What a difference a few weeks makes. Could anybody have imagined the state of what has transpired in the last few weeks? Are we yet aware of the full ramifications or the extent of the impact of the financial meltdown that we have witnessed now? Will this period go down in economic history, wherein a hundred years later people will talk of the Global financial collapse of 2008, in the same breath as the one in 1929? I really am in no position to answer these questions that come to my mind, but I do want to write the impact of these events as seen through my own insignificant eyes.
A few weeks ago, many just as I, would have thought about financial independence. Not a worry in the world and everything going to plan. Leveraging was the order of the day and everyone around me was talking like a wealthy man. Wealth was growing and picking appreciating stocks or property, was like shooting fish in a barrel. Rarely was the day when any bad news percolated out in the Financial press. Oil was raging away, threatening to touch US$ 200 a barrel, and for most that was just a theoretical number with no consequence on their lifestyles. The sub-prime crisis had unfolded months ago, but such was the hubris that we shrugged it away, sure in the knowledge that alls well in this world. In fact a few weeks earlier, I was in Mumbai and talking to close friends about retirement, and possibly doing something different in a couple of years. Even though there were economic storm clouds on the horizon, we could not see them. The Sensex had hit highs, come down and then resurged. Everything was temporary, consumption was the order of the day and life was meant to be lived to the hilt.
In the last few weeks however, talking to quite a few people in Dubai and elsewhere, the common theme is the disappearance of the dream. Along with the financial pain suddenly looms the horror of a recession leading to retrenchments across industries. If you are in a job, there is a good chance that either you or someone you know is going to be axed. If you have your own business, then you know that the heydays are behind you as consumers across the world are tightening their belts. (My own current employer announced retrenchments and though I have survived the first cut, the sword stills hangs overhead.) The press is drumming up all the bad news it can get its hands on, spreading further panic and fear. Organisations are tripping over each other in their enthusiasm to report bad tidings, blaming consumers, government regulation (or deregulation), the market, anything but themselves, as if that would exorcise them from the responsibility of their decisions. The vapid statements of assurance from leaders and politicians alike, have done nothing to soothe the collective paranoia. Suddenly no one can see any redemption ahead. The same people who were stridently claiming that oil would touch US$ 200 p/bbl are talking about a floor below US$ 20. The bulls are in their pens now, and the bears are having a field day.
Cash has suddenly become king. All the people who were trumpeting the virtues of the stock market or property as an investment are now conspicuously silent. Having spoken to a few sages in the Banking industry and also in the investment banking divisions, all I get are confused expressions as they scratch their heads in wonder. My investment advisors who used to hound me every few months to invest more with them, based on their amazing skill in increasing my fortune during the good times have now run for the hills. If I do get one of them on the phone, their only excuse when asked to explain the tatters of a portfolio, is that everyone is in the same state. These were the same ones, who last year took all the credit for their stock picks.
I am of the firm opinion that we are all idiots led by fools. All of the Bankers, property consultants and investment advisors know as little as any of us, they only get paid better. They use financial gobbledygook to hide their ignorance, and basically mouth statements that they have picked up in that mornings financial press. I am thankful that a very small portion of my portfolio was in the hands of these morons. My own performance (even if only slightly) has been better. Coming out of this, if and when I do have enough to invest, I will for sure never ever (ever!!) go to any investment advisor again. Far be it from me to say that my own performance has been flawless. It has been pretty dismal. My decisions (or the lack thereof), at the very least were "my" decisions. I learned from them unlike the decisions of advisors, from which I learnt nothing (other than not to trust them in future).
As I look around me I feel a strange sense of peace. I am obviously standing on the edge of a precipice, but knowing that does not deter or frighten me. Instead I feel strangely confident. After years, I feel I can stand up and look ahead without fear. Having been in the shelter of a safe port all my life had made me soft and weak. The choppy waters of the open ocean fascinated me, but I looked at it with deep seated trepidation. Survival was not guaranteed. Now I have set sail and even though it has been a short journey so far, it has given me confidence. Will I not be thrown overboard? Will I not fear for my family and my own life? Of course I will. But I will come up and I will swim harder. In the words of William Ernest Henley
It matters not how strait the gate,
How charged with punishment the scroll,
I am the master of my fate,
I am the Captain of my soul.
If and when we all do come out of this period, we will be stronger and wiser. My logic is that having walked the path once, the next time around it can only get easier. Of course this feeling does not just come from me. No man is an island, and in my case it comes from the solidity of my wife’s unflinching support, and the mature understanding of my children to whom we have always spoken as adults. I have written more than once, about my extended family, whose support make me feel like I have an army behind my back.
I don’t know about you all, but it has definitely rained on my parade over the last month or so. But I see the glimmer of the sun peeping out from behind the clouds, and as the radiance spreads, it lifts my spirit and gets me ready to face a new dawn.
