Gifts of Wisdom: Save on my books + Mastermind (until October 31, 2025)
Every Diwali we clean corners that we normally don’t look at. It’s also a nice metaphor for our inner world – for our habits and prejudices that need some fresh air. So this year I’m sharing limited-time offers on the few things I’ve created to give us a clearer understanding: my books and the Mastermind membership.
🎁 The Sketchbook of Wisdom and Boundless (both hardcover): Read my reflections on self-discovery, growth, and living a life that is yours.
🎁 Mastermind Value Investing Membership: My most comprehensive learning program, which now also includes Value Investing Almanack and weekly/bi-weekly live Q&A sessionshas opened with ₹3000 discount for new members. Click here to join now.
In his book SapiensYuval Noah Harari tells the story of French car manufacturer Peugeot to explain something interesting about the human mind: our ability to believe in what does not physically exist.
Peugeot, he writes, is not the factory, the cars or even the employees. These could all disappear, but Peugeot would continue to exist. It emerged from a few sheets of paper signed by a group of lawyers in 1896. From then on, it lived as an idea, a legal fiction and a shared belief that united thousands of people under one name.
Harari uses Peugeot to symbolize what he calls a imagined order, that is the unique human ability to create and believe in things that are intangible, yet completely determine our lives. Money, nations, religions and corporations are all imagined orders. They exist because enough people agree that they exist. These beliefs enable people to work together in large numbers, far beyond the limits of personal trust.
An investor in India can invest in a French car manufacturer, a Japanese electronics company or an American technology company because all participants believe in the same imaginary rules of ownership, contracts and companies. This shared trust in invisible ideas has made human progress possible.
But the same imagination that builds civilizations can also cloud judgment. The stock markets thrive on these imagined orders.
When a new company goes public, investors not only buy shares, but also a belief. They invest in a ‘story’ about the future. And a belief or story, once reinforced by media and marketing, becomes a force in itself.
In recent years, India has witnessed a spate of IPOs (initial public offerings) where the story was far ahead of the substance. Many of these companies are still loss-making, but are valued as if the future is already guaranteed. Promoters and early investors, driven by waves of optimism, have used these moments to sell their shares at prices inflated by hope.
There is nothing illegal about this. It’s how markets work. But it also reminds us how fragile faith can be when disconnected from reality.
The concept of limited liability company (simply a “company” or a “company”) that Harari writes about is another of humanity’s remarkable inventions designed to encourage risk-taking by reducing personal loss. It helped ordinary people become entrepreneurs without fear of ruin. But it also introduced a subtle moral divide. When companies act irresponsibly, their founders can hide behind the corporate veil and say, “It wasn’t me; it was the company.”
I come from a small Marwari business family, where there was no limited liability. I have seen the businesses of some family members and along with them, the family wealth completely deteriorated because they took risks that backfired. Back then, business failure meant personal financial ruin. You could lose not only the factory, but also the family home, gold and silver, not to mention the reputation. That is no longer the case in the modern world of businesses, even though many of them in India are still run by Marwaris. The corporate structure has given today’s entrepreneurs the courage to take risks that previous generations could not afford.
This detachment often takes the form of selling an inflated dream. When promoters cash out at peak valuations while calling it ‘value unlocking’, they are acting within the rules, but not necessarily in the spirit of fairness.
This moral divide becomes most visible when stories replace numbers. Many modern founders, especially in the startup world, speak the language of “purpose” and “disruption” while quietly capitalizing on the market’s exuberance. They are not necessarily dishonest, but simply operate in a system that rewards faith more than prudence.
Take, for example, the founder of an eyewear company (whose colleague called them a “tech company”) preparing for an (overpriced) public issue, who has publicly said: “I don’t have to justify valuations. My job is just to justify value to the customer and make the best quality products at the lowest possible price. I don’t understand valuations, but it is largely done by ‘strong advisors’.”
And when a TV host asked him how much value he had left on the table for shareholders, he said: “As a company, our job is to create value for customers, and as far as valuation is concerned, that’s what the market decides. There are investors selling shares, and there are investors coming in, and they’ve done a lot of work to get to these numbers.”
Do you see any sense in these statements (other than the “customer” part)? Not me. These are garbled and robbed messages, but also telling. The modern entrepreneur can shake off the responsibility of valuing his business, something that would have been unthinkable in the old world of family businesses, where every rupee played a personal role. Limited liability made risk-taking safer, but it also made the burden of responsibility thinner.
For us as investors, the danger lies in the seductive psychology that comes with taking new companies public. The story is always compelling: India’s growth story, technological disruption, demographic tailwinds, digital revolution, etc. etc.
The pitch is compelling because it offers the opportunity to participate in something bigger than yourself. But investing, in its purest form, is about buying income and not participating in moves. India’s best companies (which are also part of Harari’s “imagined order”), companies that have actually built wealth over decades, have never needed marketing campaigns or endorsements. They let their results speak for themselves.
Now I am not being cynical here, but trying to encourage you to be discerning. Harari reminds us that while imagined commands are powerful because we believe in them, they are also malleable. They can change and sometimes they collapse. A company that exists purely in the imagination can disappear as easily as it appeared. We as investors must therefore learn to see through the story and the content.
Every time we invest, we participate in a fiction, but we must make sure it is a fiction well founded An. Our job as investors is to distinguish between imagination that creates value and imagination that merely sells it.
What I see in the IPO market is sort of raideven if it is legal. It’s about the slow erosion of skepticism in the face of beautiful stories, about how faith, left unchecked, can so easily turn into self-deception.
Markets will always be full of new stories, but it is our job to decide which stories deserve our belief. The idea is not to stop believing, but to believe – and “see” – wisely.
Gifts of Wisdom: Save on my books + Mastermind (until October 31, 2025)
Every Diwali we clean corners that we normally don’t look at. It’s also a nice metaphor for our inner world – for our habits and prejudices that need some fresh air. So this year I’m sharing limited-time offers on the few things I’ve created to give us a clearer understanding: my books and the Mastermind membership.
🎁 The Sketchbook of Wisdom and Boundless (both hardcover): Read my reflections on self-discovery, growth, and living a life that is yours.
🎁 Mastermind Value Investing Membership: My most comprehensive learning program, which now also includes Value Investing Almanack and weekly/bi-weekly live Q&A sessionshas opened with ₹3000 discount for new members. Click here to join now.
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