“I care about family, money and weed…”
-Zheani Sparkes, the 21st century’s answer to Sappho
I don’t really believe in socialism anymore. I lost interest in communism around my fourteenth birthday, but I used to think there’s at least a decent argument to be made in favor of socialism. At this point I’ve changed my mind on that. I think people who want to live in a socialist nation should be free to do so, but I would personally prefer a smaller government with dramatically reduced responsibilities over the system we have now.
There are a couple of reasons for my change of mind. The biggest problem I hadn’t anticipated is how dangerous governments can become during times of crisis. A government with a limited mandate will very rapidly take on responsibilities that its citizens never anticipated. You’re told to stay inside for a few weeks while the government ramps up healthcare capacity, then half a year later you watch as every small business in your community is gradually destroyed.
I say “small business”, but that’s a middle-aged white men term that means something hip young left-wing millennials refer to as “your passion” or “self-actualization”. When we use different words, we struggle to understand each other. When you’re a talented competent individual, you’ll probably find yourself owning a “small business” eventually at some point in your life. Everything you and me like is ultimately a “small business” too. Your favorite restaurant, your favorite vintage clothing boutique, even your favorite music videos, all of them are the product of small businesses.
Anarcho-Primitivists will say that we spend our days now pursuing “surrogate activities”, when our brains are designed to go hunting and gathering. Whether that’s true or not, the optimistic way of looking at it is that you can now occupy yourself doing things you’re truly passionate about. Find some very specific niche and you can earn a living doing it, because there’s little competition. Hint: Those Youtube videos with millions of views can’t teach you how to earn money, because things stop being profitable once everyone starts doing them. Remember this Taoist wisdom: The way that can be named is not the way.
Often there’s a bright spark in every tragedy. I’ve had plenty of grief in life, but this misery forced down our throats by our governments has shown me that I’m not bitter enough to want to watch the world burn. Children deserve a happy life free from worry, young people deserve to go out and socially mingle, old people deserve to watch their life work bloom. Right now we live in some kind of dystopian nightmarish fanfic written by a teenage libertarian who just discovered Ayn Rand. If libertarians had told you a year ago that this sort of stuff would happen, we would laugh at them.
One of the things I’ve figured out is that in a genuinely free-market, the kind of people who end up with a lot of money tend to be the people I like seeing in control of things. Peter Thiel gives smart young people money to drop out of college and start their own business, funds oceanic cities and rejuvenation technology and goes around holding speeches where he warns conservatives that big tech companies like Google are bending over and spreading their cheeks for the genocidal Chinese communist regime. That’s the kind of guy I want to have power.
The problem with a democratic socialist nation is that the kind of people who generally end up in control of things are the kind of people I don’t want to have power over me. If you’re dumb enough to believe that overpopulation is a “racist” or “neocolonialist” myth, do you realize that I consider you profoundly dangerous? If you think black Americans are more at risk of harm from police brutality than from violent crime and tell black Americans that the police are their enemy, I consider you extremely dangerous to the fabric of society.
I can’t say I have any real ideology anymore, but if I did, it would probably be some sort of geolibertarianism, distributism or Georgism, mixed in with a whole lot of Stirnerism and individualist anarchism. The most beautiful things flourish when people are free to unlock their own human potential. That’s what liberal intellectuals figured out in the Enlightenment, it lead to the wealth we live in today.
In general, intelligent people are wealthier than less intelligent people. If you live in a first world countries and live in poverty, there are five main possible reasons I can think of:
1. You’re just not very intelligent. I think that’s an unlikely scenario, because you’re smart enough to read my blog.
2. You just genuinely don’t care about material wealth. That’s perfectly fine, but I hope you don’t end up regretting it later in life.
3. You’re still very young and haven’t had time to accumulate wealth.
4. You lost faith in your own talents and abilities. This is a psychological problem, it can be addressed. Just browse through the articles I wrote about psychedelics, you”ll figure it out.
5. Societal barriers prohibit you from utilizing your own innate skills. This is a legitimate problem, but it can be overcome.
The thing I want to point out here today however, is that there are so many opportunities for earning money out there, that it doesn’t really matter whether society is putting up barriers against you. Chances are, even you can earn money doing things you enjoy, you just have to figure out your niche.
Imagine yourself as a giraffe, surrounded by an enormous herd of zebra. The zebra compete with each other over tiny specks of grass, in an overgrazed landscape. You? You’re eating leaves off trees, something they don’t even recognize as food. If you’re doing something useful nobody else is doing, you deserve a disproportionately large reward, for little work. That’s not just how capitalism works, it’s how nature works. Nature loves the freak who is doing something different from everyone else.
