Why Making Money in the Share Market is Actually So Difficult (5 Years of Lessons)?

Q&A: Questions & Answers Portfolio Q&A
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I heard about big investors making hundreds and thousands of crores, so I thought if they can do it, I too could make a crore or two. I started investing in 2020 and researched heavily via books, screeners, technical analysis, fundamental analysis, everything to build solid knowledge. But after five years, I am realizing it is a game dominated by bigger players. What about your experiences?

You pick a promising growth stock and invest, then suddenly a governance issue, scam rumor, or insider trading news causes it to tank more than 50%. Your capital is wiped out, and you waste so much time in stress and constant monitoring. Take Zaggle, the latest example with blockbuster Q3 results, yet the stock is down 55% from highs due to cash flow concerns.

Then there is Transformers & Rectifiers. Management promised 65% revenue growth over the FY25 base, targeting 3500 crore total revenue. The price at 480-500 looked like a steal, so I accumulated in huge quantities. But Q2 numbers missed badly, and the stock crashed to 232. Even management cannot be trusted fully—they inflate targets and then blame “execution issues” as if it was never their fault.

BLS International was similar. The numbers were coming extremely well with 40%+ CAGR. When the stock dipped, it prompted me to buy more and average down. Suddenly, an MEA order debarring them for a couple of years from new tenders came. The price fell to 270 levels. Then, news hit that the High Court removed the debarment. These kinds of sudden reversals feel like manipulation by bigger hands, leaving retail investors at their mercy.

Even companies showing consistent growth with a big runway for the next 5-10 years offer no guarantee that your capital won’t get nullified. It feels like a trap designed to lure young retail investors with big dreams.

The only safe path seems to be sticking to large caps growing steadily at 8-12%. Chasing 40-50% appreciation year after year just destroys capital.

Your turn: Have you faced similar burns? How do you protect your capital now? Switched to large caps only? Veterans with 5+ years, is all this self-education worth it, or is it just bait for retail? Please share your thoughts

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I think what you are facing is not a “market manipulation problem”… it is a small-cap expectations problem.

In small & mid caps, growth is not linear — it comes in bursts and disappointments.
Management over-guides, execution slips, orders get delayed, governance doubts appear. This is not exception… this is the nature of the segment.

We enter these companies assuming they behave like large caps but grow faster.
Reality: they behave like startups but are listed.

So price doesn’t fall because big players trap retail — price falls because valuation was pricing perfection.

If a company is trading at 40-60 PE, market is already discounting 3-4 years of flawless execution.
One weak quarter → thesis reset → 40-70% drawdown.

The mistake most of us made after 2020 bull run:
We studied businesses, but underestimated uncertainty.

We looked at CAGR, TAM, guidance, order book…
but not at probability distribution of outcomes.

Now I follow simple rules:
• Position sizing based on trust level (never large allocation to unproven management)
• Basket approach instead of conviction bets
• Assume every small cap can fall 60% anytime
• Buy only when valuation gives margin of safety, not only growth story
• Core portfolio in stable compounders, satellite in high risk

Small caps are not wealth destroyers — concentration + expectations destroy wealth.

Education is not useless.
It just teaches you risk after you pay tuition fee to the market.

Everyone pays it.

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I will recommand you to read Howard Marks market cycles and the most important thing books. Understanding human phycology is more important in stock market than fundamentals. PE ratio is a myth for valuation, in bull markets PEG ratio kill small investors in a growth stock, any growth more than 15-20% is not sustainable in long run, as stock in a sunshine industry start growing its profits, stock price rises and Promotors feel estatic seeing rising growth in their wealth, stock comes in radar of PMS, MF and FII’s. Rat race starts to buy stock as 5 years, even 10 years projections come out based on past 1-2 years high growth rates, stock is termed as multibagger in long term, everything looks rosy on paper, at last retail investor is informed by brokerage reports, tip by a friend about growth prospects and not to miss out, retail take a bet and dreams about making multi bagger returns. Promotors are scared to show any dip in performance hence result management/manipulation start to keep showing high profits, even QIP’s are done in name of growth or promotors sell stake if they think business is less worth than market is quoting. Any quarterly result which is expected to be weak is known to large investors and they circulate a final buy cal from 2-3 hired research analyst and dump holdings on investors buying watching TV or social media campaign. Fall is price is very steep however retail diesn’t exit as he saw research report and recommendation, once result is out stock is down 20-30% and retail becomes a long term holder and start averaging. This is whole saga of growth stocks. In Stock market you are competing with PMS Managers, FII’s, MF Managers, operators. Probability of making large multibagger returns are very less if you share same opinion as the masses have at a levels where stock is already priced to perfection for next 4-5 years earning, margin of safety is very less. For retail investor to make large alpha is to follow contra investing. In long term you will beat PMS, MF Managers as they can’t buy s stock which is besten down and going through temporary issues due to internal pressure, their goal is to just beat the Index returns. Look for beaten down stocks, out of favour sector stock with low debts, good management, high promotor holding, probability of making returns will be higher with safety of initial capital. Why i am stressing on cycle is here, TRIL is a capital goods stock and cycle for capital goods is already over, see 15 year chart of capital goods and you will realize that their stock prices dis not move from 2008 till 2021, look for business where revenue sustainability can be established for at least 5 years, even 15% sustainable growth is good, Market cap is not more than 2-3 times the networth of company, cash flows are good and OPM are at least 10%. Multi buggers are bought in peak bear markets and sold in peak bull markets. Hope this helps.

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@Cshar shared some very good points. I think the crux here is to keep learning our lessons and eventually we might become better at picking good stocks at value.

