How recent episode make investor biased:
to think that lockdown has happened again so nifty will go down 40% like last yr – dumb
to think that small and mid-cap will crash because they crashed in 2018 after huge run up (dumb because both run up were on different base of valuation)
I am moving my entire portfolio to quality because I lost money in small caps. – dumb to think same companies keep making money like 20% annually and other businessmen are fools
Pharma and metals don’t do well, and IT is just a dividend play, i will own fmcg and financials like bajaj and hdfc for life – no performance since last 2 yrs of latter two sectors
to think that pharma and chemical are doing well so I will keep them for life –chemical might do badly for 2-3 yr from today ?
momentum investing always works because it is buying rising names. – reality is it falls the hardest too
When I started as investor I had a similar thought process. But reading /questioning/tracking advisors/fund manager taught me to think different than others. I am no expert but better investor & advisor than before.
if something that worked recently even the pedestrian knows it. because everyone has already jumped into it, it will stop it from working. there are patterns but they don’t repeat so frequently. They do repeat in distant future. Look for older patterns not recent ones.