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international investment philosophy

International Investments: Thinking Thin
By Gary Scott

international investment philosophy

The best-selling book, “Blink” is a worthwhile read because it offers an important idea on how to think, learn and process information. The author, Malcolm Gladwell, unveils an innovative thought procedure he calls, Thin Slicing. This information can help you invest and do business faster and more accurately. Thin slicing is the ability to make fast decisions based on small amounts of the most important information on any subject.

Blink points out that in the Information Era too much information can be bad. Our greatest intelligence can be overwhelmed by data. We make mistakes when we ignore our first thoughts and hunches. Excessive thinking reduces success.

The book begins by showing how the Getty Museum was offered a Kourous statue of unbelievable quality for nearly $10 million. The museum was suspicious and hired experts who ran every extensive test imaginable for 14 months before finally deciding that this statue was real. They bought the Kourous but upon revealing it to an art expert, the first thought that popped into her mind was the word “fresh”. Upon this and several other art experts’ first impressions the statue was reexamined and found it to be a fake!

Thin Slicing is the process of relying on our accurate first impressions  similar to the one these art experts had. This is not instinct and is not intuition. This is a focus on finding the priority data about any one  situation that really counts and then forming conclusions from that data. Thin slicing ignores huge amounts of information that may seem important but often may be just noise and static that doesn’t matter.

Blink shows that this ability to spot patterns and behavior based on very narrow slices of experience is often unconscious. We can come to highly accurate conclusions in very brief amounts of time, but can then mess up the right answer if we try to think through why we made the decision.

However the books shows that through observation we can learn that patterns our unconscious sees and use the knowledge to greatly improve the accuracy (and speed) of our decision making process.

For example, the book shows how an insurance company that offers  medical malpractice has learned to ignore exhaustive, expensive examinations of doctor training, credentials and history of medical errors. Instead the firm’s staff just listens to very brief snippets of conversation between a doctor and his or her patients. The company has learned that a doctor’s skill and the number of errors he might make has little to do with litigation. How a doctor treats his patients is what determines whether there are lawsuits or not.

This insurance company has “thin sliced” its information processing. The company focuses on personality and social skills rather than on medicine and has identified a few common traits that make the difference between doctors who get sued and those who do not. The safe doctors for example spend three and a half minutes more per session with their patients (18.5 minutes versus 15 for doctors who were sued). They let their patients know what they are doing and why, engage in active listening and put more humor and  laughter into their exams. The quality of data given by the sued and not sued doctors is the same. The difference is simply in how the data is delivered!

In another instance a marriage psychologist is able to predict with 90% accuracy whether a couple will remain married over the next 15 years after reviewing a 15 minute video of the couple talking. If he reviews an hour- long conversation his accuracy rises to 95%. He does not need to look at their history, hear their problems, analyze, or even talk with the couple. He has created a coding system for their emotions and reactions in the conversation (disgust, contempt, anger, defensiveness, stonewalling, etc.) and he assigns a code to every second of the conversation.

Findings have shown that almost anyone can be trained to be highly accurate in predicting whether a marriage will succeed or not after observing just three minutes of conversation.

What does this have to do with investing? Blink is important because when it comes to investing there is always way to much date of which most is useless.

There are so many variables that can affect the value of a piece of land, bond or share, that the best we can do is collect lots of data about the past and then plunge ahead with hope and a prayer that the future will be the same. (And of course, it never is!)

A very few investors consistently do better than most.

Yet when these best investors try to describe how or why they are better, they cannot accurately do so.

Blink quotes the son of George Soros for example who said: “My father will sit down and give you theories to explain why he does this or that but I remember seeing it as a kid and thinking at least half of that is bull. I mean you know the reason he changes his position on the market or whatever is because his back starts killing him.”

We know more than we know we know. All we have to do is learn how to identify this knowledge and then systematically tap into it. Learning this process saves huge amounts of time, drastically enhances accuracy and brings us great power.

A common denominator of good investors is that they focus on fewer concepts and less data rather than more.

For example Warren Buffet, one of the world's great investors, says his core investing points are:

1. Do what you like.

2. Money isn't everything.

3. Work only with people you like.

4. Buy businesses, not stocks.

5. Invest only in what you understand.

6. Don't over diversify.

7. Keep looking for new opportunities.

8. Buy businesses you plan to keep for life.

9. Look for businesses that are available at a good price.

I recall watching an interview between Buffet and John Templeton. They argued over whether to invest internationally or not. Buffet said there is plenty of opportunity right here in the U.S. John said there is even more opportunity if you choose the world. I pondered this for many years and finally realized both were right. Each had their own unique system of filtering the bad from the good each system worked.

