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Barbell Strategies for everyday life
An alternative to index strategies
What are the right strategies for you?
We've talked about Index Strategies in our last essay. But a dangerous thing about investing in life's index, is that one unpredictably dangerous event can wipe you out.
While such dangerous events, "Black Swans", are inevitable and unpredictable by design, these events are the ones that end up shaping our collective timelines.
So, while it feels like you're not taking any risk & thus, rationally giving up the rewards of taking risks, you're actually taking a far greater risk than you realize.
There's a better way to live, one that can take advantage of both extremes, and one that doesn't leave you exposed when things go wrong, and one that’s honestly much more fun, which is The Barbell Strategy.
The Barbell Strategy involves taking outsized risk on one end, while making sure you're safe & protected on the other end.
Here’s the formal definition -> The barbell strategy is an investment concept that suggests that the best way to strike a balance between reward and risk is to invest in the two extremes of high-risk and no-risk assets while avoiding middle-of-the-road choices.
In simple words, you should avoid staying in the middle, where it looks like you're protected but you're really not. This is the opposite of the index strategy, where you’re in the middle with the average all the time.
Thus, using the barbell strategy, you have unlimited upside because of the outsized risk, but you're also safe & protected from ruin on the other end.
For example ->
The barbell strategy involves keeping half of your assets in cash, with the other half invested in highly leveraged speculative assets.
Your cash may go down in value due to inflation over the years, but this also gives you enough optionality to invest in new opportunities as they come up. The speculative investments can also pay off during this time, outperforming what you held in cash.
The opposite of this strategy is keeping 100% of your assets in the index, where it may feel like you're safe, but a black swan event like a market crash may destroy 50% of your investments at any time.
Taleb described the underlying principle of the barbell strategy this way:
"If you know that you are vulnerable to prediction errors, and accept that most risk measures are flawed, then your strategy is to be as hyper-conservative and hyper-aggressive as you can be, instead of being mildly aggressive or conservative."
In this essay, just like the last one, we’ll explore different ways of applying barbell strategies to various aspects of everyday life. Not every barbell will apply to everyone, but once you understand the underlying concept, you’ll be able to create your own barbells with ease.
The Job vs Startup Barbell
Instead of quitting on your job to work on your startup full time, or staying in a full time job while planning to quit it to start your own company "some day in the future", work on your start-up on the nights & weekends while continuing on your full time job.
Most start-ups fail, and it's statistically likely that yours will too. By working on it on the nights and weekends, even if it fails, you won't starve. Your employers, if they are not midwits, should also appreciate this, as running a startup would force you to develop and build useful skills that can translate to your full time job as well.
The opposite of the above advice is what you'll hear from the investors.
Investors are looking out for their own. Their goals are different from yours. If you were to rank their priorities, the #1 priority when they invest in any business is profit. Whether the founder starves or ends up unemployable is pretty low on that list.
You're just one bet in every investors' portfolio.
If you're not the only bet on theirs, does it make sense to bet your time on one single thing?
Just like you wouldn't invest all your life's savings in a small yet promising company, you shouldn't play the same game with your career. Like all great advice, this one’s a little counterintuitive. It is mainstream advice to go “all-in” on one thing, and make that your life’s focus.
It is also bad advice for most people. Unless you have a significant runway to fall back on, which is the case for most of us without trust funds, you shouldn’t quit your job. Unless you hate your job or if your job is in an entirely different field from where there is no skill transfer, you shouldn’t quit.
Like all barbells, this one’s heavy to lift but the potential benefits are worth it. Usually, nobody is working for 8 continuous deep-work hours in any job if they are being honest, but this barbell should force you to work hard & attempt the same.
The Career Choice Barbell
Instead of "following your passion" or choosing a career based on current advice on what pays well, spend time thinking about your future deeply, while continually developing useful cross-functional skills.
