Manage your anger to steer clear of trouble

Anger is an emotion that is unusual. Under the influence of anger, people are prone to committing violence or to raising their voice. Often, people regret their actions they take when they are angry. A perpetual state of anger can lead to high blood pressure.

Calm yourself down when you get angry. Your body will send you some signals. You make start breathing faster, blushing or get more tensed up. To calm yourself down, you must distract yourself for a few minutes. Rage is expensive.

If you don’t control your behavior when you are in a rage, you should get into fights and quarrels. Many people commit crimes because of the moment of rage. Often these rage moments last only 5 to 10 minutes.

In addition to managing your own temper, it is clear that people will try to pick a fight with you. When that happens you can choose to react or you can calm down and walk away for a while. How you react determines the outcome of the conflict. Learn this – always walk away first.

Stress from anger creates health problems. We won’t address health from diet and exercise in this article. But we can deal with stress from anger. Always handle stress carefully. You can do that by avoiding conflict. Walk away and always give factual inputs. Tell people how you feel when they are in a receptive mode.

Sleeping is a good way to tackle anger. Sleeping calms your mind and body. Having sufficient sleep in the night is crucial to better anger management.

I have been a victim of bad anger management. I brood over matters and definitely don’t always hold back criticism of my own work or my colleagues’ work in my previous role in a Fintech start up. Many believe that “openness” is the way to making progress. Yes it is. But openness and tactfulness must come hand in hand.

Never allow anger to get the better of you. Don’t believe that you can control yourself when you are in a rage. Do not even allow the rage to develop.

Here are some good articles that you can read about anger management

1. How to control your anger. You can control your anger, and you have a responsibility to do so," says clinical psychologist Isabel Clarke, a specialist in anger management.

2. Controlling anger before it controls you. Anger is a completely normal, usually healthy, human emotion. But when it gets out of control and turns destructive, it can lead to problems—problems at work, in your personal relationships, and in the overall quality of your life.

3. Anger Management. Anger is a perfectly normal human emotion and, when dealt with appropriately, can even be considered a healthy emotion.

Lessons on hiring I have learnt from my personal experiences

Forming a great team is crucial. I learnt that bitterly. It is impossible to do things by myself. I’m limited by my personal capacity. Outsourcing stable processes is so important for scaling your project.

I often judge people based on intuition. That’s a huge mistake. Rather than judge people, match people’s skills to job tasks you need. Putting the right skills/talent to the right job instantly increases the performance by multiple folds.

I don’t think there are exceptional talents that excel in everything that they do. I believe that most people are great in a few areas. Some are good at writing and researching, some are good at checking and detecting errors. Some are good at giving ideas whereas some others are great at keeping time and being punctual.

The CV is rather useless in terms of providing great insights on the potential colleague. At best, it tells you a list of jobs he/she worked on. We need to fit different characters to different jobs. If you want to restructure the firm, you need a new leader. The existing leader can never restructure the firm himself – he is embedded in the system. It’s very hard for him to tear apart the relationships he built. It’s much cheaper to change a leader.

I think the first step to hiring is deciding on the firm structure. Do you want a team that is punctual on submissions? Do you prefer a team that is managed strictly on project management tools? I prefer these management methods! The opposite is to get a team less structured – less emphasis on abiding by specific timeline and deliverables. The next step is to hire the right type of characters.

Experience can sometimes be overrated. An intelligent worker will learn from mentorship and from doing and reading. Hiring a cheaper intelligent worker is better than hiring purely for experience in the long term. Because intelligence is hard to detect, sometimes experience adds value.

Interaction with the potential colleague is almost always the best way to assessing them. I would take out intuition from decision making process. I would allow this potential colleague to meet with the existing team. If he is able to interact well with them, that’s a plus. Next, I would ask behavioral questions. Amazon is good with these types of interviews. I have personally been interviewed by Amazon – they ask 5 to 8 behavioral questions. Probe them with other questions when the candidate is sharing his experiences.

