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'On the market floor, do the HRITHIK dance for maximum gains'

Most retail investors are not enjoying this HRITHIK dance since HRITHIK is conspicuous by its absence in their portfolios

April 03, 2019 / 10:16 AM IST
 
 
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VK Vijayakumar

The financial theory assumes the investor as a rational wealth maximiser. The rational investor takes decisions based on fundamentals and financial reasoning. But, in reality, the investor is far from rational; he/she is often guided by emotions far removed from financial logic.

This is the reason why markets often become manic-depressive, driven by greed and fear. This emotional reaction of investors manifests more in retail investor behaviour.

Retail investors are unduly influenced by herd instinct, and therefore, they move with the crowd even when the crowd-behaviour becomes irrational.