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Religion uses language in quite a different way from science. The language of religion is more closely related to the language of poetry than to the language of science. True, we are inclined to think that science deals with information about objective facts, and poetry with subjective feelings. Hence we conclude that if religion does indeed deal with objective truths, it ought to adopt the same criteria of truth as science. But I myself find the division of the world into an objective and a subjective side much too arbitrary. The fact that religions through the ages have spoken in images, parables, and paradoxes means simply that there are no other ways of grasping the reality to which they refer. But that does not mean that it is not a genuine reality. And splitting this reality into an objective and a subjective side won’t get us very far.

– Niels Bohr, Physics And Beyond

Our portrait of real markets tells us what it takes to beat the market. Any of these can do it:

— Get good information early. How do you know if your information is good enough or early enough? If you are not sure, then it probably isn’t.

— Be a disciplined rational investor. Follow logic and analysis rather than sales pitches, whims, or emotion. Assume you may have an edge only when you can make a rational affirmative case that withstands your attempts to tear it down. Don’t gamble unless you are highly confident you have the edge. As Buffett says, “Only swing at the fat pitches.”

— Find a superior method of analysis. Ones that you have seen pay off for me include statistical arbitrage, convertible hedging, the Black-Scholes formula, and card counting at blackjack. Other winning strategies include superior security analysis by the gifted few and the methods of the better hedge funds.

— When securities are known to be mispriced and people take advantage of this, their trading tends to eliminate the mispricing. This means the earliest traders gain the most and their continued trading tends to reduce or eliminate the mispricing. When you have identified an opportunity, invest ahead of the crowd.

Market inefficiency depends on the observer’s knowledge. Most market participants have no demonstrable advantage. For them, the market appears to be completely efficient.

– Ed Thorp, A Man For All Markets

A complex system that works is invariably found to have evolved from a simple system that worked…A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.

– John Gall, The Systems Bible

The hardest thing in the world to do is to write straight honest prose on human beings. First you have to know the subject; then you have to know how to write. Both take a lifetime to learn…

– Ernest Hemingway

If the world were static, we could have monotonically increasing confidence in our beliefs. The more (and more varied) experience a belief survived, the less likely it would be false. Most people implicitly believe something like this about their opinions. And they’re justified in doing so with opinions about things that don’t change much, like human nature. But you can’t trust your opinions in the same way about things that change, which could include practically everything else.

When experts are wrong, it’s often because they’re experts on an earlier version of the world.

– Paul Graham

When the fixed cost of a category is high, the relative cost of the best version of the product in that category is relatively low.

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One of the things that makes you independent is to accumulate capital because the capital can grow on its own. If you have enough capital, it will support you indefinitely. So when you’ve achieved that goal, there’s no point in spending time doing anything you don’t like doing if you can help it.

– Ed Thorp

Barbarism is unified but undifferentiated; triviality is differentiated but lacking in any central unity; the ideal of civilization is the integration into a complete whole and with the minimum strain of the maximum number of distinct activities…a civilization [could] be judged by this double standard: the degree of diversity attained and the degree of unity retained

– W.H Auden

Value creation is always a good first priority for new industries, but value capture ultimately matters a lot, too—especially because industries that can’t manage it are run by capital markets and professional managers rather than founders.

– Byrne Hobart