Linear Vs Exponential Work

Think about your work in terms of timeframe, probability of payoff, and the relationship between input and output (linear vs. exponential). You could:

· Push rocks

· Roll snowballs

· Wait for waves

· Plant and harvest

· Or try to trigger avalanches

Pushing rocks: you’re Sisyphus. The day starts, you push the rock. Next day, same thing. It's linear work. You may get paid well, but you better love the work. Because that damn rock is waiting for you every morning. If you don’t show up, if you don’t push, nothing moves.

Rolling snowballs: you find a spot with sticky snow, you form a ball, you get going. In the beginning, people scratch their heads. It’s so small. Why bother? But you keep at it. The ball expands. It reaches a scale you could never have imagined. Your work compounds. You keep going. You build an empire.

Planting and harvesting: you're sweating today in the hope it will pay off next season. All you can do is pick good soil, tend to your field, plan, and fight pests and rodents. You don't control the weather. You don't control market conditions when you harvest. A big payoff is possible, but it's not guaranteed. You have to trust the process and hope for the best. If you get it right, you buy more land and enjoy some rest.

Waiting for waves: you’re standing at the beach, watching the endless ocean, filled with opportunity, offering treasure and deadly depths. You wait. You wait for a great wave, a massive trend, an opportunity. Until you spot it, you have to practice. You spend days, months, even years trying to catch small waves. You fall off the board. People say you’re wasting your time. But when you finally spot your wave, you're ready. You let it carry you, in perfect flow, and never look back.

Triggering an avalanche: the strangest and least predictable way to leverage your work. You rely on the built-up potential of your surroundings. You create things in the hope they will resonate with the world. You hope that one day, one of your ideas will connect and spread like a virus. But most of the time, nothing happens. You are a lone wanderer on a snowy mountain while everyone is comfortably sitting at the stove. But when you hit the right spot, an avalanche will roar down the slope and reshape the mountain. Your initial spark will take on a life of its own and, for better or worse, transform everything in its path.

Why does this matter?

What you do — and how you frame it — matters a great deal. Do you work to get paid today or to compound far into the future? Are you prepared to jump on an opportunity when it presents itself? Do you spend enough time practicing? If you are caught in a daily grind, are you possibly rolling boulders right over any seeds you planted?

Most likely, your work is some mix of the above. Think about someone like Beal.

· Looking at possible investments every day? Can feel like pushing boulders.

· Reinvesting profits and compounding the value of your portfolio and bank? Definitely a rolling snowball.

· Preparing your capital structure for the next credit cycle? More akin to planting seeds.

· Trying to revolutionize space launches? It feels almost like he was trying to ride a wave that wasn’t quite ready yet. Interestingly, once solved it can spawn an entire industry making it more avalanche-like.

· Offering a price to solve a mathematical problem? Following curiosity for its own sake and contributing to the whole of human knowledge… one of many people kicking around for a possible avalanche.

The right kind of work depends on who you are, what feels interesting to you, what opportunities are available to you, and what responsibilities you have.

Some pushing of rocks may be required, but don't let that define your life. Keep looking for opportunities to form a snowball, for fertile soil, or for beaches with promising waves. Pay attention. Maybe the ground around you is just waiting for someone to trigger an avalanche?

You can apply the same framework to life. For more inspiration and food for thought, watch or read the transcript of this excellent recent talk by Graham Weaver: ‘how to live an asymmetric life.’ “Yes, it is possible to reduce one’s downside,” Weaver reflected on his investing career, “but it is not possible to eliminate it.”

Source –

https://neckar.substack.com/p/journal-beal-infinite-loops-and-asymmetry

9 sources of permanent advantage

Raw talent/intelligence - Some people are just naturally better and smarter. 

Hard work - Some people work harder. 

Differentiation - Seeing the world differently. Doing something different. Reading different books. Interpreting the same information differently. 

Process / Discipline - Creating a process and following it. Working out every day is a great example. 

Talent Collector - The ability to hire the best people and get the most out of them. 

Patience - A lack of patience changes the outcome. 

Ability to take pain - Are you willing to look like an idiot to get better? How much risk are you willing to take, AND, importantly, can you handle the losses? 

Temperament - Keeping your head when everyone else is losing theirs. 

Luck 

Source – https://fs.blog/

Living An Asymmetric Life

Discovering the Power of Asymmetry

When I started my investing career, I focused almost exclusively on what I believed were the two fundamental rules of investing: Rule One: Don’t lose money, and Rule Two: Never forget Rule One. 

We bought some companies at very low prices and others at a discount to their net asset values. On three separate occasions, the memo I wrote to our investment committee claimed, “It is mathematically impossible to lose money on this investment.” We lost money all three times. In fact, I personally lost money on five of my first eight investments, and we lost money on our first fund. 

