Stock markets rise and fall for a variety of reasons — most of them, I'm starting to believe, are entirely fictional. Analysts pick and choose from a basket of narratives to help retail investors make sense of the chaos. The accurate assessment always follows the price-action, never precedes it, as you may have observed. Once you spend enough time in the stock market, you start de-rating the value of analyst opinions and brokerage calls. You do have to pay attention to reports of rating agencies — companies go belly-up all the time despite oversight. But if you have a long-term investment horizon, other than financial reports of your invested companies and a few other things, not much else matters.

During my masters, I spent quite some time around the Dadar Parsi Colony area. My route to college was an atypical one. It was grossly inefficient and deliberately so. As an utterly anxious person, I would do anything to avoid crowds. That included spending 5x money and 4x time to get to and from college. Before I made friends at college, I would commute by bus both ways. I don't think any sane person in the entire college campus considered taking a bus from Wadala depot to their destination in the suburbs. I loved it. The 255 Ltd bus route was so long and transparently unprofitable — because it seldom plied at max capacity — that (I think) it was eventually discontinued (thankfully after my course had ended).

My strolls in the area weren't in the proper Parsi colony area, but nearby. But you could tell there was something different about that space. Joggers would sometimes wish you – a complete stranger –  a warm 'Good morning'. There was a grocery store on the way to the depot where I used to stop and buy snacks (usually a Cadbury 5 Star) for the long 2.5 hour way home. I can count the number of times I've eaten at the college canteen on one hand. Some very few times, I used to pick up a Dinshaw's vanilla ice-cream. I have a thing for Dinshaw's or Pastonji's vanilla ice-cream. We don't get Dinshaw's easily in the suburbs, so Pastonji's is a decent alternative. Owner of the store was clearly a Parsi. Low-key early-50 year old, inquisitive with a stern demeanour — I had seen him have rows with his staff and his vendors with "Aaj kaiko itna bhav...kumi kar". I'm not a social person at all so I was always there for less than 30 seconds. One evening passing by his store, I saw him struggling to carry a corroborated box of bottled water. I helped carry it in and began speeding off. He stopped me with a, "Arre baccha, hamesha jaldi mein. Kuch lega nahi?". I smiled, nodded in the negative, and sped off.

A few days later when I went to his store for the usual 5 Star, he started a brief conversation. He had many questions. He shared a few words on importance of education but with a helpful warning — "pagal ghode ke mafiq nahi". Something to the tune of "Apply your mind. Do good. Work is worship — everybody has to do something for a meaningful life". I cannot recollect the exact words. It wasn't something profound; heard it a million times from others. The dialogue delivery wasn't particularly impressive either. But it was with genuine concern and seemed heartfelt. I clearly decided to tuck it in my memory, possibly because it was the first time a random stranger had offered totally unsolicited life advice.

I used to watch him sternly commandeer his helper to clean the store with buckets of water on my way to class at 8 AM. The store was always well looked after. I had sometimes seen him offer small packs of biscuits to kids that lived in nearby shanties. That's not uncommon for shopkeepers to do as such, but it reminded me of the generosity of another Parsi-owned establishment (only a guess) — Merwan's near Andheri station — whose manager was always a goto for school and college kids raising funds for social causes (prodded by our teachers to check-off a task for grades for Scouts).

There's something intrinsic in the Parsi way of life that's endearing — and missing elsewhere. Other communities have a social "giving back" mantra too. But sometimes, I guess, there's a feeling that "giving back" is restricted to one's own ethno-religious circle, whereas here, I see it being done for one's ecosystem instead. It's also low-key. Sometimes good is done to be socially recognized as "good" i.e. in exchange for social stature. That doesn't seem to be the case here.

It's easy for businesses to grow at a rapid pace by profiteering off their customer-base — cut costs by using inferior raw materials, source production to contract-based establishments, increase the net-selling price, cartelize with others so prices always go up, discontinue a crowd-favourite but loss-making product after gaining popularity, etc.

Another way to do business is to focus on sustenance. If you've ever shopped at Merwans Cake Shop, you'll know what I'm talking about. The rates haven't changed in decades. I used to have Rs. 10 (or maybe Rs. 15) Chicken Patties while attending 12 std classes at Sinhals at Andheri station 16 years ago. Today it's at Rs. 17. More or less the same great taste. New products such as the Chicken Mayo Roll are great too! Primary employees are all women, sometimes persons with disabilities, always warm and friendly.

It's not clear how Merwans manages to operate with products at those prices (as a brokerage would say). They do offer premium products designed to offset costs for their popular products, but I'm not sure what their top-line sales look like. Maybe the trick is to stay small, focus on volume growth and cater to a small, loyal base? Maybe the secret is to own the supply-chain end-to-end? Maybe they use income from other sources (property rents?) to fund the bakery biz? Maybe they burn all previous year profits to maintain prices? Maybe they are a loss making biz, always raising funds! Financial struggles in the restaurant and bakery space are commonplace. The bottomline is still this — they are still here. Through all kinds of challenging business environments — inflation, interest, rent, political cycles. Longevity is an undervalued virtue in stock markets.

