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, …

…or, well, use your imagination.

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…

… 🙂 .

Trigger-Happiness triggering your happiness?

Action?

All the time?

Do you crave it?

And, are you in the markets?

Boy, do you have your work cut out for you, or do you have your work cut out for you?

Ideally, your long-term investment should not give you action.

When it does, it should push you to act.

What backfires is when you act to push it.

Unless you’re convinced by a stock, you don’t buy it.

Unless there’s margin of safety, you don’t buy it.

Unless there’s more margin of safety, you don’t re-buy it.

Unless you’re fed up with the stock or the antics of its management, you don’t sell it.

The whole long-term game is biased towards inaction.

Those who master the art of inaction are good long-term investors.

Bridging gaps is paramount.

What do you do with the vast amounts of time at your disposal?

Do twenty other things.

Create value in many walks of life.

Let the areas not overlap with any of the markets you are tapping.

Capture the attention of your mind.

What happens if you don’t?

Boredom, inaction or the need for action will propel you towards making a mistake.

Mistakes in the market cost money.

That’s how they’re defined.

Do yourself a huge favour.

Approach the markets after having embraced inaction.

What’s that other fellow doing?

The human being is nosy.

Maybe curious is a better word.

Problem is, this one characteristic is enough to make one fail in the market.

Curiousity is a good thing. At the right time and in the right area, yes.

Curiousity is a bad thing at the wrong time and in the wrong area.

However, that’s how we are wired. We like to know what that other fellow is doing, the one who is successful. We want to do the same thing. We want to ape the success. Whether we know anything about that other fellow’s field or not becomes secondary.

That’s when the walls begin to crumble.

Know your field.

Develop it.

Be curious in your field.

Succeed in your field.

If you don’t, after trying repeatedly, change your field.

Find a field that you’re successful in.

If one successful field doesn’t fulfill you, develop a second field.

However, just because your best friend hit the jackpot in his field, don’t move over to his field and expect to hit the jackpot too.

Unfortunately, we show that kind of behaviour again, and again and again.

That’s human nature.

A prime example comes from the stock market.

At the end of a boom, the last ones holding the hot potatoes (stocks that have gone up too much) are the “pigs” (retail traders and investors who buy at exorbitant prices after getting lured in by the successes of the earlier parts of the boom), who then get slaughtered. This is common stock-market jargon, by the way. It has gotten so streamlined, because it has happened again, and again and again.

If you’re doing stocks, do stocks properly. Make stocks your life’s mission. Or, don’t do stocks. Period. There’s no in-between to being successful. Success in stocks, like success in any other field, demands your full attention. Don’t do stocks just because the other fellow made a killing in stocks.

Memory is weak.

Give the bust a few years, and a whole new set of pigs launch themselves at the fag end of the next boom.

Right.

Slaughter.

You’re not a pig.

Know your field. Stick to it. Succeed in it. Period.

Adding No-Action to your Repertoire

Action with positive outcome vs…

… no action vs…

…action with negative outcome…

…hmmmm.

Sometimes we become oblivious to actions with negative outcomes.

Society preaches to be active.

We listen.

We feel that doing something means a step forward.

Well, it ain’t necessarily so.

Many times, and especially in the markets, it actually pays to do nothing.

The most successful investors in the world will tell you, that the biggest money is made while sitting. They’ll also tell you, that almost no one has learnt how to sit.

They’re right.

Meanwhile, I’m telling you, right here and right now, that you can sit comfortably upon your investment without jumping only if you’ve bought with margin of safety. Think about it.

Also, the most successful traders in the world will tell you that the number one action that saves money in the markets is no action. Yeah, when markets move sideways, which is about 60%+ of the time, trades tend to get stopped out both ways, and the trader loses money repeatedly. At such times, it’s better not to trade.

What’s vital here?

Recognition.

Recognize that it’s a time for no action.

Then, do something else.

For this to be practical, make trading and investing your bonus activities.

Meaning, that if your bread and butter depends upon another mainstream activity, you can easily switch off from trading and investing for a while, at will, and without any negative impact upon your basics.

Also, you need to be versatile enough to have fall-back activities lined up, which switch on where trading and / or investing switch off. These need to take over then, and keep the mind occupied.

The danger of not going into no-action mode is the continuous committing of actions with negative outcomes.

That’s precisely where we don’t want to be.

 

 

 

 

 

 

 

Did you invite the f-word?

The next trade… 
… yeah… 
… take it. 
What? 
Can’t? 
Why?  
Afraid of what might happen. 
That’s the whole thing. 
You see a setup – you trade the setup.
When you see a setup, there are no more what-ifs, supposings or anything. Then, it’s just you and the trade. Take the trade. 
No room for f-(ear). It’s the new f-word.  
How do you drive fear out of the equation? 
Risk a miniscule fraction of your networth per trade. 
Don’t make trading your bread and butter. Make it your bonus. 
Don’t allow anyone else’s negativity to creep in. Don’t talk to people. Trade on your own. No room for tips. 
Don’t listen to your broker. Tell him what to do.
Don’t trade under compulsion. 
Enjoy your trading. 
Once in the trade, lose the mini-bias that got you in. Now, just manage the trade. 
Stop hit? You’re out. 
Run? 
Raise stop. 
Running? 
Keep raising stop. 
Losing some of your notional profits? Market throws you out?
Good. That’s a proper exit. 
See, fear wasn’t allowed to the party. 
Look for next setup. 
Position-size your entry. 
Take the next trade. 
And so on and so forth. 
Not upto trading?
Ok. Don’t trade. Till you’re up to it.
 
