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Don't touch that dial
On India's fast-growing economy, the 1990s tech bubble, and patient investing
While India's per-capita GDP of $6,100 doesn't make it a wealthy country, it does place the country squarely in what the World Bank defines as the global middle class. And it's on a strong upward trend.
■ One of the characteristics of a middle-class country is that the broader public possesses the resources to set money aside for investment. And that is reflected in the news that tens of millions of individual trading accounts were opened there in 2021. Such broadening of access to the economy is generally a good thing: Capitalism can do a lot of good when it's democratized.
■ But it's also a familiar tale that any mass movement runs the risk of attracting people who exploit the knowledge gap between their own expertise and that of a flood of novices. Enthusiasm can overtake education and that can have terrible consequences for those who get swept up. America's own experiences with the 1990s tech bubble and the current cryptocurrency boom are just two good examples.
■ Thus it may be worthy to applaud the approach adopted by Zerodha, one of the country's online brokerage firms. Instead of enticing customers to engage in frenetic trading, they're actually trying to use design features to make users slow down and take a more patient approach to investing.
■ Zerodha observes that it is in their own best interest to cool investors' passions so that they don't find themselves turned off by big, traumatic mistakes early in an investing experience. And good for them.
■ What's in a company's best interests in the short term is often not the same as what will serve it best in the long term. The same goes for individuals, and the same goes for countries, too. Patience is too often in short supply, so we shouldn't hesitate to cheer for the long term. The lure of a market with more than a billion potential customers must be great. The patience to try to avoid creating a billion sad stories is something commendable.