Influence of Regret in Investing

𝗧𝗵𝗲 𝗕𝗶𝗴𝗴𝗲𝘀𝘁 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗠𝗶𝘀𝘁𝗮𝗸𝗲 𝗜 𝗘𝘃𝗲𝗿 𝗠𝗮𝗱𝗲: 𝗔 𝗟𝗲𝘀𝘀𝗼𝗻 𝗼𝗻 𝗧𝗶𝗺𝗶𝗻𝗴 As a wealth management professional, I’ve learned that selling at the right time is just as crucial as buying. A few years ago, I invested in Tata Motors when it was trading around ₹𝟰𝟱𝟬. It surged to ₹𝟭,𝟭𝟬𝟬, and instead of selling, I held on, believing it would climb higher. Now, with the stock currently at approximately ₹𝟳𝟱𝟰, I regret not cashing out at its peak. 𝗪𝗵𝘆 𝗜 𝗦𝗵𝗼𝘂𝗹𝗱 𝗛𝗮𝘃𝗲 𝗦𝗼𝗹𝗱: 𝟭. 𝗪𝗲𝗮𝗸𝗲𝗻𝗶𝗻𝗴 𝗗𝗲𝗺𝗮𝗻𝗱: Rising interest rates and inflation are impacting vehicle sales, affecting Tata Motors’ future earnings. 𝟮. 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗶𝗼𝗻: The EV market is crowded, with rivals like Mahindra & Mahindra making significant advancements. 𝟯. 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻 𝗜𝘀𝘀𝘂𝗲𝘀: Ongoing disruptions, especially in semiconductors, are hindering production and raising costs. 𝟰. 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗨𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆: A projected slowdown in the auto industry due to broader economic factors raises concerns about future growth. 𝟱. 𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗖𝗼𝗻𝗰𝗲𝗿𝗻𝘀: At ₹1,100, Tata Motors had a high P/E ratio, and the adjustment to market realities could further impact its valuation. This experience taught me that knowing when to sell is just as vital as knowing when to buy. Here’s why: 𝟭. 𝗠𝗮𝗿𝗸𝗲𝘁 𝗖𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝗖𝗵𝗮𝗻𝗴𝗲: External factors can significantly impact stock prices. Stay informed about market trends and economic indicators. 𝟮. 𝗘𝗺𝗼𝘁𝗶𝗼𝗻𝘀 𝗖𝗹𝗼𝘂𝗱 𝗝𝘂𝗱𝗴𝗺𝗲𝗻𝘁: Allowing emotions to dictate investment decisions can lead to significant losses. It’s essential to detach from your investments. 𝟯. 𝗛𝗮𝘃𝗲 𝗮𝗻 𝗘𝘅𝗶𝘁 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆: Setting profit targets and stop-loss orders is crucial. I should have predefined an exit strategy to protect my gains. Successful investing isn’t just about picking winners; it’s about knowing when to protect your capital. Have you ever made a similar mistake? Share your stories below, and let’s learn from each other! #InvestmentMistakes #WealthManagement #SellStrategy #FinancialLiteracy #StockMarketInsights

Let me share a personal story that taught me a valuable lesson about investing. When I first started out, I was like a kid in a candy store with stocks. I'd get excited about a company, buy in, and then... well, things didn't always go as planned. But did I sell when things looked bad? Nope! I'd convince myself it was just a temporary setback and even buy more to "average down" my costs. Classic mistake, right? One stock that really burned me was Yes Bank. I bought it way back when I was just dipping my toes into investing. Some finance guru on YouTube did this whole breakdown of why it was a great buy, and I was sold. Even when things started looking shaky, I doubled down during their follow-on public offer (FPO), thinking I was being smart by lowering my average purchase price. Spoiler alert: It wasn't smart. At all. I ended up sitting on a mountain of Yes Bank shares that were worth way less than what I paid. It was tough to admit I was wrong, but eventually, I bit the bullet and sold everything at a massive loss. You know what, though? I don't regret it one bit. That decision freed up my money (what was left of it, anyway) and my mental energy for better opportunities. Plus, it taught me a crucial lesson: sometimes, the bravest and smartest thing you can do is walk away from a bad investment. I ask myself, "If I had this cash right now, would I buy this stock again?" If the answer's no, it might be time to sell, regardless of whether I'm at a loss or a profit. The market doesn't care about our feelings or how attached we are to a stock. Sometimes, you've got to be willing to break up with a bad investment. Trust me, your future self (and your wallet) will thank you! P.S. Ever heard of the "sunk cost fallacy"? It's that mental trap where we keep investing in something just because we've already put so much into it. In investing, it's what makes us hold onto losing stocks or even buy more to "average down." But here's the truth: Past investments shouldn't dictate future decisions. What matters is the potential going forward, not what you've already spent. Breaking free from this fallacy is tough . It's about having the courage to say, "This isn't working," and redirecting your resources to better opportunities. #InvestingLessons #SunkCostFallacy #Mindset

