Its an great interview taken before we Lost the great Leader and Visionary - C K Prahalad. Its a definately a read.
The Life's Work of a Thought Leader
Aug 17, 2010
Aug 5, 2010
Beijing Billionaire Who Grew Up With Mao Sees No Housing Bubble
Read the end of this report. Has a different perspective.
Beijing Billionaire Who Grew Up With Mao Sees No Housing Bubble
Beijing Billionaire Who Grew Up With Mao Sees No Housing Bubble
Jun 16, 2010
Jun 1, 2010
How to Ignore the Yes-Man in Your Head
How to Ignore the Yes-Man in Your Head
By JASON ZWEIG
A mind is a terrible thing to change.
You decide gold is a good bet to hedge against inflation, and suddenly the news seems to be teeming with signs of a falling dollar and rising prices down the road. Or you believe stocks are going to outperform other assets, and all you can hear are warnings of the bloodbath to come in the bond and commodity markets.
When Investing, Consider Your 'Confirmation Bias'3:47A recent study shows people are twice as likely to seek information that confirms their beliefs than they are to consider evidence that contradicts thems. WSJ Intelligent Investor columnist Jason Zweig tells Kelsey Hubbard how this "confirmation bias" can influence their financial decisions.
.
In short, your own mind acts like a compulsive yes-man who echoes whatever you want to believe. Psychologists call this mental gremlin the "confirmation bias." A recent analysis of psychological studies with nearly 8,000 participants concluded that people are twice as likely to seek information that confirms what they already believe as they are to consider evidence that would challenge those beliefs.
Why is a mind-made-up so hard to penetrate?
"We're all mentally lazy," says psychologist Scott Lilienfeld of Emory University in Atlanta. "It's simply easier to focus our attention on data that supports our hypothesis, rather than to seek out evidence that might disprove it."
It also is easier for people to rationalize than to be rational. "We're very good at cooking up post-hoc explanations of why our predictions didn't work," Prof. Lilienfeld says. "We reinterpret our failures as near-misses: 'This stock would have gone up if only X had happened,' or '99 times out of 100 I would have been right if not for this freak event.'"
The more you learn, the more certain you become that you are right. While gathering more data makes people more confident, it doesn't make their predictions much more accurate. Each new fact makes you more inclined to find another fact that resembles it, reducing the diversity and value of your information.
Confirmation bias contaminates the thinking of professional investors, too. "We've made tons of errors like this," says Staley Cates, president of Southeastern Asset Management, the Memphis, Tenn., value-investing firm that runs the Longleaf funds. "A lot of psychological traps can be combated with humility, but on this one, that doesn't help." Longleaf, Mr. Cates says, clung too long to a big position in General Motors, letting product improvements and cost savings "blind us to the fact that GM might not make it" without government help.
View Full Image
Heath Hinegardner .
So how can you counteract confirmation bias?
Gary Klein, a psychologist at Applied Research Associates, of Albuquerque, N.M., recommends imagining that you have looked into a crystal ball and have seen that your investment has gone bust. Next, come up with the most compelling explanations you can find for the failure. This exercise, which Christopher Davis of the Davis funds has integrated into the research process at his value-investing firm, can help you realize that your beliefs mightn't be as solid as you thought.
Try estimating the odds that your analysis is wrong. Let us say that you reckon there is a 20% chance of an adverse outcome; that is like saying you will be proven wrong one in every five times. This way, if the investment does go awry, you will be less likely to dig in your analytical heels and desperately try to prove that you are still right. This procedure, says Michael Mauboussin, chief investment strategist at Legg Mason Capital Management, provides "psychological cover for admitting that you're wrong."
Show your investment to another person you respect whose ego isn't already invested in the decision. Ask: If you didn't own this, would you buy it now? If you did own it, would you sell it now?
Run an imaginary portfolio alongside your real one. There, you can buy or sell at will, with no risk to your wealth. On that blank slate, would you own more—or less—of this investment? Mr. Cates says at Southeastern Asset Management requires each of its analysts and portfolio managers to run a paper portfolio and to justify any differences between their paper holdings and the firm's real-world bets. "It helps us know what people really think," Mr. Cates says.
Before you buy in the first place, write down a statement of what would compel you to change your view of the investment. If any of those events come to pass, the written record will make it harder for you to pretend nothing has changed or that you don't have to do anything in response.
