SITALWeek #421
Welcome to Stuff I Thought About Last Week, a personal collection of topics on tech, innovation, science, the digital economic transition, the finance industry, and whatever else made me think last week.
Click HERE to SIGN UP for SITALWeek’s Sunday Email.
In today’s post: I recap some of my favorite as well as some of the most popular posts from 2023. Before I dive into that you'll find a brief reflection on how to break free from the most common cognitive biases in order to improve decision making.
Over the holiday break, I came across a paper that attempted to reduce an array of cognitive biases to a small number of grouped behaviors. I tend to agree with the spirit of the paper, but my impulse was to reduce their reduction even further. We've focused on rooting out cognitive bias for decades (see chapter 6 of Complexity Investing), and it's a major focus of how we try to interact with each other and make investment decisions at NZS. At the most basic level, almost all of the hundreds of cognitive biases boil down to two things: 1) "knowing" that things in the future resemble things you "know" from your personal past, and 2) believing everything you come across fits with that "knowledge". Obviously, the problem is the illusion of "knowing" since, in reality, we are largely unprepared for the future, and what we "know" from the past is rarely as useful as we think it is.
There's clearly more nuance to cognitive bias, but I think the best way to improve decision making is to approach questions with a complete beginner's mind and strongly resist the urge to say "I've seen this before", no matter how much it might resemble something familiar. Complex adaptive systems have so many different variables and inputs that superficial resemblance to something you've seen before generally isn't useful. It's a challenging paradox for our brain. For every single investment I look at, I immediately start making countless comparisons to prior companies, industries, investment patterns, TV show plots, something that happened when I was 12...you name it, and I start comparing. Then I have to repeat the mantra "who cares!? it’s probably not relevant" and instead try to look at everything fresh. Having a beginner's mind strikes me as the hardest thing to do in investing and life. The roughest paradox of decision making is that the single best source of information we have at any given moment is what we already know, and yet it's a pretty lousy well to draw from.
The only practical advice I've seen on how to lesson our reliance on cognitive pattern-recognition ruts is from Lisa Feldman Barrett: "Your brain predicts (in large part) by reassembling your past experiences that are similar to the present moment. That means every new experience you cultivate for yourself – every new thing you read, every new person you talk to, every new thing you learn – is an opportunity to change what your brain will predict in the future, and which actions you may take. In other words, your brain (meaning you) can nudge its future predictions in various directions, right now, by investing in new experiences. You are continually cultivating your past as a means of controlling your future."
For me this lesson on how the brain works and how we can improve our future is the closest thing I have to a New Year's resolution: seek out new experiences and randomize the way I do things in an attempt to give myself a little bit better chance at making better decisions.
And now, onto some favorite and popular sections of 2023's SITALWeeks:
One of the more popular reads was last year's kickoff post in #379 that discussed the differences between innovation in the purely digital world versus the analog world titled: When Positive and Negative Feedback Loops Collide (couple this read with Zippy Drones from #389).
Also from #379 was a post on the derivative impacts of GLP-1s titled: The Impact of Eating Less on Food Supply Chains and Healthcare. Later on, in #412's Diet Drugs Dampening Snack Spend we found out GLP-1s are already starting to measurably reduce caloric consumption.
In #380, the popular post Follow the Developers - in order to find the next winning platforms - took on increased meaning as the year progressed and LLMs entered the mainstream.
In More Q, Less A in #382, I dove into the challenging art of learning how to ask better questions. This exploration of Beginner's Mind, Socratic Questioning, and Rhetoric is something that is still very top of mind for me today as we navigate a rapidly evolving and unpredictable future.
One of my favorite posts was You Auto-Complete Me in #385 that explored the nature of human consciousness as illuminated by LLMs. Couple that with AI Awareness from #387 that explores the relationship between humans, homeostasis, and AI. Also on this thread, I looked at the twisted Comedic Brain and AI's sense of humor in #396. Many of these posts cover my sense that AI embodied in robots will be the most important development in the coming decade.
I looked at the evolution of machine interfaces from multi-touch to chatbots in #391's Discovery Engines. Couple this with #394's Passing the Innovation Baton. This shifting user interface and changing gateways is something I think of often. See also: Smart Phones, Dumb Pipes.
I contemplated the future of investing in Vanishing Edges as the nature of markets evolves.
David Bowie, Bob Dylan, and Buster Poindexter taught me about the nature of reality in Cinéma Vérité.
Long time readers know that I am obsessed with the evolving nature of content and our increasingly fragmented relationship with it. I explored this idea in depth in "Will it Play in Peoria?" in #403.
I discussed the current AI bubble in Lessons from an EDFA in #404, and I also discussed the Magnificent Seven's tenuous dominance of financial markets in #418.
I covered a farewell to one of the greatest performance artists of all time in “I Know You Are, But What Am I?”.
Another fan favorite post was #409's The Simulacrum, which explored the idea of using AI to slow down time as the number of interacting agents in the economy explodes. Couple this with Jobless Economic Growth? in #420.
Artificial Efficiency in #414 looked at the impact of AI on headcount and productivity, something I suspect will be a big topic for the next several years.
I really enjoyed writing about what we can learn from the old TV ads of my youth in Lessons From Vintage Advertising.
Later in the year, I began exploring the death of journalism and what it means for society as the large Internet gatekeepers all pushed to demonetize news in No News Is Bad News.
Finally, a recurring theme last year was my ongoing discussion of how AI is likely to create a new Age of Wonder for scientific discovery. See also: Science GPT.
Happy New Year!
✌️-Brad
Disclaimers:
The content of this newsletter is my personal opinion as of the date published and is subject to change without notice and may not reflect the opinion of NZS Capital, LLC. This newsletter is an informal gathering of topics I’ve recently read and thought about. I will sometimes state things in the newsletter that contradict my own views in order to provoke debate. Often I try to make jokes, and they aren’t very funny – sorry.
I may include links to third-party websites as a convenience, and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by NZS Capital, LLC. If you choose to visit the linked sites, you do so at your own risk, and you will be subject to such sites' terms of use and privacy policies, over which NZS Capital, LLC has no control. In no event will NZS Capital, LLC be responsible for any information or content within the linked sites or your use of the linked sites.
Nothing in this newsletter should be construed as investment advice. The information contained herein is only as current as of the date indicated and may be superseded by subsequent market events or for other reasons. There is no guarantee that the information supplied is accurate, complete, or timely. Past performance is not a guarantee of future results.
Investing involves risk, including the possible loss of principal and fluctuation of value. Nothing contained in this newsletter is an offer to sell or solicit any investment services or securities. Initial Public Offerings (IPOs) are highly speculative investments and may be subject to lower liquidity and greater volatility. Special risks associated with IPOs include limited operating history, unseasoned trading, high turnover and non-repeatable performance.