I like to distinguish between two types of information. “Intelligence” information tells you new things about the world. For example, the history of World War II or how a semiconductor works. “Awareness” information offers you an entirely new way of experiencing the world. As a result, I generally find it more interesting to spend time on the latter, as well as the practical applications.
This week I discuss five ideas that have genuinely changed the way I view the world.
In light of the current market volatility, Tom Pence also hosted an excellent interview with Harvard Economist, Megan Greene, on inflation. Here are a few headline takeaways and an update on Tom’s investment outlook. He discusses why he’s defensively positioned and what would cause him to become more bullish.
What Am I Missing?
[16 minute read]
Mike Michaelson: “Christof, let me ask you, why do you think that Truman has never come close to discovering the true nature of his world until now?”
Christof: “We accept the reality of the world with which we're presented. It's as simple as that.”
- The Truman Show.
Source: Getty Images.
“The Umwelt” is probably the single idea that has scrambled my brain and raised my awareness more than any other. Coined by neuroscientist David Eagleman, it describes the simultaneously obvious and bonkers idea that humans have only evolved to perceive what’s most relevant to our survival.
Is water relatively tasteless for every species, or just for humans so we can tell if it’s tainted? If water actually tastes like delicious cookies, but we couldn’t then know if it’s poisoned, that would be a significant evolutionary disadvantage. That trait would therefore be selected against over time until water tasted like nothing.
An earthworm has never seen a beautiful sunset because it hasn’t ever needed to. We don’t experience the world anything remotely like a bloodhound, or a tick, or a bat does. It's easy to imagine the ways our perception might be better than other species, but it's harder to imagine the ways it might be worse. Even our vision seems exceptionally accurate, but Eagleman notes the part of the electromagnetic spectrum that’s visible to us is less than a ten-trillionth of it.
We are consciously aware of about 60 bits of information at any one time. We select that from an available pool of 11 million bits; essentially everything that we have evolved to be aware of. But the Umwelt idea suggests that our personal pool of 11 million bits sits in an ocean of potentially trillions of inputs we can probably never directly perceive.
The Umwelt is a concept that makes you wonder: what am I missing on the outside of my own world?
In investing, the risks of a limited worldview are illustrated by over-allocating to your own familiar domestic stock market. Despite years of underperformance, this has been particularly true of Japanese investors. Curiously, home bias also tends to be worst in the riskiest countries. Whether they were unwilling or unable, Schwab noted recently that Russian investors had 95% of their equity portfolios invested in Russian stocks.
We are often hurt by an inability to go beyond the familiar world we know.
Here are five increasingly wild examples of the Umwelt concept, and some practical applications.
1. The “Western thinking” Umwelt
Joseph Heinrich’s book The WEIRDest People in the World makes the observation that we tend to assume everyone thinks like “Western, Educated, Industrialized, Rich, and Democratic” people. His literature review of experimental psychology found that 96% of subjects enlisted in research studies came from Northern Europe, North America, or Australia. About 70% were American undergraduates. But the Western cognitive Umwelt is simply not how a huge proportion of humanity actually thinks.
What’s beyond that world?
If you’re comfortable with extremely broad generalizations, a study by Nisbett and Masuda (below) attempted to draw distinctions between Eastern and Western thinking. They found that “Westerners” tend to focus on individual objects and linear relationships, while “East Asians” tend to look at the overall context.
“Attention to the object encourages categorization of it, application of rules to it, and causal attribution in terms of it. Attention to the field encourages noticing relationships and change, and prompts causal attribution in terms of the context and distal forces.”
This is especially important currently because naïve, reductionist thinking is persistently leading to catastrophic failures in the way we try to control complex adaptive systems. Paying too much attention to the object, not the broader field.
Practical application: Optimal cognition is rebalancing the Western tendency toward reductionism and integrating it with more East Asian holistic perspective. This provides a deep understanding of both the individual parts, and the way they flow together. “Hybrid thinkers” who can straddle both worlds could come to dominate the next few years of messy transition.
This is the true benefit of genuine diversity. For example, a 2021 study by Lu, Naik, and Teo found that fund management teams with heterogeneous educational backgrounds, work experiences, nationalities, genders, and races outperformed homogeneous teams by 3%-8% a year, after adjusting for risk.
2. The “abstract ideas” Unwelt
Our entire culture is predicated on the ability to communicate abstract concepts and ideas. From derivatives to the metaverse, our world is increasingly built on incomprehensibly complex layers of abstraction jumbled on top of the physical world. I’ve written a lot recently about the devastating dangers of getting stuck in abstract ideas. They can waste our lives, divide our society, facilitate violence, and damage our mental health.
What’s beyond that world?
How could you possibly live without the ability to communicate abstract ideas? One of the wildest counterexamples is the Pirahã. This small Amazonian tribe doesn’t appear to have any abstract words in their language at all. They have no words for colours or even numbers. Their language is essentially restricted to describing immediate experience, and as such, they live very much in the present. Based on the amount of time they spend smiling and laughing, anthropologists have described the Pirahã as one of the happiest groups on earth.
