Your Why

Understanding what’s happening in any market is a critical skill that will help you make the best financial and personal decisions for yourself. 

• Tracking the housing market will inform you if it’s a good/bad time to buy a house

• Tracking the larger job market will inform you if it’s a good/bad time to pursue a graduate degree

• Tracking the stock market will inform you if it’s a good/bad time to invest

As you track these markets, it is critical to ask why these changes are happening:

• Why is the housing market up right now? In Southern California, it’s relatively high demand, and very little supply. 

• Why does the job market feel tough for MBAs right now? A combination of a pre-pandemic hiring surge, career pivots leading to relative inexperience, and being inflexible on location are driving factors.

• Is the stock market experiencing a bubble? No! Well, it depends on Nvidia…

Right now, we are seeing a market boom due to ideas around how AI will boost productivity and lead to a new “Industrial Revolution.” The conventional wisdom is that AI ecosystem stocks are likely going to grow as the industry does. That’s probably true, but no one can tell the future. 

Understanding the context behind why AI as an ecosystem will take off where other technologies haven’t (block chain, voice technology, etc) is an important skill to refine. Learning the why behind what’s happening will always help you make better decisions. 

Be obsessive about the two following things: 

• Information capture: “Warren Buffett spends about 80% of his typical day reading — scouring newspapers, magazines, annual reports, industry publications, and a broad array of books.”

• Information application: Only after amassing volumes of information does Warren Buffet decide to invest in a stock. 

Learn the why. You’ll still make plenty of wrong calls, but having the most information will only help you in the long run. 

PK