Barbells & Cubism
Nanette, the most discussed Comedy special in the recent times left me awestruck. Each of the issues tackled are subjects of a lifetime of research in themselves — however, one aspect that piqued my interest specifically was a discussion on Picasso and Cubism.
Hannah, the stand-up comic and creator of Nanette had a very pejorative take on Picasso and much as I deeply moved by her performance, I couldn’t help be drawn to the Cubism itself — the creator (attributed largely to Picasso) of which Hannah was vehemently against.
The intent of this write up is to help me in my exploration of how one can hold opposing views in mind while objectively assessing reality. Seeing things from varied perspectives, much like Cubism.
In this podcast, VGR talks of decision making by human beings - how they identify their tribe and how this effects decisions they make subsequently throughout their lives. Belonging to a tribe is often embracing its ideology. Affiliation-al thinking as he puts it.
Enter Munger — “Extreme ideology cabbages one’s own mind.” How very true! There is certainly some hot button for every individual that cabbages his/her mind. How does one avoid this pitfall?
As I think of staying centered while faced with opposing views, a Barbell comes to mind.
I have been obsessing about Barbells and portfolio construction ever since I read about this strategy in Antifragile by Taleb. The idea is simple. A portfolio 90% in cash and 10% in risky assets (say beta of 5) and hence with a weighted portfolio beta of 0.5 (90%*0 +10%*5 = 0.5) is inherently more robust to downside than a portfolio that is 100% invested in 0.5 beta assets. In a market crash where hypothetically the markets go to zero, your Barbell portfolio loses at most 10% of its value, whereas the seeming low beta portfolio goes to zero!
I’ve seen several instances of this Barbell in day to day life:
i) The maker versus manager schedule. Folks like Elon Musk come to mind.
ii)Prioritizing time as an adult: Most people with meteoric career graphs I’ve seen, have distinct social graphs. They successfully straddle between very few deep relationships (usually filial) and perfunctory relationships with very many people in their professional networks. These worlds rarely merge into a middle ground cloud of friends-family-colleagues.
iii) Investing in platforms such as Tencent or Amazon where the core business trades at rational multiples but usually distorted by expensive embedded promise of growth (R&D spend, think Alexa, AI and beyond)
iv) Move fast and break things as Zuckerberg often quotes or wait there for the perfect pitch as per the Oracle of Omaha
As the physicist/philosopher David Bohm observes, one way of dealing with opposing views, is to label them in your mind as a paradox and not a problem. The cue that something is a problem (i.e, opposing) anchors the mind to resolve it immediately, whereas phrasing something a paradox lets the mind observe it without rushing to solve it.
What’s your strategy of holding opposing views as you evaluate reality? What helps you stand tall with your Barbell and not let it tip one way?
