# Technically speaking, how are you doing?

Hey,

The whole world looks at the same or similar technicals, you know.

For example, if there’s support, everyone knows there’s support.

If a Fibonacci level has been reached, it’s the identical story.

When a trendline is broken, yes, you guessed it, the story hasn’t changed.

Yeah, we’ve got a problem.

What do we do here?

We don’t have an option but to think a couple of steps ahead.

As in, when a support is reached, we’re still talking about support at minus let’s say 3%, ok? Decide whatever number you wish to for yourself here, but till support minus that number is not breached, in your book, support still hasn’t been broken.

Thinking around, that’s what we are doing here.

Why?

We don’t wish to be pushed into market behaviour till something is happening.

We wish to forgo noise.

When we act, we wish to do so in a more sure-shot fashion.

A thinking-around approach thus becomes inevitable.

Similary, it’s not a Fibonacci bounce-off till let’s say (Fib62 + x) has been surpassed. Decide what your x is.

Or, a trendline is not broken till the close says so, or till there are two simultaneous closes below or above it.

You get the drift.

That way, for all you know, you could still end up using a potentially defunct technical machinery, which, because of your thinking-around exercise, has suddenly become a powerful and potent tool.

🙂

# My Buddy called Compounding

Compounding…

…is my happy space.

When I’m having a difficult market day,…

…I open my calculator…

…and start…

…compounding.

My friend clears all doubts in a flash.

It’s easy to compound on the calc.

In German they’d say “Pippifax”.

The younger tribe in the English-speaking world would say easy peasy…

…(lemon squeasy).

Let me run you through it.

Let’s say you wish to calculate an end amount after 25 years of compounding @ 9 % per annum.

Let z be the initial amount (invested).

The calculation is z * 1.09 ^25.

That’s it.

You don’t have to punch in 25 lines. It’s 1 line.

What if you went wrong on the 18th line?

So 1 line, ok? That’s all.

What’s ^ ?

This symbol stands for “to the power of”.

On your calculator, look for the y to power of x key, and then…

…punch in z * 1.09 (now press y to the power of x)[and then punch in 25].

What does such an exercise do for me?

Meaning, why does this exercise ooze endorphins?

Let’s say I’m investing in sound companies, with zero or very little debt, diligent and shareholder-friendly managements, and into a versatile product profile, looking like existing long into the future, basically meaning that I’m sound on fundamentals.

Let’s say that the stock is down owing to some TDH (TomDicK&Harry) reason, since that’s all it’s taking for a stock to plunge since the beginning of 2018.

I have no control over why this stock is falling.

Because of my small entry quantum strategy, I invest more as this fundamentally sound stock falls.

However, nth re-entry demands some reassurance, and that is given en-masse by the accompanying compounding exercise.

At the back of my mind I know that my money is safe, since fundamentals are crystal clear. At the front-end, Mr. Compounding’s reassurance allows me to pull the trigger.

Let’s run through a one-shot compounding exercise.

How much would a million invested be worth in thirty years, @ 11% per annum compounded.

That’s 1 * 1.11^30 = almost 23 million, that’s a 2300% return in 30 years, or 75%+ per annum non-compounded!

Now let’s say that my stock selection is above average. Let’s assume it is good enough to make 15% per annum compounded, over 30 years.

What’s the million worth now?

1 * 1.15^30 = about 66 million, whoahhh, a 6600% return in 30 years, or 220% per annum non-compounded.

Let’s say I’m really good, perhaps not in the RJ or the WB category, but let’s assume I’m in my own category, calling it the UN category. Let’s further assume that my investment strategy is good enough to yield 20% per annum compounded.

Ya. What’s happened to the million?

1 * 1.20^30 = about 237 million…!! 23700% in 30 years, or 790% per annum non-compounded…

…is out of most ballparks!!!

How can something like this be possible?

It’s called “The Power of Compounding”…,

…most famously so by Mr. Warren Buffett himself.

Try it out!

Pickle your surplus into investment with fundamentally sound strategy.

