The Angst, The Truth and Everything-in-between – Quest for Value
Quest for Value

The Angst, The Truth and Everything-in-between



I like the word ‘angst’ – without going into the exact definition in Webster’s dictionary – conveys anger, frustration, desperation, exhaustion, anxiety, dread, worry etc. This one word – one word is all you need to know about what happened in March 2020 in the Indian markets (and world markets in general). Angst.

The Angst of Knowing: By now, you would have received letters from multiple PMS fund managers (either as their client or the very dependable Whatsapp forwards) talking about how they couldn’t see the havoc Corona would create in markets (and in life), and that they certainly understood the disease (having graduated from Whatsapp university) but underestimated the magnitude of the fall. In the same breath (as in, in the very next paragraph) will go on to tell you about how they think it’s only a 1-2 quarters disruption and that life will slowly get back to normal.

Of course, the discerning and erudite readers of this blog (haha!) will certainly notice a certain irony in those 2 paragraphs of almost any and every PMS letter you have read in March. But that’s their superpower – knowing, but not really knowing, and yet showcase that they actually know with sufficient disclaimers – and thereby the angst.

The Angst of Not Knowing: There are other sets of investors in the market where their stated position is ‘I don’t know’ / ‘I am not sure’ / ‘God knows what will happen’ which in summary can be termed on angst of not knowing. But why is it angst when you don’t know? Well, to start with, these ‘I am not sure’ investors are either in majority cash / majority invested. Mostly, majority cash. If you really don’t know – in the sense of ‘economy would go up or down’, ‘markets would go up or down’ – what would one truly do (keeping opinions aside)? The person would move to a 50:50 in terms of debt/cash : equity. That’s the true definition of ‘I am not sure which way things will go’.

So, the opinion (people take offense to the word ‘opinion’ these days – so, let’s say ‘stated position’) is ‘I don’t know’ but the action / positioning is ‘I think it will go to dogs’ (if you are mostly cash) or ‘I think we will recover well’ (if you are mostly invested). And to top it, all the ‘I am not sure’ investors are edgy – either to buy (so that they don’t miss the next upmove) or sell (so that they don’t miss the next downmove). And thereby the angst.

The Truth

Truth in this Kali yuga has multiple hues and meanings. For the purposes of this blog, let’s assume that Truth is something that can be stated with facts, but truth and facts are not the same. If that doesn’t cause you angst, I don’t know what will – because ‘you can’t handle the truth’ (A few good men reminder!)

The truth of knowing: I mean, and the truth is there for everyone to see (with a little Google search) of how some star and worshipped fund managers spoke about ‘leadership-wonderful-analytics-leaders in sectors are built on amazing culture-holding this for 15 years secular theme’ etc. have bailed out of financial services at the first sign of trouble. The truth then, irrespective of what their history and geography have said in the past, is almost all who spouted the above are ‘momentum investors’ and don’t need to be held at a pedestal. Every past interview is laced with hindsight bias and information asymmetry.

Everyone knows and talks about sector rotation these days. And the sector rotation broader opinion (from groups and twitterati) is to move from ‘the-red-hot-financial-services’ that has given folks stellar returns over the past few years to the ‘much-safer-pharma-because-you-know-Corona-and-healthcare spends will increase’ or ‘tailwind-chemical-and-magical-specialty-chemical’ because ‘China shift’ and ‘consumer-staples-is-expensive’. But you know, that’s not generally true – as in the reasons, not sector rotation per se. Sector rotation to these exact same sectors is as old as the hills as the image below depicts (between, somehow ‘rotation’ is a bit offensive these days – because it implies you have completely sold out on the previous theme which you had claimed in your 1001 ‘letters to the investor’ that this is the theme for 15-20 years (as true as it is that you bailed on this theme, like I said, ‘you can’t handle the truth’ and hence the new, taaza jargon is ‘sector tilting’ – implies…you know what it implies…))


The truth of not knowing: In these days of Internet and rampant Whatsapp groups, there is nothing that is not known. I mean, people have become expert epidemiologists in about 2 weeks, in what generally takes 10-15 years of hard work. So, what is there to not know?

– Somehow, folks seem to know exactly where Nifty will end up in 6 months to 1 year (6000-6500 on the bear side, and 12500 on the bull side), but cannot for the world of it, state about 4-5 stocks that will give them 25% CAGR returns with reasonably high probability in 3 years.

– Somehow, folks seem to know exactly what kind of stimulus and how much stimulus India should give and why FRBM is not relevant in this Covid era, but cannot for the world of it, know how to become anti-fragile with their own finances.

– Somehow, folks seem to know how human behavior is going to undergo radical change because of Covid (and thereby the resultant businesses and endless discussions around it), but cannot predict their own behavior in a bull / bear market the next day.

Deep down, we all think we know it. Like everybody knows everything. But in reality, the truth is nobody knows anything. Or is it…


One of the wisest investors that I have had the privilege to know, asked me recently, after I told him a long story/thesis about a particular stock, ‘kuch action kiya kya?’. On reflection, that’s a perfect statement to balance the angst and the truth.

– If you are convinced / positioned (for the ‘I am not sure’ investors) that market is going to dogs and Nifty to 6000-     6500 (or pick any figure below the current figure), have you acted accordingly? In fact, to take the                     Soros/Druckenmiller route, have you bought puts/shorted futures to that effect?

It is general human behavior that if you are in majority cash (means negative on the market), you’d kind of secretly hope that the situation deteriorates further and you can then come as knight in shining armor and scoop up a lot of businesses at dirt cheap prices.  You can in fact write a lot of eloquent and erudite pieces on the 2nd, 3rd and 4th order effects of any event (in life or in markets), especially a negative one. So, why not leverage this negativity and buy some puts / short the market for a small percentage of your portfolio to really drive a home run?

– Similarly, if you are convinced / positioned (for the ‘I am not sure’ investors) that market is going to back to near normal, FY21 is a washout for sure but most if not all businesses will be 70-80-90-100% there fully operational by FY22, have you acted accordingly? In fact, to take the Soros/Druckenmiller route, have you bought calls / long futures to that effect?

It is a completely abnormal human behavior to be optimistic in the face of such humanitarian crisis. Unlike the bear theory articles, you will hardly have any convincing arguments of why the market will go back up or why the businesses will go back to near-normal by FY22. The difficulty in such markets is not to find stocks which go up, but you want them to disproportionately go up – and that’s where the thinking gets stunted. If you are in the optimistic-bent camp of near-normal from FY22, and that bear markets are where stocks move 3% or 5% per day on the up (and missing out on certain days on some stocks will draw down your return significantly), then the key questions to ask are do you have a pipeline of stocks-at-certain-prices (realistic – not like HDFC bank at 200 rupees), why aren’t you buying stocks, shifting stocks and in general buying calls/long futures to drive a home run?


It’s not the opinion that counts – between the angst and the truth – because the opinions are too many, but it’s the action that counts. ‘How are you positioned’ / ‘What are you buying / selling’ is a much better indicator than ‘kya lagta hai market’. People can still lie, or tell you the partial truth, but that’s much better than an opinion and a narrative. Like the wise investor said, ‘kuch action kiya kya?’ – that’s the absolute truth in investing life.