flame talk on what i wish i knew when i was 17
TRANSCRIPT
![Page 1: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/1.jpg)
What I Wish I Knew When I Was 17
Sanjay BakshiFlame UniversityJanuary 9, 2021
![Page 2: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/2.jpg)
# 1: Just how powerful some of the ideas that are taught in academia are, just how useful they
are in making decisions and for understanding how the world really works;
![Page 3: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/3.jpg)
# 2: How becoming a wiser person over time
requires application of these ideas;
![Page 4: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/4.jpg)
# 3: That these ideas will come from multiple disciplines and you will have to learn to be a broad thinker by picking up the best ideas from multiple disciplines;
![Page 5: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/5.jpg)
# 4: How you only need a handful of key ideas from
key disciplines to really understand how the world really works; and
![Page 6: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/6.jpg)
# 5: How these ideas often combine to
produce stunning outcomes
![Page 7: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/7.jpg)
Idea # 1: Compound Interest
![Page 8: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/8.jpg)
![Page 9: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/9.jpg)
100 × (1.10)^30 = 1,745
100 × (1.14)^30 = 5,095
5,095/1,745 = 2.9x
![Page 10: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/10.jpg)
![Page 11: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/11.jpg)
Example: Delayed Gratification
![Page 12: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/12.jpg)
![Page 13: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/13.jpg)
![Page 14: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/14.jpg)
• Let A be the eventual outcome you desire
![Page 15: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/15.jpg)
• Let A be the eventual outcome you desire • Let P be your starting position
![Page 16: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/16.jpg)
• Let A be the eventual outcome you desire • Let P be your starting position • Let R be the outcome of effort you put in over time
- this should rise over time if you are any good, right? So, R is not a constant
![Page 17: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/17.jpg)
• Let A be the eventual outcome you desire • Let P be your starting position • Let R be the outcome of effort you put in over time
- this should rise over time if you are any good, right? So, R is not a constant
• Let n be the period over which you put in the effort
![Page 18: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/18.jpg)
Example: Frugality
![Page 19: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/19.jpg)
You may think, perhaps, that a little tea, or a little
punch now and then, diet a little more costly, clothes a little finer, and a little more
entertainment now and then can be no great matter but
remember what Poor Richard says “Many a little makes a mickle; beware of little expense for a small
leak will sink a great ship.1” — Benjamin Franklin, Poor
Richard’s Almanac
![Page 20: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/20.jpg)
“It is easier to suppress the first
desire than to satisfy all that follow it.” — Benjamin Franklin,
Poor Richard’s Almanac
![Page 21: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/21.jpg)
“Life is like a snowball, all you need is wet snow and a really long hill.” —
Warren Buffett
![Page 22: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/22.jpg)
![Page 23: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/23.jpg)
![Page 24: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/24.jpg)
![Page 25: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/25.jpg)
![Page 26: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/26.jpg)
Example: Tradeoffs
![Page 27: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/27.jpg)
![Page 28: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/28.jpg)
The farmer who killed the goose
that laid the golden eggs
![Page 29: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/29.jpg)
![Page 30: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/30.jpg)
![Page 31: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/31.jpg)
![Page 32: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/32.jpg)
![Page 33: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/33.jpg)
"When you improve a little each day, eventually big things occur. When you improve conditioning a little each day; eventually you have a big improvement in conditioning. Not tomorrow, not the next day; but eventually a big gain is made. Don't look for
the big, quick improvement. Seek the small improvement one day at a time. That's the only way it happens-and when it happens, it lasts." -John Wooden, one of the most successful coaches in the history of college basketball.
![Page 34: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/34.jpg)
![Page 35: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/35.jpg)
Idea # 2: Proof by Contradiction
![Page 36: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/36.jpg)
![Page 37: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/37.jpg)
Reductio ad absurdum
A form of argument that attempts to disprove a statement by showing it inevitably leads to a ridiculous, absurd, or impractical conclusion
![Page 38: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/38.jpg)
Example # 1: Buffett on Absurdity of Dotcom Valuation
![Page 39: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/39.jpg)
Warren Buffett
![Page 40: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/40.jpg)
Warren Buffett
![Page 41: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/41.jpg)
Example # 2: Ralph Wanger on Disk Drive Industry
![Page 42: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/42.jpg)
Ralph Wanger
![Page 43: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/43.jpg)
Example # 3: Harry Markopolos on Absurdity of Bernie Madoff’s
Investment Returns
![Page 44: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/44.jpg)
Harry Markopolos Bernie Madoff
![Page 45: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/45.jpg)
![Page 46: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/46.jpg)
![Page 47: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/47.jpg)
![Page 48: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/48.jpg)
![Page 49: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/49.jpg)
Warren Buffett Ralph Wanger Harry Markopolos
![Page 50: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/50.jpg)
“How often have I said to you that when you have eliminated the impossible, whatever remains, however
improbable, must be the truth?”
