Weekend Reads for Advisers: Investing, Poker, and Retirement
This week I heard something that really stuck with me: “Follow your ignorance.” It’s a phrase that my colleague, Jason Voss, CFA, likes to use, and it’s a mantra we all should adopt. Said another way, it could be: “Follow your curiosity.”
I like to think that that attitude is what informs this reading list and gives it more of an eclectic feel.
From time to time, I stray into mathematics, literature, photography, or whatever else piques my curiosity. And while I try to include links that are relevant to the profession — such as investing, retirement, or behavioral finance — I often find that the most enjoyable reads are not necessarily those directly related to our day-to-day jobs but the ones that take us to places we didn’t know existed; that spark — or satisfy — our curiosity.
That happened to me this week, when I saw this tweet:
Happy that Jeremy Denk won a MacArthur. His NPR essays on Bach's Goldberg variations = incredible teaching! http://t.co/K4qRdmKgr1
— Steven Strogatz (@stevenstrogatz) September 25, 2013
I had three immediate questions: Who is Jeremy Denk? (A: A classical pianist and one of this year’s 24 recipients of the MacArthur Foundation’s “genius grants.”) What are the Goldberg Variations? (A: A work for harpsichord by Johann Sebastian Bach, consisting of an aria and a set of 30 variations.) And, how are they connected to Hannibal Lecter? (A: See section “And Now For Something Completely Different.”)
Curiosity underpins success because it begets relentless questioning. Adam Bryant of the New York Times captured it well in the column “Distilling the Wisdom of C.E.O.’s.”
“Why ‘passionate curiosity’?” he asks. “There are plenty of people who are passionate, but many of their passions are focused on just one area. There are a lot of curious people in the world, but they can also be wallflowers. But ‘passionate curiosity’ — a phrase used by Nell Minow, the co-founder of the Corporate Library — better captures the infectious sense of fascination that some people have with everything around them.”
And as Jason notes in his recent post, “Advice on How to Become a Research Analyst,” curiosity is an important trait. After all, by reading across a wide array of topics and publications, we create, what he calls, “a mosaic of knowledge.”
One of the tips in his post is “to read, read, read, read. Read investment texts. Read texts on geopolitics. Read texts on mergers and acquisitions. Read economic texts. Read anything that sparks your curiosity, even fiction.”
With that in mind, here’s this week’s selection of articles and video clips that sparked my curiosity:
Investing
- @RPSeawright outlines five investment lessons he has learned from his legal training. (Above the Market)
- Sobering reading: Billions of dollars wasted on investment advice. (Financial Times)
- Is poker a game of skill or chance? Science weighs in. (Discover Magazine)
- Tom Brakke, CFA, (@researchpuzzler) shares great reads on investment decision-making from his blog, including “Emotional Finance” and “Letter to a Young Analyst.” (Research Puzzler)
- “The Investment Performance of Emotional Assets” (SSRN)
"emotional assets" (fine art, postage stamps, violins) earned 6.4% to 6.9% compound returns from 1900-2012 http://t.co/bwePWgzlUb #WSJ
— Jason Zweig (@jasonzweigwsj) September 24, 2013
Behavioral Economics/Behavioral Finance
- Another member of the 2013 class of MacArthur Fellows is Colin Camerer, a professor of behavioral economics at the California Institute of Technology. He was honored for “expanding our knowledge of individual behavior and challenging models of human interaction that form the basis of classic economic theory,” according to the MacArthur Foundation. Camerer has been published in a number of prestigious financial and scientific academic journals, including the Financial Analysts Journal (see: “The Pricing and Social Value of Commodity Options“).
- Camerer’s most recent publication, in the journal Neuron, describes the mechanism that causes individual’s propensity to “ride” financial bubbles and lose money (see: “In the Mind of the Market: Theory of Mind Biases Value Computation during Financial Bubbles“).
- Time wrote about the findings: “What’s to Blame For Stock Market Bubbles? Your Brain (Time)
- Camerer also gave a TED talk earlier this year in which he explores what happens when two people are trying to make a deal: whether they’re competing or cooperating and what is really going on inside their brains. His research shows just how little we’re able to predict what others are thinking. See: “Neuroscience, Game Theory, Monkeys.”
- For more on neuroscience, see: Why practitioners need to learn the language of neuroscience. (CFA Magazine)
- “Selling Your Home? Steer Clear of Biases Like the ‘IKEA Effect’” (The Globe and Mail)
- @RPSeawright asked a number of his friends to describe an idea they think is true or likely to be true that has dangerous and/or remarkable consequences or implications. Here are the fascinating, varied responses: “The Carnival of Dangerous Ideas.” (Above the Market)
Retirement
- Should equity exposure decrease in retirement? Or is a rising equity glidepath better? (Nerd’s Eye View)
- Why retirees should choose deferred-income annuities (DIAs) over single-premium immediate annuities (SPIAs). (Advisor Perspectives)
- “You Can’t Control When You’re Born . . . Revisiting Sequence of Returns Risk” (Wade Pfau’s Retirement Researcher Blog)
- “Looting the Pension Funds: All Across America, Wall Street Is Grabbing Money Meant for Public Workers” (Rolling Stone)
Estate Planning
- “Helping Financial Planning Clients with Their Digital Estate Planning” (Nerd’s Eye View)
Work/Life (im)Balance
- Working less may make us more productive. (The Economist)
- “Step Away From the Phone!” (The New York Times)
Mathematics
- Two-part series from Tim Johnson: (Part 1) “Political Science: The Lost Culture of Mathematics?“; and (Part 2)
“How Economics Suffers from De-Politicised Mathematics.” (Magic, Maths and Money)
And Now For Something Completely Different
- “Hannibal Lecter’s Guide to the ‘Goldberg Variations’” (NPR)
- Fantastic TED talk: Andrew Stanton (Wall-E, Nemo) on the clues to a great story. “The best stories infuse wonder.” (YouTube)
- Incredible, mesmerizing images: “Winners of the Astronomy Photographer of the Year 2013.” (My Modern Metropolis)
- For the parents out there, a very worthwhile read on creativity and the implications of children suffering a severe deficit of play. (Aeon Magazine)
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
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