Category Archives: A-game

Banana Trajectory

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Growth …

… is a non-linear entity.

Especially…

… high growth.

Amongst many things, …

… one point needs …

… pointing out.

Between periods of high growth…

… anything can happen.

The levels of what can happen are, amongst other correlations, directly proportionate to the number of similarities between an economy in question and the functioning of a proper banana republic.

Freedom of speech can be suppressed.

Parallel economies can thrive.

Extortion and blackmail can rule.

Genocide.

Landgrab.

Terrorism.

People buyouts.

Apathy.

Dysfunctionality.

And then there’s high growth again, perhaps soon, if the economy gets its act together despite its rulers, and perhaps accelerated, if the rulers come to their senses and return back to being peace, growth and democracy loving .

Without getting into what kind of a republic we live in, for lack of a better phrase, and with a very small use of one’s imagination, one could venture to suggest that our own path of growth could resemble that of a banana trajectory.

The banana in this title doesn’t have much to do with the curvature of the fruit.

Much rather, it’s about the economy to banana republic correlation.

Might I suggest that our economy’s banana behaviour is mostly mild. Then, rarely, it gets intense. Normal growth returns. Then comes high growth. Periods of very high growth are rare, but there too.

Overall I’m happy with my and in my republic.

Sometimes, its banana behaviour beats me up.

Yeah, every ten years or so, there’s a big hit.

No one likes getting hurt.

I do remember to stand up and continue fighting, …

… because it is in this very republic, that I can make my 15% p.a.c.

On the conservative side, that is. Perhaps I can make more.

I don’t get that in any other economy.

You see, occasional banana behaviour is good news for a long term contrarian.

Banananomics lead to blunders, and temporary downfalls, with all indices falling big.

Which is where we have the guts to buy, and big.

Why?

We know we are on a high growth trajectory with intermittent banana behaviour.

A very simple formula suggests itself.

Buy big during reactions to banana behaviour.

Take principle out after spurts of high growth.

Sit tight on underlying in profit, perhaps for life.

A high growth trajectory with intermittent banana behaviour will give you many such cycles in your lifetime.

One stands to make multiple times the ten-yearly hits.

Upon recognising this recurring pattern, one can even fine-tune and enhance loss-attenuation.

🙂

Normal

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Hey…

… how’ve you been?

Just hit my normal, so, am feeling good about it.

LifeVector took a multi-SD shock some months back, and everything that makes my normal went out of whack.

Life today is about finding one’s normal amidst constant and new shocks.

Didn’t know I had it in me, to take a multi.

Found out while it happened and in the aftermath.

It’s good news for one’s environment, since everyone remains protected, if one is confident about navigating through multis.

So, what makes up my normal?

Firstly, I don’t fit.

So I construct my own fit.

Takes two and a half decades.

My fit has many-dimensional functionality, tailor made, to extract fullness from life.

In no defining order, there are some income-creating avenues.

Wealth-creating ones.

Recreation.

Giving.

Movement.

Study.

Wellness.

Spirit.

Family.

Exploration.

Responsibility.

Evolution.

Systems.

Auto-pilot.

Am not necessarily passing every avenue. There’s failure too.

I do know one big thing, though, from the recent shock.

It’s an invaluable lesson.

Don’t mind sharing it with you.

Am unhappy when away from my normal.

Further away, more the unhappiness.

Happiest when normal is hit.

Happiness-peak continues as normal remains intact.

Hmmmm.

Isn’t that a big learning?

Hope it helps you too!

🙂

Pipelines

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Replicability of an approach is a pipeline. You can always draw on it for a fresh trade, for example.

Scalability is a pipeline getting broader.

Research sharpens the edges of your pipeline, sustains these well, and founds new paths (pipelines), going forward.

Deep Thought is where one taps the pipelines of the Universe.

Experience builds reflexes, which guard and enhance pipelines. This is intuition in action.

Ability to discern allows judgement to manipulate a pipeline in the correct direction.

Cataloguing provides hindsight, so that the pipeline of foresight is strengthened.

Giving opens up vast positive pipelines for oneself, by creating energy vacuum in one’s immediate environment.

Relaxation allows the pipeline of genius to emerge. Brilliant sparks which have been developing silently, within oneself, burst forward.

Family is a pipeline of joy.

Freedom allows the pipeline of creativity to flow.

Also, detachment allows time for the pipeline of flow to form properly. This is particularly valid in trading. Think of profits being allowed to run, for starters.

