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William Ackman on the Psychology of the Successful Investor
Following the meltdown of the financial system in 2008, subsequent economic downturn, innumerable investigative journalism pieces about the big banks and investment practices, and finally the rise of the Occupy movement, it’s safe to say that finance and investing have taken a high-profile position in the mind of the public. People who wouldn't know Freddie Mac from a hole in the ground four years ago are now paying attention to the meta-structure of the US economy in an unprecedented fashion.
Combine this with the meteoric rise of new tech companies in the last decade, such as Apple, Facebook, and Google, which routinely make headlines with news of IPOs and stock prices, and it’s safe to say that Americans are more critical of and interested in investment practices in general. We’re also entering a new era where potential investors can follow a company from its buzz-y birth, a la Groupon, to its debut on the public exchanges, and take an active part in becoming a part of a company that they themselves understand and use, far removed from arcane financial instruments utilized by hedge funds and investment banks.
In this light, retail investing, i.e. individuals buying stocks to build personal portfolios and plan for retirement, could well be entering a new era, as anyone with a laptop and an eye for business news can follow the information along with the rest of the market, along with a healthy dose of post-crash skepticism. But the age-old question remains: what makes a good investor? And how do the recent market woes affect the average person?
Burton G. Malkiel’s personal investment book A Random Walk Down Wall Street famously states that "a blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts." This assertion is generally based on longitudinal studies showing that most successful professional investors will, over time, come closer and closer to the market average, despite earlier luck or innovative practice. (Makliel’s monkey dartboard notion became so popular that The Wall Street Journal ran over 100 simulated dartboard contests from 1988 to 2001. The results: inconclusive.)
So what’s an individual investor to do, if even the pros can’t demonstrably do better than random chance most of the time? Here’s Floating University lecturer William Ackman discussing a core conceit of successful investing:
Andy Samberg and Cristin Milioti get stuck in an infinite wedding time loop.
- Two wedding guests discover they're trapped in an infinite time loop, waking up in Palm Springs over and over and over.
- As the reality of their situation sets in, Nyles and Sarah decide to enjoy the repetitive awakenings.
- The film is perfectly timed for a world sheltering at home during a pandemic.
China moves to Russia and India takes over Canada. The Swiss get Bangladesh, the Bangladeshi India. And the U.S.? It stays where it is.
What if the world were rearranged so that the inhabitants of the country with the largest population would move to the country with the largest area? And the second-largest population would migrate to the second-largest country, and so on?
A recent analysis of a 76-million-year-old Centrosaurus apertus fibula confirmed that dinosaurs suffered from cancer, too.
- The fibula was originally discovered in 1989, though at the time scientists believed the damaged bone had been fractured.
- After reanalyzing the bone, and comparing it with fibulas from a human and another dinosaur, a team of scientists confirmed that the dinosaur suffered from the bone cancer osteosarcoma.
- The study shows how modern techniques can help scientists learn about the ancient origins of diseases.
Centrosaurus apertus fibula
Royal Ontario Museum<p>In the recent study, the team used a combination of techniques to analyze the fibula, including taking CT scans, casting the bone and studying thin slices of it under a microscope. The analysis suggested that the dinosaur likely suffered from osteosarcoma, a type of bone cancer that affects modern humans, typically young adults.</p><p>For further evidence, the team compared the damaged fibula to a healthy fibula from a dinosaur of the same species, and also to a fibula that belonged to a 19-year-old human who suffered from osteosarcoma. Both comparisons supported the osteosarcoma diagnosis.</p>
Evans et al.<p style="margin-left: 20px;">"The shin bone shows aggressive cancer at an advanced stage," Evans said in a <a href="https://www.rom.on.ca/en/about-us/newsroom/press-releases/rare-malignant-cancer-diagnosed-in-a-dinosaur" target="_blank">press release</a>. "The cancer would have had crippling effects on the individual and made it very vulnerable to the formidable tyrannosaur predators of the time."</p><p style="margin-left: 20px;">"The fact that this plant-eating dinosaur lived in a large, protective herd may have allowed it to survive longer than it normally would have with such a devastating disease."</p><p>The fossilized fibula was originally unearthed in a bonebed alongside the remains of dozens of other <em>Centrosaurus </em><em>apertus</em>, suggesting the dinosaur didn't die from cancer, but from a flood that swept it away with its herd.</p>
Dinosaur fibula; the tumor mass is depicted in yellow.
Royal Ontario Museum/McMaster University<p>The new study highlights how modern techniques can help scientists learn more about the evolutionary origins of modern diseases, like cancer. It also shows that dinosaurs suffered through some of the same terrestrial afflictions humans face today.</p><p style="margin-left: 20px;">"Dinosaurs can seem like mythical creatures, but they were living, breathing animals that suffered through horrible injuries and diseases," Evans said, "and this discovery certainly makes them more real and helps bring them to life in that respect."</p>
Join the lauded author of Range in conversation with best-selling author and poker pro Maria Konnikova!
UPDATE: Unfortunately, Malcolm Gladwell was not able to make the live stream due to scheduling issues. Fortunately, David Epstein was able to jump in at a moment's notice. We hope you enjoy this great yet unexpected episode of Big Think Live. Our thanks to David and Maria for helping us deliver a show, it is much appreciated.