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30 minuter

LVMH - Love Me Harder

Topic: An investment in LVMH

Conclusion: Just say no

Until today, I've never looked twice at the LVMH share, but that's about to change.

It's now 5:55 p.m. Swedish time on Saturday, February 17, 2018 and I'm about to google the company for the first time, and form an opinion on its shares.

To be clear, it's almost completely irrelevant whether LVMH makes telecom equipment or champagne and leather bags.

The two things that do matter are:

  1. What profits and cash flows LVMH can reasonably be expected to produce
  2. How much of those will be distributed to shareholders, and how the market will value those profits and cash flows (or otherwise decide on the share price)

Everything else is "assistance fluff" used to determine 1 and 2.

Don't get me wrong though, it is important to know what business LVMH is in, in order to assess the company's sustainability. What's not important, however, is my view on the design or quality of their bags, the value for money I get from LVMH's champagne or cognac, or attractiveness of their accessories, watches (did you notice my LVMH watch in the after ski picture above?), perfumes, cosmetics and... magazines (?).

Any single product or brand in this vast conglomerate is all but insignificant, no matter your subjective perception of its importance

But I trust you already understand as much.

By the way, it's now already 6:05 p.m., so I'd better get started.

Valuation vs. financials and market position

My first observation is that with a market cap of 126bn EUR at a P/E ratio of 24.5 and a P/Book ratio of 4.3 they sure need to have a plausible plan for how to grow strongly and consistently for me to be interested. Alternatively, the numbers have to be fudged in some way (NB: fudging usually takes place in the opposite direction).

I have no interest in a deep dive in LVMH's financial statements, so instead I just googled "LVMH financials" and found this on Reuters.

The 5-year sales growth has been 8.8%, and the 5-year EPS growth 8.3%. The numbers unfortunately are all over the place for other time periods, but 8.8% seems plausible as both a historical gauge and an estimate for the future. I mean, why wouldn't a leading luxury goods house take some market share from the general economy, also known as customer "wallet share", and thus grow a few points faster than average?

Another consideration is whether LVMH has a wide moat (sustainable competitive advantage) that warrants a higher than average long term growth forecast? Maybe, maybe not, but for now that's probably the safest bet (that they do have an advantage that will allow for continued growth outperformance). My hunch is that consumers want to be mislead, and LVMH has a position and cash flow that permit outspending competitors in terms of marketing. Did you know that most of the advertising for luxury products is directed toward those who have already bought from the company - it's there to alleviate post-purchase disappointment and cognitive dissonance.


The consensus forecast for 2019 is 12 EUR per share, which is +9% up from 2018, and the long term projected growth rate is 10%. I think that is a little too high, considering the 5-year historical average of less than 9% growth during a global stock market boom and immense central bank liquidity injections. I have nothing to add regarding the company's historical numbers for leverage, margins, tax rates etc., other than that LVMH strikes me as a streamlined and efficient company - a mature category leader. The "mature" part makes me think I can simply extrapolate all numbers into the future. In real life forecasting is never that easy, but for now I'm painting this picture in broad strokes.

There's just one thing that bothers me a bit: the ROE, Return On Equity, is "just" 17-18% for a P/Book of 4.3. That implies a required rate of return for investors of just 4% Sure, there is growth on top of that, and there is compound interest if you let the years pile up, but for every single year, the implied return for an investor is actually just 4% - unless the P/B valuation multiple increases over time. On the other hand the implied return is 4.4 per cent year two...

6:30 p.m. Here I had to take a short break for overseeing dinner, not to mention having a re-fill of champagne

Pros and cons with an investment in LVMH

There are upsides: great market position, proven growth model, proven investor interest in the stock, great cash conversion (cash flow is higher than profits), they already have a normal to high tax rate of 30 per cent, and a future proof product (vanity never dies).

But there are downsides too: a lowly 4% implied return on an equity investment, a P/CF of 17x and a P/E of 24x, not to mention the risk of an unprecedented era of easy money and widespread conspicuous consumption coming to an end.

TINA: There Are No Alternatives?

Sure, I get that in today's low interest rate environment there aren't many good alternatives, and a 4% real return, although with operational risk, is much better than 0% or negative real return.

Nevertheless, remember that the LVMH share has occasionally traded at much lover multiples in the past, and my best guess is they'll do it again when the economic cycle turns. Actually, the LVMH share lost 50% in both of the most recent down cycles. I'm betting they'll do even worse this time round. Notwithstanding that, I think the minimum return requirement for any equity investment should be 8-10%.

Please keep in mind that interest rates and inflation are cyclical phenomena and equity investments have extreme duration. Hence the current ZIRP/NIRP paradigm shouldn't affect your tolerance for high multiples.

I know I'm getting out on a limb here. Some will say the growth rate of 9% should be added to the ROE for a total of 13% de facto ROE. I don't agree, although there is of course some growth effect to consider. Anyway, I'm used to critique regarding my valuation methods. I still, e.g., remember the ridicule I faced when the Swedish retailer H&M traded at 350+ two years ago, and I said I wouldn't touch it above 200 (it's now at 135-140).

The LVMH case smacks of the same situation all over again. Although this is not a recommendation in any way, shape or form, I would hold off buying any LVMH shares above 150. Personally, I doubt I'll buy any until it hits two digits at 99 EUR/share. Why not check at my P/E=1 idea in this post instead?

Cheers (6:50 p.m., I spent almost an hour on this! I hope you're happy!!)

Taggar (blogg): 
31 minuter

Gold, God, Quantum physics - are you buying this?

