#april fools was (check notes) over two months ago but once again i DID post this on time on twitter so be nice to me
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xander trio doin' the askr.....
#fe14#fire emblem fates#fe xander#fe laslow#fe peri#april fools was (check notes) over two months ago but once again i DID post this on time on twitter so be nice to me#i have a few memes i haven't put on here yet so#be ready for my belated jokes#dots draws#dots on the soapbox
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Title: Twelve Months
Fandom: K Project
External: AO3
Ratings/Warnings: T
Summary: “Yeah, I am. I’m dating Fushimi. Right, Fushimi?” It wasn't the worst lie Yata had ever told and Fushimi didn't seem entirely opposed to the idea, so Yata figured there wasn't much that could go wrong. After all, how hard could it be to pretend he was dating his best friend?
Notes: This was originally written for the Sarumi Anthology back in July, since the waiting period’s passed I figured I’d post it properly as well ^^ Cute middle school fake dating fluff, based off an ask from a while back.
I. April
“Yata-kun, I like you. Please go out with me!”
Yata Misaki, second year middle schooler, had just received his first ever love confession (well, second if he counted Oogai, but she hadn't really confessed and even if she had Yata kinda suspected that he wasn't the one she actually wanted to confess to).
Not that he’d wanted a confession, of course. Yata wasn’t entirely certain what to think of things like love letters and confessions and girls beyond the fact that they made him feel vaguely uncomfortable. There was also the fact that he found being near girls in general to be somewhat intimidating, which he was aware was strange for someone who had been raised half his life solely by his mother. In any case, Yata had assumed that he wouldn’t really have to worry much about a girl bothering to ask him out — Oogai Aya aside, he was well aware that he wasn’t exactly what someone might call ‘popular’ with girls.
And yet, not two weeks into the school year, there was a girl in front of him confessing her feelings. Not only that, but a popular girl. Yata didn’t pay much attention as to who was and wasn’t popular in his class — he had better things to do than keep track of things like who was dating who and why. But even he knew that Takizawa Mariko was very social and very well-liked, and exactly the type of girl who normally would have nothing to do with a punk kid like him.
But she was still standing there, staring at him with wide hopeful eyes, and Yata’s mind went blank.
What do I say? He didn’t exactly have a lot of experience in this area. What the hell do I say?
“Well, Yata-kun?” He’d expected her eyes to fill with tears or something at his hesitation — that was what girls did when you rejected them, right? Even though he hadn’t technically rejected her yet. He hadn’t accepted either, though, and Yata kept staring blankly back at her. Rather than tears there was something almost..amused about her expression and Yata was suddenly aware of how many people in the class were looking at him.
Wait…were they making fun of him? Yata felt the indignation rising in his throat. Was it like some kind of bullying, to send a girl to confess to him just so she could laugh at him? If it had been another guy Yata would have jumped up and punched him but this was different. This was a girl and you couldn’t punch a girl. Or at least Yata couldn’t, and he shifted in his seat.
“Aren’t you going to answer her, Yata-kun?” One of the other boys taunted and Yata clenched a fist. That was Watanabe, one of the guys Yata had thought was his friend once and the only member of the long-disbanded ‘Yata team’ who was in the same class with him this year. Watanabe had started hanging out with some other kids who were on the baseball team and apparently it had made him bolder because last time Yata checked he'd been the type of guy who preferred to complain about people privately like a coward rather than just say it properly to their face.
“Shut up, I’m getting there!” Yata snapped. Takizawa leaned closer to him and to his mortification Yata found himself sliding backward.
“So, will you?” Takizawa blinked widely at him, suddenly sincere, and Yata swallowed hard. Maybe he'd been wrong, then? Takizawa was popular and all, so if she was confessing it would have to be the real thing, wouldn't it? Yata felt the heat rushing to his face and he slid his chair a little further back again, almost knocking over the currently empty desk behind him. Yata's eyes darted briefly to that desk and then to the door, as if looking for help.
That guy should be here any time now. If anyone could get Yata out of this, it would be him.
But Takizawa was still staring at him and the doorway remained empty.
“I—I—” He needed an answer, any answer, and Yata spat out the first thing he could think of. “I’m already going out with somebody!”
There was a long pause and Yata thought he heard someone snicker. He would’ve shot them a glare if Takizawa hadn’t been right there in his line of vision, one hand on her hip as she looked at him curiously.
“Really? I hadn’t heard Yata-kun was dating anyone.” She gave a tiny little laugh that didn’t sound very amused at all and suddenly reminded Yata of the way Oogai got sometimes, the times when he thought she became twice as hard to deal with.
“So who’re you dating?” It wasn’t Watanabe this time but one of the guys with him, a wide smile on his face and Yata really wanted to punch him.
“Yeah, Yata-kun, who’re you dating?” Watanabe echoed.
“I bet he’s not dating anyone,” one of the other boys snickered. “Too scared to say ‘no’ to a girl, huh?”
“Fuck you, I’m totally dating someone!” Yata snapped, half rising out of his seat before he’d even realized it.
“So who is it?” Takizawa asked him. Her expression was slightly injured but her voice seemed to have pitched lower than it had been a few moments ago.
“She’s not—”
“If she’s not in our class I’m sure I can find someone who knows her,” Takizawa continued blithely. “After all, I know most of the girls in second year. So who is it, Yata-kun?”
“It’s…” Yata trailed off. The only girl that he wasn't related to and actually on anything like speaking terms with was Oogai and he couldn’t really bring her into this. Yata's hands clenched and he could feel all the eyes in the room on him in a way that made him feel suddenly stifled.
That was when a figure finally appeared at the classroom door and Yata's eyes brightened as he jumped out of his seat.
“Fushimi!”
Yata reached over and grabbed Fushimi’s arm as he walked in, ignoring the way Fushimi clicked his tongue at the unexpected physical contact. They’d been hanging out for not quite a year now and he knew that Fushimi still wasn’t the best with touching people but this was an emergency after all.
(Not quite a year and sometimes it felt to Yata like they were still trying to find their feet around each other. But it was fun, spending time with Fushimi, and already Yata knew he wouldn't have traded that time for anything, not even a love confession from a girl.)
“You’re dating Fushimi?” There was the edge of a laugh in Takizawa’s voice and Yata wasn’t sure if it was from disbelief that he would be dating Fushimi or that anyone would be dating Fushimi. Somehow the idea of it being the second one made Yata feel a spike of irritation and he tightened his grip on Fushimi’s arm.
“Y-yeah,” Yata said, trying to put as much confidence as he could into the words. “Yeah, I am. I’m dating Fushimi. Right, Fushimi?”
He gave Fushimi a hopeful smile and Fushimi stared back at him as if he’d just said the most worthless thing in the whole world.
“Are we?” Fushimi’s voice seemed flat at first listen but Yata could hear the slightest lilt of amused mockery in it, just the smallest rise in his tone that no one else in the room had probably caught at all. Yata shot him a quick desperate look.
“We are. Right?”
Fushimi looked back at him, one eyebrow raised and Yata could tell that he was deciding whether it would be more amusing to leave him hanging or not. Yata gave him a tight smile that he hoped did enough to indicate ‘please play along’ without saying as much.
“Tch.” Fushimi clicked his tongue and shrugged, extricating himself from Yata's grip and easily stepping past the crowd to move towards his desk near the back of the room, right behind Yata's.
“See?” Yata said, a little rushed and weak as he turned back to look at Takizawa. “Fushimi and I are...we're dating, so...I guess that means I can’t go out with you or accept your feelings or…whatever. Sorry!” He gave a quick bow just because it seemed like the thing to do and hurriedly made his way to the back of the classroom and settled himself at his desk, turning his chair so that he could rest his arms on Fushimi’s desk.
Technically Yata’s actual desk was in the front of the room but he’d decided that the desk nearest to Fushimi was a way better place to be and the kid who was ‘supposed’ to be here had seemed perfectly willing to let Yata take over (Yata's glare and Fushimi's cold expression might have had something to do with it too, to tell the truth, but Yata had just gotten close to Fushimi and he didn't intend for them to let themselves be separated so easily).
“Fushimi…” Yata stretched out across Fushimi’s desk, slightly defeated. “You could’ve at least played along, you know?”
“It’s not my fault you’re too much of a virgin to say no to a girl,” Fushimi said with a shrug. He was playing with his PDA under the desk and barely even looking at Yata.
“I-I could’ve said no if I wanted!” Yata said irritably. “I just…she would’ve cried, right? Girls always cry about that kind of stuff. Anyway, it’s fine now, isn't it? I think I convinced her.”
Fushimi briefly looked up from his PDA.
“You’re such a moron, Yata.” He rolled his eyes. “You know that girl is in our class, right?”
“Yeah? So?” Yata stared back at him blankly and Fushimi sighed.
“She’s going to know we aren’t dating,” Fushimi said. “Unless you think you can convince her all year long she’s going to figure it out eventually. Well, not like anyone really believed it in the first place. She’ll probably start asking you again tomorrow just to see you make a fool of yourself one more time.”
“Hey!” Yata snapped and Fushimi turned back to his PDA. Yata paused. “You…you think she will?”
“I don’t care.” Fushimi murmured it into the screen of his PDA, eyes downcast.
“Well…we can just pretend to be dating all year, right?” Yata thought his voice sounded maybe a little strained and swallowed hard, trying to seem confident. It wasn’t that bad of a plan, was it? They could totally pull off something like that, he was sure of it. Fushimi was really smart, after all, and he probably knew all kinds of stuff about how this dating thing worked. “I mean…we already hang out together all the time…” 'We're friends, is what he would've liked to say, words on the tip of his tongue, but he could still feel the presence of that wall between the two of them and he hadn't figured out exactly how to scale it yet. “So it can’t be that hard to pretend we’re dating.”
He trailed off hopefully, waiting for a reply.
“Don’t be an idiot,” Fushimi said coldly and Yata deflated a little, falling back over the desk.
“Okay, okay.” He buried his head in his arms, defeated. “I guess that was a stupid idea.” Yata sighed. “I’ll just have to…accept her feelings, or whatever. It can’t be that bad, right? Going out with a girl. We can…hang out or…do whatever girls do with their boyfriends after school…” His face went red again. “Not—not like that kind of stuff, I mean…!” He groaned. “I’m gonna have to go shopping and see stupid romantic movies, right? Every single day…”
“…Fine.”
Fushimi’s voice was soft and calm, and Yata looked up sharply.
“Huh?”
“I said ‘fine.’” Fushimi shrugged, continuing to stare at his PDA. There was something weird about his expression and Yata couldn’t quite place it.
“What? Really?” Yata felt a rush of gratitude and he leaned forward, trying to move closer to Fushimi.
“Why not?” Fushimi said, looking bored. “Since you’ve gotten yourself into this mess, Yata, I guess I can help get you out of it.”
“All right!” Yata felt a grin spreading across his face and noted that Fushimi was staring at him now, looking a little breathless, and Yata wondered if he’d said something annoying again. Even so he couldn’t stop smiling as he leaned across the desk. “You’re the best, Fushimi!”
Fushimi didn’t say anything, only looked back at down at his PDA with a nod. Despite that, Yata kept smiling at him.
(He hadn't managed to scale the wall yet but if he waited maybe it would start coming down on its own. He just had to wait, and believe.)
This would be easy. After all, how hard could it be to pretend they were dating?
II. May
“The girls are looking at me funny again.” Yata set his bag down on Fushimi’s desk and Fushimi looked up.
It had been three weeks since he’d agreed to Yata’s stupid plan about the two of them pretending to date. So far not much had changed, other than Yata’s constant idiotic need to loudly greet Fushimi as ‘my boyfriend’ while looking significantly in the direction of the girl with bad enough taste to confess to him.
Well, not like it had been a real confession anyway. Any moron could see that she’d been toying with him. If he’d said yes she probably would’ve just laughed in his face and then they could have gone on as normal.
Or maybe she would have accepted and strung him along for a few weeks, dragging him to stores and movies and taking advantage of Yata’s brainless good will as much as possible. The thought made Fushimi scowl for no apparent reason.
It wasn't like there was anything much between the two of them. They spent time together, true, and Fushimi had made them a special mailing app because he thought it might come in handy, having communication that only the two of them could use. And maybe there had been a small feeling when he'd seen they were in the same class again, a brief lightness in his chest, the feeling of suddenly being able to breathe again, but that was nothing.
Yata was just...Yata, that was all, and Fushimi didn't entirely hate spending time with him.
“Do you think we’re not fooling them anymore?” Yata wondered, as if they’d been ‘fooling’ anyone at all right from the start. Fushimi shrugged and Yata groaned quietly, burying his head in his arms for a moment before looking up to level a glare in Fushimi's direction. “You’re not helping much, Fushimi.”
“This was your idea,” Fushimi said pointedly.
“There has to be a way to make them think we’re actually dating,” Yata mumbled into the desk. “Fushimi…what do you think we should do?”
