Complimentary DVD delivered to your home or office: Go.

Against the Gods: Steve Jobs and “Risk” (Update)

A friend of mine passed this piece along courtesy of her friend a prominent vascular surgeon living in Washington, DC:

In reading about Steve Jobs’ death, I was disappointed to learn that after his carcinoid tumor (a rare type of malignant tumor) of the pancreas was diagnosed, he waited nine months before having it removed because he believed that a strict change in diet would cure the problem. This raises the issue of risk analysis, a hard and sometimes controversial topic that, blessedly, doesn’t seem to be a Republican or a Democratic issue. Nonetheless, while this topic is difficult to understand in depth, it is, in my view, well worth spending some time contemplating. For, as most of you undoubtedly know, risk assessment is at the heart of economics, banking, horseracing, investments, medicine, agriculture, baseball and public policy to name just a few.

There is a wonderful book entitled: “Against the Gods, the Remarkable Story of Risk” by Peter Bernstein. At a minimum, have it on your bookshelf and peruse it periodically. One interesting point is that there is an amazing asymmetry as to how we make decisions with regard to gains and losses (pages 272 forward). When decisions involve the possibility of considerable gains, we are consistently risk-adverse (i.e., we will opt for a sure gain versus an even greater gain with the possibility of no gain). In contrast, when the choice involves losses, we are risk seekers, not risk-adverse (i.e., we would rather take an 80% chance of losing $4000 and a 20% chance of breaking even than accepting a 100% chance of losing $3000).

On the surface this may seem like an interesting conundrum but one which has little relevance to our day-to-day lives. In general, I think this is correct. But not always. The term “conventional wisdom” has acquired, in many cases justifiably, a patina of being pejorative. Ordinarily, one would think that conventional wisdom was for the most part based on experience (also known as “data”). Given the increasing focus within health care and policy making to have decision-making be driven by data (“evidence-based”), it seems reasonable to be supportive of this concept while keeping in mind that close calls can be skewed one way or another by how the statistics are formulated or interpreted.

But analysis of a large amount of conventional thinking seems to me to reveal that in most cases the conventional wisdom is entirely correct and in a few notable cases conventional wisdom falls far short (that is, most of the time it’s not a close call as to whether the perceived understanding is credible upon close inspection). As a notable example, we all know that eating a meal diverts blood supply to the intestines and thus vigorous exercise such as swimming immediately after a meal will divert blood supply away from leg muscles and cramps will occur such that a large number of children will drown if they go swimming soon after eating lunch. How do we know this? Our mothers told us so. The confirmatory data supporting this hypothesis are the many dead children who must be removed from pools in the early afternoon each summer. It is because of a number of instances of such ludicrous and loose thinking that for more than 50 years we have frequently succumbed to the notion that most established dogma should and can be subjected to criticism and thus often be dismissed immediately. My suggestion is that when you are inclined to do this, do so because you have acquired believable and reproducible data from reliable sources that support your opinion and reliably debunks conventional wisdom. Absent reliable data, think twice when you are inclined to summarily reject conventional wisdom. Remember the adage “everyone is entitled to his own opinion, but not his own facts”.

My plea therefore, is that we try to train ourselves and our children as well as our friends, when appropriate, to be aware of the need to make ourselves make important decisions based on reliable data rather than whim or opinion not well grounded.

This brings us back to Mr. Jobs. My speculation, based on what I have read thus far, is that he viewed much of his phenomenal success as being a result of his amazing ability to confront and overturn conventional wisdom. I suspect he assumed his extraordinary talent in this one facet of life translated into a belief that he was equally talented in other arenas where he had little training or experience (I have been astounded through the years at what poor health care decisions truly rich people make–I guess it’s called “regression to the mean”). So, when Mr. Jobs made the decision that he could cure the carcinoid cancer that he knew he had (biopsy confirmed) with diet, he did so with not one scintilla of believable data. To my knowledge there has never been a case of carcinoid tumor cured by diet. Of course, we have to keep in mind that a prompt operation might not have been curative. Unfortunately, for him as well as for us, we’ll never know.

Thanks. And I am a huge Jobs fan.

Note Added Oct 20: The Associated Press purchased a copy of the book Thursday. The book delves into Jobs’ decision to delay surgery for nine months after learning in October 2003 that he had a neuroendocrine tumor — a relatively rare type of pancreatic cancer that normally grows more slowly and is therefore more treatable. Instead, he tried a vegan diet, acupuncture, herbal remedies and other treatments he found online, and even consulted a psychic. He also was influenced by a doctor who ran a clinic that advised juice fasts, bowel cleansings and other unproven approaches, the book says, before finally having surgery in July 2004. Isaacson, quoting Jobs, writes in the book: “`I really didn’t want them to open up my body, so I tried to see if a few other things would work,’ he told me years later with a hint of regret.”

