The untaught art of Balance
Soccer, Finance and balancing the unexpected
It is 1994 and Grenada, and Barbados are playing to qualify for the Caribbean Cup, the equivalent of the European Cup.
If you remember at that time, Football was going through a mode which prioritised defensive tactics. It meant many draws and ultimately, penalty shoot outs. The tournament had a unique rule a goal in extra time would be worth 2x goals for qualification purposes to encourage more results.
As regulation time was nearing its end, Barbados was leading 2-1, but it wasn't enough goals to qualify. To get to extra time and therefore get a chance for 2x goal), Barbados scored an own goal. Then Grenada did the same. For the final 7 mins, each team defended the OTHER team's net to stop their own goals. In the end, Barbados got to extra time & netted the 2x goal!
The above is a straightforward but fun example of how unexpected output happens in systems which are even slightly complex. If you look at pretty much all of what is written on any subject, the assumption is that most of them are a straight-line process. You have a few variables you mix them, and then you get the output. Unfortunately, that truth is limited to only books ( Fuck Economics) or labs.
Pretty much all processes or systems work in complex loops with conflicting forces instead of linear fashion. The argument of this article is that to win at anything investing, business, career ( all complex processes) you don't need to maximise the inputs. Still, instead, you need to find a balance which maximises the output of the system.
Let's look at a few real-life scenarios.
Every financial planner OR book will ask you to save money and avoid say outlandish holidays. So you do that. Perfect!
But let's make this more complex and realistic.
You are in the '40s, and you have a daughter who is 10. Think How many holidays do you have left with her before she goes independent? 5, 7, max 10. Just ten holidays over the next maybe 40 years. So will you now take that outlandish holiday or not?
Something super hot. Trading. You are in your first job and then you to start to trade. You fucking crush it and get real good at it.
Brilliant! Life is dope. However, something else also starts to happen.
You start ignoring your job, thinking that's for lame people. You stop learning more. You stop growing professionally.
And then you realised that fuck you don't have enough capital to make any meaningful gains out of your trading.
Something close to my heart. You become an old school value investor. You read, you become a sponge, and you get humble and understand your weakness. You pride yourself in taking rational decisions. You get great returns, and you are doing brilliantly well in investing.
You hit financial independence and think of solving a problem which is very close to you. So you start something up.
And then you realise that this humility, rationality goes against you. You need to irrational, crazy,
I could go on and on from pretty much every field which has a system.
How do we get out of this?
Complex systems don't have solutions, but instead, they have what I call as balance points. At some point, the system will maximise output for you. To get to that point is all about knowing the system, inputs, and then tweaking them to get a perfect balance.
The most visual form of this is looking at Master Chefs cook. They keep working on getting the perfect balance of a complex dish by mixing and changing a dish's ingredients.
To conclude, whenever you get advice on money, career, startups think about the system instead of jumping the gun and implementing them.