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Philo's avatar

I enjoyed this.

This reminded me of an anecdote about a famous early electrical engineer who had a lot of practical experience who was taking classes at Columbia with a theorist he didn't like. He supposedly used his cutting edge practical knowledge to trick his professor into electrocuting himself in front of the class during demonstrations. Business and academia seem to attract different kinds of people and the former tend to skip grad school or go to industry straight after (see SV becoming a bigger employer of top econ phds).

I can think of some examples of famous modern academic economists who got rich. Hal Varian went from Stanford to Google early on to design their auctions. Julian Simon ran a successful mail-order business and wrote a book about it. He also wrote a paper suggesting that airlines run a reverse auction to handle overbooking, which was rejected by airlines at the time but was widely adopted a decade later. (I don't think he made money from the latter.)

Nobel economist Paul Samuelson got rich as an early investor in Berkshire Hathaway, while promoting a strong version of efficient market theory in public. Buffett would complain that this was hypocritical (without referring to him by name), but he seems to be over it now.

https://www.wsj.com/articles/what-you-can-learn-from-one-of-warren-buffetts-smartest-investors-11545411745

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Brent P. Newhall's avatar

Thanks for this! It helps crystallize some of my thoughts on finances. The financial world is not random, but its trends and effects are so unpredictable it's more productive to treat it as though it is random. Thus, the key skill is an ability to work productively with uncertainty, to ride the waves of uncertainty instead of seeking a rock-solid provable foundation.

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