Read these anecdotes. To me, these are neither the case of good luck or bad luck nor the case of good skill or bad skill, these are cases of sheer stupidity & ignorance on behalf of two of your acquaintances.
It takes a lot of education (especially of finance, business etc.), practice, experience, ability to learn out of one’s own mistake etc. to become good at investing directly into stocks (by good I mean the ability to beat the markets CAGR over a 10 years plus duration by 2-3% or more). Unfortunately, because everybody is allowed to invest and because anybody who has even 100 Rs in his pocket can invest directly in stocks, people start thinking that they should invest directly into equities.
75% of the fund managers globally are unable to beat the benchmark, so how do people start believing that they can beat the market comfortably and hence should directly invest into equities without the required education, practice, experience and the ability. The larger problem with equity investing is this only. For most (and by most I mean 95% of population) it just doesn’t make any sense to invest in any stocks directly. These should just buy ETFs or MFs of reputed houses in direct plan or seek a smart adviser/PMS manager. It is that simple. And then hold them without checking prices every now and then just like they hold their other assets - real estate, family gold, PPF - hold it for 10-15 years or till your retirement. By doing this one can easily make atleast 12-13% (or much more if your adviser/PMS manager is good) compounded annually.
However, most people are greedy. They think just because they have heard stories (that too unaudited and without any proof, people everywhere just love to brag about their successes and hide their failures) like the one mentioned by @Cshar which in most cases is just because of luck/timing - they feel that they can earn similar return. Most of these people, by the way, hear these stories at the peak of the market and then loose big time as they are too late to the party. And then they vow never to come back to the market. But in India, population is huge - so new crop of young punters enter and the cycle goes on. The biggest beneficiary of this cycle are your brokers/investment bankers/savvy investors and unscrupulous promoters of dubious companies who recognize this cycle and offer/market their shares and the stories attached to these shares precisely at the time when the appetite to punt among masses is high. When I see so many small cap stories and SME IPO stoeies being touted on various online forums and blogs I feel a lot of unease - these are deadly weapons used against gullible investors to sell crappy unknown to them knowing they are greedy for the next 5 to 10 bagger.
Equity investing is an art and a science and both need to learned over time. I guess a total of 10 years of education/reading and investing is the minimum before one can even hope to beat the market on their own merit. And it is not a part time job unless one is follower of a coffee can investing approach (only invest in highest quality blue chips) which is also meritorious though in my opinion sub optimal to other philosophies of investing.
Both of your acquaintances deserved their fate - they should better know that stock markets is ultimately a zero sum game where the money flows from fools, less knowledgeable, less experienced and the less smart to the well read, smart, experienced practitioners with the right educational/psychological base. One should only participate with meaningful proportion of one’s net-worth if one truly believes (by a very objective assessment) that they are better than the average and that too distinctly better. So not only one has to be much better than average in an objective assessment of oneself but also do a cost-benefit analysis of their time spent in directly investing vs time spent in say doing better in one’s job, more social work etc. which can provide much higher tangible returns compared to few % points extra in stocks If people, actually do this analysis in a true manner, my guess is 90% will come to the conclusion that its not worth investing on their own and they should either search a smart adviser/PMS or do it via mutual funds/ETFs.