Edward de Bono wrote about a small but significant difference between the way we think about the physical and mental world.
Let’s imagine we had to build a staircase.
Would it look like the one on the left in the picture – or the one on the right?
Most people, in the real world, understand that small steps are the way to go.
But, when it comes to mental work, we try and take shortcuts.
Take investing, for example.
Tom Dorsey wrote about a colleague of his who said – Tom, ain’t but one way to make money in the stock market. Slowly.
Most of the people and businesses that survive compounded their value over time – they didn’t simply skyrocket to fame and fortune.
The recent falls in the value of cryptocurrencies, although there has been a rise again, have left some people feeling elated, and some despondent.
If you bought at $16,000 hoping to hold until it went up, $12,000 is going to keep you nervous for a while.
But, the prices simply reflect supply and demand – and someone who takes a position needs to be aware that buying a currency is not a one-way ticket to riches.
Over the last year, a fairly sensible trading strategy could have resulted in a 6x return on Litecoin. Around 6-7 trades would have turned $20,000 into $122,000.
If you knew how to do it, had the money, were willing to take the risk and had the discipline to monitor markets at least daily that is…
On the other hand, a much easier approach would have been to buy a selection of low cost index funds five years ago and then get on with life.
That would have gained almost 30%. That’s not a bad return either given where interest rates are.
The same principles – going step by step – apply to most of the knowledge work we do now.
People who create anything of value do so piece by piece over time.
It’s tempting to take a shortcut.
But a shortcut may turn out to be the harder path.