Every Saturday, I plan to send out this special post with a few ideas I am reading and thinking about. Plus, a question I am meditating on.
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Book I’m Reading – A More Beautiful Question
Since early childhood, most of us learned that our parents did not like us asking many questions and that only authority figures – most grown-ups – had the right to ask them. The result was that we stopped questioning things and accepted what we saw, heard, and were told with meek acceptance.
Sadly, this approach worked well in the industrial era, but proves futile in the knowledge era, because it compromises our ability to think and understand deeply.
In his book, A More Beautiful Question, which I glanced through recently at a bookstore, Warren Berger led me to the importance of asking thoughtful, ambitious “beautiful questions” — the kind that can help us grow into happier and more useful human beings. An insightful passage from the book reads thus –
We’ve transitioned into always transitioning…In such times, the ability to ask big, meaningful, beautiful questions – and just as important, to know what to do with those questions once they’ve been raised – can be the first step in moving beyond old habits and behaviors as we embrace the new.
In the modern era, we must use unfamiliar tools in our attempt to take on new challenges without clear instructions, and with the clock ticking. In such times, Berger writes –
…questioning…will be even more important in helping us figure out what matters, where opportunities lie, and how to get there.
“Judge a man by his questions rather than his answers,” said Voltaire. Now, more than ever, the quality of our lives depends on the quality of our questions.
So, what questions are you asking?
Articles I’m Reading
One of the best theories I have read on the importance of investing in high-quality businesses in the Indian context comes from Bharat Shah of ASK Group, who has written a book (sad, it’s not available publicly) titled “Of Long Term Value and Wealth Creation from Equity Investing.”
I recently came across his old interview where he shared his insights on value investing and how he formed his investment process and principles. A passage from the interview reads thus (emphasis mine) –
…successful long-term investing calls for two vital technical capabilities or craft and two personality traits. While craft can be honed and refined by observing and absorbing, character traits have to come from within and be developed.
The two essential skills are: ability to comprehend and grasp the true character and the innards of diverse businesses as well as the ability to value them. Till these abilities are developed, one cannot become a good investor.
The two vital character traits are: discipline (or temperament) and wisdom. Discipline lies in investing only into quality businesses and the temperament of not getting carried away by the fads of the markets and buying such quality businesses only at a meaningful margin of safety.
One of my favourite financial writers, Barry Ritholtz, recently wrote about the biggest financial regrets people have. This was based on a survey of over 2000 people by American life insurer giant New York Life, and found these as the biggest financial regrets –
Image Source: Biggest Financial Regrets – Barry Ritholtz
Barry concluded thus, and I completely agree with this –
The sooner you begin to accept mistakes are inevitable, stop beating yourself up over them, and just fix what is not working, the faster the compounding can start.
By the way, do you have any personal financial regret? If yes, what are you doing about it, except regretting?
That real estate and banking are two of the most corrupt industries in India has come to light again with the PMC Bank (Punjab & Maharashtra Cooperative Bank) fiasco. The suspended managing director of the bank admits that past management did not keep the board in the loop about NPAs and also claimed the bank has an exposure of Rs 2,500 crore to the troubled real estate major HDIL, which is almost a third of its loan book!
When asked about the reason for underreporting of these loans, the MD has said PMC Bank wanted to grow fast and reporting the exposure could have led to a run on the bank. And if this does not sound shocking enough, when asked how the bank was able to hide HDIL’s NPAs for all these years, the MD said, “I am not going to tell you how we got it hidden. It is that the RBI has not seen it.”
Anyways, all this reminds me of an article written in 2016 by Tamal Bandyopadhyay about the corruption levels in the Indian banking system. You would be aghast at some of what he wrote –
…the pressure on giving loans without proper risk assessment mounts on senior executives just ahead of their interviews for promotion. If they don’t oblige, the risk of missing promotion is high. The senior executives also run the risk of being transferred to places not to their liking if they reject a loan proposal, recommended by the boss.
The current boss of a government-owned bank has recently told his executives to sanction loan proposals that he recommends (of course, verbally) and not bother about whether they will turn bad. His philosophy is: As long as the loan book is growing, none should bother about non-performing assets as bad loans as a percentage of overall loans can be contained through aggressive loan growth.
Tamal also wrote –
Instances of borrowers taking care of a senior banker’s child’s education overseas or picking up the tab for wedding reception of the daughter and even honeymoon at Bali are not rare. Similarly, a real estate firm may not mind selling a flat to senior bankers at a hugely discounted price to ensure speedy appraisal of the loan process. There are also borrowers who offer “annuity” to bank chiefs after their retirement to express their gratitude for the support extended to them in appraisal of loan proposals and disbursements of loans.
The annuity comes in the form of annual holidays, chauffeur-driven cars and guest house or hotel accommodation at certain cities.
