What drives individual investors – what brings them to investing, what scares them away, what keeps them,…?
I really do not know, and even though I have read a lot of theory on this, let me tell you what I have seen among my friends/clients.
Some of my friends took to equity very early on in life, have benefited from equity, and are happy equity investors. They do not worry about a fall in Nbfc, or a rise in IT, or the weakening dollar – for them macro is completely incidental. Some of them will call at the top of a industry and reduce their exposure much before the fund managers do. They are many a times happy to be out of the madness of an industry and will miss out the top 20%, but will have enough power and ammunition to get back when the fall is 40%. Some of these people had sold Cholamandalam, Kotak, Yes, and even Hdfc. Now they are sitting on dry gun powder and planning to buy/ have bought some Nbfc. Of course many of them are not convinced about the fall being enough!
There are some investors who will chase ONLY an absolute number. 2 of them for example have been told that they have to create a corpus of Rs. 6/7 crores for their retirement. For one retirement is 5 years away for the other it is about 14 years away. Both look at their portfolio ONCE a year and tell me “is the speed enough or do I need to add more fuel”. They have no clue on Asset allocation, large cap, small cap,…..that is supposed to be my headache or the fund managers headache. Complete supreme confidence in themselves that in case there is a screw up, they will earn money (still!) from their business. I guess this comes from their track record of being successful in their careers (one is a Ceo in business, other is an ex Ceo who retired early when I told him that he had enough money to quit!
There are investors who are happy in debt, real estate, etc. Many of them have been lured into investing in equities. So there is a feeling of TINA. These people actually love real estate, gold, or even PPF. However thanks to my nagging, or nudging, they have some money in equities. Immaterial of whether the market is doing well or badly, they are constantly looking for exiting the market!
Then there are a few investors (mostly women) who ask “is my portfolio doing well” – and then they do not care beyond that.
Then there are a few who think they can time the market. They would have sold in the past (and have deep regrets), bought some share which they cannot sell now….etc. However there are some who have a tremendous sense of GRATITUDE for what they have got! So they will come to me and say “I never thought I will have Rs x in my account…but now I have 10x “.
Not all investors are driven by the same drivers.
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