Greed is never good

by Parag Parikh/ ETBB

Investing has as much to do with emotions as with hard facts. As stocks keep rising, people urge you to purchase stocks. Seeing your friends making easy money makes you envious and this envy becomes your worst sin. A bull market also causes ‘investors’ to lose their sense of perspective. In their rush to earn returns, they ignored the fact that while the sensex had moved from 2600 to 6000 in 30 months, the rise from 6000 to 12600 took less than a year. What was the probability that ‘investors’ who bought at these levels would make money in the short term? Virtually nil. But this did not deter them from buying. Instead of buying large-caps (which are safer), people invested in smaller stocks, which involved lower monetary outlays.
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