A Real Estate Career: Lessons Learned (2014-2015)

In 2014, my tax business was winding down, and during the summer I was getting anxious again.

As these things tend to happen, while randomly talking to a friend, he asked me if I wanted to join his hedge fund as an analyst.

Completely putting aside the fact the position was in Hong Kong, I accepted.  And for the next 18 months, I helped them analyze real estate and Korean stocks.

This was my first real job in finance.

When you work in finance, you get spoiled – especially if you’re on the buyside, and you have all sorts of service providers working for you.

Finance draws hard-charging, intelligent, and driven types, and when you have Ivy Leaguers and graduates of Asia/Europe’s top 10 universities as your service providers – your bankers, brokers, traders, accountants, and researchers, well, I’m not sure I’ll ever have that level of service again.  Emails were written to me in clear prose.  If there was a problem, I received a phone call explanation within seconds.  Things got scheduled, presentations were efficient, full of information, and if I asked for anything, things just got done.  No one passed the buck, and if they did, it was to actually find the person who could solve the problem, and these problems got solved in hours, if not minutes.

Sigh.  Maybe this is the daily reality for many people, but for me it was new.  This meant that literally all I had to do was focus on the thing I had been hired to do, which was to stay plugged into the markets, pore through financials and industry reports, think, and analyze.

Never before in my life had I woken up so early, before 6, to catch the bus into Central to start fielding the calls and get work done before the Korean and Japanese markets opened at 8am.  Never had I had so much energy as when I was plugged into the information flow and market chatter every day, hearing from analysts, companies, and brokers spanning Tokyo to Mumbai.  The financial markets are an arena where the biggest game in the world – the exchange of capital – is played out on a daily basis, against some of the smartest people, with huge sums of money at stake.

And looking back at that time, that’s what I miss the most.  There’s no feeling or job quite like working in the financial markets – the pace, the energy.  It’s like being plugged into an IV of chatter and information and raw sentiment.  You can actually feel, around town, when the markets are up or down.

Now onto the actual job.

Our fund had a value bent, which meant that we were looking for undervalued or overvalued companies to buy or sell.  Before joining, I had a romanticized notion that it was all about digging through data and research, coming up with some sort of brilliant, deviant opinion and using that to make money.

There is that.  But I learned I was quite naive, because identifying the stock to buy/sell is only a fraction of the job.

Being good at analysis, and picking the right name, is only one leg of the stool.  It doesn’t matter if you’re good at analysis if you buy in at the wrong time or sell at the wrong time.  It also doesn’t matter if you buy/sell too much or too little of it, or if you can’t or don’t have the conviction to hold during the hard times.  Also, since you’re never going to be 100% right, 100% of the time, you have to be constantly evaluating your own decisions, your decision-making process, your own thoughts, in context with the present and history of the market.

In short, not only do you have to be brilliantly analytical, you have to have the instincts of a gambler to size and time the bet, the temperament of a stoic to not let gains or losses affect you, and the introspection of a monk.

Only by getting all four of those things right, can you succeed in the job, and it’s why investing is so hard.

It’s always been my opinion that investing is the best interdisciplinary exercise you could ever conduct, or learn.  And one of the biggest reasons is for the last point above.

Constantly evaluating your own thinking and process for making decisions will serve you well not only in investing, but in life in general, and is the foundation for success in general.

At the fund, though, I found myself teetering on the edge of this.  If you’re not careful, endless introspection can lead you to have massive self-doubt all the time, and start going down epistemological rabbit holes, like ‘how do I know I know this’, or ‘am I sure that I know this, and with what probability, and how do I know this probability is even correct’.

In my job, I found a lot of parallels to surfing.  The financial markets do not have sympathy or other human sentiments, just like the ocean.  You can’t fight them, just as you can’t fight or force a wave to do anything.  You can only react to what’s given to you.  You can’t argue about rightness or wrongness.  The markets, and the ocean alike, do not care about you.

Working in the markets is one of the most humility-inducing jobs you can have, and those who get arrogant get crushed.

In many ways, the job gave me an appreciation for knowledge in general.  When you can sit in a room with extremely intelligent people discussing a company, and everyone has extremely divergent, completely opposite viewpoints and opinions on the company’s prospects, you begin to see that it’s hard to purport to ‘know’ or declare anything with certitude.

And that states of the world are best expressed in probabilities, and the smartest people are always questioning and changing their minds.  They’re comfortable with uncertainty, and don’t let it paralyze them.

I learned a lot on the job, but that might have been the greatest lesson for me.

What I’ve Seen in China

Spending time in China is enough to convince you that you know nothing about it.

