Opportunities on the rise

To be frank, I expected 2019 to be a good year. I was hoping the POTUS to get to some kind of arrangement with everyone, even if this would only mean that people learn how to handle his very specific character. But as we can see, the situation is completely out of control.

We have a new military conflict brewing up. We see a trade fight developing on a previously completely unimaginable scale, with even the largest companies in the world being brought down to their knees. Huawei is about to be the first victim and might very well not survive this fight. But what happens if China puts a ban on Apple? Or Starbucks? Some companies will pay a hefty price for what is happening.

Investors panic and my main portfolio suffered. It is now down to a total result of -12,7 %. This does not include received dividend payments. If I include the received dividends then I am at -7,8 %. It’s not too bad yet, so should I limit my losses and sell off?

Staying the course

The clear, only and simple answer is “no”. I am not selling even one share. We had chaos before. We had conflicts before. And the stock market always came back better and stronger.

What I am doing now is standing on the sidelines. I collect dividends and wait patiently to see how things are going to unfold. Most importantly, I am closely observing other stocks and specifically the dividend kings and dividend aristocrats. Chances are that even these behemoths which pay and increase dividends for 25+ or even 50+ consecutive years might come down significantly and therefore create great buying opportunities.

Cost-averaging down and yielding dividends up

For those who are convinced that their stocks will survive, whatever happens, a stronger market correction is a great opportunity to add more shares of those companies to your portfolio. For one, if you add shares to an existing position at a lower price, your average purchasing price for the entire position will be reduced. This way you will be able to balance off the losses more quickly once the correction is over and markets start to rise again.

Another benefit is, that while you are lowering your average purchasing price, as long as the company doesn’t cut its dividend, your dividend yield will automatically go up and your dividends will increase due to higher share count.

Growing dividends is all I want as my target is to be able to retire early with nothing else but dividends to cover my expenses.

Conclusion: No panic

For an inexperienced investor, it might be difficult to keep calm while watching the portfolio shrinking. However, as we know the market is designed to transfer money from the active to the patient. At least that’s one of the teachings from Warren Buffett and no one knows it better than him. So let’s enjoy the show, stay the course and don’t be fooled. We will pass this one. And the next.

Disclosure: I am invested in Apple via stocks.

Thinking about inflation

Today is the 12th of May, which means that today is the last day of the 19th week of this year. This, in turn, means that we have only 33 weeks left until it’s New Year’s Eve again. Time is short.

I have fulfilled one of my targets for 2019 and took a break in-between jobs for a total of 6 weeks. Frankly, I could use another 2 weeks. I spent 3 weeks in Thailand relaxing in and working a little on our house in the beautiful north-east province of Isaarn. After that, we visited my parents in Poland for a week and spent another 2 weeks together in our main home in Berlin. Those 3 weeks in Europe just passed by like nothing.

It’s funny because every time I visit Europe I feel different about it. Last year I was feeling great and was actually really thinking about moving back to Berlin. The summer was nice and hot, people were smiling and my daughter had the best time with my parents. This year, while it all also felt good, I took another perspective. One thing I noticed was that the city is getting pretty expensive.

Inflation is just part of the deal

When I moved out of my parents’ place at the age of 21, I had a super tight budget and was only able to spend approx. 20 Euros a week. My rent was roughly 400 Euros a month, which was equal to my income from my civil-service job (instead of going to the army I was doing civil service and working in a kindergarten). While working there from 6 AM to 3 PM every day, I took on a 2nd job for 3 hours daily at some local office. It would pay me 6 Euros an hour, and cover my expenses for utilities, telephone and whatever was required to ensure I don’t end up on the street. Additionally, in the evening, I would give Karate-lessons to children once a week in my local dojo which paid me 20 Euros. This was the money that I used to buy food/groceries for me and my girlfriend at that time, as we moved in together. It was tough but do-able.

