The 2-Minute Thought: What I Learned from Writing a Novel in a Month

Forgive me for taking a slightly longer break from “The 2-Minute Thought” than expected.  The reason was that I wrote a novel in the month of November – and then I needed to recuperate for a week.

Yup, I wrote a novel in 30 days.  It isn’t bestseller material, and it ain’t publishable or even sharable.  But it has a beginning, a middle, and an end, which means it’s a completed first draft.

The amazing thing is not that I wrote a novel in a month, but that I was far from alone.  Hundreds of thousands of people around the world write a novel in the month of November as part of something called National Novel Writing Month, or for those who know and love it, “nanowrimo” for short.  To succeed at nanowrimo, the only requirement is that you get 50,000 words written down in the month of November.  That’s not War and Peace.  It’s more like somewhere between Of Mice and Men and The Catcher in the Rye.

Let’s be clear.  Nanowrimo is not about quality.  It’s about quantity.  You have to write, on average, 1,667 words a day to make it to 50,000 words by the end of the month.  That means you do not have time to go back and rewrite – or even read what you wrote last week or the day before.  It also means that some, or perhaps most, of what you produce will be garbage. 

But that’s the whole point.  In order to write the full arc of a novel in 30 days, you need to be able to live with the fact that some of your writing will be garbage.  Otherwise, you would just end up rewriting Chapter 1 over and over again – or maybe just part 1 of Chapter 1.  That’s where many well-intended novels-to-be end – the perfect part 1 of Chapter 1.  The beauty of nanowrimo is that it frees you to move on and make it to the final chapter. 

And why do ordinary mortals with regular day jobs choose to write a novel in a month?  The motivations are many.  Some aim for publication (and there are bestsellers out there that started life as nanowrimo drafts).  Some have carried a novel inside them for years, but never found the time to get it out.  Some want the creative adventure.  And others?  It’s just a crazy thing to do.  You can throw out your draft on December 1, so why not?

Me, I just wanted to try it – and I did learn a lot.  One thing I learned was that with focus and a deadline, it’s amazing what you can do.  Writing even a bad novel can seem hard, but it gets easier if you force yourself to sit at your desk every day for a certain amount of time – and perhaps even set a timer. 

Another thing I learned is that bad writing beats no writing.  Beautiful prose is nice, but if it gets you to the big picture faster, bad prose is okay – and infinitely better than no prose at all.  In other words, don’t sweat the small stuff before it’s time to.

And finally, I learned that if you don’t have a lot of time, you need to cut a lot of garbage out of your life.  You know what I’m talking about -- all those things that take a lot of time but that you don’t really care about.   

Paul Graham, the venture capitalist of start-up incubator Y Combinator, once wrote in an essay called “Life Is Short” that if we don’t actively fight off meaningless time fillers, we never get to what we really want to do.  

“You think you can always write that book, or climb that mountain, or whatever, and then you realize the window has closed.”  Instead, Graham advises, “Relentlessly prune b. s. [my abbrev], don’t wait to do things that matter and savor the time you have.  That’s what you do when life is short.”  Yup.





Life is Understood Backwards…But Lived Forwards…

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We are Value investors which means we believe that successful long-term investing involves buying out of favor securities selling cheap relative to their earnings and assets. Stock prices are a function of many things - earnings, dividends and the level of interest rates – but equally important is human emotions.

Ray DeVoe, a well known market commentator of past decades, summed up the market well, “The stock market is only indirectly related to economics. It is a function of human fear, greed and apprehension, all overlaid on a business cycle.” The reason Value works is people don’t like to be associated with losers and their fear and apprehension has them sell securities even when they are often very undervalued. 

Richard Thaler of the University of Chicago recently won the Nobel Prize for Economics for his work in human behavior and how this affects our decision making process. Although we are rational and logical most of the time, we are also very irrational at other times.  And I mean both the unsophisticated individual investor and the most professional portfolio manager.

Here are some examples of Behavioral Finance in action. First the Endowment Effect.  This is the tendency to value things we already own more highly than those we don’t.  Give people a common coffee cup and ask them to price it and sell it to others. Theory would suggest both buyers and sellers would value a cup fairly similarly.  They don’t. Few mugs sell because the sellers value them far more highly than the buyers. Does this sound familiar? Think of your family heirlooms and the value you ascribe to them or the stocks you own. Owners and non-owners value things very differently.

A second example is anchoring.  A stock does not know you own it. But you know you paid $25 for it even though the price today is $16. You focus on the $25 price. You will often not sell until you get back to your starting point. Maybe it would be better to disregard your purchase price and simply ask, would I buy this stock today or  hold it or sell it? 

A final example is how we value the present versus the future. When you take a new job, HR asks you how much you want to contribute to your retirement plan. Since expenses are high and the future is far away you put down a very small amount or none at all.

