Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Book : Psychology of Intelligent Analysis & Article : Triple U Investing

with 6 comments

Enjoying this fine work on behavioral domain. Whilst the book was intended for CIA and intelligence agents with backdrop of military and political illustrations, it would make a more apt textbook for just about any analyst, business or otherwise.

One could have it from Amazon or download from CIA library for free,
https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/books-and-monographs/psychology-of-intelligence-analysis

It would make one a better analyst, expose the limitations of our mind, memory, aid to provide the tools to overcome those shortcomings. Taleb’s work exposed our dope-ness for narrative and this affirms our chump-ness for analogies. In all work to do with analysis, decisions ought to be arrived at with incomplete information. One interesting aspect is, the very circumstances under which analysts work, i.e. are presented with bits of information leading to clearer view towards the end, is the most vulnerable and error prone from our cognitive ability vantage point.

Several limitations, including maximum number of simultaneous thoughts, competing hypothesis, tendency for satisficing and selective perception and failure to consider ‘diagnosticity of evidence’ and all of psychology schemata applies to our field of investing. Simultaneous evaluation of competing hypothesis causes greater cognitive strain.

In my readings several religious books too aver to our mental state unable to grasp contradictory viewpoints. We either see a twisted object lying on the ground as either a rope or snake, not both, at least not at the same moment. Our standards may have changed and we like to over simplify but in another world measuring scales can be radically different or even in ours at a different time in past, person who could interpret a sentence in maximum possible permutations was deemed most erudite, not the one who could stick a singular simplified view.

Interesting essay, I can relate to it : Unknown, Unknowable and Unique Investing by Zechhauser.

Written by amitdipsite

April 11, 2011 at 10:42 am

Posted in Uncategorized

6 Responses

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  1. Hi Amit,

    I was wondering if you would be able to provide more information on how you setup your partnership. I'm trying to do the same thing for family and friends and am really frustrated by the various SEBI requirements. In particular, how did you avoid requiring a PMS license, how do you allocate performance fees in a Pvt Ltd setting etc.? Any help would be appreciated.

    Thanks

    Samarth

    savant

    April 13, 2011 at 1:59 am

  2. Hi Samarth,

    You can open a Pvt. Ltd Company, LLP or Partnership

    http://www.llp.gov.in

    http://www.mca.gov.in/Ministry/actsbills/pdf/Partnership_Act_1932.pdf

    But a CA will be required.

    Amit

    Amit Arora

    April 13, 2011 at 2:01 am

  3. Hilarious but true.
    ———————————————

    This business, on a legitimate basis, is a fraud.
    Not that it’s a fraud. You need money to be in this business. But not a lot.
    You need more money to open a shoe-shine shop than you do to buy a $2
    billion company, let’s be honest about it. But to buy a shoe-shine store, if it
    costs $3,000, you need $3,000. If you don’t got it in cash, you need to bring
    it by Thursday.
    But if it’s an LBO, not only do you not have to bring it, you don’t have to see
    it, you don’t know where you’re going to get it, nobody knows where they
    got it from. The whole situation comes from absolutely nothing.
    But the more you need, of course, the less money you need. In other words,
    if there’s money involved, you don’t get involved in this business. This is a
    business for people who don’t have money, but who know somebody who
    has money, but who doesn’t put it up either…

    —JACKIE MASON, “What the Hell is an
    LBO?”

    Amit Arora

    April 18, 2011 at 4:43 am

  4. hi amit, you had recommended A.K. Capital services. I did my research on this. But today i got a news that it has been delisted from delhi stock exchange. Plz tel will it affect companys performance. Thanks

    ajit

    April 21, 2011 at 6:36 am

  5. Hi Ajit,

    Zero effect on performance of company. Some savings to the company in terms of listing fees.

    Thanks

    Amit Arora

    April 21, 2011 at 8:56 am


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