Last year, during one of our regular runs between Madras and Bangalore, we had stopped at a road-side tea stall for a cuppa, after my wife had completed the mandatory, thorough reconnoitering trip inside to ensure that things were clean. While awaiting the arrival of the invigorating potion, we heard a group of three patrons -- they seemed regulars-- discussing about stock market and specific companies. I was somewhat rattled when they left with this parting shot in Thamizh, to the lady making the tea: `Dont be stupid, don't sell ITC; get rid of Madras Cement instead'. They did not turn to see me agape at hearing such sagely advice in the boondocks. But the lady (owner of the tea stall) caught my astonished look and with a wry smile asked `why sir, can't we invest in shares'? I had absolutely no problem with anyone dabbling in shares (and P.Chidambaram would probably wear an additional towel, swelling with pride at seeing `equity culture' seeping into countryside tea-stalls) but was aghast as to what kind of advice such people got and how they went about this rather intriguing business! More informed people, with an apparently better support system, do struggle with decisions to buy and sell and there we were, with a tea-stall owner in the middle of nowhere, mocking me at my surprised look!
Goaded into some discussion, the lady disclosed that she went by `recommendations' from a few regular customers (she did not clarify whether they got chai free in lieu), what she read in the newspapers and from English TV channels which pontificated on the subject, regardless of whether there was any audience. In the process, she herself had become an `advisor' of sorts in her own community for those who had the flint and some surplus cash, to step into that minefield. She was cagey about how much money she had made from trading in shares - as if we were income tax sleuths, pottering around the countryside looking for equity investors evading taxes on capital gains! But obviously she could not hide her pride and wanted us to know that she was successful in her endeavour, indicating clearly that her book was running `positive'. Her husband, who seemed a truly subservient male under the thumb of the ruling deity, smiled broadly as much in agreement as in appreciative awe of the wily lady's acumen. Ever since we made that trip, all the investment decisions I previously made unhindered, are undergoing a newly-introduced in-house audit review by my wife, whose attitude is obviously `if she can, I can too'!
But then why should one be surprised? Most Indians are Jekyll and Hyde characters, as we know; they are first and foremost either cricket pundits or investment specialists (many are staunchly both!) and then in the remainder of their time, they try to live the lives assigned to them. There seems to be this unrelenting urge in everyone to be an equity dealer, a latent suicidal desire bursting at the seams to buy and sell at some opportunity and exploding frequently, resulting in losses. When some such specimens find that their bets are going well 20% of the time, they magically accumulate a fan following via all possible routes including social media and investment-specific website fora. Very soon they become 'thought leaders' in their own right and dole out advice non-stop, as if they had inside information that the share market is staring at permanent closure in a few months. They are very soon further elevated by the sponsoring fora and ensconced as investment gurus to quickly develop a permanent and compulsive flow of opinions on all kinds of companies and situations, even in their sleep. Most established brokerage houses generally try to substantiate their conclusion on a stock by publishing well-researched analysis and rationale and they can probably boast of a 30% success rate after all that effort. But these so-called-gurus have no such compulsion and never hesitate to anoint a stock as a buy or sell, splurging not more than 6 to 7 oft-repeated words on its merits or demerits, seemingly thriving on sheer guesswork.
Let us look at some of the typical Oracle-like pronouncements frequently made by such gurus. `Stock ABC may see higher levels' avers one advisor, being overly coy in not giving even a hint as to why he divines so and the approximate time-frame for this eventuality. Somewhat akin to the meteorological department, with all its technogical contraptions and satellite support `predicting' rain sometime in the future. In my opinion, the weatherman comes out distinctly ahead because he does not exhort you to gamble with your money, as he is gazing into his crystal glass; at the most it is a question of getting your hair a bit wet, if you are cussedly unlucky! The same stock advisor is uncharacteristically a bit more elucidating and over-committed by his usual standard of vagueness, when he says `AAA may possibly test 320 in the next 6 months', as the share is wallowing around at 330 that day! Come on, give me a break; a pundit predicting a 10 rupee-band for possible, not even probable, movement in half year!! `I prefer XYZ' says another, as if he is talking about dietary choices he is evaluating and has been forced to decide in favour of onion pakora rather than raj kachori! `Stay away from BBB stock' or `Avoid infra space' are familiar dictates from such advisors, again without any supporting argument as to why they say so, but then most of the regulars have already figured that out a couple of months earlier without any prompting!
