Mungerilals, Diwali & Diwaala

As planned earlier a grand pre-Diwali bash was organised at a banquet hall of a reasonably priced hotel. The gathering was even larger than expected. The song from Tejaab was blaring: “Ek, Do, Teen, Chaar, Paanch……Baarah….. Teraah” to celebrate in advance the event of Sensex crossing 13K mark.

There was one specific Mungerilal under heavy influence of liquor; I was told he had 8-10 pegs and that too of some heady cocktail. He was behaving like Chunnilal of Devdas-fame (Sanjay Leela Bhansali’s Devdas, not the original classic)…if you remember Jackie Shrof’s dialogues like: “D se Diwaana, D se Daaru, D se Devaa etc etc…”. This guy was going from group to group in that party to offer his “expert comments” which are mentioned at the end of each section. Please pardon him for using some unparliamentary words. By the way, I found out that this Mungerilal a.k.a. Chunnilal had lost huge money trying to play the futures both in equity & commodities markets. He was the classic case-study on effects of excessive “Liquor & Leverage”.

1. A large group of Mungerilals was assembled in a corner loudly singing, in Qawwali style: “Ghar ghar mein hain Diwali, mere ghar mein….” This song sums up the ‘investment returns’ most of the Mungerilals got from this bull rally.

Chunnilal: “Q se Qawwali, Q se Quarterly results, Q se Qayamat ..…”

2. One Mungerilal had this to say about financial markets: “There are various types of animals in financial markets..like bears, bulls, pigs etc….but one must remember that Market itself is a MONKEY!” He further added his experience…..After hearing the news about North Korean N-Test, he went short on Nifty Futures and went long on Crude Oil Futures. Apparently, he lost money on both the trades. That’s why he was convinced that Market is like a Monkey, for its indifferent & irrational behaviour! I was also told that the same Mungerilal had similar experience when he was long on TISCO Futures and as a hedge shorted Steel Futures on a commodity exchange. (Unfortunately lost on both the positions)

Chunnilal: “A se Animals, A se Andheraa, A se Antarctica, A se Amaranth ….”

3. A Mungerilal told me why he fired his good looking secretary. When he ordered her “Get my broker, Miss Maria”; her mistake was that she asked him: "Yes sir. Stock or Pawn?"

Chunnilal: “B se Bellary, B se Betting, B se Bovespa, B se Broker aur B se Bh****…”

4. A Techie Mungerilal- a software professional was fired by his employer (a large organization) for using online trading software during office hours. This guy had attended some free seminar on one of the weekends & was convinced that by timing the market in momentum (swing) trading one could make lots of money. By the way, his educational qualifications are Engineering graduation & some PG course in Comp Science. I recalled Buffet’s quote that there is no relationship between your IQ & Investment returns.

Chunnilal:”S se Software, S se Silverline, S se Sadak, S se Suffer, Se Sazaa…..”

5. I overheard conversation of two Mungerilals who were drinking like a fish. First one: “Yaar, this Nifty trading strategy has really hit me hard, I’m unable to sleep well nowadays” The other Mungerilal replied: “Hmmm…The market may be bad, but I sleep like a baby these days. I wake up every hour and cry!”

Chunnilal: “N se Nifty, N se Nasdaq, N se Neend, N se Naalayak, N se Nuksaan…”

6. One Mungerilal was telling about the advantages of online trading: “Trading online is just great. I find it really speeds things up. You see I now get my margin calls 5x faster than before!!”

Chunnilal: “M se Margin, M se Market, M se Morgan-stanley, M se Mehangai..”

7. There was a heated argument about financial ratios wherein one Mungerilal was adamant & wanted to prove that “P/E ratio means the percentage of investors wetting their pants (pee**g) as the market keeps crashing!”

Chunnilal: “I se IFCI, I se Investment, I se Interest-rates, I se IFSL, I se Ispat, I se Idiot…”

8. In another corner a group of ladies were discussing and complaining about how their respective Mungerilal husbands misbehave moodily according to their day-trading fortunes. One of the Mrs. Mungerilals of the artistic kind started singing: “Kabhi neem neem, kabhi shahad shahad, kabhi naram naram, kabhi sakht sakht…..…mera piyaa….” After hearing this, another Mrs.M started singing “Kya se kya ho gaya Trader-wa….tere pyaar mein….chaha kya, kya milaa….” The third one was a poet herself so she recited: “Dil ke armaan aasoon mein beh gaye….…hum Nifty average kar ke mar gaye….”

Chunnilal: “P se Piyaa, P se Pyaar,  P se Power-your-trade, P se Panga……..”

9. A young son (9 years old) embarrassed his Mungerilal Father by asking loudly: “Papa..Papa… If all the business channels have ‘PROFIT’ in their name or tag line, then how come you make such huge losses by watching these channels all day & night? You even do not allow me to watch Pogo, Cartoons, Disney!”. I thought for a moment and realized how bright this young boy was! Look….NDTV “Profit”, Zee Business---Aap ka “Faayda”, CNBC TV18----“profit from it”.