Demons out of the way? 
 
Up to trading again? 
 
See the next setup?
 
Take it.

The Business of Writing

Many things can happen when one writes. 

What happens depends on why one writes. 

Some write for money. 

Their bread and butter depends on it.

Writing gets them money. They earn a living. 

At times, they have to eke out words. Even when they’re not coming. Quality goes down. 

Money in the equation carries its own side-effects. 

What happens when money is not in the equation?

Yeah, some are so lucky. 

However, luck or no luck, one has to still want to keep money out of the equation.

When money is what one is writing about, you can imagine the temptation. 

One falls back on one’s basic definitions.

Why am I writing?

Am I writing for money?

Do I need any money that my writing might generate?

If the answer here is no, then the question still remains.

Why am I writing?

Am I writing for fame?

Who doesn’t want to be famous?

Am I able to control this impulse?

If the answer here is well-yeah-mostly, the question still remains.

Why am I writing?

What is the answer?

I’m writing…

…because…

…the words are coming. 

I’ll continue to write till they keep coming. 

I’ll stop writing when words stop coming. 

I’ll resume writing when words start to flow again. 

I’m not going to stop their flow.

I’m nobody to stop their flow. 

Has writing ever harmed me?

Never. 

It soothes. 

Balances.

Calms. 

Settles.

Concepts become clearer. 

Spreads goodness. 

Creates vacuum within, because your energy has ventured out. This vacuum will attract fresh energy from the universe. 

Has there been any regret about writing?

Readership? Perhaps?

Flow reaches its destination. Ultimately. If it’s persistent. 

My writing is persistent. 

It will keep coming. 

Its flow will reach its destination. 

So, any regrets then?

None. 

Happy reading!

🙂

What to do with constant hunger? 

Hmmm… 

Is it a healthy state of being? 

No. 

What does it do for you? 

Gets you right up there. 

What’s the problem? 

You’re still hungry. 

Never satisfied. 

After three victories in a day, a miniscule here or there in a market-situation gets you down. 

Deplorable? 

Yes and no. 

You’re at peak-performance. 

That’s the good thing about constant hunger. 

However, you’re not happy. Yeah, still not happy. You want more, and more, and more. You don’t know where to stop. You’ve forgotten about happiness. 

Don’t get me wrong. 

Keep your hunger. 

Strive. 

Harder, higher. 

Then, celebrate a victory. 

Be in that space for a while. 

Forget about tomorrow for a while. 

Be happy for a while. 

Next time, be happy for a while longer. 

And even longer. 

Till it becomes a habit. 

It’s been twelve years in the marketplace. I have to keep reminding myself of this chronology every day.

The most basic things in life are also the most difficult to win back. 

We were born in a state of bliss. We were oblivious to almost everything. We were happy. We need to win that happiness back. 

There will always be a new target. 

The one just achieved deserves a happy adieu. 

🙂 

Is it just the Japanese?

No.

It’s us too.

We’re all whacky, at some level.

Humans have quirks.

Different ones to make the world go round.

Normal for me would be idiosyncratic elsewhere.

And vice-versa.

So there we are.

The other day someone was talking about panty-automats and strawberry-excretia. Way off the bell-curve, thought I. What was it about the Japanese?

Then, how were we perceived, as people?

We do have some ugly habits, us Indians.

Ever seen a guy doing an ayurvedic nasal-cleanse on the road? Sure.

Most leave the ayurvedic out.

Occupying someone else’s seat – we’re champions at that.

I’m sure you’ve heard of Indian Standard Time.

Cleaning house and throwing the dirt on the road outside our house – yeah, we’re geniuses.

However, one of our quirks is actually positive.

We SAVE.

It’s inborn. In our genes. Adding up. Compounding. All this comes naturally to us.

Yeah, silver lining. Does redeem us a bit, since this particular quality is in short supply, the world over.

Here’s hoping that we infect other nations with the savings bug.

Also, every nation has some positive quirks. Let’s look for these, to adopt.

Cheers!

🙂

Let it come, then we’ll see…

Looking around for an opportunity?

Or letting one come?

Does it matter?

Is there a difference?

You bet!

When you’re looking around, you could be in a hurry. You want to get it over and done with.

Big mistake.

You are vulnerable.

Entry price will be expensive.

Your adversary feels your anxiety and jacks up entry level.

Quality? What quality? You’re in a hurry, right?

Don’t be.

Hurry spoils the curry.

Let the investment come to you.

