Jigneshbhai and Swami

भ्रष्टाचार को पकड़ना मुश्किल ही नहीं नामुमकिन है: The unending search for catching corruption: Jigneshbhai and Swami

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“There is one thing tougher than catching ‘Don’. Call it Mission Impossible if you will, though it is tougher than that. Can you tell me what it is?” asked my South Indian friend Swami as we sipped an evening coffee.

I gave it some thought for a while and ventured a guess. “Beating Australia in Australia.”

“No, we have done it a few years back”, Swami said, rejecting my answer. “Any other guesses?”

Then it was my broker friend Jigneshbhai’s turn. “Beating the market index?”

“Naah, sometimes some people do end up beating the index. It is मुश्किल, but not नामुमकिन,” said Swami, like a quiz master, surprisingly using Hindi, possibly giving us clues.

When there were no more guesses, he finally announced in chaste Hindi, “Well, you may achieve Mission Impossible and catch Don, but भ्रष्टाचार को पकड़ना मुश्किल ही नहीं नामुमकिन है!”

He continued telling us that he had just finished watching three thrilling, adventure movies in the course of the week. He started with watching Tom Cruise jumping off buildings in Mission Impossible: Ghost Protocol, and was impressed with the thrills. On the next day, on the insistence of his wife, despite the Ra.One experience, he went and watched Don 2: The Chase Continues. He said he was impressed with the thrills, pace and slickness of the movie.

But the most thrilling of all was the movie he watched on TV spread from Tuesday through Thursday, in which he followed a bunch of talented artistes chase and nail down a known evil named ‘भ्रष्टाचार’. “It seemed a thrilling, almost non-scripted ride. It was never clear what will happen next”, remarked Swami.

“In fact, there was amazing suspense on who the heroes were, who the villains were, and viewers were left wondering whether they kept changing roles”, remarked my broker friend, Jigneshbhai who had partly watched some of the proceedings.

“Yeah – new characters kept coming in from time to time. The stage kept moving, new rules and equations between various characters kept on emerging. In fact, at one point, they even left the viewer guessing on whether the story was actually about nailing down this भ्रष्टाचार guy, or if the plot had changed to something else”, Swami remarked, confused as always.

“Hey, you must be joking about the Lokpal Bill”, I said.

“Yes, of course. But were the thrills in it anything less than MI-4 or Don-2?”, mocked Jigneshbhai. On second thoughts, he continued “Well – those movies at least have a happy ending. This one does not seem like it is going to end soon.”

“But they were going to pass the bill soon, I had thought. Perhaps this session or the next”, I said, trying to be a bit logical and patient. One better be rational and take a well-considered view, specially when it comes to issues of national importance.

But then Swami said, “Well, it is a thriller – so you never know what will happen. They may pass it, but most likely not. In any case, passing the bill is one thing. But catching भ्रष्टाचार is another. That guy will still get away. Don does not catch himself, right?”

He continued, “That’s why I said, Tom Cruise may achieve Mission Impossible. Don may get caught eventually. India may beat Australia in Australia. Someone might even beat the market index consistently. Those things are easy. But it has been 40 plus years now – in our unending search for catching corruption. So भ्रष्टाचार को पकड़ना मुश्किल ही नहीं नामुमकिन है.”

The Annual Performance Appraisal: Jigneshbhai and Swami

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“I must leave now”, said Swami, my South Indian friend just as we were sipping our coffee.

“Going out with family?” I asked, knowing that he was quite the family man.

“No! Don’t ask – I have this big form I have to fill after going home, and submit it tomorrow without fail”, he said.

“Hmm – something to do with your son’s school I guess. Then you better go”, I said.

“Arre – nothing like that boss! In fact, it is about the boss! I have to go home and fill my performance appraisal form, listing all that I did in the year and ensure my boss gets it by tomorrow, so that he can rate my performance! You know how this corporate thing works. You have to do this every year. I am sick of it – but kya kare? Will not get my increments and bonus if I don’t fill that form!”, an aggravated Swami said. I guess my repeated questions on why he was leaving our weekend coffee discussion early had clearly pressed the wrong button.

“Your annual appraisal system is part of the problem in our markets also”, interjected Jigneshbhai, my broker friend.

