Index Investing by Kumar Abhishek;

Author:Kumar, Abhishek; [Kumar, Abhishek]
Language: eng
Format: epub
Publisher: SAGE Publications
Published: 2020-03-03T16:00:00+00:00

THE FINANCIAL SOOTHSAYERS

Lao Tzu, the 6th-century BC poet and philosopher, once observed: ‘Those who have knowledge don’t predict. Those who predict don’t have knowledge’. Yet most of the financial industry seems to be obsessed with predicting the future. You open any business magazines or any business channel on your TV and you will find all the executives from top brokerage houses, donning the cloak of Oracle, predict where the market is headed and how some key financial decisions taken by the government are going to impact the market. Further, this business of prophecy telling gains momentum when the market becomes volatile and everyone seems curious to know what will happen to their portfolio. William Bernstein in his book The Four Pillars of Investing has put it down very aptly. He says:

It is said that there are only two kinds of investors: those who don’t know where the market is going and those who don’t know that they don’t know—the overconfident fellas. But there is a rather pathetic third kind—the market strategist. These highly visible brokerage house executives are articulate, highly paid, usually attractive, and invariably well-tailored. Their job is to convince the investing public that their firm can divine the market’s moves through a careful analysis of economic, political and investment data. But at the end of the day, they know only two things: First, like everybody else, they don’t know where the market is headed tomorrow. And second, that their livelihood depends upon appearing to know.4

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