Category Archives: Correction

Cluster of Blessings

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Hey.

We realized…

…that what we’re doing…

…is anti-fragile in nature.

How, you ask.

Since what we’re doing is in stocks. Equity. Robust at best. Not anti-fragile.

?

Well, take a definition, and expand it a bit, and the definition starts to make broader sense. One draws on the definition, and creates a utility for that definition in one’s own line of work. That’s what we’ve done. Creator of the term anti-fragile, Mr. Taleb, could turn around and say, hey, you’ve just taken my thing and used it in your thing. Of course we’ve done that. We stand on the shoulders of giants, giants like Mr. Taleb. And now we’ve got his thing, projecting onto our thing, making something new out of our thing. Bottomline, we have a thing that is anti-fragile, and Taleb gets credit for his thing starting to develop universality, at least across another asset class.

So how are we doing stocks in an anti-fragile manner?

We benefit from chaos, volatility, uncertainty, fear and the like.

How?

Before these conditions cause mayhem in stocks, we have gravitated, in a growth market, over the years, to exhibit meaningful holding power. Both mentally, and financially. So, what do we possess before topsy turvy conditions, like now? Holding power.

What else are we armed with?

Liquidity.

Liquidity is a state of mind. Our state of mind causes us to be liquid at the right time.

Next.

We have…

…high conviction. In a basket of market players. Our due diligence regimen, over decades, has allowed us the means to recognize such stocks. In these, we have developed what?

High conviction.

We are itching to buy these underlyings, at huge…

…margins of safety.

Cut to current conditions. Chaos, volatility, uncertainty, fear, war, maniac, missiles, nuclear threat and what have you.

The margin of safety that we look for starts to abound. We accumulate high conviction underlyings, over multiple buys, ending up with low buying averages.

As conditions amplify, buying averages get lower. We are benefiting from chaotic conditions in that our buying averages are getting lower and lower.

Perceptions change for the better. They always do. Gone is 1929, where it took the better part of two decades for circumstances to change. Till 2019, one used to talk about max 15 to 18 months being the length of a bear market. Information flows very fast. When efficient, whenever that is, markets are then super-efficient. Factoring in is taking days, perhaps only a day. A change in perception is incorporating very, very fast. Frankly, we’re talking months, not even years. And, we’re mentally and financially prepared, with our holding power, for a time-frame measured in years.

Comes the turnaround. Sooner than later, such are the times.

Our low buying averages multiply fast. In fact, very fast. The lower they are, in our high conviction holdings, the faster they multiply. We start to hold many 2-baggers in 3 to 6 months, for example.

Now we call the shots. In fact, our very low buying averages do.

We can choose to pull our principal out, full 100%, at 2x, 3x, 4x, 5x or what have you, depending on our muse.

The moment we go cost-free, we have moved into 100% margin of safety. Nothing can break our cost-free-ness (except ourselves). We can choose to leave our cost-free-ness to our children, by which time it will have majorly compounded. Since we have no principal invested in our cost-free-ness, we won’t be in a hurry to liquidate it. In fact, we won’t even be looking at it.

We’re calling our low buying averages anti-fragile. The lower they get, the more anti-fragile they behave in the aftermath of chaos. We’re adding an allowance towards fast incorporation of change in perception to the definition of anti-fragile, because of which our inherently anti-fragile low buying averages get to benefit from their anti-fragile nature (thanks again to Nassim Nicholas Taleb for giving us the framework of anti-fragility).

And what are we calling our cost-free-ness? I mean, it is seeming to be beyond fragility. It is giving benefit beyond any scale. Generational benefit. I don’t have a name for this effect, yet.

Our cost-free-ness has generated generational well-being. It has allowed us to not liquidate it, by the state of mind it has caused in us. It has allowed itself to be passed on.

Hmmm. Taking a phrase from Nichiren Buddhism, it is our…

…cluster of blessings…

…that we pass on…

…to the next generation.

Matrix Diaries

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Hey.

I think…

…you’ve pretty much understood…

…that we’re buyers in this whole mess.

I’d like you to add one more word to your understanding.

We’re…

…fearless…

…buyers.

We were not always fearless.

The human being is born with fear built in as a protective emotion.

During the process of rewiring, we wired this emotion out.

How does one do that?

Before I delve into it, wish to reiterate the we.

Who’s the we here?

Everyone who gets taught forward in this space and from this space, and then goes on to implement successfully, that’s the we. Why do such a thing? Gives me a kick. What’s a good life? A collection of meaningful things that give one a kick, implemented repeatedly.

Now imagine a matrix.

We are in the matrix.

Outside the matrix are all things that cause us fear.

Inside the matrix we implement our strategy without fear.

We have built systems that have automatically thrown out of the matrix all things that cause us fear against acting in the markets.

First we created a safety net. An emergency fund. Perhaps two. Out went fear of existence.

Starting with a small networth, we plunged into the markets. Luckily, we tasted failure fast, and lost it all, broken down, emergency fund to fall back on, young, enough energy and will power to bounce back. Now we had a model of how not to do it. We knew where we didn’t want to land up, and understood somewhat how not to do it. The experience of a blow-up and the knowledge of how not to do it made more fear exit the matrix, as we itched to get back into the game.

