Manipulation / Fraud / Ponzi – I Reject You

I detest manipulation, and manipulators. 

I like people who are straight-forward, without hidden agendas. Simplicity is gold. Simplicity breeds success. Simplicity gives satisfaction from within. 

All the twisting and turning, wheeling and dealing, wangling and dangling of manipulation makes me want to puke. 

Therefore, manipulators, frauds, Ponzis, I reject you. Manipulation doesn’t make the manipulator happy. Try it and see. I’m 100% sure your story won’t have a happy end.

Rejection is a simple process. When you reject something, you stay away from it. You get out of its way when it is in the vicinity. You head off elsewhere when that something is headed in your direction. Everyone’s probably been rejected sometime or someplace, so everyone probably understands rejection. 

Well, rejection is one thing, but how does one recognise a manipulator, fraud, or Ponzi?

Recognition is key. 

This breed of people talk sweet. They appear harmless. They don’t lose arguments. Quick, witty, sharp. Fast thinkers. They keep you hanging. Give ambiguous answers. Mostly, they like to not answer at all, so as to keep you dancing around them, making you more vulnerable to their schemes or ulterior motives. If you’re interested in their something, they use silence as a weapon. You’re hot, you’re interested, they’re silent, makes you hotter, makes you more interested. The idea is that ultimately, when the manipulator breaks the silence, you lap up whatever you’re getting. Also, they keep you hungry for more. Manipulators are vicious, vile people. 

Where manipulators push you to act, slowly, but steadily, by twisting and turning your world in the manner they consider appropriate (since you’ve given them that power), frauds outright present a reality which sucks you in to sign the dotted line. Frauds sell a dream. It’s a great dream. You want to be a part of it. It overwhelms you. It’s almost too good to be true.

Ponzis are frauds. They sell the dream of unrealistically large returns. They count on greed to cloud your vision. They lure new sets of investors by distributing investorial proceeds from one set of investors as dividends to slightly older investors, and so on and so forth, till the bandwagon is overloaded with thousands of investors paying full-throttle only to see the Ponzi vanish next day, with everything, never to be heard of again. 

When someone doesn’t give you a straight-forward answer, walk the other way. Don’t bother with benefit of doubt, just walk the other way. With very high probability, you’ll have avoided a manipulator. When someone uses silence as a weapon, walk away ten miles. Warn everyone of a mega-manipulator in the neighbourhood. Analyze sweet- and smooth-talk ten times. Is there any truth in what’s being said, or are the words an eye-wash, hiding a fraud behind themselves? If you’re not greedy, you won’t fall for a Ponzi. Don’t be greedy. Period. 

You’ve hit full cycle. 

You’ve understood the existence of the breed we speak about. It has dawned upon you. Let’s call this “internal realization”.

Then comes “external recognition”, of the breed being in your vicinity, and trying to exercise its powers upon you. 

Lastly, comes “complete rejection”. 

Well done. 

You’ve saved yourself from lots of emotional and or monetary trouble. 

Spread the word. 

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What’s the Intrinsic Value of Inflation – FOR YOU?

Pundits taught about Inflation.

It ate into you.

Did it discriminate?

Nope?

Did life discriminate?

Or was it your Karma?

So you made it to HNI, without perhaps knowing what HNI stands for.

You’re a high networth investor, bully for you.

Here’s a secret. You’re not really bothered too much about Inflation.

What?

Yeah. Don’t bother too much about it. 

Why?

It’s eating into you, given, right. 

By default, you need to look into something that’s eating into you, right?

Well, right, and then, well, wrong. 

You had a hawk-eye on inflation till you made it to HNI. Well done, correct approach.

Now, you’re gonna just use your energies for other purposes, for example for asset allocation, fund-parking patience, opportunity scouting, due diligence – to name just a few avenues. 

Why aren’t you using even a minuscule portion of your energies to bother about the effects of inflation?

Well, simply because it’s not worth the effort – FOR YOU – now that you’re an HNI. 

Sure, inflation will eat into you. However, the way you handle your surplus funds will defeat its effects and then some, many times over. Use your energies to maximise this particular truth. 

What makes you an HNI? Surplus funds to invest, right?

Surplus sits. 

It waits for opportunities. 

An entry at an opportune moment gives maximum returns.

