money Archives - Notes by Logoraman

The Psychology of Money – My Highlights

Last month I read ‘The Psychology of Money’ by Morgan Housel. These are the highlights I made.

On idols and role models and following their paths

Therefore, focus less on specific individuals and case studies and more on broad patterns. Studying a specific person can be dangerous because we tend to study extreme examples—the billionaires, the CEOs, or the massive failures that dominate the news—and extreme examples are often the least applicable to other situations, given their complexity. The more extreme the outcome, the less likely you can apply its lessons to your own life, because the more likely the outcome was influenced by extreme ends of luck or risk.

On risk

There is no reason to risk what you have and need for what you don’t have and don’t need.

How random/chance events can shape your world

A tilt of the Earth’s hemispheres caused ravenous winters cold enough to turn the planet into ice. But a Russian meteorologist named Wladimir Köppen dug deeper into Milanković’s work and discovered a fascinating nuance. Moderately cool summers, not cold winters, were the icy culprit. It begins when a summer never gets warm enough to melt the previous winter’s snow. The leftover ice base makes it easier for snow to accumulate the following winter, which increases the odds of snow sticking around in the following summer, which attracts even more accumulation the following winter. Perpetual snow reflects more of the sun’s rays, which exacerbates cooling, which brings more snowfall, and on and on. Within a few hundred years a seasonal snowpack grows into a continental ice sheet, and you’re off to the races. The same thing happens in reverse. An orbital tilt letting more sunlight in melts more of the winter snowpack, which reflects less light the following years, which increases temperatures, which prevents more snow the next year, and so on. That’s the cycle. The amazing thing here is how big something can grow from a relatively small change in conditions. You start with a thin layer of snow left over from a cool summer that no one would think anything of and then, in a geological blink of an eye, the entire Earth is covered in miles-thick ice. As glaciologist Gwen Schultz put it: “It is not necessarily the amount of snow that causes ice sheets but the fact that snow, however little, lasts.” The big takeaway from ice ages is that you don’t need tremendous force to create tremendous results.

How avoiding bad decisions can help you succeed

Good investing is not necessarily about making good decisions. It’s about consistently not screwing up.

No one wants to hold cash during a bull market. They want to own assets that go up a lot. You look and feel conservative holding cash during a bull market, because you become acutely aware of how much return you’re giving up by not owning the good stuff. Say cash earns 1% and stocks return 10% a year. That 9% gap will gnaw at you every day. But if that cash prevents you from having to sell your stocks during a bear market, the actual return you earned on that cash is not 1% a year—it could be many multiples of that, because preventing one desperate, ill-timed stock sale can do more for your lifetime returns than picking dozens of big-time winners.

Difference between becoming rich and staying rich

40% of companies successful enough to become publicly traded lost effectively all of their value over time. The Forbes 400 list of richest Americans has, on average, roughly 20% turnover per decade for causes that don’t have to do with death or transferring money to another family member. Capitalism is hard. But part of the reason this happens is because getting money and keeping money are two different skills. Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast. It requires frugality and an acceptance that at least some of what you’ve made is attributable to luck, so past success can’t be relied upon to repeat indefinitely.

Only the paranoid survive

A mindset that can be paranoid and optimistic at the same time is hard to maintain, because seeing things as black or white takes less effort than accepting nuance. But you need short-term paranoia to keep you alive long enough to exploit long-term optimism.

What is true freedom? How does money help achieve that?

Controlling your time is the highest dividend money pays.

But if there’s a common denominator in happiness—a universal fuel of joy—it’s that people want to control their lives. The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.

Having a strong sense of controlling one’s life is a more dependable predictor of positive feelings of wellbeing than any of the objective conditions of life we have considered.

But doing something you love on a schedule you can’t control can feel the same as doing something you hate. There is a name for this feeling. Psychologists call it reactance. Jonah Berger, a marketing professor at the University of Pennsylvania, summed it up well: People like to feel like they’re in control—in the drivers’ seat. When we try to get them to do something, they feel disempowered. Rather than feeling like they made the choice, they feel like we made it for them. So they say no or do something else, even when they might have originally been happy to go along.