With the right stewardship, it may be possible to run a business focusing on longevity and sustenance, making enough profit to tide over wage hikes, debt-servicing obligations, and inflation. Use windfall profits (if any) to expand your business to other regions or invest in R&D to figure out ways to beat the next inflation wave through innovation in product composition, but without compromising on customer experience. And, all the while, also contributing to social good and the ecosystem you live in. It's definitely not easy. Your employees are also probably taking a hit — no booming salary hikes compared to elsewhere. You need to have a handle on the business environment, consumer behaviour, an R&D program that works, and most importantly, an excellent sense of property, labour, and commodity prices.

No grandiose expansion plans. No debt-fueled acquisitions without a plan to turn a profit and reduce debt. No exploring new verticals and technology.  Nothing fancy.

I'm reminded by all this after tracking a couple of recent events, both around new-age internet companies trading on the stock market — (a) a comment by Zomato co-founder/CEO Deepinder Goyal (b) Vijay Shekhar Sharma of PayTM.

Stock markets value companies typically based on QoQ, YoY revenue, profit, EBITDA growth, among a few other parameters such as margin and volume growth (for FMCG) and NII (for lenders). This rough framework of measuring health and performance is applied to all listed stocks to enable intra-sectoral and inter-sectoral comparison as well as to mathematically estimate future earnings and performance. In order to attract new investors, this leaves companies little choice but to chase — "pagal ghode ke mafiq" — growth and profit. Zero regard for ecosystem effects, impact on lives and livelihoods.‌                                              

A typical high-level analysis of numbers that matter.

The idea here is that a company yielding higher free cash flow will reward its investors through schemes such as dividends or bonus debentures, among others. That's a bargain people gleefully accept. It also means that if a company were to break the hamster-wheel ride and drop in performance parameters, its investors would panic at the thought of losing dividend income and sell all their holdings. The investment is purely linked to expectation of returns — not so much to product quality, customer experience, company values and ethics, contribution to employees and society, and so on.

Zomato and PayTM, through their comments, make a different case to investors — that they are household names focusing on longevity and they will focus on gaining market share and reinvesting in their businesses. That...really tests the calibre of retail investors and inspects their reasons for investing in a fundamental way. Is your investment for beating short-term bank fixed deposit interest rate? Is it for the long, long term with some exceptional performance sprinkled in the interim, because you believe in the company and its impact? Is your investment to see widespread financial inclusivity in India? (No, I have not applied for the PayTM IPO. I hold 0 shares in Zomato.)

If Merwans Cake Shop were to list on the exchanges tomorrow, I'd happily rebalance my portfolio to give it about 15% weight. It's not out of charity. It's not out of a sense of nostalgia. It's not out of an expectation of explosive future growth and high yields. I've seen them deliver and innovate, so I believe in them. I would like to be an investor because I like the idea that they can use it to exist for another 'X' years, in small part because of me. I like the idea of a cake shop that serves delicious, top-quality, reasonably priced bakery products to the price-sensitive market sustainably — with a little help from public markets. The returns will come, either from the stock market, or the ecosystem. (Aside: the public markets will chew them up and spit them out. I believe Elon Musk lamented about being a listed company once for similar reasons)

However, neither PayTM nor Zomato evoke the same sentiment for me, although I do order from Merwans using Zomato. The primary reason for this is because they aren't in the stock market out of a Parsi-esque sense of larger ecosystem wellbeing. I don't trust them to not give in to market and investor pressure. That's what investors and public markets do — steer your vision to a path of high profitability. Slide-decks to early VC investors possibly pitched a similar ecosystem-exploiting business model (e.g. monopoly over all food delivery and power to dictate restaurant food prices) that the VC's bought into.

Instead, my long-term money goes to the Parsis of Bombay that have existed seemingly since forever and have a handle on commodity prices and business environment — listed group companies of the Godrej's, the Wadia's, the Tata's. I do feel that that's a reasonable middleground. They do good work for the ecosystem, the ruthless capitalist-minded stock market, as well as little old me.

There's an old Parsi establishment at Ballard Estate that espouses a view a strongly connect with – "There is no love greater than the love of eating". I also subscribe to the idea there are no forbidden meats or foods, and I regret the time naive old me posted this personal preference on social media (it was a day before a college exam, and I was flooded with messages). My list of preferred food is quite short and I'm absolutely not someone who experiments with new foods. If you invite me to your place for a home-cooked meal, I will politely decline. The only place with home-cooked meals compatible with my tastebuds home and food made by my Mom. I learnt this lesson very early in life. :haha:

After their current stewards have stepped away though, I can only hope they continue to exist as they have done for so long. The chief risk is an identity crisis of sorts when the next generation — roughly speaking, my generation — takes over. Some are already in the business of monetizing long-preserved resources for short-term gains.

Disclaimer: This is not investment advice or recommendation.