Should You Invest In Stocks Now?

Should you invest in stocks now?

With the market down 30% from the peak, I’ve seen many variations of this question in recent weeks. Mostly people who dollar-cost average by adding money from every paycheck wondering if they should increase the amounts they put in since the market is “on sale”. It’s an understandable question — I load up on Lucky Charms when they go on sale.

Ok, number one, nobody is qualified to answer this question for you, so let’s get that out of the way. While I hope the following will help you come to your own answer, the learning opportunity here is to get a better understanding of how markets work.

We need to address the mistaken presumption in the question. There’s a bit of a myth that the market is cheaper today. Well, this is true if you compare current prices to past earnings. But markets look forward. Lower nominal prices do not mean bargain. If fundamental deterioration was steeper than the price decline the market is actually more expensive. What a buyer is really interested in is whether the prices are a better value. If Trader Joes sells bruised bananas for half price, the cheapness is for a reason. Right now corporate America’s prospects are brown and soft. Is 30% the right discount? It’s a coin toss.

The market from a bystander perspective is nothing more than the fair point spread. In other words, whenever you put money in you are basically investing at the fair price. I’ll preempt some pushback to that by saying this perspective is a bit scope dependent. There are people who make money in narrow niches of the market that can be mispriced. Dislocations and liquidity frictions can mean opportunities for those experts. Just like if you were an expert in your local real estate market (have great contractor and banker relationships, got the look from the broker you grew up with, some other form of private info), market turmoil could lead to some easy layups. But zoom the scope out until you are a tourist and you are back to tossing fair coins.

This is always the case when you put money in the market. The price balances the buyers’ and sellers’ consensus of the future. Right now all buyers and sellers are meeting at prices that assume earnings in the future will be worse than they expected back in January. If you bet on Bucs to win the Super Bowl this year and Tom Brady gets hurt, the price to bet on the Bucs will get cheaper. The lower price to buy them is probably an equivalent value to the higher non-injured Brady price. It just reflects bleaker fundamentals.

Let’s belabor the point from another angle. The silliness of statements like “I’m a buyer of the market if it goes down to 200” when it’s currently trading for 3000. The unsaid assumption baked into that statement is “all else equal”. Well duh, all else equal, when the market is trading for 3000 there’s a stack of bids from 2000 to 3000. The only way your 2000 bid becomes in play is if the world is different. A bid is an inherently conditional statement. I wish I could have bought my house for $200k. But if my neighbor’s house ever goes on sale for $200k, it’s more likely we’re about pestilence deep into Egypt’s 10 plagues than I’m getting the deal of a lifetime.

Evergreen advice

It’s widely understood that the average stock picker is no better than chance at figuring out what a value is. A full-time endeavor whose output is no better than chance. The conclusion is obvious. Trying to time or beat the market is a low-yielding object of attention. You cannot do this reliably or repeatedly. Not worth the brain damage to trying to decipher if the market is a value. You aren’t counting cards to overbet a stacked blackjack deck here.

Focus your energy on understanding your liquidity needs. Give that exercise its full due. Only you have visibility into your family’s income in a slowing economy. Make sure you have the cash you need to live. Nothing has changed about the fact that the market tempts you with a reward in exchange for volatility. If the risk is suitable, stick to your regular plan.

(Mandatory disclaimer…I’m not giving investment advice. I’m not qualified and have zero credentials.)

A word on market consensus right now

The debate rages on whether the market is oversold or has a lot further to fall. The market price collapses the expected value into a single number. There’s plenty of smart-sounding people with models and forecasts and opinions and degrees on both sides of that price. All of these ideas are swamped by the other market-based consensus: the volatility. The options market is pricing the 1-year standard deviation of the SP500 at 40%. This is about 2x the market’s typical confidence interval. Volatility is a more actionable input into your investment process because it directly feeds into the thing you should be thinking most about — your cash requirements for upcoming expenses. If that kind of volatility is intolerable given your upcoming liabilities (retirement, college, buying a house, and so on), then you are overexposed. Stock returns have always been an award with strings attached. Volatility is not just small print. It’s a double-edged feature. If it didn’t exist markets would not offer a reward.

Build Your Own Cabinet

By last weekend the urgency around Covid-19 hit critical mass. It had been building for weeks. I wrote:

The virtual hivemind was buzzing with concern while mainstream meatspace seemed complacent and oblivious in contrast. Luckily the virtual crossed over to reality.

I promised more to say about that. Specifically on how we consume information.

We are decades beyond the pastoral era of Tom Brokaw mediating world events through a single pipe into your living room. What remains of that gatekeeper model feels like a pot-stirring imperative not to inform but to confirm. To confirm its self-selected audience’s biases. Preachers have always found reliable income by selling affirming nods to the choir. With the major news networks so politicized, I’m reminded of a joke I used to hear on the Nymex floor.  “Do you know how I can tell your lying? Your lips are moving”.

In his post, The Media Who Cried Wolf, Dave Perell describes the collapse of trust in not just the media but institutions in general. He explains how the high-peak, staccato news cycle backs us into “adopting a posture of learned helplessness”.

