Discover more from Psychology of Investing
You too stopped reading. Why?
Mentors, Signposts, Guardrails - Books can be all that & more.
“The man who doesn’t read good books has no advantage over the man who cannot read them.” —Mark Twain
Some small green frogs have found a way to lower their signals’ pitch, thereby communicating that they are larger than they actually are. This ability enables them to preserve their territories by fooling the larger males.
Fiddler crabs regenerate their claws, which look impressive, but are lighter and weaker. But the female sexes don’t know that and the male competition doesn’t want to get in a fight with you to test that. So 44% or more of fiddler crabs are bluffing their way into enjoying the perks of looking strong and cool.
Cuckoos are notorious for leaving their eggs in the nests of other bird species so that someone else can rear their chicks. These eggs have many similarities with other eggs, and hence cuckoos have gotten away for a long time. However, scientists have found that some of the parasitized bird species have begun to recognize cuckoo eggs as interlopers.
These are a few interesting stories that come to my mind from the last book I read “What I Learned about Investing from Darwin”. It’s written by Pulak Prasad and it does a great job of taking me on a journey through the evolutionary history of many species and bringing the Amazonian forest come alive in my imagination.
It felt like I was floating in the misty air of the flora and fauna-rich forest and seeing all these deceptive acts play out in front of me.
Q. How do these stories apply to investing?
A. If deception is an evolutionary trait and has been exploited by the animal kingdom for millions of years, it's impossible for humans not to share this tendency with other species. Survival is a biological trait, and all species will do what they need to do to survive. And it’s this peculiarity that makes people lie, deceive, misrepresent, and mislead. It’s effortless for most as it’s ingrained in them to survive at all costs.
No wonder, many wise investors have always shared an increasing skepticism of company management, especially those with perverse incentives. Pulak Prasad even shares the tendency of management to flaunt their peacock feathers at every opportunity provided.
This only cemented the importance of assessing the quality of the people I deal with. If I am not good at that, I will be the patsy on the table, losing my chips to the hustlers and the deceivers looking at my money with hawk-eyed vision.
That’s one lesson learned from this book. But there are so many more that I walked away with. I learned about the process of investing, the art of buying or selling securities, the mindset needed for long-term investing, and how to be great at it without losing one’s peace of mind.
That’s 5 hours very well spent. If I execute the lessons learned, then it could translate into thousands of dollars in time to come or even more.
That’s a wonderful ROI i.e. Return on (Time) Investment
The beauty of a reading habit is that I don’t need to know the author personally, I may have never met him or worked with him, but I could surely be the benefactor of his three decades of investing expertise. Expertise that has led him to create and manage a multi-billion dollar AMC and become a well-respected figure in the investing community.
Thank you Pulak for taking the time to write this gem of a book.
In addition, I would like to thank every single person who has compressed their knowledge, insight, expertise, and perspectives in a mere 100-500 page bundle. These pages don’t just contain words that inform, they contain messages that have the ability to transform your mind, body, career, and life. Those messages could alter your very being, and take you on a path that was impossible, given your circumstances or background.
In no way am I suggesting that every book is useful; some could be a drag on your energy and some should be just used as a paperweight. Some even look good on the library shelf or the coffee table, and nothing more.
But you only need a handful of books to land on your desk, that could nudge you in a direction, that brings you unimaginable wisdom or riches. Stuff you couldn’t have even imagined in your wildest dreams.
When someone asked Jim Rogers what was the best advice he ever got, he said it was the advice he received from an old man in an airplane: read everything.
How does this really happen?
We all come from backgrounds that are limited in its exposure e.g. I come from a commerce background, and mastered in Finance for my post-graduate. But my entire time during my academic studies was invested in rote learning, and verbal vomiting during examinations. None really tested me intellectually or needed reasoning skills or insights of any kind. None needed a wholesome 360-degree development of one’s personality or psyche.
It was enough to get good grades, get a job, and succeed in the professional world. But so many topics got completely ignored -
Fitness & Nutrition
And these topics are crucial too.
Without understanding philosophy, you might struggle to make peace with reality and spend years trying to control all the outcomes
Without strong relationships, you might be surrounded by people who won’t root for you today or follow your lead in endeavors or support you in old age.
