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jerryking : proclivities   10

To Be a Great Investor, Worry More About Being Wrong Than Right - MoneyBeat - WSJ
By JASON ZWEIG
Dec 30, 2016

The stunning surprises of 2016 should have taught all of us that the unexpected will happen. To be a good investor, you have to be right much of the time. To be a great investor, you have to recognize how often you may be wrong. Great investors like Warren Buffett practice trying to disprove their investing assumptions to determine whether they are correct.

Techniques to combat these cognitive biases:

Shun peer pressure from social media or the Internet. If you reveal your opinion to a group that has strong views, the sociologist Robert K. Merton has warned, the ensuing debate becomes more “a battle for status” than “a search for truth.” Instead, get a second opinion from one or two people you know and can trust to tell you if they think you are wrong.

Listen for signals you might be off-base. Use Facebook or Twitter not as an amen corner of people who agree with you, but to find alternative viewpoints that could alert you when your strategies are going astray.

Write down your estimates of where the Dow Jones Industrial Average, oil, gold, inflation, interest rates and other key financial indicators will be at the end of 2017. If you don’t know, admit it. Ask your financial advisers to do the same. Next Dec. 31, none of you will be able to say “I knew that would happen” unless that’s what the record shows.

Book reference: Keith Stanovich, Richard West and Maggie Toplak point out in their new book, “The Rationality Quotient,” rational beliefs “must correspond to the way the world is,” not to the way you think the world ought to be.
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Commenter:

What investors need to do is focus on their own investments, their strategies for each particular holding, long-term, income-oriented, speculative, etc. and stick to their plan without being distracted by peers and press looking for big headlines.
Warren_Buffett  biases  confirmation_bias  investors  books  Pablo_Picasso  personal_finance  investing  Jason_Zweig  pretense_of_knowledge  self-awareness  self-analysis  self-reflective  proclivities  warning_signs  signals  second_opinions  peer_pressure  DJIA  assumptions  mistakes  personal_economy  surprises  worrying 
january 2017 by jerryking
From Michael Lewis, a Portrait of the Men Who Shaped ‘Moneyball’ - The New York Times
By ALEXANDRA ALTERDEC. 3, 2016
Lewis decided to explore how it started.

The inquiry led him to the work of two Israeli psychologists, Amos Tversky and Daniel Kahneman, whose discoveries challenged long-held beliefs about human nature and the way the mind works.

Mr. Lewis chronicles their unusual partnership in his new book, “The Undoing Project,” a story about two unconventional thinkers who saw the world differently from everyone around them. Their peculiar area of research — how humans make decisions, often irrationally — has had profound implications for an array of fields, like professional sports, the military, medicine, politics, finance and public health.....Tversky and Kahneman's research demonstrating how people behave in fundamentally irrational ways when making decisions, relying on their gut rather than available data, gave rise to the field of behavioral economics. That discipline attracted Paul DePodesta, a Harvard student, who later went into sports management and helped upend professional baseball when he went to work for Mr. Beane.....Unlike many nonfiction writers, Mr. Lewis declines to take advances, which he calls “corrupting,” even though he could easily earn seven figures. Instead, he splits the profits from the books, as well as the advertising and production costs, with Norton. The setup spurs him to work harder and to make more money if the books are successful, he says.

“You should have the risk and you should enjoy the reward,” he said. “It’s not healthy for an author not to have the risk.”
Amos_Tversky  Michael_Lewis  Moneyball  books  book_reviews  unconventional_thinking  biases  cognitive_skills  unknowns  information_gaps  humility  pretense_of_knowledge  overconfidence  conventional_wisdom  overestimation  metacognition  behavioural_economics  irrationality  decision_making  nonfiction  writers  self-awareness  self-analysis  self-reflective  proclivities  Daniel_Kahneman  psychologists  delusions  self-delusions  skin_in_the_game  gut_feelings  risk-taking  partnerships 
december 2016 by jerryking
Some of the Wisest Words Ever Spoken About Investing - MoneyBeat - WSJ
By JASON ZWEIG
Nov 25, 2016

Investing is often portrayed as a battle between you and the markets. Instead, Graham wrote, “the investor’s chief problem — and even his worst enemy — is likely to be himself.”