Understanding what you are paid to do

John D. Rockefeller was one of the most successful businessmen of all time. He was also a recluse, spending most of his time by himself. He rarely spoke, deliberately making himself inaccessible and staying quiet when you caught his attention. A refinery worker who occasionally had Rockefeller’s ear once remarked: “He lets everybody else talk, while he sits back and says nothing.” When asked about his silence during meetings, Rockefeller often recited a poem:

A wise old owl lived in an oak,
The more he saw the less he spoke,
The less he spoke, the more he heard,

Why aren’t we all like that wise old bird? Rockefeller was a strange guy. But he figured out something that now applies to tens of millions of workers. Rockefeller’s job wasn’t to drill wells, load trains, or move barrels. It was to think and make good decisions. Rockefeller’s product—his deliverable—wasn’t what he did with his hands, or even his words. It was what he figured out inside his head. So that’s where he spent most of his time and energy. Despite sitting quietly most of the day in what might have looked like free time or leisure hours to most people, he was constantly working in his mind, thinking problems through.

Do you really want expensive cars and watches or do you want respect?

The letter I wrote after my son was born said, “You might think you want an expensive car, a fancy watch, and a huge house. But I’m telling you, you don’t. What you want is respect and admiration from other people, and you think having expensive stuff will bring it. It almost never does—especially from the people you want to respect and admire you.”

Returns vs Savings

The first idea—simple, but easy to overlook—is that building wealth has little to do with your income or investment returns, and lots to do with your savings rate. A quick story about the power of efficiency. In the 1970s the world looked like it was running out of oil. The calculation wasn’t hard: The global economy used a lot of oil, the global economy was growing, and the amount of oil we could drill couldn’t keep up. We didn’t run out of oil, thank goodness. But that wasn’t just because we found more oil, or even got better at taking it out of the ground. The biggest reason we overcame the oil crisis is because we started building cars, factories, and homes that are more energy efficient than they used to be. The United States uses 60% less energy per dollar of GDP today than it did in 1950. The average miles per gallon of all vehicles on the road has doubled since 1975. A 1989 Ford Taurus (sedan) averaged 18.0 MPG. A 2019 Chevy Suburban (absurdly large SUV) averages 18.1 MPG. The world grew its “energy wealth” not by increasing the energy it had, but by decreasing the energy it needed.

How can you stand out in today’s world?

A question you should ask as the range of your competition expands is, “How do I stand out?” “I’m smart” is increasingly a bad answer to that question, because there are a lot of smart people in the world. Almost 600 people ace the SATs each year. Another 7,000 come within a handful of points. In a winner-take-all and globalized world these kinds of people are increasingly your direct competitors.

Intelligence is not a reliable advantage in a world that’s become as connected as ours has. But flexibility is. In a world where intelligence is hyper-competitive and many previous technical skills have become automated, competitive advantages tilt toward nuanced and soft skills—like communication, empathy, and, perhaps most of all, flexibility. If you have flexibility you can wait for good opportunities, both in your career and for your investments. You’ll have a better chance of being able to learn a new skill when it’s necessary. You’ll feel less urgency to chase competitors who can do things you can’t, and have more leeway to find your passion and your niche at your own pace. You can find a new routine, a slower pace, and think about life with a different set of assumptions. The ability to do those things when most others can’t is one of the few things that will set you apart in a world where intelligence is no longer a sustainable advantage. Having more control over your time and options is becoming one of the most valuable currencies in the world.

Spreadsheets vs real world

One is volatility. Can you survive your assets declining by 30%? On a spreadsheet, maybe yes—in terms of actually paying your bills and staying cash-flow positive. But what about mentally? It is easy to underestimate what a 30% decline does to your psyche. Your confidence may become shot at the very moment opportunity is at its highest. You—or your spouse—may decide it’s time for a new plan, or new career. I know several investors who quit after losses because they were exhausted. Physically exhausted. Spreadsheets are good at telling you when the numbers do or don’t add up. They’re not good at modeling how you’ll feel when you tuck your kids in at night wondering if the investment decisions you’ve made were a mistake that will hurt their future. Having a gap between what you can technically endure versus what’s emotionally possible is an overlooked version of room for error.

Other relevant lines

Napoleon’s definition of a military genius was, “The man who can do the average thing when all those around him are going crazy.”

“It’s not whether you’re right or wrong that’s important,” George Soros once said, “but how much money you make when you’re right and how much you lose when you’re wrong.” You can be wrong half the time and still make a fortune.

India and The 10 Rules of Successful Nations

What will it take for India to succeed? When will we shed the tag of emerging nation and graduate to developed nation status? Why is 28% of our population still poor? We explore these questions in detail in this article based on the book ‘The 10 Rules of Successful Nations’ by Ruchir Sharma.