I’m going to give you three examples today.
This guy has the most soothing pleasant voice I could possibly think of. He could read news reports or recipes and I would enjoy it. And get this: With 180k subscribers, he’s probably doing it for a living, or about to start doing it for a living. If you’re doing something entirely different from everyone else, then there’s no competition. Competition makes anything unprofitable. The reason you get paid peanuts in retail or as a code monkey is because you’re entirely interchangeable.
I would honestly recommend most people to just find your own niche, doing something weird that you enjoy but nobody else is doing. If you can spend your days doing something you genuinely like, then you simply won’t care that you’re barely able to make ends meet. Start out with a very narrow obscure niche. The advantage of being the only guy doing something is that you don’t even have to be good at it. When you have your niche, you can begin broadening it as it grows. Amazon started out as a bookstore, Facebook started out for Harvard students, etc.
The main path to wealth has historically been theft. This is the easiest route, the hard part is getting people to ignore the theft. Slavery is theft of labor and made many people wealthy. Most of the United Kingdom is owned today by descendants of the Norman aristocracy, who were made barons when William the conqueror invaded the island. Even the wealth of the Rothschild family is said to have started by embezzling money from Europe’s wealthiest monarch. I would be dishonest if I would simply skip over this option altogether. I’m not recommending it, what I’m going to do is explain to you why this is the main path to wealth.
The easiest and most ethical option is stealing from the rich. It’s easiest for the following reason: If you steal a hundred thousand dollar from a billionaire, he won’t notice or care. If you steal a thousand dollar each from a hundred people who struggle to get by, you made yourself one hundred enemies.
Oftentimes, the easiest way to steal from the rich is simply by threatening their business model. This can be completely legal. Imagine a company exploits its workers. Work there for a bit, wait for them to exploit you, document it, then sue. You’re owed 20,000 euro of unpaid overtime? Ask for 50,000, wait for them to offer to settle. They’ll happily cough up a lot of money if it means they can continue to exploit the other workers.
The other way of course is to set up your own business that threatens theirs. Everyone wants to be the next Zuckerberg. If you build any sort of website or app that even remotely threatens their business model, you’re bought out. It worked like that with the company I work for too, they simply bought out their competitors.
If you know where to look, it’s really not that hard to steal money from the rich. If you’re stealing less than 100,000 euro a year from a giant corporation and it’s not too blatantly obvious, it’s simply not going to be worth their time to do something about it. Lawsuits are expensive, reputation damage is expensive, etc. Your chances of getting in trouble drop from low to negligible when you live in a different country than your target.
I see eighteen year old boys all the time in the news, who ruined their lives because they decided to sell fake tickets for concerts to normies online or other stuff like that. You earn peanuts and you guarantee you’re making yourself a priority, because the police want to look good and lifting boys like that out of their bed is an easy way for the police to score points.
Now imagine setting up a website, renting a botnet on the darkweb and having them click on your website’s ads. Scam Google out of a hundred thousand Euro in this manner and you’re simply not worth their time. Is it possible that you’re the exception to the rule that’s extradited to the United States and thrown in prison there? Sure, it’s possible. It’s possible you’re falsely accused of rape after sleeping with some girl you met in a shady bar too, yet people happily take that risk.
As another example, VAT fraud costs the EU 170 billion Euro every year, twice the EU’s budget. If you have a small business embezzle 100,000 Euro through VAT fraud and don’t make it painfully obvious, do you think you’re going to get caught? Again, the risk is almost negligible, but it exists. The risk of getting convicted of crimes you didn’t commit exists in your life too and you accept that risk in your life too.
Now, I’m not encouraging anyone to go out and steal from the rich. What I’m telling you is that it happens at a huge scale, because modern society has gotten so extremely complex that most rich people have their wealth locked up in systems subject to numerous attack vectors. The police simply can’t keep up with all these issues, they pick up people once in a while and publicize it to make an example out of them and to discourage others.
Remember, your average police force is dealing with drive-by shootings, rapes, heroin laced with fentanyl, burglaries, robberies, riots, luxury fashion shops looted by peaceful protesters from the 90IQ 90k college debt generation, statues torn down in broad daylight, middle-aged people dragged out of their cars, kidnappings and terrorism. Somewhere at the bottom of their list of priorities is the guy possibly committing VAT fraud with his small restaurant that nobody ever visits, or the guy blackmailing websites with DDOS threats.
The people who tend to get caught are the ones being blatantly reckless or flying too close to the sun. Nineteen year old boys with Audi’s and mechanical watches on their wrists draw attention they shouldn’t wish to attract. To any nineteen year old boys reading along, I want to warn you: You don’t want to become a millionaire overnight and you don’t want to wear the uniform of the kind of guys engaged in funny business. Have some basic patience.
