Why 89% of Pakistanis will fail at investing in 2026

The index has climbed about four and a half times in the last few years. A lakh you'd put in back then, when almost nobody was buying, would be around four and a half lakh today. And now that the number is out and the headlines are good, everyone wants in. People who have never bought a single share are on YouTube and Google, asking whether the stock market is finally where the money is, whether now is the time.

Here is what I think happens next for most of them. They lose money. And when they do, they'll blame the market. My honest guess is that around eighty-nine out of every hundred people who are invested or about to invest will end up losing, not because the market is broken, but because of a handful of mistakes they keep making and a mindset they've never fixed. The market is still healthy. You can still make good money in it. Both of those things are true at the very same time as the eighty-nine who won't.

The strange part is that it isn't for lack of information. Everything you'd need is sitting free on YouTube already, good people explaining all of it patiently and clearly. So if the knowledge is right there, why doesn't it land, and why do the same people keep losing. The gap was never information. It's the distance between being aware of something and being educated about it, and that distance is the whole of what I want to walk you through.

The most dangerous investor is the one who just found out

Right now there are roughly three kinds of people around this market. The first is unaware. He doesn't really know the stock market exists as something that could grow his money, so he keeps it in a bank or a plot and never thinks about it. The second is aware. He just found out there's money being made here, he's opened an account, put a little in, and now quietly thinks of himself as an investor.

The third is educated. He understands how businesses actually work, how our economic cycles turn, which sectors fit where, when to enter and when to get out, and he can survive the market falling without panicking.

The whole trap is in the second man. Because he's just become aware, he's convinced he's already the third. He's mistaken hearing about the market for understanding it. As I'd put it, you can be aware of a great many things and still have no real knowledge of the things you're aware of, and that's exactly where he's standing without knowing it.

And that makes him more dangerous to himself than the unaware man ever was. The unaware man does nothing, so he loses nothing. The aware man acts, on half a picture, usually near the top, and when it goes wrong he doesn't just lose his own money. He leaves the market bitter, and on his way out he tells everyone who'll listen that the whole thing is a scam, that you put your money in and it drowns. He stains it for the next person, when the only thing that actually failed was his reading of it.

You can hear this the moment the subject comes up. A while ago a friend asked me whether I invest in forex or crypto, and I told him most of my money is still in the stock market, because I think there's real value there over a long stretch of time. He heard "Pakistani stock market" and immediately asked whether it has the same lucky-hit flips as forex and crypto, whether it's basically satta, whether it's even halal. These are the questions almost everyone lands on.

Only about two-tenths of one percent of us, barely three and a half lakh people out of a population of twenty-five crore, even have an investing account, and when I ran a poll, most people said the honest reason was simply that they don't know how any of it works. A market of real companies making real products for real customers isn't satta. Treating it like a place to strike it lucky is what turns it into one.

You decide from the small circle of what you've seen

There's a psychologist, Daniel Kahneman, who named this better than I can, in his book Thinking, Fast and Slow. He calls it "what you see is all there is." We assume the little we can see is the whole of what's out there, and then we make decisions on that basis, and the decisions come out narrow because the seeing was narrow.

Picture it as a large circle. That circle is every option that could have improved your money over your life. Now draw a tiny grey circle inside it, the few things you've actually seen and understood. And inside that, a smaller circle still, your opinion, built only from those few things. Most people make their biggest money decisions from that innermost circle and call it wisdom, when it's really just the size of what they happened to be exposed to.

Here's what that narrowness quietly costs. If your circle is small, you put your money in a bank at around eight percent and feel safe, because a bank is the one thing you've seen. Widen the circle a little and you learn the market exists and has historically done closer to fifteen. That gap doesn't sound like much for one year.

But money that sits still doesn't stay still. Our inflation has averaged around eleven percent over the last twenty years, which means it's quietly eating whatever you don't grow. Run those two paths out over twenty years and the bank might turn your money into about four crore, while the market could have made it closer to nine, more than double. The entire difference was a piece of knowledge you never had. So the real job, before any stock, is to make that grey circle bigger.