“Don’t drag me into this.”
“But you always have the best ideas,” Yata said, resting his head on one hand. “What do people do when they’re dating anyway?”
“Shouldn’t you have thought of that before you decided we were dating, virgin?” Fushimi said with a slight smile. Yata’s face colored and Fushimi couldn’t help but feel a bit of a thrill run through him, something sparking inside that he only seemed to feel when Yata was around. He’d only started noticing it in the last few months, that despite all the times Yata Misaki was exasperating and annoying and a bother to deal with, he always seemed to set off something warm in Fushimi’s chest that he couldn’t recall having felt before.
(Not that he wanted that feeling, of course. There was nothing special about Yata Misaki. It was only that he was...there. That was all.)
“Sh-shut up!” Yata grumbled. “How am I supposed to know what to do? I’ve never dated anyone.”
He sighed, leaning back to look at the ceiling. Fushimi clicked his tongue.
“Names,” he said finally. Yata immediately snapped his head back to look at Fushimi.
“Huh?”
“Names.” Fushimi’s voice was simple and matter of fact. Really, it wasn’t like Yata hadn’t walked into this one and if he had to hear the complaining about it he might as well have some fun. “People who are dating use each other's given names, don't they?”
He knew what Yata’s first name was, of course. He’d heard Oogai use it, heard Yata get indignant over it again and again. Clearly it was a sore point and there was no way Yata would agree to that kind of idea, calling each other by name properly. But he’d given a suggestion and now they could move on to other subjects besides Yata’s stupid ideas.
(And as for his own name…Fushimi’s hands tightened over his PDA just a bit.)
“O-okay.” Fushimi looked up sharply at Yata’s grudging reply, the response he hadn't expected at all. Yata's face was pinched with distaste, as if he was trying to force the words out through his teeth, but there was a definite determined spark in his eyes.
Fushimi's hands stilled on his PDA, his breath catching just slightly. He hadn't expected Yata to agree at all and suddenly he couldn’t help but think of it, every utterance of his own name he’d ever heard – 'and how's my little monkey today?' – and he didn’t need it here as well, didn’t need to hear it from Yata's mouth, didn't need to have it echo in Yata's voice too. But he'd been the one to bring the names thing up so he couldn't take it back either.
“What was that, Misaki?” Fushimi stretched the name out as much as he could, savoring each syllable as a smirk wound its way across his face.
(He could say it and Yata wouldn’t leave, after all. Yata always came when he called so just this wouldn’t be enough to make Yata leave. His skin felt hot, though.)
“Don’t—” Yata looked around wildly and then lowered his voice. “Don’t call me that in public, all right?”
“That defeats the purpose, Misaki,” Fushimi said idly. Yata had a look of complete consternation on his face and it was really so amusing, watching him try to reconcile his irritation with the truth of Fushimi’s words. In a moment he'd give up and they could go back to the way things were before.
“All right.” Yata sighed instead. “But just until we convince everyone, okay?” He paused, as if unsure for a moment before continuing. “…Saruhiko.”
Fushimi froze.
He hadn't thought this far, for once. Why should he, really, when Yata — Misaki, his mind already whispered, latching onto that word tightly even though he didn’t know why — was so adamant about not letting anyone use his first name. Fushimi had only made the suggestion because the idea of watching Misaki struggle over it had amused him and for once his mind had stopped at step one, hadn't bothered to jump ahead properly to step two: what to do if Misaki actually agreed.
“Is…is that okay?” Misaki squirmed a little in his seat, looking nervous. “I mean, it feels kinda weird using your first name, F…Saruhiko.” Misaki gave a small laugh. “Your name is way cooler than mine, you know?”
‘Way cooler than mine,’ and it was so ridiculous, such a stupid thing to say when that hated name had never been considered normal by anyone. ‘The one with the funny name,’ everyone always said, and the curve of a mocking smile as that guy repeated that ‘monkey, monkey’ over and over again.
And then there was Misaki and his ‘cool.’
“100 points,” Fushimi said quietly and Misaki looked at him curiously. Fushimi leaned back, setting the PDA aside so he could focus all his attention on Misaki. “That’s fine. Misaki.”
“I said, don’t call me that in public!”
“But you’re my ‘boyfriend,’ right?” Fushimi smirked and Misaki groaned.
“You're an asshole, Saruhiko.”
III. June
Yata Misaki was fighting a war.
It was like an endless battle, something that was going to take all his skills to conquer. He’d fought his way through round after round, unable to win, but Yata was certain that this time he was sure to finally achieve success. This time, victory was going to be his.
“Okay, Saruhiko, say ‘ah!’”
“I don’t need you to feed me, idiot.”
It had all been Saruhiko’s idea, of course, because Saruhiko always had the best ideas. People who were dating made lunches for each other, after all. So a nice romantic thing to do — the sort of thing that would make it clear to everyone that they were totally dating — would be if one of them brought the other lunch.
“Why do I have to be the one to make food for you all the time anyway?” Yata muttered, watching as Saruhiko carefully sorted through the contents of the bento with his chopsticks, as if Yata had hidden high explosives in there and he wanted to be certain he knew where they were before taking a bite.
“You asked me out, right?” Saruhiko said simply, in that tone he had that made it sound like anything he might say was logical simply because he was the one saying it. “The one who confessed first should be the one making the other lunch, Misaki.”
“Shut up!” Yata snapped and Saruhiko made an amused humming noise. Yata was almost starting to regret agreeing to that ‘first name’ plan.
(Almost. Hearing Saruhiko say his name was annoying sometimes, especially since he was always saying it where everyone else could hear, but…it wasn’t too bad, when it was just the two of them. And Yata had gotten so used to using ‘Saruhiko’ that he didn’t know if he could ever go back to thinking of his friend as just ‘Fushimi.’)
“Anyway, are you going to eat it or just examine it all day?” Yata said.
“Are these vegetables?” Saruhiko held a piece of radish in his chopsticks in the same way someone else might take out a bug that had sneaked into their lunch.
“It’s just a piece of daikon! Don’t tell me you don’t eat that either?”
“I don’t like vegetables.” Saruhiko set it aside, returning to his task of digging out anything else vaguely healthy that might have been placed in there by accident.
Yata had thought that making Saruhiko’s lunch would be easy. He wasn’t that bad at making food and his mom would probably help him a little if he asked, and anyway Saruhiko was skinny so he could use some good nutrients. Yata’s first bento for him had been packed with colorful vegetables. Saruhiko had taken one look at it and thrown it on the floor.
So far Yata had brought him six bento boxes. He had refused four outright, eaten the egg out of one, and was currently sifting through the sixth and setting aside most of it.
Yata Misaki was fighting a war against Fushimi Saruhiko’s tastebuds, and so far Saruhiko was winning.
—
“Oh, come on!” Yata moaned as Saruhiko picked his way through his ninth bento.
Yata had tried to be a little fancier this time. There were the eggs, since he knew Saruhiko liked those, and a tuna mayo rice ball which had been a proven success from a few days prior. Yata had made a couple other rice balls this time, with pickled plum and roe in the centers, hoping that since Saruhiko had eaten the tuna one it might be worth it to attempt some other fillings, but Saruhiko was doggedly digging around those. In addition to the rice balls he’d refused the soybeans, vegetable tempura and the cubed pineapple that Yata had put in specifically knowing that it was something Saruhiko would eat.
Yata had also arranged the whole thing in the shape of a large heart because if Saruhiko was going to be an asshole about it Yata considered it fair game to reply in kind.
“I don’t like eating pineapple with tamagoyaki,” Saruhiko said flatly. The heart-shaped rice already had six different holes in it and there was a small pile of food still growing on Saruhiko’s desk.
“You don’t like anything,” Yata moaned. “Seriously, Saruhiko, if you hate all food then why am I the one making the lunches?”
“It’s not my fault you can’t make anything decent, Misaki,” Saruhiko replied.
“My lunches are totally decent! No, better than decent! It’s…you!” Yata pointed an indignant finger at him. “Seriously, what’s with that diet? Are you a little kid? Your growth is going to be stunted, you know?”
“I don’t think Misaki is in any place to tell me about stunting my growth,” Saruhiko said flatly, a hint of a smile on his face. The bastard had gotten a growth spurt a few weeks ago, probably just to piss Yata off, and was not at all shy about pointing out that he'd added a few more centimeters to his height advantage.
“Yeah, well, keep eating like that and I’ll be taller than you in no time!” Yata stated. His growth spurt was coming, after all. He could feel it. Any day now he was going to shoot up like a weed and overtake Saruhiko, and Saruhiko was going to be jealous as fuck, just you wait. “Is there anything you like?”
“The egg is fine.” Saruhiko popped a bite of it in his mouth, just to demonstrate. “Meat is okay. Hamburger. But don’t add spices to it.”
“What the hell kind of diet is that? Vegetables are there for your health!”
“What was that, Misaki? I couldn’t hear you from all the way down there.”
“Aaargh, just…just shut and eat your heart-shaped bento, dammit!”
IV. July
Fushimi hunched his shoulders as he stepped out of the school building, his classmates streaming out around him with mindless energy, the sound of their useless chatter echoing in his ears. It made his head hurt.
It was the start of summer break and Fushimi wanted nothing more than for it to be over already.
He never understood why all his classmates acted as though school break was anything to be excited about. Not that Fushimi particularly cared for school — just another pointless requirement imposed upon him by society, that he had to come to this place every day and be taught stupid things by teachers who knew less than he did. But at least it gave him something to do, a way to pass the time from one day to the next.
(And there was Misaki, too, but Fushimi didn’t let himself think about why that should matter.)
Break was different, though. Fushimi shifted, fingers clenching just a little tighter on the straps of his school satchel. It was almost time for ‘that guy’ to come home too. Maybe it would be better to stay away from that house for a few days. There were always internet cafes, after all.
The same as every break, really. Spending his time split between sitting alone in his room in that big empty house or seated in front of a computer at an all-night internet cafe, staring blankly at the screen in front of him and buying his food, nowhere to go and nothing to do. Not much different from being in school, when he got right down to it.
“Saruhiko! Wait up!”
(Except for one thing.)
Fushimi didn’t turn around but he slowed his pace to allow Misaki to catch up.
“I thought that stupid teacher was going to talk forever!” Misaki moaned as he pulled level with Fushimi. “At least it’s finally summer break, right?”
Finally summer break. Fushimi clicked his tongue in reply. The break meant there was really no need for them to spend so much time together, and no need to continue to use each other’s first names either. Fushimi supposed it only made sense for Misaki to feel relieved about the whole thing. He was probably as sick of their ridiculous ‘fake dating’ ruse as Fushimi was.
“So, what should we do during summer break?” Misaki’s voice cut into his thoughts and Fushimi looked up. “You—you know, you haven’t been to my place yet so I thought…”
“What the hell are you talking about, Misaki?” Fushimi felt his stomach twist for no reason. Surely even an idiot like Misaki had realized it by now, that they didn’t need to keep up this stupid plan while school was on break.
“Well, I’ve been to your place, right?” Misaki was looking up at him with wide sincere eyes and Fushimi held back a flinch at that particular memory. Misaki fidgeted a little, looking uncomfortable, and Fushimi scowled.
(And not Misaki anymore, Yata, Yata, because there was no need for appearances anymore and he had to remind himself of that, always.)
“Are you an idiot?” Fushimi let the chill sink into his voice. Don’t hope. Don’t expect anything. Cut the thread now. “You don’t have to pretend when we’re not in school.”
“What are you talking about?” Misaki — Yata — cocked his head to one side curiously. His expression seemed to darken suddenly, rainclouds settling over his eyes. “Um…unless you don’t want to come over to my place. I mean, you don’t have to? We can meet up and do other stuff too. Ah, I can mail you, all right? Mom’ll probably want me to watch Minoru and Megumi sometimes but I bet I can get away if I tell her I made plans with you. And the beach! We should go to the beach, Saruhiko, just you and me! We can take the bus and bring stuff along — you’ve got sunscreen, right? You probably need it–”
He continued, almost babbling and Fushimi could barely keep up, plan after plan about what they should do and where they should go — and in his mind Fushimi could almost see the shape of it, days expected to be empty suddenly packed full of wild plans, closed rooms giving way to roads that didn’t end, that open hollow space filled to bursting with echoes, Misaki, Misaki, Misaki.
“So that’s okay, right, Saruhiko?” Apparently Misaki had finally been forced to stop for a breath. “I-I mean…I was really looking forward to hanging out with you more now that school’s out for a while but if you have stuff to do or something…” His face twisted just a little, as aware as Fushimi that the idea of Fushimi having any plans at all was patently ridiculous.
“…Fine.” Fushimi shrugged, ignoring the sudden feeling of warmth budding up in his chest, so full he wondered if he was sick, if that light would burst out and swallow him if he let this go too long.
But Misaki was here, next to him, keeping perfect pace and perfect time and even though there was no need for appearances anymore Fushimi suddenly wanted nothing more than to keep walking there beside him for hours and hours until the sun went down.
