An Investment Classic!

This was yet another book picked up on a whim. And by the time I finished reading it turned out to be classic investment advice book. Needs to be added alongside The Intelligent Investor and Margin of Safety.

The author David Dreman seems to be in the value investor camp and champions contrarian investment strategies. There were some important investment lessons in the book!

He started from basics reminding how it is very difficult to spot a bubble until after the fact when its bursting confirms its existence. And there’s a reason for that. To a crowd few images are more alluring than the promise of instant wealth and everyone FOMO’ing into those asset classes. This is where the human psychology comes into play. Because if the potential outcome of the gamble is emotionally powerful, its attractiveness is insensitive to changes in probability. No wonder psychology becomes an integral part of investment. The book does a good job on reminding the humans cannot process large amounts of info. Investors mistakenly believe that with more data points they can predict/forecast accurately but that's not the case!

The book then delves into the Efficient Market Hypothesis (EMH) and a lot of pages are devoted to why it’s inaccurate backed by many surveys, studies, and contradictions. Although at some point, it started to feel like a rant to me.

David Dreman does share his secret sauce later – describing how low P/E, low P/B, low P/CF and low industry average stocks tend to do well over a long period of time and also remain relatively unscathed during periods of high volatility. I get that this book is a reprint edition of 2012 thus data of most of the surveys referenced is dated up to 2010 alone. I was interested to look for data within the last few years where growth stocks and mega caps like FAANG have been the hot picks. It’s relevant cause they have traded at expensive multiples thus my guess is that Dreman’s strategy would have always excluded them and robbed the investor of crème de la crème. 

I found a fund which runs a portfolio based on David Dreman’s contrarian principles and it seems to have under-performed the market by ~53% since 2003. 

https://www.validea.com/contrarian-investor-portfolio/david-dreman

Nonetheless, the book served as a good refresher of certain key fundamentals-  

• Never FOMO 

• Position Sizing matters a lot

• Never place too much trust in analysts 

• There is a chapter where Dreman goes into lot of detail about how analysts have huge conflicts. The brokerage firm where they work, also has an investment firm which wants underwriting opportunities in offerings. And a lot goes on behind the scenes to curry Buy side recommendations and invites blowback too on Sell side recommendations.

• Valuation matters aka multiples matters.

• Liquidity and leverage together can be huge risks as proven time and time again. Stay away from leverage!

Technologies That Will Change The Future Faster Than One Thinks

The premise of the whole book is that the dozen different technologies in the pipeline - are going to converge and revolutionize the world like never before. The author starts off with the example of how one technology “internet” alone changed the whole world. And then he goes on to imagine how much the world can change from these upcoming technologies.
This coming together of these technologies at the same time is what he calls “convergence”.

The technologies he mentions are as below accompanied by my understanding/take - 

• Digital Payments

• Along with depreciation of cash I include Blockchain as well in this category. Doing away with cash definitely has its own advantage in reducing corruption and having a trail. Benefits of digitization outweigh the cons in my view! But on top of that Blockchain technology adds its own advantages. 

• Having a decentralized ledger which is immutable in itself is a great step above.
  
  

• Artificial Intelligence

• The term has lost its significance because of how much it has been used loosely by companies and everyone. But it still doesn’t diminish its potential.

• For example - A smart-assistant which can take care of things for you keeping in mind your preferences and other things seems too good to be true but that is the long term goal. Yes, it can be eerie in some aspects but will be very handy.
  
  

• Drones/Robots

• Great use in terms of last-mile delivery and other aspects too like medical and rescue missions excluding military uses which is their own can of worms.
  
  

• Space Economy

• Now it is well obvious why it’s important for humans to be interplanetary species, the side benefits are very important as well. In the course of making space travel safer, cheaper and accessible - eventually we will master suborbital travel technology as well. This can reduce the current time to fly via planes from one part of the world to the other. I think this milestone will be crossed much earlier and will have far-reaching effects.

• And we haven’t mentioned electric vertical take-off and landing (eVTOL) vehicles yet! Flying taxis in layman terms.

• Imagine the impact on real estate when one can commute to work 100s of miles away in a matter of minutes and then back.
  
  

• CRISPR/Gene-editing

• Many diseases are caused by gene corruption aka genes are the source of it.

