Give Your Investment Ideas Some Legs

Ever since I started writing for Safal Niveshak, I always wondered where does Vishal get his ideas for writing.

“Write more, write every day,” Vishal often recommends.

However, one of the most important (and often ignored) aspects of mastering any skill is tacit knowledge. Tacit knowledge is the knowledge that can’t properly be transmitted via verbal or written instruction.

In a master-apprentice relationship, more is caught than taught. This means a lot more can be learned by observing what good writers do because they may not explicitly verbalize when they’re asked to explain their craft.

Last year I connected a few dots when I noticed that Vishal walked more than 3200 km in a single year. That’s close to 10 km daily average.

I always wanted to travel the length of India. Finally did it…walking…step by step…over the last one year 😇 pic.twitter.com/wOrsOsQtMb

— Vishal Khandelwal (@safalniveshak) October 1, 2019

Maybe that’s the connection I had been missing — the connection between walking and better thinking.

Of course, mistaking correlation for causation is a standard cognitive error. So I dug deeper.

My favourite investment writer, Morgan Housel, claims that almost all his ideas take shape while taking long boring walks. In a podcast interview, Housel revealed that he makes a conscious effort to walk (without headphones) for 40 minutes every day. When he notices a dip in the quality of his writing, he knows he’s not walking enough.

Walking can promote quality thinking, which can also improve your investment process over time. John Huber of Saber Capital writes in his post on walking, thinking, and investing –

I walk just about every day, sometimes for a couple hours at a time. This activity is something that I’ve begun doing more in recent years. My personal exercise routine has evolved since my days as a competitive runner. I still run occasionally, but I find it’s more enjoyable, and—at a more relevant level to this discussion—easier to get what I would call “quality thinking” accomplished. So I do occasionally exercise vigorously, but I think of walking more as an investing activity than I do an exercise activity.

After hours of reading annual reports, making calculations, and spending time thinking in my office, I sometimes find that walking helps me crystallize the work and the thinking that I put in earlier.

Basically, I’ve always felt that investing is a discipline that is most successfully implemented in a quiet environment that promotes thoughts, ruminations, and observations much more than it promotes hustle and activity. I’m a big fan of hard work, and a big fan of those that hustle. But investment is a field where one must diligently work, think, and act, and must resolve oneself that results come later—often years after—that groundwork has been laid.

What Housel and Huber practice intuitively is gradually being attested by research also.

Two Stanford researchers — Marily Oppezzo, a doctoral graduate in educational psychology, and professor Daniel Schwartz — concluded that walking has a positive effect on creative thinking. They examined the creativity levels of people while they walked versus while they sat. A person’s creative output increased by an average of 60 percent when walking.

“Many people anecdotally claim they do their best thinking when walking. We finally may be taking a step, or two, toward discovering why,” wrote Oppezzo and Schwartz.

Famous scientist Albert Einstein knew this secret. He said –

I take time to go for long walks on the beach so that I can listen to what is going on inside my head.

I am guessing that walking triggers the diffuse thinking mode in our brain.

Neuroscientists have discovered that when our brain is engaged in any cognitive task, it usually switches between two states — a highly attentive state called the focused mode and a more relaxed resting state called the diffuse mode.

Barbara Oakley, in her book A Mind for Numbers, writes —

It [Diffuse-mode thinking] allows us to suddenly gain a new insight on a problem we’ve been struggling with and is associated with “big-picture” perspectives. Diffuse-mode thinking is what happens when you relax your attention and just let your mind wander. This relaxation can allow different areas of the brain to hook up and return valuable insights. Unlike the focused mode, the diffuse mode seems less affiliated with any one area of the brain—you can think of it as being “diffused” throughout the brain.5 Diffuse-mode insights often flow from preliminary thinking that’s been done in the focused mode.

In fact, this connection between walking and creative thinking is centuries old. The 18th-century musician Mozart observed —

When I am traveling in a carriage or walking after a good meal or during the night when I cannot sleep–it is on such occasions that my ideas flow best and most abundantly.

As an investor, one of the most important activities that will define long-term success is how much you read and understand. And effective assimilation of knowledge will solely rest upon how deeply you reflect on it. Which directly correlates to how much time you spend away from chronic distraction.

Regular (and distraction-free) walks may sound boring and a waste of time, but trust me, they’re probably the simplest ways to add some extra percentage point to your long-term investment returns.

The by-product, that is, improved fitness and health, is like a special dividend. 🙂

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That’s about it from us for today.

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Find time for a walk. But please wear your mask, maintain distance, and stay safe.

With respect,
— Vishal