The one thing the educated actually watch

The educated aren't smarter than you. They're mostly watching two numbers, inflation and interest rates, and understanding what those two do to everything else. When inflation climbs, the State Bank raises interest rates to cool it down. Borrowing gets expensive, so companies stop expanding, they make and sell less, their profits shrink, and the stock market slows with them, because a market is only ever as strong as the companies inside it. But at that same moment the money market, where the government borrows, is paying close to that high rate, so your money earns well sitting there instead.

Then it turns. Inflation eases, rates come down, companies borrow and grow again, people buy more, earnings rise, and the stock market starts to run, while the money market's returns quietly dry up. The same rupee belongs in two completely different places depending on where the cycle is standing. Read the cycle and you know which. Ignore it and you're always a step behind it.

Watch how that played out here. Three or four years ago, when Pakistan was on the edge of default, reserves almost empty, everyone chasing an IMF loan we were terrified of not getting, nobody would touch the market. And a small group of people bought, at price-to-earnings multiples of three or four, absurdly cheap. They weren't braver than everyone else. They could simply see that things had bottomed out, that the only way left from there was up, and that a recovery would carry the market with it. That's the money that's three or four times bigger now.

Now hold that next to what's happening today, because this is the part almost nobody joins up. The same crowd that was too frightened to buy back then, when it was cheap, is the crowd arriving now, at the top, when it's expensive. Which means they're stepping in to buy exactly what the educated bought cheaply years ago and are now getting ready to sell. The person who just became aware is nearly always on the wrong side of the very same cycle, too scared to move when it's low, too excited to stay out when it's high. Awareness tends to arrive right after the opportunity has already left.

It gets sharper when you look underneath the headline. Even in a strong year the gains aren't spread evenly. More than half of the recent returns came from just two sectors, and the biggest slice of that was banking, whose stocks have tripled or more.

Why banking. Because the government always needs money, and the banks lend it against what's effectively a sovereign guarantee, almost no risk, and then the government taxes the public to pay it back, and the banks' profits keep climbing. Is that healthy for the country over the long run? I don't think it is. But the people who spotted that small cycle running inside the big one are the ones who made the money.

Which is also why entering today needs far more care than it did two years ago. The multiples that were three or four back then are sitting around eight or nine now. There's a rough gauge I picked up from one of Abdul Rehman's podcasts, that a fair multiple is roughly twenty minus the interest rate, and plenty of companies are already near it. So yes, there's still money to be made here, I meant that at the start. It's just that the easy part already happened, and it happened for the people who understood the cycle, not the people who only just heard the market was hot.

The car that taught me to read a whole sector

Let me show you what it actually looks like to widen the circle, using my own money, because this is the part I lived rather than read. Last year I wanted to upgrade my Cultus. I liked the look of a Haval, and because I overthink everything, the research pulled me in much deeper than the car. It pulled me into the auto sector itself, and there I learned something simple.

The sector is cyclical. When interest rates fall and the rupee holds steady, people borrow and buy cars, and the whole sector runs. Rates are around ten or eleven percent now and may still be cut, reserves are healthier, the rupee is steady, so the sector is running hard.

Then I went looking for the company. I studied Sazgar, which had started out making three-wheelers and had partnered with GWM, and had gone from selling around ten thousand units a year to twelve or thirteen thousand, and had done it in the premium SUV space nobody expected them to take.

The share was eleven hundred rupees, and almost everyone said it was wildly overvalued, that it had already run up from around forty. People love to tell you that if you'd bought it at forty you'd be a billionaire today. Maybe. But a forty-rupee stock that reaches two hundred and fifty, you'd have sold it long before, everyone does, so that isn't really how any of it works.

I bought at eleven hundred, because by then I understood the business well enough to. And then it did what stocks do. It dropped to nine hundred, to seven hundred, jumped to two thousand, fell back to sixteen hundred, and I kept buying on the way down, averaging out to around twelve hundred and fifty.

