lördag 18 oktober 2014

Study or not? Buy or rent? How long is a piece of string?

If you just want to know whether you should get a degree or not, skip down to "Young People today!"

No compromises allowed

I like Ayn Rand's books and her philosophy of objectivism. She keeps returning to Aristotle's meme "A is A", which has stuck to me too; What is is, and not something else. It's simple enough, but worth repeating and remembering. When things don't add up, you'd better look more carefully at the details again. A is A.

I also agree with her that in a compromise between food and poison, or between good and evil, only the bad side wins. She abhored compromise - as do I.

All choices aren't compromises

However, many situations in life present themselves as compromises, while in fact they are just choices of degree, or decisions of optimization, how best to attain a target without compromise.

These are examples of such questions:

  • Lift weights with a slight injury? (How slight? How heavy weights?)
  • Stay at a job that doesn't make you happy? For how long? How unhappy? What pay?
  • Use perfectly strict form in the gym or chase higher weights?
  • Short-term or long-term happiness (have that ice cream or not?)
  • Should the Federal reserve raise/lower rates or not? Imperfect information and confidence.
  • Wash your face or not? Good or bad bacteria?
  • Send healthcare personnel to Ebola ground zero or not. How many? Help contain the contagion or risk bringing it home?
  • Watch the news or another episode of a half decent tv series instead?
  • Take contrast showers? How long? How often to change the temperature?
  • How long should you endure in the sauna?
  • Muscle strength or definition. Power or volume?
  • Fast or not?
  • Plan ahead meticulously or be spontaneous and immediate
  • Learn by reviewing or repeating past lessons to perfection or by looking ahead to more complex next-level challenges to reinforce memory and understanding
  • Contrarian or not (in investing, as a politician, nutrition-wise...)
  • Be cautious or aggressive (in investing, e.g.)? How cautious, how aggressive?
  • How long blog posts should I write? How often? Should I attempt humour... or sex?
  • How long to hold your breath underwater (as long as you can, very few can hold their breath for too long)

Who is John Galt?

For the above issues, I would answer with a question: "How long is a piece of string?", i.e. there is no one and objective answer. It's all a matter of personal preferences.

Neither I, nor you know fully and totally who you are and what you really, really want (zigazig ah?). Sometimes it's good to push the limits, sometimes more, sometimes less - and at other times caution is required. Here are nevertheless a few guidelines:

Avoid permanent damage

General tip: In short I would advice to avoid risk of permanent and disabling losses of financial and physical health. With that prerequisite in mind, I would go back and forth, up and down; read ahead and review back... Go with your intuition; it will refine itself with the years and the inevitable hits and misses. It will take your state of mind before and after into consideration, when calibrating itself. Given enough experience and knowledge, "intuition" can be extremely powerful but it has to be fed and honed.

Avoid constricting yourself with dogmas or promises to your younger self. He's gone anyway, and he didn't know anything about life.

Keep an open mind and perform a lot of trial and error in your tens and twenties. Push the limits and venture a bit outside your comfort zone every now and then, but there is no need to go full retard. Try to grow in small increments but do it consistently and permanently. Your older self would of course appreciate if you were a bit considerate about his health and his finances, but focus mainly on yourself and the next five years. Anything beyond that is just that - beyond. But do save for retirement anyway.

Expect life

The above is actually quite easy. The answer to each and every one of the above issues is "42", i.e. "life". Just live it and your genes and feelings will guide you. Experiment, live fully, but don't gamble with life, limb and bankruptcy. Keep reading, searching, question, discussing, and most of all growing, improving, getting better and getting better at getting better, but don't expect an answer; Expect life. Expecto Patronum.


