Articles that I read in January 2019

8/01/19
I read an article in Emotion Machine about a counter intuitive way to handle worries. As per the article, you should designate a specific time of the day to worry. You should worry only during this time slot. At other times, if you have any worries, you should note it down so that you can handle it during your ‘worry time’.

The article also suggests various strategies to handle worries.during the designated time. You can make it a practice to write all your worries on a piece of paper and tear and throw it away, symbolically throwing away the worries.

Another approach is to divide your paper into two halfs. On one half write down all your worries. On the other write all your positives. The positives need not correspond to the negatives, they need not counter the negatives. Only condition is that you must have as many positives as you have worries.

Another strategy is to write down and analyse each worry. Focus on the assumptions that are causing the worry.

The other two strategies are to sing away the worries, literally singing the blues away and doodling your worries.Worry cannot coexist with any form of creative activity.

The key to handling worry is trust and faith. Many people make the mistake of trying to handle worry through rational thoughts and analysis. Rational thought may have its uses but when it comes to handling worry, its use is limited. Worry comes from the subconscious. Only trust and faith talks to the subconscious.

The key challenge to talking to subconscious is that you can do it only when you are totally relaxed. And when you are worried you are never relaxed. So you never communicate with your subconscious which is the repository of solutions to your problem. So your problems are not resolved.

And this is what the approach of worry time solves. Since you have a designated worry time, you give yourself the freedom to relax at other times.

11/01/19
Today  I read an article by Liz Ryan on how to trust your intuition and listen to your gut. Her articles are always good and she adds a lot of value. This was also not different.

(In the post below, words 'Intuition' and 'gut' are used interchangeably to mean the same thing)

She wrote about ten ways to listen to your gut while making any decisions. As children we always trust our gut feeling, but we lose that ability as we grow older, rather we unlearn it by suppressing our gut feelings in favor of intellect. The ten ways to ensure that your gut is active in decision making are:

• Pay attention to the way your body reacts in different situations. Noticing your emotions and body reactions is the first step to re-establishing the connection with your gut
• Learn to listen to the signals that your gut is sending you. Ask your gut to take your decisions and relax as you let your body make decisions for you.
• Spend as much time with people who reinforce you
• Day dream. (Note: I do it a lot). Don’t try to censor ideas that your gut tells you.
• In the evening reflect on your day and try to answer the question, what was my body trying to tell me?
• Identify the difficult moments in your life when you listened to your gut and made decisions.
• Always listen to your body before making any decisions
• Venture into unknown experiences whenever you can.
• When you have free time, sit quietly and ask your body what should I do now? Listen to its suggestion
• Stop and listen when your gut sends you a message. Pause in the middle of any important activity and take input from your gut. Your gut is never wrong.

The three suggestions that stood out for me were, one, whenever you are about to take a decision, confer with your body and take its concurrence, two, when you are sitting idle, ask your body what should I do now and do what the body says and three, every time you tend to  become analytical stop the brain-work and listen to the body.

Nice article to close the day.

15/01/19

Today I read two good articles, both of which opened my eyes to my weaknesses. The first article was written in the ‘Acquirer’s Multiple’ by John Hopkins. The article summarized Michael Burry’s MSN Case Studies. Burry is the doctor / investor made famous when he made huge returns during US Subprime crisis. He was profiled in the book ‘The Big Short’ by Michael Lewis.

The article is titled 'How Can Investors Get Eve After Suffering a Loss'. Burry says that when presented with new money, investors aim is to grow it by 30% to 40% or more in normal cases. But if the investor has lost money, his goal shifts to breakeven. Here is where the math fails him. Breakeven math is cruel. For example, to overcome a 50% loss, the investment has to double from the current valuation. This is significantly higher, and very difficult to achieve, that the investor’s normal expectation of 30 to 40%. While he is happy with 30 to 40% returns in normal cases, the same investor wants a much higher return in breakeven cases.

To get such returns, the investor ends up taking excessive risks. The ratcheting up of risks only leads to a ratcheting up of losses leading to a downward spiral!

In case you are sitting in a loss, the best option is to analyze the cause of the loss. Most probably one will find that losses were caused due to either fundamental factors or due to the investor having strayed from a successful investment method or process.

Since the risk of ruin is real in stock market, the investor must be careful with any decision that he makes with his money.

You can read all the case studies HERE

I read another article in medium.com. It is a great website for quality content. This article titled 'Most People Think This Is A Smart Habit, But It’s Actually Brain-Damaging' written by Michael Simmons is about the damage caused by Junk learning.

