If you aren’t familiar with Casey Neistat, allow me to remedy the situation.
Casey Neistat is likely the most burgeoning YouTube star of 2016. Here’s his channel. I’m approaching a year having subscribed to his daily vlog videos and to my eye what Neistat is doing on YouTube is a testament to the democraticization of video content.
Recommendation — Nassim Nicholas Taleb (or “NNT” as I like to refer to him) opened my eyes with this book. Any book that can blow open your understanding of the world is a must-read — and this is one of those books. The role that randomness and unpredictability play in our lives is completely under-appreciated, when it is acknowledged at all. Just one attempt at appreciation I’ve made can be found in my post “But For,” which is an attempt to string together a series of unplanned events that have cumulatively had an enormous impact on my life.
Going forward, I want to garner a greater appreciation for power law, stochasticity, black swan events, and living in “Extremistan.” On my immediate reading list are related books: The Drunkard’s Walk: How Randomness Rules Our Lives, Stumbling on Happiness and The Luck Factor: The Four Essential Principles. I’ve yet to order it, but NNT’s first book, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, is also on my list.
I’ve become a bit of a Nassim Taleb junkie and typically link down stuff he puts out (videos, articles, posts to his low-tech blog “Opacity,” etc.).
Review — Rather than recant what others have said better, I’ll selectively quote a thorough and informative review of the book from Amazon:
The Black Swan is probably the strongest statement of enlightened empiricism since Ernst Mach refused to acknowledge the existence of the atom. Of course, in theory, everyone today is supposed to be an empiricist – all right-thinking intellectuals claim to base their views solely on positive scientific observation. But very few sincerely confront the implications of rigorous empiricism. Specifically, few confront “the problem of induction,” illustrated here by the story of the black swan.
Briefly: observing an event once does not predict it will occur again in the future. This remains true regardless of the number of observations one adds to the pile. Or, as Taleb, recapitulating David Hume, has it: the observation of even a million white swans does not justify the statement “all swans are white.” There is no way to know that somewhere out there a black swan is not hiding, disproving the rule and nullifying our “knowledge” of swans. The problem of induction tells us that we cannot really learn from our experiences. It makes knowledge very problematic, if not impossible. And yet, humans do behave -almost without exception- as though they believe that experience teaches us lessons. This is forgivable; there is no better path to knowledge. But before proceeding, one must account for the limits that the problem of induction places on our claims to knowledge. And humans seem, at every turn, to lack this critical self-awareness.
…
Taleb explains that conventional social scientists use induction to collect data, which is then plotted on the good old Gaussian bellcurve. With characteristic silliness, Taleb dubs the land of the bellcurve “Mediocristan” – and informs us that it is the natural habitat of the white swan. He contrasts Mediocristan with “Extremistan” – where chaos reigns, the wholly unexpected happens, power laws and fractal geometry apply and the bellcurve does not. Taleb’s fictional/metaphorical ‘stans’ share something with the ‘stans’ of the real world: very ill-defined borders. Indeed, one can never tell whether one is in the relatively safe territory of Mediocristan or if one has wandered into the lawless tribal regions of Extremistan. The bellcurve can only help you in Mediocristan, but you have no way of knowing whether you have strayed into Extremistan – beyond the bellcurve’s jurisdiction. This means that bellcurves are of no reliable use, anywhere. The full implications of this take a while to sink in, and are sure to cause huge controversy. In July, Taleb will debate Charles Murray (author of -what else?- the Bell Curve). I’ll let you know who wins.
Today is my 28th birthday — here are a few birthday reflections:
Happy Birthday to me! Thanks for all your well wishes!
Update 5:35, Feb. 4: I had no idea that today was also Facebook’s Fifth “Birthday” (as much as a website can have a date of birth, anyway), and also something called Basecamp’s birthday, too. Maybe that is why Facebook greeted me with this odd message (odd coming from a computer/website):
Happy Birthday, Justin!
From all of us on The Facebook Team, have a great day!
Er . . . thanks Facebook!
A common question I get nowadays is “What should I invest in?” My best answer to that question is probably not what you’d expect.
