Shorting stocks for 2016, going long life

A sustainable new year’s resolution – executive summary

Get your bearings*, and if you don’t like them, or just aren’t sure, change direction little by little.

-Done.

*I’m not talking about balls of steel here, but those are useful too


Man in the mirror

Are you aiming for your goals? (OK, that was weird, you think)

Are you heading where you want to go? (eh, duh! Or…?)

It might not be as straight forward as you think. It’s easy to be led astray, climbing the nearest hill instead of the right one, suboptimizing…

So, my advice is: watch that man in the mirror every once in a while.


As Yogi Berra used to say: “You can observe a lot just by watching” and Lao Tzu: “If you do not change direction, you may end up where you are heading

At least once a year, I like to gauge my momentum by comparing where I was a year ago to where I am now (Berra: observe by watching). Then I change things as needed to get me where I want to be (Lao Tzu). I rarely make drastic changes. Quite the opposite; I stick to my “just one, just one more” principle and start making small changes every day, week or month, thus making the change require as little willpower as possible to carry through. Breaking out of homeostasis is hard enough as it is.

 

Try this (I do)

Ask yourself:

  • Are you happy with your body? Is it functional (and/or aesthetic)?
  • Are you learning and progressing the way you had hoped or wanted?
  • Are you spending more or less time than planned or desired on various activities?
  • Are your finances and investments under control?
  • Your social life?
  • Are you happy?

A year ago, on January 1, 2015 I was finally freed of my final obligations at the hedge fund I had spent close to 15 years on.

January 1, 2015 was also the release date for this blog.

Now, it already feels like I’ve been blogging like this my entire life. The amateurish look of my blog, however, reminds me of my newbie status. In 2016 I want to fix that, maybe get help with the design.

A year ago, my eBook “The Retarded Hedge Fund Manager” was yet to be released. Now, it’s been downloaded several thousand times. In 2016, that one will get a face lift as well. I just might get some help with logos and pictures and format it for print on demand (!) I think I know just the guy for the job (but he doesn’t, even if he’s reading this). 

Back then, a year ago, I was stubbornly short the stock market and expected 2015 to be quite hard on the bulls.

Instead it was quite hard on my balls! In particular during the first few months. Both my stock shorts and gold longs performed spectacularly poorly. Luckily I made a few really good oil trades to make up for some of the losses.

 

Fingerspitzengefühl

After the disastrous spring, I made it all back, despite gold continuing its fall. I added to the gains by shorting the story stock Fingerprint at two occasions, with all but magical timing, (from 480 to 313 in just one day, and, later, from 676 to approximately 510 in about a week). 

 

Investing in 2016

For today’s post, I was actually planning to write an article exclusively about investment thoughts ahead of the new year, but realized I didn’t have that much to say right now. So, here are just a few bullet points instead – with no or little qualification.

I’ll stay short the stock market in general in 2016 – stocks are hideously expensive, economies are sandcastles built on zero interest rates, malinvestment and speculation on unicorns.

I’ll buy small amounts of interesting companies on sharp drops. I’ll announce my purchases after I’m done with them, unless I feel there is more downside left. Some people perceive my information as recommendations. To prevent unduly criticism, I’ll keep my investments to myself until after I think we have seen the trough.

I’ll cover my index shorts very slowly, 1% or less at a time, to finance small incremental purchases of select stocks, gold (GLD and GDX, and probably som physical as well) and oil (Brent ETF/certificate). I have no plans of initiating any shorts on single stocks.

My horizon for the above changes are about 12-36 months; 6-12 months to buy oil, 24 months to go neutral stocks, 36 months to go fully long stocks. Everything is subject to change, depending on how markets and the economy develop of course. I mean, who knows how a super extended bull market will end in an era of mad central bankers and the beginning of a (probably) tougher than usual recession?

 

Gym progression

A year ago, I struggled with 130kg in both the benchpress and the squat. During 2015, I increased my squat PB to 155kg and reclaimed 135kg in the bench (and a not too bad attempt on 137.8kg (303.5 lbs) last week – we’ll see if I manage to get it before New Year’s), i.e. if I make it tomorrow…

I have been fighting against surgery and injuries in 2012, 2013, 2014 and even in early 2015. Because of that, on paper I’m “only” right back to where I was a year ago in my deadlifting.

