Volume 4 Issue 19: Intelligent Investing

Sacrifice of the Haves for the Have-nots

I've been meaning to share this article by Andrew Sheng for a while. It is an interesting read throughout. Here are some parts that Andrew Sheng talks about that ties in to the Western Delusion that any practice that is "un-Western" is not good enough. Here are some interesting excerpts:

In particular, the rise of emerging markets has challenged traditional Western deductive and inductive logic. Deductive inference enables us to predict effects if we know the principles (the rule) and the cause. By inductive reasoning, if we know the cause and effects, we can infer the principles. 

Eastern thinking, by contrast, has been abductive, moving from pragmatism to guessing the next steps. Abductive inference is pragmatic, looking only at outcomes, guessing at the rule, and identifying the cause. 

Like history, social-scientific theory is written by the victors and shaped by the context and challenges of its time. Free-market thinking evolved from Anglo-Saxon theorists (many from Scotland), who migrated and colonized territories, allowing fortunate individuals to assume that there were no limits to consumption. European continental thinking, responding to urbanization and the need for social order, emphasized institutional analysis of political economy. 

Thus, the emergence of neoclassical economics in the nineteenth century was very much influenced by Newtonian and Cartesian physics, moving from qualitative analysis to quantifying human behavior by assuming rational behavior and excluding uncertainty. This “predetermined equilibrium” thinking – reflected in the view that markets always self-correct – led to policy paralysis until the Great Depression, when John Maynard Keynes’s argument for government intervention to address unemployment and output gaps gained traction.

...

New thinking is required to manage these massive and systemic changes, as well as the integration of giants like China and India into the modern world. A change of mindset is needed not just in the West, but also in the East. In 1987, the historian Ray Huang explained it for China: 

“As the world enters the modern era, most countries under internal and external pressure need to reconstruct themselves by substituting the mode of governancerooted in agrarian experience with a new set of rules based on commerce.…This is easier said than done. The renewal process could affect the top and bottom layers, and inevitably it is necessary to recondition the institutional links between them. Comprehensive destruction is often the order; and it may take decades to bring the work to completion.”

Using this macro-historical framework, we can see Japanese deflation, European debt, and even the Arab Spring as phases of systemic changes within complex structures that are interacting with one another in a new, multipolar global system. We are witnessing simultaneous global convergence (the narrowing of income, wealth, and knowledge gaps between countries) and local divergence (widening income, wealth, and knowledge gaps within countries).

...
A new wave of what the economist Joseph Schumpeter famously called “creative destruction” is under way: even as central banks struggle to maintain stability by flooding markets with liquidity, credit to business and households is shrinking. We live in an age of simultaneous fear of inflation and deflation; of unprecedented prosperity amid growing inequality; and of technological advancement and resource depletion. 

Meanwhile, existing political systems promise good jobs, sound governance, a sustainable environment, and social harmony without sacrifice – a paradise of self-interested free riders that can be sustained only by sacrificing the natural environment and the welfare of future generations.

We cannot postpone the pain of adjustment forever by printing money. Sustainability can be achieved only when the haves become willing to sacrifice for the have-nots.

I particularly like that last sentence. This is precisely what economics is all about. Resources are limited (i.e. not infinite). If control over resources (be it monetary or otherwise) is concentrated in the hands of the wealthy and powerful etc., then sustainability cannot be achieved. I am not advocating a completely egalitarian society, but the need for re-balancing can no longer be ignored. Germany has prospered from the formation of the Eurozone, while the periphery rode along its coat tails. Now that the region is in dire need of unity, why can't Germany play its role as a Eurozone member and sacrifice a little for the have-nots? It may seem like an exaggeration, but the health of the global economy depends on it.

Volume 4 Issue 18: Intelligent Investing

Burma's Turn. When Is It Malaysia's Turn?

I kept this article from quite a while back but didn't manage to write anything meaningful about it. Nonetheless, it is a Stiglitz piece, and it would be a shame if I did not share it. Stiglitz talks about Burma (or now known as Myanmar) and its prospects after the leadership change which brought forth a string of rapid reform measures that makes Najib's reform measures look bad. Here is some extract:

Under the leadership of the new president, Thein Sein, the authorities have responded to calls for a political and economic opening. Progress has been made on peace agreements with ethnic-minority insurgents – conflicts rooted in the divide-and-rule strategy of colonialism, which the country’s post-independence rulers maintained for more than six decades. The Nobel laureate Daw Aung San Suu Kyi was not only released from house arrest, but is now campaigning hard for a parliamentary seat in April’s by-elections. 

On the economic front, unprecedented transparency has been introduced into the budgetary process. Expenditures on health care and education have been doubled, albeit from a low base. Licensing restrictions in a number of key areas have been loosened. The government has even committed itself to moving towards unifying its complicated exchange-rate system. 

The spirit of hope in the country is palpable, though some older people, who saw earlier moments of apparent relaxation of authoritarian rule come and go, remain cautious. Perhaps that is why some in the international community are similarly hesitant about easing Myanmar’s isolation. But most Burmese sense that if changes are managed well, the country will have embarked on an irreversible course.

