Blog Archive
My book is almost finished. Actually it is finished, and I’m just touching it up, pruning and clarifying certain ideas. Here’s a short excerpt, just one single sentence from the book, to get a taste:
Small, consistent steps, taken with awareness, celebration, feedback, analysis and course correcting, will always get you further than occasional and mindless spurts, not to mention being more enjoyable than a single marathon for some pie in the sky moonshot you might never complete, and might not even want if you ever get there.
That’s the excerpt. Here’s the interpretation:
Today I was interviewed on the topic of saving for retirement: when to start, how much to put away, when to start reducing risk, what to forego in terms of consumption, what to plan for etc. Saving and investing money is much like investing in your own life. It comes down to getting the small things right – and the earlier the better.
But small and early, the wu wei concept, isn’t enough. What you do small and early is utterly crucial. Hence you need to pay close attention to who you are, what you truly like, and what effect your chosen small steps actually have, as opposed to what you meant them to cause. That’s what I mean by taking your steps with awareness.
Celebrate your successes. Better yet, celebrate your learning experiences, good or bad. Then reinforce your habits or course correct. Every completed small step is reason to reflect about what you did, why you did it, what effect it had. It’s an opportunity to celebrate the fact that you did something, that you had an experience, that you learned something, and that you’re still around to improve on your decision making process. Analyze what happened, and feed your conclusions back into your habits, targets and life direction.
Do it continuously. Acknowledge that the process is a success in and of itself. Sticking to a good habit is more of a success than actually reaching a long term goal. Sure, keep tweaking and updating your desired direction, and possibly ultimate endgame, with the outcome of your taken small steps. But avoid staking years of toil and effort on long term goals and potentially empty hopes of grand celebrations at the finish line. You’re most likely somebody else when you get there. In addition, with the goal behind you, you have nothing, not even a process. In effect when you reach your long term goal you have nothing to celebrate. The risk is you establish another, equally arbitrary and long term goal just to fill the void.
Striving for a million dollars or a 200 lbs bench press are such useless goals, with nothing but emptiness waiting for you. Using your body every day, or managing your savings a little better every day, are processes you can be happy about every day.
Life and finances work much the same way, and should be considered in context of each other. You can’t predict, but you can prepare. Establish good habits that resonance with your personality and every day will be reason to celebrate sticking to and improving on your habits and best practices. The inevitable setbacks will be nothing more than temporary and largely inconsequential stumbles.
You don’t need to finish the marathon under 3 hours, there’s no defeat in falling and missing the magic number. The joy lies in every step along the way. If marathon runners were only in it for winning or beating a certain time, there would be very few marathon runners around. No, it’s the small steps, the habits, the joy of the process that drive them. The same idea applies to your life and your finances.
Trying to spurt will only make you miserable. Aiming for the moon might or might not get you there; and maybe, just maybe you’ll get to celebrate once. And then what?
Becoming strong, fast, rich, accomplished or successful isn’t about reaching a final goal, it’s about the becoming in itself, i.e., enjoying and celebrating the process. If you save, invest, socialize and exercise in a way that’s sound, ever improving, and not least enjoyable – taking small steps in full awareness and with an effective feedback process – chances are you’ll appreciate your life so much more, than even if you did succeed in a one in a billion moonshot effort to become rich, famous or achieve some other form of externally validated status.
Robert Sapolsky says that your subjective status is at least as important as your objective status, and after a certain threshold level of living standards, what group you choose to compare yourself to is the main deciding factor of how good you feel about yourself. I choose to rank myself in the serenity and happiness group, and there I come out on top, which also means I actually come out on top in therms of how I feel. Win-win-win.
More excerpts are coming up. The question, however, is whether I should include these long winded clarifications in the book or not. What do you think?
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Global cooling on the way? Be prepared!
The climate is changing. We can agree on that.
The question is what is driving it, and what we can or should do about it. And possibly in which direction the wind is blowing.
In a recent short paper (by J. KAUPPINEN AND P. MALMI, June 29, 2019) the researchers demonstrate how natural changes in humidity explain, much better than, e.g., CO2 emissions, the variations in global temperatures over the last half century.
Variations in low cloud cover, and their corollary, changes in relative humidity, seem to be an order of magnitude more important for explaining both the general trend rise in global temperatures and even more so regarding the interimistic drops in temperature. The latter is of course wholly unexplained by the steadily rising levels of CO2.
The authors conclude that “During the last hundred years the temperature is increased about 0.1°C because of CO2. The human contribution was about 0.01°C,” i.e., “we have practically no anthropogenic climate change. The low clouds control mainly the global temperature”
The results have been corroborated by a team in Japan: “New evidence suggests that high-energy particles from space known as galactic cosmic rays affect the Earth’s climate by increasing cloud cover, causing an ‘umbrella effect’“
It’s not us
So, humans aren’t doing it. Therefore there’s really no use in trying to reverse the effects by unnecessarily restricting human activity. Quite the contrary, actually. If galactic rays are causing temperatures to rise through changes in relative humidity and cloud cover, we’ll need all the human ingenuity and creativity we can muster in order to find out how to live and thrive in a much warmer world, including potentially higher water levels and frequency of extreme weather.
