What Do You Value Most in Life?

Before I delve into my latest topic, just want to mention that I added some more absolute return managers to my last comment on the Quebec Absolute Return Fund. As I've stated repeatedly, Montreal has many excellent portfolio managers in both the long-only and absolute return space.

On Thursday, I hooked up again with Pierre Malo, my supervisor when I was working at PSP Investments who is now consulting and working at Jean Turmel's Perseus Fund. The last time we met up for lunch, we discussed process over performance. Pierre is one of the rare good guys I've met in finance. He had to let me go from PSP and I still love meeting up with him, which should tell you a lot. Once again, our conversation touched finance and life:

• Upon greeting me, Pierre told me I look good and told him I feel great, both physically and mentally. Going to gym helps but something about turning 40 last week which made me realize life is way too short to expend my mental and emotional capital on people who drag me down. I also realize that I'm too good with others because that's my nature, but if they don't reciprocate, then I'm wasting my time (one trader explained it to me like this: think about it as a trade where you're initially making money but then it goes against you. At one point, you got cut your losses or else you won't have any emotional capital left)
• We then ordered our food. Pierre ordered the tuna salad and I stuck with my salmon and asparagus. We ordered some white wine to wash it down -- lots of it! (It's fun letting loose, drinking it up once in a while, especially with a former boss who you got along with on a professional and more importantly, personal level)
• Corporate governance was a topic we talked a lot about today. According to Pierre, while shareholders are informed of corporate compensation, they can't vote on it. This means that whether you're a small investor or a large institutional investor, you can't influence compensation at large corporations. The board of directors vote on compensation and these boards are typically stuffed with former corporate hacks looking to repay favors.
• Pierre calls this the "agency problem," where there is a separation between the owners of a company and the managers. He rightly notes that a stock price can be going up for all sorts of reasons (like the sector is in favor) and it's ridiculous to vote in high compensation based on share price appreciation. "There is a huge element of luck involved".
• On my piece on the Quebec Absolute Return Fund, he told me something critical was missing: "what's the risk they're willing to tolerate to generate T-bills + 5%?".
  
• We then talked about the Osama bin Laden "conspiracy theories" and both dismissed them. Why are there no pictures? Where's the proof? Who cares? All we need are pictures of bin Laden with bullets in his head so some idiots can add fuel to the fire and ensure massive retaliation (just cause bin Laden is dead doesn't mean al-Qaeda ceases to exist)
• I remarked that the world is changing faster than ever. The one thing that worries us both is growing income inequality -- the great divide. We talked about how Bill Gates at least created his foundation and is giving away his wealth for good causes, but there is little political will to tackle the issue of income inequality. Politicians are basically looking out for themselves not the middle class, and certainly not for the working poor.
  
• That brought us onto a whole other discussion on work and values. I told him that it bugs me seeing civil servants who have the luxury of having guaranteed jobs whine about their working conditions and counting the days till they retire so they can collect a big fat pension while people like my 80 year-old father still work full eight hour days seeing psychiatric patients. But it also bugs me seeing how greedy people in finance are and how they use you as long as you have something to offer them.
• Our society is obsessed with money and things. We measure people by their net worth. It's sad but true. And all for what? Go back to read my comment on turning 40. Andrew Lahde said it best: "I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck . . . What is the point? They will all be forgotten in 50 years anyway. Steve Ballmer [Microsoft chief executive], Steven Cohen [founder of hedge fund SAC Capital] and Larry Ellison [chief executive of Oracle] will all be forgotten.”
• I bring that last point up because over at Zero Hedge some people thought I was all gun-ho about hedge funds in my last comment. I shared my thoughts on hedge funds:

I've allocated to the best hedge funds all over the world. I don't get all hot & horny over hedge funds and know that it's a tough business. Some of the richest and happiest guys I've met in Montreal are anonymous prop traders you've never heard about. They manage their own millions and do not answer to any institutional investor. If I had a choice of collecting 2 & 20 and the stress of managing a hedge fund (including all the marketing bullshit, RFPs, stupid institutional managers breathing down your neck) or managing my own portfolio, I'd opt for the latter. There is way too much hype about the glory of managing a hedge fund. Trust me, it's not as easy or as glorious as it seems.

