The Goal of This Post
This post is a synthesis from the book The Almanack of Naval Ravikant, by Eric Jorgenson, sharing some of the key insights on building good judgment and effective decision making; I hope you enjoy it!
If You Only Takeway One Thing
“Judgment is knowing the long-term consequences of your actions and then making the right decision to capitalize on that.”
Outline
Some of the key ideas we’ll explore in this post:
- Judgment
- How to Think Clearly
- Shed Your Identity to See Reality
- Learn the Skills of Decision-Making
- Collect Mental Models
- Learn to Love to Read
Building Judgment
- Judgment is wisdom applied to external problems.
- Judgment is knowing the long-term consequences of your actions and then making the right decision to capitalize on that.
- Without hard work, you’ll develop neither judgment nor leverage.
The direction you’re heading in matters more than how fast you move, especially with leverage. Picking the direction you’re heading in for every decision is far, far more important than how much force you apply. Just pick the right direction to start walking in, and start walking.
How to Think Clearly
- Real knowledge is intrinsic, and it’s built from the ground up.
- Making effective decisions boils down to dealing with reality.
- What we wish to be true clouds our perception of what is true.
Learn to reason independently, from the ground up. Resist the pressure to confirm. Insist on thinking everything through for yourself.
Shed Your Identity to See Reality
- It’s important to be able to uncondition yourself, to be able to take your habits apart.
- Tension is who you think you should be. Relaxation is who you are.
- Identities, labels, and stable-beliefs keep you from seeing the truth.
- To be honest, speak without identity.
Learn the Skills of Decision-Making
- Almost all biases are time-saving heuristics.
- For important decisions, discard memory and identity, and focus on the problem.
- To make better decisions, be honest.
Collect Mental Models
- Mental Models are compact ways to recall your own knowledge.
- Evolution: “Allocation, Abundance, Scarcity”
- Inversion: “Work backwards and avoid/eliminate mistakes”.
- Complexity Theory: “Systems operate in the face of ignorance”.
- Economics: “Supply-Demand, Labor-versus-Capital, Game Theory, Market Decisions”
- Principal-Agent: “Quality as a function of Ownership”.
- Compound Interest: “How scaling works”.
- Basic Math: “Arithmetic, Probability, Statistics”.
- Black Swans: “Extreme Probabilities and Tail-Events”
- Calculus: “Understanding Rates of Change”
- Falsifiability: “Truth requires predictive power.”
Applied for decision-making:
- If you cannot decide, the answer is no.
- If you’re evenly split on a difficult decision, take the path more painful in the short term.
- Lean into things with short-term pain, but long-term gain.
Learn to Love to Read
- Read what you love until you love to read.
- Focus on new concepts, with predictive power.
- If they wrote it to make money, don’t read it.
- Explain what you learned. Teaching forces learning.
- Focus on building a high-quality, solid foundation. Math, Science, Logic, Microeconomics.
- To think clearly, understand the basics.
A Final Thought
If you start with the originals as your foundations, then you have enough of a worldview and understanding that you won’t fear any book. Then you can just learn. If you’re a perpetual learning machine, you will never be out of options for how to make money. You can always see what’s coming up in society, what the value is, where the demand is, and you can learn to come up to speed.
All content credit goes to the author(s). I’ve shared the bits I’ve enjoyed the most and found most useful.
Cheers ’till next time! Saludos!
Alberto
Beto's Blog 