how contras think to make money
The true contra man with the true contra stand
“ two roads diverged by the woods
and I took the one less traveled by
and that is all that made the difference”
-Robert Frost
that is all that makes a difference !
between the guy who makes money and who makes a lot of money.. a guy who thinks opposite to what others think and has the cheek to think he is right when others think he is a insane ( they all say it because they all say it ! ) .. such an impetuous guy is the true contra man and such men made histories on the Wall Street and Dalal Street.
The contra man thinks always in causalities.. he is a top what if thinker and can link the events in a necklace of time and geography to make seemingly worthless stones as beautiful as China jade.
Now think… what if ( God forbid!) there is an earthquake in Tokyo ! and you are an investor with a lot of money. There is panic in the investors, everybody is selling yen and getting out of the Nikkei … the stocks of all Japanese insurance Companies are falling like a misfired missile… what to do??? You exit like all and make losses because not everyone is lucky enough to exit at par.. you sell your insurance bonds at a discount and exit yen futures at a discount !!! you sell because there is someone buying.. and he is forcing to sell you at even greater discount
That someone is Mr.Contra. His cold logic has kept him impervious to market panic. Insurance will be hit but in Japan some insurance Companies provide specially earthquake insurance and they will bear all the brunt. The other insurance Companies would not be hit that bad but would still be available cheap. So contra man has hit a boundary. But he hits a six by buying yen forwards very cheap when all are selling them. This is because as the earthquake aftermath is slowly subsiding and Japan gets up on its feet the first thing that the Japanese will need to rebuild their lost assets is money. So they will liquidate their investments in Europe, US and elsewhere and effectively sell their dollars and Euros and buy Yen. So yen will appreciate. So yen forwards are now at a premium and people rush to catch the Virar local. But our Contra man has come down ( all mumbaikars who travel in trains know “ down”) in the train on a window seat.
The Dalal Street also had its variants of the contra men ( not the contra funds that invest in seemingly small and midcaps) . these contra men are OK rich guys who can take risk on a decent margin capital ( decent is > 1 crore). These people buy the Nifty stocks when the market is plunging down at relatively cheap levels but not the bottom ( the falls have been so steep recently that no one could gauge the bottom ) . while the market falls and there is a deluge of sells at very cheap levels as the margin stocks are sold by brokers to meet their margin requirements these contra men keep on accumulating stocks ( bought 100 @ 50 , wait buy 100@ 37 wait… if market stabilizes there good or wait for a stabilizing level ) averaging out their price to lower values ( they cannot wait for a bottom out because the market may show a rebound anytime and keep them waiting for a bottom that never was !) when the market rebounds ( what goes down goes up faster) they sell their stocks in small lots above the avg price ( if avg : 42 start selling 50 @ 48 , 50 more @ 52 , 50 @ 57 so on ) so they follow a reverse curve then normal speculators who sell on a slide and buy on a rise ( because they do not have much margin capital to defy the market and swim upstream )
We start selling here we buy here : with the market
Contra starts accumulating here starts selling here till he reaches the top
How to be a contra I do not know ! I also would sell at the fall and buy at the rise. To defy the market you need to hold and for that you should have vitamin M. Also very few real contra get away with this. Many a mighty have fallen by buying very high above the bottom and accumulating the shares at averages that may or may not be reached. By averaging they had multiplied their risks ( large sum large risk!) and now have their funds locked up till heaven knows when.
Anormal man like me once told me “hum bhi chalti hui local pakadte hai Churchgate se, charni road se down aane ka time nahi aur kaunsi local pakadne ki hai uski judgement nahi aati “
To be a contra you must have a judgement of a Chief Justice and the aloofness of a surgeon. Good Contra men are so probably born !
“ two roads diverged by the woods
and I took the one less traveled by
and that is all that made the difference”
-Robert Frost
that is all that makes a difference !
between the guy who makes money and who makes a lot of money.. a guy who thinks opposite to what others think and has the cheek to think he is right when others think he is a insane ( they all say it because they all say it ! ) .. such an impetuous guy is the true contra man and such men made histories on the Wall Street and Dalal Street.
The contra man thinks always in causalities.. he is a top what if thinker and can link the events in a necklace of time and geography to make seemingly worthless stones as beautiful as China jade.
Now think… what if ( God forbid!) there is an earthquake in Tokyo ! and you are an investor with a lot of money. There is panic in the investors, everybody is selling yen and getting out of the Nikkei … the stocks of all Japanese insurance Companies are falling like a misfired missile… what to do??? You exit like all and make losses because not everyone is lucky enough to exit at par.. you sell your insurance bonds at a discount and exit yen futures at a discount !!! you sell because there is someone buying.. and he is forcing to sell you at even greater discount
That someone is Mr.Contra. His cold logic has kept him impervious to market panic. Insurance will be hit but in Japan some insurance Companies provide specially earthquake insurance and they will bear all the brunt. The other insurance Companies would not be hit that bad but would still be available cheap. So contra man has hit a boundary. But he hits a six by buying yen forwards very cheap when all are selling them. This is because as the earthquake aftermath is slowly subsiding and Japan gets up on its feet the first thing that the Japanese will need to rebuild their lost assets is money. So they will liquidate their investments in Europe, US and elsewhere and effectively sell their dollars and Euros and buy Yen. So yen will appreciate. So yen forwards are now at a premium and people rush to catch the Virar local. But our Contra man has come down ( all mumbaikars who travel in trains know “ down”) in the train on a window seat.
The Dalal Street also had its variants of the contra men ( not the contra funds that invest in seemingly small and midcaps) . these contra men are OK rich guys who can take risk on a decent margin capital ( decent is > 1 crore). These people buy the Nifty stocks when the market is plunging down at relatively cheap levels but not the bottom ( the falls have been so steep recently that no one could gauge the bottom ) . while the market falls and there is a deluge of sells at very cheap levels as the margin stocks are sold by brokers to meet their margin requirements these contra men keep on accumulating stocks ( bought 100 @ 50 , wait buy 100@ 37 wait… if market stabilizes there good or wait for a stabilizing level ) averaging out their price to lower values ( they cannot wait for a bottom out because the market may show a rebound anytime and keep them waiting for a bottom that never was !) when the market rebounds ( what goes down goes up faster) they sell their stocks in small lots above the avg price ( if avg : 42 start selling 50 @ 48 , 50 more @ 52 , 50 @ 57 so on ) so they follow a reverse curve then normal speculators who sell on a slide and buy on a rise ( because they do not have much margin capital to defy the market and swim upstream )
We start selling here we buy here : with the market
Contra starts accumulating here starts selling here till he reaches the top
How to be a contra I do not know ! I also would sell at the fall and buy at the rise. To defy the market you need to hold and for that you should have vitamin M. Also very few real contra get away with this. Many a mighty have fallen by buying very high above the bottom and accumulating the shares at averages that may or may not be reached. By averaging they had multiplied their risks ( large sum large risk!) and now have their funds locked up till heaven knows when.
Anormal man like me once told me “hum bhi chalti hui local pakadte hai Churchgate se, charni road se down aane ka time nahi aur kaunsi local pakadne ki hai uski judgement nahi aati “
To be a contra you must have a judgement of a Chief Justice and the aloofness of a surgeon. Good Contra men are so probably born !
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