Category Archives: Target

MainStreaming

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When the trickle…

…becomes a flow…

…becomes a water-fall, …

…you’ve just gone main-stream.

Life main-stream is not different as such, …

…except for more zeros behind a one.

One more thing is very prominent, though.

NOISE.

Yeah, noise just got that much louder.

Why?

Because…

…there’s your main-stream, …

…and ever other professional concept or suggestion, …

…is noise, …

…for you.

If that’s not your reality, you’re going to bungle up your main-stream.

At this stage, mistakes are costly.

Going back to a drawing-board is going to cost precious time.

By the time you’ve gotten to your main-stream, time is not a luxury.

Make your scaling up worth it by believing in your main-stream.

Keep fine-tuning it to make it work for you, to its logical conclusion.

That would be the legacy stage.

Once you’re passing on your legacy, all else becomes noise, since closing a positive loop with deep satisfaction is what we ultimately strive for.

Mini Models

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Hey.

Patterns …

… keep changing.

Sometimes, markets move with a rhythm.

At other times, there’s none.

Rhythm, that is.

What is there, then, at these times?

Nothing recognizable?

Noise?

Something developing, but still not discernable?

A mix of all this?

It’s ok.

We don’t have to have a pattern at all times.

We’re ok with occasional mini-models.

Once defined, one moves as per these.

When the mini-model doesn’t work anymore, one discards it.

Examples?

Mondays are slow. Then they’re not. Helps in entry-planning, and sometimes also in exit-planning.

There’s one breakout in the watch-list per day. Then there’s none. Helps during profit-booking and / or exit-planning.

There’s one addition to one’s in-profit watch-list per day. Then there’s none. Helps in recognizing bullishness picking up and slowing down.

Monthly profit target not met by far, and it’s nearing the last week of the month. Rally slowing down? Reversal coming?

One gets the gist. Make up any mini-model.

Make up?

Yes. That’s the thing.

Working with something that no one else in general is using, or has thought of, is an edge.

What this means is, that while others might be making use or no use of slow Mondays, these haven’t become a mass pile-on party like a Fibonacci event, which the whole world knows about, uses, and can be fooled with.

Our own mini-models work …

… just for us,…

… and then they don’t, …

… which is when we discern the next one that is working.

We traverse from mini-model to mini-model, learn tremendously, and …

… create more and more cost-free-ness.

Over time, all our created cost-free-ness makes one’s cup run over.

🙂

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.

Synthesis…

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…makes for a call.

What exactly is…

…synthesis?

Multiple factors amalgamate, react, cook, boil, simmer…

…and lead to synthesis.

Where does it happen?

This one happens inside…

…of one.

What is it’s value?

Synthesis is a per saldo action resultant pointing the way forward. It’s value is proportional to acumen generated by experience.

Acumen is a translation into DNA thing. It’s how we pull the bow, aim, and shoot. It’s how we get the arrow to swerve, and how we keep firing when it’s hot. It’s how we…

…don’t fire when there’s no need.

Acumen also varies as per how we are feeling. Ill-health dims it temporarily. Thus, when action is coming up, we try and stay healthy. We, in general, try and stay healthy in body and mind.

Not all living beings have full capacity to synthesize.

Not all who do use their capability.

Synthesis in the Zone leads to some huge market calls.

Discerners

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Hey,

We learn…

…to discern.

Primarily, what we’re looking out for…

…is a real deal…

…amidst noise.

To reiterate, we need to know the difference between noise and situations we must act upon.

The thing about noise is, …

…it’s messy.

It’s not difficult to recognize the stalky forest of noise.

However, sometimes, …

…one has trouble seeing the forest for the trees.

One needs to give noise space.

View it from a distance.

Hands-off.

For a while.

One will know it’s noise.

Situations requiring action are much clearer.

Mostly we pre-define them.

When our definition is hit, we get alerted.

Then we act.

We’ve taken any fear out of our action by mentally preparing ourselves by the time the action situation arrives.

Sometimes, situations develop very fast.

There’s been no pre-definition.

