The Black Swan – Nassim Taleb

The Black Swan: The Impact of the Highly Improbable – by Nassim Taleb
Date read: 1/28/18. Recommendation: 9/10.

A strong case could be made that Nassim Taleb is one of the most original minds of our time. It's well worth reading every book of his Incerto series, which includes: Antifragile, The Black Swan, The Bed of Procrustes, and Fooled by Randomness. Taleb defines Black Swans as events with the following three attributes: rarity, extreme impact, and retrospective (though not prospective) predictability. He discusses how the root of our inability to understand Black Swans lies in mistaking a naive observation of the past to be representative of the future. The book details specific themes that arise from our blindness to the Black Swan, including: confirmation bias, narrative fallacy, human nature, silent evidence, and tunneling. Taleb sets out to make us more aware of the biases in our logic as it relates to Black Swans so that we might better embrace our own humanity (that's part of it!) and avoid large-scale harmful predictions that might hurt our future. He advocates the "barbell" strategy and positioning ourselves to take advantage of positive Black Swans (lose small to win big) and situations where favorable consequences are much larger than unfavorable ones.

See my notes below or Amazon for details and reviews.

My Notes:

Black Swan–an event with the following three attributes: rarity, extreme impact, and retrospective (though not prospective) predictability.

The reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or "incentives" for skill.

The problem lies in the structure of our minds: we don't learn rules, just facts, and only facts. Metarules (such as the rule that we have a tendency to not learn rules) we don't seem to be good at getting.

The bell curve ignores large deviations, cannot handle them, yet makes us confident that we have tamed uncertainty. Its nickname in this book is GIF, Great Intellectual Fraud.

History is opaque. You see what comes out, not the script that produces events, the generator of history.

Financial distress could be more demoralizing than war (just consider that financial problems and the accompanying humiliations can lead to suicide, but war doesn't appear to do so directly).

"F*** you money" is a psychological buffer: the capital is not so large as to make you spoiled-rich, but large enough to give you the freedom to choose a new occupation without excessive consideration of the financial rewards. It shields you from prostituting your mind and frees you from outside authority.

It is hard for us to accept that people do not fall in love with works of art for their own sake, but also in order to feel that they belong to a community. By imitating, we get closer to others–that is, other imitators. It fights solitude.

There are traps built into any kind of knowledge gained from observation. A turkey before and after Thanksgiving. The history of a process over a thousand days tells you nothing about what is to happen next. This naive projection of the future from the past can be applied to anything.

Mistaking a naive observation of the past as something definitive or representative of the future is the one and only cause of our inability to understand the black swan.

Other themes arising from our blindness to the Black Swan:
-Error of confirmation: focus on the seen and generalize to the unseen
-Narrative fallacy: thirst for distinct patterns
-Behave as if the Black Swan does not exist: human nature is not programmed for Black Swans
-Distortion of silent evident: history hides Black Swans
-Tunnel: focus on a few well-defined sources of uncertainty

The sources of Black Swans today have multiplied beyond measurability. In the primitive environment they were limited to newly encountered wild animals, new enemies, and abrupt weather changes. These events were repeatable enough for us to have built an innate fear of them.

Narrative fallacy: vulnerability to over-interpretation and our predilection for compact stories over raw truths. It severely distorts our mental representation of the world; it is particularly acute when it comes to the rare event.

The more random information is, the greater the dimensionality, and thus the more difficult to summarize. The more you summarize, the more order you put in, the less randomness. Hence the same condition that makes us simplify pushes us to think that the world is less random than it actually is.

Myths impart order to the disorder of human perception and the perceived "chaos of human experience."

We continuously renarrate past events in the light of what appears to make what we think of as logical sense after these events occur.

Events that are nonrepeatable are ignored before their occurrence, and overestimated after (for a while).

The way to avoid the ills of the narrative fallacy is to favor experimentation over storytelling, experience over history, and clinical knowledge over theories.

Our intuitions are not cut out for nonlinearities...We think that if, say, two variables are casually linked, then a steady input in one variable should always yield a result in the other one. Our emotional apparatus is designed for linear causality.

In a primitive environment, the relevant is the sensational...Somehow the guidance system has gone wrong in the process of our coevolution with our habitat–it was transplanted into a world in which the relevant is often boring, nonsensational.

The nonlinear relationships are ubiquitous in life. Linear relationships are truly the exception; we only focus on them in classrooms and textbooks because they are easier to understand.

The problem of silent evidence: tablets with portraits of worshippers who prayed then survived a shipwreck. Where were the pictures of those who prayed, then drowned? They would have a lot of trouble advertising their experiences from the bottom of the sea. This can fool the casual observer into believing in miracles.

My biggest problem with the educational system lies precisely in that it forces students to squeeze explanations out of subject matters and shames them for withholding judgment, for uttering the "I don't know." Why did the Cold War end? Why did the Persians lose the battle of Salamis?

I am not saying causes do not exist; do not use this argument to avoid trying to learn from history. All I am saying is that it is not so simple; be suspicious of the "because" and handle it with care–particularly in situations where you suspect silent evidence.

Gambling = sterilized and domesticated uncertainty.

In real life you do not know the odds; you need to discover them, and the sources of uncertainty are not defined.

Train your reasoning abilities to control your decisions; nudge System 1 (the heuristic or experiential system) out of the important ones.

Our human race is affected by a chronic underestimation of the possibility of the future straying from the course initially envisioned.

The more information you give someone, the more hypotheses they will formulate along the way, and the worse off they will be. They see more random noise and mistake it for information...Once we produce a theory, we are not likely to change our minds–so those who delay developing their theories are better off.

Remember that we are swayed by the sensational. Listening to the news on the radio every hour is far worse for you than reading a weekly magazine, because the longer interval allows information to be filtered a bit.

We attribute our successes to our skills, and our failures to external events outside our control, namely to randomness. We feel responsible for the good stuff, but not for the bad.

Anchoring: lower your anxiety about uncertainty by producing a number, then you "anchor" on it, like an object to hold on to in the middle of a vacuum.

Epistemic arrogance: tendency to tunnel and think "narrowly."

Forecasting by bureaucrats tends to be used for anxiety relief rather than for adequate policy making.

In order to predict historical events you need to predict technological innovation, itself fundamentally unpredictable. (Karl Raimund Popper's central argument)

Someone with a low degree of epistemic arrogance is not too visible, like a shy person at a cocktail party. We are not predisposed to respect humble people, those who try to suspend judgment.

Prediction error: buy a new car but do not anticipate that the effect of the new car will eventually wane and that you will revert to the initial condition, as you did last time. If you had expected this, you probably would not have bought it. You are about to commit a prediction error that you have already made. Yet it would cost so little to introspect!

Overestimate the effects of both pleasant and unpleasant future events.

We cannot teach people to withhold judgment; judgements are embedded in the way we view objects. I do not see a "tree"; I see a pleasant or an ugly tree. It is not possible without great, paralyzing effort to strip these small values we attach to matters. Likewise, it is not possible to hold a situation in one's head without some element of bias.

Be human! Accept that being human involves some amount of epistemic arrogance in running your affairs.

What you should avoid is unnecessary dependence on large-scale harmful predictions. Avoid the big subjects that may hurt your future: be fooled in small matters, not the large. Do not listen to economic forecasters or to predictors in social science (they are mere entertainers), but do make your own forecast for the picnic.

American culture encourages the process of failure, unlike the cultures of Europe and Asia where failure is met with stigma and embarrassment.

"Barbell" strategy: be as hyperconservative and hyperagressive as you can be instead of being mildly aggressive or conservative.
-85-90% in extremely safe investments
-10-15% in extremely speculative bets (venture-capital style)

Negative Black Swan businesses: military, insurance, homeland security–face only downside.
Positive Black Swan businesses: movies, publishing, scientific research, venture capital–lose small to make big.

Seize any opportunity, or anything that looks like an opportunity. They are rare, much rarer than you think.

Put yourself in situations where favorable consequences are much larger than unfavorable ones.

The 80/20 rule is only metaphorical...in the U.S. book business, the proportions are more like 97/20.

Although unpredictable large deviations are rare, they cannot be dismissed as outliers because, cumulatively, their impact is so dramatic.

I worry less about advertised and sensational risks, more about the vicious and hidden ones. I worry less about terrorism than about diabetes.

You have far more control over you life if you decide on your criterion by yourself...It is more difficult to be a loser in a game you set up yourself. In Black Swan terms, this means that you are exposed to the improbable only if you let it control you. You always control what you do; so make this your end.

We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurrence of monstrous proportions...So stop sweating the small stuff. Don't be like the ingrate who got a castle as a present and worried about the mildew in the bathroom.

Reducing volatility and ordinary randomness increases exposure to Black Swans–it creates an artificial quiet.

Living organisms need variability and randomness...Organisms need, to use the metaphor of Marcus Aurelius, to turn obstacles into fuel–just as fire does.

Black Swan events are largely caused by people using measures way over their heads, instilling false confidence based on bogus results.

A Black Swan for the turkey is not a Black Swan for the butcher.

Do not confuse absence of volatility with absence of risk. Trend towards lower volatility but greater risk of big jumps. It has fooled entire banking system and will fool again.

Using leverage to cure the problems of too much leverage is not homeopathy, it's denial. The debt crisis is not a temporary problem, it's a structural one. We need rehab.

For Seneca, Stoicism is about dealing with loss, and finding ways to overcome our loss aversion–how to become less dependent on what you have.

The man had reached the Stoic self-sufficiency, the robustness to adverse events, called apatheia in Stoic jargon. In other words, nothing that might be taken from him did he consider to be a good.

Seneca ended his essays with vale. It has the same root as "value" and "valor" and means both "be strong (i.e., robust)" and "be worthy."

A More Beautiful Question – Warren Berger

A More Beautiful Question – by Warren Berger
Date read: 1/19/18. Recommendation: 8/10.

I first heard Warren Berger on The Knowledge Project podcast, then purchased this book in an effort to improve my own questioning ability. While it is a great resource for asking better questions, this book offers so much more than that. It's an insightful look into the role of inquiry in modern life. Berger suggests that as the world becomes more complex and dynamic, questions become more valuable than answers. He offers a framework to formulate and ask better questions. But he also digs deeper into topics such as the age of adaptation, design thinking, our education system, and the reasons people avoid fundamental questioning. As an added bonus, there are some brilliant questions Berger challenges us to consider for ourselves along the way. 

See my notes below or Amazon for details and reviews.

My Notes:

To encourage or even allow questioning is to cede power–not something that is done lightly in hierarchical companies or in government organizations, or even in classrooms, where a teacher must be willing to give up control to allow for more questioning.

If the questions from leaders and managers focus more on Why are we falling behind competitors? and Who is to blame?, then the organization is more likely to end up with a culture of turf-guarding and finger-pointing. Conversely, if the questions asked tend to be more expansive and optimistic, then that will be reflected in the culture.

With all that's changing in the world and in our customers' lives, what business are we really in?

The Age of Adaptation: To keep up, today's worker must constantly learn new skills. "I went to school, got a degree, picked up a skill, gained expertise in my field–I established myself over the years. Why should I have to start over?"

When the world moved at a slower pace and things weren't quite so complex, we spent the early part of life in learning mode. Then, once you became an adult, you figured out what your job was and you repeated the same thing over and over again for the rest of your life. Today, that rinse-and-repeat approach no longer works as well...the comfortable expert must go back to being a restless learner.

As the world becomes more complex and dynamic, questions become more valuable than answers.

To navigate today's info-swamp, we must have, "the ability to evaluate risk, recognize demagoguery, the ability to question not only other people's views, but one's own assumptions." -Leon Botstein

But eventually, all doctors–and all the rest of us, as well–will have access to some form of cloud-based super-search engine that can quickly answer almost any factual question with a level of precision and expertise that's way beyond what we have now. Which reinforces that the value of questions is going to keep rising as that of answers keeps falling.

Einstein on looking up his own phone number in a phone book – no reason to fill his mind with information that can so easily be looked up.

Design thinking:
-Framing a problem and learning more about it (why)
-Generating ideas (what if)
-Prototyping (how)

Connective Inquiry: Connecting existing ideas in unusual and interesting ways. One of the primary sources of creativity. Involves both connections and questions.

Do kids stop questioning because they've lost interest in school, or do they lose interest in school because their natural curiosity (and propensity to question) is somehow tamped down?

Project-based or inquiry-based schools get students to ask introspective questions such as What's interesting to me? Nobody's ever asked them that before. Entire curriculum is based around big questions.

The emphasis on letting students explore, direct their own learning, and work on projects instead of taking test–can also be found at Montessori schools. Montessori alumni include Jimmy Wales (Wikipedia), Jeff Bezos (Amazon), Sergey Brin and Larry Page (Google).

Students find it really liberating to have a teacher say, 'I don't know the answer–so let's figure this out together.'

Every time you come up with a question, you should be wondering, What are the underlying assumptions of that question? Is there a different question I should be asking?

Contextual inquiry: Asking questions up close and in context, relying on observation, listening, and empathy to guide us toward a more intelligent, and therefore more effective, question.

Think of the brain as a forest full of trees. Some of those trees are closer together than others, and the branches communicate with each other. As this happens, neural connections are formed, which can produce new thoughts, ideas, and insights. (via Dr. Ken Heilman, Professor of Neurology)

The more eclectic your storehouse of information, the more possibilities for unexpected connections. (Heilman points out that people who are well read and well traveled, those who have diverse interests and a broad liberal arts education, and developing "a whole series of different modules that can enable more connectivity and more creativity.")

Divergent thinking–which calls for trying to generate a wide range of ideas, including offbeat ones, in the early stages of creative problem solving. Idea is to force your brain off those predictable paths by purposely "thinking wrong"–coming up with ideas that seem to make no sense, mixing and matching things that don't normally go together. Jarring effect on creative thinking. In neurological terms, when you force yourself to confront contrary thoughts or upside-down ideas, you "jiggle the synapses" in the brain. Goal is not to generate lasting ideas on the spot. It's to think differently and consider a wide range of possibilities by connecting ideas that don't normally go together.

"A prototype is a question, embodied." -Diego Rodriguez

"The trick is to go from one failure to another, with no loss of enthusiasm." -Winston Churchill

Brainstorming: Generating questions instead of ideas. Allows us to think more freely and creatively. Peer pressure is reduced as answers tend to be judged more harshly than questions.
-Focus on coming out of a session with three great questions that you want to explore further (should provide a sense of direction and momentum)
-"How Might We" approach

What if a job interview tested one's ability to ask questions, as well as answer them?

Reasons people avoid fundamental questioning of much of what they do in their lives:
-Questioning is seen as counterproductive; it's the answer that most people are focused on finding, because the answers, it is believed, will provide ways to solve problems, move ahead, improve life.
-The right time for asking fundamental questions never seems to prevent itself; either it's too soon or too late.
-Knowing the right questions to ask is difficult
-What if we find we have no good answers to the important questions we raise? Fearing that, many figure it's better not to invite that additional uncertainty and doubt into their lives.

Since most schools teach us to prize answers over questions, while also generally teaching that most problems have one "right" answer, small wonder that our habit is to think that the answers we need are out there–just waiting to be "found," stumbled upon, looked up, acquired, purchased, or handed to us.

There is no substitute for self-questioning.

Is there something else you might want to want–besides what you've been told to want?

The "deferred-life" plan: ambitious young entrepreneurs devote themselves entirely to making money in the present, so that at some later point they'll have the means to pursue what really matters to them (once they take the time to figure out what that is).

Part of being able to tackle complex and difficult questions is accepting that there is nothing wrong with not knowing. People who are good at questioning are comfortable with uncertainty.

Appreciative inquiry: focus on what is working in our lives–so that we can build upon that and get more out of it. Strengths and assets. Gratitude is a shortcut to happiness. People who value and appreciate the basics tend to be a lot happier.

"When you're in a bookstore, what section are your drawn to?" -Carol Adrienne

-Why do I seem to "shine" when doing certain things? (What is it about those activities/places that brings out the best in me?_
-What if I could find a way to incorporate these interests/activities, or some aspect of them, into my life more? And maybe even into my work?
-How might I got about doing that?

"What's truly worth doing, whether you fail or succeed?" -Chris Guillebeau

Articulating a personal challenge in the form of a question has other benefits. It allows you to be bold and adventurous because anyone can question anything. You don't have to be a recognized expert; you just have to be willing to say I'm going to venture forth int he world with my question and see what I find.

Questions (the rights ones, anyway) are good at generating momentum which is why change-makers so often use them as a starting point.

How do we continually find inspiration so that we can inspire others?

What do you want to say? Why does it need to be said? What if you could say it in a way that has never before been done? How might you do that?

Zero to One – Peter Thiel and Blake Masters

Zero to One – by Peter Thiel & Blake Masters
Date read: 1/12/18. Recommendation: 8/10.

I had high expectations for this one, considering it has become a sacred text for many startups and entrepreneurs. But Zero to One did not disappoint. The core of the book emphasizes that there is no single secret to innovation and entrepreneurship. But Thiel explains that if we want to to create a better future, we can't wait around, we have to go out and actually build it. He touches on concepts like vertical progress, opposite principles, monopolies, luck, venture capital, and the importance of getting the founders right when launching a new startup. The first half of the book is particularly brilliant. If you're an entrepreneur or working in technology, there's a reason this book is so highly rated.

See my notes below or Amazon for details and reviews.

My Notes:

The paradox of teaching entrepreneurship is that such a formula necessarily cannot exist; because every innovation is new and unique, no authority can prescribe in concrete terms how to be innovative.

Successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.

"What important truth do very few people agree with you on?"

Brilliant thinking is rare, but courage is in even shorter supply than genius.

Horizontal or extensive progress:
-Going from 1 to n
-Taking a typewriter and building 100
-Globalization (China)

Vertical or intensive progress:
-Going from 0 to 1
-Taking a typewriter and building a word processor
-Technology (Silicon Valley)

Spreading old ways to create wealth around the world will result in devastation, not riches. In a world of scarce resources, globalization without new technology is unsustainable.

Focus on building from small groups of people bound together by a sense of mission: It's hard to develop new things in big organizations, and it's even harder to do it by yourself. Small size affords space to think.

Conventional beliefs only ever come to appear arbitrary and wrong in retrospect; whenever one collapses, we call the old belief a bubble.

Opposite principles that are more correct than common startup lessons:

- It is better to risk boldness than triviality (instead of making incremental advances)
- A bad plan is better than no plan (stay lean and flexible)
- Competitive markets destroy profits (improve on the competition)
- Sales matters just as much as product (focus on product not sales)

To build the next generation of companies, we must abandon the dogmas created after the crash (dot-com).

The most contrarian thing of all is not to oppose the crowd but to think for yourself.

Under perfect competition, in the long run no company makes an economic profit.

If you want to create and capture lasting value, don't build an undifferentiated commodity business.

Competition is an ideology–the ideology–that pervades our society and distorts our thinking.

Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking.

If you can recognize competition as a destructive force instead of a sign of value, you're already more sane than most.

The value of a business today is the sum of all the money it will make in the future.

Every startup should start with a very small market. Always err on the side of starting too small. The reason is simple: it's easier to dominate a small market than a large one.

The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors. Any big market is a bad choice, and a big market already served by competing companies is even worse.

"Victory awaits him who has everything in order–luck, people call it." -Roald Amundsen

The strange history of the Baby Boom produced a generation of indefinite optimists so used to effortless progress that they feel entitled to it. Whether you were born in 1945 or 1950 or 1955, things got better every year for the first 18 years of your life, and it had nothing to do with you...A whole generation learned from childhood to overrate the power of change and underrate the importance of planning.

Instead of working for years to build a new product, indefinite optimists rearrange already-invented ones–bankers, lawyers, management consultants.

In an indefinite world, people actually prefer unlimited optionality; money is more valuable than anything you could possibly do with it. Only in a definite future is money a means to an end, not the end itself.

But indefinite optimism seems inherently unsustainable: how can the future get better if no one plans for it?

But leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won't help you find the global maximum.

Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best.

Long-term planning is often undervalued by our indefinite short-term world.

A business with a good definite plan will always be underrated in a world where people see the future as random.

Vilfredo Pareto – In 1906 discovered the "Pareto principle," or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy–a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas.

The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.

VCs must find the handful of companies that will successfully go from 0 to 1 and then back them with every resource.

Venture-backed companies create 11% of all private sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP. Indeed, the dozen largest tech companies were all venture-backed.

An entrepreneur makes a major investment just by spending her time working on a startup. Therefore every entrepreneur must think about whether her company is going to succeed and become valuable.

The power law means that differences between companies will dwarf the differences in roles inside companies. You could have 100% of the equity if you fully fund your own venture, but if it fails you'll have 100% of nothing. Owning just 0.01% of Google, by contrast, is incredibly valuable (more than $35 million as of this writing).

A conventional truth can be important–it's essential to learn elementary mathematics, for example–but it won't give you an edge. It's not a secret.

If everything worth doing has already been done, you may as well feign an allergy to achievement and become a barista.

Bad decisions made early on–if you choose the wrong partners or hire the wrong people, for example–are very hard to correct after they are made.

Anyone who doesn't own stock options or draw a regular salary from your company is fundamentally misaligned...That's why hiring consultants doesn't work.

