Jan

8

If one were to deliver a last lecture like Randy Pausch, what would it be like? I'd start with trying to prolong life. It's terrible to die at an early age like he did, and there are many things that a person can do now to prevent it. Let's start with the Mediterranean and Okinawa diets and statins, Tagamet, and nsaids like Vioxx and Celebrex. In addition to the added time to enjoy and liquify the wealth, this gives one the power of compound interest.  

The second thing I'd say is always be aware of deception. The market is at least as smart as the caterpillar which has a hundred ways of deceiving its predators. A good understanding of deception in nature, and models that go into first, second and third level deception in various games is a good start.

The third thing is similar to Randolph's head fake thing and is contained in Liddell Hart best. The power of indirection. A frontal attack is often met by the adversaries best defenses. It wastes too many resources. Absolutely essential is to divide and conquer.  

The fourth thing is to develop a good character. All your faults will come out in the market. and if you are a chronic complainer, or liar, or compulsive gambler, or procrastinator, the market will ferret them out and do you in.  

The fifth thing is to always be humble. The market is so smart, so changing that to think you ever have the answers for too long, is certain to lead you to be behind the eight ball when things change.  

The sixth thing is to develop good fundamentals. Randolph says that he likes to use football analogies and to get a good three point stance and to play well without the ball. I'd go back to coach Wooden and start with washing the hands, and putting on the socks, and keeping your execution costs low, and making sure that you don't pay too high a cost in promotion or that you're carrying too many people on your shoulders who aren't paying an appropriate part of the passage.  

The seventh thing is to learn how to count. Too many people are prey to wishful thinking and an inability to distinguish regularities from randomness too many are subject to real psychological biases, (not the ones talked about by the Nobelites) to think that you can overcome them without some hand studies and calculations of variability.  

The eight thing is to learn how to handle failure. It's bound to happen, and you have to learn from it.  

The ninth is to read good books. We have many that we recommend on this site.  

The tenth thing is like Shakespeare to suit your apparel to your position, and to suit your positions to your size so that you don't get in over your head.  

The eleventh thing is to have some escape hatches and contingency plans i.e. the mouse with one hole is quickly cornered or as Randolph says, what happens if the wolves are after you. I could go on and on, and perhaps I will but I"d like to get your insights on this.

Valery Kotlarov comments:

I’d take the best of the best writers and begin with something like what Kurt Vonnegut said here. I love every book he wrote, and the most important thing that I took from them is the fun– that every situation in life can be so comical and funny, so we should never take anything too seriously. As humans, we are driven by language, and sometimes it’s funny what one can understand from the same sentence or even word– something totally different from what another would understand. Also, I’d speak about the charismatic and optimistic personalities, like Ayn Rand. I’d mention the legendary people. I’d also speak about the bank robber, whatever his name, just to show that success is something that we can create and follow, but we should never be slaves of it, or friends of it.

When I was in Turkey, I heard that many families build homes for themselves. Each year, they build it higher and higher, step by step, so in a few years they get a warm house. And I’d speak about some of the greatest inventors like DaVinci, Edison, Tesla, Archimedes, and what they did to show the achievements and that dreams can come true. I’d take some of the Gregory Bateson’s ideas, and emphasize that the ideas and dreams are things we are made of. And from here again to Vonnegut: “We are what we pretend to be, so we must be careful about what we pretend to be.” And, well, I’d also emphasize reading and learning– the importance of it, and to try make fun of it all–life, whatever it is. Also I’d never think or call it my last lecture, just too optimistic for that, even if 99% of facts would point that it is (gimme events not the descriptions) Last, I’d buy some S&P or other stocks of  healthier, economologically speaking, countries, and give it to someone I love (so he or she could only use it after some 15-20 years.) 

Nigel Davies writes:

There's only one major addition that I can think of, and that's the importance of having a higher purpose or mission in life. This is something that all the great people in history have in common, whether it's 'queen and country' (e.g. Nelson), 'the truth' (e.g. Galileo) or helping others (e.g. Mother Theresa). This could even be the biggy, the one that holds other principles in place.

