Multi-Tasking: The Bane of Productivity and Creativity

This is the first of what I expect will be a series of posts on the topic.  

In addition to reading widely, I listen to radio stations throughout the world.  One of the most interesting is Radio Australia.

One of its best programs is Big Ideas.  

Big Ideas brings you the best of talks, forums, debates, and festivals held in Australia and around the world, casting light on the major social, cultural, scientific and political issues.

Each segment is about an hour in length and usually consists of a lecture followed by a question/answer session.  The segments are presented as podcasts that may be accessed from the Big Ideas web site. 

One of the most interesting programs I listened to in recent weeks is Information Overload, a lecture delivered by David Levitin. 

Daniel Levitin biography
Daniel Levitin web site

I'm not about to reveal the details of the plot line save to offer some highlights of the lecture:

• the downsides of multi-tasking
• when to make important decisions
• procrastination
• the value of walking
• the two principles of decision making by the Joint Chiefs of Staff

I was originally attracted to Levitin's writings as part of my efforts to learn more about playing the piano.  As I'm discovering, most of the challenge of mastering the instrument rests in what goes on between the ears. 

Attention to the "Little Things" can make a Big Difference

I read widely.  In an effort to learn more about agriculture, I have started to read a variety of blogs.

A recent entry in one of them entitled, The 5% Rule - A Little Tool with Exponential Effects, attracted my attention.  Here's the thesis:

..  in a study by Danny Klinefelter analyzing farm financial data from US producers looking at the following categories: Price received per unit ($/bu), production per unit (bu/ac) and cost per unit ($/bu).  In each category, the top 25% performers were only 5% better than the average, while the bottom 25% performers were only 5% below the average in each category; so not a really a big difference in the grand scheme.  Accordingly, a study from David Kohl showed that the top 20% of US producers  in 2012 made $859,000 net profit, whereas the bottom 20% only made $14,000.  The absolute difference between the top and the bottom producers continues to increase.
http://www.agadvance.com/web-articles/business/blog-mar-2015/the-5-rule-%E2%80%93-a-little-tool-with-exponential-effects.aspx

The same mechanism applies to a variety of human activities - everything from household finances to business.  The accumulated benefits achieved from focusing on the little things can make the difference between mediocre performance and outstanding results.  

It is well known that management fees for Canadian mutual funds are very high - about the highest in the world.  Over time, they can exert a corrosive impact on the accumulation of money ... and this is quite aside from the fact that most of 'em can't even equal the performance of passive market indices over extended periods of time.  

Mr. Rosentreter produces a quick example: a 40-year-old with $300,000 in his investment portfolio saving for 25 years and aiming for a 5-per-cent average annual return. That will grow to $1.015-million over that span (with no additional contributions for ease of calculation). Bumping that rate of return to 7 per cent, by dropping fees to 1 per cent from 3 per cent over that span, would increase the investment pile to approximately $1.628-million – or 50 per cent more.

The above-noted article is worth reading in its entirety.  There is a plethora of simlar articles.  In my view, most investors would be well advised to consider investing in market indices.  The reduction in management fees would most probably outweigh any touted benefit of investing in actively managed funds.  As I have written extensively about this in previous posts, I will dwell on it further.  Years ago, I refused to give any consideration to investing in actively managed mutual funds and other vehicles.  

However, I will invest in companies which manage money for others with the rationale that I much prefer to be on the other side of the desk.