A Buffett of Knowledge

Warren Buffett made $36,918,604 a day last year; $1,000,000,000 more than Bank of America’s net income over the past three years combined. His holding company, Berkshire Hathaway, wholly owns GEICO, Fruit of the Loom, Dairy Queen, and NetJets to name a few. As a CEO he has been described as transparent, uncanny, down-to-earth, and folksy; interesting descriptions for a man whose book value has appreciated over 700,000% for since 1965.

How is this possible? How can one even begin to embark on the quest of becoming as intelligent and successful as Warren Buffett?

When faced with questions about how he does it, Buffett replied, “I just sit in my office and read all day” And similar to Buffet, I believe that reading is one of the best ways to procure knowledge; it just takes time and effort.

Buffett describes knowledge as something that acts similarly to interest; as it gathers it compounds, day after day, year after year. Applying the same logic to investments (the sooner the genesis the longer the opportunity for interest to compound) there is no better time to start then right now.

We must be conscious of how we read. We must do the necessary work to form an opinion, not simply reiterate content that we have read, but absorb and comprehended it. Rolf Dobelli describes the former as Chauffeur Knowledge in his book The Art of Thinking Clearly:

After receiving the Nobel Prize in Physics in 1918, Max Planck went on tour across Germany. Wherever he was invited, he delivered the same lecture on new quantum mechanics.

Over time, his chauffeur grew to know it by heart: “It has to be boring giving the same speech each time, Professor Planck. How about I do it for you in Munich? You can sit in the front row and wear my chauffeur’s cap. That’d give us both a bit of variety.”

Planck liked the idea, so that evening the driver held a long lecture on quantum mechanics in front of a distinguished audience, with Max Planck sitting in the front row pretending to be his chauffeur.

Later, a physics professor stood up with a question. The driver recoiled: “Never would I have thought that someone from such an advanced city as Munich would ask such a simple question! That question is so simple; my chauffeur will answer it ..!”

Read with a purpose, learn with a purpose.

How does one find time? First, as my co-author described in his last post, we need to understand that not all hours are created equal. I believe that we make time for things that are important to us. I recently compiled a list of what, on average, my day consisted of. I came to the conclusion that if I was going to invest, gradually, in my future wisdom via reading, there were several sacrifices I could make quite easily.

An hour in the morning - I have begun to dedicate an hour every morning to simply reading, thinking and developing a skillset that will aid me for the rest of my life: reading for understanding and not for information. To complete this process, to ensure I have learned something and not just acquired chauffeur knowledge, I will find someone to explain myself to. Just like teaching someone how to do something helps you learn more about it yourself, I have started to write down and discuss my thoughts about the topic I learned in a manner that welcomes ongoing dialog; we need to be challenged on what we have learned.

The person who says he knows what he thinks but cannot express it usually does not know what he thinks.

                        -Mortimer Adler

This aforementioned “expressing” can be accomplished in many different ways; one method is the Feynman Technique. Essentially, this technique does just what the above quote points out; it allows us to express what we know and think in a way that points out gaps in our knowledge and areas that need attention.

The first step of the Feynman Technique is to choose the concept you wish to master and write it at the top of the page.

The second step is to imagine you are explaining the concept to someone else; as mentioned above we learn much better when we explain things to others. Explaining a concept to another person prevents us from hiding behind our own uncertainty, we are forced to fully develop our thoughts and ideas in a clear and concise way. Write it down.

The third step is to go back to the book; while expanding your thoughts and ideas on the concept be sure to go back to the source when your unfamiliarity with certain sections are made aware.

The fourth and final step is to simplify your language. Personally, while taking notes or journaling I tend to write and describe concepts in the way that they in my head at that given time. That is not enough; we read and interpret things differently over time, we forget things. Standardizing our thoughts is important so the message will be clear every time; that is why eliminating jargon, or at least explaining it is important.

The above techniques and practices will require sacrifice. The procurement of knowledge is not a short path, or something that happens quickly; it requires self-control.

