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Once upon a time, when I worked as an equity research analyst, I used to meet company managers as part of my research process.

I “grilled” them with my questions and cross-questions, doubted and criticized them, liked those performing well and condemned those that didn’t.

Looking back, I reflect on those times with some wisdom that comes with middle age, and I know that there were things I would have done a bit differently, knowing what I know now about the idea of…empathy.

Empathy is the ability to understand and share the feelings of another. It is the ability to put yourself in another person’s shoes and understand with depth the gravity of their situation.

In general, I believe the world and investors needs more empathy.

[Read more…] about The Man in the Arena

Here are the best things I read and thought about today –

• Bloomberg carries this nice piece (Tip: If your Bloomberg free articles limit is over, you may try opening this article in an incognito browser) from Nir Kaissar and Barry Ritholtz, where the authors write to answer this question – How do you get rich? By earning a lot or saving a lot?
   
  Here is Barry’s point of view on the subject of “frugality” –

  I am not, nor have I ever been, a fan of “sustained and disciplined frugality.” With that said, here’s what to keep in mind:

  1. Focus on the big things; the little things will take care of themselves
  2. We all only have so much internal discipline, a consequence of limited mental bandwidth. Don’t fritter it away on things that don’t matter very much.
  3. Spending should always be a function of what you can afford, not a slavish devotion to some puritan ideal.
  4. Money can bring security, comfort and happiness, but beyond a certain point returns on having more of it diminish rapidly.
  5. Experiences tend to beat material goods in terms of money well spent.

  First, the big things: Your education, your career choice, your work ethic, who you marry, who you work with, your skill set, your compensation, your health, your outlook, how you think about the world and the commitment you make to yourself about continually learning and improving. Get those right, and those $5 lattes become pretty irrelevant.

  [Read more…] about The Hedonic Treadmill

Here are the best things I read and thought about today –

• Morgan Housel continues to amaze, and here is his latest post on the three sides of risk. In the post, Morgan takes us 20 years back to his late teens and shares a tragic skiing incident that took away the lives of two of his best friends and ski partners, and how he survived by way of a fluke decision he had put no thought into.
   
  Talking about how that incident changed Morgan’s life, he writes –

  My risk tolerance plunged after Brendan and Bryan died. I broke my back skiing (no nerve damage) a few months later, which crushed it even more. I haven’t skied much since. Maybe ten times in the last 19 years. If I’m honest, it scares me.

  [Read more…] about All That Matters