Multi-Disciplinary Reading - Book Reviews

Deven · March 7, 2025, 11:49am

Confessions of stock market wizards

The book is about mistakes by stock market wizards like S Naren, S Arora, Rajeev T etc. Total 26 Wizards, whosewho in investing.

I purchased this book as I like to learn more about mistakes.

Mistakes discussed are like

Our ego blocks from revisiting the decision and introspecting on facts.
Mistakes misjudging size of opportunity
Error of Commission
Error of Omission
Not buying enough
FOMO
Selling high PE stocks and buying low PE – Creates junk portfolio
Continue investment in companies who has issues of corporate governance
Averaging falling knife
Price is not always right indicator
Underestimating size of opportunity e.g. Bajaj Finance
Married to a stock and believing is the only way to make money
In calm time mistakes is mostly of greed and FOMO
In Crisis time mistakes is mostly caused by panic

To mitigate mistakes:
I. Diversified Portfolio
II. Buying Right and not right-away buying
III. Whenever a stock becomes popular, beware
IV. Risk is meaningfully different from uncertainty

Some other notable quotes/thought:

A. Acceleration Phenomenon: Think like in case of pharma company, what new drug discovery signifies. Or capex cycles in large companies
B. Crowed is mostly wrong at the start and end of the trend, but usually right in the middle of trend.
C. Value migration: In case of Infosys – human effort migrating to Technology and Hero Honda -shift in demand from scooters to motorcycle
D. Realization of mistake is not sudden like light bulb, it’s slow and painful.

The book lacks examples hence it’s feel like textbook. 2-3 investors gave many examples Ayush Mittal, Gautam Trivedi and Prof Bakshi.

Ayush mittal – Polymedicure from 60 crore market cap to 25000. In meantime stock drop to 50% initially.

Gautam Trivedi – Indian hotels turnaround by CEO Puneet Chhatwal. He also mentioned to consider stock when PE firms buyout management of companies like JB Chemicals brought by KKR. He also gives example of Varun B, Dixon etc.

Prof Sanjay Bakshi:
Quality of Decision vs Outcome
Good Decision and Good Outcome
Bad Decision and Bad Outcome
Good Decision and Bad Outcome – Unlucky
Bad Decision and Good Outcome – Lucky

Example: VGL products - Good Decision and Bad Outcome – Unlucky
He invested in this B2C ecommerce company. The business was growing and so stock price. However, PE backed competition entered and VGL has to jump to save market share. Profit dropped and share price. As prof do not know how long other player burn money. He questioned himself that knowing current situation will be buy this stock? As answer was no, he sold it and took loss.

Later situation improved and stock rose to multiple x from where he sold. In VGL case he doesn’t believe it was mistake to buy and also don’t believe it was mistake to sell.

Example: Symphony Ltd - Bad Decision and Good Outcome – Lucky
Symphony was the only player in cooler segment – consumer appliance business. It has competition with unorganized players. Revenue, Profit and share price gain multifold. At 70 PE he sold. Later competition entered as Philip Fisher says high profit margins are like open jar of honey; it will attract competition. It was his mistake of buying it in first place as he ignored this, due to this this is bad decision but good outcome.

The book may have been super duper if author included more examples. After sometime it’s become repetitive. Like most book this is value for money but…
I give 7 out of 10.

phreakv6 · March 23, 2025, 2:03am

Quench your own thirst, Jim Koch, 2016 - By differentiating his business right from the beginning in not being in fight with Anheuser-Busch and backing on his 5 generation heritage in brewing, banking on drinkers to appreciate good flavourful beer and paying a premium for it - the company had clarity of thought from the beginning on product, market and placement. Boston Beer Company founded in ‘84 sold 36k barrels by ‘88 (7x expectation), went public in ‘95 pioneered the craft beer market with ‘Samuel Adams’ beer. The book talks about how the business was conceived, built and expanded.

My notes -

The recipe the company started with was from 1860s, a family heirloom, an “all malt” beer adhering to the stringent Reinheitsgebot (beer purity law from 1516) that insists beer can have only 4 ingredients - water, yeast, malted barley or wheat and hops. Most American beers used corn, rice and preservatives with malt making it cheaper, lighter and more drinkable
Mashing - Milling grain with hot water and creating a mash (like porridge) breaks down complex carbs into simpler sugars which are turned into alcohol during the fermentation process
Jim hiked and climbed and was a part of Outward Bound that he talks very highly of - in terms of fostering toughness - no people, no books, nothing but your own thoughts and solitude. It helps to come to grips with true self
Never compromise on work and career - if you are going to work hard, make sure its the most satisfying and meaningful work
Business ideas are like radio signals - they are out there. You must turn your receiver on and tune in
Skunky aroma and cardboard taste is a sign of stale beer (most beer in clear/green bottles ends up this way due to oxidization with light). Brown bottles protect beer better
Paradigm shifts that happen in scientific revolutions upend what we know and challenges our assumptions (Thomas Kuhn). Most value in an industry is created by such paradigm shifts when people venture outside conventional wisdom (rest of the time industry operates to improve cost/quality)
Tagamet was a blockbuster drug in 80s that tried to cure ulcer by reducing acidity. In reality ulcers were caused by infections and could be cured by antibiotics (an outsider figured this out)
Real opportunity is in understanding the outliers - in a market dominated by economies of scale in marketing, production and sales (traditional beer market), a small volume flavourful beer that charges a premium could hold its own
Two rules to successful companies (HBR based on 2 decade long study) - 1. You succeed by adding value and not reducing cost 2. There are no other rules. If you can do both (add value while reducing cost), you have a home run (cheaper and better)
If price is all you have to offer your customer, then you are just a commodity
“I lend money on four Cs: character, concept, collateral and cash” (A successful banker)
Most of the time, in most places, the candidate with the best resume or best educated gets hired, not the best candidate (he calls it education-based caste system). Talent comes in all kinds of packages
Started with clear, limited but ambitious goal - hit hundred bars and restaurants but not liquor stores which took out 75% of the market -in one good neighbourhood with one truck. Old-fashioned door-to-door sales only
CEO - Chief Everything Officer. He had to get permits of brewing, negotiate leases, arrange for legal and PR help, design label, figure out how to hire and pay people and so on
Samuel Adams beer used 100% malt, noble hops, traditional brewing practices like krausening, dry hopping and decoction mashing and in small batches. Expensive to make but tasty
Am expert who fixed ships boilers could charge $10k and might just end up banging a pipe to fix but justify his cost as $1 for hitting the pipe and $9999 for knowing which pipe to hit
Nothing kills a bad product faster than good marketing
Difference between marketing and sales is the difference between masturbation and sex. Former you can do all by yourself in a dark room but the latter requires real human skills
Culture and values can trump money and resources. A small company with great culture and values can run rings around a larger one with money and resources. The Boston Beer company had no office in the first year and focused on “less is more”. Making great beer and figuring out how to sell it was the only priority (one bar at a time with one truck - as most distributors turned him down)
He created and memorised a 30 second sales pitch so he would know exactly what to say when he went in. He would ask questions early in the conversation (simples ones that were easy to say ‘yes’ to) and offer something tangible the customer could pickup and hold and close by asking how many cases they would take
String theory - in a mountain hike (outward bound ones), strings were used everywhere and a lot got used up. When expectation was set that strings were scarce and less handed out, less was used (He applied this everyday to business). Every acquisition decision was evaluated between a “nice to have?/need to have?” basis.
Travel lighter, carry only a briefcase. The latin word for luggage is “impedimenta” (impediment). Don’t impede yourself. Take only what you need and no “nice to haves”.
A customer negotiated 75 cents off a case by saying he would call in his order and there wont be a visit needed. That saved the author $40 of which he was passing back $37.50 to the customer (happily). The customer says “I make my money when I buy by goods, not when I sell them” (that 75c is his profit)
To start with he was making 10% profit on a bottle (profitable within first month and stayed profitable). But by negotiating with the contract brewer from a 60 day to a 5 day payment cycle once he was profitable, and making bottles light-weight, he took it to 20%
Placing table tents in the bars (the small A-shape paper frames with advertising) increased sales from 3 cases to 5 cases per week (66% inc. - so table tents became standard fare). Shelf space at eye level in the bar quadrupled sales (negotiated with the bartender)
Never ask customers do something that’s not in their long-term best interest
If a prospective customer wont benefit from your product or service, stop selling, say thank you and move on
Sales wasn’t just about delivering a pitch but making a meaningful conversation and doing a lot of listening
A single brew was 4 truckloads of beer. In first 6 weeks he had barely sold a truckload when a single order comes in for a full truckload. $5000 in profit from a single phone call from customer
For large brewers, the guy selling the product on the street cares the least. For smaller ones run by the founder, he is the one that cares the most, understands the product best, so its an asymmetric fight
In the beer industry “premium” means cheap. Heineken for instance wasn’t using hops but a cheaper extract from hops without the same complex bitterness
Aim for superlative. Be the first, the best, the only, the biggest, the smallest - anything. They went from being the “smallest brewer” to “best beer in America” to “only American beer in Germany” and today “largest craft brewer”
Fermenting breaks down the complex sugars into alcohol and carbon dioxide (bottled and capped (happens after bottling. thats where the carbonation comes from)
The company doubled in size every 18 months (went up 48% even in recession in ‘91). The model was simple and scalable and great unit costs. Contract brewing kept it asset light. No marketing hires made till ‘94 (almost 10 yrs without marketing!)
If you have a problem to solve, the least efficient way to do it would be to hire someone. Make do with fewer people. Find a great office location but keep it small, no empty space (scarcity spawns invention)
Beer needs to be fresh to taste best. Its not like wine. Its liquid bread. Fresh beer is like orchestra live vs same thing on your iPhone (stale). Company actively took off stale inventory from customer’s shelves (shared cost with distributors) so as not to lose customers.
You start by making thousand dollar mistakes and if lucky move on to make $100k mistakes and if really successful to make million-dollar mistakes (real education doesn’t come cheap).
Why would you want to impress people who are impressed by the car you bought? They are idiots by definition. Why bother to impress idiots?
Never hire someone unless they raise the average (no desperate hires)
Job interviews are only marginally better than handwriting analyses to decipher character. People are good to figuring out what employees want to hear
First 12 year growth of 40% CAGR and a decade of stagnation post IPO as craft brewing drew in lot of competition from established players including Anheuser-Busch. Author agrees that it takes a different kind of person to run a mature company than it did to start it
Stay alert to options that don’t appear scary but are really dangerous
Spend a lot of money and train people even if you are worried they might leave, because if you don’t train them and they stay, its much worse
Most of what we think we are tasting, we are actually smelling (hence the glass that beer is served in makes a lot of difference)
You have to create value for others before you can capture value for yourself. The more others share in your success, the more success you will have.

