söndag 12 oktober 2014

Lateral living

This post explores three main topics. First, when to be part of a group and when to be an individual. Second, how to oscillate between extremes to get the most out of life. Third, it has something to say about growing in small increments but consistently. The post is a bit messy and repetitious but the basic take-aways are:

  • The crowd is right sometimes, even in investments, but you have to be of a contrarian nature to know when
  • Live laterally (try a lot of different things and combinations) for better odds at success and happiness (and knowing yourself), even when you have found your long term strategy and chosen area of focus in life
  • Take one (small) step at a time, reflect and adapt

Life is a paradox that has to be lived

social or individual
strategy , persistence and focus or explore
bic picture or details
success or happiness
order or entropy

Go with the herd or go it alone?

Safety in numbers or lone wolf?

Conventional or Contrarian?

One of the eternal questions is the one about individualism; When is it best to blaze the trail, and when should you just fit in?

As a social animal, humans feel comfortable in the crowd. The crowd is a good thing when crossing a crocodile infested river or grazing the savannah. As a predator it is sometimes better to hunt alone, e.g., when staking prey, investing or competing in sports. Group behaviour is particlarly adequate when aiming for good enough or a basic level of safety. Individualism is better suited for exceptional results, for a broader spectrum of possible outcomes including when failure is okay, perhaps when failure or even death is better than mediocrity.

So, how do you know when to apply the one method or the other?
-You don't. Period. The rest of the post elaborates on how to asymptotically get closer to an answer by exploring the world and yourself by visiting extremes and contrasts in a reality made up of all shades of gray.

Which "triangle" picture is the most interesting to you of the following?

Life takes place in the grey, between black and white, between perfect order and total chaos. It takes intelligence and effort and a certain type of discipline to move between focus on the details and a more comprehensive bird's eye view, between consistency and variation, between focus and holistic approach. Life isn't black or white; it is both and it is the contrast between the two.

Don't go head over heels for a life-long strategy or force consistency in an area you know nothing about and not even your own preferences (yet). You have to try, try hard, but be open about your ignorance and know when to fail, give up and restart.

What I am trying to say is that unless you have perfect knowledge about yourself and the world, you can't (shouldn't) decide beforehand what to do for the rest of your life. You have to do some trial and, most likely, error first.

Don't lay down a strategy of consistency and just stick to it. You can't decide to be chaotic and unpredictable forever (what if you don't like it in the future). You can't decide to always be contrarian (the crowd is perfectly right at least as often as a stopped clock), nor always conventional (when the crowd is wrong, it is often devastatingly wrong).

As Joe reminded me of in the comments to SGM's recent post about how to think like an investor, not even a simple thing like physical fitness is easy to plan, due to lack of perfect information. I suggested he simply try a basic approach first:

Just wear yourself out; get sweaty and exhausted. Anyway you like, that you think makes sense, probably running and lifting things in various ways. perhaps throwing some stuff around as well. There is no need to be overly creative or experimenting; just do what others do. The focus should be on getting tired - both from aerobic (running) and anaerobic (short-term, explosive, muscle) exercise.

Then, in a couple of months, we can talk about specifics. First walk, then jog, then run, then do pushups, jumps and chin-ups, then do free weights - first basics and then more specific exercises. If you are reasonably fit you can of course do everything at once even in the beginning. The goal is to get a feel for what you like, increase your proprioception and reach a basic level of fitness to progress from.. During the initial stages of your workout career, you will probably cycle your goals between wanting to be:

  • Fit
  • Strong
  • Big
  • Defined
  • All-round
  • Agile
  • Fast
  • Impressive
  • Functional
  • Disproportionate arms
  • Six-pack abs
  • Bendy
  • Dangerous
  • Healthy
  • Happy
  • Calm
  • Focused
  • Lateralized
You see why it would be hubris to pin down one of them as your only goal before even beginning.

