These are based on experiences over the last one year wherein which I have learnt tried to learnstockmarket trading. I found many analogies between spirituality and the market

For many of you who must be wondering about this article , there is a direct correlation between spirituality and the stock market.

EQUANIMITY

In trading which involves continuous buying and selling of shares, you can do well only if you are able to balance your fear and greed. That is what spirituality is all about isn't it-equanimity? In fact, after one has mastered trading skills and money management sufficiently, the best way to see what a person's SQ(spiritual quotient) is to see how he operates in the stock market or whether he is able to balance his fear and greed or not.

UNCERTAINTY

The great mystic, Osho had said that life itself is constant insecurity and there too is one of the best lessons from the sharemarket at least in the short run where the mkts is highly unpredicible and profits highly uncertain..

EGO MANAGEMENT

Another thing that the stockmarket teaches is that one should not have an ego and get out of the marktet when one is wrong. Since time immemorial spirituality has been preaching but ego management still remains a predominant problem. Spirituality talks about transcending the ego which is a notch highere. One has to surrender to the market and get out when one’s decisions are prove wrong which is good practice for spirituality.

NO PRIMA DONNAS

There is another interesting analogy. In the stockmarket, there can never be a supreme guru who can be right all the time. Stockmarket history is littered with people who were superstars and then fell from grace when their strategy could not change with changing times. When there cannot be a supreme guru for the stockmarket, how can there be one for life. To try and become a guru itself is somewhat unspiritual because” knowledge is food for the ego” and in spirituality there cannot be an ego. One has to explore issues through discussions (according to krishnamurthy) as we are doing instead of searching for larger than life heros or gurus.

QUACKS

One similarity here is that the stockmarket too is full of quacks:-

Like in other walks of life, there are "spiritual professionals" who distort their profession(religion, spirituality) for money. In fact our own India with its so called spiritual legacy is a lot of nonsense. India is just a country with a lot of spiritual knowledge. Application, in comparion is zilch. If application(acting beyond petty emotions) had been half as good as theory, we would not have a most problems that plague our country. In the stkmarket, application is tough because of information overflow. There are analysts too who tried to influence decisions with wrong information and wrong analysis.

Let us talk specifically about people in the stock market who try to maniupulate information:-

God being supreme in spirituality, isn’t the so called operator the stockmarket god. The only thing close to him are some film stars who too can dictate anything.It must feel great to control even a few scrips even for a day instead of responding to them. Just imagine- the destiny of a few stocks in your hand- you can make them or break them without any past karma to worry about In Hinduism there is a trinity of gods with specific functions but these guys are all in one- they can create, preserve, destroy any scrip. Wonder what the real god thinks about them?

Cash apart, you need to be spirited if not spiritual to run the market. Not for faint hearts. Reminds us of another spiritual great Swami Vivekanand who has gone on record saying that it is better to play football than to read the gita because a weak person cannot be spiritual-peaceful and equanomous.

BEING IN THE PRESENT

“We must learn to accept the present moment,whether it is a state of utmost happiness,or that of greatest sorrow. It is our expectations which reduces our state of joy ,whereby we fail to enjoy the greatest thrills of day to day happier intances “

This is very well said. Following the principle of "perception of reality more important than reality", the stock market too runs on expectations and the one who is able to monitor others’ and alter one's expectations is the winner. Suffice to say that in the western world, desire is the driving force behind everything but in the eastern world desire is the bane of everything. The truth of course lies somewhere in between--the golden mean as osho would say. In the battle between the bulls and the bears, the pivot keeps shifting.
Where being in present is concerned, nothing better than day trading since they don't carry any positions forward and strictly believe in " live for today". When you day trade, you need maximum concentration. Most people I have met do not trade more than two scrips at a time for better focus. If you do not "live in the moment", you cannot day trade effectively. We also have to forget losses and carry on with trading.

HORSES FOR COURSES

I was not referring to those gurus. In one of the best trading softares, Metastock, there is a process of optimization by which one can choose what moving average and other technicals apply better on which share/scrip. Several of these spiritual/motivation gurus make sweeping statements of what they teach without knowing how the concepts apply on each individual or his field of expertise and the audience also laps it up without discrimination or viveka as our Shastras propound. Only somebody like Lord Krishna who is a trikaldarshi and who knows how and when to apply what can be revered as a guru. We all know his role in the Mahabharata, don’t we. I read in a book that Krishna would never have sent his wife on what some washerman said the way lord Rama did. Even god has to be practical and optimize. Wonder how the lord would have dealt with something like the mkt?

