Myths and thinking traps
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Common myths
Myth 1A ₹20 stock is cheaper than a ₹2,000 stock.
Read more: Market cap and size →FactThe share price only says what one share costs. Total size depends on how many shares exist: market cap is the price times the shares outstanding. A ₹20 share of a company with 500 crore shares has a market cap of ₹10,000 crore, while a ₹2,000 share of a company with 1 crore shares has ₹2,000 crore. To compare size, look at market cap; to compare what is paid for earnings, look at a ratio such as P/E.
Myth 2A low P/E means a stock is a bargain.
Read more: Valuation: P/E, P/B, dividend yield →FactP/E is the market cap divided by the latest annual net profit. It shows how much buyers pay per rupee of that profit, and nothing more. A low P/E can go with falling profits, a cyclical peak in earnings, or heavy debt. A high P/E can go with expected growth. The ratio describes a relationship between two reported figures; it does not say whether a price is right.
Myth 3Bonus shares make me richer.
Read more: Corporate actions →FactA bonus issue gives extra shares for free, and the price usually adjusts by about the same ratio. Holding 100 shares worth ₹1,00,000 at ₹1,000 each leaves you with 200 shares at about ₹500, still ₹1,00,000. Your percentage of the company is unchanged, and nothing about the business has changed. The number of shares you hold goes up; your total value does not, on its own.
Myth 4If it fell 50%, it only needs 50% to recover.
Read more: Drawdown and recovery →FactA 50% fall takes ₹100 to ₹50, and getting back to ₹100 needs a gain of 100% on the ₹50 left. Gains and losses are not symmetric: a 20% fall needs a 25% gain to recover, and a one-third fall needs about a 50% gain.The drawdown measures how far the price is below its earlier peak, and the recovery needed grows faster than the fall.
Myth 5A high dividend yield is always good.
Read more: Dividend yield (TTM) →FactDividend yield is the dividends with ex-dates in the last 12 months, divided by the latest close. When the price falls, the yield rises even if the dividend is unchanged, so a high yield can follow a falling price. The yield also says nothing about whether the company can keep paying the same amount, which depends on its profits and cash flow.
Myth 6The 52-week low is a floor.
Read more: 52-week range →FactThe 52-week low is the lowest price in the past year. It is a record of where the price was, not a level the price cannot go below. Prices have traded below earlier lows many times, and a stock can set a new 52-week low on any day. The range shows the past year only.
Myth 7Promoter selling always means trouble.
Read more: Ownership and shareholding →FactPromoter holding changes for many reasons: a restructuring, a transfer within the promoter group, an open-market sale, or dilution when new shares are issued. The percentage alone does not show which one happened, so the filing that explains the change is the place to check. Pledged shares are a separate figure and should be read alongside it.
Myth 8The past 5-year CAGR is the return I will earn.
Read more: Absolute return and CAGR →FactCAGR is the smooth yearly rate that turned the start price into the end price over a past window. It uses past prices, and it leaves out dividends unless a total-return figure is shown. It says nothing about the next five years, and the same stock can show a very different rate over a different window.
Myth 9More data points mean more certainty.
Read more: Sample size →FactMore observations reduce noise, but they do not remove uncertainty. A ratio based on five companies, or a pattern across two quarters, can move a lot when one value changes. A median from a small group can also be unrepresentative. Check the sample size next to each statistic before reading much into it.
Myth 10An index's return is the average stock's return.
Read more: Averages and medians →FactMost indices weight each company by its market value, so a few large companies can move the index while the typical member does something quite different. Companies are also added and removed over time, so the index describes a changing basket. A median or an equal-weight view of the same companies can give a different picture.
Myth 11Face value tells you what the share is worth.
Read more: Face value →FactFace value (for example ₹1, ₹2, ₹5 or ₹10) is a nominal amount printed on each share when it is created. It is used in accounting and in some corporate actions. It is not the market price: a ₹10 face-value share can trade at ₹2,400.
Myth 12A high Piotroski score means the price will rise.
Read more: Piotroski F-score →FactThe Piotroski F-score is a count from 0 to 9 of nine yes-or-no tests on profitability, leverage and efficiency, using the latest reported figures. It describes the pattern in the financial statements. It is not a forecast of the share price, and the score does not say how the market will value the company next year.
Myth 13After a long run of gains, a stock is due for a fall.
