Nonstop Nonsense

“Charlie Chaplin once said ‘I remain just one thing, and one thing only — and that is a clown. It places me on a far higher plane than any politician'” said Jigneshbhai, my broker friend as we met for our weekend coffee. He was musing over the happenings of the past few days apparently.

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“But it’s getting increasingly difficult to differentiate between a clown and a politician nowadays” he smiled, looking at Swami and me. For a change this week, he had started talking and we were the ones silently sipping our coffee.

But Swami was least interested in the political circus and was waiting with his questions.

“I love Charlie Chaplin. But honestly, there’s been so much happening over the past few months, that there’s been more to worry than talking about comedy” he said, quite satirically unlike his regular style.

“Oil prices have been fluctuating, the populist budget is done, the RBI has reduced interest rates a bit as inflation is down but then maybe so is growth. And now we have the worst terror attack on our paramilitary and talks of war. Plus there is a US-China trade war. And there are elections coming up in a few weeks, and we aren’t even sure if the current government will be back!!” Swami was clearly exasperated by the set of events over the last few months and understandably, perturbed about what seemed like a fairly uncertain time for an investor.

He paused for some breath, and I looked towards our broker friend to say something.

“After Charlie Chaplin, there was another clown who made me laugh. Do you remember that slapstick guy in Didi’s comedy show?” Jigneshbhai asked, still stuck in his comic musings. Almost on second thought, he added, “But our new age clowns and Didi’s can’t be matched” he continued, looking at us with a wink in his eye and a wide smile.

But his smile quickly went away when he saw Swami stare at him, clearly not amused.

Here he was talking about all the important happenings impacting his investments, and Jigneshbhai was smiling thinking about his comic stars, old and new.

Realizing the mood difference, our broker friend acknowledged Swami’s concern, but didn’t take it seriously. There was a slight longish silence as usual, while we waited.

“Of course, there’s been a lot happening. But eventually all of this won’t matter – for your investments. You will hardly remember this after a decade or two,” Jigneshbhai assured us, always talking in time frames which put Swami off.

“Who knows who will be alive at that time? I want to know what I should do now, or the next few months at best?” Swami revolted, despite our broker friend’s long-term assurance.

“Well – that’s true, but then on that, I don’t have any answers for you” said Jigneshbhai, his mood turning from a cheerful one to slightly pensive. Thinking about Chaplin and Didi surely got him more laughter than this talk of recent happenings for sure.

While Swami, I and our broker friend were sitting silently sipping our coffee, the wealthy man in the sprawling bungalow came across to our table. Apparently, he had been listening to our conversation.

Though admittedly, our conversation today was more like Jigneshbhai’s monologue on his comic heroes and Swami’s rambling on unsettling happenings of recent times.

So the wealthy man quietly sat with us for a few seconds, and just as we were getting ready to leave, he left us thinking with what he said. “Charlie Chaplin said that life is a tragedy when seen in close-up, but a comedy in long-shot. For your investments, all of this, after a few years, will seem like Nonstop Nonsense!”

Of Artificial Intelligence, Natural Stupidity and a Higher Wisdom

“Artificial Intelligence is going to completely change investing” said Swami excitedly as we met for our coffee. Jigneshbhai did not react, and continued sipping his black coffee, as usual. Swami was not the one to be discouraged by that, at least immediately. So he continued with even more enthusiasm.

“Machines will be reading through stock prices and market movements and predicting what’s going to happen next!” he proclaimed.

Still seeing no response from our broker friend, Swami turned to me and said “With Artificial Intelligence technology, humans are going to be redundant.”

I gave him a polite nod, while trying not to take sides. He quickly realized I had no idea about this AI and investing stuff, so he turned impatiently back to Jigneshbhai.

“So are you going to say something or just stay silent?” Swami asked, with a tinge of protest.

Jigneshbhai looked up and finally said, “Yeah, machines are getting smarter.”

Happy that he had finally got some response, Swami slowly got ready for what he thought was going to be a long argument with Jigneshbhai.

“I read that AI programs will read through earnings reports and identify trends. And AI will also track social media and measure sentiment about a company.” Swami happily boasted of his new-found knowledge.

