Shankar Sharma writes on " The Unbearable Lightness of being Hare-ish"

.

I am sitting this beautiful February morning and the sea before me is my favorite colour: layered turquoise.

I sip my own creation - the world's best coffee - Caffè di Artisan - and reflect over the events of the last 6 months in India.

The screen on my mobile phone is red. It used to be very green till late summer 2024.

But it does not bother me what color it is.

Because I am neither a Bull nor a Bear.

I am... a Hare.

Everybody knows the broad characteristics of a hare: a hare is lean, has very large ears which help early detection of movement, sound and most importantly danger. It can run very fast...70 kmph. But it can brake very fast as well. It can swivel, zigzag, and most importantly, make U-turns the effortless way a grizzled pizza maker flips dough bases.

The Hare lives in open grasslands, not in areas with dense foliage. Danger lurks in density. The hare favors visibility.
But here is what is less well known about the hare. Unlike many other animals, it does not dig deep burrows. It lives shallow, in small depressions in the terra firma.

Now that is fascinating! Why does it do that?

Survival and safety. If you go deep inside a tunnel, escape is a problem. (Seems paradoxical though, considering that El Chapo dug a tunnel to escape jail. But then, those guys are different).

If you see every single characteristic of the hare, it's about survival first.

That's how my mind works. Survival first. Prosperity later.

In large part, if not entirely, your investing mindset will be formed by your formative experiences in youth.

I lost my father when I was 17 and I was the only son in a family of three sisters and no great family wealth. (And despite having large ancestral wealth in land, till date, I have not touched it for the simple reason that I wanted to make it on my own with no financial assistance from inheritance. That's my commie side).

When you have a loss like that, you go into survival mode. You become lean. You make do with less. You play the rare offensive game - but you focus on defense first.

You subsist to survive.

That's exactly how Soros has thought: quick U-turns, escape from the un-escapable. All because of his escaping the Nazis with his father, as a kid.

Warren Buffett has a different view of investing because he won the ovarian lottery: a white kid, born to prosperous parents, living the dream in small-town America, and enjoying the post-war boom in the best place you could enjoy a post-war boom in.

Buffett saw smoke from barbeque grills. Soros saw smoke from burning homes. Buffett saw white picket fences. Soros saw barbed wires around concentration camps.

Radically different youth experiences that fashioned radically different investment approaches. Each approach made money beyond imagination.

The Hare knows that life is unpredictable. And therefore, every cell in its body is meant for quick reaction to the vicissitudes of life.

It's not a cherophobic mindset, just to be clear. It is simply knowing that life itself, in general, or at least in part, can look like the price chart of a tech stock, instead of that of an FMCG company (at least, the way FMCGs used to be).

The Hare is built from youth, to conquer the tech stock price chart. It does it with insouciant ease.

That's me.

As a Hare, I run. I run scared. But because I run scared, I run long. I run free. I run wherever I can because I have made myself a finely tuned almost AI -like droid that, via design, construct and instinct, will run, swivel, pivot, somersault. Fly in the air like in a Jonty Rhodes run out. Like a Michael Bevan between wickets, never to be run out.

Whatever it takes to survive first. Runs can and will come later.

The Hare knows it's vulnerable. It knows that it has limitations. I know that too. I know that stock market gains are permanent. Till one day they are not.

Rakesh Jhunjhunwala, born to an Income Tax officer, lived life in tony South Bombay, and had a different life from mine. He thought like Buffett because he was allowed to think like Buffett by his formative circumstances.

Mine compelled me to think like Holocaust-survivors Soros or Andy Grove.

Each of us is going to be a prisoner of our foundational years. Or maybe, instead of " prisoner", I should call it "inmate".

But I am at peace being a Hare. It has made me very wealthy because it has fashioned in me, an alloy of high-tensile steel, blended with ultra-flexible rubber. I bend easy. I never break.

I bent back in 1998, when I made my first major trading error: being short on Tech. That cleaned me out. That bankrupted me.

I was bent into shapes like no contortionist can ever get into. But I never cracked because I was a Houdini . I wasn't going to become a corpse like my father's. I wasn't going to become roadkill on the investment highway.

I was a hare. I was going to survive. Then, prosper.

I swiveled. I went long on Tech. The rest of '98, '99 until 2000 February, was an endless party of Dom Perignon at Geoffrey's Pub in South Bombay.

But a Hare never sleeps. I am not only muscular. I am precuscular: in markets, I sleep with a half -open eye. Often, that's enough because at peak bull markets, the Dom lulls us all into the soothing stupor of soon-to-be-slaughtered rabbits.

I always watch out for market twilight.

My half eye, in February-March 2000, showed me enough: it showed me up for the lucky idiot that I was. And it also showed me that I wasn't alone.

