A Timeless Analogy About Speaking and Listening

A conversation is like playing catch (and we never learn learn how to listen)

Mortimer Adler & Charles van Duren (How to Read a Book):

The reader or listener is much more like the catcher in a game of baseball. Catching the ball is just as much an activity as pitching or hitting it. The pitcher or batter is the sender in the sense that his activity initiates the motion of the ball. The catcher or fielder is the receiver in the sense that his activity terminates it. Both are active, though the activities are different. If anything is passive, it is the ball. It is the inert thing that is put in motion or stopped, whereas the players are active, moving to pitch, hit, or catch.

Plutarch (Essays):

Instead, just as in a ball game the catcher must move and change position in a rhythm which responds to that of the thrower, so in the case of speeches there is a certain harmonious rhythm on both the speaker’s and the listener’s part, if each of them makes sure that his own conduct is appropriate.

Epictetus (Discourse)

This is what you will see skilful ball players doing also. None of them is concerned about the ball as being something good or bad, but about throwing and catching it. Accordingly, form has to do with that, skill with that, and speed, and grace; where I cannot catch the ball even if I spread out my cloak, the expert catches it if I throw.

Yet if we catch or throw the ball in a flurry or in fear, what fun is there left, and how can a man be steady, or see what comes next in the game? But one player will say “Throw!” another, “Don’t throw I ” and yet another, “Don’t throw it up!” That, indeed, would be a strife and not a game. In that sense, then, Socrates knew how to play ball. How so? He knew how to play in the lawcourt. “Tell me,” says he, ” Anytus, what do you mean when you say that I do not believe in God. In your opinion who are the daemones? Are they not either the offspring of the gods or a hybrid race, the offspring of men and gods?” And when Anytus had agreed to that statement Socrates went on, “Who, then, do you think, can believe that mules exist, but not asses?” In so speaking he was like a man playing ball. And at that place and time what was the ball that he was playing with? Imprisonment, exile, drinking poison, being deprived of wife, leaving children orphan.These were the things with which he was playing, but none the less he played and handled the ball in good form. So ought we also to act, exhibiting the ball-player’s carefulness about the game, but the same indifference about the object played with, as being a mere ball.For a man ought by all means to strive to show his skill in regard to some of the external materials, yet without making the material a part of himself, but merely lavishing his skill in regard to it, whatever it may be. So also the weaver does not make wool, but he lavishes his skill on whatever wool he receives. Another gives you sustenance and property and can likewise take them away, yes, and your paltry body itself. Do you accordingly accept the material and work it up. Then if you come forth without having suffered any harm, the others who meet you will congratulate you on your escape, but the man who knows how to observe such matters, if he sees that you have exhibited good form in this affair, will praise you and rejoice with you; but if he sees that you owe your escape to some dishonourable action, he will do the opposite. For where a man may rejoice with good reason, there others may rejoice with him.

Prospect Theory Through the Ages

“Riches do not exhilarate us so much with their possession as they torment us with their loss.” – Epicurus

“Men feel the good less intensely than the bad.” – Livy

“For most people, the fear of losing $100 is more intense than the hope of gaining $150. We conclude from many such observations that losses loom larger than gains and that people are loss averse.” – Daniel Kahneman

Irrational Overconfidence

In September, 2008, Dick Fuld, the Chairman and CEO of Lehman Brothers, traveled from his office on the thirty-first floor to Lehman’s trading floor to make an announcement. “I know some of you are unhappy with the performance of the stock,” Jared Dillian, a former Lehman employee reports in his memoir Street Freak. “And so am I. As you know, I own a lot of stock. And this has been just as painful for me as it has been for you. But we’re going to… get the stock back up to eighty-five bucks.” Fuld concluded on a reassuring note. “And don’t think I forgot about that one-fifty!” alluding to his long-term goal. Lehman filed for Chapter 11 bankruptcy protection on September 15th.

