Sharpening Your Skills

Investing is Saying “No” 99% of the Time

September 22, 2018 By Nagesh Belludi Leave a Comment

As an investor in high-quality public companies and startup ventures, I spend very little time each on a lot of investment opportunities and a lot of time each on a very few opportunities. Over seven-tenths of the returns I’ve ever produced have been with just four companies.

I try to learn of as many ideas and opportunities as possible, especially in companies led by first-class entrepreneurs and businesspeople. From time to time, I spend hours at the community library flicking through one-page summaries in the Value Line Investment Survey, arguably the best investment product available on the market.

Exposing myself to many opportunities makes me a better investor. Even if my stock-filtering method quickly guides me to say “no” commonly, my goal is to find a kernel of usable information to add to my “mental attic.” I can’t predict when something might come in handy to help make sound investment choices in the future. As the great investor Charlie Munger said at the 1996 Wesco Financial annual meeting,

Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly at scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime.

A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then, all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.

How to Make Others Feel They Owe You One: Reciprocity and Social Influence

September 18, 2018 By Nagesh Belludi Leave a Comment

Reciprocity, as described below, is a manipulative technique. My aim for this article is twofold: firstly, it sensitizes you to one of the many things people can do to get you to do their bidding. Secondly, reciprocity is a handy technique for those circumstances where certain ends can justify certain means.

Reciprocity is treating other people as they treat you, or for the purpose of this article, as you wish to be treated—specifically with the expectation that they will reciprocate your favor in the future.

In other words, reciprocity is a sneaky trick that permits deliberate interpersonal influence. Do something for other people and they will be willing to do something for you, partly because they’ll be uncomfortable feeling indebted to you.

The concept of reciprocity is ingrained in human nature. As part of our upbringing, we are taught to give something back to people who give us something. Reciprocity and cooperation are the underpinnings of a civilized society—they allow us to help people who need it and to hope that they will help us when we need it. Research suggests that the desire to repay goodwill is hard-wired in the human brain.

Jack Schafer’s The Like Switch: An Ex-FBI Agent’s Guide to Influencing, Attracting, and Winning People Over (2015) offers a clever technique to put reciprocity into action:

The next time someone thanks you for something, don’t say, “You’re welcome.” Instead, say, “I know you’d do the same thing for me.” This response invokes reciprocity. The other person is now predisposed to help you when you ask them for a favor.

The effects of goodwill are short-lived. A long-forgotten reputation for helpfulness gets you nothing. You have to renew your reputation by helping others regularly.

To learn more about reciprocity, read social psychologist Robert Cialdini’s Influence: The Psychology of Persuasion (1984.) He identified reciprocity as one of six principles that can help get others’ compliance to your requests.

Don’t Ignore the Counterevidence

September 14, 2018 By Nagesh Belludi Leave a Comment

Left to themselves, much of our opinions and judgments are subjective, imprecise, incomplete, narrow-minded, or utterly unapprised.

A good critical-thinker deliberates objectively about alternative world-views that may cause him/her to philosophize differently. The English philosopher and economist John Stuart Mill made an unparalleled case for this intellectual obligation in his treatise On Liberty (1859):

If the cultivation of the understanding consists in one thing more than in another, it is surely in learning the grounds of one’s own opinions. Whatever people believe, on subjects on which it is of the first importance to believe rightly, they ought to be able to defend against at least the common objections. … on every subject on which difference of opinion is possible, the truth depends on a balance to be struck between two sets of conflicting reasons. Even in natural philosophy, there is always some other explanation possible of the same facts; some geocentric theory instead of heliocentric, some phlogiston instead of oxygen; and it has to be shown why that other theory cannot be the true one: and until this is shown, and until we know how it is shown, we do not understand the grounds of our opinion. But when we turn to subjects infinitely more complicated, to morals, religion, politics, social relations, and the business of life, three-fourths of the arguments for every disputed opinion consist in dispelling the appearances which favour some opinion different from it. The greatest orator, save one, of antiquity, has left it on record that he always studied his adversary’s case with as great, if not with still greater, intensity than even his own. What Cicero practised as the means of forensic success, requires to be imitated by all who study any subject in order to arrive at the truth. He who knows only his own side of the case, knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side; if he does not so much as know what they are, he has no ground for preferring either opinion. The rational position for him would be suspension of judgment, and unless he contents himself with that, he is either led by authority, or adopts, like the generality of the world, the side to which he feels most inclination.

