Mental Models, Chow Yong Han, Page 11

Persevere for nonlinear effects

(Extracted from Fooled by Randomness by Nassim Taleb) Our brain is not cut out for nonlinearities. People think that if, say, two variables are causally linked, then a steady input in one variable should always...

September 15, 2019| Investing, Nonlinearity Read More

We can’t move away from suboptimal QWERTY

(Extracted from Fooled by Randomness by Nassim Taleb) The arrangement of the letters on a typewriter is an example of the success of the least deserving method. For our typewriters have the order of the letters on...

September 15, 2019| Path Dependence, Structure drives behaviour Read More

Curious incident of the dog in the night-time

(Extracted from The Adventure of Silver Blaze on Wikipedia) Gregory: “Is there any other point to which you would wish to draw my attention?” Holmes: “To the curious incident of the dog in the night-time.”...

September 15, 2019| Inversion Read More

Luck alone can create successful fund managers

(Extracted from Fooled by Randomness by Nassim Taleb) We create a cohort that is composed exclusively of incompetent managers. We will define an incompetent manager as someone who has a negative expected return,...

September 15, 2019| Investing, Randomness Read More

Luck factor increases with sample size

(Excerpt from Fooled by Randomness by Nassim Taleb) The initial sample size matters greatly. If there are five monkeys in the game, I would be rather impressed with the Iliad writer, to the point of suspecting him to...

September 14, 2019| Investing, Randomness, Survivorship Bias Read More

Practise and master one kick

“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” Bruce Lee...

September 9, 2019| Focus Read More

Mild success by hard work. Wild success by luck.

(Extracted from Fooled by Randomness by Nassim Taleb) Nero believes that risk-conscious hard work and discipline can lead someone to achieve a comfortable life with a very high probability. Beyond that, it is all...

September 8, 2019| Life, Randomness Read More

Changing your strategy or be patient?

(Excerpt from The Laws of Investing by Morgan Housel) Benjamin Graham published several editions of his book The Intelligent Investor, with each new edition swapping out old formulas for new ones that worked. This...

September 8, 2019| Investing, Randomness Read More

Barbell Strategy

(Extracted from Antifragile by Nassim Taleb) If you put 90 percent of your funds in boring cash (assuming you are protected from inflation) or something called a “numeraire repository of value,” and 10 percent...

September 8, 2019| Investing, Nonlinearity Read More

Largest positions are the ones you don’t lose

My largest positions are not the ones I think I’m going to make the most money from. My largest positions are the ones I don’t think I’m going to lose money in. Joel Greenblatt...

September 8, 2019| Inversion, Investing Read More