Slowly we built a system. Incorporated models. Saw what worked. What didn’t work for us exited. Model developed a slight edge. Tasted some wins. Confidence started to grow. As it grew, more and more fear exited.

Then came replication. Would the model work again? It did. Would it work bigger? Scaled up a bit. Working. Till not working. Fine-tuned. Working again. Knew we had something now. Came a black swan and its aftermath. Model excelled. Realized we were anti-fragile. Whatever was left of fear was now outside the matrix. We were tready for all out implementation.

And that’s where we are functioning from in this crisis.

If you say might last a year, no fear, we silently implement. We’re liquid because the model creates liquidity in good times. Two years? Still no fear. Liquidity might run out after 18 to 20 months, probably, but that’s the whole goal, to be fully invested, as per a model in which one has high conviction. Three years you say? We say still no fear.

The biggest money is made by…

…sitting…

…and we didn’t say this first. Someone you look up to did.

We’ve learn’t how to sit. Sitting is an integral part of the model.

While we sit, we do many constructive things. Since we’re investors, while we sit, we invest heavily…

…in OURSELVES.

Do the math.

Fool?

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I don’t mind.

What?

Being called that.

Why?

For me, it’s an indicator.

How?

When someone in my environment expresses that he / she considers me foolish, this acts for me like a guage.

Where?

In order formulation.

Which?

Good till traded orders.

Explain.

Ok. Let’s say someone considered my 787 GTT HDFC Bank entry foolish. With price having fallen to 745, and still not showing signs of stability, someone might consider me foolish for having entered ‘early’ at 787. I want this to happen. I want to sense this attitude in another person’s behaviour.

Then?

Simple. Formulate and enter next GTT for HDFC Bank at 690.

What’s the logic?

That’s just the way I use this indicator.

Position-sized small quantum?

Absolutely.

Considered bulk-entry at bottom?

What’s the bottom? Who claims to know the bottom?

499?

No idea. How do you know you’ll catch the bottom? What if you miss entry altogether?

What if I get full entry in lumpsum, at 499?

What if price stays below 400 for a month after that? Your lumpsum entry will hardwire you to your terminal, and it’s one month of sleepless nights, I can promise you that. Neurosis. Psychosis. Freeze. God knows how long it will be before you can take another rational decision.

And your staggered full entry with a higher buying average will not cause all these things?

That’s the whole point. It will not.

It will not? How?

Market psychology is counter-intuitive. When are you going to understand this one basic point? Going in, let’s say ten times, between 800 and 499, over three months, at every new entry, the nervous system forgets older price. It focuses on newer price, not even on buying average. It actively registers one small quantum entry at 499 as per this strategy, and forgets other entries above, at least forgets them well enough to suit the purpose. Bottomline – such a nervous system is poised to avoid neurosis, psychosis and the like.

You’re just making this up.

Try it out. This is what works for me towards full strategy implementation. I am able to successfully fool my nervous system into buying maximum units without setting it up to hurt itself, should the market fall more, and stay lower for longish periods. This is my win, and a cornerstone of my lowering the buying average strategy in high conviction stocks during crises. Tested successfully during CoViD. No more testing. Current crisis is about full implementation. Will keep this buying strategy on through the entire crisis, or till fully invested, whatever comes first.

Why put in everything?

This is money sidelined to go in. It’s not daily resources money, or college fund money, or family expenses money. It is investing money. It’s supposed to go in. What’s better for it than to go in low?

Where is the courage coming from?

High conviction is a state of mind. It’s a reflex. Over time and over many, many studies, observations, behaviour analyses etc., you develop it for a stock. Once you have high conviction in a stock, nothing should come in between you and full entry, if price allows.

Am still trying to decided whether you look foolish or intelligent?

Though I don’t care for your opinion, I don’t mind it either if you give it to me, for I will use the encounter as an indicator.

Is that what you’ve gravitated down to, using ridiculous and self-concocted indicators to navigate the markets?

Doing things which no one else has before sets me up for vindication no one else has gotten before. No more questions, do the math.

Miners

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Hey.

We’re miners.

We mine for…

…margin of safety.

Surprised?

As in, can one mine for…

…something abstract?

Sure, no biggie.

Ok, bear with me on this.

Entry quantum = shovel.

Wedge it in deep enough = Good Till Traded (GTT) Order = Poise.

Emotional sell most likely on open or on close = mined material falling into basket.

GTT executed = margin of safety mined successfully.

All the time?

No. In times like this, specifically, when there’s blood on the streets.

Isn’t margin of safety already available in times like this?

Yes it is. However, we want to mine for extra on top of what is available.

Like your yesterday’s experience with the HDFC Bank GTT hit well below trigger, a couple of seconds after open?

Exactly like that. Oh, there’s another add on.

Tell me.

We buy with a lag.

Meaning?

Let’s say something’s fallen big, and has come on our radar owing to levels broken.

With you. Then?

We let it fall for the whole session, setting up GTT only after the session, and placing GTT around 4 to 5% below close. Time and price lag.

Isn’t that way below?

That’s the whole point. An emotional sell will hit, and then price will stabilize.

What if no hit?

Possible. Good with that. What’s also possible is, there could be no hit for two or three sessions, and then there might result a soft execution. We’ve still mined the extra margin of safety, even though it’s taken us a few more sessions.

