Happy 10th Birthday, Magic Bull !

Wow!

10 years…

…have flown by.

We’re smiling. 

Our strategy stands. 

Its construction has culminated.

It can weather the market.

Over time, we’ve fine-tuned our small entry quantum strategy extensively,…

…and it’s bearing fruit. 

We’ve made it generic. 

Anyone can use it. 

There’s nothing to hide.

The two main ingredients required are patience and discipline.

Since these are anyways in short supply, even though our material is in public domain, very few people will actually avail benefit from it.

Why?

It’s work.

In general, one shies away from work. 

Who’s going to dig out the nitty-gritty from 600 odd pieces on the site?

People are ok with a free ride, but putting in effort is a wholly different matter.

So the question arises – Why?

Why is the matter open to all? Why upload? Why write?

When we share, we achieve happiness.

Our body secretes hormones of happiness when we help others.

When our existence becomes invaluable to the Universe, the Universe goes out of its way to protect us. 

Karma – the boomerang – comes back. 

Don’t think – ever – even for one instant – that this effort is not being rewarded. 

The Universe is repaying – in full – with heavy interest. 

However,…

…one doesn’t do it for such repayment. 

It’s FUN. 

One does it for the enjoyment. 

It’s a giveback.

One does it for the happiness it causes, in oneself and in others.

Evolution,…

…and protection…

…are just side-effects.

This effort…

…will go on.

Long after me…

…my words will live on.

On that note,…

…happy 10th birthday, Magic Bull.

Sitting – III

Mood-swings…

…happen all the time…

…in the markets.

If we don’t get used to dealing with them, we’re pretty much gone.

When pessimism rules, it’s quite common for one to develop negative thoughts about a holding. 

Research – stands. 

There’s nothing really wrong with the stock. 

However, sentiment is king. 

When sentiment is down, not many underlyings withstand downward pressure.

Eventually, you start feeling otherwise about your stock that is just not performing, as it was supposed to, according to its stellar fundamentals. 

If your conviction is strong enough, this feeling will pass. 

Eventually, pessimism will be replaced by optimism. 

Upwards pressure…

…results in upticks. 

Finally, you say, the market is discovering what your research promised.

You feel vindicated, and your outlook about the stock changes, in the event that negativity had set in.

You’ve not ended up dumping this particular stock.

If your conviction had not been strong enough, you would have gotten swayed. 

Market-forces are very strong. 

They can sweep the rug from under one’s feet, and one can be left reeling. 

In such circumstances, solid due-diligence and solid experience are your pillars of strength, and they allow you footing to hold on to. 

However, if your research isn’t solid enough, you will start doubting it and yourself, soon (and if you’re not experienced enough, make the mistake, learn from it, it’s ok, because your mistake is going to be a small mistake just now, and you’ll never repeat it, which is better than making the same mistake on a larger scale at the peak of your career, right?! We are talking about the mistake of doing shoddy due-diligence and getting into a stock without the confidence needed to traverse downward pressure).

With that, your strategy has failed, because it is not allowing you to sit comfortably. 

Please remember, that the biggest money is made if first one has created circumstances which allow one to sit comfortably. 

Basic income. 

Emergency fund.

Excess liquidity.

Small entry quantum.

Rock solid research work, encompassing fundamentals and technicals both. 

Margin of safety.

Patience for good entries.

Exit strategy. Whichever one suits you. It should be in place, at least in your mind. 

Etc.

Fill in your blanks. 

Make yourself comfy enough to sit and allow compounding to work. 

Weed out what stops you from sitting, and finish it off forever, meaning that don’t go down that road ever again.

Very few know how to sit. 

Very few make good money in the markets.

Make sure that you do. 

Make sure that you learn to sit.

My Buddy called Compounding

Compounding…

…is my happy space.

When I’m having a difficult market day,…

…I open my calculator…

…and start…

…compounding.

My friend clears all doubts in a flash.

It’s easy to compound on the calc.

In German they’d say “Pippifax”.

The younger tribe in the English-speaking world would say easy peasy…

…(lemon squeasy).

Let me run you through it.

Let’s say you wish to calculate an end amount after 25 years of compounding @ 9 % per annum.

Let z be the initial amount (invested).

The calculation is z * 1.09 ^25.

