DIGIVESTASI - Most investors, big and small, tend to be influenced more by psychology than numbers, ratios, or medians. There's even a term for the psychological gap in stock market investing: FOMO (Fear of Missing Out).

"If you can develop a mindset that is not affected by market action, then the struggle will cease to exist," says author Mark Douglas, a very valid quote about investing in the stock market, quoted on Mint's website on Tuesday. (13/2).  Looking back, no one knew where the market was headed in the short term.

"Most people end up making mistakes like doing nothing, booking profits too often, or waiting for another pullback (in the market)," said Mayank Bhatnagar, chief operating officer at FinEdge. Avoid making hasty decisions based on FOMO as indices hit new all-time highs.

This is because such market conditions can tempt investors to take excessive risks. 
Radhika Gupta, Managing Director and CEO, Edelweiss Asset Management, said it would be prudent for investors to continue with their planned investments based on a Systematic Investment Plan (SIP). Investing gradually as needed can help overcome short-term volatility.

Despite these advantages, retail investors as well as high net worth (HNI) investors are vulnerable to false psychological signals from the stock market. Unfortunately, the other side, or even waiting, does not provide a safe haven for investments.  While retail investors should not jump on the bandwagon due to FOMO, sitting still and waiting is also not an ideal solution, as they are two sides of the same coin.

"Waiting may not be a good option,'' Shiley Gang, head of product at Tata Asset Management, recently said, ``It's not about timing the market; it's about timing the market.'' he said.

The more time you spend in the market, the bigger your investment becomes. By waiting for a market bottom to form, investors lose "market time", the site says. Investors may experience more losses by waiting for their cash (i.e. keeping money in hand rather than investing it), but all stages of SIPs in a market that turns out to be on the rise can win.

Anil Gehlani, Head of Passive Investments and Products at DSP Mutual Funds, said: "Investor behavior is changing significantly today with savvy financial advisors providing guidance to investors." . 
More and more investors are now focusing more on asset allocation and regular, planned investments and moving away from market timing. 
 

This is evident from the slow and steady increase in monthly SIP inflows into equity funds.
 

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