Five Secrets to Create Your Own Luck
Happy birthday to me! Well, not exactly me, perse. Happy birthday to ITsolopreneurs! It was pretty much one year ago when I started putting fingers to keys and crafting the beginnings of my blog.
When I look back at how 2016 went for ITsolopreneurs, I have nothing but pride in how far the blog has come. I’ve been fortunate enough to appear on three podcasts. I’ve had multiple guest posts. I appeared on the cover of an industry magazine. None of this seems overly significant compared to most of the other multitudes of blogs out there. I’m still a newbie. I have a long way to go. Nevertheless, it’s a little taste of success. And that’s worth celebration. I used to think people just get lucky with their accomplishments. But I realized it’s far more reliable to create your own luck.
At the beginning, I had no idea how it would look, or how I, little insignificant me, could add to anybody’s life. I had no idea if people would care to even consider my insights upon solopreneurship, people skills, and professional success. I just knew I had insight. I knew I had a unique perspective on how I saw the world. And I had a voice. While I might have been a little self-conscious at first to express my opinion on the vast and sometimes treacherous waters of the internet, I chose to explore it.
Upon reflection of the past year, there are some key lessons that I learned, which I know will stick with me forever. And both my career and personal life would thrive because of what I learned in the last 365 days.
Key Lessons in Attracting Success
1. You Never Know Unless You Try
My podcast partner, Perry Lai of TransformYourKid.com recently posted in our Facebook group about how he told his kid to write a terrible composition. Luther, his son, was supposed to write a composition for school. But he was procrastinating. He was procrastinating because he didn’t’ feel that he was good at writing. So he wasn’t looking forward to putting pen to paper and composing anything. So, Perry instructed him to compose a ‘terrible’ composition. Why would a father tell his son to purposely craft something terrible? He did this to eliminate the perfectionist factor.
Often the reason we don’t take action is that we are overwhelmed by the fact that we don’t think that we can create that perfect piece of work…maybe tot even perfect, but a respectable piece of anything. So many of us (myself included) think we simply wouldn’t be able to do it justice, whatever it is. Hence we end up doing nothing. We don’t want to put in a ton of effort into a project only to have it fail spectacularly. By giving his son the permission to create something terrible, Perry essentially eliminated the possibility of failure. Here’s the rub. The first iteration of anything we do, be it a composition, drawing, book, will be disastrous. The first few times we do anything, it will suck. It only gets better. Only when you have a tangible version of anything, regardless how crappy it is, can you make it better. Making anything better first requires that you have something on which to improve. So, clearly the first step is to create that first version. As Nathan Chan of Foundr magazine said, ‘if you not embarrassed by your first product, you’ve shipped too late.’
2. Consistency is Worth More Than Aptitude
I used to play badminton competitively in university. I could hardly hit anything when I started. I played “churchyard badminton.” I played the type of badminton that people would play on a Sunday afternoon, outdoors at the church picnic, with my Sport Chek racquet. I was terrible. But something about the sport spoke to me. Ever since I did my first smash, I was hooked. For the next 5 years, even beyond my graduation, I played badminton 6 days a week, from 7 – 10 every night. A couple years into it, I started entering tournaments and competing at various clubs, and eventually throughout the province. My group of friends and I went to Calgary, Grand Prairie, Red Deer, all over Alberta to compete. I had progressed far from where I started. With the help of a college coach, who gave us free instruction out of the kindness of his heart, I trained like the college kids. My best ranking was 24th in the province in my category. I was still no star player. I still got my ass handed to me by the A-players from Glencoe and Royal Glenora… the kids who started in badminton when they were 8. But the point is that with consistent effort applied over time, and the intent to get better, you will improve.
Same thing with blogging. The first few times, it took me hours upon hours to write a decent blog post. One of the key success factors to building the blog was to publish consistently. Daunting as it might have been, I started to write every week. It’s been a year. I’ve shaved down my efficiency in crafting articles tremendously. Again, the more you do something and the longer you keep at it, you can’t help but get better. True, there’s still a long way to go for me. But if you show up and work it every day, every week, or whatever frequency to which you committed, the only way to go is up.
Sure there are people with talent. There are plenty of people who are much more talented writers, who write more eloquently, and with clever humor and poise. But ask me to bet on consistency or talent, and I’ll put my money on consistency every single time. It matters less how smart and talented you are. If you’re not rolling up your sleeves and bringing it consistently, you’ll never win the race.
3. Finding a Mastermind is invaluable
You can’t get good at basketball playing by yourself in the driveway. Half a year ago, I formed a mastermind with some folks I met in a business course I took. Having a mastermind you can bounce ideas off is invaluable. Just today, Frans, Marco and I met, as we do every Sunday. I had a mental block about a development on my site, and together we were able to work through it. No more mental block. I felt the excitement again to continue working on my site. I was once again inspired. Had I not talked to them about it, I would have continued to wallow in my own stagnancy. I could afford a couple weeks of stagnancy, as uncomfortable as it feels. Soon though, I would have lost the momentum and perhaps even threw it on the backburner.
