Month 16- Do not arise, no need to awake without a reason and always stop; also move the goal post
At the outset, I am using the catch line phrase coined by Swami Vivekananda (by the way my father says the line is taken from Upanishad), trust me I have no intent to stir a hot political debate. To do that enough social network activists working day and night. I am taking the audacity of spinning the great Swami’s words; DO NOT ARISE, NO NEED TO AWAKE WITHOUT A REASON AND ALWAYS STOP ALSO MOVE THE GOAL POST.
First, it’s not necessary neither to stand up or get up to grab opportunity unless there is a reason to do so, if you do not stop you are likely to make more mistakes. And in contemporary world you keep moving your goal post to stay afloat. Debatable, of course! I found more relevance of my thoughts in the world of work I do these days i.e. Investing.
** I have not got slightest intention of disputing Swamiji’s word or personality. Even I am a staunch supporter of Swami Vivekananda and all those who preached peace. Neither a minuscule element like me can shake the teachings of one of the greatest religious preacher of all time.
5 quarters and 15 Month is gone (it’s actually 16 now), how I am doing then? Of course still alive, kicking fine in Goa beach on middle of week. It doesn’t mean all that you think now (rich, easy money etc). Simply it means I am moving my goal post after reaching smaller one, hence neither I am awaking and don’t see a reason either. I have to stop if I don’t want to whipsawed unnecessarily!
But first an incident:
As usual I was coming from Gym and getting into lift. I bumped into an old man who was more inquisitive to know what this character is doing in Gym that to 11 in morning. He couldn’t resist the urge I guess but ask; what do you do? It’s a difficult question to answer these days, not that I can’t explain but the process is pain staking to explain stocks to stock market to stock exchanges! I tried to take a short cut, I said I am trying to do something on my own. My answer did not satisfy him, he repeated the question what exactly the kind of attempt of work. I said again something related to research. What kind of research, I didn’t reply this time; just smiled back. And fortunately, the lift stopped at my floor. But the story didn’t end here, he saw me again in Airport after few days and guess what! Our roots belong to same city i.e. Puri. Being a small city horror started encircling my thoughts, this guy must be knowing my misadventure from someone else. I was wrong, my small city has become larger now perhaps! Instead he told me if you are trying to stand successful in something you must not use flights as flying is expensive. And this followed by advice like any well-wisher would offer. Considering seniority all I had to offer is nod my head and smile back. And the story spins further he saw me after 15 days again rushing to airport, again and again multiple times. I am sure he made up his mind, if this guy is destined to screw up his life why should I offer unsolicited advice and that to free!
The incident defines my existence these days, I am finding it difficult to explain what I do even in a city like Bengaluru, imagine what will happen in smaller cities. But I can tell you something, we don’t get deterred from our activities even we are smaller in numbers, investing is an act of intelligence and incredible risk appetite with a curriculum which is open ended for life long.
What’s happening otherwise, lots to share actually; themes, holidays, excitement all over. First and foremost, this is being greatest 15 months in my life, I have never enjoyed like before. No compulsion to get up in morning yet I get up at 6.30 in morning. No need to work beyond 6 in evening, most of times I hit bed at 11 in night even late. There is no guarantee of survival beyond 6 months (I keep 6 months cash balance against expenses, that’s it) yet I made whole year expenses before end of first of month.
Ok, chunking various themes:
Right mode thinking:
This is my immediate task, taking forward behavioural finance to next stage. How do we use gut (right side of brain) with analytics (left side of brain)? Why it’s important for people like us? To give a small perspective here is a table to differentiate attributes between left mode and right mode:
Source: Betty Edwards
Using words to name, describe, define
Using non verbal cognition to process perceptions.
Figuring things out step by step and part by part.
Putting things together to form wholes.
Using a symbol to stand for something.
Relating to things as they are, at the present moment.
Taking out a small bit of information and using it to represent the whole thing.
Seeing likeness among things; understanding metaphoric relationships.
Keeping track of time, sequencing one thing after another. Doing first things first, second things second etc
Without a sense of time
Drawing conclusions based on reasons and facts
Not requiring a basis of reason or facts; willingness to suspend judgments.
Drawing conclusions based on logic; one thing following another in logical order.