Misaki brightened even more at his reply and Fushimi felt a smile wind its way onto his face — the unfamiliar sensation he had been becoming more used to, slowly, ever since the day Misaki had dragged him onto the back of a bike in the dark, chasing after things they couldn’t reach but peddling with all his might anyway.
“All right! You’ll come over to my place though, right? I wanna show you my room and everything!”
Misaki began chatting brightly, still keeping pace with Fushimi as they walked side by side in the summer heat and Fushimi let the sound fade into a pleasant hum of background noise, pausing here and there to nod or make a comment in response to something Misaki had said, letting the uneven music of Misaki’s voice lull him into something almost like calm, almost like contentment.
Maybe summer break wouldn’t be that bad after all.
V. August
“Are you going to ring the bell?” Saruhiko’s voice was mocking and amused, and even without turning Yata could almost see the little half-smirk that he just knew would be on Saruhiko’s face.
“Shut up!” Yata snapped. “Who rings the doorbell to their own house?”
“The guy who’s too nervous to open the door on his own,” Saruhiko said languidly. Yata heard him give a small snicker. “What’s wrong, Misaki? Nervous about letting your parents meet your boyfriend?”
“W-wait, that’s not—” Yata finally turned to look at him, flailing about for a moment before he caught the way Saruhiko’s shoulders were shaking in silent laughter. Yata shot him a glare but couldn’t quite make himself scowl completely.
Saruhiko had finally agreed to come over to Yata’s house and he was even going to spend the night. They’d already spent half the vacation together, meeting at the library and the game center and spending entire days just walking around doing whatever they felt like. But Yata hadn’t forgotten his earlier invitation back from the last day of school before break and he’d been determined to get Saruhiko to come over and meet his family. Convincing his mother to let Saruhiko stay overnight had been easier than he’d expected — she’d been wanting to meet the ‘Fushimi Saruhiko’ that Yata talked about all the time — and Yata hadn’t been able to stop the rush of relief when Saruhiko had agreed. Saruhiko hadn’t said anything but Yata knew that he’d already spent at least a few nights sleeping at internet cafes instead of going home and it always made Yata’s mood darken to think about it. He didn’t know what exactly was up between Saruhiko and his parents but Yata couldn’t help but feel it was completely unfair, that someone as cool as Saruhiko didn’t even have a place to really call his home.
And besides that, Yata thought with some irritation, if it hadn’t been for Yata coming after him about it all the time Saruhiko would probably have spent all summer eating ice cream and cola and probably fainting from heatstroke. Yata had already started figuring it out, that for all Saruhiko's knowledge of things Yata didn’t understand at all, Saruhiko had absolutely no idea how to take care of himself – and with school out and no need, technically, to make Saruhiko lunches anymore, Yata wasn’t entirely certain that Saruhiko wouldn’t starve.
“Are we going to go inside or just stand here all day?” Saruhiko clicked his tongue. “It’s hot.”
“I’m getting there!” Yata growled. It wasn’t that he was nervous, exactly, about Saruhiko meeting his family. It was just that he’d never brought anyone over before, at least not since they’d moved back to Shizume, and his mind was already churning with the possibilities of what could go wrong. Not that his mom wouldn’t like Saruhiko, of course — Saruhiko was amazing, she had to like him — but Saruhiko hadn’t been too thrilled about this either and Yata didn’t want him to be uncomfortable, since they were…the thought trailed off.
(Saruhiko put a limit on such words, always, and Yata wondered when he would be finally able to speak it out loud, the thing he felt more certain of every day.)
There was the sound of the doorbell buzzing and Yata jumped. Saruhiko gave him a flat look from where he was half-leaning over Yata’s shoulder, pressing the button.
“Misaki, is that you? Stop playing with the doorbell!” His mother’s voice was sharp and certain from the other side of the door and Yata gave Saruhiko a dark look. Saruhiko only gave him a confident smirk back and Yata felt his worries ease a little.
“I’m back!” Yata stuck his key in the lock and opened the door with such force that it slammed a little and he winced as his mother’s voice came from down the hall again.
“Don’t slam the door!”
“Sorry,” Yata muttered as he turned his head to look at Saruhiko, who was still hovering just on the other side of the door. With a sudden rush of impulsiveness Yata reached for him, hand closing over Saruhiko’s wrist as Yata dragged him over the threshold and into the house. “Mom, I brought Saruhiko!”
“Oh, so this is Saruhiko-kun!” Yata smiled as his mother’s head poked out from an open doorway. She was holding a half-asleep Megumi tucked in the crook of one arm and laundry in the other, showing no sign that either one was particularly heavy. Yata straightened proudly as his mother walked over towards them.
“Thank you for inviting me.” Saruhiko bowed, voice far politer than Yata had ever heard it and he couldn’t help but gape a little. Saruhiko caught his eye, body still angled slightly downward and Yata thought he could see a bit of a spark in Saruhiko’s gaze that made him grin.
“Misaki certainly talks about you all the time,” Yata’s mother said and Yata gave a small sheepish laugh.
“Not all the time, come on, Mom!”
“Almost all the time,” his mother corrected, giving Yata a warning look. “Your parents don’t mind you spending the night?”
Yata felt a momentary spike of panic but Saruhiko didn’t even blink.
“Yes, they gave me permission.” Saruhiko’s voice was smooth and confident. He looked every bit the well-behaved honor student type Yata had originally taken him for and Yata had to bite the inside of his cheek to keep from laughing. “They’re sorry they couldn’t talk with you over the phone about it. My mother is…very busy.”
There was only the slightest pause in his words and Yata’s gaze shifted back to his mother, wondering if she’d caught it.
His mother was looking down at Saruhiko with slightly furrowed brows, as if trying to figure something out, but when she spoke again a moment later there was a smile on her face.
“I see. Well, welcome to our home, Saruhiko-kun. Misaki, are you going to show your friend around?”
“Your friend,” and Yata froze, eyes darting quickly over to Saruhiko. Saruhiko's face was still calm and polite, no sign that those words had meant anything to him at all.
“R-right!” Yata recovered quickly and waved Saruhiko forward. “Come on, Saruhiko, I’ll show you my room!”
Saruhiko gave Yata's mother another half bow and slid past her, moving to join Yata. As Yata began to turn away to lead Saruhiko towards his room he caught sight of his mother’s face again, still smiling as she watched Saruhiko’s back but with something almost a little sad in it and he wondered if they’d messed up somehow. She didn’t say anything more though, only hummed quietly to herself as she went to finish the laundry.
“What was that act about?” Yata said quietly as Saruhiko came up beside him.
“Nothing.” Saruhiko gave him a small smile. “I just thought that, as your boyfriend, I should make a good impression on your mother.”
—
“Saruhiko, are you awake?”
They were lying in Yata’s room with the lights turned low, Yata keeping his voice down to avoid waking anyone else in the house — considering his mother’s ears, he thought she might be able to hear him even when he whispered. He was lying on a futon on his bedroom floor, Saruhiko having taken the bed.
It hadn’t gone too bad so far, all things considered. Saruhiko had kept up the polite act all through dinner — making me look bad, Yata thought petulantly, though he supposed at least his mom was probably impressed that he’d managed to become close to such a ‘well-behaved’ person — and he’d even managed to win Yata’s siblings over. Minoru had barely left them alone all evening; eventually Yata’d had to practically kick him out of the room so that he and Saruhiko could have some privacy.
They’d played video games most of the evening, Yata having even saved up to buy a second controller just for this. Saruhiko had won six times to Yata’s two but Yata couldn’t quite bring himself to mind. It had been fun, playing a game with someone else, trading insults and challenges back and forth and Yata hadn’t even felt that frustrated when Saruhiko managed to somehow turn the tables on him and win even when it had looked like a sure victory for Yata.
Saruhiko had smiled a lot too, confident and pleased and for once almost totally unguarded, the usual tension that Yata could always see in him easing with each game. He was still aware of it, that wall he'd felt before, still there even with all the lunches and first names. But now, lying there in the dark with Saruhiko curled in the bed beside him, for the first time Yata felt as though that invisible thing separating them had finally started to wear down.
“Hey, Saruhiko?”
“Hmm?” Saruhiko’s voice was sleepy and a little lost, as though he wasn’t fully awake, and Yata took a deep breath as he sat up and leaned over the edge of the bed.
(The wall between them starting to wear down but there was still one bridge Yata hadn’t been able to bring himself to cross, and he took a deep breath.)
“We’re friends, right?”
Saruhiko’s eyes flashed open, his whole body going suddenly stiff, and Yata held his breath as he felt that wall begin to rebuild itself, the shield carefully going back in place.
And then, just as suddenly, it was gone again and Saruhiko’s eyes slid closed.
“Yeah.”
The reply was so quiet Yata almost couldn’t hear it over the sound of his own breathing. But it was there, and clear, and he smiled.
We’re friends.
VI. September
“Everyone knows you two aren’t dating, you know.”
Fushimi didn’t even bother to look up at the girl who had settled herself into the desk next to his, glaring at him. He knew she was in their class — she’d been the one to ask Misaki out, right, he was fairly certain Misaki had pointed that out before. Not that Fushimi particularly cared. The only member of the class he had any interest in was Misaki. The rest of the class might as well not exist, as far as he was concerned.
“I don’t know why you two keep it up,” she continued and Fushimi kept his eyes trained on his PDA. Annoying. “It’s stupid the way you two play act like that all the time, like you’re fooling anyone. Do you even like Yata-kun?”
Fushimi clicked his tongue, quietly, and still didn’t look up. He heard the girl sigh irritably.
“You don’t, do you? Well, what else should I expect from you, I guess.” She tossed her head slightly and made a huffing noise. “If you don’t like him then just give him to me. Yata-kun’s never had a girlfriend before, has he?”
“You don’t like him either though, right?” Fushimi finally spoke up, because hearing her talk was getting on his nerves. He glanced towards the door of the classroom, wondering when Misaki was going to come back for him already. One of the teachers had asked to talk with Misaki after school — who knew what for, grades or fighting or just being Misaki, as always — and Fushimi had agreed to wait for him back in the classroom. It was raining outside, gray and cloudy, and somehow the room felt gray too, without anyone else there.
“We’re friends, right?”
Fushimi’s hands tightened just slightly around his PDA. He hadn’t expected those words, lying there in the dark. He hadn’t expected to feel almost relaxed, sleeping in a room with another person there.
He hadn’t expected to agree with Misaki’s words, but somehow he had anyway.
“I don’t see how that’s any of your business,” the girl sniffed and Fushimi rolled his eyes.
“Didn’t you talk to me first?” Fushimi gave another soft tongue click. “Don’t bother Misaki again.”
“What does it even matter to you?” the girl said. “I’ve talked to the other girls about you, you know. You don’t have any friends at all, right? Just because Yata-kun took pity on you and let you spend time with him doesn’t mean he belongs to you.”
“We’re friends, right?”
It wasn’t that he wanted to hold onto those words. It was only that he’d decided to allow them, for now. He knew better than to reach for things that would only break in the end. Those words of Misaki’s, he wouldn’t treasure them at all.
“But he’s my boyfriend, isn’t he?” Fushimi said flatly and was somewhat amused by the exasperated expression he got in return.
“Like you’re actually dating.” The girl crossed her arms.
“You don’t know though, do you?” Fushimi didn’t know why he was bothering to respond to her. It wasn’t like he needed to defend himself or anything — whether she thought he and Misaki were dating or not didn’t matter to him at all. He was only keeping this entire thing up for Misaki’s sake, because Misaki had been worried that she might try to talk to him once school started again after break. Fushimi had assumed the girl would have given up already now that it was clear her plans of making Misaki her servant for a few weeks before dumping him had failed. But she’d come up to talk to Misaki the first day they came back and Misaki had grabbed nervously for Fushimi’s sleeve again, stuttered refusal on his lips, and Fushimi had only clicked his tongue and nodded vaguely in response to Misaki’s declaration of the continued committed status of their relationship.
“I know.” Her voice was wavering though and Fushimi swallowed back a smile. “You two only hang out because no one else will hang out with you, right? I heard about what happened last year from Watanabe-kun. He said Yata-kun was super overbearing and no one wanted to deal with him. You two are only together because you don’t have anyone else to be with. Oh, wait, is that it?” She gave an irritating little twitter. “Are you lonely without him, Fushimi-kun?”
Fushimi didn’t even see the point in answering that, face still turned away.
Lonely? As if I’d ever be.
As if someone who had spent nights and nights in that big empty house would have to cling to a person like Misaki in order to keep from feeling lonely. Fushimi had never needed anyone that way. He’d always been fine on his own.
“We’re friends, right?”
But it hadn’t been so bad, spending the summer with Misaki. Hadn’t been so bad, lying there in Misaki’s bed with Misaki on the floor beside him, talking about whatever they wanted until Misaki’s mom stuck her head in the door and told them to go to sleep.
