Posts by "daniel clough"

Stocks vs. index investing

I just read Twitter Inc and LinkedIn Corp Won’t Survive and it reminded me why I prefer index investing over individual companies.

The article makes two key points.

  • Twitter and LinkedIn won’t survive
  • It’s only a matter of time before a very dangerous domino effect comes into play

Taking the first, I think it does a pretty decent job of summarising the woe’s of Twitter and Linkedin. They both have growth and product issues, combined with scaringly large headcounts. Facebook looks fantastically robust in contrast.

I have no idea if they will survive or not, but they are both in deep trouble and their stock price is taking a hammering (both have shed more than 60% of their value in the last year – see graph below).

Stocks vs. index investing - TWTR & LNKD stock price over past 12 months

TWTR & LNKD stock price over past 12 months

Taking the second, I agree, there will be other fatalities. No doubt, there are other tech companies out there with similiar problems and overvalued positions.

That said, this isn’t new. Every year this happens to many companies. And in some years this happens to a larger number of companies as part of an overall market trend / correction. It’s incredibly hard to predict. Many try. Most fail.

But at the same time, we also see new companies going public and their valuations will climb. They replace some of what is lost by the declining companies, in some cases adding more. The market is self-cleansing in that way.

And that’s where the value of index investing comes in.  You’re not trying to predict winners and losers. You own a % of every company in the index and you take the highs and lows of each. You won’t experience a 10 bagger, but you will experience slow and consistent growth over the long-term.

Take a look at Twitters and LinkedIn’s stock price over the last 12 months, when compared with the S&P 500.

Stocks vs. index investing - TWTR & LNKD stock price compared to the S&P 500 over past 12 months

TWTR & LNKD stock price compared to the S&P 500 over past 12 months

Yes, the S&P 500 also declined, but at a sixth of the rate compared to Twitter and LinkedIn.

They key to investing in indexes is taking a long term view. Evidence shows that the market always goes up in the long term and this graph shows it nicely:

Stocks vs. index investing - History of S&P 500

History of S&P 500

My investment strategy is index investing, two specifically – The FTSE All Share and S&P500. I feel it gives the best probability of return and I love the passive nature of it. I don’t need to think about or keep an eye on anything. I just contribute to it regularly like I would a savings account and get on with life.

Wait, our whole life is just a firefly blinking once in the night?

It’s not often something stops me in my tracks because it resonates so deeply. But, it happened yesterday.

It came from Tim Ferriss’s latest podcast with Naval Ravikant (CEO and a co-founder of AngelList and successful investor). Naval was back to answer ten questions from listeners and he took on one about a life insight he has.

It was so awesome and I’m going to remember it when I find myself worrying too much about the future.

I transcribed that part of it below. I highly recommend listening to the whole thing. It’s only an hour long and it’s excellent.


Q: What insight about life have you acquired that seems obvious to you, but might not be obvious to everyone else?

Naval: This one is a tough one, its a deep question. I do have one fundamental, recent belief that I’ve acquired in the last few years that I don’t think most people would agree with. But it’s such a personal thing and it came about in such personal circumstances that I’m not sure anyone else will get there in the same line of reasoning. That said, I’ll lay it out anyway.

Which is, I’m not afraid of death anymore. And I think a lot of the struggle that we have in life comes from a deep, deep fear of death. And it can take form in many ways. One can be that we want to write the great American novel, or we really want to achieve something in this world, we want to build something, we want to build a great piece of technology or we want to start an amazing business or we want to run for office and make a difference.

And a lot of that just comes from sort of this fear that we’re going to die, so we have to build something that lasts beyond us. Obviously also the obsession that parents have with their children. I mean a lot of that is warranted and biological love, but some of that is also the quest for immortality. Even some of the beliefs or some of the more outlandish parts of organized religion, I think fall into that.

