Friday, December 20, 2019

心态

投资股市心态很重要。股市很liquid,assets are highly diversified, transaction cost is low,加杠杆方式各种各样,杠杆率可高达20X。而且盘子极大,你一天之内你进出几百万,对市场一点影响也没有。这些都是股市的优点,但是大部分的散户反倒被这所害,关键还是因为他们是抱着一种投机而不是投资的心态。


大家先来看一下股市大盘,比如标普500,几十年下来的长期几何平均收益,daily return大概是~0.02%. 但实际上股市每天的价格1~2%波动是常有的事,也就是你的大脑要应付1:50~100的信噪比。No matter what genius you are, the part of your brain in charge of fight or flight response simply is not equipped to pick up such signals from the noises.


如果你的进出股市的频率是以天或以月计,你不用计算机实现你的策略,而是凭感觉来买卖,那么你会很难挣钱。这并不是说这样的操作没有人会挣到钱,相反每天总是会有很多人挣到钱,但是这些人挣到钱的原因大体都可以归结为运气(概率),而不是他们自己觉得的原因。


能够在这个频段上consistently挣钱是一些HFT和model-based trading strategy, 前者为了几毫秒的竞争优势可以自己去铺光缆, 后者是诸如James Simon之类的牛人. 即便在他们之间,竞争也是异常激烈,每年的利润空间都一直在压缩。

个人投资也并不是没有优势的。对于个人来说,投资的目的一般是为了几十年后的退休,这期间还会一直往里放钱。而机构投资者每年每季度都有报表的压力,一有风吹草动客户就要提现,经常是刚好要加仓的时候。所以个人投资这于专业人士最大的优势是真正长期投资和 commitment of future cash inflow.

个人投资者最好不要快进快出,想着一夜暴富,这是拿自己的短处和别人的长处相拼。不管你用什么投资策略,你至少要觉得这种策略会适用的将来3到5年,甚至更长。如果你觉得3到5年实在太长没法预测,那么你的策略可能本身就有大问题。这其实和很多地主和做实业的time horizon相吻合,很少有成功的投资者在买房产或开公司时想着三五个月后就卖的。

解决了time horizon的问题,再来说一下怎么应对市场的波动. 首先你要知道: Nothing is certain in the market but uncertainty, if you cannot stomach uncertainty, stay away from the market. PERIOD.

有些人用自己今天挣了或陪了多少钱来衡量市场的波动,这显然是有问题的,因为数目大小还和你的基数有关。大部分成熟的投资者知道要看相对的percentage change,而不是绝对的dollar amount。但是如果这个绝对数字和自己每年的工资或生活费用相比太大或太小,他们还是会乱了阵脚或行事轻率,做出些错误的决定。

过去十年,帮助我应付市场波动的方法有两种:一是把价格上的波动转化为时间上的波动来思考。比如2018年年底大跌, 跌幅和跌速都让人心惊肉跳,但如果你换算成时间,那只不过回到一年多以前,换句或说,I am just as rich or as poor as myself about one year ago and my lifestyle has changed very little since then. So, what's the big deal?

又比如,2000/2 dot com泡沫破灭和2008/9次贷危机相比,前者跌幕比后者大多了,但前者只把时间往回推了4,5年,而后者推回了十来年,所以后者对社会,经济的影响远大于前者.换句话说,后者是比前者更难得的一次机遇。

每个投资者都希望自己是个时间旅行者,哪怕是只看到明天报纸的头条就可以发大财了。每次市场的波动其实就是一次短暂的时间旅行,如果2008/9年的你有机会告诉1998/9年的你,市场到哪了,只要你相信世界不会永远停留在1998/9年或回到更以前,你就会发觉这机会和你可以时间旅行看明天的头条没什么区别。同理,2019涨得这么疯其实就是开始透支未来,哪天要回归现在你就不会太惊慌。

我另一种应对市场波动的方法就是,每次我要进入或退出某个仓位前,我都会把支持和反对的理由一一列出来,最好是写下来,然后放在一边凉一凉。过上一段时间在去看一下,这些理由还有没有效。如果因为这段时间内发生的事情自己的想法有所改变,可能自己以前的想法欠成熟,或是自己在思维方式上有重大的盲点。

