Hi Guys,
With an apology to our own John Wayne, I suspect it is essential for each and everyone of us to have “True Grit”. In the investment community, passion, perseverance, and persistence are dependable characteristics for financial success. It is critical to stay the course.
University of Pennsylvania researchers are developing a wide database that purports to measure Grit from a simple 12-question test that is accessible on their website.
The initial work in this nascent field can be traced to some experiments conducted at Stanford a few decades ago. In these experiments children were seated alone at a table. The test conductor placed a sweet treat on the table and told the very young kids that they could either eat the sweetie now or wait for 15 minutes with a promised doubling of the sweeties. Upon their return, if the child had resisted the immediate attraction, he/she was indeed rewarded for his patience.
Some waited; others did not. The real test was finally completed a dozen years later when these same test subjects were interviewed with regard to their schooling success. Those who resisted the immediate satisfaction of the tempting treats as youngsters recorded far more success in their subsequent schooling accomplishments. The current studies have expanded from this simple beginning.
Here is a Link to an article by Dan Solin titled “Grit is Critical to Your Success”:
http://thebamalliance.com/blog/grit-is-critical-to-your-success-dan-solin/Grit is not a constant. Solin provides a few tips to toughen your grit quotient. Based on our many commentary exchanges, I suspect that MFO members have an abundance of Grit. I challenge you to take the test; it requires just a few minutes of your time. Here is the Link to the quiz:
https://sasupenn.qualtrics.com/SE/?SID=SV_06f6QSOS2pZW9qRThere are no right answers here. But a high Grit score seems to be an attractive attribute that should contribute to an investor’s overarching market performance. That’s especially true given the definition of Grit as formulated by one of its key researchers, Angela Duckworth. Her powerful definition is repeated here for your convenience and inspiration. It was lifted from an interview with Forbes about a year past.
“Grit is passion and perseverance for very long-term goals. Grit is having stamina. Grit is sticking with your future, day in, day out, not just for the week, not just for the month, but for years, and working really hard to make that future a reality. Grit is living life like it’s a marathon, not a sprint.”
This definition directly applies to successful investing.
The brief test that I hope you completed has been given to all sorts of groups over a long timeframe. At West Point, the freshman class is exposed to it. It is a better predictor of future undergraduate overall performance than an IQ test.
Let us know how high on the Grit scale you measured.
I wish you all True Grit.
Best Regards.
Comments
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Thanks very much. Sorry for the off topic post.
Well, I took it, but honestly, hard for me to be objective, since the questions kind of tipped the answer, no?
Like a pitcher tipping his pitches!
In any case, believe there is some truth to the grit factor.
Thanks MJG.
Regards,
Ted
https://www.google.com/search?q=john+wayne+true+grit&biw=1600&bih=731&tbm=isch&imgil=ov9NCsr9LGYIbM%3A%3Bhttps%3A%2F%2Fencrypted-tbn1.gstatic.com%2Fimages%3Fq%3Dtbn%3AANd9GcSEIBuajDZjFUXHOLNqWDIOKZpHICVk2zOdQO7ucMdFtyqRTHFA%3B460%3B276%3BZjdpiuyvxiIkMM%3Bhttp%253A%252F%252Fwww.theguardian.com%252Ffilm%252F2009%252Fmar%252F23%252Fcoen-brothers-plan-true-grit-remake&source=iu&usg=__P4poE7ZAzejU7fUJ60hEGwIUyeo=&sa=X&ei=q_s_U_qzAuGlsASi_IGgAw&sqi=2&ved=0CC8Q9QEwAQ#facrc=_&imgdii=_&imgrc=ov9NCsr9LGYIbM%3A;ZjdpiuyvxiIkMM;http%3A%2F%2Fstatic.guim.co.uk%2Fsys-images%2FFilm%2FPix%2Fpictures%2F2009%2F3%2F23%2F1237809061255%2FJohn-Wayne-in-True-Grit-1-001.jpg;http%3A%2F%2Fwww.theguardian.com%2Ffilm%2F2009%2Fmar%2F23%2Fcoen-brothers-plan-true-grit-remake;460;276
Financially speaking, developing and adhering to a basic household budget leaps to mind. I'm of the belief that what we call "investing" flows intrinsically from this and cannot be achieved without that basic budget in place and fully understood.
Enough sermonizing. IBD (Investors Business Daily) ran cute article this past week titled "Sink-Or-Sail Lessons From Seafaring Types Teach Business Buoyancy" Can't get the link to work, but perhaps someone can. The article fits right in here IMHO. Regards
I believe Savings (no matter how small) are a need not a want.
