Dear Patrons.

Missing the Forest for the Trees!

Belgian surrealist painter Rene Magritte is one of the painting which creates lot of curiosity among the viewers. Name of it is “THE SON OF MAN” (Google it). There is an encrypted message in it. (Read further only if you have google the image).

At first glance, most people would naturally be curious about the face that is hidden by an apple. One can see the face partially but it’s still quite difficult to identify the man. What does the apple signify? What exactly the painting trying to convey for human behavior? For most people, the mind initially focused only on the face. The face is the only thing which is “visibly hidden’.

It is about the psychology of attention and how important it is in the field of investing. Investors often focus on the high frequency short term news / noise and miss out on the long-term goals.

The artist wants to decode a message from the painting which is The closer you look… The lesser you see!!!

Attention is scarce and there is enough noise in the financial markets to keep investors distracted from their core investment process. Here I use ‘noise’ as representative of data / news flow /small events which ideally should not have a significant impact on the investors’ decision-making process. However, noise does take focus away from long term investing and leads to shrinkage of investment horizons. Noise creates excitement and anxiety; and induces participants to trade more. That is the reason for us to remain focused to disciplined investment and control behavior in volatile times.

Dear Patrons,

Procrastination is idiotic.

Psychologist Roy Baumeister did a clever psychology experiment on his students. He has put a group of students in front of an oven in which delicious pizzas were baking. Delicious scent cheese blew around the room. Students expected that they will get to eat those pizzas. However, Roy then placed a bowl filled with mashed potatoes and told students that they could eat as much of these as they want, but they cannot eat the pizzas.

Students in a second group were allowed to eat as many pizzas as they wanted.

He then left the students alone in the room for thirty minutes.

Afterward, both groups had been invited to solve a tough math problems. The students who were forbidden to eat pizzas gave up on the maths problem twice as fast as compared to those who were allowed to eat freely on pizzas.

The period of self-control had drained their mental energy which they now needed to solve the problem.

Same way the more you procrastinate about a task, the more energy you are actually wasting in it because no project completes itself.

Many tax payers delay / procrastinate investing in tax saving instruments of 80C till the last possible day of March of any financial year. It actually bears no fruits as the efforts and stress one gives on last moment could have been easily saved by just investing the same amount in the beginning of the year. For any investment, simplicity is more important than complexity.