![Page 51: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/51.jpg)
Falsification is Powerful Way to Think
![Page 52: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/52.jpg)
Idea # 3: Reductionism
![Page 53: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/53.jpg)
30x + 10y = 90
divide both sides by 10
3x + y = 9
Example of Reductionism
![Page 54: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/54.jpg)
You can never make any explanation that can be
made in a more fundamental way in any other way than the most
fundamental way.
![Page 55: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/55.jpg)
Idea # 4: Inversion
![Page 56: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/56.jpg)
Example:
What is the Probability of Landing Heads at Least Once in 10 Coin Flips
![Page 57: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/57.jpg)
“Invert, always invert.” — Carl
Jacobi
![Page 58: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/58.jpg)
Equation 1:
20x + 10y = 5x + 8y +10
By using inversion by moving terms on right hand side to left hand side of the equation, leaving one term only on left hand
side, we get
(20x - 5x) +(10y - 8y) = 10
And we end up with the
Reduced Equation:
15x + 2y = 10
![Page 59: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/59.jpg)
Example: Ask, How to Fail?
Then Don’t Do Those Things
![Page 60: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/60.jpg)
“Instead of thinking how to make your
business better, think how to ruin it, and then
simply avoid those things.”
![Page 61: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/61.jpg)
“We should make a list of everything that
irritates the customer, and then we should
eliminate those defects one by one. That is the way to compete in the
service business.”
![Page 62: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/62.jpg)
“All I want to know is where am going to die, so I never go there.” — Charlie
Munger
![Page 63: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/63.jpg)
Example: Avoid Dumb Behavior
![Page 64: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/64.jpg)
“You don’t have to pee on an electric fence to learn not to do it.” — Charlie Munger
![Page 65: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/65.jpg)
![Page 66: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/66.jpg)
![Page 67: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/67.jpg)
![Page 68: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/68.jpg)
Idea # 5: Small Probabilities, Large Consequences
![Page 69: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/69.jpg)
![Page 70: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/70.jpg)
Let Us Play A Game
I toss a coin
If it lands HEADs I will pay you Rs 50 lacs
If it lands TAILS you will pay me Rs 10 lacs
WILL YOU PLAY?
![Page 71: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/71.jpg)
The Game
I toss a coin
If it lands HEADs I will pay you Rs 50 lacs
If it lands TAILS you will pay me Rs 10 lacs
WILL YOU PLAY?
Expected Value of the Game
![Page 72: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/72.jpg)
A Game
I toss a coin
If it lands HEADs I will pay you Rs 50 lacs
If it lands TAILS you will pay me Rs 10 lacs
Your net worth is Rs 10 lacs
Now WILL YOU PLAY?
![Page 73: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/73.jpg)
Rephrasing This Game
Will you take a 50 percent chance of a wipeout?
![Page 74: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/74.jpg)
What about 20 percent
Will you take a 20 percent chance of wipeout?
![Page 75: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/75.jpg)
What about a 1 percent chance
Will you take a 1 percent chance of a wipeout?
![Page 76: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/76.jpg)
What Is the Big Lesson
You do not take the risk of ruin no matter how good the upside
![Page 77: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/77.jpg)
In a strategy that entails ruin
benefits never offset risks of ruin
Nassim Taleb
![Page 78: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/78.jpg)
Nassim Taleb
It is irrational to separate risk taking
from the risk management of ruin
![Page 79: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/79.jpg)
![Page 80: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/80.jpg)
Anil Ambani, Reliance Power, Reliance
Infrastructure, Reliance Capital,
Naresh Goyal, Jet Airways Kishore Biyani, Future Group
C.P. Krishnan Nair, Hotel
Leelaventure
Gautam Thapar, BILT, Crompton Greaves, CG
PowerG.M. Rao, GMR Group
![Page 81: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/81.jpg)
Subhash Chandra, Zee Entertainment Jaiprakash Gaur, Jaypee Group
Vijay Mallya, United Breweries, United Spirits, Kingfisher Airlines
Sanjay Chandra, Unitech Tulsi Tanti, Suzlon V. G. Siddhartha, Cafe Coffe Day
![Page 82: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/82.jpg)
![Page 83: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/83.jpg)
It takes 20 years to build a reputation and five minutes to ruin it.
If you think about that, you'll do things
differently.”
![Page 84: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/84.jpg)
Idea # 6: Don’t Become a Patsy in the Game
![Page 85: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/85.jpg)
Assume that a coin is fair
It has an equal probability of landing heads or tails when tossed
I toss it 99 times and get HEADS each time
For the next toss what is your prediction?
Will it land head or tail?
![Page 86: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/86.jpg)
Assume that a coin is fair
It has an equal probability of landing heads or tails when tossed
I toss it 99 times and get HEADS each time
For the next toss what is your prediction?
Will it land head or tail?
