Category Archives: Liquidity

Reflex

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Uncertainty…

…gives rise to…

…options.

Well, if one is liquid.

If not, one doesn’t have the luxury.

If yes, one has the option to act…

…upon the opportunity being offered.

Or, one can choose not to act. To wait. For an even better opportunity.

These are wonderful options.

How did they come into play?

Because of uncertainty.

This trait makes people nervous.

When the masses are nervous, they sell.

This creates selling pressure, …

…leading to falling prices.

These, after considerable falls, create opportune entries.

That’s where we come in, because we are…

…liquid.

Liquidity doesn’t come for free.

One needs to learn how to create it, and one keeps learning this till liquidity-creation has become a reflex. Our financial behaviour, from this point onwards, out of sheer reflex, just sheer generates…

…liquidity, …

…units, …

…soldiers that fight another day, another battle, to, in the future, bring back home their…

…winnings.

Preparedness

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Wealth transfers…

…don’t happen in the exact same way…

…each time.

There’s expectation…

…and there’s reality.

Crowd’s expecting a certain behaviour, or pattern, or event etc., but, in reality, the path that wealth finds, towards its transfer, is kind of unique for the moment that it’s taking place.

Like this time.

Everyone’s expecting a crash.

Or a series of crashes.

Media is full of screamers.

All lobbies are vying for all other lobbies to sink.

Meanwhile, quitely, wealth transfers itself.

It holds on the fear of an investor, and jumps on to the greed of another, or should one say courage?

Yes, courage, actually, because the investor entering is disregarding noise and fear. He or she has imbibed the courage to do so. It hasn’t come for free.

This time round, the screaming is going to continue, it seems, for a few years, till full wealth transfer is complete.

Yeah, what if there is no single crash moment, but a long-drawn-out, slow, irritating wealth transfer?

Are you prepared for that?

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.

How to?

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How does one…

…position oneself…

…for what’s coming?

What’s coming?

Yeah.

Meaning the turbulence ahead?

What else. First up, we’re taking turbulence to be the norm, from this point onwards.

All right. Turbulence = norm. Baseline set.

Then, how do we maximally exploit our understanding, …

…simultaneously creating income…

…but then also allowing wealth to accumulate and compound?

Yeah, how do we?

You tell me.

We need to start with an asset class.

Right.

Which asset class?

Again, you tell me.

What we’re comfortable with.

Yes. Beautiful. And then we weaponize the asset class chosen, the one we’re comfortable with.

Weaponize?

Yeah. Otherwise it will be no good for these times. We need to make it time-befitting.

Example?

Let’s say you choose gold, ok? What good are your efforts in gold if after a point governments nationalize it and then confiscate it, paying you a reasonable price at that moment, and then, from that point onwards, in the hands of enough governments, gold turns a 100-bagger, for them, not for you?

Yeah, what good are my efforts in gold then?

No good. You need to trade gold, use some profits as income, and another portion of profits you invest in other asset classes, bought cheap, which the government has issues regulating harshly.

Like? Crypto?

Some think so. That’s their weapon of choice. Personally, I have problems with storing my entire networth on a pen-drive. That alone takes crypto off the table for me.

So where do you go?

Stocks. They come naturally to me.

Stocks can be harshly regulated.

In isolation, if we’re looking at stocks-stocks, yes, I’ll give you that. In a solid framework encapsulated within an income-generation cum wealth-creation mechanism operating with fundamental, evergreen principles like margin of safety, letting profits run, position-sizing and what have you, even stocks can be made to behave like the anti-fragile system they are a part of.

Would that not be valid for any asset classes, then?

Yes, provided the government can’t seize that asset class overnight from you.

Like cash?

True.

Gold?

True.

Silver?

Yeah.

Bonds?

Not sure. Risk of default though.

Real-estate?

Prices of real-estate follow demand and supply, and demand is reciprocally proportional to negative regulation. Governments can crash real-estate. So, yes.

Crypto?

I’m not so sure that crypto is beyond regulation. However, exchanges collapsing regularly are not my scene.