And I don’t have that quest for immortality anymore. And I think I came to this fundamental conclusion. I thought about it a lot and the Universe has been around for a long time. The Universe is a very, very large place. If you study even the smallest bit of science, you’ll realise that for all practical purposes, we are nothing. We’re like, we are amoeba. We’re bacteria to the Universe. We’re basically monkeys on a small rock, orbiting a small backwards star in a huge galaxy which is in an absolutely staggering gigantic Universe which itself is likely part of a gigantic multi-verse.

And this universe has been around probably for ten billion years or more and will be around for tens of billions of years afterwards. So your existence, my existence is just infinitesimal.

It’s like a firefly blinking once in the night. So we’re not really here very long and we don’t really matter that much. And nothing that we do lasts. So eventually you will fade. Your works will fade. Your children will fade. Your thoughts will fade. This planet will fade. The sun will fade. It will all be gone. There are entire civilizations that we just remember now with one or two words. Like Samarian or Mayan. Do you know any Samarians or Mayans? Do you hold any of them in high regard or esteem? Have they outlived their natural life span somehow? No.

So I think we’re just here for an extremely short period of time. Now from here you can choose to believe in an afterlife or not. And if you really do believe in an afterlife, then that should give you comfort and make you realize that maybe everything that goes on in this life is not that consequential.

On the other hand if you don’t believe in an afterlife, then you should also come to a similar conclusion which you realize that this is such a short and precious life, that it’s really important that you don’t spend it being unhappy. There is no excuse for spending most of your life in misery. You’ve only got seventy years out of the fifty billion or so that the universe is going to be around. Whatever your natural state is, it’s probably not this. This is your living state, your dead state. It’s true over a much longer time frame. So when I think about the world that way, I sort of realize that it’s just kind of a game. Which is not say that you go to a dark place and you start acting unethically and unmorally – quite the contrary.

You realize just how precious life is and how it’s important to make sure that you enjoy yourself, you sleep well at night, you’re a good moral person, you’re generally happy, you take care of other people, you help out. But you can’t take it too seriously, you can’t get too hung up over it, you can’t make yourself miserable and unhappy over it. You just have a very short period of time here on this Earth. Nothing you do is going to matter that much in the long run. Don’t take yourself so seriously. And then that just kind of helps make everything else work.

So yeah. That’s that’s an insight about life that I’ve acquired that now seems obvious to me. But it’s really not I think obvious to most people.


Check out the full podcast here.

2016 so far

At the beginning of 2016, I set out a few focuses for the year. Now that we’re a month in, it’s a good time to reflect and see how I’m doing.

be adventurous — set monthly adventure challenges; make friends with adventurous people

Whilst I didn’t set or do an adventure challenge in January, I did a few things to build momentum for a more adventurous year.

  • I’ve committed to a cycling challenge in March. 120 miles through Yorkshire over two days (March 4th and 5th).
  • I have followed a few adventurous and inspiring people on twitter.
  • I created an adventure / challenge list to keep track of my ideas for stuff to do.

Still a bit too much talk and no action, but that will change. I will do something in February to get me outside of my comfort zone. And, I’ll need to definitely get out and do some longer cycling rides to prep for Yorkshire in March.

move forward financially — earn, be frugal, stick to budgets and save

I feel mixed on this. I’ve made some progress, but I’m a million miles from where I want to be. I’m still looking for a new role, and until I find it, the earning and saving part is on hold. That leaves being frugal and sticking to budgets.

I set out a household and personal budget for Jan and went over it quite a bit. This was because of a combination of some unforeseen expenses (washing machine died, car insurance renewal I forgot about etc.) and some old non-frugal habits (bit of eating out, buying stuff I don’t really need etc.).

That said, it was an improvement on 2015. I made plenty of decisions throughout the month that brought my spending down. And, actually setting a budget made me more conscious of my spending throughout the month. This is the first step to getting to where I want to be.

I’ve adjusted the budgets a bit for February and will keep getting better. It’s going to take a a bit of time to transition from wasteful habits to being more frugal and owning less.

find work I enjoy, is meaningful and will challenge me

As I got started looking for the next thing, it hit home how much I’ve isolated myself the last couple of years (taking a bit of time off and then working on Rescover from home). I was never a networking extraordinaire, but because I was senior and in a circle of stuff going on, my previous gigs came about very fluently. It’s clear I now face a cold start.

