Creativity for Jas Jason A. Voss, CFA Investment Content Director, CFA Institute CFA FA Soc Society Vic Victoria Superstars 4 April 2017
JASON A. . VOSS, , CFA Bio iography Ret etir ired co co-portf rtfoli lio manager of f th the e Davis vis Appre recia iati tion & In Inco come Fund Fund d bes ested th the e S&P 500 by 49.1 .1% over ver my te tenure Fund was one of Morningstar’s first ten funds to receive its Stewardship Grade “A” Auth thor r of f a hed edge fu fund co communit ity fa favo vorite te book, , The e In Intu tuit itiv ive In Inves vesto tor Given hundreds of interviews to the likes of: WSJ, Barron’s, Smart Money, Business Insider, BBC, BBC’s Toda day Prog rogramme , , Marke rketp tpla lace Morni rning Rep eport, t, et et.a .al. l. Conte tent t Dire irecto tor at t CFA In Insti titu tute Lead researcher and author for CFA Institute’s In Inves vestm tment t Ide Idea Gen enerati tion Guid ide – an in industry fi firs rst book book Oth ther er res research in inte terests: lie ie de dete tecti tion, fro fronti tiers of f beh ehavio ioral l fi finance, how to to bea eat t th the e marke rket 2
JASON A. VOSS, CFA Opening Comments We have arri rrived at t an un unparalle lele led tim time in in human history with regard to intelligence… Artif rtific icial l in inte tell lligence Natu tura ral l in inte tell lligence My y point? There re is is more re th than en enough hope! 3
CREATIVITY FOR IN INVESTMENT SUPERSTARS OVERVIEW Knowle ledge Including…What creativity is and is not; the neuroscience of creativity; nec ecessary co condi diti tions; ty types es of f cre creati tivit ity and d how to to acc ccess th them em; ; an alte ternate il illu lustr trati tion; over verview of f cre creati tive prob roblem solvi ving Appli lications Including…A new way to read the news; skills inventory; mind mappin ing; ; do doin ing what t reju rejuvenates you; ; men enta tal l mode del l in inve vento tory 4
WHAT CREATIVITY IS… …AND IS NOT 5
WHAT CREATIV IVIT ITY IS IS Defined It It is is th the abili lity to to pro roduce work rk th that is is novel l (th (that t is is, , orig riginal, l, unexpected), hig igh in in quali lity, and appropri riate (th (that is is, us useful, l, meets ts ta task co constra raints). Grou rounded in in eve everyday men enta tal l proc rocesses – it it is is not t th the e ex exclusive purvi rview of f a gif ifte ted fe few It res It responds to to proc rocess f α Note th the sim imila lari rity of f th this def efinition to to th that of 6
WHAT CREATIV IVIT ITY IS IS Im Important t to to In Investment t Managers fo for r Several l Reasons In Individual l lev evel: l: solv lving pro roble lems on th the jo job Economic level: l: leads to to new ew sci cientific fin findings and new ew in inventions Context t lev evel: l: th this is is th the skill ll th that t allo lows yo you to to sca cale le yo your co consciousness to to th the pro roblem at t hand Example le: What t is is th the e righ right t sca cale le to to watc tch a fo footb tball ll game/matc tch? 7
WHAT CREATIVITY IS IS NOT Not th the ex exclu lusive purv rview of f th the gif ifted fe few. Cre reativity re responds to to pro rocess. REPEAT! Not left-bra rain vs vs. rig right-brain. This is is definitively shown to to be a fa fals lse des escription and is is tru true only ly in in schizophrenics. Not pure re analy lysis. Not bra rainstorming. Quickly ly: Why bra rainstorming sucks. 8
FROM A NEUROSCIENCE PERSPECTIVE 9
FROM A NEUROSCIE IENCE PERSPECTIVE Two Types of f Neura ral l Sys ystems Each ex extra racts a dif iffere rent t kin ind of f in information fro from th the en environment Emoti tional l syste tem – see eems de designed to to att ttach ch a va value ta tag to to sen ensory in info form rmati tion Cognit itive system em – dev evoid of f salient in info form rmation; see eems des esigned to to co conduct t fe featu ture analysis Both sys ystems are re us used to to co constru ruct t sophisticated re repre resentations of f th the en environment t th that t ser erve as th the basis fo for r co cognitive assessment Both sys ystems also opera rate in in tw two modes: deli libera rate and spontaneous 10
NECESSARY CONDITIONS FOR CREATIVITY 11
