Heard of Aadhar?
OK. Silly question.
To recollect, Aadhar is an identity database of all Indian Citizens and contains your personal details as well as biometric data. You provide this data through authorised centres and personnel only.
Once you go through the process and receive your Aadhar Card, this is what it is supposed to look like.
The Aadhar is a commendable system. It is the world’s largest such program and it has already issued the identity cards for over 120 crore Indian citizens.
It takes in the required data and makes the card available to you.
Unfortunately, here is something that happened.
Well, this is mischief but that’s not what I am trying to point you to.
The point is that Aadhar is only a system. Its output is as good as the data supplied into it.
If you input Garbage, it will output Garbage.
Garbage In, Garbage Out
What happens when you mix the right ingredients (flour, sugar, water, chocolate, etc) and put it inside the oven for a defined time and at a defined temperature.
You get a delicious cake, hopefully.
What if you were to replace the ingredients with mud?
You get the point.
Let’s apply GIGO to money and investing.
While machines can suffer from GIGO, humans have the intelligence and the capacity to filter out irrelevant info or data. It is easier said than done though. And the graveyard of investment decisions made by millions of investors and millions of rupees lost is the proof.
Some of the common investment decisions to be made by any investor are:
- Select a mutual fund
- Pick a few stocks
- Buy insurance policy (health and life)
- Buying a home
- Take a loan, maybe
These decisions require research inputs and with adequate analysis a decision is arrived at.
What are the inputs?
There are several ways and sources you can use to get your inputs.
- Moment to moment prices or NAVs
- Top gainers or losers
- 52 week Price high / low
- Past return
- Level of Sensex or Nifty
- Talking heads on TV
- What is your colleague/boss recommending?
- Company annual reports
- Mutual Fund factsheets
- Where did your neighbour invest?
The problem is to filter the signal from the noise, the garbage from the relevant.
Now, can you identify, out of those listed above, which inputs are garbage to your investment decision?
Seriously, you may shrug it away but it is important to think about.
How would you feel if you received that Aadhar with the dog pic for yourself?
Do share your thoughts.
Important – With the Money Master course, you can go and find out the most relevant inputs for your investment decisions. The course is now open for subscription but only for a few more days. If you have questions, find out more here and/or write to me.
Finally, where are you headed?