It had felt…easy, almost. As if he belonged somewhere, if only for a moment.
But he didn’t need it, certainly.
“I’m right, aren’t I?” The girl gave him a disgusted look. “It’s awful the way you use Yata-kun like that. I bet you can’t name a single thing you like about him.”
“Saruhiko!” Misaki’s voice saved him from having to answer and Fushimi looked up.
Misaki was standing in the door to the classroom, smile bright as the sun, staring right at Fushimi as he stepped inside.
“I’m ready now, so we can go—a-ah, Takizawa!” Misaki skidded to a stop a few steps from Fushimi’s desk, staring at the girl like a rabbit who hadn’t realized it was jumping in front of a fox. “Um…Saruhiko and I were…”
“We’re going to your house today, right?” Fushimi stood slowly, deliberately, and he didn’t even bother to spare the girl a glance as he reached for Misaki’s arm and steered him away. “Misaki.”
“Right!” Misaki’s face brightened again, eyes shining as he stared at Fushimi and in that moment it felt like Fushimi could have been the only one in the room, the only person who mattered because Misaki’s eyes were on him and him alone.
“Then let’s leave. This room smells…awful.” He deliberately pitched his voice just a little higher and was rewarded with the girl giving him an absolutely livid glare. Fushimi only smirked slightly as he led Misaki out of the classroom.
“What was that about?” Misaki half-turned to look back at the girl they’d left fuming behind them and Fushimi carefully maneuvered himself between them as he herded Misaki forward.
“We’re friends, right?”
Well, maybe. Fushimi supposed if he thought about it, he could find something about Misaki to like.
“Nothing.”
VII. October
Yata leaned against the gate in front of Himuka Middle School, hands in his pockets as he waited for Saruhiko.
It had really gotten colder out lately, with the change of months from September to October, and Yata fidgeted a bit where he stood. An early winter wouldn’t be so bad, though. He was already thinking of all the fun stuff he and Saruhiko could do over winter break if it snowed — maybe they could go sledding or something, or have a snowball fight. Though Saruhiko was already complaining about the cold as it was and he did seem to get sick pretty easily, so maybe that wasn’t such a good idea. Well, there were still a few months left to think about it and anyway, Yata supposed that if he asked Saruhiko about it Saruhiko would probably have some even better ideas about what they could do. It was Saruhiko, after all. Saruhiko always had the best ideas.
Yata wasn’t sure when it had happened that all his own plans seemed to inevitably include Saruhiko too, but that was all right.
“We’re friends, right?” He’d told Saruhiko as much that day when they’d sat there in Yata’s room half asleep, and Saruhiko had accepted those words and agreed. So really, what was weird about it, planning to spend time with his friend?
With his best friend?
“Yata-kun!” Yata couldn’t stop himself from starting in surprise as someone called his name from the building entrance.
Ah…Yata swallowed down a panicked grimace as he spotted Takizawa Mariko running up to him, hair bouncing with every step she took, and he wondered how girls always managed to make their hair move like that.
“I thought I saw you standing there.” Takizawa smiled at him and it made Yata’s stomach feel strange — not the good strange he got sometimes when he was near Saruhiko but the kind of strange he’d felt when he’d first opened that jungle app and seen the people he thought were his friends saying terrible things about him behind his back. It didn’t feel like a real smile on her face at all (and it definitely couldn’t match Saruhiko’s smile, the one Saruhiko always tried to hide if he thought Yata was looking at him). “What are you doing?”
“U-um…I’m…I’m w-waiting for Saruhiko.” The words came out thin and halting and Yata really wished she wasn’t standing so close to him like that. Not that he was scared or anything (”Virgin,” a little voice in the back of his head that sounded way too much like Saruhiko mocked quietly) he just didn’t like when girls stood close. She smelled funny too, some kind of perfume that made his nostrils itch and Yata took a step backwards only to find his back pressed against the cold stone of the gate.
“Really?” There was a tiny upward curve in the corner of Takizawa’s smile, just an edge of mockery that made Yata suddenly annoyed for reasons he couldn’t explain.
“Y-yeah! Why wouldn’t I wait for him? He’s…he’s my b-boyfriend, right?” Yata gave her what he hoped was a cool, nonchalant smile.
“Oh. I see.” Takizawa made a noise that sounded like a partially swallowed laugh and Yata felt his eyes narrow. “Well, since Fushimi-kun isn’t here, I wondered if you’d like to walk me home instead.”
“Huh?” Yata looked back at her blankly and she laughed again, the sound brittle and bright and fake and Yata bit his lip.
He wasn’t going to say anything mean to a girl, of course. After all — she was a girl, right, and you weren’t supposed to pick on girls. But looking at her face with the narrowed eyes and the painted on smile, all Yata could think was how much better it was being with Saruhiko, who didn’t need to hide behind words he didn’t mean and smiles that were faked. When Saruhiko smiled it was always genuine, when Saruhiko was mocking Yata he always made it clear in the twisting of his tone and the way his head would bend just slightly forward. There was never the feeling Yata had now, that sinking feeling of not knowing if someone was being sincere or not, the sick twist of his stomach wondering if he was being praised or being mocked and thinking that no matter what answer he chose it would definitely be wrong.
“Well, Yata-kun?” Takizawa inclined her head slightly towards him. “You can’t let a girl walk home alone, right?”
“T-that’s—” Yata cast about wildly for an excuse.
“Misaki. I’m finished.” Yata felt a rush of relief as Saruhiko’s voice cut through the air. He had appeared as if from nowhere behind them, school satchel slung over one shoulder and looking as bored as ever.
Or maybe not quite. As Saruhiko’s eyes passed over the scene, Yata thought there might have been the slightest tightening in his expression when his gaze narrowed in on Takizawa. Her expression seemed to darken just a bit in response and Yata wondered if he’d missed something.
Either way he had an escape at last and without thinking Yata reached out and grabbed Saruhiko by the hand, dragging him forward.
“I—I guess we should get going, huh, Saruhiko?” Yata said quickly, trying his best to ignore the way Saruhiko’s hand tensed under his. “B-bye, Takizawa!”
Yata didn’t even let himself look at her expression as he dragged Saruhiko forward. Saruhiko followed along behind him, not pulling away even though Yata could almost feel the edge hovering in the air around him, as though he’d approached a wild animal that wasn’t sure if it wanted to bolt or attack.
“Misaki?” Saruhiko’s cold voice broke into his thoughts and Yata gave a sheepish laugh.
“Y-yeah?”
“She’s gone. You can let go of my hand now.”
“Oh.” Yata supposed that he could but somehow his own hand didn’t seem to want to let go. “Well…there are other people from our school still around though, right? Holding hands is something people who are dating do and since we’re supposed to be dating and all…”
It was a stupid thin excuse and Yata wasn’t even sure why he said it. But Saruhiko seemed to think about that for a moment before accepting it with a nod.
“Fine. Until we get to your place, then.”
“R…right.” Yata swallowed hard and gave Saruhiko a shaky smile. Saruhiko didn’t even seem to be paying attention, face turned forward as if Yata wasn’t even there.
They walked on in silence, Yata adjusting his grip just a bit so that his fingers could entwine with Saruhiko’s a little more and it looked like they were actually holding hands, rather than just Yata holding into Saruhiko.
His hands are cold. Yata risked turning his head just a bit to look at Saruhiko beside him. Saruhiko had his PDA clutched in his free hand and was staring at it fixedly, as though it didn’t bother him at all that he and Yata were holding hands. There was the slightest curl of white in front of his face, breath made solid by the cool air, and Yata wondered if they should both be wearing gloves. Though it seemed like Saruhiko never wore gloves, now that Yata thought about it, and he found himself absently rubbing his thumb against the back of Saruhiko’s hand as if he could transfer some of his own body’s warmth to Saruhiko.
Saruhiko’s hands were really soft, too, he couldn’t help but think. Saruhiko’s skin was smooth and pale with long elegant fingers, nothing like Yata’s rough calloused hands. Yata wondered if this was what a girl’s hands would feel like and then rejected it, Saruhiko’s hands were probably way better than any girl’s.
What the hell are you thinking about? Yata turned his face away abruptly, feeling the heat rise in his cheeks. What had he been thinking anyway, comparing Saruhiko’s hands to a girl’s? It wasn’t like they were actually dating. It was way too weird, right, thinking things like that about his friend’s nice hands. Yata could feel his own palms sweating and his hand seemed to tighten all by itself over Saruhiko’s.
“Misaki.” The voice made him jump and Yata nearly tripped over his own feet as he tried to recover.
“W-w-what?”
“We’re at your house. You can let go of my hand now.” Saruhiko’s voice sounded flat and bored, as if it didn’t matter to him at all that they’d walked all this way hand in hand, and Yata abruptly pulled his hand away.
“Oh…right.” Yata laughed sheepishly. “Sorry, sorry. That was weird, right? We probably didn’t need to walk like that all this way after all, huh?”
Saruhiko only shrugged in reply, face still blank though there was the faintest hint of red around his cheeks. Yata wondered if he was cold.
“Well, since we’re here, you wanna come in?” Yata hurried forward, hands held stiff at his sides. Saruhiko looked at him for a long moment and then gave one of his faint smiles, the kind that to Yata felt brighter and more honest than any dumb girl’s smile could be.
“Fine.” Saruhiko inclined his head slightly in agreement and Yata quickly turned to lead the way inside.
His hands still felt clammy, the echoes of Saruhiko’s touch lingering, and Yata ignored the feeling.
They were just friends, after all.
VIII. November
It was November 7th and Fushimi scowled into his heart-shaped bento.
The air was chilled again today, the way it had been for the last month or so, and the sky was gray and overcast. Even so he sat on the roof of the school, picking at his food as he waited for Misaki, who had shoved the bento at him and then run back to the classroom claiming that he’d ‘forgotten’ something.
Fushimi took another slow bite of his food. His nerves had felt on edge all morning, like a prey animal who knew there was a predator lurking somewhere just over the next rise but not certain where. The creaking sound of the house settling, his own footfalls echoing down the hallway, everything had put him on alert, waiting. He’d already decided he wasn’t going home tonight — an internet cafe, probably, since it was a school night and as surprisingly accommodating as Misaki’s mom had been Fushimi doubted he would be able to get away with asking to sleep over on a weekday, not when Misaki tended to keep him up late talking about whatever came to mind. Either way, though, he wasn’t going home tonight.
That guy never forgot his ‘little monkey’s’ birthday, after all.
Fushimi grimaced, setting the food aside as his stomach suddenly decided it didn’t feel like taking in anything more. He didn’t see why so many people made such a big deal about birthdays — it was just another day, after all, another turn of the calendar page. Stupid ideas about how ‘only good things will happen on this day,’ Fushimi couldn’t understand any of that. He supposed society felt the need to keep track of such things for organizational purposes — which class in school you were assigned to, for example, or when you could smoke and drink, as though somehow maturity was granted in the lag time between sundown and sunrise — but beyond that Fushimi didn’t quite see the point in remembering a birthday at all.
He remembered Misaki’s birthday, of course: July 20th, because Misaki had somewhat nervously informed him of it a few days prior to the actual date. Presumably even Misaki had realized that if the two of them were going to continue this stupid game of pretending to be dating it wouldn’t look particularly convincing if Fushimi didn’t do something to mark the date. Misaki had asked for his birthday at the time too and Fushimi had given him the answer almost offhandedly, not thinking about it at all, and had been rewarded with three days worth of Misaki teasing him for being younger until Fushimi had pointed out that when you took maturity and height into account Fushimi was older by decades if not generations, and Misaki had glared and told him not to talk back to his elders.
But then, remembering Misaki’s birthday was different.
“Saruhiko!” Fushimi raised his head slightly as Misaki’s head poked out of the door that led onto the roof. That had been Misaki’s idea too, eating on the roof, and while Fushimi didn’t care for the cold or the wind he had to admit that for once Misaki had managed to have an actually decent idea. Away from the rest of the class it felt…calmer, somehow, the constant buzzing in the back of his mind fading away and melting into the sound of Misaki’s voice instead. It was like a small world for the two of them, fresh air and ideas that circulated from one mouth to the other, things they would do, amazing plans, anything at all that came to mind and more often than not nothing important at all, just the pleasant cadence of back and forth between himself and Misaki that Fushimi sometimes thought he could listen to all day.
He kept those thoughts brief, as much as he could. Fushimi knew better than to believe in the idea of a perfect closed world — it was all just smoke on the wind in the end, gasoline and a match.
But still. Sometimes, when Misaki was there on the roof with him, it wasn’t so bad.
“What took you so long?” Fushimi pushed the bento box forward as Misaki sat down beside him. “I’m finished.”
“The hell, Saruhiko, you barely ate even half of it!” Misaki immediately grabbed the food and held it up almost under Fushimi’s nose. “Come on, you have to have more than that for lunch. You’re gonna freeze to death if you don’t have any fat on you once it’s winter, you know.”
