Wicked learning environment
Learning chess may look like a very difficult task and that is very true there are grandmasters who have been practicing almost for decades to attain perfection and identify patterns, In Paul Hoffman's book King's gambit he states that "In practice the possibilities in chess are boundless, although theoretically it is a mathematically finite activity – there are, for example, 988 million positions that can be reached after four moves for white and four for black ", and is often quoted "fact" that there are more possible moves in a chess game than there are atoms in the universe really correct?
Chess looks so difficult, but the good news is that all the possible patterns and combinations can be identified and practiced, If you were a human computer like Deep Blue which was designed by a computer scientist at IBM then its possible to identify and learn all the patterns there is in the full chess game.
So any game or area where patterns repeat and are easily recognizable which can be used to learn those patterns are Kind learning Environments as stated by David Epstein in his book Range, where else can we find a Kind learning environment ? Piano classes, musical instruments always use same patterns and even after many years they don't change, when patterns are repeatable we can easily identify them and learn from those patterns, but what about an area like investing or business or science ? do patterns repeat ? can we identify repeatable patterns?
In chaos theory its stated that the world is very random and a butterfly's flap of its wings in California can cause an earthquake in India , with so much randomness or Entropy in the system can we find identifiable patterns in business or economy? chances are very slim and that is the reason Super star's like Buffett has mentioned that they are not in the prediction game, which is very very difficult. which makes total sense when we think of investing and business from a Wicked learning environment where patterns are not repeatable each time we get a surprise.
In march 2020 nobody expected a fall in the stock markets , it was not a black swan event, it could not have been avoided, but we could have prepared, that is totally random wicked environment behavior where we cannot predict the behavior of a event.
In stock market and business similar randomness happens all the time, In recent Q1 2022 a predictable blue chip company announced its quarterly earnings and left the stock to tumble 5% because the results were not in line with the analysts prediction, the surprise to me is not the random behavior of the stock, but the prediction part where we are trying to predict randomness, statistically speaking, it may make sense to allow for a margin of error and make a prediction, but margin of errors in most cases are too wide that even a dart throwing chimp could make a guess and get a 50 : 50 odds.
Business environment and investing is filled with random behavior where patterns are not repeating often thus making it difficult to identify patterns because of the sheer complexity involved in the system, If we are not able to identify patterns in a wicked environment how can we learn ?
We need to structure our thinking differently from normal box thinking, learning from different fields like science, biology discusses how scientist approach a problem through hypothesis.
In probability we have " Bayes analysis" which is a wonderful tool i use in thinking of investment problems and structure our PF based on those tools.
Using analogies, metaphors from other fields to think of investing will help in breaking down complex problems to easier manageable tasks.
Ex : Buddhism talks of equanimity which can be applied in investing where you are required to control your emotions and remain detached.
Similarly like equanimity lessons can be drawn from neuroscience ex: If you know when the AMYGDALA is active in some stressed out situation you can avoid making investing decisions, a wicked learning environment requires us to be always prepared and expect the unexpected, when we are prepared, we may take advantage of those situations.