This is where we are tested.

Are we there to see the fast situation unfolding?

Mostly not.

The solution to this is to pre-empt lucrative scenarios and feed in good till triggered (GTT) orders.

These remain in the system for one year on some platforms.

If we’ve been lazy and haven’t fed in our GTTs, we need to recognize an unfolding situation.

Most have that capability.

Most are also afraid.

Can we quickly eliminate fear and act?

Those who can win big over a large sample size.

Holding

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Hey.

I hold…

…my course.

Steering gets tough at times.

The most difficult time to continue holding…

…is during adversity.

The line held drops for a bit.

One veers off the path.

While off, there’s a lot of reflection.

Was one better off on course?

There was stability.

Routine.

Continuity.

A logical conclusion.

Satisfaction.

Achievement.

Success.

Etc.

Whilst off, random, non-linked and irrational causes are created.

These causes are useless in the long-term scheme of things. In fact, their effects hamper.

So, how to continue to stay on course, especially during adversity? Nichiren Buddhism shows the way.

One can pick up activities that simultaneously create good causes.

One can set a daily goal.

Each day one strives to achieve the goal.

While doing (these), one forgets the circumstance, the adversity or the whatever that’s been bothering one.

However, if one is not comfortable following a set formula, on a personal note one could well establish one’s own methods of making powerful good causes too.

The feeling of immersion and happiness emerging from the good causes created engulfs the persona and takes one forward steadfastly into the day, and to a night of satisfying sleep.

There will be a next time, when holding will look difficult.

At the next juncture, one will try and remember that one successfully navigated through last time.

And, that one can repeat the strategy that saw one through, to see one through yet again.

Taking this loop to the nth, life becomes a ballad of ons and off, with resolute efforts to get back on after each off.

Vital towards getting back on are good fortune earned from the many good causes created, and will power strengthened from multiple jumps back on.

Activation

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Wrt success and happiness…

…what was your pick.

You said both, right?

There was a thing about that, though.

Thing was, success made one happy, sure, but how long did that particular happiness last?

It got boring after a point.

Taking any one thing, and succeeding at it again and again and again, gave no kick anymore, after a while.

Because everyone wished to succeed in life, and, also, because everyone strove to be happy, how would one go about making the happy condition regular, in worldly terms, apart from the spiritual angle?

Accumulation and activation of good fortune was a must here. How would one go about this?

By doing anything that helped the cause of another. By doing good deeds that helped something, or someone. This would then create a field of good fortune. On such very field, success could flow, towards one. No field meant no flow. Creating field after field, then moving on to create another – such behaviour would accumulate mountains of good fortune, which, upon breaching of critical mass, would get activated for fruition. Activation was important, since initial success motivated one to continue.

On this trajectory, success would eventually overflow. Perhaps there would be fame.

Hey, what had happened to one’s happiness?

Did it increase post activation? Upon fame? Or did it decline?

Down the line, the high would summon its buddy, the low.

Between highs and lows, there was a high chance of balance being lost. Happiness levels would start to decrease. There came a time when it was gone.

One started to ask. When was one happiest?

While creating field upon field, yes, that seemed correct, that’s when one was happiest.

Creation of good fortune, the sheer act, that was it.

One didn’t seem to bore of that particular kind of happiness emanating from creation.

That brought us back to the basic question.

What was worth striving for most in life?

To immerse repeatedly into the act? The act of creating good fortune?

That seemed to be the best answer.

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.

2050

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Hey,

There’s a Street View… ,

… , and then there’s a street view.

I rely on…

…my street view.

Making it a point not to heed that the Street thinks, I repeatedly look for micro and macro signs on my street.

My street is where I am.

I mostly spend my time in my own country.

And, my street view is one of staggered growth.

There’s development…

…with holdups waiting to happen out of nowhere, and often.

That’s India, for me.

Am I going to cry?

