Saturday Serendipity

Quote, Mental Model, Interesting find, Question for you.

Aug 26, 2023

Hi there!

Reading time: About 3 minutes

Quote

Consistency isn’t simply willpower, which comes and goes. Consistency is doing it when you don’t feel like doing it. ~ Farnam Street

Mental Model

Inertia

Inertia in physics is the law of motion. Newton summarized it this way: “The vis insita, or innate force of matter, is a power of resisting by which every body, as much as in it lies, endeavors to preserve its present state, whether it be of rest or of moving uniformly forward in a straight line.”

To put it in simpler terms nothing that is moving will stop moving until there is an external force to stop it and vice versa nothing that is not in motion will be in motion until there is external force to move it.

In Life

Much like physics we also find ourselves being very resistant to change. We don’t like to change our beliefs even when we see conclusive evidence against it. We get a commitment bias. Very few people are resistant to cognitive inertia. Especially nowadays when social media algorithms are all set up to feed the stuff that you believe in and increase your belief in those things. Everyone becomes a prey to cognitive inertia. This resistant to change is very dangerous and it can be fatal for us. Cognitive inertia is the reason we are so resistant to change.

Sometimes you make up your mind about something without knowing why, and your decision persists by the power of inertia. Every year it gets harder to change.
Milan Kundera, The Unbearable Lightness of Being

“Cognitive inertia also manifests in the form of status quo bias. When making decisions, we are rarely rational. Faced with competing options and information, we often opt for the default because it’s easy. Doing something other than what we’re already doing requires mental energy that we would rather preserve. In many areas, this helps us avoid decision fatigue.” Farnam Street

In Investing

Cognitive inertia affects our investing decisions as well. We refuse to see the bad things about the companies that we are invested in and only look for things which feed our belief. Even when we see something bad like the company losing market share and losing out to its competitors we tend to hope for the company to make a comeback.

A good way to tackle this problem as an investor is to ask yourself if I was to buy this company now would I buy it?

This would change your perspective on it.

Companies can also get trapped in the inertia of "this is how things have always been done." This resistance to change can make businesses obsolete in today’s rapidly evolving market. The most successful companies recognise when they're being held back by inertia and when to apply the necessary force, in the form of innovation, to pivot and adapt.

Innovation is one of the most important things in a business if it does not innovate then it is not going to be a very profitable company in the future.