Stocks?

Have we heard of governments seizing stocks? As long as no illegal activity, all debts paid off, clear ownership and succession, I don’t think the government can do that. So stocks of companies, for me, remain in the fray. On top of that, we encapsulate them into a system. The system has an edge. It’s multi-faceted. It generates income, approximately when required, in cash. Otherwise, it creates wealth through compounding. Throw in 20 -30 models like margin of safety, letting most profits run, position-sizing, fine-tuned Fibonacci, income dynamos, etc. etc., and what we’re looking at is a unique entity, which behaves differently when compared to fragile stocks, or even to robust stocks.

So what you’re trying to say is that it all depends how you handle each asset class is what makes that asset class either fragile, robust or anti-fragile.

Exactly.

Is that your word?

Which word?

Anti-fragile.

No. It belongs to Mr. Taleb. In whatever way a word or a concept can belong to a person…

Like governments can crash real-estate, they can also crash stocks. What do you say to that?

Oh, that’s an anti-fragile part of this system, which leaves the user liquid enough to benefit greatly from such crash, seen from a 15 month perspective. User of such system is positioned to take huge advantage of temporary and large price dips. Stocks have a very low ticket size as compared to real-estate, and can be readily swooped up in a crash in bulk, unlike real-estate, which is heavy and is a huge liquidity-enemy.

Where do you stand with your system, personally?

As a whole, I’m working towards making my system with stocks, income-generation and wealth-compounding as antifragile as I possibly can.

What’s the critical mass, above which the system can be considered safe for the new world order?

I’m not sure. It’s all experimental.

So how will you know?

If I make the transition to the new world order whilst preserving a large portion of my portfolio, I’ll know that I’ve succeeded.

Any other method apart from the make or break one suggested by you?

No. Everything else is theory. Surviving reasonably well and then thriving is the only practical method that counts for me.

Thanks.

🙂

Where to?

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Changing world order…

…dedollarization…

…shifting boundaries…

…new havens…

…new strategies?

Confused as to what to do?

Where to with your hard-earned funds?

Don’t panic.

I personally don’t adhere to growth at any price, …

…so if your fund manager has you chasing the Moon …

…in gold, silver, copper, crypto, or any other newly identified haven…

…for a second, stop…

…and reflect.

Remember that word…

…’value’?

Ya, that’s a word we like.

We’re pursuing value.

There’s value in growth.

One can see it in the chart, …

…or one can see it in numbers, what with GARP and all that.

GARP’s good, …

…value’s great, …

…and we add two more words.

Nil burden.

Optimal.

Quasi nil burden?

Will do.

That’s where our money is going.

Hopefully, you’ve gotten our drift, but we believe you have the wherewithal to decide for yourself.

We want three other dynamos to work for us.

Liquidity is created by minor capital gain pursuits.

There’s the steady dividend, which adds to liquidity.

Now comes the kicker.

We pledge some portfolio and create margin. A small income is then made on the margin.

So, to recap, there’s the main-game that’s long-term. That our wealth, created and compounding.

Three side-hustles then generate income on top. That’s it for us.

Yeah, over to you now. Where’s your money headed? In these turbulent times, I’m sure this question must be flashing through your mind.

Potent Pioneers

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Hey.

We define our own roadmap.

Own indicators.

Own rules of action.

Own changes to our rules.

Own interpretations of prevailing market rules.

You get the drift. We have our own way of looking at things.

First up, acting on someone’s opinion leaves us at their beck and call.

Then, there’s the thrill, the kick, of defining a path.

And, lastly, but most definitely not ‘least…ly…(?!?)’, since everything on the path is kind of different, we don’t get slaughtered with the masses.

Also, in our own unique way, we have first mover advantage.

We can do all this, because we’re (almost always) liquid.

Liquidity is ammunition. Just ask a soldier what ammunition is worth in battle.

Liquidity didn’t come to us just like that.

We learnt (from many a beating) how to accumulate it.

