How to Win in the New Era

Equity markets’ volatility has heightened concerns among retail investors about the road ahead. Global tariff-related developments have further added to the uncertainty, making it harder to navigate the current landscape. This article outlines a clear roadmap to help retail investors make informed decisions in these turbulent times [EasyDNNnews:PaidContentStart]

The equity market has turned sharply volatile, with the benchmark Sensex frequently witnessing four-digit swings with alarming ease. Following a prolonged downward trend over the past few months, the latest round of tariff-related developments has only exacerbated market instability. This surge in volatility is making it increasingly difficult for investors to generate consistent returns. 

The graph below shows all the days since September 30, 2024, when Sensex has fallen by more than 1,000 points. Out of 132 trading sessions from September 30 until April 11, 2025, on average, every tenth day Sensex has witnessed a fall of more than 1,000 points. 

The current market environment brings to mind the wisdom of Charles D. Ellis, a renowned American investment consultant. Nearly five decades ago, Ellis observed that the stock market had evolved from a “winner’s game” into a “loser’s game.” In a winner’s game—akin to professional tennis—the outcome is shaped by the superior skill of the winner. In contrast, a loser’s game—much like amateur tennis—is often decided by who makes fewer mistakes. In today’s choppy market, this philosophy serves as a timely reminder: success may come more from avoiding errors than chasing outperformance. Ellis believed that as markets became crowded with skilled players, an investor’s success would depend less on brilliance and more on not committing any capital-wiping investment decision. 

SEBI-registered research analysts in India rose from 467 (2018) to 1,330 (2024), reflecting growing demand for financial expertise amid an expanding investor base (3 crore to 10 crore). However, analysts remain relatively few compared to market participants. 

Fast forward to today’s Indian markets, buzzing with new retail trading apps, IPO hype and meme-stock mania, and Ellis’s thesis resonates louder than ever. Has investing indeed become more of a loser’s game in the current environment? And if so, how can everyday investors tilt the odds in their favour? 

In the following paragraphs, we revisit Ellis’s core idea and explore what it means for India’s retail investing boom. Through narrative and numbers – from the post-2020 trading frenzy to cautionary tales like Paytm’s IPO – we’ll see why playing defensively might be the smartest way to win. Finally, we outline practical takeaways on how not to lose: avoiding big mistakes, sticking to a process, focusing on asset allocation, and tuning out the noise. Consider this a playbook for winning the loser’s game in Indian markets today. 

The “Loser’s Game”: Charles Ellis’s Timeless Lesson 

Ellis’s insight originated from an analogy with tennis. In the 1970s, scientist Simon Ramo observed that professional tennis is usually won by the player who hits more winners, whereas amateur tennis is usually “won” by the player who makes fewer errors. In fact, Ramo found that in amateur games about 80 per cent of points are lost (due to double-faults, balls hit out of bounds, etc.), not won by brilliance. 

The implication: if you’re an ordinary player, the surest way to win is by avoiding unforced errors. As Ramo bluntly put it, the strategy for winning is to avoid mistakes. Ellis applied this metaphor to investing. Early on, investing seemed a winner’s game – a shrewd stock picker could consistently beat the market because there weren’t many experts. But by 1975, the game had changed. “Gifted, determined, ambitious professionals” had flooded Wall Street, making it incredibly competitive. 

With so many smart people coming into investing, any edge was quickly eroded. Ellis noted a sobering trend: most professional money managers were failing to beat the market; in fact, the market was beating them. 

Investing had become a loser’s game. In a loser’s game, minimizing mistakes trumps maximizing brilliance. Ellis suggested that average investors (and even pros) should change their approach: play defensively, focus on not losing, and accept that you won’t always hit six. Or in his tennis analogy: keep the ball in play and let the other side make the fatal errors. “Most of us are amateurs but we refuse to believe it… we’re often playing the game of the professionals. What we should do… when we’re the amateur, is… rather than trying to win, we should avoid losing,” goes one summary of Ellis’s point. 

In simple terms, don’t try to outsmart the market at every turn; instead, avoid doing anything dumb enough to knock you out of the game. That was the advice in 1975. But does it hold true in 2025, especially in India’s roaring retail market? To find out, let’s look at how investing behaviour has evolved in recent years – and why it’s arguably more of a loser’s game now. 

India’s Retail Investing Boom: Winners or Lots of Losers? 

If you’ve been following the Indian stock market over the past few years, you know it’s been a wild ride. The Covid-19 pandemic and its aftermath triggered an unprecedented retail investing boom. Stuck at home with smartphones in hand, millions of Indians downloaded trading apps and opened Demat accounts for the first time. India’s demat account market has shown remarkable growth since the pandemic, with the number of total demat accounts nearing the 200 million mark by FY25. As of March 2025, the total demat account count stood at 192.4 million, a significant increase of 41.1 million accounts from the previous year. This represents a year-on-year growth of 27.1 per cent, maintaining a consistent upward trend. The rise in accounts has been especially notable in FY22, with a 65 per cent increase and continued robust growth of over 30 per cent annually since then. The growing participation of retail investors and the increasing digitalisation of trading platforms are major drivers behind this surge in demat account openings, contributing to the expansion of India's stock market ecosystem. 