Most people never spend time thinking and researching about what their career should be, and thus, their choice of career is designed by the people around them. For those who do, who are lauded for "following their passion" eventually end up at McDonald's if they're not from a privileged household.
Follow your passion is bad advice.
Usually, the stuff that people do have passion for are fields where working doesn't "feel" like working.
If you like to sing, you're probably decent at singing, and thus, society might try to tell you to give singing a shot. Sadly, a lot of people are great at singing, and the competition from good singer to bestselling rockstar is cut throat.
Distribution & success is concentrated to the top 0.01% of players. Most creative pursuits that require a short learning curve to be somewhat good at, tend to have these odds.
Things which look and seem "fun" attract a large group of people who get very good at it either in a short amount of time, or through mandated practice throughout their childhood, and thus, you'll find a greater amount of competition in these fields than what you uniquely choose that’s somewhat hard.
If you still want to give such concentrated careers a shot, go right ahead!
But the point of this barbell is to not do it without understanding the risks of failure & odds of success. A life dedicated to the pursuit of art is a great life but it can be a tragic one if you were led to believe that anyone can become the next Stephen King. For every person that can write, there's a person who is writing 10,000 words every week. The second writer is far more likely to be a bestselling author than the first.
Choosing a career that pays well is a better choice than the first, but it's still an attempt at index investing. When you choose a conventional career that pays well, it's important to remember that it's a career that's paying well "now". The wisdom of the markets doesn't always price in the future, or the progress of innovation. A middle manager and lawyer might be great professions now, but LLM AI's can replace these relatively easily in the future. A civil engineer may feel like there’s no innovation left in the field, but a breakthrough can create massive demand in the future.
Instead of following your passion or the convention of diving into a high paying field, the other side of this barbell suggests this -> Develop evergreen cross-functional skills.
These skills roughly fall into 2 buckets - Building Skills & Selling Skills.
In the digital world, building skills involve learning writing, full stack programming, design, product & business fundamentals.
Selling skills involve learning negotiation, marketing, persuasion, psychology & game theory.
Focus on these two areas and you'll always have an evergreen founder's stack ready to deploy regardless of the career you choose. These are also skills that'll take you a lifetime to master, and useful in most careers where you'll find yourself in.
Parallels of such skills exist in every domain, not just in the digital realm. To figure out what they are, ask yourself “What do I need to know to build X completely from scratch, and sell it?” Once you have the answer, start working.
No vs Yes Barbell
It's common advice to say "No" so that you can focus on what's important. It's also a ridiculously stupid advice, even though the intentions are good. Most people are bad at saying no, and thus, take on far too many useless projects & tasks. Being nice in the short term instead of being objective inevitably causes feelings of bitterness & regret in the long term.
But if you get good at saying no, there's a tendency to always say no.
If you say no too often, without enough thought, just because you think your thing is more important than everything else, you miss out on discovering opportunities, projects & options which might be better than what you're working on.
Instead of saying “No” all the time to focus on your "one true goal", or saying "Yes" all the time to make everyone around you happy, be strategic & deliberate in saying "No" & "Yes" roughly equal amount of times to different opportunities.
If you're convinced that what you're working on is too important to be saying Yes to anything else, say "No" to 80% of the things thrown at you. Deliberately say Yes to the other 20%.
By saying no enough times, you free up your time to focus on what's important. By saying yes, you make sure you say yes to the best opportunities thrown at you.
People either do one or the other here. They either say yes all the time, and thus, can't focus on one thing, or they ignore everything else and end up missing out on several opportunities while their favorite project dies a slow death.
The Networking Barbell
Humanity has collectively realized how superficial, telic relationships can be beneficial to their careers, but they've carefully named it "Networking", as if we're a hivemind of bots talking or "connecting" with other bots.
I disagree with the whole practice of this insane, artifical yet acceptable social practice, even though I understand the benefits of it.