如果这样反复考虑下来,几个月甚至一两后还是觉得某个策略是可行的话,自己再去执行起来就不会患得患失了。而且十天半个月间的市场波动应该丝毫不会影响我决定的执行。

不少投资者的思维方式还停留在,“我觉得市场明天(或将来)要涨或跌,所以我今天要买或卖”。但这个世界 fundamentally uncertain. 所有的结果都是有可能的,因此我们必须Always expect the unexpected! 在想某个事件发生的可能性时,不能只是是或否,涨或跌, 而应该是一个probability distribution. 我们的投资决定应该是评估了所有的可能后,基于自己的风险承受能力做出的一个trade off, 而不是跟着感觉走。

财经访谈节目上的新闻,专家的意见不是瞎掰就是有意的误导,即便是顶着Nobel光环的经济学家也是如此。这些人对他们的观点但凡有点信心,他们早会在市场上提现了,哪有时间上节目挣那点小钱。不要去指望有谁能给tips发大财,唯一有用的tips是insider information,但没有人会冒着坐牢的危险给你通风报信,有人有时候蒙对了也只是道听途说的结果。

最后聊一下杠杆。炒房也好,办企业也好,一个主要的事情就是融资。owners一般不想冲稀自己的股份,但只要一借钱就绕不过杠杆的问题。

房贷是大部分人加杠杆的方式,但房贷的利息其实是比较高的,而且银行的rate滞后Federal rate cut 很多。我记得2009-2011间,我天天给银行打电话想借钱,但每家银行都忙着修补自己的balance sheet, 贷款的门槛很紧,你只靠房贷会错失很多机会。

当时有个朋友给我介绍了Interactive Brokers,如果你有比较高的balance,IB的margin rate只比federal rate高一点,而且它紧跟rate cut。如果你已经决定了要上杠杆,IB的 margin loan可能要比房贷合算,而且借款的多少长短很随意,不像房贷总是一大笔长期的commitment。当然你必须维持足够大的cushion,不要太贪心,否则margin call就麻烦了。

还有一种加杠杆的方式是ES-minis. 它成本比IB的margin loan还要低些,杠杆一直可以加到20X以上。有兴趣的朋友可以自己去研究一下。我在这就不多讲,免得把一些不适合做金融衍生物的人引导上破产跳楼之路。

我对投资感兴趣,不但因为这是我实现财务自由之路,而且是对智力的挑战,行为处事的考验.o In the world of investing, you have to be curious, humble and brutally honest with yourself. At the same time, you must also be a  decisive and displined practioner, able to execute your strategies with a sniper's precision, one shot, one kill.

Saturday, September 8, 2018

也无风雨也无晴

不经意之间,自己已是四十好几,回想往事,有时难免感慨。 二十多年前,我大学毕业,大部分的同学都出国了,我没好的去处,只好呆在本校保研。毕业时人去楼空,孤坐寝室,真是一贫如洗, 四壁途光。

读了不到一年的研究生,才发觉国内科研水平实在太差,呆下去只是浪费时间,所以选择退学,赖在学校蹭住,考T考G,准备出国。 当时我父母在南方的一小城工作,每月工资就一百来块。

帝都万事皆贵,白居不易,为了糊口,只好先找了份家教。教的是一个外国小孩,他家住在俯视建国门的豪华公寓里,父母都很和善,我忍不住问他们房租多少,被告知3000美元一个月!那时美元兑人民币8点几,黑市十二三,这样的租金对我来说就像是天文数字。 

为了赚钱交报名费,我在三角地随便撕了一张招零时工的帖子,跑到国贸那边去应聘。等我换了几次公交赶到时,人家还剩半小时就要关门了。幸好面试的是一个人大毕业的小姑娘,当年没上我们学校可能是她人生的一件憾事吧,所以赶人之前还和我聊了几句。聊完说今天实在没时间了,要不你明天来吧。临走时还问了我一句,你POWERPOINT熟吧?我说“那当然!”

