Michael Frey

In 2001, Warren Buffett gave a talk at the University of Georgia. He asked them the most Warren Buffett question ever: • If you could invest in a friend and get 10% of their income for life -- who would you pick? Once the students answered the question, he then asked this: • Why would you invest in that person? • What character traits do they have? Now they have a list of character traits to adopt. Shortly after this, Buffett asked: If you could short a friend's earnings, who would you pick and why? Now you have a list of character traits to avoid. ---- 1. Do not think this thought experiment is only about money. You can use it for whatever currency you value. E.g. Happiness coin If you could get 10% of a friend's happiness, who would you invest in and why? If you could short someone's happiness, who would you pick and why? You can run the same thought experiment with Fitness coin, Friendship coin, Romance coin, etc` 2. This thought experiment is genius because it hacks a bug in life's video game: Humans are terrible at self-awareness. But we are great at spotting things in other people. E.g. If your friend is in the wrong relationship, you can realize in 10 minutes what may take them 10 years. Daniel Kahneman summarised his book on cognitive biases with the following: “The premise of this book is that it is easier to recognize other people’s mistakes than our own.” - Daniel Kahneman 3. Nuance - It has to be purely from merit. Buffett says it can't be because someone will inherit a large sum from their parents. It has to be based on their behavior. E.g. If you want 10% of someone's fitness coin, it's not because of incredible genetics -- is because of the actions they take.