Read more: Calendar returns and seasonality →FactA single stock's past run does not make its next move predictable. Long streaks of rises and falls appear regularly in random price series, so a streak on the chart is common and does not carry a schedule. The chart shows what happened; it does not show what must happen next.
Myth 14An RSI above 70 means the stock must fall soon.
Read more: RSI (14) →FactRSI (14) compares recent average gains with recent average losses on a 0 to 100 scale. A reading above 70 or below 30 is a conventional label for a strong or weak recent run. It describes the price path over the recent sessions it covers. It measures recent momentum; it is not a timing tool for when a price will turn.
Myth 15Companies listed today show how the market did in the past.
Read more: Survivorship and look-ahead bias →FactCompanies that failed, merged or were delisted are no longer in today's list. A list of current companies therefore over-represents the survivors, and their past returns look better than the typical company's. A fair look at the past needs the companies that disappeared as well.
Myths in real numbers
Two of the myths above can be checked against current figures. These are large, widely known companies, picked for familiarity and not as a recommendation. The figures are past data and describe a single reporting date.
Real companies
These companies were picked because they are large and widely known, not as a recommendation. Each line describes one figure; none is a verdict.
Dividends with ex-dates in the last 12 months came to 0.50% of the latest close. The yield moves with the price, so it is not a fixed return.
Paid in each of the last 9 financial years.
as of 23 Oct 2026Dividends with ex-dates in the last 12 months came to 4.43% of the latest close. The yield moves with the price, so it is not a fixed return.
Paid in each of the last 21 financial years.
as of 23 Oct 2026Dividends with ex-dates in the last 12 months came to 1.88% of the latest close. The yield moves with the price, so it is not a fixed return.
Paid in each of the last 5 financial years.
as of 23 Oct 2026Dividends with ex-dates in the last 12 months came to 1.27% of the latest close. The yield moves with the price, so it is not a fixed return.
Paid in each of the last 4 financial years.
as of 23 Oct 2026- ITCITC Limited5.62%
Dividends with ex-dates in the last 12 months came to 5.62% of the latest close. The yield moves with the price, so it is not a fixed return.
Paid in each of the last 21 financial years.
as of 23 Oct 2026 - TRENTTrent Limited0.15%
Dividends with ex-dates in the last 12 months came to 0.15% of the latest close. The yield moves with the price, so it is not a fixed return.
Paid in each of the last 9 financial years.
as of 23 Oct 2026
Past figures from NSE prices and company filings, as of 23 Oct 2026. Picked because they are large and widely known; not a recommendation.
Real companies
These companies were picked because they are large and widely known, not as a recommendation. Each line describes one figure; none is a verdict.
- RELIANCEReliance Industries Limited−2.0% a year
Over five years the share price fell at a compound rate of 2.0% a year. This measures past prices, excludes dividends, and is not a projection.
One year: −13.4% (price only).
as of 23 Oct 2026 - TCSTata Consultancy Services Limited−6.3% a year
Over five years the share price fell at a compound rate of 6.3% a year. This measures past prices, excludes dividends, and is not a projection.
One year: −14.8% (price only).
as of 23 Oct 2026 - HDFCBANKHDFC Bank Limited−3.8% a year
Over five years the share price fell at a compound rate of 3.8% a year. This measures past prices, excludes dividends, and is not a projection.
One year: −29.2% (price only).
as of 23 Oct 2026 - BHARTIARTLBharti Airtel Limited+22.2% a year
Over five years the share price rose at a compound rate of 22.2% a year. This measures past prices, excludes dividends, and is not a projection.
One year: −3.9% (price only).
as of 23 Oct 2026 - ITCITC Limited+1.7% a year
Over five years the share price rose at a compound rate of 1.7% a year. This measures past prices, excludes dividends, and is not a projection.
One year: −35.5% (price only).
as of 23 Oct 2026 - TRENTTrent Limited+31.2% a year
Over five years the share price rose at a compound rate of 31.2% a year. This measures past prices, excludes dividends, and is not a projection.
One year: −13.4% (price only).
as of 23 Oct 2026
Past figures from NSE prices and company filings, as of 23 Oct 2026. Picked because they are large and widely known; not a recommendation.
Thinking traps
Anchoring to your purchase priceThe price you paid becomes the reference point for every later number.
