Jawad Mian Profile picture
22 Jun, 14 tweets, 2 min read
1) Of all the early warning signs that can help prevent investment disasters, one stands out.

COMFORT.

🧵
2) It’s our natural tendency to seek comfort; but in investing, when we tend to get comfortable in our views, feel our portfolio is safe, experience tells us something bad is about to happen.
3) Our comfort zone is a state of mental security where our uncertainty and sense of vulnerability are minimized.

Where we feel we have some control.
4) But the market is not stable, dependable, or how we want it to be.

So this actually creates behavioral conditions that maximize risk.
5) When markets move in a familiar pattern that seems to match our script, we become complacent and do not challenge our thinking.

Bad habits form.
6) Without the sense of unease and dread that comes from discomfort, we no longer seek contradictory evidence and opinions.

We no longer actively pursue truth.
7) In 1908, psychologists learned that in order to maximize performance, we need a state of relative anxiety—a space where our stress levels are slightly higher than normal.

This space is called “Optimal Anxiety,” and it’s just outside our comfort zone.
8) By exposing ourselves to the vagaries of the market, investing is already an anxiety producing activity.

So if comfort creeps up after a period of strong returns we savor it. This lulls us into thinking we have it all figured out.
9) The problem is performance is a lagging indicator, not a leading one.

No matter in how great a position we are, we should beware of comfort if we want to stay consistently on top.
10) So find a way to break out of your echo chambers.

Engage the people you disagree with, to challenge your own thinking and because sometimes, they may just be right.
11) It’s an uncomfortable feeling when the market does not seem to work rationally by our standards.
12) It means our understanding of how it ought to work is probably defective; and we must work harder to develop a new understanding.
13) But it is only by pushing through discomfort that makes
intellectual freedom and growth more possible.

Why?

Because it requires our deepest level of thought, attention, and presence.
14) As it so happens, the wise old Rumi knew this, for he said:

“Run from what's comfortable. Live where you fear to live."

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More from @jsmian

21 Jun
This is the story of my father.

“He dropped out of school at fourteen. When most boys are busy playing sports or chasing after girls, he had time for neither.”

1/6
He made his first million by the time he turned thirty in 1979.

2/6
His famous trades: arbitraging silver, buying land during war, seeing China’s threat and ME!

3/6
Read 7 tweets
5 Jun
1) Among the quick, incisive thrusts of practical wisdom from Peter Drucker is this: “The best way to predict your future is to create it.”

But before we can create, we must get to know ourselves.
2) Drucker points out that success in the knowledge economy comes to those who know their strengths, their values, and how they best perform.

Only then, armed with such self-knowledge, can we decide where we belong and what our contribution should be.
3) “It's amazing how few people know what they are good at,” Drucker says.

We’re much better at knowing what we’re not good at.

So, he suggests constantly giving yourself feedback on how you’re doing.
Read 21 tweets
3 Jun
1) In a new bull market, you can almost feel the greed tide begin.

Usually it appears a few years after the market bottom, but this time is different.

Let me explain. 🧵
2) The coronavirus pandemic has made death salient, spurring certain psychological tendencies.

Buying stocks is one result.
3) The cognizance of death, and our innate fear of it, drives much of our conscious and subconscious behavior, according to psychologist Sheldon Solomon.
Read 22 tweets
16 May
1) The Middle East is undergoing a major transformation.

It is entirely possible to know exactly what will happen in the future.

Maktub. It is written.
2) Within the field of eschatology, concerned with the final events of history, the three Abrahamic religions Judaism, Christianity, and Islam display certain convergences.
3) The Abrahamic covenant of Genesis 12 is among the most determinative revelations of scripture.

God calls upon Abraham to journey to Canaan, a region approximating present-day Israel, where He promises to make of him and his descendants “a great nation.”
Read 36 tweets
13 May
1) I find myself less interested in people’s opinions and more interested to learn about the essential truths and beliefs that guide them.
2) Opinions can change. What we think about the market can differ from one week to the next.

What doesn’t change is our lived experience and the core principles that lead to trading success.
3) So with everyone focused on the outer world—what I wish to explore in our new "Inner Game" series is deepening knowledge of our inner reality.
Read 6 tweets
11 May
1/ An investor is a professional observer.

In one sense, it has never been easier: we have never had this many tools and information at our fingertips.

But in another sense, it has never been more difficult: our brain is fatigued trying to attain signals from noisy news flows.
2/ As William James wrote, "We see, but we do not see: we use our eyes, but our gaze is glancing.

We see the signs, but not their meanings. We are not blinded, but we have blinders."
3/ Trapped behind our Bloomberg screen, frivolously searching for new patterns, we become isolated from everything, including our own increasingly abstract thoughts.
Read 16 tweets

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