If I rack my brains, I’ll come up with more…

…pipelines.

That’s not the point.

The point is to delineate that one’s per saldo self is a net resultant of many pipelines acting in tandem.

These have taken time, effort, fortune, patience, blood, sweat, tears and what have you to create.

I measure my life’s success in seamlessly implemented pipelines on autopilot.

For every long-term, seamless, auto-pipeline functioning optimally and on full, there have probably been fifty discarded efforts.

Whether one is trading, investing or sheerly living a fulfilling life, …

… it’s one ‘s pipelines that provide critical support.

Screen-Time

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Is that a hammer in your hand?

No?

Great.

Yes?

Does everything appear to be a nail?

In the markets, I like to keep buttons away from sight, as a start.

Meaning, that the conditions to bring a button out…

…need to trigger first.

How would I know?

For that, there are alerts.

Meaning that we go on doing other stuff, till we are alerted, that there’s action ahead.

That’s when we activate the concerned button to visible mode.

Taking time, we decide whether this particular button needs to be pressed.

No?

Proceed with other stuff as normal.

Yes?

Press.

Do your accounts.

See how you’ve fared.

Done?

Proceed with other stuff…

…till next alert for button visibility activation.

Why all this rigmarole?

Because we don’t wish to be trigger-happy in the markets.

We take calls when they’re due.

We use time-slots in between calls to live life, tension-free, happy.

That’s one approach to the markets.

I’m sure you have your own.

Maybe yours involves more screen-time.

I respect that.

Mine doesn’t involve too much screen time, to be honest.

That’s the way I like it.

That also doesn’t mean anything as far as volumes or output are concerned.

Lesser screen-time leaves me ample space for other stuff.

I get to live a fuller life-experience.

To each their own.

This is my take.

I respect your take too.

Some takes require maximum screen-time.

Some like it like that.

That’s their life.

Fine.

Respected.

This is mine.

And this is my market screen-time…

…perhaps an hour or two a day, sometimes one, sometimes two.

Something like that.

Specialization

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What…

…is working for you?

Do you know?

Have you singled out…

…what gives you profit?

Many things?

What gives more?

Two things?

Which of these is more enjoyable?

Single it out.

What fits best?

Time-line fit.

Mental fit.

Physical fit.

Family fit.

Attitude fit.

Approach fit.

Profitable.

That’s what you are doing…

…from the moment you identify…

this supreme fit.

No one is stopping you from trying other stuff too.

Sure.

We’ve come here to do, and why not do maximum, right?

Sure.

Maximize on your life’s activity.

For profit, however, tread on that one path, which…

…fits supremely.

Specialists…

…score maximum…

…in their area of specialization.

One might argue that what if?

Ya, what if something turns in the area where one’s maximally into?

One’s saved up in the good years, right?

That will bridge the gap.

See what’s wrong and fix it.

Come back in, slowly.

Find rhythm.

Accelerate when comfortable.

A series of procedural and systematic steps, followed correctly…

…eventually leads an expert to a peak.

When you’re peaking, here’s wishing…

—that you never look back!

🙂

Shareware – When Everyone has Access

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Hmmmm…

…what is…

…and what isn’t?

Is technical analysis 1.0.1 still valid?

Why has this question arisen?

What is it about shareware?

Basics never go away.

One always falls back to basics.

Having said that, basics can be made to appear a certain way.

Why?

So that a newbie recognizes a pattern and acts.

Does that render the shareware useless?

NO.

One learns how to use shareware.

Combining a basic candlestick pattern with volume and open interest, for example…

…renders the shareware back as useful.

However, we are now moving in the sphere of technical analysis 1.0.2+ .

Moral of the story?

Don’t believe what basic shareware is telling you as is.

Back up your observation with multiple factors.

Aligning combinations?

Sector behaviour?

Broader market?

Market rhythm?

Cycle?

Domestic sentiment?

International what have we-s?

Psychology at play?

Get a feel for the goings-on.

It’s ok to pay for market software and set it up with multiple edges, rather than use plain vanilla free- or shareware.

Why?

Edges…

…translate into money.

Even an alert is an edge.

20 alerts are 20 edges.

Freeware not allowing any alerts?

Well, rethink, Mr. Scrooge.

Spend on quality, to make multiples later.

Let’s get out of the freebie mentality…

…since we wish to strike it big with the markets.

Wishing all lucrative market play!

🙂

SystemPower

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Life moves…

…from system to system.

We add value…

…at every step.

One breathes easy after setting a system on auto.