“I have a heater in my room.” Fushimi batted the food away and Misaki glared. “Anyway, I don’t remember putting you in charge of my eating habits.”
“I’m the one making you lunches, right?” Misaki said. “Are you gonna refuse your boyfriend’s home-made lunch? Huh?”
“Yes,” Fushimi said pointedly and Misaki sighed.
“This is why you get sick all the time, you know?” Misaki leaned back on his palms for a moment before a quick smile crossed his face and he reached for the school satchel he’d brought up with him. “If you don’t eat all your lunch I’m not going to give you your present, how about that, huh?”
“Present?” Fushimi felt something inside him twitch a bit, a quick shake that he clamped down on immediately as he hunched his shoulders and looked down at his feet. “What the hell are you talking about, Misaki?”
“Well…it’s your birthday, right?” Simple and easy, as if those words were something that mattered to Misaki even though Fushimi himself had long given up on them.
“So what?” Fushimi fished into his pocket for his PDA, suddenly in need of something to occupy his thoughts and his hands.
“So I got you a present, dumbass!” Misaki was looking at him as if Fushimi was being dense on purpose, and Fushimi clicked his tongue.
“Shouldn’t you give it to me in the classroom, then? So all those idiots can see.”
(That was what Fushimi had done, after all. He’d known that it would be necessary to get Misaki some kind of present, if only to keep up appearances. He hadn’t been able to think up many ideas so in the end he’d simply bought the cheapest birthday card he could find and then spent the evening encoding a simple app to transfer to Misaki’s PDA — a small game where a little black sprite on a skateboard moved forward and you had to tap the screen to get it to jump over various obstacles. It hadn’t been difficult to make and there hadn’t been time to work all the bugs out but Misaki had been as excited as if Fushimi had given him a real present, insistently bugging Fushimi to hack his PDA so that Misaki could play the game between classes. Fushimi had assumed that Misaki would be bored of the whole thing soon enough but Misaki still played with the app from time to time even though he’d cleared all the levels.)
“Screw those guys.” Fushimi raised his head slightly at Misaki’s declaration. Misaki was staring at him, gaze steady and unyielding, and Fushimi suddenly couldn’t bring himself to look down at his PDA. “I—I don’t want those guys bothering us for stuff like this. This is for us, you know?” He laughed sheepishly. “That sounded kinda lame, huh? I just thought…it’d be nice to give it to you when it’s just you and me.”
“You don’t need to get me a present, Misaki,” Fushimi said coldly. As if he needed something like that, as if he wanted it.
“Yeah I do!” Misaki said, leaning forward suddenly so that he and Fushimi were face to face. “You’re my best friend, idiot, of course I’m gonna get you a present!”
‘Of course,’ as if it was the easiest thing in the world.
“Oh yeah, and I asked my mom if you could stay over tonight too!” Misaki continued. “Since it’s your birthday, and then I thought we could make stuff you like for dinner — you liked that hamburger thing Mom made last time, right? — and then you can sleep in my room again and—”
“It’s not a big deal, Misaki.” He had to say it or else he’d get too comfortable, or else he’d start thinking it was important. “It’s just a birthday.”
“Well…yeah, but it’s your birthday, right?” Misaki said. There was an unexpected seriousness to his tone now, the usual open cheerful idiocy replaced by something deeper, Misaki aiming for the hundred point answer surrounded by a pile of marks he’d missed. “Seriously, Saruhiko. I want to celebrate your birthday with you. Not because of the dating thing, or because of appearances or whatever it is you’re always talking about. I want to celebrate with you. Even if you act like a jerk about it I’m still gonna keep wanting to celebrate birthdays with you, even when we’re not even in school anymore and nobody cares if we’re friends or dating or what. So…let me celebrate it for you, okay?”
Fushimi felt his whole body stiffen, eyes widening as Misaki stared at him with that steady gaze, the sun shining just behind him in a way that made Misaki’s whole body seem to almost glow, and finally Fushimi nodded.
“All right!” Misaki’s face brightened instantly as he fell back and reached for the satchel again. “So, are you going to finish your bento or not?”
“Not hungry,” Fushimi said immediately and Misaki groaned.
“Come on, Saruhiko!”
Fushimi felt a laugh stirring up inside him, warm, and dimly he found himself thinking that when July came he would have to make some new levels to add to Misaki’s app.
IX. December
“This is stupid. I told you we should’ve skipped.” Saruhiko was leaning forward so that he was slightly hunched over the desk, staring at Yata with flat eyes.
“You don’t have much holiday spirit, do you, Saruhiko?” Yata teased lightly. The rest of their class was spread out throughout the classroom, writing out cards and hanging decorations, discussing where they would go on Christmas and with whom. Yata was at his desk still, with Saruhiko sitting there in front of him looking bored.
“Tch.” Saruhiko clicked his tongue and grimaced, and Yata smiled. Well, it wouldn’t be like Saruhiko at all to care much about any holiday and especially not one that involved things like ‘spreading good cheer.’
He probably didn’t intend to do anything much on Christmas, and Yata fidgeted a little.
“Hey, Saruhiko…”
“Yata-kun, Fushimi-kun.” A voice broke in and Yata sat up straighter immediately as Takizawa Mariko walked over to them. She and Saruhiko exchanged a momentary acidic look and Yata found himself wondering again what that was all about. It didn’t seem like the two of them had even so much as talked, it was kinda weird that they wouldn’t like each other already. Then again, Saruhiko didn’t like anyone.
Except Yata, and he was beginning to feel a little proud of that.
“If you two aren’t doing anything” — she gave them both a pointed look and Yata couldn’t help the sheepish laugh that escaped his lips — “you could at least take these printouts to the teacher’s office, couldn’t you?”
“Ah, right, right.” Yata ignored the way Saruhiko huffed quietly and rolled his eyes.
“Just this stack here and this one.” Takizawa set the papers onto Fushimi's desk and then turned and walked off without even a second glance at them, heading back to where a circle of their classmates were huddled together making Christmas cards. They were all glancing back at where Yata and Saruhiko were sitting, whispering and giggling together in a way that made Yata’s eyes narrow. He abruptly stood.
“Come on, Saruhiko.”
Saruhiko glared at him.
“Why do I have to?” He sounded petulant as always and Yata sighed.
“You can’t make me take these all by myself!” Yata pushed the smaller stack towards him. “Anyway, it gets us out of here for a little while, right? I wanna talk to you.”
“We’re fine talking here.” Even so Saruhiko stood up and reluctantly took some of the printouts, splitting the smaller stack and pushing the rest into Yata’s arms, ignoring the dark look Yata gave him in return.
The hallways were quiet, students all still in their classrooms working on school projects, and Yata walked side by side with Saruhiko towards the staff room.
“It’s almost Christmas, huh?” Yata said as they walked.
“So?” Saruhiko clicked his tongue. “It’s just another day.”
“But that means it'll be new year soon, right?” Yata said. “Mom said we might be able to set off some fireworks this year. You should come too, Saruhiko! I bet Mom would let you stay overnight again.”
“Maybe.” Saruhiko gave a half shrug as though he was worried about dropping his papers despite carrying less than half of what Yata held. Yata peered at him out of the corner of one eye.
Saruhiko’s face was blank as always, far away, but with a slight wrinkle of his eyebrows that made it seem to Yata as if he was thinking about unpleasant things again. Yata bit back his own scowl.
Saruhiko was like that a lot, he’d noticed. It was becoming easier for Yata to tell, too — a slight dip in that usually so calm expression, a tightening of his fists and a strange tension in his body. Saruhiko was always the kind of guy who thought about the terrible things first and sometimes Yata had begun to find himself thinking that he wanted to be the person who made Saruhiko think of better things, happier things.
“And…maybe you could come over for Christmas too?” Yata tried to sound nonchalant. “I mean, it’s not that big a deal…Mom already put up a tree so that we could decorate it. Ah, I mean, Minoru and Megumi decorated it. That’s for kids, so..” Yata coughed. “Anyway, we don’t do a lot for Christmas, just dinner and presents and stuff, but it’s not bad.” He gave Saruhiko a hopeful smile.
Saruhiko was staring down at the papers in his hands, that pinched expression still on his face.
“And anyway, we’re dating, right?” Yata pulled out his trump card. “This way we can tell everyone that we spent Christmas together and we don’t even have to lie! Genius, right?”
There was a long silence, finally broken by a soft click of Saruhiko’s tongue.
“All right.” Saruhiko shrugged, and there was a forced casual air to it that made Yata want to laugh. Really, this guy couldn’t say anything honestly.
If you’re happy, just say so, all right?
—
“Oh, Yata-kun, Fushimi-kun. You’re back.” Takizawa was waiting for them when they stepped back into the classroom, standing near the door in such a way that Yata found himself pressed next to Saruhiko in the doorway. “That took a while, didn’t it?”
“We didn’t know which desk to leave it on.” Saruhiko answered easily before Yata could even start to think of an excuse, and a cold smile spread on his face. “Someone didn’t tell us.”
Takizawa’s face darkened for a moment and Yata gave Saruhiko a quick irritated look. He wasn’t exactly friends with Takizawa but still, it wasn’t good to treat girls that way.
“Oh, hey, look!” Watanabe’s voice rose above the din of the classroom. “Yata and Fushimi are in the right spot, aren’t they?”
“My, he’s right.” Takizawa’s voice was broad and almost forced and Yata looked at her in confusion. She was staring at something above him and Yata followed her gaze.
There was sprig of mistletoe hanging above the doorway.
Right above where he and Saruhiko were standing.
“Ah—this—this is—” Yata looked over at Saruhiko desperately. He didn’t remember seeing the mistletoe when they’d walked out of the room — did they even have mistletoe? He couldn’t remember seeing any at all. And why would someone hang mistletoe above the classroom door anyway, anyone could get caught under it.
“Well, Fushimi-kun, Yata-kun?” Takizawa’s mouth was twitching in a barely hidden smile and Yata suddenly realized that the entire class was staring at them, waiting. “This shouldn’t be a big deal, right? After all, you two are dating.”
Shit. Yata exchanged a panicked glance with Saruhiko. What do we do, what do we do? After they’d kept the whole thing up for months, there was no way to get out of it now, not that Yata could think of.
Saruhiko was smart, though. Yata swallowed hard, nodding to himself. Right, Saruhiko would think of something. He probably already had a plan for a way out of this.
“Saruhi—” Yata turned to look at him and was stopped dead by the feel of Saruhiko’s lips on his.
Yata froze and then moments later Saruhiko had pulled away, the kiss nothing more than a featherlight touch on Yata’s lips and Saruhiko’s face gone flat and bored as if nothing at all had happened.
Yata was suddenly aware of the heat building in his face and the way Takizawa and the rest of the class were staring at them, open-mouthed, and abruptly Yata grabbed at Saruhiko’s sleeve.
“We''ll be right back!” Yata all but yanked Saruhiko back out into the hall, letting the door slam shut behind them.
“What the hell was that?!” As soon as the door had closed Yata immediately whirled to face Saruhiko. He could feel the redness in his face, embarrassment creeping up the back of his neck and settling there. “You—you just—”
“What are you so worked up about, Misaki?” Saruhiko scoffed. “This whole ‘fake dating’ thing was your idea, right? I was just making sure you didn’t blow our cover by being a total virgin, is all.”
“Well…okay, but…” Yata shook his head, trying to get back on track. “Wait, not okay! What the hell were you kissing me for, that’s not—I mean, you can’t—” Yata sputtered, mind still feeling almost dizzy with the memory of that small light kiss.
“Honestly, Misaki, what’s the big deal?” Saruhiko shook his head. “It’s not like that was your first kiss anyway, right?”
The silence clearly told him all he needed to know and Yata felt his ears burn with shame.
“Oh?” Saruhiko’s eyes were sparkling. “Is that what this is about? Did I steal your first kiss, Misaki?”
“Sh-shut up!” Yata said. “It…it wasn’t my first kiss.”
(It was, but he wasn’t telling Saruhiko that.)
“Kissing your mother doesn’t count, Misaki.” Saruhiko gave a sigh of long suffering. “This was just a fake kiss anyway, right? So it doesn’t count, idiot.”
“A…fake kiss?” Yata repeated, part of him insisting that it had certainly felt real. But then, it wasn’t like he had much to compare it to anyway. “It doesn’t count?”
“Of course not.” Saruhiko’s voice was calm and matter-of-fact, the same tone he used when explaining math problems to Yata when they were studying for a test. “Couldn’t you tell, Misaki? Those idiots probably set up that mistletoe on purpose to test us. I just wanted to show them, that’s all.” Saruhiko shrugged. “So it doesn’t count.”
“Doesn’t…count?” Yata thought he should’ve felt relieved about that but there was a weight in his stomach he couldn’t explain. He managed a nervous laugh. “Yeah…yeah, I guess I’m being stupid, huh? No way a fake kiss counts.”