 90年代中计算机在中国还未普及,生物系的小孩很少有机会碰,我连POWERPOINT是什么都不知道。回来正赶上下班高峰,公交站黑压压一片几百号人。虽是起点站,挤了几次居然都没挤上去。当时北京已有凉意,一阵秋风吹过,落叶纷纷,飘零于高楼之间,自己也如浮萍,置身其中,望不尽天涯路。刚好旁边有一年轻人,也要去中关村,于是相约打车。他也是个身无分文的北漂,一路上大家幻想着怎样空手套白狼,并没有觉得自己穷,只有对未来无限的憧憬。 

回到学校就赶紧打听POWERPOINT是什么,找到一计算机系朋友那上机,花了一晚上恶补,速成POWERPOINT“专家”,没想到第二天面试的时候居然还让我给蒙混过关了。同时被招的还有一个清华的孩子,我当时还很纳闷:这公司谱真大,找零时工还这么挑剔?

后来才知道这公司叫McKinsey & Company,她们忙不过来,需找几个零时工加班。 负责招聘的小姑娘告诉我加班费一小时100人民币,刚开始我还以为听错了。看在钱的份上,我对加班特热心。有时干到半夜,只能骑车回家,白天车水马龙的大街顿时安静下来,想着这一晚下来和我爸妈半年挣的差不多,一点也不觉幸苦。

公司里那些哈佛毕业的海归一年几十万美元,心想大家的起点差别也忒大了! 当时中国还在争取入WTO,但世界各大公司已在准备为进入中国布局,国内一些有远见的企业和部委也想走出去。在那打杂能看到很多咨询策划的案子。运筹帷幄之间,隐约能看到中国正面临几千年未有之大变局:前朝留下来的贫民窟中现代化的高楼如雨后春笋般崛起,新旧体制转变之间,老的一代被淘汰下岗, 同时给年轻人无限的机遇,真是无边落木萧萧下,不尽长江滚滚来。 

半年后,我和清华的小孩都拿到了留美的奖学金。那孩子是北京人,觉得将来国内的机会会比国外多,居然放弃了出国的机会!我从小在一鸟都不拉屎的山沟里长大,眼界和格局都不如别人, 我那时的价值体系里城市一定比乡下好,外国一定比中国好。于是借了几百美元,买了张单程机票,怀揣着做科研的梦想,踏上了美国这片陌生的土地。 

到美国没多久,很快意识到自己天资有限,科研底子太差,这辈子拿炸药奖是没戏了。于是决定退学,随便找个工作,了此残生。但生物没有PhD根本找不到像样的工作,即便找到,生物PhD的工钱的和墨西哥民工没多大差别。没办法只好找几本计算机书临时抱佛脚,去应聘码工。还好抓住dotcom的尾巴,在当地一IT企业找到实习的机会,希望过后就能转正办身份 。

我们部门在研发一个新项目,大家没日没夜在赶活,产品发布前一天公司宣布有重大决定,要大家去开会。CEO来了先是一大堆同志们辛苦了的BS。然后话风一转,说现在dotcom 泡沫破灭,大的环境不行了,公司决定关掉你们这个部门。 大家都懵了,我当时OPT马上就用完了,这要被雷了,我书读不成,美国也没法呆了。

会一开完我就去其它部门挨家挨户敲门,不管认不认识,不管什么活,我都愿干!居然还有一个部门被我说动,收留了我。接下来的几年就是一波接一波的裁人,坐我周围的人一个接一个的消失了,最后连当时决定收留的的 VP也被扫地出门。几经周折终于拿到绿卡,可以离开原来那家公司找工作, 于是2008跳槽到一家硅谷的公司。

本想干一二年站住脚跟后就自己出来创业。但马上又遇到席卷全球的次贷危机。美国很多买了房的人都在水下,大批公司破,大量民众失业,整个世界一片凄风惨雨,好像资本主义快要走到尽头的样子。 幸好我加入的这家公司发展极快,牛人很多,在那混能学到很多新的东西,于是没想到这一呆就是十年。

刚开始我们小组才几个人,干了几年混成小头目,有阵子还颇有点成就感。可不久就意识到我只不过一个庞大机器中的一个零件而已,公司里能人多了去,其他人在我这职位上可能比我干得还好。想明白了这点后我就不再追求所谓的career development,每隔一二年换个好玩的项目,闲云野鹤,安心做码工。 

