The Headmaster had told his First Disciple and many other people that he was not all knowing and all powerful. To many, this was normal. To the Eldest Brother and other disciples of the Academy who believed in their teacher unconditionally, the Headmaster was too humble, which led to him seeming proud.
In fact, the Headmaster knew that, for example right then, he could not understand Ning Que's joke and could not understand the praise in Ning Que's statement. He thought about it but did not understand, and so, he decided not to waste time to think about it and continued telling his tale.
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