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Investing Myths

Are You Playing the Stock Market’s Favourite Game?

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One of the most popular questions that a business channel anchor or an analyst asks a company’s management is – “What’s your EPS estimate for the next quarter and year?”

For those who are not aware, EPS is the short form of ‘earnings per share’ and is calculated by dividing a company’s earnings/profits by its total number of shares.

During my initial days as a stock market analyst, even I was guilty of asking similar questions about earnings, though all I wanted to hear from the managements was their long-term outlook (like for 3-5 years) and not for the next quarter or year.

The truth is that the entire investment community is undeniably fixated on the EPS.
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30 Most Dangerous Myths about Money & Investing

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There is an awful lot of bad advice out there when it comes to managing your money or investing in stock markets.

Like rumours, these myths get told and retold as if they were true. They spread like wildfire even though they are flat out wrong.

Some of these myths are just plain dumb, some are deceptive…but almost all are downright dangerous!

It’s time you know what these dangerous myths are, so that you are in a better position to side-step them.

So let’s get started right here, right now!

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That Sinking Feeling Can Destroy Your Wealth

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Imagine two scenarios.

Scenario 1: You are looking to watch that latest Hollywood action flick you’ve been waiting for the past six weeks. Going by the pre-release popularity of the movie, you’ve had to pay Rs 500 per ticket, which is almost 3 times the normal price.

However, you are excited for the movie so the cost doesn’t pinch you that much. Now, just a day before your show, a couple of your friends who’ve already watched the movie tell you that it’s not worth watching at all. The hero’s acting is poor, and the story is very predictable and boring.

What do you do? You’ve already spent Rs 1,000 for a couple of tickets for you and your wife.
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30 Excuses That Prevent You from Investing Success

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Be honest. How often do you sabotage yourself in your investing journey?

You trick yourself into thinking that keeping up with stock market news, and reading the latest “10 secrets to become a successful investor” post on Safal Niveshak is “working”.

You know better, but some part of you believes that simply reading the article will help you move forward.

That having a deep understanding of the stock markets and how humans behave when it comes to investing will position you better when the ‘right time to invest’ arrives.

But that ‘right’ time never comes.

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Confirmation Bias: What’s Your Internal ‘Yes-Man’ Saying?

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I remember the time when I bought my first car. I went to the showroom with my mind fully made.

I had in fact already imagined myself owning and using that car. When I reached the showroom, I was so much filled with a ‘confirmation’ towards that product that each of its features made me think that I was about to make the right decision.

The chosen car’s design seemed the best amongst all other cars displayed. Its seat covers looked the brightest and softest. Its power steering and power windows seemed the most powerful of all. And its price seemed reasonable.

I had already confirmed the purchase in my mind and was seeing everything fit into that mould now.

You see, the way I behaved while purchasing the car holds true with most other expensive things we buy in life. We first make an emotional decision to buy such things and then try to find rational reasons to justify the purchase.

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How to Find the Next Infosys

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My eyes were stuck at a newspaper headline that read – “15 companies that can be the next Infosys”.

And then there was something I read online that said, “Find the next Infosys”.

Another suggested, “How to build a fortune with blue-chip stocks that don’t even exist yet!”

Bam! How do I invest now in stocks that don’t even exist yet?

You see, business media is replete with such claims that they know of the ways investors can find the next Infosys, or HDFC Bank, or L&T (or future blue chip stocks that don’t even exist now!).

But ask them whether they were able to identify the first Infosys (i.e., the real Infosys) when it came out with its IPO in 1993 or even after that, and you’ll stare at dumb looks.
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You Need Financial Education to Make Money from Stocks. Lie, Lie, Lie!

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If you have been made to believe that you need to be financially educated to make money from stock markets, see this…


If financial education was what was required to make money from stocks, the stock market experts would’ve become rich by investing their own money and not selling worthless stock advice to gullible small investors.

But it doesn’t happen that way.
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Who Else Wants to Beat The Market?

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When you invest your money with a mutual fund, you don’t normally think in terms of losing money.

All you want is to make money. And this must be your fund manager’s goal as well, or so you may think.

But if you read most mutual fund advertisements and what fund managers boast about on business channels and in newspaper interviews, their ultimate goal is to ‘beat the market’.

In fact, the entire mutual fund industry seems to have conspired against the small investor by pitching him nothing but this – “Give me your money, and I’ll help you beat the market!”
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“I can’t make money from stocks. I am not an expert.”

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“You know Vishal. I have been investing in the stock markets for the past one year. And one thing I have realised is that if you are not an expert, you can’t make money from stocks.

“You have to be ‘in’ the market, and have to be very smart to become a successful investor. What’s your take on this?”

“Are you finished, Ravi?” I asked my friend who had till now given me a long sermon on how he lost a lot of money in stocks in the past 12 months, and why he thought the markets are only for people who are financially very savvy – Ravi calls them ‘smart investors’ – like analysts, fund manager, or brokers.

What Ravi was complaining about was not something new to my ears. I had heard such reasoning earlier as well, especially from people who had lost a bundle in the stock markets.
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