And that elicited this response:

Leo, if money can buy happiness then it is beyond glorious. The hedgies/VC guys I know spend their spare time (and lots of it) jetting between their various homes, yachts etc. and when bored they buy more real estate and build ever bigger castles while pursuing various interests eg art, car racing, yacht racing, exotic cars etc. I also know guys who run their own book some of whom are structured to deploy their own as well as others capital sometimes in partnership with pro money guys.

• Wow, it sounds exciting jetting across the world between all their beautiful homes, car racing, yacht racing, etc., but I'm reminded of the wise words from my 80 year old father who's seen many rich and poor patients suffering from mental illness: "Leo, I know you don't like listening to your father, but when it comes to money and sex, only too much is enough".
  
• These are all things and things shouldn't define you as a person. I asked Pierre whether he's truly happy and he said yes. I then asked him if he lost everything, would he still be happy. He told me everything but his wife who he loves deeply (good answer!).
• I then shared a secret with him: "You know I was making very good money at PSP but towards the end, I hated the job. It was like a cancer eating away at me from the inside. I hated the politics of the place but I don't hate anyone there. I'm just very disappointed with some people." He understood exactly what I meant.
• We talked about different people and I told him flat out how some people disappoint me. There are lots of people who talk the talk but few walk the walk. I started accepting donations on my blog last week and very few people stepped up to the plate and actually donated to support my effort. I'm also disappointed with some people who I helped when they were down and out looking for work, personally delivering their resume to presidents and CIOs of pension funds and yet when I ask them to keep and eye out for me, total silence. Talk is cheap! Actions always speak louder than words.
  
• Having said this, quite a few people have contributed to my blog. One senior pension fund manager who contributed $500 shared this comment with me after I thanked him (I thank all those who contribute any amount, big or small, because it's the thought that counts):
  

Your product is quite useful (and entertaining), and should simply be valued accordingly. No need for any special thank you. I have casually suggested within my organization that we consider a more substantive contribution, but its best to let various others appreciate the value of what you are doing on their own timetable.

• And here is what one former colleague of mine had to share after graciously donating $100:

I had dinner at Baton Rouge tonight with my wife and me three kids. When I saw the bill, I nearly fell off of my chair. I came back home, feeling dumb about wasting all that money, I went on your blog to read your articles. I went to read your 40-20 article. It was like a fresh breeze. Through your own experience, you are trying hard to remind all of us in the finance world about the true priorities in life. I call this exercise the re-normalization of money-addicted individuals. Call it a medicine but some of your articles are like drugs helping our brains to remember that true things in life can't be bought with money. As you can see, this small donation is like buying drugs at the pharmacy... and it brings me much relief to offset this stupid dinner I had tonight. Cheers my friend.

• When I think of all the good people I met in finance, I can count them on one hand. My ex-boss Pierre is one of them and so is this guy who is currently looking for work and still was decent enough to donate his hard earned money to support my venture. I remember something profound this person told me in his office one day: "They can take away your title, take away your job, but they can never take away what you have in your heart and in between your ears." That advice always stuck with me.

Finally, Pierre let me know about people he admires, great Canadians like Terry Fox and Rick Hansen, people who overcame adversity to teach us that we can do anything once we set our mind to it. Then Pierre told me he admires me. I said: "Me?!? What's to admire about me? I'm just a blogger who has MS. I don't even consider myself disabled." He replied: "You should be proud of your accomplishments. You write about important and sometimes contentious topics. You dedicate yourself to sharing this information with the public. And you're a fighter. That's very admirable."

Thank you my friend, I appreciate your support and look forward to our next lunch.

***Feedback***

I like what a friend from Chicago sent me:

''To live around those we love; to care for and do the little things that magnify courteousness, empathy, and considerateness: those are the things that (to me at least) matter. If we are blessed with doing something that we enjoy and at the same time paying our bills, what more could one hope for?''

And I liked this comment from someone at Zero Hedge:

I have found that investments in others brings with it a sense of true purpose and ultimately meaning to life. At least with mine it does. I also know that investing like this does not bear immediate returns, at least any that can be seen, but I also know that the investment echoes on long after I've forgotten it.

Couldn't have said it better myself. Focus on helping others and you'll find inner happiness. And finally, this George Carlin quote from a man who declared bankruptcy because his 20 year old son was diagnosed with paranoid schizophrenia:

Life is not measured by the number of breaths we take but by the moments that take our breath away.

The man was not in a position to donate to my blog but his email and the quote above are priceless.