Dance the Bawwdy Music!

..dance the body music

makes you feel so happy

dance the body music

music makes you happy

hear the music play

feel your body sway

hear the dj say

oh what a big smash big smash

dance the body music…

 

Osibisa, was it, late ‘70s?

Yup. 

What an cool swingy number, sung by an unforgettable band!

Disco beat. Rhythm. Easy peasy lyrics. Synth. Floor’s going crazy. Song’s all over the people. People are all over the song. 

Euphoria. 

Why are we talking about it?

Music or euphoria?

Euphoria. 

I used the music element to paint a picture of euphoria in your mind.

What is it about euphoria?

Why does it push me on alert?

Is it that I don’t wish to enjoy my life?

What could I have against euphoria?

I’ll tell you. 

Before I tell you, I’d like to mention that I love the feeling. 

It fantastic being in the feeling. I’ve got one eye on my alerts though. 

WHY?

We make our biggest mistakes when hit by Euphoria. 

Yes. 

Surprised?

Don’t be. 

Under the influence of Euphoria, our biochemistry is so, so different. 

We’re far from peak. 

Our defences are down. 

We are highly capable of plunging into…an abyss…oblivion…call it what you feel is befitting. 

We let go of safety. 

We bet big. 

We bet dangerous. 

We bet the farm.

That’s what euphoria can do to us. 

I do feel euphoric, at times. 

A trade’s gone well. 

A deal’s come through. 

Stability at home. 

Euphoria. 

However…

…as I told you…

…one eye is on my alerts. 

If even a single thought emerges of betting big, bigger than my normal size, well, my predefined red-alert also goes up with such a thought. 

I see my alert’s red flare, and the unwanted thought subsides. 

I am able to sick to within the confines of my position-size rule.

If even one thought emerges of trying a new untested line, just because all current lines are doing ok, well, my predefined strategy saturation alert also goes up with such a thought. 

I remind myself that I’ve decided upon financial strategy saturation, and don’t plan to add a new line, at least not in a hurry or upon an impulse. 

I’m able to stick to my strategy saturation decision. 

Are you understanding what I’m trying to tell you?

If yes, I’m so happy for you. 

You’re not leaving it for later. You’re understanding it without being hit by the aftermath of a decision taken under the influence of euphoria. 

Cheers mate!

🙂

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Dealing from a Position of Weakness 

When you’re losing… 

… you downsize your position. 

Why? 

To save your corpus. 

You lower the risk. 

Is risk quantifiable? 

You bet. 

Risk is no abstract entity without a body. 

In a trade, your risk is defined by your stop to stack-size ratio and the size of your one position. 

When you’re losing, you either lower the magnitude of your stop, or lower the quantity of your one position. 

Till when?

Till your corpus crosses par and then some. 

At par, you trade normal. 

Normal stop. 

Normal quantity. 

What is normal? 

Depends on you. 

What is normal for you? 

That’s what goes. 

Why the caution when below par? 

Lots works against you at this time. 

Sheer math for example. Downsizing sets this right. 

Emotions. 

Whoever’s got a remedy for those is king already. 

You. 

Your body-chemistry is affected. You’re sluggish. More prone to error. Nobody’s got a remedy for you, except you. Wait for your body to heal before trying out that perfect cover-drive, or what have you. 

Winning or losing in the markets depends a lot upon psychology, chronology, systems, strategy, application and adaptation of style. 

I like to call this “getting one’s meta-game together”. 

Let’s go people. 

Let’s get our meta-games together. 

Then we can scale it up. 

🙂 

One Up on the Romans

Sometimes, words are hard to come by.

Like now.

It’s a dry spell.

Happens.

At other times, well, they burst forth as if a geyser’s exploded.

Then, I’m not able to stop their flow.

That also happens.

Welcome to the dual-natured environment of Earth.

While we’re steeped in this duality, there’s no option but to get used to it.

One can always go on to then master it.

Oh, I forgot, that’s optional.

I’ll tell you what I’ve done to master such fluctuating fortunes, as far as word-flow is concerned.

Two simple steps, that’s all.

When we’re dry,…, we’re dry. No PhDing over the fact that we’re dry. We’re just dry. Period. Accepted. Digested. We just go on to do other stuff. There are millions of other things that grab our interest on this dual planet.