In reality, I’m clearly a better lifter, including my 20-rep deadlift at 140kg (309 lbs) and a 6-rep set at 165kg (364 lbs). Thirteen months ago I tore my left hamstring (weakened from surgery) when attempting a 175kg deadlift. Last week I lifted the same weight off the floor, but aborted due to my new no injury policy. That’s actually quite a solid progression from rock bottom a year ago.

In 2016, I’m aiming for a 200% bodyweight deadlift (C. 180-185kg) and 142.5kg benchpress. Apart from that, it would be nice with a 100kg clean (and press?!) and perhaps slightly bigger arms (currently 16″ exactly)… Not that 16 1/8 sounds that much more impressive than 16 ;)

 

Flung out of homeostasis

A year ago, I had a job (well…), a girlfriend (since 10 years back), an expensive Swiss watch. Now I have a blog, a dog and a podcast, but no job, girl or watch.

This may sound surprising, but I like all the changes.

Of course I wasn’t happy to be left, or losing my Gold Hublot, but with a little perspective it’s refreshing.

You are supposed to break out of homeostasis, and this time I got a little a lot of help doing it. Blogging, dogging and podding also contributed to making 2015 a truly memorable year.

 

How was yours, and what are you doing about it in 2016?

 

I’ll leave you with a gem connecting finances and that little thing called life:

Patience is required for investing, while living should be done impatiently

Maybe I got a little too comfortable, inactive…, perhaps… patient and stuck in homeostasis, despite the superficial changes with quitting my job and getting a dog.

Well, no more of that for a while. Now it’s all changes and impatience around here. Except regarding my finances, there I practice infinite patience.

Wishing you a boatload of surprises and voluntary changes for 2016!

Summary

How hard can it be?

  1. Where were you a year ago?
  2. Where are you today?
  3. Where does that trajectory lead?
  4. Do you like what you see?
  5. If not, change direction, a little at a time, to make the change easy (and thus sustainable)

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36 Comments

  1. Hi
    Thanks, interesting!
    What do you mean with “…cover my index shorts very slowly”? How is that done kn practice?

    • If you have 100 units to start with, cover 1 unit at a time. If you have 100 000 units, cover 1000 or around 1000 at a time, perhaps once a week or month depending on price movements.

  2. It would be really great to see your long list for stocks to potentially invest in during 2016. Possible?

    Thanks for all the interesting posts in 2015, hope you will be able to continue like this in 2016!

  3. ”Fingerspitzengefühl”
    Ha, so you do speak some German, huh? :)

    Just a quick note on direction.
    Sometimes it’s important to have actual, quantifiable data on how you’re doing, because perception of progress can be off.
    You may think you’re doing great, but actually you’re worse off than you used to be.
    Or you may think you’re doing worse, but actually, you’re doing better.

    The human memory is very fickle at best.
    Nostalgia can kick in very quickly and suddenly you think you were doing way better in life and being more happy in the ”good old days”.
    Whereas if you actually looked at the data from the past, instead of relying on the rather selective memory, you would recognize that things might have been not quite as nice as you remembered them.

    That’s why old people always talk about how things were better back in the day.
    Yet if you actually compare things from way back then to today, it seems like we’re doing better now.

    Ever re-read one of those books you thought were awesome when you were a kid, or a movie, a game, or album?
    How often did it stack up to your memory of it?
    And how often, in comparison, was the memory far better than what you actually got?

    Thats presumably also why a considerable amount of the ”great books” aren’t all that great anymore.
    They are part of mankind’s collective nostalgia.
    And it takes some time for reality to catch up.

  4. Sir Mikael,

    On BOOH:

    Seeing your “transformation” has been incredible! Your progress is probably more attributable to the quote: “the man, who has begun to live more seriously within, begins to live more simply without”

    One thing I found is that in order to BOOH, you have to get clear of all the bullshit.

    Even “dressing smart” is homeostasis (in most situations).

    Go out and invest your energy into stuff. That’s it. Some will stick, most won’t… all will reinforce your character.

    I would implore you to never mention yourself as “jobless” (or similar) again. You mightn’t have a fancy title; you’ve grown. You’re now responsible for an audience of people, not stocks. Never self-deprecate.