• Through this technology, the idea is to repair those genes once and for all and cure the disease. It can also ensure the disease stops being hereditary. The potential is much more than that - theoretically one can design babies by laying down their characteristics like height, IQ, eye color etc. Here it becomes a moral issue.

• Worth mentioning though that silencing a gene has effects which are not well-understood yet. For ex-  function of a gene is different in a liver v/s in other organs. But nonetheless, lots of companies are working on therapies and research happening on it.
  
  

• 5G

• This one is easy to explain. Faster internet helps in so many ways especially when we are going to have Internet of Things (IoT) i.e every device working with an internet. 

• Also, in certain areas which are in difficult terrain it is hard to lay down infrastructure for communication. There are ambitious projects to beam the internet down to those areas from the sky (space). With that everyone is now connected and can have access to information.
  
  

• Precision Medicine

• This field is about designing medicines and dosage specific to every individual. The same dosage isn’t ideal for everyone. With the advent of this field, we can have medicines designed specifically. Also, also have medicines which are so “smart” that they go in your body and work only on those areas/regions which they are supposed to.

• 3D printing

• "3D printing" can refer to a variety of processes in which material is deposited, joined or solidified under computer control to create a three-dimensional object, with material being added together (such as plastics, liquids or powder grains being fused together), typically layer by layer.

• It can be revolutionary as you can now customize any part and reduce the time to make any product. 

Overall, all the above technologies are quite revolutionary in themselves and with all converging at the same time they are going to have a profound impact. But if I were to rank the sectors most likely to change, they are - 

1. Transportation

2. Real-estate

3. Healthcare

4. Insurance

5. Shopping/Entertainment

The book in itself is a good primer and confirms the belief that the world is on a cusp of huge change. Imagining it is both exciting and a bit terrifying as how everything will shape up. But change has always been inevitable! 

Gateway to the West - St Louis

Initially looking at the title I thought the author was exaggerating how central STL was to American History but by the end of it I could see why he would say that. The city lies at the confluence of Mississippi and Missouri.

STL was the HQ for the famous Lewis & Clark expedition who was tasked in exploring the flora and fauna and assess the land further to the West, and also establishing it as a major trade hub for fur trade. The city was a pioneer in lots of activities in the past, and also has a very complicated history - violence, removal and genocide and expropriation and control of land.
The city incidentally also was at the center of Dred Scott decision, and was of strategic importance during the Civil War and was also one that had the first General Strike in the country.

The author introduced me to a new term, which he at many places emphasizes and shares evidence of- the phenomenon of "racial capitalism" - process of extracting social and economic value from a person of a different racial identity. How this has been a consistent manifestation in the city and its adjacent counties for over a couple of hundred years. It has some heavy sections on episodes where even government agencies (Federal Housing Agency) encouraged segregation in neighborhoods basically making it a federally sanctioned segregation policy long after it had been termed illegal, how in the present day tax incentives are being used to used invite economic development only to small tracts rather than the whole town and poor homeowners are evicted for being unable to pay taxes while commercial properties are tax-exempt due to "redevelopment laws". Not surprising to know but still makes one upset.

Also, the book also has uncomfortable portions describing the plight of Native Americans - how they had been lied to, cheated out, dominated and in many instances literally butchered by disproportionate force.

Overall, it's a good read. The author did a great job handling a heavy topic and taking us through the different eras and pointing out different facets of the city - what changed and what has not. Worth reading!

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Some notes -

• The book tells about a few instances where the Native Indians came out with a white flag (a universal sign of truce) but it was ignored and the fighting continued. Seems to be true on researching on the internet.
  
  
• The author lays out reasons how there was a certain degree of class conflict at play even before the Civil War. Those not holding slaves felt marginalized by those who did and actually felt threatened by the accomplishments of the few free "colored" people.
  
  
• Even immigrants from Europe who settled in the region faced hostility from the natives.
  
  
• Many European origin immigrants (Germans specially) were sympathetic to slaves and wanted to give them more rights but there was an unspoken fear in terms of work/labor that the city might become an attractive destination then. 
  
  
• Somehow, even during the struggle for workers rights when Unions were prevalent - it is remarkable that people of color weren't allowed entry in them.
  