I think the question that is so mind-boggling is, if countries like Myanmar and Senegal can do it, what is stopping Malaysia from implementing meaningful reforms? Are we so short of ideas? You know it is worrying when your Prime Minister has to set up a website to seek ideas on how to improve the country.

Reactions to the BPL on Sunday ala Meme

In the 93rd minute, when it all seemed doomed for Manchester City to not win the BPL. It would seem that we will once again have to hear the boasting and the gloating of all Manchester United fans for another year. But then...

The Star - Malaysia's Best Newspaper?

I am appalled to see the kind of investigative reporting that the reporters at the Star are doing. In this article today, the Star reports that 100,000 people showed their unwavering support for UMNO:

If the reporters at the Star had an ounce of initiative, they would have obtained this picture, which was shown in the Malaysian Insider:

The stadium does not even look like it is half full. And any donkey with the ability to use Google or Wikipedia will be able to find out that the Bukit Jalil stadium has a capacity of 100,000. According to Wikipedia, the seating room is about 87,000. So, with my advanced mathematics skills, I calculated half of 100,000 to be only 50,000. How did the Star come up with the 100,000 number? Who knows... Maybe it saw fit to exaggerate the amount of support for its "masters".

The Malaysian Insider portrays a more accurate picture:

KUALA LUMPUR, May 11 — Datuk Seri Najib Razak rallied Umno tonight to defend the country from being destroyed by the opposition, which he called uncivilised, undemocratic and lacking credibility.

The Umno president told at least 50,000 in the arena and thousands more loitering outside “not to let our children and grandchildren become destitute (terbangsat).”

Why is anyone still reading the Star?

Being An Investment Banker - Part 5

How many times do I have to emphasize the insanity of the job as an investment banker? Let me be clear on this. I have no personal vendetta against investment banking. But does it not make you wonder that if all that soulless money-chasing is worth it? For starters, I think that question is moot. The real question is, is there a way to make money without losing your soul? 

Here is another life story of an ex-Wall Streeter:

When some people think about Wall Street, they conjure up images of traders shouting on the stock exchange, of bankers dining at five star restaurants, of CEOs whispering in the ears of captured Congress members.

When I think about Wall Street, I think about its stunted rainbow of pale pastel shirts. I think about the vaulting, highly secured, and very cold lobbies. And I think about the art passed daily by the harried workers, virtually unseen.

Before I occupied Wall Street, Wall Street occupied me. What started as a summer internship led to a seven-year career. During my time on Wall Street, I changed from a curious college student full of hope for my future, into a cynical, bitter, depressed, and exhausted “knowledge worker” who felt that everyone was out to screw me over. 

The culture of Wall Street is pervasive and contagious. While there are Wall Street employees who are able to ignore it, or block it out, I was not one of them. I drank the Kool Aid. I’m out of it now. But I’d like to tell you what it was like.

When you are wealthy and successful, you have a choice. You can believe your success stems from luck and privilege, or you can believe it stems from hard work. Very few people like to view their success as a matter of luck. And so, perhaps understandably, most people on Wall Street believe they have earned their jobs, and the money that follows. 

While there are many on Wall Street who come from wealthy backgrounds, there are also many people from very humble backgrounds. In my experience, it is often those who do not come from privilege who are the system’s fiercest defenders.

When I was a summer intern, we met with various executives who’d tell us about their careers and pitch us on the firm. The aim was to sell the firm to everyone, even though only a few of us would ultimately be offered full-time positions at the firm. It had an element of redundancy to it, since we were clearly already interested in the firm, or we wouldn’t be there at all. The effect of these talks, then, was to make a competitive situation even more competitive. Welcome to Wall Street. One executive described the firm as a “Golden Springboard.” If we began our careers there, his reasoning went, there wasn’t anywhere we couldn’t go. The executive was right. Background becomes irrelevant once you have “made it” to Wall Street. Once you’ve gotten in the door, you’re one of “us.” 

Once hired, the cultural indoctrination begins in earnest, especially for those recent grads who begin their careers in “analyst training programs.” These programs are exclusively for college and graduate students, are often several months long, and are custom-tailored to the department you’ll ultimately join. The Sales & Trading analyst program is more competitive than, say, the Technology training program. And while most of the training is job-specific, there is also an air of finishing school. A trader friend of mine was instructed not only in the mathematics of the financial markets, but also in wine tasting and golf. You are trained, but also you are groomed. 

The grooming is not all fun and games and country clubs. Most of the message revolves around how hard everyone works, and how hard you are expected to work in turn. Wall Street views its own work ethic as legendary. Sixty-hour weeks are standard. An ex-boss of mine used to brag that for one six-year stretch he never took a sick day or a vacation. The streak ended when he contracted strep throat, refused to go to the doctor, and eventually had to be hospitalized (at least so he claimed).