Over my 29-year career as a professional investor, I have come to realize that in those early days, I was dead wrong in my thinking about investing. If I had to summarize great investing in a single word, it would be “asymmetry.”

I learned that, yes, it is possible to reduce one’s downside, but it is not possible to eliminate it. The better strategy is to seek opportunities where the possibility of gains wildly outweighs what you can lose, which is typically capped at 1x your investment. 

Further, there are criteria, which, when you stack them on top of each other, don’t stack linearly; they become logarithmic — or asymmetric. For example, if you have an incredible management team who builds a great team to support them, moves at a fast pace, operates in a large industry, can redeploy large amounts of capital at high returns, and is willing to do so over a long time – then you’re not playing for a 1.5x or 2.0x outcome, you could be playing for a 10x, 20x, or even 100x outcome. 

Investing is about finding those asymmetric opportunities.

Living an Asymmetric Life

As I started applying the principle of asymmetry to investing, I also began to realize that the principles were even more powerful when I applied them to other areas of my life. And just like in investing, I was playing small in my life — playing not to lose. 

I uncovered several principles that would allow me to create asymmetry in my life, and these also stack logarithmically. Apply one of these to your life, and you will improve your life significantly. Apply two or three, and you will live an incredible life. And, if you can run the table and apply all four of these principles, you can live a life with joy, energy, and meaning — and you can sustain it for decades.

Principle 1: Do Hard Things

Our whole lives, we have been led to believe that the goal of life is ease and comfort. We can order food from an app and binge-watch movies from our couch for only $9.99 per month. The less energy we exert in getting what we want, the more we pat ourselves on the back for having “made it” in life. 

What a fantastic lie. 

When I rowed crew in college, we measured our fitness level with a 2,000-meter test on a rowing machine. From the first day of the season to my peak fitness six months later, I would get about 20 seconds faster. Ten of those seconds would come from the work we put in – rowing, weightlifting, and running for two or three hours a day for six months. But surprisingly, 10 of the 20 seconds came in the first two weeks of the season. It did not come from improvements in cardiovascular fitness, strength, VO2 max, or technique. It came from psychology. Specifically, I would get comfortable being uncomfortable. I would realize that I could sustain a high heart rate longer than I thought and that when I got to 1,500 meters and was in pain, I could keep going. 

The graph above depicts growth and change in our lives. We typically hit a plateau at some point, shown by the red circle. Once we reach a plateau, things are going to have to get worse before they get better. This is true for nearly all growth and improvement. For example, if you need to have a difficult conversation with your partner, your life will get worse first. But once you have the discussion, you will work through the issue and become closer. If you need to leave a difficult relationship, you might have a painful breakup, be lonely for a while, and then experience the anxiety or nervousness of dating again. Your life will get worse before it gets better. This is true for changing jobs, starting a new career path, learning a new skill, or starting a new habit. 

Everything you want is on the other side of “worse first.” But when you can get comfortable being uncomfortable, you can have nearly anything you want in this life. 

“When you can get comfortable being uncomfortable, you can have nearly anything you want in this life. ”

If you want to live an asymmetric life: Do hard things.

 

Principle 2: Do Your Thing

When I graduated from Stanford Business School, I had two alternatives for my career. One option was the job I had before business school, working at a large private equity firm. This path was clear. It had a salary and bonus, and several other classmates would be joining me at the firm. 

The other option was to try to start my own company. I had bought several companies as a fundless sponsor in business school, but this path was far from clear in my mind. I didn’t know how to start, how to raise money, or even if I could afford to pay myself. With all these unknowns looming large in my head, I chose to take the big private equity job.

The job was hard. I took early flights, traveled across the globe, stayed up late meeting bid deadlines to purchase companies, and worked 80+ hours per week. I didn’t have kids yet, but if I had, I would have gotten home late, been away a lot, and missed little league games. The job I had billed as the “easy” option in my head was actually really difficult. 

The first principle of Buddhism is Dukkah, which translates to “suffering.” Life has suffering. As I learned during this phase in my career — and Buddha learned 2,800 years before me — there is no “easy” or “safe” path. No matter what path you take, life will present suffering.

Life is suffering. So figure out something worth suffering for.” 

While still in that big PE firm job, I met a guy at a dinner named Dave who had the same role as me at a rival fund. As we ate, Dave told the story of a deal he had just bid on. He lit up as he talked about debt covenants, leverage multiples, and the intricacies of his bidding strategy. He had so much energy and enthusiasm — about debt covenants, of all things! Instead of enjoying my overpriced meal, I had a sinking feeling in my stomach. I realized my energy for this role was not even close to the passion Dave had. I also realized that Dave, and anyone else who was that fired up about this job, would crush me. He was living his dream; I was just going through the motions. 