What is junk learning? In simple words, it is learning something that do not add value to the learner. It provides an illusion of learning, an illusion of a time well spent but it is really harmful to the learner. Just as a junk food sates your hunger but is ultimately unhealthy, junk learning sates your intellectual hunger but ultimately hurts the learner.

There are a few reasons why junk learning hurts you. First one is the physical changes caused to the brain. Learning of any kind will alter the brain. It means that one has to learn to a plan and ensure that only healthy input goes into the brain.

Another pernicious impact of junk learning is that it leads to junk decisions. Author gives two examples from his life of wrong decisions generated by junk learning. First is that for a long time he was under the idea that sales was bad. Due to that learning, he avoided learning about this value adding activity.

An example given is about author wanting to become a writer. For years he had this idea that to become a good writer, one has to write a lot of content. So every day for the next three years he wrote a blog post each. No one read his posts and then decided that he was not a good writer and that he cannot make a career out of writing. This meant that he had added two more junk learning on top of the first one.

Then he read the book ‘Blockbusters’ by Harvard professor Anita Elberse. The book said that in the world of media like movies and writing, it is better to churn out high quality content rather than volume. Once he internalized this knowledge and erased the original wrong idea, his productivity skyrocketed and career opened up.

Learning is a circular process of taking in information, reasoning with that information, experimenting in the real world, getting feedback and taking in what we learn and go through the cycle again. If one part of the process is faulty, it can throw up our learning process. Junk learning affect that first step by taking in bad ideas. This makes our reasoning bad and this leads to ineffective actions and wrong decisions etc.

The final impact of junk learning is that our fundamental bad idea will lead to new bad ideas piling up. We discussed this earlier when new bad ideas piled on the author’s first idea that writing more content will lead to a career in writing. And how reading the book ‘Blockbusters’ helped him debunk the original bad idea and led to a successful career in writing.

Let me give an example of the negative effects of Junk Learning. It is an extreme case of Junk Learning. I remember the incident that happened one day in 2001 when I was driving down to Hosur with my manager Rajumohan. He popped a question, what would you prefer, achievement or money? I remember replying that I will prefer achievement over money. You can read the full post here.

The article also says what happened after I realized my mistake, what happened when I dumped my junk learning and saw the light as it were...

I just lost 8 years, that is all.

What hit me was junk learning. I imbibed the wrong lesson that for me money doesn't matter, only achievement did. Due to this junk learning, I moved from project to project, doing great work, but never really having the courage (or feeling the need) to ask for a raise I deserved. Money did not matter to me remember?

Why was it junk learning? Because the question was wrong. 'Achievement or Money' creates a false binary. They are not the same. Achievement is related to how diligently you do your work, money is the measure of the value of the output you produce. If you are an achievement oriented person, you will produce high value output, but you won't know the value of your output.

Did I tell it right? Did you understand what I meant. Achievement and money are not mutually exclusive. I should have answered 'I would prefer 'Achievement and money'. Had I done that I would not have taken many wrong decisions that I took over my career. I would not have left 20000 shares of a company on the table (worth almost 60,00,000 INR as per today's share prices) and left for a paltry salary of 8,00,000 per year. I would not have left a job that was giving me almost 100 Pound Sterling a day in UK, in addition to my salary in India, to another job that was giving me almost the same Indian Salary, without those Pound Sterling.

You see what I mean? Junk learning cost me a lot. I trace all my wrong decisions in my career to that one discussion  'achievement or money' that I had with Rajumohan in 2002.

That is how pernicious junk learning is.

So, what are the sources of junk learning? How can be overcome its negative effect?

Author mentions five sources of junk learning and ways to overcome them. The first source of junk learning is the learning that depreciates in value as time progresses. The learning depreciation means that one has to keep learning continuously just to stay in the same place. One mental model that help to overcome this is to acquire learning that appreciates in value over time or at the least learn stuff that do not depreciate over time.

I intuitively know this. That is the reason that I ask everyone to learn business concepts and accounting flows rather than an application version. The former do not lose value, in fact the more you work on this, the more your value will increase. Learning an application version like R12 is like depreciating learning. The learning is useless as soon as the version changes.

Second source of junk learning is overconfidence that comes out of scant learning. This is called Dunning-Kruger effect, which says that till one point, the more you learn, the more you know that the less you know. The awareness of your ignorance will lower your confidence till it touches the lowest level before rising. Little knowledge will make you to commit mistakes. The way to handle this is being a cynic and regularly question your assumptions.

