As per Hindu mythology, the word Dussehra derives its significance from two words, where “Duss” means the ten heads of Ravana, and “Hara” means to defeat.
Ravana’s ten heads represent his ten different qualities. Today, we will concentrate on those qualities that might be inside ourselves, causing us to lose capital. Each quality has a role to play and provides us with many invaluable financial lessons in life.
The key to successful investing is to avoid these qualities…
Let’s take a look!
- Kama (Lust): Excessive obsession with “money” is not healthy. It blinds your cognitive ability and makes you maniacally run behind one objective. Investors tend to forget the basics and blind their logical reasoning. They make grave mistakes to earn that Alpha. For example, investing in penny stocks with no fundamental research because they appear to be cheap. Eventually, they end up losing all the money.
- Mada (Pride): Overconfidence bias often leads to investors believing they can make money in the market. They believe they possess the ability to time the market. Moreover, beginners who got lucky once, think they will be successful in the future. However, markets do not care about your view or your efforts. It has a mind of its own and it will do what it wants to do. The sooner you accept this fact, the better
- Ahamkara (Ego): When you invest, you take a position based on your perception ofthe market and the stock. Along with the money, your pride is at stake when you invest. The problem arises when you are more concerned about your ego than the money on the table. Therefore, we should not be in denial. Accept the mistakes and learn from them.
- Moha: (Attachment to possessions): Investors often commit sunk cost fallacy. It is the phenomena in which a person is hesitant to exit a stock because they have invested substantially in it. They are so emotionally attached to a particular stock that they hold it forever.
- Lobha (Greed): The abduction of Sita cost Ravana his life. In investing, greed drives investors to seek unprecedented gains. During market booms, investors buy stocks beyond their limits…and sometimes even use leverage. However, they don’t know where to stop. The unrealistic expectations are largely disappointing when greed takes over emotions.
- Krodh (Anger): When an investor doesn’t get the desired returns even after thorough research, it makes him angry. Nobody wants to see their stock prices going down. During such times, he will act out with anger and take impulsive decisions which are not right in his investment journey.
- Maatsarya (Envy): We should not compare our investment returns with peers. One strategy that worked for one individual may not work for another. Your friend would have different goals, and risk tolerance levels than you. Copying others without knowing yourself could lead to poor investing results.
- Jaddata (Insensitive): Often people ignore their own health while investing in markets. Regrets, stress, fear, and reaction to every gain and loss can cause damage to mental health. Their lust for money makes them insensitive to their family and friends.
- Ghrina (Hatred): Hatred or dislike is another emotion that is common between Ravana and investors. It was said that Ravana used to dislike people who did not work according to him. Similarly, investor sentiment becomes pessimistic about the company when it doesn’t give the desired returns. Or even when it reports one bad quarter. Short-term hiccups are common, but what is more important is the long-term view of the company.
- Bhaya (Fear): Fear of Missing Out (FOMO) influences investment decisions to capitalize on each and every opportunity. Investors often take irrational and hasty decisions simply because of FOMO.
Therefore, we should remember Lord Rama’s life which teaches us many aspects of life. One of the most important ones is being disciplined for successful investment. It was due to Lord Rama’s patience and planned-out strategy that Goddess Sita was saved from Raavana. Likewise, we should have patience and stay invested to endure attractive profits in the long run. We should also understand our risk-taking capacity and plan our investments accordingly without taking impulsive decisions.
Nifty ended the week with gains of slightly more than a percent. It seems that the bulls are finally making a comeback after a solid pounding from 18,100 levels a few weeks ago. It is likely that the bulls might hold the levels of 17,000 for the month of October and make an attempt to retest 18,100 once again. Short-term resistance is placed around 17,500 levels. Nifty50 closed the week at 17314.65, up 1.29 percent.