In just four years, the investor base more than quadrupled, marking one of the biggest rushes of new entrants the market has ever seen. 

This democratisation of investing is a great success story on the surface. It reflects rising financial literacy, easier access (thanks to zero-commission brokerages and slick apps), and the lure of equity returns when bank deposit rates were low. Social media and online forums have further popularised stocks – suddenly everyone from college students to retirees had a hot tip to share on WhatsApp or a meme stock to discuss on Twitter. IPOs of new-age companies became water-cooler talk. It wasn’t just a bull market; it was a cultural moment. 

But here’s the uncomfortable question: in this frenzy, how many of these newbie investors have actually won – and how many might be, unwittingly, playing a loser’s game? Ellis would probably warn that when too many people chase a “winner’s game” (trying to pick the next multibagger stock or time the market perfectly), it inevitably becomes a loser’s game for most of them. And indeed, beneath the exuberance, there are signs that many retail investors have learned harsh lessons in recent years. 

One stark example is the explosion of derivatives trading by individuals. Equity futures and options (F&O) were once the domain of seasoned traders, but post-2020 saw a surge of retail players trying their luck in these high-risk instruments – often encouraged by trendy trading YouTube channels or Telegram groups promising quick profits. The result? A SEBI study released in 2023 found that nearly 9 out of 10 individual traders in the equity F&O market lost money. In an updated study covering FY2022–FY2024, SEBI reported an astounding 93 per cent of retail F&O traders incurred losses, with an average loss of about ₹2 lakh each over those three years. 

Out of more than 1 crore individuals who tried their hand at F&O, only a tiny sliver – about 7 per cent – made any profit at all, and merely 1 per cent earned over ₹1 lakh annually in profits. In aggregate, retail traders lost ₹1.8 lakh crore in the F&O segment over three years. These are sobering numbers that drive home Ellis’s point: when everyone is trying to be the smartest person in the market, most end up losing to the house (or to transaction costs and cleverer counterparts). 

Easy access to trading has made it a double-edged sword. On one hand, it’s never been simpler for ordinary people to invest in stocks. On the other hand, the very ease and gamified experience of modern trading apps can lure folks into overtrading and speculation. It’s all too tempting to whip out your phone and bet on a hot tip you saw on Twitter, or chase an obscure penny stock that a “finfluencer” bragged about on YouTube. In many cases, these end in losses. SEBI even noted that many social media financial influencers have been pushing F&O trading as a get-rich-quick scheme, often using fake “profit” screenshots to entice novices. Such noise can lead inexperienced investors to play a dangerous game they don’t fully understand. As Ellis might say, they’re swinging for aces (tennis analogy) but more often hitting the ball into the net. 

To be clear, not all retail investors are losing money. Plenty of sensible individuals have made steady gains by investing in quality stocks. But the overall behaviour trends – frequent trading, short-term focus, speculative punts – suggest that a large chunk of the new crowd has been playing offence when they should be playing defence. 

One telling sign: despite so many losing money, many keep coming back for more. Over 75 per cent of loss-making retail F&O traders continued trading the next year in hopes of recouping losses. This hints at the classic traps of overconfidence and FOMO (fear of missing out) that turn the market into a loser’s game for many. 

When Hype Meets Reality: Lessons from Paytm and Ola IPOs
Nothing captures the perils of chasing “winners” better than the saga of India’s startup Initial Public Offerings (IPOs). In 2021, amid euphoric market conditions, a string of high-profile tech unicorns hit the stock exchanges. IPOs were being oversubscribed within hours by excited investors. Many saw IPOs as guaranteed shortcuts to quick gains – subscribe at the offer and watch it pop on listing day. Indeed, some early ones fed that belief: Zomato’s stock jumped 65 per cent on its debut in July 2021 (issue price ₹76, closed at ₹125.85 on listing day), and Nykaa’s share price skyrocketed 80 per cent on listing in November 2021. 

It felt like a winner’s game – you pick the right IPO and double your money in a few days. No wonder Indian companies raised a record USD 9.7 billion via IPOs in the first nine months of 2021, the highest in two decades, as investors big and small rushed to join the party. 