When we’re up and running – that’s just it – we’re up and running. No PhDing over why we’re up and running. We let the flow happen. We can decide to make it happen even more. That’s optional…, but we don’t stop the flow… till the tap dries itself out.

Similarly, you can experience a string of losses in the markets. Losses make you hit your cut-off. A cut-off is a cut-off. You don’t keep on trading. Nature’s telling you to lay off till your mind and body align themselves with the flow of the markets again. Just do other stuff till you’re mentally and physically back.

On the other hand, when profits run, they can really run. PLEASE LET THEM RUN. Don’t PhD about the run. Let them run till they dry out.

When in dualism, the idea here is to first live through dualism, in order to understand its nature.

We’re one up on the Romans, though.

We’re trying to be masters over our fluctuating dualistic environment.

Yeah, in the markets, we’re getting through losing spells with minimal damage.

Simultaneously, we’re maximizing the potential of profit-runs.

That’s what we’re doing.

If not, then that’s exactly what we are going to do.

Cheers

🙂

Who Told Who So?

Nobody’s in a position to tell anyone so.

That’s the marketplace for you in a nutshell.

There are times when you’re sure a scrip has peaked, and it just keeps on going higher, and higher, and then even higher.

At other times, a scrip might show tremendous valuations, but it just refuses to rise. 9 years in a row. Just refuses to rise.

Welcome to a world where if you’re able to watch your own back, you’re good.

In the world we are speaking about, a Rakesh or a Warren are what they are because that’s what suits them particularly. What suits them might most definitely not suit you. What makes you think you can emulate someone in the marketplace?

That’s the whole point, people.

You need to carve out your own unique niche in the marketplace. Something that suits you, and just you. If you do that, you’ll be happy. Satisfied from within. And that’s when you’ll start doing well.

Your best performances will come when you start being … … yourself.

Playing someone else’s game? Well, try to. Don’t be surprised if you lose your pants.

Your biochemistry is unique. So are your reactions to subtle changes around you. Thus, your interactions and dialogues with Mrs. Market need to be unique. These need to cater to your needs, your queries, your tendencies and your idiosyncrasies.

We try to follow rules. We want to master Mrs. Market. Frankly, what a joke!

Firstly, we need to make our own rules, for ourselves.

Secondly, Mrs. Market needs to be understood, even if for short spans, and she most definitely doesn’t need to be mastered. She’ll master you rather than you her. Be wary of her, win from her, but why do you wish to conquer? Fool’s paradise. Stick to the script, pal. Take your winnings and go. Why do you bet the farm, in an effort to make a killing? You’re not proving any point to anyone. Everyone’s busy doing their own thing with Mrs. M. No one’s looking at you. You don’t need to prove anything to anyone. Don’t bet the farm. Stick to the script. Take your winnings and go.

So, what’s the real learning in this world we speak about?

When you go wrong. That’s when real learning begins. How do you handle yourself? How do you come back? How do you start winning again? How do you then keep winning, again, and again, and again.

That’s the learning.

I didn’t tell you so.

You discovered it for yourself.

Remember that.

Discover it for yourself.

What’re you waiting for?

Finding the “Switch-Off” Button

Gadgets have a switch-off button, right?

Whatever for, have you ever wondered?

Do we have one too?

If we do, is it clearly marked, i.e. is it easy to find?

If we do, and if it isn’t clearly market, where and how can we find it?

Why is it essential to find it?

What if we don’t have a switch-off button?

First, let’s observe the Master. Sherlock Holmes. Master at the art of switching off.

Observe Holmes when the next obvious lead will take a day to obtain. Since the case is going nowhere, Holmes will take the day off. He will play his violin, trip on some coke to study its effects on mind and body (he’s Holmes), go to the art gallery, or what have you. The case at hand has gone into oblivion. Attenuated. What happens when it is time to pursue the case again? Holmes switches on. He is fresh. Alert. The switching-off really helped.

Remember the “attenuate” button on your car’s stereo?

Why do you think it is there?

So you can take that call without getting disturbed by the music. The music is still there, but upon pressing this button, it becomes really soft. So soft, that you don’t get affected by it. You conduct your business on the phone, and then press this button again, and the music comes back on in its full glory.

Same goes for the markets.

