Trigger Vigour

Can you pull a trigger?

Or do you hesitate?

Are you afraid?

This is vital stuff, and you need to recognize this about yourself.

Why?

We’ll go into the why some other time, but let if suffice for now to say that trigger dynamics are part of basic risk-profiling, and if one’s market movement is not as per one’s risk-profile, things generally go wrong.

Back to triggers.

Cast aside pulling, are you able to recognize a trigger?

What comes before recognition?

Definition.

Have you defined market triggers?

Everyone has a different definition of when to act.

You need to know when you are going to act.

No ifs, no buts, just clear-cut action.

Your system will tell you that it’s time for action.

You do a double-check.

Are you recognizing what your system is telling you?

Is what it’s telling you recognized by your mind as a time to act?

Yes?

Then act.

What is the action, you ask?

Hmmm.

Why are you asking that?

You have to define the action too.

Just like you defined the conditions for action, you also define what exactly the action is going to be.

When you act, you pull a trigger. The quantum and style of your action is your follow-through after the trigger is pulled.

Make it mechanical.

As much as possible.

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Meet the BenchWarmers

Yeah, one too many real-estate agents (REAs) have popped up over the last decade.

Any Tom, Dick or Harry (TD/H) who has nothing to do becomes an REA.

Small little office, empty chairs, one TD/H reading a newspaper or watching TV… familiar?

Meet the bench-warmers.

Real-estate is in the dumps.

Sure.

Real-estate bill is in the offing. Might come out soon, might come out later.

Circle-rates are trying to bring the black-money component down.

Government A-B-C categorization is all warped.

Meanwhile, deals have dried. Volumes are zilch.

Is this the bottom?

Who says yes?

I’m afraid not too many have that conviction.

I don’t either.

You see, at bottoms, there’s blood on the streets.

Do you see any blood?

Nope.

Is black-money receding?

Slightly, maybe. Some say significantly. Some say insignificantly. Wishy-washy answers at best. Let’s put this under the “not-sure” category.

Are the bench-warmers packing up their benches?

Nope.

Are more bench-warmers springing up, in anticipation of volume-spikes?

Yeah.

Is this going to make their situation only worse?

Yeah, probably.

When will things start moving finally?

No one knows for certain.

Under the circumstances, how can one call this a bottom?

We’re still way above 2005 levels.

It’s not a bottom, or so I think. Maybe I’m mistaken. However, that’s my opinion.

All right, if it’s not a bottom, what is it then?

Time to wait and watch?

Yeah.

Time to pick up (a property) already?

Probably not.

Time to nibble at a real-estate stock?

Maybe. Just make sure the fundamentals are good and debt-component is negligible. And nibble. That’s all.

What about the bench-warmers? How should they act?

Use their office to generate income. Any which legal way, through any vocation. If not, rent it out with fool-proof lease deed. That’ll generate income too.

Bench-warming degenerates our faculties. It shouldn’t be practised over a prolonged period of time.

Let It Come To You

Don’t run after the investment.

Let it come to you.

Let it breathe down your neck.

You’re not hungry for it…

…but, if it’s that good…

… you might take it.

Let it reveal its hidden goodness.

Let it ignite your curiosity to look for even more than basic goodness in the investment.

Play a passive-then-active role.

Some call this the sweet spot.

I call it the sweetest spot…

… which you really want to be in, in the world of investing.

Yeah, don’t be in a hurry.

Hurry spoils the curry.

Take your time, to the extent that…

… take time out of the equation.

Give your money the best possible chance…

… to make loads more.

So…What Does Trade Selection Hang Upon?

Feeling.

Feeling first, feeling last. 

Math in the middle. 

That’s my recipe for trade selection. 

For me, trading is an art. 

I rely a lot on gut. 

Many people tell me that’s wrong. 

Everyone’s got a right to their opinion. 

What works for Jill might not work for Jack.

People tell me to get emotion out of the way.

Emotion can be an ally too. 

Just try and get the hang of your gut feel. 

Let the trade speak out to you. 

You’re looking at a chart, and the chart should shout out to you – “Trade me!!”

That’s what I call “Feeling First”.

There’s something about first impressions. 

I mean, whoever made that proverb about first impressions sure knew what he or she was talking about. 

So, after your first impression tells you that a chart is tradeable, you then need to see some kind of a mathematical fit going for you. 

You plan your trade.

You try and fit some mathematical model into the underlying’s previous behaviour, and plan the trade into the near future based upon the future-play which your model spits out. 

You calculate a stop according to your money-management rules. Just more math. 

Now comes “Feeling Last”. You look at your chart, which contains the entire map of your trade.

At this stage, your gut must speak to you. 

Yes or no. 

Nothing else. 

Are you pulling the trigger or are you not pulling the trigger.

If not, then no whys. It’s a no. Learn to take a no. Look for another trade setup, elsewhere. 

If yes, then again – no more whys. It’s a go-ahead. Have the guts to follow through. 

Keep it simple. 

The best ideas in the world are – simple. 

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.

Only the Lonely

You are unique.

Are we still debating this?

No, right?

If we are, then sit yourself down.

Alone.

Reflect.

Please see how you are… unique, and that you are… unique.

Moving on, what does that mean for you?

Specifically, what does it mean for your market strategy?

A newbie starts off with very generalized market strategies.

What’s good for the goose, is good for the gander types.

Ones that treat donkeys and horses alike, to literally translate from Hindi.

Slowly but surely, you realize that you don’t want donkey treatment anymore. Mrs. Market has kicked you around and converted you from a donkey into an intelligent market player.

An intelligent market player requires a fine-tuned, risk-profile specific strategy.

That’s where you either step in or you don’t.

Choice is, as they say, now yours.

Do you want to continue with generalized, text-book level donkey strategies, or do you want to spiral up to the level of exclusive strategy tailoring and fine-tuning.

People who approach the market as a secondary or tertiary activity don’t generally spiral up. Most of them are unhappy with their returns, but since they already have primary (and probably successful) professions going for themselves, they choose to remain where they are as far as the markets are concerned, and they don’t aspire to rise any higher.

You see, they don’t have the time to take this spiral plunge.

Now it’s decision time for you, buddy.

Do you wish to remain at the average donkey level all your life as far as the markets are concerned? If not, read on.

You need to spend some alone-time, as long as it takes.

Go over all your market activity till date.

Develop a feel for your risk-taking ability.

What bothers you? What do you like? What kind of a “line” are you capable of stomaching? For how long? How do you react to a loss? To a profit? Are you emotionally stable? Can you remain stable for long? How long? What gets you on tilt? Once you make a rule for yourself, are you able to follow it? Or, do you keep second-guessing yourself? What kind on income are you looking for from the markets? Have you learnt to sit on cash? Can you stay invested for long periods? Can you let your profits run? Do you respect your stop? Do you know what a stop is? Do you know how to manage a trade? Have you fully understood basic money-management? After what level of income do you start functioning smoothly?

Etcetera, etcetera, etcetera.

Ask yourself these and many more such questions.

Let the answers come from within.

Listen to those answers.

Understand who you are.

Then, devise a unique and fine-tuned market strategy for yourself.

Keep working on this strategy, fine-tuning it till it is in tandem with your unique self.

At that point, it will become a successful strategy, and will yield above-average results.

Being above-average in the markets is a winning scenario.