Friends,
We had company over a few days ago. How’s that for a throwback term to when your cable remote had a wire — “company” as a term for guests. So we’ve got some friends and family hanging out and the topic of jealousy comes up. Not in the adulterous context so much as the general coveting sense of the word.
I don’t talk about envy or jealousy much here.
(I wasn’t much of a Gin Blossoms fan, but I gotta admit this 90s tone is my comfort animal)
Yinh thinks I’m seemingly immune to jealousy. If she had to name one superpower of mine that’s the one. That’s a wild claim but her misperception is understandable. I just don’t get jealous of the things that are commonly referenced as objects of jealousy — wealth, freedom, abs.
I chose my words carefully — “things that are commonly referenced as objects of jealousy” — because the conversation we had with company re-framed my understanding of jealousy. These external objects are not the root of jealousy unless you stopped maturing once you got your driver’s license. I mean as a kid I genuinely thought the world was unfair because f’n George had the GI JOE aircraft carrier.
This simplistic “I am mad because someone has a bigger X” is a fake idea. That’s self-evident. If jealousy were that basic, everyone would be seething all the time. We reserve envy for people we deem to be in the same category as us — similar job, ability, circumstance. If you are jealous of royals you should just go all-in on reincarnation religion and give up orgasms in this life. But for most people whose jealousy stems from even a shred of just-world delusion, there are a couple of ideas worth internalizing.
First is a technique that forms a cornerstone of my own yin-yang sense of reality — every strength is a weakness.
You think too much. You don’t think enough.
You are OCD about to-do lists. You’re a messy professor.
You’re indistractable. You have self-diagnosed ADHD.
In one context, you are a force, in another, your mother thinks you’re inconsiderate.
If every personality trait is some version of the “Wife and My Mother-in-Law” illusion, then you can never get what someone else has without having to make bargains you aren’t aware of. It’s the whole “unless you want to trade your life for someone else’s, don’t bother wishing for à la carte upgrades”.
I don’t know when exactly I internalized this but I’d guess it was ~ 20 years ago. I read Neil Peart’s Ghost Rider, a soul-searching memoir of his 50k+ mile motorcycle ride in the aftermath of losing his wife to illness and teen daughter to a car accident within 9 months. While whatever made him one of the greats had nothing to do with those tragedies, the sheer weight of that book made its mark — I have no idea what others carry.
I don’t know what’s in store for me, but my life, both its interior and exterior, joy and suffering, is all I get. If you can’t find peace with what it finds, what you invite consciously or unconsciously by virtue of living in your body, you can’t even inhabit the only thing you get. If you unify your power with acceptance, there is no oxygen for jealousy to burn. Life is deeply unfair but you are still responsible until you are, once again, dirt.
The second idea, the one surfaced by our conversation, is that jealousy is a gift. Not as fuel, although perhaps that works for some. [Many exceptional achievers claim this but they are also telling on themselves. Not that they care and why should they, who am I to judge? But this type of fuel to be used as anything more than a seasonal nitro boost leads to far more Pyrrhic flameouts than glorious moon landings.]
Jealousy is a shortcut. A forced examination that will save you time in the long run. It will be clear what I mean in a moment, but I didn’t see it this way until that conversation where Yinh recounted her interview with improv comedian Holly Mandel.
The exchange:
Holly Mandel: While I was going through the Groundlings, a couple of people, including one of my at-the-time closest friends and almost constant writing partner. She got on Saturday Night Live, and I remember feeling I knew something was happening the night that SNL was in the audience to see a few people.
It could have been any of us that got called in for an audition, but she was definitely on a short list, I think. I remember feeling her energy that night—she was very focused on something beyond just the show. And I was just interested in the show. I just wanted to have fun on stage, and I remember there being a different energy there. I didn’t have that.
