Success Master Skills: Pay Up For Knowledge

I have written in this blog before that life is now so complex, and the paths to success so specialized, that expert knowledge is needed in almost every area of life, if oen wants to make the most of one’s efforts.

Well, last year, I decided to take a dose of my own medicine. Instead of “going it alone” with a few books, I decided to head out into the world and take some courses with experts. The result?

The results exceeded my wildest dreams.  Every facet of my life improved. So, I strongly recommend the following Success Secret: Pay up for knowledge!

In March 2010 I took an statistics-oriented trading course from John Joseph , a brilliant trader, system developer, and CTA.  Immediately, my trading systems improved, and I have been much more consistently profitable as a result

In May, 2010 I went to the Market Technicians Association Symposium in New York and, as an outgrowth of that trip, managed to learn some key  material which I put to use in my longer term trading, and which has yielded some very satisfying results in the almost 12 months since the Symposium.

 In June 2010 I took three weeks of training in Microsoft Access, because, thanks to the trading course just mentioned, I was generating so much data that I had to put it together and keep track of it much better. Result? Much better record keeping, much faster and more creative “slicing and dicing” of my data. Also, the ability to handle many more systems.

From August to October, I took the Dale Carnegie Course, their flagship course.  This was truly life-changing. I had known a few people who took it, and so, 30 years too late, I took it myself.  My life changed for the better  immediately: better friendships, less of an “edge” to my interactions with others, and so much more. I will be studying that material for a lifetime.

None of these efforts was cheap. And not only in money terms. You have to face your demons and come to terms that, to get a better life, you must admit you are not an expert. But once you go through that door, the rewards are truly beyond measure.

2010 was my Annus Mirabilis. May 2011 be yours.

Success and Convexity Part 5: Negative Convexity

This is Post 5 in my series on Success and Convexity. For our non-mathematical purposes, we’ll define positive convexity as opening the door to many good things while limiting the access of many bad things.

What then is negative convexity in the world of personal success and achievement? It's negative luck.  It is opening the door to many bad things. Maybe not even consciously opening the door, but just leaving the door open, or even forgetting to close it. If you do this in your house, it’s not that you know something bad will come in, it’s that you don’t have any good idea what may come in. You are giving unrestricted access to negative possibilities.

Our goal should be, for the most part, to restrict access to “the unknown bad things” that can happen. We only want things to get “out of control” on the good side of things. We want to get into a line of work with an unlimited upside; around friends with drive, courage, vision and good hygiene. We want to make sure we wander into bookstores and libraries and classrooms and not wander into bars and crack houses and , hopefully, as few greasy burger joints as we can manage.

Here are some examples of negative convexity. Often these actions turn out badly because they “open the door” to unknown bad things.

Giving your opinion
Sad to say, no one wants to hear your opinion. And the louder your opinion, the less someone wants to hear it. Furthermore, down the road, that person may retaliate in some way if your opinionated remark has injured their self-esteem. Oh…another minor point…your opinion could be totally wrong. The point is, favoring the world at large with your many "fascinating" opinions is a virtual “kick me” sign to the universe, and can open the door to a surprising number of repercussion, many of them painful

Using credit and leverage
The more you lever up, the more it can work against you in the exact proportion to the amount you have borrowed/leveraged. Much of the financial agony of the past few years was caused by huge amounts of leverage, from homeowners putting up miniscule amounts  as down payments, to giant banks borrowing against those same mortgages at 30-to-1 margins. There are even hints that the U.S. Government could lose it’s own Triple-A credit rating because of too much borrowing. Again, it is the “unknown” side of the coin that is the bombshell. You don’t know what will precipitate the destructive side of leverage: you might lose your job; your industry could go into a slump; you could have miscalculated the whole nature of the bet you made. The fact is you just don’t know, but one thing you can know is that leverage is a door to the unknown. You never know what might walk through.,

Avoid washing your hands, annual checkups, exercise
None of these actions are a ticket to doom. What they are is a ticket to the unknown. You don’t wash your hands? Well…perhaps you will never get sick from some germ. Or maybe you’ll be sick 2,3,or 4 weeks per year and it will just “slip under the radar”, with those lost weeks of productivity, family activities, friends, etc just “gone” without your even thinking about them.