Sit tight.

Lo, and behold.

🙂

# When the Need to Commit Arrives

You’ve got something together.
It’s taken time…
…effort…
…capacity to overcome failure…
…stamina…
…self-belief…
…and what have you.
However, now, you have something in your hands.
What is this something?
A strategy…
…that will yield more than inflation…
…over the long-term…
…nothing over the top…
…as simple as that…
…no over-ambition…
…but nothing less.
If you wanted less, you might as well have packed up operations on day 1.
Beating inflation over the long-term is our bench-mark.
For us, there’s no other rat-race.
Ya, so, what now?
Now, well, it’s time to commit.
Slowly, surely, with no doubt in our minds, over perhaps half a decade(or perhaps a full decade), we now fully allocate.
Why?
There’s no other logical conclusion.
We were striving for this.
Now that we are there, it’s time to pull the trigger…
…slowly…
…but surely.

Superinvestors?

Sure. Tremendous pipeline, great bargains, of course they’re buying.

Who else?

Market-makers.

They buy and sell for a living.

They make the market for us to trade in.

Let’s forget about them for this discussion.

Anyone else?

The syndicate?

What syndicate?

I mean, is there even a syndicate?

Let’s not go into conspiracy theories.

Whether or not there is a syndicate should not affect us.

Moving on…

…think of anyone else?

Mutual funds?

Sure.

Lots of SIPs going in, a few NFOs doing the rounds, yeah, MFs are biting.

Foreigners?

More like exiting.

Hedge funds?

Busy trading I guess, won’t count them as strong hands, they’ll book a profit and will be sellers, over the short to medium term.

Retail investors are scared.

They’re tired of the markets.

Most have run away.

Most of those who haven’t, want to.

Well, the small entry quantum guys are.

Why?

Firstly, they’re liquid.

Their strategy leaves them liquid, … , like forever.

Till when are they going to buy?

As long as quality is selling cheap, they’ll continue to buy.

Are they scared?

No.

Why?

Their strategy gives them the courage to work on full throttle at times just like these.

Times like what?

You know, bad news galore, whatsapps, lay-offs, scams, everything under the sky that can take place – is taking place.

And you know, bring it on. Gloom, doom, kaboom, and quality will start selling even cheaper.

We are loading up on quality and will continue to do so as long as it is cheap.

We’re happy that there’s a buying opportunity.

🙂

# Insiding

The correct market strategy for oneself…

…is like a holy grail.

Some don’t attain it at all.

Mostly, one does get to it but is not able to maintain it.

It’s great if you can arrive at your correct strategy, and keep it alive, forever.

However, that’s a huge statement.

Lots of caveats will need to be addressed before this statement can be made achievable.

What works for me is lots of hit and trial.

Levels internalize.

One gets a feel for what is disturbing (to oneself).

Internalization gets our reflexes going on auto.

“Insiding” is a term that I’ve made up signifying the struggle one goes through recognizing whatever needs to be recognized and arriving at one’s correct strategy.

This act of recognition comes from taking hits, year after year, till one is street-ready to handle whatever the street can offer at its worst.

Market action is mostly about making mistakes.

One keeps these small.

Whatever you end up doing right for yourself, …

…, yeah, that’s what you’re scaling up.

Out of ten attempted ideas, one might work.

Out of a hundred, three might work exponentially.

These are the ones.

Stick to these.

Scale them up.

Whatever it has cost you to arrive at them, is mere tuition fees.

Yes, that’s how you’ll need to see things, to remain sane.

Be happy – at least you have something concrete in your hands – a strategy that works – that’s huge.

The moment you see it turning incorrect, leading to market mistakes, just tweak, tweak tweak till the strategy starts working again.

Tweaking will go on as long as markets exist.

What’s a market mistake?

A market mistake is anything that makes you lose money consistently.

A correct strategy is something that yields money consistently.

That’s why one needs to keep things small till major mistakes are out of the way.

Make mistakes, sure, they are bread and butter.

Just don’t repeat them.