You’ve sifted through the Ponzis. You’ve isolated multi-bagger investments. You’re waiting for the right entry. 

Meanwhile, old Infleee is eating a few droplets of your wad. Let it. Focus on what we’ve discussed. A multi-bagger investment entered into at the sweet-spot could well make ten times of what old Infleee eats up. 

Go for it. 

The Path

You’re just two steps away…

… from success in finance.

Don’t follow anyone.

Use your common-sense.

That’s all it takes.

Use your nose to sniff out trouble.

Use your eyes to identify Ponzi billboards, with promises of 12%+ returns. Use your hands to push away the Ponzis, or your feet to kick them out of your office.

Shut your ears to the external world. No tips, no rumours. Use your ears to hear the sound of your own intuition. Yes, use them to hear your inner voice. Correct, this is about you. You and only you bear full responsibility for your finances and well-being.

As and when you identify the taste of success, you might realize the following.

Success doesn’t taste sweet without appropriate struggle. To really know, feel and retain something, the human being must know and feel the opposite pole first.

What matters in the end?

Meaning, after you’ve gotten your success, and are sitting on top of things?

Yeah, what matters then?

Any ideas?

The path you took. That’s what matters.

Your path has shaped your soul.

Success is a mere statistic.

The real game was played on the path.

Did you enjoy the path?

Did you enjoy it despite the struggle?

Did it challenge you?

Did you learn something?

Did you grow?

Did you stop to smell the flowers while on the path?

Did you help others who were struggling with their paths, even as you were coming to terms with your own path?

Did your path fulfill you?

Did it give you the feeling of “Yes, I’ve done something”?

Did it make you happy?

These are the factors that really matter.

They make your grade in the path called life.

Enjoy your path. It’s nature’s gift to you, whereas…

… success is a mere statistic.

Anatomy of a Multibagger

Wouldn’t we all like to rake it in?

A multibagger does just that for you. Over a longish period, its growth defies normalcy.

In the stock markets, a 1000-bagger over 10 years – happens. Don’t be surprised if you currently find more than 20 such stocks in your own native markets.

Furthermore, our goal is to be a part of the story as it unfolds.

Before we can invest in a multibagger, we need to identify it before it breaks loose.

What are we looking for?

Primarily, a dynamic management with integrity. We are looking for signs of honesty while researching a company. Honest people don’t like to impose on others. Look for a manageable debt-equity ratio. Transparency in accounting and disclosure counts big. You don’t want to see any wheelin’-dealin’ or Ponzi behavior. If I’d been in the markets in the early ’80s and I’d heard that Mr. Azim Premji drove a Fiat or an 800, and flew economy class, I’d have picked up a large stake in Wipro. 10k in Wipro in ’79 multiplied to 3 billion by ’04. That can only happen when the management is shareholder-friendly and keeps on creating value for those invested. Wipro coupled physical value-creation with market value-creation. It kept announcing bonus after bonus after bonus. God bless Mr. Premji, he made many common people millionaires, or perhaps even billionaires.

A good management will have a clean balance-sheet. That’s the number two item.

The company you’ re looking at will need to have a scalable business model.

It will need to produce something that has the ability to catch the imagination of the world for a decade or more.

The company you’re looking at will need to come from the micro-cap or the small-cap segment. A market-cap of 1B is not as likely to appreciate to 1000B as a market-cap of 25M is to 25B.

Then, one needs to get in at a price that is low enough to give oneself half a chance of getting such an appreciation multiple.

Needless to say, the low price must invariably be coupled to huge inherent value which the market is not seeing yet, but which you are able to correctly see.

After that, one needs the courage and conviction to act upon what one is seeing and has recognized.

One needs to have learnt how to sit, otherwise one will nip the multibagger in the bud. Two articles on this blog have already been dedicated to “sitting”. Patience is paramount.

The money that goes in needs to be a small amount. It’s magnitude shouldn’t affect your normal functioning.

Once a story has started unfolding, please remember one thing. If a stock has caught the imagination of the public, it can continue to quote at extended valuation multiples for a long time. As long as there is buying pressure, don’t exit. One needs to recognize buying pressure. That’s why, one needs to learn charting basics.

Phew, am I forgetting something here? Please feel welcome to comment and add factors to the above list.

Here’s wishing that you are able to latch on to many multibaggers in your investing career.

🙂

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! 🙂

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 🙂