Thursday, March 29, 2018

Boiling Frog Syndrome and Stock Market Psychology..

 What is the Boiling Frog Syndrome....

Frogs are very similar to humans in the power of adjustment with the situation.
The Boiling Frog premise is that if a frog is put suddenly in to boiling water it will jump out. Secondly When you put a frog in a vessel of water and start heating the water. As the temperature of the water rises, the frog is able to adjust its body temperature accordingly. The frog keeps on adjusting with increase in temperature. Just when the water is about to reach boiling point, the frog is not able to adjust anymore. At that point the frog decides to jump out. The frog tries to jump but is unable to do so, because it lost all its strength in adjusting with the water temperature. Very soon the frog dies.

What killed the frog? Many of us would say the boiling water. But the truth is what killed the frog was its own inability to decide when it had to jump out.
We all need to adjust with people and situations, but we need to be sure when we need to adjust and when we need to face. The frog-in-boiling-water syndrome, can arise in other, more serious, situations throughout our lives where we willfully ignore an increasingly dangerous situation, telling ourselves that we’ll do something about it “soon”.
The main reason we get into these situations is “Denial”, we stubbornly choose to remain in the same situation and get stuck in deteriorating circumstances and do nothing about it till we find ourselves at a miserable dead end.

human beings like frogs do not understand the small changes happening around them and  adjust to the small changes happening without even recognizing whether the change is beneficial or harmful to their well being... the same co relatation of boiling frog syndrome can be seen and experienced in the stock market correction..
The present correction which we are going through...that is very slow correction from nifty 11170 to 9940 points was very slow and not even noticeable...i mean the slow correction was happening but we adjusted to the slow correction and today everybody will be feeling that they did not get a chance to sell around the nifty levels of 11100...

 i feel the pain is still left and the further corrections will also be very slow and the market will not give the poor greedy investor to sell and exit at higher levels..at every downside fall we the market participants get adjusted and the market keeps on making new lows and bottoms and because of these bias we are not been able to sell...Always remember the fall will never be in a straight line or in a linear manner..It will always be in zig zag manner to take advantage of our Psychology...
 Human Brain can immediately identify a steep downfall and goes on to recognize the danger of that sudden and steep fall in prices and the Investor becomes aware and cautious....But if the fall is very slow and takes a long time then the human brain will not identify the slow fall in prices and will keep on adjusting to the situation up to the point where it recognizes the price fall as dangerous....

today we are experiencing the same syndrome in the stock market correction which is slow time wise and moving in zig zag fashion price wise...

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