You need people who are not just skilled on paper but who will work together cohesively after they're hired.

If you've invented something new but you haven't invented an effective way to sell it, you have a bad business–no matter how good the product.

PayPal: Needed smaller niche market segment with a higher velocity of money–found this segment in eBay "PowerSellers." There were 20,000 of them. Because eBay's solution to the payment problem was terrible, merchants were extremely enthusiastic early adopters.

If you can get just one distribution channel to work, you have a great business. If you try for several but don't nail one, you're finished.

The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.

The most valuable companies in the future won't ask what problems can be solved with computers alone. Instead, they'll ask: how can computers help humans solve hard problems?

Companies must strive for 10x better because merely incremental improvements often end up meaning no improvement at all for the end user.

Apple's value crucially depended on the singular vision of a particular person. This hints at the strange way in which the companies that create new technology often resemble feudal monarchies rather than organizations that are supposedly more "modern." A unique founder can make authoritative decisions, inspire strong personal loyalty, and plan ahead for decades.

We cannot take for granted that the future will be better, and that means we need to work to create it today.

The Inevitable – Kevin Kelly

The Inevitable: Understanding 12 Technological Forces That Will Shape Our Future – by Kevin Kelly
Date read: 12/27/17. Recommendation 7/10.

Kelly is a great teacher when it comes to helping others think beyond the realm of current possibilities. I often find myself fighting the inertia of the way things currently are, instead of looking at the inevitable trends and determining what's next. The specific forces he outlines become a bit repetitive, as there is significant overlap to each. But as a whole it's a great exercise in reminding yourself to take your thinking to the next level. Kelly is also refreshingly optimistic about the future of technology. He suggests that while we have little control over the inevitable technological forces on the horizon, we do have influence over their character and how symmetrical those relationships end up being. 

See my notes below or Amazon for details and reviews.

My Notes:

Everything, without exception, requires additional energy and order to maintain itself. I knew this in the abstract as the famous second law of thermodynamics, which states that everything is falling apart slowly...Existence, it seems, is chiefly maintenance.

Most of the important technologies that will dominate life 30 years from now have not yet been invented.

Technology is taking us to protopia...a state of becoming rather than destination. It is a process. In the protopian mode, things are better today than they were yesterday, although only a little better...This subtle progress is not dramatic, not exciting.

The revolution launched by the web was only marginally about hypertext and human knowledge. At its heart was a new kind of participation that has since developed into an emerging culture based on sharing.

The accretion of tiny marvels can numb us to the arrival of the stupendous.

Coming out of the industrial age, when mass-produced goods out-performed anything you could make yourself, this sudden tilt toward consumer involvement is a surprise. We thought, "That amateur do-it-yourself thing died long ago, back in the horse-and-buggy era."

But the web in 2050 won't be a better web...It will have become something new, as different from the web today as the first web was from TV.

The AI on the horizon looks more like Amazon Web Services–cheap, reliable, industrial-grade digital smartness running behind everything, and almost invisible except when it blinks off.

The business plans of the next 10,000 startups are easy to forecast: Take X and add AI. Find something that can be made better by adding online smartness to it.

"AI is akin to building a rocket ship. You need a huge engine and a lot of fuel. The rocket engine is the learning algorithms but the fuel is the huge amounts of data we can feed to these algorithms." -Andrew Ng

If AI can help humans become better chess players, it stands to reason that it can help us become better pilots, better doctors, better judges, better teachers.

Nonhuman intelligence is not a bug; it's a feature. The most important thing to know about thinking machines is that they will think different.

Because of a quirk in our evolutionary history, we are cruising as the only self-conscious species on our planet, leaving us with the incorrect idea that human intelligence is singular. It is not.

One of the advantages of having AIs drive our cars is that they won't drive like humans, with our easily distracted minds.

Industrial revolution eliminated all but 1 percent of farming jobs, but automation created hundreds of millions of jobs in entirely new fields.

Third age of computing: prime units are flows and streams. We've moved from batches or daily, to real time.

The union of a zillion streams of information intermingling, flowing into each other, is what we call the cloud...The cloud is the new organizing metaphor for computers. The foundational units of this third digital regime, then, are flows, tags, and clouds.

A universal law of economics says the moment something becomes free and ubiquitous, its position in the economic equation suddenly inverts. When nighttime electrical lighting was new and scarce, it was the poor who burned common candles. Later, when electricity became easily accessible and practically free, our preference flipped and candles at dinner became a sign of luxury.

Deep down, avid audiences and fans want to pay creators...But they will only pay under four conditions that are not often met: 1) It must be extremely easy to do; 2) The amount must be reasonable; 3) There's a clear benefit to them for paying; and 4) It's clear the money will directly benefit the creators.

Book reading strengthened our analytical skills, encouraging us to pursue an observation all the way down to the footnote. Screening encourages rapid pattern making, associating one idea with another, equipping us to deal with the thousands of new thoughts expressed every day.

Ownership is casual, fickle. If something better comes along, grab it. A subscription, on the other hand gushes a never-ending stream of updates, issues, and versions that force a constant interaction between the producer and the consumer.

Bitcoin:
-The most important innovation in Bitcoin is its "blockchain," the mathematical technology that powers it.

-When I send you one bitcoin, no central intermediary is involved. Our transaction is posted in a public ledger–called a blockchain–that is distributed to all other bitcoin owners in the world. This shared database contains a long "chain" of the transaction history of all existing bitcoins and who owns them.

-A new transaction like ours must be mathematically confirmed by multiple other owners before it is accepted as legitimate. In this way a blockchain creates trust by relying on mutual peer-to-peer accounting.

-A number of startups and venture capitalists are dreaming up ways to use blockchain technology as a general purpose trust mechanism beyond money. For transactions that require a high degree of trust between strangers, such as real estate escrows and mortgage contracts...

As we increase dematerialization, decentralization, simultaneity, platforms, and the cloud–as we increase all those at once, access will continue to displace ownership. For most things in life, accessing will trump owning.

The need for some top-down selection would only increase in value as the amount of user-generated content expanded...Facebook and Twitter's algorithm to sort your feed, Wikipedia's veteran editors. You don't need much of them, just a trace.

I have learned that in collaborative work when you share earlier in the process, the learning and successes come earlier as well.

The more powerful the invention or creation, the more likely and more important it is that it will be transformed by others. In 30 years the most important cultural works and the most powerful mediums will be those that have been remixed the most.

How we handle rewards for innovation, intellectual property rights and responsibilities, ownership of and access to copies makes a huge difference to society's prosperity and happiness. Ubiquitous copying (and tracking) is inevitable, but we have significant choices about its character.

The fastest-increasing quantity on this planet is the amount of information we are generating. New information is growing at 66 percent per year, doubling every 18 months, which is the rate of Moore's Law.

In our everyday lives we generate far more information that we don't yet capture and record...Taming this wild information will ensure that the total amount of information we collect will keep doubling for many decades ahead.

Metadata is the new wealth because the value of bits increases when they are linked to other bits.

Ubiquitous surveillance is inevitable. Since we cannot stop the system from tracking, we can only make the relationships more symmetrical.

Bitcoin transparently logs every transaction in its economy in a public ledger, thereby making all financial transactions public. The validity of a transaction is verified by a coveillance of other users rather than the surveillance of a central bank.

There is a one-to-one correspondence between personalization and transparency. Greater personalization requires greater transparency. Absolute personalization (vanity) requires absolute transparency (no privacy).

If today's social media has taught us anything about ourselves as a species, it is that the human impulse to share overwhelms the human impulse for privacy...Vanity trumps privacy.

If anonymity is present in any significant quality, it will poison the system. While anonymity can be used to protect heroes, it is far more commonly used as aw ay to escape responsibility. That's why most of the brutal harassment on Twitter, Yik Yak, Reddit, and other sites is delivered anonymously. A lack of responsibility unleashes the worst in us.

Like all trace elements, anonymity should never be eliminated completely, but it should be kept as close to zero as possible.

Wikipedia works because it turns out that, with the right tools, it is easier to restore damaged text (the revert function on Wikipedia) than to create damaged text (vandalism).

No one would have believed 30 years ago that there was an $82 billion business in answering people's questions for cheap or for free (Google).

Part of the increasing ease in providing answers lies in the fact that past questions answered correct increase the likelihood of another question. At the same time, past correct answers increase the ease of creating the next answer, and increase the value of the corpus of answers as a whole. Each question we ask a search engine and each answer we accept as correct refines the intelligence of the process, increasing the engine's value for future questions.

A good question is not concerned with a correct answer.
A good question challenges existing answers.
A good question is the seed of innovation in science, technology, art, politics, and business.
A good question skirts on the edge of what is known and not known, neither is silly nor obvious.

Question makers will be seen, properly, as the engines that generate new fields, new industries, new brands, new possibilities, new continents that our restless species can explore. Questioning is simply more powerful than answering.

Tribe of Mentors – Tim Ferriss

Tribe of Mentors – by Tim Ferriss
Date Read: 12/20/17. Recommendation: 8/10.

Tribe of Mentors is built around a set of 11 questions that Tim set out to answer for himself by asking some of the most brilliant people (100+ in this book). Most of the questions are the same as the rapid-fire questions he uses in his podcast, "what book have you gifted the most?" and "what new belief, behavior, or habit has most improved your life?" There are a few nuggets of eye-opening wisdom, but the brevity kept things fairly shallow for me. I prefer Tools of Titans which covers a wider range of ideas in greater depth, and includes more of Tim's own notes and insights. For me, the most valuable part of Tribe of Mentors was its wealth of book recommendations.

See my notes below or Amazon for details and reviews.

 

My Notes:

What would this look like if it were easy? It's easy to convince yourself that things need to be hard, that if you're not redlining, you're not trying hard enough.

Life punishes the vague wish and rewards the specific ask.

"Life shrinks or expands in proportion to one's courage." –Anaïs Nin

The most fulfilled and effective people I know look at their life's journey as perhaps 25 percent finding themselves and 75 percent creating themselves.

"In the world of writing, everyone wants to succeed immediately and without pain or effort." –Steven Pressfield

"Real work and real satisfaction come from the opposite of what the web provides. They come from going deep into something–the book you're writing, the album, the movie–and staying there for a long, long time." –Steven Pressfield

Finnish word, "sisu" – the mental strength to continue to try even after you feel you've reached the limits of your abilities.

"Intelligence is like following a GPS route right into a body of water until you drown. Wisdom looks at the route but, when it takes a turn into the ocean, you drown. Wisdom looks at the route but, when it takes a turn into the ocean, decides not to follow it, then finds a new, better way. Wisdom reigns supreme." –Terry Crews

"If you let yourself off the hook for not doing something for any reason, you won't ever do it." –Debbie Millman

Paraphrasing Debbie Millman's interview with Dani Shapiro: Overly confident people are annoying, arrogant, and compensating for some type of internal psychological deficit. Dani declared that courage was more important than confidence.

Naval Ravikant:
"Suffering is a moment of clarity, when you can no longer deny the truth of a situation and are forced into uncomfortable change."

"The genuine love for reading itself, when cultivated, is a superpower...The means of learning are abundant–it's the desire to learn that's scarce. Cultivate that desire by reading what you want, not what you're 'supposed to.'"

"Memory and identity are burdens from the past that prevent us from living freely in the present."

"Ignore: The news. Complainers, angry people, high-conflict people. Anyone trying to scare you about a danger that isn't clear and present."

"Ignore the unfairness – there is no fair. Play the hand that you're dealt to the best of your ability. People are highly consistent, so you will eventually get what you deserve and so will they."

"By focusing inward on yourself as a writer instead of outward on what you think readers will want to read, you'll end up creating the best most original work, and that one-in-a-thousand person who happens to love it will up finding their way to you." –Tim Urban

"It's not how well you play the game, it's deciding what game you want to play." –Kwame Appiah

"Integrity is the only path where you will never get lost." –Mike Maples Jr.

"The best advice I have seen comes from people who don't try to tell me the answer...instead they give me a new approach to thinking about the question so that I can solve it better on my own." –Mike Maples Jr.

"Too often, aspiring artists put pressure on themselves to make their creative work their only source of income. In my experience, it's a road to misery." –Soman Chainani

"The education system, by and large, gears everyone up to adhere to set industry standards. While this a foolproof way to get a job and live a normal life, very few people can break out of the cycle of the mundane to be adventurous, inventive, selfless. The safety net of regular job is too comfortable." –Richa Chadha

"Grudges are for those who insist that they are owed something; forgiveness, however is for those who are substantial enough to move on." –Criss Jami

"The difference between winning and losing is most often not quitting." -Walt Disney

"My advice is to choose a profession that is really easy for you to do and that also allows you to be creative. If it is easy for you to do and somewhat difficult for your peers to do, you will not have to work too hard to be successful and you will have enough spare time to enjoy life...If, on the other hand, you have to work long hours all the time just to be competitive, you will burn out and not enjoy life." -Lewis Cantley

"If you must play, decide on three things at the start: the rules of the game, the stakes, and the quitting time." –Chinese Proverb

"Creating is a better means of self-expression than possession; it is through creating, not possessing, that life is revealed." -Vida Dutton Scudder

"Hard choices, easy life. Easy choices, hard life." -Jerzy Gregorek

"To laugh often and much, to win the respect of intelligent people and the affection of children...to leave the world a bit better...to know even one life has breathed easier because you lived. This is to have succeeded." –Ralph Waldo Emerson

"The struggle ends when the gratitude begins." -Neal Donald Walsch

"Our culture puts such a premium on the notion of originality, but when you really examine just about any 'original' thought or work, you find it's a composite of previous influences. Everything's a remix. Of course, there's such thing as being overly derivative, but I tend to mostly value sincerity over originality. I think I perform better when I focus less on being original and more on being honest." -Joseph Gordon-Levitt

"When something goes badly, I don't automatically assume I did something wrong. Instead I ask myself, 'What policy was I following that produced the bad outcome, and do I still expect that policy to give the best results overall, occasional bad outcomes notwithstanding?'" –Julia Galef

"One distraction I've learned to avoid is consuming media that's just telling me things I already know and agree with (for example, about politics). That stuff can be addictive because it feels so validating–it's like venting with a friend–but you're not learning from it, and over time, I think indulging in that impulse makes you less able to tolerate other perspectives." -Julia Galef

"Do what you love, do it in a way that you love, and pour your heart and soul into every moment of it. Do not be subject to inertia." –Josh Waitzkin

"Do what you can, with what you have, where you are." -Theodore Roosevelt

"It's not what you look at that matters, it's what you see." -Henry David Thoreau

"Beware the investment activity that produces applause; the great moves are usually greeted by yawns." -Warren Buffett

"Focus on your writing skills. It's the one thing I've found that really helps people stand out. More and more communication is written today. Get great at presenting yourself with words, and words alone, and you'll be far ahead of most." –Jason Fried

"Remember that you'll always have less attention than time. Full attention is where you do your best work, and everyone's going to be looking to rip it from you. Protect and preserve it." -Jason Fried

Scaling: "No, don't scale. Start small, stay small as possible for as long as possible. Grow in control, not out of control." -Jason Fried

Raising capital: "No, bootstrap. As in life, we form business habits early on. If you raise money, you'll get good at spending money. If you bootstrap, you'll be forced to get good at making money." -Jason Fried

"Burnout is not the price you have to pay for success." -Arianna Huffington

"Macro patience, micro speed....Everybody's impatient at a macro, and just so patient at a micro, wasting your days worrying about years. I'm not worried about my years, because I'm squeezing the fuck out of my seconds, let alone my days." -Gary Vaynerchuk

"Courage over comfort." -Brene Brown

"If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and five minutes thinking about solutions." -Einstein

"Always take jobs for which you are not qualified; that way you will inevitably learn something." -Esther Dyson

"I started my first business with $200...I learned far more about business from than $200 than from a debt-inducing MBA." -Kevin Kelly

"Be polite, on time, and work really fucking hard until you are talented enough to be blunt, a little late, and take vacations and even then...be polite." -Ashton Kutcher

"When 99 percent of your life is your work, either you are really bad at what you do or you are completely off balance with the rest of your life; neither is something to be proud of." -Jérôme Jarre

"Do not seek to follow in the footsteps of the wise, instead, seek what they sought." -Matsuo Basho

"Have the moral courage to live in the gray, sit with uncertainty but not in a passive way. Live the questions so that, one day, you will live yourself into the answers.." -Jacqueline Novogratz

"Don't worry all that much about your first job. Just start, and let the work teach you. With every step, you will discover more about who you want to be what and what you want to do." -Jacqueline Novogratz

When feeling overwhelmed: "I go for a very long run and remind myself of the beauty of the world, that the sun will rise again tomorrow, that what matters is to be in the arena." -Jacqueline Novogratz

"Don't try to be something you're not. Be confident in the skills you have, as they may be make-or-break for the journey you pursue." -Steve Case

"If you want to go fast, go alone, but if you want to go far, you must go together." -Steve Case

"No society in human history ever suffered because its people became too reasonable." -Sam Harris

"Those who are determined to be 'offended' will discover a provocation somewhere. We cannot possibly adjust enough to please the fanatics, and it is degrading to make the attempt." -Christopher Hitchens

"The real measure of a good life is 'How happy and satisfied am I with my life right now?'" -Mr. Money Mustache

"You are free for life once you have 25 to 30 times your annual spending locked up and working for you in low-fee index funds or other relatively boring investments. If you save the standard 15 percent of your income, this freedom arrives roughly at age 65. If you can crank that up to 65 percent, you're free just after your 30th birthday, and you often end up a lot happier in the process." -Mr. Money Mustache

"A high savings rate (or 'profit margin on life') is by far the best strategy for a great and creative life, because it's your ticket to freedom. Freedom is the fuel for creativity." -Mr. Money Mustache

"It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things." -Leonardo Da Vinci

"Be in a hurry to learn, not in a hurry to get validation." -Evan Williams

Pursuing your passion: "For many, that is terrible advice. In your 20s, you may or may not really know what your best skills and opportunities are. It's much better to pursue learning, personal discipline, growth." -Chris Anderson

When feeling overwhelmed or unfocused:
"Have I had enough sleep? Have I eaten? Would it be a good idea to go for a short walk?
And once those have been answered, or fixed, if there's an actual situation that's overwhelming:
Is there anything I can do to fix this? Is there anyone who actually has information or advice about this that I can call and talk to?" -Neil Gaiman

"Top down (macro thinking) means I consider the big picture issues before the small when making decisions...For example, I invest in real estate where smart people want to live." -Adam Fisher

"Just learn how to learn. Then you can always figure out the next thing that you will need to know." -Adam Fisher

"Choose opportunities based on the quality of people you will get to work with." -Scott Belsky

"You can do so much in ten minutes' time. Ten minutes, once gone, are gone for good. Divide your life into ten-minute units and sacrifice as few of them as possible in meaningless activity." -Ingvar Kamprad

"Asking myself the question, 'When I'm old, how much would I be willing to pay to travel back in time and relive the moment I'm experiencing right now?' This simple question puts things in perspective and makes you grateful for the experience you're having right now versus being lost in thoughts about the past or future.

Responses to problems: "Most likely, the problem won't be around in a year, but my reputation of how I dealt with it will." -Whitney Cummings

"No one is qualified to tell you how you experience the world." -Vlad Zamfir

"Discipline equals freedom." -Jocko Willink

"Don't aim at success. The more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued...Happiness must happen, and the same holds for success: you have to let it happen by not caring about it." -Viktor E. Frankl

"The player of the inner game comes to value that art of relaxed concentration above all other skills; he discovers the true basis for self-confidence; and he learns that the secret to winning any game lies in not trying too hard." -W. Timothy Gallwey

Excellence is in the next five minutes, improvement is in the next five minutes, happiness is the next five minutes.

The power broker in your life is the voice that no one ever hears. How well you revisit the tone and content of your private voice is what determines the quality of your life. It is the master storyteller, and the stories we tell ourselves are our reality.

Focus on what's in front of you, design great days to create a great life, and try not to make the same mistake twice.

Feeling as though you are trying too hard indicates that your priorities, technique, focus, or mindfulness is off. Take it as a cue to reset, not to double down.

The Undoing Project – Michael Lewis

The Undoing Project: A Friendship That Changed Our Minds – by Michael Lewis
Date Read: 11/26/17. Recommendation: 9/10.

A fascinating look into the unlikely relationship and original contributions of two Israeli psychologists, Daniel Kahneman and Amos Tversky. Together they examined how people make decisions and predictions, and uncovered the systematic bias and errors that are inherent to each. They found that the human mind replaced laws of chance with rules of thumb–what they referred to as "heuristics," including availability, representativeness, anchoring, and simulation. Each heuristic reveals itself in the form of a cognitive bias (hindsight, recency, vividness, etc.). The papers of Kahneman and Tversky have had widespread positive implications, helping to educate experts in various fields (economics, policy, medicine) of their own biases, and ultimately leading to the creation of "behavioral economics."

See my notes below or Amazon for details and reviews.

My Notes:

"Your mind needs to be in a constant state of defense against all this crap that is trying to mislead you." -Daryl Morey (GM, Houston Rockets)

It seemed to him that a big part of a consultant's job was to feign total certainty about uncertain things.

