Have you ever felt that a company is doing good business and wanted to buy the stock, but waited for a drop in price. And the stock never came down, you never invested and gave manifold returns only on paper. Didn't you want to kick yourself because … [Continue reading]
Behavioural Finance: Overreaction and Availability Bias
You travel on a particular road to work everyday morning and yesterday you saw an accident happen right before your eyes. What would your reaction be? You will begin driving carefully. Even if you don't if you tell your family or friends about it, … [Continue reading]
Behavioural Finance: Gambler’s Fallacy
If you and your friend has a bet on coin flips and for the 10th consecutive time (you are using a fair coin), you called out "heads", but you lost, what would your thoughts be on the 11th toss? "I have lost 10 times in a row. I am definitely going to … [Continue reading]
Behavioural Finance: Confirmation & Hindsight Bias
Confirmation Bias Fundamental analysts or people who believe such reports need to be aware that they might be under the influence of Confirmation Bias. This is the tendency of people to favour information that confirms or matches their beliefs. Lets … [Continue reading]
Behavioural Finance: Loss Aversion and Sunk Cost Fallacy
Have you even gone to a buffet lunch/dinner, found out that the food was very bad, but ended up eating your fill anyway? Or unknowingly bought an uncomfortable pair of shoes and kept wearing it even though it was painful? Did you ever sit through the … [Continue reading]
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