Noise as a Weapon and An Enemy

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Genghis Khan, the famed Mongol leader had a feared army of horsemen called the "Devil's Horsemen". Tales of their numbers and ruthlessness preceded them, weakening their enemy even before they arrived. Later studies on their tactics revealed psychological warfare: use of arrows that made whistling noises, Chinese firecrackers, and dragging large objects behind horses to create dust storms. The Great Khan had mastered the art of using noise - sound and sight - to conquer.

Marcel Proust, the legendary French writer, had also identified noise as his greatest enemy. He would seal off the bedroom of his Parisian house: shutters and drapes drawn, even his walls were lined with sound-absorbing cork. This besides the earplugs he wore. And yet, when 23 letters that he wrote to his neighbours were translated, they were complaints about one main issue - excessive noise.


 How Noise Impacts Investing

Just like Proust and the opponents of Genghis Khan, today’s investors are overwhelmed with “noise”. A normal day in investing begins with an update on how the Dow closed and how the SGX Nifty opened. Soon after, research summaries start pouring in on WhatsApp, followed by hourly index movement notifications and stock price updates. Experts on TV are continuously sharing their insights on the market and Twitter constantly buzzes with notifications of results and corporate actions. In this fast paced social media world, where one tweet from Elon Musk can wipe out 14 billion USD of Tesla’s market value, it is hard to keep up with the news and even harder to differentiate noise from fact.

One day, while I was speaking to a concerned client, I asked him what was troubling his mind. He said that the constant barrage of information was really stressing him out. This situation is a classic case of information overload. It greatly affects an individual’s ability to make good investment decisions and hampers an investor’s journey to financial freedom. 

It is at this time, wealth managers need to take over and cut the clutter. The majority of investors are not day traders, and they do not understand the complex jargon that inherently comes with investing. Instead of adding to the noise, wealth managers should filter the fluff and only pass on easy to use, relevant data that provides clarity and eases the minds of their clients.

Although knowledge is power, in the case of irrelevant and excessive information, it actually causes more harm than good. Investors must have a conversation with their wealth managers and explain to them what kind of information they need and how often. The smart investors will always choose quality information over quantity. 

Let’s stop the noise! Both Genghis Khan and Marcel Proust will agree.

"All these noises and jumping up and down along the way are really just emotions that confuse you" John Bogle, founder of Vanguard

Author: Sandeep Jethwani (Co - founder - dezerv.)

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