how to get rich without getting lucky kind of went viral it got famous did a podcast on it afterwards um it got printed up in a book uh and it's not it's it's very incomplete it's very high level right it's maybe like 10% of what you and I actually know to be true you're the F up your mic your mic is dead uh oh okay is that better okay um you said something there which was you thought it was obvious yeah and I did too when I saw that I was like everybody in s Valley
knows this why is this getting like 120,000 whatever it was right but there's then I actually thought back to when we were coming out of at least when I was coming out of Academia and profit was like supposed to be a function of sufficient malevolence right you know that say if you're mean enough you could make a high right capitalism exploitative and if you if you have money you took it from somebody which is obviously false go look at the caveman we're not subdividing up the deer carcasses from prehistoric times so obviously we create things
I I I will I will say I think the East Coast has that model because it's actually more true for them absolutely yeah the the older the industry the more it's about dividing up the spoils and about using regulation and network effects and all that stuff to kind of keep what you have uh and this is a common phenomenon you see in societies you even see with individuals which is after they've made it then they become either extractive or they become defensive of the existing system and so for example the current meme among the left
you know is billionaires or evil well yes some of them maybe right depends how you got it uh I'm always amazed that the monarchy still exist in England you know those that was extractive at a point this is where I think defining wealth is important uh people think of wealth as hoarded money right but really wealth is a byproduct of knowledge if you look at wealth It's a combination of two things David de has a great definition where he says wealth is the ability to affect Transformations it's to transform things from one thing to another
so if I can turn electricity into cars or if I can turn labor into oil or whatever can turn money into you know another thing if I can swap it then that that is that transformative ability Is wealth but now if you look at what allows us to transform one thing to another some of it is Capital stock with machinery and but most of it is knowhow uh the caveman had access to all the same resources that we did they just didn't know what to do with them to them uranium wasn't even a thing oil
was just like a sticky substance that maybe you stumble across once in a while so the vast vast majority of wealth is actually knowledge right so most people who are knowledgeable actually incredibly wealthy they just choose not to use it or maybe they do choose to use it down the road and I think that's very encouraging especially now with the internet knowledge is so readily accessible um now of course the right kinds of knowledge what I call specific knowledge in my tweet stone is very important knowledge on the edge of what Humanity knows and wants
and if you work hard enough at it or if you're obsessed with it you figure it out that kind of knowledge can be monetized much more than certain knowledge which is now common for example if chat GPT can spit ITA to you say you're not going to monetize it everybody else can get access to it too it's funny because AI really does disrupt the bidt but not the person who's like you know just if you're if you're doing something in the physical world or if you're doing something genuinely Innovative then you're good yeah true true
creativity like people confuse creativity with oh I'm painting or I'm writing books cre creativity is solving problems and it's solving problems in new ways in new ways that aren't just simple extrapolation or interpolations of existing ways and that's something that still I think humans uniquely do that AI does not do I think AI is a little over named but you know it's it's it's natural language Computing It's very effective yeah but it's not solving new problems that we didn't know how to solve but that said most of our lives are spent in drudgery they were
spent in physical drudgery and physical automation has gone a long ways to getting rid of that dishwashers washing machines and all that but and cars but now a lot of it has spent in intellectual drudgery filling out forms writing reports essays uh you know emails for things that are kind of obvious uh so a lot of work is busy work and the promise of natural language Computing and artificial intelligence is to take that over from us and to leave us for True creativity which is solving problems that we don't yet know how to solve that
is where all the value is so specific knowledge is probably the hardest thing to get across in this whole tweet storm and it's probably the thing that people get the most confused about the thing is that we have this idea that everything can be taught everything can be taught in school and it's not true that everything can be taught in fact the most interesting things cannot be taught but everything can be learned and very often that learning either comes from some innate characteristics in your DNA or it could be through your childhood where you learn
soft skills which are very very hard to teach later on in Life or it's something that is brand new so nobody else knows how to do it either or it's true on the job training because your pattern matching into highly complex environment building judgment in a specific domain classic example is investing but it could be in anything it could be in judgment in running a a fleet of trucks could be judgment and weather forecasting so specific knowledge is the knowledge that you care about the first thing to notice about specific knowledge is that you can't
be trained for it if you can be trained for it if you can go to a class and learn specific knowledge then somebody else can be trained for it too and then we can Mass produce and mass train people heck we can even program computers to do it and eventually we can program robots to walk around doing it so if that's the case then you're extremely replaceable and all we have to pay you is the minimum wage that we have to pay you to get you to do it when there are lots of other takers