It will.

Brokers are restless. They want to sell. They’ll knock at your doorstep once they know your funds situation. And, believe me, they won’t ask you about your funds situation. They’ll ask your banker. In fact, your banker could well be on retainer. He’ll make sure that high quality info ups his retainer fee. That’s how it works today. Don’t believe me? How come so many people have your cell number? Did you give it to them? No? Information is a commodity. It can be bought for a price.

So, wait.

Block your surplus funds as fixed deposits.

Get an overdraft going for one fixed deposit.

Delve into your normal activities.

Now you’re sitting pretty.

An opportunity comes.

It’s cr*p. Broker’s hoping you’ll bite into the nonsense being sold.

You tell the broker to buzz off. Lack of hurry gives you the clarity required to act like this.

Something lucrative comes along. Price is right. You overdraft on your FD. Yeah, it’s ok to pay the price for quality with margin of safety.

You can always fill in the overdrafted amount as new funds accumulate. The nominal interest paid for ODing is called opportunity fees. It’s chicken-feed. Just forget about it.

The best investments in life are worth waiting for.

Pioneers

Pioneers pioneer.

However, it’s a rough ride.

They don’t mind the ride.

There’s a fire which won’t be stilled till they’ve carved out their path.

Pioneers refuse to conform to their surroundings. What’s around them puts them off.

You see, many are not happy with what Nature offers them upfront, without any ado. A very small fraction of these unhappy people choose to do something about it. Majority of the latter fails. Those who succeed are called pioneers.

In a weak moment, pioneers look for comfort. The path is devoid of any. Is there someone, on the way, who offers them a cup of coffee? Seldom. Nobody really bothers with people who’re carving out their own path in the first place.

It’s ok.

Sometimes, though, things get lonely. Pioneers feel grossly misunderstood. They feel like misfits, till they make it fit by sheer and gargantuan effort.

After it fits, and the path’s been carved out, it’s all hunky-dory, mostly. The world wants to ride along any kind of recognition coming someone’s way.

There are those who carve their paths which the world isn’t able to understand immediately. Yeah, some pioneers die unrecognized, perhaps in misery. There’s been nobody to offer them that cup of coffee, their whole lives.

Such are the lives and times of pioneers.

Their achievements ultimately benefit the world monumentally.

Don’t be afraid of becoming one.

Yeah, do the world a favour.

Whose Game Are You Playing?

Are you playing your game?

No?

Why not?

Why do you play someone else’s game?

Do you think that’s going to make you happy?

Just for the record, working for someone doesn’t necessarily mean you’re playing that someone’s game. You’re walking a common path with someone. Could be your boss. Spouse. Parent. Sibling. Whosoever. You could still be playing your game.

Life’s a game too.

A game doesn’t mean you have to rule over someone, or something. Wherever there’s a lesson to be learnt, a game is on. When we talk about your life-lessons, we talk about your game.

If I’m not mistaken, life is about learning. For some of us. There are souls who come to spend surplus Karma. Once this is exhausted, their game changes by default, since the lessons start again.

We come face to face with people and situations… to learn. The same people and / or situations keep reappearing till some learning is fully learnt. They can appear in an overbearing role, but you’re still playing your game. You’re learning your lesson. Or not. These people and / or situations cause you to behave as per a groove which has encompassed your life. The lesson is to learn how to break out of the groove. If you’re learning the lesson, you’re playing your game. If not, you’re playing someone else’s.

Play the market. Play your game with the market. Someone else’s successful market game might lure you. It won’t give you lasting succes. Why?

Someone else’s successful market game caters to someone else’s psychology. In crux situations, you will falter in that game. You will lose it all. That someone will succeed. He or she has spent years devising a game which caters fully and totally to his or her psychology and risk profile. Not to yours. He or she cannot know as much about your own psychology and risk profile as you do. Therefore, devise your own market-play. Then, play it.

It takes years or perhaps a decade to discover and understand your behaviour, psychology and reactions to varied market situations. Be there. In the market. Make small mistakes. Learn your lessons. Understand your grooves. Devise a comprehensive strategy around this.
That’s your game.

What are you waiting for?

Play it.

🙂

Taking the Pan out of Panic

Panic – Pan = ic = i see = I SEE.

Times are unprecedented.

We’re breaking new lows of evil everyday.

Ours looks to be a hopeless nation.
Is it over for us?

Shall we pack up our bags and migrate?

Just take a deep breath. Bear with me for a moment. Try and cast your panic aside. Try and think clearly.

I’ll share with you an observation. Take any Indian. Doesn’t have to be an outperformer. Take an under-averagely performing Indian, for all I care. Weed him or her out of our pathetic system, and place him or her in a nation with good governance.

Lo and behold, our candidate will start performing. Not only that, soon, he or she will be outperforming. After a decade or so, he or she will probably have mastered the system and punctuated it with innovative short-cuts.

Get my point?

We are a resilient race. We might look fickle, frail and harmless superficially, but we can struggle, bear, survive, and finally break out. Just give us good governance.
Don’t panic. We’re not going down that easily.

