My investment consultant is an eternal optimist. From his point of view, the outlook on the stock market is always bullish, and therefore I should stay perennially invested. He also appears to have a direct line of communication to all the powers-that-be in the world of high finance and all governmental agencies. As a consequence of which, he has his finger on the pulse of likely policy decisions that will impact the market positively.
Of course, if we happen to be just a couple of months away from the Budget, then his hotline to the Finance Secretary ensures that all his gullible clients are that much ahead of the game. And whichever way the monthly review goes with my well meaning consultant, the meeting always ends with my fishing out my cheque book and affixing my signature for a not insubstantial amount in favour of some unheard of fund or the other. “You will not regret it Sir”, is invariably his cheerfully encouraging parting shot, while I dubiously view his rapidly vanishing behind with a thoughtful frown.
It must be said that most of the arguments my friendly adviser trots out in favour of ‘playing the market’, carry a plausible ring of credibility. The Reserve Bank is tightening its credit policy, interest rates on bank fixed deposits are plummeting, chit funds are an absolute disaster, and with real inflation clocking in at a disturbing 7.5 % and climbing, you simply cannot afford not to aim for annual pre tax returns of less than 15%. To a middle class citizen such as yours truly, such down to earth, every day facts of life make for a compelling argument to look for avenues that will keep your head above water, in a manner of speaking. And to put the lid on it, he will add helpfully, “When I say 15%, I am just being cautiously conservative. If I don’t get you at least 20% guaranteed return, I’ll eat my hat”. Since he does not wear a hat, I have to let that pass.
What about the risks? Of course there are risks. You cannot think of a fluffy omelette without breaking a few eggs, can you? No pain, no gain. One must have long term vision, and not be tempted by short term gains. In between all this commonsensical (my coinage) homespun philosophy, there is always Greed. Yes, let us not beat around the bush. Something for nothing or how to make a fast buck with your eyes closed. Actually, placing your hard earned money on the stock markets is not vastly different from betting on a race horse.
The bookies swear by Ace of Spades, a pedigree champion that’s going to burn the turf and leave all the other contenders panting, and you decide to have an expensive flutter on this flighty filly. And what is the upshot? Ace of Spades limps to a 7th finish in a field of seven. “Developed cramps. Luck of the draw”, moans the bookie, predictably. My investment consultant speaks in a similar tongue. Perhaps he was a bookie in his previous life.
The damndest thing about this investing lark is that you always seem to be behind the eight ball. It is one thing to be told, when you’re in your 30s or 40s, that you should be patient with stocks and mutual funds, because you’ll rake it in when you’re in your late 50s or 60s, with enough life left in the old dog yet, to enjoy life, travel the world (business class), and give your missus the time of her life. Don’t worry about your children and grandchildren. They are all in Washington, New York or London wallowing in their semi detached villas, swimming pool attached, with a sedan and a station wagon in the parking lot. And let’s not forget the two Irish wolfhounds.
The fatal flaw in this line of thinking is what happens when you reach your 50s and 60s and the stock markets, as is their wont, continue to play ducks and drakes with your vanishing assets, which your wealth managers (what a laugh) have promised to manage? And it hardly helps that when Wall Street catches a cold, Dalal Street goes down with pneumonia. You look ahead at your life and what do you see? You see the 70s and 80s looming, and you’re no longer thinking of the Swiss Alps, Pattaya Beach or Monte Carlo. You are worrying about hip replacement, prostate surgery, triple bypass and similar medical pleasantries. Of course, the medical insurance chappies don’t even want to know your name by then. Funny thing, insurance. When you don’t need it, they’ll give it you on the cheap. When you want it desperately, it’s “Adios amigo”.
In the final analysis, I am pretty clear that the whole investment scenario, the stock markets, mutual funds, fixed deposits et al, is a collective bum rap. When you trust your life’s savings with your investment advisor, and you cannot do without him alas (someone has to do all the running around), you simply have to trust to Dame Luck. You’ll win some, and you’ll lose some. You can only hope that, at the end of the day, you come out on the positive side. Never mind if you are staying ahead of inflation or not. And why do I stick to my consultant after so many years of frustration? I can only quote the late British radio and television comedian Tony Hancock, “Because he’s got such a nice face”.
Writer is Bangaluru —based brand consultant, music lover and occasional columnist
