Busy Times

Market falls are busy times. 

No, we’re not busy whining. 

We’re busy buying.

Are we not afraid?

That the crack might deepen?

That it might go down to zero?

No.

We’re not afraid of this scenario. 

Meaning?

Meaning that even though such a scenario cannot be ruled out…

Huh!?

Yeah, it can’t be ruled out. With trade wars and back to back black swans waiting to strike, theoretically, the bottom is zero.

And you’re not afraid?

No.

Why?

Because I buy into fundamentally sound businesses…

…zero debt…

…great 5 year numbers…

…sometimes, great ten year numbers…

…and I buy with considerable margin of safety.

Still, one is normally always afraid, right?

Wrong. A small entry quantum strategy kicks out all remnant fear.

How?

This strategy leaves me liquid. Let it go down to zero. I’ll still have liquidity to buy.

And that which you’re buying…

…is sound, yes. If I buy something sound, it will yield returns. It’s like agriculture. Crops grow in good soil. They don’t grow well in bad soil. I make sure that I choose excellent soil.

How does one do that?

Due diligence. Period.

With all the scams and frauds going on…

Well, I look long and hard for shareholder-friendly managements. Representable salaries, willingness to share, largesse, debt-averseness, intelligence, business savvy, the list goes on.

What if you land up with a fraud management?

Solid research will make you avoid scamsters. I search the internet thoroughly for any kind of smoke. Crooks leave a trail, and one is able to catch their online trail pretty easily. 

Alone online?

Second recourse are annual reports. They reveal a lot. I don’t invest in a company without having a thorough look into its annual reports. I look at CSR, the director’s report, skin in the game, balance sheets, profit and loss statements, cash-flow, special items, what have you.

What if you still land up with a fraud?

After I know I’ve landed up with a fraud management, I would look to exit at the next market high. 

What if your holding is wiped out till then?

If it’s wiped out, I have many other holdings to lean on, and don’t forget the liquidity that is yet to flow into honest managements.

So you’re not afraid of the loss?

There is some risk one has to take. Here, it is the risk of being wrong. The good thing is, once I know that I’m wrong, I won’t double up on my wrong call. I’ll get busy elsewhere and look to exit from my wrong call with as little damage as possible, perhaps even in profit.

Profit?

You forget, I like to buy with margin of safety, and you’d be surprised at what people are willing to pay at market highs. 

I see, well then, happy investing!

Thanks! 🙂

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Incorporating the Satisfaction Factor 

How do you wish to leave your portfolio? 

Leave as in… 

… you leave. 

Let’s paraphrase this. 

In what condition do you envision your folio to be at your time of ultimate departure? 

Why is this question necessary? 

Why are we putting together our folios? 

What do we want out of the whole shebang? 

Are we playing the game just because everyone else is doing so, without thinking any further? 

Stop. 

Think. 

Do. 

We want satisfaction. 

Everyone searches for happiness. 

We want to have led full lives. 

We want to leave with smoothly outlined pipelines which won’t be blocked by any surviving party’s antics. 

Auto-pipelines are a reality now. It takes a standing instruction, that’s it. 

We want to have done some CSR work, as in charity. 

We want to leave a legacy. 

We don’t wish to make our surviving family slaves to an inheritance. We want them to be self-sufficient with trouble-shooting acumen. However, funds need to be accessible at times of emergency. 

And blah blah blah blah blah…, list can be endless. However, you get the gist. 

All this requires planning… 

… NOW.

Take out the time to do some basics. 

Nobody’s asking you to do a doctorate on this. 

Just do the basic nitty-gritty. 

The whole with some basics leads to successful and satisfactory implementation. Leave out the nitty-gritty, and you could be left without the success and satisfaction part too. 

Do it properly, come on. 

🙂