the sweetest Coffee!

 one of the investing methods which tickles me a lot is the 

"coffee can investing"

buying 20 promising small cap stocks worth rs.10000 each (total rs.2lacs), "putting" them in an empty coffee can and opening them after 10 years.

strong likelihood that 9 will be zero or more after 10 years while 1, if 100x....is likely to be worth 10 lacs (worth 40 lacs if 400x)

Mohnish Pabrai's career is filled with many such stories

to rob or not to rob!

becoming successful
in stock trading
is not like a bank robbery

where
you learn
how to rob,
buy the equipment
walk-in with a gun
and walk-out with bags of cash.

unlike robbing
trading is like
daily visits to the bank
and withdrawing cash
in instalments.

those who try the robbery way
in trading
get robbed themselves.

fastest and surest and safest way
to become rich

even richer than the robber
without opting for his noble way

is

to keep visiting the market
keep withdrawing
keep ploughing back
and keep compounding!

a gift cheque for you!

u spend

hundreds every day (if not more)!

--

a good portion of this is totally avoidable

some portion is a clear wastage

and some part is sheer carelessness!

what to talk of the amount we can save by negotiation and planning!

--

if we just consciously save 10 bucks everyday

out of

the waste, careless and avoidable expenses only

(not difficult i hope!)

we would have saved

300 a month!

not a big amount, isn't it!

--

now if u put this 300 in a mutual fund

thru SIP route every month

for 35 years from the age of 25 to 60

and

assuming a return of 20% pa

and inflation of 7% pa

do you have any idea what would you have saved?

--

25,02,076/-

AFTER providing for inflation!!

TAX-FREE!!!

============







terminal value of the 420 instalments at the end of 35 years (420 months), starting from last instalment and going backwards

300 303 307 310 313 317 320 323 327 330 334 338 341 345 349 352 356 360 364 368 372 376 380 384 388 392 397 401 405 410 414 419 423 428 432 437 442 446 451 456 461 466 471 476 481 486 492 497 502 508 513 519 524 530 536 542 547 553 559 565 572 578 584 590 597 603 610 616 623 630 636 643 650 657 664 671 679 686 693 701 709 716 724 732 740 748 756 764 772 780 789 797 806 815 823 832 841 850 860 869 878 888 897 907 917 927 937 947 957 967 978 988 999 1010 1021 1032 1043 1054 1066 1077 1089 1101 1112 1124 1137 1149 1161 1174 1187 1199 1212 1225 1239 1252 1266 1279 1293 1307 1321 1335 1350 1364 1379 1394 1409 1424 1440 1455 1471 1487 1503 1519 1535 1552 1569 1586 1603 1620 1638 1655 1673 1691 1710 1728 1747 1766 1785 1804 1823 1843 1863 1883 1903 1924 1945 1966 1987 2008 2030 2052 2074 2097 2119 2142 2165 2189 2212 2236 2260 2285 2309 2334 2360 2385 2411 2437 2463 2490 2517 2544 2571 2599 2627 2656 2684 2713 2743 2772 2802 2832 2863 2894 2925 2957 2989 3021 3054 3087 3120 3154 3188 3222 3257 3292 3328 3364 3400 3437 3474 3511 3549 3587 3626 3665 3705 3745 3785 3826 3868 3909 3952 3994 4037 4081 4125 4170 4215 4260 4306 4353 4400 4447 4495 4544 4593 4643 4693 4743 4795 4846 4899 4952 5005 5059 5114 5169 5225 5281 5338 5396 5454 5513 5573 5633 5694 5755 5817 5880 5944 6008 6073 6138 6205 6272 6339 6408 6477 6547 6618 6689 6761 6834 6908 6983 7058 7135 7212 7289 7368 7448 7528 7610 7692 7775 7859 7944 8029 8116 8204 8292 8382 8472 8564 8656 8750 8844 8940 9036 9134 9233 9332 9433 9535 9638 9742 9847 9954 10061 10170 10280 10391 10503 10616 10731 10847 10964 11083 11202 11323 11446 11569 11694 11820 11948 12077 12207 12339 12473 12607 12743 12881 13020 13161 13303 13447 13592 13739 13887 14037 14189 14342 14497 14653 14812 14972 15133 15297 15462 15629 15798 15968 16141 16315 16491 16669 16849 17031 17215 17401 17589 17779 17971 18165 18361 18560 18760 18963 19168 19375 19584 19795 20009 20225 20444 20664 20888 21113 21341 21572 21805 22040 22278 22519 22762 23008 23256 23507 23761 24018 24277 24540 24805 25072 25343 25617 25894 26173 26456 26742 27030 = 2502076 Total

Prepaid Trading - II

1) u have just 5000 in ur pocket

2) u don't want to take big risk

3) u want to make big money

4) u want to do this fast!