Now we’ve learnt, …

… and we’re liquid, …

… and we’ve developed our own unique system …

… with its own unique edge.

This makes us…

… potent…

… pioneers.

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! 🙂

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.

Thaw?

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What does this even mean, …

… in today’s financial context?

Great, there’s some kind of a thaw on the horizon.

It’s only happening because one leader refused to be bullied.

Now, others are at least voicing themselves.

Had no one stood up, bully would have continued to arm-twist the world.

Is this a healthy situation?

Specificallly, in the context of one new tantrum almost everyday, there seems to be something big brewing.

Markets, in their efforts to behave ‘efficiently’, factored in a possible ‘thaw’, and one is barely getting entries now, for lack of margin of safety.

Fine.

No action is also considered action. No action is supreme.

Since one can feel it in one’s bones that something big is brewing, …

… will choose to save entry capital for the times to come.

Whatever’s brewing, should it come to pass, …

… will create the conditions for more entries, …

… will create margin of safety.

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?

A-Gamers

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Hey, …

…nowadays, …

…we only play our A-game.

There’s no time for formalities.

It’s late in the day.

All weapons are out.

This is the need of the hour.

So, what are the salient features of our A-game?

A well-forged, multiply-faceted, time-tested road map – our system of systems – our one Strategy. This one’s 360 degrees. It incorporates both trading and investing, and leads to very long holds in cost-free form. Includes more than twenty highly competitive, sharpened, edge-providing Modules, about which I wrote a few articles back. As far as strategies go, we are cruising in a Maybach on the Autobahn. No worries there.

Patience. In the last twenty odd years, we have learnt how to sit. Makes biggest money, said we know who. Patience is ubiquitous, or is it? Many people have developed it. Many are born with it. But then, many are not. And, markets demand their own kind of patience. Over the years, we have learnt and developed market-patience. We wait for our levels before acting. We sit on our Cost-Free-Ness, like, forever. We are not in a hurry. I ‘can behave’ as if this is my own module 🙂 (do allow me the indulgence), but patience is universal and out there for everyone to incorporate and exploit on their own.

Liquidity. This is a module. Am reiterating it here since it is key. Our initial small-entry-quantum strategy (remember, that’s how we started!) allowed us ample liquidity, always. Yes, we were always liquid in situations, when they came, while building up the backbone of our portfolios. Slowly, portfolio-size started to grow. Then came the incorporation of position-sizing, thanks to my learnings from Dr. Van K.Tharp. Subsequently, I instinctively added my own twist to this, making it Non-Linear Position Sizing (NLPS) that we follow. NLPS initially allows for small entry quanta. As portfolio-size increases, so does each entry quantum-size. However, the latter increases more than y = x, i.e. more than linear. This means that over the very long term, entry quanta become remarkably substantial in size. Nevertheless, we still maintain balance by perhaps Fine-Tuning entries and exits to the nth level, i.e. with huge win probabilities, which automatically / mathematically leads to lesser entries. Strategy thus goes on cruise-control. Furthermore, outstanding entry-prices, followed by Quick Generation of cost-free-ness make our very long-term holdings as Anti-Fragile (thanks for the term, Mr. Taleb) as possible.

Talking of cruise-control, our back-end allows for full Automation at button-clicks. All transactional trail-mail is auto-forwarded to every required avenue. It’s a one-time self-setup time-expense, so don’t be afraid of it, since the reward is disproportionately huge. Each avenue allows preview and further transfer / storage after button-clicks. Taxation? Button-clicks. Indexing? Button-clicks. Retrieval? Button-clicks. Viewing in any format? Button-Clicks (baby).

Time. We have all the time in the world. We do our own thing. Income is sorted. Wealth is being generated on auto, and is multiplying. Learn languages. Travel. Pro-bono. I teach kids. To manage their own finances. From a young age. Currently I’m teaching four kids. It’s a give-back, and they can pay it forward.

In a nutshell, that’s my A-game. I’ve taught it forward, so I can talk about a we. You’ve seen it develop in this space over the last 14+ years. I’ve nothing to hide. It’s for everyone to use and benefit from. The act of Giving gives me the most Satisfaction in life.

