Wealth transfer from the Less-informed to the well-informed

I recently had a WOW!!! moment when I was reading the book “ALL I WANT TO KNOW IS WHERE I'M GOING TO DIE SO I'LL NEVER GO THERE." By "Peter Bevelin". The book is a conversation that takes place between, Warren Buffett, Charlie Munger, a librarian and a Seeker. I was able to connect the dots on what is written in the book to what is happening in the stock market now

The following 500 words are from the book and this is probably the most profound and earnest explanation of what is happening in the stock market ?

Excerpt Form the book, Page number - 42

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BUFFETT "People always make the same mistakes."

MUNGER "YOU can see the results of not learning from others' mistakes by simply looking about you. How little originality there is in the common disasters of mankind —drunk driving deaths, reckless driving maimings, incurable venereal diseases, conversion of bright college students into brainwashed zombies as members of destructive cults, business failures through repetition of obvious mistakes made by predecessors, various forms of crowd folly, and so on."

"The other aspect of avoiding vicarious wisdom is the rule for not learning from the best work done before yours. The prescription is to become as non-educated as you reasonable can."

BUFFETT "I think you can learn a lot from other people. In fact, I think if you learn basically from other people, you don't have to get too many new ideas on your own. You can just apply the best of what you see."

LIBRARIAN "And the most efficient way is to learn from wise people —those who already have figured out what works and not and their lessons."’

BUFFETT "I would look for the best practices and 1 would discard the rest... Look at effective individuals and try to figure out why they're effective."

SEEKER "Yes, like you guys." "Anything else that is useful?"

MUNGER "I think history's very helpful. It enables you to keep things in perspective...So the history of civilization —and the history of finance and investing—is very useful."

BUFFETT "I like history. I like financial history particularly...it's useful to realize how extraordinary things can happen occasionally."

LIBRARIAN "And it helps us to avoid thinking 'but this time it is different.' History mostly repeats itself even if it's never exact. As the Greek historian Thucydides wrote, 'The events which happened in the past and which (human nature being what it), will, at some time or other and in much the same ways, be repeated in the future. But it seems that every generation forgets the misery of the past and this is maybe why some crisis occurs regularly. Every generation has to get its own head chopped off in its own way."

MUNGER "Why do we have to repeat the same old follies over and over again in a thin disguise? But evidently we do."

BUFFETT "What we learn from history is that people don't learn from history."

LIBRARIAN "And that everyone is wise after the event. As the proverb says, 'After the ship has sunk everyone knows how she might have been saved.”'

SEEKER "I told you so."

LIBRARIAN "Winston Churchill said it well, 'Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong — these are the features which constitute the endless repetition of history."

SEEKER "I get the message."

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Why do I feel the above expert is insightful and timely?

1)????? There has been record inflow of SIP (Systematic Investment Plan) which are giving mutual funds / DII (Domestic Institutional Investor) to keep pumping capital in to the Indian Markets on the contrary, FII (Foreign Institutional investors) have been selling and that is on a record high too

2)????? IPO (Initial Public Offering) and QIP (Qualified Institutional Placements) are at all time high which indicates, promoters are rising money and giving up stake in their companies ?

In both cases, it is a clear, wealth is being transferred from the less-informed to the well-informed and I will explain this in detail

There are four key players in the stock market broadly,

1)????? Promoter - Owner of the business and is most informed of what is happening in the business

2)????? FII - Foreign investors are second best informed and why do I put them ahead of DIIs? DIIs are registered in India and raise money through SIPs from public and are hence regulated and accountable. FIIs on the other hand are foreign inflow of dollars and are less regulated and accountable. This gives them a clear edge to access insider information and be better informed ???

3)????? Mutual funds / DII – Have access to information what is publicly available, and have experts who research sectors and companies, and are professionals in managing SIP inflows

4)????? Retail investor – Have access to information that is publicly available similar to DII and manage their own money

When Promoter and FII, who are well-Informed players are selling, Mutual funds / DII and Retail investors are buying and it is clear that, wealth is being transferred from the less-informed to the well-informed. I can relate this to “Every generation has to get its own head chopped off in its own way." (From the book excerpt above)

There is a saying, that stock market is "more a place where wealth is transferred than created" and this is precisely what I am witnessing now. I am not an expert in stock market. My pursuit, is to learn from wise people who have already figured it out

One of the most propagated statements by people who manage other people’s money (fund managers) is “No one can time the market”. I agree, it is not possible to time the market on a daily or weekly basis, but you certainly can do it on a monthly or quarterly basis. When the Promoters and FII are timing the market to sell, Retail investors are told to not stop their SIP when the Market falls and isn’t that a brilliant design for wealth transfer? ??

For those of you who know me well, my love for HR and technology precedes all and once a while, connecting dots in investing helps in understanding the world around me better.