What’s happening currently is a purge. Yeah, it’s a catharsis with a big C. While it continues, asset classes across the board will probably get hammered.

What does that mean for you?

Only one thing.

Stay in cash. Accumulate it. Learn to sit on cash. Sit on it as long as the purge lasts. Let its value depreciate, doesn’t matter. Park it safely with a conservative private bank. Fixed deposits would be the instruments of choice. Yeah, you don’t want to leave unattached cash lying around. Potentially, unattached cash could be susceptible to online fraud. Attach your cash, safely, and keep it before your eyes. Put some watch-dogs in place, as in sms and email alerts. Password-change attempt? You are immediately alerted. New payee added? You are immediately alerted. Watch-dogs bark.

As per my instinct, though we probably won’t go bankrupt as a nation, we might just go a long way down before the purge is over. After the purge, there will be tremendous bargains on offer, across the board, in all asset-classes. Cash will be king. Save your cash and sit on it – for that day.

Meanwhile, your wealth-manager will try to push you into panic purchases with your cash. As in, buying gold at 32k, and the USD at 65. Don’t listen. These are crazy levels. One doesn’t invest at crazy levels. These are not even normal trading levels. Yes, they are institutional trading levels. One does not invest at institutional trading levels.

It’s time to use your common-sense and maintain a cool head.

You can only do that by refusing to panic.

How To Nip A Ponzi In The Bud

Mirror Mirror on the wall…

Who’s most prone of them all?

As in, most prone to Ponzis…

Frankly, I think it is us gullible Indians.

Everyday, there’s some report of a Ponzi scheme being busted, with thousands already duped.

Charles Ponzi’s is a case of the tip of the iceberg – maximum recognition came posthumously. If Charlie would have received a cut every time his scheme was used by mankind, he would probably have become the richest man in the world. Unfortunately for him, he popped it before reaping the full rewards of his crookedness.

What Charlie did leave behind was a legacy. Yeah, Charlie did an Elvis, meaning that many have tried to emulate Charles Ponzi since he departed. Maybe I’ve gotten the chronology wrong, but you know what I mean…

Chances are, a Ponzi will eventually cross your path sooner or later. More sooner than later.

How do you recognize a Ponzi? Yeah, that’s the first step here – identification.

A Ponzi will talk big – he or she will flash. There will be a small track record to back up what is being said, and this will almost be blown into your face, after you’ve been dazzled by the Ponzi’s fancy car, expensive clothes and gold pen. The Ponzi will be a good orator, and his words will have a hypnotic effect on you (ward this off with full strength). The Ponzi will show off, making you feel awkward. You will feel like being “as successful” as what is being projected before you, right there, right then. When all these symptoms match, and such feelings well up inside of you, you are, with very high probability, talking to a Ponzi, who is trying to suck you in with a promise of stupendously high returns.

After you have identified the Ponzi, the next step is to not get sucked in. This is going to take all your self-control. Remember, the grass is not greener elsewhere. Take charge of your emotions. You’ve identified a Ponzi, man, that’s big. Now you need to follow through and see to it that a minimum number of people come to harm.

Hear the Ponzi out. Don’t react. In fact, don’t say a word. Don’t commit a penny. Keep reminding yourself, that you have it in you to succeed. You don’t need the Ponzi’s help to get good returns on your money. You certainly don’t want to lose all your money. With that thought in mind, block the Ponzi and his promises out. Leave politely and inconspicuously.

After you’ve left securely, without having committed a penny and without having left your details with the Ponzi, you now need to sound the alarm. Tell all your friends of the lurking danger. Forewarn them, so that no one you know gets sucked in. Ask everyone to spread the word. The whole town needs to know within no time.

Identify – Control – Alarm – this is a three step programme to nip the Ponzi In the bud – try it out, it works!

Cheers! 🙂

Why Emergency Fund?

Why do you wear a seat-belt while driving?

Why do you purchase medical insurance?

Why does one carry two parachutes while jumping off a plane?

Why do you keep your spouse happy?

So you can live in peace, right?

Peace of mind – so important…

Without peace of mind, market decisions are warped. Disturbing factors cause you to take wrong decisions.

Once faced with a market decision, it is extremely easy to go wrong. There are many telling you what to do. Some have agendas, others speak wthout an agenda, for the sake of speaking. Topping that, Mrs. Market starts playing tricks on you. She’s almost always catching you on the wrong foot. You needs to be mentally alert to identify your initial error and correct it as per your outlined strategy. If your mind-control is compromised, you step deeper into the delusive web of Mrs. Market by not being able to identify your initial error, and then the error can get bigger, and bigger, and even bigger, till it has the capability to consume you.

That’s why emergency fund!

You are not bigger than Mrs. Market. No one is bigger than Mrs. Market. You might start thinking you are, because of a few successes. As a result, you might start to play bigger. Over-confidence will first cause you to make a small mistake. Because you will not have identified the mistake as a mistake, owing to delusional conditions, the small mistake might get bigger and bigger, till it becomes bigger than you, and your market career is over.

