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Showing posts with label copycat investing. Show all posts
Showing posts with label copycat investing. Show all posts

Sunday, August 10, 2014

Why copying Institutional/Big investors is dangerous for Retail investors

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Many newbies of stock market often find that the easiest way of entering the domain of stock market investing is by copying the investing techniques/portfolios of seasoned investors or institutional investors, but remember
COPYCAT STOCK MARKET INVESTMENT IS VERY DANGEROUS FOR INDIVIDUAL INVESTORS!!

There are many reasons for the questions: Why is copycat stock investing dangerous?. I am covering some of the aspects regarding the same in this post. READ CAREFULLY

1. Holding diversification becomes too difficult to achieve: Institutional Investors or Big investors hold different stocks from almost every domain in their portfolio, they have lot of money for ensuring that their risk is mitigated by a diversified portfolio. Such a diverse portfolio is too hard to match for a retail investor because of money crunch, hence they are not able to diversify and hence face a greater risk of a loss from their investment portfolio. The main reason of big investors making profits from their investments over time is 'Diversified stock portfolio'

 

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