Tag Archives: #multiple

Cared to Rewire?

Posted on by
Reply

Hey.

From this point onwards…

…it all boils down to…

…stamina.

Theories for market success have been out there, in abundance, since eternity.

Everybody can read how the richest man in Babylon…

…got rich.

Or how compounding works.

Position-sizing.

Entry quantum.

Margin of safety.

Profit run.

Multibaggers.

Engines of income generation.

Entry into the territory of wealth.

Generational wealth-creation. Etc.

Yes. Everybody can read. Or listen. Or both.

Question is…

…how many can follow through?

Of those who set out, how many can remain grounded and focused when the heat is turned up, like now?

Most importantly, how many can finish?

I would estimate that a low single digit percentage walks the talk to successful culmination.

Why?

You see, heat does something critical.

Once it is turned up, it burns out all nervous systems that haven’t been rewired.

Given that we are not born with nervous systems programmed towards market success, we need to rewire them over the years and over the knocks. Once fully rewired, our nervous systems can withstand, pivot, and generate wealth over prolonged strife.

As this crisis continues, more and more players will start to cave in.

Capitulation at lows.

Others will stop all activity owing to fear, but might not sell. They’ve frozen. Better than capitulation.

There will be some who cash out with the intent of getting in lower, cannot then find the courage when the lows come, and then join their frozen compatriots as the reversal arrives and accelerates.

Still others, with funds safely picked away in fixed deposits, will be afraid to bring them over to Equity. Fine. They are behaving as per their risk-pr0file. At least they are in control of their behaviour.

Rewired market entities will be acting. They know what to buy. Markets give ample time to study, and all kinds of preparation will have been done, like, yesterday. These folks will have started buying upon the arrival of their levels. Clockwork. Small entry quanta. Position-sized as per their risk profile. Programmed to keep entering for a long period. That’s how they will have positioned themselves and their liquidities. These entities will show stamina and will outlast everyone to still be buying at market bottoms and slightly beyond. They will emerge with the lowest buying averages, and will make the quickest multiples upon reversal, after which some will pull their principles out, while others will ride their holdings to multibaggers.

Who do you want to be?

It’s ok if you don’t identify with any of these categories. Find your passion elsewhere.

Or, self-PhD to a rewired market mindframe, sooner than later. Preferably – now. This crisis could even just be beginning. No one knows. Since no one also knows how long it will last, for all you know, you could still get a year or two’s great buying ahead.

Wishing you lucrative investing.

Constants

Posted on by
Reply

Waldermort…

…overplayed his hand.

Thought he had the nuts…

…and bet the farm.

Turns out…

…that the adversary’s hole cards…

…plus the flop, turn and river…

…are leading to a full house.

As opposed to Waldy’s…

…ordinary nut flush.

Waldy is oversmart and a half.

Backfires at times.

This one has backfired at the worst possible time.

Only one result.

Waldy loses…

…everything.

Reserve status.

Serious player status.

Reputation, if there was any.

Loyalty, which was abundant from former allies, but is now…

…not even zero, but minus.

What more can one lose?

Whatever one can. It’s lost.

When this is over, a new methodology of doing everything business and financial will have emerged.

Meanwhile, a few constants remain.

There are areas in the world, where there is growth.

And will be, for the next 25 years.

Like India.

Semblance of stability?

Yes.

Integrity?

Yes.

Win-win attitude?

Yes.

Loyalty?

Yes.

Balance?

Yes.

Clout?

Yes.

Consumption.

Yes.

Period.

Buy India during this fall.

As long as the fall lasts. One year. Two years. Three years. No one knows.

What one also doesn’t know is whether India will give this buying opportunity again.

So, buy India.

Even if it means that you get fully invested during current fall.

That’ll be just great.

Magic

Posted on by
Reply

Sure, …

… nobody said this was a bottom already.

No signs of a bottom.

For all you know, the real correction just started.

So, everyone is asking, …

… why in the world a buyer is buying …

… now.

Confused? No need to be.

First up, please understand, that money enters the market in a planned fashion when position sizing rules are in place.

Oh, there’s one more safety rule.

In a day, only so much goes in, in total.

