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By:

Kaustubh Kale

10 September 2024 at 11:37:15 pm

Modak and the Art of Investing

As the aroma of freshly steamed Modaks fills homes during Ganesh Utsav, the festive spirit comes alive instantly. My mouth is already watering at the thought! The humble Modak, prepared with love to honour Lord Ganesha, may look simple from the outside. But anyone who has tried making one knows that a good Modak depends on several things coming together - the right ingredients, the right recipe, patience with the process, and finally, enjoying the result. Investing is surprisingly similar....

Modak and the Art of Investing

As the aroma of freshly steamed Modaks fills homes during Ganesh Utsav, the festive spirit comes alive instantly. My mouth is already watering at the thought! The humble Modak, prepared with love to honour Lord Ganesha, may look simple from the outside. But anyone who has tried making one knows that a good Modak depends on several things coming together - the right ingredients, the right recipe, patience with the process, and finally, enjoying the result. Investing is surprisingly similar. Choose the Right Ingredients A Modak is only as good as the ingredients that go into it. Fresh coconut, good-quality jaggery, properly prepared rice flour and the right flavours all contribute to the final result. Our investments and financial products are the ingredients of our financial plan. Equities, mutual funds, fixed income, gold and other investments each have a specific role to play. The objective is not to pick whatever appears most exciting at the moment, but to select suitable, good-quality investments that match our financial goals, time horizon and ability to take risks. Health and life insurance are equally important ingredients. Adequate coverage helps protect savings, the family, and their financial goals and dreams. Good ingredients provide the foundation. But ingredients alone are not enough. Get the Recipe Right You may have the finest ingredients in the kitchen, but if the proportions are wrong, the Modak may still not turn out well. The same applies to investing. Asset allocation is the recipe of a financial plan. Too much of one ingredient can spoil a Modak. Similarly, excessive concentration in one asset or too much money in low-return products can spoil a portfolio. Balance is key. A thoughtfully constructed portfolio brings different investments together in the right proportions. To keep asset allocation very simple - short-term goals can be planned through bank fixed deposits, recurring deposits and debt mutual funds. For long-term goals, one can consider hybrid mutual funds, equity mutual funds or direct stocks. Trust the Process Once the Modak is shaped and placed for steaming, constantly checking whether it is ready will not make it cook faster. Investors often make the same mistake. We keep checking markets, reacting to every correction, chasing recent performers or changing strategies because of short-term noise. Good investing requires patience and discipline. Invest regularly, review periodically and allow your financial plan enough time to work. Compounding is powerful precisely because it rewards those who remain invested for long periods. Sometimes, the best thing an investor can do is simply avoid unnecessary interference. Enjoy What You Have Created Finally comes the most important part - eating the Modak! The purpose of investing is not merely to accumulate the largest possible number on a statement. Wealth should eventually help us fulfil our goals, support our families, create financial security and enjoy life with greater peace of mind. A good Modak needs the right ingredients, the right recipe and trust in the process. A good investment journey needs exactly the same. This Ganesh Utsav, may Bappa bless us with the wisdom to make good financial choices, the patience to stay disciplined, and the prosperity to enjoy the fruits of our efforts. Ganpati Bappa Morya! (The author is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal. He could be reached on 9833133605.)

Gates of Power, Corridors of Pain: The Chokepoint Fallacy

Mar 30
5 min read

From the Øresund to the Dardanelles, chokepoints have imposed prolonged conflict and heavy costs on those who seek to command them.

Gallipoli landings, 1915.
Gallipoli landings, 1915.

With Washington mired in a strategic cul-de-sac in Iran with no evident off-ramp, there has been frenzied speculation in the past few days of President Donald Trump and the Pentagon mulling weeks-long ground operations, including raids on Kharg Island and Iranian coastal positions abutting the Strait of Hormuz.


Kharg, lying some 650 kilometres northwest of the strait, handles the bulk of Iran’s oil exports. The logic behind its proposed seizure is to constrict Tehran’s fiscal lifeline.


Regardless of whether American troops are ultimately deployed on ground in Iran, the allure of capturing global chokepoints has exerted a powerful hold over strategists in different marches of history.


For centuries, a narrow strait, a fortified island or a constricted passage between two seas have acquired an almost talismanic allure when contemplated in the councils of power.


Trump’s designs upon Kharg Island belong to this enduring tradition: the belief that the seizure of a point may compel the submission of a system.


But History, that stern tutor of overreach, offers a colder verdict. While chokepoints have enriched nations, more often they have entangled ambition, provoked resistance and imposed costs far exceeding their promise for the powers that sought to control them.


Fiscal Geography

No state monetised a chokepoint more systematically in early modern history than Denmark at the Danish Straits. What began as geography became policy in 1429, when King Eric of Pomerania imposed a toll on all vessels passing through the Øresund - the narrow channel linking the North Sea to the Baltic.


The levy came to be known as the ‘Sound Dues,’ derived from “the Sound” - the English term for Øresund itself. Every ship was required to halt at Helsingør (Elsinore), declare its cargo, and pay a duty calibrated to its value. Far more than a toll, this was one of Europe’s earliest experiments in what historians have termed “fiscal geography” - the systematic conversion of location into revenue.

