Quote of the week:

“No great improvements in the lot of mankind are possible until a great change takes place in the fundamental constitution of their modes of thought.” – John Stuart Mill

The science behind decision-making 

“Because we have to make decisions everyday — at work and in our personal lives — it’s surprising that smart decision-making is not taught in school,” writes Anne-Laure Le Cunff in a thoughtful piece on the art of decision-making. “It’s the kind of skill everyone should have in their mental toolkit.” I agree.

Le Cunff, who writes extensively about the link between neuroscience and creativity, doesn’t claim that there’s any specific way to make better decisions. But she does explore the brain science—and the necessary preconditions—to make more rational decisions (especially in an increasingly noisy world). She writes:

“So, to make decisions, you need to be able to leverage information to adjust your actions. But there’s another important source of data your brain uses in decision-making: your emotions. Sure, we would love to think that all of our decisions are rational, but research suggests otherwise. For example, studies found that ‘fearful people made pessimistic judgments of future events whereas angry people made optimistic judgements.’ In another study, participants who had been induced to feel sad were more likely to set a lower price for an item they were asked to sell.”

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Overlaps between value and growth investing

The dynamic between “growth” and “value” investing is often set up as some sort of tribal distinction, as if both camps are in warring factions in complete opposition. In fact, I tend to believe this distinction is overblown—and largely semantic. John Huber of Saber Capital Management wrote a great piece recently on this subject in which he compares the classic “value” investor John Neff to the classic “growth” investor Peter Lynch. His finding? They’re actually quite similar. “Neff is often bucketed into the ‘value’ camp,” John writes, “and while I certainly would agree that he’s a value investor, I got to thinking how similar his style was to Peter Lynch, who is labeled a growth investor.” He continues:

“In fact, I think both investors are more similar in their strategy than they are different. They tried to market their funds using particular language (just as Buffett tries to simply explain his philosophy), but the simple reality is I think they simply were looking for the most common sense and lowest risk ways to compound their capital.”

A few more links I enjoyed: 

The Infinite Ladder – via Frederik Gieschen
“Consider who you are today compared to a year or two ago. A good indicator of progress is the feeling of slight embarrassment by the quality of your work or the beliefs you held. Journals are important because your memory is being re-written as we speak. You need hard evidence to show you who you were and what you were thinking. How much have you really changed? How many of your limiting beliefs are still present? How many bad habits and coping mechanisms still haunt you? It’s hard to tell how much you’ve changed until you bump into yourself on the road, doing what you’d thought you’d long left behind.”
What Happens in the Brain While Daydreaming? – via Harvard Medical School
“The research provides tantalizing, if preliminary, evidence that daydreams can shape the brain’s future response to what it sees. This causal relationship needs to be confirmed in further research, the team cautioned, but the results offer an intriguing clue that daydreams during quiet waking may play a role in brain plasticity — the brain’s ability to remodel itself in response to new experiences. ‘We wanted to know how this daydreaming process occurred on a neurobiological level, and whether these moments of quiet reflection could be important for learning and memory,’ said lead author Nghia Nguyen, a PhD student in neurobiology in the Blavatnik Institute at HMS.”

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