The Knowledge Project – Win-Winning at the Great Game with Adam Robinson (Part 1)

Check out The Knowledge Project Show Notes/Episode Landing Page

Key Takeaways
  • It is so important to connect with others – “If you want to do anything in the world, it’s all about creating a vision for others to join”
  • When you type “How can I learn…” into Google, “How can I learn to love myself?” is one of the top search suggestions 
    • This means that, clearly, “loving oneself” is an immense problem, and no one has anyone to turn to
  • The paradox of the most important things in life – happiness, love, success – is that you can’t look for it
    • If you’re looking for happiness, you’re not doing what you need to do to be happy
    • If you’re looking for love, you’re not being lovable
    • If you’re looking for success, you’re not doing whatever it is you need to do to be successful
  • Always be asking yourself, “How can I create more play in this situation, for others?”
    • Like on a job interview, instead of thinking to yourself, “How can I impress this person, or make this person want to hire me?” ask “How can I create fun and delight for this person?”
  • “If you want to find gold, it’s where things don’t make sense” – It’s an algorithm for finding good opportunities
  • Adam has a good approach to investing – “What I do, is I look for these groups [metal traders, stock traders, currency traders, and bond traders] to express strongly, different views of the future, and then I express probabilistically, in the past, who tends to be right when these groups disagree”
  • Adam says that 19 times out of 20, when stock traders and bond traders disagree in their views, the bond traders are right, and early
Intro
  • Adam Robinson (@IAMAdamRobinson) an author, educator, hedge fund manager, and co-founder of The Princeton Review
An Invitation to the Great Game
  • This is a book Adam is in the process of wrapping up – it’s his first work of fiction, but it’s not out yet
    • He wrote the first draft in 10 days (Adam says it’s a short book, meant to be read in an hour or two)
  • What is the “Great Game”? – Life
    • Everything in life is a game – education, careers, starting a business, politics
    • “The great game of life is a win-win game” 
Adam Doesn’t Make New Years Resolutions
  • Instead, he thinks of the lessons he’s learned in the past year, and he makes an effort to apply them mindfully in the coming year
  • In 2016 he learned:
    • The importance of connecting with others
      • “If you want to do anything in the world, it’s all about creating a vision for others to join”
      • Apply this liberally – whether you’re starting a business or a relationship
    • The importance of creating fun and delight for others
    • The importance of leaning into each moment, and in every encounter, expecting magic or miracle
      • Almost like a dog – it goes up to every person expecting a good interaction’
The Loneliness Epidemic
  • “There’s a global loneliness epidemic”
    • It’s accelerated by technology
    • Technology (Google, Facebook, your email) is designed to hijack your attention
      • “If there’s one thing humans need to know how to do, it’s control their attention”
      • Once your attention is hijack, it’s monetized by making you click on links – it’s all engineered
      • How can you “make” someone click on things?
        • Reflect the world that you think  
          • If you think the world is a scary place, Google will reflect that back to you
          • Therefore,you become more hardened in your own views – “All we seem is exactly what we expect to see”
          • “The internet and technology is one big confirmation bias engine”
        • Or present what you don’t like
          • Something will get you angry…so you click
      • “Technology is designed to get us to respond. And the way to do that is to heighten emotions, and hijack our attention.”
  • How can I learn to love myself?
    • When you type “How can I learn” into Google, “How can I learn to love myself?” is one of the top search suggestions – it was number 4 for me
      • This means that, clearly, this is an immense problem, and no one has anyone to turn to
  • The epicenter of the suicide epidemic? – Palo Alto, CA
    • They have the highest teenage suicide rate
  • “By quantitative measures, people should be happier, yet they’re not”
    • We have material wealth once undreamed of
What are the keys to happiness?
  • Not to look for happiness
    • “The paradox, of the most important things in life – happiness, love, success – is that you can’t look for it”
      • If you’re looking for happiness, you’re not doing what you need to do to be happy
      • If you’re looking for love, you’re not being lovable
      • If you’re looking for success, you’re not doing whatever it is you need to do to be successful
  • “I believe the secret to happiness, is to be fully engaged in your life”
    • Happiness catches us by surprise – it’s a byproduct
More on Attention
  • “There are only two places your attention should be, either on the task at hand, or on others”
    • If you’re feeling any negative emotion – doubt, fear, frustration, or loneliness – it’s a sign to redirect your attention
    • The way to find yourself is through others
  • “One of the problems with self-help books, is they rivet your attention on the one thing you ought not to be focused on – yourself”
    • “Most ‘how to’ books, they’re not really ‘how to’ books, they’re ‘what to’ books. They show you what to do, but they don’t actually show you how to do it.”