Mill recommends anticipating the potential objections to one’s argument, coming to terms with the merits of opposing points of view, and establishing why the balance of reasons still supports one’s viewpoints:

Ninety-nine in a hundred of what are called educated men are in this condition; even of those who can argue fluently for their opinions. Their conclusion may be true, but it might be false for anything they know: they have never thrown themselves into the mental position of those who think differently from them, and considered what such persons may have to say; and consequently they do not, in any proper sense of the word, know the doctrine which they themselves profess. … So essential is this discipline to a real understanding of moral and human subjects, that if opponents of all important truths do not exist, it is indispensable to imagine them, and supply them with the strongest arguments which the most skilful devil’s advocate can conjure up.

Idea for Impact: Consider objections to your viewpoints; Remain open to alternative interpretations.

Suspend your inclinations and commitments and ask whether any of the objections have some force against your argument.

Don’t argue merely from those premises that appear compelling to you; address the premises that appear compelling to your opponent.

As Aristotle counseled, “The fool tells me his reasons; the wise man persuades me with my own.”

Summary of Richard Carlson’s ‘Don’t Sweat The Small Stuff’

September 4, 2018 By Nagesh Belludi 1 Comment

Stress follows a peculiar principle: when life hits us with big crises—the death of a loved one or a job loss—we somehow find the inner strength to endure these upheavals in due course. It’s the little things that drive us insane day after day—traffic congestion, awful service at a restaurant, an overbearing coworker taking credit for your work, meddling in-laws, for example.

It’s all too easy to get caught up in the many irritations of life. We overdramatize and overreact to life’s myriad tribulations. Under the direct influence of anguish, our minds are bewildered and we feel disoriented. This creates stress, which makes the problems more difficult to deal with.

The central thesis of psychotherapist Richard Carlson’s bestselling Don’t Sweat The Small Stuff… And It’s All Small Stuff (1997) is this: to deal with angst or anger, what we need is not some upbeat self-help prescriptions for changing ourselves, but simply a measure of perspective.

Perspective helps us understand that there’s an art to understand what we should let go and what we should concern ourselves with. As I mentioned in my article on the concept of opportunity cost, it is important to focus our efforts on the important stuff, and not waste time on the insignificant and incidental things.

I’ve previously written about my favorite 5-5-5 technique for gaining perspective and guarding myself against anger erupting: I remove myself from the offending environment and contemplate if whatever I’m getting worked up over is of importance. I ask myself, “Will this matter in 5 days? Will this matter in 5 months? Will this matter in 5 years?”

Carlson stresses that there’s always a vantage point from which even the biggest stressor can be effectively dealt with. The challenge is to keep making that shift in perspective. When we achieve that “wise-person-in-me” perspective, our problems seem more controllable and our lives more peaceful.

Carlson’s prescriptions aren’t uncommon—we can learn to be more patient, compassionate, generous, grateful, and kind, all of which will improve the way we feel about ourselves and the way that other people feel when they are around us.

Some of Carlson’s 100 recommendations are trite and banal—for example, “make peace with imperfection,” “think of your problems as potential teachers,” “remember that when you die, your ‘in-basket’ won’t be empty,” and “do one thing at a time.” Others are more edifying:

Let others have the glory
Let others be “right” most of the time
Become aware of your moods and don’t allow yourself to be fooled by the low ones
Look beyond behavior
Every day, tell at least one person something you like, admire, or appreciate about them
Argue for your limitations, and they’re yours
Resist the urge to criticize
Read articles and books with entirely different points of view from your own and try to learn something

Carlson’s succinct insights have hit home with legions of the hurried and the harried. He became a bestselling author and a sought-after motivational speaker. Before his tragic death in 2006 at age 45, Carson followed up “Don’t Sweat The Small Stuff…” with some 20 tacky spinoffs intended particularly for spouses, parents, teenagers, new-weds, employees, and lovers.

