Behavioural finance is something which few get right.
Recently, I met a highly qualified finance professional, far senior to me, 30+ years of experience in finance. He made 4x money in last 3 years but was ‘unhappy’.
Reason? The stock went further up & he missed to capture the full potential upsides.
He regrets his selling decision because he made 4x rather be could have made 6x if he would have waited patiently for 1 more month.
I tried to explain him that you can’t sell at the exact top. He agreed. Though, despite knowing the fact that you can’t buy the bottom & sell the top, his bias of missing out on ‘extra’ profits is making him regret his decision.
And there are countless people who regret each of their decision. Whether they’re right or wrong.
For eg: If you buy a stock, it can go either of the 2 ways. Up or down. And in both the cases you’ll regret your decision. Let me explain. If you bought 1000 quantities of Reliance at 2500. If it goes up, you’ll regret why you didn’t bought 2000 quantities? If it goes down, you’ll regret incurring losses & not waiting for lower prices to buy. You see, you’ll regret both the ways, whether you’re right or wrong.
Stock market is the business of regrets. Whether you’re right or wrong. You’ll always regret. Better you don’t regret. I personally have zero regrets.
I’ve made it pretty clear to myself & have come to peace & conclusion that there’s no point in regretting. You can’t change your decision. The ifs & buts are always going to be there & are hypothetical.
If one accepts the profits or losses as they are, they’ll go a long way in surviving the volatility of stock market.
And if you can survive in stock market for a long period of time, you’re bound to make money. As simple as that.
1 Comment. Leave new
Yes, Absolutely Agree with your thought Sir..
Most of Clients who deals directly in stocks without proper Homework & Or with guide as “Sarthi” like you, regret is assured either of time on Buy n Sale.. Perfectly Matched the Title, “SM is Business of Regret”