  • Inhaling vs. Exhaling
    • “When I’m alone, I’m inhaling, and I’m focused only on my world of ideas. Once I leave my home, and I go out into the world, my attention is solely focused on others (exhaling).”
Good Questions to Ask Yourself
  • “How can I create fun and delight for this person right now?”
    • Engage others in play
    • “Much of life would be improved, if the seriousness we applied to work, we applied to games”
  • “How can I create more play in this situation, for others?”
    • Be more playful about things in life
    • Example – On a job interview, instead of thinking to yourself, “How can I impress this person, or make this person want to hire me?” ask “How can I create fun and delight for this person?”
      • This turns the interview, into a game
      • If you truly create fun and delight for the other person – then they’ll want to be around you, and you really improve the odds of you getting a job
  • Instead of asking yourself , “What do I need to do in this situation?” ask “Who do I need to be in this situation?”
    • “There’s a lot of doing, and not enough being”
    • Instead of “What do I need to do in this job?” ask “Who do I need to be in this job?”
The Algorithm for Changing the World
  • Ask yourself – “What vision to I have for others/this relationship/the world/this person/myself…and how can I enroll others in that vision?”
  • “To change the world, which is the result of our thinking, we have to change the thinking behind the world” – Albert Einstein
  • To change someone’s thinking, you can either change the questions they ask, or offer more inspired answers to those questions
    • All human creations, are just answers to questions
      • Example – Democracy answers the question, “How can everyone have a say in the political, economic, and social affairs?”
      • Example – Slavery answers the question, “How can I extract economic value from others, without compensating them?”
        • Wkipedia also does this
    • “What’s needed in the world right now, is more imagination, to come up with more inspired answers to the questions that people are already asking”
How can we learn to think better?
  • Good thinking is just the relentless asking of questions
  • Logic can only get you so far
    • The real great insights come from your unconscious, or out of the blue
  • One thing Adam thinks should be taught in schools (to the extent that it can be) – allowing students to get in touch with their unconscious, and to listen to that voice
    • How do you get in touch with and listen to your unconscious? – Allow yourself time
      • Note from Podcast Notes – they don’t really get too in depth on this, but you might take it to mean more uninterrupted time
    • How do you know when you’ve tapped into truth and your unconscious? – The answer surprises you, you’ll be startled by it
      • What is surprise telling you? – Your model of the world is incorrect (this is good, it’s a learning opportunity)
On Things Not Making Sense
  • “When people say things don’t make sense, all that tells me is they’re not thinking about the world correctly”
    • The world is conflicting with what you think should happen
    • “Really what makes no sense, is their model of the world”
  • In a way then, when people say that things don’t make sense – that’s an investing algorithm for Adam, it’s pointing him in the right direction
    • When someone says, “It makes no sense that the price of gold is dropping,” really what they’re saying is “I have a dozen logical reasons why the price of gold should be rising”
      • So Adam knows, when this happens, there’s some other VERY powerful reason, that trumps all the other reasons why gold should be going higher
    • “If you want to find gold, it’s where things don’t make sense” – It’s an algorithm for finding good opportunities
  • One way to get good ideas – look where no one looks
    • Where does no one look? – Where things don’t make sense
Investing
The Investment Approaches
  • Fundamental Analysis
    • The main premise of this approach  – There’s a true value of X, and humans drive the price of X away from the true value, because they suffer from various behavioral biases
      • Example – If the true value of Amazon stock is $114/share, we value it at $1,200/share
      • Using a fundamental analysis approach, your thinking would be:
        • That you can determine the true value
        • That you’ll have good reason to know it’s actually the true value, and not a guess
        • AND that everyone else will one day wake up, and realize what the true value is (and eventually, the actual value will navigate towards the true value)
    • “If you buy gold expecting it to go up, it’s an article of faith. You believe that other people are going to wake up and will sooner or later realize what you think.”