I scream, actually, at apathy prevailing, but from the inside. To no avail. At one point the screaming stops. The only thing remains is to take advantage. I’ll make it up for India. Part of the money earned will go towards a private initiative towards my country’s development. So, no guilty-conscience here. My country gives me repeated opportunities. Why should I not take them? India does give me grief too. It’s ok. I love my country. We both can take liberties with each other, as do parents and children between themselves.

Owing to our attitudinal coordinates, our country is full of bottlenecks, and these bring a rising entity down, regularly.

Apart from that we’re emotional.

Over-emotional, actually.

So what’s going down goes down by an unhealthy multiple.

Activation.

Chart Pattern?

Numbers talking to you?

Method.

System development.

Pinpoint.

Enter.

Sizably.

Making size a function of portfolio magnitude.

When something here rises, one lets it ride with a stop that eventually triggers, then trails.

One never books a winner fully in India. Not in this bull market.

Billion dollar strategy.

One first goes cost-free.

And then some.

After one’s in-the-profit stop is triggered and then hit, one takes one’s principal out, with which one will fight the next battle, the next quest for cost-free-ness.

One leaves one’s cost-free-ness created on the table and shifts if out of sight and out of mind.

One’s cost-free-ness can be held for a long, long time.

Till 2050?

Yes, if the underlying has been duly whetted for a 2050 hold.

That’s how we play India.

Till 2050.

Throw-Offs

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Hey.

Stumbled upon a concept.

Calling it the throw-off, and…

…sharing it with you.

How many times have you booked too early?

Booked late?

Gotten in early?

Late?

Not risen to required action?

Made a bad decision?

Lost faith in the market?

In yourself?

These are results of throw-offs.

Something has thrown you off your game.

This something is the ongoing market action at the time.

Action has been such, that it has thrown one off one’s track.

It’s not your fault. Action is such.

Price hits a stop, for eg. You take the stop. Price resumes in same direction.

Price hits a target. You get out. Price resumes.

Price falls just short of the stop, resuming. You double down. Price then breaches stop and a down-trend starts.

Price shoots past target, not giving you time to act. You then define a new target. Price nose-dives beneath old target, just as fast, eating up a good portion of your original profits.

Examples can be many. Common factor is market action throwing you off your profits, or throwing you out in loss.

Where do we stand?

Is this cause for alarm?

Is there something we can do about it?

First up, market action is a sum resultant of all market behaviour put together, and is perhaps impossible to defy. Our pockets are not deep enough by miles.

We don’t fight market action.

We use it.

Yes, since we can’t defy it as such, we make it work for us. Also, if market action alarms you, do something else which doesn’t. That’s where we stand.

It’s ok to be thrown off while following one’s trading plan.

It’s not ok to be thrown off, having been psyched into altering one’s trading plan mid-trade.

Meaning that it’s not ok to book below target owing to adverse market action above one’s stop.

Also, when a trade is going against us, again, it’s not ok to exit owing to adverse market action above one’s defined stop.

One exits at stops, not above. Sticking to this one rule will nullify throw-offs above stops. Defining is easy. Doing is difficult. Over time, with practice, we define and do. Period.

Now we tackle targets.

How do we knock-out throw-offs here?

Another day, another defining rule… 🙂 … .

Don’t exit at targets.

If you don’t exit at targets, no one can throw you off before a target.

Ok, so what’s the exit strategy whilst in profit?

Have a target.

When it comes, it triggers your stop into existence, which you have defined x% below this target.

So, we now stop using the word target. We use ‘trigger’ instead.

In other words, your stop gets activated, or triggered into existence, once a certain profit-threshold is crossed.

This stop, which has just come alive, is dynamic in nature, towards the profit-side only.

It moves in the same direction as the price, in a proportion defined by you.

As price keeps moving, your stops keeps locking in more and more profit.

You’ve knocked out the throw-off, since your exit is completely rule based, and no one else knows the parameters (numbers) you are feeding in for exit.

Eventually, price action makes you exit rule-based, when price reverses above the ‘trigger’ and hits your dynamic stop. Market action hasn’t succeeded in throwing you off your game.

Notice one thing?

You’ve been in control of your trade all along.

