We get to learn something new about ourselves in these unusual times. Some are new and interesting – I am a lifelong introvert – heck my primary school headmaster wrote1 ‘this mustelid is a lone wolf’ in the valedictory report. I am not as much an island as I thought I was. I spent too long reading science fiction in my youth – everybody told me this is tripe2, but it’s probably as far as I am able to go towards fiction, I tended to borrow more non-fiction from the library than fiction. I am weak on things like 100 books to read before you die because of this bias. I couldn’t make it through Heart of Darkness, and pretty much anything by Charles Dickens does my nut in – I am a fast reader but couldn’t get anywhere with Great Expectations which is part of why I failed Eng Lit O level.
I was fortunate in my upbringing, I had parents who loved each other, and stayed together till death did them part. Although we were poor, by modern standards, I was loved and knew it. And so I came to believe that Time healed all psychological injury3. As I grew older I came to see this is not true for all people, sometimes issues from childhood drag people back to early hurts, and it takes effort for them to regain equilibrium. Philip Larkin had something to say about this. I saw a little echo, a resonance of the pathology in myself more recently. Time does not always erase.
The best-laid plans of mice and men
The Firm, whose research campus I worked at for over 20 years was a fantastic place to work for a long time. There is a Facebook4 group Friends of the site recently established, and some ex-colleagues invited me. Despite the fact that the campus had a pretty clear no photography rule for a long time, it was good to see some bygone days, and reminiscences of some of the earlier projects. Even the barmy ones, like trying to splice optical fibres with a box that was a controlled spark gap, which needed careful positioning – on the roadside while there was snow on the ground.
Another project where two of us were working in Portugal, and as we drove off from a border crossing checkpoint from Spain the hatch of our rental car opened and dumped some very expensive HP kit on the highway. Amazingly it was still serviceable after we gathered it up.
Some things were entertaining – the 1980s hair. The impression that there were women on site – yes, technically there were, but they or their partners must have taken all the photos, because science and engineering joints like that were virtual monasteries. Dear xGF came from Lancashire, not Suffolk 😉 For Ipswich’s women who were so inclined, the odds were good, but the goods were odd. One of the high schools near the site has a much higher prevalence of autism than is typical in the county. They get decent grades, but the second-generation goods are probably still odd.
Fear is the mind-killer
Frank Herbert, Dune
I looked at the signals coming from the markets, and they blithely ignore the massive economic shock there is now. Yes, Donald Trump threw a shedload of money at the markets, but it doesn’t explain it all. The compass spins and knows no north. I look at the numbers in my ISA and I don’t believe them. My ISA has a lot less crap in it and it has a fair amount of gold, but even so. It keys an atavistic memory from long ago, of my great-grandmother describing losing her life’s savings. Twice.
So I consider returning to work, to head this off. And within 24 hours the Universe delivers a slap to the chops with a wet fish. Synchronicity in motion.
And bless y’all, I thank commenters on that piece for holding up a mirror. Because to be honest I did not think of returning to work because of a deep-seated urge to do so. I am not Jim at SMHD, and if I did this I would be running from something. Jim was running towards something, and there’s a world of difference.
I don’t have the option, probably
On the Facebook group, the manager, let’s let us call him S, who initiated my journey out of The Firm pipes up. It was mainly to say hello and give some innocuous anecdote. And in a flash I was back in a stuffy office in late February 2009, and I was hearing bullshit about performance management and needs improvement in billable hours because my last project had been grounded by a US division reverse takeover. And I had no good options, and no reserves.
There is a theory that faced with an overwhelming threat we split off parts of our minds to preserve the rest. In physical danger this is the feeling of time extending, which is a common experience. I once was driving a car with three people on a snowy long downhill run near Piddletrenthide and I felt the car begin to slide. The split comes, and time slows. One part of me was trying to control the car, to surrender control slowly. I recall another part of my mind eyeing up the wall by the side, if I could use that in the last resort, and separately trying to drop down to use more engine braking, since this was a rear wheel drive car. We got away with it, drifting down the hill to the river, and halfway down I gained traction.