Let’s say what you are referring to as a bottom comes within, hmm, two days, one day, four hours, one hour… ,

… whenever it comes.

Do you actually believe and / or have the guts to get fully invested in that minuscule time-frame?

Let me answer that for you. NO.

Why am I so clear on this?

Moving big money in one shot when the whole world’s pajamas are falling, and watching it possibly become half in a few days will most likely lead to neurosis and / or psychosis.

It is mentally digestible to keep buying at levels as per the entry quantum allowed by one’s position-sizing algorithm.

Though the overall market or index or sector benchmark might not be signalling a bottom, individual stocks hover around correction levels, threatening to recover from there.

We let them hover.

If they are not declining further from a correction level after a bit, we pick up one lot.

What’s the lot?

It’s a function of one’s networth at that point.

What function?

You decide. Yes. Your decide your own position size at each point thus, as per a mathematical calculation. You can decide to programme this function, for example, in a manner that you go in more when you are winning and go in less when you are losing. Or vice-versa. As per your personality and risk-profile. You call the shots. You are the master of your money and journey.

As time goes by, and as the correction deepens, you have lots of lots in. Ideally, you get fully invested before recovery. Compared with trying to move in fully at the exact bottom, well you might get lucky with the latter option, but it will burn your nerves, and resulting psychosis can last longer than when rational decisions will need to be taken. Not worth it. Position-size, entry quantum, going in bit by bit – this is what our nervous system can handle well without getting damaged. Markets change within months, perhaps weeks, and…

… when the magic happens, you deploy your exit strategy, whatever that is. Be rationally around to do so.

Or, simply, don’t do anything except watching the magic, …

… of a low buying average develop into a multiple.

Poise

Posted on by
Reply

Hey.

Story’s changed already.

IT has suddenly become a defensive buy, it seems.

Not perceived as oil dependent.

See how fast that happened.

Five weeks ago one was hearing the RIP bugles for IT, or so the spin-doctors were trying to spin it.

Bottom-line : don’t believe the stories being spun. Have your own…

… high conviction.

And, the opportunity is…

…now.

Make up your mind.

Invest where you see stability and growth. Invest in India.

There are a lot of high conviction ideas in India that can be latched on to.

Fear makes good investments fall too. That is happening now. To take advantage of this effect, one needs to be fearless with high conviction.

How does one build high conviction in a stock?

Repeated shareholder-friendliness shown by a management.

Clean balance-sheet.

Abundance of free cashflow.

Debt-free-ness.

Longevity.

Vision.

Margin of safety.

That’s it.

Oh, one more thing.

Don’t force the market.

Let it make you enter.

Be poised with a funded GTT order in place before market open.

Keep doing this throughout the fall, as margin of safety deepens. One can do this if one has created enough liquidity during good times, and if one keeps entering with small entry quanta proportional to one’s networth.

Idea is to enter with and into high conviction multiple times, each time lowering the buying average.

With that, one sets oneself up for a fast multiple when markets recover.

It’s boiling down to…

…poise.

The Number One Reason

Posted on by
Reply

Yeah, what is it?

What’s the number one reason why we fail in a long-term investment?

I’ve made this mistake, and true, those investments didn’t work out well for me.

However, I’ve stopped making this mistake.

That’s right. I don’t buy without margin of safety anymore.

Even a growth stock will eventually offer you some kind of margin of safety.

Wait for it to.

So, why doesn’t an investment work out that hasn’t been bought with margin of safety?

Mathematics…

…and psychology.

Lesser the margin of safety, the more difficult it is to make a multiple. Just do the math.

Then, investor-psychology is such, that investments bought without margin of safety don’t allow the investor to sit.

They disturb the investor when they go against him or her.

The more an investment goes against an investor, the more he or she jumps.

In the end, too much jumping leads to an erratic decision.

In the worst case scenario, one bails out of a sound investment at the lowest point of the market.

How does one avoid something like this?

Learn to sit.

Create circumstances around yourself that allow you to sit.

Buy with margin of safety.

An investment bought with ample margin of safety allows you to sit even when the investment is down.

Because you’re holding sound investments, …

… sitting makes you win in the long-term.

Have the Guts?