Evaluating yourself honestly is at least as important as evaluating your investments accurately. If you don’t force yourself to learn your limits as an investor, then it doesn’t matter how much you learn about the markets: Your emotions will be your undoing....Nobel Laureate Daniel Kahneman with his book Thinking, Fast and Slow.
I’m especially grateful that he taught me this: “The most important question is, ‘What is the base rate?’”....Michael Mauboussin, a strategist at Credit Suisse, has taken that hint and compiled base rates for all sorts of corporate measures, so investors can readily check a company’s projections against reality.....From the economist and investing writer Peter Bernstein, who died in 2009, I learned about Pascal’s wager: You must weigh not only the alluring probabilities of being right, but the dire consequences of being wrong....Finally, Mr. Bernstein never tired of emphasizing that we can never know the future — least of all at the very moments when it seems most certain....Richard Dawkins pointed out in a lecture in 1996, many of us today know more about the world around us than Aristotle, the greatest mind of his age, did more than 2,300 years ago: “Science is cumulative, and we live later.”

Investing knowledge is also cumulative, and we all benefit from those who have already learned — and taught — how it works.
investing  investors  gratitude  Peter_Bernstein  wisdom  economists  Jason_Zweig  ETFs  books  Benjamin_Graham  pretense_of_knowledge  base_rates  Michael_Mauboussin  self-awareness  self-analysis  self-reflective  proclivities  probabilities  Pascal’s_wager  Daniel_Kahneman  delusions  self-delusions  emotions  Achilles’_heel  cumulative  Nobel_Prizes 
november 2016 by jerryking
A billionaire’s guide to productivity - The Globe and Mail
FRED MOUAWAD
Contributed to The Globe and Mail
Published Wednesday, Feb. 11 2015

1. Prioritize. Rank the level of importance of family, me time, and work. Think about the areas of life that need nurturing in order to feel more fulfilled. It is essential to strike a balance to lead both a happy and productive life.

2. Allocate time (JCK: lead time) to maximize an impact (JCK: leverage or return on effort). Forewarned is forearmed. Plan ahead how you will use your time – after all, knowing your schedule is half the battle.

3. Know your natural penchants. If you find that the time spent on these activities does not give you a high level of return, consider allocating your time more thoughtfully.

4. Reduce uncertainty, increase accountability. A lack of clarity is productivity’s greatest enemy.

5. Know when to be a lone wolf. It is important to know your strengths. What tasks are you better off performing on your own? What tasks can you delegate?

6. Establish a nurturing culture. Productivity is easier to achieve in the right environment.

7. Measurement gets results-- measure performance to make continuous improvements. But make sure that you measuring the right things.
time-management  productivity  GTD  JCK  lead_time  priorities  strengths  self-discipline  business_planning  reflections  work_life_balance  uncertainty  clarity  affirmations  self-awareness  ksfs  preparation  penchants  predilections  measurements  proclivities  willpower  high-impact  time-allocation  return_on_effort 
february 2015 by jerryking
Victorian values for the 21st century - The Globe and Mail
Margaret Wente

The Globe and Mail

Published Saturday, Oct. 05 2013

the real keys to success are far more old-fashioned – Victorian, even. They are self-regulation, conscientiousness and diligence. More than ever, perhaps, 21st-century success will require 19th-century values.....The trouble is that cultivating 19th-century habits in the 21st century isn’t easy. In Victorian times, self-regulation was reinforced by many kinds of external pressure, including social norms, religion, family and Queen. The consequences of lapsing from the straight and narrow – social disgrace, even ruin – could be severe. Today, you’re far more reliant on yourself to stay the course, and nobody else much cares if you don’t.....Daniel Akst argues in Temptation: Finding Self-Control in an Age of Excess, modern life requires an unnatural degree of self-control. ... in an age of super-affluence, it’s a constant struggle to keep our appetites in check. “It’s not that we have less willpower than we used to,” he writes, “but rather that modern life immerses us daily in a set of temptations far more evolved than we are.”

Self-discipline and high IQ often go together. But they are not the same. As Mr. Akst reports, self-discipline is a far better predictor of university grades than either IQ or SAT scores. ...many of America’s children have trouble making choices that require them to sacrifice short-term pleasure for long-term gain.”
21st._century  achievement_gaps  gender_gap  IQ  values  books  self-control  self-discipline  Tyler_Cowen  Victorian  willpower  temptations  delayed_gratification  self-regulation  proclivities 
october 2013 by jerryking
99 Percent
July 1, 2004 | | MIT Technology Review | By Joe Chung.

