Systems of Success

I have been giving a friend gym lessons every weekend. I am not a qualified personal trainer but I have always thought it would be fun to guide someone and watch their physique develop.

It was not so easy to get my friend to get started though. My friend had for goodness knows what reasons signed up for a boxing course with the aim of entering into a competition. He's a skinny guy by nature and had recently been lamenting to me about how he wanted to grow muscle as he was always outmuscled by his sparring partners. But, he said, he did not want to go to a gym because that was beyond his comfort zone. He said that he had been doing bodyweight exercises at home but felt progress was slow. He also had problems motivating himself and would only exercise when he was in the mood for it.

I asked him what exercises he had been doing. Not that I have anything against bodyweight exercises (I used to do them and got a lot out of them), but the nature of the exercises he was doing was like, I told him, trying to box with Manny Pacquiao with one hand tied behind your back. Why do that when you can box with two hands?

I then went into a grand lecture as to how success is a culmination of habits. To achieve success, you must take the necessary actions that cause you to improve. Depending on what you are hoping to achieve, there are many things in life that require constant, habitual actions to bring your goal to fruition - i.e. you create long-term habits in your life that lead you to take actions towards improvement and hence success. And to create habits, you need to have 2 ingredients: 1) knowledge and 2) motivation. This is the road map to success - by accumulating the requisite knowledge and motivate yourself into building long-lasting systems of success. Or so I thought. 

But let's break down this road map again and look at it from the other way round.

Knowledge - My friend did not have knowledge as to the workouts he could do in the gym that would efficiently develop muscle. I gave him a run through verbally on the basic exercises he could do. Problem solved. He could not say anymore that a lack of knowledge was inhibiting him from succeeding in his goal. You now know what you have to do to succeed, I told him.

Motivation - I told him that he had to want to achieve his goal badly enough. There was no point in complaining that his workout regime was not working out if he was someone who exercised in accordance with his moods. I asked him how serious he was about this boxing competition. Did he want it badly enough? Perhaps he was better off pursuing another sport, like chess? He shook his head vehemently and said he wanted it. Then I said ok, then the next thing he has to think about, now that he has the knowledge and the motivation, is to:

Habits - .. is to use the knowledge and motivation to create long-lasting positive habits that would cause him to do things regularly that can help him to succeed. There are ways in which you can make yourself do things on a regular basis for the long term. Taking exercise for example, some people like to have exercise buddies exercise with them every week. Failing to show up would mean letting your buddy down. Some people make a public commitment e.g. on their blog to say they want to exercise every week. That could work as well if social pressure gets you going. I told my friend another way to ensure that he sticks to a routine of exercising every week was to give someone trustworthy a large sum of money that will be forfeited and given to charity if he failed to turn up for the exercise session. But that sum of money had to be big enough so that he feels the pain. I nobly offered myself for this very important role but he rejected my kind offer. Then I offered to help supervise and push him every week if he would come to the gym near my place. He was on for it. That's building a habit for you.

Actions - Then it was just a matter of showing up. First week goes by, second week goes by. You set out to do the things that your habits lead you to do. After a while things become routine and you start to do those actions by autopilot. Any resistance you had towards doing those things start to erode over time and you no longer have to motivate yourself to do those things because they have already become an automatic, habitual action. And over time, the actions accumulate to lead you ultimately towards progress and success.

Until recently I thought progress in life towards your goals is about building enough positive habits that will each take you on autopilot to progress and success in things that you find important. In other words, building systems of success. It's a bit like building dividend streams that will lead you to wealth - here then, I'm talking building smart streams of little habits that will make you a stronger, faster, better person. Habitual progression. I still stand by this but recently I came across a blog entry that has added to my understanding of the path to success - there was another path I had not been thinking about. More on this in a future post.

Expenses Update for January 2015

Here's my inaugural post on my personal monthly expenses. I also wrote a summary of my personal finances (including expenses incurred) for 2014 here.

