Tag: investments

Retard’s foreplay – sticky icky life advice

Foreplay

Executive summary: It’s all about living life and not being a dick

  • Don’t try to impress – live for you, not others
  • Life is a spectrum – not discrete points and precise solutions
  • Always be prototyping – you’re never ‘done’

Reading time: 20 minutes

However, I hope you’ll spend much more than that on it in total. There is more depth to it than might be obvious at first glance.

-foreplay or near dick experience (Greece 1991)

Why would you listen to my advice?

I come from a lower middle class family, with no contacts and no role models, born in a small town north of the polar circle, but eventually found myself in the upper echelons of European finance.

Then I quit, and transcended beyond conventional success.

I’ve experienced 8 concussions, 2 ACL ruptures, spent 2 hours on the summit of Aconcagua (6961 m / 22837 ft), received a physics award straight from the hands of the Swedish King, I was an honorary member of the Swedish Chemistry Association, I’ve received the award for the to date only European hedge fund of the decade, I’ve hitchhiked from Västerås to Marbella (the entire stretch of Europe) and back at the age of 17 (in 1989), been in numerous street fights, and I retired at the age of 41 with an 8-digit USD net worth (from negative between 19 and 24, and zero before that).

In short, I did it.

-Did what?

Lived. Hard and well; with grit, scars, material success, and eventually true progress and a deep sustainable and independent self-esteem and happiness.

I don’t pretend to know everything, or that my my experiences are translatable 1-to-1 to your situation. However, I think it would be worth the while just sneaking a peak at my solutions for development and personal success for inspiration.

Or are you worried about the Joneses across the street? Got a new car, did they? Perhaps diplomas, Whore City and the rat race is more for you then. As you were. 

 

Life after life?

Being fully retarded for over a year now, I’ve had time to think about purpose and pleasure in life after retirement. So, what do you do when you are financially independent and without obligations?

Short answer: Learning and sharing

Longer answer: Man is a pattern recognizer. We use it for collecting food and avoiding danger. We are wired for curiosity and finding pleasure in decoding patterns.

Man is also a social animal. We need others (though I seem to need people less than most).

Once I realized expensive things didn’t interest me, I explored myself in depth. It’s the result of that process that I want to share with you, hoping it will save you time and frustration, and make you a happier and truly more successful person – however you choose to define the latter.

In practice: I’m reading, listening, discussing, synthesizing information (pattern recognition), and then blogging and podding (social sharing) about my conclusions. Those activities lend structure as well as meaning to my otherwise fully retarded life.

 

Retard’s Playbook

In 2016, my big project is writing a book; a book for the lost generation, a life guide for people living in the aftermath of the cold war, for the post-Berlin Wall generation, for the iPhone and Snapchat generation.

Retard’s Playbook is a shortcut to wisdom for the app generation.

Retard’s Foreplay (today’s post) is a preview.

Without scars you didn’t live

 

Game changer

As far as I’m concerned, Retard’s Playbook will be the first thing I do. I expect it to be a game changer for anybody reading it, as well as for me writing it.

Below you’ll find just three of my favorite life heuristics, as well as a taste of my experiences that underlie them.

If this post doesn’t resonate with you, my book won’t either. Good to know.

Here are your short cuts to success and happiness:

 

Don’t be impressed or daunted

-Stop trying to impress. That’s living a second handed life for others, instead of knowing and being yourself.

When I was 7, I bicycled down a slide blindfolded to impress a group of older guys. For the price of one concussion, some blood and a scar in my forehead, I got nothing but a few mean laughs. Another time, I slipped when running and jumping from meter-sized rock to rock, suffered another concussion, blood loss and head scar, but this time purely for my own pleasure, and some heartfelt laughter together with friends. There’s a world of difference.

When I was in my teens and twenties I thought famous people were impressive, and I wanted to be famous too, for no particular reason. I just wanted to emulate their lifestyle, without a thought to what it would take to get there and what it really meant. I mindlessly bought the media hype regarding conventional success.

In addition I thought the top was unreachable. I was daunted and had no wish to even try. It took stumbling onto the scene of high-level money management to learn that overnight success often takes a lifetime of effort.

