Josh Wolfe on filtering information using the Fitzgerald, Twain, Schopenhauer framework

Literary giants have provided us clues to help us in a world awash with information. When he was featured on the Knowledge Project podcast, venture investor and entrepreneur Josh Wolfe (@wolfejosh) revealed the fascinating framework he uses to filter information.

I’ve got this framework on information processing, which I call Fitzgerald, Twain, and Schopenhauer. And each of these was a famous literary giant that had a quote that I think defines where we should direct our attention.

And so Fitzgerald’s famous quote was, “The test of a first-rate intellect is the ability to hold two opposing ideas in your head at the same time and still retain the ability to function.” …Most of the front page news for the New York Times or the Wall Street Journal, or the FT are Fitzgerald situations. There’s a smart person saying that gold is nothing but a shiny piece of metal. There’s a smart person saying it’s a great stored value in an otherwise fiat currency world.

There’s somebody saying that China is a fraud about to blow up with overindebtedness and state manipulation of statistics. And there’s somebody else saying that this is the engine of growth for the next decades to come. And the only certainty in the uncertainty in the volatility between these two sides that are playing out over time.

The second situations are Twain situations. And his famous dictum was, “It ain’t what you don’t know that kills you, it’s what you know for sure that just ain’t so.”

And so what is the thing that everybody is predicting linearly is going to continue, and then boom, there’s informational surprise…To me it’s like the physics of information, it’s entropy. Informational surprise, I think defines everything, in markets especially. But here, great example, ten years ago was housing. Housing prices could only go up. And on that false assumption, which you had historic support for, all of a sudden, boom. There’s this big shock and big surprise.

And then the final situation is the Schopenhauer dictum, which is, “Talent can hit a target that nobody else can hit, and genius can hit a target that nobody else can see.”

And that goes back to the asymmetric information contained in the minds of the scientists who feel like they have the answer or have a secret that nobody else knows. And our job is to find those people before everybody else knows that secret–and then give them money.

Head to this page to listen to the full episode which covers all sorts of interesting issues including uncovering new ideas and decision making, or jump to 21:55 where he explains how his system works.

Photo by Fabio Ballasina on Unsplash

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