I could sit through all of that for exactly one reason. I knew what the company was actually worth, so the swings didn't frighten me out of it. Top financial houses now put its fair value somewhere between twenty-four and twenty-six hundred. My money is roughly doubled, and I'm comfortable holding for the rest of it.

And a doubling is precisely where most people can no longer think straight. They hear about the man who rode Sazgar from forty to two thousand and decide that anything less than twenty times their money isn't worth showing up for. Not twenty percent, twenty times. Crypto and everything around it handed us so many quick dopamine hits that a stock doubling in a year or two, which is genuinely one of the best outcomes there is anywhere in the world, now feels like nothing to them.

So they can't hold a good thing long enough for it to work, and twenty percent, which is a perfectly good return, feels like a disappointment. The conviction to hold isn't a personality trait. It's what's left over after you've done the knowing. You cannot sit through a bad week in a stock you never understood in the first place.

Stop borrowing other people's thinking

The tempting shortcut is to hand the thinking to someone else. A signal, a tip from a friend, a WhatsApp or Discord group, a trader telling you buy at this price and sell at that one. The trouble is that the person giving you the tip is usually playing a different game than you are. He might mean it as a quick trade, in for a fifteen percent move and straight back out, while your actual plan was to hold for five years.

You take his one sentence and act on it with your goal, and the outcome was never going to match, and nearly every time, it's your money that ends up lost.

My own employee once asked me about this. What if I buy at a hundred, sell at a hundred and five, put it into something else, sell that at a hundred and ten, and just keep flipping my way up? I asked him what he'd do the day the stock he bought at a hundred and thirty was suddenly worth ninety-eight. He said he'd pull his money out. That's the entire problem in one answer.

There's a Humphrey Yang video I keep coming back to. Over thirty years, if you miss just the ten best days in the market, your return can drop by about fifty-four percent. Miss the twenty best and it's seventy-two. Miss the thirty best and you've given up around eighty-three percent of what you'd have made. And those best days almost always come right after the market looked completely dead, when there was blood everywhere and nobody was willing to be in. You can't possibly time that. All you can do is stay in.

Which is exactly why I keep telling people to build an emergency fund first, six months of expenses, before they take any market risk. If a hospital bill or some construction at home lands and you've nothing set aside, you'll break your investment to cover it, at the worst possible moment, and the time in the market you needed is gone.

Warren Buffett was a net buyer of stocks for decades, holding far more than he sold, and he's only turned net seller now, at these very high US valuations, the same way our own smart money is quietly selling here. The aim was never to trade cleverly. It was to never be forced out.

So widen the circle deliberately, and give it real time, maybe two hours a week to start. Follow the people who explain it properly, Nukta Business for what's happening in the wider economy, Abdul Rehman and Sarmaya for reading sectors and individual companies, Ammar Siddiqui and plenty of others for the bigger picture of building a financial life.

When their language gets too technical, and it will, paste it into ChatGPT or Gemini and ask it to explain the whole thing to you like you're ten years old, until the links between the pieces actually click. And read Psychology of Money, not to find a stock in it, but to update what you believe about money itself, because until those beliefs shift, none of the rest will quite make sense to you.

The thing that decides all of it before you start

Here's the part that quietly defeats most people before any of this even begins. You'll tell yourself you don't have the time. You get bored ten minutes into a podcast, your mind drifts, you decide this isn't for you. That isn't a knowledge problem, and it isn't a time problem. It's that the endless scrolling has worn your attention span down to almost nothing, so you can't sit with anything long enough to learn it, and none of the rest works until that's repaired.

I made a whole separate video on fixing exactly this, because for a lot of people in 2026 and 2027 it's the single most important thing to sort out. Everything above sits on top of it.

Because in the end the market isn't going to reward you for being aware, or for good intentions, or for a tip a friend swore by. It pays the person who did the slow, unglamorous work of widening the circle, understanding the cycle, and building the conviction to hold. Do the effort and what you learn stays with you and you actually act on it, because it cost you something. Skip the effort and you'll implement things you never understood, and the first small problem that comes along, you'll run. The knowledge is free and it's everywhere. The only real question left is whether you'll go and get it.