The focus of this book
Outliers is an important business book, and it covers a wide range of things; two things stand out to me so far:
- 10000 hours
- Statistics can be deceiving
I discuss both of these things in detail in this article.
Almost every celebrity opinion leader who has read this book, including Munger, agrees that the most important point is that in order to be truly proficient in a field, in addition to talent, one must invest about 10000 hours of effective training.
Statistics can be deceiving
Almost every opinion leader who has read this book, including Munger, agrees that the most important point is that in order to be truly proficient in a field, in addition to talent, one must invest about 10000 hours of effective training.
If you know statistics, market surveys, or research, you might understand the accuracy of statistics highly dependent on the design of questions, the methods or techniques of questioning, and the interpretation of data. That is, the same set of data, everyone’s views can be different. Why is this so? There are many reasons: for example, lack of professionalism, sample size, bias, errors, preconceived notions, target first and then shoot arrows.
But one of the most serious and most capable of changing statistical results is “preconceived ideas, first target, and then shooting arrows”────because statistics and market surveys belong to more fields of non-science, and the mathematics and statistics involved in the middle are just tools . It is people who report and interpret in the end; as long as there are people, there will be prejudice. Munger made a thought-provoking comment on this phenomenon: “To the man with only a hammer, every problem looks like a nail. ”
I can get the statistics I want
I quote Graham in section 5-2 in my book of “The Rules of Super Growth Stocks Investing”, he said: “The combination of precise formulas with highly imprecise assumptions can be used to establish, or rather to justify, practically any value one wishes.”
I have published an article on this blog, “Non-quantitative factors determine success or failure of an investment” discussed this topic. In short, in order to get the results I want, I can design the results that will meet my final expectations. The survey method, and then packaged with statistical methods, can be used to increase persuasiveness when publishing. In fact, our society, including elections, shopping malls, and Wall Street, uses such methods every day. Modern people actually live in such an environment, but it is difficult for us to notice it!
Anders Ericsson’s research
In the 1990s, the psychologist K. Anders Ericsson and two of his colleagues conducted an experiment at Berlin’s top music academies. The research by Erickson and his colleagues surprised people to find that there is no “innate genius” in excellence.
The results of the study stated: “The emergingpicturefromsuchstudiesisthatten
thousand hours of practice is required to achieve the level of mastery associated with being a world-class expert—in anything,” Neuroscientist Daniel Levitin (Daniel Levitin) Said: “Whether it is a composer, basketball player, writer, ice skater, pianist, chess player, or a habitual criminal who has succeeded in committing crimes, the results of the statistics of their practice time, every time without exception, this number comes up again and again. 10000 hours is equivalent to 3 hours of practice a day, or 20 hours a week, or 10 years of practice.”
10000 hours works for stock investing
The problem is that very few people are willing to put in 10,000 hours for a long-term investment reward and a successful investment. This is also the central idea of the two articles I post on this blog, “Why people with high IQ prone invest failed” and “Too high IQ is not useful in investment, but will hinder“– There are not so many smart people in the world. Most smart people just “think they are” smart. And the most fatal thing is that most people with high IQ are reluctant to invest time and effort. They think that fundamental research necessary for stock investment is time-consuming and not worth it. It’s stupid and behaviour of an idiot!
“10,000 hours is equivalent to 3 hours of practice a day, or 20 hours of practice a week, or 10 years of practice time”—the same holds true for investing, and I’ve been doing like this. In my book “The Rules of Super Growth Stocks Investing”, sections 1-5, I list 10 years as one of the top three criteria for a successful investor you want to consult. It’s no coincidence, or whatever number I guess.
Many people will disagree, thinking they don’t have as much time to devote to. To this view, I can only say “it’s not whether you have or not, it’s willingness, choice, and devote.” Everyone has 10000 hours.
No difference on investment
In 2000, Buffett answered questions in front of 165 students in a class at Columbia University, his alma mater, how to prepare for an investment career? Buffett replied, “Read 500 pages like this every day,” He pointed to a bunch of public company financial reports and materials; “That’s how knowledge builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”
That’s why Buffett once said how to improve the odds of investing, saying, “You have to understand the business, there is no other way.”
John Templeton said: “Achieving a good record takes much study and work, and is a lot harder than most people think.”
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