The other magic about mastermind groups is the accountability that is part of the deal. Quite frankly, you’re way less likely to give into your own devices and slack off if you have to report to your accountability partners. There have been so many occasions where I really want to slack off, but because I have to report to my peers on a weekly basis, I’ll pull up my socks and do the work.
4. Resourcefulness is Critical
Anyone who knows me knows that I am of average intelligence. Never have I claimed to be an expert on any particular subject. But it doesn’t stop me from sharing expertise and experiences with the world. Why should it? Even if you get a PhD in an area, you can’t truly have acquired all the information in that area. On that note, I’m not sure why would you bother even, when you know that the collective knowledge of the entire world is at your fingertips. People often mistake having knowledge with the ability to acquire knowledge. Why take it so hard on yourself? It’s impossible anyways. There’s absolutely no way that you as one single individual can know everything about everything. No one’s going to fault you for not having all facts yourself.
You do need to be resourceful, though. There was once a Chicago newspaper that tried to skewer Henry Ford back in the day. They pompously questioned his intelligence because they knew he wasn’t formally educated. It got to the point where Ford was brought to court and even cross-examined. Ford was peppered with trivia questions about philosophy and history. Eventually, Ford runs out of patience and says:
“If I should really WANT to answer the foolish question you have just asked or any of the other questions you have been asking me, let me remind you that I have a row of electric push-buttons on my desk, and by pushing the right button, I can summon to my aid men who can answer ANY question I desire concerning the business to which I am devoting most of my efforts. Now, will you kindly tell me, WHY I should clutter up my mind with general knowledge, for the purpose of being able to answer questions, when I have men around me who can supply any knowledge I require?”
He’s absolutely right. Why would clutter your mind with anything other than what you need at a given point in time? With the dawn of the internet and all the remarkable new industries it’s spawned, we as the human race has had convenient access to more knowledge than ever before. It’s changed the face of education, of business, even finding love. In business, it’s enabled even peasants like me to try my hand at building an online enterprise for myself.
Resourcefulness has and always continues to be a skill that is indicative of success in any area of your life. Especially in business, where there is no user guide, no set manual, no set of instructions you follow to make it, being resourceful is critical. It literally makes the difference between whether you’re going make it in the business world, or crumple in the corner and die an unceremonious death.
Ideas are Ever-Plenty
People often ask me how I can come up with something to write every week. I’ve been asked time and time again what my “creative process” is. “Aren’t you afraid that you’ll run out of topics on which to write?” they ask. Here’s the thing. There’s so much craziness going on in the world, you can’t even make this stuff up. All you have to do is open your eyes. Be observant. Be curious. In following the trail of curiosity, there’s always something to write about.
Most of us are way too self-absorbed to notice anything past the end of our nose. But if we just take a minute to pay attention to more than just ourselves, you’ll find that your immediate environment is a fertile field of ideas that are quietly waiting for someone to act upon them. It could be that next business idea, or you might notice a problem that calls to you to solve. The simple definition of business, as I explained to my 5yr old, is when you are able to create something valuable out of otherwise ordinary materials and solve someone’s problem. In turn that someone gives you money for it. That is business, pure and simple. Ideas are the easy part. The road to success is strewn with great ideas that were never executed. The operative word is to execute.
5. Sow enough seeds and Something will Start Growing
I am of the philosophy that if you throw enough stuff onto the wall, something is bound to stick. So if you want to make it rain, if you want something happen for whatever it is you’re trying to make happen, turn every stone. Take every opportunity. Say yes to everyone and everything thing that is going to help you cover more ground on your critical path.
When I was learning to sell insurance, I was taught that the key to getting sales was to fill the pipe with leads. Only when you have enough potential opportunities to filter down to the yes’s can you see any sort of turnover in sales. Not everyone is going to say yes. In fact, we were taught in the world of insurance, that you have to talk to three people, to get one yes. That means that you have to go through two no’s before you score. So reverse engineering that concept, if you want to have 10 sales, you have to fill the pipe with 30 potentials. There’s no shortcut. It’s all about the numbers. Take enough shots and you eventually score the goals. Every business is different. The turnover ratios are obviously different in every industry. But one thing’s for sure: if you don’t fill the pipe, if you don’t sow seeds, you won’t see the harvest.
It’s always exciting to start something new. Whether you’re starting a new job, or exercise regimen, the hoopla is always at the beginning. That’s the easiest time to bring it. In the beginning, you’ve got the most momentum. You’re feeding off the novelty of your new project. As time progresses, and you’re not seeing success, you feel like you’re failing. That’s normal. It feels like failure in the middle. You’ll get tired. You’ll start to ease off the pedal thinking questioning why you even went down this path. Every so often, though, the universe will throw you a bone to keep you in the game. You just have to stay in the game. Revisit that vision often. Keep executing. The harder you work, the luckier you get.
Here’s to the quiet ones who grind with consistency, with a clear vision of what success looks like when they get there. We salute you.
