Multiples obey skewed mathematics

Income-oriented linear growth… 

… is single-digit. 

There’s something safe about it. 

It’s going to be there tomorrow, and after that. 

Safety means less return. 

You’re ok with that as far as basic income is concerned. 

Not so the case when it comes to wealth. 

With wealth, the multiple comes into play. 

Multiples dance to a different tune. 

The search for multiples can lead to negative return – for a while at least. 

It’s risky. 

The level of reward is coupled to a corresponding level of risk. 

In comes time. 

Wealth-play is palatable because of time not pushing you to the wall. 

With time on your side, the ingredients of your cooking-pot have ample opportunity to sprout and grow into big trees. 

If growth is not able to take off owing to lack of circumstance, this becomes the breeding ground for negative return. High deductibles add to the bleeding. After all, it’s wealth you’re seeking to generate, and there will be a little blood. 

Such is the game. 

If you can’t stomach the ride till the multiples emerge, play the income-game full-time instead. 

However, once you start to digest the wealth-game, you realize that is really quite headache-free and pretty much an auto-pilot avenue. 

You’ll even start to like it when the first multiples emerge! 

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Nath on Equity : have stuff – will talk

Behind Equity, there’s 41). human capital. 

It’s human capital that keeps 42). adjusting equity for inflation.

43). No other asset-class quotes on an inflation-adjusted basis. 

That’s good news for you, because 44). equity takes care of the number one wealth-eater (inflation) for you. 

All world equity ever quoted, whether currently existing or not, has 45). returned 6% per annum compounded, adjusted for inflation. 

46). All equity ever quoted that still exists has yielded 11% per annum compounded, adjusted for inflation.

Equity selected with good due diligence, common-sense and adherence to basic rules listed here and in previous articles is 47). well-capable of yielding 15%+ per annum compounded, adjusted for inflation. 

However, equity is 48). a battle of nerves, at times. 

This asset-class is 49). more about creating long-term wealth. 

It can be used, though, to 50). generate income through trading. 

51). Trading, however, is burdened with more taxation, commission-generation and sheer tension. 

Trading equity 52). eats up your day. 

Investing in equity 53). gives you enough room to pursue many other activities during your day. 

Trading strategies are 54). diametrically opposite to investing strategies. 

55). It takes market-players the longest time to digest and fully comprehend 54).

For long-term players, 56). up-side is unlimited. This is a vital fact. 

Also, 57). downside is limited to input. Factor in good DD, and that very probably won’t even go half-way. 

58). Thus, 56). and 57). make for a very lucrative reward : risk ratio. 

Equity needs courage, to 59). enter when there’s blood on the streets. 

It also needs detachment, to 60). either exit when required for monetary reasons, or when everyone else is getting ultra-greedy and bidding the underlying up no-end. 

Impedimenting

Market strategy often sounds ridiculous. 

Take impedimenting for example. 

You put impediments in your own path. 

Absurd?

No. 

Uselful?

Very.

Why?

Because we are human. We are full of behavioural quirks which invariably cause market losses. 

That’s why impediments. 

Where?

In your path?

Why in your path?

Who are these impediments meant for?

They are speed-breakers for your quirks. 

Because your quirks are inside of you, the breakers are in your path, put by you, not for yourself, but for your quirks, when these choose to expose themselves. 

1). One example – money transfer before market entry – there’s no beneficiary added. Ha. You need to add the beneficiary first and wait for it to be approved. Then you transfer money to your other account, which is linked to your transaction account. Impediments. 

Why have you done this? You don’t wish to enter anything on a whim. Whenever money moves, it’s movement should not be made easy. You’ve seen to it. Good. 

2). Example numero two – Calls Blacklist. Make it very difficult for market people to speak to you if you don’t wish to speak to them. Why? Bias. You don’t want their bias. You have limited time. You have your own opinion. Many times during market-play, there’s no room for another opinion. 

3). Doing the DD (due diligence) – don’t act without DD. Make the DD huge. Have steps and procedures which you are going to follow – period. When you shudder at the idea of DD, that’s when DD becomes an impediment. You want the upcoming DD to make you shudder. You don’t wish to enter the underlying on a whim, remember?

4). Don’t discuss your portfolio – with anyone. YOU DON’T WANT ANYONE’S BIAS. You are mentally diligent enough to build your own opinion. People asking for causal tips are going to bother you. You need to impediment your way away from these. 

5). Systems – make systems. Stick to them. They cost time. They are impedimenting. Good. While a system engulfs you, it gets the chance to scour your approach for mistakes. Your system will alert you, so it’s been worth it. 

6). Blockage – new funds are to be blocked for a while. Don’t act with new funds immediately. Give yourself ample time to decide your strategy with new funds. Pickle them away in a fixed deposit till you are sure what you want to do with them. 

Make your own list. Above are just examples, and yeah, there’s more, but double yeah, make your own list. 

Working with self-made speed-breakers to enhance your performance makes you grow. 

Your returns grow too.