The Portfolio Post

As your finance guinea pig on of the website’s main functions will be following the portfolios of the various strategies I learn and write about.

As I write this there are portfolios tracking:

  • Hack Wall St. In my first book I developed a portfolio that beat the market over its first twenty months.  Then I published a special report (that you can get by subscribing to my weekly newsletter) that established the portfolio as it stands.  The book and the portfolio follows several techniques to zero in on temporarily undervalued securities.
  • Intelligent Asset Allocation. In my next book I devote a chapter to structuring a portfolio to avoid large drawdowns with uncorrelated assets.  In a recent risk preference article, I developed a portfolios of diversified ETFs that we will follow.
  • My personal portfolio. I have divided my portfolios into two separate sections.  First, are long-term quality companies that I would be fine holding for years (there is a dividend tilt with this section as well).  Second, are options that I trade based on the active trading strategy I wrote about here.

Looking forward I hope to establish portfolios for:

  • Jockey Stocks. I am currently compiling a list of the greatest living capital allocators.  These super-investors have compounded the capital available to them at rates exceeding 15% and sometimes 20% for decades.  This portfolio will be able to hold quality assets in bull markets and shovel up bargains in bear markets.
  • Austrian Economics. This portfolio will be a living oxymoron as Austrian Economists typically don’t believe in the power of predicting macro-economic events.  Nonetheless understanding what will happen to economies and commodities based on the actions of governments and central banks can lead to profitable speculating.
  • Market Timing. Comparing each asset class’s relative valuation to the others allows us to focus on undervalued asset classes.  Only investing when there is a trend in place allows us to make enough money to buy an asteroid mining company when we retire.
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Toward an Active Trading Strategy

Earlier this year one of my favorite investment research firms, Stansberry & Associates, created an open house product: for $99 you could get access to all the research, newsletters and trading services the firm offers.

Until this point, I had only dabbled in any sort of technical analysis or momentum trading.  I had read one book about systematically owning the top 100 stocks based on momentum and another about picking value stocks quantitatively and started trying to figure out a way to combine the two strategies.  Thinking being the key word, as nothing had really come of it.

So I eagerly purchased the one-month open house, excited to read all about distressed debt investing, natural resource stocks and their ‘Extreme Value’ publication.  Surprisingly, I found myself hooked on their day trading service within hours.

The Stansberry Short Report sends out a bi-weekly missive with some idea or another, typically based on technical analysis done by Jeff Clark, a 30-year wall St. veteran.  The best part, though, is Clark’s “Direct Line” which he updates almost hourly throughout the day, evaluating the S&P technically as well as sharing any ideas he comes up with.

After downloading the Direct Line app, I became addicted.  I was constantly checking my phone while at work, while walking to lunch, before I got out of bed, in the shower – it was like a money-making version of Pokémon Go.

During the month of the open house (February 2016) my portfolio increased by 15% thanks to my new found trading partner and all the ideas that were funneling in from the other services.

After the month ended and I recovered from the resulting depression, I got a lot busier in my day job and stopped trading for a while. However, when I started up again in June, right after Brexit, I managed to get my portfolio value to go up another 15% in just over a month.

At this point, I decided it would be best to get a trading plan down on paper both to share with readers and to keep myself disciplined going forward.

The trading plan has three parts:  first, we look for assets with a lot of potential energy, or the ability to quickly rise tens of percent; then, we try to figure out when this potential energy will convert into kinetic energy for an entry point; and finally, we utilize deep in the money call options to leverage each trade.

Potential Energy

Potential energy is the field where I am used to playing.  To use it, look for situations in which the market has mispriced a security for some reason or the security just likes to jump into huge trends, gaining tens of percent in a matter of months or even weeks.

We’ll start with the more boring of those two scenarios, value investing.

Undervalued Stocks

Value investing is self-explanatory. You buy stocks that are valuable because they have room to run and when they revert to the mean you will see some good gains.  Here are some good spots to find ideas:

  • The Magic Formula is sort of the original ultra back tested value screen. Joel Greenblatt made 50% a year for ten years with special situations in his hedge fund and then decided to shift into an easier quantitative strategy.  The one he came up with pairs high earning yield (value) with high return on capital (quality).
  • Quantitative Value took the Magic Formula further, adding all sorts of fun bankruptcy and fraud screens to improve the results even more.
  • Morningstar subscribes to the same value ethos, but adds a little subjectivity, employing tons of analysts to analyze their universe of bigger companies to pinpoint those that are undervalued with economic moats, good stewardship and low uncertainty. I like to run the 5-star and highest discount to intrinsic values screens weekly.
  • Gurufocus follows the professional value investors with the best historical returns and pulls out their holdings from SEC filings. I prefer to pick specific gurus and look at their newer holdings, but you can also look for the stocks owned by the most gurus.
  • The big movers or new low list isn’t as easy to name or link here. Many of my better performing trades have come from buying calls when a good company sees its stock cut an unreasonable amount for some reason or another.  In late 2015, Wal-Mart was killed in the markets after a bad quarter and I was able to evaluate the situation, buy calls and then exit up 50% within a few months.
  • Special Situations I wrote a whole book about these so I will leave it to that. Check out the current portfolio for moves I like now.

Assets prone to intense up and down trends

Here’s the strategy that’s lost me shitloads of money at times. I have made more than ten commodity-related speculations that have lost >90%.  I have also made more than ten speculations in commodities that have at least doubled.

  • Gold & Silver Miners are the big one. This year alone I have had six or seven gold miners calls close out over 100% and two or three over 200%.  If you time the trend well, you can make a lot of money really fast.  If you time it poorly and are a slave to long-term macro-economic trends and other gold buggy things, you can lose a lot of money.  For now, focus on learning where to find and evaluate the plays (I like the Stansberry Resource Report) and risk management.
  • ‘Undervalued’ Commodities are full of fits and starts. In my newest book, I have a whole chapter on gauging whether commodities and other asset classes are mispriced and how to time investing in them.  Basically look for a commodity that cannot be produced profitably at current prices.  I used this method to make over 400% on Chesapeake Energy and over 200% on Freeport-McMoran earlier this year.  I also have a legacy position in Cameco from before I used stop losses that is down 90% so pay attention to risk management.

Kinetic Energy

Alright.  This is the part of the equation I was missing for over ten years of my investment life.  If I could get back all the dollars I invested in cash rich but behind-the-times shoe retailers or biotech companies that want to inject bubbles into peoples’ arteries or overpriced (the product and the stock) donut stores, I would have at least, like, $1,000 more than I do now.

