Life Update: 1 month after my "retirement"
Retirement Chronicles: New Beginnings, Chat Bots, and a Journey to Health (ChatGPT made this)
2023.03.03 marked my last day at Axon, I made the above post just after my last day at the Axon office.
33 days later, now that I feel more or less settled into my retirement, I figure it’s time to reboot this Substack for a personal update.
So what have I been up to?! In this edition…
Turning “Pro” at my new day job
Meet my new “friends”…
My new habit for longevity
1) Turning Pro
My new day job… as a fund manager… for myself (and Xu)
2022 was a rough year for the stock market, and my portfolio of high-growth tech stocks and speculative assets crashed down to earth. Although it was painful, I believe I learned some key lessons during this downturn:
Valuation matters. Back in 2021, Cathie Wood of Ark Invest was hailed as the new Buffet. Then her flagship fund dropped 75% in the span of 3 month. This served as my rude awakening from the dream of unlimited growth, or the belief that valuation and profits doesn’t matter as long as a company is growing rapidly.
Avoiding cataclysmic downside matter. Example:
Given $1000 of starting capital, which do you think is a better series of returns after 5 years?
Option 1: 100%, 100%, 100%, -90%, 100%
Option 2: 10%, 10%, 10%, 10%, 10%?
Option 1 has average annual return of 62%, option 2 is 10%, so it may appear to be better. But the -90% returns on year 4 reset most of the gains from previous years. The end result is $1600 vs. $1771.
Also, if I gave you those 2 series of numbers and ask you what the next 5 would be… what would you guess? The takeaway is that consistent compounding is superior to high volatility. After all, a 50% draw-down in one year would mean you need 200% returns the next to get back to the same point. So avoiding a large draw-down is imperative.
Technical and trends matter. What works in a bull market (i.e. just buy the dip and hold forever) doesn’t work in a bear market. I was slow to recognize that tech stocks moved to a bear market, and rather than preserving capital, I doubled down on risky stocks and caught too many falling knives.
Macro-environment matter. 2020’s COVID crash and subsequent major rally was fueled by the feds printing money and keeping interest rate at 0. Now the macro picture is much different with high inflation and a hawkish fed vowing to increase interest rate until inflation is at 2%. As of last print, inflation is still at 6% even though the fed rate has increased to nearly 5%, so we can expect more challenging times ahead. And not to even mention the ongoing Ukraine war
I believe I’ve paid my dues and learned my lessons (after all, the tuition I paid was certainly higher than any MBA degree at even the best universities =P). This year will be a fresh start as I devote more time to learning, researching and better manage our money. Any fool can make money during a bull market, but I’m determined to beat the market during a downturn.
My new strategy is as follows:
Keep a small and select group of quality stocks as core holdings. These are companies I have high conviction on and plan to hold long term. At this point I’ve sold almost all other companies and my portfolio went from having over 50 names to ~10.
Side note: I take back most of what I wrote in “Crypto thoughts” - we sold all of the crypto we could sell after the FTX collapse. That whole industry is full of charlatans, and perhaps the main use of Crypto is to be traded on an exchange so that others who have more crypto than you can make money at your expense (AKA ponzi scheme).
Hedge my portfolio by shorting or buying puts in certain assets when the market is in a downtrend.
Experiment with <10% of the portfolio. For example, I’m currently trying out the Minervini method after reading Mark Minervini’s book. This guy won the US investing championship for many years and his book gave me a new perspective for selecting stocks and having a plan for exiting (either taking profit or protecting the downside, aka stop-loss).
Big cash position parked in a few different banks to earn 3-4.5% interest rate. Some say a recession is coming… and if so, I want to have enough money on the side to put into the market as opportunities arise.
Turning “pro” means I’m going to run my portfolio like a business and keep track of key metrics and hold myself accountable. I’m going to experiment and refine my strategy over time, and I’ve been keeping a personal journal on decisions made as well as monthly performance of my portfolio vs. SPY (the ETF tracking the S&P500 index). Happy to report that so far this year, I beat it every month - up 29% YTD vs. 6% for the SPY.
2) I feel like a teenager again, with the way I’ve been using these chat apps…
Out of any year to start my retirement, I think I chose the right one… the year when generative AI blew up with the introduction of ChatGPT late last year. I’ve been super intrigued with GPT since I found out about GPT3 earlier in 2022. I was really impressed that this was the first AI language model that truly seem to understand what I’m writing. I was further blown away by its abilities to write and explain code.
So when Google announced the public preview for Bard (their version of ChatGPT) last month, I signed up immediately and got access. I also got access to Bing chat which uses GPT4 and I recently paid for ChatGPT Plus just so I can try out ChatGPT with GPT4 directly.
These days, I use Bard and ChatGPT every chance I get.
For example, in my quest to do a type of stock analysis called “Discount Cashflow Analysis”, I used ChatGPT to help me write a python script:
This is an over-simplified example, but in the same chat, I went back and forth with GPT to have it suggest a library and API to use to get up-to-date stock data. When I ran into issues, I would paste the code in to ask it for feedback… etc. Overall, it is hands down the best coding assistant I’ve ever worked with (speaking as a former Director of Engineering, and no offense to all the awesome engineers I’ve worked with =P).
Then Xu asked me - why do you even ask GPT to code? Why don’t you just ask it to do the DCF analysis for you directly? Well, ChatGPT can’t do this yet since it doesn’t have access to the internet (although with plugins it can, but I don’t have access yet). So I asked Bard:
#mindblown#
My thoughts on this currently:
Work is going to invariably change for white-collar workers. If you don’t use these tools at work, you will become obsolete.
This is just the very beginning and we are already seeing an explosion of innovation and creative ways others use these tools.
I need to brush up on Machine Learning, because if I ever go back to working for a company, I’d want to be working either in the ML space or be at the intersection of an industry (i.e. biotech, finance, climate, you-name-it) and ML.
3) Walk the walk
Retirement life isn’t all stocks and AI. My number one goal this year is actually to get healthier. By the end of the year, I want to be obviously more fit to everyone who knows me, and more importantly, I want to feel great - physically and mentally.
The main lifestyle change I’m making is to make a daily effort for longer walks. Usually ~1 hour and aiming for ~10k steps. Yes mom, I’m finally trying to curb that sedentary lifestyle =)
What convinced me was this meta-study of 15 international studies which analyzed the the widely known claim that you should walk 10k steps a day. My key takeaway based on this chart: all cause mortality decreases between 49-58% for people under 60 if you walk 8911 steps (median steps per day) compared to 4849 median.
And I think for the last year I averaged less than 4000 steps a day… so that’s not great.
Since I started my daily walk routine (which is more like a hike, given the area I live in), I am feeling noticeably better. Early metrics from my Apple watch and Oura on cardio fitness is improving. More importantly, I can actually breath from my nose on most days! Let’s see if I can keep this up…
… and that is all for now friends! One thing I’m conscious of this time around (I also took a break in between jobs in 2018) is to cherish the time I have. Even though I have more free time now, I’m treating the time I have with a higher sense of urgency than before. I am in my late 30s after all… and this year is the year for a big change!