Waiters

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Hey, …

…what’s your hurry?

This is a long game.

It will continue…

…after you.

Hurry will spoil the curry.

Learn to wait…

…for your level.

We’re waiters.

We win…

…because we wait.

No level, no action.

If we’ve leant how to wait, we’re already ahead of most players. Almost 90% don’t know how to wait.

What’s the worst that can happen?

Our level doesn’t come, and we don’t get some particular action. Could be a buy, could be a sell.

Fine.

We can live with that.

There’s always another day, another opportunity, another set of actions, …

…just move onto the next scrip, entry and / or exit available.

What’s most important is that we have kept our liquidity intact.

We are financially sound for the next action.

A hurried entry without the level coming would have used up this particular liquidity, making it unavailable for the next action.

We act…

…at our level.

Our level is set to make winning highly probable.

That’s why, in the long game, …

…we win.

Obviousness

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Knowledge streams…

…at unprecedented speed.

You want it?

You got it.

Lag is negligible.

Everyone has access.

Conclusion? Fazit? Nichor? Bilan?

What seems obvious is likely a trap.

Fundamentals can be fudged, to an extent. A closer look at gaps between fundamentals vs actuals unveils those who fudge. Actuals on the ground will need to match fundamentals, somewhere. For example, if there’s no debt on the balance-sheet, there will well be a surplus which the company in question accumulates, and there will be a path on which this surplus flows. This path should be visible in the annual report. If there’s no surplus, company will show visible signs of stagnation. If something officially declared by a company doesn’t match (visible) actuals, the fudging window opens. We steer clear of companies with even a fudging crack open.

Technicals can be used to set entry and exit traps.

By professionals

For the masses.

Masses act at levels.

Generally, price hovers around an obvious level till the majority has acted. Then, generally, price goes against. When crowds cut entries, institutions enter on their exits. This strategy paves the way for relatively easy and heavy entries.

Moral of the story for us?

We wait for an obvious level.

We don’t act. Yet. However, we are on alert.

We envision an aftermath play in our minds.

Entry pivots are coming quick, nowadays. There’s hardly any time to act, especially if one has an otherwise busy schedule.

Therefore…

…we only deal in GTTs. Period.

Thus we feed in our GTTs, as per mentally outlined situation, and back up these with funding, if entry-trigger is less than 5.2% away. All this we do in a cool moment, after market hours, away from the noise, when we can think clearly.

And, most importantly, …

…we do it away from the obviousness.

Pigs

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A structural component of markets…

…are its hands.

There are weak ones.

Then, other hands are strong.

Weak hands can be snatched from…

…easily.

They panic fast, and throw their holding during mild turmoil, …

… they are afraid, …

…not possessing holding-power, because they haven’t created the circumstances, and have prematurely jumped into a market.

Buying without margin of safety is one such premature jump.

Without fundamental, technical and / or general knowledge are others.

They are the mythical ‘pigs’ that get ‘slaughtered’.

Evert cycle produces new ones.

The ‘pig’ of one cycle eventually goes on to become a strong hand of another future cycle.

Strong hands know.

They study fundamentals, or technicals, or are generally savvy from experience, having developed market intuition. Strong hands have come prepared, perhaps, with a combination of all these traits.

They are liquid.

The’ll buy through the fall, piece by piece.

You can’t throw them off, …

…because they have holding-power.

It didn’t come for free, for once upon a time, they too were ‘pigs’ that got slaughtered, but they survived to live another day, learn, and rebuild.

As we grow in market experience, our hands tend to get stronger.

Some ‘pigs’ don’t make it to the next market.

Their slaughter moment might come late, paralyzing them financially, with no time, or energy, or both, to recover.

Some just give up on markets after an early slaughter experience.

We need to make many mistakes, early in the game, by sheer doing, learning, and not repeating, these. Early on, the numbers that we play with, are generally small. That’s when we need to get fatal errors out of the way.

