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Distilled wisdom from approximately five years of battling markets as a retail trader. Classified most often in the category of ‘brilliant advice you won’t follow’ based on my experience, we all view ourselves as considerably above average. All of these points could be expanded on but represent a minimal guide to reality as I experienced it.
1) Equity swings are brutal for your emotional health : you have to work out how to “game” your emotions so you can focus on your “average” day and making that better and not thinking Â +/- 2 standard deviation days are normal.
2) Escape velocity is difficult to achieve : to make a living you really need a large multiple of a normal salary just for your trading stake. The cost of living can eat away at your capital base.
3) Reasonable expectations : Â Warren Buffet does 22% p/a. Will you do better? And how consistently? Funds management is a very different thing to retail trading.
4) It takes years, not months : Just like chess mastery, to get to a high level in trading, the journey is measured in years and not months. Might your time be better invested in another area of income generation?
5) The education industry is dangerous : The skill to recognize sharks can only be gained by swimming with them long enough until you notice your own blood in the water (or words to the effect)
6) Opportunity cost can be significant : While you are engaging in this anti-social activity, you could be contributing to society in a Â more meaningful way than just a “liquidity provider” in the capital markets.
7) You can lose your respect for money : When your equity swings are daily in the thousands of dollars range it is a simple thing to lose discipline in matters such as daily budgeting. Why bother to look after saving Â a few dollars at the shopping center when it might be less than the brokerage on your next trade?
8> Variable reinforcement activities can lead to addiction : Beware of signs of addiction.
9) You can never truly win unless you have a finish line : Every day places you closer to ruin, unless you know when to walk away from the heat, it will eventually burn you.
10) Sometimes a zero sum game is good : As often the case, trading represents a negative sum game.
“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” -Steve Jobs
Some sage advice about wealth creation, also an interesting analogy about a conservation law for creating wealth. Also there is the element of risk to throw in the mix, the idea being that the job at the post office might be perceived as ‘low risk’ but could in reality be quite ‘high risk’ when all life considerations are measured.
Startups are not magic. They don’t change the laws of wealth creation. They just represent a point at the far end of the curve. There is a conservation law at work here: if you want to make a million dollars, you have to endure a million dollars’ worth of pain. For example, one way to make a million dollars would be to work for the Post Office your whole life, and save every penny of your salary. Imagine the stress of working for the Post Office for fifty years. In a startup you compress all this stress into three or four years. You do tend to get a certain bulk discount if you buy the economy-size pain, but you can’t evade the fundamental conservation law. If starting a startup were easy, everyone would do it.
When the suburb refresh was underway it wasn’t clear to me what these statues were supposed to represent. All it took was the perspective of a 2 year old to see that they were obviously ‘My favourite dinosaurs!!’. Long necks of course.
And you aren’t supposed to climb them ‘no no no’.
Some thoughts + musings + photos + other stuff soon