December 22, 2010
I've been in a mental holding pattern for a few weeks now. I've been heavily influenced by Nassim Nicholas Taleb for the past few months, and I think I've been unable to reconcile his warnings on the futility of risk taking in complex domains due to the limits of knowledge in such domains with the act of playing poker. I felt like a hypocrite. To reference a favorite analogy of NNT, I was a man riding the elevator up to the gym to use the stairmaster. There was a disconnect between domains.
If stock trading is a fool's game, then what was I doing wasting my time in this simplified version of it? I still played occasionally for entertainment, but my heart was no longer in it. I had lost the conviction that this was worthwhile. I don't just want to be another lucky idiot. If that's my best possible scenario, I can save myself a lot of sweat and play the lottery instead. And I'll ultimately save myself from the illusion of thinking my win was mostly through skill. As Ludwig Borne said, "Losing an illusion makes you wiser than finding a truth." If all the poker skill in the world is necessary but not sufficient to become a real winner, I might as well just go to night school in dentistry and lead an intellectually honest life.
Then I heard this! Eureka! Let's aggressively take risks in domains not subject to the Black Swan problem! Poker is a simple domain. It has easy, calculable odds. The variables are finite. It's not subject to the Black Swan or blowing up spectacularly. I can't lose more than I ever expect to lose, the bankroll. I can't leverage myself into blowing up 2, 3, 100 times my bankroll. So simple, yet I was too stupid to realize it myself. I was paralyzed into inaction.
It's time to take risks again. With the knowledge of those risks. Not as a coward or an idiot who takes risks only because he does not know the odds. I go forward, into Aggressive Certainty!