  • There is no architecture quite like the public architecture of the Communist Party.  Roads and sidewalks are massive, supposedly wide enough to drive tanks through.  The railroad stations are simply just the largest buildings I’ve ever seen or been in, looking like you could fly an A380 through them.  Government buildings are fronted by sidewalks that are like stadiums.  It communicates authority.  The scale is hard to comprehend if you’ve never been there.
  • The power of the state, in terms of it being manifested, is intermittent but ubiquitous.  After 950 AQI readings (~20 is healthy) on the air quality scale in Beijing, you can count on the next day being completely crystal blue.  How does this happen, is there a natural way?  It’s as if the air itself was reprimanded by the inner sanctum of the CCCP and told about the errors of its ways.
  • Blue skies are not taken for granted.  I once had a taxi driver take me from the airport in Chongqing to my hotel, and for the entire thirty minutes he was exclaiming loudly about how clear and blue the skies were, sticking his head out of the window, looking up, and yes – all while driving.  The air is indeed noxious, and during days when the readings are, say, above 300, visibility on the streets are as if you’re driving through fog.  Above 500, heavy fog.  Above 700, like you’re in a cloud.  The romantic side of me, on these days, can’t help but imagine myself back in London during the Industrial Revolution, or Chicago during the age of the railroads.  It must be what those cities were like: swarming seas of people, raucous roads, barely contained chaos, buildings rising impossibly fast, out of nowhere.
  • Is there another economy that has so many feverish booms and busts, in so compressed a timeframe?  Bubbles roil through the property market, then stock market, then private wealth products market, not necessarily in that order, but predictably every few years.  Technology companies are the same.  Two years ago, I started noticing a lot of green, orange, and yellow bikes on the road, with bike-sharing becoming huge there, way before it did anywhere else in the world.  A few months later, I saw entire sidewalks become parking lots for these bikes.  They were everywhere, the streets were filled with them.  A few months later still, I saw empty lots full of these bikes, rusting and old, unattended.  A few months later, I came back and saw nearly all of the bikes gone, and read that a lot of the companies had gone bankrupt.
  • Parts of the large cities – Shanghai, Shenzhen, Beijing – are more expensive, posh, and futuristic than equivalent places in London, Hong Kong, or New York.  And I will assume that they will only get even more so.
  • The line cutting is maddening and annoying.
  • But I can emphathize with some of it, as it is less a personal act of discourtesy, and more a symptom of an everyone-for-themselves, distrust of rules and the state that leads people to have this interesting mentality that there are rules and laws, there are taboos, and there are absolutely forbidden things that you must never do, and the intersection of those three things are like a Venn diagram – they are not one and the same.  I.e., everyone seems to use a VPN to access all the ‘forbidden’ websites, even at work, no one actually uses the metal detector machines in the subways, queues are optional, and most confoundingly to foreigners – contracts really don’t mean anything.
  • People are honest and straightforward.  They will tell you to your face that you look tired or if you’re fat, or if you need to eat.  In restaurants, you can regularly ask for things not on the menu.  You can ask and talk about anything, and people will tell you, as long as you avoid the subjects of Tibet and Taiwan.  Sometimes when we do market research, we literally go to our competitors and ask their frontline staff about stuff.  For a North/East Asian country, refreshingly informal and with a language devoid of hierarchy and formality.
  • When I first went to China, back in the winter of 2010, there was barely even a smartphone market.  I remember buying a used Nokia with a monochrome screen and using that.  Now just 7 years later, almost the entire population is on WeChat, which is a portal for everything from taxis, medical services, banking, and other payments.  Merchants in the middle of rural villages in China will prefer taking your cash over your credit card, but WeChat payments trump all.  In 2010, I remember my classmates telling me there was a huge difference between kids born in the late 80s and kids born in the 90s.  It was a seven-year difference we were talking about.  Now, you could probably feasibly move those endpoints to the 90s and aughts, and there would be even more of a generation gap still – think about it, two degrees of a generation gap in 20 years.
  • The resultant optimism, though, is refreshing.  This is a country that hasn’t had a major recession in twenty years – economic growth has always rounded to 10%.  Can you imagine that?  It means that everyone is down to try new things.  They’re figuring it out.  There’s no established tradition that needs to be followed, but nor are there established best practices.  In my field, it means that clients sometimes ask for – and expect – insane things that have never worked in the history of the world.  I’ve driven through 2nd and 3rd tier cities to the edge of the city, through rural villages, and then come face to face with resorts on the scale of Dubai.  I’ve driven deep into the mountains and seen waterslides and retail malls that wouldn’t be out of place in Orlando.  I’ve spelunked through entire cities where they built something, and no one showed up – yet.  To be clear, many of these insane projects and endeavors are destined for the dust-bin of history, but the risk-taking and dice-rolling is something to marvel at.
  • There seems to be no established dress code at most of the offices I visit.  Women wear skirts that are shorter than sexy nurse Halloween costumes, and tops that look like bright foliage.  Men wear business casual, loosely interpreted, like rocker boots and hawaiian shirts and whatever it is, it’s untucked.  Everyone is on their own phone during meetings.  Sometimes people answer their own phone during meetings and whisper into it without any repercussions from others.  Business cards were a thing for a few years, but it’s gone straight to WeChat.  Government officials will add you as contacts on WeChat and then send you funny memes.
  • It’s changing rapidly.  And on this note, a lot of the criticisms leveled against Chinese tourists abroad – rude, dismissive of lines, loud and obnoxious, pushy – I recall as things I thought about Koreans about 20 years ago.  Koreans of a certain age, say 50s, will fit this stereotype.  Social norms change and I can see them changing in China too.  Younger people have been abroad, studied abroad, and bring mores and expectations back home.

