but investing if I've lost money today I have less money tomorrow to invest with to become a a decent investor I mean just decent is a year or two that's just decent that you you're not even on the JV team yet you're just learning the ropes and and and and and if you've made too many costly Mistakes by the time you become proficient and now you're really good you got no Capital left in what
kinds of of positions in real life you could call them situations right do you tend to excel and in which ones do you not [Music] I wanted to start with a bit of a personal question which is uh what do most people get wrong about the real you they I most of the time and I process information in my body even when I'm reading even when I'm thinking even when I'm calculating can you tell me more about that like where
do you feel it yeah so um George Soros famously said that when his back is acting up that he knows something is wrong in markets so people have a and even Einstein wrote about having a he said his uh talked about a kinesthetic awareness and and if you think about it if you think about human beings as animals which we are um we learned to process information in our environment way before the Greeks invented logic
right and even the word logic comes from the Greek word for Logos and words and human beings to survive had to well heck animals to survive process information in their bodies and we've lost that as a as a as a as a as a world as a species we've lost the ability to process information in our body so when I'm reading when I read an idea say in in one of your podcasts right I'd read a transcript I'm reading
something or or reading a quote or reading anything I'll often pause and when I say often at least once a minute I'll pause and I'll process it in my body so what I mean by processing I'll just stop for a moment and see how it feels in my body and then so how do I reason with that when I encounter a new idea I'll say oh this feels like I mean it's not a conscious thought but this feels
like another thought that's related to it and so I I Navigate the world even of ideas through my my felt sense in my body yeah I like that it's almost like your subconscious is processing the environment exactly right signals that you're not even aware of because your rational brain hasn't quite kicked in yet exactly right and you think about it the our species had many eons of evolution um before we ever came up with logic
and and and rationality and conscious thinking and uh you know there's that great book by uh Julian James the origins of Consciousness in the breakdown of the bicameral mind and his thesis was that Consciousness such as you and I experience it like right now you and I are conscious that we are on a podcast talking to each other uh but uh if I'm walking down the street and I have a a bag in my hand I'm not conscious of the back
and yet at no point do I ever let the bag go right and anyway so I am unconscious of that people who who commute to work every day and anyone who's driven say for more than about a half hour you experience this this jolt frequently where you're driving along and all of a sudden you go whoa like out of nowhere you realize I've been totally un oblivious to everything around me for the last who knows how many minutes
and you know that you've you've stopped at lights you've avoided you know bumping in other cars you've done a lot of things but you weren't aware of it and and um so so clearly we can function when we are not conscious and Julian James uh thesis in his book is that is that Consciousness is pretty darn recent in human history and by pretty darn recent he he said somewhere in the last oh somewhere between Homer between
the Odyssey and the ill The Odyssey and what was the other book Homer wrote anyway between the two Homer novels that uh poems um Consciousness was born in the human species so only about two three thousand years ago and um and he said I realize what what I am saying I am saying that the pyramids were constructed by people who were not conscious who were functioning who developed mathematics and were able to
put you know multi-ton stone blocks into place and they weren't conscious and which is a wild thesis and uh and it's a it's a brilliant book the origins of Consciousness and the breakdown of the bicameral mind and he um you know it's it's been critiqued um uh uh over the years but it's still brilliant it's still a lucid Exemplar of um how a philosophy book could be written if the author strove for clarity
as opposed to showing you how smart he or she is in a sense a conversation arose in our brain and at the time we weren't aware of it before before again because of the breakdown of the bicameral mind bicameral is uh two Chambers like the uh Congress of the Senate and the House of Representatives by camera right two Chambers and so the the left and the right brain the breakdown he said it's
been many years since I read it as a as a teenager he he said um that conversation arose and we didn't know where it was coming from and we attributed it to the Gods that there must be something outside of us this voice because when the person hears the message right sending a message exactly and uh so I think I think that's something that people should really learn to get in touch with um is uh and I'm not this isn't touchy
feely I mean in a practical way and you know one of the things I wanted to say at the beginning Shane um one of the things I well one of the many things I love about you is that you are on a constant hunt a safari for usable information really usable and I I wanted to to to emphasize um both of us to anyone listening to us right now that everything here the goal is to provide practical useful
information not well that's an interesting idea right this is this is the uh the upgrade hour with Shane and Adam right and how to upgrade yourself how do we use it yeah that's a key question for me you know one thing I've been dying to talk to you specifically about giving your knowledge of Chess and decision making is sort of the concept of positioning and I've been uh noodling on this idea I think since
we we last spoke actually it's been a number of years and it seems to me that the best decision makers in the world almost always operate from a position of strength and that sort of strikes me because when you operate from a solid position or Foundation nearly every move you make is good it's all accumulative whereas when you operate from a poor position things almost always go from bad to worse to what extent do you feel