  
• There was some hope that in the period of Reconstruction - lots of legislations would be passed to help the now free but the narrative shifted to "freedom" to own property and continue doing whatever and the momentum was lost.
  Tl;dr of the reconstruction period. 
  
  
• John Fremont (many places named after him) has a very checkered record.

Ten Lessons for the Post Pandemic World

The title of the book and the author's name was enough to compel me to put this on my To-Read list and go through it before the subject got outdated. I like the overall tone of the book. Agreed with most of the lessons, appreciated some nuance on thorny topics and definitely benefitted from Fareed Zakaria's international worldview.

Here is a basic summary of the ten lessons - 

Lesson 1 - Buckle up : There will be more pandemics

• Not sure if we will see any global regulation of wet markets and meat factories. What may come out will probably be a patchwork. Hopefully, plant based meats are cheap enough to replace meat to some extent.

Lesson 2 - What matters is Quality of Government

• With so many health departments at state, local and tribal level (2,684) and then add county health departments on top of it - is one reason why the Covid-19 Response was so bad in the U.S
  
  
• If you look at other areas - lobbying and other ills plague the system.
  
  
• It is kinda depressing. It doesn't look like the two political parties, the media and the population have the intention or the "attention span" to indulge in conversations on institutional reform.

Lesson 3 - Markets are not enough

• People specially the young generation has realized that the capitalism in its current form isn't working at all. For example - why is the effect of "government spending" not a concern when Federal Reserve provides support to those with stocks and bonds.
  
  
• Why should "Essential workers" be just respected and not rewarded by the markets?

Lesson 4 - People should listen to the Experts and Experts should listen to the People

• This was a brilliant chapter. It summarized the political, social trends. 
  
  
• Experts have fared badly and seem to be out of touch with the lives of an average person.  Looking down upon those who are non-college educated, not from fancy schools is only going to depend this "anti-elitism" sentiment.
  
  
• How those who are college educated (meritocrats) who rule the rest (technocrats/bureaucrats) - and invite disdain from the rest of population. In other words, two thirds of people stand by and watch as the other third run everything. Experts these days can be vaguely described as = highly educated living in cities, holding professional jobs, tend to be socially liberal.

• Power kills empathy.

Lesson 5 - Life is Digital

• People would naturally adapt to this new world differently, some feeling liberated, others trapped.
  
  
• The pandemic showed us that technological revolutions are further along than we would have thought but also digital life can feel cramped, a poor simulacrum of the real world.

Lesson 6 - We are social animals

• Here the author said that "well managed cities" will thrive -why? Because people will stay because of their friends or because what's easy for their pocket. He also mentioned the "fifteen minute city" model that is coming up.
  
  
• This was slightly confusing as he said in the earlier chapter that life will become digital and just like life was 200 years ago when people used to farm - professional and personal life intertwined together.
  
  
• Not clear how the "social" part will manifest itself in a digital world? Will it be in the form of social gatherings? Educational lessons? Work in person?

Lesson 7 - Inequality will get worse

• The pandemic will push millions back into poverty over the next few years.
  
  
• Growing inequalities if not addressed by reforms, may result in unrest and revolutions.

Lesson 8 - Globalization is not done

• Even if the West wants to move away from Chinese suppliers, the best and easy way is to move factories to places where production costs are low and no such politics like Vietnam, Bangladesh, Romania or even Mexico. In short, globalization is here to stay.
  
  

Lesson 9 - The World is becoming Bipolar

• I agree that the world will become bipolar. However, I feel like U.S may become the weaker of the two powers if current status quo remains. China looks way strong at the moment.

Lesson 10 - Sometimes the Greatest Realists are the Idealists

• It is considered to be an idealism to hope that countries all across the world co-operate but the author reminds us that the world has seen 70 years of peace with intermittent wars in some corners - which has led to a lot of development and people moving out from poverty.
  
  
• He reminds us that the broader view after World War II - that collective security, and collective endeavors were in each nation's self-interest -still holds true today.
  
  
• Somehow a dysfunctional dynamic has set in under which politicians use multi-lateral institutions for their benefit but turn on them whenever problems emerge - and it harms people's faith in institutions and a global rule based order. He gives the example of European Union. 
  
