From Skill Acquisition to Cognitive Upgrades - Reflections on Investment

In this edition of Reflections on Investment, I intend to delve into the topic of skill acquisition and cognitive upgrades in relation to investment.

Appearance vs Essence

Tennis is a regular sport for me, and I have been playing for a few years now. My skill level is average, but I have come to realize that this seemingly simple sport requires much more understanding than I initially anticipated. For the purpose of this discussion, I will set aside the more complex techniques such as serving, approaching the net, and slicing, and focus solely on the forehand and backhand techniques. I have noticed that only a small percentage, probably less than 10%, of players on a tennis court (the facility I play at has over 10 courts) are able to consistently and naturally produce high-quality shots with their forehand and backhand.

Tennis is a sport that almost everyone initially seeks coaching for (the learning curve is significantly higher compared to badminton), so it is surprising to see such a high level of inconsistency even after receiving coaching. Looking back, I even recall having a few coaches who were simply familiar with the hand movements, but had significant issues in explaining and understanding the principles of generating power.

If you search for instructional videos online, you will find various coaches with seemingly similar approaches, but their explanations of the details vary greatly. Some professional coaches even use detailed breakdowns and imitate the movements of professional players for teaching. I can't comment on the scientific accuracy of such methods, but personally, I found them to be somewhat counterproductive. This is because each person has their own unique body structure and habits of generating power, and trying to forcefully imitate movements on the surface is extremely difficult to achieve.

Take the example of the wrist lag technique shown in the image. You will notice that different players have vastly different positions, and it is actually quite challenging to intentionally execute this movement. It can feel very uncomfortable if you try to imitate it. You might wonder if this peculiar movement, such as Federer's unconventional stance, is suitable or not.

Another major misconception among many amateur players (and surprisingly, even some coaches share this understanding) is that tennis involves hitting the ball straight forward. This misconception has led to many incorrect training practices. Indeed, from an outward appearance, it may seem like the ball is hit straight forward, similar to how many people perceive punching in boxing as a forward strike to hit the opponent.

Many punches may indeed appear to be thrown straight forward from the surface.

The forward force in tennis strokes, regardless of one's physical abilities, is actually not significant. This is because, from a physics perspective, we cannot generate a substantial amount of forward force since momentum cannot accumulate. In fact, the more important source of energy comes from rotational force. On one hand, there is a reactive force similar to the recoil of a spring after rotation and spin. On the other hand, this force is not hindered by our own body limitations along the path of motion, allowing momentum to accumulate. This is why we are able to generate seemingly impressive ball speeds. From a physics standpoint, it is also understandable that the accumulation of force is much greater in rotational motion compared to linear motion, as the reactive force from rotation is minimal and its path is the longest.

So, why do we actually hit the ball when we are performing a rotational motion? It's because we utilize Centrifugal Force, which helps release the accumulated energy from the previous rotation. This force acts outward from the center of rotation and allows us to transfer the stored rotational energy into the forward motion of the ball when we strike it. This is how we are able to effectively hit the ball and make it move in the desired direction.

Understanding this point, you will realize that in fact, many sports utilize the release of Centrifugal Force through rotation to achieve forward striking motions. Apart from the previously mentioned examples of tennis and boxing, this applies to various other sports as well, including baseball, shot put, and many more. In these sports, athletes generate rotational energy and then transfer it into the desired forward motion, effectively propelling the object they are interacting with.

Once you understand this principle of generating force, several conclusions can be drawn (which may seem simple, but can be easily misunderstood before comprehension):

1. By actively increasing uncoil (the reverse rotation), you can enhance the power of the coil. It is similar to adding more rotation by actively counter-rotating a spiral. This is evident in boxing, and the core purpose of wrist lag is to utilize the re-coiling action of the wrist to achieve topspin in tennis strokes.

2. Different stances represent different principles of force generation. For example, an open stance allows for better utilization of the uncoil and coil rotational force, resulting in shorter movement patterns and faster reaction times, while still maintaining speed and power. On the other hand, a closed stance generally relies on leg power to generate forward rotation, resulting in longer movement patterns and relatively slower reaction times, often used for approaching short balls. In reality, modern professional players rarely use closed stances for regular strokes.

3. In addition to accumulating and releasing force, coil (rotational force) has another advantage over direct forward striking: its release is more linear, thus providing greater stability. This is particularly important in sports that require high stability, such as tennis and golf.

4. Adding additional force in directions other than rotation actually hinders the transmission of rotational force, resulting in inefficient use of the arm's strength. Moreover, exerting force in a non-rotational manner disrupts the stability of the rotational force, leading to a significant decrease in shot consistency (despite occasionally producing impressive shots, consistency becomes challenging to maintain).

Different stance positions have varying effects on force transmission:

Kinetic Chain power chain principle

Compared to relying solely on the muscles at the extremities (such as the hands and feet) for generating force, the Kinetic Chain approach is more scientifically grounded. It fully utilizes the most developed muscle groups in the human body and utilizes sequential force generation through chain-like transmission. For example, force is generated from the legs, transferred to the core, then to the shoulders, and finally to the wrists. The underlying principle of force generation in the Kinetic Chain is fundamentally similar to the concept of accumulating force through rotation, as mentioned earlier.