that's important and maybe you could explore that with me sure sure so um well like you Shane I try to reduce uh the world the complexities of the world to um usable little rules um accents right principles algorithms heuristics um so that in the real time Flux Of Life I remember to do something and not you know some other time so one of my principles is um never make a decision when I'm confused now that like okay but
that doesn't sound like such a big deal but I have made decisions when I was confused or tired or stressed you and I would call it in in the stupid Zone and and um and it's important to remember those things in real time again A Feeling state actually there's a great book on feeling States um and it's written is a book called the gift of fear the gift of fear and it's written by a guy named Gavin de
Becker who's brilliant really brilliant the book is full of so many uh insights really a philosopher that that dude um I believe he was for a while he became the chief of security for Bezos may still be but anyway the gift of fear what's that book about and uh um Oprah raved about it when it came out I think it came out about 25 odd years ago and this principle was this sorry his main thesis was this
um it was a book on how to be Street Smart so you're walking down the street it's say it's at night in a city you don't really know and you have a vague sense something is off and that's your intuition tapping you on the shoulder saying get out of here yeah um and yet we look around our conscious mind looks around for for why am I feeling like this and we don't act in the moment and it's really key
um now I say that this is a book about being Street Smart again the gift of fear in real time so I know here's another Maxim that I've uh sort of a riffing on his point whenever things are a little strange they're very strange so that I know in a public setting if I'm walking I walk into a room and I go huh if something is seems a little bit off then I then it's really off and I don't wait to um
figure out to assess the situation I remove myself from it immediately and that's true so here we're talking about Street Smart the same principle can be applied to an investment or a negotiation or a hiring decision or heck getting married whatever it is the key decisions in life we make them rationally and yet our body is giving us information all the time that we ignore and we dismiss um which is being stupid
um but we haven't trained ourselves in a um each of us as individuals so you The Listener listening to Shannon Adam uh Riff on this stuff um the way your body processes information and your intuitive insights about the world about others it's going to have a different vocabulary from Shane's or atoms and you have to learn that and um you know actually I'll share with I I I'll share a a memory I have one of the most extraordinary
experiences I ever had in my entire life so this occurred about 30 years ago it's a Sunday morning I'm in New York City I'm gonna say it's about seven seven o'clock in the morning on a Sunday and I'm out jogging in Central Park so that's the picture so you could picture it in your head and it's beautiful Sunday morning I'm jogging there are a few people out but not that many seven o'clock on a Sunday and
um I'm I'm running um those of you who are familiar with Central Park um I'm running near the the Museum of uh the Metropolitan near the Metropolitan on the east side I'm running beautiful and all of a sudden I go I jump and I leap laterally about 10 feet out of nowhere and my heart is pounding I didn't tell you this story did I shame no okay my heart is pounded okay what the hell is I
mean I'm jogging along and go ah and I left I mean laterally like 10 feet like I still don't know how I did it and my heart is pounding I'm going what the heck and I'm like I'm looking around and like what the heck is going on and I'm kind of embarrassed like like does anyone see me do that and um I'm trying to catch my breath and my eye scans up the embankment and about 15 feet so the event was about 15 feet
and then there's a lot of a Shrubbery Central Park full of dense Shrubbery and stuff there's a crouching mountain lion a crouching mountain lion now it's a statue but you can look this up it it's like it's hunched like this about to leave and it's it's uh because of the copper patina and everything or the BR whatever it is um it's meant to be hidden now most people when they see it they look at it and they they spot it but
it's directly but I didn't spot it directly it came in through my peripheral vision so my caveman brain said get out of here and I reacted before I had any idea like uh oh you're about to get eaten and and it was my first well I had another experience kind of like that but of what it must have been like to live with no thoughts or words that self-preservation is a powerful Instinct yeah but but see let's let's
get away from the word Instinct because it was a clear um I mean it was an instinct of course but that I was acting and that I was programmed to act before I thought because obviously if you were an analytic type and said huh why am I feeling that you're you're you're you're you're that crouching mountain lion's lunch it's like we have defaults yeah so again that the alarm that my body felt and it just
I spr I wasn't there wasn't even a millisecond I just leapt and um because and even to this day I don't know how I physically could have moved that far but I did and uh and the survival of of of my ancestors depended on doing that um totally right and and so even though that's a even though the book Gavin's book uh to Becker's book The Gift of fear is about being Street Smart well that that same intuition is
speaking to you all the time about various dangers in your environment whether they're investing dangers or relationship dangers or contractual dangers whatever it is um and to not not ignore that and in fact the opposite really um uh refine that that you the instrument of your body as a as a um as an early morning system and as totally as a computer in its own right I want to come back to sort of Chess and
positioning and how that affects our ability to make decisions that accumulate or multiply by zero Almost sure what do you think about that so chess chess is an amazing game but I love um as as a as an as an Exemplar as a paradigm for life we have to be careful because the chess board so I'm going to contrast chess with poker and we'll talk about positions right so so um um chess if you if Shane and Adam are playing a
