Retail Investment at an All-time High Despite Market Volatility

You see an investment opportunity at a low price, but you think this has no value on books, so you don't buy it. Later, you see everyone on Twitter talking about the same thing. That is the only thing they seem to be talking about. Surprisingly, now the investment is trading at an all-time high. You don't give in until a credible person talks about it. You think, he knows more than me – if he's saying it, then there must be some value to it. So you eventually buy it – at its highest price. Later, you realise it was all a bubble, and the price comes crashing down to almost nothing.

The slang "FOMO", meaning ‘fear of missing out’, seems to be more valid during recent times.

Since the lockdown began, for many people, expenses have been reduced, and they have a higher percentage of disposable or, we might say, investible surplus. 

As of January 2021, the country had a total of 5.15-crore demat accounts, compared with 4.08-crore as of the financial year 2020 and 3.59-crore as of FY19.

Many people have chosen trading to earn passive income, and some have even turned it into a full-time career; the top reason being that you can work according to you. That is, more flexibility. 

Another reason for turning to trade is the pandemic. Many are bored at home and do this for entertainment and short-term profits.

One interesting paradigm shift that is taking place is the rise of financial content creators. The subscriber base of various creators in the financial space has gradually increased, especially since the pandemic. So a lot of young investors have also entered the stock market to try out their luck.

Some realised how inflation affects their savings and investments, so it's better to diversify and look for a place that gives them better returns. 

It's good to see many people diving into the markets to create wealth for themselves, but at the same time, some don't realise the risks associated with the markets. But when the portfolio looks green in the bull market, who would want to worry about the risks?

"Things that have never happened before happen all the time."

― Morgan Housel

The author is Co-founder, Wint Wealth

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.