在湾区几家大公司做技术的码工能混到Senior/Staff level很多,一年大概$30~60万, 所以每年一粒米的双码家庭并不稀奇。但加州各种税加起来40~50%,基本上半年就白干了。湾区生活费用也高,一般自住的房子至少要$2~4M,小孩如送私校,每人每年4~5万,在加上其它各种费用,每年能有10万左右free cash flow就不错了。  

我不大喜欢折腾房产,主要是嫌烦,我也不会挑股票,于是业余时就只能做做S&P相关的衍生品。昨天清理账户,发现净资产居然已过亿(RMB),自己都不太相信。小时候觉得亿万富翁是个遥不可及的概念,现在伸手可及了,可发现自己生活并没多大改变:还是朝九晚五,上下班忙着接送小孩。 

这世间总有些人喜欢比来比去,TF vs 码工,房产 vs 股票, 等等。其实每个人的能力,境遇,喜好都不同,你说你的鞋子合你的脚可以,非得争你的鞋子比别人的鞋子更合脚就没意思了。人有时觉得有必要justify自己职业人生的选择,其实只是自己底气不足。就像一个人走夜路,大声说话,更多的是为了给自己壮胆而已。 

至于投资,条条大路通罗马,不同的资产就像高速上不同的车道,不可能一条lane畅通无阻,另一条堵得水泄不通,短时间内可能会有些差异,但如果你跑的是长途,差别不会太大。每个人自己账面上的得失总是一清二楚,你的方法要是真管用的,闷声发大财还来不及呢,哪有空和人争口舌上的胜负。 

从大的方面讲,决定长期投资收益的无外乎大势,杠杆,和运气。过去二三十年,真的大势一是信息产业革命,二是中国的市场化。不管是在北上广深买房做生意,还是在硅谷做码工兼炒房。来钱比较容易的,大多都跟搭上这两辆顺风车有关系。相反如果站错了风口,如Warren Buffet收购的Berkshire Hathaway,即使个人最牛B也无力回天。  

杠杆则是个双刃刀。用得好时,你可能会提刀而立,为之四顾 ,为之踌躇满志;可这刀用得稍有不慎,一夜之间也可能会全功尽弃。所以一个人的成败,跟运气还是有很大的关系。顺风顺水的时候,最好别把自己太当回事,这样碰到逆境的时候也不会太失落。 

人生一世,求名求权求色的都有,为了生计,大家都得求财。 财富能会给你一定的自由和安全感,但不一定能给你生活里最重要的事. 再有钱,孩子还得自己养,老婆还得要自己睡吧。投资理财,就是一场远足,别太在意能走多远,重要的是经历风雨起落后,还有心情看风景: 

莫听穿林打叶声,
何妨吟啸且徐行。
 竹杖芒鞋轻胜马, 
谁怕? 
 一蓑烟雨任平生。 
料峭春风吹酒醒, 
微冷, 
山头斜照却相迎。 
回首向来萧瑟处, 
归去,
也无风雨也无晴。

Sunday, December 31, 2017

Unknown unknowns

I think it's much more interesting to live not knowing than to have answers which might be wrong. I have approximate answers and possible beliefs and different degrees of certainty about different things, but I'm not absolutely sure of anything.  - Richard Feynman

One year ago, Donald Trump was elected.

During the run-up to election day, the world overwhelmingly believed Hillary Clinton would win. Market expected another 4 more year's divided government and business as usual.

So did I.

On the election day, Clinton's victory seemed a sure thing, at least as mass media reported, and the market stayed relatively calm.

After market's closed, votes got tallied. Clinton's victory's no longer a sure bet, the global stock market started collapsing. I thought about sell, but the future for DOW already dropped more than 800 points.

It's too late.

It seemed that my portfolio may suffer a huge loss tomorrow.  I went to bed and told my wife to embrace the impact.

The only mechanism for me to cope with the incoming huge loss is to comfort her that it would just push us back a couple of years. We would be just as rich or poor as two years ago, so no major lifestyle changes anyway :-)

As I went to bed, Carl Ican left Donald Trump's victory party and started binge-buying stock futures. It's reported that he made billions on the election day night.

