September 12, 2010
There is something fundamentally human about being contrary. Lemmings. Sheep. The Roman Mob. The “unwashed sea of humanity”. These aren’t exactly inspiring phrases. Instead, we look affectionately at the road less travelled, whether we take it or not. There’s some solid logic behind being contrarian.
The Roman Mob is the first real example of dangerous groupthink. The rulers of Rome worked hard to keep them contentedly fat and distracted, lest they render their rule irrelevant. They managed to do that on and off for a long time.
Every complex problem has a solution that is simple, neat, and wrong. -- H.L Mencken
Groups don’t think deeply. That’s the root cause. They take the path of least resistance and push with sheer mass. Think about a complex problem like taxes. What will the population say? “Lower taxes for the poor and middle class!” And maybe, “Tax the rich!” It’s a simple solution. Neat. But very shallow and very wrong.
As individuals, there are lots of endeavors that can be especially promising for contrary thinking. Two of the biggest I can think of are investing and any sort of intellectual venture. I’ve heard lots of little quips about how to do this. Warren Buffet said “Be greedy when people are fearful, and fearful when people are greedy.” Baron Rothschild said “When there’s blood on the streets, buy property.” But the best I’ve ever heard is from Doyle Brunson. Here’s an excerpt from Super System on No Limit Holdem:
On Ace-King An A-K is a "better" hand than two Aces or two Kings for two very important reasons: (1) You'll *win more* money when you make a hand with it; and (2) You'll *lose less* money when you miss a hand with it. And I can't think of two better reasons than those to prefer an A-K over the very big Pairs. On Small connectors (4-5, 5-6, 6-7, etc) Small connecting cards are a hand that's not designed to put a whole lot of money in with before the Flop. It is a hand that's designed to take a lot of Flops with. You want to get a Turn with them to try to make a little Straight, a little Set of Threes, a little Two-Pair.. or something. ... The beautiful part about having the small connecting cards is that if you don't get any help.. you throw them away. If the turn comes 9-9-2, for example, you don't get involved with a 7-6. You're through.
It’s important to note that poker is a zero-sum game, but the same general philosophy can be applied elsewhere.
This is damned good advice. But why? And why is it so hard to follow?
It’s so hard to follow because it’s so easy to recognize big hands. When you get dealt two Aces in the hole, you get a little giddy and you want to kill with them. But logic dictates that it’s really a bad hand. And it’s bad because you want to kill with them. They’re hard to fold.
It takes a bit of thinking to get around this problem, something a group will never achieve. The logic is self evident but hard to understand. Poker, on the surface, is about having the best hand. Think a bit more deeply and that’s not quite right. You can win without the best hand, so it must be something else. Poker is actually about making money. It’s about having the most chips in front of you. You have to recognize it on your own to really get it and apply it. Big pairs are not the best hands in No Limit Holdem. You win small pots with them and lose big pots with them.
Obscuris vera involvens -- Virgil
The same thing happens in investing. If you took Warren’s advice in the real estate market, you would’ve been sitting on cash in 2007 while everyone else was buying at exorbitant prices, and you’d be buying short sales and foreclosures right now and turning good profits on them with less risk because your investments were smaller.
In the startup scene you hear “Fail Fast, Fail Early” a lot. It’s the same thing here. When you miss your flop with a 4-5, it’s really easy to get away from. You’ve got nothing. You’ll lose less money with that hand.
Blogging is like this. Nobody expects much out of blogging. You’re allowed to write a bunch of crap on a blog. You’re almost expected to. That’s a very good thing since, in order to write eloquently, you have to trudge through a bunch of crap first. Fundamentally, it’s called learning. By the way, another blog post got me to write this one (thanks Sebastian!).
Success is going from failure to failure with no loss of enthusiasm. -- Churchill
Everyone worries way too much about failure, including me. Failure is a tremendous learning opportunity. The key is to set it up so that when you do fail, you’re ready to jump into the next thing.
Ever notice when you embark on a big project you feel weighed down? It halts your progress because you have some understanding of the scope of the project. There are a huge number of things I’ve either stopped or not started because of that sheer weight on my shoulders.
The things I actually do, I do for fun. And they almost always start small.
Humanity has advanced, when it has advanced, not because it has been sober, responsible, and cautious, but because it has been playful, rebellious, and immature. -- Tom Robbins
So think about what Doyle says. Ponder, fail, and play. In the end, it won’t matter much anyway.
Sebastian quoted Ozymandias, but I very much prefer Auden:
About suffering they were never wrong, The Old Masters; how well, they understood Its human position; how it takes place While someone else is eating or opening a window or just walking dully along; How, when the aged are reverently, passionately waiting For the miraculous birth, there always must be Children who did not specially want it to happen, skating On a pond at the edge of the wood: They never forgot That even the dreadful martyrdom must run its course Anyhow in a corner, some untidy spot Where the dogs go on with their doggy life and the torturer's horse Scratches its innocent behind on a tree. In Breughel's Icarus, for instance: how everything turns away Quite leisurely from the disaster; the ploughman may Have heard the splash, the forsaken cry, But for him it was not an important failure; the sun shone As it had to on the white legs disappearing into the green Water; and the expensive delicate ship that must have seen Something amazing, a boy falling out of the sky, had somewhere to get to and sailed calmly on.