Satisfaction

Satisfied?

No?

Why not?

Trading badly?

No.

Investing badly?

No.

Then what?

Can’t pinpoint.

I see. 

I’ll tell you what.

What?

I’ll tell you what I think it is.

How would you know?

It’s an educated guess. 

Ok, go ahead.

Are you doing what you’ve come to do?

Meaning?

You’re in finance, correct?

Correct.

Do you feel happy about being in finance?

Yes. 

In finance, how many things are you doing?

Many.

How many?

Nine. Maybe ten. 

What do you think is the reason for your dissatisfaction? It’s not results, you said. Look in the ten things. Is there one thing amongst them that you’ve come to do?

Yes. 

Are you doing enough of it?

No. 

Why not?

I’ve just started developing it. It’s risky. I’ve started slowly. 

When’re you going to scale up?

Over the next twenty years.

Huh?

Yeah, because sky’s the limit. I’m going to scale up very slowly, and always as a single digit percentage of my total networth.

So over the next ten years, will you have reached a substantial level.

Yes, of course. 

Do you think you’ll still be dissatisfied?

No. 

There you go. 

Market-maker

Manipulation. 

Recognition. 

Alignment. 

Trade. 

Spike. 

Out. 

How does one recognize manipulation? 

On the charts. 

After eyeballing many many charts, one gets a feel for it. 

Manipulated strike-points become pivot points. 

It’s a push from a fund-heavy conglomerate. Push becomes a cascade as traders join in. 

After the spike, the market-maker pulls out funds so cleverly that rates don’t fall. 

Funds are now ready for the next push. The same funds. 

Repeat. Same loop. 

Till strategy fails. 

Then, maker starts manipulating in opposite direction. 

Life’s busy for the maker. 

There’s trouble with the authorities. Ends on a compromise. Maker will step in when authorities need to prop the market. 

No maker – no market. 

Why do you think there’s always a quote to your underlying? 

Because of the maker. 

After a market has crossed critical mass, makers sit on their spikes. They roll-over on expiries, and enjoy the ride. 

Ride is not always smooth. 

Makers often get greedy and break their own rules. Functioning with no safeties, many makers get wiped out. To add to their woes, a large percentage functions on borrowed money. 

Makers have an electronic life, which loops from cellphone to terminal and back. It’s a life that’s punctuated by headaches, physical and mental. 

Don’t envy a maker. 

He or she is just doing his or her job. That’s all. 

Trade the maker. 

The Thing with Focus

Depth. 

Confidence. 

Proper entry. 

Decent exit, if required. 

Understanding. 

Lack of panic. 

Overall picture. 

These are some of the things that focus is capable of giving. 

Swagger? 

One-basket attitude. 

Over-depth. 

Narrow-mindedness. 

Loss of overall picture due to over-chewing one subject. 

Robotic mindset leading to freeze. 

Yeah, these too. Within the capabilities of focus. 

We want the former qualities. 

We’re discarding the latter ones. If they come knocking at our doorstep, we’re shooing them away. 

We spoke about diversified focus. 

Whatever we do in life, let’s do it well. 

We’ll have our many baskets. Why should we take the risk of having just one basket? 

And, into our many baskets, we’ll delve deep-deep-deep. 

Period. 

Sheer Moat Investing is not Antifragile 

There we go again. 

That word. 

It’s not going to leave us. 

Nicholas Nassim Taleb has coined together what is possibly the market-word of the century. 

Antifragile. 

We’re equity-people. 

We want to remain so. 

We don’t wish to desert equity just because it is a fragile asset-class by itself. 

No. 

We wish to make our equity-foray as antifragile as possible. 

First-up, we need to understand, that when panic sets in, everything falls. 

The fearful weak hand doesn’t differentiate between a gem and a donkey-stock. He or she just sells and sells alike. 

Second-up, we need to comprehend that this is the age of shocks. There will be shocks. Shock after shock after shock. Such are the times. Please acknowledge this, and digest it. 

To make our equity-play antifragile, we’ll need to incorporate solid strategies to account for above two facts. 

We love moats, right? 

No problem. 

We’ll keep our moats. 

Just wait for moat-stocks to show value. Then, we’ll pick them up. 