game of chess we see all the pieces it's not like you've got a piece behind your back that you're hiding and Adam look at that and look away and you put the piece on the board oh no yeah we see I see everything that you see you have complete information complete information right complete information and you know this because you're such a scholar of Buffett um he and uh Charlie Munger talk
uh they're very keenly aware of have I thought this through correctly right we're going to get to that and a i and chess and positions I'm gonna weave all that together because your question is so profound so um so the chessboard I see everything and in my calculus I am taking into account the fact that I could be mistaken I can make a mistake and I wouldn't know it in other words if you make a mistake in your reasoning
or you overlook something by definition you're not aware of it but in the Game of Poker I don't see your full hand I don't even know the cards that I'm gonna get right and so I'm assessing um all kinds of probabilities right and then on top of that even if I had all of all of the cards I could also make an error in my judgment and so one thing is to to be aware of um positions that you excel in
right uh uh uh again you being such a scholar of of uh uh uh uh the resident at uh Farnam Street um that uh Buffett and Monger um are keenly aware of the kinds of industries that they know well and the kind of situations those companies in those Industries they're completely familiar with them and so when you talk about good positions let's talk about that notion so even without knowing anything about
Chess or not much about chess if you The Listener um uh the chess board is some pieces are on the board and they're placed in an arrangement which is known as the position think of it as as like on the football field with your players arranged or the basketball court like where's your Center where's your you know all of this and and so I know I Adam know that there are certain kinds of positions I do very well in
some more you know I like uh quiet uh slow positions where there's not much interaction with um my opponent's pieces for about 10 or 20 moves I like kind of getting my pieces all arranged just so before the battle starts right and so there are certain openings like anyone has watched the Queen's Gambit the Queen's Gambit is an opening um and uh speaking of which um um so so the positions that arise from
the Queen's Gambit you Shane might like those positions and I Adam just just because of my nah aesthetically I just I don't like those positions or I tend not to do well in those positions right so I'll steer the game as much as I can from the very opening to positions that are of my liking right in other words I'll engineer that and um and and and that also is a really important uh skill for for anyone to develop is
in what kinds of of positions in real life you could call them situations right do you tend to accept and in which ones do you not a Trader for example might know there's a certain kind of I don't do well the the opening hour I'm always messed up and you know um or I don't like dealing with uh fed report days like you know in the fomc is about to make an announcement I'm just I'm not going to look at the markets
during those days and so we learn the kinds of positions in which we Excel and I don't think that um there's any hard and fast rule because the ones that I like Shane you might go Adam I I don't like any of those positions and then with poker I guess there's a lot more uncertainty but then uh how you bet and how you place those bets leads you to a better or worse position so you might have the best hand in the
world but if you have no chips left you're in a bad position to take advantage of it you know what it's so funny you mentioned that that's um so I think we talked about this but I'm not sure um there's two ways to live your life one of them is um avoiding pain and the other is seeking pleasure and um and you know uh better than anyone Buffett's first rule of investing never lose money right and Rule Number Two
never forget rule number one and so why is that important because his his insight and it's a genius Insight is you can't help but make money over time just because human Enterprise that is learning and accumulating and growing so over time the value of any Enterprise of any business uh is going to grow um and so as long as you avoid loss um your money will grow and and and and someone asked me but Adam you said in
chess Fisher always played to win and didn't mind losing versus investing you say don't lose money and here's why if you think about it and it took me a while I went oh yeah this is why because in uh in a chess game if I lose it the next round tomorrow I'm the same chess player right I haven't lost anything maybe I'm pissed off whatever but in fact well I wouldn't be but but you
know when you when you learn to compete you learn not to shake things off and not look at get emotional about things but investing if I've lost money today I have less money tomorrow to invest with and the problem with a lot of people in investing is that they're to become a a decent investor I mean just decent is a year or two that's just decent that you you're not even on the JV team yet you're just learning the ropes
and and and and and if you've made too many costly Mistakes by the time you become proficient and now you're really good you got no Capital left yeah right that's the that's the problem with with uh the learning curve of investing is uh is that by the time you're smart um about investing you could very well have lost a lot of money let's let's talk about Ai and chat GPT I'd love to hear your thoughts on
all of these developments recently and and yeah you see the world going and maybe what scares you and what excites you so open AI was started by Musk and uh Sam Altman who's running it now Reid Hoffman a bunch of his uh old Posse and uh it was started with the noble belief that AI is too important in the world to be owned by anyone uh company or or country it's just two the stakes are too big it's got to be a a Global Commons
like a shared resource it's just too important and um so open AI was born um now it it's not quite as open as it used to be there's some other open source companies like stability Ai and and there's I think one or two others and and so so chat GPT is fascinating and really everyone should be using it right now so in its trivial thing it can answer questions like um you you could open up your refrigerator
