ETMarkets Smart Talk: The Psychology of investing! Stay grounded in a bull market, says Nimesh Chandan
“Swaying with the pendulum of market mood can compel the investor to buy during a bubble and sell during a crash. But it is important to understand that such behavior will not lead to superior returns,” says Nimesh Chandan, CIO, Bajaj Finserv AMC.
In an interview with ETMarkets, Chandan said: “It is better to think independently from the narrative and verify whether the crowd is overreacting or underreacting,” Edited excerpts:
With the markets reaching all-time highs, many retail investors may experience "FOMO" (Fear of Missing Out). How can investors manage this emotional urge to invest at peak levels without considering fundamentals or long-term goals?
Neuroeconomics says we are naturally inclined to think short term and prone to emotional reactions and biases. FOMO during such markets is hence expected.
Additionally, some investors who might have booked profit early and hoping for a correction to re-enter the market may be driven by regret.
Good planning and disciplined execution are required to navigate these markets. Firstly, create an asset allocation plan or a financial plan that addresses your long-term goals.
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