Similarly when a postprandial piss-head came fishtailing towards me on a Suffolk country road, the time dilation gave me headspace enough to pull right into the nearside and angle in before stopping at a point where his fishtail would be out so it was not a head-on crash. You need time dilation to get that anywhere near right.
In cases like that, where there is an immediate physical hazard, these splits are useful, kicking off elements in parallel to search for solutions.
Where the problem is situational, however, there are some useful aspects of splitting elements of the mind off. But these parts do not recombine.
I was facing my working life being cut by a quarter, being iced in my late forties. And the frozen recording of that time played out again, the recollection what it felt like through the long three following years of living like the celibate monk in a brothel as I salary-sacrificed into AVCs and built my ISA. A split off part searched the solution space, and though I thought all was lost I invested into a stock market. Sometimes you must hold contradictory ideas at the same time, because knowledge is imperfect. Sometimes getting a win in one area compensates a wipe-out in others.
One of those split off parts saw S, and it all started to go grey, I closed the browser window, switched it all off, and learned that I do not have the option of returning to work. It is interesting that I didn’t associate the pain with The Firm, but with that individual and The Firm combined.
The synchronicity of observing S pipe up feels significant. There is a message here, and I am old enough and ugly enough to grab the wheel. These ancient split off elements search lived experience for anything that looks like the original circumstances, and then they break glass and yell out FIRE. Not the retire early sort.
Rob asked the reasonable question “Be sure the problem is with The Man and not Your Man From The Firm”. While this experience would support the latter hypothesis, the thought of anything to do with ‘performance management’ gives a similar chill – just not one I have faced. And I do need to ask myself some tough questions about giving up any of my time for a 100% savings rate. They ain’t making any more of it for me…
what has once been lost can never be regained
In Journey’s End I said
But something snapped within. Although others weren’t happy with being targeted I was unduly susceptible at that time and place. Once the mainspring is broken the dream can never be repaired because it has become a nightmare. I will never work for an organisation with a modern performance management system, and I focused all effort on making sure that I will never be in that weak position again.
These split off elements lie dormant, and it appears these slings and arrows accrete over time. Another is the older archaic fear of hearing that great-grandmother losing everything. Some of the hazard is of course the strange times we are in, perhaps I pick up some of the mental haze of anxiety that is widespread.
I will never walk free of the psychological injury of the three year grind out of work, with no good options, and within hours of publishing that returning to working post I saw the truth of this as S showed up. It is not as incapacitating as developmental injuries are – after all, all I need to do for that cobra’s head not to rise again is avoid being employed 😉
Don’t forget to live in the moment, because those moments are precious and they are running out.
Gretchen Rubin, The Happiness Project
She was also big on
Compared to many, my financial position is very good. I have decent health – I weigh less than I have done for 30 years. Some of that is retiring early, and shaking off the stress, and drinking much less because I do not need to ease the pain.
My German great-grandmother did lose her life savings twice, but the modern world is not the same as her experience, it is far less extreme, although Fintan O’Toole does make a fair case that some of the same drumbeats are drifting in the air.
That health is valuable, and it was purchased by retiring early. I saw at The Firm what stress does to people. Health is precious, and I need to file hyperinflation under the red wine part of Serenity, not the coffee end.
The option I probably don’t have is returning to work to earn a useful amount of money.
Moreover, once you leave there is no coming back, and no “side-gigs” exist. It’s all or nothing. That’s specialization for you. Nonetheless, I can’t hide that fact that all work is shit. It’s just slavery by another name.
Don’t mince your words, ZXSpectrum48k. Tell it how it is 😉 I spent enough time saying similar, but it seems time softened the memory. But not the experience, as S’s mug showed up.
Earning lots of money means a certain amount of bullshit in the job6, and because there is no obvious metric7 to a bullshit job performance management makes something up. Something about this offended the Ermine fur.
