onsdag 29 oktober 2014

Why you must follow your passion

You don't have a passion...

-If you do you can't not follow it. That is what passion is.

Unless it's unavoidable, don't try to substitute it with just the thing you find most enjoyable. If we all did that, Gillette would be the world's most valuable company and we'd all be blind by now.

Do you like computer games and wonder whether you should try do be the next Minecraft guy? Do you like singing in the shower and think you might be the next Lady Gaga/PSY/Taylor Swift/Sia/Ariane Grande/Sam Smith? Do you like explosions and think about becoming a chemistry teacher or a Nobel Prize winner (my thoughts when I was 18)?

...Nobody does

The answer is NO, you shouldn't. Just wondering means it's not a passion, it's just something you like. But that's okay, almost nobody is passionate abut anything. Rather than trying to find a passion, you should actively try to avoid whatever bouts of improductive interests entice you, but more about that below.



Steve Jobs infected you with the idea of passion

The last couple of decades the notion that you should follow your passion has been more and more popularized. Apple's founder Steve Jobs is guilty of spreading that meme (idea virus). Not least since he became extremely successful doing what he said he was passionate about.

Focus on skills is making a comeback

However, lately, the opposite career advise is gaining foothold again (i.e., what was always the advice before Jobs).

Cal Newport's research, e.g., shows historically poor readings for job satisfaction among people in their 20's - exactly those that have been exposed to the follow your passion meme. They seem to be more and more miserable for every new position they take up in their never ending search for the perfect job.

People who try to follow their (artistic) passion end up as miserable semi-prostitutes in the outskirts of Los Angeles. In fact they will probably never understand that they actually didn't follow their passion. They were just brainwashed by the media that fame and fortune was both attainable and desirable. They should have focused on building a skill instead:

Leverage your best combination of valuable skill and interest

This is what research says you should do, if you want a career that makes you both successful and happy (more on that issue in this post about whether you want results or happiness, as well as in this and this post).

You should create a matrix of 1) what's valuable in society and 2) what you are reasonably interested in. Then you should immerse yourself, for 5-10 years, in the area that has the most promising combination of value/interest for you. As your skill improves with time, your appreciation of it will rise. Hence, if you started out "interested", a few years later you would be a couple of steps closer to "passionate". In addition, your value and potential leverage/power/independence will rise in lockstep. At a certain point you can use that power to attain lifestyle traits that are important to you (e.g., working less, avoiding e-mail, being more creative). Cal Newport's book about skills and passion expands on that theme.

If you are interested in Cal's research about job satisfaction and you are around 25 years old as well as have 35 minutes to spend, you should check out Cal's talk here. Please note that he doesn't really say anything more than what I have already done here. It could still be worthwhile, however, if you are more of a video and audio person.

Ludvig at SGM has also written a good post about this topic, with a comment section to match it.


Summary: Try to avoid following your passion

If you just can't help yourself, can't avoid immersing yourself in what's drawing you in, then you are already following your passion. And that's a good thing for you. You will be happy no matter if you are successful or not, and you would be miserable if something managed to keep you from your passion. However, 99% of the population don't have that obsession; and if you are one of those, don't follow what is only a whim or a lust.

If you, with some effort, can divert your efforts to developing a valuable skill, instead of doing what you like, then you should do that. Expressed differently, if you can avoid it, it's not a passion and thus you'd better not follow that path unless it is productive.

The passion recommendation is a tautology

But if you just physically can not stop yourself from whatever it is that is your obsession, then you must follow that passion. And that is not advice it is just a logically factual statement; a tautology even. If it is impossible to keep away from an activity then the only possibility is that activity; a must.

You may not be passionate about statistics, programming, economics or this blog, but you still should study those topics to awaken a possibly dormant, productive, interest.

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måndag 27 oktober 2014

Market view updates from Bob Janjuah at Nomura and Dr Hussman

First, Bob's letter in its entirety. He doesn't like the feel of the bounce. It's too intense and built on the wrong foundations.

The bounce I forecast in my last note from 16 October (Indigestion turns to stomach ulcers) has played out very nicely. I was looking for this bounce to last into this week, but points-wise it has actually been a little stronger than even I expected with the S&P 500 closing on Friday above my 1905 weekly closing pivot level.

I should therefore be moderately bullish. But things do not feel right on the bounce – underlying deep price action and flows, together with the extent of the moves in headline indices/indicators, which diverge heavily from some key risk indicators, leave me feeling very uncomfortable. In this context the 'markets' aggressive attempt to define what we saw during the risk sell-off – which actually began in September and lasted for a month from high to low (in say S&P, 19 September the high to 15 October the low) and not 'just a couple of days in the week of 13 October' – as being driven by a set of isolated idiosyncratic risk factors (ebola, Shire, Pimco etc), leaves me concerned. Why? Because it tells me that markets are still refusing to accept the real drivers, namely mounting evidence of weak global growth, strong deflation, and growing policy gaps/credibility concerns. As such my concern is that once the market is reminded/accepts that we have broad-based problems and not just a few unfortunate idiosyncratic hits, then the reprice of risk will resume.

In respect of my 1905 pivot level and the bounce that commenced almost on cue on the early morning of 16 October, I would now be positioned very close to home. This week (the FOMC meeting, US GDP data) will I think be key and will set the tone for markets for a few weeks, certainly into nonfarm payrolls next Friday and likely through to later in November.

On balance I think the S&P 500 (as a proxy) could rally 75 points (+/- 25) over the next two to three weeks, or it could drop 200+ points.

Assuming one rode the bounce from 16 October, I think the risk/reward now is to be very close to home, and one either waits for new highs in risk (2020 on S&P) before getting involved again, or one waits for violation of 1905 again, in which case I think there would be easily be another 150+ points to the downside to capture.
Apologies that I cannot be more precise at the time, but I really do think that the next week or so will set the tone for markets for the rest of Q4 2014, so I think patience will be rewarded.


Then, Hussman.

As I noted last week, “Keep in mind that even terribly hostile market environments do not resolve into uninterrupted declines. Even the 1929 and 1987 crashes began with initial losses of 10-12% that were then punctuated by hard advances that recovered about half of those losses before failing again. The period surrounding the 2000 bubble peak included a series of 10% declines and recoveries. The 2007 top began with a plunge as market internals deteriorated materially (see Market Internals Go Negative) followed by a recovery to a marginal new high in October that failed to restore those internals. One also tends to see increasing day-to-day volatility, and a tendency for large moves to occur in sequence.”
 
My impression is that we are observing a similar dynamic at present. Though we remain open to the potential for market internals to improve convincingly enough to at least defer our immediate concerns about market risk, we should also be mindful of the sequence common to the 1929, 1972, 1987, 2000 and 2007 episodes: 1) an extreme syndrome of overvalued, overbought, overbullish conditions (rich valuations, lopsided bullish sentiment, uncorrected and overextended short-term action); 2) a subtle breakdown in market internals across a broad range of stocks, industries, and security types; 3) an initial “air-pocket” type selloff to an oversold short-term low; 4) a “fast, furious, prone-to-failure” short squeeze to clear the oversold condition; 5) a continued pairing of rich valuations and dispersion in market internals, resulting in a continuation to a crash or a prolonged bear market decline.
 
Note in particular how similar the 2007 and 2014 market behaviours are:
 
2007 and 2014:
first a climb and a drop
then a longer climb and a larger drop
then a quick recovery to the cycle high
then an even larger drop
and a quick recovery
 
 
And, of course, don't forget ZeroHedge's laconic comment on stock market volumes: "LOL"
 
(FYI: very high volume on every down day, and very low volume on all up days the last week)
 
 
 
 


söndag 26 oktober 2014

Changed habits and rubbing armpit bacteria in the face

Some people talk about how the years are speeding by faster and faster. I don't.

