Game Design, Programming and running a one-man games business…

An autistic introduction to the stock market

A long time ago (about 25 years!) I worked for about 2 years for a company called Datastream/ICV. They were an IT company for stock market trading floors, both real-time and research. I worked in ‘the city’ in London. I had to catch the same awful train each morning all the stockbrokers caught while they tried futilely to read the financial times. The train only went one stop, and it was so bad it had its own nickname: The Drain.

As part of my job, because we supported real-time and historical trading software, my work PC had the complete suite of trading analysis software that the company provided. We were expected to be vaguely familiar with what it looked like, so we could check it worked ok. We were not expected to know anything about actual markets and trading, but just by being in that world 8 hours a day you cant avoid picking up a lot of tips and information.

If you think ‘oh I bet the real atmosphere was nothing like I’ve seen in the movies’ you would be wrong. They seem pretty accurate to me. My favorite of the bunch is ‘The Big Short‘ but I also enjoy ‘Margin Call‘, and even, for all its horrors, ‘Wolf of Wall St‘. I have definitely interacted with people like the traders in all those movies.

The full suite of trading software normally costs a staggering amount on a monthly basis, but we had it for free. One bank at one point kept missing their payments, so our company just switched off all the data and their screens went blank, for the whole bank. I’m not sure how long it took for them to make the missing payment but it was definitely just counted in minutes. The company charged a fortune, but they had to provide insane service. If your ICV screen had issues, we would fix it within 20 minutes. We were not even in the same building. We had cars full of replacement kit, and would run to them, drive as fast as possible to the bank, run up stairs with a new PC and swap them out without even saying hello. The actual faulty PC would be looked at later. Also, if there was a problem it would be fixed by the people who showed up, in one visit. Guaranteed, or the world would explode. We would not go home and come back to work on it tomorrow. Nobody goes home. It didn’t matter if it was 4AM, you were not leaving until it was fixed. It was a fascinating place to work.

Anyway… it gave me a big interest in the stock market which I already had dabbled in from when I studied for a degree in Economics. I had *some* cash when I worked there, and made a few trades. Our software was so comprehensive I could see my personal trade scroll through on the ticker and know it was me. These days, High-frequency trades and dark pools make that sort of thing academic. Oh well.

Anyway, this blog post is about autism (thats clearly me) and the markets. I think they are a match made in heaven. Trading stocks has a lot of attributes that really scare people off (or means they suck at it), but which seem perfectly fitted to my particular level of autism…

Firstly trading stocks is completely and utterly impersonal. I don’t speak to anybody about my trading, ever. There is no dealer to speak to, and I flat-out-ignore all the emails from my stockbroker for ‘a chat’. All trading is electronic (well…99% of it is), and you can trade all day long without having to talk to anybody. Bliss.

Secondly, trading well requires doing a lot of analysis that is mostly based on numbers. All the information is freely available, and its all in electronic form. If you enjoy making spreadsheets that compare things, this is heaven. Most of all, the numbers are TRUE. Apart from the super-rare cases of outright fraud, we can all know for definite how much revenue Netflix made in the last quarter, and how much their stock has risen or fallen or been diluted. The facts of the matter are never in dispute, the data is absolutely true.

Thirdly, being emotional regarding stocks is a DISADVANTAGE. The more clinical, and analytical you can be, the better. This is an occupation when a cold logical vulcan approach is absolutely beneficial. You do not need the stocks to like you, or make them laugh, or make small talk with them. In fact any kind of emotional reaction to a stock is a negative. The best traders are very very detached from the decisions they are making. Its ideal for people who prefer facts over feelings.

Now saying that is easy. DOING it is staggeringly hard. Humans are vulnerable to so many cognitive biases and stupid emotional outbursts that its amazing we invented the wheel. However you can narrow it down to a few common mistakes people make regarding trading stocks:

  • When you buy a stock and it rockets up, people want to SELL so they can ‘lock in their gains’.
  • When you buy a stock and it steadily drops over a long period, you hold it anyway to avoid ‘crystalizing a loss’.
  • If you really like a product, you sometimes buy a stock thinking that makes it a good stock to buy.
  • You want to feel like a hotshot trader so you buy and sell all the time, to feel like you are doing something.
  • A stock you buy is up 500%. You sell, because otherwise you are ‘tempting fate’ or ‘being greedy’.
  • A stock you want to buy has recently gone up 500%. You don’t buy because ‘you are too late’.

