11 ms·

I’m Just Now Realizing How Stupid We Are

320 points by tokenadult 12y ago

11thEarlOfMar 12y ago
Sadly, none of this would make any sense if I had not already learned it the hard way.
- bradleysmith 12y ago
  I find it funnier than sad. But, I agree with you completely.
- arthurjj 12y ago
  I enjoyed the article but that is a good, if unintentional, criticism of the article.
  - deleted 12y ago
    [deleted]
- TeMPOraL 12y ago
  That is my experience as well. I grew up learning many clichés, proverbs and tips, but most of them didn't really mean anything to me until I experienced them first-hand. I suppose tips like these are like uninitialized pointers - they aren't really useful until you have experiences to attach them to, but after that they are a handy way to access those experiences quickly.
PeterWhittaker 12y ago
Great lessons, for investors, business folk, developers, and actors.
- stinos 12y ago
  Or rather, for everyone, at least those that are not economics related. My favourite one: "I've learned that strong political beliefs in either direction limit your ability to make rational decisions more than almost anything else." Actually you can just leave the 'political' away and it only becomes more general truth.
  - enraged_camel 12y ago
    Yeah, pg wrote an essay about this and it's one of my favorites. http://www.paulgraham.com/identity.html http://www.paulgraham.com/identity.html
j2kun 12y ago
> I've learned that there's a strong correlation between knowledge and humility. People who spend 10 minutes on Google studying monetary policy think they have it all figured out, while people with Ph.D.s and decades of experience throw up their hands in frustration. The more you study economics, the more you realize how little we know about it. This is the problem with Congress making decisions about science, the internet, and the economy.
- autokad 12y ago
  what decisions about science would you be referring to?
  - maaku 12y ago
    climate change?
  - pcrh 12y ago
    A lot of legislation cannot be approach scientifically, e.g. the right taxes rates, etc. Other legislation can be very scientific, e.g. is marijuana dangerous?
    - im3w1l 12y ago
      We may not be able to decide the right tax rate scientifically. But what we can do is determine very accurately the consequences of the choice. If we increase the tax rate x%, innovation will suffer y% but n less people will have to starve in the streets.
      - jessaustin 12y ago
        Even this is grossly overestimating the powers of current economic analysis. Many economists will give you this sort of ridiculous precision in advance, but in retrospect all they'll say is "we can't run a controlled experiment so you have to believe me that if we had done more of what I recommended, the results I promised would have occurred."
wwwwwwwwww 12y ago
If you enjoy reading and absorbing this kind of knowledge, I suggest reading Meditations by Marcus Aurelius. It's a book of personal thoughts/writings/observations that Aurelius wrote while he was emperor of Rome. It's absolutely stunning how much knowledge from back then is still applicable in the modern world. http://en.wikipedia.org/wiki/Meditations http://en.wikipedia.org/wiki/Meditations
- stinos 12y ago
  +1 for bringing this up. Might have been on HN before, but it cannot be stressed enough what a great mind he was. Especially his striving for 'good' in his writings is leaves a bitter taste in my mouth everytime I read it because I know I'm still far from being good. Well, something that can make you think like that is superb.
- blahber 12y ago
  +2 Aurelius's Philosophy is timeless. "The Wisdom of Life, by Arthur Schopenhauer" is another good wisdom book.
- johnohara 12y ago
  +3 Been a while since I spent time with his quotations. Thank you.
nlh 12y ago
> I've learned that how you reacted to past bubbles is a good indication of how you'll act to future ones. The same people buying dot-com stocks in 1999 were buying Miami condos in 2006 and gold in 2011. There was a saying that emerged in the first .com boom -- "You know we're in trouble when the UPS guy is giving you Internet stock tips." Maybe we should ask the UPS guy every few months what he's excited about investing in? Canary in the coal mine, as it were...
- FigBug 12y ago
  And now they are buying bitcoin.
  - Zigurd 12y ago
    Be careful of glibness. I knew the Web was going to be big when people who could not be troubled to learn what a paragraph style is in Word were hanging on my every word, taking notes, and buying books about how to install a 3rd party IP stack in Windows. There's a difference between the UPS guy having an opinion about something and going out of his way to learn about something with a fairly steep learning curve.
  - NhanH 12y ago
    Without commenting on the success rate of bitcoin itself, the money being put in bitcoin is still an order of magnitude smaller than the bubbles mentioned in GP. The USP guy, more likely than not still doesn't know about bitcoin.
    - bushido 12y ago
      > an order of magnitude smaller than the bubbles mentioned The thing about money and markets is it all relative(%). Whenever talking on these topics people revert to absolute($) comparisons, this is where most analysis breaks. I am not arguing or commenting on bitcoin success, just that your mention of "order of magnitude" sounds like an absolute value.
      - 12y ago
deleted 12y ago
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ahoge 12y ago
> I've learned that there's a strong correlation between knowledge and humility. It's the Dunning–Kruger effect: http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
- enraged_camel 12y ago
  No, I disagree. There's a big difference between humility and lack of self-confidence.
  - ahoge 12y ago
    That's just the most extreme form. As with most things, it's a gradient. If you know that there are things you don't know, you'll probably be more humble. If you feel overwhelmed, because there doesn't seem to be an end in sight, it might affect your confidence.
- ianstallings 12y ago
  I tend to agree with this but I also think that a knowledgeable person should be eager to stand his or her ground and probably will on subjects that matter dearly to them. For instance you might be able to convince a scientist of a philosophical viewpoint, but they might never budge from their stance on a scientific view point and in turn adamantly defend its idea with an almost righteous conviction (e.g. Richard Dawkins). But I guess we should be truly happy about this effect. If the smart amongst us were brow beating us all constantly it would be very painful indeed. I know I'd be a ripe target.
sutterbomb 12y ago