Anyway, what we’re looking to do here is read charts to try to figure out when a stock is going to go up for long enough to profit on it.  Many billionaires think this doesn’t work, but billionaires also sometimes consider playing only four men on defense in basketball or sign Greg Hardy.

The theory behind why technical analysis works, as far as I understand it, has to do with psychology.  Assets in a trend tend to stay in a trend.  People like to buy what’s working for them and like to tell everyone about it.

Determining if the stock is trending

We are really only concerned with trending stocks for this strategy.  There are traders who make a living trading in channels.  I actually know a guy who used to pay his rent by buying out of the money calls in big bank stocks when they were two standard deviations below their average price over a period of time, but that’s for another article.  All of the strategies above look for companies with a lot of potential energy and to juice out returns for weeks and months from that potential energy we need the stock to be trending up.

The way I gauge the strength of a trend is the Average Directional Index (ADX).  I’ll admit I don’t entirely understand the math behind the ADX and I’m not particularly worried about ever understanding it.  The developer back in the 70’s looked at the average true range of the stock over a period as well as the distance between the highs and the lows over the period.  When the ADX is over 30 a security is trending.

Alternatively, the old-fashioned way to determine if a stock is trending is by hooking together several highs and lows in a row (at least three.) If the line is up, it’s trending up. If it’s down, it’s trending down.

Determining if it’s an Uptrend

Really it should be obvious if the stock is trending up, but we can make it a little more objective using moving averages.

We will use the 200-day and 50-day moving averages (200 dma and 50 dma), which represent a year and a quarter of trading days.  And if you want to get really fancy, you can use the 20 and 9-day exponential moving averages (20 ema and 9 ema); exponential moving averages weigh the more recent days higher.

For a stock to be in an uptrend, you want the shorter period average to be higher than the longer.  So if you set up a chart to show the 200 and 50 dma and the 20 ema, you’d want the 200 to be lower than the 50 which was lower than the 20 which was lower than the market price.

The logic behind this is fairly simple: if the more recent prices are higher than the older prices, it means the stock has been going up.

Finding an Entry Point

Here are the three main ways we will look for an entry point:

  • The slope of the moving average should always be positive. You want the stock price growth to be accelerating.  When the slope changes form flat or negative to positive this signals the stock will be moving up even faster shortly.
  • Moving Average Crossovers are when (for our purposes) a more recent moving average crosses over a longer one. So when the 50 dma price moves above the 200 dma price.  This signals to the market that the stock is ready to trend upwards.
  • MACD Crossovers. The Moving Average Convergence Divergence (MACD) plots the difference between the 12 ema and the 26 ema along with a ‘signal line,’ that is the 9 ema of that line.  When the MACD line crosses over either the 0 or the signal line it is a bullish signal.  The MACD is just a derivative of the MA crossovers with a shorter time-horizon.

The Instrument We Will Use

Many of these moves offer fairly high risk. To attempt to mitigate that risk with leverage (no one has ever said that before) we will use stock options to trade.

Stock options (specifically calls, which for now is all we will use) give the holder the right but not the obligation to buy a stock at a certain price before a certain date.  For example, if I wanted to buy calls for PayPal (current price of $38) to get the option to buy it at $34 before October 21, 2016 (it is August 9 as I write this) I would have to pay $4.60.  This price is made up of the intrinsic value of the stock, or what you would get if you exercised it today ($38-$34), and time value, which is the remaining 60 cents.  The time value is the value the market gives to the potential for the stock to rise above the current price between now and the maturity date.

You have to buy 100 options at once so the above call would set you back $460.  To break even you need PayPal to hit $38.60 ($34 strike plus $4.60 option price) in the next two and a half months; just a 1.6% return.  If PayPal announces amazing news and jumps 21% to $44, your option would be worth at least the new intrinsic value of $14, turning your $460 into $1,400.  Nice.

Deep in the money calls

Options can be one of three things: in the money, out of the money or at the money.  With calls, in the money means the market price is above the strike price (so there is an intrinsic value), at the money means at the strike price and out of the money means below the strike price (no intrinsic value).  The presence of intrinsic value lowers the leverage in the option.  This seems like a negative at first but with options we will get fairly high leverage no matter what. We are looking for an option that will move about as much as the stock price.  If we bake in too much leverage, a 1% move in the stock will send the option down 25% and we’ll hit out stop loss.

Luckily, there is a way to estimate how much the option price will move as a percent of the stock price. It’s called delta.  We will target a delta north of 0.80 (which means the option price will move 80% of the stock price) and won’t put on a trade without a delta of at least 0.70.  The PayPal options we looked at above have a delta of 0.86.

Another fun way to look at delta is to calculate what is called the position delta.  Because every contract contains 100 options you can multiply the 0.86 delta by 100 to see that you are, in effect, controlling 86 shares of the stock with your option.  This is where the risk management through leverage comes in.  If you wanted to actually buy the 86 shares you would need to commit $3,268 (86*38).

The full-of-potential-energy opportunities we are targeting with this strategy are prone to quick falls and even my four-page investing plan is to enough to be right every single time.  Using an option allows you to reduce your initial outlay and your total potential capital loss while participating in the same amount of potential return.

Risk Management

Stop Losses & Position Sizing

Back to the billionaires.  The business section of the bookstore is full of stories about guys who invested their entire net worth plus some into their business and stuck with it even as the stock price fell 99.9% and they had to write trading tutorials at night to get by.  If you’re Eddie Lampert or Wilbur Ross or even some random laundromat owner, doing those two things can make sense.

If you’re using a leverage derivative to try to get quick returns in the market, you should use stop losses and position sizing.

Position sizing is the easy one.  You should rarely, if ever, risk more than 5% on any of these trades.  Because options will usually have binary outcomes (that is they go up or they go to zero) you should only trade the amount of money you are fully willing to lose forever in that position.  And look at your trading portfolio as a percent of your total, too.  I have something like 70% of my portfolio in cash and long-term value investments.

Stop losses take a little explanation but are also easy.  The most straightforward way to use them is to pick a percent and sell the stock if it ever falls that percent from the highest point it’s been since you purchased it. I like 30%, so if you buy an option at $5 and it shoots up to $8 your stop loss is now at $5.60.

You can also use what is called a free ride and loosen up your stop after.  In a free ride you sell half the position when it doubles.  This means no matter what happens, you get your initial outlay back.

