Jul 13, 2011
Life seems to be one new life-altering phase coming after another. As kids, we all had our own little obsessions: some flipped pogs, others dressed up as Ninja Turtles, or some, as in my case, wrote down the name and registration of every airplane landing at Toronto’s international airport (that’s a whole other post on its own).
But we grow up and out of those things, and we soon find ourselves in the awkwardness and involuntary erections that mark puberty. Yet this too is just a phase, one in a long line of which defines our experience growing up.
It doesn’t stop when we get older, the phases just become more expensive and equally pretentious.
there is Digital Rebel inside each of us
Take for instance the inevitable photography phase. This one is a real mid-late 20s phenomenon, where we purchase a $$$ digital SLR and then proceed to annoy every person we ever have dinner with again. You know what it is, its the jackass at a table of 12 that insists on making an entire round to take a picture of everyone’s dish.
But tucked somewhere in between our Kodak (or should I say Hipstamatic) dreams, and our future spent raising Alpacas,comes the phase where we are seduced by Louis Rukeyser’s wonderful world of the stock market.
At least with photography,there comes a point where every would-be Capa realizes that nobody wants to see a 100 picture gallery on Facebook devoted to a recent dinner at Chilis’. With investing, we only realize we suck when our bank account hits 0, and we’re trading hand jobs for stock tips in a McDonald’s parking lot (that didn’t happen to me, i swear…).
Balloons and Oversized Cheques
The allure of the stock market is hardly subtle. If you’ve just invested $100k in an English literature degree, the stock market feels like those letters you get from the Publisher’s Clearinghouse Sweepstakes. You may have already won! Yet, instead of Ed McMahon standing at your doorstep with red balloons and an over sized cheque, its Jim Cramer, sleeves rolled up to this chin, welcoming you to a ‘house of pleasure’ (which interestingly enough I have discovered to be located on Sukhimvit Soi 11)
The stock market is the sickle-cell anemia of software engineers
The stock market is like a mid-autumn bug, a single sneeze turns into a torrent of phlegm in mere minutes. For software engineers (especially those of Indian heritage, like myself) we are particularly vulnerable to its spread. I am sure it comes as no surprise that there aren’t many of us spending our Saturdays captaining a softball team, running to cure AIDS, or trolling through a farmer’s market looking for that one special candle. We have far too much free time, that when combined with lofty salaries and the lack of any real hobby not involving a keyboard or Gandalf, makes us easy prey to the webmasters of http://www.SeekingAlpha.com.
So i did what i am sure many of us did, i snorted my first line of the drug known as the Wall Street Journal, and then enjoyed my first, among many, Erin Burnett and Maria Bartiromo lesbian fantasies. I definitely was not alone. If you took a walk down the hallway of any Microsoft engineering building, I bet you will find as many aspiring hedge fund managers as you would Magic-playing virgins.
It’s all about opportunity costs
Yet for me, I realized only after 4 years ( and in business school ironically enough), that investing in the market as a small-time player like me is not worth it. Even if by some miracle I eek out a 10% return above the S&P 500, did that additional $X justify the amount of time I had to spend reading about Soybeans and listening to Charlie Gasparino?
(sidebar: I’ll say it, because we’re all thinking it. Charlie Gasparino is a tool box. not just a tool, he is like a god damned Craftsman series 100-piece socket wrench kit)
The market moves like Sauron’s host…
The market is bigger than all of us. Its movement is like that of a breaking wave, nobody knows where its going to go, yet we all jump our surfboards and try to conquer it. And even more so, we all love to claim that we have.
But we don’t. For every big win a small-time investor has in a stock, I am sure you could find an equally offsetting loss. I scored huge on betting on Northwest Airlines being bought out, but my enlightened decision to double down on GM debt in July of 2008 more than took care of that win. For every wall-street fund manager who is bullish on gold, I am sure you can find the same number who are bearish.
The scary truth is that we are all out here running around rubbing two sticks together trying to catch a flame.
