Category Archives: Patience

Don’t Cry for Chris Atkinson

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Chris Atkinson is terminal.

You couldn’t tell that by looking at him.

He’s happy. Most of his physical pain gets subdued by medicine. The remaining portion gets subdued by the harmonious environment he’s created around himself all his life.

Whatever’s left of his life is still a pleasure. He looks forward to it.

He won’t be sorry to go, though, for he carries with him a huge sense of accomplishment.

For starters, he’s had a flawless marriage. Neither of them have felt the need to fight.

He has been faithful to her and has given her everything he possibly could.

She has supported him selflessly in every venture of his. She has never abused the financial freedom he’s given her. Also, she’s never been jealous of his intelligence.

She has not nagged. That’s a huge one, and he knows the value of his good fortune.

Furthermore, she has overlooked the “too-much proximity” clause, and has allowed him to work from home in peace. She has even added to the harmony of his work-sphere at home.

He’s not told her he’s terminal. In fact, no one else knows, except him and his doctor.

He has always wanted to work till his last day. Also, she should see his smiling side till the end.

What about after that?

Will she be safe?

After all, before her marriage, Jane Atkinson was probably the most tech-unsavvy woman alive.

Forty something years with him have completely turned that around.

She is financially independent today. More importantly, she’s able to access and manage her personal funds and investments independently. She doesn’t need to contact any fund-managers, brokers, bankers or the like. All her accounts are online, and their logins and passwords are sorted, stored, and accessible only to her. She is able to move her personal funds worldwide with a few button-clicks.

He has taught her fantastically.

She has learnt very well.

Initially, it was a slow going.

The most important thing was, there was no ego from her side while learning. She knew he was teaching her something really important. Though she was not the least bit interested in it, she respected his seriousness and intensity, and decided to learn as diligently as she could, without insulting his earnest attitude.

Slowly, she’s gotten the hang of it. Slowly, her interest in money matters has awakened.

It’s also worked because he has been very patient with her. He’s never blown up.

His monthly “lectures” on saving have converted her from a champion spendthrift to a slightly serious saver. She still spends a lot, but has been managing to save a bit every month. Since his monthly allowance to her has been huge since the beginning, the bit she saves equates to a lot of money in her personal account at the end of every month, money that’s waiting to be invested.

And now comes the kicker. She knows how to handle idle funds. Her knowledge on investing comes purely from watching him in action. She has watched in bits and pieces over forty plus years. She has shared his professional tensions, allowing him to speak freely about what has bothered him. Her mind has soaked in all this information. Because of the long time-span involved, she has digested the information and transformed it subconsciously into a usable form. Today, she is not only financially independent, but also financially capable.

So, no, he’s not worried about her on the financial front.

What’s eating him a bit is the emotional side of life. How will she take it?

He knows she’s strong. She’ll be shattered, though. They share a bond that most people don’t have. They don’t need to speak in each other’s presence. There’s so much mutual love, that life is telepathic. Her mental strength will pull her through, he tells himself. Their happy memories will sooth her feelings.

If you ask him, he’ll want her to move on. As in, he’ll want her to find a new and suitable relationship. She won’t, though. They have something a new relationship will not be able to replace.

He knows she’ll plunge further into her charity work, and will keep busy.

She’ll remember and miss him every day. That very thought takes away any of his pain that remains, physical or mental. He feels wanted, and will do so till his last day and beyond. Feeling wanted is a tremendously satisfying state of mind.

He has always been aware that she is emotionally dependent on him, and has never abused this knowledge. Over the last four decades, he has made her aware of her emotional dependence, asking her to work on it.

Today, he feels she’s capable of handling his permanent physical absence. It’ll hurt her, but she’ll handle it. She’ll cry, but joyful memories will pull her through.

Don’t cry for Chris Atkinson.

When he goes, he’ll go on a happy and fulfilled note. He’s had a great life.

Many couples wish they would live their lives like Chris and Jane Atkinson have done.

Going All-in Against Mrs. Market

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Yeah, yeah, I’ve been there.

And it backfired.

Luckily, my stack-size in those days was small. That’s the good part. The shocking bit was, that back then, I had defined my stack-size as my networth. Biggest mistake I’ve made till date in my market-career, and I was very lucky to escape relatively unhurt.

Wait a minute, why is all this poker terminology being used here, to describe action in the world of applied finance?

Well, poker and market action have so much in common. Specifically, No-Limit Hold-’em is deeply related to Mrs. Market. We’re talking about the cash-game, not tournament poker. It’s as if Hold-’em is telling Mrs. Market (with due respect to Madonna):

i’ve got the moves baby
u got the motion
if we got together
we’d be causing a commotion

A no-limit hold-’em hand is like one trade. Playing 20-50 hands a day is excellent market practice. You’ve got thousands of games available to you online, round the clock, and most of these are with play money. Even though the “line” is missing here because of no money on the line, this is a no-cost avenue for trade practice, and it’s entertaining to boot.

Back to stack-size? What is stack-size, exactly?