That day, your emergency fund will feed your family.

So, firstly, make sure that an emergency fund exists for you.

It needs to be accessible, i.e. liquid.

It needs to be sufficiently large.

Its contents should be safely parked.

If it is generating some income of itself, even better, but the emergency fund should not be locked-in. If it is locked-in, you should be able to access it in a maximum of 24 hours, even if you need to pay a small monetary penalty for full and irreversible access.

Your spouse, who you’ve kept happy, should know about the emergency fund, and how to access its contents. If you’ve not kept him or her happy, he or she might access this fund anyhow, and blow it up beforehand. So, keep him or her happy and in a responsible state of mind. It is possible that he or she is just not interested in finance, right, so then what do you do? Wait for your child to grow up, wishing that he or she has an interest in finance! Anyways, someone you trust should know how to access the emergency fund. If nothing else, write out all details in a file, and inform the person you trust of the file’s existence.

Why am I being so extreme about all this?

I’m big on safety. I don’t like seeing a market player blowing up, because I wouldn’t want that to happen to myself. Have you been to a circus?

The acrobats do have a safety line, don’t they? I mean, they practice all their lives, and pull of the most amazing stunts, again and again, day after day, but at the back of their mind, they know it’s over if they make just one mistake. Unless they have a safety line. If and when a mistake occurs, their safety line will save them. The existence of a safety line allows them to perform with peace of mind, and perform well.

It is exactly like that in the markets. One big mistake, and it’s all over.

Unless there’s an emergency fund.

It’ll allow you to survive, recuperate, and get back on track. When you’re back, you’ll most definitely not repeat the big mistake you made. Also, the first thing you’ll do is regenerate the emergency fund, before you get back to proper market action.

Here’s wishing that you never need to access your emergency fund, but also wishing that it exists in the first place.

Here’s wishing that its presence gives you the necessary peace of mind to perform better.

Two Minutes of Freedom

Why have you come?

Meaning, why are you here? What’s the purpose of your earthly sojourn?

Do you want to do something new?

No? How boring is that?

Why would you just want to live and leave with nothing original to your credit?

At times, I feel the urge to discover something earth-shaking.

Don’t you?

I mean, don’t you want to go where no human has gone before?

Whether we are successful or not is not the point.

At least we possess this desire.

And that’s where freedom of thought comes in.

You are born free, to think.

No one can steal that freedom from you, even in the worst conditions of bondage.

Use your freedom.

Think freely, even if it’s for two minutes a day.

Lose all shackles, as a rocket in space loses a burnt surplus engine. Define your own path, and think freely on that path. Develop it, bit by bit.

Slowly, your thought will take form. A whole system of work will emerge. Keep developing this.

Your system will take you places. For example, if you’re playing the markets, it’ll win you money.

It is new, it is original, it is your system, and it can well take you where no human has gone before.

Well done, keep going … … and it’s all happening because of the two minutes of freedom you allowed yourself.

Going Legit in the Times of Robber Vodka

A good, clean, healthy and tension-free life – don’t you want that for your children and families?

Right, people, go legit.

It is possible, despite the Robber Vodkas, the Call Muddies and the Rama Lundgren Rajus of our times.

The first step is going white.

Go white, people. Declare your assets, pay your taxes, just sheer refuse to deal in black money as much as you can, and for heaven’s sake, start cutting out unwanted people dealing in black from your lives.

Second step – avoid people wearing whites. 98%+ of male folk dressed in whites in this country are either inactively or actively politically connected. In the process, you might pass up on the 2% genuinely good ones in whites, but you’ll have avoided all the ones you want to avoid. Political connect in India will not allow you to go legit. People hook up with politicians for favours, and / or because they feel that in their hour of need, their political clout will save them. Did you know, that for the one favour, your political connection will make you do ten illegit things in reciprocation, stuff you’d never dream of doing normally. Ask yourself. Is the trade-off really worth it? No, right?

Then, avoid dealing with people who use body-guards. I mean, use your common-sense. There’s no reason to shun a benevolent, well-known corporate honcho with or without body-guards, like Anand Mahindra for example. You’ll learn to recognize shady honchos. There’s that feel about them, that mafioso vicious vibe. If you can sense that vibe in a honcho, don’t deal with that person. Forget about the profit you’re losing out on, and look at the level of tension and complication you’re avoiding.

Don’t deal with people promising stupendous returns. Nip the Ponzis in the bud. Dealing with a Ponzi will eventually land you in court, to get your money out . Believe me, you don’t want our super-efficient judicial system messing up your life, if you can help it.

Be firm while dealing with any government officer. The government officer will only start to misbehave if there is any weakness from your side. Remember, a government officer is supposed to serve the nation. His or her salary is paid from the taxes you dish out. If your dealing is clean, the official could harass you for refusing to bribe, but that’s about it. Take the harassment, but keep coming back till your work is done. We need to stop bribing. Then, and only then will government officers eventually stop expecting us to bribe.

