Beware of crowds and commentators! - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Beware of crowds and commentators!

Dec 15, 2010

We are a strange country. We play only two games. One is, of course, cricket. The other one is speculating in stock markets. There is one very important aspect that is common between the two games: the crowds and the commentators.

Try and think of an India-Pakistan one-day match without these two elements. Imagine an empty stadium with just the two teams playing. No cheering, no booing, no yelling, no clapping. And no "wise guys" yakking away endlessly into the microphone. How about it? Would that be a cricket match at all?

It would be an absolute drab. Quiet. Empty. Emotionless. Endlessly boring.

Enough of cricket. Now switch to stock markets. Do you see the similarity already? Here, the companies are the 'players' while the 'crowd' comprises investors and speculators. The crowds and the commentators are quite an interspersed lot. It is often difficult to differentiate between the two. And unlike cricket where there just a couple of commentators, stock markets bear hundreds of them.

A cricket match may last a day or at most five days. A 'going concern' company has a much longer life. But the amount of commentary and the so-called "expert advice" that pours in minute after minute is humungous. Loads and loads of information, news and views are bombarded at you 24x7. News anchors, reporters, analysts, "market gurus", economists- all take turns to pound at you. It makes you feel as if the world is changing so quickly and dynamically that if you don't react then you might just lose out. In such a scenario, the easiest option is to impulsively react. Because you would have to be a supercomputer to really be able to make any sense of the plethora of information.

Let's answer some simple questions. Does a company's fate change minute after minute? Does its sale and production rise and fall every single day the way its stock price does? Absolutely not! Would you judge the fate of a cricket match looking at a few balls?

If you quietly step back from all this ruckus and chaos, you might begin to understand what's going on. It is quite natural to be drawn to the loudest and the most prominent stimulus. The yells and noises that the crowds and the commentators make are quite compelling. But should you listen to them? We hope you know our answer!

The companies are the 'real' players. They are the ones you should be looking at. What the company does, rather than what the crowds or the commentators do or say, will matter in the long run. Simple. So mute your television the next time you watch a cricket match.

Equitymaster requests your view! Post a comment on "Beware of crowds and commentators!". Click here!

3 Responses to "Beware of crowds and commentators!"

Jignesh khadela

Dec 19, 2010

Quiet true!
It is really important to be selective about the information when there is plethora of it available just click away to make real time decisions.

Like 

Subinoy Choudhury

Dec 18, 2010

Sir,

Well explained! Every morning we open business channels and we find new face appearing to talk about probable stock price and these channels just mulitply the news as if these are the most trusted views about companies.

Your this article is very timely and helps us to be more cautious.

Like 

ss Varadan

Dec 15, 2010

Well said!

So, what we need is a TV Channel/ single Web-site where each Player(EACH Company) talks about the review of its Business Plans!!

Like 
  
Equitymaster requests your view! Post a comment on "Beware of crowds and commentators!". Click here!

More Views on News

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

ONGC to NMDC: Here are 5 Stocks Value Investors Should Closely Track (Views On News)

Nov 26, 2021

Before investing in value stocks, research the company and gain insight into why the market is discounting it.

Top 5 Stocks FIIs Bought and Sold Recently (Views On News)

Nov 25, 2021

FIIs have largely stayed on sidelines for the past few months, withdrawing money across emerging markets.

Everything to Know About the Upcoming Tega Industries IPO (Views On News)

Nov 27, 2021

Are you looking to apply for the Tega Industries IPO? You must ensure that you know specific details.

3 Charts on Why the Indian Bull Looks Tired podcast (Views On News)

Nov 27, 2021

Rahul Shah explains the key reasons behind his pessimistic outlook on the stock market.

More Views on News

Most Popular

What is thematic investing?

Your guide to Understanding the Intricacies of Thematic Investing

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Nov 26, 2021 (Close)

MARKET STATS