Imagine you need money, and have two stocks: 📈 Stock A - Profit of 25% 📉 Stock B - Loss of 10% Which one would you sell? Comment your choice before reading further 👇 💭 If your mind instantly told you to sell the winner A, it isn't your fault. In the world of investments, it's common to find people clinging to loss-making stocks while selling profitable ones too soon. This is the Disposition Effect - a behavior that goes against the age-old advice of "buy low, sell high." But it's far more prevalent than you might think. Why do we behave this way? The answer lies in Daniel Kahneman's dual-system thinking process and his exploration of human psychological biases: System 1 – Our intuitive, automatic, and fast-paced thought process, which often jumps to conclusions. It's driven by emotions and instinct. System 2 – Our logical, methodical, and slower thought process. It's in charge when we pause to think and assess. In the case of the Disposition Effect, it's System 1 that reacts first. We are generally loss-averse - we feel the pain of loss more intensely than the pleasure of an equivalent gain. This perception biases us to avoid realizing losses and prompts premature realization of gains. Regret is a strong player here! We fear the regret of watching a sold, loss-making asset rebound in value, so we hold onto them. Simultaneously, we seek the pleasure of securing gains from winning stocks and tend to sell them too soon. However, this emotional dance costs us. Succumbing to the Disposition Effect can affect our portfolio growth. The remedy? Lean on System 2. Engage in thoughtful analysis before acting. Don't be swayed by potential regret or fear; let sound strategy be your compass. A reminder: The market doesn’t remember or care about your buying price. Financial firms, keenly aware of these behavioral nuances, create their strategies and research plans around them. - - - Share or Repost if you found this insightful! ♻️ - - - Follow → Pallav Kulhari 🚀 for more content on understanding humans. - - - #humanbehavior #behavioralscience #behavioralfinance #investing

Investment Decisions: Logic vs. Emotion Got an interesting question today from an investor: "I bought Adani Ports at ₹430. It went up to ₹1,620, but I didn’t sell. Now it's back to around ₹1,100. If I sell now, I’ll regret not selling at ₹1,620. Will it ever go back to that level?" This is a classic dilemma many investors face. But is the problem with the market or our mindset? Two key behavioral biases are at play here: 👉 Anchoring Bias – We mentally lock in the highest price we’ve seen, ₹1,620 in this case. Selling below that feels like a loss, even if market conditions have changed. 👉 Endowment Effect – Once we own a stock, we get emotionally attached. It feels like "ours," making it harder to sell, even when logic suggests otherwise. 💡 So, what’s the right approach? Forget your purchase price. Ask yourself one simple question: "If I didn’t already own this stock, would I buy it today at ₹1,100?" ✅ If the answer is YES, hold it. ❌ If the answer is NO, sell and reinvest where there’s better potential. A few investing truths to remember: 📌 The market doesn’t care about your buy price. 📌 Invest with discipline, not emotions. 📌 Let go of regret—the market always presents new opportunities. Success in investing is about moving forward, not looking back. #Investing #StockMarket #InvestorMindset #Psychology

