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#695: Shane Parrish on Wisdom from Warren Buffett, Rules for Better Thinking, How to Reduce Blind Spots, The Dangers of Mental Models, and More

The Tim Ferriss Show

Wed Sep 27 2023



Building a business on content:

  • Farnam Street was not initially intended to be a media company, but rather a platform for sharing timeless ideas and knowledge.
  • The goal was to learn from others and share that information to provide equal opportunity through accessible information.
  • One pivotal moment was the decision to start an email list after losing a significant portion of the audience due to the shutdown of FeedBurner by Google.
  • The email list now has hundreds of thousands of subscribers and allows for direct communication with readers without relying on external platforms like Facebook or Twitter.

Positioning in decision making:

  • Positioning refers to being in a favorable position or circumstance that allows one to make better decisions.
  • By avoiding bad positions and understanding different perspectives, one can make more deliberate and incisive decisions.
  • Mental models are tools that help see problems from different angles and reduce blind spots, enabling better decision making.
  • Asking questions like "and then what?" or using inversion can help challenge assumptions and uncover potential weaknesses in positions.

Importance of ordinary moments:

  • Ordinary moments determine one's position, which in turn determines results.
  • Being aware of one's circumstances and taking actions to improve them is crucial for success.
  • This concept applies not only in finance but also in personal life, relationships, health, purpose, etc.
  • Putting oneself in the best position involves considering multiple possible futures, managing risk, and preparing for various outcomes.

Other exemplars of deliberate decision makers:

  • Naval Ravikant
  • Patrick Collison
  • Cat Cole

The value of mental models:

  • Mental models allow for seeing problems through different lenses or perspectives.
  • They can help identify blind spots and provide alternative viewpoints when making decisions.
  • Mental models should be used as tools for reflection and synthesis rather than as rigid checklists.

Investing:

  • Focus on diversification and minimizing risk.
  • Consider investing in companies that are making money or have a clear path to profitability.
  • Be patient and wait for the right investment opportunities.
  • Allocate more funds during periods of panic and market downturns, and less during times of market highs.
  • Evaluate potential investments based on their risks and rewards, as well as your own understanding of the investment.
  • Utilize fail safes and rules to regulate cash flow into index funds.

Index fund investing:

  • Continue to invest in index funds regularly, but adjust the amount invested based on market conditions.
  • Consider the weighting of top companies in indices when making investment decisions.
  • Anticipate changes in the landscape of index funds as stock picking becomes more popular again.

Making better decisions:

  • Focus on creating timeless content that is useful to others.
  • Build an email list to communicate with your audience effectively.
  • Avoid spreading yourself too thin by trying to do everything at once.
  • Write every morning from five until six to create quality content consistently.
  • Hide money from yourself to avoid unnecessary risks and stress.
  • Prioritize sleep and optimize for quality of life rather than constantly chasing extra gains.

Cognitive biases in decision making:

  • Sometimes too much information can lead to failure in decision making, rather than too little information.
  • Taking on too much at once or seeking a quick fix solution rarely leads to success.
  • Retroactively analyzing decisions can be helpful in learning from failures.
  • Some people believe that failures don't provide valuable lessons, but this perspective may be flawed.

Approaches and tools for better decision making:

  • Making rational decisions is easier when there are clear goals and limited emotions involved.
  • Managing emotions and avoiding hunger, anger, loneliness, and tiredness can improve decision making.
  • Focusing on the desired outcome instead of proving oneself right helps make better decisions.
  • Thinking independently of circumstances or crowd mentality enhances decision making abilities.

Positioning oneself for better decision making:

  • Recognizing everyday moments as opportunities for decision making is crucial.
  • Being well positioned physically and mentally allows for independent thinking and judgment.
  • The ability to manage one's temperament and emotions contributes to effective decision making.

The importance of writing in the age of AI:

  • Writing helps individuals understand their own thoughts and ideas more clearly.
  • Writing facilitates reflection, refinement, and generation of new ideas.
  • Using AI-generated content limits critical thinking skills and hampers personal growth.
  • Writing cultivates humility by allowing individuals to give up on ideas that do not make sense.

The potential risks of relying solely on AI:

  • Over-reliance on AI weakens individual faculties and critical thinking abilities over time.
  • The habit of capturing long-form thoughts through writing fosters stronger cognitive capabilities.