Category Archives: Books

Expected value calculations

I am in the process of reading “Principles: Life and Work” by Ray Dalio. Overall the book is very good and informative but one chapter really caught my attention: Learn How to Make Decisions Effectively.

In particular, what stood out there was the author’s explanation of making decisions as expected value calculations.

When you make a decision or take action that can either result in success or a failure, you have these factors to consider:

  • the probability that the action will result in success
  • reward gained if the action results in success
  • the probability that the action will result in failure
  • penalty/loss if the action results in failure

The expected value (EV) for such a decision then can be defined as follows:

EV = Probability of success * reward – probability of failure * penalty

EV greater than zero can be thought as a winning decision and if you have multiple choices, pick one that has the highest expected value.

A quick example from the book: let’s say the reward for being right is 100$ and the chance of you being right is 60% (0.6). The penalty is also $100 dollars (and the probability is 0.4 arrive at 1-0.6). Then EV = 0.6 * 100 – 0.4 * 100 = +20.

This simple example is all well and good but check out couple thoughts now to branch out further.

The best bet is not always a bet with the highest probability. If something is very probably but has a small positive outcome and very large negative outcome, the EV is negative.

A decision can have a relatively small chance of success but if the payoff is much larger than the cost if you fail, that decision has a positive EV and is the right choice as long as you can cover the loss. This is where investments in risky but highly rewarding endeavors can pay off greatly. Again, as long as you can cover the losses.

If you stick to “playing” with EV positive outcomes, over time you will come on top. The key is to make sure you have a good information and feel for the event’s probabilities and costs.

What’s cool is that when taking an action or making a decision, you have four things that you can leverage to increase your EV: increase your chance of success, increase your positive outcome, decrease the chance of failure, decrease the penalty. Not always all four are malleable but you would be surprised how often there are other options to consider that increase the expected value. Following such thought process teaches your brain to search for alternatives that influence the four factors I just mentioned.

Furthermore, when you start searching for different options with better odds, the actual odd value is less important than knowing that the decision you are picking is either less risky (you are decreasing the chance of failure) than the previous one or is more rewarding, etc.

Now whenever I am working on let’s say a feature release, I consider expected value formula and ask myself: what’s my confidence level that what I am releasing will work correctly? In my profession (software) this is often tied to proper and extensive testing and validation. If I get a feeling that I could have done more testing, I right away do so to increase the chance of success. If the release goes wrong, what is the worst that can happen? This often makes me re-evaluate the size and scope of the release and if possible I break things up into smaller pieces which means the impact of a negative outcome will be smaller.

I am continuing to dig and have thought exercises with this rule but so far it has been very beneficial.

Book review: How to Fail at Almost Everything and Still Win Big

The book was highly enjoyable and packs so much useful information and advice. I am impressed how succinctly and clearly Scott has expressed his opinion on a large variety of topics.

It is essentially Scott’s take on life and how to succeed. Success can mean different things to different people, but I can safely say many will find information in here that they can use. I would highly recommend this book to anyone who is looking to get a good sense of how one can accomplish difficult tasks and live a fulfilled life.

At a high level, his take on life boils down to several key points (which I hear repeated in various forms over and over again in other books):

Increase your energy capacity by eating right, getting a good amount of sleep every day, and exercise/stay active. These are the foundational pillars that enable you to work hard, think clearly, seek out knowledge or adventure, and in general lead a fulfilling existence. Beyond that, you need luck, be at the right place at the right time so to speak. But luck is not a fixed concept, you can increase your odds of luck by picking up new skills, mastering concepts such as psychology, finance, social interactions, public speaking. The additional skills will increase your surface area of luck, so to speak and the rest is up to you: once given an opportunity, take

Through it all, embrace the failure for it is a valuable signal and a learning material that if utilized properly will enable you to grow.

The topics that the book covers are rather varied and all expressed from Scott’s point of view and what he learned. The presentation style though is fun and engaging which makes it easy to read and learn.

A couple of ideas that stood out to me in addition to the above big level concepts:

  • Systems vs goals. I’ve had heard this distinction before but did not fully buy into it. The author has some really interesting points and examples of how expressing your goals as systems instead can make a huge difference.Let’s take reading books as an example. You could set a goal of reading two books per month. It’s measurable, you know when you succeed or fail. And is actionable, action being sitting down and reading. But putting that number out there, Scott argues, makes you feel somewhat inadequate if you don’t succeed, you are always in a state of failure until you reach that number.

