Stage 4 – 2011 to 2015 – Post Credit Crunch Recovery
‘Retirement’ and Learning to Fly. Experimenting and codifying an Approach.
Like most Companies, Fujitsu had a tough time during the Credit Crunch and as a consequence they decided to make something like 1000 People Redundant out of about 11,000 in the UK & Ireland. I guess the Redundancies were announced in perhaps April sort of time in 2010 and initially I had no intention of leaving but for some bizarre reason unbeknownst to me, a nagging voice started talking in my Head and saying “hey, why don’t you take Voluntary Redundancy and escape from all this silliness and pursue your Investing more seriously?”. It was a huge decision because I had always intended Retiring early (I was 44) but I thought I would do a few more years to boost the Retirement Pot and also of course to reduce the Years I had left on the Planet !! Being a Paraplegic Wheelchair User it was a big fear that if things went horribly wrong it might be very difficult to get another Job that suited me and of course ‘Fear of the Unknown’ was a huge issue with which I had to wrestle. I actually took quite a bit of time over this decision – probably several weeks – this is quite out of character for me because usually once I have what seems to be a Good Idea I am keen to get on with it. I presume this shows the gravity of the decision I had to take, but of course looking back from 9 years into the future I now know it was an excellent decision and it is my general experience that whenever I know anyone who has been made Redundant or taken VR, it is the best thing that has ever happened to them despite their initial worries.
However, I had 4 very strong reasons to leave – Fujitsu was really annoying me with the sheer incompetence of the whole place and the intense feeling that the whole system was set-up to stop me doing my Job well – I was at the end of the Chain in the Bid Creation process and of course if other People missed their Deadlines (which they always did and their work was often very poor quality), it was myself and the other Proposal Managers who were having to pick up the pieces and make a Silk Purse out of a Pig’s Sphincter. I found this extremely frustrating because for me it is vital to get satisfaction out of what I am doing with my life because otherwise there seems little point – I have always been like this and can remember probably around 30 Years ago where I was doing a totally mundane Job working for the DSS and I had to print out a sort of Cheque Book thing for Benefits Claimants – and I made it my focus every day to beat my record for the number I had done the previous Day and so on. I think I drove my Work Colleagues nuts because of course I very soon showed up how inefficient and slow they were !! Of course this plays into what I am doing with the WD Website – this stuff is Art you know although I would imagine many Readers would question the validity of this statement…….
My health was not playing ball – it was getting on my nerves and being freed up from having to drag myself into an Office most days was a pretty attractive prospect. I really felt that my Investing was plateauing and I saw leaving work as a way to give me more time and to take things to a higher level – this was a big driver as I was quite frustrated by the challenges of balancing lots of competing factors. I guess I had recognised that if I continued working Full Time then there was no way I could really improve my Investing Results and I needed to do something radical. Finally, Fujitsu were going to give me a reasonable Payout after 14 Years and this was like a huge Chunk of Free Cash and I saw it as the kind of Opportunity which rarely comes along and I would be an idiot to let it pass me by (as it happens this was spot on because Fujitsu did not do another Round of Redundancies for many years afterwards). Another reason, although I never thought of it as a key reason at the time, was that I could see many of the really experienced people I worked with leaving – it struck me that there would be no one left behind to do the work and things would be pretty miserable as they were already very annoying. I didn’t think I was prepared to do such fruitless battling every day. No doubt I caused quite a stir with my Bosses when I announced I wanted to take Voluntary Redundancy (sorry Chris !!!) but thankfully they let me do it and the remaining months up until when I left on December the 19th 2010 were a bit of a Victory Lap or Final World Tour – my memory is probably misleading me but I recall it being quite a pleasant period mostly and I got to work on some interesting Bids that were quite demanding and to work with many People who I had worked with on Bids previously so that was quite a nice way to wind down (and of course just to show how crazy things were, I actually ended up working an Extra Week because of the Deadlines of a Bid we were doing !!)
