David Loses Money

Tracking my adventures in making money without earning it

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Savings

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Ugh, savings. It’s when you get money, then do nothing with it. If you let it sit in a bank account it might earn interest, but odds are the interest being paid is less than the rate of inflation, so you’re losing money by having it sit there doing nothing.

This is sort of by design. Interest being lower than inflation means it then it encourages you to – you know – do something with it, which gets that money moving throughout the economy and blah blah things happen. If money isn’t moving from place to place in an economy then everything seizes up and it all falls apart.

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Recent Trades [November 2021]

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I haven’t done much trading recently: NSW coming out of lockdown + taking up flying lessons + booking holidays has drained me of my spare cash, so it’s been mostly HODL each day. All my stuff has gone up a bunch over the past two weeks, but I feel like it’ll be hit with a crash by the end of the month. The whole Evergrande problem hasn’t been resolved – really wondering when that’ll come to a head.

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Performance for 3Q21

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Wow! This past week has been horrible for shares. It wiped out about the past 6 weeks of gains for me, and as for Hedgefundies… oof. Seems the big dramas affecting everything are:

  • Evergrande and the hot mess that will result in. It’s weird because everyone knows it’ll be a big drama when it inevitably falls apart, but there’s no real agreement on what that drama will actually be and what it will affect.
  • Attempting to taper off quantitative easing. Did you know something like 25% of all the money in America came into existence in the past year or so, as part of attempts to stop the economy from imploding due to COVID? There’s no way that won’t eventually have consequences.
  • US debt ceiling drama. It feels like once a year or so this is a thing and it always ends the same way, and everyone seems to forget and freak out? Yeah I’m sure the Republicans will let the US default, just like every other time they’ve threatened to and then backed down.

Did you know that historically, September is the worst month for the sharemarket? Let’s blame it all on that and be blindly optimistic for the future.

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Recent Trades [September 2021]

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I’m not sure how frequently I should do these posts. At the moment I’m going with my gut, just writing when I feel like I’ve done a few – but whatever a “few” is is some arbitrary number that depends on the alignment of the stars or whatever. But here’s what I’ve been up to recently. I’m due for a quarterly rebalance on Hedgefundies on Friday so I’ll do a separate post about that then. But anyway, here’s my activity since the last post about this 2 months ago…

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Learning to Budget

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I’ve traditionally been pretty bad with money. Throughout most of my 20s, it used to be a cycle of “hooray I got paid, time to buy all the things I want… oh crap now I’m totally pov until next payday.” Usually that, or variations of “oh crap, I forgot this bill was coming up.”

In June 2014, my friends and I went quarters in a discount 4-pack licence for You Need A Budget (YNAB) on Steam. Yes, on Steam. So it was sitting in my games list just under World Of Goo. It was a strange time. Anyway we all lived variations of the previous paragraph and wanted to get more control over what was going on in our lives. I’d tried Quicken, Mint, Excel spreadsheets and a few other budgeting apps before and they’d never worked for me, but YNAB purported to be different somehow.

It had a bit of a learning curve and there were a few false starts, but I was determined to get the hang of it. It took about 6 weeks until I started noticing an actual difference to my life and stress levels. After around 3 years I was completely out of debt* and the previously familiar background stress of “money” was not a thing in my mind anymore. I cannot emphasise enough how good that feels. I remember it constantly being an anxiety at the back of my mind, and these days it’s just… gone. Yes, I get paid much more than I used to, which allows me to be a lot looser with things these days, however I believe that knowing how to budget makes a gigantic difference to your life no matter your income. I am super fanatical and evangelical about You Need A Budget (it has changed my life) but regardless of how you do your budgeting, the idea all boils down to:

Know what you’ve got to work with.

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Overdiversification

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Warren Buffet once said “diversification is a protection against ignorance – it makes very little sense for those who know what they’re doing.” This is perfect for me, because I have no clue what I’m doing and have little interest in becoming an expert in whatever I’m buying into.

I’m assuming we all know about risk and everything. But I want to pad the word count on this a bit so:

  • Unsystematic risk: the risk you take when you punt on a stock – it’s lower when you’re buying well-established gigantic companies with huge market caps and way higher when buying speculative pennies, however your rewards are usually reflected in that.
  • Systematic risk: the risk of owning shares. You can’t do anything about this, you just have to accept that occasionally the entire market can and will shit its pants.

So you can’t do anything about systematic risk (other than be like hurr durr I’ll put my money in savings and lose it to inflation) but you can deal with unsystematic risk by diversifying your holdings. But at what point does diversifying become pointless?

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Barry

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It’s 4PM on the ASX and your stocks are up. You’re comfortably in the green, you’re beating the index, and life is good. 4:10PM comes around and suddenly your whole portfolio violently shits itself and half your gains for the day vanish. It’s like when you’re at trivia and the host decides to make the final question worth 50,000 points. What’s the deal?

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Mining Crypto

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I’ve never really looked into crypto mining before, because I missed the pre-ASIC boat with Bitcoin and just assumed it was impossible without super specialised gear and cheap electricity. However, on Friday afternoon I found myself reading a Slashdot article about malware that altered CPU settings to make them more effective for mining, and from there I went down a rabbit hole. I didn’t have any intention of mining anything, but eventually I was like screw it, I apparently (barely) have the equipment I need so let’s give it a whirl.

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Getting Started

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The first thing I ever bought was Virgin Blue in 2008. I used to get paid every fortnight, and had to pay rent every month – which meant that one or two times a year there’d be a pay cycle that didn’t involve rent or other monthly expenses. Normally I ended up living pay to pay, but somehow I’d ended up with some cash left over for a change.

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Recent Trades [August 2021]

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I’ve done an abnormally large amount of trades in the past few weeks – mainly as a result of:

  1. Lockdown hitting Sydney so there’s nothing else to spend money on for the next few months.
  2. A lot of holiday refund money coming into my bank account.

I think I’m about tapped out for the rest of the month, but we’ll see – I’m still trying to chase down about $1,000 in ski season pass refunds, and if that ever comes through I’ll probably dump it on Boeing.

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David Loses Money Tracking my adventures in making money without earning it

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