"Uncertainty is the only certainty there is. And knowing how to live with insecurity is the only security.” — John Allen Paulos Uncertainty causes anxiety and fear . And these emotions may lead to displaced anger and poor judgment. What should we do when we face uncertain odds in the near future? “You shouldn’t give circumstances the power to rouse anger, for they don’t care at all.” — Euripides What if we re-interpret the uncertainty? What if in uncertainty, lie opportunity? After all risk and luck are two sides of the same coin. Win or lose, uncertainty enables us to learn. “The difference between predictions and outcomes is the key to understanding a strange property of learning: if you’re predicting perfectly, your brain doesn’t need to change further… Changes in the brain happen only when there’s a difference between what was expected and what actually happens." (emphasis mine) — David Eagleman So when we predict the future and the predictions turn out to be wrong, we ...

There are two modes of habit change: 1. Obsessive focus on a single goal or a set of goals. See this interesting article: https://lifemathmoney.com/get-obsessed-or-get-nowhere-moderation-is-for-cowards/ . This is the approach movies often depict as the secret to success. See "Julie and Julia" or "Jiro Dreams of Sushi". 2. Small improvements over your lifetime. Get 1% better every week, or perhaps even every day. See the book "Atomic Habits" by James Clear. Both approaches have their pros and cons. I find the latter more persuasive as it focuses on the process rather than explicit goals. Food for thought: “Objective judgement, now, at this very moment.  Unselfish action, now, at this very moment.  Willing acceptance — now, at this very moment — of all external events.  That’s all you need.” — Marcus Aurelius

1. Do a series of short exercises every day. Doesn't have to be long. Even 15–30 minutes of walks every day could be transformative. Do body weight exercises (squats, pushups, pullups), if it works for you. 2. 10 minutes of meditation every day (perhaps first thing in the morning). Use an app for guided meditation: Headspace, Calm, or Waking Up (I use the latter). 3. When writing, read aloud after first draft. Edit for flow. 4. Don't take criticism from someone you wouldn't take advice from. 5. Design your environment for success. Arrange your workplace the day before. 6. If you need a tool, buy the cheapest one or the easiest one to find. If you end up using it extensively, then buy the best one. Another one I like is: frugality about things you don't care about, lavishness on things dear to you (hat tip to Ramit Sethi ). 7. Decide a reset (for example a 5 minute walk or a breathing exercise). Use it every 30 min or every hour, while writing.

Success = talent + strategy (systems) + tactics (effort) + luck. And maybe a dash of apparent stupidity or stubbornness. Goals are important, as they provide clarity of ideas, strength of conviction, and direction of effort. We can use our goals to decide what not to do. In physics, we distinguish between speed and velocity. The former is undirected motion, the latter is directed. Before taking on a project we need to ask, we need to be clear why we want to do it, how to do it, and what specifics would be involved (the sequence is important). At the goal-setting stage, we need to broaden our scope. Perhaps start by asking if failure wasn't a factor, what would we like to do. Then the expansive thinking must be followed by directed effort. This is where habits become important. Start small (what if you make it very easy in the beginning?), keep records, use a commitment device. Perfectionism is a cop-out — regular effort beats waiting for inspiration. I do believe there is a role of...

“Anything you experience is so much more vivid than if you’re just told about it.” — Daniel Kahneman “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.” ― Otto von Bismarck How do we learn from mistakes of others and those we make ourselves? The first we can perhaps best do by reading widely and incisively. The second is a bit trickier. Perhaps there is role of mindfulness or similar practices to identify our harmful habits and stop making same mistakes over and over again. Systems first, goals later.

It's a simplification, but approximately on a neurological level, the messenger molecule dopamine is motivation. We respond to incentives (hence the field of economics). Thus if we want to change habits or build new ones, we need to design incentives properly. The same core group of neurons in our brain that enable learning, also encodes motivation. Changes in the level of the neurotransmitter dopamine affects our learning ability. We are reward-seeking creatures, and dopamine is the messenger of reward. When this system goes haywire, it can lead to addictive loops of behavior. Our goal, of course, is to hack the system to our advantage, to learn new things. We need positive feedback loops. For enabling new habits without resorting to sticks/carrots, we need to (a) have regular reminders, (b) ma ke new habits short and easy, and (c) journal our progress diligently. The last step will help our motivation, as we can do hard work as long as we know that we are on the right track. “Wh...

“… the race is not to the swift, nor the battle to the strong…” -- Ecclesiastes “It may be that the race is not always to the swift, nor the battle to the strong — but that’s the way to bet.” — Hugh E. Keough (sometimes attributed to Damon Runyon) Between 218 BC and 216 BC, Hannibal of Carthage defeated one of the greatest armies — that of the Roman Republic — in not one but three decisive battles. Battles of the Trebia, Lake Trasimene, and Cannae were so shrewdly won by Hannibal against such great odds, some of the tactics employed by him are studied to this day. But Rome didn't capitulate. Romans decided to bide their time until their advantages of resources ultimately turned the wind of the war. Hannibal was soundly defeated 15 years later not on Roman soil but at Carthaginian battlefield. Sometimes resilience is the difference between ruin and survival.

