In Part 1, I discussed the importance of incentives as explained in the book.
Today, I will highlight some key concepts from the book and how I have applied them to my life.
Data and Noise
"A very rarely discussed property of data: it is toxic in large quantities—even in moderate quantities."
Reading the newspaper everyday? You could be spending your time better. Why is the newspaper the exact same size (give or take a page or two) every day? On some days, more news happens than others, so a newspaper should reflect that. Somedays it could only be 1 page and others upwards of 100 pages.
As for books, use the test of time in choosing what to read. The logic is that time filters out the crap. So it's not that old books are inherently better, but only the best have survived.
A book that has been around for 50 years is more likely to continue in circulation in 10 years than a recent "bestseller".
Application: I will continue to not read the newspaper, nor will I watch the news*. As a guideline for reading books, the majority of my reading will be classic texts (at least 50 years old) or well-researched recent books that discuss history.
Most importantly, will go on technology fasts and try to limit aimless web surfing as much as possible. I will not send "text messages" in a restaurant.
Fighting that "connectivity" feeling has been a constant, worthwhile battle.
*The news is not just noise, but biased and controlled noise, making it even worse.
"What a tourist is in relation to an adventurer, or a flâneur, touristification is to life; it consists in converting activities, and not just travel, into the equivalent of a script like those followed by actors."
A word created by Taleb, describing the boring, mechanical routines we fall into. For example, always eating 3 balanced meals, strict planning of a 2 week vacation, or a career in a cubicle.
Application: Intermittent fasting (have done it on 2 days so far and feels great). When traveling alone, maximize randomness without pressure to visit any landmark or unnecessarily plan ahead.
Phenomenology vs Theories
"What scientists call phenomenology is the observation of an empirical regularity without a visible theory for it."
We try to fit the complicated world into theories. Many of these theories turn out to be completely wrong. We are reluctant to admit our lack of understanding of our complex, non-linear world. So phenomenology is looked down upon by many.
As a whole, we are way too confident in theories that try to interpret history and data to fit them.
One problem that you will find in many theories or ideas is that they rely on lack of evidence as proof. Remember: absence of evidence is not evidence of absence.
It needs to be repeated, in caps: ABSENCE OF EVIDENCE IS NOT EVIDENCE OF ABSENCE.
Application: I accept the complexity of the world and will not pretend to know more than I do. It is quite dangerous to think/live that way. I am very skeptical to junk science and any theories outside of physics.
I am not afraid to take action based on phenomenology; things that I can't explain, but empirically work. I don't need theories.
Optionality, Risk ,and Profit Margin
"Like Britain in the Industrial Revolution, America’s asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms of trial and error, with no comparative shame in failing, starting again, and repeating failure."
A lot of supposed innovation, like the industrial revolution or medical/technological discoveries, are explained to us as an organized, academic, research-based event. In reality, the discoveries are usually a messy series of trial and error from tinkerers/technologists who randomly stumbled upon them.
Related to optionality is the true understanding of risk. We look at how much money can be made first without addressing the most important question: what is the downside risk? Could I lose everything, or just a small portion of my assets/health?
Without considering and limiting risk, you are fragile.
Application: I need to rely less on
logic prediction and more on optionality. I see an opportunity in business and look for a low-risk, high-upside exposure. Continued risks will eventually pay off.
On a personal level, I know what to avoid: refined sugar, cigarettes, and a sedentary lifestyle.
In conclusion, I will take part in low-risk high upside ventures, read the classics, and avoid toxic information and activities, and embrace the randomness of the world.
Readers, please comment with your own applications!!