For anyone wanting to build a business in the consumer space, this is an inspiring read. The idea of being bootstrapped and profitable from first month, focusing on product quality first and then on cost, selling, focusing on unit economics, avoiding poor investment decisions, investing in people are all the foundation of any good business and so is worth a read. 9/10

Apurva_Dubey · March 23, 2025, 5:39pm

Gray Matters: A Biography of Brain Surgery by Theodore Schwartz (2024)

Written by a practicing neurosurgeon, this is one of those books that gives you a comprehensive and a well-rounded view of a body to knowledge. Among other things, the book covers (1) the history of development of the neurosurgery discipline, and its various sub-disciplines (2) vignettes on key actors who pushed the envelope and shaped the practice (3) anatomy of the brain (4) recent advances in treatment of neurological challenges, including BCI – Brain Computer Interface. In addition, the author has covered numerous case studies on neurosurgical interventions, some involving famous personalities like JFK (his assassination and autopsy report), Joe Biden (treatment of his aneurysm), Lance Armstrong (treatment of his double brain tumor), Michael J. Fox (Parkinson’s) etc. Overall, I enjoyed reading this book and would recommend it.

1/ BCI – brain-computer interface

BCI technology is advancing so rapidly that it’s more than likely that, within five years or so, a fully implantable, commercially available device will help both paralyzed and locked-in patients move about, search the internet, or communicate using only their minds integrated with computers.
BCIs can be separated into two broad categories: (1) output BCI and (2) input BCI.
Output BCI: brain’s electrical signals are routed from the brain and directed into a computer. Instead of using a keyboard or a mouse to input information, the user, whose brain is plugged in, need only think about what they might want to accomplish, and it would happen instantaneously. Use-cases: restoration of movement to a paralyzed limb.
One crucial defining attribute of an input BCI is that it must interface directly with the brain. For this reason, the cochlear implant and the retinal implant, which restore lost hearing and vision, respectively, don’t count as true BCIs because they input information into peripheral sensory nerves and organs rather than directly into the brain.
Output BCI takes information out of a computer and inserts it directly into the brain.
The most common BCIs, which already exist are the deep-brain-stimulating devices that treat Parkinson’s disease and OCD. These therapeutic input BCIs are what we call neuromodulatory, since they alter the brain’s existing circuitry.
As for neuroprosthetic BCIs, as of 2023, there are very few on the market, although several are currently in development. More critically, since BCIs require an interface between the brain and a computer—and since that interface often involves opening the skull and inserting electrodes—neurosurgeons have become their gatekeepers.
The experience of vision does not come from the eyes. It comes from the brain. In fact, you don’t really need your eyes to see because seeing doesn’t happen in the eyes or in the optic nerves. It occurs in the visual cortex of the brain.
To power a BCI eye, the information must go into the brain which makes it much more difficult than BCI limbs.
Several companies are currently working on visual prosthetic. The most advanced of these prosthetics is made by a company called Second Sight Medical Products. At the time of this writing, six of these devices have been implanted. Scant published data on the outcomes.
An implant device called the Utah array has facilitated giant leaps forward in the development of output BCIs. After years of animal testing, the Utah array was first implanted in humans as an investigational device in 2004 and was FDA approved in 2021.
Although originally designed as a visual prosthetic, the array was soon inserted into the motor cortex to help paralyzed patients move robotic arms. It’s currently being implanted in the brains of quadriplegics at several different academic institutions throughout the world.
Using a larger grid of 250 electrodes, a BCI translated a paralyzed patient’s imagined words into synthesized speech at a rate of almost 100 words per minute, incorporating a vocabulary of over 1,000 words.
Elon Musk’s Neuralink has developed a BCI consisting of over a thousand microelectrodes, which are inserted into the brain using an automated robotic surgeon, the R1, that pokes each tiny flexible electrode into the cortex like a sewing machine. Early human trials in quadriplegic patients have begun.
We could also imagine a BCI that senses electric and magnetic fields—as birds and fish do—and inputs this information directly into the brain to create enhanced humans with perceptual abilities beyond our five senses.

2/ Deep Brain Stimulation (DBS)

In the modern field of functional neurosurgery electrodes are placed in the brain that alter the circuitry underlying human emotion. This technique, called deep brain stimulation, or DBS, is now used to treat a variety of behavioral disorders, including depression, anorexia, substance abuse, drug addiction, and obsessive-compulsive disorder.
In 2009, deep brain stimulation received a humanitarian use designation from the U.S. FDA for the treatment of OCD. Placing DBS electrodes is not considered a technically difficult operation for a neurosurgeon.

3/ Parkinson’s disease and the treatment frontier

Parkinson’s disease is caused by the degeneration of a small group of neurons that produce a chemical called dopamine, one of the several neurotransmitters that neurons use to communicate with each other.
This degeneration occurs in a specific part of the brain, an island of neurons known as the substantia nigra (Latin for “black substance”). The dopamine secreted by the neurons of the substantia nigra modulate yet another group of neurons in a separate location called the basal ganglia. Together this circuitry regulates the smooth coordinated execution of movement.
Scientists can now chemically cajole skin cells into making dopamine, and these transformed cells can then be transplanted back into the substantia nigra. Since the same patient is both donor and recipient, this strategy avoids immune rejection.
Another strategy has been to package the gene that codes for dopamine inside a virus, which can be injected into the substantia nigra in the hope that the virus will infect the neurons there and reprogram them to start producing dopamine. This so-called gene therapy for Parkinson’s, while promising, has also met with mixed results and is still considered experimental.
The latest technology to gain traction in the treatment of Parkinson’s disease is called focused ultrasound. Modern focused ultrasound device is currently produced by the Israeli company Insightec.
Focused ultrasound treatment is delivered inside an MRI magnet, which can measure temperature inside the brain, allowing the surgeon to see the exact size and shape of the damaged area—a process known as MR thermography.
MR-guided focused ultrasound is now employed around the world to treat a host of illnesses, including essential tremor, Parkinson’s disease, epilepsy, chronic pain, obsessive-compulsive disorder, and stroke.
Even more groundbreaking is focused ultrasound’s ability to selectively open the blood-brain barrier (which is the protective filtration system that prevents many of the drugs and therapies that we currently administer orally or intravenously from entering the brain). For instance, one of the reasons that GBM, the deadliest form of brain cancer, remains so resistant to treatment is that many of the most effective chemotherapies and immunotherapies can’t reach the tumor due to the blood-brain barrier.

4/ Stroke

Stroke is the second leading cause of death and the number one cause of disability in the US. It’s a disease that has plagued neurologists and neurosurgeons for years.
One of the most common symptoms of a stroke is loss of vision in one eye, experienced by the patient as a shade being lowered. This phenomenon is called amaurosis fugax, Greek for “fleeting darkness.”
The history of stroke therapy can be separated into three distinct stages. The first was diagnosis, which required astute neurologists correlating detailed bedside examinations with autopsies. The second stage was prevention, which relied on anticoagulation and carotid artery surgery. This brings us to the third stage: treatment.
It took fifty years for the modern medicine to develop a substance that rapidly dissolves clots. It’s called tissue plasminogen activator, or tPA. In 1996, the FDA approved tPA as the first-ever treatment for acute stroke.
tPA turned out not to be the miracle drug it was advertised to be. Many clots were too large or too thick to be dissolved. Another problem was that many strokes also cause small hemorrhages in the brain which can then rupture. Giving a clot-busting drug to a patient with a brain hemorrhage is just about the worst thing you can do.
A new strategy was desperately needed which came by way of retooling endovascular techniques The first device for removing clots from within brain blood vessels was called the MERCI retriever, an acronym for “mechanical embolus removal in cerebral ischemia.” Approved by the FDA in 2004, the MERCI was basically a corkscrew concealed inside a catheter that could be threaded up into an occluded blood vessel and snaked past the clot, after which it would be deployed to hook the clot and pull it back out of the blood vessel.
In the last seventy years, the field of stroke care has finally arrived at the third stage in its evolution, progressing from diagnosis to prevention to, at long last, an effective treatment.