I started serious stock picking back in late 2024 after market crash. I bought zaggle with QIP story and narrative given by some well known respected retail investor. Zaggle is currently my biggest headache with 40% drawdown even after averaging. Lessons learnt if QIP in play then stock might be overvalued and dont fall for others conviction build your own. So when I saw TARIL next year with similar narrative building I immediately called BS and avoided.

Now when I look at it TARIL price might actually go into double digit because if oversupply and competition intensifies they will not be able to hold their ground and remember these were penny stocks at one time. Asset light business like bls, zaggle can survive headwinds with their large cash reserves but taril types will find it difficult to hold the cash. Again, I could be wrong here.

I bought bls as well at 370 and immediately tasted the bitter B2G medicine and whims of regulators. This lesson helped me avoid stocks like shakti pumps with their dependence on govt schemes. We should have really invested in these business when they were trading at double digits instead we fell for others narrative and foolish enough to give exit to them.

In short, treat your losers with respect as they are giving valuable lessons which no book, podcast, big bulls can give us. Once we learn enough lessons it will be our time to shine. Keep grinding!

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Sir , IMHO I would request you to learn some basics of Technicals so that it be blended with fundamentals which could give you higher probablity of making profit in todays market.

There are many videos on you tube by Himanshu Sharma sir also known as chartitude and Ishmohit sir on SOIC channel both explains technicals in very simple,language .I have personally benefitted a lot mostly in understanding trend of the stock/sector and also exit framework has improved drastically.

PS - Student of both with no commercial affiliation with either of them

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I would start by what veterans say ‘it is simple but not easy’. If it had been easy, everyone would have made money and returns would not have been that great which are enjoyed by ones who understand and play a long game. Based on my experience of now close to 8 years in the market, i would suggest the following:

  1. Though difficult, follow the business and not the price. If you stay anchored to the price, you will have experiences as mentioned.
  2. No business has zero bad news. With bad news prices would correct. Important is whether your investment thesis is intact or not. Hence follow journaling as it has helped me a lot.
  3. To understand how money is made in long run, suggest that you use say chatgpt and create a prompt to chart journey of today’s bluechips, say Infy, HDFC, etc. You would realize that bad news, business challenges, price corrections were all there and still they made multibaggers in the long run. Then ask yourself are you ready to live with such swings?
  4. Have key metrics that are non-negotiable for you like say peg < 1, DE < 0.5, ROCE > 15%, etc. Also learn some basic forensic accounting which can help you stay out of potential laggards or even blowouts.
  5. Let us take an example of BLS. Is it possible for new entrants to come into this industry and replace BLS as past references are critical to win new business, relationships also are important, etc. If you feel that your thesis says that it is a less competitive business, not having major disruption risk, price war, etc., should you not wait for some more quarters/years? You should not play quarter-by-quarter when you are investing.
  6. Diversification across stocks, sectors, etc. is very critical to avoid blowouts in a few of your stocks.

There is lots to write more. However, i will end saying that as in everything else in life luck matters here too. Hence, do your job of building a good, honest thesis while buying and then, continually monitor (possibly without being very trigger happy). Happy invesing to you.

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Very nice article for a new comer.

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This is a nice thread started after very long time. Threads like this where people share their experience is worth much more than talking about individual stocks.
Although not eligible for any advice, sharing only for pure learning - I think for any investor, story of few multibaggers and few 50% and even more drawdowns from peak must be common. If not, then either the complete story is not shared or the person is yet to face the truth of markets and no matter how good or for how long one goes on “not out”, the time will come which will teach him to be modest & levelled.

The answer lies in simplicity of following good practices, being disciplined as much as possible, refining once’s strategy with experience, achieving ideal capital allocation to different types of stocks (and even Mutual funds) based on one’s own risk profile and investing only that much if one can endure a 40-50% down volatility. Based on the type of investor you are, you may want to work on either your stock selection criteria - for example a buy & hold for long investor need to have a most refined stock selection criteria while if you are more of a momentum investor then work on your techno funda skills and exit strategies. Crashes & dips will always be there - you might need to work on rebalancing strategy, switching ships…there are so many variables it really gets overwhelming at times for everyone. And if it does, then no harm in setting the ego aside and relying on greater allocation to mutual funds while working on yourself with little less pressure.

Do remember, market is not about better cagr, winning the race, beating index/MF/peers, having least draw downs, finding multibaggers….its more about patience, being in the game, learning, evolving, even relying on others to do the job when needed - Mutual funds, believing and risk management. Even with large caps you can get excellent returns during phases. All your companies need not perform well at all times, sometimes even a 12 percent cagr with 2% dividend yield (and growing dividend on invested capital with time) can be a great investment if held patiently and sometimes a dark horse upside may surprise us while at same time we may loose 50% of paper profit of our patiently held multbagger but thats allright….as long as you feel risk is managed and capital allocation is getting better (even if it means Mutual funds inclusion).

Disc: Been in markets since long with very mediocre cagr (although not calculated can sense) but good growing dividend yield on invested capital, improved capital allocation & risk management with time and slow adopter in having good allocation to Mutual Funds as well - to manage self strategy risk and have some short term goal managers stabilize portfolio somwehat. I am not eligible for any advice and this post is only for learning purpose. I can be wrong in all my assessments.

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It is good you asked this question as a newcomer. As individual investors, we need to understand that the odds are stacked against us due to so many reasons- we don’t have deep knowledge about the industry or the minutiae of every business. What we believe may not happen and even if happens, markets may behave differently leading to losses. Too many things can go wrong. Under these circumstances it is better to bet safely thru mutual funds and some direct stocks where you can trust the management and track record of performance is verifiable. All of us have gone thru the same learning curve. Even know it happens. Small cap are a landmine so capital allocation should be limited as there is no accountability from the promoters. Over a period of time you will learn the ropes.

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