> I've learned that people are twice as biased as they think they are, which is precisely why biases are dangerous. This is a bit backwards. It's more like an inverse relationship - if you don't think you have any biases you are likely to be the most biased. It's probably a factor of 2 for those who admit a level of bias, and a much greater factor for those who don't admit bias.
- thewopr 12y ago
  Well technically, there would be no multiplicative factor for those who don't admit bias, because zero times anything would be zero. Your point is nonetheless a good one.
bsirkia 12y ago
I've always been a big fan of Motley Fool, particularly their podcasts, and I think it's for the same reason I like this article: their contributors seem to value honesty, to point of self-deprecation, over the desire to appear superior.
bambax 12y ago
Every one of those observations sounds extremely true to me. Regarding the first one: "changing your mind is one of the most difficult things we do" -- changing our mind is almost impossible; changing other people's is down right impossible. BUT - It's possible to influence people before they have made up their mind. - It's also possible to reframe / rename / re-position a subject, so that it becomes a new category about which people don't already have an opinion. Politicians do it all the time (most people are opposed to torture, but "enhanced interrogation techniques" sound both useful and reasonable, for example). Marketers also do it, sometimes, but they should do it more. On this last topic, this book is absolutely fantastic: http://www.amazon.com/Positioning-The-Battle-Your-Mind/dp/0071373586 http://www.amazon.com/Positioning-The-Battle-Your-Mind/dp/00... It explains why brand extension is almost always a bad idea ("Google Play", OMG!!!!), and why "7Up: the uncola" is genius.
- enjo 12y ago
  It is possible to change peoples minds, but the trick is that you have to convince everyone around them first. Social proof is the most powerful force in the universe. It's infuriating, but the research shows us time and time again that most people simply choose the position they perceive to be most popular. It is, incidentally, why the internet is so dangerous. It is easier now, more than ever, to surround yourself with people who confirm your beliefs ALL OF THE TIME. If we're going to make decisions socially, that's a pretty worrying state of affairs. It is also why most meaningful change happens in generational cycles. At least that is how it seems to me.
  - bambax 12y ago
    It is also why most meaningful change happens in generational cycles "People don't change their minds. They die, and are replaced by people with different opinions" -- Arturo Albergati, via Paul Graham (http://www.paulgraham.com/quo.html http://www.paulgraham.com/quo.html) (Strangely, when one searches for that quote, the first hit is Paul Graham's page; I'd like to know where exactly this was said, but couldn't find it after a quick investigation).
    - 12y ago
roymurdock 12y ago
I disagree with this one: I've learned that Winston Churchill was right when he said, "You can always count on Americans to do the right thing -- after they've tried everything else." Congress is a basket case 99% of the time, but when things are truly at the precipice it gets things done. The "right" thing is pretty subjective, and I would argue that if we were doing the "right" things, we could have avoided a partial government shutdown last year as Congress struggled through the debt issue. Speaks to the author's comment about short-term thinking: I've learned that short-term thinking is at the root of most of our problems, whether it's in business, politics, investing, or work. It's not a good sign that we are allowing ourselves to reach moments of crisis in which we are forced to make the "right" decision. What if that decision comes down to defaulting on our debt and wronging the rest of the world?
- d0mine 12y ago
  > I've learned that short-term thinking is at the root of most of our problems Greedy (aka "short-term thinking") algorithms provide optimal solutions for many (but not all (obviously)) problems.
  - pbhjpbhj 12y ago
    It sounds like you've missed the point - yes the optimal solution short term might be one action, but sometimes losing in the short term is more optimal in the long term. Like say, a vote for socialism reduces a companies profits but retains the humanity of government in the long term (made up example obv.). Moreover, long term solutions encompass the solution space of short term ones - so if short term thinking is required then you can choose the short-term thinking solution that optimises for the long view outcome.
    - d0mine 12y ago
      Perhaps the reference to computer science was not very clear in my previous comment [1]. "Optimal solution" means the best possible (globally) over all possible dimensions including time. [1]: http://en.wikipedia.org/wiki/Greedy_algorithm http://en.wikipedia.org/wiki/Greedy_algorithm The point being is that even a short-term thinking may yield long-term benefits sometimes.
jeremysalwen 12y ago
I don't think it's true that "The country is richer than it's ever been." According to this graph, that would be in 1999, not now. http://upload.wikimedia.org/wikipedia/commons/3/37/Median_US_household_income.png http://upload.wikimedia.org/wikipedia/commons/3/37/Median_US...
- rwl 12y ago
  I think the author is probably talking about total wealth, not median income; by that metric, we're richer than in 1999 (though it is less equally distributed), according to this graph: https://upload.wikimedia.org/wikipedia/en/a/a3/Graphic.png https://upload.wikimedia.org/wikipedia/en/a/a3/Graphic.png But whether we go with total wealth or median income, really the point here is the following sentence in the article: I don't think it's as happy as it's ever been. I think the author is taking the long view here, not comparing the present to 1999 or 2009. The claim is that despite having more wealth (by either measure) in the last, say, 20 years than at any other period in our history, we aren't happier because of it. I'm inclined to agree.
Blahah 12y ago
Mostly insightful, but this bit: Those who criticize the behavior of "greedy Wall Street bankers" underestimate their tendency to do the same thing if offered an eight-figure salary. You have to be greedy to go into Wall Street banking in the first place. Most of us deliberately didn't become bankers because we aren't motivated by greed. This makes bankers fair game for criticism.
- raverbashing 12y ago
  No, the point stands. Especially because you don't need to be a Wall Street banker to do just like them. They just have more power, but people should consider their actions regardless of salary.
- edanm 12y ago
