May 1, 2013- The Barometer and the House

Good morning,

I missed blogging so I’ll try to write more here. Invisible readers – hello to you too and thanks for reading. It’s the labor day and most of the people I know are probably enjoying their vacations out in the beach.  I decided to stay since there’s a lot of work tomorrow and on Friday.  Plus, I cannot really quite get to “relax” despite the holiday because part of me feels there’s too much work left undone (and it never seems to end.)  People say I’m a workaholic.  I sometimes think not because of the plenty of work left undone (say writing a comprehensive earnings analysis of XYZ and ABC et al, a conference to prepare for in case we will partner et al)  Still though, I guess I should be thankful because I have work and at least there’s enough people who believe that productivity in this kind of work is relevant.  That’s enough.  

Digressions aside, I was reading a short story from a book my former boss’ daughter gave me during my birthday.  It’s called “The Idea Book.”  In page 104/105 the story goes like this:

The Barometer and the House

Background: A teacher once set this as a test question:  How can you measure the height of a house with a barometer?  The teacher wanted the students to say that you measure the air pressure on the ground and then the air pressure at the top of the house.  Then, by using a formula, you can work out the height.  One student, however, thought that this was too simple, so he suggested the following: “If I were to measure the height of a house, I would climb up onto the roof and lower the barometer tied to a piece of string until it reached the ground.  I would then measure the length of the string.”  The teacher marked this as wrong. 

But our friend, the obstinate student, was not wrong.  After all, he succeeded in measuring the height of the house with a barometer.  The student did not give in; he asked the teacher to give him another chance to answer the question.  

This time , he wrote: “If I were to measure the height of a house, I would climb up onto the roof and drop the barometer from there.  I would time the process to see how long it takes for the barometer to reach the ground.  From this, I could calculate the height of the house. “

Once again, the teacher gave him zero.  This time, the student suggested: “I would climb up  the stairs in the house and on the way up, I would take measurements against the wall.  On reaching the top, I would multiply the number of times I used the barometer by its length and then I could work out how tall the house is.”  The student was told off again.

“Maybe the teacher is expecting a more mathematical answer,” he thought.  His next ideas was this. “I would place the barometer next to the house and measure its shadow.  Then, I would measure the height of the barometer and the house’s shadow in order to work out the height of the house.” The teacher didn’t like this answer either!

By now the student was so fed up that he wrote: “I would go ot the house, knock on the door and say to the occupant, “If you don’t tell me how tall your house is, I’ll beat you to death with my barometer!”

According to an email circulating around the Internet, the student in question was Nils Bohr, a Danish Nobel Prize winner.  As another Nobel prize winner, Linus Pauling, once said, “The best way to get a good ideas is to have lots of ideas.”And, of course, it is just this ability to look for several answers to a question that many Nobel prize winners have in common.

*****

Our search for the “right” answer is not something we learn to do only in school.  Unfortunately, we also carry this attitude over to our working lives.  Next time you have a problem to solve at work, ask yourself if you can find a solution in another way.  And don’t give up until you have thought of at least seven completely different ways of solving the problem.

*****

Personal Reflections:

About the Many Solutions on Solving a Problem

Others will interpret that I’d say there are many ways to be rich in the markets (technicals, fundamentals, history, money flows, faster information et al)  That solves the problem right?  Well, that’s true but for now, since this is my personal diary, I’d talk about my personal problems.

I had been thinking for quite a while now, how relatively old I’ve become and how in my mind, I haven’t quite accomplished a lot of things that I’d be proud about.  In short, I think I’m falling short of my own consensus estimate of myself.  This is the negative inside of me thinking.  I guess I’ve always been competitive that sometimes I feel really bad or depressed at myself.  When I look at the mirror, I see a problem – fats.  I also know that despite being able to make money (hell I suppose everyone does in a bull market),   I haven’t gotten my alphabet soup credentials either.  So here’s me signing up for those stupid exams so that I can finally tell myself I’ve done that stupid piece of sh*T.  I had been so busy so I can’t get myself to take the exam.  So here I am, I’d just sign up and maybe the crammer in me will feel the need to pick up a few books and what not and grab a piece of paper to ace and pass them on that day.  Over the past couple of days,  I feel that I read a lot, I trade a lot for clients.  I get stressed a lot.  My investments are a lot.  Yes, I nitty gritty my clients’ positions even if they’re not even mine.  I oversee a lot and have a lot of responsibilities but somehow, my feeling is still that I don’t do quite a “good job.” even if by all sticks and stones, I have done nothing except work.  I breathe and sleep work all throughout the day.  My mornings open with Martin Soong and Bernie Lo. My evenings end with Jim Cramer and David Faber.  Larry Kudlow wakes me up.  The Fast Money guys like Najarian are my morning buddies.  Sad life ei?  But I think though that I have nothing to complain about because I guess most everyone probably is the same (in their own different regions, sectors and assets.)  Also, there are so many successful people in the field (1% of a million is still many) who work harder, are more connected and have a decent life!  I really don’t know how people manage to do the things they do.  Congrats to all the insane workaholics out there.  You guys make me look dull.

You know, I used to dream about managing people’s money.  A legit and reputable Jack Schwager type of market wizard but I know those things take time.  It takes track record. It takes unbelievable credentials.  Also, at the end of the day, I think I’m happy with making a few Xs and Ys because I don’t need too many people to please.  I’m happy just to trade on my own, perhaps a few people and friends, and enjoy the game itself.  No administrative stuffs.  Just the game.  

There are several ways to address the problem (my problem of non-satisfaction.)

1.) Make Tons of X and Y that Once the Number is Hit – you’d be happy. (This takes time, amount of money placed and a certain type of return.) Also doubtful that one would be happy because once numbers are hit, they never really stop adding another zero to reach.  Also success begets success so how do you turn that down right?  Of course, I know that between luck and skill, I’m thanking the gods for giving me both and perhaps more of the former.

2.) Create Passive Income Streams —(Trading and investing, reading and researching is an active job for me so it’s definitely not passive.)   Passive for me means I have a simple chicken stall somewhere selling food, hiring workers to sell it for me.  Of course there’s an entrepreneur inside of me, but there’s also an opportunity cost of capital that always rings on my mind so as a friend/client put it – I’m already stuck in this profession since I’ve been doing this ever since I left school.  I know of no other industry except where I’m at so I just need to be good at it and stay there.

3.) When you watch Julia Roberts’ Eat Love Pray movie – you’d sometimes think to yourself that you’d want some sort of a sabbatical.  A time where you do nothing but visit places, learn languages, learn different cultures, work on yourself (body, mind and spirit) and study again – and yet not let the professional world know that you’re on a semi-vacation so that you can still be back at work.  Well for one, this option is only good for two kinds of people – a.) People who have no responsibility for other people (since leaving even for just two days’ worth of work is already a problem for me, what more for two weeks or two months.  It will only make me disconnected and not able to function properly.)  b.) People who are rich and do not care about the opportunity to make money at the present time period (sabbaticals are expensive and not going to earn money except experience.).  Also, studying is not as easy as going to school and getting a tuition fee.  One has to undergo endless cups of caffeine to prepare for these exams, interviews and polish oneself for a slot on such endeavors.  Also – an expensive experience.

Thoughts in my nascent mind –

And yes, I really feel old.   

Bye for now and enjoy your youth.  I talk like an old person when I’m actually in my latter twenties.

 

-Faceless Trader.

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One Response to May 1, 2013- The Barometer and the House

  1. wil says:

    haha i like your last statement

    Like

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