Interview with William J Bernstein – Financial Theorist and Author

Bill Bernstein is one of my favorite authors. I loved his book “A Splendid Exchange” and recently read “The Investors Manifesto” as I began piecing together a thesis on investments.

I am glad I reached out to him as he’s among the friendliest people I’ve had the fortune to meet. The interview was full of funny quips and piercing insight.

A few of my favorites quotes from Bill –

‘Now the other thing you learn from financial history that may be the most valuable is that the best fishing is done in the most troubled waters.’

‘Show me a person who works 70 or 80 hours a week and I’ll show you a person who’s never had an original thought in their life because you just don’t have the time to have them.’

‘The times that I was most productive were actually the times that I was working the least and I had the most free time.’

‘Careers are grossly overrated.  If you really want to accomplish something, don’t put yourself into a deep, long rut.  It’s going to eat up decades and decades of your life.  You have to do whatever the heck it is you want to do.’

Full transcript on RealLeaders.tv as always. Enjoy!

On Michael Phelps Swimming Blind

This week’s learning is part 2 from a 3 part from The Power of Habit by Charles Duhigg. (Parts 1, 2)

Back in Beijing, it was 9:56 A.M., 4 minutes before the Butterfly race’s start. Phelps stood behind his starting block, bouncing slightly on his toes. When the announcer said his name, Phelps stepped onto the block, then stepped down, then swung his arms three times, as he had before every race since he was twelve years old. He stepped up on the blocks again, got into his stance, and, when the gun sounded, leapt.

But, Phelps knew something was wrong as soon as he hit the water. There was moisture inside his goggles. By the second turn, everything was getting blurry and as he approached the third turn, the cups of his goggles were completely filled and he couldn’t see how many strokes were left!

For most swimmers, losing your sight in the middle of an Olympic final would be cause for panic. Phelps was calm. Everything else that day had gone according to plan. The leaking goggles were a minor deviation, but one for which he was prepared. Bowman had once made Phelps swim in a Michigan pool in the dark and some of the videotapes in Phelps’s mind had featured problems like this.
Most important, Phelps’s keystone habits had established a certainty within his mind: he could succeed, no matter the obstacles. After all, he had always succeeded before. His self-image, all of his habits, were built around the certainty of overcoming any problem.

As he started his last lap, Phelps estimated how many strokes the final push would require – 19 or 20, maybe 21 – and started counting. He felt totally relaxed as he swam at full strength. Midway through the lap he began to increase his effort, a final eruption that had become one of his main techniques in overwhelming opponents.

At 18 strokes, he started anticipating the wall. He could hear the crowd roaring, but since he was blind, he had no idea if they were cheering for him or someone else. 19 strokes, then 20. It felt like he needed one more. That’s what the videotape in his head said. He made a 21, huge stroke, glided with his arm outstretched, and touched the wall. He had timed it perfectly.

When he ripped off his goggles and looked up at the scoreboard, it said “WR” – world record – next to his name. He’d won another gold – swimming blind!

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Sketch by EB

After the race, a reporter asked what it had felt like to swim blind.

“It felt like I imagined it would” Phelps said. It was one additional victory in a day full of small wins. It was a triumph of keystone habits, just another step in a lifetime of success.

I felt goose bumps as I read this. I hope you enjoyed this series on habits.

The challenges never stop

It’s tempting to wait for this issue to get sorted before smiling more, celebrating more, and being happy more.

Life is an endless stream of issues – some bigger than others and all capable of taking up all your head space if you just let them. Today is as good a time as any to celebrate this life and tell someone you love them.

Life will always keep you on your toes as the challenges never stop. It’s just a sign that you are alive and well.

Don’t postpone happy.

A few thoughts on Sydney and Australia

Today marks the end of an almost 4 month long stint in Sydney. There have been so many times in the past few months when I’ve been grateful for this opportunity. It’s been a fantastic time here and I thought I’d write down a few things I will take away.

“How you going?” and “No dramas.” I love both these characteristically Sydney/Australian phrases. “How you going” is best walking-past-someone-and-being-nice in the hallway phrase I’ve heard. You can walk by saying “Gooooooood” and it’s the perfect response to the question. It’s fitting the Aussies made this minor tweak – they know what it takes to be nice.

“No dramas” is another one of those hallmarks. Why bother with saying “no worries?” Why even use the W word? Keep it simple. Speaking of which..

Simple nicknames, mate. There are very few names that survive in Australia without being shortened into something warm, friendly, and typically ending with ‘y’ or ‘o’. Martin becomes Marty, Thompson becomes Thommo, and even breakfast becomes brekky.

And then there’s mate. Is there a friendlier way to address someone you barely know?

Simple names. While the Aussies don’t control how most people are named, the names they do control reeks of simplicity. Let’s take some examples –
– One of the most gorgeous bridges in the world across Sydney harbour – Harbour bridge
– A gorgeous landmark built for the Opera – The Opera House
– The hills from the great dividing range behind Sydney that have a blue-ish hue – The Blue Mountains
– A beautiful beach 7.5 miles long – The 7 and a half Mile Beach
– The central station – Central

I could go on. They don’t do fancy here. It’s all about simplicity.

Sydney

Work to live. Live to work. I’ve learnt a lot from the Aussie attitude towards work. As a friend remarked “We work to live. We don’t live to work.” The Aussie focus is on the 3 F’s – family, fitness, and fun. People all over the world pay lip service to work life balance and prioritizing family and happiness.