INTRO Per Gessle, the Swede who composed the song "It Must Have Been Love" that was featured in the Julia Roberts movie "Pretty Woman" has said that he only writes when he's inspired. I'm mostly like that too, all other comparisons aside. This post formed in my head over the course of less than a minute, not unlike this one on The Meaning Of Life.

THEME Contemplating and discussing the true nature of reality over the last six months seem to have led to me being hit by and interacting with a stray inspiraton* five minutes ago, incidentally right after re-watching the amazingly entertaining movie "The Wolf Of Wall Street" during a long and late Saturday brunch.

* a very rare elementary particle

CONCLUSION Cutting straight to the chase, my conclusion is that what matters on the stock market is how consistently and predictably you can earn "money" that can be used for manipulating reality into subjective experiences with certain desired properties (I hint at what those properties might be in my Perspectives article series. Start here).

IN SHORT: DO WHAT WORKS, and take a good hard look at Gran Colombia Gold Corp

This morning Mike Cernovich referenced a quantum physics article in Scientific American that discussed a new slant on how to interpret the problems of wave collapse, observer dependency, matter duality and more. It got me thinking. By the way, if you're interested, here is my immediate reaction to the article:



God and reality

Winter came, and with it late night discussions about the existence and nature of God. Yes, "God", as in some kind of power or presence outside the laws of nature, or as the very laws of nature (whatever that's supposed to mean; I mean are they laws, or aren't they).

For me the word "God" is too tainted by culture and tradition to possibly serve as the basis of an open minded conversation about existence. As much as I try to suppress images of a potent and aware entity, and replace them with "anything or everything" or "purpose" or some other temporary placeholder, I keep failing.

In parallel with discussing the God delusion we have talked at lenght about reality, not least whether it's objective or not, i.e., whether reality exists or not.*

(* I'll just add here that reality does exist. This, here that we experience is reality. In my view, that holds water whether reality actually exists or not, since I think the word 'reality' is defined as "this, here" that I experience and I have good reason to assume you experience too)

Solipsism and pragmatism

The conversations have ranged from pure solipsism* to self-referential unusable tautologies such as "the universe is the universe", "God is all and all is God", "purpose is the purpose", and much more.

(* solipsism = I am the only thing that exists and everything else is just a dream - quite a complex dream with billions of dreamed up personalities, trillions of other seemingly independent living things, quadrillions of celestial bodies scattered over trillions of cube light years, evolving over billions of years, including Darwinistic trajectories and thousands av brilliant scientists climbing atop each others' shoulders to scout ever further. Imagine all that in just one entity, i.e., me, not to mention I have forgotten it all and am lost in my thoughts slowly rediscovering minuscule fractions of it all before imagining dying)

I am a practical person. And, as much as I'm a fan of basic research, understanding that we can't know when and for what that knowledge might come in handy, pure philosophical word play that doesn't even aim for practical use, but rather aims for self-containment and non-practicality quickly loses its appeal to me.

By the way, if this post triggers a strong need in you to explain to me all the ways I have misunderstood solipsism or any other branch of philosophy, or quantum physics for that matter, please don't. This article is not about that at all. Quite the opposite. It's about doing what works.

The universe is all mental

The quantum physics article Mike linked to builds up to an idea about thoughts being the ultimate building blocks of nature, perhaps a little like the illusive inspiratons I jokingly mentioned above.

These ubiquitous "thoughts", which I assume are pretty dissimilar from the everyday brain thoughts with which we humans are familiar, interfere with each other as well as with organical thoughts; thus giving rise to the physical reality.

With "thoughts" everywhere, from the empty voids of space to the cores of stars and brains of humans I'm guessing brains acts as a kind of amplifying antenna that can focus inanimate thoughts into living thoughts.

Alright, as much as I try to keep an open mind - on a theory stating that brains and thoughts are not the product of billions of years of evolution, pattern recognition and survival of the most adaptable - trying to comprehend a theory of substrate-free "thoughts" as the ultimate building block is just as difficult as stripping the word "God" of all its religious baggage.

Please explain

Why "thoughts", I ask? Why not just super strings? They are equally mystical, ethereal, versatile and infalsifiable. Whether you decide to build a world view with turtles all the way down, hyperdimensional strings, gods behind gods in Russian dolls, or thoughts all the way down, doesn't really matter. You're still not explaining anything. And you're not adding anything to the toolbox of improving your own subjective experience (except for the fun it might be to play a meaningless game for a while).

Experience, prediction, manipulation

For me, my experience is all that matters. My reality is my reality, but it'd better be pretty well attuned to the more or less predictable laws of nature for my subjective experience to be sustainably pleasurable.

Experience is all, since non-experience is non-experience. Per definition.

If you want to define these words any differently, be my guest, but I won't understand you. Hint: if you want to be understood, strive to use unambigous words that people (can) understand.

What interests me are reliable predictions in as much as they allow me to manipulate and control my experiences.

The actual and ultimate truth might be something altogether different and incomprehensible. But that doesn't matter to me. What matters to me is what I (can) experience.

I can't remember anything before my birth, and there are no believable recounts of post-death experiences. This, here, this stream of consciousness began some time around the birth of this body, and it seems destined to end with this body (not yet fully counting on uploading or immortality).

So, I can experience what I can experience, and that is what appears to be a physical world of things, including electrochemical patterns in brains. Humans now understand a great deal of what can and does affect us (cause experiences), and of what can be manipulated by us. That's just another way of saying science has laid out a pretty good map of reliable laws of nature; laws that I consider when making decisions I hope will lead to as meaningful a life as possible.

That which might "exist" but can't be manipulated or affect us is simply irrelevant. Per definition. The world may be a dream, or nothing at all. Maybe I'm alone, maybe not. Maybe I'm a simulation... Maybe there is a "God", even though it has left no trace of its existence since the Big Bang.