While not everyone was as manic as my boss (Wall Street has more than its fair share of laziness and incompetence), even those who feel less committed to the job still buy into a concept of “face time.” It’s not right to leave your desk before a certain time. An ex-colleague of mine used to ask anyone who’d pass by his cubicle before 7pm on their way out the door, “Oh, half day today?” 

This dueling masochism/machismo brings with it a tremendous superiority complex. People on Wall Street truly believe they work harder than anyone else. When confronted with the stark reality of, for example, a single mom working two jobs, the response is usually some variant of, “Well, if they’d only worked as hard as I did in school . . .” 

But the key to truly understanding superiority on Wall Street is by looking at how it’s measured: with cold, hard numbers. Numbers can be amplified by honest work, but they can also be amplified by betrayal, manipulation, and cheating. And when everything is a cold cost-benefit analysis, why wouldn’t you break regulations—provided you knew the profits you stood to make would dwarf the fines you would pay should you get caught? 

On Wall Street, the best-paid employees actively seek out their “market value” by interviewing and cultivating job offers at competing firms. Once they’ve secured an offer, they go back to their boss and try to land what’s called a “counter-offer.” If the new firm is offering to pay $300,000, the old firm may counter that offer with $400,000. 

But even in this game of betrayal, a little bit of lying will optimize your results. You can solicit a counter by handing in a resignation letter. But to resign and then accept a counter is to admit you’re a mercenary. This will get you labeled a “high flight risk.” No, playing the game correctly to maximize money means pretending the game is not about money at all. A more strategic route is to explain, “Well, this offer just fell into my lap, I really don’t want to leave, so is there anything you can do to help me out?” 

Of course, manipulation isn’t only for tricking your bosses—it extends to the clients as well. On Wall Street, it is not frowned upon to “rip the faces off” one’s own clients. If the client is dumb enough to get hoodwinked, that means the client didn’t work hard enough. He didn’t do his “due diligence.” In other words, if I screw you, you only have yourself to blame. That is the “zero-sum game” of trading. 

But perhaps the zenith of Wall Street fitness is the unpunished cheat. Around the holiday season, inter-dealer brokers will send gifts to the traders, trying to curry favor with bottles of wine or champagne. Inter-dealer brokers are brokers who allow Wall Street banks to anonymously trade with one another, since the last thing you want to do if you’re Morgan Stanley is let Goldman Sachs know your position, though you may still want to trade with them. But there is a catch to the gift-giving: according toFINRA, Wall Street’s self-regulatory agency, the brokers are only allowed to spend a maximum of $100 per trader. On slow winter days, the traders would Google the bottles of wine, trying to determine which vendors had cheated. Often they would find that, yes, this vendor breached the limit. The response to the cheat was always the same: a smirk, and an approving nod. It’s not about who cheated. It’s about who cheated successfully.

This attitude extends to higher stakes games as well. Take the case SEC v. Citigroup Global Markets, Inc. According to the SEC, in 2007 Citigroup sold their clients a portfolio of assets (mortgage-backed securities, as it happens) that Citi was actively betting against. The SEC therefore charged Citigroup with securities fraud; it’s been reported that the fearsome regulatory agency won’t settle for anything less than a $285 million fine. Looks bad, right? Well, yes, unless you consider that, according to Forbes, Citigroup allegedly made $160 million on this one deal (investors lost $700 million). Citigroup looks like it’s going to lose $125 million! But how many similar deals have gone un-prosecuted? If the answer is one, Citigroup is back in the black; if the answer is, as surely it must be, more than one, then Citigroup is doing very well, thank you. 

This is why paying fines when you are caught breaking the rules is simply deemed “the cost of doing business” on Wall Street.

Poker is extremely popular across Wall Street, and provides an instructive lesson. The book Poker Winners Are Different by industrial psychologist and poker adviser Alan Schoonmaker presents a scenario where a player notices his best friend’s “tell”—that is, the best friend has a habit of showing when he has a good or bad hand. The book then poses the following dilemma: should you (a) tell your friend, (b) win a bit of money from him, and then tell him, or (c) exploit your friend, never telling him. The correct answer: screw your friend. Schoonmaker, who used to do “management development” work at Merrill Lynch, writes that winners will “do whatever the rules and ethics allow to maximize their profits.” This behavior is heralded in poker and it’s heralded on Wall Street. Despite what may be emblazoned on plaques or in mission statements, the ethics of Wall Street are purely about winning at any cost.

If they didn’t know it going in, Wall Street employees quickly learn that even their company is an enemy. To the firm, employees are a cost to be minimized, or a producer to be exploited. You also learn that you must never show gratitude for your bonus. To appear satisfied with your compensation is to admit that they paid you more than they had to, so you must feign outrage no matter what. What happens to a culture that discourages gratitude?

But most people on Wall Street do not feel gratitude anyway. It does not matter that their compensation is enormous compared to the average American—that is not who a Wall Street worker is comparing themselves to. They are looking at the compensation of the top sales person, the top trader, or, at the very top, the CEO.

What this environment did to me is that I began to see everyone as a threat. From that idiot two cubicles down from me, to the moron on the other end of the phone (the client), to—more than anything—the faceless, imagined people on government assistance who I assumed (incorrectly) were what was causing such large percentages to disappear from my paycheck.

