Financial apps are no guarantee of great investments; ability to think independently can make you a successful investor The key to successful investing isnt about having the most sophisticated tools but about developing and maintaining a fundamental understanding of what youre doing with your money
Dhirendra Kumar
CEO, Value Research
Recently, I was reading an essay by Paul Graham, tech investor and Co-founder of Y Combinator, where he makes a striking prediction about writing in the age of AI. Graham suggests that in a couple of decades, there won’t be many people who would be able to write well. With AI tools readily available to handle most writing tasks, he predicts a world divided into ‘writes and write-nots’—those who choose to maintain and develop their writing abilities and those who completely delegate it to AI.
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Graham, known for his incisive analysis of technology trends, makes a great observation: “Writing is thinking.” He quotes computer scientist Leslie Lamport, who puts it even more bluntly: “If you’re thinking without writing, you only think you’re thinking.” This means that the division Graham predicts isn’t just about writing, but thinking ability.
This insight perfectly mirrors a fundamental truth about modern investing that many struggle to grasp. Just as AI tools can mask, but not replace, the need for clear thinking, investment apps and platforms can mask, but not replace, the need to understand basic financial concepts.
Consider someone who has just started his investment journey. Today, they’re immediately presented with an array of sophisticated investment apps, each promising to make investing as easy as ordering food online. These apps offer beautiful charts, one-click investing, and AI-powered recommendations. The interface is slick, the execution is seamless, and the experience feels empowering. However, just as using AI to write doesn’t teach you how to think clearly, using investment apps don’t teach you how to understand value, risk or market behaviour. The tools can execute your decisions perfectly, but can’t help you make wise decisions.
I’ve seen countless investors make this mistake. They master the tools, but not the principles. They can navigate complex trading platforms, but can’t explain why a company’s stock price might be too high or too low. They can execute sophisticated options strategies, but don’t understand the fundamental risks they’re taking.
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This insight is particularly relevant in today’s market environment. With the markets having gone through a year of significant volatility, many investors are drawn to tools promising to help them ‘optimise’ their trading or ‘time’ their investment. Whether the market is near its peak or in a dip, there’s always a new app or platform promising to make you a better investor.
However, as Graham warns about the danger of outsourcing thinking to AI, we should be wary of outsourcing our investment thinking to apps and platforms. The key to successful investing isn’t about having the most sophisticated tools, but about developing and maintaining a fundamental understanding of what you’re doing with your money.
I’m saying this as someone who has spent decades building tools to help investors make better decisions. However, I’ve always maintained that these are tools for supporting investment thinking, not replacing it. The best users of our services are invariably those who use our data and analysis to enhance their understanding, not those looking for quick answers without comprehending the underlying principles.
Like the most important aspects of writing, the biggest investment gains come from clear thinking. Understanding why and what you’re investing in and how different investments behave under various conditions is crucial. These insights can’t be delegated to an app.
So, my advice is to start with understanding the basics. Learn how businesses make money. Understand how different types of investments work. Know why markets go up and down. Then, by all means, use good tools to execute your strategy, but never let the tools do your thinking for you.
Keep your investments simple enough to be able to understand and explain them. Review your portfolio regularly, not just using charts and graphs, but carefully considering whether your investments still make sense for your goals. Make changes based on your understanding, not just because an app suggests these changes.
Remember, in both writing and investing, the tools should serve your thinking, not replace it. As Graham predicts, in a world of ‘thinkers and think-nots,’ successful investors will maintain their ability to think independently about their investments, rather than simply delegating their decisions to increasingly sophisticated tools.
The Author is CEO, VALUE RESEARCH
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This story originally appeared on: India Times - Author:Faqs of Insurances
