Friday, April 3, 2015

What one can learn from Warren Buffett about entrance exam preparations.

Writing this blog after a relatively long gap. A new batch of students has entered the entrance exam zone and has started preparing for the next year's exam, and as usual most of them have their own doubts and confusions regarding their preparation strategy.

Whenever new students send me an email or call me, I compare their query with some of the old queries that I had received from the earlier batches. And do I see any change in the pattern and depth of the queries? No. The  queries have remained the same.

Most, you can say 99%, of them are about the 'source'. Which book to study from? Or more specifically 'Which MCQ book to study from?'

Obviously I'm not the only person they would ask. They ask almost everyone including someone who may be remotely associated with entrance exams. And now the opinions differ. Students get a diverse set of opinions that leads the students to a set comprising at least 10 to 12 books recommended for their preparation.

Now the question is "Does this simplify the strategy?". The answer is "No". It only complicates your preparation strategy.Many advises that are given online or offline are so complex that whenever the student narrates it to me, I ask him or her "Do you think the advice is practical and simple to carry out?".

The students agree that the advice they have received is complex (wide and diversified) and they are finding it difficult to implement. And when I counter question them "Then why didn't you switch over to a better plan?" Their answer is "The plan was so elaborate and inclusive of so many books, that I thought it must be a good plan"

This is not specific to entrance exam preparations. This human behavior is common to financial management, investments and overall approach to life as well.

Let's hear it from the greatest investor of all times Warren Buffett. Considered to be the most successful investor of the 20th century, Buffett is consistently ranked among the world's wealthiest people. He was ranked as the world's wealthiest person in 2008 and as the third wealthiest in 2011. In 2012 Time named Buffett one of the world's most influential people.

1. There seems to be some perverse human characteristic that likes to make easy things difficult.

This is easily seen all around, where students feel that if it's complex then it must be good.

No. The greatest things are the simplest ones. The secret lies in simplicity. Buffett's investment strategies are very simple. The huge wealth has been created implementing simple methods. Difficult to believe, because we 'assume' that he must be following a secret method or a complex strategy which nobody else follows.

2. The (business) schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.

Although he applies this statement only to business schools, it is applicable to all schools.  Students show complex behavior in comparing authors and asking other students to solve some 5% controversial questions that have never influenced the result. They spend 95% of their time solving these questions. A simple behavior is simply focusing on stuff that gives ranks, but someone who is spending a lot of time on solving controversial questions is considered to be doing the right things. You better change this approach.

3. Wide diversification is only required when investors do not understand what they are doing.

This applies very well to students who create a huge library only to crack an entrance exam. And they don't succeed. This over dependence on too many sources or books only shows lack of clarity on your plans. You better develop clarity first.

So combining all these factors, what can we conclude?

1. Keep it simple. First cover your weak areas. Others won't be aware of your weak areas. So no point in asking others.
2. Stop worrying about how many more books you should buy and how many more MCQs you should solve. Focus on how much you extract from one source.
3. Don't compare authors. Pointless exercise. You must develop your own reasoning.You must generate your own answer from textbooks and stick to your own answers.
4. Focus on major concepts and connect with similar concepts = Core concept.

Why this exercise is good? Because it works on the tenet that you will not forget anything that you have understood. If you are forgetting something, it means you haven't understood it. If you are not able to simplify something, then you have not understood it. If you are not able to apply something, you have not understood it.

Our aim should not just be to get entrance exam ranks. Our aim should be to become and produce excellent ambassadors of science that the community will be proud of.

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