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Investors waiting at the finishing line!

In anticipation of major policy shift at the centre, investors have poured huge amount of capital in equity markets. They were patiently waiting at the bay till late December 2013 to see if there was a remote chance of improvement in business activities across the country. Elections results of Rajasthan, MP & Chhattisgarh gave investors a hope that the voters are likely to challenge the status quo and choose Modi’s vision of inclusive growth and development agenda at the central elections. The market rally began well before Modi’s rigorous national election campaign. Investors expected that the Modi government will do away with the policy gridlocks of the previous complacent government and dark clouds hovering over the companies would clear. However, growth agendas take time to materialize due to high public investments required at the initial stages. We can experience a similar situation now. Extremely high optimism surrounds the Arun Jaitley […]

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Thumb rule for Investing!

Do you stay glued to the daily ups and downs of stock prices? Do you wonder what to conclude from the prices, fluctuating every now and then? Do you hope to make a windfall on the hot new stock you bought? And yet, things don’t go as you want. Trust me; this can be simply termed as human misjudgement of the underlying value. What is a stock? It’s a small piece of business. What does that mean? Simply, that you own the earnings and the cash flows that the business generates from time to time. To give you an evident analogy, the dividend on the stock is similar to rent you receive on your property and capital gain from the stock is similar to gains you earn after selling the property. Does the rent or property price change every day? It changes only over a period of time, may be […]

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Investors…Beware of these behavioural biases! – 1

Investors…Beware of these behavioural biases! – 1

It is a common perception that investing is all about having the right knowledge about the dynamics of the market, the sectors and ultimately the investible companies. However, knowledge is not the only thing that matters. Even the most knowledgeable investors may not be successful investors, if they are not able to control their emotions. Investing is not just about finding the right stocks, buying and selling them to make a profit. Finding the right stock is a very important step, but in addition to this, what ensures sustained success in investing, is control over behaviour and emotions. In his book on Behavioural Investing, author James Montier touches upon such non-financial aspects in the field of investing. He highlights some of the most destructive behavioural biases and common mental mistakes often made by investors leading to investment losses. Appropriately, the book is titled ‘The Little Book of Behavioural Investing: How […]

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