Watching the Bid/Ask spread

When you buy an option you aren’t really buying it from the person who owns the stock.  That person likely sold it to a third party called a market maker who will then sell it to you.  The market maker makes money based on a bid/ask spread.  The ask is the price you have to pay for the option and the bid is the price the seller gets.  So if the bid on a contract is $2.00 and the ask is $2.50, then the bid/ask spread is $0.50.

This one has killed me a couple times even when I may have made a good decision.  I bought puts (opposite of a call) on Brazil a few weeks ago because I read an article saying country stock markets historically peak right before an Olympics.  The market has since risen 6% and my options have fallen 30%.

I don’t remember the exact numbers but the bid/ask on this trade was something like 2.05/2.65.  This meant after buying the option I was immediately down 23%.  We use the market price for our stop losses, which is equidistant from the bid and the ask most of the time, but even then the position opened down 12% (even more when you count the commission) which was too much of a hurdle for the flimsy reasoning I employed on my buy.

Putting It All Together

Even though you’ve read this treatise, I wouldn’t suggest going out tomorrow and filling your portfolio with options.  The first thing you should do is explore all the potential energy sources and make a watch list of 10-20 stocks.  First, find names that you know (stores where you shop, websites you use, firewalls that thwart your hacking, etc.) and track their charts.  When they hit a potential entry point, find a deep in the money call and write the price down.  Over the next few months pay close attention to the price of the option and figure out what your return would’ve been had it been a live trade.

Some Books to Read

Quantitative Value

I spoke about this book earlier.  Suffice it to say it’s easily the best $85 (only $54 on amazon through this link!) investing book I’ve ever read.

Trading by Numbers

Luckily, I found this one at the library, as it is also irrationally expensive ($75 list or $41.60 on amazon through this link).

Swing Trading for Dummies

Just reviewed this one!

Intelligent Option Investor

The Intelligent Option Investor may be my favorite book of 2015.  The author has two tiers to his strategy: finding value and using option strategies to profit from the reversion to that value.  Sound familiar?  There are also a lot of cool charts you can make to use the volatility implied in option prices to see where the market thinks a stock will be in the near future and then compare that to your value.  If you don’t think that sounds like a great Friday night, then I guess you’re not interested in being rich.

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Book Review: Swing Trading for Dummies

In my voyage to teach myself active trading I figured one of the best places to start would be a “for Dummies” book, so here’s my review of Swing Trading for Dummies.

Note that most of this book is about technical analysis and I cannot reproduce the charts used in the book.  This summary is best used by somebody who will read the book and use it to call back to the knowledge gleaned from the book.

Defining Swing Trading

The author defines swing trading as a strategy that is markedly different from both day trading and buy-and-hold investing.

Where day traders sell out of their entire portfolio daily to not be affected by opening gaps up or down and pick trades based on intraday technicals, swing traders will hold their positions for weeks or months and will allow fundamentals to have a material impact in the trade decision.

Where buy and hold investors will focus on creating a diversified portfolio that can pull through any macro dips, swing traders will try to trade around the dips: buying when the market is going up and shorting when it is going down.

Enter and Exit Using Technical Analysis

There are two steps to technical analysis

Reading Charts

  • The four main chart types are:
    • Line charts simply connect the dots from one price period to another, typically using the closing price
    • Bar charts show the open, high, low and closing price of a security on that day, distinguishing which if the stock open or closed higher with a line protruding from the bar
    • Candlestick charts show the same thing as bar charts but distinguish whether the open or close was higher by the color of the bar
    • Point and figure charts use X’s to represent up movements and O’s to represent down movements
  • Prices where sellers outnumber buyers and the stock seems to hit a ceiling are termed resistance
  • Prices where buyers outnumber sellers and the stock seems to hit a floor are termed support
  • Prices typically move through four phases:
    • Accumulation, a channel of shifting between support and resistance with light volume because wall street generally thinks the security is priced correctly.
    • Expansion, is when the stock trends up. This typically starts with a higher than normal volume day and is signaled by the support transitioning into the resistance
    • Distribution, follows the expansion phase. Institutions are starting to take profits and volume is starting to taper off, but general interest in the stock from its price run-up keeps the price in a channel until…
    • Contraction, is when all gains developed during the expansion are given back. Short sellers should use temporary rallies as entry points during the contraction period.
  • The head and shoulders pattern is marked by three sequential highs with the middle high being the highest (think a stock hitting $8 and then falling back, $10 and then falling back and then $8 again). This typically signals a down trend.
  • The cup and handle pattern is the opposite of the head and shoulders pattern
  • Trend lines are drawn by connecting highs or lows together. If three connected together create a straight line the stock is likely trending.

Learning Technical Indicators

  • The first step is learning whether or not the security is trending: if you use an overbought indicator to short a security in a strong uptrend you will get burnt.
  • Use only a few indicators and stick to them.
  • The best signals to enter or exit a stock are when the technical indicators diverge from the stock price.
  • The Average Directional Index (ADX) will show if a security is trending or not. Readings above 30 show a security as trending and readings below 20 show that it is stuck in a channel.
  • If a security is trending use the following indicators
    • Pick a moving average and enter when the slope changes from flat or negative to positive and vice versa
    • Buy when a short-term moving average crosses over a longer-term moving average
    • Use MACD to buy when the MACD line crosses over its 9-day moving average, the zero line or when there is a divergence from the stock price
  • If a security is not trending use the following indicators:
    • Stochastics compare the current price to a range of recent prices. Trade when the stochastics action diverges from the price action (e.g. the stock hits a recent low but the stochastics do not).
    • The relative strength index is range bound between 0 and 100. Above 70 equals overbought and below 30 equals oversold.  You can also trade when a stock hits a new high or low that is not confirmed by the RSI.