Stock markets behave irrationally, because there are simply not enough people with money, looking to take advantage of all the irrationalities. I’m going to give you one simple example.
ARIX Bioscience is a venture capital fund, with 135 million shares issued in total. The shares are valued at 80.5 cents each right now, for a total valuation of the company at £107.13m. What does the company own right now? Look for yourself here. For their last reported date, they have no real debt, 55 million worth of cash and stocks valued at 150 million. Those stocks would have to go down by two thirds since their last reported price, for the company to be worth less than its balance sheet. Some of them are publicly traded, you can check for yourself and notice their value has mostly stayed the same.
What’s going on here is that the company is trading at a discount of around 45% to its net asset value, simply because there’s not enough people who know of the opportunity, who are willing to step in. If you’re at the supermarket and one wealthy old guy tells you “I’ll hand you fifty bucks if you carry my groceries to my house RIGHT NOW”, while another wealthy old guy tells you “I’ll hand you a hundred bucks if you carry my groceries to my house RIGHT NOW”, you’ll ignore the guy offering you fifty bucks. What everyone else notices is just you not grabbing the fifty bucks and they’ll be skeptical, they’ll be unable to believe the opportunity is real. That’s how it works with stocks. In periods like we live in right now, the opportunities are so numerous for small investors, that many of them simply go ignored. I’m not claiming I found one of the best opportunities out there right now, I’m merely claiming this is a pretty good one.
Economists will tell you markets are efficient. There’s an expression for that: “Those who can’t, teach.” Economists work at universities instead of working in business, because they apparently can’t spot the market being inefficient. The epitome of markets behaving inefficiently, is when a company that literally only owns stock in other publicly traded companies trades at a discount compared to the stock it has on its own balance sheet.
You don’t have to believe me, you can look this up for yourself. British Venture Capital Funds are trading at an unusual discount. How is that possible? Again, you’re the giraffe, surrounded by zebra. You’re mulching on those leaves and you’re asking yourself “how is this possible, why am I not hungry and nearly starving like all the zebra”? Nobody is paying attention to your opportunity, because the rest of the animals are divided into two groups:
1. Dumb herd-following animals, who try to eat grass even though all the other animals are already eating grass.
2. Smart animals, picking food that nobody else pays attention to.
The first group is too dumb to understand your opportunity and a lot of them will die of hunger (if these were humans, they would be daytrading Forex or paying 50k a year to study “communication science”). The second group is too smart to have time for your opportunity. The babboon sticks a stick into a termite nest, the vulture eats rotting zebra brains. You’re doing well, but they’re doing so ridiculously fine that although they recognize leaves on trees as perfectly fine food, it’s simply not worth the effort for them to climb into the tree.
When I tell you “I think I can consistently get 20% a year off stock”, you’re going to ask me “if that’s possible, while the average is 8%, why doesn’t someone else grab that opportunity?” The main answer to that question is because the guy smart enough to see my opportunity to get 20% a year is grabbing the opportunity that gets him 25% a year. When I’m telling you “this is going to earn you 20% in a year”, the following rules need to be met for you to use the opportunity:
- You need to have ~10,000 euro or more to stick into it, because otherwise fees will eat into the kind of opportunities I spot.
- You need to actually care enough about money to use the opportunity. Lefties don’t care because they have wealthy parents and live isolated from reality. Boomers pretend they don’t care about money (they actually do) because they take it for granted.
- You need to be smart enough to understand that I’m correct.
- You need to be dumb enough to be incapable of finding a substantially better opportunity than mine.
- You need to be poor enough to care about an opportunity like this. It’s literally not worth Warren Buffet’s time.
If you think about it, that simply doesn’t leave a large group of people. I’m going to give you an example of a guy doing what I’m telling you to do. The guy who runs NoNameInvesting uses value investing techniques to buy American OTC nanocap companies. What is his compounded annual growth rate over the seven years he has been doing this? It’s an absurd 51.4%. In an average year, this guy can turn 100 bucks into 151 bucks. Economists will tell you this is supposed to be coincidence: For whatever reason, he has been getting incredibly lucky over seven successive years.
The reality of course, is that he’s simply playing in a market that not enough people pay attention to. Part of the evidence is that he got better at it over the years. His first three years were mediocre, but then he figured out the trick. That’s how the world works. I don’t care whether Ethereum is going to move to Proof of Stake, or whether Amazon’s earnings figures are going to disappoint this quarter, because there’s a huge crowd of people already looking at that sort of stuff. If I’m going to be doing something, then I want to be one of the few people doing it and I want to be one of the best at it.
