A few days ago, market regulator, Sebi, passed an interim order against a person with an online brand, ‘Baap of Chart’. The order forbade him and his associates from conducting any activity related to the security markets, besides freezing the bank accounts in which the proceeds from the entire activity had been deposited. The order noted that, over two years, he had operated as an unregistered investment adviser in the garb of an investment educator, and had collected Rs.17.2 crore from his ‘students’. It’s not clear how much of this amount has been frozen.
By itself, the case appears to be rather mundane. This is essentially a variation of something that happens quite frequently. The interesting thing is the air of hyperbolic stardom and celebrityhood created around the perpetrator. It tells us about the type of investors who were being targeted. Someone who has chosen and promoted a personal brand ‘Baap of Chart’ is not looking for an informed or evolved investor. You can watch the videos on his YouTube channel to understand what I mean.
If you want to understand what’s going on, read some of the recent comments on this YouTube channel. These have been posted by followers of ‘Baap’ after Sebi proscribed him. Some are blaming Sebi, as well as YouTube, for allowing this person to loot them, while others are blaming Sebi for banning the great man who was teaching people how to become wealthy. The latter seem to think this is a conspiracy by the rich and powerful to prevent others from becoming wealthy. All in all, the comment thread of this channel appears to be an insane alternate universe to anyone who approaches investing the way you and I do. The basic problem is that many of these people do not understand what a stock market is or how it functions. I don’t mean it in the obvious sense; 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 framework on how prices are decided? At one time, the most common mental models were the ones based on ‘tips’ and ‘operators’. In the tip model, people with insider information told you about it and you made money. The operator model was the same, but in this, people believed that some shadowy entities were managing stock prices. These are old models. In keeping with the latest technological developments and advent of AI, a third, flawed model has been added. Some people, claiming to have deep technical understanding and tools that can decode what’s happening in the markets, are offering to share these secrets for modest sums ranging from Rs.1,500 to Rs.12,000. These amounts are authentic because I have taken them from the Sebi order, which is based on the actual payments that flowed through the payment gateway into the accounts of Baap and his associates.
It is unfortunate and incredible that there are people who actually believe this to be true. How can they think that someone who has the secret to generate a vast amount of wealth rapidly would be holding online courses for a few thousand rupees? I don’t want to appear 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 truly works is driven by reality. It may look like hard work, but gets easier with time. To follow one ‘baap’ or the other—and there are plenty more offering similar services—is the opposite of this strategy. It looks easy in the beginning, but as time passes, it gets harder and harder.
The Author is CEO, VALUE RESEARCH