What was your experience with the recent HDFC bank buy?

GTT was set up on 2nd March, for 809, when price was at 887.

Just fishing in the air or what?

Didn’t want it at 887. Wanted it at 809. That’s all there is to it.

So, 78 points were mined, that’s almost 8.8%, wow!

Hold on. There was so much emotion in play, that scrip opened at 770, a massive 72 points below previous close, order triggered at 773 a second or two later, and was executed at 778 after some more seconds. So that’s about 12.3% mined. It took 17 days and 13 trading sessions. By the way, the extra 12.3% mined goes a very long way.

Explain.

In 25 years, at 15% per annum compounded, it compounds to 4 times plus the entire sum that’s gone in just now.

Tremendous!

Welcome to the world of compounding, and that of…

… mining.

Specialization

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Hey.

Calls have started coming in.

Am I doing ok?

Is the panic getting to me?

Am I going under?

I was waiting for this.

Calls of this nature, coming in, are a fantastic guage for the onset of panic.

You see…

…I specialize in guaging panic. You could call me a fall-specialist. A crash is my field of action.

During the crash in CoViD wave 1, I categorized two levels of panic.

Level I was classified as middling panic and identified at the point when calls were coming in asking if people should cancel their systematic investment plans. Aversion to invest with blood beginning to flow on the streets. Noted.

Level II was classified as grave panic, and identified at the point when calls were coming in of the nature, that now that all companies would be bankrupt, why was I still putting in money, into the markets? Questioning the whole financial system. Noted too.

In current scenario, questions about my health followed by queries about which stocks to invest into, after I had answered with a ‘never been better’ reply, for me, corresponds to level I of panic, identified.

Am still waiting for those other calls, asking why I’m putting in money when everything was going bankrupt anyway. Probably coming soon.

So, what’s the course of action, now that level I prevails.

We take it up a notch.

Meaning?

Look harder for entries.

Weren’t you already entering?

Yes, but wasn’t trying very much. Was letting the market punch me hard into an entry.

Meaning?

I’ll give you an example to drive this point home.

Ok.

HDFC Bank, right?

Right.

I had a GTT on for the last many sessions for entry at 809. Wasn’t coming. GTT remained. Either the market socked me into this position, or I wasn’t entering. Happened this morning. Triggered during open, at 773, executed at 778. Market pushed me into the position with force. I let it.

And now?

Will leave myself open to a lesser force push. Will put nearer GTTs, let’s say ~3% away.

If such prices don’t come?

Then not interested in entries.

What happens at level II of panic?

Even lesser force required to enter. Only GTTs lesser than 1 to 2% away perhaps. Many entries.

How come you are so liquid?

This approach creates liquidity during good times. Entering with small quanta now, as compared to networth. Can go on buying for more than one year from this point, if required. Such is the strategy.

Good to know, thanks for sharing.

Mind you, buying during panic does take a toll on one’s psyche. One needs to recuperate and regenerate. It’s not as easy as it sounds. I try very hard though, to recover mentally before the next session. Wish to last very long in the markets, …

…successfully.

Cared to Rewire?

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Hey.

From this point onwards…

…it all boils down to…

…stamina.

Theories for market success have been out there, in abundance, since eternity.

Everybody can read how the richest man in Babylon…

…got rich.

Or how compounding works.

Position-sizing.

Entry quantum.

Margin of safety.

Profit run.

Multibaggers.

Engines of income generation.

Entry into the territory of wealth.

Generational wealth-creation. Etc.

Yes. Everybody can read. Or listen. Or both.

Question is…

…how many can follow through?

Of those who set out, how many can remain grounded and focused when the heat is turned up, like now?

Most importantly, how many can finish?

I would estimate that a low single digit percentage walks the talk to successful culmination.

Why?

You see, heat does something critical.

Once it is turned up, it burns out all nervous systems that haven’t been rewired.

Given that we are not born with nervous systems programmed towards market success, we need to rewire them over the years and over the knocks. Once fully rewired, our nervous systems can withstand, pivot, and generate wealth over prolonged strife.

As this crisis continues, more and more players will start to cave in.

Capitulation at lows.

Others will stop all activity owing to fear, but might not sell. They’ve frozen. Better than capitulation.

There will be some who cash out with the intent of getting in lower, cannot then find the courage when the lows come, and then join their frozen compatriots as the reversal arrives and accelerates.

Still others, with funds safely picked away in fixed deposits, will be afraid to bring them over to Equity. Fine. They are behaving as per their risk-pr0file. At least they are in control of their behaviour.

Rewired market entities will be acting. They know what to buy. Markets give ample time to study, and all kinds of preparation will have been done, like, yesterday. These folks will have started buying upon the arrival of their levels. Clockwork. Small entry quanta. Position-sized as per their risk profile. Programmed to keep entering for a long period. That’s how they will have positioned themselves and their liquidities. These entities will show stamina and will outlast everyone to still be buying at market bottoms and slightly beyond. They will emerge with the lowest buying averages, and will make the quickest multiples upon reversal, after which some will pull their principles out, while others will ride their holdings to multibaggers.

Who do you want to be?

