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1/ Investing is a good analogy to think about life. Particularly the idea of resource allocation.
Investing at its core is about capital allocation. You've got virtually unlimited firms out there to invest in but only limited money. So what do you do? You make bets.
Investing at its core is about capital allocation. You've got virtually unlimited firms out there to invest in but only limited money. So what do you do? You make bets.
2/ You try to assess the upside and downside of investing in these firms and then allocate money accordingly.
Similarly, in life, very often we face a resource allocation problem. Resource here is not just money, but more importantly, your physical and mental energy. Your time.
Similarly, in life, very often we face a resource allocation problem. Resource here is not just money, but more importantly, your physical and mental energy. Your time.
3/ Time is the most scarce resource of all. Once spent it cannot be made back.
In investing you might start with filtering out all those industries that you have no idea about or are not interested in. So in life, you need to reject all the avenues outside your skill set.
In investing you might start with filtering out all those industries that you have no idea about or are not interested in. So in life, you need to reject all the avenues outside your skill set.
4/ If you do not possess the intellectual or emotional inclination to be a software engineer, it makes little sense to put most of your time in there just because that's what cool people are supposed to be.
Instead, you double down on skills that work for you. In your favor.
Instead, you double down on skills that work for you. In your favor.
5/ Then there's the time horizon we're looking at. Do you invest in a company for the next year? Or a decade? Lifetime?
We need to ask the same questions for our relationships, the skills we build, or the habits we form.
We need to ask the same questions for our relationships, the skills we build, or the habits we form.
6/ When it comes to measuring investment returns, it's usually easy to calculate. Spreadsheets can do that.
However, life returns cannot be put in Excel. What is the metric you want to optimize for? Money? Health? Happiness? Freedom?
How to even measure them?
However, life returns cannot be put in Excel. What is the metric you want to optimize for? Money? Health? Happiness? Freedom?
How to even measure them?
7/ Also, are you investing for yourself or on behalf of someone else?
If you've got a client whose money you manage, you've got a lot to answer. Make presentations. Meet targets.
But if you're just investing for yourself, you are only answerable to yourself.
If you've got a client whose money you manage, you've got a lot to answer. Make presentations. Meet targets.
But if you're just investing for yourself, you are only answerable to yourself.
8/ In life though it's very rare that you are not answerable to anyone else but yourself.
There are people dependent on you, and sometimes you've gotta do stuff for them even if you don't enjoy it. The payoff has to be kept in mind when allocating resources.
There are people dependent on you, and sometimes you've gotta do stuff for them even if you don't enjoy it. The payoff has to be kept in mind when allocating resources.
9/ I've been thinking about this since I heard @collision on @patrick_oshag's podcast. He says how building a firm is lot about allocating scarce resource. You need to figure out what works and then deploy most of your firepower there.
10/ It's a shame that resource allocation is only taught in the context of biz/engineering, and not as the all encompassing idea that it really is.
Only if it were taught as an integral life-skill, would we realize the scarcity of our time and energy. And allocate it prudently.
Only if it were taught as an integral life-skill, would we realize the scarcity of our time and energy. And allocate it prudently.
