The Art Of Thinking Clearly, Charts That Make You Wonder, Your Blueprint, The Final Frontier

August 3, 2021

“A wise man’s questions contain half the answers.”

- Solomon ben Yehuda ibn Gabirol 

“You only live once, but if you do it right, once is enough.”

- Mae West (American actress, playwright, screenwriter, singer)

“Your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed.”

- Peter Lynch


A. A Few Things Worth Checking Out:

1. Carl Kawaja from Capital Group was on Invest Like The Best (Wisdom From Decades of Investing), in what was probably the best episode. Packed with stories/anecdotes + an unstructured mix of investing/philosophy/life that felt like a conversation not a podcast.

2. I’m not fan of Thinking, Fast and Slow by Daniel Kahneman.

I think the book is very over rated and there are far better signal to noise ratios out there. But somehow reading Kahneman makes people feel smarter.

I’m a big fan of Rolf Dobelli and his “Art of Thinking Clearly” is a much better book on the same subject, which I was re-reading over the last week. Highly Recommended.

This great twitter thread that does a great job of packing in the wisdom on our cognitive biases:

3. Orlando Bravo, founder of Thoma Bravo was on the Capital Allocators podcast.

Orlando Bravo is a Founder and Managing Partner of Thoma Bravo, a private equity firm focused on software and technology companies with over $78 billion in assets under management. Among his many accolades, Forbes named Orlando “Wall Street’s best dealmaker” in 2019.

4. Listening to a bunch of great conversations about Philosophy:

Michel Foucalt: pt 1, pt 2, pt 3. Here are my notes in Evernote from what I picked up.

Jean Baudrillard and Simulacra and Simulation (inspiration for the Matrix). Here are my notes in Evernote.

5. All of the Berkshire meetings since '94 are available in podcast form. Hang out with Charlie & Warren on your next long walk or drive.

6. Ray Dalio and Larry Summers Discuss the New Paradigm and Inflation.

7. Howard Marks Memo: Thinking About Macro. There is also an audio version of the Memo, HERE.

Regular readers of my memos know that Oaktree and I approach macro forecasts with a high degree of skepticism. In fact, one of the six tenets of Oaktree’s investment philosophy states flatly that we don’t base our investment decisions on macro forecasts. Oaktree doesn’t employ any economists, and we rarely invite them to our offices to share their views.The reason for this is simple: to use Buffett’s terminology, we’re convinced the macro future isn’t knowable. Or, rather, macro forecasting is another area where – as with investing in general – it’s easy to be as right as the consensus, but very hard to be more right. Consensus forecasts provide no advantage; it’s only from being more right than others – from having a knowledge advantage – that investors can expect to dependably earn above average returns.

Howard Marks was also on CNBC:

8. Kyle Bass on CNBC discussing China's business crackdown.


B. Charts That Made Me Wonder

Is Everyone Already Bullish?

Are We Ever Going Back To The Office?

Maybe It’s All Part of A Much More Restricted Life

Will Inflation be Transient?


C. What’s In Your Blueprint?

Many of us are going to be seeing our parents and grandparents after 18 months this summer. I know I will be. That fact combined with how much time I have spent with my kids in the last 18 months got me thinking about the book that has most changed my world view in 2021.

Do you find yourself wondering why as you get older you act more and more like your parents? And why do our kids have so many of the behavioural traits that we do?

This book tries to answer the age old question: What’s more important Nature (your DNA) or Nurture (your environment) in determining your characteristics, abilities, even outcomes?

Robert Plomin is a behavioural geneticist at King’s College London and has done some ground breaking work in behavioural genetics.

To start, how would you fill out the table below. Take a minute and jot some numbers down on paper.

Heritability is how much of the differences between individuals can be explained by their inherited DNA differences.

Now compare your notes above to this. These are the average ratings across 5,000 adults and the results of genetic research.

I was really surprised by some of these numbers that were over 60%.

It turns out that we no longer see any reliably measured personal trait that is not heritable to some degree.

To be clear: the 70 per cent heritability for weight means that 70 per cent of the differences between people in their weight can be attributed to differences in their inherited DNA sequence.

The other 30 per cent could be due to systematic environmental factors, such as diet and exercise, or unsystematic – random – environmental factors.

Genetically, we are 99% the same, so genetics is the study of the influence of the 1% of our DNA sequence that differs between us (which is still 30 million rungs in the DNA sequence that has 3 bn base pairs).

Key ideas to take away:

A.Heritability is not due to one or even several genes. It is the product of thousands of tiny differences of extremely small effect, taken together. This set of differences can be brought together in a ‘polygenic score’ that draws in analysis of thousands of SNPs (pronounced as “snips” - single-nucleotide polymorphism – a change in one of the 3 billion pairs in the DNA double helix).

B. The Nature of Nurture (aka Parents Matter, But They Don’t Make A Difference): Parents who value reading, and read to their kids, often have kids that enjoy reading. This is not because the parents read to their kids (it is correlated with that, not caused by it). It is primarily an inherited feature – bookishness is approximately 50% heritable. Parents do not create kids except at a genetic level.

Your genes determine how you perceive things and what environments you are attracted to, parents who enjoy and value reading will likely have kids who also enjoy reading and being read too. That also means that two siblings with 50% DNA overlap will do differently in the same environment, but the good news is that children are great at making their environment, regardless of their parents, but you do have to listen.

C. The Genie Is Out of the Bottle and Our Future is DNA. Because we can predict better we can now do better at prevention. For example, we can identify through genetic testing, those at elevated risk of coronary heart disease and offer them advice on preventative behaviour.

The UK health system, through the NHS, has a vested interest in prevention (unlike the private US system which thrives on performing procedures). Although the early focus has tended to be on rare, single gene disorders, the big advances in health will come when polygenic scores are able to predict common disorders in the population. Predictive power undermines the current risk-pooling insurance system, which will need to be totally rethought.


D. The Tech and Crypto Section:

1. Business Breakdowns Podcast: A Primer on Space: The Final Frontier. I hadn’t realised Space was more about the services unleashed on Earth.

2. Great “Wait But Why” article from 2015 on How (and Why) SpaceX Will Colonize Mars.

3. Putting the Power of AlphaFold into the World’s Hands. Learn about AI’s most important scientific contribution to date and why DeepMind’s AlphaFold is a huge biological breakthrough.

4. Germany now allowing funds to hold up to 20% in crypto.

5. FTX (crypto exchange) just raised $900mm Series B at $18bn from Paradigm, Sequoia Capital, NEA, Coinbase Ventures, Willoughby Capital, the Paul Tudor Jones family and Izzy Englander.

Here’s a deep dive into Sam Bankman-Fried. Thank you Victor for the flag.

6. Want to Invest in the Creator Economy? Thank you Ian for sharing.

7. Play To Earn is the new business model in Gaming, and Axie is the token everyone is talking about.


E. Geo-Politics….

Not a headline I thought I’d see - but as the article states: Kremlin aims to -re-establish itself as security guarantor for large chunk of Eurasia.


Longevity researcher Dan Buettner on the health benefits of friendship:

"I argue that the most powerful thing you can do to add healthy years is to curate your immediate social network. In general, you want friends with whom you can have a meaningful conversation. You can call them on a bad day and they will care. Your group of friends are better than any drug or anti-aging supplement, and will do more for you than just about anything."

Source: The Power of Positive People