The Chains of Habit

by Geoff Gannon


In my last post, I mentioned Twitter is a distraction most investors are better off keeping themselves clear of. I got some responses like:

“Agree (Twitter) can be (a) distraction. I'm careful who I follow, restrict my usage, save leads for later like you!”

But also:

“…if it’s a distraction for him I get it. But you can literally pick who you follow, don’t have to tweet, connect (with) other investors...”

And:

“…get Geoff’s (point) here, but Twitter has led me to some great ideas, resources, convos. Great tool if used correctly.”

All of these responses are right, of course.

Some people I’ve gone on to meet in real life have mentioned the first place they saw my name was on Twitter. It helps that my Twitter profile says I live in Plano, Texas. This has encouraged investors who live in Texas or are passing through one of Dallas’s airports to reach out to me for a face-to-face meeting. In a couple cases, good things have come from that. And I have Twitter to thank for it.

So, why don’t I think Twitter’s so great?

 

Part the First: Wherein Geoff Complains All the Good Playwrights have Gone to Hollywood

I started blogging on Christmas Eve 2005. Back then, I used to read a lot of value blogs. Most of them don’t exist anymore. And not enough good ones have been stared up since. Why? Twitter. Some of the best “would-be” value bloggers spend their time on Twitter instead of blogging.

I talk stock ideas with a lot of people via email, Skype, etc. You wouldn’t know the names of anyone I talk with. But some of them are good. Very good. And they know small, obscure stocks in their home regions – Benelux, Nordic countries, India, Southeast Asia, Hong Kong, Latin America, wherever – so much better than I do or likely ever could. In the past, I’d tell them “you should start a blog.” And sometimes, they would. Now, I tell them “you should start a blog”. And they say: “If I have something to say, I can put it on Twitter.”

And they can. And in terms of visibility, I think they’ll get more out of Twitter. They’ll reach a bigger audience. But, if I can be selfish here for a second…

They are robbing me of depth.

 

Part the Second: Wherein Geoff Complains that All Music Ought Not to be Pop Music

They are robbing me of a considered, potentially contrarian take. Because Twitter is many things. But the one thing it is above all else is: “catchphrase”. To appear on Twitter, an investment idea has to be distilled into a single phrase. And that phrase – if it’s to be re-tweeted widely – has to be catchy.

I’m writing this post in a noisy environment. There are other people here doing other things. And they’re a distraction. So, I have on some good headphones and I have a piano version of “Pachelbel’s Canon in D Major” playing loud on loop. It’s a catchy tune. If you’re not sure if you’ve heard it, you have. If you’ve been on planet Earth any time in the last 30 years, I promise you you’ve heard this song. Parts of it – especially one particular part – crop up in all sorts of music that worms its way into your ears as you go about life (listening to your car radio, shopping in stores, watching TV, going to weddings, etc.)

Here’s the thing. If you search online for Pachelbel’s Canon right now and play it – I’m pretty sure it won’t sound novel to you. I can promise that. You won’t be 100% certain this is the first time you’ve heard this song. None of you will. For some of you, you’ll know exactly where you’ve heard it before. Congrats. But, for others, you’ll know only that you have heard it before – but you won’t remember where.

And then there will be some of you for which this will happen…

You will hit that chord progression (or whatever the famous part is, I don’t know music) and you’ll know only that you are sort of nodding your head on the inside: “Yes, yes this is familiar and catchy and that’s really all I know and really all that matters in this second.”

That’s Twitter. Twitter is Pachelbel’s Canon.

Now, there’s nothing wrong with that if you use it the right way. I’m looping a bit of piano to create a musical cocoon I can write in. If I had a workspace all my own at this moment – I wouldn’t need a piano playing on loop. Likewise, If you’re using Twitter the way investors of old used to start their day with The Wall Street Journal, The Financial Times, etc. and a cup of coffee to ease into the day – that’s fine.

But, Twitter is – like skimming a newspaper – shallow work with a low return on your attentional investment.

I’ve said before that Cal Newport’s “Deep Work” isn’t a great book. But, it is a great idea. Let me plug it again here.

 

Part the Third: Wherein Geoff Complains that Writers Can’t Ever Be Just Readers Again

You don’t know this about me, but I sometimes write fiction to relax. And I sometimes hang out with real fiction writers – novelists who make a living making stuff up. And when you ask these novelists a question you think is really clever – “what’s the one thing about being a professional writer no one ever told you to expect?” – they all pretty much give you the same 3 answers:

1.        It’s physically demanding. At some point, you’re 100% certain to majorly mess up your back.

2.       You read less.

3.       It changes the way you read.

As someone who managed to mess up his back writing before he reached the age of 30, I’d prefer not to dwell on #1. So: why do writers read less once they become professionals?

Writers, not surprisingly, spend a lot of time writing. And writing and reading exercise the same mental muscles. Writing often feels enough like reading that it ends up taking its place.

Amateurs can write or not write. Professionals don’t have that luxury. They have to write. So, they end up cutting reading from their life. No editor or agent has ever called them up saying “so, how’s the reading coming along?” Any prodding they get from others pushes them toward writing – not reading.

