Tuesday, April 28, 2015

BUYING AND SELLING- QUIRKS IN INVESTOR BEHAVIOUR

The way stock prices move during the day is a fascinating watch. It makes a mockery out of every one's predictions. I am excluding from this the specialist 'intra day' traders, who could perhaps align with split second changes.
There was this stock, that I had liked at around Rs.300/-. I spotted this very late as I have stopped following daily prices or markets. I was not aware of this company till about a month ago!. After having made my studies, I decided to add this to my portfolio. On the day I took a call, it was trading at around 290/-. So, I bought some, giving my broker a limit of 285/- (no reason, just thought I was an expert). Ultimately, I did buy some quantity at 287.
A few days later, the stock started to fall and it reached a level of around Rs.230/-.  I thought that I should add some at this level. So the following morning, the stock opened at around 245/- and again, without any rhyme or reason, I put a limit of Rs.240 on the stock, for buying. As the day progressed, the stock climbed up. My broker called and wanted to know if I wanted to buy at 'market' (around 256/) since it was on an 'uptrend'. I told him to hold on (again, no rhyme or reason). I had bought first at 287 and here I was, again dithering over a few rupees.
My aim is to hold this stock for ten years or more and I am looking at a thirty percent plus return. If that was true at around 300/-, it should be more so at 256. But I have my quirks. I am behaving like a short term trader.
I normally do not look back at the prices, once I have completed my purchases. I have done well in most of my limited purchases. But here, I am, disturbed by  the 'noise'.
This kind of behavior can result in either my missing an investment for buying or even stop my selling.
I did finally get the stock at 240/. and when I last saw, the price was 264/-, a couple of weeks ago.
I guess I was lucky. The stock could have run away. Of course, if could have tanked also. But the capriciousness of my decision making is perhaps costing me a couple of percentage points in my returns.

2 comments:

Manish Chauhan said...

And I thought I was the only one :-)

Karthikraja K said...

I second your Thoughts. Sailing in the same Boat. But it makes lot of regrets sometimes. Only on rare occasion, it makes me happy that i bottom fished.