Young people today!
As a young person today, however, you also face the following more tangible and particularly perplexing issues, not least considering your lack of experience with everything:
  • Should you get a degree
  • What to study
  • What profession to aim for
  • Employed or entrepreneur
  • Save for retirement? When to start? How much?
  • Buy or rent (house, car, phone, furniture, travel - NB: installments=renting)
  • Aim for success, fame and riches or fulfilment and happiness
First and foremost, you should build a habit, a method of how to solve problems and make decisions: Get to the bottom of any problem; find the axioms, the premises as Ayn Rand would have said. Once you have broken down the problem into smaller pieces they become much more manageable and easier to solve (Vitaliy Katsenelson Oct 13, 2014). Don't panic. Don't take it all in at once, just methodically deal with one small part at a time, e.g.:

Should you get a degree?

It depends on what you want to do with it. Is it necessary for you? Will it get you a job? A job you'll enjoy? Do you want to learn something particular, or do you just want a piece of paper, documenting your willingness to learn, your academic stamina? Keep digging at these issues and you'll probably find that you don't want a standard institutionalized degree. These days formalized education is mainly a waste of time and money. You could learn the same on-line, only more and better, much faster, with better teachers, more pedagogical methods, study material and motivated peers - not to mention at a tenth or a hundredth of the cost.

Too cool for school?

Everything is moving faster these days. We are in a race toward the technological Singularity, and the milestones are coming at an accelerating pace. When I studied finance between 1990-1994, you could still spend 4 years locked up with your text books and come out ahead on the other side - just barely.

The Berlin wall had just fallen (1989) and globalization was all the rage (this was before Madonna's "Vogue" and Wilson Phillips' "Hold on". The charts were still ruled by Paula Abdul, Milli Vanilli and Debbie Gibson). In addition the internet was stealthily gathering pace during my time at SSE - and took off like a rocket with Netscape's IPO in 1995. Luckily, I was already an analyst, researching IT companies by then.

I might have missed it, if I had still been in school. Beginning in the early 1990's, I think you should be too cool for school. Not as in goofing around, doing nothing, but as in DIY: study online, study exactly that which gives you an edge. Ask around what might be needed; try your own skills live as you go along, rather than suddenly present yourself before a would-be employer, with obsolete skills or a useless document from some backwater school.


Here are my two cents on what you should do, if you are 16-20 years old today (or older for that matter if it seems to apply to your situation):
  • High school math and reading abilities is all you need to stand on; the rest you can get faster, cheaper and better online. Drop out from anything else unless you put good use to your time (connecting and learning - but could you do it just as well without the tuition fees? Probably). Here is a little something about our obsolete and inadequate education system
  • Internetacy (literacy for the internet - knowing how to search efficiently, and how to discern truth from lies. Be the person people wants to ask instead of googling it themselves)
  • Learn programming and marketing, and maybe a few basics about statistics (you know the adage about lies and statistics, I gather? In addition, remember that statisticians my be dull but they have their moments). Read here about my choices, and here about why you want to know statistics.
  • Be an entrepreneur or get out of here! There is no hiding in large organizations shuffling paper anymore. Be valuable and sell that value for your own profit.
  • Save? Yes, you should save enough to take care of yourself. The government has no means to do it in a reasonable way the way things are going. How much? How long is a string? Break down the issue in manageable pieces. Do the math. In Google Sheets. Ask if you want specific guidelines, but 10% of your disposable income is a good rule of thumb.
  • Buy. You should only rent things, or pay in installments if it's an investment - like your newfounded business. And, no, a house is not an investment. Save until you can actually buy your living space for your own money. OK, you could borrow half the sum, in particular if prices have fallen sharply lately. Remember that house prices sometimes fall by half and that mortgage interest rates were deep in the double digits just a few decades ago. You do not want to experience the double whammy of halving prices and sharply higher interest rates if you have a 75-100% mortgage on your house.
  • Success or happiness? What are you? Stupid? Get out of here! You should be happy (and that is being successful). Read here and here and here.

12 kommentarer:

  1. When things don't add up. . .


    "Use perfectly strict form in the gym or chase higher weights?"
    -- This was a huge dilemma for me my first year of working out seriously at the gym. But then it faded into oblivion as I gained more experience.Now I just do what feels right, and it works.

    "(have that ice cream or not?)"
    -- I believe eating unhealthy can actually be HEALTHY (chocking your body to break it out of homeostasis) once in a while. Say, every 1-2 weeks.

