24 January 2006

Monkeys and Dentists

I enjoy flights and periods where I can rip an entire book in one go. Binge reading – along with all my other outlier habits – appeals to me.

Fooled by Randomness, Taleb – another of my (thankfully growing) collection of works that help me understand how I view the world.

Reading the early part of the book, I remembered a series of saying that the a few successful (for themselves and, generally, others) investors have mentioned to me over the years…

On Attribution of Success

[winking] “Gordy, we all KNOW that success is always down to good management.”

Allocation of Risk, Sharing of Gains

“The nice things about this business (Venture Capital) is the inevitability of the homeruns if you stick around long enough.”
If we don’t know then who does?

“Remember this, history tells us that we never really know which Fund will hit it big. If you invest then invest a little bit in everything.”

“Everyone that I know that has made it big in life has bet the
farm.”

…but didn’t the folks that went bust do the same?

++++

Monkeys – it’s the old adage about placing a zillion monkeys in front of a typewriter and one will come up with the bible. The result is a large variation in actual outcome across a wide population with outstanding performance due entirely to chance.

Dentists – a small variation in actual outcome across a wide population with a high expected outcome.

So which one am I?

When I view my life to date through the prism of a series of probable alternative outcomes (Monte Carlo self-simulation)– it is simultaneously terrifying and liberating.

Terrifying because there is no way that I can reasonably run a scenario that gets me back to my current situation, sitting here, quite happily, on this plane. I simply cannot comprehend a reasonable scenario that gets me back here. When I think about the key events in my life, the outcome that occurred wasn’t what anyone would have predicted.

Liberating because, either way, I am a big winner. If I am dentist then I am extremely good one. If I am a monkey then I am a seriously lucky one. Both ways, there is a large element of relief that I either figured something out (not quite sure what) or am pretty clueless and should relax a bit more (always a good idea for relentless planners).

In finance, I certainly feel more like a monkey than a dentist. As this was a key point of the very eloquent author, my self-evaluation is likely anchored by his book.

In athletics, I’ve been “insulted” by people calling me a dentist before – “anyone would get your results if they followed your path”. That never really sounded like an insult to me, still doesn’t.

As the author notes, because set-backs are experienced as disproportionately negative events, most people don’t have the staying power required to persist until a breakthrough (even if it is due to random success!).

As I’ve grown older, my attachment to past decisions has reduced and I’ve given myself increased freedom to change my mind – often to the concern of those around me. It turns out that the author thinks that this is a good thing for my personal safety as well as happiness. He states it much better than I could paraphrase.

Perhaps it depends on which aspect of my life I look at. There is a stack in the book so grabbing pieces that suit my self-view is probably how I went about reading it. I found myself highlighting passages in the text that held particular appeal to me.

Anyhow, time to spend a little time mulling over my one/five/ten year plan – net even a month old and time for a revision. Good thing that I wasn’t too attached to it.

A patient wife is a great asset and source of stability. She’s probably reading this as you are.

The only constant is change.

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