To me, financial "true grit" is developing and sticking to a "goal based budget' that, over a life time, provide finanacial independence, financial opportunities and life style experiences that would not have been possible otherwise.
To me, It starts with Savings being thought of as a need, not a want.
I can hardly believe it, in this day and age, but there are still countries who will not provide birth control unless you are married. I kid you not. I know this first-hand. Just ask our own JohnChisum.
My score ranked, seemingly, around the 20th %ile. I suspect it would have been lower if it weren't for the reason Charles mentioned. But asking questions regarding *if* you have the ability to stick with a task doesn't address *why* you may or may not do so.
I have several learning issues which limit my ability to stick with any one task for extended periods of time. While I score quite high on tests designed to measure ability to manipulate information, testing regarding my immediate processing skills and short term memory rank in the 12th and 4th %iles respectively. In clinical terms I have ADD inattentive type and some form of dyslexia. Physically, I have been told I lack gray matter in my prefrontal cortex. The upshot is that I am highly distractable, forget things easily, and can wander through my day in a daze going from one incomplete task to another repeatedly getting excited for a new task while literally forgetting all about what I was doing not :30 prior. I don't have "grit" as measured by this test.
Yet my non-gritty brain structure also has the ability to conceptualize theory and future results very well. Certain things just make sense. So I am able to set long term investment goals and stick to them because I can conceptualize the framework of the time value of money. While I get slightly upset when things go down, I know that this is a lifelong plan, and that today's results are not my portfolio 35 years from now. If my stocks and funds have bad days, I use my distractability and go find something else to do. It's pretty easy for me. Having most holdings in tax sheltered accounts where I might incur penalties for withdrawl also helps.
My fiancee, I suspect, would score quite highly on the grit test. She's as practical as they come (other than marrying me), but she is not theoretical and does not have an ability to project money's future time value. At least part of that is an over-conservative and anxious attitude towards money learned from her mother (while my grandparents had me charting stocks at 6 or 7, teaching me about ownership in corporations. Like much in life, upbringing is so determinative). She has no intuitive grasp of liquidity, for instance, so wants money in a bank where she can get it immediately, just in case, and doesn't conceive the problems that causes with inflation. She would be entirely incapable of watching a market crash if she knew what she were invested in. So she has agreed to let me handle all retirement and investment accounts. She sends money with each check, I invest it and give her a report every year at Christmas.
Different strokes for different folks and all, but you have to be adaptive to life's complexities. I'm not sure this test completely measures that ability.
Thank you for your many honest and intelligent contributions. Your replies advanced the topic to a higher plateau with the challenges and the examples that you introduced.
I submitted the topic as a sort of fun diversion. In general, I am not a fan of oversimplified self-assessment tests. I usually choose not to participate since I typically doubt their usefulness, and even their validity.
In this instance, I was made aware of the Grit project by my wife. I suspect like most women, she is more prone to enthusiastically partake in such things. She convinced me to also join that parade; more power to all females.
I fully appreciate and agree with your assessments. The Grit question set is transparent, especially if you have a predetermined goal to score high on the Grit scale. Angela Duckworth, a prime mover in the study, recognized that deficiency and hoped that privacy guarantees would ameliorate that shortcoming.
As mentioned in the quiz itself, there are no right or wrong answers. The aim is to identify an individual’s Grit level. At best, filling out a brief questionnaire must be considered an incomplete soft science with all the reservations that such a science fully embodies. Precision can not be one of its strong suits. Grit characterization is definitely an evolving soft science at an early stage in its evolutionary process.
At present, the Grit studies find that high Grit scores correlate with higher scholastic attainment levels and with advancing age. Many exceptions exist. Although never explicitly tested for Grit, Harry Truman and Abe Lincoln among our Presidential cohort surely demonstrated a high Grit quotient without exceptional educational privileges.
Formal education is not a final success determinant. An exceptional IQ is not mandatory either. These are major provisional findings of the present Grit study program.
Until the West Pointers were added to the statistical database, the data had a definite female bias. Originally, and even today, participation is voluntary. Of course, the West Point study somewhat changed that ground rule.
The current Grit study is surely not perfect. The work continues, and presumably improvements will be integrated into the ongoing program. It currently suffers from several shortcomings.
