Suvi Investing Journey

(The Confused Consultant) #42

Incredible Act of Well-Wisher’s. THANK YOU

18 Nov morning, got a call from home to my shock. My mother got admitted to ICU fighting for life and death. I had to rush for Bhubaneswar immediately and subsequently an ordeal which still continues till now. But that’s not something personal I want to convey you and give pain for no reason. Something else got repeated again, this time. Again, and again, act of superior luck, an unexplained result forced me to rethink and share what is it, why this happens at a time when you need most, what could be forces behind it. I tried to sometime and I think got a knack to some extent, here it is. First the incident:

I call them Well-wisher’s trades. Simple reason, the success belongs to numerous people who at some point of time knowingly and unknowingly have fond memories of me, shared their dreams and pains, empathetic to my needs, a shoulder to cry, no fear or prosecution. The ear keeps ringing with same words- we cannot be consumed by panic differences any more.

As medical bills shoot hour by hour, day by day (still it is); I noticed something once again which I saw 5 years back (when I had a medical problem). Two of stocks I purchased in November 2nd week start rising ferociously, sometimes sounded for no reason. I added aggressively, stocks rose further. One delivered 60% in a week, both of them covered 65% of total medical bill so far. Almost similar when I was in a slumber health back in 2012. This force me to think why this happen when you need something the most. Here is answer:

It’s the lovely people surrounding us. For me it’s YOU whether colleagues, neighbor, family, forum, street; you name anything. I think when you ride high and low at bad times; combined wishes of people just gravitate towards your effort and make it an inferno which destroys all possible evils and obstacles from the process. It made me realise how important for me to connect with you, understand you, share with you. It reinforces my beliefs how genuine your wishes, how lovely and beautiful human you are. It’s so centrifugal and powerful which even make extremely painful process as cake walk.

I once again thank you all the wishes and love. I think this keeps all of us going.

Some practical aspects I found regarding this subject:

  1. I guess time to spend time with needy, financial contribution is not enough.

  2. I have made it a point this point I will attend every question to best of my abilities wherever, who ever asked.

  3. Going forward I will ensure I say thanks to deserving. Sometimes I guess it’s missing due to arrogance and ego perhaps.

This is becoming an ephemeral subject now for further deep dive and action!

Thanks all and loads of wishes

(asvasanra) #43

Cannot express my gratitude for your thread " Guru mantra". I had stumbled onto it yesterday, and have been, you can say, addicted- in a good sense, especially drawn by the lucidity with which you explain the various concepts.
Am really thankful for your effort to impart your knowledge and share your wisdom. Would also request to know if we can message you directly with specific query, if any.

(The Confused Consultant) #44

Yes Sir

The whole purpose of me spending time on forum is to reach out and understand people, help and learn from them, importantly getting their good wishes.

Please reach out to me at [email protected] , whenever you feel I am of any help to you otherwise even as well.

Thanks for writing in to me.

(kums17) #45

Its great to read your threads. Keep it up

(The Confused Consultant) #46

Just replied in morning to some one, take it as a pinch of salt or write of as contrarian.

At the outset it’s nothing unusual to get frustrated and confused. Investing is a painful activity as it involved both indecisiveness and regret. I was beaten down twice initially (almost zero portfolio).

  1. Investment includes primarily 3 activities:

a. picking a stock
b. money management (bet size etc)
c. risk management (managing loss of capital)

If you go anywhere be it online forum or seminar every one speaks about first activity So whole focus goes to 33% requirement. Why? Because we are too engrossed with few people and their ideas, hardly we look beyond them. In short please understand what is risk management and money management is, then customise it.

There is nothing wrong in cloning, biggest of companies outsource their non core competency. I have seen mathematician who are strong in money management buy stock letters for a picking a stock. This approach has been immensely successful for them as they understand what they are good at.

  1. Value investing in 2018 is an ego statement. Value investing was defined during 1940’s changed numerous times, it has big disadvantages, not updated. Then why every one calls themselves as value investor? Simple, Mr Warren Buffett say so. Tomorrow he dies, 80% will not call them as value investors. Every investing has something to offer. pick the good advice’s from where ever available.

