Imagine traveling back to 10,000 years B.C. The people you meet would speak a different language and have completely different experiences. But by and large, they would be like you. We humans, including our brains, have not changed much in 12,000 years. But our lifestyle has changed tremendously in just 100 years, even more in 12,000 years. For millions of years, our ancestors had to be on the move to obtain food and survive. The result is that we not only have a body that is built for movement, but also a brain that is. This is a book about exercise and how we have walked out of step with our biology – or rather: we sit out of step with it.
BIOLOGICAL MISMATCH. If you look at the history of mankind as a day, we were hunters and gatherers until 23:40. We became industrialized at 23:59:40 (20 seconds before twelve o’clock) and digitized, connected to the internet, 23:59:59 (one second before twelve o’clock).
NATURE VS NURTURE. Your DNA alone does not determine how your brain will develop. You have about 23,000 genes. And you have 100 billion brain cells that have about 100,000 billion connections between each other. 23,000 genes cannot determine all of these links. The brain is too complex to be completely controlled by a genetic program where it is predetermined how it will develop. The genes set a framework for how brain cells are formed and die, connect to each other and break connections. Exactly how this happens, what qualities you develop and how you function, is affected by what you been through, what environment you live in and what lifestyle you choose.
THE HPA AXIS. The body has a stress system called the HPA axis. When the brain detects something it perceives as a threat, the Hypothalamus (“H” in HPA) sends a signal to a gland in the brain, the Pituitary (“P” in HPA), which responds by releasing a hormone that travels into the bloodstream with your Adrenal glands (“A” in HPA), that responds by releasing the stress hormone cortisol which makes the heart beat faster and harder. The motor of the HPA axis is the amygdala, which is the brain’s alarm system. The amygdala activates the stress system, but can also be triggered by it. When the amygdala signals danger this leads to increased cortisol levels, which makes the amygdala even more active and increases cortisol levels even more. If the amygdala is allowed to unwind uncontrollably, you will eventually panic.
AMYGDALA ACCELERATES, HIPPOCAMPUS BRAKES. To slow down the stress system, the body and brain have several brake pedals built in. One of these is located in the memory center hippocampus, which has an ability to slow down the stress system and act as a counterweight to the stress motor amygdala. There is always a balance where they pull in different directions. When the hippocampus can no longer slow down the amygdala, the stress system begins to live its own life. Another stress brake is the frontal lobe / prefrontal cortex, a seat of “higher thinking”, which has a central role in not overreacting emotionally and acting irrationally. Here, too, a balance is created with the amygdala.
CORTISOL LEVELS MUST DECREASE. It is natural that cortisol levels increase from stress. But it is important that they decrease when the stressful situation is over. The stress hormone cortisol is almost a poison to the brain cells in the hippocampus (which can die from too much cortisol), and if there is too much for a long time (rather months and years rather than hours and days) the hippocampus risks shrinking slightly. This can make the memory worse.
EXERCISE AS MEDICINE. Exercise means stress for the body. Cortisol levels increase while running, cycling or other physical activity. But after the workout, the body does not need the same stress boost. Then cortisol levels drop to lower levels than before. If you continue to exercise regularly, cortisol will gradually increase less and less each time, and decrease more afterwards. It will also increase less and less even when you are stressed for other reasons. In fact, the frontal lobe and the hippocampus are the two parts of the brain that are most strengthened by your movement. But it is important to make exercise a habit – it takes time before the hippocampus and frontal lobe are strengthened.
GABA – ACTIVATED BY EXERCISE. GABA (Gamma-aminobutyric acid) is a substance whose function is to calm the brain and dampen the activity of brain cells (when the activity is calmed, the feelings of stress disappear). GABA activation means fast and effective stress relief – just like when you drink alcohol or take sedatives. GABA is also activated by movement. You get some effect if you walk, but the best thing is to run or cycle.
EXERCISE ATTACKS STREES FROM SEVERAL ANGLES. Stress reduces the brain’s ability to change (plasticity) while exercise increases it. Increased stress slows down the transition from short-term to long-term memories while exercise improves it. The really nice effects on well-being and stress resistance are only noticeable after a couple of months of regular training. Exercise attacks stress and anxiety from several angles. Cortisol levels drop after a workout and will not rise as sharply next time. The “brake pedals” hippocampus and frontal lobe are strengthened and become better at breaking the anxiety motor amygdala. The activity of the brain’s braking system GABA increases and the muscles’ ability to neutralize a stress substance increases. All this is happening at the same time....more
A book well-deserved of the mark of "a classic". Highly interesting book on the subject of leadership (although a bit harsch and rough for todays worlA book well-deserved of the mark of "a classic". Highly interesting book on the subject of leadership (although a bit harsch and rough for todays world). My notes from the book below. More "Briefs" like this can be found at www.libraryof.xyz
Niccolò Machiavelli was an Italian political philosopher and historian that had a key figure in shaping the political life of the Renaissance. His book “The Prince”, written in the 16th Century, is an instruction manual for new princes. The book is based on a time when cities were constantly threatened by neighboring principalities and there were continuous power struggles and change of rulers. Machiavelli’s last name has become synonymous with terrible human behavior and if one looks up the word Machiavellian in a dictionary, the description is cunning, scheming, and unscrupulous.
