July 7, 2020

Making way through unforseen and unprecedented times

Amit Trivedi

Owner, Karmayog Knowledge Academy

“This is an unprecedented event. We haven’t seen anything like this before. Nobody saw it coming.” Well, these are some of the most common reactions to the current state of the pandemic and the response of the governments of various countries. How should one react in such situations? How does an advisor handle the clients in such “unprecedented” times? Many a times, the advisors are reminded to study history to understand how various events took place. Former President of the United States, Harry Truman is believed to have said: “The only thing new in this world is the history you do not know.”

At the same time, we haven’t come across such a massive lockdown situation in the history of India’s financial markets. Even the previous lockdown also happened a century ago, and the markets have changed beyond recognition since then. So, what history are we talking about? Well, many do not agree the “history repeats”, but they cannot argue with a modified line that the “history rhymes”. And for that, we need to look at certain things, which may appear to be highly unrelated.

An unprecedented response to a wildfire

In the month of August 1949, a wildfire took place at Mann Gulch in Montana, United States. This is a place between the Rocky Mountains and the Great Plains. A team of firefighters was dispatched to control the fire. By the time the team reached there, the fire was raging. They could see the clouds of smoke from a distance. By afternoon, the fire was reaching such levels that it seemed uncontrollable. The firefighters were wishing for a miracle and then the wind picked up speed. Now the fire started moving at a very fast pace towards the firefighters. There seemed to be no way to escape. The fire had turned into an inferno and the gushing wind was only making things worse. Fierce wind was howling and blowing towards the firemen. The team of firefighters, led by Wag Dodge, saw a wall of flame 200 feet tall and 300 feet deep running towards then at 30 miles per hour. They started running away from the inferno. The distance between the men and the fire was collapsing fast.

What should they do? Wag Dodge suddenly realized that there was no way to outrun the blaze. He yelled at his men to stop. It was either the noise of the fire that Dodge’s voice did not reach the men, or that they couldn’t bear the idea of stopping. Dodge took out his match box, lit a match stick and ignited the grass in front of him. Soon, the ground around him had turned into ashes. He lay down on the burned ground and put a wet handkerchief on his mouth, closed his eyes and tried hard to breathe the thin layer of oxygen near the ground.

The fire passed around him without touching him a bit, since there was nothing left to be burnt between Dodge and the wall of fire. Thirteen of the firefighters were killed in this fire and two others survived since they could find a crevice to hide in the rocky hillside.

What gave Dodge the idea to start a fire to escape from a fire?

The idea of starting a fire as a protection against fire seems outrageous, but then that was what helped Dodge survive, while his other colleagues succumbed. How did it occur to him? This idea was never discussed earlier, and still he could think of it in the spur of the moment. Was it his intuition?

Well, it was his experience that helped him realize that it was impossible to outrun the fire. It was his experience that he thought of fighting fire with fire. What he did was to clear his surrounding of inflammable material – isn’t that common sense. And still, the entire event looks like Dodge getting some divine intervention.

Dodge’s approach has now become a standard firefighting technique. It is now formally taught to the firefighters.

The lesson for the financial advisors

It is your experience, the insights you draw from various experiences that helps you become better advisors. It is your understanding of the nature of various financial markets; investment options and investment vehicles; and the functioning of the human mind that makes you better at your work. However, you cannot live all the events, so you must read the history and every time you read something or come across something, you got to try and relate it to various situations that you have encountered. Ask yourself: “Could you have handled the situation any better? Was there a better way?”

You also got to write a journal – take down the notes based on what you learnt. Do not keep it only in your memory.

Thinking, contemplating and writing would put us in a situation similar to what Wag Dodge experienced. Even without any formal training about what to do in such a situation, his intuition helped. Learning in normal times helps us get better able to handle the unforeseen and unprecedented situations.