uh see what items you have in the refrigerator and in your pantry and say I'm preparing a dinner party for vegans give me some menus and it'll you know it can answer questions that it's pretty impressive but what excites me most about about uh chat CPT and again um that's what we know about has been released you've got to believe that there are companies and government organizations that are way ahead of where what you and
I see is chat CPT for like always keep that in mind so um so I use it as a thought partner I use it to to help me ask better questions the key thing is not that it can answer questions um it's that it gives me a tool to ask even better questions in the same way that Yo-Yo Ma can coax more um beautiful music out of a cello than you or I could I don't know how to play the cello um but you know Yo-Yo Ma can can take a
cello and and get it to do way more than any other cellist and in the hands of a master what you can do with chat GPT as a as a as a thought partner as a I give you a perfect example you could say um um let's say I'm I'm um I want to come up with a new product you know and uh I could describe the product I could describe the kinds of of um ah here simple example I'm a used car salesman I could describe the car
and um and say what kinds of questions will people ask about that car and and it might might say to them and go whoa whoa I would have forgotten to to deal with that I have to have an answer to that question right and uh so it can train you exactly right forget training chat TBT training Adam in an atom upgrade show right like oh yeah it's training that but I I'm getting better and better at
asking questions going oh that's right now most of the time this is interesting because I've I've tested chat gbt the way to think about it is um is that it it's a super smart um uh Lightning Fast research assistant it doesn't come up with insights it it doesn't and I fed it situations where I had an Insight like around the Princeton Review and things that I know about markets so I'd I'd give it the
data I had it it's not able to make is not able to make it's able to make logical conclusions think of it as uh it's a really good deductive analytic machine um uh but it's not yet capable of making logical leaps that aren't evident from from the domain it's not gonna well in areas where you're an expert it's probably not that useful and it's often wrong well but I don't care even when
it's wrong it tells me why would it have flawed that right exactly right and so even when chat CPT is wrong it's useful again I'm not using it for its completeness I'm not um I used to give students an exercise the key thing in school right now this is really important it's the key to the Future it's the key for everything not just School is when you've got machines that can answer anything the edges
who asks the best questions that's key and the better questions you can ask the more you're gonna get out of the out of whatever AI thing you're using so how do we learn how to ask better questions then a good question is one that prompts other questions or a good question is one here's another uh way to comment and a good question is one that um increases the choices that I have so um I Adam as a decision maker so here
I'll give you an example of that uh um that goes back to positioning right because if you're in a good position you have more choices than if you're exactly right you want to maximize the number of choices that you've got always now at a certain point you got to rein that in and come to a decision and rule out all the choices but you want to see the choices at least initially as long as you're not
overwhelmed by them like a CEO of a company does not want the chief marketing officer to give him 47 different choices give me three and I'll make the call but don't I don't want to have to deal with you know 47 choices but at least initially and just sort of like okay let me see what my choices are and then we got to start narrowing it down but here here's an example um that people can use right now this is
the Shannon Adam upgrade hour um whenever you find yourself asking how do i x how do I get to uh uh um London quickly or how do I increase um marketing how do I increase sales and also increase the sales price of the of the item I'm selling how do I do that instead of asking how do I ask the following question who knows how to do whatever that is so all of a sudden instead of my trying to figure out how I Adam ought to do it
mm-hmm I've got lots of choices now the it's okay I gotta find someone who knows that and that gives me lots of choices instead of my thinking okay what are my constraints what am I doing here um so that's an example um this is here's one that I a little more sort of personal to to human beings um I I often go to Google and run what I call Google experiments so I will type in the beginning of a question
and see what it auto suggests right it auto completes right and I think we talked about this uh yeah right how can I learn to if you type in how can I learn to you'll see the number one question people ask on on the Internet is how can I learn to love myself right and but here's a question that here's a better question because we're talking about making questions better here's a better question than how can I
learn to love myself is how can I learn to love hmm let's remove yourself and all that judgment around it okay how can I learn what does loving mean what does that mean to love let's take it away from myself for the Moment by the way that's not my question it's what Google pulls up right and by the way you know if you're an entrepreneur um Google is great um because you can just type in questions um here suppose I was a
a coffee company right and I wanna what are people curious about I could type in a question like this why does coffee and see what it auto completes right might say give me gas yes and I'll know oh I should address that in marketing I didn't know that or I could be a lingerie designer um uh where can I find lingerie Zat and just see what it you know is edible or whatev um and so to see the kinds of questions
that people come up with and and and it's it's a really important exercise um that uh you know the problem with the Socratic method is that Socrates the teachers doing all the work yes right you have to do the work to get the to know the questions to ask right and it's it's think about school the teacher asks the questions and the students you know raise their hand and give the answer that's machines are
