Salman Khan is my favorite actor in bollywood. Well, favorite is a stretch. He is the one, I like the most among the handful that I do like. Salman Khan is like a poor man’s Marlon Brando. But, where Marlon Brando is one of the greatest actors ever, Salman Khan is not even adequate by bollywood standards. And while Brando acted on broadway theatre and Oscar winning movies , Salman Khan makes movies which are ………….I don’t know, I am at a loss for words.

But still why would I wish ill will towards a perfectly good massala movie that Da bang is billed to be. Well any enthusiasm that the reigning powers of bollywood may have for making good soulful cinema , is tempered by the fact that horrendous movies  can make a lot of money if marketed properly. If Dabangg becomes a hit , it will further set the wrong incentives in place.

But I am jumping to conclusions. It is entirely possible to make a good movie which is also a mass entertainer. Maybe it will set the right incentives for Salman Khan , to put atleast some thought in his movies.

-          Amaresh

The original Salman Khan -

This has to be the rudest book I have ever read.

Well, not quite. But it is on a subject on which most people are not generally rude. People mock everything, but they are sensitive when it comes to making fun of someone else’s faith. No need to be so – says Dawkins and rambles in an absolutely no holds barred discourse on why there is no God. For me, it was one of the most delightful things I have ever read. I also realized that I am not a skeptic but more technically a de facto atheist.

So why is Dawkins (he is one of the world’s leading biologist) being so rude. He has explained his reasons in the earlier part of the book. I can’t recall all of them but one was that non believers should start demanding recognition to the right of no religion. If a person has a right to choose his religion, he should also have the right not to choose any. I have been trying to explain that to my parents, and to no avail.

But of course there are Pavlovian associations with the honorable religious man. To the extent that some salesman and property dealers put pictures of gods in their offices so that the client would think that he is dealing with an honorable moral man. Remember the hindi film hero who may be angry and is a non believer in the beginning but melts in the end and is finally redeemed. As far as Dawkins is concerned, the non believers need not be apologetic. Scientific evidence may be inconclusive to rule out any possibility entirely, but it is heavily weighed in the favor of the non believer.

Yet apologetic they are. I remember Indrajit Hazra writing something about him being a non believer. But despite that he said that he finds religion cute (he was being a wuss of course). Cute ????? . I think that would offend both the believers and non believers , for entirely different reasons though.

Amaresh

I remember watching a Barkha Dutt episode of “who are these people”. As usual, it was low on logic and high on entertaining rhetoric – it was about the privacy of celebrities. How their private lives is nobody’s business but their own. Now, that topic is for another blog some another day, but what is inescapable is the fact that all public figures project an image of clean with an empty closet personal life. Tiger Woods, projected it for perhaps a lucrative deal from Accenture, Amitabh Bacchann projects it so that he can get farmer status for tax benefits ( I know it doesn’t fit I just felt like writing that) and politicians project it so that they can get votes.

In India, it is a de facto assumption that the Buddha politician must be a great family man. But in America, so much hoopla is made about the family life of the candidate. I think we would see a gay American president, before we see a President who does not believe in the institution of marriage and just like women too much, to commit to one. Remember the old hindi film cliché – “ main baal bacchon waala aadmi hoon”.

What exactly is so honorable about being married . The reasons for most marriages are– economics, escape from boredom, lack of imagination for challenging traditions, need for legalized sex at home while you have fun on the outside and of course to propagate the species. Yeah, I know, that is the life force – it is a good enough reason to make it honorable.

But, while as honorable as that is (mindless propagation of species) there are plenty of lesser pavlovian associations with marriage. So he is boring enough to get married – it means that he is also dependable for lot of other boring things. The fact that you have made a commitment to one person means that you are no longer seeking many different sensations ( hopefully). The fact that you are commited, implies that you will be consistent ; and we are programmed not to trust people who are inconsistent and keep wavering in their own mind.

-          Amaresh

The theory of randomness and chance has been made popular by trader and scholar Nassim Taleb in his books Fooled by Randomness and Black Swan. But, I know of at least one thinker who had put forward similar theories few centuries ago – Machiavelli. Basically his theory was – that in life you are playing a duet with lady fortuna. Sometimes, she is calling the shots and sometimes you can manage to take the lead and make her play a subordinate role through your efforts. But she is always a factor. If there is one endeavor where lady luck is absolutely calling the shots – it is finding love.

Suppose, for an argument sake, we divide all female personalities in 100 types. Now, for your particular personality, some of these girls are much more suited than the others. So, let us arrange them in a decreasing order of suitability ; 1 most suitable and 100 least suitable. It is pretty much like a normal curve and you are much happier being in either of the two tails. It is when you end up with females in the middle of the curve that you are doomed.

