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The Ultimate Learning Guide


Shane Parrish


I first came across Farnam Street about four years ago and it has consistently been one of the best sources of learning I have found on the internet.


The site is a passion project headed up by Shane Parrish and he synthesizes a bunch of worldly wisdom from books, talks, and very smart people.


The foundation for Farnam Street is Charlie Munger, known to be an extremely profound thinker. Even the name, Farnam Street, is where Berkshire Hathaway’s headquarters in Omaha is located. If that sounds familiar it’s because Charlie Munger is the right-hand man to Warren Buffett, arguably history’s best investor.


Mr. Munger is a huge proponent of mental models, or a way of seeing the world that helps you make optimal decisions. Farnam Street is an exploration of these mental models and “mastering the best of what other people have figured out.”


It is clear Shane has poured his life and soul in Farnam Street and so I wanted to collect portions of the best learnings I have taken away over the years so that others could enjoy them as well.


To be clear, this list is not exhaustive, though not far from it. And the articles are listed in no particular order.


*WARNING: THIS IS GOING TO BE ABSURDLY LONG*


(you don’t need to finish this in one sitting. in fact, it’s probably better if not)


Without further ado, after reading hundreds and hundreds of articles, I present to you…


The Best Quotes from the Best FS Articles



- The Decision Matrix: How to Prioritize What Matters


Type of Decisions

1. Irreversible and inconsequential

- Good training ground


2. Irreversible and consequential

- Spend time focusing


3. Reversible and inconsequential

- Delegate


4. Reversible and consequential

- Gather evidence





- The Disproportional Power of Anecdotes

“generalization is a widespread human bias, which means a lot of our understanding of the world actually is based on extrapolations made from relatively small sample sizes.”





- Strategy vs. Tactics: What’s the Difference and Why Does it Matter?

To achieve anything we need a view of both the micro and the macro, the forest and the trees — and how both perspectives slot together.





- Double Loop Learning: Download New Skills and Information into Your Brain

Reflection, however, is an example of an approach I call first-order negative, second-order positive. It’s got very visible short-term costs — it takes time and honest self-assessment about our shortcomings — but pays off in spades in the future. The problem is that the future is not visible today, so slowing down today to go faster at some future point seems like a bad idea to many. Plus with the payoff being so far in the future, it’s hard to connect to the reflection today.
It’s easy to focus on other people; it’s much harder to look inward and face complex challenges.





- Smarter, Not Harder: How to Succeed at Work

Incredibly successful people focus their time on just a few priorities and obsess over doing things right. This is simple but not easy.





- Pain Plus Reflection Equals Progress

Pain is something we all try to avoid, both instinctively and consciously. But if you want to do amazing things in life, you need to change your relationship with pain
The easy path means being the same person you were yesterday. It’s easy and comfortable to convince yourself that the world should work differently than it does, that you have nothing to learn from the pain. The harder path is to embrace the pain and ask yourself what you could have done differently or better or what your blind spot was. It’s harder because you stop living in the bubble of your own creation and start living in reality.





- The Value of Probabilistic Thinking: Spies, Crime, and Lightning Strikes

There are three important aspects of probability that we need to explain so you can integrate them into your thinking to get into the ballpark and improve your chances of catching the ball:


1. Bayesian thinking

Consider the headline “Violent Stabbings on the Rise.” Without Bayesian thinking, you might become genuinely afraid because your chances of being a victim of assault or murder is higher than it was a few months ago. But a Bayesian approach will have you putting this information into the context of what you already know about violent crime.

2. Fat-tailed curves

You’ll never meet a man who is ten times the size of an average man. But in a curve with fat tails, like wealth, the central tendency does not work the same way. You may regularly meet people who are ten, 100, or 10,000 times wealthier than the average person. That is a very different type of world.

3. Asymmetries

Far more probability estimates are wrong on the “over-optimistic” side than the “under-optimistic” side. You’ll rarely read about an investor who aimed for 25% annual return rates who subsequently earned 40% over a long period of time.




- Average is Over

As machines become more powerful, the people who benefit will be the people who are “adept at working with computers and with related devices for communications and information processing.” The way to earn well will be to augment the value of tech, even if only by a small bit.