Hiring is a 50-50% exercise. Even though you can do your best to assess the colleague, it turns out that 50% of the time you will be wrong. You should react by letting the person go respectfully. In bigger firms, there may be other positions for the person to rotate to. For small teams, it is important to recruit slow and let off misfits fast.

Applying Kanban on personal work and life

The Kanban method has greatly improved my productivity

Kanban is a very famous framework which is used by software teams that practice agile software development. Kanban methodology is more than 50 years old.

In the late 1940s Kanban was developed by Toyota Production System (TPS) to streamline production. The company began optimizing its engineering processes in the same way as the supermarkets were using to stock their shelves. Supermarkets stock products which are enough in order to meet consumer demand, which advances the flow between the supermarket and the consumer. As inventory levels match consumption patterns, the supermarket gains significant efficiency in inventory management by decreasing the amount of excess stock it must hold at any given team. At the same time, the supermarket is able to ensure that a specific product that a customer may need is at stock at any given time.

Toyota used the same system to the floors of its factory, aiming to improve the huge inventory levels with the actual consumption of materials. In order to be able to know capacity levels in real-time on the factory floor (as well as to the suppliers), workers would pass a card, or "kanban", between teams. For example, when some materials that were being used on the production line finished, a “kanban” was forwarded to the warehouse of the company, which included the necessary material, the amount needed etc. Then the warehouse would have new materials, they would send them to the factory floor, and after that they would send their “kanban” to the supplier. The supplier would also have the specific material available, so as it can be sent over to the warehouse. The signaling technology of this process has been improved since then, but the "just in time" (JIT) manufacturing process still exists.

The system worked extremely well, allowing Toyota to reduce production costs while maintaining a high level of quality. Later, Kanban became a staple at all business schools.

We can apply Kanban principles on personal life

First, you need to visualize all your projects and processes on a board. You can do it electronically or on a physical board. I recommend using a PM tool like Asana or Trello. This helps you simultaneously monitor everything you need to do and easily ascertain your next task. Instead of juggling several tasks, you are now clear on the next bottleneck. This is similar to Scrum Sprint development theory.

Second, you need to keep your WIP to a minimum. Don’t put too many things in WIP. It will stress you up. The whole point of Kanban is to increase productivity by tackling what is necessary, one thing at a point of time.

Keep 3 categories of tasks:

1. WIP (Doing it),

2. KIV (Wait to do),

3. Done. Visualize how each task move from one category to another.

Limit your to do list to only things that are important

Decide aggressively which tasks should be in KIV for whatever reasons and focus on moving WIP to done. Drop, delegate and dismiss things that are not important.

Kanban helps you by tracking your activities and mastering your time. Kanban is always giving you feedback about your decisions and work, you’ll know well in advance if something needs changing.

Loss aversion can impact your retirement planning

A big number of investors deal with deep fear of risk and little loss tolerance

Investors tend to become too emotional. Emotions affect investments badly. Assume stock price moved down by 2% in a day. The drop of 2% might cause anxiety in investors who have disproportionate fear of losses. They might suffer from sleeplessness or simply sell the stock in the same day regardless of their intended portfolio time horizon.

Behavioural finance involves considering investors’ long-term preferences for risk and return. Investors may be affected by emotional responses and behavioural distortions. Someone who is highly risk averse can consider forgoing a bit percentage of market returns to buy insurance. For example, he can own a portfolio of 60% bonds and 40% equities just to make sure his portfolio is not as volatile as others who could be holding onto 70% equities. Of course, the investor who holds lesser equities will quite likely have lesser portfolio value in the long term (20 to 30 years).

The industry’s traditional approach has essentially been to deliver “optimal” portfolios which are built on taking for granted that the investor will be constantly and totally rational. This approach imposes a huge emotional and practical obstacle on investors. They are required to tolerate the ups and downs of the investing cycle and see through the longer term horizon. Some investors simply cannot put up with that.

By ignoring the significant role of emotions during the investment journey, investors turn out to be uncomfortable with traditional portfolio solutions 

This can lead to poor decision making and lower performance. When investors strive for rational perfection in their portfolios, they become more likely to make emotionally driven decisions.

