Never take broker recommendations at face value

Topic: learning about learning in a stock market context

Conclusion: Think through your investment strategy seriously; exactly what is it, that is supposed to make you outperform some of the smartest and most driven people in the world?

The magic formula of outperformance

Do you want to know how to outperform the stock market? Not only that, do you want to know how to both avoid negative years, and outperform the market?

For the benefit of new readers, I was a hedge fund manager for 15 years. Our fund won the to date only HFR reward for “The European Hedge Fund Of The Decade” (2000-2009). Between our inception in October 1999 and our peak in April 2011 the fund returned, net of fees, around 600 per cent to investors while the stock market was flat. With no down years. Our best years were 1999, 2001, 2002 and 2008. In about that order, if I remember correctly.

There exists a concept of an ideal investment method in my mind. I, however, have never been able to follow it. You can read about those Platonesque investment best practices in my TAOS series (and upcoming pamphlet) or in my old (still) give-away e-book.

This article deals with how we in practice used third party research, i.e. brokers, to produce those returns, not what we in theory should have done.

Futuris (the fund) received research reports from around 20 different brokers (Citigroup, JP Morgan, Goldman Sachs, Bear Stearns, Deutsche Bank, Nomura, Morgan Stanley, Merrill Lynch, BNP Paribas, Cheuvreux…, you know the names). Every day a few phone books’ worth of research reports landed on my desk (conveniently, I had people that opened the envelopes for me — during vacation times some of the envelopes remained unopened and went straight to the paper recycling bin).

This is important:

I never took a recommendation at face value.

Many private investors these days buy stocks when their bank or broker issues a buy recommendation. Some might buy just to ride the wave of greater fools buying, but many actually buy just because “an analyst said so”. Some even do it only based on public news, that some random research firm or journalist has put the word “Buy” in print.

What I did was collect and compare the underlying data and reasoning supplied in the reports (as well as in IRL meetings with some of the analysts, and client-only conferences). I wanted to triangulate an asymptotic “truth”, the real world signal that – distorted through management hyperbole, analyst preconceptions, biases, misunderstandings and muddled reasoning – gave rise to the wide range of reports available to me.

I used all this information and my bird’s eye view, to form my own view of a company’s position and development, including its 3-12 month finances, and compared that to my assessment of what the important market players were likely thinking. If the discrepancy were large enough, and if the margin of safety in terms of absolute valuation was palatable I put money to work*.

* Putting money to work in a hedge fund with three partners isn’t all that straight forward, even if Futuris wasn’t big on bureaucracy. Actually, the research part was made as a collaboration effort between me and my in-house analyst (portfolio manager to be, really). Once the idea was more or less fully formed, I pitched it to my two partners, and we discussed whether it was good enough on absolute terms, as well as if it warranted replacing one of the existing forty positions in the fund, i.e., the position’s relative merits).

Perhaps the most important lesson to draw from this post is that a professional investor does not follow broker recommendations, so why should you?

About learning, memory and connecting with reality

Initially I set out to write about how to learn, and not least why to learn. When you hear about a “learning machine”, ask yourself “what for?”. I ask that about God (if he can’t ‘kick back’ as David Deutsch says, what is he good for?). I ask that about the limited number of people I can have a serious relation with (which ones and why: comfort, companionship, learning, challenge…).

A while ago I listened to an episode of The Brain Science Podcast about “affordances” – how the brain perceives objects foremost in terms of what you can do with them = their “affordance”. Today, episode #141 of the same podcast series dealt with a similar idea: “concept neurons” and how our memories are mainly based on a few salient key concepts stored in particular single neurons in the hippocampus. These “concept neurons” are connected to a limited amount of facts stored in the cortex and together they form the basis for a made up narrative that the brain decides makes sense for the moment.

Just as we don’t see the world, we don’t remember it either. The brain makes it all up, and that is why we need notes and commonplaces, and to constantly battle our desire to be right by exposing ourselves to opposing views and as wide a range as possible of “facts”, if we want to be able to kick reality harder than it kicks back.

Talking of kicking back, do you really want to compete in the worst conceivable environment, i.e., the stock market? It features the best and most driven competitors, and the market can be characterized as an ever-changing complex beast, where correlations are tentative at best, not to mention highly variable.

Hmm, it seems I need to expand on these last ideas about memory formation, learning and purpose in a separate post later on.

Conclusion: Does it work?

Just take this with you if nothing else: Why do you learn; what do you want to accomplish and why? Why is it supposed to work; what is your theoretical foundation? How do you learn? Is it working? Are you hitting reality, or does it keep hitting you while you punch holes in the air?

Navigating the 6 degrees separating fact from wisdom

Executive summary: How to remember and make use of the abundance of information available.

