The Medici Effect, Time Travel, and Why You Should Major in English
Applying the Medici Effect to Investing
It's Saturday night, and you're enjoying a drink on your front porch when suddenly, a DeLorean pulls into your driveway. Marty McFly is sitting shotgun, and Doc Brown is in the driver's seat.
They know you love investing but discovered it later in life, so they offer you a ride back to 1996 so you can make some changes. In most scenarios, you would buy Amazon and call it a day, but they place some stipulations on their offer.
The only things you can change are your college and your major, with the goal of giving yourself the best opportunity to excel as an investor.
Do you choose the Ivy League, major in economics, get your MBA, and call it a day? You could also decide to specialize, major in computer science, and capitalize on the tech boom.
What if I told you you'd be better off as an English major? Or Mechanical Engineering? Philosophy? Etc.
It begs the question.
Does your major matter when it comes to investing?
Last week, I talked about some of the investors I have been lucky enough to meet since I started investing. I plan to conduct interviews with some of these investors over the next year to gain a deeper understanding of their journey and investment process.
One of the reasons I'm curious to pick their brains is that I've noticed something several of them have in common. Most of them studied fields unrelated to investing and have used their unique backgrounds to excel as investors. For those with traditional backgrounds (Economics, Business, etc.) they often draw from other life experiences to separate themselves from the field.
Don't get me wrong—a background in business and economics is a great place to start. If I could take a time machine back to 1996, I would pay much more attention to my Accounting 101 professor. But the fact that so many successful investors come from nontraditional backgrounds or apply nontraditional concepts makes me curious.
The Medici Effect
This week, I stumbled upon an idea that gives us insight into why nontraditional backgrounds give investors an edge. The idea is called the Medici Effect, and I am reading a book by the same name. In the book, Author Frans Johansson gives a brief history of the Medici family and explains their effect on the Renaissance and beyond.
Who are the Medicis?
The Medicis were a wealthy family from 15th-century Italy who inspired the Renaissance by providing funding that attracted a diverse group of artists, thinkers, creators, etc.
Good news! The Medici effect isn't limited to 15th-century artists. We can create our own Medici effect by embracing diverse ideas and seeing where they intersect.
There is much more to explore regarding the Medici Effect, but this helps explain why investors benefit from non-traditional fields of study.
Johansson discusses the power of exploring diverse ideas and concepts and looking for areas where they intersect. Those from traditional fields tend to think in black and white and rarely pull from other places. Their extensive training creates high associative barriers.
Those who come from non-traditional fields are more able to combine thoughts and frameworks that allow them to excel as investors.
Think Nassim Taleb's Antifragility or Carl Jacobi's inversion. These are two of the uncountable concepts that when combined with investing can unlock remarkable results.
Should I wait for Marty McFly?
You don't need to wait for a time machine or change your major. Regardless of your background, any investor can make these connections. They just need to be open to the idea.
It starts by asking a simple question.
"Where does this intersect?"
This idea is one of the reasons I'm excited to interview and learn from other investors.
Together, through learning, we can compound our knowledge by exposing ourselves to diverse ideas and alternate ways of thinking, creating our own Medici effect.
What about you?
I would love to hear which fields you have drawn from to improve as an investor. Please share your thoughts in the comments section below.
Moving Forward
My writing is a combination of collecting and connecting the dots. Some weeks, I will share what I'm learning (collecting), and some weeks, I will share how I am applying what I'm learning (connecting).
I write for a couple of reasons. First, it helps me think through and process what I'm learning. More importantly, sharing my writing has allowed me to connect with some amazing people and make new friends.
So, if something resonates with you or you'd like to connect, please reach out. I'd love to chat.
Have a great weekend!
-Jason
Further digging
The Medici Effect: What Elephants and Epidemics Can Teach Us About Innovation