    "Learn by reviewing or repeating past lessons to perfection or by looking ahead to more complex next-level challenges to reinforce memory and understanding"
    -- This one is HARD.

    " you should build a habit, a method of how to solve problems and make decisions: Get to the bottom of any problem"
    -- This is something I'm very interested in knowing how you do. I am working very hard at creating a system (check-list approach) for this over the next couple of months (possibly years).

    "rather than suddenly present yourself before a would-be employer, with obsolete skills or a useless document from some backwater school."
    -- Sadly, this is what the majority of graduates do (I might be a bit condescending here).

    "The government has no means to do it in a reasonable way the way things are going"
    -- Indeed. I wouldn't count on a pension. Especially if I was a US citizen.

  2. "A is A", it could be said, that mixing a raisins with turds, it still turds ( Charlie Munger). Being 23 years old, I'm just finishing my degree in International Business, and must agree with you, that "internetacy" with effort and persistence, will give you more knowledge and even with a faster pace.

    At my university I can recall only few professors, who were really great pedagogues, and it's really hard to have the opportunity to meet them.

    But thanks to coursera, you can learn online from great professors, and do it with your own pace. That's awesome :)

    The best moments of learning for me, were :
    - writing a thesis on renewable energy, even I haven't really clue about it before, it sounded just interesting and made me curious, along with knowledge that Mongolia, my country has one of the best renewable resources in the world

    - volunteering on goat farm for a month. learning and doing, how milk is transformed into cheese, and seeing the whole movement from production to end-user.

    As a young person, I try to stay with continous learning and improving, saving and avoiding permanent damage.

    1. Great quote from Munger. Like most other stuff he says.

    2. I like your attitude, it will get you far.

  3. Great article Mikael, you have some great insights for younger men.

    "Internetacy (literacy for the internet - knowing how to search efficiently, and how to discern truth from lies. Be the person people wants to ask instead of googling it themselves)" - probably the most important thing young people should be doing instead of updating their facebook.

    Got some questions though;

    > Why learn programming?
    > Do you mean saving as saving for retirement or saving for a back-up fund?

    Take care,

    1. Thanks.

      Saving: yes, I mean for retirement, but there are other reasons to save. Everybody should invest just one hour, every 5 or 10 years or so, in making a simple long-term budget to see where the potential holes are. Retirement, injury, freezer, investment opportunity, starting a company...

      Programming: the discipline of programming in itself teaches cold hard logic in a way that is hard to attain any other way. Further, learning programming creates an understanding of the internet, of computer viruses, of electronics, apps, browsers, of everything that surrounds us.

      Learn some basic coding first, then move on to higher level programming.

      If you can program or code you can build most of what you want and need. In addition you can build and sell stuff that is made from essentially free input. Apart from providing real food and shelter, if you can create or fix programs you will be self sufficient.

      It's like having your own virtual construction company.

    2. I was thinking to skip saving for retirement and just investing the saved money in assets since money devaluates over time. So that when I retire the assets can take care of me instead of sitting on a big pile of cash - would you advice against this?

      I guess I could try it out in the future, it seems interesting and rather fitting for my strengths.

      Thanks Mikael

      Take care,

    3. Buying assets is a good way of saving. It's almost the ONLY way, since, as you say, cash devalues (due to central banks; before CBs old people talked about how much things used to cost in dollars. Nowadays old people talk about how little things used to cost in dollars).

  4. Not only is taking your own route the better choice, but also it earns and deserves more outside respect.

    Create your own system instead of being played inside the system.

    I test/troubleshoot my system in strange ways all the time for feedback, thereby improving my path to optimized results.

    Be different, and different things will come to you.

    1. Nice one-liner, Kyle ("Be different..."). I'll keep that one.

  5. Hey Simon,

    Here also you have some reasons, why to learn to program :


    1. Thanks Zoljargal!

      I'll check it out but at the moment it just doesn't look as a priority although it accompanies my strengths pretty good.

      Take care!