Uncertainty and volatility was my thesis for 2025 - I just didn't know how right I would be. Now, I've had a lot of people asking what should we do as they see markets impacting portfolios - I'm not a licensed advisor, but I do watch markets closely -  what should we do when it feels like the world is shifting beneath our feet? I’ve long drawn on principles from thinkers like Benjamin Graham (value investing), Kay and King (Radical Uncertainty), Henry Mintzberg (emergent strategy), and Michael Porter (competitive advantage). Their common thread? Don’t try to predict. Prepare. In that regard, my response to the questions has largely been sharing a column from Jason Zweig where he highlighted thoughts from Jonathan Treussard, Ph.D. to leverage the Pyramid of Regret as an anchor in uncertainty. It’s a decision-making framework is useful for portfolios, business strategy, and life itself. Tier 1: Low-Regret, High-Control Actions: Actions you’re unlikely to regret. A) In investing: spend less, save more, diversify smartly, harvest tax losses. B) In business: tighten processes, train teams, maintain core systems. C) In life: prioritize health, show up for others, simplify. Tier 2: Medium-Regret, Adaptive Actions: Directionally sound but more speculative. A) In investing: rebalance, shift some funds, build liquidity. B) In business: adjust forecasts, explore backup vendors, prep scenarios. C) In life: adapt plans, strengthen your support network. Tier 3: High-Regret, Drastic Actions: Hard-to-reverse decisions driven by fear. A) In investing: panic selling, high-risk bets. B) In business: cutting too deep, abandoning strategy. C) In life: reactive moves that sacrifice long-term goals. “We can and should engage in extreme thinking,” Treussard shares. “We should not engage in extreme acting.” In uncertain times, the most powerful action is often restraint. Start with what you can control. Build stability at the base. Adapt where needed. Only then, consider bold moves—if they serve your strategy. This pyramid mindset mirrors what I try to relay on a daily basis both to friends and colleagues - and to live in my own actions: Clarity over chaos. Discipline over drama. Control the controllable. Whether you're managing a portfolio, leading through volatility, or navigating personal change - this tiered approach helps build resilience, minimize regret, and move forward with intention. That’s how we navigate complexity — and come out stronger - smarter, better, faster, sharper.

𝐑𝐞𝐠𝐫𝐞𝐭. 𝐓𝐡𝐞 𝐬𝐢𝐥𝐞𝐧𝐭 𝐤𝐢𝐥𝐥𝐞𝐫 𝐨𝐟 𝐫𝐞𝐭𝐮𝐫𝐧𝐬. As an investor, your regrets will likely fall into one of these five traps: ❌ Letting emotions override reason ❌ Overestimating how much you actually know ❌ Entrusting your money to the wrong people ❌ Backing doomed businesses - obsolete, over-leveraged, or crushed by competition ❌ Overpaying for hype-fueled stocks with flashy narratives Now, pause and ask yourself: / Do I 𝑟𝑒𝑎𝑙𝑙𝑦 know the subject deeply? / Am I pretending to know more than I do? / Or is it simply unknowable? The answer makes all the difference. This takeaway stuck with me while reading Joel Tillinghast’s 𝐵𝑖𝑔 𝑀𝑜𝑛𝑒𝑦 𝑇ℎ𝑖𝑛𝑘𝑠 𝑆𝑚𝑎𝑙𝑙: 𝐵𝑖𝑎𝑠𝑒𝑠, 𝐵𝑙𝑖𝑛𝑑 𝑆𝑝𝑜𝑡𝑠, 𝑎𝑛𝑑 𝑆𝑚𝑎𝑟𝑡𝑒𝑟 𝐼𝑛𝑣𝑒𝑠𝑡𝑖𝑛𝑔 (Columbia Business School Publishing).

