Ignore short-term price movements: Sharp daily or intra-daily movements are the biggest source of distraction and could drive your opinion on the markets. There are many factors affecting the short-term movement of a security, be it the cash market, the F&O market, institutional flows or systemic liquidity, besides stock- or sector-specific news. Hence, it is imperative that you consider a holistic view of things.
Media commentary: Try to separate facts from opinion. Though there is no doubt that the television media is one of the quickest sources for data on the economy or global events, the internet is preferable for the variety of content available and its speed of assimilation.
Look at the big picture: I tend to have a top-down focus on markets, and being an economist helps. This approach implicitly helps you focus on the big picture, even if you miss the short-term details. With so much information, having a meaningful framework is essential to maintain the market’s signal-to-noise ratio.
Refer to history: Market noise affects us the most when we read (and analyse) less and make interpretations based on whatever quick information is available. Having a sense of history is central to getting a right read on the markets. History does repeat itself, more often than not.
Different Conversations: Understanding markets sometimes needs a focus away from it, hence you should have regular conversations with experts from different walks of life for their views on news and events.
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