Multi-Disciplinary Reading - Book Reviews

phreakv6 · October 17, 2022, 7:31am

Numbers Don’t Lie, Vaclav Smil, 2020 - I relate so much Vaclav Smil being a numbers nut myself. You can understand history qualitatively in stories and you can understand them in numbers by looking at long-term trends of things and also guess what’s to come by applying some mental models. This is our civilisation, more in numbers and less in narratives

My notes -

Energy consumption per capita is 150 GJ in developed countries vs 35 GJ in Nigeria (Barrel of Crude has 42 GJ)
World population is ~8 billion and it produces $90 trillion economic output, consuming a 500 billion GJ of energy
TFR - Total Fertility Rate - Number of children born to a woman during her lifetime. TFR has been falling world-wide - (quality over quantity). TFR of 2.1 is replacement level - population remains stable (little over 2 to make up for two parents and girls that don’t survive till fertility)
South Korea TFR dropped from 6 to under 2 in 30 yrs (’60s - ‘90s). (Its currently at 0.92!)
‘50 - 40% lived in countries with TFR > 6. ‘00 - just 5% in countries with TFR > 5 and mean was 2.6 (closer to replacement level of 2.1). By 2050 - 75% will be in countries below replacement
In 1900 Europe had 18% of world population. In ‘20 its 9.5%. Asia is now 60% of world pop and is ascending. Between ‘20 and ‘70, Africa will have 75% of all births (wow)
If TFR is below replacement rate of 2.1 but above 1.7, there’s a possibility of future rebound (France and Sweden are at 1.8). TFR < 1.5 makes rebounds very unlikely (1.3 in Spain, Italy and Romania. 1.4 in Japan, Ukraine, Greece and Croatia)
Best indicator for quality of life is infant mortality rate. Low rates can only be achieved by a combination of several factors - good healthcare, prenatal, postnatal and neonatal care, good nutrition, good sanitation and access to social support, govt. investment in infra etc.
Infant mortality rate was 200-300 (out of 1000 births) in the 1850s - reduced to 35-65 in 1950s. In affluent countries with homogenous population (low migration) this is now < 5 (Japan, South Korea, Iceland, Finland, Norway). Its relatively higher in Canada (5) and US (6) due to heterogenous migrant population and income inequality
Vaccination has the highest cost-benefit. Pentavalent vaccine costs $1 and prevents diphtheria, tetanus, pertrussis, polio, meningitis, otisis and pneumonia. Returns in terms of illness costs and economic benefits add up to 44x return on investment (Gates foundation research)
Vaccination coverage is now 96% in high income countries and 80% in low-income nations (up from 50% in ‘00)
Average heights been increasing over the last century. In Japan, it was 160 cm in 1900 and is 172.6 cm in 2020. High animal protein (milk, dairy products, meat and eggs) has led this shift
Being tall is associated with a lot of benefits from higher life expectancy, lower risk of cardiovascular diseases and also higher earnings (Correlation first documented in 1915). CEOs were taller in firms with large assets!
Netherlands has tall citizens (182.7 cms) - mostly from the last quarter of 20th century - Dutch milk production and milk consumption rose through the 60s. Easiest way to improve a child’s chances of growing taller is to give them more milk
Life expectancy has been going up around the world since 1850 when it was 40 in the US. Japan currently has the highest at 87 - About 20 years for 50 years gain, but this gain might be tapering out and we need fundamental advances in science to continue at that rate.
Our ability to sweat lets us run longer - we can remove heat from the body through sweat and continue burning energy at high rates (Amateur marathoners may use 700 watts vs experienced ones at 1300 W in 2.5 hrs for 32.2 kms)
The great pyramid of Giza was probably constructed by a maximum of 7000 workers going by back of the envelope calculation of potential energy and calorie conversion of food and other supporting evidence at the site
GDP as a measure doesn’t measure air and water quality, soil erosion, biodiversity loss and the effects of climate change
Unemployment measures vary wildly from 1.2% to 6.7% in the US depending on ways of measuring - a 5x difference based on the methodology
Nordic countries are the happiest as per world happiness report - it measures based on GDP per capita, social support, life expectancy, freedom of choice, generosity and perceptions of corruption. (Some of the happiest countries have the highest suicide rates)
In 1800 < 2% of world population lived in cities. By 1900 ~5%. 1950 it reached 30% and by 2007, ~50%. There are 512 cities with a population of > 1 million, 45 of them > 5 million and 31 above 31 million.
WW-I led to several advances - diesel powered submarines, tanks, bombing raids, aircraft carriers, portable transmitters etc.
In 1909 Fritz Haber had figured out a way to manufacture Ammonia (NH3) from Nitrogen and Hydrogen under high pressure. In BASF, Carl Bosch in 1914 commercialised this to create the world’s first Ammonia plant. (Haber-Bosch process). This was to be used to produce Sodium or Ammonium Nitrate fertilisers. When Germany was blockaded in WW-1, they used Ammonia to create Nitric Acid and TAN to synthesise explosives instead of fertilizers (Deepak Fertilizers does exactly this)
Iron Curtain - Ran from Baltic to the Black Sea with Moscow controlling nations to the east of it. Post Soviet fall, the Maastricht treaty of 1993 helped form the European Union. A common currency in Euro came about in ‘99. With 450 million population (<6% of world), it produces 20% of world’s economic output (US is 25%) and 15% of global exports.
Adoption of common currency without common fiscal responsibility, excessive bureaucratic control from Brussels, reassertion of sovereignty threaten the EU
UK is now an aging has-been (32% old-age dependency ratio), de-industrialised country with a per-capita income that’s just over half of the Irish mean
In the long-run, the fortunes of nations are determined by population trends
Japan has 25% population above 65. Population is shrinking as well with the 127 million today expected to reduce to 97 million by 2050 when people above 80 will outnumber the children!
China population is aging rather rapidly due to the one-child policy (abandoned only in 2015). Ratio of economically active to dependent people peaked in 2010. China of today might be the Japan of the ‘90s when Japan was a threat to the West in terms of growth only to stagnate for the next 30 years
China’s nominal GDP is 5x India’s as per IMF’s 2019 estimates. $14.1 trillion vs $2.9 trillion. Adjusted for PPP, China’s per capita is $20980 vs India’s $9030
Between 2000 and 2017, manufactured products output rose from $6.1t to $13.2t but its importance is dropping fast, just as agri has retreated to just 4% of economic output today. Manufactured products was 25% of world output in 1970 but was only 16% in 2017
China (30%), US (17%), Germany and Japan make up 60% of manufactured products output - but manufacturing was only 21% of Japan and Germany’s output and only 12% of US output. Services and Tech output is far higher now in US and consequently, manufacturing trade surplus of US until 1982 and China’s chronic deficits until 1989 have reversed (This is Putin’s current bone of contention if you listen to his speeches)
Keeping large empires for extended periods of time has become a challenge of late
1880s is probably the most inventive period in human history - Electricity, ICE engines, Electromagnetic waves (and consequent applications of X-rays, infrared, cosmic rays, radio waves etc.), commercial coffee, pancakes, oats antiperspirant, kraft paper, light-rail system, bicycles, revolving doors, skyscrapers, WSJ, cash register, elevator, vending machine, Coca-cola and ballpoint pen
Transformers are a critical invention that allows us to step-up and step-down current allowing us to deliver it across great distances and also to charge devices like phones (all chargers have a transformer)
Diesel is 12% more energy-dense and diesel engines are 15-20% more efficient than petrol, allowing diesel vehicles to go further on same tank of fuel. 40% of European cars are diesel while only 3% of US cars are. Diesel will continue to dominate petrol for heavy road transport, shipping, off-roading etc
Edison held 1100 patents in the US and more than 2300 worldwide
Inventions improve efficiency but over long-periods, the annual rate is still low - crop yields have risen 2% since 1950. Steam generators converting thermal power to electricity at 1.5%. Lighting (lumens per watt) has improved the most at 2.6% from 1881 to 2014 (LED bulbs). Yet, our progress in computing power following Moore’s law has doubled the power every 2 years from 1970!
Information would be carried forward only in human brains as bards told and re-told stories. Then clay cylinders, tablets took over, and later scrolls and Gutenberg’s movable type. Today, all of Shakespeare’s plays can be held digitally in less than 5 MB
World’s first gas turbine began to generate electricity in 1939 (ABB) with efficiency of 17%. The gases from the turbine were still hot enough (600 deg C) and steam turbine attached to gas turbine could improve efficiency and so CCGT was born (combined cycle gas turbine) - today CCGT’s deliver 60% efficiency. Siemens has a CCGT rated at 593 MW.
Levelised cost of electricity for coal-fired steam generators is $60/MWh. $48/MWh for solar photovoltaics, $40/MWh for onshore wind. $30/MWh for conventional gas turbines and < $10/MWh for CCGTs (Caveat: Book came in 2020)
Nuclear reactor construction was slow to start but picked up in ‘60s and by ‘77 accounted for 10% of US energy and 20% by 1991. Nuclear share of electricity today - 72% in France, 50% in Hungary, 38% Switzerland, 24% in South Korea and 20% in US
Three nuclear failures so far - Three Mile Island in ‘79, Chernobyl in ‘86 and Fukushima in ‘11. There are currently 449 operating reactors in the world as of ‘19 with 53 under construction (Failure rate is perhaps too high given the number of reactors for a 60 yr period)
Wind energy requires a lot of fossil fuels - For a 5MW turbine, it takes 150 tons of steel for foundations, 250 tons for rotor hubs and nacelles, 500 tons for the towers. Cranes and earth moving equipment, as well as vehicles that transport parts use diesel. We will need 450 million tonnes of Steel, 90 million tons of crude and 600 million tons of coal by 2030 if Wind is to form 25% of global power demand
A well-sited and well-build wind turbine can generate as much energy as it took to build it in a year
So far we have reached 14 MW wind turbines (GE). Larger capacities will need larger blades (energy increases with square of radius swept by blades) and so larger towers to house them in. Blade mass increases as a cube of blade length, so larger designs are extraordinarily heavy
PV cells were $300/W in 1950s, $80/W in ‘70s, $1/W in 2011 and 8-12 cents/W in 2019. More drops in price may come but cost of installation is substantially higher. Efficiency is at 10 W/Sq.m in sunny places
In 2000 global PV generation was < 0.01%, a decade later 0.16%, and by ‘18 about 2.2% (Hydro is 16%). PV cells may do 10% by 2030. Energy transitions on a global scale, take a long time (Be wary of quick shift to renewable claims)
Largest Li-ion battery storage system (with 18k cells) can store 400 MWh. To be completely on renewables , we need to store energy and central Li-ion systems may not be able to serve megacities. Pumping water and using turbines or decomposing water with cheap solar and storing Hydrogen may also hold promise
Electric cars are about 40% battery weight. For large container ships to be viable through electric power, energy density has to be 10x higher than what’s possible today (these will continue to run on diesel)
Electricity is now 38x cheaper than in 1902. Considering wages have gone up, it is now 200x more affordable. Along with lumens/W efficiency of modern bulbs, light is now 2500x more affordable!
Though PV cells prices are falling and wind turbines prices as well, electricity prices have gone up overall (Renewables are overall expensive)
In 1800, few places around the world burned coal - 98% was biomass or “new” carbon (wood and charcoal). By 1900, biomass was still 50% and by 2000 12% (sub-Saharan Africa > 80%)
First climate change convention was held in 1992 - 86.6% fossil fuels then. In 2017, fossil fuels supplied 85.1% energy needs - A mere 1.5% reduction in 25 years (again, not easy to replace fossil fuels)
In ‘92 renewable sources provided 0.5% of electricity and in 2017 4.1% - this may look like a win for wind and solar but most gains have come from hydro
Only 27% of total final energy consumption is electricity (Very, very important metric - a lot of energy consumption in shipping, logistics, industrial, home heating isn’t electricity - they are diesel, aviation kerosene, gas and coal and won’t go away anytime soon. Neither can use of plastics die anytime soon)
We crossed the Atlantic in sailing boats that took 4 weeks eastward and 6 weeks westward (Against the wind). Steamships did it in ~16 days in 1838, down to 9 days in 1848, ~5 days in 1907 and 3.5 days in 1952. Boeing 787 today does it in 7.5 hrs (Concorde could do it in 3.5 hrs)
First bicycle design came about in 1817, was made of wood and was powered without pedals by feet pushing against ground. Only when cheaper steel came about, along with pneumatic tires and paved roads that it took off around 1885! Still the Rover bicycle design stayed almost unchanged for 100 years until alloy frames, mountain bikes and upturned steering and thin tyres came about around 1980
Charles Goodyear’s vulcanisation process led to solid rubber tyres in 1844. Dunlop invented the inflatable tyre around 1880s. Around 1890s Michelin brothers came up with detachable tyres for bicycles. Dunlop brand is today owned by Goodyear tire company. Michelin is still a market leader behind Japan’s Bridgestone - rare case of business surviving and staying near top
Ford Model T Runabout in 1909 costed $825. Assembly line embracement and innovations reduced this cost to $260 in 1925 (just 2.5 months of avg wage that time). Ford market share was 15% in 1908, 48% in 1914 and 57% by 1923. By 1927 Ford had sold 15 million model Ts!
Best selling car of all-time though isn’t the Ford Model T but the Volkswagen commissioned by hitler with design by Ferdinand Porsche (and hence the Porsche 911 line still pays tribute that that design).
Watt/gm of car engines have gone up from 1 watt/12gm 100 yrs back to 1 watt/gm today in modern cars. However, avg car weights have gone up tremendously as well (~3x reaching 1.8 tons)
Vehicle-to-passenger ratio is another key indicator of efficiency and choices we make. A small Citroen has a ratio of 7.3 vs a Boeing 787’s 5.3 (0.1 for a bicycle and 1.6 for a Vespa. 28 for a BMW 740i and 32 for Ford F-150). Nearly three quarters of commuters drive alone to work making this worse
3/5th of EV electricity comes from fossil fuels (global mean) - some places this power comes from hydro (99% in Quebec), some places from nuclear fission (75% in France) while most EVs in China are driven by fossil fuels
Jet Fuel or Jet A-1 has 42.8 MJ/kg - a bit more energy dense than gasoline but can stay liquid at -47 deg C
Nitrogen is the most important macronutrient in crops, alongside phosphorous and potassium. Nitrogen is mostly “fixed” from its inert state in air by bacteria attached to plants’ roots. With growing demand crop rotation wasn’t an option and so synthetic fixing was a necessity - facilitated by Haber-Bosch process ammonia (urea) which provides half of all nitrogen required by crops (Nitrogen from air and Hydrogen from methane in natural gas (CH4) which also provides the energy required
Nitrogen utilization efficiency via Urea has reduced since the 60s and excess nitrogen applied also acidifies ecosystems and nitrates also contaminate fresh water sources (N20 is also a greenhouse gas)
Wheat yields in early medieval periods was 0.5 ton/hectare. 1 ton in 16th century. 1950 it rose up to 2 ton with crop rotation and urea. Borlaug’s dwarf variety improved yields producing as much wheat as straw which tripled yields since to about 3.2 t/ha (though population doubled 2-3 fold, this helped us keep up with the mouths to feed)
Food waste - 40-50% of root crops & fruits, 35% fish, 30% cereals and 20% oilseeds, meat and dairy are wasted. In poor countries, wastage is in the supply chain and in rich, post reaching the Customer (largely sedentary aging populations)
US supply of nutrition per capita was 2100 cal in 1970s to 3600 kcal today. Actual avg. daily intake is 2100 kcal, so 1500 kcal is wasted - all the inc. in supply in last 50 yrs is wasted! Obesity (bmi > 30) has more than doubled from 13.4% to 35.7% between 1962 and 2010. 74% males and 64% females have excessively high weight (bmi > 25)
Classic Mediterranean diets have low incidence of heart disease - low on sugar and meat, high intake of carbs in bread, pasta, rice complemented by pulses and nuts, dairy, fruits, veg and seafood, consumed lightly processed with olive oil. Italian diet is now less Mediterranean with increased meat and animal fats (3x), less than 50% dietary fats from olive oil and beer substituted for wine
1976 US beef consumption was 40% and chicken 20%. In 2010 its 16% beef and 40% chicken. Nothing converts feed efficiently into animal protein as broilers and so chicken is cheap. Avg weight of broiler chicken was 1.1 kg in 1925 and is now 2.7kg in 2018!
French per capita wine consumption was 121 L in 1850 and 124 in 1950 (barely changed). However, it dropped to 95 L in 1980, 71 L in 1990, 58L in 2000 and 40 L in 2020 (substituted by mineral water, fruit juices and carbonated soft drinks)
Agriculture today is not to grow crops for people but to grow feed for animals
High Japanese life expectancy can be attributed to moderate overall food consumption (belly 8 parts in 10 full). Japanese also waste food less vs west (avg availability of 2700 kcal and consumption of 1900 kcal - wastage of 800 kcal vs 1500 kcal of US)
Modern cement began its life in 1824. The 20th century was the era of reinforced concrete. Between 1900 and 1928, US consumption rose 10x. China produces 60% of global total. In last 2 yrs, China has used more cement than the US did in the entire 20th century!
About 1.2 billion people need to heat their houses - 400 million in EU, Ukraine & Russia. 400 million in northern US and 400 million in China
Between 1800-2000, transfer of carbon from fossil fuels to atmosphere increased 450x while population went up just 6x. 2000-2017 though emissions have declines by about 15% in US and EU while it has gone up 3x in China (probably mere displacement of production)
Four pillars of modern civilisation - ammonia, steel, cement and plastics (none have affordable non-carbon alternatives)

These are bite-sized chapters covering a wide-range of (related) topics from demographics, energy, inventions, mobility, renewables, climate change, agriculture, etc. If you love making sense of the world we live in, you are bound to enjoy this. 9/10

Apurva_Dubey · October 17, 2022, 2:31pm

@phreakv6 Great stuff sir – if you ever start a paid service I will be your first customer

phreakv6 · October 26, 2022, 4:50am

A Zebra in Lion Country, Ralph Wanger, 1997 - This is probably one of the funniest investing books, maybe after ‘Where are the Customer’s yachts’. Funny doesn’t mean its not insightful though. Its a nice short, thoroughly enjoyable read on all things investing.

