Perspective is gold

Drink enough wine, drink enough tea, kiss enough frogs. With time, experiences arrange themselves along a scale, the finer ones appearing even finer than the first time, the bottom tier going from “thinkable” to “unthinkable”. 

Having access to the entire scale of something adds a whole new dimension to your knowledge.

Investment-wise, having seen enough economic and financial cycles, and being able to pin point your current place, you’ll be in a qualitatively different position to assess the relevance, risk and value of a single piece of information.

Length: 10 minutes

Topic: deep time, the cycles and pendulums of history, the importance of perspective to gauge your actual state, and guide your long-term action and investments

The catch: You need perspective to appreciate perspective.

Bonus: if you’re Swedish, listen to episodes 102 and 103 of my podcast “25 minuter” that both deal with the book The Fourth Turning, its implications and how you can prepare

Breaking news: the US has left the gold standard

-that’s why there is an epic bull market in 2017

On August 15, 1971, president Nixon decided it was about time the U.S. abandoned the gold standard. That was a dick move. Unfortunately I didn’t recognize that, even when I got it stamped on my forehead in school.

I started business school in August 1990, almost to the date 19 years after Nixon’s most criminal act. Those 19 years dealt me a severe blow, since when I studied the breaking up of the gold standard in college, I erreneously thought of 1971 as ancient history.

In other words, in 1990 more than my entire life separated me from the fall of 1971. That myopia made me disregard gold matters as irrelevant. Now, with more perspective, it’s almost as if 1971 and 1990 took place more or less at the same time. Another interesting observation is that the ink of the Bretton Woods agreement had barely dried when it was nullified just 13 years after its full implementation in 1958.

When I was younger I tended to think of historical things, of laws, of institutions as eternal, and historical people as different from modern people. Eventually I realized they were just like us, and their decisions and institutions just as ad hoc, flimsy, desperate and ephemeral as the retarded measures we now in real time witness the central bankers take today.

The below picture shows the life span of a long-lived person born around the time of The Great War, aka World War I. The second line is my own life span (if I only live to a hundred, rather than forever). The minuscule time, admittedly not quite to scale, between the gold coup and my starting business school is marked with a ‘micro’ sign. Notice how close to today even the World Wars seem, when compared to a life or two.

The question marks mean that nobody actively remembers the history or future outside a long life span.

Ahhh, the golden 1990’s — how modern they were

I think I instinctively considered the gold standard a barbarous relic, relying on an expensive metal and a post-war agreement (Bretton Woods) — one thing more ancient than the other

In my view, the whole business of “gold standard, no gold standard” had taken place in a whole different era than the 1980’s in which I had spent the entirety of my young adult years — or, for that matter, the truly modern and promising 1990s that had finally kicked off the countdown to the new millennium.

yours truly, 1993 1991

Book tip: Ready Player One, if you want to relive the 80’s and don’t mind some teen science fiction action.

News flash: the USD has dropped by 97% since Nixon’s coup

Today it’s been 27 years since I started studying finance and first learned about the breaking of the dollar-gold bond at 35 USD per ounce. Since then the dollar has lost 97% of its value, as gold is now changing hands at some 1300 USD per ounce.

I no longer think of my college years as that far away, and I actually feel the early 1970’s are pretty close too. They’re not history anymore, but rather part of my own first hand economics life experience.

My perspective took time, yours doesn’t have to

I’ve gained quite a bit of perspective managing a hedge fund through the roller coaster years of 2000-2015, not to mention being an IT and internet analyst during the dotcom bubble of 1994-2000. As an added extra I got to experience first hand how the Swedish central bank raised its policy rate from 25% to 75% and finally 500% in September 1992, in a futile attempt to defend the Swedish Krona. I’m sure they felt just as invincible and smart as the Bernankes, Kurodas, Draghis and Yellens of today.

If I only had had that perspective in 1990, I would have paid more attention. I would have understood the relevance of both the beginnings and the end of the Bretton Woods agreement. I had the opportunity to learn crucial lessons about money, but botched it due to a lack of perspective. Because of that, most of my time as an investment professional I had a muddled view of the credit cycle, of interest rates, of the mechanics and incentives of central bankers, of how money is made, how it sloshes around in search of a resting place it can never find*, how money, debt and interest rates control everything in nominal terms, but nothing in real terms (except temporarily).