That Burning “What If” Question

August 8, 2018 By Nagesh Belludi Leave a Comment

The Rightness of Past Choices Become Obvious in the Clarity of Future Hindsight

In the Czech novelist Milan Kundera’s philosophical novel, The Unbearable Lightness of Being (1984; film adaptation, 1988) the womanizing protagonist Tomáš deliberates if he wants to be single or with his eventual wife Tereza:

We can never know what to want, because, living only one life, we can neither compare it with our previous lives nor perfect it in our lives to come.

…

There is no means of testing which decision is better, because there is no basis for comparison. We live everything as it comes, without warning, like an actor going on cold. And what can life be worth if the first rehearsal for life is life itself? That is why life is always like a sketch. No, “sketch” is not quite the word, because a sketch is an outline of something, the groundwork for a picture, whereas the sketch that is our life is a sketch for nothing, an outline with no picture.

The Mournful “What If” is a Powerful and Emotional Inquiry about Alternative Lives You Could Have Lived

Oftentimes, when dealt with adverse circumstances, life’s self-criticism apparatus kicks in. Plagued with self-doubt, life asks the questions “Why did things turn out this way?” and “Why wasn’t this experience what I expected it to be?” Regrets gnaw in the back of the mind, “How would my life be different?” and “I never shouldn’t have done this.”

And when you cognize life in hindsight, your lived life doesn’t usually compare favorably with your imagined, could-have-been life.

And that’s why you should refrain from ruminating about those non-lived lives—such projections of your mind only instigate sorrow.

Idea for Impact: Sketch the Picture of Our Own Choosing

One of the most effective ways of eliminating regrets is to eliminate the underlying ignorance that is the cause. The wise fancy what the past was once and appreciate how it is molded them. But they no longer desire to live there or evoke the choices of the life that could have been.

As the great Stoics taught, you must reject regret, appreciate that you are now the distillation of all your past choices and experiences, and take the next positive little step. Reflecting on “What do I want to make of all of this?” and “What am I looking forward to?” can clarify your potential.

As Viktor Frankl emphasized in his 1946 masterwork on positive approach to psychological treatment, “Live as if you were living already for the second time, and as if you had acted the first time as wrongly as you are about to act now!”

Who wants to lament the life not lived when you can do dive into the life you’re actually in and do so much good now?

Live this choice. Sketch the picture of our own choosing.

How Far You’ve Come

August 2, 2018 By Nagesh Belludi Leave a Comment

While browsing through advertising genius David Ogilvy’s The Unpublished David Ogilvy, I stumbled across a mention to a 1964 letter of introduction that Ogilvy received from a gifted job-applicant.

Ogilvy calls this “the best job application letter I have ever received.” The first paragraph announces,

My father was in charge of the men’s lavatory at the Ritz Hotel. My mother was a chambermaid at the same hotel. I was educated at the London School of Economics.

Ray Taylor, that aspirant, became an Ogilvy & Mather copywriter.

It reminded me of a quotation from the American priest Henry Ward Beecher: “We should not judge people by their peak of excellence; but by the distance they have traveled from the point where they started.”

Idea for Impact: Appreciate how far you’ve (and others have) come.

We’re All Trying to Control Others

June 19, 2018 By Nagesh Belludi Leave a Comment

We're All Trying to Control Others

One of the realities of the human condition is that we’re all operating our lives by trying to make the settings around us—the environments in which we live, work, and play—to be just the way we want them to be.

However, we share these settings with other people, who themselves are trying to make their settings just the way they want them to be.