My notes -

Investing philosophy - invests in small companies with growing earnings whose stocks are still good value
Most of today’s hot new issues will be in cold storage in 5 years
Acorn Fund (author’s fund) started in Dec 31, 1969 - Apr-May 1970 was a severe bear market which cut the fund value by a third. ‘73 and ‘74, the fund was down by 24% and 28%. After 6 years, in ‘76, the fund had just about regained original value
Early 70s Nifty Fiftys were trading at very high valuations and market became two-tiered. Disney 76x, McDonald’s at 81x and Polaroid at 97x while rest of the market underperformed (it looked like market was manipulated but it was just groupthink)
Tough markets are no time to be serious. That’s when you need the comic relief. (Author wrote lively letters and attracted attention to his fund). Nobody pays attention if you are serious
When the expensive Nifty-Fifty finally dropped, even reasonably priced stocks dropped too. When a large segment of the market gets overpriced and corrects, everybody gets nailed - the guilty, less guilty, the bystander. Even your sensible portfolio will go down (It might recover fast as the former high-flyers are on everybody’s avoid list)
The cat that sits down on a hot stove lid will never sit down on a stove lid again - hot or cold (paraphrasing Mark Twain). Mid-to-late 70s saw interest drop in the market and avg. volumes dried up dramatically
“Like an over-sexed guy in a whorehouse. This is the time to start investing” - Buffett comment was made Oct ‘74. Strong upturn though didn’t arrive until 1982 (all portfolio managers wanted to do the same thing again)
Banks’ commercial loan depts were loading up on mortgages (to real-estate) but at the same time their equity analysts hated their stocks - whenever one end of the bank is doing one thing and the other end another thing - there’s opportunity for arbitrage (real-estate stocks were available for a pittance)
When all of hear the same news within seconds, we act like a herd of zebras who have sensed a pride of lions sneaking up
Paid hands are not the same as owners and drivers of small companies - even with bonus.
When a company develops into a multi-industry giant, even the company’s top management can’t understand all that it does.
Not all small companies are same - some are small because they are young and haven’t been around long. Others have been big but are losing money now and have shrunk their market cap - in other words, they have had smallness thrust upon them
The highways suburbanized the US. Everybody then moved from their city apartments for single-family housing. Also, everyone needed an automobile. Malls, drive-in fast food were born
IBM made deals with business through people at the top while selling $5 million machines. When it had to sell $2000 machines, it had to make deals with VPs who were unwilling to tolerate the arrogance of IBM’s sales reps. IBM realized it but could do nothing about it
When the highway system was built in the US, movement of goods shifted to trucks. (Cheap oil perhaps drove it. We might be going in reverse as our situation is different.)
Small companies are well-suited to respond to rapid change. Big companies have layers of management and are slow
Four different ways stocks price can rise 1. Growth 2. Acquisition 3. Repurchase 4. Revaluation
If you don’t make some misjudgements, you are doing it wrong - you’ve not taken enough risks and you’ll never score a big one. You do best when you stray furthest from the herd
Small is good, micro is not - smaller the stock, bigger the risk. Acorn invests in quality small companies, seasoned rather than new, with strong financials, dominance in their segment, entrepreneurial management, and understandability (simple businesses). Owns about a dozen of them to offset the duds
When people comment on health of market - they mean the index, maybe DJIA or S&P500 but the health of the patient in the next bed (small stocks) might be very different. There are two different markets and their fortunes alternate
Trying to sell a small illiquid stock in a down market brings the image of galley slaves, chained to their bench while the ship sinks (Ben Hur)
If you are pursuing a style that doesn’t suit you, you will be unhappy and an unhappy investor is an unsuccessful investor
GARP - Growth at a Reasonable Price. Looks like the term originated at Acorn
When growth stocks stumble, resist the temptation to buy. A fall due to one disappointing quarter may not stop with one disappointing quarter (like there’s never one cockroach in the kitchen)
How high can a tree grow? As high as its trunk allows it to, until it collapses under a column failure
Walmart reported 99 consecutive quarters of earnings growth until 4th quarter of 1995 when it de-grew 10%
Earnings disappointments aren’t as rough on value stocks. Over long periods value investors earn better returns than growth investors. You can’t make 5-10-20x if you don’t hold on.
In gambling there’s a steady flow of wealth from hopeful gamblers to ones that know what their odds are. Bargain stocks, long-shot opportunities are cheap for a reason, just like lottery tickets - because their odds are low
Dollar gain isn’t equal to a dollar lost (Tversky & Kahneman). At even odds, no two neighbours will bet their cars against each other - because a no car is far worse than 2 cars is good (non-linear value function)
Most people ignore probabilities, exaggerate risks, and are prone to sacrifice returns in favour of perceived safety
Bets on long shots are popular on last race of the day
When something negative happens, a stock may go down much more than the news warrants (over-discounting bad news)
The further you stray from stocks you really understand, the more likely you are gambling rather than investing. (Make sure your portfolio isn’t an haphazard collection of second-hand “stories”)
Too often people start with discipline but abandon it. Then you end up buying the hot sector at the peak of the cycle
If you are not a risk-taker but chase fast-growing small companies because that’s where the big money is made, you will be dismayed by the gyrations (know thy risk tolerance)
There’s no field of human knowledge that isn’t valuable somewhere in the investment process and hence no one can know all that’s valuable
Many US ticker symbols are like vanity license plates. RARE (steak house), DOSE (Drug company), BID (Sotheby’s), JAVA (Coffee) etc.
Author picks the theme to invest in first and then picks the attractive stocks within the theme
Funds do well as long as portfolio decisions are made by a small group of people
Bottom-up stock picking makes you end up with lot of stocks, hard to follow and quantify risk at portfolio level. Top-down lets you choose attractive stocks within areas of market that are compelling
Author wants to be convinced that management is competent, that product line is exciting, but also that its particular industry is one with superb prospects
How do you identify investment themes? “You see you do not observe” (Sherlock Holmes to Watson). Observe trends around you
How do you know when a theme has played out? Price are high, Wall St. is cranking out new issues, magazine covers declare its importance and so on.
If you can see where the con men are flocking, you can tell which ones are about to peak
Since the industrial revolution began, investing in companies that benefit from technology than in technology companies has often proved the smarter strategy (Going downstream)
People coming into casinos for excitement are transferring their money to people following laborious, boring routines
Solid tripod - Growth potential, financial strength and fundamental value
Usually market pays what you might call an entertainment premium for stocks with an exciting story (hilarious insight)
Quit test - If you were authorized sufficient line of credit, will you buy all the stock and takeover and run the company? Those are the ones the author finds worth investing in
Good management to Wall St. is 3 quarters of rising earnings. Make it 4 and you have a great management (hilarious insight)
Good managements gets everyone working in the same general direction and ensuring the direction is a sensible one. Great managements can change the direction of a company
Annual reports can be useful but you must be more interested in what the company doesn’t want you to read
If a company that normally has 25% sales in inventory suddenly has 50% - start asking questions. Its possible that there’s rapid expansion causing it, but more often than not, its impending doom. (Mirza Intl. and Parag Foods come to mind)
Disaggregating business segments allows you to discover “hidden value”. Eg. A poor segment might be dragging overall earnings down - the good part is worth more than what the company is selling for (Similar to Kahneman’s dinner plates experiment - very imp. mental model to have)
Sometimes company’s asset value might be considerably different from its book value - fixed assets depreciated to the point that book value is negligible but there’s still economic value
Author expresses reason for owning in a short, clear statement - “Expansion of hotel and casino business will double earnings” for eg. When statement is no longer valid, its easier to sell (Most times we try to “predict” instead of “react” - so write down thesis and react post sufficient confirmation)
Prices are set by optimists (earnings overestimated by those who like and own the stock). You have to remind yourself of that fact and leave room for disappointments.
Discounted at 12%, a $100 payout 20 years down the line is worth $10 now. At 7%, its worth $26. When interest rates dropped in the mid-80s, most stocks, especially growth stocks with payouts into the future, had large P/E re-rating
Stock market vs Chess - number of rules of the game is not known and rules change over time
Aureodigititis - disease of the golden finger. In bull markets, anything our finger points to, turns to gold and we delude ourselves as “intuitive” stock pickers and skimp on research leading to disaster
When men want something, they will without reflection leave that to hope, while they employ full force of reason to reject anything they find unpalatable (Thycidides)
Exceptional growth usually sows the seeds of its own decline (Invites competition)
Any yardstick for valuation, even one with sound theoretical basis that has worked for a century can stop working (Jeremy Siegel in ‘Stocks for the Long run’)
People calling market direction are more interested in trying to prove their brilliance than making money
When market’s going down, its not because you are stupid. When its going up, its not because you are smart.
Later stages of a bull market a witches coos in your ears “There is no risk. The market will only go up. IPOs are marvelous. Your stockbroker is your best friend. A limitless, effortless fortune awaits you”
What we made in a year, we lost in a week (’87 crash)
When you live through something catastrophic, its hard to recollect/relive it in the future when you are far removed. Maintaining a journal helps give voice to the experiencing self (Kahneman talks extensively of this). Author got the idea from Soros’ Alchemy of finance to maintain a journal
Mutual funds were forced to sell as their shareholders changed from careful investors to a lynch mob (’87 crash)
When you are frightened, its hard to tell calmness from paralysis
If the market is collapsing what you own hardly matters, as when there’s a runaway bull market. The best investors are kids who have never lived through a bear market and who just heedlessly buy whatever’s moving
Tulip mania - End of 1636, a pound of tulips sold for a year’s income of a middle class family
Optimists aren’t compelling and they don’t have a lot to say and they sound naive.
“Don’t bitch. Switch” - Find growing companies wherever they are domiciled and switch to them when you don’t find growth where you are
Seventy years of communism was like five years of total war (Russia)
Until ‘93 only 5% of US money went global but in ‘93 money earmarked for global went to 50%
Its tempting to pay back debt in cheaper dollars. That’s the only solution politician can think of. Inflation is more palatable than unemployment
Singapore shipyards are lowest cost yards in the world for merchant fleets that need upgrading (wonder where we fit in now)
China and Taiwan were equally poor in ‘49. By ‘78 Taiwanese income approached European levels
When an investor first hears about China, it sounds like heaven. China needs honest books and written agreements and stable laws.
When some developing countries grow between 6-10%, the disposable income grows at 15-20% and their companies can grow 25-30%.
Any place in the world that gets richer eats more meat and protein, less bread and rice, wears nicer clothing, owns a car, a large air-conditioned house and feel entitled to a pair of Reeboks and a meal at McDonald’s once in a while. Find companies that satisfy these desires

Having read quite few of these investing books by fund managers and academics, this is one that is closer to ‘One up on Wall St.’ and is more actionable and suited for retail and its funny to boot. 9/10

Apurva_Dubey · November 6, 2022, 6:12pm

Richer, Wiser, Happier by William Green (2020)

The author interviewed (and spent time with) many investment greats over multiple years which resulted in this book. In this book the author takes us deep into the psyche of each investor – how their investment styles were shaped by their worldview and their personal philosophy. I particularly enjoyed the chapter on Howard Marks (read it twice over).

Apart from the investment mantras, the book is full of nuggests of sublime wisdom which I really enjoyed; for example –

A sense of impermanence can also inspire us to value and nurture our relationships (since we don’t know how long any of us will be here) and to live more fully now. In his book The Science of Enlightenment, Shinzen Young writes of learning to experience the world with “radical fullness” by focusing on every moment with “extraordinary concentration, sensory clarity, and equanimity. You can dramatically extend life—not by multiplying the number of your years, but by expanding the fullness of your moments.”

Here are my notes –

Mohnish Pabrai | The Man Who Cloned Warren Buffett

There are no prizes for frenetic activity. Rather, investing is mostly a matter of waiting for these rare moments when the odds of making money vastly outweigh the odds of losing it.
Say No to Almost Everything. Take a simple idea and take it seriously.
Mohnish’s mantras
- Rule 1: Clone like crazy.
- Rule 2: Hang out with people who are better than you.
- Rule 3: Treat life as a game, not as a survival contest or a battle to the death.
- Rule 4: Be in alignment with who you are; don’t do what you don’t want to do or what’s not right for you.
- Rule 5: Live by an inner scorecard; don’t worry about what others think of you; don’t be defined by external validation

Sir John Templeton | The Willingness to Be Lonely

To beat the market, you must be brave enough, independent enough, and strange enough to stray from the crowd
First of all, beware of emotion: “Most people get led astray by emotions in investing. They get led astray by being excessively careless and optimistic when they have big profits, and by getting excessively pessimistic and too cautious when they have big losses.”
Second, beware of your own ignorance, which is “probably an even bigger problem than emotion.… So many people buy
something with the tiniest amount of information. They don’t really understand what it is that they’re buying.”
Third, you should diversify broadly to protect yourself from your own fallibility.
Fourth, successful investing requires patience.
Fifth, the best way to find bargains is to study whichever assets have performed most dismally in the past five years, then to assess whether the cause of those woes in temporary or permanent.
Sixth, “One of the most important things as an investor is not to chase fads.”

Howard Marks | Everything Changes

In a world where nothing is stable or dependable and almost anything can happen, the first rule of the road is to be honest with ourselves about our limitations and vulnerabilities.
If you want to add value as an investor, you should avoid the most efficient markets and focus exclusively on less efficient ones.
Any asset, however ugly, can be worth buying if the price is low enough. Indeed, Marks believes that “buying cheap” is the single most reliable route to investment riches—and that overpaying is the greatest risk. Thus, the essential question to ask about any potential investment should be “Is it cheap?”
The future is influenced by an almost infinite number of factors, and so much randomness is involved that it’s impossible to predict future events with any consistency
When analyzing any asset, what Marks wants to know, above all, is “the amount of optimism that’s in the price.”
The future may be unpredictable, but this recurring process of boom and bust is remarkably predictable. Once we recognize this underlying pattern, we’re no longer flying blind.
“You can’t know the future,” says Marks, but “it helps to know the past.”
One way that Marks gauges the current investment environment is by gathering “vignettes” about “stupid deals” that are getting done. For example, in 2017, Argentina issued a hundred-year bond with an annual yield of 9 percent. It was vastly oversubscribed, even though Argentina had defaulted on its debt eight times in two hundred years, most recently in 2014. It seemed a fine example of what Samuel Johnson called “the triumph of hope over experience.” Sure enough, when the author interviewed Marks in 2020, Marks noted that Argentina had just defaulted for the ninth time.
As Marks often says, “The environment is what it is.” We can’t demand a more favorable set of market conditions. But we can control our response, turning more defensive or aggressive depending on the climate.
“Skepticism calls for pessimism when optimism is excessive. But it also calls for optimism when pessimism is excessive.”
Never bet the farm against the inexorable forces of change.
Both in markets and life, the goal isn’t to embrace risk or eschew it, but to bear it intelligently while never forgetting the possibility of an unpleasant outcome.
Lessons from Howard Marks
- The importance of admitting that we can’t predict or control the future.
- The benefits of studying the patterns of the past and using them as a rough guide to what could happen next.
- The inevitability that cycles will reverse and reckless excess will be punished.
- The possibility of turning cyclicality to our advantage by behaving countercyclically.
- The need for humility, skepticism, and prudence in order to achieve long-term financial success in an uncertain world.

Graham, Kahn, Buffett, Eveillard, and McLennan | The Resilient Investor

First, we need to respect uncertainty
Second, to achieve resilience, it’s imperative to reduce or eliminate debt, avoid leverage, and beware of excessive expenses, all of which can make us dependent on the kindness of strangers.
Third, instead of fixating on short-term gains or beating benchmarks, we should place greater emphasis on becoming shock resistant, avoiding ruin, and staying in the game.
Fourth, beware of overconfidence and complacency.
Fifth, as informed realists, we should be keenly aware of our exposure to risk and should always require a margin of safety.

Joel Greenblatt | Simplicity Is the Ultimate Sophistication

“For the simplicity that lies this side of complexity, I would not give a fig, but for the simplicity that lies on the other side of complexity, I would give my life.” (attributed to the US Supreme Court justice Oliver Wendell Holmes)
We each need a simple and consistent investment strategy that works well over time—one that we understand and believe in strongly enough that we’ll adhere to it faithfully through good times and bad.
It’s not enough to find a smart strategy that stacks the odds in your favor over the long haul. You also need the discipline and tenacity to apply that strategy consistently, especially when it’s most uncomfortable.
Lessons from Joel Greenblatt
- First, you don’t need the optimal strategy. You need a sensible strategy that’s good enough to achieve your financial goals.
- Second, your strategy should be so simple and logical that you understand it, believe in it to your core, and can stick with it even in the difficult times when it no longer seems to work.
- Third, you need to ask yourself whether you truly have the skills and temperament to beat the market.
- Fourth, it’s important to remember that you can be a rich and successful investor without attempting to beat the market

Nick Sleep & Qais Zakaria | Richest rewards go to those who resist the lure of instant gratification

First, there is a compelling case to pursue quality as a guiding principle in business, investing, and life—a moral and intellectual commitment inspired by Zen and the Art of Motorcycle Maintenance
Second, there is the idea of focusing on whatever has the longest shelf life, while always downplaying the ephemeral. This principle applied not only to the information they weighed most heavily, but also to the long-lasting companies they favored.
Third, there is the realization that one particular business model—scale economies shared—creates a virtuous cycle that can generate sustainable wealth over long periods
Fourth, it’s not necessary to behave unethically or unscrupulously to achieve spectacular success, even in a voraciously capitalistic business where self-serving behavior is the norm.
Fifth, in a world that’s increasingly geared toward short-termism and instant gratification, a tremendous advantage can be gained by those who move consistently in the opposite direction

Charlie Munger | Don’t Be a Fool

Invest better, think better, and live better by adopting a strategy of systematically reducing standard stupidities
Munger strives consistently to reduce his capacity for “foolish thinking,” “idiotic behavior,” “unoriginal error,” and “standard stupidities.”
Safeguard against stupidity: imagine a dreadful outcome; work backward by asking yourself what misguided actions might lead you to that sorry fate; and then scrupulously avoid that self-destructive behavior.
For a start, he says, “Don’t pay too much. Don’t go for businesses that are prone to obsolescence and destruction. Don’t invest with crooks and idiots. Don’t invest in things you don’t understand.”
The habit of actively collecting examples of other people’s foolish behavior is an invaluable antidote to idiocy.
He once told Berkshire’s shareholders, “I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.”
Nothing matters more than averting obvious errors with the potential for catastrophic consequences.
Munger particularly admires those with an unflinching determination to seek out “disconfirming evidence” that might disprove even their most cherished beliefs. The willingness to welcome the discovery of our own errors is an inestimable advantage.

phreakv6 · November 20, 2022, 5:35am

Day to day Economics, Satish Deodhar, 2012 - If you wanted a well-structured and simple book to understand the basics of Macroeconomics, this could be a very good start. It covers everything you need to know from role of govt., capitalism, stock markets, economic cycles, fiscal and monetary policies, role of central banks, inflation, taxation, globalisation and free trade etc… The stats are bit outdated though since the book is written in 2012 but that could be a positive as you can look up where numbers are today and see how we have fared in the last decade.

