What to do in the Age of Shocks?

Wait for a shock.

That’s it.

Then go in… a bit.

Sound simple?

Ain’t.

Why?

Firstly, patience.

Who has patience, today?

Few.

Secondly, psychology.

Shock brings pessimism.

You don’t want to go in, not even a bit.

That is the whole thing.

Punchline. Understand it, and you’ve won already.

Thirdly, funds.

Who has funds, when the shock arrives?

Few.

Why?

Barely anyone knows how to SIT on funds.

I didn’t either.

Self-taught.

Through mistakes and pain.

By putting money on the line… losing it.

Took eleven years.

Now I know.

So don’t tell me that one is only born with the ability to sit.

Don’t waste your funds. Save them. They are your soldiers.

Fourthly, energy reserves.

Who has energy reserves when the shock arrives?

Few.

Why?

We’re too busy doing this doing that, always, forever. We don’t know how to conserve energy and build up reserves. Those who do then use their reserves to carry forward their strategies upon the arrival of a shock.

Fifthly, focus.

The hallmark of a big winner is focus.

Who has focus?

Few.

We’re too busy diversifying. It’s safer. Investing in the wake of shocks requires pinpointed focus.

Sixthly, courage.

Who has courage?

Few.

Why?

We’ve been taught to avoid, and move on. Life’s too full of BS that needs to be avoided. However, coming out during shocks needs courage. Face the enemy, and fight.

Seventhly, and perhaps this should have been on the top of the list, common-sense.

Who has common-sense?

Almost no one.

Why?

We’re too busy being complicated and sophisticated. We want to portray falsehood. We miss the forest for the trees. However, shocks are tackled with common-sense. Simplicity in thinking is paramount. The simplest ideas making the most sense are also the most successful ones.

Eighthly, long-term vision.

Who has vision?

Handful of people.

Why?

We’re too near-sighted. We want instant gratification. However, a shock presents excellent ground to root yourself in for the long-term. Understand this, and you’ll have understood a lot.

I could go on.

That’s quite enough though.

Above are eight points to think about,  to be seen as eight weapons that need sharpening, to come out fighting in the age of shocks.

Be patient, optimistic, fund-heavy, energy-heavy, focused and brave. Use your common-sense. Have long-term vision. BASICS.

Wishing you successful investing, in an age riddled with shocks.

🙂

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Is Your Money Comfortable?

Everyone likes being comfortable.

So does your money.

Can you function optimally under tension?

Well, neither can your money.

So… make it comfortable. Allow it to breathe.

Money is a concept, a force.

Soon, it’ll find its flow. Till it does, yes, you’ve allowed it to breathe.

What does all this mean?

What are we talking about?

Don’t worry, I’m not getting metaphysical on you…, yet.

Simple – no confinement, no locking, just parking, no further expectations – that’s when your hard-earned life-savings breathe freely.

Yeah, you park them, where you can see them.

If, then, a daily dividend emerges, well, that’s a bonus. Try and make sure that the avenue you’ve used for parking doesn’t reduce your corpus on a daily basis, even slightly. You are more than happy with a miniscule daily dividend, which, of course, is auto-reinvested into the same avenue.

Now, both entities are breathing freely – you and your corpus.

You can take a break.

Reassuring is the fact that your resting corpus is visible to you on your mobile.

You do take that break.

At times you think – freely.

You enjoy life for a bit.

Slowly a thought process emerges.

Where will your money go next?

Where does it want to go?

What’s the most lucrative path for it to flow upon?

You listen to the universe.

The answer floats in the universe.

It is your answer – the resultant vector of your struggle and learning.

For it to flow into your mind, your per saldo vibration must match the exact vibration of that part of the universe, where your answer lies.

If there’s a mismatch, then perhaps you need to struggle a bit more, till your vibration gets even finer and there’s a match.

The solution flows into you.

It’s like an energy bomb, that slowly explodes inside of you, and as the emitted energy starts to seep into every cell of your body, your new system simultaneously starts to dawn upon you.

You are now ready to move your funds to a more permanent and lucrative location. Speed of movement is defined by your new system. So are time, mode, avenue, repetitiveness and tenure.

Meanwhile, your funds have remained intact. That’s a very big thing. Very few human beings know how to keep their funds intact. If you know it, you already know a lot.

Soon, your new system takes over. More than half the battle’s won already.

All the best, wish you well, and if I did get metaphysical on you, it was only to get the point across.

Maybe you actually even liked the meta-bits, so let’s call it even stevens.

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! 🙂

Getting Too Comfy For Our Boots, Are We?

What a party we are having in the debt-market, aren’t we?

Exceptional payouts, day after day, week after week, month after month, it’s almost going to be year after year.

Are you getting too comfortable? Lazy, perhaps?

Meaning to say, that when you can get a 10 % return after tax without having to move your behind for it, it is a very welcome scenario, right?

People, scenarios change.

It isn’t always going to be like it is at the moment.

Are you flexible enough to change with the scenario?

Or will you be lost in the current moment, so lost, that you will not recognize the signs of change?

