[The Weekend Bulletin] #83:🦔/🦊(Hedgehogs&Foxes), World's Worst Boss,...
...Holding, Selling, Averaging, Emergency, Personality driven productivity, & more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Last week, I asked you to share your experience/struggle in forming new habits. We had an interesting discussion around keeping pace with reading in a world of information overload (more on that in Section 4 below).
I also committed to talk about a habit that I have working to develop for some time now. Its something that has been on my wish-list for a very long time, but have only managed to implement recently. I started working on it last year, and after a few unsuccessful attempts, have now managed to make it a part of my daily routine. I think that it is an interesting practise that most investors should try to develop. Watch out for an email on this habit in the coming week.
Now on to some links worth reading and thinking about this weekend.
Section 1: Investing Wisdom
Of all the decisions an investor makes, the one that requires the most courage is an implicit decision - to do nothing. The benefits of holding on to a good business are widely known, however, very little is spoken about the conviction to remain invested. This dated article provides some fodder.
In case you are wondering why holding requires the most courage, this thread by Prof. Bakshi has the answers (summarised in the pic below):
At the other end of the spectrum of the above discussion is evaluating your sell decisions. More often than not, when you look back at your sells, you'll realise that they trade at a price higher than your selling price. Investors often regret making such decisions, wishing instead that they'd help on. But, as this article suggests, that is a very simplistic way of look at your sells. Evaluating a sell decision requires more nuance than that.
I haven't come across anyone putting in as much (data backed) thought into averaging as Nick Maggiulli has. Across time, he has compared averaging to a number of strategies, with the recent one being sitting on cash vs averaging. Reading the whole series together will give some good perspective on how to invest your money, so here it is (in no particular order):
I don't think there is any event in recent history that has taught us the importance of having an emergency fund as much as the ongoing pandemic has. If realising the importance of an emergency fund is the first step, the second step would be deciding how much to put aside. The following is a good framework to start with:
Section 2: Mental Models & Behavioral Biases
Drawing analogy from the behaviour of animals, this mental model provides an interesting framework to analyse people, especially leaders, and decision making. Called the 'Hedgehog and Fox', this model provides us with the two extremes of a scale along which we most leaders lie. The fox here is a metaphor for someone who has many strategies (multi-faceted), while the hedgehog represents someone who holds a single world-view (focused). Take a pause here, and think about the leader of a business that you want to invest in - would you prefer that he is a fox or a hedgehog? Think why you make a choice over the other. Now read the following three articles to find the answer:
Section 3: Personal Development
Talking about personalities, did you know that what productivity method works best for you depends on your personality? I was surprised to find this. Here is a quick test on which one will suit yours (I took multiple tests to see if the system works, and I found the output to be logical - its worth your time).
If finding a the right productivity method does not motivate you enough to take action, then I guarantee that this will (not just motivate, it may even shake you). A very interesting perspective on 'being your own boss'.
"You are only as mentally tough as your life demands you to be.
An easy life fashions a mind that can only handle ease. A challenging life builds a mind that can handle challenge. Like a muscle that atrophies without use, mental strength fades unless it is tested.
When life doesn't challenge you, challenge yourself."
Section 4: Blast From The Past
We consume a lot interesting text in our quest for knowledge. However, with each new byte of data that we feed into our memory, we lose some bit of old information that was held. Even without the addition of new information, our memory regularly cleans out information that is held deep and not often retrieved. If is for this reason that re-reading old texts (books/articles/notes) is highly recommended.
There are other advantages to re-reading. Spaced repetition for one - when we revisit some old material, it is etched better into our long term memory. More importantly, as we gain more experiences in life, re-reading an old text can provide some fresh perspectives that we may have missed while reading earlier.
It is to reap these benefits that this section revisits article/s from an earlier issue. Below are articles that first appeared in the eleventh issue of TWB:
Quite a coincidence that this article popped from the archives. This past week, we had a discussion on managing the anxiety that comes as a result of information overload. We had some interesting responses, and the below just adds another interesting perspective:
In the time that will take you to read this sentence, 10,000 new tweets will appear on Twitter. If this pace of information broadcast overwhelms you, then this article will provide an interesting perspective to you: Information overload is not as big a problem as we seem to feel it is.
Quotable Quotes
On trade-offs:
Making time to think:
I’m often guilty of consuming too much and thinking too little.
Sir David Attenborough was praised on BBC for being the most widely travelled naturalist, and this was what he said:
“Well…I suppose so…but then on the other hand it is fairly salutary to remember that perhaps the greatest naturalist that ever lived and had more effect on our thinking than anybody, Charles Darwin, only spent four years travelling and the rest of the time thinking.”
In other words, Attenborough is suggesting that time spent thinking trumps endless data collection.
With the internet and the liberalisation of data, investors may be lured into endless gathering of data that we hardly have time to think at all.
Most information are like food. There is an expiration date to it.
Spend time thinking about information that has the longest shelf life, with the highest weighting going to information that is almost axiomatic.
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That's it for this weekend folks.
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If you have any feedback/interesting articles that you’d like to share → simply reply to this email/leave a comment below.
Have a wonderful week ahead!!
- Tejas Gutka
[Jul 10, 2021]
Your posts are awesome Tejas! Always. Although I had gone through a couple of articles included in the post earlier as well, yet the care with which you stitch the best together is simply worthy of deep admiration.
Keep learning! Keep shining!