How do you deal with uncertainty?

Hey, I don't need another alpha to tell me I'm too soft for the industry. 

Seriously, there's a lot of stuff going on for a fresh grad in 2023. You just came out of (arguably) the most influential pandemic in the past 20 years, and you saw how the system (health, finance, welfare, what have you) crashed right in front of you;  it'll be even worse if you lost any family member to it. Then the war between Russia and Ukraine broke out, which reminds you of the fragility of peace and the instability of the seemingly established world order. Now you have all these dramas between China, US, and Taiwan, and it seems like they are pretty much on the edge of a war to decide whose dick is bigger. 

Now, you are starting your job in finance in a market that is prone to fall; inflation is still high, and we are yet to reach the turning point. There are already rounds of cuts before us, and it might not be an exaggeration that there's even more to come. If we have to bring AI into the conversation, well, that bonker might take all of our jobs in 10 years, who knows? 

All of that is intertwined with the excitement and fear of moving to a different city, establishing yourself, building new relationships, and, maybe, living a completely different life. 

I guess people eventually find a way to adapt to the environment. But what do you do before that happens?

 

I wouldn't call that 'insecure', what kind of title is this?

Lot of this is valid, I think you accumulate as much money as possible before big tail risk events occur (AI taking our jobs and China-US War over Taiwan), you can figure out your options after that. I'd probably want to move to a low COL country at some point should 1 or both of those tail risks occur where even having $2ml with 4% interest ($80k will let you live like a king). Probably to my country of origin but maybe some others as well. At the end of the day, almost all of us are immigrants / descended from immigrants so that's a natural cycle anyways 

 

Thanks for the input, Sequoia. Mind giving it a better title? 

I personally just call it a great sense of insecurity especially given I am a Chinese national myself. I figure that one can really get absorbed if one gets into the weeds of the so-called crisis mentality nowadays. I guess it's the sudden realization that "this could actually happen" that hits you the hardest. Like I would never be able to imagine if 80% (to say the least) of the bankers in Hong Kong lose their jobs to a full-blown trade war between China and US, not to mention in the case of actual military operations. 

I see your points about saving up and living a life, but, not gonna lie, I think I might be too young to fully appreciate it. For the past 22 years, I have been living a life largely built upon the consensus that everything makes some sense. And I think there should be tons of kids like me (no matter if they are from the US or China) who pushed themselves/ worked harder than the rest to win a position in finance, and it does mean a lot to them at 22 (if not everything). May I say to not working as hard/ climbing the ladder tirelessly also somewhat makes a person insecure? 

My apology it's all bits and pieces here.

直指人心,見性成佛
 
@Rei

Thanks for the input, Sequoia. Mind giving it a better title? 

I personally just call it a great sense of insecurity especially given I am a Chinese national myself.

Your title reads "insecurity" like a person is insecure to go out, be social, give presentations, etc. The content of your post seems to describe "uncertainty." Maybe it is a language thing. 

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee
 
Sequoia

 and China-US War over Taiwan), 

DAVE S3E3 HEARSAY 😊 - Spoiler Free Reviews

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee
 

I don't think this is insecurity at all man, this is risk assessment and recognition of real threats in the short to mid-term. The best thing you can do in my opinion is just work your ass off. Develop skills for understanding what characteristics make a good business and try to internalize how those are developed over time if possible. Sure, cliché and probably not a unique answer but in reality I do not believe bankers or private equity get replaced by AI. People are what build large businesses and people who have built large businesses are not just going to trust some computer to handle selling something they spent 10, 20, 30+ years building. They will want a human touch that empathizes with the time they put in and in many cases the care they have for their people. These are human businesses. Sure, stuff on the lower size end of the market will probably get more automated (websites for selling your $1m-$10m rev biz are popping up all over) and the absolute # of people required to get a deal done will probably go down significantly over time. But at it's core it is still a relationship-driven business on both ends of the sell and buyside (PE). I do NOT envy what HF/AM bros will be dealing with though, quants are scary as fuck.

If things really go to shit in the US and Europe, get comfortable with the idea of taking some risk and head to southeast Asia or LATAM, those markets have a lot of promise and by the time I'm 30+ I think I will probably relocate to one of them for a few years regardless of where I am career-wise just to see if I can get a ball rolling with something.

Also:

@Rei

If we have to bring AI into the conversation, well, that bonker might take all of our jobs in 10 years, who knows? 

"The obedient always think of themselves as virtuous rather than cowardly" - Robert A. Wilson | "If you don't have any enemies in life you have never stood up for anything" - Winston Churchill | "It's a testament to the sheer belligerence of the profession that people would rather argue about the 'risk-adjusted returns' of using inferior tooth cleaning methods." - kellycriterion
 

Thanks, man. That's very true. 