  "You have to be greedy to go into Wall Street banking in the first place." That sounds false. It also sounds like, after assuming that, literally any thing you can think about investment bankers will automatically be against them, so I would really really make sure that what you say is true before just assuming it. Also: "Most of us deliberately didn't become bankers because we aren't motivated by greed." Really? That's why most people didn't do it? I think most people would become investment bankers with eight-figure salaries, but can't. "This makes bankers fair game for criticism." I think everyone is fair game for criticism if they've done something wrong. It's dangerous if you have to first assume someone is a bad person to criticize them.
- autodidakto 12y ago
  You have an insight (bankers are self-selected to be more greedy than average), but the author's point still stands: people underestimate their tendency to do bad things when offered enough money. He phrased it in a way that might seem to morally protect the bankers ("he who is not guilty of greed may throw the first stone..!"), but I don't think that he is trying to argue that the guilty shouldn't be punished.
- njharman 12y ago
  "Most of us ... because we aren't motivated by greed" History would indicate otherwise. Maybe most of us aren't dominated by our greed to the exclusion of all else / to sociopathic levels. But, most of us certainly are greedy. I suspect it's in our genes. Greed/hoarding (to a degree) being evolutionary strengths.
bushido 12y ago
This is extremely insightful and applies to a lot of industries: I've learned that we can't tell the difference between luck and skill. Out of millions of investors, a few will be phenomenally successful due to luck alone, yet no one is willing to admit they are one of the lucky ones. I recall reading this statement written in different words in a few articles and essays from PG and others.
- WalterBright 12y ago
  One reasonable test is if a person consistently is "lucky", then it is more likely to be skill. Steve Jobs, for example, made three fortunes. I suspect it is skill.
  - bushido 12y ago
    There are always exceptional exceptions :)
  - gaius 12y ago
    But had he not had the incredible good luck to meet Woz when he did, he would have died penniless and alone.
- sumedh 12y ago
  > I've learned that we can't tell the difference between luck and skill. You should read what Warren Buffett has to say on this topic http://www4.gsb.columbia.edu/null?&exclusive=filemgr.download&file_id=522 http://www4.gsb.columbia.edu/null?&exclusive=filemgr.downloa...
- Nevermark 12y ago
  Skill: Step 0: Create 1024 different "funds". Step 1: In half the funds (512) buy a very volatile stock. In the other half, sell the same stock short. Wait a week and close out all positions. Half the funds will now have made a lot of money. (Half will have lost the same amount of money.) Step 2: In half the winning funds (256) buy a very volatile stock. Sell short in the other half. In a week close out the positions. Step 3: In half the two-time winning funds (128), buy a very volatile stock, in the other half, sell short. Close out. Steps 4-10: Repeat with half as many winning funds for each repetition. Step 11: You now have exactly the same amount of money that you started with, minus some trading fees. But you have a remarkable fund you can point to where you made an enormous amount of money betting correctly on volatile stocks 10 times over 10 weeks. Your fund's return will be amazing and turn any investor green! Start acquiring investors who you can charge fees for depositing funds, removing funds, keeping funds invested, whatever: Profit! Note this plan is unconventional in that there is no "Step 10b ???" before profit. Profit is assured.
larrys 12y ago
"Most of what people worried about over the last five years -- inflation, rising interest rates, a double-dip recession, stagnant markets, Greece leaving the euro, a government default -- never occurred." Why? Because the reason most people are worried is based on something that they've read which is often because of this: "I've learned that journalists' need to write far exceeds the number of things that need to be written." The root of all opinion is generally what people are exposed to and what is written by a third party (not even an expert) as opposed to what they have actually figured out independently on their own or heard from multiple experts (who may have differing opinions). In other words their bias doesn't come from experience or informed opinion but merely what they are read that others have written. That's why polls are not as important as they look. Even if accurate they merely measure what people read in the paper, online, or see on the nightly news.
blahber 12y ago
/insightful Not said often, but thanks for taking the time to submit. > I've learned that there's a strong correlation between knowledge and humility. Although I think, arrogance is sometimes required to make people understand that it's the Right Thing.
greenyoda 12y ago
"I've learned that journalists' need to write far exceeds the number of things that need to be written. No writer can say to their boss, 'There's nothing important to write about today,' although it is the truth most days." These words should be inscribed at the top of HN's "submit" page.
- arbuge 12y ago
  This is perhaps doubly true for financial news and CNBC. ...make that most news now that I think about it. I can't remember the last time I saw an article on CNN that was actionable in my life in any way. Not sure why I bother to read the news most days, although it still feels like a useful thing to do.
  - PhantomGremlin 12y ago
    I watch or read the news for "gestalt". Most individual articles are not "actionable", but the aggregate over weeks or months probably is. Unfortunately, the article's first lesson is that you probably won't change your mind quickly enough to profit from anything you see on either CNBC or CNN.
- andrewflnr 12y ago
  I actually disagree with this point. There are always topics that could stand to be exposed or revisited. I wish the media would keep certain topics continually in the public awareness, rather than covering them dot a while and moving on to the next shiny or scary thing (and thereby playing into the hands of those who would rather some issues be forgotten). Stuff like the progress of healthcare.gov, preliminary study results that turn out to be premature, ongoing issues like human trafficking, etc.
opendais 12y ago
Tbh, "I've learned that changing your mind is one of the most difficult things we do. It is far easier to fool yourself into believing a falsehood than admit a mistake." That is probably the one from which many other's stem. If you only make the same mistake a couple of times before changing your mind, you are far, far better off than everyone else because I've seen people repeat the exact same mistake dozens of times. Tbh, I have too...which is probably why I generally assume I've made a mistake until someone tells me otherwise alot of the time. Well, except for a few things I feel strongly about that aren't simple binaries where everyone might have radically different end goals.