Many of the adverse reactions to OWS have been along the lines of, “They’re just jealous.” Of course the Wall Street critics think OWS is about envy. Envy is part and parcel of their daily lives. When you are living in a culture of envy, you see envy everywhere you go. Why wouldn’t you think envy is at the core of our movement, too? 

The envy and hostility of Wall Street leads many to a common goal: to amass enough money so as to enact your revenge. This end goal is called fuck-you money.

At one point in my career, I was being recruited by a hedge fund. During the recruitment process, one of my interviewers frankly described the fund’s founder—his boss’s boss—as a “spoiled brat billionaire.” My interviewer related a story about a meeting between the hedge fund and an executive at a company the fund wanted to work with. At one point, the visiting executive made statements the fund founder didn’t like. The founder turned to the visitor and said, “So, you came here just to try and fuck me over?” The visitor quickly stormed out in a rage. But the founder wasn’t satisfied just yet. He followed the man out of the room, into the elevator, shouted the entire ride down, and then yelled at him in the lobby until he finally left the building. When the founder came back upstairs to greet his shaken employees, he said, invigorated and beaming, “Wasn’t that fun?!”

This is Wall Street’s equivalent of the American Dream: to earn enough money so that you can behave in a way that makes the very existence of other people irrelevant. 

Despite the toxicity I’ve described, Wall Street is not a collection of 1 percenters maniacally laughing at the 99 percent they have crushed under their boot. No, Wall Street is far too self-absorbed to be concerned with the outside world unless it is forced to. But Wall Street is also, on the whole, a very unhappy place. While there is always the whisper that maybe you too can one day earn fuck-you money, at the end of a long day, sometimes all you take with you are your misguided feelings of self-righteousness. 

I am far from the only Wall Street employee ever to feel chewed up by the system, even as I worked to perpetuate it. Another ex-Wall Street employee described feeling like a “hyper-specialized pawn” who “worked all the time with little control” of her life, and “little personal satisfaction at the end of the day.” I, too, felt manipulated, and why shouldn’t I? That was the game, after all. I felt overworked, demotivated, and I was clearly doing nothing to help the world.

I was able to leave once I decided that my happiness was more valuable than money. This is no great revelation to anyone at Occupy, but to someone who lived and breathed the idea that money was everything for seven years, it was not so easy. The true key to getting out was taking off my blinders: meeting others who were outside Wall Street’s bubble. This was a long process that involved a lot of psyching myself up in order to quit. Wall Street is not an easy place to walk away from. But after a year of planning, I finally submitted my resignation. I now teach computer programming at several venues, including Girl Develop It, which is a group that provides low-cost classes to women (men are welcome, too) in an environment that strives to be non-intimidating. 

It is hard to contrast the joy of community I feel at Occupy Wall Street with the isolation I felt on Wall Street. It’s hard because I cannot think of two more disparate cultures. Wall Street believes in, and practices, a culture of scarcity. This breeds hoarding, distrust, and competition. As near as I can tell, Occupy Wall Street believes in plenty. This breeds sharing, trust, and cooperation. On Wall Street, everyone was my competitor. They’d help me only if it helped them. At Occupy Wall Street, I am offered food, warmth, and support, because it’s the right thing to do, and because joy breeds joy.

I was privileged enough to make it in the door on Wall Street, and to get bonuses during my time there. But I never felt as fortunate, or joyful, as I did the night after the eviction of Occupy Wall Street from Liberty Square, when we had our first post-raid General Assembly. When the thousands of supporters who filled the park necessitated three waves of the people’s mic. When our voices together echoed not just down the park, but up into the sky as the buildings caused the sound to ricochet off their glass walls.

And so I say to my friends who still dwell behind the Wall: come join us. The spoils of money can never match the joys of community. When you’re ready, we’ll be here.

What Successful People Do Differently

This is the transcript of an interview that was taken from the Harvard Business Review on what successful people do differently. Granted it is a very long read, but in a grand scheme of things, I would consider this a very small amount of time and effort to invest in your search for success:

SARAH GREEN: Welcome to the HBR IdeaCast from Harvard Business Review. I'm Sarah Green. What makes successful people different? Today we're talking about some of the strategies of people who are great at what they do, with Heidi Grant Halvorson, a motivational psychologist and author of the new ebook Nine Things Successful People Do Differently. That's also the title of a blog post she wrote for hbr.org which has become far and away our most popular blog post of all time. Heidi, it's so great to have you on the program today.

HEIDI GRANT HALVORSON:Thanks, Sarah.

SARAH GREEN: So first I wanted to ask you just about the genesis of this list of the nine habits of successful people, because some people have seven habits, other people have six keys, maybe someone else has five principles. So how did you settle on these nine things, and what are they based on?