His other son (12 years old) asked: “Papa, tell me…about those Technical Analyst Uncles (TAU jee!!) who appear on business channels giving advise to buy & sell….Tell me Papa….how come those expert TAUs (Technical Analyst Uncles) do not sit in front of trading screen to make money…why do we see them in TV studios during market hours?”

To add insult to the injury, his youngest (7 years old) daughter said this: “Papa papa, bhaiyya log theek kehte hain!! Dekho naa…aap ke woh khaas dost- Circuit Uncle (dealer working with broker) woh to sara din computer screen ke saamne baithte hain….phir bhi naa toh aapke ke liye naa khud ke liye paisa bana paate hain! Aur aap Papa, aap to Mummy se jyaada Circuit Uncle se hi baat karte hain naa!”

Naturally, father Mungerilal was too embarrassed and speechless. I however felt that at least GenNext is smarter & is unlikely to follow footsteps of Mungerilal father.

Later I overheard this Mungerilal screaming at his wife “Yeh sari tumhari galti hain, Tum ne bachhon pe kuchh acche sanskar nahin kiye hain! Teeno sach bolte hain!!! aur meri izzat kaa faaluda kar diyaa sab ke saamne! Agle parties mein main akela hi jaya karoonga”.

Somehow, I saw couple of Lawyers wandering around this family, could be sensing some business opportunity.

Chunnilal: “Ch se Channel, Ch se Chamatkaar, Ch se Chaalu, Ch se Chandramukhi, Ch se Ch***…”

10. Another Mungerilal, who was successful in making some short-term money, was busy scolding his wife. The reason was that his wife was told during a kitty party & was convinced that “Bull Market is nothing but a random market movement causing a ‘trader’ to mistake himself for a financial genius”.

Chunnilal: “T se Timebomb, T se T-Group, T se Trading, T se T-Spiritual, T se Timing…..”

I wondered if this was true, then “Bear Market shall be defined as a period when the kids get no allowance, the wife gets no jewelry and the husband gets none”

11. Then I heard this heartbreaking experience of one Mungerilal which is quite emotional. His daughter got engaged in April this year and marriage is scheduled in first week of December’06. He had saved money to buy 10 tolas (100 gms) gold jewelry as a wedding gift (dowry is a legally banned term in India). A Broker-Friend (I think it’s a misnomer!) suggested to him that instead of putting Rs. 1 Lac in buying physical gold, why not buy gold futures, after all with the same money he could play to buy 1 Kg worth of Gold (Power of Leveraging, you know)! And he had further convinced Mungerilal that by rolling over his position, in the next six months he would be able to multiply his money, so not only gold jewelry but entire marriage expense will be free!!! Around the same time, couple of firangi “expert analysts” on CNBC predicted gold prices to touch US$ 1,400, which meant double the level it was trading at that time.  This was about first week of May’06. So, Mungerilal calculated that by leveraging, his money would grow exponentially in a very short time (simple calculation explained by Circuit: Gold will double, so… 20,000-10,000=10,000 x 100 = 10 Lacs profit!). By paying Rs. 1 Lac towards margin & some buffer amount to take care of volatility, he bought a contract of 1 Kg Gold at the rate of Rs. 10,500 odd.

It was very very unfortunate that gold started falling thereafter…below 10,000 level he got his first margin call….Circuit somehow convinced him not to book loss…so Mungerilal borrowed some money (personal loans are so easy these days….just dial-a-loan…HUM HAIN NA!) to pay up additional margin. But Gold refused to go up due to global factors. Broker-Friend & his technical analyst came out with some research report showing strong support at 9,600 (some US$ 660 odd level on Comex). The Broker-Friend, Tech Analyst and Circuit all proved to Mungerilal the Power of Averaging (remember first it was power of leveraging!).Mungerilal further borrowed on his credit card limits and bought one more lot of 1 Kg contract. One fine evening, when gold breached sub-9,000 levels, Mungerilal got frantic calls from Circuit & Broker-Friend either to pay up additional margin or else they would be forced to cut his positions. Having reached all the credit limits, poor Mungerilal was helpless.

His net booked loss was to the tune of Rs. 3 Lacs all in a matter of few weeks, apart from outstanding loan, interest thereon, brokerage, phone bills, sleepless nights, physical & mental stress etc.

Even Chunnilal got stunned & speechless after hearing this episode. However I faintly heard him murmuring: “G se Gold, G se Gaflaa, G se Gadhaa, G se Gareeb, G se  Ga****…”

12. There was one Mungerilal narrating his story about how he suffered losses due to heeding advice rendered free on some internet chat room. There was a group of 3-4 boarders who used to “talk-up” particular scrip. He forgot that rising tide raises all the ships. He started believing them blindly after he made some quick buck. It took some time and lots of money for him to realise that he was trapped into buying some real junk stocks of Z category.