Once you are in a trade, market-forces are connected to you.

If you cannot attenuate them during off-market hours, you can ruin your evenings, nights, weekends, health and family life

Big, big price to pay.

Not worth it, so get busy and learn to attenuate the market’s connecting force once you switch your terminal off. Rest assured, it will come blaring back at you when you switch your terminal back on, but that time between terminal off and terminal on is oh so precious. That time belongs to you, and not to Mrs. Market. Don’t allow her that extra privilege. Use that time for things that you wish to do in life. Use it for your family. Mrs. M will be getting your undivided attention during the next market session anyways. Let her be content with that. Keep her in her place.

Just as any gadget needs rest, so do you.

Sometimes, the markets go nowhere, and / or are choppy. It doesn’t pay to trade. Switch off from the markets. Take a holiday. Do something else, till conditions become better for trading.

Yes, we do have a switch-off button. It is not clearly marked. It is located in the mind. One activates it indirectly. By switching on to some other relaxing activity that has the ability to grab the mind’s interest.

Switching off is a skill, and this skill needs to be developed. We don’t necessarily come with it. Most of us need to learn it. Otherwise, we’ll become tired, erratic, irritable etc. etc., scale up to commit big blunders, and then we will eventually burn out. That’s if the Street doesn’t throw us out as paupers before a looming burn-out. Also, our family lives will have gone for a toss. Our children will remember us as dreadful parents. Yes people, we need to find the switch-off button asap, and then we need to learn to activate this button at will. Essential.

And please don’t worry about not having such a button. After all, it was the human being who put such a button into all gadgets. Well, the idea must have come from somewhere. From inside our own mind, perhaps, where our own button exists?

So, When Does One Attack Here?

Ammunition.

Your game revolves around it.

We’re not talking war over here.

Or are we?

The marketplace is a war-zone, come to think of it.

Question is, how do you use you ammo?

Do you fire the bulk right away?

Who are you trying to scare?

This is the marketplace, people, overall, it’s not scared of your few rounds. There are just too many players, with varied interests and ideologies. Your few rounds might cause a mini-spike in the underlying concerned, but that’s about it. That mini-spike is not going to make it to tomorrow’s paper.

So, why bother? You don’t need to attack here. Straight away, that is. You can attack when the time is ripe, and when you are ripe too.

What does being ripe for an attack mean?

It means that your defences are fully in place and on auto-pilot. Your basic income is taken care of and suffices your family’s needs. Actually, let’s go a little further and say that your family is able to live comfortably on income generated by you which is independent from any of your speculative / risky activities. This is the first step. You need to work yourself into such a position, even if it takes you a long time. Without knowing that your family is safe, no matter how you fare in the marketplace, you will not be able to trade freely.

Then comes the second step in setting up your best defence. You need to have access to an emergency fund. Meaning, this kind of a fund needs to be salted away first. It then needs to be made accessible when required, and otherwise, it is to remain unused. Don’t let your emergency fund’s miniscule return bother you. In lieu of that, you are getting safety. Your emergency fund needs to remain safe, sound, and there, when you need it. This way, if and when something happens, and funds are required, a). you won’t have to tap into your family’s basic income, and b). you won’t have to tap into your trading corpus. You’ll access your emergency fund. Your family will remain financially undisturbed, and so will your trading, despite the emergency.

Now comes the final step, before you can get on with your trading, yes, even aggressively. In this step, the focus is on you. While setting up your family’s basic income and your emergency fund, you have struggled. Your health could have taken a knock. Your mind could be in a whirl. Normalize, my friend. Take time off. Stare at the wall. Get your body-chemistry back to equilibrium. Take a vacation. Take many vacations. Finally, when you are in shape, go for it.

Ok, so you’re in shape, and ripe for attack.

Now, the time needs to be ripe for attack too.

Mrs. Market has three basic modes of movement. She trends, moves in a range and then, she just plain goes nowhere, i.e. she’s flat.

Your aggression needs to be implemented only when she’s trending. Period.

That’s when it’ll yield mind-blowing returns.

Fire away when she’s flat or moving in a range, and you’ll keep getting stopped out.

How can you tell when she’s trending?

Through technical analysis.

So, study. Learn to differentiate between her three basic modes of movement.

Then, when she trends, and only then, use your ammo aggressively.

