Clear The Decks

Good Working Habit No. 1: Clear Your Desk of All Papers Except Those Relating to the Immediate Problem at Hand.
― Dale Carnegie, How to Stop Worrying and Start Living

Its been 24 days now since I was let go. This week I officially kicked off my job search. So, what did I do in the three weeks between my firing and now?

1) Clean up my stuff
As an investor, in general, you always feel behind. To stay sane, you need to learn to hit “pause” at some point of the night, compartmentalize your job and decompress.  Early in the morning, you can hit “play” and resume the craziness. Whether you are a long-term investor or a trader, this is, and always will be, something that comes with the territory. The life of a portfolio Manager is even worst. Now, you have the added pressures of macro, themes, sizing, positioning, marketing, etc. on top of understanding the fundamentals of your current portfolio, prospects for potential inclusion and new ideas. At all times, you feel like the treadmill is moving at 15 miles an hour and that you are only able to run at a max 10 miles an hour. Just when you collect your sanity after a couple 100 hour “catch-up” weeks, some crazy news or a blow-up hits and you are forced to put everything aside to focus on the issue(s) at hand. In the background, the inventory of unread material accumulates, both electronically and physically.

I admit, I like to print things out. Its a bad habit. I have a hard time reading a lot of material on screen however. Also, if I just save a document on my computer, I tend to forget about it and it just disappears into cyber heaven. If it is something I feel I gain valuable insight from, I tend to print it to read at nights and weekends. The pages I don’t get to accumulate into inventories.

Given my disappointing returns this year, I was pushing my focus on my names and on my financial models. Therefore, I sacrificed any “clean-up” time to a desperate attempt to save my job. By the time I was let go, the inventory had gotten out-of-hand. My wife was not happy.  My first day home, I immediately began to tackle the mess. Instead of just throwing everything out, I bifurcated these materials into three piles (1) just throw out, (2) read now then throw out, and (3) keep with intent to read over the next few months. By year-end, my goal is for my apartment to be almost paper free.

Newspaper-wise, I caught up on all WSJ’s, Barrons, NY Times, IBD’s, and NY Times that I had missed over the past couple years. I’m fairly confident that I have now read every issue for at least the last two years. Why do I believe this is important? Because (1) I feel this allows me to understand the general public consensus on all important issues and (2) this creates for me a “lowest common denominator” of knowledge about business, politics, etc.

Magazine-wise, I am now about 60 – 70% of the way through my business magazine inventory including Forbes, Fortune, Business Week, Bloomberg Magazine, and Entrepreneur magazine. I’m about 50% of the way through my industry specific journals for the homebuilding, building products, REITs, and real estate agent spaces. I have not spent any time reading leisure magazine reads including GQ, Esquire and Yankee magazine.

As for paper, I have a great variety of research reports, company-specific filings and general macro, investing, and strategy articles that I’ve accumulated through the years. I’ve only kept the research reports and company-specific filings that I may need for my own portfolio investing and for any write-ups. I’ll keep pairing these files down further in the coming weeks. As for the rest, I plan to try to read 50 – 100 pages of these a day until the inventory is depleted / read and scanned away for storage.
Putting this task into perspective, I’ve probably read over 500 pages of information a day for the past couple weeks. I’ve run across many interesting insights and I have sharpened my understanding of some key issues. It feels good to have consumed all this information and it felt GREAT to bundle up the read paper and get it out to a recycling plant. From now on, whatever comes in gets read that day and disposed of. No more inventory. In-and-out same day.

Outside of paper, newspapers and magazines, I’m also trying to simplify my life in every way possible. Maybe due to stress, anxiety, unhappiness, whatever, I began to accumulate some unneeded “things” over the past few years. I’m spending my free time going through and deciding what has a true purpose in my life. The rest I am donating. Be gone clutter!  I recently finished listening to the book “My Year of Less” The Year of Less: How I Stopped Shopping, Gave Away My Belongings, and Discovered Life Is Worth More Than Anything You Can Buy in a Store by Cait Flanders and I am currently reading The Power of Less: The Fine Art of Limiting Yourself to the Essential…in Business and in Life by Leo Babauta. These books have been great in staying motivated to simplify my surroundings. Messy bed, messy head.

