#sandeep anand

Why Hitting Rock Bottom Is The Best Thing That Can Ever Happen!!

THE IMPEDIMENT TO ACTION ADVANCES ACTION. WHAT STANDS IN THE WAY BECOMES THE WAY — MARCUS AURELIUS

Hitting the rock bottom would mean facing any type of adversities in life and it is not easy for anybody to face adversities. But stoic philosophy teaches otherwise as I began this post with a quote by the famous Roman emperor Marcus Aurelius. The stoics guides us that adversities are the greatest opportunities in life. Again that could really be true when we remember all the adversities that has happened in our own lifes but in hindsight.

Am not delving further into philosophy. Now time for a physics concept that we have all learnt. That`s Newton`s second law of motion which states that the rate of change of a body’s momentum is equal to the net force acting on it. Hold this thought for a while.

Am an investor and am going to explain how to benefit from this concept of handling rock bottoms. I love this work of investing because it is multi-disciplinary by nature. Now if we apply these concepts in Investing, there can be huge wealth created. But how?

George Soros is definitely the best investor the world has ever seen whose fund generated an average annual return of 30% over a 30-year period from 1970 to 2000.Though am not a fan of the billionaire investor Soros who pocketed $1 billion by betting against the British pound in 1992, I have always followed one of his quote in my investing process which goes by “The worse a situation becomes the less it takes to turn it around, the bigger the upside”.

But what happens when investors face the worst situations? Most common human reactions are panic and extreme fear during adversities in the markets. When markets hits the rock bottom, that is exactly the point of extreme pessimism and lowest expectations. When the expectations are the lowest, it takes a small trigger of positive impulse (net force) to turn around and the upside could be biggest, if the law of momentum sustains.

Consider Meta (Facebook) stock that saw the most dramatic devaluation in November 2022 as the stock hit the rock bottom of $88. The whole Wall street community called it the end of social media giant. Now that was really the rock bottom and it took few harsh measures from the management to turn it around and the stock saw the highest upside. Meta stock went up 3X in 6 months !!

The Only Way is Up

The good news is, once you’ve hit rock bottom, you know you can’t possibly go any lower. You realize the bottom is actually a great springboard from which to push yourself up. This is true whether its in investing or any other aspect in life. So next time we face any adversity, the point where we feel our weakest, just understand this -> things can only change for the better. The only way is UP !!

Only Lesson I took away from 2023 Berkshire Annual Conference

This was my second visit to the Berkshire annual convention or as the popular parlance state ‘woodstock for capitalists’. Not to worry. I didn’t take away anything specific to business or investing this time around since all of that has been spoken or written enough about Mr. Buffett and Mr. Munger through several mediums. What instead I took away was something that I observed keenly during the meeting – ‘Their long attention Span’!! Yes the two nonagenarians sat there for 5-6 hours and attended with utmost concentration fielding all the questions and answering them in detail. They have been doing these meetings since last 3 or 4 decades consistently.

There were no phones ringing, no checking mobiles or any other distractions during the meeting and what is commendable is their ability to sit there, focus and concentrate with such long attention span.

Charlie Munger had famously attributed this to his success. To quote him

I think people that multitask pay a huge price. They think they’re being extra productive, and I think they’re out of their mind. I use the metaphor of the one-legged man in the ass-kicking contest.

I think when you multi-task so much, you don’t have time to think about anything deeply. You’re giving the world an advantage you shouldn’t do. Practically everybody is drifting into that mistake.

Concentrating hard on something that is important is .. I can’t succeed at all without doing it. I did not succeed in life by intelligence. I succeeded because I have a long attention span.

Both of them are known to read hundreds of pages of books, analysts reports, company reports and so on for hours together every day. This practice is extremely difficult in today`s world of digital distraction. Humans are now officially worse at focusing than a goldfish.

A recent study by Microsoft concluded that the human attention span has dropped to eight seconds – shrinking nearly 25% in just a few years. On average, people spend 3 hours and 15 minutes on their phones per day. Individuals check their phones an average of 58 times each day and is increasing by day.

We feel we are effective multitasking but humans cannot multitask because of the ways that our building blocks of attention and executive control inherently work. To this end, when we attempt to multitask, we are usually switching between one task and another. The human brain has evolved to single task. And on top, all these are taking a toll on our mental health.

We cannot undo any of the digital distractions that are taking over our lives but we atleast can try to zone out for few hours everyday from gadgets, that might help reduce the stress and the urge to attend to notifications. And more importantly, it helps improve our focus on one task in hand thereby elongating the attention span.