I would reiterate that optimization is one of the best spiritual lessons of the stock market; in fact both Viveka(discrimination) and Vairagya(Distancing) if one goes by trading psychology.

CONTRADICTIONS

Reading Mr Gujral’s derivative book again, I came across a statement “Don’t form strong opinions on the market”. It reminded me of what Osho said once .”Only fools give opinion” To which I added “and only fools respond to them” This is said because the opinions may have been formed because of our past prejudices and conditioning and the person/issue may have changed by then and there is a “divergence” Spirituality constantly tells us to be non-judgmental because when you go to the deeper roots you get a completely different picture as in the case of some companies who try to window dress their balance sheets-management accounting v/s financial accounting.

I was associated with a person conducting spiritual workshops who told me a kind of story. He said that a person walking on the road saw some people beating a man. He tried to pacify them and telling them about the undesirability of violence. However when he learnt later that the beaten person had burnt his wife alive, he started beating him himself. Opinions can be so fickle and that is why spirituality constantly tells us to be non-judgemental; Derivative expert Mr Gujral also tells us how nimble one must be to adjust to the market if one wants to succeed. Technical Analysis to me too is more of a market adjusting rather than mkt forecasting or decision making tool. I have already spoken of spiritual principle of "surrender " to the mkt.

Interpersonal conflicts are also caused because of opinions formed on prejudices because of different conditionings. I also read somewhere that if you have not formed a new opinion recently or revised an old one, you have not lived.

Doesn’t it apply to our dear stock market more than anything else. The so called intellectual truth may still be found but the stockmarket truth will always prove elusive because "There is no holy grail" which means no trading system can work forever-applies equally to life actually:-.

“ All maxims have their opposites, and proverbs should be sold in pairs a single one being half the truth.” - SENECA

Moral of the story-good old optimization stated earlier You have to know what to do with which instead of any single strategy or opinion. (Other Contradictory opinion are given in article on Third-eye and spirituality)

TRADING SYSTEMS -FOCUS AND OBJECTIVITY.

I must add here that no less a person than Mother Teresa who has run the largest charity organization in the world has expressed her reservation about verbal conversations. she said that they sometimes create more problems than they solve. Similarly a mechanical trading system takes the emotion out of trading. A trading system similarly makes the decisions unbiased and objective.

This is an example from a trading system:-

Quote:
System 1 makes an average of 250 points per trade but only trades 4 times a year.
System 2 only makes an average of 10 points per trade but trades 200 times a year.

System 1 makes 1,000 pts a year but system 2 makes 2,000 points a year. However if we allow 5 pts per trade for commission and slippage then system 1 costs 20 pts/year whereas system 2 costs 1,000 pts/year.

From an investment perspective, diversity may reduce adversity but from a trading perspective I think it is better to focus on a few as many people are doing

What is given above for system 1represents Pareto’s law, “20% of the causes lead to 80% of the results”

My cousin brother-in-law when he comes to the US instead of going to meet relatives individually throws a grand party himself. He told me once,” On the face ot it , it may be costly moneywise but when one considers the time, money and energy requited to meet people individually, this is far better. This is an excellent example of spiritual management because there is less stress and more peace and happiness which is what spirituality is. In the past , joint marriages of siblings was arranged similarly. Electricity losses in power transmission companies also lose through many small thefts and lighting companies try to reduce the watt losses. Even in the household it is not uncommon to hear ladies scream ,” Why can’t everybody eat at one time?” so that the administrative effort in serving the food in optimized.

The principles of yoga also say that unless you know how to conduct yourself in the real world, doing Yoga and meditation and other tools of meditation can only have marginal effect. There is a Darshana Centre in Baroda in India which has a unique meditation which explains how the forces are scattered in the subconscious mind and require a central focus for optimum functioning.


