Tremendous

An angel investor's take on life and business

  • The Mindset That Could Sink Wallstreetbets (And Others)

    As someone who makes a living from investing, I have watched the Gamestop/Wallstreetbets events with interest. Today, I decided to venture into the belly of the beast and try to find out what these traders are all about.

    I noticed two common patterns:

    1) Us-vs-them thinking. The individual trader versus the evil hedge fund industry.

    2) Determination to hold a position out of machismo

    Take a look at some examples below (usernames redacted). These are all from today alone:

    The backdrop to these conversations is the cratering of their most widely held stock, Gamestop:

    The initial buying of Gamestop and other heavily shorted stocks had some logic: Wallstreetbets wanted to engineer a short squeeze. A rapidly escalating price would force hedge funds that had shorted the stock to buy it to close out their positions. Otherwise, the hedge funds would face even worse losses. But, since all those hedge funds have to buy at once, the price can spiral higher and higher.

    Despite the logic of that move, I find many people’s judgment clouded by us-vs-them thinking and machismo. Whether hedge funds are morally good or bad has no bearing on whether a position is worth holding. And one should never identify with an investment emotionally. If one’s identity and manhood (something tells me these posters are probably mostly men) are wrapped up in holding Gamestop stock, how can you make a rational decision based on the facts?

    Will you choose to invest or not invest based on data, or will you just hold your position all the way down to 0 to show everyone how tough you are?

    Perhaps a lack of machismo is one reason why female investors tend to have a better track record:

    According to the Warwick University research, women’s outperformance can be attributed to the type of investment they tend to favour.

    The study revealed that men are more likely to take a risk on more speculative, “lottery style” stocks where they believe [they] have the potential to make a lot of money very quickly. Men also tend to hold on to lossmaking investments in the hope that they will come good.

    Financial Times

    Instead, I suggest adopting a philosophy of non-attachment. This is a concept often attributed to Buddhism. It has parallels in many other religions, including Christianity. If we detach from our opinions and possessions (including stocks), we can view things more dispassionately. That investment isn’t you. You are you. The investment is just an investment. And it either makes sense or it doesn’t on its own merits. What’s more, whether you made millions or lost everything, it doesn’t change who you are.

    I find meditation helps me in this process. It gives me a chance to get outside of the normal rushing freight train of thoughts and examine my opinions and beliefs from the outside. Or just simply take a break from them!

    Time will tell whether the likes of Gamestop make good investments, and whether Wallstreetbets remains a phenomenon or fades. But detaching from our emotions and opinions and viewing them from the outside is a useful strategy we can employ forever.

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    Photo: “Ship sinking in the Strait of Gibraltar” by ^ Johnny is licensed under CC BY-NC 2.0

  • This Video Will Make You Smile

    Last night, my wife and I watched the newest episode of the adorable Japanese video series Pui Pui Molcar. I’ve mentioned this series before here, and this week’s video was their best yet! The video is below. If you’re stressed, take a couple minutes and enjoy!

    Pui Pui Molcar, Episode #5

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  • What Is the Ideal Amount of Exercise?

    Above: Me sucking wind after a tough workout.

    We often hear what the minimum amount of exercise we need is, but what amount of exercise is actually optimal? At what point have we reaped all the benefits exercise has to offer, and possibly even gone over the edge into damaging overtraining?

    With the largest snowstorm in years lashing my apartment today, I thought it was as good a time as any to try to find an answer.

    The federal government recommends a minimum of 150 minutes of moderate activity or 75 minutes of vigorous activity per week. This establishes a useful lower bound we definitely shouldn’t dip below, but a highly cited study in JAMA Internal Medicine finds that you can get further longevity benefits by exercising a lot more:

    the longevity benefit threshold appears to be approximately 3 to 5 times the recommended physical activity minimum

    So, in order to be sure to get the maximum longevity benefit, you need to do five times the minimum recommended level of exercise. 5x the minimum recommended level would be 1 hour 47 minutes of moderate activity daily or 54 minutes of vigorous activity daily.

    Furthermore, the study found no danger from exercising even more than what it takes to get the full longevity benefit:

    there does not appear to be an elevated mortality risk with LTPA [leisure time physical activity] levels as high as 10 or more times the recommended minimum.

    Looking at the differences between moderate and vigorous activity, I also wondered if one is better than the other. There doesn’t seem to be solid data to say that either moderate or vigorous activity is superior from a health perspective:

    comprehensive reviews of the literature on physical activity and mortality report that overall volume of physical activity is associated with lower mortality risk but report mixed findings on the relative contributions of moderate- vs vigorous-intensity activities

    So am I doing enough? Looking at the pedometer app on my phone, I’ve averaged 2.75 hours per day of walking (moderate intensity exercise) over the past year. I also do about 3-4 hours a week of vigorous exercise (yoga and strength training, mostly), so about 30 min daily.