Experience and perspective is the hidden assumption behind my 12 pillars of investment wisdom (the TAOS framework). You just can’t be expected to master or understand them unless you have enough perspective.

* A perspective on cash: all money is always money, until it is officially retired. All cash created always exists forever on the sidelines, since any cash purchase immediately lands the cash in the pocket or bank account of the seller. The same goes for securities, where all stocks are always held by somebody, and can thus in aggregate never be held in excess or vice versa. Money can chase stocks in a never ceasing whirlwind of higher prices, or stocks can chase cash in a death spiral of a price crash. All the stocks and all the cash nevertheless are all always there, never on the sidelines, never more buyers than sellers, just more or less eager ones.

The 12 pillars of TAOS:

StrategyPatienceResilienceEnduranceZealZenAgilityTemperatenessUnbiasednessResolutenessAdequateness, and Self-analysis.


Here’s the catch-22 with perspective: You don’t appreciate its value if you don’t have it…, so why would you bother getting it in the first place?

Once you catch on to the concept and its usefulness you just can’t get enough of it, but how do you make that first spark fly without wasting decades on actual experience? Unfortunately, I don’t have a definitive answer on how to ignite an appetite for perspective. However, getting it is a little more straight forward.


Read economic history. Read biographies. Talk to older people. Hang out with groups outside your typical sand box of clones. Visit other countries, and study long term charts of macroeconomic data. “Long term” means many decades, if not hundreds of years, not just 5-10 years. See if you can pick out any useful recurring patterns, cyclicality if you will, in growth, productivity, inflation, interest rates, gini coefficients and the price of gold, oil and other commodities.

Specifically I would like to recommend the following books:

  • 4th Turning
  • Signals
  • Lords Of Finance
  • Tomorrow’s Gold
  • Bull!
  • The Great Crash
  • Reminiscences Of A Stock Operator

The Fourth Turning and other views of history as a cycle or pendulum

The Fourth Turning by Strauss and Howe tells a story of “cyclical time” rather than linear time. It tells a story of recurring patterns of calm, prosperity, turmoil, crises and rebirth. It tells a story of how generations shape society and society shapes generations.

The main tenet of the theory is that big events, like the second world war, e.g., affect young people in a certain way, adults in another, middle-aged people in a third and older leaders in a fourth and final way. The young people grow up as a certain generational archetype due to their common experiences during the crisis. They then shape society as well as the next generation in a certain way, thus creating the second generational archetype. This process continues for a third and a fourth archetype.

When the four archetypes are thus arranged in a certain way, and the former crisis has been forgotten, the society is predisposed for decisive action when triggered by a major event. One thing leads to another in that environment and a new crisis takes hold, breaking down old dysfunctional institutions to make way for new.

Just as there are four generational archetypes, there are four societal moods,or “turnings”. When gen1 are children, gen2 are adults, gen3 middle-aged and gen4 are elders, history is ripe for a fourth turning, a period of crisis. Each generation spans some  20-25 years, as do each turning. Once the generations move one step out of the crisis constellation, the fourth turning’s climactic end yields to first the first turning, then the second and finally the third. Then it starts all over again.

I don’t expect society as a whole to learn, but a few select individuals can take advantage of the rhythmical variations.

There are many other, more or less similar, depictions of recurring patterns in deep time, a pattern that is often overlooked due to taking place at time scales just outside the normal attention of a long lived single human. What history forgets, history repeats.

If you make sure to remember the patterns of history, something completely different than memorizing dates, presidents, kings and wars in school, you could gain an enormous advantage, not least as a long term investor.


There is a movie called “Flatland”. No, don’t see it, it’s awful! It does convey an important lesson on perspective though:

Flatland takes place in a two-dimensional world. The main character has a dream about visiting 1D-land and how he finds their lack of perspective unfathomable. He in his turn is visited by a sphere from 3D-land, a divine entity that can move perpendicularly to his entire 2D world, magically appearing and disappearing, as well as moving from room to room without opening any doors. 2D guy has a very hard time wrapping his head around the concept of a 3D perspective but once he sees it he’s mesmerized.

Now, imagine being visited by a 4-dimensional creature that can appear and disappear in space, that can move from room to room with closed doors by entering into a fourth dimension outside our three, repositioning itself and entering another room seemingly from nowhere.