SEA and LATAM actually sound more than promising to me. And I traveled to a few countries in SEA and Meixco myself. Gotta say the COL is substantially lower while your living standard is roughly on par (if not better). Damn, districts like Roma and Polanco in CDMX are just too good to be true.

直指人心,見性成佛
 

I agree and also find comfort in realizing that historically, humans figure things out. People have adapted for our entire bloodlines (by nature of us being alive). In recent history many people (Russian, Persian, Vietnamese, Chinese… so many more) have relocated to America to rebuild lives. There’s so many stories of doctors fleeing Iran and being cab drivers while going to med school and being doctors in the US.

If they could figure it out, why can’t I? Not being arrogant that I’m better, but simply logically realizing that we can do things to improve our lives.

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.” - Nassim Taleb
 

Agree. I went to Cuba for the first time a few weeks ago, and the one-week stay was inspiring. I got to see how tenacious people can be when it comes to coping with adversity. It's called hardship because many of the people in Cuba find it hard to put food on their tables, get proper drugs if their kids get a fever, or simply live with dignity. I stopped saying my life is hard after the trip, which I frequently did in the past. 

直指人心,見性成佛
 

The amount of fair-weather friends in the comments is very telling. You should go ahead and self-deport immediately, since you have no interest in sticking around through tough times.  BTW, just because you immigrate from somewhere and have no cultural connection to your new country, doesn't mean the core population feels that way. 

Perhaps instead instead of fleeing to yet another country, these people could go back to their own places and change them to make them good instead of relying on daddy USA/Europe to handle it for them while they leech off. 

The people who get offended at this will unsurprisingly continue to try to move to where people like me live too. Hmmm. 

 

This comment makes me wanna go back to when "nationalism" carries a somewhat negative connotation. 

直指人心,見性成佛
 

For me, it is pretty simple. I know I will be fine.

However, I am a graduating law school in a week from UW after getting three majors from KU (while graduating in 2020) and I am a CPA. I had 3 finance internships (hedge fund, corp dev, and m&a advisory at a Big Four). I have a job in corp dev at a Fortune 300 where I am already on two $10b-plus projects. My reason for everything being fine is because of relatively unique circumstances specific to myself.

What is going to happen is what is going to happen. If I worried about every possibility I’d never be able to do anything

 

These times have taught me to look within for guidance, not without.

By "within," I mean my own skills, interests, and where I find my inner sense of fulfillment. I think if you work hard at what you love and what you are naturally good at, you'll turn out fine. Everyone's naturally good at something. It's up to you to find what it is so the world always finds you useful.

By "without," I mean chasing prestige, following what everyone else is doing, adhering to the conventional wisdom on the best career paths, etc. Sometimes the conventional wisdom (be a doctor, lawyer, banker, etc.) is right. But if there's anything we've learned the past two years, it's that the world can turn upside down any moment. Tech seemed like a sure path to mid six figure income and great wlb a year ago. This year we're seeing mass layoffs, leaner tech companies, threat of automation from AI, etc. The world will always need the expertise of the tech guys who are truly passionate and knowledgeable about software. But the folks who were hoping to blindly ride the wave to an easy life... they're in a stressful position now.

Might as well do what you are really passionate about so you never have to worry. I think if you're smart enough, you'll always find a way to make it work. And you'll enjoy figuring it out too.

 
Most Helpful

life is uncertainty, so get used to it and it's good you're thinking about this now. I've said this a million times before, but turn inward and work on yourself. buffett said this at the berkshire meeting over the weekend, write out your obituary (I prefer eulogy) and spend the rest of your life trying to live up to those values. too many on this site and in general focus on resume virtues and not eulogy virtues.

first, realize you cannot model all uncertainties. 100 year flood walls laugh in the face of a once in a lifetime event like sandy or katrina. markets laugh at MPT and VaR models when you insert counterparty risk or some std deviation slightly outside of your modelled range. life is unpredictable, so the first part of dealing with uncertainty is realizing it is and always will be a permanent condition

second, figure out where you are the most vulnerable, and work on that. for me, I was broke so I had to get gainful employment in a career that was lindy (as long as there has been money, there have been money managers, good or bad). and don't stop there, this is part of working on yourself, trying to improve a little bit all of the time, and progress will be slow, so this leads into the 3rd point

third, view yourself in the absolute, not the relative. fuck whatever your friends are doing with their money and careers, focus on yourself and your goals and where you were in the past versus where you are now. the vast majority of people treat their lives like weeds, growing rapidly upward without setting a solid foundation and while they may find money, they also find fragility, lack of purpose, and likely will face an existential crisis later in life. this is not to say you shouldn't chase money. I initially went to finance for the money, I've stayed in it for other reasons, but this is why basing your life upon your values instead of others' values is so important.

