This week MrRip, the person behind retireinprogress.com (and soon mr.rip?), invited me to join one of his Twitch live streams (in Italian). I am fairly new to this ‘game’ and do not fully know the proper etiquette to thank him for the opportunity, it was definitely a blast for me.

As I said in the past, I find his blog content* one of the few places where you can apply the Ben Affleck line “now you know what is possible, let me tell you what is required”. Too many people focuses on just one of possible/require sides of the coin, these days of assets going to the moon more likely on the ‘look how I got my Lambo’ possibility side. It is a very clichey thing to say but I like the fact that he comes from a very different back-ground and therefore he has opinions that are different from mine. I spent my life in a series of echo-chambers. First Milan, where everyone is doing something creative and thinking about the economic side of anything is considered a faux-pas (even if behind the scene everyone is still obsessed with money). Then Luxembourg, where everyone was a trader or a wanna-be one, at least in the years I was there pre and post Great Financial Crisis. Then Geneva, where the more your life is about money, the more you have to pretend you do not care. It is really important to have someone to sanity-check your beliefs.

I often spend hours reading and theorising on things, I rarely produce anything. I used to do it in my 20s and then…I got lazy? Most probably. Anyway, you have to find your stimuli, he is an effective one for me.

The preparation

I started listening to podcasts eight years ago, up to the point where podcasts became the only thing I listen to. No more music. When you are young, you ask yourself at what point you will stop watching Mtv (the old one, the one with the music videos) or caring about music. And then it comes: basically you stop because you do not have more time to, you have different priorities. Like Russillo says, when you are young you have a lot of ‘free mental space’ where you can store lyrics and gossip; then you start to use it for mundane tasks like mortgages and budgets and nursery pick-ups. I still like music, I do not have time to dedicate to it.

With so much time dedicated to it, it comes natural to think “anyone can do it”. After the experience with this blog, my real life realisation of Meb Faber line no one wants to read your shit, I knew what I was up to.

  • I knew I had to be pumped so I prepared a list of songs and videos to bring myself in the right mood. Two hours before starting, my energy level dropped faster than the rug pulled under $SQUID. Given the multitude of exams and interviews I had after a sleepless night, I still consider it as a success on my side. I am a champ in sabotaging myself.
  • Me and my wife are still in denial about this ‘working from home’ thing. Typically we used the third room in each of our past and current apartments as a dumpster; now the dumpster has a small foldable desk and an Ikea chair because it’s 12 months we think we are not going to work from here. My wife employer does not have an office, denying reality is not that hard I guess. In the last 18 months of conf calls I saw people sitting in a corridor, and they were talking with clients…anyway, as you probably have guessed I did not prep my background.
  • We prepared a list of talking points but I did not prepare the most important part: introducing myself. It’s like during an interview, they ask you “describe me your biggest professional challenge and how you dealt with it” and you suddenly realise “oh, I knew I had to prepare something for that”. Too late.
  • Years ago, in the spirit of frugality, I decided that I do not need a personal laptop, I can do with my employer one alone (plenty of evenings I had to bring it home anyway so…). This way I am subject to my employer IT Dept Russian roulette: I am never 100% sure which website will work (yes, also the web-based software I use for work). Sure enough, months ago we did a test with Mr Rip to check connection, video and audio quality. But in the meantime my old laptop battery exploded, I got a new one and…never underestimate the Russian roulette. If you re-watch the stream, the moment I connect and no one hear anything, you can see a frame where Mr Rip face goes “this fucker, I knew it!!”. Now that I think about it, during the test I used my wife Apple device but you already realised how much I hate it because the only way I can name it is ‘Apple device’ (iBook? ProBook? I learned how to use MS-DOS, I am too old to unlearn how to use a mouse with two buttons). So I took the very responsible choice of fuck it, my laptop is already here, I do not even have to switch all the cables, let’s go (plus as I said, I was tired).
  • It does not take long to heat up a typical London-size room with just your body heat and a laptop to random-Jamaica-beach level. It’s been five years that I am here, I should have known it. I kept the door closed not to repeat that BBC guy and son comedy skit. Mid stream I seriously considered to turn the chat into an OnlyFans session and show everybody how rip you still can be at 43. If we repeat and you happen to be watching, be prepared.

