In 1979 when I did my first trade, I had to walk to my broker’s house in the night and discuss what to buy and sell. Sure we both had phones at home (2 phones each actually) but most of the talk happened face to face. He would call around 5 pm or later to confirm that a transaction was done or not done.
If somebody dropped dead at 11am, I could do NOTHING to access him because he / his representative would be inside the ring of the BSE. And I thought I was trading too much – I would do small transactions – perhaps one a day. That was too damn high. There was a physical limitation of how many transactions got done.
Then came online brokerage. Your broker sat on a terminal and did the transactions – obviously volumes went up from Rs. 250 crores to about Rs. 25000 crores. Stunning, but yes, that was the kind of jump.
Today’s investor is bombarded with ‘data’ pretending to be information. He is inundated with data. Views. Opinions. Interviews.
Cost as the only consideration of choosing banks, fund managers, term insurance, distribution channels. So sudden switches, closures, re-starts. Again pointing towards activity.
Every day, week, month people open their computers, phones, or whatever to decide whether to buy or sell and what to buy or sell.
Every day the poor investor is bombarded on television, on the net, on his phone about what he should do NOW or face death!!
Every day a chartist calls him or pings him to sell him a newsletter.
Everyday some bank / brokerage house wants me to borrow money, invest, insure, switch loans, – again calling for action.
Actually I have no clue what would have happened if I had left my 1995 portfolio as it is and done NOTHING at all. It had 300 shares of Infosys!!
There is nothing wrong with information, but it is making lazy people lazier. They are happy to believe what they see in print. On investment forums. On blogs. In pink papers. In newsletters.
Do not do that. See if it is accurate. Learn to read the balance sheet. Many of these stories are written by the machine. Accurate and stupid. So go beyond the story. Go behind the numbers. As soon as Infosys posts one quarter of good results there are ‘strategic management articles’ saying how Sikka is a great strategist. Hey what is the hurry to judge? One quarter bad results from Ta Mo and people are willing to say “Ta Mo” is doomed and finished. Oops guys get curios.
Have a Great weekend.
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