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Category Archives: Money

Makes the world go around

Secrets They Don’t Tell You About Trading

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

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  +/- 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 :  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  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  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.

How To Make Wealth

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.

source article

The $7.30 coffee

Watched a man order a coffee today for $7.30. It was a super large size with a triple shot and some other add ons.

I used to work an entire day for $50 after tax back at my first job in 1992. That days effort in 1992 would capture me just seven of those coffee’s today, pays to think about the inflation tax and how it will rob you blind if you don’t position your money accordingly.

Catastrophe

Everybody is making changes to their lifestyle with the impact of falling stock markets around the world.

Our cat has had to sell his luxurious home and now lives in a cardoard box that is too small for him, life can be tough.
Poor Kitty

View

A great view from the cliffs at Shorncliffe, Brisbane.

Some great houses along this particular stretch of road, we went for a drive to look at the houses and the view, not a bad place for a future home. That’s Redcliffe in the background.

View

Renovation Mark 2

Some pictures of a recently completed renovation. Currently I’m trying to find tenants to rent the place, the plan being just to hold the dirt the bricks are parked on for as long as possible while the dirt appreciates in value and hope the house doesn’t fall down. I thought it would be best to spend more money up front and attempt to attract a higher quality tenant, charge a higher rent and not to have to worry about major repairs or renovations for at least 5 years. I’m not sure how wise this approach will turn out to be, time will tell. The house definitely needed some money spent on it though as it had been a rental since it was built in 1989 and wasn’t in great condition, eventually I can see this house being knocked down once the land becomes valuable enough, probably that’s at least 10+ years into the future though.

I made plenty of mistakes again with the renovation but the end result looks reasonably acceptable.

Front view
Lounge
Entrance
Kitchen
Bathroom
Toilet