Use Fundamental Analysis to Pick Stocks

  • Wait until after a quarterly report to trade so that the results are baked in and there are no surprises
  • Analyze the balance sheet to determine financials strength
    • Look for companies with large cash and working capital balances
    • Look for companies that do not have a lot of debt compared to equity
    • Be wary of large increases in inventory or accounts receivable
  • Assess the income statement next
    • Compare sales growth rates to net income growth
    • Look at margin trends
    • Watch for dilution from share growth
  • Focus on wide moat companies with high insider ownership
  • Wait for catalysts
  • Value the company either by comparing it to peers or deriving value from only its own cash flow or book value
  • Screen stocks by value metrics to look for opportunities

Manage Risk

  • Limit position sizes by percent of capital or risk level. Don’t invest in a stock that could decrease total capital by more than 7%
  • Create stop losses based on a trailing percentage or a time period
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Some Book Lists

Intro to Investing


One Up on Wall Street


Beating the Street


Essays of Warren Buffett


Motley Fool Million Dollar Portfolio


The Manual of Ideas


Special Situations


You Can Be a Stock Market Genius


Super Cash


Trade Like Warren Buffett


F Wall Street


Intelligent Option Investor


Personal Finance


I Will Teach You to be Rich


Choose Yourself Guide to Wealth


Money: Master the Game


Rich Dad, Poor Dad


The Value of Debt


Economics


Choice


Economics for Real People


Economics in One Lesson


Basic Economics


The Politically Incorrect Guide to Capitalism


Natural Resource Investing


Profiting From the World’s Economics Crisis


Investing in Resources


The Collapse of the Dollar and How to Profit From


it


Crisis Investing


The Goldwatcher


Entrepreneurship


Zero to One


The Lean Start-Up


The 4-Hour Workweek


Ready, Fire, Aim


How to be a Billionaire


Business History


The King of Capital


Money Masters


The Outsiders


The Vulture Investors


Too Big to Fail


Management


Sam Walton: Made in America


The Snowball


Plain Talk


The Goal


How to be Rich


Advanced Value Investing


Quality of Earnings


Active Value Investing


The Investment Checklist


Applied Value Investing


Margin of Safety


 

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The How to Hack Wall St Post

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After years of gobbling up any special situations investment research I could get my hands on I decided to try my hand at writing a short eBook about them in 2014.

Special situations, in my definition, are any type of unorthodox investment or speculation where there is either an inherent catalyst (like in merger arbitrage) or some sort of market mechanism that unfairly undervalues of company (like in spinoffs).

As a high schooler I dreamed about the days where I would spend all day in an office at a hedge fund reading bankruptcy filings and modeling recapitalizations to try to eke out some value where no one else cared to look.

While I’m sure some poor soul is doing that 80 hours a week right now at Baupost, my own special situations strategy has evolved to one that targets more simple situations and spends as much time figuring out how and when to invest as why to invest.

The intention of this eBook was to explain the strategies I have used the most with case studies and develop a model portfolio.  The book is in no way a textbook and at times may be lacking in financial jargon or space wasting explanations.  However, I firmly believe that for $2.99 it is one of the best ways to get an introduction to Special Situations and start to learn the way to think about investing unconventionally.

The situations I wrote about included:

  • A unique corporate event where-in a subsidiary of a bigger corporation is “spun-out” to shareholders, for free. Typically, this event follows mass selling by large institutions who do not want to or cannot take the time to learn about the new subsidiary – this selling drives the price down, likely well below a true intrinsic value of the company.
  • An arbitrage in the shares of a thinly traded subset of popular exchange traded funds.
  • Piggy backing on the actions of hedge fund billionaires and benefitting when they find an undervalued company and shake it up to release value.
  • The kind of deep value that you would not want your mother to know about.
  • Utilizing long-term derivatives to juice the returns of an investment in an otherwise boring blue-chip stock.
  • How to literally strike gold with ultra-small cap gold mining “juniors.”

About that Model Portfolio

As I write this in July 2016 the model portfolio has just outperformed the S&P over the twenty or so months since its origination: 7.8% to 6.4%.  Though the total return is not very exciting the individual position performances are with six of the nine positions moving at least 30%.

The Sold Positions

  • The Apple LEAPS were the first position to sell and they performed wonderfully as Apple reverted to a better valuation (it has since retreated back to being mildly undervalued). The LEAPS were purchased for $11.26 per contract and sold for $23.60 per contract turning the $1,126 minimum investment into $2,360. Nice.
  • Starz was touted as a John Malone vehicle that would likely sell in the open market for much more than its current price. We paid $31/share and it jumped up to $46 over the next six months – close to a 50% return.  It is very possible that in a more actively managed portfolio I would’ve sold the stock then.  Unfortunately, we sat on the position and the price collapsed to $21/share before, you guessed it, someone offered to buy the company for much more than the market price: $32/share in July 2016.
  • Gazprom and Richardson Electronics were the two deep value picks – both traded for extraordinarily low valuations. Gazprom (Russian oil giant) was massacred by the drop in oil prices and we stopped out of the position with a 37% loss – about $740 in the $100k portfolio.  Richardson Electronics drifted down to $7/share from $9.93/share where it was purchased to stop out at a 30% loss.  For what it’s worth, Richardson now trades for about two-thirds of its net asset value – sometimes stocks that look like values are just value traps that won’t ever rise out of the hole.  In the future I will look to pair momentum and trend following with the deep value picks to better avoid the value traps. All in all, our strategies of using small position sizes and stop losses protected the portfolio when both of these stocks dropped 30% or more; the total impact to the portfolio was a drop of just 1.4%.
  • FTD Companies, Inc. was another big loser who joined the 30% loss club. Following an acquisition, the company lost $80mm in 2015 and now trades for 50x TTM EBITDA.  It’s possible there is still a case to be made that the company will get its cash flow margins back to pre-merger level, however in this portfolio we are looking for easy, catalyst-based, decisions and right now FTD falls into the too hard pile.

Current Positions as of July 2016

  • Biglari Holdings and Third Point Re are the two activists. Biglari is up 16% and Third Point is down 16%.  Biglari’s back of the envelope valuation still looks low: $350mm of cash and investments net of debt make up just over a third of the $870 market cap – when you back them out the company trades for just 8.7x FCF.  Third Point’s Dan Loeb recently called the first quarter of 2016 one of the most catastrophic quarters in hedge fund history.  Meanwhile his fund lost 2.3% in the quarter and 1.4% in 2015 – not huge losses but when a company trades based on the performance of the portfolio these losses will kill it in the short term.
  • Silver Wheaton and Sprott Gold Miners ETF were up 55% and 73% respectively. We have entered into a potentially long-term gold and silver up trend and these two positions should power the portfolios performance going forward.

For more on the current structure of the portfolio please visit the portfolio page and for more details on the current position, subscribe to my newsletter where I update the portfolio once monthly.

Books Recommended

If you click on these links to buy the books I recommended I get paid a commission and you’ll learn a lot and become rich in the long-term.  So best of both worlds.

