I wanted to learn how stock options are accounted for in the financial statements. I found the concept very difficult to understand and after few days of reading I learnt only 10% of the material. The interpreter inside my head generated a lot of negative thoughts like (1) You are not wired to learn this concept (2) You are dumb as you didn’t understand it first time (3) Why bother you don’t need to learn about stock options accounting to analyze a business. Being dejected I put the material down and went out to do some other activity. Then one day I came across the following passage while reading How to Read a Book.
In tackling a difficult book for the first time, read it through without ever stopping to look-up or ponder the things you do not understand right away. Pay attention to what you can understand and do not be stopped by what you cannot immediately grasp. Go right on reading past the point where you have difficulties in understanding, and you will soon come to things you do understand. Concentrate on these. Keep on in this way. Read the book through, undeterred and undismayed by the paragraphs, footnotes, comments, and references that escape you. If you let yourself get stalled, if you allow yourself to be tripped up by any one of these stumbling blocks, you are lost. In most cases, you will not be able to puzzle the thing out by sticking to it. You will have a much better chance of understanding it on a second reading, but that requires you to have read the book through at least once. What you understand by reading the book through to the end— even if it is only fifty percent or less— will help you when you make the additional effort later to go back to the places you passed by on your first reading. And even if you never go back, understanding half of a really tough book is much better than not understanding it at all, which will be the case if you allow yourself to be stopped by the first difficult passage you come to.
The passage gave some hope and made me to reread the material. Even on the second reading I found it hard and difficult to understand. But I felt it was better than the first time. I learnt around 25% of the material and felt very happy. But the happiness was short lived as the interpreter inside my head put me down again by telling that 25% is much lower than 100%. Few more days went by and I came across the following passage from Poor Richard’s Almanac.
In studying Law or Physick, or any other Art or Science, by which you propose to get your Livelihood, though you find it at first hard, difficult and unpleasing, use Diligence, Patience and Perseverance; the Irksomeness of your Task will thus diminish daily, and your Labour shall finally be crowned with Success. You shall go beyond all your Competitors who are careless, idle or superficial in their Acquisitions, and be at the Head of your Profession. Ability will command Business, Business Wealth; and Wealth an easy and honorable Retirement when Age shall require it.
Benjamin Franklin’s message lifted my spirits and made me to reread the material for the third time. I was able to follow the material fairly easily and it was rough in few places. I was able to learn around 60% of the material and felt very happy. For a change the interpreter in my head appreciated my efforts and told me to keep up the hard work. Few days went by and I came across the following passage written by Charlie Munger.
For some odd reason, I had an early and extreme multidisciplinary cast of mind. I couldn’t stand reaching for a small idea in my own discipline when there was a big idea right over the fence in somebody else’s discipline. So I just grabbed in all directions for the big ideas that would really work. Nobody taught me to do that; I was just born with that yen. I also was born with a huge craving for synthesis. And when it didn’t come easily, which was often, I would rag the problem, and then when I failed I would put it aside and I’d come back to it and rag it again. It took me 20 years to figure out how and why the Reverend Moon’s conversion methods worked. But the psychology departments haven’t figured it out yet, so I’m ahead of them.
Munger’s message to me was like a spinach to Popeye. If a smart guy like Munger spent 20 years to understand something then I should not feel dejected for not understanding stock options accounting by reading it couple of times. This gave me enormous confidence to reread the material for the fourth time. It was becoming a lot easier and clearer and I was able to learn around 75% of the material. I have another 25% to go to and with diligence, perseverance, and hard work, I am sure that I will master the material. There are few lessons that I learnt from this experience and they are given below.
- Learning starts when things get difficult.
- Failure to understand doesn’t reflect on our inability to learn. Instead it tells that we need to put in more effort.
- Interpreter in our head is doing its job by constantly giving suggestions. Instead of heeding to it blindly we should evaluate its suggestion using prefrontal cortex, higher-order functions of our brain.
- Do not give up when you didn’t understand a concept. Go back to it again and again and rag it until you get it.
- Every time you read a difficult material focus on what you understand instead of worrying about what you don’t understand.