Bridging the Gap

How does one bridge the middle overs?

Sure, a blogger who is simultaneously a cricket fan…

…will dish out analogies from cricket… 🙂 … !

We’re in the business of identifying extremes…

…and acting upon such identification.

Whatever is in the middle of these extremes…

…is, for us, an area of…

…inaction.

Do we know how to not act?

There is an impulse for action in all humans.

In these loaded times, this impulse is extreme.

Why do we not want to act when an extreme is not there yet?

During times of complete pessimism, one is able to purchase underlyings for a song.

Similarly, during times of total optimism, one is able to secure good exits for stuff that one wishes to get rid of.

How one behaves in between adds or subtracts significantly to or from one’s market success.

Selling early means lesser profits, and the same goes for buying late.

This is the kind of behavior that lessens our multiple, sometimes greatly.

This kind of behavior would be absolutely ok if one were trading.

We, @ Magic Bull, are in the business of effecting multiples.

Anything coming in the way of that is behavior we wish to avoid.

With markets normally trading between extremes about 95% of the time, this leaves us with a lot of time in which we do not act.

Also, it brings us back to the pivotal question – how do we manage not to act when everything and everyone around us is screaming for action?

We do – everything – else.

Apart form market action, there’s business activity, charity ventures, extra curricular activities, family time, sport, leisure, entertainment … … one’s day is packed.

There are two portions of the day when one is driven to the edge of action, though.

The first is after studying market opening.

This is when one does a half-hour call with one’s broker and just sheer discusses everything one is observing.

Strike 1.

Then, as one studies the close, this situation can arise again.

One writes, for example.

Or, annotates charts.

Observes prices.

Collects impressions…

…and demarcates patterns.

That’s sufficient.

Strike 2.

There’s no room for strike 3 – one just doesn’t let strike 3 happen.

The Benefit of Quantum upon Quantum

Underlying equity. 

How do you protect against fraud and / or investor-unfriendliness?

You’ve done your research. 

All good. 

Stock is a buy. 

Meets your parameters. 

What’s the next step?

Protection. 

You buy quantum upon quantum. 

You don’t plunge into the stock with all you’ve got to give. 

No. 

You put in a quantum.

Then you wait. 

Better opportunity arises.

Fundamentals haven’t changed. All still good. 

You put in another quantum.

Quantum…

…upon quantum. 

That’s how you keep entering the stock till it keeps giving you a reason to enter. 

Year upon year. 

Between quanta, you’re studying behaviour. 

You’re looking for investor-friendliness. 

Your next quantum is only going in if investor-friendliness continues.

No more investor-friendliness?

No more quanta.

You wait.

Will investor-friendly behaviour resume?

And you wait.

Is it coming?

Yes. 

Good. 

Upon buy criteria being met, next quantum goes in. 

Not coming?

At all?

Ok. You’re looking to exit. 

Market will give you a high to exit. That’s what markets do. They give lows, and highs. 

Wait for the high. 

High?

Exit. 

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.

Happy Fifth Birthday, Magic Bull!

Turning 5, tick-tock, how time flies!

Has the game changed? 

No. 

What are we in it for? Why do we play?

Bread and butter. Security. Children, their future. Ourselves. Goals. Luxury. Whatever makes us tick. 

Each time we tick, let’s tick better. 

Mistakes mean learning. We’re seeing them as tuition fees, because mistakes cost money. They are the only real learning. You learn when you’re hit. You learn from the pain. 

All other learning is – paper learning. It doesn’t translate into our DNA easily (or at all). For DNA-translation, there needs to be a biochemical change in the body. Metamorphosis. If paper-learning does that for you, well, you’re lucky. Count your blessings. To be envied. 

Rewards bring hubris. 

Hubris makes us vulnerable. 

How?

We get lazy and are caught napping. Off-guard. Hubris-condition coupled with big market-mistake can mean downfall. Don’t want to take names, but exactly this has happened to many. 

What is it about success? What does it do to the human being? Why do we stop being ourselves once we succeed? Why do we stop learning once we succeed?

Yet, each one of us strives for success. 

Can we remember to behave ourselves once we succeed? 

What kind of behaviour are we talking about?

The same behaviour that paved the way for success. Can we maintain that same standard of behaviour? Why is that difficult? It becomes difficult because the after-party causes hangovers. Let’s just scrap the after-party. Let’s continue to be ourselves even after we succeed. 

Instead of the after-party, let’s do something for society, for example. We can even pursue a constructive side-game, which has nothing to do with the main-game. It keeps us ticking on a different level. 

It’s important to tick. The opposite of that is stagnation. Ticking means evolution. 

Evolution means that the next time you take a shot, you’ve better at your game. You’ve evolved because of past learning. You are human capital, remember?

Happy Ticking!

🙂