desperate for change

I have been reading some books about trading, especially on options. I think that I have a fair understanding on why it is hard to make money with options. Not only do you have to be correct about picking which stock will go up, your gains have to overcome the cost premium of the option itself.

(If you don’t understand options or trading, I’ll point you to the usual source of knowledge and wisdom.)

There are different ways to participate in the market. Heck, even with regular stock purchasing, you can invest for the long-term, or you can day-trade the trends. And yes, there is less margin for errors with the day trading: you could be down after coming back from your coffee break if you are trading a stock you don’t know well.

The hard thing about trading is that you could be totally be doing the “right” thing and still come out with less money.

I came across this article about yet another Web 2.0 startup. Of course, with a catchy title like “More bootstrappy this time,” you just can’t help but want to drink whatever they are drinking.

8coupons fits my criteria of “dull, boring but useful” that I suggested would have a decent chance at startup success. Perhaps I should be more clear about the “dull, boring” part – I think that when you have a product that is too exotic, then the sales process is more involved. Just think about selling a candy bar vs selling a wedding cake. Margins are also higher on the more exotic items. It is really a tradeoff of high margin/low volumes vs. low margin/high volumes. The bootstrappy nature of web startups would make me lean towards the dull and boring, lower margin-higher volumes.

The other thing that caught my eye was this:

“We don’t go out anymore,” Yuan said. “For the past two years, all we do is work.”

Considering that Yuan himself is also working full time as a programming in his day job, this conjures up the image of the last generation of immigrants, who worked long hours to make ends meet.

I wonder if I would be willing to leave my current level of comfort (and laziness) to work as hard as they are. You can’t help but admire their scrappy fight for a piece of the online pie.

Boots image used under Creative Commons license from:
http://flickr.com/photos/liftarn/1447521121/

For those of you who keep track, the next Lotto 6/49 jackpot is $35M dollars. Tax free Canadian dollars for those of you who care. The last two draws were $32M and $30M.

When it was $30M two draws ago, I bought a ticket on a whim. I jokingly tell people that it was my retirement plan.

The fact of the matter is, I let my desperation get the better of me. Sure, it was only $2 but it is a matter of principle. Intellectually, I know the mathematics of the odds and return on investment. I also know that there isn’t any different ways for me to pick the numbers to significantly increase my odds.

Nothing gave me more clarity than checking my numbers and seeing that I’m not a winner. Geeze! What a freaking waste of time, energy and $2.

I remembered a saying that I used to go by: I make my own luck with my own blood, sweat and tears. It is good to be reminded of that once in a while.

Image used under Creative Commons license. http://flickr.com/photos/stuseeger/203484387/ 

I have one fanatic reader that has been giving suggestions to me about how I can make my posts more interesting. One suggestion in particular is that I should let my audience get to know me better through my writings.

I think that I am usually reserved and private so the idea of putting myself out there is not an easy one to embrace. Here goes anyways – five ideas that I have been thinking about recently:

1. Startups – Instead of trying to do something original and wacky, try doing something that everyone will use. Specifically, I should think about dull, boring but useful applications. The market is big enough to support Yet Another Version of whatever you are doing. Just look at the success of 37signals – their products are the epitome of dull, boring but useful. (Don’t get me started about how Ruby on Rails makes everything sexier.)
2. Options – I remember looking at options trading about 5 years ago but then decided against it at the time. My rational at the time was that there didn’t seem like there was enough trading volume or interest and there was a pretty large spread. However, things seem to have picked up enough to warrant another look.
3. Trading – I am currently reading My Life as a Quant by Emanuel Derman. A pretty geeky read but quite interesting. One of the things that he likes to write about is the difference between the traders and the quants (quantitative analysts). Traders has all these tools to help them with the decisions, but ultimately it takes a lot of guts to pull the trigger to actually make the correct trade.
4. Career – The other recurring theme of My Life as a Quant is the idea of an evolving career. He started out as a physicist, then moved briefly into a programmer role in the C and UNIX heydays, and then finally as an analyst on Wall Street. While the decisions for the transitions were not necessarily deliberate plans, sometimes fate whispers things in your ear to guide you to where you should go.
5. Time Management – An exercise that I once did was to analyze where the 24 hours of a day go. I probably could have skipped watching 1.5 hours of TV without drastically affecting my quality of life (Futurama, Pinky and the Brain, Naruto). Then again, you need to have a bit of R&R now and then.

I am not sure where I really am at these days. I sure wish that fate would whisper just a little louder for me.