Lastly, my other reason for cleaning out my apartment is so that my wife and I can put it on the market to sell it. After 5 years and one baby, we’ve outgrown our 800 square feet of Manhattan real estate. (one piece of early real estate advice — more to come — never, ever buy into a New York City Co-Op, especially in an older building. Never. I cannot emphasize this enough) Given the recent softening in the NY real estate market, I am not sure how long it will take to sell. Therefore, we are going to prepare it for sale during September to get it on the market during October. I will try to sell it on my own without a broker. Any helpful suggestions are much appreciated. Given how high real estate prices have gotten, we’ll likely rent for the next couple years hoping that prices go down. I’m not too worried about missing out on price appreciation when certain major real estate markets are already hitting affordability issues with the 30 year mortgage rate still below 5%.

2) Clean up my accounts
I’ve also gone through and organized my financial and online accounts. I’ve checked on how many frequent flier miles / points, etc. I’ve accumulated, when they expire, annual fees, etc. I’ve gone through and ‘unsubscribed’ to all promotions and all other emails that show up in my inbox that I do not read. I don’t want any marketers bothering me to spend money that I should not spend. Unless the good, service, etc. is either essential or needed for me to advance to my next stage in life, I refuse to buy it. I have now gone through credit card statements to weed out any recurring charges not needed. Its amazing how some $5 subscriptions end up going on and on for months without getting much utility out of them.

3) Clean up my head

This has been perhaps the most difficult part of getting unemployed. No matter what, I don’t believe there is a way to just lock-out negative thoughts while in this position, especially for those of us who are wired pessimistic by nature. Therefore, it is a recurring struggle to keep these negative worms from crawling in. I find myself constantly figuring out ways to feel thankful or hopeful in order to “kill the negativity worms”.  Staying busy helps a lot (thus all the cleaning). The sounds of laughter from my wife or child instantly make everything better as well. Long walks and late night feel-good movies sooth as well.

Years ago I started making a habit of maximizing my productivity. Any time I’m standing in line, waiting for / riding the subway, doing pedantic repetitive tasks, etc. I try to (1) check email, (2) read, or (3) listen to podcasts. With my email cleaned out and all my reading time at home lately, I’ve focused on self-help podcasts to fill up my empty spaces of time. I’ve subbed out many of the macroeconomic and investing podcasts with motivational podcasts. I listen to commencement speeches. I listen to Ted Talks. I find good motivational speeches — Tony Robbins, Dale Carnegie, etc. Youtube has become a close friend. I’ll probably post some of the better one’s I run across periodically. A very powerful one to begin with:

When unemployed, there are invisible booby traps lying around that can suddenly set off a whirlwind of negative thoughts and emotions. The number one source of these is social media. A warning label should appear when you log onto Facebook.

One morning this week, after my normal exercise routine, I was feeling content about things and I had a succinct plan in my head of things to accomplish for the day.  Then I checked for messages on Linkedin. When the app opened, the “wall” popped up displaying an article about one of my former grad school classmates. Two top investment banks were battling over him as a partner. I hurriedly scrolled past it only to find a link to another friend of mine getting featured on CNBC. By the time I closed the app, the worms were partying. My day was shot right there. No matter how hard I tried to focus, my mind was beaten to a pulp by FOMO, “fear of missing out”.  All I could think about was the charmed life of these two people vs. my seemingly pathetic state of existence. Very unhealthy.  My already fragile self-esteem broke into pieces on the floor. Although, this proved to be a horrible wasted day, It proved important in the sense that that quickly I learned to stay away from social media feeds, especially while in this unemployed state. I do believe this is the worse of today’s addictions and pollutants.