I can do the creative passive stuff and/or other opportunities, but I’m unlikely to make more than the £1000 HMRC small earnings allowance8. I should file that under recreation, not strategic reserves. It’s not enough to fight the inflation my great-grandmother saw. I would need to double my ISA to shift the needle on the dial, and inflation is an exponential. We have learned earlier this year that fighting an exponential increase is a very tough wicket to bat on.
Let’s turn this round. What would I want of work?
- Interesting challenge
- Interesting people
- It comes to me
- some money. I have already accepted I will never find scale enough for it to make any clear difference to my long-term.
What do I not want of work
- An employer. PAYE. NI. BTDT, I have now got all but a part year of NI paid up, thanks to the outstanding value of Class II self-employed contributions.
- performance management. Shop Class as Soulcraft had it right, as did Carl Jung – “you know an electrician’s work is good when the lights come on, rather than a shower of sparks” and “You are what you do, not what you say you’ll do.” respectively. Indeedably brought this up in Dichotomy. In my earlier days you didn’t need performance management – you could see decent work because it worked. It changed something in the world, hopefully for the better. Performance management is an symptom of a job gone bullshit IMO. Every single piece of work that has come my way since leaving The Firm has been by people seeing what I have done or hearing from other people how I fixed their problems.
- no hustle – the corollary of it comes to me. I don’t mind getting out there and making a name for myself, but I am not a travelling salesman, and the whole sales thing brings me out in hives. As for the dead eyes of people at networking events who are only hungry for what you can do for them, no. My time is more valuable than that.
- too much of it so it consumes a lot of time
This doesn’t look like adding up to doubling the value of my ISA, and I would be old indeed before that came to pass.
What is all this hyperinflation stuff, anyhow?
An ancient memory stirs, of my German great grandmother in a care home, in the early 1960s. I recall it as a sunny day, like these days we have been having, and seeing the goldfish in the round pool, they looked huge to me.
I did not speak German, my parents were frightened that having another language present would impair my ability to speak English properly9. My mother and great-grandmother were talking, and I heard my great-grandmother speak of losing her life’s savings. Twice – once in the inflation following the First world war, and then again in the second. While I could not understand the words, I could hear the intonation, and my mother explained, well, as much as you can explain this to a six or seven year old.
The young and impressionable Ermine heard the signal. I did not understand what had happened, but the voice tones told me that some very bad shit went down.10
Leftovercurrency gives us the story of this note:
The ‘Goldmark’, was the national currency of the German Empire from 1871 until 1914. The Mark was part of the ‘golden standard’ monetary system. The value of one mark was fixed to the value of 0.358 grams of gold.
This changed in 1914, with the outbreak of World War I. To pay for the war, and to protect its gold reserves, Germany abandoned the gold standard. From August 1914, Reichsbanknotes were no longer exchangeable for gold.
This history is part of why the Germans really hate the idea of bailing out those feckless Southern Europeans. There is an archaic cultural memory of how that ends.
It runs deep. In the late 1980s I went on holiday to Germany, taking my Access credit card, and a Eurocheque card which was a specialised overseas sort of debit card as backup. Being young and foolish I did not really get just how much of a hit the transaction costs were with the Eurocheque card. Driving across France and Belgium I was able to use the Access card, no doubt at some usurous exchange rate, but no other trouble. As soon as I crossed the border into Germany, they just plain didn’t take credit cards. I had to either get cash out of ATMs using the EC card, or pay with Eurocheques. Germans didn’t trust credit, 70 years after that banknote was printed. I think they have got over it now.
