Percentage Change (Myth vs Fact)
Irrationality during Price Correction of a Stock
Explained π§΅π
Irrationality during Price Correction of a Stock
Explained π§΅π
βAsian Paints YTD 25% down hai YTD seβ or
βZomato toh IPO price se bhi niche aa gaya. It seems interesting bet nowβ
These are the common lines we will hear in all the upcoming corrections over the period of time.
βZomato toh IPO price se bhi niche aa gaya. It seems interesting bet nowβ
These are the common lines we will hear in all the upcoming corrections over the period of time.
Price Vs Value:
Irrational investors in the market tend to be price biased or percentage biased when it comes to investing. Human psychology has a tendency to accept the price if it is accepted by the market, ignoring the hidden value behind it.
Irrational investors in the market tend to be price biased or percentage biased when it comes to investing. Human psychology has a tendency to accept the price if it is accepted by the market, ignoring the hidden value behind it.
These scandals are usually seen in IPOs when few companies take the advantage of the bull market and list their shares at overpricing.
As the IPO price gets approved, irrational investors accept it as the base price, despite knowing the fact that the IPO price was overvalued.
As the IPO price gets approved, irrational investors accept it as the base price, despite knowing the fact that the IPO price was overvalued.
Once the LTP goes below the IPO price, an alarm rings in the mind of most investors thinking that they have found some money-making stocks.
However the stock falls further and once it comes below 50% from the IPO price, irrational investors start dreaming of a 100% return.
While in all these timelines they forgot the fact that they already knew that the IPO was overpriced.
While in all these timelines they forgot the fact that they already knew that the IPO was overpriced.
The same happens when any blue-chip stock falls more than 20-30% from its All-Time High, ignoring the fact that the ATH price might be overvalued also. Itβs not necessary for any company to show its High price again if the same share has fallen over 50% from the high.
"Though Bhav Bhagwan Che"
But don't forget change in price should not be the sole reason for your investing thesis.
But don't forget change in price should not be the sole reason for your investing thesis.
"As an investor focus on Intrinsic Value rather than % Change"
"As a trader, focus on setting up strict Stop Loss as well as Trailing Stop Loss, rather than setting up Target."
"As a trader, focus on setting up strict Stop Loss as well as Trailing Stop Loss, rather than setting up Target."
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