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Tuesday, November 21, 2017


The Bull Share Market made Millionaires Out of 80 lakh Retail Investors.

The Bull Market made Millionaires
Out of 8 Million Retail Investors.
Now It's Your Turn

Tue, 21 Nov 2017
Tanushree Banerjee :: Editor, The 5 Minute Wrapup
'Stock Market Millionaires.'
Maybe a sequel to Yuval Noah Harari's bestselling book Sapiens - about the human race - will have these three words someday.
The wealth the human race has created with intangible assets, ie stocks, in the past twenty years, is possibly the largest in history.
And therefore, a nomenclature for this new breed of humans is overdue.
Homo Sapiens can now evolve into Homo Stock Market Millionaires...
Indians, of course, have been very late to join the race of stock market millionaires. And only recently, a few million Indians, have got a taste of that wealth.
How much wealth?
Well, the benchmark index (BSE 500) moved up 6 times in the last two decades. In the process, it created about Rs 100 trillion of stock market wealth. But until recently, most of this was pocketed by foreign investors.
In fact, even today, just 6% of Indians of working age have a demat account. And less than 10% of their savings have ever gone into stocks.
So, it's just a fraction of Indian investors who have got some share of the stock market wealth. And most are a product of the latest bull market. A third of the stock market millionaires in India have been created only in the last four years.
The rise in the marketcap of BSE 500 stocks over past four years has, on an average, offered gains of Rs 1.9 million, to each demat account. Of course, this a rough calculation, for not all demat accounts were opened at the same time. And at least a million demat accounts could have belonged to institutions and foreign investors.
New Stockmarket Wealth Created

Between 2013 and 2017

Plus, the assumption that every demat account holder made money in stocks over these four years and lost nothing, is also not accurate. Of course, the number of gainers and quantum of gains far outnumbered the losers and losses.
But the point is that nearly 8 million Indians made the attempt to join the breed of stock market millionaires very recently.
So, those who haven' can't wait to do so!
New Stockmarket Wealth Created Between 2013 and 2017
Increase in no. of demat

Total no. of demat accounts

Growth in BSE 500 Market cap

(Rs m)
Avg gain per demat account

(Rs m)
Source: NSDL, CDSL and BSE

The problem is that such recency bias could be disastrous to the longevity of the breed of stock market millionaires in India.
Blinded by the millions pocketed by their family, friends, colleagues or a few stock market gurus, several new stock investors could get aggressive. And in doing so, could forget that the bull market cannot last forever. Worse still, they will believe that buying any kind of stocks at any phase of the bull market could get them similar results.
They need a stern reminder of Buffett's warning....
    A pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons: First, many in Wall Street will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest
So, if you are an investor hoping to join the breed of stock market millionaires, don't jump in blindfolded.
You cannot ignore the risk of losing money.
Remember - money lost in stock markets is difficult and often impossible to recoup. And the experience of losing a ton of money in stocks could scar you for life.
You can join the millions creating wealth with stocks, you can do it right only with patience and discipline. And in my letters I show you how to do so...
So, do not throw away your chances by making inexcusable mistakes in the current markets. Rather, book profits where necessary, rid yourself of poison stocks and get your allocation right.
Most importantly, being patient - wait to buy the safest and timeless stocks - could be the best tactic to count yourself in Harari's book about a race of stock market millionaires.


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