SpreZZaturian
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Före detta hedgefondförvaltare, partner och VD på Futuris som utsågs till Årtiondets hedgefond i Europa för perioden 2000-2009
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Change or die - learn to appreciate the cheaper things in life

Aiming for a career in finance? Read this first

This (be warned: quite self-centric) post contrasts the life as an analyst or portfolio manager against that of an early retiree. It deals with the alleged dangers of retiring, and postulates a solution (always be investing).

For the budding investment professional, or potential quitter, my two "days in the life of" should be of some worth.

In addition, during your 30 minutes here, you'll get my two cents on happiness and purpose (experiencing, understanding, creating and sharing), as well as scientifically based advice on how to make tough decisions such as quitting your high status job, or ditching Med School for a trip to Thailand with your boyfriend since just around a year (my little sister just announced that little gem yesterday).

learn to appreciate the cheaper things in life
priceless

Warning: if you are still 'raw' since 9/11, be prepared for insensitive opinions from my former self.

 

Life topology, please

I quit my position as a hedge fund manager some 18 months ago. That's a pretty big step for a 41-year old - still in the first half of a normal working span for a Western world citizen. My environment was flabbergasted, but for me it was the only sane thing to do; end homeostasis and establish a huge 'milestone' to pivot the experience and memories of living around.

I often talk about the disproportionately benign effects on humans of convexity. With that, I mean making sure life is a roller coaster that includes many and frequent 'moderate extremes'.

Living life laterally (focusing on new things periodically) ensures accumulating a unique set of experiences and skills, which strengthens the monopoly of you and enhances your value as a partner or employee. Apart from the external worth, it simply makes you better and happier as well.

Exposing the body to moderate extremes, such as cold, heat (sauna), hunger, dehydration, strength training overreaching, varied foods, capsaicin (chili), broccoli (actually slightly poisonous) etc. makes it stronger. And feels kind of good in a Samantha Fox-y way "I couldn't decide between pleasure and pain".

Challenging the brain with unusual tasks increases brain plasticity; the very ability to learn: meet new people (much younger and much older), read books and watch documentaries recommended to you, even if you never would have otherwise.

Move on, if too boring though. The last few weeks I've read Half Of A Yellow Sun and New Delhi Borås, watched the movie "The Man From Earth", and the documentary "Of Hearts And Minds" based on spontaneous recommendations. They were all completely off topic for me, but one was excellent and the other not bad. All were useful.

All of the above is often fun too, in the now, and makes life seem longer and fuller in the retrospect, due to more milestones (Brain Science research).

 

Change is good

In short, variation is healthy and fun. Actually, not changing is downright dangerous; homeostasis means slowly decaying and dying. Both the brain and body will "rot" if left in the comfy zone for too long, and before you know it Alzheimer's or muscle atrophy will get you.

An additional piece of evidence comes from the podcast Freakonomics, that shows that if you have a hard decision to make, always take the active route, for increased happiness. That goes for everything from quitting your job to ending your marriage or selling the car - or cleaning out your not so recently deceased grandmother's old apartment and sub-letting it.

I didn't know all this explicitly when I quit, I did feel, however, that I was slowly shrinking as a person, that I was losing my versatility of mind. But, perhaps most important of all, wealth, contacts, power and experience had finally taught me to appreciate the cheaper things in life*. In addition, I had had time for introspection and realizing status just wasn't interesting. I wanted to live for me, not others.

*growing up in the lower middle class, I just had to show off my new money with sports cars and watches. It took me some ten years to get over that phase and value curiosity, intelligence and experiences much more highly than conspicuous consumption, envy and empty admiration.

 

This is what changed

A day in the life of me (now)

Last Friday (August 14, 2015), I got up at 8 a.m., after 8 solid hours of sleep. That's typical.

I work out every second day and on those days I have exactly one cup of coffee after walking the dog for an hour, but before gym - and no more caffeine for that day. This was such a day. Consequently I had a cup of coffee and went to the gym.

After my pretty long workout (they have stretched out to 2 hours of weight lifting rather than 1, since I retired), I had one quart of milk (1 liter) in the dressing room. I want to provide muscle fuel as soon as possible, not least since after my gym sessions, I've typically gone 16 hours without any nutrition. I do 16:8 fasting every day (since January 2013).

Back home, I had a quick shower and a protein shake (olive oil, milk, raspberries, blueberries, 1 banana, 50g protein powder), and then took a brisk 20 minute walk to lunch (fish buffet) with my first boss, and Ludvig at SGM before sitting down for a lecture on Omega 3 and other fatty acids. I (re-) learned a lot - and this time I wrote it all down (!)

