Recently, I was asked to write an authored piece for a well known international publication.
The topic was quite broad: "A guide to the stock markets".
And so, since I reside in India and Upstox is a domestic, Indian retail discount brokerage firm- the tone of the article was an optimistic one. It recounted 2014 as the year the markets rose more than 30%, how the Sensex has averaged 21% returns since 2001, and how investing in India is just a great idea. I wanted the tone to reflect the idea that FII's should invest in India, a conviction I strongly believe in.
The response I got from the publication was shocking. In a nutshell, the publication referred to the book "A Random Walk on Wall Street" in its email reply, and wanted me to focus more on the idea that trading and investing in the stock markets is nothing more than, literally, a "random" activity (perhaps a "random walk on Dalal Street" would have put a smile on the editor's face.) It was looking for a generic article on the stock markets and how, basically, one cannot purchase a stock under what the market values as its "fair price".
And that is when it hit me- this was not an issue isolated to one publication. This is an everyday issue that we, as traders and investors, deal with daily!. Trading is associated more with a casino than it is to, say, real estate. Although markets have risen more than real estate prices (in general, over the past 15 years, across the top metro cities in India), there is a very strong, negative stigma associated with trading.
So the question comes down to this: how does one deal with this social stigma?
Conviction Pays Off
Family members, friends, and even strangers might push us to the edge. In an interview, the "Warren Buffett" of India, Mr. Rakesh Jhunjhunwala, credits his family for not discouraging him from pursuing a career in the stock markets. From an interview with the Economic Times, he states that "My father told me to do whatever I wanted in life but at least get professionally qualified."
It's easy to get discouraged in the world of trading. Being informed and knowledgeable are must-have tenets, but being able to accept mistakes as your own, and accepting the market for what it is- the reality- and not deluding yourself into believing something that is not there is incredibly important qualities.
But one must also have a sense of self-conviction, even if his/her friends and family do not necessarily "support" him/her. It's a free world!
Warren Buffett starting investing at a young age and, over time, by making mistakes over and over again- built his investing methodology, now famously known as "value investing". When Warren Buffett decided to forego chasing technology, "dot-com" companies in the 1990's, analysts chastised him. Buffett, however, stuck to his guns. He knew that the markets were in a mania and that, on a fundamental level, technology stocks that were being IPO'd at a pace that could be not sustained, not posting profits, but having incredible Price to Earnings ratios was a fool's game to play with.
And so he stayed out of that game. In the end, he had the last laugh.
Similarly, that's how you deal with social stigmas when it comes to the trading world. It's a zero-sum game- for every profitable trade, there's somebody on the other side that lost. Conviction is what allows one to maintain the consistency and patience to ride it out for the long run.
Stay smart, stay hungry, and stay a little foolish to gain an edge on your peers 😉