As our numbers grow, and as our hands become strong, we then position ourselves…

…to thrive in the markets.

Any market.

Holders

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Holding- …

… power…

…is not a given.

Meaning, that it is not necessary…

…that an individual, ample in liquidity, …

…carries this asset to the table.

We need to learn to hold.

Who’s going to teach us?

Not text-books. How do we know that the writer concerned knows how to hold? We don’t.

Not professors. Do they even have their own money on any line? We don’t know.

So, where do we stand?

How do go about developing holding-power?

Only reliable option is to do, and learn.

How should learn how to hold?

One practices.

It’s like learning how to catch a ball…

…by doing it again and again,…

…till one can catch the ball by reflex.

Creating time-, ease-, comfort- and wealth-buffers around our investment helps.

As to the why, holding makes the difference between nominal and outstanding returns.

To generate multibagger returns, one needs to hold long-term.

This is extremely difficult to teach the mind, since almost everything comes in between, luring the mind to sell early.

Instead of teaching it, one sheer tricks the mind into very long-term holds without being bothered about how high the price might be interim.

This trick played on the mind hides itself under the banner of generating…

…cost-free-ness.

Opportunity

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Knock knock.

Nobody home.

See you, bye. Maybe never.

Knock knock.

Come in.

This is the requirement.

No funds.

Bye.

Knock knock.

Hey. Funds not a problem.

Guts?

What if I lose?

Bye.

Knock knock.

I wish to invest and the risk is digestible.

Ok. Pull the trigger.

Should we wait for a better price?

Bye.

Knock knock.

Let’s pull the trigger.

Ok.

There.

Bye.

Hey, it’s been a month and I’m up 10%. Let’s cash out.

Ok. Bye.

Knock knock.

This time I’ll let my profit run. The last one doubled in 6 months, but I’d cashed out after a minuscule rise.

So you’ve learnt how to sit?

I keep a lookout for you. If I’m not home I get alerted to your presence, so that I can act in time.

Then, I always maintain ample liquidity for you.

The amounts I put in make my risk digestible, looking at the total size of my portfolio and liquidity.

Once you knock, I’m not afraid to pull the trigger anymore.

I’ve learnt to let multibaggers develop. I don’t nip them in the bud anymore.

Wonderful. Now add cost-free-ness to your repertoire.

Why?

It’ll trick your mind into holding your multibagger eternally, so that it is given the chance of becoming a megabagger.

Will do, thanks, cost-free-ness won’t cost me anything, right?

Not a penny.

2050?

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Yes.

Why?

Why what?

Why 2050?

Growth trajectory.

Whose?

India’s.

What about it?

Spurts with bottlenecks. Not linear.

So?

Will take 2050 till fruition.

Meaning, for you?

Quest for multibagger accumulation will be successfully achieved.

By 2050?

Yeah.

Anything else?

My own trajectory.

Will you be around?

Not relevant.

Why?

I’ll leave the assets as my legacy.

To whom?

Family. Country. Charity.

Striving and then leaving it?

Doesn’t cause me any reaction.

Why?

It’s cost-free.

Meaning?

My principal is not invested. Pulled it out in profit. What remains in the markets is cost-free. I live and enjoy my life on my income, simultaneously creating a cost-free legacy. The cost-free-ness tricks my mind into an eternal hold. I stop jumping. Vicissitudes of price path have no meaning for me once something has become cost-free.

And why stop in 2050?

Growth culmination. India enters first-world territory. It becomes difficult to create multiples fast. Life is far more efficient, and so is price, then. Loopholes are filled in by artificial intelligence before an EoD chap like me can react. Info-flow is so fast and transparent, that everybody knows. Everyone is smart because they use the appropriate tools. Since all money is smart, there’s no edge anymore. But that’s 2050. Today, oh, there are edges. Inefficiency lasting longer than EoD. Sometimes lasting months. Loopholes. Pattern related. Operator related. Price related. AI is not fully there yet. Most market players are not smart, I think the official statistic reads 88%. Almost all tools look at the wrong stuff. By the time one reacts to indicators, which are a function of price, most of the edge is gone. Information-flow is not fast enough, and if you can read it in the numbers or the chart before it happens, the edge is huge. And, forget about transparency. It’s just not there. We’re sitting of big edges currently.

