Oct 22, 2020

Enough To Do Anything, Not Enough to Do Nothing

[Warren] Buffett does not believe that it is wise to bequeath great wealth and plans to give most of his money to his charitable foundation. Having put his two sons and a daughter through college, the Omaha investor contents himself with giving them several thousand dollars each at Christmas... 
Buffett is not cutting his children out of his fortune because they are wastrels or wantons or refuse to go into the family business -- the traditional reasons rich parents withhold money. Says he: "My kids are going to carve out their own place in this world, and they know I'm for them whatever they want to do.'' But he believes that setting up his heirs with ''a lifetime supply of food stamps just because they came out of the right womb'' can be ''harmful'' for them and is ''an antisocial act.'' 
To him the perfect amount to leave children is ''enough money so that they would feel they could do anything, but not so much that they could do nothing.'' For a college graduate, Buffett reckons ''a few hundred thousand dollars'' sounds about right.

- "Should You Leave It All to the Children?," Fortune Magazine, 1986

As usual, the 'Sage of Omaha' nails it. As someone who has acquired more wealth than my family had growing up, I have thought a lot about this question. Now, thanks to Rory Sutherland quoting the Buffett line above, I have a great aphorism to help me decide how much money I should give to my children... 

Enough to do anything, but not enough to do nothing.


Oct 20, 2020

The Purpose of Money

"There’s this belief that to make money, you have to be born rich. Or you have to be privileged. Or you have to be in the right circles, you have to get lucky...There are still ways to accomplish the original American dream, which is make money but do it in a deliberate, systematic way."

"When I say money, I mean wealth. I don’t mean a law firm where you make a couple of hundred bucks an hour, but you’re still tied to the clock. I mean, when you wake up when you want, you go to sleep when you want, you live where you want, and you have freedom."

"The purpose of money is freedom." 

- Naval Ravikant, The Tim Ferriss Show 

Every Interaction is an Opportunity

"If you have a conversation with a [negotiation] counterpart and have no new information when it’s over, you’ve failed; every interaction is an opportunity to learn more."

- Brandon Voss, "Negotiation Training: How To Make A Counter-Proposal?"

This quote resonated for me because of some tough negotiations I've had in the past with sharks who have no reservations about asking for a price reduction or better terms every time you meet with them. In some cases, I've been completely caught off guard and had an emotional reaction that I kicked myself about later. 

The key to staying calm in these situations is to have an action plan. Or to use a chess analogy: Be thinking several moves ahead, After one particular encounter that went poorly, Bill and I even went so far as to plan seven moves ahead for our next meeting. One of our key moves was to respond to outrageous request by asking lots of questions. Voss wisely turns this reactive tactic into a proactive standard operating procedure.

Oct 2, 2020

MySide Bias

{This post is part of the Archive of Human Exploits}

"[M]any commentators have ascribed some part of the [political] divide to what they term our 'post-truth' society, but this is not an apt description of the particular defect that has played a central role in our divided society. The cause of our division is not that people deny the existence of truth. It is that people are selective in displaying their post-truth tendencies.

"What our society is really suffering from is myside bias: People evaluate evidence, generate evidence, and test hypotheses in a manner biased toward their own prior beliefs, opinions, and attitudes ...

"It turns out that myside bias is not predictable from standard measures of cognitive and behavioral functioning. The degree of myside bias that people show is not correlated with their intelligence or level of actively open-minded thinking; nor is it correlated with their educational level. It is not correlated with how much they display other biases...myside bias in one domain is not a predictor of the myside bias shown in another domain. It is simply one of the most unpredictable of the biases ...

"In short, just as we are gorging on fat-laden food that is not good for us because our bodies were built by genes with a selfish replicator survival logic, so we are gorging on memes that fit our resident beliefs because cultural replicators have a similar survival logic. And just as our overconsumption of fat-laden fast foods has led to an obesity epidemic, so our overconsumption of congenial memes has made us memetically obese as well. One set of replicators has led us to a medical crisis. The other set has led us to a crisis of the public communication commons whereby we cannot converge on the truth because we have too many convictions that drive myside bias."

- Prof. Keith E. Stanovich, "The Bias that Divides Us"

Sep 22, 2020

JFK on Action & Risk

"There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction."

 - JFK