When some change in the economy happens, it is necessary for the media to do a story. Obvious, is it not?

So they do a story and the story is not always in your interest. You have no clue whether to read the paper with the vested interest in mind or just to read the paper for news.

So let us take some typical ways how news is generated.

When Na Mo goes to Australia, there will be news items (rightly so?) about companies based in Australia, mining companies, companies which export to or import from Australia. This does not mean anything for your portfolio. So far so good.

Soon one anchor (some are called editors too) will ask an expert…’where do you think you should invest if the India-Australia ties improve’.

Fair enough from the news point of view. The answer will be ‘Infra – did you see the amount that the Aus Govt has promised to invest in India’..and so YOU are likely to be led up a path. NOTHING WRONG WITH THE DISCUSSION – only thing is it is irrelevant for your portfolio, and is completely useless for you. You would have been much better off watching Discovery channel program on crocodiles.

The MSM caters to and panders to your ‘Id’ of wanting something new, and now. Your investment portfolio has to be created by your super ego trying to tell you what can go wrong with such moves. However, the media sounds so correct and convincing that you are likely to do something stupid.

Let us take the big broader issues like ‘What if Na mo comes to power’ – so everybody and his aunt was saying ‘buy PSU shares because Na Mo will ..blah blah’ . I did buy NTPC at 116 – not because Na Mo was coming to power (that of course!!) but I was convinced that at that price NTPC was a good buy immaterial of who was in power. I sold it off at 164 or thereabouts – the jump was just too much, and hence not sustainable. Then I got a chance to buy again – and now it is back to 147.

You need to understand that the media does what is right for itself. You need to do what is good for you. Just because the PM went to the US and met Obama, it does not mean that all US based companies become a great buy. Or become a top sell.

Nothing like that happens. Price, valuation, buy back, ….still work. Will continue to work, not necessary to be reactive in your portfolio management – at least not to political news…