Friends,
Last week I hinted at a framework for deciding what to pursue if you started with a blank sheet of paper.
Before I continue, I want to briefly address headspace. As we travel through life there are periods where we are head down with specific outcomes in mind. It could be printing money at your job, training for a marathon, building a business, surviving residency, or writing a thesis. Whether consumed by a grueling grind or a creative fever, it’s not the time for introspection.
Don’t interrupt momentum in between checkpoints. Even if it’s a slog, be gracious for the conviction. It’s a gift that comes and goes. Don’t squander it. Just like true learning, personal progress is uncomfortable. Ron Burgundy said it best — “it’s a deep burn”. The only way is through.
Conversely, if you are at a checkpoint, looking for your next sprint, you’re in explore mode looking for your next exploit. I don’t love the word exploit here but it’s a classic framing of the problem (see my notes on an interview with AI researcher Brian Christian). Part of that search is self-search. “Why” overtakes “how”. If this is where you find yourself, I hope this essay offers a perspective to turn over in your mind. If you are full speed ahead on your current jam, you can skip ahead to today’s Money Angle.
Otherwise, let’s make our way toward the framework.
It comes from a meatspace friend who I admire for a brutal amount of intent in how he lives. He’s not an online guy but has one of the Tim Urban visuals from The Tail End printed out in his office. I have an offline in-law who has the number of weekends he has left with his kids on the front page of his digital dashboard. Besides being impressed with Tim Urban’s reach, I’m struck at how conscious these people are about time. I remember listening to an interview with investor Chris Cole where he talks about the watch he wears — it counts the days until his expected actuarial death.
Personally, I don’t feel compelled to inhabit this level of morbidity, but I can appreciate its life-affirming focus. If they sound quasi-extreme, it’s only because it’s easy to take time for granted. But you can’t put more sand in an hourglass1.
Acknowledge Your Agency
Complacency is a warm blanket. It soothes and coddles. Until you get itchy. Then it becomes the very source of your discomfort. Once you notice, you can’t get it off fast enough.
Agency is choosing which discomfort you want to confront. Fear or complacency. Fear of what? I don’t even want to type it out because it sounds ridiculous, but here it goes:
You are afraid of your own potential.
It still sounds ridiculous. So why indulge the thought? Two reasons.
- If it’s true, then finding out has an outrageous expected value in terms of fulfillment.
I doubt fulfillment is a destination. It’s more of the feeling of pushing against something and having it push back in a way that makes you feel like you are alive. That you are in a conversation with existence rather than just watching it.
- Others have this thought as well. And that’s a clue that it could be real and worth confronting.
As evidence of this second thought, I strongly urge you to read the entirety of Nat Eliason’s short post:
Shadow Careers and Unembracing Failure (4 min read)
I want to zoom in specifically on the back half of the post (boldfaced is mine):
We should want to work on things where failing terrifies us. If you feel nothing when a relationship ends, why were you in it in the first place? If you wouldn’t be devastated by failing to succeed at your mission, what kind of mission are you spending your limited years pursuing?
It’s a bit lofty, sure, but it provides a useful heuristic. Assuming your basic needs are met it might not be worth working on anything where you aren’t terrified of failing. If you know a project is going to succeed, or you’d be fine if it failed, then it’s not a true calling for you.
There’s a concept I think about from time to time, that hell would be meeting the person you could have been. Who you could be if you ignored the shadow careers, the side quests, the failures you were okay with.
Imagining that person can often be helpful. You’ll almost immediately fill in certain gaps, probably related to what you’re most insecure about. What would you expect them to say they did? What would they tell you they accomplished that would make you immediately overcome with self-loathing at your own shortcomings?
I know my answers, and I bet you do too. It’s not fun to think about, but it is certainly useful. Most of us are in shadow careers. Shadow careers are the defaults. We have to spend some time imagining that person, seeing what they could say that would make us the most embarrassed, to start to tap into a potential level of fulfillment we’re passing up for what’s easy.
“What happens when we turn pro is, we finally listen to that still, small voice inside our heads. At last, we find the courage to identify the secret dream or love or bliss that we have known all along was our passion, our calling, our destiny.”
And lest it gets confused, achieving these secret dreams won’t bring any lasting happiness. Finding the right challenge to struggle against, though… that’s a game you can play for life.