Messrs. Cates, Davis and Mauboussin help run funds that posted steep losses last year clinging to stocks in the face of evidence that they might be wrong. They all say that fighting confirmation bias is a never-ending battle. But if you can't conquer this gremlin of your own mind, you don't stand a chance of outwitting the market.
By JASON ZWEIG
A mind is a terrible thing to change.
You decide gold is a good bet to hedge against inflation, and suddenly the news seems to be teeming with signs of a falling dollar and rising prices down the road. Or you believe stocks are going to outperform other assets, and all you can hear are warnings of the bloodbath to come in the bond and commodity markets.
When Investing, Consider Your 'Confirmation Bias'3:47A recent study shows people are twice as likely to seek information that confirms their beliefs than they are to consider evidence that contradicts thems. WSJ Intelligent Investor columnist Jason Zweig tells Kelsey Hubbard how this "confirmation bias" can influence their financial decisions.
.
In short, your own mind acts like a compulsive yes-man who echoes whatever you want to believe. Psychologists call this mental gremlin the "confirmation bias." A recent analysis of psychological studies with nearly 8,000 participants concluded that people are twice as likely to seek information that confirms what they already believe as they are to consider evidence that would challenge those beliefs.
Why is a mind-made-up so hard to penetrate?
"We're all mentally lazy," says psychologist Scott Lilienfeld of Emory University in Atlanta. "It's simply easier to focus our attention on data that supports our hypothesis, rather than to seek out evidence that might disprove it."
It also is easier for people to rationalize than to be rational. "We're very good at cooking up post-hoc explanations of why our predictions didn't work," Prof. Lilienfeld says. "We reinterpret our failures as near-misses: 'This stock would have gone up if only X had happened,' or '99 times out of 100 I would have been right if not for this freak event.'"
The more you learn, the more certain you become that you are right. While gathering more data makes people more confident, it doesn't make their predictions much more accurate. Each new fact makes you more inclined to find another fact that resembles it, reducing the diversity and value of your information.
Confirmation bias contaminates the thinking of professional investors, too. "We've made tons of errors like this," says Staley Cates, president of Southeastern Asset Management, the Memphis, Tenn., value-investing firm that runs the Longleaf funds. "A lot of psychological traps can be combated with humility, but on this one, that doesn't help." Longleaf, Mr. Cates says, clung too long to a big position in General Motors, letting product improvements and cost savings "blind us to the fact that GM might not make it" without government help.
View Full Image
Heath Hinegardner .
So how can you counteract confirmation bias?
Gary Klein, a psychologist at Applied Research Associates, of Albuquerque, N.M., recommends imagining that you have looked into a crystal ball and have seen that your investment has gone bust. Next, come up with the most compelling explanations you can find for the failure. This exercise, which Christopher Davis of the Davis funds has integrated into the research process at his value-investing firm, can help you realize that your beliefs mightn't be as solid as you thought.
Try estimating the odds that your analysis is wrong. Let us say that you reckon there is a 20% chance of an adverse outcome; that is like saying you will be proven wrong one in every five times. This way, if the investment does go awry, you will be less likely to dig in your analytical heels and desperately try to prove that you are still right. This procedure, says Michael Mauboussin, chief investment strategist at Legg Mason Capital Management, provides "psychological cover for admitting that you're wrong."
Show your investment to another person you respect whose ego isn't already invested in the decision. Ask: If you didn't own this, would you buy it now? If you did own it, would you sell it now?
Run an imaginary portfolio alongside your real one. There, you can buy or sell at will, with no risk to your wealth. On that blank slate, would you own more—or less—of this investment? Mr. Cates says at Southeastern Asset Management requires each of its analysts and portfolio managers to run a paper portfolio and to justify any differences between their paper holdings and the firm's real-world bets. "It helps us know what people really think," Mr. Cates says.
Before you buy in the first place, write down a statement of what would compel you to change your view of the investment. If any of those events come to pass, the written record will make it harder for you to pretend nothing has changed or that you don't have to do anything in response.
Messrs. Cates, Davis and Mauboussin help run funds that posted steep losses last year clinging to stocks in the face of evidence that they might be wrong. They all say that fighting confirmation bias is a never-ending battle. But if you can't conquer this gremlin of your own mind, you don't stand a chance of outwitting the market.
