I have read the
book on which this is based on. The book had all the original names of the people
involved. For some reason, a few people got renamed in the show. So, characters
portraying Ajay Kayan, Rakesh Jhunjhunwala, Radhakishan Damani were not called
out explicitly.
Although, the book is a great read and the web series is an even better watch, here are some to the lessons that I took away from the whole period and sequence of events.
- Unbridled
Ambition - I think this was the main reason why Harshad
got into trouble. He did not know where and when to draw a line. He came from a
modest background and wanted to grow too big too fast. He did not consider the
consequences of his actions, because he always wanted more.
- Leverage
Kills – Ultimately, it is
when you are over-leveraged is when you get into real trouble. Liquidity is
king. Harshad’s efforts were concentrated on leverage to pump in liquidity. The
problem is no one is bigger than the market. In his hubris, I think he forgot
that.
- The
End Do Not Justify The Means –
Harshad used to say that what he
was doing was being done by everyone else. All the big players were following
the same corrupt practices. Actually, it makes no difference if everyone is
doing the wrong thing. It is still wrong. The problem with being on the wrong
side of the law is that it’s a slippery slope. You start with a small
digression, and very quickly it snowballs into something out of control. This
is exactly what happened with Harshad which led him to eventually claim that he
bribed the then Prime Minister.
- Market
Personified – When he
was leading the markets he became a media darling, the first real Big Bull. His
ostentatious lifestyle, his Lexus, his larger than life image in the media were
also major contributors to his downfall. Firstly, it attracted detractors who
felt sidelined or spited or were simply envious of his meteoric rise. Secondly,
it gave a face to the good and equally importantly, the bad of the markets. So,
when the markets crashed, it was Harshad who had to take probably a larger
share of the blame. Personification is a concept popularized by Daniel Kahneman
and it played out perfectly in this instance.
- Alternate
Histories – Radhakishan Damani, RKD as he is more
popularly known is believed to have told a few of his friends: "Agar
Harshad saat din aur apni position hold kar leta, toh mujhe kathora leke road
par utarna padta." (Had Harshad held his position for seven more days, I'd
have taken a begging bowl and walked on the road). At that time, no one knew how
the dice will get rolled and that RKD would become a great businessman and
investor. The same is true of Rakesh Jhunjhunwala. Always be aware that winners
and losers are known only in hindsight and the most intelligent course of
action is to be conservative and prudent while investing.
- Karma
Catches Up – Ultimately, Harshad was running a sort of Ponzi
scheme, where increasing amounts of cash was required to keep the markets
propped up. His wrongdoings brought down so many people who trusted him blindly
and bought shares based on his advice.
A great study in contrast is Warren Buffett and Charlie Munger. More than their investing acumen, I am a great admirer of the way they have conducted their life and business.
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