This falls outside the usually technical or at least tech related nature of my posts. But it’s something I don’t understand and I’m intuitively taking a very technical approach to learning about it.
I cannot comprehend finance. I truly cannot. I can build and understand complex software + network architectures but finance is a mystery to me and I always have felt pretty ‘thick’ when I hear my much younger cousins discussing their killing on the stock market or the latest ETFs or ask me about my portfolio (what portfolio?). If you are reading this, cousin PK and you thought we had an intelligent discussion, it’s because I am an amazing faker – it’s unfair that I can never list that on my otherwise hollow looking linkedin profile.
I have started looking into this new world of finance and don’t quite like what I hear. I have never been able to make purely profit based judgements of any matter big and small and this is getting to be an issue with the financial system as well. What does it produce? How can you create nothing but be able to make the most money in it? Simply put, how can money ‘create’ more money without any intermediate product or step as an outcome as well?
I need to start at genesis if I have any hope of understanding a subject and so I have started at the beginning – or atleast a recent beginning and this shit is crazy. In my mind, there is no such thing as perpetual energy – you cannot produce or consume anything without a by product or cost. But the last 30-40 years has seen the emergence of what is called ‘Financial Innovation’ or ‘Financial Engineering’ – which has made made possible producing money from money without any actual product involved!! How neat. Not really. That neatness has apparently translated into the global chaos we see now.
Co-incidentally, I listened to the ‘How money got weird‘ podcast on NPR’s Planet Money this week and something clicked for me – I wasnt the only one who thought this stuff would be funny if it didn’t basically mean armageddon. Apparently many people have clued into this a long time ago and I am just discovering it now because I am new to the subject.
Also watched Inside Job on netflix yesterday and it only re-iterated the ‘this stuff is ridonkulous’ message.
If so many ‘experts’ think it is fucked up now, how the fuck did we get into this mess??
Both Planet Money and Inside Job featured a commentator Satyajit Das – who seems to be one of those crucial spectators of the last few decades who both participated and observed the transition of Financial services from a service industry to a primary industry and is able to lucidly document and talk about it.
I just bought his latest book ‘Extreme Money‘ and it’s proving to a fascinating read as well.
So…I have totally digressed from my original goal of understanding the financial system so I can ‘diversify’ my portfolio (I’m just copying what my nouvea rich friends say). But this is far more interesting than making money any day – or at least till the day when I find my bank account empty again.
Also, I have a certain revulsion – immature according to my father – to making money without creating something or at least producing something. Far away from what I am learning about the global financial system, perhaps the stock market is about showing faith in companies that produce and helping them produce by investing in them. I hope so. But that doesn’t explain what many people around me do – this thing called ‘day trading’. What’s that about?
I’ve been told that my general engineering/knowledge-based approach to life and knowledge of various verticals makes me a potential money-spinner. When I hear that, I sit back in my chair, cross my legs, nod sagely but don’t reveal that I don’t even know where to begin – or if I want to. I don’t know but I am slowly cluing in and I recognize right now is that I need to understand this stuff a little more before I can even know if this is something that produces value.
Any gurus who can help me fast track my enlightenment so I can get started making money? Or I could just stick to my plan, work 20 hour days and create a company that makes me a lot of money (or not).
OK, must listen/watch list from this post:
- Last week’s Planet Money podcast ‘Wierd Money’. Planet Money, This American Life and in general most NPR podcasts are delicious listens. Their accompanying blogs are equally tasty. Must must subscribe if you are a podcast sort of person. If you are not, these podcasts are a great introduction to podcasts.
- Extreme Money, the movie. If you are on Netflix (Canada), you already have access. If not, go to your neighbourhood Blockbuster. Oh wait…(Snap!).
- Another generally top notch and related podcast – Freakonomics radio.
