Reflections 2020

Don’t worry, this won’t be a COVID-only post. But I’m allowed to refer to it a few times, if that’s ok.

Just wanted to write down my thoughts on the black swan year we just went through. Following each short section, I’m looking at what I can do to improve my life and investing in general. We cannot fix everything but at least we can work on those things under our control.

1. I cannot predict the market even if you tell me what events will take place in the world

FTSE Global all cap pandemic
FTSE Global shares (all-cap) index

I cannot even remotely predict what the stock markets will do. By March, we knew the virus is spreading out of China and that we’re getting into uncharted territory. It was only logical markets would crash. And they did by 30%. But where would the bottom be? Why not -60%?

Those who bought back then got rewarded handsomely. I was a bit too early but my £10k are now worth ~£13,000 while the economy is in worse shape. Sure, a lot of money was printed but nonetheless, the GDP took a hit.

Recovery following a crash has happened many times before. (So far) the market has always gone up. Eventually. This time it happened A LOT faster than I expected.

The number of cases was steadily going up and stock markets reversed their downturn trajectory. They started looking far into the future again. Madness, especially if you think we were hitting all-time highs in the absence of a vaccine and while everyone was expecting a more deadly 2nd wave. Which actually arrived as promised and didn’t affect the stock price levels!

Lesson learned: Timing the entry means you need to time the exit as well. This year taught me I would’ve been very bad at it. Better invest regularly and in different things like property and bonds and enjoy the free ride.

2. I enjoy guiding people around tax and investing

This blog started as a journal for me to document my process to financial independence. I really enjoyed the writing process. It articulates my thoughts and translates the noise in my head into words I can see. It’s not uncommon to see bloggers take action on a topic after writing a blog post. You should write even if you have no readers. I know I certainly did in the beginning.

Anyway, I soon found out that other people want to generate a passive income too, escape the 9-5 and share similar goals on life and career. I knew I enjoy writing but I hadn’t given teaching a chance.

Earlier in the year, I felt the need to add value to LTD company owners who like me, want to invest. I didn’t have time to do more 1:1s and something more organized had to be done. I know some of you own limited companies and like learning about ways to put your business cash to work.

So I launched the company investing academy and its online course to find out it’s a great new beginning. I like:

  • Breaking down complex topics (i.e. tax, investing) into actionable steps
  • Talking to different people around the UK with common goals
  • Building a community and learning from each other mistakes
  • Feeling a sense of achievement when hearing about the members’ success

Lesson learned: The course and the community are definitely something I will spend more time doing.

3. I’m not good at outsourcing stuff

Read any business book or ask any business people. The first thing they’ll tell you is that you need to scale your time. Time is a finite resource. Once you delegate a task you just ‘create time’ in exchange for money. And that’s gold.

I can think of plenty of things I should be outsourcing right now. Building my parents’ new e-shop. Tasks like video editing and technical aspects of my new page, like payment integration. Improving the speed of this blog (which should subsequently improve rankings). Even the editing and proofreading of long posts like this 3k-words monster.

But I have trouble doing it.

It’s not that I had a bad experience outsourcing or that I don’t want to pay. I had an OK experience in the past. The ROI is positive anyway. I just didn’t have a GREAT experience and given I have high standards for quality, I’m afraid I’ll get mediocre results. Last but not least, privacy becomes a concern every time I outsource. Mailing list access. Database / files access. Something that should not be shared but is, because the role-level access is not low enough.

If you have any tips on how to overcome my fear of outsourcing or where to start, I’m all ears. Also any good books?

4. Location independence is good, WFH fatigue is not

work from greece beach

We’ve spent a few months working from Greece. I really enjoyed the sunny activities in the weekend and the relative freedom of movement without a (big) fear of infection. This worked out well. But I miss the social interaction with coworkers and the team.

I’d also rather live in a larger place if I am to be here 24/7. I think the property commentators call this ‘search for space‘ and it’s one of the reasons house prices keep going up in the midst of the pandemic.

If the Work From Home (WFH) trend continues after the virus is over, I’ll probably be in an office or a co-working space 2-3 days a week.

Lesson learned: Find a place to work with likeminded individuals. But we’re not out of the woods yet, are we!

4. Raising kids is amazing

I wasn’t really into kids. In fact, I was probably trying to avoid interacting with them. I just found it a bit awkward and never felt ready. Others get along just fine with them. Perhaps it’s the fact I score ISTJ on the Myers-Briggs test?

