Stock Market is a strange place. A really strange one…
At times, things which happen here are so far away from common sense, that if aliens were looking at stock markets, they would refuse to make any contact with humans… because lack of common sense shown here proves that we may not be an intelligent form of life at all.
One of the simplest examples of stupidities in stock markets can be illustrated as follows: We wait for discount sales and promotional offers when we want to purchase clothes, furniture, etc. But when the same discount sale starts in stock markets, we run away. We are no longer interested in purchasing goods (stocks) which are available in markets at cheap prices and at very high discounts.
I just read an interesting article by Morgan Housel here, which almost forced me to imagine my own set of hypothetical situations, where other people start behaving like those in stock markets.
In each of the following situations, I have used my name (Dev) instead of anybody else’s, to avoid getting into conflict with readers for use of anybody else’s name. Unfortunately, if your name is Dev too, then please accept my apologies 😉
So go on…Enjoy the rest of the post… 😉
If we are as impatient about gardening as we are about investing: Dev plants some seeds in his backyard. He checks them after 4 hours. Nothing changes. He digs them up and replants them. Four hours later…. still nothing changes. Two days later, Dev is disheartened and angry that there is no mango tree in his backyard. He calls mango trees a big scam.
If we thought of private businesses like public businesses: Dev owns a bakery. One year he sells 1024 cakes. The next year he sells 1023 cakes. Business channel reporters stand in front of his bakery and call him incompetent and unworthy of running a bakery.
If medical advice is given as universally and indiscriminately as financial advice: Dev is a doctor who goes on TV talking about the benefits of a new cancer drug. He doesn’t mention that unless you have cancer, the advice is irrelevant for you. Unaware, half of the viewers start using the new cancer drug despite not having cancer.
If we credentialed doctors as easily as we do stock brokers: Dev keeps shouting just one thing: “the hip bone is connected to the leg bone.” This simple and obvious observation qualifies him to be a famous ortho-surgeon and your life is now in his hands.
If we held weathermen to the same standard as stock market experts: Dev, a local weatherman has been predicting since 1990s, that next year, it will rain in Delhi during monsoons. As common knowledge is, monsoons do bring in rains every year in India (including Delhi). But Dev is inducted into the Meteorology Hall of Fame for his “spot-on, dead-accurate forecasts of the Delhi’s climate for last 20+ years.”
If we checked our physical health as often as we check our portfolios: Dev wakes up in morning and checks his blood pressure. He checks it again before breakfast, during breakfast and after breakfast. He checks it again just before leaving for work. When he reaches office, he checks it again, then again before lunch, and twice before leaving office. During one of these times, he weighs himself during the day and notices that he has lost half a kilogram. He calls his doctor to find out about his health and what exactly is going on.
If we thought of school grades like we do corporate accounting: Dev gets an ‘F’ in maths test, but says he actually got an ‘A’ if you strip out one-time bad answers on a pre-mistake basis. His teacher* buys the logical explanation and gives him an ‘A’ in report card.
* -‘Auditors’ 😉
Very good article .
Thanks Suresh 🙂
mazaa aa gaya, waah!!!
try making a movie on this theme, i am sure it will enter the all-time top-10 list hilarious satires.
Thats a great idea Mudit ;p …it would actually be quite a hilarious one ;p ;p
Just don't understand why stock market investing is compared with gardening only. Why should not be compared as pilot handling the flight. You need to watch all the controls as frequently as possible so that flight lands safely.
If you are cricket fan, it would thrill us to know score every moment. Imagine our joy when the batsman hits 4 or 6. For me market hours are like live match. It thrills us if our stocks does well on any day, feel great if UCs are hit. Ofcourse feel bad, if market tanks. Even the businessman monitors the customers, inventory, cash every hour. Comparing with farmer with investment community is not fair.
I have a counter view for each of the para. This article is a selective bias and chose to highlight what fits the bill.
Its good to hear a counter view…
But the examples which you gave are more similar to trading in stock markets rather than investing. And it is indeed a personal bias towards slow and steady investing which had me chose only those points which showed investing as slow and steady activity…after all investing is more about what we chose to believe and what best suits our personality…isn't it?
Many people (& me included) don't have the expertise to make it big by trading in short term. But have the belief that long term investing can work wonders if followed with discipline… 🙂
But we can have differing opinions about stock markets 🙂
Reminds me what Warren Buffett or someone else said on the same subject of patience and consistency.
You can't produce a baby in 1 month by getting 9 women pregnent.
Well said Harjeev. I guess that pregnant-woman analogy could also have been a good addition to the list 🙂
hahaha Very Very funny.. “If we checked our physical health as often as we check our portfolios” before i encountered this blog that was my state of being.. not knowing what to take and fearfull of seeing any red in my portfolio..