You could assign the above to just three categories: Aesthetics, Functionality or Health, but specifics like "good looking", "impressive", "attractive", "defined", "big" etc., within the Aesthetics category for example, are helpful when setting later stage targets. How to achieve the items on the above list calls for its own post, probably a long series of posts. Hence I'll leave it for now.

The important take-away here is that you shouldn't carve your target, strategy or methods in stone, but rather go for a half-systematic trial and error goal seek model, since 1) you don't know what you want or what you will want, 2) you don't know how to get there; which method is the best, 3) no one method is probably the best but a variation and combination, a cycling of approaches, 4) unfortunately you'll have to get used to living with uncertainty and changes - sometimes consistency an patience is called for - for a while - and sometimes flip-flopping between approaches to find what is working, is needed.

The incredibly deep book Gödel Escher Bach deals with the topic of recursion, self-reference, in mathematics, music and tricky-perspective pictures. It has a lot to say about the ability of combining various disciplines, about repeating patterns, about pattern recognition per se, about intelligence, about the limits of formal systems, about perspective, about top-down and bottom-up approaches. To me it manifests the importance of iterating between extremes to understand the complex mix in between that is life and you; Life doesn't take place in the extremes or monotone but a certain application of extremes, of diversity helps, whether looking for risk and excellence or just wanting to do a little better. It all circles back from life in the middle to using moderate extremes to do well in the grey area of life. Life is a mix of black and white or the contrast between them, not just either of them.

The investment crowd is inevitably right sometimes

Ludvig asked me (in the comment to the same post) about investing with the crowd; when and how that can be productive.

The quick and dirty answer (my favoured approach to most things - I hide behind Occam's razor if needed) is that the crowd is inevitably right sometimes, for quite long stretches in time and performance.

When the crowd is right you benefit from understanding that, from investing with it, with the trend, However, you also have to be independent enough to panic before everybody else does; you have to understand when the crowd is gradually leading itself astray, like a flock of birds following a magnetic anomaly despite perfectly visible geographic signs below them. Then you have to be prepared to leave the cozy feeling of patting each others' backs, telling one another how smart you are. But not before.

When you eventually leave the crowd, you'll be ridiculed, maybe even threatened, but I guess you are prepared for that. Your problem is the opposite; how to stand doing what everybody else is doing, when every contrarian fibre in your body is calling out for doing the opposite of whatever it is everybody else is doing.

Just remember this: first a few lone contrarian wolves and risk seekers buy around the bottom. Gradually others latch on, after a while more and more pile on to what is becoming the trend. Soon a majority (the crowd) is singing the market gospel, be it for houses, stocks, bonds or gold, other commodities or what have you. At this point the crowd can very well be right, most often is; stocks may still be cheap, the economy fine, alternatives poor or scarce. Not least, the market may have quite far to run, since everybody is not yet in. Then it is "right" to be with the crowd. However, when the gap closes between "majority" and everybody (and their dogs too, and mothers-in-law; extremely bad call though), including the last bears throwing in the towel, and the last fools desperately catch the bull market's final euphoric spasms, you need to get out unless you hadn't already.

Personally, I always sell* too soon (see this post in August for my private portfolio); when it's risky and expensive but not yet ridiculous. It's part of my personality; I always just go for about half of what can be taken and do it with minimum effort (see my 1/50 rule of efficiency). You, however, might want to take advantage of the momentum of unthinking crowds and trend followers and hang on for longer - perhaps both when chasing the peak and the trough. Riskier yes, but potentially (albeit not necessarily) with higher rewards. You never know when the first air pocket in a bull market will appear, or the first crazy bounce after what turns out to be the final trough. Nota Bene that at this point the greatest risk (and potentially return) has reversed to be running with the crowd.

(*I'll probably buy too soon too the next time round)

Another thing to consider regarding investments is that if you don't know what the crowd is doing or thinking it is difficult to be contrarian. On the other hand, you can get pretty far ignoring the crowd altogheter; sometimes you'll agre, sometimes you'll be on opposite sides. As long as your model works you don't have to care which it is. But, still, you could do even better by knowing your frenemy, knowing the crowd, knowing how to use it. Just don't get too close to it or you'll be sucked in.