    Instead, you should come up with a system for reading books, such as: anytime you commute on a train, you will read a book (instead of looking at twitter/fb/etc on my phone). Or every other day during lunch you will read. etc. You pick what works for you and do the action. You don’t worry about the count of books, just make sure you put a system in place that allows you to spend time reading. Then pay attention to how well you are doing. If you are not reaching the amount of reading you want, try to find a better system. Iterate.

    It’s a simplified example, but if you apply it to enough behaviors, you can have a pretty good setup going on for reading and anything else. For instance, I have couple systems for reading (that I setup without even knowing): 1) keep my kindle in the commuting backpack 2) when on a train, read 3) when I see a book I like, buy it. The number of books per month varies, but I feel like I am always reading. I am almost at the end of the month and have finished four books. Last month 2, a month before 2. I am happy with the amount of reading I do and sometimes it drops to zero but that’s OK.

  • Happiness level of a human being depends on the direction of the progress and not the current state. (e.g. A rich person that goes from 2 billion to 1 billion dollars in fortunate is often sadder than a person who is increasing his earning from 90k to 120k).
  • Affirmations, a somewhat vague and controversial concept of essentially wishing for a certain outcome and it becoming a reality. Scott presents multiple examples from his life and makes sure to mention how there is no science behind it and it all could essentially be bullshit. Yet he seems to have used them in the past and tends to believe there is something there.
  • Avoid career traps that require you to sell your time for money. I am definitely in that stage right now, basically, my time is what earns me money and this book is making me strongly consider what other revenue streams I could add to improve this situation.
  • Happiness is being able to do what you want when you want it. The flexibility of choosing when to do the activity that you want to do is very important to us, it appears. I can attest to that and could explain why I am very happy at my current job: the flexibility of my schedule.
  • One should be familiar with or get a good understand of topics such as psychology, public speaking, accounting, and a few other foundational skills. I jotted down the list and see which ones are my weak points. I am always taking courses in my field of profession, but this book is making me consider if I should try to branch out and see if I can learn a complimentary skill that is not necessarily tied to my current profession (software engineering).

Again, if you are a looking for an easy yet educational read, I highly recommend Scott’s book. Enjoy!

Book review: Antifragile


Absolutely loved the book and its main messages. It’s deep, ambitious, and very thought provoking. It was an immense pleasure to read.

Things that jumped out of me, in no particular order:

  • Term “Antifragile”. As defined by the author, antifragile is something that benefits from random events, somebody that gets stronger when stress is applied to it. This is a step above “robust” where robust most often means ability to deal with stress. Love it as a concept. Netflix’s Chaos Monkey seems to be something that you could define as a tool of antifragility. By randomly killing cloud instances, it helped Netflix build a more resilient architecture that now survives all kinds of cloud service failures. It actually gains from AWS going out as the rest of the services scramble, they stand strong and get positive press, admiration, tech fans that want to work there, etc. Evolution is another example. Individual participants (a human, animal) dies and disappears but the concept of genome continues to survive and actually gets stronger as individual members experience stressors that take out the weak and let the strong survive.

  • Barbell strategy, a way to build antifragility. There are many ways to explain this strategy, but it boils down to playing majority of the time safe, and be very aggressive otherwise. NO MIDDLE GAME. Playing safe you are not exposing yourself to destructive events that could take you out, so to speak. At the same time, if you truly pick a smart but aggressive investment or activity, since it’s loss magnitude is small, even if all of it disappears – that’s just a small percentage lost. But if you hit “gold”, you benefit greatly. The key is finding an activity/investment that has such a great upside and whose downside is small. Seems obvious at first, but I think in real life we play mostly in the middle. Very little on the safe side, very little on the risky side and fat column in the middle. This thought is really nagging at me and making me reconsider many of my own activities and actions.

  • Optionality, another way to build antifragility. When you have little or no options, you are limited in your actions and when you have no options, a catastrophic event can wipe you out. You don’t get better when Black Swans hit, you either suffer greatly, or survive. Options can enhance you ability to benefit from the Black Swan.