I find these sacrifices quite similar to the sacrifices we make when we begin to invest in monetary terms; after a while we don’t quite remember what it was like not to invest, and that is certainly not an environment we wish to return to.

-Luke

Another great article on Buffett can be found here.

Not All Hours Are Created Equally

In the last post I had I mocked the barrage of articles that claim to have the keys to success. Generally speaking, I believe that what leads one person to success will not necessarily work for someone else. In other words, what works for one person may or may not work for another. To suggest that there are certain actions to be taken that will lead to success can be a bit misleading. Rather, I believe it is often a combination of many factors, both seen and unseen, that result in success or failure. This topic was touched on in a previous post by my co-author of this blog, Luke. Additionally, the author Malcolm Gladwell discusses this topic in his book Outliers, which can be found here.

However, I do believe that there is one trait that has a strong correlation with success (at least more so than some of the other traits emphasized). In my opinion, successful people (however you define that) are productive in the early parts of the morning. Does this mean that you have to wake up at 5:00am to achieve your goals or you will fail? No. Nevertheless, not all hours are created equally. Time in the evening is typically spent watching television, browsing the internet, texting, etc. Time in the morning, from 6:00am to 9:00am is the best time for working on productive activities. Individuals simply do not get up early to do the same things they stay up late for.

Why is this the case? Self-control fatigues throughout the day. Most diets are broken in the evening, the majority of crimes are committed at night - i.e. decision making tends to be inferior as the day goes on. Again, this is because self-control declines throughout the day and one is more susceptible in the evening to temptation. This relates to success because it is important to be productive to be successful. When is it easiest to be productive and therefore the best time to get stuff done? In the morning, when distractions can most easily be fended off. Again, not all hours are created equally, especially when it relates to productivity. Specifically, non-urgent yet important tasks are best addressed in the morning. These are activities that are especially easy to put off; however, they are significant.

An excerpt from the book What the Most Successful People Do Before Breakfast: A Short Guide to Making Over Your Mornings - and Life by Laura Vanderkam:

Before the rest of the world is eating breakfast, the most successful people have already scored daily victories that are advancing them toward the lives they want.

Additionally, a Chinese proverb says the following:

No one who can rise before dawn 360 days a year fails to make his family rich.

However, one cannot just wake early and sacrifice sleep in order to be up. A good nights rest is important as well. Furthermore, this advice is not applicable to everyone. As mentioned before, what leads one person to success will not necessarily work for someone else. I simply am suggesting that being productive in the morning has a stronger correlation with success than some of the other recommendations you might here. For example, some information has suggested that schedules for people who do creative work might be a bit different. See this link and click on the poster for an interesting breakdown of how Ludwig Van Beethoven, W.A. Mozart, Sigmund Freud, Charles Dickens, Benjamin Franklin, and more spent their time. Daily Rituals: How Artists Work by Mason Currey explains it further.

Overall, I suggest you be careful when considering replicating what other people have done or are doing in hopes of achieving success. What worked for them may not work for you. And in reality, as Malcolm Gladwell explained in the aforementioned Outliers, the factors that resulted in their success may not be what they seem. However, I do believe that being productive in the morning has a strong correlation with success, more so than some other suggestions. This is because self-control, a large determinate of productivity, fatigues as the day goes on. As a result, your best chance of getting things done is in the morning.

-Joe

How to be Successful

If you want to be a professional athlete, watch as many games on TV as you can. Because we all know that’s how Lebron James became good. Similarly, if you want to major in science, watch as much MythBusters as you can. And if you want to be a lawyer, watch as much Law & Order as you can.

Read every book written by Tony Robbins.

Eat a pinecone every other Tuesday. You’ll thank me later.

Never forget the advice people are posting on Facebook and Twitter.

Avoid sleep the night of a full moon. This is how Neil Armstrong became an astronaut. However, besides those days, sleep in as late as you can. You’re going to be well rested.

All the members of The Beatles tied their left shoe before their right. If it worked for them, it will work for you too.

Albert Einstein washed his hair with Suave conditioner. The ingredients in the Shampoo would secrete into his brain which would make him smarter. I suggest you use the same.

