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Investment Lessons from The Mahabharat for the Smart Investor

Cofounder , Goalchi Capital
Apr 15, 2018 5:09 AM 7 min read

The Mahabharat is one of the oldest and longest Epic poems in the world. The influence of the sacred text on Indian culture is deep and profound. Though the central story is that of the “Great War” and the circumstances that lead to it; it contains enormous life lessons all along. Bhagavad Gita, one of the most revered texts among Hindus, is also a part of the Mahabharat. Here we dig into this holy epic, unearthing some valuable investment lessons.

Lessons From The Mahabharat: How To Invest In Stock Market 

Respect the Power of Time


In the Bhagavad Gita, Krishna who is the avatar of Lord Vishnu proclaims that he is the Almighty Time.


“I am time, the destroyer of all; I have come to consume the world”.

Bhagavad Gita


This statement alone is indicative of the importance of time, which is equivalent to God. This is particularly true in case of personal finance. There exists the concept of ‘time value of money’, that is, a rupee today is worth more than a rupee an year later. Essentially, the value of money progressively degenerates with passing time. Inflation also eats away the value of a currency. Therefore, it is rational to select instruments of investments such, that the rates yielded by them overcome the effects of time decay and increase the overall value.


Power of compounding helps build a large corpus through small contributions. A compound interest on your investments, yields interest on both principal and the accumulated interest. The “power” in the power of compounding materializes only when the investment has been made in the right financial instrument for the right amount of time.  Time works both for and against an investor. It is the prime component in valuing and comparing investments. Time indeed is the real god in the world of finance.


Goal Planning is Important


Once, the young Pandavas and Kauravas were taken by their Guru Dronacharya for a test. The objective of the test was to assess the target hitting capacity of the students. They were supposed to hit the eye of an artificial bird hanging from a tree at a distance with an arrow. The brothers were excited to take the aim, but before they could start, the Guru asked them a simple question. “What do you see?”, he asked. Everyone but one, answered whatever they could see – the trees, sky, leaves etc., and they were not allowed to even aim the target. When Arjun’s chance to answer came, he replied that he could only see the bird’s eye and he was allowed to hit the target which he successfully did.


The vital lesson from this short piece is, it is only once the target has been identified precisely, would there be any possibility of hitting it. The purpose of investment should be defined at the outset. This will enable one choose the appropriate route to be taken and efficiently plan the time available to complete it. For instance, a young person saving for his retirement would have a long time to achieve his goal. Therefore, it would be beneficial to allocate most of the funds for this purpose into equities. Equities are less risky in the long term and provide the best returns. On the other hand, a person who is about to retire in a few years should keep most of his investments in debt. Don’t get caught up in the unnecessary clutter while pinpointing your goals, it has to be marked and measured so that the most optimum route could be chosen to achieve it and a scale could be used to appraise it.


Expert Advice is Always Helpful

 Lessons From The Mahabharat: How To Invest In Stock Market

When Duryodhana was offered the mighty army by Krishna, he was delighted. He thought in the event of war, the huge army would be a much more useful asset than one Krishna. Arjun who was much more knowledgeable always wanted Krishna by his side, even though Krishna would not fight the war. Eventually, he became Arjun’s “Saarthi” or charioteer and advisor all through the war. Arjuna was one of the wisest men of his time, yet he chose someone who would drive him through the war literally and mentally. Krishna was a righteous guru and Arjun was the perfect disciple. Arjun and Krishna prevailed while Duryodhan perished at the end of the war.


Thus, it's very important to take advice from an expert when it comes to managing your finances and investments. The aim should be to achieve the righteous goal, here, in this case, it is the corpus for whatever purpose one is saving. A good financial advisor would take you through the volatility of markets, through its ups and downs, and make sure your ultimate investment goal is fulfilled. There are several instances in the Mahabharat emphasizing the importance of a virtuous and candid advisor.


There would have been a sure and brutal defeat for the Pandavas if Krishna would not have convinced Arjun to fight the war. Likewise, a good financial advisor would help you make decisions when you are in doubt, recommend solutions for your financial problems and help you choose the right path when you are struck by indecision. He would be stoic, objective and clear towards the course that should be taken.


Don’t Venture into Unknown Territory

Lessons From The Mahabharat: How To Invest In Stock Market 

Yudhisthira agreed to gamble (Dyut) with Duryodhana, despite knowing nothing about the game. Shakuni was a notorious expert of the game; it was as if the dices followed his command, and he was to play on behalf of Duryodhana. As expected, Yudhisthira began to lose. At the end of the game, he lost his everything – his wealth, his wife and his brothers to the game. The humiliation of the Pandavas and harassment of their wife Draupadi ensued. The real seed of Mahabharat or the Great War was planted as Pandavas took oaths to destroy Kauravas. The lost wealth and properties of Yudhisthira were reinstated by Gandhari, mother of Duryodhana, through a boon to Draupadi. But Yudhisthira again played the game and this time too he lost. The Pandavas were to be banished for thirteen years.


The lessons that an investor can take from this excerpt are numerous. The first is to never try investments, which you personally do not understand, without the help of a skilful advisor. Many people invest in products just on the promise of returns and often get duped. Be very clear about the risk-return profile of the financial products and also of the reputation of issuing companies. The lure and excitement in products that are volatile like derivatives, which have a very high risk-return profile, compel many to invest in them. Equipped with little knowledge and meagre resources at their disposal, they end up on the losing side. Subsequently, these people blame the market. Manage your emotions and learn from the history so that the past mistakes are not repeated.


Another major point of focus is to measure the capacity of the risk that you can take without being insolvent and the risk that the prospective investment may offer. Even in the worst case scenario, it should not affect your normal well being. Many people in the euphoria of bull market start investing in equities at higher valuations and get shocked when a little correction or a bear phase occurs. They go beyond their risk tolerance levels during a Bull Run and suffer great anxiety and stress when they see their investment value going down below the initial investment.


Sometimes a Little Sacrifice is good for the Ultimate Goal


Karna had a special weapon given as a boon by Indra. This weapon was being preserved by him to kill Arjun. When Karna was wreaking mayhem on the battlefield and seemed unstoppable, Krishna urged Pandavas to let Ghatothkach fight him instead of Arjun. This was done as the exotic weapon in possession of Karna was a deadly threat to Arjun. Ghatothkach was the son of Bheem and a powerful warrior; he fought with great valour and forced Karna to use the weapon on him. This weapon could only be used once and as a corollary, it was impossible to kill Arjun or defeat Pandavas now. Ghatothkach was killed and was a major loss to the Pandavas but during that time winning the war was the supreme objective and for that Arjun’s presence throughout the war was essential.


An investor who wants to be a winner in the Kurukshetra of markets and attain financial freedom has to make crucial sacrifices. He has to make rational decisions based on logic and reason. A good starting point will be to start saving according to the financial plan, forego dispensable expenses and invest in a sustained and disciplined manner. Only then can one invest successfully and emerge as a smart investor.


There are numerous characters in the Mahabharat and each of them have distinct characteristics – unique, with peculiar philosophies and idiosyncrasies. Similarly, every individual has a different expectation from his investment. However, this must be backed by a clarity of goals, strong determination and complete devotion.


Mahabharat is a giant body of work that has knowledge and wisdom sprinkled generously throughout.  Here we have discussed a few of them that will inspire us towards financial prudence. Financial well-being can only be ensured by taking informed decisions, followed by apposite action. The advantage of superior knowledge is fully realized only when it is applied appropriately.