When faced with choices about what we want to do, most of us miss one important piece of the equation. We factor in all the risks and tradeoffs, but we completely discount how differently we will show up when we’re truly energized about something. When our whole being is fully invested, we tap into a superpower, and we can sustain that for a long time. You won’t tap into this power as long as you’re living someone else’s dream. 

“When faced with choices about what we want to do, most of us miss one important piece of the equation. We factor in all the risks and tradeoffs, but we completely discount how differently we will show up when we’re truly energized about something.”

If you want to live an asymmetric life: Do hard things. Do your thing.

 

Principle 3: Do it for decades

In 2004, at my fifth business school reunion, one of my classmates put his arm around me and punched me in the gut (literally and figuratively). He said, “Graham, during the greatest wealth creation of all time (Internet 1.0), you’re buying stupid label printing companies.” And I remember thinking, “Yup, that’s pretty much right.” But neither my classmate nor I were thinking very far beyond that moment. 

Vince Lombardi, the legendary coach of the Green Bay Packers, once said, “The Green Bay Packers never lost a football game, but on a few occasions, we ran out of time.” 

I loved what I was doing. And therefore, I was willing to do it for a long time. I am now 22 years into my role as CEO of Alpine Investors, and I’m still fired up!

“I loved what I was doing. And therefore, I was willing to do it for a long time. I am now 22 years into my role as CEO of Alpine Investors, and I’m still fired up!”

The equation for returns is X = (1+R)^N, where N is quadratic. Consider this equation where X represents your competence in any given role. The R represents everything you’re doing to improve yourself:  coaching, reading, learning, writing out your goals, using your imagination, etc. The most powerful part of the equation is the N, the number of years you are in your role. If you love what you do, you will do it for a long time, and your N will be large. And if you improve at a reasonable rate over a long period, you can become the best in the world at what you do. 

There is almost no obstacle that won’t yield to you at full power for a decade. 

If you want to live an asymmetric life: Do hard things. Do your thing. Do it for decades.

 

Principal 4: Write your story

During the Great Recession, I hired my first-ever executive coach, JP Flaum. At the time, Alpine’s largest company was in default. Understandably, I blamed the company’s performance on the economic recession, but JP pushed me on this. He encouraged me to write a new story for this company based on three principles:

Describe the company five years from now, in detail. Get out of the fog of war in front of your face.

Describe it as the outcome you would want if you knew you would not fail. Picture your Nirvana.

Remember, “The ‘how’ is the killer of all great dreams.” So, don’t worry about how you will achieve any of the story as you’re writing it. Just write down the dream.  

We wrote a new story for that company, which involved hiring a new CEO, building an all-star team, improving the technology and the uptime of the product, building a world-class sales and marketing team, and winning new contracts. It was fun to write that story, but of course, it felt aspirational and out of reach. 

But we got to work on the first step: hiring a world-class CEO. And then, together with the CEO, we began to methodically execute the plan. We brought on an all-star team, improved our product, created a world-class sales and marketing organization, and ultimately won every contract (except one) which came up for bid over an 18-month period. The market didn’t change; the industry didn’t change; the competition didn’t change. We changed. We wrote a different story. 

Since then, we’ve written hundreds of stories. We wrote stories about the performance we wanted to achieve, the talent program we would build, the culture we needed to retain the best people, the training program we would create for new MBAs to become CEOs, the sourcing platform to find proprietary investments, and our plans to be a force for good in the world. All those stories seemed aspirational when we wrote them, and nearly all of them came true. 

No matter where you are in your life right now, you can write a new story. 

If you want to live an asymmetric life: Do hard things. Do your thing. Do it for decades. Write your story. 

 

Fear 

One of the biggest things that will hold you back in life is fear. Fear is a master manipulator. It will disguise itself as helping you, as being practical, as keeping you safe. And ultimately, fear will disguise itself as “not me” and “not now.” It might already be creeping in as you read this. 

These principles are the antidote to fear. Each of these four principles is a tangible, tactical way to look fear in the face and make a decision — one based not on fear, but on what is possible — on playing for the asymmetric upside in your life. 

Now is the time to do hard things. There is something you fear. Go do that. There is something you’re putting off. Do that. Because everything you want in this life is on the other side of “worse first.” 

Now is the time to do your thing. No matter what path you choose, you will suffer. But some things are worth suffering for, and you vastly underestimate your expected value when you are excited and at your full power. 

Now is the time to do it for decades. Great things take time. Because there is almost no obstacle that you can choose that won’t yield to you at full power and in control of the game clock.  

Now is the time to write your story. As your life goes on, you will realize how precious it really is, and you don’t want to spend it living someone else’s life. You have a magical life inside of you. Give yourself permission to live it. Take the time to write your story. Ask for what you want, and the universe will respond.   

You did not come this far to play small. You came this far to move the world. Now is your time.