Skipped your checkup? So what? You’re feeling fine. Maybe there’s nothing there. Or maybe you have something quiet and chronic that could chew up a few years of your life, but you won’t know that for a while.

Don’t exercise enough? Maybe you lose an hour of life per hour of exercise…I don’t know. Maybe you lose just a teeny biit of flexibility over time, so when you have to lift that heavy object, instead of some aches and pains, you rupture something. Again, these are issues of playing the odds. Of letting the unknown, or ignored, into your life. And once it gets in, because convexity tends to increase, you may find yourself in the “steep part of the curve of “hurt”, when you never needed to be there.

More on Negative Convexity in another post.

Success and Convexity Part 4: More on Positive Convexity

This is post 4 in my series on convexity. For the purposes of these posts, out definition of positive convexity will be opening the door to many good things, while limiting the access of incoming bad things.

I mentioned in my last post two secrets to adding positive convexity to our lives:
1. Hard Work and
2. Exploratory behavior.

Here are two more:

3.Margin of Safety

Shakespeare said “discretion is the better part of valor”. Woodworking experts admonish “measure twice and cut once”. Billionaire Warren Buffett and his mentor Benjamin Graham emphasized investing with a “margin of safety”, a level of business value that would endure no matter what the price or vicissitudes of the business, thus making it safer to invest in. Airplanes and space shuttles are designed with redundancy: multiple systems that can be pressed into service if a main system (hydraulic, navigation, etc) fails.

For us to “spread our wings” in our chosen field, to take advantage of the many opportunities for positive convexity (strings of good outcomes building on each other), each step should be taken only after the worst-case scenario is considered.’’

A simple example would be buying a house. If you, for instance, were to buy the house with 100% cash, you could take full advantage of the positive convexity of the purchase: the potential that your investment would increase over time. Furthermore, if you paid with cash, you would have no worries about meeting the mortgage, ever, thus you would have the absolute minimum chance of losing that house. This would meet our laymen’s definition of convexity of maximizing the planned and unplanned positive outcomes, while cutting off the risk of outsized negative outcomes.

Do the scheduled maintenance on your car. Get your checkup. Eat your bran flakes. File your taxes on time. Why? Because these actions generate margins of safety, allowing you to “blossom” the rest of the time. They “cut off the tails” of the “bad” side of the “curve”. They limit your downside, and then your creativity and drive can generate the”upside”.

4.Noticing and recording

Noticing and recording is an amazingly effective method of creating positive convexity. Walking around with a notebook or voice recorder will exponentially increase the number of “positive inputs” that you experience everyday. In a moment, a million-dollar idea can be captured before it disappears into your unconscious. Or you may see something: a book, a piece of property, a new product, etc and note it down for future reference. Many of us get terrific inspiration when we are out walking or driving…the kind of inspiration that might change your life. If you take 3 notes a day that’s over a thousand new inputs per year. One out of a hundred might even be a breakthrough. And ten breakthroughs a year is a lot of positive convexity.

5. Consistency

Woody Allen once said "eighty percent of success is showing up". A pithy and ever-so-true Success Secret. I went to the grocery store today and they didn't have my favorite focaccia bread. Big deal? Sure, but now, in the back of my mind, I have this meme that reminds me:  "well, if you go out of your way, they might not have the focaccia". Similarly, if you don't show up, your clients, friends, etc may start taking you off the "guaranteed list" and putting you on the "maybe" list. On the other hand, if you always pick up the phone, meet your deadlines, get your eight hours sleep, etc, you create a "base" from which to build. You certainly wouldn't like it if various bodily organs worked "inconsistently".  How could you get through your day?  We should expect of ourselves the same consistency that we expect of many of the small, but priceless goods and services we enjoy today without even thinking about it. Many nations don't have consistent power, water, and other infrastructure. Whole countries get avoided by international investment because you can't build a factory there, because you don't know if the lights will be on. Consistency seems like a little thing, but it is a base from which positive convexity can be built.