“The most important thing is the ability to survive until you get lucky.”- David Boxenhorn
Nassim Nicholas tableb brought the random idea of randomness in life. He is found saying this line often, “Life is a long gamma. We must benefit from it.” Of course, for one who is unfamiliar with the word long gamma, this becomes a foreign interpretation. But here Nassim refers to long as volatility, meaning the ups and downs in one’s life and gamma refers to the positive convexity effect, which means benefit. Therefore, we must benefit from the ups and downs in our life. Do you think it’s that simple to comprehend?
Now, what does randomness, luck, volatility, and gamma have to do with your or my life? EVERYTHING.
Before creating this model in my head, concepts were mere alphabetical representations of words that made some sense, SOMETIMES.
But once familiar with building a risk detection model, everything started making sense.
Let us begin with the concept of randomness. Is a rolling dice random? Is stepping on bug random? Is getting a degree in history random? Is learning new language random? Randomness is found everywhere, you are meeting a new person, you are winning a lottery or a stock appreciation, getting your unicorn startup, getting into an accident, and so on. But instead of accepting these events to be random, we tend to either believe we benefited because of one’s skill or lost because of one’s bad choice. Both the tracks will lead you to an unending spiral of delusion and regret. But Nassim brings the idea of randomness. Accept that the benefit or loss was not because of a skill set or a bad choice, but just a random event.
Now in no way or form, we are transferring accountability to another entity. For this, Nassim brings the concept of SKIN IN THE GAME/ SOUL IN THE GAME. Take accountability for the event. Now how will you benefit from this event?
Were you just lucky? People underestimate luck and overestimate skill and hard work. I do not mean skill and hard work do not matter. But we tend to overestimate it by a lot. Accepting luck in our lives makes it easier for us to position ourselves for the right moment. Just because you started something or invested in something does not guarantee you are hitting a home run. But if you do not start a thing, you will certainly never hit the home run.
In a gaussian chart, the majority will have a median income of 30k to 70k, the six figures are the outliers of a general population, so are the unemployed. The rich billionaire is an outlier, so is a homeless person. Then, what do we do in this stance? Now Nassim brings the idea of a barbell. You play safe with the 90% of the asset, you bet with the 10%. In this way, you are protected from the harm of speculation and exposed to the benefit of the unicorn. Where can we apply this strategy?
Dating: you allocate 10 % of your time to a new person to find if he/she is a better fit. If you find a fine man/lady, homerun. Spend most of your time with books.
Marriage: 10% rockstar. 90% accountant.
Investing: you allocate 10% of your capital in a highly speculative asset class and put the rest to inflation hedged asset class.
Bodybuilding: you spend 10% of your time lifting heavyweights. Sleep for the rest of the time.
Health: practice fasting a day or so to let the body consume the excess and eat like a barbarian the rest of the week.
Nassim shares many heuristics like these to make his life anti-fragile(Things that benefit from randomness.)
You win not by hitting home runs every time. You win by staying in the game without getting knocked out/ hitting a catastrophic loss. Stay in the game.
“Take as much risk as you can, but be sure you are here tomorrow.”-NNT
Life is long gamma, we should benefit from it.