You Can be a Stock Market Genius is definitely the investing book I have read the most times. Though, strangely, I have still read it probably only a fraction of the times I have read several different fantasy novels. This likely spells disaster for my future investment returns. Anyway, Greenblatt goes over a bunch of strategies he used in the 80’s and 90’s to take the market out behind a dumpster a shoot it.

The best part isn’t learning the strategies and then picturing yourself diving into the pool of gold coins you will soon be able to accumulate after reading the book it is the way Greenblatt recounts the events surrounding his best investments using the strategies. It’s still one of a very few investment books that became a page turner for me.

One Up on Wall St. & Beating the Street

Peter Lynch books are not typically included in lists of special situations books because he is mostly a story stock investor – finding where consumer demand is strongest and finding a way to profit off those names. I do, however, really like the way Lynch divides up investment opportunities, talking about spin-offs, turnarounds and all his different categories. He’s also pretty good at telling stories, like Greenblatt, this falls into the page turner list. When I was 13 I got through a nine hour bus ride in Wales or England or something (didn’t know it would take nine hours to go through the entire country) solely by reading this book. So that’s somethin’.

How to Trade like Warren Buffett & SuperCash 

James Altucher has successfully transitioned into a self-help guru since these books came out. I think he’s a millionaire now, thought I’m not entirely sure he has actually come out and talked about his  net worth anytime lately – he prefers to talk about the millions he has lost in the past – and that’s what we’re going for on this site. For whatever reason he dislikes these books now and has talked about just throwing away all his copies. This is not a great argument for you to buy the book I know (though you should buy it I’ll get like $4ish if you do), but I do still like the books.

How to Trade Like Warren Buffett goes through several special situation strategies Buffett has used in the past to make money when the stock market isn’t lending itself to traditional value investing and then Altucher interviews Zeke Ashton and Mohnish Pabrai both of whom I have a lot of respect for. Supercash is similar but for hedge funds. Both books are more a collection of 10-20 page articles than a coherent book, but I like them more that way and have read each chapter probably 7x but never either of the whole books in a row.

Manual of Ideas

John Mihaljevic is ultra smart and puts more work into his monthly newsletter  than I do annually, probably. I mean, seriously, they’re all like 100 pages. Mihaljevic does a great job taking complicated investing strategies and explaining how they work in an easy to understand matter, which is perfect for most people, including me. This book goes over the traditional value investing in quality companies and cigar butts angles and then talks about special situations, investing in equity stubs, international stocks, small caps, etc.

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Differing risk levels for different people

As more and more of my friends and family embark on investment adventures, whether because they’ve been consistently saving money from their first grown-up job or need to figure out what to do with unwieldy Roth IRAs or 401ks near retirement, I have been getting a few requests a month for advice on what to do.

Unfortunately, there is no ‘one size fits all’ portfolio plan.  There isn’t even an age filter for different portfolios.  A 23-year-old I help is saving for a down payment and wants as little risk as possible with fixed income, while a 56-year-old is looking to actively manage an IRA in almost all stocks.

So after hours and hours of pondering their unique portfolio challenges while holding my breath under water at the pool or playing with my cats, I’ve come up with four distinct risk levels and paired them with the portfolio strategies that could serve each best.

Risk Level 1: Fixed Income

This approach is pretty boring.  My girlfriend and I used it to save for a down payment, which my sister (aka the mysterious 23-year-old friend above) is also doing.  Short of a default, you rarely see any sort of permanent capital loss with fixed income.

Fixed income investing is simply loaning money to some other entity.  We like to focus on municipalities and high yield corporate debt.  Right now everything else you can find domestically is overpriced after a 30-year bull market.

Luckily, we don’t have to actually do the legwork of analyzing municipalities or distressed corporations – we’ll leave that to the professionals.

How ETFs and CEFs work

ETFs or Exchange Traded Funds and CEFs or Closed-Ends Funds (which is a subset of ETFs) are the vehicles we will use to invest in fixed income.  They are a pool of money typically invested passively with criteria set at inception though sometimes invested actively by a manger.  They trade on an exchange like a stock would – with ETFs new shares are generated for every purchase and the new cash is then invested; with CEFs there is a finite amount of shares and buyers must bid them away from sellers.

This fact helps us find our niche.  Because there are no new shares created, buyers will sometimes bid more than the value of the assets in the fund (this is called the Net Asset value or NAV) and sellers will sometimes ask less than the NAV.  This creates either a discount or premium to the NAV.  We will target closed-ends funds that trade at a discount.

If we manage to find a CEF that holds a basket of muni bonds that yield 4% at a discount, we gain two advantages.  First, if the NAV is $10 and the market price is $9, the potential gain as the market price reverts to the mean of $10 is 11%, which is more than almost any fixed income instrument you can find short of investing in Venezuelan bonds.  Secondly, we will target munis that are tax shielded which means you don’t have to pay a tax on the distributions.  So if you are in the 25% tax rate bucket, a 4% yield is the equivalent of a 5.33% after-tax yield in a different instrument.

Because you will find generally the same performance in any CEF that holds Munis, we will focus on the discount and the expense ratio.  We are looking to keep the expense ratio below 1%.

Some Opportunities

To look for Munis, I used the Closed-End Fund Center’s screener.  I set the screen to look only for CEFs trading at a discount and classified as: FIXED INCOME – TAX-EXEMPT, with an expense ratio of 1% or less.  Here is the result sorted by Premium/Discount:

muuuunis

The market return column takes into account a reversion to the mean price and the distribution yield (which is in the last column).  The top two funds by distribution yield also have the highest expense ratio so there is definitely a trade-off.  Patient investors could likely refresh this screen monthly and only invest when the market return, adjusting for the expense ratio, is above a chosen benchmark such as 10% or 8%.  Otherwise, picking several funds at discounts with satisfactory yields and low expense ratios should be sufficient.

When straying from munis, my two favorite alternative fixed income investments are so-called ‘junk bonds’ and emerging market debt.

Junk bonds are the debt of distressed corporations.  Because there is some element of uncertainty regarding the solvency of these corporations, the yield is much higher.  To mitigate this risk, high yield ETFs will typically employ a manager and analyst to gauge the credit of the bonds and then use diversification to not allow one company’s collapse to have a material impact on the fund.  In the portfolios I manage we hold the Blackrock Corp High Yield fund (HYT).  HYT’s current distribution yield is 7.94%, its adjusted expense ratio is 0.97%, it manages just over $2B and it currently holds 100 bonds.