That trauma still stalks the German psyche. I have a suspicion that we may yet have reason to be grateful to Brexiters, not because the UK will soar like Icarus cut free of the deadweight of the EUSSR, but because this ancient fear will clamp a dead hand on the coronavirus economic reconstruction of the EU and the internal inconsistencies of the Euro may come home to roost. It is an economic union without a common Finanzministerium or even debt mutualisation. Brexit Britain will crash and burn in its own blessed way, but the explosion of the Euro cratering could be bigger. Sometimes you can get the right answer for the wrong reasons 😉
It’s probably hard for those in the current FIRE scene to understand the fear of inflation in people who have seen it. I remember the 1970s – I was still at school then, but inflation was rife, even into my first year at university. 25% inflation is really quite something…
For example had I stayed working at The Firm for eight more years and saved 50% of my salary it would still not be enough to double my ISA estate. That’s not enough to fight five years of 1970s inflation.
Since then it typically takes 15 years to halve your money
which is more tractable. Of course, getting ahead of inflation is precisely why you accept all the pain and volatility of equities rather than sticking it all under your mattress or ILSCs or US TIPs. UK index-linked savings certificates have not been available for almost ten years. You can buy UK index-linked bonds but there’s a lot of hurt associated with them compared to the elegant simplicity of ILSCs because of the variation in bond price. A prudent mustelid bought £15k of ILSCs in 2011 part of an emergency fund against getting hoofed from The Firm before the three years were up. The emergency never came, and NS&I tell me they are worth 19 and a bit k now
because unlike inflation linked bonds there is no variation of the underlying market price of the ILSC with inflation expectations to screw things up. The trouble with TIPs in my view is that the US$ is the de facto world reserve currency. Even in my lifetime I can see some possibility that this may not always be so. What happens then? In 1960 you got 12 Deutschemarks to the pound. You got 2.7 on Dec 31,1999. The Americans hoofed the British Pound from its reserve currency status after WW2, because they are top dog. For now, but 30 years hence? I know Warren Buffett says never bet against America and it worked for him. So far. I know what you’re thinking. Did he fire six shots or only five… Do you feel lucky?
What caused this problem for me and what can I do about it?
I don’t believe the messages I am getting from my financial capital. You, dear reader, are probably a young whippersnapper relative to me. You may have serious problems at the moment, ones that I don’t have. For that I am grateful for my privilege – this is more a function of age and luck than of inherent cleverness.
But it means that your capital, the value of your future income stream, is a function of what you can do, whereas my capital is financial capital. It is what I have. The signals I am getting from the financial capital are at serious variance with the evidence of my eyes and the state of the world. You probably don’t need to worry about financial capital so much, it is the value of the future stream of income from your human capital that matters. That will be inflation-proof to a first approximation, though it can vary with secular trends – more AI will devalue it, a larger world with shorter supply chains will probably increase its value. Depends on your field.
One problem I have is that my ISA is denominated in £, and we have had a lot of determined muppetry here, starting in 2016, and we ain’t done yet. A moment’s glance at the GBP relative to a basket of currencies that make up IMF SDRs show you that the Brexit vote made me 10-20% poorer at a stroke
Now there’s a perfectly reasonable argument that the people who voted for Brexit mainly hold human capital and no significant financial capital, and if the currency goes down then their jobs might be more secure, so they’re not bovvered in the slightest. Their phones get dearer, but it’s harder to survive without a job than without an iPhone.
I don’t blame them for looking after their interests, but I don’t want to support them, if they are going to shit in my world I owe then ‘owt. I got out of the FTSE100 in March and favoured world equities – VWRL and L&G dev world exUK and some S&P500, though I also have some UK mid cap because the story is so bad, it has to be a recovery play sometime 😉
The numbers I read tell me two things jumbled up. One is how much capital I have. The other is the inverse of how stupid Britain is being, as viewed by foreigners. The chart above shows they aren’t impressed.
I don’t give a shit about foreigners’ view of how we are handling our affairs. I want to get that out of my face. Particularly when I look longitudinally, over years. I want to know if my great-grandmother is right, not the state of the UK. Nor do I care about the state of the US, to be honest.
It’s a bit like the problem with the constant speed of light making everything else relative. I want an objective standard. The £ definitely isn’t it, nor is the $. Much as I like gold, that isn’t it either, because gold is a general fear indicator as well as a long-term store of value. It sure as hell ain’t bitcoin. I am not sure that the € will last the next ten years.
