Tag Archives: #LongTermFool

Upside?

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Hey.

I’m all in.

Into India.

Growth.

Emotion.

C-word. Rhymes with interruption.

Extremes.

Consumption.

Hunger for outreach.

Cut to high growth.

This being a non-linear entity.

Comes a phase where we might quadruple in six months.

That time is not now, I got that.

Time now is to get in.

When all bleeds.

That’s what I’ve done.

Downside?

Sure.

Can be down by 50%.

60%.

Would take some black swans though.

Won’t be the only one. All will go down in such conditions.

Sleep?

Well.

How can I take the strain?

Have 23 years of practice. Blood and biochem can take it and then some. I have that confidence in myself.

Any more downside?

Mood.

Emotional checks.

Good behaviour at all times, coming naturally.

No worries because markets fall.

Selling a weed upon fund requirement state of mind.

Don’t need more.

Upside?

Unlimited.

Paying the Price

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Hey.

In the markets…

…our convictions fight against each other.

Cut to the ongoing core IT vs AI standoff.

With mega spends on standoff propaganda alone, currently, the AI lobby is winning.

Not…

…comprehensively.

I fight from the core IT lobby side, which, btw, is evolving, obviously not fast enough in the eyes of almost all, and the image badgering continues.

One admits to being wrong for a while.

Admission means action.

Low-conviction SaaS names bow out. Losses taken. From what remains, stronger names bought, in innovative arenas. Ballast. Bought. Clean balance sheets. Vision. Bought.

Coming to the high-conviction names, they will remain.

However, taking on the humiliation of admitting, accepting and dealing with low-conviction losers is something I am deliberately doing.

I’d much rather discuss my losers with you.

It doesn’t mean I’m not holding winners.

It’s just that I’m choosing to discuss my losers with you.

On purpose.

A little bit of humiliation everyday, admitted, acted upon, and gotten rid of, goes a very long way. One wakes up to holding multibaggers, one fine day, sooner than later, in this manner.

And on that day, some of my high-conviction IT names, if still around in portfolio when they beat the propaganda machines of the AI brigade by posting unexpectedly great results, will then also count amongst the multibaggers held.

On the other hand, if this doesn’t happen for a longish enough time, high convictions will turn lower, ultimately underceding a minimal threshold. Since I finance my expenses by selling losers, and put my income into fresh potential winners, underceders will eventually exit. That’s the price one pays for pursuing multibagger accumulation.

Point is, ultimately, losers find the exit door. Before they become losers, they get ample leeway, measured both in time, and in notional losses, since conviction is, for that long time period, high enough to not identify them as weeds. However, once mentality flips, the weed is born in the mind. Once the mind makes up its mind that something is a weed…

…that something needs to be weeded out, …

…only to be replaced with potential flowers, …

…again, and again and again.

An Anatomy of Loss Aversion

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Just ask…

…a doctor…

…about the toughest course at medical school.

He or she will probably say…

…anatomy.

Well, cut to the stickiest field in market play.

You got it.

Loss aversion.

Is a thing, and is…

…not a thing.

Depending on the on-off switch.

Switch is off, and you don’t need to bother about how much your stock is down.

There is something in the story telling you that the broad market is wrong.

Gross discounting and mispricing.

So gross that you’ll buy more?

Maybe.

So gross that it scares you into capitulation?

Because you’ve lost faith?

Your story not sticking?

Welcome to a world where this particular switch has, for you, just turned…

…on.

And in this world, the Sun doesn’t shine so bright.

Your food doesn’t taste so good.

Your mood is below par at best.

Your ego just took a huge hit.

You were wrong.

Now you are either facing up to it, or…

…averting the gaze of your loss.

This is a common storyline. Happens all the time. To all of us. Please…

…don’t beat yourself up about it.

1). Since belief is gone, so must the stock … go.

2). From the remnants, buy into something where the story is rock solid, and where perhaps some margin of safety exists too. Basically buy where your maximum tick-marks hit.

3). Move on. There’s so much to do in life.

Once a switch goes on, please…

…keep the torture phase down to…

…zero.

By following steps 1). 2). and 3).

Till the time that a switch goes from off to on, till that time comes, please…

…enjoy your life in your world where the switch is off.

Please…

…don’t sacrifice off-time by behaving like it’s on-time.

Off-time means time and space to make some great calls elsewhere, those that come in handy, especially when a switch turns from off to on.

You know the next step.

Risk vs Reward

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Hey.

I am not ashamed…

…of being fully invested…

…in equity.

Yeah. That’s the status.

Invested. Fully. In equity.

Dangerous?

Sure.

So is driving.

Flying.

Cycling.

Living.

It’s about first digesting the dangers mentally, and then acting.

So, what are the dangers?

Loss.

Hmmm. Notional loss at best. So’s that of one’s house, when its value goes down in price.

Notional.