Play more games on your phone. Words With Friends is a great way to network.

Focus entirely on the short-term. It is the most relevant. There is no need to think about the consequences of how something might play out years from now. Who knows if we will even be around then.

Stay inside your comfort zone. It is your comfort zone for a reason. Look at Nelson Mandela. He was imprisoned for trying to do too much.

Don’t worry about communicating with a wide variety of people. Stick to your generation.

 

-Joe

Swim Like Michael Phelps

Rolf Dobelli tells the story of an individual, Pete, who resolved to amend his physique; he had acquired some extra weight and wasn’t too happy about it. For this reason he contemplated taking up various sports. Joggers appeared scrawny and unhappy, bodybuilders looked too broad and stupid; tennis was out of the question because he wasn’t interested in the upper-class social aspect of it. What did seem attractive to Pete were swimmers-they have streamlined bodies and a dominating figure. He decided to begin training several times a week to achieve his goal of this “swimmers look”.

After several weeks of training he realized that he had succumbed to an illusion. Pete realized professional swimmers do not have a desirable athletic “look” due to their swimming. Rather, athletic bodies allow them to be professional competitive swimmers. The bodies cause the swimming, not the swimming causing the bodies. How swimmer’s bodies are designed is a factor for selection and not the result of their swimming.

The above cognitive bias, referred to as “swimmers body illusion,” is constantly present in our everyday lives. Associations and patterns are frequently made with institutions, physique, and other forms of “success” where we fall victim to confusing selection factors with results. Correlation does not equal causation. Is an Ivy League school responsible for producing the brightest individuals in the nation? Or do they simply recruit the brightest individuals to attend? If the latter is the case then the statistic is a representation of the recruiting process and not the educational process that the students have undertaken.

I am increasingly skeptical of advice that is presented to me on how to be happier, more successful, stronger, or better looking, to name a few. The presenter of the advice has often manipulated the information in a biased way to be better tailored towards their personal situation, consciously or subconsciously. Of course the advice the individual is presenting worked for them, otherwise they would not be reiterating it. What needs to be kept in the front of the mind is that the unhappy do not write self-help books, the unsuccessful do not write books on success, the weak do not write books on strength and the unattractive don’t sell beauty products. There are many other factors in play that have an impact on outcomes. Very rarely are they driven by one visible catalyst; rather, many that go undetected.

These positive aforementioned characteristics can very well be attributed to some other, unknown factor. For the successful perhaps it was the environment that they were raised in, for the strong and good-looking genes play a big role in the results, and for the happy…well who knows where that comes from.

There is much that is seen and much that is unseen on the road towards goals and dreams. Expectations should and must be adjusted for uncontrollable random factors that are attributable towards results.

-Luke 

The Red Queen Hypothesis

The Red Queen hypothesis is a theory in evolutionary biology that suggests that an organism must constantly adapt and evolve, not just to have a competitive advantage, but in order to survive. The term is taken from a saying in the book Through the Looking-Glass by Lewis Carroll. The Red Queen says to Alice “Now, here, you see, it takes all the running you can do, to keep in the same place.” The Red Queen hypothesis suggests that over time the organisms that survive are not the ones that are the quickest, strongest, fastest, or smartest, but rather the ones that are most adaptive. When people think of Charles Darwin, they immediately think “survival of the fittest.” However, Darwin actually said “It is not the strongest of the species that survives, it is the one that is the most adaptable to change.” I believe this same concept applies to business as it does to evolutionary biology.

For a variety of reasons, businesses are changing more than ever before. Part of this has to do with an increase in competition. Ideas can circulate more freely due to the interconnectedness of our society. As a result of this, businesses are forced to be ever responsive to their changing environment. This often manifests in a change in the business itself.

However, it is not actually the business that does the adapting – it is the people the business is comprised of. One of the biggest detriments to success (however you may define it) is complacency. Yet this has always been the case. In more recent times, not only is complacency a threat to success, but continuing to grow at the same rate is also a danger. Due to this, is it necessary to be adaptive.