My goal for this year has been to write every day. Could be technical/scientific writing, or blog posts like the one you are reading now. I have been using the following steps to write faster and more persuasively. I urge you to give these a try and build your own habits. What you do regularly is who you are. Four steps: (i) Block off 2 hours each day (no distractions, no commitments, put it one the calendar), (ii) Get a piece of music on loop and put on your headphone, write for 25 min (no editing) only using a note-taking app (I use Evernote) for notes (no web browsing), (iii) Mild exercise or walking for 5 min, repeat (i–iii) 3 times, I use Toggl Desktop for this 25-5 pomodoro-type time-tracking. (iv) Edit your prose for grammar and flow, read aloud if you prefer. Reduce the variables, build a habit, win the day.

We learn by copying. A baby learns to talk by listening to their parents and trying to emulate their tone and the sounds they make. Even in our adulthood, we often judge our success by comparing ourselves to our peers. What we watch, what we read, what we listen to, all depend to some extent on our family members or our friends. It's no wonder that's hows bubbles form in markets. People buy certain stocks, gold, or houses, not only due to their value, but also due to simple herd behavior. And it works, some of the time. That's how asset values sometimes balloon out of proportions. But these inflations are very sensitive to outside shocks. Once the spell is broken, everyone joins a mad stampede to get out and the prices of the assets drop like a rock. This happened to the price of houses in 2008 (in the US) and the price to gold in 2011. The implication for us is to lead our lives according to predetermined principles, and minimize following our peers all the time. Otherwise...

There is this common template for a nightmare. You are late to class. Everyone in your class is writing something. You freeze. You realize that there was a test scheduled for this period. And you forgot. Now you have to take a test completely unprepared. You sweat. You wake up. It actually feels good that at least the real world isn't as scary. Variation of this nightmare occurs to almost all of us, even when you are long past the age for taking a test in a class. Which other irrational fears are we carrying with us into the adulthood?

I like to point out, from time to time, the importance of saving and investing. What if we invert this question? 1. When is not a good time to save? 2. When is it enough? Inversion is a favorite mental hacks of the great investor Charlie Munger. The first one is easy. When you face an emergency, or have a great opportunity to spend your money on someone/something you love, you should do stop saving temporarily. The second one is trickier. This relevant for your retirement — this is the time you can stop saving permanently. Let's say your annual expenditure is X. This, of course, is different from your annual income. If you have accumulated 25X in equity funds, 1X in cash, 1X in debt/liquid funds, and 1X in gold, you can stop saving. You're set. The goal is to withdraw 4% from the equity fund each year (adjust for inflation as you go along). Generally speaking, this amount (1X) would be compensated by appreciation of the equity markets. You can't do this when the stocks drop...

How do we see the world around us? It's easy to give in to the illusion that we see the world as it actually is. However, even rudimentary knowledge of neuroscience and behavioral psychology would tell you that it's a lie. For one thing, our sensory inputs are limited. There are animals that can see ultraviolet radiation. You can't. Apart from your literal sensory inputs, what you read, what you watch, who you interact with, influence your worldview. These subjective experiences make us unique, but also make us vulnerable to biases. There are two obvious ways we perceive the world in an inaccurate (but still somewhat useful) way. "The filter" is the part of the world even makes an impression on your brain. Just like you don't see your nose all the time, even though it's literally in front of you 24/7, we filter out enormous amount of information before us. This is a necessity. Our brains are amazing, but the world is too vast. Our sensory inputs are noisy....

If you write (say in MS Word) or prepare presentation slides (in MS Powerpoint or Keynote), you need to choose a set of functional and pleasing fonts (technically we should refer to these families as typefaces, but most people refer to them as fonts anyway). Here are the ones that I like. All of these are available in macOS Catalina or in Google Fonts. Versatile Fonts: You can't really go wrong with these. You can use them in body copy, Headers, or as display types. Avenir (my favorite), Helvetica (the world's favorite), Proxima Nova. Fonts for Long Written Sections: Palatino, Charter, Garamond, Baskerville. Fonts for Heading/Display: Futura, Gill Sans, Open Sans, Lato, Founder's Grotesk, Didot, Bodoni. For presentation slides, it may be worth sticking to sans serif fonts, as they are easier to read from a distance. I prefer Avenir. For spreadsheets, we should stick to fonts that have clear representation of numbers. Goldman Sachs recently made their own typeface for numb...

