Haphazard Linkages

“Sometimes a cigar is just a cigar .” - Sigmund Freud ***** CAN YOU SEE A VULTURE? "The Virgin and Child with St. Anne" by Leonardo da Vinci (1503) In a 1910 essay, Freud made a valiant attempt at divining an aspect of the painter Leonardo da Vinci’s personality through the above painting. Freud peered at the picture after tilting his head to the left, and noticed a vulture. Off went Freud on his psychoanalytic jet and concluded that the picture hid an insight into the painter’s life.  It seemed to speak volumes about da Vinci’s ‘homosexual’ childhood fantasy. Freud relied on a translation of da Vinci’s writings, apart from the painting, for his interpretation. Only the unforgiving arrow of time would pass true judgment on Freud’s mental frolics. The great man had mistranslated the word for ‘vulture’. The edifice on which Freud’s theory of da Vinci’s sexual fantasies rested was an illusion. Freud apparently considered the essay to be the on

This edition is about a topic that fascinates me: bidding behaviour.   On how people make decisions under conditions of uncertainty. And the notion of ‘rationality’.   *****  Many of you participated in a game I played with you recently. (I’m sure you are glad that I didn’t ask you to predict your expiry dates!)   An investment prospect offers 100% return potential over your benchmark return (your ‘required return’). How much of this excess return would you be willing to pay/share upfront to participate in the idea? There were no right answers for this ‘buy in’. Only interesting answers.   Chart time. Buyin for ‘50%’ represents 50% and above.     Participants comprised of finance and non-finance backgrounds. The left bins generally had finance people; who opted for some variant of upfront fee and profit share structures. Many non-finance guys populated the higher bins. Interestingly, several finance folks populated the 50% and above bin. And I had s

I can see what you see not Vision milky, then eyes rot. When you turn, they will be gone, Whispering their hidden song. Then you see what cannot be Shadows move where light should be. Out of darkness, out of mind, Cast down into the Halls of the Blind.  - Diablo I usually avoid referring to stuff from the 90s as the opening act. It risks giving away my vintage… But the above words from one of the most successful role-playing games from the 90s – Diablo – (who remembers it?) is apt for this edition. Auditor Problems. It’s an opportune moment to dive into the Corporate Halls of the Blind. ***** Indian markets have been beset by a sudden wave of auditor resignations from listed companies in recent times. Stock prices of the affected companies have taken a beating. Runaway auditors have caused market participants to speculate over the next defection, as alpha monkeys smell quick gains. Auditor issues have surfaced after a period of widespread pri

Bonhomie. So much of it wafts through the market air currently. Hannibal Lecter’s quote from Red Dragon in the subject line wells up in one’s head. (Though some would counsel against letting Dr. Lecter crawl into one’s brains.) The past decade has seen a major change in the way market participants think about positioning. Like a responsible parent helping toddlers to get on their feet, central banks globally have held the market’s hands through periods of disquiet. We have learnt to walk, indeed. Conditioning has nudged us to presume the parent’s omnipresence during future periods of turmoil. Assorted naysayers, bear mongers have been shaken out. Converts and survivors from The Resistance have taken to trend following, along the path of least resistance. Up. Momentum plays on liquidity – the ETF brigade – have added to the crowd. The zigging and zagging of prices – Volatility – has progressively entered hibernation, as a result. QUIETER...and QUIETER Vo

With most market participants making money this year, the timeless quote by Napoleon in the subject line rears its head, once again. Regular non-readers know the wonderment I have on the impact of luck on investment outcomes. The markets have been on a tear (sure you didn’t notice), and my mailbox/chat is seeing two polarized stances. On one side is the  Bullish Apology . Where market participants pre-emptively share justifications for continued strong markets everywhere. This group exhibits hyper optimism, using recent history as the periscope through which to peer at and gauge the future.  The second, and potentially, the more interesting group, is the  Bubble Babble  crowd. This group looks askance at the rallies, and deems things a bubble. This year has given this group a great polarizer. Bitcoin. A tiny bit know much about it. Most know a bit about it; yet there is a growing supply of those sharing their two coins, calling Bitcoin a bubble. Both groups share certain