tag:blogger.com,1999:blog-7148222695370746347.post5455776405508108702..comments2023-10-15T17:16:24.091+05:30Comments on Stock Market Charts | India Mutual Funds Investment: Become a successful investor by avoiding 'herd mentality'Subhankarhttp://www.blogger.com/profile/13248068905130821262noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7148222695370746347.post-18127877926908403972010-01-07T10:05:17.596+05:302010-01-07T10:05:17.596+05:30So true n yet so difficult to resist. It really re...So true n yet so difficult to resist. It really requires strong emotional discipline.sumihttps://www.blogger.com/profile/01473513041115738407noreply@blogger.comtag:blogger.com,1999:blog-7148222695370746347.post-65609028671683495492009-12-18T19:18:24.438+05:302009-12-18T19:18:24.438+05:30@Jasi: Yes, there is definitely some safety in her...@Jasi: Yes, there is definitely some safety in herds. Imagine a herd of wildebeest jumping in to cross a crocodile infested-river. The flailing hooves of the large herd tend to confuse the crocs. While most make it across, a few of the wretched animals become food. I'd rather be a croc in the river.<br /><br />@Madhu: At every market peak, a new set of naive investors jump in and lose money. But they have an important role to play. They help a few smart investors to become rich!<br /><br />@Eswar: You have pretty much covered the investment group scene. A couple of points: some groups are closely moderated and that is detrimental to a free and open exchange of information and opinions; a few thought-leaders manipulate opinion towards stocks that they have already acquired at lower levels. Investors should be aware of it.Subhankarhttps://www.blogger.com/profile/13248068905130821262noreply@blogger.comtag:blogger.com,1999:blog-7148222695370746347.post-88372728533701472712009-12-04T11:17:58.402+05:302009-12-04T11:17:58.402+05:30Group decisions can be flawed in a number of ways:...Group decisions can be flawed in a number of ways:<br /><br />1) Trusting a member and taking everything he/she says at face value. What typically happens is either no analysis or very less analysis. While a 'bad factor' may be staring at us in the face, we can choose to give less importance to it and gloss over the feel good factors listed.<br /><br />2) We all know what "too many cooks" can do. But, what typically happens is - in a crowd, we tend to accept more people mentioning the stock as a "strength" rather than weakness. <br /><br />3) As a variation of the above, we can spoil our own profit booking plans due to the "confirmation bias". <br /><br />Typically it goes like when stocks run up too much, too soon - <br /><br />"May be I should book part profits here. After all it is 3X my buy price. But, wait a minute! This X guy is smart. He is buying at CMP. May be there's an explosive move up ahead or some news is coming out. Let me hold"<br /><br />4) Wide variety of people in forums "crowd out". There are too many recommendations, too many stocks and typically, they all "go up". So, we often step outside our C-o-C and chase stocks.<br /><br />5) What we typically forget is that each individual is unique. Even if we have an overlapping portfolio, my goals, buy and sell levels, holding power, purchasing power, risk taking ability etc., need not match with you. <br /><br />In a group though, we take comfort in the "herd". If many people follow a certain pattern, we try to follow the same without even thinking whether their intentions are the same as ours. They may be swing traders and we may be long term investors. <br /><br />The fact is that to figure out people, it takes quite a while. What we "think" is since we may not have the time and means to do that, we should not miss 'plenty of opportunities' in the middle and tend to follow blindly. <br /><br />After all, everybody is doing it. So, in case we go down, we think that we can picture people jumping out of the boat. But, we do not realize that we are always blind folded by emotions and those who had jumped out have already taken away all lifesavers.Anonymoushttps://www.blogger.com/profile/14686273117038425857noreply@blogger.comtag:blogger.com,1999:blog-7148222695370746347.post-31704469678959448222009-12-03T19:01:37.893+05:302009-12-03T19:01:37.893+05:30I 100% endorse your views. Unfortunately most of t...I 100% endorse your views. Unfortunately most of the retail investors are last to enter the market and the fall is so steep that they will never think of the market till the next peak. They start blaming everyone except themselves.<br />During the bear phase retail investors blame Jhunjhunwalas, bharat shahs and others for their debacle. But they dont realise that these so called bulls are not supposed to give free advice. If they give one then it wud be with some ulterior motive.Madhuhttps://www.blogger.com/profile/15757492225817270032noreply@blogger.comtag:blogger.com,1999:blog-7148222695370746347.post-74067981792781413422009-12-03T00:39:32.255+05:302009-12-03T00:39:32.255+05:30Sir :) thanks for the your WOW (words of wisdom)!
...Sir :) thanks for the your WOW (words of wisdom)!<br />That was indeed WOW ... I think that way you have the WOW factor ;)<br />Ok, so coming back, I believe what you ve said is to be taken with a pinch of salt. I personally feel its got a lot to do with risk profile of a person. Usually, if you are following the herd you are making a safe choice which, I agree, might not give you stellar returns but, may give steady and safe returns. <br />Being contrarian could mean walking against the winds, something everyone might not like.<br />Im just thinking loud here :)<br />Your thoughts sir?Jasihttps://www.blogger.com/profile/14267764047614537730noreply@blogger.com