Right, we’ve pretty much cut ourselves off from a lot of people and things, so where does this leave us?

Don’t worry, we are not alone.

There are like-minded people around, and we need to make these like-minded people a part of our lives. Yeah, and we can lead good, healthy lives with such people surrounding us.

Also, don’t for a moment think we can’t do anything for our country, just because we’ve nixed the political linkage. Private opportunities come along everyday, to help people and society. If you want to still make a difference, grab these opportunities. Poor people come to you for medical aid. Help them. You can contribute privately to social-welfare. Many private citizens are running clean NGOs. As the name suggests, these NGOs have no government involvement, and are less likely to be corrupt. Funds donated to clean NGOs will very likely reach disaster areas on time and in full.

You can make a difference, all by yourself. You don’t need a corrupt government to make a 20-odd% difference for you per unit of currency you trust them with, as tax or whatever. Yeah, only about that %age gets converted into welfare; the rest is nibbled up along the way.

Make a difference – all by yourself.

What are you waiting for?

Clean up your act, go legit.

It’s not going to cut you off from any good, clean and healthy action.

Trust me on this.

Happy Second Birthday, Magic Bull !!

Seasons change. So do people, moods, feelings, relationships and market scenarios.

A stream of words is a very powerful tool to understand and tackle such change.

Birthdays will go by, and, hopefully, words will keep flowing. When something flows naturally, stopping it leads to disease. Trapped words turn septic inside the container holding them.

Well, we covered lots of ground, didn’t we? This year saw us transform from being a money-management blog to becoming a commentary on applied finance. The gloom and doom of Eurozone didn’t beat us down. Helicopter Ben and the Fed were left alone to their idiosyncrasies. The focus turned to gold. Was it just a hedge, and nothing but a hedge? Could it replace the dollar as a universal currency? Recently, its glitter started to actually disturb us, and we spoke about exit strategies. We also became wary of the long party in the debt market, and how it was making us lazy enough to miss the next equity move. Equity, with its human capital behind it, still remained the number one long-term wealth preserver cum generator for us. After all, this asset class fought inflation on auto-pilot, through its human capital.

Concepts were big with us. There was the concept of Sprachgefühl, with which one could learn a new subject based on sheer feeling and instinct. The two central concepts that stood out this year were leverage and compounding. We saw the former’s ugly side. The latter was practically demonstrated using the curious case of Switzerland. There was the Ayurvedic concept of Satmya, which helps a trader get accustomed to loss. And yeah, we meet the line, our electrolytic connection to Mrs. Market. We bet our monsters, checked Ace-high, gauged when to go all-in against Mrs. Market, and when to move on to a higher table. Yeah, for us, poker concepts were sooo valid in the world of trading.

We didn’t like the Goldman attitude, and weren’t afraid to speak out. Nor did we mince any words about the paralytic political scenario in India, and about the things that made us go Uffff! We spoke to India Inc., making them aware, that the first step was theirs. We also recognized and reacted to A-grade tomfoolery in the cases of Air India and Kingfisher Airlines. Elsewhere, we tried to make the 99% see reason. Listening to the wisdom of the lull was fun, and also vital. What would it take for a nation to decouple? For a while, things became as Ponzi as it gets, causing us to build a very strong case against investing a single penny in the government sector, owing to its apathy, corruption and inefficiency. We were quite outspoken this year.

The Atkinsons were an uplifting family that we met. He was the ultimate market player. She was the ultimate home-maker. Her philanthropy stamped his legacy in caps. Our ubiquitous megalomaniac, Mr. Cool, kept sinking lower this year, whereas his broker, Mr. Ever-so-Clever, raked it in . Earlier, Mr. Cool’s friend and alter-ego, Mr. System Addict, had retired on his 7-figure winnings from the market. Talking of brokers, remember Miss Sax, the wheeling-dealing market criminal, who did Mr. Cool in? She’s still in prison for fraud. Our friend the frog that lived in a well taught us about the need for adaptability and perspective, but not before its head exploded upon seeing the magnitude of an ocean.

Our endeavors to understand Mrs. Market’s psychology and Mr. Risk’s point of view were constant and unfailing, during which we didn’t forget our common-sense at home. Also, we were very big on strategy. We learnt to be away from our desk, when Mrs. M was going nowhere. We then learnt to draw at Mrs. M, when she actually decided to go somewhere. Compulsion was taken out of our trading, and we dealt with distraction. Furthermore, we started to look out for game-changers. Scenarios were envisioned, regarding how we would avoid blowing up big, to live another day, for when cash would be king. Descriptions of our personal war in Cyberia outlined the safety standards we needed to meet. Because we believed in ourselves and understood that we were going to enhance our value to the planet, we continued our struggle on the road to greatness, despite any pain.

Yeah, writing was fun. Thanks for reading, and for interacting. Here’s wishing you lots of market success. May your investing and trading efforts be totally enjoyable and very, very lucrative! Looking forward to an exciting year ahead!

Cheers 🙂

I know a guy who knows another guy who knows this guy…

Well, congratulations.

