Last week I was at one of our religious ceremonies where some ritual has to be done. The room was full of people like me, all seated and following the instructions of the priest who was intoning something in Sanskrit, which none of us followed. But, we have been doing this for many years and pretty much know the drill (or most of it anyway). So we kind of go thru the process without too much difficulty. I would be greatly surprised if even a couple of people in that hall with more than 100 men even had more than a passing inkling of what was going on. Sure, everyone knew what they were doing physically and why they were doing it (atonement). But hardly anyone knew the exact steps or the meaning of the intonations that we all repeated faithfully after the pundit.
While I was there, along comes a young boy (maybe 10-12 or so) along with his mother. Generally, we don’t see ladies at these do’s as it is almost exclusively a male thing. So that itself was a bit of a surprise. The boy and his mother were obviously from the US- as could be made out from their accented speech – and were quite clueless about what to do. All the mother wanted was that her little kid should do this process ‘correctly’ and she was here, determined to ensure that the boy would ‘do’ everything necessary! So, she makes this kid sit down next to us gents sitting there and tells him to look at the person next to him and do as he does. Hearing this, the chap next to the kid turns helpfully towards the kid and guides him thru some gestures. Like how to hold something and what direction to pour the water and such other- you know, the typical ritualistic stuff. The mother looked relieved and oh-so-grateful for this fantastic help from the gentleman that she beamed a smile at him. That was good enough to keep him smiling for the rest of the day! She was a young mother while our friend the gent was, well, pushing his 50s!
The reason I am narrating all this is because this whole charade (and I do call it a charade) reminded me of how things go on in the markets. They were so uncannily similar! Picture this. A new trader comes to the market, knowing only that money is there to be made here and that he wants to make a lot of it. The how’s of it, he has no clue but he is confident that he can wing it by watching the others do it and learn as he goes along. Who does he meet in the market? Actually, when he comes to the market, it is quite like that young lad walking into that room full of us older people. We were all doing something, appearing as though we knew what we were doing and also going thru the motions while mouthing some unintelligible words pronounced first by someone else. Just like that lad and his US-based Momma were fooled into thinking that we all actually knew what was going on and what we were doing, so too does the newbie trader think that those who are here in the market before him actually know what they are doing!
What is the result? Well, that young lad ended up thus. He joined the group that had already got thru about half of their rituals but of course the boy had no inkling of that. No one told him different because they did not know that the lad had not done the first half of the program! So he ended up doing the second half of the program (so to speak). Thus he had absolutely no idea of what went on before or what that was for. He got an idea of a much shorter process so that became his belief and his knowledge of what was involved. The Momma did not know different and could not tell him. She believed that the kindly gent who was trying to help the boy would do what was necessary. But of course, that gent also had no clue except to show the boy the physical gestures he had to carry out.
The newbie trader pretty much suffers the same fate. Depending on who is the kindly gent who guides him, the new trader will experience markets in that fashion. Initial information and process shape the view for the morrow. So the trader carries home those impressions given to him by someone who is himself completely at sea! Small wonder that Mark Douglas coined the finest phrase for the people playing the markets- he called it Following the Follower!
If you think about it, is there really a Leader? We have icons for the market but are they really leaders, like, say Modi is the PM of the country or Fadnavis is the CM of the state? Meaning, something that is acknowledged by all, whose edicts are to be followed and implemented? No Sir. Market icons are meant for the press and the television. They don’t speak for you, and in most cases, they are not even speaking to you! They are airing some views, some homilies, some self-evident truths and facts. Follow the trend. Don’t fight the tape. Buy fundamentally good stocks. Buy right, sit tight. Growth and earnings is everything. Liquidity is driving the markets. Valuations are the most important thing. You got to think long term etc.etc.……….. Aren’t all these cliché’s endless? And largely pointless to someone who doesn’t understand what they really mean?
Most people don’t have the faintest clue about how to approach the markets. But then, they spend many years in the market and others begin to think that these people must know! So, the newer among them begin to look at the older ones as leaders, as someone who can show them the ropes! What a miscarriage of expectations!
Ultimately, we have to make the effort ourselves if we have to know. We have to go deeper into the subject, learn, experience it for our self, internalise the learning’s from those experiences and then create wisdom from all that introspections. Only then, will it really work out. Most people go thru their entire life in the markets not being able to see this or do this at all. To most of them the market remains an enigma or a place of frustration or to some, downright evil! But for those who come to know, the market becomes the most wonderful of places to be, where you can be anything that you want to be, provided you put in the work and continue that work. To that young boy I would have liked to say that he should not have looked at any of us and instead hired a separate priest who would take him thru the whole thing, explaining the relevance, the meaning, the importance of everything that is being done. Only thus can understanding be achieved.
To the many who are just participating in the market, hoping that ‘one day’ it will all come together somehow, I only have this to say- good luck! Instead, find yourself a good mentor ( needs a bit of a search though), follow him or her. Not the follower who you are currently following, without even realizing it!