Map of Danish Sound Toll system
Map of Danish Sound Toll system

The results were transformative. By the 16th and 17th centuries, the dues accounted for a substantial share (at times nearly two-thirds) of the Danish crown’s income. They financed fortifications, sustained naval power and elevated a middling kingdom into a pivotal Baltic actor. Grain from Poland, timber from Scandinavia and naval stores from Russia all passed through the Danish Straits.


Yet success bred intense friction between rival European powers. The Dutch Republic, whose commercial lifeblood depended on Baltic access, resisted both diplomatically and militarily. Sweden, rising to great-power status in the 17th century, contested Danish dominance in a series of Northern Wars. The Treaty of Brömsebro (1645) and subsequent settlements chipped away at the universality of the dues, weakening their fiscal logic.


By the early 19th century, the system had become strategically intolerable to other rising powers. During the Napoleonic Wars, Britain, fearing that Napoleon Bonaparte might gain control of the Danish fleet and with it influence over the Baltic approaches, launched the Bombardment of Copenhagen in 1807, a pre-emptive strike aimed as much at a chokepoint regime as at a state.

Danish Sound Dues
Danish Sound Dues

The Copenhagen Convention of 1857 finally abolished the Sound Dues under international pressure. But this was achieved at great cost to other powers and Denmark itself.


Strategic Limits

If Denmark represented the fiscal exploitation of chokepoints, Malta illustrated its strategic limits. Perched between Sicily and North Africa, the island has long served as a pivot in the central Mediterranean. During the Great Siege of 1565, the Knights Hospitaller had repelled an Ottoman armada, demonstrating how a fortified node could blunt imperial expansion.


Yet Malta’s later history under British rule offers a completely different lesson. As a base during the Napoleonic Wars and a linchpin of imperial communications thereafter, Malta was indispensable but never quite sufficient to guarantee British control of Mediterranean Sea lanes. It functioned as part of a chain of the British Empire along with Gibraltar to the west and Suez to the east. During the Second World War, this dependency became stark as Axis forces subjected the island to relentless siege, nearly starving it into submission. Between 1940 and 1942, Malta endured one of the heaviest sustained bombing campaigns of the war, with German and Italian aircraft seeking to neutralise it as a British base.

Malta Convoys, 1942
Malta Convoys, 1942

Its survival depended on a series of hazardous convoy operations mounted by the Royal Navy - most notably Operation Pedestal (August 1942), alongside earlier efforts such as Operations Harpoon and Vigorous. Losses were severe as carriers were damaged, cruisers were sunk and merchant ships destroyed in significant numbers.


Malta, a chokepoint base, completely consumed British power, demanding a continuous expenditure of ships, matériel and lives to remain operational.

 

Geometry of Defence

Long before modern naval theory pioneered by the likes of A.T. Mahan, the Eastern Roman Empire or Byzantium had well understood what narrow waters could do. The Bosporus and the Dardanelles were engineered as instruments of denial by successive Byzantine emperors.

 

Constantinople’s layered defensive system - most famously its landward Theodosian Walls, complemented by numerous towers, signalling networks and the chain across the Golden Horn, transformed its geography into a lethal defensive weapon against its numerous adversaries.


Naval manuals attributed to Byzantine emperors like Leo VI ‘The Wise’ emphasised manoeuvrability, coordination with shore-based defences and the calibrated use of incendiaries.

 

As chroniclers like Anna Komnene observed, fleets entering the narrows found themselves trapped by the very environment as currents worked against them, space constrained manoeuvre and missiles rained from both shores. The straits multiplied defensive power in a way open seas could not.

 

By the early 20th century, technological optimism revived the belief that chokepoints could be forced. Admiral Jackie Fisher had revolutionised the Royal Navy, and a generation of planners assumed that speed and firepower could crack ancient gates. Modern battleships, it was assumed, could overwhelm static defences.

Second Arab Siege of Constantinople, 717 CE
Second Arab Siege of Constantinople, 717 CE

However, the Gallipoli Campaign of 1915 brutally exposed fallacy. Today, that campaign is the most frequently invoked historical analogy amid speculation of the U.S. attempting to land troops to seize Kharg.

 

In 1915, British planners, encouraged by an overconfident Winston Churchill, believed that forcing open the Dardanelles strait - a narrow waterway whose control promised the opening of a route to Russia, and the seizure of Constantinople, thereby knocking the Ottoman Empire (allied with Wilhelmine Germany) out of the war.

 

Instead, it became a sorry case study in strategic overreach which cost 250,000 Allied casualties - including heavy losses among British, French, Australian and New Zealand forces. The Ottomans, under commanders such as Mustafa Kemal Atatürk, exploited the terrain and interior lines to devastating effect. Allied forces, once landed, found themselves trapped between sea and ridge, unable to advance and unwilling to retreat.

 

Fisher himself grew sceptical as the operation unfolded, wary of committing capital ships to a geometry that favoured the defender. The intended decisive stroke had transformed into a nightmarish stalemate, ending in withdrawal and humiliation for the British.


The enduring allure of chokepoints lies in their deceptive clarity. They promise leverage over complex systems and suggest that control can be localised, decisive and swift.


Yet, History points in another direction. Chokepoints invite fierce contestation precisely because they matter. They justify evermore escalation and impose sustained costs on those who seek to dominate them.


From the Øresund to the Dardanelles, the lesson that recurs with stubborn consistency is that while narrow waters magnify power, they magnify its burdens too.


Whether that lesson will temper the feverish calculations now deliberated in Washington remains, as ever, uncertain.

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