How does “range” make you a better investor?
Started reading this interesting book “Range: Why Generalists Triumph in a Specialized World,” the premise of it being that those who have backgrounds of great breadth (e.g. Roger Federer played all kinds of sports) can be just as good, if not better, than those with a narrow focus (e.g. Tiger Woods holding a putter at 2 months).
The book argues that in fields such as financial markets, where patterns aren’t strict (e.g chess), those with ranged backgrounds tend to become more skilled.
How do you feel that any “range” in your background outside of investing (and banking, if you did that too) has helped you to become a more successful investor?
Great book
My background is so diverse I think it works against me lool. I have brief investment banking, start up capital raising, procurement, import and export, tech and business development. Has it helped, yes, I know a lot and a few things. I thinking being too broad hasn't worked out for me. I want to be in finance and investing but have too much of everything else an don't enough finance. I think you should aim to be T shaped. Have a broad understanding and experience and drill down on one area i.e finance. Read broadly and open yourself up to learning do doing things in different sectors.
This is a very interesting topic that is not discussed enough. To me, everyone needs some degree of "Range" per se. As finance has grown, areas of specialty have become more niche, people are extremely siloed. You can observe this phenomenon in academia, and economies (division of labor). I so often read people on this site who appear to be very intelligent, just judging based on their writing style and breadth of vocabulary, commenting on an area within finance where they have little specialty, and displaying a lot of ignorance. Not their fault - they simply haven't had exposure to it. However, if you want to maximize your skill set as an investor or financier, you need to have an adjacency of knowledge.
My personal background is very non-traditional, studying biology at the lowest tier university one could imagine and falling in love with investing during that time. Before (somehow) landing a job in the industry, I had no idea how to get into investing nor the vertical with which I could gain entry. Therefore, I studied very broadly, from ops research to obscure parts of the capital markets. I did this out of desperation to land a career doing what I loved. However, when I transitioned into my current role, I realized the cross-pollination of learnings can be an edge. Drawing on insights from far flung fields can manifest into a kernel of knowledge on the craft of investing. Alpha is generated in betting correctly against the crowd. Everyone in the crowd reads Warren Buffett's letters and watches Invest Like the Best - is there real alpha to be had if you are doing what everyone else is doing?
All this is to say, great investors study broadly and try to draw insights from a variety of disciplines. Being curious is the best trait an investor can have. Learnings, just like money, compound rapidly. When you are engaged in learning from a variety of areas, always try to tie it back to an investing insight. Often, you can't readily do this, but that framework will percolate in your subconscious in manifest in unexpected ways.
You couldn't have put it better, well done.
I haven't read Range but it's on my reading list. Munger speaks often about the mental models approach - building your lattice of mental models from a variety of different disciplines. Robert Hagstrom's 'Investing: The last liberal art' is a great book about this.
You can be surprised how many things you can learn about your own field by learning about other fields.
And to me, it's simple - diminishing marginal utility. Your total utility decreases when you hold the same asset (specialize too narrowly). Instead, smooth your consumption across multiple states/ assets (generalist)
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