Saturday 27 July 2019

The Real Cost of Stock Investing



If you buy a stock, what do you have to pay? The most obvious answer is the stock price plus the brokerage and taxes. That’s true but that’s not the total cost. The total cost of investing in a stock or the stock market is its quantifiable element and the unquantifiable element. When most investors talk about costs, they are talking about just the quantifiable element, not the latter one.

What is this unquantifiable element? It is the peace of mind. By investing in the stock market, you unknowingly commit to parting with your peace of mind. Now there are many things apart from stocks that can deprive you of the peace of mind and we are not going to talk about those lest we would enter into a philosophical realm from which it is difficult to escape. But like those things, stocks also can also claim a fair share of the peace of your mind. Ironically, most investors invest in stocks for wealth creation that could give them peace of mind eventually, but that’s what they keep losing every day.    

How does this happen? No matter if you are an experienced investor or a rookie, movement in stock prices causes you to experience a range of emotions over a short period of time—from ecstasy to despondence to anxiety to fear to doubt to irritation and so on. These emotions and their rapid fluctuations and recurrence are as if you were on an emotional roller coaster for the full day. You can imagine the impact it has on you. Little surprise, people in the financial industry age faster (my own observation; I don’t have any study backing it).

Emotional instability is the biggest cost you pay for investing in stocks. And because this cost can’t be stated in a currency, investors keep paying it without knowing that they are. This cost is much more than the gains you will ever make. Over their investing lives, most investors will be in net loss. That’s sad. 

What to do? Should you stop investing in stocks? No, of course. In order to reduce the emotional cost of stock investing, cut yourself from the financial world as much as you can. Don’t check your portfolio too often; once a week or fortnight is just fine. Consume less of financial news and analysis; most of it is useless in the medium to long term. Follow your stock strategy, not market movements. Find other useful pursuits than worrying about stock prices, the economy and the market.

It’s only when you have cut the emotional cost of stock investing that you can proudly say that you have made money in the stock market.

Saturday 13 July 2019

Silly Stuff Serious Marketers Must Avoid


Marketing is a dynamic field. But there are still some old tricks that one can still find around. They have stopped creating an impact and actually become irritable, yet the textbook marketer doesn’t want to let go of them.

Take for instance discounting. Discounting for a short time is fine but if it stays forever, it stops creating the desired impact. Over time people realize that the discounted price is the actual price and there is no discount whatsoever. Worse, some think they have been tricked by making them believe that they are getting a bargain.

Now consider freebies. Marketers try to attract investors with free gifts. If you go for them, you are asked to share your contact details. Some people leave the deal that very moment. Others give fake information. I have created a “junk” email account. If I must part with my contact information, I provide that junk email address. I never worry about the emails in that account.

Many payment applications offer cashbacks these days to entice users. It’s only after you have earned them do you realize that they come with many riders. You can’t use more than a certain percentage of the cashback on one transaction. A highly irritable term is “up to.” The number written after up to is an attractive one. The moment you apply the deal, your payback turns out to be miniscule. 

From quoting 9s at the end of the price (299, 399, 999…) to duping you on no-cost EMIs that do entail a charge, to using tricky language, marketers often try to deceive customers. Erroneously, many marketers still think that marketing is about selling a product by using clever means. They spend a lot of time devising ways in which they can trick customers. They think that once the transaction is done, their job is over. That’s a mistake.

Marketing is about providing solutions. It’s about assisting the customer solve his problem. It’s about a life-long relationship. It’s not about fooling people. You might fool your customer once but he won’t ever come to you next time. What’s more, he will spread negativity about your business. The cost of this is enormous in the long term.

What should the marketer do? He should put himself in the customer’s shoes. Would he like it if a freebie required him to share his contact information? Would he like it if having been offered an “up to” 100% cashback, he ended up with just 5%, which can only be used in tranches? If you are giving something away, have no strings attached. If the customer likes your free product, he will come back and pay up for the other things you are selling. 

As a marketer, your  primary challenge is how to create more and more value for your customer. Invest your energies there.