Incrementally wiser

Birthdays are traditionally a time of celebration. A get together with friends and family, presents, parties and the like. For me, more importantly, they are a time for reflection. Reflections on the road I’ve traveled, thinking over what I’ve learned along the way. I daresay some of these might seem like common sense, self evident even, but even so, to put it down into words offers a sense of clarity that only writing can offer. Warning: long post ahead

  1. You can tell a lot about someone’s character by how they treat those from whom they can gain nothing, especially when no-one is watching. Manners make the man.
  2. Making friends from other countries and cultures does wonders for broadening your perspective of the world. You realize that despite all our differences, we are more alike in our struggles, hopes and aspirations than we realize.
  3. On a related note to point 2, learning the local language is practically mandatory to truly understand and appreciate a foreign culture, due to the fact that there is a lot of nuance and cultural context that is lost in translation. 
  4. You catch more flies with honey than with vinegar, as the saying goes. Buffett has said that the only diploma he keeps in his office is from Dale Carnegie’s course on “How to Win friends and Influence People”. The book is a timeless classic and should be required reading in schools.
  5. Charlie Munger is fond of saying that “Wisdom acquisition is a moral duty”. I have to agree, and my some of my greatest frustration often stems not from people who do not know something, but those who lack the willingness to learn.
  6. The more you read biographies and autobiographies of successful people, the more you realize they were just as fallible as anyone else. Malcolm Gladwell’s Outliers points out how much success can be a product of circumstance and fortuitous outcomes. This is not to underplay their achievement, but to recognize their humanity, and how they overcame limitations to achieve greatness. As a corollary, compassion for those less fortunate is always worthwhile, and society’s tendency to look down on the poor is misguided. Everyone has their own struggle, their personal demons and their own backstory.
  7. In the 2016 Berkshire Shareholder meeting, Munger’s best statement was “If you see the world accurately, it’s bound to be humorous, because it’s ridiculous. One of the downsides of ignorance removal is the tendency to become more cynical as the rose tinted glasses of idealism are shattered. Human beings are capable of unspeakable cruelty and incredible irrationality, and the world is not a fair place. We must find beauty where we can.
  8. The older you get, the less you care what people think, at least, from my experience. I would rather measure myself on my own internal scorecard than dance to the drumbeat of society. I also find myself less inclined to continue arguing for the sake of being right, long after the other side has refused to listen.
  9. Expecting folks in their late teens or twenties to have absolute clarity on what they want to do in life is absurd. When I was in my teens, the idea that I could be this fond of business, finance and economics was inconceivable, and I would have laughed at the idea. I have evolved since then, both in my interests and my thinking, yet there is much of me that remains the same. The nerd / geeky kid inside who loves anime, comic books, video games and science fiction is very much alive.
  10. Failing to plan is planning to fail. Thinking through possibilities and outcomes in a probabilistic manner in advance can save a lot of future grief. That said, Prussian military strategist named Helmuth Von Moltke famously said that “No operation extends with any certainty beyond the first encounter with the main body of the enemy“. Adaptation, the ability to evolve with circumstances is key to both survival and success.
  11. You gradually recognize that incentive caused bias is one of the most powerful forces in the world, and that you get what you reward for. You will, as Charlie says, constantly underestimate its effects ( I expect this to be a life-long problem)
  12. The sharing of knowledge and wisdom is an admirable trait, and it is part of the reason why I have so much respect for Warren Buffett. He is one of the best investors in history, yes, but the lessons contained in the decades worth of Berkshire Shareholder letters was his way of sharing his knowledge voluntarily and freely. I, and investors everywhere are forever grateful

    Buffett teaching a class
  13. Much of what should be taught in formal education system is not, and much of what is taught, shouldn’t be. Ideas like efficient market hypothesis, capital asset pricing model, beta as risk etc are somewhat like teaching the flat earth hypothesis as a model of reality. It is truly amazing that they still form the core of a lot of finance courses even today. I have to wonder whether even decades from now, modern portfolio theory will continue. Humanity can be astoundingly slow to discard bad ideas.
  14. There is a tendency to compartmentalize  knowledge in silos, and slap on self restricting labels based on what formal education or experience. The marketing guy who can’t know finance, or the arts major who must necessarily be bad at mathematics. I have yet to understand why anyone would limit their mental toolkit in this manner.
  15. The best feeling in the world comes from “flow”, when you are so immersed in doing something you love that you lose all sense of time and self. Over time, the more times you experience flow, the more you know that you have found something you enjoy doing.
  16. The paradox of knowledge lies in the fact that in order to know whether or not someone is a good source of information or whether a theory makes sense or not, you must first have some knowledge to begin with. The best way to tackle this problem is to develop critical thinking and a working knowledge over a broad spectrum of topics so you have a framework against which to judge new information.
  17. Our society has this obsession with positions and titles, which have the effect of making people feel important. True leadership is only possible if a leader is respected for his abilities, knowledge and experience; and is willing to fight alongside his team in the trenches if necessary.
  18. The reasons that hold people back from becoming good at investing are more based on temperament than due to knowledge. The latter can be taught, the former cannot. I favour the idea that value investing is like an inoculation, it either takes or it doesn’t.
  19. Skepticism is the best armour, and the question “Can I believe it” should be substituted by “Must I believe it?”. Searching for the piece that doesn’t fit, the wrench in the works can be discomforting, but ultimately allows for a perspective of the world as it is, not as we wish it to be. On a related note, the best thing you can do for someone who pitches an idea to you is to try and destroy it by playing devil’s advocate. The truly mature will welcome this process and not see it as a personal criticism.
  20. In Japanese culture, there is a concept known as 本音 (hon’ne): true opinion and 建前 (tatamae): public facade. Most people would rather hear the latter, especially the more it fits with their worldview, but the people you freely share the former with are those you instinctively trust, for you know they will accept a thought process that may be outright controversial if it is backed by rationality.
  21. The world is inherently probabilistic, which means that the best way to approach life is to figure out when and where you have an edge in terms of the odds, and place your bets around that area (equally true of investing).
  22. Soft Bank founder Masayoshi Son has 300 year vision for his company. It sounds outrageous, given how inherently unknowable the future is, yet I like the audaciousness of it. I think the best way to tackle generational plans is the use of the Lindy effect combined with the idea of using a systems approach rather than having a concrete goal. Being a learning machine combined with continuously compounding wealth seems a good way to begin.
  23. The two most valuable fields of study may well be psychology and history, for we learn that much of history follows the same themes in new packaging, and that human nature has not changed in the last few millennia.
  24. Incremental improvement through deliberate practice is the best way to get better at anything, and the idea of inherent talent is overrated. The reason people falter is that they do not persist, for there is often no self evident reward when you take aside time day after day honing your skill-set. Rome was not built in a day
  25. The deadliest of the proverbial seven deadly sins is envy. Constant comparison with others is the surest way to be miserable, thus I believe the best question to ask here is: Am I better than I was? Can I be better than I am? 
  26. The best way to understand something is to break it down to constituent components, the most simplest building blocks, and then build it back up again. Elon Musk calls it first principle thinking

27. Finally, when you look up at the stars and think about the vastness of the universe,    humanity seems to fade into triviality. Man’s search for meaning is an essential part of the human condition, and we as a species can feel terribly self important, but the blunt truth is we inhabit a position in space and in time that is an insignificant blip. It may seem like a pessimistic position to hold, but I argue that it is a very liberating one, for it frees us to seek our own purpose for being.

Calvin & Hobbes by Bill Watterson

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