The Covid Pandemic has thrown most plans out of the window. Before the pandemic, India was talking about becoming a $5 Trillion economy by 2025. While there were questions raised on the path to this goal even before the pandemic, the current struggle seems to be around how to get back to the pre-covid growth trajectory with the second wave and the many regional lockdowns. We are also seeing news of the wealthy and well-footed making plans to emigrate permanently amidst the collapsing health infrastructure of the country. In contrast, there are many who can afford to leave but are vowing to stay back and rebuild the country.

Before all these chaos began, any Indian who has ever visited a developed country and experienced their public infrastructure, transportation and health facilities would have wondered at least once, “When will India reach this level?” “What is stopping us?” Most people answer this question with one word Overpopulation. We are a nation of 1.3B people and unless we control our population growth we will always struggle. I wanted to understand this in depth and began reading up on what makes nations successful, the history of nations like South Korea and Japan that went from Emerging to Developed Nation status in a few decades and what is holding India back? There is no better place to start this journey than with the many books by Ruchir Sharma – ‘Breakout Nations’, ‘The Rise and Fall of Nations’ and ‘The 10 Rules of Successful Nations’.

Over the last few days I have been reading ‘The 10 Rules of Successful Nations’. Each chapter in the books lays down a rule and goes on to explain the same with the help of supporting data. I decided to evaluate India’s performance across these 10 rules to understand where we are doing well and where we are faltering.

Rule #1 : Population – Successful nations fight demographic decline

Most productive age of a human being lies roughly between 15 – 64. Countries like Japan, Germany etc have a shrinking population in that age group. Bringing more women into workforce, increasing the retirement age to 70, encouraging couples to have more babies by providing subsidises, welcoming immigrants in this age group (especially students who are then allowed to continue working in the country), automation and adding robots to workforce are some of the things countries do to counter the threat of a shrinking working age population.

India is lucky in this regard. We have a huge population that falls in the productive age range of 15 – 64. We will continue to enjoy this advantage dubbed ‘the demographic dividend’ for around 37 years starting back in 2018.

Image courtesy – https://economictimes.indiatimes.com/news/economy/indicators/india-enters-37-year-period-of-demographic-dividend/articleshow/70324782.cms

Demographic Dividend and Successful Nations — Image courtesy – https://economictimes.indiatimes.com/news/economy/indicators/india-enters-37-year-period-of-demographic-dividend/articleshow/70324782.cms

Rule #2 : Politics – Successful Nations Rally behind a Reformer

Politics seems to follow a circle where a national crisis leads to reform which leads to good times which in turn leads to complacency and from there to another crisis. During times of crisis, nations tend to elect a reformer as their leader. More often than not these are fresh faces with a massive support base. The first terms of these leaders are filled with promise and action but by the second year of their second term they tend to stagnate unable to push big reforms. Democracies tend to fare well compared to autocracies with a reformer at the helm and politicians with massive support bases tend to do well compared to technocrats.

India seems to be following this rule to the T.

Rule #3 : Inequality – Successful Nations Produce Good Billionaires

Good billionaires come from industries that make products and services that increase productivity like technology, manufacturing, e-commerce and entertainment whereas Bad Billionaires come from rent seeking industries that mainly involve extracting resources from nature like mining, real estate, construction etc. Two metrics we can keep track in this case are % of wealth held by billionaires vs GDP and % split of Good and Bad Billionaires. The former should be less than 10% and the latter should be 75:25 for emerging countries.

The numbers for India are

Total Billionaire Wealth / GDP = 14%

Good Billionaire : Bad Billionaire = 71 : 29

In both these metrics we don’t score that bad.

Why should Total Billionaire Wealth not exceed 10% of GDP?

Any economy works when people spend money. The problem with the rich becoming richer is that there is only so much money one can spend on food, clothing, appliances etc.

How does the rich keep getting richer?

Money introduced into the system by stimulus programs announced by governments during downturns, low interest rates etc aimed at increasing productive investments instead ends up getting diverted to purchasing stocks, luxury homes and other financial assets pushing up their prices. Most of these assets are owned by rich people and hence they end up getting richer. it is not the poor getting poorer but the rich getting richer that widens the gap.

Rule #4 : State Power – Successful Nations have Right-Sized Governments

A right sized government for a country like India is one whose spending is around 31% of the GDP. This spending should also go to productive investments for the economy to keep growing at a healthy pace. The ideal budget deficit should not exceed 3% of the GDP. While over spending is bad, underspending is equally bad. Underspending leads to creation of a black economy in the country. Once the black economy is a certain percentage of the GDP the tax revenue of the government drop as people avoid banks.