And then she got on SNL, and I remember being so conflicted. It was one of the first times I really dealt with such a deep sense of jealousy. And I’ve since come to understand that jealousy is actually still a gift—it just means somebody has something that tells you you want something of that same caliber. It doesn’t mean you want what they have. But I didn’t know that at the time, so it was just this icky emotion.
It was fascinating to watch her career go, which was fantastic and she was wonderful on the show, and to start to learn that that feeling of failure was really about having to trust that it just wasn’t for me. At the time, I thought it meant I had FOMO, that I wasn’t picked. But later in life, I got to look back and say, Oh, my personality would never have been able to handle it. At the time, I wasn’t built for that. I wasn’t designed for that.
And that energy on stage showed me that she was focused—she wanted to go beyond just the Groundlings. It was a great reminder that you may not see the lesson now, but you can trust you’ll get it at some point. And when I did, it felt really nice.
Yinh: So what did you do with that feeling—with that icky feeling—at the time?
Holly Mandel: Pretending it wasn’t there. And probably acting out of it at times that weren’t lovely. All those messy choices you make. I don’t know how many people listening to the podcast have been around people who get famous really fast. I’m sure there are different versions of that in everybody’s life.
But fame is weird—suddenly the whole world knows the person who used to be your roommate, and they’re living this magical life you were one degree away from. So it’s a growth moment to really learn how to navigate that with grace, and again, have this bigger trust that something else is meant for you. It just hasn’t hit yet.
Maybe this moment is a lesson in: how do you handle being around people who are starting to get their dreams when you haven’t had yours yet? How do you handle that? I think that’s a huge lesson.
Yinh: A lot of my listeners are in asset management, just because that’s the business I’ve been working in. Many are friends and family, but I think there’s a similar dynamic with money instead of fame.
So many people follow the same financial trajectory, and all of a sudden one great mentor, one great job, or one great bonus puts a few extra zeros next to their name. It changes a lot. But for those who don’t get it, you start to question: Am I not good enough? Am I smart enough? What can I do better?
It feels like failure if you don’t get it. But it also lights a fire under you. It motivates you if you do want that, and it helps you question if you really do want it.
Holly Mandel: One hundred percent. And I’ve seen the underbelly of all of that. It isn’t as glamorous as it looks. That’s another growth moment: asking, Is that really the thing you want? Or does it just look good in the magazine?
The mature framing of jealousy is that it’s about you, not them. When it spotlights that you don’t want to do what it takes. You wanna play around but still get the prize? Jealousy reveals the true price of the prize.
The faster you can “muck” your miswants and double-down on your true wants, the faster you can get to burning the inevitable anxieties on the right path rather than wasting your energy on the wrong one. The jealousies you encounter on the right path are distance markers. They allow you to measure your pace vs what is possible which you can then scale for you. They are opportunities to renew your resolve.
It’s the yin-yang thing again. Jealousy is self-sabotage or self-knowledge. Wield it well.
Money Angle
Interactive Brokers launched “interactive finance lessons”. Their modules for option basics are very good.
I also noticed that they would make outstanding learning aids for the options section of the Series 7.
All free.
Money Angle For Masochists
In the discord, I was asked a good question that’s lingered for me. I’ll share the fuller response here but first the question:
When you are talking about the ‘mantra’ to reset discipline – “I am buying/selling A for $X because B is $Y bid/offered” – are you thinking in terms of actually putting on both trades or just in pricing terms (that’s expensive and stands in R to this so I am buying this)?
I thought at first that it was the latter you meant but then was thinking that maybe that isn’t actually an expression of the narrow rather than overarching opinion – like I can say I am buying X cheap because Y is expensive to make myself feel good about buying it but it doesn’t really discipline me, whereas the actual long short trade makes me focus on time to expiry, volume, price, trend etc.
Anyway like I say, dumb question but would be very interested to hear the longer form version?
Yea, this is anything but a dumb question. And in case you don’t remember the mantra, it’s what I call a “getting back on track” technique to reset discipline. (thread)
The technique focuses you on relative value. To directly answer the question, I mean that you should stay anchored to the relative lens whether you choose to do both legs or not.
