2013-01-30

Trading money for memories

Here's the short version first.
I wasn't supposed to have any savings at the age of thirty. I was supposed to have spent a few years studying quantitative stuff, burnt out my savings, and then attempted to begin life as a normal member of the workforce after that. As it turns out, life never is exactly as planned, I didn't spent too much time actually on quantitative studies. Instead I got stuck in a few jobs, had spare cash, decided to invest it not in the business of making money, but in an education in what happens when you hypothetically try to make money, finished that project, and moved on with "stuff post thirty". At this point I've probably lost most readers, so I'll just get on with the long version.
On memory.
Everything that is done, is only worth doing for the resultant stories. Nothing else propagates as florally as information encoded in streams of humanly sensible imagery. And so I tend to plan about this dynamic of human cognition a lot, and try to ensure that I remember things by having a story to tell about them. This is not a revolutionary thought by any stretch of the imagination - such dynamics are regularly studied in anthropology and neuroscience. I just try to apply them to myself, in my personal operation, quite frequently.
On the way.
  1. I come from a family where we don't really plan to retire, we spend a lot of time investing in knowledge, and pretty much intend to work until we keel over. So in college, I found myself inadequately served by the intellectual culture of the institution and my peers, and stayed for the second-half just to get my degree, on the college's dime. I graduated with a tiny, 10-year, interest-free loan, which as a gesture of thanks to the college community, I paid off within a year or two after graduation. I was twenty-one. The plan was, upon graduation, to focus on learning things, and not on making money, until I was thirty. I figured, naturally, that if I wanted to make money after that, I would be better served by any accumulated commercial knowledge, and maybe I wouldn't want to make money after all. It turns out, I'm still not interested in making loads of money, but I do think it is a novel project to try a commercial strategy, from time to time, and to see how the market reacts. And to see how I react to the market participation, as well.
  2. My first two years after graduation, I moved through three jobs, at a government think tank for track-two diplomacy, at a consulting firm that surveyed job salary prices, and in a supporting role for the equities investment team of a Malaysian bank. I quit that third job, because I had been asking for more opportunities to write computer programs, and they had gotten tired of trying to give me other things that didn't actually need to be done, such as larky training programs, with no particular KPI. I'm no slouch, the money was shit, and I figured I could teach myself much more programming at home for a little while.
  3. From my third to fifth year after college, I helped entrepreneurs to set up two companies. Neither of these turned out to be a high-growth startup, though both CEOs claimed that they would aggressively pursue growth. Not enough appetite for compromises, so more disappointment, I suppose. Both companies have turned out to be lifestyle businesses, and one of them may or may not actually be making any money - of that, I am not sure. But what I learned from this period, was a bunch of stuff about how (i) business operations, and (ii) software systems, are designed, developed, maintained, and eventually put to death intentionally or through natural causes.
  4. From my sixth to eighth year after college, I attempted to avoid jobs, by raising my price for freelance work. I ended up billing larger invoices than I billed in the years before, but met some of the most miserable business people you could ever hope to work with, for, or against. At the beginning of the seventh year, I was trying to stop moving from rental to rental, and was trying to purchase an apartment not too far from Kuala Lumpur, which I could make into a longer-term base for studies. Some of those folk I mentioned were met in the process of trying to transact this property. Half way through the eighth year I gave up waiting for the transaction, and began renting the property. I have been here a month, I hope to not have to move again for quite some time, and it has been gorgeous.
On trading.
  1. I took a slow job while initially waiting for the apartment to transact, and in my seventh year post-college, with the excess cash that I wasn't supposed to have, I forced myself to begin trading stocks and call warrants (European options) on the KLSE. As it was excess, the money was not a problem, so the gamble was on; the point was, if the money was lost, to be able to lose the money without flinching. There was a two week period when I was on on leave from my job, and able to spend the entire day, every day, on the market - that was a positive experience, and I did feel that I had significantly more control over my portfolio during that time.
  2. Otherwise, as the seventh year came and went, and I avoided all employment in a desperate attempt to find more time for study, I encountered social friction in (i) a quasi-romantic relationship, and (ii) separately (as anticipated) with my mother whom I had committed to entertain for the last time, by sharing a home for a few months. I also attempted to spend less time on trading, and was then able to confirm that the less time I spend thinking about trading, the worse my judgment of the markets becomes.
  3. Since then, my portfolio has been all but wiped out, from my failed hands-off approach, and I am wondering when to liquidate the portfolio. But there is a good chance I will simply write it off completely, in order to help myself remember what works, and what doesn't work for me, as a trader. It is very likely that when I can summon the time, financial capital, and presence of mind, I will, in the future, trade again.
On these experiences.
I have spent the last two days working on a project involving financial statements, and have been happy to learn how to balance the balance sheet, intertwined with the cash flow statement, and the income statement. This has reminded me that I enjoy the knitty-gritty of finance, even though I have very limited experience in this field.

The money spent on my trading portfolio was equivalent to roughly half of my net-worth at the time I began trading. I am happy with how it has gone, and will use this experience to remind me of the opportunity cost of hands-off investment management, which I am not particularly good at yet. For example, I could have used that to pay tuition for a formal degree program, as the down payment for a larger home, or on a better car.
Levelling up.
I am twenty-nine now, not quite thirty, but the next phase of my life is upon me, and I am looking out for something to do. I have been vocal to my peers, and in public, about my interest in doing just one job (or vertical path) for the next decade or so just for the hell of it. Let us see what happens next.

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