I was a bit surprised with that. I could not quite figure out how Jigneshbhai had an opinion on that too. I could see the same reaction on Swami’s face. But before we could ask anything, Jigneshbhai continued, “So your performance is also measured once every year?”

“Yes, they say they will do it twice every year, but happens only once. Increments are only given once a year”, confirmed Swami, with a sore face. Somehow the word ‘increment’ used in corporate circles seemed like a well devised tactic to set expectations on the size of salary raises, and that expectation seemed quite evident on Swami’s face.

Be that as it may, but Jigneshbhai went ahead making his point on how they were a problem.

“You see, as the time for filling your appraisal form comes near, I am sure people start frantically showing evidence of their performance? Like finishing up more projects, telling the bosses what they are doing and generally being more active?”

“Yes – that is right, more or less. But it is not fair to everyone, you know. Sometimes the good people get bad ratings, and bad ones get good ratings”, reaffirmed Swami, still having his issues with the appraisal process.

“Well life is not always fair. But this appraisal thing affects fund managers and institutions also. They know that the time for the measurement of their performance is near. So every fund wants to beat every one else.” Jigneshbhai had a good understanding of psychology.

“So what do they do?” asked Swami almost innocently.

“Well, I am not sure, but I guess it should be, more or less, what you are doing. Some researcher said that’s the reason markets fall in December. So that relative performance can be shown for the year. And then rise in January when they get fresh money”, explained Jigneshbhai in his nonchalant style. Sensing the surprise, he continued, “Of course, you cannot profit from it. When everyone wants his appraisal form to look good, this stops happening.”

This was not good to hear. And it also left Swami both alarmed and confused as usual. “Hmm, so they are playing games at the expense of my money”, he thought, but did not say it in those many words. Instead, always looking for simpler answers, he asked “So even they are working for increments. So, what are you saying? Stop investing in funds?”

“Of course not, you cannot change that”, resumed Jigneshbhai. “But you can become an appraiser once a year – of the fund manager of your mutual fund. And unlike corporates where every year performance is relative to others, in markets, you have an absolute against whom to measure his performance – the market index. Put him on a performance improvement plan if he cannot beat the market index. If it still does not improve after a year or two, sack him and move your money to a low-cost Index fund.”

Why Bulls, Bears, Pigs and The Big Fish don’t matter, and Cows and Goats do: Jigneshbhai and Swami

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“The ocean in Mauritius is just wonderful, blue-green and pristine. Truly is a paradise island”, said my South Indian friend, Swami who had just been back from his vacation. One of the few times I had seen him happy, without much to complain about. Just when I thought he was in a good mood, he said, “But I got badly tanned. Got fully blackened, and for two days, I could not get out of my house.”

“So did you do any under water activities?” asked Jigneshbhai my broker friend.

“Yes, I think that and the sun is the reason for my tan. But it was worth it. The sea life – the fish and other sea animals were just wonderful to see up close under water.” Swami remarked. Clearly, his vacation had got more positives than negatives out of him. I was glad to note that he loved the sea, the fish and the sea animals more than he disliked the seafood. And if this is what Mauritius could do to Swami, I am sure it must be really be paradise for normal mortals. Jigneshbhai and I exchanged a smile on that thought.

But our thoughts were interrupted.

“I am not interested in the small fish. It is not useful to check even what the big fish are doing.”

We just looked around to check who had spoken. It was the wealthy man in the sprawling bungalow who had just joined us. I am sure he must be frequently going to Mauritius – I hear it is some sort of tax haven for wealthy people and foreigners. So not surprised that he had a view on the sea life there.

“No, sir. I could see only the small fish, we did not go deep enough to see the big fish. But the small fish were very beautiful and interesting, sir!”, Swami remarked, trying to disagree with the wealthy man.

“No point in following the small fish or the big fish. I am not interested in either the bulls or the bears also”, said the wealthy man.

He was known to speak rarely, and when he did, it was cryptic. But I was not sure he realized that we were talking of Mauritius. As far as we knew, bulls or bears were in the safari or at best in the markets. We just stayed silent, trying not to look awkward.

But Swami could not resist continuing. “Sir, we did not go to mainland Africa, only to the island of Mauritius. So did not see any bears, bulls or other animals in the safari.”