In India the government spending as a % of GDP stands at around 17.7% for FY22 and the budget deficit is around 9.5% of GDP. While the government spending at 17.7% looks reasonable if we were to look at what the government is spending on we will come to the conclusion that most of the money goes into subsidies and schemes.

You can refer the linked PDF for more details – https://www.indiabudget.gov.in/doc/Budget_at_Glance/bag6.pdf

Rule #5 : Geography – Successful Nations Make the Most of Their Location

Location still matters in the Internet Age. Physicals goods amount to $18 trillion of global trade compared to $4 trillion of services. Being located near and around trade routes matter a lot. Countries that don’t actively work towards building this connectivity to global trade routes suffer. Equally important is to distribute the wealth thus amassed by port cities to other provinces in the interiors of the country. China is the master of this game building many ports along its coastline devoid of natural harbours. Income earned through export allows a nation to build factories and roads, import consumer goods without building up foreign debt.

When it comes to India the Trade as a % of GDP has been hovering around the 40% mark. This percentage is fine for countries like India with a huge domestic market.

What India doesn’t do well is in terms of spreading the wealth across the country. The biggest marker for this failure is the lack of metropolitan regions across the country. While China has around 100 cities with more than a million population (the threshold to qualify as a metropolitan region), India has just 50. This means that the bulk of the population is concentrated in the main metro cities because the bulk of the opportunities are limited to those cities.

Another marker is the absence of boomtowns or towns where the population went from around 2.5L to 10L in a few decades. While China has 19 such boomtowns, India has just two and that too were created when authorities redrew the local administrative maps.

Shipping Routes of the World. Created by London-based data visualisation studio Kiln and the UCL Energy Institute

Rule #6 : Investment – Successful Nations Invest Heavily, and Wisely

Economy grows strongly when investment is somewhere between 25 – 35% of GDP. Now the problem with investment is that you can invest in good things as well as bad things. Good things like technology, roads, ports and factories fuel growth. Bad investment binges in things like real estate and commodities don’t fuel growth or raise productivity. In fact when investment in real estate becomes 5% of GDP there is a good chance of a bubble burst following.

Going by this rule, India’s investments hover around the 30% GDP mark. But very little of that investment goes to manufacturing. Most of the factories in India are also in the Small and Medium categories as larger factories tend to attract more bureaucratic scrutiny.

Rule #7 : Inflation – Successful Nations Control the Real Inflation Threats

Inflation refers to the uncontrolled increase in prices of goods and services. It is denoted as a % increase from last years prices. For emerging economies inflation ideally is in the 4% range and for developed nations it is in the < 2% range. There are two ways to control inflation. One is by increasing competition in the market thereby forcing companies to maintain or reduce their prices. The second is by raising the interest rates as people are reluctant to borrow money at higher interest rates. The opposite of inflation is deflation where prices of goods continue to fall year after year. There are two kinds of deflation, the good one is created by advances in technology that lowers the labour and other costs involved in producing goods thereby reducing its price. Then there is the bad deflation caused by a shrinking demand amongst consumers.

Inflation is tracked by a metric called CPI or Consumer Price Index. To calculate CPI, you first choose a base year (t1) and figure out the cost of goods (p1) for that year. Then to find the CPI of a subsequent year (t2) when the prices are (p2), you use the formula

CPI = (p2)/(p1) * 100

CPI has been steadily increasing in India for the last many years.

Rule #8 : Currency – Successful Nations Feel Cheap

US Dollar is the most traded currency in the world. For this reason most countries hold bulk of their foreign exchange reserves in US Dollars. In the event a country’s currency under goes a rapid devaluation, the dollars from the reserve can be used to pay the various import bills. For countries doing a lot of exports it is in their best interests to keep the value of their currency low compared to dollar. This means 1 dollar can buy more goods in a country thus attracting more people to trade with you. Subsequently your dollar reserves also increase.

To know how much a country exports and how much it imports we look at the Current Account of the country. When the exports of a country is greater than its imports we have a Current Account Surplus and a Current Account Deficit in the opposite scenario. A deficit means the country is importing or consuming more than it is exporting or producing. This excess has to be funded by borrowing from abroad. If the Current Account Deficit of a country keeps growing for 4 continuous years and peaks at the 5th year above 5%, trouble follows. Foreign investors and even domestic investors will start fleeing as they lose confidence in the economy.

source: tradingeconomics.com – India Current Account Deficit

When we look at the Current Account data for India, at least for the past 10 years our Current Account Deficits have been dropping consistently settling to around -1.7% of GDP for Oct – Dec 2020 quarter as per RBI data. Running a Current Account Deficit is not all bad if the excess imports being made are in productive sectors. Importing plants and machinery for manufacturing, state of the art telecom equipments are examples of productive imports.