They may pay too much attention to the short term, forgetting the longer term horizon.

Investors may overreact to market movements in the short term

Investors may invest in “familiar” assets, firms in their region. They feel safer holding shares of companies that they are familiar with and believe they can manage these risks better.

They may buy when everything is bullish. Emotionally, they feel comfortable following the herd. 

They may also sell when everyone is bearish, in times of extreme fear.

Some risk adverse investors may hold their money in cash, incurring high opportunity costs.

On average, all these behaviours drag down our long-term returns.

By simply taking less risk you can buy easily and naturally emotional insurance, but at what cost? 

However this also reduces long-term returns, often in a dramatic way. When they get to choose many will prefer not to invest at all, rather than investing on a mathematically perfect portfolio, just because the first choice makes them feel more comfortable. They leave their wealth sitting in cash.

An investor with large amounts of wealth in cash is, in fact, purchasing emotional comfort at a very high premium. By not investing, a moderate-risk investor in a globally diversified portfolio is missing out on long-term annualised returns above what you’d get from holding cash (averaged over many years) of about 4–5% per year—a huge amount to forgo because investing feels too uncomfortable!

Unlike the traditional industry, I don’t believe this purchase of emotional comfort is irrational. Emotional comfort is important and necessary, but it’s very expensive. Although there are occasions of people who may need more emotional comfort compared to others, what is clear is that no one has to pay 5% of their wealth every year to get a little rest.

Invest in low-cost passive funds to ensure emotional comfort and wealth

For all those reasons described above people should invest on cost-effective passive funds, that can provide them both with emotional comfort and wealth at the same time. The links below illustrate the reasons why somebody should invest in passive funds and how he/she can do it efficiently:

1. Passive funds are a better choice than active funds, since more than 84% of U.S. active funds underperformed the S&P 500 over the year. From a long-term view, over the past ten years, more than 98% of active funds failed to beat their benchmarks.

2. Investing like an idiot, but earning like a Pro. Investing in low fees index funds is the only way to retire in peace. After years of research it has been reported that low fees are "the most proven predictor of future fund returns". In other words, the cheaper the costs, the better the fund is likely to perform and the more money you're likely to make.

3. Stop getting cheated - Trading Courses. Passively managed funds have the lowest costs and now, the highest returns over time.

Useful rules for getting the most out of reading

Reading is the fastest way to soak in knowledge and others’ life experiences. Imagine a billionaire who has achieved almost everything. He puts away his business concerns to read a book, hoping to tell his stories, successes and failures. Would you not read it? It takes 1 week to absorb the wisdom he shared in the book. Then there are scientists and economists who publish their findings and applications in different sectors of lives. Should you not right them?

Here are a few rules you can follow to help you maximize the benefits of reading:

1 Curate your sources of reading. Most sources are rubbish. Scan their headlines. That’s sufficient. Don’t spend your time reading CNBC, CNN or even BBC most of the time. Go straight to deeper commentaries on FT, Economist or sector specific journals. Read a lot from top writers on Medium. You will be surprised how many CEOs and successful business people blog on Medium.

2 Use social media for news breakouts, not for learning. Twitter will teach you close to nothing. But Twitter will be the fastest channel to tell you the latest news. I think Facebook is relatively useless. Why would you want to know what happened to your friends? I like Quora. It’s the best way to waste away your time. At least you learn something new/exotic from another part of the world.

3 Books are the most curate form of reading. Read a lot of book reviews. Don’t read to enjoy the writing style. Read to learn. Book reviews will tell you the main points of the book (80%) in under 5% of the time to read the entire book. I read at least 5 book reviews on Blinkist a week. For those titles that seem to deserve a little more time (like Think Fast and Slow), I read the entire book.

4 Journals are also great. I read CFA journals. That’s why I keep up with financial news. CNBC tells me too much for nothing. I used to like Readers’ Digest. But it is now a horrible service apart from the jokes.

In summary, read books, read journals. Record your learnings on Evernote. Reread what you have learnt. And have an amazing life.