We go in during the aftermath of a shock. Otherwise, we don’t. 

We go in with small quanta. Time after time after time. 

Voila. 

We’re  already sufficiently antifragile. 

No magic. 

Just sheer common sense. 

We’re still buying quality stocks. 

We’re buying them when they’re not fragile, or lesser fragile. 

We’re going in each time with minute quanta such that the absence of these quanta (after they’ve gone in) doesn’t alter our financial lives. We’re saving the rest of our pickled corpus for the next shock, after which the gem-stock will be yet lesser fragile. 

Yes, we’re averaging down, only because we’re dealing with gems. We’ll never average down with donkey-stocks. We might trade these, averaging up. We won’t be investing in them. 

Thus, we asymptotically approach antifragility in a gem-stock. 

Over time, after many cycles, the antifragile bottom-level of the gem-stock should be moving significantly upwards. 

Gem-stock upon gem-stock upon gem-stock. 

We’re done already. 

The Thing with Sugar and Dairy

It’s common knowledge now. 

Cancer cells love sugar and dairy. 

In fact, they love them so much, that they grow ten (?) times faster in their presence. 

Just act as if the question mark isn’t there. 

I’ve put it there because I’m not sure whether the number should be eleven, or nine, or what have you. 

However, the numbers are deadly. 

Shocker, right?

Spent my childhood gobbling sugar and gulping dairy. Didn’t know any better. 

Now, only dairy going in (hopefully) is the good dairy. Yoghurt. 

Only sugar in diet is the good sugar. Honey. 

At least, that’s the goal. 

What makes these two “good”?

There’s something bio in them. 

Yoghurt’s got bacteria. They’re the good bacteria. They cleanse one’s system. Cancer cells don’t like them, because probiotic bacteria probably break them down. 

Honey’s got the saliva of bees, containing vital enzymes. These catalyse various biochemical and metabolic processes. Cancer cells don’t like them either. They like the sweetness of honey, but not these enzymes. So, honey’s a tad less dangerous.

The bio-portion saves the day. It’s for a good cause. It’s purpose is friendly, and positive. 

Cut to equity. 

Where does one look for terminal disease?

In balance-sheets and annual reports. 

Debt. 

Promoter ego.

Fraud. Scam. Manipulation. 

Creative accounting.

These are some of the things that can cause terminal disease. 

All of them might exist, at some level, in any given balance-sheet and / or annual report. 

What we need to gauge in our minds are the levels. 

Is any level alarming enough to cause terminal disease, or for that matter just disease?

Bearable debt leading to growth is even a good thing. It’s like a tonic. Unbearable debt leads to terminal disease. We need to stay away from a stock with unbearable debt on its balance-sheet.

Nothing functions without ego. I am. Therefore I do. However, an overbearing and overambitious ego leads to disastrous decisions that can cause terminal disease. We need to stay away from companies whose promoters have overbearing, self-promoting and overambitious egos. Such promoters don’t even realize when they’re functioning in self-destruct mode. Am not going to take any names here, but you get the gist. 

Frauds, scams and manipulations come under the category of “sheer disease that’s already terminal or just one step away from going terminal”. Upon finding them, needless to say, avoid the stock.  

Accounting. Sure, everyone’s busy getting creative here. We need to separate positive accounting from its negative counterpart. 

Accounting that leads to fund-availability at the time of need and results in value-creation for the shareholder is to be welcomed. This kind of accounting does not cause terminal disease. It creates a detour that strengthens the company overall in the long run. 

Such accounting whose sole purpose is to deceive the shareholder and benefit the promoter is a very big red flag. This kind of accounting leads to terminal disease.

While zeroing in on a quality stock, you’re simultaneously ensuring longevity-enhancing conditions. 

In the process, you’re automatically ensuring that your portfolio accumulates one gem after another. 

Wishing for you happy and successful investing. 

🙂

Looking for a Deal-Breaker

I look. 

Don’t find it. 

Look again. 

And again. 

Keep looking. 

Tired. 

Eyes ache. 

Sleepy. 

Stop. 

Resume next morning. 

Still nothing. 

So on and so forth. 

Few days. 

Absolutely nothing. 

Buy the stock.

Yes. 

That’s the chronology. 

