Tali Sharot

The Optimism Bias

"Optimism protects us from accurately perceiving the pain and difficulties the future undoubtedly holds, and it may defend us from viewing our options in life as somewhat limited. As a result, stress and anxiety are reduced, physical and mental health are improved, and the motivation to act and be productive is enhanced. In order to progress, we need to be able to imagine alternative realities—not just any old realities, but better ones, and we need to believe them to be possible."

Jamie Dimon

2017 JP Morgan Chase Annual Letter

"Bureaucracy is a disease. Bureaucracy drives out good people, slows down decision making, kills innovation and is often the petri dish of bad politics. Large organizations, in fact all organizations, should be thought of as always slowing down and getting more bureaucratic. Therefore, leaders must continually drive for speed and accuracy to eliminate waste and kill bureaucracy. When you get in great shape, you don’t stop exercising."

Sean Stannard-Stockton

"One of the phrases you hear people using a lot right now is when we might “return to normal” or predictions that “we’ll never return to normal.” But life never returns to “normal” because the only constant in life is change.

Of course, the future will not look like the past because it never does. But the future also never pivots completely away from the past because so many economic behaviors are driven by deeply ingrained human needs and desires that do not change all that much even when our environment changes radically."

Siddhartha Mukherjee

The Gene An Intimate History

"From bacteria to elephants - from red-eyed flies to blue-blooded princes - biological information flowed through living systems in a systematic, archetypal manner: DNA provided instructions to build RNA. RNA provided instructions to build proteins. Proteins ultimately enabled structure and function - bringing genes to life."

Ray Dalio

"In 1971, when it was apparent that the US didn’t have enough gold in the bank to meet the claims on gold that it had put out, the US defaulted on its promise to deliver gold for paper dollars which ended the Type 2 gold-backed monetary system, and the world moved to a fiat monetary system.  As is typical, this fiat monetary system initially led to a wave of great dollar money and debt creation that led to a big wave of inflation that carried until 1980-82 and led to the worst economic downturn since the Great Depression.  It was followed by three other waves of debt-financed speculations, bubbles, and busts—1) the 1982 and 2000 money and credit expansion that produced a dot-com bubble that led to the 2000-01 recession, 2) the 2002-07 money and credit expansion that produced a real estate bubble that led to the 2008 Great Recession, and 3) the 2009-19 money and credit expansion that produced the investment bubble that preceded the COVID-19 downturn.  Each of these cycles raised debt and non-debt obligations (e.g., for pensions and healthcare) to progressively higher levels and led the reserve currency central banks of the post-war allies to push interest rates to unprecedented low levels and to print unprecedented amounts of money.  Also classically, the wealth, values, and political gaps widened within countries, which increases internal conflicts during economic downturns.  That is where we now are."

Morgan Housel

"Progress happens too slowly for people to notice; setbacks happen too fast for people to ignore."

Steven Bregman

"Between April 1971 and March 1980, the inflation rate rose from 4.2% to 14.6%. The trailing P/E ratio on the S&P 500 contracted by two-thirds, from 19.5x to 6.7x. Interest rates rose, too, but if you look at the magnitudes of these three number series and continue to follow the progress through the recovery, the earnings multiples really were associated with the inflation rate. "

Steven Bregman

"It is typically said that low interest rates support high stock and other financial asset valuations. But it is high inflation that is associated with serious valuation contraction. Investors today have little personal or institutional memory of the last inflationary period. Once inflation mentality takes hold, it ripples throughout the economy and daily life. People go shopping more frequently and buy greater quantities, because they know that the price of cereal will be higher the following month or even week. In 1971, President Nixon imposed wage and price freezes. Sounds like Russia or China, right? In the 1970s, during lunch hour, workers would visit a couple of banks, move their $1,000 or $5,000 6-month CDs from their old bank to a new one in order to get the free toaster ovens being offered for the switch."