So, 2050, stop, and then what?

No idea. Let’s go with the flow. Right now the flow is leading up to 2050.

And what if there are world-shattering events before that?

We buy. We are almost always highly liquid. When we’re not, we start creating liquidity. We are never illiquid. 2050 is just a number. We have numbers to go on, like lamp-posts. It’s another lamp-post, like 1984, or Y2k, or what have you.

Do you want to be the person remembered for 2050?

That’s not even a question for me. I’m flowing with 2050 because that works for me. I don’t care about the rest. If you wish to think with that mindset, that’s on you.

Why rude?

Nothing rude or not rude about it. 2050 is part of my framework. Nothing more, nothing less.

I see.

Hack

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Farm-land?

Own it?

Yes?

If so, you can avail an overdraft on your fixed deposits, having to pay low interest.

Why?

Government allows farmers to take crop-loans.

If you own farm-land, well, you are a farmer.

Even if you don’t use the facility to buy crops, you can still use it…

… for whatever.

Perk.

Government sops it to farmers and you get roped in as an accidental farmer.

G(ood) f(or) y(ou). Yeah, gfy.

Why overdraft?

So that a fixed deposit doesn’t need to be broken prematurely.

Why the trouble?

Let’s say you need trade money to be in a trade for a few days, but the bulk of your liquidity is working elsewhere. However, in good times, you have created fixed deposits, which add to your liquidity at regular intervals. When your liquidity runs out for a few days, you think of breaking an FD to replenish it, but this incurs a penalty.

Suggested hack keeps everything intact.

You utilize the created liquidity, let’s say for a month.

Meanwhile, your income pipeline generates new income. You use this to keep nullifying parts of the loan. Let’s say in 40 days you have nullified the loan, and your positional trade, for which you took the loan, is still on. You are charged low interest on the loan taken for 40 days. Now the loan is nullified. Position is on and yielding. All equations solved. Net net something created out of …

…s omething that was already utilized elsewhere.

It doesn’t necessarily turn out so good all the time with a position, though.

If it’s losing, you are suffering positional loss and interest payment loss simultaneously. That’s the downside.

This hack is worthy, nevertheless.

Interest charged on 40 days is a small figure, typically less than a percent. A positional trade in profit can well give 15%+ in that period.

So, hack stands.

All you need to do is to see if the hack fits you.

Cost-Free-Ness

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Why…
 
…do we play this game?
 
I play it to…
 
…win.
 
What’s one’s definition of a win?
 
It’s different for everyone.
 
I’ll tell you mine.
 
I want to be completely cost-free in the markets before the end of a bull-run. 
 
What does being cost-free mean?
 
It means that whatever one has in the market, has been completely freed up of its principal. 
 
That’s done by taking the principal out, over time, as markets climb. 
 
What purpose does cost-free-ness serve? 
 
Firstly, whatever’s in the market now, in a cost-free state, is all high quality material. 
 
It can’t be otherwise. 
 
What’s not high quality will be pulled out as markets persist in their climb. 
 
Why?
 
The impulse to book is very strong. 
 
In that state of mind, whatever is not worth holding anymore, will be automatically booked. 
 
It’s human nature. 
 
Secondly, what’s in the market now, can stay in, like, forever, without causing us any tension. 
 
That’s an ideal state of mind for the creation of multibaggers, and the underlyings in question are all multibagger material, being the essence of one’s entire market-play. 
 
Thirdly, one has gotten one’s soldiers home, to fight more battles, as valiantly as ever, in the times to come. 
 
Ya, cost-free-ness means that one has pulled one’s principal out. 
 
This very principal will now be utilized to make more and more shares cost-free.
 
Fourthly, we are not going to suffer any pangs about the markets climbing and climbing further. 
 