who can be trained to do it so really your returns just devolve into your cost of training plus a return on investment on that training so you really want to pick up specific knowledge you need your schooling you need your training to be able to capitalize on the best specific knowledge but the part of it that you're going to get paid for is the specific knowledge for example someone who goes and gets a degree in Psychology and then becomes a salesperson well if they were already a formidable salesperson had great salesmanship to begin with then
the psychology degree is leverag it arms them and they do much better at sales but if they were always an introvert never very good at sales and they're trying to use psychology to learn sales they're just not going to get that great at it specific knowledge is found much more by pursuing your innate talents your genuine curiosity and your passion it's not by going to school for whatever is the hottest job it's not for going into whatever field investors say is the hottest very often specific knowledge is at the edge of knowledge it's also stuff
that's just being figured out or is really hard to figure out so if you're not 100% into it somebody else who is 100% into it will outperform you and they won't just outperform You by a little bit they'll outperform You by a lot because now we're operating the domain of ideas compound interest really applies and leverage really applies so if you're operating with a thousand times leverage and somebody is Right 80% of the time and somebody is else is Right 90% of the time the person who's right 90% of the time will literally get paid
hundreds of times more by the market because of the leverage and because of the compounding factors and being correct so you really want to make sure you're good at it so your genuine curiosity is very important so very often it's not something you sit down and you reason about it's more found by observation you almost have to look back on your own life and see what your actually good at for example I wanted to be a scientist and that is where a lot of my moral hierarchy comes from I usew scientists at the top of
the production chain for Humanity and the group of scientists who have made real breakthroughs and contributions have probably added more to Human Society I think than any single other class of human beings not to take away anything from art or politics or engineering or business but without the science you know we'd still be scrabbling in the dirt fighting with sticks and trying to start fires my whole value system was built around scientists and I wanted to be a great scientist but when I actually look back at what I was uniquely good at and what I
ended up spending my time doing it was more around making money tinkering with technology and selling people on things explaining things talking to people so I have some sales skills which is a form of specific knowledge that I have I have some analytical skills around how to make money and having this ability to absorb data obsess about it and break it down and that is is a specific skill that I have I also just love tinkering with technology and all of this stuff feels like play to me but it looks like work to others so
there are other people to whom these things would be hard they say like well how do I get good at being pithy and selling ideas well if you're not already good at it or if you're not really into it maybe it's not your thing focus on the thing that you are really into this is ironic but the first person that actually point out my real specific knowledge was my mother and she did it as an aside talking from the kitchen and she said it when I was like 15 or 16 years old I was telling
a friend of mine that I wanted to be an astrophysicist and she said no you're going to go into business and I was like what my mom's telling me I'm going to be in business I'm going to be an astrophysicist mom doesn't know what she's talking about but Mom knew exactly what she was talking about she had already observed that every time we walked down the street I would critique the local pizza parlor on why they were selling their slices a certain way with certain toppings and why their process of ordering was this way when
it should have been that way so she knew that I was just had more of a business security mind but then my obsession with science combined to create technology and Technology businesses where I found myself so very often your specific knowledge is observed and often observed by other people who know you well and revealed in situations rather than something that you come up with to the extent that specific knowledge is taught it's on the job it's through apprenticeships and that's why the best businesses the best careers or the apprentiship careers because those are things Society
still has not figured out how to train and automate yet the classic line here is that Warren Buffett went to Benjamin Graham when he got out of school and Benjamin Graham was the author of the intelligent investor and sort of modernized or created value investing as a discipline and Warren Buffett went to Benjamin Graham and offered to work for him for free and Graham said actually you're overpriced free is overpriced and Graham was absolutely right that when it comes to a very valuable apprenticeship like the type that Graham was going to give Buffett Buffett should
have been paying him a lot of money and that right there tells you that those are skills worth knowing thanks for watching and if you want to learn more from Navar recant I highly recommend you checking out his book The Almanac of Navar recant as well as the guide on shortform which compiles all the key nuggets I've been using shortform for the past two years and it has boosted my learning with its Bast library of over a th000 book guides they're not sponsoring this video but there's an affiliate Link in the video description and you
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