RATHER FEARED THAN LOVED, BUT NOT HATED. A man who wants to show his goodness in all his actions, perishes among all those who are not good. A prince who wants to stay in power must learn not to be good, and to use this or not as circumstances require. It is not necessary for a prince to be loved to keep his reign. But if he is too loved, he can be perceived as weak, and aspiring leaders might try to take him down, and more easily get the people – who are not afraid – to join them. It is better to feared and not induce any uprisings from people that are somewhat dissatisfied. However, it is of vital importance not to be hated, because then he will be surrounded by enemies ready to strike when the inevitable weak moment arises – he needs the goodwill of the people during those hard times.
“It is much safer to be feared than loved because …love is preserved by the link of obligation which, owing to the baseness of men, is broken at every opportunity for their advantage; but fear preserves you by a dread of punishment which never fails.”
BE CONSISTENT. A prince should behave in such a way that he, whatever happens – good or bad – does not have to change his behavior towards the people. If you have to be cruel in adversity, you will not get gratitude and trust when you are friendly in good times.
IF YOU MUST DO HARM, CRUSH THEM. Men ought either to be indulged or totally destroyed, for if you merely offend them they take vengeance, but if you injure them greatly they are unable to retaliate – the injury done to a man ought to be such that vengeance cannot be feared.
HONE YOUR SKILLS IN PEACE TIME. If a prince, during peace time, thinks more of his pleasures than his army, he will lose his kingdom. War should be the only study. He should consider peace only as a breathing-time, giving him leisure to contrive, and hone his ability to execute military plans.
”The first way to lose a state is to neglect the art of war; the first way to gain a state is to be skilled in the art of war.”
BE PREPARED AND ACT PREVENTIVE. A prince must not only focus on the ongoing unrest but also on what the future holds. He must counteract them in every way, for if, as in a disease, one sees the danger far in advance, one can find a cure, but if one waits until the danger is near, medicine will not arrive in time and the disease becomes incurable.
THE DANGERS IN TOO MUCH CHANGE TOO QUICKLY. A new prince should be considerate in not initiating too much change too quickly. He will make enemies from those that took advantage of the old order, and only get lukewarm defenders in those that take advantage of the new order.
PUNISH ONCE AND STRONGLY. When a conqueror takes over a kingdom, he should carefully think through what acts of violence he is obliged to commit and then carry them all out at once, so that he does not have to start each new day with more violence. Then the people, after a while, will calm down, and get comfortable that a new peaceful order is in place. After some time they will also forgive the early acts of violence.
“Severities should be dealt out all at once, so that their suddenness may give less offense; benefits ought to be handed ought drop by drop, so that they may be relished the more.”
A LEADER NEEDS A BROAD SKILLSET. A leader must strive to be both military powerful and strategically skillful, but also develop the strength to do bold things – to dare to make mistakes of ambition rather than of sloth.
“The lion cannot protect himself from traps, and the fox cannot defend himself from wolves. One must therefore be a fox to recognize traps, and a lion to frighten wolves.”
YOU CANNOT BE NEUTRAL. A prince is respected if he is a true friend or a true enemy. He should never be neutral, for if two of your neighboring princes go to war, you either win together with your friend and get a strong and stable outcome, or you lose together. If you are neutral, the winner will likely come after you in the future since he perceives you both as weak and as someone who can’t be trusted. And the loser, if he comes back to power, will not trust you in the next battle since you were not around for the first one. The neutral ends up a loser no matter the outcome of the battle.
AIM FOR THE SKY. A man should always embark on the paths that great men have paved and follow the men who have been outstanding personalities, so that his ability, even if it is not on a par with theirs, still produces a good outcome.
“Without an opportunity, their abilities would have been wasted, and without their abilities, the opportunity would have arisen in vain.“
THE DANGERS IN GROWING TOO FAST. A kingdom that grows too fast, like everything else in nature that arises and grows fast, may not have deep enough roots and a strong enough foundation, that the first severe adversity will not bring it to fall. Those who have unexpectedly become princes should immediately understand to make sure of what fate has thrown at them, and afterwards lay the foundation that everyone else builds up before they come to power....more
Highly interesting book, useful in understanding consumer behaviour as well as your own habits. Insert my notes from the book below.