My default financial response to this query over the past two years has been to go long on commodities, particularly gold, silver and energy, short the stock market, particularly financials and builders, and stay out of bonds and real estate.
Despite my default advice being proven correct as the months have gone by, getting the timing right on entering and exiting these positions has been incredibly difficult, if not downright impossible. Buy and hold has brought both pleasure and pain for commodity-bulls. Equity shorts have had to endure both the unpredictability of government intervention and market reactions to said intervention. That “timing has been paramount” is just another way of saying that luck has been the determining factor in investing success. And success has meant not so much whether you’ve made a lot of money, but more in how little money you’ve lost. I take solace in treading water in an environment where a 10% or greater annual loss in this market is a job well done.
As far as financial investment advice going forward, I maintain that gold, silver and energy, and commodities generally are going to be big winners in the next few years as investors swap paper assets for real assets. This thesis is built upon the reality that debt financing by governments is exploding, which will ultimately mean higher yields on bonds and running the printing presses on the shortest-term debt around, the Federal Reserve Note — a.k.a. the dollar.
The above advice is my best guess. Use it at your own peril.
Setting that question aside, there are irrefutably good investments that you can make in bad economic times. They require setting aside more of your time than your money. Since time is the most scarce resource you can spend (And your happiness one of the most precious assets you can buy), these investments are arguably exponentially more important than your physical wealth, anyway.
Your family is a wealth of advice, laughter, entertainment, and support (Sure they can be a PITA, but focus on the big picture!). Parents love you even when you screw up. Siblings understand you in ways others can’t. And who doesn’t have warm memories of holidays spent playing with cousins or aunts and uncles? There’s no good reason family moments should be isolated to major Judeo-Christian holidays or the occasional birthday.
Keep in regular touch with your parents. They brought you into this world: you owe them the occasional phone call. Encourage them in their endeavors and reap the benefit of mutual support.
Call up extended family and make potluck dinner plans. Play games with nephews and nieces. Chastise balding uncles. Play card games. Eat food.
Simple pleasures spent with family are hard to beat. It doesn’t take much money to share a laugh and make a memory with your family, even if at first it seems like setting something up takes some element of work. The time-investment pays off.
If you are young and married, investing in family presents a huge opportunity for wealth: you can have children. Having a kid (or two or three) is perhaps the most fundamental, biologically-innate way to build wealth around. A kid is an investment in your future. Though I don’t have any kids to speak of, I’ve got a nephew and enough intuition to see a good investment when I see one. Of course, having a child is one massive investment of time (And money), but it is one that enriches parents for a lifetime. My powers of observation also note that people all around the world, at all different levels of financial wealth, are able to support children, so even in bad economic times, you can still make this pivotal investment.
Similar to family, friends are bastions of wealth that merely take investments of time. These days, with social applications like Facebook, it’s even easier to stay in touch and make plans with friends — even those you haven’t seen in awhile.
As for making new friends, check out meetup.com. I’m just getting into this site myself (I’m a bit behind the curve on this one!), but Meetup is a way to use cyberspace to meet people in real space. What more, you can find folks with similar interests to yours, attend a gathering of said individuals and potentially find a kindred spirit who shares other interests.
Get a cat or dog. Pets are fantastic because they typically require only a marginal investment of time and money while providing an immense amount of love, entertainment, perspective (ever watch a cat or dog lounge in the sun?) and stress-reduction. Pets can provide exercise (dog-walking) and even boost self-esteem by reminding you that this cute furry being depends on your caring for them for their survival.
Cats (my preference though I like dogs, too) are likely the more cost-efficient pet from a time and money perspective. Having a cat requires:
As far as breed, I happen to be big siamese/tonkinese fan as they tend to be personable, people-friendly, smarter and sociable. In other words, they seem to exhibit some of the more desirable qualities typically associated with dogs. I found Zeke (pictured above, in the youtube video) via petfinder.com. He cost me a hundred bucks to “rescue.” That was about seven years ago. I’m guessing he costs about a dollar a day to take care of, and that price is well worth it for the enjoyment he brings. Just as an example, when I haven’t seen Zeke in awhile, he usually jumps up from the ground for me to catch him in my arms at which time he licks my nose with his raspy tongue (Exfoliates the skin?).