5/ Head-On Collisions

A dilated, or “blown,” pupil is an ominous sign of catastrophically high intracranial pressure.
The period of time after head injury but before the onset of symptoms has a name; it’s called the lucid interval. One could have a traumatic brain injury, appear completely normal, and then collapse a few hours later from a fatal brain bleed.
When a lucid interval is caused by an epidural hematoma (epidural hematoma is bleeding that occurs between skull and outer membrane covering the brain), as is true of nearly half of all cases, it can last anywhere from fifteen minutes to four days. On average, however, patients with an epidural hematoma will deteriorate within six hours of their injury.

6/ Brain Tumors

Most people think a brain tumor is a death sentence – most of the time this is not the case. The 2016 WHO guidelines identify 145 different varieties of brain tumor, and at least 70 percent of them are benign.
Over 90 percent of people with a benign brain tumor will still be alive five years later; in contrast, the average five-year survival period with a malignant brain tumor is around 36 percent.
Brain metastases are the most common malignant brain tumor, and since they don’t infiltrate deep into the brain, they are also eminently treatable.
Most cancers in the body are treated with either chemotherapy or targeted immune therapies, but when tumors enter the nervous system, they become difficult to manage because the brain is screened off from the bloodstream by a protective barricade called the blood-brain barrier.
Blood-brain barrier is like a moat around the brain, a way of defending itself from the onslaught of toxic chemicals our ancestors might have ingested.
A few decades ago, brain metastases were mostly treated by giving ten doses of radiation to the entire brain. Today, very few patients receive whole-brain radiation because of a new device invented in the 1950s by a brilliant Swedish neurosurgeon named Lars Leksell: the Gamma Knife.
Leksell devised a method called stereotaxis to calculate the entry site and trajectory required to reach any target anywhere in the brain. It was the marriage of the stereotaxis concept with radioactive sources that ushered in one of the first great revolutions in minimally invasive neurosurgery—the invention of stereotactic radiosurgery.
Ironically, the only environmental exposure known to cause brain tumors is radiation.

7/ Surgical removal of brain tumor & 5-ALA

5-aminolevulinic acid, or 5-ALA for short, is a potion the patient swigs just before the operation. After getting absorbed by the gut, 5-ALA travels through the bloodstream, sneaks through the blood-brain barrier, and parks itself inside the tumor cells. A few hours later, these cells fluoresce bright pink when illuminated with a blue light. This allows the neurosurgeon to differentiate the tumor cells from the surrounding normal brain.
The drug 5-ALA was approved for use in Europe in 2007, but only after a randomized controlled study showed that it was not only safe but increased the amount of tumor that surgeons could remove by a whopping 30 percent. However, it was not until 2017 that the drug was approved in United States.

8/ Mapping the brain

The areas of the brain dedicated to language processing are different in every individual. Unfortunately, we haven’t yet developed a noninvasive test that can reliably map language zones with enough certainty.
Functional MRI scans, which show blood flow changes in the brain associated with language, do provide some data, but the mapping is indirect and not always accurate, since blood flow doesn’t always correspond with neuronal processing.
Neurosurgeons sometimes require that their patients be awake in the operating room so as to map out the parts of the brain dedicated to creating and deciphering language.
The brain itself has no pain receptors, so surgery on the brain is not felt. The brain is completely unaware of itself as a physical organ in space. We are as oblivious to what’s happening inside our skulls. You could reach into your skull and touch your brain it would just feel like touching a sponge. But there would be no sensation inside your head to alert you that your brain was being touched.
Headaches arise from irritation to the membranes around the brain, such as the dura, the blood vessels, or the periosteum, the thin layer of tissue that covers the skull. Brain tissue itself cannot be a source of pain. It simply lacks pain or pressure receptors.
The parts of the brain devoted to moving the hands, fingers, lips, and tongue are the largest. The parts moving the legs, feet, torso, and forehead are much smaller. What explains this distorted representation of the body? The larger the area of brain devoted to each body part, the more neurons are dedicated to that ability.
What perhaps most epitomizes humanity, is the overrepresentation of the mouth and the hands (in the brain). Our civilization is a product of our ability to communicate and to build. At our most basic level, we tell stories, and we make things.
Of all the five senses, the most dominant sense in the human brain by far is vision. How dominant is vision? Nearly one-third of the brain is devoted to processing it. This explains why the human brain wants us to stand upright—to see farther rather than run fast.
One of the critical if disturbing discoveries has been that it is possible, when mapping a bilingual patient, to knock out their ability to speak in one of their languages without affecting their second language.

9/ Legend of Harvey Cushing

Cushing was arguably one of the most brilliant, hardworking, and talented surgeons ever to grace the planet. He has an almost mythological status the field of neurosurgery.
Cushing studied surgery at Johns Hopkins Medical School under the legendary chief of surgery William Halsted (father of modern surgery), who revolutionized general surgery with the introduction of general anesthesia, antiseptic technique, and fastidious tissue dissection.
In 1905, Cushing published his seminal article The Special Field of Neurological Surgery, the first monograph on the subject and the field’s unofficial birth certificate.
Cushing’s impact on brain surgery was nothing short of transformative. In his hands, operative mortality went from 50 percent to under 10 percent. In the words of one of his biographers, Michael Bliss, “Harvey Cushing became the father of effective neurosurgery. Ineffective neurosurgery had many fathers.” He was also a remarkable artist and documented the details of his operations with Da Vinci–like precision.
In addition to founding the field of neurosurgery, Cushing identified what is now known as the Cushing reflex, when blood pressure rises and heart rate lowers in the face of mounting intracranial pressure, as well as Cushing’s disease, a disorder of the pituitary gland in which a small tumor secretes high quantities of steroids.
Ironically, and perhaps unfairly, Cushing never won a Nobel Prize in Physiology or Medicine, although he was nominated a startling thirty-eight times.

10/ Surgical instruments

Neurosurgeons perform most operations with only two instruments: a suction and a bipolar cautery. One instrument goes in each hand: generally the suction in the left (or nondominant) hand, and the bipolar with the right (or dominant) one.
The bipolar is a long, tweezer-like instrument that allows surgeons to pass an electrical current between its tips by stepping on a pedal, instantly charring and cauterizing small vessels or softening hard tumors so they can be removed with the suction.
One of the earliest neurosurgical drills, called the Hudson brace, was a hand-powered twist drill shaped like a crank with a rounded handle on one end and a metallic bit jutting downward on the other. First described in 1518 and still in use until only a few decades ago.
Today, craniotomies are performed with power tools driven by compressed air or electricity. A single burr hole is created in a matter of seconds with a high-speed drill, and then a device called a craniotome, a thin, side-cutting drill with a footplate, is used to disconnect the bone flap from the rest of the skull while protecting the underlying brain.
The electric drill and the craniotome are two of the many devices that have made modern neurosurgical operations safer and speedier than surgeries performed just thirty years ago.

11/ Miscellaneous

Most of the surgeries performed by neurosurgeons take place in the spine and not the brain.
Head trauma, both blunt and penetrating, remains neurosurgery’s bread and butter, in the same way that skateboards and trampolines keep orthopedic surgeons in business. Traumatic brain injury, or TBI, makes up a significant portion of any modern neurosurgeon’s on-call responsibilities.
If there is a geometric center of the brain, it’s undoubtedly the third ventricle. More a cavity than an object, the third ventricle is part of the ventricular system through which cerebrospinal fluid (CSF) flows. The ancient Roman physician Galen posited that CSF housed our vital spirit.
Neurosurgeons who specialize in operating in the deep buried compartments of the brain (like the third ventricle) are called skull base surgeons.
Glioblastoma multiforme (GBM) might be the most terrifying diagnosis in all of medicine. It is one of the deadliest forms of cancer. Without treatment, the average life expectancy is around four months.
The MRI scan, which arrived on the medical scene in the mid-1980s, had a tectonic impact on the field. So transformative was the MRI that one of my neurosurgery professors used to say half-jokingly that he would trade a stadium full of neurologists for one MRI scanner.
A few of the most terrifying moments in brain surgery occur when we need to remove the bone overlying certain critical structures such as the carotid artery, which carries most of the blood supply to the brain.
One of the central debates in medicine in the late 1800s concerned the organization of the brain. Two schools of thought prevailed. One held that the brain was arranged into discrete units, each concerned with a different function. The other proposed that the brain was a homogeneous calculating machine with widely distributed processing networks.
So far, no Nobel prizes have been awarded in neurosurgery except the one for the frontal lobotomy, which, was given to a neurologist (Egas Moniz).
Ironically, in 1949, Egas Moniz would win his Nobel Prize not for the angiogram but instead for one of the more destructive procedures in the history of neurosurgery: the prefrontal leukotomy, now better known as the frontal lobotomy, which he invented as a treatment for schizophrenia. It’s a surgery now considered to be, at best, an unnecessarily aggressive treatment of mental illness and, at worst, a dangerous form of brain mutilation. (Award for frontal lobotomy remains one of the most egregious errors on the part of Nobel Prize committee)
There are some 50,000 neurosurgeons working worldwide. High-income countries have one neurosurgeon for every 100,000 people. In sub-Saharan Africa, there is one neurosurgeon for every 5 million.
In Japan, they have one neurosurgeon for every 17,000 people. Why so many neurosurgeons in Japan? Japan doesn’t limit the number of residents who train in neurosurgery and accepts all that apply.

phreakv6 · March 28, 2025, 5:16am

The Billion Dollar Molecule, Barry Werth, 1994 - This book is a groundbreaking work in covering a medical science startup since the author was pretty much a fly on the wall during the early stages of starting up of Vertex and had great access on a day to day basis to people within the company. The insights and perspective he builds are hence very compelling. Vertex itself is one of a kind company as its approach to drug discovery is very different from what existing during its early years in the 90s.