When I woke up the next morning, I found DOW shot up more than 400 points. My thumb-sucking and inaction actually made lots of money this time, but I felt nothing but a sense of utmost humility.

How could so many people, including me, be so wrong for so long? Even after the result's clear, how couldn't I foresee how the market would react?

The fact that Donald Trump is like rock star in rural states was always there, but the information's not evenly distributed. When confronted with the fact, most people and media, including 538, chose not to see it.

Market may "always incorporate and reflect all relevant information" but people never agree what information is relevant. The interpretation of information's even harder. Not all people are able to reflect on relevant information.

It reminded me what happened during Obama's 8 years. For loyal audience of Fox news or conservative radios, it's hard for them to believe that Obama could ever do anything good for America. It's hard to imagine that the economics's not only recovered but grown steadily.

Similar things happened in 2017 to people who hate Trump. The world seemed to end soon when he took office this January. Bad news came out one after the other. Trump seemed to be a stupid crown whose's only job is to send out inflammatory tweets. They seemed perfectly fine to ignore the facts that government removed lots of regulations, passed tax cut and the market went up +25% since the election day.

Human are fallible. So am I!

It's what I learned in 2017.

============================

The market seemed to head toward a major melt-up in 2018.

I've been leveraging on stock market since 2009. My portfolio's grown to a point where my W2 income won't help me to sail through major crashes.

I keep asking myself. Is today like 1987, 1996, 1999, or 2013? is the melt-up close to peak or just started?

I have 2 more decisions left.  Is it time to make the second decision (to de-leverage)?

As the market inches up, I feel nervous like never before.

There are just too many unknown unknowns ...

Tuesday, August 23, 2016

Look Back

It's been a tremulous year. I think I need to record some of my thoughts and experiences during the period before my memories are completely distorted and rewritten by time.

On Aug 23, 2015, I found myself was thumb-sucking and expecting a major market correction on the next Monday. I was ready to embrace the impact, but the main question I was agonized at was whether the overall market valuation was be too high (SPY P/E ratio 17~18) and whether the global economics, e.g. China, EU, were slowing down or even heading to recession.

My general feeling, completely unscientific, was that economics were still sound. Many people were still living in the traumatic experience of 2008/9, and there were still plenty of fear from the past downturn lingering around. I don't yet see the crazy euphoria of 2000 or 2007. Major companies, especially major tech companies, were very profitable and siting on record piles of cashes.  Even if there was a downturn, it wouldn't be as a free fall as 2008/9. Therefore, when a friend asked what to do tomorrow, my intuition was "buy".

However, I had no idea how bad the market would go before it turned back and how long the winter could last. Whenever I read news and listen to "experts", there were all kinds of explanations for doomsday predictions or confident predictions on how would happen next. Most of them were outright garbages, but some did make subtle arguments I couldn't dismiss easily. The fog was so thick that my mind was a bit clouded and I couldn't really see through it. I was full of fear and self-doubt and was tormented between the thoughts of jumping in right now in afraid of missing opportunities and of waiting for a while in hope of further safety margin. I realized that it's easy to say "buy" and much harder to actually executing "buy" orders.

I managed to buy some at the first dip before the market bounced back briefly by the end of October. The market went even lower in Feb, 2016. I had the fear that this might be the real beginning of a recession, but I also remembered that I was thinking, if the market just had an average return of 7~8% by the end of 2016, I could reap 40~50% if I started to buy. However, I already ran out of cash and I had to buy on margin. I hesitated to buy too much because I was worried at margin calls if the market fell as bad as 2008/9.

It was the first time since 2009 that I made significant trades in response to market fluctuations. Most of trades turn profitable today (Aug 23, 2016, +22% ), but, through the whole period, I was NEVER sure I was making the right calls.

In the past year, concerns over China, oil, Fed's interest rate decision loomed over the horizon. The most dramatic event is Brexit: UK voted to leave EU unexpectedly. The consensus was it's bad for UK and added uncertainty to global economics. The market dived on June 27/28, reminding people of the reminisce of 2008/9 crashes. However, the market bounced back quickly: not only recovering all shocks from Brexit but climbing another 6~7%. It turned out Brexit might be the last chance to enter market at the same level as July, 2014.