My notes -

Microeconomics - individual economics decisions of households and firms.
Macroeconomics - decisions of the aggregate business environment
Role of govt. is to define rights and obligations of citizens and to secure them by enacting and enforcing laws. So enacting laws, enforcing them through a judiciary and police force and defending against external aggression is the primary role of govt. However govt. also gets involved in power generation, water supply, roads and postal services and formulates policies for reducing unemployment and inflation, interfering with free-market forces.
Govt. in India also manufactured watches, bread and offers air transport services (Modern bread, HMT watches, Air India - some privatised now or shutdown)
Should govt. be in certain business but not others? How does one decide? The govt. should only produce pure public goods - The ones where non-excludability (Say when you cannot prevent a person from using a good/service) and non-rivalry in consumption (My consumption doesn’t interfere with yours) cannot be enforced. Author explains these beautifully with a street-performer who is watched by everyone but no one pays in the end (They can’t choose who watches, nor can the paying ones exclude the ones that don’t pay)
Pure public good - National defence - Consumption of this service is non-excludable and non-rival. Why would anyone pay for it when they can have a free ride at the expense of others?. Private firms cannot provide this profitably. Same applies to light houses, street lights, rural roads and the police force (My thoughts - While a road can also be non-excludable and non-rival, a toll road prevents others from using it without paying - so pvt. companies can make them for profit - excludability is so crucial for capitalism!)
Club goods - restrict membership and charge fees. Say, a swimming pool or a gym at a club creates excludability and though it retains the non-rivalry in consumption. The street-performing trapeze artist does the same by starting a circus instead
Natural monopoly - A business in which only one player should exist for efficient delivery. Say water delivery. Its inefficient for multiple players to lay water pipelines. If one player is allowed, they can charge whatever they want - so govt. undertakes natural monopolies, alongside pure public goods. (My thoughts - Postal service used to be one such, as laying out a nation-wide service is expensive - but pvt. couriers now compete with India post well - as do bsnl’s competition)
Most public utilities are natural monopolies, (or at least used to be) - like electricity, landline telephone etc. (Book was written in 2012. Now we have private players doing well in both). Even when pvt. players enter a traditional natural monopoly, the govt. tries to retain regulatory purview over the same on pricing (electricity unit prices?)
Externalities - Reason for govt. to interfere in a free market. Externality occurs when production, consumption or trade of a good affects a bystander who is not party to the specific activity (late-night loud music at a neighborhood club).
Externalities can be positive (say renewables) or negative (say alcohol and cigarettes). Govt. uses taxes to regulate these - through green tax and sin tax
Pure public goods (non-rival, non-excludable), natural monopolies and externalities are clear cases of market failure where govt. may participate
The word “budget” comes from ‘bougette’, which stands for leather bag. The origin is from 1760 when the exchequer in England would carry govt. statements in a leather bag (even today this image is synonymous with budget)
Size of budget as a size of the economy shows how big or small govt’s participation is in the economy (14% by expenditure and 9.5% by receipts as of 2012 when book was written. $400b in rev (13%) and $490b in expenses (16%) as of ‘22 budget - so better over 10 yrs). Other countries’ tax revenue is markedly higher than ours and so their govt. participation is also higher (US, France, UK)
Expenditures for govt. fall under 2 heads - revenue and capital expenditures. Former is what it takes to “run” the govt. (pay judiciary, police, govt. staff etc.) while latter creates assets like bridges, roads etc.
Lower rev receipts for govt. may not mean govt. participation in economy is low - it might signify inability to collect taxes efficiently
To fund deficits, govt borrows from public, external financial institutions or under extreme circumstances, from the central bank
Nominal vs Real GDP - The former doesn’t account for inflation while latter does. Reported numbers are always “real GDP”.
GDP for goods and services is “final”, i.e. if a book is produced, then the value of book includes the paper, ink, binding material and the author’s efforts - these are not double-counted
Revenue deficit - diff between revenue expenditure and revenue receipts. If a govt. runs revenue deficit, then it needs to borrow to even fund itself - the equivalent of a household borrowing to pay maids and driver
Fiscal deficit - Diff between govt’s total expenditure and total non-debt receipts. This is OK as long as deficits are used for funding assets - but within limits
Primary deficit - Diff between fiscal deficit and interest payments for debt raised by prev govts. This is used by incumbent govt. to measure its prudence (or lack thereof)
Report deficits are central alone, when state govt. debt is added, the number could be huge
High fiscal deficit affects the entire ecosystem - interest rates, private investments, foreign trade deficit - govt. borrows heavily, increasing demand for loans, thereby raising interest rates which crowds out private sector and reduces pvt. investments. The interest rate differential also increases trade deficits over time
Taxation can be done based on Benefit principle (tax proportionate to benefits used - eg. toll road), Ability to pay principle (proportionate to income and wealth, eg. income tax) or Horizontal equity and vertical equity principles (Those who are equal should be taxed equally and unequal, unequally) or efficiency principle (Taxes should have minimal effect on consumption and production decisions)
Regressive taxes take a higher proportion of income from the poor
Direct taxes - personal income tax, corp tax and wealth tax. (consistent with Ability to pay principle). Indirect taxes - Charged or good or services consumed indirectly (GST). GST can be regressive if it affects consumption of essential goods by poor (Efficiency principle at odds with equity principle)
India has traditionally had higher indirect taxes since the direct tax base is low. This has ended up stifling consumption by the poor. (When our tax base increases, there’s a lot of scope for GST cuts and disproportionate inc. in consumption?)
Laffer curve - When tax rate is zero, tax rev. is zero. But as tax rate inc. revenue goes up until the point where it disincentivises work and production (also increases evasion) - this is the optimal tax rate.
It is a wise man that lives with money in the bank, it is a fool that dies that way - french proverb
Money is a unit of measurement, medium of exchange and a temporary store of value
Wealth is a stock concept - its a point in time value
The cash with the public (Cash balances on hand) and the demand deposits with banks are considered money (M1). Interest bearing fixed deposits are not as liquid and so are considered as ‘Broad money’ (M3 money supply)
Double coincidence of wants - You selling something exactly to another who wants it and also has something to offer in return. Money eliminates this problem and is the primary use case
Since people with deposits do not withdraw in full or not all of them do at the same time, banks use it to lend. They also create secondary deposits when they create credit. The central bank controls how much of this secondary credit can be created through cash reserve ratio (CRR), and also statutory liquidity ratio (SLR) in treasuries, gold and cash so as to avoid a run on the banks and to control risky loans
Indira Gandhi felt that banks were not serving the priority sectors and felt India could reach commanding heights if banks were nationalised (14 banks were nationalised in 1969 and more in 1980)
Depression - When GDP, employment and prices fall quite drastically and remain at that level for years
Its not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner but from their regard of their own self-interest - Adam Smith
Heckscher-Ohlin theory - or Factory-abundance theory - Every country will use its abundant factor to create goods and services where it has comparative advantage. If India is labour-intensive, it will export labour intensive goods and a capital-abundant country like US or Germany would produce capital-intensive goods
Despite sounds theoretical basis, countries often impose barriers to trade to protect domestic economy through bans and quotes on exports, restriction on import volumes, high custom duties, non-tariff barriers (NTBs) in the form of stricter quality specs on imports
Devaluation create a competitive advantage but its a beggar-thy-neighbour policy and everyone does it eventually and it leads to autarkic (no-trade among countries) situation. These prevailed after WW-1 and eventually led to WW-2. Bretton Woods 1944 agreement led to the formation of World Bank and IMF and ITO, which after 50 years of repeat negotiations led to WTO in 1994.
Trade liberalisation was a hard fought achievement of decades. China was reluctant to join but joined in 2001 and Russia in 2012. (It is striking how recent all this is)
WTO allows for dumping duties. If an exporter sells a good in a foreign market for a CIF cost (Cost, insurance, freight) that is less than exporter’s domestic market, it is considered dumping (In India DGTR imposes ADD)
Inflation is the one form of taxation that can be imposed without legislation - Milton Friedman
Inflation is calculated as the weighted average of increase in prices of different commodity groups in the consumption basket.
Inflation can be Supply shock/Cost-push or Demand-pull. Crude oil rose from $3/b in ‘73 to $40/b by ‘79 due to Arab oil embargo, Iranian revolution and OPEC regulation, leading to sustained shortage and a cost-push inflation. Optimistic sentiment due to wealth effects can cause demand-pull inflation (Hyperinflation in its most acute form)
Quantity theory of money - M x V = P x Y - where M is money supply, P is price level, Y is the level of output in the economy and V is the velocity of money (avg. number of times a unit of currency is used in a period of time). PY is the nominal GDP. If productivity and velocity of money remain same, an increase in money supply will only increase the price level, cause inflation
CPI varies for different segments of the society, between agri labourers and industrial workers or between urban and rural, so there are different CPIs computed with different weights for items
Headline inflation - calculated on the basis of WPI. Excludes services, but includes raw materials, semi-finished products and imported commodities traded at wholesale level (Cost-push inflation shows up in WPI first and then in CPI). WPI is calculated every 2 weeks
Core Inflation - In India core inflation is calculated by excluding food and fuel prices from WPI
Reducing demand-pull inflation - govts will cut down on initiating new projects and hold back on imminent spending. Central banks reduce money supply with the tools they have (CRR, SLR, OMO, Repo)
Newton controlled money supply in the UK in 1696
Everything in the world maybe endured, except continued prosperity - Goethe
Reduced output in an economy follows a glut and accumulation of inventories across sectors just as sentiment shifts
Animal spirits - spontaneous and contagious optimism with an urge to action in the economy (sometimes this is naive optimism as well). The thought of making losses is put aside, just as a healthy man puts aside concerns of death
Unemployment can be of several kinds - voluntary (not looking) and involuntary (looking but not finding). Only involuntary is considered. Frictional unemployment - between jobs or finding a job after education. Structural unemployment - no jobs for skills possessed and must retrain. (While overall jobs may remain stable, the skills might change). Around 4-5% unemployment is considered normal (natural rate)
In a business cycle upswing (pro-cyclical), unemployment dips drastically and lot of attrition occurs and inflation soars (what we experienced last year)
Counter-cyclical unemployment - economy doesn’t have to produce as demand is low and inventories are at a high, leading to unemployment
The opportunity cost of going for higher-education is high (hence Ph.D programmes are counter-cyclical)
Expansionary fiscal policy - To get an economy out of recession govt. spends increase in the economy and also tax cuts are made. This has a disproportionate impact on the GDP (There are however limits to this, as it can lead to higher fiscal deficits)
OMO - Open market operations by RBI exerts downward pressure on interest rates when it cuts CRR and SLR, increasing liquidity with banks which are forced to lend.
Repo stands for repurchase order. Banks sell Gsecs to RBI and place repurchase orders with RBI for a future date. The re-purchase price is higher than selling price (annualised % of this is nothing but the repo rate)
China and South Korea were more or less in the same league as India at the time of our independence in terms of per-capita GDP (Early implementation of land reforms played a crucial factor)
PPP - Purchasing Power Parity is calculated by World Bank by considering over 1000 commodities from all countries
The societal benefits from vaccination and primary healthcare to an individual are far greater than benefit accruing to the individual (Numbers don’t lie by Vaclav Smil substantiates this)
Education, healthcare, agri, labour and land reforms and a focus on infra can create robust long-term growth

Macroeconomics isn’t a subject like physics and is often chided for false-precision. It does help though to understand the basic tenets of it to get high-probability events judged right. I liked the simplicity and India focus of this book and would recommend it to anyone interested on the topic. 9/10

phreakv6 · November 21, 2022, 2:56pm

The Bed of Procrustes, Nassim Nicholas Taleb, 2016 - The title has a hilarious connotation, having arisen from the Greek mythology where Procrustes invites visitors and feeds them well and offers them a bed to sleep, but makes them fit the bed, by sawing the legs off of tall visitors and stretching the shorter ones. We do its equivalent all the time by fitting our thoughts into commoditized ideas, reductive categories and prepackaged narratives. This book of aphorisms (pithy observations with general truth, as per dictionary) has an old world charm of ancient wisdom and will very likely end up timeless.

This is very short book but just like Calvin & Hobbes or Dilbert, you would do well to consume them in short bites over several months to enjoy them the way they are intended. I love pretty much all of Taleb’s work, including his mathematical work and knew this would be brash, hilarious and insightful. It is. 9/10

Don’t read ahead if you are planning to buy the book.

Some of my favorites aphorisms from the book

People are much less interested in what you are trying to show them than in what you are trying to hide
Pharma companies are very good at inventing diseases that match their existing drugs than inventing drugs for existing diseases
To bankrupt a fool, give him information
In science you need to understand the world; in business you need others to misunderstand it
Education makes the wise slightly wiser. It makes the fool vastly dangerous
If you know in the morning what your day looks like, with any precision - you are a little bit dead. The more precision, the more dead you are
Hatred is much harder to fake than love
What we call a good listener is someone with skillfully polished indifference
In your prayers, substitute “Protect us from evil” with “Protect us from those who improve things for a salary”
It is a very powerful manipulation to let other win small battles
The ultimate freedom lies in not having to explain why you did something
To be completely cured of newspapers, spend a week reading last week’s newspapers
The opposite of success isn’t failure, it is name-dropping
You don’t become completely free by avoiding being a slave, you also need to avoid being a master
Karl Marx, a visionary figured out that you can control a slave much better by convincing him he is an employee
You will be civilised on the day you can spend a long period doing nothing, learning nothing, and improving nothing, without feeling the slightest amount of guilt
You are rich if and only if money you refuse tastes better than the money you accept
It seems it is the most unsuccessful people who give the most advice, particularly for writing and financial matters
People usually apologize so they can do it again
Bureaucracy is a construction designed to maximise the distance between a decision-maker and the risks of the decision
All rumours about a public figure are deemed to be untrue until he threatens to sue
The three most successful addictions are heroin, carbs and a monthly salary
My only measure of success is how much time you have to kill
The difference between technology and slavery is that slaves are fully aware that they are not free
In real life exams, someone gives you an answer and you have to find the best corresponding questions
Some ideas are born as you write them down, others become dead
Life is about early detection of the reversal point beyond which your belongings (say, a house, country house, car or business) start owning you
A heuristic on whether you have control of your life: can you take naps?
The English have random Mediterranean weather, but they go to Spain because their free hours aren’t free
Corollary to Moore’s Law: every ten years, collective wisdom degrades by half
Knowledge is reached by removing junk from people’s heads
Most people need to wait for someone to say “this is beautiful art” to say “this is beautiful art”; some need to wait for two or more
Meditation is a way to be narcissistic without hurting anyone
The problem with learning from mistakes is that most of what people deem mistakes aren’t mistakes
Anyone who likes meetings should be banned from attending meetings
Average of expectations is different from expectation of averages (Jenson’s inequality)
Never take investment advice from someone who has to work for a living
“Success” isn’t being on top of a hierarchy, it is standing outside all hierarchies

phreakv6 · December 17, 2022, 4:15am

Little Bets, Peter Sims, 2011 - This is an approach of planting several seeds in the face of uncertainty and seeing what works out. Instead of trying to predict the future and prepare projections, this approach acknowledges that the future is uncertain and the only way to find the right course is to experiment and nourish the positive bets. Actively followed by big tech in the last 2 decades, this approach has now made its way to mainstream thinking as well.

My notes -

Chris Rock tries hundreds of preliminary ideas in small comedy clubs and refines them over and over before a big show, say with David Letterman. His jokes, openings, transitions, and closing have all been tested rigorously by then. An hour long act takes stand-up comedians from 6 months to a year
Most successful entrepreneurs don’t begin with big ideas, they discover them (AdWords was one such discovery for Google). Bezos’ Amazon strategy is on similar lines of going down blind alleys or planting seeds and discovering what opportunities show up
You can’t predict how people are going to behave around a new product, so avoid spreadsheets and RoI calculations and elaborate financial predictions
Two types of innovators - Conceptual and Experimental. Conceptual ones like Mozart pursue bold new ideas and often achieve breakthrough early in life. Experimental ones are iterative, trial-and-error driven and are prone to setbacks and failure as they work towards success
When trying to do something new or uncertain, we rarely know what we don’t know. (When much is known, procedural planning approach works perfectly well)
Most productive creative people are rigorous, highly analytical, strategic and pragmatic (flies in the face of traditional assumptions)
We are educating people out of creativity - Sir Ken Robinson
Linear systems, Relentless efficiency, topdown control and eradicating failure (like in an assembly line) has left little room for creative discovery and trial and error
Tyranny of large numbers - there’s a natural tendency to think in terms of bigger bets as you get bigger (large orgs make large bets instead of several small bets)
Hewlett-Packard for many years got its ideas for new products by informally talking with Customers to identify new problems and needs, rather than market research
Affordable loss principle - Choosing what you are willing to lose in advance when making a bet (Most speculative risk:reward systems work this way)
Fixed vs Growth Mindset - Fixed mindset people believe that abilities and intelligence are set in stone, that we have innate set of talents, which creates an urgency to repeatedly prove those abilities. Growth mindset - Intelligence and abilities can be growth through effort, and failures or setbacks are opportunities for growth
People with fixed mindset gravitate towards activities that confirm their abilities (Am I going to be good at this immediately?), whereas with a growth mindset they tend to expand their abilities (Can I learn to do it?).
Students praised for their ability (wow, you are good at this!) chose easier tasks while those praised for their effort (wow, you worked really hard at this) chose challenging tasks. Praising ability reduces persistence while praising effort leads to growth mindset. Developing a growth mindset takes time and conscious effort
Failing quickly to learn fast - I won’t get it right the first time, but I will get it wrong soon, really quickly
Shitty first drafts, good second drafts, terrific third drafts (Anne Lemont who wrote Bird by Bird)
Prototyping can be counterintuitive - Doing in order to think, instead of thinking in order to do
Structured music to Improv jazz needs the part of brain that’s evaluating and censoring to be off
Plussing - concept used extensively at Pixar to improve ideas without using judgement language (people accept the starting point, before suggesting improvement, leading to positive environment)
Highest Paid Person’s Opinion (HiPPO) usually dominates how people make decisions inside most orgs (Equating status and money with intelligence and insight, when often there is no correlation)
People don’t know what they want, if they haven’t seen it - Jobs
Worm’s eye view - Looking at a problem closely on ground. Grameen Bank and microfinancing as a concept arose out of worm’s eye view of observing people
Lucky people tend to pay attention to what’s going on around them a lot more than unlucky people (and be open to opportunities)
Lucky people are effective at building a strong network of luck - building secure long lasting attachments with people they meet

This is a small book and there wasn’t much in it that I wasn’t aware of and so the fresh learning for me was relatively low. However, little bets is an important concept that’s more a practitioner’s art and perfecting it can take years of working with your mind to accept failures, developing a growth mindset, being curious to look at problems closely, developing a good network, experimenting a lot, staying open to feedback and thus inviting luck. 8/10

rajguleria · December 25, 2022, 12:41pm

In a recent interview of Warren Buffet which I caught on Youtube , he was highly recommending this book , check it out , I have seen the sample read on Kindle , looks damn Interesting

phreakv6 · December 27, 2022, 7:39am

17 equations that changed the world, Ian Stewart, 2012 - This book is an ambitious attempt to compress the most impactful equations across math, physics, statistics, fluid dynamics, information theory, finance etc. into a ~300 page paperback. It unfolds in increasing orders of complexity, just as we discovered them over centuries. You can sort of see how pythagoras theorem evolved for our need to build things and logarithms for our need to compute astronomical distances and calculus for our need to compute orbits of “heavenly” bodies and the law of gravity as a natural evolution of it.

