The ambush method
is like the gorilla war method in which one is outnumbered vis-à-vis his enemy/ opponents. So, the team which is hiding waits patiently till there is right time for strike. The key was to minimize one’s own losses/ damage and maximize the damage caused to the opponents/ enemy. This was a strategy to maximize your resources and minimize the damage.
I would like to elaborate this theory in the stock markets as this is easy to understand. Suppose one has sufficient amount of capital and wants to invest afresh in the stock markets. He has already decided on the stocks he wants to enter but he is not getting the dips he would use to enter the stocks he wishes to enter. Now, the ambush method would come into play. The person needs to maximize his returns and minimize the damage.
Step 1: Choose the stocks on the
basis of fundamental valuation methods of Dodd, Graham etc.
Step 2: Be prepared with sufficient capital.
Step3: Start investing only on down days of your stocks.
Step 4: Never invest all your capital in one go and wait the ambush method for the right time to strike to minimize the damage/loss and maximize the rewards.
The key to Warren Buffet’s success is that he uses the best time to enter when the markets are deep in red and he has all the patience, discipline, preparedness and the ammunition (cash) till the market comes to his liking. Then makes a killing attack. Following this method would obviously require the skills to be developed in all fields of life as well.
The degree of patience is key, cultivating more patience and its continuous improvement is needed. Also needed is the proper resource management. As we all see too commonly the stock markets punish the people who are undisciplined and lack patience. Wasteful expenditure of one’s limited resources of time, money and energy is bound to maximize the damage and minimize the output.
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