How Does Action Bias Massively Affect Our Investing Decisions? | Personal Finance | Anupam Roongta

Do you find yourself checking your portfolio daily?

Do you use detall or cevallon i’m asking because this determines how you invest in stock market you heard that right surprising right let me tell you in this video how choosing between that dettol or cevlon is psychologically impacting the way you behave react respond and invest in the stock investing hi investors my name is anupam roonta and welcome to the video

In this video i’ll talk about action bias and i’ll share with you three distinctions which will help you take the desired action or the desired inaction in your portfolio please watch this video till the end because it will really help you to take that call in your portfolio let’s start with the first one the first question which you need to ask yourself is how

Boring is my portfolio because long term investing is meant to be boring it is the trading and speculation which is interesting and exciting that frequent activity yeah take example of your property let’s say you have a property for last 10 20 to 30 years i mean let’s say your grandfather bought it your father bought it and today it is worth you know multi crores

Was it an interesting investment no it was like one of the most boring investments and you would not go every day and stand in front of your property like this and you know property prices will start going up and down there is no excitement in that but that is exactly what you do in front of your mobile screen or maybe on your tv screen every day watching the stock

Prices of the stocks which you have in your portfolio so stock investing is meant to be boring not exciting so if you’re having fun think twice are you moving in the right direction or not there is this very interesting quote by george soros he says if investing is entertaining if you are having fun you are probably not making money because good investing is boring

Another very interesting quote by warren buffett he says we continue to make more money while snoring then when active yeah so this is just you know a example of what i was talking about in terms of having a boring investment now the second distinction one very common and frequently asked question which i get from investors is stock patau tell me some new stock i

Typically don’t churn my portfolio much and the service which i have the stocks portfolio service i don’t uh you know do selling by selling by very frequently it’s very very it’s extremely rare right and that’s what leads to uneasiness with some investors they’re like we’re not doing anything we’re not churning we’re not selling and buying so i mean how do we move

Forward i mean this is like very they find it very boring yeah so now the problem here is finding a stock which is fundamentally sound or finding a business which is fundamentally sound cannot be a frequent activity think about it we are investing in a business you’re not investing in some chips in casino so it cannot be it has to be rare that you find some some

Diamond and then you stick with it you don’t go and sell and buy and sell and buy all the time that doesn’t make sense think about think in this direction let’s say you know someone in your let’s say extended family neighbors friends some old colleagues someone who starts a new business shuts it down after six months one year starts another business again shut it

Down i’m thinking shut it down not sell or not you know do any you know stake selling shuts it down every few months or every one or two years he is doing that what would be your thought process about that person what would be your view about that person tell me in the comments box and then proceed to the video i hope you wrote your comment now most likely we’ll

Be like oh this guy is not stable you know not confident enough or he does not know what he’s doing and this is not the way you do business so you will not have a positive impression of that person and you will not typically trust that person let’s say you want to do business with them you typically would not think about doing that right now but that’s exactly what

You’re doing in your stocks portfolio selling buying you’re selling a business you start a new business that is you buy a new stock after a few weeks few months you sell it you sell the business you again start a new business you again sell the business again start a new business start selling new business business you’re doing exactly what that person is doing

Start thinking your start taking the stocks in your portfolio as a set of businesses you have you you own this will transform the way you think this will transform the way you will invest and this will transform the kind of returns you will get in the next 10 20 30 years in the long journey yeah now distinction number three one fear or concern people have is if i

Don’t take action frequently or if i don’t watch my if you’re not active in my portfolio i’m not watching my stock price on a daily basis it might be risky what if the stocks falls sharply what do i do now again this risk or this fear is coming from the fact that you have not done your research in the first place when you bought these talks you just bought it from

One hearsay or you just did some superficial research and you heard someone on tv or maybe some uh maybe some youtube channel or maybe some video or some other some something you read and you just bought it you are not confident on the fundamentals of the company that’s why this concern is there if you buy a fundamentally sound company even if the stock price is

Fluctuating you will not bother because you know this company will not become bankrupt overnight yeah so this is you know i’ll i always give this analogy uh you might have seen people putting tissue paper on those pakoras and kachoris right to take out that oil so when you do that it does not really reduce the fat but it reduces the guilt maybe the fat reduces

By 10 but guilt reduces by 90 right similarly when you watch your stocks portfolio or your stocks every day it does not reduce the risk all it reduces is your valuable time yeah so don’t it will not help you it will not reduce your risk just because you are keeping a watch every day it will rather lead to more action more trading more speculation and substandard

Returns or maybe losses most likely it is losses for the retail industry now coming to the detail versus cevalon example as per the clinical studies cevlon is a better product than that all plus it does not burn on the wound still the market share of detail is 85 percent and market share of cevalon is just 8 percent in the antiseptic liquid why because when

You apply the that that all on your wound it burns and because it burns it feels that something is happening it is working yeah that’s the impression that’s a psychological impression we get that something is working something is happening right in case of cevalon though it’s a usp that it is not burning but that usp has gone against it now how is this related

To stock investing this is exactly what i was talking about in this video you keep on looking at action in your portfolio buy this sell this that again buy this sell this buy this so you when you when you see this action you feel something is happening and that is good same thing when your advisor is selling and buying you are like okay fine he’s doing some hard

Work he’s working for me he’s doing the research he’s selling buying selling buying and you know getting me profits also yeah i mean in the last couple of years every every stock almost every stock is giving profit so it also feels that you know they are working hard and giving you profits but ideally someone who is not doing this journey is maybe doing much

More research why because at the first place they bought something which was not meant to be sold for very long yeah i’m not saying everyone in part you know second case will be right in the first place will be wrong but i’m just giving you a thought process i’m just giving you an approach that the psychology of something is happening is working both in case of

Dead all versus seven and same thing is happening in your stocks portfolio where you keep looking for some or the other action which makes you feel satisfied that something good will happen because of these frequent actions but that might not be the case most of the time i would like to end this video with a small line a couple of lines which i wrote in here it

Goes stock market may rose stock market may thank you so much for watching the video if you liked it please press the like button subscribe and share it with your friends and please tell me in the comments box what more do you want to listen from me in terms of stocks mutual funds financial planning or any other investment topic thank you so much you

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How Does Action Bias Massively Affect Our Investing Decisions? | Personal Finance | Anupam Roongta By Anupam Roongta