A treatise on markets
Back when I lived in Vancouver, I was living the unemployed dream. Not quite right: I was working at a driving range a few days a week, and during winter I was one of the ‘Mountain Safety’ crew up at Whistler one day a week. So, the employed dream?
Even though I had a job, it felt like I was unemployed. The golf range gig was very cruisy. Involved hanging out in a booth/shed selling ball tokens, hitting a whole heap of balls, and then driving a tractor to pick up said balls every so often. Was probably the best job I’ve ever had, all for CAD 10 an hour. The volunteer gig with Whistler was similarly cruisy. We got to head up to the top of the mountain about an hour before the mountain opened, and then make our way down, setting-up go slow signs as we went. We then just cruised around the mountain for the rest of the day with walkie talkie‘s, attending to collisions, injuries (including occasional heli-evacs!), lost kids, or whatever other problems or mishaps occurred.
The Whistler gig was actually home to one of my many shameful moments: I fell asleep on the job. Super cold, bluster’y day and I lingered on a couch in a breakout area for a bit longer than I should have, after coming in for a bite to eat. I woke dazed and confused to one of the lead dudes accosting me. He wasn’t too impressed. Woops!
I was pretty lucky to not get fired. A few of the regulars I normally boarded with, put in a good word for me, rightly or wrongly.
Anyway, the main point of this ramble is that I wasn’t particularly obligated in terms of having to turn up at a workplace. And while it’d be easy to think that that would mean I’d settle into a life of midday TV, and naps (substantiated by me falling asleep while working!), that didn’t really happen. Instead, I ended up delving pretty deeply into trading (I also had quite a lot of naps).
Like most people, I’m generally pretty keen to acquire currency. And especially so, when it requires as little time tied to an employer as possible. At that time, I was still making money playing poker (that’s another venture that I was spending considerable time on), but it was becoming increasingly difficult. The supply of new (read: bad) players was waning, and the online poker houses were squeezing more and more of a cut from the diminishing player pool.
I knew that poker wasn’t something that I’d do forever. Trading seemed like a worthwhile pivot, with quite a few similarities related to bank roll management and psychology.
Over the course of about 6 months, I spent a lot of time at the Downtown library reading books about the history of markets, biographies of famous traders, trading strategies, the psychology of trading; whatever I could find, really.
A lot of the stuff I was reading was great context. And certain books were great at explaining the technical aspects of different things you could trade, such as options or futures. But once you learn all that stuff (which I never fully mastered), you were really only at the level of knowing the rules of the game. Kind of like knowing that a flush beats a straight; or the probability of hitting an inside straight draw is 8%, etc. It’s the framework that you need to know inside out before even beginning to develop a strategy.
And strategy is where things get difficult. It’s compounded by the overwhelming amount of chaff to wade through when you’re trying to figure out an approach. There’s no shortage of people trying to sell you their expertise and insight, but unfortunately, almost all is crap. Those who can, do. And those who can’t, teach, sums it up pretty nicely.
Anyway, the more I looked into it, the more daunting the prospect of trading became. On a surface level, it was clear that a select (yet diverse) group of people were able to be incredibly successful. But that assessment is like finding out that top basketball players get paid millions of dollars, and so deciding to start working on your free throw for the upcoming draft. Easy money.
There’s also the idea that those that are successful, are successful because they’ve superior intellectual fire power. They’re just better than the competition and naturally rise to the top. Many successful traders and the hedge funds they found, or are attached to, have this quality. But that’s not necessarily true for a substantial portion of them. Success is often tied to unscrupulous methods to extract surplus returns.
What’s more, to trade from home, both facilitated by, and against, the might of large financial institutions, banks, hedge funds, etc., you’re at a distinct disadvantage. Investing for the long-term is one thing. But to actively trade on a more short-term basis with a slower connection, less competitive spreads, less information, less computing power is not a great starting point, to put it mildly.
From when I was playing poker, people used to throw around stats that about 90% of online poker player accounts lost money. And then the next few percent were break even or modest winners at best. It was really only the top few percent that made all the money. I’m not sure what it is for retail trader’s, but I suspect the statistics are even more extreme.
So that’s essentially where I got to with trading. Super fascinating, but ultimately something I didn’t pursue. The reason why it’s come to the fore of my thinking in the last little while is that I’m still a sucker for the promise of ‘easy’ (read: not easy) money. Surplus time at home from the state of emergency and the GameStop saga of the last few months has fuelled my interest again. But I’ve quickly arrived at a similar conclusion to what I did a decade ago. If anything, it seems the playing field has only skewed more. And that’s despite the introduction of platforms such as Robinhood.
I’ve actually just finished reading the book about Enron: Smartest guys in the room. The book paints an amazing picture of just how corrupt the financial system was, and still is. Until I read the book, I always thought it was about the fraudulent misdeeds of a few people in one company. But it’s instead an indictment of capital markets in general, as facilitated by Wall Street.
And yet still I’m drawn to trading. Ha!
No, probably not trading. But investing, which has a longer time frame, is something I’m keen to get into more. For the last few years, I’ve been cash heavy (with my limited supply). While there’s not much inflation to speak of, the runaway appreciation in asset prices (damn you, Australian property) has left me in the dust. A flat white might still be $3.50. But a median house in Sydney of about 4 billion dollars kind of stings when you don’t own one.
Though now that I’m thinking about it more, rest assured that the point at which I do put my money in, that will be the top. For housing, I reckon I’ll be keen to buy a place end of 2022. So, Australian property bubble to burst beginning of 2023.
And I’ll just add, beyond property, investing for the long-term has been severely warped over the last few decades. So the game is far from fair, no matter what you do (property, stocks, bonds, commodities, or beanie babies). Thank you, elites (facilitated by political class and central bankers).
Anyway, here’s some pictures from the last little while in Tokyo and surrounds. The weather is starting to turn just about perfect. Some of the Sakura are already blooming, with more to occur over the next month or so. Magical time for all the hayfever sufferers.
Some quick running updates following an earlier blog: my running has severely stalled from about early December. Slight injury that I think is only now coming good. Good enough to start up’ing my mile’age again, but I’m definitely a ways away from being fit; it’ll be a while before I break any of those goal times, if ever.
But absent running, I’ve finally been climbing again. About 5 times outdoors this year, which has been great. Have lost a lot of strength from when I was climbing in 2019, but I’m keen to also up the climbing efforts too, to change that. Will see if I can simultaneously improve running and climbing at the same time.
Sayonara