KNOW THYSELF-

One of the commonest statement one comes across in trading psychology is the phrase “Know thyself”. I read that if you give the same trading system to two people, one may become a multimillionaire with it and the other can become a beggar. This would bely those people who keep repeating that one can do anything with the right “can do” attitude which is a lot of nonsense. In the mkt too, it can take ages to know what your niche in the market is,

VOLATILE OR OTHERWISE


Life’s complexity demands some sanity, some predictability and some dependability . Increased volatility, velocity, uncertainties and complexities make us drift like straw in a storm. Doesn’t the second sentence remind us of the good old market. However when one considers that the mkt is trending only one- third of the time(trendinjg implies going up or going down) and one would like to believe that there is more movement and volatility in a trending market, overall the market is spiritual( Calm for two-thirds of the time)

It also reminds you of Osho’s .” Life is not linear but dialectical”. Nothing can have perpetual linearity. In real life though one progresses more when one moves sideways and thinks out of the box.


BHAGVAD GITA

Take the ancient spiritual scripture, the Bhagvad gita itself. One of the foremost leesons of the Gita is" Do your karma and don't worry about the result". Considering the facts that markets are unpredictible, trading is a good practice for applying the Gita. This is particularly so when one considers the fact that the mkt can go against you any time which is quite frequent.

As for investing, even if one considers a two year time frame, it automatically entails distancing oneself from the fruits somewhat. Nishkam karma applies quite well here because in other fields, the probability of fruits after the effort is much more than the market.

Considering that the Lord was preparing Arjuna for battle, there is another interesting analogy. Alexander Eleder,"Trading is the most dangerous human endeavour, short of war “.

Even ancient Chinese war historian SunTzu in the art of warfare had the following:-

"Opportunistic Flexibility In Adapting Strategies And Tactics To Situation"
"Suitability Of Strategies And Tactics To Situation"

This is what Lord Krishna stood for from his own conduct by the manner in which he got Yudhishtir to lie, the way Karna died etc. This is what optimization teaches and the fact that there is no holy grail(implying no perfect one method of trading) is one of the biggest lessons of life itself. Yet one comes across pple with sweeping statements and overconfidence.

I learnt from a Journalist” We write on each other’s shoulders” . Similarly we continuously learn from one another while exploring issues as krishnmurthy would say. Just as the market is the biggest guru, life and experiences themselves are biggest gurus more than any other individual.

I believe that Technical analysis which teaches how to read the mkts should be an essential part of school curriculum. Spirituality apart, it will save people from the wrong people and wrong expectations of the sharekarket..
  
USE ADVERSITY TO YOUR ADVANTAGE

In the market the most common rule is “Buy on dips, Sell on rallies.” This means that when the market is in an uptrend, one has to buy when the slightly goes down . Similarly in a downtrend, one has to sell when the market is slightly uo(rally)

In the Bhagvat Gita, Arjuna listened to Lord Krishna only because he was in a disturbed frame of mind( in other words a dip) Adverse circumstances are the best to give messages as people tend to listen more in these circumstances. It is not for nothing that it is said that “ Circumstances are the instruments of the wise”. Even in panchtantrra stories, the situation is explained first and the moral of the story comes afterwards. The emotional effect of the event is important for the message of the moral to have any impact.

This brings us to paper trading. Paper trading or trading without money is recommended for beginners who are learning. However there is a school of thought which states that in paper trading too some minimum amount of money should be spent so that there is some fear involved. Then only the real impact of the trading comes through on the learner.

LONG TERM –SHORT TERM

The stock market makes clear cut distinctions between the short term and the long term prospects. This is like the funds flow statement in finance where a clear distinction is made between short term and long term funds.. Even the three types of trading- day, swing and position, Position trading which is of a longer duration is considered the most profitable. In contrast in the management world, very often long term goals are sacrificed for short term benefits. This causes a lot of overlapping, confusion and apprehension which is against the basic tenets of spirituality- peace, happiness, equanimity etc.

This is also a training in contextual training. In life one comes across people who try to jump to conclusions without understanding the context of the situation which leads to a lot of inter-personal conflict.

Optimisim V/s Pessimism

In the stock market, the trader who moves with the market always wins- he is optimistic when the trend is up and vice-versa. In real life one comes across many so called motivators who go around saying that you should never give up and in the name of positive thinking, preach over optimism. I have myself heard nonsensical stuff like,” Nothing succeeds like success” which is a selective truth. Management history is replete with success leads to ego and ego leads to failure. In America, a management expert wrote an article on,” The Negative consequences of unbridled optimism” . This is one of the biggest teachings of the mkt- Be a realist not an optimist or a pessimist.