Wu Wei and Investor Behaviour: A Study of Passive Investing in Indian Stock Markets

Abstract

The paper will subsequently examine the implications of the Wu Wei philosophy on investor behaviour when it comes to passive investments that are made in the Indian stock market. The concepts of Wu Wei are connected to the Daoist philosophy, involving non-intervention, patience and conformity to nature which, theoretically, may be related to passive investment strategies such as indexing and long-term holding. The research design is quantitative and analytical in which primary data was collected and sampled (200 retail investors) through structured questionnaires. Descriptive analysis, correlation, and regression are statistical tools to test the relationship between passivity in investing adoption, behavioral biases, and Wu Wei orientation. This leads to conclusions that philosophy of Wu Wei positively influences the behavior of passive investment and that behavioral biases are bad elements that influence the display of passive investment behaviors. The results also indicate that Wu Wei is a moderating force, which restrains the irrationality of trading activities and promotes long term and committed investment choices. The study is a contribution to growing body of literature in behavioral finance as it brings philosophical knowledge in financial decision making and comes up with practical implications to investors, policy makers and financial advisors. It conclusively argues that a Wu Wei oriented strategy could support an effective performance on investments and would eventually reproduce the wealth that is sustainable in India stock market.