Framework
So back to the “framework” I keep mentioning. Its purpose is to take our ridiculous premise and map it to target opportunities. We want to find the “right challenge to struggle against”.
To do that, we find the overlap of 3 concepts:
- Constraints
- Terms
- Worldview
Constraints
These are your “must-haves”. For example, your endeavor must satisfy or have an acceptable chance of satisfying your financial and geographic needs. You must account for your family’s needs. It sounds straightforward because these are conversations you should have already had but it’s worth checking assumptions. If you define your constraints too narrowly you will rob yourself of paths. This step carries the risk of guiding the Ouija board right back to where you are now by making it the only choice.
Terms
This is similar to constraints but more aspirational. These map to “nice to haves” but without the “take it or leave it” air of negotiability that phrase carries. There’s urgency here. If your terms are not serious goals, why bother with this exercise in the first place?
What’s an example of a term?
A basic example is genuinely liking what you do. Being excited to work. Another example is defining how much time you spend with your kids. Imagine what you want that to look like. This is not easy because “time with kids” is a complicated idea. Some parts of it are a drag. This is not a time to let guilt define your terms. We all have different levels of patience. Some parents prefer their kids in smaller doses than others. It’s ok. Be honest with yourself.
If this reflection isn’t mentally or emotionally demanding you are not doing it right. At the same time, there needs to be flexibility. We don’t have perfect track records of predicting what we want.
Worldview
This one is a doozy because it’s something I’ve only started thinking about in the past few years directly. And some part of that is because I didn’t realize it was ok to have worldviews. Or maybe I just didn’t find it useful to be anything other than agnostic about everything. This has been gradually changing. While I’m not interested in spelling my worldviews out, you can spot some of them by reading between the lines of this letter every week.
Still, I want to be more concrete about what worldview means. I will share my friend’s as an example. He was happy to lay them out for me (and if any local friends are reading this there’s a decent chance they can figure out who it is. He lives it.)
His life and work place an emphasis on 3 aspects of life that he never tires of exploring. To him, they hold the keys to human flourishing.
- Culture/Identity
- Community
- Learning
His hobbies and businesses orbits these three ideas. It’s not an accident. His ethnicity and religion are visibly different than what you typically find growing up south of the Mason-Dixon line as he did. He spent time touring the world as part of a band you likely know. These experiences shaped his worldview. His most recent startup was born out of things he was already doing with his 3 kids. Prior businesses were born out of community building.
Wordviews, like terms and constraints, are deeply personal. I only shared the ones above for example. Your own views can be miles apart. This pluralism is the basis for both bonds and frictions. This leads to an interaction between the three concepts. Your terms or constraints may preclude you from exposure to certain worldviews. The truth is there are some worldviews you are never building a bridge towards.
But the stakes aren’t always that high. We make compromises.
You can spend 8-10 hours a day unaligned with your collaborators’ views or doing work out of sync with your own views. If your choices are limited, your tolerance for this might be high. It’s a tough spot to be in. If you are fortunate enough to have options then a sense of alienation will gradually gnaw at you. You might tolerate it. You might rationalize. You’ll definitely compartmentalize.
Until a point.
The cost of that self-alienation builds. I once had a colleague, older than me, both seasoned and successful who quit because dealing with brokers all day (in a prior gig he purely focused on electronic trading) affected him negatively. He couldn’t compartmentalize. “I’m not who I want to be when I’m here”. I will never forget when he left. If I were 25, I would have thought “what a soft thing to say… suck it up”. Instead, I have profound respect for his choice. I suspect it cost him a lot of money.
You may believe it’s a luxury to adhere to your values. The logic reminds me of how Milton Friedman theorized that racism would be self-correcting because if a bigot chose to not sell products to or hire from a segment of the population the bigot would hurt themselves. I think Friedman was wrong because he was assuming that dollars were the sum of our values. Similarly, your values might cost you dollars, but your soul feels the cost when you ignore your values.
[That reminds me — one of my worldviews is that accounting is super important. Because what we measure gets managed, accounting is actually the art of representing the full picture of costs and benefits. Since decisions in all aspects of life are downstream of accounting, we need to measure better. We need holistic accounting. If your heart and body “disagree” with an outcome that was supposed to make you happy, I suspect your decisions fell out of a narrow accounting framework.
