Investors see the same news, read the same newspapers, look up to the same icons and respect the same blue chips. The markets present the same opportunity to all investors. Information is freely available to all investors. Yet, why do just a small minority get it right while the masses end up messing up with their monies? What is it that makes the investing of a few vastly superior than that of the majority? The answer to this question can easily be dismissed as chance or luck. But, luck cannot consistently play out for decades and we would not have marquee investors. Surely, there is something the majority is clearly missing. The answer lies in the importance few investors give to their behavior while the majority just ignores even the need to focus upon it. The behavioral emphasis that a small minority show is what makes their investing distinct from the majority. The irony is that the community of practitioners in behavioural finance has not grown in real terms despite the great emphasis on learning the subject. This probably is because practice requires far more discipline than learning. Knowing something in theory is very different from practising it to perfection. Mr. Market always has a measure of investor greed and is working overtime to expose an investor’s behavioral weakness. Conscious investing is the only way to curb greed and create the right investment behavior. The coming months will test investors on behaviour.
Investment beliefs don’t really make a better investor. Investment behavior does.- Shyam Sekhar