Breakdown of expenses:

• Clothing: $130.90* - This includes laundry, some of which we outsource to our friendly neighbourhood dhobi.
• Food: $1780.22* - Food is averaging at $30 almost a day with the bulk allocable to dining at restaurants. Yes, it's sinful but we eat out most of the time and at restaurants most of the time, with the occasional splurge on fine dining. If there is some fat that can be weaned from the expenses, this would be it but we are folks who enjoy our food.
• Health Care: $482.98 - This was unexpectedly high because of the stupid flu I have been going on and on about. Four trips to the doctor and one to the pharmacist ended up costing about $200. The rest can be attributed to largely health supplements. I'm a health junkie and am a VIP member at iherb.com - more on that next time, I'm sure!
• Home Office: $11.75 - Purchased some stationery from Popular. Nothing much to see here so move along, folks.
• Household: $283.70* - This covers largely the quarterly aircon maintenance contract we signed for 2015, and housekeeping (which is something we outsource as well to a part-time helper who comes about once a week to clean up).
• Others: $600 - A one-off work-related expense. 
• Parents: $2000 - Because I'm a good boy deep down.
• Personal care: $329 - This covers haircuts, hair treatment and some face serum I bought for my metroself.
• Property: $293.76* - Quarterly maintenance expenses for our house
• Tax: $1108.07 - Death.. and taxes. Certainties in life.
• Travel: $121.60 - This relates to transport actually, so it covers top up of EZ-Link and taxi rides. I don't drive but Mrs RetailTrader does.
• Utilities: $153.57* - Covers electricity, water, internet, cable tv. Yeah some people think we are using a bit too much aircon.
• Mrs RetailTrader: $4 - Erm not going to say too much on what I spent $4 on Mrs RetailTrader ;)

Total: $7,299.55

* - denotes expenses that are shared with Mrs RetailTrader

Top 5 categories: 1) Parents (27%) 2) Food (24%) 3) Taxes (15%) 4) Others (8%) 5) Health Care (7%)

I think amongst the Singapore bloggers who track their expenses, mine must be one of the highest hahaha. Well that just means I have lots of room to improve :) But February's expenses may be higher because it's CNY season and my first time giving out red packets. And furthermore in January I could skip my monthly mortgage payments because we credited excess sums into our mortgage savings account last year. Let's see where we end up. My goal for this year ultimately is to save 50% of all income (including trading income). 

Trading Update: 31 January 2015

True Profits Earned in 2015 to date: -US$17,260.48
All-time maximum profit earned since 2011: US$135,976.98
Current drawdown from all-time maximum true profit earned: US$20,536.58
Change from last update: Down US$12,672.32
Directional stance: Portfolio is 66.33% bullish

Holy moly! What a dreadful week. Look at those red figures!

Markets: Last week, I mentioned that there was a good chance the S&P 500 has bottomed, and an outside chance that we will hit the low 1900s before bottoming up for the next move up.

You can see what happened by looking at the new weekly candlestick chart of the S&P 500 I have put up on the sidebar. A big fat red candle formed this week taking the S&P to a low of 1989 for the week, and closing at 1994 for the week. The S&P 500 keeps getting drawn to the 1990s pivot like a magnet. Pivots can usually be strong support but if tested too many times they become likelier to give way and if they do, it means there is plenty of room to move down. Certainly, we are currently only 5 points away from seeing fresh short-term lows. The odds that we are going lower have increased so we need to brace ourselves for a rough ride down before we see sunshine.

Portfolio: What I said last week holds: If we see a further correction down to the low 1900s, that would mean for short term pain for the next two weeks or so before we see "green shoots" in the portfolio. 

Currently it's red, red wine. Like SMOL pointed out, CNY is coming and red is appropriate ;) And during CNY last year, I was experiencing a drawdown of a similar quantum. History rhyming again?

Flu: The worst of the flu is thankfully over, but I am just left with some lingering mucus in the nose from time to time, and a propensity to cough when speaking from time to time. A friend said he could "smell my flu" last night (to clarify, we were only speaking across a table and doing nothing else). Erm, ok. The flu is certainly taking its own sweet time to get out of my life but I will give it the time it wants. Maybe my body is trying to time my full recovery with that of the markets?

Primed for new highs?

Weight: Seeing that it's been a bad time in the markets, I have decided to look at another kind of chart. What's that? Certainly looks more bullish than the S&P 500 currently. But that's actually a chart showing my weight for the past year. Despite my best efforts to trim down on the fats, my weight seems to have "bottomed" (lol) and rebounded to near the "previous highs". While I can choose to blame the latest upswing on the stupid flu, whatever, it's time to shake it off!