Apr 9, 2010
Feb 11, 2010
Dec 9, 2009
Timeless and Time-Tested Warren Buffett Watch Predictions
As a new year approaches, it is customary for journalists to make predictions about the future.
In keeping with Buffett's long-term way of looking at things, Warren Buffett Watch offers eight predictions that are intentionally on the 'timeless' side of the prognostication spectrum.
In keeping with what's becoming a holiday tradition, they are the same set of predictions we've offered for the past two years. We still stand by them.
Warren Buffett became one of the wealthiest people in the world by making predictions and putting money behind those predictions. Every time he buys a stock or a business or some other investment, he's forecasting the future.
Judging by the incredible returns of his holding company Berkshire Hathaway, Buffett and his colleagues are very good at making those predictions.
Of course, it helps when you can give your predictions plenty of time to come true. That's one reason Buffett's favorite holding period for investments in "outstanding businesses with outstanding managements" is "forever." After all, "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely."
With that in mind, here are Warren Buffett Watch's 'timeless' predictions.
1. Recessions can't be avoided forever. As 2007 was coming to a close, Buffett told our Becky Quick that if unemployment picks up significantly, the "dominoes" will fall and the U.S. economy will fall into recession in 2008. He was right, but not alarmed. "It is the nature of capitalism to periodically have recessions. People overshoot." (He told Becky she's young enough to expect to see 6 or 7 or them.)
2. We'll survive current and future recessions just as we've survived past problems. As Buffett told us in August, 2007, (and repeated throughout 2008 and 2009): "We've got a wonderful economy... There's never been anything like that in the history of the world. We live seven times better than the people did a century ago on average... We've had problems all along. If you look at the last century, we had that Great Depression and World War Two, we had the Cold War, we had the atomic bomb, but the country does well."
3. Recessions will create opportunities. "I made by far the best buys I've ever made in my lifetime in 1974. And that was a time of great pessimism and the oil shock and stagflation and all those sort of things. But stocks were cheap."
4. All stocks won't be cheap. Like Ted Williams waiting for the right pitch, a successful investor waits for the right stock at the right price, and it doesn't happen every day. "What’s nice about investing is you don’t have to swing at pitches. You can watch pitches come in one inch above or one inch below your navel, and you don’t have to swing. No umpire is going to call you out." You get in trouble, Buffett says, when you listen to the crowd chanting "Swing, batter, swing!"
5. The crowd will make mistakes. Buffett cites this piece of advice from his mentor Benjamin Graham: "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."
6. Investors will mistakenly think falling stock prices are bad. "If they reduce the price of hamburgers at McDonald's today I feel terrific. Now I don't go back and think, gee, I paid a little more yesterday. I think I'm going to be buying them cheaper today. Anything you're going to be buying in the future, you want to have get cheaper."
7. Good times will prompt bad decisions. In his 2000 Letter to Berkshire shareholders, Buffett compared the crowd that buys big when prices are high to Cinderella at the ball. "They know that overstaying the festivities - that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future - will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."
8. There will be more dancing at another wild party followed by another painful hangover. Looking back at the Internet bubble, Buffett is quoted as saying, "The world went mad. What we learn from history is that people don’t learn from history."
In keeping with Buffett's long-term way of looking at things, Warren Buffett Watch offers eight predictions that are intentionally on the 'timeless' side of the prognostication spectrum.
In keeping with what's becoming a holiday tradition, they are the same set of predictions we've offered for the past two years. We still stand by them.
Warren Buffett became one of the wealthiest people in the world by making predictions and putting money behind those predictions. Every time he buys a stock or a business or some other investment, he's forecasting the future.
Judging by the incredible returns of his holding company Berkshire Hathaway, Buffett and his colleagues are very good at making those predictions.
Of course, it helps when you can give your predictions plenty of time to come true. That's one reason Buffett's favorite holding period for investments in "outstanding businesses with outstanding managements" is "forever." After all, "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely."
With that in mind, here are Warren Buffett Watch's 'timeless' predictions.
1. Recessions can't be avoided forever. As 2007 was coming to a close, Buffett told our Becky Quick that if unemployment picks up significantly, the "dominoes" will fall and the U.S. economy will fall into recession in 2008. He was right, but not alarmed. "It is the nature of capitalism to periodically have recessions. People overshoot." (He told Becky she's young enough to expect to see 6 or 7 or them.)