When a Market has a sea of lucky idiots, all you need to do is to confront your idiocy.

Or, more politely, do an assessment of your skills inventory that made you so rich.

As I always say, "It's when you are at your most profitable, that you should be at your most critical."

Done right, chances are the "Skills" test will show up, at best, a false positive, ie, that you indeed were skillful in getting rich.
My February 2000 Test showed me the real, ugly, unvarnished picture: that I was indeed, an idiot. Just with a hot hand in a bull market.
Like a Hare, I pivoted away from this dangerous idiocy: I sold. All. And a few months later, I even shorted.

I shorted the very same stocks I had been long in. I can't mention those names because they are embarrassing today, but they were the only game in town back then. As a Hare, even as I hesitate, I almost always participate.

I play everything. I believe nothing.

If that's not being Hare-ish, what is.

It gets even better. I bought HFCL in '98 at around Rs 90. I sold it at Rs 1,600 in February 2000. I shorted it at Rs 2300. I covered my shorts at Rs 200.

All within 2 years.

And, to get the Nobel in Hare-ishness, I bought it again in 2017-18 at around Rs 16. And I sold between 4-10x a few years later.
That's dancing all over the crests and troughs of a price graph. Just like well brought up Hares do.

2004-07 was a remake of the same movie. Different cast. Same plot. But like it always happens, everybody loses the plot even when everybody knows the plot.

A Hare never loses the plot because he knows that there is no plot. It's all just fairy-tales. Fairy tales are for kids. Adults, if they are Hares, should know better than fall for kiddies tricks in what's a giant kiddy party game.

Come to think of it, this is pretty good way to describe the Stock Market, isn't it?

Again, in the December of 2007, the Hare pivoted. Out went the Infra plays. Out went the Banks. Out went...well, everything that could be out-wented.

The Skills Test was showing the same result as in February 2000. Strange how this test almost never turns up a different result and yet we always expect it to.

Summer of 2024: and I ran this Test, through my special AI software that can, telepathically, run this test on the entire investing population.

(I did not have to run it on myself because I already knew the result: Idiot with a hot hand in a bull market.)

People who had no clue about anything were "analysing " anything, recommending anything and those "anythings" were all working like anything.

I even got dressing down lectures from SME investors, one of who, works for Gas Authority ( GAIL) who told me, after several sessions of lessons ( from him to me)," Aap to purush hi nahi"( You are not a man). Imagine the ignominy of being told that when your testosterone is 550. But, in crazy times, accurate research is a liability.

(I only asked him politely how I could short the GAIL stock, because clearly, its senior employees spent more time studying SME IPOs instead of doing...well, doing whatever GAIL does.)

The Hare knows this " Mood of the Nation" because he's been there before. Occasionally, he still ends up believing in the bull-shit but with always, an eye towards safe house-grasslands, away from the Bear.

When you are a Hare, you will escape all right, just with a few claw marks.

Is being Hare-ish being pessimistic? The answer is nuanced.

A common saying in the Indian Fund Management circles is that an essential quality of being a great investor is optimism.

I agree.

But the question that follows is: Optimism about what exactly?

Rakesh (Jhunjhunwala) was optimistic about India. He made tons of money because of that optimism.

I have always been structurally optimistic about America. And occasionally optimistic about India And I have made a partial ton of money on that divided optimism.

(Of course, as a side matter, I am optimistic on neither now but that's the matter of another Le Grand Fromage piece).

But the concept of optimism for a Hare is quite different.

As a Hare, ultimately, the only thing I'm optimistic about is: my abilities to escape problematic markets with minimal claw marks, and to escape to pastures with easy pickings. I don't care whether that pasture is in America or India or in Mongolia.

So, which one should you be: Bull, Bear or Hare?

I am biased. The personality of the Hare suits me. The personality of the Bull suited Rakesh. It's all about our circumstances.
It worked out for all. We all ultimately get what we want from markets, in our own distinctive ways.

He grew up seeing the Arabian Sea from Malabar Hill. I grew up watching dirty water in mining quarries in my little coal town, Dhanbad.

But ultimately, we both ended up with the exact same view from the exact same spot in the hallowed land of South Bombay. (Of course, the dwelling sizes were vastly different.)

And here's the interesting horns of dilemma, Robert Pirsig kept posing in " Zen and the Art of Motorcycle Maintenance": Suppose I had known, with 90% perfect foresight, that being an all-in, 24/7 Bull would have made me 10x more money, would I still have chosen to be a Hare? Absolutely. What if the 10% came true?

In more plebeian terms, I would rather make Rs 1,000 crore across 50 stocks in multiple markets, than make Rs 10,000 cr on 3 stocks in a single market.

So, the answer to the question of what you should be, like all intelligent answers, is: it depends.