How much risk-taking is good risk-taking? This is a question Nassim Nicholas Taleb takes head on in Skin in the Game. It isn’t an easy book to read. But it’s one that we like to re-visit every once in a while.
“Ironing your shirts then putting them in the washing machine produces a different outcome from washing your shirts first, then ironing them.
“The reader can either trust me on this, or try the experiment with both sequences on the next Sunday afternoon.
“Now, assume that your capital is around one million dollars and you are involved in speculation. Apply path dependence to the reasoning.
“Making a million dollars first, then losing it, is markedly different from losing a million dollars first then making it.
“The first path (make-lose) leaves you intact; the second (lose) makes you bankrupt, insolvent, maimed, traumatized and more generally unable to stay in the game, thus unable to benefit from the second part of the sequence. There is no make after the lose. Hence an asymmetry; losses and gains do not offset each other in some conditions; there is no netting of costs versus benefits. And what is the condition? The mere probability of hitting the insolvency point which we can call by the respectable mathematical name ‘absorbing barrier’ but is commonly known in no less scholarly circles of gambling and speculation as ‘uncle point’ or ‘throwing in the towel’. If your country is a former member of the Ottoman Empire, odds are you will call this uncle point an ‘aman’, which is an expression thought by non-Turks to be usually uttered by Turks upon failed Turkish enterprises.
“Warren Buffet—as well as literally anyone who survived in the risk taking business—has a version of it: ‘In order to succeed, you must first survive.’ My own version has been: ‘never cross a river if it is on average four feet deep.’
“I know, I know it is only money—we are simplifying for now. We are assuming, for the purpose of this example, that you are in a simplified world in which the worst case is what happens to you and you only, and that you can define it the way you want, which you did here by expressing it in financial health.”
Sound advice, we think.
In this issue
- Can robots paint?
- Why sleep matters
- The fine print
Have a good day!
Can robots paint?
Can technology create art, is a question Babe Howard set out to investigate. Turns out, this is a question that has been on the minds of many people and they have been at work to find out. In the not-so-distant future, Howard meticulously documents, humans and technology will work together and “democratise artistic expression”.
He writes about a robotic printer one can program to produce real oil paintings “on the the level of a human master artist”.
Howard writes: “I was pulling the warehouse’s front door open when I remembered why I had come to Red Hook in the first place—to pick up my painting. Back inside, Jeff Leonard rifled through a stack of completed artworks leaning against the wall near the printer, possibly waiting to be picked up by their creators. Providing a few identifying traits, I waited until he found the bathroom portrait. ‘I remember this one,’ Leonard said, holding the canvas at a distance as Tritt and Jarvis looked on. ‘It’s nice.’ When I arrived, the men had been calmly discussing the big-name artist who was set to tour the studio the next day. With their direction now firmly established, they were confident—not only about their ability to entice even more high-profile artists, but to raise more money. Their focus on NFTs, Jarvis told me, had become ‘the glue,’ creating ‘more alignment’ between Artmatr and the venture capital firms they were speaking to about their next round of funding… With years of research and development behind them, ‘we’re not parachuting in’ with only a startup idea and no plan, he promised.
“The room was quiet, punctuated only by the sounds of Leonard wrapping the painting up for my commute. I left the men in the warehouse and hopped a train home, where the paper-sheathed canvas drew a few stares. I still had yet to get a clear look at it in person, and despite Leonard and Tritt’s praise, I suspected I could have done better—although at what, I was not entirely sure. And the machine had done exactly what it had been told to do. Possibly I was feeling inside the strange space between holding a painting of your own, and holding one of someone else’s that you had just acquired—both situations with which I had no prior experience. I was trying to decide if the canvas would feel like my own once I peeled it out of its wrapping, when I remembered something else Tritt had said to me two months earlier, as I had looked at the finished piece drying atop the work table. Clocking my speechlessness, he grinned into the camera: ‘You’re a painter now.’”
Why sleep matters
This is based only on anecdotal evidence, but the pandemic and remote work seem to have deprived people of a good night’s sleep. We have heard many friends say they sleep less. It’s a reason why we covered it in FF Recommends earlier this year.
A column by Jane E. Brody in The New York Times points out that lack of sleep is more damaging than we imagine.
She writes, “Persistent fatigue may be the main complaint of sleep-deprived people. But beneath the surface, growing evidence indicates that disrupted or insufficient sleep can have widespread damaging effects on their physical and mental health. Sleep deprivation increases the risk of developing heart disease, high blood pressure, stroke and Type 2 diabetes. It muddies clear thinking, depletes energy, increases irritability and dampens one’s sex drive.
“Even those who sleep soundly but for fewer than the commonly recommended seven or eight hours a night, may not be as medically well off with short sleep cycles as they think.
“For example, a major study suggests that middle-aged people who are chronically short on shut-eye face an increased risk of developing dementia in their later years. The study, published last spring in the journal Nature Communications, followed nearly 8,000 50-year-olds in Britain for about 25 years. Compared with those who averaged seven hours of sleep a night, the study participants who slept six hours or less on weeknights were 30 percent more likely to be diagnosed with dementia nearly three decades later.”
The fine print
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Team Founding Fuel
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