    • The fundamental analysis view of investing – that you can figure out something about the world that no one else has figured out
  • Technical Analysis
    • This way of thinking – “There’s no way you can figure out the true value, it doesn’t really exist”
      • They say – “Just show me the price charts and by the patterns of those price charts, I’ll be able to predict where the price will be tomorrow, or X weeks/months from now”
    • But the problem with this approach – one of confirmation bias
      • In a sense, you can always tailor what you’re seeing, to find what you’re looking for
      • “You can find a technical indicator and parameter setting that will argue for pretty much any position you want to argue”
  • A Game Theory Approach
    • This is Adam’s approach
    • How does it work? – Wait for different groups of investors, to express different views of the future, and then figure out which group is right
      • How? – Look for differences of opinion, strongly expressed, and decide which one is right
    • “I can’t predict the future, but I can tell you what I need to see, to tell you the future’s about to change”
Adam’s Favorite Investing Book of All Time (and it’s not even an investing book)
    • It’s a book about the spread of ideas
    • All ideas pass through the following stages:
      • An innovator comes up with an idea –> early adopters –> the early majority who adopt for social proof –> the late majority –> the laggers
    • Compare – All truth passes through 3 stages
      • It’s ridiculed –> it’s violently opposed –> it’s accepted as self-evident
To Sum Up
  • You need a repeatable investing process, and you have to have a way of knowing whether that investing process needs to be tweaked
Good Quotes About Investing
  • “Successful investing is anticipating the anticipating of others” – John Maynard Kaines
  • “An investment is nothing more than an expression of a view of the future”
  • “All a trend is, is just the spread of an idea”
More on Adam’s Approach to Investing
Stock Traders vs. Bond  Traders vs. Currency Traders vs. Metal Traders vs. Energy Traders
  • Each of these people is expressing a view of the future through their investments
    • A stock trader who’s bullish on the economy (thinks it will improve) will buy stocks
    • A bond trader who’s bullish on the economy will buy corporate bonds and sell treasuries as a hedge (just in case the interest rates rise – causing the bonds to go down in value)
    • A metal trader who’s bullish on the economy, will buy industrial metals (copper, iron), but will simultaneously sell precious metals (gold, silver, platinum – who needs these if the economy is doing well?)
  • If stock traders and bond traders differ in their views (say the stock trader is buying up stocks because they think the economy will do well, and the bond traders are more pessimistic – they start selling corporate bonds and buying treasuries)…
    • “19 times out of 20, when those two groups disagree, the bond traders are right, and early” 
      • “When I say 19 times out of 20, I really mean 99 times out of 100”
    • “If you want to find out when a stock will be in trouble, follow the corporate bonds of that company relative to US treasuries”
      • The ETFs for that – LQD and IEF
        • LQD is the corporate bond ETF
        • IEF is US treasury 10 year ETF
        • So just take a ratio of LQD/IEF – this will tell you what bond traders think of the economy. When they disagree seriously with equity/stock traders, the bond traders are right, and early.
  • “When the equity traders and currency traders disagree about the direction of currencies, the equity traders will be right on the currencies 3 times out of 4”
The Metal Traders
  • Adam calls them the most far sighted and accurate group of traders
    • They have a simplistic view of the world (their model is simplistic)
      • If people are buying copper – all is good
    • They’re in touch with the world economy (metal is something tangible)
    • They’re very far sighted – if you want get iron out of the earth, you need to plan far in advance
Adam’s Hall of Fame Ranking of Traders
  • 1/ Metal Traders
    • “Metal traders have not been wrong once, in the last 18 years, in regards to the direction of interest rates”
  • 2/ Bond Traders
  • 3/ Equity Traders
  • 4/ Oil traders
  • 5/ Currency Traders
  • 6/ Economists
    • “Economists are literally always wrong. If you have a group of economists, and they’re in 100% consensus about the direction of interest rates, I’m going to take the other side of the trade, for sure.”
  • 7/ Central Bankers – “They’re not in touch with the economy at all”
In Summary
  • “What I do, is I look for these groups to express strongly, different views of the future, and then I express probabilistically, in the past, who tends to be right when these groups disagree”
  • This is how Adam tries to anticipate the anticipation of others
Parenting
  • It’s important for parents to let their children know that learning is hard
    • If a child thinks it’s easy, as soon as they encounter difficulty, they’ll tend to think the problem has to do with them, rather than the material
  • It’s important for parents to model what it means to struggle
    • “Kids today don’t know what it means to work at something and persist, they don’t see it modeled anywhere”
    • Something that parents can do, that would be a great lesson – model struggle, and being able to stick with something/not give up
      • You can’t expect kids to just “get” that
    • You have to teach your kid that “it’s okay not to know the answer, but you can persist at finding it”
Some Good Takeaway Lessons
  • Take a more detached/experimental approach to what you’re doing
    • Think about a stand up comedian – they are CONSTANTLY tweaking their set to make it perfect
    • We should be constantly tweaking our processes to make them perfect as well
  • Try different things – always be experimenting
    • Whether in your work or in life
    • A good first step – do the opposite
Random Yet Thought Provoking
  • “I never know what I’m thinking, until I say it”
  • “When you look at the world differently, you look at your self differently”
  • “There’s more to life than making it faster” – Gandhi
    • “Technology and civilization enables us to do stupid things faster with more energy” – Adam
  • “If you haven’t gotten what you want yet, it’s a sign you didn’t really want it, or you tried to negotiate over the price” – Rudyard Kipling
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