Deep Survival: Who Lives, Who Dies, and Why - Laurence Gonzales

[Saluki]

This doesn't seem like an investment book, but if you believe that Charlie Munger was onto something when he told you to "invert, always invert" or "tell me where I'm going to die so I don't go there" then this book will appeal to you.  I noticed the connection to investing instantly and I when I googled the author I saw that Bill Miller and Michael Maboussin sought him out and eventually got him working with Miller's people at the Santa Fe Institute. 

 

There some writers who have great ideas but are terrible writers (Nassim Taleb) and some people who are great writers but don't have great ideas (Michael Lewis) and some people who have great ideas and are great writers (Malcolm Gladwell).  I'll put Gonzales in that third group.  

 

Ostensibly it's a book about disasters like plane crashes and 9/11 but he takes a hard look at who lives and who dies and why.  If a person gets lost in the wilderness, the lowest survival rate is children 7-12.  One of the highest survival groups is children under 6.  Why?  Older kids make decisions like adults, but they are bad at adulting.  Younger kids make decisions like animals, not little adults. If they are tired, they rest. If they are thirsty they drink. If they are cold, they crawl into an empty log and take a nap. They do what adults who end up surviving do. He tells the story of someone on 9/11 who made it to the lobby on the lower level and a guard told him to go back, and he did.  And he died.  There's a story in there about a 17 year old girl in a plane crash who hiked for 2 weeks through the jungle in her communion dress and lived while the people who stayed by the plane (and had the plane as shelter plus whatever food and water was in the wreckage) died. What about the special forces soldier who died on a rafting trip where civilians take their families and live?  

 

It seems like a lot of it comes down to perception of danger and doing the wrong thing.  The Army commando didn't think the water was dangerous (he'd done much more dangerous stuff, so he pushed the guide away who tried to rescue him and floated down the river laughing until he died.  Like in investing, they didn't know they were doing something risky and disregarded it, they didn't think it was risky. 

 

And with regard to doing the wrong thing, this passage reminded me of gambling or day trading" "the word 'experienced' is often used to describe someone who's gotten away with doing the wrong thing for longer than you have. "  On Mount Hood several climbers died on what they thought was a "beginners' mountain" because they tied themselves together thinking that if someone fell, the others with their crampons and axes could stop their fall. But "there's no such thing as a beginner's mountain.  It's like beginner's sex."  And unless that rope is tied to something that is anchored to the mountain, it's the wrong thing to do, even if you've done it before and nothing bad happened.  As he explained, without a belay (anchor), "that's not a rope, it's a suicide pact."  What about the two guys who went on a 4 day hike and the guy who was upset that his partner was going too slow, decided to go ahead and wait for him?  One guy had a map, the other had the compass.  Those work great if you have both together, and are practically useless by themselves. 

 

If you wonder whether this is useful, it saved Gonzales' life.  He wrote articles on airline crashes there was a McDonnell Douglas plane that was the Boeing 767 of its time.  He didn't believe the company's excuse that all the crashes were due to human error. "Why aren't all the other planes crashing from human error too?".  He was going on a trip and refused to take that plane even though his friends mocked him for it.  The plane crashed and his friend died, and he lived to write about it in his book.  He also wrote about his father, a WWII bomber pilot, who's 10 person plane was shot down over Germany, and he was the only survivor.   

 

There's another related book called "Everyday survival" that I also read at the same time as this, but if you had to pick one of the two, I would say read this one. Highly recommend!  

[james22]

Ordered, thanks.

[james22]

Fantastic.

[UK]

https://tim.blog/2023/09/07/nassim-nicholas-taleb-scott-patterson/

 

"If you must panic, panic early"

 

 

[Maverick47]

Thanks for the recommendation, @Saluki!  I’m enjoying this greatly.  One can easily draw lessons for investing from some of the stories.  For example, the unanticipated results of roping climbers together could be compared with the dangers of tying your investments together, either by concentrating in a single industry, or, worse, by concentrating in the industry that your own employment is dependent upon.

 

Instead of thinking about what could go right with an investment, I expect I’ll want to spend more time thinking of what could go wrong, so, as Charlie Munger notes, “I’ll never go there.”

 

I appreciated his comments recommending writers on wildfire and airline disasters, and picked up some additional books to read on those particular topics….

 

I’d much rather learn these sorts of lessons vicariously than from personal experience…

 

[james22]

On 8/17/2024 at 8:44 PM, Maverick47 said:

One can easily draw lessons for investing from some of the stories.  For example, the unanticipated results of roping climbers together could be compared with the dangers of tying your investments together, either by concentrating in a single industry, or, worse, by concentrating in the industry that your own employment is dependent upon.