![Page 87: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/87.jpg)
What is the probability of getting 100 heads in 100 tosses in a FAIR coin
That’s simply 0.5^100
Or 1 in a 1,267,650,600,228,229,401,496,703,205,376 chance
![Page 88: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/88.jpg)
What is the probability of getting 100 heads in 100 tosses in a FAIR coin
That’s simply 0.5^100
Or 1 in a 1,267,650,600,228,229,401,496,703,205,376 chance
![Page 89: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/89.jpg)
That’s 1 in 1 nonillion 267 octillion 650 septillion 600 sextillion 228 quintillion 229 quadrillion 401 trillion 496 billion 703 million 205
thousand 376
That comes to a somewhat low probability of 0.000000000000000000000000000000788860905221011805411728565
2827862296732064351090230047702789306640625
![Page 90: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/90.jpg)
What is more likely
This: 0.000000000000000000000000000000788860905221011805411728565
2827862296732064351090230047702789306640625
Or This?
The Assumption that the coin is fair is FALSE!
![Page 91: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/91.jpg)
As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is,
you’re the patsy.”
![Page 92: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/92.jpg)
Idea # 7: Think Like a Statistician
![Page 93: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/93.jpg)
![Page 94: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/94.jpg)
![Page 95: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/95.jpg)
![Page 96: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/96.jpg)
![Page 97: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/97.jpg)
Idea # 8: Think Like a Bayesian
![Page 98: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/98.jpg)
Conditional Probabilityor
Bayes’ Rule
![Page 99: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/99.jpg)
![Page 100: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/100.jpg)
The simplest form of Bayes’s rule is in odds
form:
Posterior odds = Prior odds × Likelihood ratio
where the posterior odds are the odds (the
ratio of probabilities) for two competing
hypotheses.
![Page 101: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/101.jpg)
![Page 102: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/102.jpg)
Imagine that you’re walking across the campus of some
large American University and you meet a guy called Tom. You chat with him for a few minutes and you notice the Tom is shy. He’s not really making eye contact very
often, he sounds as if he’s mumbling.
Is Tom more likely to be in a Math PhD program or in the
business school? (Let’s assume it has to be one or the
other.)
![Page 103: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/103.jpg)
https://youtu.be/BrK7X_XlGB8
![Page 104: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/104.jpg)
![Page 105: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/105.jpg)
![Page 106: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/106.jpg)
![Page 107: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/107.jpg)
![Page 108: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/108.jpg)
![Page 109: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/109.jpg)
Benefit # 1: Belief Updation
![Page 110: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/110.jpg)
Belief updating is to good forecasting as
brushing and flossing are to good dental hygiene. It can be
boring, occasionally uncomfortable, but it pays off in the long
term…
![Page 111: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/111.jpg)
Confirmation Bias: Overweighing evidence that confirms your prior
notions and under weighing evidence that
contradicts it
![Page 112: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/112.jpg)
“What a man believes, he prefers to be true.” -
Sir Francis Bacon
![Page 113: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/113.jpg)
“When facts change, I change my mind. What do
you do Sir?” - John Maynard
Keynes
![Page 114: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/114.jpg)
People who were right a lot of the time were people who often
changed their minds. He doesn’t think consistency of thought is a
particularly positive trait. It’s perfectly healthy — encouraged, even — to have an idea tomorrow
that contradicted your idea
Jeff Bezos
![Page 115: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/115.jpg)
Benefit # 2: Freedom from Insensitivity to Base Rates
![Page 116: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/116.jpg)
![Page 117: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/117.jpg)
Benefit # 3: Becoming More Objective
![Page 118: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/118.jpg)
![Page 119: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/119.jpg)
![Page 120: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/120.jpg)
![Page 121: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/121.jpg)
1.Compound Interest 2.Proof by Contradiction 3.Reductionism 4.Inversion 5.Small Probabilities, Large Consequences 6.Patsy in the Game 7.Think Like a Statistician 8.Think Like a Bayesian
Summary
![Page 122: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/122.jpg)
# 1: Just how powerful some of the ideas that are taught in academia are, just how useful they
are in making decisions and for understanding how the world really works;
![Page 123: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/123.jpg)
# 2: How becoming a wiser person over time
requires application of these ideas;
![Page 124: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/124.jpg)
# 3: That these ideas will come from multiple disciplines and you will have to learn to be a broad thinker by picking up the best ideas from multiple disciplines;
![Page 125: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/125.jpg)
# 4: How you only need a handful of key ideas from
key disciplines to really understand how the world really works; and
![Page 126: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/126.jpg)
# 5: How these ideas often combine to
produce stunning outcomes
![Page 127: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/127.jpg)
“Worldly wisdom is mostly very, very simple. And what I’m urging on you is not that hard to
do if you have the will to plow through and do it.
And the rewards are awesome – absolutely awesome.” — Charlie
Munger
![Page 128: Flame Talk on What I Wish I Knew When I Was 17](https://reader035.vdocuments.mx/reader035/viewer/2022081407/6296118130821d3c74770286/html5/thumbnails/128.jpg)
Thank You