An alternate universe of crazy beliefs

Some days ago, markets regulator SEBI passed an interim order against one whose online brand seems to be 'Baap of Chart'. The order forbade this person and his associates from any activity connected with the security markets, as well as freezing the bank accounts into which the proceeds of the entire activity had been collected. The order noted that over two years, this person had operated as an unregistered investment advisor in the garb of an investments educator and collected Rs 17.2 crore from 'students' for this activity. It's not clear how much of this amount has been frozen.

By itself, the details of the case are quite mundane. Essentially, this is a variation on something quite common. The interesting thing is the air of hyperbolic stardom and celebrity that has been manufactured around the perpetrator. It shows us what kind of an investor is and what type of person was being targeted. Someone who has chosen and promoted a personal brand, 'Baap of Chart', is not looking for the kind of investor who reads The Economic Times or visits Value Research Online. At least, I hope so. You can watch a few videos on the YouTube channel to understand what I mean.

If you want to understand what's happening here, while on YouTube, read some of the recent comments, that is, the ones that followers of this Baap have made after SEBI has proscribed him. Some are blaming SEBI as well as YouTube for allowing this person to loot them, and some are blaming SEBI for banning such a great man who was teaching the masses how to become wealthy. The latter generally seem to think this is a conspiracy by the rich and powerful to prevent others from becoming rich. All in all, the comment threads of this channel appear to be an insane alternate universe to anyone who approaches investing the way you and I do.

The basic problem here is that many of these people do not understand what a stock market is. I don't mean that question the obvious way - that it's a place where people buy and sell tradable securities through brokers. How do they think stocks really move? What is their mental model of how prices are decided? Once upon a time, the most common mental models were the 'tip' model and the 'operator' model. The tip model was simply that there are people who have insider information, and if they tell you, then you can make money. The operator model is the same but believes that there are some shadowy entities that are managing stock prices.

These are old models. Now, this being the age of technology and AI and whatnot, there's a third flawed model that has been added. Some geniuses have a deep technical understanding of the markets and brilliant technological tools that can decode what's happening in the markets. Moreover, these geniuses are so kind-hearted that they will teach anyone these secrets online for modest sums from Rs 1,500 to Rs 12,000. These amounts are authentic because I've taken them from the SEBI order, which is based on actual payments that flowed through the payment gateway to Baap and his associates.

Are there actual people out there who will believe this? That someone who has the secret to generating a vast amount of sureshot wealth rapidly will be shilling courses online for a few thousand rupees? I don't want to sound patronising, but anyone who believes this will probably only learn the hard way, and that hard way has been arranged by Baap, with a little help from SEBI.

The only mental model that will work is to be driven by reality. That looks like hard work, but it gets easier and easier with time. To follow some baap or the other (there are plenty more) is the opposite - it looks easy in the beginning, but as time passes, it gets harder and harder.

Also read: Immunity from frauds