“Exactly.” Maybe it was his imagination, the slight waver in Saruhiko’s voice. And maybe it was his imagination too, the small flush hovering around Saruhiko’s pale cheeks.
After all, Yata told himself, fake kisses definitely weren’t the same as the real thing. Because Saruhiko had said so, and Saruhiko knew everything.
And it was definitely his imagination, the feeling almost like disappointment that ran through him as he followed Saruhiko back into the classroom.
X. January
"Here, Saruhiko!" The smile on Misaki's face was wide and bright as he held out something in his hands.
It had been three weeks since the kiss and they weren't talking about it. Fushimi could only assume that Misaki, in his usual stupid thoughtless way, had accepted Fushimi's explanation of 'fake kisses don't count' and had decided to let the entire incident fade straight out of his mind.
Which was how it should have been, of course. It had only been a stupid impulsive move on Fushimi's part, borne of annoyance at the way everyone had been staring at them and egging them on, and at the idiotic blush staining Misaki's face.
That Fushimi had gone home that night and lain there in bed, thinking about the feel of Misaki's lips against his, that had been the stupidest part of it all.
"Misaki..." Fushimi turned his attention back to the object Misaki had just offered him. Of course Misaki would just go back to their usual way of doing things, back to pretending they were closer than they were in order to keep everyone fooled.
Of course Misaki wouldn’t think anything of it, that kiss.
It was dangerous, definitely, he knew that. The thing to do would be what he had always done -- loosen his hold, throw it away before it could slip from his hands. The thing to do would be to tell Misaki that this plan was stupid and he wasn't going to play along anymore.
"So...its kinda been getting colder lately, right?" Misaki looked almost shy, nervous as he spoke and Fushimi wondered if he really had forgotten about the kiss after all. "And I noticed you didn't have a scarf or anything, and you get sick all the time, right? So I thought about it and I remembered that I saw one of the girls in our class give her boyfriend a hand-knitted scarf so I thought it wouldn't be too hard and my mom helped me and...here!"
He practically shoved the scarf into Fushimi's hands and Fushimi stared down at it dumbly. It was white, or at least mostly white (it looked like Misaki had run out of white yarn at some point and compensated for it with the sort of beige that was only used by people desperately trying to pretend they were still using white) and the stitching was decidedly messy and uneven. There were threads sticking out around the edges, poorly tied off, and it was easy to tell the sections that had been done by Misaki versus his mother, neat stitching contrasting with a mess of loose threads awkwardly tied together.
It was possibly the worst excuse for a scarf he'd ever seen, something only an idiot or an amateur would have been proud of, and Fushimi opened his mouth to give Misaki a caustic remark in reply.
Misaki was still staring at him though, eyes shining in expectation, and Fushimi felt a sudden lump in his throat that he couldn't explain.
(He could let go, he knew that, but somehow he knew that if he did Misaki would only reach for him again and again, and the knowledge made him tremble without really knowing why.)
"Mm. I guess I can take it then." Fushimi shrugged and wrapped the scarf around his shoulders. It was a little warmer, maybe, or at least it made his face feel hot.
Misaki smiled proudly and slid back into his seat, already talking aimlessly about some anime he'd watched the night before, and Fushimi leaned in to listen, one hand unconsciously reaching up to touch the scarf around his neck.
--
"Hey, what happened to your scarf?" A week later Misaki looked at him curiously as they walked home together. There was a light snow falling and Misaki was fully covered with scarf and gloves and coat. Fushimi had on only a light jacket and didn't shiver at all with Misaki's warmth radiating beside him.
"Dunno." Fushimi shrugged. "You only made it to keep up appearances, right? Everyone saw you give it to me so I don't need to keep bringing it back every day."
"Yeah, but..." Misaki looked a little crestfallen and Fushimi kept his eyes trained on his feet. "Well, aren't you cold?"
"I can buy another scarf." Fushimi shrugged again. "You're not really my boyfriend, right, Misaki? So it doesn't matter what scarf I wear."
"Ah, right, right!" Misaki laughed sheepishly but Fushimi thought he could see it anyway, the smallest crack in that smile, and his fingers clenched in his pockets.
Fushimi brought up another subject instead, space rockets and what he and Misaki would do once the snow melted and soon Misaki was smiling properly again, eyes shining as he responded to everything Fushimi said, and they walked side by side all the way to Misaki's house talking about anything and everything, and Fushimi didn't feel the cold.
Misaki had to go to a relative's house or something of the sort when he got back home so they parted there, Misaki yelling at him as he left that he needed to stay over again sometime and that Misaki's mom would make him something good for dinner. Fushimi didn't reply but he nodded a little in Misaki's direction and raised one hand in a small wave as he turned away.
It was snowing harder by the time he made it back to that big house. Fushimi's hands felt numb on the doorknob as he carefully pulled it open, his breath catching as he listened for any signs of life inside.
Quiet. That guy had finally left, then.
Fushimi left his wet shoes by the doorway and slowly made his way up the steps to his room. As he opened the door one hand went back to his pocket, fingers closing around the tangle of white and beige yarn inside.
The same yarn that covered half the bed, as if someone had painstakingly and maliciously unwound an entire scarf and then left the insides there, as a reminder.
Fushimi sat down on the bed, pulled his knees up close and stared down at the yarn in his palm.
He was going to let go soon. Really.
XI. February
The ingredients were laid out perfectly on the kitchen counter: three different kinds of chopped chocolate, milk, dark and bittersweet. Heavy cream. Cocoa powder. Some fruit — pineapple, of course, candied orange peel and strawberries. Three types of nuts. Sprinkles. Foil liners and pink ribbon. It looked like the kitchen of a girl preparing for her first Valentine’s Day.
“Why do I have to be here again, Misaki?”
Complete with lazy boyfriend leaning against the counter, Yata thought darkly as he turned to glare at Saruhiko.
“You said you’d help me with the Valentine’s chocolate, right?” Well, technically Saruhiko hadn’t said anything, because Yata had asked him when there were earphones in his ears and Saruhiko had only inclined his head in reply to the question he likely hadn’t even heard, but still.
“Why do I have to help make chocolate that you’re giving to me anyway?” Saruhiko asked, glaring in the direction of the ingredients. “Isn’t this something a girl is supposed to make on her own?”
“Shut up!” Yata snapped. “A-anyway, who says I’m making them for you? I’m the one who always makes you lunches, so you should be making chocolate for me!”
“We’re in your kitchen,” Saruhiko pointed out.
“Yeah, because if I waited for you to make chocolate I’d never get any,” Yata said. “This is something people who are dating do, right? It’s almost Valentine’s Day and it’ll look weird if we don’t do something.”
“We kissed, isn’t that enough?” Saruhiko shrugged and Yata stiffened.
It wasn’t like he’d forgotten the kiss. He’d tried, of course — it wasn’t like it counted, after all, Saruhiko had said as much so it was clear that assigning any importance to it whatsoever was stupid. So really, there was no reason to think about the kiss or to pretend it meant anything at all. It was just like the chocolate they were about to make, another obligation so that everyone would think they were dating and the girls in class would leave Yata alone (well, the girl in class, but Yata liked to think that maybe if there had been more than one who liked him this would keep them out. And besides, sometimes he heard gossip in the halls from girls watching Saruhiko and complimenting his hair and his skin and if they didn’t think he was taken they might even try to ask him out. When you thought about it that way Yata was doing everyone a service, keeping Saruhiko from inevitably breaking peoples’ hearts).
“Valentine’s Day is different,” Yata muttered at last. “It looks weird if a couple doesn’t do anything for Valentine’s Day, doesn’t it? So we need chocolate.”
“The store sells chocolate,” Saruhiko countered, nose wrinkling as he poked a piece of pineapple with one finger.
“That’s not the same!” To be fair, Yata didn’t have a lot of experience with the ins and outs of Valentine’s Day but clearly he had a better grasp than Saruhiko, who wouldn’t know romance if it bit him on the nose. “Store bought stuff isn’t the kind you give to people you like. You have to make it or there’s no feeling behind it at all!”
Saruhiko looked up at him, a momentary look of open surprise flashing across his face before he ducked his head and clicked his tongue.
“’People you like,’ huh?” There was something Yata couldn’t quite catch in his voice, not quite mockery but close, and a stiffness to the tone that was entirely unlike his usual taunting lilt.
“That’s not what I meant!” Yata said quickly, too quickly, and he couldn’t stop the sudden blush that stained his cheeks. “Ah, wait, wait, but I didn’t mean I don’t like you. I mean—I don’t like you like you, you know, it’s like — we’re friends, right, so I should make the chocolate and besides we’re supposed to be dating so…” Yata trailed off, aware that the sentence had gotten away from him at some point but not entirely certain where.
He thought that he saw Saruhiko’s expression twitch just a little, a slight upturn of the mouth that was halfway to a laugh before Saruhiko covered his face with one hand.
“Honestly, Misaki.” Saruhiko shook his head. “Do you even know how to make chocolate?”
“My mom showed me,” Yata said eagerly. He could feel the sudden awkwardness that had descended between them vanishing just as quickly and the tension in his body seemed to ease just a little as he leaned over the kitchen counter. “I told her I needed to make some for school. It wasn’t too hard, we should be able to make all kinds of chocolate with all these ingredients!”
“If you’re just making it for me do we even need all this?” Saruhiko was poking at the ingredients again, looking at them the way some people looked at insects that had crawled through a hole in the wall.
“Well…I didn’t know what kind you’d like,” Yata muttered, looking away. “Since you’re so damn picky and all. So I just told Mom to buy me whatever she could think of.”
“I don’t like anything too sweet,” Saruhiko said and of course he didn’t. Yata sighed.
“Okay, let’s get started. Here, my mom even wrote down the instructions. There’s enough stuff that we can both work on it at the same time.” Yata slid a bowl over towards Saruhiko. “I’ll take the milk chocolate and you do the dark, all right?” Yata rolled up his sleeves. “Let’s do this!”
—
Thirty minutes later the stove was coated in heavy cream and melted chocolate. There was cocoa powder all over the walls and on Saruhiko’s shirt and Yata had milk chocolate streaks all over his cheeks. He’d managed to get some chocolate into the molds at least, and Yata sighed as he slid them into the fridge.
“Mom’s gonna kill me,” Yata moaned, leaning against the counter and ignoring the way pieces of slivered almond dug into his fingers. “This is all your fault, Saruhiko.”
“Mine?” Saruhiko raised an eyebrow. He was currently trying to wipe cocoa powder off the screen of his PDA and not quite succeeding. “You’re the one who started throwing sprinkles at me.”
“Because you were going to set off the smoke alarm with your chocolate!” Yata said. “Seriously, Saruhiko, do you even know how to cook? What were you doing putting all the chocolate over the boiler anyway, I told you to heat the cream first.”
“It was taking too long.” Saruhiko shrugged, and a square of chocolate dislodged itself from his sleeve. “This way was faster.”
“You almost started a fire.”
“Maybe you should have stayed and kept an eye on things, then,” Saruhiko replied, unconcerned.
“I had to go answer the phone! All you had to do was watch the cream for a minute.”
“I did watch it. It wasn’t doing anything.” The words should have been mocking, Yata was sure of that, but Saruhiko’s tone was completely serious.
“You…wait. You have cooked before, right? Saruhiko?” He had to know how to cook. Yata still didn’t know a lot about Saruhiko’s parents but he knew enough to realize that Saruhiko tended to be on his own for most of his meals. He could still hear Oogai’s words, after all: “He doesn’t eat anything the maid makes and always buys his food so if he maybe doesn’t have the strength to buy food he won’t eat anything at all.”
“I don’t need to know how to cook,” Saruhiko said, sounding slightly defensive as he hunched his shoulders and stared down even harder at his PDA. “We should have just bought chocolate in the first place.”
“Yeah, and you probably wouldn’t have liked that either,” Yata muttered, turning to look despondently back at the mess they’d made of the kitchen. They needed to get it cleaned up before his mom got back and Yata was pretty sure that he was going to be the one who ended up doing the majority of the work. He sighed heavily, looking down at the pans still with bits of chocolate sticking to the edges. “I wanted to give you something good. You barely eat my lunches half the time anyway and I didn’t know what kind of chocolate you like, so…” Yata trailed off, defeated.
There was a light touch against his cheek and Yata froze as Saruhiko’s fingers brushed against his skin, wiping the chocolate off his face. As Yata stared Saruhiko brought the finger up to his mouth, licking the chocolate off slowly.
“This kind is fine,” he said quietly, and then turned back to his PDA.
“W-what?” Yata felt the sudden rush of heat to his face and he found himself thinking about it again, about standing under mistletoe with Saruhiko’s lips brushing against his, and he swallowed hard.
“The chocolate.” Saruhiko shifted just slightly, the smallest twitch of movement but still enough that Yata could see the sudden awkwardness in him. It was the way Saruhiko acted when he was trying to express something and didn’t quite know how to convey it properly. “I like that kind.”