And herein is the source of a great many conflicts: as we control our worlds and our lives with the purpose of making them transpire as we’d like them to, we intercede with the controlling of others.

Conflict is not necessarily bad. It is a normal, fundamental, and pervasive facet of life. It is a natural outcome of what happens when our expectations, interests, viewpoints, inclinations, and opinions are at variance with those of others.

Every relationship is a minefield of conflict, and each instance of contradictory viewpoints brings new challenges.

The key to getting along amicably and resolving the problems of the world is working out how we can wisely facilitate our control of what is important to us without interfering with other people’s efforts at doing the same thing.

Idea for Impact: Life is negotiation. Getting what you want out of life is all about getting what you want from—and with—other people. Learning how to engage in conflict to get what you want without inflicting damage on the opportunities and the relationships is one of life’s essential and practical skills.

The Historian’s Fallacy: People of the Past Had No Knowledge of the Future

June 7, 2018 By Nagesh Belludi Leave a Comment

The practice of picking a thesis and then setting out to establish it is a widespread intellectual pursuit. But biographers and historians sometimes portray their subjects as if the historical participants could recognize what lay ahead of them.

Assuming that people of the past pondered over the events of their day from the same perspective as we do in the present is committing The Historian’s Fallacy.

The notion of the historian’s fallacy was first presented by the British literary critic Matthew Arnold (1822–88) in The Study of Poetry (1880.) In questioning how historical backgrounds were portrayed in the development of literary styles, Arnold called attention to the frequent logical error of using hindsight to assign a sense of causality and foresight of significant historical events to the people who lived through them. In reality, those historical participants may not have had wide-ranging perspective that we assume in interpreting the context, conventions and limitations of their time. Arnold wrote,

The course of development of a nation’s language, thought, and poetry, is profoundly interesting; and by regarding a poet’s work as a stage in this course of development we may easily bring ourselves to make it of more importance as poetry than in itself it really is, we may come to use a language of quite exaggerated praise in criticising it; in short, to overrate it. So arises in our poetic judgments the fallacy caused by the estimate which we may call historic. … Our personal affinities, likings and circumstances, have great power to sway our estimate of this or that poet’s work, and to make us attach more importance to it as poetry than in itself it really possesses, because to us it is, or has been, of high importance.

The American historian David Hackett Fischer, who coined the phrase “historian’s fallacy,” cited the claim that the United States should have anticipated Japan’s surprise attack on Pearl Harbor because of the many warning signs that an attack was in the cards. Fischer argues those signs seem obvious only in hindsight—to the World War II military leaders, many of those signs suggested possible attacks on many positions other than Pearl Harbor.

A good historian strives for objectivity by ignoring his own knowledge of consequent events and employing only what the historic individuals would have known in the context of their own time.

A related fallacy is Presentism—a manner of historical analysis wherein the past is interpreted by means of present-day attitudes. Presentism often fosters moral self-righteousness. Employing present-day moral standards to reflect on the Founding Fathers’ ownership of slaves, David Hume’s racism, or Gandhi’s opposition to modernity and technology should not be tainted by our stance of temporal condescension.

Writing To-Do Lists Can Help You Sleep

June 4, 2018 By Nagesh Belludi 1 Comment

Sleeplessness Can Both Cause Anxiety and Be Caused by Anxiety

If you have recurrent difficulty with falling asleep or staying asleep, making a to-do list may help.

The authors of a Baylor University study suggest that not only can anxiety about unfinished tasks affect your sleep, but improving your sleep problem can also help symptoms of anxiety.

The authors’ experiment asked 57 students to spend a night in a sleep lab with no gadgets or distractions. Five minutes prior to an enforced sleep time, one half of the volunteers created a list of things they wanted to do over the upcoming days and the other half recorded tasks that they had completed during the previous few days. The researchers examined the participants’ brain activity during the night and established that those who wrote their to-do lists fell asleep nine minutes sooner on average.

