A Thread on Illusion of control πŸ§΅πŸ‘‡
1/ People have a tendency to believe that they can somehow influence the outcome of a totally uncontrollable event. They have this sense of control over a situation which, in reality, can lead to completely random outcomes.
2/ This bias leads to Overconfidence and Higher than usual optimism, both of which are again behavioral biases. This happens a lot in general life as well as in stock markets.
3/ Suppose you think you are good at executing a certain strategy on a stock, you put a lot of money in that one single trade which can lead to a huge loss that goes completely against your basic risk management parameters.
4/ In the above case, you were too sure about your strategy and thought you had control over the market when that was never the case.
5/ Conclusion - Events occurring in markets and life are uncertain and uncontrollable. A stock can go up on bad earnings and vice versa. Having an Illusion of control can lead to bad outcomes be it in investing or in life.
If you want to know Whether you have predicted the right future of a stock or not ? Checkout this πŸ‘‡

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More from @FinsenseG

8 Nov
Everyone knows that the stock market is closed on Holidays. But, one day, the stock market is open i.e., on DIWALI.

The story of - Muhurat Trading

A Thread πŸ§΅πŸ‘‡
1/ Muhurat trading is an activity in the Indian stock market which is done on the auspicious occasion of Diwali. Muhurat is a Hindi word meaning β€˜auspicious time’. In the Hindu calendar, a muhurat is said to occur when the planets are assigned to bring good fortune & prosperity.
2/ Each year, the stock exchange announces a one-hour session dedicated to Diwali for trading. The muhurat time is usually in the evening. Traders and investors buy or sell stocks on the NSE & BSE during muhurat trading time as a symbolic gesture.
Read 9 tweets
6 Nov
Let's do a small experiment !

Suppose you want to buy a lottery, If your number comes, you win Rs. 1 crore.

It costs Rs. 100 to enter the contest and a random number is assigned to you.

The seller gives you an option to pick your favourite number for Rs. 120 as an entry price.
Which option will you pick and why ? Comment.
This question is based on a behavioural bias called " Illusion of control"

In any case, you have some probability of winning the lottery, but sometimes people don't realize that and go for their favorite number ignoring the fact that it doesn't change the probability of winning.
Read 4 tweets
5 Nov
What are the various Charges and Taxes involved while buying and selling equity shares ?

A thread πŸ§΅πŸ‘‡
1/ Brokerage Charges - Brokerage charge is the commission one has to pay to their brokers for transacting on your behalf and for using their platform. Discount brokers (like Zerodha, Upstox) offer free delivery trades and Flat Fee services where they charge a maximum of β‚Ή20.
2/ Full Service brokers charge usually more commission than discount brokers. Some full-service brokers also offer flat fee services. The maximum brokerage that can be charged is 2.5% of the trade value. But disruption has ensured that this charge remains well below 0.5%.
Read 17 tweets
4 Nov
Which are the most important parameters to look into Shareholding Pattern?

A Thread πŸ§΅πŸ‘‡
1/ A lot is spoken about changing shareholder patterns, people analyze the changes in shareholding trends and try to make sense out of it. Well, shareholding and type of shareholding does play an important role in the growth of a company. So, who are the various shareholders?
2/ Promoter or Promoter Group - They are usually the founders of the business. The promoter can be a single person, a family, a trust, or another company. Promoter holding says a lot about the confidence of those who know ins and outs of the company.
Read 15 tweets
3 Nov
What are Alternative Investment Funds?
And How are they different from Mutual Funds?

A thread πŸ§΅πŸ‘‡
1/ Alternative Investment Fund collects money from Investors and pools it together. They then use this money to invest in unconventional avenues like hedge funds, private equity and venture capital, unlike common avenues of investing like equity and debt.
2/ AIFs are like a buffet dinner, where the fund can decide from various options where it can invest in. They can diversify their holdings across hedge funds, private equity and infrastructure funds. There are fewer restrictions on AIFs as compared to Mutual Funds.
Read 21 tweets
29 Oct
What are hybrid mutual funds?
Whether you should invest in this scheme or not?

A thread πŸ§΅πŸ‘‡
1/ Hybrid Fund is a combination of different asset allocation like equities, debt, gold, real estate, etc. The biggest advantage for investors is that the investor gets a better allocation of funds.
2/ Also, the investor is also investing in debt which gives security and some funds also invest in commodities like Gold which gives protection when the overall market situation is bad for equity and debt asset class (like in Covid situation).
Read 24 tweets

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