I was researching a company as a potential investment opportunity in the Indian stock market.
I started reading about the history of the company.
Clicked on a youtube link on its website.
It was a short five-minute video. Very useful.
Then something interesting happened.
On the right side of the youtube page, I was prompted for a video.
It was Yuval Noah Harari. A renowned historian and author.
And also one of my all-time favorites. I was hooked.
I specifically liked this part in the video:
I will address the fake news question, not because it is the easiest to solve, but also because it is the most relevant to what you are doing in Google. And I would say that the current incarnation of the fake news problem has a lot to do with the model of the news and information market. We have constructed a model which basically says, EXCITING NEWS FOR FREE, IN EXCHANGE FOR YOUR ATTENTION.
I was blown away by this last phrase.
EXCITING NEWS FOR FREE, IN EXCHANGE FOR YOUR ATTENTION
I instantly said to myself, “This is what is happening with me right now.”
I started my research on a company and without realizing, moved to watch this exciting video and spent an hour on it.
How did I fall for that? And how can I avoid this in the future?
It got me thinking for a long time and this post is just a reflection on that.
What generally comes in the way of our attention today?
Push notifications, randomly checking emails, distracting thoughts, sharing and receiving trivial things on social media has become the norm today.
Have we really given a thought as to how things have changed so drastically over the years?
Let me rewind back a couple of decades. I was in my eighth or ninth grade. Back then, the most important task (supposedly) for all the people of my age was to study and prepare well for the exams. And if you asked any parent from a middle-class Indian household like mine in the late nineties, they would say that our friends and television were the two biggest barriers to our focused attention. When exams were near, we were barred from watching TV and going outdoors. Simply by blocking these two options for us, our parents made sure that we paid all our attention to the most important job at hand, which was to study for exams.
Fast forward to today in 2019. If I were an eighth-grader in today’s time, all my parents would do is take my mobile phone away from me and just switch it off.
But just think for a moment, how many of us can spend a couple of hours in a day without our mobile phones. Forget about a teenager preparing for the exam. Today, this dangerous device called the mobile phone is controlling everyone everywhere. While there would be some exceptions, my hunch is that 99% of the adult population would get restless if their phone goes missing for an hour.
When I was growing up, I was taught that “Cigarette smoking is injurious to your health”.
I think I should teach my child that “Consuming excessive data from the mobile phone is injurious to your health”
But the irony is this: how can I teach him that when I am myself controlled by my mobile phone for a large part of my time?
In the past, we had a fair amount of control over our distractions. Hence, our average attention span was pretty reasonable. Today, we are slaves to our distractions and thus our attention span is getting shortened all the time.
Have we ever thought about why this is happening?
I guess there is evolutionary logic behind all this. Information and news, in the pre-internet world, were neither free nor easily accessible. Hence, one had to spend a lot of time and effort looking for it. And it also cost us some money. So, you would make that extra effort and spend that money only if you really wanted it. That led us to value information a lot.
Today, on the contrary, the majority of the news and information is freely available in a device that is in your pocket. So ideally, we should value it less and be mindful of the fact that much of it is not relevant for us. Evolution, however, shows that we are very slow learners. We tend to value all the information today in almost the same manner when it was in short supply in the pre-internet era.
The chart below briefly explains how we changed the way we consume information over the years.
Some experts have been proposing for long about staying away from the digital medium and social media. One such person is the famous author Cal Newport whose bestselling book “Deep Work” has caught the attention of many readers. It’s a must-read for any knowledge worker in today’s time. Here’s a passage from his book where he explains what distraction does to our productivity:
If you keep interrupting your evening to check and respond to emails, or put aside a few hours after dinner to catch up on an approaching deadline, you are robbing your directed attention centers of uninterrupted rest. Even if these small work sprints consume only a small amount of time, they prevent you from reaching the levels of deeper relaxation where attention restoration can occur. Only the confidence that you’re done with work for the day can convince your brain to downshift to the level where it can begin to recharge for the next day. Put another way, trying to squeeze a little more work out of your evenings might reduce your effectiveness the next day enough that you end up getting less done than if you had instead respected the rest period.