“Well, Africa is still the new frontier. You should be more worried about the Pigs in Europe – I hope someone takes care of them.” As he said this, we were almost getting on the edge now. Swami and I were desperately trying to make sense of this conversation.

I think Jigneshbhai got what the wealthy man was trying to say now. He quietly signaled to us to stay silent and asked, “Sir, got it. Those economies – Portugal, Italy, Greece and Spain are in trouble, and I understand that this is good time to ignore the bulls, bears and all the big and small fish or anyone who has a view on the markets.”

“Yes, indeed. You are right”, smiled the wealthy man, finally satisfied that someone understood what he was saying.

While both Swami and I were clueless, Jigneshbhai eagerly asked, “Sir, in that case, which animals do you prefer?” This left us further dumbstruck. Looked like he had picked up the animal language.

The wealthy man replied, “Honestly, I prefer goats and cows. They are easy to maintain, need just simple grass, and are sure to give you milk regularly. As they grow older, they almost always multiply easily. If they don’t, their meat is useful. So even if you pay a high price, goats and cows are useful, valuable animals.”

While Swami and I were wondering what happened to our conversation on Mauritius, Jigneshbhai was happy hearing what the wealthy man said, almost cheerful and thanked the wealthy man as he left back for his sprawling bungalow. And while leaving, the wealthy man turned back to us and said, “There’s a lot of animal instincts out there. So don’t go with the herd.”

Your Call is Important to Us: The Tragicomedy of Customer Service: Jigneshbhai and Swami

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My simple-hearted friend Swami was in a restless mood the other day when we met over coffee. ““कृपया प्रतीक्षा करें, आप कतार में हैं” – isn’t that what they said, when you called customer service numbers in those days?” he asked us. “Some of them said ‘Please wait. You are in queue’,” my wise friend … Read more

A Gambler’s Instinct: The knack for taking calculated risks and knowing when to take them: Jigneshbhai and Swami

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“One thing that is different in our players of today and our players of yesterday is that earlier our players used to play mostly not to lose, and today they very often play to win”, said my broker friend Jigneshbhai over our Sunday evening coffee. Continuing, he remarked, “The difference may seem minor but is vast. In the first approach, the best result you will get in the game is a prevention of loss and then you hope for a win. While in the second approach, the worst approach you may get is a loss, but if you calculate your risks, you may also get a big win.”

“Like what happened last week, when Dhoni and Raina suddenly decided in the 35th over that they were not happy with 225 as that may, at best, prevent a loss, but wanted 300 to play for a win.”

“But there was risk in it. What if they had lost their wicket?” interjected Swami.

He was right. There was a risk of that happening, and in that case even the result of prevention of loss would have been difficult to guarantee. “Yes, that’s right. Playing for a win always has more risk than playing not to lose. And it is not always sensible at all times to play only for a win. There will be stages when it is best to play not to lose. But the reason I think Dhoni is a great captain is because he has a wonderful gambler’s instinct that helps him decide when to play not to lose and when to play for a win. And acts accordingly.”

Just as we were leaving, he added, “You know, Swami. In the long-term game of investments in the capital markets, playing not to lose can, sometimes, also mean you are playing to win. It seems to me that the current period is one of those times when you can both play not to lose as well as play to win.”

And then in the background I heard this song by the famous country music singer Kenny Rogers that he started humming as we left.

“Now every gambler knows the secret to survivin’
Is knowin’ what to throw away
And knowin’ what to keep
‘Cause every hand’s a winner
And every hand’s a loser
And the best that you can hope for
Is to die in your sleep”

“So when he finished speakin’
He turned back for the window
Crushed out his cigarette
And faded off to sleep then somewhere in the darkness
The gambler he broke even,
but in his final words
I found an ace that I could keep”

“You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done”

[youtube=http://www.youtube.com/watch?v=kn481KcjvMo]

A Cryptic Cocktail: Mixing Cricket Commentary with Stock Markets and Investing: Jigneshbhai and Swami

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The wealthy man living in the sprawling bungalow near my house with his BMW and Mercedes speaks very sparingly. And whenever he speaks, it is quite cryptic. So one has to really concentrate when he is speaking, and think hard after he is done. So the other day when my South Indian friend Swami and I were just walking across from my house to get a coffee, we saw the wealthy man taking a walk with his dog. He knows Swami, who by now has had a number of ‘question-mark’ conversations with him in the past. So he wished me good evening, and this time before Swami could ask him anything, he just told him with a wry smile, “The situation is tense but under control.”