Your head is sane, your emotions are stable. You have set yourself up to take some very profitable decisions.

Wishing for you lots of profits…

… 🙂

.

Banana Trajectory

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Growth …

… is a non-linear entity.

Especially…

… high growth.

Amongst many things, …

… one point needs …

… pointing out.

Between periods of high growth…

… anything can happen.

The levels of what can happen are, amongst other correlations, directly proportionate to the number of similarities between an economy in question and the functioning of a proper banana republic.

Freedom of speech can be suppressed.

Parallel economies can thrive.

Extortion and blackmail can rule.

Genocide.

Landgrab.

Terrorism.

People buyouts.

Apathy.

Dysfunctionality.

And then there’s high growth again, perhaps soon, if the economy gets its act together despite its rulers, and perhaps accelerated, if the rulers come to their senses and return back to being peace, growth and democracy loving .

Without getting into what kind of a republic we live in, for lack of a better phrase, and with a very small use of one’s imagination, one could venture to suggest that our own path of growth could resemble that of a banana trajectory.

The banana in this title doesn’t have much to do with the curvature of the fruit.

Much rather, it’s about the economy to banana republic correlation.

Might I suggest that our economy’s banana behaviour is mostly mild. Then, rarely, it gets intense. Normal growth returns. Then comes high growth. Periods of very high growth are rare, but there too.

Overall I’m happy with my and in my republic.

Sometimes, its banana behaviour beats me up.

Yeah, every ten years or so, there’s a big hit.

No one likes getting hurt.

I do remember to stand up and continue fighting, …

… because it is in this very republic, that I can make my 15% p.a.c.

On the conservative side, that is. Perhaps I can make more.

I don’t get that in any other economy.

You see, occasional banana behaviour is good news for a long term contrarian.

Banananomics lead to blunders, and temporary downfalls, with all indices falling big.

Which is where we have the guts to buy, and big.

Why?

We know we are on a high growth trajectory with intermittent banana behaviour.

A very simple formula suggests itself.

Buy big during reactions to banana behaviour.

Take principle out after spurts of high growth.

Sit tight on underlying in profit, perhaps for life.

A high growth trajectory with intermittent banana behaviour will give you many such cycles in your lifetime.

One stands to make multiple times the ten-yearly hits.

Upon recognising this recurring pattern, one can even fine-tune and enhance loss-attenuation.

🙂

Normal

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Hey…

… how’ve you been?

Just hit my normal, so, am feeling good about it.

LifeVector took a multi-SD shock some months back, and everything that makes my normal went out of whack.

Life today is about finding one’s normal amidst constant and new shocks.

Didn’t know I had it in me, to take a multi.

Found out while it happened and in the aftermath.

It’s good news for one’s environment, since everyone remains protected, if one is confident about navigating through multis.

So, what makes up my normal?

Firstly, I don’t fit.

So I construct my own fit.

Takes two and a half decades.

My fit has many-dimensional functionality, tailor made, to extract fullness from life.

In no defining order, there are some income-creating avenues.

Wealth-creating ones.

Recreation.

Giving.

Movement.

Study.

Wellness.

Spirit.

Family.

Exploration.

Responsibility.

Evolution.

Systems.

Auto-pilot.

Am not necessarily passing every avenue. There’s failure too.

I do know one big thing, though, from the recent shock.

It’s an invaluable lesson.

Don’t mind sharing it with you.

Am unhappy when away from my normal.

Further away, more the unhappiness.

Happiest when normal is hit.

Happiness-peak continues as normal remains intact.

Hmmmm.

Isn’t that a big learning?

Hope it helps you too!

🙂

Screen-Time

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Is that a hammer in your hand?

No?

Great.

Yes?

Does everything appear to be a nail?

In the markets, I like to keep buttons away from sight, as a start.

Meaning, that the conditions to bring a button out…

…need to trigger first.

How would I know?

For that, there are alerts.

Meaning that we go on doing other stuff, till we are alerted, that there’s action ahead.

That’s when we activate the concerned button to visible mode.