He wasn’t done yet though. “And so many news reports on a company or a sector come out every day. AI will go through all these things and predict how it will impact prices in real-time.”

I nodded at Swami in appreciation, making him feel good about his knowledge and that he had a receptive audience, though I was a relatively easy audience to impress.

Jigneshbhai though didn’t seem too impressed. Turning to him, Swami confidently said, “So with all this analysis and real-time prediction, this artificial intelligence is going to change the face of investing!”

Swami seemed done with his side of the argument, now expecting Jigneshbhai to start. But all that our broker friend nonchalantly said was “Maybe, but more likely not.”

Obviously this wasn’t acceptable for Swami, and even I expected a more elaborate response. So we waited for Jigneshbhai to say more.

After a longish period of silence waiting for him to speak, our broker friend finally said, “Investors don’t need to increase artificial intelligence. All they need is to reduce natural stupidity.”

Swami and I looked at each other confused. Swami had read so much on AI, and the whole world was gung-ho on how AI was going to impact everything, and here was our broker friend more worried about natural stupidity! Before I could say anything, Swami was ready with his question.

“What do you mean? AI is not going to change investing?” he asked.

Again he got a smile from Jigneshbhai. Again we waited for him to speak. Again there was a longish silence.

Jigneshbhai finally spoke.

“Well, it may change trading. They anyway look for so many variables like MACD and moving averages and global cues and what not! Now they can add trends from news and earnings reports and social media sentiments to that mix if it suits them. Someone I am sure will come up with software to do it and sell it.”

He said this with a sense of wry despair. Swami and I were thinking about what he said, and thought perhaps he wasn’t wrong. It looked like Swami was also beginning to question his recently acquired knowledge.

Meanwhile, our broker friend continued.

“But for investing, all you need is to avoid natural stupidity. I hope they come up with some AI technology to detect that!” he said, and laughed loudly.

Just as he was laughing, Swami and I saw the wealthy man from the sprawling bungalow sitting at the table next to us. It looked like he had been listening to our talk on AI and investing all along.

As we were getting ready to leave, he tapped Jigneshbhai on his shoulder and said, “To avoid natural stupidity in investing, no AI can help. You need a higher wisdom!”

Where have you been?

“Where have you been?” asked my friend Swami to Jigneshbhai, as we met for our weekend coffee after a really, really long time.

Indeed when I checked, it was over a year since we had last met, and some of our coffee house friends had also started asking me why we had stopped meeting.

“I was on some quests. I was climbing mountains and diving deep into the seas” said my broker friend to Swami.

Swami and I looked at each other wondering whether Jigneshbhai was serious about what he was saying or pulling a fast one, with some cryptic clues on his whereabouts over the past year. Be that as it may, with no further clarification forthcoming from our broker friend even after the usual confused looks on our faces, we just let things be without delving further.

But then Swami, as usual, could not control his curiosity and was the first to ask. “So what kind of mountains and quests? Have you left investing in the markets?”

Swami and I waited for an answer. It drew a blank, for a while at least. After a rather long silence, finally Jigneshbhai said, “A lot of famous people go away on these kind of retreats and come back refreshed. They climb mountains or go to foreign lands and come back with new perspectives, I hear. So I thought let me try that too.”

Swami was quickly ready with his next question. “So did you come up with some solutions to the falling markets? Or just had fun?” he asked rather bluntly.

Jigneshbhai had a wry smile on his face and replied, “When you come back from such retreats, you generally see problems, not solutions. Everything looks better in the places you have been too, and worse where you come back.” And he further asked, “and the problems you see around you when you are back can spark off a chain of frustrating thoughts, isn’t it?”

Swami and I listened to our broker friend, and couldn’t quite get what he was saying. Seeing our confused faces, he explained, “Don’t you come back from a foreign trip and then everything in India seems so bad for the first few days? And then that sparks a chain of complaints on our airports, roads and traffic for a few days, isn’t it?”

“Yes – so?” asked Swami indignantly, “So you are also finding problems after your retreat from wherever – mountains and deep seas – you went on a quest to?”