Each chapter of tHighly interesting book, useful in understanding consumer behaviour as well as your own habits. Insert my notes from the book below.
Each chapter of the book revolves around a central argument: Habits can be changed, if we understand how they work. It focuses on habits as they are technically defined: the choices that all of us deliberately make at some point, and then stop thinking about but continue doing, often every day. Habits is a formula our brain automatically follows: when I see CUE, I will do ROUTINE in order to get REWARD. To re-engineer that formula, we need to begin making choices again. And the easiest way to do this, according to many studies, is to have a plan to trick the brain from sending us on an unwanted path.
THE HABIT LOOP. This process within our brains is a three-stop loop. First, there is a cue, a trigger that tells your brain to go into automatic mode and which habit to use. Then there is the routine, which can be physical, mental or emotional. Finally, there is a reward, which helps your brain figure out if this particular loop is worth remembering for the future. Over time, this loop – cue, routine, reward; cue, routine, reward – becomes more and more automatic.
WE RELY ON CHUNKS. The process in which the brain converts a sequence of actions into an automatic routine is known as “chunking, and it is at the root of how habits form. We rely on these every day. Some are simple: you automatically put toothpaste on your toothbrush before sticking it in your mouth. Some, such as getting dressed are a little more complex. Habits, scientists say, emerge because the brain is constantly looking for ways to save effort. The brain will try to make almost any routine into a habit, because habits allow our minds to ramp down more often.
THE CASE OF PEPSODENT. The psychology of Pepsodent’s success was according to the marketing chief based on two basic rules: (1) find a simple and obvious cue – tooth film, and (2) a reward – beautiful teeth. But they weren’t selling beautiful teeth. They were selling a sensation. Once people craved that cool tingling – once they equated it with cleanliness – brushing became a habit. When this was understood by many competitors, they imitated. Today, almost all toothpastes contain additives with the sole job of making your moth tingle after you brush. The same goes for foaming when using shampoo. Shampoo does not have to foam but is a huge reward when used.
THE CRAVING BRAIN. Why habits are so powerful is explained by the fact that they create neurological cravings. Most of the time, these cravings emerge so gradually that we are not really aware that they exist, so we’re often blind to their influence. But as we associate cues with certain rewards, a subconscious craving emerges in our brains that start the habit loop spinning. Cravings are what drives habits. And figuring out how to spart a craving makes creating a new habit easier. It is as true now as it was a century ago.
THE GOLDEN RULE OF HABIT CHANGE. You cannot extinguish a bad habit; you can only change it. Use the same cue, provide the same reward, change the routine. Alcoholics Anonymous (AA) is successful because it helps addicts use the same cues, and get the same reward, but shifts the routine. If someone needs relief, they can get it from talking to their sponsor or attending a group gathering, rather than toasting a drinking buddy.
CHANGING HABITS. Let’s say that your routine is to get up from your desk every afternoon and to go the cafeteria to buy a chocolate chip cookie. You have now identified the routine. Step two is to experiment with rewards. Most cravings are obvious in retrospect, but incredibly hard to see when we are under their sway. For instance, instead of walking to the cafeteria, go outside for a walk around the block without eating anything. As you test four or five rewards, you can look for patterns. Try to understand what you are craving. Once you figured out the routine and reward, identify the cue. Almost all habitual cues fit into one of five categories: Location, Time, Emotional state, Other people, and immediately preceding action. Write down the answer on these questions and a pattern may emerge.
EASY IN THEORY. Though the process of habit change is easily described, it does not necessarily follow that it is easily accomplished. It is facile to imply that smoking, alcoholism, over-eating, or other ingrained patterns can be upended without real effort. Genuine change requires work and self-understanding of the cravings driving behaviors. However, it helps to be aware of the habit’s mechanisms.
KEYSTONE HABITS. In 1987, the hitherto unknown Paul O’Neill took over Alcoa as CEO, and began with a press conference. Wall Street had previously speculated – will he close unprofitable subsidiaries etc? O’Neill began by saying, “I want to talk about occupational safety, and I want zero accidents at work”. His strategy was to focus on one thing, to attack a habit, and then hope that change spreads through the organization like rings in the water. Security became a “keystone habit”; something that affects how people work, eat, live, and communicate. By striving for zero accidents the whole organization was forced to investigate why accidents happened in the first place. To understand why this, they had to study how the manufacturing process went wrong. It required staff training and quality control. Alcoa became the best and most efficient aluminum company in the world. And everyone wanted to contribute to the goal....more
Jim Slater was the former auditor and controller who in the 1960s introduced “asset stripping” and “takeoveA book well worth reading. My notes below.
