NISM Series XV : Research Analyst Certification Exam Notes
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Winner's curse: Tendency to make sure that a competitive bid is won even after overpaying for the asset. While behaviourally it is a win, financially, it may be a loss.
Herd mentality: This is a common behaviour disorder in investing community. This bias is an outcome of uncertainty and a belief that others may have better information, which leads investors to follow the investment choices that others make. Such choices may seem right and even be justified by short-term performance, but often lead to bubbles and crashes
Anchoring: Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered when making decisions. Investors hold on to some information that may no longer be relevant, and make their decisions based on that. New information is labelled as incorrect or irrelevant and ignored in the decision making process
Projection bias: We project recent past to the distance future completely ignoring the distant past.
Fact-based sections in research report - Peer group analysis, shareholding pattern, company fundamentals, key financial indicators and financials. Source of information: Annual reports, quarterly reports, calculations.
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