I have attached an investment idea overview for June 2023 (attached image above).  Please review and let me know if you have any questions.

The second part of this post, I wanted to describe the process called “Gestalt switch” on how insights occur.

Signals Hiding in Plain Sight:  The Power of Mental Models in Investing (Gestalt switch)

Gestalt switch: The sudden change in perception or understanding that occurs when investors adopt a new paradigm. It involves a shift in the way investors conceptualize and approach the investing field.

The power of mental models and the transformative nature of paradigm shifts play a significant role in shaping the progress and outcomes in the field of investing.

Traditionally, investors have operated within conventional paradigms, adhering to the usual rules and frameworks.  However, breakthroughs and significant advancements occur when anomalies or crises challenge prevailing beliefs, demanding a new way of thinking, and approaching the investing landscape. These paradigm shifts represent a pivotal moment, where old theories are supplanted by new ones, leading to a transformative understanding of the field.

It is important to note that these paradigm shifts are not solely driven by new evidence or discoveries. Instead, they often arise from a change in the way investors perceive their field. This change in thinking can be triggered by a new discovery or observation that cannot be explained within the confines of the existing paradigm. Just like the invention of the telescope revolutionized astronomy by providing a new tool to observe the cosmos, new tools or techniques in investing can unveil hidden evidence that was already present, offering investors a fresh perspective and a “new set of eyes.”

Investing progress does not follow a linear path. It is punctuated by periods of stability, where there is a consensus among investors regarding the fundamental principles of the field. However, these periods of stability are often followed by periods of instability, characterized by disagreement and poor performance. During these unstable periods, the existing paradigm is challenged, leading to a search for new theories and practices that can better explain the complexities of the market, especially company level prospects and valuations.

When investors do adopt a new paradigm, it triggers what is known as a gestalt switch – a sudden change in perception and problem-solving approach. This shift represents a fundamental alteration in the structure of theories, practices, and beliefs within the investing domain.

To facilitate the adoption of new paradigms and enhance our understanding of the market, we believe in acquiring mental models from unrelated fields (lateral). By distilling these models to a few fundamental variables using quantitative & statistical techniques, we gain valuable insights that can be applied vertically in the investing field.

We are committed to reducing errors and refining our systems over time. This requires a long-term approach, persistently “chipping away” at the investing process. Through incremental progress and occasional paradigm-shifting breakthroughs, we strive to produce above average outcomes.  By upholding objective scientific principles and minimizing errors, we can operate at a higher level and navigate the market with precision.

Thank you for your trust and partnership in this exciting journey of investing.

Sincerely,

Manny Singh,

Co-Founder & Portfolio Manager

Chakkal Capital Management, LLC | Website: ChakkalGroup.com

Series 65 Licensed | LinkedIn: https://www.linkedin.com/in/singhmanny/

Tel: 206.261.5956 | Email: manny@chakkalgroup.com