cwisecarver 12y ago
Thanks for the front-page love HN. I work at the Fool as a web developer. Morgan has just been sent the link to this thread. Maybe he'll chime in if there are questions.
kqr2 12y ago
For those interested in a good book about human biases and thinking, check out Seeking Wisdom From Darwin to Munger. http://www.poorcharliesalmanack.com/seeking_wisdom.php http://www.poorcharliesalmanack.com/seeking_wisdom.php http://www.amazon.com/Seeking-Wisdom-Darwin-Munger-3rd/dp/1578644283/ http://www.amazon.com/Seeking-Wisdom-Darwin-Munger-3rd/dp/15...
adventured 12y ago
"I've learned that people's expectations grow faster than their wealth. The country is richer than it's ever been. I don't think it's as happy as it's ever been." Greater than half the country did not participate in the supposed recovery. Check out the plunge over five years in the labor force, the unemployment rate among teenagers, blacks, hispanics, the use of food stamps, the use of ss disability, etc. Real wages haven't moved in 40 years. It's little wonder it's not an overly happy country, most people have not participated in the Fed's asset inflation party. The rich are richer than they've ever been, the poor are the poorest they've arguably been since the great depression. Not arguing the why's mind you, but there is a very good reason the country doesn't seem very happy.
31reasons 12y ago
I've learned that there is no reason to take everything you read as gospel.
Confusion 12y ago
I've learned that we can't tell the difference between luck and skill. Out of millions of investors, a few will be phenomenally successful due to luck alone, yet no one is willing to admit they are one of the lucky ones. and the same goes for CEO's.
- lurkinggrue 12y ago
  Survivor bias is a bitch.
neotoy 12y ago
"excessive pessimism" stopped reading right there. All credibility lost.
pessimizer 12y ago
>I've learned that strong political beliefs in either direction limit your ability to make rational decisions more than almost anything else. Strong political beliefs in any direction, not either direction. This complaint also relies on the fictional 'rational decision about a political issue' vs. 'political decision' distinction, where your opponent is always "playing politics", but you're always simply being empirical and pragmatic. >I've learned that people's expectations grow faster than their wealth. The country is richer than it's ever been. I don't think it's as happy as it's ever been. Not in the median it isn't. The fact that the nation's total wealth has increased while median individual wealth has decreased is a lesson about something, but not about the bulk of people's expectations rapidly growing. What a lot of people want is what most people in the US actually had before the 80s.
- tokenadult 12y ago
  >I've learned that people's expectations grow faster than their wealth. The country is richer than it's ever been. I don't think it's as happy as it's ever been. Not in the median it isn't. Your claim is that median wealth has in some meaningful sense decreased in the United States during my lifetime of just more than half a century. Because of various family circumstances and my own career choices, I have generally been below the United States median in income much of my working life, and have always been below the United States median in financial assets or possession of land and real property. And yet I have every reason to believe the author's claim that "The country is richer than it's ever been," and not just for the fat cats, but for me too. For one thing, we have this newfangled Internet technology that allows you and me to have a thoughtful discussion while shattering barriers of distance. Having once lived overseas when my only affordable means of communication with my homeland was postal aerograms, I count this as a HUGE increase in wealth, which is certainly enjoyed by most at-or-just-below median people in most developed countries. (I communicate with friends and relatives from a variety of countries online every day.) So I call baloney on your assertion. But perhaps you have evidence that will convince to change my opinion. Discussing this issue thoughtfully will also make both of us richer than we used to be, so I am all ears. AFTER EDIT: You do make a good point that political opinions can (and do) differ along more than one dimension. There are many, many different kinds of political opinions, including many that are inconsistent with other opinions held by the same person.
fleshweasel 12y ago
"There's nothing important to write about today." Are you shitting me?
deleted 12y ago
[deleted]
Nevermark 12y ago
Humans became a technological species immediately at the critical point where a few percent of us could be rational and original a small percent of the time. That was enough for knowledge to start snowballing. In historical terms, that happened a few moments ago and we are still at the mostly-stupid stage. Before we have a chance to evolve to be smarter, technology itself will have left us in the intelligence rear view mirror. No species lasts forever but we should feel successful for being the origin of not just the next species, but the next order of life on Earth after DNA. Self-designed life will be as profoundly smarter than we are, as multi-cellular life became more interesting than the first microbes. This is very inspiring to me. But if for some reason, you find it depressing that our technological "children" will soon look nothing like us, there is still time to find a way to transition your own mind into that next generation. Just be prepared to change anything about your own biology that holds you back, just like to learn you need to sacrifice any beliefs that hold you back. Prepare yourself mentally now to sacrifice your biological substrate and neural continuity for your new uber intelligence in a few decades.
tthomas48 12y ago
Actually one of the things that gives me the most hope is the fact that Godwin's law is so much less frequently invoked. I think after a couple decades of being able to vomit up the first thing on our minds, many people are learning to take a more measured approach online.
jwheeler79 12y ago
i was not at all enlightened by this article and took most of the points as basic common sense everyone should have (but unfortunately everyone does not). the fact that the author had to come to these conclusions 'over time' means he's susceptible to being just another damn fool in the first place.