Yata stared at him for a long moment, his own hand going up to touch his cheek. He could still feel the ghost of Saruhiko’s fingers there, the uncharacteristic gentleness of that touch warm against his skin, and Yata swallowed hard.
It was just Saruhiko being Saruhiko again, right? Yata knew that for all his knowledge Saruhiko didn’t quite ‘get’ things sometimes, artful in things Yata could never hope to understand and clumsy in the things that should have come to him as easily as breathing, and Yata nodded.
“All right. I’ll remember that.” Yata smiled at him, even though Saruhiko still wasn’t looking at him. “I guess we did okay, right? I mean, we got a couple chocolates made. You’ll have to tell me how they taste.” Saruhiko shrugged, not looking up.
“I’m not cleaning this up.”
“Do you want your chocolate or not, asshole?”
—
The next day Yata came to school dragging along a single slightly lumpy heart-shaped chocolate wrapped with the biggest, brightest pink ribbon he could find and handed it to Saruhiko in front of the entire class, blithely ignoring the glare directed his way or how both of them still had small traces of cocoa powder visible under their nails.
Saruhiko ate the chocolate anyway, though.
(“The kind you give to people you like,” and if something inside Yata shifted just a little he ignored the feeling. Fake chocolates probably didn't count either, after all.)
XII. March
Fushimi sat under the shade of a tree, eyes half closed as the leaves fell gently around him.
School was finished for the rest of the month, their last few days as second year middle schoolers ended. There were still plenty of students hanging around the grounds, discussing club activities and saying goodbye to the third years. Fushimi sat under a tree near the main gate with Misaki laid out on his back beside him.
“We’ll be in the same class again next year, right?” Misaki had one hand outstretched and was staring up at the sun through his fingers.
“Mmm.” Fushimi inclined his head slightly, not allowing any doubt to seep into his mind. Of course he and Misaki would be in the same class.
(And he knew it was a dangerous thought — there was still a handful of white yarn in his pocket, reminding him of how easily it could all fall apart — but the sun and the wind and the sound of Misaki’s voice made him feel drowsy and almost content, almost like he wanted to believe.)
“I guess we don’t have to pretend to be boyfriends anymore, at least?” Misaki said, glancing over at him furtively. “Um…sorry about that, Saruhiko. I know I kinda dragged you into it.”
“It’s fine.” Fushimi shrugged. “We kept it up long enough, so no one should bother us anymore. Stop worrying about it, Misaki.”
“I bet we’ll do even more amazing things once we’re third years!” Misaki’s voice continued on and Fushimi let his eyes slide shut again, listening. “You and me, we can do anything, right? I mean, we fooled the whole class all year long!”
Fushimi gave a soft click of his tongue but didn’t reply. We, Misaki had said, when it was clear most of the class hadn’t believed a word of it until the kiss.
The kiss. Fushimi shifted, leaning his head back against the tree. Well, he’d said it to Misaki, hadn’t he? Fake kisses didn’t count, so there was no reason for his heart to continue pounding every time he thought about that moment.
Misaki didn’t say anything, a slight shifting of leaves the only sign that he was still there but somehow Fushimi knew that he was, that Misaki was there beside him and wouldn’t leave, not without a smile and a hand outstretched for Fushimi to follow.
Dangerous. Very dangerous, and the air smelled a little like a fire. Even so, Fushimi couldn’t help but find part of him thinking that it might be nice if this could be forever, him and Misaki relaxing under a tree in the crisp March air while leaves floated down around them.
“Yata-kun!” The voice made his eyes open and Fushimi scowled. Misaki started beside him, face falling.
“A-ah, Takizawa—” She was walking towards them with a purposeful stride, hair in ribbons and a challenging glint in her eyes as she spotted Fushimi there beside Misaki.
It wasn’t really like he’d planned it, what happened next. It was only that Fushimi had always felt the need to rise to a challenge like that and he couldn’t resist the urge to make the final move even when the game was already won.
Fushimi promptly leaned down, wind blowing against his cheeks hard enough to make them burn as he pressed his lips against Misaki’s.
It felt different than that first kiss. He could still hear Misaki’s small noise of surprise, swallowed up by Fushimi’s kiss, and the push of their lips against each other was more awkward than anything. It wasn’t quite a tender thing and not quite a confident one either, more tentative than Fushimi would have liked and maybe a little bit — dangerous — but Fushimi didn’t break the kiss until he could see it out of the corner of his eye, the way that girl’s eyes widened as her feet slowed until she was just standing there staring at them blankly.
Fushimi let his lips linger on Misaki’s for just a moment longer — just to be sure the effect hadn’t been missed, maybe, and that was an excuse he could accept — and then he pulled his head away and gave the girl a slow confident smile.
“Sorry,” Fushimi said smoothly. “You’re interrupting something.”
The girl opened her mouth as if to reply but she couldn’t seem to think of any words and after a moment of gaping she finally turned and walked away without another word.
“W-w-what the hell was that, Saruhiko?!” And immediately Misaki was sitting up and grabbing him by the front of his shirt, face bright red, and Fushimi clicked his tongue again.
“I was getting her to leave. Obviously.” Fushimi rolled his eyes. “We spent a whole year keeping this up, did you really want to blow it now?”
“But you—again you—”
“I already told you, fake kisses don’t count.” Honestly it was so amusing sometimes, how stupid Misaki could be. It was definitely a fake kiss, just like the other one had been, and that last lingering moment meant nothing at all. “She won’t bother us again.”
“I…guess not.” Misaki seemed to turn that over in his head before the usual smile lit his face again. “That was a pretty good idea, wasn’t it?”
“Don’t act like it was yours,” Fushimi scoffed. “You were standing there like a deer in headlights.”
“I would’ve done something, if you hadn’t k-kissed me first!” Misaki claimed. He climbed to his feet and held a hand down to Fushimi, sun shining behind him, reflecting in his hair and his smile. “Hey, let’s go to the game center, all right?”
Taking that hand meant something, he knew that. Even so, Fushimi reached up anyway, let his hand fit in Misaki’s as easily as if they’d always been meant to be this way, side by side.
“We’re friends, right?”
Fushimi could feel a slight heat building in his face and his hand tightened just a little over Misaki’s. He supposed maybe Misaki’s stupid ‘fake dating’ plan hadn’t been so bad after all.
Not that he would ever admit that to Misaki, of course, but Fushimi couldn’t swallow down the smile as he stepped forward with Misaki towards the sun.
#Fushimi Saruhiko#Yata Misaki#sarumi#K project#fic#I actually really liked how this turned out#it's a bit non canon thanks to the birthday tickets comic but that's all right#anyway cute babies in love#with a bit of angst because I do that
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Wed Aug 15 #sexed @sugartheshop Sensual Bondage with Pervertibles
Perveritble: any common often domestic item that can be used for a different purpose other than that originally intended by the manufacturer in a style that is part of a BDSM or kinky play scene
Below are three separate blog posts because ain't no body got time for that...separate posting bullshit.
I just want to go play in the woods.
1. Sugar classes, when sex workers lose clients to death, and the amazing Domme I met
2. The post I promised you yesterday
3. Summary of the successful summer tour (and whatever shit I decide to write about along the way)
First up...SUGAR
Below is the post I promised you yesterday.
But before we get to that...please check out this bondageworkshop I’m teaching on August 15 in Baltimore at www.sugartheshop.com. Tickets are $25 and the classis 90 minutes, from 630 to 8. I always hang around til close because it’s fun and the teaching space is super gorgeous. The stores great too :) and they share the same space…
On a more personal/professional note, I’ve read about the grieving process particular to sex workers who loose long term clients. And now I am both proud and saddened to say I find myself for the first time at this place in my peculiar career. Both clients are regulars and souls that I genuinely enjoy, cleints who respect me and men I believe are a blessing to those who know and work with them, and especially those that may love them or call them family. Good people. I’m not sure what this chapter of my journey is going to have in store but I’m prepared to face it without fear or reservation, because as I see it? My job is to make every moment feel like life its self until the last moment the slave can retire to the great Master of us all, that quaking moment between here and forever.
Last Wednesday after my class at Sugar I attended the wake for the untimely end of the Baltimore Eagle and bumped into an amazing Domme with the verbal gymnastics of the best stand up can offer and she was dressed like a pin up doll, veil and all. And I wondered, why can’t we all be like that? When I discussed my style with her, professionally speaking, her replay was,
“Oh honey, you work so hard, that’s why they have to pay you for it.”
Such a siren with the sweet tongue was she that still I do not know if I am flattered, or being scolded.
I liked her. It’s a lonely sport, topping the top 1%.
One. More, Eclipse. This week. Then you can all breath but my ruler is gonna play hopscotch across my sky for the NEXT two months so I’m just gonna keep riding this ride and asking for patience because GD if I couldn’t slap a bitch on a day like today #PMSRealness B r e e e a t h e
See you on the 15th.
2. Yesterday's blog post is about domestic violence, the kind I have lived with most of my life until now, so I'm finally ready. Let's all take a deep breath.
DV stands for a lot for a lot of things. Not just my initials, Domina (D) Vontana (V), but also...domestic violence. This post is a coming out story. This is my emotional psychological and mental #metoo moment. I’ll never be capable of sharing the stories of my multiple sexual assaults. I’m too much of a scorpio for that shit.
Last week I picked up a new pickup truck and it’s been glorious. I’ve started rapidly checking things off my to do list at the farm that have lingered for months, years even. And then finally today the clouds part, the sky clears and FOR FUCKING ONCE there is sun in the sky on a Saturday. If you live in the Mid Atlantic you appreciate what I know. For those of you who don’t let me say this - I arrived back from Asia the last week of April. I arrived at the farm the first week of May. It has rained. Every. God. Damn. Day. Since minus maaaybe...a total of 2 weeks. Today is one of those days that makes up those two weeks and so I took a nice long drive through the country in my new truck.
And that’s when I realized...I haven't been yelled at by a man in a year and a half. That is a record in my recent history. And by recent I mean the past decade, at least. Because strong women get abused too. Honestly, I’ve often wondered if my abusers didn’t take more pleasure in hurting me BECAUSE I was a dominatrix.
My father was a Pisces and a preacher. My mother was a Sagittarius and a musician. If you know your astrology your cringing right now, and probably laughing. Both my parents were trauma survivors. Especially my father. He was as queer as his daughter here and just as charismatic and beautiful. My mother was the codependent to his addict and as the eldest child and a daughter I was expected to perform the role of caretaker to both. And it sucked.
It sucked every single day. There wasn’t a god damn day that went by that there wasn’t some potentially humiliating and or completely unjust situation to deal with while the world outside the window carried on like inside everything in my life wasn’t completely absurd, completely violent and completely religious, all at the same time. Mind fuck is not even the word. Oh and the cherry on this shit cake is that the context for all of this is rural, white America where everyone knows your name and your business. The only place to hide is literally, the corn fields.
My parents did their best. I know this now. And it was not that great. I accept this now. And that is why for most of my adult life I have loved men who returned my love with vicious emotional and often violent attacks. Some of these men I am still friends with and they may read this and be upset at me and that’s a price I’m willing to pay because the very reason I haven't been screamed at in the past year and a half is because finally, finally...I am putting myself first everywhere in my life, not just in the dungeon. It is a choice who’s time had come and a choice that has made me more available to the people in my life, not less.
If I hadn’t had the figurative and literal space of the dungeon to practice speaking up for myself and EXPECTING to be heard I would most certainly be less fulfilled than I am today. And today I am filled with all the things that make life worth living - love, friendship, passion, creativity, community and family. And I’m almost positive that the only reasons I’m coming up with this blog post now, at this moment, rather than any other I’ve contemplated revealing the truth of my struggle is probably the intense PMS I’ve experienced during the full lunar eclipse on my moon. So bare with me, babes.
And what the actual fuck is my part in all of this? I stayed. I believed the lie that obligated me to fix these men. I honestly thought I could heal someone, all I lacked was resources. Then I found myself in a situation with limitless resources and it didn’t make a damn bit of difference - the addict stayed sick for a very long time. Long enough for me to finally skip country and fulfill my expat fantasies and also to finally quit my codependent habit. Now I am in control of my life in and out of the dungeon and no longer suffer fools in any area of my life. And for that every broken bone, every stint in the ER, every bruise and every scar is worth it because I am free at last.
Psst. Come closer. I have another secret to tell you. The final reveal. Remember when they said it was scary out there in the real world and so maybe we closed our heart chakras to feel safe? Turns out that is a red flag for predators that sends them knocking at our doors. It was only after I took the chance and did the work that I found myself starting to attract the kind of people and experiences I had always longed for that’s why recently when I felt my heart trying to close again I reminded myself that THAT was NOT the path to security.
My brother (biological): “Once a woman realizes she doesn’t need you? It’s over.”
3. Summer Tour Summary
This note is to tell you Mistress had a wonderful summer tour and will be taking the next week off to do even more fun stuff, the old fashion way - without social media.