Practical application: The dominant theme of the last six months, and likely the foreseeable future, is the collapse of many of modernity’s layers of complex abstraction. Ephemeral digital businesses at insane valuations, excess financialization, and impractical postmodern theories are all meeting the immediacy of reality. This broader collision is increasingly being framed as “reals” versus “virtuals.”
Vaclav’s Smil’s new book How the World Really Works, published last week, is spectacularly well timed. He discusses the divergence between abstract ideologies of growth and decarbonization and the scientific realities of the present moment (insights here). Within the context of Western versus Eastern worldviews, Gavekal’s Dan Wang has insightfully argued that China's rapidly pivoting away from the insubstantial business models of Silicon Valley and Wall Street. Instead they are focused on infrastructure, construction, and agriculture; what Wang calls “the physical world.” The government hopes their population will “make babies, make steel, and make semiconductors.”
3. The “five senses” Umwelt.
We typically think we interact with the world using a combination of five distinct senses: touch, taste, smell, sight, and hearing. But there are also different cultures sharing the Earth with us right now that seem to have dramatically different sensory experiences.
What’s beyond that world?
In his book Radical Wholeness, Philip Shepherd uses the fascinating example of the Anlo-Ewe culture in Africa. Their primary sense is balance, not just in purely physical terms but in the entire structure of their character. Children as young as two can walk back and forth from their wells carrying buckets of water on their heads. This requires a constant sense of where you are in relation to the world, or what the Anlo-Ewe call “Seselelame,” which very roughly translates as “feel-feel-at-flesh inside.”
Practical application: This example brought to mind Lia DiBello’s findings that superstar businesspeople all tended to share an intuitive sense of strategic balance. She believes experts can intuitively and dynamically balance the three key pillars of supply, demand, and capital.
“Unlike most business professionals, they are attuned to the early indicators of widespread change. Beyond this, they are expert at keeping the triad in balance, or shifting the balance when external conditions are conducive to do so.” [Emphasis added].
Holistic thinking has tangible real-world benefits, as does rapid receptivity to the right external information, which brings me to….
4. The “head thinking” Umwelt.
If you ask most people where the center of their consciousness resides, my experience says they point at their heads. But head-centered cognition is far from a universal human experience. In Neolithic times, our center of consciousness was located in the abdomen. It then slowly migrated upwards to the chest by the time of the Ancient Greeks. By Plato’s era, it has risen to the head, where it has stayed ever since for many, especially in the West. But this experience is not currently true for many other cultures or indigenous peoples.
What’s beyond that world?
Shepherd talks about rediscovering our atrophied “whole-self cognition.” His blanket term for this is “holosapience.” For example, he recommends developing the sense of “spacioception”; a feeling of space or constriction in our own bodies. He also suggests experimenting with moving our center of consciousness down our body in his “elevator shaft” meditation. In cultivating this holosapience we sometimes encounter areas of our body we cannot feel clearly. Shepherd thinks this can be an indicator of trauma held in the body.
There is a curious sign that Western society is currently waking up to this phenomenon. Bessel van der Kolk’s 2014 book The Body Keeps the Score went unexpectedly viral during the pandemic and spent most of 2021 top of the New York Times bestsellers list. Van der Kolk’s thesis is that trauma can be stored frozen in the body (great podcast below). He’s pushing for greater acceptance of trauma treatments beyond the current Western medical Umwelt of talk therapy and “post-alcoholism era” pharmaceutical prescriptions. His suggestions are considerably more embodied; with a belief that “the disconnection between mind and body is where trauma lives.”
Practical application: Once head and body are unified, “holosapience” can provide us with a “borderless affinity” where we react to the world around us seamlessly and rapidly. More than any other single trait I’ve found, across business, and life in general, receptivity to the right external stimulus determines our flourishing and evolution.
5. The “heart is a pump” Umwelt.
This one is the most fun. Specifically within the genre of embodied cognition, I have been most interested in the role of the heart. Up until very recently, my understanding of our hearts was that they were a “dumb” pump, primarily for oxygenating our blood. The dissonance is that wisdom traditions across human culture continually reference the power of the heart as a guide.
What’s beyond that world?
The ubiquitous message from myth is that the heart somehow helps us navigate the infinite hidden signals beyond our own Umwelt. How could that possibly be true? Stephen Buhner’s work has been a significant piece in this puzzle. He argues that the human heart is one of the most powerful electromagnetic generators and receivers known to nature. It is constantly in reciprocal relationship with both our inner organs and outside world. It therefore isn’t some kind of competing second brain: “it is, in fact, a highly evolved organ of perception and communication.”
The implication is that incorporating a lost sense of heart-cognition we achieve a sort of two-way sonar for our surroundings. Or perhaps something more.
There’s a great story in Shepherd’s book about the Sng’oi people of Malaysia. Psychologist Robert Wolff found that they would often anticipate his visits to their settlement despite having no conceivable means of knowing he was coming. They talked about an “ancient way of knowing.” He even describes a time when he personally experienced it. After spending long days walking the jungle with a tribesman, he was asked to find water. As he watched him strain his senses, the tribesman simply said “water inside heart.” Wolff suddenly found he was able to sense its presence nearby.