I rather like IMF Special Drawing Rights for this job. Basically because the IMF are cleverer than me and think about how to allocate the balance:
The value of a SDR is based on a basket of key international currencies reviewed by IMF every five years. The weights assigned to each currency in the XDR basket are adjusted to take into account their current prominence in terms of international trade and national foreign exchange reserves.
The current XDR basket is US$ 41.73%, € 30.93%, RMB 10.92%, ¥ 8.33%,£ 8.09%.
Once upon a time the googlefinance function in Google Sheets would give you an answer for GBPXDR, and tell you the exchange rate, but that function seems lost so you have to compute it from the individual forex pairs. This did my head in because it seemed like there were not enough variables to solve the equation but fortunately the IMF tell you how much of each currency to use, and an example calculation.
I have converted this to a Google spreadsheet and get the same answer as XE.com which is good enough for me. Now all I need to do is scale the £ value of my ISA into XDR which I can bet from the two providers and chart that, rather than see my investments in terms of the unreliable £, which will now doubt enjoy another bout of notoriety when the shifty éminence grise Dominic Cummings fixes a no-deal Brexit for us at the end of the year.
It is time to reorientate my approach to investing
At some point during this bear market I realized — emotionally, not mentally — that I probably shouldn’t keep doing this.
I canned a lot of junk in March, and shifted even more to VWRL. There is a chance that I orientate to the US just as the place goes up in flames and Warren Buffett’s claims of American exceptionalism burn out, the classic sucker’s rally.
What didn’t go into VWRL etc I shifted into cash and a bit more into gold. The gold I feel OK about, the cash not so much, certainly I don’t want to be holding that over the end of the year, gold is a worthy alternative. I am hoping for the other shoe to drop and the markets go into a tailspin. At the moment everything is going the other way. That’s OK too. It’s what diversification is all about.
And I see that in myself, too. But I decided it was time to get serious about not drifting towards 95%-100% equities every time markets get going again in the blind pursuit of maximum returns, as I have done for nearly 20 years.
Monevator’s comment was not available for most of the time I have been writing this, and yet it says how I feel. If he is getting older, there have been far more miles of road gone under the wheels for me. I too want to get off the treadmill. That’s what the gold and the cash are for, as is the simplification into what passes for quality in the stock market these days.
I’m not convinced that Monevator can live with
But it’s not there to deliver return.
any more than I can live with considering returning to work 😉
I want one last punt, it’s only on less than 10% of the ISA. There’s always November 😉 The Orange Man is throwing the kitchen sink at the markets, because if he doesn’t get his base onside he’s looking at a risk of doing time. So the cash and the gold I bought anew (as opposed to the gold I bought before the brexit vote) is up for grabs for one last hurrah if the markets bomb out as they should do IMO. If they don’t, well, I will spend the money over the next few years. It’s not enough to save me from hyperinflation. I don’t need to buy bonds because of my DB pension.
While I’ve retained the HYP, VWRL and Charles Stanley Dev World ex UK throughout, buying anything outside that I have aimed at quality. More VWRL, and a S&P500 fund. I have made some mistakes selling BRWM, and I’ve even managed to turn a loss on selling VUKE in March, though since I bought most of that some time ago I have actually crystallised a decent overall gain. I’m not going to buy the FTSE100 again, even if it goes down in November. Because: ZXSpectrum’s words ring true
The high street was obsolete anyway, airlines should go bust, the petroleum industry needs massive downsizing. The FTSE is not coming back because it full of crap companies with obsolete business models. The S&P and Nasdaq are not.
I was buying too much trash in the last couple of years of the bull run up to Jan 2020, though at least I had deferred a lot of purchases and held a decent lump of cash because of the poor valuations. The market recovery has made my existing shareholdings look better than in March, though I suspect there is only wind beneath these valuations.