Image the market as following: You’re at a party, where people are talking, your goal is to say something insightful, something most people don’t yet know. At a party like that, you want to feel like you have an interesting story to contribute. There are two ways to do that: You can go to a room filled with dumb boring people who have nothing amusing to say. Or, you go to a room with hardly any people left, chances are higher that the people there will want to hear you contribute something to the conversation. At a big party, filled with smart interesting people? Chances are you’ll embarrass yourself by saying something everyone else already knows.
This leads me to one more point I need to make. Look at companies that have been impacted by the pandemic. Buy them. Why? Again, you want to be the smartest guy in the room. The fun thing is: Most people right now, are ridiculously stupid. The British public thinks 1% of British people have died from COVID-19. The actual number of 0.1%. Americans think 30% of deaths are under 44. The actual number is less than 3%. People have been completely terrified by the media. The official numbers exaggerate the risk, but people don’t even believe the official numbers, they believe some kind of horror story implied by the media through lies of omission.
But in the meantime, here’s the cases of COVID19 in the Netherlands:
And here are the number of hospitalizations:
Do you see what I see? The hospitalizations are practically gone. We have no lockdown, so people should still be getting infected. Why aren’t they getting hospitalized? It’s probably a mix of three factors:
-The virus has mutated and is now milder
-The people getting infected are younger, because elderly people were the first to get infected
-We’re simply seeing more cases because we’re testing more people.
You can add to this the fact that deaths as a share of hospitalizations should be going down, because we now know how to treat people better and don’t have to fear crowded ICU’s anymore.
What does that mean? For all practical purposes, the pandemic is already over. By the time we have a vaccine, we won’t need it. Sure, it will take a few months before politicians start acknowledging that the pandemic is over, but who the hell cares? You want to buy these companies at a discount, before your boomer uncle who watches CNN has figured out the pandemic is over.
Sure, at some point the epidemiologists will sneak out in the middle of the night and start scraping drunk drivers off the asphalt to check whether they’re testing positive so they can be added to the death toll, but it will become increasingly ridiculous, until we reach the point where it becomes utterly unsustainable. Long before this nonsense becomes unsustainable, even the hedge funds and banks will have figured out it’s over.
Remember, I’m not telling you to buy giant tech companies, I’m telling you to look at tourist and live-event type companies that are down 50% or more YTD. You have knowledge that most people don’t have: The pandemic is nearing its end.
Of course it’s possible that you don’t have the ability to use the opportunities I see. I started out doing completely pitiable stuff. I would go to obscure “bitcoin stock markets” as a 22 year old, where everyone was trading in stock of scammy companies. Sometimes people would want to sell newly issued stock, but there was literally nobody to sell to, I would be the first person to place a bid, see people sell me their stock at a 90% discount and wait a few hours, to sell it to someone bidding more.
At some point, Americans were forbidden from using the website due to regulation. On the last day Americans were allowed to sell their stock, I placed bids. There were plenty of people selling, but not enough people to sell to. Then I waited a few days and sold the stock at a decent profit. This sort of stuff was possible, because hardly anyone was using these sort of sites.
In hindsight I wouldn’t do this again, because it wasn’t genuinely worth my time. It earned me more than stocking shelves would, for less effort, but practically anything earns more than a job in retail. The main thing I got from it were the lessons it taught me.
What ended up being far more profitable, was short-selling cryptocurrencies. This works as following:
-A cryptocurrency doesn’t produce money, it merely transforms money into heat, due to the need to waste electricity. This is how money leaks out of these schemes.
-People continually come up with new currencies, so the pool of money has to be shared over a growing number of tokens.
-The biggest ones will be replaced by new ones over time, because the people who set these schemes up will want to convert their tokens into actual money.
If you understood these principles and didn’t put all your eggs in one basket, then it was generally quite simple to earn money off these cryptocurrencies. You don’t know when they’ll go down to zero, but you do know that in the long run the way forward has to be downwards. This is how I earned the money that allowed me to start taking investing seriously.
There are essentially, in my opinion, two valid approaches to investing:
- Value investing. As a value investor, you try to spot companies trading below their fair value. You then wait until the market figures out that it’s trading beneath its fair value, then you sell. This is the Warren Buffet approach.
- Momentum investing. Rather than focusing on finding undervalued companies, as a momentum investor you try to understand human psychological biases. This is essentially the George Soros approach. He doesn’t call it Momentum investing, but his concept of reflexivity is effectively the same thing.
