The Comedy of Investing

“I make sense of the world by mocking it” – Me!

When I started investing, I thought I’d have to be well versed in finance, accounting, economics, strategy, valuation and all that jazz. That was because I was asking the wrong questions. Over time and mistakes, I stumbled onto a better set of questions. How can I figure out whom to trust? What kinds of situations are analysable? What sorts of behaviour lead to big trouble? All my big questions pertain to human nature and its glorious eccentricities. While there are no clear answers, investors usually seek guidance in two fuzzy fields: history and psychology. While I’ve done the same, it can get boring. I found a more fun, shortcut method of assimilating the same learnings. I discovered comedy (no, not CNBC). History shows patterns, psychology explains them and comedy brings them to life. Here are a few illustrations of my favourite comedians helping me in my day job.

Forecasts

Forecasts are my pet peeve. They’re as meaningless as they’re never-ending: price targets, earnings guidance, economists, strategists, COVID doomsday prophets. Talking heads make up for lacking a real job by bringing along their personal crystal ball (first copy, bought on Snapdeal). But it’s psychologically hard to dismiss impressive-sounding, well-dressed people. Thanks to comedy hall-of-famer George Carlin, I laugh them off. Al Sleet, the hippy-dippy weatherman from Carlin’s early work, had the most outrageously hilarious forecasts ever, outside of the field of economics. In three words, Al made it impossible to ever take a forecast seriously: “Tonight’s forecast: dark”. You can see a sample of Al at https://www.youtube.com/watch?v=3nTItILnLYE

Self-delusion

“Jerry, just remember. It’s not a lie if you believe it” – George Costanza, on beating a polygraph

History reveals situations with terrible odds of success: invading another country, drunk driving, M&A, start-ups. Yet, generations march down the same path, even after being shown historic evidence relevant to their domain. When leaders sound confident of success in such doomed ventures, they aren’t merely lying to others. They believe it themselves. I’m special, this time is different and all that. As explained by evolutionary biologist Robert Trivers, this psychological trick confers a survival advantage. Projecting confidence increases odds of scaring away a competitor or securing a mate. There’s no better way to project confidence than to actually feel confident, even if misguided. I deliberately included ‘start-ups’ in this list of otherwise nefarious activities to illustrate how seemingly flawed mental wiring is good for humanity. This is the modern equivalent of overconfidently stepping out of a secure cave to hunt. Most may not return, but it’s a net positive for the gene-pool. George Costanza’s quote plays in my head every time I encounter overconfident self-delusion. More at https://www.youtube.com/watch?v=uD7n_p7zAqo

Bias

We’re all biased. Except sanctimonious op-ed columnists, who are obviously flawless. Two analysts can express polar opposite views after listening to the same earnings call, entirely due to confirmation bias of their prior stance. Every bit of ‘analysis’ I get in my inbox is tainted by the bias of its author. How do I stay cognizant of omnipresent bias, including my own? Every few weeks, I re-watch a timeless bit from Yes Minister about “Who reads the papers”. Jim Hacker says it best: “The Daily Mirror is read by people who think they run the country; The Guardian is read by people who think they ought to run the country; The Times is read by the people who actually do run the country; the Daily Mail is read by the wives of the people who run the country; the Financial Times is read by people who own the country; the Morning Star is read by people who think the country ought to be run by another country, and the Daily Telegraph is read by people who think it is.”. This early-80s series reveals how partisan media, fake news and filter bubbles aren’t recent phenomena. More at https://www.youtube.com/watch?v=DGscoaUWW2M.

While on bias, a rant on comedy itself. The problem with today’s comedians is that they let bias get in the way of comedy. Great comedians mock all of humanity, not half of it. Limiting jokes to one mockable leader makes for lazy, mediocre comedy. If Seinfeld had spent the 90s making Bill and Monica jokes, we’d be asking “Jerry, who?”. Astutely highlighting universal human absurdities, on all sides, makes for timeless humour.

Not sweating the small stuff

Tina Fey’s a genius. Her throwaway jokes in 30 Rock are better than the main jokes of most comedians. One such line has boyfriend Criss Cross telling Liz Lemon “You’re ha-ha crazy, not oh-no crazy”. That’s my go-to line for not letting the perfect get in the way of the good, in people and businesses. While I seek generally good businesses, even great ones aren’t perfectly good. Most have a stub of a division that’s a drag, a legacy problem that’s everlasting, a small acquisition that’s indefensible or key people who are quirky. Fey’s right about everyone being (at least) a little crazy. The central question isn’t whether there are flaws, but whether they’re ‘ha-ha’ or ‘oh-no’. This sense of proportion has been indispensable in shrugging off the small stuff, so that I don’t end up stupid about the big stuff. [Sorry, I just can’t find a clip of this throwaway line].  

Calling BS

[Non-Tamilians can skip this section or contact nearest Tamilian for illumination]

I love Madras, the city I grew up in. If I had the synthesize its attitude into a single phrase, it would be “Ippo ennaangarai” (“Whats your point”). No one can get through one minute of BS, before this phrase makes it appearance. I grew up on the comedy of SV Sekhar and Crazy Mohan, who embodied the same brutal irreverence. Without this formative influence, I wouldn’t survive the BS overload that comes with stock-markets. When a dodgy lender boasts of ‘confidence capital’ from an even dodgier ‘investor’, my mind heads straight to a Crazy Mohan classic: when the hero in Apoorva Sagodharargal runs out of achievements to tout, a flunky helpfully adds “His banian size 42” (no translation required; more at https://www.youtube.com/watch?v=nEmiiYtqeWY). Whether it’s hockey-stick projections in pitchbooks, private equity folks only mentioning their best investment or PPTs of IT companies (“My client was a Neanderthal, until I reimagined his business to save $4 trillion”), I channel my inner Madras to call BS.

Nowadays, serious writers are so hung up with how the world should be that they forget how the world actually is. Articles are mostly about “someone should do this or not do that”. Comedians, on the contrary, start with “have you ever noticed that …”. If they didn’t start with reality, the audience wouldn’t find it relatable. As they proceed to exaggerate to the point of absurdity, the humour makes it starkly memorable. The best comedians are more astute observers of human frailty than psychologists. Their best bits are nuggets of worldly wisdom. It’s worth asking ourselves: to become wiser, should we read op-eds or Calvin & Hobbes?.

I pretend that my job is serious and analytical. I throw in Charlie Munger quotes, to appear smarter than I really am. But, inside my head, it’s all Larry David. I view the world through Seinfeld references and Michael Madana Kama Rajan dialogues. I make sense of buggy humans in a messy world through comedy. And the best indicator that I’ve stumbled onto something good? I struggle to mock it.  

[This essay is part of the series "Buggy Humans in a Messy World". Views are personal. Ideas are at best unoriginal and at worst plagiarized. For anything sensible, credit goes to people around me. For any nonsense, blame is solely mine.]