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The Nightcrawler is published every Friday evening by Eric Markowitz, Nightview Capital’s Director of Research.
Quote of the week:
“Things do not change; we change.” ― Henry David Thoreau
The virtues of wandering
This week I wrote a short essay about a simple question: how does one come up with good ideas? The piece was inspired by a conversation between Jeff Bezos and Lex Fridman—highlighted in Issue 116 of The Nightcrawler—in which Bezos describes his “wandering” approach to idea generation. In the piece, I synthesize a few practical frameworks to foster creativity, while drawing from real-life examples (such as the unlikely creation of Velcro in the Swiss mountainside). The key, I’ve found, is to spend time outside of your comfort zone: “If you’re stuck, go for a walk. Or read a book outside of your field. Spend time wandering, both figuratively and literally.”
“Idea generation, in the investment business, has always been something of a dark art. Some managers prefer stringent quantitative screens to generate ideas. Others keep a narrow band of expertise and choose only to invest in particular niches. Then there are the generalists, who simply hunt in open territory for the best ideas. Each specialization requires specific frameworks to be successful, but the point is this: idea generation has always been—and will always be—part art, and part science.”
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Investor psychology and enduring discomfort
Kevin Stevens has a smart piece this week that frames the necessary ingredient to outperform markets over the long-term: “If we make a habit of investing in only the obvious,” he says, “we’ll always pay a higher price.” He continues:
“The market and investing don’t reward us for reacting in comfortable ways. It rewards those who can endure discomfort and have the courage to make the decisions others can’t bring themselves to do. Of course, we don’t purposely buy high and sell low, no one logically would do this. But our emotions create the conditions for us to forget this logic in the moment.”
“But how do you know where to steer your car or point your arrow? The short answer is wisdom. Wisdom isn’t about the intelligence stuck inside your head, it’s about how effectively you can interact with subtle relational forces in the world around you. These can feel like love, aliveness, novelty, interestingness, excitement, curiosity or attraction. And they are fundamentally non-verbal, right-hemispheric intuitions.”
“Opting for a do-nothing approach, however, goes against the grain for most individuals since we’re genetically programmed to believe that doing something is preferable to doing nothing. However, choosing to do nothing is a choice, and it’s a choice that proves incredibly challenging to adhere to, especially in a world where we are constantly inundated with information and we might be losing money at the same time.”
“One aspect we haven’t address yet is speed, the clock rate of work and decision making. Many people would consider speed an aspect of efficiency. But a certain type of speed is a necessity to tighten the feedback loops enough to be effective — we call this velocity, not speed: speed in a given direction. It’s hard to be effective without a talent for rapid triage, removing things that don’t contribute to the outcome, even when those things help us be efficient. Effectiveness requires high-signal, high-frequency feedback.”
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