The mother of all f**kups - Assumptions and their unintended consequences

Welcome to Finance and Fury, the Furious Friday edition

Going to run through the last part of the Lucky country – and that is how we can best turn our luck around

Through – innovation, freedom of choice, and ignoring narratives based on assumptions

Going to skip through Innovation and freedom of choice –to not repeat the same thing over and over – check out the other eps on this – links on the website – Quick summary of how they fit into todays topic though

Growth through Innovation – these two-go hand in hand – Creating new businesses and technologies, products and services which drives innovation – profit incentive – Innovation efficiency is a market force Innovation is a chain – single inventor, drive to improve, idea used to make product, then others improve Without companies we never get tech improvements – Chain between Gov tech and population What accelerates this - Freedom of choice and equality of opportunity – After researching this for years – assume it to be correct – but others have different views based around their assumptions I also believe that freedom of choice extends to what we allow as a population – due to the decisions we make based on assumptions Taxation policy is based around assumptions – but regardless of low or high rates – collect average tax to GDP% But when the very assumptions that we are basing a decision off is incorrect – it isn’t surprising we don’t get the outcome expected

 

What Today's episode will cover - What we assume is good for us, or will work – may have the opposite effect

Also – how to know what we are told to assume is actually good for us

Assumptions and models

– Our lives are built on assumptions – heuristics – this is good, saves mental capacity for mundane tasks in decision making –

System 1 and 2 – but something repeated enough moves from us thinking about it – to an automatic action I see this with investing all the time – If it is something I already own or understand well – investing becomes an automatic action – but if it is a fund I haven’t seen before, i wouldn’t just assume it is the same as all of the ones I currently hold If you are told something over and over again – you just assume it is true – repetition is a powerful tool Good and bad habits also form this way – if you hear the same thing over and over from different sources – must be true? Example – Who do you assume is smarter/provided greater benefit to our lives? Einstein or Tesla? Person – not company Based around assumptions – I’m assuming most of you have to stop and think about it for a second or have Einstein as a default answer – he is more commonly discussed/known – But I might be wrong – I am just assuming that based on personal experience, few people truly know the benefit to our lives Tesla provided Einstein was once asked how being the smartest man alive was – ‘I don’t know, you’ll have to ask Nikola Tesla’ What did Tesla invent? Beyond the power in your home – 300 patents – a lot of them helped develop most tech we have First Electro-Magnetic motor patent in 1888 – Why Musk named the company after him Radio – Marconi credited – when asked ‘Marconi is a good fellow, let him continue, he is using 17 of my patents’ Wireless, remote control, Radar, Xrays, Hydroelectricity, the resonant frequency of earth – earthquake machine, speedometers or electricity frequency or flow meter The list goes on– but didn’t care about money or credit, gave what patents away worth billions back then we assume that he had nothing to do with it anything outside of electricity – was an obscure fellow who had some beef with Edison – Instead – developed free wireless electricity for public use – His backers weren’t happy – JP Morgan and Oilmen The only man that was willing to fund him was John Astor, who died on the Titanic, a boat the JP Morgan owned He ran out of funding – and was smeared by the press of the time to destroy his reputation so nobody would take him seriously – Story of him wanting to marry a Pidgeon – actually not true – I assumed it was as I read it online It was a dream he had - he became fascinated by them - can sense the resonant frequency of earth better than almost any animal – then he had a dream about one and was talking about that – fake news is nothing new – just thanks to the internet and phone cameras, it is hard to completely cover up the truth What did Einstein leave us? theories of relativity with little application outside of the metaphysical/purely theoretical Tesla quote – ‘Einstein’s relativity work is a magnificent mathematical garb which fascinates, dazzles and makes people blind to the underlying errors. The theory is like a beggar clothed in purple whom ignorant people take for a king….its exponents are brilliant men but they are metaphysicists rather than scientists’. Moral of this story - Be aware of things that dazzle to blind – things that cannot be explained to you – too good to be true Don’t trust something that sounds too good to be true – promises and assumptions – political game used to win votes

 

This is where Narratives comes in

– Due to repetition and overexposure – these can become a commonly held assumption

narrative or story is an account of a series of related events, experiences, or the like, whether true or fictitious has one purpose – to entertain through storytelling to entertain, motivate or educate The best narrative has all three – motivates people through educating them of something to fear – while being entertaining Built around distractions or to drive public opinion – which drives policy decision

 

