Wednesday, April 09, 2014

Conviction vs Hope

This post is not about stock investments.
I invest in stocks. I am no stock market guru but I like to find out good businesses at good valuations and invest my money in stocks of those companies. The outcome is two folds:
1) Obvious one is that I gain good returns on my investment
2) Second one, though not-so-obvious but I feel more important one, is that my understanding of 'good business' has improved great deal over the years!

And one important learning from my experience with investments is that you should invest in companies that provide 'conviction' of good returns and not just 'hope' of good returns. After your analysis, you should not just hope that the company/stock will deliver good returns but you should be convinced enough to invest significant amount of money in that company. I would avoid a company that gives 'hope' for very high returns, for a company that gives 'conviction' of above average to high returns. Because 'hope' involves very high amount of risk compared to 'conviction'.

Now, as the first line of this post mentioned - this post is not about stock investments.
This is about politics.... Indian elections. Peak time - aggressive campaigns everywhere!
I support BJP and in particular its PM candidate Narendra Modi. Typical discussions one would find on social media is about two parties - BJP or AAP.
One thing common about supporters of both the parties is devoted fan base. And the fact is that both these parties had common fan following hardly 3 months back. The people who liked BJP also liked AAP and vice versa.

I was one of those. I have been in favor of Narendra Modi for the PM candidate for long time but at the same time, I liked the emergence of Arvind Kejriwal. Right from the movement against corruption couple of years back, till his win in Delhi elections.

Narendra Modi provided 'conviction' based on his track record and Arvng Kejriwal provided 'hope' being an outsider in the mainstream political system.

But things have changed in last few months. My opinion for Arvind Kejriwal has changed ever since he decided to contest in national elections! I had to choose between Modi and Kejriwal and I choose Modi. The same stock market learning goes here... preference to 'Conviction' over 'Hope'!

When I say I support Modi, I do not expect him solve all of India's problem or do some kind of larger than life changes in the lives of Indians. I just find him best option of the available ones!
And when I say I do not support Kejriwal, I do not say I will never support him. I just mean I do not support him for this election. I would like to see his capability as an administrator before I vote for him in a national election. I would wait till the 'hope' is converted into 'conviction'.

I think Kejriwal had a chance in Delhi. He could have done good work as a CM of Delhi but instead he chose to resign over the issue of an anti-corruption bill. And of course anti-corruption bill is important but it cannot be end of life for a government! It is a no-brainer that he did so to be able to focus on national elections!
Nothing wrong in doing so but then he missed an opportunity to 'prove' himself!

Instead of resignation, he could have done work in other fields. For example, traffic is a huge problem in Delhi - he could constructed 100 flyovers! This one action alone could have left a long lasting impact and could have ensured his victory in Delhi elections had the elections happened again! In the name of good governance, he decided to go with freebies.... the famous menace of democracies all over the world!

He has ended up dividing his support base. There was no need to tell people to choose between him and Modi. He could have worked efficiently in Delhi and the Modi supporters would have started supporting him gradually by next general elections in 2019 or even 2024!

Patience could have gone a long way in building his reputation and over a period of time he could have captured imagination of the middle class!

I am still puzzled at his impatience for this general election because I am sure he knows that he cannot win enough seats in general election in such a short span of time with limited resources! So effectively he has traded his reputation (and divided his support base) for a few not-so-useful seats in general elections!

I hope he wins again at state level in Delhi or any other state and proves his credentials as an effective leader. Who knows, he may prove to be better than Modi or any other leader! But then he has to show it not just say it. If he delivers, why would people not support him!

After all, everyone wants good governance - the ones who support him and the ones who don't support him!

Let's see what's the outcome of this elections. My gut feeling is that BJP would get more seats than the poll predictions but I might be biased.
Whatever may be the result - I hope one party gets majority and whatever party you support - Do not forget to vote!

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