Sunday, November 27, 2022

Little Rules About Big Things

There is rarely more or less economic uncertainty; just changes in how ignorant people are to potential risks.

You should obsess over risks that do permanent damage and care little about risks that do temporary harm, but the opposite is more common.

The only way to build wealth is to have a gap between your ego and your income.

Everyone belongs to a tribe and underestimates how influential that tribe is on their thinking.

A lot of financial debates are just people with different time horizons talking over each other.

It’s easy to mistake “I’m good at this” with “Others are bad at this” in a way that makes you overestimate how valuable your skills are.

It’s important to know the difference between rosy optimism and periods of chaos that trend upward.

If your expectations grow faster than your income you’ll never be happy with your money no matter how much you accumulate.

The inability to forecast the past has no impact on our desire to forecast the future. Certainty is so valuable that we’ll never give up the quest for it, and most people couldn’t get out of bed in the morning if they were honest about how uncertain the future is.

Having no FOMO might be the most important investing skill.

Few things are as valuable in the modern world as a good bullshit detector.

Most of what people call “conviction” is a willful disregard for new information that might make you change your mind. That’s when beliefs turn dangerous.

People have vastly different desires, except for three things: Respect, feeling useful, and control over their time. Those are nearly universal.

The market is rational but investors play different games and those games look irrational to people playing a different game.

There’s a sweet spot where you grasp the important stuff but you’re not smart enough to be bored with it.

A big takeaway from economic history is that the past wasn’t as good as you remember, the present isn’t as bad as you think, and the future will be better than you anticipate.

Most assholes are going through something terrible in their life. People hide their skeletons, which requires blind forgiveness of their quirks and moods because you’re unaware of what they’re dealing with.

History is driven by surprising events but forecasting is driven by obvious ones.

Pessimism always sounds smarter than optimism because optimism sounds like a sales pitch while pessimism sounds like someone trying to help you.

Every past decline looks like an opportunity and every future decline looks like a risk.

A comforting delusion is thinking that other people’s bad circumstances couldn’t also happen to you.

For many people the process of becoming wealthier feels better than having wealth.

Something can be factually true but contextually nonsense. Bad ideas often have at least some seed of truth that gives their followers confidence.

Every market valuation is a number from today multiplied by a story about tomorrow.

Comedians are the only good thought leaders because they understand how the world works but they want to make you laugh rather than make themselves feel smart.

People learn when they’re surprised. Not when they read the right answer, or are told they’re doing it wrong, but when they experience a gap between expectations and reality.

People tend to know what makes them angry with more certainty than what might make them happy. Happiness is complicated because you keep moving the goalposts. Misery is more predictable.

Getting rich and staying rich are different things that require different skills.

Money’s greatest intrinsic value is its ability to give you control over your time.

Past success always seems easier than it was because you now know how the story ends, and you can’t unremember what you know today when trying to remember how you felt in the past.

“Learn enough from history to respect one another’s delusions.” -Will Durant

There’s more to learn from people who endured risk than those who seemingly conquered it, because the kind of skills you need to endure risk are more likely repeatable and relevant to future risks.

Nothing too good or too bad stays that way forever, because great times plant the seeds of their own destruction through complacency and leverage, and bad times plant the seeds of their own turnaround through opportunity and panic-driven problem-solving.

Most people can afford to not be a great investor. But they can’t afford to be a bad investor.

What money can and can’t do for you isn’t intuitive, so most people are surprised at how they feel when they suddenly have more or less than before.

Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works.

Unsustainable things can last longer than you anticipate.

“The thing that is least perceived about wealth is that all pleasure in money ends at the point where economy becomes unnecessary. The man who can buy anything he covets, without any consultation with his banker, values nothing that he buys.” - William Dawson

Napoleon’s definition of a military genius was “The man who can do the average thing when everyone else around him is losing his mind.” It’s the same in business and investing.

It’s hard to tell the difference between boldness and recklessness, greed and ambition, contrarian and wrong.

Woodrow Wilson talked about whether something was accountable to Darwin or accountable to Newton. It’s a useful idea. Everything is accountable to one of the two, and you have to know whether something adapts and changes over time or perpetually stays the same.

Risk has two stages: First, when it actually hits. Then, when its scars influence our subsequent decisions. The recession, and the lingering pessimism that does as much damage.

Tell people what they want to hear and you can be wrong indefinitely without penalty.

Optimism and pessimism always overshoot because the only way to know the boundaries of either is to go a little bit past them.

Reputations have momentum in both directions because people want to associate with winners and avoid losers.

It’s easier to lie with numbers than words, because people understand stories but their eyes glaze over with numbers. As the saying goes, more fiction has been written in Excel than Word.

It’s easy to take advantage of people. It’s also easy to underestimate the power and influence of groups of people who have been taken advantage of for too long.

You have five seconds to get people’s attention. Books, blogs, emails, reports, it doesn’t matter – if you don’t sell them in five seconds you’ve exhausted most of their patience.

It always looks like we haven’t innovated in 10 or 20 years because it can take10 or 20 years before an innovation is an obvious success.