    So, I seem to be comfortably above the level needed to get the maximum longevity benefit. That said, counterintuitively, I sometimes find my mood is a little lower on days I don’t do vigorous activity. (You think you’d be happy for a rest day, but maybe not!) Just because I’m at the maximum amount of exercise to produce longevity benefits doesn’t mean that more exercise might not produce other benefits in terms of mental health, athletic ability, appearance, etc.

    Since there appears to be no harm from even very high levels of activity, I may add another vigorous workout (likely yoga or calistenics) to my routine some weeks, depending on my schedule and desires at the time.

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  • Is There Real Science Behind Taking Vitamin D to Prevent COVID?

    Many of us have heard that vitamin D might protect us from COVID, but is there real science behind these claims? Yesterday, I received a very thoughtful message from Dr. Peter Attia on the subject. Dr. Attia cites a randomized controlled trial from Spain that found the following:

    patients not treated with vitamin D had 33.3 times the risk of ICU admission compared to patients treated with vitamin D

    Vitamin D seems to help with disease severity even if it doesn’t prevent you from catching COVID in the first place. Dr. Attia also provides some good perspective on dosing.

    there is virtually no risk to supplementing, say, 5,000 IU/day

    I had heard that too much vitamin D could cause kidney stones, but Dr. Attia put those concerns to rest as well:

    Too much vitamin D results in hypercalcemia, most commonly due to an overproduction of calcium that can result in kidney stones. However, vitamin D toxicity is not easy to come by: a review article noted that all published cases involved an intake of at least 40,000 IU/day. Even though the Food and Nutrition Board established a conservative dose threshold of 2,000 IU/day, some studies suggest that doses of up to 10,000 IU/day is safe for most adults.

    I’ve taken 5,000 IU of Vitamin D for nearly 3 years with no ill effects that I can discern. I based that decision on information from this book that it may boost testosterone levels. I was also informed by this book, which noted that those who live in the north struggle to get sufficient vitamin D in the winter, regardless of the amount of sun exposure. The next step I need to take is to get blood levels of vitamin D taken to confirm the supplementation is getting me into the healthy range.

    If you want to get more interesting content from Dr. Attia, you can sign up for his newsletter at the bottom of his message. If you found this post interesting, please share it on Twitter/LinkedIn/email using the buttons below. This helps more people find the blog!

  • Sound Familiar?

    Today, Myanmar’s (deeply flawed) democracy fell today to a military coup:

    The coup follows a disputed election in November that Suu Kyi’s National League for Democracy party won by a landslide. The main opposition party, the army-backed Union Solidarity and Development Party, claimed the vote was marred by fraud. Myanmar’s election commission rejected the allegations but tensions between the two sides had been rising for weeks. The military made its move hours before Myanmar’s parliament had been due to sit for the first time since the National League for Democracy’s win in the Nov. 8 general election.

    USA Today

    More here.

    Photo: “File:Remise du Prix Sakharov à Aung San Suu Kyi Strasbourg 22 octobre 2013-04 (cropped).jpg” by Claude TRUONG-NGOC is licensed under CC BY-SA 3.0

  • New Research Identifies the Key Causes of Aging

    Dr. Jeremy Walston, Professor of Medicine at Johns Hopkins University and co-author of the study

    I just read an interesting new study identifying the biggest causes of aging. The authors gathered a panel of leading experts on health and aging and asked them what the biggest risk factors are for failing health as the years go by. Here’s what they found:

    Experts identified 13 factors predisposing to or clinically manifesting AACD [accelerated aging and cellular decline]. Among these, chronic diseases, obesity, and unfavorable genetic background were considered as the most important.

    Early detection of accelerated aging and cellular decline (AACD): A
    consensus statement

    None of the risk factors will shock you, but seeing all the key risks laid out in order of importance can really help guide our decision making:

    One risk stood out above all:

    smoking was consistently viewed as the most prominent risk factor

    So if you’re smoking, definitely consider quitting! I recently shared how I put down the cigarettes 6 years ago. Hopefully my experience can help.

    These risks mostly boil down to either what you put into your body or what you do with your body. Here’s how I try to mitigate these risks:

    • Sleeping 8-9 hours a night
    • Exercising at least 4 times a week, in addition to walking at least 4 miles every day
    • Eating a lot of fruits and vegetables and avoiding too many processed foods
    • Meditating most days, generally for 10-20 minutes

    Although I did, incongruously, read this article while eating some potato chips, so there’s room for improvement! 🙂 Have a great weekend everyone!

  • We Added 2 New Vaccines To Our Arsenal in One Day!

    Johnson & Johnson CEO Alex Gorsky.

