A Little Bit of Manual is a Good Thing

Sure.

Auto is the motto.

Keep some pivotal stuff on manual, though.

It’ll give you something to do.

Because it’s pivotal stuff, it decides direction, or quantum, or what have you.

Position-sizing is ideally done on auto.

You can write an algorithm for it too.

Yeah.

You can take auto to the nth level and then some.

Keeping position-sizing on manual, though, for example, makes you remain in touch with portfolio expansion or contraction. Central.

In my opinion, setting risk:reward is a trade to trade thing, and depends upon the underlying chart. Hence, being manual here gives more dexterity.

Same goes for setting stop-losses.

Which auto strategy to look at, when, is by default a manual thing. It should be, anyways, in my opinion.

This adds spontaneity to life.

Spontaneity has a certain freshness to it which makes work fun.

Some strategies are better off when not looked at for days.

Manual helps here.

When an auto strategy stops working, one needs to manually fit it to work again.

If the strategy needs dumping, you’ll need to see to this yourself.

Creation of a new strategy – you got it – manual.

The manual stuff keeps you moving, and fit.

The auto stuff just goes on auto, and if that’s all there is for you, you’re going to start getting lazy.

Befriend manual, but don’t become a slave to manual.

A little bit of manual is a good thing.

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Wave Buying upon Prolonged Corrections

Where there are markets, there are corrections.

At first, they cause us dismay.

Slowly, we get used to them.

Then, we start using them.

Next step is – exploiting them.

One can speak of exploiting if a correction persists, and one is long-term investing.

During a persisting correction, we purchase in waves.

How are we defining a wave?

Go through your long term portfolio and pick out those stocks that are offering margin of safety.

You convince yourself of their health once again. Still healthy? Go ahead.

You purchase them one by one, one per day, by putting one entry quantum into the market for each purchase.

There will be greed to buy more than one underlying in one day. Don’t give in. This will allow your buying power to persist alongside a persisting correction.

The size of your entry quantum needs to be small enough to sustain entries all year round, still leaving ample liquidity on the side. Your long-term strategy should not immobilise your financial and familial activity in any way. Thus, an optimally small enough entry quantum is vital.

You’ve gone through a wave.

Breathe.

Correction persisting?

Go through your long-term portfolio again.

Where does margin of safety still exist? Pick out stocks list.

Go through next wave.

Repeat.

Till when?

Till no margin of safety is offered, or if you feel that the buying limit with a stock is surpassed.

4-5 such waves can really ramp up your portfolio.

What happens if corrections continue over multiple years?

Take long breathers between sets of waves.

Keep doing due diligence. If you’re not convinced about a stock anymore, don’t include the concerned stock in the next round of wave-buying (you can exit such a stock completely upon a market high; wait patiently for such a high and then throw the stock out, if still unconvinced about it).

Yes, ultimately, markets will start to rise again. Margin of safety dries up. You stop buying.

Your portfolio will now start showing its health.

Why?

It’s been accumulated with conviction, at the right price.

Congratulations.

🙂

I Got the Feeling

What feeling?

The feeling of value-creation – that’s the feeling we’re talking about. 

When can one create value?

When there is value…

… and one sees it,…

…upon which one has the courage to act…

…and make that value one’s own.

This normally happens during and after a correction. 

Therefore…

…a correction is not a cause for depression.

Please understand that and please incorporate that into your DNA.

A correction is a time for action.

You go about adding value to your portfolio, again, and again, and again, as long as the correction lasts, and after, till bullishness sets in beyond your comfort level.

How can you keep on doing this?

This can be achieved by keeping your entry quantum small enough each time. We’ve been over that many times, and only recently, we went over it very thoroughly. 

So, the markets are falling, and you are going on and on, adding value. To be able to follow through properly, your system needs to be fully convinced about what you’re doing, and that’s why, I ask you again. 

Do you have the feeling?

Do you have the feeling that you’re creating value and adding it onto your holding?

Keep doing so, till the feeling persists. 

Stop, when the feeling is gone. 

Save, so that you have the resources to go on and on adding value. 

Enter small, so that you can enter many, many more times, perhaps adding even more value the next time. 

Be sensitive towards when the feeling comes and goes. 

Soon enough, during a burst of bullishness, you’ll see how this knowledge translates into a burgeoning portfolio. 

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. 

🙂 

The CC

Done it again.

Introducing…

…the…

…Constitutional Comparative (CC). 

It’s in our constitutions…to compare. 

We exhibit the constitutional comparative by default…

…and we need to expunge this trait from our DNA…

…which takes time…

…but can be done, with determination and practice. 

Each one of us is unique, and we’ve come to do unique things. 

Some blossom early. 

Some blossom late. 

Some don’t blossom at all, or so it seems. Turns out later, their sole purpose in life was to provide stabilizing energy to their environment. They became activated from the womb, and they deactivated upon death. There was no question of blossoming at a certain time. You could also say, that they blossomed their whole life long. 

SEE?

Don’t compare. 

You can’t see the wheels within wheels just like that. 

Seeing wheels within wheels takes insight, penance and an appropriate state of mind. Therefore, if you really must compare, at least graduate to that state of mind first, where you possess the capability to see wheels within wheels in action. 

Or, if graduating to this state of mind is not worth your while, well, fine, no probs, but…

…DON’T COMPARE then…please. 

Live your life. 

Do what you’ve come to do. 

If you don’t know what you’ve come to do, well, FIND OUT. 

HOW?

Go within. 

Talk to yourself. Yeah, it’s not crazy to talk to yourself. 

In solitude come phenomenal solutions. 

You realise who you are…

…and what you’ve come to do. 

In a crowd, such finer points get lost, in the noise. 

And, why all this on a blog which has to do with finance?

Well, you can only invest properly if you’ve found yourself first. 

If you know who you are, you’ll also invest like who you are, as per your risk profile. 

A portfolio put together with the knowledge of your own risk profile will last you long, and will give you good returns for life. 

🙂