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Thursday 6 January 2022

Weekend Reading - 7th Jan 2022


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

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1. The world is irrational

The first step to accepting that some things don’t compute is realizing that the reason we have innovation and advancement is because we are fortunate to have people in this world whose minds work differently from yours. People like Elon Musk and Steve Jobs, whose personalities are equal parts brilliant and absurd, and the absurd can’t be separated from the brilliant – you have to accept the full package. We’d never get anywhere if everyone viewed the world as a clean set of rational rules to follow.


The next is accepting that what’s rational to one person can be crazy to another. Everything would compute if everyone had the same time horizon, goals, ambitions, and risk tolerances. But they don’t. Panic selling stocks after they’ve declined 5% is a terrible idea if you’re a long-term investor and a career imperative if you’re a professional trader. There is no world in which every business or investing decision you see should align with your own view of the world.


Third is understanding the power of incentives. Bubbles are technically irrational, but the people who work in bubbles make so much money from them that there’s a powerful incentive to keep the music playing. They delude not only their customers, but themselves. Nothing gets people to look the other way like easy money.


Last is the power of stories over statistics. If you look, I think you’ll find that wherever information is exchanged – wherever there are products, companies, careers, politics, knowledge, education, and culture – you will find that the best story wins. Great ideas explained poorly can go nowhere while old or wrong ideas told compellingly can ignite a revolution.



2. The rule of awkward silence

Tim Cook and Jeff Bezos run two of the most valuable companies in the world. From the outside, they seem to exhibit very different personalities. But within their companies, both men are known for a fascinating practice: They each embrace the rule of awkward silence.


When faced with a challenging question, instead of answering, you pause and think deeply about how you want to answer. This is no short pause; rather, it involves taking several seconds (10, 20, or longer) to think things through before responding.


We live in a world that demands instant gratification. But there's a major problem with all of this instantaneous communication:  It doesn't leave time to think. Critical thinking calls for deep and careful consideration of a subject. It requires introspection and retrospection. It involves weighing and analyzing facts, and careful reasoning. And it results in making insightful connections. None of this is possible without time.


But when you embrace the rule of awkward silence, you steal back time. Time that used to be wasted on nonsense answers. Time that used to be wasted on telling another person what you think they want to hear, as opposed to what you truly believe.



3. Sea ice and how it impacts the climate

One way that scientists monitor climate change is through the measure of sea ice extent. Sea ice extent is the area of ice that covers the Arctic Ocean at a given time. Sea ice plays an important role in reflecting sunlight back into space, regulating ocean and air temperature, circulating ocean water, and maintaining animal habitats.


Arctic sea ice minimum extent is now declining at a rate of 13% per decade. The pace is likely to accelerate because of climate change-induced warming and the ice-albedo feedback cycle. The albedo effect describes the white ice surface’s ability to reflect Earth-bound sunlight back to space.


Sea ice acts as a “blanket,” separating the ocean from the atmosphere. Every year, some ice survives the summer melt. Once winter hits, more water freezes and it becomes thicker and stronger “multiyear ice.”


Melting sea ice in the Arctic does not dramatically change sea level. Melting land ice, for example from the Greenland or Antarctic ice sheets, does contribute to sea level rise. That’s because when land ice melts, it releases water that was previously trapped on land and adds to the water in the oceans.




4. How Driverless Cars Will Change Our World

Self-driving vehicles are steadily becoming a reality despite the many hurdles still to be overcome – and they could change our world in some unexpected ways.


The promise of driverless technology has long been enticing. It has the potential to transform our experience of commuting and long journeys, take people out of high-risk working environments and streamline our industries. It's key to helping us build the cities of the future, where our reliance and relationship with cars are redefined – lowering carbon emissions and paving the way for more sustainable ways of living. And it could make our travel safer.


There will be challenges to tackle like regulations, rethinking the highway code, public perception, improving the infrastructure of our streets, towns, cities, insurance and the big question of ultimate liability for road accidents.


One new space we can expect to see driverless technology deployed in is high-risk environments, from nuclear plants to military settings, to limit the dangers to human life.


Much in the same way that electric charging stations have slowly entered car parks, side streets, and service stations, so too will autonomous vehicles eventually make their way into our everyday worlds. Years from now, we may well be wondering how we ever lived without them.




5. Influencer marketing: The new wave in marketing

Influencer Marketing has changed the entire course of how marketing is perceived now. Today, any campaign starts from setting an appropriate tone for the brand to getting the right influencers on board to maximize reach.


From celebrity endorsements to micro-influencers across multiple platforms, brands have worked their way up to rationalize every expenditure by reaching out to the right target audience. Earlier, influencer marketing was aimed to reach the masses via television ads or radio or newspaper ads, without giving a second thought to who the buyers are, but now even the trend has changed drastically. Brands have changed drastically.


Social media platforms like – Instagram, YouTube, and others, are among the chief platforms where an Influencer marketing campaign begins. And, it has been found out that 74% or more people discover new products or make a purchasing decision while using social media.


The Indian influencer marketing industry is estimated at $75-150 million a year, according to a digital marketing agency. Today, the Indian audiences are consuming more online content (images, videos, or blogs) than ever before, which explains the increase in reach and engagement of several brands, who are frequently creating content to allow their potential consumers to discover and interact with them on a daily basis.



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