Thaler knows that how you frame a  proposition affects the outcome. If the HR Department were to say that unless you tell us differently we are going to put 5% of your salary in the retirement account and then increase this percentage every time you get a wage increase, what do you think would happen? The answer is, participation and overall savings jump significantly. Framing matters.    

Pogo could have been talking about our decision making process when he said, “We have met the enemy and he is us.”


So When Is The Next Big Drop Coming?...

Wow, talk about a question beyond my pay grade! But in this charged environment we have to ask.  A lot of people are very anxious and nervous in this market.  Since March 2009 it has been nothing but up for stock prices. This is the second longest uptrend in history. Only the 1987 – 2001 run is longer. 

In addition, the market is expensive today (see chart below). We are not in Bubble territory yet but the market price-to-earnings ratio is above the long term average of 15X.  We have gotten used to expecting big crashes every six or eight years - the tech bust in 2000 and the housing bubble in 2006 - 2009 – so shouldn’t we be expecting another one soon? The Fed is starting to push up interest rates and inflation may follow soon so the economic environment may be taking a turn for the worse.

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And then there are the foreign policy issues like North Korea and Brexit and, of course, the daily tweets out of Washington. These are generating increasing investor fatigue and exhaustion.

So, you get the picture, there is plenty to worry about. But stocks continue to move higher and stay stable (see chart below) and the world has rarely been more in sync. Not only is the U.S. economy growing but so is Europe (even Greece is growing!), and Emerging markets today are better able to handle global stress.  

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We will get a Bear Market (a 20%+ drop) at some point in the future, we always do, but the experience doesn’t have to be life threatening. As the chart below shows (sorry for the small print) even the big drops are followed in pretty short order by recoveries. The secret to long term investing is often neglect!  

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High School Kids Aren’t What They Used To Be...

Move over baby boomers, Generation X and Millennials.  All the fretting and worrying over you is done. The focus now is on Generation Z, or the “iGen.” These are kids and teens born between 1995 and 2012 who have never known life without the internet. They have Instagram accounts before they get into high school, and they’ve grown up using smartphones to do almost everything – schedule their lives, make friends, socialize, get information and entertain themselves.

The heavy use of smartphones has some people worried. Yes, smartphones mean we’ll never get lost – and that we’ll always be able to look up the population of Burkina Faso and find a decently rated Thai restaurant in a strange town. But they also mean constant distraction and potentially, changes in the way we think, sleep and interact socially.

So imagine what it’s like to not remember the world before smartphones. Jean Twenge, the psychologist at San Diego State who coined the label “iGen,” has pointed out that when the first iPhone came out in 2007, the oldest members of iGen were about 12. The youngest have never known life without smartphones. And while Millennials, or Generation Y, also grew up with the internet, it was never as all-consuming as it is for Generation Z.

But before starting to tsk-tsk and tut-tut, let’s remember that every new technology has always brought on a wave of alarm about what could happen to youths, and so far, every generation has made it to adulthood pretty well.

Let’s also note that iGen-ers have a lot of good things going for them. For one thing, according to a research summary by Samantha Guerry, a market strategist, Generation Z kids are whizzes at sorting information “at light speed,” thanks to their “eight-second filters.” They have so many options and so little time that they’ve become expert at handling a lot of information quickly – and at figuring out who the “trusted curators” are to help them manage the information flow.

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By many accounts, Generation Z-ers are highly pragmatic and career-minded. More than past generations, they are realistic about what it takes to prepare to support themselves financially. And they are living healthier, safer lives than teenagers in the past. They drink less, smoke less, try or use drugs less frequently, and have less sex. Partying and rebellion are out. Safety and risk aversion are in.

Generation Z also is extremely tolerant. The iGen-ers grew up with diversity and gay marriage being no big deal, so being judgmental just isn’t part of their fabric. If there’s anything they disapprove of, it’s being intolerant. As Twenge says, they “are just less willing to label anything as ‘wrong.’”

But, of course, there’s a less positive side to Generation Z, and it’s a biggie: It’s that iGen-ers have much higher rates of anxiety and depression than past generations. Teen depression and suicide rates have soared since 2011, and though there are many possible reasons for this, smartphones are a key suspect. The conjecture is that always being hyper-connected affects more than sleep and concentration. It also can lead to feeling left out, isolated, and lonely.

Twenge says that more screen time clearly has been linked to more unhappiness. That doesn’t mean the causation flows from smartphones to depression – and there are other reasons for teens being stressed today, including increased competition, college admissions and the job market. But she says, according to the surveys, “There’s not a single exception. All screen activities are linked to less happiness, and all nonscreen activities are linked to more happiness.”

That sounds awful, and the knee-jerk reaction is to ban or at least sharply curtail smartphone use. But let’s be realistic. Smartphone use is not going away any time soon, and teens are teens. Perhaps the best we can do is stay vigilant but also keep an open mind. Yes, by all means let’s worry about teens being in their rooms alone, on their phones and possibly distressed. But let’s also accept that Generation Z has learned to use smartphones in ways that aren’t always bad – just different.