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

 

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​Risk is something that you don't really foresee

The biggest risk is always what no one sees coming. If you don’t see something coming you’re not prepared for it. And when you’re not prepared for it its damage is amplified when it hits you.

 

Look at the big news stories that move the needle – Covid, 9/11, Pearl Harbor, the Great Depression. Their common trait isn’t necessarily that they were big; it’s that they were surprises, on virtually no one’s radar until they arrived.

 

One truth is that if you’re only saving for the risks you can envision, you’ll be unprepared for the risks you can’t imagine every time. So the right amount of savings/security/liquidity is when it feels like it’s a little too much.

 

It should feel excessive; it should make you wince a little.

 

Most of the time someone’s caught unprepared it’s not because they didn’t plan. Sometimes it’s the smartest planners in the world working tirelessly, mapping every scenario they can imagine, that end up failing. They planned for everything that made sense before getting hit by something they couldn’t fathom.

https://www.collaborativefund.com/blog/never-saw-it-coming/

 

Enjoy yourself, it's later than you think

Our time together is finite, but we fail to recognize it until it's too late.

 

Time is cruel. You’ll love it with all of your being, you may even pray for more of it, but the reality is that time doesn’t care about you.

 

Your relationship with time is the ultimate unrequited love.

 

We spend most of our lives playing a game.

 

Everything we do is in anticipation of the future. When that future comes, we simply reset to think about the next future.

It’s natural, but it’s a dangerous game—one that we will lose, eventually.

 

Time is our most precious asset and the present is all that’s guaranteed. Spend it wisely, with those you love, in ways you’ll never regret.

https://sahilbloom.substack.com/p/its-later-than-you-think

 

Importance of patience

Patience requires endurance against obstacles, both known and unanticipated. The longer your time horizon, the more disasters you’ll experience. Most people don't bear hardship well and quit. Depending on luck, periods of extreme hardship and under-performance may come before any success, leading to an expectation of failure.

 

And even if you’ve experienced a bit of success, or even a lot of success, the naysayers will always come out against you. See the many, many hit pieces on Warren Buffett at various stages of his career. The man has been “washed up” more times than a three-year-old’s t-shirt.

https://www.permanentequity.com/writings/how-patience-pays-off

 

The case for optimism

Since we cannot be certain of the future, optimism is only a belief -- a stance that could be incorrect. On the surface, an optimistic belief might seem no more valid than the stance of pessimism. But the deep history of new ideas makes it very clear that the optimistic stance of believing something is possible is a requirement to make anything new real, and is thus more powerful than pessimism. In the long run, optimists shape the future.

 

All the evidence so far indicates that there are no limits for knowledge or improvement. We’ve encountered nothing we can’t potentially improve. Every question answered by science generates at least two new questions, two new territories of unknown things that we now know we don’t know. In this way our ignorance expands faster than our knowledge, which is healthy. Because behind this expansion there is a great asymmetry: what is knowable but still unknown will always be larger than what we already know, meaning there are more possibilities waiting to be discovered than have already been discovered. This asymmetry in knowledge is reason to be optimistic, because it means there are no limits to our improvement. We can always imagine a better way -- and we are also always improving what/who the “we” is. Optimism recognizes that our potential for improvement is infinite in all directions.

https://www.warpnews.org/premium-content/kevin-kelly-the-case-for-optimism/

 

Market return are non-linear

This is an old blog but we need to keep reminding ourselves of the message

Returns will not be linear. Some quarters and years will be great. Some others will be horrible. If you don’t stick thr​​ough the horrible, you will not be there to see the great.

 

If you join at the wrong time and don’t stick long enough, you may actually lose money. Wrong time or right time is known only in hindsight no matter what is the market level, global news, or under/overvaluation. If you try to get in or out, you may end up doing worse.

 

The right question to ask is not what is the highest return strategy that is available anywhere but what is a high a return strategy that I can stick with for long periods and let my investment compound without getting scared out of it either due to volatility or my temperament not matching with something to do with the strategy be it the kind of stocks, buying/selling frequency etc. And this is something only you can decide.

http://blog.intelsense.in/2022/02/would-you-invest-in-strategy-if-you.html