Brokers: A friend highlighted to me that I have excess concentration risk in a single broker. Duly noted given that the portfolio size has grown and a broker wipeout would set me back many years in savings. As I use CFD brokers (currently City Index), I am going to give the big boys in the Singapore CFD space (i.e. Oanda, CMC, IG Markets, Saxo and if I'm really desperate, Philip because their really antiquated platform haunts me till today) a call to see if they permit shorting of the leveraged ETFs that I use. If so, I am going to park future funds in each new broker I can find until I have an even distribution amongst all of the brokers. If anyone has any experiences on Singapore CFD brokers to share, please let me know!

Romney: I'm a fan of Mitt Romney because the man speaks so smooth like a seasoned used car salesman and gets things done. Isn't that all you need to succeed in life? While he came from a comfortable background, he took his wealth to greater levels in his days at Bain Capital. Unlike other politicians in the picture today, some of whom were previous law lecturers without executive experience, Romney was a guvnor and had to organise the Winter Olympics 2012 under difficult circumstances (as it was held shortly after the September 11 attacks on World Trade Centre). A self-made man and a hero for me.

Best man never to make President?

So it's sad when I read that Romney has announced that he will not be running for President in 2016. In my book, one of the greatest men never to have taken the highest office. I suspect at the back of his mind though, a third failed campaign might have broken some part of him. I would have thought that part of the reason why he decided not to run was because after meeting Jeb Bush last week, he thought that Jeb, the other front-runner at the time, could get the job done, but it doesn't help that people have pointed out that Romney has in his statement announcing that he is not running, made some jabs at Jeb. Some say Romney is going to align himself with Chris Christie (another ex-lawyer!).

Why Lawyers Can Be Fuckers

Given the preponderance of lawyer jokes over that of any other profession, one is inevitably invited to consider if the premise that lawyers are somehow a little less moralistic than the average person holds.

My premise would suggest that the folks who have decided, or settled, on the practice of the law do not have any inherent inclination towards evil. 

The lawyers you see today, were once wide-eyed impressionable folks, like the rest of us, before they stepped into the institution known as law school. 

Once they went to law school, they came to be acquainted with the construct of the reasonable man.

Ah this reasonable man. It seemed, to the law student, that society is tailored to give the reasonable man the utmost of respect.

Why so? For, whatever the reasonable man said could be done, the law was crafted to allow as such.

So, the reasonable man assumes greater and greater importance to these wide-eyed impressionable law students.

Such that, the reasonable man grows to assume its mantle as a guide to the standard of behaviour by which folks acquainted with the law aspire to. 

Friends of the reasonable man

This is despite the fact that a reasonable man says that he need not save a drowning baby because he did not cause the baby to be drowning in the first place.

That reasonable man may also whisper in your ear to tell you that it is reasonable to omit to give someone material information as long as it can be established that the omission does not cause harm.

Unfortunately, many fail to see that laws are tools created by humans to regulate social behaviour.

As it is impractical and highly utopian to even attempt to socialise human behaviour to regulate humans into becoming angels overnight, as a compromise of sorts, laws are used more as tools to discourage behaviour that is unwanted, i.e. intrinsically offensive or harmful to others.

Thus, law is employed to work on a "lowest common denominator" basis, as a tool to weed out the lowest forms of behaviour that cannot be tolerated by society.

But what happens when people adopt the conduct of a reasonable man as their moral compass?

Is it right to say that as long as certain behaviour is not unreasonable and not criminal, that it's fine?

That seems to be the moral basis by which certain people in this world have decided to live their lives by. And definitely more so for people who think they have been educated in what is legal and what is reasonable.

To friends, families, and anyone important in our lives, does it suffice if we are merely reasonable towards them?

Or should we owe them a fiduciary duty of the utmost good faith?

Is it good enough, if we tell ourselves that everyday, we just have to be "reasonable" and not commit crimes?

When a lawyer omits to tell his friend something he knows his friend would like to know, he knows he has failed to act in his friend's utmost good faith. But can he still say he at least acted reasonably, because even if he did not disclose that information, he knows that his friend would not have relied much on it?