All of this is emotional bullshit. The actual way to trade is simple to describe, staggeringly hard to do. You look at companies that seem like good companies according to your analysis of their product, their leadership, their future plans, the competition. You look at the data regarding their financials, and then you calculate how much their market cap SHOULD be. You can then work out if they are a bargain *at this price*. If so, you buy. And theoretically every day, you do the same analysis. If they ever stop being a bargain you sell.

Sounds easy-peasy (but maybe a lot of analysis)

It’s STAGGERINGLY hard if you get emotional. The very hardest thing is loss-aversion. People HATE selling a stock at a loss as this means they have definitely lost money. Even though its clearly dying and dragging you down with it, people cling on like its some sort of pet. This is how most people lose money.

Oh…options…

In the UK, most people don’t trade options. Most individuals do not have access to the full range of options that are traded elsewhere in the EU or US/Canada. I cant find anywhere that sells a lot of LEAPs. Options trading is something that I do not do, although I have done it in the past. The reason I do not do it is that I have learned my lesson. I used to trade options quite a lot, sometimes trading the same option 4 or 5 times a day. I did stocks and also currency options. I thought I got quite good at it, and it seems like easy money.

Then one day I lost a staggering amount of money. I actually don’t want to look up what it was, but I know it was at least 10 years work as a boatbuilder. How long did it take to lose it? About 5 minutes. I could not sleep that night. I was distraught.

To be fair, I was not short of money, and have since easily made it back on normal buy & hold stock trading. I have not traded options since. Options are like nuclear weapons. They all seem like fun and games until Hiroshima is vaporized, where Hiroshima is your life’s savings. Do not do it. No ifs and buts, just do not do it.

What I DO dabble in (quite often) is leveraged commodity ETFs. This is very risky stuff. Its the riskiest thing I do. I only do it with about 1% of my investments. Its been hilariously profitable, but its risky, and I don’t recommend it. What I recommend is doing a LOT of reading, a lot of analysis and buying and holding stocks of companies that seem undervalued, and having the patience to see the investment come good. This could be *any* company. Over the years I have done well out of companies that make customizable teddy bears, sporting goods, software, cars, electrical equipment, pharmaceuticals and tons of other things.

Oh and one last tip: The financial news (CNBC, Bloomberg, Yahoo finance etc) is all absolute garbage. Complete trash. Do not believe anything you read in the ‘financial news’. They are not selling information or analysis, they are selling ad-space, and the clickbait is designed to maximize that. This is why you can see headlines that say ‘Tesla SOARS!’ and ‘Tesla in freefall!’ within 2 hours of each other on the same site. The ‘journalists’ cranking out ‘market coverage’ are ad-salespeople. They have no idea what they are actually writing about.

So anyway, I write this not as specific stock advice (thats for you to research), but to point out that if you are someone like me, who finds personal interactions hard, who has problems working in teams, or for other people, then if you can find a way to make income through investments, you might find it perfectly suited to you. The reality is that a lot of very successful investors are quiet solo geeks sat at a laptop, not loud alpha-males screaming at each other wearing designer suits. Frankly the alpha-males are not very good at it. (but they like to play the role until it goes wrong, thats for sure).

Do not use liquidweb web hosting. Ever.

I recently bought a new domain, to point to a folder on my server. Sounds simple right? But SIX PEOPLE over the course of four days at my host (Liquidweb) clearly had absolutely no clue how domains worked (despite selling me one), and totally failed to achieve this trivial, laughably simple task for which I pay them monthly. I got about a dozen emails to suggest various ways in which they didn’t understand, or had no idea, or couldn’t do it. They wasted hours of my time.

I fixed it myself in 40 minutes, giving up all hope that anybody at liquidweb had a clue on how to do their job.

And today I discover that 9 months ago they just put my price up 50% without bothering to email me. What utter assholes. I do not understand how people running businesses think that this is the way to treat your customers.

I am actually considering shutting down this blog, my forums and website and just only being on X.

Do not, under any circumstances, ever, ever consider using liquidweb. They are a complete trainwreck.

Solar Farm Update: ENERGIZATION!