Fortunately, there are alternatives. In fact, the alternatives likely drove big media to a “we-must-fan-partisan-dumpster-fires strategy” out of commercial necessity. The alternatives are the unfiltered sources of information bursting from permissionless platforms. WordPress, Twitter, Reddit, Substack, Medium, etc.

Ben Thompson, borrowing a computer networking term, writes in Zero Trust Information:
“…once we get through this crisis, it will be worth keeping in mind the story of Twitter and the heroic Seattle Flu Study team: what stopped them from doing critical research was too much centralization of authority and bureaucratic decision-making; what ultimately made their research materially accelerate the response of individuals and companies all over the country was first their bravery and sense of duty, and secondly the fact that on the Internet anyone can publish anything.

To that end, instead of trying to fight the Internet — to try and build a castle and moat around information, with all of the impossible tradeoffs that result — how much more value might there be in embracing the deluge? All available evidence is that young people, in particular, are figuring out the importance of individual verification; for example, this study from the Reuters Institute at Oxford:

We didn’t find, in our interviews, quite the crisis of trust in the media that we often hear about among young people. There is a general disbelief at some of the politicised opinion thrown around, but there is also a lot of appreciation of the quality of some of the individuals’ favoured brands. Fake news itself is seen as more of a nuisance than a democratic meltdown, especially given that the perceived scale of the problem is relatively small compared with the public attention it seems to receive. Users therefore feel capable of taking these issues into their own hands.

A previous study by Reuters Institute also found that social media exposed more viewpoints relative to offline news consumption, and another study suggested that political polarization was greatest amongst older people who used the Internet the least.”

Embracing the Deluge

Both traditional sources and the decentralized free-for-all will coexist. While the unpermissioned voices are not without risk (looking right at you Jenny McCarthy), it is no longer possible nor desirable to put the genie back in the bottle. But to learn from those who will not be bothered by the indignity of a sitting for a test, you need a new strategy. You must funnel wide and narrow quickly. For every rare gem trapped in a non-conformist’s amber, you will sift through elaborate forgeries and well-rehearsed charlatans.

This is not easy. You cannot be an expert in everything. Modernity is too specialized and complex. Punters don’t even kick field goals. This reality underscores the necessity of tuning a good filter. This filter cannot be so strict it ignores the fringe. This filter must consider whether something is “because of” or “in spite of”. It must weigh incentives. Then know when to overrule the weights. You’ll find yourself rummaging through a mish-mash of minds with bias and brilliance. With strange values and foreign logic. And this filter needs to triage these sources as they wait to be verified. Make no mistake, this is a 21tst century skill. So how do you do this?

Build a Cabinet

The solution is to recruit help.

Build your very own cabinet of trusted advisors. Whose thinking resonates with you? Who can be verified by proof-of work? Curate what gets your attention. The sources you read, the blogs you RSS, the people you exchange ideas with, and the accounts you follow.

In the lyrics of the late Neil Peart:

“If you choose not to decide, you still have made a choice”

This exercise is not optional. If you don’t actively choose who you let in your mind, you will find squatters with bad agendas living in your head.

The risk

The echo-chamber. The outrage that bounces back and forth in the mainstream is a convenient reminder that there are many people who disagree with you. It can be easy to lose sight of that when you build your own church with its own choir to preach to. It’s common to believe that people examine facts then draw conclusions. Wrong. People form an impression first. An impression that by virtue of being first must be overtaken. It’s like a mental cortical reaction. How a fertilized egg blocks late-arriving sperm from fusing with it. Your brain is monogamous with the first gut reaction it meets.

To resist that, you need to date around. Curate from different beliefs. Let the ideas compete on their merit and see if you can be like an MMA fighter taking the best from each martial art. Yes this can be risky too. You may find yourself DM’ing with truthers or scheduling dopamine-fasts. But if you never make that error you are probably too conservative. If you never fail you don’t take enough risk. (Some prefer the if-you-never-missed-a-flight-you-wasted-too-much-time-in-airports-being-early argument)

So find a unifying thread between all your follows that transcends belief compatibility. Instead, search for sincerity or decency or curiosity or being logical. These are traits of honest debaters. An honest debate is a performance even a truth-seeking detractor will appreciate. You don’t need to agree with all your follows. If you do, beware, you are dangerously cozy.

How to build a cabinet
Twitter is a great way to observe the battle of ideas. You unknowingly start to assign believability scores. Some folks sound smart, almost too slick, but you can’t tell because they are out of your field. You struggle to judge them. So you watch them. At some point, they might tangle with an argument you have a solid grasp on. Now you have more information. You mentally build a profile. You wade through personalities looking for truth. The people you let in will become trusted sources of info. Unpaid curators.  Friendly adversaries who can improve your thinking. And in the best cases, friends.

Almost everything I read these days has been a recommendation from someone who has good taste in the topic at hand. By curating your people filters well, you curate your content funnel downstream. This is the way to efficiently navigate the deluge of ungated information. In this new world, the average content is worse, but the best is unparalleled and more abundant than a gated system would produce. Just try to find me a better TV character than Antoine Dodson.

