Weight of Expectation

Difficult times force us to see. To cancel things that can wait. To put aside petty grievances. To focus. To deal with deep challenges honestly and uncomfortably. The root word for the conscious yogic practice of difficulty (Tapas) means “warmth, heat, or fire”. Some of the earliest mentions coming from the heat required for birth. The warmth of the womb. 

Expectation Management is not just living in a world of negativity and expecting the worst. It is not being a “permabear” (permanently talking about doomsday and how good the old days were). If you detach a little from the result and focus on the process, you can start to give generously. Planning can make you obsessed with cause and effect. I did this, so I expected this, and it didn’t happen. 

Expectation Management helps people do anyway. Then do again. Freed from the weight of expectation. The weight of having to prove themselves and their team. I see too many people grappling with monsters in their head to show that they, and the groups they identify with, are “good enough”. Life becomes this long exam where you are constantly weighed and measured. Mainly by yourself and your expectations. 

Scales and Weights

Lessons Learned

Looking back far enough, there are lots of examples of extreme events (high impact, low probability). Numbers we use for risk analysis make better questions than answers, because they never include the full picture. A great book to read to give you a little bit of humility is the story of Long-Term Capital Management, titled “When Genius Fails”. It is an important book to read for those who think they have cracked the code. Thinking in “distributions” (a range of possibility) rather than simple numbers is vital. Howard Marks implores that we, “always remember the six-foot man who drowned in a river that was five-foot deep on average”. It is not just the average that matters. The statistical term is moments. You have to think in moments. How the range of possibility is made up. That includes thinking about tail risk, and what isn’t in the numbers (yet). In scenario testing, you need to plan for what could happen, not just a single path. In the same way as looking at what did happen is not enough. What could have happened? You need to plan for your plan not covering everything. With hindsight, we think we understand the world. We think the lessons we learn through mistakes mean, “if I had done it this way, this is how it would have played out.” In reality, if you had the chance again, everything would be completely different. 

Lessons from Rivers Crossed

 

Going to Zero

Nassim Taleb has written about Risk in a very accessible way. His books include “Fooled by Randomness”, “The Black Swan”, and “Anti-Fragility”. He writes about risk and decision-making. In particular, he looks at tail risk. The extreme events that have never happened before, but will have a dramatic impact. Events that fundamentally change everything.  If you only look at what has happened, you assume that things are fairly controlled. That the world is like the spinning of a coin, or the roll of the dice, with varied but fixed outcomes. But it is more complicated than that. Real risk is not normal. It has fat tails, so there are more outliers (unusual observations), than would normally be expected. That is on both the upside and the downside. When normal changes, it can change dramatically. When you think through risk, you need to ask, “What makes this go to zero?”. You need to know what will destroy you, and you need to protect for those risks. Then you need to position yourself to be available for the positive surprises. Why could this go really well? You do not know that it is going to go really well. But you need to open yourself up to that possibility. Risk can't be studied purely by looking at history, even though history matters. 

Plot Twist

Be wary of averages and extremes. When making decisions about a path to go on, it is important to “think in distributions” and to think about what is not there. The range of outcomes, and what happens if it does not work out. The past (especially long histories) is incredibly helpful. Including similar histories, with slightly different contexts. Same, but different. There but for the grace of. The starting point for wealth creation is an income. A source. Researching how others have done it is key, but make sure you do not just look at the ones who have done well. Especially if you are the product. If someone is teaching you to make money like they did, but in reality they are making money by teaching you… that is just a Ponzi Scheme. Layers of teachers teaching teachers to teach teachers till all the teachers are taught. Talk to people doing what you want to do about the challenges. Lots of people. Not just the ones you are paying. Talk to the bitter and twisted. Do not take their word as the truth, but be aware. How can it go wrong? How can it go right? Build the capacity to cope with plot twists.