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You’re a completely different person at 14 and 77….No Shit Sherlock

Look at a photo of yourself as a teenager and, mistaken fashion choices aside, it’s likely you see traces of the same person with the same personality quirks as you are today. But whether or not you truly are the same person over a lifetime—and what that notion of personhood even means—is the subject of ongoing philosophical and psychology debate.

The longest personality study of all time, published in Psychology and Aging and recently highlighted by the British Psychological Society, suggests that over the course of a lifetime, just as your physical appearance changes and your cells are constantly replaced, your personality is also transformed beyond recognition.

The study begins with data from a 1950 survey of 1,208 14-year-olds in Scotland. Teachers were asked to use six questionnaires to rate the teenagers on six personality traits: self-confidence, perseverance, stability of moods, conscientiousness, originality, and desire to learn. Together, the results from these questionnaires were amalgamated into a rating for one trait, which was defined as “dependability.” More than six decades later, researchers tracked down 635 of the participants, and 174 agreed to repeat testing.

This time, aged 77 years old, the participants rated themselves on the six personality traits, and also nominated a close friend or relative to do the same. Overall, there was not much overlap from the questionnaires taken 63 years earlier. “Correlations suggested no significant stability of any of the 6 characteristics or their underlying factor, dependability, over the 63-year interval,” wrote the researchers. “We hypothesized that we would find evidence of personality stability over an even longer period of 63 years, but our correlations did not support this hypothesis,” they later added.

More here – Quartz

Mining Industry

I have been thinking about this table I put up the other day. It merely confirms my view that the mining industry is an historical economic distortion that is vastly overrated in its importance. Employing less that 2% of the Australian workforce (see below) and only contributing about 6% of GDP yet receiving about $10B in subsidies annually, it is perennial parasite that governments continually suck up to in order to curry favour with a handful of very wealthy people. And actual mining companies are an idiot tax on investors.

employment

Jumping At Shadows

I was reviewing the latest Investment Trends data which can be viewed here. There are a few things that jumped out at me but I want to discuss the chart I have posted below.

crash

This chart looks at the current fears investors/traders have about the market. What is interesting about these fears is that as you would expect they are all events that investors cannot control and they are also largely irrelevant. Whilst I understand that fear is a default setting for many particularly within the echo chamber of both social media and mainstream news the fear of an impending crash is an irrelevant one. My view that it is irrelevant is because in part this is a perennial fear for investors that never comes true. In many ways it is akin to having a fear of sharks when you go to the beach.

Ords

These two charts look at what might be termed the equity curve for investing $1.00 in the All Ordinaries Index in 1984 and the underwater equity curve of this investment. A few things are apparent – markets do have periods of collapse although not as often as you would think. The market went almost two decades without a pullback of 20% or more. Indices always recover – note I said the index not that market. Your stocks might be completely stuffed but the index recovers due to its upward bias.Survivor bias can work in your favour of you hold and index ETF.

The number of times that the index has ended with a week on week 20% decline are surprisingly rare as can be seen below.

ords zz

However, this style of data does little to assuage the nervousness of the irrational, even pointing out that simple systems exit the market in the initial stages of the market collapse offer little comfort. The conventional wisdom of the standard market participant is that they go to bed on Wednesday and wake up on Thursday and the market instantly collapses 30% on the open with no warning. This certainly was not my experience of the 1987 crash or the prelude to the GFC. In 1987 the market had actually peaked in September and the market became extremely unstable in the weeks before and had actually given up 10% and then gapped down before the crash. There was ample time and warning, the same is true of the GFC.

I perhaps shouldn’t be too hard on such market participants because the survey also notes that the majority of investors take their advice from market analysts.

 

CEO Salaries

Whilst looking for something completely different I came across this list of domestic CEO salaries. I thought it would be interesting to strip out some of the data and look at those CEO’s who are paid the most but whose companies lose the most money. Its remarkable how well you can do when your company is not doing that well….

CEO Salaries

 

How Things Have Changed

The change in the relative size of world markets over the past century. You will note that the Australian market has shrink significantly.

size

Source – Credit Suisse Global Investment Reurns Yearbook 2017

Closing the gap between behavioral science and business

It is a strange time to be a behavioral scientist in business.  When I left my PhD program almost ten years ago to focus on real-world applications, I spent the majority of my first few years explaining over and over what behavioral scientists actually did.  Now, I regularly get inbound requests to speak at large companies and books by Adam Grant, Dan Ariely, Jonah Berger, Angela Duckworth, Amy Cuddy, Barry Schwartz, and others sell millions of copies.  Executive confidence that behavioral science is both valid and interesting has seemingly never been higher.

And yet hiring behavioral scientists to explicitly apply what they know has remained somewhat rare.  When I left Microsoft, I got far more recruiter inbound based on my background in startups and venture than I did in behavioral science, despite being considerably better at the latter.  And while there are a few corporate behavioral science groups, like Om Marwah’s burgeoning team over at Walmart, Steve Wendel’s at Morningstar, Charlotte Blank’s at Maritz, Prasad Setty’s at Google, and Jeff Helzner’s at AIG, by and large the Fortune 1000 seems to love behavioral science without actually applying it.

There is a fundamental gap here.  How can executives believe in behavioral science, espouse its virtues and recommend its writings, and yet not be investing in its application to their own companies?  Surely it can’t be all TED talks and no desire to see it work?

More here – Matt Wallaert

A Pom Discovers The Ute


 

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