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Decision Making
Stock Market

The Bigger Picture

naitik | July 13-2020 April 4th-2021 | No Comments
HomeDecision Making, Stock Market
You serve a purpose in the life of each person that you stumble upon. We may often not realize it, no one might even acknowledge it. One way to think of this is if it dint serve a purpose we wouldn’t be there and it probably wouldn’t have happened.
 We’re short-sighted because we are wired to be like that, often missing the bigger picture which is difficult at times to see clearly. Parts of the puzzle don’t fit together according to us our mind cannot process it all.
On of the mental models which come to my mind here is complex adaptive systems i.e millions of different moving parts interact with each other (we obviously don’t even know which parts might have caused a certain thing to happen). To avoid shortsightedness we can do two thing either sit and reflect on situations whenever possible and let your system 2 (ref: Thinking fast & slow — Daniel Kahneman)do the work or let things play the way they do because at the end of the day it works out in the best way for you.
Another example here we can take is exams (like CFA exams) its sum total of different subjects that gives you a grade, doing excellent in one subject might help only if you have done good or at-least above average in others. 
The same goes for your investment portfolio where different asset classes interact to give you returns so looking at the whole picture helps you, similarly, a portfolio of stocks will do well if you take care that entire portfolio has quality stocks with minimal downside risks. Most people get what the work for.The underlying point I wanted to highlight is when you will be able to see the bigger picture someday it will all fit together and make sense to you. Until then have some faith.
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