🤯 Why Direct Stock Investing Feels Smarter… But Isn’t Always Better
If you’ve ever regretted selling early, waited too long to buy, or paused your SIPs because of “market noise” — this letter is for you.
Let’s talk about a feeling we all know too well — the feeling of being too involved in our portfolios.
You spend hours researching a stock. You feel confident about the company.
You convince yourself it’s a long-term play. But…
👉 The moment it drops 25% after you buy, your belief starts shaking.
👉 The moment a YouTuber says “avoid this stock,” you rethink everything.
👉 The moment a bear market hits, you stare at it daily.
Why? Because when we pick a stock, we naturally track it more.
We develop attachment. We want to control the outcome.
And if it doesn’t behave the way we want, it starts controlling us.
But here’s the fun part:
If you had held the same stock through a mutual fund, you probably wouldn’t have panicked.
Why?
Because you wouldn’t even know what was inside.
That’s the invisible advantage of passive investing.
You can't act impulsively. And that... oddly enough, is a superpower.
🧠 The Problem With Being “Too Smart”
Let me share a secret:
The best SIP investors I know are not great at finance.
But they’re brilliant at doing nothing.
They don’t check their NAV daily.
They don’t care about GDP numbers, RBI policy, or crude oil prices.
They invest on the 1st or 5th of every month.
They don’t skip a month just because elections are coming.
They don’t try to be smart — and that’s exactly why they build wealth.
Meanwhile, smart investors — the stock pickers, the analysts, the “I’ll wait for correction” folks — often end up:
❌ Missing entries
❌ Selling winners too soon
❌ Holding junk hoping for miracles
❌ Taking advice from a tweet or meme
Being “informed” can work against you if it leads to overthinking and unnecessary action.
📊 Case Study: SIP in Nifty 50 vs Stock Picker’s Regret
Let’s take a basic SIP in Nifty 50 for ₹5,000/month from Jan 2016 to Jan 2024:
Total Invested: ₹4.8 lakhs
Value as of Jan 2024: ₹9.5+ lakhs (CAGR ~11.8%)
No tracking, no stress, no decision fatigue
Now compare that to someone who bought RBL Bank, DHFL, or Vodafone Idea in 2018 thinking “it looks undervalued.”
Even if they sold and jumped to another “tip,” chances are:
👉 Their portfolio hasn’t doubled
👉 And their mental bandwidth is exhausted
🔍 By the way...
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🧩 Holding Winners is 10x Harder Than Finding Them
This is probably the most underrated truth in stock investing.
Finding multibaggers is hard, yes.
But holding them through the ups and downs is even harder.
Let’s say your ₹1 lakh becomes ₹2 lakhs.
The first thing your brain says:
“Let’s book before it falls.”
Then you sell. Stock goes on to become 4x.
You stare at it, think about re-entering, hesitate… and miss the ride.
This cycle repeats — again and again.
💡 That’s why the biggest wealth isn’t made by hopping between 20% trades.
It’s made by holding a Titan or a Page Industries or a Bajaj Finance for a decade.
But guess what?
It’s not your fault. It’s just that your brain was never designed for long-term investing while staring at red and green ticks daily.
Mutual funds solve this by hiding the temptation.
You don’t see that a single stock is up 300% — so you don’t get greedy or impulsive.
You just let it grow.
🧭 Don’t Pick Stocks Without a Framework (It’s Not Fun After Year 2)
Stock picking feels exciting at first — you're in control.
But after a few years, when markets get rough, only a proper system saves you.
Here’s a basic framework I personally use and recommend:
Define the Why
Are you picking stocks for learning? To outperform SIPs? For long-term alpha?
Clarity here gives purpose to your portfolio.
Pre-decide Holding Period & Exit Plan
Set clear rules for exits — time-based, event-based, or price-based.
Eg: Exit if 200 DMA breaks and earnings slow down.
Track Fewer Stocks, But Go Deep
You don’t need 20 stocks.
5–7 good picks you truly understand are more than enough.
Position Sizing = Peace of Mind
Going all-in on a “conviction bet” sounds cool — until it tanks 40%.
A 10% position losing money won’t hurt your sleep. A 50% one will.
🧘 Knowing Yourself is the Real Edge
Be honest about why you’re investing.
If the money is for:
Emergency
Home loan down payment
Business needs
👉 Avoid direct stocks. You’ll panic during drawdowns.
But if it’s for:
Retirement
Long-term compounding
Passive wealth creation
👉 SIPs and funds will do the job — without drama.
Also — this is rarely talked about:
📈 Compounding feels boring in year 1 to 5.
But post year 7? The graph explodes. That’s when you start to see visible results in you graph and after 10 years it shows a big shift.
Sadly, many investors exit in year 3 or 4 saying: “Returns are too slow.”
And that’s how they miss the entire game.
🧠 Direct Stocks ≠ Wrong. But They Demand Mindfulness.
If you enjoy picking stocks, go for it. But do it with intention.
Avoid chasing every breakout you see on Twitter.
Don’t fall for “top 5 stocks to buy now” YouTube shorts.
Stick to your own checklist.
Review it once a quarter — not daily.
And please — don’t add 3 new stocks every month just because they’re trending.
Mutual funds force discipline.
Direct stocks demand discipline.
📝 Final Word
The truth is:
The more control you have in investing, the more chances you have to mess it up.
That’s why SIPs work better than we give them credit for.
That’s why “doing less” actually compounds more.
And that’s why… before you pick your next stock — ask yourself:
“Would I still hold this if it fell 30% tomorrow?”
If the answer is no — maybe SIP into a fund instead.
Let me know —
What’s the biggest lesson you’ve learned from stock picking?
Would love to hear your story.
Talk soon,
Arun Bau
CA | CFA Level 3 Cleared | Market Educator
📩 P.S. – If you're someone who prefers clear, mindful research over hype —
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