HEIDI GRANT HALVORSON: Basically, the idea, for me, came from my background as a research psychologist. I come from sort of an academic background doing research on-- and the questions I was always interested in had to do with-- why some people handle difficulty better than other people do, why some people seem to be able to set goals and reach them, and other people set goals for themselves and end up not quite making it. And the answers to me were very interesting, because they're counter-intuitive. I think, particularly in the United States and in Western countries in general, we talk a lot about, we think a lot about, ability as the main explainer of success-- that if someone is very successful, they're at the top of their game, it's because they have some talent, some genius that we think of as innate, something they were born with. And that turns out to be surprisingly wrong.

Really, success, more than anything else, turns out to be about being able to set goals and reach them because you use the right strategies. And for, I think, a lot of very successful people, they kind of figure that out as they go along almost intuitively, that some kinds of strategies work for them and others don't. But I thought it'd be great to make this knowledge explicit for people and say, look, here are the nine things-- and really that number, nine, just came from me taking a look at several decades worth of research on motivation-- and saying, what are the strategies that really stand out, that we've tested again and again and found them to be the most effective, to have the biggest impact on whether or not people actually reach their goals? So it was sort of saying, what would give you the most bang for your buck?

And it just turned out to be nine. Nine things that we know from really many, many studies really make a difference. And the other thing I liked about these particular strategies that I talk about is that they're pretty straightforward in terms of once you understand what it is you're not doing, and what you need to do differently, it's fairly easy to implement these changes in your life. And really, knowledge is the key. I think for many of us, we just don't understand where we're going wrong. And why, in some areas of our lives, we seem to be very successful. In other areas we have trouble, and we don't quite understand what the difference is. So these are the nine things that really make the biggest difference.

SARAH GREEN: So one of the strategies that successful people employ is focusing on getting better rather than being good. And that's sort of feel-good, but isn't it important to really be good at something to be successful at it?

HEIDI GRANT HALVORSON: Absolutely. You know, I am glad you brought this up, because it's something that I end up talking about a lot with people. Because I really want to emphasize again and again that this is a research-based argument. So there are a lot of people out there, particularly when it comes to motivation, saying things that sound great, the kinds of things you want to hear. Like, just think positive things and everything will work out for you. And then it turns out to not really be true. But this is one of these cases where what sounds good actually turns out to be the most effective kind of mindset you can have. And so I talk about the difference between when you're doing something-- whether you're tackling a new project, or setting a goal for yourself, or taking on some challenging task, thinking about what you're doing in terms of getting better. In other words, it's about progress, rather than doing it perfectly right out of the gate.

And it turns out in many studies we've been able to show that when people think about what they're doing, whether they're taking a very difficult test of some kind, or working on a project over weeks at a time, that when they think about that as something they're going to improve on, that they're going to develop over time, that they might make mistakes along the way. But that's OK because you learn from those mistakes, and over time you'll really come to master this. When that's the mindset you're taking with you when you approach a task, you actually perform better.

The irony is, if you allow yourself to make mistakes you make fewer of them. And that has a lot to do with the fact that when we expect perfection of ourselves, and we expect to do something, regardless of how difficult it is or how new it is to us, when we expect to do it perfectly right out of the gate, we make tons of mistakes. Because we're anxious, and nothing messes up performance quite like anxiety does. So you feel tense, you're worried, you feel like you're being evaluated, and that really disrupts performance. So this attitude of, I'm going to get the hang of it eventually if I keep trying and keep working at it, actually does result in far superior performance. Particularly when things are very difficult and challenging.

SARAH GREEN: So the idea of steady improvement is so ingrained into your whole approach that some of the things you argue we can improve actually were things I always thought were innate. One of these, for instance, is having grit. That's also on your list as one of the strategies that people use. How can we actually go about making ourselves grittier?

HEIDI GRANT HALVORSON: Grittier, yeah. You actually run into the same argument about the getting better mindset, that people say, well, if I don't think that way, how can I become somebody who thinks that way? And the truth is that all of these things are very malleable. So even the mindset that you approach a task with is something that you can change over time. So the more you keep telling yourself, I'm going to think about this in terms of growth, I'm going to think about this in terms of improvement, then that becomes the new habit over time. And it's the same thing with grit. We tend to think about grittiness, which is basically persistence in pursuit of long term goals, being able to bear down and hang in there when the going gets tough, and not give up on yourself. So grit, it's tempting to think that is something that is kind of innate, that some people are gritty and others aren't. And that again turns out to not be the case.

Grit is something that is learned. And we find that grittiness really comes from, in many ways, your underlying beliefs about the nature of ability. So if you believe that you can get smarter, you can become more creative, you can become a better leader, you can become more socially skilled, you can become a better communicator, if you believe that human abilities are things that grow with effort and experience, it kind of makes you naturally gritty. Because when things become difficult you say, all right, this is really an opportunity for me to develop this skill. And if I just hang in there eventually I can master this. We find that the people who lack grit tend to be those who believe that abilities are fixed, that you sort of either win the DNA lottery or you don't. And you are born smart, or you're born creative, or you're born a good leader or you're not. And so when they encounter difficulty and things are challenging to them, that don't come easily, they are very quick to conclude, well, I guess I'm just not good at this. I guess I lack this ability. And so they give up. So grit really is just fundamentally about hanging in there. And that turns out to be really more than anything else a function of whether or not you believe you can improve.

