The Power of Right Questions
Understanding Patterns and Questions
If I ask you, "What is 2 plus 2?" you'll quickly say, "4." That's simple math. There's no confusion.
Now let me change it a bit. Suppose I ask: "What comes next in this series: 2, 4, 6, 8, ?" You'd probably answer, "10." That's right because you identified the pattern. Each number increases by 2, so the next one is 10. This is not just math; it's reasoning. You used logic to continue the sequence.
But here's where it gets interesting. What if I ask: "What comes next in this series: 2, 4, ?"
Now things get tricky. Is the answer 6 because the pattern of plus 2 continues? Or could it be 16 if the sequence is actually squaring the previous number? With only two numbers provided, we don't have enough information to be sure.
The Real Problem
This teaches us something important. Sometimes the answer isn't the actual problem; the real problem is whether we fully understand the question.
Think about it. In the first two cases, the question was clear and solvable. However, in the third case, we couldn't solve it because the question itself was incomplete.
This situation shows we don't have enough information to identify the exact pattern. We would need to find the next number in the series. If that number confirms a pattern, we could then guess the fourth number. If it raises more questions, we would keep asking for the next number until we spot and confirm a pattern.
Information and Prediction
There are many ways to think, predict, and use math to anticipate the future. For example, Ravi took a cab from Delhi to Gurugram. The cab traveled at an average speed of 10 KMPH over a distance of 12 KM. Thus, we can conclude that it would take Ravi 1.2 hours to reach his destination.
We can only make these conclusions when we have sufficient information.
When we talk about the stock market, what do we actually do?
We try to predict what will happen next in a given time frame. We will discuss this more later.
The Critical Question
The critical question now is, "How did you understand all the questions I asked above?"
Most people are looking for answers—in the stock market, in their businesses, in their relationships, in their careers, and in their jobs. Interestingly, they often don't even know what question they are trying to answer.
It's also worth noting that this confusion is why people rush towards guaranteed strategies; they don't even know the question.
Can you tell me the difference between knowing the question and understanding what the question really is?
Someone who knows English can read the questions I presented and recognize them. But do they grasp the meaning behind those questions?
You understood these questions because you previously studied math and reasoning. If you hadn't, you might not have made sense of them.
Why Understanding Matters
Why is this understanding important?
When you know and grasp what the question is, you will find ways to get to the answer. Now, we need to ask, "Did anything in your past prepare you to understand stock market questions?"
In this module, we will build that understanding and lay a foundation for you to grasp the questions. As mentioned, once you comprehend the question, understanding the answers becomes much easier. A common mistake in teaching or learning about the stock market is starting with the answers, which can lead to confusion instead of clarity. All the answers often generate more questions.
The Basics of Stock Market Understanding
To understand maths questions, we learnt the number system. To understand reasoning, we developed logical linking, learnt basic maths.
Now, just as they were the basics of maths and reasoning, what are the basics of the stock market?
That would include a basic understanding of:
- Business - How companies operate and create value
- Money - Its nature, flow, and impact
- Banks and the central bank - Financial system infrastructure
- Economics - Principles governing resource allocation
- Economy - The bigger picture of economic activity
- International trades - Global interconnections
- Tax - Government's role and impact
- Maths and reasoning - Analytical tools
- Policies - Regulatory framework
- Role of Technology - Digital transformation
- Psychology and behavior - Human decision-making
- Emotions and our actions & reactions - Behavioral finance
- Effects of money on our emotions, decisions, choices, freedom, family, and future
- Everything above TOGETHER, in normal day-to-day operations around us, i.e., outside of the stock market
- Some miscellaneous stuff - Unexpected connections
Who Becomes a Trader?
Do you know who become a trader?
A person who has an excellent understanding of the said field, sector, industry, etc. For example:
- Vegetable traders know best about the vegetable market
- Car traders know best about the car market
- And so on...
That means, a person who wants to become a trader must have a solid understanding of selected products/services/sector/field/industry.
Who Becomes an Investor?
Do you know who become an investor?
A person with vision for long-term value creation, the ability to see beyond short-term noise, and patience with cycles.
Traders understand markets in detail. Investors see value over time. To truly succeed, you need both perspectives—the sharp eye of a trader and the long vision of an investor.
Your Journey Ahead
Our journey through Arthasutra is about developing these perspectives together. Each article will challenge your thinking. Eventually, you will find yourself asking better questions and answering them with clarity.
This is not just a journey into markets; it is a journey into freedom of thought, where wisdom becomes your true asset.
What's Next?
In the next article, we will dive into our education and upbringing journey to explore some realities about ourselves.
Key Takeaways
- Questions matter more than answers - Understanding what you're really asking is the first step
- Patterns need sufficient data - Without enough information, multiple interpretations are possible
- Stock market success requires foundational knowledge - Like math needs numbers, markets need comprehensive understanding
- Both trading and investing perspectives are valuable - Short-term precision and long-term vision work together
- Learning is a journey - Building understanding step by step leads to clarity
Reflection Points
- What questions about the stock market have you been trying to answer?
- Do you really understand what those questions mean?
- Which of the 15 basic areas do you need to strengthen?
- Are you more naturally inclined toward trading or investing mindset?