Emerging market debt allows us to gain exposure to debt that is less correlated to the US bond market bubble and has much stronger returns.  For this we will go with the simple Vanguard option of the Vanguard Emerging Markets Government Bond ETF (VWOB).

Risk Level 2: Global Asset Allocation

If you fell asleep reading the subhead for risk level one, number two may be for you. I can make this one sound extra sexy by calling it tactical global asset allocation.  This is the method that I talk about in my soon to be published book.

Asset allocation involves finding uncorrelated asset classes and diversifying among them.  The theory is that when one asset goes down or sideways for an extended period the others will pick up the slack and lower volatility.

Though this strategy likely won’t result in amazing returns very often, it will allow you to set it and forget it until you rebalance your portfolio each year. You’ll have confidence knowing that you won’t have to worry about losing half or more of your portfolio or seeing a decade of less than inflation returns.

A Sample Portfolio with ETFs

I go a little more in depth in the book, but here I will just create a simple portfolio with some domestic and international allocations and choose one low fee ETF for each.

  • 5% – Cash
  • 5% – Blackrock Corp High Yield fund (HYT)
  • 5% – Vanguard Emerging Markets Government Bond ETF (VWOB)
  • 10% – Central Fund of Canada (CEF) (Gold & Silver)
  • 5% – United States Commodity Index (USCI)
  • 5% – Adams Natural Resources Fund (PEO)
  • 10% – Vanguard REIT ETF (VNQ)
  • 10% – iShares Global REIT (REET)
  • 10% – PowerShares Dividend Achievers (PFM)
  • 10% – Cambria Value & Momentum (GMOM)
  • 10% – Cambria Shareholder Yield  (SYLD)
  • 15% – Cambria Global Value (GVAL)

Risk Level 3: All in Stocks

Now we get to a legitimately exciting investing strategy.  Depending on when you start and when you stop, stocks can return anywhere between 5% annually and 15% annually for decades.  This is what fuels millionaire retirements and the jealousy of jocks who made fun of you in high school for knowing what EBITDA meant.

Some Passive Opportunities

My favorite passive opportunities for stocks are in the portfolio above. I will outline each of them a little more here.

  • PowerShares Dividend Achievers (PFM) – Holds shares of only companies that have increased their dividends for 25 straight years. This allows for a modest yield, a value component and the consistency of a business that has had the strength to raise prices and increase its dividend for 25 straight years.
  • Cambria Value & Momentum (GMOM) – Has a universe of thousands of assets in which it can invest. Only invests in those that are in an uptrend and undervalued.  Can also go to cash to hedge against overvalued markets.
  • Cambria Shareholder Yield (SYLD) – Sorts all domestic stocks by the amount of money they return to shareholders through buying back shares, paying dividends or paying down debt and buys the top 100.
  • Cambria Global Value (GVAL) – Chooses the top 25% most undervalued countries in a 45 country universe and invests in the most undervalued companies with market caps over $200mm.

Some Active Opportunities

My girlfriend is currently employing the strategy I will recount here, so my future happiness may depend on its success.  For most people, individual stock selection will not be a long-term winning endeavor, but there are a few ways to make it work:

  1. Don’t invest all your savings in individual stocks unless you’re going to work full time choosing them. Invest the majority of your portfolio with the methods we’ve talked about and then pick some stocks to fill it out.
  2. Buy what you know. If you work in marketing don’t buy a biotech company with fortunes that will rise or fall based on one drug for some disease that 19 people have.
  3. Pay attention to value. You may know LinkedIn’s business inside and out but paying 100x earning for it is just setting yourself up for failure.
  4. Use professional resources. I’m not a big fan of most brokers and most research from Wall St. – too many conflicts of interest.  However, I love Morningstar’s rating system and there are several newsletters to which I will subscribe for life (which ones they are is for a different article).  Seek out professional sources you trust and take their advice.

Risk Level 4: Trading

This is the stuff Michael Lewis writes about and your cousin’s grandfather-in-law works with all day to afford his seven yachts.  If you get good at trading, you can generate great returns fast, but it’s unlikely that will happen, so here are some things more likely to help you succeed.

Creating a Base Portfolio

The first thing I did when I decided to start trading was build a base portfolio.  >60% of my portfolio is in solid, dividend paying businesses with great managers.  I will either beat the index or closely lag it with these stocks, but I will very likely not have a permanent capital loss in them.  This will make my total returns more consistent and provide equity in any margin calls.

Some Other Trading Tips

  • Sell covered calls. Calls are an option to buy a stock at strike price before a certain date.  The calls have an intrinsic value which is the difference between the market price and the strike price, as well as an implied volatility which is the value given to the chance that the market price will rise.  When you have owned an investment for a while and are willing to sell it, you can sell a call at that strike price and take in the premium for implied volatility.  In the best-case scenario, you don’t have to sell your shares and you keep the premium.  Worst case you keep the premium and sell the stock where you were already confident selling it.
  • Sell naked puts. Puts are the opposite of calls – the stockholder gets the option to sell a stock at a strike price.  When you find a strong stock you are willing to own at a certain price you can sell a put.  Best case you don’t have to buy the stock and keep the premium.  Worst case you get the premium and buy a stock at a price you were ok with.
  • Buy deep in the money calls. Deep in the money calls are calls with a strike price below the current price.  Because the market price is above the strike price, the value of the options is mostly intrinsic value. The price of the options moves more in line with the stock.  The advantage in this strategy is the inherent leverage: if a stock you think will go up in the next six months is trading for $10/share and you think it will jump to $15 you may be able to buy a call option with an $8 strike for $3.  If the price moves up 50% to $15, your call option could move up in value to around $8 which would be a 167% return.
  • Use margin. Margin is simply using a loan to buy stocks.  In my account, I focus on the base portfolio for margin and try to find consistent, strong growers to purchase.
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Austrian Economics & Investing Mind-map

As some of you know I’ve had one book come out so far. The second is currently enduring the editing process (subscribe for updates on it in my Weekly Notebook). The third is sort of an unusual case and does not lend itself to this series. So for my fourth eBook I will be writing about Austrian Economics and Value Investing.

