Investment lessons from Mahabharata

Dharme Charthe ch-kaame ch-mokshe ch-bharatarshabh
Yadi ehasti tadanyatra yan nehasti na tadkwaachit” , said the sage Vaishampayana, a disciple of Veda Vyasa.

The Mahabharata is an evergreen epic and the viewership of the latest Star Plus version is testimony to its timelessness. It has an absorbing, complex plot with great twists, multi-faceted characters and strong women, it shows the failure of Dharma and the imperfection in all of us and how even good people can lose themselves at times. You’ll find all shades of grey in many characters which reflects the truth about each one of us. You’ll find Krishna using every little trick in his bag, to help the Pandavas win the war, making you wonder what kind of a God he is. There is a lot to love, hate, despise and argue about the Mahabharata.

But one thing that is common of Indian Mythology is that it never gets outdated or obsolete. In fact it comes back with a vengeance every few decades, with more relevance for that time period. You can apply it to the subprime mortgage crisis, the current E-commerce Kurukshetra in India, the wolves of Wall Street – practically to everything.

The Mahabharata in particular is a treasure trove of lessons for today’s investors and today we take a peek into the annals of history and bring to you some gems of investor advice.

5 men or 20 men?

Draupadi was a strong and demanding lady. She wanted 14 qualities in her husband. She wouldn’t be happy with just Shah Rukh Khan! She wanted all the Khans plus a bit of Ranbir and a dash of Ranveer! Lord Shiva could not find these in any single man and the least he could get was, the pancha pandavas who, together could satisfy her 14 demands! That’s the same case with assets. We look for some characteristics in the assets which we invest in. We look at returns, risk, liquidity, lockin period, etc. The fact is, we’d like an asset class to have the looks and the charisma and the money and power but no single asset class can do that for you. You need to go for the Pandavas and build your personal bouquets.

We typically look to debt instruments for safety, equity for higher returns, gold for returns and comfort and a house for stability, a piece of land for long term capital appreciation. Also, every decade or so, the returns of the assets keep changing. Some assets fall out of favour, some gain attractiveness and this is a cycle. Having balanced investments evens out a lot of things for you including the particular asset class’s market cycles.

Too many Kauravas spoil the chance of success

Mahabharata at the same time teaches one that over-diversification is no surety for success (it may be an investor’s downfall in fact). In the key battle of the Mahabharata, the Pandavas consisting of just 5, brothers could eventually defeat the Kaurava clan of 100 brothers. It’s easy for a leader to communicate and get a sign-off from 5 people, than from a team of 100! In a team of 100, there will be some voices who will definitely weaken you and become a bottleneck for progress. You can easily feel the disharmony in very big teams. This is very true for stock traders who have a very big portfolio of stocks. Every sector, every cap, every company has seasons and cycles and trends. It gets overwhelming to keep track of 100s of stocks and it’s better we pick 10-20 good stocks and stick to them (unless we have a dedicated Financial advisor who watches our portfolio for us). This just goes to show over-diversification may not necessarily create more value.

Blind love leads to heartbreaks

Dhritharashtra’s love for his son was blind! Dhritarashtra loved his son too much to stop or correct him even when he was bothered by his son’s actions. Some of us love certain asset classes this way and stick to them despite what returns they give. Women, even in today’s times look at Gold as the only ‘available’ investment. Women’s participation in stock market and Mutual funds is pretty weak and that is a reflection of this blind love! Or some of us get so attached to a specific stock in our basket that despite poor valuations and poor forecast we stick to it because we love the company blindly. Blind love never did anyone any good and losing money can pain as much as a heartbreak!

Make knowledge, learning and emotional resilience your DivyaAsthras

It always pays to prepare oneself as best as possible for life – whether it’s learning a new skill for a new role change or saving smartly to fund your child’s dream college. You should have your kitty filled with some asthras which will come handy in times of need. We’ve seen different kinds of smart people – some who network like crazy so when they need a job, they have enough people to reach out to. Some are always upgrading their skills so that they can encash their skills when the right opportunities come. Some people help others so much that when they themselves are in trouble, help is just a call away! We call these Divyasthras. They save you when you are in dire need – when you badly need a job or you need support to take care of a sick parent or you suddenly need cash for some emergency.

Arjuna, Bheema and Yudhisthra undertook long arduous journeys to obtain Divyastras, strength and strategic wisdom much before the actual battle of Mahabharata, which held them in good stead in the most important juncture of their lives. Arjuna kept learning all his life. He learnt military science from Drona, divine weapons from Indra, Pashupatasthra from Mahadev and treated Yudhishtra and Krishna as his guide all life too.

