Addendum - How i make decisions??

Happened to read in Fortune. This is really good stuff on decision making. Read on...

How I Make Decisions

Simon Yates Managing Director, Equity Derivatives, Credit Suisse First Boston—New York City

"When you see a trader panic, you can be pretty sure that for the next few hours, he's going to lose money. All the base instincts in your brain—what I call "caveman brain," the sort of fight-or-flight feeling of emotion that is designed to stop you from being eaten by a sabertooth tiger—takes over your decision-making. You start trading scared, taking smaller positions on good ideas and cutting profits too quickly.

I supervise about 23 people, and we can trade $1 billion a day. My goal is to make money 52% of the time. I can make the right call half the time by flipping a coin; a good trader does a little better. Successful traders don't spend much time regretting decisions or going back over things. If a decision turned out to be wrong, so what? Move on. So when you have to make a quick decision and you know that there's a good chance it will be wrong—the worst thing you can possibly do is sit there and panic and hope. You have to be decisive—go on and do it. When I see somebody go into panic mode, I tell them, "Get off the desk. Go for a workout, or go sit in the park for an hour."

The first thing I look for when hiring traders is emotional robustness. And you can get some very, very smart people, the classic Harvard MB person who has been top of his class the whole way through, but they haven't had the emotional experience of failure. They come into this trading job, and they have this view, "Okay, I'm going to work very hard, I'm going to do all the research, and then I'm going to succeed." It's fascinating watching them the first time that doesn't happen. There's this sort of "How can this be?" look on their face. That's when many of them get out of the business.

If people in a bar ask me what I do, I say it's a bit like stock trading but with more math. In some ways it's like being a police officer: There's a lot of time when nothing is going on, and then suddenly you've got to be really fast.

You can't wait until you have absolute confirmation. You're looking to get enough information to think that you probably have detected something, and based on that, you make your trades."

frog and heat

i recall reading in some well gathered Azim Premji presentation one fact about a frog and how he uses that analogy to explain change management in business. You put a frog in a basin full of water. if you drop the frog in hot water, the frog jumps out instantaneously sensing the heat. Now, drop the frog in room temperature water, and very slowly increase the heat of the water - the frog doesnt care. Leave the frog at that - even when the temperature of the water reaches to unbearable heat, the frog still doesnt realize it. Ultimately, the heat levels have risen so high that the frog faints and ultimately dies.

Business changes are like that - it is no brainer for someone to look at an alarming change and react to it. it is these very subtle, imperceivable changes that you need to watch out for - it is what seperates the ordinary from genius, from the regular to the achiever.

This is not just business - slow changes are everywhere. You can take the same analogy to even other parts of life - ageing is one. You dont realize that you are ageing, your colleagues dont, but you go meet a friend after two years and he/she will tell you how old you have become. Working out - you dont realize you are not working out anymore when you see your tummy project out in some photograph. You dont realize you have been wasting so much money in cigarattes and drinks until you sit down and do the math.

Watch out for slow changes - be ready for changes, and adapt. The prime reason human being is so successful an animal in this planet is because you can put him in any part of the world, and he can adapt to the environment. Fishes and animals cant do that.

Dream dreams and the to do list

What is life?? What are we here on the Earth for? Do we have a sense and purpose or we just wandering like a sail boat in the ocean waters? Questions do come now and then. i am reminded of the guy in the movie 'the Matrix' - he picks up some food, puts it in the mouth and says - 'Real is just another four letter word'. He tastes the steak instead of going through analyzing that the steak is fake. So, you do have an option to say 'f#$#@ it' and just walk away without thinking about your reason for existence OR you can start to spend some of your precious brain cycles on answering a question that you know for sure that will be an impossibility to answer with good accuracy and meaning.

Life is, my version of story, a series of experiences that accummulate over the period of your life time. You probably dont recollect a hell lot, doesnt mean you didnt experience it. Experiences can be good or bad - you need a good balance of good and bad experiences. Good experiences cherish your life, bad ones teach you. its like you have a car for 10 years and you never had a peek into reality when all of a sudden you have a flat tire and you are left to yourself in the middle of a long deserted highway. A prior bad-flat-tire experience could have given you precious lesson that might have helped out here to make a worser experience a good one.

In the US, people chase their dreams. That is one big difference in mentality i see between US and India (note - i am speaking for myself here and i am over generalizing, so dont quote me Narain Karthikeyan, Abdul Kalaam, or some lazy bum white american that you happen to know). What i mean here is that people in general in the US have dreams - they work to make the dreams a reality. Like owning a sail boat, making a trip around the world, finishing their ambitious home project, sky dive etc. In India the common man also has dreams, but they are limited to going to work, coming back home, watching tv, some movie, getting married, growing up kids, send them to good schools, see them get married, see them give birth to kids, play with the grand kids, and then one fine day - bid farewell. Well, these are true desires but how ambitious do they get? Ofcourse, i have to state here that in US parents give up support of kids at a very early age while in India the son can be a 'thanda choru' as long as he wants. What i dislike is this constant savings mentality where you save every penny every day so your son or grandson can save every penny for his son or grandson and so on - the reality of what happens is quite the opposite wherein every penny saved gets spent is some medical emergency to cure a heart attack that is an accummulation of stress due to the penny savings!!

Money matters very little at the end of the day - experiences count. You can be the richest person in the world, but you dont take anything with you when you leave this life. The Gita says 'you didnt bring anythign to this world, you are not taking anything when you die so you didnt gain or lose anything'. Experience things - go take a hike, go around the world, try a Moroccon delicacy or some Afgan Baklawa, go dancing, discipline your body, sky dive off a plane, make a trip to Alaska and see the cosmic showers - but first, make a list.

Make a list of the top 100 things you want to do before you die. Be as creative, and ambitious imagining you had all the money and power in the world to do what you want to do. Then chase the list. Tick it off one by one - one at a time, and this is important, you do that while maintaining your regular life. Essentially you go to work, get married, make love to your wife, have kids - in parallel have the wish list track where your dreams come true.

As someone in Nike (or somebody in their ad agency) said - JUST DO IT.