Three a.m. and the gypsy finally rests, alone, on her bed. It’s been ten days and four states. At least 1,000 miles.
I.am. so. Blessed.
Several years ago I was up for a full ride to UNC so I moved to Chapel Hill. Thus began a period of restoration. My work is very demanding and there are few opportunities for training or mentorship. I left my vanilla life behind when I went pro out of necessity, not choice. This past week I visited the very people who gave me back my vanilla life.
It wasn’t until this week when I stepped back into the wooded paradise I called home for two years that I felt like I was finally back from Asia. That yard is where the Japanese Ume plum blossom first appeared in January and I didn’t even know what I was smelling, but it was fantastic. Fast forward four months it’s April and I was stepping off a plane in Tokyo with just a backpack. My dream to change my life yet again started in that yard, and it ended there. Last week.
Some people know what they want. I know what I don’t want. The path to perfection for me is a process of elimination, not acquisition. Turns out, I want less of myself and more of others. I want more experiences and less things. I want love. And beauty. And art. And laughter. And dialogue. And play. And I’m an introvert. So quality not quantity.
I’ve spent much of my life alone, in one form or another, often literally alone. I admit that part of this lifestyle is self sustaining for me, if not self serving. But all good things must come to an end. Now that I’m back my gypsy spirit has managed to work out a reasonable circuit: Baltimore, DC, rest at the farm, repeat.
So I’ll see you there (www.sugartheshop.com)
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My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on http://ift.tt/2ljLF4B
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My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on https://mbploans.tumblr.com/
0 notes
Text
My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on https://mbploans.tumblr.com/
0 notes
Text
My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
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My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on http://ift.tt/2ljLF4B
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Text
My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on http://ift.tt/2ljLF4B
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My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on https://mbploans.tumblr.com/
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Text
My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on https://mbploans.tumblr.com/
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Text
My Interview with Morgan Housel
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
Safal Niveshak (SN): Tell us a little about your background, how you got interested in writing and investing, and how you have evolved in these fields over the years?
Morgan Housel (MH): I started in college in investment banking. I always loved investing and knew I wanted to do it as a career. But the culture of investment banking totally put me off. I like to have time to think things through, and any culture that emphasizes 24/7 speed and fixed process over deliberation is one where I wouldn’t do well at. So, I moved on pretty quickly from that.
I then got into private equity, which I enjoyed. But this was summer of 2007, and global credit markets started freezing up, which is devastating for private equity firms that own highly leveraged companies. So, I needed to do something else.
A friend of mine wrote for the Motley Fool and said I should give it a shot. I never thought I’d be a writer, and I majored in economics in college, which meant I didn’t write much at all. But I applied, thinking a) they wouldn’t hire me, and b) if they did I would do it for six months before I found another private equity job. I ended up staying for 9 years and fell in love with the process of writing about investing.
Two years ago, I met a guy named Craig Shapiro from Collaborative Fund, a venture capital fund. We hit it off right away. Even though we come from very different backgrounds we see the world through a similar lens. I joined Collaborative Fund nine months ago and it’s been an amazing team to work with.
How has my writing evolved? Whenever you do something for 10 years you’d think it’d get easier. But writing has become much harder for me. I’ve written 3,500 articles, which means all the low-hanging fruit is long picked. It’s much harder for me to come up with ideas than it was, say, five years ago. So, I’ve slowed down as a writer. If I used to write 10 articles a week, now I write one or two. Now the stuff I write is generally deeper and longer, but every year it gets harder to come up with new ideas and topics.
Also, I’ve just become much more sceptical over time. That’s probably the biggest change in my writing.
SN: That’s an interesting journey you have travelled, Morgan. Anyways, as much as I understand, you aren’t a full-time investor nor do you manage other people’s money. How do you manage your own money? Is it through direct stock picking, or mutual funds, or both?
MH: My entire net worth is a house, a checking account, and the Vanguard Total Stock Market Index. I don’t think investing needs to be complicated so I keep it as simple as I possibly can. The fewer knobs you have to fiddle with the fewer opportunities you have to screw up over time.
SN: Wonderful! That’s as simple as it could get. What’s your broad investment philosophy? Has your philosophy changed much through the years? If yes, how?
MH: My broad philosophy is that investors are their own worst enemies, and the real key to good investing over time has little to do with the investments you pick and lots to do with how you manage your behavior.
Financial journalists spend years quibbling over investing strategies that might improve your returns by, say, 50 basis points a year, and then a financial crisis hits, people are forced to sell stocks to pay their bills or keep their sanity, which ends up costing them 400+ basis points a year. It’s so clear which one matters more.
To me the evidence is overwhelming that if you spend 10% of your investing energy on picking a portfolio and the other 90% on focusing on keeping your emotions in check, putting market volatility into proper context and doing everything you can to take a long-term view, you’ll end up doing better than the majority of investors.
SN: It’s good you talked about emotions, and how it is a huge mistake investor make falling into emotional traps time and again. When you look back at your own investment mistakes, were there any common elements of themes?
MH: Overconfidence. That’s true for most people and I was no different. At various points in my career, I thought I was cleverer than I was or had more insight than I did. The few times it “worked” was likely due to luck. More often it just didn’t work.
Some people are very good at certain segments of active investing. But everyone, no matter how they invest, must fight overconfidence. It’s pervasive and is probably the second-largest cause of investing regret, after ignorance.
SN: When it comes to direct stock picking, the worst problems investors get them into is by falling into behavioural biases. How has been your experience on this front? What tricks do you use to minimize mistakes of behavioural biases? What are the most common behavioural mistakes you make, apart from overconfidence that you mentioned earlier?
MH: This might sound like a weird comparison, but it’s one I think about a lot. I vividly remember on September 11 2001, looking out the window and thinking about the amount of suffering that was going on at that very moment. It’s a weird feeling to know that thousands of people are suffering at a specific spot in real time, in a way that you can accurately visualize, rather than a hypothetical. It just melts your mind.
In 2008 and 2009 I remember having a similar feeling, thinking about all the people who at that very moment were taking actions that would affect them for the rest of their lives — selling when stocks were cheap in a way that would almost certainly impact their ability to ever retire.
Of course, the impact was orders of magnitude less than 9/11, but I had the same strange feeling of thinking about the number of people who, at that very moment in October 2008, were experiencing something that would hurt them the rest of their lives. It felt strange. That’s when I started getting really interested in the behavioral side of investing. I see about 80% of investing as a psychology game.
The big takeaway from 2008 and 2009 was how quickly your own actions could harm the rest of your financial life. It really came down to understanding your own risk tolerance and how that fit into your time horizon. Panic selling is the most common behavioral mistake in investing.
For me, fighting it has been a combination of holding a lot of cash and studying market history. But there’s no easy solution to behavioral biases. These things have millions of years of evolution backing them up. The best you can do is be honest with yourself about your goals and your tolerance for decline.
SN: Okay, what’s the behavioural mistake with the biggest impact that’s the least understood or noticed?
MH: How people think about fees are probably the least-noticed bias.
Most investors don’t actually write a check for their fees. They’re deducted from your fund or investment account automatically. When something is so out of sight, out of mind, you don’t pay rational attention to them in the same way you do, say, the price of a gallon of gasoline.
The result is that investment fees may be one of the largest — if not the largest — annual expenses for upper-middle-class households. A couple nearing retirement with $800,000 in mutual funds could easily pay 1% in fund fees, 1% to a financial advisor, and 0.5% in trading and other costs. So, 2.5% in fees on $800,000 is $1,666 a month — an amount that is very real but for which the customer never actually sees or pays an actual bill. For perspective, the average mortgage payment in America is about $1,300 a month.
A lot of financial advisors earn their fees, especially if they can manage a client’s emotions and endurance. But the way investment fees are structured means people end up paying way, way, way more than they would for other service-based products.
SN: How can an investor improve the quality of his/her decision making? Does maintaining a journal help? What has been your experience in improving your own decision making over the years?
MH: Most medical doctors still go to a doctor to get their own check-up. Investors should do the same. Even if you don’t have a financial advisor I think it’s important for all investors to bounce their ideas off trusted advisors — friends, mentors, family, whatever.
Robert Shiller once said, “You have to understand that your own thoughts are not really your own thoughts.” Everything you know is a product of the people you’ve met and the experiences you’ve had, most of which were out of your control. That’s always stuck with me. It’s a reminder of how hard independent thinking is, and how important it is to hear out the views and thoughts of a diverse group of outside experts.
SN: That’s a very pertinent point you made, that independent thinking is hard. Now, with so much noise all around, it’s become terribly hard. With traditional media, TV, bloggers, twitter, etc., there’s so much information flow these days. It can feel overwhelming. How do we go about curating signal from noise?
MH: I’d think about two things.
One, when someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance? Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioral finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
SN: How do you think about risk? How do you employ that in your investing?
MH: I have two definitions of risk –
Risk is the odds that you won’t be able to do something in the future that you reasonably need to do to keep yourself happy.
From Carl Richards: “Risk is what’s left over when you think you’ve thought of everything else.”
The first is a reminder that risk is different for everyone, and is highly dependent on your time horizon.
The second is a reminder of how hard risk is to think about. Risk is, almost by definition, the stuff we aren’t thinking about.
SN: Indeed! Anyways, if you had just two-minutes to advise someone wanting to get into investing, what would your advice be? What are the biggest pitfalls he/she must be aware of?
MH: Keep it simple. Don’t try to be a hero. Compounding takes a lot of time. Volatility is the cost of admission for high long-term returns. That’s the message I’d get across. It’s simple but encompasses the majority of what you need to know.
SN: What are the most important qualities an investor needs to survive the complexity of the financial markets?
MH: I think it’s a combination of humility and a fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things — a good grasp of basic arithmetic, delayed gratification, the ability to live below your means. But those first two are most important.
SN: You wrote a wonderful note in Feb. 2017 on getting vs staying rich. You mentioned about cultivating humility as the way to stay rich. If one is not humble by nature, can humility be cultivated?
MH: Yes — through humiliation. Lack of humility always catches up to you. Look, in markets, you’ll receive some return over the next 20 years, and most people who try to front-load those returns into shorter periods of time will cough up whatever excess short-term returns they earn down the road — reversion to the mean. It’s very similar with humility. Most ego you have today will be balanced out with humiliation down the road.
SN: Which investor/investment thinker(s) do you hold in high esteem?
MH: My top five include –
Michael Batnick
Ben Carlson
Jason Zweig
Craig Shapiro
Brent Beshore
All have an incredible mix of insight and humility that is incredibly rare. They’re also just great people.
SN: You inspired many through your writings. Which are some of the books, blogs, and other resources on investing, behaviour, and multidisciplinary thinking that have inspired you the most over the years?
MH: This might sound odd, but I think reading about World War II has had the biggest impact on my thinking. There are few events in history that were as transformative and as well documented as World War II, so it’s just an incredible period to study to learn how people dealt with adversity, uncertainty, despair, and hope. The most accessible piece of content here is Ken Burns’ documentary, The War. It teaches you more about human behavior than anything else I’ve come across.
SN: If you were to give away all your books but one, which one would it be and why?
MH: Nassim Taleb’s book Antifragile is probably the book that I go back to the most. Taleb is a prickly personality but he’s an incredible writer and can explain complicated topics in easy-to-understand ways without dumbing it down at all. It’s a very hard skill and he’s mastered it. If you look past his ego and sharp personality I think he’s one of the smartest thinkers around today. Or at least he’s a very smart thinker and an excellent communicator.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
MH: I love the hypothetical question, but I think it’s impossible to relearn stuff in a planned way, since so much of what you know is based on past experiences that can’t be replicated. How do you teach someone about what it felt like to lose half your money in 2008? You can’t. You must experience it. Same for bubbles. No book can recreate the emotions of 1999.
But … I’d leave a list of 10 people to talk to, and I’d ask each of them for four or five hours of time where I sit them down and say, “Tell me the basics of your field that explain the majority of the outcomes.”
SN: What would you be doing if you weren’t writing and investing?
MH: I have no idea. I think I might enjoy teaching elementary school, but I’d probably get bored of teaching the same thing repeatedly. But if you strip out the career luck I’ve had and look at my academic background, I should probably be an accountant working 90 hours a week in a dark basement somewhere.
SN: What other things do you do apart from writing and investing?
MH: Mostly reading. I try to read more books and fewer articles. I’m also a growing fan of podcasts. And I try to walk a lot. We have a young son, so we sleep when we can — which isn’t much.
SN: That was brilliant, Morgan. Thank you so much for sharing your insights with Safal Niveshak readers. I wish you all the best for your work and life.
MH: Thanks Vishal! I hope your readers find this useful in some way.
Note: This interview was originally published in the April 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
The post My Interview with Morgan Housel appeared first on Safal Niveshak.
My Interview with Morgan Housel published first on http://ift.tt/2ljLF4B
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