The Most Common Failure Mode of Stereotypically Smart People
If you don't really understand what you're automating/generalizing, you're doomed to fail. Investigate before you automate. Become wise, then generalize. How? By doing the thing manually. Live and breathe the concrete examples until you feel them in your bones.
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The most common failure mode of stereotypically smart people is jumping straight to abstraction/automation without really understanding what the hell they’re abstracting/automating.
If the contour of the problem in your head doesn’t match up with reality, you’re doomed to fail. Doesn’t matter how airtight your reasoning is. Wrong assumptions plus airtight reasoning equals wrong decisions.
The way to avoid this trap is to start by just doing the frickin’ thing manually, live and breathe a wide variety of concrete examples, and don’t try to generalize until you’ve really gotten your arms around those concrete examples. Become wise, then generalize. Or, as Jason puts it, “get inside the trade.”
“I [Jason] came from a world of high frequency trading. Some of these companies would hire really highly educated, smart people with PhDs in physics and CS and math and say, here’s our massive historical database of all the trades over the last 10 years, go write some algorithms that can predict where the price is going to go. And they were almost doomed to fail.
Typically what would work better is if you’d have a professional trader who would spend years and years trading this stuff manually and understood how you made money with a particular kind of trade. These are the factors to consider, these are the forces that are at play, these are the things you’re to watch out for, this is how you can lose a lot of money. That’s this hard, hard won experience from winning and losing on a lot of trades. There’s an emotional instinctual reaction to, yeah, I would not buy at that point.
My experience has been, if you have been the domain expert yourself, you understand exactly how this works. Get inside the trade. Don’t just automate it. Do the thing to understand what the hell is going on. Really understand it. Have emotional scars from it. Then automate it.”
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