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.

Upfront

I shared my thoughts on the IT industry.

Global गिरावट के बीच IT Sector से कितनी उम्मीद ? Abhishek Basumallick | Swadesh Hours

Life may not get better. So learn to make the most of it.

You feel overwhelmed by an extremely long to-do list. But it’s worse than you think! You think the problem is that you have a huge number of tasks to complete, and insufficient time, and that your only hope is to summon unprecedented reserves of self-discipline, manage your time incredibly well, and somehow power through. Whereas in fact the incoming supply of possible tasks is effectively infinite (and, indeed, your efforts to get through them actually generate more things to do). Getting on top of it all seems like it would be really hard. But it isn’t. It’s impossible.   We can’t ever get free from the limited and vulnerable and uncertain situation in which we find ourselves. But when you grasp that you’ll never get free from it, that’s when you’re finally free in it – free to focus on the hard things, instead of the impossible ones, and to give this somewhat preposterous business of being a human everything you’ve got. https://ckarchive.com/b/75u7h8hkk9g9e

Investing is an emotional competition

Investing can be looked at as an emotional competition – your emotions and ability to control them versus the emotions of those you buy or sell securities from and to. A primary function of investment strategy is to counteract emotional impulses and thus survive (and take advantage of) adverse market developments. Investment performance is mostly determined by patience, risk management, a willingness to study, and what you do when things go differently than you anticipated. Those factors are personality driven.   In addition to having a clear concept of what their competitive advantage is over others, successful investors, I’ve learned, incorporate into their investment strategy clear concepts of acceptable risk, what constitutes an acceptable level of inactivity and length of holding period after funds are committed. And successful investors stick to their strategy. That strategy – for instance sitting on cash, sitting on losing positions, sitting on winning positions — must be based on self-knowledge. If the strategy is out of sync with the personality, it won’t work, no matter how well it has worked for others. https://microcapclub.com/2015/05/i-passed-on-berkshire-hathaway-at-97-per-share/

And then what happens?

We’re not very good at predicting the future.   We’re very good at being aware of the urgency of the moment, and familiar with our need to deal with emergencies.   Before we react, though, it might be worth asking “and then what happens,” five times.   Five steps from here to there…   If any of the steps involve, “and then a miracle happens,” or “we’ll deal with that later,” it might be worth taking a few more moments to reconsider the first step. https://seths.blog/2022/06/and-then-what-happens-2/

Don't blame the media if you feel they only publish bad news

Life tends to look gloomy between the pages of a newspaper. Journalists are often accused of chasing bad news because it sells papers and attracts viewers. This may be partly true, but researchers have shown that readers are naturally drawn to calamitous tales and are more likely to share them with others. Rumours about potential dangers – even if they are unlikely – spread among people far more readily than rumours that could be beneficial.   In one study, scientists at McGill University in Canada, used eye-tracking technology to study which news articles volunteers paid most attention to. They found that people often chose stories about corruption, set-backs, hypocrisy and other bad news, in preference to positive or neutral stories. People who were more interested in current affairs and politics were particularly likely to choose the bad news, and yet when asked, these people said they preferred good news. https://www.bbc.com/future/article/20220624-why-criticism-lasts-longer-than-praise

Getting wealthy versus being wealthy

I think for a lot of people the process of becoming wealthier feels better than having wealth.   If it’s wealth we were after, most of us would feel great, because most of us are unfathomably wealthier than we were a generation or two ago. Or ten years ago. Or five years ago. Or two years ago!   What feels great is being on an upward path. That’s when dopamine takes over. That’s when you can extrapolate it and assume it goes on forever, and compare yourself to where you were before, and feel like nothing can stop you.   When that path declines – even if it happens when you have a level of wealth you couldn’t fathom a few years ago – the whole sensation shatters. The problem is that an occasional downward path is inevitable in investing. Outside of fraud, it’s completely unavoidable. The reason markets can go up a lot in the long run is because they make you pay the cost of admission of going down a lot in the short run. https://www.collaborativefund.com/blog/wealth-vs-getting-wealthier/