What does this have to do with Twitter? I fear that an hour spent skimming stock related Tweets feels a lot like an hour spent reading a 10-K. We all know our time is better spent actively reading 10-Ks, taking notes, doing our own calculations, etc. And yet, what are we being prodded to do?

Twitter prods us to:

·         Quickly agree/disagree (make a knee-jerk logical judgment)

·         Get outraged about something (make a knee-jerk moral judgment)

·         Click that link (I started this post with a link).

·         Read that book (I told you to go out and get “Deep Work”).

·         Watch that interview.

·         Etc.

No one is prodding you to read a 10-K. A terrific investment for a stock picker to make would be to buy a parrot and teach him only those two words: “10” and “K”.  I doubt I could ever give you a morsel of advice that would do as much to improve your actual stock picking as that kind of constant nagging.

Finally, professional writers report that they can’t read the way they used to. They can’t read “just for fun” anymore. They watch a magic trick, and they see the magician at work. Reading for them becomes more about analyzing the artifice of good storytelling than simply surrendering themselves to the tale.

This, honestly, is where you (the reader of this post) and me (the writer of the post) diverge in terms of our attitudes toward Twitter. A writer is more likely to be changed by Twitter than a reader.

A huge problem with Twitter is that I can clearly see which posts of mine “work” and which “don’t work” in terms of the immediate response of new followers, re-tweets, reactions from people, etc.

My goal isn’t really to get a lot of followers, re-tweets, etc. It’s to write stuff that resonates. More than anything, I want to write stuff that translates into some practical improvement for my readers. I don’t want them to agree with what I write. I want them to incorporate something I wrote into their investment process. I want them to get better because of me.

It’s fine to say that. But, our actions aren’t driven by what we claim to believe. Beliefs simmer on the back burner. Actions are determined by more immediate front burner stuff. They’re driven by things like a nagging parrot that squawks “10-K, 10-K, 10-K”. Our actions are driven by reminders. Our actions are driven by habits. Our actions are driven by the stuff we choose to measure.

If I want to lose weight – I don’t actually have to change my beliefs about what food I should be eating. All I have to do is start recording everything I eat throughout the day. That simple act of monitoring my diet will change my diet. Buy a journal, buy a scale, get someone to nag you to exercise – and that’s all it takes. You’re going to lose some weight. Will this “new me” prove durable without the right principles, motivation, etc. to back it up? Maybe not. But it’ll get you started faster than thinking the right thoughts. It’ll get you actually doing the right things. The act of monitoring followers, re-tweets, likes, etc. can change behavior. If you want your behavior to be changed in the same direction as the stuff Twitter measures and notifies you about – that’s great. Your interests and Twitter’s metrics are aligned.

But, if your preferred metrics for success are different from Twitter’s – that’s a problem. Because you’re going to do what you’re reminded to do – not what you believe in but don’t measure.

 

Part the Fourth: Wherein Geoff Tells Investors to Eat Their Vegetables

I told you I know some professional novelists. I’ve read one of the earliest works (unpublished of course) by one of these writers. It’s terrible. I don’t just mean it’s unpublishable. I mean, it would quite likely not make it into the top few slots of your average high school writing class. There isn’t anything there that would give you the slightest whiff of innate ability. No teacher would encourage this writer to write more because they saw something good in what the kid was already doing. The only reason they’d encourage him is because they saw passion and they saw some serious work ethic. In fact, this writer went on to write more completed books – before ever getting published – than some successful novelists write in an entire career. He willed himself to become good. And he did.

I’ve talked to a ton of investors over the 12 years I’ve been blogging. Intelligence is not what separates the successful ones from the unsuccessful ones. Having the “best” investment philosophy isn’t what does it either. The ones with initiative succeed. The lazy ones don’t. The difference between those who made it and those who didn’t comes down to what I’d call “intellectual assertiveness”. I’ve been doing this 12 years – so, I’ve now met people who were in high school or college at first and now have several years of really solid investing behind them. All the good ones today are people who from the moment I first met them were willing and eager to go off and do their own work and come to their own conclusions. They were all people who’d rather spend time with a 10-K than with Twitter.

Does that mean a little Twitter is so bad?

No.

But, I want you to be very honest with yourself here when I ask you this. If you are presented with two next actions to take and one is “quick” and “easy” and one is “slow” and “hard” – what’s your next action going to be?

 

Conclusion: Wherein Geoff Presents Two Expensive, Irrational Habits He Has

I read 10-Ks in a little office I rent about a ten-minute walk from my apartment. It costs me money to rent an office. So, why do I do it?

I use a full service broker I have to call up on the phone to place a trade with. It costs me money to use a full service broker instead of an online broker where I’d enter the trades myself. So, why do I do it?

Twitter is a great tool if you use it right. Online brokers save you a lot of money if you use them right.

I have a lot less confidence in my ability to consistently tackle the slow, hard things when I could instead tackle the quick, easy things than most people do.

Most people judge a tool by how useful it is when put to its best use.

There is a tendency to think all future decisions will be made in the clear light of day.

I try to imagine all future decisions will be made when it’s 2 a.m. – I’m a little sleepy, a little hungry, I’ve had a drink or two. What could go wrong?

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