fourth, think about what can go wrong and make reasonable preparations for it. simple heuristics here - what if you get a 20% pay cut? live below your means so this wouldn't be such a massive shock and you can survive. keep some cash on hand instead of trying to over optimize and have 100% of your net worth in risk assets. live a simpler life than you can afford. don't count on bonuses for your regular lifestyle. have the majority of your expenses be variable rather than fixed. minimize debt. acquire skills, can you row a boat? lead people? fish? hunt? shoot? grow food? build stuff? while I don't think going back to the dark ages is a big probability, I'd rather know a couple of things than not. prioritize health. a healthy body and healthy mind eliminate a lot of risks and will help you manage stress better. have a nice balance of cardio, strength, flexibility, and erudition. 

fifth, surrender. you cannot hedge against all risks. even risk experts like nassim taleb and mark spitznagel still have counterparty risk, solar flare risk, etc., so I pull the thread by asking myself "and then what?" until I get to the final end of things. like what if inflation stays high, I'll have to cut my expenses. and then what? if it stays high some longer I'll have to cut more. if it stays high some more but I can't cut anymore, I'll pick up a side hustle and begin growing my own food and fish more. if we get into a hyperinflationary environment like turkey or argentina, people still make it work, so I'll find a way. maybe I'll start writing professionally, maybe I'll start teaching english, maybe I'll join the military, maybe I'll do some form of physical labor. and if things get to the zombie apocalypse? we're all fucked, so in some sick twisted way we're all fine. while I said your goals should be absolute not relative, your perception of your station in life is more relative than absolute. I've ran into some of the happiest people in the world in the 3rd world, and all are in poverty by our definition, but relative to their neighbors, it's all good. it's only shitty if you're like a homeless person in SF next to marc benioff or some shit.

finally, stoicism. I always reframe questions about risks into "ok, but what can I DO about it?" if nothing, then surrender is necessary. if I can do something, I make a plan and I start to act on it

 

Thank you, May happen someday, but in the meantime I write nothing new. If you look up stoicism, some Christian and Buddhist philosophy, nassim Taleb, lindy self improvement books, you'll find it all 

 

Thank you for your kind words, means a lot, I'm glad my ramblings have helped, much love!

 

If you get through life unscathed, you're quite lucky and unusual. Life is not linear (no matter how much you try to make it that way). There will be all kinds of setbacks out of your control. The market, jobs, health, family and other relationships all will provide many opportunities for great joy and sadness. I'm almost 59 and I can't think on one person I know who hasn't had some type of setback, either self inflicted or from outside sources. What this means is there is NO Certainty. As they say, the only certainty in life is death and taxes. The rest is about what you make with your time and abilities. Every journey will be different.

What I've learned over the yrs is that change is constant so learn to embrace it. Look at the new opportunities that come for change (in your job, your relationships, your social life, your health.) A real example I'll offer is at 55, I almost died of severe blocked arteries. I've always been active, stay in good shape, etc. but I was a ticking timebomb. Actually passed out and had emergency treatment. Doc said had that not happened, I would have had a severe heart attack "imminently". So UNCERTAINTY and CHANGE. I wasn't expecting to be hospitalized when I woke up that Friday morning and started doing jump rope and pushups. Fast forward and I have a much better diet, work out all the time, feel like I'm stronger than I've been in yrs (actually hit the golf ball further than I did a few yrs ago). Life is about dealing with change and uncertainty. I took my reality and changed my business to one that I enjoy more and it has provided me with more free time to do what I want. In a way, it was a blessing.

Craps going to happen. Just take a deep breath and get through it, learn from it. It's generally not as bad as it seems.

 

are you sure you don't spend too much time on news or browsing online? Maybe those macro 'realities' (?) altered (exaggerated) your perspective on your daily life.

If not, the most practical advice is to understand that whatever happens, you'll be OK. It's out of your possibilities to predict an uncertain future. The only thing you can do in the present is to become more competent for whatever challenge may arise: Technology, military, financial, etc. If you feel prepared to face whatever may be thrown at you, there's nothing to fear. In other words, improving your competency levels across a wide range of subjects and skills is the only way to minimize the risk of facing hardships in an uncertain future.

 

wsa007

Is this just 4-5 of income stashed away as cash in banks or do you have other liquid assets you can tap into over those years that are equivalent to 4-5 years on income?

That assumes I make $0. I have enough passive income to live indefinitely. My costs are low, am dual income no kids (yet!) and I live in an LCOL/MCOL city right now. Lifestyle is very modest as is my fiancee...so we invest over 95% of our income.

I know I am paranoid lol but it makes me feel good so w/e. I feel it lets me take a lot of risk with my main businesses and operate them the way I want to. As a result, my net IRR is much much higher and I live without worry. 

 

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