Data becomes useful information only when you put it to productive
use
in the age of data overdose, what’s relevant to you?
Every day, and every hour, we are hit by some data point. It could
be through the morning newspaper, television channels running “breaking news”
throughout the day, a mobile app, a WhatsApp forward, a post in other social
media, or a conversation with your friend or colleague. We are calling it data
as it is not information yet; it will become information once you process it as
per your requirements. Every data point is useful in some way to someone, but
every individual is different and your requirements are unique to you. Hence,
you have to think through which data points are relevant for you, and
de-clutter your mind space.
There are broadly two sets of data points. One, which come every day on a
routine basis. Two, events that happen occasionally and are relevant or
seemingly relevant. Apart from these two, there are opinions voiced by various
people, experts and non-experts, in the media and social media. Let’s start
with the routine data points. To get a basic sense of the market, you would track
the Nifty, Sensex, 10-year government security yield, crude oil price, among
others. If you want to dig deeper, you would track price-earnings ratio,
price-to-book-value ratio, corporate earnings growth, among others. What is
relevant here is, to what extent and depth you want to go and how much time you
have. You set the bandwidth for yourself. If you are an investor and have
assigned your money to a professional fund manager like a mutual fund or PMS
(portfolio management service), then a basic sense of the pulse of the market
would suffice. You may want to set a wider bandwidth, if you are managing your
own portfolio or you want to have a deeper understanding. In that case, you
have to know the purport of the data points you set for yourself. For example,
generally, weakness of the Indian rupee against the dollar or other currencies
is taken as a negative as it leads to “imported inflation”. However, it may
help certain export-oriented industries, your investments in feeder funds
(mutual fund schemes in India that invest in funds abroad) and domestic price
of gold, due to the conversion factor.
Coming to events, there are events that are significant and have
some impact on your portfolio, and there are events that are not so significant
but seem important, going by the headlines and discussions around you. As an
example, the Union budget and the “follow-up budgets” are important as they
impact your investments. An example of the second type is Brexit as it does not
have as much direct impact on your investments in India. Though global markets
have linkages and repercussions are felt all over the world, the context here
is the extent to which it actually impacts you. The relevance of an event may
not be as much as the discussion or noise around you, and vice-versa.
Hence you need to form your dashboard. Swans are called eclectic
because supposedly they can separate milk from water and take milk only. Swan
is the vahana (vehicle) of Saraswati, the goddess of knowledge. It implies that
to acquire knowledge, you have to be eclectic, take the useful stuff, and
forget the noise. On daily events, think through what all you need to track,
and follow those data points. Importantly, know the impact of these on your
investment portfolio. As an example, if you are tracking global interest rates
and the amount of government bonds trading in negative yield, you have to be
aware that global negative interest rates may influence interest rates in India
downwards, but does not per se mean that interest rates in India will turn
negative. On events, understand what is happening and analyse how it impacts
your investment portfolio. If it is not material, de-clutter your mind and put
your bandwidth to better use.
The other point we made is about opinions voiced in the media or social media.
It is good to gain from someone’s viewpoint; it gives clarity to the events
happening around us. However, do not let the negativity of these opinions
darken your mind. Read the opinions from the perspective of whether they add
value to you, or it’s being said just for the sake of saying something.
To summarize, clarity on what you want to track will help you
reach better output from the plethora of inputs available.
Source | Mint – The Wall Street Journal | 16th
October 2019
Regards
Mr. Pralhad Jadhav
Research Scholar (IGNOU)
Senior Manager @ Knowledge Repository
Khaitan & Co
Mobile @ 9665911593
thanks for useful information
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