Is there such a feeling that no matter whether the index rises or falls, you always seem to be losing money?
You entered the market to bottom-fish at 2900, and now it's back to 3000 points, how come the loss is still 10%?
In the past two days, I met a retail investor who added positions at 2923, and now that the index is back near 3000, the account loss is as high as 45%.
From the end of October last year to February this year, in just these short five months, why are you still losing money?
The cruel truth is that in the stock market, a round trip at 3000 points, retail investors always seem to be the ones losing more money.
Many people may not understand why, so let's first take a look at the reasons.
The reasons for the losses of retail investors are actually just a few.
1. The interplay of ups and downs in a structured market.
First, let's talk about the biggest essence, which is the structured market that has led to the losses of most people.
From 3000 to 2600 and back to 3000, in this process, there are many directions that have actually set new highs.For instance, bank stocks, the Big Four banks, have already reached new highs.
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For example, coal stocks have been rising for five consecutive years and have long been at their peak.
Take China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC), their stock prices are already very high.
Take China Mobile, its stock price has also reached a historical high.
Take Yangtze Power and China Shenhua, which represent high dividend stocks, they have also reached high points.
Too many large-cap stocks with significant weight have long surpassed the 3000 point mark and are very high.
And these directions are not the direction of most retail investors, the stocks held by retail investors are still far from the 3000 point level.
This is the truth and also the main reason why retail investors lose money, the direction is wrong.
It's okay to buy more as the price falls, but if the direction of the fall needs to be repaired, it takes a cycle, not just seven or eight trading days, it can't solve the problem, the pit dug is too deep, it takes time.
If you haven't been able to add more positions at the bottom of the pit, then the cycle of recovery will definitely be very long.Moreover, some incorrect directions may ultimately not have the opportunity to break even, but will become more and more deeply entangled, such as loss-making stocks, which are definitely not the main direction of the future.
2. The loss caused by the wrong trading rhythm.
The wrong rhythm is also a main reason for retail investors to lose money.
In November and December, it is the world of small-cap stocks, and blue chips are motionless, lying down and falling.
In January, it is the world of blue-chip stocks, with the big blue-chip, 50 and 300, taking the lead in recovering.
Many retail investors are in the wrong direction. The first time they try to bottom fish, they think that blue chips can't fall anymore, and the direction is wrong.
When they find that blue chips are still falling and small tickets are rising, they go to chase small tickets, buying all kinds of loss-making stocks.
The result is a direct plunge, and in a dozen trading days, it is halved.
In fact, any industry, sector, or direction, will rise if it falls too much and fall if it rises too much, which is the law of the market.
But retail investors just want to rotate, hoping that the sector they buy can rise against the trend, hoping that they can turn the tide against the wind.The ultimate outcome is that the performance was outperformed by the index, which is the price of greed.
Controlling the pace of trading is indeed a good remedy for some sensitive investors, but for ordinary retail investors, it is a poison without a cure.
3. The collapse of mentality leads to incorrect operations.
How many people reduced their positions below 2800, and even cleared their positions at more than 2600.
The only explanation is that they couldn't hold on mentally, and the daily decline was about to collapse.
When bottom-fishing at 2900, the thought was that the valuation was cheap, the opportunity was very good, and it was a golden pit.
When cutting losses at 2700, the thought was that the decline was endless, and there were mines everywhere, which was a bottomless pit.
They had long forgotten that the lower the valuation, the safer it became.
They chose to ignore the country's bottom-fishing and rescue market, and they ignored the policies, looking at everything with an empty eye.
In order to avoid the last drop, they were afraid of falling to 2500 and were ruthless with themselves.When the index begins to rise, it's too late to regret, and even if the losses are recouped, it's just a small profit, which is definitely a huge loss.
Those retail investors who cut their positions at the bottom, handed over their chips with blood to others, and can only silently lick their wounds.
4. Desperate for a cure, they are cut like leeks.
The last type is also very common, desperate for a cure.
At the end of last year, there were many investors who leveraged their positions above 3000 points.
In the end, all of them were liquidated at the market low of 2635.
Most investors use leverage, not because they have a good understanding, but because they are eager to recover their losses and have made a wrong judgment of the opportunity.
The market is too cruel, even if 3000 points is reasonable, it does not mean it can't fall to 2600 points.
Believing in some wrong guidance, using the wrong tools, and paying the wrong tuition fees, they were finally cut like leeks.
Why there were so many A-share killings in January, in fact, many of them were specifically targeting these retail investors.They believe that buying speculative stocks can double their investment in the short term and recover their capital. However, once they enter the market, they are met with a series of consecutive limit-downs.
At any time, there are those who take advantage of others' panic. As soon as you lose your composure, the sickle will fly towards you, and it is impossible to avoid it.
This is not only seen in the stock market but also in life, reflecting human nature.
Only by understanding the reasons for losses clearly and making corrections can you take the first step and keep up with the index.
The A-share market has fluctuated around 3,000 points countless times.
However, those who make money in this fluctuation are always a minority, and most people end up losing money.
This market, in terms of the index, is a cycle.
But within the cycle, there are gains and losses. Large capital is definitely making money, which means that retail investors are destined to lose money.
This also explains the essence of why the vast majority of retail investors ultimately cannot even keep up with the index.When this market offers you a way to achieve the same returns as the index, shouldn't you consider it?
This is also why the ultimate destination for retail investors is index funds.
And index funds have long been verified by the global stock market as the only way out for the vast majority of retail investors.
Many people are still trapped in individual stocks and cannot extricate themselves.
For those who already have their own trading system, there is no problem at all.
But for those retail investors who are like weathercocks, really don't try anymore, because the difficulty coefficient is getting bigger and bigger.
Various professional investment institutions, quantitative strategy trading, is a sure harvester for ordinary retail investors.
All are trading strategies simulated according to the behavior of retail investors, and retail investors are unable to avoid it.
This is also why it will be said that the future is an era of de-retailization, because the investment form of retail investors will undergo great changes.
Retail investors without a trading system will lose their living space, and the situation will be very bad.Individual investors need to reflect on the reasons for their losses and then seek a way out; otherwise, in the stock market, which is like rowing against the current, they will become increasingly distressed.
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