Their Story: Market wisdom, at a click

Development in technology has made the availability of information very easy. Earlier, if you had a question on a stock or other investments, you may have consulted your friends circle. But now, thanks to the internet, investors are making use of online platforms such as groups and messaging forums to discuss issues and get answers from experienced hands.

One common worry for many participants in the financial markets is interpreting the impact of various developments or events on the market. Take the case of Brexit that hit the market a few weeks ago. M Venkateswaran, a financial advisor, says that there was a lot of concern among investors at the time of Brexit. He shared a lot of factual information on his WhatsApp broadcast group (where only he can post). “The messages in the group will put events in perspective. In turn, this will trigger specific questions from other participants in the group that can then be answered on a one-on-one basis,” he says.

He is also part of a closed Google group where they discuss the impact of events on various sectors and stocks. It also helps him enhance his analysis and stock selections. “If I post an idea, the group critically questions my assumptions and key investment thesis. This helps me make well-informed decisions,” he says. The process, akin to the investment selection process that a mutual fund goes through, helps remove your biases.

There is also the benefit from collective wisdom. “Sugar, for instance, is a cyclical sector and since many of them have seen various cycles, they can provide a good perspective on it,” he says.

The power of many minds is also what attracts Saurabh Gautam, a stock investor and founder of Stockadda, a discussion forum. He gives the example of how he changed his views on small-cap stocks, which he did not think favourably about. “Some members in a discussion group I was in, had done an in-depth fundamental research on smaller companies; they even used to do plant visits and meet the managements,” he says. These members were from diverse backgrounds — sales, finance, management and HR and their investment ideas gave 4 to 7 times returns overa five-year period. “I didn’t invest in them, but today I can see the lost opportunity. It taught me a lesson that size of the company does not matter as much as the growth potential and the ethics of the promoter,” says Saurabh.

Not just for ideas, users say they also benefit from the experiences of others with regard to service providers as well. Rakesh Popli, a retired businessman from Surat who is a day trader, says that he participates in Traderji, a messaging forum. “We discuss different brokers and their cost structure, customer service and various services offered. The experience of the others in the group helps you steer clear of dubious outfits,” he says. Various tools such as the ones for charts, technical analysis are also discussed in the forum and your learning curve improves considerably.

Besides the learning, users also felt the forums provided a sense of community. “Trading is a lonely business,” says a senior trader who goes by the name of Smart Trade and acts as a moderator on Traderji platform. “There is no one to talk with during market hours, unlike an office where you have colleagues, subordinates, boss and meetings,” he explains. But online platforms, he says, attempt to fill the gap and help build friendships.

He recalls an incident from his rookie trading years. “I was holding a stock position, the market was crashing but I could not take a decision. A senior trader, on seeing my unhappy face, advised that the position must be to cut losses. He traded on my behalf and saved me from devastating losses,” he says. According to him, online forums try to fill a similar need and provide personal hand-holding and guidance when one is emotionally stuck. “Practical tips, such as how to ensure there are no connectivity issues at market close, as well as handling one’s emotions are discussed and senior traders offer valuable advice,” he says. Mukesh Kothari, stock investor and founder of Chittorgarh.com, IPO Investment and discussion site, says that members feel a strong sense of community. “Many of the people in the forum know each other very well though they have not met face-to-face. There is a sense of belonging and a sense of pride when they share their knowledge and experience to help each other on the platform,” he notes.

Yet, there are some issues that users, especially newcomers, must be aware of. One, Venkateswaran says that the new participant must be wary of un-moderated groups.

“Discussions may be hijacked by a few who dominate and push their viewpoint real hard. There may also be a lot of spam and unwanted posts that dilute the information,” he says.

Two, Smart Trade warns about vested interest. “Many traders boast about their superior performance and profits; their hidden agenda is to get hold of gullible investors and take them to their personal site,” he says.

Three, Kothari cautions about positive reviews one may see about products and services. “Public relations agencies may hire many people to write raving reviews; it is extremely difficult for visitors to distinguish between real reviews and paid ones,” he warns.

Four, there is also a risk that your personal information may be sold, according to Kothari.

Also, information such as IP address remains with your post and can reveal your identity. He advises that one must not post personal information such as phone number, email address, PAN number, bank account, client IDs and login information.

Popli says that forums are akin to a ‘ nukkad ki chai ki dukaan’ , where you are likely to meet all kinds of people and hence caution is needed. He advises that new users register using an alias and not give too many personal details. “Initially, try not to get into private messages with other members. If there is a provocative comment, just don’t answer.  You can make use of features in the platforms such as ignoring a member or reporting offensive posts to the moderators,” he advises.

Veterans also advise that new users go through old messages on various threads and observe the posts for a while before participating actively.

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