In volatile times like this, we each navigate a new ocean of infinite opinions. One of the hardest tasks is differentiating between what sounds smart and what’s actually true. Thankfully there are some really interesting tools to tackle this massive problem.
There’s also one central approach that seems to be incredibly powerful in enhancing mental and physical health, as well as professional success.
Also this week:
- My favourite annual markets forecast piece.
- What seems to be emerging as a key, cautious assessment of Web3.
- The triumphant return of my occasional DJ set recommendations.
“Articulate and Incompetent.”
[9 minute read]
“In business, only intuition can protect you against the most dangerous individual of all - the articulate incompetent.”
- Robert Bernstein in “The Tao Jones Averages: A Guide to Whole-Brained Investing.”
Source: Getty Images
On Wall Street it’s widely accepted that pessimism sounds smarter and sells better. This is especially true during the kinds of volatile periods we’re experiencing right now. It has also been a catastrophically bad long-term investment strategy.
An articulate, logical, and consistent argument is not required to have any relationship with actual reality. Temperament and experience does. This is especially applicable to the business, investing, and start-up worlds. As Anna Weiner once savagely wrote in Uncanny Valley:
“Venture Capitalists have spearheaded massive innovation in the past few decades, not least of which is their incubation of this generation’s very worst prose style. The internet is choked with blindly ambitious and professionally inexperienced men giving each other anecdote-based instruction and bullet-point advice.”
The key word in that paragraph is obviously “inexperienced.” Whenever someone offers you their opinion, a superb initial question paraphrases Morgan Housel: “what have you experienced that makes you believe what you do?” The profound usefulness of this simple question is that it immediately anchors abstract ideas back to real-world experience. Or reveals its absence; especially in non-practitioners like politicians or academics.
A phenomenal recent piece from Cedric Chin goes a level deeper (below). He examines Ray Dalio’s concept of “believability.” Believable people have a record of at least three relevant successes, and have great explanations of why their approach worked.
But the core limitation of “believability” is that it’s a weaker strategy for assessing experience in unbounded domains like investing. Retrospective explanations are much harder to assess. You might have gotten lucky fifty times in a row but have amazingly consistent explanations for your staggering genius. You may even believe them. A lesson I wish I’d learned much earlier in life is that a lot of people are not always believable in the same domains that they think they are. For example, Dalio’s expertise might lie in organizational structure for hedge funds, rather than macroeconomic forecasts. In fact, a major problem we are seeing unfold in real time is that some influential, very high-IQ people often have limited awareness of exactly where their circle of competence ends.
The broader the field, the greater the reliance on expert intuition. Despite its slightly mystical connotations, intuition can be thought of as pattern recognition. “The synthesis of experience with unconscious reasoning on the basis of that experience.” This is a fundamentally right-hemispheric trait, and exploring these neglected skills is a big focus for 2022.
Intuition itself isn’t intrinsically good or bad, it depends on the level of your experience. Expert pattern recognition can be incredibly powerful. After only a couple of seconds, chess grandmasters can nearly perfectly memorize the location of pieces on board. But their advantage over non-experts disappears if the board layout is random and has no relationship to an actual game of chess.
But “experience” isn’t necessarily the length of time you’ve been doing something, it’s the number of repetitions that build up that database of patterns. This is why Lia DiBello’s model for designing safe environments where you can trial and fail incredibly rapidly, over days not years, was so compelling. She has found that 60-100 trial-and-error cycles can be enough to approach mastery in a bounded domain. She believes that our adaptive unconscious learns 200,000 times faster than the conscious part of the brain. This kind of learning takes A.I. millions of iterations, but humans can do it much faster because they bring all relevant past experience to each new situation.
For example, we tend to be so good at judging social situations because we’ve had so many similar varieties of prior experience in that domain. So, as you’d expect, in business and investing the best usage of expert intuition I’ve seen is the ability to read face-to-face interactions. Investors I’ve worked with who have conducted literally thousands of management meetings often attain an implicit sense for when something is amiss. FBI body language expert Joe Navarro wrote a book called “What Every Body is Saying.” The key insight I took from it was that there are probably no universal “tells” for lying, but the ideal approach is to observe closely enough to get a baseline of behavior that then you can notice subtle deviations. Across thousands of interactions this translates to an intuitive recognition of an articulate incompetent. In contrast, left-hemispheric imbalances, such as in autism, are often associated with being unable to read faces or social cues.
The big problem with unconscious reasoning taken from very large sample sizes is that we can’t always articulate why we made a decision in retrospect. George Soros couldn’t explain why he changed his portfolio when his back hurt. In fact, intuition is often actively impeded by a conscious attempt to control and explain it. Even worse, your brain’s left hemisphere has a propensity to lie when it doesn’t understand something, the right does not. Yet the left also has access to much more sophisticated language, logic, and reasoning. The “articulate incompetent” often has a perfect explanation that’s entirely logically consistent but isn’t true. In contrast, as a right hemispheric trait, expert intuition is typically experienced much more in emotion and sensation rather than long words.
