SCHOOL ADMISSION LESSONS FOR TRADERS
There is this acrimonious debate going on in my house. Apparently someone has been a bit lax in not filling up the form for a Lower KG admission and is now running from pillar to post seeking someone with ‘influence’. This said person had been confident earlier that her as well as her husband’s qualifications (which are indeed impressive) and their suitably being well employed with a good family background etc would be sufficient to get her daughter admitted to some of the better schools to which she had applied. For whatever reasons, all those schools regretted their inability to admit the said student (a bright and chirpy girl of 3-4 years). And now, a sense of crisis has gripped that young couple. Apparently, the feeling is, the child will find it even more difficult to get in next year! Why that should be so I have no clue but these days, young people seem to have pretty definite views about everything.
I was left wondering as to how the schools decided whether a kid is to be admitted or not? Do they take some kind of quiz, like identify colors or shapes or some such? Well, they should know that kids are mercurial about how they respond. On a day a child may simply refuse to respond and the same kid will not stop on some other day. This is the way children are. So, could it be on appearances? I doubt that. Then can it be on background? Then the parents are the ones applying for admission and not the child! Some kinds get rejected because they cried at the ‘interview’ or didn’t speak or maybe didn’t show sufficient intelligence during the interaction? How the hell does one decide? Can there really be a criterion for 3 year olds? And the bigger point is, should there really be one? Left to me, I would just collect all the forms and just run it thru a random selection process. Maybe they are doing just that but I don’t know it.
This also got me thinking about people seeking advisory services and training on market methods. There are many of those and there are many service providers too. So, it is not dissimilar to school admissions. Advisory services just want the numbers so they will accept anyone who shows up at their doorstep. They have just one or two products to sell but the same is sold to all and sundry. This leads to a huge mismatch of expectations and delivery. People with a Lac or two of capital trade futures. People with larger capitals believe they can take much larger positions. Almost no one wants to set a stop loss. And almost everyone takes profits early.
As a result there is a big disappointment of the buyer as profits are lesser and losses are more while the service provider faces high attrition levels because of client dissatisfaction. Neither is willing to apportion any blame to themselves. The fault is always the other guy’s. Dissatisfaction is the only outcome here.
Can there be a solution? Of course, and it is really quite simple. Advisors need to be upfront about what their product is and how it shall perform. Further the right kind of product needs to be sold the buyer. If they are not adequately capitalised then they should be dissuaded from trading futures. (Apparently Sebi is going to do something about that soon). Buyers need to understand and accept that even if a service is efficient and accurate, its sequence of success may be quite non- linear. There has to be an understanding too that every recommendation of the Advisor has to be followed. Unfortunately, most of the time people are just looking for some kind of validation of their own thought process. This is not part of the contract between the buyer and seller. The latter is offering his expertise and the buyer is paying for it. This cannot be judged in a day or week. You need to give some time for the process to work. But people are far too quick to judge and give up on the advisor if he doesn’t come thru on every trade and every traders.
Stock selection for trading by traders cannot be reduced to a random selection process like selecting KG level students in a school. There are too many moving parts in a stock that changes the probabilities of what will unfold in the future in multiple ways. In a school the future is pretty much sure once the admission process is completed. But people worry and fret so much about what could well be a totally random selection process but want to be very exacting and demanding about a thought out process. They are willing to pay in Lacs for the admission but would balk at the thought of spending a few thousands for customised advise. They are ready to do whatever the schools will ask them to do as parents but will not do even a single thing consistently of what the advisor asks the buyer of his service to do! They will not question a single process of the school (lest it endanger the admission probabilities) but will question almost every call of the traders. If they don’t question it, they will try to second guess it or modify it as per their own preferences.
The advisory industry is a big one and a lot of people are at work here. It is time both of them started following some good practices here. For the traders, there is just one requirement- be consistent with finding winners. But for the consumer of the advice, the need to change is much greater. They need to bring in a higher level of understanding of what they are doing. The biggest risk in the market is when you are unaware of what you are doing. SMS based traders are among the most undisciplined lot and may have a share a lot of the blame for the advice not really working out for them. Ideally, they should sit with their chosen advisor and chalk out an action plan that can create a win situation for both of them.
If you are among those seeking advice, either from our company or anyone else, I suggest that you do this engagement asap.