Why was Hitler successful in his initial days?

There was nothing remarkable about Hitler in his early days. He was a bastard son of Alois Hitler Sr and was never adopted/legitimized. Hitler was not a German but an Austrian, who was stateless for seven years before being granted German citizenship in 1932. He was an aspiring architect & a painter. Yet there are no notable buildings or paintings credited to his name.

His military credentials are also doubtful. On 5th February 1914, he was deemed unfit for military service by Austro-Hungarian Army, hence he volunteered to be enlisted in the Bavarian Army. (even though his citizenship prevented him from legally doing so). He served away from the front-lines as a dispatch runner and never rose above the rank of Gefreiter (a very junior position). His much acclaimed Iron Cross was due to the recommendation of his Jewish commanding officer Lieutenant Hugo Gutmann, who championed his cause. His antisemitism views are famous, yet his first love was rumored to be with a Jewish girl, Stefanie Rabatsch.

Politically he was a failure throughout his career. He joined DAP (German worker’s Party) in September 2019 as an undercover intelligence agent responsible to spy on the party and influence its opinions. In 1923, his infamous “Beer Hall Putsch” was a failed coup and a poor imitation of Mussolini’s “March to Rome” a year earlier. He was charged with high treason and sentenced to five years of prison, at Landsberg. Where he was doomed, but achieved his resurgence through his book “Mein Kampf” and was released early.
There were seven elections between 1924 and 1933 and his party was never able to achieve majority. This is in spite of the global depression, high unemployment, hyperinflation and all other socio-economic factors that are contributed to rise of Fascism in Germany. Nazi party never won the elections. Hitler was nominated as the Chancellor in 1933 and later grabbed Dictatorship to form Nazi Germany.

So why was Hitler so successful in his initial days as head of Nazi?
Nothing sums up the rise of Hitler then the famous poem “First they Came… “  by Martin Niemöller. The world at that time had become too self-centered to act against the atrocities against mankind. It became an easy prey to the divisive ideology & propaganda promoted by fascism.

In 1931, The League of Nations chose not to act when Japan attacked China in Manchuria. Japan’s indiscriminate rape, plunder and massacre of Manchuria, China continued for three years without any intervention.

It failed to mobilize when Mussolini attacked Somalia (Abyssinia) in 1935.The League of Nations gave a tacit approval to Nazi annexation of Saarland in 1935 and Rhineland in 1936. The nationalist caused a 3 year long civil war in Spain overthrowing a elected democracy there but the world did not care. In fact, it was encouraged to expand east closer to Russia. In 1938, Hitler invaded Austria on the eve of plebiscite (referendum to decide on joining with Nazi) and the world did nothing.

in 1939, Czechoslovakia had a well-equipped modern army of 1.2mn soldiers with a home advantage ready for onslaught of 1.5mn German soldiers. (total strength invading Poland). They had prepared a series of fortifications of 264 small forts and over 10,000 light pillboxes designed to provide a stiff resistance. On the other hand hand in 1939, the German tanks were yet not a fighting force. As demonstrated in the march of Austria, over 30% of the armored vehicles developed mechanical failures even though no shots were fired.  The Czech’s LT-35 was much more reliable and mobile, unlike Panzer I and II. In fact, German continued to produce 1,400 of them till 1942 under the new name Panzer 38(t). Nazis were fully aware of their positions and hence relied on posturing rather than military.

The policy of appeasement by Chamberlain (then British Prime Minister) fanned the dreams of world domination rather than nipping the fascist menace at its bud. Annexation of foreign reserves, material stock piles, industries, natural resources & technology from these conquests further strengthened the Nazi military at the cost of its inhabitants. For example, Germany gained 2,175 field cannons, 469 tanks, 500 anti-aircraft artillery pieces, 43,000 machine guns, 1,090,000 military rifles, 114,000 pistols, about a billion rounds of ammunition and three millions of anti-aircraft grenades from Czechoslovakia. This amount of weaponry would be sufficient to arm about half of the then Wehrmacht and enabled them to expand to Poland.

The invasion of Poland was also the same story. Except for a token declaration of war against Germany, France & Britain did nothing for 8 long months, till it invaded France. Germany army bloated from 100,000 men in 1935 to over 2mn (1.5 participated in invasion) by 1st Sept 1939. This new green, untested army had unproven tactics, command structure, training & discipline which could easily be bogged down if the Western front was opened. Furthermore, in this first battle fought by Nazi Germany, the bulk of the tanks, weaponry used were Czech and acquired forcefully only a few months ago without adequate time to train/familiarize.