Jim Slater was the former auditor and controller who in the 1960s introduced “asset stripping” and “takeover battles” to the London Stock Exchange. During the happy 1960’s and until the stock market crash in 1973, the stock market value of his acquisition platform Slater Walker increased 100-fold. In the aftermath of the stock market crash, Slater lost everything, after which he started again investing privately and wrote some books – one of them being “The Zulu Principle”.
THE ZULU PRINCIPLE. In short, the principle says that if you choose a narrow subject and study it carefully, you quickly become one of the most knowledgeable in the field. The name comes from an example where his wife read an article about the tribe “Zulu” in South Africa. If you read an article in the newspaper, order some books on the subject and then travel to South Africa to meet them, you are quickly one of the country’s most familiar with the subject.
“It is only necessary to be six inches taller than the other people in a room to see above everyone’s heads. Applying the Zulu Principle helps you grow those extra six inches.”
ELEPHANTS DO NOT GALLOP. Slater advocated investments in smaller companies. The reason’s were several; the largest institutions are not there and small companies, precisely because they are small, have better growth opportunities than the large ones. For the past 50 years (the book was written in 1992), small companies outperformed the market by 3.8% annually. However, they are often “out of fashion” for periods of up to several years.
HAVE A SYSTEMATIC APPROACH. By being systematic, you can beat the market by a good margin over time. The important thing, however, is to “walk the line” – you must not change strategy just because it underperformed a year or two. Slater’s “Zulu Principle” is a growth strategy based on the PEG (price / growth). The criteria are briefly described: (1) a PEG ratio below 0.75, (2) a P/E ratio below 20, (3) EPS growth above 15%, (4) positive relative strength to the market, (5) ROCE> 12% and (6) a market capitalization between £20-100m. In addition, he wanted to see low indebtedness, a dividend, the opportunity for a change in perception (we want to buy before a stock becomes a growth darling) and a positive-sounding chairman’s words.
TIMING AND MOMENTUM. Slater believes that a share’s relative strength to the stock market is of great importance when timing the purchase. The stocks that perform best tend to behave like winners already at the time of purchase – that is, have rising share prices. Jim O’Saughnessy, who examined 43 years of data from the Compustat database, found that of the ten highest-yielding strategies, all contained elements of relative strength to the market over the past year.
PROFITABILITY – ROCE. A company’s ROCE (return on capital employed) should be compared with the cost of borrowing capital. If the ROCE is significantly higher, additional borrowing will result in higher EPS, if ROCE is lower, increased borrowing will result in lower EPS. Profitability determines the company’s opportunities for capital raising and expansion. It is important to adjust for intangible assets when calculating ROCE.
INDEBTEDNESS – GEARING. Slater prefers to see a relatively low level of indebtedness in the companies he invests in. Net gearing in excess of 50% can cause problems, especially if a large part of the liabilities are short-term. A heavily indebted company is likely to be fully invested and operationally committed, and thus much more vulnerable than an ungeared company. In addition to the security that redundant funds provide, it also increases the opportunities for opportunistic business in the event of a changed business climate – an option that indebted companies, which may be forced to make forced sales, do not have.
DON’T BE CHEAP ON THE SPREAD. Slater knew that he was often one of the major players in the small company shares he traded in. If you are the largest in the order book, you cannot be so pricey if you want to get through with some transactions. He therefore used to “pay up” a little at the time of purchase and give a little extra discount at the time of sale. This is the price for trading in small company shares, a price that is more than offset by a carefully investigated case....more
If fighting is sure to result in victory, then you must fight, even if the ruler forbids it. If fighting will not result in victory, then you must not fight even at the ruler’s bidding. The general who advances without coveting fame and retreats without fearing disgrace, whose only thought is to protect his country and do good service for his sovereign, is the jewel of the kingdom. There are five dangerous faults which may affect a general: (1) Recklessness, which leads to destruction, (2) cowardice, which leads to capture, (3) a hasty temper, which can be provoked by insults; (4) a delicacy of honour which is sensitive to shame and (5) over-solicitude for his men, which exposes him to worry and trouble.
KNOW YOURSELF. KNOW YOUR ENEMY. If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself and not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
KNOW THE ENEMY. Though the enemy maybe be stronger in numbers, we may prevent him from fighting. Discover his plans and the likelihood of their success. Rouse him, and learn the principle of his activity or inactivity. Force him to reveal himself, so as to find out his vulnerable spots. Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient. In making tactical dispositions, the highest pitch you can attain is to conceal them; conceal your dispositions, and you will be safe from the prying of the subtlest spies.