My notes -

Built to function more like a university style lab than a commercial drug business
Everyone understood it would take at least 25 years to taste success. Merck wasn’t built in a day. It was a research powerhouse in 40s and 50s but tasted success only in late 20th century with a string of first-in-class and best-in-class drugs
Vertex raised $10m with no products, no revenues and burnt $75k a week. It would take a dozen more years and at least $250m to develop its first drug
First project would be to improve upon experimental drug FK-506. It suppressed the immune system to facilitate organ transplants but was extremely toxic. Vertex wanted to go about it in a different way. They wanted to design the molecule atom by atom - not by sifting and sieving through hundreds of thousands of molecules through trial-and-error
Academic and industrial scientists tended to be dismissive of each other. Former thrives of publication and publicity while latter has to keep their best works secret.
Vertex had several sub-disciplines - of molecular biology (deals with function), chemistry (structure and mechanics), medicinal chemistry, x-ray crystallography, nuclear magnetic resonance spectrography, molecular modelling, computational chemistry, protein engineering, protein chemistry, enzymology etc. (all united by a culture of enlightened self-interest)
Glaxo jumped from 25th to 2nd place in the drug industry post success of anti-ulcer drug Zantac
Prior to WW-II only a handful of drugs worked - derived from a combination of luck and empiricism. Post penicillin, lab-coated scientists started cooking obscure dirt samples in fermentation broths and screening them for activity.
There’s no objective reason why a fungus a million years older than us should be able to lower cholesterol in us and yet it did - as with Merck’s Mevacor ($1.6b drug)
By building molecules one wants, rather than fishing for them in nature, we could minimise the side-effects of molecules found in nature
Immunosuppression occurs when some but not all of body’s defences are disarmed (thus helping in body accept the transplant and reject the graft). By modifying Fujisawa’s FK-506 from scratch, they could have proof-of-concept that could then be used to build molecules for Multiple sclerosis, juvenile diabetes, rheumatoid arthritis, crohn’s, psoriasis, lupus and other autoimmune diseases
Vertex’s idea was to make keys that fit the locks - the locks are always proteins and Vertex had great knowledge of FK-506’s protein receptors than anyone else. Using X-ray crystallography and precisely mapping the floppy protein with thousands of atoms, they had to design a drug that could fit into the receptor at a 1 in 10 billionth of a meter precision (FK-506 protein is FKBP or FK-506 binding protein discovered at Harvard. FK-506 itself was a drug occurring in nature discovered by Fujisawa)
To build a molecule that mimics FK-506 built from the ground up, FKBP was essential and could only be sourced from the spleen of human cadavers
Molecule on the surface of T-cells on helped the body distinguish self and non-self and trigger the immune reaction (so for transplanters., they had to figure out how to disable them so the body doesn’t reject the organ). Sometimes patients had to take immunosuppressants for life as the threat of rejection persists for life. Cyclosporine was the first and FK-506 the second that helped with this (both severely toxic). Cost-wise former was $240k and latter cheaper at $130k (establishes economics clearly)
Most drug companies threw legions of chemists at a problem to change an atom here, a sub-group there in a natural compound and hope it gives better results. Merck was routinely able to bludgeon competition by throwing more chemists at a problem (Vertex despised this approach)
Structure based drug design (SBDD) was to design small molecules with only the area of activity (and not the whole large naturally occurring molecule) - with the minimal size and weight possible from the ground up (Orforglipron which is a small molecule mimicking GLP-1R also likely works this way is my guess)
Diseases are not treated first and foremost as diseases but as markets
A German dye chemist made a dye from coal tar (sulfanilamide) which led to sulfa drugs to combat bacterial infections (1935)
Though penicillin was discovered in the 30s, it couldn’t be mass produced until much later as extracted, purification were difficult and yields were poor. Similarly streptomycin was discovered from soil while actively screening and looking for it (unlike penicillin) and could combat TB (1943)
Drug companies screening for samples all over the world and even paid half airfare (Squibb) for their employees to bring back samples from where they were vacationing. Cephalosporin was discovered in sewage sludge!
Tishler working for Merck synthetically manufactured Cortisone in a 37 step process (1944) and shot Merck’s success into the stratosphere as it was used for all sorts of miraculous ends - from asthma to ulcerative collitis, almost 28 illnesses were treated with it
Merck began screening 50k microbes a yea at a plant in Spain post success of Cortisone
Merck’s success was on information - not intuition or insight (hence Boger left Merck to start Vertex)
What would cost Fujisawa $1000/gm would cost Vertex $1000 a tankload if successful (small molecule at scale)
Molecules that look at act like peptides but are structurally different - peptide memetics (Orforglipron again I think is one such)
After Linus Pauling’s discovery of the way proteins folded, synthetic chemistry fell in stature to structural chemistry because it could explain form and function instead of blind synthesis
Despite Merck’s ability to make Cortisone, Syntex, a little known biotech figured out it could make it from Mexican yam and went on to become largest maker of Cortisone in the world
Periplanone-B a pheromone that attracted cockroaches was synthesised and could deceive cockroaches into a frenzy (complex 10 member ring compound)
New drugs are rare, novel ones rarer. Most of variants and work on known receptors. Very few novel ones work on a different pathway
Medicinal chemists vs process chemists - former discover drugs while latter improve ways of cheaply producing them. Process chemists struggle for respect in companies like Merck
Scientists publish to establish new work and authorship. Within industry they do also do this to frustrate competition and entice investors
Altruism has no other evolutionarily justified motive but self-interest
When researchers found good rewards for doing science that was visible, the attention brought money and money, more research (cancer research was hot on Wall st. in the 90s)
A prophet who turns out right is a seer, and wrong, a charlatan
Avg. third year revenue for a new drug is $300m

The drug in question eventually did not see the market but Vertex went on to make few other very successful drugs and recently even got approval for a non-opioid painkiller (incidentally, I am reading “Empire of Pain” on the Oxycontin saga which was a Opioid painkiller). This is a field I knew very little about but the more books I have read, the better the clarity is in my head and simpler the mental models to use as an investor in this space. However, this is not a book for everyone. It is big, wordy and dry and not something most people will enjoy. 8/10

hardik_shah1 · March 28, 2025, 6:17am

Have read this one twice. The amazing thing is Vertex turned out to be one of the best performing new pharma companies in last 3 decades.

Another aspect to see is that despite initial failures, the investors stuck around till it succeeded in the third try, I guess.

Also, the initial researchers put in gruelling effort. The top researchers in that team worked 120 hours weekly in the initial few years, so much so that they had blisters on their hands and swollen legs from standing at the workbench nonstop.

Mohanlate · March 28, 2025, 8:14am

Here is a categorized list of the books discussed here:

Investing/Finance

Poor Charlie’s Almanack, Charlie Munger
The Dhandho Investor, Mohnish Pabrai
One up on wall street, Peter Lynch
The little book that beats the market, Joel Greenblatt
Rich Dad, Poor Dad, Robert Kiyosaki
Bulls, Bears and Beasts by Mr. Santosh Nair
Fortune’s Formula by William Poundstone

Psychology/Behavioral Economics

Thinking, Fast and Slow, Daniel Kahneman
Fooled by Randomness, Nassim Nicholas Taleb
Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay

Science (General/Popular Science)

Guns, Germs and Steel, Jared Diamond
Stuff Matters, Mark Miodownik
The Selfish Gene, Richard Dawkins
Astrophysics for People in a Hurry by Neil deGrasse Tyson
A Short History of Nearly Everything by Bill Bryson
What is Life by Erwin Schrodinger
Faraday, Maxwell and the Electromagnetic Field by Nancy Forbes and Basil Mahon

Mathematics

Men of Mathematics by E T Bell
How Not to be Wrong by Jordan Ellenberg

Philosophy

Seneca on the Shortness of Life
Candide by Voltaire

Biography

The Man Who Knew Infinity by Robert Kanigel (Biography of Ramanujan)

Business/Management

Zero to One, Peter Thiel
The Success Equation by Michael Mauboussin
The Checklist Manifesto by Atul Gawande

Memoir/Personal Reflection

Walden, Henry David Thoreau
Being Mortal by Atul Gawande
When Breath Becomes Air by Paul Kalanithi
No Shortcuts to the Top by Ed Viesturs
Annapurna by Maurice Herzog

Social Justice

Just Mercy

Literature (Mentioned within reviews)

The Odyssey
Confucius
The Vedas

Note: Some books could potentially fit into multiple categories, but I have placed them in the category that seemed most emphasized in their review. For example, while “Fooled by Randomness” touches on philosophy, its primary focus in the review is on probability theory and behavioral economics.

