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Friday, 1 April 2022

Weekend Reading: 02-Apr-22


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.

 

You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.


Advisory Performance for FY22





1. Price Anchoring: How Anchor Prices Increase Sales

When Steve Jobs announced the first iPad, he told the crowd that analysts predicted he would sell it for $999. He put $999 on a big screen and let it sit there while he spoke.

 

When it came time to reveal the actual price, the $999 was flattened by a falling $499. With a simple animation, everyone in the room (who would undoubtedly buy an iPad) felt like they just saved $500.

 

What’s interesting is that no one in the room had any idea what an iPad was worth. How could they? It was a brand new product. Yet somehow they felt like they had the opportunity to buy it for less than its value. 

 

Price anchoring refers to the practice of establishing a price point which customers can refer to when making decisions. Every time you see a discount with “$100  $75” , the $100 is the price anchor for the $75 sales price. 

 

A product is truly never "cheap" or "expensive"; it’s all relative. People love to compare when valuing products and having an anchor price allows them to do that. 

 

Another potential strategy is to show your competitors’ prices on your pricing page. This gives your customers a frame of reference from which they can evaluate your product, but also risks drawing in competitive options for them to choose from

https://www.priceintelligently.com/blog/bid/181199/price-anchoring-to-optimize-your-pricing-strategy

 

We are all in this together

The Indian Summer Monsoon (ISM) and the West African Monsoon (WAM) are of immense significance for around 1.7 billion people of India, northern and central Africa.

 

But both systems are undergoing adverse changes due to global warming. So much so that both these systems have been included under global climate tipping points.

 

Global tipping points are thresholds in large planetary systems that once crossed, would lead to irreversible changes and disruption of one climate tipping point could lead to disruption of other climate tipping points as well, forming a cascade.

 

The WAM always has had the potential of impacting the Indian monsoon system. The circulation in the tropics is interconnected (walker circulation). Therefore, changes in circulation in one place is likely to affect circulation far afield due to an altered walker circulation.

 

Future projections show a possible weak intensification of the WAM in the future. Therefore, other factors may play a stronger role in altering the ISM intensity. On the other hand, the realisation of the Great Green Wall in the Sahel region may strengthen the intensity of the WAM significantly and this may have a cascade effect on the ISM.

https://www.downtoearth.org.in/interviews/climate-change/-the-west-african-monsoon-always-had-the-potential-of-impacting-the-indian-monsoon--82123

 

 

Status games

Status is relative to the context in which it is being evaluated. In other words, VCs don’t care how much you can bench and weightlifters don’t care about your investment returns. Both groups have their own standards for judging members of their community and they care much less about everything else.

 

This is why you have to choose your status game wisely. Because whatever status game you choose in life ultimately determines what you optimize for. Choose money and you’ll end up working all the time. Choose beauty and you’ll always want to look better. Choose fame and you’ll constantly be seeking attention.

 

Each of these choices has consequences too. Your pursuit of wealth could leave your personal relationships in shambles. Your pursuit of beauty could impact your mental and physical health. Your pursuit of fame could end up ruining your reputation.

 

Whatever status game you decide to play, you have to ask yourself: are the benefits worth the costs?

https://ofdollarsanddata.com/choose-your-status-game-wisely/

 

Root causes can run very deep

Every current event has parents, grandparents, great grandparents, siblings, and cousins. Ignoring that family tree can muddy your understanding of events, giving a false impression of why things happened, how long they might last, and under what circumstances they might happen again. Viewing events in isolation, without an appreciation for their deep roots, helps explain everything from why forecasting is hard to why politics is nasty.

 

Japan’s economy has been stagnant for 30 years because its demographics are terrible. Its demographics are terrible because it has a cultural preference for small families. That preference began in the late 1940s when, after losing its empire, its people nearly starved and froze to death each winter when the nation couldn’t support its existing population.

 

It was almost the opposite in America. The end of wartime production in 1945 scared policymakers, who feared a recession. So they did everything they could to make it easier for consumers to spend money, which boosted the economy, which inflated consumers’ social expectations, which led to a household debt boom that culminated with the 2008 crash.

https://www.collaborativefund.com/blog/deep-roots/

 

The origin story of April Fool's Day

Some credit the ancient Roman festival of Hilaria as the inspiration of April Fools’ Day. Hilaria took place at the end of March and was a day of joy, merriment, and dressing up in disguises.

 

One origin story starts in France, where one source states that April Fools’ Day may have begun as far back as 1582 and explains why April 1 is the special date. That’s when France switched from the Julian to the Gregorian calendar. And, no, this isn’t the funny part. Evidently, some folks didn’t hear about the calendar change, which came about because of the Council of Trent in 1563. So they didn’t know that they were supposed to start the new year on January 1 instead of April 1, as had been done in the past. According to Snopes.com, French peasants would go to their neighbours’ houses to pretend they were playing a New Year’s Day call on them. If the people really thought it was the start of the new year, they were considered April fools. This is a fun story, but as noted above, some historic references to April Fools’ Day date before 1582.

https://parade.com/985732/kelseypelzer/april-fools-day-origin/

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