  • Via Negativa. Another way to increase antifragility, as well as a way to look at life. Don’t try to add, but work hard to remove. When looking at a design of the systems, adding functionality adds complexity, which adds fragility. Simplify, remove it, and remove some more. A noble goal in any profession and in life. It’s something that is really hard to do as adding can be tempting and short-term gratifying. Also, rarely did anybody receives an award for not doing something. Bigger/complicated systems seem to hide failures underneath the surface and it eventually all comes out in a large (Black Swan) event that has catastrophic repercussions. Large governments, top-down as opposed to bottom-up, are inflexible, fragile, and susceptible to large crises. Think of how much infrastructure and layers of bureaucracy that exist within large governments and corporations. When you get an inside look, the picture is not pretty. According to the author, such setups are just a matter of time before they get hit with a Black Swan event that can wipe them out. At the very least many people suffer.

  • Lindy effect. The longer the technology is around, the longer it will survive. Another way to spin it, don’t trust something that is new because by the mere fact that it is new, it has a really high probability not sticking around.

  • Skin in the game. A large topic but it boils down to an idea that don’t listen/rely on somebody who is not impacted by whatever they are saying or asking you to do. A doctor that suggests you a procedure which he himself would never under go (e.g. risky back surgery), an investment advice from somebody that does not use it themselves. These appear to be obvious but are not obvious in real life. There are a ton of forecasters and prediction people that get things wrong all the time, their false forecasts or news being used in real life with negative consequences. Yet the forecaster suffers no consequences. That’s the reality of the modern world. We are too large, too big, we seek out commentators on anything and everything and then follow them without asking if that person has anything in it or just spewing nonsense for profit and moving on.

In general, the book praises the life of stoicism, small size, and simplicity, suggesting the reader looks at Mother Nature, the most antifragile thing that we know of, for clues on how to live and advance.

I love this book so much that I will buy a print copy to refer to from time to time.

As a side note, I found it fascinating to see how many people absolutely deplore the author and this book. I can see how the ideas can be unsettling, and the author’s style is rather rude. I actually like it, no sugar coating and straight to the point. If you are offended by it, move on. The message is simply not for you.

Book review: The Wisdom of Insecurity

I don’t possess good enough writing skills to review such a book in detail.  Instead, I would like to link to Scott Young’s review. He does a much better job than I could and then, with Scott’s review being quite large, I would like to share a couple of my own thoughts below.

Would I recommend it? If your interests are starting to steer towards the philosophy of living in the present, Zen and Buddhism (those are not mentioned in the book directly but the philosophy is there), you should give this book a try. It’s relatively short and has some good ideas.

The book was written in the 1940s but very much applicable to today’s age. The main theme of the book is our search for security in the ever-changing world. In Watt’s view, such attempts are fruitless and are only spent by people who cling to a false idea of what life is all about.  To seek security in your life is to misunderstand life itself. Change, wars, successes, and failures are all part of life and trying to “fix” them in place is a losing fight. We use words as labels to try to define things we don’t understand or can’t control. Yet so much in life is not under our control.

One of my favorite sub-themes of the book is how we as humans fail to live in the present. We search for happiness, that always feels like a thing that will happen in the future. We define and come up with ideas of what happiness is based on our past experience. So we look towards future informed by the past and ignore the present.

The book also includes many discussions around the role of science and religion. In a way, to the author, the two are identical in that it is a human invention that tries to explain the world around us. Science uses scientific methods while religion assigns certain beliefs and urges its followers to adhere to them. Both trying to define the same thing while using a different language.

I am walking away from this book with a good reminder that nothing stays on forever, that change is part of life, without pain there would be no joy and vice versa, and the best we can do is appreciate the present moment we have while we are on this short adventure called life.


Book review: The Mastery

Mastery – a guide to discovering the inner force and principles for achieving mastery in any field or activity. It does not dive into the specific areas or skill sets but instead distills a set of general principles that one must follow on their path to achieving mastery in a field or subject of their choice.

The book is very dense in the material it presents. You could unpack each chapter for hours and dive into them deeper with more books and materials. What helps for the book to stay clear on the message and follow along is the format it chose. It expresses the principles by looking at contemporary and historical figures that were highly influential and respected personas in music, business, and technology and weaves all principles in mini stories that are easy to isolate and dissect.