Alternative Beta Strategies: Alpha/Beta Separation Comes to Hedge Funds
Written by: Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies, J.P. Morgan Asset Management
A quiet revolution is taking place in the alternatives world. The idea of alpha/beta separation has finally made its way from traditional to alternative investing. This development brings with it a more transparent, liquid and cost-effective approach to accessing the “alternative beta” component of hedge fund return and a new means for benchmarking hedge fund managers.
The good news for investors is that the separation of hedge fund return into its components—rules-based alternative beta and active manager alpha—has the potential to shift investing as we know it. These advancements could democratize hedge funds and, at long last, make what are essentially hedge fund strategies available to all investors—even those who aren’t willing to hand over the hefty fees often associated with hedge fund investing.
A benchmark for alternatives
With respect to traditional equity investing, we have long accepted the idea that there is a market return, or beta—but this hasn’t always been the case. Investors used to assume that to make money in the stock markets, one needed to buy the right stocks and avoid the wrong ones. The idea of a market return independent of skilled stock selection seemed ridiculous to most market participants. Yet today, we would never invest in an active manager’s strategy without benchmarking it against its respective beta.
Interestingly, hedge fund managers have been held to a different standard. Investors have been much more willing to accept the notion that hedge fund strategy returns are pure alpha, and that their investment returns are based entirely on the skill of the fund manager. That notion explains why investors have been willing to accept a “two and twenty” fee structure just to access what has been perceived as one of the most sophisticated and powerful investment vehicles available.
In thinking about the concept of beta, consider its precise definition—the return achievable by taking on a systematic exposure to an economically compensated risk. In traditional long only equity investing, the traditional market beta has been further refined as a number of other risks have been identified that are commonly referred to as “strategic beta.” These include factors such as value, momentum, quality and size. But no one ever said that these risk factors must be long-only.
Over the past decade, as more hedge fund data became available, academics began to disaggregate hedge fund return into two components: compensation for a systematic exposure to a long/short type of risk (alternative beta), and an unexplained “manager alpha.” What they found is that a significant portion of hedge fund return can be attributed to alternative beta. That fact has turned the tables on how we look at hedge fund return. With the introduction of the alternative beta concept, hedge fund managers will have to state their results, not just in terms of total return, but also as excess return over an alternative beta benchmark.
Merger arbitrage—an alternative beta example
The merger arbitrage hedge fund style can be used to illustrate the alternative beta concept. In the case of merger arbitrage, the beta strategy would be the systematic process of going long every target company, while shorting its acquirer. There is an inherent return to this strategy because the target stock price typically does not immediately rise to the offer price upon the deal’s announcement. This creates an opportunity to purchase the stock at a discount prior to the deal’s completion. The premium that remains is compensation to the investor for bearing the risk that the deal may fail.
Active merger arbitrage managers can add value by choosing to invest in some deals while avoiding others. Therefore, their benchmark should be the “enter every deal” strategy, not cash. In fact, the beta strategy explains the majority of the return to the average merger arbitrage hedge fund. And it doesn’t stop there. Other hedge fund styles that can be explained using alternative beta include equity long/short, global macro, and event driven. Note that the beta strategy invests in the same securities, using the same long/short techniques as the hedge fund strategy. The difference is that the beta strategy is a rules-based version that can become the benchmark for the hedge fund strategy. After all, if a hedge fund strategy cannot beat its respective rules-based benchmark (net of fees), an investor may be wiser to stick to the beta strategy.
Implications for investors
What does all this mean for the end investor? Hedge funds have traditionally been the domain of sophisticated investors willing to pay high fees and sacrifice liquidity. Alpha/beta separation in the hedge fund world means that investors can finally choose whether to buy the active version of the hedge fund strategy or opt for the passive (beta) version. Hedge fund strategies can be effective portfolio diversifiers. Now, through alternative beta, virtually all investors can access what are essentially hedge fund strategies in a low cost, liquid, and fully transparent form. For investors who haven’t had prior access to hedge funds, this could be welcome news. Not only can investors look at an active hedge fund manager’s strategy and determine how it has done compared to the systematic beta equivalent, they can also invest in ETFs that encapsulate these systematic strategies.
When looking at one’s traditional balanced portfolio today, there are plenty of questions around whether the fixed income portion will achieve the same level of diversification it has provided in the past. After all, with yields still low, there is little income return. Additionally, the capital gains that came from interest rate declines are likely to reverse. With fixed income unlikely to adequately fulfill its traditional role in portfolios, there is a need to find an alternative source of diversification. This is where alternative strategies may help. For investors seeking to access diversifying strategies in liquid and low-cost vehicles, alternative beta strategies in ETF form are one option.
Looking for an alternative to enhance diversification in your portfolio?
For investors looking to further diversify their overall portfolio, JPMorgan Diversified Alternatives ETF (JPHF) seeks to increase diversification and reduce overall portfolio volatility through direct, diversified exposure to hedge fund strategies using a bottom-up, rules-based approach.
Learn more about JPHF and J.P. Morgan’s suite of ETFs here.
Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to obtain a prospectus. Carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read them carefully before investing.
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