  2. Investment is an act opposite to our habits. Investment asks us to do uncomfortable things which we do not manage in day to day life. For example buying cheap is a bargain in real life, in stock market it can be nightmare. This stems around psychology of person, a lot of habits needs to be re-written per se

(s) #47

Unfortunately in current market condition Junk is also selling at premium. Correction are dreams and destination is looking illusion. Risk are being ignored by experts and novice alike. Message is tread with caution and load only if you have a horizon of 5 tears plus.

(kums17) #48

I agree with every word written here. The real challenge is compliance and adherence to Size and Risk management. The reasons for missing on size is probably ignorance, lack of perseverance and not developing conviction on your winners. Pyramid during up-move can help us overcome this problem. Risk management is more to do with building own psychology. But I am grateful to you for exposing me to these issues.

(The Confused Consultant) #49

I am happy to know you could able to identify a money and risk management for yourself and you are working on it. There are people on both sides, even averaging down works beautifully; subject to they should know capital requirement, stock numbers, risk of ruin etc. It’s a whole picture which can be fixed basis your own capital, your psychology, stock selection and so on. Important is to understand what works for me! That would require open our eyes rather than carried away by hyperbole. The challenge to my opinion (I can’t say about others, but I have faced all these):

  1. CAGR is not the right measurement of metrics, it doesn’t tell you anything. You won’t know what works for you or not I.e. whether it was profit percentage, accuracy or even loss containment.
  2. CAGR calculation is not easy in non linear place. When components are variable and moving you just can not calculate end number and publish CAGR.
  3. 50-60% drawdown depends on your capital availability, number of stocks and psychology. If I have 1 lac rupees and invested in 8 stocks for 80000. With 20000 rupees I am planning to average downward , you can imagine how dilapidated condition you are in. Second can you digest that kind of drawdown? At least I can not now, I won’t let go my entire decades of profit in a whisker.
  4. Large drawdowns are handled by people using ‘OTHERS MONEY’. There are multiple reason behind it. A good number of these guys can’t come and go in so easily due to liquidity. The number of choices available become narrowed down, if exit then what to do? PMS is far better situation in this regard.
  5. Averaging down increases your risk significantly. Again it will go back to your deep pocket, psychological texture, concentrated portfolio and so on.

Sir you would agree market is non linear place. If we try to assume we can conquer it by assuming everything is predictable and in long run it will take care it’s a fallacy. This attitude has beaten down many sooner or later. Rather than predicting Sensex at 45000 or 15000 at any time I would probably do is:

  1. Have an entry and exit plan always. This is irrespective of market condition, many factors influence an exit plan. E.g. my own metrics, I will try protect my historical average. Can you ask Michael Phelps to slow down in 5 races to 5 minutes so that he can win next races in fraction of minutes. Athlete works on his own performance, he doesn’t take loses or slow down easily rather cut them and analyse to come back immediately.
  2. Average holding period tells us how effectively we have been managing our psychology. Agree, this period every one is a Phelps, but over a period of time your will realise it’s far tougher to hold a stock than what we think.

(The Confused Consultant) #50

Big Bull Rakesh Jhunjhunwala confession finally:

How much has leveraged investments/trading contributed to your success?
Trading is the mother of all my wealth. That’s where I get all the money to invest.

Would you say that being a trader made you a better investor?
Yes and vice versa.

What time frame do you use for your trading or non-core positions?
I always approach every act of trading with an open mind.

Does taking a loss have an emotional impact on you?
Never, because I am not afraid to make a mistake. I only ensure that I make one which I can afford. A setback well digested is the key to victory.

Would you say that the key to your trading success is emotional discipline?

Have you had losing streaks? How do you handle them?
Certainly, I have had them. The way I have handle them is by reducing my position.

(The Confused Consultant) #51

Markets: ONLY Method to Madness

Once again, a roaring bull markets, hyper sensitive participants born in bull markets with ever talented financial institutions forming a cocktail of decade. The bigger question when you will have hangover and pop a much-desired medicine? Or keep the medicine next to you as and when it is required. And what do we call this cocktail, ‘THIS IS DIFFERENT’.

