19 | Bouncing Back, Obscure PDF’s, and Tyler Cowen

"think about life as being about tradeoffs"


Hey! CbK #19. As always, I’m keen to share what I’ve been reading, learning, and compressing. Shorter issue this week as I’ve been slammed, but first, a quick quote from Sam Altman:

It doesn’t matter how fast you move if it’s in a worthless direction. Picking the right thing to work on is the most important element of productivity and usually almost ignored. So think about it more

Here’s the format of today’s email:

  • Part 1: Bouncing Back

  • Part 2: Obscure PDF’s

  • Part 3: Under the Spotlight: Tyler Cowen

  • Part 4: Bonus Quirky Content - Something to Read, Watch, and Listen.

Bouncing Back

To quote Big Sean “Last night took an L, but tonight I bounce back”. So what’s the process after copping a loss on an investment? Continue and trust the process? Double down? Tear your philosophy down and rebuild? Or D) All of the above?

Stan Druckenmiller [Link]

One of my most important jobs as a money manager was to understand whether I was hot or cold. Life goes in streaks. And like a hitter in baseball, sometimes a money manager is seeing the ball, and sometimes they’re not.

And if you’re managing money, you must know whether you’re cold or hot. And in my opinion, when you’re cold, you should be trying for bunts. You shouldn’t be swinging for the fences. You’ve got to get back into a rhythm.

So that’s pretty much how I operated. If I was down, I had not earned the right to play big.

And obligatory GOAT quote:

You asked me what I learned. I didn't learn anything. I already knew that I wasn't supposed to do that. I was just an emotional basketcase and couldn't help myself. So maybe I learned not to do it again, but I already knew that.

Warren Buffett

Best thing I could really find for old mate Warren was this article “Additional Links: Warren Buffett's Advice on Coping With Stock Market Losses” [Link]. Not great, but that'll do donkey that'll do.

One of the most effective ways to cope with losses within your portfolio is to adopt a long-term time horizon. Your stocks may be making losses at the moment, but they are unrealized losses until they are sold. Therefore, allowing them time to recover may mean that losses are ultimately turned into profits.

The past performance of the U.S. stock market as a whole shows that it has continually experienced declines followed by recoveries. Sometimes, its rebounds can be fairly rapid. However, on other occasions, it can take time for investor sentiment and the prospects for the economy to recover.

Charlie Munger

Meanwhile compared to Buffett, Munger goes straight for the throat:

If you're not willing to react with equanimity to a market price decline of 50 percent or more two or three times a century, you're not fit to be a common shareholder and you deserve the mediocre result you're going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.

Howard Marks

I feel Marks is 100% in the camp of “cop it and continue”:

To succeed at any activity involving the pursuit of gain, we have to be able to withstand the possibility of loss. A goal of avoiding all losses can render success unachievable almost as readily as can the occurrence of too many losses. Here are three examples of “loss prevention strategies” that can lead to failure
- Source: Dare To Be Great Memo

Harry Markowitz

Here’s a nice way to wrap up, just imagine the regret if you made a poor investment and never got back on the horse…

I visualized my grief if the stock market went way up and I wasn't in it – or it went way down and I was completely in it. My intention was to minimize my future regret.

Obscure PDF’s

I keep a full list of obscure PDF’s on my personal site [Link] but thought it might be worthwhile to share and compress some of my favourites.

Peter Lynch's Articles for Worth Magazine from 1993-1999 [Link]

Don't buy "cheap" stocks just because they're cheap. Buy them because the fundamentals are improving.

Cheap doesn’t always equal good. Things can be expensive yet still be of good value and vice versa.

I’ve had a fair few mates reach out to me about crypto lately (fuck knows why cause I never mention crypto). But if I could tattoo this quote on my forehead I would:

In hindsight, it would have been nice to have owned these stocks, but my advice is: If you don't know what it means, don't put money into it.
- Page 67 of the PDF

I feel dumb for having to even say that, but times are weird.

Valve Handbook for New Employees [Link]

More business related, but still a worthwhile read. Biased cause I’m a gaming nut.

Screwing up is a great way to find out that your assumptions were wrong or that your model of the world was a little bit off. As long as you update your model and move forward with a better picture, you’re doing it right. Look for ways to test your beliefs. Never be afraid to run an experiment or to collect more data. It helps to make predictions and anticipate nasty outcomes. Ask yourself “what would I expect to see if I’m right?” Ask yourself “what would I expect to see if I’m wrong?” Then ask yourself “what do I see?” If something totally unexpected happens, try to figure out why. There are still some bad ways to fail. Repeating the same mistake over and over is one. Not listening to customers or peers before or after a failure is another. Never ignore the evidence; particularly when it says you’re wrong.

