Finding symmetries in an unsymmetrical world ..

Panic, Fear ,and Greed : On being Financially literate

Posted by: ekta1007 on: September 13, 2011

It should not be a matter of surprise that though we learn Newton’s laws of motion, Bernoulli’s equation (Fluid Dynamics), speed, time and distance and internalize in our brains the information that seamlessly helps us every day–– the ping pong ball jumping back at us, pressing the pipe’s valve while trying to increase the water pressure to remove the mud stains on the tyres, or just having a fair idea about the time the car across the street would take to “hit us”  ; yet we learn little or nothing of applied Mathematics  .

Generations of unused Mathematics rotting away in the brains – simply disobey all laws of Economics, Applied mathematics, and Probability –underestimating risk, hoarding money, slowing down the Engines of Growth , in Panic or in Greed .

In IT organizations most people do not understand the financial instruments, take mutual funds for  that matter –people recklessly invest in them at the end of Financial year, to save taxes – thereby driving the prices up – and at the same don’t understand the logic of buying low, and selling high. Instead driven by greed, they invest when the market is bullish – and when panic strikes in – go raging to sell it all. Fact of Matter is, Markets REALLY need a recession – because recessions cull the non-competitive firms , permit for Market corrections and un-grounded Price hikes, and act as a catalyst for spurring new products and services; thereby making the economy stronger .

The point is : Markets thrive on incomplete information , and will never take steps to educate the consumers – simply because informed customers translates to lost Revenue, and markets thrive on Incomplete information .

If you are doing the obvious, there’s got to be something wrong with it .

So when you next pick up a stock , a mutual fund, or any financial Instrument – Stop by , and question yourself –“ Do I know enough?” – and if not – pick up the right source – and “GO” to the “School” – because learning never really stops .

And Math is NOT just for Dummies .

Ekta Grover

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