Note: While reading a book whenever I come across something interesting, I highlight it on my Kindle. Later I turn those highlights into a blogpost. It is not a complete summary of the book. These are my notes which I intend to go back to later. Let’s start!
My painful mistakes shifted me from having a perspective of “I know I’m right” to having one of “How do I know I’m right?” They gave me the humility I needed to balance my audacity.
Experience taught me how invaluable it is to reflect on and write down my decision-making criteria whenever I made a decision, so I got in the habit of doing that.
- I saw that the only way I could succeed would be to:
- Seek out the smartest people who disagreed with me so I could try to understand their reasoning.
- Know when not to have an opinion.
- Develop, test, and systemize timeless and universal principles.
- Balance risks in ways that keep the big upside while reducing the downside.
From very early on, whenever I took a position in the markets, I wrote down the criteria I used to make my decision. Then, when I closed out a trade, I could reflect on how well these criteria had worked. It occurred to me that if I wrote those criteria into formulas (now more fashionably called algorithms) and then ran historical data through them, I could test how well my rules would have worked in the past.
- When trying to understand anything—economies, markets, the weather, whatever—one can approach the subject with two perspectives:
- Top down: By trying to find the one code/law that drives them all. For example, in the case of markets, one could study universal laws like supply and demand that affect all economies and markets. In the case of species, one could focus on learning how the genetic code (DNA) works for all species.
- Bottom up: By studying each specific case and the codes/laws that are true for them, for example, the codes or laws particular to the market for wheat or the DNA sequences that make ducks different from other species.
- How to improve
- Have clear goals.
- Identify and don’t tolerate the problems that stand in the way of your achieving those goals.
- Accurately diagnose the problems to get at their root causes.
- Design plans that will get you around them.
- Do what’s necessary to push these designs through to results.
Idea Meritocracy = Radical Truth + Radical Transparency + Believability-Weighted Decision Making.
- Great managers orchestrate rather than do. Like the conductor of an orchestra, they do not play an instrument, but direct their people so that they play beautifully together.
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