Some people have called for the abolition of the tenure track.  They argue that tenure encourages aging professors who are (assumed to be) less fit to teach to stay in their university positions.  The problem, and the push-back, seems to be in the fact that teaching does not pay well – if there is not security, and it does not pay well, why would you do it?  Some might also say that tenure allows for true experimentation and freedom in that security.

But say we do actually abolish tenure.  What then?  More-over, who then?  Will it just be the young academics withtheir  (at least some) lack of wisdom and experience?  I admit to be one – a young academic, though I acknowledge I am just learning the ropes, though I am at a trade school more than a University.  For me, a tenure track is a light at the end of the tunnel.  In a conventional sense, I seem to have three options – to teach and get paid half (or less) than than the “real world” with no security, to find a tenured position with security but sill less pay, or to go back into that “real world” where I have no problem supporting my family and saving toward retirement (the reward for my years of effort).

The fourth option (non-traditional in modern academia, though rampant in millenia past, especially in Greek philosophers and mathematicians around the intersection of BC and AD¹) might be a create-your-own tenure track.  Either with independent wealth (a side business, stock market transactions, etc) or with corporate sponsorship.  Being at a private institution now, I do not see corporate sponsorship as a feasible solution.  Independent wealth is not easy to come by – and it is not a guarantee.  But if one could, similar to Nassim Nicholas Taleb, practice an art or a business in such a way as to create financial freedom, one could choose a career without regard to monetary gain or stability.  If I were blessed with financial freedom, I would continue to teach and be involved in academia.

It is not that I plan to leave academia and time soon.  But this whole problem of money and security has been on my mind lately.  I am always reading, thinking and learning about business – I wonder if there is a way to create my own tenure track.  I need a good idea.

On the side (of web design and development, teaching, etc) I like to read and think about investing.  The Intelligent Investor is my favorite book on investing, written by the brilliant man Benjamin Graham.  The reason it is my favorite book is that it makes practical sense to me.  It seems wise.  It rails against speculation.  It is about as conservative and grounded an investing strategy as you can get.

As I read through Taleb’s The Black Swan, I recognized an idea that is complementary.  It is all about limiting your risk to the unknown – which is really what Graham was getting at.  Here’s Taleb’s approach:

I am trying here to generalize to real life the notion of the “barbell” strategy I used as a trader, which is as follows.  If you know that you are vulnerable to prediction errors, and if you accept that most “risk measures” are flawed, because of the Black Swan, then your strategy is to be as hyper conservative and hyper aggressive as you can instead of being mildly aggressive or conservative.  Instead of putting your money in “medium risk” investments (how do you know it is medium risk?  By listening to tenure-seeking “experts”?), you need to put a portion, say 85-90 percent, in extremely safe instruments, like Treasury bills – as safe a class of instruments as you can manage to find on this planet.  The remaining 10 to 15 percent you put in extremely speculative bets, as leveraged as possible (like options), preferably venture capital-syle portfolios.  That way you do not depend on errors of risk management; no Black Swan can hurt you at all beyond your “floor,” the nest egg that you have in maximally investments.  Or, equivalently, you can have a speculative portfolio and insure it (if possible) against losses of more than, say, 15 percent.  You are “clipping” your incomputable risk, the one that is harmful to you.  Instead of having medium risk, you have high risk on one side and no risk on the other.  The average will be medium risk, but constitutes a positive exposure to the Black Swan.  More technically, this can be called a “convex” combination.

