Why Investors Fail in Share Market?


The share market generally is known as the place to trade equity shares. Also, known as the stock market. In recent years, the craze of investors has shifted from the traditional way of investing in the equity market.

Equity investing can benefit you in many ways,

  • Beating inflation in the long term.
  • Yielding a minimum of 12-18% returns per annum.
  • Choosing the ideal penny stock at attractive prices can make your wealth grow faster.
  • Holding more liquid assets

The real fact is, that most people (90%) come here to trade, and earn money. But, there are only a few people (10%) enter to create wealth by making a long term portfolio.

The futile scenario is, that most investors become traders as time moves, which themselves don’t aware of. Here we will be discussing on failures of investors and not of traders. The mistakes made by traders will be covered in another topic.

Come let us focus on the common mistakes that investors make and fall under the trap of speculation. The speculation trap will make them bleed in investing.

4 Common Mistakes That Investors Make

1. Investing in the Price of the Shares

This is one of the common mistakes that investors make. They feel the stock price is the only weapon to analyze before investing.

We have seen many people invest in the share market seeing a 52-week low or all-time low. They feel, that buying at a low price can make wealth. This will not be working at all times. You might end up bankrupt.

The price of a stock is not a prime factor to decide. We have seen many people, who say “I have invested in x shares because the price has moved from 100 to 200 and expected to move to 400.

Instead, you should understand the business of the company, and fundamental and financial performance on average of the last 5 years.

Check our articles on,

  1. Quantitative Fundamental Analysis
  2. Qualitative Fundamental Analysis

2. Depending on Technical Analysis:

As an Investor, you shouldn’t check technical analysis. Technical analysis is used by professional traders, who check the exact entry point and exit point.

You should understand technical analysis can’t make you a long term investor. If not investing and holding for the long term, you will not be an investor, it is known as speculation.

Apart from price growth over the period, there are many benefits a company provides to its investors,

  • Dividends
  • Bonus
  • Splits

These factors and basics are covered in our previous topics, Benefits of share market. Kindly have a look for a more clear understanding.

When you run behind the price of the shares, you are going to miss many benefits associated with the share market.

If you bought ITC at Rs.10 in 1993, the current price is Rs. 416. So in the last 27 years, the price has grown only by CAGR 11.18% P.A. It is only 17.5 times higher. Even if you calculate with an all-time high price of Rs. 300, it is only 30 times the growth.

If you have invested Rs. 1 lakh in ITC in 1993, the current value will be about Rs. 10.05 Crores (current price of Rs. 416 per share as of 20th March 2024). Which is almost 1050 times growth.

ITC has offered,

  • 1:1 shares bonus – 3 times
  • 1:2 shares bonus – 2 times
  • 3:5 shares bonus – 1 time
  • 1 split of FV 10 to FV 1.

Just be aware, that if you invest in seeing the price, it generates only 30 times of invested amount. If you invest in seeing other parameters and stay 31 years investors, the wealth will grow by 1050 times.

3. Emotions on Investing in Share Market:

 The people who can control their emotions can win as long-term investors or intelligent investors.

Most people fail in this category.

The major emotions that make tragedy in wealth creation are,

  • Greedy
  • Fear of Missing out (FOMO)

Let us check one by one.


The main emotion which makes people bleed their wealth is greed. An interesting fact is, that they don’t understand this mindset has traveled alongside. It is always important to have a fair idea of the return which we can expect.

No company or share will perform in the same way as its the past.

What makes people greedy?

The mindset comes with media, people we trust, YouTube, and articles from various top websites. They hold an attractive title stating the past performance of 400% growth in 6 months.

These make people in an agreed situation, “Let me also try the share” and buy the shares at a high price or overvalued.

Fear Of Missing Out (FOMO):

This emotion always tends to happen at the time of market correction or stock correction.

Investors always try to buy the shares at a low price. They don’t understand the factor behind the correction. It may be due to,

  • Change in CEO.
  • Criminal cases on decision-makers.
  • Regulatory Issues.
  • Continues degrowth in revenue and market share.
  • EPS fall for continuous years
  • Huge debt burden, promoters share pledged.

You have to analyze this first before investing in shrinking shares.

In fact, before analyzing these factors, many investors start investing in the shares as it is available at the lowest price. The mind will be filled with, “If I miss it now, the share price will move up”. This is meant to be a fear of missing out.

This is what happened when YES Bank started to fall and due to media, people invested as long as the price fell and many became bankrupt.

4. Investing without Calculating Share’s Value:

You will buy a Pen costing Rs. 10 for Rs. 50 or more. In the same way, the shares also should be bought. So, there are many methods to calculate the value of a share.

  • Business Overview
  • Book Value
  • EPS – Earnings Per Share
  • P/E ratio
  • Intrinsic Value
  • Excess Liquid Cash Per Share
  • Debt to Equity ratio (DOE)
  • Interest Coverage Ratio
  • Financial Performance

When you don’t look into these aspects, you will not be considered an investor, you will be just a speculator.

When you don’t buy a share without understanding its value, you will never know the reason for the share price going up and going down.

When you don’t know the value share, you will tend to sell a multi-bagger stock when it falls to 10% or more.

In the same way, you will purchase a stock that is falling in revenue since it is less than industry P/E.

You have to do all kinds of quantitative and qualitative analysis of a stock before investing. If you can’t invest your time to analyze on your own, please move your focus towards Index funds or Index ETFs.


  • Remember, you are the only reason for the failures in investing.
  • Share market investments always have market risk. So, kindly avoid these practices if you have any.
  • Before investing in any company completely analyze your own.
  • Even from our articles take the information, and analyze yourself. Calculate the value of the shares on your own.
  • As an investor, don’t focus on technical analysis. Technical analysis is meant for professional traders.
  • Practice well and control your emotions of greed and fear of missing out.