When and where you were born can have a bigger impact on your outcome in life than anything you do intentionally.

Most people are good at learning facts but not great at learning rules – the broad lessons from events that will apply to future events.

Everyone is making a bet on an unknown future. It’s only called speculation when you disagree with someone else’s bet.

There are two types of information: stuff you’ll still care about in the future, and stuff that matters less and less over time. Long-term vs. expiring knowledge. It’s critical to identify which is which when you come across something new.

The same traits needed for outlier success are the same traits that increase the odds of failure. The line between bold and reckless is thin. So be careful blindly praising successes or criticizing failures, as they often made similar decisions with slightly different levels of luck.

When communicating, “know your audience” easily becomes “pander to your audience.”

Most financial mistakes come when you try to force things to happen faster than is required. Compounding doesn’t like when you try to use a cheat code.

There is an optimal net worth for most people, after which not only does happiness stop increasing but more money becomes a social and psychological liability. The number is different for everyone, but is probably lower than most people think.

Risk is what you can’t see, think only happens to other people, aren’t paying attention to, are willfully ignoring, and isn’t in the news. A little surprise usually does more damage than something big that’s been in the news for months.

Innovation and economics can be miles apart. Twitter directly influences geopolitics between nuclear states and is worth half as much as Progressive Auto Insurance.

Risk management is less about how you respond to risk and more about recognizing how many things can go wrong before they actually do.

There is too much marketing (waving your arms) and not enough branding (building trust).

A lot of people don’t realize what bet they’re making. Maybe they thought they were betting on disruptive technology, but it turned out they were betting on low interest rates. Or they thought they were betting on alternative energy, but it turned out they were betting on subsidies and tax credits. Many bets don’t work not because your bet was wrong, but because you didn’t realize the bet you were making in the first place.

Housing is often a liability masquerading as a safe asset.

Asking what the biggest risks are is like asking what you expect to be surprised about. If you knew what the biggest risk was you would do something about it, and doing something about it makes it less risky. What your imagination can’t fathom is the dangerous stuff, and it’s why risk can never be mastered.

A lot of good writing makes points that people already intuitively know but haven’t yet put into words. It works because readers learn something new without having to expend much energy questioning whether it’s true. The alternatives are points that are obvious and well known (boring) or something that’s non-obvious and unknown (often takes too much effort to understand and impatient readers leave).

Emotions can override any level of intelligence.

Small risks are overblown because they’re easy to talk about, big risks are discounted and ignored because they seem preposterous before they arrive.

If you have an idea but think “someone has already done that,” just remember there are 1,010 published biographies of Winston Churchill.

No one is thinking about you as much as you are.

John D. Rockefeller was worth the equivalent of $400 billion, but he never had penicillin, sunscreen, or Advil. For most of his adult life he didn’t have electric lights, air conditioning, or sunglasses. Everything about wealth is circumstances in the context of expectations.

Read fewer forecasts and more history. Study more failures and fewer successes.

There is an optimal amount of bullshit in life. Having no tolerance for hassle, nonsense and inefficiency is not an admirable trait; it’s denying reality. Once you accept a certain level of BS, you stop denying its existence and have a clearer view of how the world works.

Most problems are more complicated than they look but most solutions should be simpler than they are.

About once a decade people forget that bubbles form and burst about once a decade.

If something is impossible to know you are better off not being very smart, because smart people fool themselves into thinking they know while average people are more likely to shrug their shoulders and end up closer to reality.

You can’t believe in risk without also believing in luck because they are fundamentally the same thing—an acknowledgment that things outside of your control can have a bigger impact on outcomes than anything you do on your own.

“Reality will pay you back in equal proportion to your delusion.” – Will Smith

A common irony goes like this:

  • Paranoia leads to success because it keeps you on your toes.
  • But paranoia is stressful, so you abandon it quickly once you achieve success.
  • Now you’ve abandoned what made you successful and you begin to decline – which is even more stressful.

Risk’s greatest fuels are leverage, overconfidence, ego, and impatience. Its greatest antidote is having options, humility, and other people’s trust.

Once-in-a-century events happen all the time because lots of unrelated things can go wrong. If there’s a 1% chance of a new disastrous pandemic, a 1% chance of a crippling depression, a 1% chance of a catastrophic flood, a 1% chance of political collapse, and on and on, then the odds that something bad will happen next year – or any year – are … pretty good. It’s why Arnold Toynbee says history is “just one damn thing after another.”

People suffering from sudden, unexpected hardship can adopt views they previously would have considered unthinkable.

It’s easiest to convince people that you’re special if they don’t know you well enough to see all the ways you’re not.

A large group of people can become better informed over time. But they can’t, on average, become more patient, less greedy, or more level-headed during periods of upheaval. That will never change.

Good ideas are easy to write, bad ideas are hard. Difficulty is a quality signal, and writer’s block usually indicates more about your ideas than your writing.

More people wake up every morning wanting to solve problems than wake up looking to cause harm. But people who cause harm get the most attention. So slow progress amid a drumbeat of bad news is the normal state of affairs.

