August Rush: A New Home and a Financial Setback
Since I last wrote I feel as though I’ve lived another lifetime and I’ll forever call it August 2011. It’s hard for me to explain recent events in my life in a short narrative so over the next few days I’ll post a series of entries under the theme of my ‘August Rush’.
My wife and I decided to buy an apartment. Since we returned to Korea we’ve lived with her mother, and that had both its emotional and logical reasons, but it changed the nature of our relationship and not for the better. Summer tends to be the slow season for apartment hunting in Korea, for the very good reason that people don’t want to hike around in the unbearable heat as I have just spent the last month doing, and with prices of apartments in Busan rising at a bubble-like pace, we were watching our relocation options dwindle by the month. We had to take advantage of any lull there was.
I became a full-time financial trader in December 2004, and I was quite successful for a few years, but since my wife stopped working alongside me last year - providing an all-important extra set of eyes and second opinion - my profitability just ebbed away and my heart wasn’t quite in it any more. I sat alone in my office trading London hours into the early hours of the Korean mornings, I wasn’t getting out of the apartment much at all, so I was failing to learn the Korean language. And the relentlessly negative financial macroeconomic environment of the last few years began to take its toll on me, because in the end I found it doesn’t matter whether you’re winning in the market if the constantly depressing news environment just wears you down. I started doing a weekly radio segment on Busan e-FM during trading hours just to get away from things, an unthinkable move during more motivated times.
But the end of my career as a trader in August came quickly. I have a rule that if the running annual total of my profits falls sufficiently below the level I could earn from a normal salaried position, then I have to accept that I’m in the wrong job. When you’re ‘in the zone’ in trading, as we call it, you feel untouchable, but when you’re not it’s easy to see extended runs of losses, because this is an activity where studies have suggest 90% of participants consistently lose money. When you find yourself in that 90%, when general market conditions seem no longer aligned with your trading style, you have to find something else to do with your life. And while it would make for a great narrative if could say I’d suffered a major financial blow-up, really it’s been more of a setback, albeit a significant one.
The culmination of my minor financial crisis was connected with the search for an apartment. I’d done a radio segment about ‘the gravitational pull of Haeundae’, and like a lot of Koreans in Busan I felt like I had to be there, but not just out of the need to climb the property and perceived social ladder; the two prominent foreign schools - Busan Foreign School and Busan International Foreign School - are both in the area, and with the prospect that this is where my son needed to go one day, we were planning ahead. But Haeundae is expensive, and it seemed like we had a choice – buy a nice apartment in a good area, or a bad apartment in a good area. We started looking around and it only seemed to make that choice seem even more stark.
I’d seen some nice apartments in Centum City, but they were out of our price range, and yet tantalisingly close enough that if I pushed hard with my trading accounts living there might be possible. So I did something I hadn’t done in a long time – broke my risk management rules, ignored the warnings I’d built into my systems, and went for it. If I failed at least I could say that I met my undoing out there on the ragged edge which so often defines who you are as a person. In earlier and more reckless times as a trader I’d done the same thing, and I’d always come out of it on top, but not this time. My decision came just days before the market entered a particularly high period of volatility, and in trading parlance, I was long when I should have been short and short when I should have been long. By the time it was over, I’d lost quite a lot of money and Centum City was no longer tantalisingly close but instead an even remoter dream.
You live by the sword and die by the sword as a trader. I knew what I was doing, I let frustration and impatience get the better of me, and now I have to pay the price. That was my first financial disaster. My second may be buying the apartment itself, because I’m convinced that Busan is in the midst of an unsustainable property bubble that could entirely conceivably implode in on itself at any moment. But we urgently needed a place to live, and rather presciently as it turned out, while watching what was happening in the international financial markets and the Korean construction sector, I predicted that Korean banks might stop lending, as banks in the UK had a few years earlier, excluding a generation from the dream of home ownership.
In fact when we were arranging our loan, in a remarkable and frightening admission the bank manager told us that he couldn’t guarantee the bank would still be willing to honour it at the end of September when it was supposed to be released. Despite this, it wasn’t certain then that the turmoil in the financial markets would translate into real-world actions, but just days after we arranged to buy our new apartment, the Korean banks made their move as I’d believed they would, but much sooner than I expected.