Richard Jewell noticed a suspicious object.
July 27, 1996.
Summer Olympics, Atlanta, USA.
Richard thought it was a bomb. He called for the bomb squad.
At the same time, he started clearing the crowd that had assembled in the area for post-game celebrations.
But things happened too fast.
The suspicious object burst. It killed 1 person and injured over 100 people.
News channels rushed to report the event.
Richard Jewell had previously worked as a jailer. That experience helped him get a role as a security officer in the Summer Olympics.
A day after he discovered the bomb, he was hailed as a hero. A newspaper wrote about him and his efforts.
And then, everything changed quite rapidly.
A newspaper leaked some information it had gotten. According to this leak, the FBI suspected Richard was behind the bombing.
Richard went from being the hero to the devil.
The FBI searched his house thoroughly. His car was seized. Four big news channels stationed their people around Richard’s house.
Richard was in his house, and could go anywhere – because they had not arrested him yet.
He mostly stayed inside because whenever he stepped out, he was chased by the media.
The media found someone who knew Richard. That person told the media that Richard owned a bag similar to the one used in the bomb.
Someone else told the media that he seemed very eager and energetic on the day of the blast.
All of this was broadcasted to the entire world. Anger and emotions built against Richard Jewell.
3 months after the blast, the FBI reached out to his lawyers and gave their verdict: the FBI thought Richard Jewell was innocent.
It was only 9 years later, in 2005 when the real suspect was caught and charged.
But the damage was done.
Richard’s image had been tarnished and reversing that was extremely difficult.
Richard complained that many people recognised him. He went on a date with a woman and she later published the accounts of the date in a magazine.
He said he had become more suspicious of people than ever before.
Richard sued many of the media outlets for defaming him – and settled with many of them for undisclosed amounts of money.
He died at the age of 44 from a heart attack.
Richard Jewell’s case highlights what happens when emotions – and not facts – drive a large number of people into making bad decisions.
We see such sways in the markets often.
Stocks
One classic example of this is the Zoom stock.
During the pandemic, many businesses were doing poorly. But video-conferencing was being used by a huge number of people.
Many investors thought investing in Zoom stock was a great idea.
But what they forgot to factor in was that everybody thought the same – and bought the Zoom stock.
It led to the stock being overvalued.
Towards the end of 2019, Zoom’s stock price was around $65. This was right before the pandemic hit.
Towards the end of 2020, Zoom’s stock price was over $300.
Today, it is hovering around $60.
Other stocks like Beyond Meat and Peloton have also seen their stock prices go up, and then come down.
But before the stock prices came down, many investors bought these stocks based only on optimism and euphoria, and lost money.
It is not just small investors.
Big institutional investors also fall prey to such emotionally driven investments.
In the start-up world where venture capitalists invest, it is a common observation.
Companies like WeWork were once valued at nearly $50 billion. Today, it is not even worth $1 billion.
A company need not fail for it to be swayed by emotions.
Many great stocks go through periods when their stock prices get pushed up and down based only on emotion.
If an investor is investing in a stock with long-term conviction, it is a different matter.
Many investors try to make a quick return by buying and selling stocks that are going up.
At different times, even stocks of companies like Tesla, Nvidia, and Netflix have moved simply because too many investors were ‘feeling’ positive about these stocks.
A large number of people getting swayed only by emotions is never a good sign — at least not in the stock markets.
This is more true in case of stocks that are popular in the news and social media.
We need to remember: “you need to keep raw irrational emotion under control”, Charlie Munger.
We also need to be careful when investing in a stock that is too ‘popular’.
The images above were generated using AI tools.
Quick Takes
+Companies and various services worldwide were impacted due to outages affecting Microsoft 365 apps and services.
+India’s forex reserves rose by $9.69 billion in a week to reach a new all-time high of $666.85 billion as of 12 July.
+For Netflix, India ranked 2nd in terms of paid net subscriber additions globally and 3rd in revenue percentage growth in the April-June quarter.
+Domestic air passengers increased by 5.76% year-on-year to 1.32 cr in June. IndiGo had the maximum number of passengers at 80.68 lakh (60.5% market share): DGCA.
+India’s pharma exports increased by 9.67% to $27.9 billion in the financial year 2024.
+India's trade deficit stood $20.98 billion in June vs $19.19 billion in the same month last year.
+India’s wholesale inflation stood at 3.4% — highest in 16 months.
+Xiaomi's profit in India fell 77% to around Rs 200 cr in the 2023 financial year. Revenue from operations fell by about 32% to Rs 26,697 cr.
+BluSmart has raised Rs 200 cr from key investors such as Swiss investor ResponsAbility, MS Dhoni's family office, and ReNew Chairman Sumant Sinha.
6-Day-Course
Theme of the week: types of equity mutual funds
We’ve reached the end of this week’s course that started on Monday. Here’s a test you should take. Get pen and paper!
Question 1:
A large cap mutual fund should invest at least ___________ % of its money in the stocks of 100 biggest companies.
-100
-50
-80
Question 2:
As compared to mid-cap companies (101-250th), small-cap companies (smaller than top 250) are considered to be less riskier investments.
-True
-False
Question 3:
Mutual funds that mandatorily have to invest 65% of the money in shares of companies are called as _______________ funds.
-Multi-cap
-Flexi-cap
-Large-cap
Question 4:
In ELSS funds (tax saving mutual funds), you cannot withdraw your money before a 3 year lock-in period.
-True
-False
Question 5:
Funds that only invest in companies from a particular sector are called as _______________ funds.
-Focused
-Contra
-Sectoral
Answers:
Q1: 80
Q2: False
Q3: Flexi-cap
Q4: True
Q5: Sectoral
The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.
Team Groww Digest