Sir Isaac Newton is considered one of the greatest scientists of all time His scientific laws and inventions changed the world forever
But friends, despite being so intelligent and among the world’s biggest scientists, he failed miserably in the stock market today, in this post, we will learn how even the world’s greatest scientist couldn’t solve the puzzle of the stock market So do Read this post till the end so that you don’t make the same mistakes which Sir Isaac Newton did
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Friends, the story begins in the year 1710 When Robert Harley became the head of finance of the British Government and he found that the government is buried under debt To solve the problem of increasing debt,
Robert Harley sought help from a banker named John Blunt John Blunt started the South Sea Company in 1711 in partnership with the government The company announced that all those creditors who have given a loan to the government can surrender their debt to the company and in exchange for that they will get the company shares of the same value as of their debts To increase the interest in the company among the public the government gave the monopoly right to the company to trade with Spanish America John Blunt, on the ground of this monopoly,
started showing people the great future of the company After this, the creditors started to surrender their debts to the company and took company shares in exchange for it after some years, in 1718, The King of Britain, King George I made himself the governor of the company Seeing this, the trust of the common people increased a lot in the company and people started buying its shares And due to this, the company’s share price started to go high Seeing the share price increases, by the year 1719, all the creditors converted their debts into company shares Friends, at the same time,
one of the biggest scientists of the world and among the richest people of Britain, Sir Isaac Newton also noticed the increasing share price of the company and invested in the company hoping for its bright future On the other side, the South Sea Company came up with new methods to increase its share price
The company started giving free shares to all the prominent people and businessmen of Britain Because of this, all these people started praising and admiring the company publicly, As a result, the company’s share price started increasing rapidly and it reached 330 Pounds in March from 120 Pounds in January Sir Isaac Newton saw the increasing popularity of the company among people
He felt that the company’s share price can fall anytime, and he sold all his shares making a profit of nearly 100% But friends, this was just a trailer, the movie was remaining to increase its share price, even more, The company came up with a scheme that anybody can buy its share by paying only 20 % of its price Just after the launch of this scheme, people went mad for buying South Sea Company’s share and the company’s share moved up like a storm and reached 550 Pounds in May 1720 Sir Isaac Newton had already sold his shares
But seeing the company’s share price rising, he regretted his decision Nevertheless, he had the belief that the share price will not rise any further and it will go down rapidly But friends, the company did not want to leave any effort to lift its share price The company again launched a new scheme and decided that it will give loan to people to buy its shares The company started giving loans and now, people started buying the company’s share by its loan
After this scheme, everybody, either a big businessman or a small trader, wanted the shares of South Sea Company only Due to this immense demand, the company’s share price skyrocketed to 890 Pounds in June 1720 Sir Isaac Newton had already found the answers of complex questions of Physics and Mathematics But, he was unable to comprehend the force working behind the increasing share price of the South Sea Company’s share He was feeling really bad due to his mistake of selling his shares too early and by seeing people making easy money in the company’s share
At last, Sir Isaac Newton pulled himself out of his mental inertia, and in an attempt to rectify his mistake, he invested way more money than before in the company But, he didn’t know that the company’s share price was just about to reach its peak For some time, Sir Isaac Newton felt right about his decision of buying the shares again When in August 1720, the company’s share price reached 1000 pounds He started to feel that the company’s share price will go only up and therefore, the idea of selling his shares never came to his mind At last, in August 1720,
the share price started to decline after reaching a peak of 1050 Sir Isaac Newton felt this downfall was temporary and he did not sell his shares But friends, this time the company couldn’t come up with new schemes, and in one month, that is, by September the share price dropped from 1050 Pounds to 175 Pounds
The Government tried hard so that the trust of people in the company could increase but this did not happen and by December 1720, the share price fell to 124 Pounds thus, before Sir Isaac Newton’s very eyes, his 20,000 Pounds vanished whose today’s value is close to 30 crore rupees
Friends, this is beyond doubt that Sir Isaac Newton is one of the most intelligent persons in the world till now and the way he changed the world, perhaps no one can ever do it But despite all this, he had to suffer such a big loss in the stock market Now, the question is why it happened? And how despite being so intelligent,
Sir Isaac Newton couldn’t understand the stock market So friends, the answer to this is Sir Isaac Newton couldn’t control his emotions and made three mistakes among the 10 biggest mistakes of investing, And only because of these mistakes, he suffer such a big loss,
First of all, he invested in the South Sea Company without the knowledge and doing any research If Sir Isaac Newton had seen the financials and the profits of the company, then perhaps, he would never have invested in the company Thereafter when he sold his shares making a 100 % profit, he did not feel good seeing the share price increasing and falling into the gravity of his emotions, he bought back the shares at a very high price Still, he could have saved his loss
if he had sold his shares just when the price started to go down But, this time he did the biggest mistake of not accepting the fact that he did a big mistake by buying shares at such a high price And he remained hopeful that the share price will rise again But friends, nothing as such happened and Sir Isaac Newton had to bear a loss of 30 crore rupees In this way friends, to become successful in the stock market, emotions matter more than intelligence If we can control our emotions and do not commit the biggest mistakes of investing then we can become a successful investor,
Thanks, To Read