Today, it’s impossible to find a 70 sqm 2-bedroom roof-apartment anywhere in Berlin for the same price of 400 Euros. Prices have doubled and tripled. It would also be very hard to get through the week on 20 Euros, even if that 20 Euros would be only for myself.

We all know that things change and that prices go up, one way or another. It’s just how it is and part of the game. Going deeper into this topic one might argue that today we receive much better value, despite paying a higher price. Apartments are in better conditions, with central heating systems, clean drinking water from the tap and better-insulated buildings to protect us and reduce heating costs during winter. Computers got actually cheaper while offering a performance that we could only dream of 20 years ago. Food… well this one is probably arguable. I don’t think food got better over the years.

But still, we really need to think about it and what it means for our personal situation.

Future prospects

This all happened in less than 20 years. I am now 39 years old so chances are, that I got at least another 20 years ahead of me. Probably more. It could be another 40 years. Or even 60. Could prices double and triple again?

Well, yes they could. In fact, I am pretty sure they will.

That’s why it is so important that your savings grow at a similar or larger pace. We cannot rely on things remaining similar in pricing in 10, 20 or 30 years from now. What we think will be enough to live on today, may be very different from the reality in the future. That’s why keeping money on a savings account over long periods of time is probably not the right thing to do. This money is losing value day by day.

Investing in stocks that consistently grow dividends, on the other hand, seems like a much smarter way to go. Even if those increases are marginal, like 2 % or 3 % a year, it beats every savings account out there not only by percentage but more importantly by its long-term value.

Obviously, if those increases can go up to 7 % or 10 % or even more, then there is really not much to complain about. And, this is not the case only for some rare-super-stocks. It’s pretty common for many companies out there. Plenty of companies increase their payouts on an even much larger scale, like 15 % or 20 %!

It does also make sense for a few simple reasons. As prices go up, so do revenues and profits. If companies manage on top to improve their margins and grow market shares, the growth becomes exponential. As an investor, you are poised to participate in this process.

This is why investing is such a powerful tool to increase wealth and this is why in my opinion, everyone who plans for FIRE needs to be invested one way or another.

About 996 and Jack Ma

I got to admit it. I am a workaholic. Not only did I work the last two years in a job with a 6-day-workweek with 10-12 hours daily, I also had a side-gig writing articles for a financial magazine, I was exercising four times a week for two hours straight, I was working on this blog and I invested a lot of time in stock and market research. So, being active for 90-100 hours a week was pretty much “the ushe” for me.

What is 996

996 refers to a description of a work routine that is being predominently practiced in some Chinese companies. I can confirm that it’s also pretty common in Thailand, Japan and South Korea. It stands for working from 9 AM to 9 PM and this for 6 days a week.

This equals to 72 hours of work every week and it is a reality for many workers in China. We are not talking here about regular labour jobs like construction or the notoriously overworked hospitality sector, but mostly about employees of IT companies. Programmers, software engineers etc.

Working more than 40 hours a week is illegal in China. However, as in many asian countries, laws are often something more of a guideline and tend to be “flexible”.

Jack Ma calls 996 a blessing

There are plenty of smart people in this world, but Jack Ma is not only smart, but also very outspoken. I like to listen to his “teachings” as he has a very sharp mind. In most cases he chooses his words with caution but they always have an impact. To give it a more clear picture, he is like the Bruce Lee of business. Sharp, on point and hard to counter.

Surprisingly, he did not choose his words very wisely when it came to comment on the 996 debate. His remarks that working 996 is a blessing were not well received on social media, so he followed up with a post on his blog to explain it further:

“Any company should not, and cannot, force employees to keep a 996 work schedule. Alibaba has always advocated, living your life with gusto and being happy at work. But young people, themselves, must understand that happiness is a struggle! Not defending 996, but do pay tribute to the fighters!”

Well, I was curious how he actually REALLY said it and I found a full transcript of his blog on this topic. It may be a little long, but I think it’s worth a read so here you go:

About 996, this is a hot topic in China now, and many companies have this issue. I personally think that being able to do 996 is a huge blessing. Many companies and many people want 996 but have no chance.

