The comfort of the crowd

I cannot even come up in front of a class of students and talk without hyperventilating. It has nothing to do with the topic in question. Despite knowing the subject intimately I am not able to stop myself from breaking into a sweat the moment I stand in front of the group and find them staring at me. If this is what happens when I am in front of a small group of students, I cannot imagine what it will be to stand in front of an auditorium full of people, peers and colleagues.

I do not want to stand out. I want to blend, be part of the crowd, inconspicuous. If I could help it, I would be happy to live my entire life like that.

What happens in the physical world also happens in the world of decisions. Specially when your decisions are liable to be judged with the benefit of hindsight. So why stand out? Why not go with the crowd, with the idea of the time? There is no way we can be blamed for going wrong by doing what everybody believes to be right? Right? Even if you went against the crowd and the decision proved correct, you will be a marked man.

For eg. Paulson made money betting against CDOs in 2008 when most people lost their shirts. Since then his every trouble has been highlighted. He is not the only one who has not made money in the last few years. But he is the one we know of because the crowd would love to know that even the one who got away in 2008 is now down their own depths and the media is willing to feed this story to them.

This is precisely why most people will find comfort in the crowd, with the wisdom of the times. For eg. it is generally believed that there is a lot of trouble in Europe and macro headwinds are intensifying. So most funds will be forced to increase their cash holdings.

Even if a fund manager felt that it is probably the time to start increasing exposure to assets, he is unlikely to do so because he leaves himself open to this knock out punch "What the h*ll where you thinking? Everybody knew Greece was going out of the Euro. Spain was next and then Italy. Everybody knew that Merkel would never agree to Euro bonds..... that was always her stated position. Why the f**k did I ever entrust my money to you?

But you ask me, what happens if he is proved right? Will he not stand out? Will he not get rewarded by the investors for being right when everybody else was going wrong? Well then clearly we are not living in the same world. In the world that I inhabit, the fund manager will be lucky if he gets a grudging "Lucky b**st**d" from his investors. If you do not believe me, ask Dr. Michael Burry of Scion Capital who was featured in Big Short.

And as usual, because you have been good enough to read this note till the very end, I leave you with this very important information that I am still long and will cut my long position and go short below 4996. And as an additional bonus for being so nice, I will give you an intraday tip! Buy Nifty at current 5115 with a stop at 5072. Sell at close