Once I left Full-Time Work I was amazingly productive and highly motivated to get stuck into improving my Investing and ensuring I could consistently make Money – to a large extent I didn’t have a choice because although I had a nice Pile of Capital I was not in a position where I could just do nothing and I needed to make my Investing pay like a Job. I started off re-reading many of the Investment Classics like The Naked Trader, The Intelligent Investor, One up on Wall Street, The Zulu Principle, Free Capital, and probably some others such as Warren Buffett biographies (all Books mentioned here are available in ‘Wheelie’s Bookshop’ and if you buy any you are treating me to a Beer – cheers !!). I paid particular attention to The Naked Trader and The Zulu Principle which are perhaps my favourite two (although there are some more recent reads around Psychology that I strongly rate). I also added some other Investing Books like Simon Thompson’s ‘Stock Picking for Profit’ which I quite like (this is sadly not available in Wheelie’s Bookshop and you can only order it from Harriman House I think).
All this reading probably honed my Fundamental Analysis skills but of course there is much more to this merry game. I also read some more ‘fictional’ stuff like Michael Lewis’ ‘Liars Poker’ and ‘The Big Short’ and ‘Popular Delusions and the Madness of Crowds’ and no doubt some others. I’m pretty sure I re-read The Naked Trader’s Spreadbetting Book during this time also and Ken Fisher’s ‘The only 3 Questions that count’ which is a very thought provoking book. I also used some excellent Websites like Paul Scott’s from which I learnt a lot and of course The Naked Trader continued to be essential reading although Robbie had already started pulling back by this point.
Leading on from this I then re-read some Technical Analysis stuff like ‘Technical Analysis for Dummies’ and ‘Candlestick Charting for Dummies’ – the latter of which is perhaps the most useful and valuable Book I have ever bought – it is the ONLY book which I refer to almost every day. I then had a spell where I became a bit obsessed with Short Term Trading and even tried some Intraday Trading but I was a total disaster at it and I blew £2000 in about a Week – however, I think since back then I have probably refined my Skills in this area and if I was to try such Day-Trading stuff again I might be slightly better at it (for instance, my knowledge of Candlesticks is far superior now and that would probably help – perhaps I could make £2000 last a fortnight before I blow it all !!). I see it as not really what I want to be doing though as I am most definitely not a ‘Screen Watcher’ and if anything all my mucking about and experimenting in these Early Days of Retirement actually had the huge benefit of making me realise where my Stock market ‘Skills’ (if I have any !!) are best used in a manner that suits my Personality – this is just so important and I cannot stress enough how vital it is that any Investor/Trader figures out as quickly as they can what their ‘Style’ actually is. I cannot see how you will be successful if you have not figured this out and defined it.
To help with my Short Term Trading I read ‘Way of the Turtle’ which as it happens taught me some useful ideas that I use in my Longer-Term Investing Approach (for example sizing Positions to the expected Volatility – the Turtles size using Average True Range ATR) and adding to Positions in stages and suchlike. I also read Toni Turner’s ‘Beginners Guide to Short Term Trading’ which is a remarkably cheap book for such useful stuff – great book. Even though my efforts at Short Term Trading turned out a failure, I think it taught me an enormous amount about how Trading is done successfully, even if I was useless at putting it into practice and one of the Lessons was about Discipline and that is something I still struggle with even now. It was from this period that I picked up a lot of ‘Trader Tricks’ that I rely on – in essence I spent time slowly refining my Approach and stealing from Short Term Traders (which I am most definitely not) to use some aspects of how they do things to enhance how I do my Long Term Investing – particularly around Timing of Entry and Exit and more recently around Psychology – both of myself and of the other Participants in the Market.
I think much of my ’Learning’ was a subtle thing sort of by osmosis and it just crept up on me – I am constantly surprised by the things I know when I have conversations with People and clearly my Knowledge is not something I gained overnight and it has taken probably every minute of my 18 years to assemble this Mental Database and ability to interpret what I have stored. I have no doubt that just by exposing myself to all sorts of information around Finance, Business and Investing over many many years has had a highly beneficial effect – although of course there is the risk of ‘Noise’ which comes along with it, and various biases that this can instil in your Brain. I think it was when I attended that Darren Winters ‘Training Course’ some years ago that I realised just how much I knew – and since that starting the whole WheelieDealer thing has brought this home to me in a big way – I have written loads more about this in a later Part of this Blog Series which I suspect Readers will find particularly appealing.
