28 July, 2021

Bear With Us, For What They Tell You Is Bull

The story about this ­century’s wealth creators in the stock market busts a few myths, and reveals that the path to riches is random and unreal, almost fantastical

Illustrations by Rajat Baran
Bear With Us, For What They Tell You Is Bull

It is a mysterious, but happy and comforting, truth about math. The worth of a thing, either real or perceived, can whistle through the air, and go up a million times. At the same time, value obliteration is constrained and conservative. The price of a product or a stock can whittle down to zero, or lead to a maximum 100 per cent fall. So, while the gains can be infinite, losses are limited. This is possibly the most crucial lesson in wealth creation, and the one that’s never taught.

This curious character about calculations is a huge boon. It is a facet that possibly helped the human race to achieve control over the planet, and reach the heights (or depths) of culture and civilisation. The reason: our brains are wired so that they ­exaggerate negative emotions, and play down the positive ones. While you are thrilled with positive returns, you feel worse about similar losses. In essence, a Rs 100 decline in what we own ­affects...

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