What would be these signs? (Man, this is like spoon-feeding….grrrrrr&#*!).

Inflation begins to fall.

The country’s central bank announces back to back interest rate cuts.

Too lazy to read the paper? Or watch the news? Ok, if nothing else, your online liquid mutual fund statement should tip you off.

How?

The payout, dammit, it will have decreased.

Also, something else starts performing.

What?

Equity.

Smart investors don’t like the debt payout anymore. They start moving their smart money into value equity picks.

Slowly, media stops reporting about a gloomy economy. The buzz gets around. Reforms are on the way.

Foreign direct investment picks up. The media latches on to it. It starts speaking about inflows as if the world begins and ends with inflows.

Now, the cauldron is hot and is getting hotter.

Debt payouts are getting lesser and lesser. Equity is already trending upwards, and has entered the meat of the move.

If the trend contnues, a medium to long-term bull market can result.

There you have it, the chronology played out till just before the start of a bull market of sorts.

Be alert. Recognize the signs early. Be mentally in a position to move out of the debt market, if the prevailing scenario changes.

Otherwise…

… you miss a first run in equity. Boo-hoo. When stocks cool at a peak, and start falling, you make multiple wrong entries into them.

You get hammered by equity, having caught it on the down-swing.

You missed the correct entry time-point in equity because the debt-market made you too comfortable. You were late to act. When you acted, finally, you caught a correction, and took a hammering.

One or two more hammerings like that, and you’ll be off equity for the rest of your life.

And that, my dear friend, would be a pity.

Why?

Because, in mankind’s history, it is stocks that have given the best long-term returns. Not gold, not debt, not bonds, but stocks.

You need to approach them properly, and timing is key.

What Exactly is a Decent Trade?

A decent trade should yield you money, right?

Not necessarily so.

Am I crazy?

No.

So why am I saying this?

Am I not in the business to be in the green?

Of course I am, so let’s delve a little deeper.

As is slowly becoming clear to you, Mrs. Market is a schizophrenic. Her behaviour is mostly looney, and more often that not, she traverses an unexpected trajectory.

In the business of trading, there lie before you a set of circumstances, and your trading decisions are based upon these.

Thus, you outline your trade.

You plan the entry.

You plan the exit.

You define the reward : risk ratio.

You draw up a trade management plan, as outlined by your system. You preplan your response to all possible movements of Mrs. Market.

Can you do more?

No.

Can you predict Mrs. Market’s future behaviour?

No.

You have an idea about what she might do, based upon past behaviour, but does that make her future path certain?

No.

So that’s it, you enter a trade offering a high reward : risk ratio, based upon information from the past and a probabilistic idea about the future. A high reward : risk means that if there is a payout, it will be high in comparison to the loss you might bear if the trade goes against you. Something like 2 : 1 (possible profit : possible loss), or at least more than 1 : 1.

So what’s going to make your trade decent?

Just stick to your systematic plan, and you’ll have traded well.

Notice, no talk of any money here.

We’ve only spoken of sticking to our system-outlined trading plan.

We are not focusing on money. We are focusing on trading well.

Money is a side-effect to decent trading.

Trade decently, do the right thing, and money will follow as a side-effect, seen over the long run.

If your trade-management plan says you are cutting the trade below point X, and if point X is pierced by Mrs. M as she moves against you, well, the right thing to do would be to cut the trade.

So what if the trade didn’t yield you money?

It was a trade well executed, AS PER YOUR SYSTEM-OUTLINED TRADING PLAN.

What would have made this trade an indecent one would be if you hadn’t cut the trade below point X, irrespective of where Mrs. M went after that.

Why would the trade then be “bad”?

Because you didn’t follow your system’s advice.

You second-guessed yourself.

That means that you don’t have faith in your trade-management abilities, and / or that you succumbed to your emotions. You begun to hope that Mrs. M would start to move your way after piercing point X during her move against your trade direction.

If you did follow your system, you actually didn’t let any hope enter the equation.

Decent.

You had faith in your system, and did not second-guess yourself.

Very decent.

Such faith in one’s system is absolutely essential, and you’ll realize that as you start to scale up in trade-size.

Let’s look at the other part of your trade-management plan.

Let’s say that you decided that if Mrs. M moved in your directon, then you would stay in the trade till you saw the scrip giving at least one sign that it was stagnating. Only then would you book profits, upon such a signal from Mrs. M.

Assume then, that after entry there’s a spike in your direction, and you are in the money.

What do you do now?

Do you get greedy, forget about your trade-management plan, and book the trade? Would such a money-yielding trade be considered decent?

No.

Firstly, you got greedy.

Indecent.

Then, you forgot about your system-outlined trading plan.

Very indecent.

So what if you made money?

Sticking to your system’s advice would have given you the chance to make more, perhaps much more.

It is difficult enough to pinpoint a scrip which is about to explode.

Then, when you land such a scrip, the last thing that you want to be doing to yourself is nipping the explosion in the bud.

You nipped potential profits, even if you took a portion home.

Very, very indecent.

There you have it, people.

Use your common-sense, and, trade decently.