The stream

My prior experience with Twitch is limited to watching Crokeyz playing Magic (and I guess a lot of illegal football when it was justin.tv). That’s it. I was a bit disappointed no one subscribed to the channel while we were talking because I studied and I know it is polite to say thank you.

I suspected it is a mess for him to play and read the chat at the same time and I can confirm it is. At least the first times you do it. It is a great way to interact with your audience but it is also great at stopping your train of thoughts and drive the conversation in every possible direction. Yesterday evening our Uber driver had a brand new Nissan Leaf and boy, if you are not use to electric cars the acceleration can put you off. I thought he was an asshole while he was just adjusting his foot. Same thing here, the interaction is a great tool but you need to master it first. It did not help the fact that me and Mr Rip have no priors to really let the conversation flow properly. If you were watching, tried to interact and felt ignored I am sorry for my unresponsiveness, it is hard to keep everything together so that the stream is enjoyable for everyone. Or at least, that’s the intention.

In Crokeyz spirit, my plan was to throw in some banter here and there. I did not re-watch myself by I guess I bombed pretty hard on this.

First time I spoke with Mr Rip, I turned on the camera and he literally went ok, I pictured you quite differently. To be fair, at the time my hair and beard were even longer but I have to agree, I do not see a lot of look-alike when I walk in the City. I also do not work for a bank, which makes a ton of difference. When Devils, the SKY series came out, an Italian friend told me he was picturing me in situations like the protagonist and I was eeeeeeeee, not exactly. All of this to say that I would pay to read what impression the viewers got about me. When I moved to Luxembourg I basically had the chance to ‘restart my character’ the way that I wanted. No one knew me there. It is a really powerful thing, it teaches you a lot on how we limit ourselves, just because we feel forced to meet someone else expectations. True you do not pass from the fat guy to Will Smith in Hitch overnight but you understand that in several situations you are your greatest limit. It is possible that a guy who wore the same ENTREPRENEURSHIT hoodie (just realised it was probably not visible in the video) uninterrupted for the last 12 months is managing billions (with very limited flexibility) from his kitchen table; it is also possible that Sky will not want to write a plot about his life, because is job is 90% writing boring papers and making sure that he does not breach any of the 1000 rules the local regulator imposed on his firm. If I write something here is because I have experienced it but I understand that it is easy to fake it nowadays. If you are sceptical I get it and it is probably good for you to be so.

During the stream I mentioned “everything is a momentum trade now”. Again, not my idea but stolen from Howard Lindzon. I found his blog five years ago and to be honest with you I did not understand him at all. For example, he was preaching the long Bitcoin – short Goldman Sachs verb and I thought he was just another guy pissed with big banks after 2008; I get it but GS is like Real Madrid in football, everyone despise them but you do not bet against them (and if you get the opportunity, you join them no matter what). If you want to have a crash course on who Howard is, not a long time ago he joined The Compound and Friends podcast. When I first saw the eToro feat that allows users to copy other traders I thought it could lead to very bad outcomes; RobinHood confetti after a trade are an equally bad thing. Howard was an early investor in both companies: we see things differently but I think he is a good soul, as I think I am even if I would work for GS. More relevant, he is definitely able to see long term trends that matters: the social aspects of eToro and RH are powerful and he was correct in riding that wave. The lesson here is that, sometimes!, it is fine to follow someone even if you do not fully understand what is saying. It is like the leverage example we talked about during the stream: just because there are thousands of ways leverage can destroy you, it does not mean you cannot use it profitably. I am not saying go and follow whatever TikToker you stumble upon, but keep your eyes fully open when you find someone really special.

A thought I had for the stream that we did not discuss

Some weeks ago I started watching Industry on BBC. It is a series about a group of graduates that start to work for an investment bank in London in the years after the Great Financial Crisis. Little caveat: despite taking place in the finance world, the series takes a lot of influences from Girls and Euphoria (Lena Dunham directed the first episode), be prepared and do not be surprised. After watching three quarters of the first episode, I was chit chatting with some colleagues in the office and commented “thanks god I was never accepted in one of those grad programs because they would have killed me”; back home, I finished watching the episode to learn that one of the grads commit suicide…not a great banter. Anyway, my point stands: getting those jobs is a meat grinder and if the sex part is a bit over the top, all the rest, the drugs, the abuses, the client interactions are accurate.