Examples of sources in action
Coronaviruses and infection behavior were fairly foreign topics until recently. Twitter helped me get to the heart of the matter much faster than reading Wikipedia or news articles. The nerd analysis was strongly underway by late January around the time the market made its initial swoon. Pandemics are low probability events. Reasoning about low probability events and strategies for dealing with exponential phenomena are not intuitive. But watching discussions amongst people who are strong in these areas makes more sense than watching the news or listening to the average journalist.

First came the nerdy exponential math and flattening the curve arguments. Then the game theory arguments. For example, understanding that if you need to be certain before you act then you will never win against a fast-moving adversary. One of my cabinet members is follow (and friend) Meddling Mage. He has elite-level game instincts (the guy literally has a Magic the Gathering Card made in his honor) so you pay attention when he re-tweets something like this.

Another example is Nassim Taleb. He has made a living thinking about black swan events and risk mitigation. When I care about those types of topics I’m going to seek his view. His wisdom: if you are going to panic, it is better to panic early. If you are right the people who thought you overreacted won’t be around. Not to mention the fact that the act of overreacting makes it more likely that you will end up looking like you overreacted. That’s some pretty diabolical reflexivity. This is also true of terrorism by the way. The measures you take against terrorism make it less likely to occur which make you look foolish for worrying about it when it doesn’t happen. The better it works the more unnecessary it appears.

Rationalists will recognize the Bayesian process. Use trusted sources and your own instincts to form priors. Update and iterate. In the post-mortem, score your trusted sources and recalibrate going forward. Getting meta about info intake is worth some effort.


The Loudness Wars

A loud environment for information is also a compressed environment for information.

This is an outstanding article by Rusty Guinn about the loudness war in our media. Rusty is at Epsilon Theory where his team does neural net voodoo to analyze how narratives propagate throughout society. He uses the “loudness wars” metaphor from recorded music to discuss the media landscape. The first time I remember reading about loudness on music albums was when fans complained that Metallica’s 2008 Death Magnetic album sounded terrible because of the mix (I suspect many people think it sounded terrible for artistic reasons too). Turns out the loudness wars had already been going on for over a decade. The post is worth a read for that history alone.


Besides my Twitter lists, my cabinet includes many online writers which you can find here. (Link)

COVID stream of conciousness

It’s fair to expect a mini baby boom in about nine months from now. Zak is actually a Sandy baby. Born July 13, 2013. Do the math. Although we were already living in SF we had close friends from NJ visiting during Sandy week and they re-scheduled their flights to get back home before the storm hit. Anyway, you are probably reading this. You already knew Zak’s birthday, but not sure if you counted the months backwards before. TMI maybe.

COVID stream of consciousness…

…feels too big.
…Friday I worked from home for the first time. I kept a Google hangouts video chat open with my partners so I don’t get too lonely.
…find ways to support your local businesses. Gift certificates has been a popular idea floating around.
…landlords, making rent is going to be hard for people. some leniency especially in what is bound to be a soft real estate market is not just a way to shoulder some burden but may very well be optimal.
… support your favorite small bands. Buy merch. Nobody makes money selling music. So no performance, no money.
…find a way to cut a deal with people who give lessons.
…check on elderly neighbors.
…homeschooling will be even less stigmatized as resources their upscale war-machine-style
…some people who always wanted to work from willfind the fantasy underwhelming. Perhaps dreadful.
…everyone is stressed but if this just feels like a snow day you have extra bandwidth. Meanwhile, there’s someone close by who is facing crushing pressures, anxiety, or just dire decisions.

Embrace the tech

We are all lucky to have smartphones and video calling. Recent shows I’ve enjoyed have been Cheer on Netflix (Ladarius is extra af) and Ramy on Hulu (very edgy comedy about a 22-yr old Egyptian kid in NJ navigating modernity, Islam, and dating). The Arabic on the show is perfect Egyptian Arabic Ramy’s parents’ accents is humor that you can only appreciate if you have had a shib-shib thrown at you during dinner. Thanks to my cousin Gaby for finding that gem.

Don’t forget to go outside but don’t touch the jungle gym. Maybe order a kettlebell and a jump rope for at-home WODs.

A RadReads Testimonial

My friend Khe has been a big inspiration and helping hand. I got to know him by simply reaching out in response to his letters which I’m an enormous fan of. Besides being super smart, prolific, and epically competent he has a big heart. When I didn’t even know him he took the time to respond to my question with a personal vid. There’s no quid pro quo, he just has a big giver mindset as I came to learn. He’s a kindred spirit and I just wanted to recognize that’s he’s been not only influential but directly helpful.

You should definitely subscribe to his letter. He doesn’t need a plug from me. This is for you. (Subscribe Link)

But if something can top the letter it’s truly the community he built. Hundreds of people joined in that spirit of mutual aid and vulnerability. Entrepreneurs, artists, designers, educators, developers, financiers. Outside my private chats with old friends, it’s the coziest place on the web for me. If you email him, he can invite you. For people looking for a spark, my number one rec is to join the RadReads Slack group.