Posted on by
Reply

Somebody did say …

… that Equity was not for the faint-hearted.

Oh, how true!

Everyday, my heart stands tested!

However, because of a small entry quantum strategy, I am able to stay in the game.

If I am able to stay in the game for multiple cycles, I will prosper.

Why?

Firstly, the strategy by default renders me liquid, such are its tenets.

Then, a good hard look at fundamentals is always called for.

To close, it is important is to enter with technicals to support you.

Now let’s say I make a mistake.

What is a mistake?

Ya, good question – in the markets, what is a mistake?

In the markets, when the price goes against you, you have made a mistake.

So let’s say that I’ve made a mistake.

Is the mistake big?

No.

Why?

Because of my small entry quantum.

What does it mean for my next entry?

Added margin of safety.

Is that good?

You bet.

Why?

Because fundamentals are intact.

What’s going to eventually happen?

Stock’s going to bottom out.

I’ll have a decent amount of entries to my name.

My buying average will be reasonably low.

The margin of safety my buying average allows me will let me sit on the stock forever, If I wish to.

Down the road, one day, I might be sitting on a big fat multiple.

Please do the math.

Happy and lucrative investing!

🙂

Wealth-Generators know how to Sit

Posted on by
Reply

Most humans don’t know how to sit. 

Most humans are not wealthy. 

If you are a wealth-generator, you’ve probably already made the connection, knowingly or unknowingly. 

You sit. 

You are focused.

You know what you are doing. 

You are confident about what you are doing. 

You don’t keep looking over your shoulder. 

You are not jumpy. 

You don’t require a daily quote. 

In fact, you’re quite happy with a monthly quote. 

You know the value of your underlying. The world cannot tell you otherwise. 

You seal one wealth-generating opportunity, and move on to the other. 

That helps you to sit on the former, while you focus on the latter…

…till you seal the latter, which is when you move on to the next one, and so on and so forth. 

Soon, you are at the pivot of many, many wealth generating ideas. 

You are surrounded by multiples. 

Some have fully matured. 

You bring them to their logical conclusion. If this is a cash-out, well it’s a cash-out. 

You move the funds resulting appropriately…

…perhaps to a new avenue…

…or perhaps to finance something big…

…be it a lifetime-requirement…

…or what have you. 

You recognise the fact that one of the main purposes of wealth is also to fulfil lifetime-requirements. 

Mere income is not able to fulfil these. 

Generated wealth is. 

You recognise that. 

You are a wealth-generator. 

You know how to sit. 

The One Basic Difference between Wealth and Income 

Posted on by
Reply

What’s with this wealth vs income series? 

It goes on and on. 

So what? 

Any problems? 

Thoughts are like threads. 

They can be pulled into infinite. 

Also, they are a realm in which one has unlimited freedom. 

The speed of thought is faster than the speed of light. 

Think about it. 

From here to there – anywhere – Jupiter – Uranus – some other universe – in a flash. 

Explore your thoughts. Pull them out into infinite threads. It pays. 

We are trying to understand the meaning of wealth. 

How is it different from income?

What’s the one elephant-in-the-room factor that sums up this difference? 

Is there even such a factor? 

Yes, I feel there is. 

Maybe someone’s come up with this before. I don’t care. We all stand upon the shoulders of giants, as do I. From there, we generate our two pennies. 

So, how is wealth intrinsically and basically different from income?

Income is something you take out of your flow, to finance your everyday environment, including shucking up for nitty-gritties in day to day lives of those who depend upon you. 

Wealth can be generated from that portion of your flow that has not been taken out for mundane use. This flow, which has not been taken out, has then been simultaneously allowed to coexist by you in a different form, over a long period of time. It accrues, compounds and multiplies – over the long period of time – into wealth.

The most lucrative things in life are also the most simple ones. 

Being simple doesn’t come easy to most of us. 

That is why the majority of humans are not wealthy. 

Multiples obey skewed mathematics

Posted on by
Reply

Income-oriented linear growth… 

… is single-digit. 

There’s something safe about it. 

It’s going to be there tomorrow, and after that. 

Safety means less return. 

You’re ok with that as far as basic income is concerned. 

Not so the case when it comes to wealth. 