How Ruminating about Unfinished Tasks Can Keep You Awake

The beneficial effects of a humble to-do list on your sleeplessness can be explained by the Zeigarnik Effect, the tendency for interrupted tasks and thoughts to be evoked better than completed tasks.

As I’ve written previously, Psychologist Bluma Zeigarnik, who studied this phenomenon, theorized that incomplete tasks can incite “psychic tension” and can inundate you with a constant stream of reminders. Just the modest act of capturing how you’re going to deal with the unresolved tasks in a to-do list can achieve a sense of completion and respite.

According to Michael Scullin, the lead researcher of the aforementioned Baylor study, “there’s something about the act of writing, physically writing something on paper, that helps us hit the Pause button.”

When you have a task that’s unfinished, it’s on your mind more than any task you have completed. If you test people’s memory for things that were unfinished versus things that were completed, people remember the things that were unfinished a lot better. It seems that unfinished tasks rest at what we call a heightened level of cognitive activation. We think that’s the key ingredient. With our day-to-day lives and work schedule, unfinished tasks pile on one another and create this cognitive activation that’s difficult to set aside—unless, of course, you write about it.

Idea for Impact: Write a To-Do List Before Hitting the Sack Every Night

Some folks I know create a ‘brain dump’ just before bedtime—they not only jot down any worries or unfinished tasks from the day, but also create a plan for resolving their worries and stressors.

Elevate Timing from Art to Science // Book Summary of Daniel Pink’s ‘When: The Scientific Secrets of Perfect Timing’

May 29, 2018 By Nagesh Belludi Leave a Comment

Daniel Pink’s When: The Scientific Secrets of Perfect Timing (2018) explores how the quality of the decisions we make are correlated with their timing.

Pink is an expert on motivation and management, and an author of such best-selling books as Drive: The Surprising Truth About What Motivates Us (2009) and To Sell is Human: The Surprising Truth About Moving Others (2012.) He describes When as not so much a “how-to” guide for making the most of our lives, but as a “when-to” manual for individual and group work.

The Best Times of the Day to Make Optimum Decisions

Pink’s principal theme is chronobiology—the science of how the body’s biological clocks can influence our cognitive abilities, moods, and attentiveness.

Drawing on scientific research on the science of timing, Pink concludes that the mental acuity, creativity, productivity, temper, and frames of mind for most folks follow an identifiable “peak-trough-rebound” template. Most people get their best work done in the mornings, suffer a trough of mental weariness in the afternoon, and experience a late-evening burst:

Our cognitive abilities do not remain static over the course of a day. During the sixteen or so hours we’re awake, they change often in a regular, foreseeable manner. We are smarter, faster, dimmer, slower, more creative, and less creative in some parts of the day than others. … [R]esearch has shown that time-of-day effects can explain 20 percent of the variance in human performance on cognitive undertakings.

Needless to say, this “peak-trough-rebound” phenomenon is fairly universal but differs among individuals. There are “larks” who do remarkably well in the mornings and “owls” who tend to embrace their late night productivity habits.

Optimizing Your Day with Daily Rhythms

According to Pink, “peak-trough-rebound” is attributable to the body’s relatively low temperature when we wake up. The increasing body temperature gradually boosts our energy level and alertness, which consequently “enhances our executive functioning, our ability to concentrate, and our powers of deduction.” As the morning evolves, we become more focused and alert until we hit a peak. Then our energy level wanes and our alertness declines, only to be restored in early evening.

Pink concludes that mornings are good for decision-making and that errors increase in the afternoons. Studies recommend that we schedule surgery in the mornings when surgeons tend to make fewer mistakes and avoid petitioning a traffic ticket in the afternoons because judges tend to be less considerate than in the mornings.

“Breaks are Not a Sign of Sloth but a Sign of Strength”

Pink emphasizes the risks of clouded judgment that characterizes the afternoon “trough.” As an example, Pink speculates that the sinking of the RMS Lusitania in 1915 was about the time of day—it’s captain’s ill-fated decisions were made in the afternoon following a night of no sleep.

