Tag Archives: #MarketModel

Take a Bow!

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Hey.

So, what’s our model?

It’s not sector based.

First I thought it was.

I now realize it’s not.

Well, to be honest, our model has various facets.

One of these is on, currently.

Value? Buy. Deep value? Buy.

Objective? Make a multiple fast. Pull principle out. Leave profit in the market for compounding.

Sector?

Doesn’t matter.

Moving on to next facet.

Ok. In range bound markets, what do we do?

No value buying, of course.

Ideally nothing.

However, action does get the better of us, at times, ya, ya, we are all human, and have that video game need. So, in range-bound markets, we do buy, at times, with the objective of making a small profit, slowly. When the profit objective is achieved, principal is pulled out and the profit is left in the market to compound if not required otherwise.

Right. Next facet.

What happens for us in a market that breaks out?

Two things.

First up, we are looking to make a quick let’s say 25%, and then getting principal out. Profit stays in the market to compound, irrespective of the level, ya we have the guts, since that which stays in the market enjoys 100% margin of safety. Secondly, some of the deep value still in the market has made a mega multitude by then, and we can take a call about it. We might or might not liquidate a fraction, depending upon our 2 to 3 year liquidity needs.

Moving on.

What happens to the stuff that gets stuck?

If our world is not falling apart because of that something that’s stuck, that something is and remains for us just another position. Downside is the position going down to zero. Upside is unlimited. We stay or cut, depending on our per saldo existence and / or situation in the world.

Stuff will get stuck. This is the markets baby, not a vacation in Hawaii. [Thought to self – let’s make activity in the markets like a vacation in Hawaii. Hands off, no engagement during market hours, let’s do an Ed Seykota baby, adding a few leg-glances like only handling in GTTs, disengaging after Thursday analysis and market input (3:45 pm to 4:15pm), only to re-engage on Monday morning 8 am to 8:30 am, to punch in GTTs for Monday.]

Very long-term play allows us to work well with even hundred positions stuck, because a handful of lucrative positions will offset these and then some. Perhaps one will even be able to say ‘and then lots’.

Now comes the pointe. This is something I learnt from Dr. Van K. Tharp, God bless his soul. Position-sizing.

Our one entry quantum is a function of our networth.

Make it whatever function you are comfortable with, corresponding to your own networth.

As our networth increases, our one entry quantum increases in size. As our networth decreases, our one entry quantum decreases in size. When we are winning, we set ourselves up to win bigger. When we are losing, we set ourselves up to lose lesser.

Final question – answered here.

Ya, final frontier. We tackle this very maturely.

Why are you getting all this for free?

Free? Please remember, that nothing in life is for free. Not one breath. There always needs to be a karmic field to support an event. No field, no action, meaning this here wouldn’t be taking place.

I’ve taken freely from a lot of people. This is my giveback. Please take freely of this. Don’t feel any burden. All you need to do is to pay it forward, at some stage in your life, when you comfortably can. Help someone in need. Make our world a better place. If perhaps you already are doing so – take a bow!

🙂

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. 

 

 

 

 

Triggers Ahead

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Market moves require trigerrs.

In the absence of these, lack-lustre activity results…

…giving rise to illogical short-term trading ranges, for example.

Come a trigger, a move starts, or continues, or even ends, if the trigger is adverse.

What kind of triggers lie up ahead?

US election.

Yeah, Mr. President is going go keep US markets on a high till then, and that will translate over to world markets.

Corona cases receding?

Yes.

Trigger on the upside.

Corona recoveries increasing?

Yes. Reiterates the above.

Vaccine announcement for release expected till December ’20?

Upside trigger.

Vaccine starts showing good results?

Reiterates the above.

Small- and mid-cap buying by institutions to the tune of 28k Cr till the government deadline of January 31, ’20?

That’s a solid one.

This one is going to hold the back-end of the market (small- and mid-caps) perked up and reaching for January ’18 highs.

That’s five triggers back to back.

Any down-triggers in this time-frame?

Hmmm…

…let’s see…

…the picture till January 31, ’20 seems to be quite clear, actually.

Of course one might be wrong, and the model might break down.

That’s when we’ll just change the model.

However, till the model breaks down, one follows a charted roadmap which is already panning out.

Where does that leave you?

Assuming this model hits, there would be frenzied buying in small- and mid-caps just before the January 31, ’20 deadline.

Many MF Houses have announced their cautious and unpanicking approach towards picking up small- and mid-caps.

Come January, some players will not have picked up enough.

If the authorities don’t extend the deadline, these very institutions will make a beeline for such underlyings.

Government fellows will have a bit of a guilty conscience because of the mayhem they caused in this segment in January ’18, ordering the ad-hoc reshuffle of MFs.

To make things good again for affected parties, they might even allow such a frenzy to happen by not extending the deadline…

…and that’s exactly what we want.

Why?

We are waiting patiently for complete euphoria to set in, to sell those inhabitants of our folios, which we don’t wish to hold anymore.

As per this model, this could happen in January.

If It doesn’t, and if the model breaks down, that’s fine too, we’ll just wait for another time and high.

Winning in the markets is mainly about patience and discipline.

Money follows.