In Fooled by Randomness, Nassim Taleb wrote that “news makes idiots of us because it gives us confidence, not insight.” Like a PhD in macroeconomic theory. Today is one such day in India, when after the Union Budget is announced, a lot of us will feel like PhDs in macroeconomic theory.
After all, media (television, newspapers, radio) and social media are all already filled with updates and “expert” comments on the Budget.
My wife has already prepared her questions to be asked after the Budget is announced – “What got expensive and what got cheaper? What can I shop more for?”
But I am not answering anything of it this time. Why? Because I am taking up this challenge of avoiding everything related to Budget for the next three days i.e., till the noise dies down.
Though I don’t watch and analyze much of Budget every year, and I don’t read much of news, as a ‘test’ of my ability to avoid all kinds of noise and especially such a loud noise like Budget’s that will surely hit me from all sides, I am going on a three-day diet of consciously seeking news related to what the FM would be announcing today (and the Budget won’t matter after three days anyways).
Are you up for it too?
You see, a Budget anyways won’t make any difference to your life. If you are already a spendthrift, you will continue to spend a lot even if things got cheaper or taxes are lowered. And if you are already frugal, you will continue to spend within your limits even if things get expensive or they don’t touch the taxes a bit. So how would this Budget really impact your life? Why give it such a big shelf space in your brain’s attic? Why waste precious time amidst noise?
By the way, if you are worried that by avoiding all news for the next three days, you may miss an opportunity if one of the stocks you own or are looking to own falls or rises due to Budget’s impact, don’t be. A 5-10% rise or fall in stock prices won’t make a difference to your decisions anyways. And if prices rise or fall even more, I am sure you will somehow come to know about it. 🙂
So are you up for the challenge? Let me know in the Comments section of this post if you are, and also let me know if you aren’t and why.
I’m asking you to take up this challenge as a test, but you have a choice to dump it.
I will take this challenge up with you, Vishal. Our family has already junked newspapers at home. And the only news channels I watch are DD News and RSTV. If a piece of news is important enough, it will find its way to me.
Today and tomorrow, websites and newspapers will be filled with 90% noise and 10% signal. I’ll wait a few days before reading in-depth insights about the budget from my favorite economists. Would love to read a column from you too.
Glad to find some company, Vishal. Thanks!
Agree with you Vishal, better to cut the noise and focus on the music (long term).
Thanks Vipul!
Yes. But unfortunately my job requires me to listen to the budget!
All the best, Radhika! 🙂
Nice thoughts..
Stock pickers need to stay shut and AUM collectors need to be on TV/social media.
Both are different, why mix them up 🙂
Thanks Nakul!
Respectfully disagree. Mr Market is at his most manic depressive behaviour on budget day and opportunities to buy when others are fearful and sell when others are greedy are plenty because of the wild distortions. You don’t have to be a frantic trader on this day but if you can keep your head when others are losing theirs and dispassionately assess the situation then you will certainly benefit.
As far as macro is concerned, true value investors generally ignore the macro anyway
Well, we can always agree to disagree. But for people in general, if they think they can keep their heads when others are losing theirs, they have not known the stock market. 😉
well, I did watch the market during budget. Made no trades at all 🙂
But had the opportunity arisen (irrational fall in some of the stocks that I’m following), I’d have made investments. Overall, I still feel that not watching the markets when there’s a high chance of valuation mismatch is a lost opportunity.
I unfortunately cannot avoid the budget totally. I am sales of an Indian Bank and need the news to use as conversation points during calls.
I have however avoided all the expert talks. Will read few articles on Twitter of few people whom I respect
Great, Aditya. Can understand your constraints.
I am IN for the challenge….also compliment on well timed communication.
Thanks Charanjeev!
yes i will take up the challenge, Already i had stopped reading newspapers and watching news channels after reading your Mental models ebook. Now it is easy for me to ignore budget.
Great, Kiran. All the best!
Yes I’m too on NO NOISE mode for next 48 hrs. Will only go through tweets in general and will not ponder over Promises of (LAWYER) FM
Glad to know that, Dev. All the best!
Vishal – I have been a passive reader/lurker of this website. Not typically a commentor, but couldn’t resist now. I think what you are doing is fantastic, as difficult as it is. Please continue being a torchbearer in “cutting down the noise”.
Thanks for your kind words, Sridhar! Regards.
Agree with you Vishal. These budgets and expert comments never affects the market permanently. After all the basics are.. what got expensive and what got cheaper? Anyways the Bazaar has accepted the budget positively.
Lets concentrate on ‘Value Investing’.
Thank Amol!
Agree with you. Anything that generates temporary attention and no meaningful outcome, should be avoided.
Thanks for your comment, Asim!
Dear Visual ,
Thanks to your articles that I don’t read newspaper, watch TV, read analyst recommendatios. I know from doing above to doing nothing as mentioned above make huge difference. Now I watch my friends frantically making calculations and trading on budget day. Your blog keeps me sane in the mad rush for news.
Glad to know that, Rahul. Thanks!
Hats off and Thanks for your words here… Budget is like a speculating, so we can avoid as an Investor (If really). Agreed with the words you posted 🙂
Thanks Saravana!
I agree with you vishal…We are long term value investor, and during one share holding period such 4-5 budgets comes and goes…. Still we make money… So its a noise to ignore, the same way we should ignore the opening bell commentary on TV News channels….
Indeed Pankaj. Thanks!
Yea I agree
I successfully ignored the budget news for the past 4 days. But I find it super amazing that so many of the banks, mutual funds have suddenly “decoded” the budget and are anxiously waiting to tell me about how they’ve done it! My mailbox after 3 days is full with the words “budget decoded” 🙂
Ha ha, Ashish! Delete all those messages 🙂
Totally agree with you Vishal but sometimes shouldn’t we take this as an opportunity to make short term gains (holding period ~ a week) and then reinvest the profits in our long term holdings. After all even a non-performing company will run up significantly if there is some major allocation is given to the sector.
Though I saw this late and I did watch the budget, I would certainly have taken up the challenge. I have been following the annual budgets for a large part of my professional life and you are absolutely right – rarely to they make a difference to a common citizen. The whole exercise is totally overhyped by the media both before and after the event.
Am up to join you in the Challenge next year though. 🙂
Thanks Madhav! Well, you can join the challenge now too in another way – avoid reading papers and watching news for the next 10 days, and then let me know if that made any difference to your life. 🙂