BUILD ON STRENGHT. In battle, there are not more than two methods of attack, the direct and the indirect; yet these two combinations give rise to an endless series of manoeuvres. The clever combatant imposes his will on the enemy, but does not allow the enemy’s will to be imposed on him. You can be sure on succeeding in your attacks if you only attack places which are undefended. You can ensure the safety on your defence if you only hold positions that cannot be attacked. Hence the general is skilful in attacks where the opponent does not know what to defend; and he is skilful in defence where opponents does not know how to attack.
WARFARE IS BASED ON DECEPTION. When able to attack, we must seem unable, when using our forces, we must seem inactive, when we are near, we must make the enemy believe we are far away, when far away we must make him believe we are near. The good fighters of old first put themselves beyond the possibility of defeat, and then wait for an opportunity of defeating the enemy.
GENERALS THAT WIN MAKES MANY CALCULATIONS. Hold out baits to entice the enemy. Feign disorder, and crush him. If he is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is of choleric temper, seek to irritate him. Pretend to be weak, then he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. Attack him where he is unprepared, appear where you are not expected. A clever general avoids an army when its spirit is keen, but attacks it when it is sluggish and inclined to return. This is the art of studying moods. Disciplined and calm, to await the appearance of disorder and hubbub amongst the enemy – this is the art of retaining self-possession.
WAGING WAR. Though we have heard of stupid haste in war, cleverness has never been seen associated with long delays. There is no instance of a country having benefited from prolonged warfare. In war, let your great object be victory, not lengthy campaigns.
STRENGTH. It is the rule in war, if our forces are ten to the enemy’s one, to surround him; if five to one, to attack him; if twice as numerous, to divide our army into two. If equally matched, we can offer battle, if slightly inferior in numbers, we can avoid the enemy, if quite unequal in every way, we can flee from him. Though an obstinate fight may be made by a small force, in the end it must end it must be captured by the larger force.
FIVE ESSENTIALS FOR VICTORY. (1) He will win who knows when to fight and when not to fight. (2) He will win who knows how to handle both superior and inferior forces. (3) He will win whose army is animated by the same spirit throughout all its ranks. (4) He will win who prepared himself, waits to take the enemy unprepared. (5) He will win who has military capacity and is not interfered with by the sovereign.
TACTICS. A clever fighter wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated. Hence the skilful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy....more
Philip Tetlock has tested a large population’s forecasting ability through tests performed over a long period of time. The results show that about 2% is what he calls “Superforecasters” (SF) – these people have a real, measurable ability to assess how high-stakes events are likely to develop three months, six months, a year and a half and a half ahead. Foresight is a product of a way of thinking, gathering information and updating perceptions. This habit can be learned and developed. You can test yourself: www.goodjudgement.com
INTELLIGENT, BUT NOT GENIUSES. The population that took the test had a higher score on intelligence and knowledge tests than 70% of the total population. The SF’s had higher than 80% of the population, well above average, but most of them well below the so-called “ingenious territory” (often arbitrarily defined as the best 1%, or IQ of +135).
THINK PROBABILISTICALLY. The best forecasters, according to Philip Tetlock, are good at numbers but rarely use mathematical models or formulas. They think in terms of probability. They know that the difference between the good and the amateurs is that the former know the difference between a 60/40 bet and a 40/60 bet (in poker, investing and management).
PROBABILITY IS AN INTUITION THAT REQUIRES EXPERTISE. Bridge players can develop well-calibrated judgment, but research shows that what is calibrated in one context is rarely transferred well to another. To get better at a certain type of forecast, that specific one should be repeated with good feedback.
DEFECTIVE IMPULSES. System 1 is fast and always running in the background. If you get a question and you immediately know the answer, it comes from system 1. It is designed to jump to conclusions based on some evidence. System 2 is more logical and challenges that answer – is it fact-based? This takes time and energy and sometimes it is not activated. Researchers have come to the conclusion that people who assume that their initial assessment is wrong, and then make another estimate in combination with the first, often improve the accuracy. The same effect applies if there are a few weeks between the first and second estimate.
Beliefs are hypotheses to be tested, not treasures to be guarded.
HAPPINESS IS GIVEN TO THE PREPARED. Randomized controlled trials have shown that mastering the contents of a small booklet can improve your accuracy by about 10%. It shows that “Fortunes favors the prepared mind”. But there is much we do not know. There is a three-stage way to quickly separate what is “knowable” and what is “unknowable”.
1. FERMI-IZE. Physicist Enrico Fermi conducted an experiment with his students, who did not have Google or other aids, if they could guess the number of piano tuners in Chicago. To break down the answer, we need to guess (1) the number of pianos in Chicago, (2) how often the piano is tuned each year, (3) how long it takes to tune a piano and (4) how many hours per year a piano tuner works.