So you’re well connected.

You probably play golf with the CEO of Big Balls Incorporated.

We’re not even going into how you wangled the slot.

You probably feel, that because of your connectedness, you can get away with anything in life.

Well, almost anything.

That’s the bottom-line.

You can get away with almost anything in life.

Here are two areas where your connectivity counts jack. As in El Zero. Nadda.

One is before the Almighty (presuming that God exists). Buying a slot with God using connections isn’t gonna cut it with the big guy. You can’t buy personal time with deities using money and / or connections, even if you think you can. Also, that “bought” time, when you shoved everyone else out of line, well, that time’s not going to make your life any better, or richer. You’ve just established yourself as someone who shoves others out of line using connections….that’s how your deity is going to view your performance. So, what you’re going to understand from this space is that before deities – the Almighty – God – the Metaphysical – or whatever you might want to call what I’m talking about, connections don’t work. You only end up scoring negative in your deity’s books.

Which brings us to the more relevant matter – where else do connections not work?

In the marketplace of course, my friend.

Don’t believe me? Fine, find it out for yourself, the hard way. Or, read on.

You see, in the marketplace, insiders have an agenda. All insiders. They have an agenda.

That agenda is personal. It includes them. It doesn’t include you … … if you’re not connected to the insider. Once you are, and you use that connection to fish for “lucrative” inside information, that’s where the insider’s agenda starts to include you. The information you get is as per the agenda of the insider. If a promoter wishes to off-load huge quantities of stock, you will be told that the stock’s a good buy, because blah-blah-blah-blah-blah. On the other hand, if the promoter wishes to buy back large quantities of stock, because of attractive valuations, you’ll be told to sell the stock owing to tricky prospects in the future. You are not getting quality information when you fish for tips. You’ll only find yourself getting trapped if you follow insider tips.

There are good insiders too … is that what you are saying? Ok, fine, some insiders are good human beings. They are not vicious, and they wish you well. They might even want to do you a favour, wishing that you make some money from the information they are letting out. All true. Question is, does it really work?

No.

Why?

You see, an insider never functions alone. When a company experiences a turnaround or a great quarter comes along with excellent earnings, white-collared people connected to the functioning of the company obviously know this, and they leak this information out (for a price) to smart researchers and investors. These smarties (along with their entire intimate circle of connectivity) buy into the company’s prospects. The money moved is called smart money. Smart money registers / reflects on the traders’ charts. The scrip might show a bounce-back from a low with huge volume, or a resistance might be broken, or a new high could even be made (all coupled with large volume). Traders latch on. Price movers higher. All this is happening before the CEO has announced quarterly results, mind you. Finally, a few days before the results, the corresponding results-file lands on the CEO’s desk. He or she congratulates his or her staff on the spectacular performance, and over a round of golf, the information is shared with you. The CEO is obviously thinking that the market is going to react positively to the earnings surprise that’s going to be announced.

Well, the earnings are not going to be a surprise. The market already knows, and earnings have thus already been factored into the price, before results are announced. Announcement time is generally selling time for traders, who tend to sell all stock upon the first spike after announcement. With no more buying pressure (since traders are out of the scrip), the inflated scrip tanks despite the good news, leaving you stuck with a peak-price buy. Well done, well done indeed.

See, that’s why. Don’t listen to insiders, even if they mean well.

In the marketplace, you really are on your own. Isn’t that exciting? As in challenging?

All the best, my friend. Learn to rely on your own judgement.

The Ugly Side of Leverage

Not too long a time ago, in an existence nearby, people saved.

Credit was a four letter word, or a six letter word, or whatever you want to all it, as long as you get my point.

People worked hard, and enjoyed the sweet taste of their labour.

They knew their networth on their fingertips, and there was no question of extending oneself beyond.

People were happy. They had time for their families. Words like sophistication, complicated and what have you had simpler meanings.

At the end of the month, as large a chunk as possible was pickled away.

For what?

Safety. Steady growth. For building a lifetime’s corpus. For the future generation.

Life was straight-forward.

Then came leverage.

At first, leverage was an idea that was looked down upon. People were slow to leave their safety zones.

Then they saw what leverage could do.

It could make possible a lifetime of fun. One could do things which were well out of one’s financial reach currently. Leverage could even buy out billion dollar companies.

All one had to do was to pledge one’s incoming for many, many years. If that didn’t suffice to fulfill one’s fun-desires, one could even pledge the house. The money borrowed would eventually be paid up, along with the compound interest, right? After all, one had a steady job that promised regular income.

What use was a lifetime of sweat if one didn’t get to enjoy oneself? One couldn’t really live it up after retirement, could one? That’s when one would eventually possess enough free funds to do what one was doing now, with the advent of leverage.

The do-now-pay-later philosophy soon took over the world.

Without being able to afford even a meaningful fraction of their expenditure, people began to go beserk.