Now if you're somebody who in the past has tended to think of your abilities as sort of fixed, and tended to say, oh, I'm just not good at this and given up on yourself, then what I encourage you to do is read the book, or read some other things that people, not just myself, but other people in psychology have written about. Abilities, as it turns out, abilities don't work that way at all. We have now decades of research showing that intelligence is profoundly malleable. It grows absolutely with experience and with effort, that creativity is something that also can be developed. Self-control can be developed, and that's another thing I talk about.

One of the nine things is working on your self-control muscle, that idea that willpower is not something that's innate. It can be developed. Leadership skills can be developed. Social skills can be developed. There are no skills, there are no human abilities that cannot be developed. So once you embrace that and realize you've been, maybe without realizing it, believing some things that weren't true about your own ability it becomes much easier to really become a gritty person.

SARAH GREEN: I'm glad you mentioned the idea of strengthening your willpower muscle. The way you talk about that is kind of surprising. This idea that as you're working towards getting better at something like improving your willpower you may actually temporarily exhaust your so-called muscle on willpower. How do you work towards getting better at something in a way, like on willpower, that makes it so that you keep moving forward instead of that suddenly you just crack and dive into the box of doughnuts or whatever?

HEIDI GRANT HALVORSON: Well, I think many of the strategies that I talk about are related to each other. I think again, with willpower you need to take the long view, that this is something you're going to develop over time. We have really several problems when it comes to willpower. One is that we don't understand how it works. Again, this willpower turns out to be one of these things people often assume you either have or you don't. You see the people, the very skinny vegetarians who are non-smokers, and you say, oh, that person was born with a lot of willpower. And again that's really not how it works. Nobody is born with a lot of willpower. It's developed over time like a muscle. So the first thing we need to do is realize anybody can get more willpower if you feel you don't have enough.

But at the same time willpower is always going to be limited because that's another way in which it's like a muscle. You can, just like your biceps or triceps, you can work them out and you can get them stronger. And you can develop huge biceps and triceps. But it's still always going to be true that after a really long, hard workout those muscles are going to be tired, and they're going to kind of feel like jelly. And so your willpower is like that. You can develop it, you can absolutely get more of it. And there are exercises, literally, you can do that I talk about, ways you can train yourself to have more willpower.

But I think at the same time you need to be thinking about your day, thinking about your life, the goals you're pursuing, the times of day where you're most likely to have low willpower because you've used it up. So for many of us that's immediately after work. You spend all day putting out fires, and dealing with stressors, and your willpower's going to be at its lowest. It needs a little bit of time to rebound. So that's going to be a time you're very susceptible to temptation.

And then we need to make plans, which is another thing I talk about among the nine things, plan how you're going to deal with that low willpower. So rather than just saying, oh well, I'll just resist temptation, don't put yourself in harm's way. Instead, come up with an alternative. Something you can do that's going to keep you out of harm's way when temptation abounds and your willpower's low. So it's about building the muscle while still being smart about how it works, and protecting yourself really, when you need to.

SARAH GREEN: So in the blog post, and then at greater length with more detail on exercises in the ebook, you talk about these nine strategies as positive ways to move forward and improve and move toward success in achieving your goals. Are there things though that are counterproductive that you see people doing, kind of shooting themselves in the foot, strategies we should avoid?

HEIDI GRANT HALVORSON: Absolutely. There are a bunch, and unfortunately there are a lot of people kind of advocating for these strategies, and I think with good intentions, because they seem like they should work. One of the things that you hear a lot about among people in the self-help literature, and then in the business world too, is this importance of a positive outlook, that optimism is so important, and that positive thinking will get you everywhere, that if you just sort of visualize the success that you want it will manifest itself. And that would be great if that were true. I mean really, I would absolutely love it if that were true.

But it turns out that not only is it not true in the sense that there is absolutely no evidence that if you visualize yourself in a successful position that that will just somehow materialize, it'll just happen. In fact, actually there's now good evidence that that kind of thinking actually sabotages your success. So in other words, when people are only positive in their thinking-- they're sort of wild-eyed optimists, they're unrealistic optimists, they just focus on the positive and they don't think at all, don't allow themselves to think about the obstacles that need to be overcome in order to make that dream a reality-- that actually they're less likely to succeed. And it has everything to do with this idea that, the way I talk about it, is sort of that visualizing success is bad. The idea is really you need to visualize the steps you need to take to make success happen.

So I still think of my message as sort of optimistic, in the sense that what I'm telling people is they really can be more successful then they are currently if they apply these strategies. But that said, it involves thinking seriously about what your obstacles are, what kind of problems might derail you and figuring out how you're going to deal with those problems. That's how you make success happen. Some people call that negative thinking, thinking about obstacles, thinking about what could go wrong, coming up with a Plan B. That kind of thinking gets, I think, a bad rap. But really it's a very critical part of being successful. Really successful people are what I call realistic optimists. They believe they can succeed, which is very important. But they believe that they're going to have to make that happen by thinking very realistically about the problems that lie in their way. So that's, I think, one example of the kind of strategy that's out there, this sort of relentless positive thinking that really sabotages people.