    In difficult times such as these, we have to celebrate our wins. We had two big ones today: both the Johnson & Johnson and Novavax vaccines were found to be effective against COVID. J&J was 66% effective and Novavax 89% effective.

    The FDA should approve both ASAP. Indeed, the FDA is considering authorizing the Novavax vaccine based on data from overseas. J&J is likely to be authorized in February. Since many are dying each day, each day of delay is very costly.

    Both were less effective against the variant from South Africa, with Novavax below 50% efficacy there. But Novavax is working on a new formulation to counter that variant.

    We face a constrained supply of vaccines, so any effective ones we can add to our toolkit are a huge win!

    Photo: “File:Alex Gorsky at World Economic Forum.jpg” by World Economic Forum is licensed under CC BY 3.0

  • A Professional Investor Explains GameStop in a Few Text Messages

    This morning, my friend Bill* texted me asking if I knew anything about what’s going on with GameStop, whose share price has skyrocketed recently. I may have told him a bit more than he wanted to know! But I thought this text thread might be useful to others too, so I published it below:

    This type of trade is too speculative for me, but I do find it interesting. The link to the post explaining the suspension in GameStop trading is here.

    P.S. Since I use Signal for text messaging, I can’t take screenshots, so I recreated this conversation using this interesting tool.

    *Not his real name

  • What Does the Pandemic Mean for Real Estate Investments?

    A health and economic crisis is scaring nearly everyone right now, including investors. Stocks recovered in record time, but what about investments in real estate? Are they doomed, or is the bad news perhaps a bit overblown?

    I invest in real estate through Fundrise, which allows me to spread my money across many projects nationwide. I prefer this to the concentration risk I would face in, for example, owning an apartment building in New York City, where a recent rent law change has substantially reduced the value of buildings.

    But regardless of how diversified you are, the pandemic is impacting all aspects of life…and business. So I set out today to gain more understanding of how these changes would affect my real estate investments.

    The national picture for apartments, which is most of what Fundrise owns, is surprisingly good. Vacancy rates in major markets including Dallas, Los Angeles and Washington DC, all areas where Fundrise has many buildings, are not all that elevated. This squares with my returns in Fundrise, which were over 7% in 2020 despite just about the worst market conditions imaginable.

    Indeed, despite the strong and sustained lockdown measures in LA, its vacancy rate is comparable to that of Dallas, an area that locked down a lot less. Dallas, LA and DC all have a vacancy rate around 5%. Only LA is materially above its Q1 2019 vacancy rate, and keep in mind that LA has had a serious housing crisis for many years.

    Of these three markets, LA definitely concerns me the most, with higher unemployment. But prices have held up so far.

    So, what’s the upshot? National unemployment is up but still not extremely high, and the higher end apartments Fundrise tends to own are less likely to be occupied by those in leisure/hospitality, who may struggle to pay their rent right now. Add that to the fact that more vaccines are being deployed daily, bringing the beginning of the end of this health crisis.

    So, I see the outlook for residential real estate investments as fairly bright, all things considered. To sell now in the face of slight weakness and a coming end to the pandemic simply wouldn’t make sense.

    I intend to sit tight.

    Note: If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

    Photo: “Boarded up & masked – 10th Avenue, New York City” by Andreas Komodromos is licensed under CC BY-NC 2.0

  • A COVID Vaccine is Being Manufactured in Baltimore Now. But the Government Won’t Let You Have It.

    The AstraZeneca COVID vaccine is being manufactured today at a plant in Baltimore. This vaccine has been show to be between 62% and 90% effective at preventing symptomatic COVID.

    But despite those excellent results in trials in the UK, Brazil, India and South Africa, the US government plans to wait until an American trial is finished in April. This as 4,000 of our fellow citizens die daily.

    We should do what the UK and other nations have done, rely on the data we have, and get this vaccine approved immediately. I propose we follow the counsel of economist Alex Tabarrok:

    “The AZ vaccine should be given an EUA immediately and made available in pharmacies for anyone who wants it while continuing to prioritize Moderna and Pfizer for the elderly and essential workers.”

    Alex Tabarrok, Marginal Revolution

    I just wrote my Congressman and Senators to urge them to push for immediate FDA approval of this life saving medication, and I humbly request you do the same! Frankly, I am very frustrated with this situation. Maybe you are too!

    If you like, you can use the text I used, below. You can find your Congressman’s contact info here and your Senator’s contact info here.

    Dear X,

    The AstraZeneca COVID vaccine is approved in the UK and other countries and has shown efficacy of 62-90%. With over 4,000 of our fellow Americans dying daily, I urge you in the strongest possible terms to push the FDA to authorize this lifesaving medication immediately.

    Thank you for all the good work you do!

    Sincerely,

    X