Why people waste time to know view on market?
Most people (investors or distributors) want to
know views about market, what will be market level in future? When will Sensex
touch 1 lakh etc? In my training these questions are often asked. My answer is
I am neither God nor a financial astrologer. Only God knows about future and
even the most knowledgeable expert does not know it. I say this because of
undermentioned reason which is based on fact and logic.
Market movement is decided by billions of
people and hundreds of factors. Which factor will affect which person in what
way who can correctly say? How long that factor will stay and how again people
will react who can say?
When people ask me my view on market, I simply
ask that person can you please tell me what you will be thinking 24 hours from
now or what will be your mood 3 days from now? We don’t know. So, if I do not
have a 100% correct answer about myself, which I know the best and have lots of
control (not full) then how can we say about billions of people who are involved
in market?
Sometimes my trainees ask me that then how come
Mr X is saying such thing on a TV channel. My simple reply is whatever he says
is on some presumption, assumption based on today’s fact. But when we all know
our mind has changing thoughts then how some human being can say what billions
of people will be thinking 1 day, 1 month, 1 year, 10 years from now w.r.t
market? Assessment or analysis on present may or may not turn true later on. I
also say, go back and check yourself what he had said few or some years back
and judge how accurate he had been.
Why people are interested to know about view on
market, its future level? It has to do with human psychology. Anything which is
glamourized, expressed in story, give some visualization, do catch attention
and interest. An urge to know something of future which I don’t know also creates
curiosity. Many people think if they talk such things before others they are
accepted as more knowledgeable and get respect.
The experts can give somewhat correct answer
about quality and not quantity (return or price or level). That too as per
assessment of facts as on date. Someone asked me about investment in one of the
top IT companies. I said yes as of now seems it looks as one of the best
investment opportunities. But can I say the same 10 years from now. Answer is
“I don’t know”. Reason is, the future prospect of growth banks upon the quality
of people who are managing the business. Their decision affects the quality of
product/service, their financing decision, their investment decision, their
service quality etc. Who can say who will be handling these decision 10 years
from now or the status quo will remain in future also. People, process,
competition etc changes with time.
Most investors think risk comes from economy,
market, company, product, business etc but if we go deeper the root cause of
all the risk is the human being itself. They are the consumer, they are in the
management, they are investors, they are policy makers etc. Human being thinks,
and behave irrationally most of times (i.e. emotion). No one can predict who is
thinking what. The only thing one can predict is everyone wants betterment in
their lifestyle i.e. growth. So, any investment decision should be based on
“growth” only. Safety which many people think is different from growth is in
fact a part of growth only. (Watch my coming article: Is growth and safety
same or different?)
My advice to each and every investor is please
don’t ask about view on market but do investment based on your own margin of
safety (Watch my coming article: What is an investor margin of safety). Don’t
even ask is it right time to invest or not. All time are right to invest. The
better question should be how to invest (lumpsum or SIP or lumpsum then STP). Ask
in which asset and security there is possibility of making loss and why or
making gain and why. Don’t ask how much you will gain or how much you can lose.
