Common Characteristics of Retail Investors in the Capital Market

See how many you or your friends have fallen for

1. Easily develop faith in an investment target that is continually rising or rapidly increasing; the more an asset rises, the more faith they have. When prices rise further away from the fundamentals, they not only fail to reduce their holdings but may also continue to increase their positions, buying more as prices go up.

2. Blindly trust influencers and 'experts', lacking independent thinking skills, believing everything they hear.

3. Easily fall for narratives describing the future, without considering the current facts. For example, many retail investors previously believed that 'new energy is the future of humanity', so they bought shares in electric vehicle companies at high prices without considering that very few of those companies will survive in 10 years, and that those stock prices have already priced in many years of future performance.

4. Enjoy hearing rumors and investment advice from others who are also retail investors.

5. Experience FOMO (fear of missing out) when they see an asset's price soar, feeling compelled to participate.

6. Lack knowledge of finance and economics, entering the capital market to chase prices without understanding anything.

7. Treat the capital market like a casino, always thinking about 'taking a gamble' or 'going for it' when investing or trading.

8. Buy without any research beforehand, simply because they 'feel it will rise'.