On the benefits of being under resourced
An organization that is under-resourced is similar to an individual who regularly practices intermittent fasting.
In the case of the individual, weaker cells are cannibalized by the body to produce new cells. Studies has shown decreased probability of developing cancer and Alzheimer, coupled in some cases with increased longevity.
In the case of the organization, operations are forced to be focused and only opportunities backed by stronger market signals prioritized and pursued. Wastage and distractions are structurally curtailed. ROI improves as a by product.
On organic growth
An organization that is organically grown tends to be happen-chance and exhibit somewhat illegible and opaque structure.
In contrast, an organization that is deliberately designed tends to exhibit a legible and transparent structure.
Counter intuitively, it is the former that exhibits more resilience in times of environmental stress. The observed illegibility and opaqueness is attributed to the process of organic adaption to its environment. Chief historical examples are:
- Military of Carthage
- Genghis Khan’s Mongolian horde
The main challenge with sticking to the strategy of loss aversion & reversion to mean is, as Charlie Munger has said it, being able to stand there and do nothing when no trading pattern emerges for multiple days in rows.
During this period of time, restlessness creeps in and the mind becomes more susceptible to the narrative fallacy or apophenia ( seeing patterns and trajectories when none exists). Inevitably one gets tricked into nursing grandiose visions of what the future might be and while leaving the physics of reality behind…
Actual costly examples:
- Spotify 2nd May 2018 @168 when it continue its climbs
- net loss on the swing -USD1,016.04
- Tesla 10th May 2018 @ USD308 when it continue its climb
- net loss on the swing -USD5138.85
- DocuSign 18th June 2018 @ USD65.66 when it continued its climb
- net loss on the swing -USD6023.37
- Dropbox 18th June 2018 @ USD42.53 when it continued its climb
- net loss on the swing -USD928.21
Accumulative screw ups: -USD12,986.72
Had I not succumb to the siren calls of the narrative fallacy and retained my ability to sit and down nothing, I might have the opportunity to enter on the dip instead of the up.
Nevertheless all hope is not lost, the path remains clear and apparent. That is to diligently practice the craft of adhering to the script while acknowledging the psychological biases.
Ironically, the practice of investment is synonymous with the practice of mindfulness.