It’s ok if you don’t identify with any of these categories. Find your passion elsewhere.

Or, self-PhD to a rewired market mindframe, sooner than later. Preferably – now. This crisis could even just be beginning. No one knows. Since no one also knows how long it will last, for all you know, you could still get a year or two’s great buying ahead.

Wishing you lucrative investing.

Mindset

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How long is this lasting?

Everyone’s asking.

I have another question, …

…since no one knows the answer to that above question.

My question is, …

… as far as your market strategy is concerned, …

… why are you even asking?

Just implement your strategy na.

Asking means you don’t know what to do.

Which brings us to some more observations.

‘Don’t know what to do’ state of affairs is digestible, …

… if this is your first time.

First time as in first time facing such conditions.

Conditions?

Panic. Confusion. Sell and ask later mindset. Gullibility. Mass hypnosis. Massive spin-doctoring. Etc.

If you’ve seen such stuff before and haven’t devised a plan for next time round, you are not excused, but please do so now.

If you’ve been through all this more than twice, and still don’t have a plan for situations like this one now, well, maybe you should rethink your market foray. Are you in the right space? Are you doing it out of compulsion? Keeping up with some Joneses? Whatever applies. Rethink. Shape in, put a strategy in place for market crashes, or, shape out, meaning, do something else where your expertise is challenged, and emerges forth naturally.

It boils down to rewiring.

What boils down to rewiring?

One’s behaviour during a crash.

Not panicking? Coolly implementing set strategy? Liquid enough, exactly for such situations? Not looking over your shoulder to see what strategy someone else is implementing? Not asking others for opinions? Implementing your own, mapped course of action without regret?

Great. That’s a fantastic mindset to have earned.

Such a mindset is going to take you places when mass psychologies reverse.

Wait and watch.

Soil-Conditions

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Hey.

The king wears…

…no clothes, …

…and doesn’t have an idea…

…as to what the adversary is wearing.

The latter, however, is aware of the former’s wardrobe malfunction.

Maniac versus potential fanatics, which is capable of a rational reaction?

Neither?

Probably.

It might seem though, perhaps correctly, that the former is exhibiting fanaticism.

Everything is a lie.

Over-reaction : huge.

Underlying cause : none visible, yet. Actually, adversary will now scramble to create underlying cause, even if it didn’t exist. Its leader is eliminated. One can’t expect reasonable reactions from a nation now one in anger. Anger as in, how dare you? Our guy might have been a demon, but who the hell are you to eliminate him and incite us to take over our own land. We might or might not want that, but WHO THE HELL ARE YOU? WHO ASKED YOU?

Status : the hornet’s nest has been disturbed. Deed is done. This blunder might well undo the king, unless he has planned to print his way through, which then will accelerate undoing his economy, which in turn will also undo the king. All arrows are promoting towards king – exiting stage – soon.

In this turmoil, world pays tax. Oil shock is upon us.

If one was in the adversary’s boots, one would have also sealed off Hormuz. What’s the surprise? Meaning, if one is surprised, where were your think tanks? Are they low IQ? Stupid? Non-existent? Probably a mix of all three, if that is possible. I’ll tell you why there is surprise. One grossly underestimated the adversary, who was in a state of preparedness to be able to seal off Hormuz in less than ten hours. That’s why there is surprise. Wars are won and lost because of the element of surprise.

Meanwhile, oil shock means mostly all components of the stock markets go down. Fall gains momentum. As value buyers, we are on high alert.

One is not rejoicing about what’s happening. War is terrible. Brings destruction to all involved. Acknowledged.

What’s happening is a stone cold implementation of entry strategy.

Staggered.

With small quanta. [Each quantum a function of one’s networth at that moment. Algorithm of that function to be decided by oneself.]

Wherever and whenever value is seen.

For as long as it’s seen, …

…or till liquidity gets exhausted.

When one enters at deep value, one has already made money.

It’s just that the world will stamp its approval during times of euphoria, which is when the money will show, as in the sapling having grown into a plant, or a tree.

That’s fine with us.

We absolutely ok with just keeping on planting sapling after sapling in the right soil conditions.

Staples

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At the start of the Russia-Ukraine conflict, …

…and well into it,…

…as per media reports, …

…the matter should have been over / resolved / won…

…way, way, …

…way back.

Guess which media’s reports were reaching us.

Were they reporting correctly? Or brainwashing?

You tell me.

Is that particular conflict over?

You tell me.

Who is emerging from the conflict?

You tell me.

Which media’s reports are reaching us wrt current war outbreak?

You tell me. If you don’t, let me tell you. Same spin-doctors as always.

Only, this time around, one has gotten more selective in what one believes.

Ya, ya, this current conflict is all but won, it’s only a matter of days, sure, adversary will be on the table for talks etc. etc. Meanwhile…

…we mentally prepare for another…

…Vietnam.

Afghanistan.

Iraq.

Russia-Ukraine.

Prepare as in length, devastation, impact, whole shebang.

Only one thing is true.

NO ONE KNOWS.

Amongst other things, the word ‘narrative’ has become a by-word for…

…lies…

…so it might be a better ploy to…

…not believe.

Also meanwhile, we keep doing our staples.

What are these?

Our outlined course of action, should such a situation arise as the one that has.

