These things should be taught in School. Even after being in the industry for so long, these set of stats have an ability to stump me from time to time.
Exponential growth, Compounding and Drawdown termite come from the class of MATHS that can numb you with results. Human mind due to god knows what all biases almost always underestimates its POWER.
We have seen the Compounding examples in various blogs and articles, so we won’t give those examples here. Frizzy haired Jew called it Eighth wonder of the world and he was NOT EXAGGERATING. Everyone must have seen that Rice doubling on chess square example.
See This Covid chart as it happened. Scroll the Dates slowly.
When something starts doubling in 2 -3 days, conventional maths go out of the window. Here is a quick question, if sea weed doubles everyday and has now covered half the pond in 38 days, in how many days will it cover the entire pond.
Similarly Drawdown is a Termite that EATS Compounding. Please read this blog we wrote a long time ago explaining HOW the Drawdown Termite eats into portfolio and Same Exponential maths work (this time in opposite direction). This BLOG would Put a SERIOUS dent on your Buy and hold Hope Strategy you are deploying with your SIPs for your daughters wedding.
We shared with our audience that our Flagship product MWM (MysticWealth momentum) is 6287 basis points above its benchmark CNX500.
That looks awesome and ALL but human mind like i said is unable to grasp the gravity of the situation yet again.
One of the ways to bring home the point and make our mind understand the gravity of any statistic is to use the technique called INVERT ANALYSES.
Using Invert analyses, we conclude that CNX 500 has to gain 168% to BREAKEVEN with us.
Let that SYNC in. If CNX 500 were to Rally 168%, some of those SUPER STOCKS that MWM tracks, have to go BIZERK and rally 300-1000%
In the last 03 years,we have to a degree substantiated with empirical evidence that if there is a Momentum, we are sure to catch it.
Idea is to play good defense in bad days to save capital for the good days where you can swing for the fences.
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