Category: Finance
The Culture Principle

choose-to-grow

Ray Dalio and Bridgewater have built a competitive advantage through their systematizing the use of radical truth and radical transparency. They have mitigated some of our cognitive biases. They have also developed a way to use and combine the outputs of multiple different mental models:

Bridgewater have a created a system which will generate better outcomes than their competitors. It will also increase the growth rate of people working in that environment. They identify everyone’s strengths and weaknesses. There is constant feedback, the effectiveness of strategies to address them will be continually rated and able to be subject to improvement. Someone working in that environment will soon leave their peers elsewhere behind. This in turn will improve the performance of the organization as whole.

In effect they have built a process for using multiple mental models/conceptual frameworks and of combining different perspectives:

We all have slightly different conceptual frameworks or mental models and they are all a mix of what is useful and what is not.  This means that we can improve our understanding by incorporating other peoples. This is one of the reasons why having a diverse team working on problems can be better than having one rigid perspective.

Try and have multiple different mental models, made up of components which can be mixed and matched. Use them as different spectacles or filters to view reality or the problems you are working on. While even this will not let you see reality as it is, it may give you a better understanding than those you are competing with. It may help you see what they do not”

Ray’s principals are well worth reading. Its caliber can be judged by its start:

Principles are concepts that can be applied over and over again in similar circumstances as distinct from narrow answers to specific questions. Every game has principles that successful players master to achieve winning results. So does life. Principles are ways of successfully dealing with the laws of nature or the laws of life. Those who understand more of them and understand them well know how to interact with the world more effectively than those who know fewer of them or know them less well. Different principles apply to different aspects of life—e.g., there are “skiing principles” for skiing, “parenting principles” for parenting, “management principles” for managing, “investment principles” for investing, etc and there are over-arching “life principles” that influence our approaches to all things. And, of course, different people subscribe to different principles that they believe work best.

 

Read the Principles, read up on Mental models. Then incorporate your conclusions into your life. Action it.

 
Splendid links 3

NSA surveillance, wiretapping and its impact on culture and country

“The tyranny of a prince in an oligarchy is not so dangerous to the public welfare as the apathy of the citizens in a democracy” Montesquieu

  • Change
      • Remember way back when Janet Napolitano and DHS listed conservatives, pro-lifers, ex vets, Christians as potential terrorists. Did that enable NSA to target and scrutinize the phone and computer data of people associated with those groups? Is a great question, inspired by a great post:

Obama represents the counterculture of the 1960s. The part that hated the culture and the institutions of the country. They are the ones who spit on Viet Nam vets as they came home, and chanted “Ho, Ho, Ho Chi Min, the Viet Cong are going to win” as they rioted for a communist victory in Viet Nam.

They didn’t like America. And they went on a long march through the institutions they own today: academia, the media, the press, the “permanent” government.

Pushing back, the rest of the country became more reflexively more pro-country. But that is changing thanks to the Obama administration. Now that the hard core cadres of the Left have captured the Presidency, the patriotism of the Country Class may be turning…. love is reciprocated with hate, there is a reaction…..

My admiration for law enforcement, for the military, for teachers, for trust in the basic justice of the government is disappearing. I may soon end up as part of the NEW American counterculture. After all, if the country under Obama represent the dominant culture, then those of us who were once patriots will now become what they once were.

On Reality, America and the world today

“When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.” Frederic Bastiat

 
Financial Cycles

Do you applaud the BIS for acknowledging financial cycles or to shake your head that such an article should be thought necessary?

Understanding in economics does not proceed cumulatively. We do not necessarily know more today than we did yesterday, tempting as it may be to believe otherwise. So-called

“lessons” are learnt, forgotten, re-learnt and forgotten again. Concepts rise to prominence and fall into oblivion before possibly resurrecting. They do so because the economic

environment changes, sometimes slowly but profoundly, at other times suddenly and violently. But they do so also because the discipline is not immune to fashions and fads. After

all, no walk of life is. The notion of the financial cycle, and its role in macroeconomics, is no exception.

No s**t Shirlock

This in all probability means moving away from equilibrium settings and tackling disequilibrium explicitly. In many respects, all this takes us back to previous economic intellectual traditions that have been progressively abandoned in recent decades.

You mean those classical economists had something sensible to say after all. Well I never.

If policy is unable to constrain the boom sufficiently and the financial bust generates a serious balance sheet recession, policies need to address balance sheet repair head-on. The overarching priority is to structure them

so as to encourage and support the underlying balance sheet adjustment, rather than unwittingly delaying it.

Take that Krugman, Bernanke et al. Your policy prescriptions have not and can not work. Reality always wins and your policies fly in the face of reality.