Nature of the Beast

Stocks…

…crash.

It’s the nature of the beast.

Stocks also multiply.

For stocks to multiply, one needs to do something.

What is that something?

One needs to buy stocks when they crash.

Let me give you an example. 

Let’s assume markets are on a high, and there’s euphoria.

Excel Propionics is cruising at a 1000.

The prevailing euphoria seeps into your brain, and you buy Propionics at a 1000.

For Propionics to multiply 10 times in your lifetime, it will now need to reach 10,000.

Likely? Wait.

Cut to now.

Stocks are crashing. 

The same stock, Excel Propionics, now crawls at 450.

You have studied it. 

It’s debt-free.

Positive cash-flow.

Ratios are good.

Numbers are double-digit.

Leverage is low.

Management is shareholder-friendly. 

You start buying at 450. 

By the time the crash is through, you have bought many times, and your buying average is 333.

For Propionics to multiply 10 times in your lifetime, it will now need to rise to 3330.

Which event is more likely to happen?

Just answer intuitively.

Of course, the second scenario is more likely to play out than the first one. In the second scenario, Propionics will need to peak 3 times lower.

Simple?

No!

Try buying in a crash.

You are shaken up. 

There’s so much pessimism going around.

Rumours, stories, whatsapps, opinions. The whole world has become an authority on where this market is going to go, and you are dying from inside.

What’s killing you?

The hiding that your existing portfolio is taking, that’s what’s killing you.

Are you liquid?

No?

Very bad. 

Why aren’t you liquid?

Create this circumstance for yourself.

Be liquid.

Optimally, be liquid for life. 

Then, you will look forward to a crash, because that’s when you will use your liquidity copiously, to buy quality stocks, or to improve the buying averages of the already existing quality stocks in your folio. 

How do you get liquid for life?

You employ the small entry quantum strategy.

Yes, that’s about right. 

We’ve been speaking about this strategy in this space for the last two years.

Read up!

🙂

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Chancing

How does one discover the missing ingredient?

By chancing it. 

One keeps trying different mixes…

…till something hits. 

The hit is then fine-tuned…

…such that it is reproduced again and again.

Once the hit can be reproduced at will, one has got the strategy all together. 

A successful strategy is then let loose. 

At first it is on manual.

Ultimately, it comes on auto, or semi-auto, whatever best is possible. 

There has come and passed a stage, when this same strategy has not been winning. 

Aha. 

What is the difference between the mix of that stage and the current – winning – mix?

It’s some kind of a twist you’ve discovered. 

Something you are adding, or doing differently. 

This something is making the strategy win. 

Congratulations!

You’ve kept trying. 

You’ve been in the field. 

You weren’t away from the field, ruminating. 

You were getting action. 

Losing action, but action. 

Losing action has huge educational value. 

It tells you how not to do it. 

You keep twisting, fitting, tuning, upon loss. 

You chance new stuff.

Eventually, something clicks. 

You develop that something further and take it to the nth. 

Where does that leave you?

You have to keep chancing it. 

There is no way around this. 

Make funds available for the R&D. 

Have the courage. 

Don’t be afraid of a hundred losses. 

Winning is around the corner. 

What’s it Gonna Take Today, Pal?

Indicators.

Fibonacci.

Moving averages.

Price action.

Isn’t everyone following all this?

Do the markets behave accordingly?

No. Not really. Sometimes, sure. Generally, no. Just my opinion.

So?

Where does that leave you?

How do you plan your trade entry?

There’s not much planning to it really.

Oh yeah?

Pray on what basis is one to enter then?

Study.

Then overall feel.

What?

Yes.

Gumption?

So?

With no study, direction’s a 50:50.

With study leading to overall feel translating into gumption, this ratio could well become 55:45.

You don’t need more.

Blackjack odds for the card-counter are perhaps 53:47 at peak.

Ok, so you’ve got your 55:45, what then?

Trade management.

You make your money managing your trade.

Formula?

Simple one.

You cut the wrong call. Nip it in the bud.

Let the right call continue being even more right.

Learn, perhaps the hard way, to let the winner continue winning.

Trade might reverse.

That’s the risk you have to take, to win more.

There are no free lunches in life.

What’s the mild pain for?

Carrying forward a niggle?

Something that doesn’t stop you from performing, though?