Also featured in:
MIT Technology Review Magazine
July/August 2004
More in this issue »

If genius is 99 percent perspiration (and 1 percent inspiration), then entrepreneurs surely walk the fine line that separates the Einsteins of the world from those poor sweaty souls who practice yoga in saunas. The archetypal startup is the lone inventor in a basement pursuing his or her passion with relentless energy. Somewhere between the original spark of genius and a successfully profitable enterprise, though, lies a maturation process that pits the inventor’s vision against the cold and cynical outlook of the business world. Often the 1 percent-a deep and highly individual creative desire-gets lost amid the desire to look and feel like a “real” company. But it is quirky proclivities combined with the sweat that creates the innovations around which successful businesses are formed.
start_ups  angels  apparel  women  entrepreneur  innovation  execution  proclivities  inspiration 
september 2013 by jerryking
The Acceleration of Tranquility
October 4, 1999 | Forbes ASAP | by Mark Helprin, a senior fellow of the Hudson Institute and contributing editor for the Wall Street Journal, served in the Israeli infantry and Air Force. His best-known novels are Winter's Tale and A Soldier of the Great War.

The comparison between an old way of life and the futurist possible way of life of 2016 had a strong significance. First, the reader realizes how fast the world has involved and changed in one century. Even though most of us are aware of that, I thought this comparison was very powerful. It emphasized the fact that in today’s world and even more in tomorrow’s one, everything goes/will go so fast that we don’t even have time to disconnect from other people and from our daily activities; not even a day or an hour. We are prisoners from our own creation. Of course, productivity has dramatically increased between the statesman of 1906 and the business man from 2016. In fact it is even essential to be effective today that to have instantaneous and unlimited access to all the technology related to the business world. What I liked was when the author emphasized the fact that even though we had less technology the other century, we certainly had more “freedom”, more quality time where we could think, read, learn and where we could enjoy more the little things we had access to. A sentence that had a strong influence on me was “the lack of certain things when you want them makes your desire keener and you better rewarded when eventually you get them”. I think this is what bad the technology and constant innovation has brought to us. Nowadays, we expect to have everything we want and we want it fast; we accept less and less the frustration we face.

Questions Raised by Helprin’s Article
1. Which view is more appealing? Why?
2. In referring to the ‘016 view, Helprin writes “life is lived with the kind of excitement that your forebears knew only in battle”. What is he saying?
3. Helprin writes: “When expanding one’s powers, as we are now in the midst of now doing by many orders of magnitude in the mastery of information, we must always be aware of our natural limitations, moral requirements, and humane preferences”. Do you agree? Why or why not?
4. What does Helprin mean when he says that “potential has always been the overlord of will”?
5. Do you agree with Helprin’s argument that the “genie is out of the bottle”? Why or why not? Are there alternatives to “racing with the genie”?
6. Do you agree that “the heart of Western civilization is not the abdication of powers but rather meeting the challenge of their use”? Explain.
7. What is the difference between information and knowledge? What clues does Helprin give to answer this question?
8. Was the age of “brick and iron” friendlier to mankind”? Explain.
9. Do you agree that what we need are “discipline, values, and clarity of vision”? Explain.
10. Helprin writes: “the founders laid down principles that have served to prevent the transformation of individual to manipulable quantity. It does not matter what convenience is sacrificed in pursuit of this”. Do you agree? Explain.

http://engscisoc.pbworks.com/w/page/19104263/Acceleration%20of%20Tranquility
history  future  Mark_Helprin  questions  critical_thinking  orders-of-magnitude  proclivities 
november 2012 by jerryking
Investing Ideas That Stand Test of Time
April 25, 2000 | WSJ | Jonathan Clements

These days I find I am left with just three core investment ideas:
(1) Financial Success is a Sense of Control
If you ask folks about their financial goals, they will likely offer a laundry list of goods they want to buy or announce they want to accumulate as much money as possible. But in reality,
both goals are a prescription for unhappiness.
Sure it might be nice to purchase everything that catches your fancy. But nobody has unlimited wealth, so a focus on endless consumption inevitably results not in happiness, but in frustration and financial stress. Yeah, it would also be great to have heaps of money. But if all you want is an even bigger pile of cash, you will never be satisfied, because you will never reach your goal. So what should you
shoot for? A far more worthy goal, I believe, is eliminating the anxiety that comes with managing money. You want to reach that sweet spot where you feel your finances are under control, no matter what your standard of living and level of wealth.