So I lied. I did share a worldview.]
Ok, this is getting long and I’m feeling pedantic. I mentioned last week that I’m still working through stuff. I know this might all sound a bit pompous and snowflakey. I’ll never apologize for snowflakism (another worldview in there probably). But I also appreciate that many people are dutiful without overthinking. Life can sometimes feel like a parade of sterile transactions that pay the bills. There’s grace in just being reliable. The older I get the more inspired I am by the unsung elders who just get it done without too much introspection. There’s tremendous beauty in that and they don’t even realize it.
But this essay is for those trying to sleep in an itchy blanket. It’s warm but you’ll never rest.
Living is risk. Your potential is indeed fearsome. March straight into it if you want to live.
“When in doubt, have a man come through a door with a gun in his hand.”
-Raymond Chandler’s advice to writers who get stuck
Further reading:
How to Pick a Career That Actually Fits You (60 min read)
This is another Tim Urban classic. He penned it in 2018. In a pensive weekend, while Yinh was at Coachella I actually printed out the worksheets and worked though them while I streamed the festival on YouTube. I forgot the name of the post but was able to search for it according to how I remembered it — as the “octopus” model.
The resources at the end are also worth checking out, especially 80,000 Hours. Tim describes it as:
dedicated to helping young, high-potential people make big career choices—is an awesome resource. The site is run by super smart, thoughtful, forward-thinking people, and can be digested in video or book format in addition to on their site.
Money Angle
I liked this post by Morgan Housel:
How People Think (29 min read)
He explains:
This article describes 17 of what I think are the most common and influential aspects of how people think.
It’s a long post, but each point can be read individually. Skip the ones you don’t agree with and reread the ones you do – that itself is a common way people think.
My obsessive need to consolidate and refactor required transposing his list to this one (I re-titled them all for compression):
1) Tribalism
2) We only see the tip of icebergs
3) All probability gets represented as yes or no
4 and 5) We expect trees to grow to the sky (which leads us to overreaction)
6) We are surprised when geniuses disappoint us
7) Unhealthy competition makes us short-sighted. The antidote is extending the horizon to create space.
8) Stories FTW
9) Complexity sells
10) Motivated reasoning is the rule
11) Experience is the raw material for empathy
12) Heisenberg makes us poor self-evaluators. Seek other’s input
13 and 16) Innumerate about extremes [compounding & inevitably of rare occurrences ie the birthday problem]
14) Simple but not easy
15) When imagining change we fail to consider the full context [for example when you are younger you imagine being older as your current life with grey hair but you don’t consider the mental and emotional evolution that comes with aging]
17) Idealism is seductive but counterproductive often leading to isolated demands for rigor
I want to zoom in on #7. It’s our child-eating friend Moloch again. I covered him several times this year:
- Notes From Moloch (9 min read)
- Don’t Look Up, It’s Moloch (10 min read)
- Putting Moloch To Rest (7 min read)
Recall how Moloch symbolizes the tendency to overoptimize on a single value to the detriment of all others, swallowing everyone in its unhealthy path.
I tend to be pretty laid back in general. For better or worse, I tend to be a satisficer rather than a maximizer. A charitable interpretation of that trait (there are non-charitable ones too but I’m the host of this here party at the Moontower) is I appreciate ergodicity. See Luca Dellanna’s What Is Ergodicity? for a quick explanation that word.
But it turns out, humans likely grok the idea in their DNA. In fact, this appreciation forms the basis of pushback against some of the cognitive bias research, especially loss aversion. Contrived behavioral economics experiments assume agents maximize single-trial expected value instead of median expectancy. What behavioral economists label as design flaws are more of Chesterton’s Fence to protect you from self-destruction in the name of maximization. The expected value of saved seconds from jayrunning across the street might be positive. But you only need one ill-timed fall to negate the sum of those optimized moments.
So when I say that “slack” is the answer to Moloch, it has nothing to do with being lazy. It’s appreciating that any one trial is just a single draw in a repeated strategy and the merits of the strategy cannot be graded on isolated outcomes.
Since we are on the topic of behavioral economics, there is another common knock against cognitive bias research.