That’s it.

You don’t have to punch in 25 lines. It’s 1 line.

What if you went wrong on the 18th line?

So 1 line, ok? That’s all.

What’s ^ ?

This symbol stands for “to the power of”.

On your calculator, look for the y to power of x key, and then…

…punch in z * 1.09 (now press y to the power of x)[and then punch in 25].

What does such an exercise do for me?

Meaning, why does this exercise ooze endorphins?

Let’s say I’m investing in sound companies, with zero or very little debt, diligent and shareholder-friendly managements, and into a versatile product profile, looking like existing long into the future, basically meaning that I’m sound on fundamentals.

Let’s say that the stock is down owing to some TDH (TomDicK&Harry) reason, since that’s all it’s taking for a stock to plunge since the beginning of 2018.

I have no control over why this stock is falling.

Because of my small entry quantum strategy, I invest more as this fundamentally sound stock falls.

However, nth re-entry demands some reassurance, and that is given en-masse by the accompanying compounding exercise.

At the back of my mind I know that my money is safe, since fundamentals are crystal clear. At the front-end, Mr. Compounding’s reassurance allows me to pull the trigger.

Let’s run through a one-shot compounding exercise.

How much would a million invested be worth in thirty years, @ 11% per annum compounded.

That’s 1 * 1.11^30 = almost 23 million, that’s a 2300% return in 30 years, or 75%+ per annum non-compounded!

Now let’s say that my stock selection is above average. Let’s assume it is good enough to make 15% per annum compounded, over 30 years.

What’s the million worth now?

1 * 1.15^30 = about 66 million, whoahhh, a 6600% return in 30 years, or 220% per annum non-compounded.

Let’s say I’m really good, perhaps not in the RJ or the WB category, but let’s assume I’m in my own category, calling it the UN category. Let’s further assume that my investment strategy is good enough to yield 20% per annum compounded.

Ya. What’s happened to the million?

1 * 1.20^30 = about 237 million…!! 23700% in 30 years, or 790% per annum non-compounded…

…is out of most ballparks!!!

How can something like this be possible?

It’s called “The Power of Compounding”…,

…most famously so by Mr. Warren Buffett himself.

Try it out!

Pickle your surplus into investment with fundamentally sound strategy.

Sit tight.

Lo, and behold.

🙂

You Miss, I Hit

We’re in the markets to…

…capture gains. 

How do gains come about?

Buy low sell high?

Sure, you’ve then got some gains. 

Enough?

Probably not, because everyone of us holds enough losers. That’s part of the game. Amongst many losers, we then find a winner.

How does one maximize gain?

One looks for mispricing. 

Let’s say we’ve id’d a stock. 

It passes our entry criteria.

Now, we look for an entry point that will give us a price advantage. 

We would ideally like the public to misprice the stock on the downside. 

That’s when we would like to pick it up. Higher the misplacing, higher our advantage. 

When is maximum gain captured?

This happens when the same stock is mispriced by the same public on the upside. 

Is such a strategy easy to implement?

Sounds easy, but NO!

Why?

(For starters), That’s because it goes against our grain to buy something really low, for fear of it going even lower, since sentiments are so down. 

Can well happen. You buy something really cheap, and before you know it, your something is down by another half. 

What’s your protection?

Rock-solid research. Identification of sound fundamentals. A shareholder-friendly management. Technicals that support you. Mispriced entry point. Product-profile that’s going to be around. Lack of debt. Substantial free cash flow. Etc.

If you’ve got such pillars going for you, it’s only a matter of time till they start to shine forth. 

If mass-depression causes you to wilt, though, it’s on you. 

Mispricing on the upside causes us to blunder too. 

Most sell their big winners which still have sound fundamentals, and can potentially go on to bag much higher multiples. 

Do this, sure, but only if you NEED the money. 

If not, give your potential multibaggers the time to become full-fledged ones. 

Sell early, and you won’t perhaps ever find another entry point. Winners barely ever give an entry-window. 

At market highs, sell your losers, because they’ll perhaps be inflated too, and you might get a good exit. 

When others misprice, make sure you hit some home-runs. 

Listening to Time

Market work…

…has some eccentricities.

One can’t work in the markets all the time.

That’s normal, right?

Well, yes and no. 

