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How Investor Personas Shape Stock Price Movements
What is the Fuss?
Retail investors play an essential part in the stock market. In India, retail investors invest in either individual capacity or via Mutual Funds, which are also called Domestic Institutional Investors (DII).
The total contribution of retail investors (via individual investments + via DII) has increased by an absolute 8% in the last decade (from 55% in March 2014 to 63% in March 2024). The inflows and outflows of retail investors now play a dominant role in stock price movements, which used to be Foreign Institutional Investors (FII) earlier.
This is a generational shift from a savings mindset to an investing mindset. Numerous awareness campaigns, such as “Mutual Funds Sahi Hai,” have helped in this transformation.
But how do Retail Investors invest and influence stock price movements? Retail investors have different personas and financial goals, which impact how they make a Buy, Sell, or Hold decision. Eventually, an amalgamation of these decisions decides the overall sentiment in the market and results in a downward, sideways, or upward price movement.
In my past seven years of investing, I have donned at least seven distinct personas, if not more. In this post, I list down these seven personas I have worn at some time, as have…