‘So traumatic, I stopped investing’: Cult.fit founder Mukesh Bansal on day trading in stock market

E-commerce platform Myntra and fitness service provider Cult.fit co-founder Mukesh Bansal said he stopped investing in stock market for long period of time after burning his fingers day trading in his younger years.

While speaking to online stock broking platform Groww founder CEO Lalit Keshre in his podcast SparX, Bansal said that he was heavily into day trading in his twenties but eventually stopped.

“Starting early you have the benefit of compounding. You can compound for 30-40 years, but one thing you don't have in your younger years is patience. I also got to investing in my early 20s but day trading,” he said.

“I was day trading like mad. You feel like historically stock market is giving you 10% annual return over a very long period, but when you are day trading stock price obviously fluctuates and you may see 10% happen over one week. And you know you brag, but it can also correct 10%,” he said.

The entrepreneur said that he has changed his investment strategy considerably and now holds stocks for a long period of time.

“For me, day trading was so traumatic I eventually just stopped investing for a long period of time. I eased myself back into it, just very conservative mutual funds. My whole investment strategy is changing. I just want to hold for very long period of time,” he said.

“I'm obviously not an investment professional, I don't have insider knowledge or able to analyse a particular industry. But I know that long-term holders created most value for most people.”

Groww CEO Keshre agreed that most investors lose money in day trading. “There's nothing bad in day trading. The problem is that people get into it without understanding what it is. Day trading is a very very serious stuff and not meant for like 90% of the folks. Options, futures they are not meant for most of the folks,” he said.

He also warned investors against people who give stock recommendations. “There are a lot of people who are kind of giving you tips and advices. One simple rule is whoever is giving advice on stocks or MF, just stay away from them,” he added.

Keshrre further explained how an aspiring investor can strategise entering the market.

“Market gives you a lot of options to learn. You start with small amounts and then you can figure where are you inclined towards. How much deep you want to go? Let's say you can really understand companies. What does CureFit do? How does their P&L look like? How will they expand? How will they grow? What is the management like? Then you get into individual stock picking,” he said.

He added: “If you think I don't have this much time, then you pick mutual funds. In mutual funds then again you figure out. Can I understand about mutual funds, who is the fund manager? What are the stocks mutual fund is investing in? What is the kind of past return? The holdings and expense ratio and so on. Now if you think that this is interesting, then you get into mutual funds. If you see this is too much, then you just think about index funds.”

“Index funds are what? There's a market, you're betting on the entire market. You're indexing on the entire market. So if index does good, you will do good. There's no stock picking. If you think you can't understand index fund and you have a lot of money then you can hire an adviser. If you can't afford advisor, if you don't want to invest in stocks, if you can't understand mutual fund then FD is an option.”