On 7th June 1996 the open-outcry trading floor of the JSE in Johannesburg was closed and replaced by an electronically driven, centralised, automated trading system. Since then all trades have been carried out electronically but before that it was a manic, noisy affair. At 09:00 the bell would ring and traders from all over would scream out their buy and sell orders, bumping and shoving one another and running around to get instructions from their clients. The dust would only settle at 17:00 when the closing bell sounded and calm descended over the JSE floor.
So things are different these days; the physical element has been replaced by an electronic one and traders sit in soundproof, air-conditioned rooms – but the noise is ten times worse. Now there are billions of people all over the world who scream out their opinions on Twitter, Facebook, Spotify, YouTube, Instagram and live TV stations. There is no opening or closing bell, the noise continues 24/7. When Hong Kong closes, Europe opens. When Europe closes, The USA opens. Trading can be done around the clock and the anonymity of social media has resulted in ridiculously misleading, i.e. fake, news being circulated as the truth by trolls hunting clicks and reactions.
This tsunami of opinions, lies, comments and speculation becomes so overwhelming that one sometimes has to just walk into the office, close the door and stare out the window until calm returns. The good news is that one can actually ignore all the daily noise, unless you are a trader.
As an investor, you can focus on the longer-term trends and cycles of the markets and leave the daily movements to the short-term speculators. It is a fact that investors who ignore the noise and commit to the longer term, outperform those who try to chop and change over the shorter term.