One thing bothering me most in the past year and more, is the long term, 5~10 years, perspective of S&P 500.  The current low interest and low inflation environment is unprecedented. It probably won't last forever. I've been following some prominent central bankers and economists closely, but I don't yet see any convincing arguments on how the economics will unfolded itself in the next decade. Perhaps, no one really know. I'm trying to prepare myself over various scenarios: slow and steady growth, rapid growth into bubble territory, or panic triggered by another recession. I'm trying to develop some mental models to identify tell-tale signs of these scenarios so that I can be prepared to deal with them. What worries me most is a prolonged dead economics, S&P just oscillates around 0. I don't think I have the strategy and the temperament to deal with a lost decade like Japan.

Another thing I learned is making profitable trades is very hard. My trades in the past year returned ~20%, but the performance is still subpar compared to leveraged do-nothing strategy, for example, UPRO and TQQQ return 30~40% in the same period. Therefore, even though I managed to initiate ~700K long positions, the gain makes only a small contribution to the return of my total portfolio.


Friday, November 6, 2015

Thumb sucking

Warren buffet calls unnecessary sitting and thinking “thumb sucking”. I find that 99.99% of my time is spent on sitting alone and thinking. I read a lot, almost indiscriminately, but most of things just pass through my brain and rarely register with me.

In rare occasions when I feel the urge to act, I still find it's very hard to pull the trigger. I'm not sure whether my “thumb sucking” helps or hurts my investment. I want to document my latest episode while it's still fresh.

My portfolio doubled in 2013. At the end of 2013, I felt uncomfortably excited and was thinking whether I should change my asset allocation and leverage ratio. But, I concluded that I'm fine if 2014 is a flat year. As long as I didn't see immediate crash, I should continue sucking my thumb and doing absolutely zero trade.

The market continued its climbing in 2014. At the end of 2014, I got another ~35% boost for doing nothing but my anxiety level became almost unbearable. For the first half of 2015, the dominating question in my mind is whether to deleverage or not.  My inclination was still thumb-sucking if I cannot convince myself with overwhelming evidences against doing nothing.

The market seemed clueless, too, jumping from one excuse to another to justify some movements.

In the middle of 2015, the fear for lingering Euro crisis was resurrected and people were talking about Grexit and potential repercussions. On the eve of Greece vote, the news coverage was playing doomsday scenario similar to 2011, when euro crisis first broke out.

I happened to dine with my family at the same restaurant where I was in 2009. I discussed with my kids how the restaurant looked like in 2009 and what's unfolding in Europe at the moment. I told them the crisis was largely man-made and the fear was not as real as it was in 2011. But, they seemed not very interested, Only Leo half-jokingly said I should wait for crash and then jumped in.

It turned out European were just playing the game of chicken and the market eventually shrugged it off. There was only 3~4% changes in S&P and I was not comfortable to act in such small changes. The margin of safety was just too small.

Another big theme of 2015 is the slowdown of Chinese economy. There was a big rollercoaster ride in Shanghai stock market in the firs half t of 2015. I decided not to play big in China long long ago. so, the ups and downs in China hadn't affected me directly.

China economy seemed to continue deteriorating. Anxiety was building up. On Aug 11, Chinese government decided to devalue RMB. People became nervous. I was trying to digest the news while the market declined steadily. Fear was building up. On the night of Sunday, August 23, it's obviously that there would be blood everywhere on the next morning, but it's too late for me to get out. DOW dived another 588 points and S&P posted the worst day in 4 years on the next morning, Monday Aug 24.

I now tend to think of market fluctuation in terms of time rather than price. So, the market on Aug 24 is equivalent to temporarily send my portfolio back May 16, 2014. I felt it might be a good opportunity to buy, but not sure whether there was more room to drop.

Before the market opening of Aug 24, one of my friends asked me what to do. I intuitively said "buy" but I didn't actually execute it. My excuse was I already ran out of cash, if I started to buy, I had to us margin.