After zeroing in on a stock…

…that’s the chronology. 

Am I happy the search was unsuccessful?

You bet!

Am I spent?

Yawn…yes. 

Was it worth it?

Of course. I now own a quality stock. 

What’s happened before?

Stockscreener. 

Stock pops up. One that appeals to me. 

Check it for value. 

Pass.

Check it for moat.

Pass. 

Look for deal-breaker. 

Yeah, final step. 

Takes the longest. 

It’s boiled down to a yes or no. 

One’s going to holding the stock for a long, long time. 

This is when one is asking every cell in one’s body. 

Yes or no?

No deal-breaker?

Fine. 

Going for it. 

It’s a yes. 

What’s the Advantage of “Out of Sight”?

Trigger-fingers?

We are.

At some stage or the other, in our market-life. 

Is it good?

No. 

Why?

When we are in this mode, we shoot. 

We don’t look too much. 

We just shoot.

Why?

Either we don’t know any better. 

Or, we’re not able to control the impulse. 

We want to do something. 

We want action. 

If we’re not getting it, we forcefully create it. 

Is this wrong?

You bet. 

How do we rectify it?

Simple. 

Huh?

Yeah, just use the “out of sight” principle. 

Pray what’s that?

Well, if funds hit your bank account, pick up your smart-device and transfer them online to your liquid fund account. 

Advantage?

Funds are not present in your feeder account. 

Try firing now.

Nothing happens. 

No funds. 

However, the funds are not far away. In fact they are just a few button-clicks away. 

These few button-clicks are activation-barrier enough. 

They make you stop and think. 

You do your proper due diligence before moving them out of your liquid mutual fund account back to your feeder account. 

You use them for proper investing opportunities. 

You’re not trigger-happy anymore. 

All it took was a simple trick. 

Use it. 

There’s no law against liquid mutual fund accounts. Probably never will be.

Those five or six button-clicks have converted you from trigger-fingers to duly diligent!

🙂

Who gets 5 Stars for Fund Movement?

Movement?

Or lack of movement?

What will you have?

Who discusses such a topic?

Is this lame?

Is it that we have nothing better to do?

NO.

Fund movement is a central topic.

Funds are blood.

You need to be master of their movement. Winners are.

What’s there to discuss?

Aren’t things obvious?

Well, no.

To most people, things wrt movement of funds are everything else but obvious.

No pipelines are created.

No sheds for storage.

No safety mode in the firing gun.

Gun fires as soon as the load is available.

You see, all this leads to losing positions.

How?

One should not fire as soon as one can load.

One should fire when one sees a ripe target for the taking.

What should one do till then?

Store the load. Elsewhere. Give it some light work to do. Put it in a position that it can make its way easily back to you as soon as you call it in.

When do you call it in?

When you see the big fat target.

Again, isn’t all this obvious?

Again, no, to most people, no, no, no.

Most people are busy getting sophisticated.

They don’t focus on the basics.

Basics win you the game.

Sophistication might deceive you into the false belief that you are winning or are one up, but because you’ve forgotten to focus on the basics, chances are high that you’ll end up losing.

So here’s what one needs to do.

No gun in the house.

No load in the house.

Big fat target. Identify.

Go to load. Load = funds.

Direct load to gun. This is the movement process. It happens online. Funds are directed to a website.

Fire. Pull the trigger on the concerned website. Yeah, gun’s in cyber-space.

Wait for next opportunity.

Repeat.

So on and so forth.

This way, due to sharply controlled fund movement, one creates positions with high potential to win.

Come on, get your basics in order. Leave sophistication to the losers.

🙂

Fitting

I have this Wills fleece sweat-shirt since ’98.

Love it.

It’s a fit.

Can wear it for anything.

I’m sure you own or do something that just fits.

Very few people in the market understand the value of a fit.

What does a fit feel like?

It comes naturally.

No prompting or pushing.

It’s the essence of your strategy which resonates with you.

A fit holds you and moves you forward.

It makes you money till it continues to fit.

The ideal fit lasts a lifetime.

Nuances.

Everything and everyone has nuances.

A fit happens when nuances are out of the way. They’ve been dealt with in a full and final manner. They appeared, sure enough, got knocked out, which is when they disappeared. What remained was pure you and your fit. The two of you united.