Here are 100-word summaries for each book mentioned in the sources:

Guns, Germs and Steel, Jared Diamond: This book seeks to answer why some countries are richer and some races conquered others by looking at the last 13,000 years of history. It argues against racial or genetic superiority, highlighting the importance of geography, biodiversity, and germs. The east-west alignment and large continuous landmass of Eurasia, along with domesticable flora and fauna, led to early food production, settled lifestyles, specialization, and resistance to germs. The book reveals that germs killed more Native Americans than guns. While insightful, the review notes the book is repetitive and could have been better edited.
Thinking, Fast and Slow, Daniel Kahneman: This book introduces the two systems of thought: System 1, which is quick, intuitive, and prone to biases, and System 2, which is slow, effortful, and analytical. The book explores how these systems affect our judgments and decisions, covering concepts like the availability heuristic, anchoring, substitution, loss aversion, and the endowment effect. It delves into how our brain handles probability and the differences between our experiencing and remembering selves. The reviewer considers this a highly important book for understanding human beings and recommends rereading it.
Poor Charlie’s Almanack, Charlie Munger: This book is highly praised for its insightful content, particularly the 100 pages on human misjudgment and a talk on building a successful business like Coca-Cola using multi-disciplinary knowledge. It also includes biographical information on Berkshire Hathaway, Munger’s partnership with Buffett, and his views on various topics from philosophy to finance. The book is filled with wit, wisdom, and anecdotes, making it an enjoyable and highly recommended read that the reviewer anticipates revisiting.
Zero to One, Peter Thiel: This book, while a quick read, is considered to have its core message concentrated in the first 40 pages. It discusses building monopolies and avoiding competition, similar to Munger’s ideas. The concepts of Definite/Indefinite Optimism/Pessimism are also introduced early on. The remainder of the book is viewed as less substantive, focusing on anecdotes related to PayPal and criticisms of certain sectors. The reviewer finds it a less impactful read compared to others.
The Selfish Gene, Richard Dawkins: This book explores the origin of life and the reasons behind our behavior through the lens of gene theory, biology, mathematics, and game theory. It introduces new mental models for understanding individual and group behavior, including concepts like game theory strategies (hawks vs doves), replicators vs vehicles, and the influence of relatedness and altruism. The reviewer found the book highly original and engaging, comparing its readability to a sci-fi thriller.
The Dhandho Investor, Mohnish Pabrai: This book draws heavily on the principles of Buffett, Munger, and Graham’s value investing. It examines successful “dhandhos” (endeavors) and emphasizes low-risk, high-uncertainty businesses, along with portfolio position-sizing based on odds and Kelly’s formula. The book advocates for making few but big, concentrated bets with a favorable risk-reward profile. While much of the content aligns with established value investing literature, it offers a practitioner’s perspective.
Fooled by Randomness, Nassim Nicholas Taleb: This book discusses probability theory, behavioral economics, biases, heuristics, luck, chance, and skill. It highlights the idea that perceived truths can be falsified and explores the difference between knowing and doing. Key takeaways include the asymmetry in outcomes, our tendency to favor the tangible over the abstract, and the limitations of models. The reviewer found it to be an excellent multi-disciplinary read that provokes further learning.
Astrophysics for People in a Hurry by Neil deGrasse Tyson: This book provides a broad overview of the Big Bang and the Standard Model of particle physics. It highlights the gaps in our understanding of dark energy and dark matter. A memorable point from the book explains the crucial imbalance between matter and antimatter for the existence of the universe. The reviewer found it an intriguing read for those interested in popular science.
A Short History of Nearly Everything by Bill Bryson: This book surveys the history of scientific discoveries and inventions through engaging anecdotes about the lives of various scientists. Written in an accessible and novelistic style, it covers a wide range of scientific topics. The reviewer recommends it as a must-read for anyone with even a slight interest in science.
Stuff Matters, Mark Miodownik: This book is described as a “love letter from a material science buff”, exploring the origins, manufacturing, and impact of everyday materials like steel, paper, concrete, chocolate, and plastic. Each chapter dissects a specific material at various scales, covering its science, art, culture, and human emotion. While the depth of analysis varies, it is considered a quick and fun read that highlights how materials have driven progress.
The Success Equation by Michael Mauboussin: This book explores the interplay between luck and skill, particularly in the context of sports. It falls along similar lines to books by Max Gunther on the role of chance in success.
Fortune’s Formula by William Poundstone: This book is described as a thriller that blends mathematics, gambling, the mafia, and investing. It provides a historical background on the Kelly’s equation and its applications.
Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay: This book serves as a reminder of the cyclical nature of irrational behavior, covering famous historical bubbles like the Tulip bubble and the South Sea Bubble.
The Man Who Knew Infinity by Robert Kanigel: This is a biography of the mathematician Ramanujan, highlighting his extraordinary talent and the impact of his passion for mathematics. The book illustrates the power of combining dedication with inherent ability.
What is Life by Erwin Schrodinger: This book comprises lectures that explore how life interacts with physics and chemistry. Notably, it laid the groundwork for the concept of genes, which Crick and Watson later discovered.
Men of Mathematics by E T Bell: This book offers a collection of chapters on legendary Western mathematicians. It is recommended for those with an interest in mathematics, and it is mentioned that John Nash was inspired by this book.
Faraday, Maxwell and the Electromagnetic Field by Nancy Forbes and Basil Mahon: This book explores the contributions of Faraday and Maxwell and their differing approaches to understanding the electromagnetic field, highlighting their significant impact on the future.
How Not to be Wrong by Jordan Ellenberg: This book demonstrates how simple mathematics can aid in rationalizing ideas and opinions, making it an important read from an investment perspective as well.
The Checklist Manifesto by Atul Gawande: This book emphasizes the importance of checklists and processes across various professions, including investing, to reduce errors and improve outcomes.
Being Mortal by Atul Gawande: Written from a doctor’s perspective, this book reflects on how old age leads to the final stages of life. The reviewer finds it insightful and often gifts it to friends.
When Breath Becomes Air by Paul Kalanithi: This moving book explores the thoughts and feelings of a person facing a limited lifespan, offering a profound perspective on life.
No Shortcuts to the Top by Ed Viesturs: This book, by a mountaineer, teaches risk management through the author’s experiences. The reviewer appreciates the author’s approach to work and thought process, suggesting he would be a capable money manager.
Annapurna by Maurice Herzog: This book recounts the adventurous first ascent of an 8000-meter peak, although some accounts suggest certain portions may be exaggerated.
Seneca on the Shortness of Life: This short book presents a primer on Stoicism in three essays. The first essay argues that life is long enough if used wisely, inspiring later ideas about living life to the fullest. The second discusses resilience to loss, and the third focuses on achieving tranquility of mind through managing vices and virtues. While based on common sense, it bridges the gap between knowing and doing.
Candide by Voltaire: This is the only fiction book listed, included for Voltaire’s critical thinking ability, which the reviewer believes is essential for an investor.
Just Mercy: This book tells a powerful true story about the potential for mercy in a broken justice system. It highlights the work of the Equal Justice Initiative in fighting for the wrongly convicted and disproportionately punished, with chilling accounts of injustice. A memorable quote emphasizes that individuals are more than their worst actions.
One up on wall street, Peter Lynch: The reviewer initially avoided this book due to its title but found it offers a different investing style compared to the Graham-Buffett-Munger approach. Lynch’s strategy includes holding a large number of stocks and making decisions based on simple first-level thinking. The book provides a good primer on balance sheets and valuation, making it useful for beginners and offering a different perspective on investing.
The little book that beats the market, Joel Greenblatt: This short book introduces the “magic formula” for investing, which involves selecting companies with high returns on capital that are also fairly valued. While seemingly simple, backtested data suggests it can outperform the index. It is considered a good concept for less active investors, although it involves frequent portfolio turnover and doesn’t specifically filter cyclical stocks.
Rich Dad, Poor Dad, Robert Kiyosaki: This book aims to improve financial literacy by explaining concepts like assets vs liabilities and cash flow in simple language. It might be helpful for financial novices who are stuck in debt cycles. However, the reviewer disliked the emphasis on property flipping, the hollow motivational content, and the extensive cross-promotion of the author’s other products. It is also criticized for its poor coverage of risk management.
Bulls, Bears and Beasts by Mr. Santosh Nair: This fictional book discusses the rise of a trader in the Indian stock market, highlighting the challenges faced and unscrupulous activities within the market. It also explores the evolution of Indian stock exchanges, the influence of FIIs, and various market booms, busts, and scams. Written in lucid language, it is not an investing guide but rather a discussion of the history and present state of Indian capital markets.
Walden, Henry David Thoreau: This book documents Thoreau’s two-year social experiment living simply in nature at Walden Pond. It blends journal entries, poetic musings, and political satire, describing his self-sustainable lifestyle and connection with nature. The book’s archaic language and extensive nature descriptions make it a difficult read, but its ideas on simplicity and detachment from materialistic pursuits are still relevant and similar to Stoicism.
The Black Swan, Nassim Nicholas Taleb: The reviewer finds this book largely repetitive of Taleb’s earlier work, “Fooled by Randomness,” with an excessive focus on critiquing the Gaussian distribution. It introduces the concepts of mediocristan vs extremistan, highlighting the different laws governing scalable and non-scalable phenomena. Notable takeaways include the idea of the “anti-library,” the “barbell strategy,” and the “ludic fallacy”. Taleb advocates for skeptical empiricism and cautions against over-reliance on complex mathematical models in economics.

phreakv6 · March 30, 2025, 4:13am

Scarcity, Sendhil Mullainathan & Eldar Shafir, 2013 - I had always believed scarcity was good and even after reading the book believe so (the book acknowledges the benefits of scarcity as well). However, the book makes some valid points on why scarcity can be very bad and why it keeps poor people poor on average.