  
• In the author's words - It's not a flight of fancy to believe that co-operation can change the world. It is common sense.

New Deal

The motivation to pick this book was to actually know about the circumstances around and during the New Deal era and then try and draw some sort of comparison between then and now as the world recovers from the Covid-19 shock.

My main preference was a book that was comprehensive and did not have a few volumes - and this fit the bill. Also, I have noticed that the foundations of a lot of influential institutions were laid during that time and that era is supposed to be considered as a prime, rare example of how the government actively stepped in to help and rebuild the society after it was decimated by the 1930s depression. No wonder we hear terms thrown around like the “Green New Deal” - a New Deal’s 21st century version of what many believe should sound like. Also, this program helped cement F.D.R’s position as one of the most successful Presidents. Historical Rankings of presidents of United States

Here is my attempt of what I could find the main features of the New Deal, the similarities and differences between then and now.

Standouts -

• 100 days of any presidency are the most pivotal in terms of setting the tone and agenda for the 4 years.

• Under the New Deal the foundations of quite a few institutions and laws were laid - some of which remain like FDIC, Glass-Steagall Act, NRA, SEC, CWA, FSA.

• Organizations like NRA did standardize code and practices but ended up policing a lot more. It prevented things from getting worse but did little to speed recovery.

• Gold buying was a mistake from FDR. Eventually, he abandoned the Gold standard.

• The Social Security Act was conservative and inept in the context that at that time there was no other welfare system in which the state shirked all responsibility for old age indigency and insisted funds  be taken out of the current earnings of the workers. Sickness, in normal times the main cause of joblessness was disregarded.

• Laid the foundation of Social Security in the form of Old Age Revolving Pensions and later Social Security Act of 1935. 

• FDR’s comment is also remarkable that -  the employee share of taxes was to ensure that the contributors had a legal, moral and political right to collect it (a way of having skin in the game). And with taxes in there, no one could dare scrap it. 

• Building infrastructure helped give employment to so many people. Master-stroke!
  CWA built/improved 500,000 miles of roads, 40,000 schools, over 3,500 playgrounds and 1,000 airports and renovated multiple govt. buildings.
  Unfortunately, alarmed at how much CWA was costing - FDR ended it as quickly as he could.

• Initially, the African American community wasn’t supportive of the New Deal specially because the Congress at that time failed to pass Civil Rights Legislation.Not a single piece of Civil rights legislation was adopted in FDR’s four terms in the White House.

• The big Crossover happened between 1934-36 when they finally became pro-Democratic.

• Lots of tussle between Globalists v/s Isolationists w.r.t WWII. One faction wanted intervention, the other didn’t. The U.S did adopt the policy of indifference/neutrality which did play a little role in things getting out of hand. And ultimately the Pearl Harbor attack forced it to join the war.

• FDR was initially sympathetic to the cause of labor (unions).

• In the late 1930s, there were fears that fascism which was popping its head in Europe might raise its ugly head here in the U.S itself.

• The U.S was desperate to stay out of WWII.

• FDR interacted with the press freely. Monumental in changing the perception of the government - it made them think of the government.

  Similarities

• Heading into 1932, most Americans had come to a despair of the whole political process, a contempt for Congress and political institutions. The country was facing peak unemployment, run on the banks and stock market crash. 
  
  

• The stories in the newspapers of that time and remarks of the observers tell us about abundance for one half and the other half struggling. This is very similar to how the situation is post Covid-19 in the US except for the banks and the stock market. There however remains a high number of unemployment and the main street is reeling from the year that has gone by.

• Plus, the landscape of the world and how it conducts business might have changed forever putting lots of jobs in peril.

• Even in 1933 - the sentiment to forgive debt was very popular. Same as what it is now - in terms of student loan debt, housing.

• I saw some criticism that POTUS 46th took a long time to get the Stimulus Bill passed. But even back then, March 4th FDR was inaugurated and in May - Industrial Recovery Bill passed. Turns out passing legislation is a time consuming process!

• FDR surrounded himself with experts - something happening now too.

• Even in the 1930s - policies were being dictated by interest groups.

• Lots of struggle by the Unions - FDR was not sure about them.

• Same political playbook in elections - fear, exaggeration and distortion.

