Archives for April 2019
Behaviouronomics: Motivated Reasoning
An oxymoron is a figure of speech in which apparently contradictory terms appear in conjunction. To me, the word motivated reasoning seems like an oxymoron. Let me explain.
Sound reasoning should be objective — devoid of any or all biases/motivations. Right?
But the human mind is a house of paradoxical features. As it tries to get rid of one bias, it leaves the backdoor open for the same bias. Motivated reasoning is a bias that affects that part of our mind which is often referred to as rational and objective.
Let me give you a quick refresher on System 1 Vs. System 2 concept.
World famous psychologist Daniel Kahneman has done revolutionary work in the field of understanding human cognition. His two systems framework is a brilliant mental construct to decode how our brain makes decisions. System 1 is the result of our reflexive brain — quick and eager to jump to conclusions. System 2 is our reflective brain — slower, effortful, logical, and less prone to error.
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Investor Insights: Jiten Parmar
Jiten is an entrepreneur and a passionate long-term investor. He has been investing in the market since 1993, starting with US equities and then Indian equities in 2002.
In this interview, Jiten shares his evolution as an investor, key lessons learned, his investment process especially in investing in cyclical industries, and how he tries to minimize decision making mistakes.
Wandering with a Beginner’s Mind
Among all the contemporary business leaders, very few come close to Jeff Bezos’ talent for communicating business strategies in a simplified manner. Like Warren Buffett, Bezos writes an open letter to Amazon’s shareholders every year. He’s been doing it for over two decades.
These letters have become an extraordinary source of insight into how Bezos (the world’s richest man) and his company (Amazon) think about customers, innovation, building products, and future.
Amazon started as an online bookselling platform and interestingly didn’t turn a profit for the first six years. Today it’s the second publicly traded company (after Apple) to ever hit a market capitalization of $1 trillion.
Like me, if you’re an admirer of Bezos, then you’re in the good company of people like Warren Buffett and Charlie Munger who are also big fans of the Amazon CEO. Buffett and Munger admit that they failed to see Bezos’ genius early on. Buffett called him the most remarkable business person of our age. Munger, in his nonchalant voice, said, “Jeff Bezos is a different species.”
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The Intangibles of Assessing Management Quality
Value Investing Workshop in Mumbai: Register now for my upcoming Value Investing Workshop in Mumbai on Sunday, 5th May 2019. Few seats remain! Click here to register.
I read a column on Forbes’ website sometime back that contained a narration from one Nancy Ortberg, who was once a nurse at a hospital emergency room in California.
In her story, Nancy described something astonishing that she witnessed in the emergency room.
“It was about 10.30 pm,” she said. “The room was a mess. I was finishing up some work on the chart before going home. The doctor with whom I loved working was debriefing a new doctor, who had done a very respectable, competent job, telling him what he’d done well and what he could have done differently.
“Then he put his hand on the young doctor’s shoulder and said, ‘When you finished, did you notice the young man from housekeeping who came in to clean the room?’ There was a completely blank look on the young doctor’s face.
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