In any case, my actual personal experiences are more or less limited to sleep, food, love and a few other "experiences". My aim is to optimize those over the course of my life, by designing as solid and consistent a foundation of predictions and manipulations as I can.

Pragmatism and investing

And, that is also exactly how I would, in the best of worlds, go about my investments. I don't care whether the world 'really' exists (though it should be clear by now, that to me "exists" means whatever this experience is. Per definition), or if a country's or company's operational fundamentals exist objectively. I don't care if "valutions" are real or not.

What I do care about is how to predictably and as consistently as possible make decisions that enhances my potential for manipulating reality into better subjective experiences. That might include maximizing dollar amounts on the stock exchange, or units of gold, or analysing historical metrics patterns. In doing so, I like to rely on consistent laws of nature, rather than fickle gods and "it's all a dream" fantasies.

What matters isn't if valuations, profits, money or even the universe is real. What matters is how I feel about it, and not least what I can do to improve on that situation.

P.S: Please, let's keep "free will" out of today's discussion.

Gran Colombia Gold Corp

-when did you last see a Price Earnings ratio of 1?

By the way, have you seen this Price/Earnings = 1 company in Canada? Gran Colombia Gold Corp. Disclaimer: this is not an investment recommendation and any losses incurred are your own. In addition, PER=1 might be significantly misleading due to dilution, but I'll leave that to you. I personally, however, would be surprised if the stock didn't reach 6 dollars per share by the end of 2018.

Taggar (blogg): 
4 februari

Se upp med förenklande och fördunklande etiketter

OM du gör bättre investeringar genom att kategorisera bolag som "fina" så fortsätt med det. Allt som fungerar på aktiemarknaden skall uppmuntras, för det finns så mycket som, inte fungerar.

Personligen har jag dock inte lyckats sätta en motiverad värderingspremie baserad på om ett bolag är "fint" eller inte.

Ämne: Den intressanta verkligheten bakom uttrycket "fint bolag"

Slutsats: Det dunkelt sagda är det dunkelt tänkta

I den här artikeln kommer jag förklara varför jag tycker att uttrycket "fint bolag" är så fascinerande, och förhoppningsvis förmedla hur det kan leda till sämre investeringsresultat för den som använder sig av det.

"Fint? Vad betyder det?!"

Världens bästa investerare och wonderful companies

Charlie Munger och Warren Buffett brukar säga att det är bättre att köpa ett fint bolag till rimligt pris än ett ok bolag jättebilligt. Det har gått oerhört bra för Munger och Buffett.

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price"

Men, glöm inte bort att Howard Marks som är nästan lika framgångsrik har sagt att det är priset som är absolut avgörande för avkastningen. Marks säger att det finns ingen tillgång som är så dålig att investeringen inte kan bli bra om priset är tillräckligt lågt.

Citaten från Marks, Munger och Buffett är emellertid irrelevanta för dagens ämne utom på ett sätt: Det är lika dumt att investera baserat på ett uttryck som "fint bolag" som huruvida priset är "lågt" eller om företaget är "wonderful" eller "fair". Man gör sig skyldig till precis samma misstag av icke-analys.

Dessutom, Munger stannar förstås inte vid att kategorisera bolag som "wonderful" eller "fair", eller att värderingarna bara delas in i två lika vaga kategorier. Han och Buffett har förstås en gedigen checklista som avgör om ett bolag uppfyller kriterierna för en långsiktigt högavkastande investering jämfört med alternativen.

Att de har som övergripande strategi att hellre köpa dyrt och bra än billigt och dåligt betyder förstås inte att analysen stannar där. Inte ens ett riktigt bra företag med bra ledning är värt hur mycket som helst.

Det farliga med "fina" bolag

Så här gör man (till exempel) när man tjänar pengar på aktier:

  • Köp en aktie baserat på analys av historiska kursrörelser och sälj den dyrare till någon annan
  • Köp en aktie baserat på analys av bolagets intjänings- och utdelningsförmåga och vänta på utdelningarna
  • Köp en aktie som värderas lägre än motiverat av bolagets intjäningsförmåga och sälj den när marknaden justerat för den tillfälliga felvärderingen

En del lägger till en fjärde punkt: Köp ett bolag som är "fint" och håll det oavsett vad som händer med kurs eller verksamhet så länge det fortfarande är "fint". Sälj bolaget när det inte längre är "fint", förhoppningsvis till någon annan som fortfarande tycker att det är "fint"

Jag förstår att beskrivningen "fint" mycket väl kan användas som förkortning för "rimligt eller lågt värderat i förhållande till bolagets förutsättningar att skapa vinst och kassaflöde", eller kanske "som har kompetent ledning, kompetent personal, tekniskt försprång skyddat av patent, hög och stabil marknadsandel tack vare bra produkter, låga enhetskostnader och nöjda kunder" och liknande positiva beskrivningar. Warren Buffett kanske skulle säga att om företaget har en "vallgrav" (moat) av skydd mot konkurrenter så är det ett fint bolag, men vad vet jag om hur han tänker?

Etiketter formar verkligheten

När du sätter en etikett på något så låser du din uppfattning om saken. Det gäller både när du säger saker om dig själv som "jag är ekonom", "jag kan inte sjunga" och när du kategoriserar andra eller andra saker. Etiketter och fördomar är ibland användbara genvägar, det är därför evolutionen tagit fram dem. Men, på börsen och i många andra moderna sammanhang utgör de s.k. evolutionära mismatches.

