The Dismal Future of the Australian Economy

gold price vs asx200 27 august 2015
GOLD vs the ASX200 (Commsec)

The recent volatility in stock markets has gotten me worried. Everyone keeps telling me to relax because “economic fundamentals are sound,” but when I ask them to explain how this is true, it’s revealed that they don’t really know what they’re talking about. It seems that most people just hope for the best and rationalize away bad news.

The Chinese stock market is certainly wobbly. Some say the Chinese economy is very healthy. After all, they have low debt and a massive foreign exchange reserve. They are the biggest lender nation in the world with the USA the biggest creditor nation. However, we don’t really know much about the true size of China’s debt because there is significant activity in the underground economy that is not transparent, and I’m not too confident in official figures provided by the Chinese government. Of course, China has been manufacturing products from t-shirts to smartphones, but the government has in recent years been intervening in the economy to prop up the stock and property markets. It’s uncertain whether these distortions can be held together by the government or whether the market will eventually strike back.

America has resorted to printing money, which has resulted in surges in the stock and bond markets. However, unemployment is still high and wage growth is low. Printing money doesn’t seem to have done anything other than make the holders of stocks and bonds wealthy (these are mostly wealthy people anyway).

In Australia, our economy used to be dominated by two sectors: the banks and the miners. The miners dug resources from the ground and shipped them to China. China makes goods and ships them to US consumer who buys these goods.

But the American consumer (or consumers from any other developed country) is not buying as much as they did before the GFC. This means China is slowing down, the price of resources is dropping, and the mining sector in Australia is getting crushed. We only have the banks left, and how do they make money? The balance sheets of Australian banks is mostly in loans to consumers who buy real estate. Real estate prices have been going up thanks to profits from mining. In other words, banks do well because house prices have been sustained by profits from the resources sector. Now that mining is dead, what will sustain us? Where are our strong fundamentals? House prices only go up with people buy houses, but to buy houses you need to make money in the first place. You can’t make money from houses without putting money into it in the first place.

Many who have bought stocks have made great wealth from quantitative easing, but now that tears are emerging in a bubbling world economy held together by printed money, it’s time to look at investing in gold.

Gold tends to shoot up significantly when stocks tumble, and when stocks go down, gold tends to go sideways or go up anyway, so there doesn’t seem to be any downside to investing in gold.

Personally, I will be buying this shiny metal from now on.

Protecting Yourself From GFC 2

I’ve been very lucky in that I started working full-time in 2009, which is right when the GFC hit. When I started working full-time, I started saving up about $50k per year. I was able to do this because I lived with my parents and didn’t have too much to spend on other than internet and food, so I plowed the money into shares, ETFs, and mutual funds. Luckily for me, the stock market recovered heavily after GFC when central banks around the world decided to print money to prop up stock markets.

Recently, I have become concerned about a potential GFC 2, so lately I’ve been reading books about technical analysis in an attempt to try to figure out when to sell before a crash.

Below is a graph of the ASX200 for the past year with bollinger bands overlaid. Notice how if you sold when the index hits the bottom band and bought when the index hits the top band, you’d capture all the gains and avoid all the losses.

Bollinger bands on the ASX200 August 2015 (source: Yahoo7 Finance)
Bollinger bands on the ASX200 August 2015 (source: Yahoo7 Finance)

A problem I have is that a lot of the assets I have are illiquid. Shares are diversified and selling each one would be time consuming. Real estate is incredibly illiquid, and I don’t have to explain why. Taking money out from mutual funds requires you to fill in various forms and wait many weeks. Furthermore, selling assets may have unwanted tax implications. I’ve been a believer in buy and hold for a long time, but I am starting to have my doubts.

Rather than bother with selling assets, a better idea is to use leveraged inverse ETFs. One that has been recently issued on the ASX is the Betashares Australian Equity Strong Bear Hedge Fund (ASX: BBOZ). (Note that this is supposedly not technically an ETF.) How does this fund work? As the website says, “A 1% fall in the Australian share market on a given day can be expected to deliver a 2.0% to 2.75% increase in the value of the Fund (and vice versa).”

