“Because only when you experience the whims of a woman will you understand life… and markets,” said Rakesh Jhunjhunwala to Fake Jhunjhunwala ,Aditya Magal. This article tries to compare stock market to woman.

Context

Let us first set the context why we wrote about it. Quoting from EconomicTimes:How parody blogger Aditya Magal impressed Rakesh Jhunjhunwala on the meeting of Rakesh Jhunjhunwala to Fake Jhunjhunwala:

Real and Fake Jhunjhunwala Face to Face

So, do you have a girlfriend?”

“No sir.”

“Why? At your age, I was more interested in girls than in stocks.”

“That’s not true. At my age, you were on the floor of Bombay Stock Exchange trying to invest 5,000.”

“So, you must be interested in boyfriends, if you are not into girlfriends.”

“Sir, sir, no sir! Why do you want me to have a girlfriend?”

“Because only when you experience the whims of a woman will you understand life… and markets”

Rakesh Jhunjhunwala is India’s best known stock investor. Dubbed India’s Warren Buffett, he trades on his own account through firm Rare Enterprises, a name coined with the first two initials of his name and that of his wife Rekha. He is 1075 on Forbes Billionaires list of world and 41 in Forbes Billionaires list of India.Thousands hang on his every market move. “Many clients ask when we recommend stocks whether Rakesh has bought it, and what he’s holding,” said Chirag Shah, assistant vice president for dealing at broker Bonanza Portfolio. interest readers can know more about him by reading Wiki:Rakesh Jhunjhunwala ,NDTV:No clone of Warren Buffett.

Aditya Magal has been Fake Jhunjhunwala, the writer(earlier anonymous) behind The Secret Journal of Rakesh Jhunjhunwala‘, a popular parody blog that tore into people in the news – politicians, actors, journalists, other stock market players, anyone – with biting sarcasm. He caricatured the identity of Jhunjhunwala, an opinionated ace stock picker with interesting quirks, into a loud, wildly entertaining character who spared none. Some of his posts: INDIA’S Top 10 Greatest Assholes : An India Today Exclusive (Mar 2010), ARNAB GOSWAMI : Birth Of A Hero.

My first reaction on hearing it was that of “Oh no-not this one too” Just like when I hear girls are not good in Maths or women being bad drivers. I thought if one of the biggest stock market investor in India is saying so there must be some substance to it. So I decided to think on lines of comparing stock market to a married woman and the thoughts are as follows. The intention here is not to take sides or point fingers or prove someone better. Please don’t take it seriously.

Managing Diverse Factors

The stock market is influenced by many factors simultaneously which shape the overall investment environment and cause the stock market to shift or move up, down or sideways. These factors range from corporate, economy, political Changes, Investor Sentiment,Government ,Monetary Policy. Ehow:What Influences the Stock Market? describes these in detail. Similarly a  woman has to juggle children, husband, inlaws, house, maid, society etc and office (if employed).

Barometer 

In Hindu homes, it is often said that Gods reside where women are respected, honored, and protected. It is believed that Goddess Lakshmi lives in every home in the form of Griha-Lakshmi or the lady of the house. Homes where the women are happy and free to express themselves are joyous abodes. Similarly stock exchange is supposed to be barometer of economic and business conditions in a country. Each economy is economically symbolized (indicators) by its most significant stock exchange. New York Stock Exchange is considered to be barometer of USA, London Stock Exchange of Britain, Bombay Stock Exchange  is considered as barometer of India . If stock market is doing well then it means companies are making money, their stock value is rising, consumer confidence ,consumer spending is high, country is doing well. Kalyan-city:Role of Stock Exchanges In Capital Market of India explains how stock exchange are used to Promote Capital formation, indicate Industrial Development etc. Infact Napoleon went to extent of saying Give me good mothers and I shall give you good nation. 

Irrational Swings

Women are perceived to be moody(irrational) in addition to being delicate and vulnerable. They are supposed to cry over anything: a sad movie (or even a happy one), a broken nail or a haircut gone awry.  Similarly Stock market seem to be swayed in either direction by press releases, rumors, euphoria and mass panic. Sometimes, the market seems to react irrationally to economic or financial news, even if that news is likely to have no real effect on the fundamental value of companies itself. But it has been realized over the short-term, stocks and other securities can be battered or buoyed making the stock market behavior difficult to predict, over the long term the fundamentals rule. The woman who cried over a movie has the strength to bear pain to bring new life in the world.

Short Term v/s Long Term

Some people invest in stock market to get a quick profit – higher risk in lieu of higher profits while some consider trading the markets as exciting often investing on stocks based on tips, hear say. Some get lured by the penny stocks or stock that make lot of noice, the one everyone seems to talking about. But there are some long term investors who look at the stock market as an door to purchase businesses that they believe would do strongly in the long run. So they buy at the correct price and then hold it for long term like Warren Buffet.  Similarly men might go after girls blinded by their beauty, cool factor or how popular associating with that ‘hot chick’ will make them. Some even change their girl friends quite fast.But those that are brave enough to commit to marriage and find the right woman and hold them for long term end up being richer.(So says my father )

Trust

Trust is defined as the willingness of a person to leave himself or herself vulnerable, based on an expectation of positive behavior from other people. One gives money to a bank, trusting that they will hold it and return it with interest.  One invests in stock, trusting that they will grow your money and give dividend. Woman marries expecting her husband to be faithful. When husband says he is working late, she trusts him and makes sure he has rest once he comes home. When company says they are growing and shows growth in books, stock market trusts it.

But when the trust is broken, When company cooks up its books and finally stock market comes to know of it then the stock price comes crashing down(Remember Satyam ). When husband has extra martial affair the woman comes to know gets angry and at times goes to extent of leaving the house.  Just like a woman might still try to forgive the husband and carry on so does stock market does not delist the company unless in extreme case.

We repeat: The intention here is not to take sides or point fingers or prove someone better. Please don’t take it seriously. What do you think -can we compare stock market to woman? Do you agree or disagree with the points raised here and why? Is there something else that you would like to add? Just wondering what would one compare the government to ..a man?