The Investment Field
Now let’s look at the field of investment and research through this lens. If you interact with any Indian investor from the nineties, he/she would tell you about the lack of primary data and information on the listed companies back then. Those days, people had to wait for a long time to get any information. And even that was not sufficient. Any diligent investor had to spend a lot of time, money and effort to get the required details to complete the research. Equity research firms, at that time, used to sell their research to institutions at a good price. So, for an individual investor, getting credible information on hand was very hard.
If you are an investor who has begun the investment journey in recent times, just try to visualize how would you research and invest if there were:
o no websites of the companies you were researching
o no annual reports available in digital form
o no management interviews on the internet
o no corporate presentations
o no investors’ conference call transcripts
o no investor relations departments
I am sure you would feel very helpless.
So, don’t you think we are in an advantageous position compared to the investors back then?
I would say, “It depends”.
The above-mentioned information sources are surely available today in plenty. And they are mighty useful too. But, today we face a gigantic problem of information overdose. The volume of information available to us is so high that we always have a tough time separating the signal from the noise.
For example, today we face the problem of:
- Constant media updates
- Multiple investor conferences around the country
- Flooding of social media with investment recommendations and theses
- Holdings & trades of big investors/fund houses propagated on digital platforms
- Innumerable updates during the day from all your free subscriptions on the stock market
I am not saying that all of the above is not relevant at all. What I mean is that, as a normal human being with all our innate biases, it is impossible to make a rational choice as to which ones to pay attention to and which ones to ignore. So you end up making a bad choice more often than not.
As an investor or a researcher, you need to put in long hours of meticulously going through your information with minimal distractions. In this digital world, that is probably the biggest challenge.
I find it a big challenge for me. As an investment advisor, I try to spend most of my time researching investment ideas in the equity market. However, I have observed that my attention time does get affected because of my association with the digital world. One hack which has worked for me well is waking up at 4 am in the morning. That is the time when you face the least distraction. Two hours of focused work at the start of the day for me is far more productive than the whole day’s work.
But, I am still grappling with how to effectively manage my work during the day with minimal digital intervention.
Some of the smartest people and investors I know, almost always stay away from the digital medium. And some have trained themselves to effectively use it. But a majority of us are still finding it tough to deal with. In fact, many of us don’t even realize how big a problem it has become now.
You would have also read about several tips on how to not get distracted by social media. The most common one and apparently the most logical one which I have read is to turn off notifications from all the apps on your mobile phone. I have tried that too. It surely works for some time.
As you do not get any notifications on your mobile, you seem to believe that you would not get distracted.
However, these digital distractions have settled so deep into our minds that we fail to realize what is happening. Even though we do not get distracted by the notifications, we cannot let go of the habit of checking our phones on a regular basis.
And for the majority of us, that regular basis can be anywhere from a few minutes to an hour at the most.
How on earth can we focus on the work at hand if we keep checking our phones so often?
Several experts have differing opinions on this subject. In the video which I have shared above, Harari offers his own solution. He proposed to make high-quality news extremely pricey so that it doesn’t abuse your attention.
With all due respect to him, I believe that is not a fair solution.
That would only lead to information asymmetry in favor of the affluent people. So a vast majority would be deprived of essential high-quality news. That I believe is not a fair deal.
So, the only solution that comes to my mind is to look inward rather than outward.
I have found a perfect solution here.
It is the transcript of a very famous conversation between Shane Parish of Farnam Street and Naval Ravikant, the owner and CEO of Angel list.
Here’s what Naval Ravikant says somewhere in that conversation which I believe is very relevant for us:
In my mind, the mind should be a servant and a tool, not a master. It’s not something that should be controlling me and driving me 24/7.
So, we may like to blame the rising social media and advanced digitalization for all our distractions and reduced productivity, but the real problem is in our minds.
If some people could figure this out so naturally, I believe many others can also follow with the help of deliberate training.
And remember, being aware that you are a prisoner of your own mind is the first step towards becoming free.
Coming back to our role as investor and researcher in the stock market, here are some ground rules which can help:
While working, stay away from distractions.
Don’t get lured into the exciting but time-consuming pop-ups on your computer screen.
Keep your phone away or in silent mode.
You really don’t need to answer calls when you are working. You can always call them back later.
Focus and Believe
That you can make that change in you and your life.
And remember what the American psychologist, Herman Simon once said:
A wealth of information creates a poverty of attention.