Runners need to include interval training, distance training, pulse training, short and long distances, speed play etc. They need variation and consistency, they need exertion and rest, they need to push through the limits but listen to their bodies too.

The investor's world is at least as complicated. Long-term, short-term. Trend and contrarian. What do others think I know about what they know? Valuations? Politics? Alternaives? Financing? Overshooting? Consistency and disciplined patience or tight likewise disciplined stop-losses?

Bodybuilders, strong-men, weight-lifters, competitive athletes all face similarly complex decision and planning challenges. To be a solid top three athlete you can get far by doing what everybody else is doing, just add a little more talent or maybe more or less hours to the mix. A music artist could follow the same recipe, copy what works. But to be exceptional, you need to take more risk, you need to risk not being elite at all, risk total failure. To win in men's high jump Richard Fosbury invented a completely new style. Jan Boklöv did the same in ski jumping. Both were about to be disqualified from their respective sports. Instead they became legends. High risk and high return, but it could have ended in complete failure. High risk means the range of results is bigger and you don't know where you'll end up. However, if you don't risk it, you know you'll be mediocre. Not that there's anything wrong with that.

An artist needs to know what is working in the media and the shops right now. She needs to be immersed in pop culture to stay with the times. Both in order to stand out from the crowd or to make sure she is mainstream. Mainstreaming can make a living but not success, and being embedded in the crowd all but destroys the chances of originality and stardom.

And yet, these guys all already know what they want. You often don't. You are still searching for a purpose, a strategy, a meaning. You might want to want something. You might want to settle down with a long term strategy and hope to learn to like it. It probably works well enough, the brain will make sure you don't end up miserable. As long as you don't fail completely at everything you do, you'll probably even turn out happy - as long as you immersed yourself, adhered to your talents and strengths and did your best at something you could at least tolerate from the beginning. I and SGM have written about that here.

Explore lateral thinking

A refined or alternative solution, a more efficient and robust approach would be to invest a few years in experimenting with who you are (no, I don't mean kissing your same-sex cousin in the shower), what your strengths are, what your desires are, what methods stick more naturally to you. A way of helping you in that process is exploring lateral thinking, exploring (moderate) extremes and diversity. Set fire to your brain synapses by doing unexpected things, crazy combinations, meeting new people (Gina Dirawi, a Swedish TV personality, has a series based on meeting other people to get some perspective on how small her own problems are), and so on.

Walking on the wild side

Lateral process for success

This is how you can find out who you are, what you want, how to do it. This is at least one drop in the holy grail of how to be efficient, finding purpose, being productive and not least happy:

The brain and the body alike thrive on diversity, on novelty, on challenges. In addition, the brain evolved to control the body and predict the environment it is moving around in. Hence the brain and body are intimately linked and develop best in concert - like when walking and thinking, walking and discussing, walking and listening to science podcasts. Sitting on the other hand is the worst thing you can do - it shuts down both the body and the brain and accelerates aging (less brain plasticity, less body mobility and even less plasticity).

It would be very comfortable, albeit possibly boring, if life was just black or white, if you could just choose one path and then be done with it. Now, that is not the case. Life is all possible colors, nuances, shades and hues and you had better embrace it and take advantage of it or succumb to the monotone.

Okay, here it is, the one rule to live by:
Provoke yourself, your brain and your body with lateral thinking. Rather than focusing too much for too long on a single topic, risking suboptimization, mix things up consciously in order to stimulate your creativity and adaptability.