At a place of work, one should be able to work. 

Markets don’t always allow work.

So don’t other work places, sure. 

At other times, you don’t feel like doing market work. 

Aha. 

This happens multiple time a year. 

What do we do here?

We create an environment that incorporates this eventuality seamlessly. 

First up, why is this incorporation essential?

Let’s assume that we need to work in the markets all the time. 

When we don’t feel like, and we have to, well, then, we are likely to make mistakes. 

Read mistakes as losses. 

Mistakes in the market translate into losses. 

(Amongst other things), we are in the markets to …

… minimize losses. 

Therefore, when we don’t feel like doing market work …

… we just sheer don’t do it. 

So, back to square one, how do we incorporate this seamlessly?

By making market work our secondary source of income.

Our basic income needs to be sorted through our primary source. 

Now, we can shut off the markets at will without this affecting our basic income. Whether we can also emotionally detach is a discussion for another day. 

There are times when one just doesn’t feel like opening up the terminal. 

Listen to such times. 

Shut out the markets at will…

…only to open them up again when they’re a go for you.

We’re still at step 1, which you’ve just cleared for yourself. 

Now we try and gauge whether times are such that markets allow work.

Listen to such times. 

When you feel like working and markets allow you to work, go all out. Exhaust existing work potential. 

When you feel like working, and markets don’t allow work, do other stuff. Get your research ready. Become poised. 

Sooner than later, your action criteria will be met…

…and you will be able to act. 

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.

Behaviour at the Sweet Spot

When you’re active,…

…happy,…

…at your financial goal,…

… and looking to go beyond,…

…what is this condition called?

It’s called…

…being at the sweet spot.

Stop here.

Enjoy it. 

It’s come after toil.

Don’t let is go.

Whatever you do from this point onwards, maintain the existence of the sweet spot.

If you’re careless, the sweet spot will be gone…

…and you’ll be back in the rut. 

If you don’t know how to behave at a sweet spot…

…you’ll most certainly see it go.

So…

…how does one behave at a sweet spot?

First up, don’t make too many moves here, because balance is brittle and has come at a cost. 

You’ve moved your mountains to reach here. Movement is done. 

Savings will emanate at the sweet spot. 

Tap these. 

Do whatever it is you wish to do from a part of these savings. 

As your savings grow further, detach yourself more and more from the rat-race. 

The sweet spot was the one where you told yourself you’d be happy. 

Beyond, you should be happier. 

Make sure that comes true for you.

Happy Living!

Where do you want to be?

Where do I want to be?

Do I want to look at a stock price and know where things stand with the stock in question?

Yes.

That’s where I want to be.

It’s not going to come for free.

What will it take?

Looking at the stock…

…for an year or two.

That’s what it will take.

How boring, you say?

Sure.

When stock market investing seems boring…

…that’s when you’re doing it right.

Excitement and roller-coaster rides are for video-game pleasure, and for making losses.

Money is made when it’s outright boring out there.

Where do you want to be?

In the money?

I thought so.

Then, please get used to boring and don’t ever complain again that things are boring.

How does one position oneself in such a manner that one studies a stock for an year or two.

Hmmm.

Let’s put some skin in the game.

I know, this phrase is becoming more and more popular, what with Nicholas Taleb and all.

Yeah, we are picking up stock.

What stock?

The one we wish to observe for an year or two.

Why pick it up? Why not just observe it?

You won’t. You’ll let it go.

Why?

Because it’s not yours.

So we pick up the stock? What’s the point of observing if we’re picking it up now?

Well, we’re picking up a minute quantity – one quantum – now. That gets our skin into the game. Then we observe, and observe. Anytime there’s shareholder-friendly action by the management, we pick up more, another quantum. We keep picking up, quantum by quantum. Soon, while we’ve kept picking up, we’ve observed the stock for so long, that now, one look at the stock price tells us what kind of margin of safety we are getting in the stock at this point.

Wow.

Now, future entries become seamless. One look and we have a yes or no decision. Isn’t that wonderful?

Absolutely.

That’s where we want to be.

It has to be a Dunk

When I shoot…

… it has to be a dunk.

If I’m not getting a dunk in…

… I’m not shooting.

What are the implications?

Imagine only taking market dunks for multiple decades in a row.