Further climb benefits our material in the market, immediately. 
 
More material, picked up at trading levels, is likely to yield a small chunk of cost-free shares, in the form of a winning trade. As one exits such trade, one leaves one’s profit in the market, in the form of cost-free shares. 
 
Sure, eventually the market will collapse, and we’ll be left with some material which is not only not cost-free, but is now losing, perhaps big.
 
That’s ok.
 
Why?
 
Because, quantities are relatively small. These are trading levels, remember? Thus, entries will be small.
 
Then, these are the same underlyings as already existing in our portfolio. 
 
We want to hold these. 
 
We are holding many cost-free units of these very underlyings. 
 
Current loss-making units of these underlyings can be averaged as markets sink further, because we are highly convinced about these holdings.
 
Eventually, the curve will turn, and a new cycle will start.
 
As markets climb in the new cycle, eventually these new units will start becoming cost-free.
 
Such positive loop outlined above is the market sweet-spot I always wish to be in.
 
It’s the essence of almost seventeen years of first-hand, in-the-field market learning, with personal funds on the line at all times, struggles, losses, beatings, the works and what have you. 
 
And now, there’s cost-free-ness.
 
That’s my win in the markets!
 
🙂
 
 
 
 

One-Way Bias

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I know, I know…

…but am not getting cocky, please believe me. 

There is something about a one-way bias,…

…so let’s discuss this one today.

When we’re only focused in one direction,…

…we’re not second-guessing the market. 

We have a set strategy, whatever it might be.

We don’t abandon it, suddenly, to go reverse. 

That saves us a lot of trouble, time and money. 

How?

No looking over the shoulder, as to when the market is reversing, saves trouble and time. 

Reversing during a set trend fails, fails, fails, till it succeeds.

Thus, money is saved, since all these failures are avoided. 

Money is made by not reversing, if reversing is to be a failure many times. 

Brokerage is saved. 

Yeah, bucks are saved, and perhaps made, owing to a one-way bias, let’s face it.

One might argue, though. 

Here it comes.

What about the huge profits to be made when a market reverses fully and finally?

Ya, I knew this one would come.

Pipe-dream.

Firstly, how would one know when a market is fully and finally reversing, before the event has set in fully and finally?

The truth is, it’s not reversing, not reversing, not reversing, till it’s reversing fully and finally. 

Does one really want to keep going contra till one is proven right, breaking an arm and a leg on the path?

NO.

Canning the argument. It’s a fail. 

Let’s say the market has fully and finally reversed. 

Now what?

Does one change one’s bias?

Or what?

I knew this one one would come too!

Changing bias is detrimental to a long-term investor’s strategy.

No-brainer, right?

So what does the long-term investor do when the market reverses fully and finally?

As a market over-heats, the long-term investor has been busy. 

He or she has not been not buying, but selling, unwanted stuff at first, and then freeing up wanted underlyings, such that what remains in the markets is free of cost. Ideally.

Thus, when a market reverses fully and finally, such an investor is not afraid of letting underlyings be in the market, since they are “freed-up”.

Now comes the full and final reversal. 

For the long-term investor it’s a valuable time to pause, giving the nerves and the system much-needed rest.

Liquidity has been created and pickled.

It’s a time for research, reading and reflection. 

Activity will resume upon the next bust. 

For someone with a short bias, like for the “Bears” in the Harshad Mehta TV show, though, now is an active time. 

Positional traders change bias after long-term trend change. 

Personally, I find going both-ways pretty taxing, so mostly, I stick to a long-long bias.

I say mostly, because once a downtrend has set in, the punting-demon does emerge, and I might trade a few puts here or there for the heck of it, if there’s nothing better to do, but not to the extent of contaminating my long-long bias.

Living in a country showing growth, active in its markets, we will do well with an upwards bias.

Short-circuiting poison will emerge from time to time. 

Control it…

…till you can’t.

At that point, trade a few Puts, or a Put Butterfly, or what have you, just to see what the other side feels like.

It’s just recreational, you see, not enough to contaminate one’s main bias.