If GFC 2 hits again, rather than watch half my wealth disappear, I can protect a portion of it by buying a large amount of BBOZ. The gains in this BBOZ will compensate for any losses. Obviously the more cash I can save up, the more BBOZ I can buy and the more protected I will be. Furthermore, buying at the right time is essential. The bollinger band patterns on the ASX200 are interesting, but I hope to study the markets further to see if I can find any clues as to when GFC2 will hit.

Working with a Stern Manager

My manager is inundated with work. There are times when he curses or swears at his computer. The stress must be getting to him. I am concerned because there are times when I try to talk to him but he tells me plainly that he is too busy and that I should come back later to talk to him. I apologise and get back to my desk.

Work is still dreary and boring. My manager is quite a stern man. I am, however, very loyal to him because he hired me, promoted me, and has made significant attempts to try to develop my skills. His sternness is just his personality. He is not the sort of person who naturally smiles a lot. He is just like me, so I understand him well.

It’s difficult working with a stern manager. There are other colleagues at work who have managers who are fun and easy-going, and I envy them. Throughout my career, I’ve work under many different managers, and I am used to working with all sorts of different personalities, so I’m not too fussed. I’ve worked under some very difficult managers before.

There are times when I hate my job immensely. There is just a dead and dreary feeling I get at work, like I wish I was somewhere else. I sometimes imagine I’m on a tropical island, lying on a deckchair with a laptop. I am working online. I am drinking cool and refreshing coconut juice while working under the sun. I can hear the waves of the beach nearby.

This is a dream, but working through a cold winter makes me dream of becoming a location independent entrepreneur (also known as a digital nomad). There is a lot of stuff on the internet about digital nomadism. Believe me, for a 9-to-5er who is sick of his job, digital nomadism is career porn.

So why don’t I quit? I’m sure I don’t get paid as much as doctors or investment bankers, but for what I do, I get paid quite a fair amount. If I move to another job, I feel I will either work much harder (and be stressed out) or get paid less. I therefore have it good, but the work is not really rewarding and I feel depressed often. The people I work with are also annoying. I suppose it’s not really my job that I hate. I just hate working.

I have also travelled to developing countries, and when I see poverty up close and in person, I really feel blessed because no matter how bad I feel, when I think about it I have it quite good. When I compare myself to people in developing countries, I am happy with myself, but of course when I compare myself to some of my colleagues, things don’t look so good. Some of my colleagues have done so much better than me, and maybe I feel a bit of envy, shame, or anxiety. The stigma is there. I try not to make deep friendships at work for this reason. I feel like I want to hide myself, to distance myself from everyone so that at the end of the day I just do the work I’m told to do and that is that. I am like a machine who goes to work to just do what I need to do as dispassionately as possible, and if there is any emotional void then I can look for ways to fill it outside of work.

Dragging Myself to Work on a Cold Day

It was hard for me to wake up today because it was so cold. I wanted to press the snooze button over and over again.

Work is a bit relaxing because my manager is on holiday, but there is still work to do because I am managed by a senior officer. Whenever I am at work, I always feel like other people look down upon me for not being promoted fast enough. People within my team don’t ever talk about this, but people outside my team always talk about it. I find that strange. There is one guy at work who told me that I needed to get out of my team and go elsewhere because I was not being paid enough where I was. He has been in the organisation for the same amount of time I have been and is on the same level as me. I don’t know why he is such a snob to me.

Anyway, I must say I’m used to status anxiety at work, but it’s something that always bothers me. I am only human.

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I bumped into a girl I once had a crush on at the train station. We chatted for a bit, but she had to get back to her work. She doesn’t work with me. When I got back to work, I messaged her and tried to chat with her, but it didn’t really go anywhere. I could kind of tell she wasn’t into me, so I stopped chatting. I sort of did the same thing to another girl I remembered. We used to hang out often but haven’t seen each other in months. I emailed her. We exchanged more emails. She told me she got braces. I told her we should catch up, but she told me she was busy that we had to catch up another time. I wasn’t sure if she was trying to push me away.