Now, this is not to say that all banks are deceitful or all bankers indulge in corruption. I have seen and known honest, hard-working bankers. But the fact remains that banks in India, like globally, remain hotbeds of corruption. And the malaise is deep…very deep.
Thought I’m Meditating On
Haruki Murakami wrote this beautiful passage on weathering life’s storms –
Sometimes fate is like a small sandstorm that keeps changing directions. You change direction but the sandstorm chases you. You turn again, but the storm adjusts. Over and over you play this out, like some ominous dance with death just before dawn. Why? Because this storm isn’t something that blew in from far away, something that has nothing to do with you. This storm is you. Something inside of you. So all you can do is give in to it, step right inside the storm, closing your eyes and plugging up your ears so the sand doesn’t get in, and walk through it, step by step. There’s no sun there, no moon, no direction, no sense of time. Just fine white sand swirling up into the sky like pulverized bones. That’s the kind of sandstorm you need to imagine.
And you really will have to make it through that violent, metaphysical, symbolic storm. No matter how metaphysical or symbolic it might be, make no mistake about it: it will cut through flesh like a thousand razor blades. People will bleed there, and you will bleed too. Hot, red blood. You’ll catch that blood in your hands, your own blood and the blood of others.
And once the storm is over you won’t remember how you made it through, how you managed to survive. You won’t even be sure, in fact, whether the storm is really over. But one thing is certain. When you come out of the storm you won’t be the same person who walked in. That’s what this storm’s all about.
A Question for You
Heard of the concept of “Stop Loss?” A strategy used largely by traders, a Stop Loss order is placed with a broker to mostly sell a security when it reaches a price lower than the purchase price. So, if you have bought a stock at Rs 100, you can put a Stop Loss at Rs 95 or Rs 90. As soon as the stock falls to your Stop Loss level, it will be sold and your loss will be limited.
Well, Stop Loss works in life too. In his beautiful book How to Stop Worrying and Start Living, Dale Carnegie offers us the advice of using Stop Loss in our day to day living. How long are you willing to wait for someone who was supposed to meet you for lunch or dinner? How long are you willing to remain angry with someone for something they once did to you? How much are you willing to pay for something? Are you sure that the value you put on what you want isn’t too high?
His point with all of this is that if we start putting Stop Loss on those things that have the potential to cause us worry or anxiety, we can minimize the stress in our lives that would otherwise take a major toll on us physically and emotionally.
So my question to you is – What worry are you putting a Stop Loss on today?
Enjoy your weekend,
anil bharti says
good one !
Hello Vishal I am a Banker in PSU Bank and I am working for last eight years and it is true that Corruption is prevalent in my organization and this is not only the case with only my other banks are also facing this problem, I have not read what Tamal bandopadhyay has but as per your article, with my 8 yrs of experience I can tell what he has written is absolutely true.
But i want to ask is corruption prevalent only in Banking and Real estate sector? Because recently Thomas Cook India private limited got bankrupt, what was the reason for that?
Ishmohit Arora says
Sir are you sure it was Thomas cook India Pvt limited and not the international one? Indian Thomas cook is owned by Fairfax Financial, which is a solid conglomerate.
My father in the 60s’ when he had to sustain 5 school going children, his worries were stopped by reading and following Dale Carnegie’s books!
1. How to Stop Worrying and Start Living
2. How to Win Friends and Influence People
Putting Stop Loss is a good Recipe for worry and stress!
From which book of Haruki Murakami do you quote him here?
Kafka on the Shore
Thomas Anderson says
I liked the concept of applying stop loss in life. I can so much relate to it. Thanks for this post and keep up the good work.
Sreejith Surendran says
Thanks Vishal for this wonderful write-up.So much to learn on various fronts of life..!
Digonta Bordoloi says
Lovely post, Vishal… 🙂
This also reminds me of the corruption that’s widespread in the medical industry. Where like the bankers, doctors get their ‘conferences’ in exotic locations get sponsored by drugmakers… 🙂
Rajesh Mukhija says
Thanks very much for the wonderful post. Excellent read and great learning.
Eagerly await the next one.
Keep it up.
Mohan Lal Tejwani says
Very good article 👍👌
Thank you so much for sharing.
With regards 😊
Earlier corruption was limited to govt offices where in you visit for certain service. Slowly it got extended to other Govt entities like Govt hospitals, schools, PSU banks, Courts and Police stations and what not. Now the wave of private entities. Go to a private bank for loan, they will load all kinds of charges including insurance. Go to auto showroom and ask for a vehicle with bit of waiting time, lots of premiums gets loaded. I recently went in a cab driven by a villager and was dumbfounded, howmany loadings private NBFC did, all knowingly. Go to a tourist place including divine centers, the moment you got down from bus/train/flight, looting starts. We will see millions of articles like these but remains same as no one want a change.