Grin and Bear it.

3 March 2008

The world markets get a Bear hug, Bear Stearns goes for just over 1% of what it was valued at about a year ago, sub prime domino doesn’t stop, we in India are not as decoupled as we thought and the rest of it.. you’ve heard. A bit too late but you have. And you are not amused. Some are! And they’re grinning. 

Ok this may really get some peoples goat big time. I’ll expect the curses fly in thick and fast. A friend of mine asked me why I get a wry grin on my face whenever the stock market crashes. Especially since I have money invested there as well.

Its coz I consider the share market an idiot’s playground. If you don’t have the imagination to create, the grit and stamina for labour, the dedication and perseverance to invent, the humility, ability and skill to toil, the patience for an original idea then you put your money on a bandwagon that everyone is on and watch it multiply. Honestly, how many brokers, traders, fund managers have you interacted with in your life who kept you rapt with their wit, wisdom or insight?

I’m not saying its not hard work. Staring into a screen is punishing to the cervical vertebrae, the eyes as well I’m sure.

As long as it sounds and looks complicated with jargon about futures and options mid caps small caps derivatives PE FII debt equity etc etc etc one automatically assumes a punter is a pundit and knows what’s up and we exist in a fools paradise.  Alas. One humble little audience member summed it up best at the World Economic Forum. After listening to a seemingly informed talk by seemingly informed economic wizards for a bit, he gets up and says – “I was here last year and not one person including many of you even mentioned the word sub-prime. Was that a word you were even aware of then?”

The glittering panel looked suitably embarrassed and squirmed. I’m sure there were others grinning.

But the fundamentals are still strong say some stoically.

Now when the nature of markets is such that an AP Bardhan from the CPI saying that the “markets can go to hell” leads to a market crash (as happened a year or so ago) with analysts like Shanker saying on air that a tin pot dictatorship like Pakistan is better than a democracy where such ridiculous freedom of speech by lefties causes markets to crash - he gave the example of a profitable and stable stock market in Pakistan (no kidding, he said that. On air!! And not one business journalist thought that was a statement worth zoning in on for a grill session), what kind of fundamentals are these? Why do wealth managers have such dictatorial tendencies? Because they want guarantees on trading anything from the right to pollute (they call it carbon credits) to drinking water to derivatives on ice cream prices and power bonds and wheat futures zinc copper you name it. But things don’t always pan out as planned.

Now see, in a world such as ours where over reported remarks can send the digits spiraling out of control or more serious sub prime crises or smaller anomalies or earthquakes or lippy politicians giving outside support or “anchor investors” as famously pointed out by the outgoing SEBI chief talking up and talking down stocks or vindictive industrialists or just plain and simple human greed - can make the market turbulent, then there are no certainties. And we are in the midst of a social set bred on assurance wanting guarantees. Classical economics taught us that profit and interest is the reward for risk bearing and uncertainty. And in ensuring that profit is guaranteed individuals and Corporations resort to whatever it takes. Many commercials that tout financial expertise spout ridiculous claims.

Checked out Anupam Kher selling us financial tips lately – “Ghar baithe crorepati ban joa.” Sit home and become a millionaire overnight. Now that’s the commercial of an apparently respectable, responsible, financial service with accomplished suit clad analysts I’m sure. And they’re telling us sit home and chill we’ll make the money for you. A sucker is born every minute and someone is grinning every second and not just on his way to the bank.

The BSE is in a desperate battle in the High Court since they don’t want to comply with a Central Information Commission order. They want to be kept out of the RTI’s (Right to Information Act) purview. I wonder why. Is it because :

a. It’s completely random with everyone clueless about “trends”?

b. its not clean and someone is up to manipulation?.

c. both of the above.

Whatever the case may be, you’ll still hear many more wise words. Financial punditary dear friends is the art of sounding smart in retrospect. But I’ll leave that to the experts and stick to faltu fundamentals which tell me the market is an idiot’s playground and idiot money is unreliable, fickle and erratic, and right now the play ground is packed to capacity.

At the first crash pundits said it’ll stabilize at 18 and bounce back, then they said it’ll stabilize at 17, ten 16, 15,14 now you here nervous whispers of 12 but what’s missing is the sheepish smiles. There’s still the swagger - the arrogance of a fools confidence, not that I think there’s anything wrong with idiot playgrounds, I’ve had my best fun on idiot playgrounds but just as long as we know, you have to grin and bear it.