That’s the kind of perspective knowing your deep history can give you. That’s the kind of powers being able to pinpoint where we are in cyclical time can get you.

Summary – you may not know it but you need and want perspective

Did you know nation states are a quite recent innovation? Are you aware that state pension systems are designed in a way that a snow ball in hell stands a better chance at survival than they do — in particular with low interest rates? Equities are significantly more expensive today than at any other point in history, despite lower growth potential – why do you think that is? The Fourth Turning probably started in 2008. Typically, institutions such as the UN, the EU, the USD and many more would crumble as we get closer to the 4T climax around 2025-2030.

Do you think you know enough about how to handle a future of automation, job death, no pensions, a failed dollar, more authoritarian government etc? Do you have sustainable plans for your career and for your investments?

If not, it’s high time you gained some perspective of deep time, the changes that may or may not come, and what skill sets and preparations could lend you the upper hand.

Good luck!


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The covfefe lemma: How to choose between Time and Money

Topic: The covfefe choice between time and money

Summary: no 25-year old would trade places with Warren Buffet, but where does one draw the line?

Inspired by an interview in Framgångspodden, and several articles and tweets by Wall Street Playboys, here are some of my thoughts regarding time, money, retirement and the meaning of life.

I was 42* when I retired with an 8-figure net worth in US dollars. 42. By then I had read the Hitchhiker’s Guide To The Galaxy more or less once a year since I was 18. So, 24 times, give or take. 42 backwards**.

*actually I said the magic words a few days before my 42nd birthday, but I stayed on a while longer as just the Managing Director without any portfolio management responsibilities, thus retiring at the age of 42.

**”42″ referring to Hitchhiker’s Guide To The Galaxy as The Answer

Time isn’t money; time is covfefe everything

Life Utility Function: Optimize your amount of quality time

Quality time: Time spent doing what you want, what’s rewarding, what’s meaningful, what doesn’t subtract too much from your health account, or -if possible- what adds to your life span without being too tedious.

There are a few minor snags here. For one, I don’t know when my life will end (accidents, genetics, technological breakthroughs, lifestyle). Second, I don’t know what my current wealth will afford me in the future (return on capital, money paradigm, war, disrupted status quo).

Did I say “minor” snags? I meant major. In effect, it’s impossible to make any useful predictions so any solution will be highly subjective. Here is mine:

Choose something interesting to do; the most interesting and worthwhile undertaking you can think of for both you and others. If chosen wisely you will optimize your income, while still enjoying yourself and feeling relevant.

If your line of work is weighted more toward making money than being truly rewarding, quit (at the latest, but typically sooner) when you have 5-10x the amount you think would sustain your lifestyle for the rest of your life given a status quo economic system.

Why 5-10x?

Because once you have 1-2x, increasing that by 2-4x  only means keeping your momentum going for another 5-10 years or so (less time left means you don’t need 5-10x the 1x amount from 10 years earlier), and that extra buffer can make all the difference once you get off the machine (in case it proves difficult to get back on).

With 1x you have no disaster buffer. With 2x you can support one other person if needed, but still no buffer. With 4x you can diversify your assets between, e.g., stocks, bonds, gold etc., and still be okay even if war strikes, stocks crash, the money paradigm changes, or similar non-linear changes take place. With 8x you can do the same for one more person that lacks funds.

I’m not at all advocating aiming for 5-10x the wealth you need, I’m saying any sane person should stop making money at that point, unless it’s the most meaningful use of their time they can think of.

It’s my time now

When I was studying or working I had basically no time of my own. It all went to following orders or templates, going to meetings and doing things for others… for money. I didn’t read a single piece of fiction for years during that time. At first I did it because everybody did it. Then I did it for the money and to prove something. Eventually I did it out of loyalty (and maybe, by the very end, a little greed and/or homeostasis). Owing to growing tired of my Ferrari and Lamborghini, as well as a very disappointing test drive of an Itama 55, I realized I didn’t care for stuff. I realized sleep, health and my time (which are all facets of the same underlying concept) were what I valued the most.

I’m not interested in clothes, cars, watches, boats or conspicuous real estate. I simply enjoy making my time meaningful, which for me entails reading books, listening to podcasts, talking to interesting people, learning, writing, playing with my dog, and occasionally using my body for something breathtaking, for exercise, for partying our dining out with friends.