Everything is sales.

Source –

https://collabfund.com/blog/little-rules-about-big-things/ 

Sunday, November 13, 2022

The 5-Hour Rule Used by Bill Gates, Jack Ma and Elon Musk

You just walked in the door from an exhausting day at work. You're hungry and spent, just wanting to catch your breath for a minute. You grab something to eat and then veg out in front of the TV. The next thing you know, you've just binge-watched five episodes of the latest Netflix show. While that's okay occasionally — we all need ways to decompress and shut down — this isn't a healthy habit.

That's why the most successful people in the world spend their free time learning. It's not exactly breaking news. During his five-year study of more than 200 self-made millionaires, Thomas Corley found that they don't watch TV. Instead, an impressive 86 percent claimed they read — but not just for fun. What's more, 63 percent indicated they listened to audiobooks during their morning commute.

 

Productivity expert ChoncĂ© Maddox writes, "It's no secret that successful people read. The average millionaire is said to read two or more books per month." As such, she suggests everyone "read blogs, news sites, fiction and non-fiction during downtime so you can soak in more knowledge." If you're frequently on the go, listen to audiobooks or podcasts.

 

Maybe you're thinking: Who has the time to sit down and actually read? Between work and family, it's almost impossible to find free time. As an entrepreneur and a father, I can relate — but only to an extent. After all, if Barack Obama could fit in time to read while in the White House, what excuse do you have? He even credits books to surviving his presidency.

 

President Obama is far from the only leader to credit his success to readingBill GatesWarren BuffettOprah WinfreyElon MuskMark Cuban and Jack Ma are all voracious readers. As Gates told The New York Times, reading "is one of the chief ways that I learn, and has been since I was a kid."

 

So how do they find the time to read daily? They adhere to the five-hour rule.

 

Breaking down the five-hour rule

The five-hour rule was coined by Michael Simmons, founder of Empact, who has written about it widely. The concept is wonderfully simple: No matter how busy successful people are, they always spend at least an hour a day — or five hours a work week — learning or practicing. And they do this across their entire career.

 

Simmons traces this phenomenon back to Ben Franklin, who was constantly setting aside time to learn. Franklin generally did this in the morning, waking up early to read and write. He established personal goals and tracked his results. In the spirit of today's book clubs, he created a club for artisans and trademen; they'd come together to pursue self-improvement. He also experimented with his new information and asked reflective questions every morning and evening.

 

The five-hour rule's three buckets

Today's successful leaders have embraced Franklin's five-hour rule by breaking the rule into three buckets.

 

Read: Self-made millionaires including Mark Cuban and Dan Gilbert, owner of the Cleveland Cavaliers, read between one and three hours daily. Elon Musk learned how to build rockets, which lead to SpaceX, by reading. Besides expanding your knowledge, Jack Ma, co-founder of Alibaba, says that "reading can give you a good head start; this is often what your peers cannot obtain. Compared to others, readers are more likely to know other industries' strategies and tactics."

Even if you can't commit to an hour or more of reading every day, start with 20 to 30 minutes. I always have a book with me so when I'm waiting for a meeting to start or in the waiting room of a doctor's office, I can read instead of waste time on my smartphone. You could also try audiobooks during your daily commute or when exercising.

 

Reflect: The five-hour rule also includes reflecting and thinking. This could be just staring at the wall or jotting down your thoughts. For example, Spanx founder Sara Blakely is a longtime journaler.

Focusing on the past gives you a chance to learn from mistakes you've made, as well as assess what you did correctly. As a result, you'll be better suited to achieve your goals and improve your life. In 2014, a University of Texas study found that mental rest and reflection improves learning.

Need help getting started? Schedule reflection time in your planner. I've found blocking out 15 to 20 minutes after lunch is ideal because I'm coming out of that post-lunch slump. But start small: Allocate five or 10 minutes per day, then work your way up so you're not overwhelmed.

Know the questions you want to ask. Stick with just two or three questions focused on that specific day. For example, if you attended a conference, ask, "What were the key takeaways?" and "How can I apply this to my business?"

 

Experiment: The third and final bucket is rapid experimentation. Ben Franklin and Thomas Edison became leading inventors and thinkers because of their experiments. We have Gmail because Google allowed employees to experiment with new ideas. The reason experiments are so useful is because you have facts, not assumptions. Experiments show you what's working. You can learn from your mistakes and obtain feedback from others. Best of all, experimentation isn't that time-consuming. Most of the time, you're testing through the same activities you'd perform without testing.

 

Jack Ma even recommends applying the knowledge you've learned to a real-life scenario. For example, after reading a book about collaboration and teamwork, you could take on new volunteer work to put that knowledge to use.

 

When you make learning a habit, you'll very likely be more successful and productive across different areas of your life. By investing in a reading habit, you can ensure you're growing yourself — and your company — every day.

  

Source –

https://www.entrepreneur.com/living/the-5-hour-rule-used-by-bill-gates-jack-ma-and-elon-musk/317602