𝙍𝙚𝙜𝙧𝙚𝙩 𝙞𝙣 𝙏𝙧𝙖𝙙𝙞𝙣𝙜: 𝙃𝙤𝙬 𝙩𝙤 𝙃𝙖𝙣𝙙𝙡𝙚 𝙄𝙩 𝙇𝙞𝙠𝙚 𝙖 𝙋𝙧𝙤 : Regret is one of the toughest emotions traders face. A losing trade isn’t just about financial loss, it’s also about the emotional weight of feeling wrong. Many traders even avoid making decisions just to escape the pain of regret. But is that the right approach? 𝗛𝗲𝗿𝗲’𝘀 𝗵𝗼𝘄 𝘁𝗼 𝗱𝗲𝗮𝗹 𝘄𝗶𝘁𝗵 𝗿𝗲𝗴𝗿𝗲𝘁 𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲𝗹𝘆: ✅ 𝗔𝗰𝗰𝗲𝗽𝘁 𝘁𝗵𝗮𝘁 𝗿𝗲𝗴𝗿𝗲𝘁 𝗶𝘀 𝗽𝗮𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗴𝗮𝗺𝗲 – Losses happen, and so does regret. Instead of resisting it, acknowledge it and move forward. ✅ 𝗗𝗼𝗻’𝘁 𝘁𝗶𝗲 𝘆𝗼𝘂𝗿 𝘀𝗲𝗹𝗳-𝘄𝗼𝗿𝘁𝗵 𝘁𝗼 𝗮 𝘁𝗿𝗮𝗱𝗲 – A losing trade doesn’t mean you’re a bad trader. It’s just one event in a long journey. Separate your identity from the outcome. ✅ 𝗔𝘃𝗼𝗶𝗱𝗶𝗻𝗴 𝘁𝗿𝗮𝗱𝗲𝘀 𝘄𝗼𝗻’𝘁 𝗽𝗿𝗼𝘁𝗲𝗰𝘁 𝘆𝗼𝘂 – Sitting on the sidelines out of fear may feel safe, but it also means missing out on potential gains. Growth comes from action, not avoidance. ✅ 𝗧𝗵𝗶𝗻𝗸 𝗹𝗼𝗻𝗴-𝘁𝗲𝗿𝗺, 𝗻𝗼𝘁 𝘁𝗿𝗮𝗱𝗲-𝗯𝘆-𝘁𝗿𝗮𝗱𝗲 – No single trade defines your success. Focus on probabilities and strategy rather than emotional reactions to individual results. ✅ 𝗠𝗮𝗻𝗮𝗴𝗲 𝗿𝗶𝘀𝗸, 𝗺𝗮𝗻𝗮𝗴𝗲 𝗿𝗲𝗴𝗿𝗲𝘁 – When you control risk properly, losses won’t feel like disasters. A well-planned trade, win or lose, is always a step forward. ✅ 𝗗𝗲𝘁𝗮𝗰𝗵 𝗲𝗺𝗼𝘁𝗶𝗼𝗻𝗮𝗹𝗹𝘆 𝗳𝗿𝗼𝗺 𝗼𝘂𝘁𝗰𝗼𝗺𝗲s – The market doesn’t care about emotions, and neither should your decisions. Approach trading with logic, not fear. Regret is inevitable, but how you handle it defines your success. Instead of fearing regret, embrace it as part of the learning process. Keep moving, keep improving! In trading, you cannot let your emotions drive your decisions. If you do, you will fail— Warren Buffett #TradingMindset #PsychologyOfTrading #StockMarket #GrowthMindset #RiskManagement #Linkedin #Linkedingrowth #Investing #Finance

Imagine if they had... . The decline of Nokia in the smartphone market highlights how the fear of regret can impact a company. When Apple introduced the iPhone in 2007, Nokia was reluctant to shift its focus from its successful feature phone business to smartphones. The management feared that substantial investment in a new operating system might result in losses if it didn't resonate well with consumers. This hesitation enabled competitors like Samsung to develop their own smartphones and capture a significant share of the market. A major driver of human behavior is the avoidance of regret. This tendency shapes how individuals make decisions, particularly when considering potential gains and losses. This cognitive bias causes people to prioritize avoiding possible regret over making bold or innovative choices. According to Loss Aversion theory in behavioral economics, people feel the pain of losses more acutely than the pleasure of equivalent gains. This challenges traditional economic theories that assume people make rational decisions by balancing potential outcomes to maximize expected utility. Just as in the case of Nokia, the fear of regret, if unaddressed, can inhibit innovation and impede strategic growth in companies. Firms that prioritize avoiding regret over pursuing innovation may find themselves trailing behind competitors willing to take calculated risks. To avoid this pitfall, companies need to recognize and reward innovative efforts, even when they aren't immediately successful. Creating an environment where employees feel safe to share ideas and failures are seen as learning opportunities is also crucial. To counteract cognitive biases, structured frameworks such as pros-and-cons lists, risk assessments, and scenario planning should be implemented to reduce the emotional weight of regret in decision-making. In the early 2000s, Yahoo had the opportunity to buy Google for about $1 million but hesitated, fearing that the investment might not be worthwhile. Imagine if they had... #strategy #tataprojects #organization