Why is this fit so important?

We’ve spoken about the money angle. A fit makes you money.

There’s the family angle. A fit doesn’t let your market-life harm your family-life. Hence it ensures its own longevity by vitalizing your market-life and also your mental health.

A fit then possesses the versatility to deal with stumbling blocks along the path. Travel? You implement your strategy successfully despite travel. Schedule? Fit works around it. Diet? Fit changes diet, till diet fits.

Don’t underestimate the power of a fit.

🙂

Decoupling One o Two

Trade on.

Market forces.

You.

Connection.

Attenuation.

Life normal.

This is the real decoupling.

What was the other decoupling?

The myth one?

Myth?

I mean, Switzerland is kinda financially decoupled. The CHF just keeps its own despite anything.

Israel is also sort of decoupled. Despite everything. Functions on its own tangent. Matter of opinion.

These are exceptions. They prove the norm.

There are remote chances these exceptions won’t exist tomorrow. Having said that, let’s hope nothing like that ever happens.

However, permanent decoupling is mostly a myth. We’ll be better off not incorporating it into our investment or trading strategy.

Decoupling one o two is a different matter.

It is very welcome.

It gives longevity and harmony to a trader’s market- and normal-life.

Happy trading!

🙂

What’s it Gonna Take Today, Pal?

Indicators.

Fibonacci.

Moving averages.

Price action.

Isn’t everyone following all this?

Do the markets behave accordingly?

No. Not really. Sometimes, sure. Generally, no. Just my opinion.

So?

Where does that leave you?

How do you plan your trade entry?

There’s not much planning to it really.

Oh yeah?

Pray on what basis is one to enter then?

Study.

Then overall feel.

What?

Yes.

Gumption?

So?

With no study, direction’s a 50:50.

With study leading to overall feel translating into gumption, this ratio could well become 55:45.

You don’t need more.

Blackjack odds for the card-counter are perhaps 53:47 at peak.

Ok, so you’ve got your 55:45, what then?

Trade management.

You make your money managing your trade.

Formula?

Simple one.

You cut the wrong call. Nip it in the bud.

Let the right call continue being even more right.

Learn, perhaps the hard way, to let the winner continue winning.

Trade might reverse.

That’s the risk you have to take, to win more.

There are no free lunches in life.

Making the Skew – work for you

Anomalies.

Anomalies?

Opportunities.

Yeah.

It’s all about perspective.

Just align your perspective.

Get into the skin of the anomaly.

Why?

You were in this to make money, right?

So chop chop.

Anomalies are like waves.

They swell… and recede.

If you’ve missed one, wait for its one-offset to start swelling.

Oh yeah, forgot to reiterate, you’re out before it recedes.

That would be a great trade.

Getting in well before the swell and staying in would be an investment entry-strategy.

Getting out after a swell would be an investment exit-strategy.

Use your imagination.

Wishing you a lucrative market-footprint!

🙂

How I Wish to Trade

Tension?

No.

Hassle-free?

Yes.

Profit?

Yes.

Fun?

Too. 

I want it to make me want to come back. 

In the background?

Yes.

Part of my normal life?

No. 

Disturbing me in the night?

No?

Terminal on – ideally once a day. Max twice. That’s it. 

Protection?

Yes. Stops for forex. Hedges for options. No naked options. 

Exits?

Make me exit. Yeah, Mrs. Market needs to make me exit. I don’t wish to exit on my own. She needs to throw me out of a trade. 

Fear?

None.

Why?

Bread and butter secured through other-than-trading instruments.

Trading with surplus.

Surplus can potentially become zero. Will I still take the next trade?

Yes. After scanning strategy for errors.

Loss?

Will take small ones, again and again and again. That’s the only way to find the large profit moves. 

Once profit sets in, what then?

Nothing then. 

Normal. 

Behaving as if nothing has happened. 

Giving the trade room. 

It needs to make even more profit. 

It is a potential multi-x trade. Why should I nip it in the bud? As I said, make me exit. Throw me out. 

Family life?

Balanced.

Remnant anger from trading?

None. 

When yes, stop trading. Trading should never be allowed to disturb family life. 

Evolutionary?