gonna do that you gotta know what questions to ask yes right and and uh and even there I'll introduce the notion of the question behind the question so for example a friend could come up to me and say uh Adam you know any good books on meditating but what's the question behind that why do you want a book I'm meditating oh because I want to give it to my teenage daughter because she's stressed in school and I figured if she had because
if he said my teenage daughter is stressed right and she's I'm trying to offer ways constructive ways that she can handle the stress and I was thinking meditating books right by giving me the context he gives me Adam more choices in how to comment it right and go well the best way to learn meditating is not from a book that's just going to get her in her head yeah right and they're physical things
and because I know your daughter is a Dancer she meant like this kind of movement meditation right so so uh it was a general patent who said never tell your men because he was the General never tell your men uh how to do anything tell them what to do and let them surprise you with their ingenuity right and um but even that even that suppose General Patton said we need to take that Hill
now in battle you got to take the hill you you don't have the perspective and you can't go huh maybe Eisenhower a patent was wrong maybe we shouldn't take that Hill maybe we should take that other Hill that's better and you know maybe his uh Chief a staff might say uh you know uh General Patna that Hill's pretty good but there are two hills are you sure you want to do that one you know obviously when you're when
you're executing a in in a battle you just gotta execute the command right but yes um but as uh as managers as bosses as teachers as parents in relationships the more choice we can give the other person which is to say the context which is to say to go back to your word the position and then I'll know oh your real question is this oh here's a great example uh I remember um wow I learned this in high school so um
I don't think we talked about the Shane um okay I'm I'm just want to get my head around the anecdote okay a um a state-of-the-art uh um office complex goes up and from day one there are complaints from all the tenants about the weight for the elevator takes forever to for the elevator to arrive and uh so they call in one engineer after the next and uh they say well you can increase the speed by having an Express Elevator
and these are the three most frequented floors in terms of elevator times that we've tested so just dedicate one to go to that anyway so they all worked around um how to how to decrease the weight time because that was the question how can we decrease the wait time but that wasn't the problem the problem was not that people waited the problem was that people complained about the waiting and so that uh a
um and they bring in an architect and he he says oh you don't have to speed up the elevators just put mirrors in in every waiting area and that's why we could go to themselves and destruction exactly right now it's on problem solved didn't have to speed up the elevators it's also why I assume you walk so long at airports to get your bags when you check them in right because they want to make that a long path so
you don't stand around the machine and feel like you're waiting oh well there you go and so you think about like the lines in Banks or or motor vehicle bureaus they could do stuff with that wait well right now everyone has a smartphone so you can pull that out yeah you don't like we don't being in our own head right yeah exactly right um first you want to get to the question behind the question what's the real
question we're dealing with here right totally and one is a tenant Revolt oh man um they're complaining about the elevator weight and uh by the way if you go to any hotel pretty much every hotel has Mirrors in the uh as you're waiting for the elevator and a lot of Office Buildings anyway so you're solving the root cause not the symptom the symptom is like people are bored and then they're
noticing it and then the root cause is sort of like you can fix that in multiple ways but you can distract them as a mechanism to change the feeling people are having I'm going to jump on the word you use distract okay but it's great yeah no it's great because I I I I would use the word distract too but let's improve even that so what we're doing is we're inviting the tenant to use the time in another way
right as opposed to a distraction like distracting from right a distraction assumes if I'm trying to focus on writing a paper right then noise outside is a distraction from that totally right um so we could invite so it's a more positive Framing and framing is a big thing it uh at Farnham Street right your mental models and frames and so the instead of the distraction frame huh we're giving them more choices what to
do with their time totally yeah you could look at yourself that's a very positive uh framing of that yes yeah I like it I wanna I wanna switch gears a little bit and talk about how we become a learning machine I mean I might describe actually life as learning that's what life is a plant doesn't I don't know plant is alive it doesn't really learn anything it can't modify Its Behavior right
and I mean it doesn't preset ways right like heliotropic it'll turn towards the Sun but it's its responses its range of response is pretty limited and so as human beings we learn and we should be learning um every day we should be learning every day there's an old joke uh um at the end of uh a third grader goes up to his teacher at the end of the day and ask the teacher um um uh Miss Johnson what did we learn today
and Miss Johnson says well why do you want to know Tommy he says because my parents are going to want to know when I get home and I want to tell them what I love you today and so but that's a question I could pose to everyone listening right now what did you learn today and you want to go to bed smarter than when you woke up yes in concrete ways so Shane every day okay I'm gonna make an outrageous statement
um I Adam know more about financial markets than any other living person okay so that's an outrageous statement how can I make that because um every day I created software to test ideas about markets so back in the day uh say before the internet if Shane you had a question or I had a question or whoever's listening to this right now you're the listener if you had a question pre-internet days you'd sit there going is it worth my
