what I want my kids to know

I went to Catholic school for K-12. Public schools were less than good where I grew up. My kids go to public school. The K-8 schools here are fine. Better than where I was raised but still nothing special.

The biggest difference is demographics. This is an upper-class area, the student body on average has a natural head start academically. You can attribute it to nature or nurture but it’s true. The mean OLSAT scores, which determine if your kids get into gifted programs, are a full standard deviation higher than the CA mean. Since the test is approximately an IQ test, that places the mean public school student at around 115 in this area. You need to be somewhere around 1.5-2 standard deviations higher than that mean to make the gifted programs here.

There are children of founders, scientists, artists, doctors, lawyers and athletes. Several are legit famous (Steph Curry lived here at the start of his career and there are a number of NBA, MLB, and Olympians who call our area of the East Bay home. Alanis Morrissette lived a few blocks away from the first house I lived in here, but has since moved, and the Chevron CEO’s house is on the best block for trick-or-treating. I think he’s not here anymore either, though). There are many more famous in their fields. But it is a deeply understated area as I can think of at least 3 billionaires in town and probably 2 dozen centimillionaires, but you are not going to find a 30k sq ft house anywhere in the vicinity. It is the opposite of Miami. It is what my friend Jason Buck calls, “stealth wealth”.

Beneath the fancy folk, there’s a thick sedimentary layer of unmemorable overachievers (like yours truly) ranging from white collar workers to the type of entrepreneur who calls themself a businessperson, not a founder. You own a construction company or a few burger joints that sell boozy shakes.

And then there’s the strata of wage earners with the honest jobs. The kind you find in Richard Scarry books. Nurse, firefighter, teacher, cop. They almost all grew up here. Nobody subjects themselves to the financial punishment of moving here if they make their money the hard way.

Finally, there are the villains of CA. Retired boomers living in $2mm houses, paying $2k a year in property taxes with 2 vacant bedrooms plus a 3rd for their golden-doodle. As an abstract class, I understand the venom, but also these are my neighbors who I mostly get along great with. If I went on Nextdoor maybe I’d feel differently but I choose not to look.

[Everything I said above is likely taken up 1 to 10 notches, depending on if you are in Marin or the peninsula. The East Bay, for all its unrelatability to much of the U.S., is still the most relatable. Much of my surrounding area towns remind me of where I grew up, but parallel shifted higher simply because CA cost-of-living and incomes have a higher Y-intercept. The slope of experience is likely very similar. For Mother’s Day my wife’s extended family of ~50 people visited from various parts of the East Bay and I feel like this is the normal I grew up around, except everyone has straight hair and knows how to use their indoor voice when they’re 12 inches from your face.]

Back to public school. The system itself is incrementally better than home, but the kids are generally pulling from a more talented, competitive, and driven baseline. Life’s not fair and it’s indifferent to your pleas otherwise. I tell my kids this.

On Monday, on the way home from track, I took the 7th grader to Safeway. We were in there for odds and ends. Bagels, sunflower seed butter, milk, berries. 2 paper bags worth of stuff. There was a $30 tub of protein. All-in, $120.

I gave Zak a lecture he didn’t ask for or see coming. “Did you see how little stuff we just bought? 120 bucks, including about 10% sales tax. If you work as that check-out person in the grocery store for $15/hr, that haul is a day of work.”

Then I go on my dad rant about not getting fooled by your surroundings. What school says is an A is nothing but basics. The basics of showing up and executing on what they told you to do. If inflicted by an uninspiring teacher, it’s compliance training.

[I’m not saying everyone should feel this way, you know your own kids. The only way I would not have gotten As growing up was if I were negligent and that certainly happened sometimes, but again, the bar of not being negligent is ground zero executive functioning. If you can’t do that, then it makes sense to track down the reason and decide what the cost/benefit of trying to remedy it or not is. These are personal battles to choose.]

The gears were turning. Both he and his 4th-grade brother were taking this in. I’ve explained this to them before but they were listening now. We chatted for about 45 minutes meandering through several related topics. One question took me off guard because it’s a sharp reminder that their frames of reference are so different that their minds go to places that surprise me. They asked if I had that paper they give people when school is over.