Via Notes From Todd Simkin On The Knowledge Project:
Shane points out a paradox in cognitive science. Knowing our biases doesn’t seem to help us overcome them.
Todd concurs:
It is definitely true that it is sort of descriptive of the past. A lot of these heuristics and biases are things that we can see when we after we’ve already identified that a mistake has been made. And we say, Okay, well, why was the mistake made? Say, oh, because I was anchored, or because of the way the question was framed, or whatever it might be, we have a really hard time seeing it in ourselves.
But we know the cure for this. I wrote:
This is a topic the brilliant Ced Chin has studied in depth. Ced told me that the literature suggests the only way cognitive bias inoculation works is via group reinforcement. I told him that was exactly the cultural DNA when I was at SIG which makes me believe there is a lot of value in being aware of bias. Anytime you replayed your decision process, it was a cultural norm to point out where in the process you were prone to bias.
Todd reinforces Ced’s conclusions:
We have a really easy time seeing when someone else is making that type of stupid mistake. A big part of our approach to education is to teach people to talk through their decisions, and to end to talk about why they’re doing what they’re doing with their peers, the other people on their team. If we can do that real-time, that’s great. Often in trading, you don’t have that opportunity, because things are just too immediate. But certainly, anytime things have changed. If you’re doing things differently, it’s a really good time to turn to the traders around you. And the quantitative researchers around you and the assistant traders and your team and say, Hmm, it looks like all the sudden Gamestop is a whole lot more volatile than it was a week ago. Here’s how I’m positioning for this trading. What do you guys think? And have someone say, oh, it seems like you’re really anchored to last week’s volatility. If things have changed that much, you need to move much more quickly than you’re moving right now.So you don’t realize that you’re anchored, that’s the whole nature of being anchored, is that you don’t recognize the outsized importance that the anchor has on your decision, but somebody else who’s a little bit more distant from it can. So if we’re good at encouraging communication, then we’re going to be really good at getting other people to help improve your decision process.
I add:
There it is. The key — communication. It’s not some magic formula. Even after I left SIG I spent my whole career working with SIG alum. This culture and these types of communications happen all day on the desk. Despite the common perceptions of “trading”, I have always found it to be a team game and communication skills are paramount.
Todd expands:
I know that you are fond of pointing out that you are the sum of the five people that you spend the most time with. So if the people that you’re spending the most time with are your co-workers who are thinking about trading the same way you are, then maybe you’re going to combine the same types of errors, it’s certainly better than then trying to act on your own. But even better is if you have a culture that rewards truth-finding, as opposed to rewarding action. If nobody feels personally attacked, because of somebody else pointing out their error, but instead feels like we together have now done more to get closer to, to some truth to the better way to act or the you know, the more accurate, fair value of this asset that we’re trading, then everybody feels like it’s a win. And they will therefore encourage the involvement of the people around them.
If you work in a Molochian, credit-stealing environment you face a prisoner’s dilemma as to whether you even want to even correct others’ biases. (I suspect this gets worse as the fiefdoms that emerge in large hierarchies rot the spirit from the inside). Teamwork and its antecedent, alignment, are devilishly hard, but critical because they hold the key to improving decisions.
When Shane asks what the most important variables are for being a better decision-maker, he expects Todd might say “probabilistic thinking”. But Todd did not hesitate with his answer:
Talk more is number one, that beats probabilistic thinking. That beats sort of anything else. Truth-finding is being able to bring in other people in the decision process in a constructive way. So finding good ways to communicate, to improve the input from others. Thinking probabilistically I think is definitely a very, very important piece of trying to diagnose what works by trying to think of where where things fall apart, where people fail. The other place that people fail is falling in love with their decision process and not being open to being wrong. So an openness to feedback to finding disconfirming information to actively seeking out disconfirming information, which is really uncomfortable. But that I think is the other piece that is super important for being a good trader.
If I were to try to be a prop trader from my pajamas, I’d form a Discord channel of sharp, open-minded, truth-seeking, humble, teachable teammates before I even opened a brokerage account.
Trading is not a single-player game.
You need honest mirrors. Not the ones you find in fancy dressing rooms.
Stay groovy squad
- You can slow it down.
Memories As A Unit Of Time (4 min read) More on Time Dilation: Mountain Time (2 min read)