The lawyer would reason that his behaviour is "not unreasonable", and it is definitely not criminal.

But if you asked me, it reeks of reprehensibleness.

I ran this argument by Mrs RetailTrader, who is a lawyer by trade.

She smiled and would only say that my premise is "not unreasonable".

Trading Update: 24 January 2015

True Profits Earned in 2015 to date: -US$4,588.16
All-time maximum profit earned since 2011: US$135,976.98
Current drawdown from all-time maximum true profit earned: US$7,864.26
Change from last update: Up US$7,753.64
Directional stance: Portfolio is 63.51% bullish

Again, let's recap what I said last week, and what has happened since this week:

Last week

The breather that the S&P 500 is taking is proving to be longer and deeper. The S&P 500 took that frolic and detour into the 1990s and decided to linger a while more, and even toyed with the 1980s. That frolic and detour has caused the portfolio, which was positioned very bullishly at 60+%, to suffer a larger drawdown. The maximum drawdown experienced this week was at the close of markets on Thursday, at US$22.5k.

However ironically the technicals do not seem to warrant that bearish scenario that I highlighted (i.e. a downtrend that could head to under 1800). That scenario is currently off the table and so it is just a matter of seeing where and when this little frolic of S&P500 wants to end. It is very possible that the frolic ended on Thursday at 1988, or it could go on down to about 1950, so we shall see. It's a bit like getting the flu (I've got one since 2015 began (does my health mirror the markets or what?), but I've had no other symptoms since Day 3 of my flu, save for a lingering cough that refuses to go away for good. That's a bit like downlegs in a bull market - they end when they want to end, you just have to wait it out and let them run their course. So downlegs in a bull market = the flu.

This week

Markets: There is a good chance the S&P 500 has bottomed at the 1980s, and we are in the next bull leg that will take us to 2200+. There is an outside chance that the move from the 1980s to 2060s was a dead cat bounce within a larger correction, and the S&P will hit the low 1900s before bottoming for the move up to 2200+. 

Portfolio: The numbers for the portfolio are looking better this week as the S&P 500 bounced to the 2060s before taking a breather last night. From the portfolio's perspective, the leg bull leg up should put the portfolio into the green. At 60+% bullishness, the portfolio is primed to profit from a bull leg. If we see a further correction down to the low 1900s, that would mean for short term pain for the next two weeks or so before we see "green shoots" in the portfolio. 

Nobody likes to be in the red in your first month of trading but I'm still looking to have good year here. I just hope that the saying "As goes January, so goes the year" does not come back to haunt me. As things stand, if the portfolio's performance in January is repeated throughout the year I will be seeing annualised losses of over 16%. Let's see haha.

Off-topic (Health Matters): And finally I reserve a little luxury of space to bitch about life outside the trading world. As I mentioned last week, I've been sick since the new year and was coming close to finally declaring a victory over the flu late since last week until it decided sometime this week to relapse, causing me to hit new lows (like the S&P500) flu-wise. My nose ran and ran like the Ganges River, and well it looks like there are other bloggers I follow who have been sick since the start of this year as well (misery loves company!). I actually had to see the doctor on back-to-back days because my symptoms morphed like Mystique (on certain days the nose decided to take centrestage and on certain days the cough went crazy on me). Finally after I acquired VIP status in the clinic, the doctor got exasperated and told me: "Your flu is taking too long to recover. Now I am going to treat it very, very aggressively." That was music to my ears and I have been the super drowsy meds he prescribed me as I have been sleeping like a baby the past few nights. Now the nose is much drier and my cough reduced, and hopefully like the S&P 500 I can make a rebound to new highs (health-wise) this year. 

Sick.. of being sick

Truly a reminder that without health, you cannot enjoy anything, even if you have lots of money. Before we are forced to spend money to recover our health, why not focus our efforts on maintaining our health in the first place? Health is something that, when you have it, you tend to take it for granted, but it's only when you lose it that you realise how important it is. You ain't know what you got till it's gone. When we fall sick, our bodies are trying to send us a message and we really can't do worse than to heed it and give our bodies the tender loving attention that they demand.