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The Index Mindset

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Summary

Bob Seawright discusses Michael Jordan's current situation with his NBA team, the Charlotte Hornets. Jordan is in "serious talks" to possibly sell his majority stake in the team, which he bought for $275 million in 2010 and is now valued at $1.7 billion. This article examines the idea of the "index mindset" and how it relates to Jordan's situation. Seawright argues that while the index mindset may be an appropriate default in certain contexts, it can be dangerous in others and should not be adopted across all domains. He uses examples from sports, finance, politics, art, and private life to explain how the index mindset fails to take risks and create meaning. He concludes that if we want things to become better than they are, the index mindset is not the way to go and encourages readers to actively manage their lives.

Q&As

What is the "index mindset"?
The index mindset is an approach that favors average results over extreme ones, a bird-in-hand over two in the bush, relative over particular truth, function over form, quantity over quality, mandate over merit, efficiency over exploration, passivity over action, predictability over tails, determinism over freedom of choice, mistake avoidance over smart decisions, evolution over revolution, adaptation over reformation, safety over risk, diversification over concentration, preservation over creation, velocity over due diligence, optionality over decisiveness, the general over the specific, and growth over profit.

How has Michael Jordan's ownership of the Charlotte Hornets worked out?
Michael Jordan's ownership of the Charlotte Hornets has worked out spectacularly badly. The team has posted a record of 419-596 in the roughly 13 years of Jordan’s ownership, with only three winning seasons, two playoff appearances, and zero postseason series wins.

What did the 75-year Harvard study find about happiness?
The 75-year Harvard study found that happiness is love. People who have loving relationships with family and friends thrive; those who don’t, don’t.

What is the Jeff Bezos regret minimization framework?
The Jeff Bezos regret minimization framework is the idea that if you fail, you won't regret that, but you will regret not ever having tried.

What does Carl Jung mean by "The least of things with a meaning is worth more in life than the greatest of things without it"?
Carl Jung means that the least of things with a meaning is worth more in life than the greatest of things without it. Meaning comes from giving more than receiving and from being a part of something bigger than oneself.

AI Comments

👍 This article is an insightful take on the index mindset and the importance of active management in life.

👎 The author's analogy between Michael Jordan's business ownership and the index mindset is a bit of a stretch.

AI Discussion

Me: It's about the "index mindset" and how it has become increasingly prevalent in our society. It talks about how Michael Jordan made a bad bet on himself as an owner of the Charlotte Hornets and how his profit has come from rising NBA team values generally rather than any premium for having made the Hornets more attractive and more valuable.

Friend: Interesting. What are the implications of the article?

Me: The article argues that the index mindset is about risk mitigation rather than ambition. It's about management and administration rather than opportunity. It's about the efficient frontier rather than the bleeding edge. It solves for minimax rather than maximin optimization. It doesn't want the last shot. The index mindset always plays it safe and throws away a big shot for index returns. This approach may be appropriate in some contexts but it can be dangerous in others. The article argues that if we truly want things to become better than they are, the index mindset isn't the way to go and it encourages people to take risks and be ambitious in their pursuit of meaning and mattering.

Action items

Research index investing and determine if it is the right approach for your financial goals.
Reflect on your life and identify areas where you could benefit from active management.
Develop a plan to take risks and pursue opportunities that could lead to greater satisfaction and meaning.

Technical terms

Index: A type of investment that tracks a specific market or sector, such as the S&P 500 or the technology sector.
Index Mindset: A mindset that favors average results over extreme ones, a bird-in-hand over two in the bush, relative over particular truth, function over form, quantity over quality, mandate over merit, efficiency over exploration, passivity over action, predictability over tails, determinism over freedom of choice, mistake avoidance over smart decisions, evolution over revolution, adaptation over reformation, safety over risk, diversification over concentration, preservation over creation, velocity over due diligence, optionality over decisiveness, the general over the specific, and growth over profit.
Chalk: A term used in sports betting to refer to the favorite in a game.
Tinder: A dating app that allows users to find potential partners.
Moral Relativism: The belief that there is no absolute right or wrong, and that moral values are relative to the individual or culture.
Quantum Mechanics: A branch of physics that deals with the behavior of matter and light on the atomic and subatomic scale.
Globalism: The belief that the world should be viewed as a global community, with shared interests and responsibilities.
American Exceptionalism: The belief that the United States is unique among nations and has a special role to play in world affairs.
Regret Minimization: The practice of making decisions that minimize the potential for regret in the future.
Jeff Bezos Regret Minimization Framework: A framework developed by Amazon founder Jeff Bezos that suggests that people should make decisions that minimize the potential for regret in the future.
Maximin Optimization: A decision-making process that seeks to maximize the minimum possible outcome.