While setting the system on auto, it’s the process that drives us (Neo).

Process gives quality to life. Enjoyment emanates.

It’s this enjoyment that we carry forward. Rest, all of it, stays behind. This enjoyment, and the memory of it, is our earning that lasts, eons.

Systems can be applied to all walks of wife.

Deciding not to have a system in an aspect of life…

…is also a system.

Why?

You decide to…

…not do something…

…if a particular situation arises.

Keyword is…

…’decide’.

The more important questions here are…

…whether you have stuck to your system?

Did you refrain from acting?

Did sticking to process evolve you?

Were you thrown out of your comfort zone?

Did you enjoy getting tossed around?

Sometimes we do. It teaches and equips us for bigger game. We enjoy exploits in the bigger game after having learnt from the turmoil in the smaller game.

Whatever cooks your recipe.

Permute…

…combine…

…and devise…

…the optimal chronology for yourself.

Yeah, optimize the system…

…and don’t stop optimizing…

till you’re ready to leave such system on auto.

Wonderful.

You now have so much confidence in your newly fully optimized system, that you actually leave it functioning on auto, and move on to use your life to keep adding further value.

Eventually, life becomes an ensemble of powerful systems.

Remember, some of these are no action systems too, so you’ve got that base covered, yeah, this line was for the critics 🙂

Occasionally, systems malfunction.

Then, we fine-tune.

Or, we discard, and create anew.

The power at your disposal when a system functions successfully, on full and on auto, is immense.

Imagine a life with multiple successful systems functioning on full, and on auto.

Apart from all the pluses that emerge in such a life, there’s something I wish to focus on.

Systems on auto means spare time after achievement.

Using this time to do something even more meaningful is what attracts me.

Eventually, all the value addition starts to benefit not only you but also the people in your environment, your city, your country, and…

…the entire world.

🙂

Harness

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Market forces are like Wifi.

When we connect to them, they…

…connect to us.

When we’re indifferent, …

… we’re in a different world.

When we create systems, and put them on auto-pilot, we mostly do away with the ability of market forces to act upon us.

A successfully implemented system on auto-loop is like making time stand still.

That’s our goal; that’s where we want to be.

In the act of getting there, we are subject to compelling market forces.

How do we deal with them?

Rather than suffering KOs from their punches, we devise systems…

…to absorb their blows,…

…understand the implications of these,…

…to, then,…

…harness them.

What am I talking about?

Why give market forces so much power?

Why not?

They’re there, right?

In abundance, too.

Why not use them?

How?

You can go back to George Soros’s back pain for starters.

Have you developed such physical systems?

I’ll tell you what I implement. It’s a me thing. You’ll need to develop your you thing. I’ll share with you my me thing, though.

When markets are down, I do feel bad, it’s an initial reaction. I wait for it to intensify. I wait for myself to feel awful. That means markets must be really down. As awfulness rises, I start buying. When awfulness is uncontrollable, I buy big. When it makes me puke, I buy maximum. Meanwhile, I’ve rewired my nervous system to accept the awfulness as a marker for buying, and I’m not sad that I’m feeling awful during market crashes. Hmmm, I know it sounds a bit crazy, but this a successful harness-methodology of otherwise overwhelming market forces.

When markets are up, I feel buoyant. Earlier, when I felt buoyant, I used to buy more. Now, I do nothing. Market-nothing, that is. Non-market, I’ll do many things. That’s harnessing buoyancy. As markets rise further, I do even more of market-nothing, and when I can’t control it, I then start creating cost-free-ness. When buoyancy is uncontrollable, I create maximum possible cost-free-ness, and hopefully, then, I can go on market-vacation. Before I do that, I make sure to transfer the cost-free-ness created to a dedicated holding platform for my cost-free-ness.

Ideally, new market activity needs to only commence upon the next set of opportunities. Sometimes, one needs to wait long for these to develop. The act of bridging time comes in handy here. Market is not giving action. We harness even that. We have accumulated lots of pending tasks, just for this kind of period. Now, we do these. Ultimately, an opportunity arises. A new cycle of cost-free-ness-creation starts.

Development of you-unique systems helps you harness the market in a winning fashion.

Wishing you lucrative investing and lots of cost-free-ness!

🙂

Making Time Stand Still

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The buck stops…

…with the entity called time.

Too much hangs on it.

Lack of it makes decisions difficult.

Too much of it defers them.

In the markets, we take it out of the equation…

…and then act.

If not, market forces bog us down.