Hitler, aware of his weak position, signed a pact with his arch-rival Stalin & handed him over more than half of the Polish territory in return of Russian support in the invasion to surround the Poles. This war and the lull that followed helped Hitler to revolutionize his green recruits into the most formidable wrath that the world has ever seen.

In short, “The only thing necessary for the triumph of evil is for good men to do nothing.” – Edmund Burke

Sarahah: Curing one’s blind spot

Every person has a blind spot. Traits, attributes, biases, habits or even filler words/speeches or stories which others notice but we fail to give adequate attention to. An anonymous messenger like Sarahah really helps us identifying them. After-all defining the problem correctly is the first step to any transformation & correction on ones behavior.

Will you please help me identify my blind spot. Please use this Sarahah link to help me identify & cure the faults in my thoughts, actions & presentation.

Why is peanut more expensive than peanut oil?

Why are groundnut/peanuts more expensive than peanut oil? Why are sunflower seeds more expensive than sunflower oil? Why are roasted grams more expensive than gram flour (Besan)? Even whole wheat is more expensive than the wheat flour! Flax seeds used to be cattle fodder, now you need to pay 100/- to get a fistful of them.

It is not a question of offseason fruits being more expensive than their canned/frozen/preserved cousins. I am talking about standardized dry items that have almost the same shelf life than their processed cousins. I am also not talking of fashion fads & branded items. Most of these items are available in bulk at the grocery stores.

Recently I took up gardening as a hobby. To my wonder, the cost of the seeds exceeded the value of produce. This is when my labor, organic manure (kitchen waste), planters & water were free.

I hope the manufacturer is not losing money when they grind gram/wheat into flour or extract oil from groundnut/sunflower. Most of the processed food have FSSAI mark, so I am presuming that there is no adulteration with palm oil/starch to keep the prices low. Then why is the processed food cheaper than the seeds from which they are made? No extractor can have 100% yield, some of the seed’s weight would be lost to moisture, oil-cakes, and other inedible outputs. Who is paying for these wastage?

Merits of Solitude in the digital world

Humans are wired to seek company & attention. Kids develop better & healthier when showered with attention. Adults are happier when they have company. A mere human touch is often enough to reduce the stress & anxiety.

However, too many stimulus is also not good. Think of human mind as CPU. Our five senses continuously feed it with information to process. Our emotions & mental state further overloads the system. Movie, TV channels, Online games & virtual reality allow us to live in multiple realms at once, but we have a single brain that needs to assimilate the information from various sources. If our mind is not able to cope up with the information bombardment, it starts buffering. Typically, night time was the daily solace where this buffer is processed through dreams and we wake up fresh without a worry in the world.

With the long hours, late nights, hard partying & intoxicants, not only our sleep time is getting shrunk, but also become less productive. Most of us check our mails even before brushing our teeth, robbing us even of a seconds where the mind can be without worries. We are living life of a mother with wailing kids under her arm, craving for a moment’s peace.

Remember Happiness is an “inside job.” We have very few real friends and more virtual friends on social media. We analyze the impact of a moment by how many likes a selfie will get rather than how much we really relished the occasion. Most friends are also too lazy to give us a call or share a cake with us on our birthday. They will simply all their social media app to notify them and create the wish/card on their behalf & even deliver it to your best friend forever.

Personally, I have attended 10 day Vipassana to help me sort things out. I have found overnight trekking/camping, long travel through trains or road to be beneficial. Essentially switching off one’s electronic media is all it takes.

Sometimes it is good to have a me time. It helps reboot our brain, improves concentration, helps sort our unprocessed raw emotions, help discover one’s voice. Once cannot find a solution of our problems, our relationship tussle without having a clear, cool mind. I am not. I am not asking for taking an extreme step of an isolation tank or sensory deprivation therapy. Just a few hours disconnected with the world and solitude usually does the trick.

HUF: tax planning

In the era of progressive taxation system, it is always advisable to distribute the income across multiple legal entities. A new pan card can save approximately 1.6Lkhs every year in taxes. Yet creating a Hindu Undivided Family (HUF), is one of the least talked about topic in India’s financial advisers.

How it saves tax:

  1. HUF becomes a separate legal entity. Hence it is eligible for rebates that is enjoyed at lower tax rate. Making the first 4-5 Lakhs of income virtually tax free.
  2. Cost of set up is also negligible. (20/- for a stamp paper, 50/- to get it notarized, 107/- for the PAN card application, ~200/- per annum for the bank account, ~400/- per annum for the demat account) Remember the bank account & demat account are optional.

