Earning Wisdom

Published on January 17, 2023

Passive consumption of information is not enough to earn true wisdom. We must put in serious efforts to leverage what we learn from others.

“It would be nice if wisdom had such a quality that it could flow from one man who is full of wisdom to another man who has no wisdom, just as with two connected vessels water flows from one vessel to the other until the water level is the same in both of them. The problem is that to obtain wisdom, you must make an independent, serious effort of your own.”

— Leo Tolstoy, A Calendar of Wisdom, January 17

At the age of 73, Leo Tolstoy started to obsessively focus on “collecting the wisdom of the centuries in one book.” Tolstoy first dreamt about putting together a collection in the mid 1880s when he decided that he had to “create a circle of reading for myself: Epictetus, Marcus Aurelius, Lao-Tzu, Buddha, Pascal, The New Testament.” 

Tolstoy’s ambition was realized in three editions of A Calendar of Wisdom published between 1904 and 1910Tolstoy was a lifelong learner and never stopped thinking, reading, and writing, so perhaps there would have been additional editions of the book if he had not died of pneumonia in 1910 at the age of 82.

For each day of the year, the reader is presented with a series of quotes along with Tolstoy’s own thoughts. Due to many quotes with religious and spiritual themes, the book was banned by the Soviet regime after the Russian Revolution. In 1995, it was again published in Russia and quickly sold over 300,000 copies. The book was translated into English by Peter Sekirin and published in the United States in 1997.

Tolstoy’s entry for January 17 recommends that readers resolve to make a serious effort to obtain wisdom from those who already possess it — in other words, to learn from the experiences of others. While exposure to wisdom is surely better than nothing, it is not enough to simply be exposed. We must make a concerted effort to internalize and understand the wisdom we read and put it into practice in our lives. 

I purchased A Calendar of Wisdom a couple of weeks into the new year, but it was not difficult to catch up. I have also been reading entries from The Daily Stoic by Ryan Holiday which follows a similar format. In both cases, each entry appears on a single page and serves as a prompt for reflection. Tolstoy’s selections and his own thoughts have a decidedly religious theme whereas Holiday’s selections are often more secular.

It is far better to start the day grounded in timeless wisdom rather than in a flurry of mindless activity leading into an even more frenzied day. But, as Tolstoy says, simply reading brief quotes and then not doing anything with that information is insufficient. We need to find ways to take wisdom we are exposed to and somehow apply it. What are some ways we can take this important step?

The Power of Writing

I have started each day since October 2019 by writing for about fifteen minutes. I adopted a practice created by Julia Cameron called morning pages and I wrote an article about my experience with the technique a few months later. My initial goal was to improve my focus and productivity:

“The concept behind morning pages is simple, so simple that it is tempting to dismiss it as a gimmick out of hand. The only rule is that you are supposed to sit down first thing in the morning immediately after waking up and write three pages of longhand, in a stream-of-consciousness style.

That’s it.

There are no rules regarding what you should write about or how long you should spend writing. When the three pages are written, you simply stop and proceed with the rest of your day.

Why is this valuable and how can it help you to be more productive?”

While morning pages has probably made me more productive, it has also served as an opportunity to internalize wisdom in materials that I read. At first, I would often write about a book that I had read the prior evening. Morning pages is supposed to be a stream of consciousness experience, so if I am still thinking about a book after waking up the next day, that is a good signal to write about it. In some cases, I picked up the book and copied a quotation from it, and then wrote about the quote.

When I read Tolstoy’s entry today, I immediately copied it down in my morning pages journal. It occurs to me that the simple act of writing down a quote helped to internalize the message and to, in a sense, “own” it. Tolstoy wrote that piece of wisdom over a hundred years ago and I wrote it down this morning. The thought did not originate with me, but the act of writing it down made it part of my thought process. And obviously it made enough of an impression to inspire the article you are now reading.

Internalizing the wisdom of others through writing goes well beyond writing down quotes verbatim. We should write about what we are reading in our own words and apply our reading to our day to day lives. This is not limited to philosophical musings. If you read an article or listen to a podcast by a successful investor, you should write down your takeaways immediately. Better yet, read the 10-K of a company that the investor mentioned and see if you can spot the attributes that he or she discussed.

