THE SEVEN SINS OF INVESTING

Predicting stock market outcomes is irrational. Don't be a victim of investment sins, because unlike biblical sins, these won't hurt your soul, but will hurt your assets

- Narayan Krishnamurthy

Investing is constantly evolving, and so are strategies and financial models, which are applied and tested by scores of investors. Yet, these strategies and models fall short of explaining the complexities in human decision-making. Take, for instance, our tendency to leap at news of a sale, be it at stores or more so online, making purchases that justify the price drop or discount. However, when it comes to a fall in the stock markets—which is akin to a sale as prices of stocks and mutual funds fall—few investors clamour to buy them. Many get scared and sell their holdings, worried over the uncertainties.

Since May 2024, you need to ask yourself how you felt about your investments. The markets were going up, and there was more money being ploughed in during this phase by foreign institutional investors (FIIs) and Indian investors (institutional and retail). However, as we approached September 2024, the FIIs began to exit their positions (see FII Trading Activity). Now, there are many reasons for FIIs investing in India, and there are probably as many reasons for them to pull their investments from the country. For instance, the US elections and rising inflation were a few reasons that were cited for the exit beginning September 2024.