As important as it is to upgrade your skills for work, to help you earn more, is the knowledge of how to grow what you’ve earned. One should know what options are available to grow his money or safeguard his savings. Unfortunately financial literacy does not start at school level in India. In today’s Google searchable world, this is an unpardonable crime! One should know how our emotions play into monetary transactions and cushion ourselves from facing emotion led financial losses. Though there is only so much one can do about emotions, what we can do is, know our patterns and avoid those situations altogether. This is how many folks in Norway control their diets. They ensure that they never pass through high calorie food! One can’t rely on willpower always!

Along with investments you should ensure that you and your loved ones are well protected in case of any eventualities with adequate life insurance and health insurance policies. Most experts also advise to have a percentage of your assets liquid- as emergency funds to meet sudden expenses or hospitalization (where cashless is not applicable).

Forgive but keep an eye

Krishna pardoned Shishupala’s 100 mistakes before killing him. The lesson we can infer from this is, sometimes we all make mistakes – whether it’s financial or at job or at relations. It’s important to forgive, take the lesson from the episode and move forward with awareness. With respect to investments, sometimes –on certain months your investments may underperform. Maybe the market sentiments and volatility disproportionately affected your portfolio. Maybe some new rule caused some fund to underperform. It’s important to give things time. Is it a temporary situation? Maybe things will improve? With time we can intuitively know if this situation is the end or it’s just temporary. We should then monitor the portfolio just enough (no overzealous watching the statements every hour!) to confirm our assumptions and make a forgive or chop the head decision. So, give things time and either chop the head off or wait for the nectar from the flower!

 Have a war strategy and an expert CEO

The Pandavas would not have won the war without Krishna, the mastermind behind all the plans. Being such a small team, their only strong point was Krishna. Having a strategy helps you execute your job in a planned way and attain your financial goals. Lord Krishna did not fight the battle himself but made the strategy that worked for Pandavas. He just acted as a mentor and coach to the Pandavas. Similarly, when it comes to your finances, you must strategize about investing and personal finances before you start allocating your money to different investment sources and it always pays to have a learned mentor to guide you through the choppy waters of finance if you are a novice. Given the time it takes to understand equity markets and various investment options and the regular tracking they need, it’s wise to start with a world-class advisory tool like FundExpert and let the tool be your personal wealth strategist and CEO.

Be maniacally focussed on your goals and stay invested for 10,000 hours!

More than capability, often times it is maniac focus and commitment that does the job. Arjuna was a skilled archer. But Eklavya must have been the greatest. Just by watching Dronacharya train the young princes he learnt archery and he was better than the men directly being trained. That kind of maniac focus is what differentiates a Tendulkar from Kambli. They work on their profession and skills to the exclusion of everything else. Also, there is this theory of 10,000 hours to mastery which works for all fields!

In the financial world too, focus and commitment pays dividends. You need to have a long term commitment to succeed and need to stick to investment goals over a long term to reap true benefits. A case in point is the systematic investment plans with varied plan periods (ranging from 5 years to 20 years) where an investor has to continue with regular investments over a long time period and as is often seen, these give rich returns. Even in the equity market the most successful investors are the ones who stay with their stocks over longer time frame with long term goals in mind and do not let short term market volatility scare them. If you know your investments in and out, you can afford to ignore the newshawkers and scare creators and just let your investments do their work.

Don’t play a game you’re not skilled at

Yudhishtra’s gambling experience offers a perfect and the most basic lesson of investing. He was beguiled by Shakuni into playing a game he was not an expert at and lost not only his Kingdom and other assets but even his brothers and wife. Not just that, his entire family had to face ridicule and sorrows all because of this unwise decision. The dice game was equally a game of skill as it was a game of chance. Yudhishtra was less skilled than Shakuni and failure was unavoidable. Skill and presence of mind triumph over bad luck.

shakuni-duryodhan-in-mahabharat

Shakuni and the dice

The same is applicable in the investment world. If you do not know well about the risks and returns of fancy products and alternate investment options and you do not find an ideal expert to guide you; just learn to keep it simple. Do not get enticed by the lure of quick returns or fancy products and focus instead on good solid investment options including good mutual funds, FDs, PPFs, bonds etc. Better to earn less than losing all the capital!

On the same lines Abhimanyu’s story comes handy. Abhimanyu knew how to enter the Chakravyuh but had no idea how to exit. Everyone with a driving license thinks they can drive and everyone with a demat account, a stock tip and some cash to trade think they can trade. Stock market history is full or people who’ve lost money over stock tips. They get the BUY call but don’t know when to SELL. They get the SELL tip but they bought at a different price than was expected. So, don’t go by tips. As we previously stated, stay simple, earn a little less but protect your capital from ponzi schemes and snake oil peddlars.

The world of financial planning and investments may seem like a chakravyuh – too complex and frightening but with the right sarathy, one can take small steps and slowly grow their expertise and be their own sarathy.

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