Sunday, 23 March 2014

TNG reviews Peter Lynch

Something I discovered a little later in life than I would have preferred: the power of learning and continually engaging one's mind with new information.  Sounds silly, but if you're not making a habit to better yourself what’s the difference between you and a hermit living in the woods?  What are the chances of achieving your dreams in whatever it is you want to do, bar living a sustainable lifestyle in a woodland environment (but even then!), if you didn’t learn from others?  Books are an invaluable resource you can use to improve yourself.  Someone has already done the hard work.  Take advantage of that.  Leverage it.

Throughout university I was led to believe that the books I should be reading to prep myself for getting a job were Liar’s PokerFreakonomicsBlack Swan, among others.  Don’t get me wrong, great books, very smart authors.  But you are better off leaving these for a holiday.  They're entertaining but they won't teach you anything of practical use. 

A great part of my life has been dedicated to following the stock market and learning how to invest.  The first time I put actual money on the table I went all-in.  It took losing a lot of that money to realise that this was a mug’s game - at least the way I was doing it.  My approach involved scanning the daily movers and shakers, and trading on momentum.  Technical analysis... I have yet to come across anyone who actually uses this successfully to generate consistent growth in their portfolio.  As I would later discover, none of the greats used it.  Who are the greats?  Black swans some call them.  Yeah those exist I’m sure.  But my new hero, Peter Lynch, is no black swan.  At least his approach isn’t.  Ever hear the mantra: “Invest in what you know”?  This is Lynch.  He coined that phrase.



One Up on Wall Street by Peter Lynch may look like it was born in the 80s.  And along with Mr. Lynch’s fantastic suit on the cover, its title may draw a few laughs.  But the principles you will take from it are timeless and of great value.

Read this book if you have limited knowledge on investing; read it if you consider yourself to be pretty well read on the topic; read it if you have no clue.  It is applicable to all levels. And for all those looking to get a job in this industry, it will set you up well for answering that very popular interview question: “If I gave you £100,000 where would you invest it and why?”.  This book will embed in you sound investing principles, which you will lean on throughout your life and/or your career.  And Lynch is a great writer to boot.  He cuts straight to the point and doesn't dance around the subject only to keep you chasing the plot - every succinct chapter is a standalone lesson in itself.

Aspects of the book that made the greatest impact on me:
  • Value-investing in nut-and-bolt industries;
  • How to categorise companies and analyse them (slow growers, stalwarts, fast growers, turnarounds, asset plays and cyclicals);
  • How to phone up a company and what questions to ask (no, really);
  • The best time to buy and sell;
  • How to confront financial statements and what key data to look for;
  • Why futures and options are for farmers and not investors;
  • And of course, what the title of the book itself is alluding to, how working on Wall Street can put you at a disadvantage to the individual investor.

What this book won’t tell you:
  • What companies to invest in and when (what book could do that?);
  • Quantitative analysis (boooring);
  • How to get rich quick (go away).

I love the idea of investing long-term, but it still scares me - after losing so much.  Reading this book added a good few levels to my confidence and really helped affirm my understanding of what I previously knew about but hadn’t really fully grasped.  Lynch accomplishes this with his down-to-earth writing style - love his wit - and an arsenal of real world examples he uses to illustrate his points.  A must-have for any collection.

Grab a copy of One Up on Wall Street from Amazon:

Saturday, 25 January 2014

Hey, are you guys still here?

Hey, are you guys still here?  According to Google Analytics people still seem to be finding their way to TNG.  53 just today!  Those numbers have inspired me to sign up to Google AdSense.  Who knows, maybe in 12 months I'll get a cheque from Google to pay for that MP Five Forces tattoo I've always wanted.

Life's a big bucket of new toys lately.  I'm trying new things all the time and I can't express how happier I have become as a result of it.  I'm working on a business plan, with a couple more tinkering away in the back of my head.  I have found insight and inspiration from diving into the fantastical world of podcasts.  Economics, design, sociology, psychedelia are just a few of my favourite topics at the moment.  And even toying with the idea of starting my own.  Who wants to hear me speak?  53 people a day, that's who might!

Stay tuned folks, 2014 is going to be a great year.

Thanks for reading.


-TNG

Tuesday, 29 January 2013

Don’t Make These Mistakes When Networking (Guest Post)

Young entrepreneurs try especially hard to become the next big thing, often failing at the first hurdle. However, only those with true entrepreneurial spirit have the ability to brush themselves down again and face the pitfalls, and learn from their mistakes. If your ego can’t take this, then maybe have a look at what you want from a career.

Effective networking is not hard if you can get the fundamentals correct. Dress smart and be smart, remember that you are doing this to meet new people. Do not get this confused with a sales pitch; if you can successfully build up relationships with people then you will eventually be in a position where the sales will come in naturally from your charm and personality.

