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Investors…Beware of these behavioural biases! – 2

Investors…Beware of these behavioural biases! – 2

In our last blog, we talked about some of the behavioural biases and mental pitfalls investors suffer from. We ended our blog with a promise of more to come! So here it is… a few more behavioural biases and ways to overcome them. Permanent bulls and permanent bears: We have this habit of hanging on to our views for too long and are able to adjust very slowly. In the stock market, there are some who are permanently bullish and some who are permanently bearish, about the market. Both generally fail to make money in the market. A general observation about analysts is that they are reluctant to change their stance (from buy to sell or vice-versa) even when the facts demand a change. Primary reason for this is the fact that the analysts have spent time and effort in coming up with those views in the first place. This […]

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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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