Om någon (någon annan eller en tidigare version av dig själv) gjort en gedigen analys av ett företag och år efter år kommit fram till att bolaget outperformar på en rad punkter (tillväxt, resultat, kassaflöde, renommé, anställda) så förstår jag om man inte orkar redovisa allt detta utan börjar kalla bolaget "fint" eller "kvalitativt" eller "det finns en mängd punkter över lång tid som motiverar 30% högre multiplar än liknande företag eftersom det pålitligt vuxit ifatt värderingen på 2 år gång på gång". OK, kalla det "fint" för att du tröttnat på at förklara för oinsatta varför du äger en skenbart dyr aktie.

Men, om du bara hört någon annan kalla det "fint", hur ska du då veta vilken premie som är motiverad?

Eller, om du slutar analysera detaljerna (förståeligt om resultatet varit detsamma åre efter år) och bara tänker "äh, det är ju ett fint bolag, varför skåda hästen i munnen", då kan bolaget eller dess förutsättningar ha förändrats.

Det är denna lättja jag vill varna för när man använder vaga etiketter. Vilket P/E-tal ska ett "fint" bolag ha? Och ett fult då? Så länge etiketten fungerar för dig och du vet precis vad den står för ska du förstås använda den. Det är effektivt - slösa inte tid på att övertyga andra om du inte måste för att din strategi ska fungera.

Men tänk på att när det pratande huvudet på TV säger "det är ett fint bolag" så har du ingen aning om vad just det huvudet menar. Dessutom tycker jag att det påfallande ofta gäller fallna änglar, dvs bolag som t.ex. Hennes & Mauritz som överpresterat historiskt men sedan väldokumenterat tappat mark. Man vill så gärna att aktien och ens pengar ska komma tillbaka så man hänger upp sig på att det ju brukade gå bra och därför struntar i märkliga lageruppbyggnader, fallande marginaler. vilseledande information med mera.

Vad som än får din båt att flyta

Fina bolag fungerar i alla fall inte för mig. Det är för oprecist.

Däremot kan jag också i en snabbpitch säga saker som "de har ett teknologiskt försprång och ett genomtänkt affärsmannaskap som sannolikt gör att tillväxten fortsätter vara högre än branschsnittet samtidigt som lönsamheten är högre. Skalfördelar och en från grunden genomtänkt produktion och distribution gör att företaget sannolikt fortsätter att utöka sitt försprång", dvs jag säger typ "fint bolag och kan därför värderas högre".

Så, om du inte är helt säker på att användning av termen "fint bolag" gör dina aktieaffärer säkrare eller mer högavkastande, var vaksam och gå igenom relevanta fakta en gång extra.

Taggar (blogg): 
28 januari

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?

Taggar (blogg): 
30 december 2017

Taking stock of the financial year of 2017 and adjusting my direction for 2018

Topic: my poor trading skills, and total tally for 2012-2017, as well as my plans for 2018

Length: short

Conclusion: I'll quit trading listed stocks (after a final handful of  +100%-ers)


(see my post on Hubris here in the TAOS series)

Almost six years ago I opened a private trading account. I did it mainly to take advantage of the coming stock market crash. It never came, and as a result I lost 15.3 million SEK on my short Swedish stocks position (Nasdaq OMX S30 index) - almost 2m USD. This year I sold the last of that position, which means I can finally take stock of the position and tally the result.

Positive surprise

I thought I had barely made up for the losses on other positions, maybe falling short by as much as 5 million SEK or so, but when I finally found the tool for it today, it turned out I've made a positive total result of +1.8 million SEK on my trading account. That means my other positions have gained 17.1 million SEK over the same 5-6 year period. I should be embarrassed - not by the result but by my not knowing the result, and not caring.

Anyway, I've learned a handful things from this experience:

  • I don't care about financial losses (too little, since I haven't bothered to stop the losses or even to calculate the result)
  • I hardly care about gains (I like being proven right, but it's a very fleeting sensation - and a year later it's completely gone; I couldn't care less whether I have 2 million USD more or less in my bank account)
  • I'm not good at predicting the market or at trading
  • It's been a waste of time (except for these lessons)
  • The obvious conclusion is that I should (and will) stop trading listed stocks, and thus free up many quality hours for 2018

Other trading results: why did I make 2 measly dollars in profit on Hennes & Mauritz?

Some people may be interested to know that my life time result on Hennes & Mauritz is 22 SEK (about 2 dollars and 50 cents -- I made one single trade on September 20, 2016 in the stock); that I made half a million SEK in profits on Net Gaming Europe in 2017, and about as much on Gaming Innovation Group over the 2 years I've been active in the stock.

Some Swedes might be surprised to learn that if I add up my lifetime losses on Studsvik and Stockwik and add in my result on URA(nium), CF Industries (Thank you Jesse Felder [I think]), Xact Bull x2, BEAR x15, FING(erprint) and Finepart; that entire pile of dog excrement amounted to nil, zip, nothing but a waste of time.

Calling it quits - soon

Going into 2018, I only hold a few small listed positions in Stockwik, Finepart and Net Gaming Europe, plus a for-fun-position in BEAR x15 (i.e., a devil's instrument for being short the Swedish stock market with a leverage of 1500%). My plan is to get rid of all of them in the coming 12 months unless the market or any of the companies significantly changes character.

I think all positions are set up for 100% gains each in 2018. But, hey, who would listen to the guy who just admitted he lost a fortune on one single position going against the best bull market of a century?

Draghi said "Whatever it takes" back in 2012. Did I listen? Yes. Did I understand or believe him. Apparently not.

Look out for another year end report on the more important aspects of life in a few days.

Meanwhile, here is my pre-year end review for 2016, and the actual YER2016 and here is the one for 2105, and a bonus one that I wrote in May 2016. I'll use those as templates for my coming real Year End Review for 2017.

