Failure is an option – it has to be

What you are getting into: 5 minutes of serious fun, of deep thoughts about how to pick a career (and more generally perhaps a new slant on life), a Mars rover, Vince Chase, bikini babes, and some stock market gloom.

NASA: Failure is not an option (Apollo 13)

Okay, I can see where NASA is coming from. It’s a bit like the “leave no man behind” credo (rather get 25 men killed trying to get that last guy out; the one who has already had his arms and legs hacked off and most likely will bleed to death on his way back. If he even gets that far)

NASA obviously wants every launch to succeed, every astronaut to come back alive. Check and re-check until everything is 100%. Not 99%. Failure is not an option.

Well, unless you are sending teachers into space in much colder weather than the O-ring seals are made for (against advice from the manufacturer and without getting their clearance), all but guaranteeing leakage and explosion (Challenger 1986).

But that’s a whole different story. Perhaps NASA interpreted it as “failure to launch on time is not an option”.


Failure has to be an option

I’m sure NASA is aware of that too, but it’s still important to spell it out. Without taking risks you won’t break new ground.

However, the pitch here is even simpler than that: If you against my recommendation want to get into finance. If you say you love it, and that it’s not about the money. Prepare for this:

Imagine 20 years hence

You have been staring yourself half-blind at multiple computer screens showing dozens of real time charts of various financial gauges. You are not trying to understand business models and predict successes and real cash flows, because that’s not what drives stocks within your relevant investment horizon (see chart below from zerohedge). You are not contributing value (by, e.g., identifying and financing worthwhile, productive investments). Rather, you are a kind of parasite, sucking blood from meaningless market fluctuations, dictated by other people’s greed and fear, as well as politician’s machinations to appear important and stay in power. 

Are you buying this?

Imagine stock markets 20 years from now are still at the same level as today (see previous posts for why that is not unreasonable). Imagine that not only prices were stagnant after decades of artificially low interest rates taking valuations of sketchy-accounting-profits too the current extreme highs (see this article by dr Hussman, e.g., and his valuation chart below), but volumes dwindled (3/4 of stock market volume is algos trading with each other, the remaining 25% of real money is mostly there because liquidity appears good and markets have been booming, in the wake of money printing induced lack of risk aversion.

In addition, once prices fall, and algos find it harder to make money, real money will withdraw as well. With prices falling too, the money value of the remaining volume could fall to as low as 5-10% of current trading – at least when it comes to real money – what’s left of algo liquidity will be too erratic to trust anyway.

Imagine that not only did prices first halve, then boom, then halve again, then gradually work themselves back to current levels 20 years from now, on very thin volume. To make matters worse, imagine you weren’t even that good a parasite. Imagine you made at best an average white collar wage but at 150-200% of the hours.

What if you lose?

What I’m asking you to do, in finance or whatever endeavor you take up, is to imagine failure.

Then ask yourself, would you still love doing it (like, find it tolerable, choose it…)? Or was it really the money, the parties, the girls, the Swiss watches, Italian cars and boats that enticed you?

If you still say you want to do it – for the thrill, for the math and statistics, for pitting your mind against the best and the brightest life-wasters you can find, and not for the money. If you can honestly say you will be fine, if you after 20 years, with bags under your eyes, with an empty bank account, with a weak back, and ruined liver, with a mediocre career in a business on the ropes, can say it was worth it.

Imagine you are high finance’s equivalent of a washed up boxer who never won anything but makes his living as a human punching bag (like Rocky in Rocky I before he got a shot at a fight vs. world champion Apollo Creed). If you can still say it was great, a thrill, what you would have chosen again given a second chance. Then by all means get into finance. If not, why not choose a career doing what you actually like doing even in your spare time.

I just re-listened to this old TED Radio hour show about microbes, exploration and creativity (From curiosity to discovery, Sept 12, 2014) which goes to show just how much fun and new ground there is to break right here on earth. Then there are all the other issues of water, food, health, energy, death and pollution to solve – possibly with the help of genetics,AI,robots and nanotechnology. There is so much fun things to do that’ll make you grow, rather than playing on the big casino.

The Entourage dream is just that – fiction

So, please before you let the latest Entourage movie distract you, with its yachts, cars, houses and bikini babes; just think for one second if those things would really make you happy if you couldn’t tell anybody about it. Or, for that matter, if you tried with the sole aim being copying Vince’s lifestyle, and you failed.

Failure is an option – it has to be. Vince knows that, he always claims they can all move back to mom in Queens, whereas that would be his entourage’s worst nightmare.

Could you handle failure in the direction you are going?


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4 Replies to “Failure is an option – it has to be”

  1. Failure is like a hangover; you know you did something you enjoyed, now you’re paying for it. As long as it’s not life-threatening, you eventually pick yourself up.

    The best part of failure is you realize who your friends are. The masks come off – people willing to sue you for lack of payment etc etc. It’s surprising who turns into an ogre as soon as their money supply is cut off. I’ve often wondered if I’m the same, then I realize that I try to work with people whom I like. Whether they have money is mostly irrelevant.

    The world would be a much nicer place if people were able to work on things they wanted, allowing them to invest their energy into what they genuinely cared about. The ironic thing is this yields so much wealth in the long term (these people are able to invest over years, not days or months – this is the core of what makes a great X or Y).

    What you espouse could be true for all careers – talent doesn’t mean money; ambition doesn’t mean plain sailing. Failure is the result of over-stretching your resources to attain something out of reach. Sometimes you win, often you lose.

    If you fail, the most important thing is to stop the haemorrhage of cash. Cut off all expenses. Once you’ve levelled your financial position, you’ll be able to start moving forward again. Hold your head high, remember you have garnered a very rare experience, and have learned so much about yourself that you’ll be able to hold your own next time.

    If you have debt, come to an agreement with your creditors. The more institutional your creditors, the more they’ll be able to negotiate. If you have too much debt, you can bankrupt yourself, move in with friends, take a year to get a low-paying job, lick your wounds. The typical reason for failure is an inferior network (no-one knows – or cares – about you); thus any adjustments you make will give you the chance to improve this.

    If anyone reading this has failed, send them to me. I’ll help them out.

    1. Very insightful as always Richard.

      The most important thing, I think, is to understand that failing isn’t the end. It’s from where you start over, one small manageable step at a time.

  2. I’ve already said I’m convinced to avoid finance Mikael. It’s beating the dead horse ;)

    I like the Abenomics charts best from this post. Eye-opening.

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