Forcing your business card down people’s necks is never a good move. In fact the truth of the matter is, the more you give out then the less credible you could look. If you are tactful with whom you give your cards to then they will become more valuable as you know someone wants to keep in touch. This is not to say don’t give out your business cards, far from it, as these are calling cards that will be a necessity to building up contacts but don’t just provide them to anyone and everyone. This brings me to my next point.

If you have contact details then use them, by not following up, you have effectively thrown away a potential relationship to someone who could be very useful to you in the future. Something that follows on from this question is why did you even go to the networking event in the first place? You must set time aside to make some form of communication with these people.

It is as much about them as it is about you. Relationships work two ways; you need to be able to have time to hear about them, their business and what they do as much as they need to put the time aside to listen to you. It’s also impossible to network if you are only willing to stay with the people that you came with, or already work with. Confidence may hold many people back here but, that said, being overconfident could come across as cocky and not do you any favours. If you can show that you are cool, calm and collected, then this will look good to employers and show that you can handle stressful situations really well.

I would always suggest being prepared for these events; don’t throw away easy contacts by making a fool of yourself or being overt or extravagant. Behaving in a professional manner will work wonders for you in the long run, hopefully opening up a world of opportunities and contacts who will be valuable assets for you in your future career.

This is a guest post by Matt Jones, who is currently working with Vistaprint who specialise in free business cards.

Monday, 7 May 2012

Podcasts Are Changing My Life

Today I listened to my first podcast.

Saying that now makes me feel like a father of four.  I used to be so aware of technology.  

I stumbled across one which by the sound of the title alone seemed like the most tediously-presented-public-broadcasting-possible yet probably something-which-actually-offered-sage-practical-advice - Marketplace Money from American Public Media, presented by Tess Vigeland.  

*Cough*

Within five seconds of turning it on my latter predictions all proved correct, and then some.  The content was informative, insightful and, at times, hilarious?  They had on one of my favorite American comedians, Michael Ian Black, reading from his new book, You're Not Doing It Right.  Somehow they made it work and I was treated with Black's brutally honest humour about his personal experience of becoming a BMW-owning d*****bag (unquote).

Among many other guests and segments was author Jane Hodges speaking about the emotional rationalisation some of us may go through when we choose to buy a home over renting, and the organisation's China Correspondent, Rob Schmitz (woah, this thing must be bigger than I thought), discussed why people in the PRC can react so openly when asked about how much money they make (compared to Westerners).

I was glued to it for the entire hour.

Listen to the whole thing here.

Friday, 2 March 2012

Should I Pay Down My Student Debt or Save More? Feat. Simon & Garfunkel

For the past twelve months I’ve been weighing the merits behind saving whilst I pay down my student loans versus throwing as much as I can at my outstanding balance and leaving my savings account to flat-line.  And when I say savings I am talking about long-term savings here (ie. retirement).  There may be a valid business case to save up for a car while you pay down debt (or even borrowing more to buy a car sooner). As we'll soon find out, you just need to be sure the return outweighs the cost.

So I think the easiest way to prove this is via Excel.  But first a few assumptions:
  1. There are no tax benefits to saving money or paying down/holding debt.
  2.  Inflation isn’t doing anything Zimbabwe’ish whilst you save in a different country/currency (or for all the economists in the room, purchasing power parity holds).
  3. There is no value/life experience to be had from saving your money whilst clearing your debt.

That last point is an especially important one.  I could gain no personal benefit from learning the action of opening up - and depositing money into - a Lloyds 2% fixed-interest savings account.  On the other hand, there may be something to be had from learning how to properly invest in stocks or other securities (even if my performance was equivalent to that of a 2% savings account). 

Given the above, this is obviously quite a limited test – so please don’t rely on the outcome alone when making your investment decisions.

Alright, so let me put on my storytelling cape and hat in what will most likely be a god awful attempt to engage you in some compound interest magic. 

Simon and Garfunkel both just graduated Kent University’s masters programme in management studies.  They both came out with exactly the same amount of student debt - £60,000.  Fortunately however, after much perseverance, hard work and dedication, they got a job.  To the marvel of many.

After consulting with each other through the medium of song, they discovered that they would both be able to earmark the same amount of cash to pay down their debt (£10,000 per year).  But Simon’s friends told him he was better than that; he could do much better if he abandoned the plan and saved some of that cash instead.  Garfunkel was not averse to saving; he just knew where his priorities lay.

Simon saved 25% of his allocated income and used the remaining 75% to make payments on his loans.  His debt had fixed interest of 4% and his savings 2% (see belief above).  In the end, it took him 10 years to pay off the bank.  When this was done he was sitting on a cushy £28,605.45 in savings.



