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Retail Investors can grow their wealth much faster than HNI/Institutions because they have many EDGE.
The road to success in the stock market is not a system or strategy; it's within you, but first you need to understand that your greatest challenge is not the stock market. It's YOU.
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If you are having descent knowledge, wisdom and experience of stock investment & you are given a task to manage bigger fund as a fund manager -OR- you are going to manage your own capital (small in size). You are bound to perform much better when your capital is small as compare to managing bigger funds. This is because when you manage small capital, you have luxury to buy any stock however small it may be, you can get in and get out anytime as per your will, you are not a public figure hence not much ego hinderance takes place.
Generating a higher returns even if you are managing large sum of money is possible only if….
a) You manage your own money (Very Important) - Look at all the big investors, they have managed their own funds. You don’t have any pressure to perform when you are managing your own money. You are not in a rat race or doing momentum trades to outperform other PMS/Funds on monthly or quarterly basis, rather you have very long term approach of the businesses you pick. You are not accountable to anyone else. You can buy right and sit tight for 5-10-20 years also as long as you don’t need that money for your consumption purposes or for your obligations.
b) You stay anonymous or generally stay away from social media or fan followings/eye ball etc. - If you observe, you will find that there are some smart investors like Late Rakesh Jhunjhunwala, Vijay Kedia (early days), Sunil Singhani, Dolly Khanna, Ashish Kacholia, Mukul Agarwal who started small, earned exponential returns over the longer period of time, stayed away from media (they generally do not talk about their stock investment in public forums) and created huge wealth by picking right and sitting tight.
Few investors or PMS fund managers performed excellent during their early days but later on they got into limelight and started attracting eyeballs / publicity hence being a public figure ego comes into picture. Popular investors face difficulties in taking “U” turn from their bets because of pressure from fan followers. These so called media savvy investors will not be able to generate handsome returns because whole world is keeping eye on their activities.
There is saying that, you can be either a good trainer/teacher or a good player/student. You can’t be both. It means all those popular investors who regularly appear on TV or active whole days on Twitter (even while travelling they post their pictures or status) or now a days gives interview (mostly PAID) on YouTube can’t be a good investor. Unfortunately viewers starts taking them as role model and following them. You can’t learn art of investment from someone who is earning money from social media fan followers. You can’t earn money from market while your trainer is earning money from seminar teaching you. Goals are not aligned, hence if you are expecting that you will become a good investor following them, forget it….
And finally a few words based on my 2 decades of market experience & personal wealth creation journey…
a) “If you really want to make it BIG, first make it clear whether you want to take be an INVESTOR or TRADER, you can’t be both. I will suggest go with INVESTOR.
b) After that you have to make it very clear whether you want to FOCUS on micro/small cap stocks only to create wealth or mid-cap or large cap stocks also. I will suggest based on history, go for micro & small cap focused stock provided you are young & highly ambitious and have high risk profile.
c) Now, you have narrowed down your approach, selected a path suitable for you. Remember that a portfolio mixed with all kind of stocks, a portfolio where you do long term and short term both will not help you in achieving exceptional success, though you may make descent profits, good wealth but to create fortune you need to have narrow focus.
d) After that you need to focus on only 2 things - Buy Right & Sit Tight. This is possible only if you have invested only the money which you don’t need at all for next 3-5 years or more and you have patience & courage to hold a concentrated portfolio of max 5-6 bets.
Remember that, no champion has completely balanced life when he or she is going for a gold medal. Champions are laser focused on their goal; they understand that power of narrow focus. This comes at a price; it’s called sacrifice.