My notes -

Time management and money management might be distinct problems but the end behaviour of failure at either is same even if cultural contexts are different
Scarcity - having less than what you need. Unemployment (financial scarcity), social isolation (social scarcity), obesity (perceived scarcity in sticking to diet), poverty (a perpetual tight budget) are all problems of scarcity
In a study of starvation it was found that subjects would get impatient in the food queue, dislike for certain foods vanished, all food was eaten to last bite, people were hunched over and protective of their food (all on expected lines). They also developed obsession around cookbooks, agriculture, looking at prices of fruits and vegetables, dreaming to be restaurant owners etc (things without immediate practical benefits but centred around food)
Scarcity captures the mind. The mind orients automatically, powerfully, towards unfulfilled needs. Hungry people detect words that mean food, like CAKE easily in a jumble of words as its in the top of the mind. The increased focus makes these words look bigger
The capture of attention alters experience (subjective expansion of time), as it happens in a car crash where a few seconds feel like they last longer because of greater amount of information processed
Scarcity makes us less insightful, less forward-thinking, less controlled. Being poor reduces a person’s cognitive capacity more than going one full night without sleep. (which further perpetuates poverty)
Scarcity perpetuates scarcity - thats why poor stay poor, lonely stay lonely and busy stay busy and why diets often fail (body refuses to stop craving due to perceived scarcity)
Scarcity can also make us more effective (because of the same capture of the mind and focus). Thats why second half of a meeting or anything limited by time is more effective than first. The group with tighter deadlines are hence most productive (scarcity dividend)
The coupon with no expiration date is less likely to be used. Without scarcity of time, the coupon does not draw attention and may even be forgotten
In a game of throwing blueberries at a target, the ones with lot of them, threw fast and lost accuracy while the ones with limited berries, threw more accurately (rich get to take more bets and risk less in failure)
In theory the rich (more berries) could have taken time like the poor to boost accuracy and still got twice as many shots as the poor but this seldom happened - its hard to fake scarcity (which is why OpenAI will struggle against the likes of Deepseek)
Scarcity works at all time scales (in milliseconds as in the CAKE work eg. when hungry, in minutes in the blueberry throwing game and in days for a college student with deadlines)
Focusing means neglecting other things. It causes us to “tunnel” and focus single-mindedly on managing the scarcity at hand
“To photograph is to frame, and to frame is to exclude” - Susan Sontag
When asked to name things that are white, people named more words when started off with nothing than with two cue words of “milk” and “snow” - because the cue words crowded out the others making them harder to reach
Scarcity in one walk of life means we have less attention, less mind to the rest of life (hence the struggle to focus on cognitive tasks when sleepy or hungry) - this is the bandwidth tax scarcity extracts from us (distractions arise from within us and disrupt)
Most kids who succeed in the marshmallow expt. did so by focusing elsewhere - to resist desire, simply arrange not to notice it.
In cognitive tasks, farmers performed much worse before harvest than after (abundance improved cognition). Poverty reduces fluid intelligence (think and reason abstractly) and executive control (planning, attention, initiating and inhibiting actions and controlling impulses)
Bees create precise structures while wasps create messy ones because bees work with wax that is scarce, while wasps work with mud that’s abundant
Cabinet castaway - one in ten items bought at a grocery store is destined to be never used and left in the cabinet
Slack absolves you the need to make trade-offs. It means mistakes do not mean real sacrifice. The rich have a slack of time, money and other resources. Rich can afford to pack a suitcase with a lot of slack (they can buy what they need) unlike the poor who cram it to the brim.
Scarcity does not just mean less room to fail - it also implies a greater opportunity to fail
Perception is relative, which is why we are more likely to use more detergent when the cap is large
Quantity surcharge - where a larger pack in a supermarket costs more per unit than small which is a sneaky trick sometimes used. Never in a budget supermarket but more likely in higher end one (poor are likely to figure it out) - abundance makes us less able to know the value of a dollar
Being poor makes people better at economics than professional economists (perhaps economists must be paid less)
Hyperbolic discounting - we overvalue immediate benefits at the expense of future ones
Everywhere is walking distance if you have the time - steven wright
An initial scarcity is compounded by behaviours that magnify it
Willpower is a muscle that fatigues with use (there’s only a limited amount of willpower available, so use wisely)
Scarcity leads to juggling and focusing on the ball in hand even as several are coming down. Without slack, a shock is inevitable. It is not enough to have more resources than desires on average - it is important to have enough slack
Errors are inevitable but accidents are not
Your coffee grinder wont grind if you overstuff it. Similarly roadways operate best at 70% capacity. Traffic jams are caused by lack of slack
A company saddled with debt is imposed with scarcity and thus to focus on the important things and to execute as survival depended on it. A LBO (leveraged buyout) did the same thing - it switched an org from abundance to scarcity. Knowing when slack is fat (and hence to be cut) or truly beneficial is important -a lot of leveraged buyouts ended in bankruptcy as well where slack cut was essential for its operations (Ford reducing work week from 6 days to 5 days improved productivity)

There are few things I strongly believe in, like having slack in life, both in time and money is one of the most important optimisations you make. In general I have always optimised my life for freedom - that means freedom of having time and also being financially free (even when not making a lot of money, you can be financially freer than ones making just that little bit more than their desires which they can’t keep a lid on). This slack is what protects you from shocks of job losses (when having savings to tide over a year or two or few) or situations where lot of time needs to be spent on investing for the future (say reading books) or unpredictable things like taking care of someone sick or elderly in the family. These aren’t groundbreaking ideas but no one perhaps has weaved a coherent narrative around scarcity. 8/10

Sanchit_Narang · April 2, 2025, 5:53pm

PART I - LOSSES ABSORB FUTURE GAINS

a. Fastest Skier Does Not Win the Race

Survival vs Performance - The highest performer is not necessarily the winner; rather, the survivor is the winner.
One major blow, such as a leg injury in skiing, can lead to early retirement, nullifying any future performance.
Similarly, a high performer at work may only sustain success until burnout occurs.
In the short term, performance is crucial, but in the long term, survival is key.
Future probabilities cannot be determined solely based on past repeated outcomes since future events may involve irreversible changes.
Sweet Spot - Taking small, reversible risks allows one to start again if they fail.
Investing Connection - Taking small positions in nascent, fragile, or unproven business models is viable, but a large bet can wipe out a portfolio, creating irreversible loss.

b. Russian Roulette

Playing Russian roulette 100 times may seem to offer a high expected gain, but even one bad outcome results in death, eliminating any future gains.
This highlights the irreversibility of certain decisions in investing, relationships, and work.

c. Law of Large Numbers

The more times an experiment is repeated, the probability of outcomes converges to the expected probability.
Example: Flipping a coin 10 times might result in 70% heads, but with more flips, it will approach 50%.
However, if an activity cannot be performed indefinitely, probability estimates based on large numbers may not apply.
Irreversible events, such as bankruptcy, portfolio wipeouts, or severe injuries, skew long-term averages and lower future gains.

d. Much of Life is Russian Roulette

Burnouts in careers and sports injuries are examples of Russian roulette in real life.
Overemphasizing short-term performance can eliminate future gains.
Prudence, Not Cowardice - The goal is not to avoid risks but to avoid those that can wipe out future opportunities entirely.

e. Lifetime, Population, and Expected Outcome

Expected Outcome - If six people play Russian roulette with a $6K prize, five win, and one dies, the expected outcome per person is $5K.
Population Outcome - If 600 people play, 100 die, and total earnings are $3M, the expected outcome remains $5K.
Lifetime Outcome - If a person plays continuously, they will eventually die.
A system where expected and lifetime outcomes coincide is ergodic; otherwise, it is non-ergodic.

f. Risk Aversion

Humans are naturally risk-averse because resources are finite.
Even when an activity has positive theoretical odds, real-world constraints may make participation disadvantageous.

g. What You See is Not All There

There is no point in envying someone’s outcome if you are not comfortable with the risk they took to achieve it.
Example: A friend winning the lottery twice does not mean buying lottery tickets is a sound strategy.

h. Payoff Changes as Time Horizon Changes

A skier with a 10% chance of breaking a leg and a 20% chance of winning has an 18% probability of winning one race.
However, over multiple races, the probability shifts, as the risk of injury accumulates.

i. Points So Far

Irreversibility absorbs future gains.
A system where expected and lifetime outcomes differ is non-ergodic.
Expected outcomes are reliable only when there are very large repetitions.
Risk aversion is rational in non-ergodic systems.

PART II - WHAT WORKS ON AVERAGE CAN STILL FAIL LOCALLY

a. One vs Many

What works for one person may not work for all.
Averages can hide localized spikes of irreversibility.

b. Centralization

A single decision applied to all may not be effective.
The closer one is geographically and socially to a decision-maker, the more likely the solution will work for them.

c. Average Returns Are Not Your Returns

A train that is on average delayed by five minutes may still cause you to miss your flight if your train is 20 minutes late.
Averages often mask extreme cases, hiding irreversible losses.

d. Irreversibility

One cannot rely on averages when an outcome can be irreversible.
Missing a flight due to a delayed train is an example of how averages fail in real-life scenarios.

e. The Gambler and the Gamble

Being a Gambler - Placing small, diversified bets, unaffected by many losses, but relying on a few outlier wins.
Being the Gamble - A founder whose fate is tied to their own company’s outcome, which can lead to irreversible damage.
Replaceability - Employees are replaceable after burnout, but an employer or founder is not.
Alignment of Incentives - Organizations should align incentives to balance risk.
In non-ergodic systems, the survival of the population does not necessarily align with the survival of its individual members.

f. Points So Far

Survival of the population does not mean survival of all its members.
Averages can hide irreversible spikes in extreme cases.
Survival matters more than long-term performance.