Impossible?

I m possible!

Trust prepaid (options) trading!

Step I :

put 4000 out of 5000 back in the chester.

Step II :

learn 2 technical indicators thoroughly.

Step III :

when your TA (technical analysis) indicates that the market is about to move up or down buy one lot call or put (whatever be the case) which is available at around 20 bucks. This will cost you around 1000.

if your TA is right the call/put (as the case may be) will zoom to 40 bucks in a few sessions.

book profit.

(even if your TA was wrong, all you would have lost is 1000. in that case, take another 1000 from your chester and take another shot. you have 5 such chances with the 5000 you started. but for the time being, i am sure ur TA would be correct!)

after step III, you now have 2000 in your pocket (besides 4000 in the chester)

Step IV :

when your TA (technical analysis) again indicates that the market is about to move up or down buy TWO lots of call or put (whatever be the case) which is available at around 20 bucks. This will cost you around 2000.

if your TA is right the call/put (as the case may be) will zoom to 40 bucks in a few sessions.

book profit.

now you have doubled your wealth again.

now you have 4000 in hand.

so far, you have doubled twice.

Now, divide your wealth again in two parts.

put 2000 in the chester (now your chester has 4000+2000=6000).

you now are left with 2000 in hand.

--------------

repeat Step IV with this 2000 and buy double the lots you bought last time!

and double it to 4000.

repeat Step IV again with 4000.

and double it to 8000.

Now you have doubled twice again.

divide it in two parts. put 4000 in the chester (now your chester has 4000+2000+4000=10000).

you now are left with 4000 in hand.

--------------

repeat Step IV with this 4000 and buy double the lots you bought last time!

and double it to 8000.

repeat Step IV again with 8000.

and double it to 16000.

Now you have doubled twice again.

so, divide your wealth-in-hand again in two parts.

put 8000 in the chester (now your chester has 4000+2000+4000+8000=18000).

you now are left with 8000 in hand.

---------------

repeat Step IV with this 8000 and buy double the lots you bought last time!

and double it to 16000.

repeat Step IV again with 16000.

and double it to 32000.

Now you have doubled twice again.

so, divide your wealth-in-hand again in two parts.

put 16000 in the chester (now your chester has 4000+2000+4000+8000+16000=34000).

you now are left with 16000 in hand.

--------------

repeat Step IV with this 16000 and buy double the lots you bought last time!

and double it to 32000.

repeat Step IV again with 32000.

and double it to 64000.

Now you have doubled twice again.

so, divide your wealth-in-hand again in two parts.

put 32000 in the chester (now your chester has 4000+2000+4000+8000+16000+32000=66000).

you now are left with 32000 in hand.

---------------

This way you keep doubling your fortune.

You keep increasing your chester money.

starting with minimum money.

without taking big risk (considering the backup money in your chester)

God forbid, if your TA goes wrong at any time, you can start with a lower step from a portion from the chester.

Have patience for the initial few steps. the compounding rise will take you higher than you can imagine faster than you can think!

---------------

all the best!!!

---------------

and the winner is.....

3 years ago I started a monthly SIP (Sytematic Investment Plan) with SBI Mutual Fund's Magnum Tax Gain'93.

I started it not because of my prudence

but because of

a) repeated edging by one Mr.Vijay (a real gentleman financial advisor whom I now trust utmost) and

b) the reason that I wanted to save some tax under section 80C but in a way which gives more return than traditional life insurance

(I believe that one should buy term insurance for life insurance and mutual fund with or without SIP for savings!) (the above mentioned fund gives 80C benefit besides market investment returns)

Frankly speaking, when i started the SIP with a small monthly contribution I was least excited!

Reason?

"It will take ages before the monthly systematic investment will becaome a fortune!" I thought.

Still, I did start with the SIP and gave 12 cheques to Vijay.

Every month it was an irritant to part with the instalment.

Many times I decided to stop the SIP after the committed 12 instalments.

But after around 8 months, one day I was pleasantly surprised to receive a dividend cheque from the MF.

It was a decent amount but it appeared many times bigger due to the surprise element!

