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Thursday 24 September 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. 

I especially try to not post Corona related articles as that is all one gets to read in all traditional media.

If you like this collection, consider forwarding it to someone who you think will appreciate.

The secrets of a fulfilled life
I usually do not read such bullet pointed summaries titled "8 points to great happiness" nonsense. But this article is a culmination of The Guardian columnist Oliver Burkeman's long career so is worth reading. Some main points:
- There will always be too much to do – and this realisation is liberating.
- When stumped by a life choice, choose “enlargement” over happiness.
- The capacity to tolerate minor discomfort is a superpower.
- The advice you don’t want to hear is usually the advice you need.
- The future will never provide the reassurance you seek from it.
- The solution to imposter syndrome is to see that you are one.
- Selflessness is overrated. 
- Know when to move on.

Are you wealthy? Depends on your friends and relatives! 
People gauge their wellbeing relative to those around them. And rising income tends to raise the gaze of your aspirations as much as your bank account.
A thing that’s obvious but easily overlooked is that feeling wealthy has little to do with what you have. It’s more about the gap between what you have and what you expect. And what you expect is driven by what other people around you have.
There are a million ways to get more money. But the only way to feel wealthy is to maintain a gap between what you have and what you expect. The expectation part has to be managed as much as the income part. It’s easy to ignore the expectation part because focusing on the income side alone is much more intuitive.

Investing isn't easy (Yeh aag ka daariya hai….!!)
If investing were as easy as looking at market cap to revenue or PE ratio or book value and declaring “It’s cheap” or “It’s overvalued”, then anyone with a calculator would be immensely wealthy.
But it isn’t that easy. Because cheap stocks get that way for a reason – deteriorating fundamentals or existential business model threat. The hard part is deciding whether or not the issues are temporary.
Expensive stocks get that way for a reason too.
Sneering at optimism and turning your nose up at momentum doesn’t make you the superior investor. It doesn’t signify that you’re the more high quality market participant. In fact, over the last ten years it’s made you a laughing stock.

The Dunning-Kruger Effect - The less you know, the more you think you know 
The least competent participants in a study conducted by Dunning and Kruger — the ones that scored in the bottom quarter—were more likely to overestimate their performance. The least they knew, the more they thought they knew. Meta-ignorance (or ignorance of ignorance) arises because lack of expertise and knowledge often hides in the realm of the “unknown unknowns” or is disguised by erroneous beliefs and background knowledge that only appear to be sufficient to conclude a right answer.
How to get better?
- Block time for self-reflection.
- Use second-level thinking to make decisions. 
- Take smart notes. 
- Be aware of cognitive biases that may cloud your judgement.

Creativity is not a 9-to-5 job
Creativity is the culmination of experiences we have in our lives and simply cannot be forced: “We tend to believe that the act of creating is what defines creativity, but creativity starts long before anything is made. The first word you write is a distillation of the knowledge you’ve accumulated over time. The first brushstroke you paint is a reimagining of the experiences you’ve stored somewhere in the mind.”

Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing.

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