I know less about having a dog, but caring for a dog takes a good bit more work as they must be walked and taken out to “do their business.” They demand a bit more attention/companionship, too, which is why getting a dog should never be taken lightly. Dogs also provide some unique benefits that accompany the additional cost of ownership. I don’t go into dogs here because I can’t speak from experience.
Suffice to say that having a pet can be an incredibly rewarding investment.
You can invest in your health right now by taking a walk outside. This will not only get your body moving but it will expose your skin to the sun, which will boost your Vitamin D production. Mind, taking a walk and getting some sunlight is only marginally going to improve your health, but health is maximized by simple things.
If you are ready to step it up, getting a solid workout in is as simple as setting aside 30 minutes and doing some bodyweight exercises. For example, maybe you should try Craig Ballantyne’s Bodyweight 300 Cardio Circuit, which requires no more equipment than a wall, floor and watch.
Even simpler, run some sprints up a hill outside. Or just do some push-ups or lunges during commercials while you watch television. Add in some social interaction for some investment-synergies by playing Ultimate Frisbee, kickball or basketball with friends and family. Alternatively, go toss a ball with your kid or walk your dog. Unlearn the notion that exercise is accomplished in a gym, for a set period of time, at certain times of the day. De-complicate your health (See my workout blog for other ideas).
As for the other key way to invest in your health, eat real food that you cook in your kitchen. It’s cheaper than going to a restaurant, better for you (you know what you put in it), reaps creative benefits and if you’re up for entertaining, you can synergize again by inviting over friends and family.
If you’re not hungry, try fasting for 24 – 30 hours. There are health benefits to fasting (More on this here). If you’ve never fasted before, I recommend it for nothing more than the experience of purposefully breaking your eating habits.
Reading a book is a cheap way to live vicariously, acquire knowledge on the cheap and amass immense quantities of accretive, intangible wealth. Gleaning just one good idea, paradigm or perspective from a book makes the hours it takes to find it worthwhile. Why is this? Because useful ideas are transferable and can be combined with other ideas to create even more useful ideas, theories, paradigms, etc. Ideas (and knowledge) compound your wealth in ways you can’t predict.
For just two books that may bring you some comfort during turbulent times, I highly recommend:
If nothing else reading allows you to reap the rewards of someone else’s hard work and research — even if you’re just reading a blog.
The above suggestions are just a few ways to make valuable, high-return investments in uncertain economic times. At the risk of presenting advice that may be obvious, I focus on the elements of life I can control, which happen to be the elements of life that I’d deem most fulfilling. I have little control over the economic or political environment. I can scarcely predict what will happen today, much less can I predict tomorrow or the coming months and years. I encounter immense uncertainty, a stochasticity of life, that I can either lament or embrace. By investing in wealth that is more intangible than financial, I am better able to manage the uncertainty of these troubling economic times, and no matter what happens to the stock market or our economy, I’m assured to live a rich, fulfilling life.
Mike Rowe of Dirty Jobs on passion:
The answer (aside from the fact that they’re still employed) is because they are blissfully sheltered from the worst advice in the world. I refer, of course, to those preposterous platitudes lining the hallways of corporate America, extolling virtues like “Teamwork,” “Determination” and “Efficiency.” You’ve seen them–saccharine-sweet pieces of schmaltzy sentiment, oozing down from snow capped mountains, crashing waterfalls and impossible rainbows. In particular, I’m thinking of a specific piece of nonsense that implores in earnest italics, to always, always … Follow Your Passion!
In the long history of inspirational pabulum, “follow your passion” has got to be the worst. Even if this drivel were confined to the borders of the cheap plastic frames that typically surround it, I’d condemn the whole sentiment as dangerous, not because it’s clich?, but because so many people believe it. Over and over, people love to talk about the passion that guided them to happiness. When I left high school–confused and unsure of everything–my guidance counselor assured me that it would all work out, if I could just muster the courage to follow my dreams. My Scoutmaster said to trust my gut. And my pastor advised me to listen to my heart. What a crock.