Good writing is good thinking. When you force yourself to put your own independent thoughts down in written form, the flaws in your knowledge and logic quickly emerge and become impossible to ignore. Consider this recent tweet by Paul Graham:

The beauty of obtaining wisdom through writing, whether from philosophers or from successful investors, is that anyone can do this sitting quietly in a room. With nothing more than an electronic device and an internet connection, we have the entire world of wisdom at our fingertips and we have the freedom to write down our thoughts about what we have read. 

This incredible privilege was reserved for the wealthy not very long ago yet very few people today leverage this massive advantage of modernity. Instead, most people just keep passively and mindlessly scrolling — perhaps this is best thought of as a scourge of modernity.

Writing Is Not Always Enough

While it is possible to internalize a great deal of wisdom just by reading and writing, it would be naive to think that worldly wisdom about all subjects could be obtained by sitting quietly in a room consuming information and writing about it. There are obviously many areas of human endeavor that require taking action, especially when taking action shapes our own psychological response to events.

No matter how much you read about great investors and write about them, and no matter how many “paper portfolios” you create applying their wisdom, there is absolutely no substitute for risking your own hard earned money on investments that you have personally selected. 

But shouldn’t it be possible to gauge your personal investing skill based on a “paper portfolio” consisting of pretend positions that you invest in with hypothetical money? Why not see if you have skill before risking your own hard earned money?

Deprival-Superreaction Tendency refers to reactions to the experience of loss — both the loss of something one already possesses as well as the loss of something that one has almost obtained. It is one of Charlie Munger’s twenty-five psychological tendencies that lead to human misjudgment and closely related to prospect theory developed by Daniel Kahneman and Amos Tversky. 

We feel the benefits of a gain much less forcefully than the pain of an equivalent loss:

Anyone who has risked real money in markets can relate to prospect theory. From a trader’s perspective, gain and loss corresponds to quotational gains and losses while a value investor will usually think of permanent gains and losses, but the principle is the same. Losses sting far more than the pleasure we get from an equivalent gain. 

Any investor who intends to have staying power over years and decades must be able to come to terms with our tendency to react emotionally to losses. It is not enough to read about prospect theory on Wikipedia or even to read Daniel Kahneman’s excellent book, Thinking, Fast and SlowIt is not enough to write about these topics without having experienced anything for yourself in the real world. And it is not enough to “risk” gains and losses on paper without any real money being at stake. Our psyche knows that paper portfolios are not real and we will not experience authentic emotions.

Doing the Work 

We live in an age of abundant information and even more noise. Building wisdom requires time, the ability to differentiate valuable information from noise, and then taking steps to do something useful with newly acquired knowledge. As Tolstoy said, “to obtain wisdom, you must make an independent, serious effort of your own.” It is much easier to do this today than during Tolstoy’s life, but few actually take action.

Here is the action plan I have adopted that has worked well in recent years:

  • Improve my information diet by exposing myself to sources more likely to represent useful signals rather than noise. I am not an advocate of completely avoiding the news, but I recognize that the news is almost all noise. It is important to be aware of the Lindy effect and to tilt reading toward older books.
  • Write about what I read either for myself in morning pages or other writing or, better yet, for public consumption. I have found that writing for others forces me to improve the quality of my thinking. I often realize that my knowledge is superficial or non-existent when I try to explain a subject to others. 
  • Take action when appropriate. Not all worldly wisdom can be obtained sitting quietly in a room while reading and writing. Warren Buffett has said that “if history books were the key to riches, the Forbes 400 would consist of librarians.” Obviously, Mr. Buffett is not saying that we should ignore books. He has been a voracious reader all his life. My interpretation is that he is telling us that we eventually must engage with the real world in addition to learning vicariously.

It is easy to be a passive consumer of nothing but noise, doom scrolling on social media and getting engaged in topics that will be long forgotten within hours or days. Almost all social media is a pointless, frustrating, dystopian waste of time and I almost always regret logging into Twitter. At least I am aware of the problem.

True wisdom requires doing the work. Fortunately, having a curious mindset and remaining persistent for a long time eventually pays off.

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Earning Wisdom
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