Why is this post so small? I have long been thinking of writing short posts, for multiple reasons. One, brevity makes me think harder as I must cut through the clutter and write only what is essential. Two, with considerably reduced attention spans, I risk losing your attention with long posts. Three, it makes my writing task easier. And so, here I am. Starting today, I am experimenting with writing posts that can fit into a mobile screenshot. I got this idea from here.
So, here is my first post that you may download as a screenshot. This should also help you save all my “screenshot posts” without the need to print them (maybe, use them as mobile flash cards), and also share with your friends etc.
Let me know if you like this new format (and if you have ideas to improve). Let me know even if you don’t. 🙂
Stock Prices: Information or Influence?
In one of his papers on qualities of great investors, Michael Mauboussin writes that investing is an inherently social exercise. Stock prices often go from being a source of information to a source of influence.
Consider the history of stock market bubbles. As stocks surge, people who own them get rich on paper. This causes envy among people who do not own the surging shares. Their mind shuts down and they end up buying stocks at extremely high prices (even Newton did that!). This feeds the process. Everyone wants to get on board the stock’s gravy train because everyone else is.
Wise investors do not get drawn into such whirlpool of influence. They ignore the views of others and use their own minds. This is difficult, though, as it requires the trait of not caring what others think of you, which does not come naturally to humans.
Mauboussin writes that the crowd is often right, but when it is wrong you need the psychological courage to go against the grain.