Taking time, we decide whether this particular button needs to be pressed.

No?

Proceed with other stuff as normal.

Yes?

Press.

Do your accounts.

See how you’ve fared.

Done?

Proceed with other stuff…

…till next alert for button visibility activation.

Why all this rigmarole?

Because we don’t wish to be trigger-happy in the markets.

We take calls when they’re due.

We use time-slots in between calls to live life, tension-free, happy.

That’s one approach to the markets.

I’m sure you have your own.

Maybe yours involves more screen-time.

I respect that.

Mine doesn’t involve too much screen time, to be honest.

That’s the way I like it.

That also doesn’t mean anything as far as volumes or output are concerned.

Lesser screen-time leaves me ample space for other stuff.

I get to live a fuller life-experience.

To each their own.

This is my take.

I respect your take too.

Some takes require maximum screen-time.

Some like it like that.

That’s their life.

Fine.

Respected.

This is mine.

And this is my market screen-time…

…perhaps an hour or two a day, sometimes one, sometimes two.

Something like that.

Approach

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Markets speak.

Can we hear them?

Do we know their language?

We are not born knowing their language.

We learn.

Their’s is not a normal language.

It keeps changing…

…till it’s similar to the past…

…and then it changes again…

…to throw us off-track.

We need to keep adapting.

Every corner could be a new one, with a new sign.

Feel the challenge?

The thrill upon attempting to decipher?

Do you feel fulfilled?

Well, if yes, then you’ve met your calling.

Congratulations.

Now sustain.

Play out your full market journey. Enjoy it. Win.

How?

Since every corner could be a new one, every corner needs to be approached with a what-if-plan.

Simultaneously, one is on the lookout for signs.

What signs?

Similarities, in patterns, psychology, chronology, feel, levels, anything.

Have you seen this before?

What happened last time?

Approach with multiple scenario what-if.

What if you haven’t seen current signs on offer?

Carve out the situation.

Create scenarios.

Build a what if for each scenario.

Approach.

Notice something?

Whether one has seen something before, or not, the approach is basically the same.

Great.

We’ll not bother with getting spooked out.

We just keep tapping the markets, armed with a play-out strategy for each unfolding scenario.

Our approach is designed such that we sustain till the end of our market journey and beyond.

We keep intact our health, family life, and our corpus.

We keep sharpening our edge, and keep attempting lucrative reward risk scenarios.

We learn to take our stop.

We learn to let runners run till logical exits appear.

We learn to establish and enjoy a life beyond markets.

Wishing all market success and happiness.

🙂

Banking on Infinity

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In a market…

…that promises decent…

…long-term growth, …

… we are able to…

…bank on infinity.

In such a market, the concept of cost-free-ness proves successful …

… in that it is able to generate multibagger outcomes, …

… over the very long-term. 

In such a market, the power of compounding makes itself felt in its full glory.

Also, in such a market, fear goes out the window for the clued-in player, since one is able to…

…bank on infinity.

We are fortunate to be playing in one such market. 

Yes, one such market is our very own. 

Having said that, India has idiosyncrasies, as does every market, and the Indian angle on these is definitely unique. 

The main one is that we’re an emotional lot. 

That is automatically then reflected in our market too. 

High beta. 

Meaning, in normal English, that there will abound huge entry opportunities, and huge exit opportunities, on a regular basis. 

And that, if I may underline, is worth Gold for us in the pursuit of cost-free-ness.

In other words, we will be able to create cost-free-ness year upon year, month upon month, and, at times, like now…

…week upon week.

Is that not…

…wonderful!

Once cost-free-ness is created, we transfer it out of sight, and, banking on infinity, we can just sheer forget about it, focusing our attention on the next round of cost-free-ness-creation.

We can do that because we are in the right type of market for this particular model. 

In fact, this model has been conceptualised for exactly…

…this market. 

Maybe someone has done it before me. Perhaps a lot of people. More successful. Big players. Famous. And that’s huge. I’m happy for them.

However, that’s not the point. 

We’re not in this for the glory of who got there first.