I’m pretty active in there so you’ll find a familiar handle. But everyone in there is insanely friendly. Lurk around, you’ll understand.

There’s a new #remote-work channel in there for folks looking for a virtual watercooler with video chats. Lots of experiments in our new world.

Finally, he did a brief but terrific letter this week on dealing with COVID distancing. (Link)

The Distance Learning Links You Need

Resources for parents with kids at home

Start Here

  • Outstanding tips and resources for kids both offline and online (Link)
  • Shane Parrish’s crowdsourced thread of learning resources (Link)
  • List of all education companies now offering free subscriptions (Link)

Schools

  • Outschool: Live online learning for all grades and subjects (Link)
  • A Guide to Using Khan Academy Kids for Remote Learning (Link)
  • Beanstalk: Distance learning made free for the duration of the COVID threat (Link)

Focused Resources

  • Mystery Science: elementary science videos (Link)
  • Kurzgesagt: animated science videos  (Link)
  • 3Blue1Brown: animated math concepts (Link)
  • Moontower list of resources to teach kids about money & business (Link)

Game Focus

  • Moontower guide to game-based learning (Link)
  • Moontower reader Erik Berg’s favorite board games and why (Link)

Interactive

  • Nicky Case has the best explorable games to learn about complex phenomena (Link)
  • Nicky is building an explorable COVID game to understand how infections spread (Link).
  • Science Buddies: A great site for finding science projects by interest and age level. We want to do the one about germ spread. (Link)

Schedules

  • Khan Academy’s Recommended Schedules (Link)
  • That schedule floating around social media:

Get Unstuck and Move

A Chance To Break Inertia

We are all anxious. The spread of possible outcomes is well outside the range of future outcomes that we imagine. We automatically presume that each year will be similar to the previous year give or take. We underestimate the volatility. After all, the chance of any particular bad thing happening is small. But if the count of all those particular things is N then (1-p)^N math means it’s only a matter of time before you are faced with something dire that you never planned for.

If a global pandemic doesn’t remind you to be an active participant in choosing your life, then the road you’re traveling is nothing more than a stretch between toll booths. We are not just here for the scenery.

“There Are no ‘Adults’. Everyone’s making it up as they go along. Figure it out yourself, and do it.” – Naval Ravikant

Raise your hand if you were told this when you were young. I wasn’t. I don’t blame my parents. They were just trying to fit in this country. To get along you need to go along. That whole idea. Hard to imagine someone who fought to get to this country thinking otherwise once they finally arrived. The downside is it’s a recipe to live someone else’s life. The fact that it could be a good life is actually a trick. Because it makes you feel guilty when you wake up and realize it’s not the one you would have chosen. Nobody will understand if they see you achieving that ‘model’ life that they themselves are chasing.

Actually, it’s worse than that. If you start chipping away at the idea that this dream was ever yours, you will scare your peers. Especially those who underneath it all feel exactly the way you do. By re-evaluating your priorities you remind people they are trapped in a cage of their own making. It makes them immediately accountable for how they feel.

Imagine you live in one of those zip codes with 10-rated public schools. You tell your friends you are selling the house and are choosing to rent a tiny house. Some will praise you, even though on the inside they think you are a leper. Or worse, they’ll think you got fired. Then there’s that couple using a line of credit to install an open kitchen with that red-knobbed range. They secretly envy your freedom. Not financial freedom. Your mental freedom. Remember if you woke up tomorrow with cheaper tastes you just got a giant pay raise.

So what was it that you wanted before all the adults told you what to want?

Search and Experiment

This issue is the 1 year anniversary of Moontower. This weekend last March I sent the first email to 40 people who indulged me. I asked 100 people total and I was thrilled 40 said yes. It was an experiment. I’m always reading, taking notes and trying to connect dots. Why not share these remixes of others’ originals to see what happens?

Well, a lot happened. Today, there are nearly 500 Moontower readers (help me find 5 more!). Small but beyond what I imagined. I don’t even have that many Facebook friends. It’s a lot of work but it’s so worth it. I have been delighted by the rekindling of many friendships. In some of these cases, it could be described as mutuals who I saw a lot in the past but actually only became friends with recently because of the letter. Looking back it doesn’t surprise me that someone who earns a regular place in your inbox might also be someone you’d want to be friends with. And that works in both directions as you start having more regular dialogues. In many cases, the conversations have led to in-person friendships. All the inbound prompted me to tag many of them with an “Encouragement” label in Gmail. It’s a little self-care hack I picked up that might help on a rainy day. Overall, lots of positivity. More than I could reasonably anticipate.

Beyond the relationship aspect, the letter set a few things in motion. The combination of a forced weekly writing practice plus encouraging feedback gave me confidence. That led to writing more personally and originally (I’m not getting ahead of myself — this a work-in-progress). This, in turn, uncovered a seed I want to water — the joy of teaching. By far my favorite feedback has been when somebody says they learned something from me. So I tilt the letter in that way when I can. What’s something abstract that I can take down a notch? Or what’s a principle that exists in one area that can be applied to another? I didn’t know I could do this until others told me I could.