Quite recently I found out why: The brain records events not as they are, not the details, but merely saves clues like duration, intensity, peak and ending.

A painful colonoscopy e.g. is remembered as less painful if the procedure is prolonged by a couple of relatively painless minutes. Other quirks of the memory means that novelty takes up more memory space and is remembered as longer.

Hence, changing habits, taking new routes to work, trying new food, travelling to new places etc make life more interesting and fun in the now. A good thing. In addition, novelty and other kinds of intensity make life seem longer and the years are remembered as passing by at a more constant speed.

So, change slows the speed of time in a good way; it speeds the perception of time in the now, slows it in retrospect and makes you feel life as fuller and longer rather than empty and boring in the now and short and fleeting when looking back.


Compare the experience vs. the memory of waiting for the bus with the experience vs. the memory of something new and exciting, like your first bungy jump or first time in Australia.


I have always lived a varied life; not consciously though, I have just happened to, apparently more often than most, introduce new habits, new travel destinations etc. This year is no different:


  • I retired (which in itself brought more change, such as studying languages and programming)
  • I became a vegetarian (which is several changes in one since I have to think about almost every meal and grocery purchase)
  • I learned to love cilantro (from hating it)
  • Yesterday, I ate a whole bag of potato chips (UK:crisps) - I have never done that before and I'm sure I'll remember this event the rest of my life


Unlike the washed masses...

The last few weeks I have tried yet another thing: not washing my face. Since as long as I can remember I have been taught to wash my face twice daily and then moisturize. The last few years, I have used face scrub products on a daily basis and found that my skin has become very clean and healthy looking.

As long as I scrubbed daily and moisturized (no fancy products, just not the very cheapest ones) and didn't touch my face, I was spot-free, with reasonably matte skin quality. However, I could get bouts of oilyness and acne, if I skipped the morning, evening or post workout routine. In short, I had the skin of my life but it was a hassle to keep it like that.


...I have stopped washing my face

Now I have embarked on a new experiment. Inspired by this article about armpit bacteria and this one about rubbing them in your face, as well as several TV shows and other articles about good bacteria the last several years, I have stopped washing my face. Not least eating lactobacillus reuteri enhanced my understanding about bacteria. After all they make up 99% of our genes, and we couldn't live without them.

It's been about three weeks now, and just as with turning vegetarian, what was supposed to be a short and light trial became the real thing from the get go. Cold turkey. So, I only use water in my face..., and I'm starting to think about widening the experiment to more parts of the body.... why not all of it?

I'm daydreaming about developing and marketing bacteria-based hygiene products. And yes, I know you can buy yogurt shampoo, but I was thinking something more hard-core.

lördag 25 oktober 2014

Update from my latest podwalks - and some rare footage of me from the mid 90's

My latest two podwalks (yesterday and today) both took 2 hours each. I wanted to combine moving and learning with freezing slightly, so yesterday I only wore a t-shirt and a light rain jacket and no gloves. Today I chose just a t-shirt (no sweater, no jacket, no scarf) but did wear gloves. I was prepared for getting quite cold but actually wasn't cold at all. My brown fat seems to be working well already.

I don't have that much to report from the podcasts per se. I just wanted to give you an impulse to get out there, walking and listening. Anything new you pay attention to today is beneficial for your future brain capacity.

Here are the shortest notes possible from some of the podcasts:

Christianity brought linear time, going from creation to doomsday, instead of the circular concept of time that's common in earlier religions. There is a debate going on among scientists and philosophers whether time exists in itself or if it's just a construct to organize movement. Unresolved.

Brain Science discussed a recent book about mirror neurons. They exist in primates and one experiment suggest they exist in human brains too. However, there is no evidence of mirror neurons explaining speech or empathy e.g. - ideas that have been carelessly promoted and spread without the research to back them up. The most interesting tidbits from the show were: "If you think you have a new idea you just haven't read enough", "Check established truths; go back to the original source and see what it actually said". Scientists are often sloppier than you might think.

Brian Cox - boy band idol (D:Ream) and superstar quantum physicist. Cox believes in the Many Worlds interpretation whereas one of his best friends believes on the Schrödinger cat interpretation. Cox also succinctly explains that Quantum Mechanics is about calculating the probability that a particle moves from point A to point B given certain variables (mass, charge etc)

And this is what I did when Cox was playing at the Top of the Pops:

Man O Man



Singled Out

I'd rather be happy than rich (okay, I'm BOTH, but hypothetically)

I'd rather be happy than rich or healthy. How about you?

If missing that extra income or eating unhealthy food, or being hungover means I can prioritize something that makes me happy, that's where I'll go.

Sure, I'm all for creating productive habits, watching them become you and take care of themselves unconsciously. But if it doesn't work, I wouldn't keep pushing myself, being miserable only to achieve som second-hander goal of being rich, famous, glorious, immortal or whatever. Give me happy and I'll take fat and poor and extra helpings too.

What about you? have you thought about what it is you really want, what makes you tick?

Note: often, being healthy and productive makes you both happy and rich, but remember to keep your eye on the prize. And the prize is being happy, not living somebody else's life.

Some rich people meet royalty, drive sports cars, test drive helicopters and yachts, wear ridiculously expensive watches, go to champagne spray parties -  and seem to have so much fun. Isn't that proof money buys happiness?

No, what they are really doing (I know, because I have done all those things) is trying out stuff to try to be happy. A champagne bottle is just a water pistol, a sports car or a speedboat is a rollercoaster, watches are to get the attention they never got as children.

OK, to be fair, some are probably simply having fun, and when money is no object you can just as well buy your own fun wherever you are; No need to go to Disneland if you own a Lamborghini. Why buy a cheap watch when the money has to be spent anyway... and the service is soooo good?

But don't stress your life or your economy to copy the 1%. That won't make you happy, only stressed and miserable.

When the truly rich spray each other with several cases of vintage champagne, it's like when ordinary people splash water at each other in the pool. The rich are not checking anxiously that people notice them when they order a magnum champagne with fireworks - like you do. They order four at a time just to make sure there is some at the table all the time - for convenience. If a couple of bottles are left when they leave, they couldn't care less than you would if there's still water in the pool when you get up.

torsdag 23 oktober 2014

I am preparing myself for the arrival of black swans

Here's a secret for you: I don't have it all figured out

I don't think any self-dev blogger has it all figured out. Most of them (or us) probably have even less control over life than you do. That might actually be the number one reason we keep writing daily blog posts about how do be efficient or effective or passionate or happy or healthy or impressive... We simply don't have the answers so we try them out on you.

