I’m not against any particular style of investing but having been in the market for quite sometime and observed several investors (both successful and unsuccessful) over a period of time, I believe that one can not be both trader and investor at the same time. Long term investors share certain characteristics that traders find it very difficult to emulate and vice-versa. That said there are enough statistics available that favor long term investing as a more effective means to generate superior wealth than trading.
To me having 40-60 stocks in one’s portfolio with constant churn is not long term investing but more of a trading style which chases momentum and narrative. In a prolonged bull market (like the one we are seeing currently) narrative and momentum trump fundamentals and every second stock is a winner. In 2023, over 1600 stocks delivered more than 50% return. My own portfolio generated more than 50% return but I only attribute this to the luck of being in the market than any specific skill I possess.
There have been so many cases of promoters of small caps/micro siphoning off funds, cooking books and colluding with operators to run the stocks. Their narrative to the market is always rosy and they always say the right things in interviews/concalls to convince the common investors that their company is the next best thing. You will see such companies doing very well during bull market and not so good during bear market.
For new investors it’s safe to stay with quality names than take too much risks get into small and microcaps where it’s very hard to assess quality of management. No reading of financial reports or management commentary will help unless one has direct access to the management (and even then there is no guarantee). If 15% CAGR with all the risks of small caps/microcaps investing is goal, buying an Nifty ETF will generate better return on a risk adjusted basis.
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