Where do you think that’s going to leave you?

Most of the time, though, one’s not shooting.

That’s because, most of the time, dunk trajectoires are not available.

When one is not shooting, does it become boring?

Only if you let it.

Yeah, just don’t let it.

No action is a good thing.

It saves resources.

Then, when opportunity is available, one might get twenty dunk days in a row.

Things can get so active, that one wants activity to normalize again, if not stop for a while.

Actually, not a challenge.

I’ll tell you what is a challenge…

… for me.

Dunk opportunity…

… and travel.

I don’t like this combination.

How do I deal with it?

First up, what don’t I like about it?

Distraction.

Not doing full justice to the trip.

Not doing full justice to the investing opportunity either, as in distracted due diligence.

Hmmm.

What do we do here?

Sure, you’ll argue, today one carries one’s terminal where one goes.

Does one also carry one’s zone, you know, the magical frame of mind, from within which one takes magic decisions?

Very probably not.

When one takes an investment decision, is it not better to be in this magical zone?

Therefore, unless the opportunity is just too pressing, such that it makes me open my terminal even during travel, …

…, yeah, my terminal mostly stays shut when I’m on the move, …

…, because then it’s time to do other things. Yayyyyy!

😀

Try retaining one-off Wealth

Easy come, easy go…

…am sure you heard that one before…!

When you come into something too easily, you sure do want to spend it, right?

Well, why not?

However, do take that one step back.

Let’s explore the possibilities here. 

You can spend it all. Have a blast. Blow it up. Yeah. We’ve touched upon that. Know many people like that. 

Or, you can save some and spend some. 

How about that?

Who’s asking you to save it all?

No one. 

You like spending?

Fine. Spend. A bit. Gratify your most burning desires without injuring anyone’s fundamental rights. 

Then, save the rest. Pickle it. Look away. Move on with your life. 

Why?

Lady Luck smiled. You got your one-off dose of wealth. Use some of it to make wealth a permanent feature in your life. 

For that to happen you’ll need to invest, be patient, compound, reinvest and what have you, till many many cash flows take care of all your needs. 

From which point did it start?

From the moment you decided to save some of your corpus and provide it with the necessary environment to grow.

It’s a basic decision…

…, yeah, a real simple one…

…that’s tough to implement. 

Try retaining wealth. 

You’ll then know exactly what I’m talking about. 

Wealth-Generators often go Contrarian

You knew that too, right? 

Sure. 

Going contrarian is a buzz-phrase. 

We hear it again and again…

… till we begin to start thinking… 

… that we know what it means. 

Well, try going contrarian. 

Yeah, try actually doing it. 

You’ll see what I mean. 

It’s real hard. 

Going against the crowd takes all the strength you might have… 

… and then some. 

Most humans aren’t able to go contrarian. 

Most humans aren’t wealthy. 

When there’s blood on the streets, there’s no telling how much more there will be. 

Under such conditions, the contrarian investor lets go of his or her hard-earned money into an investment, knowing perfectly well that the Street might even value the investment tomorrow at a huge discount to today’s price.

That’s ok too, says he or she.

Why?

Because homework’s been done.

Underlying is strong.

Debt-free.

Management is stellar.

Balance-sheet is robust.

Projections are paramount.

That the world is pricing the investment wrongly is a problem with its vision.

Underlying is not going under. With above credentials, this alone matters.

Times change. Vision of the majority changes. Investor makes a killing. Cashes out some, principal and what have you. Leaves lots of free-standing shares… forever… or till parameters change.

Wealth-generators repeat this behaviour-pattern many times in their lives.

They’re not afraid of going against the grain.

They know otherwise.

Also, the money they use has been freed up.

Its being out of action for a long time is not going to change their lives even a bit.

They will have the last laugh.

Wealth is the reward of going contrarian. 

Going for the Multiple 

Relax. 

We’re not going for the jugular. 

Or are we? 

The jugular has the most copious flow. 

Maybe we are then… 

… going for the jugular. 

However, there’s no stabbing happening. 

We do everything from the inside of our comfort-zone.

We act with harmony. 

Balance. 

Focus. 

Intelligence. 

Common-sense. 

We try and be non-violent about it. 

What are we doing? 

We’re looking to create wealth. 

What makes us look? 