In September, 1998, precisely ten years before the collapse of Lehman Brothers, John Meriwether, the founder of Long-Term Capital Management, wrote a letter to investors announcing that “we see great opportunities in a number of our best strategies.” Long-Term’s equity plummeted from $2.3 billion to just a few hundred million dollars by the end of the month. The fund was liquidated two years later. According to Roger Lowenstein, author of When Genius Failed, “[Merriwether’s] analysis was devoid of any suggestion that anyone at Long-Term had made a mistake.”

Why does overconfidence sometimes flourish as our odds diminish? In nearly every corner of human life involving prediction—from poker tables in Las Vegas to corporate board rooms in Manhattan—we’d be better off if we were more realistic about our chances. But no. We double down. And we usually pay the price.

How You Make Money Will Influence How You Understand Luck

Imagine a genie visits two people. He gives the first, Brett, $100 million. The second, Mike, also receives $100 million. But the genie places Mike under a spell. Whereas Brett is aware that he received his fortune from the genie, Mike believes that he has spent the last twenty years of his life investing in the stock market. Through hard work, he has netted $100 million so far.

To an accountant Brett and Mike are the same. But Brett and Mike inhabit much different mental lives. Brett continues his life as normal, minus a few indulgences. He remains parsimonious, knowing that his fortune might vanish just as fast as it appeared. Mike continues to invest confidently. One weekend, however, an oil crisis in the Middle East erupts and a bubble in the tech industry bursts. Mike loses all of his money. Devastated, he commits suicide and destroys the lives of those who loved him.

On the path to $100 million, we should never judge the quality of a decision based on its outcome. If a hypochondriac buys 10,000 bottles of Advil and the world’s supply of ibuprofen suddenly runs out, we would never praise him for his foresight. Luck can play a large role in success, especially with respect to investing. There’s nothing inherently wrong with that, of course, except when we attribute a lucky result to our skill and intellect. Once that occurs, overconfidence and risky decisions flourish, and the chances of blowing up increases.

In his splendid book The Most Important Things: Uncommon Sense for the Thoughtful Investor Howard Marks offers similar advice. “We all know that when things go right, luck looks like skill. Coincidence looks like causality. A ‘lucky idiot’ looks like a skilled investor. Of course, knowing that randomness can have this effect doesn’t make it easy to distinguish between lucky investors and skillful investors. But we must keep trying.”

The Friendly Face Fallacy

Mike is a friendly, good looking middle-aged man who lives in Manhattan. He is having drinks with his friend Brent, a sharp thinking interlocutor.

Mike: Yesterday, a woman approached me asking for directions, which I happily provided. This is not the first time this has happened to me. People ask me for directions all the time! I must have one of those faces.

Brent: Mike, you fool. Don’t you see your illogical reasoning?

Mike: No. Please, explain.

Brent: How many lost people have looked at your face and decided not to ask you for directions?

Mike: How could I possibly know the answer to that question?

Brent: You cannot, which is my point.

Mike: I don’t follow.

Brent: True, people have asked you for directions. But it’s nearly impossible to know if  you “have one of those friendly faces” without first knowing how many people have looked at your face and turned the other way. Your judgment only considers success stories. It’s like trying to measure how good David Ortiz is at hitting home runs when your evidence is a highlight reel of every single one of his home runs. You need to account for how many times he didn’t hit a home run — all the strikeouts, ground outs, fly outs, singles, double, triple, etc.

Mike: I think I see what you are saying. But I still think I am at least above average.

Brent: Possibly, but unlikely. For that you would have to know what the average is in the first place. And I assume you don’t have data on how many times the average Manhattanite is approached for directions. Your intuition is not a good guide to determine that number.

Mike: So I am just an typical Manhattanite who is approached for directions as much as everyone else?

Brent: Most likely – but you’re an above average friend.

Mike: Thanks, Brent.

Brent: You’re welcome.