# Hocus-Focus

Is it on your benchmark index?

Sure.

Ok. Drops further. Developing into a crash…

Where’re you at now?

My focus has shifted.

Tell me more.

I’m now focusing on the shares i’ve begun to accumulate,…

…and, specifically, I’m focused on the number of shares being added to my portfolio,…

…that’s my number. Yeah, that’s where my focus is at.

First up, I feel the joy as this number enters my demat. After that, I cast a brief glance at whatever benchmark indices I’m looking at, and decide for myself, whether my focus needs to remain shifted.

What if you’re rubbing your hands in glee, and dud shares are being added to your name?

That’s the whole point. These are not duds. They are gems as per due diligence done, and are going for the price of non-precious counterparts. That’s why my focus remains shifted.

When will it shift back?

That switch happens on auto. When benchmarks start oozing expensiveness, focus automatically shifts to the benchmarks. It should no longer be on the number of shares entering your folio, because shares should not be entering your folio when benchmarks ooze expensiveness.

Exceptions?

Sure. Specific stocks could be cheap when a benchmark is expensive. Let’s not deviate from the point though. This is about a healthy shift of focus, and then a second – healthy – shift back.

Right.

Scared to enter?

Things look gloomy?

Forever?

NO.

Look at History.

Markets are where they are despite what’s happened.

Governments, scams, frauds, bribes, wars, disasters – the list is endless.

In the end, we are still where we are.

Is that good news?

YES.

What does it mean?

Growth – reflects in the corresponding market – eventually.

Sure – we might not be growing at 7%+.

We definitely are growing at 5%+, perhaps at 5.5%+.

In a few years, growth could well accelerate.

Why?

Earning hands are growing.

So are aspirations.

The consumption story in India is alive and kicking.

What we’re seeing currently is a result of eighteen months of bad news.

Such a long spate of negative stuff churning out gets the morale down.

People start letting go of their holdings in despair.

Maybe there’s another eighteen months of negativity left – who knows.

That’s not the right question.

Don’t worry yourself about the bottom and when and where it is going to come.

Why?

If you don’t have the courage to go in at this level (with small quanta of course, we do follow the small entry quantum strategy)…

…do you really thing…

…that you will muster up…

…anything remotely resembling courage…

…at a number that is let’s say 20% below current levels?

Gotcha there?

# Give Me My Table & I’ll Undetach

Detaching…

… .

My work is done for the day.

Enjoying the remainder of the day is now a priority.

Would that be possible without detaching from the workplace?

No.

Is it that easy…

…to detach?

No.

Am I successful in detaching?

Reasonably.

Just like that?

No.

Meaning?

It’s taken me fifteen years to learn to detach reasonably well from the markets, …

… and, there are still times when external factors cause unwanted and untimely re-attachment.

The next time I wish to undetach (yeah, just made up this word!) is the next time I wish to engage.

To undetach, all I need is my work-table.

Rest follows on auto.

However, when I’m not on my work-table, mostly, I don’t wish to undetach, …

…and surely enough, someone will want to discuss markets, …

…or someone switches on financial TV, …

…or one catches a headline in the paper, …

…or a tip can’t be refrained from being given, …

Getting around peoples’ free-fund-attitude is the biggest challenge for a market-practitioner, in my opinion.

You might master market-etiquette, and you might learn how to detach in isolation. However, people won’t spare you

Detaching despite people while living and thriving amongst people is one huge win.

Getting there…

… 🙂 .

# Going beyond the P-Word

Hey,

You panicking?

Why?

Don’t.

How?

To go beyond panic at a time like this, you’ll need to be amply liquid.

And, then, you’ll need to have the guts to engage.

One way for remaining liquid for life is to follow a small entry quantum strategy.

…yeah,…

we won’t be going into the nitty gritty of how the strategy works for the moment.

In a nutshell, our small entry quantum strategy leaves us liquid, and then some.

What exactly is a time like this?

Well, Benzes have started to go for the price of fiats, and…

…that’s why we need to…

engage

Forget your pain, pinch or panic.