There’s a sort of a paradigmatic shift with the wave equation which for the first time uses second derivatives. What started as a study of vibration of violin string has had applications far and wide in earthquakes, light, heat and waves in general. The imaginary number i and the Euler’s formula for Polyhedra were abstract for the time they evolved in but had far reaching implications in quantum mechanics and topology much later. Roots for the normal distribution were present in Pingala’s work before 200 BC but such is our fragmentation of geography, culture and ideologies that until recently progress was always bound and hence lost.

The 19th century worked out complex mechanisms of fluid dynamics, thermodynamics and complex nature of waves - most of this involved integrals, derivates, partial derivatives (most developed just a century or two earlier) and abstract concept of fields. 20th century brought us relativity, uncertainty, quantum mechanics and the Shannon’s ground-breaking information theory which in a way laid the base for the information revolution. For all the phenomenal work before it, Black-Scholes has perhaps broken more than it has fixed but if past is any indicator, as things become more and more virtual, we might be in for some surprising things a century or two from now.

The notes don’t do justice to the equations. It wouldn’t be a stretch to call it a capsule of the most important scientific progress we have made. It is a noble cause, especially with the way human knowledge is fragmented and boxed into disciplines and rendered inaccessible for a seamless rumination across them. It doesn’t assume much from the reader, so please by all means go ahead and pick it up and give it a shot, even if you hated math/phy and equations in school. 10/10

My notes -

Stephen Hawking’s publishers apparently told him every equation in ‘The Brief History of Time’ will reduce sales by half So they finally included only E = mc^2 and sold 10 million copies
The equal-to sign (=) was invented in 1557 (which is so recent in the scheme of things) to avoid repetition of ‘is equal to’
Pythagoras Theorem - Tells us that the three sides of a right-angled triangle are related (5th Century BC). The abstraction of the relationship into an equation linked geometry with algebra and inspired trigonometry. Was used in navigation, surveying and also inspired Einstein’s theory of space, time and gravity
Pythagorean triplets are 3 numbers that satisfy the equation - Eg. 6-8-10 (36 + 64 = 100), 5-12-13 etc.
Babylonians knew about 3-4-5 triangle, a thousand years before Pythagoras
Erastothenes around 240 BC calculated the size of earth using sun’s shadow and elementary trigonometry
Triangulation - measure few distances and angles and work out the rest - two sides and subtended angle can get us opp side. Two angles and a side can give us the other two sides etc. Was used routinely in surveying, for eg. height of Mt. Everest. Currently we use satellite and GPS instead of this
Limitations in Euclidean geometry and Pythagoras theorem due to curvature of space, lead to development of a separate geometry for curved spaces (developed by Reimann and eventually led Einstein to postulate that gravity curved space)
An ant confined to the surface of a curved space may never perceive the curvature (just as we don’t). Test for Pythagoras theorem is useful to test curvature.
Logarithms (Napier and Briggs) - Gave us an easy way to multiply numbers by adding numbers instead before the advent of calculators in the ‘80s and lead to the invention of the slide rule
Logarithm is the inverse of exponent. So if a^x = y, then log y = x (logarithm to the base a)
Logarithms also helped with square roots and cube roots. (sqrt(x) = x^(1/2) = 1/2 log x)
Logarithms were crucial to the estimation of astronomical distances by simplifying the multiplication (Few months effort to few days)
Radioactivity and half-life calculations use logarithms to estimate
Human perception is proportional to the logarithm of the stimulus (Eg. decibels). Its the reason why we can detect a 50g difference in 100g vs 5 kgs. (This has lot of psychological applications in terms of how we say, perceive signal vs noise and is extremely useful in investing)
Calculus (Newton) - To find instantaneous rate of change of a quantity (say speed), calculate how its value changes over a short time interval and divide by that time and then let that time be arbitrarily small.
Calculus is the basis of most mathematical physics and Newton invented it (disputed with Leibniz) as a precursor to his laws of motion. Its used in calculation of tangents, areas and in volumes of solids etc.
Differential calculus is the computation of slopes and integral calculus that of areas and volumes
Calculus philosophically sees God as a detached creator who stood back from his creation and left its to its own devices
Energy as a concept is a convenient fiction that helps to balance the mechanical books
Newton’s Law of Gravity - Expresses the force of gravitational attraction between two bodies in terms of their masses and the distance between them. It led to accurate prediction of planetary orbits, eclipses etc. and led to development of satellites, hubble, interplanetary probes, GPS etc.
Aristarchus of Samos put forward the heliocentric theory in 270 BC but it fell out of favor and wasn’t revived for 2000 years in the West (West drowned itself in organized religion). Aryabhatta meanwhile put forth a mathematical model for heliocentrism in 499. West took to heliocentrism under Copernicus, Kepler and Brahe in the 16th century
Imaginary numbers - The idea that sqrt(-1) can exist as an abstract entity led to the creation of complex numbers. It led to improved understand on the way we understood such things as waves, heat, electricity and magnetism and the basis for quantum mechanics
e^(i * pi) = cos pi + i sin pi = -1 (i unites e and pi!)
Euler’s formula for Polyhedra - (F - E + V = 2). The number of faces (F), edges (E) and vertices (V) of a solid are not independent but are related. Led to the development of pure mathematics of topology (study of surfaces, knots, links etc.)
Normal Distribution - The probability of observing a certain value near mean is high and it reduces further away from the mean. How rapidly it reduces is captured by the standard deviation. Widespread applications in clinical trials, various testing, census etc.
Pascal’s triangle is the very basis for modern statistics was known to the West in 16th century whereas it was found in Chandas Shastra written by Pingala somewhere between 500 - 200 BC
Pascal’s triangle can be seen as binomial coefficients of two-variable expressions of the kind (p+q)^n
IQ is a statistical method for quantifying specific types of analytical problem-solving but may not imply intelligence (cleverness, intelligence and wisdom are not the same)
Wave Equation - The acceleration of a small segment of vibrating violin string is proportional to the avg. displacement of neighboring segments (strings will move in waves). It helped us generalise our understanding towards sound, heat, light, water waves and also to improve our understanding of earthquakes. (Modeling a violin string led to a lot of breakthroughs in everything)
Hearing is nothing but detection of compression in the air and seeing the detection of waves in electromagnetic radiation
Pythagoras found that two strings of equal tension that had lengths in simple ratios like 3:2 or 2:1 produced unusual harmonic notes (sin x, sin 2x waves superposed). A string half in length plays an octave higher
Western music uses 1-4-5 progression a lot. Here the 4th and 5th are one-quarter (4:3) and one-third (3:2) down from the root note and the octave halfway (2:1) down (C D E F G A B C → C F G makes the 1-4-5 and the last C the higher Octave root). How we mathematically arrive at these notes as (3/2)^n is something I have never come across before
Brain adjusts ear’s response to incoming sounds, so what we consider harmonious has a cultural dimension (Perhaps why its hard to listen to music from diff cultures for this reason)
Fourier Transforms - Any pattern in space and time can be thought of as superposition of sinusoidal patterns with different frequencies. Used in finding structure of large molecules like DNA, digital compression, cleaning up old audio tracks, analysing earthquakes etc.
Buildings have their natural frequencies of vibration. Earthquake proofing is making sure building’s vibrating frequencies are different from the earthquakes (to avoid resonance)
Navier-Stokes - It is Newton’s second law of motion in disguise as it provides the acceleration of a section of fluid given the pressure, stress and internal body forces. Gives us an accurate understanding of how fluids move. Led to understanding of aerodynamics, faster and quieter subs, F1 cars, advances in understanding of blood flow in arteries and veins etc.
Maxwell’s equations - Showed that Electricity and Magnetism are related - A spinning region of electric field creates a magnetic field at right angles to the spin and vice versa. Led to the understanding that light was an electromagnetic wave
Faraday was working class and lacked formal education so developed theories based on analogies and conceptual machines (built the first motor and generator). Maxwell helped with the math (While it’s called Maxwell’s equations, this has the same problem as pointed by Taleb’s Lecturing birds to fly. Its the technology that came before the science)
Maxwell borrowed concepts from fluid dynamics to come up with the concept of “field” (Faraday called it ‘lines of force’). A field was an invisible fluid
Radio waves as longer wavelength electromagnetic waves was predicted by Maxwell. It was verified by Hertz but discarded as useless. Radio was later invented.
Carrots are good for eyesight was a myth propagated during WW-I. The British were using radar to detect German bombers but propagated the myth as disinformation
Second Law of Thermodynamics - The amount of disorder in a thermodynamic system always increases. Better steam engines, efficiency of renewables etc. And the theoretical construct of ‘heat death of the universe’
Heat measures changes but temperature measures states (heat transfer is possible only when fluids have diff temperatures - zeroth law of thermoD)
Living systems borrow order from the environment and pay it back by making the env. even more disordered - Schrodinger in ‘What is Life?’. (This runs contra to the opinion that life reduces entropy - its explained nicely why its only an illusion that it does)
Relativity - E=mc^2. Arguably the most famous equation there is. So matter contains energy equivalent to its mass multiplied by square of speed of light - in other words, gargantuan. Changed our view of space, time, matter and gravity. Indirectly led development of nuclear weapons but mainly satnav, gps, blackholes, big bang
Special relativity vs general relativity. Former takes into account space, time and matter while latter includes gravity as well (Einstein’s book “Relativity” is a surprisingly lucid read even for people with no knowledge of physics)
Schrodinger’s Equation - Matter not as a particle but a wave, describing how it propagates. Fundamental to quantum mechanics. Radically revised notions of matter at small scales
Particles as wave functions led to several philosophical questions about the universe (as with Schrodinger’s cat). If you can’t observe an entire wave function, does it really exist?
Information Theory - How much information does a message contain? It established limits on the efficiency of communications. Applied in statistics, AI, cryptography, meaning in DNA sequences and all digital communications
Shannon quantified the amount of information a message contained. He also identified that efficiency for a given rate of error detection and correction is the ratio of length of coded message to the original
The formula for information theory looks very much like entropy in Boltzmann’s approach to thermodynamics (base 2 vs natural log and -ve sign only diff). So entropy can interpreted as “missing information”
Chaos Theory - How a population of living creatures changes from one gen to next when there is limits to growth. Probably the simplest of equations that generates deterministic chaos - what appears random. Apparent randomness hides underlying order. Uses in weather forecasting, population dynamics in ecology, quake modeling, space probe trajectories etc.
What’s deterministic can be unpredictable, as any uncertainty in initial conditions can grow exponentially fast
Black-Scholes - How price of a derivative contract changes over time, so that when the price is correct, it carries no risk. Gave rise to derivative markets and increasingly complex financial instruments
Simplest derivatives arose in 18th century Japan at the Dojima rice exchange. Although the amount of rice was limited by what farmers could grow, there was no limit on the number of contracts that could be issued
The time evolution of position of a particle w.r.t a origin in brownian motion is similar to diffusion equation - probability spreads like heat. Bachalier modeled option markets with Brownian motion (Theory of Speculation).
Bachalier’s work was flawed since it predicted extreme events were extremely rare that it would never happen but financial markets are fat-tailed (indicates increased levels of risk). While Bachalier’s brownian motion assumed exponential decay in risk, financial markets follow power-law curve (x^-a) - the difference could be as high as 1 in a million to 1 in a 100
By ‘95, virtual economy (investment, currency trading, complex wagers) had overtaken real economy (based on production of real goods). Virtual economy deliberately confused real and virtual -like arbitrary figures in accrual accounting vs cash basis accounting
Black-Scholes equation is from the world of mathematical physics - where quantities are infinitely divisible, time flows continuously and variables change smoothly which doesn’t apply to financial markets. It also assumes perfect information, perfect rationality, market equilibrium and the law of supply and demand (it has all the pitfalls of efficient-market hypothesis)

phreakv6 · December 27, 2022, 1:55pm

100 Baggers, Christopher Mayer, 2015 - Inspired by Thomas Phelps’ 100 to 1 in the Stock Market, 100 baggers goes down the same route to find characteristics of stocks that are 100 baggers. Fresh learning for me was very relatively low in this book, but by repeated hammering of old ideas, somewhere we can bridge the gap between knowing and doing.

My notes -

Key to 100 baggers is not finding them, but keeping them. Buy right and hold on
Investors crave activity, wall st. is built on it. Greatest fortunes are built by gritting your teeth and holding on
Investors need to distinguish between activity and results. Lot of shavings don’t make a good workman
Every sale should be considered a confession of error - shorter the holding period, greater the error
Investors have been conditioned to measure stock price performance based on quarterly or annual earnings but not on business performance
Early days of mutual fund industry, most funds had a decree that the shares of leading 30 companies once bought could never be sold
Average lifespan of a firm in S&P 500 is now 20 years (Used to be 61 years in 1958). Avg asset life as well is reducing drastically (
Phelps look at 19 multi-baggers suggests that
- Most powerful stock moves happened with earnings growth and multiple expansion for extended period of time
- Some opportunities happen in beaten-down, forgotten stocks returning back to profitability
Utilities dont become 100 baggers. Knowing what not to buy is very important
Retailers, beverage makers, food processors, tech firms etc. have become 100x
Train your mind to look for ideas that could be big, to think about the size of the company now vs what it could be
Monster Bev - 100x in 10 years between 1996-2006. 700x by 2014. High sales growth, margin expansion and RoE expansion. (Even buying in 2004 after it was well discovered and trading at 30x multiple could have made a 100x solely on earnings)
Amazon - long runway for growth and large R&D investments that paid off is another 100x
RoCE is very important. If company can continue to invest at high rates of return for long periods, there will be parabolic effect
Other 100x mentioned - Electronic Arts, Comcast, Pepsi, Gillette
If a business earns 18% RoCE over 20-30 years, even with an expensive starting price, you will have a fine result
Over time return of a stock and its RoE coincide nicely
If a company earns a high RoE for 4-5 years through margin expansion and not leverage, its a good place to start
Bet on owner-operators with personal capital at risk - Jobs, Walton, Gates, Schultz, Buffett all created incredible wealth for themselves and shareholders
Next best bet after owner-operators is bet on Outsider CEOs
CEOs main job - Capital allocation, value per share (not overall size or growth), cash flow (not earnings), decentralized orgs, independent thinking, prudent buybacks and acquisitions
Berkshire’s capital structure has about 37.5% of leverage - (but its at -ve cost of capital from insurance float most years, or at a avg. rate less than treasuries)
Due to the leverage used to finance risk assets, Berkshire priced its policies to make profit and not compete with other insurers.
Real wealth creation - not flying first-class wealth, but having-libraries-named-after-you kind of wealth
Noah’s ark way of investing - being involved in 50-75 things and ending up with a zoo. Buffett puts meaningful amounts of money in a few things
When done right buybacks can accelerate the rate of compounding (lack of other avenues for growth, stock trading cheap + actually extinguishing shares)
A truly great business must have an enduring moat that protects excellent returns on invested capital
Common moats - brands, switching costs, network effects, low-cost, large size advantage
Creating an industry map and understanding where the profit pools are can help (Mauboussin)
Beverage industry is a stable industry, trends there unfold slowly over time. Sodas don’t get disintermediated by internet (sort of moats to look for)
High and resilient gross margins is the single most important factor of long run performance. Hard for a low gross-margin business to become high (GMs persist)
Turnaround candidates - high gross margin business having low operating margin - the latter is easier to fix.
True moats are rare and not so easy to identify. Moats can’t be identified from a firm’s financial statements. (If its not clear, you are probably talking yourself into seeing moats)
Average mutual fund earned a return of 13.8% but avg. investor earned only 7% (poor timing)
People are dying of boredom. They just want something to happen. People sabotage their portfolios out of sheer boredom. (boredom arbitrage is a thing)
Usually market pays a premium - an entertainment tax for stocks with an exciting story
Age of venality - there’s an unprecedented willingness to do dishonest things in return for money
The more success and awards and public adulation a CEO gathers, the less likely they are to admit faults
Reading conference call transcripts is better than listening to them. Read several quarters at a time and look for disappearing initiatives, changing narratives (I prefer reading and then listening to subtle “tells” where allocation is high)
On Boards - boards rarely represent shareholders because directors consider directorship as a perk than a responsibility. Boards seldom find truth in any investigation (its like asking them to admit their own incompetence)
On Auditors - audits are not “clean bills of health” and do not detect fraud
China is to stock fraud, what Silicon valley is to technology
Investing overseas is like swapping risks you cannot see for risks you can see
Be careful around companies that seem to be created mainly to scratch an investor’s itch (like Droneacharya)
People tend to make rosy forecasts of the future more often than not. Reality is often more volatile
Sosnoff’s law - price of a stock varies inversely to the thickness of its research file (Best ideas are often the simplest)
People do not have ideas - their ideas have them. Be way of fixed ideas (from ‘The Ego and his Own’)
Ideas come from people and hidden stories do exist. There is a person somewhere who knows that story
Under an inflationary environment, businesses that can pass on the cost and are asset-light (say see’s candies) do better than businesses with tangible assets (gold miners and oil stocks) - Buffett
Asset heavy businesses generally earn low rates of return - barely enough to provide capital for inflationary needs of the existing business, with nothing left for real growth, for distribution to owners, or for acquisition of new business - Buffett
Stocks unlikely to recover from a downturn are either - 1. Grossly overpriced 2. Suffered permanent impairment 3. Suffered massive dilution to cover for its misfortune
When you buy a cow to milk, don’t plan to race her against your neighbor’s horse (If you bought it for dividends, don’t compare with another stock’s growth for eg.)
When any rule or formula becomes a substitute for thought rather than an aid to thinking, it is dangerous and should be discarded

This can be a good book to convince oneself of long-term investing and its ability to create serious wealth over long periods of time by finding and holding a few great businesses through thick and thin. In an environment where a barrage of information with poor signal-to-noise ratio comes at us everyday making each day feel like a month, this is easier said than done. 8/10

phreakv6 · December 30, 2022, 12:14pm

Blood, Sweat and Pixels, Jason Schreier, 2017 - I wanted a book to understand the video game industry and found this. Author covers 10 popular games across styles and covers their creation through interviews with the hundreds of people involved. Video games are somewhat like movies but more complex since they reside at the weird junction where art meets technology - so its a movie that gets developed like software. Budgets are big and so are the revenue which can sometimes cross even $1billion, just like a Hollywood blockbuster.

