Probabilistic thinking

Their wordsIf you don’t get this elementary, but mildly unnatural, mathematics of elementary probability into your repertoire, then you go through a long life like a one-legged man in an ass-kicking contest. You’re giving a huge advantage to everybody else.

Their wordsOne standard antidote to foolish optimism is trained, habitual use of the simple probability math of Fermat and Pascal, taught in my youth to high school sophomores.

Their wordsAnd the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t.

Their wordsAnd it makes sense to load up on the very few good insights you have instead of pretending to know everything about everything at all times. You’re much more likely to do well if you start out to do something feasible instead of something that isn’t feasible.

Their wordsProbabilistic thinking is essentially trying to estimate, using some tools of math and logic, the likelihood of any specific outcome coming to pass. It is one of the best tools we have to improve the accuracy of our decisions.

Their wordsThe future is far from determined and we can better navigate it by understanding the likelihood of events that could impact us.

Their wordsBayesian thinking allows us to use all relevant prior information in making decisions.

Their wordsFar more probability estimates are wrong on the “over-optimistic” side than the “under-optimistic” side.

Their wordsSuccessfully thinking in shades of probability means roughly identifying what matters, coming up with a sense of the odds, doing a check on our assumptions, and then making a decision.

Their wordsBut the truth is we don't know what the probability is. We don't know what the probability curves look like. We actually can't use expected value.

Their wordsin quote-unquote real life, right? Which is starting businesses or you know, writing books, right? Or composing music or playing basketball or playing poker, right? Or basically doing anything interesting we're in a probabilistic domain, right?

Their wordsthere is a more subtle error and harder harder to fix but that the best prediction the best guess is always less extreme than your impression intuitive prediction is as we say not progressive it doesn't recognize regression to the mean

Their wordsyou want to find what is repeatable and what you could do again and those are the things you should just pay the most attention to

Their wordsif you can can do something that changes your odds of an outcome it's not luck by definition luck to me the biggest are where and when you were born you can't control it

Their wordsI learned how to balance risks better right so I learned that if um how I could reduce my risks without reducing my returns by being able to literally structure my bets in a more Diversified way