 

Source -

https://www.grahamweaver.com/blog/2023-stanford-graduate-school-of-business-last-lecture

Getting To Genius

Everyone knows that to do great work you need both natural ability and determination. But there's a third ingredient that's not as well understood: an obsessive interest in a particular topic.

To explain this point I need to burn my reputation with some group of people, and I'm going to choose bus ticket collectors. There are people who collect old bus tickets. Like many collectors, they have an obsessive interest in the minutiae of what they collect. They can keep track of distinctions between different types of bus tickets that would be hard for the rest of us to remember. Because we don't care enough. What's the point of spending so much time thinking about old bus tickets?

Which leads us to the second feature of this kind of obsession: there is no point. A bus ticket collector's love is disinterested. They're not doing it to impress us or to make themselves rich, but for its own sake.

When you look at the lives of people who've done great work, you see a consistent pattern. They often begin with a bus ticket collector's obsessive interest in something that would have seemed pointless to most of their contemporaries. One of the most striking features of Darwin's book about his voyage on the Beagle is the sheer depth of his interest in natural history. His curiosity seems infinite. Ditto for Ramanujan, sitting by the hour working out on his slate what happens to series.

It's a mistake to think they were "laying the groundwork" for the discoveries they made later. There's too much intention in that metaphor. Like bus ticket collectors, they were doing it because they liked it.

But there is a difference between Ramanujan and a bus ticket collector. Series matter, and bus tickets don't.

If I had to put the recipe for genius into one sentence, that might be it: to have a disinterested obsession with something that matters.

Aren't I forgetting about the other two ingredients? Less than you might think. An obsessive interest in a topic is both a proxy for ability and a substitute for determination. Unless you have sufficient mathematical aptitude, you won't find series interesting. And when you're obsessively interested in something, you don't need as much determination: you don't need to push yourself as hard when curiosity is pulling you.

An obsessive interest will even bring you luck, to the extent anything can. Chance, as Pasteur said, favors the prepared mind, and if there's one thing an obsessed mind is, it's prepared.

The disinterestedness of this kind of obsession is its most important feature. Not just because it's a filter for earnestness, but because it helps you discover new ideas.

The paths that lead to new ideas tend to look unpromising. If they looked promising, other people would already have explored them. How do the people who do great work discover these paths that others overlook? The popular story is that they simply have better vision: because they're so talented, they see paths that others miss. But if you look at the way great discoveries are made, that's not what happens. Darwin didn't pay closer attention to individual species than other people because he saw that this would lead to great discoveries, and they didn't. He was just really, really interested in such things.

Darwin couldn't turn it off. Neither could Ramanujan. They didn't discover the hidden paths that they did because they seemed promising, but because they couldn't help it. That's what allowed them to follow paths that someone who was merely ambitious would have ignored.

What rational person would decide that the way to write great novels was to begin by spending several years creating an imaginary elvish language, like Tolkien, or visiting every household in southwestern Britain, like Trollope? No one, including Tolkien and Trollope.

The bus ticket theory is similar to Carlyle's famous definition of genius as an infinite capacity for taking pains. But there are two differences. The bus ticket theory makes it clear that the source of this infinite capacity for taking pains is not infinite diligence, as Carlyle seems to have meant, but the sort of infinite interest that collectors have. It also adds an important qualification: an infinite capacity for taking pains about something that matters.

So what matters? You can never be sure. It's precisely because no one can tell in advance which paths are promising that you can discover new ideas by working on what you're interested in.

But there are some heuristics you can use to guess whether an obsession might be one that matters. For example, it's more promising if you're creating something, rather than just consuming something someone else creates. It's more promising if something you're interested in is difficult, especially if it's more difficult for other people than it is for you. And the obsessions of talented people are more likely to be promising. When talented people become interested in random things, they're not truly random.

But you can never be sure. In fact, here's an interesting idea that's also rather alarming if it's true: it may be that to do great work, you also have to waste a lot of time.

In many different areas, reward is proportionate to risk. If that rule holds here, then the way to find paths that lead to truly great work is to be willing to expend a lot of effort on things that turn out to be every bit as unpromising as they seem.

I'm not sure if this is true. On one hand, it seems surprisingly difficult to waste your time so long as you're working hard on something interesting. So much of what you do ends up being useful. But on the other hand, the rule about the relationship between risk and reward is so powerful that it seems to hold wherever risk occurs. Newton's case, at least, suggests that the risk/reward rule holds here. He's famous for one particular obsession of his that turned out to be unprecedentedly fruitful: using math to describe the world. But he had two other obsessions, alchemy and theology, that seem to have been complete wastes of time. He ended up net ahead. His bet on what we now call physics paid off so well that it more than compensated for the other two. But were the other two necessary, in the sense that he had to take big risks to make such big discoveries? I don't know.

Here's an even more alarming idea: might one make all bad bets? It probably happens quite often. But we don't know how often, because these people don't become famous.

