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.

Investing is an act of arrogance

Investing is an act of arrogance. You are basically saying, “I am right and the person on the other side of the transaction, who is buying a stock from me or selling it to me, is wrong.”   This arrogance requires amnesia of your past successes and failures; it is earned with your current sweat, through thorough research. Your research leads you to conclusions that often disagree but sometimes agree with the prevailing trends in the market. Arrogance – belief in your process and research – allows you to follow through on your conclusions, even if the market scorns them.    This is how we try to close the gap between theory and practice created by volatility. We continuously build and update our financial models, talk to companies and their competitors and to industry insiders, do a lot of reading, and debate companies with our peers. We have to keep earning the right to be thoughtfully arrogant through our hard work. When time passes, facts change, and new information comes out, we have to have the flexibility to change our minds.   When you are making thoughtfully arrogant decisions, you are ignoring both what the crowd thinks and, just as important, your past successes. You are arrogant (I am paraphrasing Seneca here) because through your research you have discovered the truth (what the company is worth) before time did.  https://contrarianedge.com/why-value-investing-requires-thoughtful-arrogance/

Focus is the most critical factor of success

The tendency of people and organizations is to lose focus. So one way to identify outstanding people is by their ability to commit and focus on something for a long period of time.   The only people you should hire are focused ones. The only competitors you should worry about are the focused ones.   People naturally lose focus when they forget that focus means saying no to good opportunities and good people. Average ideas are everywhere, and they try to pull you in. The more successful you are, the more people will want to work with you. If you start saying yes to average ideas, you quickly lose the space and time you need to execute on great ones.   Organizations lose focus in many ways, but the one that causes the most damage is bureaucracy. An organization where committees make decisions will always end up losing focus. When an organization loses focus, it opens the door to competitors who can focus.   Focus is hard, and because it’s hard, it also creates a hidden place to find opportunities. https://fs.blog/focus-to-win/

Satisfaction = what you have ÷ what you want

All of our evolutionary and biological imperatives focus us on increasing the numerator—our haves. But the more significant action is in the denominator—our wants. The modern world is made up of clever ways to make our wants explode without us realizing it. Even the Dalai Lama, arguably the world’s most enlightened man, admits to it. “Sometimes I visit supermarkets,” he says in The Art of Happiness. “I really love to see supermarkets, because I can see so many beautiful things. So, when I look at all these different articles, I develop a feeling of desire, and my initial impulse might be, ‘Oh, I want this; I want that.’ ”   The secret to satisfaction is not to increase our haves—that will never work (or at least, it will never last). That is the treadmill formula, not the satisfaction formula. The secret is to manage our wants. By managing what we want instead of what we have, we give ourselves a chance to lead more satisfied lives. https://www.theatlantic.com/magazine/archive/2022/03/why-we-are-never-satisfied-happiness/621304/

Focus on output rather than input

Traditional corporate culture has an obsession with input—hours worked, etc.—when what really matters is the output. It seems obvious, but as a manager or employee, always push for a focus on outputs vs. inputs. It takes time to shift cultures, but it’s worth it in the long run.   As a solo entrepreneur or freelancer, seek to detach earnings from hours. Rather than charging by the hour for your service or offering, charge based on deliverables. As you find new leverage in the system, you’ll be able to scale your time efficiently and rapidly increase your income and wealth creation potential. https://www.sahilbloom.com/newsletter/the-locksmith-paradox-sparking-creativity-more

A simple pain job can save lives of birds from wind turbines

Each year, turbine blades kill hundreds of thousands of birds and bats. As wind power becomes more prevalent, this number may rise into the millions—although it’s important to remember that other power generation methods likely kill far more birds than wind farms do.    This concern has led to a number of proposed interventions, from turning off wind farms during migrations to installing special whistles only bats can hear. A new study presents a relatively low-cost, set-it-and-forget-it option: just paint one of the turbine blades black.    While the raw numbers were quite small, the intervention was effective. “Overall, there was an average 71.9% reduction in the annual fatality rate” at painted turbines, the researchers write. www.anthropocenemagazine.org/2020/09/a-simple-paint-job-can-save-birds-from-wind-turbines/