A diploma?

Yes. They asked if everyone gets one if they finish school or if you have to go to a “good” school? A bit of a strategic moment here. I need to simultaneously encourage education without tricking them into placing it on a pedestal. Education at its best is useful knowledge and deep inquiry, but at its worst, the exact opposite — propaganda and conformity (I hate using the “—” but I assure you that was me).

I told them I had a diploma. In fact, it’s framed, a gift to me from their grandma. They asked why I don’t hang it up like the orthodontist does. It was time for real talk.

I explained that I’m not especially proud of my degree. But take full responsibility for my disappointment. I took a non-technical econ degree. It was an easy 4.0 because it relied on me writing persuasive-sounding bullshit on blue-lined pamphlet paper. This didn’t push me to grow.

Then I found myself in a technical career where I wish I had studied what I tried to study at first but gave up on. Computer science. It would have empowered me to go faster. But even more important is the confidence. I was always insecure about not applying myself growing up and therefore having no real skills. Attached to what I was told about my potential for longer than maturity should permit.

Possessed by the ghost of my adolescent guile, I asked Zak if he thought he was actually good at the tasks given to him at school or if he was good at guessing the teacher’s password. By whose standards is your grade an A?

My correction (overcorrection?) now is that I tell my kids the world doesn’t need nor give a smouldering turd about another smart person. Dime a dozen. What you need is nerve. Courage. What’s the point of smart if you can’t get what you want out of life? In fact, nothing is more embarrassing than watching a person who thinks of themself as smart complain. If you’re so smart, figure it out. If you can’t, then your smarts are either not useful, not real, or a party trick. If they are a party trick, find a way to get the trick rewarded so you have less to complain about.

So what is school good for? What can you salvage from the private school or the better school district? It’s a hard question. And I’m at least a little concerned that my impulsive but deeply sincere reply below represents the bulk of my answer.

I’m not trying to manufacture contempt in my kids for their smuggest peers, but I assure you I’m going to look the other way while their mom does.

The excerpt below from author Devon Erikson articulates a phenomena we all see. It’s also deeply related to trading which I’ll explain afterwards.

There are two types of intelligence tasks: answer tasks and result tasks.

A result task is graded by the reaction of the environment to your work. Either your software runs, or it doesn’t. Either your rockets fly, or they don’t. Customer buy millions of your product, or none.

You have unlimited tries unless you run out of money, but there’s no partial credit, and you can’t talk the universe into accepting your answer if it doesn’t.

Result tasks typically require a lot of work, are data-intensive, and have lots of sub-problems, because the ones that didn’t are already solved.

Result tasks are why we care about smart at all. Because smart people are the ones who can do this. And every human advancement or achievement ever was a result task.

Answer tasks are quite different. They are artificial problems created by a human being for another human being, whose goal is to produce the known answer.

Tasks like this have useful features. They can be tightly calibrated for appropriate difficulty. They are easy to grade. They can be used to teach particular subjects or skills.

But there are certain things they don’t teach.

How to do the boring parts that don’t impress anyone with how talented you are.

How to fail and try again.

How to change the question instead of answering it, because the question itself was wrong.

How to absorb from others what they had to learn the hard way, instead of reinventing the wheel.

How to deal with problems that have no solutions, only tradeoffs.

How to work with others and pass the ball.

How not to adapt instead of freezing when the universe gives the exam before the lesson.

How to substitute the adequate you can afford for the ideal you can’t.

How to prioritize what is needful over what is elegant or cool.

Without this learning, and other similar lessons, the talent child turns into an adult with an unbalanced intellectual development, like a bodybuilder who skipped far too many leg days.

You’ll find a lot of men like this in academia because it provides them with a sheltered, tightly controlled environment, where the problems are abstract if not utterly fake, and the persuasiveness of a solution trumps its workability.

They tend to scorn achievers, especially achievers with modest academic credentials or none, and this invites scorn in turn from people with real jobs.

