Asymmetry and Arbitrage
In this section, we’ll talk about getting the most reward out of the smallest investment.
As mentioned elsewhere on the site; we live in volatile times. These are fraught with danger, but the volatility also creates tremendous opportunity.
In this article, I’ll explain how best to approach and take advantage of this.
We’ll start with the fundamentals; systems thinking.
Systems Thinking
Most people do not think in systems. Worse still, most “systems thinkers” do not think in systems. This leads to cloudy online advice like equating systems thinking with having a to-do list and making sure to brush your teeth twice a day. (See the “life hacking” section below.)
But you have to think in terms of systems because otherwise you can’t “hack” the system and get extraordinary results from ordinary actions.
Systems thinking is essentially finding routines, programs and best practices that are dynamic as opposed to static.
A to-do list isn’t a system. If you do the to-do list every day, monitor the results, and work variables into the process, that’s a system.
And it’s only when you do these things that you’ll find good opportunities.
Effectively, you do the above so that you can observe what’s going on around you, how you best operate and how other people operate.
Opportunities
The best opportunities are found where nobody else is looking. This makes writing about them difficult. Every so often, a city will have an “up-and-coming” neighbourhood where cutting-edge things occur and likeminded people congregate. That’s well and good until that becomes widely known, and then everyone floods into that neighbourhood, bringing with them the status-quo.
We have that on a digital scale too: opportunities are hard to come by and once they’re widely known there’s bound to be a flock of people ruining it.
Still, this site is small enough that we can talk about hacking and not cause a tsunami of people copy-pasting the same exact method until it doesn’t work.
Most “hacking” is about the method behind the madness anyway; and “life-hacking” is no different.
It’s not what you do, but why you do it and how you apply whatever hack you’ve found.
“Life-Hacking” As A Term
Life-hacking is a term that should denote something good but doesn’t. That’s due to what I’ve talked about above. Life-hacking as a concept was written about in the popular book The 4-Hour Workweek and from there, it’s use as a term spiralled.
Now you can go on YouTube and see “15 Life-hacks that’ll increase your Productivity” videos and all fifteen basically amount to, “Don’t be a complete loser” and there’s nothing insightful.
That said, the idea of “hacking life” is a good one: you treat it like a game to be played and then you find the cheat codes. Those cheat codes normally involve arbitrage and asymmetry.
Arbitrage: Taking knowledge or ability from one domain and porting it to another.
Asymmetry: Taking advantage of natural inequalities and using them to get a disproportionate advantage over whatever task you’re trying to win at.
Gamification
From there, you can expand out using the hacker metaphor: assume problems are puzzles to solve or games to be won. This has two effects; 1. It takes away the emotional pulls that you’re subjected to usually. You’re likely invested in getting a great romantic partner or not going bankrupt. This clouds your judgement in a way that something silly like, “See how many matches you can get in an online dating app,” or, “how can you make $50 this weekend by writing and selling an ebook,” don’t.
The above is effectively gamifying your situation and divesting your ego of getting in your way.
Psychology of Hacking
If you want to “hack” opportunities, then, as stated above, you’ll want to look where nobody else is and you’ll want to have people looking at one thing while you do another. Effectively, what people call a “life-hack” is effectively a magic trick; you look at the stack of cards as they’re being shuffled, but the card you’ve picked is never in the deck.
To get unbelievable results with little effort, you’re effectively doing something mundane and turning it into something impressive.
A good example that’s a bit overwrought is hiring a Lamborghini and putting it on your Instagram account. It gives the impression you’re rich and because people largely believe “seeing is believing,” it’s a bit of a “hack.”
It’s not a particularly great one, because eventually it catches up to you or you spend more energy creating a fake version of yourself than you would actually having integrity. Still though, it’s a glimpse into the psychological effect of hacking. Similar hacks include wearing nice clothes, being taller, make-up and speaking with authority.
For more business oriented psychological hacking, the most profane example I can think of are the plugins on ecommerce sites which say, “only 5 left” or, “sale ending in 37 minutes.” In most cases, these are automated, fake and designed to tug on your in-built sense of urgency. But they work.
Effectively, they’re the magician telling you “look over here,” while they’re doing something simple elsewhere.
Final Thoughts
This section of the site will be, effectively, about hacking. However, I’ve dithered around creating a separate section for this, because ultimately it runs throughout all of the other categories on the site:
- The best opportunities are ones where you have no competition
- Best practice is to take knowledge and skills from one domain and apply them to another
- Watch out for magic trick behaviour from others
- The more you learn about psychology, the better you’ll be at hacking and the less effective other hackers will be on you
- All things considered, you should expend minimum effort for maximum results
The above is a framework that I believe anyone can adopt, and is crucial to understanding where I’m coming from with a lot of what I talk about elsewhere on the site.
The world is absolutely set up so that you don’t get the above, and so you have to complete adapt your mental space as well as take physical action to get the results you want.