“Hmm” said Jigneshbhai. “Well, they are not real problems, mostly imaginations.”

“And when your mind imagines problems, it starts looking around for data or some aspects of reality to justify it, and that sparks a wildfire of thoughts. And then you think the problem is real.”

Swami and I were starting to understand a little bit of what Jigneshbhai was trying to say now, but not yet quite fully. As we were musing about it, he further continued.

“So if I am corporate employee back from such trips, I imagine problems with my job, my boss and commute. If I am an investor, I imagine problems with my shares, my mutual funds and markets. And if I am a politician, specially an opposition one, I imagine problems with the government. And yes, as these sparks ignite thoughts, some parts of reality do surface to justify them, and it can become quite a wildfire.”

Swami and I now understood what our broker friend was referring to. We smiled at each other happy that, for once, we had some clue of his tacit talk. Meanwhile, he continued.

“And then there are so many ‘amplifiers’ to spread the wildfire – maybe your thoughts or other people in your company, or other market participants and all the media especially, which is always looking for sparks with a potential.”

“But then, after a while, I always wonder – what started the wildfire? Did the imagination come first or did the aspect of reality come first? Or did the imagination and some aspect of reality combine on a fertile ground to start it?”

Swami and I found ourselves nodding in agreement with Jigneshbhai. So often in investing had we found that a rumor causes prices to drop and then some other news comes, and then there is further fact-driven amplification, and then it becomes a wildfire. But what came first? It is hard to say.

And then in politics too, so many allegations start and then some news comes, and then some data to fuel the imagination by the amplifiers, till it becomes a wildfire. But did the imagination come first or the data and amplification? Tough to say.

While Swami and I were thinking about this, Jigneshbhai confidently remarked, “But one thing is certain – whatever started it, there’s always someone taking advantage of these sparks, specially if they are in politics.”

This broke Swami’s and my chain of thought. While we were still thinking whether imagination or aspects of reality cause these sparks, our broker friend was almost suggesting that it doesn’t matter eventually.

Swami asked, “So you mean that someone engineers these fires?”

With a wry smile, Jigneshbhai, seemingly happy that we were asking the right question, said, “Well, it may or may not be true. But what is true almost always is that after it is sparked, someone, who is the same or different, is definitely taking advantage of it.”

Finally he confidently asserted, “For someone, these sparks or wildfires, fuelled by imagination or some aspects of reality, are always an opportunity – self-made or godsent.”

Just as he was saying this, I saw the wealthy man in the sprawling bungalow (who always speaks cryptically) at the table next to us.

He had been listening to this coffee talk between us. Before Swami and I could ask him where he had been, he looked at our broker friend Jigneshbhai, and, like Thakur from Sholay, in a solid baritone voice, said “लोहा गरम है मार दो हथौड़ा!”

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ढूंढते रह जाओगे!

“Many years back there used to be an ad for some detergent remember where the lady of the house boomed with pride ‘ढूंढते रह जाओगे’ when her husband found no stains on his shirt. Do you remember that?” asked Jigneshbhai while sipping his coffee last weekend.

Swami and I met our broker friend Jigneshbhai had after a really long time, almost as if searching for an occasion.

I did remember that ad and a quick search on his phone by Swami got the video, and he showed it to our broker friend.

After watching it quickly, Jigneshbhai exclaimed, “Yes – ढूंढते रह जाओगे – she said.”

“It looks like a lot of people are searching for things they aren’t going to find in a hurry” he continued as he took another sip.

Swami and I looked at him waiting for an explanation, but as usual our broker friend kept silent and kept us waiting.

As usual, Swami was the first to lose his patience. He erupted “Who is searching for what and what aren’t they finding?”

“A lot of people!” remarked Jigneshbhai looking up from his newspaper and pointed out. “For one, the government is searching for the दाग of black money and still not finding it!” He showed us the numbers released recently which showed that almost all currency notes were returned to banks after demonetization.

He continued “For another, the RBI is searching for the दाग of fake currency and still not finding it!”

