Last week, in this column, I broke a thirty-year habit and admitted that “this too shall pass” did not quite fit the present moment.
The mailbag that followed was the largest I can remember. After enough years of doing this, one learns to read the replies as carefully as one writes the column, because the shape of a few hundred reactions often says more than the piece that provoked them.
The letters sorted themselves into four rough piles, and the piles themselves are worth a column.
A brief recap, for readers who missed the original. Most market disruptions, I argued, damage sentiment rather than actual assets. Factories still stand, workers still arrive, customers still buy; what changes is mood, and mood is cyclical. The current situation in West Asia is an unhappy exception. The damage being done to drilling, storage and refining capacity in the region is damage to steel and concrete, and steel and concrete are repaired by welding and pouring, not by a recovery in confidence.
That is why “this too shall pass” needed an asterisk for once.
Reader response
The first pile was the thank-yous, and to those readers I owe a short reply: you are welcome. There is little more to say. The job of a column is to name what is happening, and if some readers felt someone had finally said aloud what they were already sensing, that is a fair return for a week’s work.
The second pile was more interesting — and more important. A great many readers wrote, in effect, to ask whether I was using restrained language to hint at something far worse, whether the column was a coded distress signal from a man who knew more than he was letting on.
I was not.
I was being realistic, and being realistic mostly consists of saying: “I don’t know.”
There are genuine downside scenarios, but there are also genuine silver linings worth keeping in view. We may well see expanding refining capacity, diversified energy supplies, and far greater investment in domestic manufacturing. The kind of pressure we are now under is exactly what prompts long-postponed decisions.
We may yet emerge from this period with capabilities we should have built much sooner.
To read my column as a coded warning of catastrophe is itself an example of the very behaviour I argue against: pattern-finding where none exists. I told you exactly what I think, as I always do.
Spreadsheet syndrome
The third pile was the smallest — and the most entertaining. A vocal subset of readers wrote in to express displeasure at being offered, yet again, the boring prescription of SIPs, term insurance, and a handful of plain mutual funds.
This advice, they explained, was for beginners. Sophisticated investors of their calibre required something more elaborate: currency hedges, macro frameworks, sector rotations, and AI-age portfolio theory.
I have met this type of gentleman many times over the years.
He is unfailingly confident, and he is also, almost without exception, the person who loses the most money in moments precisely like the present one.
The boring SIP investor, two decades in, is usually doing better than the gentleman with the complex spreadsheet — and sleeping better at night.
Honest uncertainty
Which brings me to the fourth pile, the largest by far. A great many readers wrote to ask, in one form or another, what will happen next, and what they ought to do in response.
My answer must remain the same as always.
I do not know, and I will not pretend that I do.
More importantly, anyone who claims to know with confidence is either selling something or fooling themselves — and very often both. Resist them politely.
Boring wins
What you can do instead is exactly what you have been doing all along: keep your SIPs running, hold the term insurance, stay diversified across asset classes, and rebalance once a year.
None of this requires a forecast about West Asia or oil prices, and none of it stops working in the months when commentators do not know what comes next.
The dullest possible behaviour remains, by a very wide margin, the strategy most likely to make you wealthy over twenty years.
In a season as uncertain as this one, an honest “I don’t know” is the most valuable thing a commentator can offer you, and a confident forecast is the least.
Dhirendra Kumar is founder and chief executive officer of Value Research, an independent investment advisory firm