The third source of junk learning is confirmation bias. We tend to learn new stuff that confirms our current understanding. This is not the correct approach. We must learn by trying to prove ourselves wrong. Learning happens through assimilation and accommodation. In assimilation, we use our existing knowledge to learn new things. Accommodation happens when we understand the futility of our existing knowledge to handle a new situation. Here our current knowledge is either wrong, or is useless to handle the new situation or worst, hinders our learning new things. Confirmation bias encourages assimilation but discourages accommodation. We accept ideas that confirm to our existing knowledge and ignore those that counter our point of view.

We call it binary way of thinking. This is rampant in the current state of political polarization in India where we are not ready to listen to counter view points.

We stunt our progress by avoiding discomfiting evidence. Why do we do that? A study shows that we perceive intellectual threat like a physical threat. We need to overcome confirmation bias by stress testing our fundamental beliefs about the nature of reality and learn to handle the strong emotions that come up when we do that.

Fourth source of junk learning is trusting the wrong people and wrong ideas. This because of the Halo effect. We assume that if a person is good in one area, he must be good in others as well. The example given is of George W Bush. In the days immediately after 9/11, his approval rating of the way he handled the aftermath of the crisis skyrocketed. In addition his approval rating for handling the economy also improved. It was difficult for people to approve his work in one area while accepting that he was not good in an unrelated area. It was a mix of Halo Effect and confirmation bias in action. The way to handle Halo Effect is to maintain a healthy dose of scepticism.

Halo effect explains why children think their dad is a superhero.

The fifth and final source of junk knowledge is over-specialisation. It limits our ability to learn across disciplines. The concept of learning transfer deals with how we transfer our learning from one domain to another. Positive transfer occurs when a concept used in one area applies to another unrelated area. This is akin to how McDonald's used the Toyota concepts of Production Line and JIT in Burger business. Negative transfer occurs when learning in one are hinders the learning in another area. For example those who learn Spanish find it difficult to learn English because the latter has gender-less nouns.

Over-specialisation causes negative transfer. The way to handle this is by learning supplemental areas that are transferable. These include learning how to learn and learning how to regulate and monitor ones limited resources like limited short term memory and slow learning rates. Author comes up with the idea of mental models to aid learning transfer.

Mental models are ways that aid the transfer of knowledge. Specialization limits the mental models that you can access in a certain situation. This article in Farnam Street Blog documents 108 Mental Models including Systems Thinking, Occam's Razor, Multiplying by zero, Greesham's Law, Bell Curve etc. The more the mental models you know, the better decisions you will make.

There are a number of links to support materials provided in this article. The links are.

• Link to Blockbuster book
• Link to fundamental knowledge that does not change over time
• Link to the article ‘Dollars and sense of continuing education’
• Link to Trunk Technique

There are a number of takeaways for me from this article. I am making a number of assumptions based on the learning I had in the past. For example I have taken many decisions based on my learning. Liz Ryan has influenced me to leave my unhappy job and so has money moustache in wanting me to retire and live on my savings. So has all the articles that I read asking me to find my passion.

Tomorrow’s task is a brutally honest and candid identification and assessment of the learning that has held me back from achieving my full potential. Also prepare a plan of action for the future.

It is time that I moved out of being a tyro, aficionado and a dilettante and move on to becoming a professional. I need a learning plan and an outcome plan. I need to put a money target to my learning and focus on my learning.


16/01/19
I read two articles today. First one was in ‘Emotion Machine’. The article was titled ‘Small talk vs Big Questions: How to build a deep connections with anyone?’. There are 36 questions that you can ask people to develop deep connections. You can read the article for the full set of questions. The five questions that I liked are:

• Would you like to be famous? In what way?
• When did you last sing?
• If you wake up tomorrow with a single quality what would that be?
• What does friendship mean to you?
• What would be the one thing, other than your family, that you will save if your house caught fire?

Asking these big questions will help build authentic relationships.

I also read an article by Morgan Housel. The article is titled ‘When it's time to do something’. He is a very good writer who adds a lot of value. This article was below par. He says that we should attach actions to define our labels. For example, I keep saying that I am a long term investor. I should back it up by stating what I will do in case of various hypothetical situation? What do I mean by that term? Do I mean that I will stay invested in equity for a long time no matter the market rises or falls? Or do I mean that I will hold on to individual stocks for a long time no matter the price rises or falls? Won’t I do any selling at all? What happens if the market has overrun its valuations? Won’t I book profits?

