Finatter

  We believe that we are rational decision-makers but little do we realize that it is also influenced by our biases. The human brain quickly categorizes new information with the experiences of the past, Once grouped it responds to the same ways it does with other things in the category-leading to bias. finance unlike physical sciences it is affected by one's behavior and gives different results to different people according to their temperament be it wealth creation or financial debacles. To overcome financial debacles we should see things as they are without our biased lens. To let go of our biases we should constantly challenge our beliefs by engaging in debates and discussions who have a contrarian view( just to hear the other side) but confirm with the facts available. Here is the list of biases researchers have warned that we may fall for. Anchoring Bias: Over-reliant on the first piece of information. Availability Bias: Overestimate the importance of the information available...

  The margin of safety (MOS) has been extrapolated from bonds to equity it can be defined as the " Difference between the price paid for an equity share and the least price available in the range of intrinsic value of the share ". The best MOS is available when there is blood on the street and good quality are sold in fear and panic  It is also noteworthy to mention that as inflation rise MOS will continue to rise. For MOS company should be large-cap and have a track record of more than 10 years, MOS may not help to not lose money but will help minimize risk.  Loses usually occur when stocks are bought at high prices when markets are optimistic at the turn of economic tide these companies may lose significant market share. So, money can be lost even in quality companies when bought at a high price. PS: This is an excerpt from  the book  " Ordinary Stocks Extra Ordinary Profits" by Anand Srinivasan

  For all gold enthusiasts here is the answer  Gold has a special place in Indian households and is blindly trusted by Indians and let's delve deeper into how gold has earned such a special place. let's weigh-in. Gold as investmen t vs currency vs insurance vs ornaments  Let's desegregate into different clubs which gold belongs to  Investment : Anything which puts money into your pocket can be called an investment just because you hoard gold nobody gives you a penny unlike stocks or bank deposits which earn dividends and interest for just hoarding it, so gold will only have capital appreciation without yearly yield making a bad investment. On the flip side, it has an added benefit of easy transfer of wealth unlike any other investment known to man with less or no paperwork. Currency : Gold is a perfect currency as its supply is constant, it is either present under the earth or above the earth and with no scope for manipulation.   Gold does not dissipate into th...