His main question to NBA scouts he interviewed, "who did you miss?" Wanted to find some degree of self-awareness.

But this raised a bigger question: Why had so much conventional wisdom been bullshit? And not just in sports but across the whole society. Why had so many industries been ripe for disruption? Why was there so much to be undone?

Danny Kahneman's defining emotion is doubt. An outsider who was displaced by WW2.
Amos Tversky was the quintessential Israeli and thrived in the role of a fearless hero. Self-assured.

The question the Israeli military had asked Kahneman–Which personalities are best suited to which military roles?–had turned out to make no sense. And so Danny had gone and answered a different, more fruitful question: How do we prevent the intuition of interviewers from screwing up their assessments of army recruits? Remove their gut feelings, and their judgments improved.

Walter Mischel's "marshmallow experiment" inspired Danny to study "the psychology of single questions."
-A child's (3-5 years old) ability to wait turned out to be correlated with his IQ and his family circumstances and some other things. Tracking them through life, found the better they were able to resist temptation, the higher their future SAT scores and sense of self-worth, the lower their body fat or likelihood that they would suffer from some addiction.

"It's hard to know how people select a course in life. The big choices we make are practically random. The small choices probably tell us more about who we are. Which field we go into may depend on which high school teacher we happened to meet. Who we marry may depend on who happens to be around at the right time of life. On the other hand, the small decisions are very systematic. That I became a psychologist is probably not very revealing. What kind of psychologist I am may reflect deep traits." –Tversky

Economic theory, the design of markets, public policy making, and a lot more depended on theories about how people made decisions.

By changing the context in which two things are compared, you submerge certain features and force others to the surface. "The similarity of objects is modified by the manner in which they are classified." –Tversky

Danny thought, this is what happens when people become attached to a theory. They fit the evidence to the theory rather than the theory to the evidence. They cease to see what's right under their nose.

"Belief in the Law of Small Numbers"
Teased out the implications of a single mental error that people commonly made–even when those people were trained statisticians. People mistook even a very small part of a thing for the whole...They did this, Amos and Danny argued, because their believed–even if they did not acknowledge the belief–that any given sample of a large population was more representative of that population that it actually was.

If you flipped a coin a thousand times, you were more likely to end up with heads or tails roughly half the time than if you flipped it ten times. For some reason human beings did not see it that way. "People's intuitions about random sampling appear to satisfy the law of small numbers, which asserts that the law of large numbers applies to small numbers as well."

The failure of human intuition had all sorts of implications for how people moved through the world, and rendered judgments and made decisions.

The entire project, in other words, was rooted in Danny's doubts about his own work, and his willingness, which was almost an eagerness, to find error in that work...It wasn't just a personal problem; it was a glitch in human nature.

Oregon researchers (with Lew Goldberg) asked doctors to judge the probability of cancer in 96 different individual stomach ulcers by looking at a stomach X-ray. Without telling the doctors, researchers mixed up the duplicates randomly in a pile so they wouldn't notice they were being asked to diagnose the exact same ulcer they had already diagnosed...Doctors' diagnoses were all over the map: The experts didn't agree with each other. Even more surprisingly, they rendered more than one diagnosis for the duplicates–couldn't even agree with themselves.

"Belief in the Law of Small Numbers" raised obvious next question: If people did not use statistical reasoning...what kind of reasoning did they use?

"Availability: A Heuristic for Judging Frequency and Probability"
The mind did not naturally calculate the correct odds...It replaced the laws of chance with rules of thumb. These rules of thumb Danny and Amos called "heuristics."

Four Heuristics: availability, representativeness, anchoring, simulation.

Representativeness: When people calculate the odds in any life situation, they are often making judgments about similarity.
-You have some notion of a parent population: "storm clouds" or "gastric ulcers" or "genocidal dictators" or "NBA players." You compare the specific case to the parent population.

The smaller the sample size, the more likely that is is unrepresentative of the wider population.

Availability: Any fact or incident that was especially vivid, or recent, or common–or anything that happened to preoccupy a person–was likely to be recalled with special ease, and so be disproportionately weighted in any judgment.

"The use of the availability heuristic leads to systematic biases." Human judgment was distorted by...the memorable.

The bias was the footprint of the heuristic. The bias, too, would soon have their own names, like the "recency bias" and the "vividness bias."

"We often decide that an outcome is extremely unlikely or impossible, because we are unable to imagine any chain of events that could cause it to occur. The defect, often, is in our imagination."

The stories people told themselves, when the odds were either unknown or unknowable, were naturally too simple.

It's far easier for a Jew living in Paris in 1939 to construct a story about how the German army will behave much as it had in 1919, for instance, than to invent a story in which it behaves as it did in 1941, no matter how persuasive the evidence might be that, this time, things are different.

Simulation: Power of unrealized possibilities to contaminate people's minds. As they moved through the world, people ran simulations of the future.

Danny wanted to investigate how people created alternatives to reality by undoing reality. He wanted, in short, to discover the rules of imagination.

Imagination wasn't a flight with limitless destinations. It was a tool for making sense of a world of infinite possibilities by reducing them. The imagination obeyed rules: the rules of undoing...
-The more items there were to undo in order to create some alternative reality, the less likely the mind was to undo them.
-"An event becomes gradually less changeable as it recedes into the past." With the passage of time, the consequences of any event accumulated, and left more to undo.
-In doing some event, the mind tended to remove whatever felt surprising or unexpected.

"On the Psychology of Prediction"
People predict by making up stories.
People predict very little and explain everything.
People live under uncertainty whether they like it or not.
People believe they can tell the future if they work hard enough.
People often work hard to obtain information they already have. And avoid new knowledge. –Tversky

Man's inability to see the power of regression to the mean leaves him blind to the nature of the world around him.

When they wrote their first papers, Danny and Amos had no particular audience in mind...They sensed that they needed to find a broader audience. Began targeting high-level professional activities, economic planning, technological forecasting, political decision making, medical diagnosis, and the evaluation of legal evidence.

They hoped that the decisions made by experts in these fields could be "significantly improved by making these experts aware of their own biases, and by the development of methods to reduce and counteract the sources of bias in judgment."

That is, once they knew the outcome, they thought it had been far more predictable than they had found it to be before, when they had tried to predict it–"hindsight bias."

In his talk to historians, Amos described their occupational hazard: the tendency to take whatever facts they had observed (neglecting the many facts that they did not or could not observe) and make them fit neatly into a confident sounding story:
"All too often, we find ourselves unable to predict what will happen; yet after the fact we explain what did happen with a great deal of confidence. This "ability" to explain that which we cannot predict, even in the absence of any additional information, represents an important, though subtle, flaw in our reasoning. It leads us to believe that there is a less uncertain world that there actually is, and that we are less bright than we actually might be."

"Creeping determinism"–Sports announcers, political pundits, historians all radically revise their narratives so that their stories fit whatever just happened. Impose false order upon random events probably without even realizing what they were doing.

"He who sees the past as surprise-free is bound to have a future full of surprises."

Error wasn't necessarily shameful; it was merely human. "They provided a language and a logic for articulating some of the pitfalls people encounter when they think. Now these mistakes could be communicated.It was the recognition of human error. Not its denial." -Don Redelmeir

"So many problems occur when people fail to be obedient when they are supposed to be obedient, and fail to be creative when they are supposed to be creative." -Tversky

"The secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours." -Tversky

"Selective Matching"
–Amos had collected data on NBA shooting streaks to see if the so-called hot hand was statistically significant...but the streaks were illusions...false patterns that people mistakingly assigned meaning to.
–"For arthritis, selective matching leads people to look for changes in the weather when they experience increased pain, and pay little attention to the weather when their pain is stable...[A] single day of severe pain and extreme weather might sustain a lifetime of belief in a relation between them."

Even though insurance is a stupid bet, you buy it because you place less value on the $1,000 you stand to win flipping a coin than you do on the $1,000 already in your bank account that you stand to lose.

By the summer of 1973, Amos was searching for ways to undo the reigning theory of decision making, just as he and Danny had undone the idea that human judgment followed the precepts of statistical theory.

"It is the anticipation of regret that affects decisions, along with the anticipation of other consequences." -Kahneman

People did not seek to avoid other emotions with the same energy that they sought to avoid regret. When they made decisions, people did not seek to maximize utility. They sought to minimize regret.

People regretted what they had done, and what they wished they hadn't done, far more than what they had not done and perhaps should have.

"The pain that is experienced when the loss is caused by an act that modified the status quo is significantly greater than the pain that is experienced when the decision led to the retention of the status quo. When one fails to take action that could have avoided a disaster, one does not accept responsibility for the occurrence of the disaster." -Kahneman

"Theory of Regret" (they soon left this behind and focused on "Risk Value Theory")
-Coming close: Nearer you come to achieving a thing, the greater the regret you experienced if you failed to achieve it.
-Responsibility: The more control you felt you had over the outcome of a gamble, the greater the regret you experienced if the gamble turned out badly.

"For most people, the happiness involved in receiving a desirable object is smaller than the unhappiness involved in losing the same object...Happy species endowed with infinite appreciation of pleasures and low sensitivity to pain would probably not survive the evolutionary battle."

"Risk Value Theory"
-Realization that people responded to changes rather than absolute levels.
-Discovery that people approached risk very differently when it involved losses than when it involved gains.
-People did not respond to probability in a straightforward manner.

A loss, according to their theory, was when a person wound up worse off than his "reference point." This could be wherever you started from, your status quo, or an expectation (i.e. annual bonus).

"Framing"–simply by changing the description of a situation, and making a gain seem like a loss, you could cause people to completely flip their attitude toward risk, and turn them from risk avoiding to risk seeking.

"I have vivid memories of running from one article to another. For a while I wasn't sure why I was so excited. Then I realized: They had one idea. Which was systematic bias." –Thaler

"Reality is a cloud of possibility, not a point." –Tversky

"The Conjunction Fallacy"
People were blind to logic when it was embedded in a story. Describe a very sick old man and ask people: Which is more probably, that he will die within a week or die within a year? More often than not, they will say, "He'll die within a week."

Amos created a lovely example. He asked people: Which is more likely to happen in the next year, that a thousand Americans will die in a flood, or that an earthquake in California will trigger a massive flood that will drown a thousand Americans? People went with the earthquake.

The force that led human judgment astray in this case was what Danny and Amos had called "representativeness," or the similarity between whatever people were judging and some model they had in their mind of that thing.

The work that Amos and Danny did together awakened economists and policy makers to the importance of psychology.

Richard Thaler–the first frustrated economist to stumble onto Danny and Amos's work and pursue its consequences for economics single-mindedly–would helped to create a new field, and give it the name "behavioral economics."

The Airbnb Story – Leigh Gallagher

The Airbnb Story – by Leigh Gallagher
Date Read: 11/15/17. Recommendation: 7/10.

Essentially a giant case study of Airbnb and its founders–Brian Chesky, Joe Gebbia, and Nathan Blecharczyk–which documents the evolution of their initial concept through its unprecedented growth. With regard to each of the founders, it was interesting to hear about their backgrounds and a great reminder that there's no one-size-fits-all approach to launching a company. Chesky and Gebbia were resourceful and got things off the ground without the traditional "technical DNA" that most investors in Silicon Valley obsess over. Their art-school background ended up being an asset that helped set them apart from competitors (better user interface), along with a perfect wave of external factors including timing, price, and a shift in consumer preferences towards artisanal experiences. Gallagher also does a great job remaining objective and presenting both sides of the story–as Airbnb hasn't come without controversy. It's one of the most engaging success stories of recent years.

See my notes below or Amazon for details and reviews.

My Notes:

Airbnb tapped into something greater than low prices and an abundance of available inventory. It offered an experience that was special and different...It also opened up access to different kinds of neighborhoods than traditional tourist zones.

Founders:
Brian Chesky–most striking evolution since he lacked specific industry knowledge and tech skills. Developed a couple skills that were critical to his growth as a leader: 1) knack for ring-leading dating back to his college days, 2) near pathological curiosity + voracious reader. His solution to acquire the rest of the tools he'd need was to basically hack leadership by seeking out help from a series of expert mentors.

Joe Gebbia–design disrupter with bold ideas and knack for entrepreneurialism.
(^ attended Rhode Island School of Design together)

Nathan Blecharczyk–gifted engineer.

Origins: ICSID/IDSA World Congress (design conference) was coming to San Francisco, Chesky and Gebbia knew hotel capacity would be tight and rates would be high. Put together AirBed & Breakfast website, emailed design blogs and the conference organizers to ask them to help promote, and booked three guests (professional designers on a budget).

First Guest, Amol Surve: "It was a hack from both our sides. I was trying to hack and go to the conference, and they were trying to hack and make rent. It was, like, a perfect match."

Originally concept existed as a resource for finding rooms during sold-out conferences across the country. Went to launch at South by Southwest that year.

"If you launch and no one notices, you can keep launching. We kept launching, and people kept writing about it. We thought we'd just keep launching until we got customers." -Brian Chesky

Kept refining their vision, broader vision came into focus: website where booking a room in someone's home would be as easy as booking a hotel. *But this meant they had to build a sophisticated payment system.

Investors thought the idea of renting out space to strangers was totally weird and unbelievably risky. They were put off by Chesky and Gebbia's art school background; they thought they lacked the technical DNA.

2008 launched their site for a third time and targeted Democratic National Convention with hype around Obama and a massive shortage of housing in Denver for the event. Ran into issues with supply shortage.

Afterwards they were desperate for funds launched fictitious brands of cereal called Obama O's and Cap'n McCain's. It worked (Obama O's sold out in three days, were being resold for as much as $350/box).

They had made less than $5,000 from their core business and somewhere between $20,000 and $30,000 from selling cereal.

Y Combinator: "If you can convince people to pay forty dollars for a four-dollar box of cereal, you can probably convince people to sleep in other people's airbeds. Maybe you can do it." –Paul Graham

Paul Graham taught them two important lessons:
1) It's much better to have one hundred users who love you than one million users who "sort of like you"
2) Go to your users (they ended up flying to New York and going door-to-door)

By going to their users in New York, they identified two major pain points: trouble pricing properties and photos. They decided to send professional photographers to each host's home at no charge (at first they were doing the photos themselves). Meeting directly with their users is also what gave them the idea to add the option for people to rent out their entire residence (and nix the breakfast requirement).

"If you are successful, it will be the hardest thing you ever do." –Nathan Blecharczyk

"I think hiring your first engineer is like bringing in DNA to your company." –Brian Chesky

Hacking Growth–Built backdoor into Craigslist to repost their listings on there.

Airbnb's business is fundamentally about leveraging a network effect: the more people who list, the more appealing it is to travelers. The more travelers who use it, the more appealing it is to hosts.

Figuring out how to get the right listings in front of the right people was and remains a complicated process. Every listing is unique, not just in its look, feel, location, and price but also in its availability, its host, and its host's set of rules and preferences.

During the first Internet boom, a trio of brothers in Germany–Marc, Alexander, and Oliver Samwer–started making a living taking the ideas of the most successful U.S. tech start-ups and cloning them abroad, then selling them back to the original company. Wimdu was their Airbnb equivalent. When they reached out asking if Airbnb was interested in buying them, the advisors to Airbnb all gave different opinions.

Chesky ended up taking advice from Paul Graham who told him the difference between Airbnb and Wimdu was that Airbnb owners were missionaries, and Wimdu owners were mercenaries. Missionaries, he told him, usually win. Decided not to buy for the above reason, also because he didn't want to absorb the Wimdu employees and thought best revenge would be to force Samwer brothers to actually run the company they had no interest in running.

"Uber is transactional; Airbnb is humanity." -Elisa Schreiber

Why Airbnb has caught on in the way it has is due to a combination of factors:
-Price (founded during recession in 2008, weakened spending power of consumers)
-Dissatisfaction with the mass commodification of large-scale hotel chains
-Desire for small-batch artisanal everything, want the same kind of imperfect authenticity in travel experiences.
-Hunger for anything that claimed to have a purpose or mission.
-Desire to seek out community in wake of the decline of human connection in today's complicated world.

Airbnb's data reveals that the average host makes around $6,000 a year.

Sharing economy: "Fundamentally, this model of business isn't going to have the same kind of protection that the hotels or the car-rental companies or the taxi commission provide. We always make a trade-off, and we'll start to make different trade-offs with the sharing economy." –Arun Sundararajan

Airbnb's experience in New York is a case study for the kinds of collisions that can happen when new ideas and technologies come out of nowhere to threaten the status quo and incumbent industries–and how the political realities on the ground aren't always as smooth as the ascending line on these companies' unfettered growth charts.

Airbnb Negatives:
-Inhibit quality of life for neighbors who didn't sign up for transient tourists
-Creates safety issues by providing access to residential buildings to strangers
-Removes housing from a market that is already in a serious affordable-housing crisis, driving prices up for everyone

"Belinda [Johnson] taught me that no matter how much somebody hates you, it's almost always better to meet them." -Brian Chesky

Home sharing has caught on is because it reinforces social contracts that have become frayed. It enables everyday people to be economically empowered. It brings people together.

When Airbnb came along, it was different from VRBO, HomeAway in a few significant ways:
-More user-friendly interface than anything that had come before it.
-Brough the owner and customer together in new, more intimate way (personalities, magazine-worthy photography)
-Self-contained system that handled payments, messaging, and customer service
-Sophisticated technological backend
-Instead of focusing on vacation destinations in resort areas, focused on cities.

After dismissing it for so long, the hotel industry slowly started to confront its Airbnb problem. (In 2016!)

"Sports is the only thing where you learn your limitations quickly." -Brian Chesky

The survival of a tech company depends on a willingness to branch into new categories.

Hooked – Nir Eyal

Hooked: How to Build Habit-Forming Products – by Nir Eyal
Date Read: 11/11/17. Recommendation: 6/10.

Examines how to engineer user behavior, the moral implications, and how to leverage those findings to improve people's lives. Eyal documents each step of the "hook model," consisting of a trigger, action, investment, and variable reward. It's a short read and doesn't advance much past the basics, but if you're looking for an introduction to the startup mindset and how to begin building a product or service of your own, it's worth your time. 

See my notes below or Amazon for details and reviews.

My Notes:

Habits = automatic behaviors triggered by situational cues

How did these companies engineer user behavior? What were the moral implications of building potentially addictive products? Most important, could the same forces that made these experiences so compelling also be used to build product to improve people's lives?

The Hook Model: Trigger, Action, Investment, Variable Reward

When harnessed correctly, technology can enhance lives through healthful behaviors that improve our relationships, make us smarter, and increase productivity. *Should be used to help nudge people to make better choices (as judged by themselves).

Hooks connect the user's problem with a company's solution frequently enough to form a habit.

Price Sensitivity: As customers form routines around a product, they come to depend upon it and become less sensitive to price.
*Rise of the freemium model

Users who continuously find value in a product are more likely to tell their friends about it. Frequent usage = brand evangelists who bring in new users at little or no cost.

Viral Cycle Time: the amount of time it takes a user to invite another user; and it can have a massive impact.

"Many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new." -John Gourville
If you're building a new product, it can't just be better. It must be nine times better because old habits die hard.
*QWERTY keyboard vs. Dvorak Simplified Keyboard

"Are you building a vitamin or a painkiller?"
-Painkillers solve an obvious need, relieving a specific pain and often have quantifiable markets.
-Vitamins, by contrast, do not necessarily solve an obvious pain point. Instead they appeal to users' emotional rather than functional needs.

"If you want to build a product that is relevant to folks, you need to put yourself in their shoes and you need to write a story from their side. So, we spend a lot of time writing what's called user narratives." -Jack Dorsey

"5 Whys Method" – Adapted from the Toyota Production System. By repeating why five times, the nature of the problem and the solution becomes clear.

The more effort required to perform the desired action, the less likely it is to occur.

Fogg Behavior Model, B=MAT. Behavior = Motivation, Ability, Trigger.

Remove steps until you reach the simplest possible process...Any technology that significantly reduces the steps to complete a task will enjoy high adoption rates by the people it assists.

"Take a human desire, preferably one that has been around for a really long time...Identify that desire and use modern technology to take out steps." -Evan Williams

The unknown is fascinating, and strong stories hold our attention by waiting to reveal what happens next.

Rewards of the tribe–gratification of others.
Rewards of the hunt–material goods, money, or information.
Rewards of the self–mastery, completion, competency, or consistency.

The escalation of commitment–makes some people play video games until they keel over and die. Has also been used to influence people to give more to charity.

The more users invest time and effort into a product or service, the more they value it. In fact, there is ample evidence to suggest that our labor leads to love. (IKEA effect)

The more effort we put into something, the more likely are to value it–rationalization.

Content increases the value of a service.

LinkedIn–Trick to getting people to return, getting them to initially enter just a little information.
Twitter–Following the right people.

Five fundamental questions:
1) What do users really want? What pain is your product relieving? (internal trigger)
2) What brings users to your service? (external trigger)
3) What is the simplest action users take in anticipation of reward, and how can you simplify your product to make this action easier? (action)
4) Are users fulfilled by the reward yet left wanting more? (variable reward)
5) What "bit of work" do users invest in your product? (investment)

The Hook Model can be a helpful tool for filtering out bad ideas with low habit potential as well as a framework for identifying room for improvement in existing products.