Making leaps of insight, often based on incomplete patterns, bunches, feelings or visual images.
Thinking in terms of linked ideas, one thought directly following another, often leading to a convergent conclusion.
Seeing whole things all at once; perceiving overall patterns and structure, often lead to divergence
Isn’t it exciting to know our brain emits so many contrarian views for decision making? Answer is no, because there are very few who use right side of brain. The cognitive approach come to some people faster than others, but can be attempted. Most of entrepreneurs, investors are very good in right mode thinking. Both side work in tandem, when it gets optimised it sends physical signal to body also.
See how some of greatest personalities get signal:
George Soros has a backache always before major decisions he has taken i.e. favourable
I just feel it’s right; famous multibillion dollar short selling by Jesse Livermore in 1929.
Andrew Carnegie scratched head while using right side of brain.
Pierpont Morgan use to rotate his support stick.
It doesn’t mean by scratching head we will become Carnegie, but when it becomes automated you know you are on way to optimal stage.
Audit trail of ultra-successful
One of the best way to learn about a vocation is chunk themes from the words of most successful people in that vocation. When it comes to world to investing and speculation I was trying to create themes for some time, here they are. You may add and modify yours and let me know as well.
(* Jack Schwagger books helped a lot to find some of the themes below)
First why? - are you sure you really want to invest? Then why? If you think money, excitement then answer is no. You get more excitement in amusement park.
Does method match personality? - if you can’t give back much of capital then value investing is not for you. If you can’t read annual reports and financials then focus on growth investing to some extent. Fact you need something which suits to you e.g. I am more familiar to accounting, finance and value investing suits me to analyse the financials and connect with business.
Do I have an edge? Even greatest discipline can’t make you successful if you don’t have an edge. E.g. when I trade I try to use my own set up, for me standard technical terms like RSI, Fibonacci are of little use.
Method means hard work- developing your method requires research, observation and thought with lots of modification and failures.
Skill and hard work- exceptional performance requires both natural talent and hard work to realise its potential.
Work should be effortless- for us investing may be a lot about research but when we execute it’s just another day! We don’t watch market tickers every second.
Money management and risk control- know how much capital to put to risk, know when and where to exit, protect capital at any cost.
A plan- plan is a blue print of core philosophy, know your do’s and don’ts before you start.
Discipline- one boring and rhetoric word yet most difficult to practice.
Independence- never decide on other’s opinion only.
Confidence- very few believe they won before they start, are you one of them?
Losing is part of the game- if you can’t stand taking losses you will either end up taking large losses and miss great opportunities.
Patience- sitting tight with a plan, one of most difficult attributes I found. Imagine you are sitting on pile of cash and your method says stay out. Second lot of people sit tight without a plan, that doesn’t help either; it’s just a gamble to play into market direction.
Develop low risk idea- it depends on two elements i.e. patience and risk control.
Change position size- when you are riding on profits and confidence increase your position, reverse is the case for loosing.
Pyramid- scale in and scale out your investments in a such way that you don’t miss out opportunities but importantly realise the opportunity as well.
Be stupid- I told few people yesterday market is going to go down, and today it’s up by 5%! Don’t try to shield your old view just because you look stupid, change your view as information comes by.
Catching a part of profit is great- Avanti feeds is a 100 bagger, though I hold and exited partially I couldn’t make 100 baggers. Don’t worry, you are not here for relative return but absolute return against objective. For example, my target in a year is 100 Rupees, I am happy first to reach the target and then re-plan.
Maximise amount not number- win big in amount not in numbers.
Disloyal- if you are on wrong side get out.
Hope is a dirty word- never take action expecting market will come back
Don’t take comfortable action- do what is right not what is comfortable.
Pay attention to intuition- a sub conscious mind is not restricted by constraint, use it when it throws up signals.
Finally, there is life than trading or investing.
I leave with words of one of my friends who started a restaurant in Noida last month after working two decades in a financial services firm.
It took me nine years to have a cold-water shower in morning and tell my boss I need to go for what I dream of! It was matter of seconds after which I attained inner peace and satisfaction level which is way beyond my imagination. To be comfortable in life we need to go through uncomfortable things first.
Have a nice day guys and lots of wishes!