It's not merely that the returns from following a path are hard to predict. They change dramatically over time. 1830 was a really good time to be obsessively interested in natural history. If Darwin had been born in 1709 instead of 1809, we might never have heard of him.

What can one do in the face of such uncertainty? One solution is to hedge your bets, which in this case means to follow the obviously promising paths instead of your own private obsessions. But as with any hedge, you're decreasing reward when you decrease risk. If you forgo working on what you like in order to follow some more conventionally ambitious path, you might miss something wonderful that you'd otherwise have discovered. That too must happen all the time, perhaps even more often than the genius whose bets all fail.

The other solution is to let yourself be interested in lots of different things. You don't decrease your upside if you switch between equally genuine interests based on which seems to be working so far. But there is a danger here too: if you work on too many different projects, you might not get deeply enough into any of them.

One interesting thing about the bus ticket theory is that it may help explain why different types of people excel at different kinds of work. Interest is much more unevenly distributed than ability. If natural ability is all you need to do great work, and natural ability is evenly distributed, you have to invent elaborate theories to explain the skewed distributions we see among those who actually do great work in various fields. But it may be that much of the skew has a simpler explanation: different people are interested in different things.

The bus ticket theory also explains why people are less likely to do great work after they have children. Here interest has to compete not just with external obstacles, but with another interest, and one that for most people is extremely powerful. It's harder to find time for work after you have kids, but that's the easy part. The real change is that you don't want to.

But the most exciting implication of the bus ticket theory is that it suggests ways to encourage great work. If the recipe for genius is simply natural ability plus hard work, all we can do is hope we have a lot of ability, and work as hard as we can. But if interest is a critical ingredient in genius, we may be able, by cultivating interest, to cultivate genius.

For example, for the very ambitious, the bus ticket theory suggests that the way to do great work is to relax a little. Instead of gritting your teeth and diligently pursuing what all your peers agree is the most promising line of research, maybe you should try doing something just for fun. And if you're stuck, that may be the vector along which to break out.

I've always liked Hamming's famous double-barrelled question: what are the most important problems in your field, and why aren't you working on one of them? It's a great way to shake yourself up. But it may be overfitting a bit. It might be at least as useful to ask yourself: if you could take a year off to work on something that probably wouldn't be important but would be really interesting, what would it be?

The bus ticket theory also suggests a way to avoid slowing down as you get older. Perhaps the reason people have fewer new ideas as they get older is not simply that they're losing their edge. It may also be because once you become established, you can no longer mess about with irresponsible side projects the way you could when you were young and no one cared what you did.

The solution to that is obvious: remain irresponsible. It will be hard, though, because the apparently random projects you take up to stave off decline will read to outsiders as evidence of it. And you yourself won't know for sure that they're wrong. But it will at least be more fun to work on what you want.

It may even be that we can cultivate a habit of intellectual bus ticket collecting in kids. The usual plan in education is to start with a broad, shallow focus, then gradually become more specialized. But I've done the opposite with my kids. I know I can count on their school to handle the broad, shallow part, so I take them deep.

When they get interested in something, however random, I encourage them to go preposterously, bus ticket collectorly, deep. I don't do this because of the bus ticket theory. I do it because I want them to feel the joy of learning, and they're never going to feel that about something I'm making them learn. It has to be something they're interested in. I'm just following the path of least resistance; depth is a byproduct. But if in trying to show them the joy of learning I also end up training them to go deep, so much the better.

Will it have any effect? I have no idea. But that uncertainty may be the most interesting point of all. There is so much more to learn about how to do great work. As old as human civilization feels, it's really still very young if we haven't nailed something so basic. It's exciting to think there are still discoveries to make about discovery. If that's the sort of thing you're interested in.

Source –

http://www.paulgraham.com/genius.html

The 7 Virtues Of Great Investors

Last year, in my Wall Street Journal newsletter (and in my columns), I wrote a series about the essential attributes that all great investors seem to share.

The series was inspired partly by Benjamin Graham’s declaration, in The Intelligent Investor, that intelligence is “a trait more of the character than of the brain.” It also is rooted in Warren Buffett and Charlie Munger’s constant emphasis on “temperament” and their repeated observations that the investors with the highest IQs often don’t earn the highest returns. Finally, it’s based on my own decades of watching and interviewing the world’s leading investors.

As Ralph Waldo Emerson wrote in his essay “Experience“:

Temperament is the iron wire on which the beads are strung.

I keep getting requests from readers who’d like to have all these posts collected in the same place. Someday, I might turn the series into a book, but for now, I’ll post links to them all here, along with an extremely brief summary of each.

You’ll find a lot more detail, including practical suggestions on how to cultivate these virtues yourself, if you follow the links below.

