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Here is a thread on a talk delivered by @Sanjay__Bakshi on "What I Wish I Knew When I Was 17" in @FLAMEUniversity
Five things he wish he knew before 17:
1. How powerful some of these ideas (mentioned later in this thread) are, which are taught in academia and how useful they are in making decisions or understanding how the world works.
1. How powerful some of these ideas (mentioned later in this thread) are, which are taught in academia and how useful they are in making decisions or understanding how the world works.
2. How becoming a wiser person over time requires requires constant application of these ideas.
3. These ideas will come from multiple disciplines.
4. You only need handful of ideas from key disciplines
5. Combination of these ideas produce stunning results
3. These ideas will come from multiple disciplines.
4. You only need handful of ideas from key disciplines
5. Combination of these ideas produce stunning results
To become wise one has to, as Charlie Munger says, jump the jurisdiction boundaries of subjects.
List of Ideas:
Idea No. 1 - Compound Interest: Mostly it is taught to us in the sense of money but it can be applied to anything in life. Like Knowledge, Viruses, etc.
List of Ideas:
Idea No. 1 - Compound Interest: Mostly it is taught to us in the sense of money but it can be applied to anything in life. Like Knowledge, Viruses, etc.
How does one get a very large sum of money over a long period of time?
Through: Delayed Gratification i.e. giving up something today to have much more of it after a few years.
Through: Delayed Gratification i.e. giving up something today to have much more of it after a few years.
He then shares the example of The Marshmallow Test, which I had also shared in one of my previous articles. https://www.notion.so/arjunbadola/The-Most-Difficult-Thing-0dafc0d842864c3e8039f53a97cbe4b4
Application of compound interest formula on things other than money:
A = being the thing you desire
P = your starting point
R = Outcome of your effort (This gets better over years as you learn and improve, so R is not constant)
n = No. of years in which you put the effort
A = being the thing you desire
P = your starting point
R = Outcome of your effort (This gets better over years as you learn and improve, so R is not constant)
n = No. of years in which you put the effort
Lesson: Larger the P, the more the A will be if other things remain the same, if R & n are constant.
But how do you increase this P?
1. Through regular effort
A. In investing it could be through staying frugal.
But how do you increase this P?
1. Through regular effort
A. In investing it could be through staying frugal.
B. Shares his example of never buying shampoo or soaps as he is able to get them from hotels as he travels a lot. These are tradeoffs. Save money now and save later.
2. Starting early: "Life is like a snowball, all you need is wet snow and a really long hill" Warren Buffett
2. Starting early: "Life is like a snowball, all you need is wet snow and a really long hill" Warren Buffett
Being young makes you stand at the top of the hill and there is a huge runway in front of you compared with a 50 year old person.
There is always a trade off. You can either have a large R (have fun today) but small n later in life, or Sacrifice today for a larger R.
There is always a trade off. You can either have a large R (have fun today) but small n later in life, or Sacrifice today for a larger R.
Like in the Marshmallow experiment, people don't like reducing R.
Ex: Spending time on social media is a trade off between time not spent on reading a book, writing a blog post, finding a role model, thinking on a topic, etc.
Ex: Spending time on social media is a trade off between time not spent on reading a book, writing a blog post, finding a role model, thinking on a topic, etc.
If you become greedy you would start doing thing which increase R in short and make you happy but that will result in n and if n becomes zero there will be no rise in A.
People who understand this concept they won't kill the goose which laid golden eggs.
People who understand this concept they won't kill the goose which laid golden eggs.
Compound Interest also consists on another idea that is Pain today Gain tomorrow.
Like: All successful people did things which required efforts and which other people were not willing to do.
Like: All successful people did things which required efforts and which other people were not willing to do.
Prof. recommends reading, The Little Book of Talent by Daniel Coyle, where the author finds true talent and what do these guys do?
Findings: Repetition is the key.
Here is quote from the book:
Findings: Repetition is the key.
Here is quote from the book:
You keep learning and learning, during which the chart moves slowly upward but the day you become an expert there is sudden exponential rise.
"The best way to measure progress is not in minutes or in hours, but in the number of quality repetitions you make" - Daniel Coyle
"The best way to measure progress is not in minutes or in hours, but in the number of quality repetitions you make" - Daniel Coyle
Idea No. 2: Proof of Contradiction
You make an argument to disprove a statement showing that it leads to a absurd conclusion, which means the proposition was false.
Ex: Buffett figured out that Dotcom Valuation are absurd.
You make an argument to disprove a statement showing that it leads to a absurd conclusion, which means the proposition was false.
Ex: Buffett figured out that Dotcom Valuation are absurd.
He realized that at such valuation the company would require to earn amount which was impossible as there weren't effort people out there to use the service.