I do realize I have certain "objective" credentials, a life CV so to speak:

  • With my almost 43 years, of which 25 immersed in finance (if I count the 4 years at business school), and most of my life curiously experimenting, I am considered experienced.
  • With my track record of about two handfuls of awards in finance and natural sciences (have I mentioned when I aced the organic chemistry test for the chemical olympics and became honorary member of Sweden's Chemistry Association?), as well the wealth I accumulated during my career, I am considered successful.
  • By retiring at my age, I am considered having cred.
  • Certain personal details and experiences, in combination with the previous mentions, strengthen the picture of me as someone with a grip on life, e.g. 1) having studied three different martial arts, can do the side split, and emerged victorious from all street fights but one; 2) not just climbing to the summit of Aconcagua but staying there for two full hours including stripping at the top; 3) my super cars, gold Hublot, penthouse; 4) My zen-inspired focus on mindfulness


The Ultimate Black Swan

Given the above, I can understand why it superficially seems as if I am in perfect control, and I appear to have a carefully thought out system for living my life efficiently and productively. However, if you have read more than a handful of my posts here, you know better than that. It should be obvious that rather than being complete...:

  • Sometimes I am really lost... and...
  • I am searching
  • I am learning
  • I am growing

However, what I do do that not everybody does is:

  • I think about my experiences; what they can teach me about the world and about me
  • I write it all down, warts and all, for your benefit
  • I don't pretend to have the final answer - quite the opposite
  • I am constantly prepared to realize that I really never knew anything. You can say I am trying to prepare myself for spotting the ultimate black swan. The process entails knowing myself as well as possible
I think most people actively try to avoid discovering such odd-colored poultry. They'd rather find a simple truth and a simple solution and either peddle it on their web site or just gobble it up and adhere to it blindly. That's why the tabloids look the way the do. The last thing most people want is to find out the world isn't flat or the earth is moving around a nuclear fusion plant or that the darkest little square inch of the sky is actually brimming with thousands and thousands of galaxies with several hundred billion solar systems in each.

THAT is where I come in; disguised as an experienced and succesful know-it-all guy, I can be your look-out for new findings and new answers. I'm doing it for myself anyway, but the more the merrier so please come along.

By the way, fill in your e-mail address under "Subscribe" at the top right and press "YES, please" and you'll get automatic e-mails whenever I write a new post here. You never know when that black swan might manifest itself. And, no, I don't send spam.


Oh, perhaps I should finish off with some advice:
  • Know you don't know the world
  • Know you don't know yourself
  • Be prepared to relearn everything

tisdag 21 oktober 2014

5 reasons why it's time to sell the bounce NOW

Five reasons to sell the bounce NOW:

First, It's still a bear market., and I recommend you sell the bounces not buy the dips
Second, the S&P 500 index (Es at 1910 as I'm writing this) has already bounced to the key level 1905 (slightly above actually, but see the next point)
Third, "false breaks" are common and I think this is one of them (falsely positive, false break upward). The downward move tends to be abrupt if (when) the upward break proves false. You have to panic before everybody else does. Beware of air pockets.
Fourth, a two-month trend line would have the bounce peak out around here, maybe 1% higher but I would never chase so small amounts if it means going against the main strategy
Fifth, A bounce of this kind in a downward trend usually lasts 3-4 days. I wouldn't give it any more time than that and that time is already up.

Perhaps it's time to sell that next tenth already (see comment section to this post).

måndag 20 oktober 2014

The top one recommendation on how to save money and enjoy life more


Know Thyself

That's it, but do keep on reading if you desire some personal elaboration on the theme.


Conspicuous consumption is for second-handers that live for others

I have to admit I have spent a fair bit of money in the process of getting to know myself. On the other hand, the money was mine to spend - and I did get some fun for it. Mostly, I just learned the lesson that money doesn't necessarily buy happiness, unless you are sure of what you want.

What I mean is that I could have just thought it through instead, gone to the bottom of my own desires, and approached "fun" head on. That way I would have enjoyed life even more and without unnecessary spending.

Instead, I did what most people do, I bought expensive things (convertible cars: Porsche, Ferrari, Lamborghini, watches: Omega, Hublot, a center-of-the-city penthouse) and paid for expensive services that really didn't add any extra value. It's a bit sad, since I came from humble beginnings and already knew what activities made me tick. My detour into conspicuous consumption, however, cemented the lesson about mindfulness:


Pay attention to who you are and what you like,
and focus on that directly,
and you will be so much better off in life
- without the need to earn and spend so much

It will make room for much more living 


Be mindful - You know what you like, you just have to think about it

When I think back, I know what events have stuck in my mind, and how I feel thinking about them. With a little effort I can almost remember how I felt during those events as well. Forget for the time being that our memories are deceptive, since they are all we have anyway.

Even if you are still in your 20s, you should already have enough life experience to know what makes you happy or excited - both short-term and long-term.

Personally, I like the feeling of heights, of big things, of open spaces where you can feel the gigantic dimensions (mountains are good for all of this, as is some scuba diving). I like acceleration (bungy jumping e.g.). I like being tired after a workout. I like setting personal records (in computer games when I was young and in weight lifting now that I'm older). That should have been enough. No, not just enough; that was better than what I tried in the interim that followed when I started earning serious money.


Real-time social media posting is for suckers

For a while, I let commercials and other people lead me along to buying fancy clothes (expensive but poor quality), ridiculously expensive watches and sports cars. Maybe even my penthouse apartment is a testament to my vanity (it is practical and comfortable though and I enjoy it a lot without people seeing it). I even fooled myself into thinking I had bought the cars for enjoying the acceleration - by myself. Gradually I realized I actually enjoyed looking at my Lamborghini (or other people's cars) more than I did driving it. In addition, bungy jumping was way more fun than track racing or illegal speeding on public roads. 

Now I know that if I have to put an activity in a Facebook status while I'm doing it, it's not worth doing. Think about things you enjoy just experiencing or doing by yourself without telling people. No, not that; don't you know you can go blind..., not to mention the added shaving trouble? Go for those things: dance, swim, travel... Hell, buy a car or a watch if you want but think before you do it: Is it for you or for somebody else?

Ask yourself this: Do you purchase the car for its driving specs that you want to utilize, or is it for showing off its shine to strangers?


Live for you

Wear comfortable and durable clothes that make you feel good. Buy furniture to use - not to show off. Buy a sofa you can be comfortable in even when you have the influenza - not a show piece you can't have your feet or fever-sweaty head on. Travel to places you want to experience, not that you want to brag about on social media. Get a tan if it feels good in the sun, but don't expose yourself to additional cancer risk if it's hard work only to make your friends jealous (or appalled for that matter).

You can of course still invest in a suit or other appropriate business attire for your situation, if you think it will accelerate your income and target acquisition. Just don't buy or do stuff for the sake of other people's admiration without getting paid.


Expensive fun in the sun - almost smashing my Ferrari

This video of me driving my Ferrari 360 Spider is from 2005 (the one I bought from Zlatan Ibrahimovich, if you know details about Swedish soccer). That was one of very few times I had a really, really good time in a car. Fortunately, other things make me much happier than driving:



It cost me 85 000 USD to own the Ferrari. I could have done way better things with that money than one single high speed (>100mph) spin on a track race.

lördag 18 oktober 2014

Study or not? Buy or rent? How long is a piece of string?

If you just want to know whether you should get a degree or not, skip down to "Young People today!"

No compromises allowed

I like Ayn Rand's books and her philosophy of objectivism. She keeps returning to Aristotle's meme "A is A", which has stuck to me too; What is is, and not something else. It's simple enough, but worth repeating and remembering. When things don't add up, you'd better look more carefully at the details again. A is A.

I also agree with her that in a compromise between food and poison, or between good and evil, only the bad side wins. She abhored compromise - as do I.


All choices aren't compromises

However, many situations in life present themselves as compromises, while in fact they are just choices of degree, or decisions of optimization, how best to attain a target without compromise.

