Wednesday, January 03, 2018

The Art of the Good Life #4 - Black Box Thinking

We're rapidly moving back into our regular programming because I need to put in more effort to complete my training.

The section of black box thinking comes in two parts.

The first part is radical acceptance. You need to accept reality and acknowledge your flops. My investment skills did not grow for a while because I stuck to high yielding stocks and REITS and needed passive income so much that I was unwilling to consider alternative approaches. I have to accept that my performance has been so-so over the years.

Thankfully, back-testing and leverage showed me that there are certainly ways to have high quality growth without sacrificing my income needs.

This can be applied in many other areas in a person's life.

Last year, I finally accepted that one particular bookstore in Singapore does not really deserve my business anymore. I'm not really a cultural person and this bookstore takes a lot of pride in stocking books that I really did not enjoy reading. For years, I patronised the bookstore because I felt that the owner may need some help to pay the rent. After all, why even care about making money when culture is dead, right ? So I bought plenty of shit I would not read or even mention on this blog because that's what money is supposed to do. Preserve beauty.

But supporting culture does not make one a cultural person. At the urging of my distributor, I tried to read one book by a local author I shall not name and I was quite bored by accounts of jet setting types who studied at overseas university and come from elite schools.

The final straw was when the bookstore owner proclaimed on public TV, quite proudly, that he had told customers to get the fuck out of his store. I grew up in retail background and ill treating even a bad customer is not something I think any boss should be proud of, so i decided never to visit that bookstore again unless I really had an explicit book order that only be met by going there.

Well so far, I never felt the need to visit that bookstore ever again.

The second section is black box thinking itself. This comes from the black box installed on airplanes that record every signal sensor that can be used for forensics analysis after a plane crash.

First, we need to acknowledge that we fucked up or are inadequate. Then, we need to system to track where went wrong when we fucked up. If you cannot figure out what went wrong, you are very likely to make that same mistake again. I basically was so obsessed with passive income, I was too willing to ignore total returns and volatility. Only after amassing a more comfortable hoard was I willing to entertain the idea that returns can magnified provided that we also magnified risk and we can artificially inflate yields to improve risk adjusted returns.

Also I am the cultural equivalent of a barbarian.

Some people say that it's not Art unless it is useless.

It is time for me to stop appreciating or doing useless things.


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