320 points by tokenadult 12y ago

11thEarlOfMar 12y ago

Sadly, none of this would make any sense if I had not already learned it the hard way.

bradleysmith 12y ago
I find it funnier than sad. But, I agree with you completely.
arthurjj 12y ago
I enjoyed the article but that is a good, if unintentional, criticism of the article.
- deleted 12y ago
  [deleted]
TeMPOraL 12y ago
That is my experience as well. I grew up learning many clichés, proverbs and tips, but most of them didn't really mean anything to me until I experienced them first-hand. I suppose tips like these are like uninitialized pointers - they aren't really useful until you have experiences to attach them to, but after that they are a handy way to access those experiences quickly.

PeterWhittaker 12y ago

Great lessons, for investors, business folk, developers, and actors.

stinos 12y ago
Or rather, for everyone, at least those that are not economics related. My favourite one: "I've learned that strong political beliefs in either direction limit your ability to make rational decisions more than almost anything else." Actually you can just leave the 'political' away and it only becomes more general truth.
- enraged_camel 12y ago
  Yeah, pg wrote an essay about this and it's one of my favorites. http://www.paulgraham.com/identity.html http://www.paulgraham.com/identity.html

j2kun 12y ago

> I've learned that there's a strong correlation between knowledge and humility. People who spend 10 minutes on Google studying monetary policy think they have it all figured out, while people with Ph.D.s and decades of experience throw up their hands in frustration. The more you study economics, the more you realize how little we know about it. This is the problem with Congress making decisions about science, the internet, and the economy.

autokad 12y ago
what decisions about science would you be referring to?
- maaku 12y ago
  climate change?
- pcrh 12y ago
  A lot of legislation cannot be approach scientifically, e.g. the right taxes rates, etc. Other legislation can be very scientific, e.g. is marijuana dangerous?
  - im3w1l 12y ago
    We may not be able to decide the right tax rate scientifically. But what we can do is determine very accurately the consequences of the choice. If we increase the tax rate x%, innovation will suffer y% but n less people will have to starve in the streets.
    - jessaustin 12y ago
      Even this is grossly overestimating the powers of current economic analysis. Many economists will give you this sort of ridiculous precision in advance, but in retrospect all they'll say is "we can't run a controlled experiment so you have to believe me that if we had done more of what I recommended, the results I promised would have occurred."

wwwwwwwwww 12y ago

If you enjoy reading and absorbing this kind of knowledge, I suggest reading Meditations by Marcus Aurelius. It's a book of personal thoughts/writings/observations that Aurelius wrote while he was emperor of Rome. It's absolutely stunning how much knowledge from back then is still applicable in the modern world. http://en.wikipedia.org/wiki/Meditations http://en.wikipedia.org/wiki/Meditations

stinos 12y ago
+1 for bringing this up. Might have been on HN before, but it cannot be stressed enough what a great mind he was. Especially his striving for 'good' in his writings is leaves a bitter taste in my mouth everytime I read it because I know I'm still far from being good. Well, something that can make you think like that is superb.
blahber 12y ago
+2 Aurelius's Philosophy is timeless. "The Wisdom of Life, by Arthur Schopenhauer" is another good wisdom book.
johnohara 12y ago
+3 Been a while since I spent time with his quotations. Thank you.

nlh 12y ago

> I've learned that how you reacted to past bubbles is a good indication of how you'll act to future ones. The same people buying dot-com stocks in 1999 were buying Miami condos in 2006 and gold in 2011. There was a saying that emerged in the first .com boom -- "You know we're in trouble when the UPS guy is giving you Internet stock tips." Maybe we should ask the UPS guy every few months what he's excited about investing in? Canary in the coal mine, as it were...

FigBug 12y ago
And now they are buying bitcoin.
- Zigurd 12y ago
  Be careful of glibness. I knew the Web was going to be big when people who could not be troubled to learn what a paragraph style is in Word were hanging on my every word, taking notes, and buying books about how to install a 3rd party IP stack in Windows. There's a difference between the UPS guy having an opinion about something and going out of his way to learn about something with a fairly steep learning curve.
- NhanH 12y ago
  Without commenting on the success rate of bitcoin itself, the money being put in bitcoin is still an order of magnitude smaller than the bubbles mentioned in GP. The USP guy, more likely than not still doesn't know about bitcoin.
  - bushido 12y ago
    > an order of magnitude smaller than the bubbles mentioned The thing about money and markets is it all relative(%). Whenever talking on these topics people revert to absolute($) comparisons, this is where most analysis breaks. I am not arguing or commenting on bitcoin success, just that your mention of "order of magnitude" sounds like an absolute value.
    - 12y ago

deleted 12y ago

[deleted]

ahoge 12y ago

> I've learned that there's a strong correlation between knowledge and humility. It's the Dunning–Kruger effect: http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

enraged_camel 12y ago
No, I disagree. There's a big difference between humility and lack of self-confidence.
- ahoge 12y ago
  That's just the most extreme form. As with most things, it's a gradient. If you know that there are things you don't know, you'll probably be more humble. If you feel overwhelmed, because there doesn't seem to be an end in sight, it might affect your confidence.
ianstallings 12y ago
I tend to agree with this but I also think that a knowledgeable person should be eager to stand his or her ground and probably will on subjects that matter dearly to them. For instance you might be able to convince a scientist of a philosophical viewpoint, but they might never budge from their stance on a scientific view point and in turn adamantly defend its idea with an almost righteous conviction (e.g. Richard Dawkins). But I guess we should be truly happy about this effect. If the smart amongst us were brow beating us all constantly it would be very painful indeed. I know I'd be a ripe target.