So yesterday was the big day and we finally switched on our solar farm! The site is not 100% finished, with a lot of tidying up to do, but for the first time ever, the 3,024 solar panels on the site are finally generating power and feeding it into the national grid. Overall, it will provide power for 300 homes, which is pretty good. That might sound a lot if you are reading this in the US, but UK per-household electricity consumption is actually quite low. Yesterday was a big big milestone, but not the total end of the project. We do not have the monitoring logins set up yet (but the power is being logged by the meter), and we do not have the final construction bill, soi I cannot tell you if/how profitable it might be yet. But here are the switch-on day details:

Annoyingly, I live hundreds of miles away from the site, so we have a four hour drive to get there (including a short breakfast/coffee stop where I recharge the EV). Because switch-on was booked in for 9.30AM, that meant a very early start, and then a long drive in darkness and eventual sunrise. That did mean that the project manager was onsite at sunrise and got some really nice pictures:

Because you have to arrange someone from the distribution network operator (DNO) to come and ‘witness’ the site energization, you have a hard deadline, because they are busy and not flexible. My wife had to come back from holiday a day early to make the date. It also meant that this was a HARD deadline, and everything had to be ready. I had assumed we would comfortably meet that, but when we arrived on site there were about 9 vans and a bunch of people still running cables and connecting stuff. This was pretty scary because the DNO will not wait all day, and there is every chance some initial test fails, or something is wrong. There was a lot of pacing up and down. Also the site manager was beyond stressed. Obviously a good time to just take photos :D.

Because everything was being tested, it was a good time to poke around and look at how everything works. The DNO substation was open and being worked on, which is a rare chance to see inside it. We will probably never see inside this box again, as it is owned by the DNO, and is their responsibility, and only they have the key! The insides are basically some big fuses and switching stuff and a transformer. This is where the power gets converted from about 400v to 11,000 volts to go out into the grid. This box is also where the (now underground) cable that connects the farm comes into the site. You can see that a lot of cabling goes down through the floor and then runs underground out to where it eventually goes back up above ground onto power poles away from the site. There is other, much thicker cabling on the LHS that goes to our big green switchgear box.

Here is the big green box I’m talking about with both doors open:

The left hand door goes into the main room that has all the switchgear and is where all of the phat cables from the inverters enter (from under the floor into that concrete trench, yet to be filled in with earth. Thats the bit that has the fire suppression system in it, and the big cooper bars which are live when energized (see previous blog post). The room on the right hand side is basically the meter and CCTV room. Its got the incoming supply meter (to measure how much power we have imported to site overnight to power minor stuff like CCTV etc) and the outgoing meter, which is the one I care about, and is remotely read to work out how much power we are generating. It also has the wifi router for the CCTV and other CCTV related equipment. Here is the meter stuff:

As I recall LHS is the power supply (import) meter, middle bit is CCTV related and RHS is the important export-tracking meter. I guess what most people are interested in, including me, is where is the big button with ACTIVATE SOLAR FARM written on it, with klaxons and so on. The answer to this seemed pretty vague, and thats in part because we connect each of our inverters through to the DNO substation, rather than there being a single cable or a single switch. The closest we get to it seems to be this button, and ironically this isn’t even my finger, its the project manager pointing at it :D

Also you would imagine there is some big ceremonial ‘moment’ when its activated, but I think such things are only really staged for TV. Basically each inverter got switched on, and then the DNO people check that nothing trips or goes wrong, and then they switch everything on, then switch the power TO the site off, just to check that when that happens, the site correctly switches itself off in reaction (just like home inverters do).

In practice this means there is a lot of nervous pacing while DNO people and ‘my’ people switch things on and off and then give the thumbs up to each other, and then eventually they come over and get you to sign a piece of paper, and declare that its all approved and energized. Any disappointment at the lack of champagne and fireworks is just matched by relief that it happened.

What I do NOT have yet is live (or indeed delayed) monitoring of the site. That should be set up at the start of next week, at which point I will exhaustively investigate all the options and data and write long blog posts about it :D. I definitely felt extremely relieved at the point at which everything was declared live, although frankly the site manager seemed even more relieved than me. I thought he might feint/explode. It was also cool that the landowners were taking a break from looking after their 1,200 sheep (OMG) to come witness the final energization of the site.

It feels almost surreal that its connected. There is other stuff to do, but no matter what, I now own (entirely! no financing!) my own solar farm. It has a peak output of 1,243 kwh (output capped at 900kw), will supply 300 houses, and has over three thousand solar panels. It is the ultimate geek toy. My stupid-ass DJI drone failed me (software awfulness for which I blame google 100%) on the day, so no decent drone pics, but it was untidy and a bit cloudy anyway. As a result I may well frame one of the sunrise pictures to sit above my monitor in my office :D.