Since requirement is a very small fraction of corpus, it can be pulled from corpus, when it surfaces.

What will be pulled?

Chunk or the whole of a loser.

Loser’s liquidation will fund expenses.

Any accrued income will go into creating future winners.

Good money chases good outcomes.

Bad money finances expenses.

Nothing stays loose in the bank.

Fixed deposits are passé composé. Baby.

A). Our currency depreciates by the day, geo-politically.

B). Inflation eats into FDs daily, as sure as a shot.

C). Why be subject to this double whammy?

Is being down 50%, or 70%, or 90% in stocks — even the overhang of such a possibility — a better outcome, you ask.

Well, it can happen, I’ll give you that.

In fact, every stock quoted will be down 50%+ once every 5-7 years, on average.

With such scenario, how can I sleep at night, you ask.

It’s ok. I sleep well.

You see, I’ve not pickled the funds away blindly.

Quality companies with shareholder-friendly managements. Impeccable balance-sheets. Minimal debt. Value. Growth at reasonable price. Higher growth at representable price. Some punts, yes, with very high growth at unreasonable price, but that’s what one pays for very high growth. This will yield results. Over time. That’s why I sleep…

…well.

What’s the max I can lose?

100%.

Correct. For max loss to happen, planet needs to be going down. In that scenario, stocks won’t be our worry.

Reasonable number?

A 50-75% max notional loss is always on the cards, temporarily, with the world on tenterhooks all the time.

Temporarily is the key word.

Growth markets swallow hiccups–fast. And, I’m invested 100% in a growth market. With hiccups. (Where are there no hiccups?) Soon to be a high-growth market. Watch.

What’s the max profit I can make, let’s try and answer that.

Do we even have a number here?

I don’t.

Minimal Leeway

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Beats.

Bass.

Rhythm.

Swing.

Dancing.

Got my own groove going.

Background becomes…

…noise.

This…

…is the state of mind…

…mandatorily required…

…before entering an arena…

…called markets…

…in my opinion.

Now the noise can come.

It gets filtered through layers, and layers.

Most of it gets weeded before reaching.

That bit which makes it through, comes as whetted info that is required for action.

And action it is.

Need for action?

Switch on.

Action.

Done?

Switch off.

That’s it.

That’s markets where one wants them.

Any more leeway, and they have you.

Which version do you want?

Graduating

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Hey.

It’s taken me the longest time to graduate…

…in the markets.

What, you expect me to show you a…

…college degree…

…for the…

…MARKETS?!

Graduation here is nothing like that.

It’s more a state of mind.

A mind that knows…

…how to get rid of a …

…loser.

And not feel broken up about it.

No emotional aftermath.

No overhang. Period.

Buy a winner with the money that remains. Spend it towards expenses.

Use it to fulfill a desire.

Move on.

On repeat.

That’s market graduation.

It’s also the difference between winning and losing.

Very few people win here.

Why?

Nobody wants to admit they are wrong.

Nobody wants to take the immediate hit.

Almost…

…nobody.

The 10-12% who do…

…win.

And they deserve it.

It’s a very expensive lesson.

Money-wise. Time-wise.

Many go broke and aren’t able to learn it.

Others run out of time. Still not graduates.

A lot like one of the deepest lessons of life.

The one that has a…

…‘sorry’ in it.

Admitting that one’s wrong. Taking corrective action. Doubling down with positive action. Moving on to fight many more battles, thoroughly enriched.

Welcome to the Graduation++.

I completed my post-grad before I did my grad, here, in the stock markets.

Was always good with numbers, so the post-grad lesson came earlier.

How to take a losing system, and make it a winning system, just on the basis of number-correlations…

…but more of that another day.

🙂

Gracefully retiring CostFreeNess for Oneself

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Hey.

Comes a time, when a concept has done its duties towards one.

One’s own philosophy has undergone many x.y upgrades, on the back of the wealth being created by a concept, …

… … one like … …

…CostFreeNess.

Why would someone then retire such a concept?

Perhaps requirements from the field of action have changed.

Yes.

That’s the one.

Let’s divide the timeline of action into before and after.

Before today, the day of retirement [of CostFreeNess, for me], I was getting established.

The extra boost supplied by CostFreeNess was…

…required.

It gave a feeling of doing something right.

I don’t need that validation anymore.

Walking towards different heights, climbing new peaks, setting forth in motion new paths, pioneering a new trajectory – casting off the transient and revealing the true – to quote a central axiom of Nichiren Buddhism – all this – requires walking free from older concepts that were once pivotal for one.

Were.

What’s coming is not where these are pivotal anymore.

Hence the retirement, for myself.

With lots of thankfulness and gratitude.

CostFreeNess is long not done for others, in different phases of their market trajectory.

CostFreeNess is a king-maker.