• Govt. help back in the 1930s was criticized by the same arguments that it violated traditional American assumptions of self-help, self-denial and individual responsibility.

• Met a lot of resistance to tax the inheritance and top 1% and regulate big companies (power utilities in those days).

• America First was still a thing back then. As the world political temperature grew hot and clouds of war assembled, a lot of advisors wanted the U.S to sit out (isolationism). FDR even in his inaugural address said “the putting of first things first”.

• Even back in the 1930s war was considered to be a willful distraction from troubles at home.

• Talk of packing the courts.

• The recession in 1937 - raised concerns of inflation and heavy taxation due to federal spending. FDR did cut WPA rolls and PWA funding being paranoid about inflation.

• Anti-monopoly sentiments.

• It was a widely believed perception in the 1930s that the decade before (1920s) had seen obscene wealth building.

• Quoting from the book verbatim - 

  During the upturn of 1935-37, conservatives argued that, since the crisis had passed, reforms were no longer appropriate.

  Sounds familiar to the rhetoric we are beginning to hear?

• Another line that caught my eye -

  In the early years of the depression, the nation was united by a common experience. People felt genuine compassion for the victims of hard times. By Roosevelt’s second term, as it seemed that the country might never wholly recover, the burden of the unemployed had become too exhausting a moral and economic weight to carry.
  Sounds familiar?

• Tussle over balancing immigration versus high rate of unemployment amongst U.S citizens.

Differences -

• 1934 elections were one-sided. Republicans were almost erased as a national party. Dominating the legislature helped FDR execute his policies without any opposition.

  It doesn't seem one-sided in 2020.

• Looking back from 2021 the jolt in 2020 seemed short-lived compared to how it was in the 1930s. Ofcourse, we don’t know what unknowns lie ahead - variants, inflation, debt-to-GDP ratio.

  
  

• Economics in the 21st century is quite different than 100 years ago.

Then v/s Now

Conclusion -

Finally, it is quite clear that the policies of the New Deal era were quite successful. Almost every big monument, bridge, institution was conceived as part of the New Deal. It is remarkable that it had something for everybody. It had a Federal Art Project under which the artists were paid to pain murals outside government buildings! 

If I were to pick 3 key-takeaways from then - 

1. Government spending is not as bad as it is made out to be.

It generates jobs and touches the lives of more people than we can imagine. The main thing is to go big and not timid in terms of vision.

2. Spending on infrastructure is worth it.

I say that because many of the bridges, highways built under that scheme are now the main tourist attractions and would have probably generated tonnes of jobs, and billions in revenues.

3. Fight the monopolies.

There was an active measure to fight the monopolies during that time and yes, it did face lot of pushback. It didn't do as well as other policies but this is something I wish would have happened.

20 lessons from the 20th Century

This thin book by Timothy Snyder is a pocket book version of things citizens should do to make sure democracy survives as world over democracy seems to be be under assault and ideas like free speech, liberty and equality are being chipped away gradually. I heard about the book on Trevor Noah's show and was quite impressed to later find out that the author can speak 11 languages!! No wonder he's an authority as he has a rare feat of having read most of the European literature in its original version. I was not able to relate to a few ideas but appreciated the list, the examples accompanying them and the insights he shared.

I liked how in the beginning he laid out a few things derived from Greek history and then proceeded to share his 20 lessons.

• Aristotle warned that inequality brought instability. 
• Plato believed demagogues exploited free speech to install themselves as tyrants.
• Fascism and communism were responses to globalization.

1. Do not obey in advance.

• People are remarkably receptive to new rules in a new setting.

2. Defend Institutions

• Mistake is to assume the rulers who came to power through institutions cannot change or destroy those very institutions.

3. Beware the one-party state

• Eternal vigilance is the price of liberty.
• Americans certainly have the same danger which Ancient Greeks had oligarchy. The fact that donating money to political campaigns is acceptable is a big problem because it implies that the very rich can then have more say.

4. Take responsibility for the face of the world

• The small choices we make are a vote thus choosing to buy from a company that pays its workers poorly, adopts anti-labour practices is a vote in favor of such practices.
• Symbols of loyalty should include your fellow citizens rather than exclude them.

5. Remember Professional Ethics

• There is no such thing as "just following orders".