while to make a one-hour trip to the public library maybe find a book on the topic maybe yeah yeah um maybe that relevant book will have an answer and maybe the answer will be something that I can actually use so you're looking at a two or three hour investment and most of the time you might have gone nah yeah okay now on the internet you can do that in milliseconds you go huh let's just check that out
right so now imagine that in markets so well what what you've really accelerated is sort of like the learning Cycles exactly exactly you remove the friction like instead of taking three or four hours to learn something now it takes milliseconds perhaps exactly right which is goes back to what I was talking about with the with the uh neural Nets right my learning cycle back then for a neural net was a week
right to test one model I'll bring it back to my old Princeton Review days so so uh you you may know if listener I back in the day I co-founded the Princeton Review with John katzman and when I started off I um I was a tutor and in the early days I was tutoring um 10 to 12 hours a day seven days a week do the math yeah that meant I was seeing 60 to 90 kids A week that's crazy I know and people don't
believe me until I show them old schedule um you know weekly calendars that I had from back then and um I still remember I was seeing kids every hour on the hour from seven in the morning till seven or eight at night and um and and uh I remember there's this one girl uh I still remember her name Hannah calls up and says Adam all my friends are using you I have to come at the uh you know this is before we had created
formal courses and uh she said I have to please can you see me and I looked at my schedule and I I just smiled I said nah I really don't have any time unless you want to come at six in the morning and just like that she said okay she didn't negotiate she didn't say couldn't you make it 6 30 she just she said okay anyway so think about that Shane I had 60 and I taught each kid each week the same test
which meant I had 60 to 90 learning Cycles on every single question in the test so I would try out different explanations as I went through the week by the time it was Wednesday I basically knew every error that a kid was gonna make on that test I would know on question 13 the kid probably chose C like I you know and I would say is that is that the key to learning then accelerating the number of learning cycles and getting feedback
and then reflecting on that feedback exactly right so so with markets so to go back to markets so if I want to test an idea here's an idea um uh JP Morgan is uh is one of the Premier Banks in the world and it's one of the the key uh uh um um it's one of those sort of an Exemplar of the notion of too big to fail when the FED gets in trouble and calls a lot of bankers and financial types into like
come help us they'll call Jamie Diamond like he's the head of their list right and so so suppose I wanted to test the idea if JP Morgan is outperforming other Banks is that good or bad for the banking sector for banking stocks in general and over what time frame so before I created my software if I wanted to test that question I have to download the data I'd have to get JPMorgan closing stock data for the
last you know 40 odd years then I'd have to think of all the things I wanted to test it against Banks maybe 10-year yields maybe maybe the broad Market put all of that in to a spreadsheet set up conditions like Define outperforming right and then set up all these conditions I'm saying all this for a reason even if you're not interested in finance um you're the listener it took me about an hour to set all that
up and at the end of the day I might go oh it doesn't tell me anything about right and I've just spent an hour well I I paid some programmers to hard code what I normally do using Excel so I can answer that question in about five seconds now something that used to take an hour and I'd go probably not my worth looking at right and then is I can answer a question like that on financial markets and by the way I will tell you JP
Morgan's outperforming does tell you something about those who want to look it up it does tell you something um and uh um in in a in a counter-intuitive way actually um oh wait you can't just leave it at that well uh it's it's it's so jpmorgan's outperforming is not it's not is uh slightly bearish for financial stuff uh interesting yeah yeah it's slightly outperforming sorry it's slightly embarrassed not hugely so
and when it's underperforming it's slightly good now again you have to Define just like with chat CPT or anything if uh Define outperforming like so what do I mean by that over what time frame is it outperforming by how much but I can put all of that in and just say broadly jpmorgan's outperforming is not good for financial stocks and not good for and and also not great for the broad Market
and uh when you think about it intuitively there's a little [Music] um there's a little bit of flight to safety there it's the safest banking stock so if it's I'm performing people are a little scared right but this I can't reveal but if you add in one more condition um it's really bearish with adding in one more condition that I got to test about three minutes later I that I can't reveal
um but if you add in another condition it's really bearish and and the flip side is the opposite conditions it's hugely bullish to give you it so what you what you really did was sort of like take away the time to get the Learning Cycle complete right like you're you're inputting a question there's almost no friction between the question and the response exactly and I get Ben to modify the question right okay now
now you can spend an hour modifying the question or even 10 minutes and I keep getting to iterate and each time I learn something new which suggests further questions right yeah so I'll give you an exam so how does someone apply that in their lives you want to increase the learning Cycles so there's a great book I think you've mentioned it before that there's um I think the the Talent Code and uh
there's that guy's name kroyler yeah yeah anyway brilliant book great great book I think it was in that book um um and they talk about um how Brazilians play soccer really well I remember that yeah and one of the ways they play is to have instead of a hundred a hundred me like a a instead of playing on a a field that's like a football size yeah they shrink it down so it's like 30 feet which means that the learning