If these open-mouthed (only because they ceaselessly suffer from verbal diarrhoea) predictors are outstanding in their vagueness and lack of specificity, they cannot be faulted for not measuring up in terms of quantity. Two such predictors had some 42 opinions on stocks in very diversified industries, all within a period of 2-3 days. There is absolutely no pretense of specialization in any industry. What is the need? After all, balance sheets, profit and loss accounts and numbers are the same, industry characteristics be damned! I decided to keep track of some of the `predictions' and as can be expected from mass producers of stock recommendations, some 4-5% of the recommendations were right over a period of time. I am sure the tea-stall lady, with her three magi as fleeting advisors, did better without making so much noise, simply because she was forking out real money, her own, in the process! I am so sure of the quality of some advisors that I constantly play the contrarian for the heck of it and can assure you of having done reasonably well overall. So, one might say there is some use for such advisors, after all??
I jumped out of my skin one day, some years back, when I saw my father watching NDTV Profit and intently following the ticker tape running at the bottom of the screen. He has never gone anywhere near the stock market ever and had no reason to be glued to that screen. But he was and when I asked him why, his answer was a simple `just like that'! I think many of these advisors have taken this a few drastic steps ahead and are into advising `just like that'. There is no need to pity the followers because they happily `created' this tribe of advisors in the first place!! They deserve what they get.
Goaded into some discussion, the lady disclosed that she went by `recommendations' from a few regular customers (she did not clarify whether they got chai free in lieu), what she read in the newspapers and from English TV channels which pontificated on the subject, regardless of whether there was any audience. In the process, she herself had become an `advisor' of sorts in her own community for those who had the flint and some surplus cash, to step into that minefield. She was cagey about how much money she had made from trading in shares - as if we were income tax sleuths, pottering around the countryside looking for equity investors evading taxes on capital gains! But obviously she could not hide her pride and wanted us to know that she was successful in her endeavour, indicating clearly that her book was running `positive'. Her husband, who seemed a truly subservient male under the thumb of the ruling deity, smiled broadly as much in agreement as in appreciative awe of the wily lady's acumen. Ever since we made that trip, all the investment decisions I previously made unhindered, are undergoing a newly-introduced in-house audit review by my wife, whose attitude is obviously `if she can, I can too'!
But then why should one be surprised? Most Indians are Jekyll and Hyde characters, as we know; they are first and foremost either cricket pundits or investment specialists (many are staunchly both!) and then in the remainder of their time, they try to live the lives assigned to them. There seems to be this unrelenting urge in everyone to be an equity dealer, a latent suicidal desire bursting at the seams to buy and sell at some opportunity and exploding frequently, resulting in losses. When some such specimens find that their bets are going well 20% of the time, they magically accumulate a fan following via all possible routes including social media and investment-specific website fora. Very soon they become 'thought leaders' in their own right and dole out advice non-stop, as if they had inside information that the share market is staring at permanent closure in a few months. They are very soon further elevated by the sponsoring fora and ensconced as investment gurus to quickly develop a permanent and compulsive flow of opinions on all kinds of companies and situations, even in their sleep. Most established brokerage houses generally try to substantiate their conclusion on a stock by publishing well-researched analysis and rationale and they can probably boast of a 30% success rate after all that effort. But these so-called-gurus have no such compulsion and never hesitate to anoint a stock as a buy or sell, splurging not more than 6 to 7 oft-repeated words on its merits or demerits, seemingly thriving on sheer guesswork.
