I culled the FT subscription - Curiosity Killed Your Investment
Posted by: Brian Dennehy
I recently cancelled my subscription with the FT. You might think that should be essential reading for someone doing my job. Perhaps not. This isn’t about whether the FT is a good read – no rant on that count. It is about having an effective investment strategy, less stress, and more time.
The desire to read is a key element of our curiosity gene. As Albert Einstein said:
“I have no special talents. I am only passionately curious.”
I am very fortunate that as part of my job I get to read loads every week, and more often than not written by some remarkable people. (As an aside, much is paid-for research, but I will share what I can from time to time). But it can also be a curse.
From the day we are born curiosity is what drives us to explore and learn and have fun. This desire to discover is deeply ingrained, on a par with the basic desire for food or sex according to Christopher Hsee of the University of Chicago.
Curiosity in general, and reading in particular, can drive considerable success. Many thousands of people have not only successfully undertaken a multitude of tasks with which the rest of us might struggle, but have also been kind enough to share their success, in blogs and book and broadcasts. Most “stuff” has already been tried before, by someone. All you have to do is learn from them.
The world’s most successful investment partnership certainly knows that - Warren Buffett and Charlie Munger.
Buffett says he spends 80% of his day reading and thinking, which can be 500 pages every day.
While 500 pages might be a tad ambitious, how about just 25 pages every day? That’s about 1 hour per day.
The problem? Most of us will find excuses, similar to the ones we trot out when asked why we don't go to the gym - even though we pay for a gym membership!
But if you focus, you can do it. You can carve out an hour in the day to read.
Buffett told this story of his business partner:
“Charlie, as a very young lawyer, thought to himself “Who’s my most valuable client?”. And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning… Everybody should do this, be the client and sell yourself an hour a day.”
Think about this hour. On the one hand you could check Twitter or Facebook, mindlessly trawl through the BBC online, reply to a few emails which aren’t either that important or time sensitive. Or you could invest one hour in yourself.
But reading, in and of itself, isn’t enough. Curiosity has its dark side. Does your reading cause you to navel gaze or get on with stuff?
Some years ago, in the 1990s, I realised that a high level of reading, while hugely enjoyable, was also a distraction. Interestingly I could observe this by virtue of the people around me, and my clients, making good money (based on my research) but I wasn’t!
Philosophers like Leibniz and Diderot were already complaining about information overload in the 17th and 18th century. Imagine how mind-boggling they would have found the internet age.
Whichever century we consider, the issue is not how much information we can access, but how we manage it.
If you have a little too much of the curiosity curse gene, if your school reports were littered with “easily distracted” (mine too!), and you have a messy-cum-eclectic collection of investments, you have a clear need to re-focus.
Someone (I can’t recall who) said that I couldn’t change the personality trait which gives me an over-active curiosity gene – I couldn’t change that desire to read intensively. But I could change how I responded to what I learnt or discovered.
If I am reading investment-related matters (endlessly fascinating for me) I put most of this in a mental box marked “interesting but otherwise wallpaper”.
A much smaller amount goes into a separate mental box marked “critical facts, must prioritise action”. Obvious really!
But which are the critical facts? This is where you have to have a tight investment objective, and a clear process to achieve it. Then the critical facts become very clear.
For example, assume your objective is to identify funds with a high probability of performing better than their peers (outperformance). And the process to achieve this is Dynamic Fund Ratings.
Therefore, the critical facts on which I need to focus (Dynamic Fund Ratings) are very clear and very few. My reading in search of critical facts is now focussed and extremely efficient.
In particular, because I have a clear process, I no longer feel obliged to read widely and voraciously in search of a magic formula and some Holy Grail – which wastes vast amount of time, and is both stressful and endlessly unsatisfying. Now when I read more widely it is for interest or for fun – it can be both relaxing and stimulating – but not in pursuit of some will-o’-the-wisp.
Back to the FT, it doesn’t provide any of critical facts I need. But that wasn’t the problem. The online version, so easily accessible on my phone, wherever I was 24 hours a day, became a continual distraction, along with other online subscriptions. There are some occasionally brilliant insights in the FT, but certainly not sufficient to justify my time spent perusing it. It was the curse of the curiosity gene in the internet age. A cull was required.
Do you have a messy-cum-eclectic collection of investments? Do you obsessively twitch at every news alert on your phone? Try separating out the wallpaper from the critical facts you need for your investing success. Don’t get distracted by the latest missive from the FT or your broker or even me – we are just wallpaper. You already have the small number of critical facts you need to transform your investing potential. Focus on those and it will be easy to tidy your investments into a coherent whole, and substantially increase the long-term potential of your investing efforts – and you can read more widely just for fun.