I'll write a larger essay someday on networking alone, but in this context, here's the barbell strategy :
Instead of superficially "connecting" to other people on LinkedIn, or in conferences where people are intent on doing the same, go out of your way to reach out & talk with as many people as you can, deliberately venturing outside your own industry, but aim to engage deliberately with a selective group of people on a deeper level.
That is, treat your professional contacts as real people with real lives that aren't just names of recommendations of a resume, but also broaden your horizon to get "connected" to not just industry players but with everyone.
The practice of broad outreach protects you from industry specific downturns, pushes you outside your comfort zone to interact with a wide group of people, and then, because you're treating everyone as real human beings, you can get to know people from various walks of life at a deeper level. Not only will this translate organically to more career opportunities, this would also lead to new friendships, deeper relationships and more personal growth.
There is some risk in this, where, because you're not strictly professional, you'll meet some people who aren't willing to break out of their shells. That's perfectly fine, as long you're genuine and honest about your intentions. And your intentions should never be career advancement, i.e, telic, with other people. Instead, it should revolve around getting to know the other person, understanding different perspectives, solving common problems and finding win/win areas.
The Job Location Barbell
Instead of picking a career that requires physical presence, or periodic travel, pick jobs which are 100% remote, and use the time saved (from commute, superficial banter) to upskill yourself.
This is doubly true if you’re a founder. Remote companies allow you to quickly prune away those who don’t work hard or slack off. That’s the primary worry about the micro-managers who think if they can’t see their employees working, they won’t know who is working and who is not. That is false.
Everyone works, but some are experts at sliding by, and many believe they’re working when they’re actually spending 2 hours on work.
Remote forces these sliders by making their metrics readily visible without any fluff, and in two months, you’ll have a good idea of who to keep and who to fire based on their performance.
Obviously, this is not possible for all jobs like dentistry, doctors, etc. (yet), but the point still stands.
The Dating Profile Barbell
Instead of creating a half-hearted dating profile and casually swiping throughout the week, spend an entire day setting up your dating profile & then swiping on specific days with boosts to maximise your chances of success with minimum time invested.
Sprinkle in as many filters and disqualifiers you can (so that you match with the right people), save up money to spend on boosts and once a week, or month, swipe for 30 minutes every alternate hour on Thursdays, 6-11 pm and on all alternate hours all day on Sunday, with all boosts activated. Then, never worry about swiping till it's Thursday and Sunday again. Take the lessons from each session to optimise your profile further.
This swiping strategy is much better than an unboosted, unconscious attempt where you spend hours everyday without any results. Thursdays ensure you capture the people who don't open the app on weekends, and Sundays ensure you're casting the widest net in the smallest amount of time.
Choosing a Partner Barbell
Instead of following the conventional route of never settling down or finding someone, dating them and settling down whenever it feels "right" to do so, (only to then wonder whether your soulmate is still out there), date & reject as many people as you can till you're 25, or 35 (or whatever age that’s at least 30% sooner than what you have planned now), and then settle down with the first person that's better than all of your previous partners. Iterate through your partners by always choosing the next partner based on if they're better than your previous partner. By the time you reach your settling down age, stop exploring and settle down immediately with the best option.
This strategy is based on the optimal stopping algorithm, and thus, has the highest likelihood of you getting the best partner in the least amount of time & effort invested.
This is a hard barbell to follow, specifically because love isn't tamed by algorithms and matters of the heart don't always follow mechanical, statistical rules. If it does for you, go right ahead, but I'd be careful of rejecting good partners just because there's a better partner in the horizon.
It's doubly important to know actually know what's "better", and think deeply about that. Things you like in a partner at 22, may not be things you care about when you're 30, and vice versa. People change too, and can grow into a different person with time. This different person can be a better person or a worse person, and there's no way to figure out beforehand which it'll be.
Still, experience does help, and with experience, you'll have enough knowledge about yourself to understand what you seek in a partner and enough lessons to carry forward to new relationships and make them the best they can be.
The Media Barbell
Instead of consuming mainstream or social media 7 days a week, get your news from a collection of newsletters & podcasts.
