As you might know, if you follow me in any form, my favorite author of all time is Nassim Nicholas Taleb.
He is primarily known as an authority on the financial markets and risk management, but he is as well a philosopher in a general sense and a ruthless political commentator.
One of my favorite ideas in his latest and greatest book Antifragile, is something called The Barbell Principle.
He uses this concept to describe how you might want to invest your savings, if your goal is to stay unexposed to great risk, and also have real potential for profit. This is achieved by allocating the majority of your resources in completely secure assets – cash or equivalents – while putting the remaining minority in seriously volatile investments, like options.
This explains the name: you concentrate everything at either end of two extremes.
It allows you to sleep comfortably at night and still have a fast horse in the race.
Once you experiment with the principle, you find that it can be useful in many areas of life, since it often gives you the best of two worlds.
In training for a marathon, for instance, many coaches recommend a barbell–style training regiment, where you combine running very slowly for longer distances with sprint intervals. This is supposedly the most time-efficient way to improve, compared to training hour after hour at semi-high speeds.
You can take this approach to general luxuries. At one moment you live frugally, and enjoy the simple pleasures of life. Then, on occasions, you splurge and treat yourself, without making it a habit. This will enhance your feeling of appreciation and enjoyment, compared to always being semi-indulgent – a great defense against hedonic adaptations.
One more: you make sure you don’t sit in front of the computer all day, being semi-productive, mixed with random surfing. Instead, you sit down and get seriously productive in compressed and restricted time slots each day, and really make the allotted time count. The rest of the time, you stay away from the computer and do something else – that may even involve a little movement too.
Recently, I applied the barbell principle to my life in a new and profound way. I decided to quit my full-time job, in favor of a part-time job, in order to gain a greater potential for upside. How? Had I chosen to stay in my full-time position, I could easily have told you, what my personal worth would be in ten years from now. I could have estimated it, since I already knew my salary bracket and potential for promotions in the coming years.
On the other hand, with a part-time job, I will spend a part of my week making sure that I am able to pay my bills, but in the rest of my spare time, I will be able to work on my own entrepreneurial projects, that could potentially have upsides that are impossible to estimate. So now, I can safely say, that I will either do financially okay, or very good.
This also brings with it a greater sense of mystery and adventure, as the rest of my life won’t be decided for me in advance.
In what other areas of life can you apply the barbell principle, in order to improve your potential for upside?