I was shopping yesterday and was curios
to know the price of onions (which turned out to outperform most of
the Index Stocks of late.
Onions have been trading around Rs 50 per kg down from Rs 90 per
kg a few weeks back.
One did not look at Buying MORE Onions
when the price touched Rs 80+ . Families which purchased 2 kilos of
onions purchased only 1.5 kilos or even lesser.I just wanted to show a very
important aspect of Behavioral Finance
In fact one looked at alternative choices, like the hotels which
served cucumbers or cabbage for onions
When it comes to the Stock Markets it is the opposite
When the Sensex touched a new high of 28000 everyone
were queuing up to buy stocks.
When the markets corrected a few weeks later no one looks at
buying the same stocks
If one uses the Onion
approach to buy Stocks we will be very successful in creating Wealth
in Equities
