As an eventful 2016 chapter has drawn to a close, I am reminded of how uncertain our world is. As Yuval Harari writes in his wonderful book “Homo Deus”
“Centuries ago human knowledge increased slowly, so politics and economics changed at a leisurely pace too. Today our knowledge is increasing at breakneck speed, and theoretically we should understand the world better and better. But the very opposite is happening. Our new-found knowledge leads to faster economic, social and political changes; in an attempt to understand what is happening, we accelerate the accumulation of knowledge, which leads only to faster and greater upheavals. Consequently we are less and less able to make sense of the present or forecast the future”
While Brexit and Trump were in no way true Black Swans, the media and the punditry were pretty far off target in setting the probabilities of these events occurring, serving as a reminder yet again of the pitfalls of forecasting. At home, the sudden, unexpected event of November’s demonetization took us all by surprise, and for better or for worse, as a nation we must live with the consequences.
We continually live under the illusion that we are in control: of our lives, of our choices and of our destiny. It is a necessary facade that our optimistically biased species maintains in order to persist at tasks we would have long given up otherwise, and to believe that if we just try hard enough, we can achieve anything.
While we may be less in control of our environment than we believe, humanity possesses the unique ability to develop its own potential, and as K. Anders Ericcson points out in “Peak”: “Learning isn’t a way of reaching one’s potential but rather a way of developing it.”. Thus it is my belief that we should let go of trying to foresee the road ahead perfectly, and instead focus on what we can control in our own development and in preparing contingencies for the unforeseen speed bumps that will no doubt crop up from time to time. To that end, some themes I am working on for 2017 include
- The need for reasonable diversification: I know there are a lot of people who think you need to swing for the fences with a few big bets to make money in investing, but in recognition of the inherent uncertainty of the future, I would rather focus on risk management and prevent significant blowups. To finish first, you must first finish, and investing is a marathon, not a sprint.
- Saving and investing more: Retirement calculators are a comforting tool, usually allowing the user to spend guilt free after putting in a certain amount of money. However one must recognize that much can change between now and then, and I would rather invest as much as possible, ensure a massive margin of safety, and render need for such precision unnecessary. Additionally, every bit saved puts you one step closer to owning your own time completely.
- Reading more: I have cut down on reading headline news significantly, choosing to spend more time on blogs, magazines and books, which I feel provide more in depth and useful information. It is not one of those activities that shows results immediately, but when you are able to call up multiple references to things you read earlier when faced with a new problem, you will realize the wisdom of reading widely.
- Travel: A particularly memorable experience from last year was spending around 10 days in Singapore, attending a friend’s wedding along with exploring the city (and its wonderful food). I ate like a local at the local food-courts, rode Singapore’s commendably efficient public transport everywhere and stayed in a backpacker hostel, allowing me to chat with other travelers. Looking back, travel memories are one of those things that you treasure most, and to that end I think I ought to make atleast one significant excursion every year.
- Do more in less time: There is an old adage called Parkinson’s law which says that work expands to fill the time available. We complain of less time because we do not optimize what time we do have. I seek better ways to complete tasks that are more efficient and cut down on needless busywork, and resolve to spend less time working. After all, there is more to life than a routine of meetings, presentations and verbose e-mail. Friends, family and personal development should always come first.
Finally, New Year’s day also marks Charlie Munger’s 93rd birthday. The night may be dark and full of terrors, but his wisdom continues to be the lamp that illuminates the paths of many around the world, and problems become easier to solve if we just ask the question: What would Charlie Do?
Thanks for reading and Happy New Year. Have a wonderful 2017.