What people didn’t know, and what they are now finding out the hard way, is that leverage is a double-edged sword. Since people didn’t know this, and since they didn’t bother to read the fine-print of the documents they were signing while leveraging their monthly salary or their home, well, financiers didn’t bother to educate them any further. No hard feelings, it was just business strategy, nothing personal.

Today, we know more. Much much more. Hopefully we have learnt. We are not going to make the same mistakes again.

So, when you buy into a company, look at the leverage on the balance-sheet. A debt : equity ratio of 1 : 1 is healthy. It promises balanced growth. If the ratio is lower, even better. We’ll talk about debt : equity ratios that are below 0.5 some other day.

Most companies do not have a healthy debt : equity ratio. Promoters like to borrow, and borrow big. You as an investor then need to judge. What exactly is the promotor using these funds for? Is he or she using these funds to finance a hi-fi lifestyle, with flashy cars, villas and company jets? Or is the promoter using these funds for the growth of the company, i.e. for the benefit of the shareholders? Use your common-sense. Look into a company’s management before buying into any company.

As regards your own self, reason it out, people. Save. As long as you can avoid taking that loan, do so. Loaned money comes with lots of hidden fees. If I’m not mistaken, now you’ll even need to pay service tax and education cess on a loan, but please correct me if I’m wrong. There’s definitely a loan-activation fee. Then there’s the huge interest, that compounds very fast. Ask someone who has borrowed on his or her credit card. There’s the collateral you’re promising against the loan. That’s your life you’re putting on the line. All for a bit of leveraged fun? How will your children remember you?

Also, when you invest with no leverage on your own balance-sheet, your mind is relaxed. There is no tension, and your investment decisions are solid. Furthermore, if you’re invested without having borrowed, there’s no question of having an investment terminated prematurely because of a loan-repayment date maturing coupled with one’s inability to pay.

How does the following sentence sound?

” Then came leverage, and common-sense disappeared.”

Not good, right?

Do You Believe in You(rself) ?

Still not hit the success button?

Suffering from an inferiority complex?

Market got you down?

Is it over for you?

Which brings us to the more important question : Do you believe in YOU?

Wrong English, I know, I know. Sometimes I misuse the language for effect. The effect is more important to me than how silly I look because of bad grammar.

Ok, so you want to succeed, make it big in the markets, blah blah blah.

Who doesn’t?

You obviously can’t last out if you don’t believe in yourself. Markets are draining, and tend to suck the living blood out of one’s body, so one needs to last. Market forces exhaust the system. It’s something about them, something electronic. This something consumes your stamina. So, no two ways, you need to last out. 20, 30, 40 years maybe…

I’m not saying it’s going to take you that long to succeed. For all I know you’re the next Jesse Livermore in a few years. Getting there is one thing, but staying there is another. Consistency. Maintaining success for many years in a row. That’s big. Something like that can be, and probably is, a trader’s lifetime goal.

It all starts with belief.

Baby steps.

First, weave a safety net around you. This involves the creation of a regular source of income to sustain your family’s basic needs. Such income needs to be independent of the market, any market. Your trading is not really begging you to earn your basic income. It can well do without that extra pressure. A comfortable slot for your trading to be in is when it can generate additional and bonus income for you. That’s the sweet-spot, and you want to be in it, with a comfortable safety net around you, free to trade the markets with no extra pressure.

Then, create a reliable system to trade the markets.

This can even take many years. I mean, some of us take seven odd years to recognize their basic risk-profile. Good, at least we are recognizing our risk-profile, because everything else is going to be built up on top of that.

As your system starts to perform, your belief in yourself gets stronger. Good going, stranger, now do humanity a favour and support others who are struggling to find themselves. In any way you can. It’s good Karma, and will help you further on your own path.

Then, you hit it big-time, your system catches some huge market swings, and you are there.

Now, other things start happening. Success brings with it its own entourage.

Remain on the ground, please. That’s how you are going to last out. Keep trading. Hitting the magic spot is not enough, you need to milk it as long as possible. Your new status of “successful” will bring many to your doorstep. The crowd wants to acquire the magic formula from you. People want your time. Deal with it, buddy. In a manner that still keeps you performing in the Zone, trade after trade. Also, in a manner that keeps you from hurting anybody’s feelings. I know, thin line, difficult to do, but you don’t additionally want the remnant emotional baggage of hurting people to affect your trading.

Apart from fame, there are other members in the entourage of success, and I’m just classifying them ad-hoc under the header “extra-curricular activities”. Yup, these will come your way. That’s part of being successful and famous. Well, do what you want, you’re a grown-up, nobody’s going to tell you where to draw the line. All one can say is, that if any extra-curricular baggage starts seeping into your trading, you’re going down Sir. Period.

Oh, where did it all start? Belief, right. Look where it can get you.

So come on, get up from your drawdown. Drawdowns happen. They are part of the learning process. The earlier they happen, the better it is for you. Now, you probably won’t let them happen when the stakes are big. When a future drawdown looms, you are prepared, and nip it in the bud. You don’t let it grow into an ulcer. That’s what your earlier drawdowns have taught you.

So get up and give it another shot.

All it takes is a bit of belief.