My notes -

What it takes to produce a game? - Artists, designers, animators, programmers, QA testers, producer, art director, marketing, sound dept.
Why making games is difficult? Interactivity, constantly-changing technology, non-standard tools, challenging schedules, difficulty in ascertaining fun factor until game is playable
A demo for E3 is something all studios work towards where audience first gets a glimpse of the gameplay. However more often than not, this is not even close to the finished product and is built to impress and garner interest. A lot of dev time is actually wasted in this marketing effort
Video games are a $30b industry in the US alone
Producers fund developers who make games, publishers publish them (like music labels?) - this is standard model. Publishers are large and have a lot of leverage in this deal
Independent game studios need to have a contract ready soon as the last one is finished or they will be in trouble. Eg. Microsoft funded Obsidian’s Stormlands and when they closed the contract, Obsidian had to let go of a lot of the team
Standard burn rate - $10k per person. So 50 member team of Obsidian meant a $0.5m cash burn per month (hence the importance of contracts for small indie studios)
Sometimes publishers tie-in a bonus to the developer if the game hits a certain score of Metacritic, say 85 (Bethesda offered Obsidian $1m for Fallout: New Vegas for 85 score)
To stay afloat, indie studios can either find a new investor, find new contracts before old ones expire or fund their own games with reserves (self-produce) or appeal directly to fans on kickstarter and raise funds for a game and self-publish to retain royalties (New model)
RPGs in the 2000s were based on rules of Dungeons and Dragons and had fixed isometric cameras (like Baldur’s Gate) but later games like The Elder Scrolls V: Skyrim came with 3D and voice acting and lesser conversations and old-school RPGs went out of favour
When Microsoft cut Obsidian contract for Stormlands, they let go off half the team of 50 and took to Kickstarter to develop an old-school RPG (Pillars of Eternity), they raised $4m which could fund 40 devs for 10 months, which was more than sufficient for a technically less-complex old-school RPG (tools used: Maya and Unity)
Vertical slice - A portion of demo video intended as proof of concept to demo a game
Kickstarter not just helped with the funding but also real-time feedback. Concept art, vertical slices, weapons, strategies all got vetted by actual players who were funding. Its like 300-400 people who weren’t paid but were working for the game
One common theme in video game dev - everything came together in the last minute
Crunch - working overtime, until 3:00 am for several weeks is “Crunching” is quite common in the video game industry
Naughty Dog the game studio (Uncharted & The Last of Us series) has a reputation for great-storytelling and eye-popping visuals (and extended crunches for its devs)
Naughty Dog was founded in 1984 and developed platformers like Crash Bandicoot and Jak & Dexter. Sony bought them in 2001 to develop a new game for PS3 (Uncharted)
A movie like No Country for Old Men is what inspired The Last of Us (Why can’t characters be gritty and leave a lot unsaid?)
Straley and Druckmann the creative team behind The Last of Us (& Uncharted) wanted to avoid video game-y elements like boss battles, ultra powerful weapons and special enemy classes
Uncharted 4 sold 2.7 million copies in a week and went on to make $1 billion in revenue! It took $40 million to be completed. (Hollywood mega blockbusters make $1-2b in revenue)
Stardew valley, unlike most games that have dozens of people who specialize in art, programming, game design and music was famously developed by 1 person (Eric Barone)
Stardew Valley took ~5 years to develop for Barone working alone with no prior experience in game development. He self-published it on Steam Greenlight (users choose what’s interesting for them). It sold 400k copies in 2 weeks grossed over $20m by 2017 ($129m now according to Steam stats)
Diablo-III came after massive success of Diablo-II and had to match up to the hype. Developed by Blizzard (of Warcraft and Starcraft fame). The game was procedurally generated so everytime it felt fresh
Diablo-II had different difficulty modes - Normal, Nightmare, Inferno etc. In III, the game design introduced a chicken-and-egg problem where you would get best gear only in Inferno mode and you can’t get to Inferno without best gear. They introduced a model in which you could pay for weapons but people saw it as a ‘pay-to-win’ than a ‘play-to-win’ game
Game economics is so difficult that one problem can introduce several more. For people that didn’t want to pay, Blizzard introduced a mode in which you could gather loot by smashing pots. People spent more time smashing pots than playing the game
Blizzard completely revamped Diablo-III post launch and made it so that difficulty level will scale up with the player and shut down the Auction house which had earned it a bad repute (Making money off virtual items and retaining your reputation is hard)
Ensemble, a studio that made the Age of Empires games for over a decade was bought by Microsoft in 2004. Ensemble’s employees were stringent in hiring and spent 100 hour weeks over years together (crunch work culture)
RTS (Real-time strategy) games like AoE requires the computer to make thousands of decisions every second on when to construct buildings move units around the map (very compute intensive). Pathfinding is also a difficult problem to solve in an RTS
Halo Wars - Microsoft directed Ensemble to work with Bungie (original creators of Halo) to create a MMO on the lines of World of Warcraft (WoW). This sort of collaboration is very rare in the industry and very hard to pull off due to clashes in work cultures
RTS games are typically made for PC as it requires a Keyboard and Mouse to play effectively. Halo Wars was the first to adapt a RTS successfully to the Xbox 360 controller
Companies with serious bad rep win worst company of America (annually polled) - won by AIG in 2008, BP in 2011 (oil spill). Electronic Arts (EA) won it back to back in 2012 and 2013 (Reason: Micro-transactions in its games, online-only SimCity reboot & buying BioWare. EA had a history of buying great studios only to shut them down later)
BioWare was started by medical doctors - in ‘98 produced the D&D based RPG Baldur’s Gate which inspired Pillars of Eternity and The Witcher 3 and also Neverwinter Nights, Mass Effect
Dragon Age took 7 years to develop from 2002-2009. BioWare hoped it would be the Lord of the Rings of video games. It was a massive success and sold millions of copies. EA wanted BioWare to develop a sequel in just over year - Dragon Age 2 was a serious flop in 2011
Game engines provides a physics system, a graphics renderer, a main menu (Re-usable things across games). Transitioning Game engines are sometimes made as business decisions but these are technically very difficult to accomplish
Dragon Age : Inquisition had to ship with a new game engine, gameplay, across 5 platforms in roughly two years and was heavily inspired by Bethesda’s Skyrim (Such big shifts are rare and technically super complex)
Bungie broke up its tie-up with Microsoft post Halo 3 (Microsoft owned the Halo IP but Bungie owned all technology) and started work on Destiny as a way of getting out of Halo’s halo
Activision signed up with Bungie for $500m for Destiny - biggest dev deal in video game industry
Most video games aimed for campaign length of 10-20 hours. The Witcher 3 came out with a campaign that 100 hours long!
The Witcher 3 unlike the other games here was developed in Europe (Poland), developed by CD Project Red (company that started with selling pirated game CDs in Poland in the 90s)
Best way to build a great game was to spend a lot of time in pre-production, talking, prototyping, answering questions
In film-making everything existed to serve the story. In games everything existed to serve the gameplay

Sheer number of moving parts make game development highly unpredictable and exciting and requiring pretty much anyone who developed games to be a workaholic. It is clearly not an easy industry. The book gave a very good glimpse into the people and companies that build games, their motivation, struggles with a brief bit of economics and logistics of it. Not too deep, not too shallow. 8/10

Apurva_Dubey · January 9, 2023, 5:58pm

Chip War: The Fight for the World’s Most Critical Technology (2022)
Book by Chris Miller

I read this well-researched book on the chip industry over the holidays. This book contends that semiconductors will determine the shape of international politics, the structure of the world economy, and the balance of military power.

I have organized my notes around some themes I observed; the book, however, is organized differently. A highly recommended read if you want to understand the chip industry.

(1) Journey of a chip

A typical chip is designed with blueprints from the Japanese-owned, UK-based company called Arm, by a team of engineers in California and Israel, using design software from the United States.
When a design is complete, it’s sent to a facility in Taiwan, which buys ultra-pure silicon wafers and specialized gases from Japan. The design is carved into silicon using some of the world’s most precise machinery, which can etch, deposit, and measure layers of materials a few atoms thick. These tools are produced primarily by five companies, one Dutch, one Japanese, and three Californian, without which advanced chips are basically impossible to make.
Then the chip is packaged and tested, often in Southeast Asia, before being sent to China for assembly into a phone or computer.

(2) Type of chips

It is common to split the semiconductor industry into three categories. “Logic” refers to the processors that run smartphones, computers, and servers. “Memory” refers to DRAM, which provides the short-term memory computers need to operate, and flash, also called NAND, which remembers data over time. The third category of chips is more diffuse, including analog chips like sensors that convert visual or audio signals into digital data, radio frequency chips that communicate with cell phone networks, and semiconductors that manage how devices use electricity.
This third category has not been primarily dependent on Moore’s Law to drive performance improvements. Clever design matters more than shrinking transistors. Today around three-quarters of this category of chips are produced on processors at or larger than 180 nanometers.
Today, the biggest analog chipmakers are American, European, or Japanese. Most of their production occurs in these three regions, too, with only a sliver offshored to Taiwan and South Korea.
The largest analog chipmaker today is Texas Instruments, which failed to establish an Intel-style monopoly in the PC, data center, or smartphone ecosystems but remains a medium-sized, highly profitable chipmaker with a vast catalog of analog chips and sensors.
There are many other U.S.-based analog chipmakers now, like Onsemi, Skyworks, and Analog Devices, alongside comparable companies in Europe and Japan.
The memory market, by contrast, has been dominated by a relentless push toward offshoring production to a handful of facilities, mostly in East Asia. Rather than a diffuse set of suppliers centered in advanced economies, the two main types of memory chip—DRAM and NAND—are produced by only a couple of firms.
For DRAM memory chips an advanced fab can cost $20 billion. There used to be dozens of DRAM producers, but today there are only three major producers: Idaho’s Micron and with Korea’s Samsung and SK Hynix.
The market for NAND, the other main type of memory chip, is also Asia-centric. Samsung, the biggest player, supplies 35 percent of the market, with the rest produced by Korea’s Hynix, Japan’s Kioxia, and two American firms—Micron and Western Digital. The Korean firms produce chips almost exclusively in Korea or China, but only a portion of Micron and Western Digital’s NAND production is in the U.S., with other production in Singapore and Japan.
The big shift in recent years is the collapse in the share of logic chips produced in the United States.

(3) Chip architectures

Arm: is a UK company that licenses to chip designers use of an instruction set architecture—a set of basic rules governing how a given chip operates. The Arm architecture is dominant in mobile devices and is slowly winning market share in PCs and data centers.
x86:an instruction set architecture that is dominant in PCs and data centers. Intel and AMD are the two main firms producing such chips.
Only three companies have the necessary intellectual property to produce x86 chips: America’s Intel and AMD as well as a small Taiwanese company called Via.
RISC-V: an open-source architecture growing in popularity because it is free to use, unlike Arm and x86. The development of RISC-V was partially funded by the U.S. government but now is popular in China because it is not subject to U.S. export controls.

(4) Photolithography and EUV

Photolithography (a.k.a. printing with light) is the process of shining light or ultraviolet light through patterned masks: the light then interacts with photoresist chemicals to carve patterns on silicon wafers.
This process helps produce transistors much smaller than had previously been possible
Photolithography made it possible to imagine mass-producing tiny transistors.
The Dutch company ASML (offshoot of Phillips with Intel as major investor) builds 100 percent of the world’s extreme ultraviolet (EUV) lithography machines, without which cutting-edge chips are simply impossible to make.
Producing advanced semiconductors has relied on some of the most complex machinery ever made. ASML’s EUV lithography tool is the most expensive mass-produced machine tool in history, so complex it’s impossible to use without extensive training from ASML personnel, who remain on-site for the tool’s entire life span. EUV machines cost over $100 million each.
EUV technology took almost 30 years and billions of dollars to come to fruition. Some of the best precision engineering companies worked with ASML to make it happen (Cymer for lithographic light sources; Trumpf for carbon-dioxide based lasers)
ASML will have introduced a new generation tool, called high-aperture EUV, which is scheduled to be ready in the mid-2020s

(5) A highly concentrated industry

Nearly every chip in the world uses software from at least one of three U.S.-based companies, Cadence, Synopsys, and Mentor. These control around three-quarters of the market. It is impossible to design a chip without using at least one of these firms’ software.
Excluding the chips Intel builds in-house, all the most advanced logic chips are fabricated by just two companies, Samsung and TSMC, both located in countries that rely on the U.S. military for their security.
Making advanced processors requires EUV lithography machines produced by just one company, the Netherlands’ ASML.
Applied Materials remains the world’s largest semiconductor toolmaking company, building equipment like the machines that deposit thin films of chemicals on top of silicon wafers as they were processed.
Lam Research has world-beating expertise in etching circuits into silicon wafers.
KLA, based in Silicon Valley, has the world’s best tools for finding nanometer-sized errors on wafers and lithography masks.

(6) Rise and fall of Japan’s semiconductor story

Japanese society was structurally geared to produce massive savings, because its postwar baby boom and rapid shift to one-child households created a glut of middle-aged families focused on saving for retirement. Japan’s skimpy social safety net provided a further incentive for saving.
Tight restrictions on stock markets and other investments left people with little choice but to stuff savings in bank accounts. As a result, banks were flush with deposits, extending loans at low rates because they had so much cash on hand.
Japanese firms got access to far cheaper capital. Chipmakers like Hitachi, Mitsubishi, Toshiba, Fujitsu had close links to banks that provided large, long-term loans. Even when Japanese companies were unprofitable, their banks kept them afloat by extending credit.
Because of this, five years after the 64K DRAM chip was introduced, Intel—the company that had pioneered DRAM chips a decade earlier—was left with only 1.7 percent of the global DRAM market.
The biggest error that Japan’s chip firms made was to miss the rise of PCs. None of the Japanese chip giants could replicate Intel’s pivot to microprocessors or its mastery of the PC ecosystem.
1998, South Korean firms overtook Japan as the world’s largest producers of DRAM. Japan’s market share fell from 90 percent in the late 1980s to 20 percent by 1998.

(7) Intel

Due to competition from Japan Intel was about to go out of business. Andy Grove (then CEO) made a pivot to producing microprocessors for PCs and Intel became a turn-around story.
By the mid-2000s, just as cloud computing was emerging, Intel had won a near monopoly over data center chips, competing only with AMD. Today, nearly every major data center uses x86 chips from either Intel or AMD. The cloud can’t function without their processors.
Shortly after the deal to put Intel’s chips in Mac computers, Steve Jobs came back to Otellini (Intel’s CEO) with a new pitch. Would Intel build a chip for Apple’s newest product, a computerized phone? Intel turned down the iPhone contract (phew!)
The early iPhone processors were produced by Samsung, which had followed TSMC into the foundry business. Otellini’s prediction that the iPhone would be a niche product proved horribly wrong. By the time he realized his mistake, it was too late.

(8) Taiwan and TSMC

Taiwan produces 11 percent of the world’s memory chips. More important, it fabricates 37 percent of the world’s logic chips.
Taiwan had deliberately inserted itself into semiconductor supply chains since the 1960s, as a strategy to provide jobs, acquire advanced technology, and to strengthen its security relationship with the United States. In the 1990s, Taiwan’s importance began to grow, driven by the spectacular rise of the Taiwan Semiconductor Manufacturing Company (TSMC)
The Taiwanese government provided 48 percent of the startup capital for TSMC. Philips, the Dutch company provided another 27.5 percent. Rest came from wealthy Taiwanese businessmen.
A crucial ingredient in TSMC’s early success was deep ties with the U.S. chip industry. Most of its customers were U.S. chip designers, and many top employees had worked in Silicon Valley.
The founding of TSMC gave all chip designers a reliable partner. TSMC promised never to design chips, only to build them.
TSMC’s foundry model gave birth to dozens of new “authors”—fabless chip design firms—that transformed the tech sector by putting computing power in all sorts of devices. However, the democratization of authorship coincided with a monopolization of the digital printing press. The economics of chip manufacturing required relentless consolidation.
The geography of chip fabrication shifted drastically over the 1990s and 2000s. U.S. fabs made 37 percent of the world’s chips in 1990, but this number fell to 19 percent by 2000 and 13 percent by 2010.
(2015 stat.) Measured by thousands of wafers per month, the industry standard, TSMC had a capacity of 1.8 million while Samsung had 2.5 million. GlobalFoundries had only 700,000. (Top 3 fabs in the world.)

(9) Rise of fabless chip firms – Nvidia, Qualcomm etc.

Since the late 1980s, there’s been explosive growth in the number of fabless chip firms, which design semiconductors in-house but outsource their manufacturing, commonly relying on TSMC for this service.
Today Nvidia’s chips, largely manufactured by TSMC, are found in most advanced data centers.
Nvidia designs chips called graphics processor units (GPUs) capable of handling 3D graphics. Making realistic graphics requires use of programs called shaders, which tell all the pixels in an image how they should be portrayed in a given shade of light.
Nvidia’s GPUs can render images quickly because, unlike Intel’s microprocessors or other general-purpose CPUs, they’re structured to conduct lots of simple calculations—like shading pixels—simultaneously
Nvidia’s GPUs are processor of choice for advanced machine learning/AI applications
Cloud computing companies like Amazon Web Services and Google are designing their own chips that will be fabricated by companies like TSMC (which are pure foundry plays)
Tesla is also a leading chip designer. The company hired star semiconductor designers like Jim Keller to build a chip specialized for its automated driving needs.
For each generation of cell phone technology after 2G, Qualcomm contributed key ideas about how to transmit more data via the radio spectrum and sold specialized chips with the computing power capable of deciphering this cacophony of signals. The company’s patents are so fundamental it’s impossible to make a cell phone without them.
Qualcomm has made hundreds of billions of dollars selling chips and licensing intellectual property. But it hasn’t fabricated any chips: they’re all designed in-house but fabricated by companies like Samsung or TSMC.
Designing chips as complex as the processors that run smartphones is expensive, which is why most low- and midrange smartphone companies buy off-the-shelf chips from companies like Qualcomm. However, Apple has invested heavily in R&D and chip design facilities in Bavaria and Israel as well as Silicon Valley, where engineers design its newest chips. Now Apple not only designs the main processors for most of its devices but also ancillary chips that run accessories like AirPods.
Today, no company besides TSMC has the skill or the production capacity to build the chips Apple needs.

(10) Playbook for setting up semiconductor business

When Japan, Taiwan, and South Korea wanted to break into the complex and high-value portions of the chip industry, they poured capital into their semiconductor companies, organizing government investment but also pressing private banks to lend.
Second, they tried to lure home their scientists and engineers who’d been trained at U.S. universities and worked in Silicon Valley.
Third, they forged partnerships with foreign firms but required them to transfer technology or train local workers.
Fourth, they played foreigners off each other, taking advantage of competition between Silicon Valley firms to get the best deal for themselves.