However, something that nags?

Can’t stop to get it out of your system?

Momentum doesn’t allow you?

When you do stop to get it out, it doesn’t go away?

Is it more mental?

Or more physical?

Can’t decide?

Don’t know what to do?

Who to ask?

What if the hospitals grab you?

Make your wart into a cancer?

Are they then ever going to let you go?

Naehhhh.

Totally stumped?

We’ll, I’ve got something for you.

Are your ears standing up?

Can’t believe your luck?

Could Nath be bee/essing?

How does he know about all this stuff?

What makes him an authority?

Why should I trust him?

Well, don’t.

Is it costing you to listen?

Well, then listen. No harm.

So, as I said, I have something for you.

Are you ready?

Here goes.

Two words.

Embrace it.

Yeah.

Yeah, embrace the niggle.

Make it drive you on.

Make its mild pain give you quality output.

Milk it.

Make the niggle your advantage.

What if it goes away?

Halleluyaa.

You’re pain-free.

What if it doesn’t?

It then becomes your secret weapon.

That’s like buttering your toast on both sides.

🙂

Patience and Nerves Anyone?

As someone I look up to put it recently – “It’s a game of patience and nerves!”

What is?

The stock-market. 

For whom?

The long-term investor. 

Do you have any?

What?

Patience, or nerves, or both?

You do?

Well, then you’ll do well in the markets, over the long-term. 

We look for complication. Meanwhile, we forget the basics. 

These are basics. 

If you’re not patient, you’ll for example jump into a stock at the wrong time, or you’ll jump out of it too early, or what have you. 

If you don’t have patience, well, develop it. 

If you can’t, do something else instead. Trade. Don’t long-term-invest then. 

If you cannot develop patience, you are not cut out to be a long-term holder. 

One method to cause the tree of patience to grow in you is to create the correct environment. 

Just don’t do anything that will make you jump. 

Invest your sur-sur-plus, money that is then pickled away, money that you won’t miss, yearn for or require over the very long-term. 

Go in with margin of safety. 

Stay in a stock you’ve singled out and entered until there’s a glaring reason to exit. Try to exit upon a high. This is the market. Highs are its nature. So are lows. That means that highs come. Wait for them to come, to exit from anything you need to exit from. 

Nervers, well, they come into play if you’ve not invested with margin of safety. 

I do remember two instances though, where everyone’s nerves were tested. October 2008, and March 2009. At these times, stocks sold for a song. Good ones and bad ones alike. Fear did the rounds, extreme fear. That’s what fear does. It creates once-in-a-lifetime opportunities. Take them. Maintain a clear head. Your nerves of steel will do that for you. Create an environment for your nerves to become strong. Or, perhaps expressed another way, create an environment where any weakness in your nerves is not required to show itself, and gets subdued into extinction. 

How?

Again, just go in with your sur-sur-plus. You’re not going to miss this money even if the sky is falling upon your head. And you’ve gone in with margin of safety. Your nerves will stay intact. 

Ensure your basics. Allow them to shine. 

The rest will take care of itself. 

Good investing. 🙂

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.

Take that –>@&%# Mr. Peer Pressure

Dear Mr. PP,

I don’t give in to you, never have, never will.

You’re not that important.

I don’t spend my time thinking about you.

I don’t respect any entity without a backbone, and you certainly don’t have one.

I’ve met you many times.

At first, I felt you, and was taken aback. You wanted me to do something I didn’t wish to do. You were strong.

I was stronger.

When you don’t know anything about the reputation of your opponent, frankly, you don’t give a d*m*. You fight. Till you fall or till the other fellow backs down.

I won my first head to head with you. Thank my stars.

After that I found out who you were. Yeah, who was it exactly that I didn’t succumb to?

After I’d grown up and all, and fully realized your devastation potential, I always leaned back on my first head to head. I mean, you were beatable. Period.

Yeah, I was lucky to have beaten you first up. It’s been a huge psychological advantage.

I’ve carried over this advantage into my market life.

Take a hike, Mr. PP.

[As far as market related activities go, I follow and advocate an unbiased, singular and customized path which doesn’t follow any crowd or any myths as such.

This path certainly does not let me invest under any kind of pressure.

Where there’s pressure, there are vested interests.

Please beware of investments which don’t suit your risk profile and are touted to quench vested interests].