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Caught in a value-buying trap: why retail investors often get it wrong


Concept by Muhabit ul haq

Synopsis

Betting against the institutional investors generally ends up in losses. ET Prime looked at the returns of 490 stocks in relation to the increase in retail shareholding. We observed that those with higher retail participation have had lower returns. This is true even in a bull-market scenario where many stocks are on an uptrend.

Abhishek Pradhan, a 43-year-old businessman from Mumbai, is a regular investor in equities. In a way, he follows the classic investment philosophy of value investing in companies that are beaten down, but are expected to bounce back. He has long-term positions in Yes Bank and ITC — the two most loved stocks by investors who are hopeful of becoming rich one day by hanging on to them. Pradhan bought Yes Bank shares at around INR300. He added some

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