Category Archives: Mrs. Market

Where are u going, Mrs. Market?

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Mrs. Market follows no one’s rules.

She’s got a mind of her own.

We need to understand that.

She likes attention. We need to keep asking her where she’s going.

The wrong thing is to ask each other where she’s going. Why not ask the source?

So how does one ask her?

By putting one’s money on the line and getting into a trade.

You’ll get your answer all right.

She’ll tell you where she’s going. If it’s a winning trade, she’s going where you think she’s going.

If it’s a losing trade, she’s got other plans.

And you’ve got your job cut out: i.e. to get out of the losing trade and to move in her direction.

Mrs. Market goes to work

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Ben Graham gave us Mr. Market.

I’m sure you remember the polite but schizophrenic-manic-depressive-to-overtly-optimistic fellow.

Then, over the years, Mr. Market had a sex-change.

Meet Mrs. Market, the suave, canniving, multiply schizophrenic, cold-blooded and “efficient” ((she thinks she’s efficient))  global phenomenon.

If there’s one thing she wants, it is respect. Yes, she wants your full attention. Either that, or she wants you to lay off. Or, she’ll just pull your pants down. Period.

Her quantum of movement and also her frequency of movement nowadays has become nerve-wracking. Not to forget her speed of movement – play her if you can take her speed and if you have a sound heart condition.

She rewards some of those who look at her all the time. First she wants undivided attention, and then she wants you to know her levels. If she crosses a level, she wants you to join her. Then she rewards you.

But, she’s canniving, remember. Sometimes, she back-tracks on you. So, whenever you’re on a date with her, just carry some insurance with you. This insurance is called a stop-loss.

And now for her weak-point. Wanna pin her down? Well, she thinks she’s efficient. To be fair, though she was a disaster at efficiency earlier, she has become a little efficient now, but only sometimes. At these times, you don’t want to go out with her, because she’ll block your every pick-up line and trick in the book.

You actually need to take her for a spin when she’s inefficient. Then you’ll get to any base with her. In fact, you might even hit a few home-runs.

But careful, you’re not traveling without your insurance. Because, at any given time, she might turn efficient, and God help you if you are caught unawares.

There will be times when she will pull your pants down despite your every precaution. At these times, you’ll need to pick yourself up and live for another day. What’ll have helped is the fact that you didn’t give your everything into your affair with Mrs. Market before she ditched you. What you saved up can be used for another, this time lucrative fling with her.

She’s a relentless worker. On weekends, though, she rests. You need to catch your breath too, to get ready for her next ride. Wish you luck!

A Time for Things

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You don’t normally have dinner at breakfast time, do you?

Of course not.

Similarly, you don’t buy into a State Bank of India with a 5 year horizon when 6 years of earnings growth has already been factored into the price.

There’s a time for things.

You do buy into the same State Bank of India with a 2 week horizon when it’s shooting off the table and giving clear-cut up-moves as it makes its way into no-resistance territory.

And that’s about it. You’re in it for the short-term because that’s how the environment has defined itself. It’s a trading environment, not really meant for investors, whether conservative or unconservative. Thus, you have a stop-loss mechanism in place, in case there’s a down-swing, because up-moves can go hand in hand with down-moves. Where there’s a big money to be made, there’s chances of making a big loss too.

Oh, are you asking why you can’t enter into such stocks at this time with a long-term perspective? I see. Do you fly first class? No? Why not? Because it’s expensive, right? Similarly, such stocks are expensive just now. That’s not to say they won’t rise further. What you need to understand is that when you wake up five years from now, such a stock will have peaked and could possibly be heading for its trough. So your net returns over the long-term could even be negative.

Really wanna be a successful investor? Then you need to learn to buy cheap, with a margin of safety. You need to be patient enough to wait for lucrative entry levels.

Not getting your margins of safety anywhere in the markets just now?

Ok, just trade till you get them. Then you can stop trading, and start investing. Fine?