2. BASE RATE – OUTSIDE IN. The base rate is how common something is within a broader class. To answer how likely a family is to have a pet, one must start with how likely an American household is to have a pet.
3. DIRECTED AND PURPOSEFUL INVESTIGATION. The SF’s often use several different analytical tools and seek information from several sources to later synthesize it into a single conclusion.
PERPETUAL UPDATE. A forecast that is updated to reflect the latest available information is likely to be closer to the truth than a forecast that is less based on current data. The Bayesian theorem states that your new belief should depend on your previous beliefs (and all the knowledge that informed about it) multiplied by the “diagnostic value” of the new information.
SUPERFORECASTERS IN A NUTSHELL. A superforecaster is cautious (nothing is certain), humble (reality is infinitely complex) and non-deterministic (there are several potential outcomes). In their abilities and ways of thinking, they tend to be open-minded (perceptions are hypotheses to test), intelligent and knowledgeable (curious) and reflective (introspective and self-critical). They are comfortable with numbers, pragmatic in their methods and analytical. In addition, they are “dragonfly-eyed” (values different views and synthesizes them into their own), probabilistic (many layers of “maybe”), well-thought-out updaters (when facts change, they change their view) and good intuitive psychologists (test thinking for biases).
A goal without prioritization is not a goal, because a clear prioritization is required in order to decide how to spend our time. A good goal also has a well-thought-out purpose such as; “I do x which takes me in the direction of y”. Ask yourself what you need to do to be able to retire when you are 50 years old. This is more effective than aiming to retire when you turn 50. Start at the end and then break everything down into goals and milestones. Spend a lot of time on “The one thing” that can take you to the goal, and think carefully on how you can build the necessary habits to keep the right course in the long run.
“People do not decide their futures, they decide their habits and their habits decide their futures.” – F. M. Alexander
AN INTERVIEW WITH YOUR OLDER SELF. Pretend you are interviewing yourself as an 80-year-old and ask yourself to look back on life. This exercise can help set priorities right. By all means, consider studies on what old people have often regretted with their lives. For example, a study has shown: (1) that they too late realized that happiness was a choice, (2) too often built up too many emotions that became difficult to deal with, (3) spent too much time trying to support themselves so that they did not have time to build a life and (4) wished they dared to live a life true to themselves – not according to the expectations of others.
LOOK AT THE FULL PICTURE. Life is like juggling five balls; work, family, health, friends and integrity. The work ball is made of rubber and the other four are made of glass. If you drop the work ball, it bounces up and you can catch it. If you drop any of the other balls, they will break. The environment is very important for your well-being as health, inspiration, instincts and behaviors are contagious according to many studies.
80/20 PRINCIPLE. 20% of the activities do 80% of the work. 20% of the 20% most important activities are 4%. These 4% make a bigger difference than the other 16%. Once you have found out what your top 4% are, remind yourself each morning. Study others who have entered the same field. And most important of all: dare to close the door to less valuable activities: “I don’t know the key to success, but the key to failure is trying to please everyone”.
THE ONE THING. Successful people build their lives and their schedules around their “one thing”. Focusing on the most important things by definition gives an unbalanced life, but having a “balanced life” is not necessarily normal. For millions of years human life has been about working – it might not be a bad thing.
”The people who achieve extraordinary results don’t achieve them by working more hours. They achieve them by getting more done in the hours they work”. “If disproportionate results come from one activity, then you must give that one activity disproportionate time”
SEINFELD´S CHAIN. What do you need to do in order to do what you want in 5-10 years? Connect today with days ahead, otherwise you will walk without a compass. Seinfeld said that the way to become a good comedian is to write at least one joke every day. To build a habit, he made a cross in the calendar every day when writing a new joke. No day was allowed to pass without a cross, the chain would be unbroken. It takes three months to build a habit before momentum and motivation take over. “Success is actually a short race – a sprint fueled by discipline just long enough for habit to kick in and take over”.
WRITE DOWN GOALS. Studies have shown that those who have written goals had 40% greater chance of reaching them, and those who also sent follow-up to friends had a 77% greater chance of reaching the goals (you are held responsible for your results). Also, do not be afraid to set high goals – if you want to do x, focus on how you can do 2x. If you set high goals, you are in principle guaranteed to achieve at least the first goal.
SET ASIDE 4 HOURS A DAY. Each morning we have a full battery but will use up the willpower during the day. Do not fight against this, but design your days so that you have time for four hours “the one thing” when the energy is high – every day. Preferably try to find a job that overlaps with “the one thing”. If you get 4 hours per working day, it will be about 900 hours per year. If you also get four hours a day in self-study, it will be 1,460 hours. In one year there are almost 2,400 hours in “the one thing” and in four years the 10,000-hour rule is met.