Right after the lecture stopped at 2:40 p.m. I had to walk just as briskly back to my apartment, fetch the dog for her second outdoors this day, and then walk even faster for 30 minutes to another meeting.

During my few minutes at home, I did make time to buy some Brent oil (at what happened to be the low of the day, and the lowest price in many years - but I'm sure it won't be the low of the cycle, though).

My old friend from secondary school and I met in a park to discuss his world changing business idea, before I walked back home with Ronja (my dog) again. By then it was about a quarter past 6 in the evening, and I hardly had enough energy to make dinner after all the walking, discussing, thinking, taking notes, working out etc. Hence, I just heated something from the sub zero and served with pan fried french fries and a hot Asian sauce.

The rest of the day, between 7 pm and midnight approximately, I just relaxed with an old sci-fi movie that a blogger friend recommended, walked Ronja a third and final time, and then finished the day with the season finale of True Detective season 2.

I certainly do know how to kick back and relax; it's what I do best - paleolithic campfire time. Actually, my original plan for retirement was to just read books, take walks and in general do nothing. I literally wanted to be a DNB (as per R Rousey).

I knew retirement research shows you shouldn't be passive when retiring, nor watch a lot of TV, but I am used to proving people wrong and looked forward to doing so again.

However, somehow, a dog, a blog, several book plans, new contacts, new energy, science podcasts and curiosity came between me and the hammock. It probably was inevitable all along. Some people have a certain energy that won't die; it's just that most of those stay in institutionalized work if successful there.

Not I; I had done my years, and then some, in whore village, and now it was time for the artist presently known as SpreZZaturian to emerge. And that's an artist that just can't help always investing...

By the way, I have always applauded artists switching genre, whereas most people I know enjoy seeing movie stars fail as rock artists or the other way around. Who else has the opportunity to really go for it? Who cares if it sells, that's second hander thinking (Ayn Rand).

 

A day in the life of me (before)

Scene: September 2001. My hedge fund (Futuris) had had a pretty good year so far, doing guerrilla warfare against tech stocks - in after dead cat bounces and out after wash-outs, sometimes around earnings, sometimes between, depending on market sentiment and indications from tech industry peers. We didn't know it then, but we were laying the foundation for a Morningstar Gold award (as well as the HFR Decade award much further ahead).

I got up, sleep-deprived, at 6:52, but dressed within a minute (I've always had a psychological problem with rising before 7; it's just not for humans, not this one at least). Despite better hours since quitting sell-side, there still was a sense of face time, and of having to be on top of all new information before the start of the market.

I occasionally tried getting up as late as at 7, or even later, but then my mornings became too hectic, and I always succumbed and gradually moved my alarm clock back to the time that was optimal for me; 6:52 am. By setting the alarm at the optimal time, I know when the alarm rings that I have to get up right away and thus never, ever snooze, not even for a minute.

I arrived at work at 7:30 a.m. (a year earlier I still was on a 7am-7pm office hours regime [and then more work from home], which was much more humane than during my first years on the sell-side, but still didn't leave much room for living). After finishing reading Financial Times and other news, I was off to a tech conference held by a nearby bank.

I also typically used mornings for quickly browsing up on names, events, suppliers/brokers, abbreviations etc. that just wouldn't stick in my asocial mind. I knew that if I didn't, I would look like a fool several times a day.

I've always had a mild firm of face blindness as well as difficulty remembering details I think are less important, like who works where and with what. That can unfortunately make me seem arrogant, or just plain stupid. During my last three years in the business I stopped pretending, and predictably got the obvious "Alzheimer's?" comments.

During the tech meetings that day, September 11, 2001, I as usual tried to ask 'smart' questions to pry some forward looking information out of management. In reality it was often the same questions as before, and several times over:

  • Why?
  • But why?
  • Okay, but why?
  • Does it really work that way?
  • How?
  • But in detail?
  • Why?
  • You want fries with those lies?

The above questions work better with some added knowledge:

"You said in the last quarterly report that you aimed for X but got Y; How come (why)?"

Then be ready for the answer with a prepared follow up question that sets a trap, that reveals either A or B:

Okay, I see, but then why did Z happen, doesn't that mean that either A or B, which proves that Y was in the books to start with, rather than X?! Or does this one go to 'eleven'? (Hah, got  you!)

The year 2001 was a time when tech valuations were coming down wholesale, in particular around earnings seasons, since the companies had no way to live up to the ridiculous expectations set a couple of years earlier. I didn't know definitely that 2001-2002 would turn out to be 'the big one', the IT crash, but my spidey sense was definitely tingling.