A big change that happened to me over this Period was that I started to become much less reliant on ’Tips’ and far better at finding my Investments myself (quite simply I had the luxury of time to do this !!) and I started to formulate a much clearer idea of what I thought made a ’Good’ Investment and what tended to be a disaster. During this period, I think quite early on, I started creating my ’Rules/Parameters’ for each year (I will shove in a link to a Blog I did on this at the end of this Blog) and I think that was a big help in getting a much clearer grasp of what my ‘Approach’ actually was and it enabled me to tweak what I did over time. I think this ability to locate your own Investments and not rely on the ideas of others is a huge indicator of when you are truly moving from an experienced but incomplete ‘Intermediate’ Investor to a much more ‘Fully Fledged’ and effective Investor. A lot of it is in essence about relying more on your own Ideas and having confidence in them than needing the ‘Confirmation Bias’ and ’Halo Effect’ handed to you on a Plate by Tipsters and suchlike. I am not necessarily saying ‘Tips’ are a bad thing and when time is tight they can be extremely useful but really these should just be seen as a route to a possible Investment and a starting point from which to do proper in-depth Research and Analysis.
I am pretty sure that my biggest leaps forward in ‘Cutting out Noise’ have been made in the last 3 Years whilst doing WheelieDealer but it was during this Phase that I started to go down this path of trying to simplify things and to be much more disciplined and regimented with regards to my Approach and how I dealt with Noise – more and more I am understanding how important this concept is and if you are serious about making Money then I see it as an essential aspect of Investing that you must master. I write a lot more about this in a later part to these Blogs.
Once I had escaped the drudgery of Work it was critical to establish a Daily Routine and looking back now on how I do things I think there is huge value in becoming ‘Robotic’ and doing the same things over and over every day in a similar way. This not only helps immensely to provide a Structure to your Day as a ‘Retired’ person but it has the huge and probably underappreciated benefit of helping to keep your Emotions stable and calm so that you can be more Rational and Objective in how you go about your daily Investing activities. I do the same things if the Market is booming as I do when the Market is falling off a Cliff (the latter seems to happen a lot !!) and I have no doubt this is extremely helpful to keep myself ‘on an even keel‘ when it comes to how I think about my Stocks and helping to maintain some semblance of sanity. I cannot over-stress how important this state of mind is – if you let your Emotions drive your Investing/Trading Actions then you are 100% guaranteed to make stupid and expensive errors.
At the end of this Blog I have included one I wrote a couple of years ago about how my usual Day pans out – although in truth it has probably changed a bit now but it gives the Reader some sense of how I go about things (perhaps in the future at some point I will revisit this Subject although there is probably little point now and I have loads of other Blogs on the Slate that need writing first !!). I don’t think I actually wrote down a Daily Timetable but for many people this might in fact be a really good idea. I recently had a chat with a mate who is also a Full Time Investor and he said to me that he was feeling a bit listless and directionless and I suggested that one thing that might help him is to write out a proper Daily Plan and to try to create a repeatable structure around how he does things. For me this was not something I wrote down but I just repetitively started working in a very ’automatic’ way which in essence can be boiled down to reading Company RNS Statements from about 8am to 9.30am, then reading Investors Chronicle and other stuff through the day and then at 5pm ish doing my Daily Numbers and seeing how my Stocks have done for the Day. I then often work on a Blog or something in the Evening and then at 10pm I am updating ShareScope and ‘plonking’ through my Charts to see what is happening and if I need to plan any Trades for the Next Day or if I need to do any Index Trades that night. I am lucky to be a very boring and repetitive person and I see these as Core Skills which help give me an Edge !!!
That’s it for this Part – you might have noticed that the Blog Series has grown into 5 Parts and the next bit should be out in the coming Week. I have written those bits in Draft and they grew to be quite lengthy so I decided it would be wise to chop it up a bit more.
I hope you are finding this useful,
Cheers, WD.
Evolution of an Investor – Part 1 of 5 Link
Evolution of an Investor – Part 2 of 5 Link
Visit WD Website HERE
Follow WD on Twitter @wheeliedealer