GM Davies is the author of Play 1 e4 e5: A Complete Repertoire for Black, Everyman, 2005

Victor Niederhoffer adds:

Find a good mentor. You can ride on their shoulders and they will achieve immortality and pay back for the mentoring they received through you. But by the same token, never take a tip from anyone, a trade for the day, because you won't know if it fits in with your persona as it did with theirs, and you'll never know how strong their convictions are, and when they change them, and you'll be weak.

Be optimistic. Nothing good has ever come to those who hope for the destruction of civilization or the market or who fight the upward drift which must continue up to follow the strands of human progress, which is still grand, even today especially if you consider all the individualism unleashed on the world in India and China.  

One of my mentors, Dr. Raymond Chang, says that the best meal for a lifetime he knows is to take a vitamin D3 Supplement each day, and I would add it to the list. Exercise is always helpful as it prolongs the life, and eases the tensions, and improves the digestive process, and makes you look better, thereby attracting better mates, and mentors, and is in keeping with the fundamental nature of humans, which involves play and sympathy.  

Family. The people that you can always count on are your extended family, and the more you use this to support you, the better you'll be. Conversely, be aware that most of your non-extended family, except for your very good friends, can never be trusted to support you when you need it the most and indeed are likely to disappoint you over the long run.

Friends. Friendship based on business is always better than business based on friendship. I would augment my little thing about deception above by saying that one should always beware of the negative lie as a tool of deception. The thing where the deceiver tries to say something bad about himself so as to get you off your guard so he can go in for the big kill. I was interested in this regard to see that the French firm that killed itself out of honor on the Madoff matter was taken in by the very self deprecating manner in which B. M. told them that he once lost too big while his kids were tugging at his coat, and telling him not to help others, when he tried to intervene with big bucks against his kids advice. It is interesting how the kids "apparently" did not tug at his coat vis a vis any of his other less noble activities.

Stephen Stigler comments:

That is a good list, although I'm tempted to repeat a comment of my father's, "There are not ten good reasons for anything." Which would suggest focus and priorities.

James Sogi adds:

Do what you love. Love what you do. Don't do what you hate. Many people will tell you what to do. There are social and family pressures, some hidden. Follow your own agenda. Trade your own style. You can't follow someone else's style. It won't fit, and you will lose money. Trade and make money the way you know how, they way that is comfortable to you.

Spend time with your family. As Vic says, no one but they will really be there when your really need them. There is not much time, and it will soon be gone. Spend time with them. 

Kim Zussman writes:

Regarding Vic's "fourth thing," use the market-mirror for self-diagnosis, but never rule out the possibility that your condition (you + the market you're in) could be pre-malignant and require complete excision.

Laszlo Birinyi comments:

There are two things I would add. One, read different books and develop breadth. Drucker amazed me in school because he could illustrate ideas from history, literature, life and whatever. I encourage my kids to take courses in Arab culture or Norwiegen or whatever, not just literature and art which are their major interests.

Second, learn to listen. I find at bonus time everyone has inflated opinion of their contribution. I did well in my career because I never argued with my bosses. If they paid me x, my contending that I was worth 2x wasnt going to fly. If it was .5x (fortunately it never was) that was a signal to shape up.

David Brooks writes:

All of Victor's ideas about ways to prolong our mortality are right on. I particularly like the comments about deception, because I have always believed that one of the things that differentiates excellent surgeons from merely good surgeons is the ability to see things that others don't, such as tissue planes, obscure vessels, the deceptive picture that disease often presents.