These are examples of such questions:

  • Lift weights with a slight injury? (How slight? How heavy weights?)
  • Stay at a job that doesn't make you happy? For how long? How unhappy? What pay?
  • Use perfectly strict form in the gym or chase higher weights?
  • Short-term or long-term happiness (have that ice cream or not?)
  • Should the Federal reserve raise/lower rates or not? Imperfect information and confidence.
  • Wash your face or not? Good or bad bacteria?
  • Send healthcare personnel to Ebola ground zero or not. How many? Help contain the contagion or risk bringing it home?
  • Watch the news or another episode of a half decent tv series instead?
  • Take contrast showers? How long? How often to change the temperature?
  • How long should you endure in the sauna?
  • Muscle strength or definition. Power or volume?
  • Fast or not?
  • Plan ahead meticulously or be spontaneous and immediate
  • Learn by reviewing or repeating past lessons to perfection or by looking ahead to more complex next-level challenges to reinforce memory and understanding
  • Contrarian or not (in investing, as a politician, nutrition-wise...)
  • Be cautious or aggressive (in investing, e.g.)? How cautious, how aggressive?
  • How long blog posts should I write? How often? Should I attempt humour... or sex?
  • How long to hold your breath underwater (as long as you can, very few can hold their breath for too long)


Who is John Galt?

For the above issues, I would answer with a question: "How long is a piece of string?", i.e. there is no one and objective answer. It's all a matter of personal preferences.

Neither I, nor you know fully and totally who you are and what you really, really want (zigazig ah?). Sometimes it's good to push the limits, sometimes more, sometimes less - and at other times caution is required. Here are nevertheless a few guidelines:


Avoid permanent damage

General tip: In short I would advice to avoid risk of permanent and disabling losses of financial and physical health. With that prerequisite in mind, I would go back and forth, up and down; read ahead and review back... Go with your intuition; it will refine itself with the years and the inevitable hits and misses. It will take your state of mind before and after into consideration, when calibrating itself. Given enough experience and knowledge, "intuition" can be extremely powerful but it has to be fed and honed.

Avoid constricting yourself with dogmas or promises to your younger self. He's gone anyway, and he didn't know anything about life.

Keep an open mind and perform a lot of trial and error in your tens and twenties. Push the limits and venture a bit outside your comfort zone every now and then, but there is no need to go full retard. Try to grow in small increments but do it consistently and permanently. Your older self would of course appreciate if you were a bit considerate about his health and his finances, but focus mainly on yourself and the next five years. Anything beyond that is just that - beyond. But do save for retirement anyway.


Expect life

The above is actually quite easy. The answer to each and every one of the above issues is "42", i.e. "life". Just live it and your genes and feelings will guide you. Experiment, live fully, but don't gamble with life, limb and bankruptcy. Keep reading, searching, question, discussing, and most of all growing, improving, getting better and getting better at getting better, but don't expect an answer; Expect life. Expecto Patronum.

/Sprezzaturian


Young people today!
As a young person today, however, you also face the following more tangible and particularly perplexing issues, not least considering your lack of experience with everything:
  • Should you get a degree
  • What to study
  • What profession to aim for
  • Employed or entrepreneur
  • Save for retirement? When to start? How much?
  • Buy or rent (house, car, phone, furniture, travel - NB: installments=renting)
  • Aim for success, fame and riches or fulfilment and happiness
First and foremost, you should build a habit, a method of how to solve problems and make decisions: Get to the bottom of any problem; find the axioms, the premises as Ayn Rand would have said. Once you have broken down the problem into smaller pieces they become much more manageable and easier to solve (Vitaliy Katsenelson Oct 13, 2014). Don't panic. Don't take it all in at once, just methodically deal with one small part at a time, e.g.:


Should you get a degree?

It depends on what you want to do with it. Is it necessary for you? Will it get you a job? A job you'll enjoy? Do you want to learn something particular, or do you just want a piece of paper, documenting your willingness to learn, your academic stamina? Keep digging at these issues and you'll probably find that you don't want a standard institutionalized degree. These days formalized education is mainly a waste of time and money. You could learn the same on-line, only more and better, much faster, with better teachers, more pedagogical methods, study material and motivated peers - not to mention at a tenth or a hundredth of the cost.


Too cool for school?

Everything is moving faster these days. We are in a race toward the technological Singularity, and the milestones are coming at an accelerating pace. When I studied finance between 1990-1994, you could still spend 4 years locked up with your text books and come out ahead on the other side - just barely.

The Berlin wall had just fallen (1989) and globalization was all the rage (this was before Madonna's "Vogue" and Wilson Phillips' "Hold on". The charts were still ruled by Paula Abdul, Milli Vanilli and Debbie Gibson). In addition the internet was stealthily gathering pace during my time at SSE - and took off like a rocket with Netscape's IPO in 1995. Luckily, I was already an analyst, researching IT companies by then.

I might have missed it, if I had still been in school. Beginning in the early 1990's, I think you should be too cool for school. Not as in goofing around, doing nothing, but as in DIY: study online, study exactly that which gives you an edge. Ask around what might be needed; try your own skills live as you go along, rather than suddenly present yourself before a would-be employer, with obsolete skills or a useless document from some backwater school.


Internetacy

Here are my two cents on what you should do, if you are 16-20 years old today (or older for that matter if it seems to apply to your situation):
  • High school math and reading abilities is all you need to stand on; the rest you can get faster, cheaper and better online. Drop out from anything else unless you put good use to your time (connecting and learning - but could you do it just as well without the tuition fees? Probably). Here is a little something about our obsolete and inadequate education system
  • Internetacy (literacy for the internet - knowing how to search efficiently, and how to discern truth from lies. Be the person people wants to ask instead of googling it themselves)
  • Learn programming and marketing, and maybe a few basics about statistics (you know the adage about lies and statistics, I gather? In addition, remember that statisticians my be dull but they have their moments). Read here about my choices, and here about why you want to know statistics.
  • Be an entrepreneur or get out of here! There is no hiding in large organizations shuffling paper anymore. Be valuable and sell that value for your own profit.
  • Save? Yes, you should save enough to take care of yourself. The government has no means to do it in a reasonable way the way things are going. How much? How long is a string? Break down the issue in manageable pieces. Do the math. In Google Sheets. Ask if you want specific guidelines, but 10% of your disposable income is a good rule of thumb.
  • Buy. You should only rent things, or pay in installments if it's an investment - like your newfounded business. And, no, a house is not an investment. Save until you can actually buy your living space for your own money. OK, you could borrow half the sum, in particular if prices have fallen sharply lately. Remember that house prices sometimes fall by half and that mortgage interest rates were deep in the double digits just a few decades ago. You do not want to experience the double whammy of halving prices and sharply higher interest rates if you have a 75-100% mortgage on your house.
  • Success or happiness? What are you? Stupid? Get out of here! You should be happy (and that is being successful). Read here and here and here.

I wish I could have worked like this

Vitaliy spells out exactly how it is, as well as how it should be. I wish I hadn't wasted so many years as a face-timer, research-producer and CNBC-prisoner.


Take the rope off your neck and wear comfortable clothes to work (I often opt for jeans and a “Life is good” T-shirt). Pause and ask yourself a question: If I was not bound by the obsolete routines of the dinosaur age of assembly-line manufacturing, how would I structure my work to be the best investor I could be?



If this is how you think, then go with it (picture from before I quit managing money)



Twitter memes for portfolio managers:

Do you remember when money managers had CNBC on during the day? That was fun.


Wearing a suit and tie, staring at real-time stock prices on the screen all day?! Are you out of your mind?!


Multitask? What are you, four years old? Do you believe in Santa too?