  • Take (cold) contrast showers (circulation, will-power) and hot saunas (testosterone)
  • Sweat, freeze (brown fat)
  • Strain your body during training. Relax and meditate
  • Listen to music you like. Listen to music you don't like. Listen to silence; be mindful, know thyself. Music stimulates your IQ
  • Fast, be hungry. Overeat, aim for hypertrophy
  • Enjoy your food, consider every bite, pick apart the taste components
  • Move, walk (and listen to podcasts about things that interests you and things that are not on your list)
  • Talk to new people. Listen to them.
  • Walk barefoot when you shouldn't (chance encounters, new feeling, new thoughts)

Lateral living is
unequivocably good 

  • Be wet and then dry (walk in the rain and then enjoy a hot coffee and drying yourself)
  • Get drunk and have a hangover, then workout and take a sauna and enjoy getting well again
  • Travel and meet people with other and worse problems than you

You grow more if you socialize with ambitious and succesful people in life, with bigger and stronger people in the gym etc. Then change your crowd when you have reached the top of your group, in order to keep climbing the ladder. On the other hand, intimacy, friendship, gratefulness and consistency are a few of the best things in life. In addition, meeting with less fortunate people increases your own gratitude and happiness. Success and happiness are not perfectly linked, if you are not mindful, they can even be opposite each other. Once again, life is about contrasts and diversity, about (unusual) combinations, not about finding the one answer and method. That includes my one rule about laterality; sometimes you should focus instead and then circle back to controlled diversity and experimenting.

If you are writing a book, looking for new ways to make money, creating a day trading system, looking for a girlfriend, competing in sports, aspiring for the Nobel Prize in Physics... If you are looking for excellency for reaching the next level you have to experiment, combine, look in unexpected places. You need a sufficient experience and knowledge in several different areas. Music, art, sports and math are intimately linked. Logic, rhetoric, sensations and feelings too. You can read way, way more about this in the extremely heavy tome of GödelEscherBach.

I do boring stuff to increase my everyday laterality

The other day I went for a walk before breakfast as I often do. I listened to 4 or 5 podcasts, some of them on science, others about language or politics. When I'm not walking and listening to podcasts I read a lot so digesting new information in audio form stimulates my brain in new ways. In addition, I make it a point to include programs I think might be boring or at least are on topics I don't care much about. They often turn out not to be and I often learn things I didn't know I anted to know about. As an added bonus I often get completely new ideas about completely unrelated areas.

All these ideas tend to just briefly stick in my mind, only to evaporate a minute later, unless I write them down. Luckily, Ludvig inspired me to start using Evernote to keep and organize my ideas. Earlier, I simply remembered what I remembered, but now I have accumulated 100 separate and indispensible notes in less than three weeks. They are organized in 12 different notebooks, while using 70 different labels. And, nota bene, these are the 100 notes that are still relevant; as soon as I have used an idea I erase the note. The funny thing is that I actually downloaded Evernote 6 months before even meeting Ludvig but never used it. That's how good a salesman he is.He could sell sand to beduins and ice to inuits.

The lateral thinking process can be used as a tool for creativity in your chosen area or as a way of knowing yourself, finding out what it is you really want out of life, finding your area. Do a lot of contrasting stuff and novel combinations and be mindful of your reactions and feeling during and after. Ignore what the crowd is doing; what is considered success or requisites for happiness. I can tell you it is not having a penthouse, a Ferrari or a Lamborghini or six pack abs. That's just stuff. Getting there, however, and exploring life and becoming me in the process, not least knowing a sports car isn't happiness in itself, has given me tremendous value.

Said about exploring and lateral thinking:
  • According to this TED talk about children's minds, babies think and behave like scientists; ever curious, with 360 degree attention. That's part of the magic behind learning language by just listening and moving such a complex thing as a human body through a complex world. The drawback is a complete lack of focus. Adults have the opposite characteristics.
  • And this video about teaching and learning, states that 98% of children have genius-level creativity before the uniformity of school wrings it out of them.
  • And, finally, as part of our hiring process at my hedgefund, I had the prospects explain how and why all the physical money in the country would fit in a famous building. The case showed whether the interviewee was level headed and creative, focused, arithmetic but still holistic and had common sense and was able to verify his own work on the fly through quick bird's eye view sanity checks before delving into the details again.