We’re in this for generating long-term wealth by using the concept to the hilt, because it’s working, and promises to do so till into the far-foreseeable future.

Before I sign off for now, there’s one more thing to remember. 

When we bank on infinity, we most hold before our eyes, that the translation of long-term growth into long-term wealth…

…is not linear.

Growth is perceived in spurts of optimism spilling into over-optimism, and these become our exit opportunities, where we exit with our principals, and are left with stacks of cost-free-ness. 

During spurts of pessimism, spilling into sheer depression, prices dip low enough, such that we, once again, get representable entries. 

It’s a neat little cycle that has been playing out since markets started. 

In our own market, this cycle allows us to generate cost-free-ness, again and again, while banking on infinity. 

 

 

 

 

Is Cost-Free-Ness the Holy Grail?

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There is…

…a Holy Grail…

…mentioned in the Holy Bible. 

Also, …

… human capital

… pursues excellence.

I…

… am no exception.

Having stumbled upon…

…cost-free-ness…

…after many knocks in all possible markets, …

… and having developed the concept a tad, …

… I do say to you this.

I say to you, …

… , that cost-free-ness…

… is no holy grail. 

In its pursuit, money does get stuck. And, …

… upon its generation, money does flow, at times, into expensive, “uncatchable” material.

These are the two main mentionable “nuances” associated with the pursuit of cost-free-ness, that one needs to be aware of. 

Money getting stuck? Hmmmm.

If we’re afraid of money getting stuck, we should exit from the market. Any market. Period. 

Don’t be in the game if you can’t take the heat. 

It’s ok. 

Play another game, where you can. 

Perfectly fine.

Now let’s tackle the other one. 

Purists are jumping, I know. 

I can hear them yelling “EXPENSIVE!”

Sure.

Extremely high quality…

…will be expensive. 

One legitimate entry opportunity every ten years can be possible in such underlyings.

When it comes, and if one is having a bad hair week, one can even miss the window.

When it comes, we’ll enter big.

That’s a larger game, non-cost-free initially, and we’ve played it well in March 2020, entering non-cost-free, entering big (because of the available margin of safety), and generating vast amounts of cost-free-ness within a few months, to then ultimately be sitting on large, extremely high-quality & completely cost-free portfolios, perhaps for life.

However, such timelines are anomalies. We’ll pounce upon such chronologies when they happen. Meanwhile, …

…our bread and butter is to generate small amounts of cost-free-ness on a regular basis, day-in-day-out, all year round, …

… and it’s ok to enter extremely high quality with one’s freshly generated small amounts of cost-free-ness, right here right now, at the expensive price. 

Why?

Firstly, it’s not costing you. 

Secondly, when we deploy cost-free-ness into extremely high quality in a long-term-growth-promising market like India’s, it’s probably for life. 

Seen from a perspective of a decade or two, or perhaps three, the currently expensive cost-free entry is legitimate. 

Please do the 10, 20 or 30 year math for India, and you should come to the same conclusion.

Why do we wish to deploy immediately?

Out of sight, out of mind. 

Money has idiosyncrasies. 

The biggest one is that it is spent, in the blink of an eye. 

Better, deploy it, specifically also because your mathematics is okaying a legit entry for the extremely long-term.

And, pray, have you wondered why you will be able to sit on your investment for so long?

Primarily because your entry is cost-free. 

There is no other singular, more overwhelming reason. 

Cost-free-ness overwhelms the mind into sitting on extremely long holds. Try it out for yourself.

That takes care of the second point, …

… and I say to you this, that…

… cost-free-ness, …

… though not the holy grail, …

… could well be the next best market concept available to mankind, for long-term success in the markets.

Wishing you lucrative & highly successful cost-free investing!

🙂

Taking Off with Cost-Free-Ness

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In Buddhism, …

…there’s a saying to the effect, …

…that as the sun rises, …

…the radiance of others stars, …

… to the observer’s eye, …

… pales, …

…into insignificance.

We’re not going to leave an observation like that hanging.

We’re going to extrude it.