“My perception opened further. I no longer saw water - what I felt with my whole being was a leaf-with-water-in-it, attached to a plant that grew in soil surrounded by uncounted other plants, all part of the same blanket of living things covering the soil, which was also part of a larger living skin around the earth. And nothing was separate; all was one, the same thing: water–leaf–plant–trees–soil–animals–earth–air–sunlight and little wisps of wind. The all-ness was everywhere, and I was part of it… All of me was filled with being.”
We know that sharks and rays can detect a signal as weak as a 1.5 volt battery from two thousand miles away. But we don’t know what the lower limit is on human perception of electromagnetic signals, especially if they aren’t served to our conscious awareness. But, to quote biologist Dr. Bruce Lipton, “a large number of recent scientific studies have confirmed that “invisible forces” of the electromagnetic spectrum profoundly impact every facet of biological regulation.” If remotely true, this is an absolutely perfect illustration of the Umwelt, and one that might have radical implications.
Practical application: The most simple is that mystical-sounding phrases like “follow your bliss” are given a much more solid scientific foundation. I have long suspected that our exploratory attention, what you “love,” is a guide to our direction in life and future growth. If our heart is navigating an infinitely complex electromagnetic landscape; it offers us a superior compass to our brain’s enclosed computer.
What does this all mean?
Taken together, all these ideas hint that Westernized, intellectual, abstract, head-centered thinking just isn’t the totality of human potential. Moreover, the reintegration of this way of thinking into a more holistic relationship with the world may be our individual and societal destiny.
There’s a universal pattern in nature that I call “simplicity/separation/synthesis.” A musician hears music, deconstructs the notes, and then plays the tune creatively. We understand something intuitively, deconstruct it analytically, and then return to synthesis again. We are born undifferentiated, become maximally individuated at midlife, and then (hopefully) return our egoic powers to the service of the world.
Within this specific pattern, the imbalanced tilt toward the brain's left hemisphere that is damaging the world may just be the necessary middle part of that universal process. And before this powerful but limited mode of thinking destroys us, we will unify it with our holistic embodied cognition. The right hemisphere returns to its rightful place in supervision over the competitive left.
Shepherd also sees this prodigal reunion as the completion of the Hero’s Journey of consciousness. The reconciliation of mental conscious with bodily unconscious. Perhaps our dragons are the trauma frozen in our bodies and the jealous fears of our left hemispheric ego.
Practical application: William Green’s excellent interview with Arnold Van Den Berg last week (below) opened with a noteworthy claim:
“If I had to choose just one role model from all of the remarkable investors I’ve interviewed over the last quarter of a century, it would be him.”
Holocaust survivor and value investor Van Den Berg has spent the last 50 years examining the nature of the subconscious. Is it a coincidence that one of the most widely-admired investors is also the one who talks repeatedly about harmonizing your conscious and unconscious mind? His steadfast belief in his own character led him to hold onto his energy stocks during years of underperformance. With the fundamentals of the market more digitally intangible than ever before, and the macro environment unprecedented, character in a crisis is critical. A well-balanced psyche can provide that foundation.
In the hands of a blindfolded man, the scalpel of Western analytic thinking dissects and endangers everything it touches. But if it’s returned to a master surgeon that sees the interconnectedness of the whole body, it can help us heal.
Related reading & listening.
- Read. Culture and Point of View- study by Nisbett and Masuda. (47 minute read).
- Why read. As referenced above, a broad but fascinating examination of the differences with which Eastern and Western people might perceive the world.
- “There are marked differences in the cognitive processes of East Asians and Westerners. These include categorization, causal attribution, reliance on rules, use of logic, and preference for dialectical understanding of events. In our view, these cognitive differences derive in good part from perceptual differences, in particular, differences in what is attended to. We have shown that East Asians attend to the field more than do Westerners and that Westerners pay more attention to focal objects. Attention to the object encourages categorization of it, application of rules to it, and causal attribution in terms of it. Attention to the field encourages noticing relationships and change, and prompts causal attribution in terms of the context and distal forces. In addition, attention to the field could be expected to make it difficult to segregate a particular object from a field in which it is embedded.”
- Listen. This Conversation Will Change How You Think About Trauma (1 hour 20 minute listen.
- Why listen. This podcast with Bessel van der Kolk and Ezra Klein was a great introduction to a thesis that’s currently going viral within American culture.
- Listen. Master Your Mind- Arnold Van Den Berg with William Green (2 hour 5 minute listen)
- Why listen. William is a great interviewer and a rare spiritual/investing hybrid. Although I don’t agree with a lot of Arnold’s methods, and find some of it a bit too woo (even for me!), his overall message is profound. Arnold has lived, and thrived, by matching his character to his interests and investment style. It’s a resounding endorsement of a lot of my life philosophy.
- “What I’ve come to learn in the subconscious mind and everything I’ve read for 45 to 50 years, single most important thing in life is what you believe. Your belief governs your feelings and your feelings create your attitude and your attitude creates reality.”