I first heard this term being used by the Mumbai police during the Mumbai riots in the early 1990’s. It was so conveniently cryptic and became so popular that the Home Ministry started using it. Now I think it has become the de-facto phrase used by government officials, specially Home Ministry ones, to describe, in an imprecise way, what is happening whenever there are riots, earthquakes, floods, strikes, accidents or anything remotely like those.

So I was a bit surprised when the wealthy man used it, not quite clear what he was referring to. So I took the liberty of asking him if he had some time for a quick coffee. The wealthy man does not easily say yes, but this time, he surprisingly did – so in a few minutes, we found ourselves chatting with him over a coffee.

After an awkward silence for a few minutes, my South Indian friend Swami had to ask something. He tends to lose his patience with Jigneshbhai, but with the wealthy man living in the sprawling bungalow, you cannot do that. So in polite language, he asked him for advice on the current state of the markets.

The wealthy man replied, “This match is very much in the balance now”. And added in his baritone voice, “It is not going to be easy for the batsman to get bat on to ball on this pitch.” Further, neglecting our confused looks, he continued, “It will provide assistance to the bowlers, but if the batsmen apply themselves, one can play a long innings.” I knew he spoke sparingly, and was cryptic most of the time, but this seemed out of context. So we thought he probably misunderstood the question – perhaps he heard matches instead of markets.

So Swami tried to explain – “Yes sir, but I was referring to the markets, not to the Champions league matches. I have already lost so much, would be great if you could throw some light on what to do next.”

This time, we thought we will hear some gems of wisdom. But the wealthy man continued. “Well, given the conditions, it should be good toss to lose”. This was getting a bit out of hand. Even I was starting to wonder what was happening here. But Swami was now getting a bit aggressive. He clarified, “Sir, I am losing money everyday in these volatile markets. You have been playing the markets for so many years. Should I sell and get out now?” Again with eager eyes, we were looking for some pearls of wisdom this time. And the wealthy man said, “We had a cracker of a game today, but at the end of it all, one will have to say that the team that kept its nerve better prevailed”.

This was getting too much to handle now, even for me. We were starting to fear if the wealthy man had lost it – maybe growing age and the stress of his wealth getting eroded at this stage in life was getting to him. Or perhaps he was watching too much of TV, and business and sports channels were getting mixed up in his head. Swami gave me a strong stare, almost warning me that he is going to stop having coffee with me. As if handling my broker friend Jigneshbhai was not enough, now he had this wealthy man from the sprawling bungalow to make sense out of.

So we started wrapping up with our coffee, and hoped that this was it. It did not seem to make sense to press the point now. Not wanting to take the discussion further, I asked for the bill, and while waiting for it, asked the wealthy man which team he was supporting in the Champions League. I casually added, “The Royal Challengers seem to be up to it this time, but you never know with them. The Mumbai Indians could spring up a surprise.”

I thought this conversation was now making sense. We were both talking about the same topic. At least we will leave on a sober note. No more mixing cryptic cocktails of cricket and markets, I thought. So as we left, we were stumped when the wealthy man threw another cryptic one. “Indeed, in these conditions, I am in support of investing in wonderful companies with good long term potential. For the true fan, this pitch is just what the doctor ordered.”

Not an Ordinary Joint Family: The European Union and the Crux of its Problems: Jigneshbhai and Swami

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ambuja“भैया ये दीवार टूटती क्यों नही?” said one brother to the other in the Indian joint family from the famous Ambuja Cement ad. And then the voiceover replies, “टूटेगी कैसे? ये अम्बुजा सीमेंट से बनी है.” I had heard that this ad was popular with the English players whenever Dravid used to come out to bat during the recent Test series. But that was for the Great Indian Wall of Cricket. It is not the same with walls in joint families. They keep on coming up and going down.