 It is very unlikely, that you will meet the females ranked 1 to 5 straight away. And if you do, you are very lucky. You would also be very lucky if you have met the females 90- 100, because you would know very soon that it is not going to last. So, you would try to have a fuck and get over with it. But, you are really in trouble, if either you meet females in range 10 – 40 or 50 -80.

If you meet females 50 -80 you would not know straight away that it is not going to work out. Break ups, heartaches , affairs , infidelity, lies and frustration et al are in store for you. And every time, you are having one of these failed relations, your personality is getting corroded little by little. Nothing you can do about it , you have just been unlucky.

And it is even worse, if you end up with a female 10 – 50. As you would think, that maybe this is love. That maybe this is as good as it gets. That maybe all that passion is only in bollywood movies. So, you will go ahead and marry and never know genuine love. Or maybe a female from 1 – 5 comes much later and you are a married man in love with another female. It is not at all your fault – you just have been unlucky.

The reason why it is all so tricky is that you really cannot tell between 10 and 90.You can tell what you do not absolutely want(100) and you can tell what you are definitely heads and heels into love with (1). But between that, the curve is really hazy. So that is why the ancients say – unlucky in love.

-Amaresh

As far as Punjabis are concerned, they are the numero uno in our country. They think they are the most street smart, the best looking and the wisest when it comes to making money. But the truth is that they are a distant second in all of the above. A bihari will run rings around a Punjabi any given day. Kashmiri men and women are much better looking than Punjabis and when it comes to making money, you will pick a Gujarati or Marwari over a Punjabi any day.

They present an interesting study in contrast when it comes to making money – Gujaratis and Punjabis. Punjabis have a brash , bindass risk taking and entrepreneurial style of making money. They have the bravado to try out new things. And then do not tend to get bogged down by traditions and morality when it comes to making money. But a Gujarati is much more clever. He is an opportunist who waits for the other person to take risk and puts his money when he doesn’t see any downside but lot of upside. For example a Punjabi will take a loan , start a factory and try to create a market. Gujarati will sit on the sideline for the Punjabi’s business to get distressed and then buy a stake in his factory at a much bargain price.

But the real Gujarati wisdom shows when it comes to managing money. Gujarati spends well within his income. He has little taste for pompous materialism in which a Punjabi will always indulge. He just gorges on chatpata street food which doesn’t cost much and keeps on saving his money. That money is wisely invested ( unlike most of the other people who want to work for the money rather than let the money work for them) and he accumulates enough assets till the income from that assets is sufficient for the Gujju to indulge himself in. But by now his frugalness is so well entrenched that the Gujarati is content to live within his means. Which means that instead of a lamborgini he can afford , he is content with the BMW. The Punjabi wants the BMW even if all he can afford is a Honda city.

-          Amaresh

Munger : ” Here, my early experience was a doctor who sent bushel baskets full of normal gall bladders down to the pathology lab in the leading hospital in Lincoln, Nebraska. And with that quality control for which community hospitals are famous, about five years after he should’ve been removed from the staff; he was. And one of the old doctors who participated in the removal was also a family friend, and I asked him: I said, “Tell me, did he think, ‘Here’s a way for me to exercise my talents’” — this guy was very skilled technically– “‘and make a high living by doing a few maimings and murders every year, along with some frauds?’”. And he said, “Hell no, Charlie, he thought that the gall bladder was the source of all medical evil, and if you really love your patients, you couldn’t get that organ out rapidly enough.”

Now that’s an extreme case, but in lesser strength, it is  present in every profession and in every human being. And it causes perfectly terrible behavior. If you take sales presentations and brokers of commercial real estate and businesses- ” I’m 70 years old, I’ve never seen one I thought was even within hailing distance of objective truth “

Kurt Cobain yells out in the end of smells like teen spirit – a denial !!!!!!

And wordsworth once said “ my heart leaps out in thousand joys , as it beholds a rainbow in the sky”. Or he said something to that ilk I cant exactly remember – the point is that a rainbow is an illusion but since it is pleasing, Wordsworth is ready to believe it.

Ghalib has put it this way –  Hum ko maloom hai jannat ki haqeeqat lekin, Dil ko behlane ko Ghalib ye khayal achha hai.

In words of Munger : “This first really hit me between the eyes when a friend of our family had a super-athlete, super-student son who flew off a carrier in the north Atlantic and never came back, and his mother, who was a very sane woman, just never believed that he was dead. And, of course, if you turn on the television, you’ll find the mothers of the most obvious criminals that man could ever diagnose, and they all think their sons are innocent. That is simple psychological denial.