Ray Dalio

"This whole 1971-1991 cycle, which affected just about everyone in the world, was the result of the US going off the gold standard. It led to the soaring of inflation and inflation-hedge assets in the 1970s, which led to the 1979-1981 tightening and a lot of deflationary debt restructuring by non-American debtors, falling inflation rates, and excellent performance of bonds and other deflationary assets in the 1980s. The entire period was a forceful demonstration of the US having the world's reserve currency - and the implications for everyone around the world of how that currency was managed....

 

After the 1980s debt restructurings were completed in the 1990s new global increase in money, credit, and debt began again, which again produced a prosperity that led to debt-financed purchases of speculative investments that became the dot-com bubble, which burst in 2000. That led to an economic downturn in 2000-2001 that spurred the Federal Reserve to ease money and credit, which pushed debt levels to new highs and created another prosperity that turned into another and bigger debt bubble in 2007, which burst in 2008, which led the Fed and other reserve currency countries' central banks again eased, leading to the next bubble that just recently burst."

Ray Dalio

"History has shown us that we shouldn’t rely on governments to protect us financially. On the contrary, we should expect most governments to abuse their privileged positions as the creators and users of money and credit for the same reasons that you might do these abuses if you were in their shoes.  That is because no one policy maker owns the whole cycle. Each one comes in at one or another part of it and does what is in their interest to do at that time given their circumstances at the time."

Ray Dalio

"Central banks want to stretch the money and credit cycle to make it last for as long as they can because that is so much better than the alternative, so, when “hard money” and “claims on hard money” become too painfully constrictive, governments typically abandon them in favor of what is called “fiat” money. No hard money is involved in fiat systems; there is just “paper money” that the central bank can “print” without restriction. As a result, there is no risk that the central bank will have its stash of “hard money” drawn down and have to default on its promises to deliver it. Rather the risk is that, freed from the constraints on the supply of tangible gold or some other “hard” asset, the people who control the printing presses (i.e., the central bankers working with the commercial bankers) will create ever more money and debt assets and liabilities in relation to the amount of goods and services being produced until a time when those who are holding the enormous amount of debt will try to turn them in for goods and services which will have the same effect as a run on a bank and result in either debt defaults or the devaluation of money."

Vladimir Lenin

"There are decades when nothing happens; and there are weeks when decades happen."

Sean Stannard-Stockton

"We also saw unprecedented efforts by Congress to enact fiscal stimulus [in response to COVID 19]. We recognize that few people have any intuitive feel for numbers once we start counting in trillions (with a t). So, here’s a quick way to comprehend just how unfathomably large a trillion is. A million (with an m) seconds ago was a week and a half ago. A billion (with a b) seconds ago was 1989, when the San Francisco Giants played in the World Series against the Oakland A’s during which an earthquake shattered the city. But a trillion (with a t) seconds ago, humans hadn’t invented agriculture yet. In fact, our species was still a thousand generations removed from learning how to plant and cultivate crops. The earth was going through an ice age, the Sahara Desert was wet and fertile, and humans had not yet crossed the Bering Strait from Asia to the Americas. The number a trillion is unfathomably large."

Scott Galloway

"In 1999, the firm I co-founded, Red Envelope, was drafting an S-1 in anticipation of an IPO. At 31, I stood to register $30-60 million on the IPO. The bursting of the bubble damaged us, but the injuries weren’t fatal, and we were the only retail IPO of 2002. In 2008, a longshoreman strike left all our holiday merchandise hostage on a cargo ship 8 miles off the shores of the port of Long Beach. Then, as the credit crisis began to take hold, a prescient analyst at Wells Fargo decided to pull our credit facility. Within 90 days we were Chapter 11. That event, combined with divorce, reduced my net worth 97%.

I didn’t deserve to lose near-everything. What happened wasn’t my fault — ok, maybe the divorce. Regardless, was this fair or (im)moral? Just as there’s no crying in baseball, there’s no fairness in shareholder accretion or destruction. Looking at jets at 31 wasn’t moral or fair either. So, what happened? Exactly what’s supposed to happen in a market economy — downside registered against commensurate upside.