Tagged with: , , , ,
Posted in Risk Management
12 comments on “Against the Gods: Steve Jobs and “Risk” (Update)
  1. Allan Mcintosh says:

    ” So, when Mr. Jobs made the decision that he could cure the carcinoid cancer that he knew he had (biopsy confirmed) with diet, he did so with not one scintilla of believable data ”

    there is so much “data” out there that shows a change in diet,lifestlye and cleansing can and will cure dis-ease and it can easily be found by asking the right people the right questions. Consider Cause and effect, this is the basis for results in life wether it be health or trendfollowing success. In order to understand something completley we must look at the cause and not the effect otherwise we are blind just like modern medicine and occupy wall street types who think they have no control over their destiny.

    This kind of limited thinking is what destroys people and economies.

  2. Mike says:

    the article referred to this one particular cancer
    of which there is “not one scintillia of believable data”

    The risk is that no-one will survive any experiment by dieting to accumulate the data.

  3. Michael Covel says:

    Allan, I think you are making the point of the Doctor who offered the view on risk–a lack of data gets us all in trouble.

  4. ravi says:

    Jobs got to where he was by staying independent and contrarian and taking big gambles and unfortunately applied the same ‘will’ on his health. he did not accept and cut the loss, instead went to denial. Just my opinion. I write this with sadness.

    In all things, Pascal’s Wager is a worthy stance.

    Assuming cancer is curable by dieting and avoiding traditional medicine is a big gamble. There are things outside one’s competence and that is where experts are often very experienced to provide a course of action with generally lower risks even if they cannot guarantee high likelihood of success.
    Doctors especially are very cautious in not giving
    hopes (they dont talk like visionaries) and it is likely Jobs was not happy with what he heard from his initial reviews and he probably poked hole on their arguments and took things to his hands. Again, all my conjectures.

    A very surprising bit of information I read over the weekend, is how Steve Jobs used to say for long time – ‘I dont want to live beyond 50′. This explains a lot. I strongly believe that our body is actively manufactured and managed each day from our deepest beliefs and desires and unfortunately, our fears and frustrations. Everybody gets what they expect. (not necessarily what they want).

  5. Hempman says:

    Any type of pancreatic cancer is usually a death sentence. There are many people who have beaten terminal cancer with diet and lifestyle changes. What was Steven Jobs thinking or going through when he was diagnosed? We will never know. Personally I would not trust the experts in treating cancer. I know too much and have known too many that didn’t make it.

  6. Robert says:

    I don’t know about diet being able to cure cancer. But there is a doctor at the Cleveland Clinic that has reversed cardiovascular disease with diet and has the Angiograms with dye contrast to prove it.

  7. Jason says:

    Article/argument is seriously flawed. Pancreatic cancer is usually a death sentence within months of diagnosis. Steve Jobs lived half a decade with it. This shows proof Jobs was right about diet and his form of cancer.

  8. Buzz says:

    Keep in mind that one of SJ’s closest friends was Dr. Dean Ornish, whose work is focused on diet and emotion’s impact on wellness.

  9. Jason, you missed the Doctor’s argument. Plus, there is absolutely no way to make the jump toward “diet” based on this case alone. That kind of “jump” is a central point of the Doctor who wrote the piece–extrapolating out a wide analysis from little to no data. Jobs could have survived for any number of reasons, but there is no absolute diet proof.

    Also, to add to the discussion: http://cancerguide.org/median_not_msg.html.

  10. The Doctor’s central point:

    “Mr. Jobs made the decision that he could cure the carcinoid cancer that he knew he had (biopsy confirmed) with diet, he did so with not one scintilla of believable data. To my knowledge there has never been a case of carcinoid tumor cured by diet. Of course, we have to keep in mind that a prompt operation might not have been curative. Unfortunately, for him as well as for us, we’ll never know.”

    If the Doctor is wrong–so be it. However, is he wrong?

  11. Michael Covel says:

    From wires tonight:

    The Associated Press purchased a copy of the book Thursday.

    The book delves into Jobs’ decision to delay surgery for nine months after learning in October 2003 that he had a neuroendocrine tumor — a relatively rare type of pancreatic cancer that normally grows more slowly and is therefore more treatable.

    Instead, he tried a vegan diet, acupuncture, herbal remedies and other treatments he found online, and even consulted a psychic. He also was influenced by a doctor who ran a clinic that advised juice fasts, bowel cleansings and other unproven approaches, the book says, before finally having surgery in July 2004.

    Isaacson, quoting Jobs, writes in the book: “`I really didn’t want them to open up my body, so I tried to see if a few other things would work,’ he told me years later with a hint of regret.”

  12. Steve says:

    http://youtu.be/H0ibsoqjPac – Access to the correct information, like trading, is key to success.

Leave a Reply

Michael Covel Books

Underground Insights

Subscribe now to free email newsletter and get latest blog posts, podcast episodes and special offers delivered to your in box:
Go.

Pricing for trend following systems, risk management, trader psychology training and black swan strategies. Absolute return systems and education for new traders and established pros. Thousands of clients across 70+ countries. Testimonials.

The Trend Following™ podcast with Michael Covel. Listen now on iTunes and Android. Top authors and traders plus alternative commentary. 2M+ listens across 182+ countries & territories.

Free Video

One small town guy's trend following experience sent to your home. Get your free DVD delivered immediately and be inspired.

Trend Trading