Top investment analyst Michael Keppler has used Thin Slicing to be one of the best equity analysts in the world.

Keppler rates equity markets based on value. His experience in this field allows him to decide whether a market is a buy, sell or neutral candidate based on just a very few factors, mainly p/e ratios, price to cash flow and dividend yields relative to that market’s history. There is a bit more to Keppler’s system, but not a lot.

Michael has spoken at a number of our courses and it is fascinating to see him field questions, because he has such absolute focus on value. If there are questions about politics, he’ll say something like, the market reflects the politics in its value. If asked about the strength of the underlying currency, he’ll say something like the market reflects the currency position in its value. If asked about support and resistance levels or current moving averages, he’ll say something like, the market reflects all these things in its value.

Value is his focus and this allows him to make accurate decisions in the shortest time from a minimal amount of fact. He is able to filter out the news, the weather, the politics, the currency, the economies, the wars, the terrorism and all the noise that can confuse, waste time and mislead.

The proof of the pudding is in the eating. Since 1993 Keppler’s Major Market High Value Strategy has risen 211.8% compared to a 137.1% rise in the bellweather Morgan Stanley Capital Index. In addition his standard deviation (4.5%) is also lower than the MSCI (4.8). You can see more about Keppler and his strategies.

When looking at your investment decision system, instead of figuring out how to process more information, perhaps it makes sense to look at ways to calculate with less!

Where do you start weeding data out? Look first for things, knowledge and experience that you know and believe in. This is the keeper information. Use the “as above so below” theory to apply your core beliefs to a broad range of circumstances. Take Buffet’s “work only with people you like” suggestion as an example. If you know you can’t work with people you don’t respect, you can weed out many potential investments right away. If this is a maxim, in one short stroke you can eliminate many deals without worrying about their profit potential, their honesty, their economic and social good, their market position, their moving averages, their cash flow and so forth.

Cut out data that you know little of. You won’t have much confidence in this aspect of your decision anyway so why waste time considering it? Ignore details that are short term and that can change at a moments notice.

When it comes to thinking it appears that less really is more. Yet just keeping information out of the system is not the only factor that increases our ability to make fast, accurate decisions. If Blink is to be believed, a lot of our most accurate thoughts takes place in ways we cannot even know, at our deeper levels of existence.

I experienced this recently when Merri conducted her first Andean Cooking - Food is Medicine. This was a great course and delegates loved the week and food we shared. My role included doing lots of dishes and this is good. Mindless work allows plenty of thought which leads to lots of deep alpha thinking. The deeper we think, the closer  we get to truth!

So while I was up to my elbows in bubbles and soap suds I was thinking that there is no greater way to success, wealth and better health than by knowing more truth. Thin Slicing, a way to make fast accurate decisions.

According to Gladwell’s book a lot of our effective thinking works at our deepest quantum level, beneath our awareness and logic.

Let's look a minute at our deeper quantum mechanical aspects to understand this better. What are we? What is our brain, our mind and our thoughts?

The traditional Newtonian answer is that we are solid matter run by electrical energy and chemistry. Our brain is specialized electrical chemical matter that can store, recall and process information and our thoughts are this process.

This explanation partially works if we stick to the lighter side of Newtonian physics. However if we look deeper, we see that at some stage, all the chemistry and electricity cannot explain the process well.

We have to go deeper into quantum mechanics.

Our knowledge of quantum physics has been with us for a century but is still largely ignored because this science suggests that at a deeper level of existence the tiny bits of stuff, that are us, start shifting and acting in unpredictable non-scientific ways. Part of the time our deeper aspects act like matter and part of the time acts like energy.

So what is this stuff-energy? The startling reply according to quantum science is that we are simply our intention, or attention or observation.

Consciousness appears to be the root of all being and we are as affected by these tiny movements of awareness as we are by the huge particles that swirl above us in space (the sun starts and planets).

This is where the scientists of processing information and those who are called mystics seem to come together. Prayer, meditation, astrology, yagyas, shamanism, chanting, whirling, mysticism and quantum science are all ways of affecting intention by combining the conscious and unconscious.

"Blink" for example tells the story of Vic Branden, a tennis coach who always knows when a professional player was about to double fault his serve, even before the player hit the ball. This is highly unusual since so few professionals ever double-fault. This ability slowly came as a surprise so he started keeping a record at a professional tournament in Southern California. He correctly predicted sixteen out of seventeen double faults on players who almost never double-fault. Something in the way the players hold themselves, or the way they toss the ball or  the fluidity of their motion triggers something in his unconscious and he just knows. The frustration is that this man does not know how he knows. Gladwell suggests in this book that snap judgements rely on the thinnest of information known at the unconscious level.