Wait, stop the beat a minute, whaddyamean check the stock prices every day? Stupid says what.

fredag 17 oktober 2014

48 hours later

I guess moves like this could catch some people off guard:

Correction of -7.5% and dead cat bounce of +5.5%, within the span of 48 hours


The VGA Index is the front end futures contract for the market capitalization weighted EuroStoxx50 Index over the 50 largest and most liquid stocks in Europe.

torsdag 16 oktober 2014

Yes, I think the stock market will crash

This is now a bear market. The reasons are:
  1. Momentum has turned. So far the market has been saved over and over again by its own momentum, but the last week momentum has turned and now selling begets selling instead of the opposite.
  2. Everything is built on printed money and debt, which is just another way of saying it's all smoke and mirrors, an indian rope trick if you will
  3. Once interest rates normalize the game is over; it's only a matter of time (first, however, flight to safety will cause interest rates to fall)
  4. I think so
That's the short and the long of it. However, most people want more. Just note, that anything said about the stock market is just beliefs, never really truths. Anyway, here goes:

  • The economy is built on debt:
    • Governments are more in debt than ever
    • Deficits are large despite 6 years of recovery - imagine what will happen with debts an deficits in a recession. Sooner or later taxs must increase to close the gap. That will hurt growth and profits. Considering the size of the debt burden, the breaking point is rather sooner than later
  • Valuations are built on debt
    • Investors buy stocks since nothing else has a return due to money printing, pushing up valuations
    • Companies borrow and buy their own stock to manipulate earnings per share and compensate for stock options. These buybacks push up bothe EPS and stock prices, while lining companies with debt
    • Investors' margin debt at the NYSE is at record levels - these will be called and thus create forced selling at a certain point
  • Profits are misleadingly high
    • Government deficits and transfers, food coupons etc mean people can keep consuming more than otherwise, despite low or no wages
    • Low savings rate means companies can pay less wages while still selling more, thus earning more than they normally would. The savings rate is low, since people are used to financing their consumption with loans due to low interest rates (consumer loans, house loans, car loans, student loans). Neither individuals, nor the state will be able to afford paying for retirement without higher savings or higher taxes.
    • Profits are artidicially high, since they don't account for true personnel cost (they are paid with stock options instead of cash)
    • Profits are phony, since the large debts hardly affect profits, as long as interes rates are near zero
  • The benign feedback loop now reverses
    • Falling asset prices weakens confidence and leads to more selling
    • Less collateral for loans mean less room for spending
    • Companies will raise prices on what they can; necessities; leading to even less room for spending
    • Less room for spending means lower profits, but also demands for higher wages and pensions,leading to even less profits and more public budget tightening
    • Higher wages, pensions, taxes and higher prices means inflation and sooner or later higher interest rates
    • Higher interest rates means less lending as well as higher loan service costs. This leads to lower house prices, lower stock prices, even less confidence etc...
Hence, in my mind it is only a matter of time before the economy, profits and valuations of these profits will join with reality again, With lower growth, lower profit margins and lower valuations of these lower profits, stocks should be worth at most half of what they are today.

Now, should and will are two different things, in particular when it comes to stocks. On the other hand, the stock market moves in cycles, just as most things do and when the market pendulum has reached its max and its momentum fades, the pendulum inevitably turns.

Momentum dies when a small correction feels big. After 6 years of relentlessly rising stock prices and ever smaller corrections, it takes "a lot" to shake investors' confidence and create sellers of buy-the dippers. On the other hand, the more debt is piled upon debt the less it takes to feel like "a lot". The current little correction of 10 per cent usually occurs at least once every year and should be nothing. Now however, many are panicking already.

Consequently, I think we are right on the edge of whether the big downturn has started or not. Just as Bob Janjuah said in his market call update today (Bob's World), if we close at the current levels for two weeks in a row (tomorrow and next Friday), confidence will be broken (confidence in the market, in the economy, in central banks, in politicians), selling will beget selling and the downturn will be confirmed.

There will be many, many bounces; dead cat bounces. Don't let them fool you. Sure, try to trade them if you feel like it. The market seldom drops more than 20 per cent in a straight line and seldom for more than a quarter, so try to buy some after similar plunges. Sell once it has bounced 10-15 per cent; don't go for more or you risk being locked out of the market fall. During the downturns of 2000-2003 and 2007-2009 there were tens of such bounces.

Maybe a bounce is already due; maybe we will fall another ten per cent first. In any case, I would use the bounces for selling, not the falls for buying. The market is now a bear market where you sell the bounces, not buy the dips.

Cheer up! If the market falls by half, you'll get the opportunity to invest at reasonable valuation levels. Good for you. The market has already fallen by 50 per cent two times since the peak in 2000; a third time won't break the global system or cause wars. Just be sure to keep some money at the ready, to be able to invest if the current rout does indeed turn out to be the beginning of the real downturn.

onsdag 15 oktober 2014

Immediacy Mode - Just do it right now (sometimes)

Household work

Yes, I know, who needs it? But, still, someone has to do it and unless you want to hire people going through your stuff you are the one that has to perform it sooner or later.

Sometimes, in particular when it comes to houshold work like shopping, cleaning, washing, changing light bulbs etc., rather than planning, writing lists, prioritizing or procrastinating, I just enter my

"Immediacy Mode"

That means I take care of everything that enters my mind just as I become aware of. If another thought interrupts me I let it temporarily override the current task at hand and move fluidly from task to task and then circle back to half-finished tasks.

Example:

  • Have eaten: clear away the plates and cutlery
  • Dishwasher is full but clean. Empty dishwasher.
  • Dishwasher's filter appears clogged. Clean filter.
  • Floor is dirty, needs vacuuming. Get vacuum cleaner. Notice broken light bulb on the way. Change light bulb. Then get back to getting vacuum cleaner.
  • Vaccum floors.
  • Notice plates are still on the table, put them in dishwasher (feel good you emptied it and declogged the filter)
  • Take out the garbage or just place it by the door.
  • Jeans itch. Take them off. Take a shower. Collect all jeans material that needs washing. Start washing machine.
  • Want a cup of coffee. Got no milk. Go to the store (polish shoes first if you notice it needs doing) and buy milk (yes, without hesitation) - take out the garbage you left by the door on the way. Make coffee and have a café au lait when you get back.
  • Come to think of a short blog post you'd like to write. Write it right away if possible (if it's short and simple enough. Immediacy Mode really only works for non cognitive tasks)
  • Remember you are supposed to to your mobility exercises today - or 50 push-ups. Do them right away just as soon as you think of them. Yes, just drop to the floor while the thought is being thought and do it.
  • Fold laundry
  • Make bed
  • Pay bills
  • Add song to Spotify list
and on and on... Just clear away all those little things, one after the other. A loose screw, unstable chairs, time to recycle, clean away winter clothes, throw away old t-shirts, clip toenails...

In just one hour you can get surprisingly much done and never being bored about it or feel burdened. No need for planning, for lists, for feeling overwhelmed, just do everything you see right away when you see it.

What do you see now?

tisdag 14 oktober 2014

Own your failures

I have written about efficiency, about the 1/50-rule, and about adding good enough skills in spades by spending just 20-100 hours on each. It's easy on paper, but how did it work out in practice this year?

Already knowing the answer, I proceeded to take stock of my progress. Here are the results:
(FYI: Financial analysts use that expression all the time. It always cracks me up, since in Sweden it sounds like something that might happen in a U.S. prison if you drop the soap in the shower)


I failed!

