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Managing through chaos


Cardboard
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Great article Cardboard, there are other factors to consider for this particular trip: http://www.guardian.co.uk/uk/2011/sep/24/scott-antarctic-lies-race-pole?newsfeed=true

 

It mentioned that Scott also wanted to do more than just go to the pole, he had plans to collect a bunch of natural specimen for research, and those made his mission a lot more complicated.  Scott also wanted to find out whether mechanical/horse/dogs were more effective so he was testing all 3, whereas Admunson basically just used dogs and didn't think about much else.

 

I think this is true in investing as well - a few weeks ago I was discussing with a friend about shorting Europe.  He started to ask questions like "it would be interesting to know if Europe falls more than America or emerging markets", or "We should care if emerging market falls more than commodities", or "what is the equivalent event in history and how did that unfold?"

He is a naturally more scientific and more curious fellow than I am, and we started to do that kind of research but it sidetracked us from just doing the simple - short some indices.  We made about 5% return on portfolio instead of the 15-20% if we just executed the most simple plan.

At the end I think the lesson is "is your priority to make money or write a book?"

I also found out at the end that our reactions to what had happened was very very very different. 

My reaction was "I cannot darn believe we didn't make as much, that pisses me off so much, it was so clear Europe was going to fall".

His reaction was "There will always be plenty of opportunities, at least we found out which theory was correct".

I was even more pissed at his reaction than losing potential profits.  That to me was even more surprising.  I guess it kind of tells you what each person really cares about.

 

 

So I think the key here is that if your priority is results, then make sure that never falls off the priority list.  There are always a bunch of other stuff that can distract from it - theory, intellectual exercises, curiosity, or sometimes, loyalty to a particular intellectual framework.

 

So another lesson from the Scott vs Admunson trip would be this: just get your results and don't apologize.

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