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17 Comments so far

  1. Russell Sears on January 5, 2009 11:37 am

    I read your first e-mail on the “Last Lecture” before my morning run, and all through the run and into the drive to work I wondered why your list lecture did not include, exercise, family and friends. It was great to see that you extended the list.
    But also my heart was sick with the notion that perhaps you have received some terrible prognosis.
    Yet, I would add a couple of comments:
    On mentors: Seek others help, in your talents. A good coach is a necessity to keep your balance, even if you are an expert in the field. You don’t have to reinvent the wheel of course, but the coach will see your errors of over-eagerness while still encouraging your dreams.
    On Losses: When the changes or losses happen, view them as a time to change the dysfunctions in your life. Always strive to improve your response. Be it a new school year, a new school, leaving home, college, various new jobs, marriage status and having children. These are all times to consider what you did well and continue the good work. But also want to change, what bad habits did you indulge, and then set about improving response to life.
    Value consistency. A child thrives on consistent environment, rules and routine. Adults do also. Loyalty, marriage, daily effort thrive on consistency. The brilliance in Sharpe’s ratio, is that it sets the bar high. The question isn’t did you make money but did your actions and acceptance of volatility actually improve your lot or where you better off, passively consistently buying and holding. Its the reckless investor/ i.e. gambler, who does not hold himself to this standard. They end up trading to trade.
    Life will force some losses on you, without that escape hatch.
    Yet, in life there will of course be times when you must cut your loses, but those that don’t weight against the standard of consistency, will end up changing things just for the change. Like the Sharpe ratio, there are many ways to game the system and trick you into self-deception. Those that don’t learn this end up like the gambler; they die broke morally as well as literally, without a nickel and without a true friend or disciple.

    Russ

  2. Perry E. Metzger on January 5, 2009 4:28 pm

    I find it heartening that you mention D3, Victor. I’ve been crusading on that for a while. There are reasonable studies that show pretty amazing reductions in several cancers from D3 supplementation. I’ve been taking a couple thousand IU a day for a while now — it is about as cheap and easy a life extension measure as I can name.

  3. Newton Paulo Linchen on January 5, 2009 4:38 pm

    Victor and Laurel,

    I've been trying to reach you by e-mail, but with no success. Would you send me an e-mail we could talk (briefly)?

    I am from Brazil and I am a big fan of your work around here.

    Best Regards,

    Newton.

    (Please forgive my poor English).

  4. Valery Kotlarov on January 5, 2009 8:50 pm

    I’d take the best of the best writers and begin with something like what Kurt Vonnegut said here http://www.wesselenyi.com/speech.htm. I love every book he wrote, and the most important thing that I took is the fun - that every situation in life can be so comical and funny, so we should never take anything too seriously. As humans, we are driven by language, and sometimes it’s funny what one can understand from the same sentence/ even a word - something totally different from what other would understand.
    Also, I’d speak about the charismatic and optimistic personalities, like Ayn Rand - maybe she was somewhere naive and not so consequential: while she describes that popularity is the greatest sin in Atlash Shrugged or something like that, she herself was hunting it of course. But the point is, other - to take the best out of her writings, especially when she wrote that it was the way of her own life. Well, only empirically it would make “sense”, and it did for me.

    I’d mention the legendary people - I’d also speak about the bank robber, whatever his name, just to show that success is something that we can create and follow, but we should never be slaves of it, better said: friends of it. When I was in Turkey, I heard that many families build homes for themselves, each year, they build it higher and higher, step by step (divide and conquer?), so in a few years they get a warm house. And I’d speak about some of the greatest inventors like Da Vinci, Edison, Tesla, Archimedes… and what they did to show the achievements and that dreams can come true.
    I’d take some of the Gregory Bateson’s ideas, and emphasize that the ideas/dreams is something we are *made of*. And from here again to Vonnegut: “We are what we pretend to be, so we must be careful about what we pretend to be.”
    And, well, I’d also emphasize the reading/learning - the importance of, and to try make fun of it all/life whatever it is.
    Also I’d never think or call it my last lecture, just too optimistic for that, even if 99% of facts would point that *it is* (gimme events not the descriptions ;-) )

    Last, I’d buy some S&P or other stocks of more healthier economologically speaking, countries, and give it to someone I love (so he/she could only use it after some 15-20 years)

  5. Jeff Watson on January 5, 2009 9:19 pm

    There is a book just waiting to come out expanding on the wisdom of this post.

    Jeff

  6. legacy daily on January 5, 2009 10:50 pm

    Excellent post, thank you. In my case, I felt there was too much to say in a single post or even a couple. So, I created the web site http://legacydaily.com … still early in my life, but then again the time we have left is as unpredictable as the markets (or as predictable as the markets depending on how you see things). I especially appreciate your point about being humble.

