In 140 characters or less:
Incredible (true) tales are distilled to the core mental models that determine who survives. Big lessons for investing models and mindset.
Why you should read it:
While Deep Survival is about extreme survival situations, the parallels to effective investment decision making are rich and deep.
Investing lessons aside, the book is also chock full of incredible survival stories that make for a compelling read. People set adrift at sea for months, that survive by catching fish and collecting rainwater. A 17 year old girl that survives a plane wreck (without a parachute!) in the jungle and then marches out to safety over 11 days. In each story there are lessons and recurring themes.
There is a saying that all great marriages are the same, but all terrible marriages are terrible in their own unique way. So it is with survival. In all the stories of survival the survivors take similar actions and most importantly have similar attitudes and mental models for how they think about the world.
#1: Stay focused on the present (a.k.a ‘Be here now’)
“Even in the initial crisis, survivors’ perceptions and cognitive functions keep working. They notice the details and may even find something humorous or beautiful [imagine the vast Atlantic ocean beneath a starry sky]. If there is any denial [of their plight], it is counterbalanced by a solid belief in the clear evidence of their senses. They immediately begin to recognize, acknowledge, and even accept the reality of their situation.”
Being present in the situation not only removes a big mental burden, it frees their faculties to consider the opportunities for survival around them. There are obvious parallels for investors when there is a market crash. Instead of getting caught up in the self-pity of the herd, they should focus on looking for the opportunities that are still available.
But the lesson is broader than just dealing with the extremes of a market crisis. Every day is a new opportunity for investors, yet it is easy to become trapped in the past. If our company’s shares are up 20% we can easily anchor on the past price and avoid buying more. Or, conversely, if the shares are down we may hold on solely to avoid the pain of selling. Instead we should stay present, the past price paid is irrelevant, all that matters is the future.
Remaining present is not always easy. Deep survival suggests that the best survivors are able to retain an insulating sense of humour, often a dark sense of humour. They keep their thinking light and flexible, freeing the brain to operate at its highest level. We should find ways to build playfulness and levity in to our own investing processes. There is something beautiful, funny, or interesting, to be found, in even the darkest places.
#2: It’s all your fault
“They [survivors] may initially blame forces outside themselves, too; but very quickly they dismiss that tactic and recognize that everything, good and bad, emanates from within. They see opportunity, even good, in their situation. They move through denial, anger, bargaining, depression, and acceptance very rapidly.”
The people that make it out alive are the ones that take full responsibility for their situation. By doing so they instantly transform themselves from victims to survivors. Their mentality has shifted. No longer are they at the whim of forces beyond their control, instead they begin the arduous task of bending those outside forces to their will.
Note that this does not mean they have caused their horrible situation. A passenger in a plane that explodes over the jungle, or a sailor that is struck by a whale, these people did not cause their predicaments. But, by believing that they are solely responsible for their survival, they have taken back their power.
The opposite approach is to blame others for your situation, to despair at how unfair the world has been to you. While it may be true that you have been dealt a horrible hand, believing that outside forces are responsible for your situation also means believing that you are powerless to change it. Accepting responsibility means taking back the agency to dig your way out.
Not all people with this survival mindset will make it. Many times the forces working against them are just too insurmountable. But by taking responsibility for their situation, no matter how dire, they have given themselves the best chance of surviving it.
#3: Take bold action while exercising great caution
With all the tales of things going wrong it would be easy to think the best approach to survival would be to avoid taking risks. But the author is quick to point out that smart, decisive, risk-taking is actually the key to survival.
Steven Callahan, was an extremely experienced sailor that was crossing the Atlantic solo in his well equipped yacht when in the middle of the night he was suddenly struck by a whale and woke to find his cabin flooding with water. His quick reactions allowed him to make it out of the cabin and deploy his life raft. But then, sitting in his life raft in the middle of the Atlantic ocean, he quickly realised that there would be no rescue party. His meager survival rations would not last long. If Steven wanted to survive he would have to dive back in to his sinking yacht:
“The next step was to take bold action while exercising great caution, which is but one of the many delicate balancing acts necessary for survival. So he dove back in to the flooded saloon to retrieve his survival bag. He made it out and returned to the raft. When he eventually let go of Solo [his yacht], he was very well equipped, considering the circumstances. He had just saved his life by risking it, which is the essential task of every organism. No risk, no reward. No risk, no life.”
Steven Callahan went on to survive after being adrift in his life raft for an incredible 65 days. As with investing, the best survivors are willing to take smart, calculated risks when necessary to ensure their own survival.
The last word:
Deep Survival by Laurance Gonzales is often a thrilling read, stepping from one incredible survival scenario to the next. If the book were just a collection of these awe-inspiring stories it would be well worth the price of admission. But Gonzales goes much further, providing dozens of excellent insights into the mind of a survivor.
As investors we aren’t dealing with life and death, but seeing a position down 50% can easily trigger similar deep emotional responses. Deep survival gives us the tools to not just cope with anything the market throws at us, but take the strong decisive actions that will enable us to seize the opportunities that are always in front of us.