When I was an undergraduate in university, I had to take a couple of free elective modules and I decided to challenge myself and take something radically different and beyond my major of business and finance: Philosophy.
I did a total of 3 electives that include General Philosophy, Philosophy of Religion, and Moral Philosophy, taught by Mr Jason Phan. Under his guidance, I was introduced into an entire new ‘paradigm’, and my fascination with the world and how humans make sense of it grew. It was through that experience that I learnt that everything in this world is interconnected, including all forms of disciplines and knowledge branches that may at first glance seemingly appear vastly different (as quantum mechanics to biology and music theory).
While learning many various things like logical syllogisms, inductive and deductive reasoning as well as the utilisation of thought experiments to stress-test preconceived assumptions and concepts, there was a particular instance that made a deep impression upon me.
In the rigorous readings I chanced upon the eccentric genius, Nobel-prize winning physicist Professor Richard Feynman from Caltech, who is credited for his work on quantum electrodynamics and the Feynman diagrams (pictorial schemes for mathematical expressions governing subatomic particle behaviour).
Feynman was known to be highly original in his ideas, and was an expert in explaining complex concepts to his students and the general public. Many books have been written about the man and his life and his contribution to our understanding of the sciences.
In the book “What Do You Care What Other People Think?“, Feynman recalls a time when he was still in school and playing with his schoolmates one fine day:
“The next Monday, when the fathers were all back at work, we kids were playing in a field. One kid says to me, “See that bird? What kind of bird is that?” I said, “I haven’t the slightest idea what kind of a bird it is.” He says, “It’s a brown-throated thrush. Your father doesn’t teach you anything!”
But it was the opposite. He had already taught me: “See that bird?” he says. “It’s a Spencer’s warbler.” (I knew he didn’t know the real name.) “Well, in Italian, it’s a Chutto Lapittida. In Portuguese, it’s a Bom da Peida. In Chinese, it’s a Chung-long-tah, and in Japanese, it’s a Katano Tekeda. You can know the name of that bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird. You’ll only know about humans in different places, and what they call the bird. So let’s look at the bird and see what it’s doing-that’s what counts.”
(I learned very early the difference between knowing the name of something and knowing something.)”
Wow! Just take a moment to ponder about that for a moment…
Imagine all the things we could discover if we adopt the same form of mentality and inquisitive mindset as Feynman and his dad did while observing Spencer’s Warblers!
His curiosity with how things are and work was part of how he lived his life through and through. In fact, it was recorded that Feynman once came out of his bath tub in the midst of a shower just to take sugar cubes for some ants that were crawling around in his washroom so that he could observe where the ants go and how they work together…
All these reminded me of an article published by Bloomberg last year that touched on the famous, secretive and ultra-successful American quantitative investment firm Renaissance Technologies (Rentec). Founded by mathematician James Simons, Rentec is a team of serial, professional scientists that utilise statistical tools and employ quantitative research in order to make money in the financial markets.
Essentially, they look for inefficiencies in publicly-traded assets or patterns in financial markets that could be exploited, and formulate strategies and models using sophisticated computers to generate investment strategies. These strategies are then coded in-house with proprietary languages…
I was spending some time wondering how one could even begin or get started in obtaining ideas to explore or test, and then I realised that the basic concept could be as simple as Feynman’s example in the passage above (just by mere observation of casual events happening around us). And this is exactly found in the article by Bloomberg:
“At the 2013 conference, (Peter Brown, co-head) referenced an example they once shared with outside Medallion investors: By studying cloud cover data, they found a correlation between sunny days and rising markets from New York to Tokyo. “It turns out that when it’s cloudy in Paris, the French market is less likely to go up than when it’s sunny in Paris,” he said. It wasn’t a big moneymaker, though, because it was true only slightly more than 50 percent of the time. Brown continued: “The point is that, if there were signals that made a lot of sense that were very strong, they would have long ago been traded out. … What we do is look for lots and lots, and we have, I don’t know, like 90 Ph.D.s in math and physics, who just sit there looking for these signals all day long. We have 10,000 processors in there that are constantly grinding away looking for signals.”
Thus, we could list some pointers as a mental takeaway:
- What are some things everyone knows and accept as true but are relatively unexplored and uncovered?
- What are certain things that everyone accepts as false but you think could be true?
- What are some interesting patterns (to you) that are interesting but no one seems interested?
Idea generation is critical for the serious active investor. Adopting an inquisitive and curious approach along with a scientific methodology like Dr Feynman and Rentec could lead you to your next best original idea.
Are there any areas in your life that you could have taken for face value? Like Feynman, put on your scientific caps and let your mind wander and explore what you find interesting! Stay inquisitive!