COMMON BEHAVIOURAL MISTAKES WHILE
INVESTING
· When we are told
“This stock will treble in 3 months and don’t ask me why”, we don’t ask why.
· We believe all
the fiction published in research reports even when they are suffixed with an
“E” (estimate).
· We believe that
if an investment house is even discussing a company’s prospects with a positive
bias, then it has bought into it.
· We discuss stock
prices when we should be discussing profits.
· We discuss
profits when we should be discussing the commodities that influence them.
· We willingly buy
stock in companies that we don’t buy debentures from.
· We seldom have a
perspective on future profit in the companies that we have invested in.
· We buy into companies
reporting higher profits ignoring that they could well have run up before the
results were announced.
· When a stock that
we have invested in slips, we dismiss it as a technical correction; when it
drops more, we say it is a great buying opportunity; after it has sunk, we
promise to use a ‘stop loss’ next time.
· When we see a
great counter being overlooked for long, we begin to doubt our wisdom, make a
sheepish exit and leave the fortune for someone else to encash.
· We believe that
when the market corrects 15%, it is going to correct 45% and when it rebounds
35%, it is headed for 75%.
· We are
over-researched in buying opportunities, but our official stance for selling is
that we should not bother as we are invested for the long term.
· We are always
buying and selling equities based on someone else’s reference of what is cheap
and expensive, seldom our own.
· We confuse the
fact that the smartest investors are more concerned with what is happening
inside companies than what is happening in their stock prices.
· We overlook the
fact that investing is 99% strategy and 1% trading.
· We hope, when it
is time to act in the market.
· We think brokers
know best.
· We seldom encash
profits to raise the quality of our lives.
· We encounter some
of the biggest multibaggers in the newspapers under the column ‘research
reports’ but flip the page to look at the quotations instead.
· We buy more stock
when the market climbs but flip from the front page to the back page when it
melts.