PART III - ERGODICITY

a. Defining Ergodicity

A system is ergodic if lifetime outcomes coincide with population outcomes.
When analyzing a decision, ensure that it does not falsely assume ergodicity.

b. Ergodicity and Irreversibility

Irreversibility creates non-ergodicity.

c. Ergodicity and Exposure

Ergodicity and non-ergodicity are often misunderstood as inherent properties of an activity.
Example: Russian roulette is ergodic for the company making gamblers play but non-ergodic for the players.
A system may be ergodic at scale while its individual members experience non-ergodicity.

d. Ergodicity as a Non-Binary Outcome

A system is either ergodic or non-ergodic, with no in-between.
The real world is concerned with finite outcomes rather than infinite ones.
A system may be non-ergodic in an infinite time frame but ergodic in a shorter, finite time frame.
Studying ergodicity is more relevant in near and medium-term timeframes.

PART IV - REDUCING EXPOSURE

a. Barbell Strategy

Example: Investing part of wealth in safe assets with reasonable returns while allocating another portion to high-risk, asymmetric return opportunities.
The barbell strategy allows for controlled risk-taking without threatening survival.

b. Kelly Criterion

The Kelly criterion helps control risk exposure based on expected payoff, ensuring overall risk remains limited.
Precautionary Principle - Avoid risks that could blow up the entire system.
Any risk is not worth it if it could destroy civilization.

Summary

You can only optimize reversible domains.
Reduce exposure to irreversibility by limiting your risk.
Exposing part of yourself to risk is better than total avoidance.
Nature equips us with tools like fear and caution to manage non-ergodicity.
Invest your wealth and time using a barbell strategy.
Test your beliefs and habits purposefully.

PART V - ENSURE THAT THE DANGEROUS GETS REMOVED

a. Skin in the Game Reduces Moral Hazard

Decision-makers who can make short-term decisions without being affected by their long-term consequences create moral hazard.
It occurs when an individual or group has incentives to increase exposure to risk because they will not bear the consequences.

b. Skin in the Game Removes Sources of Irreversibility

It is not incentives that provide skin in the game, but irreversibility.
Negative incentives like fines do not stop a driver from driving again, but irreversibility prevents them—crashing leads to death, serious injury, or police canceling their license.
A population can decrease its exposure to irreversibility by exposing certain members to it.

c. Skin in the Game Prevents Dangerous Behaviors from Spreading

Skin in the game prevents dangerous or ineffective behaviors from spreading.

Summary

Skin in the game acts as a filter and incentive.
Sociality helps incentives within a community.
Some dos and don’ts:
- Beware of advice from people without skin in the game.

PART VI - REDISTRIBUTION

Redistribution influences whether a system working well on average also works everywhere.

a. Load Redistribution

The faster a system redistributes the load, the more ergodic it is.
Spikes in load can cause irreversibility.
- Example: Patients waiting too long at a clinic may switch doctors, causing irreversibility for the doctor.
Buying a car in installments even when you have full cash in the bank protects against unforeseen circumstances, increasing resilience and survival.
Preemptive redistribution increases resilience and opens up opportunities.
Pre-mortem analysis for projects helps identify potential failures and eliminate their causes.
A system that lacks the ability to redistribute is, by nature, brittle.

b. Financial Redistribution

In some situations, redistribution helps in survival even when you give more than you receive.
Sometimes taking a step backward helps ensure survival.
Increasing the average better outcome should be our goal. An extreme or rare outcome is of little use if it carries the probability of game over.
Sometimes protecting your downside is much better than looking for a moonshot upside.

c. Ergodicity, Cooperation, and Evolution

Even though top performers share more than they get, it smooths their losses, negating game over.
Cooperation reduces irreversible losses caused by volatility, thus reducing irreversibility.

PART VII - LUCK AND SKILL

Success results from skill, hard work, and wisdom, but wild success often comes from reckless betting, extreme luck, and folly.
Some reckless drivers survive a lifetime without crashing, but that does not mean their driving is optimal.
If you don’t take extreme risks, even if you’re the most skilled person, you may be outperformed by someone who does. But if you take extreme risks, your average outcomes will be worse than if you hadn’t.
Distinguish between calculated risks whose consequences you can bear.

PART VIII - THE HIDDEN SIDE OF NON-ERGODICITY

Non-ergodicity is undesirable when the lifetime outcome is lower than the population outcome but desirable when it is higher.

Example of Positive Non-Ergodicity

Learning - If you ensure that past errors won’t happen again.
Relationships - Going on a date with the same person ten times produces different outcomes than going on ten dates with ten different people.
Customer Acquisition - In some businesses, showing your product once to a thousand customers will convert a few into clients, but showing it ten times to a hundred customers will convert more.

PART IX - OTHER EXAMPLES OF NON-ERGODICITY

a. Behavioral Change

It is non-ergodic; the distribution of effort matters.
It is about getting one thing right at a time.

b. Narrowness, Broadness, and Ergodicity

The easiest way to increase performance is to narrow the time frame over which it is measured.
However, this often leads to unsustainable performance—boosting short-term performance at the cost of long-term sustainability.

c. Sustaining Performance

Sustainability is often a larger obstacle to performance than talent.
Tracking leading indicators rather than lagging indicators helps sustain performance and prevent irreversibility.

d. Tragedy of the Commons

Whenever damage speed is faster than recovery speed, fatigue occurs. If this continues long enough, fatigue failure occurs.

e. Fatigue and Ergodicity

Beyond a point, fatigue can lead to irreversibility.
However, small and controlled amounts of fatigue help make the system ergodic.

phreakv6 · April 6, 2025, 5:21am

The End of the world is just the Beginning, Peter Zeihan, 2022 - The author thinks the world has peaked and has had it best perhaps in the last 10 yrs (’10-’20) - a prosperity large parts of the world may never see again. A simultaneous collapse of production, consumption and post WW-II Bretton Woods financial system looms for various reasons from history. I read this book last year and found it made several good points - but the thing with such books is its hard to predict when exactly things would play out and hence its not actionable - the recent few weeks however have set the ball rolling for everything described in the book.

