Alpha in investment usually means: (1) excess return; (2) adjusted by risk; and (3) earned by active management.
More generally, alpha signifies the people and resources that contribute to life significance.
This morning I made a list of alpha sources in my life. These ranged from my PhD studies and cumulative research experience to membership of international scholarly organisations. Several themes emerged:
- The alpha sources fell into three major categories: (1) capital; (2) knowledge / networks (as resources); and (3) decisions that led to specific, mindful actions that established cause-effect chains (causality).
- Positive changes to capital and knowledge / networks also expanded my decision scope.
- Utilisation means better actions on capital and knowledge / networks (pragmatics).
- Academic success has a winner-takes-all dynamic that is also a J-curve with asymmetric payoffs for those who can survive the ‘up or out’ career dynamic.
I also noted the following after completing most of my annual tax expense estimates:
- At least 10% of my yearly income goes to resources for personal research projects.
- What if the personal research projects were income-producing?
- I have spent the past decade in combinatorial search through various disciplines; now I am developing a personal synthesis that draws on all of these experiences.
- I have access to academic networks and institutional libraries that expand the scope and reach of my personal research projects. This can be a problem: shifting goal-posts.
- The employers I have worked for are increasingly top-down, fragilista (Taleb), and run on a private equity model.
- Informational resources are expanding; bureaucracies are creating new ideological myths in response.
- I signed some bad contract deals early in life that still financially affect me (namely, student debt).
- Having ‘skin in the game’ heuristic (Taleb) changes how to deal with sucker bet dynamics: you become aware that you are placed in a sucker position (single point of failure) even if you can’t change it (external costs shifted to you).
Some final thoughts:
- The core resources I need for personal research — a computer, a personal research library, an inter-library loans card, and personal blog facilities — can be run on a tighter budget than I have allowed over the past decade.
- The core challenges I have are: (1) having enough capital (including to hedge downside risks); (2) cultivating high energy / focus to do optimal research work; and (3) making daily progress amidst life changes and work commitments / routines.