Please note that this was after 18 years of bull market, and before the crashes of 2001-2002 and 2007-2008, so there really were no recent precedents - and we nevertheless worked with the idea that a big crash was in the works.

 

Trust no one

It wasn't until this time (very late to the game compared to my peers), around 2001 that I eventually understood that you can't and shouldn't trust company management.

They are nothing but hired marketers, and they are not there to guide you to the truth.

Founders are even worse. They believe their own hype, and are blind to the negatives.

Michael Hasselquist (former chairman of Nyckeln and CEO of Beijer Capital, among dozens (!) other assignments), who was senior partner at Futuris 2001-2002, used to pose two key questions:

"Which E; whose E? Which S?", regarding Price to Earnings and Price to Sales ratios as a basis for stock valuations (implying the E or S could change, was forecast by somebody with too little information or with an agenda),

and

"Would we, you and I, buy the entire company if we had enough billions privately?" (thus making sure the valuation level was sound and sustainable and the risk level appropriate).

These days (August 2015), those questions sound obsolete and irrelevant, and I've been made fun of for trying to spread some truths about normalization of growth, margins, valuation and debt, but I suspect the time will come again for Michael's piercing questions. Soon.

 

Coffee machine

During meetings like those on that day, September 11, 2001, I typically had a small cup of coffee or two, and stuffed my mouth full of candy, during every presentation and Q&A session. I tried to limit myself somewhat, but during 5-10 meetings over a whole day, I could easily eat half a pound of candy and drink 6-8 (small) cups of coffee.

That's quite a contrast to 15 years later, when I stop at one cup every second day (to keep my caffeine sensitivity high, and to ensure good sleeping habits).

 

Trading with the enemy

I went back and forth between my office and the conference venue, and during one of my breaks at the office, suddenly CNBC started showing smoke billowing from one of the World Trade Center towers in lower Manhattan.

I tried to make sense of the size of the hole and soon realized that it was really, really big - something you only know if you've actually been close to the absolutely huge and wide towers in real life. Fifteen minutes later I happened to see the second plane smash into the other tower in real time.

I then had to leave more or less immediately for more meetings, as if nothing had happened. I did not realize what a pivotal event I was witnessing.

Back at the conference during a Q&A session which was suspiciously empty, I happened to casually tell the CEO (he and I were alone together and he wondered why there were so few attendants) of that particular company that two jumbo jets had crashed into the WTC towers. His face turned pale immediately. He understood the world had changed. So did a friend of mine, who that very day was about to launch his new long haul private airline service...

When I got back to the office, I made a few joking remarks, thinking that the gains we made on our short positions should have people in a festive mood - even if it meant financially being on the same side as Al Quaeda and Bin Laden (though they were not yet associated with the event at the time).

Nope. Not so much. At all. No giggles for me.

"One tower has fallen and is completely gone, and the other might fall too. This is way past any kind of jokes" is what I got back and a dead serious look.

I hated it. We made gains. The towers were already gone, that was in the past, not our fault, and not anything that could be changed. We didn't know anybody in the towers (although I couldn't know that for sure).

My not so empathetic brain could only see that we made a lot of money and should be happy for that. Everything else was out of our control anyway. Besides, I thought you were always allowed to joke about everything, unless somebody directly affected was within earshot.

I hated being taken down from exhilaration; pride even (for being short at the right time). I felt constrained, controlled, not living up to my full potential. I didn't feel like that very often in 2000-2005, but after 2010 I did. It felt like being reprimanded and controlled by "the adults" for no logical reason other than political correctness. I did feel that way on September 11, 2001.

As an aside, other things I started hating during my final years were  snappy market sound bytes: when in doubt stay out, long and wrong, trend is your friend, don't fight the Fed, Trade when you can, not when you have to, etc.

They sound good and they are based on a kernel of truth, but not as much as implied or assumed. I am guilty too though; increasingly so with time. I mean, they do sound good, you sound professional and cool.

It's the curse of vicariousness again; living for others, through them or for them, instead of doing what's real and what works.

After the WTC towers fell, the US markets were closed for a week, then opened -7% on the first day, and lost another 7-8% during the rest of the first week.

We covered our shorts a bit too early - and not really based on economics or fundamentals but on political correctness ("we can't be seen profiting too much from this carnage"). I couldn't believe that last reason; I hated the notion, but I kind of agreed with the actual decision to buy anyway. Also, I really didn't have much real say in the matter back in 2001. It was the two senior PMs that called the shots back then, while I was just an in-house analyst.

 

It got old, or was it just me?