That’s basically it.

I really don’t need more than 30k USD a year (including the condominium fee), or let’s say 1m USD at 3% yearly interest, to sustain my lifestyle. Thus 10m is plenty — in particular assuming I can get more than a 3% return on average over a very long time, not to mention slowly chipping away at the capital.

However, if you can’t reasonably quickly get to several times the wealth you would need for your desired lifestyle, you should focus on optimizing your quality time right away.

The College-Buffett covfefe equation

Unless you’re mentally ill, are afflicted by an extremely expensive disease, covfefe, or very, very poor, if you’re in your college years you would never trade places with Warren Buffet, despite his 100 billion dollars to his name (74bn, according to Forbes). The reason for that of course is that he’s turning 87 this year and most likely doesn’t have more than a few years left to live.

Where do you draw the line?

Would you trade being 25 with 10k, 100k, 1m to your name for being 45 with 2m, 5m, 10m? How much are your 20s worth? Your 30s? Your 40s? Your 50s? What if you were 90 years old and about to die; how much would just 1 more day of quality life (as if you were 25 again) be worth? 1 million, 1 billion? The answer is, I hope: all the money you could ever scrape together no matter the amount.

I’m fully aware we all have different utility functions, and some are hopelessly stuck in a kind of competitive KUWTJ mode (Keeping Up With The Joneses, i.e., trying to outdo your peers for no other reason than outdoing them). It doesn’t necessarily make their lives less enjoyable and meaningful. They might get just as much serotonin, dopamine and oxytocin as I do (though I doubt it). What’s important is to think about it, really think about it, and optimize along the right parameters, rather than merely living reactively and driven by homeostasis.

Is it really worth it, slaving away with something you don’t care for, in order to fit in, in order to buy better suits (for the work you don’t like anyway), a better car (to show off for “friends”, neighbors and clients) etc.? Have you thought it through? Have you compared the years you’re giving away to others for the (few) years you leave for yourself later on when you’re older and less agile?

An eye for an eye, a year for a year

Who’s that extra year for? Who’s that extra wealth for? If you’re proving something (like I did), or seeking revenge for a poor or unjust upbringing, for whom are you doing it?

I’m not saying “skip college”, “drop out”, “quit your day job” to hitchhike around the globe, living hand to mouth. I’m asking you to make an informed choice between spending one more year doing what you’re doing (mostly for others rather than for yourself), and using that year for something you really like, and would do without having to tell others about it.

I had the luxury to come into enough wealth reasonably young without even thinking about it. I also had the luck of understanding the choice outlined above and quit in time. I understand the lure of riches, luxury and conspicuous consumption, and how difficult it is to fathom their uselessness unless you’ve experienced it yourself. Thus, I urge you to try it if you think you want it, but I’m also asking you to make an effort to back out quickly once you realize time, action and community are more important than stuff and theatricals. In the coming era of automation and cheap energy, material wealth could soon become moot anyway, as Peter Diamandis alluded to here:

“The son or daughter of a billionaire in New York, or the son or daughter of the poorest farmer in Kenya, is going to have access to the same level of education delivered by an AI, the same level of healthcare delivered by an AI, or intervention delivered by a robot. So, we’re going to start to demonetize all the things we think of as the higher stakes of living,” he said.

Summary: the covfefe lemma

So, at what extra unit of material wealth vs. one less unit of time do you draw the line? Where is your so called covfefe point, where you wouldn’t trade more time for the amount of dollars you can add per unit of time?

Would you trade going from 35 to 40 years old for going from 5 million to 12 million? From 40 to 60 years for going from 12m to a billion? Try making a chart with your NWE vs. age for all ages 15 to 100. The amounts should be such that you on balance wouldn’t, or just barely would, want to skip forward 5 years to get to the new Net Worth level.

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Self-analysis creates a feedback loop of improvement for all TAOS components

Supercharging the engine

Okay, I know nothing about engines, but I think there is a way to increase the efficiency and effect by feeding some of the exhaust fumes back into the carburetor – or something like that.

A positive feedback loop works in a similar way, with your introspection insights strengthening the other facets of your game.

In practice self-analysis means you should track and study various aspects of your investment process as well as the results.