  7. Christopher Tucker on January 6, 2009 12:32 am

    For those interested, Randy Pausch’s lecture can be seen here: http://video.google.com/videoplay?docid=-5700431505846055184 or in several formats here: http://www.cmu.edu/uls/journeys/randy-pausch/index.html

    it is an hour and fifteen minutes or so and worth the time.

  8. vic on January 6, 2009 1:37 am

    One is reminded that all too many honorary awards are given to those dying and when you are asked to receive one, you should check your premises and wonder if it is anticipated that you are ready to shuffle off. It's the reverse of the well known entertainment thing that the only thing that is guaranteed to sell out a music event is a five year old performer or a naked one. There is a certain gravitas that one gives to the senescent and the infants. And one wonders if someone who was alive and thriving and kicking gave a last lecture whether so many of the cliches in it would not have been greeted with a hook. I guess there's a market lesson in this which can be quantified. Beware of undue emphasis on the end and the beginnings. They deceive often. vic

  9. Nigel Davies on January 6, 2009 8:07 am

    Is it too cynical of me to suggest that this was a masterstroke by the author to ensure the financial well-being of his family? Beyond just the book sales I can see an entire ‘last lecture’ industry springing up. Brilliant.

  10. Rocky Humbert on January 6, 2009 8:51 am

    GM Davies used the term “higher purpose” in life — however noticably absent from all of these posts is any mention of G-d.

    Dare I suggest that a man’s last lecture to his fellow man should be the sum of his life’s deeds and memories (as remembered by others over the course of a lifetime)?

    Dare I suggest that the most honorable last lecture for a man should only be to his creator (”Shema Yisrael”)?

    Dare I suggest that last lectures (however honorable, touching and well-intentioned) tend toward self-written epitaphs.

    Does a man who sees his own demise suddenly become wiser than a man who is healthy?

  11. Newton Paulo Linchen on January 6, 2009 10:21 am

    Victor, You Just Said It!:

    Victor Niederhoffer adds:

    “Find a good mentor. You can ride on their shoulders and they will achieve immortality”.

    Whether you accept it or not, whether you realize it or not (of course I believe not) - YOU are my mentor…

    I read your work and study your ideas non-stop since 2 years now, and I realize I am just at the beggining…

    I would like to remind you of the words of the great Tom Wiswell (immortalized in your Education of a Speculator): “If you wish to play with the masters: become acquainted with their games, their strenghts, and their weaknesses, if any. Watch them when they play, and listen when they talk, and read their books before you play them.”

    Regards,

    Newton Paulo Linchen.

  12. Paul Marino on January 6, 2009 11:10 pm

    Know Your Costs:
    The best business professor I had in college stressed this simple but rarely thought through bit of advice that is vital to all the above categories and in all aspects of life.
    A daily spec post that speaks to this for me is one of Jeff Watson’s great posts about the store clerk who can survive through thick and thin; “Take care of the buying and the selling will take care of itself”.

    My father is an Accounting Professor, a conservative but successful man, who hopefully if he loses a few pounds will get to enjoy the golden years in life fully with my beautiful mother. (as an aside, their individual doctors recently told each of them (60,61 yrs)to take vitamin D supplements as they are deficient. I blame this on not being outdoors enough.)

    Above his home office desk my father has a copy of the Charles Minard flow map of Napolean’s march on Moscow which is honestly one of the most beautiful, haunting and educational things I have ever seen. Reminds me of Vic having the Titanic pictures around his office.
    http://en.wikipedia.org/wiki/File:Minard.png

    Not to say don’t reach for the stars at all times, but before your plunge: know thyself and short thy vices.

    Happy and Healthy 2009 to all on Daily Spec.