Without effective communication, you will not be looked upon as dependable or reliable, hindering your own professional growth.
Without leadership skills, you may miss out on creating a bigger impact on your institution, society, or country.
Without Personal Finance knowledge, you may act solely on borrowed conviction, and enrich others instead of yourself.
Without fitness & nutrition knowledge, you may not have a life of abundance and vitality. Add to that the less time with your loved ones.
Without the knowledge of human psychology, you will be seduced into acts that ain’t beneficial to you, only to the purveyors of messages crafted for their benefit at your cost.
And since these domains also become important for creating joy and abundance in our lives, it calls for taking time out to read. A 30-second video or a 1-minute reel will only entertain you, it won’t cement any knowledge in your mind that you could tap into for years ahead.
You can’t rely on a packet of Lays Chips for your nutritional requirement from a meal. It’s just empty calories. It may even fill you up temporarily, but your hunger pangs will come knocking on the door soon, once they realize that you just fed them some vegetable oil, salt, and potato. They need more than that. They deserve more than that for the work they do for 24 hrs while you go about your life.
Similarly, you and I need more than entertainment or news.
We need mentors, who will guide our thinking toward our goals and work ethic.
We need signposts, that will provide us with direction while we navigate the terrain of success.
We need mining rigs, to drill down a particular subject and gain domain expertise.
We need elders, to share their wisdom with us on how to go about building bridges to greatness.
And books can be all this and more.
“The reading of all good books is like a conversation with the finest minds of past centuries.” - Rene Descartes
Ryan Holiday and Seneca have taught me to distinguish what’s in my control and what isn’t.
Dave Asprey and Tim Ferriss taught me the power of minimum effective dose, workouts, and supplementation
Pulak Prasad and Saurabh Mukherjee taught me about Investing handsomely
Robert Cialdini and Dale Carnegie taught me how to communicate effectively at all times
Nassim Taleb taught me about luck and randomness, risk and return, optionality and black swans
I didn’t have uber-successful parents or uncles who could take me under their wing. I didn’t get hired in a startup led by a visionary founder like Bezos or Musk. I didn’t volunteer in Gandhi’s struggle for independence. Nor did I apprentice under the guidance of academic legends like Michael Maubossein or Daniel Kahneman.
I didn’t need to. BUT…
I can read their books.
I can still be a part of their journey.
I can still open my doors for them to shape me.
I can still make friends with them and enjoy their company for life.
It’s just not one on one over a coffee at Starbucks. But it’s still one on one, mentally, and emotionally.
It’s not late to pick up this habit. You could start with one page a day. That’s it.
Stick to this baby step on a daily basis, and you will be surprised with the reading muscle that you will develop with just this step. In a few weeks, you could be effortlessly reading many more pages daily, and books monthly. In no time, you will be making friends with the eminent great and learning from them. In a few years, you will be surprised by how this habit shaped your life and nudged you in a direction you couldn’t have foreseen.
“I think of the best investors as mental athletes. They strive constantly for an intellectual advantage—more information, better information, faster information, or simply a more nuanced interpretation of information that’s already out there for everyone to see. All that hard-earned knowledge compounds over time and pays off in unpredictable ways” - Will Danoff, Portfolio Manager, Fidelity Contrafund
Where to begin?
If you genuinely admire anyone, and if that figure has their recommended reading list available in public, then get your hands on a few of the books on that list and begin from there.
If reading isn’t your thing, you can go the audiobook route via Audible.
It’s the intention that matters. It’s the effort that counts.
Or you could continue with constant dosing of social media in 30-60 second formats. That will inform you with some random facts or news or a funny clip. But it won’t make you richer, wiser, and happier.
Recommendations for the week #
I came across a beautiful TED talk by Anne Lamott, author of Bird by Bird. It’s about her 12 absolute truths and her expression of these is eloquent, light-hearted, and profound. Highly recommend it.
I’ve been listening to the entire music library of Lumineers, an American alternative fold band based in Denver, Colorado. All the songs are soulful and feel-good, and they take me to a happy place. I am loving it and I’m sure you will like ‘em too.
Wishing you all a fantastic weekend ahead.
Sending you loads of love and luck🔮