The seven virtues of great investors are:

Curiosity. As I wrote in my newsletter on Jan. 19, 2022:
Curiosity is the first investing virtue. It’s what enables you to find and develop all the others…. Ordinary investors are afraid of what they don’t know, as if they are navigating the world with those antique maps that labeled uncharted waters with the warning “here be dragons.” Great investors are afraid of what they do know, because they realize it might be biased, incomplete or wrong. So they never deviate from their lifelong, relentless quest to learn more.

Skepticism. I argued that…
…the main product of the financial industry isn’t portfolios; it’s propaganda.
And propaganda with numbers, cloaked in jargon, can hit investors like general anesthesia: You just drift off to sleep while financial professionals surgically remove your money….
Numbing investors with numbers is a standard marketing tactic in the financial industry. That’s why skepticism is one of the seven virtues of great investors.
I then listed my favorite techniques for sharpening your skepticism, which you can find here.

Independence. As I wrote in February 2022:
…without independence, investors are doomed to mediocrity.
What’s your single most valuable asset as an investor? Your mind!
If you let other people do your thinking for you, you’ve traded away your greatest asset — and made your results and your emotions hostage to the whims of millions of strangers. And those strangers can do the strangest things.

Humility. I warned in my newsletter that humility is a…
 …paradoxical blessing that you can possess if, and only if, you believe to the marrow of your bones you do not possess it. The harder you work at achieving and retaining humility, the more you will need to remind yourself that you still don’t have it, lest you puff up with pride at being humble.
Then I suggested three mental exercises that might help you cultivate authentic humility.

Discipline. In my newsletter for Jan. 11, 2022, I highlighted a couple of examples:
Warren Buffett moved from the buzz and bustle of New York City back to Omaha in 1956, where he began managing money in his house on a placid street.
The late global investor Sir John Templeton relocated from New York to the Bahamas where, he told me decades ago, The Wall Street Journal arrived days late. By reading the news a week later, Templeton told me, he could put it in perspective and prevent himself from over-reacting.

Patience. In March 2022 I wrote that patience is often measured not in months or years but in decades. Readers added their own keen suggestions for how to extend your time horizons and look past short-term disappointments.

Finally, courage. My column, “The Secret to Braving a Wild Market,” pointed out that none of these virtues will get you through the worst of markets unless you can muster courage:
Making a courageous investment “gives you that awful feeling you get in the pit of the stomach when you’re afraid you’re throwing good money after bad,” says investor and financial historian William Bernstein of Efficient Frontier Advisors in Eastford, Conn.

You can be pretty sure you’re manifesting courage as an investor when you listen to what your gut tells you—and then do the opposite.

  

Source –

https://jasonzweig.com/the-seven-virtues-of-great-investors

The hack to get into problem solving mode

If you’ve ever emerged from the shower or returned from walking your dog with a clever idea or a solution to a problem you’d been struggling with, it may not be a fluke.

Rather than constantly grinding away at a problem or desperately seeking a flash of inspiration, research from the last 15 years suggests that people may be more likely to have creative breakthroughs or epiphanies when they’re doing a habitual task that doesn’t require much thought—an activity in which you’re basically on autopilot. This lets your mind wander or engage in spontaneous cognition or “stream of consciousness” thinking, which experts believe helps retrieve unusual memories and generate new ideas.

“People always get surprised when they realise they get interesting, novel ideas at unexpected times because our cultural narrative tells us we should do it through hard work,” says Kalina Christoff, a cognitive neuroscientist at the University of British Columbia in Vancouver. “It’s a pretty universal human experience.”

 

Now we’re beginning to understand why these clever thoughts occur during more passive activities and what’s happening in the brain, says Christoff. The key, according to the latest research, is a pattern of brain activity—within what’s called the default mode network—that occurs while an individual is resting or performing habitual tasks that don’t require much attention.

 

Researchers have shown that the default mode network (DMN)—which connects more than a dozen regions of the brain—becomes more active during mind-wandering or passive tasks than when you’re doing something that demands focus. Simply put, the DMN is “the state the brain returns to when you’re not actively engaged,” explains Roger Beaty, a cognitive neuroscientist and director of the Cognitive Neuroscience of Creativity Lab at Penn State University. By contrast, when you’re mired in a demanding task, the brain’s executive control systems keep your thinking focused, analytical, and logical.

 

A cautionary note: While the default mode network plays a key role in the creative process, “it’s not the only important network,” Beaty says. “Other networks come into play as far as modifying, rejecting, or implementing ideas.” So it’s unwise to place blind faith in ideas that are generated in the shower or during any other bout of mind wandering.

 

What is the default mode network

Marcus Raichle, a neurologist at the Washington University School of Medicine in St. Louis, and his colleagues serendipitously discovered the default mode network in 2001 when they were using positron emission tomography (PET) to see how the brains of volunteers were functioning as they performed novel, attention-demanding tasks. The team then compared those images to ones made while the brain was in a resting state and noticed that specific brain regions were more active during passive tasks than engaging ones.