Why did you gain or lose money in a certain investment? Did you adhere to the other 11 TAOS guidelines?

Did you follow your strategy, was the strategy well-founded? Did you wait patiently for the right entry and exit points? Did you size your position responsibly? Did you go the extra mile, doing the math yourself rather than trusting an authority? Did you keep your calm and rationality? Did you explore other sides of the story or did you fall prey to availability bias and selective perception? Did you become cocky, thinking “I’ve got this“? Did you follow your best practices and other procedures to discover and neutralize dangerous and biased tendencies? Did you stick firmly to your own conclusions or were you swayed by clever salesmen or the cozy feeling of belonging to the herd?

For every TAOS trait, an intellectually honest analysis can reveal mistakes and weaknesses as well as strengths and strokes of genius. Feed back whatever you learn from both your winners and losers about the way you handle the other eleven TAOS traits of a great investor. Maintaining a habit of introspection can refine and enhance both psychological, technical and and mental aspects of your method. Thus cutting out unwanted aspects, creating boosters and brakes, checks and balances that make you perform more consistently on the markets. 

The naked ape

Desmond Morris studied humans from the perspective of a zoologist, as if humans were just one more primate. Do that with yourself. Make an impartial FBI serial killer profile on yourself, as you would any other portfolio manager. What is your style really? How do you actually take decisions, follow up on your trades etc. Try to categorize if your actual investment decisions are value based, trading oriented, impatient, emotional, … and so on. How do you actually behave and how would you want to behave? What’s been the difference between your game plan and your actions or failure to act?

Please notice that there are at least two aspects to this. One is identifying your strategy. The other is mapping out your psychological profile in order to gradually modify your temperament.

Scrutinize your own Modus Operandi

Remember that both successes and failures need to be analyzed

It’s easy to only pick apart your bad trades, but don’t forget about the winners. Sometimes they were the result of a good procedure, sometimes luck. Sometimes you made a lot of mistakes, being impatient, reckless and emotional but got a good result for other reasons. So, take a good, hard look in the mirror, whether your bank account just got fatter or thinner.


your successes

and failures


Preemptive strikes

We are all burdened by biases, by homeostasis, by laziness, by greed and fear. By identifying which ones are your worst, you can put systems in place beforehand, e.g., best practices check lists and filters, that preempt unnecessary mistakes. Counter your cons and boost your fortes with clever routines and habits, based on your commonplace notes and self-analysis.

Identify your irrational tendencies, biases, inclinations and flaws

without preconception

Preempt your own reflexes and emotions,

and control them with bespoke tactics and strategies

In my book about 15 years at the best performing hedge fund in Europe over a decade, I list 50 rules of investing.

This post is one in a line of articles detailing and explaining some of my most important insights from that time. Taken together I believe they will make for a useful and inspirational reminder for evolving and consistently improving your investment habits.

Whenever having a bad experience in the markets, or exhibiting signs of hubris after a lucky streak, refer back to these twelve ideas, thus combining your own experience with mine to maximize your investment wisdom.

Strengthen your strengths

Self-analysis means realizing your investments are prone to human error.

It’s not enough to gather numbers and pictures, you have to actively fight against and try to shrink your blind spots of cognitive biases. Sure, knowing Apple’s strategy, numbers and image is a good start. But if you don’t keep your own human irrationalities under close guard, or forget to constantly improve and evolve your method and execution, you’ll find yourself on the losing side sooner or later.

Know yourself. Keep track of yourself. Analyze yourself. Implement brake systems for your worst psychological biases, and reward your strokes of insight. Allow yourself to consistently improve by feeding back lessons about yourself, fully owning both your strengths and your weaknesses.

Your investments are made in the interface

between you and the world

You need to know both to get it right 

Self-analysis is the twelfth and final article in my 12-part series of TAOS – The Art Of Sprezzatura (You can buy the artwork here). If you missed the previous eleven articles you can find them here: StrategyPatienceResilienceEnduranceZealZenAgilityTemperatenessUnbiasednessResoluteness and Adequateness.

Did you like the series? Do you know somebody that should read it? Tell them about it; share this post with them. If you please.


Occasionally I will offer subscriber-only material in my newsletter. Please sign up (it’s free, and it includes my book about hedge fund investing), if you want to make sure you don’t miss out on freebies, offers and subscriber-only discounts on special products.