Depressing article about Facebook depression:

Deadly as well are the “misery loves company” companions. There are always a couple people we know (1) who derive pleasure from another person’s misfortune, (2) who are going through an equally hard time, (3) who are always going through a hard time. As for the sadists, fuck them. At 42 years old, its time to just write them off. If the return on invested capital you are putting into the friendship only results in schadenfreude pleasure for them, this is a terrible economic arrangement. Do you invest money in companies that just pay out the proceeds to lousy management without any other return? Well, similarly, why would you invest in a personally bankrupt situation? They’re cut despite the “remember the good old times sunk costs”. The equally hard time people are tricky. Naturally you should try helping them, but I’ve quickly found that conversations / texts can quickly turn into unproductive pity parties that allow worms to grow. I’m limiting these as well. I’ll just put that energy here in the hopes it helps others make better life / career decisions.


Haha… was just looking at this Lou Holtz quote above … I guess my blog violates his advice. Oh well….

Overall, I’m trying not to be too social until I figure things out. I’m a true believer that you only have a few genuine friends through life.  My dad’s test was always “if I were in some kind of trouble and needed someone to unconditionally show up with money to bail me out at 3am without making any issue of it, they are a true friend.” Those friendships should be guarded and protected. Overall though, when recently unemployed, it seems better to limit social interaction to situations with a knowingly good return on invested capital proposition going in. Sitting over beers and complaining may be fun but you’re just allowing the worms to party, especially the next morning.

As a participant in the Wall Street rat race, I began to lose sight of some of the basics of life. In many ways it feels as if I now hit an entirely new section of my book of life. For the first time in 11 years, I feel that I can finally catch my breath and figure out some basic things. Taking a lesson from John Wooden, the iconic coach of many insanely good UCLA men’s basketball teams, I’m going back to the basics to re-learn how to put on my socks. I’m rethinking the little things that really count in life. I’m focusing on finding answers to the questions that kept coming up through the passing years but which I would just brush aside. I feel that I can’t come up with the right long-term strategy without answering some of these basic questions.

When losing my job, my initial impulse was to run home and start my job search. Get on the phone and network like crazy. Stay up till 3am sending resumes. This is the typical Wall Street mentality — i.e., you lost your job — well, jump right back up and hit it hard until you regain a seat. Although tempted, something caused me to stop in my tracks.  I realized that by doing this, I’d make a bad situation even worse. All I would do is jump into some job I really didn’t want — chase money and ignore what’s not been working. In two years, I’d probably be right back in this same predicament having the exact same thoughts, or worse. I right away decided, I need to figure out how never to be in this position ever again. The only way to turn these lemons into lemonade is to take the time to answer the key questions, to be patient while investing in my career. Stop the haste because all it will produce is waste.

The initial basic questions that I am working through, among others, are:

(1) What are my true talents and interests? How do I better align these with my career? How do I better use my creativity?

(2) What has repeatedly caused issues during my career? How do I formulate a plan to prevent this issues from repeatedly arising in the future?

(3) What do I ultimately want to accomplish in the second half of my life? How can I help others? How can I create a better environment for others?

(4) What is the right environment for me and my family?

There are definitely many things I love about NYC, however, deep-down I know its not the right place for us. In a 2012 talk with MBA students, Warren Buffett gave his views on living in New York. In many ways, these are the same issues I’ve been thinking through as I compare my childhood in the suburbs of Chicago to my current living situation in NYC.

“I decided to live in Omaha because I like the city, the community and it’s where I call home. It’s all about what you really want to do. Living in Manhattan is expensive and you need to be rich. There is a lack of sense of community and life style, thus lack of the enjoyment of life.

You may need to do fifty things a day in New York, but I’d rather to do some reading in my office and do 1 to 2 things a day and do them well.

I didn’t have a real plan when I returned to Omaha, there was no master-plan when I left New York.