His explanation is that our subconscious is the creator and leader of our conscious thought and that we cannot escape the programming we have acquired at our deeper levels of being.

Gladwell also shows how some people and companies have learned to identify at the conscious level what is unconsciously known. For example one insurance company has learned how to spot whether Doctors are likely to be sued for malpractice or not.

Most of the ancient wisdoms have recognized the power of the unconscious, but instead of trying to bring the unconscious into the conscious realm, they develop thought tactics in the opposite direction.

Most ancient philosophies have conjured ways to place conscious intentions into the unconscious, deeper level of being.

For example Hindu beliefs have a concept of deep thought called Yagyas which have been practiced for thousands of years.

They are used in many ways in the modern world. For example Dr. Joe Vitale, President of Hypnotic Marketing, Inc., an Internet marketing firm in Texas is one of the top marketers in the world.

He has written so many books on how to succeed and sell I can’t list them all here. He is the author of the international best-seller, “The Greatest Money-Making Secret in History!”, the best-selling e-book “Hypnotic Writing”, and the best-selling Nightingale-Conant audioprogram, “The Power of Outrageous Marketing”, along with numerous other works.

He has written books for the American Marketing Association and the American Management Association, including The AMA Complete Guide to Small Business Advertising and his clients include small presses to large publishing houses, such as Doubleday Books in New York. He has also helped large companies, from The American Red Cross to Hermann Children's Hospital in Houston.

He has shared two heart-warming stories, one o f a life saved and the second perhaps of an entire new business paradigm born that show how yagyas work.

Five years ago Merri and I donated money to fund the start up of a special vedic organization run by Dr. D.S. Dixit that provides these yagyas.

I would like to share how this small token (without our awareness) affected Dr. Joe Vitale.

Joe is a fiery and inspiring speaker. He has spoken before hundreds of business groups, including the Sales and Marketing Executives, and the first Houston Publishers and Authors Association conference. You read earlier about his publishing and consulting successes.

The point is Joe is very much a man of the modern, Western business world. He is well into the ideals of Western wealth, money and success in materialism.

Yet Joe was going through a transformation and was writing new books about the spiritual aspects of wealth. H e needed hel p in marketing these new books. Since we do not know Joe, we’ll use his exact words from his best selling book (it just outsold the latest Harry Potter at Amazon.com) about how he used the yagya service we originally helped fund.

"Karmic Surgery” by Dr. Joe Vitale

“Dr. Marcus Gitterle is an emergency room physician and anti-aging specialist. We met after he read one of my books, love it and emailed me, saying he lived in the same small town I do. We had lunch and became quick friends.

“One day, he told me about a way to do ‘karmic surgery’. This was new to me and made me aware of a new tool that was almost magical. 

It could help you release any troubling problem, or heal any condition, or achieve any intention, and do it without your doing anything. In fact, others did it for you.

“Marc explained it like this: ‘Just as you have a problem and go into the surgery, the problem is taken out while you are asleep. When you awaken, the problem is no longer there. You might be told to rest more, to drink more fluids, but in essence you are now free of the problem. All you did was agree to let others remove it for you.’

“What Marc is talking about are yagyas, or yagnas. These are known in the East and little known in the West. They are not surgery, but instead a way to have spiritual masters perform rituals on your behalf, with the intent to achieving your intention.

“I know this may sound strange. But yagyas have a long history. A yagya is a religious or spiritual ceremony performed by a Hindu priest in order to alleviate karmic difficulties. Basically, a yagya is the chanting of specific Vedic mantras (sounds) by professionally trained and dedicated Vedic Pandits. This is generally the most preferred method to dissolve a crisis situation or a dangerous, life-threatening one. But you can also use yagyas to get clear so you can have, do, or be whatever you want.

“Rather than continue trying to explain what a yagya is, let me instead give you a testimonial on how one influenced my best friend.

“Saved from Death

“My best friend of two decades was on her death bed a year ago. After being in a near-fatal car accident, having both knees replaced, her back broken, suffering from depression, then becoming suicidal and anorexic due to medication she never should have accepted, she was taken by ambulance to the hospital, where she lay unconscious and dying.

“We had already tried everything. She had gone to healers, doctors, therapists, and psychiatrists. I hired home health care for her. She prayed, meditated, listened to tapes. I asked 500 friends of mine to pray for her and send her healing energy. Nothing was breaking her free. I feared I would lose my best friend of 25 years.