This leads to a stunning possibility implied by the opening quote. True expert intuition may often be associated with poor explanations. We should therefore be extremely suspicious of neat explanations in the broadest domains.
The left hemisphere is fundamentally competitive in its relationship with the right. This might be a reason why contemporary business is so hostile to intuitions that can’t be articulately rationalized. Added to that, if the signals originate outside of our head, our defensive intellect is fundamentally more suspicious of their credibility. A loss of a sense of embodiment and intuition is a common symptom of left-hemisphere imbalances like schizophrenia. This is why I’ve written so much about the importance of cultivating embodiment. As patterns are laid down and stored in the unconscious, important signals are served to our conscious awareness via emotions and sensations, not words.
There’s a single, practical insight I’ve seen recur across multiple fields about the effective use of intuition (and even improve physical and mental health).
Increase your vocabulary of granular words to describe emotions and sensations.
It can improve your mental health. Philosopher-psychologist Eugene Gendlin observed hundreds of therapy sessions. He claimed a critical determinant of whether a patient would eventually recover was how they processed their experience internally and the quality with which they could express it. Psychologist Lisa Feldman Barrett has also argued that it can even improve your physical health (see her pleasingly practical tips below).
“People who exhibit higher emotional granularity go to the doctor less frequently, use medication less frequently, and spend fewer days hospitalized for illness.”
In her recent book The Extended Mind (insights here), Annie Murphy Paul also cites work by UCLA scientists that found significant benefits to planning and decision-making from using a larger number of terms for feelings.
This is because we are literally learning the language of our body and unconscious. If it learns 200,000 times faster and has access to millions of times more information, that’s an unbelievable advantage. We can detect 40 million shades of colour with the human eye, but only frequently use about 11 words for them. We have an infinite palette of emotions and sensations, yet only a handful of words to describe them. (I am English, therefore particularly disadvantaged.) Important patterns without subsequent recognition are useless. Soros’ back pain would have been useless to him if he didn’t know what it meant and just took some Advil. But if we can learn to close the dissonance between mind and body and refine pattern recognition, that seems to be the basis for a huge amount of personal health and professional success.
We think more than we can say.
We feel more than we can think.
We live more than we can feel.
And there is much more still.
- Eugene Gendlin
- Read: Try these two smart techniques to help you master your emotions by Lisa Feldman Barrett (14 minute read).
- Why Read: This is a pleasingly succinct and practical list of tools and tips. As a layman, I have no way to assess Feldman Barrett’s claims except based on the basis of my own pattern recognition and intuition. I also spent a year getting a certificate in Existential Therapy, which reaches conclusions that are consistent with this general concept. The idea is to learn more words and get better at applying them to yourself in the right situations. I’d also pair this with Dr. Feldman Barrett’s recent appearance on the podcast Infinite Loops.
- "One of the best things you can do for your emotional health is to beef up your concepts of emotions. Suppose you knew only two emotion concepts: “Feeling Awesome” and “Feeling Crappy.” Whenever you experienced an emotion or perceived someone else as emotional, you’d categorize only with this broad brush, which isn’t very emotionally intelligent. But if you could distinguish finer meanings within “Awesome” (happy, content, thrilled, relaxed, joyful, hopeful, inspired, prideful, adoring, grateful, blissful . . .), and fifty shades of “Crappy” (angry, aggravated, alarmed, spiteful, grumpy, remorseful, gloomy, mortified, uneasy, dread-ridden, resentful, afraid, envious, woeful, melancholy . . .), your brain would have many more options for predicting, categorizing and perceiving emotions, providing you with the tools for more flexible and useful responses. You could predict and categorize your sensations more efficiently and better suit your actions to your environment.”
- Read: Believability in Practice by Cedric Chin (29 minute read).
- Why Read: As always, Cedric goes the extra mile in applying insights to the real world. This is another classic in helping you assess both advice and expertise in the real world.
- “To a novice, advice from a non-believable person will seem just as logical and as reasonable as advice from a more believable person, except for the fact that it will not work. And the reason it will not work (or that it will work less well) is that advice from less believable individuals will either focus on the wrong set of fiddly details, or fail to account for some of the fiddliness of reality.
- To put this another way, when you hear the words “I don’t see why X can’t work …” from a person who isn’t yet believable in that domain, alarm bells should go off in your head. This person has not tested their ideas against reality, and — worse — they are not likely to know which set of fiddly details are important to account for.”
Additional reading and listening.
- Read. One of my absolute favourite charts and articles of the year: Visual Capitalist’s 2022 prediction bingo card. Where the consensus is set up. The "increased volatility" forecast is looking good then.
Source: Visual Capitalist.
- Read. Web3 First Impressions by Moxie Marlinspike (29 minute read).
- Why read. This seems to be emerging as a key thought-piece on Web3. It’s pretty cautious.
- Listen: Finally- something for your soul from my intermittent dance music recommendation series. A kind reader (thanks D-Pat!) sent a PHENOMENAL Above and Beyond DJ set from the top of a gorgeous granite rock in Colombia. The set and setting are amazing. Apparently Cercle music does these events all over the world with the best DJs. A huge discovery for my WFH. Enjoy!
Have a great weekend!