There used to be the old Indian joint family many years ago which had no walls. All brothers and their wives and children used to live in the same big house with no major walls separating them, and led by the great patriarch and matriarch. It worked in a lot of cases because most brothers were involved in the family business and hence shared the profits as well as the losses, the good times and the bad. Occasionally a brother turned out to be a good-for-nothing, and the joint family took care of him and his family. Not necessarily the best thing to do, but that’s how it was. If things took a turn for the worse, in cases of family honor specially, very rarely the good-for-nothing brother was thrown out! And then over time with individual families within the joint family, the walls kept coming up, growing into different houses, different businesses. Everyone had to earn their own bread and manage themselves, as the joint family dissipated.

Well this was what my broker Jigneshbhai was trying to explain to my South Indian friend Swami the other day. As usual, Swami was perturbed that ‘global turmoil’ was messing up with his investments. As if the Sub-prime crisis and US Debt problems and rating downgrades were not enough, he was now being told that some new beast called the European debt crisis had come up. And Jigneshbhai was insisting that this was because of the European joint family. “Don’t joke here”, said Swami. “This is about money, not family.” “That’s the problem. The Europeans mixed up family with money. In India, people are moving from joint to nuclear, and the Europeans moved from nuclear to joint!”, insisted Jigneshbhai.

Unable to understand, Swami kept staring at me, wondering what kind of financial adviser I had recommended to him. “Look Swami – a few years back, Europe was a continent with different countries running on their own, like our own nuclear family. Each of them had their own incomes, their own budgets, their own savings. And then they decided, we stay so close to each other – so why not allow free trade, free movement of people. Till that point it was fine! That prevented wars, you know – they had a history of fighting each other. Once people met, worked and mingled, they felt better about each other.”

It is great to listen to Jigneshbhai when he gets into this ‘ज्ञानी’ mood. So I listened, and so did Swami, albeit with his usual confused look. Jigneshbhai continued. “But then they decided to mixed their finances with proximity, and said let us give up our currencies, and have a common one. That brought all the walls down, and everyone thought they had become one big joint family. But that was not really the case, because there were big brothers and small brothers in it.”

“So now are they fighting?” asked Swami.

“Not fighting wars, but it is not very different. One brother is doing well, and says why should I pay for that good-for-nothing, and that fellow says if you don’t give me money, I will bring the family down. Unfortunately, it is not an ordinary joint family. There is no patriarch as such who can clamp everyone down, or throw a good-for-nothing out. And you know how it becomes then – like our  TV serials. That’s why I said, the problem is the European joint family.”

Good to hear this, thought Swami. It is not just Indians who have family problems. He was just going to ask a ‘सास बहू’ type question, but remembered his investments. His confusion was still not clear. So he asked, “Boss, so when is this family drama ending, and what does this all have to do with my investments?”

Smiling, Jigneshbhai replied, “Nothing. Family problems don’t get sorted out so soon. And Europe is not just another ordinary joint family. So if you have the courage and the money, keep investing. Your family will, later, thank you for it.”

A Matter of Faith: The Role of Reason and Belief in Investing: Jigneshbhai and Swami

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“Can you guarantee it?” asked my South Indian friend Swami, when my broker Jigneshbhai asked him to hold on or add to his investments saying that markets will recover. Jigneshbhai said, “Boss, there are no guarantees, but they should recover eventually.”

Swami continued, “But when? For the last 4 years, the returns from my investment are less than 5% annually. I would have been better off with my fixed deposits. Today they give 9% at least. If you cannot give guarantees, what’s the use?”

This conversation was getting a bit heated. It always happens when it is about money. I continued sipping my hot coffee watching them talk.

Finally, Jigneshbhai got up in a rage, and asked, “You do your puja everyday Swami. Can your God guarantee that you will not die tomorrow?”

This was something Swami did not expect. This was about money, not God, he thought. “Don’t change topics”, he said in a disillusioned manner. Sensing that this was going awry, I intervened, and finally we changed topics and started talking about somewhat milder things like the weather, cricket and politics. Eventually a dissatisfied Swami left, as unhappy as he had come.

Jigneshbhai turned to me after Swami had left. “I will tell you boss, I have been in this profession for the past twenty years. Reason alone is not enough to invest. Beyond a point, you also need faith. And people like Swami have faith in everything else but the markets. Of course, markets do not cover themselves in glory to attract faith. But you must have some faith in the future. Who knows what will happen tomorrow. How can I give guarantees when God himself does not?”

