How to apply Butterfly Concept for Market Success?

15 November 2018

How to apply Butterfly Concept for Market Success?

Greetings from Hitesh! Our last post on Butterfly theory was well received by our readers. Many have asked to explain how to apply the same for success in Market? Let me deal with the same. Before you read this post, you must read yesterday’s post on BUTTERFLY theory, if you have not read so far, for better understanding of this post.

Now, let me deal with above captioned subject.

I am sure you would have observed following things in market.

1.  Stocks which has solid fundamentals have not moved up.

2.  Stock which have not so good fundamental moves up as if there is no tomorrow.

3.  Companies like DHFL, where STAR INVESTOR like RAKESH have done investments, falls by 50% in a day.

4.  Companies which comes out with excellent results, go down and companies which have declared average or below average resutls – shoots up.

5.  The companies you thought you should buy, but did not buy, moved up and companies you bought did not moved up.

6.  After waiting for a long time, when prices did not move, you sold the shares and shares moved up the next minutes or next day.

7.  Some companies move up by 10 to 100 times in a 1 to 10 years period when overall index moved up by 2 times in 10 years.

You would have come across many such examples in your journey as an investor. All the above events are examples of NON – LINEAR results.

Let us see some of the most talked about MARKET THEORIES.

1.  TREND is a FRIEND. It says follow the trend. If stock is moving up, buy and if moving down sell.

2.  Buy low and sell high. It says buy when everybody sells and sell when everybody buys.

3.  Buy on Rumours and Sell on NEWS.

4.  Don’t put all eggs in one basket. Meaning don’t invest all your money in one or few companies. You must diversify.

Market experts – explain above events with above theories. They have invented many such theories. They are trying to find logic in the NON-LINEAR events as mentioned above with the above theories.

There are some other thinkers – who don’t agree with these theories and they call the above events as RANDOM events.

NASSIM TALEB is one of the chief proponents of RANDOM theory. He says everything is RANDOM. Our Indian mind uses the word BHAGYA in place of RANDOM.

What is the experience of BIG investors?

Buffett started investing at the age of 16. He got major money / name and fame after he crossed his age 50. Today also out of 210 odd stocks, some 10-15 stocks have given him the good return.

Rakesh started in his 20s and got major name and money around 40s. Out of 35 odd stocks, only 5 stocks have given him good returns.

Both are well known investors for their fundamental picks and see from all their fundamental stocks – 2-5% stocks have moved up. Once again NON-LINEAR Resutls.

If you are investing in MARKET – you must know what MARKET PROMISES.

What Market Promises?

1. It promises a playing field, not the game. (This says learn to play the game as efficiently as you can).

2. It promises to reward risk, not proportionately.                     (Come out of EGO that since you have done investments after proper study, stocks must move up. Market has taken RAKESH and BUFFETT also for a ride. Who are we?).

3. It promises opportunity, it does not promise profits.          (know which opportunity to bet on).

4. It promises a lesson, not learning. (Lessons are hidden in each market move. Learning is up to you).

5. It promises that the quality of indicators and analysis is proportionate to quantity of participants, not quality.       (this is the most beautiful of all. It says – look at your DATA size before you talk about your conclusions).

If you are in this market, for sure shot ideas, fast money-making ideas – then you will not like above NON-LINEAR events.

How to get SUCCESS in the market in above scenario?

There are mainly two ways of success. If you are follower of KRISHNA / MOHAMAMD / JESUS / NANAK – their way is the way of SURRENDER. You surrender to market (Existence), and EXISTENCE will take care of you.

If you are follower of MAHAVIR or BUDDHA, you will talk about – your Resolution. You are the doer. You will approach everything based on your skill sets and your guts. You will strive to realise success on your own efforts.

They have created so many religions based on the above great souls. Unless, there is RESOLUTION, you can’t SURRENDER!! Resolutions is DOING, and SURRENDER is BEING. Resolution is the beginning, Surrender is the end.

So, if you are not holistic, you will miss the point.

The most important factor to keep in mind is that we all must align ourselves with MARKET (BEING or EXISTENCE) to make money. Market is the GOD for INVESTORS and TRADERS.

Find out which way is good as per your personality and follow it.

What NEXT?

Life and Market both are NON-LINEAR. Accept that and move ahead towards your goals.

All the BEST.

Follow me on Twitter @hiteshmparikh / WhatsApp - +91-9869425399.

Live With Passion…Invest With Passion.

Hitesh Parikh.