The Cycle of Flow

Life is riddled with cycles.

Words flow. Then they stop. Lulls can be long.

Doesn’t bother me anymore.

I know that when the flow starts, I’ll be there, milking it completely. You’ve seen me do it. I’ve been amazed myself by the sheer force of flow.

I’m happiest in full flow. At this time, I don’t believe in containment.

Lulls are good too. They happen for a reason. Especially if your situation changes. Your system is busy getting accustomed to the new situation. It is accumulating and assimilating. Respect its silence. Conserve your energy. Let it do its work. Don’t try to get busy just for the sake of feeling busy. You don’t have to prove anything to anyone. This is your unique game. No one else is playing your particular game. Wait for your system to finish assimilating. Let it use whatever energy is available. You don’t waste this energy.

At some stage, your system will be ready to disseminate.

It’ll give signs.

Flow will ignite.

Words will emerge.

Many of us block at this stage.

We’re afraid of embarrassment. We don’t want to look silly. We hate awkward situations.

Fine. Block. Fall sick. Your wish. Blocked flow turns toxic inside.

Why do you behave like an unevolved j#ck@#s?

The human being has come to evolve. Devolution is not your purpose. Evolution is.

If you wish to evolve, don’t block.

Just like you respected the silence…

… now, respect the flow.

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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 Sprachgef√ľhl, 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 ūüôā

Wisdom of the Lull

It’s awfully quiet.

Are you enjoying the silence?

Or are you fretting and fuming, that there’s no action?

There’s a buzz to silence. It’s charged.

And you can harness that charge.

What for?

For the storm of course. Which is to follow. Don’t you want to be ready for it?

Cycles, people. Finance moves in cycles.

In the ’00s, I used to move from market to market. Action here, action there, action everywhere. Result was, well, I became a “Jack of all trades”, and a master of none.

Well, that’s changed now. With time, I’ve zeroed in on the markets I wish to master. I stay with these markets. No abandoning.

Tell you a secret – every market has idiosyncrasies. These four words take long to find out. Lots of hits. And then one learns these magic words.

Nuances, markets have nuances. Market A will have nuance Z, and market B will have nuance Y.

To master a market , you need to stay with it. Don’t abandon it when it is quiet. You do want to master it, right? So stay. Watch. Don’t do anything if you don’t wish to, but watch. Recognize the idiosyncrasies and their patterns.

Welcome to the wisdom of the lull.

A lull gives you time to consolidate and get your action-plan ready. It allows your nervous system to recharge. You can catch up with stuff you’ve missed out on. Financially, you’re not worried, even if you’re not trading.

Why?

Because your trading corpus is giving you fixed income when its units are not being utilized for trading, silly. And, this fixed income is large enough to support you and your family and then some, remember? That was a basic tenet we had carved out for ourselves before we got into serious trading. Don’t forget the basics. Keep reminding yourself. Financially, a lull needs to give you enough income to support your family and then some, such that you are not required to pull a single trade. Trading 1.0.1. If that’s not the case, first muster up a large enough corpus that fulfills this condition, before you get into serious trading.

Why?

A lull should not have you jumping in your pants, eager to implement dozens of trades in an effort to get basic income going. When Mrs. Market goes nowhere, your trades will eventually keep getting stopped out, because of money stops or time-stops. That’s how you recognize a lull. Now you can shut shop, recharge, watch, and your corpus is still generating basic fixed income, allowing you to harness the full wisdom of the lull.

This is also a time to go over previous trading errors. Let me tell you a story. Remember Jesse Livermore? Well, Jesse was eccentric. Geniuses are eccentric. Jesse was a genius trader. Since there would be no trading action around the end of December and the beginning of January, Jesse used to lock himself up in a bank-vault during this period, stocked with ample food and drink supplies . He would then go over all his trades implemented in the previous year, trying to understand the mistakes he had made. He would come out of the vault when the previous year’s trading had been fully digested by his system. When he emerged from the vault, he was ready to take on the new year.

Why a bank-vault, you ask?

Jesse said he wanted to get a physical feel for money. He wanted to be with it for a while. Trading was too abstract, and one lost touch with reality. By living with real money in a closed space for a few days, Jesse’s system was acknowledging that trading has to do with real money, real losses, real profits.

Yeah, I’m sure the vault had a washroom. Jesse Livermore could pull any stunt with his bankers.

Jesse Livermore was the first trader to realize and harness the wisdom of the lull.

Thanks, Jesse.