Quote of the week:

“Conventional opinion is the ruin of our souls.” — Rumi

Life lessons from a Wall Street legend

Byron Wien, the prolific writer and veteran investor, passed away this week at 90 years old. At the start of the year, Byron re-published his classic “20 Life Lessons,” a formidable collection of wise insights about life, careers, happiness, and investing, which includes one of my favorite credos: “Evolve. Try to think of your life in phases so you can avoid a burn-out. Do the numbers crunching in the early phase of your career. Try developing concepts later on. Stay at risk throughout the process.”

“Concentrate on finding a big idea that will make an impact on the people you want to influence. The Ten Surprises, which I started doing in 1986, has been a defining product. People all over the world are aware of it and identify me with it. What they seem to like about it is that I put myself at risk by going on record with these events, which I believe are probable and hold myself accountable at year-end. If you want to be successful and live a long, stimulating life, keep yourself at risk intellectually all the time.”

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Triage in business

“When we think of triage,” writes Coleman McCormick, “our minds often drift to the medical definition: the prioritization of patients in an order of treatment that maximizes survival.” In reality, Coleman says, the concept of triage is a skill to be mastered in business and investing, where one’s ability to prioritize information is not just key to long-term survival—but effectively a competitive advantage. 

“In a battlefield, medics are on a mission to minimize the overall casualty count. The need for attention overwhelms the available resources to treat everyone. So, how does the concept of triage apply in the business context? Here I’d adapt the definition slightly: ‘The assigning of priority order to projects on the basis of where funds and other resources can be best used, are most needed, or are most likely to achieve success.’ Most working environments aren’t, of course, as dangerous as a battlefield, but we can apply similar guiding principles.”

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The seduction of pessimism 

I always liked the Nat Friedman quote that while “pessimists sound smart, optimists make money.” Manish Gvalani, a wealth manager and writer of the Pyschology of Investing newsletter, develops this concept a bit further in a recent essay which explores the fundamental human nature that makes pessimists seem so profound—even when they are so often wrong. 

“Historically, markets have witnessed umpteen events such as wars, recessions, riots, WTC bombing, housing crashes, European debt crisis, and in spite of all this chaos, markets still went up 250x from 1950 to 2023. And all of these smart-sounding reasons would have nudged or even forced you out of the markets because that seemed a wiser bet. What seems wise, may have been a very unprofitable bet to make. Staying invested or continuous accumulation of an Index can lead to multiples of your money, as shown below. This is life-changing in so many ways but it doesn’t sound smart, nor does it sound exciting.”

A few more links I enjoyed: 

Lessons from History: The Rise and Fall of the Telecom Bubble – via Fabricated Knowledge
“Unlike in 2000, the pure AI companies of interest today are private or capped profit vehicles. So there’s a loss of visibility because they are private. AI will result in successful companies, but I believe many of the small AI companies of today will fail to make it. Tomorrow’s winners are probably born today, but that’s some time. What I think has the most direct analogy is the capacity building during the telecom bubble and today’s AI infrastructure spending splurge. So let’s talk about it.”
A Transformation Guide: Interview with Devin Martin – via Tom Morgan / Sapient Capital
“Consider on the other hand your average index fund holder. She is free to ignore the vast majority of the ups and downs that an average day offers. She feels secure in long term trends and unbothered by day to day fluctuations because her capital is spread out over hundreds of investments. If one investment performs poorly it isn’t like her whole outlook becomes bleak. Everyone gets this in finance. Few seem to see the correlation to their emotional life. When we get obsessed we become weak. If all one cares about is a single relationship or a single job they become incredibly fragile and incapable of weathering minor fluctuations, setbacks or criticisms. Your well-being becomes too wrapped up in how that job goes, in how that relationship goes. To be healthy and resilient we must spread our emotional capital out.”

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