When we make a well-managed underlying cost-free, …

…what are the implications, …

… on existing holdings, …

…which are not cost-free yet?

Well, over a large period of time, …

…their comparative impact on the folio…

…will start paling, … into insignificance.

Let’s say we hold x value of cost-free-ness in an underlying.

Rest of the folio’s value is y, with y = let’s say 30x.

Here’s one way go looking at it.

What’s the maximum loss you can incur on your y?

Not going to happen, but it’s 30x.

What’s the maximum gain that can occur on your cost-free holding?

Uncapped. Yeah.

At 15% per annum compounded, which is reasonable to expect for a well-managed company with many other tick-marks, if you hold your cost-free holding for 25 years, it’s value would be ~ 33x (= 1.15^25).

So, what have you done?

You’ve paled your other portion of the folio into “insignificance”, with just one created pocket of cost-free-ness.

Do ponder, what the implications would be, if you were to create a). 10 such pockets, or b). 20, or c). 50, or perhaps even d). 100 such pockets of cost-free-ness?

Can you even imagine where you would then be in 25 years?

a). With 10x of cost-free-ness, you would be at ~ 329x.

b). With 20x of cost-free-ness, you would be at ~ 658x.

c). With 50x of cost-free-ness, you would be at ~ 1645x.

d). With 100x of cost-free-ness, you would be at ~ 3292x.

Now substitute the value of x here.

Arbitrarily, let’s take x = 1.

One rupee.

One thousand.

One lakh.

One million.

One Cr.

Take what suits you.

See where you started from, and see where you’ve then come.

For example, starting with 1L of cost-free-ness, we land up at ~ 16.5 Cr in 25 years for 50 pockets.

Let’s say I have a target of creating 1 million worth of cost-free-ness in 50 pockets.

Where do I stand in 25 years?

At ~ 165 Cr (50 *1Million *1.15^25).

Alone the after tax dividend emerging from this stream would be > 2.5 Cr per annum.

Any takers?

🙂 (Happy Cost-free-ness!)

Supremacy of Cost-Free-Ness makes itself felt in Equity alone

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The impact of cost-free-ness stretches across all asset-classes…

… that are long-term-holdable.

Equity, Gold, Real-Estate, etc., …

… with perhaps bonds being a question mark with regard to applicability.

Why is cost-free-ness not that valid a concept for short-term-holds?

That’s because multibagger appreciation of a short-term-hold is not realistically expectable.

Then, with gold and real-estate, there are certain nuances, which need to be mentioned.

Gold doesn’t adjust itself for inflation. The 100-year appreciation in Gold is 1% per annum compounded, adjusted for inflation. We can make some Gold cost-free, and then hold the cost-free Gold for the long-term. However, to expect it to burgeon into a multibagger is too much. There’s no human capital behind Gold, no intelligently thinking minds. Also, Gold is commodity-cyclic in nature. Forget about all these technical arguments. Sheer 100-year History has taught us not to think in multibagger terms with regard to Gold. Let’s say we held it for the touted 100 years. Well, then, 1 x 1.01 ^ 100 = 2.70. We’re then holding a 2.7 bagger after 100 years. Safety risk too. Naehhh, not interested.

What’s the deal with real-estate? No human capital behind it, again. Thus, the asset-class doesn’t auto-adjust for inflation. Also, we’re not taking any cash-component into consideration. What does that make real-estate behave like, in the long-term, in a regime like now? Perhaps like a glorified fixed-deposit. Or, even, perhaps, like a high single-digit yielding bond. Now minus inflation. Hmmm, after the math, real-estate becomes an asset-class that yields 2-3% per annum compounded, adjusted for inflation, let’s say 2.5%. Minus the half percent for its management (which is a hassle, btw). Well, then, 1 x 1.02 ^ 100 = 7.24. We’re left holding a 7-bagger after 100 years. With hassle in the equation, 100 years is too much effort for a 7-bagger. Not interested either.

