Saturday, September 25, 2010

Frustruation Squared

Don't get me wrong, it's a good frustration, but its still frustration squared.

On the one hand I can't find very many stocks that trade under 8x FCF (I really only like to buy at 6x or under) but at the same time holding cash is not generating any returns.


The squared part comes from the fact that Ben Bernanke is doing everything in his power to reflate all assets by printing more dollars(while deflating the power of the U.S. dollar). I can't buy gold because it's against my discipline to buy non-cash producing assets, but its a little painful watching it go up everyday when it seems so obvious. It also doesn't help to watch my short position eating away at me. Bernanke's also buying long-term debt to keep the market interest rates artificially low. And he can buy as much as he wants because he can print as much money as he wants. Argh. I'm not finding cheap stocks, the recovery seems like a headfake, and junk bonds are yielding miniscule yields over risk-free treasuries.

What's an investor to do?

I think this is why investing is so freak'n hard. You need to have the discipline not to fuck things up. Not to want to buy just because Bernanke says that he's not going to let the economy double dip. Good luck pal, there are some forces beyond your control. I have to stick to my guns, my game plan, my strategy.

Wait, wait, wait, wait. Strike.

People panic. Mood's swing. Optimism fades to fear. In the next 3-5 years there will be opportunities for me to buy large positions in stocks trading at 6x FCF. Until then I just need to sit and wait.

You can't control the debt markets forever Bernanke, eventually they will control you.

"In 2009, hedge funds generated about 3% of trading volume in U.S. government bonds. This year, that share jumped to roughly 20%, according to consulting firm Greenwich Associates."

The sharks are sitting at the table. They will pounce when they're ready.

YTD: +1% (up 10% on the net ~10% long exposure established throughout July and August - but should I have put on more exposure / larger positions?).

Monday, September 20, 2010

Running on all Cylinders

It's my 4th week at the new job and while its still too early to call the "honeymoon" phase over, from what I can tell, I'm loving it. At times its almost too good as I've been very tempted to work on the projects from home. Maybe this is just the puppy love that accompanies any new relationship, but it's exhilarating. It's a different "exhilarating" then my prior investment banking work which generally was closer to "relief" that I could get the job done vs. the actual excitement of the work. The reason why I'm writing this post is because of the "hedonic treadmill" that we all run-on in life. I'm aware that like any other good thing, I don't want to take it for granted. In short, it would be a serious mistake if I woke up 6 months to 2 years from now and wasn't incredibly grateful for my current circumstances at work given what I could be doing.

Things to appreciate about the new job:

Waking up later helps me get more sleep. I used to wake up at 3:30 most mornings, now I get to wake up at 4:40. That's huge.

Shorter commute - Approximately 10-15 minutes vs. 20 - 40 minutes.

Constantly Feed - Breakfast and Lunch on the house everyday vs. rarely, if ever, treated at the old job. I also don't have to wait on any group orders.

No headaches (yet) - During my last month at the old job I literally got a headache nearly every day. It seemed like a physiological response that I needed to get out of there.

Better pay - 30%+ higher with the opportunity to hit my life targets in the next 10 years.

Better resources - Access to Bloomberg, sell-side research, transcripts, financial times, factset, wall st. Journal, Barron's, pretty much anything I could possibly need.

Calm and Patient Boss(es) - While I'm sure I will someday have a valuation disagreement with my boss, he is very considerate (as is most of the people I have met at the firm) and listens to what I have to say. That's not to say that everything will be rainbows and sunshine, but it's certainly not thunderheads on the horizon. At my old job I would be asked complex questions and would be cut off 5 seconds into a response. I would get yelled at for nothing. In comparison, my first week at the new firm, the founder had a meeting with the new guys (me and one other new hire) for lunch to get a chance to talk with us and ask questions.

Stimulating Work - This is my favorite part and I must never let myself take it for granted. Even if there are periods of pay fluctuation that are disappointing, this is by far one of the most important components to my professional happiness (2nd only to doing my best). Don't forget it.

Sunday, September 12, 2010

Isocrates Quote

"Democracy destroys itself because it abuses its rights to freedom and equality. Because it teaches its citizens to consider audacity as a right, lawlessness as a freedom, abrasive speech as equality, and anarchy as progress."

Thursday, September 09, 2010

My Dad's Office Quote

My Dad had the following hand-written quote (written by himself) framed in his office when he was a practicing physician:

"Creative thinking will also be blocked quite successfully by such factors as mental and physical exhaustion, petty irritations, noise, worry over domestic or financial matters, depression, anger or working under pressure. The Scientist must learn to design his whole way of life in such a manner as to protect himself against such sterilizing influences or he will not be able to succeed in his work, no matter how great his special talents may be."

- Hans Selye (a Dr. that studied the symptoms and coined the word we now commonly know as "stress")

I'm not sure 100% why, but it makes me proud that it's now sitting on my desk at home.

Friday, September 03, 2010

The Hunger

In that brief interlude between vacation and starting the new job, I felt the hunger.

It was a need to work. The feeling of getting work done. Completing assignments, tackling new ideas. Sure I can do investing on my own, but I needed to feel the demand. A boss requesting items. A "to-do" list. Yellow pads and stacks of paper. Time management, priorities and deadlines. Fear and greed. The heat. The discipline. The hunger.

I must remember this need when in the years to come, I don't feel like I need a firm to work for and should branch out on my own. Before I commit, I must ask myself if I can sustain this hunger on my own.