2. We'll survive current and future recessions just as we've survived past problems. As Buffett told us in August, 2007, (and repeated throughout 2008 and 2009): "We've got a wonderful economy... There's never been anything like that in the history of the world. We live seven times better than the people did a century ago on average... We've had problems all along. If you look at the last century, we had that Great Depression and World War Two, we had the Cold War, we had the atomic bomb, but the country does well."
3. Recessions will create opportunities. "I made by far the best buys I've ever made in my lifetime in 1974. And that was a time of great pessimism and the oil shock and stagflation and all those sort of things. But stocks were cheap."
4. All stocks won't be cheap. Like Ted Williams waiting for the right pitch, a successful investor waits for the right stock at the right price, and it doesn't happen every day. "What’s nice about investing is you don’t have to swing at pitches. You can watch pitches come in one inch above or one inch below your navel, and you don’t have to swing. No umpire is going to call you out." You get in trouble, Buffett says, when you listen to the crowd chanting "Swing, batter, swing!"
5. The crowd will make mistakes. Buffett cites this piece of advice from his mentor Benjamin Graham: "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."
6. Investors will mistakenly think falling stock prices are bad. "If they reduce the price of hamburgers at McDonald's today I feel terrific. Now I don't go back and think, gee, I paid a little more yesterday. I think I'm going to be buying them cheaper today. Anything you're going to be buying in the future, you want to have get cheaper."
7. Good times will prompt bad decisions. In his 2000 Letter to Berkshire shareholders, Buffett compared the crowd that buys big when prices are high to Cinderella at the ball. "They know that overstaying the festivities - that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future - will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."
8. There will be more dancing at another wild party followed by another painful hangover. Looking back at the Internet bubble, Buffett is quoted as saying, "The world went mad. What we learn from history is that people don’t learn from history."
Nov 3, 2009
Importance of Break during my schooldays....
"In Schooldays, i remember the Break, that we used to get to eat snacks or lunch, and we all used to wait for it. The moment the bell rings and everyone is waiting to leave their seats, meet their friends, play on the ground, run around in the floor lobby, shout, scream, laugh etc. I could see some teachers moving in their rooms, children running away from them. Big Boys use to gather down and play with Football, or rush towards canteen for some spicy snack. My School was located at the beach front and had a beautiful sea view from all its window and we could always feel the great breeze coming from the Arabian Sea. It was a calm, peaceful, innocent and effortless days, where morning we use to rush to schools and evening wait to play and nights study with mom & dad and go off to Good night sleep..., there was no one to ask what is market today, what is happening in US, whats around Dollar, why are markets falling...etc. At times i Feel that y is there no such Breaks in Markets. Why dont for few days we go off from the market mood and leave the way the life is. In school we lived the way life is."
Buffett always says that he would love if the markets close after the day he Buys something and reopens after 5 years or so....Indirectly a Break from regular routine effort of analysing stock prices and market movements would have made him a trader than Investor, so a Break actually can help you become a Investor.( thats just a point to take a break)
Break in the school use to energise us to come back in the class room and attend lectures more attentively. Today Mr.Market is an never ending Class, where knowledge is thrown everyday with lot of unwanted information, news, comments which are actaully of no use. If Mr. Market would have been close this infomarions, news, comments wouldnt have been there. Break is reuqired in your work, in your life, in your thoughts, in your everything that you just do it in regular routine. I think it energises your thoughts, you have more energy to come back to do something new, different, with more energy and zeel.
Our Life in the the Corporate Culture has become monotonous, We get up in the morning, rush to read each and everyline of the paper, to know before others do. We rush to Mr. Market and try to know everything which is available under the sun(irony is that we dont even know nor cant we know even 1% of it), we reproduce the same with our logics and comments from some great gurus coming on the TV sets, and finally we end the day with meetings and partys again discussing the same old Mr. Market and still we never find the answer to why is the market up , down, sideways etc to it. The quest for knowing Mr. Market has made us Robot which acts without thinking....
I feel that I require a break from Mr. Market, and i suggest to all that a Break is must from anything that u love doing it, because that would give you more energy and different thought process...
I am on for a vacation and see my self posting after a Month....
Happy Investing.....
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