When I did debate in high school, I used to spend hours reading articles, policy whitepapers, and philosophy books. I could easily go 7-8 hours straight doing research to find 1 or 2 new insights that would improve my case. I enjoyed reading, doing research, and “connecting the dots.” At some point during high school, probably around junior or senior year, I went “all in” on debate. Debate became my number one priority, even above schoolwork. I don’t know if focusing so much on debate was an intentional decision or even a change I recognized at the time, but in hindsight it seems obvious. Regardless, my efforts paid off – I quickly went from a mediocre to really good debater. After high school I found that similar to debate, markets rewarded thoughtful research. The best investors don’t necessarily have the best models or tech, they just have a skillful ability to connect the dots. Over the past two years, I learned a lot about investment philosophies, markets, and corporate finance. I started investing my own money and made tons of mistakes. I watched great traders and investors make tons of money and studied how they operate. Investing was a fun, educational side hobby, and I made a few thousand bucks from it too!
I never made the time to go “all in” on investing like I did with debate. I had challenging coursework and heavy extracurricular commitments that prevented me from doing proper research and building conviction. But as I’m making my way through college, I’m realizing I need to shift direction. I’m not going to spend the rest of my life doing math or CS research, so why do I need to know efficient algorithms for matrix multiplication or be able to prove limits are unique in inner product spaces. I need to be spending less time on coursework and more on networking, side projects, and investing – pulling levers for growth. The tipping point was my EECS 498 midterm. The class is primarily PhD and grad students, I fail the midterm (which was the first time I’d failed anything in a while), and it makes me think why I’m spending so much energy getting good grades when none of it will matter two or three years from now.
Anyways, the point is: I’m going all in on investing. That doesn’t mean I’m going to start failing my classes, just that investing takes precedence. I know I have what it takes to be a good investor. I don’t want to sound arrogant here, but an honest assessment of my investing habits: I’m independent-minded (good at being contrarian), risk-averse (makes me hunt for asymmetry), and patient. My biggest weakness is low confidence but hopefully that can be rectified by maximizing research, using my time to build conviction, and winning. I know that all of these traits are hard to evaluate since I’ve only been investing for two years, but I know myself better than anyone else and believe this is an honest assessment. It’s time to get serious and start making real money. Ok those were most of the structured ideas in my mind so now for the stream of consciousness type content.
Some lessons I’ve learned:
- On trading and investing: Scaling down on up-legs and up on down-legs is an effective trading strategy, given you are small and nimble. Don’t try and do fancy stuff. You’ll get burnt.
- There are times to be patient and times to move fast. Never get caught in between.
- Conviction is key. You will sell early if you don’t have conviction. You will not take a big enough position if you don’t have conviction.
The current market is really weird – everyone’s calling for a demand destruction induced recession but that is exactly what gives me hope that it won’t happen. Oil has gone parabolic and I’ve been hit with some major FOMO. Sold out of VAL warrants, BTU, and some uranium early so I’ve been feeling bad about that. But, instead of doing some stupid YOLO trades, I’m going to build conviction. The key themes I want to go deep on: offshore oil, tin, and coal. Offshore oil drillers like Valaris and Transocean are still trading at 0.2-0.4x replacement value. The asymmetry is NOT gone. Tin producers haven’t moved a ton and the story seems to be similar to uranium from what I’ve heard, except there’s legit producers trading at single digit times EBITDA. Could be a solid long-term theme to dive in on. Coal producers are primarily for the long-term account. Sounds like an oxymoron but dividends and buybacks from massive free cash flow should make some of these names put up superior risk adjusted returns.
On another note, finally got approved for options by Fidelity. Will this result in me blowing up my account WSB style? Let’s hope not! I did start a high-risk account recently (as if the long-term account full of junior miners wasn’t high risk enough already…) – probably going to do some fun trades in there and see how it goes.