Basically, it’s growing at an exponential pace and everything you know about it now, will be wrong tomorrow.

If you are interested in the evolution of cultures, the study of cities, if you’re interested in seeing an economy and society change, if you’re interested in history or curious about what the future might look like, visit China.  Don’t miss it.

Things Korea Does Well

Underappreciated things about an already underappreciated country.

  • Korea is a textiles manufacturing powerhouse.  In most places in Asia, markets will sell a lot of cheap clothing.  But here, the off-price stuff sold for $3 or $5 in the subway stations comes from manufacturers who, on the other side, are making stuff for Patagonia, Zara, Nike, etc.  The Dongdaemun night market (wholesale clothing market, open to everyone) is literally the definition of a fast fashion nerve center, stocking retailers around the country every night (literally, retailers from all over Korea come to shop here starting at midnight to stock inventory for the next day), with production runs and test clothing that run in the single digits.  In common terms, this just means – bring an empty suitcase and load up on quality, off-brand, no brand outerwear – and innerwear.  Every subway station usually has a ‘sock store’ selling nothing more than socks for less than a dollar.
  • A lot of underappreciated and unknown ‘health’ food.  Korean traditional cuisine stems from a philosophy that food is medicine and vice versa.  While meat (Korean BBQ, fried chicken) gets all the attention, herbs, vegetables, and roots, usually served pickled, are staples of every meal.  Things like bean sprouts, Korean thistle, burdock, sesame leaves, pepper leaves, thorny ash, mallow, bellflower roots, not to mention mountain herbs for which there is no proper common translation, like Korean pimpinella, ainsliaea, ragwort, bog rhubarb, Korean angelica, sedum, etc. etc.  The list goes on and on; Koreans pickle anything that can be picked.  Not to say that all food in Korea is healthy, that’s far from the case, but a typical traditional meal is fairly well-balanced.  Some sort of fermented stew, served with a variety of pickled vegetables and herbs, carbs in the form of rice or noodles, and meat in the form of fish or pork.
  • An unbelievable cafe culture.  Koreans binge drink coffee the same way they binge drink alcohol, which if you think about it, might be a yin and yang phenomenon, with one not possible without the other.  The multitude of, and staggering variety of cafes and coffeeshops on every corner is mind-blowing.  Cafes and coffeeshops that serve alcohol alongside their coffee, dessert-specialty coffeeshops, coffeeshops that specialize only in giant portions, coffeeshops and cafes of every imaginable theme and configuration possible.  They say to show, not tell, and to do that, I suggest you just Google “Korean cafes” or “coffeeshops” on Google or Youtube.
  • This one is an element of Korea that I don’t think Koreans realize yet.  If Koreans didn’t spend all their time just studying, and their early to mid 20s in an insane cycle of work & drinking all-nighters, there would be more world-class athletes in every field from here.  I was part of two different gyms here, and having trained extensively in both the US and Asia, I will say that the number of physical specimens and giants in Korea is surprisingly high.  But years of study and atrophying behind a desk means that they don’t know it yet.  Also, the terrible diet and drinking doesn’t help.  This might be the only country I’ve trained where guys regularly smoke before and after workouts, and come in smashed from the night before.  And for the latter, I don’t mean young guys in youthful partying mode.  I mean salarymen in their 30s and 40s.
  • Lastly, Korea is a convenient country.  Things are efficient, quick, available.  Convenience, and a culture of service stems from its homogeneous society.  I’ll just point back to an earlier article I wrote about this.