Poor Charlie's Almanack – Charles T. Munger

Poor Charlie's Almanack – by Charles T. Munger & Peter D. Kaufman
Date Read: 11/1/17. Recommendation: 9/10.

This is one of those must-read books because Munger's concepts are foundational to so many other authors and their ideas. To set expectations, the book is a monster. It took me months and multiple attempts to get through because there is so much there. It's comprised of 11 speeches given by Munger over the years. He details his now-popularized concept of "multiple mental models" and building a latticework of these models to improve cognition. Munger explains that adopting a more multidisciplinary approach is critical to achieving this, and cites Keynes when he suggests that it's better to be roughly right than precisely wrong. He also outlines "sit-on-your-ass investing" and the general approach that led to his success alongside Warren Buffett at Berkshire Hathaway. Poor Charlie's Almanack is one of those that you should sit with and reflect on so you can take it all in.

See my notes below or Amazon for details and reviews. 

My Notes:

Lollapalooza: The critical mass  obtained via a combination of concentration, curiosity, perseverance, and self-criticism, applied through a prism of multidisciplinary mental models.

To Cicero, if you live right, the inferior part of life is the early part.

Cicero points out how silly it is to complain of reaching old age. According to Cicero, the best a young person can hope for is to get old before he dies, and it is not fitting to complain about getting the best outcome you could have ever reasonable wanted. 

"I've long believed that a certain system–which almost any intelligent person can learn–works way better than the systems that most people use. What you need is a latticework of mental models in your head. And, with that system, things gradually get to fit together in a way that enhances cognition."

"Multiple Mental Models" serve as a framework for gathering, processing, and acting on information.

Just as multiple factors shape almost every system, multiple models from a variety of disciplines, applied with fluency, are needed to understand that system.

Sit on your ass investing (not buying or selling very often): "You're paying less to brokers, you're listening less to nonsense, and if it works, the tax system gives you an extra one, two, or three percentage points per annum."

It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities.

Reduce complex situations to their most basic, unemotional fundamentals, but avoid "physics envy," human craving to reduce enormously complex systems to one-size-fits-all Newtonian formulas.

"A scientific theory should be as simple as possible, but no simpler." –Albert Einstein

Charlie's methods could be summarized as, "Quickly eliminate the big universe of what not to do, follow up with a fluent, multidisciplinary attack on what remains, then act decisively when, and only when, the right circumstances appear."

It's kind of fun to sit there and outthink people who are way smarter than you are because you've trained yourself to be more objective and more multidisciplinary.

"If we have a strength, it is in recognizing when we are operating well within our circle of competence and when we are approaching the perimeter." –Warren Buffett

Few businesses survive over multiple generations.

Intellectual humility–Acknowledging what you don't know is the dawning of wisdom.

Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things.

Compound interest is the eighth wonder of the world.

Be fearful when others are greedy, and greedy when others are fearful.

It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

One of the key elements to successful investing is having the right temperament–most people are too fretful; they worry too much.

Stocks are valued partly like bonds, based on roughly rational projections of producing future cash. But they are also valued partly like Rembrandt paintings, purchased mostly because their prices have gone up so far.

If stocks trade more like Rembrandts in the future, then stocks will rise, but they will have no anchors. In this case, it's hard to predict how far, how high, and how long it will last.

Indexing can't work well forever if almost everybody turns to it. But it will work all right for a long time.

I think that, every time you see the word EBITDA [earnings before interest, taxes, depreciation, and amortization], you should substitute the words "bullshit earnings."

"Abraham Lincoln once asked: 'How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn't make it a leg.' Likewise, just because an actuary says you can earn 9% on pension-plan assets, it doesn't magically alter the reality of your future liability." –Buffett

The Importance of Mental Models: "You must know the big ideas in the big disciplines and use them routinely–all of them, not just a few. Most people are trained in one model–economics, for example–and try to solve all problems in one way. You know the old saying: To the man with a hammer, the world looks like a nail."

I don't know anyone who's wise who doesn't read a lot. But that's not enough: You have to have a temperament to grab ideas and do sensible things.

In my whole life, I have known no wise people (over a broad subject matter area) who didn't read all the time–none, zero. You'd be amazed at how much Warren reads–and at how much I read.

There's a lot wrong with American universities...You have these squirrelly people in each department who don't see the big picture.

Slug it out once inch at a time, day by day. At the end of the day–if you live long enough–most people get what they deserve.

Talk One: Harvard School Commencement Speech (6/13/86)

Johnny Carson speech, said he couldn't tell the graduating class how to be happy, but he could tell them prescription for sure misery: 1) Ingesting chemicals in an effort to alter mood or perception, 2) Envy, 3) Resentment.

Charlie adds a few more prescriptions for misery: be unreliable, learn everything you possibly can from you own experience, go down and stay down when you encounter a reverse in the battle of life. 

Invert, always invert...many hard problems are best solved only when they are addressed backward.

Reliability is essential for progress in life.

Talk Two: The University of Southern California Marshall School of Business (4/14/94)

You can't really know anything if you just remember isolated facts and try to bang 'em back. If the facts don't hang together on a latticework of theory, you don't have them in a usable form.

You've got to have models in your head. And you've got to array your experience–both vicarious and direct–on this latticework of models...And the models have to come from multiple disciplines–because all the wisdom of the world is not to be found in one little academic department.

So you have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don't, you're going to lose. And that's as close to certain as any prediction that you can make. You have to figure out where you've got an edge. And you've got to play within your own circle of competence.

Benjamin Graham's best idea was the concept of "Mr. Market"–not efficient, but manic depressive.

Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer.

The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple.

Three Rules for Your Career:

1) Don't sell anything you wouldn't buy yourself. 2) Don't work for anyone you don't respect and admire. 3) Work only with people you enjoy.

You don't have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time.

Talk Three: Stanford Law School (4/19/96)

Heavy ideology is one of the most extreme distorters of human cognition.

Warren adored his father–who was a wonderful man. But Warren's father was a very heavy ideologue (right wing, it happened to be), who hung around with other very heavy ideologues (right wing, naturally). Warren observed this as a kid. And he decided that he was going to stay a long way away from it. And he has throughout his whole life. That has enormously helped the accuracy of his cognition.

You can have heavy ideology in favor of accuracy, diligence, and objectivity. But a heavy ideology that makes you absolutely sure that the minimum wage should be raised or that it shouldn't–and it's king of a holy construct where you know you're right–makes you a bit nuts...Being totally sure on issues like that with a strong, violent ideology, in my opinion, turns you into a lousy thinker. So beware of ideology-based mental misfunctions.

"What a man wishes, that also will he believe." –Demosthenes

Workers' compensation system in California: Trouble with such a compensation practice is that it's practically impossible to delete huge cheating. And once you reward cheating, you get crooked lawyers, crooked doctors, crooked unions, etc., participating in referral schemes...So you were trying to help your civilization. but what you did was create enormous damage, net.

So it's much better to let some things go uncompensated–to let life be hard–than to create systems that are easy to cheat.

Part of what you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand.

People go broke that way–because they can't stop, rethink, and say, "I can afford to write this one off and live to fight again. I don't have to pursue this thing as an obsession–in a way that will break me."

Talk Seven: Breakfast Meeting of the Philanthropy Roundtable (11/10/00)

And I also think that one should recognize reality even when one doesn't like it, indeed, especially when one doesn't like it.

Suppose all pension funds purchased ancient art, and only ancient art, with all their assets. Wouldn't we eventually have a terrible mess on our hands, with great and undesirable macroeconomic consequences? And wouldn't the mess be bad if only half of all pension funds were invested in ancient art? And if half of all stock value became a consequence of mania, isn't the situation much like the case wherein half of pension assets are ancient art?

Efficient Market Theory: Professors were too much influence by "rational man" models of human behavior from economics and too little by "foolish man" models from psychology and real-world experience.

"Regard your good name as the richest jewel you can possibly be possessed of–for credit is like fire; when once you have kindled it you may easily preserve it, but if you once extinguish it, you will find it an arduous task to rekindle it again. The way you gain a good reputation is to endeavor to be what you desire to appear." –Socrates

Talk Nine: Herb Kay Undergraduate Lecture, University of California, Santa Barbara, Economics Department (10/3/03)

"If you would persuade, appeal to interest and not to reason." –Benjamin Franklin

The only antidote for being an absolute klutz due to the presence of man-with-a-hammer syndrome is to have a full kit of tools. 

But if you've got a full list of tools and go through them in your mind, checklist-style, you will find a lot of answers that you won't find any other way.

Practically everybody (1) overweighs the stuff that can be numbered because it yields to statistical techniques they're taught in academia and (2) doesn't mix in the hard-to-measure stuff that may be more important.

Too little attention in economics to second-order and even high-order effects...the consequences have consequences (it gets very complicated). 

All human systems are gamed, for reasons rooted deeply in psychology....The people who design easily gameable systems belong in the lowest circle of hell.

Are people who game systems bad or intrinsically dishonest? No. "They just don't think about what terrible things they're doing to the civilization because they don't take into account the second-order effects and the third-order effects in lying and cheating."

Keynes said, "It's not bringing in the new ideas that's so hard. It's getting rid of the old ones." And Einstein said it better, attributing his mental success to "curiosity, concentration, perseverance, and self-criticism." By self-criticism, he meant becoming good at destroying your own best-loved and hardest-won ideas. If you can get really good at destroying your own wrong ideas, that is a great gift.

What I've urged is the use of a bigger multidisciplinary bag of tricks, mastered to fluency, to help economics and everything else.

Keynes: Better roughly right than precisely wrong.

If you skillfully follow the multidisciplinary path, you will never wish to come back.

No matter how smart you are, there are smart people out there who can fool you if they really want to. So, be sure you can trust the smart people you work with.

Talk Ten: USC Gould School of Law (5/13/07)

Golden rule: You want to deliver to the world what you would buy if you were on the other end.

The acquisition of wisdom is a moral duty. It's not something you do just to advance in life. And there's a corollary to that idea that is very important. It requires that you're hooked on lifetime learning. Without lifetime learning, you people are not going to do very well. You are not going to get very far in life based on what you already know. You're going to advance in life by what you learn after you leave here.

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent. But they are learning machines. They go to bed every night a little wiser than they were that morning. 

The way complex adaptive systems work, and the way mental constructs work, problems frequently become easier to solve through "inversion." (i.e. if you want to help X, ask how you can hurt X?)

Mozart was utterly miserable most of the time. And one of the reasons was that he always overspent his income.

Self-pity is always counterproductive. It's the wrong way to think. And when you avoid it, you get a great advantage over everybody else, or almost everybody else, because self-pity is a standard response. And you can train yourself out of it.

You particularly want to avoid working under somebody you don't admire and don't want to be like.

Intense interest in any subject is indispensable, if you're really going to excel in it.

In your own life what you want to maximize is a seamless web of deserved trust.

Talk Eleven: The Psychology of Human Misjudgment

Doubt-Avoidance Tendency is some combination of (1) puzzlement and (2) stress. And both of these factors naturally occur in facing religious issues.

Inconsistency-Avoidance Tendency: The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance. 

Also tending to be maintained in place by anti-change tendency of the brain are one's previous conclusions, human loyalties, reputational identity, commitments, accepted role in a civilization, etc.

And so, people tend to accumulate large mental holdings of fixed conclusions and attitudes that are not often reexamined or changed, even though there is plenty of good evidence that they are wrong.

Charles Darwin trained himself, early, to intensively consider any evidence tending to disconfirm any hypothesis of his, more so if he thought his hypothesis was a particularly good one. The opposite of what Darwin did is now called confirmation bias.

As he was rising from obscurity in Philadelphia and wanted the approval of some important man, Franklin would often maneuver that man into doing Franklin some unimportant favor, like lending Franklin a book. Thereafter, the man would admire and trust Franklin more because a nonadmired and nontrusted Franklin would be inconsistent with the appraisal implicit in lending Franklin the book.

"It is not greed that drives the world, but envy." -Warren Buffett

The standard antidote to one's overactive hostility is to train oneself to defer reaction.

Social-Proof Tendency: An automatic tendency to think and act as he sees others around him thinking and acting. 

Learn how to ignore the examples from others when they are wrong, because few skills are more worth having.

Learning is most easily assimilated and used when, life long, people consistently hang their experience, actual and vicarious, on a latticework of theory answering the question: Why?

The Lessons of History – Will & Ariel Durant

The Lessons of History – by Will & Ariel Durant
Date read: 10/22/17. Recommendation: 7/10.

A high-level look at the major lessons and themes throughout human history. The Durant's discuss race, religion, economics, capitalism, socialism, war, progress, and heritage, to name a few. They offer some interesting insights that are particularly relevant in today's politically-charged climate. They tackle the concentration of wealth, value of free enterprise, and increasing complexity of the economy. The Lessons of History also wisely reminds us to maintain a healthy level of skepticism as, "history is so indifferently rich that a case for almost any conclusion from it can be made by a selection of instances."

See my notes below or Amazon for details and reviews.

My Notes:

Human history is a brief spot in space, and its first lesson is modesty.

Geography is the matrix of history, its nourishing mother and disciplining home.

Nature smiles at the union of freedom and equality in our utopias. For freedom and equality are sworn and everlasting enemies, and when one prevails the other dies.

Even when repressed, inequality grows; only the man who is below the average in economic ability desires equality; those who are conscious of superior ability desire freedom; and in the end superior ability has its way. Utopias of equality are biologically doomed, and the best that the amiable philosopher can hope for is an approximate equality of legal justice and educational opportunity.

Probably every vice was once a virtue (necessary for survival)...Man's sins may be the relics of his rise rather than the stigmata of his fall.

Meanwhile history assures us that civilizations decay quite leisurely (Greece, Imperial Rome took hundreds of years).

Does history support a belief in God? If by God we mean not the creative vitality of nature but a supreme being intelligent and benevolent, the answer must be a reluctant negative.

One lesson of history is that religion has many lives, and a habit of resurrection.

As long as there is poverty there will be gods.

The experience of the past leaves little doubt that every economic system must sooner or later rely upon some form of profit motive to stir individuals and groups to productivity.

The concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution.

The struggle of socialism against capitalism is part of the historic rhythm in the concentration and dispersion of wealth.

[The capitalist] can give the public a greater abundance of foods, homes, comfort, and leisure than has ever come from industries managed by politicians, manned by governmental employees, and supposedly immune to the laws of supply and demand.

In free enterprise the spur of competition and the zeal and zest of ownership arouse the productiveness and inventiveness of men.

The socialist agitation subsided during the Restoration, but it rose again when the Industrial Revolution revealed the greed and brutality of early capitalism–child labor, woman labor, long hours, low wages, and disease-breeding factories and farms.

The feat of capitalism has compelled socialism to widen freedom, and the fear of socialism has compelled capitalism to increase equality.

Monarchy seems to be the most natural kind of government...democracies, by contrast, have been hectic interludes.

All in all, monarchy has had a middling record...When it is hereditary it is likely to be more prolific of stupidity, irresponsibility, and extravagance than of nobility or statesmanship.

[In Greek states] The middle class, as well as the rich began to distrust democracy as empowered envy, and the poor distrusted it as a sham equality of votes nullified by a gaping inequality of wealth....27 B.C. Democracy ended, monarchy was restored; the Platonic wheel had come full turn.

Every advance in the complexity of the economy puts an added premium upon superior ability, and intensifies the concentration of wealth, responsibility, and political power.

If race or class war divides us into hostile camps, changing political argument into blind hate, one side or the other may overturn the hustings with the rule of the sword. If our economy of freedom fails to distribute wealth as ably as it has created it, the road to dictatorship will be open to any man who can persuasively promise security to all.

War is one of the constants of history, and has not diminished with civilization or democracy. In the last 3,241 years of recorded history only 268 have seen no war.

Peace is an unstable equilibrium, which can be preserved only by acknowledged supremacy or equal power.

Civilization = social order promoting cultural creation.

History repeats itself, but only in outline and in the large.

Since we have admitted no substantial change in man's nature during historic times, all technological advances will have to be written off as merely new means of achieving old ends–the acquisition of goods, the pursuit of sex by the other, the overcoming of competition, the fighting of wars.

We frolic in our emancipation from theology...[but] have we really outgrown intolerance, or merely transferred it from religious to national, ideological or racial hostilities?

History is so indifferently rich that a case for almost any conclusion from it can be made by a selection of instances.

We have said that a great civilization does not entirely die. Some precious achievements have survived all the vicissitudes of rising and falling states....They are the connective tissue of human history.

Consider education not as the painful accumulation of facts and dates and reigns, nor merely the necessary preparation of the individual to earn his keep in the world, but as the transmission of our mental, moral, technical, and aesthetic heritage as fully as possible to as many as possible.

If progress is real despite our whining, it is not because we are born any healthier, better, or wiser than infants were in the past, but because we are born to a richer heritage, born on a higher level of that pedestal which the accumulation of knowledge and art raises as the ground and support of our being.

History is, above all else, the creation and recording of that heritage; progress is its increasing abundance, preservation, transmission, and use.

Principles – Ray Dalio

Principles – by Ray Dalio
Date read: 10/14/17. Recommendation: 8/10.

Dalio offers a detailed analysis of his principles for life and work, which have led him to become one of the most successful investors of our time. He offers these lessons with a refreshing dose of humility–not what you'd expect from the founder of one of the world's largest hedge funds. I gravitated towards his life principles where he champions truth, the value of painful mistakes, and the importance of looking beyond first-order consequences. His work principles also offer great insight into human relationships, conflict resolution, and the importance of building a culture of transparency. 

See my notes below or Amazon for details and reviews. 

My Notes:

Whatever success I've had in life has had more to do with my knowing how to deal with my not knowing than anything I know.

By failing well, I mean being able to experience painful failures that provide big learnings without failing badly enough to get knocked out of the game.

Life Principles:
Truth–or more precisely, an understanding of reality–is the essential foundation for any good outcome.

Once we get the things we are striving for, we rarely remain satisfied with them. The things are just the bait. Chasing after them forces us to evolve, and it is the evolution and not the rewards themselves that matters to us and to those around us. This means that for most people success is struggling and evolving as effectively as possible.

Pain = Signal that you need to find solutions so you can progress.

If you're not failing, you're not pushing your limits, and if you're not pushing your limits, you're not maximizing your potential.

No matter what you want out of life, your ability to adapt and move quickly and efficiently through the process of personal evolution will determine your success and your happiness.

People who overweigh the first-order consequences of their decisions and ignore the effects of second- and subsequent-order consequences rarely reach their goals. This is because first-order consequences often have opposite desirabilities from second-order consequences, resulting in big mistakes in decision making. (i.e. exercise, first-order = pain, time, second-order = fitness, health).

Whatever circumstances life brings you, you will be more likely to succeed and find happiness if you take responsibility for making your decisions well instead of complaining about things beyond your control. Psychologists call this having an "internal locus of control," and studies consistently show that people who have it outperform those who don't.

Acknowledging your weaknesses is not the same as surrendering to them. It's the first step toward overcoming them.

Recognize that knowing what someone (including you) is like will tell you what you can expect from them.

Remember that there are typically many paths to achieving your goals. You only need to find one that works.

If you are too proud of what you know or of how good you are at something you will learn less, make inferior decisions, and fall short of your potential.

Intuiting vs. sensing. Some people see big pictures (forests) and others see details (trees).

The biggest threat to good decision making is harmful emotions.

You need to weigh first-order consequences against second- and third-order consequences, and base your decisions not just on near-term results but on results over time.

First pitfall of bad decision making: subconsciously make the decision first then cherry-pick the data that supports it.

To synthesize well (convert a lot of data into an accurate picture), you must 1) synthesize the situation at hand, 2) synthesize the situation through time, and 3) navigate levels effectively.

The best choices are the ones that have more pros than cons, not those that don't have any cons at all.

Some decisions are best made after acquiring more information; some are best made immediately...You need to constantly evaluate the marginal benefit of gathering more information against the marginal cost of waiting to decide.

Work Principles:
Nothing is more important or more difficult than to get the culture and people right.

The essential difference between a culture of people with shared values (which is a great thing) and a cult (which is a terrible thing) is the extent to which there is independent thinking.

You have to work in a culture that suits you. That's fundamental to your happiness and effectiveness.

Speak up, own it, or get out...What you're not allowed to do is complain and criticize privately–either to others or in your own head.

Fairness and generosity are different things.

Treasure honorable people who are capable and will treat you well even when you're not looking.

Everyone makes mistakes. The main difference is that successful people learn from them and unsuccessful people don't.

Pain is a message that something is wrong and it's an effective teacher that one shouldn't do that wrong thing again.

It seems to me that if you look back on yourself a year ago and aren't shocked by how stupid you were, you haven't learned much.

Every mistake that you make and learn from will save you from thousands of similar mistakes in the future.

If you want to evolve, you need to go where the problems and the pain are. By confronting the pain, you will see more clearly the paradoxes and problems you face. Reflecting on them and resolving them will give you wisdom.

When there is pain, the animal instinct is flight-or-fight. Calm yourself down and reflect instead.