But, I knuckled down and just went at it. I’ve started stoking the network of people I know and have been meeting some new and helpful people too. I also found some companies I like and have made some good progress in getting in front of them. I just need to continue pressing forward and I’m positive something will click.

One good breakthrough is I put some time into thinking about exactly what type of role I want. I’m now super clear on that. I want to get back to a hands on operational / product role, preferably with an early stage / growth company. The favourite period of my career so far was as Operations Manager at Jagex. I loved the challenge of helping a company and product grow and scale quickly. It plays to my strengths best.

spend lovely time with ella and fearne

We’ve had some nice times together in January. Ditching my iphone has helped me be more present for sure. I can still do better of course. The key seems to be having things planned to avoid slipping into a bit of a non-eventful day. And I want to better in general at being present and just relaxing and enjoying the moment.

be active — do crossfit classes and some light stuff around it

I signed up to the foundation course at Crossfit Stags & Does and have been twice a week in January – with just one missed session. I am loving it and the lower back is holding up too. Some of the WODS (workout of the days) at the end of the sessions have been tough, but it feels great to be pushing myself. In February I want to build on this and add in a bit of running and cycling on top.

improve mobility — stick to a basic routine in mornings and evenings

I can do better here. I’ve been doing it maybe 30% of the time. Not good enough. I want to do 5 or so exercises in the morning and a couple before bed. It’s just a matter of making it part of my morning and evening routines and getting it done quite. Will do better in Feb. I started this morning with 5 exercises, so I’m off to a good start 😉

eat paleo — start 50/50, eventually work up to 80/20

I’m fairly pleased on this front. I’m at about 50/50, so that’s good. And my weight has settled about 5 lbs lighters at ~185lbs. But, it all feels a bit unstructured and I definitely have pigged out on too many occasions. My wine consumption is a bit heavy too, so I want to cut that back. In February I am going to eat strict paleo on my non crossfit days, with Sunday as an exception – so 4 days. That will put me at over 50%. And even on the non-paleo days I intend to have some paleo meals, so I may even get to over 60%. Also, I am going to give up alcohol in Feb (with one evening as an exception).

Final few Words

I’m pretty happy with how the year has started. I’ve made good progress on most focuses and know how I want to build on that throughout the next couple of months.

This was intended to be a one off exercise, but I think I will do it every month. I found it really useful to reflect and focus on the month ahead. A lot of the thoughts for February came to me as I wrote this. And I’ll be better off for having them.

Tim Ferriss’s genius move

Tim Ferriss is a genius for launching a podcast. I’ll explain why.

I’m a big believer that you can’t connect the dots looking forward, you can only connect them looking backwards. If Tim Ferriss was able to connect them looking forward with the podcast — well, he’s a frickin genius. If not, he still comes out a genius when you connect them looking back.

Tim Ferriss is building one of the most powerful personal networks in the world

I mean, he had a pretty awesome one already right? The podcast 10 X’ed it.

Tim has interviewed the likes of Peter Theil, Tony Robbins, Arnold Schwarzenegger, Triple H, Rick Rubin, Chris Sacca, Scott Adams, Seth Rogen, Evan Goldberg, Kevin Costner, Jamie Foxx, Edward Norton etc.

EPIC.

And quite frankly, by only mentioning the most famous I do a disservice to the interesting and successful people who aren’t quite as famous. Wim Hof, Jocko Willink, Will MacAskill, Derek Sivers, Casey Neistat, Richard Betts, Tara Brach, Samy Kamkar etc.

You’ll also notice the guests get more epic over time. That’s evidence of how the podcast is allowing Tim to connect with higher profile people as the show goes on.

Expanding a personal network to that degree is priceless. I wouldn’t be surprised if Mr Obama is around the corner!

