Why wrap it up (at 50)?

Summary: Exact revenge. Take action. There is no time like the present to quit. Every yes is a no to everything else, and every no or U-turn is a door to a world of opportunities. Don’t kill your aspirations with misguided loyalty, least of all to yourself. You don’t have that many books left to read or quality weeks with your friends. Waiting for your turn is tantamount to killing your dreams.

Life is not a dress rehearsal

TEXT FROM MY SUBSTACK

You are not getting a do-over. You’re not going to heaven. You’re not going to live a second life. How many minutes or hours do you think you can expect to be with your best friend, your family, your parents before you or they pass away? How many books will get to you read? Which ones do you choose? Think about it.

How many days of quality time do you have left to spend with your loved ones?

Let’s say you have 80 more years to live and read. That’s approximately 1 000 months or 4 000 weeks. If you read a book a month, you’ve got to choose which one thousand books to read. That’s not even a very big book shelf to have around the house. One thousand inches is about 80 feet or 25 meters. Standing six levels high, that’s just two ordinary 2-meter wide book shelves worth of books. If you manage to get through one book a week for the coming eighty years, you’ll still just collect eight such book shelves.

What about travels? How often do you go away on vacation? Once a year? Twice? How many new places do you expect to visit? Or old favorites?

How often do you spend quality time with your friends, siblings or parents – not least if you live in different cities? Do they even get a week a year? You might actually have less than 100 weeks of quality time with your loved ones left. Using millimeter paper, 100 squares amount to a piece of paper about the same size as your thumb nail. Those hundred small squares could represent all the weeks you have left to hang with friends and family. If you think a little about it, maybe you can double the time, or the quality, but you still should choose wisely how you spend your time.

Harvard research shows the worst thing you can do for your happiness, is spend your time on micro interactions on social media, while being with your actual IRL friends.

Loyal to Godot

When I was a bullied kid in third grade, I couldn’t wait to get to sixth to get my revenge. By then, however, I wanted to protect the bullied ones — and when the little bullies, who bullied even younger kids, dismissed my interventions there wasn’t anything I could do, since using force against little kids would be wrong.

Throughout primary and secondary school, as well as college, I couldn’t wait to finish my studies and start working, only to realize working in finance meant even longer hours and more tedious assignments.

I stayed in school, and later on in finance, because I thought you were supposed to. Supposed to finish school, supposed to have a “good” job, supposed to “work hard, play hard”.

When I’d made some money, I predictably spent it on partying, expensive vacations, an apartment, on watches and sports cars. That’s what society teaches us; that’s what your friends and colleagues do, and expect you to do. It’s the “only” way I knew.

Don’t put off living

But, you don’t have to do as everybody else. You don’t have to go to college, work long hours at an office, take 2-week vacations to the sun every year, ruin Christmas by stress and visits no one appreciates. All you have to do is provide for food and shelter to survive and then you can choose to do whatever resonates with you.

There is no use at all in waiting for life to begin, waiting for the weekend, waiting for summer, for vacation, for retirement. You’re always changing anyway and risk not being able to or want to fulfill your plans once you get “there”.

The silent assassin of dreams

I used to dream of becoming a ski bum, but when I was 33 and started planning for an imminent retirement, I had to operate my right knee (the ACL I had torn 13 years earlier) and decided to wait until it had healed. After that I got sucked in at work, was appointed managing director (actually while being sedated for the surgery), and stayed put for loyalty reasons. In addition I realized I was probably too old and too poor a skiier to be skiing full time. Slowly, I also became more and more greedy and wanted “just one more year of dividends”.

I had learned this lesson before but forgot about it. When I was 22, I hurt my ankle badly and more or less gave up my Taekwondo career without even realizing it. I thought I’d just do weight lifting until I had healed properly and didn’t need to put in 70-100h weeks anymore. Well, here I am 30 years later and I’m still hanging around the gym and can’t decide whether it’s time to go back to martial arts yet or not, if my body can’t take it or not, if I’m too old or not. Still waiting, still haven’t learned the lesson properly.

The problem is that I’m not taking action, I’m just lingering in my homeostasis, because that’s the easy thing to do, because I’ve become “the guy who lifts” – and I’m not even any good at it.

I’ve let my lack of wants make excuses for my inaction, which over the years have slowly killed off what little wants and dreams I had to begin with, cementing a lifestyle of inaction and a mindset of wrapping it up, just coasting to the finish line. The good thing is you can always change, can always take action, can always make it your turn to be free to live.

It’s never your turn

and

it’s always your turn.

Take it, it’s yours for the taking

— Kool and the gang?

If not in sports, at least in matters of career and life, I eventually saw the light, quit my job and woke up to some important truths about living. So, fuck ‘wrap it up[ http://mikaelsyding.com/purpose/]’. Go for it! There is no time like now to start a project, or better yet to quit a project, to truly live and be happy.

You can’t wait it out, but have to act it out. Good things don’t come to those who wait. Nobody is just going to hand it to you. There is no waiting line to stand in to get your turn. It’s never your turn, and it’s always your turn. You just have to take it. I finally did, and it turned out to be early, emphatically not too late.

