Investment in a Post-inflationary Policy World

Investment environment. Many people who invest are not clear about the fact that we live in a century of inflationary money policy. While it works well enough, economic science and technology may lead us eventually to a future that does not resemble the past. Can you imagine how different your investment strategies would be if money supply wasn't pumped by governments during every economic crisis? 

- inspired by a chart of Warren Buffer's age x net worth

What I Taught Myself about Business and Investment

What I taught myself about business and investment.

I grew up in a family devoted to the non-profit sector. Folks in the non-profit sector tend to think of folks in the commercial and government sectors as lacking a taste for the finer things in life - a bunch of loony zombies that amuse the rest of us with their grandiose competitions and braggadocio. So within that domain of prejudice, I was taught generally that business and investment were offensive mechanisms, which are used to take.

Having managed, by hook and crook, to get into college on scholarship, I took great care to avoid commercial studies ... not because they were bad, but because they were lowly. I had a bunch of very important things to figure out before beginning to study commerce. To this day, I find that the best things in life are things you do to yourself at the meta-programming level - which money doesn't easily help with. Most people wouldn't know what to shop for, let alone where to shop for it.

On schedule, once I got out of school, I launched myself into government and commercial studies. I did this in Malaysia, because I thought I already understood everything else about that country, so I needed to close the loop and acquire the last two lenses. Malaysia in 2005 was a low-sophistication market ... there really weren't many interesting goings-on here. ( In 2024, I'm told it's still a low-sophistication market, but I don't currently do business here, so I have no comment on that at this time. ) I was twenty-two.

By twenty-four, I had bailed out of a think tank, a management consulting firm, and an investment bank, and started looking for work with startups. By twenty-eight, I was making decent money in technology, about 17x minimum wage - even though my core skills were people oriented, I had focused on acquiring software development skills in order to balance myself a little. ( It wasn't entirely alien to me, as I had done some computing studies until I was fourteen, before focusing on math, science, and the history of ideas. )

I finally managed to take two-thirds of a year off, just for studies, when I was twenty-nine. I also doubled my money trading AAPL call warrants, but felt that I would never get enough life experience if I started having too much money, so I burnt the money, and went back to employment in another startup when I was thirty. The year I was thirty-one, I worked four jobs in sequence rebuilding my wage from near-minimum to 10x minimum wage. ( It was pretty much the same as what I made before, but the minimum wage had gone up, over time. )

Then when I was thirty-two, I raised some money and became the managing partner of my first business venture. At this time, I understood people very well, but I still hadn't much hands-on commercial experience, so it was the best thing to do. I did the job until I was thirty-seven, spent a couple of days in jail and used that as an excuse to roll up the joint. ( It wasn't exactly jail, just the local police lockup a hundred meters from the hipster cafes ... but in 2020 Malaysia, those still had you strip naked, change into scrubs without shoes, and share a cell with five other guys ... where all of you shared one squat-toilet, one tap, and one bucket ... with only bars between remandees and the duty officer. )

Then I worked simultaneously in two corporate jobs, until I was forty. Then it was time for a second proper sabbatical. During this periods I actually had savings ... so it was a great time to get back into investment.

Now, after a couple of years of struggling to brain tactical asset allocation, I consider investment a defensive mechanism. Of course, it is defense by way of offense - so it enriched the worldview I was taught as a child.

poorly-modelled decisions - "analysis paralysis" ; and a note on related emotional regulation

"Analysis paralysis", "second-guessing" - these refer to a cognitive dissonance which occurs when decision-modelling is unhygienic.

1. Subject is in actual subject-state A.

2. Subject is aware of 1.

3. Subject is aware of possible subject-state B.

4. Subject is aware of possible subject-awareness-in-state-B.

5. Subject compares 2. and 4.

Up to step 5, there is only one possible-but-not-actualised subject-state to be simulated. This is generally healthy behaviour, and easy to manage. It provides a mechanism by which energy can be decisively allocated to staying in state A or transitioning from A to B.

However, while amusing, the following recursion may be inefficient ( due either to poor mental implementation, or  to  a general pattern of poor returns on energy spent modelling ).

6. Subject is aware of possible subject-awareness-of-state-A-while-in-state-B

7. Subject compares 4. and 6.

8. etc.

//

Tactical emotional regulation, pertaining to the above. 

Emotions are mainly used, consciously or subconsciously, to orchestrate action within a human.

In decision-making algorithms such as above, recursion might cause energetic failure of conscious computation, leading to a regression to baser modes of thought.

9.a. Subject assigns the notion of terror to 4.

9.b. Subject assigns the notion of joy to 4.

In both cases 9.a. and 9.b., what happens is "projection of emotion". However, since 9s are conscious operations, some degree of choice is available as to whether one picks terror or joy in projection. This is the domain of emotional regulation, with regards to the projection of specific emotions upon the mental state of one's simulated self.

There are other sorts of emotional regulation, perhaps we will address them in a separate note.

glee

Today a man on the train spoke to himself frequently. Covering his face with one hand, shy about his glee. Form-fitted sneakers, striped dress shirt, narrow denim jeans, grey hair parted sideways. As much as he portrayed the crazy man stereotype, he reminded me of the solipsist enlightenment : all people talk solely to themselves. They only believe that they understand anyone else, until they don't.

Maslov's pyramid, and the development of greater apices

I guess this approach to personal development, is somewhat helical. While a rudimentary ascension of Maslov's hierarchy is relatively easy, one builds a larger pyramid always first by expanding the base. So growth is a cyclical struggle of developing more physiological capability, social capital, financial power, and intellectual influence. Whenever you build an apex, you go back down and make the foundations broader, then build a higher apex. Otherwise your slopes are too steep, if you build taller apexes without broader foundations, and there is more risk involved.

"quiet time"

Working alone on large, messy, projects, is challenging. There will never be enough memory in the hierarchy, and there will rarely be enough money, or social equity of any sort. But one makes things work, which is how one ends up working alone on large, messy, projects. Today I am reminded about the fraction of time devoted to calibrating the nervous system. In some religious traditions, people take up to an hour a day out of their other work to do it - professionally religious people may take more. That's 5-7% of one's waking hours. I grew up in such a tradition, but the operation of how I spend that time has changed, as I do not practice the tradition I was taught as a child. Instead I simply calibrate myself as an information  system.