New is overvalued relative to great. … for example, when choosing which movie to watch or what book to read, are you drawn to proven classics or the newest big thing? In my opinion, it is smarter to choose the great over the new.” – Ray Dalio
I’m reading a Henry David Thoreau book called Walking. It’s a quick read – not very long at all – but full of wisdom nuggets as I posted yesterday. I’ve recently re-read Walden, and read some Hemingway’s The Sun Also Rises last fall. It’s no secret that I’ve been reading a lot of stoicism over the last couple of years, and re-read Marcus Aurelius’s Meditations again last year. And I have a pile of classics teed up for future reading. So this Tweet I read from Ray Dalio today was especially meaningful for me as I try to mix in classics and opt out of things just because they’re popular at the moment. They’re classics for a reason, and you can glean a lot of out of them if you dive in.
Choosing the great over the new goes for things beyond books and movies of course. You get what you pay for in life, and that applies to time as much as it does money. I dropped a Derek Sivers quote a couple of blogs ago; “Hell Yes or No” that concisely articulates great over new in career opportunities, relationships, what you spend your weekend doing and which food, books and media you consume. So it was with great interest that I read another Twitter thread from George Mack early this morning:
The most VALUABLE piece of investing advice I ever received came from Warren Buffett.
Buffett gave a talk at University of Georgia.
He told the students to look around at their friends and answer the following question:
“If you could get 10% of their earnings for the rest of their lives, what friends would you INVEST in?”
Once you have the 2-3 friends that you’d invest in, explore the WHY you’d invest in them.
What values do these individuals hold?
What habits do they engage in?
Here’s teh values of friends that made me want to invest:
- High Agency/Resourcefulness
- Give more than they take
- Learning machines
- Live on the edge of their comfort zones of creating a new project
- Pay attention to small details
After doing this, Buffett sugggest you look around at your friends again.
“If you could SHORT 10% of their earnings for the rest of their lives, what friends would you choose?”
Again, once you have these friends in mind – ask the WHY you’d short them.
What values do they have that you’ll think will harm them?
What negative habits do they engage in?
Here [are the] the values of friends that I’d SHORT:
- External locus of control
- Map knowledge/know it alls
Once you [have] these lists, you have finally answered one of life’s wooliest questions:
“What are my values?”
You have the guiding principles you can look to embody.
You can extrapolate this further than just financial ROI.
You can look at your friends balance sheets for happiness, relationships, fitness, etc.
Who would you invest 10% in? Why?
Who would you short 10%? Why?
You can download the values you need for these areas too.
This exercise is so powerful because our identity isn’t involved.
“It’s easier to recognize other people’s mistakes than our own.” – Daniel Kahneman
Emotion & Ego distort our reality.
It’s so easy to see when a friend should break up with their partner, quit their job or shut down their company.
Yes despite having more information on the subject than you, they still can’t see it.
Emotion & Ego (Identity)
The Buffett exercise is so powerful because it gives you the ability to view your human operating system in the same way everyone else will:
- Don’t care about you
- Want to know what value you can provide
Self aware ness has the Dunning-Kluger effect built into its software.
The most self aware people I know are convinced they lack self awareness.
The least self aware people I know are convinced they are self aware.
Buffett’s investment advice passes Peter Thiel’s test.
You know your friends better than ANYONE.
This means that you have a SECRET that the rest of the world doesn’t have about their values and habits,
This information gained is truly unique to everyone who applies it.
- Treat your objective analysis of other people as the best form of self knowledge
- Understand what values you’d invest in and what you would short in every area of life.
- The tactile knowledge of your friends is a secret as unique as your finger print.
I copied this down here as much to retain it for myself as to blog about it. Coming back around to the Dalio quote, choosing the great over the new, I’m applying this in my work as well as my reading and other pursuits. I’ve weaned myself off of low value business relationships, and avoid toxic business relationships whenever possible. I’ve fired customers who are such A-holes that they aren’t worth the commission check that comes with dealing with them. And I’ve developed other business relationships that are absolutely worth the long term investment even though the return isn’t there quite yet.
So the quoted material is longer than the original content from me this time around, but I thought I’d stick with the great instead of adding the new. Hopefully some of my new will prove great in the long run.