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Category: Behavioral Finance


Market Forecasting

We are all forecasters. When we think about changing jobs, getting married, buying a home, making an investment,blog launching a product or retiring, we decide based on how we expect the future will unfold.

Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $1000 and go to Las Vegas.” This is such a profound statement from Paul Samuelson, who was the first American economist to win the Nobel Prize in Economics.

Predicting or forecasting the market is likes rains forecast by the met department.  Continue reading

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You are a trader or investor ? This is the difficult question that most people do not able to answer,  they take a short blogterm view and when  position goes against them, they prefer to hold the stock as long-term bet.

Most successful investors tend to have clarity of thought and look only at the larger picture. They discount all day-to-day noises and concentrate only on the fundamentals. In the end, fundamentals always prevail over speed.

here is a small description that short-term is more of an emotional based trading where as the long-term provides value for your thoughts.
Short term= Emotions

Long term= Earnings Continue reading

BlogIt’s often said that financial markets are driven by two competing emotions, greed and fear. There’s a third emotion that requires constant management: boredom.

It’s exciting when assets go up or down by a lot. Generally, they don’t. It’s boring to watch things that don’t do much in a hurry.

And it’s boring to wait for the market to validate your assessment of fundamental value. Continue reading

The financial markets have come a long way in terms of technology, transparency, accuracy and speed. But there areblog few basics of the market that never changes, be it thoughts by the great Benjamin Graham, Warren Buffet, Charlie Munger or Peter Lynch.

Here are some thoughts by Jesse Livermore written in 1940 and they apply in today’s market scenario as well:-

  • Nothing new ever occurs in the business of speculating or investing in securities and commodities
  • Money cannot consistently be made trading every day or every week during the year

Continue reading

Recently an article published on Bloomberg, Richard Thaler is not only a famous economist and author, but is also blogpart of a very successful fund, the 70-year-old University of Chicago professor, whose stock-picking theories drive the Undiscovered Managers Behavioral Value Fund, is getting discovered in more ways than one:

  1. “Behavioral economics [is] a field that only exists because regular economics is based on an idealized economic agent, sometimes called Homo Economicus. In the book we refer to such creatures as Econs. Econs are creatures that can calculate like a super computer, never get tempted by fatty or sweet foods, never get distracted, and probably aren’t a whole lot of fun to be around. In contrast, real people, who in the book we call humans, don’t make any appearance in standard economics. Behavioral economics is economics about humans.  Continue reading
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