Rule #9 : Debt – Successful Nations Avoid Debt Mania and Phobia

When private sector debt grows faster than the GDP for 5 straight years, crisis follows. The pace of growth of debt is more important than the size of the debt. When government intervenes to save the economy it is usually done through assuming some of these private sector debts. They also come in the form of bail outs and write offs. When a 5 year increase in Private Debt to GDP goes beyond 40% an economic downturn is imminent.

Debt mania is something India seems to have been successfully avoiding. But India has been plagued with a lack of private credit especially for small and medium businesses. This gap is estimated to be around the Rs. 25 Lakh Crore range.

Rule #10 : Hype – Successful Nations Rise outside the Spotlight

Success comes through hard work and hard work is often done in silence away from all the hype. By the time media hype comes around usually a nation might have already peaked in terms of success. It might very well be on its way down or regressing to the mean. Ruchir Sharma calls this the Cover Curse. By the time a story reaches the cover of Time or Newsweek, it’s dead. So it might be a good idea to look beyond magazine covers if you are looking for upcoming successful nations.

Learnings from life – Part I

This is one post I have been trying to pen down for quite some time. While these are some of the learnings I have had in my life they are by no means some golden rules for anyone to follow as they are a result of my unique experiences.

There are no play-books. If you want to blaze your own path in life, understand that there are no play-books to follow. Most of our life from childhood onwards we are asked to follow different play-books. Most of the times these are based on journeys taken by people who ended up being successful. These people, their lives and journeys are often cited as examples of a path to take to achieve success and we end up blindly following them. Variables like your nature, your network, your interests and abilities are not considered and these often determine your success. So the next time you are presented with a play-book to follow, sit back and ask some questions. Find your answers and chart your own path.
Don’t wait for permission. We are conditioned to ask for permission from the time we are a toddler. Hardly any decisions we take are under our control almost till the time we start college. We are taught to take permission from parents, teachers and elders to do pretty much anything in our childhood. This is mostly done to keep us out of harms way however almost 18 years of this habit naturally tends to make us reluctant when it comes to big decisions. We are always looking out for the ‘elder’ to ask for permission. This reluctance limits our chances of success. As they say it is often easy to ask for forgiveness than for permission.
Learn to delegate. Delegation work to someone is something most of us come across in our 30s. This is mostly when most people reach middle management and have people reporting to them. Till then tasks were delegated to you and you have become pretty adept at finishing things you were assigned. Delegating work though is a different ball game and most people are uncomfortable with it at least initially. Start by delegating smaller tasks whose outcome don’t matter so that even if it gets messed up you can either redo it or no one cares. Try to give away at least 20% of your daily tasks to people reporting to you and take it from there.
Strong opinions loosely held. It is good to have opinions and having strong opinions allow you to commit to decisions and directions. Interestingly opinions change over time as you gain more experience and more often than not you will see contradicting evidence to your opinions. When that happens swallow your pride, take it as a lesson learned and change your opinion.
Data based decision making. In God, we trust everyone else must bring data. This is one of the posters that hang in our office. It is very easy to get lost amongst anecdotes and stories. The loudest mouths and storytellers can weave stories to push their points sometimes misleading the decision-making process. With data, everyone is looking at the same picture and drawing conclusions from it.
Reading books. Reading is crucial and it can help you get ahead in life. However many people get into the trap of counting pages or books they have read. Recently I have come to think of reading as a means to gain knowledge, provoke deep thinking or inspire actions on topics you care about. By that definition, an article you read, a documentary or a movie you watch or an annual report of a company can all have the same effect. I no longer set targets or maintain a long list of books I need to read. There are 3 – 4 topics of interest for me at any point in time and I try to consume any content on those topics be it books, videos, articles or tweets. Re-reading books that I liked in the past is another thing that I have started doing. I take copious amounts of note and consume additional content on the topic like author interviews, summaries, reviews of the book to build on top of the initial reading.
Habits vs Goals. This is an idea popularised by Shane Parrish, James Clear etc in their blogs. Although I still do set goals for myself on an yearly basis most of these are broken down into daily habits or tasks that are part of my daily routine. For instance fitness for me is a daily 30 minute session rather than getting a 6 pack abs or getting the fat content to < 10%.
