What happened with sks microfinance stock debacle and investors losing money is nothing new in stock markets.
The basis of such disasters lies in the craze of investors for their constant striving of ‘new’ and ‘fancy’ (so-called) investment ideas.
Always remember, investors who simply jump to grab every ‘new thing’ on markets, WITHOUT UNDERSTANDING THE ECONOMICS OF THE BUSINESS AND LONG-TERM SUSTAINABILITY OF ITS MODEL are bound to lose money. Long term sustainability is very crucial; even for short term performance of the stocks. Because you never know when a smart investor start exiting and a smart trader start shorting. Its just a matter of time. And you can never figure out when.
This has happened with dot coms companies. You can take example of praj which made short term wealth for investors but since has eroded more than similar amount of wealth. We have many similar examples.
“In fact I would go forward and say common investors (including HNIs), to leave this area of investment to ‘hi-fi’ speculators/investors like the VC funds, PE funds, FIIs and such other sophisticated hard-core professional investors and traders.”
This also goes with our approach to stay clear of almost all initial public offerings.
This will not only save investors from losing their hard earned capital, but save them from loss of moral towards investment into stocks; which is even more important.
This might seem harsh but it is a reality that the company promoters, the funds that invested in this venture have stolen money of those who subscribed in its ipo and after listing.
The point to take home is that the venture capital, PE funds and such other exists to make money. They invest so that one day they can come out with IPO and shell their shares to gullible investors. They don’t want to hurt others. Because its what they do. This is their business. If I would have been one, I would do the same. There is nothing personal about this for them. But yes, it hurts a lot to small common investors…personally.
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