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This post is kind of mashup discussion that came about while I was discussion markets in general with two very good friend and analyst – SJ & BA.

pic for blog

Most (not everyone) people believe Analyst know what’s gone happen tomm in market

One of the constant thing that analyst do is “meet management of company” at 5-star hotel of the city like Taj @ Apollo Bunder/Gateway of India, Trident/Hilton at Nariman Point, etc. While visiting one such company management along with my colleague who goes by the name of Sanjay Khan (The Shining Bald) we accidently bumped in old foreigner while entering elevator. We apologized and helped him stand up, given his old age we thought its best if we accompany him till his room. And this conversation happen during the period

Analyst: we are extremely sorry sir, I hope we have not hurt you too much.
Old Gentleman: no no I am fine, you boys ought to carry on with you work and not bother about me
Analyst: no sir, how can we do that, it’s our duty. Anyway my name is Raj and this is my colleague Shining Bald..i mean…Sanjay Khan…I mean…
old gentleman: I am Mr Buffett
Analyst: nice to meet you Mr Buffett
Mr Buffett: so what do you do for living Raj?
Analyst: Sir I am Stock Market Analyst
we reached his room and he open his door and stood there looking at us and spoke “you know why god created Analyst?
Analyst: ummm…so that we can find good stock for investment?
Mr Buffett: no…so that weatherman doesn’t get left alone.
He smile said thank you and closed the door, while I was left wondering in thoughts, Shining Bald was almost rolling on floor and laughing like a kid (ROFLK)

Most general people believe that analyst have ability to forecast or know what is gone happen in stock market in future. Once, Analyst was asked by a person, of which stocks are gone increase tomm, Analyst enquired why he thinks that he know future? And pat comes reply “because you work in stock market”. Analyst was like but that doesn’t make sense, he was like it does, you work in stock market and people who work in stock market know what’s gone happen tomm and day after tomm and so on, Analyst was like “but what gives us ability to do so?”, he said, “ that’s how it is”, I said “who says so?” And he replied “fine, don’t tell me, you make money, while I will remain poor”

I don’t know why most general public hold that belief, but Mr Buffett was right when he said “analyst exist so that weatherman are not left alone”. Think about it, how many times has weatherman gone right?…………same is the case with analyst, but people still believe in analyst can predict future and hence their keep on asking him.

There are 2 reasons why people are this way (1) Human nature and (2) somebody claims he can do it and 3) competition to fuel this

Back to the future

Human nature is pretty amazing piece of work, since time immemorial humans have always wonder about what future would be like, hence we have huge fan following of “Back to the future- trilogy” and hence, Indian community has astrologer too. Look it from perspective of businessman or capitalist or marketer and you have wonderful opportunity to cater too. Since demand exists, broker/analyst fulfills it.  Second, there would always be somebody who would claim he can forecast future for precisely above reason. hence even if general public at large might know that no one can predict/forecast future, but if somebody claims people would still be interested in paying him and knowing the same (no matter how much ridiculous or fake it might be).

A stock broker works on same logic, people in general want to know what future would be and if beneficial he would be interested in making use of that opportunity. Knowing this stock broker asks his analyst to predict future of Sensex and voila you have a report stating “Sensex at 50,000 by 2020”. Broker very well knows its long time and people suffer from short term memory loss, also you can always come up with new report to make it more exciting. Finally you have competition, if one broker does it, other would out do it and so would other and of course you have 24 x 7 TV channels, newspaper and people around you who continuously bombard you with it and make it sound true “ that humans can predict future and you would be fool in not believe the same”

While giving pocket money, parent always say “don’t spend all at one go”. Whenever you are crossing road, you ought to look on both sides before crossing. Now we cannot predict future, but we can always minimize our loss & try to be safe. Same goes for stock market investing, nobody can predict future, but there are always way to safeguard and protect your money. If somebody claims ability to predict future, I suggest you get out of there at very moment.

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