Remember this: A movie star, a hedge fund billionaire and a Fortune 500 business tycoon are all objectively impressive, but they are still only human. And they got to where they are by putting one foot in front of the other; investing, building one order of size on top of the other. It’s a question of priorities and grit more than anything else.

So, stop being impressed or afraid, and make your choice. Do you want it or don’t you? I’ve realized I don’t want it, and I’m definitely not interested in impressing anybody.

By the way, do you think Elon Musk is trying to impress anybody? He’s too occupied living his life.

A wolf has no business impressing sheep

When I was 21, I threw myself off a 9 meter cliff (30ft) in Spain, more or less realizing right before that the water was less than 3ft deep. However, I couldn’t back down… solely for the shame of it. My pride could have killed or paralyzed me there and then. And, yet, I still hadn’t quite learned my lesson.

Ten years later, I probably stayed in the hedge fund business -more for money, status and pride than anything else. The same thing happened with sports cars, as I worked myself through a BMW, a Porsche convertible, a Ferrari 360 convertible (yes, the one I bought from Swedish soccer star Zlatan Ibrahimovich) and finally a bright (Midas) yellow Lamborghini Gallardo Spyder (convertible)

Eventually I understood what was going on, and studied myself to find out what really made me tick when I wasn’t playing to the approval of others or chasing an ad agency’s idea of the perfect life. For me the answer was learning and teaching/sharing, for you probably something else.

Don’t make my mistakes. Or, by all means, do, but pay attention to your actual feelings regarding the outcome, and perhaps you’ll be able to change ways faster than I did.

 

Life is a spectrum, not a point

-life is a super positioned state of both black and white and all the grey in between, simultaneously. Just as in quantum mechanics, the truth is revealed by taking action, by the act of observing the outcome of an experiment.

how long is a piece of string?

There is never a final truth, a platonic ex ante truth. The answer to all questions vary from occasion to occasion and is decided ex post.

And, yet, A is A; i.e., it is what it is and nothing else – once it is decided. This seeming paradox illustrates the quantum nature of life. Everything and nothing is fixed – at the same time

How long should you stay in school, at a job you don’t like (Whore Village), with a partner you’re not passionate about? How much money do you need to retire? Do blondes have more fun? Are drugs bad for you? Is love all you need, or is it ‘laughter’? When and how much and how to rest, when to sow, when to reap?

First, you must realize there is no spoon; there is no definitive answer to any important question

Then you can start exploring the ever changing options in between yes and no. Often, in my opinion, the answer is “try”. Dare experimenting, unless trying involves a significant risk of unacceptable loss.

What is ‘unacceptable’? Well, I have this piece of string somewhere…

Quitting your job or relationship is not dangerous, does not involve unacceptable losses. On the contrary, staying put, dwelling in homeostasis all but guarantees wasting your life.

 

From one cityboy to another

Several years ago, I asked the author of Cityboy, Geraint Anderson, for advice on when to quit my job as a hedge fund manager. He told me to hang in there until staying two more years was more or less inconceivable, and then quit right away. So, I kept pushing a 30-month deadline ahead of me, until I in January 2014 just up and left*

*In practice I stayed on for another year, but only as the managing director with no investment responsibilities or partnership dividends. As a perverse turn of fate, the fund was unexpectedly decided to be closed down, starting in September 2014. 

What if I hadn’t quit? Had the fund been closed down with me in it? Then I wouldn’t have been the (voluntarily) Retarded Hedge Fund Manager, but the Dismissed Doofus instead. Not quite the same legacy, or ring to it for that matter.

So, take the proverbial fork in the road, i.e., explore both extremes when deciding. Say yes, take action**; say no, keep your integrity. However, don’t be gullible just because you are a yes:er.

Never fall for the “come on, dare say yes” lure. That is just not daring to say no, which is really, really bad. Superpositioned quantum spectrum of yes and no – it’s a bitch.

** As a general principle in itself, you should always take the active choice whenever there is a close call. The mind has a tendency to obsess over future possibilities and decisions, but also to adapt quickly to any outcome of a decision. Thus, regret is strongest for passivity, no matter the outcome.