He continued, still a bit angry. “You tell me, are there any guarantees that if you do your rituals, God will always oblige?” “Of course not”, I said nodding in agreement, hoping that this will cool him down. But he continued, “Similarly, there is a rationale that if you follow your investing ‘rituals’ well, the God of markets will oblige. But there are no guarantees.” “Right, makes sense”, I added, trying to fill the conversation up.

“And your friend Swami does not even follow the investing rituals.”, Jigneshbhai argued and continued, “Finally, at an individual level, it is a matter of faith.” I felt that I was hearing some words of wisdom from a true believer in markets.

I felt, perhaps, that is true in every sphere of life. Reason can get you ahead, but only so much. Like all other endeavors, reason is important as it sets goals, makes plans for you, helps you make the right choices and decisions. But there are no guarantees that it will work all the time. Beyond a point, and especially when the plans do not work as planned, finally, I guess, it is a matter of faith.

When It Rains, It Pours: What to do when things go wrong in a heap: Jigneshbhai and Swami

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My South Indian friend Swami had a new reason to complain since this morning – the rains. “I really got caught in the rains today – it was really bad, the weather, roads and traffic” , he told me as I met him today.

Monsoon in Bangalore is, at best, mild, so a steady bout of rain in the past 48 hours or so was enough to set the tone for a sad, wet morning for him, apparently. Unlike in places like Mumbai or Chennai, no one carries an umbrella in Bangalore. So the people with two wheelers stop in underpasses or under the remaining trees when it rains, and people with four wheelers crib about the two wheelers, and their own hardly replaced wipers when it rains. Every one else who is not on the roads and in some IT office complains about the roads and the traffic. And every one else who is not on a two-wheeler, four-wheeler or an office complains about how Bangalore is no longer what it used to be, and how it got spoiled due to the people with two wheelers, four wheelers and offices.

In Mumbai I have not seen people complain so much about the rain. The rain is heavier, the traffic is perhaps worse, and the distances definitely longer. And when it rains it really pours. So the Mumbai person resigns himself to the reality of losing a few more minutes of his daily life to his commute. Hence, people complain about the trains every year, and how they either stop or run a few minutes late when it rains. The intensity of rains in Mumbai is progressively captured when the Harbour line first gets closed, then the Central line, and finally when the Western line closes. That is when it must have really poured. Once in a while, you have really bad days when every one stays at home, or those who left early, walk back home in knee-deep water.

I may be wrong here, but like the rains, sometimes I see the same thing in the happenings around us too. When it rains, it really pours. Sometimes you get caught in the downpour unexpectedly.

So when you have Dhoni and his cricket team clicking well, you thrive on seeing them beat Australia in the quarterfinals, Pakistan in the semifinals and Sri Lanka in the finals to become World Champions. And then three months later, you have them losing Test matches badly; first by 196 runs, then by 319 runs and then by an innings and 242 runs. So when it rains, it really pours – on both sides perhaps. Looks like the world thrives on extremes.

So when you have an honest, educated, distinguished person, almost a non-politician returning to power as Prime Minister, it seems to everyone like the return of the dream team for Indian politics and economics to take us on the path of prosperity where India ‘lived happily ever after’. And then, two years later, with the economy facing problems and corruption on his back, he seems like a civics teacher with no voice, telling everyone how parliament makes laws, or an economics professor who knows the theory, but cannot quite put it to practice.

Any my broker friend says the same happens in the markets too. “When it goes up, it just keeps going up, and when it goes down it just keeps going down”, he says. But then I reminded him, “But it hasn’t gone anywhere for a while”. “Well”, he said, “when it does not go anywhere, it just does not go anywhere. Everyone is waiting for the flood or drought.” Hmm, may be, I thought.

So I told my south Indian friend Swami not to complain about rains – because it does look like when it rains, it really pours. “So I got it” said Swami – “so what’s the big deal, I still don’t like it that way. With all of us getting sticky and wet and slippery. Got to find a way out to deal with these rains!” “Do what people in Mumbai do”, said Jigneshbhai. “Carry an umbrella. Or like the ones where they don’t get enough municipal water – get your buckets out. Or better still, do this. Take a break and go to Khandala or Lonavala. At least you will enjoy the rains.”

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