Nifty at record high: How to navigate challenges in a surging bull market
surging bull market is undeniable. The thrill of surging stock prices is not only in witnessing sky-rocketing portfolio returns, but also in getting the vindication in the underlying investment theses. Who wouldn’t welcome the excitement of a bull market? However, there’s a catch.
While it’s a common tendency to view downcycles as emotionally draining experience, the same emotional complexity often gets oversimplified or outrightly ignored when it comes to upcycles.
The prevailing notion is that the upcycles are a gloriously gleeful ride, but this perspective can be deceiving. The truth is, upcycles are equally challenging. The psychological dynamics at play during a bull market are intricate.
While FOMO is at full display for those waiting on the fence during bull markets, for the fully invested ones, completely different dynamics come into play. The most prominent among them are the fear of selling early or the tendency to hold on to the winners for too long, blinded by the influence of the recency bias because of which the objectivity gets clouded by the recent performance of the stock. Greed and regret aversion are dominant biases during bull market that deter seasoned investors from acting rationally and objectively.
No one doubts the extent of nerve required to continue buying actions on falling markets. However, on the flip side, investors tend to underestimate the emotional skill required to do selling actions on a rising market. Here is the point.