Anyway, what I wanted to say is this: Having kids is wonderful! You get to experience both frustration and awesomeness but more awesomeness than anything else 🙂

Especially when they start interacting with you, learning new words and see their personality being developed. They become your friends. It sounds stupid but it’s true, really.

Small things make your day, like when they’re trying to play hide and seek like an ostrich or when they ask you to take a photo of themselves before they can even spell it. Anything that’s worth doing once they want it done 30 times. They have their moments where you hate yourself for having one. It all has to be done according to their routine.

Once you have a kid you realise how much free time you had when you thought you had none. Take this blog, for example. You’ve probably noticed a longer interval between blog posts!

Paul Graham explains it better than I do, so go read his essay on kids instead. It’s probably the best piece on the internet on the topic.

People often ask me the #1 advice to get rich and I’ve finally found it: DO NOT HAVE KIDS!

5. My £3,000 gambling loss

Back in March when everything was crashing I wanted to take a punt in a speculative product. Everything was in free fall and cash was king. Bitcoin at $5k, EasyJet at -60% drawdown, negative oil. So many options!

I chose to gamble on the “black gold” because why not. It’s only a matter of time before people start taking aeroplanes again. Ok, maybe it’ll take years but I was willing to wait if I could 3x in 3 years. Obviously, it could go the other way too so I went in prepared I could lose it all.

So I put around £15k in the WisdomTree CRUD ETF. Known ETF structure, a big one too, 1.4 bn in assets under management. What can go wrong.

As I’ve mentioned in the Free Oil for everyone post, to invest in oil you first need to understand how the ETF sausage is made. These oil ETFs track the price of oil using 1-month rolling future contracts. In extreme movements like in March, the 1-month future prices are much much lower than the 2-month and 1-year prices. This means that the ETF has to sell this month’s contract at low prices and buy next month’s futures at higher prices. Continuously doing that means to sell low and buy high. The result is this:

crude oil vs oil ETF contango effect

See the problem??? That’s the contango effect. When I bought the oil ETF, oil (WTI) was trading at $20. I actually managed to almost call the exact bottom! WTI is selling close to $50 as I type this and my gamble bet is still not breaking even yet…! You could also translate that to a £30k loss if you think I was between buying oil or bitcoin back then. But woulda coulda shoulda!

Lesson learned: Gamble responsibly, as always. I’m in the fortunate position to not get seriously affected by the loss of £3,000. I also made some more successful bets on Biden after the election was over. Thank you Betfair, for keeping the market open after the election thanks to Trump’s conspiracy theories trying to overturn the “rigged” result 🙂

To a prosperous and healthier 2021

I want to believe the worst days are behind us and a brighter future will emerge in 2021.

Merry Christmas to you all.

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    5 thoughts on “Reflections 2020”

    1. Hello Michael. Thanks so much for all your blog posts during 2020 – I love reading your insights. I’ve experienced similar struggles with outsourcing. Back in January, I outsourced the management of my website, hoping that it would free up time and headspace. It was a disaster! They kept breaking it, then taking ages to fix the problem they’d caused. I had a slightly better experience when outsourcing audio and video editing, although it was very slow and the results were inconsistent. I decided to outsource the stuff I absolutely cannot do – e.g. complicated company accounts and fancy design work – and bring the rest back in-house. Thanks to lockdown, I had a good chunk of time to find better ways of doing things, such as building effective processes, identifying exactly the right tools, and automating routine tasks. It took a while to set up, but now I can move much more quickly. Most importantly, I have control! Although audio and video editing takes time, it needs to be right. Even if I outsource it, I still have to check everything throughly, given it’s my personal reputation at stake. Anyway, wishing you a peaceful Christmas and a much happier New Year.

      • Thank you, Catherine, for your insightful comment. I agree with you. Also, I think learning new areas, especially technical things like podcast editing, or small web dev tasks can be quite useful. It’s also useful when it comes to assessing others’ work quality or timelines when we actually do outsource.

        Knowing that I have my limits and can’t do everything, I’m trying to find better ways. Happy New Year 🙂

    2. Hi, thanks for your post. I started following you towards the start of this year and have enjoyed your posts.

      I’m also going down the path of financial independence and its nice to read someone else’s journey and thoughts.

      While I’m not based in the UK, much of what you write remains relevant.

      Wishing you a Merry Christmas and a Happy New Year!

        • Hi, it’s both easy and hard I guess. Lots of pros about being in HK such as low taxes and no CGT. BUT at the same time it is incredibly expensive and can be very materialistic.

          I have just started writing about it with a view to track my journey and also help others navigate FI life in Asia.


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