The reality is too painful to bear, so you just distort it until it’s bearable. We all do that to some extent, and it’s a common psychological misjudgment that causes terrible problems.

It is fashionable to bash our media but shouldn’t we be grateful to them and not just for the entertainment they provide.

After all, what did we have before this media. What chance would Natha farmer have in the good old days of Doordarshan.  Chetan Bhagat says that the Star World generation is being led by Doordarshan generation. He is implying that it was boring ( I guess); but more than boring it was heavily censored. Something like the Harshad Mehta scandal would get a tempered down 30 second coverage while Narsimha Rao’s visit to a local school village where he inaugurated some Gandhi Yojana will get 3 minutes. Because Doordarshan was the monopoly supplier, and it was controlled by the reigning powers in Delhi, you would only get to see what the government wanted you to see.

Atleast, Natha farmer and Boman Irani ( in Well done Abba) come close to getting heard and having their problems solved. There are instances in real life where people have managed to whip up public sentiment in their favor with the help of media. It has been misused by Rakhi Saawant and Shah Rukh but still we are much better with it.

Of course, it would have been nice if the media drew a line somewhere. But its too late now. The corruption of the media is similar to any other form of degradation that can happen due to perverse incentives. Sponsors want eyeballs. They pay the bills. So the journalist will slowly start yielding ground and lower his standards. Slowly and slowly the discipline will go down. And the real reason the process is inevitable – if you don’t do it, then somebody else would. And soon, some people start doing it and the pressure on you, to loosen up on your morals increases. Just like when the majority of the kids are cheating in the class, you too feel ok to do it. Or if the majority of the bankers are lending loans to wrong people, you feel compelled to do it.

-          Amaresh

The first one is about Incentives. Both Freakonomics and Superfreakonomics are about the power of incentives and those very enjoyable books will make you more than aware of how powerful incentives can be. I think, atleast two or three full term courses in MBA ( like organization design , business marketing) can be reduced to basically understanding incentives.

In the words of Charlie Munger – “Well I think I’ve been in the top 5% of my age cohort all my life, understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes, but I get some surprise that pushes my limit a little farther “.

One of my favorite cases, about the power of incentives is the Federal Express case. The heart and soul of the integrity of the system is that all the packages have to be shifted rapidly at one central location each night. And the system has no integrity, if the whole shift can’t be done fast. And Federal Express had one hell of a time getting the thing to work. And they tried moral suasion, they tried everything in the world. Finally somebody got the happy thought, that they were paying the night shift by the hour, and that maybe if they paid them by the shift, the system would work better. And lo and behold, that solution worked .

Early in the history of Xerox, Joe Wilson, who was then in the government, had to go back to Xerox because he couldn’t understand how their better, new machine was selling so poorly in relation to their older and inferior machine. Of course when he got there he found out that the commission arrangement with the salesmen gave a tremendous incentive to the inferior machine.

But now, after 150 posts, I have finally decided to make this blog about something. I have been using a lot of theories from psychology and behavioral finance on this blog. Do not mistake me for someone very well read and knowledgeable. I have been using a very simple system put forward by Charlie Munger ( Warren Buffet’s second in command for few decades) in a legendary speech – psychology of human misjudgment.

The idea is something like the 80 -20 law – that majority of behavioral stupidity we observe in ourselves and those around us can be explained by 25 very simple principles. They are very easy to learn – you can pick them up from books like freakonomics and Outliers that are very fun and very easy to read. But, because this system is easy to pick up, doesn’t mean you should be dismissive of it and think that you can learn a lot more by reading thicker text books. There is a perverse tendency to put complicated things on a higher pedestal (think Indrajit Hazra) . But some of the most profound things in the world are very simple – e.g. Beatles, Coca Cola , Toilet paper etcetera, etcetera.

So, I will write about these 25 principles and their examples as and when they appear in our yuppie life. And they would appear – in movies, in malls , in your workplace and front pages of newspapers and I will be writing about them and acting all smart saying – I told you so. Apart from that, the sorry education system of our country in general and MBA education in particular would continue to be constant targets of our ridicule. And we would ridicule whatever else we feel like ridiculing. God , Jesus , Moses , Indrajit Hazra etcetera, etcetera.

Here is a link from where you can read the original Charlie Munger speech

http://www.scribd.com/doc/2260984/munger-speech-on-human-misjudgement

Since people these days have an aversion to text, you can alternatively download the really vivid, really groovy and really good power points of lectures 1-10 from this link; which is the website of Professor Sanjay Bakshi, whose lectures on Behavioral Finance are based on writings of Charlie Munger.

http://www.sanjaybakshi.net/Sanjay_Bakshi/BFBV.html