Just saw this speech by Tynan. Love this guy’s philosophies.
Everyone knows taking risks is essential to live happily & fulfilled. But sometimes it can be very hard to determine if risk is worth the reward. I loved how Tynan broke down his process to evaluate a risk.
Basically you ask yourself 4 questions:
What is the worst possible scenario?
What is the best possible scenario?
Will I regret not doing it?
Will I regret doing it?
And then determine or guess the probability the best and good enough scenarios. So even if the probability is low but reward is big enough & more importantly regret of not doing it is high, then do it.
I loved how he used this to explain his logic on deciding if buying a school bus was a worthy risk.
Watch the video to really understand this concept & other great concept in it.
Do you know there are two types of learning? Explicit is when you are learning something new by taking instruction. For example, taking tennis lessons, initially you will learn different strokes, when to use them, etc.
At the same time you are learning subconsciously. This is Implicit learning. A different part of your brain is involved in implicit learning. Implicit learning will make tennis your second nature. Only way to learn implicitly is by experience, in other words, by playing a lot of tennis. Once you learn something implicitly, you can turn off thinking while doing it. Or once you gain enough experience in tennis, you will just play, your movements will be smooth & you wont think about which stroke to use .
What really interests me is that when you are under pressure or stress, your brain will turnoff subconscious. So everything you learned subconsciously or implicitly wont be available for you now that you need it most. Your brain cannot afford any mistake, so it goes back to your first tennis lessons. Your brain wants to be in 100% control. Explicit system takes over and you will think about every little detail. For example, playing tennis in a tournament or taking an exam. When this happens most people don’t do well or they choke.
This makes a lot of sense for me at least, because so many times I know this happened me. I used to rock climb indoors all the time but outdoors I couldn’t do the easiest routes. Or I would know every single detail about some technology but during job interviews I would totally mess up. In fact, the more I wanted the job, worse I messed up.
Hopefully, with this information, next time when I choke I could take a deep breath, relax and let my subconscious take over.
Just read Malcolm Gladwell’s article on Nasim Taleb in What the Dog Saw.
It basically talked about 2 different investing strategies & psychology behind them. Most people prefer to win a little everyday even if their investing strategy exposes them to lose everything in a day.
Nasim Taleb has figured out how to make money by losing a little everyday but making a fortunate in a day. He is basically making a bet on the world being a lot more unpredictable than predictable.
I definitely prefer second strategy, sometimes I miss bi-weekly paycheck but mostly I don’t mind losing it for much bigger reward.