The Black Swan, pages 205-206

In addition to it’s application to investing, this idea can be applied to life.  And, indeed, Taleb details what that might look like at a later point in the book.  But the idea is to be conservative in your job, in your pursuits, etc with all but 10-15 percent of your life.  In that other 10-15 percent you take risks that have maximum upside.  As in, look for opportunities that “scale” (as a business person might say).  You look for things that allow you to input some amount (time, money, etc) but can return gains that are non-proportional.  I can put this idea in the negative better than the positive: if you plan on making widgets, your earnings will always be proportional with the number of widgets you make.  Sure, you may be able to raise the price, but you will always have to work harder to make more widgets and make more money.  If, instead, I could write a book, there’s a chance that book will sell millions of copies (*cough* Harry Potter *cough*) and give me a disproportionate return.  As in, I write one book which takes me x hours (say 200 hours).  The more books I sell, the more I make for those 200 hours – I do not (necessarily) need to work more hours to make more money.  David Heinemeier Hansson from 37 Signals talks about this same idea.

Anyway, it’s a very interesting idea to me and I wonder how this might apply to both my career and my investments.

On pages 58-59 of The Black Swan, Nassim Nicholas Taleb talks about an experiment by P.C. Wason.  Wason gave his subjects a number sequence – 2, 4, 6 – and asked them to try to guess the rule that generates the sequence.  In order to guess the test subjects produced other three-number sequences.  They were ten told “yes” or “no” depending on whether or not their sequences fit the rule.  The correct answer was “numbers in ascending order” but very few people got it right.  In order to see the rule, people would have had to provide number in descending order, or out of order – but very few people tried those sequences.  Generally, the subject would come up with a hypothesis of what they thought the rule might be and try to confirm it through their guesses.  Taleb goes on…

But there are exceptions.  Among them figure chess grand masters, who, it has been shown, actually do focus on where a speculative move might be weak; rookies, by comparison, look for confirmatory instances instead of falsifying ones. But don’t play chess to practice skepticism.  Scientists believe that it is the search for their own weaknesses that makes them good chess players, not the practice of chess that turns them into skeptics.  Similarly, the speculator George Soros, when making a financial be, keeps looking for instance that would prove his initial theory wrong.  This, perhaps, is true self-confidence: the ability to look at the world without the need to find signs that stroke one’s ego.

What’s interesting about all of this is my own perspective.  I find myself wanting to ignore the negative.  I want to dodge the weak points in my speculations.  Rather, I want to bolster my own confidence, my own ego by proving that my way is right.  When, in reality, I would go further faster if I failed faster by shooting down my own ideas.  Oh to be that self-confident.

“…What we call ‘talent’ generally comes from success, rather than the opposite.  A great deal of empiricism has been done on the subject, most notably by Art De Vany, an insightful and original thinker who single mindedly studied wild uncertainty in the movies.  He showed that, sadly, much of what we ascribe to skills is an after-the-fact attribution.  The movie makes the actor, he claims – and a large dose of nonlinear luck makes the movie.”

from Nassim Nicholas Taleb’s The Black Swan, pages 30-31

I’ve been reading the book The Black Swan.  It’s a very interesting book, but the above quotation really caught my eye.  I do think that “success” is largely based on circumstance and that people generally step into the role they’re given.  If much is expected, much will be returned.

From what I understand, something like this happens in the armed forces.  I have heard people say that you have no idea what you can do physically until you’re pushed to your limits.  Evidently the armed forces have a way of pushing people up to their limit, but not (usually) beyond.

Of course, what the book is talking is as much about fame and social standing as it is actual skill.  But I like the idea.  If I am put in a place, with the right motivations (I don’t like to fail, I have some reward, etc), I will generally succeed.  And looking back, people will say “see, Philip was the right person for that job, no one else could have done it.”  When in reality, my ability to do the task probably hinged on my being assigned the task and my own motivations rather than my actual skill level.  There are many people with adequate skill – just not many with the same opportunity.

However, once given that opportunity, and that success, I think some of the skill then becomes legitimate.  For instance, only a handful of players in the NBA have played in the Finals.  By circumstance, they have an advantage over everyone else.  But that experience has made them better as well.

This is all very interesting.  Ultimately my faith plays in at some point, but I won’t get into the details now.  Generally though, it is best to look to acquire the skills of your peers and above, but also to hunt for opportunities.  The two together seems to breed success.