And related to that is, I think, this idea that we think a little bit too much about when it comes-- especially to trying to change our behavior. So to, say, stop flying off the handle and losing your temper when people, your colleagues, irritate you, or if you want to stop smoking or stop snacking. We think a lot about what we're not going to do. And we really focus on that. So I'm not going to smoke, I'm not going to lose my temper, I'm not going to eat the doughnuts in the conference room. And what we really need to be doing-- again, there's been recently quite a bit of research showing that this focusing on not doing things actually ends up being very counterproductive. And it has to do with, I think, a lot of people may be familiar with this idea, of thought suppression, that don't think about white bears idea, that when you tell yourself don't think about white bears, suddenly all you can think about is white bears. So there's this ironic rebounding that happens when you try to suppress a thought, that it kind of comes back into your mind. And it turns out the same thing happens with behavior. So if you say I'm not going to lose my temper, I'm not going to eat these doughnuts, then suddenly all you want to do is lose your temper and eat doughnuts. And it turns out that people who make those kinds of resolutions end up doing more of the thing that they promised themselves they wouldn't do.

So the key becomes, actually, instead of saying what you won't do, say what you will do instead. So instead of saying I won't lose my temper, say OK, well, the next time my colleague irritates me I'm going to step aside and take three deep breathes and remind myself that it's not worth getting angry over. Or instead of having a cigarette, I'm going to chew some gum. Or instead of having a doughnut I'm going to go make myself a cup of tea. So it's the what you will do instead part that turns out to be very powerful.

Our brains like to have an action plan. And they don't like plans that are in the form of I won't do x. They want to know what you will do, and those plans turn out to be very effective. So the strategies that are effective often turn out to be just sort of subtle changes to things we're already doing. Planning is great, and we all know planning is great, but you need to plan in the right way. Being optimistic is great. Thinking about believing in yourself is great. But you have to engage in positive thinking in the right way. And so for many of the things that I talk about in the Nine Things, it's really saying look, there's more than one way to plan. There's more than one way to be positive. There's more than one way to think about willpower. Here's the ways to do these things that are really going to pay off, that are really going to lead to greater success.

SARAH GREEN: Heidi, thanks again so much for talking with us today.

HEIDI GRANT HALVORSON: Thank you so much, Sarah.

SARAH GREEN: That was Heidi Grant Halvorson. Her new ebook, Nine Things Successful People Do Differently, is available wherever digital books are sold. For more, visit hbr.org

Volume 4 Issue 17: Intelligent Investing

How To Be A Remarkable Employee?

For many of us that are just transitioning from college to working adult life, we would probably, for the first time, encounter our quarter-life crisis. For quite possibly our whole lives, we were told to study hard, get a good job and you will make a lot of money.

What many of us don't realize is that in the first three years of working, none of what was promised to us is true. You studied your butts off, and you got a good job but where is the money? Some of us even believe that as long as we did the above-mentioned things, we would be entitled to a high-paying job.

Before long, reality will soon smack you in the face. Getting a good job is not an end itself. It does not lead to a high paying job. You will soon realize that if you want to earn a high pay, you would have to work hard for it as well. After a while, you would realize that you are stuck in this rat race:

How many times have you asked yourself that question, or some other similar version of it? Waking up at 7.30 a.m. to go to work and returning past dinnertime every weekday just to keep your family fed. As Monday begins, you look forward to Friday, AGAIN. Some of you even dread Sundays because tomorrow is Monday. Weekends are a whole lot of fun because you get to watch TV, hang out with friends, or do whatever it is that you do. To make things worse, after all that, when you receive your paycheck at the end of the month, you feel only two seconds of joy as it dawns upon you that you have to pay your rent, your bills (electricity, telephone, internet, handphone and god knows what else), your wife (for her to buy groceries and necessities for your family because she quit her job to take care of your children; you refused to hire a maid because you want the best environment for your children) and the list goes on. By the time you subtract all these expenses, you are afraid to even look at the balance that remains. Maybe that’s why you don’t keep account of your expenditure. Does the above sound like you? Granted, most of my readers have not had a family yet but I hope the story is something you can relate to.

Subsequently, you begin to think that your job is not for you, simply because you do not find any job satisfaction in it. We often complain about our jobs and how we are not being appreciated for doing something that was not within our job scope in the first place. You look for an occupation change in search of a higher pay, better benefits and less working hours. Soon after, you will realize that the cycle has continued. For the few of you who are lucky enough to have found an occupation you love, you excel at it. But more often than not, we are not so lucky.  We slog through the grind, telling ourselves "We do what we have to do, so that we can do what we want to do". We then often ask ourselves, "What happened to the dream that was promised to us if we had studied hard and got a good job?"