And, imagine the load if our game is heavy.

After having gotten our basics infallibly into place, we wish to play a heavy game, without the load.

Hence,…

… – time – …

…first we take out of the equation,…

…and then we play.

We stretch the trade duration to a potential infinity. Period.

Trade might resolve in a few days. Or not. Right.

However, potential infinity gives us the wherewithal to focus on the next play.

Then, before action, we make time stand still.

How?

By forgetting that it exists.

By focusing on the one act that we are about to commit.

By encompassing the totality of all connectivities that have led us to the moment of acting, and having them before our mind and on our fingertips, as we act.

By being pinpointedly mindful of our actions whilst shutting out any disturbing noise.

By being…

…in the Zone,…

…such that,…

physically,…

…time might tick,…

…but for us it doesn’t seem to.

And…

…why?

Why are we so interested in making time stand still as we act?

For just one pure reason.

We want our act to have maximum impact.

And that it will, once we act, immersed in the scheme of things.

The chronology is as follows : Time still-stand, identification of market act, entry into scheme of things, action, exit from scheme, time roll-forward.

Timeframe doesn’t register in our minds. Potent action is identified, and happens, fitting into the natural fabric of things, into the timeline of the scheme of events.

Impact, ideally, is maximum.

Imagine the cumulative impact of a lifetime of such actions!

Wishing you lucrative times!

🙂

Tech Bubble please burst

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Bubbles burst,…

…like,…

…pendulums swing.

We’ve seen bursts.

We’ve gauged our way through them.

Lucratively.

Why?

We save up…

…for such situations.

Earlier, bursts were rare.

Now, they are common…

…and quick.

That’s great news for us.

What’s the worst that can happen in a tech-bubble burst?

Front-liners can start trading at single-digit valuations.

Mid-tiers can be down 50 to 75%.

Smaller players can lose 90% of their market cap.

When front-liners trade at single digit valuations, we’ll load up on these.

Medium sized tech scrips showed even ten-bagger behaviour lately. Such down-side would be immensely valuable for us, to avail re-entry opportunities.

Coming to small-sized, debt-free tech players with remarkable free cash-flow to market cap ratios, ya, we do own a couple, and ya, we would re-buy.

So, what’s all the hoo-hah?

Bubble bursts, we buy.

Strategy is outlined.

Players are demarcated.

No time for small-talk, chit-chat, or any other non-useful “market-activity”.

Meanwhile, we just keep trading from interim low to interim high in our pursuit for small quanta of cost-free-ness.

Period.

🙂

News from the One-Off Corner

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One-off runners emit a lure.

One don’t follow them.

However, one is dazzled by their move, and gets roped in.

What’s the out?

1). Emo-check.

2). Fundamental scrutiny.

Pass or fail.

If pass, go to 3). (if fail, move on in life).

3). Add to watch-list.

4). Watch.

Keep watching…

..till you can take a decision to make the one-off a static, or you just junk the idea of engaging with the one-off.

There’s that word again – static.

It’s possible that I’ll be laughed at for using this word in a market context.

I don’t mind being laughed at.

Others have been laughed at too.

Some of these are called pioneers today.

I’m not saying that I’m one.

However, I like to do things differently, exploring new avenues. It just sheer gives me a kick.

News from the one-off corner is their ability to showcase capability of movement.

You see, we’d like our statics to be able to move freely when the time comes.

When we see a one-off exhibiting free movement readily, we can explore whether this one can one day become part of our statics.

To build a house, one needs bricks.

As long as we desist from trading one-offs upon first movement and without proper fundamental and watch-list scrutiny, we should be safe.

When we convert the one-off into a static, news from the one-off corner translates for us into multiple wins over time.

Wishing you lucrative times in the markets!

🙂

Statics

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What are your statics?

What do you follow …

… all the time?

More importantly,…

…why follow something…

…all the time?

There are always new runners on the block.

Changing pursuits regularly should keep one busy, right?

Right.

Busy.

Busy winning?

Not so sure on that one.

Statics allow you to win through them…

…again and again.

Why?

Because you have felt their pulse.

Your fluidity has blended into their being, and you are one with the underlying.

You flow with them.

That’s when you win with them.

Ya…

…that’s when you keep winning with them.

How did you choose your statics?

Choice needs to be fool-proof for you.

Why?

If not, doubt will creep in.

That’s a poisonous crack.

It doesn’t allow you to win with your static.

Replace the static in question, this time without a doubt clouding your mind.