I remember describing it as the closest thing to a holy grail in the markets, starting the sentence with, if I remember correctly, that ‘although no holy grail in the markets exists, …’

In this space, you’ll find many, many pieces, during which this concept was developed and during which it saw itself through, to its logical conclusion.

Of course many others would have discovered this pivot for themselves; CostFreeNess is a universal phenomenon, albeit abstract; it exists like the wind or the rain, or like sunlight and the mountains.

No one here is claiming that they are the founders of anything.

If at all, I have repeatedly remarked, that …

… we stand on the shoulders of giants.

And, to make it a better world, we pay our debts forward.

At times, something we work on …

… becomes a giant …

… like CostFreeNess.

Please feel free to stand on the shoulders of a giant called CostFreeNess, and progress on the back of its propulsion.

🙂

Gamble Ramble

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In sixteen hundred something, …

…most of mankind believed swans…

…to be white.

People would use the metaphor ‘black swan’, to insinuate things or events that were considered to be …

…‘impossible’.

Cut to now.

Black swans exist.

In reality.

The bird, in Australia.

The disastrous event genre, amongst elsewhere, also in markets.

Events earlier considered ‘impossible’, now happening…

…regularly.

Big moves.

An index going circuit. Multiple times — has happened.

Stock doing 20% up or down is no great shakes.

10%+ moves are like bread and butter these days.

News gets factored in within minutes to an hour.

Which brings us to the elephant in the room.

Can one leave the trading screen?

If one has chosen to trade, that is.

Hmmm.

Screen all the time is something I don’t want at all.

Is it possible — to leave it, and go about care-freely with other work?

Leave to whom? Or, to what?

AI, for example?

Hmmmm.

Not too sure.

When moves are big, stop-losses get jumped. Happens all the time. Remember CHFUSD? Considered unbelievable at the time? Oil. Gold. Silver. Jane Street. Brexit. CoViD. List goes on.

What about overnight?

Overnight positions are most highly exposed to black-swan openings, period. That’s the risk overnight carries.

Then, why trade?

Exactly. If too much screen-time is a thing, forget intraday. If you want a sound sleep, forget overnight.

What do you do then?

I invest for the long-term. That’s my main. Distraction side-hustle is the trading window. Play-amounts. Long. Paper trading as of now till system becomes profitable. As of now, it’s not.

Not what?

Not profitable.

Worrying?

No.

Why?

Trading system is a distractor for me. It’s not about money. I want my attention to be away from mains.

Why?

Fear of doing too much there. Fiddling around one time too many.

What about trading systems that go short?

The idea of developing one is attractive.

So, then?

However, exposure to unlimited loss, full exposure to a black swan event should it happen, is a big discourager and demotivator.

Understood. Still, it’s the short systems that make money.

Correct. At the cost of max screen-time, tense nights, cortisol-laden days, and the whole negative spiral.

Point. So what does one do?

Have developed a ‘junior’.

What’s a ‘junior’?

A junior investment system, that lets candidates graduate to the senior system.

Oh, interesting. Selection. Survival of the fittest. Clever.

Thanks. Junior keeps me busy and distracted. Senior relaxes and doesn’t get rearranged unnecessarily. Decent balance. Linkage as in promotion ladder. Natural selection, as in that which doesn’t get promoted till a longish time-stop, is expunged.

Elegant. Slick. Wonderful. Why do you then need a trading system at all? Let it die out. No full-on screen-time. Relaxed nights.

Exactly. However, am still trying to find the right fit for the gambling instinct.

That which every human has? And needs to channel appropriately, lest it balloon?

Ya.

MarketAble

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What makes us…

…marketAble?

What’s it boiling down to?

The essence…

…or, if we will, the sediment…

…is…

…what…

…exactly?

It all starts off with savings.

Save, save, save.

Now, there’s a moat.

Let’s call it emergency fund, first.

Moat grows.

Comes a time, where we say… … enough.

That’s enough moat.

From that point onwards, we are able…

…to enter the market without the tensions of not having something to fall back on.

Within this time-frame of putting together an emergency fund and making it grow beyond critical mass, we haven’t been sitting idle.

Busy, baby.

Putting together a…

…system.

Rough stage.

Deployment stage, perhaps on paper.

Moat gone beyond expectations?

Right, system needs to be ready by now, to be deployed, live.

System goes live.

Refine.

Fine-tune.

Adjust.

Fiddle.

Attenuate.

Nail.

Will take some years.

In those years, we play it small.

Right.

Comes the sweet-spot.

You feel it.

System feels just…

…perfect…

…to us.

That’s the moment.

Now we can scale up.

We are continuing to, though, as per market situations — refine, fine-tune, adjust and attenuate.

Idea is to maintain the sweet-spot.

Goes away?

Bring it back.

Keep bringing it back.

Once we’ve learnt to keep bringing the sweet-spot back…

…we are then, from that point onwards…

…marketAble.