What Do I Do on this Blog?

In most of my posts, I usually ramble on about whatever ideas or thoughts are floating around in my mind in that particular period of time, but this time, I'll talk about something different. I'll talk about what my perspective is and what I do on this blog, it's purpose, and so forth. I'll split this up into six parts:
1. Rigor and Building Frameworks of Thought
2. Probabilistically Thinking
3. Interfacing Across Different Fields
4. Systemic Thinking
5. Toolbox Approach
6. Conclusion

Rigor and Building Frameworks of Thought:
My primary training is in mathematics, statistics (more so probability), and engineering, but I venture out into other fields ranging from politics to economics to finance to geopolitics. So what does this allow me to bring to the table? Due to my training in mathematics, statistics, and engineering, I bring a very rigorous way of thinking. What do I mean by rigor? By rigor, I mean mathematical rigor. All mathematical rigor is really just a sound way to think about things. It allows us to build conceptual frameworks and models on the fly while understanding all of the assumptions (both implicit and explicit) we're making. It allows us to craft different ways of looking at the same thing as necessary while understanding exactly what the framework's limitations are.

With this rigor, I combine my understanding of concepts from economics, finance, politics, and a whole host of other fields. This allows me to literally construct models to find different ways of looking at all sorts of different things within a very short period of time. It allows me to understand a system's qualitative behaviors and possibly see various scenarios coming; however, there is something more important I have.

Probabilistic Thinking:
I have the ability to think probabilistically. What do I mean by this? I mean that when I look at the world, I don't see something that can be determined. I see something that's constantly shifting. When I look out into the world, I see something that has its own way of operating or working. I see that each individual is a small, useless cog in some self-organizing mechanism--an organism. I view economies and countries as living organisms that need to constantly be adapting and changing as times change.

In every part of every way we look at the world, there is uncertainty involved. On top of this uncertainty, the response of the system or the agent to the uncertainty of some dose is usually far more important than the dose itself (in mathematics, it's equivalent having a stochastic dose with a nonlinear response). For options traders, this concept is very easy to understand. Leverage and scale matter, a lot. What matters isn't just which direction the move happened, but the degree to which the move happened and each added degree of the move changes the scale of the impact on us.

Interfacing Across Different Fields:
I have interests ranging across lots of different fields and while I'm nowhere close to a specialized expert on each of these fields, I do have fundamental basics in fields ranging from politics to economics to geopolitics to finance to mathematics to even history. Thus, I try to build models that link across economic, political, geopolitical, financial, ecological, and other kinds of systems. I'm able to take my view of risk and overlay it across differing assumptions to give me possible scenarios.

Since I'm able to think soundly about different fields, I can integrate and across many different fields, that automatically gives me a huge advantage. Then, if you add in my ability to think probabilistically, I have a sound way of thinking about possible scenarios. Due to my understanding of probability, I also have the seemingly rare ability to understand and think about winner-take-all systems (very few people fully understand the implications of winner-take-all effects). This allows me to have a healthy way of thinking about risk, developing ways of thinking that's robust to what we don't know and don't understand, and visualize possible scenarios along with possible pathways for the development of the system that interconnects many different fields.

Systemic Thinking:
Due to my mathematical ability, I have a very easy way of thinking in terms of systems. When you add in all of the other abilities I bring to the table, I have ways of understanding things that few do. On top of this, I combine all of this with key concepts and ideas from politics, economics, finance, geopolitics, international relations, and so on. Through this method, thinking in terms of systems is relatively simple for me.

The ability to think systemically means not just focusing on what happens next, but on what the possible sequence of events are. In mathematics, we call these higher order effects. In the real world, the impacts of what we do aren't straightforward and linear. On the contrary, they're complex and nonlinear. My ability to think systemically allows me to understand complex, nonlinear systems better than most.

Toolbox Approach:
In my daily approach to things, I like to take what I call a toolbox approach. I have various concepts, ideas, and frameworks that stem across differ across fields. I like to be able to create and design whatever I need in order to better understand what's going on at a certain time about a certain system. How can I do this? As I stated, I build models using different concepts and ideas, make simplifying assumptions, and then add in constraints into the system. I'm able to shift the concepts/ideas, the assumptions, and the constraints as I please to understand the limit to each model or conceptual framework I build.

Basically, I create and build tools on the fly to do understand as much as I can. I don't try to regurgitate other models or the same models because that limits our perspective. Instead, I try to gather as much understanding as I came from any way of thought I can. Then, I integrate across each of these areas by making assumptions and adding constraints. This allows me to take a toolbox approach to understanding what's going on and how to engineer systems/my behavior (I bet on the stuff I say here too BTW) to create a response that allows the system/me to benefit the most.

Conclusion:
The central key to my approach is adaptability. My goal is to build a way of understanding, looking at, and dealing with things that's robust in the face of or gains from what we don't understand/don't know/don't know we don't know. This is why I take a toolbox type approach. If one model doesn't apply, I like to play with it and tinker with it in such a way where I can get something about the system from it while making sure I understand the model/framework/whatever's limitations.

My primary concern is not in eliminating error (such a view of the world results from stupidity and sucker thinking). Error cannot and should not be eliminated while volatility cannot be suppressed. Instead, we want lots of error while gaining from the corresponding error; volatility must be dissipated and information must be disseminated. In other words, we want to be adaptable. The key aspect I strive for in my approach is adaptability. I try to look at the world where I can change my mode of operation/understanding/engineering with the times.

I'm not looking for one theory or underlying framework about how the world works--I think that's stupid and pointless. Instead, I focus on a fundamentally sound process that's highly adaptable with little downside risk, primarily tail risk, that allows me to catch the upside from the positive tail.