Taggar (blogg): 
27 december 2017

Creating a confluence of success factors - new people equal new insights

If you don't see new people you won't see new things

-Anna Svahn, networking phenomenon, in my (Swedish) podcast "25 minuter" (link)

If you always see the same people, you'll keep doing the same things, think the same thoughts, commit the same mistakes, miss important investment opportunities, and end up stagnant and disillusioned.

- Change your people, change your life.

I've written extensively before about the importance of perspective for both effectiveness and long term satisfaction, a.k.a. happiness (check out Perspective is gold, Long term satisfaction and Mentally challenged). Anna elaborates on a similar theme.

In my interview* with her, Anna explains how rewarding it can be to step out of your echo chamber, to be proven wrong and learn new things. Not least, she hits the nail on the head when recommending changing the five people you spend most of your time and energy on, lest your own situation and perspective will never change.

* it's 34 minutes packed with insights about networking, efficiency, life rhythm, Tao, writing and much more. If you understand Swedish I strongly recommend you to listen to it on whatever podcast app you're using, e.g., Soundcloud or iTunes #113.

The right people or the right place?

Successful people seem to repeatedly be right where they need to be at the right time. One explanation is that they know and regularly meet with the right people. Or is it the other way around; do they meet the right people because they are at the right place?

"Create the situation you want", is Anna's answer to that. Among other measures she has taken, in order to broaden her perspective and gain new insights, she started having breakfast with inspirational people every Friday; first one-on-one and later in somewhat larger settings. The breakfasts are invitation-only, the guests are a secret and all kinds of documentation and social media is banned. The rules ensure a free flowing conversation about anything from boosting start-ups to discussing investments, crypto currencies, or the weather for that matter.

These breakfasts are as simple as they are ingenious. Start by asking a friend from Facebook or Linked in, or a colleague from a different department. Use the first breakfast to brainstorm who else you could ask. Expand from there. Before you know it you'll have created a vibrant micro community of idea creation that can lead to if nothing else a healthy dose of brain activation and fun, but more likely also to great ideas about personal growth, investing and adventure.

Don't trust chance - create your own

My own life and career consists of a long chain of serendipitous events and a confluence of somewhat unlikely factors. I was always more likely to end up like the meth cooking chemistry professor in Breaking Bad than heading the European hedge fund of the decade and later an appreciated blog and podcast, but luck and grit happened to take me on a different path. Anna Svahn, on the contrary, is exactly where she wants to be and she just turned 25 years old this summer (2017).

Svahn has deliberately created her own confluence of synergistic factors of people, environments, habits (though she calls it rhythms) and activities, whereas I blindly stumbled from one lucky break to the other owing most of my successes to pure grit and a slightly asocial personality (not being invited to the cool kids, not giving a damn, hiding in science and symbol manipulation).

Next, I'll write an article on how my being a bullied loner and a nerd from out of town tied in with computers, programming, mathematics and being tired of school to put me in the perfect time and place for using the dotcom bubble to catapult my career. I was lucky to have the right skill set and lucky to have the right calibration regarding stock market valuations for my two decades as a finance professional.

I'll also describe my development from a die hard "Discounted Cash Flows Are The Only Theoretically Correct Way To Value Companies" advocate, through "Technical Analysis Dabbler", via "Earnings Reports Are All Important" evangelist and "Relative Growth Rates Rule" missionary and a few other of the ways any investor is bound to get lost. My view these days on DCF, TA, trend analysis etc. is too complicated to explain in anything less than a short book, but that's coming sooner or later.

A blueprint for success - creating your own confluence of serendipitous factors

IT legend Roger McNamee (listen to the interview in Superinvestors #18) has provided a blueprint for how to create your own confluence of people, activities, environment and grit in any new and exciting sector. He toured for a year, if not more, with the people who were creating the new IT industry. That's how he saw more clearly than anyone else what companies and what people would succeed, go under, get acquired, get funding, should get funding and so on.

His blueprint is exactly how I have tried saying you should cover developments in blockchain technology, quantum computing, robotics, electric engines, battery technology, AI and so on. That is, if you care about achieving a leading position in an exciting and future oriented field.

Applying the blueprint in practice

Start by reading the basics, then sell that knowledge to public and private organizations as a consultant. Keep learning more about the tech itself, as well as what your prospective clients want or need - both from your meetings with them and through external sources. Not least, keep talking to all and any industry representative you can get hold of. Call them, interview them, go to conferences, travel with them. NB: remember to provide value at all times; ask them what you can do for them. "What do you need? What do you lack? How can I help you?". Keep notes in your commonplace of people, companies, sub industries, sector convergence and divergence etc.

In one year you'll know more than any industry analyst or CEO about the key players, key technologies, key developments, most lucrative investment or employment opportunities. Contrast that with studying books and articles on the internet alone for a year, trying to understand the ever changing flows of a new industry without talking to the people shaping the development.

So, take a leaf from Anna Svahn's and Roger McNamee's books, and test drive all electrical cars you can, talk to e-car owners, talk to local politicians (about regulation), call e-car sub-suppliers and battery start-ups to gauge demand and technological developments, ask for or make your own calculations regarding Tesla's cars (do the numbers add up regarding weight, power, range, charging times, manufacturing cost and so on).

Or, why don't you buy a few toy robots, learn some Python and re-program them, talk to toy store purchase managers, visit robot manufacturers, try your alterations on your or your friends' and their children. What works and what doesn't? What are the manufacturers, innovators and stores missing?

