The Weekend Bulletin (#41)
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Some interesting artwork before we get to business:
Would you believe if I told you that the above were actually stock charts? Don't take my word, see for yourself:
You can read more here (also the source of above images).
Section 1: Investing Wisdom
He has managed a low profile for over two decades. He runs a highly concentrated smallcap strategy only for institutional clients, limits the amount of asset that he manages, and mostly favours qualitative assessment over quantitative screening. Brian Bares of Bares Capital Management talks about why he chose to stick to small and micro-cap investing, why he believes that quantitative screens are not a good starting point, and how picks his investments. You can hear about him talk here and here, or read his interview here.
I love listening to the wisdom of the ages. Here is one such in the form of investing advice from an investor to his younger self. Very crisp and to the point. The following is what resonated with me the most:
The US markets are back to all time highs. The Indian markets are not very far (adjusted for the financial sector's underperformance, we are already there in all probabilities). This makes investors nervous; first, the sharp rise has been in a period that is witnessing the worst of economic prints in recent history, and second, people expect a correction to ensue following a sharp rally to all time high levels (that's how peaks are formed, aren't they?). History, however, paints a completely different picture. A quick two minute look at some disconfirming evidence.
Section 2: Mental Models & Behavioral Biases
"Doing well over a long period of time is not necessarily about finding the right answers or making the best decision, it's about being able to strive amid the broadest range of outcomes".
One is a master of behavioural finance. The other is a master of decision making. The two together can give you some of the best lessons on decision making in an uncertain world. Morgan Housel, author of the forthcoming book, “The Psychology of Money,” interviews author, business consultant, and former professional poker player Annie Duke, about the science and strategy of decision-making and Annie’s forthcoming book, “How to Decide.”
Section 3: Personal Development
When we picture original thinkers - Leonardo da Vinci, Thomas Edison, Charles Darwin - we see them as extremely intelligent, diligent, and productive. But that is not what they are. Original thinkers are Non-confirmists (of course they are, that's how they are original). But they are also procrastinators, fearful and full of doubts. How then do these people come up with such great work in their respective fields? This 15 minute talk will tell you how. Its witty, its entertaining, and above all, its educating. And in it, lies the answer to last week's trivia: How the internet browser you use predicts your job performance.
On a related note, here is another interesting perspective on procrastination.
The modern worker's biggest strength is knowledge, unlike his ancestors that needed physical strength. How does a modern worker ensure that he keeps his mental muscles exercised? How can he learn and understand more? Well, there are more than one ways to improve your learning and retention. We'll start with a broad understanding of this subject first, and then follow up with some specific techniques next week. For starters, bookmark this page and visit few of the links in the page to build a basic perspective on the subject.
Section 4: Trivia
Over the long run, more strange things can happen than we can imagine. We have been witnessing one such strange thing over the past decade - record low interest rates. They have now fallen so low, that many investment firms are waiving their charges on money market funds to keep the yields that investors earn from dropping below zero. The question that I want you to ponder upon this weekend is this: what happens to your financial plan if you were to witness something similar on your investments? (more importantly, what if you were to witness record low interest rates post retirement - what would your asset allocation look like?). I am afraid there will be no answering this question in the next issue.
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That's it for this weekend folks. I hope you enjoyed this issue; let me know your thoughts/feedbacks by commenting below. Have a wonderful week ahead!!
- Tejas Gutka
[August 29, 2020]
P.S.
If you would like to contribute to a future issue of The Weekend Bulletin, please email a link to the article along with a short summary/note on why you like the article to: share2TWB[at]gmail[dot]com.