Besides, my corpus had grown!

So, I continued with the MF after the first year as well.

Here, I wish to share that I started the SIP when the Sensex was above 20000 just before the crash!

But because of it being monthly SIP, my instalments kept entering the market at every stair in the staircase.

My SIP instalment went into the market at 20000 as well as 7500, 15000 as well as 9000, 12000 as well as 10000......

....and it is still continuing........

The annual dividends I get fund my kids annual fees automatically! Alternately, it leaves me with a handsome amount to do anything I wish to! Last year we had a grand annual family vacation in Kullu & Manali!

And the beauty is that the corpus is growing.....

.....in compounded fashion just like the prize money in Kaun Banega Karorpati (Who wants to be Millionaire).......

What was an irritant every month is today a monthly reminder of the assured and growing prosperity!

Every month I thank Vijay hearts of hearts for somehow forcing me into this equity-linked savings.

Jokingly, I have been playing a race between my savings in this MF and the growth in my self-trading earnings.

I have no hesitation in admitting that I have been left gasping behind the MF especially after this recent bull spurt!

Why I shared this story with you?

Two reasons.

First, to recommend SIP based Mutual Fund investing to everyone!

Second, to share a strange phenomenon mentioned below.

I have

never ever

never ever

never ever

thought of selling my SIP savings!

I just think of investing more and more......

I just think of topping it up whenever market is in oversold state!

whereas I rarely survive the itch to book profit in my trades!!!

What fantastic paradoxical opposite faces of my same self!!!

One is willing to not only hold all investments forever but keep adding to it! (The fund manager keeps rotating the investment into sectors and stocks as per the situation)

The other is dying to run away with the pennies after every round!

One full of stress!

One full of pleasure!!

I have least doubt who will win this race.

It will surely be the tortoise this time as well!

Basic Mathematics of Trading

1) You + 0 = You

If you bet too small, you practically don't go far enough howsoever good you may be in trading.

Whatever small distance you cover doesn't take you far enough into the green territory to make you in the position to absorb any potential setback.

2) You x 0 = 0

If you bet too big or too recklessly then you are trying to multiply your present worth with zero which is sure to land you on the right side of the above mentioned equation!

3) You x 1.2 x 1.2 x 1.2 x 1.2 = 2U

If you bet neither small nor too big and with a method and with consistency, you have power of multiplied compounding on your side!

4) U/1.2 = 0.8U;

0.8U/1.2 = 0.69U

If you don't bet too big but have weak discipline or without method then you will keep slipping down. Power of division is working against you.

What do you do when....?

What do you do when you win an unexpected but handsome profit?

If you pack-up and leave to enjoy the booty then nothing wrong with you

but

If you dare to bet it all or most of it on the next trade

ADVISED by the method

and supported by the just-won profit

then you have in you what makes a professional trader!

On the other hand,

What do you do when you lose unexpected and rather big?

If you fight back instead of surrendering then nothing wrong with you

but

If you dare to accept the unexpected adverse situation and decide to stay away till you regain your sense of understanding of the winds

then you again have in you what makes a professional trader!

In the words of Pat Holland in his dazzling book

"The 35 rules of Gambling that all investors should know"

Rule 4 : Never chase your losses!

Rule 6: Gamble your early winnings!

"The 8th wonder of the world" (Js)

Do you know Einstein called the compounding effect "the 8th wonder of the world"!!!

No doubt it is.

e.g. if you invest Rs. 1 lac with 20% pa returns for 20 years
you will get Rs.38,33,760/-
even if you adjust the inflation rise @ 7% pa average, your 1 lac will become 11 lac!!!
an INFLATION-FREE earning of Rs.4583pm for 20 years!!!

------

In stock market, if you are talented and can get 50% pa regularly for 20 years
Your 1 lac will become 33 crore 25 lacs
even if you adjust the inflation rise @ 7% pa average, your 1 lac/- will become Rs.12crore78lac
an INFLATION-FREE earning of Rs.5.32 LACS pm for 20 years!!!

------

Einstein was right! This is nothing less than a "wonder of the world"

So, why don't people go for it?

Simple,

first, they don't BELIEVE this. they reject it outrightly. they are not used to dreaming.

second, they don't have a METHOD so that they can get the desired returns consistently.

third, they don't have DISCIPLINE to stick to the method

fourth, they don't have the STAMINA and character for that much of time!

Money freedom is always within our reach. We just don't believe it!