Good Product Manager Bad Product Manager [Link]

What makes a good product manager? To quote Ruth Langmore “I don't know shit about fuck” in terms of what a product manager really does. But know I now what makes a good one!

Know what you know and what you don't know. A good product manager is acutely aware of what they know and why they know it, as well as what they don't know. A good product manager understands the difference between opinions, hunches, and objective facts. A good product manager knows that their job is to fill in these gaps in knowledge, not to defend or obfuscate them. A good product manager doesn't ruin their credibility by over-stating their knowledge

Under the Spotlight: Tyler Cowen

Each week I provide a little spotlight on an investor or operator I admire.
Tyler Cowen is this weeks focus, in a nutshell:

  • Born in 1962 in New Jersey. His father ‘climbed some kind of career ladder from having been bankrupted at thirty, to being upper, upper middle class, so I caught different parts of that income stream.’

  • Graduated from George Mason University with a Bachelor of Science degree in economics in 1983 and received his PhD in economics from Harvard University in 1987

  • Has authored several bestselling books, hosts a podcast, and has written on his website Marginal Revolution, since 2003.

Tyler Cowen on Tim Ferriss [Link] [Apple Link]

Hell yeah, this is some advice I can get behind. I’m a sucker for some travel.

I think the most efficient way of learning at the margin for most smart people is travel, and I try to travel a lot. 

Love his thoughts on learning another language:

They force you out of your comfort zone. They make you realize what an idiot you are. You’re always learning something. You get windows into how other people think. I sometimes call it cracking cultural codes. Spanish is great, because it opens up a lot of different countries to you. German has some of the most profound writing and music, philosophy and culture, of human history. I wish I knew more. So I envy people who know many languages and people who have traveled to more and different places than I have. They’re the people you should envy.

On what chess taught Tyler:

first it taught me I could win, and second, it taught me I could lose. And those are both very important lessons. And it also taught me I needed to be honest with myself about why I was either winning or losing and that there were real stakes here. So I learned that at age 10, 11 that was a great background. And chess is not forgiving of excuses, right? It cultivates what I now call meta-rationality. And you can’t lie about how well you’re doing, not in the medium term. You have a numerical rating, it’s pretty accurate, right? You win or you lose. You can’t say “The sun got in my eyes” more than once.

And to predict your next question… “What is a meta-rational person?”

A person is being meta-rational when he or she understands how smart or well-informed he or she is in a given topic area. Meta-rationality is very hard to come by in my view, so people typically do not defer to the views of experts when they ought to. Sometimes the expert might be wrong, but if you’re just playing the odds, the expert is probably right. So people are far too confident about too many things they shouldn’t be so confident about. Meta-rational people, who are essentially impossible to find, with the margin, we can be a bit more meta-rational. They know to whom they should defer or how to find out the right answer.

Tyler Cowen on TKP [Link] [Apple Link]

TKP has their transcripts behind a paywall and I’m too buggered to do myself, but here’s some good key takeaways:

Again, apologies for being so brief. 100% cooked it this week.

Bonus Quirky Content

Something to read: David Chang's Unified Theory of Deliciousness [Link]

I think this might be like the third time I’ve mentioned Chang in this newsletter. I just love his style. Remix and refine. And mostly, I find it awesome learning from people who really know their shit. Like really know their shit. I’d love to meet Dave one day. But I bet it’d be a case of never meet you heroes cause he’d think I’m a dickhead (justified).

Different cultures may use different media to express those base patterns—with different ingredients, for instance, depending on what’s available. But they are, at heart, doing the exact same thing. They are fundamentally playing the same music. And if you can recognize that music, you’ll blow people’s minds with a paradox they can taste: the new and the familiar woven together in a strange loop.

Something to watch: Roald Dahl's Writing Routine [Full Link]

Honestly one of my goals is to have a little shack outback like Dahl.

You're very successful what do you still write you don't need to presumably work anymore?

Dahl: I love it. I love it. Yes I don't know what I'd do without having something to work and worry about all day.

Something to listen to: Scott O'Neil on What Got You There [Link] [Apple Link]

If you just think about life as being about tradeoffs and once you understand what’s really critically important to you then decisions become simple

Also, What Got You There has a number of other great episodes that you should check out. I’d recommend Yen Liow’s, Dr. Ceri Evans’, and Blas Moros’.

Rabbit hole/resource to dive into: Sriram Krishnan’s Memos [Link]

The Good Product Manager Bad Product Manager article I spoke about earlier in this issue was from Sriram’s site. Highly recommend reading through his memo collection.

Final thought for the week:

Until next week, have a good one!
- Salami Carrot

You can find previous issues of Curated by Kalani here. I’m on the web at kscarrott.com and on Twitter @scarrottkalani.

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