By avoiding conflicts one avoids resolving differences. People who suppress minor conflicts tend to have much bigger conflicts later on, which can lead to separation, while people who address their mini-conflicts head on tend to have the best and longest-lasting relationships.

Thoughtful disagreement is not a battle; its goal is not to convince the other party that he or she is wrong and you are right, but to find out what is true and what to do about it.

Recognize that conflicts are essential for great relationships because they are how people determine whether their principles are aligned and resolve their differences.

Remember that every story has another side. Wisdom is the ability to see both sides and weigh them appropriately.

When you have alignment, cherish it. While there is nobody in the world who will share your point of view on everything, there are people who will share your most important values and the ways in which you choose to live them out. Make sure your end up with those people.

We value people most who have what I call the three C's: character, common sense, and creativity.

Personality assessments are often more objective and reliable than interviews.

Look for people who are willing to look at themselves objectively...People who lack that ability fail chronically.

Know that most everyone thinks that what they did, and what they are doing, is much more important than it really is.

Most people get caught up in the blizzard of things coming at them. In contrast, successful people get above the blizzard so they can see the causes and effects at play.

If you want to build great metrics, start with the most important questions and imagine the metrics that will answer them.

Remember that almost everything will take more time and cost more money than you expect. (multiply by 1.5X)

Mastery – Robert Greene

Mastery – by Robert Greene
Date read: 9/30/17. Recommendation: 10/10.

You would be hard-pressed to find a more profound, relevant book, no matter your position in life. If I had to recommend a single book of Greene's to get you started, this would be it. He begins by defining mastery as the sensation we experience when we feel that we have a greater command of reality, other people, and ourselves. The book offers a deep dive into every element of mastery–including insight for those just starting out and searching for their life's task. True to form, Greene also provides detailed accounts from some of the greatest masters in history–Leonardo da Vinci, Benjamin Franklin, Charles Darwin, Albert Einstein, Paul Graham, and dozens more.

See my notes below or Amazon for details and reviews.

My Notes:

Mastery–the feeling that we have a greater command of reality, other people, and ourselves.

For animals, time is their great enemy...To a remarkable extent, our hunting ancestors reversed this process. The longer they spent observing something, the deeper their understanding and connection to reality. With experience, their hunting skills would progress. With continued practice, their ability to make effective tools would improve. The body could decay, but the mind would continue to learn and adapt. Using time for such effect is the essential ingredient of mastery.

When we take our time and focus in depth, when we trust that going through a process of months or years will bring us mastery, we work with the grain of this marvelous instrument that developed over so many millions of years. We infallibly move to higher and higher levels of intelligence. We see more deeply and realistically. We practice and make things with skill. We learn to think for ourselves. We become capable of handling complex situations without being overwhelmed.

The basic elements of this story are repeated in the lives of all of the great Masters in history: a youthful passion or predilection, a chance encounter that allows them to discover how to apply it, an apprenticeship in which they come alive with energy and focus. They excel by their ability to practice harder and move faster through the process, all of this stemming from the intensity of their desire to learn and from the deep connection they feel to their field of study.

Powerful inclination towards a particular subject = reflection of a person's uniqueness. Those who stand out for their mastery experience this inclination more deeply and clearly than others.

This intense connection and desire allows them to withstand the pain of the process–the self-doubts, the tedious hours of practice and study, the inevitable setbacks, the endless barbs from the envious,. They develop a resiliency and confidence that others lack.

Feeling motivated and energized, we can overcome almost anything. Feeling bored and restless, our minds shut off and we become increasingly passive.

People who are passive create a mental landscape that is rather barren. Because of their limited experience and action, all kinds of connections in the brain die off from lack of use.

I. Discover Your Calling: The Life's Task
The first move toward mastery is always inward–learning who you really are and reconnecting with that innate force.

Leonardo da Vinci's mind worked best when he had several different projects at hand, allowing him to build all kinds of connections between them.

What we lack most in the modern world is a sense of a larger purpose to our lives. In the past, it was organized religion that often supplied this. But most of us now live in a secularized world...But without a sense of direction provided to us, we tend to flounder. We don't know how to fill up and structure our time...Feeling that we are called to accomplish something is the most positive way for us to supply this sense of purpose and direction. It is a religious-like quest for each of us.

"Become who you are by learning who you are." -Pindar

If you allow yourself to learn who you really are by paying attention to that voice and force within you, then you can become what you were fated to become–an individual, a Master.

A false path in life is generally something we are attracted to for the wrong reasons–money, fame, attention, and so on.

Ignore your weaknesses and resist the temptation to be more like others. Instead, direct yourself toward the small things you are good at.

This strategy applies as well to any setbacks and difficulties we may experience. In such moments, it is generally wise to stick to the few things we know and do well, and to reestablish our confidence.

II. Submit to Reality: The Ideal Apprenticeship
"One can have no smaller or greater mastery than mastery of oneself." -Leonardo Da Vinci

Often in their Apprenticeship Phase (self-directed period that lasts 5-10 years), these types are not yet much different from anyone else. Under the surface, however, their minds are transforming in ways we cannot see but contain all the seeds of their future success.

The pain and boredom we experience in the initial stage of learning a skill toughens our minds, much like physical exercise. Too many people believe that everything must be pleasurable in life, which makes them constantly search for distractions and short-circuits the learning process. The pain is a kind of challenge your mind presents–will you learn how to focus and move past the boredom, or like a child will you succumb to the need for immediate pleasure and distraction?

It is better to dedicate two or three hours of intense focus to a skill than to spend eight hours of diffused concentration on it. You want to be as immediately present to what you are doing as possible.

The future belongs to those who learn more skills and combine them in creative ways.

You cannot make anything worthwhile in this world unless you have first developed and transformed yourself.

There are two kinds of failure. The first comes from never trying out your ideas because you are afraid, or because you are waiting for the perfect time. This kind of failure you can never learn from, and such timidity will destroy you. The second kind comes from a bold and venturesome spirit. If you fail in this way, the hit that you take to your reputation is greatly outweighed by what you learn.

You want to learn as many skills as possible, following the direction that circumstances lead you to, but only if they are related to your deepest interests.

You see what kind of work suits you and what you want to avoid at all cost. You move by trial and error. This is how you pass your twenties. You are the programmer of this wide-ranging apprenticeship, within the loose constraints of your personal interests.

In this new age, those who follow a rigid, singular path in their youth often find themselves in a career dead end in their forties, or overwhelmed with boredom. The wide-ranging apprenticeship of your twenties will yield the opposite–expanding possibilities as you get older.

III. Absorb the Master's Power: The Mentor Dynamic
The knowledge that you need to become a Master exists out there in the world–it is like a base metal or dead stone. This knowledge needs to be heated up and come alive within you, transforming itself into something active and relevant to your circumstances.

The best mentors are often those who have wide knowledge and experience, and are not overly specialized in their field–they can train you to think on a higher level, and to make connections between different forms of knowledge.

IV: See People As They Are: Social Intelligence
Social intelligence is the ability to see people in the most realistic light possible. By moving past our usual self-absorption, we can learn to focus deeply on others, reading their behavior in the moment, seeing what motivates them, and discerning any possible manipulative tendencies.

In all Benjamin Franklin's interactions with people he would force himself to take an initial step backward and not get emotional. From this more detached position, he would focus completely on the people he was dealing with, cutting off his own insecurities and desires from the equation.

Naive Perspective: Tendency to project idealizations and distortions upon teachers, parents, and friends that reflect what we want and need to see. Our view of people becomes saturated with various emotions–worship, admiration, love, need, anger. If you use this lens, focus is on what other people have done to you and the mistreatments you have endured.*

*Instead you must turn this around and begin with yourself–how you saw in others qualities they did not possess, or how you ignored signs of a dark side to their nature. In doing this, you will be able to clearly see the discrepancy between your illusions about who they are the and the reality, and the role you played in creating this discrepancy.

Often it is the quiet ones, those who give out less at first glance, who hide greater depths, and who secretly wield greater power.

The personality we project to the world plays a substantial role in our success and in our ascension to mastery.

We are quick to discern the mistakes and defects of others, but when it comes to ourselves we are generally too emotional and insecure to look squarely at our own.

V: Awaken the Dimensional Mind: The Creative-Active
As your thinking grows more fluid your mind will become increasingly dimensional, seeing more and more aspects of reality...Such originality will bring you to the heights of power.

Original Mind: Quality of looking at the world more directly–not through words and received ideas. If we think deeply about our childhood, not just about our memories of it but how it actually felt, we realize how differently we experienced the world back then. Our minds were completely open.

Retaining a memory of this Original Mind, we cannot help but feel nostalgia for the intensity with which we used to experience the world.

We may seek to retain the spirit of childhood here and there, playing games or participating in forms of entertainment that release us from the Conventional Mind. Sometimes when we visit a different country where we cannot rely upon everything being familiar, we become childlike again, struck by the oddness and newness of what we are seeing.

Masters and those who display a high level of creative energy are simply people who manage to retain a sizeable portion of their childhood spirit despite the pressures and demands of adulthood.

Some people maintain their childlike spirit and spontaneity, but their creative energy is dissipated in a thousand directions, and they never have the patience and discipline to endure an extended apprenticeship. Others have the discipline to accumulate vast amounts of knowledge and become experts in their field, but they have no flexibility of spirit, so their ideas never stay beyond the conventional and they never become truly creative. Masters manage to blend the two–discipline and childlike spirit–together into what we shall call the Dimensional Mind.

The Conventional Mind is passive–it consumes information and regurgitates it in familiar forms. The Dimensional Mind is active, transforming everything it digests into something new and original, creating instead of consuming.

You must let go of your need for comfort and security. Creative endeavors are by their nature uncertain.

To negate the ego you must adopt a kind of humility towards knowledge.

We indulge in drugs or alcohol, or engage in dangerous sports or risky behavior, just to wake ourselves up from the sleep of our daily existence and feel a heightened sense of connection to reality. In the end, however, the most satisfying and powerful way to feel this connection is through creative activity. Engaged in the creative process we feel more alive than ever, because we are making something and not merely consuming. Masters of the small reality we create.

"And this is the miracle of the human mind–to use its constructions, concepts, and formulas as tools to explain what man sees, feels and touches. Try to comprehend a little more each day. Have holy curiosity." -Albert Einstein

You do not look at the parts separately but at how they interact, experiencing what you produce as a whole.

Instead of a straight-line development from idea to fruition, the creative process is more like the crooked branching of a tree.

What constitutes true creativity is the openness and adaptability of our spirit. When we see or experience something we must be able to look at it from several angles, to see other possibilities beyond the obvious ones.

Creativity and adaptability are inseparable.

To create a meaningful work of art or to make a discovery or invention requires great discipline, self-control, and emotional stability.

VI: Fuse the Intuitive with the Rational: Mastery
But the types of intuitions discussed by various Masters cannot be reduced to a formula, and the steps they took to arrive at them cannot be reconstructed.

Through intense absorption in a particular field over a long period of time, Masters come to understand all of the parts involved in what they are studying. They reach a point where all of this has become internalized and they are no longer seeing the parts, but gain an intuitive feel for the whole.

Fluid form thinking comes in flashes and insights as the brain makes sudden connection between disparate forms on knowledge.

The key, then, to attaining this higher level of intelligence is to make our years of study qualitatively rich. We don't simply absorb information–we internalize it and make it our own by finding some way to put this knowledge to practical use.

Every moment, every experience contains deep lessons for us. We are continuously awake, never merely going through the motions.

"The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift." -Albert Einstein

Whatever field of activity we are involved in, there is generally an accepted path to the top....But Masters have a strong inner guiding system and a high level of self-awareness. What has suited others in the past does not suit them, and they know that trying to fit into a conventional mold would only lead to a dampening of spirit, the reality they seek eluding them.

Inevitably, Masters make a choice at a key moment in their lives: they decide to forge their own route, one that others will see as unconventional, but that suits their own spirit and rhythms and leads them closer to discovering the hidden truth of their objects of study. This key choice takes self-confidence and self-awareness.

The ability to connect deeply to your environment is the most primal and in many ways the most powerful form of mastery the brain can bring us.

It is easy to become enamored with the powers that technology affords us, and to see them as the end and not the means.

Although we tend to imagine Einstein as the ultimate abstract thinker, his way of thinking was remarkably concrete...If he had any qualities that were extraordinary, they were his patience mixed with his extreme tenacity.

In any competitive environment in which there are winners or losers, the person who has the wider, more global perspective will inevitably prevail. The reason is simple: such a person will be able to think beyond the moment and control the overall dynamic through careful strategizing. Most people are perpetually locked in the present.

Ideal of the Universal Man–a person so stepped in all forms of knowledge that his minds grows closer to the reality of nature itself and sees secrets that are invisible to most people.

Your false self is the accumulation of all the voice you have internalized from other people...who want you to conform to their ideas of what you should be like and societal pressures to adhere to certain values....It also includes the voice of your own ego, which constantly tries to protect you from unflattering truths.

Mastery is not a question of genetics or luck, but of following your natural inclinations and the deep desire that stirs you from within.

It is in fact the height of selfishness to merely consume what others create and to retreat into a shell of limited goals and immediate pleasures.

The 50th Law – Robert Greene

The 50th Law – by Robert Greene
Date read: 9/12/17. Recommendation: 8/10.

Greene pairs up with Curtis Jackson (50 Cent) to offer a real-world look into the laws of power and perseverance. He details stories from Jackson's rise and dissects how he was able to evolve and create momentum to escape dire circumstances. The more interesting sections of the book examine the underlying themes in Jackson's stories, such as fearlessness, self-reliance, and persistence.

See my notes below or Amazon for details and reviews.

My Notes:

If we go the opposite direction, cultivating a fearless approach to life, attacking everything with a boldness and energy, then we will create a much different dynamic.

We are all too afraid–of offending people, of stirring up conflict, of standing out from the crowd, of taking bold action.

The genius of Lincoln was his ability to focus intensely on reality and see things for what they were.

"Know the other, know yourself, and the victory will not be at risk; know the ground, know the natural conditions, and the victory will be total." -Sun Tzu

As an individual you cannot stop the tide of fantasy and escapism sweeping a culture. But you can stand as an individual bulwark to this trend and create power for yourself. You were born with the greatest weapon in all of nature–the rational and conscious mind.

[Socrates'] superiority, he realized, was that he knew that he knew nothing. This left his mind open to experiencing things as they are, the source of all knowledge.
^This position of basic ignorance was what you had as a child...Everything was a source of wonder. With time our minds tend to close off. Imagine that the world is still full of mystery.

If you have a long-term goal for yourself, one that you have imagined in detail, then you are better able to make the proper decisions in the present. You know which battles or positions to avoid because they don't advance you towards your goal.

Look at your most recent actions as if they were the maneuvers of another person. Imagine how you could have done it all better.

When you work for others, you are at their mercy...Instead you should have a greater fear of what will happen to you if you remain dependent on others for power. Your goal in every maneuver in life must be ownership, working the corner for yourself. When it is yours, it is yours to lose–you are more motivated, more creative, more alive. The ultimate power in life is to be completely self-reliant, completely yourself.

True ownership can come only from within. It comes from a disdain for anything or anybody that impinges upon your mobility, from a confidence in your own decisions, and from the use of your time in constant pursuit of education and improvement.

We live in a culture that offers you all kinds of crutches–experts to turn to, drugs to cure any psychological unease, mild pleasures to help pass or kill time, jobs to keep you just above water. It is hard to resist. But once you give in, it is like a prison yu enter that you cannot ever leave.

You cannot get this requisite inner strength from books or a guru or pills of any kind. It can come only from you. It is a kind of exercise you must practice on a daily basis–weaning yourself from dependencies, listening less to others' voice and more to your own, cultivating new skills.

If we succumb to the illusion and the comfort of a paycheck, we then neglect to build up self-reliant skills and merely postpone the day of reckoning when we are forced to fend for ourselves.

If there is ever a choice–more money or more responsibility–you must always opt for the latter.

Your goal in life must be to always move higher and higher up the food chain, where you alone control the direction of your enterprise and depend on no one.

There are ideas unique to you, a specific rhythm and perspective that are your strengths, not your weaknesses. You must not be afraid of your uniqueness and you must care less and less what people think of you. This has been the path of the most powerful people in history.

An opportunist in life sees all hindrances as instruments for power. The reason is simple: negative energy that comes at you in some form is energy that can be turned around–to defeat an opponent and lift you up.

The greatest ancient Greek hero of them all, Odysseus, was a supreme opportunist. In every dangerous moment in his life, he exploited some weakness in his enemies left open to trick them and turn the tables.

As part of this new concept, you are replacing the old stalwart symbols of power–the rock, the oak tree, etc.–with that of water, the element that has the greatest potential force in all of nature. Water can adapt to whatever comes its way, moving around or over any obstacle.

Momentum in life comes from increased fluidity, a willingness to try more, to move in a less constricted fashion.

Model in any venture that involves groups of people: You provide the framework, based on your knowledge and expertise, but you allow room for this project to be shaped by those involved in it.

The inability to deal with what is inevitable in life is the cause of so many problems. We work to postpone or avoid conflicts, and when they reach a point where we can no longer play such a passive game, we lack the experience and the habit of meeting them head on.

If leaders are fearful, hesitant to take any risks, or overly concerned for their ego and reputation, then this invariably filters its way through the entire group and makes effective action impossible

Thinking ahead requires a particular thought process that comes with practice. It means seeing something practical and achievable several years down the road, and mapping out how this goal can be achieved. It means thinking in branches, coming up with several paths to get there, depending on circumstances.

The fearless types in history inevitably display in their lives a higher tolerance than most for repetitive, boring tasks. This allows them to excel in their field and master their craft.

We too could have some or all of that power by a patient immersion in any field of study. Many people cannot handle the boredom this might entail; they fear starting out on such an arduous process. They prefer their distractions, dreams, and illusions, never aware of the higher pleasures that are there for those who choose to master themselves and a craft.

"All of man's troubles come from not knowing how to sit still, alone in a room." –Blaise Pascal

The real secret, the real formula for power in this world, lies in accepting the ugly reality that learning requires a process, and this in turn demands patience and the ability to endure drudge work.

We are creatures who make things; we don't simply imagine them. To master any process you must learn through trial and error. You experiment, you take some hard blows, and you see what works and doesn't work in real time.

If you find yourself confronting an unjust and corrupt system, it is much more effective to learn its codes from the inside and discover its vulnerabilities. Knowing how it works, you can take it apart–for good.

Try to look at boredom from the opposite perspective–as a call for you to slow yourself down, to stop searching for endless distractions.

Your sense of who you are will determine your actions and what you end up getting in life...Ask for more, aim high, and believe that you are destined for something great....People follow those who know where they are going, so cultivate an air of certainty and boldness.

Conforming to people's expectations is safer and more comfortable, even if doing so makes you feel miserable and confined. In essence, you are afraid of yourself and what you could become.

When you raise your opinion of yourself and what you are capable of it has a decided influence on what you do. For instance, you feel more comfortable taking some risk, knowing that you are always able to get back up on your feet if it fails.

Free action has a momentum of its own.

The powerful learn early in life that they have the freedom to mold their image, fitting the needs and moods of the moment. In this way, they keep others off balance and maintain an air of mystery.

The higher your self-belief, the more your power to transform reality.

We cling to jobs, relationships, and comfortable positions, all to elude the feeling of separation. We grow overly conservative because any kind of risk might entail adversity, failure, or pain.

Whenever life feels particularly dull or confining, we can force ourselves to leave familiar ground. This could mean traveling to some particularly exotic location, attempting something physically challenging (a sea voyage or scaling a mountain), or simply embarking on a new venture in which we are not certain we can succeed. In each case we are experiencing a moment of powerlessness in the face of something large and overwhelming.

In the face of this undeniable reality, of this eternal expanse, how can we not feel the preciousness of the present? It is a miracle to be alive even one more day.

There are two kinds of time we can experience–the banal and the sublime variety.
-Banal time is extremely limited in scope. It consists of the present moment and stretches out to a few weeks ahead of us. See things as being far more important than they are, unaware that in a few weeks or a year, what stirs us all up will not matter.
-Sublime time we become aware that everything is in a state of flux; nothing is permanent.

Contemplating sublime time has innumerable positive effects–it makes us feel a sense of urgency to get things done now, gives us a better grasp of what really matters, and instills a heightened appreciation of the passage of time, the poignancy and beauty of all things that all things that fade away.

Fooled by Randomness – Nassim Nicholas Taleb

Fooled by Randomness – by Nassim Nicholas Taleb
Date read: 8/28/17. Recommendation 8/10.

Deep dive into the role of luck in the financial markets and life. Taleb emphasizes how we tend to only accept randomness in our failures, never in our successes. He discusses concepts like Monte Carlo math, Russian roulette, the Pólya process, nonlinearity and the human brain, and Buridan's donkey. Our tendency to favor the visible, narrated, and neat models, leads us to being fooled by randomness. He summarizes best by suggesting we are all idiots who are mistake prone, but only a handful of us have the rare privilege of knowing it.

See my notes below or Amazon for details and reviews.

My Notes:

That which came with the help of luck could be taken away by luck (and often rapidly and unexpectedly at that). The flipside, which deserves to be considered as well (in fact it is even more of our concern), is that things that come with little help from luck are more resistant to randomness.