Let us look at some of the typical Oracle-like pronouncements frequently made by such gurus. `Stock ABC may see higher levels' avers one advisor, being overly coy in not giving even a hint as to why he divines so and the approximate time-frame for this eventuality. Somewhat akin to the meteorological department, with all its technogical contraptions and satellite support `predicting' rain sometime in the future. In my opinion, the weatherman comes out distinctly ahead because he does not exhort you to gamble with your money, as he is gazing into his crystal glass; at the most it is a question of getting your hair a bit wet, if you are cussedly unlucky! The same stock advisor is uncharacteristically a bit more elucidating and over-committed by his usual standard of vagueness, when he says `AAA may possibly test 320 in the next 6 months', as the share is wallowing around at 330 that day! Come on, give me a break; a pundit predicting a 10 rupee-band for possible, not even probable, movement in half year!! `I prefer XYZ' says another, as if he is talking about dietary choices he is evaluating and has been forced to decide in favour of onion pakora rather than raj kachori! `Stay away from BBB stock' or `Avoid infra space' are familiar dictates from such advisors, again without any supporting argument as to why they say so, but then most of the regulars have already figured that out a couple of months earlier without any prompting!
If these open-mouthed (only because they ceaselessly suffer from verbal diarrhoea) predictors are outstanding in their vagueness and lack of specificity, they cannot be faulted for not measuring up in terms of quantity. Two such predictors had some 42 opinions on stocks in very diversified industries, all within a period of 2-3 days. There is absolutely no pretense of specialization in any industry. What is the need? After all, balance sheets, profit and loss accounts and numbers are the same, industry characteristics be damned! I decided to keep track of some of the `predictions' and as can be expected from mass producers of stock recommendations, some 4-5% of the recommendations were right over a period of time. I am sure the tea-stall lady, with her three magi as fleeting advisors, did better without making so much noise, simply because she was forking out real money, her own, in the process! I am so sure of the quality of some advisors that I constantly play the contrarian for the heck of it and can assure you of having done reasonably well overall. So, one might say there is some use for such advisors, after all??
I jumped out of my skin one day, some years back, when I saw my father watching NDTV Profit and intently following the ticker tape running at the bottom of the screen. He has never gone anywhere near the stock market ever and had no reason to be glued to that screen. But he was and when I asked him why, his answer was a simple `just like that'! I think many of these advisors have taken this a few drastic steps ahead and are into advising `just like that'. There is no need to pity the followers because they happily `created' this tribe of advisors in the first place!! They deserve what they get.
4 comments:
Lovely post Varad-san.
Now I will be more careful about striking conversations in the tea stall.Till date, it is happening other way around and last thing I want to is to get dragged in to this kind investment decisions :-)
regards
madhu
Reading your ruminations results in rejoicing over your ratiocinative and rational reaction to incidents which we normally ignore. Inspires us to be more observant and more of an intellectual. Great, as usual. Keep reacting and rebooting us.
Raju,
very good piece (as usual)!
Unpredictability is the only right 'prediction 'in stock market. I have seen people who relied on their intuition and impulsive actions succeed while the well researched and analysed investors fail. Technical jargons which are nothing but latin and greek for the audience rule the discussions which aren't worth watching.
Sriram
Hello,
This is not very uncommon in my Hometown,Mumbai.Even I was inducted into the shares market by my father when I was in school!As I got older,he taught me how to buy and sell shares online,what the various financial terms meant,how to read financial statements till it was a quite an addiction.So I wont say I am too surprised to hear about the tea stall lady.
From my personal experience,I think a lot of unclaimed credit to get Housewives and middle class working ladies, into share trading,goes to the charming Udayan Mukherjee .You could hear 'his opinions' and 'advice' being discussed in the local train ladies compartment along with his 'cuteness'!
Post a Comment