Forever. Learning, learning, learning. 

Bias? 

None. 

News?

No. 

Tips?

None. 

Peers?

Maybe to start a strategy with. After strategy is made to fit – no peers any more. 

Discussion?

None. Hopefully. 

Don’t like to discuss trades after terminal shuts. 

Losses piling up?

Review strategy. Discard, renew, implement, trade again. 

Profits piling up?

Great. Do nothing. 

Are you getting the gist?

Similarly, you need to figure out how you might want to trade.

Many things I might be doing will not suit you automatically. 

You need to make things fit. 

If something doesn’t fit, discard it. 

Look for something new that might fit. 

Make a trading strategy that’s lucrative and gels with you and your lifestyle and environment. 

Such a strategy will blossom. For you. 

The Collapse of Mt Gox and its Meaning for You

February 2014.

Mt Gox collapses.

It’s not a mountain.

Mountains don’t collapse.

The largest Bitcoin exchange in the world – gone.

What happened?

Hazy area.

If one reads through the company’s press releases, it seems they themselves are not sure. Or, they’re trying to cover up that they got hacked, big-time.

Company’s claiming a black-swan event. Software goes into a crazy loop. Transaction shows as failed. However, system releases Bitcoin. Do this over and over again. You’re down 750k Bitcoin. Half a billion dollars. Hmmmmmmmmmm. Not buying it.

It’s probably not an inside job. Trail would’ve been too hot.

They’ve actually and probably gotten hacked. Possibly in the earlier days. Perhaps they tried to cover it up for the longest time, till it was no longer possible. There came a time then, it would seem, to throw in the towel and declare bankruptcy, coupled with the release of an unbelievable explanation.

Do the math. Conjecture.

We are down to conjecture, after an abominable event like this, where retail investors along with handlers, dealers and the works get fried.

For heaven’s sake.

Makes you rethink Bitcoin majorly.

Diversification is a safe thing. However, not at the cost of converting your computer into a big red flag.

There are two kinds of computers in the world. Those with Bitcoin or its cousins, and those without.

Currently, those with are targets.

There’s no better system of storing Bitcoin.

Banks aren’t taking it up systematically.

Dollar lobby is too strong.

It’s not letting Bitcoin settle.

Who was behind the possible hack?

You tell me.

Why would anyone sacrifice one’s sleep?

No tension, please.

We don’t wish to lose sleep over the fact that our computer might get hacked in the night. Also, will the cousin’s ever sort themselves out?

If criminals could hack Mt Gox, what are the chances of one’s desktop surviving?

Yeah, where does that leave you?

Till Bitcoin gets accepted more systematically, and till mainstream banks start storing it for you in their cyber-lockers, I’m afraid this leaves you off the Bitcoin demand-list.

Yeah, safety first.

What about the Spark?

Yeah, what about it?

Versatile word.

Used in spy mission abort code phrases.

Romance.

Automotive engineering.

Electrical engineering.

Stocks.

Stocks?

Stocks.

Whacko?

No.

Explain.

Ok.

Stockscreener.

Yeah?

Spits out list.

Yeah.

Eyeballing.

Ya.

Spark? Look into stock.

No spark anywhere, in the whole list? Redefine screener. Screen again.

This is a typical chronology of the beginning of stock selection.

Of course, now follows deep due diligence.

However, what are you DDing in?

That’s decided by the spark.

Remember the word.

Stop-Loss vs Hedge – what’s what and how?

Insurance.

Makes you sleep easy.

Simultaneously, you are able to take a calculated risk.

Risk?

Why should you take a risk?

No risk no gain.

It’s as simple as that.

You have to put something on the line to possibly gain something.

That’s what market activity is all about.

You’re doing this all the time.

Day in, day out.

You’ve become used to a steady and dynamic LINE. Your line doesn’t harm you anymore. It doesn’t disrupt your life.

Well done.

How did you achieve this?

By using stops and hedges.

What’s the difference?

The difference is technical, and then practical.

For some mindsets and positions, a stop is more suited.

When you don’t mind exposing your market-play, and want to close your terminal and do other stuff, use a stop.

You get up from your desk, engage in other activity, and have forgotten about your position, because now you don’t need to tend to its needs for 24 hours, for example.