  1. Remind yourself of the purpose; why are you reading or listening to X
  2. Don’t speed read; use your inherent natural speed (you’ll get faster with time)
  3. Think about and write down your insights and conclusions (not too many; one is enough)

Length: 2 minutes

Information overload?

This post was originally a late night e-mail answer to how I remember and connect the dots between so much diverse information I digest every day.


I think you overestimate how well read I am.

I seem to stumble upon people everywhere that devour books at a much faster pace, and often with a focus on non fiction, whereas I “waste” 80% of my reading time on sci-fi.

What little non fiction books I do read these days I read slowly and thoughtfully, actively asking myself “How can I use this”, “Why am I reading this”.

Of course, I do read a lot of articles and blogs, and spend several hours every day on podcasts (100% useful, scientific, economic etc and 0% fiction). So, yes, I digest several hours of al dente scientific information every day.

However, I don’t have a system for it. Not like Ludvig at SGM with his book reading book with dozens of entries per book. Not like James Clear or Eric Barker who write long articles and reviews for every book, or combine several books into one single article.

What I do do is write down one single or half a single sentence of whatever I find intriguing in a podcast. I write it down in Evernote as inspiration for future tweets or blog posts and tag it with whatever I come to think of (cancer, immunotherapy, BDR4, glioblastoma polio treatment, or whatever comes to mind).

When I set out to write a new blog post, I check Evernote for inspiration, just reading through a few of the 200+ Blog Post notes I’ve got there.  I pick one I feel for that specific day and just start writing.

While writing I often enter a state of flow and the associations spring up freely. It seems that the act of being very present when digesting the information, often walking and repeating the most important points silently to myself and then rehearsing it when writing down the single sentence, makes the information stick in my mind. Not unlike how taking longhand notes during a lecture works (the processing and condensing of the information make the essential parts stick).

In any case, I don’t have a fool proof system, just a highly functional association mechanism built in to my LAB (Light Asperger Brain).

Also, please note that I only started using Evernote less than two years ago…

Summary: 6 Sprezza steps to wisdom

If anything, my “system” can be summarized as follows:

  1. Read slowly and thoughtfully, think about what you are reading, what the practical lesson or possible use is. Reading should be done at your inherent natural speed – you’ll get faster with time, but don’t push it. When reading, ask yourself “Am I making progress now, toward which goals or intermediary goals? What does this give me? Am I learning?”
  2. Review the book (or podcast). Grade it. Ludvig likes to write down a lot of info, I only write down how good it was on a scale from 1-5. However, I probably should try to summarize my books with, e.g., one sentence after reading them. Actually, my review posts perform that function.
  3. Revisit again a few years later – if it’s really good; a 4+ or 5. A good book/podcast enjoyed twice is much better than two consumed half-heartedly. Then again, two good ones studied with intent and focus are much much better
  4. Keep a journal or notebook of ideas… a bit like I imagine Altucher does. You could associate the ideas to particular books, but I like free ideas better and don’t care that much about references. The ideas are more important than the authors
  5. Tag. Still, though, I have no system for maintaining a web of association between ideas (except Evernote tags). I’m just lucky they stay in my mind. I think it’s because I mull the same few ideas a lot. It’s like an alphabet of the same 26 ideas over and over again that I combine to words, sentences and paragraphs.
  6. Pattern recognition. By listening to a lot of diverse podcasts I get reminded again and again of what overarching main ideas there are and how they could be related to each other. Whenever I experience an Eureka moment, connecting the dots between two previously unrelated ideas, THAT connection is jotted down like an idea of its own. My approach saves energy and time (I don’t write down everything all the time) and is thus less stressful and encouraging.

Good night sir



P.S. My latest reads (October 2016):

Predictably Irrational

All I want to know is where I’m going to die


Olja för blåbär (Swedish book about the importance of oil)

Find more of my book recommendations here

P.P.S. What you read is just as important as how you read it. Browse and speed read, check out the back and endorsements, as well as the chapter headings, to decide whether to read a book or not. Don’t try to read everything, be very selective.

P.P.P.S. A tip: gradually build a backlog of carefully selected interesting high-qualitative but timing-insensitive things to read and listen to whenever stuck or “idle”

Please share this article with a friend who struggles with finding, remembering and using relevant information

Do a “Google”, goof around, play: Goofle


– set aside a certain time for having fun, goofing around and exploring like a child, actually like Google

full retard

Reading time: 5 minutes… or less. It’s mostly a lot of pictures.

Executive Summary: spend an hour each week actively trying new things, and, most importantly, having fun

Take away: double the time reserved for fun and experimenting

Call to action: Share this article (or the previous about life guidance) in order to make more people take advantage of my mistakes and particular shade of retarded wisdom.