(11) China’s challenge

During most years of the 2000s and 2010s, China spent more money importing semiconductors than oil. High-powered chips were as important as hydrocarbons in fueling China’s economic growth. Unlike oil, though, the supply of chips is monopolized by China’s geopolitical rivals.
China is devoting its best minds and billions of dollars to developing its own semiconductor technology in a bid to free itself from America’s chip choke.
World War II was decided by steel and aluminum, and followed shortly thereafter by the Cold War, which was defined by atomic weapons. The rivalry between the United States and China may well be determined by computing power.
Across the entire semiconductor supply chain Chinese firms have a 6 percent market share, compared to America’s 39 percent, South Korea’s 16 percent, or Taiwan’s 12 percent
For advanced logic, memory, and analog chips, however, China is crucially dependent on American software and designs; American, Dutch, and Japanese machinery; and South Korean and Taiwanese manufacturing.
China’s government set out a plan called Made in China 2025, which envisioned reducing China’s imported share of its chip production from 85 percent in 2015 to 30 percent by 2025.
China’s import of chips—$260 billion in 2017—was far larger than Saudi Arabia’s export of oil or Germany’s export of cars. China spends more money buying chips each year than the entire global trade in aircraft.
One of China’s core challenges today is that many chips use either the x86 architecture (for PCs and servers) or the Arm architecture (for mobile devices); x86 is dominated by two U.S. firms, Intel and AMD, while Arm, which licenses other companies to use its architecture, is based in the UK. However, there’s now a new instruction set architecture called RISC-V that is open-sourced. The idea of an open-source architecture appeals to many parts of the chip industry.
China’s also investing heavily in emerging semiconductor materials like silicon carbide and gallium nitride, which are unlikely to displace pure silicon.

(12) Smartphone vs PC supply chain

The smartphone supply chain looks very different from the one associated with PCs. Smartphones and PCs are both assembled largely in China with high-value components mostly designed in the U.S., Europe, Japan, or Korea.
For PCs, most processors come from Intel and are produced at one of the company’s fabs in the U.S., Ireland, or Israel.
Smartphones are different. They’re stuffed full of chips, not only the main processor (which Apple designs itself), but modem and radio frequency chips for connecting with cellular networks, chips for WiFi and Bluetooth connections, an image sensor for the camera, at least two memory chips, chips that sense motion, as well as semiconductors that manage the battery, the audio, and wireless charging.
Around a quarter of the chip industry’s revenue comes from phones.

(13) Chip choke of 2021

Carmakers spent much of 2021 struggling and often failing to acquire semiconductors. These firms are estimated to have produced 7.7 million fewer cars in 2021 than would have been possible had they not faced chip shortages, which implies a $210 billion collective revenue loss, according to industry estimates.
The world produced more chips in 2021 than ever before (a 13 percent increase over 2020). The semiconductor shortage is mostly a story of demand growth rather than supply issues. It’s driven by new PCs, 5G phones, AI-enabled data centers.

(14) Misc.:

Integrated circuits made up 15 percent of South Korea’s exports in 2017; 17 percent of Singapore’s; 19 percent of Malaysia’s; 21 percent of the Philippines’; and 36 percent of Taiwan’s.
5G networks will send more data by using a new, empty radio frequency spectrum that was previously considered impractical to fill (all thanks to advanced semiconductors)
The global chip industry spends over $100 billion annually on capex.
Javelin anti-tank missiles (used in Ukraine war) rely on over 200 semiconductors each as they home in on enemy tanks.
Kilby called his invention an “integrated circuit,” but it became known colloquially as a “chip,” because each integrated circuit was made from a piece of silicon “chipped” off a circular silicon wafer.

phreakv6 · January 29, 2023, 4:49am

Thinking in Bets, Annie Duke, 2018 - Poker has helped me tremendously with my decision-making and I could relate to this book a lot. It covers everything from decisions vs outcomes, skill vs luck, resulting and hindsight bias, game theory, truthseeking, motivated reasoning and self-serving bias, regret from decision theory, temporal discounting, backcasting and premortems. Some of these topics have books of their own so don’t expect a lot of depth. It is sufficient and flows well as a quick read.

My Notes -

A poker hand lasts 2 mins but involves 20 decisions and each hand ends with a result of win / lose (immediate feedback)
A decision is a bet about an uncertain future
Poker hand outcomes aren’t an indicator of decision quality and its hard to leverage it for learning (good decisions may have bad outcomes)
We must get better at separating outcome quality from decision quality
Two things that determine how our lives turn out: quality of decisions and luck
Resulting - Our tendency to equate the quality of a decision with quality of its outcome
When asked to think about good and bad decision from last year, most will choose a decision with good and a bad outcome
Hindsight bias is a companion of Resulting (Should have seen it coming)
Our brains are evolved to create certainty and order and its uncomfortable for it to think luck plays a significant role
Type I (false-positive) and Type II (false-negative) errors - Hearing rustling and thinking its a lion when its not (non-fatal) vs thinking its not when it is (fatal)
Most decisions are made by reflexive mind vs deliberative mind (Kahneman’s System I vs System 2)
Interpolating deliberative and reflexive systems is what making a living out of poker requires (Harmonize otherwise irresolvable conflicts)
Game theory - study of math models of conflict and co-operation between intelligent, rational decision makers (addresses changing conditions, hidden info, chance and multiple people involved in decisions)
John Von Neumann is the father was game theory (worked on it after Manhattan project. Nuclear disarmament and prisoner’s dilemma probably played a large part in the inspiration for “Theory of Games and Economic Behavior”)
Chess is not a game. Its just a well-defined form of computation. There’s always a right solution. Real games aren’t like that (Neumann)
Decisions of business, personal finance (saving, spending), health and lifestyle choices, raising our children and relationships are “real games”
Chess is not a great model for decision-making in life, Poker is (hidden/incomplete information, uncertainty, luck)
Uncertainty gives us a lot of room of deceive ourselves
Our lives are too short to collect enough data from own exp. to understand decision quality
Being comfortable with “I’m not sure” is a vital step to being a better decision-maker (make peace with not knowing)
“I don’t know” is not a failure but a necessary step toward enlightenment
Thoroughly conscious ignorance is a prelude to every real advance in science (Maxwell)
If we misrepresent the world at the extremes of right and wrong, our decision-making suffers
The world is structured to give us lots of opportunities to feel bad about being wrong if we measure ourselves by outcomes
Being wrong hurts more than being right feels good (Kahneman)
You have to backup your belief by putting a price on it (money where your mouth is)
Not placing a bet is itself a bet (every decision commits us to a course and eliminates the alternatives)
When we make a decision we are betting against all the future versions of ourselves we are not choosing
More accurate our beliefs (using experience and information to update it), the better our decisions
People find it easier to believe and harder to doubt (Taking info at face value and updating their beliefs)
How we form our beliefs is shapes by evolutionary push for efficiency at the cost of accuracy
Truthseeking - habit of seeking truth even when it doesn’t align with your beliefs
Beliefs once formed are hard to dislodge. It strengthens itself by actively seeking confirming evidence. This circular information-processing is motivated reasoning (Internet these days is doing the motivated reasoning for us through filter bubbles)
Fake news vs disinformation. Fake news suits particular narrative and might not be backed by facts while disinformation is made of real, verifiable facts but pushes a narrative that feels vetted
The smarter you are, the better you are at building narratives that support your beliefs (blind-spot bias)
Confidence in your beliefs should reflect how confident you are (not on/off but fuzzy)
Experience is not what happens to a man, it is what a man does with what happens to him (Aldous Huxley). Experience doesn’t make experts
Belief → Bet → Outcome → Separate Luck and Skill → Update beliefs → Bet again (Learning loop)
Snackwell’s phenomenon - People increase their consumption of something that has less of a bad ingredient (Low fat, low sugar)
A fixed reward schedule is easily extinguished when reward goes away (rats pushing lever for food stopping pushing when food stopped). When uncertainty is introduced (Reward 1/10 times), the lever pushing went far longer
Taking credit for good stuff and blaming luck for bad (self-serving bias) makes sure we learn nothing
Motivated reasoning and self-serving bias distort reality a lot based on outcomes
Engaging the world through a lens of competitiveness is deeply embedded in our animal brains. While a comfortable income, good health, supportive marriage and lack of tragedy or trauma ought to keep us very happy, it only accounts for 8-15% variance of happiness. What matters most if how we are doing comparatively
Cue → Routine → Reward (Habit loop). To change a habit, you must keep the old cue, deliver the old reward but insert a new routine (The Power of Habit)
Give yourself credit for being a good mistake-admitter, good finder of mistakes in good outcomes, a good learner and good decision maker (To avoid motivated reasoning and self-serving bias and envy)
Develop habits around accurate self-critique
Euphoria or misery with no choices in between, is not a self-compassionate way to live
Truthseeking works in groups but intellectual and ideological diversity is important within group and focus on accuracy, accountability and openness a must (otherwise it can quickly become a useless echo chamber)
If we are in love with our opinions, it can cost us in a bet
A predetermined loss limit acts as a check against irrationally chasing losses (stop-loss)
When discussing decisions, discuss the hand upto the decision point and no further (How the hand turned out doesn’t matter)
Skepticism - approaching the world by asking why things might not be true rather than why they are true
As decision-makers we must collide with past and future versions of ourselves
Improving decision-quality is about increasing our chances of good outcomes, not guaranteeing them
Temporal discounting - The tendency to favor our present-self at the expense of future self. Night Jerry wants to stay up and Morning Jerry has no say in that decision (Seinfeld reference)
We discount temporally by an irrational lot by going for a small reward now instead of waiting for a large reward later
Large temporal discounting can be avoided by giving a voice to our future selves (by imagining future, or recounting similar past) and thus altering the brain pathways by altering the hippocampus and prefrontal cortex (still works only sometimes and only when deliberating)
If Night Jerry isn’t thinking about Morning Jerry, he is definitely isn’t thinking about saving for retirement decades away
Regret is an useless emotion except when moved prior to decision. Use your future-regret to make better decisions (Minimizing maximum regret is a model I use extensively)
Tilt - poker jargon for blowing some recent event out of proportion and reacting in a drastic way (comes from pinball machines which had sensor to disable flippers when violently jostled). We aren’t decision-fit when on tilt
Ulysses contract - Ulysses told his crew ahead not to free him if upon the Sirens’ song he asked them to. (A monthly SIP is a Ulysses contract)
The expert the player, the further into the future they plan
Backcasting - working backward from a goal figuring out what got us there
Premortem - Check your positive attitude at the door and imagine not achieving your goals and why
Backcasting imagines a positive future and premortem a negative one (cheerleader and heckler)
None of us are guaranteed a favourable outcome but we can always make a good bet

There’s nothing new here though that’s not already on Kahneman’s Thinking Fast and Slow but that book can be a daunting read for most people and this can be a good substitute if concerned only with decision-making under uncertainty. 8/10

phreakv6 · February 7, 2023, 3:26pm

The Grid, Gretchen Bakke, 2016 - I love books that teach me about a sector I had no clue about and this does it for power sector. It is America focused but a whole lot of it is applicable everywhere.

It covers the history of electricity from Faraday discovering it, to the arc lamp, DC power, Edison’s DC systems, parallel circuits, invention of AC power by Tesla, long-distance distribution, centralizing distribution and production (utilities were born), standardization of outlets, appliances, the energy crisis of the 70s and the power capex, renewables, decoupling of generation and distribution from utility companies, nation-wide grids, power exchanges making power a commodity, long-distance wheeling, blackouts / brownouts, incentives of everyone from govt., utilities, home-owners, factories etc.

My notes -

The grid is 20th century’s greatest engineering achievement squarely in the center of our lives and yet we barely notice it
America has three grids - One for the west that includes bit of Mexico and western Canada, one of the east and a separate smaller one for Texas
More than 70% of the grid’s transmission lines and transformers are more than 25 years old. Most power plants are 34 years old (Written in 2016)
We rely on twice as many power plants because of massive inefficiencies in the system
Power outages - 15 in 2001,78 in 2007 and 307 in 2011. America has highest power outages for a developed nation at 360 mins per year. Korea has 16 mins, Italy 51m, Germany 15 and Japan 11m
The more we invest in green energy, the more fragile our grid becomes since the grid was built to run on well-regulated, predictable electrical flow
Wind doesn’t blow with same steadiness and every time sun goes behind clouds the generated voltage fluctuates. The grid is unprepared for this unsteady flow
Places like Wyoming or West Texas have a lot of strong wind but the grid wasn’t built to be robust in wastelands
As coal plants get retired, natural gas is our transition fuel. It is more efficient since the combustion spins the turbines and the recovered steam as well is used and is cleaner than coal (only from greenhouse gases and wastewater pollution but not from methane emissions in transmission leaks)
If only 3.2% of nat gas produced is leaked in transmission, it is more harmful than coal
The grid is built as much on law as on steel and it runs as much on investment strategies as on coal and produces profits as well as free electrons
By 2050, every single power plant in US will need to be replaced by new plants (We see this already in turbines players)
If electricity is made, its shipped and used and it all happens in the same millisecond (it was a drop of water, a ray from the sun or a gust of wind a moment ago)
The grid has to be constantly balanced by local balancing authorities who have to ensure power going into grid and being withdrawn are same (by firing up plants or by brownouts or load-shedding)
Its easier for people to understand relationship of bananas and dollars but not what a kWh (kilowatt hour) is
Universal electrification was achieved in 1930 and grid functioned well until 1960s when it ran into trouble as utilities which were monopolies became least inventive, flexible and run-of-the-mill
More solar / wind as part of the mix, the harder it is to balance the grid as generation can drop by 81% at 5 in the evening just as people come home from work and start their a/c, TVs and other electronics
Grids have to be designed for peak load and putting up capacity for peak loads is very wasteful (Not very different from running a OTT. Same concept apply everywhere!)
Ramping up generation for unpredictable peak load or sudden drop in renewable generation - only hydroelectricity can ramp up quickly. coal takes 5 mins to 50% capacity, nat gas takes 10mins. Nuclear takes 24 hours (can be shut down instantly though)
The grid protects itself with circuit-breakers when it receives more power than it can handle (too much can sometimes lead to blackouts too)
Power producers don’t care about transmission and balancing the grid - that’s the utilities’ problem
25% renewable energy target by 2025 (20% now - though 50% is hydro). To overcome challenges - use smart grid tech, curb customer demand, end peak demand, develop grid-scale storage, nation-wide extra high-volt DC/AC transmission network, reduce line congestion, encourage inter-regional co-op, develop inter-op standards, incr. govt. investment, train grid ops, integrate large number of EVs
Net metering - Utilities pay home owners for the power generated by their solar panels (adjusted again the bill). Problem is grid upkeep as more people switch to solar generation at home. So net-metering can kill the utilities and the grid if not regulated and compensated (homes still need grid as a backup power)
Electricity had the peculiar ability to divorce space from time. telegraph (1830s) sent messages across town, telephone (1876) did it with voice, radio (1896), phonograph (1877) enabled information across space and time. Electricity displaced steam engine and it was possible to send remotely produced mechanical energy across space (but not time)
Faraday experiments produced electricity in 1830s. We had no use for it until 1870. First electric lamp around 1871. By 1879 arc lamps were used in mines. 1882 NYT office had 52 incandescent bulbs
Edison’s greatest achievement wasn’t the light bulb (he did not invent it) but the parallel circuit. Until then everything was connected only in series (so streetcars had their own circuit and generation and lighting another)
If you wanted Edison’s bulb, you also had to have his dynamo, switches and his lines and had to hire Edison’s men for servicing them (First walled-garden?)
Preferred form on electric current in the 1880s was DC
AC system was made in 1887 (Westinghouse and Tesla). Voltages could be stepped up or down using transformers and helped transmit power far and wide by 1891 (60 cycles AC in US)
1896 - First large scale generation of electricity and Niagara falls and first American grid!
1907, only 8% of American homes was served by electricity
In 1901 only 18 refrigerators in Manhattan, by 1910 there were 45k appliances (80% were electrical iron)
Early days electricity was an elite product. Rich mansions had their own generation and wiring. Only after the Great Depression, the notion that money could also be made by selling cheap things to lots of relatively poor people made inroads
Standardized plug and outlet came in 1929 and by early 1940s there was a veritable explosion of electrical appliances
JD Rockefeller monopolised oil with Standard Oil owning 90% market share. Same could not be done with Electricity (Edison struggled with decentralised DC networks).
In 1907 there were over a thousand power companies having 30% market. In 28 years only 8 remained and controlled 75% of market, thanks to Samuel Insull (was Edison’s secretary)
Insull realised to make a large power company, midnight load has to be on par with 10am load. So he wanted lots of diverse customers to provide that 24/7 demand to make him large and profitable. He had a rate structure that rewards night-time use and radically lowered price of electricity in general (more one used, less he paid) and also improved efficiency of coal plants (2% to 20%)
From Insull’s time America built along with demand until 1970s and was able to keep up. But the 70s energy crisis (OPEC oil embargo), the power costs started to go up instead of down for the first time (Interesting situation similar to current). Carnot’s theorem limits on efficiency were reached. Lot of plants had to be retrofitted to function on oil instead of coal
Electricity is a peculiar kind of public good whose price went up with competition (when utilities also owned generation along with distribution that is)
Utilities attracted the bottom of graduating classes unlike computers, aerospace and electronics. These risk-averse and facile minds in a monopolistic situation weakened utilities and the sector (Currently education sector is here)
Monopsony - Being sole customer of a product. While everyone knows monopoly, very few know this. American utilities before PURPA were monopsonies (every bit as bad as monopoly)
Utilities managed the grid, made the power, owned the wires, distributed the electricity and collected the money and no one else could do it
When PURPA reversed, they had to buy power even the smallest of entities, paying “avoided costs” (hence homeowners can sell via net-metering). PURPA was smart anti-monopsony regulation
1912 10% of electricity was co-gen (generated by factories for themselves). 1962 it was down to 3% due to grid. With PURPA its back up at 12%. Goal is 20% by 2030 (Lot of grid connect and transformers and substations needed to hook these in)
PURPA destroyed the public-good / natural monopoly narrative of utilities. Utilities could now make money only by transporting, delivering and metering and not by producing
When utility companies now try to be profitable by cutting tree-trimming budgets and maintenance personnel, blackouts are the end-result
Utilities had to agree on fixed price contract well ahead for long-term. This was no good for them. They need time-of-day rates which wouldn’t arrive until much later (power exchange with real-time arbitrage. More renewables in the mix, more arbitrage is going to be needed?)
Electricity now is a real commodity - tradeable, transportable, profitable and a real hedgeable entity with futures markets and derivatives products
This now created a country-wide market for electricity and a country-wide grid and all the technical complexities that come with it, in terms of line-load factors, carrying capacities etc. Too much electricity was now traveling too far - lines were getting over-burdened, heating up, sagging, shorting-out, arcing and filling with harmonic resonances
Long distance wheeling now means utilities need a lot more data to plan investment decisions (No central controlling authority)
Enron scam - they would buy transmission rights on long-distance lines and fictitiously “clog” it and ask the state for money to “free” it
Our wires are underprepared for long-distance wheeling, population growth, explosion of pluggable devices, internet, data centers, air-conditioners and electric cars
Smart meters can allow utility companies to read what appliances you are using by reading power signatures (proven papers online). They can even tell what TV programmes you are watching
With smart meters, utility company can know when anyone anywhere is having an outage (saves on personnel costs)
Consumption was a personal matter but with smart meters, utilities can control consumption and flatten peak demand with peak pricing (everyone puts on a kettle during ad break). If peak demand is flattened, a lot of redundancy in power plants and transmission can be reduced with time-of-day and peak rates (peak load is the utility’s nightmare, just like a OTT with a live match or a e-commerce company running flash sales)
Utilities don’t know how to upgrade existing tech without putting themselves out of business, nor do they know how to continue with existing infra without putting themselves out of business
Refrigerators use 14%, freezers 6%, lightning 11% (26% for commercial) - forms the predictable baseline
Anywhere there’s air-conditioning, smart-grids will likely prosper. Your interests to stay-cool is at odds with utilities’ goal to lower peak load (on hot days, everyone feels hot at the same time when they return home from office)
To meet peak demand, utilities fire up coal / gas powered plants which aren’t used 98% of the time (just 6-7 days a year of use for such large capex!)
70% of gasoline used by the military is used for transporting other gasoline around
For decades, nuclear fusion has been 20-30 years away, from the 1950s it was 1980s, by 70s, we were to have it by 2000s, in 2014 it was 10 years away and in 2022 we are told its 20 years away (despite achieving ignition. Its simply not viable?)
Different ways of power storage - pumped hydro, compressed air, flow batteries, concentrated solar towers (liquefies salt). Most are at most 24 hours max storage, except pumped hydro. Li-ion batteries at grid scale are the dream - scale-up and down can be done to the millisecond
Negawatt- price of a watt not used. Americans aren’t good at ascribing a price to something that’s not used (You get paid for watts you did not use)
Decentralised storage can happen if EV batteries work to stabilise the grid. This way capital-intensity is also distributed (Idle cars when parked should be connected to the grid to stabilise it and then charge in non-peak hour). This way car as an asset, utilisation can go from 3-5% to 95%. Public electricity, private storage (Elegant idea if it works)

