In your quest to generate alpha, you have to outsmart a lot of smart people in the markets. You need to be mentally on top of your game. But your cognitive resources are eroded in two ways. The one is almost universally underappreciated, while the other is bitterly ironic. Both are serious.


You cannot think well if you’re being interrupted. Each interruption breaks your flow of thought and makes it harder to arrive at a smart conclusion. Your professional life is characterised by interruptions and interferences. This stuff is going on all the time, and the effects compound over time. This is chronic noise. It’s that set of ongoing low-level disturbances and distractions that form a part of every normal working day. 

The word normal is key. The very everyday-ness that makes it feel normal is what masks the fact that it’s a real problem. A single interruption disturbs the flow of a particular thought, but chronic noise erodes the quality of all thought. Chronic noise makes you massively more prone to abandoning intentional thinking in favour of impulsive thinking. It’s a gateway to alpha destruction.

Bitterly Ironic

A bitter irony is that the seeds of impulsive thinking are unwittingly sowed by the act of intentional thinking. 

Security selection and portfolio construction are complex problems. To address them well, you need to engage in deliberate and intentional thinking. This places heavy demands on your cognitive resources.

Precisely because this quality of thinking is effortful, it leads to cognitive erosion and depletion. This increases the risk that you will find yourself with insufficient cognitive capacity to deal with the complexity of the problem at hand. When this happens you will tend to place greater reliance on simplifying heuristics, which in turn makes you more prone to making errors of judgment. With every error of judgment there is a correspondent shortening of your professional life.


  • What are the sources of chronic noise for you? 
  • How might you constructively address them? 
  • How might you better attend to your cognitive renewal?


  • Justin Newdigate: Noise (2019)