What’s our mental programming?

That this can go anywhere.

How long do we keep going?

Till it lasts, or till we exhaust our ammunition, if this lasts beyond.

Ammunition? Are we fighting?

Not a war. Just usual markets. In the markets, liquidity is ammunition. One wishes to be fully invested, thus this strategy has been devised for exactly such scenarios.

Simple as that?

Ya, simple as staples.

Basics Baby

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In the…

…ongoing…

…and incoming…

…frenzy…

…there’s only one go-to strategy…

…for me.

Basics…

…always.

During CoViD, during which everything was supposed to go bankrupt, one stuck to the ‘Basics, Always’ approach, and the rest became History.

This, today, has the potential to become a CoViD like crash.

First up, there’s been mass AI hypnosis. Everyone and their Aunties are in the loop and are talking AI. No one cares anymore about companies with great fundamentals and a penchant cum track record for metamorphosis. It’s ok. We do, since that’s what counts for a steady, long-term return in the market. We are not greedy. We wish to put away our money safely, not let inflation eat at it, and we would like it to grow over the next twenty to thirty odd years. We’re balanced. We’re basic. We’re simple. We’re the opposite of complicated and sophisticated.

And now, there’s all out war. Provoked. Just to bury Epstein consequences? All pipelines choked. Gold-nugget question being asked in this moment is…

…how should one act?

Should one get swept into the AI madness and buy into abysmally high PE multiples? Infinite PE multiples? Should one buy international stocks? Gold? Bitcoin? Silver? Sit in cash? WHAT?

Answer in such scenarios is SIMPLE, always.

Basics. Baby.

Basics, always.

Basics to the rescue.

What are your basics? Go back to them.

I’ll tell you my basics. I’ve gone back to them since I started buying, February 6th onwards. And I shall remain with them, till I’ve finished buying, or till I’m fully invested, whichever comes first.

Shareholder-friendly managements.

Companies with clean balance sheets.

Companies with zero or quasi-zero long-term debt.

Free cashflow to market cap upwards of 2% for large- and mid-caps, and upwards of 1% for small-caps.

Companies with multi-decade penchants and track-records for / of successful metamorphosis and navigation through disruption.

Margin of safety. Each high-conviction buy lowers average. Mathematics to support buying and selling. A low average has the capacity to quickly give a multiple in better times, from where then one’s principal can be skimmed off to fight another battle, and the profit stays in the market for eternity, on the back of the mathematics of compounding.

These are my basics. Shared with you, with pleasure, to inspire you to find yourself in the chaos. Use these till you find your own. You can pay it forward. Leads to a better world.

One doesn’t need more. Just one’s basics. Basics that are superimposable on the entire market, and when something conforms, there’s action. Like now, for me.

Please go back to your basics at a time like this. That’s why you have developed them. Your happy, go to place. Market success is more about a high-conviction frame of mind with holding power.

The rest, rest assured, will be History. Go for it.

🙂

Take a Bow!

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Hey.

So, what’s our model?

It’s not sector based.

First I thought it was.

I now realize it’s not.

Well, to be honest, our model has various facets.

One of these is on, currently.

Value? Buy. Deep value? Buy.

Objective? Make a multiple fast. Pull principle out. Leave profit in the market for compounding.

Sector?

Doesn’t matter.

Moving on to next facet.

Ok. In range bound markets, what do we do?

No value buying, of course.

Ideally nothing.

However, action does get the better of us, at times, ya, ya, we are all human, and have that video game need. So, in range-bound markets, we do buy, at times, with the objective of making a small profit, slowly. When the profit objective is achieved, principal is pulled out and the profit is left in the market to compound if not required otherwise.

Right. Next facet.

What happens for us in a market that breaks out?

Two things.

First up, we are looking to make a quick let’s say 25%, and then getting principal out. Profit stays in the market to compound, irrespective of the level, ya we have the guts, since that which stays in the market enjoys 100% margin of safety. Secondly, some of the deep value still in the market has made a mega multitude by then, and we can take a call about it. We might or might not liquidate a fraction, depending upon our 2 to 3 year liquidity needs.

Moving on.

What happens to the stuff that gets stuck?

If our world is not falling apart because of that something that’s stuck, that something is and remains for us just another position. Downside is the position going down to zero. Upside is unlimited. We stay or cut, depending on our per saldo existence and / or situation in the world.

Stuff will get stuck. This is the markets baby, not a vacation in Hawaii. [Thought to self – let’s make activity in the markets like a vacation in Hawaii. Hands off, no engagement during market hours, let’s do an Ed Seykota baby, adding a few leg-glances like only handling in GTTs, disengaging after Thursday analysis and market input (3:45 pm to 4:15pm), only to re-engage on Monday morning 8 am to 8:30 am, to punch in GTTs for Monday.]

Very long-term play allows us to work well with even hundred positions stuck, because a handful of lucrative positions will offset these and then some. Perhaps one will even be able to say ‘and then lots’.

Now comes the pointe. This is something I learnt from Dr. Van K. Tharp, God bless his soul. Position-sizing.

Our one entry quantum is a function of our networth.

Make it whatever function you are comfortable with, corresponding to your own networth.