Moontower gives me a chance to learn new things and use that to spread understanding. So I discovered I liked explaining things. I know I love boardgames. And having a 1st grader always leaves me thinking about how games can be used to educate children. So I’ve meandered into the world of games-based teaching as a side pursuit. I’d say I’m in the research phase, but in the meantime, I’m going to take a week off work in June and host a boardgame camp for about 12 kids. Other than coaching a few kids sports teams this is way out of my element but you have to start somewhere. This chain of events brings me towards a new lesson.

You Can’t Introspect Your Way Towards Fulfillment

Life feels best for me when I’m in a flow. Building. Producing not just consuming. And if this experiment taught me anything, it’s to introspect a bit less. Have more of a bias towards action. This isn’t my default. I’d say shoegazing was more my thing (I won’t lie, I do dig Jesus and Mary Chain). To people who are naturally wired for action, like Yinh who many of you know is a first-ballot Hall of Famer at getting sh%t done, this sounds obvious. Subeasy even. But I know I’m not alone. I know from conversations with many readers who are struggling with inertia.

There are people of all ages searching for what they are good at. What they should be doing. People that don’t know their strengths. They are curious and eager but don’t know how to direct their energy. The prescription for all of them is to just take a small step and do something. If you want to get fit, don’t wait until you buy the running sneakers you think you need. Just do a few pushups right this second. The action muscle needs to be trained. I’m working on it too. Readers, if you fall in this camp and you hang with me every week in this letter, I’d bet you have a lot to give inside you. But you can’t introspect it out. You have to take a step. And you need to continue. Like a dumb mule. Forward. Why? Why is a shoegazing question. Drop it. The why will come to you later. The only formula that matters today is effort x reps equals something big. If you multiply either by zero, you get zero.

Concepts To Help You Get Started

1) Remix

Copy what I did. I started with the simple goal to be an ambassador of ideas to people who aren’t reading what I am. I take things from Twitter or my favorite blogs and show them to people who don’t read Twitter. Anyone can be a bridge. Your millennial friends are probably reading Dave Perell but that doesn’t mean everyone you know is. What insights from your career generalize to be useful to others? There’s no limit to how many people can say the same thing because everyone has a unique experience to bring to bear on subject matter. All the best self-help is just ancient philosophy that the Greeks pondered thousand of years ago anyway. But people need to be communicated to in different ways and through different formats. So the lessons can be repackaged with modern case studies or new stories that may stick in new ways. The Yoda of financial journalism, Jason Zweig, writes:

I write the exact same thing between 10 and 60 times a year, making sure none of my readers can tell that I’m repeating myself. That’s because there are only a handful of enduring truths about investing, but editors demand more than a handful of columns each year. Sooner or later, you must either lie or repeat yourself. Since I prefer the latter choice, I scour websites and journals in neuroscience, evolutionary psychology and animal behavior, looking for research that will give me new ways of saying the same old things. That way, the only person who knows I’m repeating myself is me. (Link)
2) Collect Your String. Build Your Fire

Khe Hy cites the journalistic practice of “collecting string”. These are “the random threads of thought that could someday be spun into a larger story.” Collecting string is hearing a new phrase for the first time and wondering where it came from. It’s a digging up an old anecdote that you’re convinced will resonate with your tribe. It’s the intuition that a “fleeting thought or observation” could someday lead “lead to another story, whether that’s a quick blog post or a book.” (Link)

Nick Maggiulli reminds us that building your fire takes time.

The analogy I like to use is building a fire. Most of your life you gather firewood. It’s not useful by itself, but it has potential. You keep gathering. You keep storing away information, memories, thoughts, opinions. You do this until one day you get a spark of inspiration and decide to start a fire.

Your fire starts small. A few people see it, but most ignore it. You keep throwing more logs on the fire and it burns brighter. Maybe more see it and take notice, but it’s still mostly unknown.  You keep at it day by day, night by night until you have a roaring blaze. Then they can’t ignore you. (Link)

Nick’s blog is one of my favorites. But he wrote one post a week and it wasn’t until #71 that it caught fire (staying away from “going viral” until fire season is back in CA).
3) Get numb so you can be consistent

Cedric Chin writes:

If people offer you advice, shut it out. It’s not that feedback is bad, or that advice is terrible, it’s that none of it is useful until you’re numb. You must get over the fear of launching before you focus on the disgust you feel about the quality of your work. When the disgust is all that’s left, that’s when you know to seek feedback.

Radio producer Ira Glass has a famous quote where he says:

“Nobody tells this to people who are beginners, I wish someone told me. All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work. Put yourself on a deadline so that every week you will finish one story. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions. And I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take awhile. You’ve just gotta fight your way through.”