Conclusion - listen to Anna Svahn and Roger McNamee and change your settings to change your life

  • Listen to my interview (#113) with Anna here
  • List the people you spend your time and energy on
  • List who or what kind of people you'd like to see more of
  • Change your daily habits in order to interact more with inspirational people and less with homeostasis dwellers
    • stop eating lunch with the same colleagues at the same place
    • change gym (or talk to new people about new things at your old gym)
    • watch less TV or aimlessly surf the net, and schedule IRL (preferably non alcoholic) activities with inspirational and ambitious contacts you'd like to know better
Taggar (blogg): 
11 december 2017

How two Nobel Prizes about the circadian rhythm made me change my daily habits

Topic: Weekly and daily routines for optimal health and productivity in order to maximize your amount of life time fun

Nobel relevance: A series of Nobel Prizes has shed light on the adverse effects on metabolism (diabetes), heart disease, and cancer, that living out of synch with your circadian rhythm can have.

Summary: I have the luxury to schedule my days exactly how I like. Homeostatic and hedonistic tendencies could thus easily derail my long term capacity for joy and meaning (actually the same thing, as I explained here). It's a good thing then that I let myself be inspired by science when I organize my days and weeks to get the most out of my time without limiting myself unnecessarily.

Conclusion: This is my way, but how do you organize your time in order to leave room for spontaneity while minimizing procrastination and time waste?

Book tip: Healthy routines are great, but breaking habits is a special kind of good. Explore that concept in Ludvig Sunström's book Breaking Out Of Homeostasis (foreword by me here, and our podcast episode in Swedish about BOOH here).

On my way back home after a workout session (slightly hungover) -- it's dark but I have already had my two sessions of light therapy for the day

A steady daily drum beat of habits

...ensures a great quality of life, as well as top health and productivity

My weekly routine consists of lifting weights 4 days a week between 2-4 p.m., rounded off by a short sprint on the tread mill. The other three days I walk (5-10km/day with my dog -- every day of course) and run (a couple of 5km runs a week).

Weekly schedule  
Monday work, workout
Tuesday Think tank, long reading
Wednesday work, workout
Thursday work, workout
Friday Buffer
Saturday Free, experiences
Sunday work, workout


My daily routine is built around being in bed for 8 hours, between around 11 p.m. and 7 a.m., then walking an hour outside with my dog, then coffee around 9* while doing intellectual work (reading and writing) for about 4 hours, before having my first meal of the day and walking the dog again. Those 4 hours of "work" are scheduled on my Biological Prime Time for brain work.

My 4-hour work day is more than enough to move my ten-twenty main projects forward.

* long story by me on coffee and adenosine here, and one on how to time your coffee intake and why here

Daily schedule  
23-07:00 Bed
07:30-08:30 Dog walk = sun therapy
08:30-12:30 4 hours of writing, creative work, no meetings; my Bio Prime Time
12:30-13 Food, pre workout
13-13:45 Dog walk = sun therapy, still light in Sweden even in winter time
14-16:30 Lifting weights 4 days a week (running or whatever the other days)
17-18 Shower, food
18:00-19:30 1-2 hours of writing, creative work, scheduling
19:30-20:30 Dog walk
20:30-23 Downshifting, relaxing, quiet conversations, books, videos, articles

My workouts are not scheduled for optimal recovery (since I would need to go to the gym early in the morning for that, and I just can't fit that comfortably into my sleep, dog walks and brain work schedule -- something had to give).

Instead, pumping iron takes place in the afternoon, when my body temperature peaks, and I'm the most ready for peak physical performance (e.g., benchpressing 315 lbs, as I did in October 2017)

My early evenings are spent cooking and eating dinner with my girlfriend, then doing one extra hour of computer time around 6-8 p.m. I use that time for  finishing up, tying loose ends together and preparing for the next session and then I take the dog out one final time.

The last few hours (9-11 p.m.) before going to bed, we typically just relax and downshift together, sometimes just talking, sometimes watching a movie, TV-series or YouTube videos (book reviews, cosmology shows, philosophy lectures and so on -- emphatically not cute cat videos and similar wastes of time -- you can find examples of what I like here under YouTube Channels)

Take-aways from my daily schedule:

  • I sleep around 8 hours every night -- this is the ultimate foundation for everything human
  • I don't have coffee first thing in the morning; I wait at least an hour, usually two, between waking up and having my first cup. I've written an article before about why (less addiction, better effect) -- also in line with taking care of my sleep first and foremost.
  • I fast (almost) every day between around 9 p.m. the day before and 1 p.m., i.e. 16 hours. (yes, I'm back to that schedule, thanks to re-shuffling my daily schedule, not least my workouts). TIP: consult Martin Berkhan at Leangains about the benefits of fasting (also supported by the latest Nobel Prize winner -- Swedes should listen to these 19 minutes by Vetandets Värld about the cirkadian rhythm)
  • I am outside for 2x1 hours around 8 a.m. and 1.p.m. - not counting when going for runs or spending my "free" days outside - which gives me a healthy exposure to sunlight every day (good for Vitamin-D, for synching the cirkadian rhythm, for general well-being and more)
  • I do something physically exertive every day

Take-aways from my weekly schedule

Two of my non-lifting days are scheduled for respectively "LONG READING" (Tuesdays) and "EXPLORING" (Saturdays). The third one, Friday, is marked as a "BUFFER" day for catching up, for partying, for doing more or less whatever I feel like (as if I didn't do that on all the other days).

On my three non-workout days I want exposure to new people, new ideas and new experiences. On my workout days I want to exhaust my body as well as move all my ongoing projects forward.

Final words

I'm not saying you should copy my schedule.

I'm not even saying you should make a schedule at all.