But, I think the real reason was I was still worried about further drop, and I would be more comfortable if the marker corrected further and went back to 2013 level.  However, the market bounced back for the rest of the week.

For the past few months, I've been trying to close a deal in China and I was expecting $500K in cash. On the week of Aug 24, I thought of buying on margin before the deal was officially closed. I struggled for the whole day and couldn't make up my mind. I eventually decided to do nothing if I don't have strong conviction.

I was debating myself I might lose an opportunity. I had to talk to Xufei that night, trying to justify why I didn't buy. I declared that I shall not try any significant margin unless the market drops more than 20%. It served a reminder for myself that I must be principled and shall not cross the line easily,

In the next few days, I managed to free $200K 1x from my 401K account and leverage them to 3x, but UPRO was already back ~10%. In the week of Sept 21, the deal in China was finally closed and I started to think that I might miss once in a couple of year's opportunity.

On Sept 24, the market briefly dropped to Aug 24 level. I was thumb-sucking as usual. On one hand, I feared, but hoped at the same time, the market would tank further. On the other hand, I'm afraid this won't happen and it might be my last chance.

The China deal was finally closed, but China impose capital control and I still couldn't get the cash. It gave me some excuses for not acting. However, I finally concluded that I would get the money eventually, but I might not have the opportunity to deploy the capital at the level of May, 2014 any more.  So, I decided to use margin to buy on the condition that the margin won't exceed $500K. But, the market was already back a lot (3x UPRO was up 15~20%), and I'm a bit late now. I had to choose the more beaten down ERX. After bought  ~$250K, I had to stop because I think the market was back too much.

It is the first time I've chosen to trade non-significant amount since May, 2009. I probably would do nothing if there were no liquidation event in China. I still don't know whether I make a right decision not not till today.

I find most people, including myself, tend to revise your own memory when looking back, and forget how hard it is to make right decisions when the events are still unfolding. It's why it is so important not to act on daily, monthly, or even yearly market fluctuations because the margin of errors was too small.

Another lesson is, even though, it seemed I bought at nearly the bottom of this correction, it's still higher than the beginning of 2014. If I had chosen to exit the market at the beginning of 2014 or 2015, I don't think I could re-enter the market at a time to beat the strategy of doing nothing.

Thursday, July 30, 2015

Richard Feynman

The Feynman Lectures

To live with doubt and uncertainty

... Are you looking for the ultimate laws of physics? No, I’m not. I am just looking to find out more about the universe. And if it turns out that there is a simple ultimate law, so be it. That would be very nice to discover. . . I don’t believe the special stories that have been made out about our relationship to the universe at large because they seem to be too local, too provincial.

... To me, a very fundamental part of my soul is to doubt, and to ask ...

... I can live with doubt, and uncertainty, and not knowing. I think it is much more interesting to live not knowing than to have answers that might be wrong. I have approximate answers and possible beliefs with different degrees of certainty about different things but I am not absolutely sure of anything. And there are many things that I don’t know anything about. But I don’t have to know an answer. I don’t feel frightened by not knowing things, by being lost in a mysterious universe without having any purpose — which is the way it really is, as far as I can tell. Possibly. It does not frighten me.





Friday, May 15, 2015

Risk taking

I like to watch "No Big Deal" Alex Honnold doing his free solos. Most people in the world would consider he is taking extraordinary risks, if not outright suicidal attempts, but he always seems so calm, just like going out for a walk.

Two thoughts on Alex's risk taking: 1) Different people have different skill set and inside information. The risk of free solos for Alex Honnold may be less than the risk of walking on street for many people. 2) Different people have different appetite for risk. Someone may enjoy working in safe cubicle and receiving stable income while others don't mind dying in free solos. You cannot put the same value on the same risk taking activity for different people.

Every time I watch his clips, I remind myself that risks mean different things for different people and I shall be aware of the pitfall of accepting the risk defined in most of investment textbooks.

The world is led by risk seekers and built by risk avoiders. The edge of frontiers are littered with corpuses of risk seekers, but, whenever risk takers make break-throughs, risk avoiders follow and build the new world brick-by-brick. It's kinds of like how evolution works in biological world.