Garfunkel stayed true to his heart and put 100% of his allocated income towards his loan.  Just like Simon, he paid the same rate of interest.  There’s no doubt that Garfunkel would, and did, pay off his debts first – three years sooner in fact.  And with his debt now paid off, he was free to place 100% of his allocated income into a 2% savings account.  By the time Simon had paid off his debt, Garfunkel was worth £30,632.70.



Even if Simon went on to place 100% of his allocated income into his savings, his net worth would never surpass that of Garfunkel's.  In fact, the gap between them continues to grow.

So that proves it.  Given a higher rate on my loan I should not save any money until it is paid down. Annoyingly cheesy and condescending way to arrive at that point I apologise.  But the fun doesn’t stop there.  Now we can discuss the other considerations not tested.

For instance, what about the rationale behind saving an emergency fund?  Assuming both of our singer-songwriters started off their working lives totally skint, Garfunkel took a risk not putting anything aside for a rainy day.

What about salary increases?  What about only being 20-something once?  Why save at all?  Why not live so far below your means, that you pay your debt off in two years instead of ten?

Personally, I hate having debt (woah!).  I think it is a necessary evil to take on debt in order to go down certain paths in life, but should be shed and avoided as much as possible thereafter and in every other circumstance.  I have a conservative emergency fund and everything else I can spare goes to my loan.  Otherwise I am borrowing to save (provided I cannot find an investment with a return larger than my debt’s interest).  

P.S.  Simon and Garfunkel are sweet.

Saturday, 12 November 2011

TNG Speaks up in the Workplace

6 Months Ago... I was happy.  Happy that someone had finally given me a chance.  Happy that I had a home.  I was Over the moon.  My mother was proud.

5 Months Ago... I was clueless.  There was just so much to learn.  I was scrambling against the curve.  Making juvenile mistakes at every bend.  And my colleague was being a pain in the ass about it.

4 Months Ago... I was insecure.  Doubting where I had put myself.  Would I enjoy this?  How did I end up here?  Where would I go?  Who would I become?

3 Months Ago... I was depressed.  I couldn't even lie to myself anymore.  I had no passion here.  It had become a job.  Not a career.  But where would I go?

2 Months Ago... I stuck my head out.  People around the office were talking about something I had an interest in.  And I made it known that I wanted to be a part of it.

1 Month Ago... I helped convince our risk-loving CEO that we drastically needed to hedge our FX exposure.  He gave me permission to purchase $160,000,000 in call options.  The largest single hedge ever taken out in the company's 20-year history.

2 Weeks Ago... I could have saved the company $450,000 if they had taken my advice.  Instead they paid someone else for theirs, and lost it.

Today our CFO told me that I'd go far.

A lot can happen in six months.

Sunday, 6 March 2011

TNG Moves to London

Few times in life does one get to walk through a set of revolving doors, approach an attractive young woman behind a desk and say, "Good morning, my name's Mr. New Guy, and I start work today on the 10th floor."

Few is probably an overstatement, and for that I am grateful to be here.

I'm not going to lie, my preparation for this day didn't involve much. I watched three episodes of The Office, and eight of Mad Men. I had feared that this might not be enough to prepare me for the highly provocative and often outrageous world of investment accountancy, but here I am. In one piece. Without the loss of my morals, or my dignity.

But there's always the week to come for that.

Having been at the office for so short a time, I can't really comment on what I think of it. I look forward to going in on Monday morning, so there's that. But I think it'll be at least a few more months, perhaps a year before I know if this is the right place for me. But then again, I've always said that anything is what you make of it. So there's that.

I can tell you what I think of London though. It's definitely made an impression on me. Probably best to illustrate with an anecdote.

Time: 7:57am
Location: Random market near Paddington Station

TNG: "Excuse me, could I buy an apple please?"

Old Lady looks up at me, wiping her nose on a tissue.

TNG: "If, your open..."

Old Lady: "You know very well I can't do that!"

TNG: "Sorry?"

Old Lady: "You know very well I can't do that!!"

TNG: "Um.. okay.. no sorry I didn't know very well, I'm not from around here."

Old Lady: "Do you have a pound?!"

TNG: "It's okay, I'll go somewhere else."

Old Lady: "Do you have a pound?!!"

TNG: "That's quite alright, I'll just go to that Tesco Express right there that's trying to put you out of business."

I proceed to the supermarket, but figure there has to be a vendor here somewhere that wants my business, so go to the one literally on the curb outside Tesco. Guy sells me an apple no trouble. I thank him for the apple, and his niceness.

I walk down the street finding a place to sit, wash my delicious looking breakfast, and take a bite. Rotten.

I love this city already!