(2)Investing is Simple
No doubts about it, there are lots of investments and investment strategies that are mighty complicated. But complexity usually means investors are running the risk of rotten results and Wall Street is getting the chance to charge fat fees. Investing is best when it is simple. In fact, if you want to accumulate a healthy nest egg, there
isn’t much to it. First, you have to save a goodly amount, preferably at least ten percent of your pre-tax annual income. Second, you should consider investing at least half of your portfolio in stocks, even if you are approaching retirement. Third, you should diversify broadly, owning a decent mix of large, small and foreign stocks. Fourth, you should hold down investment costs, including
brokerage commissions, annual fund expenses and taxes. Finally, you should give it time. A little humility also helps. Don’t waste effort — and risk havoc — by trying to pick the next hot stock, identify the next superstar fund manager or guess the market’s next move. Instead, your best bet is to buy and hold a few well-run mutual funds.

(3) We are the enemy
If successful investing is so simple, why do so many people mess up? It isn’t the markets that are the problem, it is the investors.
We make all sorts of mistakes. We fret about the performance of each investment that we own, so we don’t enjoy the benefits of diversification. We are often overly self-confident, which
prompts us to trade too much and bet too heavily on a single stock or market sector. We
extrapolate recent results, leading to excessive exuberance when stocks are rising and unjustified
pessimism when markets decline. We lack self-control, so we don’t save enough.

[All the points made immediately above are analogous to Jason Zweig's article on personal finance & investing. From Benjamin Graham --investing is often portrayed as a battle between you and the markets. Instead, “the investor’s chief problem — and even his worst enemy — is likely to be himself.”

Similarly, Nobel Laureate Daniel Kahneman wrote in his book Thinking, Fast and Slow. [that]evaluating yourself honestly is at least as important as evaluating your investments accurately. If you don’t force yourself to learn your limits as an investor, then it doesn’t matter how much you learn about the markets: Your emotions will be your undoing.... ]

If you are going to truly be a successful and happy investor, it isn’t enough simply to devise
strategies that allow you to meet your investment goals. Your strategies also must give you a
sense of financial control and fit with your risk tolerance, so that you stick with them through the
inevitable market turmoil.
That may mean keeping more of your money in bonds and money-market funds. It could mean
paying for an investment advisor. It might mean scaling back your financial goals and accepting
that the kids won’t be heading to Harvard and that you won’t be able to retire early.
These sorts of choices aren’t foolish. What’s foolish is settling on investment strategies without
considering whether you can see them through.
personal_finance  investing  howto  ideas  goal-setting  Nobel_Prizes  money_management  Jonathan_Clements  financial_literacy  biases  humility  mistakes  self-awareness  self-control  proclivities  overconfidence  financial_planning  delusions  self-delusions  emotions  human_frailties  Jason_Zweig  extrapolations  risk-tolerance  recency  unhappiness  human_errors  bear_markets  sense_of_control  superstars  Daniel_Kahneman 
may 2012 by jerryking
Op-Ed Columnist - The Humble Hound - NYTimes.com
April 8, 2010 | NYT | By DAVID BROOKS. Research suggests that
extremely self-confident leaders--the boardroom lion model of
leadership--can also be risky. Charismatic C.E.O.’s often produce
volatile company performances--swinging for the home run and sometimes
end up striking out. They make more daring acquisitions, shift into new
fields and abruptly change strategies. Jim Collins, author of “Good to
Great” and “How the Mighty Fall,” celebrates a different sort of leader.
Reliably successful leaders who combine “extreme personal humility with
intense professional will”--a humble hound model of leadership.
Characteristics: focuses on metacognition — thinking about thinking —
and building external scaffolding devices to compensate for weaknesses;
spends more time seeing than analyzing; construct thinking teams; avoids
the seduction (the belief) that one magic move will change everything;
the faith in perpetual restructuring; the tendency to replace questions
with statements at meetings.
David_Brooks  Peter_Drucker  leadership  single_action_bias  CEOs  self-confidence  leaders  charisma  thinking  humility  Jim_Collins  cognitive_skills  self-awareness  metacognition  proclivities  weaknesses  wishful_thinking  willpower 
april 2010 by jerryking

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