Red Envelope went through something also uniquely American … and productive — bankruptcy. The equity holders (e.g., yours truly) were wiped out (#bummer). However, we did our duty as board members and found a buyer, Liberty Media, who paid our vendors and kept the employees. No job loss, all debtors paid. When a 31-year-old is shopping for jets in November, part of the agreement with the invisible hand is he may lose most/all of it by March. There’s a word for that … capitalism."

Paul Graham

"If you want to build great things, it helps to be driven by a spirit of benevolence. The startup founders who end up richest are not the ones driven by money. The ones driven by money take the big acquisition offer that nearly every successful startup gets en route. The ones who keep going are driven by something else. They may not say so explicitly, but they're usually trying to improve the world. Which means people with a desire to improve the world have a natural advantage."

Paul Graham

"You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.

And that's kind of exciting, when you think about it, because all three are doable. Hard, but doable. And since a startup that succeeds ordinarily makes its founders rich, that implies getting rich is doable too. Hard, but doable.

If there is one message I'd like to get across about startups, that's it. There is no magically difficult step that requires brilliance to solve."

Paul Graham

"You're asking for trouble if you try to decide what to do without understanding how to do it."

Clayton Christensen

"On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I'll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I'll stay out of jail? Though the last question sounds lighthearted, it's not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys - but something in their lives sent them off in the wrong direction." 

Clayton Christensen

"Had I instead spent that hour each day learning the latest techniques for mastering the problems of autocorrelation in regression analysis, I would have badly misspent my life. I apply the tools of econometrics a few times a year, but I apply my knowledge of the purpose of my life every day. It's the single most useful thing I've ever learned. I promise my students that if they take the time to figure out their life purpose, they'll look back on it as the most important thing they discovered at HBS. If they don't figure it out, they will just sail off without a rudder and get buffeted in the very rough seas of life. Clarity about their purpose will trump knowledge of activity-based costing, balanced scorecards, core competence, disruptive innovation, the four Ps, and the five forces." 

Ray Dalio

Principles

"Step 1. Know your goals and run after them.

Step 2. Encounter the problems that stand in the way of achieving your goals.

Step 3. Diagnose the problems to get at their root causes.

Step 4. Design plans to get around the problem standing in the way of your progress.

Step 5. Do it. Execute those designs."

William Deresiewicz

"I find for myself that my first thought is never my best thought. My first thought is always someone else's; it's always what I've already heard about the subject, always the conventional wisdom. It's only by concentrating, sticking to the question, being patient, letting all the parts of my mind come into play, that I arrive at an original idea. By giving my brain a chance to make associations, draw connections, take me by surprise. And often even that idea doesn't turn out to be very good. I need time to think about it, too, to make mistakes and recognize them, to make false starts and correct them, to outlast my impulses, to defeat my desire to declare the job done and move on to the next big thing."

Ira Glass

"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."

Steven Pressfield

Nobody Wants to Read Your Shit

"Nobody wants to read your shit. What's the answer? 1. Streamline your message. Focus it and pare it down to its simplest, clearest, easiest-to-understand form. When you understand that nobody wants to read your shit, your mind becomes powerfully concentrated. You begin to understand that writing/reading is, above all, a transaction. The reader donates his time and attention, which are supremely valuable commodities. In return, you the writer must give him something worthy of his gift to you."

Ray Dalio

Principles

"While I spend the most time studying how the realities that affect me most work - i.e., those that drive the markets and the people I deal with - I also love to study nature to try to figure out how it works because, to me, nature is both beautiful and practical. Its perfection and brilliance staggers me. When I think about all the flying machines, swimming machines, and billions of other systems that nature created, from the microscopic level to the cosmic level, and how they interact with another to make a workable whole that evolves through time and through multi-dimensions, my breath is taken away. It seems to me that, in relation to nature, man has the intelligence of a mold growing on an apple - man can't even make a mosquito, let alone scratch the surface understanding the universe."