The most important thing, in the beginning, is to establish a cadence before you can focus on improving quality. But you can’t ‘fight your way through’ if you have a problem with producing. Get numb, then get good. (Link)


For more links to help you get unstuck:

  • When you learn an instrument you usually start by learning other people’s songs. I paraphrase in my own words when I take notes. I think of paraphrasing as doing a cover of the original. The writing is mine but the idea isn’t. Ben Franklin arduously did this to train himself to write. Austin Kleon recommends this approach as well. Try to reproduce others’ work so you can get in their headspace. By reproducing and reverse-engineering you learn the craft. Your voice will come later. David Laing explains in Covers Shouldn’t Just Be For Musicians. (Link)
  • The odds you notice someone else’s bad hair day is negligible. Don’t fall for the spotlight effect — overestimating how much people pay attention to our behavior or appearance. Remember, nobody cares. Most of your thoughts revolve around “I”. That’s true for everyone. The only people who notice you have a crush on you.
  • Perhaps you’d rather be anonymous. You can still capture the same benefits and perhaps even more efficiently. Dave Perell explains how as well as some of the history behind pseudonyms. (Link)
  • The very first Moontower started with a bit about dealing with “imposter syndrome” in the modern world. (Link)

 

Let Your Kids Play Boardgames

I have 7 and 4-year-old sons. I had kids to have gaming companions. Go ahead and judge me. Luckily they like games like their old man. Well just like amoxicillin tastes like Bubble Yum, it turns out gaming is a stealth way to teach your kids how to think. They learn faster when they have a goal in front of them.

This post is intended to be a living document for resources to get your family gaming in gear.

General Tips

  • Normal people don’t like reading rule books. Learning rules is best done via Youtube videos. Just search for a tutorial of the game you are interested in and use the rulebook as a reference. If you need even deeper rule clarifications I’m 99% confident any question you can think of is covered in relevant BGG forum.

  • Find Moontower on BoardgameGeek. This is the best game reference site in the world. It’s an amazing compendium of user-generated content. One of the most engaged, enthusiastic niche communities on the web. I am stunned out how much you can customize your menus and widgets on the site. I don’t fully understand why more communities aren’t copying its features. It does have a learning curve but the ability to catalog games and log plays is superb.

Games for Kids Under 10

  • Evolution: The Beginning (Link)

It’s a card game where you must manage populations of carnivores and herbivores as you try to eat the most food. The punch-counterpunch dynamic of the game maps faithfully to how predator-prey games in nature balance themselves. Concentrate too much on defensive traits and competing populations grow quickly. Modify a species to be an aggressive carnivore and more scavengers appear in the ecosystem. React and adapt. It imparts a beautiful sense of how evolution favors adaptation to the prevailing competitive landscape as opposed towards some march towards a higher form. An organism’s fitness is a purely relative concept. The game’s elegance mirrors nature well.

  • Forbidden Island (Link)

Simple and fun coop game by the same game designer who brought you Pandemic. The game gets kids to work together and while the replayability for adults is limited there is enough variation in board layout and characters to keep kids engaged. Take about 30 minutes to play and requires no more reading than identifying the names of regions. I hear the follow-up Forbidden Desert may be even better.

This was the gateway game that got us into European boardgames 11 years ago. Unless you are used to playing games for hours it might be a reach for age 6 but I’d feel very comfortable teaching it to an 8-year-old. While its conflict is economic like Monopoly, it feels less punitive and the entire design is one of the most elegant I’ve seen. I’ve never met anyone who didn’t enjoy playing this game. Lessons in negotiation, market dynamics, odds, and planning. I highly recommend the Seafarers expansion. We almost never play it without “the sea”. I do not recommend the Cities & Knights expansion which feels likes it changes the essence of the game a bit much.

  • The Magic Labyrinth (Link)

By far the best version of a memory game our household has ever played, No reading required and adults and kids are on equal footing since the game is about trying to remember you and others’ footsteps through a maze with invisible walls. This game was a big hit around here and is one of our favorites to gift since its fun and has few rules to learn.

  • Quacks of Quedlinburg (Link)

Quacks is a bit like a deck builder. It’s known as a bag builder but with a don’t-bust-press-your-luck mechanic. To most of you, that means nothing but for the remaining, you should know this an outstanding game. It’s fun, and while seasoned gamers won’t like this necessarily, it has enough luck to allow a first grader to compete with an adult. I found myself thinking quite a bit about the value of the “options” (they’re actually chips representing ingredients in a potion recipe) in the game and their respective costs. The concepts of theta, volatility, and vega would be visible to someone with a finance background if they looked past the game skin.  An engineer would see this game as a very pure simulation (most likely AI) based problem especially since the game has no trading interactions. Avi tells me the designer is coming out with a much heavier follow-up catering to a less casual crowd.

This game is a centurd old commodity futures trading game. No reading required and is a pure trading game. Open outcry style. It’s a frantic free for all where kids will offer to deal sets of grains (think rice, wheat, corn, barley, etc) to corner the market on a single commodity. The action unfolds in a way that gives a very organic sense for what is getting cheap (offered) vs expensive (what is scarce and in demand). The feeling of market pricing is intuitive and turns over quickly. Rounds take no more than 10 minutes. If your kid can count to 8 they can play although I suspect age 6 or 7 is the floor at which they can think more strategically.