This begs the question, how can we be adaptive?

There are a few key ways in my opinion. The first was discussed in the very first post on GenYus. It is helpful to be open to changing one’s mind. Circumstances change. So too should one’s thoughts and opinions when warranted. Author Daniel Kahneman was once asked the following by a fellow author:

When I asked Danny how he could start again as if we had never written an earlier draft, he 
said the words I’ve never forgotten: “I have no sunk costs.”

Sunk costs are costs that have already been incurred and thus cannot be recovered. In remarking this, Kahneman is implying that he is willing to change his mind because he does not consider anything lost. He is open to changing his mind and in this specific example, changing his work. This is a beneficial attitude to have when being adaptive.

A second way to stay adaptive is to avoid becoming satisfied. Let me clarify this by explaining a scene from the TV show Mad Men. There is a great scene where the main character Don Draper is trying to land a big client. The client comments that they are happy because they have more than 50% market share. Don responds with the following:

I’ve been looking at what you’re doing and I think you’re in desperate need of change. … Even though success is a reality, its effects are temporary. You get hungry even though you’ve just eaten. … You’re happy with 50 percent? You’re on top, and you don’t have enough. You’re happy because you’re successful. For now. But what is happiness? It’s a moment before you need more happiness. I won’t settle for 50 percent of anything. I want 100 percent. You’re happy with your agency? You’re not happy with anything. You don’t want most of it, you want all of it. And I won’t stop until you get all of it. Thank you for your time.

And then Don walks out. I would highly encourage you to view the scene here.

Overall, the Red Queen hypothesis, while meant for evolutionary biology, can provide us with some valuable suggestions about how to remain relevant as a business and also as individuals. Remaining open-minded to change and avoiding becoming satisfied are two good ways to start.

-Joe

Sources:

http://etext.lib.virginia.edu/etcbin/toccer-new2?id=CarGlas.sgm&images=images/modeng&data=/texts/english/modeng/parsed&tag=public&part=2&division=div1

http://www.ssireview.org/blog/entry/the_most_adaptive_survive

http://ny607.blogspot.com/2014/04/lifelong-learning-it-is-my-belief-that.html

http://www.farnamstreetblog.com/2014/04/the-work-of-daniel-kahneman/

http://www.investopedia.com/terms/s/sunkcost.asp

http://dailycaller.com/2012/06/06/mad-men-explores-the-definition-of-happiness/#ixzz2zXJrdAtD

http://youtu.be/mbr3bkny0OQ?t=2m20s

Reality is Far More Vicious than Russian Roulette

 

 “Reality is far more vicious than Russian roulette. First, it delivers the fatal bullet rather infrequently, like a revolver that would have hundreds, even thousands of chambers instead of six. After a few dozen tries, one forgets about the existence of a bullet, under a numbing false sense of security. Second, unlike a well-defined precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality. One is capable of unwittingly playing Russian roulette - and calling it by some alternative “low risk” game.”

                                -Nassim Nicholas Taleb, “Fooled by Randomness”

We think about and make decisions every day; this is how we have survived. Historically speaking, those who were quickest to act survived, and those who were silent and took time to ponder future outcomes were probably eaten by some wild animal. This is why we have involuntary reactions. However, presently we have the luxury, and sometimes the misfortune, of being able to have, for the most part, as much time to postulate the future as we would like.

Enter survivorship bias.

Survivorship bias is essentially humans’ tendency to over-estimate our chances of success because only success is advertised. Rolf Dobelli in The Art of Thinking Clearly does a very good job explaining this phenomenon; the book is worth a read. The combination of our ability/fortune to fanaticize about future outcomes and our systematic tendency to overestimate our chances of success leads to serious miscalculations. We observe the sea of randomness present in our everyday lives; take out little bits and pieces that we find worthy enough to serve as a good defense of our preconceived notion of our high-probability of future success.

