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The Attention Span. "Superstars and Sages."

This week is about what an obscure basketball player can teach us all about thriving in a complex and confusing world.

Also- if you missed Tom Pence’s quarterly markets update call on Thursday let me know and I can share his deck.

Superstars and Sages.

[9 minute read]

In my opinion, one of the finest sports articles ever written is Michael Lewis’ “The No Stats All-Star” about Shane Battier. Battier was a unique player who had virtually no standout individual statistics, but he acted as a “swarm harmonizer” for his team.

“When Battier is on the court, his teammates get better, often a lot better, and his opponents get worse — often a lot worse. He may not grab huge numbers of rebounds, but he has an uncanny ability to improve his teammates’ rebounding … He also has a knack for getting the ball to teammates who are in a position to do the same … On defence, although he routinely guards the NBA’s most prolific scorers [he was one of the most effective to guard Kobe Bryant], he significantly reduces their shooting percentages. At the same time he somehow improves the defensive efficiency of his teammates — probably, Morey [general manager of Battier’s team at the time] surmises, by helping them out in all sorts of subtle ways. ‘I call him Lego,’ Morey says. ‘When he’s on the court, all the pieces start to fit together …’”

Battier was a dedicated student of the game. He watched the system, memorized all the probabilities, and then maximized his role in contributing to them. He knew all the best points to intervene: what exact part of the court to force Kobe into to reduce his shooting percentage the most.

After a very long time in the sporting wilderness, my home-town team Liverpool has become remarkably successful in recent years. One of the most intriguing explanations has been their statistical approach to finding swarm harmonizers. Liverpool uses complex analytics to determine how much a single player contributes to the overall team, rather than just to his own individual statistics. In basketball and ice hockey, this is sometimes referred to as “plus-minus”; essentially what happens to the score when any given player is on the court. Battier was a plus 6; a number so significant that it’s the difference between 41 and 60 wins a season for the team.

Western culture tends to celebrate Michael Jordan: the standout player with the best stats. Eastern culture is somewhat more attuned to Dennis Rodman: the player who provided a platform for Jordan by being six standard deviations better at rebounding than anyone else at his peak. Superstars or sages.

“Emergence” is one of the most interesting ideas in the world. It describes the mysterious phenomenon where you can put two things together and get more than the sum of the parts.

Essentially- swarm harmonizers like Battier bring the whole team up to a higher level of emergence and criticality. But unlike the Michael Jordans, they do it from within the system, not at the apex of it. Hence, one’s visible and famous, the other, somewhat less-so.

Teams acting in synchrony become more emergent, and individual players can help teams act in sync. For example, acting in synchrony ramps up endorphins to much higher levels, though we still have no idea why. There is a wonderful passage in the book The Boys in the Boat that brings this to mind:

“There is a thing that sometimes happens in rowing that is hard to achieve and hard to define. Many crews, even winning crews, never really find it. Others find it but can’t sustain it. It’s called “swing.” It only happens when all eight oarsmen are rowing in such perfect unison that no single action by any one is out of sync with those of all the others. It’s not just that the oars enter and leave the water at precisely the same instant. Sixteen arms must begin to pull, sixteen knees must begin to fold and unfold, eight bodies must begin to slide forward and backward, eight backs must bend and straighten all at once. Each minute action—each subtle turning of wrists—must be mirrored exactly by each oarsman, from one end of the boat to the other. Only then will the boat continue to run, unchecked, fluidly and gracefully between pulls of the oars. Only then will it feel as if the boat is a part of each of them, moving as if on its own. Only then does pain entirely give way to exultation. Rowing then becomes a kind of perfect language. Poetry, that’s what a good swing feels like.”

So what?

The need to work within the system is the consistent conclusion of all the greatest complex systems experts. It produces emergence: human and system combine to co-create something entirely new.

Some of the best traders of all time have reported a similar kind of synchrony in their relationship with stock markets. As Stanley Druckenmiller put it:

“One of my strengths over the years was having deep respect for the markets and using the markets to predict the economy, and particularly using internal groups within the market to make predictions. And I think I was always open-minded enough and had enough humility that if those signals challenged my opinion, I went back to the drawing board and made sure things weren’t changing.”

On the day before Black Monday in 1987, Druckenmiller went from short the market to 130% long. As the market crashed, he liquidated his entire portfolio in the first hour of trading, and then went short again! He ended the month in the black. That requires absurdly rapid cognitive flexibility. If you can go long and short that dynamically, you open up the potential for extraordinary returns.

Another legendary trader, Paul Tudor Jones, has argued that the best money in markets is made at the turns. But they’re obviously incredibly difficult to time, especially as turns anticipate fundamentals.

“These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates an illusion that there is an explanation for everything and that the primary task is simply to find that explanation. As a result, technical analysis is at the bottom of the study list for many of the younger generation, particularly since the skill often requires them to close their eyes and trust price action.”

As I’ve cited a couple of times now: Philip Tetlock found that rapid belief-updating is as much as 3x more important for successful forecasting than intelligence. It’s less a question of beating the markets, but more of a deep sense of attunement that enables you to update your beliefs faster than those that are still trying to justify their actions.

Druckenmiller’s mentor George Soros was famously so harmonized with the market that he developed an embodied connection: his back pain would indicate when something was amiss. Counter to what you’d expect, in 2009, Soros famously said “when I see a bubble forming, I rush in to buy, adding fuel to the fire.” Go with the flow, while it lasts.

The individual who can successfully identify the heart of the system and work in harmony with it thrives more than any other kind of person I’ve encountered. It’s a surprisingly universal trait of successful leaders, investors, business owners, and humans across hundreds of examples.

I will explain why in more detail over the coming weeks and months.

Interesting Related Reading:

  • Read: The No-Stats All Star by Michael Lewis (72 minute read).
  • Why Read: The inspiration for this piece, and an absolute classic from Michael Lewis. Self-recommending if you like sports writing, or… writing.
  • Read: Emergent Properties of the Market Collective by Alex Barrow at Macro Ops (23 minute read).
  • Why Read: I think Alex Barrow is one of the smartest minds and best writers in finance, this piece linking murmurations of starlings to traders was a heavy influence on this article (thanks Alex!).

Have a good weekend!


Tom Morgan
Director of Communications and Content
The Knall/Cohen/Pence Group

Work (317) 571-4525

Cell (917) 656-2742

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