Although it may initially seem that the swinging of the arm is solely responsible for the serve, the truth is that a stable and powerful serve relies more on the action of the legs, known as leg drive.

Acquiring Skills

There are many misconceptions and pseudo-conclusions regarding the acquisition of skills, such as the talent theory or the 10,000-hour rule. These are merely anecdotal observations and do not necessarily have a profound understanding of how skills are truly acquired. One of the biggest misconceptions is the popular notion of "muscle memory."

Anyone with a basic understanding of neuroscience should know that muscles themselves do not have memory functions; they can only execute commands issued by the brain. However, why do we have the concept of "practice makes perfect" and the ability to perform many actions unconsciously?

To explain this question, we can touch upon the topic from the perspective of evolutionary biology:

From an evolutionary standpoint, the most crucial aspect for any living organism is "survival," and the core of survival lies in achieving intergenerational energy transfer from a group perspective, not just as individuals. Therefore, the efficient transmission of energy is of utmost importance and deeply ingrained in our genes. "Habits" (sometimes referred to as "skills") serve as important mechanisms to facilitate this efficient energy system.

From the beginning, our brain might be likened to a potato, despite being covered with countless neurons that are invisible to us.

And as various connections occur between neurons (which may happen through deliberate thinking, learning by imitation, or trial and error), some pathways may naturally connect, forming "rapid" and "efficient" channels for energy transfer. This is akin to the path created by a droplet of water, where subsequent droplets can more quickly and efficiently follow the same path.

Eventually, we may acquire numerous "habits" and "skills," forming a multitude of "highways" for different modes of thinking. These highways serve as open channels for rapid progress when encountering similar situations in the future.

Daniel Kahneman, in his seminal work "Thinking, Fast and Slow," uses the term "System 1" to describe this phenomenon of highways. Due to their efficiency, effortlessness, or "energy-saving" nature, these pathways have played a significant role in long-term evolutionary survival and competition. However, in modern life and learning, we have discovered that these highways can also give rise to numerous misconceptions and biases, which require extra caution, particularly in the context of investing.

Since there is no such thing as "muscle memory," our skill acquisition primarily involves the formation of "highways" in the form of brainwaves. In the not-so-distant future, can we directly acquire the necessary "skills" by obtaining these brainwaves?

At least in terms of scientific principles, this is unquestionably possible. Many movies, such as the famous "Matrix," depict scenes of "downloading skills," which I personally find entirely plausible. However, our current understanding of brain signals is still in its early stages. Our ability to interpret extracted signals from the brain is limited, let alone the capability to write information according to specific instructions.

In fact, we are already capable of performing brain-computer interfaces to control the movements of robotic arms. However, the acquisition of such skills primarily relies on the brain's spontaneous trial-and-error learning process, rather than having the ability to directly input electrical signals to change brain thinking. We are still far from achieving the capability to directly manipulate brain thinking through the direct input of electrical signals.

However, it seems that we can take an alternative approach by improving and refining the feedback mechanisms of trial and error (essentially, how brain cells form grooves or pathways through trial and error feedback, similar to continuously forming AB tests). This can enhance our learning abilities (the so-called deliberate practice is actually a process of rapidly forming AB test feedback mechanisms on a short circuit).

There are many examples in the business world where rapid progress is achieved in methodological terms by improving AB testing and feedback mechanisms. For instance, companies like Shanda (or present-day Blizzard) used a "rocket launch" approach in game development, investing heavily, but until the launch day, it was uncertain whether the game would succeed (similar examples can be found in the film industry, among others).

The brilliance of Tencent lies in simplifying and optimizing this process. It adopts a "complex" approach (the tech industry greatly values complex systems, as seen in Netflix and ByteDance's focus on context over control). Tencent operates with hundreds or even thousands of small teams simultaneously within the system, each competing for resources. When they reach a milestone, resources are increased, and if they fail to meet the milestone, they are quickly cut off. By lightening the approach to AB testing and feedback mechanisms, Tencent has been able to catch up with established gaming companies in terms of methodology.

It is true that the recent investment story of Yuanqi Forest is not just about developing popular soft drinks. It revolves around Tang Binsen and the investors' expectations of changing the existing model in terms of systems and methodologies.

Traditional beverage companies, such as Wahaha and Nongfu, often invest hundreds of millions in the initial stages of launching a new product. It takes several months of trial placement and research to determine its potential success. However, Tang Binsen, who comes from a gaming background, is said to have managed to control the feedback costs of trial and error for new product launches within a few million. This gives him the advantage of being able to rapidly introduce new products, quickly test them, and obtain prompt feedback, thanks to a mechanism that emphasizes agility and fast iteration.

There are indeed many similar stories, such as Tesla and traditional gasoline OEM manufacturers being completely different species when it comes to new product development pace and evolution. They utilize completely different organizational structures, high integration, extensive reuse of underlying capabilities, and significantly enhance the role of software, among other factors.