Or, bury your doubt.

Then, go and win.

Statics, is that even a word?

No idea.

It feels right, and I’m using it to channel across a pivotal concept.

That’s all that counts.

🙂

Fearlessness

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Hey, 

There’s no hype…

…on Magic Bull.

No business lunches.

Conferences.

Fees.

Advertising.

Liasoning.

Roadshows.

Magic Bull is a no-nonsense, cut-to-the-chase space.

Why?

That’s how I like it.

A strategy that works under any market conditions, …

… is multi-faceted,…

…  adaptable, …

…  self-adjusting, …

… and comprehensive, …

… doesn’t require artificial crutches… 

… because, …

… it makes…

… money …

… on its own.  

Why is the Magic Bull approach successful in any market, under any conditions?

Because it is based on fearlessness. 

We are not born fearless.

Fear is a natural human instinct innate in us. 

It saves us, many a time. 

However, to make money in the markets, one needs to get rid of fear.

How?

Most of our planning revolves around creating circumstances around ourselves that take fear out of the equation. 

You’ll need to make the effort of going through the material in this space, to get a grip on how Magic Bull eliminates this emotion. 

You see, even if there’s a free lunch in life, it’s not that free that the spoon will lift itself and put the meal down another’s throat. 

A certain minimal effort will need to be made. 

Thing is, hardly anyone makes even that kind of effort. 

Result will be, that not more than a handful will actually read this stuff, and one or two might actually implement it.

Sure. 

Growing Magic Bull’s readership is not my objective.

What do I get from the entire exercise?

Evolution. Writing evolves. The strategy just gets better and better.

Blah blah blah. 

Oh, ya, what happens when a strategy gets it right?

I’ll leave you to figure that out, since that’s what I get. 

And why again?

Because of fearlessness.

One’s cycle of winning in the markets, under any conditions, starts with fearlessness.

Wishing you fearless trading and investing!

🙂

Banking on Infinity

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In a market…

…that promises decent…

…long-term growth, …

… we are able to…

…bank on infinity.

In such a market, the concept of cost-free-ness proves successful …

… in that it is able to generate multibagger outcomes, …

… over the very long-term. 

In such a market, the power of compounding makes itself felt in its full glory.

Also, in such a market, fear goes out the window for the clued-in player, since one is able to…

…bank on infinity.

We are fortunate to be playing in one such market. 

Yes, one such market is our very own. 

Having said that, India has idiosyncrasies, as does every market, and the Indian angle on these is definitely unique. 

The main one is that we’re an emotional lot. 

That is automatically then reflected in our market too. 

High beta. 

Meaning, in normal English, that there will abound huge entry opportunities, and huge exit opportunities, on a regular basis. 

And that, if I may underline, is worth Gold for us in the pursuit of cost-free-ness.

In other words, we will be able to create cost-free-ness year upon year, month upon month, and, at times, like now…

…week upon week.

Is that not…

…wonderful!

Once cost-free-ness is created, we transfer it out of sight, and, banking on infinity, we can just sheer forget about it, focusing our attention on the next round of cost-free-ness-creation.

We can do that because we are in the right type of market for this particular model. 

In fact, this model has been conceptualised for exactly…

…this market. 

Maybe someone has done it before me. Perhaps a lot of people. More successful. Big players. Famous. And that’s huge. I’m happy for them.

However, that’s not the point. 

We’re not in this for the glory of who got there first.

We’re in this for generating long-term wealth by using the concept to the hilt, because it’s working, and promises to do so till into the far-foreseeable future.

Before I sign off for now, there’s one more thing to remember. 

When we bank on infinity, we most hold before our eyes, that the translation of long-term growth into long-term wealth…

…is not linear.

Growth is perceived in spurts of optimism spilling into over-optimism, and these become our exit opportunities, where we exit with our principals, and are left with stacks of cost-free-ness. 

During spurts of pessimism, spilling into sheer depression, prices dip low enough, such that we, once again, get representable entries. 

It’s a neat little cycle that has been playing out since markets started. 

In our own market, this cycle allows us to generate cost-free-ness, again and again, while banking on infinity. 

 

 

 

 

Is Cost-Free-Ness the Holy Grail?

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There is…

…a Holy Grail…

…mentioned in the Holy Bible. 

Also, …

… human capital

… pursues excellence.

I…

… am no exception.

Having stumbled upon…

…cost-free-ness…

…after many knocks in all possible markets, …

… and having developed the concept a tad, …

… I do say to you this.

