Mind Games with Your Stocks (Part 2)

Mind Games with Your Stocks (Part 1)
Nationalism and Stock Investment
Nationalism is a special form of stock market behavior that transgresses business management principles. India has a particularly destructive stock market culture, where tons of value may be lost for no good business reason. The media, public, and government, all support stock market moves on grounds of social relevance without any regard to economics and profitability. The country’s colonial past results in fundamental opposition to some Anglo-Saxon countries, and acquisitions of European companies are especially celebrated, whether they are judicious in business terms or not. The United States enjoys a special relationship with the Indian stock investment community, since Washington supports outsourcing in the face of mounting unemployment in its own country.

Venezuela is still too small to matter to the stock market world, but China and Russia use nationalism to their brazen advantages in stock exchange terms. International politics, controls over scarce resources, manipulations of national currencies, and trade agreements, are all frontiers on which national governments and business houses act in concert. Washington also has its collaborative bodies, but stock investment activity is kept out of the administration’s active purview.

Stocks and Statements

Though China and Russia may be active in their stock exchange transactions, their leaders generally remain behind closed doors. Stock investment takes on a different hue when prominent executives and even owners of controlling stocks make personal appearances, with statements of intent that are not related to objective business management. Stock price trends can swing wildly as reporters and investors hang on to every word uttered by a Chair Person, and read between his or her lines as well! This tends to fuel speculative behavior, putting sound stock investment principles in the shade. Holding companies with interests in diverse economic sectors are especially susceptible to such distortions, as top management statements may have little to do with ground realities in operating companies. Paucity of objective facts in seas of emotionally charged statements vitiate the stock investment ambience.

It is best for stock investors to discount personal charisma, especially when it emanates from powerful individuals well past the normal retirement age. Succession and systems are more valuable than glamorous shows, and business should add fundamental values to their stocks, rather than attend to national and social issues. Similarly, a frontal role for a Chair Person is a matter for concern, because it is not a recommended practice in professional business management.