Lifestyle, Neuroscience, Productivity

Mini Blog Series 5: The Power of Compounding (Part 2)

If you have ever been remotely interested in “getting rich” you must have considered harnessing the power of compound interest by investing in dividend-paying and tax-free retirement funds which compound over time. The association of the concept of compound interest with money is not new. But what has it got to do with knowledge?

Read 500 pages every day. That’s how knowledge works. It builds up like compound interest. -Warren Buffett

Most of us spend our time-consuming information that has a very short half-life. Most of what we read on the internet or watch on the news is of little value even just a few days later, let alone months. Expiring information is cool but it’s not knowledge, for it will not be relevant in a month or year. The first step to compounding knowledge is to focus on learning concepts, techniques, etc that will change very slowly. Alice Schroeder, the author of Warren Buffett’s authorized biography The Snowball, describes how Buffet filled his mental filing cabinet with information that had a long half-life.

As fs.blog notes, “When we consume information that doesn’t expire or expires slowly;  is very detailed; and we spend time thinking about it not passing the buck, we can match patterns. This is how you learn to see what other people are missing. The longer you do this, the more advantage you get.” 

Another key to building a long lasting reservoir of knowledge is to build up an inventory of solid first principles. A first principle is a basic, foundational, self-evident proposition or assumption that cannot be deduced from any other proposition or assumption. Elon Musk has emphasised on the importance of fundamental principles often. Thomas Moran in his post has outlined how “Musk’s superpower hinges on his learning transfer processwhich involves taking the foundational principles he’s learned in one field — for example artificial intelligence, physics, or engineering — deconstructing this knowledge into fundamental principles and then reconstructing them in another completely separate field.”

The funny thing about the memory is that the working memory is very limited — it can only hold about 4 concepts at any one time. By breaking information into small groups of about 4 things, we can make it easier for your brain to remember information. The information is then stored into longer term (procedural) memory. All polymaths and expert learners are seen to be adept at this.

There are obviously many other ways to train the brain for accelerated learning. But the takeaway is a simple one. Develop a system that works for you to retain and repurpose important data, information, and insights that are being sprayed at you daily like water from a fire hose.

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