As our networth increases, our one entry quantum increases in size. As our networth decreases, our one entry quantum decreases in size. When we are winning, we set ourselves up to win bigger. When we are losing, we set ourselves up to lose lesser.

Final question – answered here.

Ya, final frontier. We tackle this very maturely.

Why are you getting all this for free?

Free? Please remember, that nothing in life is for free. Not one breath. There always needs to be a karmic field to support an event. No field, no action, meaning this here wouldn’t be taking place.

I’ve taken freely from a lot of people. This is my giveback. Please take freely of this. Don’t feel any burden. All you need to do is to pay it forward, at some stage in your life, when you comfortably can. Help someone in need. Make our world a better place. If perhaps you already are doing so – take a bow!

🙂

You miss I hit

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Tried and tested…

…strategies…

…yield results over the long run.

Scamming might work for a while, but that’s about it.

There’s buy low sell high.

Compounding.

Pulling principal off and redeploying.

This is all constant stuff.

However, there’s a new game in town.

It’s called ‘throwing one and all off their tried and tested go to strategies in the hope they will abandon what they’re holding, and then these holdings will be swooped up by Team Malicious’.

Please don’t get roped in.

Don’t react to false panic, FOMO, ‘you’ve got to get a piece of this action’ kinda stuff. Please don’t allow anyone to fool you off your bread and butter game. Also, don’t try any fancy new game which is unfamiliar.

Earlier, one would have said India was scam central, but having seen the stories emerging currently, it’s easy to present the crown to Chief Protagonist + Team Malicious cohorts. These people make Nigerians and Indians look like jokers. One needs to learn how to lobby from these fellows, or perhaps not, since they talk ugly.

Ugly is not our thing. We’re everything they’re not.

We love harmony.

Peace.

Unison.

Flow.

Patterns.

Discernment of errors.

And then we act.

We make money off these.

And a huge error is in the making.

What is it?

‘Treating all people like fools, all the time’.

That’s the biggest mistake, made by the biggest fools.

And we’ll profit off these fools, which, hopefully, …

… should be a good lesson for them.

Needle moves

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Hey.

After all our verbal outbursts, …

… point to be noted is, …

… that what’s moving the needle in India is last evening’s development with the US.

Sentiment in India chooses to move with the money.

Till there’s a change in status, licence to print is with the US.

Noted. Where does this leave us?

First up, we’re not pumping in funds upon coming spike. Funds already went in during recent corrections. We’re amply invested.

So, how do we maximize on the spike?

That’s easy. We let it unfold. If it’s big enough, and goes beyond our critical mass, we start exiting as our trailing stops get hit.

What’s going to be the size of our exit?

That’s a personal choice.

Please remember, that there are no permanent bedfellows in business. One presidential mood swing, and we’ll crash into buying territory, That’s the reason to exit beyond critical mass. Definition of critical mass is up to you.

Now we come to size of exit.

Make your own thumb rule. You see, we are functioning at Markets 5.0.5. We make our own rules. We don’t follow. We choose to lead instead.

I’ll share with you my own exit rule, so that you get a bit of a drift as to options prevailing. I will only exit as per my 6 month liquidity constraints. That’s it. No more. No less either. Why? To me, it makes more sense to remain in this market as much as possible. That’s when the Indian markets are giving multibagger returns. And, I’m playing this game in the first place – to generate multibaggers.

For me, creation of just enough liquidity is a mere happening along the path.

Courage

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Tariff knife is…

…blunting.

500 will need to come on to have any strategic value.

500 is many things.

Call it a joke. Dream. Litany. Madness. Moronic. Ridiculous to the power of n. Whatever.

It’s still getting headlines.

500 will kill.

Since it’s do or die, all sides are coming out in the open.

Yeah, there’s real activity.

There was a 105 minute state visit yesterday. We know who flew in, and where to, with what mandate, etc.

Before that, the German chancellor, accompanied by a powerful team, came to India too.

French and German teams went to Russia.

BRICS counter is very busy, the busiest it has ever been.

New deals. Alliances. Promises. Protection.

Currency?

Yes. Coming.

This one will bypass being bullied.

New world order.

Process is in spurts and then there’s brief time for whatever equilibrium that can be achieved under the circumstances.

And that, exactly, is our style of transferring out…

…of cash…

…and into…

…assets.

Spurt, balance, spurt, balance and in the middle, somewhere, at any resulting low, we go in.

What assets?

The ones we are comfortable with.

Can the blunt knife still hurt?

Yes, 500 will kill. Businesses, relations, trade…

So what then?

The idea is to make 500 work for oneself.

How?

In the wake of 500, there will be many lows, in many assets. Those are entry points. You need to have the courage to buy.

What if there’s a lower point later?

You buy more there, later. This chronology might continue for a while.

How long?

Till the wealth transfer is complete from the old world order to the new world order.

So how long?

Don’t know. 15 months. 5 years. Anybody’s guess. I’m banking on about 3 years or so.

If your liquidity lasts 15 months, how will you manage to buy for 3 continuous years?

As I said, everything is happening in spurts. There will be pockets where my exit rule will trigger for various entries.

Oh, so your entries will generate liquidity along the way, rule-based.

Yup.

Additionally generated liquidity will lead to more buying, along the way.

True, after taking care of my personal liquidity needs.