- The Pygmalion Effect

The important point to note about the Pygmalion effect is that it creates a literal change in what occurs. There is nothing mystical about the effect. When we expect someone to perform well in any capacity, we treat them in a different way.





- First Principles *(would suggest reading in totality)

The difference between reasoning by first principles and reasoning by analogy is like the difference between being a chef and being a cook. If the cook lost the recipe, he’d be screwed. The chef, on the other hand, understands the flavor profiles and combinations at such a fundamental level that he doesn’t even use a recipe. He has real knowledge as opposed to know-how.
Rockets are absurdly expensive, which is a problem because Musk wants to send people to Mars. And to send people to Mars, you need cheaper rockets. So he asked himself, “What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. And … what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.”
Why, then, is it so expensive to get a rocket into space? Musk, a notorious self-learner with degrees in both economics and physics, literally taught himself rocket science. He figured that the only reason getting a rocket into space is so expensive is that people are stuck in a mindset that doesn’t hold up to first principles. With that, Musk decided to create SpaceX and see if he could build rockets himself from the ground.




- The Nerds Were Right. Math Makes Life Beautiful.

The math may be complicated, but the principle isn’t. Your chances of ending up with what you want — say, the guy with the amazing smile or that lab director job in California — dramatically increase if you make the first move. Fry says, “aim high, and aim frequently. The math says so.”






- Inertia: The Force That Holds the Universe Together

Cognitive inertia is the reason that changing our habits can be difficult. The default is always the path of least resistance, which is easy to accept and harder to question.
The important thing about inertia is that it is only the initial push that is difficult. After that, progress tends to be smoother.






- Understanding Speed and Velocity: Saying “NO” to the Non-Essential

Velocity and speed are different things. Speed is the distance traveled over time. I can run around in circles with a lot of speed and cover several miles that way, but I’m not getting anywhere. Velocity measures displacement. It’s direction-aware.






- Half Life: The Decay of Knowledge and What to Do About It

Many of us have seen the ironic (in hindsight) doctor-endorsed cigarette ads from the past. A glance at a newspaper will doubtless reveal that meat or butter or sugar has gone from deadly to saintly, or vice versa. We forget that laughable, erroneous beliefs people once held are not necessarily any different from those we now hold. The people who believed that the earth was the center of the universe, or that some animals appeared out of nowhere or that the earth was flat, were not stupid. They just believed facts that have since decayed.






- Bruce Pandolfini Teaches Thinking, Not Chess

“…two of the most important forms of intelligence: the ability to read other people, and the ability to understand oneself. Those are the two kinds of intelligence that you need to succeed at chess — and in life.” — Pandolfini






- Yes! 50 Scientifically Proven Ways to Be Persuasive

  • Giving away the product makes it less desirable.

  • Too many options necessitate selection, and hence frustration, when brain decides it’s unnecessary work.

  • Admitting negatives up-front might lead to better communication.






- Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments

“Ignorance more frequently begets confidence than does knowledge.”






- Dan Ariely on 10 Irrational Human Behaviors

Relativity:

When contemplating the purchase of a $25 pen, the majority of subjects would drive to another store 15 minutes away to save $7. When contemplating the purchase of a $455 suit, the majority of subjects would not drive to another store 15 minutes away to save $7. The amount saved and time involved are the same, but people make very different choices. Watch out for relative thinking; it comes naturally to all of us.

Endowment Effect

There are three fundamental quirks of human nature. We fall in love with what we already have. We focus on what we might lose, rather than what we might gain. We assume that other people will see the transaction from the same perspective as we do.

Power of Price

When told that the drug cost $2.50 per dose, nearly all of the subjects reported pain relief. When told that the drug cost $0.10 per dose, only half of the subjects reported pain relief.






- Social Proof: Why We Look to Others For What We Should Think and Do

When we feel uncertain, we all tend to look to others for answers as to how we should behave, what we should think and what we should do.






