Experts of Hypocrisy!

This has been a significant run for the broader markets- the small and mid cap stocks of the world while the larger indices have taken a breather. The PSUs are on a tear, especially the railway and defence types. So are the mid cap IT and pharma who have gone from neglected to redundant to fashionable, all in the space of two years.

The new age stocks are back to being toast of town from being roast of town in less than a year and a half. Zomato has moved from ₹40 to around ₹100 while Paytm has rallied similarly from ₹450 odd to around ₹900. This has made everyone sing plaudits for them as to how they are on path to profitability and why they are the new thing which must be owned. Suddenly, just as the price has moved up, so has all the experts in unison agreeing as to how they are much more reasonably valued and there is what they call “ a clear path to profitability” leading them to the land of milk and honey. This my friends, is what I call the expert hypocrisy.

Most fund managers who entertain us with gibberish opinion ranging from Ukraine to Monsoon to Elections to cricket World Cup to G-20 have this strong belief that they have this formula of success and they want to bless us with wealth creation. Actually, they only want us to put our money in their hands for their own wealth creation. They are doing nothing but chasing momentum in order to prove as to how they already knew that defence was a theme and how they owned HAL at 600₹ or RVNL at ₹20. This is plain bullshit.

They change their opinions according to the price movement. If the price goes down, they want to remain cautious and when the market eventually turns, they will come out and say how they told us three weeks back as to how big a buying opportunity this was. They end up owning what’s moving- hotels, defence, PSU etc.

Ask yourself if you ever heard anyone recommending HAL in 2020 or even in 2021. Did anyone tell you to buy PSU banks in 2021, except maybe a Rakesh Jhunjhunwala who held Canara bank for almost half a decade before he passed away. Everybody else claimed as to how middleclass it was to walk in to a PSU Bank branch and how they could never compete with an HDFC or a Kotak. Well, three years down the line, HDFC and Kotak have underperformed the market big times while our backbenchers have rallied exponentially.

I must admit that I too was a fan of some of these experts propounding quality investing, value investing, remain invested at all times etc. Well, hypocrisy did come out in open and in some style. Ramdev Agarwal who has been selling the idea that he has never had one rupee invested outside of equity in 40 years recently confessed that he missed the biggest bul run of 2003-07 because he didn’t invest at all! He also went on to buy zomato, praise it, then publicly thrash it and now praise it again- all in the space of one and a half years! How consistent! Anyone who claims to buy only quality- defined by high profit margins, Return on equity/capital employed can never buy a loss making startup who has not made one paise in net profit till date.

The fear of underperformance is prevalent across experts. Prashant Jain who claimed to only buy value when he underperformed big time in HDFC AMC was now explaining to Anuj Singhal how zomato has a clear path to profitability! How cute.

Among this heard, only a few who dare to hold stocks agains the tide have stood out. Rakesh Jhunjhunwala and possibly Ramesh Damani are the ones to my mind. Everybody else is just pretending to intellectualise the process of taking away our money to their offices.

I still haven’t come across one expert who was bullish on TaMo at ₹60 or even ₹120 or even at ₹200. I was, Rakesh Jhunjhunwala was and that shows in holding pattern. I’m yet to find an expert who is bullish on BSE now and also was bullish six months back, yes just six months back. For nobody on TV was.

Being bullish is bullshit if you don’t put your money behind the idea. Unless you have a significant part of your net worth behind an idea, it doesn’t count. There are now a billion people who claim to have held HDFC Bank since IPO. If anyone really held it, he would have made at least a thousand crore and wouldn’t be working as a fund manager at this age asking people to give him money. Because Aditya Puri did sell his shares for over ₹1200 crores because he did hold it since IPO. All these people bullish on Kotak should be owning half the Malabar hills as Uday Kotak said if anyone did invest ₹10k in Kotak in 1985, it would have become ₹300 crores. How many experts are worth a tenth of that!

So my only suggestion is that investing is not a process of listening to these experts who are nothing but punters. The difference between them and retail day traders is that the retail guy bets his own money!

PS: BSE has closed above ₹1250 today. My first post in May 2021 was edited to include a note that I was happy that it had closed above ₹800, which on adjusted basis was ₹266 at current price. The feeling is sweet, and so is the sound of money!