With wealth, the multiple comes into play. 

Multiples dance to a different tune. 

The search for multiples can lead to negative return – for a while at least. 

It’s risky. 

The level of reward is coupled to a corresponding level of risk. 

In comes time. 

Wealth-play is palatable because of time not pushing you to the wall. 

With time on your side, the ingredients of your cooking-pot have ample opportunity to sprout and grow into big trees. 

If growth is not able to take off owing to lack of circumstance, this becomes the breeding ground for negative return. High deductibles add to the bleeding. After all, it’s wealth you’re seeking to generate, and there will be a little blood. 

Such is the game. 

If you can’t stomach the ride till the multiples emerge, play the income-game full-time instead. 

However, once you start to digest the wealth-game, you realize that is really quite headache-free and pretty much an auto-pilot avenue. 

You’ll even start to like it when the first multiples emerge! 

Going for the Multiple 

Posted on by
Reply

Relax. 

We’re not going for the jugular. 

Or are we? 

The jugular has the most copious flow. 

Maybe we are then… 

… going for the jugular. 

However, there’s no stabbing happening. 

We do everything from the inside of our comfort-zone.

We act with harmony. 

Balance. 

Focus. 

Intelligence. 

Common-sense. 

We try and be non-violent about it. 

What are we doing? 

We’re looking to create wealth. 

What makes us look? 

Security. Our basic income secures us. 

Boredom. Adding to our basic income has become boring. 

Overflow. As basic income starts to overflow, it needs a long-term avenue in which it doesn’t demand our constant attention. 

Fine. 

What’s the best way… 

… to go about it?

Where there’s honey, there are bees. 

Finance-people find you. You have money. They have investments. For finance-people, you are bread and butter. 

So, you sit. 

You wait. 

You let them come. 

You’ve got discriminatory-ability. 

You sift. 99% of what comes goes into the bin. 

You like 1%. 

You invest in that 1%.

How much? 

Whatever you pre-define as your per-annum outflow into wealth-creation. 

Only that much. 

What then? 

What’s the bottom-line? 

What’s your holding strategy? 

Nothing. 

You sit. 

“The biggest money is made…

…while sitting.”

You’re not even looking at your long-term investment more than once a month. 

You’re not interested in daily quotes.

The daily quote can say zero. You don’t care. You know that you are in the process of creating wealth, and that it’s going to take long, and within that period you don’t care if the world thinks your holding is zero, because you know it isn’t. 

Why? 

Due-diligence. 

Ability to think differently. 

Ability to see wealth in its nascent stage, and to recognize it. 

You have these things. 

They didn’t come for free. 

You took some solid hits to earn them. 

Yeah, you have what it takes, and that’s why… 

… you’re going for the multiple. 

Wealth vs Income – the What-When-Why? 

Posted on by
Reply

Income… 

… comes into your account… 

… on a regular basis. 

You spend a good part of it to keep your ball rolling. 

If you save even a fraction, well you’re good, because this ain’t really an age of savers. 

Saved income goes into an asset. 

The asset either generates more income…  

… or, it generates wealth. 

What is wealth?

Wealth is not income. It doesn’t come into your current account regularly. 

Wealth accrues. 

Wealth compounds.

Wealth multiplies. 

Wealth grows in a skewed fashion, like an exponential curve.

You don’t look at your wealth-generating asset everyday. Once a month is more than enough. 

Wealth funds big events. 

Wealth likes time, to grow. 

Wealth separates you from those who are hungry. Hunger is not limited to food. 

Have you understood the nature of wealth?

What do you strive for, income or wealth?

That’s a huge question.

I’ve answered it for myself.

It’s taken 12+ years to find the answer.

I’ll tell you.

I now strive to create wealth.

Why?

Because income has become just a number to my mind.

Yes, that’s the answer for me.

Learning to define the quest for income or wealth requires the appropriate state of mind.

When income becomes just a number to your mind, addition to it doesn’t satisfy you anymore.

Yeah, the kick is missing…

…the thrill-factor…you know what I’m talking about. 

In an effort to rekindle this missing element, you then look to create wealth.

There’s enough additive securing you. 

You start going for the multiple. 

🙂