Deductions – Aren’t They Making You Sick?

The human being likes it easy.

Well, most do.

That’s why, many of us like to give out our hard-earned savings to be managed by a third party.

We like to believe that our full energies are required for our mainstream profession. We don’t want to get into the nitty-gritty of managing our savings.

In fact, we want to know as little as possible about the way our savings are being managed by the third party.

The third party starts from where we left off, and takes it to the Goldman level. Believe me, today, a Goldman attitude is the norm. Wealth manangers are looking to make the maximum out of you. They talk more about ways to squeeze fees out of you than about ways to make your corpus grow.

Chew this, digest it, and when you’re ready, please say the magic words.

All right, all right, I’ll spell it out for you. The magic words are “Enough! Enough! I’ve had enough of fee deductions! I’m ready to manage my savings on my own!”

See, that was simple. Say it, and then do it.

Deductions are a pain. Many strike behind your back. You feel you didn’t know about them. Well, it was all in the fine-print. Did you bother to read the fine-print?

Who reads fine-prints? Wealth managers know the answer to this question. That’s why, all the nasty stuff is put in fine-print. The sugary stuff is saved for the pitch. When an investment is pitched to you, it sounds so sweet, that you feel like jumping into it. Careful. The people, who have prepared the pitch campaign, have spent many days deliberating over it. The person pitching the investment to you has spent long hours practising the pitch. No jumping please. Tell the pitcher to buzz off, and that you’ll call him or her back if and when you’re ready for the investment. Meanwhile, read the fine-print.

This is when the pitcher takes out his last and most deadly weapon. “But Sir, deadline is till tomorrow noon,” is the sound of this time-weapon. Earlier failings have prepared you for this. You have learnt to ignore the time-bomb. You are going to take your own sweet time to decide. It’s your hard-earned money, and the least it deserves is thorough due diligence on your part.

Meanwhile, you’re reading the fine-print. You’re realizing that the game is stacked against you. There’s a monthly mortality / cover deduction in the insurance policy being pitched to you. Then there are administration charges to cover day to day expenses. Don’t forget fund management charges. Now, there’s probably even some adjustment for short-term capital gains tax. Also, there are upfront deductions on the first few premiums, pretty sizable ones. There’s a 3 to 5 year lock-in. Switching charges. Hey, where was all this in the pitch? And remember when they spoke about how you could take a loan against your policy. Did you hear anything about the huge loan disbursement fee, or whether or not service-tax and education cess charges would be passed on to you? And may heaven help you find solace if you surrender your policy prematurely. Premature surrender charges were conceived by the descendants of Shylock himself. Such surrender charges carve out chunks of flesh from your investment’s corpus.

For the company pitching the investment to you, accountability has been made very easy. All they have to do is to deduct all background charges from the daily NAV, and then publish the NAV after these deductions. You will be sent an yearly statement (if you don’t ask for a statement sooner), where stuff like mortality and cover charges will be shown in small-print. Take all this into account while calculating your returns on the investment, before wondering where a chunk of your profits went.

That’s a common scenario in unit-linked insurance policies. The market goes up so much, but your ULIP only yields you this much. Where did the rest go? To answer this question partly, look at the deductions.

The classic counter-argument (made by fund-managers) to above discrepancy is this. The market went up so much, fine, but the scrips in the mutual funds, to which the policy was linked, didn’t move up so much.

Maybe, maybe not. To find out, you’ll have to dig even deeper. Most of us don’t want so much hassle, and we resign ourselves to the dictates of the investment’s deduction policies.

Meanwhile, here’s an alternative. Learn. Study. One hour a day. Your savings deserve this from you. Every learning resource is available online, and most of what is available is free of cost. Make use of this unique opportunity. In a few years you’ll be savvy enough to manage your own funds. Thus, you’ll save yourself from the scourge of deductions.

Connect to market forces by playing with your own money, yourself. Learning solidifies in your system when you put your own money on the line. Play small for many years. Make all your mistakes in these years. Get mistakes out of the way. Learn from them. Don’t repeat them.

Soon, you’ll realize that you are ready to scale it up. Your system will sense that you have now gone beyond making big blunders, and will send you the appropriate signals telling you to scale up.

Welcome to the world of applied finance. May yours be a long and lucrative tenure.