Behavioural biases to be wary of in a bull market
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The market is on a gravity-defying trip, never mind the naysayers. At record highs, the Sensex is now up about 12 per cent year-to-date and 75 per cent from its March lows. It trades at about 33 times trailing price-to-earnings, higher than its past averages.
But like many big bull runs in the past, this rally too could turn into a frenzy with many retail investors burning their fingers due to ‘irrational exuberance’. In this situation, a reminder on the behavioural biases that we all are prone to, can be useful.