Swami and I looked at our broker friend. Swami asked, “But they got so much cash in the banks and data and now know who has how much cash, and I am sure they will catch the crooks!”

Jigneshbhai had a faint smile. “That’s another search, the income tax authorities are still searching for the दाग of those who have black money and still not finding them!”

Swami was not convinced. “They will, isn’t it? Demonetization has increased the tax base and collections, isn’t it?” he asked.

My broker friend was silent for a bit. But he added quickly. “Possibly” he said. “But that’s another search, maybe a treasure hunt, for another day” he added.

Swami was a bit irritated by Jigneshbhai by now as always. “It’s alright. But in the long-term, it will lead to growth in the economy and even the stock markets are up” he asserted.

“Well – that’s truly another treasure hunt. The public’s search for jobs and development! And the investor’s search for value in the markets!” he said in a sly, furtive manner.

Swami was angry by now. “But it has put a fear in the minds of the crooks and left all the politicians from the opposition stumped.”

My broker friend kept silent for a while again. Finally he said. “Now that is true. It has stumped the opposition. They are searching for a smarter politician and still not finding him. It’s a very tough search for the opposition – they are truly ढूंढते रह जाओगे!” laughed Jigneshbhai loudly.

And that seemed to have made Swami happy too, who broke into laughter too.

After a long time, I had seen Swami and Jigneshbhai laugh this way even as they were having their usual tussle. I myself wasn’t quite sure – like always which side I was on.

Just as we were enjoying the last sip of coffee in the middle of this laughter, the wise man in the sprawling bungalow (who always spoke little and in a cryptic manner) was watching our conversation and dropped in. And he stopped us in our tracks as he said,

“ढूंढते रह जाओगे for the दाग of black money is fine for now, but I hope the search continues with the same ferocity, and leads to some real development. Because that’s why we elected this government in the first place. Remember the same ढूंढते रह जाओगे marketing company came back a few years later and told us दाग अच्छे है!”

 

Heads I Win, Tails You Lose

“Do you remember Dr Rustom Pavri that character from Munnabhai MBBS that helps Munna pass all exams and not get caught by answering questions secretly on mobile?” asked my broker friend Jigneshbhai when we met for coffee this morning.

Swami and I had a distinct smile of recognition on our faces, but weren’t quite sure why Jigneshbhai was talking about that comic Parsi character.

“My CA friend felt like him yesterday night” he remarked.

Swami and I were wondering why. Seeing that, our broker friend clarified.

“All his trader ‘Munnabhai’ friends were calling him continuously yesterday night, like students who had suddenly got an out of syllabus surprise question in their paper.”

“But this time even my CA friend had no answer to this question. And there was no time to find an answer too!”

Swami and I then realized that Jigneshbhai was referring to the announcement made by the PM and Govt that 500 and 1000 rupee notes would be illegal tender from midnight of Nov 8-9, 2016.

It was the classic out of syllabus surprise question set by a tough paper setter aimed to fail cheating students, and given 10 min before the bell rings.

“And the best part is” continued Jigneshbhai, “that whatever happens, chances are high that the paper setter i.e. PM Modi and his government, win.”

Jigneshbhai was pretty excited about this new announcement and explained the various scenarios why it was a win-win situation for the government.

“Firstly” he said, “if you are a sincere student, this doesn’t apply to you except for a few days of inconvenience of exchanging now illegal tender for valid notes. For that small price, the government gains tremendously in the minds of the common sincere man.”

“Secondly” he continued, “if you are a cheat with cash, you can take the first choice of going to a bank and depositing it, and somehow declaring it. In which case, government gains with tax income.”

“And if you choose not to do it, then you are left with paper which you can’t do much with. In which case again the government gains because they eliminated some unaccounted money without the hassles of catching it.”

“And Thirdly” Jigneshbhai explained, “if you are a cheat with undeclared assets other than cash, you don’t suffer much immediately, but are going to think twice before generating more black money in cash. Again the government gains.”

“Fourthly” my broker friend wasn’t done yet “if none of this happens, the least that happens is the real criminal, drug, fake currency and terrorist organizations are anyway left high and dry with useless paper.”