Lucky fools do not bear the slightest suspicion that they may be lucky fools–by definition, they do not know that they belong to such a category. They will act as if they deserved the money. Their strings of successes will inject them with so much serotonin (or some similar substance) that they will even fool themselves about their ability to outperform markets.

Had Nero had to relive his professional life a few million times, very few sample paths would be marred by bad luck– but, owing to his conservatism, very few as well would be affected by extreme good luck.

I thus view people distributed across two polar categories: One one extreme, those who never accept the notion of randomness; on the other, those who are tortured by it.

When I started on Wall Street in the 1980s, trading rooms were populated with people with a "business orientation," that is, generally devoid of any introspection, flat as a pancake, and likely to be fooled by randomness. Their failure rate was extremely high, particularly when financial instruments gained in complexity.

Such a tendency to make and unmake prophets based on the fate of the roulette wheel is symptomatic of our ingrained inability to cope with the complex structure of randomness prevailing in the modern world.

We are not wired in a way to understand probability.

MBAs tend to blow up in financial markets, as they are trained to simplify matters a couple of steps beyond their requirement. (I beg the MBA reader not to take offense; I am myself the unhappy holder of the degree.)

Journalism may be the greatest plague we face today–as the world becomes more and more complicated and our minds are trained for more and more simplification.

I remind myself of Einstein's remark that common sense is nothing but a collection of misconceptions acquired by age eighteen.

Any reading of the history of science would show that almost all the smart things that have been proven by science appeared like lunacies at the time they were first discovered.

Learning from history does not come naturally to us humans, a fact that is so visible in the endless repetitions of identically configured booms and busts in modern markets. By history I refer to the anecdotes, not the historical theorizing...

For me, history is of use merely at the level of my desired sensibility, affecting the way I would wish to think by reference to past events, by being able to better steal ideas of others and leverage them, correct the mental defect that seems to block my ability to learn from others.

In some respects we do not learn from our own history...For example, people fail to learn that their emotional reactions to past experiences (positive or negative) were short lived–yet they continuously retain the bias of thinking that the purchase of an object will bring long-lasting, possibly permanent, happiness or that a setback will cause severe and prolonged distress.

Our minds are not quite designed to understand how the world works, but, rather to get out of trouble rapidly and have progeny.

A mistake is not something to be determined after the fact, but in the light of the information until that point.

It takes a huge investment in introspection to learn that the thirty or more hours spent "studying" the news last month neither had any predictive ability during your activities of that month nor did it impact your current knowledge of the world.

A preference for distilled thinking implies favoring old investors and traders, that is, investors who have been exposed to markets the longest.

Over a short time increment, one observes the variability of the portfolio, not the returns.

Our emotions are not designed to understand the point. The dentist did better when he dealt with monthly statements rather than more frequent ones.

My problem is that I am not rational and I am extremely prone to drown in randomness and to incur emotional torture. I am aware of my need to ruminate on park benches and in cafes away from information, but I can only do so if I am somewhat deprived of it.

At any point in time, the richest traders are often the worst traders. This, I will call the cross-sectional problem: At a given time in the market, the most successful traders are likely to be those that are best fit to the latest cycle.

Recall that someone with only casual knowledge about the problems of randomness would believe that an animal is at the maximum fitness for the conditions of its time. This is not what evolution means; on average, animals will be fit, but not every single one of them, and not at all times.

One vicious attribute is that the longer these animals can go without encountering the rare event, the more vulnerable they will be to it.

Studying the European markets of the 1990s will certainly be of great help to a historian; but what kind of inference can we make now that the structure of the institutions and the markets has changed so much?

There is no point searching for patterns that are available to everyone with a brokerage account; once detected, they would be self-canceling.

Economics: you can disguise charlatanism under the weight of equations, and nobody can catch you since there is no such thing as a controlled experiment.

Nowhere is the problem of induction more relevant than in the world of trading–and nowhere has it been as ignored!

No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion.

Markets (and life) are not simple win/lose types of situations, as the cost of the losses can be markedly different from that of the wins.

The virtue of capitalism is that society can take advantage of people's greed rather than their benevolence, but there is not need to, in addition, extol such greed as a moral (or intellectual) accomplishment.

The survivorship bias implies that the highest performing realization will be the most visible. Why? Because the losers do not show up.

Remember that nobody accepts randomness in his own success, only in his failures.

Medical researchers are rarely statisticians; statisticians are rarely medical researchers. Many medical researchers are not even remotely aware of this data mining bias.

Assume you are standing in 1900 with hundreds of investments to look at. There are stock markets of Argentina, Imperial Russia, the United Kingdom, Unified Germany, and plenty of others to consider. A rational person would have bought not just the emerging country of the United States, but those of Russia and Argentina as well. The rest of the story is well-known; while many of the stock markets like those of the United Kingdom and the United States fared extremely well, the investor in Imperial Russia would have no better than medium-quality wallpaper in his hands. The countries that fared well are not a large segment of the initial cohort; randomness would be expected to allow a few investment classes to fare extremely well. I wonder if those "experts" who make foolish (and self-serving) statements like "markets will always go up in a any twenty-year period" are aware of this problem.

This chapter is about how a small advantage in life can translate into a highly disproportionate payoff, or, more viciously, how no advantage at all, but a very, very small help from randomness, can lead to a bonanza.

Nonlinearities = straw that broke the camel's back, drop that caused the water to spill.

These nonlinear dynamics has a bookstore name, "chaos theory," which is a misnomer because it has nothing to do with chaos. Chaos theory concerns itself primarily with functions in which a small input can lead to a disproportionate response.

Say you played roulette and won. Would this increase your chances of winning again? No. In a Polya process case, it does (probability of winning increases after past wins, and vice versa). Why is this so mathematically hard to work with? Because the notion of independence (i.e., when the next draw does depend on past outcomes) is violated. Independence is a requirement for working with the (known) math of probability.

Our brain is not cut out for nonlinearities. People think that if, say, two variables are casually linked, then a steady input in one variable should always yield a result in the other one...But reality rarely gives us the privilege of a satisfying linear positive progression: You may have to study for a year and learn nothing, then, unless you are disheartened by the empty results and give up, something will come to you in a flash...Most people give up before the rewards.

There are routes to success that are nonrandom, but few, very few people have the mental stamina to follow them.

Buridan's Donkey: Nonlinearity in random outcomes is sometimes used as a tool to break stalemates. *Randomness is not always unwelcome.

You stop when you get a near-satisfactory solution. Otherwise it may take you an eternity to reach the smallest conclusion or perform the smallest act. We are therefore rational, but in a limited way: "boundedly rational." [Herbert Simon] believed that our brains were a large optimizing machine that had built-in rules to stop somewhere.

There are two possible ways for us to reason:
Heuristics: effortless, automatic, associative, rapid, parallel process, opaque (i.e. we are not aware of using it), emotional, concrete, specific, social, and personalized.
Rationality: effortful, controlled, deductive, slow, serial, self-aware, neutral, abstract, sets, asocial, and depersonalized.

1) We do not think when making choices but use heuristics. 2) We make serious probabilistic mistakes in today's world.

Causality can be very complex. It is very difficult to isolate a single cause when there are plenty around. This is called multivriate analysis.

Unless something moves by more than its usual daily percentage change, the event is deemed to be noise. Percentage moves are the size of the headlines. In addition, the interpretation is not linear; a 2% move is not twice as significant as an event as 1%, it is rather like four to ten times. A 7% move can be several billion times more relevant than a 1% move!

My lesson from Soros is to start every meeting at my boutique by convincing everyone that we are a bunch of idiots who know nothing and are mistake-prone, but happen to be endowed with the rare privilege of knowing it.

People confuse science and scientists. Science is great, but individual scientists are dangerous. They are human; they are marred by the biases humans have.

Recall that epic heroes were judged by their actions, not by the results. No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word.

There is nothing wrong and undignified with emotions–we are cut to have them. What is wrong is not following the heroic or, at least, the dignified path. That is what stoicism truly means. It is the attempt by man to get even with probability.

Our attribution of heroism to those who took crazy decisions but were lucky enough to win shows the aberration–we continue to worship those who won battles and despise those who lost, no matter the reason.

Some degree of unpredictability (or lack of knowledge) can be beneficial to our defective species. A slightly random schedule prevents us from optimizing and being exceedingly efficient, particularly in the wrong things.

We know that people of a happy disposition tend to be of the satisficing (blend of satisfying and maximizing) kind, with a set idea of what they want in life and an ability to stop upon gaining satisfaction...They do not tend to experience the internal treadmill effects of constantly trying to improve on their consumption of goods by seeking higher and higher levels of sophistication. In other words, they are neither avaricious nor insatiable. *Optimizers = unhappy and always seeking a better deal.

We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong (Fooled by Randomness) with us seems to flow from it.

The Bed of Procrustes – Nassim Nicholas Taleb

The Bed of Procrustes: Philosophical and Practical Aphorisms – by Nassim Nicholas Taleb
Date read: 8/18/17. Recommendation: 9/10.

Great introduction to Taleb's take on uncertainty, which he discusses in detail in his other books that make up the Incerto series: Antifragile, Fooled by Randomness, and The Black Swan. This book offers a succinct look into how we deal with what we don't know. Taleb examines our tendency to package and reduce ideas into neat narratives that fit within the constraints of our limited knowledge.

See my notes below or Amazon for details and reviews.

My Notes:

Every aphorism here is a about a Procrustean bed of sorts–we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas, reductive categories, specific vocabularies, and prepackaged narratives.

These aphorisms are standalone compressed thoughts revolving around my main idea of how we deal, and should deal, with what we don't know.

The person you are most afraid to contradict is yourself.

An idea starts to be interesting when you get scared of taking it to its logical conclusion.

To bankrupt a fool, give him information.

An erudite is someone who displays less than he knows; a journalist or consultant, the opposite.

Your brain is most intelligent when you don't instruct it on what to do–something people who take showers discover on occasion.

In nature we never repeat the same motion; in captivity (office, gym, commute, sports), life is just repetitive-stress injury. No randomness.

If you know, in the morning, what your day looks like with any precision, you are a little bit dead–the more precision, the more dead you are.

When we want to do something while unconsciously certain to fail, we seek advice so we can blame someone else for the failure.

The most painful moments are not those we spend with uninteresting people; rather, they are those spent with uninteresting people trying hard to be interesting.

The characteristic feature of the loser is to bemoan, in general terms, mankind's flaws, biases, contradictions, and irrationality–without exploiting them for fun and profit.

You exist if and only if you are free to do things without a visible objective, with no justification and, above all, outside the dictatorship of someone else's narrative.

To be completely cured of newspapers, spend a year reading the previous week's newspapers.

The opposite of success isn't failure; it is name-dropping.

Modernity needs to understand that being rich and becoming rich are not mathematically, personally, socially, and ethically the same thing.

The fastest way to become rich is to socialize with the poor; the fastest way to become poor is to socialize with the rich.

You will be civilized on the day you can spend a long period doing nothing, learning nothing, and improving nothing, without feeling the slightest amount of guilt.

Someone who says "I am busy" is either declaring incompetence (and lack of control of his life) or trying to get rid of you.

To see if you like where you are, without the chains of dependence, check if you are as happy returning as you were leaving.

Modernity: we created youth without heroism, age without wisdom, and life without grandeur.

People focus on role models; it is more effective to find antimodels–people you don't want to resemble when you grow up.

People usually apologize so they can do it again.

It is those who use others who are the most upset when someone uses them.

The three most harmful addictions are heroin, carbohydrates, and a monthly salary.

My only measure of success is how much time you have to kill.

With terminal disease, nature lets you die with abbreviated suffering; medicine lets you suffer with prolonged dying.

Only in recent history has "working hard" signaled pride rather than shame for lack of talent, finesse, and, mostly, sprezzatura.

We are hunters; we are only truly alive in those moments when we improvise; no schedule, just small surprises and stimuli from the environment.

You are alive in inverse proportion to the density of cliches in your writing.

We unwittingly amplify commonalities with friends, dissimilarities with strangers, and contrasts with enemies.

True humility is when you can surprise yourself more than others; the rest is either shyness or good marketing.

For the robust, an error is information; for the fragile an error is an error.

Games were created to give nonheroes the illusion of winning. In real life, you don't know who really won or lost (except too late), but you can tell who is heroic and who is not.

Knowledge is subtractive, not additive–what we subtract (reduction by what does not work, what not to do), not what we add (what to do).

The best way to spot a charlatan: someone (like a consultant or a stock broker) who tells you what to do instead of what not to do.

They think that intelligence is about noticing things that are relevant (detecting patterns); in a complex world, intelligence consists in ignoring things that are irrelevant (avoiding false patterns).

The curious mind embraces science; the gifted and sensitive, the arts; the practical, business; the leftover becomes an economist.

The only definition of an alpha male: if you try to be an alpha male, you will never be one.

At any stage, humans can thirst for money, knowledge, or love; sometimes for two, never for three.

Love without sacrifice is like theft.

Our overreactive brains are more likely to impose the wrong, simplistic narrative than no narrative at all.

The mind can be a wonderful tool for self-delusion–it was not designed to deal with complexity and nonlinear uncertainties.

Counter to common discourse, more information means more delusions: our detection of false patterns is growing faster and faster as a side effect of modernity and the information age.

Thus my classical values make me advocate the triplet of erudition, elegance, and courage; against modernity's phoniness, nerdiness, and philistinism.

On Writing Well – William Zinsser

On Writing Well: The Classic Guide to Writing Nonfiction – by William Zinsser
Date read: 8/14/17. Recommendation: 8/10.

An essential for nonfiction writers. This is the only book I keep within reach as I'm writing. Zinsser advocates a lean, direct writing style. He outlines strategies for crafting a more effective story that resonates with readers. This includes how to cut down first drafts, rewrite, organize the flow of an article, develop your own voice, address your audience, handle humor, and avoid the danger of clichés. There's also a practical style guide for reference that addresses everything from the use of qualifiers (rather, quite, very) to specific punctuation marks (dash, colon, exclamation point). Every writer will be better for picking this up. 

See my notes below or Amazon for details and reviews. 

My Notes:

Good writing has an aliveness that keeps the reader reading from one paragraph to the next, and it's not a question of gimmicks to "personalize" the author. It's a question of using the English language in a way that will achieve the greatest clarity and strength.

Clear thinking becomes clear writing; one cannot exist without the other.

Writing is hard work. A clear sentence is no accident. Very few sentences come out right the first time, or even the third time. Remember this in moments of despair. If you find that writing is hard, it's because it is hard.

Clutter is the laborious phrase that has pushed out the short word that means the same thing.

Beware, then, of the long word that's no better than the short word: "assistance" (help), "numerous" (many), "facilitate" (ease), "individual" (man or woman), "remainder" (rest), "initial" (first), etc.

Don't inflate what needs no inflating: "with the possible exception of" (except), "due to the fact that" (because), "he totally lacked the ability to" (he couldn't).

Eliminate adverbs that carry same meaning as the verb: "smile happily" or "tall skyscraper."

Most first drafts can be cut by 50 percent without losing any information or losing the author's voice.

Can any thought be expressed with more economy? Is anything pompous or pretentious or faddish? Are you hanging on to something useless just because you think it's beautiful?

Few people realize how badly they write. Nobody has shown them how much excess or murkiness has crept into their style and how it obstructs what they are trying to say.

Readers want the person who is talking to them to sound genuine. Therefore a fundamental rule is: be yourself.

Writing is an intimate transaction between two people...Therefore I urge people to write in the first person: to use "I" and "me" and "we" and "us."

Sell yourself, and your subject will exert its own appeal. Believe in your own identity and your own opinions. Writing is an act of ego, and you might as well admit it. Use its energy to keep yourself going.

"Who am I writing for?" You are writing for yourself. Don't try to visualize the great mass audience. There is no such audience–every reader is a different person.

You are writing primarily to please yourself, and if you go about it with enjoyment you will also entertain the readers who are worth writing for. If you lose the dullards back in the dust, you don't want them anyway.

Craft vs. attitude. Craft is a question of mastering a precise skill. The second is a question of how you use that skill to express your personality...First, work hard to master the tools. Simplify, prune and strive for order. Think of this as a mechanical act, and soon your sentences will become cleaner. Think of attitude as a creative act: the expressing of who you are. Relax and say what you want to say.

Never say anything in writing that you wouldn't comfortably say in conversation. If you're not a person who says "indeed" or "moreover" or who calls someone an individual, please don't write it.

Writing is learned by imitation.

See if you can gain variety by reversing the order of a sentence, or by substituting a word that has freshness or oddity, or by altering the length of your sentences.

An occasional short sentence can carry a tremendous punch. It stays with the readers ear.

Aim for beautiful precision. Incorrect usage will lose you the readers you would most like to win.

That's where all careful writers ought to be–looking at every new piece of floatsam that washes up and asking "Do we need it?"

You learn to write by writing.

Unity is the anchor of good writing.
- Unity of pronoun: Are you going to write in the first person, as a participant, or in the third person or as an observer?
- Unity of tense
- Unity of mood

Consider how much you want to cover and what one point you want to make. There is no last word.

Therefore think small. Decide what corner of your subject you're going to bit off, and be content to cover it well and stop.

So decide what single point you want to leave in the reader's mind. It will not only give you a better idea of what route you should follow and what destination you hope to reach; it will affect your decision about tone and attitude.

Take special care with the last sentence of each paragraph–it's the crucial springboard to the next paragraph. Try to give that sentence an extra twist of humor or surprise...Make the reader smile and you've got him for at least one more paragraph.

Narrative is the oldest and most compelling method of holding someone's attention; everybody wants to be told a story. Always look for ways to convey your information in narrative form.

A good last sentence–or last paragraph–is a joy in itself. It gives the reader a lift, and it lingers when the article is over.

The perfect ending should take your readers slightly by surprise and yet seem exactly right.

Often it takes just a few sentences to wrap things up. Ideally they should encapsulate the idea of the piece and conclude with a sentence that jolts us with its fitness or unexpectedness.

Something I often do in my writing is to bring the story full circle–to strike at the end of an echo of a note that was sounded at the beginning. It gratifies my sense of symmetry, and it also pleases the reader, completing with its resonance the journey we set out of together.

Verbs:
-Verbs are the most important of all your tools. They push the sentence forward and give it momentum. Active verbs push hard; passive verbs tug fitfully.
-Use precise verbs (don't say he stepped down, say he was fired/retired/etc.)

Adverbs:
-Most adverbs are unnecessary.
-Don't tell us that the radio blared loudly, that someone clenched their teeth tightly.
-Again and again in careless writing, strong verbs are weakened by redundant adverbs. So are adjectives and other parts of the speech.

Adjectives:
-Most adjectives are also unnecessary.
-Like adverbs, they are sprinkled into sentences by writers who don't stop to think that the concept is already in the noun.
-The adjectives that exists solely as decoration is a self-indulgence for the writer and a burden for the reader.
-Make your adjectives do work that needs to be done...They will have their proper power because you have learned to use adjectives sparsely.

Little Qualifiers:
-Prune out the small words that qualify how you feel and how you think and what you saw: "a bit," "a little," "sort of," "kind of," "rather," "quite," "very," "too," "pretty much," "in a sense..." They dilute your style and your persuasiveness.
-Don't say you were a bit confused...Be confused.
-Good writing is lean and confident.
-"Very" is a useful word to achieve emphasis, but far more often it's clutter. There's no need to call someone very methodical. Either he is methodical or he isn't.
-Every little qualifier whittles away some fraction of the reader's trust. Readers want a writer who believes in himself and in what he is saying. Don't diminish that belief. Don't be kind of bold. Be bold.

The Exclamation Point:
-Resist using it to notify the reader that you are making a joke or being ironic. "It never occurred to me that the water pistol might be loaded!" Readers are annoyed by your reminder that this was a comical moment. They are also robbed of the pleasure of finding it funny on their own. Humor is best achieved by understatement.

The Dash:
-The dash is used in two ways:
-One is to amplify or justify in the second part of the sentence a thought you stated in the first part. "We decided to keep going–it was only 100 miles more and we could get there in time for dinner."
-The other use involved two dashes, which set apart a parenthetical thought within a longer sentence. "She told me to get in the car–she had been after me all summer to have a haircut–and we drove silently into town."

Mood Changers:
-Learn to alert the reader as soon as possible to any change in mood from the previous sentence.
-Many of us were taught that no sentence should begin with "but." If that's what you learned, unlearn it–there's no stronger word at the start. It announces total contrast with what has gone before, and the reader is thereby primed for the change.

Contractions:
-Your style will be warmer and truer to your personality if you use contractions like "I'll" and "won't" and "can't."
-Only suggest avoiding one form–"I'd," "he'd," "we'd," etc.–because "I'd" can mean both "I had" and "I would" and readers can get well into a sentence before learning which meaning it is.

That and Which:
-Always use "that" unless it makes your meaning ambiguous.
-In most situations, "that" is what you would naturally say and therefore what you should write.
-If your sentence needs a comma to achieve its precise meaning, it probably needs "which."
-A) "Take the shoes that are in the closet." This means take the shoes that are in the closet, not under the bed.
-B) "Take the shoes, which are in the closet." Only one pair of shoes is under discussion; the "which" usage tells you where they are.