My notes -

Instead of cheap, better and faster, we are transitioning into a world that is pricier, worse and slower
Globalisation brought development and industrialisation to wide swath of the planet. Due to demographics & geopolitics, the 2020s will see a collapse of consumption, production, trade & investment almost everywhere
The whole was stronger for the inclusion of all its parts but in a de-globalised world, the parts will be weaker from separation
The demands of industrialised infrastructure necessitated new methods of mobilising capital - capitalism, communism, fascism emerged
Conflicts in the industrialised world are most horrific. First real industrialised conflicts - Crimean war (1853-56), American Civil War (1861-65) and Austro-Prussian war of 1866 and the two world wars resulted in 100 million deaths
American-Canadian border is the least-patrolled and longest undefended border in the world (200+ years of peace. last war fought in 1812)
Germany industrialised and urbanised in barely more than a generation. US didn’t even finish electrifying the countryside until 1960s.
Historically America was cutoff from rest of the world. Its Steel was consumed locally, financed by local community banks. It had only Agri exports and even as fertilisers increased output, pharma expanded lifespan
Soviet Union was a large land-based empire that fought with large slow-moving armies. US primarily a naval power
End of WW-II Americans used Bretton Woods to create globalised order and change rules of the game - from competition to cooperation leading to longest period of peace and prosperity for the world
Bretton Woods system lost all meaning when it ceased having a foe post fall of Soviet Union. There was no reason for Americans to continue paying for an alliance (purchased primarily to combat the Soviet Union).
Modern population structures, or demographics are a direct outcome of the Industrial Revolution
Jacquard looms, variable-speed battons, synthetic dyes - inventions built upon inventions and cotton goods accounted for 40% of British exports by early 1800s
On the farm, having children was more often an economic decision as children were free labour (hence birth rates plummeted)
Globalisation didn’t just empty the countryside, it also gutted smaller communities, forcing everyone into major cities
It took 7 generations for Britain to develop while Germany did it in 4. The Canadians, Japanese, Koreans, Italians and Argentines did it in 2.5 while Spain, Portugal, Greece did it in 2
Most of the spending a person does occurs between ages 15 and 45
The collapse of birth rates across developed world in the 1960s and developing world in the 1990s now has decades of steam behind it
World growth was also driven by increase in population - though birth rates declined, longevity increased but gains from longevity are one-time and limited. Aging population, lower young adults mean lot of these countries with crashing birth rates will never recover
Nixon visited Mao in 1972 to turn Red China against the Soviet Union. The price for that realignment was China’s admittance into the American-led global order
China is the fastest ageing industrialised society in human history (TFR at 1.3, well below replacement of 2.1). China has gone from pre-industrialised economy (pre ‘72) to post-industrial demographic collapse in a single human lifetime
We have become so specialised and our technology so advanced that we are now totally incompetent at essential tasks. Taiwan specialises in semi-con, Brazil in soy and Kuwait in oil. This led to optimal peak but this was never natural.
With a collapse of globalisation and with it, the specialisation, the parts will be less than the sum. Food and electricity shortages will become the norm and it would become difficult to even be civilised in large parts of the globe
Feudalism - a system where taxes provided protection by the lords to the serfs from bandits or small armies. Feudal systems were small (could be small kingdom, small village) and it needed very less interaction between systems
All economic models are systems of distribution - deciding who gets what, when and how
Fascist corporatism - fuses business leadership with state leadership (Hitler’s Germany). Contemporary communist china resembles fascism (single party/ruler controls) than socialism or communism.
In 2019, the earth for the first time in history had more people aged 65 and over than 5 and under
All isms have issues. Capitalism without growth causes massive inequality. The ones with political connections and wealth manipulate the system to control ever-bigger pieces of an every shrinking pie (fascist corporatism would end up here too). Socialism cannot generate capitalist levels of growth even when pie is expansing and everyone will be noticeably worse off every year. Command driven communism is the most viable but it will crush the souls of people and will depend on central command getting which tech will win and which goods will be needed right every single time
Economic growth and technological progress will stall without capital (retirees will absorb it like a sponge)
Japan follows “build where you sell” (Toyota model) where it uses local workers to build for local population and sends that income back to Japan for its ageing population
America is not going to be keeping the world open for trade - certainly not for dumping products on the American consumer market
The avg. grocery store today has 40k individual items - up from about 200 at the dawn of 20th century
With multiple modes of transport possible, trade brought logistic prices down for decades - between 1825 and 1910, freighting cotton fell 94%. Logistics cost for wheat between US to EU fell from 18% to 8% (today a microwave oven sold in US from China for $50 takes $50 to ship it back to China!)
EIC traded 50 tons of tea and start of 19th century and by end of it 15000 tons. Today 15000 tons are loaded/unloaded every 45 seconds
Competition was no longer about guns and sea-lane control. It was about cost. Shift from security to efficiency meant need for larger and larger ships (from a 75 container to a 20000 container ship, the per container savings could be in excess of 80%). Modern container ships are 16x 1945 standards and crude carriers over 40x. To save fuel, these ships go very slow - only possible when there’s no security threat. Now imagine a world where shipping tonnage is reduced (no more 20k container ships) and security isn’t a given (small ships moving faster with more crew overhead will increase logistic cost) - transport costs could at least quadruple
Port costs used to be half of shipping cost. But today turnaround time is reduced from 3-5 weeks to less than 24 hrs and instead of warehouses, containers are stacked by cranes - port costs now are less than 1/5th
Suez canal charges $1m for a Maerst Triple-E class ship. This works out to $55 per container or 1 cent per shoe pair
Modern supply chains don’t just transport raw materials and finished goods but a lot of intermediates as well - all enabled by cheaper and cheaper transport (80% of global trade by volume and 70% by value is transported by oceangoing vessels)
During Iran-Iraq war, the only thing that saved insurance companies for Reagan decision to reflag all shipping vessels as American vessels and provide them security to traverse Persian gulf (if US withdraws protection of sea-lanes, the chaos would be as worse as Covid shipping issues)
Reducing transport costs by 1% results in increase in trade volumes by 5%
Long-haul transport doesn’t just require peace in this or that region, but all regions
Currencies were always backed by precious metal. Romans used gold. The Spanish much later on used silver. Britain backed pound with gold. Post WW-I demand for pound soared and it had to go off the gold standard. US went through the same trying to back dollar with gold even as demand for it soared with globalisation and it eventually had to go off the standard in 1971.
Asset-backed currencies are incompatible with rapid growth and also incompatible with global peace (by controlling currency, US controlled trade, cooperation and peace). The French stockpiled gold in the 60s because they knew $35 peg to gold was unsustainable and had to break. US went off the gold standard to save face in ‘71 and to ensure it didn’t let go of the gains of globalisation to win the cold war
The Japanese financial model wasn’t about achieving economic stability, but political stability. When market share and employment take precedence to cost management and profitability, any short fall could be covered by debt. Debt to hire staff, debt to develop new products, debt to roll over debt - South Korea, Taiwan, Singapore, Hong Kong all extended this viewpoint.
China later embraced the Asian financial model above. It would print currency at double the rate of US, sometimes at 5x US rate
The new structure of capital of post’1971 world encouraged risk taking almost by default and led to stuff like Asian Financial crisis, Enron, GFC etc - all led by companies adding little real value but moving numbers in ledgers
The only systems today that are not expanding their money supply are the ones that have consciously chosen to forgo economic growth in favor of price stability
Late 40 to early 60s people in developed world flooded the world with investment capital across borders and this cheap capital pushed financing costs down for everyone and gave unsustainable business models an illusion of undefeatability. Most of these people will retire in the 2030s
In 2021, US paid $550b in interest. Raise govt. borrowing costs by single percentage point and those payments double (the problem which is front and foremost last 6 months)
Replace tax-heavy, mature-worker-heavy demographic of 2000-2010 with tax-poor, retiree heavy demographic of 2020s-30s and governing models of post WW-II era dont just go broke, they become societal suicide pacts
Expect a lot of capital flight and capital controls in a de-globalised world. Normally world is a rat race and capital is something to be hoarded (unlike last 50 yrs) - days of capital shortages will come back
When firms dont think they will be able to get their profits out of a foreign country, they are less likely to have interest in operations there in the first place
After cold war end, America could have disengaged itself from global affairs but oil kept it in the game (now with sufficient shale production, time is ripe)
In oil, a change in demand of about 10% results in a price shift of about 75% (both up and down)
No two crude oil streams are similar - some are sulphur heavy (almost 3% of vol) and called heavy crudes and some are the color of nail polish remover and called light sweet crude. Each refinery has a preferred input blend - many older refineries are tailored to a specific oil field
European refineries prefer Russian urals (medium/sour crude) as its easier to refine diesel from it. It will be hard for these refineries to adapt to other crude grades
US natural gas is produced alongside shale and most times its flared off due to lack of distribution. If captured, its sold at near zero margins and thus is very cheap for American end users
95% of humanity sources electricity from power plants less than 50 miles away
About 1/5th of cost of conventional power plant are upfront but for solar its almost entire upfront and for wind about 2/3rds upfront (in a capital starved world, renewables would find it difficult to make a case)
The plague (black death) destroyed millions but once it lifted, there was strong demand for skilled labour for reconstruction - people improved skills, technology and saw nice wage growth
Europe has aged to the point that it cannot absorb its own products. It must maintain high level of exports to sustain itself
American manufacturers were cheated by globalisation by design (give up manufacturing for security control)
Within North America as a unit, 8/10 dollars are generated within the continent which makes it quite insular (hence its important for US to work with Canada and Mexico closely)
In a post globalised world, India with its 1.4b strong population could build out its manufacturing capacity to serve its own citizens - it doesn’t have to be a global player. Combine India and South east Asia’s manufacturing might with Japanese tech and some alliances could emerge there (The recent China/Korea/Japan alliance is on these lines)

In post-globalised world, mass production assembly lines will be out, reducing economies of scale will reduce opportunities for automation, technological improvement will be low in manufacturing, supply chains will be much shorter optimising for security than cost, production will be colocated with consumption and workforce will have to be more generally skilled (no more specialisation). Its a paradigm shift perhaps most of us are not even remotely prepared for. Now is perhaps as good a time as any to develop the vocabulary for that thought. 9/10

PavanM · April 6, 2025, 8:25am

Thanks for the synopsis.

Recently heard a lecture by David Deutsch (DD) on the aspect of Optimism (prediction & prophecy). Thought it could apply to this book’s primary line. [Not read the book, only your synopsis - hence errors of interpretation can be mine]

At the cusp of 19th century, 1798, Thomas Malthus, posited that ‘the rate of food production [C1] will not keep up with growth of population [C2], hence in 19th century Humanity will die out due to famine, shortage - war etc’

C1, C2 are Claims 1 and 2.
C2 came true.
C1 didnt.
Hence after event, i.e. now in 21st century, C2 is a classified as a prediction; C1 was a prophecy.

However : C1 and C2 were seen as predictions then in 1798 : as, only so much of current_updated_knowledge was available.

The issue is, C1 didnt account for “growth of knowledge (GoK)” of the human race. C2 though didnt rely so much on GoK, did come true as it was a binary-tree explosion (2 parents proudcing children).

C1 turned out to be false, because food-cultivation techniques improved with science.

Hence, with this prospect of thought from DD, perhaps this book’s conjectures may be re-visited.

sumit680 · April 6, 2025, 1:23pm

one of the aspects which we need to consider is power of vote bank. If modern generation has become accustomed to faster, better and cheaper emnating out of globalisation, they will certainly oppose govt initiatives for deglobalisation.

Baseline is human mind, once made habitual of comfort will strongly resist any step backward. So some modified form of globalisation will emerge. Some midway.. else voters will reject their govts going for deglobalisation.

Access to internet and AI has made individuals much wiser and option seeking. This empowerment of individual will resist feudalism or such issues.

CHIRAG_BARASARA · April 6, 2025, 3:14pm

AS PER SURVEY AROUND 70 PERCENT AMERICAN YOUTHS ARE NOT HAPPY WITH THIS TYPE OF ECONOMY .Money printing in last decades pleased billionaires only … Source- RUCHIR SHARMA PODACAST

soylentgreen · April 13, 2025, 2:39pm

This book is part of NNT’s RWRI course syllabus, which I attended. Highly recommended the book and the course (if you have the $$$, that is).