Saturday Serendipity
Quote, Mental Model, Interesting find.
Hello,
Reading time: About 6 minutes
Quote
“Whenever you think that some situation or some person is ruining your life, it is actually you who are ruining your life… Feeling like a victim is a perfectly disastrous way to go through life.” ~ Charlie Munger
Mental Model
Velocity
Are speed and velocity are the same thing?
Before i did my research for this topic I thought they were more or less the same thing. But I was wrong.
Speed is the momentum at which you move at. It does not matter what direction you are moving in.
Velocity is the momentum and direction both that you are moving in.
To simplify if I tell you that Paarth is running at 10 km/ph that is his speed. But if I tell you Paarth is running at 10 km/ph towards the building which is facing north then it is his velocity.
As we want to relate everything to general life situations, we obviously want to focus more on velocity and not on speed. We want to be moving in a certain direction(which is our goals) not doing a lot of things that lead to no place.
Have you ever felt like you have a lot of workload, you do a lot of things but at the end of the day you don’t see any progress? I have and to be honest I think everyone has. We tend to work a lot (speed) but we don’t really align our work with our goals. While we feel like we work hard we don’t make any progress towards our goals (velocity).
This can be very dangerous as for a long time you might feel like you are doing the right things but then after a few years you end up realising all the hard work that you did at the time was bullshit.
Personally as a student most of my workload is focused on the things I like to read about not what the college gives me. I don’t know yet if the work I am doing is just work which is not taking me anywhere or it is going to take me to my goal which is to be a lifelong learner in the field of investing while also learning about other disciplines. ( I lowkey feel like I am moving towards my goal).
In Sports
I mostly only use cricket as an example when I write about these mental models in sport, and today is no different. (sorry if i baited you). In cricket whether you are a batsman or a bowler or a keeper you have to train hard if you want to get somewhere. The competition that exists in the sport especially in India is crazy. To have a goal of playing for your country in cricket is very ambitious and requires crazy hard work. Now the same mental model of velocity applies here. You need to make sure that the hard work (speed) is going in the right direction (velocity). I can practice for 4 hours a day but if the practice I am doing is mediocre it amounts to nothing. The quantity is useless, the quality is what matters.
You can train for 40 hours a week but if the training quality is bad your results will definitely be mediocre. So you have to make a habit of becoming great at picking the right things to train for to reach your goals.
In Investing
We live in an age of abundant information. As investors we get to see so much information. We see quarterly reports ,brokerage reports, annual reports, screeners, charts, financial data, economic data, etc. There is a lot of information that is actually important to take in and understand but there is a lot of information which is actually just useless and you end up wasting your time while you work hard and get no returns. People read a lot of news articles, brokerage reports, analyst reports which make them think that they are working hard and understanding the company. But the reality is that they don’t work efficiently. They waste time doing things they should not be doing. This stands true even for analysts who are professional investors.
Many times they go deep into the company and then they realise that the sector as a whole has never made money over long periods. So they ended up wasting their time researching a dead end. This time which is spent researching dead ends can also be seen as opportunity cost.
So as investors we should make sure first we have our goals set and our investment philosophy set. After that every single thing that we do should be aligned towards our goals and not be based on how much work we have done. It is not important to cover a lot of companies to get rich. You just have to cover the right ones. Again same as cricket the focus is on quality not quantity.
Antidote
So what to do when we want to figure out how to align the progress we make towards our goals and we don’t just work hard.
According to farnam street these are 3 ways to increase your velocity,
“Here are three ways you can increase your velocity:
To the extent possible, ruthlessly shave away the unnecessary tasks, priorities, meetings, and BS. Put all your effort into the projects that really matter.
Don’t rely on your willpower to say no; instead, create systems that help you fend off distractions. I have two friends who were about the same weight several years ago. Around that time, one of them was diagnosed with celiac (gluten intolerance). He immediately started to lose weight after changing his diet. Upon seeing this, my other friend decided that he, too, would go on a diet to lose weight. Because they both ate out a lot, they both were frequently in situations where they would have to make healthy choices. The person with celiac developed “automatic behavior“; he had to avoid gluten if he wanted to stay healthy and pain-free. The other person, however, had to keep making positive choices and ended up falling down after a few weeks and reverting to his previous eating habits. Another example: One of my management principles was “no meeting mornings.” This rule allowed the team to work, uninterrupted, on the most important things. Of course, there were exceptions to this rule, but the default was that each day you had a three-hour chunk of time when you were at your best to really move the needle.
And finally, do as I did, and say “no” to your boss. The best way I found to frame this reply was actually the same technique that negotiation expert Chris Voss mentioned in a recent podcast episode: simply ask, “how am I supposed to do that?” given all the other stuff on your plate. Explain that saying no means that you’re going to be better at the tasks that are most important to your job, and tie those tasks to your boss’s performance.”
“The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.”~Warren Buffett
Interesting find
That’s it for this week!
Enjoy your weekend!
Great stuff...