I say to you, …

… , that cost-free-ness…

… is no holy grail. 

In its pursuit, money does get stuck. And, …

… upon its generation, money does flow, at times, into expensive, “uncatchable” material.

These are the two main mentionable “nuances” associated with the pursuit of cost-free-ness, that one needs to be aware of. 

Money getting stuck? Hmmmm.

If we’re afraid of money getting stuck, we should exit from the market. Any market. Period. 

Don’t be in the game if you can’t take the heat. 

It’s ok. 

Play another game, where you can. 

Perfectly fine.

Now let’s tackle the other one. 

Purists are jumping, I know. 

I can hear them yelling “EXPENSIVE!”

Sure.

Extremely high quality…

…will be expensive. 

One legitimate entry opportunity every ten years can be possible in such underlyings.

When it comes, and if one is having a bad hair week, one can even miss the window.

When it comes, we’ll enter big.

That’s a larger game, non-cost-free initially, and we’ve played it well in March 2020, entering non-cost-free, entering big (because of the available margin of safety), and generating vast amounts of cost-free-ness within a few months, to then ultimately be sitting on large, extremely high-quality & completely cost-free portfolios, perhaps for life.

However, such timelines are anomalies. We’ll pounce upon such chronologies when they happen. Meanwhile, …

…our bread and butter is to generate small amounts of cost-free-ness on a regular basis, day-in-day-out, all year round, …

… and it’s ok to enter extremely high quality with one’s freshly generated small amounts of cost-free-ness, right here right now, at the expensive price. 

Why?

Firstly, it’s not costing you. 

Secondly, when we deploy cost-free-ness into extremely high quality in a long-term-growth-promising market like India’s, it’s probably for life. 

Seen from a perspective of a decade or two, or perhaps three, the currently expensive cost-free entry is legitimate. 

Please do the 10, 20 or 30 year math for India, and you should come to the same conclusion.

Why do we wish to deploy immediately?

Out of sight, out of mind. 

Money has idiosyncrasies. 

The biggest one is that it is spent, in the blink of an eye. 

Better, deploy it, specifically also because your mathematics is okaying a legit entry for the extremely long-term.

And, pray, have you wondered why you will be able to sit on your investment for so long?

Primarily because your entry is cost-free. 

There is no other singular, more overwhelming reason. 

Cost-free-ness overwhelms the mind into sitting on extremely long holds. Try it out for yourself.

That takes care of the second point, …

… and I say to you this, that…

… cost-free-ness, …

… though not the holy grail, …

… could well be the next best market concept available to mankind, for long-term success in the markets.

Wishing you lucrative & highly successful cost-free investing!

🙂

Creating Cost-Free-Ness as a matter of habit

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Upon its creation,…

…cost-free-ness…

…can be put to use…

anywhere.

Expensive stuff?

Not able to catch it?

Eluded you…

…because…

…was too hot…

…to handle..?

And…

… you really, really want it?

Not a problem anymore.

Buy it with your cost-free-ness.

I know, that defies all the rules of margin of safety et al, right?

I mean, do you care?

I don’t.

Why?

What’s stopping me from going out there and creating some more cost-free-ness?

Nothing.

In fact, that’s all I’ll be doing, day in, day out.

There’s a small hitch though, during the creation of the next batch of cost-free-ness.

The just previously created cost-free-ness comes in the way by short-circuiting one’s thought process.

Get it out of sight.

Pickle it.

How?

Pick what you like.

Buying with one’s cost-free-ness that which one isn’t able to otherwise…

…is totally ok, …

…in my opinion.

You pick…

…what you like…

…and nobody’s going to question you.

It’s your cost-free-ness, and you can use it as you please.

Pick…

…buy…

…transfer…

…out of sight…

…forget…

…and then…

…focus…

…on creating…

…the next batch of cost-free-ness.

Eat-sleep-repeat…anyways.

Create-pickle-create more…

…cost-free-ness…

…always…

…as a matter of habit.

Period.

Taking Off with Cost-Free-Ness

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In Buddhism, …

…there’s a saying to the effect, …

…that as the sun rises, …

…the radiance of others stars, …

… to the observer’s eye, …

… pales, …

…into insignificance.

We’re not going to leave an observation like that hanging.

We’re going to extrude it.

When we make a well-managed underlying cost-free, …

…what are the implications, …

… on existing holdings, …

…which are not cost-free yet?

Well, over a large period of time, …

…their comparative impact on the folio…

…will start paling, … into insignificance.

