Thursday, March 27, 2008

The Bigger Fool Nation.

Everybody, every single punter/investor/trader/speculator had figured out the winning formula/strategy to multibagger his portfolio .. some key themes "land bank", "unlocking" business values, "infrastructure" play, real estate , retail, logistics,buy every dip etc.etc.. each of the nouveau stock market cognoscenti was convinced he'd got this one figured out. The market was headed to the moon and his "strategic" investments were going to create wealth at a pace a pace..really,even his greed was having trouble keeping pace with the pace.
Note: In India, this bull market business is purely a male bastion..well, maybe everywhere.(?)

Consequently, the countryside was teeming with alpha(generating) males who seemed to have transcended their respective locales, offices, jobs, small businesses, social standing etc. on the back of their new talent. Gravity had been soundly and roundly beaten in various portfolios, trading accounts and market cap of companies.
Slim, Buffett, Gates etc.were looking over their shoulders worriedly at this new threat from a motley bunch of land banking, value unlocking, scale-on-steroids visionaries from over yonder.

A quick couple of weeks later, the fool-proof formulae/strategies of just 2 weeks back were in deep question and the initial disbelief was fast turning into a cold reality check or "repricing" of risk premia(to give a good narration). Whatever stories had been intact/decoupled, values to be unlocked,land bank plays to be played..looked to be coupling up/ locking up in rapid fashion.

Across the country, newly crowned geniuses, experts, traders were getting flak..gravity was showing up in every account/portfolio with pent up fury. The experts were stripped bare,the (surprisingly inadequate) family jewels (all male domain,remember) were strung up for all to see.
As the sage of Omaha had warned:
"It is only when the tide goes out can see who was swimming naked."
Well most ponds in the countryside had newly exposed gents, hopping around with hands cupped over their modest modesties, as the water levels fell sharply.

When you really put all these varied "investment" theories/strategies/formulas mentioned above together, you realize there was a small common denominator that accounted for the entire success.. the bigger fool theory. All these strategies worked as long as you found a bigger fool to believe in them and bid the price higher..and so up it all went..till at one stage the bigger fool just couldn't be located..Hell, even the Japanese got wise in the end(..and you know what that does to any boom cycle).

So,where does that leave us.. the markets are looking positively chest thumping young males able to flush *investors* money into their asinine do-it-yourself long term investor(3-6 months multibagger plans) available to join any worthwhile herd..and you know the market badly needs a fresh crop of bigger-fool-participants.

Fortunately,there is still one party where the PE types are still playing the bigger chimp music (same rules as the old game) ..Indian Real Estate sector.. so if you hurry along, you may just get to play some..though the fools are getting harder to rope in lately.

..but then we all know the property prices never go down in India.


Bala said...


i am starting ludus fan club ;-).. do you take request posts?.. i would like one on ULIPs and money plus

Anonymous said...


Before I comment on the content, Let me tell you I like your style of writing. In the face and the world be damned.

In the markets there are the bulls, bears and the pigs. Its the pigs who invaraiably get slaughtered.

Markets are a zero sum game for somebody to win somebody has to loose. Participants in the markets tend to forget that there has to be a sucker at the end of the chain and if u dont see the sucker in the room then u r the sucker :-).

When the real estate jig rolls down it aint gonna be funny.

Keep on dishing out the pearls ...