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Work rking Mem emory ry Bandwidth This is is th the ability to to pro rocess in inform rmation co consciously. Defined: A monitoring sys ystem of f ongoing ev events ts th that keeps re rele levant in information to to a sit ituation in in min ind so th that t yo you ca can work rk wit ith it. it. It It is is lim imited in in ca capacity, both in in sto tora rage and in in pro rocessing. Bec ecause it it is is work rking mem emory ry th that allo lows fo for r men ental l pro rocessing in in re real-time, it it is is a pre re-requisite fo for r co cognitive fl flexibili lity, abstract th thinking, stra trategic pla lanning, access to to long-term mem emory ry, sen entience, and hen ence, cr creativity. 12
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Sustained Atte ttention For r all l cr creati tivity pro roble lems yo you mus ust t be e able le to to co contro rol l yo your min ind. There are re tw two nec ecessary ry skills lls: Met etaco cogniti tion – Awaren reness of f aware reness it itself lf Top-Down Contro trol l – Choosin ing what t you th thin ink and d when en you th thin ink it it Hin int: Do what t rej rejuvenates yo you 13
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Cognitive Fle lexibili lity You mus ust be able le to to adjust t yo your r degre ree of f men ental co contro rol. l. Can yo you ch choose to to be both deli eliberate and spontaneous? Most t of f us have ve spen ent t our r yea ears rs of f ed educati tion on cre creati ting de deli liberate co contro trol l unti til th the e min ind d is is ex exhauste ted, , th then en co contro trol l is is lost. t. Sympto toms: Min ind d wande dering; in inabil ility ty to to be e fo focu cused; a fe feelin ing th that t th ther ere is is not t en enough ti time e in in th the e da day Can yo you co contro rol when yo you are re spontaneous? That is is, do yo you know how to to let et go? Hint: Know your boundaries…if you do, they are easier to move past 14
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Ju Judgment t of f Pro ropriety In In ord rder r to to ju judge something yo you mus ust t have knowle ledge of f th the pro roble lem space. The Good News: Chance are re yo you are re im improving yo your knowle ledge ev every sin ingle day. 15
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Tra ransla lati tion and Descri ription Sensations of f both th the em emotional and co cognitive sys ystems mus ust t be e tra translated in into to something us useful. l. What t are re some ways of f tra transla lating yo your r ex experiences? Number ers Words rds Numbers and word rds are re not t nec ecessary co conditions fo for r cr creativity, so what are re some oth ther ways of f tra transla lating ex experiences? Hin int: Pra ractice ex expression 16
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Mental l Sile lence Bec ecause work rking mem emory ry is is lim imited, th the les ess non-essential sen ensory in inform rmation and abstra ract, t, irre irrele levant in information, th the bet etter. This ex exclusion of f sup uperflu luous in information en ensures work rking mem emory is is not t overl rly ta taxed. Hin int: Close yo your r door, cl close yo your e-mail, tu turn rn off ff yo your ce cell ll phone 17
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Tim ime Again, because work rking mem emory is is lim imited, fo for r co comple lex pro roble lems th the abili lity to to syn ynthesize, model l (i. (i.e. sim impli lificati tion), and ex explo lore re per ermutati tions ta takes tim time. Hin int: Schedule le or r allo low tim time to to be e cr creative 18
NECESSARY CONDIT ITIO IONS FOR CREATIV IVIT ITY Emotional l Safety – In Inclu cluding Per ermission to to Fail Emotions make co contro rol more re dif ifficult lt because it it act ctivates parts rts of f th the min ind th that make cr creativity more re dif ifficult. t. For r example, th ex the amygdala. Hin int: This is is both a pers rsonal l and in institutional pre rerogative. 19
CREATIV IVIT ITY IL ILLUSTRATED 20
TYPES OF CREATIVITY 21
TYPES OF CREATIV IVIT ITY KNOWLEDGE DOMAIN EMOTIONAL COGNITIVE D P E L R I O insights, & divergent, convergent, the right B C E many possibilities answer E R A S T S E I S N P O G N T intuitions, eurekas, M epiphanies, revelations A ahas! O N E D O E U 22 S
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