There will be problems

The magic of error correcting

Topic: There will be problems

Discussion: Soluble problems are the rule

Conclusion: Error correcting is key to all decision making, not least investments, albeit unfortunately largely ignored in political areas such as public governance and big finance. Certain gender equality issues make for an interesting side-show.


Science

The scientific method has brought humanity previously unimaginable wealth and possibilities. Its most important feature is that of systematic review, critique and improvement, also known as the system of effective error correcting. Here is an example:

  • Before Newton things fell to the ground just because they always had. God was probably thought to be the ultimate cause.
  • Then Newton came up with the idea of gravity, a force that increased with mass and diminished with distance.
  • Then Einstein inched closer to reality with his theory of explaining the behavior of massive objects. Without forces, but still increasing with mass and diminishing with distance, i.e. on the surface diametrically opposite from Newton’s theory, but at a deeper level explaining the same phenomenon with the same key variables.
  • In the future, a unified theory of quantum mechanics and general relativity will still show how reality relates bodies according to size and distance but with yet a better explanation as to how it really works.

That’s how science make use of error correction through openness and peer review.

Soluble problems

Each explanation solves a problem, but each explanation only approaches reality without ever getting there completely (for that, it most likely takes the entire universe of space and time). Scrutiny and correction, as well as theorizing, reasoning and experimentation are key to this process; as opposed to authority, selective perception and ad hoc explanations.

The same method would be well-advised for politics and investments (not to mention all other decision management areas)


Investing error correction

The scientific method is most straight forward implemented in the world of investing:

You “simply” patiently and unemotionally record how and why you enter an investment. Then you analyze what went respectively right and wrong, and adjust your method accordingly for the next time. I’ve detailed my views on this in my TAOS series here; and there is an accompanying artwork available here (quite luxurious and expensive I might add, but with a 20% Black Friday discount: Use code invest2018 at checkout).

Record – Analyze – Adjust

There are two slight problems. One is that markets are governed by human psychology, causing changing correlations between fundamentals and valuations (exacerbating the small speed bump [irony] of estimating probabilities of future events). The other is that every individual investor has trouble controlling his own emotions, thus occasionally succumbing to greed, fear, lack of patience and diverging from his own strategy.

I have myself often fallen prey to hubris after a lucky streak (see one of my TAOS entries: Temperateness), or taken too little risk after a losing streak. Well, the weakness of the human psyche is a problem in itself. A soluble problem, a problem that can be remedied through error correction. It just needs to be recognized, analyzed and fixed.


Public choice

Politics is another decision making problem with some elements of error correction. It has taken us from warlords and despots to democracy. It has taken us from slavery and only free white men allowed a vote, to a system unbiased against gender, incarceration or race. It seems politics, just as science asymptotically approaches reality, is slowly inching toward a just and effective system.

However, the system of representative democracy has many drawbacks, some based on Arrow’s decision paradox*, other on the mechanics of representation itself. The worst problems are due to the power it instills the third and fourth largest parties and the resulting frequent compromises between parties and ideas.

* In reality neither voters’ preferences, nor the set of choices/solutions are as fixed as in Arrow’s impossibility theorem, but subject to debate and evolution, which in reality nullifies Arrow’s no-go theorem of public choice.

The coalitions, compromises and disproportional power awarded to small parties unfortunately mean voters don’t really know what they’re voting for, and parties and voters don’t take full or any responsibility for muddled “averaged out” decisions. Therefore the system of error correction is all but neutered in a system of representative democracy without an early cut-off point for smaller parties.

In chapter 13 in his book “The beginning of infinity”, David Deutsch explains how the plurality voting system often can fix most of these problems by awarding the power to just one clear winner, a winner that will thus get more power to implement its ideas (‘scientific’ political experiments meant to find the ‘truth’ of most effective governance) but also have to take full responsibility for the outcome and the judgment of voters in the next election.

Now, that would be putting the scientific method to good use — not in exactly all situations and countries, as Deutsch is quick to point out, but in many.

Examples of the opposite: moral hazard in finance

Banks and big finance: moral hazard, private profits and public losses. Errors and excessive risk taking are rewarded instead of corrected — quite the opposite of the scientific method and thus the financial system over time becomes prone to ever larger errors and periodic melt-downs.


Look for errors everywhere

Investing as well as various aspects of governance (of states and companies) can be said to be on a quest for an (effective) and sustainable ‘truth’ through experimentation and variation — just as science is. The financial system is worse off and the overall system of representative democracy is at the moment a lost cause.

An interesting side show is going on in the female board representation area. For a while, compliant companies performed better on the stock market, perhaps signaling temporary progress that clients and investors picked up on, and thus caused better performance for a while.

It might actually have been a step toward the truth at the time, but is now overplayed, since one-variable investment strategies typically never work long-term.

Going forward, broader initiatives within CSR/ESG show greater potential as they represent more long term economic investments and truths, incorporating previously ignored externalities, whereas feminist governance initiatives only signaled a will to do better but without an effective method based on facts.

For now, as individuals, we’ll just have to make due with what we can control — our investments. Well, and all other decision-related areas in everyday life, e.g., regarding the choice of friends, relationsships, jobs, running, strength training, bodybuilding, food choices and so on.

There will be problems. In fact, problems are our friends, our sign posts.

But they are soluble. Find them, embrace them and correct them. That is the way toward an effective future governed by truth.

Happy hunting (for errors)!