This is another gateway classic. It has the feel of trying to occupy area in an evergrowing modular puzzle. With younger children, I recommend not playing with the “farmers” because the scoring can confuse them unnecessarily.

Games for 10 and Up

A party game like Codenames. Both games are great for teams and so many ages. As word games go Codenames and Balderdash are hall of famers.  Decrypto is an instant classic and honestly, you can play it without buying the game. You just need paper and pen.

A several generations old classic. A game of M&A and stock ownership using the hotel industry as the theme. It’s in a sweet spot of complexity and has clever market-driven dynamics.

  • Power Grid (Link)

A bit higher on the complexity scale. Auctions, networks, optimization, opportunity costs, replacement costs, and cutthroat market dynamics.

A friend argues that you can learn 80% of what you need to know about trading from a few dozen plays.

Games and Investing

I would credit a lot of my reasoning about business and money from playing games. While actually investing is the ultimate game to learn from here are some of my recommendations to get kids and teens starting to think about investing.

  • Incomplete information games: Poker, Bridge, and Magic the Gathering

As a trader trainee, our curriculum included lots of poker. There is no better controlled environment for learning to make decisions under uncertainty. Many fellow trainees had extensive Magic the Gathering backgrounds for similar reasons.

  • Fantasy sports and sports betting

Point spreads and draft positions are valuable early lessons in market efficiency

  • Trading firm Susquehanna’s posts about boardgames

Boardgames: More Than Monopoly and Poker (Link)

On Trading Games (Link)

Articles

  • Designer Nick Bentley on how to get your kids into games and speed their progress (Link)

  • Gameschooling Teaches “Successful Intelligence” (Link)

Top Youtube Channels for Instructions and Reviews

  • Shut Up and Sit Down (Link)

Matt and Quinns are exceptionally bright. And even more hilarious. They are amazing guides to the gaming world. My favorite board game channel.

  • Jamey Stegmaier (Link)

A top game designer reviews and breaks down games expertly

  • The Dice Tower (Link)

Tom Vasel is prolific and has a sense of humor befitting of a game zealot.

Podcast Series Devoted to Games and Learning

  • Games in Schools and Libraries (Link)

Kathleen Mercury is the queen of teaching game design to youngsters. Her passion for turning kids into “producers not consumers” is unrelenting. With an open-source attitude, she is spreading the lessons of her innovative and fun approach to parents and teachers everywhere. She interviews the top practitioners in the game-based learning world.

  • Boardgaming with Education (Link)

Ian Zang covers game-based learning and gamification practices with experts, enthusiasts, and teachers. Get in the weeds of using games to improve education.

Lists By Experts

  • Kathleen Mercury’s recommended games for the classroom sorted by age group (Link)
  • Kathleen Mercury’s “best-of” list if games used in her day camp. (Link)
  • A thread of lists by game camp organizers. (Link)

Lists by Friends

  • Erik Berg’s Favorite Games and Why (Link)

A Virus of Cognitive Errors

You may have seen this question:

In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? 

It’s a variation of the “how many times would you need to fold a paper in half for the thickness to reach the moon?” that you have probably heard. There’s also the rice on a chessboard version.

Why are there so many covers of the same idea? Because even when people know it’s a trap they still get it wrong. Like watching someone smell something that you warned was gross. This never gets old. These questions don’t get old because we have no intuition for geometric growth.

Jacob Falkovich writes:

Before Rationality gained a capital letter and a community, a psychologist developed a simple test to identify people who can override an intuitive and wrong answer with a reflective and correct one.

Feel free to take that “test” here. (Link)

A Fatal Combination Of Cognitive Errors

So it appears our System 1 thinking is restricted to linear intuition. This is not an issue in isolation. It’s more of a problem if most people are incapable of passing a CRT and overriding this System 1 thinking. I’m not well-versed on CRT literature but I suspect most subjects don’t even have an intuition for when a growth problem lives in Mediocristan or Extremistan. There’s another angle though. If it turns out most people are at least socially aware that these questions are traps and they are still getting them wrong then I’m extra sorry. That means we can recognize something’s up but the bottleneck is 2nd-grade arithmetic.

So we don’t know when our slower, methodical thoughts should take the reins from our gut reactions. Or worse, our slower thoughts don’t even know how to drive. But really getting stuck in the mud requires a wider community cognitive failure.

Falkovich continues:

Most people sitting alone in a room will quickly get out if it starts filling up with smoke. But if two other people in the room seem unperturbed, almost everyone will stay put. That is the result of a famous experiment from the 1960s and its replications — people will sit and nervously look around at their peers for 20 minutes even as the thick smoke starts obscuring their vision.

The coronavirus was identified on January 7th and spread outside China by January 13th. American media ran some stories about how you should worry about the seasonal flu instead. The markets didn’t budge. Rationalist Twitter started tweeting excitedly about Rand supply chains. (Link)

So let’s sum up:

  • We have poor intuition about geometric processes.
  • Many people don’t override this intuition because they don’t realize when they should.
  • Even if they realize they should, they often can’t add.
  • And those who do override it are socially inhibited

The devil is too smart to knock on each person’s front door. He waits for people to get together then slips the poison in the punch — remember, alarmism about any 1% event has a 99% chance of indistinguishable from crying wolf.

