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Friday 24 April 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

The interconnectedness of financial systems
Many people did not realise how interconnected the financial system was. For instance, brokers in the equity market, who rely on customers buying and selling, did not realise how much of this trading business was driven by leveraged investors in the debt market. The brokers were always good at creating noise, but now it is very quiet on the trading side. But we do know that the City never stays the same for very long. History suggests that finance will always go through cycles. My model suggests we tend to overweight recent events, and tend to play down the longer-term, historical context.

Specific curiosity is what makes the difference
Curiosity predicts creativity when it is deployed within narrow parameters, to solve a particular problem or puzzle – or, as scholars term it, specific curiosity. Creativity scholars usually focus on the curiosity that freely flits from subject to subject, tracing novel trajectories as it goes. Specific curiosity is more discomfiting, resembling an itch to resolve a highly localised point of uncertainty or challenge.
This form of curiosity can be harnessed for creative purposes through a technique known as idea linking. When people are high on specific curiosity, they don’t just generate whatever ideas come to their mind randomly. Rather, they would have an initial idea and their next idea would be built upon the initial idea without abandoning it.
The idea that stepping outside your comfort zone is a good way to liberate the creative juices provided the context is sufficiently forgiving

Do less to achieve more
To “do less” is to slow down. Focus on one activity at a time. Do less total activities. Be willing to pass through occasional interludes of full non-productivity. To “do better” is to direct your focused energy toward quality activities, when possible. Finally, to “know why” is to get at the very core of the deep life mindset. Working backwards from your values to determine your activities creates a lifestyle dramatically more meaningful than working forward from whatever seems appealing in the moment. It’s the difference between resilience and anxiety; satisfaction and distraction.
The deep life is not an ambitious one-shot goal, like completing a marathon, that you work hard at until you one day obtain it all at once. It’s a state of being with which you become increasingly comfortable. A process that starts with your mind.

Role of luck in our lives
An interview worth reading on the role of luck in our lives.
The whole process of constructing life narratives is biased in ways that almost guarantee that people won’t recognize the role of chance events adequately. So, you’ve been successful, you’ve been at it 30 years. It’s true that you’ve worked hard all that time, you got up early, you put in a lot of effort, those memories are all very plentiful and available in your memory bank. You’ve solved lots of difficult problems. You remember examples of those, too. You know the formidable opponents that you’ve vanquished along the way. How can you forget them?  So, if somebody says, “Why did you succeed?” those things are going to get top billing in your story.
Maybe there was a teacher who helped steer you through trouble in the 11th grade. You don’t remember that. Maybe you got a promotion early on when one of your colleagues who were slightly better qualified had to turn it down because he had to stay and take care of an ailing parent. You don’t remember that either. Then there’s all this work on the asymmetry of memory.
You’re running into the wind, you’re keenly aware of it every second. You turn the corner and the wind is at your back. That’s good. You like that. But then two minutes into the return course you’ve forgotten completely about the fact that you’ve got something helping you along. Because a headwind is something that you have to work actively to overcome, you almost can’t fail to notice it. But a tailwind helps you along; it’s out of your field of vision mostly. You don’t think about it because you don’t have to think about it.

The best appreciation is when your competitors applaud
Over 20 years of watching different businesses -- incumbents like Blockbuster and Walmart and all these companies -- I’ve never seen such a good execution of the incumbent learning the new way and mastering it.
Netflix CEO Reed Hastings is a big fan of Disney+. 
Disney announced its flagship subscription video service, Disney+, has gained more than 50 million subscribers in just six months since the service debuted in November. Hastings called the rapid accumulation of subscribers “stunning.” Disney+ costs $6.99 per month and is the home for Disney’s large archive of movies, including Marvel, Pixar, and Star Wars films, along with other original content.
“To see both the execution and the numbers line up, my hat’s off to them,” Hastings said. “Great execution, clarity around brand and focus really makes a difference.”

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