    On Failure:

    I heard some time ago that Sara Blakely’s dad used to ask her & her brother “what have you failed at this week?”: http://www.cnbc.com/2013/10/16/billionaire-sara-blakely-says-secret-to-success-is-failure.html (she talks about it ~ 10:00)

    I’ve found this to demonstrate how the best treat failure. That is, like a dog to water; they still get wet, but have a blast doing it. EVERY single one of the “successful” people I talked to personally went through a devastating failure at some point. One almost lost his house & his family. They are all huge success stories now.

    You must realize that every single person on Earth has it the same as you. You’re not a special snowflake (to quote FightClub); you have as much prerogative to smile, try new things & make yourself useful as the next man.

    The difference lies in what you *permit* yourself to do. Being scared isn’t an option; fucking do it.

    Be bold and push forward with some amazing project. You want to do 1 big thing a year (“big” as in you’ll actually be proud of it when you do it), everything else is secondary.

    It seems your 2015 year was quitting the “whore village”. Next…

    http://www.urbandictionary.com/define.php?term=dogging :)

    • I’m at the airport right now. I have been here for 5 hours already. Might be 5 more. Thought I’d celebrate New Year in Istanbul. Seems I spent a thousand dollars to sit at the airport instead ;)

      No worries though. I’ve got plenty of podcasts.

      2016: I hope my new book will be that thing, but then life typically surprises you and something completely different occurs.

  5. I actually made a list last year on several aspects on life where I wanted to improve it. Tomorrow is the time to re-evaluate those items, look at the progress (if there is any) and see what I can to either increase that progress.

    So much more fun to analyse yourself on a yearly basis. It’s like a benchmark, but only comparing to yourself.

    • Good thinking. I didn’t have a list, but I documented where I was and can compare that to where I am and see if I like the direction I’m moving in.

  6. Nice post!

    If you’re willing to share:
    -How are you shorting the market now?
    -How are you handling oil?

    I’ve been adding to an oil position but don’t know how to short outside of a two-week trade.

    • Hi

      Just a simple Swedish ETF/certiicate with 50% leverage. About 75% of my portfolio in that instrument.
      Oil: same here, LONG an ETF/certificate, delta +1, Brent, buying more on every steep fall. Seems I’m in the money on the trade after today. Still hoping for more falls though to be able to buy more.
      Oil 2: Also buying some oil exploration companies with low cost. Quite speculative so I won’t mention any names.

      I don’t know how to short oil either, but not looking to anyway

      • Thanks for sharing!
        Should have checked back earlier — those falls you were looking for came quick :)

        I’ve got DOG and a similar oil ETF, but my allocations are wayyy off. Got to correct that asap.

        Thanks again
        Godspeed

        • Good luck Kyle.

          It won’t get any easier (on the financial markets) the coming few years

  7. Härligt inlägg som vanligt! Älskar hur du kombinerar det bästa ur två världar; styrketräning och börsen :)

    • :D

      Tack.

      Jag har vissa planer på att få med mer träning i bloggen på ett naturligt sätt utan att spä ut min mer filosofiska prägel för mycket

  8. Do you currency hedge when it comes to buying GDX/OIL etf? Or do you predict stronger dollar relative to SEK?

    • Hi

      No, since I want exposure to the underlying commodity and not the (arbitrary) nominal price in a particular currency.

      When I want (non-SEK) currency exposure, I speculate outright on the currency per se.

    • john harlan Relax, the oil companies always find enough oil to maximize their profits. When the oil supply diminishes enough to raise the price significantly, other fuels will take their market away from them. The oil companies are not about to let that happen. Nothing is going to happen suddenly. If peak oil is real (and I’ve been hearing about it for at least 40 years and I am skeptical), we are ready for a long, slow transition to whichever sources of energy are economically feasible, and there are many being developed to choose from. February 18 2010 at 9:40 PM rate up rate down

    • Hi. Not impossible.

      But, right now, just too boring. Also to risky to say anything about investments or I’ll get sued. Still a trader’s market, not an investor’s

  9. Do you have any opinion on your Swedish government, or you prefer to stay away from these discussions?

    • It sucks. May be the worst government in Swedish history.