- Niccolò Machiavelli and the Four Princes of Pragmatism

Version 4: A fourth Prince that other students uncover is the most interesting one, in Badaracco’s mind. Students find that the book reveals a kind of worldview, he says, and it’s not an evil worldview. This version goes: “If you’re going to make progress in the world you’ve got to have a clear sense, a realistic sense, an unsentimental sense, of how things really work: the mixed motives that compel some people and the high motives that compel some others. And the low motives that unfortunately captivate other people.”
Students who claim the fourth Prince, he said, believe that if they’re going to make a difference, it’s got to be in that world, “not in some ideal world that you would really like to live in.”






- Gresham’s Law: Why Bad Drives Out Good As Time Passes

Take also sub-prime mortgage lending practices in the lead up to the 2008 financial crisis. If two banks are competing for borrowers and one lets their standards slide to zero (or less), which is likely to prevail? Even if the practice is a “long-term loser,” it can still take hold in systems where short-term incentives provide encouragement to the actual decision makers.






- How Underdogs Can Win: A Lesson From The Swiss

Applying pressure over the entire ice surface requires a lot of work but very little actual skill. In hockey, much like basketball, teams often concede a large percentage of the playing surface before trying to stop the other team. This favors the skilled teams over the unskilled teams. Applying relentless pressure over the entire playing surface, like the Swiss, neutralized the skill advantage of their superior opponent.






- Throw Less At The Problem

Watch chef Gordon Ramsay’s Kitchen Nightmares and you’ll see a pattern. The menus at failing restaurants offer too many dishes. The owners think making every dish under the sun will broaden the appeal of the restaurant. Instead it makes for a crappy food (and creates inventory headaches).
That’s why Ramsay’s first step is nearly always to trim the menu, usually from thirty-plus dishes to around ten. Think about that. Improving the current menu doesn’t come first. Trimming it down comes first. Then he polishes what’s left.

-From Rework






- Seth Klarman: The Forgotten Lessons of 2008

Things that have never happened before are bound to occur with some regularity.The latest trade of a security creates a dangerous illusion that its market price approximates its true value. This mirage is especially dangerous during periods of market exuberance.






- What you can do in the first 60 seconds of a presentation to aid your ability to persuade?

share something personal, and show the audience that you are talking to them, not simply giving a canned speech or sales pitch. if you think about it, this is exactly what the classic comedy act opening does.

- Elements of Persuasion






- How Will You Measure Your Life?

When people who have a high need for achievement–and that includes all Harvard Business School graduates–have an extra half hour of time or an extra ounce of energy, they’ll unconsciously allocate it to activities that yield the most tangible accomplishments.

- Clayton Christensen






- Youngme Moon: On Business Competition and Escaping the Competitive Herd

Competing by eliminating our differences seems like nothing more than an expensive route to commoditization.






- What Separates World-Class Performers from Everybody Else

The best performers observe themselves closely. They are in effect able to step outside themselves, monitor what is happening in their own minds, and ask how it’s going. Researchers call this metacognition — knowledge about your own knowledge, thinking about your own thinking. Top performers do this much more systematically than others do; it’s an established part of their routine.
Average performers believe their errors were caused by factors outside their control: My opponent got lucky; the task was too hard; I just don’t have the natural ability for this. Top performers, by contrast, believe they are responsible for their errors.

- Talent is Overrated






- Bayes and Deadweight: Using Statistics to Eject the Deadweight From Your Life

You are going on a blind date. You’ve been told all sorts of good things in advance — the person is attractive and funny and has a good job — so of course, you are excited. The date starts off great, living up to expectations. Halfway through you find out they have a cat. You hate cats. Given how well everything else is going, how much should this information affect your decision to keep dating?
Quantify your belief in the most probable outcome with a bet. How much would you wager that harmony on the pet issue is an accurate predictor of relationship success? Ten cents? Ten thousand dollars? Do the thought experiment. Imagine walking into a casino and placing a bet on the likelihood that this person’s having a cat will ultimately destroy the relationship. How much money would you take out of your savings and lay on the table? Your answer will give you an idea of how much to factor the cat into your decision-making process. If you wouldn’t part with a dime, then I wouldn’t worry about it.