Why religion is the lazy coward’s way

Summary: Religion is to science what snacking and TV-addiction is to exercise and deep work; a little bit like how technical analysis relates to fundamental analysis in investing.

Disclaimer: Before bashing on religion you should always ask what kind it is, i.e., exactly what the believer actually believes. When I’m talking about religion, I mean the existence of a personalized God that can and will communicate with people, governs some kind of extra-material realm, as well as can break or change the natural laws. All of that is of course complete bunk.


Religion is lazy, indulgent, and intellectually cowardly.

A scientist has to work much harder at uncovering the true nature of reality.

It takes centuries of missteps and breakthroughs, of courageous individuals and diligent teams challenging and building on each other’s findings, to chip away at the big marble block of nature, piece by piece revealing what’s beneath.

In contrast, any child can succumb to an overactive amygdala, and assume agency in every occurrence. God is a childish invention, where the familiarity of grown-ups controlling and creating the child’s world spills over into adulthood, infecting the mind with shortcut solutions to complex problems.


It’s the snack eating, TV-couch dwelling, dopamine addict personality that turns to God for a quick fix; whereas the curious and diligent homeostasis breaker works hard and deeply, knowing that the satisfaction from accomplishment beats any short term sugar rush.

You can tell your bible touting friend the next time you see him, that he’s nothing but a feeble-minded, childish addict that’s too lazy or too scared to try to understand the true nature of reality.


Hey, if that made you think, why not subscribe to my free newsletter (and get my e-book about investing for free)? After all, I did receive the only European Hedge Fund Of The Decade award to date. Or why, not check out this summary of my 12 investment lessons from the book.

How to be healthy, look attractive and stimulate your brain at the same time

A short and easy tip…, and a more general one

  • Stop washing your face or evil bacteria will move in
  • Copy Retard’s Playbook for more “rules”

perfect skin

You are bacteria – don’t kill you

The skin evolved over millions of years as a delicate ecosystem.

It’s not “just” a skin, just a simple tarpaulin. No, it’s a complicated and living organ. Just as more than 99% of the genes we carry around are bacterial, the skin, including the face, is covered by a layer of bacteria.

Those little guys, good and bad, are exactly everywhere, and excessive cleaning kills the good bacteria that have developed a stable culture on your face and leaves a void for the first visitor to fill. Quite recently that knowledge has inspired new routines for C-sections, where bacteria from the birth canal are applied to the newborns within seconds from delivery.

 

A spotless face is everything but

Have you noticed, like I have, that you can keep your face spotless as long as you wash, moisturize and nourish yourself perfectly, but the least miss in the routine (morning, evening or around gym, partying or other activities) can make you go from your best to your worst in a couple of days (I used to, after partying, drinking, eating sugar and not following my routine before going to bed, perhaps not the morning after either due to the hangover, and topping it all off with a pizza).

As I mentioned in this post about managing short term decisions and long term consequences, I stopped using soap, scrubs, cleansers etc on my face seven months ago.

Now my face looks better than ever, not to mention withstands “attacks” (alcohol, candy, sun, sweat, touching etc.) better than ever. Perhaps best of all, I save time and mental energy, by not having to think about washing my face or about missing washing after a night out or somebody touching me. Science also tells me my skin looks much better under a microscope as well as will look better for longer.

The short and easy tip is to stop washing your face you too. Try it. Give it a month to allow for the right bacteria to establish a stable culture. Also try rubbing some armpit bacteria in your face, to speed up the process.

 

Do much more than stop washing

The more general tip is to try stuff like this every once in a while. Read blogs, and listen to science pod casts for inspiration (e.g., 60-Second science, Nature, Science Talk, TED Radio Hour, Gastropod, Brain Science, Discovery and Freakonomics). In general, simply keep your eyes, ears and mind open to discoveries and ideas that could benefit you directly.

Don’t believe or try everything you find, at least not on the first occurrence. However, once a concept and its applications keep surfacing; once you develop an understanding or get a strong recommendation from a trusted source it is time to give it a try.

It took me quite some time from the first time I heard about it until I came to trust and first tried and then made into habits things like fasting, not washing my face, mobility exercises, omega3-oil, lactobacillus reuteri pills and D-vitamin. There are many other things I’ve considered and discarded with or without trying, and there are a few contenders awaiting more information (power poses, bulletproof coffee, brain activation, meditation).

4 in the morning on May 1, after 14 hours of drinking. Luckily, my habits protect me

health habits bacteria omega3 lactobacillus

 

Retard’s Playbook is coming

I’m not saying you should blindly copy my tried and tested “lifehacks” from Retard’s Playbook (yes, there will be a book about my philosophy, ethics, investing, tips and tricks, quotes, thoughts on efficiency, education, career, happiness, health, bodybuilding etc. – just don’t hold your breath. Do however subscribe, and tell other interested friends to subscribe, to be sure to get it, as well as my first book about my time at the Hedge Fund Of The Decade).

However, I am saying you should look for your own science-based rules for health and happiness (which, on the other hand, I think will turn out to be more or less the same ones I have identified, so if you trust me, go ahead and take my short cut).

Please note that this post is not about vanity, it’s about discovery and health, about feeding and stimulating your inner pattern recognition drive. Then again…, a clean face is a sign of health, which in itself is attractive and trustworthy.

 

Trust me, stop cleansing, keep calm and subscribe

And as a friendly reminder, trust me on the face thing. Let your last face wash earlier today be just that… your last. Oh, and please subscribe or share this article with somebody who might like it.