As Costanza then added “and you’re walking around here with a Zippo?!”
Now I won’t say nobody wins in the markets. . Given enough capital, and insider knowledge, all of us can be playing the air guitar on a yacht like my boy Raj Rajaratnam:
I admit, this guy looks like a bit like El Douche. But the feds taking him out to the back of the woodshed over insider trading reminds me of when Comcast shut down my internet for downloading pirated music. Its not like I am the only person doing it.
In a world when every piece of public knowledge is already priced into a company’s stock price, having knowledge that nobody else has is one sure fire to make money.
If you think that Raj needs to go to jail for breaking the sacrosanct rule of ‘thou shall not trade on insider knowledge’, than I bet you also believe that the securitization machine behind real estate’s collapse was really designed to empower minority homeownership.
Enter the Rainman
Yet beyond those who have the insider knowledge and endless capital lie those who simply have a gift. Just like Craig David once said, there are always those who were born to do it. Be it stacking cups, lifting plates, or pricing stocks, genius is everywhere. Look at this dog:
This dog be blowing bubbles, doing handstands and all sorts of other shit that I am sure gets all the neighborhood bitches in heat. Yet you wouldn’t expect your retard dog to one day wake up and know how to skip double dutch? So it puzzles me when people run out to buy books with titles like ”
It’s not as if Buffet was sitting around in Omaha 1940 shooting marbles and thinking to himself “hmmm, i really think i will only invest in stocks that have high cash-flow multiples and bullet-proof franchises”. Even if by some miracle Buffet could write down every mental checkpoint he goes through when evaluating a stock, it still would be of no use to anybody but him. What he can’t write down are those intangible instincts that he himself has learned to trust.
Books that claim to make you a master of the market are doing the exact same thing as the pills that promise to increase your penile girth. I’m surprised Amazon.com hasn’t bundled them together as a super-saver deal.
When in doubt, blame the media.
I think what really turned me off the market are the same things which initially hooked me, the business media. The Wall Street Journal and CNBC are grocery market tabloids draped in sheep’s skin. They take random, otherwise unimportant pieces of data, find some idiot on the street who will make a case on it, and put it up in big bold letters to dress it up as the most important news since the Berlin Wall fell.
The US jobs report really depressed me
I really hate it when I hear that the US Labor Department’s Non-Farm Payroll jobs report comes in below expectations. Not because I have some sympathy for that nameless Joe standing in an unemployment line, but rather I dread the 12-hour marathon coverage on CNBC that features Melissa Lee asking everyone, including the unpaid intern in the back of the studio, “does this news mean the end to our economic recovery?”.
Or how about every time CNBC decides to aire the release of some bullshit metric pulled from the Vermont Department of Agriculture that is claimed to be the true predictor of our economic future?
But my favourite has to be the stock imagery the Wall Street Journal likes to throw around to really drive home the despair that comes with a 100-point down Dow day:
I bet the guy in the last photo is just really upset from not getting his 2pm sugar fix.
Please kid, call me when the market loses 700 points in one day
Maybe prior to September 2008 these types of stories kept me interested, but not anymore. Sons, I watched the Dow go from 14,000 down to 6,600, taking along with it most of my bschool tuition. If Lehman taught me one thing, its that short of a comet hitting the Federal Reserve building, nothing that CNBC or the WSJ claims to be a market-shaking headline can really be that bad or good in the long run.
The world goes on. The market adapts. I have accepted the market to be a shark-infested ocean that isn’t worth all the effort.
And here’s the rest of the story…
If I have one stock tip for any future would-be stock maven it would simply SPY
If you want a little bit more adventure for a minimum amount of work: diversify your money across maybe 3 major economic sectors, throw in maybe a bond ETF, and avoid individual company purchases. Then have your wife/gf/bf, or in some people’s case, a highly-intelligent dog, change the password to your online brokerage account and not tell you.
After that, grab the SLR off the shelf, and go out and take some mother f*ckin pictures.