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November 1 - November 15, 2020
Understanding and dealing correctly with the trade-off between risk and return is a fundamental, but poorly understood, challenge faced by all gamblers and investors.
In the abstract, life is a mixture of chance and choice. Chance can be thought of as the cards you are dealt in life. Choice is how you play them. I chose to investigate blackjack. As a result, chance offered me a new set of unexpected opportunities.
Since I really had no predictive power, any exit strategy was as good or bad as any other. Like my first mistake, this error was in the way I thought about the problem of when to sell, choosing an irrelevant criterion—the price I paid—rather than focusing on economic fundamentals like whether cash or alternative investments would serve better.
Just as in blackjack, I was willing to share our discoveries with the public for several reasons. Among them was the awareness that sooner or later, others would make the same discoveries, that scientific research ought to be a public good, and that I would continue to have more ideas.
The credit collapse of 2008 was different in kind from the past worst cases for which they tested, and their near-extinction reflects the inadequacy of simply replaying the past.
I think of each hour spent on fitness as one day less that I’ll spend in a hospital.
The lesson of leverage is this: Assume that the worst imaginable outcome will occur and ask whether you can tolerate it.
“Those who cannot remember the past are condemned to repeat it.”
Education builds software for your brain. When you’re born, think of yourself as a computer with a basic operating system and not much else. Learning is like adding programs, big and small, to this computer, from drawing a face to riding a bicycle to reading to mastering calculus. You will use these programs to make your way in the world. Much of what I’ve learned came from schools and teachers. Even more valuable, I learned at an early age to teach myself. This paid off later on because there weren’t any courses in how to beat blackjack, build a computer for roulette, or launch a
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Gambling now is largely a socially corrosive tax on ignorance, draining money from those who cannot afford the losses.
This well-known strategy, called laddering, generally pays off because longer-term US bonds, with more price fluctuation before they mature, generally yield more. Five-year bonds have beaten thirty-day T-bills by about 1.8 percent annually over the last eighty-three years.
Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger.
Politics, once called the art of the possible, is becoming the art of the impossible.
To starve education is to eat our seed corn. No tax today, no technology tomorrow.
She was also one of the rare people known as super-recognizers. She could casually recognize people she’d met decades before, even though they had been transformed—in my opinion often beyond recognition—by age, style, carriage, shape, and size. When most of us remember the past, the memories fade over time and the “facts” may shift closer to the heart’s desire. When it had to do with people, Vivian’s memory was both extraordinarily accurate and unchanging over time.
Life is like reading a novel or running a marathon. It’s not so much about reaching a goal but rather about the journey itself and the experiences along the way.