We do not see the tens of thousands of athletes who don’t go pro, we do not see the vast majority of musicians who never get a record label; we are constantly deceived by those on the big screen who have “made it.” An additional catalyst to these cognitive miscalculations is that we think that if we do what those who are famous did, or at least a derivative of it, our chances of success go even higher. These thoughts are of course additional reorganization of randomness into a beautifully laid out map to success: this is a sham. Instead of gathering facts to form a theory we form a theory and then gather facts to support it; this leads to further inaccuracies in the decision making process.

What I think we forget is just how little is in our control. If we were born a thousand different times in a thousand different homes we would have a thousand different parents with a thousand different value sets. It is simply too convenient that we were born to parents or guardians that had the “ideal” value-set or “perfect” belief-system. As a matter of fact, I believe that those “core-values” and “core-beliefs” are the things that we should be most skeptical of. This is because the younger we were when an idea or belief is introduced to us, the higher our bias to believe it is: the less it is in our control. This goes back to the classic argument that a Hindu, if born in a Jewish home, would probably end up being Jewish. There is just too much that is out of her control, too may occurrences and teachings that will prevent her from stumbling her way to a different religion.

Objective evaluation of beliefs and value sets is becoming increasingly important to me on my quest towards procuring wisdom. To quote Taleb for a second time:

“Probability is not a mere computation of odds on the dice or more complicated variants; it is the acceptance of the lack of certainty in our knowledge and the development of methods for dealing with our ignorance.”

-Luke

Flash Boys

I finished reading the book Flash Boys: A Wall Street Revolt by Michael Lewis this weekend. The book has generated a lot of publicity and attention since its release. It can be found here.


Here are a few noteworthy excerpts:

"The 1987 stock market crash set in motion a process - weak at first, stronger over the years - that has ended with computers entirely replacing the people."

"Someone out there was using the fact that stock market orders arrived at different times at different exchanges to front-run orders from one market to another."

"Reg NMS was intended to create equality of opportunity in the U.S. stock market. Instead it institutionalized a more pernicious inequility. A small class of insiders with the resources to create speed were now allowed to preview the market and trade on what they had seen."

"In a paper published in February 2013, a team of researchers at the University of California, Berkeley showed that the SIP price of Apple stock and the price seen by traders with faster channels of market information differed 55,000 times in a single day."

"Every systemic market injustice arose from some loophole in a regulation created to correct some prior injustice."

"RBC conducted a study, never released publicly, in which they found that more than 200 SEC staffers since 2007 had left their government jobs to work for high-frequency trading firms or the firms that lobbied Washington on their behalf. Some of these people had played central roles in deciding how, or even whether, to regulate high-frequency trading."

"In early 2013, one of the largest high-frequency traders, Virtu Financial, publicly boasted that in five and a half years of trading it had experienced just one day when it hadn't made money, and that the loss was caused by 'human error.' In 2008, Dave Cummings, the CEO of a high-frequency trading firm called Tradebot, told university students that his firm had gone four years without a single day of trading losses. This sort of performance is possible only if you have a huge informational advantage."

"A former employee of Citadel who also once had top secret security clearance at the Pentagon says, 'To get into the Pentagon and into my area, it took two badge swipes. One to get into the building and one to get into my area. Guess how many badge swipes it took me to get to my seat at Citadel? Five.'"

"The less you know about how they make the money, the better it is for them."

"The only Goldman Sachs employee arrested by the FBI in the aftermath of a financial crisis Goldman had done so much to fuel was the employee Goldman had asked the FBI to arrest."

"On the savannah, are the hyenas and the vultures the bad guys?"

"If high-frequency traders performed a valuable service in the financial markets, they should still do so, after their unfair advantages had been eliminated."

"'People think that complex is an advanced state of complicated,' said Zoran. 'It's not. A car key is simple. A car is complicated. A car in traffic is complex.'"

"Brad was not by nature a radical. He was simply in possession of radical truths."

"Technology had collided with Wall Street in a peculiar way. It had been used, as it should have been used, to increase efficiency. But it had also been used to introduce a peculiar sort of market inefficiency."


Overall, I would recommend giving this book a read.