Now let’s look at Equity. Human capital is behind it. Equity is hassle-free with regard to its management. Equity auto-adjusts for inflation. All Equity that ever existed, including companies that have gone bust, has shown a return of 6% per annum compounded, adjusted for inflation. Taking companies out that don’t exist anymore, Equity has given a return of 11% per annum compounded, adjusted for inflation, over the long-term. Intelligently chosen Equity, with proper due diligence, is extremely capable of giving a return in the range of 15% per annum compounded, adjusted for inflation, in the long-term. Let’s do the numbers. 1 x 1.06 ^ 100 = 339.30; 1 x 1.11 ^ 100 = 34,064.28; 1 x 1.15 ^ 100 = 11,74,313.45.

These numbers don’t need crunching.

It’s pretty clear, that the supremacy of cost-free-ness makes itself felt in long-term held, cost-free Equity.

I wish for you happy, long-term cost-free-ness!

🙂

Washing a Stock “Sin-Free” with Cost-Free-Ness

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Each stock has sins on the balance-sheet.

Many sins don’t show up even, on the balance-sheet.

You see, they’ve been swiped under the rug.

One’ll never know the whole story, unless one is the promoter oneself.

Some stocks have nothing noteworthy to hide, though.

Others have a side they don’t want you to see.

Still others are brimming with skeletons in their cupboard.

It doesn’t matter what you’re holding, …

… when you make the stock cost-free, …

… for you, the stock just became sin-free.

Congratulations.

You’re done already.

That’s the beauty of cost-free-ness.

Yeah, in cost-free-ness, …

… one has a universal balsam…

…that rinses the underlying completely clean to hold, like, forever.

Cost-free-ness is like a magic potion that turns around the whole story, …

… any story.

So, …

… what’s the motivation…

—in making the wholesome effort…

…of creating cost-free-ness?

Multibaggers, developing within our high quality, and now cost-free, holdings.

And how could one classify our feat of cost-free-ness, in another, very meaningful and currently “hot, happening and insider” way?

Nothing’s happening to one if markets go down even to zero, as far as one’s cost-free holding is concerned, since one has pulled out all the principal. Since one is not incurring any loss whatsoever from the holding, even upon market-reversal, for one, this cost-free holding, if I’ve understood Mr. Taleb (coiner and first-user of the phrase “antifragile”) correctly, is antifragile in nature, also then because, price contraction in the cost-free holding is a good thing for us, in that more purchase of the high-quality holding can subsequently happen, with the goal of making more and more holding cost-free, as markets swing back upwards. Market reversal after cost-free-ness is setting us up for a larger cost-free holding in the future. Seen from our initial sweet-spot of cost-free-ness, since market reversal betters our poise and increases our potential to make our cost-free holding grow in units (and size), that would be the last tick mark, required and now ticked, which makes our cost-free and high-quality holding, also, antifragile.

Being Cost-Free is like having 100% Margin-of-Safety

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What allows us to sit?

It’s margin-of-safety.

When we buy without margin-of-safety, we are not able to sit for the long term.

Long-term investing fails for us if we don’t know how to sit.

Extrapolating this logic further, what would allow us to sit on high-quality holdings, like, forever, allowing for multibaggers to develop in our portfolio?

It’s cost-free-ness.

Being cost-free in a stock is equivalent to having 100% margin-of-safety on the holding.

Such a state of being allows us to freely sit on the holding, like, forever.

A range of other benefits open up for us, and about these we have spoken in detail earlier.

For example, we become fearless with regard to our cost-free holding. Then, we experience full freedom of focus on future play, while simultaneously forgetting that we even have this other cost-free holding that we own! Like I said, we’ve discussed all this thoroughly in previous pieces.

Bottom-line is, that we understand explicitly following extrapolation : Buying with margin-of-safety translates into sitting-ability for us, leading to creation of cost-free-ness upon appropriate appreciation, and such cost-free-ness in turn equates to 100% margin of safety in the held underlying, which then allows us to sit indefinitely on our high quality holding.

We’ve thus set the stage for holding many multibaggers in our ‘folio, by the time we reach retirement age.

🙂