The Genius Romance
http://www.amazon.com/Outliers-Story-Success-Malc…
2 years ago, I was fortunate enough to intern for the PE branch of very elite investment firm, the best within it's strategic focus. I didn't know a single thing about finance back then, I didn't even know what stocks were! I got the job by showing off my math abilities - I took calculus when I was 13/14, Real analysis when I was 16.
My first assignment that summer was to read a self-help book linked above. Specifically, one chapter labeled "10,000 hours". After I finished that chapter, my MD told me to re-read it every day for the rest of my internship.
I didn't learn much that summer. I was just a monkey serving coffee, printing out presentations, moving office supplies and folders. But that one chapter changed my life - and I thank my MD for making me read it.
I won't make you read the book (its an easy read though), but the general idea of the chapter is that geniuses are geniuses not because of a gift, but because of deliberate practice. It shows you how geniuses in chess (bobby fischer), math, music (mozart), programming (bill gates) etc. all had to spend around 10 years of hard practice before they achieved anything BIG. 10 years roughly translates to 10,000 hours of practice. It concludes that deliberate practice, is the key driver of success.
This (very successful) MD told me very clearly, that the 10,000 hours story is the story of his success as well. You can be successful too friends, if you put in the time. Here are some other stories sprinkled around on the net that say roughly the same:
http://www.reddit.com/r/confession/comments/nxdzz…
http://calnewport.com/blog/2012/03/28/the-satisfy…
http://norvig.com/21-days.html
http://www.psychologytoday.com/blog/sudden-genius…
But most beginners give up too soon, because they lack the mental toughness attributes of confidence and concentration. It is hard to work on a problem if you don't believe that you can solve it, and it is impossible to keep working past your "frustration threshold". ... You build upon your preexisting confidence by working at first on "easy" problems, where "easy" means that you can solve it after expending a modest effort. ... then work on harder and harder problems that continually challenge and stretch you to the limit ... Eventually, you will be able to work for hours single-mindedly on a problem, and keep other problems simmering on your mental backburner for days or weeks. ... developing mental toughness takes time, and maintaining it is a lifetime task. But what could be more fun than thinking about challenging problems as often as possible? pg.16, The Art and Craft of Problem Solving, Paul Zeitz, 1999, John Wiley & Sons, Inc.1415
If you put more time reading these kind of deliberate practice books. You'll learn one more thing.
10,000 hours isn't just about time. It's also about how much pressure you give yourself to improve. This is best explained by example.
When you're looking to lose weigh the fastest way possible, you do HIIT - high intensity interval training. That basically means you sprint as fast as you fucking can, pushing yourself to your limit, for 15 minutes straight. It has nothing to do with how fast you actually go, it just requires you to go as fast as you can manage.
The key thing to realize here is that "as fast as you can manage" is a huge game of discipline. It has a lot more to do with how much pain you can handle than how strong your legs are. HIIT is an extreme example (although it really works), but you get the idea.
Learning is the same. If you want to be good at something and learn efficiently, you need to expose your weak spots and then address them:
Can't figure out how PIK interest flows through the 3 statements? don't let that question sit in your head! Figure it out after you reply to my thread.
Can't get your LBO modeling speed down to 30 mins. The only way to get there is practice.
Can't figure out how to follow the markets and develop your on opinion? well don't look for the magic bullet. You're just going to have to bite the bullet and read about a lot of shit (which is exactly what the market is, the exchange place of a lot of shit)
non-target looking to break into a BB? Well, after reading all the non-target success stories over and over, the one thing they all have in common is they worked their ass off (cannot emphasize enough) and never gave up.
I've read the book and agree with the premise, but I think it takes longer than 10,000 hours to be a really good investor. Can't speak to PE, but for public markets, you are looking at up 10,000 stocks that are going up and down every day -- it's system wide for the economy and you need to have at least five broad skill sets to be really good at it, each of which might take 5,000 or 10,000 hours to really develop. The other problem is that there is no feedback mechanism: You do some work and reach a conclusion of "I think this might happen" and then have to wait for as long as several quarters before you find out if you are right. The lack of a feedback mechanism dramatically slows down the process.
But yeah, most people could be much better than they are today -- it depends on how badly you want it.
Damn, I thought we were going to talk about nerd love.
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