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Tuesday, June 16, 2009

A break from the stock market and chart patterns

Some times, it is good to take a break from discussing stock market indices and chart patterns and step back a little from the scene of action. It gives a more macro perspective.

The eternal fights between the bulls and the bears is exciting to follow and they provide just the opportunities to lay the foundations of long-term wealth creation. Once in a while it is also good to do a reality check.

I was discussing the pros and cons of long-term investing and waxing eloquent about the positive aspects of the buy-and-hold strategy with a friend. He came back at me with Keynes' famous quote: 'In the long-term, we are all dead!'

My thought process hit the pause button and quickly shifted to the Puja we had at our home a couple of weeks back. Early in the morning, the door-bell rang and a young man, clad in tee-shirt and jeans, announced that he was the priest who would be conducting the day's affairs. After changing into more traditional attire, the young priest proceeded to carefully and lovingly decorate the Puja area.

What followed surprised me even more. The 'shlokas' and chants from the Vedas and the Bhagavad Gita emerged fluently in chaste and mellifluous Sanskrit from his heart. He did not refer once to any of the scriptures he was carrying with him. He stopped from time to time to explain the significance of his chants in simple English.

One of the things he said was (and this might be the essence of the Hindu religion): Human beings go through an eternal cycle of birth and death. During our brief lives, we ceaselessly pursue happiness, not realising that sadness is the other side of the coin. Sadness will follow happiness, just as death follows birth (and in stock market analogy, bear markets follow bull markets).

The only way out from this eternal cycle of 'Maya' (or illusion) is to try and attain 'Ananda' (or bliss) - which is a state beyond happiness and sadness when one's mind attains greater heights and unifies with the Supreme Consciousness (or God or Allah or whichever terminology that followers of different religious beliefs may employ).

The sooner we realise the true purpose of our lives, the better. The pursuit of worldly attainments - whether power, or fame, or long-term wealth from the stock market - have no real significance other than in the very short-term in the universe's time cycle. In the long-term, we will all be dead.

Does that mean we will stop all our activities and become hermits? Obviously not, because that path is not for every one to follow. We need to keep doing our regular assignments and duties as per responsibilities acquired or thrust upon us. But in this journey of life, we have to occasionally stop and smell the roses.

Once in a while, take a few days off. While I paid attention to the religious ceremony, my mind focussed away from the stock market and its chart patterns. You may want to go white-water rafting or spend a weekend at a tiger reserve.

A bird's eye view from time to time helps to retain objectivity. Too much day-to-day involvement in anything causes our minds to saturate and may lead to hasty and unwise decisions. Clear out the clutter, refresh your minds and come back with renewed vigour to this addictive roller-coaster ride in the stock market.

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