To start building a better base of income sources articles on the blog I am starting a series of posts tracking my work on this fourth book. The posts will update readers as I move along with the book. They will show:

  • The Mind-Map and Outline
  • The Research
  • The actual writing – could take several months :-/
  • The lead magnet I develop for the book
  • The commissioning and purchase of a cover
    • Finding and engaging a Fiverr freelancer
    • Writing a title and sub-title
    • Writing the copy for the back of the book
    • Reviewing potential covers
  • The editing process
  • The formatting process
  • The marketing process
  • The uploading and selling process

A lot of GD processes there. Anyway without further ado, here is the mind-map and outline for the book.

Mind-Map

I have to admit until a few weeks ago I had never heard of a ‘mind-map.’ I heard about the process (CANT STOP SAYING PROCESS) in a Pat Flynn podcast and immediately decided to adopt it.

My productivity has historically been limited by the franticness of my mind. As soon as I start to make progress on one project or another I start thinking about a thousand further connected ideas – stopping myself from ever actually completing the first step.

The solution to this is to allow myself an outlet for frantic ideas and then create a structured list of objects to-do. Mind-mapping is a great way to create an idea outlet.

I don’t have the writing ability to explain what exactly a mind-map is so I’m just going to upload the one I created for the book and then talk more. BTW, I used Coggle to make this.

Austrian_Economics_and_Investing mind map

 

For the past few weeks, I’ve had plans swirling around my head from time to time about how I will structure the book and what the most important parts will be. The mind-map allows me to get visualize this structure.

The book will have three sections (which are represented in the picture by the main branches): Austrian Economics, Investing and the middle section that ties the two together.

I will probably call each section a book, each sub-section a chapter and then the furthest branches from the middle will just have their own chunk of their chapter.

The Outline

This comes almost verbatim from the mind-map.

  • Book 1 – Austrian Economics
    • History of Austrian Economics
    • Prices
      • Supply/Demand
      • The Profit.Loss function
    • Interest Rates
      • Function of Interest Rates
      • Federal Reserve
      • Austrian Business Cycle Theory
        • Past Crises explained by ABCT
  • Book 2 – Tie together Book, tentatively called Potential Crises
    • Government Response to the Great Recession
    • Potential Bubbles
    • A note on the impossibility of predicting economic crises
  • Book 3 – Investing
    • Market Timing
      • Asset class valuation
      • Supply/Demand
    • Inflation resistant investing
      • Commodities
        • Producers
        • ETFs
      • Capital Efficient companies
      • Foreign Companies

Conclusion

That’s it! It is very unlikely this will end up as the final outline, as I came up with several changes as I was writing this article. As I start the research the outline will get filled in more and it is possible new books or sections will be added.

Thanks for reading! Let me know below what you think of mind-mapping or if you think I should add any topics to the outline.

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Review of The Choose Yourself Guide to Wealth

My first interaction with James Altucher was several years ago when a friend and I interview him for my old blog. I actually don’t really remember what exactly the interview was about – likely something about his book How to Trade Like Warren Buffett, which is one of my favorites. But, I have probably read his Buffett book more than seven times (which is a lot for a finance book) and the transition he has made since he was strictly writing finance is fairly startling.

Now, Altucher mostly writes about self-improvement with some entrepreneurship mixed in. His writing used to focus on unique ways investors could profit, whether that was through some kind of special situation investing or some random trend he identified that everyone was undervaluing. These concepts are still layered into his writing every once in a while, but he likes to write more about taking responsibility for your own livelihood and ignoring common sense for good sense – usually explaining all of this from his never-ending supply of embarrassing stories.

Anyway, on to the main concepts I gleaned from the book.

Choose Yourself

                As the title of his most popular book, and partial title of this book it’s not surprising that this is Altucher’s main theme. Throughout his several cycles of getting rich and going broke and getting rich again Altucher found that the only way to break out of the cycles and just create one general uptrend by choosing yourself and following his daily practice.

By choosing yourself Altucher means not choosing to live an idle life working 9-5 for some random fortune 500 company, putting some money into a 401k, and waiting for tiered promotions and a 2% annual raise. Instead, find your passions and monetize them. If you’re an expert, a semi-expert or really just have interest in some random field there’s nothing stopping you from creating a website, writing eBooks and starting a newsletter. If possible start a business that allows you to quit your job. If not become an ‘entreployee’ finding innovations at work and using this to move up more quickly and become more valuable.

Daily Practice

                The daily practice was created to make a habit of doing the things that allow you to choose yourself and become the, ‘luckiest guy on the planet.’ The practice is centered around physical (staying in shape), emotional (cutting out bad people and being honest), mental (becoming an idea machine) and spiritual (meditating and learning to deal with and overcome anxiety).

Idea Machine

Altucher, is without a doubt, the best ‘idea man,’ I’ve ever read. In his endless embarrassing stories he always starts nonchalantly with some idea he had to get him into trouble – like starting a dating website to meet girls or cold-emailing a billionaire hedge fund manager with software he wrote to pick stocks.

I think Altucher has this strength intrinsically, but I do believe his method for developing it can work. Altucher carries around a waiter’s pad where he writes ten ideas daily from a prompt. The ideas don’t have to be good, he claims most aren’t, and the prompt doesn’t have to be relevant to anything in reality. The point is to strengthen your ‘idea muscle,’ after ten months of this he believes you will become an idea machine, making it even easier to come up with monetization ideas and even having idea sex where two ideas create a third interrelated idea that can become a niche business.

I’ve been doing this for the past elevenish days, so far I have cheated a little by focusing on ideas having to do with the site – things I’ve been thinking about for months.

Investing in Yourself

                The main part of this book that separates it from Choose Yourself is the second section where Altucher shows readers how to start a business. He starts with seven trends, mostly having to do with technology or the shrinking long-term workforce. Moves into his cheat sheet on starting a business. Then finishes by hammering in his position that you should invest only in yourself – going as far as not buying a house or going to college so all the debt that incurred can be avoided and the opportunity cost invested in a business.

Conclusion

5/5

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Austrian Business Cycle Theory

In a dynamic market economy entrepreneurs are constantly adjusting to allocate the scarce resources of the economy. The entrepreneurs have a measuring stick for this – profit/loss if they are allocating the resources correctly, as the market wants, they will show a profit and continue what they are doing, however, if they allocate resources incorrectly they will lose money and will be run out of business or will necessarily adjust how they allocate these resources.

It follows logically from this that in a dynamic market economy there would be no mass error by entrepreneurs (remember the bad ones are weeded out) leading to a boom that creates a bubble and its inevitable bust. For the proper explanation of the boom-and-bust cycle one must then look not at anything inherent in the market system, but instead away from it and at the state.

