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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Avoid noise

Posted by Muthu on February 12, 2017

How will be the weather on April 7th this year?

How will be the weather on December 10th this year?

No one knows the answer. It can even rain on April 7th or there may be a cyclone on December 10th.

At the same time I can predict that it would be summer in April and winter in December. This does not hold good only for this year but year after year.

Likewise I cannot predict what Sensex level would be in April or December but can definitely tell you that over next 10 years the growth in Sensex would be in line with its earnings.

Weather is not predictable, Seasons are. Short term is not predictable, long term is.

If you can understand this, there is no need to look at markets daily. Your mutual fund investments would grow in line with earnings of the companies they own. If you are a direct stock investor, at least there is some need to track about the companies you own. For mutual funds, you engage a fund manager for doing this job. So not consuming financial news would be of great help to you. I’m not saying that there are no useful things in financial news papers and channels. Since they have to write something daily or broadcast something every hour, much of the content is noise.

If you want to be a successful investor, stop looking at your portfolio daily and consuming financial news regularly.  The more you see the daily gyrations, higher would be your mood swings. Unpleasant emotions would lead to incorrect decisions. If someone has chosen 4 or 5 diversified equity funds ten years ago and simply stayed invested completely shutting out noise, he would be sitting today on decent returns. Last 10 years, in both India and world; so many changes happened in economy, markets, commodity prices, politics, revolutions, terrorism…. the list and events would be endless.

Despite many negative events and unpredictable changes, neither Asian Paints nor Colgate stopped selling paints and toothpaste respectively. Men continued to use Gillette for shaving. People did not stop taking bath using Hamam. Bad news makes headlines. Gradual improvement and everyday life does not.

Since portfolio access is considered a hygiene factor, we would also be providing it in a month or two. But I would be extremely happy if you don’t check your portfolio. Yearly once we do review with you. That alone is sufficient.

I don’t want your financial news consumption or regular portfolio tracking come in the way of wealth creation. Listening to noise can be extremely harmful to your wealth.

Avoid noise. Stay the course.

(Note: The companies and products mentioned are for illustrative purposes only and NOT stock recommendations)

3 Responses to “Avoid noise”

  1. Dear Muthu,

    I myself am an IFa and keep getting on your newsletter on a regular basis.

    And let me tell you they are quite simple, powerful and effective.

    Thank you for enlightening us with such writings.


  2. Absolutely correct. Declutter and avoid noise. Stay calm and on course. That’s the sage’s advice.

  3. bimal64 said

    Excellent article…

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