The common theme of the book is that we all posses the ability to be great. It is not about the talent; it is not about “born genius,” or mystical powers. Luck plays a great role in our lives and cannot be dismissed. But you have to be prepared to accept and use luck to turn into anything meaningful. You have to be ready to receive it before it can make an impact on you. Through it all, it is all about hard work and more work, tactical plans combined with an ability to be flexible with a capacity to learn from others and stay on course despite the challenges that the life will present you.

It all starts with the process. First, you need to know what your big goal is. What are you trying to achieve? What is that you are trying to become? It is a difficult thing to define, and you need to spend time thinking about this deeply. Sometimes we get lucky, and we just know in our hearts what we want to do. In that case, the big goal is already defined, otherwise work to set it.

Second follows an immense practice and learning of your field or subject of interest. Not superficial tutorial here and there but full immersion and intentional practice. We need to anticipate that once the initial excitement wears off, the difference will be our ability to stick around and continue to study, learn, and practice the field. Push hard, let go, relax, push hard, let go, relax, push hard, let go relax … a cycle that will get you working hard and at the same time keeping you re-energized for more. The key is that each time you learn something, more unknowns open up and you continue to dig deep to understand the field or whatever it is that you are trying to master. The practice must be deliberate, that is with a goal in mind, and each stage has to have a purpose behind it. It’s a challenging work, but the rewards can be great.

During this time you must be strong enough to deal with self-doubt and potential criticism of others. Accept it but don’t get discouraged. Another roadblock here could be people close to you that will advise you against going for something big and steer you towards fields or topics that have quick short term gain but usually are dead-end occupations or endevours that will leave you unsatisfied. You need to find the calling that attracts you, that also is useful to the world, and then go after it.

All of the hard work is for one goal: developing of intuition. The greater the mastery, the better the intuition. There is a feel that gets developed that hints to you what approach is right and what is wrong. The deep intuition also helps you develop the connections between the subjects and fields that deepen the learning AND fuel the discovery. This is why the people that are in the field for a long time can know right away what the issues are, can solve them fast, and move past the complicated concepts in their field. The intuition is guiding them along th way.

You can enlist the help of mentors to accelerate your development. If mentors are being available, the next best thing is books and learning materials. The key is to be tactical about what is being studied and the approach that is used. The mentors can be incredible accelerators of the development and are highly recommended to be seeked out. Unfortunately in this area I have no experience as I have only occassionally encountered somebody who I could call a mentor in some capacity. The book advices on how to find such a person, how to approach it, and how to work under them. Don’t expect the mentor to have you as their primary concern. Instead you have to be creating some sort of value for the mentor in exchange for the mentorship. At the end, don’t be surprised when your hard work is taken over or adapted by the mentor. It is OK, and can happen. Accept it and expect it. And then if you follow the right path you will outgrow the mentor and move past it. The key is to recognize when that time comes and move on.

Another section that was immensily helpful and I found very useful was the section on social intelligence. Along the way to mastery, you will work with other people and organizations. The ability to read and navigate social situations is as useful as knowledge itself. Knowledge in a vacuum is useless. It has to be presented to others, allowed for others to take it apart and criticize it. Beware that at the end, people only care about themselves so potential “political” meddling and situations can arise. I love the book’s advice on it: expect it, embrace it, and move away from it. Don’t play “political” games if the goal is the mastery and gaining the knowledge. Instead, be prepared for it in a way that it does not surprise you or blind side you and do your own thing.

Overall the book was a great read. I have a feeling that I will be coming back to it from time to time. Also, just picked up a few of other Greene’s books that have similar rave reviews as Mastery. Here is to more reading and learning!

Book Review: The Richest Man in Babylon

Rating: 4 stars.

Amazon Link

I wish I had read this book sooner.  I found it very useful, despite its unusual, parable-like, story style. The stories teach the reader how to achieve financial success. Even though the setting is ancient times, the advice conveyed is very practical and applies today as well.

When we think about “financial success,” we often think of immediate and big gains: stocks that multiple overnight, big payday, bonus, etc. The reality is quite different: financial success comes to those that work hard and smart, plan for it, and then take patient and steady approach.

The book, which was written in the 1920s by an American author, shares stories that are mostly about a wise man Arkad and how he achieved financial wellness.