There is no question about it. I failed on numerous accounts, including:
  • Portuguese. I stopped doing my Portuguese lessons on DuoLingo. I had 604 words and 1728 points and had graduatet to level 9. In fact I had almost caught up with French. I even translated an article... There is no way around this failure, I simply stopped for no other reason than "I didn't feel like it anymore"
  • French. I quit my French lessons as well. That on the other hand was a calculated failure. I traded the daily lessons for reading The Count of Monte Cristo in French. Yes, the unabridged version which runs some 2200 pages or so. I'm almost done, with around just 200 pages left.
  • Handstands: Okay, I did hurt my right wrist a couple of weeks ago. Maybe my handstands were even a culprit. The real reason I didn't learn handstands this summer is pure laziness. Sure, I can dress it in terms like prioritizing, but I always have 10 minutes over for handstands if I want to.
  • Blogging seriously - I'm getting there, albeit slowly. Actually, starting Improve should count as a success, an accomplishment. It's just that I want it to be professional, on its own domain, and with a thought through strategy
  • Company - I bought an empty company last summer and named it Fimbulvetr (a cool mythological name for the winter that precedes the end of the world). The failure is that I haven't done one single thing with it, not even the tax returns or an annual report. This is an open wound in my mind.
  • Split - I did some split stretching in January and February. I all but got completely down crotch-to-the-ground and then just stopped stretching. I took it up again this week and maybe, just maybe, I'll crown the year with an epic split. So far, however, a failure. On the other hand I regularly did a lot of healthy mobility exercises, inspired by dr. Kelly Starrett.
  • Strength - I didn't get stronger this year. Instead I lost 7 kilograms = 15.5 lbs by being to strict about my fasting, as well as standing up at the office.
  • Coding - I've actually done a fair amount of coding and studying coding. The failure is that I kind of stopped after the summer. This was a win up until July; more or less until I started this blog.
  • Brain architecture - I do know a lot more about the brain now, but more about its functionality than its architecture. Good enough?
  • Composing, playing the piano, painting, photography - all failures
  • Surfing - failure; I never even got to a beach...


I did have some clean wins as well:
  • Cilantro. I progressed from comparing cilantro to spraying eau de cologne on the food... to loving it.
  • Vegetarian. I became a vegetarian two weeks ago. Since then I haven't had any land-living meat at all (okay, yesterday we raided the sub zero and had some meat bought before turning vegetarian - remember this is about the animals, not my health)
  • I retired
This 42 year old dog apparently hasn't stopped learning new tricks just yet.


Talking about old and impressive men, that are still alive and kicking (and doing the split), here is the amazing Camille François Van Varenberg admitting to failure in a beer commercial (see just 0:15-0:35 if pressed on time, but I bet you'll find the entire 2:45 enjoyable. Then move on to the 2014 versions):




Cock In A Sock gate

I recreated the Van Damme Coors Light commercial on a snowboard trip this spring, during what is also known as "cock-in-a-sock gate" (Skiing or snowboarding naked, wearing just a sock around the ****, is not appreciated by everybody I learned). FYI: it was supposed to be for a good cause; testicular cancer.

Cock In A Sock For Cancer
March 29, 2014
-The Retarded HF manager



Failure just means there is room for improvement

Summary: OK, I failed. So what? Maybe I found something more important or interesting to do. I don't feel I have lost out on anything and I don't experience slipping behind, so I must have done something right.

The process of listing wins and losses leads to accountability, which increases the likelihood of improving. The failures are no reason to feel bad or to give up; they are just a reality check and stepping stones in your process of improving.

Now get on with it and write your own
list of failures for 2014 and remedies for 2015

söndag 12 oktober 2014

What does it take to crash markets? -Nothing!

Do you remember 1973-1974, when the S&P 500 index plunged 50%, even while earnings increased by 50%? That was fun. Hussman writes more here.

What "happened" was more or less the same thing as today. All variables, market levers, were cranked the opposite direction when the bull ended compared to when it started. Consequently, earnings didn't matter. Nothing needed to happen to cause a crash.

Lateral thinking: Reader's Digest

I apologize for my last post. Don't feel bad for not reading it. Here is a summary instead.

How to succeed in life and be happy. How to find your strengths as well as your preferences:

Mindfully, try a lot of different stuff when you are young. Then narrow down your search range with age, and focus on areas that are 'natural' to you. With natural I mean those that (as your experience now has shown you) play to a productive and enjoyable combination of your strenghts, your preferences and their objective worth to others.

But, even when you have chosen a couple of focus skills, remember to add some elements of chaos, e.g., combining unexpected disciplines or activities, to stimulate creative thinking and new solutions. It will make you both more productive and happy.

Lateral living

This post explores three main topics. First, when to be part of a group and when to be an individual. Second, how to oscillate between extremes to get the most out of life. Third, it has something to say about growing in small increments but consistently. The post is a bit messy and repetitious but the basic take-aways are:

  • The crowd is right sometimes, even in investments, but you have to be of a contrarian nature to know when
  • Live laterally (try a lot of different things and combinations) for better odds at success and happiness (and knowing yourself), even when you have found your long term strategy and chosen area of focus in life
  • Take one (small) step at a time, reflect and adapt




Life is a paradox that has to be lived

social or individual
strategy , persistence and focus or explore
bic picture or details
success or happiness
order or entropy



Go with the herd or go it alone?


Safety in numbers or lone wolf?



Conventional or Contrarian?



One of the eternal questions is the one about individualism; When is it best to blaze the trail, and when should you just fit in?

As a social animal, humans feel comfortable in the crowd. The crowd is a good thing when crossing a crocodile infested river or grazing the savannah. As a predator it is sometimes better to hunt alone, e.g., when staking prey, investing or competing in sports. Group behaviour is particlarly adequate when aiming for good enough or a basic level of safety. Individualism is better suited for exceptional results, for a broader spectrum of possible outcomes including when failure is okay, perhaps when failure or even death is better than mediocrity.


So, how do you know when to apply the one method or the other?
-You don't. Period. The rest of the post elaborates on how to asymptotically get closer to an answer by exploring the world and yourself by visiting extremes and contrasts in a reality made up of all shades of gray.

Which "triangle" picture is the most interesting to you of the following?





Life takes place in the grey, between black and white, between perfect order and total chaos. It takes intelligence and effort and a certain type of discipline to move between focus on the details and a more comprehensive bird's eye view, between consistency and variation, between focus and holistic approach. Life isn't black or white; it is both and it is the contrast between the two.

Don't go head over heels for a life-long strategy or force consistency in an area you know nothing about and not even your own preferences (yet). You have to try, try hard, but be open about your ignorance and know when to fail, give up and restart.

What I am trying to say is that unless you have perfect knowledge about yourself and the world, you can't (shouldn't) decide beforehand what to do for the rest of your life. You have to do some trial and, most likely, error first.

Don't lay down a strategy of consistency and just stick to it. You can't decide to be chaotic and unpredictable forever (what if you don't like it in the future). You can't decide to always be contrarian (the crowd is perfectly right at least as often as a stopped clock), nor always conventional (when the crowd is wrong, it is often devastatingly wrong).

As Joe reminded me of in the comments to SGM's recent post about how to think like an investor, not even a simple thing like physical fitness is easy to plan, due to lack of perfect information. I suggested he simply try a basic approach first:

Just wear yourself out; get sweaty and exhausted. Anyway you like, that you think makes sense, probably running and lifting things in various ways. perhaps throwing some stuff around as well. There is no need to be overly creative or experimenting; just do what others do. The focus should be on getting tired - both from aerobic (running) and anaerobic (short-term, explosive, muscle) exercise.