But really what they are is victims. Entire campuses and networks full of what was potential greatness, crippled in it youth by bureaucracies that claim to serve it.

Homeschool your children.

Give them projects, not puzzles.

Teach them to build things.

The bridge to picking better advisors, doctors and agents in life

Devon’s argument is generally about what developers call “acceptance criteria”. The predefined requirements by which a solution is deemed a success.

“Does it fly?” versus “Would leading experts agree that this would fly?”

In a non-fake field, these acceptance criteria would be strongly correlated.

Short-term trading based on high sample sizes has an acceptance criterion of “does this reliably make beyond a narrow slice of world states?”

Investing, the further it strays from the principles that drive trading (for example, deal flow is a universal alpha), becomes faker. It becomes more consensus-seeking. More “nobody gets fired for buying AAPL” than “what have you done for me lately?”. Long feedback loops, loops that can last a career, shield its actors from dispositive resolutions of acceptance criteria.

Investing, like medicine, is a minefield because it’s a complex domain that even bona fide experts have limited, even if deep, knowledge. What is a consumer to do when tasked with finding a trustworthy agent in such a hazardous info landscape?

The trick is at the meta level. To consider the acceptance criteria that their agent uses to make judgments. Shut up and listen to people and they will unknowingly confess their epistemology. In fact, many will outright proclaim faulty acceptance criteria as a sales pitch without a hint of awareness that they are themselves fooled by standards (“I’m 30 under 30”) so fraudulent that those standards are unironically acknowledged countersignals by anyone with basic survival instincts. It’s like advertising alignment with hall monitors and the hopelessly dense.

Another red flag is the equivalent of waving your diploma on social media. An appeal to an authority that is disconnected from relevant questions like “will it bear weight?” or “does it make money”? Here’s an example. I didn’t want to call out the individual who was not only wrong about option theory but superciliously so:

“So and so is great on F&O” and “look at my degrees” are appeals to authority when the topic at hand is only answerable to arbitrage or not. This is a breathtaking juxtaposition of opposing epistemologies. Arbirtage is mathematical proof while a degree is conferred upon completion of fake obstacle courses. Arbitrage is gravity. Its equations exist whether or not someone in a robe approves.

The tweet digs into a defensive posture. Revealing. You don’t make it out of the first 5 minutes of a phone interview in trading with this reflex.

The right reflex is “I raised into a bettor, who has re-raised and I now have to reevaluate my hand.” You didn’t raise in the context of something subjective like religion or philosophy. Your opponent could be and very likely might be holding the “nuts” given this is a public forum with embarrassment at stake AND the right answer is very knowable. I can’t even process how broken your reasoning skills must be to not recognize the nature of information. This is what it looks like to be captured by the fake standards that Devon wrote about. The charitable take is to bemoan a definition of education that permits this as passable thinking. Devon would call this person a victim.

Screening for traders is tough because you have to sort through people that have spent much of their life being right, but are dropped into a game where other smart people raise into you knowing that you are smart too.

It’s hard to tell if someone would be good at trading, but it’s much easier to tell if they wouldn’t. One of the things I’d look for is the type of intellectual humility that you immediately recognize when someone seems to make very few assumptions once they are in a situation where they are confronted with a bet or claim. They have a debugging mindset as they checklist through what assumptions are material to the decision. They have an imagination that survived the weathering effects of formal education’s emphasis on what Devon called “answer tasks”.

If you ever watch a 3-card Monty hustle or even a magic show/sleight of hand, it should remind you that there’s a lot of profit lurking for someone who painstakingly examines the territory where your confidence in appearances stretches further than it should.

Just as it’s hard to tell if someone is good at trading but easier to rule out those whose reasoning machinery is stunted, you should be able to at least rule out bad agents in complex domains by inviting them to talk too much. Go forth and listen.

[Twitter is amazing for countersignals because its incentive structure encourages people to talk too much. I think a lot of famous investors have revealed themselves to be trash investors but good business builders by streaming their thoughts. Unless they are reaping some rewards from manipulation, it also indicates poor risk management. You benefited from mystery and sold it for ego strokes from simping strangers.]