A trick to learning a complicated topic is realizing how many complex details are a cousin of something simple. John Reed writes in his book Succeeding:

When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles – generally three to twelve of them – that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles.

Most fields are a hierarchy of truths with big ideas at the top and laws, rules, and finer details branching off below them. Viewing ideas in isolation, without recognizing the family free of where they came from, gives a distorted view of how a field works and can overcomplicate what are often simple answers.

Beliefs are the same. How many business and investing beliefs do I have – opinions, ideas, models, etc? I don’t know, thousands probably. It’s a complex topic. But most of them derive from a few core beliefs.

A few big things I believe:

The inability to forecast the past has no impact on our desire to forecast the future. Certainty is so valuable that we’ll never give up the quest for it, and most people couldn’t get out of bed in the morning if they were honest about how uncertain the future is.

No one’s success is proven until they’ve survived a calamity. Serendipity often masquerades as skill, and (Read more...)