Security. Our basic income secures us. 

Boredom. Adding to our basic income has become boring. 

Overflow. As basic income starts to overflow, it needs a long-term avenue in which it doesn’t demand our constant attention. 

Fine. 

What’s the best way… 

… to go about it?

Where there’s honey, there are bees. 

Finance-people find you. You have money. They have investments. For finance-people, you are bread and butter. 

So, you sit. 

You wait. 

You let them come. 

You’ve got discriminatory-ability. 

You sift. 99% of what comes goes into the bin. 

You like 1%. 

You invest in that 1%.

How much? 

Whatever you pre-define as your per-annum outflow into wealth-creation. 

Only that much. 

What then? 

What’s the bottom-line? 

What’s your holding strategy? 

Nothing. 

You sit. 

The biggest money is made…

…while sitting.”

You’re not even looking at your long-term investment more than once a month. 

You’re not interested in daily quotes.

The daily quote can say zero. You don’t care. You know that you are in the process of creating wealth, and that it’s going to take long, and within that period you don’t care if the world thinks your holding is zero, because you know it isn’t. 

Why? 

Due-diligence. 

Ability to think differently. 

Ability to see wealth in its nascent stage, and to recognize it. 

You have these things. 

They didn’t come for free. 

You took some solid hits to earn them. 

Yeah, you have what it takes, and that’s why… 

… you’re going for the multiple. 

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.

 

 

 

 

 

 

 

Does your Exit hurt you?

Good. 

Good? 

Yeah. Good. 

A proper exit – hurts. 

Huh? 

What about exiting on a high? 

Sure. 

Go ahead. 

Exit on your high.

Who’s stopping you? 

However… 

… who’s to say that the high won’t become higher? 

Exactly. 

No one knows. 

So, while the uncertainty about the high becoming higher is still out there – smarty – why are we going to not let it play out? 

Exactly. 

We are going to let it play out. 

Purpose? 

A new high might be posted. We then make more profit. 

Or, trade starts going against us, and we start to lose some of what we’ve gained. 

Hurt starts. 

When you can’t stand this hurt anymore – exit. 

That’s a proper exit. 

It’s leaving a bad taste in your mouth in the end. That’s when you know it’s a proper exit. 

You’ve stomped out the possibility of a new high. 

You’ve taken what the trade has to give. 

You’ve let the hurt set in. 

You’ve let the trade arrive at its logical conclusion. 

Now, you are exiting. 

Congratulations, you are exiting properly. 

Continue like this and you’ll become a great trader. 

What, have I let the cat out of the bag? 

Don’t worry, one can say it a million times and 99% of all traders will still continue to exit improperly. 

It’s human nature. 

Human nature works against the mindset of a winning trader.

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!

🙂

That nagging nagging push towards action 

Yeah, it’s always lurking… 

… in the background…

…waiting for an opportunity… 

… to catch you unawares… 

… and spring to the forefront. 

Market-play is a mental battle. 

Your mind wins or loses it for you. 

Make your mind understand the value… 

… of action… 

… and of inaction. 

Make your mind pinpoitedly choose… 

… the time for action… 

… and for inaction. 

Make your mind automatically switch from…

… a state of action… 

… to a state of inaction… 

… and vice-versa… 

… and feel perfectly normal doing the switch… 

… again and again and again. 

The above by itself is a winning state of mind for you, which you can build upon. 

🙂 

Satisfaction

Satisfied?

No?

Why not?

Trading badly?

No.

Investing badly?

No.

Then what?

Can’t pinpoint.

I see. 

I’ll tell you what.

What?

I’ll tell you what I think it is.

How would you know?

It’s an educated guess. 

Ok, go ahead.

Are you doing what you’ve come to do?

Meaning?

You’re in finance, correct?

Correct.

Do you feel happy about being in finance?

Yes. 

In finance, how many things are you doing?

Many.

How many?

Nine. Maybe ten. 

What do you think is the reason for your dissatisfaction? It’s not results, you said. Look in the ten things. Is there one thing amongst them that you’ve come to do?

Yes. 

Are you doing enough of it?

No. 

Why not?

I’ve just started developing it. It’s risky. I’ve started slowly. 

When’re you going to scale up?

Over the next twenty years.

Huh?

