Good Ideas

The best ideas don't need a lot of data to be convincing because they have so much room for error. Complex models with hundreds of variables, formulas, and scenarios have their place (and my career is somewhat reliant on them), but the ideas that are worth pursuing are convincing with back-of-the-napkin math and an eye for opportunity.

Statistical models are sexy. They have the ability to convince you that bad ideas can be good, and decent ideas can be great. Enough tweaking of variables and scenarios can get you to a favorable outcome. The danger is through all of the analysis, the forest gets lost for the trees. If an interest rate change of .025%, or tax increase of 5%, significantly alters the outcome of an investment thesis, do you really want your money there? If a career move is only worth it if the manager doesn't leave and those 2 promotions the recruiter promised actually happen, is that really the right move?

I'm not saying to avoid risk. One approach is to pursue lots of these ideas because the odds are weighted slightly in your favor, even if by a couple of percentage points. With a 51% success rate and enough of these ideas, you'll come out ahead. Because that's what the models say.

The better approach is to aggressively focus on quality.

In real life, slugging percentage is much more important than batting average. Getting on base 51% of the time is not a bad thing. But hitting it out of the park on every swing is better, even if overall you are taking less swings.

One or two truly good ideas per year, pursued relentlessly and allowed to compound over decades, will drive results that dwarf getting on base a small majority of the time.

Be selective in how you allocate your time and money. Wait for the good ideas, and when they come, go after them with everything you have.