sutterbomb 12y ago

> I've learned that people are twice as biased as they think they are, which is precisely why biases are dangerous. This is a bit backwards. It's more like an inverse relationship - if you don't think you have any biases you are likely to be the most biased. It's probably a factor of 2 for those who admit a level of bias, and a much greater factor for those who don't admit bias.

thewopr 12y ago
Well technically, there would be no multiplicative factor for those who don't admit bias, because zero times anything would be zero. Your point is nonetheless a good one.

bsirkia 12y ago

I've always been a big fan of Motley Fool, particularly their podcasts, and I think it's for the same reason I like this article: their contributors seem to value honesty, to point of self-deprecation, over the desire to appear superior.

bambax 12y ago

Every one of those observations sounds extremely true to me. Regarding the first one: "changing your mind is one of the most difficult things we do" -- changing our mind is almost impossible; changing other people's is down right impossible. BUT - It's possible to influence people before they have made up their mind. - It's also possible to reframe / rename / re-position a subject, so that it becomes a new category about which people don't already have an opinion. Politicians do it all the time (most people are opposed to torture, but "enhanced interrogation techniques" sound both useful and reasonable, for example). Marketers also do it, sometimes, but they should do it more. On this last topic, this book is absolutely fantastic: http://www.amazon.com/Positioning-The-Battle-Your-Mind/dp/0071373586 http://www.amazon.com/Positioning-The-Battle-Your-Mind/dp/00... It explains why brand extension is almost always a bad idea ("Google Play", OMG!!!!), and why "7Up: the uncola" is genius.

enjo 12y ago
It is possible to change peoples minds, but the trick is that you have to convince everyone around them first. Social proof is the most powerful force in the universe. It's infuriating, but the research shows us time and time again that most people simply choose the position they perceive to be most popular. It is, incidentally, why the internet is so dangerous. It is easier now, more than ever, to surround yourself with people who confirm your beliefs ALL OF THE TIME. If we're going to make decisions socially, that's a pretty worrying state of affairs. It is also why most meaningful change happens in generational cycles. At least that is how it seems to me.
- bambax 12y ago
  It is also why most meaningful change happens in generational cycles "People don't change their minds. They die, and are replaced by people with different opinions" -- Arturo Albergati, via Paul Graham (http://www.paulgraham.com/quo.html http://www.paulgraham.com/quo.html) (Strangely, when one searches for that quote, the first hit is Paul Graham's page; I'd like to know where exactly this was said, but couldn't find it after a quick investigation).
  - 12y ago

roymurdock 12y ago

I disagree with this one: I've learned that Winston Churchill was right when he said, "You can always count on Americans to do the right thing -- after they've tried everything else." Congress is a basket case 99% of the time, but when things are truly at the precipice it gets things done. The "right" thing is pretty subjective, and I would argue that if we were doing the "right" things, we could have avoided a partial government shutdown last year as Congress struggled through the debt issue. Speaks to the author's comment about short-term thinking: I've learned that short-term thinking is at the root of most of our problems, whether it's in business, politics, investing, or work. It's not a good sign that we are allowing ourselves to reach moments of crisis in which we are forced to make the "right" decision. What if that decision comes down to defaulting on our debt and wronging the rest of the world?

d0mine 12y ago
> I've learned that short-term thinking is at the root of most of our problems Greedy (aka "short-term thinking") algorithms provide optimal solutions for many (but not all (obviously)) problems.
- pbhjpbhj 12y ago
  It sounds like you've missed the point - yes the optimal solution short term might be one action, but sometimes losing in the short term is more optimal in the long term. Like say, a vote for socialism reduces a companies profits but retains the humanity of government in the long term (made up example obv.). Moreover, long term solutions encompass the solution space of short term ones - so if short term thinking is required then you can choose the short-term thinking solution that optimises for the long view outcome.
  - d0mine 12y ago
    Perhaps the reference to computer science was not very clear in my previous comment [1]. "Optimal solution" means the best possible (globally) over all possible dimensions including time. [1]: http://en.wikipedia.org/wiki/Greedy_algorithm http://en.wikipedia.org/wiki/Greedy_algorithm The point being is that even a short-term thinking may yield long-term benefits sometimes.

jeremysalwen 12y ago

I don't think it's true that "The country is richer than it's ever been." According to this graph, that would be in 1999, not now. http://upload.wikimedia.org/wikipedia/commons/3/37/Median_US_household_income.png http://upload.wikimedia.org/wikipedia/commons/3/37/Median_US...

rwl 12y ago
I think the author is probably talking about total wealth, not median income; by that metric, we're richer than in 1999 (though it is less equally distributed), according to this graph: https://upload.wikimedia.org/wikipedia/en/a/a3/Graphic.png https://upload.wikimedia.org/wikipedia/en/a/a3/Graphic.png But whether we go with total wealth or median income, really the point here is the following sentence in the article: I don't think it's as happy as it's ever been. I think the author is taking the long view here, not comparing the present to 1999 or 2009. The claim is that despite having more wealth (by either measure) in the last, say, 20 years than at any other period in our history, we aren't happier because of it. I'm inclined to agree.