I don’t know. I suppose now that I’m single again and I’m back in my old boring routine, that familiar hunger for female attention is back. The previous girl I dated told me, after we broke up, that I was unstable, that I don’t know what I wanted. Maybe she’s right. I hunger for female intimacy, but when I get it I suddenly fear commitment. Is it possible to have female intimacy without the commitment?

After work today I went to the gym. I did my standard workout but at the end I went on the chest press machine and lifted 100kg until my arms were hurting. Afterwards I had a protein shake.

On the train ride home, I continued reading an ebook called 12 Weeks in Thailand. I enjoyed the sample first chapter so much that I purchased the book outright on Amazon and began reading on the train. The book is about a wage slave earning a salary in America who decides to quit and live in Thailand. In Thailand he becomes a scuba instructor, a Muay Thai fighter, and an online entrepreneur. He enjoys a brilliant lifestyle in Thailand (living in luxury) for a low cost.

Escape!

This is just the dream scenario for me. I hate my job. I hate being a wage slave. I hate being confined in a building with people I hate. I want to be free to do my own thing. I want to be free to travel. I want to escape. When a group of friends get stale, I want the freedom to just fly out and start again from the ground up somewhere else. I know I will need to slave away a little longer at my current job so I can save up enough, but I am almost there.

Am I Misanthrophic?

I hate people. I am a misanthrope. There are times I feel lonely, and when people keep telling me how important it is to have friends and companionship, I give in and make an effort to make friends. When at work, I’d build relationships because everyone knows it’s important to network.

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But inevitably when I try to integrate myself into the world, I am so repulsed by how vulgar people are that I would quickly isolate myself again. I won’t make contact with my friends ever again, and if they invite me over, I’d reject a few times just to make it clear that I don’t want their friendship.

And I’d be lonely again, but it’s a comforting loneliness. When I think of how bad people are, it makes me thankful that I am isolated.

Of course, if you isolated yourself completely, you’d need to quit work, and if you have bills to pay then you’re out of luck because you have to work to make money. Work is a necessary evil.

Luckily, I have a job, and the job is not too bad. At work, I pretty much keep to myself and don’t get too involved in anything. I try not to make friends with anyone at work. I understand from experience that deep friendship at work can have bad outcomes.

I don’t mind working at the moment. I will continue to work, I will continue to save up, and I will see how long I can last in this organisation before they kick me out.

We live in a crazy world filled with evil people, and it’s important for everyone to have the ability to isolate himself from the world and live like a hermit if he wishes to. Sometimes you feel so drained by humanity that you absolutely must check out and live by yourself. This is what I plan to do. As I said many times already, I think I can currently live off interest and dividends, but only if I live in a country like Thailand, so I will continue to work and save and to accumulate recreational leave, and when thing get really painful for me, when I cannot take the world, then I will take a very long holiday, maybe two to four months off. I just want to see if I can live off interest in another country all by myself. Only then will I know that I can really be independent.

Freedom and Being Yourself

I’m still having my moments at work when I feel like everyone there ignores me. But I remind myself that this is not too bad. It is preferable to someone at work bugging me all the time. I also feel as if I am settling at work. There is no sense that I will be promoted. I don’t think I have a reputation for being ambitious. Everyone tells me (including my manager) that I speak slowly and quietly. This communication style is not what is expected from leaders.

There are many ways I can respond to this criticism. I can complain about it, which will get me nowhere, or I can keep trying to work hard and improve myself. Of course I will go with the latter. When I speak to some people, I get the feeling they’re trying to make me feel inadequate because I haven’t earned a certain amount by a certain time. I don’t want to fall into the trap of telling them that I have settled because any confirmation of a lack of ambition will destroy my career, so I tell them I continue to work hard and improve myself. It’s all I can do. I will continue to work hard. Whatever my employer pays me is whatever my employer pays me. I don’t even need much. I’ve been working for about six years. In that time I haven’t gotten married or gotten a mortgage or gotten children. I have negligible debt. I’ve lived with my parents and, as a result, have been saving up about $50k per year. Most of this money is invested in the stock market, which has boomed thanks to central bank expansionary monetary policy. As Mike Cernovich would say, “I have enough. I am enough.” There’s no reason to stress about anything. It doesn’t matter if my employer fires me because I can live off interest and dividends. Cheap accommodation is easy to find on Airbnb, and a vegan diet can be very cheap. Freedom is not expensive. Accommodation costs about $500 a month, and food costs about the same, so $1000 a month is the bare minimum you need to keep yourself alive, and if you assume your investments earn you 5 percent, you’d need $240k to produce that amount, which means you’d need to work for roughly five years assuming you can save $50k per year.