You’re going to ask: “What about growth investing?” I don’t see growth investing as a valid investment approach, because it doesn’t properly consider whether the potential growth justifies the current valuation. More importantly, I don’t see it as a valid investment approach, because it requires you to understand things that are very difficult to anticipate, especially if you’re dealing with companies outside your expertise. How is someone with no background in biology supposed to judge whether a biotech company will succeed in its plans?
Rather, the approach I favor is value investing, with some insights derived from momentum investing. You want to buy companies below their fair value, but you also want to make sure that the market figures out quite rapidly that they’re undervalued, so that your money isn’t tied up for years. That generally requires some understanding of mass psychology. A casino in Macau can trade below its fair value, but if the market thinks “this looks shady, I’m not touching it” and the market still thinks “this looks shady” two years from now, your money was tied up doing nothing in that period.
I should note that with the possible exception of nanocap companies, I have to recommend you not to use the value investing approach in the United States, for the simple reason that everything in the United States is overvalued right now. Why is Buffet sitting on a big pile of cash? He sees no opportunities.
I’m rounding this up. I’d like to have some kind of elegant conclusion to this long list of information but it’s not going to happen. I hope this information is going to be useful to you. And if you’re a nineteen year old boy with a beautiful dark soul (congrats on the high prenatal testosterone exposure) who managed to read this far, I hope you’re going to wait with buying that mechanical watch.
Do you have any recommendations for some good resources for getting started with these kinds of investments? I have literally zero experience with trading stocks and other investments other than making a bit of money with ethereum a few years back.
Start out reading “the little book that beats the market” by Joel Greenblatt. This teaches you the most basic techniques of Value investing. Most importantly, the techniques Greenblatt explains there will always remain relevant. After that, I would recommend just watching talks given by Warren Buffet, Charlie Munger, Greenblatt and other value investors. You can then go back further and read Benjamin Graham’s books.
You have to understand however, that value investing as an approach makes sense, but value as we understood it in Buffet’s early days is mostly different from value as it functions in today’s economy. Not every form of value is immediately reflected on the balance sheet of a company. As an example, branding, skilled personnel, these are the kind of difficult to measure forms of value that are more important these days but difficult to put a number on.
Value investing is not a get rich quick scheme by any means. However, if you understand the most basic aspects, you’ll avoid the kind of periods during which normies lose half their investment in a stock market bubble. When you comprehend the basic aspects of value investing, you’ll be able to eloquently explain for example why this is a terrible time to step into the American stock market.
Thanks, I appreciate the info!
You’re smart, but you aren’t nearly as smart as you think you are.
My current hustle has been finding big good companies with very low volumes and wide bid ask spreads in their options. These wide bid ask spreads are basically the market not knowing what the fuck it is doing. Just make low bids and pick up far dated options so you don’t get theta fucked, then turn around and sell your options for more but lower than the other sellers that are widening the spread, the volumes are too low for big money people but with a mere $2000 I can make $250-$800 consistently. You will see
unrealized losses of -50% instantly and sit like that for a while but that is because the screen isn’t printing hidden bids that come from small players. The wide spreads make the software scare people. They don’t show the percents accurately they just mark to last sell. You only need one stock to do this in but you can’t putt in too much because they market is shallow.
I would like to think I am full of shit but statistically speaking I haven’t lost over like 50 trades even though many of those trades were cancelled expired orders that never caught a sell at a good price.
Basically you can get higher returns with 90% of your money safe and 10% in extreme high yields.
I don’t even bother looking at the screen much just a few clicks a day because I can live on 250$ a week.
The only metric I look at is the RSI on the underlying stock To guess directionality, even when direction is going against me in the underlying the wide spreads mean bids can still pay me since they are so off target.
This is called picking up pennies before a steamroller. If you ever find yourself writing options on a company that goes up 50% on a day or down 50% on a day, your earnings are gone.
I would have to advise against doing this.
I wasn’t picking up pennies because I am not writing options I am only buying . Picking up pennies would be the concave function of writing options.my exposures are convex, the option writers are the ones picking up pennies.
I guess you have started investing in March 2020 and now you think you are Warren Buffet in spe. You are not. Buying fallen angels once and then selling them on rebound is nothing exceptional. It was your once in a lifetime chance, you did it but most likely you will lose to the market in long term and judging by your egotism, you will be broke really fast.
So yeah, I hope you will invest a lot in nanocaps and VC funds.
Hmm, I live in the states. Cuuuuh-rap!
So it turns out Softbank has been behind this last bull run in tech:
When did you start investing?
Would has your year-on-year returns been so far?
How did you make the bulk of your capital in such a short time?