Arkad’s main rules are simple:

  • Save 10% of your income

  • Spend less than you earn, after you put away that 10%

  • Once you have a nice amount of money saved up, don’t keep it idle but instead make it work for you. i.e., invest it somewhere so it earns money.

  • Invest it wisely, don’t invest in the areas you don’t understand without an expert guiding your way. Make sure you can get the principal back safely.

  • Own the place you live in, i.e., don’t pay rent

  • Insure your life, your earnings where applicable

  • Increase your capacity to earn by acquiring skills and knowledge.

Now you could argue with some of the points here, but the principles in general are very sound. Save part your income, don’t spend lavishly, then start investing and get back principal AND interest, while keeping insurance around and all the time seeking for ways to improve your ability to earn. Can’t go wrong with that.

Some of the other things that caught my eye were around how you go about saving money. When you start to save, don’t go crazy and frugal to the max, just make sure you start with 10% savings, and that’s a good enough start.

However do analyze your spending and see if there are expenses there that can be cut (but again, within reason). Sometimes we forget subscriptions/services that we keep, and perhaps those can be avoided.

And one of my favorite: “Opportunity is a haughty goddess who wastes no time with those who are unprepared.” When the opportunity comes, those that take it benefit, and to take it you have to be ready – you just never know when it will come.

Experiment: taking notes while reading

This seems to be a common evolution for non-fiction readers:

  1. A love for reading leads to various fiction books. A thought of reading non-fiction does not enter one’s mind.
  2. Continued love for reading and desire to learn more leads to an occasional non-fiction selection.
  3. Non-fiction starts to dominate the reading list until eventually a fiction book is a rare choice.
  4. The realization that “plowing through” non-fiction in the same fashion as fiction leads to forgetting the content way too easily — some sort of notes / review process is added.
  5. Notes / review process evolves as one gains experience with it.

If you read a lot of non-fiction and haven’t started taking notes, I would highly recommend doing so. It might seem like a daunting task at first, but it is actually not that bad and enhances the overall satisfaction with your reads.

The simplest form of note taking is summarizing the book after you read it. I’ve been doing this for six years and have found it to be very useful. It’s a good way to refresh yourself on what the book was about in case you need to make a recommendation to another reader. Summaries also come in handy when you need information that you know you read about but are not sure which book contains it. Often the summary will remind you which one it was.

I’ve found that doing a summary right after finishing the book is the best way to go about it. Make sure you record it somewhere that you can easily go back to when you need it. Google Docs is good and simple, or you can use something more sophisticated like I wrote a book site for myself that anyone can create an account on and use: Goodreads is too noisy / distracting for me for this purpose.

For a couple months now I’ve been running an experiment of taking notes while reading. It is a much more intense and in-depth process than summarizing a book. I’ve used it for three books so far and I am enjoying the process immensely.

What held me back from taking notes while reading was fear that it will prolong the reading time greatly, and make it less enjoyable. However, if you change how you read books and combine it with the constant analysis, review, and questioning of the material it leads to a greater understanding, and greater enjoyment. You really start to “feel” the book instead of passing it through your thoughts. And instead of simply reading the book from start to finish, now I do this:

  • Quickly review the book online either on Amazon or Wikipedia to see what is a point the author is trying to make.
  • Get some quick info on the author and what is the author known for.
  • Look at the table of contents and note the name of each chapter so you familiarize with how the book will flow
  • Now read through each chapter: look at the title, for each paragraph read first and last sentences to see if you get the idea of the paragraph and if it is necessary to dig in more.
  • While doing this, summarize what you are reading in your notes, but in your own words. Ask questions, verify the strong points author tries to make: do you agree or disagree? does the point make sense? what are others saying about it? The actual place where I take notes right now is a simple paper notebook. Not sure how that will hold up and how I will go about digitizing this.

Essentially you are studying the material. I am still a rookie at this and I am sure my note process will change as I go. My notes might still be too passive, still follow the book too much vs being my own voice. Or maybe not, I just need to continue doing this and evaluate how I feel about the process as I go, and adjust.

Some of the interesting links I found when researching how others take notes:

I think the key is to start simple, not too worry too much if you have the right approach, just pick one and evaluate and then adjust as you go. Personally, I will continue to develop the note taking approach and looking forward to seeing where it will take me.