“And finally” Jigneshbhai concluded, “beyond the economic benefits, the political gains in terms of clean image, brownie points and leaving the opposition with nothing to oppose clearly are like that MasterCard advertisement – things that are beyond measure.”

Jigneshbhai was truly, genuinely excited today. Perhaps after a long time, there was satisfaction felt that being honest mattered, not having black money was good. And the silent black money holder was probably worried for the first time in years.

But it was too early to celebrate. It definitely seemed like the first major step of many more steps of clampdown on domestic black economy. It seemed like an honest attempt, at the very least, and a genuine transformation, at the very best.

The old man in the sprawling bungalow who had been listening to our conversation from the table next to us, reminded us that of all the calculated risks, this would probably rank way up there for this government, with potential gains outstripping possibility of losses – for itself and for the country.

Like Amitabh’s coin in Sholay, it was a case of “Heads I win, Tails you lose.”

Saboot aur Gawaah

“Tamam gawahon ke bayaanat aur sabooton ko madde nazar rakhte hue” started Jigneshbhai in a very filmy mood when we met this weekend for coffee. “Isn’t that how that dialogue went in the old Hindi movies?”

Swami, a big fan of Hindi movies completed the dialogue that my broker friend had started. “Yeh adalat is natije pe pohochi hain ki, Mulzim bekasoor hain. Lehaza Mulzim ko ba-izzat bari kiya jaata hain.”

And we had a big hearty laugh remembering the troubled judge banging “Order, Order!” in God knows how many old Hindi movies.

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My broker friend said “One of my friends, an ardent non-believer in God, has this habit of asking for evidence every time any of us remotely talks about anything suggestive of religious, spiritual or ritualistic things.”

Jigneshbhai seemed to be in his story telling mode today, so Swami and I were all ears. Specially when it comes to proof and evidence, Swami is always attentive.

“And as you know, no one has been able to conclusively prove the existence of God so far.”

“So every time after presentation of tamam gawaah aur saboot, the ‘mulzim’ gets baizzat buried!!” Our broker friend broke into a laugh.

Swami and I were not quite sure why he was laughing so much, specially about touchy matters like proof of God.

After a while, realizing that he was laughing all alone, he stopped.

With a twinkle in his eye, he said “By the way, we believe in God with no evidence, but nowadays, ask for evidence about everything else, right?”

Swami and I got an inkling that Jigneshbhai was probably referring to the demands of proof for the surgical strikes that the Indian Army had done a few days back.

All government actions require documentation and process.

We have to submit proof of identity, proof of residence, proof of domicile, proof of income for so many things like Aadhaar card, admission to government colleges, loan applications, etc. Even to get bills passed in parliament, there is ‘kanooni process’. Audits happen to establish ‘saboot’ of corruption happening or not happening.

So it is natural that in a country that goes so much by ‘gawaah aur saboot’, the Army also needs to provide proof of a surgical strike it performed on the enemy.

I wonder whether it would have been a good idea for our Army to have submitted all the right documents at all the government offices and followed all processes, before performing the surgical strikes.

Maybe that would have left ‘tamaam gawaah aur saboot’.

While we were lost in figuring out what would be the best documentation to ensure that there is enough proof before the next surgical strike by the Army, Jigneshbhai broke that chain of thought.

“So we ask for proof from the Army, but where there is proof and ‘after tamaam gawaah aur saboot’, the judge has given his verdict, we don’t follow it, and evoke emotion!”

Swami and I were again left wondering what Jigneshbhai was talking about, but quickly realized that he was probably referring to the verdicts in the Cauvery Water case and the BCCI Lodha committee.

“Sharing water and establishing corruption and shady cricket deals where there is ‘tamaam gawaahon ke bayanaat aur saboot’, we invoke emotion, and from the Army, where we need a bit of faith, we ask for proof.” Jigneshbhai clarified.

Clearly, in a rational world, evidence and data are paramount, Swami and I thought. But our broker friend was perhaps right in suggesting that there is a place for rationality and there is a place for faith.

While we were musing over this, the wealthy man in the sprawling bungalow, who had been listening to our talk (mainly Jigneshbhai’s today), walked over to our table. He sat for a while today and left us with more food for thought.