Mediums which form narratives Television Programming – it is in the name - a very effective tool in the past – control the flow of information Remember The News isn’t responsible for providing you factual information – they are responsible to make a profit But that is through delivering stories to the public – like a lot of stories, they are based around real-world events Ignoring the accuracy of any CNN reporting – the coverage is negative of Trump – gives an image that they suffer under him But CNN – Admits that Trump getting elected was the best thing to ever happen to them – MSM dying – leaked recordings nobody watching except airports, nursing homes – Youtube news channels get more views than them – What gets people’s attention? Fear or scandal – why 92% of all coverage of Trump is negative – their viewers dropping under Obama to record lows – needed to up the scandal meter Problem with most of these stories? Conclusions are based around assumptions – or reading a headline What to do? - News websites are a great source of some current events occurring, but not what actually happened - But just know that most of what you read and see online – about our politicians –policy, climate change, everything being pushed is for a purpose – to make you click – it is what makes money - what makes people click? Doom and Gloom – but also – these companies track what people online are looking at and commenting on – Creates an echo chamber of information – room of people by lunch looking at what has the most amount of clicks No wonder we are nihilistic in the west – Creates pessimism – unwillingness to move beyond the worst – why? Cause we can’t move beyond something if we can’t solve it, or take action to help mitigate the worst Example – what is more relevant to your life – that the Government has the power to seize your money to bail out a mess they helped create? Or the off chance that for the first time ever, predictions on Climate change will be even close to accurate and things get a little warmer over the next 100 years? Depends on what your assumptions about the world are – first - the Gov would never do that, latter - warmer earth is bad Looking back over records - 18000bc – average temp was 23 degrees – so about -4 from average over 50 years 12500 years ago – a spike in a hundred years of about 3 degrees – about -1 from a 50-year average 9500 bc – spike again – by about 3 degrees from where it was – then continued to go up 9000bc to 1500bc – temps were above or the same as now – were people dying? Or did agriculture get easier? From 1400bc up until last 100 years, went through a drop in average temps – decline in temps correlated with disease and famines in the colder parts of the world – like Europe There is little evidence that a warmer world is bad – especially compared to a colder earth – Why doesn’t the news cover long term trends of the Earth’s rotational axis – oscillates between 22.1 and 24.5 degrees on a 41,000-year cycle – by 2.4 degrees wobble – very slowly currently 23.44 degrees and decreasing at a rate of about 0.013° per century this model predicts that the long-term cooling trend that began some 6,000 years ago will continue for the next 23,000 years - Global temp peaked in 7500bc – stayed there for a while – but since 4000bc started dropping Imagine that you had been alive for 20000 years – seen all a lot of different earth climates – (link to graph on the website) Current models for temp increase have massive variances - error margins – 1 - 4.5 degrees increase in temperature How are they predicting this – when not even a 2-week forecast in temperature is accurate? Assume correct damaging thing to focus on – mostly outside of anyone’s control! made scared of the weather changing This can potentially be a damaging narrative - carbon is what is creating this right? Well we are carbon-based lifeforms – if people keep following that narrative once they implement all of their changes but it doesn’t help anything – they keep looking for more solutions – already are where celebrities are talking about how having less kids can help – while wanting more immigrations This sort of focus is based on one thing - Making people focus on the elements/topics that polarise– us versus them mentality So the narrative changes our interaction with each other – rather than accepting we have shared common goals, but different ways of achieving these – it is portrayed as if we don’t agree on how, you are against me and my enemy - Loss of freedom of speech – Introduces The assumption that someone is evil for not wanting to do the same thing as you Funny that the views of a lot of our grandfathers and great grandfathers would be called the Nazis they fought today Sleight of hand Government and media combined play– creates a concern to worry about and focus attention, resources on – then the population demand change – the government capitulates, or loses power While little attention is given to the things that will actually affect us day to day

 

What to do

– What is the source of your assumptions – and the accuracy

someone is telling you the truth is okay when they are Someone thinks they are telling you the truth – hit or miss Someone is telling you a half truth for a purpose – not great Stop assuming – this is the simplest thing that we can do as a society to help drive growth, innovation, basically a better future where we keep moving forwards – rather than backwards Don’t let overtons window close – While some ideas are awful – they shouldn’t be scielened from them – The Socratic method, also known as method of Elenchus, elenctic method, or Socratic debate, is a form of cooperative argumentative dialogue between individuals, based on asking and answering questions to stimulate critical thinking and to draw out ideas and underlying presuppositions But when talking to the other side is demonised – as the attacks become personalised/polarised – triggers automatic hatred for the individual more than ideas Having emotional connection to politics – have to remove and focus on what you can do

 

Don’t let the media or politicians decide what you should think - Remember Media uses a lot of subconscious imagery as framing – is someone evil? Montage of threatening music and suggestive descriptions, mention someone else who is publicly hated Also – selective choice of what to publicise or broadcast/edit interviews – try to get a number of different sources on a story – but not all just from companies that use a copy paste template on each story Once the media have created a problem by incorrect assumptions and are found out – how much accountability is there - Can never admit that they are wrong – they just shift the narrative without any culpability for their actions And so that you don’t pick up on the fact that they are the most reliable for facts US (extension global) Media ran with a narrative that Trump (elected president) committed treason, working with Putin Trump took office and said Obama Administration, DOJ, authorised wire taps and survailce on Trump and staffers Called crazy, but turns out it was true – based on a manufactured report – approval given by DOJ Question – If there was evidence Trump was a spy/committing treason – Taps started well before he won the election Why wouldn’t anyone come forward with actual evidence Start letting what the media say fall on deaf ears – everyone is too worried about climate change as there is a report a day about it – then some major story once a month to peak interest again Think for yourself – Luck can be undone – get 21 in blackjack and ask to hit – you blew some luck We each got 21 living in this country – either born or moved here – don’t blow it Don’t just assume – assumptions are the mother of all F ups – if you are demanding for action/change – you better be able to teach the theory as to why and how it will help – instead – people assume what they are told will work

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Resources:

Temperature graph

https://wattsupwiththat.com/2016/09/29/earths-obliquity-and-temperature-over-the-last-20000-years/