Quote of the Week:

“Success is the sum of small efforts—repeated day in and day out.” — Robert Collier

Thinking smarter and making better decisions

Investing, in certain ways, is a problem-solving exercise: it uses a human-based tool (thinking) to solve a problem (growth of capital) under a variety of constraints (risk). It may sound kind of silly, but to get really good at investing, above all else, I’ve come to believe you have to consistently refine the main tool: your thought process. This is immensely hard, especially as we get older, and tend to become more rigid in our views and biases. “We’re blind to our blindness,” Daniel Kahneman, the pioneering behavioral psychologist, once said. “We have very little idea of how little we know.”

Kahneman, the Nobel-prize-winning academic and author, died this week at age 90. In 2012, Scientific American published a short excerpt of his most famous book, Thinking, Fast and Slow, that I often revisit. This book was profoundly influential on me. It cast doubt over the rationality of the human thought process, revealed our tendency towards cognitive biases, explored the concept of “blind spots” that lead to poor judgement, examined the science behind “intuition,” and much more. Most importantly, the book inspired millions of us readers to reconsider what we think we know—and how we use that (often incorrect) information to make decisions.

“The often-used phrase ‘pay attention’ is apt: you dispose of a limited budget of attention that you can allocate to activities, and if you try to go beyond your budget, you will fail. It is the mark of effortful activities that they interfere with each other, which is why it is difficult or impossible to conduct several at once. You could not compute the product of 17 × 24 while making a left turn into dense traffic, and you certainly should not try. You can do several things at once, but only if they are easy and undemanding. You are probably safe carrying on a conversation with a passenger while driving on an empty highway, and many parents have discovered, perhaps with some guilt, that they can read a story to a child while thinking of something else.”

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How to start the next trillion-dollar company

The investor and Y Combinator founder Paul Graham recently gave a speech [published here as an essay] to high schoolers, but the ideas he explores will resonate for anyone interested in technology or investing. Graham’s advice centers on the idea of pursuing a core curiosity—while actively wandering in unrelated fields to generate inspiration.

For example, Graham writes that Steve Jobs would likely never have created such a design-centric product were it not for his early passion in calligraphy: “No one, including him, thought that this would help him in his career,” Graham writes. “He was just doing it because he was interested in it. But it turned out to help him a lot. The computer that made Apple really big, the Macintosh, came out at just the moment when computers got powerful enough to make letters like the ones in printed books instead of the computery-looking letters you see in 8 bit games.” He continues: 

“Don’t feel like your projects have to be serious. They can be as frivolous as you like, so long as you’re building things you’re excited about. Probably 90% of programmers start out building games. They and their friends like to play games. So they build the kind of things they and their friends want. And that’s exactly what you should be doing at 15 if you want to start a startup one day. You don’t have to do just one project. In fact it’s good to learn about multiple things. Steve Jobs didn’t just learn calligraphy. He also learned about electronics, which was even more valuable. Whatever you’re interested in. (Do you notice a theme here?)”

A few more links I enjoyed: 

Investing early in a transcendent company – via Lucas Sacerdote and Matias Sacerdote (KIG Investment Management)
“Transcendence is the act of manifesting beyond set limits. It occurs when an entity’s influence reaches beyond its place of origin. In the business world, transcendent companies are those which transcend their industry and geographic boundaries, becoming role models for others. These companies have the power to significantly impact people’s socio-cultural behavior on a large scale. In short, they single handedly change the world for the better.”
Peter Malizia of Costco – via The Art of Quality
“Peter spent 26 years at Costco Canada and joined in the early 90’s at Price Club. He worked his way up the organization as a buyer before becoming AGM where he reported to the General Manager who reported to the CEO of Costco Canada. Peter deeply embodies everything Costco and helps us understand what small (yet powerful) patterns persist in Costco even to this day. What we discussed: What is unique about the business model that leads to its long term success? How has the culture evolved over the decades to where it is today? What is different about how Costco measure customer value relative to others?…and much more.”

*Special note*

This week, we launched Nightpixels: A data-driven visual blog about investing, business, and technology.  It’s compiled and published by Nightview Capital analyst Cameron Tierney. (Follow him on X). 

I’ll be including a link to Nightpixels at the bottom of each edition to The Nightcrawler going forward. I think you’ll enjoy it.

Nightpixels Issue #1: Visualizing the brain, NVIDIA-powered robots, and more.

This information should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the investments or strategies referenced were or will be profitable, or that investment recommendations or decisions we make in the future will be profitable. This article contains links to 3rd party websites and is used for informational purposes only. This does not constitute as an endorsement of any kind. While Nightview uses sources it considers to be reliable, no guarantee is made regarding the accuracy of information or data provided by third-party sources. Nightview Capital Management, LLC (Nightview Capital) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Nightview Capital including our investment strategies and objectives can be found in our ADV Part 2, which is available upon request.