“For the Army and government, it is rational to not provide “gawaah aur saboot”. And for the enemy and politicians, it is rational to demand for it. For you, it is wise to determine who to place your faith on! Because Koi saboot nahi, toh Koi gunehgaar nahi!”

Known Knowns and Unknown Unknowns

“Swami uncle, how do you know that Ganpati Bappa goes to his home elsewhere after we immerse him?” asked Jigneshbhai’s son as we were returning after immersing the Swami’s Ganesh idol after this year’s festival.

It was Swami’s turn to be at the receiving end of questions this time from our broker friend’s son. Jigneshbhai was having a naughty smile as he was enjoying the reversal of fortune – from Swami’s questions to Swami being asked questions.

“How can all lakes and seas reach his home?” Jigneshbhai’s son continued. “Do you have proof that Ganpati Bappa reaches home?”

Swami was lucky that we soon reached our coffee-house, and our families left us alone with our weekly coffee routine, and so the questions stopped.

“Your son asks a lot of questions!” Swami finally said, after they were all gone.

“For once, I did not face your questions! Or his!” my broker friend laughed.

“So how would you answer them? Of course, we know the real Ganpati Bappa goes nowhere. But next he would ask me if there was any proof if Ganpati Bappa was real?” an exasperated, god-fearing Swami exclaimed.

Jigneshbhai stayed silent for a while. He was probably lost in some thought.

“Well if we don’t have conclusive proof that he exists, we also don’t have conclusive explanation to negate the theory that he does exist!” Jigneshbhai stated.

That left Swami and I a bit confused. But our broker friend continued.

“There are the known knowns – like oxygen is necessary for life, and then there are the known unknowns – like we don’t know how life originated or if God exists for sure. But there are also the unknown unknowns – like maybe we don’t even know what we don’t know about the possibilities in the endless universe or in the future!”

Swami and I looked at each other, wondering whether our broker friend was fine. He seemed in fine health a few moments back, but suddenly he had escaped into an unknown orbit.

Unlike our normal confused faces in such situations earlier when Jigneshbhai gave some profound theories, this time our faces indicated outright amusement. Perhaps that’s the reason our broker friend too broke into laughter.

“I am not joking!” he said. “Isn’t it right? Even Donald Rumsfeld when once asked if there was enough proof that Iraq had weapons of mass destruction used something like this. Maybe he meant it, or maybe he was justifying the war – who knows!”

Indeed that was true. I distinctly remembered that, and it became a topic of contention for a long time. But it actually demonstrated the realities of taking decisions at the highest centers of power with an understanding of what is known, what is unknown, and an appreciation of how little may be actually known.

While Swami and I were musing about the known knowns and unknowns unknowns in our life, our broker friend, in a jovial mood today, intercepted our thoughts cheekily. “Like whether the markets will oblige him is a big unknown for Swami!”

Obviously that little provocation was enough for Swami to get started. “Maybe” he said sarcastically, “but most else in your investing domain is based on numbers and metrics isn’t it? So it should fall into known knowns!”

“Well” said our broker friend. “Numbers give you a false sense of knowing.”

Swami and I were starting to understand what our broker friend was trying to get at, and why his answers are often in shades of black and white – specially to Swami’s questions on buy or sell. But it still wasn’t fully clear so we were lost in thought.

Jigneshbhai continued.

“There are many known knowns in investing – like high profitability is good, or low P/E is cheap. And then there are known unknowns – like what will the market do in the next month, or who will be the next RBI governor. But there are also the unknown unknowns – like we don’t know what technologies or trends will emerge and impact business.”

“The important thing is to collect as many knowns as you can, and build an appreciation of their limitations due to the possibilities of the unknowns. And then act with openness.”

While we were engaged in this discussion on knowns and unknowns, the wealthy old man in the sprawling bungalow walked over to our table. He had been quietly listening to our conversation, and as we were preparing to walk, he looked at Swami and I and left us with some words of wisdom, emerging from rock music, perhaps?

There are things known, and things unknown, and in between are the Doors.

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