With case studies of error-reduction in hospital operating rooms, Pink suggests “vigilance breaks” (quick team huddles for reviewing checklists and verifying courses of action) and restorative breaks (naps, short physical activities, or mental diversions) during troughs to “recharge and replenish, whether we’re performing surgery or proofreading advertising copy.”

“Timing is Everything” and “Everything is Timing”

Based on the mentioned studies’ correlations and causations, Pink offers advice further than daily scheduling—from marriage to switching careers and sports:

The best time to perform a specific task depends on the nature of that task. Identify your chronotype (Pink offers an online survey,) understand your task, and decide on the most suitable time. Do not let mundane tasks sneak into your peak period. Additionally, if you’re a boss, understand your employees’ work patterns and “allow people to protect their peak.”
Tasks that need creativity and a flash of insight (rather than analytical perspicacity) are best done during the late-evening recovery period when the mind tends to be less inhibited and more open to inventive associations.
Harness the psychological power of beginnings—New Year’s Days, birthdays, and anniversaries are all natural times to make resolutions and start working on goals. Other opportunities for fresh starts include the first of the month, the beginning of the week, and the first day of spring.
“Lunch breaks offer an important recovery setting to promote occupational health and well-being”—especially for “employees in cognitively or emotionally demanding jobs.”
Afternoon coffee followed by 10- to 20-minute naps and leisurely daily walks are “not niceties, but necessities.” Drink a cup of coffee just before a nap—the 25 minutes it takes for the caffeine to kick in is the optimal length of a restorative siesta.
Morning workouts are best for people aiming to burn fat, lose weight, or build sustainable exercise habits. Folks trying to reach personal bests should seek out the afternoons, when physical performance tends to reach its zenith.
Studies suggest that people are most likely to run their first marathons at ages ending in 9—but those ages are also when people are most prone to cheating on their spouses.
According to one survey, switching jobs every three to five years in your early career can lead to the biggest pay increases.

Recommendation: Skim Daniel Pink’s ‘When’ for the Life Hacks

Daniel Pink’s When: The Scientific Secrets of Perfect Timing offers little fresh substance. Many of the cited studies’ implications, causations, and correlations are open to debate.

A speed-read of When, especially of the takeaway points at the end of each chapter, can offer some practical tips about when you are likely to be creative, focused, and least error-prone.

Parenthetically, the third and the final section on “Synching and Thinking” is out-of-place to Pink’s principal theme of timing, even if the case study of the synchronized effort that constitutes the Mumbai Dabbawala lunchbox delivery system is interesting. Pink explains that the importance of “syncing up” with people around you through a collective sense of identity and a shared purpose is “a powerful way to lift your physical and psychological well-being.”

Complement skimming Daniel Pink’s When with Michael Breus’s The Power of When (2016; Talk at Google.)

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Sharpening Your Skills

Wondering what to read next?

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Idea for Impact: Consider objections to your viewpoints; Remain open to alternative interpretations.

Wondering what to read next?

Wondering what to read next?

The Rightness of Past Choices Become Obvious in the Clarity of Future Hindsight

The Mournful “What If” is a Powerful and Emotional Inquiry about Alternative Lives You Could Have Lived

Idea for Impact: Sketch the Picture of Our Own Choosing

Wondering what to read next?

Wondering what to read next?

Wondering what to read next?

Wondering what to read next?

Sleeplessness Can Both Cause Anxiety and Be Caused by Anxiety

How Ruminating about Unfinished Tasks Can Keep You Awake

Idea for Impact: Write a To-Do List Before Hitting the Sack Every Night

Wondering what to read next?

The Best Times of the Day to Make Optimum Decisions

Optimizing Your Day with Daily Rhythms

“Breaks are Not a Sign of Sloth but a Sign of Strength”

“Timing is Everything” and “Everything is Timing”

Recommendation: Skim Daniel Pink’s ‘When’ for the Life Hacks

Wondering what to read next?