You can’t predict, but you can prepare
This is no joke. In fact, space weather changes could even cause a cooling before a warming, with potentially just as adverse effects. No matter which way the galactic gods lean in this respect, it’s better we come prepared, even if we can’t predict the outcome.
Winners from warming
No matter, the green revolution is still good for many things, not least combatting pollution (whether slightly warming or not), and fanning (!) innovation. So don’t give up on your recycling efforts just yet. And solar power is still our best bet long term to make sure our energy needs are met in the future, so if you like your solar companies you can keep them. The warmth of the sun is our cleanest, safest and most abundant source of energy. But we need to keep inventing better ways to capture and store it.
The corporate winners in this scenario will be solar energy capture and energy storage companies, including the entire value chain of industrial suppliers of complementary factory parts, not to mention finance companies (huge investments in storage infrastructure will be required once solar energy dominates the power supply).
However, even more interesting will be the opportunities within construction and construction materials. Imagine all the levees to be built, water-proofing solutions needed for buildings and other equipment, not to mention all the new buildings required higher up on dry land, to replace the multitude of new Atlantises being created.
And then there is the insurance business (extreme weather, remember?).
What about losers? Well, there’s the oil industry of course. And retail: the money to pay for all the new infrastructure must come from somewhere; my guess is higher housing and insurance costs will diminish the room for non-essential shopping for the bottom 99 per cent.
Tougher times might mean higher aggregate demand (whoa, Keynes!), but the resulting higher GDP doesn’t mean ordinary people will benefit. All the extra efforts are just going toward strengthening or moving all the things we’ve already got, rather than producing new and life-enhancing stuff
Gold has broken up through a 6 year resistance level around 1350-60 and is currently trading at 1393 USD/oz, after a quick visit all the way up at 1440. That makes gold look extremely interesting right now.
I’ve been buying and advocating buying gold on and off since 2013, as insurance against “Whatever It Takes” craziness by central bankers. Three years ago, I even invested privately in a gold streaming and refinery company in Colombia, and subsequently also in it’s sold supplier Gran Colombia Gold that’s listed in Canada. Even if the price in USD hasn’t moved that much yet, it’s already been a very good investment for me in SEK. The currency insurance effect of holding gold is something Venezuelians are very familiar with.
Bitcoin too is on the move, having thawed this spring from the crypto winter of 2018. Right now, the Bitcoin price is slightly above 10k$, more than 150% higher than at the turn of the year, albeit more than 25% below the peak price a few days ago on June 26.
In both instances (gold and Bitcoin) I expect much, much higher prices (multiples higher, not measly percentages) in the coming five years (and likely much sooner than that, but you never know with politicians like Draghi, Powell, Trump and Xi at the helm)
As happy as I am about my investments/insurance positions, I am simultaneously afraid we are entering into a period of extreme financial stress, almost to the point that I hope we somehow will miraculously escape it altogether without having to deal with the issue in earnest.
Equities are extremely expensive compared to both cyclically adjusted profits and gold
It’s just that with equity valuations 3x their norm (MAPE at 45 rather than 15), and gold only at about 1/4 vs S&P 500 of where it was even quite recently, and twice the amount of “almost junk” rated corp debt in the US vs. before the last crisis, and countless trillions of derivatives, extreme debt levels and recent changes in debt levels for govs, corps and individuals in most places, and 25 Tn printed money since 2008, I just don’t see how to resolve it all without tremendous volatility and chaotic relative movements between asset classes as everybody tries to salvage what can be salvaged.
REAL assets are the way to go of course, but it’s not that easy to say what IS a real REAL asset. Gold at least will stay gold, but you can’t eat it, and it’s difficult to transport. Meanwhile, bitcoins can be transported across borders by just memorizing 12 words in the right order, but they’re “just” an accounting mechanism with no tangible value (apart from the distributed and secure accounting function, which definitely has intrinsic value).
Central banks are at the end of the rope
In any case, I think both are starting to say that central bankers are losing their grip and the confidence of the people/markets. Sure, stocks are REAL claims too. In theory they grow with the nominal economy, and should grow with printed money (which there will be much more of soon). However, when relative prices between REAL gold and REAL companies are already 3-5x out of whack, you shouldn’t hope for repeating the same kind of Indian rope trick again on top of the previous one without a calamitous re-set first.
If the economy rolls over now, the Fed will probably lower rates and increase the QE “slope” (money printing) more than most expect.
Such “surprise” cuts are what kicked off the bursting of the bubble in 2001. This time is likely to get much worse – although the absolute first reaction might be a blow off top for equities first, to lure in the last fools at an extreme all time high. Gold and Bitcoin should still protect you in that environment. More importantly, they’ll protect you after the top.
ARE YOU PREPARED FOR A RE-SET? ARE YOU REALLY?
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