Most mainstream media outlets are biased, but mainstream media & journalists aren't held accountable & they're dangerously easily swayed by capital and influence. Still, they'll never miss an opportunity to claim themselves as the arbiter of "Truth".
Newsletter writers & podcasters usually have some skin in the game, and most of the time, the bias is obvious, and thus, you can follow multiple sources from all sides and then make up your own mind.
Some podcasters and writers are also entertaining and funny, some may even be comedians, so you can even get your dose of entertainment from these sources without programming your mind with biased mainstream views.
The Belief Barbell
Instead of believing whatever is true at all times, learn to believe whatever is good for you (even when it's clearly not a fact), while remembering to see the world objectively through a lens of rationality.
This involves some self deception & delusion, as you're effectively fooling yourself into believing falsehoods, but it also involves compartmentalisation as you're making sure to keep these delusions compartmentalised and not affect your objective lens of reality.
I plan to write a bigger essay explaining this someday, but a short example of this can be believing the following -
"I believe I can stick by and accomplish my New Year's Resolution"
^ This doesn't have to be true. If you have prior evidence of you consistently failing to stick to your resolutions, it's probably delusional to think that this year will be different. But it's still a useful belief that'll influence your current behavior.
Just like those who have the "growth mindset" do better than those with a fixed mindset, believing what's useful for you to believe always helps. Once you believe that you're superhuman, and work hard to collect evidence of that fact, you'll be unstoppable.
Just make sure to compartmentalise these beliefs within and don't let your inner delusions affect your objective lens of reality when you're looking outward.
The Rest Barbell
Instead of taking rest after working for a while, rest while you're working while consciously trying to increase the intensity of your work.
For most people, this is an alien concept primarily because after they've exhausted their mental resources, they need some time to wind down. This also manifests in harmful ways where people tend to take prolonged rest after short or long sessions of work, and thus, you can see always count on finding your quant trader friends drunk and out of their minds at clubs after 9 pm.
The ideal barbell strategy is to take rest while you're working. Some might claim that if you love what you do, you have infinite energy and focus, and while that's somewhat true, cognitively demanding work still requires some time to wind down. This downtime should be minutes, not large blocks of hours. And let's be honest, for the vast majority of people, nobody's working hard enough to justify the need for blocks of hours of time of rest.
And yet, people will happily finish their 8 hours of work, which definitely isn't even 8 continuous hours of cognitively demanding work, and then take the rest of the day off.
In the gym, if you exert yourself 120% on Day 1, you'll wipe yourself out for the rest of the week. Do this long enough, and you'll be setting yourself up for injuries. But exert yourself at 90%, and you can come back after a rest day. Exert yourself at 70%, and you can workout everyday.
It's the same for work, and by resting "while" you're working, whether that's taking a 5 minute rest after every 25-45 minutes (The Pomodoro Technique), or by working hard enough to not exhaust yourself, you can work longer, not burn out and reap the benefits of time. There's also less context switching, less need for pleasurable distractions and dopamine hits, and dramatically lower chances of burning out.
By doing this consistently, you'll often find that you can increase the intensity of your focus, defy your previous limits, and push further without negatively affecting our output.
Our minds are more powerful than our bodies and it will surprise you how capable it is at adapting to it's circumstances. By finding the limit where you can consistently work at a high capacity, without needing the time to shut off, will help you break through these limits in time.
The Against-Average Barbell
Instead of optimizing to be “just-above-average” optimize your life to maximize your unique edges while learning how to negotiate with the index class.
This is hard to do, as most of your life has been about optimizing to be “just-above-average”. If you’ve had a traditional education, the system treats everyone to compete against an abstract average, and forces everyone to excel just beyond the minimum standard level. This continues throughout life through various institutions like schools, colleges, offices, etc.