Shooting range Krakow

Build a potato cannon

Google famously set aside one day a week for its employees to work on whatever pet project they liked. That’s 20% undirected R&D. In the hilarious TV series Silicon Valley one such project was a potato cannon…

dog moustache

dog moustache

You should do it too.

-Build a potato cannon.



Actually, don’t; it’s dangerous.

But you should devote some time to goofing around, experimenting, venturing outside your everyday box of obligations.

aconcagua beard

2-week beard on Aconcagua


20% might be a bit much for most though. But why not start with 1% or just one hour a week for exploring new things? Just one. You can do it.







Actually you should build a potato cannon, or a steam engine or a bicycle from scratch, if it sounds like fun and a reasonable intellectual challenge. I promise you’ll feel much better about yourself, more relaxed and energized at the same time, than after an extra hour of news reruns, reality TV, keeping your house in showcase order, drinking (though you shouldn’t be a stranger to some mind alterations every now and then) or whatever you waste your time on, when not relaxing like you mean it.



when experimenting came easy

When I was 3 years old my dad put me on a toboggan and let me slide out of sight on the lower slopes of Sweden’s highest mountain Kebnekajse. That’s experimenting 1975 style but wouldn’t do in 2016.


“Cock in a sock gate”, right after handing in my resignation in January 2014:

cock in a sock

It is illegal to snowboard naked (I did have my cock in a sock though… for cancer – Google it)


When I was 5-6 years old, I took a broken electric coil in one hand and used the other to push the respective cords into an electric socket. I got a massive shock, my hand cramped around the coil and I couldn’t let go. Rigid as a stiff I fell backward and the cords came out. Perhaps my curiosity got the better of me that time, or somebody should have stimulated me more to prevent activities like that.

long face

Rubber face – embrace it


Somewhat surprised to find this pic in my phone the next day

Nevertheless, it was fun, and I have kept finding ways to get moderate electrical shocks. Like that time*… No, enough is enough. You get the point.

*However, that story of how I blacked out the entire building, short circuiting 200 Amps of power, melting the tool I held in my hand and becoming blind for a few minutes really is one for the ages.


windsurfing vice

Nothing wrong being inspired by Miami Vice


How much fun should you have in a week?

The main objective here is not really the experimentation or learning per se. It’s to have fun, to smile, to laugh, to feel good, alive (pain can achieve that too…). How much of that do you have in your life on a weekly basis as it is?

slow 3

Typical 5-min break from the screens


When did you last laugh out loud until your abs hurt?


Thailand walrus (coconut tusks)


When did you at least have to stifle a bubbling laughter in a serious situation?

aconcagua ice jump

Aconcagua glacier


When did you involuntarily make a forceful nasal exhalation in place of a real laugh?


Bad Santa: Ho Ho Ho


How long were those episodes of sheer lightheartedness and pleasure?


3 min 33 seconds?


When did you last learn something truly new? Juggling? Snowboard? Dancing? Programming? Chinese? Lock-picking? Hot-wiring? Movie editing? How much time did you spend on new things a week during the last 12 months?

ibiza pool jump

Push whatever limited imagination you possess


When did you last put on your favorite song(s) and just went with it, no matter if it’s Eminem, Guetta, Shania Twain, Stones, Britney Spears, Bach, Depeche, Bowie or Joey Alexander?

Washboard abs in snow

My balcony/roof terrace


When were you last scared (in a not too dangerous way). When did you last get a bruise from trying something physical like climbing, skating, boxing, cliff diving..?


A little hurt never hurt anybody

Ronja fool laugh goof Sprezzaturian

fool? me?


When did you last make a fool of yourself and laughed it off? Don’t tell me you were 5 years old.

dancing in the dark

(not yet) Retarded managing director


How boring and full of obligations should your life be?

How many hours do you spend doing tedious, boring, unfulfilling or simply necessary (breadwinning) tasks a week?


The photographer was NOT amused, suffering from altitude sickness at the summit of Aconcagua


Summary: double the fun

If you’re not even setting aside one single hour a week for fun and exploration; do it!

Investor statue

Statue outside the Head Office of the Wallenberg family


Whatever amount of fun and unboxed discovery and experimenting you currently engage in, try doubling it. I’m sure there is some stock market chart watching, coffee, news, weather, other TV, computer gaming, or over the top tidying at home, vacation suntanning, not to mention mindless arguing on the internet or discussing politics at home you can do without.

nerja near death

Near death experience – 3ft deep

nerja death jump


Start by doing what you have never done before:

Share this article as widely as possible in order to spread the happiness, to make more people break their shackles and enjoy life, even if for just one hour.

micke young


Encourage them to read, to bookmark, to subscribe and to read my eBook “The Retarded Hedge Fund Manager” for inspiration on how to combine success and goofing around.

odd one out at school

Me: all the way down to the right