I hope you enjoyed following this epic saga of many years. Its not 100% over yet, but this is a huge milestone. I celebrated after the 4 hour drive home with a glass of bubbly, and luckily my celebration-purchase (a chunky watch) arrived as I was typing this blog post. I feel much less stressed, but the true smugness of owning a solar farm has not kicked in yet :D.

Solar Farm Update! Line moved, Power agreement signed. Energizing date near.

I visited the solar farm yesterday. Its a long trip, but worth it. I had not been there for a while, so it was good to see progress. The reason I went on that day, was it was the day that the DNO (Distribution Network Operator) finally came and removed (recovered!) the 11kv line that ran right over the middle of our site, and redirected it around the farm, with a spur coming off to join into their substation. This was critical (and HUGELY DELAYED by insane bureaucracy) because without that line being gone, we could not install the final mounting tables and panels, or the last few inverters. There is now about a months work to go.

Its so hard to know with these things what is REALLY involved, so I half expected there to be two guys and a ladder on site, but in fact that was probably about 12 people, and multiple vans and cars and 2 tractor things and some people on those extendy platform things they use to go do stuff up telegraph poles, and a LOT of big phat cable. Here is some cable, with me for scale.

The big phat cables are the ones that connect the inverters to our switchgear and also the ones that go from that switchgear to the substation with the transformer in, so they are all roughly 400V cables. They are insanely, insanely heavy. Even heavier than they look, and they do not look light.

One of the big things that had changed since my last visit was the installation of our switchgear in a big metal shipping container. This is a big green thing, that was mostly assembled offsite, but then things need wiring into it. This is basically a switchboard where all the inverter cables get joined together ready to connect (still at 410V which is considered low voltage) to the DNO owned substation and transformer to take it from 410v to 11,000v. Annoyingly, due to earthing concerns, these two structures have to be a certain distance apart, BUT there is also a maximum distance apart they can be, for some technical reason, so its a bit tight, and nuts. Surely it makes sense to be one building? anyway… I had a good look inside the green box. Its big, you can walk around in there:

Maybe the most interesting bit in here will be the actual meter, but that is not installed yet (soon!) but also of interest are the copper busbars that all the cables coming in get attached to, so they can flow together as a single power source. Although amusingly there are two separate places for this, so its not actually single :D. In any case, these super chunky copper bars are LIVE when everything is energized:

There are a lot of cool things in the box, but the most unusual, to me, and wacky are the big fire-suppression systems in the ceiling. I hope we never need them, but I guess you have to have them. All this stuff ends up being madly pricey. Anyway, here is a picture of an industrial automatic fire extinguisher :D

The other momentous thing is probably the sight (finally omg) of the DNO doing the work to move the old line and actually connect my site to the grid. It will now be connected, but not energised. We need the final panels, and then some paperwork and a ceremony called ‘witnessing’ to ‘commission’ the site. I am surprised we do not need to sacrifice a goat at this point, but it will probably just be throwing a switch and then some paperwork. Hopefully in a months time. Anyway, here are DNO people doing things:

And this picture gives you an idea of where the DNO substation (tan color) and our switchgear (green box) are:

Hilariously while I was driving to the site and back, we were also arranging to sell the power. I got quotes from 4 companies, and agreed a price and signed the documents on my mobile phone at a cafe near the site. I won’t say who I sell it too until its officially on their website (we might get an entry on their map of generators). As for the price? Its not bad. Certainly way higher than when I started this project, but my costs have shot up too, so hopefully its ok. I estimate break even in 13 years, which is kind of insane, but when you look at valuation of stocks, in a way thats a price/earnings ratio of 13, which is actually sort of reasonable? However, I suspect we will see short term rises in energy prices and long term falls, so it really depends on how things work out in terms of govt policy favoring renewables/heat pumps/ EVs and the ability to build out large scale energy supply. Anything could happen. In terms of how competitive the market is, there was a range of prices. The company I chose offered the most, but not by much, and it does look like there is real and genuine competition. I had to sign by 3PM that day to get the quoted offer, as it changes daily, but I chose to lock in that price for a year. In future I might choose longer term locks.

Amusingly, we get paid for the power monthly, which is more frequent than I get for console video games I own the IP to. Even the staid old dinosaur energy industry can pay monthly, within 10 days. Take note, video game publishers!

