Thank you Grizzly and remind me to give you a bear hug if we ever meet in person .
Snoozing through our tea party were you?.
And yes, as said, the contract is very good; excellent ‘bread and butter’ work for NRW at a time when that is exactly what the market is looking for .
(My friend at Maquarie told me a few months back ‘boring’, solid and dependable companies are the ones people should be heading for in a bearish market.) (But NRW is never boring!)
So -part(l)y because I had guests and part(l)y to toast NRW for the contract plus a great lesson on the side, I drank my champagne last night served with a canapé of contemplation.
The text book to my lesson on the side was Pbawley’s timely link to the Magellan ten investor biases :
(Thanks again pb) “Cognitive biases are ‘hard wired’ and we are all liable to take shortcuts, oversimplify complex decisions and be overconfident in our decision-making process. Understanding our cognitive biases can lead to better decision making, which is fundamental, in our view, to lowering risk and improving investment returns over time”10 cognitive biases that can lead to investment mistakes
I am usually not too ashamed about confessing to ‘faults’ here when I see them in myself as it may be helpful to someone else .
Oversimplification or not, I figure you are all teachers, playmates, or identical twins and if it is in me, it may be in others.
(If not in you then it’s a chance to feel comparatively good about yourself or maybe just smile .And you can easily delete ‘me’ with an ignore button )
So as to our ‘tea party’ , my lesson, and two of the Magellan biases:
1) ‘Confirmation bias’ ...“investors are often overconfident because they keep getting data that appears to confirm the decisions they have made”
In the trading halt -despite learning a trading halt is not relevant to size of contract - there was ‘a night before Christmas excitement’
(Plus I had loaded up because I thought the price was good - which is true - and that this would change soon which may not be true)
As remedy to this bias Douglass cites Charlie Munger:
“ Rapiddestruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”
..Well look, I am not being vain here, but after trying to dissect the company through to 2060 and putting the Managers in retirement homes and me into a cyborg suit serviced by an umbilical cord to Amazon I do feel I went to the ‘other side’ and tried to apply that remedy.
I went way beyond 2024 which seems to be when quite a few current contracts will come up for renewal !
2) ‘Information bias’ is the other bias I wanted to acknowledge here and confess to. “Investors are bombarded with useless information every day, from financial commentators, newspapers and stockbrokers, and it is difficult to filter through it to focus on information that is relevant”
Thus is a big one ; I bring all kinds of news to this forum - some useless, some not so useless because I like information.
I also think much of the information is to some degree relevant .
Retrospectively I believe my tea party anticipation of pie in the sky was mostly created by the subliminal ‘bombardment’ that accompanied the stories. The most effective propaganda -as politicians and ad agencies know - conditions us through use of a key word or slogan.
Most of the press stories about the new iron ore mines have used the word “significant”.
The remedy cited by Magellan is to ignore daily price movements and focus on medium term prospects .
Which I guess is what you do Grizzly ....although it has nothing to do with us being impacted by subliminal propaganda.
Anyway apologies to all for the part I played in whipping up over expectation .
(20min delay)