“In desperation, I arranged for a month-long yagya to be done for her. Within two days she woke up in the hospital, sat up, and stood up. The day before, she could not move or even turn over in bed! Now she was ready to go home. The hospital was stunned. The doctors couldn’t explain it. They kept her for further testing and observations.

“She just got better and better. A week later, this same woman who was near dead, was released from the hospital. She is now walking, talking, smiling, driving, and very glad to be alive. I saw her yesterday. I thought I might never see her again. This is a genuine miracle. And that’s the power of a yagya.”

“Publishing Miracle

“Dr. Gitterle does yagyas for himself wife, and son. I have done them several times for myself. Let me give you an example.

“As you know by now, this book you are holding is based on a popular little work I released a few years ago called, Spiritual Marketing. I knew the book contained a powerful five-step process for manifesting your heart's desires, and I knew it from all the people who emailed me every day, telling me their miraculous stories.

“What frustrated me was the fact that the book was basically available only online. I knew that it needed to reach a wider audience. So I set the intention to find a strong publisher, with distribution abilities, and the power to get my book out there into the world.

“To help make that intention happen more quickly, I arranged for a yagya. I went to www.jyotish-yagya.com and asked for a yagya to be done on my behalf. I didn’t know how this would work, or if it would. But I trusted. I took action.

“Within a few weeks, I received an email from the senior editor at Wiley –who is now the publisher of this very book!

“Now stop and think about this. My original book, titled Spiritual Marketing, had been a number one best-seller at Amazon twice. Its success had been written about in the New York Times. The e-book version of the book had been down-loaded an estimated one million times. The e-book had been translated into seven languages.

Thousands of people wrote me about it. The best agent in the country shipped the book to major publishers for two years.

“Yet – nothing!

“Nothing ever happened to bring the book to a global audience until I arranged for a yagya to be performed to help my intention, and to clear me of any inner blocks preventing my goal from manifesting.

“This is karmic surgery. A yagya is a way to clear you of any current blocks – whether those blocks are from this lifetime or another – so you can go on to attract whatever you want. Talk about effortless healing!"

Merri and I have used yagyas for many years. We use several vedic astrolgers and I wrote about this long ago.

I wrote how yagyas helped our daughter Ele

I wrote how yagyas helped me with the IRS

Who would have guessed that we would also in some small way participate in helping someone like Joe and perhaps the entire business world?

These are the wild, weird and wonderful ways that allowing our thought process to work at deep levels can enhance our lives.

Prayer is another form of deeper thought that can create altered states of being that reach deeper levels of truth.

William Harris, Ph.D., headed a study at St. Luke's hospital to prove this point. The study was published in the October 25, 1999 issue of the Archives of Internal Medicine.

Harris and team examined the health outcomes of nearly 1,000 newly admitted heart patients at St. Luke's. The patients, who all had serious cardiac conditions, were randomly assigned to two groups. Half received daily prayer for four weeks from five volunteers.

There has been research that looks at how people who are sick are affected by their own spiritual beliefs and practices. Such studies have indicated that people who are religious heal better and deal with illness more effectively than those who are not religious.

However Dr. Harris looked much deeper at prayer to see if strangers praying for sick people without the patient’s knowledge could help the patient.

His study of cardiac patients took place at St. Luke's Hospital in Kansas City, Missouri suggested that intercessory prayer may make such a difference that Dr. Harris wrote. "Prayer may be an effective adjunct to standard medical care."

Harris’s study examined nearly 1,000 heart patients with serious cardiac conditions. They were randomly assigned to either a group that either received a prayer every day for four weeks from five volunteers (who believed in God and in the healing power of prayer) or to a group that received no prayer in conjunction with the study.

The participants were not told they were in the study and the group praying who never came to the hospital were given only the first names of their patients. They prayed "for a speedy recovery with no complications."

The group receiving prayers fared 11 percent better than the group that didn't, a number considered statistically significant. You can read more about this at archives.cnn.com/2000/HEALTH/alternative

We process information in many surprising ways and the next message in this series shows how our bodies can often tell us more than our mind if we know how to listen.

The next report will continue to look at deeper thought. May every thin slice of your life be satisfyingly rich!

Gary Scott

Learn about investing in top value shares, currencies, gold and silver. Join Merri and me at our September 15-16-17, 2006 International Business and Investing Made EZ course in North Carolina. Review where to invest and do business now and learn which markets and currencies may be strong in the year ahead. DETAILS

international investment philosophy
international investment philosophy

 

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