But the unsaid benefit of the mantra is that it recertifies your process. Trading is a business — churning on the basis of discernment that turns over at repeatable time scales.
The loop:
research → opportunity → execution → feedback → adjustment/research 🔁
The loop is wrapped in a risk-management sheath.
In the vol trading context, you are constructing long/short portfolios of options, whether that’s your mandate as a strategy at a fund or a market-maker.
[Some market-makers are more in the category of flipper not warehouser but this business rests on speedy tech more so than discernment of option values].
I would need to fall back on the mantra after getting punished for drawing lines in the sand. Letting my book’s net vega get too long usually because it was so cheap low. Relative value lenses are hard when everything looks cheap or everything looks expensive. Nature of the game. I suspect this is true across many forms of investment not just vol. When discernment of relative value gets hard, we get sloppy. We don’t match the bids we’re getting hit on with enough sells.
This breaks the loop. If you get carried away, we puncture the risk-management sheath as well. Your personality might even change — justifying your position with macro lingo. If you really get desperate, you start blaming the Fed or passive or any other number of things that somehow failed to remind you that nobody owes you the edge you borrowed from the momentary stretch of information and technological track that your career was choo-choo’ing along on.
(Sorry, that got a bit out of hand. I’m sure you’ve never heard anyone sound thaaat entitled, right?)
The mantra stops you from drawing lines in the sand. From turning a relative value game into a…timing game. That’s what an outsize position relative to your business is — a timing bet.
“The cost of wearing this position will be worth it in hindsight because the market will come around to my understanding on a timeline that works for me.”
Timing the general vol level? I’m sorry I haven’t seen this ability consistently from anyone (outside of pockets of legal frontrunning set-ups).
You know what happens when vol gets really low? Trading sucks. And it stays low for so long that you’re happy to dump most of your length by the time it re-traces to your average price. That’s how it goes.
The answer is to take some extra days off when the opportunity cost is low, work on your skunkworks projects, and accept that parsing whether you should sell nominally cheap puts because they “screen high on a percentile skew” basis is an awful way to make a living. If your boss doesn’t understand this, you work for a business manager, not a trader. Masterminding a crap environment is orders of magnitude worse than doing a decent job in a good one.
(Obviously, this comes back to the biggest problem in finance — alignment. The right behavior and the incentives are hard to sync. Not easy to sit on your hands when private school theta is $300 per day per kid.)
If you have had a consistently profitable trading business, you’ll understand this chart.
The blue line is a unitless version of “cheap/expensive”. It’s a sine wave with the occasional rogue amplitude. Your job is to surf it. Notice that your average buys and sells are not the bottoms or tops, but there is a consistent, albeit un-heroic, profit margin.
The opportunist, perhaps a hedge fund that only looks at your market when it’s stretched, might show up when things get extreme and take a stab. They probably won’t pick the top or bottom, and because the market is especially volatile in that period the position will spend a short time in a sharp drawdown. We can assume this is just a sleeve of their total capital that is otherwise well-diversified.
As a market-maker or trader whose primary business is to surf this particular asset class, you don’t want to turn your business into theirs (especially when I’m being charitable and simply blessing this tourist fund with skill). You have a different set of constraints. They need to bet bigger because they get less swings of the bat in a year, but their opportunity set is broader. They carry a big position across a steep (p/l per unit of time) trajectory.
You’re not here for just the peaks and valleys but you need to be “able” when the market is at the peaks and valleys.
Trading is compensation for a service. In other words, a role. Don’t lose sight of the role. The easiest way to remember that is to ask yourself, “If I’m buying X at this price, what is it cheap against?”
(This will work even if you don’t trade cross-sectionally. If you have a forecast, it will focus you on the forecast’s error bars and the cadence of its feedback.))
That’s enough for today.
Stay groovy
☮️
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