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Behavioural finance

92 articles. Educational only: none of these is a research report or a recommendation.

Second-Level Thinking: Howard Marks’s First-Chapter Discipline for Indian Value Investors

Most Indian investors I meet on Dalal Street are intelligent, well-read, and sincerely trying to compound their savings. Yet the majority will earn returns that lag…

Representativeness Heuristic: Why Indian Investors Confuse “Looks Like the Next Multibagger” with Probability

Read time: 12 minutes. Reading level: serious long-term investor. The single most expensive shortcut in your stock-picking process is the one you don’t notice you are…

Capex-to-Depreciation Ratio: The 60-Second Reinvestment-Discipline Filter Every Indian Value Investor Must Master

Every Indian investor has heard Warren Buffett’s famous line that “the most important number in financial statements is the one we never see.” That number is…

Mr. Market: Benjamin Graham’s 1949 Parable for Treating Daily Quotes as Offers, Not Verdicts

Benjamin Graham wrote the most useful four pages in the entire history of investing in 1949, and the average Indian investor in 2026 still hasn’t read…

Status-Quo Bias: Samuelson & Zeckhauser’s 1988 Cognitive Anchor That Keeps Indian Investors Stuck in Regular MF Plans, Old Brokers and Drifting Allocations

Samuelson and Zeckhauser defined status-quo bias as the systematic tendency of individuals to disproportionately stick with the current option whenever a “do nothing” choice is available.…

Interest Coverage Ratio: The 30-Second Solvency Filter

The Interest Coverage Ratio measures how many times over a company’s operating profit can pay its interest bill. Conceptually, it is the financial-statement equivalent of a…

Free Cash Flow Margin: The One Number That Separates Real Profits From Accounting Illusions

Most Indian retail investors stop their fundamental analysis at net profit. They look at the bottom line, multiply by a P/E ratio, and decide whether the…

Regret Aversion Bias: Why Indian Investors Dread the Decision More Than the Loss

Regret aversion (also called regret aversion bias or regret theory) is the tendency to anticipate the painful feeling of having made a wrong decision and to…

Inventory Turnover Ratio: The Asset-Productivity Metric That Reveals Operating Discipline

The Inventory Turnover Ratio answers a deceptively simple question: How many times in a year does a business sell through its average stockpile of goods?

The Too-Hard Pile: Charlie Munger’s Cognitive-Humility Discipline for Indian Value Investors

Most of the disasters I have watched investors walk into over the last twenty-five years did not happen because they did not understand the company. They…

System 1 vs System 2 Thinking: Daniel Kahneman’s Dual-Process Framework for Indian Long-Term Investors

Daniel Kahneman’s dual-process theory is the most quietly powerful idea in modern behavioral finance. Master it, and you stop fighting the wrong battles inside your own…

DuPont Three-Factor Decomposition of RoE: How to See Through the Most Misunderstood Ratio in Indian Investing

Return on Equity (RoE) is the single most-quoted profitability ratio in Indian investing — and the most dangerously misunderstood. A brokerage WhatsApp group will scream “this…

Self-Attribution Bias: Why Indian Investors Take Credit for Wins and Blame Luck for Losses

You remember every stock you bought that went up. The 3x gain on that mid-cap chemical play? Clearly a product of your research. The 7-bagger in…

Working Capital Days & Cash Conversion Cycle

The lesson buried inside those numbers is simple: most market participants are taking directional bets on price without ever opening the balance sheet. Working-capital metrics are…

The Fat Pitch Principle: Warren Buffett’s Ted-Williams-Inspired Rule for Swing Selectivity in Indian Value Investing

Benjamin Graham taught us the grammar of value investing; Warren Buffett gave us its governing metaphor. In his 1997 letter to Berkshire Hathaway shareholders, Buffett reached…

Base Rate Neglect: The Kahneman-Tversky 1973 Cognitive Bias Behind ₹1.8 Lakh Crore of Indian F&O Losses

Imagine you meet Ramesh, a 34-year-old software engineer in Bengaluru. He reads two books a year on investing, watches a 15-minute market video every morning, and…

Debt-to-Equity Ratio: The Single Most Important Leverage Metric Every Indian Value Investor Must Master

The Debt-to-Equity Ratio measures how much external borrowed capital a company uses relative to the capital supplied by its owners (shareholders). In the simplest language: for…

Invert, Always Invert: Charlie Munger’s Cornerstone Mental Model for Avoiding Small-Cap Disasters in Indian Value Investing

The most useful question a value investor can ask is not “how do I get rich?” It is the exact opposite: “how do I make absolutely…

The Availability Heuristic: Why Recent Headlines Distort Indian Portfolio Decisions

Ask any Indian retail investor in April 2026 to name three “interesting” stocks. The names that come up are almost always the stocks that dominated the…

Overconfidence Bias: Why 93% of Indian F&O Traders Lose Money — How Barber & Odean’s Landmark Research, Validated by SEBI’s 2024 Evidence, Explains the Zerodha-Groww Revolution and the Anti-Overconfidence Checklist Every Serious Long-Term Investor Must Adopt

Barber & Odean's Nobel-adjacent 2000 study, validated by SEBI's 2024 evidence that ~93% of Indian retail F&O traders lose money, explains the meta-bias that makes every…

The securities quoted in these articles are for illustration only and are not recommendatory. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.