When I started my career in financial markets, the first thing I was told by my mentors is to read the Pink paper …I was asked to read the business newspaper, It was just numbers, loads of articles and a complete plethora of information which was difficult to understand and relate as how could it be used to predict the financial market? I found, research by reading a newspaper is more backward looking rather than predictive.
When I started to read the financial journal regularly I realised that I was up to date with what is happening in the corporate world and the capital markets, which impressed people in any group discussions or even social gatherings. There was a complete boost in the confidence as I always had a conversation to start with! We all read newspaper in different styles. I have come across people who read the newspaper from start to end from word to word as “Reading is definitely easier than critical thinking”. On the other hand there are people who read many newspapers in a very short time. Over the years I realise that it’s not only important for every financial market participant to read but also judge and filter what is important and has relevance and rest to move on . To do this skilfully we should always ask three questions.
xists in the markets currently. To do this, first a clear understanding of conventional theories is required. Once our own framework of research is developed for decision making, getting carried away with media views can be easily avoided. Apart from this data crunching is one of the key to get to the sentiments. If I have to talk about the equity markets, know the Advance Decline Ratio, track the Open interest, volume, deliveries, 52 week high / lows and many more. Thereafter a habit of jotting down of important points that is relevant news and its impact. This helps in analysing the markets not only on that specific day but even later on date.
- Seek Disagreement: In order to avoid confirmation bias, we need to also read articles which do not match with our opinion. A trade always have two sides. All actions do have a reaction so an awareness of both the sides is equally important. A political biasness should also be avoided while reading an interpreting any news. In order to have clarity on views, whenever reading research reports or researching a particular asset class, it’s better to review multiple reports on the same topic as compared to random reading. To do this, sort content by topic, and schedule weekly reading time. You can also go through the video newspaper analysis.