Let’s say we hold x value of cost-free-ness in an underlying.

Rest of the folio’s value is y, with y = let’s say 30x.

Here’s one way go looking at it.

What’s the maximum loss you can incur on your y?

Not going to happen, but it’s 30x.

What’s the maximum gain that can occur on your cost-free holding?

Uncapped. Yeah.

At 15% per annum compounded, which is reasonable to expect for a well-managed company with many other tick-marks, if you hold your cost-free holding for 25 years, it’s value would be ~ 33x (= 1.15^25).

So, what have you done?

You’ve paled your other portion of the folio into “insignificance”, with just one created pocket of cost-free-ness.

Do ponder, what the implications would be, if you were to create a). 10 such pockets, or b). 20, or c). 50, or perhaps even d). 100 such pockets of cost-free-ness?

Can you even imagine where you would then be in 25 years?

a). With 10x of cost-free-ness, you would be at ~ 329x.

b). With 20x of cost-free-ness, you would be at ~ 658x.

c). With 50x of cost-free-ness, you would be at ~ 1645x.

d). With 100x of cost-free-ness, you would be at ~ 3292x.

Now substitute the value of x here.

Arbitrarily, let’s take x = 1.

One rupee.

One thousand.

One lakh.

One million.

One Cr.

Take what suits you.

See where you started from, and see where you’ve then come.

For example, starting with 1L of cost-free-ness, we land up at ~ 16.5 Cr in 25 years for 50 pockets.

Let’s say I have a target of creating 1 million worth of cost-free-ness in 50 pockets.

Where do I stand in 25 years?

At ~ 165 Cr (50 *1Million *1.15^25).

Alone the after tax dividend emerging from this stream would be > 2.5 Cr per annum.

Any takers?

🙂 (Happy Cost-free-ness!)

Are you Positioned?

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What’s our biggest enemy in the markets?

This one’s invariably…

…our Self.

Cut to ’07.

Fancy hotel banquet room, snacks and drinks, chief investment officer of JP Morgan is talking…

…and we’re listening.

My friend and I…

…sitting on profits…

…feeling smug about ourselves…

…young guns…

…ready to conquer the world…

…nothing can stop us now.

Or can it?

“There will always be a correction…”. These words catch my ear.

I raise my hand.

“Yes? The gentleman with the lime-green tie has a question?”

I stand up, and before I know it, I ask the deadly question.

“Don’t you think there’s been a paradigm-shift with regard to India, and that India has decoupled from the rest of the world?”

“How old are you, Sir?”

“37”.

This was ’07, remember?

“I’m going to excuse your question, because you’re young, and have probably experienced the markets for…?”

“3 years”.

“Exactly. That’s why I’ll only answer your question with a smile.”

How controlled.

“You see, globalization is a reality, and decoupling is a myth”.

Myth, really?

“It’s fancy phrases like “paradigm-shift” that catch the inexperienced investor’s imagination, leading to huge market mistakes”.

In these few sentences, my entire comprehension of markets was blown up and thrown out the window.

And that would have been a good thing…

…had I listened.

Such is the arrogance of “youth”, that “youth” doesn’t listen.

Soon, the ’08 crash happened.

I lost big time.

Was humbled.

Took me a long time to get back and stabilize.

I remember my stomach churning and my unwillingness to meet people as markets crashed to lower and lower levels.

I almost couldn’t take it.

We are our worst enemies.

What’s it going to be this market high?

We’ve learnt, and are positioned.

However, there will be newbies (like we were) who are going to go through this chain of events.

What buzz-words or phrases will catch their imagination?

BitCoin?

Liquidity?

Vaccine?

Quantitative Easing?

FIIs?

Pending rally in small-caps?

There’s a new cocktail doing the rounds this time around.

This cocktail will ensnare.

Even the topmost analysts are beginning to feel that a correction could take some time coming.

Some weeks ago, most felt that a correction could happen anytime now.

Player psychology is set for the cocktail to do its work.

Then one needs a pinprick.

In ’08 this was perhaps Lehman on the world scale and the Reliance Power IPO in India.

What’s it going to be this time?

It doesn’t matter.

Remember? There will always be a correction.

Are you positioned?

Positioned

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By now…

…, we are positioned.

The persistence of high price-levels…

…has led us to take appropriate action.

One after another, we are washing our market mistakes clean.

What remains, is cost-free-ness, in high-quality holdings.

We’ve then also helped our relatives and friends attain the same state of market-being.

MFs?