If you are not 996 when you are young, when can you 996? You have no 996 in your life, do you think you are very proud? In this world, every one of us wants to succeed, we all want a better life, and we all want to be respected. I ask everyone, if you don’t work harder and longer time than others, how can you achieve the success you want?

To say nothing of 996, as of today, I definitely have been working more than 12×12. There are a lot of people in the world working 996. There are many people working 12 hours and 13 hours a day. There are many people who work harder than us, and who are smarter than us. Not all people who do 996 have this opportunity to really do something valuable, meaningful and able to have a sense of accomplishment.

So today China BAT (Baidu, Alibaba, Tencent) companies can be 996, I think it is the blessings of us all. If you think about people who don’t have a job, think about the people who may be closing the company tomorrow. Think about the people who don’t know where the company’s Revenue will be in the next quarter. Think about the people with programs that you have put a lot of efforts on but has no user at all… Compared with them, until today, I still feel that I am very lucky, I have not regretted 12×12, I have never changed my point in myself.

Many photos now reveal show that the standing position of Ma Yun (i.e. Jack Ma) was at a side in the past, and in Central position nowadays. I am already the President of the Student Union and the President of the Hangzhou Student Union at the University. You go to see those photos. When I was in that corner, people were brought out by me. I was their big brother. Why am I a big brother? Because I spend more time than them. In addition to the class exams, I spend more time working in the student union than anyone else. I learn how to serve others, learn how to build relationships between classmates, and let the students do a better job in school. Only if you pay a huge price, one day you will possibly be rewarded. If you don’t pay the price, you can’t have a return.

In another word, what kind of company is Alibaba? Alibaba “Let the world have no difficult business to do”. This is our mission. Our company is very hard. We have not deceived anyone. We have not told you that the company is very comfortable. Do you think that “making the world having no hard-to-do business” is to fool you? We are really doing this.

Today, we have so many resources, we have a huge mission, and hope that in the future, there will be no hard-to-do business in the world. Cannot you pay for it? You have to. So, we said that if you join Alibaba, you have to be prepared for 12 hours a day, otherwise why do you come to Alibaba? We don’t lack people who feel comfortable for 8 hours to work. Today if we have to recruit some people with 8 hours to work, sitting in a good office every day, the conditions are very good, the canteen is also good, and the sense of honor is also good, we can find many people like these on the street.

But what do we need? We ask you what do you want to do in this company? It is to change yourself, help others, and achieve a mission.

Alibaba also worked overtime in its early years, but what kind of overtime did we work? Overtime for learning, after our 8 hours of work, the most important night is the retrospect and study. What we did wrong today, what should be fixed, how should we learn from each other. Two hours and three hours outside of 8 hours are learning and upgrading, which was not working overtime.

I hope that the Alibaba people love the work you do. If you don’t love it, even if you are working 8 hours, you will detest the longtime work. If you love it, 12 hours is actually not too long.

If you are not happy for 8 hours of work, the thing you do has no meaning and you are not comfortable. You don’t know what to do for 8 hours, it doesn’t make sense, so even if you don’t 996, you don’t know what to do.

This is life. You have chosen a company that ranks first in China today. The first is to pay the price. There are at least 50 million companies in China. If you choose this company instead of others, this is certainly not the same. I went home at 1 o’clock yesterday. Why? My own choice of road, no complaints, no complaints, this is my choice. Everyone came to Alibaba, since you have chosen, instead of letting yourself suffer, it is better to be more comfortable with your 996. Your ten years work can compete with others’ 20 years. This is the case.

Joining Alibaba, what after all are we bringing to others, what is the return? This is what I have thought about most during this period.

I think that joining Alibaba is not for high wages, not because of stocks, not because we have a good working environment, not because of the annual bonus, not because of these things. These are very important. We all have parents and kids, have wives and children, and we must take care of them. If you can’t take good care of this family, give them a good life, a good education, and take care of your parents’ health, that is the wrong life. But what I mostly want to consider is that you have been in Alibaba for ten years, how do we turn you into a different person.