Tim Ferriss is growing his audience like wildfire

The genius about interviewing other people, is that the interviewee will promote it when it goes live — and when they’re famous, they usually have a pretty big following themselves.

They will also have many high profile friends in their own network, who go on and share it (each with their own significant audiences). So each episode ends up getting supercharged through the interwebs.

The sheer variety of guests interviewed only helps to broaden Tim’s audience. Film stars, philanthropists, billionaires, authors, investors, founders, military figures, athletes, musicians — the list goes on.

Geeeeeenius.

Tim Ferriss is getting a learning experience on steroids

Have you ever noticed that Tim tends to ask questions that relate to what he is going through or thinking about for the future?
A bit of coaching from Tara Brach. Acting tips from Edward Norton.

And that’s just on the interview. Imagine the pre interview chats and catch ups in the future.

I’m not saying he is picking or manipulating the guests for his own selfish purposes. It’s likely just a product of where his interests lie at any one time.

Tim Ferriss is becoming an exceptional interviewer

I’ve listened to nearly every episode. Right from the beginning, Tim was quite a good interviewer. But if I was being super harsh, I would say he talked a bit too much and waffled at times. He also missed opportunities to get the gold out of a guest.

To see this improve so starkly as the show has gone on is awesome. He’s now exceptional at maximising the time with each guest. When he talks, it’s usually to clarify or add his own nugget of wisdom in. Or it’s to dig in further on a point — or steer the interview to another place just at the right time.

Tim Ferriss is building an awesome platform for promoting products

Like his personal network, his platform for promoting his own products was already pretty good.

The podcast helped significantly expand it. Whether it’s his next product, crowdfunding campaign, Tim Ferriss book club book or a sponsors product — he manages to weave then in naturally and non-offensively.

Balancing publishing with promoting is not easy. He does it excellently.

Tim Ferriss does all of the above whilst adding immense value for his guests and listeners

And that’s one of the most genius things about the podcast.

Tim helps expands the guests audience and sell their products — in a very real and effective way. Tim has the trust and respect of his audience. They listen and act when he says or recommends something.

He also delivers immense value for the listener. I get a few actionable realisations from some of the smartest and successful people every week — for FREE.

Tim Ferriss is a genius

He’s personal network building is on steroids. He’s getting an education from the best. He’s significantly building his reach and selling power. And he’s delivering huge value in an authentic way to both his guests (for free) and listeners.

I salute you Tim Ferriss.

obama

P.S. having lunch with Tim Ferriss just went on my bucket list!

Lists and using Trello to run my life

I don’t know why I didn’t think of it before, I’m going to start using Trello to organise my life.

Richard Branson is a big advocate of making lists and I seem to be coming across more and more people who swear by keeping lists.

I guess I’ve always used lists to keep organised, but it’s been a mix of Microsoft word, notepad, google docs and a moleskin notepad. Some lists might not get looked at for weeks and I’m not particularly good at remembering things that come to mind throughout the day. It’s about time I tried to pull everything together and get a system that works.

Trello is super easy to use and it’s quick to move things between lists and re-order items within lists.

I’ve set up two boards — me and work. Each board has a number of lists and here’s what I started with:

me

  • to do
  • house jobs
  • bucket list
  • friends to connect with
  • ideas

work

  • to do
  • my interests
  • sources for finding companies
  • companies — to look at
  • companies — to contact
  • companies — applied
  • people to catch up with

That pretty much covers everything at the moment.

I’m going to make a habit of carrying around a notepad with me so I can get stuff quickly out of my head, when and as I think of them. I’ll then move them from notepad to trello at the end of the day.

When I sit down each morning to think about the day ahead, I’ll start with the lists.

I’m looking forward to seeing it works. I think the process of catching ideas quickly with a notepad will mean I’ll forget things less and get more done. Using trello will keep lists front and centre of my daily planning process — again, I should get more done.

I’ll let you know how it works out and if you have any tips for using lists and keeping organised, feel free to suggest here 😉