Yeah, because sky’s the limit. I’m going to scale up very slowly, and always as a single digit percentage of my total networth.

So over the next ten years, will you have reached a substantial level.

Yes, of course. 

Do you think you’ll still be dissatisfied?

No. 

There you go. 

Sheer Moat Investing is not Antifragile 

There we go again. 

That word. 

It’s not going to leave us. 

Nicholas Nassim Taleb has coined together what is possibly the market-word of the century. 

Antifragile. 

We’re equity-people. 

We want to remain so. 

We don’t wish to desert equity just because it is a fragile asset-class by itself. 

No. 

We wish to make our equity-foray as antifragile as possible. 

First-up, we need to understand, that when panic sets in, everything falls. 

The fearful weak hand doesn’t differentiate between a gem and a donkey-stock. He or she just sells and sells alike. 

Second-up, we need to comprehend that this is the age of shocks. There will be shocks. Shock after shock after shock. Such are the times. Please acknowledge this, and digest it. 

To make our equity-play antifragile, we’ll need to incorporate solid strategies to account for above two facts. 

We love moats, right? 

No problem. 

We’ll keep our moats. 

Just wait for moat-stocks to show value. Then, we’ll pick them up. 

We go in during the aftermath of a shock. Otherwise, we don’t. 

We go in with small quanta. Time after time after time. 

Voila. 

We’re  already sufficiently antifragile. 

No magic. 

Just sheer common sense. 

We’re still buying quality stocks. 

We’re buying them when they’re not fragile, or lesser fragile. 

We’re going in each time with minute quanta such that the absence of these quanta (after they’ve gone in) doesn’t alter our financial lives. We’re saving the rest of our pickled corpus for the next shock, after which the gem-stock will be yet lesser fragile. 

Yes, we’re averaging down, only because we’re dealing with gems. We’ll never average down with donkey-stocks. We might trade these, averaging up. We won’t be investing in them. 

Thus, we asymptotically approach antifragility in a gem-stock. 

Over time, after many cycles, the antifragile bottom-level of the gem-stock should be moving significantly upwards. 

Gem-stock upon gem-stock upon gem-stock. 

We’re done already. 

Looking for a Deal-Breaker

I look. 

Don’t find it. 

Look again. 

And again. 

Keep looking. 

Tired. 

Eyes ache. 

Sleepy. 

Stop. 

Resume next morning. 

Still nothing. 

So on and so forth. 

Few days. 

Absolutely nothing. 

Buy the stock.

Yes. 

That’s the chronology. 

After zeroing in on a stock…

…that’s the chronology. 

Am I happy the search was unsuccessful?

You bet!

Am I spent?

Yawn…yes. 

Was it worth it?

Of course. I now own a quality stock. 

What’s happened before?

Stockscreener. 

Stock pops up. One that appeals to me. 

Check it for value. 

Pass.

Check it for moat.

Pass. 

Look for deal-breaker. 

Yeah, final step. 

Takes the longest. 

It’s boiled down to a yes or no. 

One’s going to holding the stock for a long, long time. 

This is when one is asking every cell in one’s body. 

Yes or no?

No deal-breaker?

Fine. 

Going for it. 

It’s a yes. 

When are you doing it Right?

There’s something called the Line.

You feel it.

It’s abstract.

You have to be its master.

Then, you’re doing it right.

Controlled, the line won’t disturb your life.

It’ll very probably add to your life, in terms of wealth.

If you let it control you, everything is finished.

Goodbye.

Life. Wealth. Peace of mind.

It pays to master the line.

How do you feel the line?

By being invested, or in a trade.

How do you master the line?

By being invested or in a trade, again and again, again and again, and then some. Simultaneously, you’re nipping your bad behaviour in the bud, while the line is on.

You control your temper. You don’t lose it.

You develop patience with loved ones.

You learn how to position-size the line, while winning or losing.

You attenuate all kinds of disturbance.

You keep going on and on like this, till one fine day, the line’s presence becomes a part of your life. Line-switch being on doesn’t change you or alter your behaviour in any negative manner anymore.

That’s when you’re doing it right.

Effects?

Trade on = like when trade was not on.

Investment? You’re not thinking about it.

You sleep well.

Good family life… not disturbed by the presence of the line.

Yeah.

Line.

Master it.