  13. Paolo Pezzutti on January 7, 2009 11:08 am

    The eight thing is important: “how to handle failure. It’s bound to happen, and you have to learn from it”.
    I learned some hard lessons. Failure is part of life and, as such, you have to accept it. It hurts because when you fail you may think you are not a valid person. And that may not be the case, although it this possibility cannot be ruled out at all. Every day you have to confront yourself with some degree of failure. Nobody likes to lose. Sometimes I play Monopoly with my little twins. They are competitive and get frustrated when one of them loses after a long game. I know it is not a good thing what I do, but I tend to tweak the rules so that there is no loser eventually. Games are useful because they teach children how to solve problems, make decisions, compare their choices with others’, learn to win and lose. And most of the times you lose, it’s a fact of life. As they learn their lessons about success and failure daily at school, at the gym, with their friends, I have created an environment where you can have fun making and losing money, building houses and going to prison, without having anyone who is the best and someone else who lost because of bad luck or because she is not able to play.
    Failure can be caused because of many reasons: wrong or risky choices, lack of skill, lack of information, unpredictable events, etc. However, the record of your failures will display specific patterns that can highlight your strengths and weaknesses, but, most of all, what the limits to your ambitions can be. Not recognizing these limits can lead you to have a very frustrating life, as you insist establishing objectives too ambitious and get systematically unsatisfactory results.

  14. douglas roberts dimick on January 7, 2009 12:28 pm

    Near completion of my first year here in China, I began what has since become my first experience of mentoring – since prior, that of always being an understudy.

    Isabelle, a Chinese girl of 17 years, was a monitor in one of my Oral English classes at China’s top ranked middle school. Two weeks into my spring semester there, while teaching 50 students per each of the 20 classes for 50 minutes once per week, I found her before my desk in the Senior 1 Teachers Office.

    “I want to go to Harvard,” she opened.

    “OK, how can I help,” rallied my Zippo-like ignited enthusiasm.

    Thus we began in early March 2007.

    For two months that summer, “Is” confirmed at Harvard what she had long sensed and increasingly so hoped. To pursue a business career so as to forward her charge for democracy in China, she should attend college in America.

    I have been seeking a mentor for two years now with my near decade evolution of SMART. My anticipation finds Isabelle’s tutelage to be an affirmation of how this of all life’s adventures… to learn from one of relative wisdom, from one who is willing to vest into a junior’s dream, can be said to be unmatched, unparalleled when compared to any one lecture, perhaps even such as in review of Randy’s.

    My father’s last lecture to me lasted for 11 years. From his opening upon family confirmation that he had Alzheimer’s — “maybe you should just get rid of me” — to his last breath, parsed while, awaiting together, we slept, wherefrom his mentorship was as a steward without any implied omnificence. His actions bore his words – neither symbolism nor instructions were required.

    My inventory of Victor’s article here and its ensuing comments touches upon much of the wisdom shared by my father’s enduring actions to survive when he was not thriving on the joy of living life. For albeit the alternative, that being at least I cannot say, clearly the imparting of knowledge, regardless of utility and quantification, that so empowers or enriches another’s life, may be considered the highest and noblest of human endeavors.

    Thus, perhaps it may be auspicious for us, as a community of speculators all (either in one or more of the markets for thoughts, commerce, and capital), now to commence upon the task to continue with this commenting and assimilation of related observations, recantations, and, whereupon election by simple or super majority, we publish a work of concurrent value, like “Daily Speculations: A Collection” or “Daily Speculations: Briefly Speaking” as suggested titles?

    dr

  15. Humble Money » Blog Archive » links for 2009-01-07 on January 7, 2009 11:39 pm

    […] The Last Lecture, from Victor Niederhoffer : Daily Speculations Excellent thoughts from the non palindrome. […]

  16. zentrader.ca » Blog Archive » Checklist for Life and Trading on January 8, 2009 2:24 pm

    […] Thought provoking list provided by Victor Niederhoffer over at Daily Speculations that will require a couple readings to  ensure everything sinks in.  Ensuing additions and comments are as good as the article itself. I condensed the list below for your convenience. […]

  17. Great Life Lesson « Masteroftheuniverse’s Weblog on January 8, 2009 9:36 pm

    […] leave a comment » Dr. Niederhoffer wrote a great article on The Last Lecture where he showed special insight into what life is all about. The article plus the follow up comments provide a beacon for life. […]

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