In a later episode, the sales desk (I used the same term during the stream, do not ask me why but desk=team in this context) head tells the protagonist “when I was in your position, my boss once told me that if he had to re-incarnate, he would not choose to be a Pope or a King, he would want to be the bond market, because the bond market intimidates people”. If you got sucked into finance these days, out of tales from WSB or crypto, you would probably react to that sentence with a big LOL. The fucking bond market?

Yet for my ‘generation’, that sentence is very accurate. The bond market was the real deal. Michael Lewis Liar’s Poker takes place on a bond desk (actually at the same bank Industry’s fictional mentor was working at, Salomon Bros). LTCM hedge fund was trading bonds (When Genius Failed), Milken creation of junk bonds (the Predator’s Ball), well the Great Financial Crisis itself, all bond shit. However good you were in that market, either at sales or trading, you could get good to great returns but nothing comparable to what you and I are seeing now in some stocks and crypto. Even during the GFC, if you did not have an ISDA it was really hard to leverage your gains.

1$ turned into 600k in 400 days with $SHIBA? This is stuff that puts me off my chair and I think I saw some…Cannot really comment about the dot.com bubble because I was still at uni and did not have any meaningful capital to trade; I remember having mates trading out of their parents accounts, so you can understand you could YOLO up to a certain point. As Josh Brown said, if you have to call your father’s bank to put on a trade, you are restrained by the fact that you feel somehow judged by him; right now you do not even have to go through the motion of opening an account with another online platform, Revolut gives you access to crypto. My wife can trade crypto in 2 clicks.

I do not know how is going to end but for sure I understand how the gains feel real now. Even the stock market is going in one direction: up. It is intoxicating. It has to be.

Some days ago a guy I did not speak with since ages texted asking me if I was trading crypto and if I could give him some tips. I never had a good relationship with this punk, he did some pretty bad things in the past so I told myself sure, here comes a shitcoin. The issue is that you still want to pick something that has a minimum of credibility or otherwise it will take a simple google search to understand I was messing with him; it also needs a visually appealing price graph. Once you enter this realm (and is valid for stocks as well), picking a loser these days is harder than picking a winner. Really, try it for yourself. Which makes me think of Mauboussin test: if you cannot lose on purpose, then it is a game based on luck and not skill (I landed on those tokens that offer an outrageous 1000%+ APY, KLIMA is a very good candidate because it has that added ESG flavour; too bad to buy a token you need a CS degree).

There is no shame in wanting to make money

The Monevator wrote two posts about the 60/40 portfolio last week. As you, me and probably your aunt by now knows, the future return prospects for this portfolio are quite bleak, so I was really interested in reading what solution they proposed. When I finally reached the end of the second post only to read “save more, spend less” my eyes did a triple cork. Look, there is nothing wrong in that advice but…seriously? I imagined myself going to an internal meeting at the office and say Sorry, rates are still low, cannot do anything about it. See you in three months. Yes, it is a very complicated situation with no obvious solution, does it mean we should stop looking for one?

I feel that right now you can only be either an ape YOLO trader or a Vanguard Lifestyle buyer, no shades of grey in between. I guess there was a time when the 60/40 was financial innovation, no? Value investing worked for a long time and then …stopped? Took a pause? Where are we now about it? Yes THIS TIME IS DIFFERENT bla bla bla but actually the way we invest changes all the time. Swensen did not use the 60/40 and as far as I recall had a pretty good career.

If I had a takeaway from the stream comments is that there is a lot of hunger out there to maximise financial returns, let’s put it this way. Setting the correct level of expectations is absolutely correct but stifling completely that energy instead of channelling it in the right direction is…not I want to do.

As of the time of this writing, c3k people bots watched the stream between Twitch and Youtube. I am very precious with my time and thinking that someone dedicate some of theirs to listen to me is…crazy. At the same time, when I was 18-ish and I started my journey I had absolutely no one I could talk to, only books and some online forum. I hope it was worth your time.

*he frequently says that the blog is not dead but we all know how these things go, now that he is a YouTube star is more probable we will see him boxing with Logan Paul one day.

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1 Comment

No Bonds for Charlie Ellis - · November 13, 2021 at 10:07 am

[…] article starts acknowledging the point I was making at the end of my previous post: the composition of investor’s portfolio changes through times. Cannot agree more with this. […]

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