What I am saying, however, is that you could benefit from at least checking what your current de facto schedule actually looks like -- and if you're getting the things done you aim to get done in the allotted slots - if not, perhaps you should do some reshuffling.

When doing, do. When not doing, do not.

P.S. Order Ludvig's book Breaking Out Of Homeostasis on Amazon before Christmas 2017 and get it for 9.99 USD

P.P.S. Don't forget to write a review, no matter how short. Why? Why not? Share!

Relevant Nobel Prizes:

Nobel Prize 2017: Circadian rhythm

Nobel Prize 2016: Autophagy

Nobel Prize 2015: DNA repai

Taggar (blogg): 
6 december 2017

Audio books and meditating

Topic: meditation without meditation

Conclusion: using audiobooks for altering your state of consciousness is meditative

Length: very short; 1-2 minutes

Market relevance: Very high, use this method to consider important variables and correlations, problems, errors and remedies to improve your investment method

TIPS: Testa 30 dagars gratis ljudböcker hos Nextory med koden "25minuter"

Meditation means mindful thinking

Meditation isn't about incense, weird positions, mantras, non-thinking or any such nonsense.

Meditation is about just being. Being you, not a reflection of others and a mindless reaction to stimulus.

Forget gurus, forget transcendence, forget most of what you have heard about meditation, except one thing:

Meditation is a valuable tool.

Meditation is way too valuable and important to be left to professionals

Personally, I like mindful breathing, sometimes just one deep breath, sometimes five, sometimes as many as a hundred, sometimes very slow, sometimes forcefully and fast.

Meditative thinking

I also like meditative thinking -- sitting still with my eyes closed, concentrating on a specific word or question or topic for five minutes, doing mind maps in my mind, going over wider and wider connections between words, concepts, logical conclusions, potential actions and consequences. When I'm done I write it all, or just the conclusion, down in a physical mind map.

When I say "I'll think about it", that's what I do. Deep work on tap. I really think about it in a focused way, both structured and unstructured at the same time. During such a thinking session of 3-10 minutes I want complete silence and solitude. That's where value is created, that's where the neocortex really goes to work.

So, I like to sit and meditate, or "think" as I like to call it not to scare non-meditaters away. But you can meditate in so many other ways (I've written about some of those before, such as touching interesting surfaces, watching everyday objects from new perspectives, doing body scans before going to sleep etc.); why not during massage, or a walk in nature, or listening to an engaging audiobook?

Audiobook state of mind

Yes, that's right, audiobooks. If you can't come up with good seeds for your own thinking, books like Sapiens, Principles or The Beginning Of Infinity can be the perfect starting points for what to think about. Walk in an effortless pace, somewhere you won't get disturbed and lose your train of thought, preferably with sound cancelling headphones (I love my Bose in-ear) and let yourself become immersed in the ideas and narrative, pondering every statement as deep as you have capacity for.

Do not let anything get by you without understanding it, without coming up with your own conclusions and implications.

Do this for at least half an hour with no notifications, no phone calls, no irrelevant sounds. It's like a SPA weekend for your brain; you'll feel at peace, blissfull, and refreshed when you change your state of consciousness back to take in the physical world again.

Conclusion - think about it

Think about it.

I.e., meditate on it.

If you don't have 5 minutes and definitely is too weak for ten minutes, try just one minute of fully aware and directed and mindful, albeit unstructured, thinking. If your mind wanders and your thoughts stray, try another minute some other day until you are able to actually create thoughts and knowledge deliberately, instead of spending all your waking hours reacting to other peoples whims and wishes.

Think about this post and whether you agree, how you can adapt the methods, when you could schedule daily meditative moments and so on. Then follow through.

Remember where you read this: mikaelsyding.com/meditation

OCH KOM IHÅG: Du får 30 dagars gratis ljud- och e-böcker hos Nextory med koden "25minuter". No strings attached.

Taggar (blogg): 
6 december 2017

"Me too" isn't ALL bad

Summary: Both sides have made mistakes, but worst of all is that actual rape victims are compared with female colleagues overhearing a bad joke that was thought to be told in private

Length: very short, 1-2 minutes

They too

A few short thoughts on the me-too campaign that has its epicenter in Sweden this fall (October-November 2017):

Let me start by saying that the campaign isn't all bad.

If anything, that's what I want you to take with you from this article. No matter what you thought before, at least consider the possibility that there are some facets of the phenomenon worth considering.

Second, try to recognize that there are bad seeds in both camps. Yes, some men have it wrong. As do some women. Not all men are despicable swine, and not all women are lying b***... *ehum* persons.

Again, some are truly evil, others are unfathomably narrow minded. But most are just trying to lead lives where they and their loved ones, men and female, can feel good about themselves. They are not actively trying to ruin other people's lives, they might even actively be trying not too, but are ignorant or misunderstood -- often because we are so quick to want to misunderstand and build straw men just to get to set them on fire.

Some make occasional mistakes despite trying their best. Some are just lazy and/or stuck in their ways. Many are frustrated that the other side just doesn't seem to understand their perspective.

I've definitely made mistakes, some more publicly than others (I'm sorry, Emma), some despite thinking things through, sometimes actually thinking that I was a bit clever. I am what many would call a librarian, travelling the world, hunting for lost treasures, messing with magical artifacts of immense value. Wait, no, that doesn't feel right... No, I'm a libertarian -- i.e., above all I treasure individual rights and freedom. As a libertarian I hold all people as equals: men, women, elderly, children, no matter when or where or how you were conceived.

However, despite being acutely aware of all living persons' equal worth, misdirected humor, ignorance and crowd psychology (locker talk) makes me as guilty as the next person when it comes to "soft" me-too transgressions. In other words, I 've said things that have hurt women. Well I've hurt a lot of other people too, but right now it's about women.

