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Counter Cyclical

4 min read

This is a story about being a contrarian...


I remember sitting down with a mortgage broker in 2007, and he said "just focus on the teaser rate, don't worry about the interest rate after the initial 2 year discount. When your 2 years is up, we'll get you another great deal!". I said to this guy "you do realise I work with Credit Default Swaps, don't you?". Naturally, I ignored his advice and went for a deal that I could afford if there was a credit crunch.

I didn't even want to buy a house anyway. I wanted to put all my money into gold, in 2005/6, and I had opened an account at a bullion vault and bought a small amount... at $550 a troy ounce. The dollar was also really weak so it was a cheap buy.

I thought the housing market looked massively dodgy and the amount of money I saw flying around at JPMorgan, in the credit markets, was ridiculous. Clearly, the bubble was about to burst and a store of wealth in a scarce commodity looked like the best bet. There were plenty of dumbasses around though.

In Cambridge in 2011, I read the original paper on Bitcoin. I thought it looked a damnsight more interesting than my startup. By the end of that year, I had started buying Bitcoins. I bought hundreds.

By the spring of 2012, I wanted to pump all of my wealth into Bitcoin. I was buying Bitcoins at $5 a pop. I was certain that there were big capital gains to be made in the emerging Cryptocurrency. Again, dumbassses didn't see the potential, but even I frittered away those first Bitcoins that I bought, rather than keeping them as an investment. Unless I was going to make a sizeable bet I wasn't interested.

Come the summer of 2013 I was running out of money. My solution: invest in Bitcoin miners and buy bitcoins at $100. I borrowed every penny I could lay my hands on and sank it all into Bitcoin. I offered to cut friends and family in on the potential rewards. Two friends let me manage an investment for them. My family wouldn't give me a cent, even to help me keep a roof over my head.

An idiot - my father - called me "lucky" when I sold my Bitcoins for well over 1,000% return, later that year. I sold my bitcoin miners for a profit. I made money for my friends.

At some point, you've been "lucky" so many times that it's statistically improbable that it's luck, and in actual fact, all the analysis and reading, and time spent thinking about the macroeconomic environment, somehow seems to beat "luck".

If I'd taken the advice of the idiots, I'd be working in a factory in the provinces for minimum wage, or I'd be dead, although the two things sounds pretty much the same to me. Is it "luck" that means I'm not? Well, I'm not arrogant enough to believe that it was smart choices or hard work that mean I am where I am. I know that I'm "lucky" to be alive, to have functioning kidneys, to have enough brain cells left to not be left as a vegetable.

How do you unpick luck from your story?

There's a snobbery that's coming across, and perhaps you even think I imagine myself as some kind of smarty pants. Well, it's pretty clear from this tale that I've taken some pretty dumb risks and done some staggeringly dumb stuff, lately.

I like to think of it as some kind of karma. If your family treat you like a worthless piece of shit and a know-nothing waste of space, then why shouldn't the wider world be a little kinder to you, and gift you the occasional lucky break when you really need one?

These are my fundamental rules for life:

  • Be nice to your kids
  • Invest in scarce commodities

That is all.