Great.

Your position will either play out, or it won’t.

If it doesn’t, your stop will automatically throw you out of your position.

The level of the stop is digestible.

Next morning, you simply move on to a new trade.

Let’s say you don’t want to to expose your market play, or, in some cases, when you don’t need to expose your market play – how do you then insure yourself?

Hedge.

A hedge maintains general market neutrality.

It leaves windows open for what-if scenarios.

For example, the trade could make money, and then the hedge could make money.

Or, vice-versa. As in lose-lose. Sure, there are win-loss and loss-win scenarios too.

The starting point is somewhat neutral, and then there are permutations and combinations.

Some people prefer this kind of play.

They like the possibility of maximizing profit from the total position at a calculated higher risk.

Also fine.

Generally, the idea is for your main position to make money and your hedge to lose money.

It might or might not play out like that.

Some like this uncertainty and know how to benefit from it.

A stop is sure-shot and straight-forward. It is low-risk as long as it is digestible.

Hedges open you to the risks of a meta-game. Play becomes more interesting, consuming, and possibly, more profitable, for experienced hedgers.

In my opinion, a hedge is slightly higher in risk than a stop.

However, both entities lower overall risk.

Currency pair forex trades are typically taken with a stop. However, they can be hedged too.

Market-neutral option-trades are typically taken using hedges.

Step into a trade with either or, for peace of mind and career longevity.

Cheers.

🙂

Is it a Crime?

With due respect to Sade, no, the next words are not going to be “to say that i love you…”.

Is it a crime? To be oneself? For you to be you?

No.

Then why?

Why what?

Why can’t you be you?

You being you is a winning combination in the markets. 

In any market. 

Why?

When you’ve recognised who you are, you invest and / or trade as per your risk-profile. 

More than half the battle is won here already. 

You’re not trying to emulate an RJ, or a WB, or CM or BG for that matter. 

You’re too busy being UU.

When does that happen?

After you’ve been there and done that. 

After you’ve had your fill of loss-making transactions. 

Yeah, you tried to do an RJ, but couldn’t sleep the night 40% down on your position, and then you folded. 

RJ probably sleeps well, even if 40-down on a position. That’s his risk-profile. When equity markets were badly beaten some years ago, I’ve seen him on TV saying that his bread and butter is safe, and his grossly hammered positions won’t be affecting his day to day life, or something to that effect. He obviously had no intentions of folding. That’s RJ. Not you. So, don’t do an RJ. Do a you. 

What happens in the markets when you behave like you really are?

You take digestible risks. Digestible for you. 

No risk, no gain. Remember. You’ll have to put something at stake, to be able to gain. 

You take a risk, again, and again, and again. 

Some play out well. Some badly. 

You nip the bad ones in the bud. 

You let the good ones play out to their logical conclusion. 

This is already a winning strategy. 

Cheers!

🙂

 

 

 

What is an Antifragile approach to Equity?

Taleb’s term “antifragile” is here to stay.

If my understanding is correct, an asset class that shows more upside than downside upon the onset of shock in this age of shocks – is termed as antifragile.

So what’s going to happen to us Equity people?

Is Equity a fragile asset class?

Let’s turn above question upon its head.

What about our approach?

Yes, our approach can make Equity antifragile for us.

We don’t need to pack our bags and switch to another asset class.

We just approach Equity in an antifragile fashion. Period.

Well, aren’t we already? Margin of safety and all that.

Sure. We’ll just refine what we’ve already got, add a bit of stuff, and come out with the antifragile strategy.

So, quality.

Management.

Applicability to the times.

Scalability.

Value.

Fundamentals.

Blah blah blah.

You’ve done all your research.

You’ve found a plum stock.

You’re getting margin of safety.

Lovely.

What’s missing?

Entry.

Right.

You don’t enter with a bang.

You enter at various times, again and again, in small quanta.

What are these times?

You enter in the aftermath of shocks.

There will be many shocks.

This is the age of shocks.

You enter when the stock is at its antifragile-most. For that time period. It is showing maximal upside. Minimal downside. Fundamentals are plum. Shock’s beaten it down. You enter, slightly. Put yourself in a position to enter many, many times, over many years, upon shock after shock. This automatically means that entry quantum is small. This also means you’re doing an SIP where the S stands for your own system (with the I being for investment and the P for plan).