Change within a year, change within three years, you go back home, your parents find out that this child has changed, your wife find out how my husband has become ideal, has become full with ideas, has become focusing on work, your kid feels that his Mom and Dad are really different from others. This is the personal growth of the Alibaba people we hope. This growth is not how high the position is, but how you think about the problem, your attitude facing difficulties and your attitude towards life.

All those who joined Alibaba will not be the same after three years, and will be different after five years. The people after ten years in Alibaba will be trusted to go anywhere. We must definitely develop this skill, but within the ten years, if you want to realize it, you have to pay the price beyond ordinary people. Otherwise why are you being here? I have said this very thoroughly, it is a bit tough, but it makes sense. We don’t fool you guys, oh come, the conditions are very good, we don’t need to fool anyone now, we haven’t been fooling anyone either in the past, and we don’t need to fool anyone at all today.

I feel today that Alibaba has done great things. What we do can have real value to society, let the people buy better things and enjoy a better life.

Business is the greatest public welfare, creating jobs, creating taxes. Without commercial taxation, without economic development, where would be the high-speed rail, and where would be the highway? We have contributed to the progress of society. We have made everyone in Alibaba grow and we have created countless jobs.

Alibaba has a blessing, we people have solved our own food and clothing, have our own good income, our company does not have to worry too much about profit, we can also do something for others, this is a great blessing.

In fact, public welfare is to help yourself, and charity may be to help others. I myself am really proud of it. Many of us in Alibaba today, though a lot of people are just not visible, are all doing a lot of charity. I also strongly hope that all Alibaba people will participate in countless non-profit organizations throughout the Alibaba Group, or participate in Alibaba’s charitable foundation.

Many people just want to buy a car or buy a house for Mom and Dad. This is very important, but I think you should have this ideal, that is, after working in Alibaba for 10 years and 15 years, one day you can build your own charity fund. You can do it. Some things that you are willing to do can help your child to have more blessings and help you to have blessings. Isn’t it a good thing? Then it requires 996.

Source: https://medium.com/@evanliuchina/alibaba-jack-ma-having-a-996-job-is-a-huge-blessing-97b5037937a3

I added the source just in case. I didn’t translate it on my own. And as you noted, I have highlighted a few sentences which I consider important.

Is Ma right?

Well… I think he is. As my readers know, I do believe that the term “work-life-balance” is pretty useless and actually hindering people to develop and to find their full potential. This is not something that capitalists tend to sey. The quote of “finding a job you love to never work again” dates actually hundreds of years back and refers to exactly the same issue. Wishing for a work-life balance when looking for a job is already putting restraints on your dedication to your very own future.

This is even more true for those who wish to reach FIRE. Financial Independence. Retire Early.

If you really want to FIRE, you just got to put those extra hours and dedication in your work. Your ten years of work HAVE to equal 30 or 40 years of work of those who enjoy a work-life-balance. There is no way around it. How else would you think being able to pull it off?

Even I am promoting stock investing, it is by all means no magic bullet. You might get lucky with one or two companies, but to setup a sustainable portfolio you need to balance your risks. And even if you can cut down 10 or 20 years of work by investing in stocks, truth is that the sooner you want to retire, the harder you got to work for it.

Your career is your single, most important asset and it can be your strongest weapon to reach FIRE. Saving 20 Euros a month is better than nothing. 200 Euros a month is reasonable. 2000 Euros a month however will make a real difference. How can you pull it off if you don’t work harder and more than anyone else?

Having said that, I believe that Jack Ma should have put it exactly that way. He should emphasize (even if just to comply with the law) that 996 is a blessing for those who want to reach for the stars, but not a requirement to work at Alibaba. Not everyone is able to work 996, similarly, not everyone can reach FIRE. However, it’s a blessing if some companies can give you the opportunity to actually really do the hard work and to get where you want to go. I think if he would have said it that way, the outcry would be far less dramatic.