That day was so much like many other days at the hedge fund - jam packed with both mundane tasks, such as routine company meetings and information gathering and management, and acute fire fighting. And it was all wrapped up in the not so cozy feeling of "what if that was the wrong decision", "what if we will look like fools..., or bandits", not to mention the occasional wet blanket of "I don't agree".

All in all, I of course loved working at Futuris 2000-2015 (my last day was on January 1, 2015), and most of my days, weeks, months and years there were LateralityTopologyConvexity and (not so) Moderate Extremes in a nutshell. Those years more or less made who I am today, through all the ups, downs, hard work, celebrations and frustration.

However, toward the end, the ondulations seemed smaller and confined, the fluctuations one-dimensional and my financial motivation for staying gone.

So, I quit; I just up and left a day in January 2014. Or, so I thought I did, but was convinced to stay as the managing director for a year, to smooth things over during the transition. Surprisingly, the fund was wound up just 9 months later for other reasons. During my 9 more or less idle months at the firm, I had time to rediscover the (my) true joys of life.

 

Keep investing

My reason for quitting was a drive for more change, for investing in myself, for growth, not the opposite. I think that's why I haven't experienced the kind of emptiness and lack of purpose many retirees and retirement researchers talk and warn about.

 

Value of life: Experiencing, understanding, creating and sharing

Hanging out with power and money was interesting for a while, not least considering my background (read the book), but soon enough I understood that the basis for happiness lay elsewhere. Finding out exactly what is a work in progress, a task that I guess, and hope, will take the rest of my life.

Right now, however, a few of the ingredients that I think are key are

  • experiencing (very broadly; and paying close, mindful, attention to the experiences); using the body and the brain to their fullest
  • creating something meaningful, something to be proud of, either the effort or the end result - this typically means not working for somebody else

My life mission can be expressed as "Experiencing, understanding, creating and sharing; for getting and lending perspective"

 

"I'm sigma"

N.B. that if you were hoping for fast cars, fast women, impressive yachts, money and "Versace, Versace, Versace!", you'll be disappointed.

But, but, but,... what about approval, and women? Well, if they aren't intelligent and curious enough to appreciate the cheaper things in life, I'm not interested in playing their game. I'm not alpha or beta, I'm sigma. 

 

The little things

Last week I got the 'innocent' question of when I am happy.

The word "happiness" doesn't quite describe the ultimate state of mind, but let's use it as shorthand for the the state I or you want to reach.

On the one hand there is the overarching oceanic big happiness that carries me over the years and decades. It's built on freedom, knowing and accepting myself etc. On the other hand there are moments of more intense everyday happiness. For me the latter take many shapes:

  • Smells: tar, sea, gas/petrol, cinnamon buns, wet dog fur, newly washed hair
  • Insights: aha moments, connecting the dots, reading and understanding new concepts, learning something new
  • Coming home to my dog, Ronja (German Shepherd - Doberman)
  • Connecting with new and old friends
  • Mind altering: fall asleep, wake up, drink, sober up, leave, arrive, coming home
  • Food and rest after working out
  • Projects; planning, progress, fulfillment, growth for me and the project
  • Positive surprises, being scared, laughing
  • Completing projects, constructions, articles
  • Touch

mind altering meeting new friends Life livet

The common denominator is progress, phase transition, change or growth (including completion and closure), including varying sensory experiences.

 

Summary: Make the change already!

Take the leap. Change. At least if you are in doubt of whether to stay or go, you should definitely goI say it, Freakonomics says it, brain research supports it, Ludvig at SGM is at war against homeostasis... What more do you need?

Be prepared for finding something else than you might expect, though.

Learn to appreciate the cheaper things in life ;) Anybody can buy expensive wine, but searching for a good cava or prosecco is much more rewarding. In addition, that's the kind of smart and interesting people I like hanging out with.

Investor wanna-be? Learn to ask the right questions, then ask them again and again. There are no points awarded for originality. And, do not trust company management. Always read between the lines and expect what can be hidden to be kept in the shadows. Never take words for facts, demand numbers, make the calculation and assessment yourself whether "growth is good" or not.

Trust no one. And, remember: "What E? Whose E?". But, perhaps most important of all, question whether you really want a job in finance, and why.

Identify your own true joys and pursue them. Learn, accept and embrace your personal traits (but be smart about it, you don't always have to be you - just know who you are and accept it but don't flaunt it unnecessarily - definitely not on job interviews, first dates, client meetings etc. I've done that enough for both of us)

 

Now, make that change you've been pondering, and stop hating: Stop hating people who change. Stop hating your situation, your environment or yourself for not changing. Just do it. Always Be Investing.

 
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