People write ridiculous nonsense to attract attention

by Manshu on June 6, 2012

in Opinion

This topic has been on my mind for two or three days now, and I couldn’t decide if I should write about something like this or not, but in the end I just couldn’t resist.

I think a lot of people look at someone on television or read something that someone has written in a newspaper and automatically assume that just because they have a big audience they must be right but the truth is that a lot of these people aren’t even trying to be right.

When you think about it, there are hundreds of people on television these days, and an even larger number write for some publication or the other. With such intense competition, how do these people stand apart from each other?

Making outrageous nonsensical statements is an easy and effective way to do this, and when you look at the large number of people who choose this path, you know it is working as well.

There is a lot more entertainment in financial news than there is actual information, and if you were to pick up most pieces written about the Facebook IPO or the petrol prices in India recently – you would see what I mean. Incredibly smart people talk about oil companies screwing the Indian populace without talking about their losses, or analysts talking about Facebook not being there in 5 years from now, well guess what, Facebook most likely will be there in 5 years, but no one will remember what you said 5 years from now, and at least making such ridiculous statements helps you stand out from the crowd today.

The noise is often so loud that it drowns out the few sane voices that exist and in some way the audience is to be blamed as well because people hang on to scary headlines repeating them mindlessly without actually going deeper in the content and questioning whether the content actually reflects the scare that the headline is trying to generate.

The other aspect of this nonsense is commentary by perma bears or perma bulls. A famous Indian mutual fund manager blogs about markets and a few months ago I created a spreadsheet with date, short term predictions that he made, and then where the market was when compared with his predictions. There were two things that were quite easy to spot. One was he always found something to be positive about and second was he was wrong 80% of the time. But to this day he continues to be optimistic and continues to give guidance, not giving a damn to his plentiful wrong predictions in the last 2 years. There are examples on the other side as well, and what good is the advise of such people?

These predictions are all but useless, and just serve the purpose to make the person popular because others are only too happy to repeat that so and so analyst expects the market to end at 21,000 or 27,000 or whatever. Being accurate is not important, being loud and saying something that grabs attention is.

I think it is important for everyone to take a deep breath and think about this for a moment and keep it in the back of your mind that the person who is writing or appearing on television doesn’t always have the same goals that you as the consumer of that news have. Being popular and being right are two different things, and unfortunately you don’t need to be right to be popular.

{ 6 comments… read them below or add one }

Dev June 6, 2012 at 8:54 am

You have made quite relevant points about cutting out the noise.
Almost all the so called experts are wrong most of time. The very few who do get it right on basis of sound logic are quitting the markets (Ref: Shankar Sharma) πŸ™ And then there are those who are eternally optimistic about the Indian growth story (RJ). I agree that India has the ‘potential’ to keep on growing at a good pace. But fact remains that in the medium term, things are looking bleak. And I am not saying this because of current stock market correction. The fundamental catalyst that was driving the economy is under question! The decision making has almost come to a standstill.
And look, even I have turned into an expert who is trying to predict the future πŸ™‚
If you have read this comment till here, you would understand that the responsibility of cutting out the noise and separating wheat from chaff is yours.

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Nitin Goyal June 6, 2012 at 12:33 pm

You are considering incompetence in reporting however you have disregarded greed.

I once heard in person from an influential person the following quote about the media:
“If you seem something in media, it is because someone has paid for it to be there. If you dont see something worthwhile in the media. it is because someone has paid for it not to be there.” (I am not talking of advertising).

You can read Dhirubhai Ambani’s biography to see how the media was totally manipulated by Reliance.

A lot of reporting in media about stocks is to generate volumes and drive up or down the prices. I would say you are almost 100% of the times better off ignoring pick of the day stocks. Similar frenzy about Gold and other stuff also comes and goes.

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Ams June 6, 2012 at 5:52 pm

Very nice article Manshu. I tend to quite agree with what you say. But when I have spoken to few people they have said that though they know some people are not making sense they are not sure how to seperate them from people making sense ( seperating chaff from wheat). For e.g. at this current stage people are not very sure whether to invest further in the market for short term or not, as there are few optimistic opinions and some totally negative .

This is a great dilemma. The interesting thing is such dilemma’s come up only when things are not going well, which is the case as of today.

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Ramesh June 6, 2012 at 8:03 pm

Yes Ams, it is true. today it is a great dilemma and people are undecided as things are not going well. In such a situation people do tend to follow those who make a louder noise on TV or in print.

The article above is an analysis of a real life situation. But it is also impossible to remain uninfluenced!

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harinee June 7, 2012 at 10:24 am

Problem is we don’t hold analysts liable for their picks. Just giving a disclaimer that person holds so and so stock doesnt cut it.
All analysts today are manipulators.
I will give you a live example. Bharti Airtel was on upswing because of an acquisition planned in South Africa.Think around 430. Last minute the deal fell apart. Common sense would suggest all would say a sell. The whole day every analyst was giving a buy, made no sense. It held till 440 I think whole day. Next day the bottom fell out off Bharti.Its never even touched 400 after that.
Everybody was trying to sell out but just wanted gullible public to pick it up.
It was an eye opener for me that not a single analyst today is worth following. I think same story repeated for Tata Motors a couple of weeks back.

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Ravikumar June 7, 2012 at 5:52 pm

Another related example is whether economy is doing good or bad, whether home loan rates are going up or coming down, there will be a special supplement for real-estate in the popular newspapers with so-called analysts saying that this is the right time to invest in apartments. For sure, there will be an article which will talk about buying second apartment as investment.

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