 

Instead of thinking about what could go right with an investment, I expect I’ll want to spend more time thinking of what could go wrong, so, as Charlie Munger notes, “I’ll never go there.”

 

Normal Accident Theory suggests investment dangers might be unavoidable?

[Saluki]

1 hour ago, james22 said:

 

Normal Accident Theory suggests investment dangers might be unavoidable?

 

Well, his take is that just because people are going to die, you don't have to be one of them. For instance, Hawaii is not Florida, It was formed from volcanic eruptions, and a lot of the coastline is sharp volcanic rock.  He was on a beach that had a manmade barrier which protected swimmers the waves and families waded in there with their kids.  He wanted to swim next to it, and asked the lifeguard.   

 

It turns out that in Hawaii more tourists means more deaths because a certain amount of them will die.  More lifeguards won't reduce those deaths because they die in ways that won't be helped by a lifeguard. They swim (or get carried out) and they can't swim directly back to the beach because the current is too strong. So they swim sideways (which is the right idea in Florida) and because the waves are much bigger, often get carried by a wave and smacked into the sharp volcanic rocks and start bleeding, which attracts the sharks to finish them off, if the impact didn't.

 

So maybe in investing, you have to be sure of the paradigm and not apply the wrong rule, which is the right rule somewhere else.  Low P/E's tend to be great investments, but not in cyclical commodities at the peak of the cycle. Those are investible when they P/E is high (because earnings are at a trough).  An old industrial company with no debt isn't the same as a new tech company with no debt.  The tech company might be disrupted by a competitor working in his garage, but the industrial company might be taken down by something like asbestos or forever chemicals litigation. 

 

Diversification might reduce your return in addition to your volatility, but it also might prevent the tight coupling that causes major accidents like 3 mile island.  Like the supply chain disruptions in Covid, you have to have some slack in the system which is inefficient, but another way to look at it, is that the slack is a shock absorber. 

[Maverick47]

1 hour ago, james22 said:

 

Normal Accident Theory suggests investment dangers might be unavoidable?

You’re right.  
 

But perhaps we can learn something about how to prepare ourselves (and our investments) to respond to the sorts of dangers that we are bound to face sooner or later, both those that are unlikely to occur and those we simply cannot anticipate in terms of the timing and the magnitude when they do occur.

 

That’s one of the reasons I was willing to hold on to my Fairfax shares after 2009.  Even though I didn’t personally think global deflation was likely, I also didn’t mind paying(in the form of poor returns on the shares) for the insurance policy that investment provided me, in the event that I may have been wrong about the future.

 

 

[james22]

31 minutes ago, Saluki said:

Like the supply chain disruptions in Covid, you have to have some slack in the system which is inefficient, but another way to look at it, is that the slack is a shock absorber. 

 

23 minutes ago, Maverick47 said:

But perhaps we can learn something about how to prepare ourselves (and our investments) to respond to the sorts of dangers that we are bound to face sooner or later, both those that are unlikely to occur and those we simply cannot anticipate in terms of the timing and the magnitude when they do occur.

 

In a world with fingers of instability that may be connected in ways we have not seen in the past, caution is the order of the day.

 

https://www.mauldineconomics.com/frontlinethoughts/fingers-of-instability-mwo040706

[Charlie]

Great book! 

 

If you really want it safe, stay at home. You know your home. There are no enemies (sometimes your wife) and no other catastrophes.

 

https://www.barrons.com/articles/yacht-bayesian-mike-lynch-sinking-causes-89781e2a?mod=past_editions

[UK]

21 minutes ago, Charlie said:

If you really want it safe, stay at home. You know your home. There are no enemies (sometimes your wife) and no other catastrophes.

 

[formthirteen]

Live to invest another day or invest to live another day.

 

[james22]

I like to imagine SBF coming across this in his prison's library.

[Saluki]

 

Apropos of this post.  

 

The slowest person should go in front, not behind, so that you all travel together.  Don't split up.  

 

If you don't know where you are, don't keep going. It's harder to find a lost person when they keep moving around. 

 

Have a lighter or something to start a fire, to stay warm and also to make it easier for rescuers to find you. 

 

Also, I think this guy has a legitimate HR complaint about hostile work environment.  "Micro aggressions?  No.  Macro aggressions.  They took me to the wild and left me to die by myself."