Curiosity@Intelsense
Multidisciplinary learning is one of the best ways to improve our investment acumen. Here is a summary of some of the best learnings of the week.
As an investor, not having a view on everything, or being able to say "I don't know" is a superpower. Nearly all good investors are people with above-average intelligence and so the damned ego gets in the way of saying "I don't know". So, they try to have a view on everything irrespective of whether they know much about it or not.
In this wonderful article on the power of not having a view, the author argues, that the expectation for investors to have views on everything is because it gives a sense of control. Financial markets are messy, chaotic, and anxiety-inducing; when an investor makes predictions and trades on them it feels like there is a steady hand on the tiller, rather than our portfolios being a hostage to fortune.
Not having an investment view on every imponderable in financial markets can seem like ignorance, but it actually shows an acute awareness of the environment in which we operate. It is far more ignorant to believe that we can accurately predict all manner of complex and unfathomable things.
Rather than have an ever-evolving set of views and positions, we would be far better off allowing others to pontificate and trade, and instead wait until there are opportunities where the probability of good outcomes are firmly on our side.
Investors would be far happier (and better off) not having a view on most things most of the time.
Another very interesting piece I read this week was the difference between amateurs and professionals. Here are the main points that the author raises.
Amateurs let the day come to them, Professionals have a routine
Amateurs love the prize, Professionals love the process
Amateurs make it look effortful, Professionals make it look effortless
Amateurs blame others, Professionals are accountable
Amateurs are flashy, Professionals are relentless
Amateurs enter with 100 mediocre moves, Professionals enter with 1 perfect move
Amateurs fear failure, Professionals embrace it
Amateurs fear being wrong, Professionals enjoy it
Amateurs are impatient, Professionals are patient
Amateurs hope for good breaks, Professionals create them
Amateurs press, Professionals wait
My first thought was that this is not right. Amateur does not mean less skilful. It just means he is not doing it as a profession. For example, I know a number of singers who are amateurs but are many times better than professionals. I know many investors who are so-called amateurs but are any day better than professional fund managers. Just because someone makes money doing something does not make that person better at it compared to another who does it for fun.
Having got this semantic point out of the way, the points here are important. Just replace "amateur" with "unskilled" and professional with "skilled" and it makes a lot more sense.
Thought of the Week
“A year from now you may wish you had started today.” ~ Karen Lamb
I get emails practically every day from people asking if they should wait to deploy capital because the market is so high or low, depending on when people ask!!
The answer I always give is the same. I don't know what will happen tomorrow. But if you are planning to invest for the next 10-20-30-40 years, which most actually are, then after ten years you will not even remember at what market levels you got in at. So, don't waste your time trying to pinpoint your entry.
Video of the Week: Why Morgan Stanley's Ridham Desai Believes This Decade Belongs To India
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