Are you wondering what is emotional investing?

Well when you confuse luck, power of compounding, patriotism, nationalism, being a good doer…..and think of all of this as investing!!

For example if I say “Reliance has done nothing for its shareholder”

I MEAN EXACTLY THAT.

People get excited and say the following:

1. it is difficult to do business in this country

2. try running a small grocery store in Mumbai….and this man has set up 5000 shops…or whatever

3. he has created such a huge infrastructure for oil

4. Jio is going to be a block buster…

I AM NOT ARGUING. I do believe in all this, but the fact remains that as a shareholder as of now you have lost out big time if you were a shareholder. Yes you got some dividends…but that is no consolation for your share coming down from 1200 to 840 and headed down.

On the other hand Colgate, Procter & Gamble, HuL, have created a lot of wealth for the shareholder.

I MEAN EXACTLY THAT.

It does not mean that:

1. India needs an American company to make tooth paste, soap, shampoo, sanitary napkins, …

2. It does not mean that they have added more value to the economy than Reliance, GMR, GVK, etc.

3. It does not mean they have created more jobs.

4. It does not mean they have added more value to the economy…

NONE OF THAT.

Nothing emotional…just that some companies have created more value for the shareholders some have not. So a Ta Mo DVR has created more value for the DVR holder than the value created for the Ta Mo shareholder.

So what does that mean?

Nothing. It just means that there was more demand for some shares and less for some shares.

 

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  1. ITC has created lot of wealth. IT MEANS EXACTLY THAT

    It does not mean that:

    a) it is the reason for 30% of all cancers in India
    b) it is not donating for cancer research in india.
    c) it is responsibile for bulk of deforestation and pollution in the deccan plateau
    d) it is not an eco-friendly company.

    so on and so forth.

  2. Subra, unfortunately, a lot of people are pure short-term traders. They won’t even understand what ‘creating wealth over multiple years’ means. So when you say Reliance has not created wealth, they are simply going to look back a couple of months and say, “no, if I had bought the futures, I’d have made a lot of money”.

    So yeah, people like me completely agree with you, but typical individual stock market players, nah, they won’t get this. (I hesitate to call them retail investors, because investors they are not)

  3. no manidipa…that is sheer stupidity. She must be getting a 20% commission…give her a gift of 20k instead of LOSING 100,000 AS PREMIUM every year for 20 years…

  4. Please be aware that ’emotionless’ investing is no guarantee of better returns either. In case of emotional investing, atleast there’s something to justify if the investment underperforms. In case of emotionless investing, you have to face the full brunt yourself. Few have the ’emotional’ quotient to survive that.

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