Well, your stack size is the sum of all your chips on the table. You play the game with your stack, and on the basis of your stack-size. The first thing you need to do before there’s any market action is to define your stack-size.

A healthy stack-size is one that allows you to play your game in a tension-free manner. My definition, you ask? Well, I’d start the game with a stack-size that’s no more than 5% of my networth. Segregate this amount in an account which is separate from the rest of your networth, and trade from this segregated account. That’s the wiser version of me speaking. Don’t be like the stupid version of yours truly by defining your entire networth as your stack-size.

In this 5% scenario, you have 20 opportunities to reload. It’s not going to come to that, because even if a couple of your all-in bets go bust, you will eventually catch some big market moves if your technical research is sound and if you move all-in when chances of winning are high.

Wait patiently for a good hand. Then move. One doesn’t just move all-in upon seeing one’s hole-cards. If these are strong, like pocket aces, or picture pocket pairs, one bets out a decent amount to build up the pot. Similarly, if a promising trade appears, and the underlying scrip breaks past a crucial resistance, pick up a decent portion of the scrip. Next, wait for the flop (further market action) to give you more information. Have you made a set on the flop? Right, then bet more, another decent amount, but not enough to commit you fully to the pot. Then comes the turn. The scrip continues to move in your direction. You’ve made quads, and you’re holding the nuts. Now you can commit yourself fully to the pot and move all-in. Or, you can do so on the river, checking on the turn to disguise your hand and to allow others to catch up with your nuts somewhat, so that they are able to fire some more bets into the pot on the river. Your quads win you a big pot. You fired all-in when the scrip had shown its true colours, when winning percentages were high. You exhibited patience before pot-commitment. You allowed others to fire up the pot (scrip) further, and you deservedly caught a big market move. Just get the exit right, i.e. somewhere around the peak, and you’re looking at an ideal trade strategy already, from entry to trade management to exit.

Fold your weak hands. If something’s not working out, give it up cheaply. Ten small losses against a mega-win is enough to cover you and then some.

Often, a promising trade just doesn’t take off after you enter. The underlying might even start to move below your entry price after having been up substantially. You had great hole cards, but didn’t catch a piece of the flop, and now there are two over-cards staring at you from the flop. Give up your trade. Muck your hand.

At other times, you move all-in and the underlying scrip tanks big against you in a matter of hours. Before you can let your trade go, you’re already down big. You’ve suffered a bad beat, where the percentages to win were in your favour, but the turn-out of events still caused the trade to go against you. Happens. That’s poker.

Welcome to the world of trading. Pick yourself up. Dig out another stack from your networth. Don’t allow the bad beat to affect your future trades. If you are thinking about your bad beat, leave the table till you are fresh and can focus on the current trade at hand.

And then, give the current trade at hand the best you’ve got.

Is This Blood?

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When there’s blood on the streets, that’s when you should go out and invest.

That’s an ancient proverb.

The 64 million dollar question is, IS THIS BLOOD?

I’m going to focus on India, because that’s my playground.

So ICICI Bank breached the 700 mark, did it? The 2009 low was around 250 bucks. At 700, it’s not blood. True, the banking sector is down. However, we are nowhere near blood levels. State Bank of India might have fallen around 50 % this year, but it’s still double the price of its 5 year low.

The Sensex shows an average price to earnings ratio of around 14. Remember 2008 and 2009? Average PE of about 9? Well, in my opinion, those are blood levels. These aren’t.

True, the mid-cap segment has taken a hammering. Let’s take Sintex Industries. At 75 levels, this stock has fallen big. Nevertheless, it’s still double the price of it’s 2009 low. At 98 rupees, Jain Irrigation has really fallen too. The PE ratio has come down from 35+ to around 14, and this looks attractive. Even Sintex’s sub-5 PE ratio looks very attractive, also because the company is aggressively pursuing water-purification and “green-innovation”. Agreed, attraction to invest is present, especially in the mid-cap arena, where you’re likely to find quality in management too, as opposed to the small-cap area, where this is less likely. However, to say that there’s overall mayhem here would be going too far.

The BSE small-cap index has halved since late 2010, but is again at double the 2009 low. Many small-cap stocks are bleeding badly, though. Most small-caps haven’t proven their pedigree yet. Thus, people are letting them bleed.

Then there are stocks like Karuturi Global and KS Oils, that have been hammered down to penny-stock levels. One has problems getting into such stocks, because the underlying story can be shady. With penny stocks, there’s always the danger of oblivion, i.e. they might cease to exist down the line. Such stocks need to be traded at best, with small amounts and for the short-term. In their present conditions, they are not investment-grade stocks.

The picture that emerges is that there are selective attractive bets being offered by Mrs. Market. There are good investments to be made for long-term investors, if you possess patience and holding-power. I’m short on patience, so I like to trade India. That should not deter you. If you are a long-termer, and have what it takes, well, then you are a long-termer. And this market is offering you some good bets, so be very selective and go for it, but don’t bet the farm, since we’re not seeing all-out blood on the street yet.