September 04 2016

Law, justice, the pursuit of public power, they are just not for me. I would much rather remain changeable, anonymous, and free. Finance I thought the study of finance could lead to a quiet, anonymous life of living off the spoils of market-beating investment, I was wrong. From what I have seen, all the risk-free gains belong to controlling insiders. The choice between Entrepreneur, Executive and Investor is easy. As an Executive, I can live off the wealth of others, earn risk-free returns on my time, and focus on amplifying these returns by seeking power, control, entrenchment, and opportunities to self-serve. Chance, not talent, plays the critical role in the Executive's success; the surest way to fail is to forget this truth and succumb to the urge of becoming an Entrepreneur or Investor. Lifestyle - Entrepreneur - high risk, single investment, bleeds life - Executive - low risk, concentrated investment, power and control - Investor - medium risk, diversified investments, passive Behavioural - goal based investing - first immunise (match assets with liabilities), then worry about upside - life cycle investing - wealth is net worth minus future liabilities, if not wealthy then conservative at all ages - until solve house, children, don't invest (not even in the S&P 500) Liquidity - liquidity, flexibility and control are extremely valuable, we all change our minds all of the time - many good things in life depend on moment-notice liquidity - but counter-balance with checks on impulse committing, only proceed if truly risk-free and maintains liquidity Asset Allocation - most investments do not have perfect correlation in their returns - adding new investments to a portfolio reduces the overall volatility of returns - buy S&P 500 and forget about it Corporate Governance - moral hazard - insufficient effort, empire building, entrenchment, self-dealing - incentives - explicit - salary, bonus, benefits - incentives - implicit - power, monitoring, debt restraints Accounting Accounting is not about bean-counting, it is about power, it can be used to clarify or obfuscate depending what the circumstance requires. The bean-counter is unassailable behind the veil of due industry practice. Corporate Structure - power structure - business model - my role Management Accounting - cashflow - categorize - month to month Financial Accounting - maintain cashflow clarity - write-off non-material accounts - defer minimally, for reporting and tax only