Understanding Behavioural Biases in Investing

Why investing is not easy:

  • The rules that one needs to apply to identify good investments are fairly simple to learn but when it comes to applying those rules to take live investment decisions, the behavioural biases that we suffer from prevent us from acting in a perfectly rational manner.
  • We have inherited these behavioural biases from our ancestors as these biases are actually favoured traits and helped us survive in the Stone Age. However, what worked in the Stone Age does not seem to work in the stock markets.

In this video, Rohan Advant, Research Analyst, Multi-Act Equity Consultancy Private Limited, helps one understand the origin of behavioural biases focusing on the bias of fear and herding. Further, he states real life examples of how these biases have been experienced in stock markets and lists out ways to overcome them.

About Multi-Act

Multi-Act was founded in 1997 by two Wharton graduates, to develop an Equity Research capability for their own investments. Today, we employ 50 people who operate out of our offices in Mumbai and Pune and service a range of clients from wealthy families, family business owners to sophisticated investors and capital intermediaries around the globe.

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