Every now and then, I ponder on the mysterious ways of our stock market. Try as I might, the erratic ways of Dalal Street defy comprehension. If bank fixed deposits or government bonds would unfailingly yield us 10% annual interest post tax, I don’t think I will even look at the bourses. Or, indeed, mutual funds which are directly linked to the vagaries of the Sensex and the Nifty. Since numbers of that sanguine nature belong to the ‘those-were-the-days-my-friend’ era, we have no option but to try and get our heads round the complexities of the here and now. If you belong to the super rich category, I don’t really think it matters one way or the other. Ironically, the same logic holds if you are languishing somewhere at the bottom of the rich-poor pyramid, to employ a fanciful jargon. It’s always the poor sods in the middle who find themselves in a muddle.
Middle class investors in India have nowhere to turn to but the stock markets. What with bank fixed deposits offering a measly 5 to 7% annualised returns pre-tax, most of us are pushed to ‘play the markets’, with a promise of 30% returns and a delivery of -10%. The problem is ‘we don’t speak the lingo’. When your investment consultant lands at your doorstep, conspiratorially whispering into your shell like ear that he has received a tip that ‘should make you wealthy beyond your wildest dreams’, you are not sure if you should roll out the red carpet or slam the door in his face.
The well-off middle class is a myth. There is no such thing. Study the budget speeches over the past couple of decades, and if you find anything sympathetic to the urban middle class, I’ll buy you a ‘one-by-two’ tumbler of coffee at the local Sukh Sagar. Which is all I can afford. A last resort is to become a farmer, in which case you need pay no taxes at all. That piece of governmental munificence to agriculturists I have never been able to fathom. Is the farmer’s currency, stuffed in trunks under his charpoy, of a different hue? Why this extraordinary partiality towards a sector that boasts some of India’s wealthiest individuals, many of them going on to become ministers at State and Central levels? Seek and ye shall not find, the answers that is, about sums it up.
Nevertheless, my fleeting thoughts about turning my hand to tilling the land, raising livestock, milking cows and growing potatoes does not hold out much promise and I have junked the idea. Mind you it’s not roses, roses all the way being a farmer either. Instead of following the stock markets, you have to closely monitor the weather patterns. Singer songwriter Sting tried to be a farmer once and ended up composing a memorable song, ‘Heavy clouds but no rain.’ Clearly he made more money with that one song than he would have ever done growing spuds in his back garden!
Then there are other issues: the ubiquitous oil prices conundrum, Trump playing footsie with North Korea and China to fret about, volatility at our borders post the 370 abrogation, the Brexit imbroglio, the automotive sector in dire straits and I haven’t even touched on inflation. All this and more are part of our daily lexicon if we are to keep pace with what’s going on universally. Not merely to improve our general knowledge, but because the welfare of our finances is driven by these global, earth shattering events. We are unsteady of feet in shifting sands. Try reading the Finance Minister’s budget speech and if you can follow any of it, ‘you’re a better man than I am, Gunga Din.’ Watching the minister live on TV is no better, though you can snigger at some of the weak jokes he must necessarily indulge in, to soften the blow. To say nothing of the statutory Ghalib or Tiruvalluvar quote, depending on whether the FM was Jaitley (RIP) or Chidambaram (RI/CBI/ED).
I am therefore doing what most ‘knowledgable’ experts in India do when they are at a loss to plumb the mysteries of the market. Which is to turn to the Bull, the oracle Rakesh Jhunjhunwala (RJ), he of the cherubic countenance to match his sunny optimism. As I could not actually obtain an appointment with him, I shot off an email questionnaire, to which I received a well worded, if characteristically outspoken, response. I can only surmise the great man himself authored the replies but if it was some underling from his office trying to save his boss some trouble, given that he must be receiving truckloads of mails, I take no responsibility for the authenticity of the mail. Though I must say it sounds a lot like RJ.
SS – ‘First off Rakeshji, what do these investment bozos mean when they say buy long and sell short? That’s a real bummer. I am afraid to display my ignorance lest they take me for a solid ride.’
RJ – ‘My friend, the long and short of it is that you should beware of short covering. If the short is covered, then the long will take care of itself. Samjha? Long term perspective is crucial. Be patient for 20 years and you’ll make pots of money.’
SS – ‘Hmmm, I think I am grasping the gist, but I am still confused. 20 years eh? I will be 90 years old, if I still have a pulse. How does that help?’
RJ – ‘Age is only a number. You can live in a very posh old age home. They are all the rage now. You see, you can never time the market. I have said this so many times, but nobody listens.’
SS – ‘And I guess I could also afford a 21-gun salute funeral. But Rakeshji, why was everyone saying the market will go through the roof if the GST bill was passed in Parliament? That did not happen. What has GST got to do with the price of fish?’
RJ – ‘Price of fish? What rubbish you are talking? I am a strict vegetarian. Please stick to price of onions. Or tomatoes. Or potatoes. I am not fussy. Anyway, you are asking about GST. See, the stock markets are very emotional. They work on sentiment. Sensex is even more sentimental than Nifty. The fact is nobody actually knew what GST entailed. All they knew was share prices will zoom if the bill was passed. But then Demonetisation came along, providing a double whammy. Get my meaning?’
SS – ‘Sort of, Rakeshji. Warren Buffet is quoted as saying, “Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.” What exactly did he mean by that?’
RJ – ‘Arre bhai, this is the problem with you smart alecks. How does it matter what Warren Buffet said in America? Listen to Dhirubhai Ambani who said, “As a school kid, I was a member of the Civil Guard, something like today’s NCC. We had to salute our officers who went round in jeeps. So I thought one day I will also ride in a jeep and somebody else will salute me.” That is desi akalmand. Homespun philosophy, mere dost. Forget about your Buffet shuffet. In India, it is only buffet. Self-service!’
SS – ‘That was so moving and inspiring, Rakeshji. Pardon me while I brush away a tear. One last question. What is your secret, that X-factor for making money in the stock market?’
RJ – ‘Ha ha. If I reveal all my secrets why would you come to me for interviews? But seriously, it is very simple. Strike a good balance between debt and equity, avoid automotive and bank scrips like the plague, mutual funds are ok but the thrill is in buying and selling shares, listen very carefully to what your investment advisor is saying, and do precisely the opposite. Never watch CNBC, Bloomberg, NDTV Profit, ET NOW and all those channels, except when I am on the show. Sure recipe for a stroke. Listen to my friend Bejan Daruwala, who has Lord Ganesh on his side. Above all, remember what Mark Twain said, “never invest on any day of the week that ends with a Y.”’
SS – ‘Thank you, Rakeshji. You have been very helpful, and I am even more confused.’