die early, die rich!

recently

i came across a phrase

which initially disturbed me.

"trader who died rich

is the one who dies early."

even livermore died broke!

--

what's the logic behind the above
seemingly un-nerving phrase?

should we not trade?

is trading useless?

i don't think so.

i searched for a suitable answer.

and after some deliberation

i found one.....

---------

if one makes millions from trading

and keeps trading like jesse livermore

he is bound to succumb to

some unguarded moment

and lose it all.

but

on the other hand

if a successful trader

after making millions

was to turn into an investor

he is assured of dying rich

(if at all he ever dies).

slow motion, fast forward

investing is
trading
in slow motion.

trading is
investing
in fast froward.

if you keep this in mind
you will be
relaxed
and can make
better decisions
in both these games.

true investors are like farmers

it is said

'for investing use fundamentals

and for trading use technicals'

these two statements are true lies.

they are grossly mischievous

and universal myths!

--

the first line about investing

is targetted towards those

who are not 'investors' in true real sense.

they are the 'leftovers'

who don't have the know-how and the sense of "investing"

nor do they have the time and sense of trading.

--

they take 'investing using fundamentals' as an alibi.

they superficially check the "fundamentals"

and buy a cheap mask of "investor".

what they take as "fundamentals"

are nothing but clever cookies targetted at their heads

by "hackers"!

fundamentals are not just numbers

fundamentals are foundations!

--

the confidence in the investment is absent

the hearty self-assurance and excitement of having "invested in a promising business"

is missing.

consequently,

expectation or fear of short-term gain or loss

reveals the true colours

of the real "investor" under the garb!

the "investor" absconds!

--

true investors are like farmers

....seeking the potential and promise

of a seed or sapling turning into a tree

or a full grown tree continuing to yield

juicy fruits

season after season!

popcorns!

a farmer

put his bumper maize produce

in the tractor trolley

went straight to the market

sold it all

and returned home

with bagfull

of cash.

--

he put the bag of fortune

on the table

opened it

and gave a bunch of currency notes

to his freshly graduated son

"this is for you, enjoy!!!"

--

he, then

picked up the bag

locked it in the almirah locker

and went straight to the store room.

there

he saw

one last big bag full of maize corns

he had kept back.

he emptied the bag

on the floor

and divided it

into two heaps.

--

"what are you doing, dad!"

his son asked

who had followed him into the store room.

--

"this heap, son

is for making popcorns

for all of us

for the rest of the year.

and that heap

i will sow back

as seeds

into the field

for next season's harvest!!!"

son heard this

and went out.

--

the farmer put the two heaps

in separate bags

put them aside

and came out!

--

and there he saw

his son

re-counting the money

he had just got!

"now what are you doing?" the father asked

"this bunch, dad

is for my luxury popcorns

and this one

is for investing!"

don't let your investments sink

if a stock has moved 200 points in 1 year
how many points can you make in investing in that stock?
obviously not more than 200!
now, if i told u that
this stock
fell by 200 points
and not the other way round
what will be your answer?
again, obviously, you will say
that what to talk of making 200 points
you would have lost 200 points
by remaining invested in this stock
in the last one year!
--
well,
i am talking about reliance industries!
it fell from 1111 to 911 in one year!
--
will you believe me
if i tell you
that there are people in this market
who have made more than
1000 points in reliance industries
in this one year
and that too
when they were
caught
INVESTED
in this stock!!!
yes, it is true!
reliance industries
travelled this 920-1120
delhi-mumbai route
more than 10 times in last 1 year or so!!!
this makes it more than 2000 points!
so, making 1000 points out of this is not a big deal!
--
but how did they do it while staying invested on the long side?
simple
while they stayed invested in the stock
they protected their investment
whenever it took a clear down-trend
by buying put options. --
out of 2000 plus point movement
they managed 1000 odd points.
and that too when the stock's net movement was just 200 points!
while pocketing all the dividends
and making the investment tax free!
--
protect your investment!
it will reward you doubly!!

identifying a trader among the investors

lets admit it

majority

if not all traders

are into stock trading

not just for money

but

subconsciously

also for the thrill

excitement

and kick

we drive out of trading!

the day we don't trade

or don't get the chance to trade

we feel so uncomfortable!

that is probably

the reason

we make trading opportunities

where none exist!

that is also a probable reason

why we

overtrade!

--

we can't extract the same thrill

from investing

or swing trading

where waiting is substantial.

moreover,

we can't wait

if we keep looking at the score!

--

that is why

majority traders are mentally

not best suited

to be investors!

and there is nothing wrong about it,

it is ok!!!

--

it is not a co-incidence

that i rarely see

a serious trader

who has the habit of drinking!

i can immediately tell

whether the person in the stock market

is a trader or an investor

by just asking one thing

"are you a teetotaler?"

if he is one

i know i am talking to a trader.

if not

then either he is an investor

or he is into an exciting co-occupation

or he is broke

or he is gonnabe...shortly!

--

trading and drinking

are clear signs

of a sinking ship!

--

investing is either for the rich

who have surplus money

and who are in no hurry

to listen to the daily ringing of coins

in the money box!

or

it is for those traders

who are already getting

the adrenalin pumped

from other sources

and are into trading

only for money!

--

trading is one of the biggest

intoxicating

and motivating

and boosting

occupation

or passtime

in th world!

it can delay the suicide plans

of a rich guy!

besides bringing the dead souls back!!!

--

not just the spirit

you will rarely see traders using

or frequently changing

brands

and gadgets

and other costly habits!

they get all the requisite joy

from trading

leaving these toys and lifestyle

to the broke or to the rich investors.

--








(note : i am a teetotaler and strongly recommend the same!)

best stocks for investing and trading

for investing

large caps are dangerous = many will not be the tops in next 5-10 years and slump

mid caps are the least dangerous = many are likely to become large caps in next 5-10 years

small caps are the most dangerous = many are likely to vanish in next 5-10 years

--

for trading

mid caps are dangerous = these can fluctuate a lot even in short term

large caps are the least dangerous = they are least likely to fluctuate big in short term. if they do, they are likely to recover if fundamentals are intact.

small caps are most dangerous = these can fluctuate wildly including in circuit locks

--

caution : only companies with decent corporate governance are being talked here. rest are not worthy of touching except when gambling is acceptable!

tomorrow never comes

a labourer won

"creator of the year" award

by the stock traders' society

for building

a 100-storey sky scraper!

--

during the award ceremony

a journalist asked

"how did u make such a huge sky scraper?"

he looked around

and replied

"brick by brick!"

--

the entire auditorium

erupted with a big round of thunderous applause!

--

before the applause died

a business tv reporter asked"

is this sky scraper

an outcome of investing

or positional trading

or swing trading?"

--

the labourer

again thought for a few seconds

and honestly replied

"day trading!

i don't know any other form of trading.

my grandfather had told me that none other exists!

he told me that everything else is a multiple of day trading

and an excuse to take a holiday

or to justify bearing loss!!

the builders never give me more than one day at a time

to build a building.

i have just one day at my disposal.

they don't even give me a tomorrow or even day-after-tomorrow!

if things go wrong

i safegaurd and repair it same day

irrespective of how long

the building is going to take

or how long i intend to be in the trade!

if things are going ok

they still not allow me to work more than a day at a time!

day is all i have got

and day is all i take care of and worry about!

the week

and thereafter

the month

and the year

take care of themselves!"