Picking Winners or Avoiding LosersPredicting the future is really hard. We know that humans are generally not very good at it.
Predicting the future is really hard. We know that humans are generally not very good at it.
I’d argue, though, that you do not really have to “predict” the specific qualities of the future — rather you just have to be good at identifying signals and separating the noise. Of course, it is much easier said than done, but this process and leverage mindset is what, in my mind, separates long term career success from repeated failures.
So how do you invest your time/money/resources? How should you?
I am a big believer in frameworks and systems for making decisions. Heuristics, as they are called, are valuable reference points to base and ground your decisions in that follow logical patterns and mathematical philosophies. While not all decision making can be explained in very logical terms, it is very valuable to understand the costs and benefits from everything you do — even if it does not always align.
I also think that it is really hard to decide where to allocate your resources.
One aspect of this is being able to spot winners. AKA the places you should invest your resources. Conversely, we could also call this being able to not pick losers. AKA places you should not invest your resources.
Which thesis do you apply to what you do?
Do you find yourself hedging your bets to make sure that you do not lose? You avoid risky investments at all costs and try your best to just not pick the losing side. In this scenario, you are trying to minimize failure. Likely, you will miss out on opportunities in the top 10%, but you’ll also save yourself from the bottom.
The opposite approach is far more risky. You are trying to bet on winners and 10x winners only. As we know from history, this is really hard and few people do it well. Without insane luck, this approach almost never works unless you have a wide data set to choose from.
But the high risk has the potential to yield high reward here. And for some, that reward is far worth it.
Understanding your bias, and which thesis you apply, is very helpful to building your resource investment thesis and is instrumental in personal development.
Originally published at gonen.blog.
Exported from Medium on February 17, 2018.