Cycles are much faster they have to take more shots they have to pass more often it's accelerate so so you wanna anytime if you're an organization right you want to find ways to increase the number of learning cycles that every one of your employees goes through um an example of this um a few summers ago um I was walking down uh Fifth Avenue and uh with a friend and I there were three young kids I'm gonna say the kids
were uh kids college kids they were clearly like you know late teens early 20s and they were raising money for um for um save the child.org saythechild.org and I watched them for a while and each one of them approached passers-by on a beautiful Saturday the sun was out people going about their business and they would stop passersby and say Excuse me sir and New Yorkers are just trained
sorry I'm in a rush right now I I gave it the office whatever it is right so I watched them for about five minutes with my friend and I said Kim I just want to do something so I I called all three of the kids together right there college kids and I said I'll give you five hundred dollars if you'll listen to me for five minutes is that a deal they said yes it is because I made probably their weekly quota yes yeah and um
so I said I've been watching you for the last five minutes and each one of you approaches passers-by with basically the same thing excuse me sir excuse me sir or ma'am or whatever and I said has that been working for you guys no it hasn't well then why don't you try different things why don't you walk into someone go I have the funniest joke for you sir or whatever try different things and see what works
now um I actually um they said wow that's such a good idea I don't know whether they did and I gave them you know I signed up and I gave them actually more than 500. um and I even wrote To The Head of savethechild.org and say you have a network of thousands of devoted experimenters who are out there who could be doing learning let's find out what's the best phrase to get people to stop and by the way maybe approaching a
couple this is the phrase to use when it's a couple always approach the woman and say this right um or if it's a single person or maybe you approach men and women differently or groups how do you do that and I said thousands of people running these experiments and there's there's sort of like no intentional iteration and then there's no learning after something is successful it's not passed on not passed
on now there's there's a kind of business that does that very well franchises so franchises there could be a franchisee say of McDonald's in Buffalo New York who goes oh on rainy days use this phrase because everybody buys milkshakes so when you go into a McDonald's um pretty much doesn't matter what you you order they will say would you like fries with that now that phrase was discovered by a girl
I believe it was a teenage girl I forget what town but she discovered that a lot of people said sure why don't you throw in some fries and they discovered seven percent of the people say yes to that that's one person in fourteen that's a mega kick in French fry sales now probably not too good for the health of the nation but but again math from a Salesman the number of of experiments that you do you're
learning cycles and each one you have a clear objective so right now you see me with my top hat on and I've taken to wearing this um I bought it uh um uh two summers ago I was walking by a a Hatter in New York a proper Hatter who makes hats for people milliners make hats for women anyway and I see this hat in the window and it just I just smiled when I saw it and I walked in and uh and I got one so this is made
to me my head and why do I say that Shane if you were in New York um and next time you are we will do an experiment you and I will walk down a street say in SoHo and I promise you that at least once a block I will get compliments at least once a block amazing and if I'm seated in a restaurant um I'll get approached at least once a meal I say at least once and often when people are leaving and they'll always
have a big smile on their face kids adults men women um it does and uh now what's interesting is I got such a good response with this why am I saying that because I have a hat a top hat just like this with with with a little bit bigger that gets no responses none whatsoever none I have no idea why I have no idea why but I don't wear that one too much because it's fun for me when people say hey nice hat and it's
always with a smile that that's key in terms of like you're just opening yourself to Serendipity you didn't do it for a reason but then when you got feedback that it made people smile it makes you almost want to wear it more it does absolutely who doesn't like seeing people smile when you when they see you one thing we talked about last time I want to get to you before we wrap
up here is uh we talked about sort of ways to avoid stupidity and you had written a book on how not to be stupid and you haven't published that yet and I'm wondering why and when that's going to be available for everybody every year on his birthday and at Christmas I send Buffett a present and um and so every year so his birthday is uh it's the end of August and Christmas is Christmas um
so every year about a month before that day I'm like oh man what am I gonna do this year because it's not an easy person to to get a perfect presence right it's not like he needs another tie right um and uh so once um one year I sent him a nickel so but it was a special nickel so every um to amuse myself um over the years I've adopted the practice if I have any coins in my pockets of course at the end of the day you take
them out of your pockets I spill them out on a table and I search through them to see if I can find any old coin and I Define an old coin as um as um um anything before 1960. okay so I the oldest coin I've have so far is a 1907 penny it's worth 300 bucks I found it I I not like I'm gonna sell it but just wow I found an old coin so I've turned it's in it's a little Adventure when I pull the coins out it's
like do I find a new coin so I happen to have a nickel from 1936. so one year that was his birthday present I wrapped it up so those of you who don't know um Buffett was six years old in 1936. so I sent him a I wrapped the nickel up very like it was a coin collector nickel it wasn't I just found it but I wrapped it up very nicely and with a birthday card I said Dearborn uh Happy Birthday um uh this is your allowance spend it wisely