It is very important to find a balance between life and work as well. Follow your heart and do something you love.”

I definitely understand what he means about “need to do fifty things a day in New York”. I call this the treadmill. No matter what, it never seems like you can ever catch up. As a hedge fund trader, I felt that the environment was set up in such a way as to completely kill any focus. The noisy trading floor, the numerous monitors with constant information scrolling, the televisions with CNBC blaring away, the phone constantly ringing, the emails pouring in, the daily management meetings, the conferences and the lunches — it all added up to feeling overwhelmed on a daily basis. My best investments were often the product of hours of reading and thinking in a quiet place. It seemed that nights and weekends were the only times I could actually accomplish quality work. Most the day just turned into a blur.

Banking wasn’t much better. It felt like an almost inhuman amount of work was pushed on top of every analyst and associate. The VP’s walked around like guards making sure the prisoners were busy toiling away. Things were usually done quickly without much creativity or deep thought. I always felt that looming deadlines caused hasty work. It felt like we were ripping off the clients who believed they would be receiving top quality work product. It was exhausting.

I bring all of this up because “environment” has captured a lot of my thoughts. Its hard to begin my job search without answering this question first. In terms of geography, I’m leaning towards Midwest and West Coast. That one is a bit easier. The harder question is in terms of the daily environment of my job. I’m still struggling with an answer to this one. All I know is that a trading floor is out of the question.

4) Focus on health

If your health is poor, so is everything else. Thankfully I have protected my health for some time. 10 years ago, I looked at pictures from a summer vacation with my wife. I was shocked on how heavy I’d become. When I got on a scale, I’d discovered that I hit 200 pounds. This was a product of too many hours in the office and not giving a shit what I was putting into my body. I felt sluggish and irritable all the time. I began a three times a week jogging routine that I later combined with a three times a week gym routine. I keep each session to 30 minutes, otherwise, I feel that I would be too tempted to quit. This routine has worked well now for many years and I’ve gotten my weight back down to 170 pounds. I’m determined to use this free time to get down to the low 160’s – my ideal weight for my height.

Every morning, I try to get out the door by 8am to get my workout in. I alternate between running-only days and running + workout days. Saturdays are off. Additionally, I went gluten free three years ago and I have 90% adhered to the diet ever since. This was a choice, I’m not celiac. I stick to this diet because it keeps me away from processed food. Also, once you go gluten-free, its hard to go back without going through “glutenization”. Its a horrible feeling.

My goals for health is to increase my running to get up to 10 miles at least once a week. I’m planning to sign up for more 5k’s, 7k’s and 10k’s this fall.

5) Prepared for the job search
I’ve gone through and redid my resume and Linkedin accounts. I’ve written and re-written a handful of cover letters for different types of positions. I’ve prepared a Word document with all the cut and paste information needed to apply online to jobs – past employment addresses, reference information, etc. I’ve also alerted “the right people” about my job search and what I am looking for.  I’ve applied for state unemployment. I know this search is going to be very humbling, however, I feel my weapons are polished and sharpened. I’m ready for battle.

My overall strategy is to begin with funds on the West Coast and in the Midwest while also spending 1 – 2 hours a day watching posts that come through from variety of other job sources. This will be an iterative exercise in that I will constantly need to replace what isn’t working with something that works better. I plan to network as much as possible but, despite common convention, I’m not going to place a ton of weight on this approach. I really feel that a person needs to have worked with you to truly vouch for you. These are the contacts I will initially focus on. The rest of my networking will come as I find the places where I need to find a connection. I think a lot of people rely too much on networking as their only search tool. Then they end up interviewing for jobs they don’t really fit. I’m trying to circumvent this outcome.

