Shelf Life of Leadership

Turning left as one exits the Harare International airport, the visitor is faced with what the locals call "Independence Gate". It is a gateway built to celebrate Zimbabwe's independence from the British rule in 1980. Twenty seven years is not a long time in a country's history but for Zimbabwe it has been enough to shape its destiny. And the picture looks fairly grim. The country is ruled by the same person who brought them freedom but President Mugabe has metamophosized from being a hero to the most hated person in Zimbabwe today.

India, on the contrary has been now free for sixty years. More for the better than for worse - many would think. Pakistan, our neighbor, was given independence twenty four hours before India and the country has hurtled from one crisis to another and even today is only a step away from being a anarchy. We Indians must thank visionaries like Pandit Nehru and Sardar Patel who gave the country a solid foundation at birth. It requires an iron will and vision to build anything, leave alone a nation and our early executives had oodles of both. But perhaps so did Robert Mugabe.

Here is my theory on this. All leaders come with a shelf life and any tenure beyond the sell-by date has dangerous ramifications. We in India came perilously close to it when China invaded us in 1962. It was Nehru's naivety that he couldn't anticipate the threat and foolishness later on to not realize the severity of the invasion. Nehru passed away soon after, leaving the reins of the nation to the younger generation but only after he ensured the solid bedrock of sustainable growth - political, social and economic. Jinnah died too - but my guess is he died too soon, and in the shadow of the partition it was easy for the armed forces to play the role in Pakistan that the army continues to even on this day.
Perhaps Zimbabwe would have continued to be the beautiful country that it was had President Mugabe not lived well past eighty.

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Bubble 2.0

Every silver lining has dark clouds around it. This makes for famous last words from a glass-half-empty kind of a person like me, but truth was never farther away from this maxim when stock markets reach bubble proportions. I was witness to the dot com bust in 2000 and to quote from a film a I saw recently - it would be funny if it were not sad. People were pouring money into every venture that had anything to do with the two most powerful vowels in those days - "e" and "i" (for electronic and information respectively). Sometimes things assumed hilarious proportions like one day when the CRISIL (a credit rating agency in India, later acquired by S&P) stock started piercing stratosphere just because the company released a new version of its website. The Chairman of a company I worked for proudly pointed our collective attention to Amazon.com, a company he revered. Why? Because it had no revenue yet commanded such huge market cap,you stupid imbecile. Commonsense economics had clearly left the building.

Turn the clock to what is happening now. The buzzword is anything two point zero. Web 2.0, Datawarehousing 2.0, BI 2.0 - you name it. Blame it all on the cheap money that made bankers and investors throw moolah at ideas that look great on Powerpoint. So you have social networking that is white hot these days. Neural networks and patented algorithms that allow me to connect to the doorman of a building that housed me in Boston for a week in 1996 (the owner of a two point oh venture now lives in the same building so you can connect to him through the doorman, you stupid nineteen eightyfive idiot). Sheer amazing stuff - six degrees of separation. I have 48 contacts in Linkedin (another social networking site for professionals), my friends have 203 at least, everyone recommends everyone and as a family it is much happier than my own. But how do these people make money, I wonder. The day Linkedin asks me to pay for the membership I will walk out - albeit with misty eyes - from this cauldron of social clustering. That perhaps brings us to flogging the most flogged path of revenue generation - online, targeted advertisements. But in a downturn, when everyone is busy running for cover who will stop to advertise lingerie on Linkedin just because your fourth degree separation happens to be that bombshell from college days?

Watch out for the end is nigh. In the words of Warren Buffet - only when the tide goes down will we find out who all were swimming naked. I will run for a swimsuit straightaway.

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Bengali Blues

I have this rather untested theory about stock market crashes. Every time you spot Bengalis becoming active and investing in the stock market, you are pretty much near the peaks. I actually witnessed this to some extent during the Harshad Mehta induced 1993 crash when it was common for a Bengali in a crammed Calcutta mini bus beam happily - "ACC book kore dilam dada" (just booked some ACC stocks. Curiously they used the word "booked" instead of buy - a hangover from the license raj where one had to get into a queue even to get cooking gas).
So are the Bengalis buying stocks now? I am not entirely sure since I have moved away from Calcutta. However, I have started gathering observations around another hypothesis of mine. Watch out for the "Sir, personal loan sir" guy outside my office building. If he is there frequently enough just short the stocks with high PE ratios. It is sad that I don't run a hedge fund - else, I could have pioneered the "Human behavior relative value" strategy. Watch this space to see how my strategy does!

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