With the advent of ‘knowledge era’ and use of computers; the speed with which multitude of events started taking place, became difficult for the “Slow Movers” to keep pace with. This is mainly the period between 1995 to, say 2005.
Indians by nature and by tradition are “Slow, Steady and Conventional”. Especially the middle class, about whom we have discussed earlier, are/were happy to remain in their comfort zone. In the changed scenario, they were mostly in a thaw. They preferred to remain as spectators (and critics!) rather than choosing to become players. They were caught in a Catch – 22 like situation. While on one hand they couldn’t resist their temptation to “reach out and grab” the opportunities, but on the other hand, their inertia, sluggishness and lethargy stopped them from gaining the desired knowledge base to grab the opportunities.
This resulted into their ‘apprehensions’ in every move. And when apprehensions take over then the “psychology of E F G H” starts dominating your actions. Let’s see what this stands for :
E : Emotions
F : Fear
G : Greed
H : Hoping against hope.
When the above factors take over then the decisions, specially in financial matters, result into disasters. People became victims of ‘heresy’ and ‘false propaganda’. In the absence of educated financial advisors and ‘factual data analysis’; the investors depended more on their emotional instincts while making an investment.
Similarly, ‘fear element’ prevented them to think “out-of-the-box’. As a result, many opportunities were lost.
Quite often, greed became predominant while making an investment. Because of this, bad investments were made on false promises of getting abnormally high returns. Investors suffered heavily due to sheer greed.
Finally, hoping against hope. Many investors preferred to stay with bad investments because of a false notion that things will turn for the better. Superstition made them believe on their zodiac signs and planetary positions. Palmists and astrologers were consulted in place of financial advisors. Hoping against hope!!
BUT SOON, THE DARK CLOUDS STARTED CLEARING!
By this time, another generation of young people came to the forefront. They were better educated, more knowledgeable, adequately aware, inquisitive, energetic, aggressive, ambitious and upright. Learning from the experience of their elders, they started to critically analyze the products of investments. As a result, logic prevailed and replaced ‘E F G H’.
Government too became active in the financial sector. Because of many misappropriation of funds, public money got trapped into dubious investments resulting into heavy losses. The fraudsters took full advantage of the loopholes in the controls of investment sector and looted public money. An interesting analysis says that those affected most, suffered from E F G H syndrome.
For enforcing financial discipline, strict rules were laid down in banking, insurance, capital market, equity market, money transactions etc. For check and control, a number of gov’t departments were set-up who worked as ‘watchdogs’. Simultaneously, it was also felt that public in general, needed to be educated. By this time, a number of top ranking global investment and insurance companies had also stepped into our country due to globalization.
TILL NOW, WE HAD BEEN DISCUSSING ABOUT WHAT IS ATTITUDE AND THE FACTORS WHICH SHAPE THE ATTITUDE OF A MIDDLE CLASS INVESTOR. IN THE NEXT POST, WE WILL DISCUSS ABOUT THE EMERGING SOLUTIONS AND OPPORTUNITIES IN THIS FIELD.
TILL THEN, PLEASE SHARE YOUR PERSONAL EXPERIENCES ON THIS. I REQUEST YOU TO FORWARD THIS POST TO YOUR LIKE MINDED FRIENDS. I ALSO INVITE YOUR COMMENTS AND QUERIES, IF ANY.