Hmmm, that’s something.

Yeah. Keep going. Don’t be afraid. Don’t let the screamers knock you off your game. This one will be won if we don’t blink. Stare the bully in the face. Wear the bully down. At the bully’s core, there is huge fear. That’s the difference between the bully and us. At our core, there is …

…conviction…

…which results in…

…courage.

Noise Diaries

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When something is a given, ….

…one just sheer deals with it.

And that something just got so much louder.

For example, social media is screaming with that something, i.e. …

… noise.

However, noise…

… has value.

One needs to know what’s being floated among the masses.

Furthermore, it’s helpful to gauge the decibel level.

If we look at the current scenario, everyone and their Aunty are yelling “Craaassshhhhhh…!” Dollar, bonds, gold silver, stocks, real-estate…

…everything’s supposed to “Craaassshhhhhhh!”

Fine.

Keep shouting.

At least we get an idea about the script and the concerned noise-level.

Is it supposed to scare us?

Yes.

Are we scared?

NO.

Why not?

Because we’re busy doing exactly what they don’t want us to.

Firstly, who’s ‘they’?

The floaters of the script. You were asking, ya, secondly?

Secondly, what do ‘they’ now NOT want us to do?

Buy cheap, like they are. They want us to let go and sell to them.

Wow.

Ya, it’s the biggest wealth-transfer in the History of mankind, currently unfolding.

Are you then not afraid of a crash, if you are buying now?

No.

Why not?

I’m liquid. If there’s a crash I’ll continue buying, into the crash. My entry quantum is aptly small and a function of my networth, thus allowing me entries for three to five years, upon any signs of reasonable value. Held over the years and bought with a clear head, in a growth market, assets will yield stellar returns.

So you’re saying you’ll cover the crash?

Yes. Timelines move very fast nowadays. Markets, when at all efficient, have become super-efficient, as if trying to prove a point to the level of overkill. When not efficient, they bubble or crash. Super-speed in times of efficiency is a huge bonus for us.

How?

Crashes play out within a shortish time-span. Buying through the crash is over fast. It’s not that when there’s a fire the crash is going to happen after five years. It will happen way sooner than later.

So is that enough time to get your money in, especially with a small entry quantum?

No. That’s why it’s important for small entry quantum cum long-term players like us, crash in, crash out, to keep buying amidst any signs of cheapness caused by fear-mongers creating all this…

…noise!

Exactly! 🙂

Market Ability

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Hammers…

…hammer.

That’s their job.

They do a good job, at hammering.

At times, the market behaves like a hammer.

Market players learn from hammerings.

Question is, can market players learn without being hammered?

I don’t think so.

One can psych oneself into believing otherwise, I’ll give you that.

And, for a while, things will look like all’s good.

Point is, one isn’t looking for the hammer, …

… the reason for which being, that one has never experienced one.

That’s when the hammer falls, when and where one is least expecting it.

It is better to undergo a hammer event in the early days of one’s market career, and while one’s young.

Young – because – a). one plays small when one’s young, mostly by default, owing to there not being ample access to fund supply. Also, b). in the early days of one’s market exposure, the bulk of one’s mistakes and miscomprehensions emerge. The combination of these two facts a). and b). leads to losses that are bearable (youth has backups, like parents). In our youth, we tend more to brush it off and move ahead, full of energy. Yeah, youth has the energy, and time (upcoming multiple market-cycles), to not only emerge from a hammer, but to go on to prosper from the now ingrained learning.

Issue starts when our corpus is big and we still don’t know what a hammer is.

Issue compounds when we then confuse our ability to implement money into markets, in an effort to make it work, with actual market ability.

What is market ability?

It all starts with risk profile.

Some people die without having recognized their risk profile

Then, after having recognized one’s risk profile upon encountering some hammers and seeing our bodies and minds react to these, we move on to systems.

From development to fine-tuning to implementation of a system, we keep chipping and chiselling away at our strategy. We emerge with one that has an edge. We continuously work to keep our edge profitable.

Simultaneously, we throw in risk management. Development of an emergency fund is part of this.

Discipline.

Regimen.

Rules.

Let’s throw in some unpredictability, on purpose.

After putting one system on semi-auto, we work on another, and so on and so forth. We use our profits to diversify and make ourselves more secure, ideally anti-fragile.

Market ability is a successfully implemented combo of all these factors and perhaps more.

It includes being a good human being at home too. There’s no question of letting out the effects of a bad market day on one’s family members. We’re stopping all market action before anything like this develops. Harmony paves the way for another serene market day…

…about to dawn.

Opportunity

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Knock knock!

Who’s there?

Oppo.

Oppo who?

Oppo – rrrr – tunity, which don’t knock often (enough).

Yes, huge opportunity is knocking.

Global talent will stay indoors, to a large extent, from now onwards, come this September 21st, i.e. today onwards.

Brain gain time for us.

India is going to boom. Forget about tomorrow, next week, next month, but come medium term, and, going on to the long term, India will shine.

Sure, tomorrow, Indian IT will probably be down. Who’s in it for just tomorrow? One doesn’t get one’s house valued every day, week or year. One might do it when one is contemplating a sale, maybe after twenty years of owning it. Same goes for very long-term held compounders. Like Indian IT.

