<b>Rajesh Bhayani</b>: Investment lessons from people around us

Several studies on behavioural patterns indicate how people behave and react in certain conditions. While there have been several such studies undertaken for investors’ behaviour, even people we meet in our everyday life can teach some investment lessons.

For example, the popular TV serial Taarak Mehta Ka Ooltah Chashmah is a good case study on people’s behaviour, and each character in that serial can teach you a lesson on investment.

The lead character Jethalal invites trouble with whatever he does. In the investment world, he would be the confused investor falling into traps of gaining money quickly. In the serial, every time he falls into a trap, he rushes to the anchor character Taarak Mehta for a solution. Taarak Mehta is like a rational investor who listens to everyone, and applies his mind before taking any action. His behaviour is a good example for investors to follow.

The character Sodhi, who runs an auto garage, is very aggressive by nature and takes quick decisions, without thinking twice or understanding the implications. For investors, especially retail investors, Sodhi is everything you shouldn’t be.

Usually, a person’s behaviour in life will be reflected in his behaviour as an investor. For example, Bhide in Taarak Mehta Ka Ooltah Chashmah, is a timid person and would be a timid investor. Investor cannot afford to be chicken-hearted. An investor has to take a risk by investing in equity but be rational. In small-negative news if he sells his positions, how can he make money? Bhide is always being teased by all and can hardly defend himself. He lacks conviction in whatever he does and panics easily. So, the advice is not to become an investor like Bhide.

Investors cannot afford to be confused like Jethalal, or chicken-hearted like Bhide, or aggressive like Sodhi. Overconfidence is another weakness that one should avoid, else after buying a scrip if the trend is changing you need to respect the market which is bigger than everyone. While you can take reasonable risks, you can’t remain overconfident like Popatlal in the serial. Popatlal’s famous dialogue is “Duniya hila dunga,” or “shake the world”. Remember, you can never outsmart the market.

While investors need to look at the long term, Indian investors like other Asian investors act extreme. Either they fall in love with a stock and don’t sell even when the company is going bust, or sell in panic for no reason. This happens when investors don’t choose their investment properly. However, for short term investors, of whom there are plenty in India, periodical profit booking has been advised. Profit booking opportunities always come and go, and a slight mistake or overlooking such opportunities could lead you to losses or cut profits. Either option is not advisable.

Coming back to Taarak Mehta Ka Ooltah Chashmah, Jethalal is attracted to Babita, a good looking neighbour. Whenever he finds an opportunity to talk to her or shake hands with her, Jethalal’s wife Daya calls him for some work and the opportunity is taken away. This is loss of profit booking opportunity. Don’t wait when you want to book profits, else Daya will enter the scene.   

Every investor understands that he is expected to behave rationally but most of them can’t put it into practice because of their nature. But if you study what mistakes others make, maybe it will be a learning for you and like the characters in the serial we talked about, you will find such people in your daily life.

Happy investing.