Chunnilal: “Z se Z-group, Z se Zigma, Z se Zinta, Z se….”

13. Then there was a table surrounded by 5-6 Mungerilals of the Technical kind. A chart was laid at the centre of table and they were trying to forecast some future movements. I got curious as always & joined that group to get insights. One said: “it seems to have bottomed out between 54 and 59, a break out above 62 will indicate a target of 72”. The other opined: “structure is positive, it has gone down to say I’m moving up. Up move is intact. My target would be 80+”. The third offered his take on the chart: “I think once it crosses this neck line of inverted head-and-shoulder pattern, it will mean a target of more than 75”. And then I heard this from the fourth Mungerilal: “arey yaar, 60 pe strong support hain! First class to jaroor milega!!” I was completely taken aback with this comment and upon further enquiry learnt that the chart was plotted by one of Mungerilals of % marks his Son got from 2^nd  to 8^th Standard and they were trying to predict his SSC (10^th Std) results! I wished them all the best luck and moved on with a strange feeling.

Chunnilal: “F se First-Class, F se Faber, F se Fibonatchi, F se FII, F se F***….”

14. One Mungerilal was cursing Peter Lynch loudly. I was concerned about Lunch’s reputation so tried to find out more…….He had heard somewhere how Peter Lynch successfully implemented “buy-what-you-see” strategy. Our Mungerilal (during April/May this year) as usual called up his broker to ask for latest “hot-tip”. His favourite dealer (Circuit) said ”Sir Jee, LML le lo…. long term charts pe break out hua hain…Now it is quoting at 46.80, apna strong momentum call hain. Bindhast aankh band kar ke buy karo…74 ka target hain!” That day, for a change he did not buy. Later the same evening, Mungerilal went to repair his Bajaj Pulsar at a local workshop. In the corner he saw a (junk looking-old) LML scooter. He made a note of it and the next day called Circuit to buy LML at market price which was then about 49.50. This Mungerilal is now blaming Peter Lynch because loss-making LML has since been referred to BIFR!

Chunnilal: ”L se LML, L se Lobhi, L se Lynch, L se Laalach, L se Loss….”

15. There was one Doctor (himself a Mungerilal) surrounded by a group of other Mungerilals. I sneaked-in to learn more….. They were apparently consulting the Doctor on medical problems. This is what I heard:

M1: Doctor Saab, aaj kal constipation ki badi dikkat hain!

Dr.M: kya aap samay pe khana khate hain? Aur samay pe sote hain?

M2: kahan Doctor jee, M1 to day trading mein hain na……unhe kahan se neend aayegi…sapne mein  bhi tickers aur charts dikhte honge!

M1: yes Doctor Saab, aisa hi hota hain! Raat ko beech mein uth ke Dow/NYSE ka closing bell bhi dekhta hoon….phir Kudlow & Company….

M3: Doctor, I have marked that whenever I trade CALL Options, I have trouble answering nature’s call!

Dr.M: I would suggest you try trading PUT option!

M2: I have devised a remedy; I go to answer ‘those’ calls only after watching bazaar-morning-call at 9am. Having said that, my ‘motion’ however depends upon global cues & what “three-wise-men” have to say….

Chunnilal: “D se Doctor, D se Dast, D se Dinesh Dalmiya, D se Derivative, D se Devil, D se Danger…”

16. At the end of the party, near the hotel car park I saw a Macro-Economist-cum-Analyst working for a large ‘Foreign investment bank-cum-merchant bank-cum-brokerage’. He was looking for something near a light pole. I asked him if he had lost something there. The macro-economist said, "I lost my keys over in the alley."  Then we all asked him why he was looking by the light pole then. The macro-economist-cum-analyst responded, "It’s a lot easier to look over here!"

Chunnilal: “E se Economist, E se Earnings, E se Estimate, E se Emerging, E se End…”

Additional Notes for inferring stock ideas: Branded watches, branded shoes, diamond jewelry, and Camera phones seem to be in vogue. Drinking & Smoking as always is on the rise. Lots of families travel often to tourist places (both domestic & international destinations) for weekend & weeklong trips. Even high school kids were seen exchanging e-mail IDs & confirmed that they use broadband at home. Mobile phone penetration is unbelievably high. There is tremendous increase in usage of Financial services like: Credit Card, Insurance, Personal-Home-Auto-Education-HomeFurnishing Loans, Loan for tourism, Top-up loan on existing home loans, Loan to repay earlier loans & above all Mutual Funds, Stocks & Commodities Broking.

Disclaimer: The names of the characters have been changed to protect their real identity & mainly to protect the author from their likely onslaught. The characters depicted here are not meant to hurt anyone’s feelings…living, not-yet-born or dead. The motive behind this reporting/writing is purely investor education.