First what is the combined crowd or forces of market wanting to tell you? Here is a list:

  1. GDP and markets are brother in arms. With GDP shifting to high gear these markets will continue their merry making. GDP calculation in a country like India is as complex like translating Ernest Hemmingway texts! House wife contribution has never been discounted in GDP, read more the critics side. Then linkage between GDP and stock market, so many unorganised sectors, Indian railways! the list is like Alexandar is great. Finding a relationship is like uniting India and Pakistan.

  2. Honourable Prime Minister Mr. Narendra Modi will bail out in case of a turmoil. Can there be a bigger joke than this? Do you think he was elected by few thousands or lacs strolling stock market for their hyper greed and excessive pleasure? Politician will continue to do what fetches votes for them. That includes actions market likes and some market don’t like. Mr. Donald Trump or Mr. Modi are no different.

  3. Central bank controls on liquidity and fiscal prudence. The five-year policies, NITI Ayog does not sit there for stock market. Rarely they have been bothered about market crashes. The travesty is policies are made long term or at least annual basis, crowd in market try to decode gain second by second.

  4. Too much money with bank. With an overnight adjustment to ‘fiscal measures’ like REPO central bank can make banks have lot of money. The ultimate custodian of treasury is central bank not scheduled banks.

  5. High PE ratio. In a PE ratio one variable is current earnings, second variable is expectation of earnings growth. Unless entire crowd agrees to one growth rate, it’s always going to swing wildly. And I guess without swinging expectation there won’t be any speculation. Without speculation stock exchange will become empty.

Am I trying to tell you that all of these events do not affect stock market. Please do not get me wrong, they all do. We both over estimate and under estimate them. One these are complex set of puzzles, we do not have clear information on them. Two rudimentary free reading online makes us feel we have all information we need. Third the biases within us are activated to the fullest now, with cash balance is ringing every second we are hypnotised to accept that we can go wrong!

Am I trying to be a bear, no? Still I buy when my processes say so. If my process stops working I sit out, if my process does not work for long time I go back and check whether something has gone wrong. Process tell us relationship between input to output, not imaginary heuristics for pleasure. It tells us what to buy, when to buy, when to sell also.

The combination of stock, risk management and money management has never changed since the game has begun in stock market. It is unlikely to change unless humans are replaced by aliens or robots. Our fibres, neurons have improved for sure, the list of biases also growing further. That would mean a lot more deliberate practice than past.

When Sensex became 5000, the people who came before me said oh my god 5000! This will fall. 5000 became 10000 turned to 21000 and now at 34000. One school will always argue this will fall (mostly guys like me who is sitting on high percentage of cash), second school will counter attack with famous saying ‘bull just got its horn’.

Your risk is yours, my risk is mine. My greed is mine, your greed is yours. This will define our relationship with market when it come to my performance, my financial objectives. No GDP, no fiscal policy will ever define this. Sooner, we understood better for us. In short understand your financial objectives, build a risk management in place and apply money management to achieve. There is no other holy grail of stock market investing for you and me. Hyperbole, academic discussions will continue depending who is getting paid by whom!

So please respect your financial objectives, risks surrounding it and the process you have build to achieve this. Nothing else is important for us. Lastly, I can see the eventuality of next disaster, ‘it will be the employed young class who has access to easy execution and information’. In previous bear market brokers and sub brokers went bust, this time speculators have cleverly shifted the risk to crowd by reducing entry barriers.

To end this, on a lighter note, ‘in a fight between domestic animal (bull) and wild animal (bear) you know who wins temporarily and in long term.’ Plan accordingly.

Lots of good luck

(paraa) #52

" Lastly, I can see the eventuality of next disaster, ‘it will be the employed young class who has access to easy execution and information’. In previous bear market brokers and sub brokers went bust, this time speculators have cleverly shifted the risk to crowd by reducing entry barriers."

Interesting line of thinking which i never thought of.I am just thinking of ways this mad rush of liquidity will run out.Will it be due to a crypto currency crash with spill over effects to equity markets or the new crowd in market getting scared in a downturn and running away

I remember a experienced investor telling me in 2009 and “you guys are all sheep and we are wolfs. As long as the herd of new sheep keep coming to the party,we will do well”

(Vikas Pandey) #53