How to succeed in chaos
8 min readIf I asked you to pick the best stock to buy, right now, based on a limited number of options, what would you do? Most people wouldn’t be able to choose a specific stock.
This is a problem in a world full of constantly changing rules, scenarios, and outcomes. If you are unable to judge a complex decision (at least most of the time) you’ll be grossly underprepared for the chaos life holds.
The fact is that we can never make a perfect choice. We will always make mistakes. Despite this, our aim is to make the best possible choice, given the information we have.
You can’t know everything. It’s a fact of life. Our brains are supercomputers, but even a supercomputer doesn’t have infinite storage. At some point, new knowledge must replace old knowledge.
As humans, we focus on what to remember and what to forget. This is why most people don’t remember basic algebra after high school. They never used the information, so their brains classified it as unneeded.
Even if we had all the knowledge in the world, we still wouldn’t be able to predict things with 100% certainty. Karl Popper, a philosopher, had a lot to say about this. One of his main points is that we can never be completely certain that our knowledge is true. It doesn’t matter how confident we are, we could always be wrong.
This is shown time and time again in history. Before Nicolaus Copernicus, most people believed that the sun revolved around the earth. Even after Copernicus, Isaac Newton had to mathematically prove the heliocentric theory for the general public to accept it.
In science, you cannot “prove” something, you must try to prove that it’s false. This applies to all areas of life. You can’t prove something is 100% correct. Instead, you try to prove that something isn’t incorrect.
Because you can’t know anything with 100% certainty, you can’t predict everything with 100% certainty. Nassim Taleb put forward the black swan problem. It proposes that just because you can’t prove something wrong doesn’t mean it’s true. The premise of the argument is that people used to believe that all swans are white. This was proven wrong when black swans were discovered in Australia.
Again, this idea is best shown by history. Very few people were able to predict the 2008 financial crisis. No one saw 9/11 coming.
The inverse is also true. In 1982, Ray Dalio predicted that the US and other superpower nations would default on their debt. They never did.
The reason for these incorrect predictions is this: Logic can only predict things that have happened before. You can’t use logic to predict something that has never happened. While history echoes itself, it never repeats itself. We had never seen anything like the 2002 .com bubble.
As technology advances, old cause and effect relationships begin fading. Once the printing press was invented, civilization had to revise itself to account for everyone having books.
We live in an age of rapid growth and change. As technology continues to progress, we must learn how to make decisions. Decisions not based on old causal relationships, but on principles, logic, and risk assessment.
In my experience, there are two methods for making decisions. You can either learn the necessary skills to gain the knowledge to make the decision, or you can jump straight in and make an educated guess.
Often, we don’t have weeks or months to make a decision. Most of the time, we only have a few minutes. Because of this, we need a system that works for decisions on both short and long timeframes.
Learning beforehand Learning as much as you can about something before making a decision is often the best route to take. If you wanted to invest in stock, you wouldn’t jump in and start trading TSLA (Tesla’s stock) or AAPL (Apple’s stock). You would learn as much as you could about trading and how to manage a portfolio. You would find out what most beginners invest in.
This approach is beneficial because it creates safety guardrails. They make sure that you don’t end up making the worst possible choice. Instead of throwing you in the deep end, it allows you to learn from other people’s mistakes.
The safety here comes with a trap. You don’t need to learn everything about that topic before you make a choice. You only need to learn enough so that you can make an educated guess. Unfortunately, because this choice is so safe, people often remain in the learning phase for way too long. This leads to procrastination. Someone might wait for years waiting for the “right” moment. Meanwhile, many possible opportunities have passed and gone.
Unfortunately, as I mentioned earlier, we often don’t have a long time to make a decision. This is why it is important to learn how to improvise and make guesses at the choice we believe is most likely right.
A good way to do this is to start with what you know. What situations have you experienced before that were like this? What lessons did you learn? Was there something you wished you had done differently?
It is important to pay attention to past experiences so you don’t repeat the same mistakes. A couple years ago, I bought a Bitcoin ETF at a high point and as a result, it was stuck in the red for 7 months. I made this same mistake at the beginning of the year. Had I looked back at my previous experiences instead of paying attention to my emotions, I could have avoided this lapse in judgment.
Mental models are important to better estimate what choice you should make. For example, you could consider the reversibility of the choice. If you did happen to make the wrong choice, how easy would it be to fix? If you could fix it in a week or a month, it’s not that big of a deal. What is the cost of waiting? Would you regret not making a choice at all? How much information would make the biggest difference in your choice? These questions can help cut down excess choices.
Because we are humans and cannot make perfect decisions, we need to accept imperfection. We won’t always make the right decision. The only thing we can do is put in our best effort to make the best choices. But when accepting imperfection becomes an excuse for ignoring what you don’t know, we can fall into the opposite trap.
Socrates once said “The only thing I know is that I know nothing.” Overconfidence is one of the best ways to kill your decision making abilities. If you believe that you know everything you need to know to make a perfect decision, you will inevitably make the wrong choice.
When you believe you know something, you don’t need to learn it. If you think you know all there is to know about writing, you’ll never try to improve. You’ll never turn to people who know more about writing than you. You’ll be stuck in perpetual stagnation.
Keeping an open mind is crucial when it comes to wise decision-making. Everyone has knowledge you can learn from. If you don’t consider opinions that you might not like, you will eventually fail. Sometimes, the piece of information that is most painful is actually the most useful.
When you have an open mind, you can learn from other people’s mistakes. You can look past people’s current situation and see the incorrect calculations and missteps they’ve taken. You can learn from those and do better.
Overconfidence is comfortable because it doesn’t need change. You can excuse everyone’s critiques as “they don’t know anything.” Uncertainty is uncomfortable because we don’t know what is ahead. When we can convince ourselves that we already know the future, our lives become a lot more stable. The problem then becomes: how can we remain calm in a world of chaotic decisions?
When you face a life changing choice, you face a field of possibilities with no predetermined script. There is nothing stopping you from making one choice or the other. While this choice is liberating, it is also crushing.
With infinite choices, we need to accept that we will make mistakes. You can’t escape it. When you stand on the edge of a cliff, you have three options. You can remain on the cliff, or you could fall. The problem is that you could also jump. Anxiety comes from the fact that you have the choice to remain on the cliff OR jump.
Despite this, we must learn to commit to our choices and jump into chaos bravely. We can’t predict where our choices will lead. But as long as you use the tools available to you to make the best choices, you’ll be on the right path. After all, it’s far greater to swim poorly than to not swim at all.
Tying it back to the question I asked at the beginning: what stock would you buy? The question isn’t really about stocks. Instead, it’s about knowing when you’ve learned enough to avoid disaster, when to trust your gut, and being willing to admit you might be wrong. Then all you can do is watch closely to tell if you were right.