While this book was very good, it was a bit poorly edited and last 2-3 chapters delivered little incremental knowledge and felt like filler. However, books like this must be bought and read over yet another self-help, motivation / investment read. These are unique and actually teach you something you did not already know. I absolutely loved it but its perhaps not for everyone. 9/10

phreakv6 · February 19, 2023, 4:47am

Superintelligence, Nick Bostrom, 2014 - This is an AI ethics book and one of the most exhaustively imaginative one you can find. I have come across a lot of concepts and philosophy in the book having followed Eliezer’s blogs and “LessWrong”. To imagine radically different futures means to veer off on tangents and go far and further than anyone else. This book does just that to portray scary futures of how things may go wrong - both for us and AI sentience, if it ever gets there. To that effect, this book is like an antidote for Kurzweil’s works on singularity.

The rough fear is that an AI optimizing for manufacturing of paper clips could turn all of planet’s resources to that purpose, highjack our power networks and metal production and turn the world into a flood of paperclips, using every last Watt of energy for that purpose and once done, move on to colonise the rest of the solar system and beyond. The worry is that AI superintelligence might be reached in a very short period of tinkering and we may not even realize and not having sufficient safeguards might prevent us from stopping the exponential proliferation before the crossover happens (point of no return).

The author also comes up with different paths to AGI - be it a whole brain simulation (neuromorphic AI), brain-computer interfaces (cyborg route), networked AI (sentience on the internets, but not literally) etc. Such superintelligence could be based on speed, say brain emulation on hardware much faster than our biological one (200 Hz of our brain vs 2 GHz microprocesser), or have a lot more planetary resources at its disposal. We might think why not just switch the damn thing off - in other words “box” the AI, or control capabilities (stunting), incentives, tripwires, domesticity, specificity etc. - there are several pitfalls with the approach as well discussed. Like I said, its a imaginative book - there’s an AI given the goal of evaluation Reimann hypothesis which turns the solar system into a computronium. Its that level wacky. Being an optimistic yet skeptical person, I liked balancing Kurzweil with Bostrom but it may not be everyone’s cup of tea. 8/10

phreakv6 · March 5, 2023, 4:26am

Subliminal, Leonard Mlodinow, 2012 - The subject straddles neuroscience, anthropology, psychology and behavioral economics but all those made-up boundaries dissolve when good writers like this effortless move between them. Bought this immediately after reading ‘The Drunkard’s Walk’ couple of years back which I loved and I was not let down.

My notes -

We all possess a rich and active unconscious life that influences our conscious thoughts and feelings
The heart has its reasons of which reason knows nothing - Blaise Pascal
Our conscious mind is superimposed onto the unconscious and how much of a decision can be attributed to each is hard to discern
Therapy focuses on self-reflection and it can never reveal the parts of the brain not open to the conscious mind
The idea that we are not aware of a lot of our decisions can be hard to digest
When it comes to understanding our feelings we have an odd mix of low ability and high confidence
We are good at rationalizing unconscious decisions with good justifications (job taken for the prestige of position, but justified as done for greater challenge)
When given good/bad popcorn in large/small size combinations, people consumed based on container size and not just taste (the woody allen joke of elderly women in a restaurant - one says “food at this place is terrible” and another adds “yes, and its such small portions” makes sense now)
Package design, portion size and menu descriptions (lyrical description of same food got higher ratings) unconsciously influence us
Fluency effect - If the form of information is difficult to assimilate, it affects the judgements about the substance (All form of writing is thinking - simpler forms work)
We judge books by their covers, products by their boxes and corp. by the glossiness of their ARs subconsciously (Dress up well, if you have something to sell)
Wine shopping - what was chosen between french (77%) and german (73%) wine was decided by the music playing in the shop (yet only 1 in 7 thought the music influenced them)
Wine tasting - blind tasting shows no correlation between cost and taste while knowing brand/vintage has high correlation (you are tasting the price!)
VMPC - ventromedial prefrontal cortex, is the seat for warm, fuzzy feelings (also brain’s brand appreciation module). Our brains are not recording taste or experience, they are creating it
Smallest difference you’d be able to detect is proportional to reference weight - when comparing 6grams and 5 grams, you can make out diff of 1 gram but if ref is 10x greater, your min. detection also goes up 10x. (Happens in information too - high contrast vs low contrast changes)
Unconscious and conscious railways of the mind are densely interconnected and path a thought to took, hard to decipher
Blindsight - visual cortex destroyed but intact optical system - individual can see without seeing (can navigate room filled with obstacles unconsciously)
Binocular rivalry - If two diff images are presented to our eyes separately, it sees only one of the two. When one changes and another doesn’t, it sees the changing one only
Unconscious mind is actively involved in shaping our memory (not just our perception)
When expectations, beliefs and prior knowledge are odds with actual events, our brains can be fooled
People have good memory for general gist of things but a poor one for details. When pressed though, their brain will make up missing details (and they will end up believing their unconscious lies)
We have traded perfect recall for an ability to process vast quantities of information (People with great memories can be poor synthesizers)
False memories are easy to plant. Our brain over time can misinterpret imagined situations as actual memories, having forgotten the source
Humans place high value on kindness. Being nice can be its own reward. We are naturally attracted to the kind and repelled by the unkind
Pain of social rejection can be as “painful” as physical pain. Fact that Tylenol works on both shows psychological pain and physiological one are related
Within a span of just few millennia people starting fishing, hunting large animals - this must have evolved with a mutation that allowed for social interactions
Theory of mind - Our remarkable ability to predict future behavior of people based on their past actions (theorizing unconsciously)
First order intentional - Capability to reflect on own state of mind, own beliefs and desires. Second-order intentional - A form of belief about someone else’s state of mind (I believe my son wants to play). Both are very essential for human-beings
Third-order intentional - Reasoning about what a person thinks a second-person thinks (I believe my father thinks his son wants to play)
Fourth-order intentionality is required to create literature (The cues in this scene will signal the reader that Horace thinks that Mary intends to dump him). Most essential for politicians and businessmen who can be outmaneuvered without this skill
Human normally engage in 3rd (empathy for eg.) and 4th order intentionality (narrating) and are said to be capable of sixth-order
Theory of mind (ToM) is essential for social connection and requires extraordinary brain power - hence social group sizes correlate with brain sizes (gorillas with groups of 10, spider monkeys 20, macaques 40 - reflects neocortex-to-whole-brain ratio)
Humans relate to one another in many different types of groups, with different sizes, different levels of mutual understanding and different degrees of bonding
Oxytocin and Vasopressin - modulation of social and reproductive behavior in mammals including us. Oxytocin is even released during hugs, especially in women where even casual touch leads to feelings of emotional closeness. Oxytocin promotes trust and positive social contact between people (There are oxytocin sprays available on the internet :-))
Men with fewer Vasopressin receptors are twice as likely to have experienced marital problems or threat of divorce (Promiscuity)
Many of our daily actions proceed according to predefined mental “scripts” that they are in fact mindless
We communicate our expectations to others (whether or not we wish to) and they often respond by fulfilling those expectations. Teachers expectations greatly affect their students academic performance. Labeling children as gifted or as a poor-learner proved to be a self-fulfilling prophecy (As parents, its important to give our children the gift of positive affirmation as they tend to start believing it)
Wearing a rolex or driving a lamborghini are modern signaling versions of the chest-thumping baboon. Wearing a non-designer shirt and jeans can also be a show of affluence (by declining to show it)
Visual dominance ratio - Percentage of time spent looking into someone’s eyes while you are speaking divided by percent spent looking at the same person’s eyes while you are listening. Near 1.0 for people with higher social dominance. Around 0.6 - you are being bossed
Non-verbal communication - body movements (facial expression, gestures, posture and eye movements), paralanguage (number of duration of pauses, quality of voice and pitch, cadence in speech) and proxemics (use of personal space) decide how convincing you are
Non-verbal ability plays a significant role in perception of a person’s warmth, credibility and persuasive power. A little speedup makes you sound smarter and more convincing (salesmen do this)
Faster and louder speech with fewer pauses and great variation in volume, that speaker will be judged to be more energetic, knowledgeable and intelligent
Expressive speech, with modulation in pitch and volume with minimum noticeable pauses, boosts credibility and enhances impression of intelligence (Margaret Thatcher did this, as did Elizabeth Holmes who successfully scammed a lot of people)
There’s a road from the eye to the heart and it does not go through the intellect - Chesterton
Though we may pack out heads full of 21st century knowledge, what’s inside our skulls still belongs to the stone age
Categorization is a strategy our brains use to improve processing efficiency. Downside - We may perceive those within the same group to be more similar than they are. Merely placing an object in a group can affect our judgement of it
Putting ourselves in in-groups and out-groups affects our perception of our place in the world and how we view others. We put ourselves in lot of in-groups based on occupation, education, gender etc. and it decides who we are and what we do (hence i’ve consciously dissociated any and all identify last few years)
If you ask people to estimate temperature between June 1 and June 30, they will underestimate it but June 15 and July 15, they will overestimate it
Messages that condemn you from doing something invites counterproductive results. (”If you don’t study, you will become an idiot” might be taken as “You are an idiot” subconsciously)
Each of us is a singular narrative, which is constructed continually, unconsciously, by, through, and in us - Oliver Sacks
We don’t tremble because we’re angry or cry because we feel sad - we are aware of feeling angry because we tremble and we feel sad because we cry (smiling can make us happy)
“must seek meaning, must make meaning, in a desperate way, continually inventing, throwing bridges of meaning over abysses of meaninglessness” - Oliver Sacks
Confabulation - Replace of a gap in one’s memory with a falsification one believes to be true
Scientists looks for evidence and form theories. Attorneys look for evidence that fit theories. Human mind is designed to be both (Brain is a decent scientist but an outstanding lawyer)
We choose our friends, lovers and spouses not just by the way we perceive them but by the way they perceive us
It is rational to bet on a horse you believe is fastest but it doesn’t make sense to believe a horse is fastest because you bet on it
You can’t connect the dots looking forward; you can only connect them looking backwards, so you have trust that the dots will somehow connect in the future - Steve Jobs (Belief or holding positive illusions about ourselves to veer off the beaten path needs confidence to follow your heart believing the dots will connect)

Some books are so good at delivery that we mistake simplicity for them being trite. This is one such, that until I sat down to summarize I felt I hadn’t picked much new from the book but that’s because what I had picked were already such an integral part of me and there in lies the magic of a great book. 10/10

phreakv6 · March 7, 2023, 6:33am

The Fish that ate the Whale, Rich Cohen, 2012 - How relevant can a banana business from 100 odd years back be in the current day? That’s what I wondered when buying this book. Started it with reluctance and then found myself sucked in and transported in time and space to the isthmus (strip of land that connect North and South America) of the late 19th century. It is amazing that Banana was unheard of in the US, couldn’t be grown there either, but became a staple in such a short time, a triumph of trade, farming, politics, marketing and of course colonialism and America’s foreign policy. This is a story of the comeuppance and dominance of Sam Zemurray and United Fruit, his competition which he later took over in a genius hostile takeover. Part biography, part history, it includes colorful characters like Lee Christmas and Che Guevara.