Yes, you should

Another way to think about it is that you are responsible for the effort, but the outcome is out of your hands. The latter is also very important in its own right, not least regarding investment success. No matter how sound your reasoning and process, bad luck and black swans can ruin the result completely.

And, just for fun… that time I got lost in the darkness, when descending from the summit of Aconcagua (6 961 m / 22 837 ft). I decided to stay the night, alone, at 6000 m / 20k ft and sleep on the bare ground with nothing but my jacket to protect me. After a while, I realized, I was about to be slowly covered in snow not to mention freeze my face off. When I sat up, one leg went outside some unknown edge, and when I threw a rock in front of me, I never heard it bounce.

Now, that is taking unacceptable risk on the Mountain of Death.

As a final word, when I’m asked for career, relationship or education advice; “Should I do this or that…?“, my answer is typically, though somewhat camouflaged, “Yes, you should“.

 

Go west

Well, that, and a more general “Go west young man, and learn programming“. With programming I mean in the widest and most generous possible sense of the word: as a coordinator, hacker, designer, Photoshop, robot control, AI, h/w tinkering, Human-Computer interfaces, organic algorithms, stock trading; or just Java/python etc., not only for practical use but as a brain exercise.

My own programming experience consists of a high level of self-taught BASICS (incidentally on a Spectrum)and much lower level of hexadecimal and machine code at a young age, followed by varying efforts in Pascal, GPSS (master level), SQL, Excel macros etc, and much later and much more lazily and impatiently, Javascript, XML and a little Python.

I managed to make money from database programming, Excel macros and computer games programmed in BASIC (when I was 10-12 yo). I suspect it also helped me keep my first job as a broker’s assistant. Most importantly though, programming made me disciplined, patient, thorough, structured, logical, good at problem solving, gave me a solid language base, made me good at algebra, confident with symbolic representations and abstract reasoning.

Today, I’m too impatient, lazy and unmotivated to make a real effort in programming. At the same time, I’m a little afraid of being sucked in again, spending my days on optimizing algorithms for no good reason, except the beauty of it.

Again, both 1 and 0 and all the things in between. Superpositioned.

 

Always be prototyping

I’ll keep this one short.

You are never done.

There.

However… (I wasn’t done after all, it seems)

At a certain point I started taking my Spectrum computer apart more and more to explore its innards and perform experiments. For example, once I realized how the keyboard worked, I constructed my own joystick (hand control) from a golf ball, a hockey puck, an aluminium pipe, tin foil, lots of tin foil, glue and tape.

It was quite difficult to get every tiny detail right with just my hands and ordinary tools, and it kept glitching. Once everything worked, I was tempted to just pour a liter of glue or candle wax on top of the entire thing to be sure it stayed that way.

Luckily, my teenage brain was smart enough to realize what central planners don’t – things will always change, no matter how much you try to fix them. Actually, fixing prices in an economy or halting a stock exchange is sure to move real prices faster than ever before.

Instead of an irreversible and ultimately disastrous permanent glue fix (a tip: don’t sniff glue, which I’m sure Bernanke, Yellen, Draghi and Kuroda do all the time), I kept prototyping, learning, improving, back-tracking and treating my disemboweled computer as a living entity. Did I mention (my) life was a Spectrum? Sinclair ZX 48K to be precise.

Certainty is impossible (about the future, the economy, the stock exchange, the integrity of electrical connections underneath a glue fix). Hence, stay humble and keep prototyping.

Thus, don’t go for that ultimate fix, the perfect education or perfect job before starting your life. Take a few steps at a time, see how it feels, adjust and keep moving. That is, unless you positively know you want to waste your life becoming impressive and rich to really show off that you matter*

Unfortunately, chances are all you’ll succeed in doing is fixing yourself as a person of status and importance, underneath a thick layer of glue, making breathing and living all but impossible.

*sadly, ‘matter’ to everybody but yourself…

 

Enjoy the journey, celebrate each boss

I like to liken life to a computer game, where the incremental progress, including beating intermediary “bosses” to get to the next level, is more important and enjoyable than actually finishing off the ultimate “boss”.