 

However, because the function of each brain region isn’t well characterised and because a specific brain area can do different things under different circumstances, neuroscientists prefer to talk about “networks of brain areas,” such as the default mode network, which function together during certain activities, according to John Kounios, a cognitive neuroscientist and director of the Creativity Research Lab at Drexel University in Philadelphia.

Raichle named this network the “default” mode network because of its heightened activity during idle periods, says Randy L. Buckner, a neuroscientist at Harvard University. But it’s something of a misnomer because the default mode network is also active in other mental tasks, such as remembering past events or engaging in self-reflective thought.

 

The network is also “involved in the early stages of idea generation, drawing from past experiences and knowledge about the world,” explains Beaty. “When you’re not actively working on a problem, the brain keeps spinning and you can get restructuring of elements of the problem, pieces get reshuffled, and something clicks.” The DMN, he adds, “helps you combine information in different ways and simulate possibilities.”

Researchers have discovered that when it comes to measures of creativity, there's a positive correlation between creative performance and grey matter volume of the default mode network. In other words, as far as creativity goes, size matters when it comes to the DMN.

 

To investigate changes in brain activation and connectivity between different regions of the DMN, researchers asked volunteers to alternate between activities involving high cognitive effort (naming colours), low cognitive effort (reading words), and no cognitive effort (resting). They found that the default mode network was most active when the participants were at rest and more active during the low effort task than the high effort one, according to the study in the April 2022 issue of Scientific Reports. This suggests that DMN activity can toggle up and down, as if on a dimmer, perhaps stopping at intermediate points along the way, depending on the level of cognitive challenge that’s required.

 

The link to creative thinking was demonstrated in a study published in January that involved patients who were awake during brain surgery so surgeons could map the exposed cortical surface for language functions. As direct electrical stimulation was applied to their default mode network or another area of their brain, the patients were asked to perform an "alternate-uses task" that involved inventing unusual uses for an everyday object—in this case, a paper clip—which is a way of evaluating divergent thinking abilities. The researchers found that the patients’ ability to successfully perform the alternate-uses task depended on the strength of connections between nodes of the default mode network.

 

“The default mode network seems to be an important source of creativity, and it’s decidedly associated with mind-wandering,” says Jonathan Schooler, a psychological scientist at the University of California, Santa Barbara. Indeed, a study in the February 2022 issue of Human Brain Mapping found that positive, constructive daydreaming—“characterised by planning, pleasant thoughts, vivid and wishful imagery, and curiosity”—is associated with activity in the default mode network and creativity.

 

The benefits of mind-wandering 

Whether we realise it or not, we all engage in mind-wandering on a regular basis, says Beaty, noting that there are different kinds. There’s deliberate mind-wandering, where you try to exercise some level of control or direction to your thinking; and spontaneous mind-wandering, which happens in the brain without us directing it. In a study in a 2020 issue of PNAS, researchers using electroencephalograms to track people’s brain activity found that spontaneous mind-wandering occurred 47 percent of the time.

 

It’s the spontaneous form, in particular, that allows you to combine information and ideas in new ways. “When your mind drifts away from a situation into an internal reverie, that’s where you can have creative insights,” Schooler says. “In this pleasurable state, you’re allowing thoughts to playfully cross your mind.” Keep in mind, he adds, “sometimes you have to do the work to create a problem space—that sets the groundwork for spontaneous ideas to emerge.”

 

This is often referred to as "the incubation effect," which occurs when you spend time away from a particular problem or challenge and your mind has the chance to wander and generate novel ideas through unconscious associative processes.

 

How to spark creativity

Besides leading to greater self-understanding, gaining insights into these aspects of the creative process can help you maximise your brain power in various situations. But keep in mind, Jung points out, “these are early days, and there’s still a lot to learn about how the brain creates.”

 

As a first step, it’s wise to prioritise getting plenty of good quality sleep, which can improve your mood and help with memory, says Kounios who is co-author of The Eureka Factor: Aha Moments, Creative Insight, and the Brain. While you’re asleep, he notes, “the information you take in during the day is transformed from a fragile state into a more durable state which can bring aha moments.”

Immediately upon awakening from a full night’s sleep or even a 20-minute nap, Christoff recommends paying attention to thoughts and ideas that occur to you in that liminal state between being sound asleep and fully awake—that’s a time when your ideas are “often quite free-flowing,” she adds, which means you can tap your creative potential.

To consciously activate your DMN and creative ideas during the day, allow yourself to spend time doing activities that aren’t cognitively demanding—such as going for a walk, taking a warm bath, or gardening—without listening to music or a podcast. Simply let your mind wander. Do this when you’re “in a state of psychological safety, where there’s no danger to having an unusual thought and no immediate task to perform,” Kounios says. (In other words, don’t do this while driving.)