My ISA is a lot simpler, and I could start a brand new tracking spreadsheet in Googlefinance, and use XDRs as the displayed value, perhaps even hide the £ column. Then replicate the old Excel spreadsheet I have used up to now, with a snapshot of the value every April. I built the old one in 2009 to try and track my results as I came out of the GFC, but it is getting unwieldy and slow, and it has too much detail and worksheets from all the whatiffery I was doing to work out when to draw my pension. I was far too pessimistic with those simulations, each and every worksheet was overtaken by events and the answer was simply ‘not now’ until last year.
It’s not a bad time to start anew with a snapshot of now, which happens to be higher than in January this year. I will get simplicity. Many of us will choose to live life differently, if we feel the rainfall of another world after the pandemic. Simplicity sounds good.
And with a more reliable scale than the Great British Pound I will see if inflation is burning the ISA up, though there is little I can do about it. I can’t earn enough to do anything about that hazard, and there’s an argument that it would be a misallocation of my healthspan. I thank DIYInvestor for the recommendation of Alan Watts’s book, written before I was born.
The tank of human capital is almost empty, and I would rather enjoy the skills I do have to make a little money, that try and flog a dead horse to shore up an ancient fear I heard many years ago. If hyperinflation comes, then I will go down with it.
- My mother twisted his arm to drop that, because she feared every reader would translate that ‘not a team player’. ↩
- I can read tripe easily. I can read Lee Child, because a) the library carries it, and with a bit of craftiness I can munge these ebooks to get ’em onto a Kindle. I wouldn’t pay for that sort of dross, but it’s fun. I was able to read DxGF’s chick-lit and get some insight into a different psyche, although I confess that it did start to drift into sameyness after the first 20 books. I have read some real literature but most of the time I stall. At least Dune makes the grade, and I have read To Kill a Mockingbird, Sherlock Holmes, Animal Farm, Tess of the d’Urbervilles, Catch 22 – sort of, The Grapes of Wrath, and the Secret Garden. Oh and The Wind in the Willows, which might have been OK but I detest because it is the source of the British bad attitude towards the noble mustelids the stoat and the weasel, though a long tradition of gamekeeping toffs blowing way grouse also play a walk-on part. Other Europeans have a much better attitude – the Swiss for instance, cherish their mustelids. And do something about it. Nevertheless, nine out of 100 shows the English Literature fail observed the problem accurately. The ermine has no literary sense ;) ↩
- I could hold this blessedly innocent view because I had little early-years injury. I had little data to go on. ↩
- I loathe FB with a vengeance, but it is a necessary evil to connect with some people, particularly now. Used in a single separate browser instance, FBP to can ads ↩
- Back in the day work conferences were telephone audio conferences, not Zoom videoconferencing. You could diddle away unwatched on your computer doing something else, like searching for inspiration to carry on. At least you could use the time for something useful. ↩
- See David Graeber’s original article for the definition of a bullshit job or the longer-form book exposition ↩
- The metric of a bullshit job is the amount of bullshit delivered, perhaps. And that is what performance management is, a piece of creative writing in management speak of how much bullshit has been delviered. It needs to be SMART bullshit, of course, and therein lies the rub. Because nobody needs it, the value of bullshit is inherently subjective, which makes it a bear to actually get it specific and measurable. ↩
- While according to Monevator’s chart £1000 pa is worth roughly £22k of capital, that’s not enough to shift the needle on the dial as far as fighting future inflation in 10,20 years. It’s a modest percentage of the ISA capital I have, and I would need to work every year to keep that up. ↩
- Although this goes against currently accepted knowledge, there is some support for their fears. The school system was not as impaired then as it is now for able pupils, although perhaps it teaches the average better – 1960s schools favoured academic learning and threw everyone else under the bus. To be good at school you therefore needed to hit the ground running, a delay in language learning would slow the early years. I was able to read English before starting school, even now I read much faster than most people. Even if currently accepted knowledge is correct, they were not to know. ↩
- You can get the lowdown in the book When Money Dies ↩