Creeping Nounism:
-Don't string together two or three nouns where one noun–or better yet, one verb–will do.
-Nobody goes broke now, we have "money problem areas." It no longer rains, "we have precipitation activity.

Paragraphs:
-Keep your paragraphs short. Writing is visual–it catches the eye before it has a chance to catch the brain.
-Short paragraphs put air around what you write and make it look inviting, whereas a long chunk of type can discourage a reader from even starting to read.

Rewriting:
-Rewriting is the essence of writing well: it's where the game is either won or lost.
-Most rewriting consists of reshaping and tightening and refining the raw material you wrote on your first try.

Trust Your Material:
-The reader plays a major role in the act of writing and must be given room to play it. Don't annoy readers by over-explaining–by telling them something they already know or can figure out.
-Try not to use words like "surprisingly," "predictably," and "of course," which put a value on a fact before the reader encounters the fact. Trust your material.

Writing About Yourself:
When students say they have to write what the teacher wants, what they often mean is that they don't have anything to say–so meager is their after-school existence, bounded largely by television and the mall, two artificial versions of reality. Still, at any age, the physical act of writing is a powerful search mechanism.

Memoir isn't the summary of a life; it's a window into a life, very much like a photograph in its selective composition.

Thoreau wrote seven different drafts of Walden in eight years; no American memoir was more painstakingly pieced together. To write a good memoir you must become the editor of your own life, imposing on an untidy sprawl of half-remembered events a narrative shape and an organizing idea.

Memoir is the art of inventing the truth.

Science and Technology:
Imagine science writing as an upside-down pyramid. Start at the bottom with the one fact a reader must know before he can learn any more.

Business Writing:
Countless careers rise or fall on the ability or the inability of employees to state a set of facts, summarize a meeting or present an idea coherently.

Be natural. How we write and how we talk is how we define ourselves.

Humor:
Humor is the secret weapon of the nonfiction writer. It's secret because so few writers realize that humor is often their best tool.

Trust the sophistication of readers who do know what you're doing, and don't worry about the rest.

You will touch more chords by finding what's funny in what you know to be true.

Don't strain for laughs; humor is built on surprise, and you can surprise the reader only so often.

The Sound of Your Voice:
Don't alter your voice to fit your subject. Develop one voice that readers will recognize when they hear it on the page, a voice that's enjoyable not only in its musical line but in its avoidance of sounds that would cheapen its tone: breeziness and condescension and cliches.

Much can be gained by knowing what to omit. Cliches, for instance, are the kiss of death. Writers who use them lack an instinct for what gives language its freshness.

Cliches are one of the things you should keep listening for when you rewrite and read your successive drafts aloud....Make an effort to replace them with fresh phrases of your own. Cliches are the enemy of taste.

Freshness is crucial. Taste chooses words that have surprise, strength and precision.

Never hesitate to imitate another writer. Imitation is part of the creative process for anyone learning an art or a craft.

Enjoyment, Fear and Confidence:
Writing is such lonely work that I try to keep myself cheered up. If something strikes me as funny in the act of writing, I throw it in just to amuse myself. If I think it's funny I assume a few other people will find it funny, and that seems to me to be a good day's work.

"The reader has to feel that the writer is feeling good...Even if he isn't." -S.J. Perelman

Writers have to jump-start themselves at the moment of performance.

Writers who write interestingly tend to be men and women who keep themselves interested. That's almost the whole point of becoming a writer. I've used writing to give myself an interesting life and a continuing education.

Any time you feel under-qualified and you're entering new territory, remember that sincerity and interest is what matters most. Your best credential is yourself.

Any time you can tell a story in the form of a quest or a pilgrimage you'll be ahead of the game.

A Writer's Decision:
Learning how to organize a long article is just as important as learning how to write a clear and pleasing sentence...Writing is linear and sequential, that logic is the glue that holds it together, that tension must be maintained from one sentence to the next, and from one paragraph to the next and from one section to the next, and that narrative is what should pull your readers along.

Much of the trouble that writers get into comes from trying to make one sentence do too much work. Never be afraid to break a long sentence into two shorts ones, or even three.

Be yourself and your readers will follow you anywhere. Try to commit an act of writing and your readers will jump overboard to get away. Your product is you.

Writing well means believing in your writing and believing in yourself, taking risks, daring to be different, pushing yourself to excel. You will write only as well as you make yourself write.

Perennial Seller – Ryan Holiday

Perennial Seller: The Art of Making and Marketing Work that Lasts – by Ryan Holiday.
Date read: 8/6/17. Recommendation: 9/10.

You can't go wrong with any of Holiday's work. His latest is a great read for anyone who considers themselves a creative, and particularly insightful for writers and entrepreneurs. If you're thinking of writing a book or bringing an idea to life, start here and save yourself a few headaches. He outlines best practices for the creative process, along with the importance of positioning, marketing, and building a platform. The most important advice can be summed up as playing the long game. If you want to create something of lasting value, there are no shortcuts or paths to immediate gratification. Put in the work.

See my notes below or Amazon for details and reviews.

My Notes:

People claim to want to do something that matters, yet they measure themselves against things that don't, and they track their progress not in years but in microseconds. They want to make something timeless, but they focus instead on immediate payoffs and instant gratification.

Part I: The Creative Process
The better your product is, the better your marketing will be.

"People who are thinking about things other than making the best product never make the best product." -Phil Libin [Evernote]

"The best way to increase a startup's growth rate is to make the product so good people recommend it to their friends." -Paul Graham [Y Combinator]

"Lots of people want to be the noun without doing the verb." -Austin Kleon

The hard part is not the dream or the ideas; it's the doing. It is the driving need that determines one's chances. You must have a reason–a purpose–for why you want the outcome and why you're willing to do the work to get it.

To create something is a daring, beautiful act. The architect, the author, the artist–are all building something where nothing was before.

Creating something that lives requires not just a reverence for the craft and a respect for the medium, but a real patience for the process itself.

The risk for any creator is over-accounting for what's happening right in front of them...must think bigger and more long term than that.

"If you listen to the greatest music ever made, that would be a better way to find your own voice to matter today than listening to what's on the radio and thinking: 'I want to compete with this.'" -Rick Rubin

How within seemingly ordinary people there can exist depths of wisdom, beauty, and insight–and that if they put in the work to plumb those depths, they might reap incredible rewards.

To wrestle with all these conflicting, difficult ideas that go into creating, you often need real silence. Meditative isolation, where you sit and wrestle with your project.

The brilliant military strategist John Boyd utilized what he called "drawdown periods." After a one a.m. breakthrough, he'd spend weeks just looking at an idea, testing whether others had already come up with it, identifying possible problems with it. Only after this period ended would he begin the real work on the project.

For one of my books I gave myself a January 1 start date for the writing. Two months before, in November, I entered by drawdown period. No more reading or rereading. Just thinking. Long walks. Resting. Preparing.

A book should be an article before it's a book, and a dinner conversation before it's an article.

Successfully finding and "scratching" a niche requires asking and answering a question that very few creators seem to do: Who is this thing for? Instead many creators want to be for everyone...and as a result end up being for no one.

Picking a lane isn't limiting. It's the first act of empowerment.

"Having no specific user in mind" one of the eighteen major mistakes that kills startups. -Paul Graham

Stephen King believes that "every novelist has a single ideal reader" so that at various points in the process he can ask, "What will ____ think about this?"

Just as we should ask "Who is this for?" we must also ask "What does this do?" A critical test of any product: Does it have purpose? Does it add value to the world? How will it improve the lives of the people who buy it?

Yet far too many people set out to produce something that, if they were really honest with themselves, is only marginally better or different from what already exists. Instead of being bold, brash, or brave, they are derivative, complementary, imitative, banal, or trivial. The problem with this is not only that it's boring, but that it subjects them to endless amounts of competition.

"People want things that are really passionate. Often the best version is not for everybody. The best art divides the audience. If you put out a record and half the people who hear it absolutely love it and half the people who hear it absolutely hate it, you've done well. Because it is pushing that boundary." -Rick Rubin
*Think of the technology that is subject to protests and legislation (Airbnb, Uber)

"The counterfeit innovator is wildly self-confident. The real one is scared to death." -Steven Pressfield

Part II: Positioning
So much in the history of art and culture hinges on moments like this. Faced with soul-crushing feedback or rejection, how does the creator respond? With petulance and anger? With open-mindedness and interest? With obsequiousness and desperation? Or careful consideration that parses the signal from noise?

As infuriating as it may be, we must be rational and fair about our own work. This is difficult considering our conflict of interest–which is to say, the ultimate conflict of interest. We made it.

"When people tell you something's wrong or doesn't work for them, they are almost always right. When they tell you exactly what they think is wrong and how to fix it, they are almost always wrong." -Neil Gaiman

Do I feel like overriding this feedback because it's wrong, I ask myself, or is it because I don't want to hit pause and do more work?

The fact is, most people are so terrified of what an outside voice might say that they forgo opportunities to improve what they are making. Remember: Getting feedback requires humility. It demands that you subordinate your thoughts about your project and your love for it and entertain the idea that someone else might have a valuable thing or two to add.

You must be able to explicitly say who you are building your thing for. You must know what you are aiming for–you'll miss otherwise. You need to know this so you can make the decisions that go into properly positioning the project for them...Marketing then becomes a matter of finding where those people are and figuring out the best way to reach them.

For creators, it's typically easier to reach the smaller, better-defined group. If you reach the smaller group and wow them, there will be many opportunities to spread outward and upward.

Who is buying the first one thousand copies of this thing? Who is coming in on the first day? Who is going to claim our first block of available dates? Who is buying our first production run?

The same article with a slightly different headline can have a tenfold spread in readership. One stands out; the other doesn't.

Creators will often spend years making something but then rush through their descriptive copy in an hour.

A great package on a great product is what creates an explosive reaction.

Imagine if your product were for one group–say, successful adults with disposable income–but your branding violated what they expected in terms of style and appearance? Wealthfront changed its name from KaChing.

My "book about Stoic philosophy," for example, had to become "a book that uses the ancient formula of the Emperor Marcus Aurelius to teach people how to not only overcome obstacles but thrive because of them."

There are many different missions. Whatever yours is, it must be defined and articulated. Once that has occurred, there is one last thing you must do. You must deliberately forsake all other missions.

If you've committed to doing something incredibly difficult that countless others have failed at before, you probably also shouldn't be juggling five other projects at the same time. You'll need to put 100 percent of your resources toward this one.

Nothing has sunk more creators and caused more unhappiness than this: our inherently human tendency to pursue a strategy aimed at accomplishing one goal while simultaneously expecting to achieve other goals entirely unrelated.

Only crazy people would compare themselves to people on totally different tracks.

Jeff Goins makes the distinction between starving artists and thriving artists. One adopts all the tropes and cliches of the bohemians and supposed purity. The other is resilient, ambitious, open-minded and audience-driven. Who do you want to be? Which will propel your work the furthest?

Part III: Marketing
"Customers will not come just because you build it. You have to make that happen and it's harder than it looks." -Peter Thiel

Don't delegate the marketing...You can cut back on a lot of things as a leader, but the last thing you can ever skimp on is marketing. Your product needs a champion.

Not everyone has the dedication to make it and to make it work. Marketing is an opportunity for you to distinguish yourself, to beat out the other talented folks whose entitlement or laziness holds them back.

I gave away more than a thousand copies of one of my books to marketing students...In the first month, sold 21 hard copies, 37 ebook. Took 5 months before the book sold 500 copies in a single month. Within 5 years, book had sold roughly 60,000 copies.

Think about a favorite album, restaurant, or pair of shoes. How did you first get turned on to these? How do you find most of the things you like or consume on a regular basis? How did you find your favorite book of all time?

"The problem for most artists isn't piracy, it's obscurity." In other words, we spend a lot of time insisting that nobody steal our work or get it for free...but we forget that being unknown is a far worse fate for an artist than being underpaid.

"Although it's hard to turn fame into money in the arts, it's impossible to turn obscurity into money in the arts." -Cory Doctorow

70% of book sales come from Amazon.

What we've created is a central fact of existence to us–after all, we made it. But to most other people, it's optional. They can easily do without our work. A savvy creator embraces this reality and makes taking a chance on it as easy and frictionless as possible for the audience.

I've watched an Instagram post from an influential person take a book to the top of Amazon; meanwhile, a New York Times profile about the same project had next to no impact. When a real person, a real human being whom others trust, says. "This is good," it has an effect that no brand, no ad, no faceless institution can match.

If you want to reach influential people, make something that will make them look good....Make your audiences look good.

Identifying influencers...if you're living and breathing what you do the answer should come naturally...who are the people who influence you too? Don't have to be famous, but they should matter a great deal to the audience you are trying to appeal to.

Best way to ask someone to endorse or share your work...The best way is not to ask.

Think relationship first, transaction second.

I've always found that a critical part of attracting influencers is to look for the people who aren't besieged by requests. Authors are inundated with requests for blurbs from other authors; meanwhile, generals, academics, and CEOs are asked much more rarely...Try to find the people least likely to get a request from someone like you, and approach them first, instead of going where everyone else is going. Be bold and brash and counterintuitive not only in how you create your work but also in who you use to market it.

In my experience, almost everyone–from brands to artists–overestimates the value of traditional PR. Much of the press that people chase is ephemeral and ineffectual, yet expensive and time-consuming to get.

Media outlets have trouble getting people to pay for their own product–what makes you so sure they're going to be able to convince their readers and viewers to buy yours?

Only areas where traditional press is underrated? Credibility and status.

Newsjacking–James Altucher book launch at same time Bitcoin was blowing up. Announced he was accepting Bitcoin and got tons of bonus media attention.

Advertising can add fuel to a fire, but rarely is it sufficient to start one.

We are better off taking the money set aside for advertising and putting it into every other marketing bucket instead.

Part IV: Platform
Kevin Kelly: "1000 true fans"

Building an email list is a move toward self-sufficiency for any creator. By forming a direct and regular line of communication with your supporters, you avoid ever being disintermediated.

I wasn't important or interesting enough for people to just sign up based on my name alone. So I came up with an idea: What if I gave monthly book recommendations? (The thinking being that one day I might recommend one of my own books to this list). Once a month for four years I sent this list out, and as a result it grew from ninety original sign-ups to the five thousand people to whom I announced my first book. By the time my next book came out two years later, the list was at more than thirty thousand, and today it's at eighty thousand.

Building your list is not someone else's job. People will not beg you for the opportunity to join it. You can't buy subscribers. No list is built entirely through advertising. It will take work–sometimes years of work–for it to pay off. But it will be worth it.

"I urge authors to consider how long it took them to write their books and see them published and to devote at least that much time to pushing them." -Barbara Hendricks

It is far better to measure your campaign over a period of years, not months.

Most think they're too good for it, or they are to sensitive to push hard enough..."Success almost always requires an unstoppable authors.." -Stephen Hanselman

As Goethe's maxim goes, "The greatest respect an author can have for his public is never to produce what is expected but what he himself considers right and useful for whatever stage of intellectual development has been reached by himself and others."

Most of the real money isn't in the royalties or the sales. For authors, the real money comes from speaking, teaching, or consulting.

"Hard work will get you a professorship or a BMW. You need both work and luck for a Booker, a Nobel or a private jet." -Nassim Taleb

Bill Walsh (legendary 49ers coach) explained that his goal was to "establish a near-permanent 'base camp' near the summit, consistently close to the top, within striking distance." The actual probability of winning in a given year depended on a lot of external factors–injuries, schedule, drive, weather–just as it does for any mountain climber, for any author, for any filmmaker or entrepreneur or creative. We do know with certainty, however, that without the right preparation, there is zero chance of successfully making a run at the summit. Walsh made three such summits in eight years.

The Rational Optimist – Matt Ridley

The Rational Optimist: How Prosperity Evolves – by Matt Ridley.
Date read: 7/29/17. Recommendation: 8/10.

I read this book to combat confirmation bias. I tend to romanticize the past and idealize the simple living we associate with the hunter-gatherer era. As such, I read a lot of books that fall in line with that interest. Ridley makes the argument that we're currently living in the best period of human history (which we are). He credits this to the free exchange of ideas and knowledge, which breeds even more innovation and knowledge. He details the driving factors of dynamic change, bottom-up innovation, and how the specialization of talents has led to mutual gain for everyone involved. It's a dense book but Ridley offers brilliant insight, which should give you a much needed boost of optimism for the future. 

See my notes below or Amazon for details and reviews.

My Notes:

This book is about the rapid, continuous and incessant change that human society experiences in a way that no other animal does.

It is not as if human nature changes...Yet to say that life is the same as it was 32,000 years ago would be absurd.

At some point, human intelligence became collective and cumulative in a way that happened to no other animal.

Exchange is to cultural evolution as sex is to biological evolution. By exchanging, human beings discovered 'the division of labour', the specialization of efforts and talents for mutual gain.

The rich have gotten richer, but the poor have done even better. The poor in the developing world grew their consumption twice as fast as the world as a whole between 1980 and 2000. The Chinese are ten times as rich.

The true measure of something's worth is the hours it takes to acquire it.

Healthcare and education are among the few things that cost more in terms of hours worked now than they did in the 1950s.

Study by Richard Easterlin in 1974, which found that although within a country rich people were generally happier than poor people, richer countries did not have happier citizens than poor countries. Trouble is, the 'Easterlin paradox' is wrong. New studies show that rich people are happier and rich countries have happier people and people get happier as they get richer. Easterlin study had samples too small to find significant differences.
*There are some exceptions. Americans current show no trend towards increasing happiness.

Besides, a million years of natural selection shaped human nature to be ambitious to rear successful children, not to settle for contentment: people are programmed to desire, not to appreciate.

Getting richer is not the only or even best way of getting happier. Social and political liberation is far more effective.

Self-sufficiency is therefore not the route to prosperity....If you wish to have even the most minimal improvement in your life – say metal tools, toothpaste or lighting – you are going to get some of your chores done by somebody else.

You may have no chefs, but you can decide on a whim to choose between scores of nearby bistros...Never before this generation has the average person been able to afford to have somebody else prepare his meals.
You employ no tailor, buy you can browse the internet and instantly order from an almost infinite range of excellent, affordable clothes.
You have no carriage, but you can buy a ticket which will summon the services of a skilled pilot of a budget airline to fly you to one of hundreds of destinations.

This is the diagnostic feature of modern life, the very definition of a high standard of living: diverse consumption, simplified production.

The cumulative accretion of knowledge by specialists that allows us each to consume more and more different things by each producing fewer and fewer is, I submit, the central story of humanity.

Barter – the simultaneous exchange of different objects – was itself a human breakthrough, perhaps even the chief thing that led to the ecological dominance and burgeoning material prosperity of the species. Fundamentally, other animals do not barter.

*Primatologist Sarah Brosnan tried to teach two different groups of chimpanzees about barter and found it very problematic...They could not see the point of giving up food they liked for food they liked even more...True barter requires that you give up something you value in exchange for something else you value slightly more.

Why did human beings acquire a taste for barter as other animals did not? Perhaps it has something to do with cooking...swapping different kinds of food.

Without trade, innovation just does not happen. Exchange is to technology as sex is to evolution. It stimulates novelty.

Technological regress in Tasmania. Once connected to Australia, until about 10,000 years ago. Isolation led to losing technologies that their ancestors had once possessed....Isolation–self sufficiency–caused the shriveling of their technology.

Imagine if 4,000 people from your home town were plonked on an island and left in total isolation for ten millennia. How many skills and tools do you think they could preserve?

The success of human beings depends crucially, but precariously, on numbers and connections. A few hundred people cannot sustain a sophisticated technology: trade is a vital part of the story.

Human cultural progress is a collective enterprise and it needs a dense collective brain.

The notion of synergy, of both sides benefiting, just does not seem to come naturally to people. If sympathy is instinctive, synergy is not.

The notion that the market is a necessary evil, which allows people to be wealthy enough to offset its corrosive drawbacks, is wide off the mark...In places where traditional, honor-based feudal societies gave way to commercial, prudence-based economies, the effect is civilizing, not coarsening.

But the idea that the market destroys charity by teaching selfishness is plainly wide of the mark. When the market economy booms so does philanthropy.

Political decisions are by definition monopolistic, disenfranchising and despotically majoritarian; markets are good at supplying minority needs.

The 'long tail' of the distribution – the very many products that are each wanted by very few, rather than vice versa – can be serviced more and more easily.

The coincidence of wealth with toleration has led to the bizarre paradox of a conservative movement that embraces economic change but hates its social consequences and a liberal movement that loves the social consequences but hates the economic source from which they come. 'One side denounced capitalism but gobbled up its fruits; the other cursed the fruits while defending the system that bore them.'

As islands of top-down planning in a bottom-up sea, big companies have less and less of a future (the smaller the scale, the better planning works).

When human beings were all still hunter-gatherers, each needed about a thousand hectares of land to support him or her. Now – thanks to farming, genetics, oil, machinery and trade – each needs little more than a thousand square meters, a tenth of a hectare.

Organic farming is low-yield, whether you like it or not. The reason for this is simple chemistry.

