I am sure all of you know about Bungee Jumping and am also sure that some of you must have tried it as well. It is an activity and you can feel the flow of adrenaline.
Some people call it a sport. This is for a very short duration.
The bungee jump involves, jumping from a diving platform with the ankles of the diver, firmly tied and held to a spring. As you jump from the platform, you fall by gravity and as you reach the bottom most point, you are pulled back by the spring force and you go up. On reaching a higher level, usually below the platform, you fall again and go up. This process gets repeated and slowly you stay at the lower end, where you are guided to the nearest landing point with help
What are the forces at play while doing a bungee jump?There are three main forces at play.1. The gravitational force, which pulls you down as you jump2. The force the spring provides which helps you from not falling and also enables you come up.3. The force or the resistance offered by air.But for the air resistance, you can keep going up and down. But the air resistance, acts on the spring force and reduces your ascent back every time when finaly the fall and climb ends.The important thing is that when the gravitation force does positive. work the spring does negative work and when the spring does positive work gravitational force does negative work. All the time air resistance does negative work.This is akin to Your Portfolio appreciating or depreciating but inflation always does negative work and erodes the purchasing value. Your portfolio has to do super positive work to over come inflation and grow
click on the link, to read more about the forceThis is classic conversion of potential energy to kinetic energy and back.But why we need to know this and what relevance it has got with investing.MarketMarket is a place where people buy and sell goods or services. In stock market, people buy and sell shares or other instruments. There is difference in perception of the buyer and seller and hence exists a price difference.Like three forces exists, In a market there exista buyer, a seller and volatilityAppreciation, depreciation and inflationWhat you buy may appreciate or depreciate in value depending upon the market forces
EnergyThere are basically two energies on display.The potential energy, the height from which the jump takes place andThe kinetic energy which is either due to the gravity or the spring force.However the level of energy gets reduced for every movement due to the air resistanceMarkets see that the stock prices or NAV of a fund, move up and down depending on the energies which is the momentum on selling side or purchasing side. And the air resistance is similar to inflation and does constantly erode growth in wealth.Hide original messageSee how some stocks have done bungee jump in the last one year
Who can do bungee jump?Anybody can do bungee jump.a. IN bungee jump, there is a trainer who guides you and helps you, take the jump and also land safely after you finish your jump/This is similar to an advisor, who guides you through the process of investing and enabling you to reach the goal or the destination.b. You get to experience the ups and downs and the resistance offered by air. You get to see the world with a different point of view.While staying the course of investing, in order to reach your goal, yet get to see all the risk, volatility, momentum and performance at play.c. Your behaviour is controlled and your are disciplined during the jump. If you can exhibit a similar discipline and behaviour in investing, you are sure the winner.d. Fortunately you dont get to hear any noise during the jump as you are isolated from the media. Avoid noise from the media while investing.e. More importantly you have to indulge in the activity to gain and like wise, you have to invest to create wealth.d. When to jump.You cannot take to bungee jump, whenever you feel doing it. It depends upon the weather, the time of the day, availbility of the trainer etc.Follow the 5W 2h process in all activities you doWhat, why, where, who, whenHow and the new one you add is ” How Much”?I am your trainer and do contact me for the experience of bungee jump in investing.