If there is something you should know about investment behaviour it is this one single fact that it is the same across every market in the world. Similar patterns are witnessed across races and nationalities, and it has been played out across centuries.
That is so because human nature is a constant. Beneath all the superficial characteristics of humans, we are the same, a trait also observed by Voltaire: "When it comes to money, everyone is of the same religion" When it comes to the stock market, you should know this. Fear sells and excitement buys. And every single mania in history has revolved around this. Be it the Tulip Mania (1637), the Mississippi Bubble (1720) or the South Sea Bubble (1720). More recently, we had the Dotcom Boom and the Bitcoin Bubble. Abundance of intelligence, or the lack of it, is completely irrelevant here. I remember reading with great amusement a research note that stated, "Issac Newton did not just taste of the (South Sea) Bubble's madness but drank deeply of it!"
Today, people want to drink the public sector undertaking (PSU) mania. Some of the headlines that I encounter are:
Railway stocks rally before the Budget announcement.
Railway stocks took a beating.
PSU stocks' rally continues.
Pre-Budget sentiment stocks to buy.
Multi-bagger PSU stocks.
Please note, I am writing this before the announcement of the Union Budget 2024. By the time you read this, the situation may be completely different, which will only prove my point.
This article is not about the Budget. Neither is it about whether or not you should invest in PSU stocks or railway stocks. It is abou how we get carried away by events.
The event could be a trade war, geo-political conflict, or tapering (the incremental reversal of a central bank's quantitative easing strategy). This time, it is the Union Budget.
This story is from the February 2024 edition of Outlook Money.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the February 2024 edition of Outlook Money.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
The Future Of Credit Card Usage
Credit card usage is increasing in India, but it's prudent to manage credit wisely
Liquidity Coverage Ratio Framework
At the recent monetary policy committee meeting in April 2024, Reserve Bank of India (RBI) Governor Shaktikanta Das proposed changes in the liquidity coverage ratio (LCR) framework to successfully meet liquidity risk.
STRATEGIES TO HELP YOU STAY ABROAD AFTER STUDIES
More Indians are now going abroad for higher studies with plans to stay and work. But living costs, the lack of job opportunities and the burden of education loans could often pose a problem. Assess the opportunities and be practical before making such a decision
FROM SAVINGS TO SECURITY: HOW INDIANS ARE PREPARING FOR THEIR SUNSET YEARS
The Outlook Money - Toluna Retirement Survey conducted in December-end 2023 threw light on how Indians plan and save for retirement. A growing number of Indians now understand the necessity of retirement planning, and want to enjoy their retirement years with kith and kin
Here's How To Install A Solar Panel
It is the season of solar panel subsidy announcements. Right after the Centre launched the PM Surya Ghar Muft Bijli Yojana to offer subsidies to 10 million households to set up rooftop solar systems, the Delhi government has announced an extra capital subsidy of ₹2,000 per kilowatt (kW) to Delhi residents for rooftop solar panel installation. Both governments have caps on subsidies. Some other states, too, offer incentives on the use of solar rooftop panels.
Master Your Own Money Choices
Instead of judging others, have clarity about what you want from your money, where you want to spend it and how you want to feel about it
3 THINGS TO CHECK BEFORE YOU EXIT YOUR POLICY
If you think that the insurance policy you bought doesn't quite align with your goals, you may surrender it. But that comes at a cost. Here's why you should do the calculations
Small And Mid Cap Rally: Be Wary
You may include small- and mid-caps in your portfolio for diversification, but understand that they may not replicate last year's returns and are relatively more volatile
HOW TO MAKE SENSE OF THE GOLD RUSH?
The precious metal has been on an upward rally for the last couple of years due to factors as diverse as geopolitical conflicts, bulk buying by central banks, and hope of rate cuts, of late. The key, therefore, is to invest in gold in a staggered manner
'People Are Normal. They Are Sometimes Ignorant But They Are Not Stupid'
Meir Statman, the Glenn Klimek Professor of Finance, Leavey School of Business, Santa Clara University, California, is the second generation of behavioural finance experts who refused to label people as \"irrational\" and instead called them \"normal\". In his latest book, A Wealth of Well-Being: A Holistic Approach to Behavioral Finance, he expands the circle of finance to include life well-being and shows how they are inextricably intertwined. As part of an interview series, 'Wealth Wizards: Money Maestros in conversation with Nidhi Sinha, Editor, Outlook Money', Statman spoke about his research, and explained concepts through anecdotes that can help you take balanced decisions. Edited excerpts:
