177. Being Smart all the time
#MakingBetterDecisions, #Goals,?#focusonwhatmatters , #Wealth, #Careers
“Money is made by sitting, not trading” – Jesse Livermore
As such, many aspects of life feel like relentless pursuits. This Monday morning as I sit down typing the draft of this article, it is raining outside. Many office goers may find this “resort-like” salubrious weather compound their Monday blues and may add to their struggles to get out to office. At work, one has to demonstrate acuity, initiative and courage to do well in their career. In other words, one has to take risks. To be sure that one is taking on appropriate risks and picking up the right battles, one has to be “right” in making these calls. A successful career is built on making a number of such “right” decisions. The thing with this is that you have to be “right” so many times.
“Sheer will and determination is no substitute for something that actually works.” - Jason Klatt
But being “right” in the face of uncertainty is hard. For anything to work out, many things along the way will have to work out. For example, to reach office on time by driving from home, one should not get into an accident along the way. But accidents can happen for any number of reasons at any point along the way. A momentary lapse of concentration or focus by any driver on the road could cause an accident.
For you to do well in your career, among other things, you may have to build meaningful relationships with your boss and your boss’s boss. After you have invested a fair amount of time and effort in building the right kind of relationship with them, either or both of them may move on to other firms leaving you hanging. Many careers are generally built in firms that do financially well. But a number of factors could affect the financial health of your company, almost none of which you can control or perhaps, even influence. Practically, a number of factors will have to turn out right for your career to be successful. Conversely, any of a number of factors may derail your career journey.
“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.” – Jesse Livermore
Right off the base, the probability of success (“number of ways you can be successful” over “the total number of ways”)?is low and the probability of failure is high. Technically speaking, your base rate (Bayesian probability) for success is low.
For you to be successful, you will have to turn out “smart” on all the interim steps and factors. That means you will have to be “smart” a lot of times. In each of these times, you will incur significant cognitive load and also, you will need luck going your way.
?Given this, would you like for your output to rely on you being “smart” a large number of times or a smaller number of times. I would think fewer times is better. So, why not design important pursuits of life such that you reduce the number of times you are required to be smart.
?How do we do this?
?By orienting our pursuits along (more) permanent and timeless factors; by focusing a lot more on building capabilities and capacities and less on fads and hypes; by focusing more on depth and less on breadth; by focusing on things that thrive on compounding and less on things that grow linearly with respect to input.
?If you are a technologist, try to be that person who uses “appropriate” technology to provide real value (solve real problems and create real benefits) to the world and not be that person with a hammer who sees all problems as nails to be put into walls – e.g., someone who believes that “Data Science” or “AI” (or any of the latest hype) will solve all problems.
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“If most traders would learn to sit?on their hands 50 percent of the time, they would make a lot more money” - Bill Lipschutz
If you are into stock markets in order to create financial wealth, it is better to be more of an investor as opposed to more of a trader. As an investor, it is better to invest in fewer number of businesses with consequential capital allocations instead of spreading out capital thinly across a large number of companies.
?For someone wishing to build successful career, it is better to limit the number of moves from one employer to another and instead focus on making stint with each employer, valuable and meaningful.
?For satisfactory social life, it is better to limit the number of relationships and instead focus on deepening them.
?Bottomline
“Do more of what works and less of what doesn’t.” - Steve Clark
Decisions, small and big, define the trajectory of our lives. Decisions are tricky because even right decisions do not always yield favourable outcomes. Success materializes only when all the interim steps turn out right but failure ensues when any of the interim steps does not work out. Success seems to be fragile and failure is robust. It is clearly better to go after pursuits where we are required to make fewer consequential decisions along the way i.e., It is better to go after compounding activities.
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I spend most of my time helping people make better decisions, build financial intuition and build great careers.