Process to set it up:

  1. Create an affidavit for HUF & get it notarized.
  2. Apply for PAN. It is a simple process that you can do from your home.
  3. Open a bank account (or post office)
  4. Open a demat account
  5. Buy 1.5 Lakhs of NSC or investments that are 80C eligible.
  6. Transfer your assets to HUF so that the returns on it can be reported at a lower tax slab
  7. File HUF income tax returns

Process to dissolve:

  1. The best way to dissolve the HUF is to use its assets for the family expenses. You could buy a car, pay for the maid, gardener, driver salary etc. Buy furniture, pay for the medical expenses of the Karta or coparceners etc.
  2. Although there is no restriction on HUF holding property or shares of business, try to keep the HUF hold liquid funds invested in taxable entities (like bonds & FD). This way it is easy to prevent the HUF for owning too much funds and make periodical withdrawals to extinguish easier.
  3. As long as the karta is alive, the coparcener cannot force it to dissolve. The HUF karta (under whose name HUF is formed) has the sole discretion on its assets.

Other considerations

  1. As the name suggests, only Hindus, Buddhist, Jains & Sikhs can open a HUF.
  2. Also people from Kerela are not eligible to open the HUF.
  3. The HUF is formed at the time of marriage and all lineal ascendants & descendants automatically become members, without exception.

HUF is beneficial for you only if your non-salary income is substantial. By moving those assets & income here, you could save some taxes. Apart from tax saving, there is little to be gained from this instrument.

The first kick

A friend of mine is expecting her first kid and I happened to be around when she witnessed the first movement of the unborn baby. She was filled with pure euphoria of motherhood and wanted to share the moment with me. I felt awkward and politely declined to touch her belly. By this time, her hormones had also normalized and my reaction made her self-conscious and led to a very long awkward silence.

An innocent kid would have not only participated in this event but would have amplified the significance. I, as an adult, only dampened the moment. It was my own inhibitions & thought process that denied me the pleasure of witnessing this wonder of nature. The first movement of the kid is a moment of pure joy where the mother realizes for the first time that a living breathing individual is being incubated in her belly. It’s like an exclusive unveiling of a premier show months before its actual release.

Why have we killed the innocence in us? We have placed innumerable artificial barriers, constraints, conditions and traditions that rarely we are able to enjoy a moment without inhibitions. The stress in our life is building up because of the 100s of man-made filters that block our joy but amplify our misery. All being said, I still don’t know how I would react if I could time-travel back.

Cost of mimicking NIFTY?

S&P 500 has as the name suggest 500 stocks. It makes it pretty difficult for a retail investor to create a portfolio, unless they have 10s of millions of dollars. As a result, investors have gone via ETF route to help them replicate the returns of the index. The market is quite efficient and the cost involved is also low (management fee of 4-20 basis points) compared to what is charged by mutual funds in India.
In India, if I invested the 15 Lakhs in Nifty, I could replicate the portfolio within 2.5% error (the cost of the management fees). Added advantage being that I get NIFTY total returns (benefit of dividends, stock repurchase, rights, one time offers etc.) which is not shown by fund managers when they show the fund performance against the benchmark. I am surprised why not many individuals are still going through mutual funds & not direct.
There are 100s of papers pointing to the fact that “In an efficient market, portfolio managers cannot beat the market (once compensated for the management fees)”. If you also subscribe to this theory, the chart below from the 10th July closing price might give you some tips. Please note this was constructed when market was at an all-time high. If a 10% correction happens, your money can buy you more stocks and help reduce tracking error further.