Ex: Ralph Wanger on Disk Drive Industry
30 companies used to make disk drive and he know that all can't survive...
Ex: Ralph Wanger on Disk Drive Industry
30 companies used to make disk drive and he know that all can't survive...
...Being optimist about all of them was not rational. Only few of them would survive. (Only 3 of them did)
Idea No. 3: Reductionism
Like in Algebra, reducing the complex problems to a simpler one.
Ex: Valuation of Suzlon had become high. But how do you prove it was high?
Idea No. 3: Reductionism
Like in Algebra, reducing the complex problems to a simpler one.
Ex: Valuation of Suzlon had become high. But how do you prove it was high?
Pick the current value and reduce it to a fundamental problem.
At current valuation the company has to sell x wind mills and there is not enough space on planet to build x mill on earth.
Idea No. 4: Inversion
You think about one probability and reduce it from 1.
At current valuation the company has to sell x wind mills and there is not enough space on planet to build x mill on earth.
Idea No. 4: Inversion
You think about one probability and reduce it from 1.
Think, How to fail? and avoid those things.
Recommends reading: The Ten Commandments for Business Failure by Donald Keough
Ex: Try to find anti role model. People who you don't want to become like.
The mission here is to reduce one's own dumb behavior.
Recommends reading: The Ten Commandments for Business Failure by Donald Keough
Ex: Try to find anti role model. People who you don't want to become like.
The mission here is to reduce one's own dumb behavior.
Idea No.5: Small Probabilities, Large Consequences
When you study in school about calculating probabilities it is always objective. Like: Probability of no.4 on a dice.
But Real world is full of subjective probabilities which comes with consequences.
When you study in school about calculating probabilities it is always objective. Like: Probability of no.4 on a dice.
But Real world is full of subjective probabilities which comes with consequences.
Shares an example of a game:
By tossing a coin if you get head, I will pay you 50 Lakhs but if you get tails you pay me 10 Lakhs. Will you play this game?
Now, the problem here is it does not mention anything about your net worth.
By tossing a coin if you get head, I will pay you 50 Lakhs but if you get tails you pay me 10 Lakhs. Will you play this game?
Now, the problem here is it does not mention anything about your net worth.
If your net worth is 10 Lakhs then you should never play this game. But if you net worth is 100 crores then one could.
You can reframe this game by stating it in terms of percentage. Like percentage of losing only 20%, 10% or 1%.
You can reframe this game by stating it in terms of percentage. Like percentage of losing only 20%, 10% or 1%.
Lesson: You do not take the risk of ruin no matter how good the upside is.
Idea No. 6: Don't become a Patsy in the Game
If something is too good to be true it probably isn't.
World is a manipulative place. Don't assume the information is right what is thrown at you.
Idea No. 6: Don't become a Patsy in the Game
If something is too good to be true it probably isn't.
World is a manipulative place. Don't assume the information is right what is thrown at you.
Always question the assumptions.
Idea No. 7: Think Like A Statistician
Shares story of USA military who were examining the airplanes which took damages during the war and returned back.
Military decided that they had to add extra armor on the red dots where they took the hits
Idea No. 7: Think Like A Statistician
Shares story of USA military who were examining the airplanes which took damages during the war and returned back.
Military decided that they had to add extra armor on the red dots where they took the hits
But a guy Abraham Wald, a statistician, came with opposite conclusion.
He said that the armor must be added on the areas where there was no hit as the already damaged parts are capable of taking hits.
He said that the armor must be added on the areas where there was no hit as the already damaged parts are capable of taking hits.
The parts where damage could not be taken was not examined as those planes did not survive.
Lesson: Don't look at the survivors. Look at the ones who took the damages are not here.
Lesson: Don't look at the survivors. Look at the ones who took the damages are not here.
Ideas No. 8: Think Like A Bayesian
There is a current belief, a information comes in which either strengthening your current belief or weakens it leading into forming a new belief.
Bayesian being are willing to change their information which is very important to become wiser.
There is a current belief, a information comes in which either strengthening your current belief or weakens it leading into forming a new belief.
Bayesian being are willing to change their information which is very important to become wiser.
To show an example of this idea I would recommend a podcast on it on which I had written an article: https://www.notion.so/arjunbadola/Meta-Updating-1a907b933f2f4729b9486748c6df02d4
Finally he ends this idea by stating the benefits of being Bayesian:
1. You know changing minds makes you wiser
2. No longer insensitive to base rates
3. You become much more objective
1. You know changing minds makes you wiser
2. No longer insensitive to base rates
3. You become much more objective
---THE END---
I have not added the Q&A session.
If you liked it please RT. Thanks!
I have not added the Q&A session.
If you liked it please RT. Thanks!