How many times will we keep on blaming our surroundings and our jobs before we realize that the only thing we can change is ourselves. By that, I mean our very own attitude and how we perceive the things around us. So, we finally arrive at our agenda for the day. Here is an article to help you stand out and in order to become a remarkable employee. I advise that you read through this carefully and take the message to heart in your approach towards your career, and perhaps with a little bit of luck, you may finally find the elusive job satisfaction that you have been hunting for:

Great employees are reliable, dependable, proactive, diligent, great leaders and great followers... they possess a wide range of easily-defined—but hard to find—qualities. 

A few hit the next level. Some employees are remarkable, possessing qualities that may not appear on performance appraisals but nonetheless make a major impact on performance. 

Here are eight qualities of remarkable employees: 

1. They ignore job descriptions. The smaller the company, the more important it is that employees can think on their feet, adapt quickly to shifting priorities, and do whatever it takes, regardless of role or position, to get things done. 

When a key customer's project is in jeopardy, remarkable employees know without being told there's a problem and jump in without being asked—even if it's not their job. 

2. They’re eccentric... The best employees are often a little different: quirky, sometimes irreverent, even delighted to be unusual. They seem slightly odd, but in a really good way. Unusual personalities shake things up, make work more fun, and transform a plain-vanilla group into a team with flair and flavor. 

People who aren't afraid to be different naturally stretch boundaries and challenge the status quo, and they often come up with the best ideas. 

3. But they know when to dial it back. An unusual personality is a lot of fun... until it isn't. When a major challenge pops up or a situation gets stressful, the best employees stop expressing their individuality and fit seamlessly into the team. 

Remarkable employees know when to play and when to be serious; when to be irreverent and when to conform; and when to challenge and when to back off. It’s a tough balance to strike, but a rare few can walk that fine line with ease. 

4. They publicly praise... Praise from a boss feels good. Praise from a peer feels awesome, especially when you look up to that person. 

Remarkable employees recognize the contributions of others, especially in group settings where the impact of their words is even greater. 

5. And they privately complain. We all want employees to bring issues forward, but some problems are better handled in private. Great employees often get more latitude to bring up controversial subjects in a group setting because their performance allows greater freedom. 

Remarkable employees come to you before or after a meeting to discuss a sensitive issue, knowing that bringing it up in a group setting could set off a firestorm. 

6. They speak when others won’t. Some employees are hesitant to speak up in meetings. Some are even hesitant to speak up privately. 

An employee once asked me a question about potential layoffs. After the meeting I said to him, “Why did you ask about that? You already know what's going on.” He said, “I do, but a lot of other people don't, and they're afraid to ask. I thought it would help if they heard the answer from you.” 

Remarkable employees have an innate feel for the issues and concerns of those around them, and step up to ask questions or raise important issues when others hesitate. 

7. They like to prove others wrong. Self-motivation often springs from a desire to show that doubters are wrong. The kid without a college degree or the woman who was told she didn't have leadership potential often possess a burning desire to prove other people wrong. 

Education, intelligence, talent, and skill are important, but drive is critical. Remarkable employees are driven by something deeper and more personal than just the desire to do a good job. 

8. They’re always fiddling. Some people are rarely satisfied (I mean that in a good way) and are constantly tinkering with something: Reworking a timeline, adjusting a process, tweaking a workflow. 

Great employees follow processes. Remarkable employees find ways to make those processes even better, not only because they are expected to… but because they just can't help it. 

Volume 4 Issue 16: Intelligent Investing

Common Sense - Minimum Wage Edition

Not even sure if this is just a coincidence, but on the Monday after Bersih 3.0, the Najib administration quickly announced the minimum wage at RM900 (for West Malaysia) and RM800 for Sabah and Sarawak. For some, the announcement of a minimum wage is long overdue, while others, claim that it will destroy their businesses.

I think that all of the above issues totally miss the real point. The crux of the problems in Malaysia's labour force was correctly highlighted by Lim Guan Eng's response to Najib's announcement:

The DAP warned today that the government's minimum wage policy announced last night will not result in better quality of life without being more competitive, creating high productivity jobs and bringing women into the workforce.

I don't know the kind of advisers that Najib surrounds himself with, but based on the evidence provided in the same article above, it is no surprise that after a disastrous Bersih 3.0 outing, Najib's hand was forced to move:

Datuk Seri Najib Razak's announcement last night follows the increase of minimum wage by around 40 per cent in Thailand last month, part of Yingluck Shinawatra's campaign pledge that helped propel her to win Thai elections last July. 

Taiwan’s move to increase minimum pay by 5 per cent last year also helped President Ma Ying-jeou win a second term in January 

Vietnam will also raise the floor wage for the public sector by 27 per cent in May after enacting a minimum wage increase of as much as 69 per cent in October for both private and state-owned enterprises. 

Thousands of workers are also expected to take to the streets in Hong Kong today, demanding Chief Executive-elect Leung Chun-ying address a widening wealth gap when he takes office in July.

As Lim Guan Eng appropriately puts it, competitiveness is the main issue here. Right up til now, Najib has focused only on the easy reforms, implementing populist measures to shore up his support.