-Joe

Any book not worth rereading isn't worth reading

“A good book gets better at the second reading. A great book at the third. Any book not worth rereading isn't worth reading.” 

                -Nassim Nicholas Taleb

I recently finished rereading the book “Liar’s Poker” for a third time. This post has very little to do with Michael Lewis’s semi-autobiographical illustration of the ecosystem of Wall Street in the late 1980’s, other than me giving my strong recommendation that you read it. The book can be found here. The main point that I took away from what had transpired throughout my read was that I reread Liars Poker not solely for entertainment, but because I sensed that I could still learn more from Lewis’s story. That desire to further learn is becoming more and more part of my main reading strategies. As Taleb states above, if it’s not worth rereading it’s probably not worth reading. This is one of my tools I use in ascertaining whether or not I’m going to pick up and start a book; “Will this be something I will probably read again?”

For a long time it was difficult for me to pick up a book and begin to read. Individuals would recommend texts to me and give their own personal dialog on why I should read; none of these tactics worked. What I realize now is that I lacked a clear sense of purpose. Presently, when I am in the process of choosing a text to read I ask myself “what am I trying to take away from this?” If it’s solely to relax, fine, but more often than not it’s a book that I sense I can use to further position myself to be successful.

This strategy: developing a “clear sense of purpose” piggybacks off of one of my favorite blog posts by Shane Parish, appropriately titled “how to read a book”. Parish requests we ask ourselves a similar question - “are we reading for knowledge or understanding?” Parish claims that unless the writer is your superior in knowledge and wisdom when it comes to the writings in the text, you’re probably not learning anything new, just absorbing data and information.

Lewis, in my case, is incredibly more informed and knowledgeable about the behind-the-scenes of Wall Street and the sales tactics that are and were used there (topics within Liar’s Poker). In my situation, I was reading for understanding. Parish also states:

“Learning something insightful is harder, you have to read something clearly above your current level. You need to find writers who are more knowledgeable on a particular subject than yourself. It’s also how you get smarter.”

These above strategies will continue to be in my focus throughout the selection of material, reading and reflection process of my ultimate goal: becoming wiser.

-Luke

Wisdom from "30 Lessons for Living: Tried and True Advice from the Wisest Americans"

I recently finished reading 30 Lessons for Living: Tried and True Advice from the Wisest Americans by Karl Pillimer. Basically, the author interviewed thousands of elderly individuals and couples regarding life lessons. The book can be found here.

A few bits of wisdom from the book:

on one's personal development-
People become trapped by their own conception of their limits, such that they come to resent even being asked to step beyond them.

on relationships and death-
Send flowers to the living. The dead never see them.

on happiness-
Happiness does not depend on how much we have but is based on personal success of skills and artistry, a sense of humor, the acquisition of knowledge, the refinement of character, the expression of gratitude, the satisfaction of helping others, the pleasure of friends, the comfort of family, and the joy of love.

on doing things now-
Never imagine that there will be time later to accomplish something, because that later time will turn out to have been yesterday.

on one's attitude-
You are not responsible for all the things that happen to you, but you are completely in control of your attitude and your reactions to them. If you feel annoyance, fear, or disappointment, these feelings are caused by you and must be dug out like a weed. Study where they came from, accept them, and then let them go. If you let outside pressures determine how you feel and what you do, you have just abdicated your job as CEO of your own life.

on what to do when worrying-
Avoid the long view when you are consumed with worry and focus instead on the day at hand.

on worrying-
The key characteristic of worry, according to scientists who study it, is that it takes place in the absence of actual stressors; that is, we worry when there is actually nothing concrete to worry about. This kind of worry - ruminating about possible bad things that may happen to us or loved ones - is entirely different from concrete problem solving. When we worry, we are dwelling on possible threats to ourselves rather than simply using our cognitive resources to figure a way out of a difficult situation.