John Salvatier

"Before you’ve noticed important details they are, of course, basically invisible. It’s hard to put your attention on them because you don’t even know what you’re looking for. But after you see them they quickly become so integrated into your intuitive models of the world that they become essentially transparent. Do you remember the insights that were crucial in learning to ride a bike or drive? How about the details and insights you have that led you to be good at the things you’re good at?

This means it’s really easy to get stuck. Stuck in your current way of seeing and thinking about things. Frames are made out of the details that seem important to you. The important details you haven’t noticed are invisible to you, and the details you have noticed seem completely obvious and you see right through them. This all makes makes it difficult to imagine how you could be missing something important.

...

If you’re trying to do impossible things, this effect should chill you to your bones. It means you could be intellectually stuck right at this very moment, with the evidence right in front of your face and you just can’t see it.

This problem is not easy to fix, but it’s not impossible either. I’ve mostly fixed it for myself. The direction for improvement is clear: seek detail you would not normally notice about the world. When you go for a walk, notice the unexpected detail in a flower or what the seams in the road imply about how the road was built. When you talk to someone who is smart but just seems so wrong, figure out what details seem important to them and why. In your work, notice how that meeting actually wouldn’t have accomplished much if Sarah hadn’t pointed out that one thing. As you learn, notice which details actually change how you think.

If you wish to not get stuck, seek to perceive what you have not yet perceived."

John Gardner

"Meaning is not something you stumble across, like the answer to a riddle or the prize in a treasure hunt. Meaning is something you build into your life. You build it out of your own past, out of your affections and loyalties, out of the experience of humankind as it is passed on to you, out of your own talent and understanding, out of the things you believe in, out of the things and people you love, out of the values for which you are willing to sacrifice something. The ingredients are there. You are the only one who can put them together into that unique pattern that will be your life. Let it be a life that has dignity and meaning for you. If it does, then the particular balance of success or failure is of less account."

John Gardner

"You have to build meaning into your life, and you build it through your commitments, whether to your religion, to an ethical order as you conceive it, to your life's work, to loved ones, to your fellow humans."

John Gardner

"One of the enemies of sound, lifelong motivation is a rather childish conception we have of the kind of concrete, describable goal toward which all of our efforts drive us. We want to believe that there is a point at which we can feel we have arrived. We want a scoring system that tells us when we've piled up enough points to count ourselves successful. 

So you scramble and sweat and climb to reach what you thought was the goal. When you get to the top you stand up and look around and chances are you feel a little empty. Maybe more than a little empty. You may wonder whether you climbed the wrong mountain.

But the metaphor is all wrong. Life isn't a mountain that has a summit. Nor is it, as some suppose, a riddle that has an answer. Nor a game that has a final score. 

Life is an endless unfolding and, if we wish it to be, an endless process of self-discovery, an endless and unpredictable dialogue between our own potentialities and the life situations in which we find ourselves. By potentialities I mean not just success as the world measures success, but the full range of one's capacities for learning, sensing, wondering, understanding, loving and aspiring. "

John Wooden

"There is a wonderful, almost mystical, law of nature that says three of the things we want most - happiness, freedom, and peace of mind - are always attained when we give them to others. Give it away to get it back."

Michael Mauboussin

"Great investors don't get sucked into the vortex of influence. This requires the trait of not caring what others think of you, which is not natural for humans. Indeed, many successful investors have a skill that is very valuable in investing but not so valuable in life: a blatant disregard for the views of others. Success entails considering various points of view but ultimately shaping a thesis that is thoughtful and away from the consensus. The crowd is often right, but when it is wrong you need the psychological fortitude to go against the grain. This is much easier said than done, especially if it entails career risk (which is often the case)."