6. Be wary of paramilitaries

• In a democracy, it is kind of implicit that only the state can use violence/force legitimately. Because if others could also use it legitimately then there would be no peace.

7. Be reflective if you must be armed

8. Stand out

• People often blindly follow orders because they often do not want to stand out.

9. Be kind to our language

• Watching TV is like looking at someone who is also looking at a picture.
• Read books.

10. Investigate

• Support Print Journalism as the internet is full of quantity but lacks quality.
• It is odd that we pay for a plumber or a mechanic but demand our news for free.
• Journalism is hard.

11. Make eye-contact & small-talk

• Helps to know people you can trust.

12. Practice corporal politics.

• Make friends across stratas of society;
• Support their cause so if and when the need arises - they will consider supporting you.

13. Establish a private life.

• Use less internet
• Words written in one situation make sense only in that context.

14. Contribute to good causes

15. Learn from peers in other countries

16. Listen for dangerous words

17. Be calm when the unthinkable arrives

• Tyrants will use it to change the status quo
• Suspend rights and habeas-corpus.

18. Be a patriot.

• Nationalist -> encourages us to be our worst and then tells us we are the best.
• Patriot -> Wants us to be the best of ourselves.

19. Be as courageous as you can.

20. Believe in truth

 

Improving Decision Making

Ever since I listened to this podcast with Maria Konnikova, I had decided to read both Annie Duke's book Thinking In Bets and her book The Biggest Bluff. As someone who is not a huge fan of Poker - I was very much sold on the premise of the books - decision making and how the game of Poker involves a lot of decision making. The story of both Annie Duke and Maria Konnikova is similar and fascinating - both hadn't ever played poker before turning a pro and winning some money at poker tournaments.

Since I read both books back-to-back - yes some of the stuff was repetitive but it helped solidify my understanding of the decision making process, the biases that come in the way and the debate of skill v/s chance. This is my distillation of learnings of it on how to improve our decision making. 

Similarity between life and poker

• Both authors spent a lot of time establishing how life is more like poker instead of the common belief - chess. Chess is rigid, mathematical with every move calculated however poker has lots of unknown sets of info - much like life.
  
  
• We need to get comfortable with uncertainty! Both in life and in poker - you would almost never have the full set of information. Get comfortable with it.
  
  
• Both authors were influenced by John Von Neumann
  
  
• Casinos are designed to make a play on people's psyche.
  
  
  
  
  

Beliefs & Biases

• People cling on to their beliefs strongly once it has lodged in their mental psyche.
  
  
• It should be no surprise then that the smarter you are - the more skillful you are to create a narrative around anything to support your beliefs. It means being smart doesn't mean you don't have any biases - rather it means you have bigger blindspots.
  
  
• It is very important - as we only get exposed to the info we have been info we have been exposed to, only live experiences we have experienced and can only think of hypotheses we can conceive of.
  It is incredibly helpful to find reasons why our theories can be wrong as it's sometimes beyond us to think of them - so very valuable to have someone talk us through them.
  
  
• It is for the same reason nowadays we have security exercises happen through red team v/s blue team format. We cannot know the truth without hearing the other side.
  
  
• Thus, avoid group-think. Stay away from echo-chambers. Welcome diversity of opinions and thoughts to challenge your beliefs and biases.
  
  
• Lot of people never take the proverbial Red Pill- they are always living in their own false narrative of the world and the reasons why things happen.
  
  
• Knowing about a bias, doesn't mean you would not exhibit it.
  
  
• If you are lucky enough to have a good set of friends to bounce around your ideas that's a great tool to hone your skills. Two to disagree and one to referee.
  
  
• To extend the above point - free press and free speech ensures that information, points in favor and counter to it reach the public. Yes, sometimes it gets messy but there is no better way to ensure this happens. I felt what Annie Duke said here is quite powerful in a socio-political context -
  

  The government serves the people, so the people own the data and have a right to have the data shared with them.

• I learnt of a new concept Rashomon Effect i.e - one event can have two different accounts. Thus, we cannot rely on any one person to provide the full and objective account of anything. The reasons why so - biases, narratives, blindspots. Get the idea?
  
  
• As a result, more info helps one to arrive at an accurate decision.
  
  
• How do you gather more info - by being open-minded.

