What are the forces at play while doing a bungee jump?
There are three main forces at play.
- The gravitational force, which pulls you down as you jump
- The force the spring provides which helps you from not falling and also enables you come up.
- 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 force.This 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?
Market 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 exist a buyer, a seller, and volatility.
Appreciation, depreciation, and inflation.What you buy may appreciate or depreciate in value depending upon the market forces
There are basically two energies on display.
The potential energy, the height from which the jump takes place and the 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 resistance
Markets 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.
See how some stocks have done bungee jump in the last one year and Who can do bungee jump?
Anybody can do a bungee jump.
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. 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.
- Your behavior is controlled and you are disciplined during the jump. If you can exhibit a similar discipline and behavior in investing, you are sure the winner.
- Fortunately, you don’t get to hear any noise during the jump as you are isolated from the media. Avoid noise from the media while investing.
- More importantly, you have to indulge in the activity to gain and like wise, you have to invest to create wealth.
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 do What, why, where, who, when. How and the new one you add is ” How Much”?
I am your trainer and do contact me for the experience of a bungee jump in investing. Schedule a free introductory call with me on tlk.to/varadha