The Flu Kills More People

Wrong logic. A frequentist will look at zika, Sars, ebola, swine flu and conclude overblown. This is the definition of survivorship bias. The fat, happy turkey who thinks November will be just like the prior months. Two people can come to opposite conclusions if one merely counts past results while the other goes below the surface to find the underlying dynamic.  Tyler Cowen generalizes the camps into “base raters” vs “growthers”. (Link)

This has been my favorite thread quantifying the trajectory and timing of CoVid penetration, hospital bed and mask shortages, and the interaction of these variables. (Link)

The Canine Uprising?

I was supposed to be in the Dominican Republic, not your inbox this weekend. We bailed on the trip. We didn’t want a remote chance of being quarantined in the Caribbean. Some people might think that’s paradise. Those people don’t have 3-year-olds.

Without any local plans, we just took care of some chores and most nights we played Quacks of Quedlinburg with Zak. For the game nerds, it’s a bit like a deck builder. It’s known as a bag builder but with a don’t-bust-press-your-luck mechanic. To most of you, that means nothing but for the remaining, you should know this an outstanding game. It’s fun, and seasoned gamers won’t like this necessarily, but it has enough luck to allow a first grader to compete with an adult. I found myself thinking quite a bit about the value of the “options” (they’re actually chips representing ingredients in a potion recipe) in the game and their respective costs. The concepts of theta, volatility, and vega would be visible to someone with a finance background if they looked past the game skin.  An engineer would see this game as a very pure simulation (most likely AI) based problem especially since the game has no trading interactions. Avi tells me the designer is coming out with a much heavier follow-up catering to a less casual crowd.


Here’s a random bit.

My 3-year-old, Maxen, is obsessed with dogs. He constantly pretends he is one, barking and crawling on all fours. He can never let one pass by without giving it the full Pepe Le Pew treatment. Friday he asked for one. He doesn’t know this is never happening. His grandmother lives with us. She believes all dogs are members of a sleeper cell waiting for their chance. Actually, that’s the wrong metaphor. This is more widespread. More like a canine Skynet. We think we have programmed our “best friends” but it’s only a matter of time before the pack becomes self-aware. I’m not kidding. She doesn’t even trust puppies.

So cohabitation with grandma and Sparky is a non-starter. I keep trying to explain to her how ridiculous she is. If Arab Spring taught us anything, a networked rebellion would require large-scale coordination. Twitter. Smartphones.

Thumbs.

Do Books “Work”?

You will probably relate.

Picture some serious non-fiction tomes. The Selfish Gene; Thinking, Fast and Slow; Guns, Germs, and Steel; etc. Have you ever had a book like this—one you’d read—come up in conversation, only to discover that you’d absorbed what amounts to a few sentences? I’ll be honest: it happens to me regularly. Often things go well at first. I’ll feel I can sketch the basic claims, paint the surface; but when someone asks a basic probing question, the edifice instantly collapses. Sometimes it’s a memory issue: I simply can’t recall the relevant details. But just as often, as I grasp about, I’ll realize I had never really understood the idea in question, though I’d certainly thought I understood when I read the book. Indeed, I’ll realize that I had barely noticed how little I’d absorbed until that very moment.

Andy Matuschak is a designer, engineer and researcher. I’m a fan of his writing and his cred is impressive. He helped design iOS and ran R&D at Khan Academy. He describes his work as:

building technologies that expand what people can think and do. I explore ideas by expressing them in real-world systems, juggling approaches from industry and academia to seek insights they can’t see alone. Thinking through making.

In his essay Why Books Don’t Work he makes claims that provide a basis for his career. It may force you to revalue your impression of familiar activities. (Link with my highlights)

Books

  • Books are surprisingly bad at conveying knowledge, and readers mostly don’t realize it.

Lectures

  • Lectures don’t work because the medium lacks a functioning cognitive model. It’s (implicitly) built on a faulty idea about how people learn—transmissionism—which we can caricaturize as “lecturer says words describing an idea; students hear words; then they understand.” When lectures do work, it’s generally as part of a broader learning context (e.g. projects, problem sets) with a better cognitive model. But the lectures aren’t pulling their weight. If we really wanted to adopt the better model, we’d ditch the lectures, and indeed, that’s what’s been happening in US K–12 education.

Education is changing.

To understand something, you must actively engage with itThat notion, taken seriously, would utterly transform classrooms. We’d prioritize activities like interactive discussions and projects; we’d deploy direct instruction only when it’s the best way to enable those activities. I’m not idly speculating: for the last few decades, this has been one of the central evolutionary forces in US K–12 policy and practice.

This is a topic I’m thinking about a lot these days. Whether we are re-training adults or experimenting with childhood learning, this is a thread worth watching.


If interested, know that Matuschak’s claims about books are contested. (Link)