  It is easier said than done - as our biases come into the picture. Imagine if we hear an account from someone we like v/s hearing an account from someone we don't like told us the same story. 

  
  
• John Stuart Mill said it best - the only way to gain knowledge is to examine every variety of opinion.
  
  

Decisions & Outcomes

• Often we confuse bad results as a consequence of bad decisions which is definitely not true. Bad Results != Bad Decisions.
  
  
• Every decision we take can be understood as a bet - which is based on our beliefs. Thus, the better accurate our beliefs are, the better the foundation of bets we make.
  
  
• We humans are terrible at quantifying the role of luck so we comfort ourselves by overlooking its importance.
  
  
• By improving decision quality we increase our chances of a good outcome, not guarantee them.
  
  
• It matters how we got there. Outcomes are path dependent.
  
  
• In the moment emotions affect the quality of decisions we make in those moments. In poker world it is called tilt. 
  
  
• Bad outcomes specially have an impact on our decision making going forward - making it likely that we would take irrational, emotionally charged decisions.
  
  
• To be rational - take the longview always.
  
  
• To keep one honest - a good idea is to keep a decision swear jar and do scenario planning. Infact, planning for bad scenarios increases one's chances of success.
  
  
• There are certain techniques called like Backcasting - Walking back from a positive outcome from the future; and Negative visualization - thinking about things that can go wrong makes it more likely to achieve goals as fear is a strong driver.
  
  
• Sometimes it helps if it so happens you are the last person to act - it is the best situation to be in as you have the most info to make a decision.
  
  
• In many cases, future outcomes are completely independent of the past but the human mind sometimes misses this fact.
  
  
• This is where the personal belief system comes in the picture - called locus of control. When something happens in the external environment, is it due to our actions (skill) or some outside factor(chance)?
  
  
• People who have an internal locus of control tend to think they affect outcomes, often more than they actually do! 
  People who have an external locus of control tend to think what they do doesn't matter too much, events will be what they will be. 
  
  
• People with internal locus - are more successful, mentally healthier and have more control over their fate so to speak.
  People with external locus - are more prone to depression and have a careless attitude.
  
  Kind of makes sense now.
  
  
• This leads to another point which both authors emphatically said - do not dwell on bad beats aka do not dwell on things when outcome is not in your favor. It is a bad mental habit. 
  
  
• Negativity can be a luck dampener. 
  Positivity can be a luck amplifier.
  
  
• Clarity of language = Clarity of thought
  So, be careful of what you tell yourself. 
  
  
• Do not pontificate on what would have/could have/should have happened!
  
  
• As the title of the podcast linked earlier says - Less Certainty, More Inquiry. It is very important to not be strongly tied to our opinion and always acknowledge room for uncertainty. Rather than saying - "You're wrong!" - better engage by saying - Are you sure about that? Or Have you considered this other way of thinking about it? And also avoid the word BUT as it is a denial and repudiation of what came before. 
  
  Yes, sounds a lot of words but our mind is easily molded by the words we say so we need to watch out.
  
  
• If you did all you could, do not think about chance. As inevitably, variance will go your way and things will eventually even out.
  
  
• Since there is always so much focus on luck - I liked how Maria K explains it.  
  

  In everything, stability and support are important components in success. In their absence, there's that much more to overcome, that many more obstacles that need to be moved before you're on the same level as the next person who is fortunate. 

• There's this good quote - 
  

  Choice of attention - to pay attention to this and ignore that - is to the inner life what choice of action is to the outer. In both cases man is responsible for his choice and must accept the consequences.

• The point being - there is a cost of being not in the moment and missing out on subtle cues.
  
  
• And also this:
  

  I must pay tribute to that powerful but capricious lady, Chance, who chose to bestow her beneficence on my personal life even though I spent much of my mathematical life trying to prove she does not really exist. 

  - Mark Kac, Enigmas of Chance 1985

   

• Also, worth noting is that it is sometimes useful to know when let go of things or stop trying. No easy way to decide but just knowing that it is okay to stop when you feel you have given it your all.
  
  
• To conclude, as goes the title of the book "The Biggest Bluff" - the biggest bluff is we believe our skills enough to carry the day even though luck is stacked against us and we do not know and still keep on trying!