Now let’s fine-fine-tune.

Don’t put more than 0.5% of your networth into any one stock, ever. Adjust this figure for yourself. Then adjust entry quantum for yourself.

Don’t enter into more than 20-30 stocks. Again, adjust to comfort level.

Remain doable.

If you’re full up, and something comes along which you need to enter at all costs, discard a stock you’re liking the least.

Have your focus-diversified portfolio (FDP) going on the side, apart from Equity.

Congratulations, you just made Equity antifragile for yourself.

🙂

Focused Diversification : Mantra for all Times

I’m more into focus.

One can focus on one thing at a time.

Agreed.

What if after that one thing starts running, it doesn’t require any more focus?

Wow.

Then I focus on another thing.

Get it running.

Then another.

Till my focus window is full.

Let me tell you about my focus window.

I focus on cash, debt, equity, forex, gold, real-estate, arbitrage, and options.

With that, my professional focus in finance is full full full.

I get something running.

That’s it.

Then I don’t need to be with it. Mostly.

Let me run you through.

1). Cash – Bind it in a worry-free and accessible manner. Done.

2). Debt – Study the underlying very thoroughly. Reject 10 underlyings. Take up the 11th which passes all criteria. Be happy with a slightly better than FD-return. Done.

3). Equity – Invest for life. Study till you drop the stock or take it up. Only invest in what meets all criteria and offers margin of safety at time of investing. On top of that – SIP (systematic investment plan). Done.

4). Forex – Get a software robot to trade it for you. Or some human-capital. All available online. Requires a bit of fine-tuning. Keep tuning till you start making a return. Done.

5). Gold – Buy physical gold. Research your source. Needs to be impeccable. Bullion. Coins. SIP. Accessible. No jewellery. Done.

6). Real-estate – Make your real-estate yield you an income. Regular income? Done.

7). Arbitrage – Understand what this is, and why it gives you a tax benefit. Get an online MF account going with Kotak MF or DWS. Divert some funds into their arbitrage MF, either or. I prefer Kotak. Monthly dividend payout option. Done.

8). Options – Get the option-strategy going. You don’t require a desktop. Mobile is sufficient. All you now need to do is take care of square-off. On mobile. This means a slightly higher level of engagement than the above avenues. Only slightly. Are you ok with that? Fine. Done.

In a flow, it’s all doable.

And, you remain focused.

Why all this?

Times demand it. You never know what might come in handy, and when.

Yeah, times are tough.

However, you are tougher.

To use Nassim Nicholas Taleb’s terminology, you are antifragile.

Let it come, then we’ll see…

Looking around for an opportunity?

Or letting one come?

Does it matter?

Is there a difference?

You bet!

When you’re looking around, you could be in a hurry. You want to get it over and done with.

Big mistake.

You are vulnerable.

Entry price will be expensive.

Your adversary feels your anxiety and jacks up entry level.

Quality? What quality? You’re in a hurry, right?

Don’t be.

Hurry spoils the curry.

Let the investment come to you.

It will.

Brokers are restless. They want to sell. They’ll knock at your doorstep once they know your funds situation. And, believe me, they won’t ask you about your funds situation. They’ll ask your banker. In fact, your banker could well be on retainer. He’ll make sure that high quality info ups his retainer fee. That’s how it works today. Don’t believe me? How come so many people have your cell number? Did you give it to them? No? Information is a commodity. It can be bought for a price.

So, wait.

Block your surplus funds as fixed deposits.

Get an overdraft going for one fixed deposit.

Delve into your normal activities.

Now you’re sitting pretty.

An opportunity comes.

It’s cr*p. Broker’s hoping you’ll bite into the nonsense being sold.

You tell the broker to buzz off. Lack of hurry gives you the clarity required to act like this.

Something lucrative comes along. Price is right. You overdraft on your FD. Yeah, it’s ok to pay the price for quality with margin of safety.

You can always fill in the overdrafted amount as new funds accumulate. The nominal interest paid for ODing is called opportunity fees. It’s chicken-feed. Just forget about it.

The best investments in life are worth waiting for.