This first appeared on LinkedIn.
So, the WeWork IPO failed. So did Uber‘s. And now, we have the “experts” telling us how they always knew all along.
Sigh! When you see the stock market “experts” on TV, they are almost always dressed sharply, look very busy, and talk in a grave voice using complicated words, and with the gravitas of someone who has seen the future. And what are they doing there? They are explaining to us mere mortals why the market went up or down or stayed steady. They are explaining to us why the others were wrong and they were right. They are explaining how the charts are saying something (this is literally as astrological as you can get) or how the market will find “support” or whether it has “buoyancy” and so on. They are also making predictions about how a stock will behave and whether one should buy, sell, or hold. Of course, later, based on whether their prediction comes true or not, they always have a valid and extremely reasonable explanation as to why it happened, and the funny thing is that in this explanation of theirs, they are almost never at fault!
Here’s the truth though: They have little, if any, understanding of the market behaviour beyond what anyone could master with a bit of observation, reading, and patience. They are explaining stuff post ipso facto. Any good economist will tell you that markets are simply not predictable beyond a point (that point being extremely shallow and near-term, and as I said, fairly predictable by a novice with curiosity, patience, and time). All that talk by them and the anchor and various other guests is to justify their presence on a channel that needs to find constant content to fill 24 hours.
This is, of course, known to most smart investors who tune in to hear what these so-called experts are saying because they know most gullible idiots will now take their word as gospel and behave in such a way as to move the markets in a direction that is in some way, affected by this “expertspeak”. It is a ripple effect of a self-fulfilling prophecy. Markets are like that. If enough “experts” shout loudly enough on enough channels that there is going to be a crisis and the market will crash, chances are, it will. In fact, even one expert shouting loudly enough can cause enough peer pressure if s/he is articulate enough and uses the requisite mumbo-jumbo for other “experts” to jump in and start following his/her lead. There are enough stories, both in fiction and reality, to show how sentiment is all that moves markets beyond really large macro-economic trends like famine or war or tech obsolescence or criminal act by a corporate etc. The explanations are simply justifications after the fact.
Why am I talking about it here? At the cost of the discussion being sidetracked by people claiming to be in the know and abusing/ridiculing my “ignorance” of the markets while praising this or that “guru”, I gave this example because I wanted to make a prediction I will stand by, which is more than what these so-called experts do, or is expected of them. And it is this: As the valuation bubble bursts, we’ll have the very same VCs & investors, Angels & consultants, experts & specialists, and old hands & serial entrepreneurs, all have pat explanations for what happened. Each of these will sound perfectly logical and reasonable, each having clear lines from cause to effect, each with competing claims of having said it earlier, and each with the smugness of someone who loves saying, “I told you so”. Each of them will be lying.
They will speak glibly of how they always questioned valuations. They will casually wave their manicured hands and shrug their Armani-covered shoulders as they order their shrimp cocktails at the Sea Lounge overlooking the Gateway at the Taj Mahal in Mumbai. They will reference everything from the Tulip Mania of the mid-17th century to the subprime crisis of the early 21st, speaking with such depth and detail as if they were at the auction tables in Haarlem in February of 1637, or in the room with Ben Bernanke on 18 September 2008 (Yes, I had to look these dates up online, as would you, unless you are a Professor of Economic History). They will let out deep sighs with mouth-full of chocolate chip cookies at the lobby of the Oberoi at Nariman Point to indicate wordlessly how no one listened to their dire warnings. But they will know that within their own circles, no one believes them. No one saw this coming. Because if they had, they’d not have behaved the way they did, with greed, lust, and short-sightedness when playing the “Find-The-Next-Sucker” game of Russian roulette with OPM (Other People’s Money), as they screwed up the lives of investors, entrepreneurs, and the general public while crashing markets, economies, and currencies with no regard to the consequences as long as they get to keep their exalted positions as the high priests of startup finance.
I only wish this time some of these cocky, rude, arrogant, and overconfident people so full of themselves as to be blind to reality are brought not just down a peg or two, but pulled up by their investors, raked over the coals, and discarded in the garbage cans of history. I wish things are shaken up to let the cream rise to the top and let the crap sink and die. I wish the startup ecosystem is thoroughly revamped, not by design, but through these market forces that show up these so-called experts to be on the wrong side of history and consigned to the TV screens where they can offer their hot air to the highest bidder for TRPs, and not mess with the crazy amounts of money they could throw at anything thinking it to be the solution to every problem. I really do wish we could go back to the drawing boards in terms of how businesses are started up, how they are funded, and how they acquire markets and grow. But I know this to be a pipe dream. Like the stock market “experts”, these very same VCs and investors will offer some convoluted explanations as to how they weren’t wrong but the markets were, how if only they had more money things wouldn’t be this bad, and how they and they alone can save the situation. And the investors will once again trust their money to these same apologists. Nothing will change. The cycle will go on. And another bubble followed by another crash will happen in a cycle of time.
Of course, this post will have people telling me how I am wrong. I am sure I am. In some way. Maybe in every way. It is quite possible I may not have thought of everything. Perhaps history will prove my conclusions false. But here’s the thing: I will not give you a convoluted explanation about how I was always right even if I am proven wrong. I will not try and explain the circumstances after the event. I will not hide behind large words and complicated technical terms. I will own up. And I will correct myself. However, here’s a question for you: What if I am right?