Start with something. A blank canvas can sometimes look like a chance for infinite creativity or a steep hill to climb. The key is to get the first stroke in and work from there. There is an interesting concept called ‘The 5 second Rule’ that I came across in Mel Robbins site. It essentially says ‘If you have an impulse to act on a goal, you must physically move within 5 seconds or your brain will kill the idea’.
No one is thinking about you as much as you. A lot of our time is spent on thinking about what others think about us. This fear or concern is natural as we are social beings and for many years in our history, our survival depended on how likeable we are in the group that we are part of. However, this thought can make us self conscious unnecessarily. Accept the fact that there will be people who will like you, hate you and not care about you. The vast majority will be the last group.
People remember how you made them feel. Treat people nicely irrespective of their social status or in whichever levels of man-made hierarchies they fall into. It doesn’t cost anything.
Avoid toxic people at all costs even if it benefits you temporarily. Some times in life you will find yourself in the company of toxic people. The fact that both of you are on the same side and consequently want the same thing is no excuse to put up with these people. At the end of the day, they are a big energy sap for you both physically and mentally. The warning signs often come early in your interactions and it is best to avoid these people.
Plan your day in advance. I go by the adage, “No one plans to fail but fails to plan”. A day planned in advance allows you to avoid distractions and gives a clear sense of purpose. Write down 3 big things you want to accomplish the next day before you go to sleep. That is all it takes.
Take notes… a lot of it. I have filled my share of moleskines and notebooks with copious amounts of notes and margin doodles. Some of these notes I never refer back to and I was concerned about that for a while even questioning the habit of taking notes. But lately, I have come to realise that they serve not just as records you can go back to but also as a way to structure thoughts and assimilate information when you take them. That alone justifies taking notes.
Figure out what you would enjoy doing even if no one paid you to do it. Life doesn’t happen in a straight line, there are many ups, downs and about turns. Not everyone discovers their passion by the time they are out of college. People end up in careers they might not enjoy but pays the bills. Once you are stuck at the wrong job it will slowly start affecting your happiness and your well being. It pays to take time and consider your options while choosing a career path.
Who wants what? Negotiations happen everywhere and not just in business. It helps to know what the motivators for the person sitting across you are. Money? Respect? Speed? Use that as leverage to arrive at a favourable outcome for both parties.
Anchor effect is powerful in negotiations. Name your price first. Make it at least 2X or 0.5X depending on which side of the table you are of what you would be happy to walk away with. Once this number is in everyone’s mind it is difficult to get it out and you have a better chance of closing the deal at your desired number.
How you do anything is how you do everything. This one comes in handy especially when you are hiring people. Traits like attention to detail etc are so ingrained in people that no matter what tasks they do it shows. Candidates who turn up a shoddy presentation for an interview citing lack of time is suddenly not going to become perfectionists once you hire them.
Don’t be embarrassed or afraid to talk about money. Yes, everyone is doing it for the money.
Trust – The world goes around because of trust. Whenever I get into any sort of relation – business or personal – I begin with 100% trust on the other party. Second guessing every action by someone is a sure shot way to strain the relation and get into all sorts of trouble. Calibrate the trust as you move along.
Unlike the digital world, real-world is not binary. A binary world is easy to understand. There are clear rights and wrongs. However, the real world is messy. There is black and white on opposite ends and a huge grey area in between. Almost everything you deal with will fall into the grey area. So, get comfortable operating in this zone.
Good, bad, evil are all relative. One man’s freedom fighter is another man’s militant. As long as you are not hurting people or on the wrong side of the law everything is game.
Your success is not limited by your intelligence. Don’t despair if you are not the smartest guy in the room. Often times your success is the result of a combination of intelligence, hard work, patience, EQ etc.
Mental models and cognitive biases are good to understand but hard to implement and watch out for. A simpler way is to understand the basic human tendencies and use that as a guiding post. Read about the 7 deadly sins. Most humans are fallible to these. Learn how to avoid them, spot when other’s actions are poisoned by them.
Every now and then, stop doing and start thinking
The #1 productivity hack is to get up early. Early depends on a number of factors like are you single and staying alone? do you have roommates? are you married and have kids? Very simply it means to wake up at least 2 hours before anyone else at home wakes up. This gives you two hours of uninterrupted work time and believe me you can get 80% of work for the day done in this time.