If the only thing that matters is winning an olympic gold medal, becoming a Fortune 500 CEO or “the richest” most will fail. Even coming in second would be a failure with that mindset, whereas it would entail hundreds, if not thousands, of sweet victories with my life philosophy.

 

Final words

I had selected 27 snippets* from my book for this post, but I’ll just have to limit it to three I see now. Prototyping. Always.

*including, e.g., Your own speed, Independent not contrarian, Awareness, Strengthen your strengths, Convexity, IRL, Don’t “work hard play hard”, Invest, Walk, Know, Amygdala learning and decision making, Break, One prio, 5 whys, Don’t hate, Input & Inspiration not Motivation & Copy, and as always: “just one more”

 

The article you just read (or if you skipped to here) provides a glimpse behind the curtains of my current book project. Retard’s Playbook is my condensed psychological and philosophical practical insights into effectiveness, success and most of all happiness.

It could save you years, or decades even, of unnecessary regret and anxiety, not to mention a ton of money – both earned and spent :-)

What should you do right now?

  • Share this article and my website with a friend or your social network. Please. Thank you.
  • Subscribe to my newsletter. You won’t regret it (and the unsubscribe link is included in every e-mail)
  • Read my first eBook: The Retarded Hedge Fund Manager for inspiration on how to re-craft your life from a conventional one to bespoke.

Practice today’s three guidelines:

  • For you. Ask yourself: “Is this for me, or for somebody else, before buying, donning or doing something”, “Do I need to tell anybody about it for it to be worthwhile?”
  • Turn off the autopilot. Second guess at least one of your own automatic decisions this week. Maybe there is more than one answer. Be patient with others, think through their position before retorting harshly.
  • Redefine a project (diet, e.g.) you have going, into an enjoyable sustainable investment process without end, instead of a potentially unpleasant discrete project where a successful result is the only satisfactory outcome.
 
 
* The headline of this article warrants some explanation: sticky advice (I hope it’ll stay with you), icky (life is a superpositioned mess; embrace that fact), sticky icky (marijuana – always a click bait, plus signals I’m a libertarian: “legalize it”, where it=everything)

Why the government fears deflation and you shouldn’t

“Deflation – what’s in it for me?”

I guess that’s the first thought in the morning for most people. And rightly so.

Why?

  • For one, it’s coming (well, unless we get inflation instead – or more likely: both).
  • Second, it has everything to do with your job security, savings, loans, investments, wealth and future living standards; in short your life.

If you thought (not) chasing the stock market at highs was unnerving, deciding on buying gold or not was stressful, or that increasing automation and the death of jobs sounded scary, wait until you understand deflation.

Takeaways:

  • Falling prices are not bad
  • Avoid debt
  • Deflation is actually the remedy
  • You can expect higher real income
  • Negative profit margins and cheap stocks
  • Cycles cycle
  • Huge public debt spells catastrophe and depression
  • Who wins? Make sure it’s you

4 reasons the government wants you too to fear deflation

  • Exacerbates debt. Deflation makes public debt repayment more difficult (debt is nominal and fixed, and if the price of everything else rises, then tax revenues increase too).
  • Can’t be taxed. Another way of saying that is that a wage increase can be taxed, regardless of your real income trend, whereas falling prices and constant wages can’t.
  • Lowers GDP. Deflation reduces nominal GDP (lower prices of everything produced) while debt (nominal, remember?) stays the same (actually it most likely rises quickly due to the typical budget deficits during deflation, stemming from less tax revenues and higher stimulus expenses). Thus the debt/GDP ratio rises in deflation, and with it the risk of higher interest rates and default.
  • Ruins banks. Just as the real value of public debt increases during deflation, private debt does too. Your mortgage keeps growing in relation to your (falling) wage. Sooner or later first you and then the banks become insolvent.

Consumption is not postponed due to falling prices

You often hear people say that deflation makes people postpone purchases, which in turn reduces corporate revenues, leading to layoffs and yet less consumption.