This ends up putting everyone in a safe competitive index but fails to produce anything remarkable. Such optimization from institutions is in good faith. A good optimization process is necessary to bring the lower performers to a standard average, but it also brings down the top performer, i.e, those who don’t need such restraints.
Those who do end up producing outsized remarkable results, are usually an exception, and these exceptions are dramatic enough that they end up altering the system altogether.
All great inventors & entrepreneurs are exceptions in the system. All great students that study 4 hours a week but still excel are exceptions. Your friendly co-worker who doesn’t seem to work but still produces stellar code is an exception.
The list goes on & on. But these exceptions also end up sticking out early, and may end up facing the scorn of the index class who want them to conform, to obey the standards and rules, to just keep things like the way they are.
Many outliers break down here, despite being exceptions, because not everyone can cultivate a thick skin especially if you’re being targeted while you’re young. This is why the other side of the barbell, “negotation” is vital. You must know how to communicate, how to convince and how to influence, while continuing to build. Not everyone has to like you, and if you’re an exception, a majority of people wouldn’t.
But if no one likes you, you won’t have anyone to work with & your dreams will remain memes in the strange land of regret & non conformity. Your dream likely involves benefitting everyone else, and even though the index doesn’t see it now, soon, they will.
Hence, learn how to navigate bureaucracies, systems & processes, even if you despise it.
Continue to hone your unique individuality, while keeping peace with the index. Similar to the question, “If you’re so smart, why aren’t you rich?” is the question “If you’re so smart, why don’t you get along with anyone?”
If you have a justification for the latter that’s not intentional & produces measurables results that doesn’t make you miserable, you’re not as smart as you think you are.
The Grey Barbell
Instead of seeing the world, other people, new ideas, old traditions & everything in between, as black & white, deliberately explore the grey areas while systematically updating your beliefs based on new evidence.
It is very rare that something or someone is 100% perfect or outright evil. Most of the time, it's all grey. Someone you despise probably has some redeeming qualities if you look hard enough. Someone you admire either have said something or done something that you don't approve of, or they have some skeletons in the closet that might be revealed to the public eye some day. Overall, it's always a good mental model to believe that nothing is black & white.
But our outrage driven mainstream media manages to convince us of the opposite.
This is especially dangerous, as humans tend to have a strong negativity bias. This negativity bias helped us when we were primates, where seeing a snake a few miles meant "RUN" or "KILL", but in the modern world, such mental shortcuts have made us prone to becoming a culture that's always sharpening their pitchforks, always seeing the outgroup as monsters, seeing the bad in other humans first and judging too quickly.
If you've ever produced anything in public that got reviews, you must have noticed that one negative review can make you more upset than the happiness that 10 positive reviews bring. It's the same for everything else, which is why I think it's doubly important to search for the bright spots, the silver linings, the glimmers of hope and morsels of good, rather than to seek out the darkness.
Having said this, it is also important to keep updating your beliefs from the grey to black/white in light of convincing evidence. It may never be totally black or white, as it's very rare someone is truly evil or 100% good, but this barbell is still a useful strategy for thoughtfully navigating our clickbait-driven world.
If you’ve read this far, you should understand how to create barbells of your own now. I believe that both Index strategies & Barbell strategies are valuable, but the point of these essays is not me yelling “YOU SHOULD DO THIS” and you taking notes, but you creating your own strategies that make sense for you.
Sometimes doing what other people are doing is a great strategy, while other times finding a distribution of high-risk high-optionality is more valuable. However, you should always be aware of the “why” in whichever strategy you choose.
Following the index strategy can make sense in many situations depending on what you’re depending, while following barbells can make sense in others. You should always be aware of the costs & benefits of each strategy, and update those beliefs constantly to get to an optimal state.
Most of the time, getting to that optimal state requires you to build your own index & barbell strategies. It is highly unlikely that you, if you’ve never optimized your life, time, choices & beliefs before, have stumbled on exactly the right optimal strategies by accident.
The right strategies for yourself are always going to be the ones you build.
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