The study leaders recognize these shortfalls. If you have an interest, you might want to view a short video on a Ted Talk segment. Here is the Link:
http://www.ted.com/talks/angela_lee_duckworth_the_key_to_success_grit#
Personally, I firmly believe that Grit can overcome high IQ brilliance once a rather low IQ threshold is penetrated. The patience, perseverance, passion, persistence, and practice that enables an investor to stay the course is an essential element to investment success. Now that’s true Grit that should be most investor’s long horizon goal.
In his hit book “Outlier”, Malcolm Gladwell documents the 10,000 hour expert rule. To become expert-like proficient at any task demanding skill, 10,000 hours of dedicated practice is mandatory. Practice doesn’t necessarily equate to perfection, but it sure does substantially improve the odds for a successful outcome.
But my present comments are gaining too much momentum in the serious dimension. My original objective was to introduce a little fun into the MFO exchanges.
My bottom-line is that I hope you had fun in completing the Grit test and/or in dissecting its utility. Those were the main purposes in my submitting it to the MFO Board. Once again, thanks for your fine thoughts and provocative comments on this subject. I respect all of them.
Best Wishes.
I don't think anyone took it as other than a welcome diversion. We just like to discuss interesting concepts things amongst friends!
There was an op-ed critical of the grit studies and authors in the Washington Post
this morning. It dovetails nicely with what Crash said: washingtonpost.com/opinions/sometimes-its-better-to-quit-than-to-prove-your-grit/2014/04/04/24075a84-b8f8-11e3-96ae-f2c36d2b1245_story.html
There are some other criticisms of the study, primarily that grit seems to come at the expense of creativity and could lead to a stubborn persistence in the face of repeated negative results. I could also certainly see a sort of Charles Murray style misuse of the data.
Happy Sunday.
Usually happens when people try to find a quantifiable approach to success in a non-deterministic domain such as investing, career success, finding relationships, etc.
Typically, they deal with puritanical qualities of patience, persistence, honesty, loyalty, celibacy, etc.
The arguments are usually full of logical fallacies like false dilemma, (see what bad things happen in when you do the extreme opposite of X, so you should do X.), selection bias (see how doing X helped somebody while ignoring cases where it didn't or the opposite did) and they persist because they cater to the confirmation bias of people who aren't doing this not out of choice but rather they don't know of any way to be and this helps them feel good about it.
The scenarios set up to illustrate are also forced. For example, the reality isn't always children being patient rewarded double. It is closer to being told, you can have one chocolate now but if you wait you can have two unless we run out in which case you will not get any.
The lesson depends on the context. If the children are dying of hunger, the smart child is the one that takes the chocolate right away and the dumb one is the one that waits (true grit or greedy?) and lands up with nothing. Or a smart child is the one that bothers to ask how many chocolates are there and how many children are being offered and gets the answer to make the right choice while the dumb child is the one that didn't bother to find out but blindly followed the "patience is a virtue" puritanical thought.
So what works is always known in retrospect but is never a good guide of what to do in nondeterministic circumstances.
We have a similar situation going on here with Ted right now holding on to the Biotechs in True Grit fashion despite the deep losses. Would he be rewarded with respect to people who sold in technicals earlier and bought back when technicals improved? No one can say. If he did well, it will be due to True Grit. If he doesn't, it will be attributed to dumb luck of the other. Confirmation bias typically in situations where both approaches may have worked.
Nothing demonstrates the futility of this more than startups which have drastic failure modes and small chances of succeeding. People try to find all kinds of qualities that would help better the odds. But for every such quality that can be shown in retrospect to have worked (persistence), one can usually find another where the opposite did (flexibility to pivot early and often) and 10 more where it didn't work. Same thing with relationship advice. Should you be a nice guy or a jerk, play hard to get or be open, etc.
Keeps the advice and self help books in business.
I recently read a book titled "Thick and Grow rich! Stickability: the power of Perseverance", which is related to this notion of True Grit. It is an attempt to capitalize on the branding of Napolean Hill long after his death. The worst book I ever read. Picked it up as it promised to illustrate the concepts with contemporary examples of companies and events.
Not only is it a perfect example of cherry picking people or companies to push the power of perseverance, it is badly written with tricks to make it look like a full size book with very little content. For every example there, you can find a counter example where it didn't work for someone else or the opposite worked.
Perseverance is not a bad thing per set but it is not perseverance that makes one successful, but the judgment of when it was applicable with smarts or dumb luck. This judgment, in real life, is neither quantifiable nor amenable to be captured in a pill or book.