and that was his allowance yeah it was the salons he was also earning money of course as you know um and he shot me back uh something that very few people in the world have ever gotten do you know what I got I don't know if I told you no okay an email oh awesome see you know that right he doesn't do it now right so I've gotten I've gotten a few and I they're more those of you who don't know Buffett
religiously does not do email um anyway so he said Dear Adam uh thanks so much I'm thinking hard about how to spend my allowance so that book how not to be stupid and he endorsed it was his Christmas present one year in the and so the endorsement is um uh this book is loaded with good ideas and appropriate warnings and I I um and it gave you a copy and also gave Tim a copy Tim Ferriss and Tim rabbit and he said oh wow this
is a good book but could you shorten some of the examples and provide more non-obvious advice and that wrangled a bit I went what do you mean non-obvious and Tim's a great a great friend right so you have Buffett who said Adam get this out into the world yeah I'm giving you an endorsement I don't give anybody endorsements here get this out of the world and Tim who said um that seems kind of obvious
so two people I respect one said this is so important the other one but it's it's kind of obvious I I sat with that and I realized I say this affectionately uh Tim was being stupid about stupidity he was dismissing so I Define stupidity as overlooking or dismissing conspicuously crucial information and Tim was dismissing it he was dismissing it as kinda obvious what I was saying now if you thought a little more
he would by the way I'm not critiquing Tim on this I'm not whatsoever because it sent me down a rabbit hole and I learned a ton Tim could have said Adam Buffett said get this book out there I'm going to give you an endorsement and yet it seems obvious to me so what am I missing he didn't say that he assumed he knew it already and think about so I realized that the the key Insight was that all Buffett said this book is loaded with
good ideas and appropriate warnings warnings um and I know something that Buffett maybe didn't think about human beings always ignore warnings they always do and and so they dismiss it they go yeah whatev um that's true by the way even on medicine bottles you know it says a warning uh this medication may affect your mental and physical functioning if affected do not operate heavy machinery or drive
right and most people think that that doesn't apply to them yes does it go oh what if like that's for other people exactly right for other people like yeah they may be affected and but I don't know if I'm affected and I'm fine right and the warning should say if you don't think this is affecting you you are definitely affected bastard you know pull over don't drive anyway so so I sat with that question why do human
beings ignore warnings and it's a really key one and it's key especially For You Shane um is that all advice is a warning all wisdom is a warning if I say the best way to um to boil an egg is this there's an implicit warning if you don't boil it like that the egg is not going to be as good as it could have been yeah right if I say the best way to negotiate a contract is to always let
them make the first offer there's a warning if you make the first offer you're not gonna get as good a result yeah so and that goes back to learning why do people I will tell you flat out so what what did I conclude and then I'm gonna get to have an announcement I'll share with you if you if you're game for it so um um is people always learn the wrong lesson because they think either about themselves or about other
people they they read something in the newspaper about somebody doing something outraged they they go oh I would never do that people don't learn is they can't imagine themselves in that situation so you'll remember at the beginning of the book I talked about musicians who had lost their instruments exactly right so those of you who don't know a 1999 Yo-Yo Ma Yo-Yo Ma the great uh cellist
left his cello in the back of a cab and this was Front Page New York Times you know news is a three million dollar Stradivarius you know and by the way back then it it it's worth way more than three million it's what he would never sell it because it's his but if someone someone would be willing to pay three million for it but he would never sell it for anyway anyway yeah about nine months later another musician
in exactly the same circumstances loses forgets his violin in the back of a car exactly the same situation and he had read about Yo-Yo Ma so I'm going to ask you a question this is a like a pop quiz for Shane and I did research they were like a dozen famous musicians who all lost their instruments almost exactly the same situation always after a performance always when traveling um and and so on and uh
after Yo-Yo Ma lost his uh instrument Shane I'm asking you let's say you're a world famous violinist and you read about Yo-Yo Ma has lost his instrument then you read another uh cellist you read about another virtuoso who's lost his Stradivarius what lesson would you Shane conclude I'm just asking you don't overthink it like what do you think most people would conclude it's not going to reply to me
oh that's interesting mostly because oh I better be careful with my instrument oh oh see you're very smart well you're okay well you're very wise most people would go oh I better be more careful with my instrument in that situation but one of the musicians Philippe Quint lost his and he knew about all the other musicians who had lost theirs do you know what he concluded Shane what he concluded that none of them had lost their instruments
he concluded they were publicity stunts he so could not imagine that somebody yeah there's no way you're no ma because that would crush him it would devastate him for years that's crazy but notice but it's not so crazy he he he himself dismissed it because they didn't really lose their instruments he should the question he should have said is if they lost theirs under what circumstances might I lose
mine that's not the lesson he drove so I have to write in a chapter into into the um into the uh um in the book into the book that that warns people of that that that is a great place to end this conversation Adam I'm so pleased uh again to talk to you and your generosity with your time and and your commitment now publicly to getting this book out yes uh his wonderful gift thank you you're so welcome had a blast Shane