So, down? Maybe. Out? NO!!! Drag other markets? A bit. Effect to continue? Very short-term.

Beautiful thing is, Indian and possibly other corporates have been working on their plan Bs, and perhaps their plan Cs, and have, slowly but surely, been implementing these.

Also, government is boldly stepping up and refusing to get bullied. Watch out for the measures to be announced that will further boost the economy, to counter this ‘shock’. Thing is, where other nations have started thinking and acting short-term only, India has started to play a longer-term game. One can call it a meta-game.

Bottom-line.?

Time to answer the door-bell, open the door, and let the knockers in.

In my opinion, it’s safe to put one’s money on the line here.

Should Indian IT fall, large quantities of domestic funds will be lapping it up. Smart money will definitely be buying into offered margin of safety.

Why?

Fundamentals.

Clean balance sheets.

Free cashflow.

ZERO DEBT.

High RoE.

Large number of diligently purchased start-ups owned.

AI incorporation and development.

Steady growth.

Technical margin of safety being offered, possibly, tomorrow onwards.

And now, brain gain.

These are some of the big pluses that Indian IT offers.

So, one can easily and calmly go out there, and, with a cool head, put one’s hard-earned money into any margin of safety exhibited by these potential compounders with amazing track records, with a clear-cut goal of generating long-term wealth.

Wishing you happy and lucrative investing!

🙂

Strategy

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Reserve currency’s buying power is…

…waning.

Many others, too, have pointed out, that…

…assets…

…quoted in the reserve currency…

…are getting expensive.

Across the board.

If something is happening across the board, is the entire board showing an anomaly, or is it the underlying entity, here the reserve currency, that is behaving differently?

Going for the latter. Gut. Common sense. Fundamentals. Printing. Geopolitical balance of scales.

Diagnosis stands. The only bubble in town is a reserve-currency-bubble.

Doesn’t stop here.

Central governments across the world blindly price, or, rather, mis-price their own currencies in response to movements in the reserve currency. Many governments artificially support levels of their own currencies which are not realistic. Net net, asset markets worldwide are rising. It seems that buying powers of fiat currencies in general is falling. Masses seem to be losing confidence in fiat currencies.

Where does this leave you, financially?

Are you very liquid?

Hmmm, liquidity is losing value. How about moving some of your liquidity into assets of your choice. Look for value, and act where you find it.

However, stay liquid to a comfortable extent, and let some value of that particular liquidity be lost. It’s ok. You’ll make it up and more, in the event of a correction, where you’ll be tanking up on assets of your choice.

There will always be a correction. Period. You need to be at least somewhat liquid, come a correction, and it will.

So, this is what needs to be done.

Identify extra, and movable liquidity.

Look for value.

See if you are comfortable with the asset class offering value.

If yes, move any extra liquidity into the asset offering value, bit by bit.

Proppers

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Come a crash, …

… we will let it…

…rip.

Toolkit is in place.

Having said that, the thing about crashes is, that when everyone expects them, …

… they don’t come.

If it were that easy, markets wouldn’t be markets.

That’s exactly what they are doing currently, being what they are, markets.

Some are being propped, and other markets are showing resilience, taking any kind of news in stride, and still advancing.

How long can something be propped?

Not forever.

However, longer than most players can stay liquid, that’s how long.

That’s an old market adage.

Eventually, proppers get tired, of printing, circulation, falsification or whatever gimmick they are employing. Mistakes at this level are deadly.

When a propped main market pops, initially it does take down most other markets, but resilient ones recover fast. Propped ones, after the pop, remain down, meaning that they encounter a delayed recovery.

A big pop only means entry opportunities in our resilient market of choice.

There’s no question of fear. This is what we wait for. Margin of Safety. Value. Opportunity.

Entry.

Fall Specialists

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Hey.

We come alive…

…during a fall.

Though we don’t panic, …

… we do feel a pang, here or there.

However, we have trained ourselves to…

…quickly normalize, …

… and then go about our business, …

… which is, …

… buying during a fall.

It hasn’t been easy.

During the first fall we experienced, we broke down.

You see, we were fully invested, and then that fall happened.

Now came two options.

Quit? Or learn to navigate?

Chose the latter. Learnt.

What did we learn?

We found ways to remain…

…liquid, calm, composed and poised.

Slowly, but surely, we turned into…

…fall specialists.

We argued with ourselves.

How many falls had this market seen in History?

Had they stopped its long-term growth?

In a growth environment like India’s?

The answers reiterated our stand.

The central idea that remained was to stand our ground and lock some great prices in, intensifying buying towards the bottom.

How would one recognize a bottom?

Technicals, pin-bars, big intraday swings, huge volumes, nihilist sentiment, depressing newsflow, one can sense these things if one is mentally there.

And that’s what fall specialists are doing, in the wake of disruption ruling international trade, difficult quarterly results, international fund-flight, regression to the mean, perpetuating newsflow, almost blood on the midcap street, actual blood on the smallcap alley, and what have you.

Yeah, we’re locking in great prices.

Remember to come back and read this piece when sentiment changes.

India is a growth environment, where lucrative prices have been hard to find since CoViD.

So, when these come, is it a wonder that fall specialists are lapping up the action?