Michael Mauboussin

"The Ten Attributes of Great Fundamental Investors:

1. Be numerate (and understand accounting)

2. Understand value (the present value of free cash flow)

3. Properly assess strategy (or how a business makes money)

4. Compare effectively (expectations versus fundamentals)

5. Think probabilistically (there are few sure things)

6. Update your views effectively (beliefs are hypotheses to be tested, not treasures to be protected)

7. Beware of behavioral biases (minimizing constraints to good thinking)

8. Know the difference between information and influence

9. Position sizing (maximizing the payoff from edge)

10. Read (and keep an open mind)"

Michael Mauboussin

"My first breakthrough occurred when a classmate in my training program [at Drexel Burnham Lambert] handed me a copy of Creating Shareholder Value by Alfred Rappaport. Reading that book was a professional epiphany. Rappaport made three points that immediately comprised the centerpiece of my thinking. The first is that the ability of accounting numbers to represent economic value is severely limited. next, he emphasized that competitive strategy analysis and valuation should be joined at the hip. The litmus test of a successful strategy is that it creates value, and you can't properly value a company without a thoughtful assessment of its competitive position.

The final point is that stock prices reflect a set of expectations for future financial performance. A company's stock doesn't generate excess returns solely by the company creating value. The company's results have to exceed the expectations embedded in the stock market."

Russ Roberts

"In the current health care system of the United States, we are typically spending other people's money rather than our own. For people who don't have a lot of money, that's wonderful and in some cases a life-saver. That's the main benefit of the current system. But there is a cost - because people are spending other people's money, they buy too much, spend money on stuff that normally wouldn't be worth it, and the system approves technology or delays technology for reasons that are not ideal. If we went to a truly market-based system, poor people would have a tougher time. But everything would be a lot cheaper. And poor people would still get good medical care paid for by other people, but in this case it would be foundations and charities. In the current world, nearly everyone has that system. There is something comforting about that equality but we pay a very high price for it."

Jerry Neumann

"There's an old saying: 'predictions are hard, especially about the future.' While hard, there are two ways to make reliable predictions about the future: deduction and induction. When either of these is available, prediction is (theoretically) possible.

Deduction relies on playing out an inevitable chain of cause and effect. It is possible when the starting state of the environment and all the mechanisms that will cause that state to evolve are perfectly known. This is a strong condition. (And perhaps too strong. In most cases, knowing not all but just the important starting conditions and transition mechanisms will get you a good approximation of the future, or at least a good estimate of the probability of success or failure. This may be enough.)

Induction, the second way to predict the future, assumes the future resembles the past. The ancients may not have known why the sun rose every morning but were pretty sure it would, because it had every day previously. Similarly, some business ideas are statistically predictable because they have been tried multiple times. If you go to a new restaurant you may not be certain if that restaurant will succeed or fail, but you know that fewer than half of restaurants survive their first year. New restaurants are similar enough to one another in their most important business aspects that their risk of failure can be induced." 

Scott Galloway

"There is an art to happiness. From 0 to 25, it's the stuff of Star Wars, discovery, spilling into adulthood, football games and magic.

Then shit gets real from 25 to 45.

Work is hard, economic stress, realize you're not going to be senator, or have a fragrance named after you and someone you love gets sick and dies.

In your 40's and 50's though, a wonderful thing happens.

You begin to take stock of your blessings, you realize that life is finite, start finding appreciation in relationships, in nature, in your achievements, and you get happier.

The lesson here is keep on keeping on because happiness waits for you."

Epictetus

The Art of Living

"Understand that nature as a whole is ordered according to reason, but that not everything in nature is reasonable."

Charlie Munger

Poor Charlie's Almanack

"Another thing that often causes folly and ruin is the 'self-serving bias', often subconscious, to which we’re all subject.  You think that 'the true little me' is entitled to do what it wants to do.  For instance, why shouldn’t the true little me get what it wants by overspending its income?  Well, there once was a man who became the most famous composer in the world.  But he was utterly miserable most of the time.  And one of the reasons was that he always overspent his income.  That was Mozart.  If Mozart couldn’t get by with this kind of asinine conduct, I don’t think you should try it."