Chris Lakin

Deviate

Deviate from what’s typical to win a winner-takes-all game.

What do we do when we don’t know what to do? We copy others.

The people around us are most likely to be average in the skill we’re trying to learn, so we inevitably copy average-performing strategies, mental models, and habits.

And if having an average level of a particular skill is good enough—and usually it is—then this is completely logical. Following those around you is the simplest way to learn when you don’t know what you need to learn.

Oftentimes, however, having an average level of skill has near-zero value because the rewards of winning go almost completely to the best few players— it’s a “winner-takes-all” game.

In these cases, if the reward is what you desire, the only outcome that matters being one of the few best players. Being merely ‘good’, or even merely ‘great’, is worth little. In these cases, your skill level needs to be among the best few players.

But you can’t do the same average things as every other player and expect to win except by luck.

In these cases, there’s a better strategy:

Ignore everyone— even the current ‘experts’.

Forget everything that you’ve been told is “true”.

And deviate from what’s typical.

Revert to first principles. Start with only the things that are by-the-laws-of-physics true and build from there. Question all assumptions, and consider all cases in which the current paradigm breaks down.

If you fail, nothing genuinely negative happens. At worst, a lot of people will call your ideas crazy. Even if this happens, you’ll still get positive attention for being someone that’s questioning things.

Most attempts of this strategy will fail. — But at least you had a real chance! — The only chance in “winning by averageness” is extreme luck.

The second advantage to this strategy is efficiency. You don’t have to be ridiculously ‘dedicated’.

In a competitive area, what comes first is good ideas. What comes next is the saturation of those good ideas from players who copy those ideas while practicing extreme ‘dedication’ and ‘determination’.

But breakthroughs don’t come from ‘more determination’; breakthroughs come from better ideas!

Otherwise, competition becomes a race to the bottom, a game of effort, and corner-cutting. Who wants to play that game when there’s another way?

While this strategy isn’t easy—it requires a lot of thought—at least you don’t have to commit ridiculous amounts of effort.

Now, if the field you’re competing in is somewhat mature, then the best players likely earned their position by investing far more effort into deliberate practice than anyone else (plus luck likely swung in their favor a few times). In which case, you can’t expect to beat them without pointing in at least as much effort as they did. Not unless you’re deviating.

But maybe your novel strategy is intrinsically 10x as good, and there’s no amount of effort that anyone practicing the typical paradigm could invest to beat you.

Besides, productivity only scales, at most, linearly with time. (More often logarithmically.) If you’re already working hard towards something, you can’t multiply the time you spend on it. But you can adopt a strategy that’s many times better.


Personal experience

In high school I participated in a paper stock trading competition. Whichever portfolio that gained the most, relative to the S&P 500, after two months wins.

The typical strategy in my school was ‘pick companies that make things you like, and buy them’.

Yes and the vast majority of everyone else in the competition, a few thousand teams, were also thinking that. How could that strategy win, except for luck?

So instead I decided to short the market with 3x leveraged ETFs.

If the market went up, the vast majority of other teams would gain, and I’d lose. But, in reality, losing the game bore no cost. This is exactly what happened the first year I played this strategy.

But if the market went down, then almost every other portfolio would lose, but mine would gain (at 3x leverage!).

This is what happened the second year I played. After two weeks the portfolio was up 56%. After four weeks, 95.6%. After 8 weeks, 98.4%. (Peaked at +142%.)

Before the last day of the competition, the top 4 leaderboard of 2,000 looked this this:

Stock Market Game leaderboard 2020 April 24, second to last day.

And the competition ended with:

Stock Market Game leaderboard 2020 April 24, second to last day.

While my portfolio didn’t win, it got really close! At least I had a chance! My portfolio was one of 9 out of 2,000 that gained more than 60%. By adopting a different strategy, I was only competing against the few players that were also thinking I was.

I believe the last day of the competition, however, was essentially down to luck. The team that won on the last day gained 87(!) percentage points overnight. He took a risky bet— that was the only to win. I had also taken a risky bet, but wasn’t as lucky.

Either way, the only way to be first was to do something deviant.


Other examples

Let me know what else comes to mind.

Summary:

Deviate from what’s typical to win a winner-takes-all game.


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Posted 2020 August 2, last updated 2021 February 9.

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