Investing requires patience,

but living should be done impatiently

Start a business, take up a sport, quit your job or marriage

If you had any doubts, age 50 is an excellent time to start a business, initiate a venture to help people, take up a new hobby, learn something new. Sixty too. Not to mention Seventy… The later you start, the better a time it is to make a change. Investing requires patience, but living should be done impatiently.

Do you want to be happy? Then take action: Move. Change. Accept the ephemeral nature of both the self (you’ll die) and context (it will change no matter what you do), instead of clinging to a fake consistency and misguided sense of loyalty.

Fuck ‘wrap it up’ at any age

— Just say no!

Nobody is going to pay unless you provide value

Getting really good at investing takes time and effort. Just because you know the theory on how to get good at tennis doesn’t mean you don’t have to work for it, put in the hours. Sure, you can be more or less effective, finding good mentors, knowing what and how to practice, but you are still the one who has to do the footwork.

Screening, analysing, macro, technical analysis – it’s all the same, you can’t take any simple shortcuts if you want to be better than average. And if you’re not better than average you’re much better off buying a broad mutual fund, for zero time and effort spent.

I teach how fundamental value-based investing is done, based on over 30 years of professional experience at the highest international level. I show how to combine valuation and timing into the complex art of margin-of-safety investing. My courses include screening methodologies, how to combine filters for fundamentals, valuation and share price momentum, but you’re still the one who has to go through the process, not least documenting and improving for every investment cycle.

But there actually are shortcuts, there are places to find quality inspiration and systematically generated ‘tips’. Quant Investing has such a shortcut, a tool for smart screening for interesting investment prospects. They do it for you, finding the most promising situations, combinations of valuation and timing. Then you can add your own research and insights to each case, knowing what others see and know in the situation.

I have an affiliation with Quant Investing, since they like The Investing Course as well as my other creative endeavours.

QI has a great professional stock screener and investment letter where they demonstrate and explain their best ideas. I think their products are a great shortcut to quality ideas, both in value and timing and well worth a try. I do get a kickback from any sales made through this link, just so you know. But I would happily endorse QI anyway. Just as they did me for no other reason than admiration for actual value created and delivered in a sea of scam artists.

History informs the future

That’s the basis of all investing. Historic observations are your only ‘guarantee’ for future performance

One way is simply studying share prices and extrapolating current trends and patterns into the future. What trends? What patterns? No regard to what the company actually does and how much money it makes? Sounds a little loose, right?

Another more robust way is analyzing 1) historical fundamental accounting data (Sales, profits, assets etc.), and 2) historical valuation multiples (P/E for example). And then 3) extrapolating 1 and 2 separately and recombining them into future share price forecasts. It really is as simple as that.

  • That” however can be taken to arbitrary depths:

For example, “Historical fundamentals” can refer to last year’s or last quarter’s revenues. And the forecast to the same level of sales as the most recent recorded level. Or “history” might refer to past growth rates. Or past trends in the change of the growth rate (“rate of change”, “second derivative”). Or more complicated patterns of growth rates (e.g., cyclical or S-curve type patterns). Or, even more complicated studies of underlying business models, market positioning, product launches, geographical expansion, competition, legislation, macroeconomic influences, consumer preferences etc.)

“Historical valuation” could likewise refer to something as simple as the Price/Sales ratio, i.e., the company’s market cap in relation to its total revenues. Actually, you do get quite far by extrapolating sales using recent growth rates and applying historical P/S ratios to your resulting sales forecasts.

Then again, “valuation” can refer to a more sophisticated triangulation of different multiples (P/E, P/S, EV/EBIT, EV/S, P/B), cash flow yields and return on equity or ROCE data, and a detailed DCF model.

Further, historical valuation multiples can refer to the company’s history, or to the history of similar companies (industry “peers”), or companies that might become relevant as the company evolves and changes, or to the overall market’s historical valuation.

After making informed forecasts of fundamentals and likely and warranted valuation levels, you should take the investing environment in terms of the economy and other investors into account. Use a kind of post hoc overlay of macroeconomic analysis as well as gauge stock market trends and sentiment, also known as technical analysis of stock price patterns, and other price patterns and data series.

So, to conclude, this is my approach to value based investing: 1) Make forecasts of company value drivers: Sales, Earnings, Assets, Debts, Returns, Investments, Cash Flows. 2) Make forecasts of the associated valuation levels (EV/EBIT, EV/S, P/B, DCF, CH yield, ROCE, ROE). 3) Consider the actions and sentiment of other investors and economic agents. 4) Estimate how uncertain you are, how bad your bad luck can get, how much unknown unknowns might hurt you, what the likelihood of permanently lower company profits is. 5) Make a judgement call of whether the upside in terms of the annual return on your invested capital in the stock is worth the risk of being wrong, compared to your investment alternatives.

Remember that when you part with your money to the stock market, you want that cash back, and then some, as fast and certainly as possible. That’s the only thing that matters in the world of investing: Cash out, cash in!

[estimating risk is a whole course in itself, but there are practical and pretty robust shortcuts]