To start, in a market there is a structure of production, capital is not just one big blob (as Keynesians and monetarists would like to assume), but is instead divided in a structure of production from lower order goods to higher order goods (think from seeds to a happy meal and so on).

Next, people naturally have a ‘time-preference,’ that is they prefer something now over later. This is why interest is charged on loans (be it loans to businesses for investment, or loans from entrepreneurs to employees in equipment and current paychecks, the interest here being paid in the profit that goes to the entrepreneurs). The interest in a market illustrates the current time preference in that economy and coordinates savings with investment.

This coordination is a must, because when people save they are necessarily forgoing consumption, so as their excess savings pushed down the interest rate entrepreneurs will have easier money to borrow and invest in lower order goods to provide supply not now, when consumers don’t want it, but in the future when the demand will come.

This is where the state comes in. When the money supply is artificially increased through fiat money and fractional reserve banking the increased amount of loans available for entrepreneurs pushes the interest rate below its natural level, and changes the structure of production.

So the result is mass investment in lower order goods to create supply in the future, when the demand is for now. This creates tons of malinvestments (think houses…) which need to be liquidated for the market to return to its natural level.

According to the Austrian School, the bust part of the cycle is not the bad part, the bad part happened when the fake money was pushed into the wrong areas of the economy creating a bubble, the bust is the necessary, though hard, part that returns the market back to where it should be.

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The Only Two Productivity Hacks that have Worked for Me

I’ve always been a huge procrastinator. In college I would time my work to force myself to be up against a deadline. Eight page English lit paper tying together Jamaican poetry and British imperialism due? Get up at 6 AM to do all the research and writing by class at 9 AM.

This works to a point and there’s even some Bill Gates quote about it being a good quality. There’s nothing like the fear of demise to get your ass into gear.

The problem is very few projects can be done reliably and with high quality while you’re rushing to meet a deadline. And if you’re attempting to do some work for yourself (like set up a website and write eBooks) forget it. You’re the only one being let down so you can always do it “tomorrow.”

So without further ado here are the only two techniques I have used that effectively stop my procrastinating.

Daily Tracking

I’ve attempted daily tracking in the past. Making spreadsheet to record my weight or a word doc full of articles or to-do list items. It never worked. It was always too easy to just ignore the doc and not open it until it had been forsaken for three weeks – massacring the entire point of daily tracking.

When I was a senior in college I was working 30 hours a week at a leasing company, doing Tim Ferris’ slow carb diet, working out every day, attempting to consistently write blog articles for the Motley Fool and take extra classes to finish both degrees on time that April. I was not doing very well.

I found that if I focused my energy I could keep the diet and workout or write a blog article and do some homework. But I could never get myself to do everything I wanted to do each day.

Following my third or fourth time attempting to update my weight spreadsheet by memory and failing terribly, I noticed a whiteboard sitting in a closet unused and decided to make use of it. I made columns for each day of the week and then rows for each daily goal.

Every day before I went to sleep I would go to each row and give myself one, two or zero points and then add up the total for the day. Underneath that I would put my weight from the morning weighing (makes me sound like livestock).

The rows were fairly simple things like: eat, workout, work, school, drink, contacts (these last two probably seem strange I was trying to wean myself off caffeine and create a habit of removing my contacts each night).

Here’s what the board looks like today:

20150402_212348

I put the board up right behind my laptop where I could easily guilt trip myself into filling it out each night. As I consistently graded myself each day I found myself naturally avoiding the negative habits and creating the positive habits to the point where it was surprising if I missed one or two points in a day it was truly surprising.

Here’s how I grade myself today:

Work: The number one aspect of work is working on this site. If I improve a web page, write an article or write/edit part of an eBook I get a point. The other point comes from my day job. If I did well getting my tasks done with quality and in a timely matter I get a point

Workout: One point for Basketball or Tabata and one point for Yoga.

Eat: Default to two points, lose a point for overeating yogurt or potatoes or something and lose both points if I eat any kind of grain or refine sugar.

Read: At least one chapter of two books.

Weight: No points awarded here but I generally want to be lower at the end of the week than the start.

Motivational Stuff

Daily tracking is what I use to develop positive habits and destroy negative ones. However, it is not the most effective at motivating me to get a specific task done when I’m in a bored lull.

For this I use anything I’ve found motivational in the past. For me it’s typically business books or podcasts. Atlas Shrugged is great as are the majority of CEO biographies. The Myth of the Robber Barons is probably best at getting me to put my head down and forge ahead. As for podcasts James Altucher’s is really good at opening my mind to new ideas and learning how to develop my own ideas; Porter Stansberry’s now defunct podcast is the best I’ve found at getting me in the mindset that my future in life is totally under my control and getting ahead at my job or with a potential business I own is my own responsibility.

Also, this youtube is great:

The problem with these motivational blips is that they are extremely temporary. There have been at least 17 times where I listen to three Stansberry podcasts while playing basketball on a Saturday morning and then spend the rest of the weekend thinking about how I could structure a website or what articles I could write. All the while no work is getting done and suddenly it’s the week and I don’t have “time” to work on the site.

The key is not getting the blood flowing, once you find your keys this is simple. The key is channeling all that energy into something that is actually productive. Once I figure out a good way to do this I’ll write another article about it.

Bonus Hack: To-Do Post its

In my day job I have 12 or 14 responsibilities and at all times at least three or four of them have some task or long-term project that needs to be done. For the first few months of dealing with this I did OK just remembering what I needed to do or not deleting the emails for task that were incomplete.

This ability ended as I developed a reputation as the spreadsheet jockey and any project that could be done with a spreadsheet was referred to me and at the same time I started working on projects for the executive management team that without fail took 4-37 drafts and each time had notes on new ways to calculate this or analyze that.

So I needed a way to keep track of all the things I was responsible for doing. So I made it a game.

I started writing down everything I was asked to do on post it notes and sticking them to the side my cubicle. The post its would say something like ‘stress test’ or ‘Allen spreads’ or for projects that I took several pages of notes on instructions there would be five or six post its each detailing a section that needed to be updated or created.

I inherently don’t like a whole lot of clutter so I did not want to have an overload of post its glaring at me. So not only did writing down the to-do list somewhere where I had to see it remind me what I needed to do, it motivated me to just knock out all the east 20-minute stuff so I could rip the post it down and chuck it.

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