Mossy Thinking

How do you keep your mind sharp?

Photo: Lisa Yont. Source: Morguefile

I recently read the reminiscences of Byron Wien, a 60+ veteran of the investment industry. He’s famous for the “Ten Surprises” predictions he publishes each year: ten news events he expects to take place but the market doesn’t. He’s not just famous because he’s been doing this since the mid-‘80s, but because he holds himself accountable each year, keeping track of how well he did. His long-term record is about 50-50, but it’s the analysis around this thinking that’s so attractive.

Wien emphasized what many others have said about investing: we always need to stimulate our minds – by reading, exploring offbeat ideas, travelling, developing new interests, mentoring, and taking intellectual risks. Of the lessons he offered from his career, at least a third of them were about ways to stay mentally awake.

Take reading, for example. It’s not enough just to consume the latest scientific or management or marketing ideas. We need to read with understanding, with a point of view. The best way to approach a new idea is to take a point of view and see if the author confirms it or refutes it. Try and form the opposite conclusion, make the case for both sides of an argument. Then decide which way you want to go. Take an “intellectual Turing Test,” where you see if you can make an argument against your own view so convincing that someone who doesn’t know you would then believe that’s actually your own viewpoint, and not one you’ve just adopted.

Turing Test diagram. Illustration: Juan Margallo. Source: Wikipedia

Or travel. Wien suggests we should “Try to get everywhere before we wear out.” If you can’t afford to take long trips, we can get much of the benefit by developing relationships with folks from other countries and cultures. The best part of travel isn’t the scenery, it’s the different types of people and thinking you discover. By getting to know how people reason in the Middle East or Japan or China, we have a better understanding of the news that comes out of those places. People around the world may be similar, but they also differ in very profound ways.

By challenging our assumptions, we can hope at least to stay even in the most demanding enterprise in the world. Investing is a very mental business, and it’s essential that we continually push ourselves and don’t let our minds grow mossy. It’s only the rolling stones that don’t grow mossy.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2019-02-21T05:57:20-04:00February 21st, 2019|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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