Feng Shui and the Stock Market

The Editor-in- Chief of the Benchmark magazine, a Hong Kong personal finance magazine wrote the following in her April issue editorial:

I turned on the TV one night and there was programme where callers would call in and get advice from the Feng Shui lady master who used the callers' birth dates for clues on the stock market. She even provided advice on the specific sectors these callers can consider pouring their money in. Wow! Is she even licensed, or is feng shui mastery a new exempted investment advisor category that I didn't know about? Are investors so desperate these days or advice they'd been listening to elsewhere is just not working?

I know someone who have recently sold off all his shares in the stock market based on the prediction of his feng shui master that there is going to be great crash in the Bursa Malaysia this year. This is not your ordinary Joe but someone who has helmed a few listed companies and also been an advisor to an investment bank.

Don't you think it takes a lot of faith to follow such advice and people say Feng Shui is not a religion. Of course it depends on how you define religion. No doubt the sociologists and anthropologists will have their own definition. For me, it's quite simple. Anything or anyone that you put your faith in, in order to ensure your wellbeing is your religion. It's also your idol.

Coming back to this Feng Shui and the stock market stuff, should a value investor pay any attention to it? Firstly, a value investor doesn't pay much attention to the stock market but to individual stocks. For a value investor, the stock market can remain closed for a whole year and that wouldn't disturb him/her. We look at businesses rather than markets.

So if someone predicts the market is going to crash and it does crash, the value investor will buy more when that happens. On the other hand if someone is going to predict the market is going to go up and it does go up, the value investor in not going to follow the momentum but stay put until the stocks have been overvalued and take profit. Stock market predictions does not influence how a value investor is going to invest.

I guess people are turning to these unconventional methods because the conventional ones based on Modern Finance Theory don't seem to work anymore. Analysts and economists are no better at forecasting than the Feng Shui masters and astrologers.

John Kenneth Galbraith, himself a well known economist said 'The only function of economic forecasting is to make astrology look respectable.'

Maybe China's ancient sage, Lao Tzu is right and was hitting out at modern day analysts/economists/Feng Shui masters etc when he said 'Those who have knowledge, don't predict. Those who predict, don't have knowledge.'

Finally the grandfather of value investing, Benjamin Graham said ' If I have noticed anything over these 60 years on Wall Street, it is people do not succeed in forecasting what's going to happen to the stock market.'

Whether or not Feng Shui is considered a religion, it is incompatible with the Christian worldview. God, the creator of heaven and earth is sovereign and not 'Qi'. Christians are assured that all things work together for good (Romans 8:28). It may not always seem so and this is when we need to follow the advice of St. Augustine, 'Seek not to understand that you may believe, but believe that we may understand'.

Btw, did any Feng Shui master predicted the sub-prime fiasco and the credit crisis?