They live those values down here. It’s not a surprise they consistently show up as one of the happiest countries in the world.

The more you know, the less you need. This is an aboriginal saying that stuck with me. We are all often so taken in by the things we think we “need.” True wisdom comes from a different place…

As I write this, the view outside my window is obscured by thick white fog reminiscent of a gloomy London day (sorry London – I love you too). It’s getting to winter in Australia, lest we forget, opposite to most of the rest of the world. In a way, I’m glad it’s ending this way because leaving this beautiful city on a characteristically sunny summer day would have been hard to take.

I am half way through Bill Bryson’s wonderful and funny account of travels in Australia. Reading it will make you long for a lovely 3 week trip across this beautiful country. I’m looking forward to coming back here many years later and just spending some time here. I’m hopeful that will happen..

This is a terrific country.

Not fair? Just dig deeper..

Newspapers love selling stories about extravagant salaries and lives of sport stars, celebrities, and entrepreneurs who’ve made a ton of money. Many of these stories are designed to have us look at their lives, sigh, and ask “Where is the justice in this world? It just isn’t fair.”

And if you’ve found yourself doing that, I thought I’d provide the counter point.

The next time you see a story about a successful superstar that makes you wonder about the fairness in the world, remind yourself that there are 3 questions you can ask yourself –

1. How lucky must he be to land all that success and fame? If that’s the question you want to ask, good luck.

2. Is it possible that she has her fair share of troubles? If you looked at the sort of problems some of your idols had to deal with, you’d probably be glad you are living your own life.

3. What rare and valuable skills does he have? The next time you see people complaining about the exorbitant salaries footballers or corporate CEO’s earn, it’s worth reminding yourself that while those complaining were hanging out in the mall, these guys were working hard to possess those rare and valuable skills. If you want what they have, go develop those rare and valuable skills.

These questions work equally well if you have difficulties coming to terms with a peer’s success.

In the long run, luck evens itself out. The world is very fair. Just because you don’t have the necessary or insight doesn’t make it any less so. And if you are feeling a sense of unfairness, remember to ask yourself what you can do differently.

Can’t change the workings of lady luck or the world at this instant. Can change yourself.

Entertaining 2 conflicting thoughts at once

Looking ahead triggers desire and ambition while looking at how far you’ve come triggers happiness and contentment.

The feelings around looking ahead can change markedly depending on when you’re looking ahead. If you are experiencing one of those rare moments when you feel completely in control, looking ahead can be fun as it’s full of dreams and possibilities. However, if you are experiencing some frustration at the current situation, looking ahead can be a source of irritation and frustration.

“This still hasn’t worked out. Will it?”

”I’m at a loss for what needs to be done for me to get to…..”

It’s tempting to avoid confronting the frustration altogether and it seems at odds with the purpose of the “looking ahead” exercise. I’ve learnt 2 things over time though.

First, our mind is more than capable of holding multiple conflicting ideas at once. As long as we’re open to the idea of doing so, our mind will go with the plan. We control the mind. So, it is perfectly possible to hold feelings of ambition along with more painful feelings of irritation and frustration.

Second, this tension of conflicting thoughts is a source of action and growth. It’s similar to the tension between finance and operations, sales and marketing, and design and engineering in great companies. They hold conflicting ideas but, if managed well, it leads to better end products. The irritation we hold helps spur action and the ability to entertain 2 conflicting thoughts helps give us perspective.

Life isn’t a joy ride. Irritation and frustration in moderation are important. We just have to remember that we don’t have to be consumed by them.

We choose.

On the Michael Phelps Racing Videotape

This week’s book learning is part 2 from a 3 part from The Power of Habit by Charles Duhigg. (Part 1)

When Phelps was a teenager, he often got very nervous before races. So, at the end of each practice, coach Bowman would tell him to go home and “watch the videotape. Watch it before you go to sleep and when you wake up.”

The videotape wasn’t real. It was a mental visualization of the perfect race. Each night before falling asleep and each morning after waking up, Phelps would imagine himself jumping off the blocks and, in slow motion, swimming flawlessly, and imagining what it would feel like to rip off his cap at the end.
He would lie in bed with his eyes shut and watch the entire competition, the smallest details, again and again, until he knew each second by heart.

During practices, when Bowman ordered Phelps to swim at race speed, he would shout, “Put in the videotape!” and Phelps would push himself, as hard as he could. It almost felt anticlimactic as he cut through the water. He had done this so many times in his head that, by now, it felt rote. But it worked. He got faster and faster.
Eventually, all Bowman had to do before a race was whisper, “Get the videotape ready,” and Phelps would settle down and crush the competition.

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Sketch by EB

By establishing a ‘keystone’ habit of visualizing victory every morning and night, Bowman and Phelps created a platform from which another habit – calming down and performing during a critical race – became effortless. The visualization keystone habit had prepared the soil from which other habits could grow.

So, how did all this come together when Phelps faced the greatest challenge of his life? Stay tuned..

Write to a teacher

Today, set aside 10 minutes to write to a teacher. A teacher needn’t be a teacher in the traditional sense. It can be anyone who’s taught you something, consciously or unconsciously.

Tell them what you’re up to, tell them what you’re learning, and share your experiences. If you are short of words, just say thank you.

They’d love to hear from you. And you’ll feel great after you’ve written to them.

I sure did.

Inspiration: A talk by Deepak Malhothra from HBS – recommended by a friend.