My notes -

You drink with a man, you learn what he knows (Sam learnt about the banana business this way)
Jews fled to America having been persecuted in Europe and own a lot of the businesses in the US - most started as small town department stores that stocked everything but later some of them became big like Lehman brothers
The Boston Fruit company (later became United Fruit) dominated the trade and carried fruit from Jamaica to Boston
At Boston, bananas were sorted into good (no freckles), turnings (1 freckle) and ripes (> 1 freckle). Ripes would soften in less than a week and stink and were useless so were dumped at the docks and never went further
If you squeeze a green banana, it will turn in days instead of weeks. Nicks, dents and bangs were equally harmful. A ripe banana will cause those around them to ripen and a whole boxcar can be ruined quickly
Ripes were considered trash only because Boston Fruit was too slow-footed to cover ground. Zemurray thought he could be swift and bought ripes at throwaway prices and turned his $150 into $190 with a $40 profit in his first run selling ripes from the boxcar (Sam came to be known as Sam, the banana man)
Ripes were a niche - overlooked at the bottom of the trade. It was logistics - could you move the product faster than it can rot?
Banana business had settled into a hierarchy - at the top were owners and men who sat in the boardrooms and traded stock. Boston Fruit was dominated by old New England families. There were 50 small and midsized importers and beneath them sea captains who rented cargo space. Then the bureaucrats: dock agents, purchasers, inspectors, overseers who worked the wharves and spoke only of bananas and at the bottom the stevedores, loaders and unloaders - mostly African Americans and Sicilians - always present, never seen and under them all, the banana peddler (United Fruit say Sam as one)
In 1899 Sam sold 20,000 bananas, in 1903 he sold 574,000 and within a decade, more than a million a year. The niche was like a previously untilled fertile ground. From a fool buying ripes, he now had $100k in his bank by the age of 21
Sam took a partner, Hubbard and Hubbard-Zemurray company (1903) started with a capital of $30k contracted Central American farmers and paid a percentage of each harvest
United Fruit was popularly called El Pulpo (the Octopus) as it wrapped its tentacles around every start-up in the banana industry - it either owned a piece of you or destroyed you. United Fruit owned 25% of Sam’s company as a silent partner
A banana plant under best conditions can grow 20 inches in 24 hours. It bore fruit 3 times in a year for 20 yrs. You dig up the rhizome, hack it to pieces and plant each piece and they would all grow into plants that last another 20 years.
Banana required sandy soil (loam), high humidity, high temperatures and at least 180 inches of rain a year. A frost will wipe out entire crop and felled easily by strong winds being top-heavy
Big Mike was a hybrid created in 1836 in Jamaica had thick skin and slow ripening time and was hardy and didn’t need delicate handling
Banana plant is not a tree, its technically a herb - world’s tallest grass (technically banana is a berry)
All banana plants are clones, replica of the entire species - so a parasite or disease that mutates to kill one banana kills entire species (Big Mike was destroyed this way)
Bananas were brought to the isthmus in 16th century by a bishop but for 350 years only consumed within a mile
Successful Banana businesses had to 1. Be big and have enough capital to weather the storm of bad years 2. Grow its own fruit to have better control in down season 3. Diversify across geographies so one disaster doesn’t wipe out entire supply
Boston Fruit changed the model of banana from being high price, low volume to low price and high volume. By 1899, it controlled 75% of the US market
Boston fruit had all its supply coming from Jamaica and in 1899, year without bananas almost went bankrupt. While banks thought Boston Fruit had grown too big, it pitched to the banks that the problem was that they were too small. They wanted to be so big, growing fruit in several geographies that nothing would kill them. Thus was born, United Fruit
People stopped slipping on banana peels when Big Mike went extinct
The early banana traders did not fear competition, their worry was that there wouldn’t be sufficient bananas
1899 (year without bananas) led to consolidation in the banana business. Most small players were willing to swap independence for security. United Fruit merged with 27 banana companies
Sherman Anti-Trust act was passed in 1890. So UF wanted to control no more than 49% of the business in any market - big enough to dominate but small enough to avoid prosecution - so rivals existed so UF could prosper
By 1905, UF owned most ships, planted most fields, had the most money and controlled both supply (controlling plantation) and demand (increasing market penetration)
By 1910 UF had 115 ships used for transporting bananas but also the largest private navy
All migrants landing off the boats in the docks in USA were handed a banana (creating market)
UF began selling baby food made of bananas to hook customers when they were tiny. They tried hot banana drink to replace coffee (failed), banana fluor and banana bread and a book of banana recipes to expand the market. The crucial breakthrough was banana and corn flakes as the quintessential American breakfast
UF was the Ottoman empire of trust. Over time the crucial benefit of competitive trade: better product at lower price was lost. Justice Dept. prosecuted United Fruit but UF won since most of its action under review occurred overseas - greatest tax-saving, law-avoiding scheme of all time - later used as template for the global corp. that exists both inside and outside American law, that’s everywhere and nowhere, and never dies
Banana republic was a term coined by ‘O Henry’ in ‘Cabbages and Kings’
Sam crossed Honduras on mule back so he could learn the country, meet its people and scout for land
Pan-American highway starts in Alaska and continues 30k miles to the bottom of the world - except for 65 mile stretch called ‘Darien Gap’ in Central America. If Russia is the Trans-Siberian railroad, Germany Autobahn and US Route 66 - Central America is the Darien gap (Gap still exists ‘22)
Gabriel Garcia Marquez’s One hundred days of solitude has a ‘Mr. Herbert’ based on Sam Zemurray
A great businessman is dumb enough to act even when he cannot afford to (Sam bought 5000 acres of land along Cuyamel river for $2000, all borrowed). He later went on to build wharves, bridges, railroads in Honduras, all privately owned so he could transport his bananas
On a banana plantation, clearing weeds is breathing. Without it, the plantation dies
Sam believed in the transcendent power of physical labor. He was deep in the muck, sweaty, swinging the blade - helping clear the plantations and plant the rhizomes. He understood every part of the business from the executive suite where the stock was manipulated to the ripening room where green fruit turned yellow
A businessman can live with a certain amount of corruption - in NY they call it ‘honest graft’. (Corruption is only when a bought man doesn’t stay bought)
When you pay an engineer by the mile, the track goes nowhere in the longest possible distance
Honduras owed American banks (including JP Morgan) $100m. They wanted to collect this debt by taxing imports into Honduras (planned by JPM and Knox, the US secretary of state). This was trouble for Sam who imported all material from US for the infra. Sam overthrew the Honduras president and took on JPM and Knox, two of the most powerful men in the world. He put Manuel Bonilla as president and controlled Honduras (guts!)
Sam financed the civil war, hiring mercenaries like Lee Christmas, buying warships - for Sam, every problem was looking for a solution
Banana wars: The enemy wins a battle or two, then everyone switches uniforms
Sam framed the war as an insurgency, people rising up against the govt. selling the nation to gringos and Yankee bankers. When won, he got a lot of concessions and around 25k acres of free land
Every great victory carries the seed of ultimate defeat
Sam disdained bureaucracy, hated paperwork, refrained from giving interviews, addressing shareholders, or attending functions that took him away from his work
When Cuyamel (Sam’s company) was harvesting 8 million bananas, United Fruit was doing 40m. Cuyamel employed 10k workers and UF 150k. Efficiency, morale and skills of employees, Cuyamel was way ahead - Sam had built a better business by being on the ground
Why was UF inefficient? It was a collection of businesses slapped together. Lot of redundancy, duplication of tasks, divisions working against divisions, rivalries, confusing chains of command
Most people looking at a banana saw a delicious fruit while Sam saw room for improvement (Selective pruning, drainage, silting, staking, overhead irrigation were Sam’s innovations being present on the field)
Sam never said much and considered small talk a weakness
UF offered to buy Cuyamel but Sam refused. When United Fruit and Cuyamel’s business war spilled onto politics and threatened to destabilise the ithmus incl. Panama canal, US govt. intervened (when there’s too much competition, the govt. intervenes as it does when there’s too little with a monopoly). UF merged with Cuyamel after the stock market crash of 1929. Sam now owned UF stock but handed over operations
Caesura - a pause between episodes of life
Some of the most profound moments of life arrive between 3-4am, when you stare at the ceiling without sleep
A child is a sphere of vulnerability, another place the world can hurt you (Tolstoy)
Tzedakah - Jewish belief of charity. More than praying or trips to Jerusalem or professions of faith, giving was more important (Sam was Jewish). The highest form of it was to give anonymously - without newspaper pomp or ribbon-cutting
Sam believed giving with display is not giving, its trading. Not even the rescued learns the name of the rescuer - giving anonymously in a way that doesn’t disgrace the one in need
Great depression led to collapse in demand, labor unrest, deflation. 1928 UF made $45m in profit. In ‘32 it made $6m - 85% decline. Less you profit, less you produce, it was death spiral
Sam merged Cuyamel with UF when UF shares were worth $100. Post depression, it was $10. Sam’s networth plummeted from $30m to $3m
Sam took over UF through a hostile takeover (NYT headline ran ‘The fish that swallowed the whale’). He repurposed the boats, fallowed the fields, controlled supply and turned the business around in 60 days and gave it 20 more years!
Sam spent 6 weeks in the fields post takeover. The greatest mistake UF management made was to think it could run operations from the 10th floor of a Boston building
Ships were running half-empty or at half-speed to save on fuel (while losing bananas). Sam cut down fleet-size, sold boats, ran boats only when full, rented out space in boats.
He decreased banana supply to control the price. In some fields replaced banana with Sugarcane, a staple that was always in demand and coconut, pineapples and quinine trees
From Boston to Bogota, he weeded out superfluous employees until 1 in 4 was gone (so much like what Musk did with Twitter)
In two weeks of Sam’s takeover, the share price of UF climbed from $10 to $26 (Its amazing what a single man can do to the fortunes of a business)
By 1940, UF owned 50% of all private land in Honduras though it cultivated only 10% (As a hedge against disease)
During WW-II, Hitler’s U-boats destroyed a lot of UF fleet and lot of bananas rotted in the field and profits tumbled
Never complain, never explain - Maxim Sam lived by
Sam’s a son, fighter pilot died in the second world war and it broke him. He took over the Zionist cause of Israel for the jews. He used his ability politik, sway Central American countries’ votes and even Nehru would later claim a jewish businessman offered him a bribe of millions to vote in favor of the partition
FDR’s (Roosevelt) four freedoms - freedom of expression, freedom of worship, freedom from want, freedom from fear
UF owned 70% of all land in Guatemala and controlled 75% of all trade and owned most of the roads, power stations and phone lines, seaport and railroad
Jacobo Arbenz, listed FDR’s freedoms as the goal and FDR as his hero when he campaigned to overthrow the Guatamala govt. but Sam’s lobbying and PR. spun him as a communist to get the support of American people to overthrow him
Pablo Neruda’s 42 lines of poetry on United Fruit co. riled up the entire nation towards revolution
Sam aligned the UF’s interests with the interests of the US govt. UF executives took positions in the govt. and vice versa. so UFs interests were the US govts. interests (little has changed on this since)
Edward Bernays was the man who invented modern PR. He found ways to govern the ungovernable masses by manipulating the few thousand that set the agenda
People can be made to behave the way we want them to behave via the subconscious of the public mind (Bernays)
If you want to advance a private interest, turn it into a public cause (Bernays)
Bernays linked “getting women to smoke more” a private interest, with “women’s liberation” a public cause. Smoking was marketed as a symbol of empowerment (Bernays was a genius)
Exploiting existing sentiment and “manufacturing consent” and “crystallising public opinion” were masterful innovation of Bernays (Even govt. of India employed him apparently)
When a traditional marketer was given the job of selling more Thunderbirds to the American public by GE, he proceed by advertising the obvious - engine size and top speed. Bernays lobbied for higher speed limits, making it more fun to own a Thunderbird
When Simon and Schuster wanted to sell more books, he talked to architects and contractors to build bookshelves in suburban homes (I thought Ogilvy was genius until I discovered Bernays)
Fisherman worries about the size of the catch, the philosopher worries about the soul of the river - Bernays’ indirect approach to everything
When Jacobo Arbenz was confiscating UF land in Guatemala. Bernays, hired by UF turned this into a problem for the US by spinning it as spread of Communism in Central America (Arbenz was inspired by FDR and not Stalin but that didn’t matter with Bernays’ powerful propaganda)
Sam and Bernays’ strategy to overthrow the Honduran govt. is used till date by the CIA of turning American business interests into American govt. interests by spinning it into something it could push down the throats of its public and cattle-prod them towards a war or design military coups as revolution
UF financed articles that appeared in The Atlantic, NYT and even made a propaganda movie “Why the Kremlin Hates Bananas” (This should make you question everything)
Soon as Geppetto carved him a pair of hands, Pinocchio reached out and pinched the toymaker
The seizure of UF’s land lit a fuse that burned through the continent and gave Che Guevara his cause
UF was broken up by an anti-trust suit and sold its properties in Guatemala to Del Monte and never again regained dominance. 1950 profit $66m. 1955 $33m by 1960, UF earned just $2m
If you don’t understand the viewpoint, you don’t understand the price (Arthur Miller, in The Price)
When ideas and assumptions prevalent at the time of their founding go out of fashion, the company fades
Fidel Castro nationalised all of UF property in Cuba. UF financed Bay of Pigs invasion in 1961, 114 died, 1200 were taken prisoner by Castro and it was a big failure. By 1970 UF owned no land on the isthmus
Last Big Mike was sold in the US in 1965 and became extinct to the Panama disease. Cavendish, neither as tasty, nor as big or hardy was unaffected by disease and continues to be sold today

This is actually a very small book but was packed with so much knowledge and wisdom on finding a niche, building and running a business, on skin in the game, corporate politics, religion, lobbying and PR, Central American and world history, colonialism, wars and geopolitics that you almost get a history of modern western civilisation in just ~200 pages. Very, very highly recommended 11/10

rajguleria · March 7, 2023, 7:00am

I have this book but didn’t go beyond first 40/45 pages as I couldn’t relate to it as it was too 19th century for me …hence thanks for the notes, will read them with interest !

phreakv6 · March 19, 2023, 6:25am

China’s Great wall of Debt, Dinny McMahon, 2018 - This was my second read on China, after Red Roulette. While Red Roulette had a insider’s perspective and lot of details that made it almost a thriller, this one is an outsider’s view and it shows. It had a lot of details though on the Chinese economy, its banks, local govt. structures, its state firms, shadow banks, corruption and the CCP

My notes -

A lot of growth in iron ore mines in Australia in the past few decades have come up to finance the China’s boom. In return Australian govt. took a leap of faith to allow Chinese investments overseas. Today CCP’s capital flows into most major Western cities
For decades, the West (United States and Europe) were the twin engines of growth and this caused a risk of both sputtering at once, as it happened during GFC
Even in 2003, Japan was the main destination for Australian iron ore. Today 80% goes to China
Chinese economy is driven by exports is a common misconception. It hasn’t been the case at least since GFC
Post GFC, when growth came to shuddering halt, China launched a massive stimulus and the heavy lifting was done by banks (Not the govt. as it was in the west). The financial system lent vast amounts of money towards housing and infrastructure
China’s total non-financial debt to size of its economy was 160% in 2008 but climbed to 260% by 2016, same as US (Today its 295%)
Extravagant govt. buildings in China have more rooms than it has officials
Land has been reclaimed from the sea for factories that haven’t been built. The country is dotted with factories that have never been used.
Chinese debt crisis and collapse has been predicted at least since 2001. Gordon Chang in ‘01. Jim Chanos in ‘10 (on a treadmill to hell) and Soros in ‘14
Australia has benefited economically from China’s rise than any other country. The mining boom gave way to farm boom as Chinese middle class bought more beef, seafood, wine, honey and dairy
Since 2016, Xi has been trying to pare back the excesses and to structurally transform the economy
Beijing is willing and able to intervene and kick the can down the road indefinitely, albeit at the cost of greater future pain (The West has done no better)
A hedge fund that published a report that a Chinese Silver mining company (Silvercorp) wasn’t producing as much as it led its North American shareholders to believe was hit with a defamation suit (criminal as well as civil offense) and its executive jailed
The detention center is about putting you in inhuman conditions to force you to sign a confession
Chinese owners would fleece US investors who blindly overpaid for growth. Revenues were mis-stated by orders of magnitude
Chinese hedge funds avoid scrutiny into state-owned companies as the govt. will go any extent to protect its interests
China looks as though it embraced free market capitalism - there’s pvt. ownership, stock markets, mortgage loans, VC funds, auction houses, skyscrapers and high-end cars
State capitalism is rampant as the govt. nurtures its own companies for capital formation and sends them abroad to buy up resources and strategically useful infra and also throwing subsidies at industries like robotics and semi-conductors, where it wants to be the global leader
Pvt. companies can summon govt. thugs to do their bidding as in crony capitalism
Markets thrive but the presence of govt. is ubiquitous - the interplay uniquely Chinese
Bad loans were at 1% in ‘13, a metric no one believed in. They believed in make believe - transparency while it may be a good thing, may not be the right thing. Companies were allowed to hide until better times so they can be nurtured back to health - trading space for time
“Trading space for time” is what the Chinese army did after losing Shanghai to the Japanese in WW-2. They withdrew far into the west, stretching Japanese supply lines while they gathered time to regroup and attack
Why should China endure unnecessary pain if the authorities could just waive the rules for awhile?
Chinese banks could avoid capital raise to cover for bad loans due to waiving of rules. Market never has accurate information to value bank shares (National interest warranted deceiving the market)
Chinese official stats are for “Reference only”. What issues can be reported on, what words cannot be used in certain stories is circulated on a day-to-day basis by CCP
No division of power among executive, legislative and judiciary. The party controls all three. Rules are simply tools for governance, not to be adhered to but rather to be applied or ignored, in service of given agenda
The criminal code doesn’t say which law you violated. As long as your behavior is found to be harmful for the country, you can always be charged with something
Party members (CCP) wear the party hat and govt. hat. The party always came first
“Numbers make officials, so officials make up numbers”. Some provinces report economic growth faster than the country itself, for years on end
Villages lie to townships, townships lie to counties and so on, all the way to State council (made up numbers are systemic)
World’s biggest closed-dye hydraulic-press force, a 22k ton press (80k tons of force) could produce bulkheads, landing gear, aircraft carriers and mining tools is in Erzhong province
Heavy press forges are vital to aircraft industry as they mold the metal through a die, instead of beating hot metal into shape. Bigger the force, lighter the components it can produce
State firms want to build large passenger aircraft to take on the likes of Boeing and Airbus
Chinalco spent $13b in ‘07 buying Rio Tinto shares so it prevent it from merging with BHP Billiton (State interests and Beijing foreign policy uses state firms)
State firms produce 25% of all economic output and 1 in 5 jobs. State firms in Aluminum, Steel, Shipbuilding, oil companies, telecom firms etc. all are virtual oligopolies
State firms have 60% of all corp debt while producing only 25% of output (most risky ventures under these.). Official govt. debt is low but state firms own it
Evergreening of loans to state firms is the norm as zombie firms are kept alive
Social stability is CCPs most imp. agenda. Improving online and offline surveillance and beefing up internal security is its preoccupation
25% VAT ensures companies are still contributing to state while being unprofitable (So unprofitable businesses never die as the cost of closing down is high)
In China industrial land could take upto 25% of a city’s area (most parts of the world its 10-15%)
Cement, aluminium, shipbuilding, steel, power gen, solar panels, wind turbines, construction machinery, chemicals, textiles, paper, glass, shipping, oil refining and heavy engineering suffer from serious overcapacity
Constant, non-stop building is an addiction in China. There are at least 50 Ghost cities (Baidu researchers)
If-you-build-it-they-will-come model taken to extreme. China’s housing can house 3.4 billion people, more than twice its population
China provides large subsidies to companies like Foxconn, funding construction while also reducing their pension funding, shipping costs, VAT, corp tax
All rural land belongs to village collective. There’s no pvt. ownership of land. Farmers use it under 30 yr leases (Easy expropriated by govt. officials)
Between 2011 and 2013, China laid more Cement than US did during entire 20th century
Real-estate accounts for 20% of GDP, provides 16% employment to urban population, 30% of loans. A slowdown in construction thus hit everything
In Beijing people pay 20x their annual income vs 2.5x annual income in most parts of US (This sounds like cherry-picking)
Typical pvt. businessperson keeps 3 sets of books - one for the banker, one for tax authorities and an accurate one for himself (occasionally a 4th for the spouse)
Shadow banking barely existed in 2008. In ‘14 it had risen to 40% of China’s GDP. By’16 doubled to 80%
Credit isn’t regulated by interest rates but by supply of credit. Govt. rations credit by telling banks how much they’re allowed to lend
Banks don’t make loans themselves but facilitate it for a charge. So depositors money in WMP (wealth management products) bear the risk if loan goes bad
During most booms, people are not only blind to the risks but they devise explanations for why risks don’t even exist
If US banks are too big to fail, China’s depositors think no deposit is too small to be bailed out by govt.
China’s banks are glorified pawn shops. They lend not based on company’s needs and cash flow but based on what its assets are worth. This collateral is worthless due to interlocking mutual guarantees
Between ‘07 and ‘15, China is responsible for 63% of all new money created globally
Construction of tallest skyscraper in the world has been synonymous with imminent onset of economic crisis (Empire State, Chrysler buildings, Petronas towers, Burj Khalifa preceded one)
As of ‘16 China is building 25 skyscrapers taller than the Empire state. Of 100 tallest building under construction, 55 were in China
Beijing’s commitment to financial stability in stock market collapse of ‘15 - preventing use of words like ‘slump’ or ‘collapse’. Nudging fund managers to only buy and not sell. Nudging the national team (state firms) to buy shares, arresting people for spreading rumours
‘02 - ‘12 ruled by Hu Jintao and Wen Jiabao is considered the lost decade. Environmental degradation, income inequality and corruption became worse
Xi stifled dissent and consolidated power. Clamped down academia, media, NGOs and legal profession and became “Chairman of everything”
Chinese people have and use a lot of cash. Fake receipts are readily available for sale to legitimise grey income
China previously had quotas on what it could export to US but post joining WTO in ‘02, quotas disappeared and exports quadrupled (200 US textile factories closed)
In ‘14 manufacturing was only 5% more expensive in US than in China. China’s endless cheap labour has reduced causing wages to rise
China’s working age population started shrinking in ‘12. Will fall by 45m between ‘15 and ‘30 from 1b in ‘12. Further by 150m by ‘50
China’s population is aging faster than anywhere in the world. From 7.7 working age adults per senior citizen in ‘15 to 4:1 by ‘30 and just 2:1 in ‘50 due to one-child policy
China will remain stuck in middle-income trap without rise in population and increase in wage growth
Supply-side economics (Reaganomics) is driven by corp-tax cuts vs demand-side economics by stimulating demand
China needs to innovate its way to close the technology gap or it will remain an assembling economy (R&D spends already surpass Europe and US now in China)
China has a disconcerting track-record of globally dominant in industries where it has no natural advantage (through subsidies so that even unprofitable industries can thrive)
Only 15% of China’s land is arable and a 5th of that is heavily polluted
China has generated 30% of global growth since GFC. China consumes about half of world’s iron ore. 41% of all lead, 51% of tin and Cu, Zn, Al and Ni. Any slowdown will adversely affect commodities and mining countries
Party uses education to mold the youth. Schooling is about political control
In theory, above a certain avg. level of income, a country’s middle class will agitate for great political rights - but China’s middle class have been politically acquiescent and genuinely supportive of CCP

It was an informative read but stopped at that, lacking insights. Great books vault that barrier. Also, a lot of what’s said is true about the US as well and the author while pointing to instabilities of the financial system in China ignores the fact that what the West has, hasn’t proved any better and the truth is no system dealing with mass human behavior ever will, long as we possess our primitive lizard brain. 8/10

nirvana_laha · March 19, 2023, 7:09am

@phreakv6 Having read all of Taleb’s work, would you care to recommend an optimal order of reading the books? I just finished Fooled by Randomness, wondering which one to pick up next.