See the amount of noise that exists in the media and how you would be better off as an investor if you learned how to manage it. Just ignoring it or overreacting to it does not help. By reading or watching the media you are likely to get ill, and you will be prone to make financial mistakes – whether you are a trader or a long-term investor.
If you are a mutual fund investor, it may not hurt you much, but if you are an investor investing in direct equity, the media cacophony can hurt you. Imagine you have done research and have bought a share for R1000. Now the financial media tells you it is worth R2000 or R750 on a daily basis, what will you do?
Will you panic? Will you rejoice? Will you act calmly?
How many times have you seen headlines like “Ambani loses $100 million” in 2 week market fall? Or “PSU shares are up $200 million in the past month”. This triggers FOMO (Fear Of Missing Out) in all of us. We wonder whether we should sell all our shares or if should we be buying all the listed PSU shares?
Apart from this, there are journalists and anchors who can tell you why the market will go up on Monday morning (today) and on Tuesday morning they can tell you why it fell on Monday! Many a time it could be the same event like G20 or employment statistics.
The financial media (largely television and social media) needs to do all this to increase the eyeballs so that there is more revenue. This may be of some sense to the trader, but it cannot mean anything for the investor. There is not much in a talk or video of any investing ‘sense’ except saying – start early, invest smartly and let the power of compounding take over. If you need some more ‘gyaan’ on investing –see a financial planner. In the general/financial media we can only give a very broad sense like – invest in mutual funds, invest in index funds, etc. Specific advice can’t be given in the public media.
Over a 1-year period, markets can be very chaotic for both G-Sec bonds and stocks. This is truer over shorter time horizons (i.e. monthly, daily, intra-day, etc.). However, when the duration is say 5 years or more the standard deviation is much lower. Watching financial social media is like being caught in a slippery slope! The more you watch, the more that you will become short term oriented than you already are. Keeping yourself long-term focused is an important part of your wealth creation journey.
We are all victims of our upbringing too! Our parents have told us ‘do not just sit there doing something’.
Jack Bogle says ‘While investing do not do something, just sit there’.
PV Subramanyam
writes at www.subramoney.com and has authored the best-seller ‘Retire Rich - Invest C40 a day’