-Joe

The Scorpion and the Frog

The synopsis of The Scorpion and the Frog fable is as follows:

A scorpion asks a frog to carry him over a river. The frog is afraid of being stung during the trip, but the scorpion argues that if it stung the frog, the frog would sink and the scorpion would drown. The frog agrees and begins carrying the scorpion, but midway across the river the scorpion does indeed sting the frog, dooming them both. When asked why, the scorpion points out that this is its nature.

The lesson of this fable is that certain behaviors are inevitable, even if they are not logical. Some behavior is simply in one’s nature.

The average individual investor goes through cycles of buying high (greed) and selling low (fear) as the market fluctuates until they either run out of money or shun the market altogether.

Why does this irrational behavior happen? I would suggest (as noted in the fable) part of it is human nature, a cycle between greed as the market rises and fear as the market declines. This graphic illustrates one’s emotions as the market fluctuates:

As a result of these emotions, investors tend to buy stocks when they are greedy and sell stocks when they are panicked or fearful (when it would be most advantageous to do the opposite). This is where a financial advisor can really add value – when an individual’s human nature would otherwise cause him/her to deviate from a long-term plan.

The ironic part to all this is that it is easily recognizable. If explained to (almost) anyone, it would be easily understood. However, investors still make poor choices despite knowledge to the contrary. Just like the scorpion who knew that if it stung the frog, the frog would sink and the scorpion would drown and yet it did so anyways, investors still make poor decisions because some behavior is in one’s nature.

Terrance Odean, Rudd Family Foundation Professor of Finance at the Haas School of Business at the University of California, Berkeley, notes the following:

Someone once said to me, “We can’t control our initial reactions, but we can learn to control what we do next.” Investors will always have cognitive biases. One approach to overcoming them is to practice recognizing biases when they manifest themselves and then adjusting our behavior.

An advisor can ensure an investor stays true to a dollar-cost averaging strategy and an appropriate asset allocation strategy through rebalancing, two essentials to avoiding this greed-fear cycle.

-Joe

 Sources:

http://en.wikipedia.org/wiki/The_Scorpion_and_the_Frog
http://rpseawright.wordpress.com/2014/04/16/five-good-questions-with-terry-odean/

Why am I doing this?

For the past several years I have kept a journal. Personal reflection and documentation has been tremendously helpful in my growth as an information procurer, wisdom seeker, and student of clear thinking. I hope to receive a similar benefit from this blog. Gen(Y)us will serve as an archive for my attempt to be on a continuous path to better position myself towards success, as well as become just a little bit wiser every day. The following is a quote by Daniel Kahneman, from the book Thinking, Fast and Slow:

Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed.

This is my attempt to better channel my attention and energy onto items that are deserving of it; I am very excited to being this quest. I firmly believe that the underutilization of attention and intelligent thought is nothing but a waste; this is an effort to address that belief.

-Luke

Lifelong Learning

It is my belief that learning should not begin or end with the educational system. While it would be great if this blog could become something more, ultimately it is a form of self-expression designed to promote my own lifelong learning. The hope is that by writing my ideas, thoughts, opinions, etc in a blog forum, as opposed to writing in a private journal or diary, I will not only have a better understanding of the topics I discuss, but also have the opportunity to interact with others, thereby increasing the desired benefit even further. Here is a quote by one of my favorite thought-leaders, Charlie Munger, on lifelong learning:

Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day.

Being in its infant stages, Gen(Y)us still has a ways to go in terms of development and progression. However, as noted in the aforementioned quote by Munger, a little improvement each day is the goal. Therefore, I am optimistic as to the possibilities of Gen(Y)us and excited about pursuing it further.

Updated: The above portion of this post I wrote two days before what I am writing now. Looking back, I hate what I wrote above. It reads like a term paper, not like a blog post. And I no longer feel the same about some of the statements I made. I was going to delete everything and start over, but I decided against it. It occurs to me right now as I am writing this that what has happened is one of the reasons I want to write a blog. And while I do not have a well-written phrase or term for the overall purpose of Gen(Y)us, I am no longer concerned about expressing that in this post.

Which leads me to a new but related point. It is important (in my opinion) to be able to change one's mind. I imagine that this will become apparent in my posts over time.


-Joe