Volatility is your friend!
- Anup Bansal
- Feb 6 2018
Today the Indian stock market fell by around 1.5% and has fallen by around 4.8% in the last four sessions since the budget. We all are feeling the pain of the downturn and the rise in the volatility. Just to put things in perspective, even after this correction, the Indian equity market has given a gain of 19.3% in the last 1 year and 42.1% in the last two years.What is volatility? It is the day to day unpredictability of markets. If there are too many changes in stock prices every day then the volatility...
FOMO
- Anup Bansal
- Jan 26 2018
I happened to be on Dalal Street on the day Sensex crossed the mark of 35,000 on 17th January. There was the crowd, there were cameramen, there were balloons, the environment was charged with jubilation and the celebrity was SENSEX!Then, the news cried out loud this week "....the Sensex took just five trading sessions (January 17-23) to reach the historic 36,000-level from 35,000....". And, you may have been going slow with equity investments anticipating a downturn in the market due to the high...
January Newsletter - 2019
- Mitraz Knowledge
- Jan 31 2019
KNOWLEDGE - SELF SERVING BIASSymptoms - The tendency to attribute favourable outcomes or successes to one's own skill/internal factors and attribute unfavourable outcomes to bad luck/external factors. Many times, outcomes can be bad because of our own wrong reasoning and not due to lack of luck. This is dangerous in the investment world because it stops us from improving our skills and creates overconfidence in our abilities to generate positive outcomes.Example - A Mutual Fund-Card always blames...
November Newsletter - 2018
- Mitraz Knowledge
- Nov 30 2018
KNOWLEDGE - INCENTIVE CAUSED BIASSymptoms - It is said that one should not ask the barber the need for a haircut. People with a vested interest will tend to direct you or make you eliminate every other route and guide you in the direction of their interest.An example - In a paper "Misled and mis-sold: Financial misbehaviour in retail banks?" by Monika Halan and Renuka Sane presented on 5th Aug 2016, auditors approach banks for advice on tax saving instruments. The private sector banks with high sales...
October Newsletter - 2018
- Mitraz Knowledge
- Oct 31 2018
KNOWLEDGE - HINDSIGHT BIASSymptoms - When finally after the outcome of an event, one tries to simplify the causes and effects of a complex situation (complex because the actual outcome was clearly not expected to happen) and starts to assume better predictive ability after linking something important before the event to the result.An example - R.Beyth and B.Fischhoff devised the first experiment directly testing the hindsight bias. They asked participants to judge the likelihood of several outcomes...
