11 August, 2020

Why do investors need to be HUNTER rather than a FARMER? - Nishat Taslin Mohona

 



Nishat Taslin Mohona

Session: 2017-2018

Banking and Insurance

 


Many of us are known about Investment and its strategies some of are very usual. But unaware about how we need to manage the investment and in terms of investment how their behavior would be. So, here we put light on the behavior of investors. Before going on, one needs to understand two things. First one is passive management and the second one is active management.

Now, passive management is to manage investment in a traditional way. It trends depending on past results and past methods. Research and development are hardly followed here. Active management is a sophisticated way to manage investment where the manager depends on analytical research, forecast, applying his own judgment and experience. It’s a creative and innovative way. It’s expensive as well.

 Now focusing on the main fact, what is FARMER and HUNTER in investment? Farmers generally work in a boundary, where they have specific types of risks. Normally they know how to deal with this risk. That’s why farmers reflect on passive management. Haunting is generally considered as a risky job where a hunter needs to go beyond the boundary. They hunt outside applying their experience, analytical research and judgment. They can't rely on previous outcomes or events.

Why is hunting better in investments? Investors who don't apply much effort on investment and rely on past events will not be beneficial much. Because humans can’t see the future, what we can do is to predict. This prediction needs to be based on research. When an investor implements passive management, it becomes more certain for maximum profitability. There will be ups and downs. But who is able to hunt more will win in the end. Thus, investors can beat the average Investor.