Okay, it seems like we have diverged a bit. Let's get back to the topic of skill acquisition. Playing games is, in fact, a rapid way of acquiring skills. Through social interaction, skill improvement, and personal growth in games, we can quickly experience complex life experiences that we may not encounter in our daily lives. Similarly, watching movies can also provide us with a condensed experience of several decades of life within a span of two hours.

However, currently, whether it's PC gaming or mobile gaming, the feedback we receive for skill acquisition is still significantly different from the real world. Therefore, playing a PC soccer game, for example, is unlikely to teach you how to play real-life soccer (excluding strategic aspects). But could this phenomenon gradually, or even completely, change with the advent of virtual reality (VR)? If VR can provide a sensory experience in terms of physical perception (which is essentially feedback of brain electrical signals) similar to the real world, then the skills you acquire in VR games could be equivalent to those acquired in the real world. The scenarios depicted in "Ready Player One" actually create a different virtual world from the real world. However, from the perspective of skill acquisition, as long as the brain electrical signal feedback in the VR environment is similar to that in the real world, VR can be used to establish more efficient, rapid, and direct AB testing, providing quick feedback in the process of skill acquisition.

Of course, in today's world where technological capabilities still have limitations, apart from imagination, it is indeed reasonable from the perspective of neuroscience to consider using visual signals as input to alter the connections between our brain neurons. I suspect that perceiving visual signals may indirectly assist the brain in establishing the definition of correct actions. If one can compare their own actions and make adjustments, improvement is possible. This is a common practice among professional athletes for skill enhancement.

However, compared to the direct input of electrical signals or the implementation of rapid feedback mechanisms through VR that we discussed earlier, purely visual input remains relatively indirect and lacks self-perceptive feedback mechanisms.

Indeed, skill acquisition is primarily a function of the brain, but we should not undermine the importance of the body as the necessary vehicle for executing skills effectively. This is why it is necessary for us to engage in some form of physical exercise (weightlifting, running, or others). However, in the long run, the first step towards human-machine integration, prior to brain-machine interfaces, may come from the synergy between humans and machines in the realm of physical performance. This has objectively reduced the appeal of a "perfect" physical body. If we compare our requirements for physical abilities with those of ancient or even prehistoric humans (when a strong body meant better survival chances rather than just aesthetics), the decrease in demands becomes evident. For example, with the advent of automobiles, our reliance on physical fitness for transportation and long-distance travel has significantly diminished.

Lastly, let's discuss cognitive upgrading and investments.

Returning to the concept of Appearance vs Essence mentioned earlier, when it comes to investments, a significant portion of our work involves induction and summarization. This means that many times we are simply making judgments about the future based on superficial phenomena, which can lead to serious errors. For example, while there are many benefits to using technical analysis, such as representing psychological biases and reflecting group thinking patterns, blindly applying technical analysis without truly understanding its essence is essentially a case of copying without comprehension.

For example, we often derive a plethora of rules, such as what to buy in a particular year, how an increase in year-on-year data will impact the outcome, or following models like CASLIM. These rules can sometimes be astonishingly accurate, as they represent the repetition of underlying psychological and social factors. However, at other times, these rules can be surprisingly inaccurate because they are still based on imitating without true understanding.

In summary, while rules and patterns can provide valuable insights, it is important to approach them with caution. These rules may exhibit accuracy due to the repetition of psychological and social factors, but they can also be highly unreliable. This is because they are still relying on imitating without true comprehension or understanding of the underlying principles.

Signal and Noise

However, one of the most challenging aspects of investing is that as individuals, we often make judgments based on the current situation. It's like walking along a series of small noise-induced fluctuations while attempting to predict the trend of major fluctuations. Limited by our narrow perspective and habitual short-sightedness (as true foresight is not easily attainable), we often mistakenly believe that we have grasped long-term trends and construct narratives to support our views. This narrative formation is actually an energy-saving mechanism deeply rooted in our genes. Only by stepping out of the trend can we realize that many of our previous judgments were based on noise.

As for how to truly grasp long-term trends, it is unlikely that anyone can provide an accurate answer because we are all limited by historical constraints. How can a frog at the bottom of a well comprehend the vastness of the sky?

However, some investment gurus have attempted to offer solutions. For example, Munger has tried to establish a cognitive framework based on lattice theory, which systematically incorporates longer-term dimensions of science (including mathematics, physics, biology, neuroscience, sociology, philosophy, psychology, literature, decision-making processes, etc.). In simple terms, this framework aims to build stability and accuracy in judgment and decision-making mechanisms by adopting a longer time horizon, far beyond the current social stage, in order to achieve true long-term investment. I wonder if without such depth of thinking, engaging in long-term investment may result in many mistakes, as one may persist on the wrong path due to inadequate understanding.

Another example is Taleb, one of the most accomplished investors and amateur philosophers, who introduced the simple concept of Lindy theory in his books. Essentially, the theory states that theories and ideas that have withstood the test of time are more stable and antifragile compared to short-term, trendy theories and stories.

I hope the above helps us better understand the concepts of Appearance and Essence, aids in skill acquisition, and enhances our cognitive awareness of things and ourselves. At the very least, they are some interesting musings. :)