The good thing with the me-too hysteria is that every man, from the comedian, via cat callers to misogynists and rapists get to think through their actions an extra round. Maybe just one employer will be pushed slightly toward gender neutral hiring procedures, maybe one music producer will reconsider the old ways of casting female lead roles, maybe many women dare step up and take what's theirs if they are more confident men will be a little more conscious about how they react to that.

We don't have to dwell on everything that's bad with the me-too movement since that could fill books... Men are being sentenced without evidence. Disproportionate power is given to liars who just regretted their decisions when waking up. There will be less flirting, less social fluidity. Women that want to fit in with the herd try extra hard to find or fabricate me-too situations.

Most important though, is that the me-too movement tends to label every man a rapist, even if he just happened to recite a bad joke that was overheard by a female employee. With every man a "rapist" some may be pushed over the actual line, most however will cower in asexuality and a robot-like attitude toward women.

Worst of all is that actual rape victims will be banalized and marginalized, simply put on par with plastically enhanced women who got cat called or ogled.

OK, these are my three take-aways regarding the me-too movement:

  1. There are good things, with the me-too campaign, albeit few and far between,
  2. Both sides have bad seeds and have done dirty deeds. Not all men are guilty and not all women are innocent
  3. Think about the actual rape-victims; they need healing, not being compared to the butt end of private jokes
Taggar (blogg): 
16 november 2017

Forget the sunscreen song and focus on sleeping

Topic: the importance of sleep, not a bug but a feature

Length: short (3 minutes?)

Style: a friendly neighborhood spider reminder

Conclusion: Sleep forms the basis of the sleep-nutrition-physical health pyramid of power that's a prerequisite for long term satisfaction and meaning of life, a.k.a. the Curiosity-Pattern recognition-Creativity-Perspective-Prediction-Procreation word cloud of True Purpose.

Bonus: my old article on how to cure Restless Legs Syndrome, a.k.a. Willis-Ekbom's Disease (link to article)

What's more important?








It's sleep

I recently wrote (link) about the meaning of life being perspective -- a good enough perspective to learn, to appreciate, to experience and gain even more perspective, in order to predict, plan and procreate for an ever more comprehensive perspective, and so on.

I followed up (link) with a practical tip on how to gain that perspective through alternating exertion and recuperation.

Today, I'm taking the final step down Maslow's hierarchy of needs -- all the way down to sleeping.

If I could offer you only one tip for the future,

sunscreen sleep would be it

Do you sleep too little?

-The answer is probably yes, and you already know why:

  • You look at screens all day, from within minutes of waking up to within minutes of going to bed.
  • You sit all day. Indoors.
  • You eat processed food.
  • You drink more coffee and alcohol than you should, not to mention too late in the day (or night)

How would you know if you sleep too little?

That's pretty easy:

  • Do you need an alarm to wake up?
  • Do you need coffee to wake up?

If so, you sleep too little.

What are some of the immediate dangers?

(see my previous articles below for more details)

Well, the worst side-effect of sleep deprivation is that it tends to lead you into behavior that will make you sleep even less. For example, it might make you drink more coffee and alcohol not to mention trying other kinds of medication. Most people also work out less and eat more junk when sleep-deprived, which both adversely affects the length and quality of sleep.

You'll do just fine without, e.g., food for several weeks, but you'll most likely go crazy or even die from sleep deprivation long before starving to death. That's however not what I'm getting at. It's more subtle and goes straight from the bottom of Maslow's hierarchy to the very top.

If you sleep enough, you'll be more energetic, more creative, more ready and able to learn new things, better prepared to appreciate and assimilate new perspectives and so on. Enough sleep is the basis for every part of the Meaning Of Life word cloud:

Sure, the odd all-nighter here and there can actually add to your perspective, but going weeks on end with less than 6 hours a night isn't good for anybody. And what's it for anyway if you can't appreciate the fruits of your labor due to being exhausted?

Aim for 8 hours of sleep per 24-hour cycle and make small changes in either direction until you find your optimum. Once you have no trouble falling asleep within 10 minutes of going to bed, and wake up well rested without an alarm you're right on the money. Remember to hold off on the coffee for 1-2 hours after rising in the morning. Keep that schedule on weekends and vacations too if you can, and you'll notice how your capacity for appreciation and innovation expands noticeably.

Conclusion: sleeping isn't just for staying alive, it's for living life

Sometimes it might seem as if we're supposed to just barely take care of our physiological needs with 6 hours of sleep, polluted air, bleach-tasting tap water, junk food in the back of a car between job meetings, and so on, and still hope to reach peaks of self-actualization and transcendence. Good luck with that! What happens is everybody races to get "rich" while feeling like crap and just hoping it'll be over soon.

NB: as little as one night of poor sleep lowers your immune defense system significantly. In addition sleep deficiency causes a stress response and inflammation that is thought to have a pathway to depression.

The key is to pay very good attention to the basics. Bliss is a side effect.

Sleep well and almost everything else lines up automatically, including better food and more energy for staying healthy. The triangle of power SLEEP-FOOD-BODY then acts as a force multiplier for your ability to LEARN, to be CREATIVE, to ADAPT, to stay CURIOUS, all of which are necessary, and probably enough as well, to become both HAPPY and SUCCESSFUL.

Again, sleep is not a bug, it's a feature. It's not something to take lightly and be done with as quickly as possibly. Instead, plan for sleep, enjoy it, take care of it as if it were a puppy or your baby.

Remember where you read this article (www.mikaelsyding.com), and tag a friend who sleeps too little.

Two of my previous articles on sleep



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