In the real world, however, we all know that falling prices on cell phones, computers and other electronics, e.g., stimulate even more sales and earnings. Despite absolute certainty of rapidly falling prices, we line up during iPhone launches and beg to buy at the most expensive prices possible.

In addition, the things we want and need to consume we buy anyway: food, clothes, transportation and so on. However, investments, in particular speculative “investments” and luxury might and should be postponed.

 

Asset prices will fall and that is good

What does happen is that the prices on assets like stocks and houses fall in a deflation – first from frothy levels to normal, and then sometimes undershoot and become cheap.

What should you as an investor or consumer think of falling prices? Very good, of course:

  • Cheaper housing? You can buy a bigger one.
  • Cheaper stocks? You can buy more of them and then earn dividends for several decades, as well as see prices increase to normal and even expensive levels after you bought cheaply.
  • Cheaper gold and other commodities? You can buy more jewellery, more of the products that are made from iron, oil, grain, sugar etc.

 

Those with too much debt deserve what is coming

…unless you bought with too much leverage of course. If you let evil and greedy politicians and ignorant central bankers fool you into borrowing to buy overpriced assets, then you’ll be in trouble – or at least you’ll be stuck with whatever assets you already have.

Newcomers and other unleveraged people, however, will be able to invest their savings in cheap stock or buy living quarters at firesale prices.

Lessons

Okay, so what’s in it for you… reading this article, I mean, apart from being a little more knowledgeable, a little better prepared and inoculated vs. the deflation is bad propaganda?

Here is what I want you to take away from this post:

Falling prices are not bad. You know this in your heart. It’s only if you are too indebted it can be bad. Or, possibly if you are looking to scale down from a large house to a smaller, then the difference will be a little smaller too.

Hence, avoid debt to the extent that it will chain you to your current asset base. As long as you have unencumbered assets left after the price falls you should be able to scale up and then ride the comeback with more than you had going down.

Deflation is actually the remedy for a sick economy. Deflation should be welcomed. It punishes speculative borrowing and investing, while making prices more reasonable for the poor (but debt-free).

Higher income? It is difficult to ask for a raise, even in a strong economy (not least in these death of jobs and automation galore days), but it’s even harder for an employer to lower your wage for a normal non-performance related job – even in a deflation. Actually, if enough people fall below a certain standard of living (due to their own mistakes) and have no more venues for borrowing left, they will demand and get wage increases(!), which will cut deep into the currently bloated corporate profit margins. If you are debt-free you can still tag along the potential wage increase train among falling prices.

Negative profit margins and cheap stocks. Also, remember that, if you are looking for cheap stocks already. Many companies will lose money sooner or later due to less sales and higher wages – that can be difficult to remember at the peak. On top of it all, a wage spiral can turn into a rate rise spiral making life for both lenders and debtors even more difficult. Don’t be that guy.

Cycles cycle. However, as difficult as losses are to think of at the peak, record margins are far from mind at the trough. If you have cash ready, bargains should be plenty at the bottom. They usually are, even if it’s been unusually long since the last time. Fortunes are made or lost depending on your correct anticipation of the inherent cyclicality in most things.

Just one thing – debt! There actually is one very big drawback of deflation. If debts are already (too) high (public debt, corporate debt, household debt, stock market margin debt, bank leverage, hedgefunds/Private equity leverage) and a large part of the economy depends on stock brokering, fund commissions, loan administration, housing etc., then a lot of people will soon find themselves unemployed and with unemployable skill sets.

Depression. That will cause lower tax revenues, increase state and federal costs (food coupons…), cause civil unrest, calls for higher tax rates, not to mention make selling products and services to all those people all but impossible. Retail chains, restaurants, travel agencies, airlines, taxi drivers, you name it… Everyone will feel the pain. And you too, because the ones mentioned will have second order effects on your employer or your business or you directly almost no matter how far you are from the epicenter in the money business.

Who wins? It’s not the end of the world though. Even in Spain and Greece life goes on, more or less as before, despite 25% unemployment (>50% youth unemployment). People still have to eat just about the same number of calories as before and preferably buy their food as cheaply as possible and cook it themselves, so farmers and groceries should prosper. I’m sure you can come up with several more industries to hide in, no matter how deep the crisis becomes. Alcohol and tobacco? Water and electricity utility companies (oh, no,… loaded with debt unfortunately).