Blahah 12y ago

Mostly insightful, but this bit: Those who criticize the behavior of "greedy Wall Street bankers" underestimate their tendency to do the same thing if offered an eight-figure salary. You have to be greedy to go into Wall Street banking in the first place. Most of us deliberately didn't become bankers because we aren't motivated by greed. This makes bankers fair game for criticism.

raverbashing 12y ago
No, the point stands. Especially because you don't need to be a Wall Street banker to do just like them. They just have more power, but people should consider their actions regardless of salary.
edanm 12y ago
"You have to be greedy to go into Wall Street banking in the first place." That sounds false. It also sounds like, after assuming that, literally any thing you can think about investment bankers will automatically be against them, so I would really really make sure that what you say is true before just assuming it. Also: "Most of us deliberately didn't become bankers because we aren't motivated by greed." Really? That's why most people didn't do it? I think most people would become investment bankers with eight-figure salaries, but can't. "This makes bankers fair game for criticism." I think everyone is fair game for criticism if they've done something wrong. It's dangerous if you have to first assume someone is a bad person to criticize them.
autodidakto 12y ago
You have an insight (bankers are self-selected to be more greedy than average), but the author's point still stands: people underestimate their tendency to do bad things when offered enough money. He phrased it in a way that might seem to morally protect the bankers ("he who is not guilty of greed may throw the first stone..!"), but I don't think that he is trying to argue that the guilty shouldn't be punished.
njharman 12y ago
"Most of us ... because we aren't motivated by greed" History would indicate otherwise. Maybe most of us aren't dominated by our greed to the exclusion of all else / to sociopathic levels. But, most of us certainly are greedy. I suspect it's in our genes. Greed/hoarding (to a degree) being evolutionary strengths.

bushido 12y ago

This is extremely insightful and applies to a lot of industries: I've learned that we can't tell the difference between luck and skill. Out of millions of investors, a few will be phenomenally successful due to luck alone, yet no one is willing to admit they are one of the lucky ones. I recall reading this statement written in different words in a few articles and essays from PG and others.

WalterBright 12y ago
One reasonable test is if a person consistently is "lucky", then it is more likely to be skill. Steve Jobs, for example, made three fortunes. I suspect it is skill.
- bushido 12y ago
  There are always exceptional exceptions :)
- gaius 12y ago
  But had he not had the incredible good luck to meet Woz when he did, he would have died penniless and alone.
sumedh 12y ago
> I've learned that we can't tell the difference between luck and skill. You should read what Warren Buffett has to say on this topic http://www4.gsb.columbia.edu/null?&exclusive=filemgr.download&file_id=522 http://www4.gsb.columbia.edu/null?&exclusive=filemgr.downloa...
Nevermark 12y ago
Skill: Step 0: Create 1024 different "funds". Step 1: In half the funds (512) buy a very volatile stock. In the other half, sell the same stock short. Wait a week and close out all positions. Half the funds will now have made a lot of money. (Half will have lost the same amount of money.) Step 2: In half the winning funds (256) buy a very volatile stock. Sell short in the other half. In a week close out the positions. Step 3: In half the two-time winning funds (128), buy a very volatile stock, in the other half, sell short. Close out. Steps 4-10: Repeat with half as many winning funds for each repetition. Step 11: You now have exactly the same amount of money that you started with, minus some trading fees. But you have a remarkable fund you can point to where you made an enormous amount of money betting correctly on volatile stocks 10 times over 10 weeks. Your fund's return will be amazing and turn any investor green! Start acquiring investors who you can charge fees for depositing funds, removing funds, keeping funds invested, whatever: Profit! Note this plan is unconventional in that there is no "Step 10b ???" before profit. Profit is assured.

larrys 12y ago

"Most of what people worried about over the last five years -- inflation, rising interest rates, a double-dip recession, stagnant markets, Greece leaving the euro, a government default -- never occurred." Why? Because the reason most people are worried is based on something that they've read which is often because of this: "I've learned that journalists' need to write far exceeds the number of things that need to be written." The root of all opinion is generally what people are exposed to and what is written by a third party (not even an expert) as opposed to what they have actually figured out independently on their own or heard from multiple experts (who may have differing opinions). In other words their bias doesn't come from experience or informed opinion but merely what they are read that others have written. That's why polls are not as important as they look. Even if accurate they merely measure what people read in the paper, online, or see on the nightly news.

blahber 12y ago

/insightful Not said often, but thanks for taking the time to submit. > I've learned that there's a strong correlation between knowledge and humility. Although I think, arrogance is sometimes required to make people understand that it's the Right Thing.

greenyoda 12y ago

"I've learned that journalists' need to write far exceeds the number of things that need to be written. No writer can say to their boss, 'There's nothing important to write about today,' although it is the truth most days." These words should be inscribed at the top of HN's "submit" page.

arbuge 12y ago
This is perhaps doubly true for financial news and CNBC. ...make that most news now that I think about it. I can't remember the last time I saw an article on CNN that was actionable in my life in any way. Not sure why I bother to read the news most days, although it still feels like a useful thing to do.
- PhantomGremlin 12y ago
  I watch or read the news for "gestalt". Most individual articles are not "actionable", but the aggregate over weeks or months probably is. Unfortunately, the article's first lesson is that you probably won't change your mind quickly enough to profit from anything you see on either CNBC or CNN.
andrewflnr 12y ago
I actually disagree with this point. There are always topics that could stand to be exposed or revisited. I wish the media would keep certain topics continually in the public awareness, rather than covering them dot a while and moving on to the next shiny or scary thing (and thereby playing into the hands of those who would rather some issues be forgotten). Stuff like the progress of healthcare.gov, preliminary study results that turn out to be premature, ongoing issues like human trafficking, etc.