Now cost-free.

ULIPs?

Gotten them to money-market.

Debt market holdings?

No more debt market for a while.

Bond-yields are rising.

There’ve been blow-ups. Boys @ FT and Nippon take a bow.

Parking where?

Fixed deposits.

Why?

Not in it for returns.

Just to park, safely.

We’re sticklers for parking safely.

Loss of interest will be made up within days of opportunity, into which funds then flow, and then some.

One can now say…

,…safely…

,…that we’re positioned.

What happens from this point onwards?

How many days has the main sensory index spent at PEs of 35+ within the last 5000 days?

Yeah, right?

Small-cap rally still due?

That’s what everyone feels, right?

That’s the point.

Leave the masses hanging onto something they’re expecting.

If it doesn’t happen, they’re what?

Left hanging. Devil takes the hind-most.

Please do your math, and please position yourself too, appropriately.

What if markets go on rising?

Sure, that’s a possibility, perhaps for a while.

Simple rule.

No level, no entry.

We know how to sit.

On our holdings, and then…

…on our cost-free-ness.

Now, capital will only move…

…upon opportunity.

And the pipe-line’s ample, our positioning has seen to that.

Come something like March ’20, and we’ll blast the flow of our pipeline.

Oh, another thing.

Notice the speed of moves, nowadays?

It’s fast, isn’t it?

As in markets are efficient, till they’re not, and then they’re efficient again, and then they’re not, back and forth, to and fro, all very fast.

Meaning what?

Meaning, that there will be ample opportunities, more sooner than later, and that till there are inefficiencies on the down-side,…

…we sit tight…

…to maximize the impact of our positioning.

Supremacy of Cost-Free-Ness makes itself felt in Equity alone

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The impact of cost-free-ness stretches across all asset-classes…

… that are long-term-holdable.

Equity, Gold, Real-Estate, etc., …

… with perhaps bonds being a question mark with regard to applicability.

Why is cost-free-ness not that valid a concept for short-term-holds?

That’s because multibagger appreciation of a short-term-hold is not realistically expectable.

Then, with gold and real-estate, there are certain nuances, which need to be mentioned.

Gold doesn’t adjust itself for inflation. The 100-year appreciation in Gold is 1% per annum compounded, adjusted for inflation. We can make some Gold cost-free, and then hold the cost-free Gold for the long-term. However, to expect it to burgeon into a multibagger is too much. There’s no human capital behind Gold, no intelligently thinking minds. Also, Gold is commodity-cyclic in nature. Forget about all these technical arguments. Sheer 100-year History has taught us not to think in multibagger terms with regard to Gold. Let’s say we held it for the touted 100 years. Well, then, 1 x 1.01 ^ 100 = 2.70. We’re then holding a 2.7 bagger after 100 years. Safety risk too. Naehhh, not interested.

What’s the deal with real-estate? No human capital behind it, again. Thus, the asset-class doesn’t auto-adjust for inflation. Also, we’re not taking any cash-component into consideration. What does that make real-estate behave like, in the long-term, in a regime like now? Perhaps like a glorified fixed-deposit. Or, even, perhaps, like a high single-digit yielding bond. Now minus inflation. Hmmm, after the math, real-estate becomes an asset-class that yields 2-3% per annum compounded, adjusted for inflation, let’s say 2.5%. Minus the half percent for its management (which is a hassle, btw). Well, then, 1 x 1.02 ^ 100 = 7.24. We’re left holding a 7-bagger after 100 years. With hassle in the equation, 100 years is too much effort for a 7-bagger. Not interested either.

Now let’s look at Equity. Human capital is behind it. Equity is hassle-free with regard to its management. Equity auto-adjusts for inflation. All Equity that ever existed, including companies that have gone bust, has shown a return of 6% per annum compounded, adjusted for inflation. Taking companies out that don’t exist anymore, Equity has given a return of 11% per annum compounded, adjusted for inflation, over the long-term. Intelligently chosen Equity, with proper due diligence, is extremely capable of giving a return in the range of 15% per annum compounded, adjusted for inflation, in the long-term. Let’s do the numbers. 1 x 1.06 ^ 100 = 339.30; 1 x 1.11 ^ 100 = 34,064.28; 1 x 1.15 ^ 100 = 11,74,313.45.

These numbers don’t need crunching.

It’s pretty clear, that the supremacy of cost-free-ness makes itself felt in long-term held, cost-free Equity.

I wish for you happy, long-term cost-free-ness!

🙂