Then, in a couple of months, we can talk about specifics. First walk, then jog, then run, then do pushups, jumps and chin-ups, then do free weights - first basics and then more specific exercises. If you are reasonably fit you can of course do everything at once even in the beginning. The goal is to get a feel for what you like, increase your proprioception and reach a basic level of fitness to progress from.. During the initial stages of your workout career, you will probably cycle your goals between wanting to be:

  • Fit
  • Strong
  • Big
  • Defined
  • All-round
  • Agile
  • Fast
  • Impressive
  • Functional
  • Disproportionate arms
  • Six-pack abs
  • Bendy
  • Dangerous
  • Healthy
  • Happy
  • Calm
  • Focused
  • Lateralized
You see why it would be hubris to pin down one of them as your only goal before even beginning.

You could assign the above to just three categories: Aesthetics, Functionality or Health, but specifics like "good looking", "impressive", "attractive", "defined", "big" etc., within the Aesthetics category for example, are helpful when setting later stage targets. How to achieve the items on the above list calls for its own post, probably a long series of posts. Hence I'll leave it for now.

The important take-away here is that you shouldn't carve your target, strategy or methods in stone, but rather go for a half-systematic trial and error goal seek model, since 1) you don't know what you want or what you will want, 2) you don't know how to get there; which method is the best, 3) no one method is probably the best but a variation and combination, a cycling of approaches, 4) unfortunately you'll have to get used to living with uncertainty and changes - sometimes consistency an patience is called for - for a while - and sometimes flip-flopping between approaches to find what is working, is needed.

The incredibly deep book Gödel Escher Bach deals with the topic of recursion, self-reference, in mathematics, music and tricky-perspective pictures. It has a lot to say about the ability of combining various disciplines, about repeating patterns, about pattern recognition per se, about intelligence, about the limits of formal systems, about perspective, about top-down and bottom-up approaches. To me it manifests the importance of iterating between extremes to understand the complex mix in between that is life and you; Life doesn't take place in the extremes or monotone but a certain application of extremes, of diversity helps, whether looking for risk and excellence or just wanting to do a little better. It all circles back from life in the middle to using moderate extremes to do well in the grey area of life. Life is a mix of black and white or the contrast between them, not just either of them.


The investment crowd is inevitably right sometimes

Ludvig asked me (in the comment to the same post) about investing with the crowd; when and how that can be productive.

The quick and dirty answer (my favoured approach to most things - I hide behind Occam's razor if needed) is that the crowd is inevitably right sometimes, for quite long stretches in time and performance.

When the crowd is right you benefit from understanding that, from investing with it, with the trend, However, you also have to be independent enough to panic before everybody else does; you have to understand when the crowd is gradually leading itself astray, like a flock of birds following a magnetic anomaly despite perfectly visible geographic signs below them. Then you have to be prepared to leave the cozy feeling of patting each others' backs, telling one another how smart you are. But not before.

When you eventually leave the crowd, you'll be ridiculed, maybe even threatened, but I guess you are prepared for that. Your problem is the opposite; how to stand doing what everybody else is doing, when every contrarian fibre in your body is calling out for doing the opposite of whatever it is everybody else is doing.

Just remember this: first a few lone contrarian wolves and risk seekers buy around the bottom. Gradually others latch on, after a while more and more pile on to what is becoming the trend. Soon a majority (the crowd) is singing the market gospel, be it for houses, stocks, bonds or gold, other commodities or what have you. At this point the crowd can very well be right, most often is; stocks may still be cheap, the economy fine, alternatives poor or scarce. Not least, the market may have quite far to run, since everybody is not yet in. Then it is "right" to be with the crowd. However, when the gap closes between "majority" and everybody (and their dogs too, and mothers-in-law; extremely bad call though), including the last bears throwing in the towel, and the last fools desperately catch the bull market's final euphoric spasms, you need to get out unless you hadn't already.

Personally, I always sell* too soon (see this post in August for my private portfolio); when it's risky and expensive but not yet ridiculous. It's part of my personality; I always just go for about half of what can be taken and do it with minimum effort (see my 1/50 rule of efficiency). You, however, might want to take advantage of the momentum of unthinking crowds and trend followers and hang on for longer - perhaps both when chasing the peak and the trough. Riskier yes, but potentially (albeit not necessarily) with higher rewards. You never know when the first air pocket in a bull market will appear, or the first crazy bounce after what turns out to be the final trough. Nota Bene that at this point the greatest risk (and potentially return) has reversed to be running with the crowd.

(*I'll probably buy too soon too the next time round)

Another thing to consider regarding investments is that if you don't know what the crowd is doing or thinking it is difficult to be contrarian. On the other hand, you can get pretty far ignoring the crowd altogheter; sometimes you'll agre, sometimes you'll be on opposite sides. As long as your model works you don't have to care which it is. But, still, you could do even better by knowing your frenemy, knowing the crowd, knowing how to use it. Just don't get too close to it or you'll be sucked in.

Runners need to include interval training, distance training, pulse training, short and long distances, speed play etc. They need variation and consistency, they need exertion and rest, they need to push through the limits but listen to their bodies too.

The investor's world is at least as complicated. Long-term, short-term. Trend and contrarian. What do others think I know about what they know? Valuations? Politics? Alternaives? Financing? Overshooting? Consistency and disciplined patience or tight likewise disciplined stop-losses?

Bodybuilders, strong-men, weight-lifters, competitive athletes all face similarly complex decision and planning challenges. To be a solid top three athlete you can get far by doing what everybody else is doing, just add a little more talent or maybe more or less hours to the mix. A music artist could follow the same recipe, copy what works. But to be exceptional, you need to take more risk, you need to risk not being elite at all, risk total failure. To win in men's high jump Richard Fosbury invented a completely new style. Jan Boklöv did the same in ski jumping. Both were about to be disqualified from their respective sports. Instead they became legends. High risk and high return, but it could have ended in complete failure. High risk means the range of results is bigger and you don't know where you'll end up. However, if you don't risk it, you know you'll be mediocre. Not that there's anything wrong with that.

An artist needs to know what is working in the media and the shops right now. She needs to be immersed in pop culture to stay with the times. Both in order to stand out from the crowd or to make sure she is mainstream. Mainstreaming can make a living but not success, and being embedded in the crowd all but destroys the chances of originality and stardom.

And yet, these guys all already know what they want. You often don't. You are still searching for a purpose, a strategy, a meaning. You might want to want something. You might want to settle down with a long term strategy and hope to learn to like it. It probably works well enough, the brain will make sure you don't end up miserable. As long as you don't fail completely at everything you do, you'll probably even turn out happy - as long as you immersed yourself, adhered to your talents and strengths and did your best at something you could at least tolerate from the beginning. I and SGM have written about that here.


Explore lateral thinking

A refined or alternative solution, a more efficient and robust approach would be to invest a few years in experimenting with who you are (no, I don't mean kissing your same-sex cousin in the shower), what your strengths are, what your desires are, what methods stick more naturally to you. A way of helping you in that process is exploring lateral thinking, exploring (moderate) extremes and diversity. Set fire to your brain synapses by doing unexpected things, crazy combinations, meeting new people (Gina Dirawi, a Swedish TV personality, has a series based on meeting other people to get some perspective on how small her own problems are), and so on.


Walking on the wild side


Lateral process for success

This is how you can find out who you are, what you want, how to do it. This is at least one drop in the holy grail of how to be efficient, finding purpose, being productive and not least happy:

The brain and the body alike thrive on diversity, on novelty, on challenges. In addition, the brain evolved to control the body and predict the environment it is moving around in. Hence the brain and body are intimately linked and develop best in concert - like when walking and thinking, walking and discussing, walking and listening to science podcasts. Sitting on the other hand is the worst thing you can do - it shuts down both the body and the brain and accelerates aging (less brain plasticity, less body mobility and even less plasticity).