If you desire a sea view, go to a shore
-instead of working your ass off in a basement

As an added bonus lateral living is unequivocably good for you, whether you come to any conclusions or not, any tangible achievements or not. You will be more versatile, fit, intelligent, creative and healthy for it, not to mention probably happy too. It will also slow down the perception of time in retrospect, since the brain records time based on novelty. People who say time passes by faster and faster are simply drowning themselves in routines, creating the feeling of boredom in the now and an ephemeral life in retrospect; the worst of both worlds. Lateral living renders the opposite experience; flow now, and a feeling of a productive and fulfilling life where time has passed at a comfortable pace when looking back.

Joe asked how to know what strategy to commit to, how to be more consistent in working out, e.g. My answer to him is that unless you already know you have to explore that consciously, i.e., DON'T COMMIT TO A STRATEGY (too early).

You have to try different things in different areas, different combinations, while asking yourself what you actually want out of training/life etc. Ludvig at SGM has proposed just picking a way, consistent with your relative strengths and then learn to like it with time, focus, persistence and immersion. I say you should first invest at least a few years in exploring yourself, being mindful of what your natural talents strengths and preferences seem to be. Then you can pick a few and try them out in parallel before settling for one. Be open to change strategy or role models along the way, but be less flippety-floppy about it the older you get - you may not have forever. But never stop exploring contrasts and extremes within your chosen area and never stop trying new, scary or boring things. Live Laterally.

Don't sweat the details before you have the big picture sorted out. Once the supertanker is on its way with some speed, it is extremely costly to change direction. However sometimes it's difficult to discern which is the big picture and which is the focus on details. Is doing mobility exercises big pic stuff or a minute detail? Is correct form when deadlifting an irrelevant detail or a most important big picture factor? What superficially seem like details can contain the bic picture devil - and there is no patented way of telling the difference before you have tried.

So, try, but be at least a little careful and don't burn too many unnecessary bridges. Don't buy put options for your entire net worth. Don't risk hurting your back or knees in the gym. Don't do irreversible damage to your health, your finances, your important relations.

Pace yourself. Add just small increments, but do it consistently. Don't aim too high in the short-term, but do set your long-term vision infinitely high if you like. Live life instead of pushing the fast forward button.

Summary: Dare to find out what you like, through trial and error. Try, fail and give up. Then restart, pick yourself up. And don't judge others when they are trying the same. Don't be a hater. Inquire and learn instead. Embrace diversity, it will make you live longer and make you grow.

Here is an amazing RSA animation about the divided brain, about the broad general right-side awareness of the unknown big picture, and about the laser-like left-side focus on the known task at hand

5 kommentarer:

  1. Great post! What a privilage to get this wisdom for free.

    1. Thanks for reading it. Now do something unexpected, something you've never done before - or at least not for a couple of years. Handstands perhaps?

  2. Excellent article. It perfectly sums up my attitude towards life: all or nothing. Live life to the fullest and maximize experiences.
    -An expert will combines his field of study with other fields of study in order to get a more refined subject.
    -A politician who understands the opposite side will be better at collecting support for his arguments than the politician who doesn't.
    -People who are genetically more diverse are more attractive than people with less diverse characteristics. http://www.cardiff.ac.uk/news/articles/mixed-race-people-perceived-as-more-attractive-4286.html
    Nothing is more stimulating to the brain than novelty.
    Consistency is key, but one could argue taking on more risk until the outcome works out to be a better path. Go big or go home.
    Instead of gradually raising the weight/reps on the bench press until you hit your weight/rep goal, just take on the weight head on until you reach the goal. Instead of doing 255 lbs for 8 reps / 4 sets, do 275 max reps / 3 sets. Gradually, you will gain muscle memory for that weight and as a result your pain tolerance will become adjusted as you actually just face the target weight head on. Kind of like that feeling you get when you shift the weights down on an exercise machine, and you can do more reps than what you would normally do if you kept the weight the same for a fixed number of reps/sets.

    1. Thank you. Good to hear I'm not alone :)

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