How Not to lose money in Stocks

I went through quite a few posts about stocks, investments, and related topics, so I thought of sharing my perspective.

Let me tell you how so-called analysts, research analysts (RA), and others often mislead people.

Everyone knows the stock market is fundamentally a game of demand and supply—or, more simply, buy and sell.

It doesn’t matter if a company is making huge profits, securing deals, or getting government tenders—if no one buys its shares, the price won’t increase, and no one will make a profit.

Now, if a company is delivering good returns, people invest, and we all make money over time.

Let’s get to the point about microcaps (market cap up to ₹500 crore) and small caps (market cap up to ₹5,000 crore).

You’ll often notice on platforms like Twitter or YouTube that influencers and creators primarily discuss microcap and small-cap stocks. (They usually don’t disclose that these are microcaps or small caps.)

But why? Because it’s easy to manipulate the prices of microcap and small-cap stocks.

Many Twitter handles, which are considered “demigods” and “saviors” of the stock market, have hundreds of thousands of followers.

For example, they might post about an "X" company:
“Buy this stock, its results are good, PEG ratio < 2.5, P/E is 19,” and so on.
The very next day (or by the end of the same day), the stock hits a 5% upper circuit.

Public reaction:
“Oh wow, sir, you’re a genius!”
“Sir, you’re the god of the stock market!”

Now check the market cap of the company—these are usually stocks with a market cap of ₹100-200 crore.

Here’s how it works: If just 10,000 people (a minimum estimate from their vast follower base) invest ₹10,000 each (a small amount compared to what most people invest in such stocks), that alone sums up to ₹10 crore. This amount is enough to influence the price of a microcap stock significantly.

So, where’s the problem? Everyone is making a profit, right?

The problem is, that the average investor doesn’t know when to exit. When bad news about the stock emerges, most people make emotional decisions, leading to losses.

No one—and I repeat, no one—on social media is genuinely helping you. If you want to invest or trade, educate yourself. Don’t blindly trust anyone in this field; it can cost you both your money and your confidence.

These people never give tips to buy large caps like Reliance, Infosys, etc., because inke price ko influence karna inke aukat ke bahar hai.

For learning, nothing is better than Zerodha Varsity.