SWIPE FOR MINES. “The art of being wise is the art of knowing what to overlook”. Multitasking is bad for productivity. Studies show that on average we are disturbed every 11 minutes and spend about a third of the working day recovering from distractions. Mute the phone and shut down all web pages....more
Steven Towns is an American value investor who has lived and worked in Japan for over a decade. He has often acted as an “activist” in Japanese listedSteven Towns is an American value investor who has lived and worked in Japan for over a decade. He has often acted as an “activist” in Japanese listed companies and speaks fluent Japanese. He writes the “Uguisu Value Newsletter”, an investor letter focusing on Japanese value stocks in the micro and small cap segment.
THE JAPANESE STOCK MARKET. Japanese listed companies’ short names consist of numbers, unlike letters that are common in Europe and North America. Shares in the same sector start at the same figure. In 2012, 31% of the listed companies were followed by analysts and among the small companies, coverage was even more limited. Japan still uses minimum trading units. As a rule, shares are traded in the hundreds or thousands, depending on the share price.
EDINET IS JAPAN’S EDGAR. EDINET (Electronic Disclosure for investors’ NETwork) is the Japanese stock exchange’s database for filings and is available in both Japanese and English. Of the small companies’ reports, however, almost all are in Japanese.
CHRONICALLY LOW VALUATIONS SINCE THE CRASH OF THE 1990s. For a short period in 1990, the total market capitalization of the Japanese stock market was higher than the previously unthreatened number one, the United States. The total Japanese real estate market was at the top valued four times more than the US real estate market. In 1990, the bubble burst. In 2005, 15 years later, the prices of commercial properties and stock market indices were down 90% and 60% from the top, respectively. In 2019, the index is still down just over 40% since the peak in 1990. In 2012, when the book was written, the median P/B was about half in Japan compared to the western world markets. In 2019, the average P/B ratio on the Japanese stock exchange was 1.1, compared to 1.6 in the UK and 3.3 in the US.
LOW PROFITABILITY. Japanese companies have generally shown low return on equity in recent decades. Towns believes that this is not necessarily due to low profits but rather to inflated balance sheets. Many Japanese companies have an equity ratio of over 60% and excess capital that returns almost nothing. Another reason for the low profitability is that the companies greatly overinvested during the 2000s, which is a result of there being (too) plenty of capital. On average, a Japanese company spends 194% of its profit after tax on depreciation. The corresponding figure for American companies is 60%. The normalized figure for Japan before the financial crisis was 65%.
AN AGING POPULATION. Towns believes that Japan’s demographic problems are overestimated. The EU and China also have aging populations and population pyramids similar to Japan’s. In addition, Japan’s older part of the population is one of the healthiest in the world. Japan spends significantly less of GDP on health expenditure (11%)  than, for example, the United States (17%)  or the EU (10%) . Japan also has the option of admitting immigrants, something that in principle does not happen today.
AN INDEBTED CREDITOR NATION. In Japan, VAT is only 10% , which is low compared to other advanced economies. This gives the state a latent opportunity to increase tax revenues through small VAT increases to meet the costs of an aging population (at the time of writing, VAT was 5%). In addition, Japan is the world’s largest creditor nation. Taxes on corporate profits and labor are, however, relatively high and amounted to 31% and 56% respectively in 2019 (Sweden has 21% and 57%, respectively). As of 2019, the Japanese government debt amounted to 238% of GDP (highest in the world with Greece as second), but the debts are to its own residents and in the yen – so the government can “print money” if the debt burden becomes too heavy.
CHEAP BIG MACS. According to The Economist’s “Big Mac Index”, the Japanese yen is undervalued. A Big Mac cost $3.64 in July 2020, compared to $6.91 in Switzerland and $5.71 in the US. Of the advanced economies, Japan is at the bottom of the list.
A LOT OF CAPITAL ON THE SIDELINE. In 2011, the average Japanese, all in all, was good for about $150k. At the time of writing in 2012, only 4% of this capital was invested in the stock market (in 2018 that figure was 10%), and only 1% in the domestic market. Japanese investors have a preference for foreign markets, which is explained by the fact that their own market has been stagnant for almost 30 years. Should the Japanese regain interest in the domestic market, the potential for multiple expansion is good....more
In 2017, the Ikea Group had sales of just over SEK 350 billion, made a profit of around SEK 30 billion and had almost 150,000 employees. In the same yIn 2017, the Ikea Group had sales of just over SEK 350 billion, made a profit of around SEK 30 billion and had almost 150,000 employees. In the same year, the Group had 400 department stores, most of them wholly owned, in 29 countries. Ingvar Kamprad founded IKEA in 1943 and was active in the company until his death in 2018. Kamprad became 91 years old and spent almost 75 years with the company. In 2017, the magazine Veckans Affärer valued Kamprad’s fortune, then controlled by the Stichting Inga Foundation, at SEK 620 billion ($76bn) and the Ikea founder was listed as number one on the list of Sweden’s billionaires. Despite living in Switzerland for over 30 years, Kamprad always had a place in the Swedish people’s soul.