 

During the day, doing something easy and familiar, often involving some kind of movement, is likely to facilitate the flow of spontaneous thoughts. When you’re in the shower, for example, “you don’t have a lot to do, you can’t see much, and there’s white noise,” notes Kounios. “Your brain thinks in a more chaotic fashion. Your executive processes diminish and associative processes amp up. Ideas bounce around, and different thoughts can collide and connect.”

 

There’s some research that suggests spending time in nature—which can evoke a sense of awe, as well as inducing relaxation—is conducive to mind-wandering because it allows “your attention to expand to fill the space,” Kounios says. “Taking a walk in nature can improve your mood and expand your thoughts to include remote ideas and associations.”

That’s why if you’re trying to come up with a new idea or solve a problem, it’s a good idea to work hard on it then take a break and go for a walk if you reach an impasse. “This allows your mind to subconsciously work on something you were consciously working on,” Christoff says.

A key factor: The activity needs to last long enough “to present the opportunity to get into a different mode of thinking that we usually guilt ourselves out of,” Christoff explains. “We need to become relaxed enough mentally in order to not try to be productive or reach some goal. With habitual activities we engage in with some regularity, we don’t feel guilty about letting our minds wander—that’s when the mind can reach new places.”

So don’t be afraid to unplug and carve out time for mind-wandering and musing on a regular basis. “One of the costs of this multimedia world we live in is we don’t leave enough time for personal reverie,” Schooler says. Giving your mind a chance to roam is an investment in your creativity, and that’s time well spent.

Source –

https://www.nationalgeographic.co.uk/history-and-civilisation/2022/08/the-science-of-why-you-have-great-ideas-in-the-shower

Make Something Wonderful

There’s lots of ways to be, as a person. And some people express their deep appreciation in different ways. But one of the ways that I believe people express their appreciation to the rest of humanity is to make something wonderful and put it out there. And you never meet the people. You never shake their hands. You never hear their story or tell yours. But somehow, in the act of making something with a great deal of care and love, something’s transmitted there. And it’s a way of expressing to the rest of our species our deep appreciation. So we need to be true to who we are and remember what’s really important to us.

—Steve, 2007

I grow little of the food I eat, and of the little I do grow I did not breed or perfect the seeds.

I do not make any of my own clothing.

I speak a language I did not invent or refine.

I did not discover the mathematics I use.

I am protected by freedoms and laws I did not conceive of or legislate, and do not enforce or adjudicate.

I am moved by music I did not create myself.

When I needed medical attention, I was helpless to help myself survive.

I did not invent the transistor, the microprocessor, object oriented programming, or most of the technology I work with.

I love and admire my species, living and dead, and am totally dependent on them for my life and well being.

One More Thing …

Life can be much broader once you discover one simple fact—and that is: everything around you that you call life was made up by people that were no smarter than you.

 And you can change it.

You can influence it.

You can build your own things that other people can use.

And the minute you can understand that you can poke life, and if you push in, then something will pop out the other side; that you can change it, you can mold it—that’s maybe the most important thing: to shake off this erroneous notion that life is there, and you’re just going to live in it versus embrace it, change it, improve it, make your mark upon it.

I think that’s very important, and however you learn that, once you learn it, you’ll want to change life and make it better. Because it’s kind of messed up in a lot of ways.

Once you learn that, you’ll never be the same again.

—Steve, 1994

Steve on people -

The most important lesson I ever learned was that you have to hire people better than you are. […] In normal life, the difference in dynamic range from average to best is usually 30, 40, 50 percent. Twice as good: rarely. So the difference between an average meal in downtown Palo Alto tonight and the best one—maybe it’s two to one. Flight home, if you’re going home for the holidays: 50 percent difference. Rental cars, breakfast cereals. I don’t know, pick one.

But I saw that Woz [Apple co-founder Steve Wozniak]—one guy—having meetings in his head could run circles around two hundred engineers at Hewlett-Packard. That’s what I saw. And I thought, “Wow.” And I didn’t really understand it at first.

Then I started to understand it. It took me about ten years to actually try to put it into practice. Because you’d try to hire and find those people. And they’re really hard to find. And everyone says they are all prima donnas. But it turns out that when they work with each other, they’re not prima donnas. They really like it. The first time I tried to build that organization—that was the Mac team. And it really worked. I saw a team of fifty people do something that literally hundreds, or thousands, of people at other companies couldn’t do. And so I’ve since then always tried to find really great people who love what they are doing and are extremely good at it. And sometimes they have experience, and sometimes they’re really young. They’re diamonds in the rough—and you hire them and take chances on them. But that’s been the most important lesson I’ve learned in business: that the dynamic range of people dramatically exceeds things you encounter in the rest of our normal lives—and to try to find those really great people who really love what they do.

Source –

https://book.stevejobsarchive.com/