Source – Bullsbook.com
The era of news channels, news papers, and news magazines is gone. Now is the time of views channels, views papers & views magazines! Yes, that’s the case wherever we go. Not just in India, but in any corner in the world.
Let’s understand the basic business model of media. It’s a simple equation. More viewership for TV channels & more readership for newspapers, magazines & websites; means more advertisements at higher rates. More the viewership/readership, higher the rates of advertising & more is the number of advertisers. Now, to increase viewership/readership; they need to have a lot of fresh content. Fresh like a fish! Else, people will simply unlike it. Now there are two things, either the content has to be originally fresh or they have to make it look like fresh. This is done in the name of breaking news, exclusive stories, rumours/insider information from sources etc. In simple words, they need to keep you busy watching/reading their content for maximum possible time; Irrespective of your requirements & needs. And one must admit, media has been doing it successfully. After all, smart business people are there to work for them! Truly, we can call them business channels, business magazines & business newspapers! They are simply doing their business, and making profits.
On this drive to increase or maintain their following, media needs to cater to maximum possible segments. Just like a big mall or shopping complex, where you get everything. But do you actually need to buy everything every time? No. You just buy what you want and get out of the building. But it’s the need of that mall or shopping complex to have everything available for sale, since they need to serve not just you but everyone else. Same is the case here. Today’s business channels, newspapers, websites, magazines need to deliver everyone. A long term investor, intraday trader, short term trader, futures & options traders, commodity trader, currency trader, economists, businessmen, students, car & bike lovers, sports lovers; everyone gets what they want here. Even if you want a trading/investment advice, mutual fund advice, real estate advice, advice on which car you should buy; yes they have it. Just like a movie channel which has everything for everyone, right from comedy, drama, tragedy to science fiction, cartoon and action! This is how business channels get the content to run the show all day & print media, websites, and magazines to make all their pages full.
Sometimes, parties/individual/companies with vested interest will join hands with media or use media to spread rumours, to intentionally leak the developments to get advantage of stock price fluctuations due to public participation, to propagate specific agenda etc. So, think before you act on any news. Not every piece of information is genuine; there may be a hidden motive. It has happened in the past that, many managements floated bullish stories about their business prospects in media through inflated reports, independent analysts etc., and investors have paid heavy price for acting on them.
The funniest thing most people try to do is to REACT to the news flashing on the TV screens or appearing on other mediums. Common sense tells us that, how can you benefit from an exclusive information which is being watched or read by millions of people at the same time? By the time this exclusive or insider information reaches you, everyone else knows it & many has already traded on it.
No one can deny the fact that, some of the most respected people in the financial world give their views through media. These people are independent investors, businessmen & entrepreneurs. And their views are worth to be taken into consideration. But there are many others who keep on popping up every hour & every day. Giving views on number of stocks, sectors & economies! And everyone has their own theories, propaganda’s, targets & logics. Majority of these experts, independent analysts are there for two reasons. First is to represent their company in media & let it’s presence be felt in the markets. And the second type of experts, i.e. independent analysts is there to advertise or to spread awareness about the services they provide.
Talking about anchors on business channels & editors of print/digital media, we see no difference between them & cricket commentators. It’s their job to sound excited & surprised on everything! If a player hits the ball for a six, it’s their job to shout; “oh! What a shot”. And if the player gets bowled out on the very next ball; “oh! What a ball.” They simply don’t know what is going to be the result of the cricket match, but they have to speak till it’s not over. Ultimately, it’s the players on the field who need to play the game. Players don’t even need to know what the commentators are saying by sitting in their air conditioned press box. Same way, YOU are the player here in this game of stock markets. You don’t need to listen to commentators & many other experts’ opinion. You have to develop your own technique & strategies to play well and win the game.
The point to be taken here is, media is absolutely necessary for each one of us to remain updated about the current developments. You should be selective, and should not believe everything blindly. Take what you want, and leave aside what is un-necessary. After all it’s you who has to think for yourself. No one is going to do it for you. It is important to get the news & not the views.
Media is doing their business & they are doing it excellently. They have nothing to do with your success or failure, and why should they? It’s time to mind your own business with equal excellence. There is a simple way of doing it. Keep the business channels mute during market hours & read the pink papers after the market closes!
Same is the case with stock brokers. They need to cater needs of every individual. So they have to offer various services & solutions. It’s a simple business model again. More you trade & leverage, more profits for your stock broker. No wonder, they manage to find out one multi-bagger stock everyday, many hot trading ideas every hour. It’s their job to provide fresh food to whoever walks in! And to communicate these hot tips, they have a strong network of so called graduate/postgraduate relationship managers, dealers (we call them volume managers) who have no idea about what’s happening in the market. Whenever you speak to them, “The market is at a very important technical level / crucial level and anything can happen” is the standard reply you will probably get!
If a person buys shares worth 1 lac rupees, holds them for 3 years and sells those shares at 10 lac rupees; the broker makes very little money. But if you are an intraday or short term trader, you trade with that 1 lac rupees with all the possible leverage and even if you don’t make any money or lose some money after making several trades; the broker earns more. Then you are a good client for them!
One thing we need to understand here is, stock brokers job is to do broking and not of doing research or investment advice. But due to their business requirement, they need to have this department. It is obvious, they have to maintain a balance between your & their profitability.
Next time your stock broker, dealer or relationship managers gives you a hot tip, question it. Analyze it and only then make a decision. After all, the trade or investment is going to be executed by using YOUR money, not theirs.
The process of buying & selling shares is transparent like never before. Today’s stock broking is a new age broking with lot of handful tools & services at your doorstep. Many stock brokers provide the tools to analyze the markets & stocks, guides to investing on their websites, journals etc. And investors should make good use of them.
Both media & stock brokers have their own roles to play to make profits for themselves. Not everything they do is helpful or harmful for you. If you think for yourself and act smartly, you can be friends with them and use them for your benefit. If not, you may end up in hurting your financial health! Just like many investors have done it in the past, by blindly following the ‘Experts’ in media.
The choice is yours!!!
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