opendais 12y ago

Tbh, "I've learned that changing your mind is one of the most difficult things we do. It is far easier to fool yourself into believing a falsehood than admit a mistake." That is probably the one from which many other's stem. If you only make the same mistake a couple of times before changing your mind, you are far, far better off than everyone else because I've seen people repeat the exact same mistake dozens of times. Tbh, I have too...which is probably why I generally assume I've made a mistake until someone tells me otherwise alot of the time. Well, except for a few things I feel strongly about that aren't simple binaries where everyone might have radically different end goals.

cwisecarver 12y ago

Thanks for the front-page love HN. I work at the Fool as a web developer. Morgan has just been sent the link to this thread. Maybe he'll chime in if there are questions.

kqr2 12y ago

For those interested in a good book about human biases and thinking, check out Seeking Wisdom From Darwin to Munger. http://www.poorcharliesalmanack.com/seeking_wisdom.php http://www.poorcharliesalmanack.com/seeking_wisdom.php http://www.amazon.com/Seeking-Wisdom-Darwin-Munger-3rd/dp/1578644283/ http://www.amazon.com/Seeking-Wisdom-Darwin-Munger-3rd/dp/15...

adventured 12y ago

"I've learned that people's expectations grow faster than their wealth. The country is richer than it's ever been. I don't think it's as happy as it's ever been." Greater than half the country did not participate in the supposed recovery. Check out the plunge over five years in the labor force, the unemployment rate among teenagers, blacks, hispanics, the use of food stamps, the use of ss disability, etc. Real wages haven't moved in 40 years. It's little wonder it's not an overly happy country, most people have not participated in the Fed's asset inflation party. The rich are richer than they've ever been, the poor are the poorest they've arguably been since the great depression. Not arguing the why's mind you, but there is a very good reason the country doesn't seem very happy.

31reasons 12y ago

I've learned that there is no reason to take everything you read as gospel.

Confusion 12y ago

I've learned that we can't tell the difference between luck and skill. Out of millions of investors, a few will be phenomenally successful due to luck alone, yet no one is willing to admit they are one of the lucky ones. and the same goes for CEO's.

lurkinggrue 12y ago
Survivor bias is a bitch.

neotoy 12y ago

"excessive pessimism" stopped reading right there. All credibility lost.

pessimizer 12y ago

>I've learned that strong political beliefs in either direction limit your ability to make rational decisions more than almost anything else. Strong political beliefs in any direction, not either direction. This complaint also relies on the fictional 'rational decision about a political issue' vs. 'political decision' distinction, where your opponent is always "playing politics", but you're always simply being empirical and pragmatic. >I've learned that people's expectations grow faster than their wealth. The country is richer than it's ever been. I don't think it's as happy as it's ever been. Not in the median it isn't. The fact that the nation's total wealth has increased while median individual wealth has decreased is a lesson about something, but not about the bulk of people's expectations rapidly growing. What a lot of people want is what most people in the US actually had before the 80s.

tokenadult 12y ago
>I've learned that people's expectations grow faster than their wealth. The country is richer than it's ever been. I don't think it's as happy as it's ever been. Not in the median it isn't. Your claim is that median wealth has in some meaningful sense decreased in the United States during my lifetime of just more than half a century. Because of various family circumstances and my own career choices, I have generally been below the United States median in income much of my working life, and have always been below the United States median in financial assets or possession of land and real property. And yet I have every reason to believe the author's claim that "The country is richer than it's ever been," and not just for the fat cats, but for me too. For one thing, we have this newfangled Internet technology that allows you and me to have a thoughtful discussion while shattering barriers of distance. Having once lived overseas when my only affordable means of communication with my homeland was postal aerograms, I count this as a HUGE increase in wealth, which is certainly enjoyed by most at-or-just-below median people in most developed countries. (I communicate with friends and relatives from a variety of countries online every day.) So I call baloney on your assertion. But perhaps you have evidence that will convince to change my opinion. Discussing this issue thoughtfully will also make both of us richer than we used to be, so I am all ears. AFTER EDIT: You do make a good point that political opinions can (and do) differ along more than one dimension. There are many, many different kinds of political opinions, including many that are inconsistent with other opinions held by the same person.

fleshweasel 12y ago

"There's nothing important to write about today." Are you shitting me?

deleted 12y ago

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Nevermark 12y ago

Humans became a technological species immediately at the critical point where a few percent of us could be rational and original a small percent of the time. That was enough for knowledge to start snowballing. In historical terms, that happened a few moments ago and we are still at the mostly-stupid stage. Before we have a chance to evolve to be smarter, technology itself will have left us in the intelligence rear view mirror. No species lasts forever but we should feel successful for being the origin of not just the next species, but the next order of life on Earth after DNA. Self-designed life will be as profoundly smarter than we are, as multi-cellular life became more interesting than the first microbes. This is very inspiring to me. But if for some reason, you find it depressing that our technological "children" will soon look nothing like us, there is still time to find a way to transition your own mind into that next generation. Just be prepared to change anything about your own biology that holds you back, just like to learn you need to sacrifice any beliefs that hold you back. Prepare yourself mentally now to sacrifice your biological substrate and neural continuity for your new uber intelligence in a few decades.

tthomas48 12y ago

Actually one of the things that gives me the most hope is the fact that Godwin's law is so much less frequently invoked. I think after a couple decades of being able to vomit up the first thing on our minds, many people are learning to take a more measured approach online.

jwheeler79 12y ago

i was not at all enlightened by this article and took most of the points as basic common sense everyone should have (but unfortunately everyone does not). the fact that the author had to come to these conclusions 'over time' means he's susceptible to being just another damn fool in the first place.