I’ve been talking about the concept of freedom for a while with many people. Yesterday when I had lunch with a friend, he was warning me against posting things on Facebook that may destroy my career. He told me about news articles about employees posting negative things about their employers and then getting fired. I told my friend that I have tried to be careful in the past about making sure others had good opinions about me. I always tried to appease everyone: my friends, my family, and my employer. It was tiring, and because everyone wants different things, you find yourself torn between different views. Now I do what I want and if other people don’t like it then they can get stuffed. My friend seemed to laugh it off.

There is a girl in my life again, and I’ve been chatting on Facebook with her quite a bit lately. I am not afraid to tell her my views on freedom. In fact, she asked me what my ultimate goal was is in life. There is a whole body of literature on the internet about how to get women to like you. It is called “game.” The internet will tell you that if a girl asks you what your goal is in life, she wants to know if you are an alpha male (or a winner as opposed to a loser) so I suppose the best answer is to tell her something that will suggest that you will be a successful man rather than a homeless bum.

The whole “game” literature, in my opinion, is a load of crap. The basic idea behind it is that women want certain things in a man (masculinity, strength, domination, etc) and you need to do everything you can to give this to her. You need to be successful, give her money, give her children, and so forth. To me, this sounds like you are appeasing her. What kind of an alpha male tries so hard to fit into the alpha male stereotype just so he can appease a woman? A real alpha male will do what the wants to do and if a woman doesn’t like it, to hell with her! Too many men out there try too hard to appease women. Just do what you want in life. If a girl comes to come along for the ride, you may, but she doesn’t want to, that’s fine.

I know it’s a cliche, but I do believe that it’s important to be yourself when you are dating. I am a bit of a strange person. People have told me to be careful of what I say because I will scare women off. But what is the alternative? If I lie and hide my true self, eventually she will find out. Isn’t it better to just get everyone out into the open right away? If she is not for you, then so be it. You will meet someone else (or not). But I cannot imagine anything worse than leading a girl on to believing you are someone you are not.

Wealth, Wellness, and Women

I’m feeling bummed. I’ve been dating a girl for a month or so and she has called it off. It was painful for me because I thought everything was going fine. I guess I’m just not good at reading into how well a relationship is going. These things happen. Lately I’ve been spending a lot of time by myself, usually in my car where I would listen to various podcasts and think about my life. I do admit that every now and then I do visit prostitutes in brothels, and I pay $120 for half an hour. But after you have sex with many girls, you start to realise how empty it feels. I suppose it’s like eating. When you’re hungry, you need to eat, but once you feast on the same thing all the time, you get sick of it. And this I suppose is the distinction between sex and love. Love is the yearning you still have after you’ve had sex with so many women and still feel dissatisfied.

Something I’ve noticed about this blog is that it has lately turned very negative. I talk about myself a lot and speak as if I am seeking pity from others. This whole habit of self-pity or seeking pity from others is downright dangerous. It is beta male behaviour that I need to stop right now. I originally set up this blog in order to track my progress in becoming more of an alpha male and to help other beta males out there become alpha males. Being a beta male is a disease.

I don’t want to fall into the trap of putting a ring on the first girl who shows me even a little bit of intimacy. It’s common, I hear, for a man to be so desperate to have a woman in his life that he marries any girl he can get his hands on only to realize years down the road that she is not suitable for him, and she divorces him and takes half his assets.

I feel like a mouse desperately hungry for cheese who, while searching for that delicious cheese, finds a fellow mouse chopped in half by the claws of a mouse trap. The dead mouse smells of rotting cheese.

Don’t let desperation lead to disaster.

Wealth, wellness, and women — three things all men want. We want money, we want to be healthy, and we wants girls. I can’t seem to get a girl, so perhaps I should focus on the other two.