Then came Paytm (One 97 Communications). The fintech giant’s November 2021 IPO was India’s largest ever at the time, backed by star Silicon Valley investors and eagerly anticipated by the public. If any IPO was a sure winner, many thought, this was it. Retail investors lined up in droves, both via apps and offline, to get a piece of this household-name brand. Paytm’s issue was indeed fully subscribed and retail subscription was 1.66 times. But what happened next has already become a fable of caution. On listing day, Paytm’s stock plunged – it closed 27 per cent below its issue price on Day 1 (against the issue price of ₹2,150, it opened at ₹1,950 and closed at ₹1,560) shocking those expecting instant riches. The pain only deepened in subsequent days: within two trading sessions post-listing, over 35 per cent of retail investors’ wealth was wiped out in this scrip. 

The stock, issued at ₹2,150, kept sliding in the weeks and months ahead. By early 2022, Paytm was trading more than 60 per cent below its IPO price. Fast forward to today, and Paytm is still down around 60 per cent from the issue price, a staggering destruction of value for those who bought into the hype. A company once valued at a little more than ₹0.9 lakh crore during its IPO now has a market cap of roughly 60 per cent of that. 

What went wrong? In hindsight, Paytm’s fundamentals didn’t justify the frothy valuation. It was a loss-making company in a highly competitive industry, and investors realised they had likely overpaid. Essentially, many retail participants treated investing like a winner’s game – focusing on potential big gains – and overlooked the risk of big losses. As soon as the stock started falling, that risk became reality. It has been observed that a lot of IPOs tend to cluster at market peaks when investors are willing to pay astronomical multiples; once the mood turns sober, those expensive IPOs struggle. 

Indeed, the cautionary tales continued into 2022 and 2023. Many of the splashy startup IPOs ended up trading well below their issue prices. By early 2025, out of the major tech IPOs since Paytm, over half were underwater – at last count, 8 of the 15 largest startup IPOs were below their listing price. Some, like Delhivery, nearly halved from their IPO price, and even well-known brands like Nykaa have struggled to sustain investor exuberance. Companies like Cartrade Tech, whose shares have tripled from its low, are yet to see their IPO issue price. 

And what about Ola Electric – another much-hyped unicorn? In August 2024, Ola Electric went public amid fanfare, in what some saw as a test of whether lessons had been learned. Initially, it seemed successful – the stock even jumped ~20 per cent on its market debut, reflecting enthusiasm for India’s EV story. It even touched a high of ₹157. But a few months later, reality bit back. As soon as the post-IPO lock-in period for pre-listing investors expired, Ola’s stock sank below its issue price of `76 and is currently trading at ₹50, leaving latecomers in the red. Ola’s journey so far underscores how even a “hot” stock can turn cold, and how betting on IPOs for quick wins is fraught with risk. In the year 2025, only eleven companies have come out with IPO and among them, except for a couple stocks, all are trading below their issue price. 

The takeaway from these case studies? Chasing hype is not a sustainable investment strategy. Each of these IPO investors thought they were onto a winner’s game – getting in on the next big thing – but many ended up playing a loser’s game, suffering losses because they underestimated risk and overestimated their ability to outguess the market. It’s a vivid illustration of Ellis’s point: in markets dominated by information and competition, the victory often goes not to those who swing for sixes, but to those who avoid getting out. It's like a test match, you have to play as much as possible and avoid getting out. 

Why Discipline Investment Beats Speculation 

If trying to pick winners – be it hot stocks or IPOs – is so hard, what’s the alternative? The answer aligns with Ellis’s original argument: don’t play the pros’ game; play your own game. For most people, that means investing in well-diversified portfolios, and sticking to a disciplined plan, rather than frantically trading or hunting for the next multi-bagger. 

Discipline isn’t just about what you invest in, but how. A rule-based, systematic approach helps take the emotion out of investing – which is key to not making costly errors. For instance, having a predetermined asset allocation (say 60 per cent equities, 30 per cent debt, 10 per cent gold, depending on your goals) and rebalancing it periodically forces you to buy low, sell high in a mechanical way. Even when it comes to equity allocation, you can decide upon your age and risk appetite what allocation suits you. You’ll trim stocks a bit when they’ve gone up (selling high) and add when they’ve fallen (buying low), thereby avoiding extreme bets. Contrast this with the undisciplined investor who might go all-in on stocks when the market is euphoric and then panic to cash after a crash – effectively buying high and selling low. A process and plan act as safeguards against our own worst impulses. 

Even professional investors acknowledge that controlling risk and avoiding blunders is more important than finding the next superstar stock. In investing, you have to first make sure you don’t make big mistakes. 

The logic is simple: if you protect the downside, the upside tends to take care of itself. By contrast, if you blow up funds (say, by putting half your money in a speculative bet that tanks), it can set you back years. 

This is not to say active investing or stock picking is impossible. There are certainly investors and fund managers who do outperform the market through skill or unique strategies. But they are the minority – and it’s exceedingly hard to identify them in advance. For the typical retail investor with a day job and limited time to analyse companies, expecting to consistently beat seasoned institutions at stock selection is unrealistic. As Ellis wrote, “The stock market’s a tough game to win; for most, it’s a better game not to lose.” In fact, it’s liberating: you can still build significant wealth without having to predict the next Infosys or the next market crash. 

