Practical analysis for investment professionals
04 November 2016

Weekend Reads: In Search of Meaning

Posted In: Weekend Reads

Weekend Reads: In Search of Meaning

Are you working on the biggest, most interesting problem that you can think of?

If not, why not?

If you are lucky, that question — lifted from Richard Hamming’s excellent talk, “You and Your Research” — will plague you for the rest of your life. Call it fear of missing out or fear of resting easy, either way it is a powerful motivator.

Just as in the spring, the thoughts of young people turn to romance, in the fall they seem to turn to meaning. Over the past few months, I’ve had a number of conversations with friends new and old about that “M” word.

There isn’t much agreement on what it means.

Cruel Irony

Maturing is a process with steps: Those most widely agreed upon are paying taxes and making compromises. I assume there are others, and that time will make them all the more obvious. In the meantime though, it’s worth thinking in detail about the compromises in your life, both personal and professional.

Our lives are complex systems, and we need to analyze them as such. That’s not an easy thing, but you can gain a lot of insight by thinking about the different places where it is possible to intervene in a system. At best, you will identify the issue and come up with a plan at the same time.

I’m not aware of a better way of thinking across the different levels of a system than the framework offered by Donella Meadows excerpted below:

Places to Intervene in a System  

(in increasing order of effectiveness)

12. Constants, parameters, numbers (such as subsidies, taxes, standards).

11. The sizes of buffers and other stabilizing stocks, relative to their flows.

10. The structure of material stocks and flows (such as transport networks, population age structures).

9. The lengths of delays, relative to the rate of system change.

8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.

7. The gain around driving positive feedback loops.

6. The structure of information flows (who does and does not have access to information).

5. The rules of the system (such as incentives, punishments, constraints).

4. The power to add, change, evolve, or self-organize system structures.

3. The goals of the system.

2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.

1. The power to transcend paradigms.

Now, that’s quite a list. But think about how it can help you uncover possible issues and move toward addressing them. If you’re having trouble getting up in the morning, you could put a coffeemaker next to your bed (change a constant, number 12). Or you could take a deeper look at why the day seems unappealing.

You can try and reinvent yourself by looking at the feedback loops you’re involved in. Tweaking how you reward yourself can be powerful, but to me what’s cool about this list is that once you finish thinking about feedback loops, you are only halfway there.

The Personal Is Professional

A great thing about working at CFA Institute is that much of what I do targets numbers 1 and 2. As part of that work, I’ve spent a lot of time in the past few months thinking about our profession and its purpose in general.

In talking to people about their work, there is widespread optimism for the activity of investing, but a profound sense of ennui. The work can feel abstract, or perhaps the work is great but there are tough-to-overcome structural impediments to serving clients as fully as you would like. To a degree, CFA Institute and State Street recently quantified this with findings that suggest an association between a professional’s motivation and their performance.

I can’t help but feel that change is needed higher up the spectrum. Ultimately, the prevailing business model for investing is “We hold onto your stuff and tell you what happened to it.”

This was compelling at one time, but today diversification is not nearly as hard to achieve as it was when funds first came into vogue. We’ve continued to deliver services primarily using funds of various types though, and as a result our offerings are unexciting to many even as we innovate furiously within the form.

I would love it if you were to think for a moment on how the power to transcend paradigms might be applied in your life, whether personal or professional. In revisiting your core assumptions, can you find the place where you’re irretrievably wrong? It exists, and time spent in search of it is not wasted.

Check out these pieces if I sparked something for you:

Good Reads Closer to the Markets

Why and Why Not

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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About the Author(s)
Sloane Ortel

Sloane Ortel publishes The Sloane Zone, an email newsletter that comes when you least expect it and makes more sense than it should. She joined CFA Institute's staff as a sophomore at Fordham University, and was instrumental to the global growth of Enterprising Investor as a collaborator, curator, and commentator over the subsequent eight years.

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