Sector Stock Name Weightage (%) in index Share price no of shares Actual investment Portfolio weightage
ALUMINIUM Hindalco Industries Ltd. 0.77 3726.05 3 11,178 0.75
AUTO ANCILLARIES Bosch Ltd. 0.59 662.85 13 8,617 0.58
AUTOMOBILES – 2 AND 3 WHEELERS Bajaj Auto Ltd. 1.05 2731.9 6 16,391 1.10
Hero MotoCorp Ltd. 1.33 1673 12 20,076 1.34
AUTOMOBILES – 4 WHEELERS Eicher Motors Ltd. 1 28039.9 1 28,040 1.88
Mahindra & Mahindra Ltd. 1.75 1366.5 19 25,964 1.74
Maruti Suzuki India Ltd. 2.67 7440 5 37,200 2.49
Tata Motors Ltd DVR 0.37 268.25 21 5,633 0.38
Tata Motors Ltd. 2.26 83.5 406 33,901 2.27
BANKS Axis Bank Ltd. 2.45 510.5 72 36,756 2.46
Bank of Baroda 0.42 166.5 38 6,327 0.42
HDFC Bank Ltd. 9.3 1639.95 85 139,396 9.32
ICICI Bank Ltd. 5.17 1070.4 72 77,069 5.15
IndusInd Bank Ltd. 2.06 383.6 81 31,072 2.08
Kotak Mahindra Bank Ltd. 3.23 963.35 50 48,168 3.22
State Bank of India 2.82 285.25 148 42,217 2.82
Yes Bank Ltd. 1.49 1511.2 15 22,668 1.52
CEMENT AND CEMENT PRODUCTS ACC Ltd. 0.37 1629 3 4,887 0.33
Ambuja Cements Ltd. 0.5 254.25 30 7,628 0.51
UltraTech Cement Ltd. 1.15 4145 4 16,580 1.11
CIGARETTES I T C Ltd. 7.65 291.65 394 114,910 7.69
COMPUTERS – SOFTWARE HCL Technologies Ltd. 1.35 849.5 24 20,388 1.36
Infosys Ltd. 5.19 332.9 234 77,899 5.21
Tata Consultancy Services Ltd. 3.49 447.7 117 52,381 3.50
Tech Mahindra Ltd. 0.66 383.8 26 9,979 0.67
Wipro Ltd. 0.91 268.5 51 13,694 0.92
DIVERSIFIED Hindustan Unilever Ltd. 2.14 196 164 32,144 2.15
ENGINEERING Larsen & Toubro Ltd. 3.85 1734.5 33 57,239 3.83
FINANCE – HOUSING Housing Development Finance Corporation Ltd. 7.13 1097 98 107,506 7.19
Indiabulls Housing Finance Ltd. 0.96 1560.75 9 14,047 0.94
GAS GAIL (India) Ltd. 0.65 364.4 27 9,839 0.66
MEDIA & ENTERTAINMENT Zee Entertainment Enterprises Ltd. 0.75 504.3 22 11,095 0.74
MINING Coal India Ltd. 0.88 258.55 51 13,186 0.88
Vedanta Ltd. 1.29 260.75 74 19,296 1.29
OIL EXPLORATION/PRODUCTION Oil & Natural Gas Corporation Ltd. 1.23 161.85 114 18,451 1.23
PAINTS Asian Paints Ltd. 1.38 1126.8 18 20,282 1.36
PHARMACEUTICALS Aurobindo Pharma Ltd. 0.53 711 11 7,821 0.52
Cipla Ltd. 0.78 548.75 21 11,524 0.77
Dr. Reddy’s Laboratories Ltd. 0.9 2725 5 13,625 0.91
Lupin Ltd. 0.7 1148.5 9 10,337 0.69
Sun Pharmaceutical Industries Ltd. 1.7 563 45 25,335 1.69
POWER NTPC Ltd. 1.09 160.1 102 16,330 1.09
Power Grid Corporation of India Ltd. 1.29 211.65 91 19,260 1.29
Tata Power Co. Ltd. 0.41 558.85 11 6,147 0.41
REFINERIES Bharat Petroleum Corporation Ltd. 0.92 404.5 34 13,753 0.92
Indian Oil Corporation Ltd. 1.09 955.3 17 16,240 1.09
Reliance Industries Ltd. 6.36 1489.55 64 95,331 6.38
SHIPPING Adani Ports and Special Economic Zone Ltd. 0.81 375 32 12,000 0.80
STEEL AND STEEL PRODUCTS Tata Steel Ltd. 1.02 2432.1 6 14,593 0.98
TELECOMMUNICATION – EQUIPMENT Bharti Infratel Ltd. 0.73 23832.05
TELECOMMUNICATION – SERVICES Bharti Airtel Ltd. 1.39 408.8 51 20,849 1.39
Grand Total 99.98 104914.05 3,039 1,495,244 100.00

The reason for this 2% error: Bharti Infratel (not a fancy stock but still has a high stock price) making it hard to incorporate in the portfolio. Also Tata Motors & Tata Motor DVR are two separate scripts. If you choose one of the two, your tracking error can be further reduced.

If you plan to replicate this strategy, I would advise that systematic monthly investment would be more sound that one shot (bullet) investment. NSE categorizes stocks in 23 categories. However if you are starting with a monthly plan, get the basics sectors right in the first 6 month (Banking 24%, O&G 15%, Technology 14%, Auto 11% & Tobacco 5.8%) then start adding the minor industries over the next 12 months. Second year onwards diversify in the main industries and gain exposure in the second & third weights of the main industries. Like that if you systematically buy exposure in 1-2 companies every month, you can reduce your tracking error & yet able to mimic the stock index returns within a 2% range. A ghost trading in which you track your portfolio performance to a SIP on your favorite mutual fund or Index might give you a nice bearing on the efficacy of your strategy.

Please note I am a passive investor. I trade only 1-2 times in a quarter. This strategy will involve trading one day in a month to rebalance.