This article also ties in with the post on negative interest rates I wrote in February. Check back on it for a few quick points on education, mortgage and stock market strategies in a NIRP world.

 

Summary

  • Plan your debt level to not get crushed in the coming deflation (or high inflation and surging interest rates)
  • Be ready to pick up bargains (e.g., keep a Quatro Stagione investment portfolio now – including cash, physical gold and possibly attractive but undeveloped land), by having unencumbered assets or cash and a basic idea of what industries and single stocks you dare buy when there’s blood in the streets
  • Make sure you are self sufficient or have employable (preferably non-financial) skills.
  • Be prepared to argue for higher wages, even in a deflation. People will lose their jobs, but the valuable ones will keep theirs, and with higher pay (if needed to cover living costs)
  • Think critically. I don’t have the exact answers. Keynes definitely didn’t. Yellen and Obama certainly don’t have a clue. Neither do academics, your teacher or Nobel prize winners. Howard Marks might. Raoul Pal too. Maybe Marc Faber can weigh in, or Kyle Bass, Jeremy Grantham, Peter Schiff, Steve Keen, Vitaliy Katsenelson or even John Mauldin, Fred Hickey or John Hussman.
    • Search for and read the works of these guys, or just bookmark mikaelsyding.com and subscribe to my newsletter and I’ll help you as best I can to stay up to date.
  • We are in a grand experiment right now; the biggest money printing experiment ever. I’d say the last big one was during the last days of Rome*. That was fun. Whether we’ll end up in a devastating debt-deflation or a likewise ruinous high-inflation environment remains to be seen. Quite likely both.
    • *Oh, don’t forget Germany in 1923, Zimbabwe recently and right now Venezuela and Argentina, among others.
  • Uncertain technology. Layered on top of this debt fueled oligarchical and nepotistic economy is an accelerated technological evolution, possibly leading to a productivity boom never seen before, or an automated hell and death of jobs.

 

May you live in interesting times

Unfortunately you do, whether you like it or not.

The economy is in a transition phase from one semi-steady state to another. It’s payback time after 100 years of the US Fed with increasing money and gold manipulation and a belief in central planning. Thus, the coming 10 years will probably be very difficult and stressful. After that however, humanity might be facing a new spring and golden era, powered by the Singularity enabling technologies: nanotech, biotech, robotics and AI (or GAIN = Genetics, AI, Nanotech).

Life was pretty simple there a while: Make a reasonable effort in school, get a job, work yourself upward, borrow a little to buy a house and pay back the loan in a few years.

That life is no more. Education doesn’t guarantee a good job, robots are (slowly) taking over, low interest rates (and thus elevated prices) mean you have to borrow huge amounts just to pay for school and a house, becoming a debt slave for life and risking bankruptcy at even a tiny increase in interest rates.

Money printing, budget deficits and run-away derivatives markets cause systemic risks that could wipe out the dollar, lead to gold confiscation, increased taxes, lower welfare and so on.

I’m not trying to scare you, just open your eyes to a few possible adverse outcomes of a number very long trends that are simultaneously reaching critical states. 

Sounds complicated? Why don’t you just subscribe to my newsletter instead and future-proof yourself that way? Simple.

However, you are still the one who ultimately will have to manage your debts, skills, income and investments. Don’t trust the government, don’t trust your banker, don’t trust me. Trust no one. (Retard’s Playbook)

Death of money

For further in depth reading I recommend Jim Rickards’ book The Death Of Money. It’s a bit heavy here and there (when reading around midnight I often fell asleep after just a page or two), but most of it is very informative, exciting and inspirational.

The last few chapters with 3 scenarios to ponder, 7 signals to watch and a few pieces of investment advice are particularly good.

To prepare for the coming deflation/inflation/social unrest, watch out for disorderly hoarding of physical gold and changes in the price of gold and the dollar, structural changes in the IMF, system crashes, the Chinese trust Ponzi scheme unraveling and a few others.