Illustrative example: anchoring to your purchase priceSuppose a share was bought at ₹800 and now closes at ₹600. Attention locks onto the question 'when is it back to ₹800?', and the company's current figures, the 52-week range and the one-year return get less weight than they deserve.
Read more: Total return →How ScripLens shows the fuller pictureThe stock page starts from today's close, the 52-week range and the 1-month and 1-year returns, so the reference points are the figures themselves, not your entry price. The total-return view adds dividends to the price change.
Recency biasThe latest few weeks feel like the whole story.
Illustrative example: recency biasA stock rose 15% in the last month, so it feels like a strong trend. Over five years the same stock's compound rate may be quite different, and a single month says little about the longer run.
Read more: Absolute return and CAGR →How ScripLens shows the fuller pictureThe price chart has range buttons from 1M to MAX, and the price growth section shows the rate for each calendar year, so a short window can be set against longer ones.
Survivorship biasOnly the winners that are still around get counted.
Illustrative example: survivorship biasIf you look at 'the best Indian companies of the last decade' using today's list, you have already dropped every company that failed, merged or was delisted. The average of the survivors looks better than the average of everyone who was listed.
Read more: Survivorship and look-ahead bias →How ScripLens shows the fuller pictureThe past-value explorer states that it covers companies listed today, and it lists companies that fell as well as those that rose. The Learn section explains look-ahead and survivorship bias with worked examples.
Confirmation biasSearching for the figures that agree with what you already think.
Illustrative example: confirmation biasSomeone who likes a company looks up its best quarter and its highest margin. Someone who doubts it looks up its weakest quarter and its debt. Both read real numbers, and neither has the full set.
Read more: Compare →How ScripLens shows the fuller pictureThe Compare page puts companies side by side on the same figures, and each stock page shows the same set of ratios whatever you think of the company. The financials table shows the periods on file rather than a hand-picked selection.
Loss aversionA fall hurts more than an equal gain pleases, which changes how the chart is read.
Illustrative example: loss aversionAfter a 30% fall, people often focus on the loss and skip what recovery requires. Yet a 30% fall needs about a 43% gain to get back to the old price, and the chart shows how long past recoveries took.
Read more: Drawdown and recovery →How ScripLens shows the fuller pictureThe price chart has a drawdown view showing the distance below the running peak over time, so a fall can be read against the path back up rather than alone.
Overconfidence from small samplesA pattern in a handful of cases feels like a rule.
Illustrative example: overconfidence from small samplesA sector's median P/E is 9 based on three companies, which feels like a fact about the sector. With 40 companies the same median can sit very differently, and the three-company figure may just reflect which three companies were listed.
Read more: Sample size →How ScripLens shows the fuller pictureThe 'In brief' summary shows a sector median only when at least five companies in that sector have data, and it states the count. The P/E spread on the read-a-stock-page Learn page shows the median and count for each sector.
Narrative fallacyA tidy story is remembered better than the numbers behind it.
Illustrative example: narrative fallacy'The company is a leader, so its margins must be safe' sounds convincing. The filing might show that margins fell for three quarters in a row, and the story does not mention it.
Read more: Profitability →How ScripLens shows the fuller pictureThe 'In brief' summary on each stock page only restates figures with their dates, from NSE prices and company filings. Ratios show their formula on request, so the arithmetic is visible.
Base-rate neglectIgnoring how common an outcome is in general, and focusing on one example.
Illustrative example: base-rate neglectA company with a P/E of 40 is compared with a few peers, and the difference is taken as meaningful. Across all companies in the same sector, P/E values can span a very wide range, so the typical level is the first thing to check.
Read more: Percentiles, spread and histograms →How ScripLens shows the fuller picturePercentile views, such as peer ranks and valuation history, place a figure within a whole group of companies or within its own history, rather than against a single example. The P/E spread shows the typical level for each sector.
Hindsight biasAfter an outcome is known, it looks obvious that it was predictable.
Illustrative example: hindsight biasA stock that doubled looks like an obvious choice in hindsight. The same signals at the time would have pointed in many directions, and most of them would not have looked decisive.
Read more: Candlesticks and chart modes →How ScripLens shows the fuller pictureFigures carry an as-of date, and the Learn section explains look-ahead bias, where information that was not known at the time gets mixed into a judgement about the past.
Educational explanations only, not investment advice, research or a recommendation to buy, sell or hold any security. Past performance does not indicate future results. Every example uses made-up round numbers. Read the Disclaimer before relying on any figure.