The next big step will be energizing the site, a day on which I am determined to get drunk afterwards, and then we will have the first few stats to obsess over, and eventually the first actual income for this company of mine. Oh My God. There is a lot of ancillary stuff to do on site, like plant some trees, tidy things up, and some plants have grown too high for the sheep to cope with, so it all needs actually proper mowing once, after which the sheep should take care of keeping the grass down.

Anyway, enjoy this final picture. It is me pointing at one of the two (now inactive) overhead 11,000 volt lines that delayed this project by a year, cost me probably more than my first house, and drove me to actual real tears. Its finally gone, and not a problem. Its about the same thickness as the power cable plugged into this laptop.

Solar Farm: Everything you always wanted to know about power purchase agreements (PPA)

I just had another meeting about the solar farm. We are now talking in very confident and believable terms about the date to actually switch on the farm, which is absolutely amazing after the last fifty billion years oft development. Amazingly, humans continue to exist on Earth and the solar system has not been swallowed up by an expanding star and yet my solar farm may get energized. (Obviously an expanding sun would be, in the short term, great news for PV generation…

This week is an exciting week because the overhead line that initially was supposed to save money and make life easy, but actually ended up causing chaos and delays… is actually being buried this week. This is a 5 day process, because what is involved includes the burying of some new line, recovery of the old line, and the actual proper live connection of the high voltage part of the site (this is the DNO’s territory and problem). This should all be completed by this Friday, which is also the day I am next visiting the site to see how things are. I don’t think THAT much visible will have changed since my last visit, but that was a while ago so its good to have a final walk-around before the next visit which should be switch-on.

Now in theory, as maybe 80% of the site is built out, and the site gets actually connected to high voltage national grid connections on Friday, you might think that we could switch on 80% of the site while we finish the rest, but thats a logistical headache. The removal of the line lets us drill the piles for the last few mounting tables and final inverters, and then connect the last few hundred panels, but all those new panels need connecting to the earthing, and the final inverters need connecting to our switchgear (all at relatively low voltage, about 400V), and doing all of that while the rest of the site is live sounds like hell…

On a huge site, like a 50MWP site, it would be absolutely worth the hassle, because of the opportunity cost of not being connected, but on our site, its just not worth introducing complexity just for literally one month of generation for 80% of a farm in a wet cloudy September…

Anyway, there is still a bunch of stuff to do that you don’t think about, like the tree planting (a condition of our planning application), and a lot of incredibly tedious paperwork to claim REGOs (Renewable generation certificates you get for producing green energy that er traded like a commodity). Honestly if someone like Elon Musk saw the bureaucracy and inefficiency behind the REGO system he would explode, but it has to be done as they are worth about £12/MWH.

The REALLY exciting part though is the arrangement of the power purchase agreement which I expect to sign tomorrow. I will go for either a 1, 2 or 3 year fixed price for each megawatt hour of energy the site produces. The actual calculation is a real paid, because there is the raw traded price per megawatt hour (about £70/MWH) and then the ’embedded benefits’ (about £20/MWH for my site) which are payments for being good enough to generate power where it is needed, and not put a strain on the main transmission network…and then the REGOs (about £12/MWH).

The embedded benefits stuff is interesting. If you think of electricity like traffic, then you have local roads, A roads and then Motorways (highways). As anybody who has built a road will tell you (We did!) the cost per mile goes up a LOT as your road gets bigger. So if generation requires an upgrade to a major transmission line (motorway) its stupidly expensive. If you can generate power that never leaves the local roads, and in fact therefore puts less pressure on even the A roads, then there is value in that, and you get compensated. To put it another way, building a small local solar farm helps supply a rural(ish) community, and puts less pressure on the connections to and from that community. In practice, my energy will certainly never leave Shropshire, and will probably never even leave the local town within Shropshire. I’ve made the job of managing the transmission network easier!

Anyway, for reasons that escape me, it seems that you lock in power purchase agreements for 1-3 years, but the price fluctuates on a DAILY basis, so you have to sign the deal the same day (before 4PM) that you get the quote. So at some point tomorrow I may well make a financial decision that affects my business for a few years. Still, I’m playing the long game here. I might lose money for 15 years then suddenly reap the rewards of madly high prices. Who knows. Doing this stuff is not for the meek. I’ll probably have pics to share on Friday!