In sourcing investment ideas, I ended up figuring out that the only secret formula that consistently works is to “start with the A’s” and get familiar with lots of companies. I agree with the Warren Buffett and the Peter Lynch approaches, as detailed below:

Buffett’s Approach: At the 2001 Berkshire shareholder meeting, Buffett discussed his approach to investment research:

“When I started, I went through the manuals page by page. I went through 20,000 pages in the Moody’s industrial, transportation, banks and finance manuals — twice. I actually looked at every business — although I didn’t look very hard at some.”

Peter Lynch’s Approach: Similarly, in the book  Investment Gurus: A Road Map to Wealth from the World’s Best Money Managers (Selection of Money Book Club), Peter Lynch discusses his investing approach, as follows:

“Lynch: Again, I’ve always said that if you look at ten companies you’ll find one that’s interesting. If you look at 20, you’ll find, two; if you look at 100, you’ll find ten. The person that turns over the most rocks wins the game.”

In many ways, I think about my job search the same way I think about finding good investments. I’m ultimately looking for where I can achieve the greatest return (interviews and eventually job offers) from the least amount of capital (time and effort spent looking). Although looking through long lists of funds to identify those worth pursing sounds laborious, I do believe it is actually a lot more streamlined of an approach than chasing around job ads or trying to shake out leads through others. By starting with the A’s and working my way down the list, I should find out which funds (especially smaller ones) post jobs on their site. These don’t get picked up by the commonly known job aggregation sites. I also get to know the investing landscape really well and I can identify  funds whose 13-D’s  are worth following. Once I identify funds that appear to be good targets, I can figure out the best way to approach. This is when I will look through my network. Worst case I’ll directly contact them. To me, this is an organized and thorough approach.

Very importantly, I am also backstopping my search process at the same time that I conduct it. What I mean by this is that I intend to initially spend ~25% of my time working on entrepreneur endeavors. Fridays and Saturdays are 100% devoted to entrepreneurship. Through the next four months, I intend to gradually ramp this up to over 50% of my time. If I am not finding any traction in my job search by late November (when my severance will be expired), I will spend a majority of my time analyzing franchise and small business opportunities. Fortunately, I have the capital to support this investment. Ya, buying myself a job is not the greatest thing on earth, however, I’m not the type of person to sit for two years sending out resumes. I’ve already begun work in this regard to figure out what franchises are out there that fit with my housing coverage.

Additionally, and also very importantly, I look back at my career with one regret. I should have been working on the asset side of my own personal balance sheet at the same time that I was working so hard on my income statement. I should have been investing passively in real estate or other cash flowing assets so that when the door slammed shut on my earnings, I’d not worry as much. If you do not know who Robert Kiyosaki is, stop reading this right now and switch over to his book Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!.

His teachings focus on generating passive income by means of focusing on business and investment opportunities, such as real estate investments, businesses, stocks, etc. with the goal of receiving enough cash flow from these investments to cover your expenses. In this way, you achieve true financial independence without working for a paycheck. Working 80+ hours a week, I always felt I never had time for this. Coulda, woulda, shoulda, didn’t … but now I have plenty of time to begin. If anything, my entrepreneurial work is also an attempt to “catch-up” in this regard.

Through the coming months. More to come on the topic of entrepreneurship…

6) Time with family

Most importantly, I have spent some quality time with my fantastic wife and my son. It amazes me how much of their lives I was missing out on without realizing it. Even if I was present on nights and on weekends, my head was filled with worrying about my portfolio. I was not focused on them. It feels great to compartmentalize all these other issues and spend some good quality time with just the two of them.

A close friend told me a couple weeks back that when he was let go from his investing job a few years back,  it turned out to be the best thing that ever happened to him. He was able to spend all day with his young daughters and to participate for a full in their upbringing. He believes that if he would have instead kept his heavy work schedule, he would not have created such a close relationship with them. In just a few weeks, I completely understand what he is saying. There are bright spots to this situation as well – God works in mysterious ways. Its been a true blessing to spend so much time with my wife and my boy.

Good article about fatherhood by investor Vitaliy Katsenelson.
Being a father

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