My buddy Shree at SVN Capital sent me a link to a 60 Minutes interview with this bearded sage named Rick Rubin. If you don’t know much about Rubin (I didn’t), he is a producer who worked on many great records by a long list of artists, from Adele to Johnny Cash (see his Wikipedia page). Perhaps he’s most famous for popularizing hip hop.
Anyway, he published a book this year titled The Creative Act: A Way of Being. If I had not seen that interview, I would not have picked up this book. I admit to a bias against modern self-help type books, which mainly seem like marketing vehicles rather than any vessels containing real wisdom.
But sometimes you have a gut feeling about people. And Rubin seemed to me the genuine article, a true wise man and independent spirit. So I got the book and I’m glad I did. It’s one of the best books I’ve read this year.
While not aimed at investors, you can think of investing as a creative act. I found many ideas applicable to our art.
Rubin defines creativity broadly. It is simply bringing something into existence that didn’t exist before. That could be a conversation, a meal, a new route to get somewhere, an email, lots of things. It doesn’t have to be recorded, stretched on canvas, encased in glass or sold. With this broad view, Rubin sets the stage for wide applicability of what he has to say.
The creative process seems to begin with simple awareness, which is not so simple to practice, partly because it’s easy to get swamped with noise. In this thing of ours (investing), there is a seemingly endless flood of news and analysis. “Because there’s an endless amount of data available to us and we have limited bandwidth,” Rubin writes, “we might consider carefully curating the quality of what we allow in.”
I think this is such an important and overlooked step for most (nearly all?) investors who simply allow too much garbage to grab their attention. They read too much macro, too much economic analysis, too many forecasts, too much news and think too much about politics.
Think about what else you might allow in if these things didn’t get so much space. Think like a nutritionist, except now you’re thinking about your brain and what raw material you are going to feed it. Higher quality inputs lead to higher quality outputs. Look for more original research, do more of your own, talk to people closer to the action (i.e., running companies), favor the concrete over the abstract (I’m reminded of Peter Lynch, who said “The GNP six months out is just malarkey. How is the sneaker industry doing?”) and favor annual reports over economic reports.
It may seem obvious, but do not pass this by lightly. Give careful thought to what you give your attention to. Push up the quality of your intake.
Rubin suggests “submerging yourself in the canon of great works.” (What makes the canon of “great” works he leaves rather undefined). Read classic books instead of the news, for example. Watch iconic films. Listen to the most influential music. Or in our case, study great companies.
Rubin says even if you do this for one year, at the end of that year, you’ll have “a more honed sensitivity for recognizing greatness.” Let curiosity be your guide, “stoked by a hunger to… learn, to be fascinated and surprised on a continual basis.”
As an investor, a great deal of what we do is intuitive pattern recognition. I recently met Tom Morgan at Sapient Capital and we chatted about this very thing. Investors can give many logical reasons why they think a particular business or entrepreneur is special, but that initial spark of attraction is kind of mysterious – or at least not so easy to put into words. In short, it’s an intuition, a feeling, based on a bank of experience, that tells you “Hey, this one is worth digging into.”
Be Wary of Labels
Another theme Rubin hits that I have banged on about in my own work is the idea of being careful with labels. We tend to want to slap labels on everything. But labels can be toxic to clear thinking. They are limiting. As Rubin says:
“Any label you assume before sitting down to create, even one as foundational as sculptor, rapper, author, or entrepreneur, could be doing more harm than good. Strip away the labels. Now how do you see the world?”
This is a big one for investors, who are often so eager to paint the world with labels: “small cap” “large cap” “growth stock” “value stock” and so on. Not only that, but they tend to paint themselves with labels. “We’re value investors,” says one letter. Why the readiness to adopt such a label? What does that even mean? To start with such a label is to limit and twist how you see the world. Rubin says somewhere, where labeling begins, thinking ends.
And think about this, which I loved and wanted to stick in here somewhere:
“Nature transcends our tendencies to label and classify, to reduce and limit. The natural world is unfathomably more rich, interwoven, and complicated than we are taught, and so much more mysterious and beautiful.”
You can say similar things about markets generally. They are way more complicated and interwoven than our labeling suggests.
Labels can be potentially dangerous, but so are narratives. And investors love narratives. (“Inflation is coming down.” “We’re on the brink of recession.” “We’re in a bull market.”) We also have explanations for everything – usually after the fact. But Rubin advises keeping the narratives in check:
“Generally our explanations are guesses. These vague hypotheticals become fixed in our mind as fact. We are interpretation machines, and this process of labeling and detaching is efficient but not accurate. We are the unreliable narrators of our own experience.”
It can be helpful to forever keep in mind there are forces at work that we don’t fully understand. To acknowledge that we simply don’t know. To stay open to various possibilities. That way, when the world goes off script, as it so often seems to do, you will be better prepared to respond with equanimity.
There Are No Shortcuts
I love, too, what Rubin has to say about patience, something almost all investors could use more of. For Rubin patience “begins with acceptance of natural rhythms.” For us investors, that means accepting that bear markets happen, that stocks go down and can go down or nowhere for long stretches of time, that compounding takes time and that many things are out of our control:
“Demanding to control a work of art would be just as foolish as demanding that an oak tree grow according to your will.”
Same with your portfolio. You can’t control it. You plant things and you give them time to grow. You weed when you need to, but you don’t pull up the whole garden because you fear there is a drought coming.
Patience also comes with creating some distance between yourself and events. For example, Rubin says instead of letting a setback get to you, you say to yourself something like: “I wasn’t expecting that plot twist. I wonder what’s going to happen to our hero next.”
(Part of this, too, is never thinking that any experience is the “whole story.” You just never know. I always think of the parable of the old man and his lost horse.)
Here is Rubin on helping create that distance:
“When we obsessively focus on these events, they appear catastrophic. But they’re just a small aspect of a larger life, and the further you zoom back, the smaller each experience becomes. Zoom in and obsess. Zoom out and observe. We get to choose.”
I think of all the times certain sharp stock moves (up or down) seemed so momentous at the time. And yet, when you zoom out and look at a longer-term chart, those events barely register.
Speaking of parables, Rubin tells one about an old man (they always seem to be old men!) in Calcutta who gets water from a well every day using a clay pot by lowering it by hand. It’s a slow process. He has to be careful not to let the pot hit the sides of the well and break.
One day a traveler notices this and shows the old man a faster way using a pulley system. But the old man says:
“I think I’m going to keep doing it the way I always have. I really have to think about each movement and there’s a great deal of care that goes into doing it right. I’d imagine if I were to use the pulley, it would become easy and I might even start thinking about something else while doing it. If I put so little time and care into it, what might the water taste like? It couldn’t possibly taste as good.”
As with the best parables, there are many ways to take it. I’ll share one thought that came to me, as it relates to investing.
I thought of how I still do all the research on a business myself rather than delegating to an analyst. I know I could cover more names and turn over more rocks if I used analysts. But what would be lost? I think about this kind of thing a lot – the rather time consuming process of research versus various ways to “speed it up.” (I am not saying using analysts is bad; every stick has two ends, as Gurdjieff used to say.)
Last thing I’ll say: Rubin’s subtitle is “a way of being” because he thinks of creativity not in terms of output but as a way of being in the world – a way of seeing, of making connections, of looking below the surface of things. I like that idea, too. It’s not a job, or a task with a beginning and an end. It’s a never-ending process, one we should enjoy and learn from.
There’s a lot more in this book; there is plenty of food for thought. My copy is full of highlighted passages. So, I recommend it. Take it on your summer vacation and reflect on the wisdom Rubin presents.
Thank you for reading!
Published July 27, 2023
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