STARTS IN THE 1940s. Ikea was launched after the Second World War and during a time when many young families, with hope for the future, wanted to build their own homes with new furniture. Inherited furniture belonged to the history. Ikea’s successful growth coincided with the development of the Swedish record years and the “folk home” during the 1950s and 1960s. But the success was not painless. Competitors were outraged by Ikea’s low prices and had suppliers terminate their partnerships with Ikea. This led to Ikea being forced to seek suppliers abroad in the early 1960s and began cooperating with manufacturers in Poland – which in the long run made even lower prices possible.
EMIGRATES IN THE 1970s. After two decades of development, growth and profitability, the Swedish society came to a halt during the first oil crisis in 1973. By then, the corporate tax had crept up to 52% and the dividend tax was around 75%. In addition there was hefty inheritance taxes and wealth taxes. This made it virtually impossible to run individually owned companies in Sweden. Wealthy individuals and business owners who had not taken measures to reduce inheritance tax could lose both their businesses and their wealth. To enable further development of their companies, Tetra Pak’s founders Ruben Rausing emigrated in 1969 (to Great Britain), Kamprad in 1973 (Denmark) and Erling Persson of H&M in 1982 (Great Britain). During the early 1970s, Ikea opened its first department stores outside the Nordic region, and at the end of the decade there were department stores in large parts of Europe as well as Japan, Australia, Canada, the USA, Hong Kong and Singapore.
” Every krona that can be saved must be saved. That also shapes our view of taxes” – Ingvar Kamprad
GROWTH PICKS UP AGAIN. During the period 1986–1998, Ikea’s sales increased by 16% per year, from SEK 10 billion to SEK 60 billion. The first Chinese department store was inaugurated in Shanghai in 1998 and became department store number 137. The wave of globalization that swept across the world during the 1980s, 1990s and early 2000s suited Ikea perfectly. In 2019, Ikea’s most important markets were Germany and the USA, with over 50 department stores in each market.
MISTAKES ARE PART OF THE PROCESS. Making mistakes is the privilege of the energetic – the one who is able to change and correct. Fear of making mistakes is the cradle of bureaucracy and the enemy of all development. One of the reasons why Kamprad often spoke about mistakes was that he knew that he could be punished if he bragged about successes. In addition, he wanted to spread the message that one can learn something from making mistakes. It is a sign of a weak and negative mind to be negative and spend time proving that one was not wrong. The strong are always positive, work forward and are the ones who win in the end.
WATCH OUT FOR BUREAUCRACY. Historical burden, fear and unwillingness to take responsibility are the bureaucracy’s breeding ground. Indecision leads to more statistics as well as more investigations and meetings. Bureaucracy complicates and paralyzes. Excessive planning suppresses your freedom of action and reduces your time for implementation. Instead, let simplicity and common sense characterize your planning.
A NATURAL CRISIS MANAGER. Kamprad has over the years been skilled at crisis management without having PR consultants around him. Once confronted with the facts, he acted quickly and clearly. Kamprad put the cards on the table and apologized. Regarding the “Nazism problem”, that Kamprad as a 17-year-old was a member of the Nazi-sympathizing party “Nysvenska rörelsen”, he stood up for what he did and told straightforwardly that he was young and naive. He also never tried to hide that he drank too much.
DID NOT SWAGGER. In Kamprad’s leadership philosophy, there were two important starting points: humility and the importance of being a good role model. Employees do as the leader does, not as the leader says. Kamprad said “we should not exalt ourselves” and it was forbidden to use the words “The world’s best furniture company”. Kamprad, for his part, thought he had more shortcomings than skills. A strong driving force was that Kamprad wanted to show the world that he could achieve something.
MOST IS STILL UNDONE. A company that considers itself at being at the finish line stagnates quickly and loses its vitality. Kamprad’s motto was “Most things are undone, wonderful future”. Only by constantly asking ourselves how what we do today, can be done better tomorrow, can we move forward. If you are satisfied, the risk is great that you dared too little....more
Enjoyed reading this book, both as an introduction to Lean Production and for a historic view on the auto industry. Read my "brief"/summary on the booEnjoyed reading this book, both as an introduction to Lean Production and for a historic view on the auto industry. Read my "brief"/summary on the book here: https://bit.ly/3bo7TM6...more