Every time I say I am a ‘long term’ investor, I must qualify what I will do in various hypothetical scenarios mentioned above. ‘Long term investor’ is just a label without any definition. It need to be embellished with definition, examples and actions.

For example someone says I am a positive person. He or she has to substantiate that statement with examples of how they have behaved positively in various situations. They have to explain how they will behave in hypothetical situations. For instance, how will they handle pink slip as a ‘positive person’?

A so-so article.

17/01/19
Today I read three articles.

Seven metaphors of cognitive defusion in ‘theemotionmachine.com’ written by Steven Handel.

The problem with facts in FT.com by Tim Harford

Why everyone should write in thecollaborativefund.com by Morgan Housel

As per the article Seven metaphors of cognitive defusion written by Steven Handel, one must learn to accept and detach from one’s thoughts and not take everything seriously. While we cannot control our thoughts, we can easily learn to detach from them. One way to do it is to use the idea of cognitive defusion, which is a process of accepting our thoughts while at the same time distancing ourselves from them.

One good way to do this is by the use of metaphors. The article lists seven metaphors that we can use for cognitive defusion.

Clouds in the sky: Think of your mind as sky and thoughts as clouds. Just like clouds, each thought will dissipate and pass us by.

River Stream: Imagine you as an observer sitting on the banks of a river or a stream and watch water flow. Every droplet of water is a thought that flows away.

Passengers on a bus: Your mind is the driver of the bus and every thought is a passenger that gets on and off the bus. Just as the driver of the bus is not attached to any passenger, the mind can easily detach from the thoughts. The best part of this is that you can attach faces to the thoughts and tell them, ‘this is your bus stop, please get off’ or ‘thank you for your feedback’ etc.

Suggestion box: Think of your mind as a suggestion box and eth thought as a suggestion. You have the option of accepting or rejecting the suggestion.

Brain drain: Give yourself 5-10 minutes and write own all that comes to your ind, without any filtering or editing. This helps you to purge the thoughts that you never thought existed. Best time to do this is either in the morning or in the evening. It can also help purge your worries and anxieties.

Feeding the wolves: this is based on the story of two wolves fighting each other. One wolf represents light, hop and positivity and the other represents darkness, despair and negativity. The grandson ask ‘which wolf wins the fight’ and grandpa replies ‘whichever wolf you feed wins’ You can feed energy to positive thoughts and starve the negative thoughts. We have the choice.

Burning your thoughts: Write down your negative thought on a piece of paper and then burn it.

All these metaphors can help you detach from your thoughts. You can use the one that works or use a combination of the approaches.

The second article that I read today is ‘The problem with facts’, written by Tim Harford for Ft.com. The article is on the challenges faced while countering fake news. This is an age where Fake News abounds. Most of the decision by President Trump, in fact even his election as President of the US is a testimony to the success of fake news. In Britain, Brexit campaign is based on Fake news. Given these developments, the article addresses three questions. One, why is it easy to spread fake news, two, what are the tactics adopted to spread fake news and three, how can we counter the spread of
fake news?

The article draws extensively from the experience of Tobacco industry that used various diversionary tactics to deny the linkage between smoking and lung cancer and delay any statutory action on the above linkage.

The word ‘Agnotology’ coined by Robert Proctor, is the study of how ignorance is deliberately produced. Facts are not enough to win this kind of argument. There are three reasons why it is difficult to fight fake news with facts. First is that a simple untruth can beat off a complicated set of facts by being easier to understand and remember. The use of a simple word like ‘Amnesty’ is sufficient to overpower the complex issue of immigration.

The second reason why fake news is difficult to counter is that facts can be boring. Boredom and distraction are a powerful tool. Tobacco industry, by diverting huge funds to research on unrelated areas like genetics and air pollution was able to divert public attention from perils of tobacco consumption. The objective of this distraction to trivialize important facts to make them stale and boring.

The third reason for success of fake news is that truth can be threatening and when threatened people tend to avoid the facts all together. Or the threat makes us latch on to even unrelated doubts.

In case of tobacco industry for example, many journalists who were smokers, got threatened by the facts presented and latched on to the idea that more research was needed on the link between smoking and lung cancer.