The mechanization of agriculture has enabled, and been enabled by, a flood of people leaving the land to seek their fortune in the city, all free to make for each other things other than food.

Throughout history, empires start as trade areas before they become the playthings of military plunderers from within or without.

In these Bronze Age empires, commerce was the cause, not the symptom of prosperity.

A Bronze Age empire stagnated for much the same reason that a nationalized industry stagnates: monopoly rewards caution and discourages experiment, the income is gradually captured by the interests of the producers at the expense of the interests of the consumers, and so on. The list of innovations achieved by the pharaohs is as thin as as the list of innovations achieved by British Rail or the US Postal Service.

The message from history is so blatantly obvious – that free trade causes mutual prosperity while protectionism causes poverty. There is not a single example of a country opening its borders to trade and ending up poorer.

Cheap imports can destroy jobs at home – though in doing so they always create far more both at home and abroad, by freeing up consumers' cash to buy other goods and services. If Europeans find their shoes made cheaply in Vietnam, then they have more to spend on getting their hair done and there are more nice jobs for Europeans in hair salons and fewer dull ones in shoe factories.

Suppose you had said to my hypothetical family of 1800, eating their gristly stew in front of a log fire, that in two centuries their descendants would need to fetch no logs or water, and carry out not sewage, because water, gas and a magic form of invisible power called electricity would come into their home through pipes and wires.

The more knowledge you generate, the more you can generate. And the engine that is driving prosperity in the modern world is the accelerating generation of useful knowledge.

The dissemination of useful knowledge causes that useful knowledge to breed more useful knowledge.

Eamonn Butler, economist: "Whenever you see the word equilibrium in a textbook, blot it out." It is wrong because it assumes perfect competition, perfect knowledge and perfect rationality, none of which do or can exist.

The possibility of new knowledge makes the steady state impossible. Somewhere somebody will have a new idea and that idea will enable him to invent a new combination of atoms both to create and to exploit imperfections in the market.

There is no equilibrium in nature; there is only constant dynamism. As Heraclitus put it, 'Nothing endures but change.'

Innovation is like a bush fire that burns brightly for a short time, then dies down before flaring up somewhere else...No country remains for long the leader in knowledge creation...Just as it is true that the bush fire breaks out in different parts of the world at different times, so it leaps from technology to technology. Today, just as during the printing revolution of 500 years ago, communications is aflame with increasing returns, but transport is spluttering with diminishing returns.

In the early 1970s, when credit cards were new, politicians of all stripes denounced them as unsound, unsafe and predatory...This nicely captures the paradox of the modern world, that people embrace technological change and hate it at the same time.

The great innovators are still usually outsiders...the R&D budgets at large companies who were once dominant get captured by increasingly defensive and complacent bureaucrats who spend them on low-risk, dull projects and fail to notice gigantic new opportunities, which thereby turn into threats.

One solution is for companies to try to set their employees free to behave like entrepreneurs.

It is the ever-increasing exchange of ideas that causes the ever-increasing rate of innovation in the modern world. Not science, money, patents, government.

Equilibrium and stagnation are not only avoidable in a free-exchanging world; they are impossible.

So long as people who are spending money on trying to find new ideas can profit from them before they pass them on, then increasing returns are possible.

The wonderful thing about knowledge is that it is genuinely limitless. This is the biggest cause for all my optimism.

"I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage." -John Stuart Mill

The world will not continue as it is. That is the whole point of human progress, the whole message of cultural evolution, the whole import of dynamic change–the whole thrust of this book. The real danger comes from slowing down change.

The pessimists' mistake is extrapolationism: assuming the future is just a bigger version of the past.

Recurring theme throughout human history, skepticism of new technologies and doomsday predications. Every organization/government claims that we're "at a defining moment in history." Apprehension about railroads in 1830s, nuclear doomsday predictions in 1950s, dangers of advances in human genetics and reproductive medicine in 2000s.

The endless modern laments about how texting and emails are shortening the attention span go back to Plato, who deplored writing as a destroyer of memorizing.

Famine is largely history. Where it still occurs – Darfur, Zimbabwe – the fault lies with government policy, not population pressure.

It is not as if Africa needs to invent enterprise: the streets of Africa's cities are teeming with entrepreneurs, adept at doing deals, but they cannot grow their businesses because of blockages in the system. The slums of Nairobi and Lagos are terrible places, but the chief fault lies with governments, which place bureaucratic barriers in the way of entrepreneurs trying to build affordable homes for people...In Cairo it would take seventy-seven bureaucratic procedures involving thirty-one agencies and up to fourteen years to acquire and register a ploy of state-owned land on which to build a house. No wonder nearly five million Egyptians have decided to build illegal dwellings instead.

Whereas it takes a handful of steps to set up a company in America or Europe, in Tanzania it would take 379 days and cost $5,506.

What Tanzania needs to do, as Europe and America did hundreds of years ago, is not to enforce its unaffordable official legal system, but gradually to encourage this bottom-up informal law to broaden and standardize itself.

Using such technologies, Africa can follow the same route to prosperity that the rest of the world is following: to specialize and exchange. Once two individuals find ways to divide labor between them, both are bette roff. The future for Africa lies in trade.

I Will Teach You to Be Rich – Ramit Sethi

I Will Teach You to Be Rich – by Ramit Sethi
Date read: 7/22/17. Recommendation: 9/10.

The most accessible, practical book I've read on personal finance. Sethi dismisses trendy advice, such as cutting back on lattes, and instead emphasizes saving on the big purchases that really matter. And he's hilarious. This book is all about optimizing your strategy, prioritizing what matters most, and making money work for you (instead of obsessing over the minute details). This is a must read for anyone in their 20s or 30s, and should be a required reading for all who can still take advantage of the most valuable asset in investing: time.

See my notes below or Amazon for details and reviews.

My Notes:

When it comes to weight loss, 99.99% of us need to know only two things: Eat less and exercise more. Only elite athletes need to do more. But instead of accepting these simple truths and acting on them, we discuss trans fats, diet pills, and Atkins versus South Beach. *Finance similar in debating minutiae and valuing anecdotal over research.

An abundance of information can lead to decision paralysis.

I also often hear the cry that "credit-card companies and banks are out to profit off us." Yes, they are. So stop complaining and learn how to game the companies instead of letting them game you.

The single most important factor to getting rich is getting started, not being the smartest person in the room.

Just as the diet industry has overwhelmed us with too many choices, personal finance is a confusing mess of overblown hype, myths, outright deception.

Frankly, your goal probably isn't to become a financial expert. It's to live your life and let money serve you. So instead of saying, "How much money do I need to make?" you'll say, "What do I want to do with my life–and how can I use money to do it?"

To be extraordinary, you don't have to be a genius, but you do need to take some different steps than your folks did (like starting to manage your money and investing early).

Spend extravagantly on the things you love, and cut costs mercilessly on the things you don't.

This book isn't about telling you to stop buying lattes. Instead, it's about being able to actually spend more on the things you love by not spending money on all the knucklehead things you don't care about.

Money is just a small part of being rich...If you don't consciously choose what rich means, it's easy to end up mindlessly trying to keep up with your friends.

Chapter 1: Optimize Your Credit Cards
Establishing good credit is the first step in building an infrastructure for getting rich. Our largest purchases are almost always made on credit, and people with good credit save tens of thousands of dollars on these purchase. Credit has a far greater impact on your finances than saving a few dollars a day on a cup of coffee.

It's fine to be frugal, but you should focus on spending time on the things that matter, the big wins.

If you miss even one payment on your credit card:
- Credit can drop more than 100 points
- APR can go up to 30 percent
- Charged a late fee
- Trigger rate increases on other cards

If you miss a credit card payment, you might as well just get a shovel and repeatedly beat yourself in the face.

To improve your credit utilization rate (makes up 30% of your credit score) you have two choices: Stop carry so much debt on your credit cards or increase your total available credit (if you're debt free).

Every year call your credit cards and ask what advantages you're eligible for. Often, they can waive fees, extend credit, and give you private promotions. "Hi there. I just checked my credit and noticed that I have a 750 credit score, which is pretty good. I've been a customer of yours for the last four years, so I'm wondering what special promotions and offers you have for me...I'm thinking of fee waivers and special offers that you use for customer retention."

Although closing an account doesn't technically harm your credit score, it means you then have less available credit...People with zero debt get a free pass. If you have no debt, close as many accounts as you want. It won't affect your credit utilization score.

If you're applying for a major loan (car, home, education) don't close any accounts within six months of filing the loan application. You want as much credit as possible when you apply.

Chapter 3: Get Ready to Invest
Over the twentieth century, the average annual stock-market return was 11 percent, minus 3 percent for inflation, giving us 8 percent.

Of employees age 25 and under:
- Less than one-third participate in a 401(k)
- Less than 4 percent max out their contributions
- Only 16 percent contribute enough to get the full company match (literally free money)

Financial institutions have noticed an interesting phenomenon: When people enter their forties, they suddenly realize that they should have been saving money all along. As a result, the number one financial concern Americans have is not having enough money for retirement.

By opening an investment account, you give yourself access to the biggest moneymaking vehicle in the history of the world: the stock market.

Ladder of Personal Finance:

• Rung 1: 401(k) match, contribute enough to get full match
• Rung 2: Pay off your credit card and any other debt.
• Rung 3: Open up a Roth IRA
• Rung 4: If you have money left over, go back to your 401(k) and contribute as much as possible to it.
• Rung 5: If you still have money left to invest, open a regular non-retirement account and put as much as possible there.

Benefits of 401(k):
Using pretax money means an instant 25 percent accelerator.

Chapter 4: Conscious Spending
Cheap vs. Frugal: Cheap people care about the cost of something. Frugal people care about the value of something.

Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on and then cutting costs mercilessly on the things you don't love. The mind-set of frugal people is the key to being rich.

50% of more than one thousand millionaires surveyed have never paid more than $400 for a suit, $140 for a pair of shoes, and $235 for a wristwatch.

Instead of getting caught on a spending treadmill of new phones, new cars, new vacations, and new everything, they plan what's important to them and save on the rest.

A good rule of thumb is that fixed costs (rent, utilities, debt, etc.) should be 50-60% of your take-home pay.

A good rule of thumb is to invest 10 percent of your take-home pay (after taxes) for the long term.

Another solution is "The 60 Percent Solution" splitting your money into buckets. The largest being basic expenses (60%). The remaining split four ways: Retirement (10%), Long-term savings (10%), Short-term savings (10%), Fun money (10%).

Chapter 6: The Myth of Financial Expertise
Americas love experts....But ultimately, expertise is about results. You can have the fanciest degrees from the fanciest schools, but if you can't perform what you were hired to do, your expertise is meaningless.

More information is not always good, especially when it's not actionable and causes you to make errors in your investing. The key takeaway here is to ignore any predictions that pundits make. They simply do not know what will happen in future.

Recently, Helpburn Capital studied the performance of the S&P 500 from 1983 to 2003, during which time the annualized return of the stock market was 10.01 percent. They noted something amazing: During that twenty-year period. If you missed the best twenty days of investing (the days where the sock market gained the most points), your return would have dropped from 10.01 percent to 5.03 percent. And if you missed the best forty days of investing, your returns would equal only 1.6 percent–a pitiful payback on your money. Lesson: Do not try to time the market, invest regularly and for the long-term.

Ignore the last year or two of a fund's performance. A fund manager may be able to perform very well over the short term. But over the long term he will almost never beat the market–because of expenses, fees, and the growing mathematical difficulty of picking outperforming stocks.

Most people don't actually need a financial adviser–you can do it all on your own and come out ahead.

Many people use financial advisers as a crutch and end up paying tens of thousands of dollars over their lifetime simply because they didn't spend a few hours learning about investing. If you don't learn to manage your money in your twenties, you'll cost yourself a ton one way or another–whether you do nothing, or pay someone exorbitant feeds to "manage" your money.

Mutual funds use something called "active management." This means a portfolio manager actively tries to pick the best stocks and give you the best return. Index funds are run by "passive management." These funds work by replacing portfolio managers with computers. They simply and pick the same stocks that an index holds.

Index funds have lower fees than mutual funds because there's no expensive staff to pay. Vanguard's S&P 500 index fund, for example, has an expense ratio of 0.18 percent.

Passively managed index fund (.18% expense ratio, 8% return on investment of $100/month), after 25 years: $70,542.13
Actively managed index fund (2% expense ratio, 8% return on investment of $100/month), after 25 years: $44,649.70

*Half of actively managed funds between 1993 through 1998 failed to beat the market, and only 2% beat market from 1993 through 2003.

More than 90% of your portfolio's volatility is a result of your asset allocation (your mix of stocks and bonds, not individual stocks).

Your investment plan is more important than your actual investments. Just as the way I organized this book is more important than any given word in it.

1998: US large cap stocks +28.6%, international stocks +20%, REITs -17%
2000: US large cap stocks -9.10%, international stocks -14.7%, REITs +31.04%

If you're 25 and just starting out, your biggest danger isn't having a portfolio that's too risky. It's being lazy and overwhelmed and not doing any investing at all. That's why it's important to understand the basics but not get too wrapped up in all the variables and choices.

"I believe that 98 or 99 percent–maybe more than 99 percent–of people who invest should extensively diversify and not trade. That leads them to an index fund with very low costs." -Warren Buffet

"When you realize how few advisers have beaten the market over the last several decades, you may acquire the discipline to do something even better: become a long-term index fund investor." -Mark Hulbert

Lifecycle funds, also known as target-date funds, automatically pick a blend of investments for you based on your approximate age. The 85% percent solution, not perfect, but easy enough for anyone to get started.

If you're picking your own index funds, as a general guideline, you can create a great asset allocation using anywhere from three to seven funds. The goal isn't to be exhaustive and own every single aspect of the market. It's to create an effective asset allocation and move on with your life.

Dollar Cost Averaging: Investing regular amounts over time, rather than investing all your money into a fund at once, so you don't have to guess when the market is up or down. *Set up automatic investing at regular intervals so you don't have to think about it.

Chapter 8: Easy Maintenance
Ignore the noise: It doesn't matter what happened last year, it matters what happens in the next ten to twenty years.

Renting is actually an excellent decision in certain markets–and real estate is generally a poor financial investment.

Tax inefficient (i.e. income-generating) assets such as bonds should go into a tax advantaged account like an IRS or a 401(k). Conversely, taxable accounts should only hold tax-efficient investments like equity index funds.

Invest as much as possible into tax-deferred accounts like your 401(k) and Roth IRA. Because retirement accounts are tax advantaged, you'll enjoy significant rewards.

If you sell an investment that you've held for less than a year, you'll be subject to ordinary income tax, which is usually 25-35 percent.

If you hold your investment for more than a year, you'll only pay a capital-gains tax, which in most cases is currently 15 percent. This is a strong incentive to buy and hold for the long term.

Chapter 9: A Rich Life
Being rich is about freedom–it's about not having to think about money all the time and being able to travel and work on the things that interest me. It's about being able to use money to do whatever I want–and not having to worry about my budget, asset allocation, or how I'll ever be able to afford a house.

Raises:
When you receive a raise, don't feel bad about celebrating–but do it modestly...A mere increase in your income is not a call to change your standard of living.

Big Purchases:
When it comes to saving money, big purchases are your chance to shine–and to dominate your clueless friends who are so proud of not ordering Cokes when they eat out, yet waste thousands when they buy large items like furniture, a car, or a house. When you buy something major, you can save massive amounts of money–$2000 on a car or $40,000 on a house–that will make your other attempts to save money pale in comparison.

Buying a Car:
Let me first tell you that the single most important decision associated with buying a car is not the brand or the mileage or the rims (please jump off a bridge if you buy specialty rims)...Most important factor is how long you keep the car before selling it. You could get the best deal in the world, but if you sell car after four years, you've lost money. Instead, understand how much you can afford, pick a reliable car, maintain it well, and drive it for as long as humanly possible. Yes, that means you need to drive it for more than ten years, because it's only once you finish the payments that the real savings start.

Buying a House:
Can you afford at least a 10 percent down payment for the house? If not, set a savings goal and don't even think about buying until you reach it.

I have to emphasize that buying a house is not just a natural step in getting older. Too many people assume this then get in over their heads. Buying a house changes your lifestyle forever.

If you can afford it and you're sure you'll be staying in the same area for a long time, buying a house can be a great way to make a significant purchase, build equity, and create a stable place to raise a family.

Real estate is the most overrated investment in America. It's a purchase first–a very expensive one–and an investment second.

As an investment, real estate provides mediocre returns at best. Risk: If your house is your biggest investment, how diversified is your portfolio? Poor returns: From 1890 to through 1990, the return on residential real estate was just about zero after inflation.

If someone buys a house for $250,000 and sells it for $400,000 twenty years later, they think, "Great! I made $150,000! But actually, they've forgotten to factor in important costs like property taxes, maintenance, and the opportunity cost of not having that money in the stock market.

The truth is that, over time, investing in the stock market has trumped real estate quite handily–even now–which is why renting isn't always a bad idea.

When you rent, you're not paying all those other assorted fees, which effectively frees up tons of cash that you would have been spending on a mortgage. The key is investing that extra money.

I urge you to stick by tried-and-true rules, like 20 percent down, a 30-year fixed-rate mortgage, and a total monthly payment that represents no more than 30 percent of your gross pay. If you can't do that, wait until you've saved more.

If You Can: How Millennials Can Get Rich Slowly – William J. Bernstein

If You Can: How Millennials Can Get Rich Slowly – William J. Bernstein
Date read: 7/15/17. Recommendation: 7/10.

An easy-to-read overview of the topics covered in his earlier book, The Investor's Manifesto. I prefer the depth and detail of the latter. But if you're looking for an introduction to investing in low-cost index funds and the importance of developing a financial strategy at an early age, this is a good starting place. 

See my notes below or Amazon for details and reviews.

My Notes:

Start by saving 15 percent of your salary at age 25 into a 401(k) plan, and IRA, or a taxable account (or all three). Put equal amounts of that 15 precent into just three different mutual funds:

• A US total stock market index fund

• An international total stock market index fund

• A US total bond market index fund

     *Once per year you'll adjust their amounts so that they're equal again.

Rest assured that you will get Social Security; its imbalances are relatively minor and fixable, and even if nothing is done, which is highly unlikely in view of the program's popularity, you'll still get around three-quarters of your promised benefit.

Five Hurdles to Overcome:
1) People spend too much money.

2) You need adequate understanding of what finance is all about.

3) You need to learn the basics of financial and market history.

• "History doesn't repeat itself, but it does rhyme." Fits finance to a tee.

• Nothing more reassuring than being able to say to yourself, "I've seen this movie before and I know how it ends."

4) Overcoming yourself.

• Human beings are simply not designed to manage long-term risks.

• We've evolved to think about risk as a short term phenomenon.

• Proper time horizon of assessing financial risk is several decades

• From time to time you will lose large amounts of money in the stock market, but these are usually short-term events.

5) Recognize the monsters that populate the financial industry.

If you're starting to save at age 25 and want to retire at 65, you'll need to put away at least 15% of your salary.

A plumber making $100,000 per year was far more likely to be a millionaire than an attorney with the same income, because the latter's peer group was far harder to keep up with.

When you buy and sell stocks, the person on the other side of the trade almost certainly has a name like Goldman Sachs or Fidelity. And that's best case scenario. What's the worse case? Trading with a company insider who knows more about his employer than 99.9999% of the people on the planet.

If you want high returns, you're going to occasionally have to endure ferocious losses with equanimity, and if you want safety, you're going to have to endure low returns.

Reading Suggestion: Jack Bogle's Common Sense on Mutual Funds.

You should use your knowledge of financial history simply as an emotional stabilizer that will keep your portfolio on an even keel and prevent you from going all-in to the market when everyone is euphoric and selling you shares when the world seems to be going to hell in a hand-basket.

The real purpose of learning financial history is to give you the courage to do the selling at high prices and the buying at low ones mandated by the discipline of sticking to a fixed stock/bond allocation.

People tend to be comically overconfident: for example, about eighty percent of us believe that we are above average drivers, a logical impossibility.

We tend to extrapolate the recent past indefinitely into the future...Both long bear and bull markets also seem to take on a life of their own.

Humans are "pattern seeking primates" who perceive relationships where in fact none exist. Ninety-five percent of what happens in finance is random noise, yet investors constantly convince themselves that they see patterns in market activity.

To be avoided at all costs are: any stock broker or "full-service" brokerage firm; any newsletter; any advisor who purchases individual securities; any hedge fund.

Your biggest priority is to get yourself out of debt; until that point, the only investing you should be doing is with the minimum 401(k) or other defined contribution savings required to "max out" your employer match; beyond that, you should earmark every spare penny to eliminating your student and consumer debt.

Next, you'll need an emergency fund, enough for six months of living expenses.

Then, and only then, can you start to save seriously for retirement.

Your goal, as mentioned, is to save at least 15 percent of your salary in some combination of 401(k)/IRA/taxable savings. But in reality, the best strategy is to save as much as you can, and don't stop doing so until the day you die.

The optimal strategy for most young people is thus to first max out their 401(k) match, then contribute the maximum to a Roth IRA, then save in a taxable account on top of that.

Once a year you should rebalance your accounts back to equal status.