In August 2021, I became a funded forex trader. A key milestone for a large proportion of today's aspiring traders.
As of today, I quit...
After sinking nearly 3 years of time and energy into the wrong places, identifying that my approach to investing is completely incorrect is a hard pill to swallow. However, quietly quitting the trading scene has provided a noticeable sense of relief. The constant stress and pressure that was associated with my life and identity as a part-time prop-trader has just melted away.
This brings me onto my second related point that came from reading a section in Tools of Titans on Tim Ferris’s approach to investing. He tied his experience in angel investing with Derek Sivers approach to work and life which I will quote here:
“When deciding whether to commit to something, if I feel anything less than, “Wow! That would be amazing! Absolutely! Hell yeah!” – then my answer is no. When you say no to most things, you leave room in your life to really throw yourself completely into that rare thing that makes you say “HELL YEAH!”
We’re all busy. We’ve all taken on too much. Saying yes to less is the way out.”
I remember distinctly that as I was reading this late last night and felt something stir in my gut. As a minor caveat, never underestimate your gut feelings. But essentially, I got to the point with prop-trading in which it just didn’t sit right with me anymore - It didn’t give me a HELL YEAH! My stomach couldn’t take the ups and downs and I seemed incapable of not compulsively checking my trades, ultimately to the point it was taking away more from my life than it was giving.
Keeping things in the realm of economics, time and energy can be viewed as finite commodities with an opportunity cost. I asked myself the honest question of if I stop prop-trading, no one would miss it and I would be getting back time and energy (the opportunities) at the expense of losing a few hundred extra dollars in the bank each month (the cost).
Ultimately, this opened up the deeper question of why I even got into trading / investing in the first place. As a result of this, I took some time (and inspiration from Tim Ferris) to redefined my approach to investing as follow:
To allocate money, time and energy to improve the quality of life of myself and my family.
As previously identified, investing in prop-trading could have produced a massive monetary ROI but noticeably reduced my quality of life. This is NOT a good investment as per my definition above. To quote Tim Ferris:
A large guaranteed decrease in present quality of life doesn’t justify a large speculative return.
So with this new definition firmly in place, I can easily formulate a new approach to investing by answering the following:
Where can I best allocate resources (money, time and energy) to improve the quality of life of myself and those around me?
The answers I came up with are as follow:
- Health and wellness
- Books and reading
- Building my personal brand
- Generational wealth creation
- Problem solving
No doubt this is a broad stroke list, but interestingly non of these require prop-trading or any trading. So specifically on the money component, I am now exclusively looking for investments on a much longer time horizons and don’t require significant time and energy. A few that come to mind include:
- Long / short equities portfolio management
- Angel investing
- Private equity
- Physical property
I hope that in writing this you have found some useful insights and questions to help you in your investing journey. I’ve struggled, as I’m sure others reading this have, to really navigate the world of personal finance. It’s only through really digging deep, reading, reflecting and trying things have I got to know myself better. That’s the pull of the investing world for me. There’s no better experiment that I’ve experienced in life that provides more insights and self awareness than testing ideas in the financial markets. It’s only after going around the block many times over the past 3 or 4 years in my investing life that I’ve been able to unlock and gain clarity on my investment approach. So, now I have this, I’ve been able to take the very first steps in creating a family investment holdings company called R.K Capital Holdings.
As I begin to develop and refine my approach to investing, I hope to grow this into an important part of generational wealth creation and achieving some of the broader things I've outlined in this article.