      But will probably be even worse after the next election in a few years ;)

  10. Har du några tips hur man kan bli rentier snabbare? Jag själv tycker att karriär och pengar är ganska banalt och livets ändlighet gör att det känns ganska onödigt att sträva efter social status och liknande. Pengar för mig = frihet och därför försöker jag spara minst 20% av mina inkomster för att kunna pensionera mig snabbare. Jag pluggar för närvarande till civilingenjör men det är knappast något jag brinner för. Jag valde det mest för att jag har lätt för matematik och jag finner att ekonomi är intressant. Men helst av allt skulle jag vilja leva livet du lever. Träna, lyssna på podcast och läsa intressanta böcker. Livet behöver inte vara svårare än så enligt mig. Vad skulle du göra i min situation? / vilsen 20-åring

    • Ja, du. Det där är inte lätt. Man måste ju ha pengar till mat och tak så något behöver man göra .

      Jag har tyvärr inga snabba knep på lager som du själv inte kommit på. Låga kostnader (och därmed sparande), genom att bara göra saker för sin egen skull och inte för att “flasha” för andra är ETT steg. Ett annat viktigt steg är att inte göra enkla misstag, såsom att ha bråttom och därmed luras in i investeringar man inte har koll på.

      Men, den sortens generella och banala tips hjälper knappast dig i din situation. Tyvärr tvingas du nog böja ner pannan och flytta ena foten framför den andra ett tag. Förhoppningsvis kan du med din inställning välja något roligt och givande att jobba med, snarare än ta det som ger högst lön. Det är väl det enda halvkonkreta jag har att komma med – att fokusera på att ha så roligt som möjligt i dig själv, istället för att slösa bort tiden på karriär och prestige. Att snabbt försöka bli en rentier är lite för mycket Whore Village för min smak. Det är bättre att snabbt börja trivas istället.

      Sorry för flummigt svar, men jag har liksom inget riktigt bra att erbjuda.

      • Jag förstår att det inte är lätt att svara på detta och det var lite av ett långskott från min sida. Jag har inte valt utbildning helt efter karriär och pengar utan det har varit lite av en avvägning från min sida. Att jobba med något som är ens hobby är givetvis det optimala men det kan knappast vara mer än någon promille som har det så bra sedan finns det väl desto fler som ljuger för sig själva. Men vad som gäller nu för mig är väl som du säger just one more- principen.

        Nåväl. Jag fortsätter läsa din blogg med stort intresse! Jag börjat med mobilitetsövningar och jag kör även din brunch med ägg, bönor och fisk varje dag. Tack för all inspiration och fortsätt med vad du gör :)

    • Hej Misantropen.

      Jag vet inte om du kommer att se den här kommentaren 10 dagar efter du skrev, men man kan ju chansa. Jag har precis samma ambition som du, men är några år längre ned längs vägen.

      Lite likt Micke så tycker jag att du tills vidare bör köra vidare som du gör: Slösa inte bort dina pengar på onödiga saker, utan spara flitigt. Bloggen Mr Money Mustache handlar om tidig pensionering, och jag tror att du kan gilla den väldigt mycket: http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

      Så, börja med att försöka hålla en hög sparkvot och lite genomtänkt investerande.

      För att inte slösa bort ditt liv i väntan på pensionen (det tar trots allt 12,5 år att bli pensionär med 60 % sparkvot) så är min starka rekommendation (och det jag själv försöker göra) att istället hitta ett sätt att kombinera det som är roligt, med det som ger dig inkomst.

      Det KAN innebära att du borde börja kika i jobbannonser (och bli grym på att sälja in dig själv) eller lära dig driva ett företag.

      • Hallå där Daniel.

        Skönt att höra. Tack för tipset. Jag känner till Mustaschen och jag har även läst en del andra bloggar som behandlar ämnet.

        Jag har ett litet sparkapital som rullar på nu i sann Quattro Staggione-anda men jag har fortfarande en lång väg att vandra. Att höja sparkvoten är min ambition men det är desto svårare när inkomsten är låg (i mitt fall är den obefintlig).

        Jag önskar dig lycka till i dig lycka till i din väg mot friheten. Jag ska kolla in din blogg närmare. Den verkar intressant!

  11. Thanks a lot for everything you write.

    I really appreciate your advice on finance and life in general.

    I didn’t had the guts to short the maket, but I did indeed sell my stocks before the crash.

    Now I’m seriously considering a long position on a WTI oil ETF, maybe waiting a few days yet :)

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