Investing, as you might know yourself, is first and foremost a great mental exercise. Hence, perhaps one of the most important pillars of investing success is continuous education (though this likely holds true for any other area as well, not just investing). And it’s no fluke that some of the best investors in the world spend a significant chunk of their day reading and reflecting.
Ray Dalio, the founder of $160 billion hedge fund giant Bridgewater Associates, says the most important things you can do to avoid being wrong in the markets is “to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.”
This is a principle I’ve tried to instil into the content on this site as well.
I can’t think of any successful investor in my network who doesn’t (often very routinely and on a subconscious level) continuously work on coming up with independent opinions and then shoot holes in them to see where and how they could be wrong.
If I have learned anything in my fifteen years in the markets it’s that “thinking right” matters. It matters a lot. It’s not everything though, as thinking without execution is purely intellectual masturbation – fun but lacking in results.
On the other hand, execution without sufficient thought is arguably worse. Like a train wreck of excited half thought ideas thrown at the wall of execution, they blow up spectacularly. And the better the execution of a bad idea the more leverage is applied to that bad idea. It has been the downfall of individuals, business empires, and entire nations. Consider Marxism as an example of good execution of a terrible idea.
You can imagine that the topic of fine-tuning your brain and seeing through the innate flaws in the way our brain operates is of deep interest to me. And it should be of great interest to you too. We can be our own worst enemy’s sometimes and being vigilant to this is extremely important.
And so I was very excited to chat to Jeff Annello from Farnam Street, a brilliant website I’ve followed for about 6 months now. The focus is a simple but potent one: to master the best of what other people have already figured out.
As always, I recorded the conversation with Jeff for you. Whether you’re seeking to become a better investor, improve your business decisions or simply walk through life as the best version of yourself, then you’re in for a treat. I’m sure you’ll walk away with something that will bring you closer to any of those goals.
What are some of the ways to make better decisions that you swear by? Let me know in the comment box below. I’m thinking of doing a follow up article on this and feature your methods in it as I think this would benefit many of us.
“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you… so if civilization can progress only with an advanced method of invention, you can progress only when you learn the method of learning. Nothing has served me better in my long life than continuous learning. I went through life constantly practicing (because if you don’t practice it, you lose it) the multi-disciplinary approach and I can’t tell you what that’s done for me. It’s made life more fun, it’s made me more constructive, it’s made me more helpful to others, and it’s made me enormously rich. You name it, that attitude really helps.” – Charlie Munger