How to 'Win' the Loser's Game: Practical Tips for Retail Investors 

For retail investors – especially those who started in the heady post-2020 period – the overarching message is clear: Slow down, play defence, and focus on longevity over short-term wins. Here are some practical ways to apply this in your own investing journey: 

Avoid Big Mistakes
This is rule number one. Before thinking about how to make money, ensure you don't lose your capital in one foolish swoop. That means no huge bets on single speculative stocks, no reckless F&O gambling, and no falling for 'get-richquick' schemes. As one market veteran advises, 'Don't go from fixed deposit to option trading or crypto trading' in a blink. 

Such leaps on the risk spectrum often end in disaster. Instead, take calibrated risks you understand. Remember, capital preservation is key – live to invest another day. If you avoid the blow-ups, you've won half the battle. 

Stick to a Process
Define an investment process or strategy and stick to it. This could be as simple as 'I will invest `X on the 1st of every month in a mix of Y per cent equity and Z per cent debt/index funds' or 'I only buy blue-chip companies after doing A, B, C analysis, and I will sell if fundamentals deteriorate by Y threshold.' The idea is to remove whim and emotion. Being systematic guards you against the day-to-day noise. It also helps you benefit from consistency – for instance, doing a monthly SIP in stocks forces you to buy more when prices are low (markets down) and less when prices are high, an in-built advantage. If you have rules (like stop-loss levels or diversification limits), honour them. Investing today, like aviation, should be run by checklists – make no mistakes. Treat your portfolio decisions less like casino bets and more like following a flight plan. 

Focus on Asset Allocation
How you allocate across asset classes (equities, bonds, gold, etc.) will often determine your returns and risk more than individual investment picks. Set an allocation that fits your risk tolerance and goals, and rebalance periodically. For example, a relatively young investor might decide on 70 per cent equity, 20 per cent debt, 10 per cent gold. If stocks have a great year and grow to 80 per cent, you'd sell a bit and bring it back to 70 per cent, locking in some gains. If stocks crash to 60 per cent, you'd buy more to get back to 70 per cent, buying low. This disciplined approach forces you to do the right thing at tough moments. It also ensures you diversify – so that no single asset or sector can ruin your wealth. Asset allocation is often called the only 'free lunch' in investing: it won't make you rich overnight, but it will protect you from many fatal errors that come from being too concentrated or too reactive. 

Tune Out the Noise
In the digital age, investors are bombarded with information 24/7 – much of it irrelevant or harmful to long-term success. Learn to ignore the chatter. That means not checking your portfolio ten times a day, not getting swayed by each sensational news headline or WhatsApp forward about the 'next big stock.' It also means resisting herd mentality. Just because everyone on Twitter is raving about XYZ stock or a friend bragged about doubling money in crypto doesn't mean you should jump in. Often, by the time a trend becomes common talk, the easy money has been made – and you're the liquidity for smarter players to exit. Instead, cultivate patience and a bit of healthy skepticism. Focus on a few reliable information sources and your own research or plan. As the saying goes, 'Stocks take the stairs up but the elevator down' – so don't let viral excitement draw you into buying at the top. Turn off that noise and stick to your game plan. 

Educate and Adjust
Lastly, continuously educate yourself about investing basics – not to time the market, but to understand why patience and discipline pay off. Read about great investors who preach capital preservation (e.g. Warren Buffett focusing on 'no loss' as the first rule). Learn from your own experiences – if you got caught in a hype cycle like an IPO frenzy or took a leverage bet that went wrong, analyse it objectively. Over time, shift your approach as needed to avoid repeating mistakes. Winning the loser's game doesn't mean never striving to improve; it means improving in ways that help you avoid losses first. Even if you decide to pick individual stocks, do it in a structured, small way (say 10-20 per cent of your portfolio as a 'satellite' to a core of index funds), so that any one error doesn't sink the ship. 

In summary, for the vast majority of retail investors, investing success will come not from dazzling stock picks or perfectly timed trades, but from consistent, boring good habits practiced over years. As Ellis and many after him have noted, avoid stupidity instead of chasing brilliance. In a market teeming with intelligent, hyper-informed participants, your edge as a small investor is not beating them at their game – it's choosing a smarter game to play. 

The Bottom Line
Yes, investing today has in many ways become a loser's game, especially in arenas where everyone is competing ferociously – be it day-trading popular stocks or speculating in derivatives. But that doesn't mean you can't win. It means the way to win is different: it's by not losing, by enduring, by being the last person standing while others beat themselves. That might sound a bit unexciting, even paradoxical – why play a 'loser's game'? –'It is not a losing game; it is a loser's game and you must make sure you are not the loser.' 

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