Habit loopJanuary 15, 2024 2024-01-15 10:10
Letter no. 128
In today’s moneycontrol article, we discuss the Habit Loop in equity investing, drawing parallels with the success of Pepsodent’s ad campaign. Claude Hopkins transformed Pepsodent with a cue-routine-reward loop, influencing habits. Similarly, investors develop habits influenced by market cues, routines of investing during downturns, and the reward of substantial gains. Despite potential consequences, this habitual behaviour persists in the Indian equities market, posing challenges for rational investors aiming to avoid entanglement. Breaking the loop might only require superficial reasons, but until then, the party seems set to continue.
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