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  • Writer's pictureAnkur Kapur

Disliking something can be dangerous too.

A certain level of liking can impair your judgement, similarly, a certain level of disliking can have equal harm.  


Disliking can impair your judgement too

Pandemic

During the pandemic time, a lot of people dumped travel-related stocks i.e. airlines, railways, hotels etc.

 

Here is a snapshot of returns over the last three years (18th March 2024). I have ignored the 2020-year performance, the price in March 2020 was extremely depressed and will show a very high return.

 

IRCTC - 3 Years share price return 35% p.a.

INDIGO - 3 Years share price return 24% p.a.

INDIAN HOTELS - 3 Years share price return 72% p.a.

 

Just because someone disliked a sector, he/she would have ignored a basic assumption, human beings will survive, and things will go back to normal.  

 

No Common background

Imagine you get a message to connect over LinkedIn. Assuming the invite is from someone who does not have anything in common with you, the probability of establishing the connection is quite low especially if the labels don’t ring a bell. There is a general dislike for that person.

 

You may not even look at the invite if it comes from someone who is not from your city and whose educational background does not match yours.

 

Boring industries are disliked.

There are so many companies in rather boring industries. The share price of those companies even during a bull run is reasonable. One of the reasons is that people in general don’t like them. In the short-term, prices don’t move that much but in the long-term share price catches up with the fundamental performance.

 

You increase your chances of investment success by just associating yourself with boring things/industries. People in general don’t like boring industries and that will ensure you get a reasonable purchase price.

 

Expert opinions

A lot of finance experts come on TV channels to share their opinions (shown as facts). Better language skills and charisma can add to your liking for the finance expert, and you can indirectly develop a liking towards the opinion of the finance expert.

 

It is a different matter that often these finance experts have their agendas to be on TV. Maybe their suggestion of an investment product is driven by the wrong incentives by the product manufacturer.

 

Similarly, if the finance expert expresses a negative view of a stock, it can influence your judgment negatively. 

 

Fair decision-making should be based on unbiased analysis given the available data. As the data changes or new information becomes available, you should continue to refine your initial analysis.

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