Why do we do this? Why do we tell our kids–and ourselves–that following some form of desire is the key to job satisfaction? If I’ve learned anything from this show, it’s the folly of looking for a job that completely satisfies a “true purpose.” In fact, the happiest people I’ve met over the last few years have not followed their passion at all–they have instead brought it with them.
Rowe is certainly on to something here. This passage is evocative of a meme that has been expressed by Richard on passion vs. excellence, Art on modern life, Twight on uncertainty and Art/me on the stochasticity of life.
What I take from Rowe, Richard, Art and Twight (and Nassim Taleb) is that life is random and complex. This stochastic complexity is difficult to predict and nearly impossible to control. The notion that there is some string of events that must occur in a perfect, precise order to have a fulfilling life is nonsense. There is no perfect job, friend, spouse or life, so stop the futile search — it is vanity. Rather spend your energy enjoying the job, friends, spouse and life that you have.
What is your passion? Why waste time asking an answer-less question?
Get on with enjoying life.
A few months ago, various circumstances led me to a brief bout with depression. It is a strange moment when you reflect that, “I am depressed”. As I’m prone to do when I don’t know much about a subject, I googled depression. As part of my searching, I ended up reading some insightful comments on depression by Art De Vany, who almost three years ago today, was watching his wife succumb to a terminal disease. Regarding depression, Art wrote (emphasis mine):
Are you depressed they ask? And I say no, you only get depressed when you compare the present state with one that is better or perfect in some way. If you accept the reality of the present state, then you can’t make these irrelevant comparisons of what is against the ideal.
You are so strong they say. And I say, no. I am just grounded in the reality of the now and trying to find the best things to do to influence the ensemble of paths on which our lives will evolve from here. If I become depressed or confused, I give up our moment of power. …
The lifepath ensemble formulation is a liberating idea because it makes you understand that you cannot achieve a unique outcome and that the transitions from this state to the next are stochastic. All we can do is to do those things that make favorable transitions more likely. …
Not that depression is that bad a thing always. If it is motivating to realize you have fallen short of some attainable goal, it may lead you to improve your preparation for the next life transition. But, if you think you can achieve the change or goal with certainty, then you may become depressed in an unhealthful way. This can fall into a non-linear dynamic that is reinforcing, leading to deeper depression and, eventually, non-competent decisions.
After reading these comments a few months back, I sensed their truth while rejecting their application. Depression is sinister in that it is addictive — I wanted to wallow in my depression rather than work to escape it. It is so easy to be the victim.
Though I won’t elaborate on this further here, it’s likely that what helped me overcome my depression were the positive steps I took1 to improve my health. Not surprisingly, these steps were small to start but have cascaded, compounding their goodness in a non-linear fashion.
Underlying the depression application of De Vany’s comments is a central, important idea: the stochasticity2 of life. De Vany also calls it the “lifepath ensemble formulation”3. These descriptors evoke imagery of a symphony of circumstances, many of which are unpredictable, that drive life forward. So much of life occurs as the sum of a randomness. Even when not random, the number of causal factors in life are often so great as to destroy predictability.
Rather than despair over life’s innate uncertainty and randomness, I accept it. Doing so assuages my anxiety about potentially negative outcomes and empowers me to take the necessarily small steps that will further progress towards a goal. This is even more important when the lifepath ensemble seems nothing more than cacophony. Indeed, the stochasticity of life adds depth and beauty. Would you really have it any other way?
Though I can’t be sure, I bet that is what De Vany means by the “lifepath ensemble” — it is the string of individual actions that come together to set a course for my life. The course will be anything but certain, so accept the uncertainty, and work within it.
Footnotes
1 Art played an indirect, but prominent role in that process, as well, so I probably owe Dr. De Vany a “thank you” or two.
2 To save anyone from looking this up — as I had to, “stochasticity” means:
the quality of lacking any predictable order or plan
3 Such a provocative descriptor and yet he has not since blogged on the “lifepath ensemble” again — 1 2
4 Quite bizarrely, the original blog post by Adams on his Dilbert Blog has disappeared. You can do the googling yourself if you don’t believe me. Strikes me as odd. Note: in the original post, Adams alluded to a book on luck by Richard Wiseman. That post is still out there for the reading.