- Poker, Speeding Tickets, and Expected Value: Making Decisions in an Uncertain World

Everything comes down to payoffs. A horse with a 50% chance of winning might be a good bet, but it depends on the payoff. The same holds for a 100-to-1 longshot. It’s not the frequency of winning but the magnitude of the win that matters.






- Complexity Bias: Why We Prefer Complicated to Simple

Complexity bias is interesting because the majority of cognitive biases occur in order to save mental energy. For example, confirmation bias enables us to avoid the effort associated with updating our beliefs. We stick to our existing opinions and ignore information that contradicts them. Availability bias is a means of avoiding the effort of considering everything we know about a topic. It may seem like the opposite is true, but complexity bias is, in fact, another cognitive shortcut. By opting for impenetrable solutions, we sidestep the need to understand.






- The Difference Between Amateurs and Professionals

Amateurs believe that the world should work the way they want it to. Professionals realize that they have to work with the world as they find it. Amateurs are scared — scared to be vulnerable and honest with themselves. Professionals feel like they are capable of handling almost anything.






- How To Remember What You Read

To get the most out of each book we read it is vital to have a plan for recording, reflecting on, and putting into action the conclusions we draw from the information we consume.
Most people think that consuming information is the same as learning information. No idea could be further from the truth.
The basic process of learning consists of reflection and feedback.






- The Feynman Technique

  • Choose a Concept

  • Teach it to a Toddler

  • Identify Gaps

  • Go Back to The Source Material

  • Review and Simplify (optional)






- The Difference Between Open-Minded and Closed-Minded People

The rate at which you learn and progress in the world depends on how willing you are to weigh the merit of new ideas, even if you don’t instinctively like them.
Open-minded people see disagreement as a thoughtful means to expand their knowledge.






- Habits vs. Goals

Nothing will change your future trajectory like habits.
While goals rely on extrinsic motivation, habits are automatic. They literally rewire our brains.
When seeking to attain something in our lives, we would do well to invest our time in forming positive habits, rather than concentrating on a specific goal.






- The Code of Hammurabi

Law 229: If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.
When you align incentives of everyone in both positive and negative ways, you create a system that takes care of itself. Taleb describes Law 229 of Hammurabi’s Code as “the best risk-management rule ever.”






- The Butterfly Effect

The butterfly effect is the idea that small things can have non-linear impacts on a complex system.
We like to think we can predict the future and exercise a degree of control over powerful systems such as the weather and the economy. Yet the butterfly effect shows that we cannot.






- Wrong Side of Right

One big mistake I see people make over and over is focusing on proving themselves right, instead of focusing on achieving the best outcome.
People who are working to prove themselves right will work hard finding evidence for why they’re right. They’ll go to the ends of the earth to disagree with someone who has another idea. Everything becomes about their being right.
The most important lesson I’ve learned from running a company is that the more I give up trying to be right, the better the outcomes get for everyone.






- Maya Angelou on Living

“You may not control all the events that happen to you, but you can decide not to be reduced by them. Try to be a rainbow in someone else’s cloud. Do not complain. Make every effort to change things you do not like. If you cannot make a change, change the way you have been thinking. You might find a new solution.” — Maya Angelou
Maya Angelou’s words remind us that there is power in reflection. It is how we learn from our experiences, widening our perspectives to appreciate that life has all manner of ebbs and flows. Indeed, I would argue that we cannot learn without reflection.






- Let Go of the Learning Baggage

our brain has two general modes of thinking — ‘focused’ and ‘diffuse’ — and both of these are valuable and required in the learning process.
The focused mode is what we traditionally associate with learning. Read, dive deep, absorb.
Diffuse-mode thinking is what happens when you relax your attention and just let your mind wander. This relaxation can allow different areas of the brain to hook up and return valuable insights. … Diffuse-mode insights often flow from preliminary thinking that’s been done in the focused mode.

Barbara Oakley






- The Generalized Specialist

Should we become specialists or polymaths? Is there a balance we should pursue?
When their particular skills are in demand, specialists experience substantial upsides.
The downside is that specialists are vulnerable to change.

Best option?

A generalizing specialist has a core competency which they know a lot about. At the same time, they are always learning and have a working knowledge of other areas.