I am delighted that, for the first time ever, a nation-state is standing up for the right to mock. In my book, personal as well as professional, mockery is a fundamental right. My writing includes a generous dose of it partly because I am an ass (others may add a suffix), but mainly because it’s central to my investing thought process. Mockery is the most effective way to ignore seemingly sophisticated gibberish that we drown in. It’s also great for spotting chicanery, because when something’s too good to be true, absurdity becomes apparent way before dodginess does. Done well, mockery is critical thinking with attitude.
I have my pet punching bags: finance and economics professors who precisely model a make-believe world instead of crudely making sense of the real one; op-ed columnists who know what everyone else should do, despite never having done anything themselves; out-of-touch mediocrities who pretend to explain Indian plebs to Western audiences. The full list of what I’ve mocked, in less than a year of writing, is way longer: economists; sell-side quirks; fund managers talking up their books; self-proclaimed oracles, deans and gurus; mythical beasts burning others’ billions; talking heads; private equity; anyone with more cufflinks than books; forecasters; permabears; promised IRR; forward PE. The common thread across this unwieldy list is that they deter sound investing. To gauge what a few businesses are worth and act when gloom offers me a chance, I have to take such ‘experts’ lightly, not seriously. By mocking them, I don’t fall for their resume, prose or sophistry.
Mockery’s power doesn’t end at weeding out noise. It helps avoid landmines. Here’s one of my favourite stories. A decade back, suspecting a hotshot lender’s numbers to be too good to be true, I popped into their analyst meet to get a first-hand feel. After a cross-country drive from Bandra to a tony South Mumbai hotel, I was greeted by a giant cardboard cut-out of a rocket, rivalling Rajinikanth’s finest on grandeur (except for paal abhishekam bit). On it was emblazoned “We’re taking off” in giant red letters. I stumbled into Cape Canaveral’s reception area to be greeted by a liveried waiter asking “Saar, whiskey”. Not only was this a first for an analyst meet, the brew on offer was Scotland’s finest. It was accompanied by a catering operation worthy of a Delhi farmhouse wedding, with live counters, Indian food force-fitted into canapes and all that jazz. Stepping into the giant hall, I was taken aback by a throne at the middle of the stage. Not the red rexine-backed one seen at wedding receptions, but the real deal. Around the throne was durbar style seating, with courtiers’ tiny chairs arranged in rows perpendicular to the big one. The lender’s top 50 managers, decked in their finest suits, occupied these chairs, standing until Boss had taken his seat. Then, they were made to stand up, one by one, say their name and designation, and sit down. A few who had last-minute flu may have been replaced by paid actors. Other than participating in this school attendance meets Mexican wave ritual, none of them said a word. Boss then held forth, mostly elaborating on what was on the rocket. With the audience dulled by booze and overawed by Mahismati setting, questioners didn’t mention non-existent provisioning for usurious lending to an evidently dodgy clientele. There wasn’t any need for it either, as the picture was worth a thousand footnotes. The message on the rocket turned out to be inadvertently prophetic, if you append “with your money” to it.
For an early warning about a dodgy business, a comic’s eye beats a detective’s. Sometimes, a surreal opening line is a dead giveaway. One iffy promoter opened with “Do you know internet? I am future of internet.”. Skynet garu turned out to be Terminator for his shareholders. One solvent extractor pretending to be a brand spent a few lakhs on advertising. When pointed out, promoter glared at CFO, snapping “(Bleddy L-board) We should fix that”. Clearly, that wasn’t the only thing that was fixed. Many mentions that simply sounded funny – far-out science projects, inscrutable jargon, operations in exotic countries – ended up smelling funny too.
Mockery gets to the crux of a problem faster than conventional analysis. Unwieldy conglomerate shamelessly adding its 48th division? It’s a sub-par mutual fund, not a stock. Ploughing surplus cash from core business into indefensibly shitty venture? Papa unable to deny idiot dynast a new toy. A project defended as EVA positive? Bad idea. History sheeter promising to turn over a new leaf? Attempt at propping up stock price to manage margin calls.
This may be a stretch, but a generally irreverent attitude spills over into self-criticism. On the margin, there’s a bit of dissonance if I make one exception to all my mockery. It improves odds of spotting my own hypocrisy instead of waiting for my son to say “If screen time is bad, you’d be blind”. The hope is to look at my own decisions, going: got industry wrong; backed laggard company; got promoter way wrong; overpaid; no redeeming features whatsoever. The more important part of self-mockery pertains to decisions that seemingly did well. I know successes where I was dead against making the investment when we did. Or where my original thesis was a dud, but management executed well in a new domain to save my ass. Or I just got a lucky tailwind. When I get too pompous in my writing, it’s good to remind myself that I am an overpaid parasite shuffling money around, convinced about the infallibility of my investing cult.
Mockery felt especially topical in light of the discourse of the last many months. It’s hilarious to see recent headlines screaming “Earnings beat estimates by 800%”. Commentators have transitioned from Armageddon to V-shaped recovery within months. Some self-proclaimed epidemiologists made economists look respectable. No one gets predictions right, but the overconfident notion that buggy humans can make point forecasts at an unusual time deserves merciless mocking. Trivializing such opinions ensures that I don’t get subconsciously swayed by them. That’s the only way to hold my nerve in March or stay grounded in November. As we approach entertaining December rituals like year-end Sensex targets and top themes for 2021, this is a timely reminder to “Mock on”.