Working and investing at the same time ?

As an answer to someone who asked me why I do not go back to work on IT in order to have two sources of income I replied something like the following …

It comes down to this: time is a limited asset.

I think that in practical terms it’s extremely difficult to work in a fixed job and invest well simultaneously. To have good results investing on long periods of time you need to be fully focused on it. When I worked my results were very mediocre or worse than that because I had no time to learn and practice investing. Investing takes too much time to do it well. It’s a huge advantage to dedicate, whenever you like, 60 hours a week to it.

A benefit of working is when you have small amounts of money saved. Then working gives a lot of income in proportion to your savings. For example if you have 50K saved and have a 50K per year job then you make a lot with your work in relation to your savings.

But if you live with low costs or have one million saved then making 10% average a year on the stock market beats most works. So it all depends on how much money you have and how much you need to maintain yourself.

My problem with working is mainly that:

1) I mostly disliked working for clients or bosses. Even as an independent or with my own company.
2) Working took time away to find out what I really liked.
3) Once I had an idea of what I liked working took most of the time I had to concentrate on learning and getting better at it.

As I see it very few people with jobs do well investing on stocks. They basically lose their hard earned money on the market. Others save their whole life and when they start investing they are old and unprepared risking their life savings due to that.

I was not one of the few lucky ones that knew soon what he liked. If you are fortunate to know it, whatever it is, then it’s a sin not to be doing it already. And working for money on something you do not like takes a toll on you, if you value yourself and your time you should really ask yourself if it’s worth it. Think about what Warren Buffett said:

If you gave me the choice of being CEO of General Electric or IBM or General Motors, you name it, or delivering papers, I would deliver papers. I would. I enjoyed doing that. I can think about what I want to think. I don’t have to do anything I don’t want to do.

The ideal with investing or any job you really like is to start as soon as possible, seriously, full time and most importantly: really loving it. It’s hard to compete with someone who does what he loves. Keeping pace with someone passionate about his job is tough. Loving your professions will make you advance fast and do it the best you can. Chances are high that you become an expert at it. The sooner you start what you like the better for your well being, health, and happiness.

Cheers!
jrv

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About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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12 Responses to Working and investing at the same time ?

  1. Kainvest says:

    Bravo!

    Jrv, so you feel happier now than the old days in IT biz?

    How would you manage the risk in case of a market crash like 2008-09?
    I could image if one’s entire income depends on the investment gains, the fear of a bad year could put quite some stress on his mind.

    Personally I could not get over with that … maybe for the lack of confidence.

    But I agree with what you said – do what you love!

    • jrv says:

      Bad years will come, for sure. I try to manage it by being in solid companies, not using leverage and by holding cash on the side to deploy in such opportunities.

      I definitely feel happier since I’m only investing. The IT job was OK. But I enjoy life more now because I like what I do more.

      Worse case if I lose it all I can always get another job. At this moment I am making silver jewelry as a hobby. I could sell it and do that seriously if I needed to. It would be a nice job, better than others I’ve done.

      Cheers!
      jrv

      • Kainvest says:

        JRV, you work alone from home, right?

        Me too albeit I work for a company.

        After years in such state, how do you feel and deal with the “loneliness” ?

        • jrv says:

          Hi Kai,

          I didn’t know you worked from home ! My problem is mainly dealing with the kids (I have 3 very young ones). I’ve managed it by developing a concentration that lets me shut down all type external noises, specially the ones coming from kids. But most of all I am very fortunate that I have a wife that loves to take care of domestic tasks and lets me work quietly, I could not be more grateful for that.

          Cheers!
          jrv

  2. Georgi says:

    Hi JRV,

    I found you when I was researching on VXX and since then I read everything you write here. We have similar backgrounds and we have come to the same conclusions. Yes, if you work it is very difficult to succeed in investing. I know at least 20 examples of failure versus one guy who is a doctor and became a successful investor (Michael Burry) by the way these two words in this post will probably bring you a lot of traffic.
    I know a few people who left their jobs, just like you and became very successful in investing. An when I say investing I am absolutely aware of the meaning of the word and I don’t confuse it with speculation.

    Keep up with the good work.

    Cheers,
    Georgi

    • jrv says:

      Hi Georgi,

      I recall you are a software developer and were shorting leap Cisco leap puts when it approached 16. You’re since then in my Google+ investor’s circle. Glad and flattered to have you as a reader thanks !

      I’ve read about Michael Burry’s life and his relatively recent UCLA speech. It is is very interesting. His results are amazing and he is very flexible in the way he makes money, his sub-prime shorts prove it.

      Before he quit being a doctor he fell asleep during a surgery because of too much focus on investments. It shows how difficult it is to have two jobs.

      I’ve read Liars Poker from Michael Lewis, it was an excellent book. I have yet to read The Big Short, where he talks about Burry.

      Burry shut his very successful hedge fund and is now managing his own money. He will not earn commissions for managing other people’s money anymore but now he has the advantage that no one will be putting any pressure on him anymore. He’s in a very comfortable position :).

      Cheers and best wishes !
      jrv

    • Kainvest says:

      http://www.youtube.com/watch?v=1CLhqjOzoyE
      Dr. Michael J. Burry at UCLA Economics Commencement 2012

  3. Feurerball says:

    Interesting topic. I work full time (engineering) and invest on the side. I am doing decent with my investments and mostly beat the market. I could do better with full time investing but not that much better, I think. The pressure of being dependent on investment income might just destroy any advantage i might gan by spending more time on investments.
    Perhaps even more importantly, observing life from the inside in the corporate world has given my insight, how management thinks, makes decisions and a corporation works. I think this has made a different and more cynical investor than I would be, if I would just do investing full time.

    • jrv says:

      Hi Feurerball,

      Indeed only a minority invests full time well, even most professionals are said to under-perform the market.

      I have a friend who worked as a stock analyst and quit his job to fully invest and lost most of his money fast, he actually did much worse than when he was working. He got nervous and emotional under pressure and had more time to make bad decisions, he accelerated his losses :). To make the story short: he lost his money fast.

      So if you know yourself it might be wise to keep doing as you do. Specially if you are doing so fine.

      Another option that guarantees to do as well as the market is to buy market index funds. Some guys just buy a couple of hundreds on them every month and have no worries nor need to dedicate their little free time to it. Here is Warren Buffett’s advice to people who want to do well without any effort:

      “By periodically investing in an index fund, the know-nothing investor can actually outperform most investment professionals.”

      Cheers!
      jrv

  4. Cesc says:

    Geez, I just found out this post and love reading it.

    Once I read that what’s really difficult for most investors are the first 100k (first 100k are a bitch, sorry but that was the title), that makes sense, 10% over 100k = 10k, actually if you make 2% one day that’s 2k of unrealized gains, of course it works the opposite way.

    Take care, keep on writting.

    Cesc

  5. kirkomi says:

    Hell Jrv,

    I am a new reader of your blog. I also want to retire in a few years. I have $105,000 invested. Well, 49k cash and the rest is invested.

    I have one question. You might feel that it is too personal to answer on the blog – in which case you can send an email. How much money do you have invested now? I would like to make a calculation myself as to when to retire. Your figures might help me get to a target.

    Thanks for the blg. It is a very enlightenng read.

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