What are the tactics used to spread fake news or counter facts? Tobacco industry followed a four stage approach. In the first stage, the industry appeared to engage, promising high quality research into the issue. Public was informed that researchers were working on the issue. The second stage was to complicate the question and sow doubts. Stage three was to undermine serious research and expertise. Autopsy reports were dismissed as anecdotal, epidemiological work as merely statistical and animal studies were dismissed as irrelevant. Final stage was normalization - to point out the tobacco - cancer story was stale news.

Doubt is the product of fake news industry. It is the best way of competing with the body of facts. The ideas is to keep the controversy alive and then brand it as stale news. The advantage is that doubt is easy to produce.

Now we come to the most important topic. How do we counter fake news?

The author provides only one solution. Develop scientific curiosity in people. Research shows that fake news is negated by scientific curiosity. While scientific literacy strengthen the set positions, scientific curiosity motivates them to seek out facts that could counter their positions.

We need champions who can present facts. One example is Carl Sagan. Another example is Swedish doctor Hans Rosling who reached an astonishing wide audience with facts like the official world bank data.

We need Fact Champions to counter the spread of fake news.

Another good article that I read today is titled ‘Why everyone should write’ written by Morgan Housel. The article explains the benefits of writing. There are many ideas in our mind that we do not put into words. We do not verbalize our ideas by use these to make decisions. By putting the ideas into words, we understand their origins, limits and their interaction with other ideas. Writing crystallizes the ideas. Putting ideas on paper is the best way to organize them in one place and helps in clearly understanding the ideas.

If we are asked to answer the following questions, we will fumble.

• What is your edge over competitors?
• How do you reach to unforeseen risks?
• What have you changed your mind about recently?
• What part of your job you are not good at?

We will get clear answers to these question only if we write them down.

Sometimes writing is encouraging. It clarifies the ideas. Sometime it is frustrating. It exposes the flaws in your argument.

Writing helps us in making better decisions. Before taking any decision, write down why you are taking the decisions.

Then take the decisions

Another benefit of writing is that it begets new ideas. The process crystallizes those fuzzy ideas lying inside your mind.

So write.

Write anything. It is the process that matter

18/01/19
Today I read an article called ‘Selfish Writing’, written by Morgan Housel. The article starts off by  referring to the book ‘Most Important Thing’ written by Howard Marks (I have that book in my reading list). This book is based on the memos that Marks sent to his investors for over ten years.

During those ten years when Marks was sending those memos, no one  noticed them. However when he published the book based on those memos, it became an international best seller.

So why did Marks continue writing the memos, even when no one was reading and responding to what he had to say?

Marks was writing for himself. He was enjoying the process of writing. And he thought that wheat he had to say was important.

As mentioned in the article that I summarized yesterday (why everyone should write), what differentiate you from  writers is that writers write. They put their ideas on paper.

I can identify with Marks. For the last 13 years, I have been blogging with hardly any response from the readers or anyone engaging with me. I have not had my articles referred anywhere or developed any new network based on my writing. I have not monetized my writing (not made any money), but I continue to write, I continue to blog with the hope that one day, the sheer volume of great content will make my blog be discovered and through that I will also be discovered.

Just as Ambi used to study harder after every failed interview, with the the only goal of reaching a stage where ‘they cannot reject me because I do not have knowledge’, I will continue to write till the sheer quality of content in my blog will make it the ‘Go to’ blog for anything related to ERP, money or personal growth.

Since Housel is interested in writing about investments, he suggests that you write about investment related topics. Some of the suggested topics are:

• What is your investing philosophy
• What is your investing strategy
• Why did you make that investment
• How did you feel when that investment did not work out.
• What have you changes about your mind and why?
• What is the investing lessons that you have learned over your investing career?

Last two are mine.

Just by writing the answers to the above questions, you will learn a lot about yourself.

28/01/19

Today I read a good article in Scientific American on breathing techniques. It mentioned the scientific basis of deep breathing technique. One good breathing method mentioned was called ‘365 method’. Three times in a day, you do pranayama of 6 breath cycles per minute, for five minutes. 6 Breath cycles in a minute means 10 seconds per cycle. You can do 4 seconds inhalation followed by 6 seconds exhalation or 5 seconds each of inhalation and exhalation. This way you will do 90 breath cycles of controlled breathing in a day and you follow this habit for 365 days.

The key benefit is the physical changes that happens in brain. The controlled breathing stimulates the cerebral cortex thus increasing your intellect and shifts the focus from Amygdala which controls emotions and cause worry..