Emo-check

Gauge…

…the impulse…

…before…

…acting.

Market behaviour evokes an impulse within us. 

Markets are such. 

They tease…

…at a spot…

…which has History with you.

They manage to find the spot.

And then they burn matches at it,…

…towards causing max-pain.

It can be a support level.

A resistance level.

Your stop-loss.

Exit level.

Entry-level

Break-even point.

What have you. 

Use your imagination. 

Whichever point holds value for you is open for needling. 

Meaning, please take it for granted that this point will probably be pricked again and again.

Why?

Ensembles…

…want you to act. 

Your action, if you succumb to the impulse, will then probably benefit these ensembles. 

Example. 

You enter an underlying. 

An ensemble takes it up 20% after your entry, on huge volume. 

Price then falls for twelve sessions, on low volume, such that more than 50% of your notional profit evaporates.

What just happened?

You’re feeling that impulse to preserve that other 50% of your profit, right?

It could be the right decision. 

Or not.

Depends on your outlook. 

Ensemble probably wishes to purchase another tranche, and is driving the price low enough to then act upon this relatively lower price. 

How will you feel, if you exit now, and then price shoots another 25%, immediately after your exit?

Hmmm, that’s another way of looking at it. 

What’s right?

What’s wrong?

Nobody knows before-hand. 

What is in your hand, though, is the ability to gauge your impulse, and to synchronise it with your objectives upon initial entry. 

When, then, one fine day, the impulse to act is so strong that no amount of rationalising can hold you back,…

…,well,…

…that’s the time when you…

…act,…

…and it’s the right decision for you, irrespective of market outcome. 

Why?

Such an “uncontrollable” impulse to act, even after study and attenuation, is better implemented rather than swallowed (leading to future indigestion). 

Taking Off with Cost-Free-Ness

In Buddhism, …

…there’s a saying to the effect, …

…that as the sun rises, …

…the radiance of others stars, …

… to the observer’s eye, …

… pales, …

…into insignificance.

We’re not going to leave an observation like that hanging.

We’re going to extrude it.

When we make a well-managed underlying cost-free, …

…what are the implications, …

… on existing holdings, …

…which are not cost-free yet?

Well, over a large period of time, …

…their comparative impact on the folio…

…will start paling, … into insignificance.

Let’s say we hold x value of cost-free-ness in an underlying.

Rest of the folio’s value is y, with y = let’s say 30x.

Here’s one way go looking at it.

What’s the maximum loss you can incur on your y?

Not going to happen, but it’s 30x.

What’s the maximum gain that can occur on your cost-free holding?

Uncapped. Yeah.

At 15% per annum compounded, which is reasonable to expect for a well-managed company with many other tick-marks, if you hold your cost-free holding for 25 years, it’s value would be ~ 33x (= 1.15^25).

So, what have you done?

You’ve paled your other portion of the folio into “insignificance”, with just one created pocket of cost-free-ness.

Do ponder, what the implications would be, if you were to create a). 10 such pockets, or b). 20, or c). 50, or perhaps even d). 100 such pockets of cost-free-ness?

Can you even imagine where you would then be in 25 years?

a). With 10x of cost-free-ness, you would be at ~ 329x.

b). With 20x of cost-free-ness, you would be at ~ 658x.

c). With 50x of cost-free-ness, you would be at ~ 1645x.

d). With 100x of cost-free-ness, you would be at ~ 3292x.

Now substitute the value of x here.

Arbitrarily, let’s take x = 1.

One rupee.

One thousand.

One lakh.

One million.

One Cr.

Take what suits you.

See where you started from, and see where you’ve then come.

For example, starting with 1L of cost-free-ness, we land up at ~ 16.5 Cr in 25 years for 50 pockets.

Let’s say I have a target of creating 1 million worth of cost-free-ness in 50 pockets.

Where do I stand in 25 years?

At ~ 165 Cr (50 *1Million *1.15^25).

Alone the after tax dividend emerging from this stream would be > 2.5 Cr per annum.

Any takers?

🙂 (Happy Cost-free-ness!)

Is it just me?

Is it just me or does anybody
feel the way that I feel?
they’re just not being real
tell me, is it just me or is anybody
thinking all the same shit?
they’re just not saying it
or is it just me?
– Sasha Sloan (also quoted below)

Waiting for…

…the rock to fall…

…is tiring.

One moves beyond.

Things happening around…

…are enough

…to make one…

…throw up.

Is it just me…

…who’s becoming numb…

…to the apathy…

…prevailing?

Does such apathy…

…deserve investment adulation?

Are we…

…even worth it?

Do those coming in…

…with funds…

…feel the way…

…that I feel…

…and are not saying it…

…because they are…

…making money?

Tell me…

…you don’t know…

…that markets can stay over-inflated…

…long enough to bankrupt nay-sayers.

Am I…

…just high…

…or am I…

…kinda right…

…?

Is it…

…just me?