It would be very comfortable, albeit possibly boring, if life was just black or white, if you could just choose one path and then be done with it. Now, that is not the case. Life is all possible colors, nuances, shades and hues and you had better embrace it and take advantage of it or succumb to the monotone.

Okay, here it is, the one rule to live by:
Provoke yourself, your brain and your body with lateral thinking. Rather than focusing too much for too long on a single topic, risking suboptimization, mix things up consciously in order to stimulate your creativity and adaptability.


  • Take (cold) contrast showers (circulation, will-power) and hot saunas (testosterone)
  • Sweat, freeze (brown fat)
  • Strain your body during training. Relax and meditate
  • Listen to music you like. Listen to music you don't like. Listen to silence; be mindful, know thyself. Music stimulates your IQ
  • Fast, be hungry. Overeat, aim for hypertrophy
  • Enjoy your food, consider every bite, pick apart the taste components
  • Move, walk (and listen to podcasts about things that interests you and things that are not on your list)
  • Talk to new people. Listen to them.
  • Walk barefoot when you shouldn't (chance encounters, new feeling, new thoughts)



Lateral living is
unequivocably good 


  • Be wet and then dry (walk in the rain and then enjoy a hot coffee and drying yourself)
  • Get drunk and have a hangover, then workout and take a sauna and enjoy getting well again
  • Travel and meet people with other and worse problems than you


You grow more if you socialize with ambitious and succesful people in life, with bigger and stronger people in the gym etc. Then change your crowd when you have reached the top of your group, in order to keep climbing the ladder. On the other hand, intimacy, friendship, gratefulness and consistency are a few of the best things in life. In addition, meeting with less fortunate people increases your own gratitude and happiness. Success and happiness are not perfectly linked, if you are not mindful, they can even be opposite each other. Once again, life is about contrasts and diversity, about (unusual) combinations, not about finding the one answer and method. That includes my one rule about laterality; sometimes you should focus instead and then circle back to controlled diversity and experimenting.

If you are writing a book, looking for new ways to make money, creating a day trading system, looking for a girlfriend, competing in sports, aspiring for the Nobel Prize in Physics... If you are looking for excellency for reaching the next level you have to experiment, combine, look in unexpected places. You need a sufficient experience and knowledge in several different areas. Music, art, sports and math are intimately linked. Logic, rhetoric, sensations and feelings too. You can read way, way more about this in the extremely heavy tome of GödelEscherBach.


I do boring stuff to increase my everyday laterality

The other day I went for a walk before breakfast as I often do. I listened to 4 or 5 podcasts, some of them on science, others about language or politics. When I'm not walking and listening to podcasts I read a lot so digesting new information in audio form stimulates my brain in new ways. In addition, I make it a point to include programs I think might be boring or at least are on topics I don't care much about. They often turn out not to be and I often learn things I didn't know I anted to know about. As an added bonus I often get completely new ideas about completely unrelated areas.

All these ideas tend to just briefly stick in my mind, only to evaporate a minute later, unless I write them down. Luckily, Ludvig inspired me to start using Evernote to keep and organize my ideas. Earlier, I simply remembered what I remembered, but now I have accumulated 100 separate and indispensible notes in less than three weeks. They are organized in 12 different notebooks, while using 70 different labels. And, nota bene, these are the 100 notes that are still relevant; as soon as I have used an idea I erase the note. The funny thing is that I actually downloaded Evernote 6 months before even meeting Ludvig but never used it. That's how good a salesman he is.He could sell sand to beduins and ice to inuits.

The lateral thinking process can be used as a tool for creativity in your chosen area or as a way of knowing yourself, finding out what it is you really want out of life, finding your area. Do a lot of contrasting stuff and novel combinations and be mindful of your reactions and feeling during and after. Ignore what the crowd is doing; what is considered success or requisites for happiness. I can tell you it is not having a penthouse, a Ferrari or a Lamborghini or six pack abs. That's just stuff. Getting there, however, and exploring life and becoming me in the process, not least knowing a sports car isn't happiness in itself, has given me tremendous value.


Said about exploring and lateral thinking:
  • According to this TED talk about children's minds, babies think and behave like scientists; ever curious, with 360 degree attention. That's part of the magic behind learning language by just listening and moving such a complex thing as a human body through a complex world. The drawback is a complete lack of focus. Adults have the opposite characteristics.
  • And this video about teaching and learning, states that 98% of children have genius-level creativity before the uniformity of school wrings it out of them.
  • And, finally, as part of our hiring process at my hedgefund, I had the prospects explain how and why all the physical money in the country would fit in a famous building. The case showed whether the interviewee was level headed and creative, focused, arithmetic but still holistic and had common sense and was able to verify his own work on the fly through quick bird's eye view sanity checks before delving into the details again.


If you desire a sea view, go to a shore
-instead of working your ass off in a basement

As an added bonus lateral living is unequivocably good for you, whether you come to any conclusions or not, any tangible achievements or not. You will be more versatile, fit, intelligent, creative and healthy for it, not to mention probably happy too. It will also slow down the perception of time in retrospect, since the brain records time based on novelty. People who say time passes by faster and faster are simply drowning themselves in routines, creating the feeling of boredom in the now and an ephemeral life in retrospect; the worst of both worlds. Lateral living renders the opposite experience; flow now, and a feeling of a productive and fulfilling life where time has passed at a comfortable pace when looking back.

Joe asked how to know what strategy to commit to, how to be more consistent in working out, e.g. My answer to him is that unless you already know you have to explore that consciously, i.e., DON'T COMMIT TO A STRATEGY (too early).

You have to try different things in different areas, different combinations, while asking yourself what you actually want out of training/life etc. Ludvig at SGM has proposed just picking a way, consistent with your relative strengths and then learn to like it with time, focus, persistence and immersion. I say you should first invest at least a few years in exploring yourself, being mindful of what your natural talents strengths and preferences seem to be. Then you can pick a few and try them out in parallel before settling for one. Be open to change strategy or role models along the way, but be less flippety-floppy about it the older you get - you may not have forever. But never stop exploring contrasts and extremes within your chosen area and never stop trying new, scary or boring things. Live Laterally.

Don't sweat the details before you have the big picture sorted out. Once the supertanker is on its way with some speed, it is extremely costly to change direction. However sometimes it's difficult to discern which is the big picture and which is the focus on details. Is doing mobility exercises big pic stuff or a minute detail? Is correct form when deadlifting an irrelevant detail or a most important big picture factor? What superficially seem like details can contain the bic picture devil - and there is no patented way of telling the difference before you have tried.

So, try, but be at least a little careful and don't burn too many unnecessary bridges. Don't buy put options for your entire net worth. Don't risk hurting your back or knees in the gym. Don't do irreversible damage to your health, your finances, your important relations.

Pace yourself. Add just small increments, but do it consistently. Don't aim too high in the short-term, but do set your long-term vision infinitely high if you like. Live life instead of pushing the fast forward button.

Summary: Dare to find out what you like, through trial and error. Try, fail and give up. Then restart, pick yourself up. And don't judge others when they are trying the same. Don't be a hater. Inquire and learn instead. Embrace diversity, it will make you live longer and make you grow.


Here is an amazing RSA animation about the divided brain, about the broad general right-side awareness of the unknown big picture, and about the laser-like left-side focus on the known task at hand
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