How does a pot of water boil? How does a viral disease become a pandemic? How do some social media posts go viral? How do empires fall? How does anything change? Let’s introduce three concepts: (a) nucleation, (b) non-linearity, and (c) phase change. Nucleation is the gathering of right conditions for a system to change. You can keep a cup of water in the freezer and it may remain liquid even below 0°C ( a metastable system ). But take it out and throw in a spec of ice, and the whole cup of water freezes. That spec of ice is the nucleus around which water molecules can gather and crystallize. This is why — in the right conditions — small protests can lead to massive uprisings in societies. Non-linearity refers to the fact when things start to change, it can happen suddenly, even exponentially. This why the spread of pandemics always surprises decision-makers. Phase change is a systematic change for the long-term. Systems find new equilibria after a phase change — simply removing the in...

A major cause of anxiety in our lives is the uncertainty we all face in the future. There are certain possibilities that we can predict and prepare for. Known risks, so to say. However, fear of uncertainty is most severe where the possible distribution of outcomes is unknown or hidden (HT: Barry Ritholtz, Michael Mauboussin). Unknown unknowns , so to say. Why does the latter produce so much anxiety in some people? First, imperfect information makes prediction hard. Second, left to their own devices, systems become more random with time (related to the concept of entropy). We seek to impose order onto a world prone to disorder. Finally, many systems are metastable. That is, they should not be stable under given conditions, but somehow manage to stay unchanged. Think a precariously made house of cards. Smallest changes in the environment can bring down metastable systems. The weakness of these constructs may not be evident to people that depend on it. Perhaps the financial crisis of 2008...

The Sanskrit word for one is eka. Dmitri Ivanovich Mendeleev found a pattern when he was writing his textbook "Principles of Chemistry" — the properties of chemical elements seemed to repeat in the order of their atomic weight. He proposed a periodic table that arranged the elements according to their atomic weight and their chemical properties. It remains the best distillation of chemical properties of the elements — a tour de force. But Mendeleev had a problem. It was the second half of the nineteenth century, and many of the elements were not even discovered! How do you place something in the table that hasn't even been found? For example, there was a spot below the element Silicon in the table that didn't seem to fit a known element. Rather than trying to fill in the blank space, he put a placeholder: Ekasilicon. How do we act in a world of imperfect information? When we try to construct a mental model, pattern recognition may help us, but overfitting can lead us ...

The easiest person you can fool, as they say, is yourself.Here are some of the stupid games people play with debt: (a) consolidate debt, (c) open new "low interest" credit card to pay other credit cards, and (c) get long-term car loan. If you don't want to win stupid prizes, don't play these stupid games. Treat debt as an emergency and and go full-tilt to get rid of it. Either choose high interest loans first, or the smallest ones first, and systematically pay off all your debt. There are only two types of debt I'm comfortable with: (a) a house with a fixed 15 year mortgage with 40% downpayment, and (b) a low-limit credit card that you'll use only to pay monthly utilities (automate monthly utility billing online, and schedule monthly full payment on the credit card from your bank account). The latter is a dangerous tool, so treat it with respect. It's true that it will help you build your credit history, but carried over credit card debt is high interest a...

We are suckers for stories. Once in a while, a set of facts challenge our worldview. But our brain really tries to fit into the neat story that we tell ourselves. The world is messy, and sometimes stochasticity thwarts even the best laid plans. It's extremely hard to do — but I believe people who excel in developing new ideas actively seek out information that clashes with their mental models. If you can't perceive change, you can't adapt. Skepticism of neat stories is a great shield against herd behavior. And we all know herd behavior is responsible for the success of all scams.

There is an intriguing dilemma in striving for excellence. Often we don't know what we are truly great at unless we try it, but even then it takes thousands of hours to be excellent in a field. There is thus a downside in focusing all your attention on a single topic or field. You can get trapped in a vocation you are good at but can never become great at. We need to develop a search algorithm for our career and intellectual life. Paths not taken, etc. etc. My solution is to choose a core area and focus of excellence. At the same time, we need to find two or three areas we can achieve competence. Trying to be good enough gives you an opportunity to find your groove. Hard work alone is not sufficient. Once you find the area where you achieve the most for your efforts, competence will lead to excellence, just by the virtue of compounding of knowledge over your lifetime. In a way this is not so different from diversifying your financial portfolio or appreciating the importance of sl...

Efficiency rules. We try to optimize our schedule, our happiness, the value we get for our spending, and so on. Efficiency means getting the best bang for your buck, not wasting a minute of your life, etc. etc. But there is a downside to a maximally efficient system. It's less resilient. It can crumble when things turn sour. There's an inherent trade-off between efficiency and resilience. You need buffers to protect against volatility and unforeseen risks . This is why I advocate allocating at least 30% of you portfolio in liquid assets, even at the cost of a greater return.