Where Is The Road
Introduction - happy Labor Day
A read quoted a Chinese tweet (weibo). There are so many interesting comments.
On May 1st the Labor day, Hu said: ####
Happy Labor Day.
Laborers should feel happy with their labor.
Don’t be a Neet, don’t keep thinking how to make money from the stock market, being concerned about how to be financially free.
Happiness
Below is how I think about happiness:
A hopeful life is a happy life.
What is a “hopeful life?”
It is a life that is going upward.
Happiness isn’t usually proportional to the amount of wealth, but a life going upward is better than a life going downward.
Fuyi, Qing Dynasty’s last emperor lived in the Imperial Palace since he was 3. Then he was kicked out at 19 years old. When he returned to the Imperial Palace at 51, he had to buy a ticket to get in.
His life in general was very sad, although he used to be extremely rich.
How to have a life that is going upward?
Have your abilities greater than your desires.
Desires are what you expect yourself to do. Abilities are what you actually can do.
If you can reach your goals and expectations, one by one, you can feel a fulfilled, happy life.
At the same time, I know lots of people are dreaming of some sort of windfall. For instance, they hope they can win the lottery.
If I say this is not real happiness, everyone will criticize me like they do to HU.
But we can talk about windfall.
If a family’s entire asset is just a house, one day the family suddenly gets a BMW. It is obvious that the family will feel super happy. It may even last for a few days or a month. If several months later, the family gets another BMW from the lottery, they will be super happy again, but less happy than last time.
What if a few months later they win a BMW again, and again in a few months…
They will sure feel happy every single time, but less and less happy over time.
What if suddenly they stop winning the lottery, for an entire year. What do you think the family will feel?
They will very likely get super upset. It is interesting that we can be upset with things that we do not have.
Because happiness depends on expectation, not the reality.
People feel happy going upward because their expectations are constantly fulfilled; people feel unhappy going downward because reality often doesn’t meet their expectations.
Waiting for the rabbit
There is a famous story in China called “waiting for the rabbit” (similar to USA’s “who moved my cheese”).
One day a farmer saw a rabbit die under a tree. He was so happy because farmers back then didn’t often get to eat meat.
But this rabbit broke his patterns, broke his expectations in life. Hence, the farmer waited for dead rabbits every day until he starved to death.
The lesson of this story is not to glorify labor and defy speculation. It is about expectation management.
If the farmer didn’t wait for the rabbits, instead he set 100 traps and checked his traps every day. With 100 traps, the chance of getting at least a rabbit was significantly higher then he will rarely starve.
In addition, If the farmer still kept up with his farming work and checked his traps at the end of the day, then he could harvest both the crops and meat.
This is called hedging. If your crops don’t do well, you could get by with rabbits; if your traps don’t do well, you can get by with crops.
What else can he do? He can ask his wife to open a restaurant selling fried rabbit rice with house-made rice alcohol.
This is called business.
There are still more options.
He can farm for people in the cities. People can order him to cultivate specific crops then have him mail the finished products to the cities.
Similarly, he can stream catching rabbits. Previously he could only feed a person with one rabbit, but now he can serve so many viewers’ curiosities from streaming.
All those ideas are still labor, but labor with much higher expected returns.
Only the dumb farmers would starve to death from waiting for windfall rabbits because they refused to work and only spent their days fantasizing.
If we look back at Hu’s tweet. He was trying to tell you: stop THINKING to make money from the stock market. If you keep THINKING making money, it is the same as waiting for a new dead rabbit. Your expectation management was malfunctioning.
Hu’s point was to feed yourself from your own labor. The focus was the labor.
Everyone’s value of labor is different. If you are the farmer who successfully implemented the previous business ideas, you can make the big bucks.
You can still live a decent life if you manage to sell your excess crops and rabbits to others, like starting a restaurant. If you can think of using 100 traps to hedge and reduce uncertainty, you are already way ahead of other farmers.
If you can’t even do that, you can just focus on raising your crops. It is still better than starving to death waiting for the dead rabbit.
Zizhi - understanding oneself
If one can zizhi (raw translation is “understanding oneself”), he can build his own income system.
And the people who wait for dead rabbits is far from “zizhi”
“zizhi” is much harder than “hedging rabbits.” If someone doesn’t even know the latter, how can he do the former?
Similarly, THINKING making money from the stock market, and making money from the stock market are two different things.
The former only sees the imminent expectation, the latter often builds a system.
Let me give you two sets of data: 100%, 0, -50%, 100%, that is 2x return. 19%, 19%, 19%, 19%, this is also 2x return.
But both vary a lot in quality. The former has a large variance and is likely just pure speculation. The latter has very little variance, it is growing steadily.
You can see Warren Buffet’s 60 year’s return curve. It has been growing with very little variance.
It is difficult to get rich, it is even much harder to get richer and richer consistently.
Zizu: be satisfied with what you have
How can you be happy if you can’t achieve “zizhi”?
Be satisfied with what you have.
People don’t have to reach “zizhi”, but they should at least be satisfied with what they have.
I gave up my professional career in Oct 2014. At the beginning of 2015 I had a meal with my company’s new Chairman of the Board. He was only 3 years older than me.
He attributed his achievement to his hard work and luck. After he graduated from one of the top schools, he joined a small company to bet on its future. The company later went public then became a big corp. He transitioned from a programmer to a manager, manager to a director, director to a higher-up.
He was a little bit emotional during our conversation. He said, “if my life can move forward one more step, maybe I could become a capitalist, otherwise this is already the peak but also the end of my professional career.”
What is his struggle? He hit a bottleneck: he doesn’t know how to get to the next level.
Thinking back now, I think I am very lucky, at least luckier than he was.
I achieve what he struggles to achieve. I successfully transitioned to become an investor and have been surviving in the capital market. Today my capital is 11x compared to when I ate with him.
In These 5 years I have passed countless hills, but what really excites me is that I can see more hills ahead.
Life can be a torture when you don’t see the roads forward; but when you do, you can enjoy your progress.
Thus, I think a hopeful life is a happy life. Laborers can still take pride in their labor.
If you have to compare your dad with Bill Gates or if you have to compare your achievements with Warren Buffet, your happiness is doomed.
Looking back, I have seen so many technicians who are stuck transitioning to management, so employees are stuck transitioning to investors, so many investors who have lost all their capital…
Being alive is already a kind of luck; being able to work is already a kind of happiness.
When you conquer a hill, don’t mind that no one else is waiting for you.
When you conquer a hill, there are more hills ahead.