The art of arbitrage – I believe – is the key to living smart. It allows you to get much more given the same amount of effort. What you do there is connecting to different worlds and then leveraging the “price differences” between them to your advantage. It’s just like what the merchants do in trading, only in this case you apply the principle to many different areas of your life.

In this post, I’d like to share 10 practical ways to increase your power of arbitrage. I will focus on three kinds of arbitrage: social, knowledge, and culture. Some of them are similar to the way you can increase your mental capacity. I think that’s because increasing your arbitrage power somehow requires you to also increase your mental capacity.

The emphasis is different though. In increasing your arbitrage power the emphasis is on connecting to different worlds, while in increasing your mental capacity the emphasis is on doing something just outside your comfort zone. Connecting to different worlds is the only way to recognize the “price differences” between them which you can then use to your advantage.

Social arbitrage

  • Join new organizations
    Organizations are where you meet new people. The more organizations you are involved in, the more people you can potentially meet. Of course, you should join organizations which expose you to different people, preferably in different worlds as well. It’s useless if you join several organizations only to meet mostly the same people.
  • Go to new events
    Unlike organizations, going to events doesn’t require long-term commitments. You just go there once, meet new people, and you’re done. But since you might not meet them anymore, the degree of your success will then depend on your follow-ups.
  • Join new online forums
    In the Internet age, online forums are also great places to meet new people. Though you can’t meet them face-to-face, you have the flexibility to participate anywhere and anytime you like. Again, the key is meeting different people in different worlds, so you should join forums that expose you to different people.

Knowledge arbitrage

  • Read books and magazines from different fields
    By reading books and magazines from different fields, you will learn the ideas and concepts of those fields. You can then bring the ideas and concepts of one field to another field to give it “fresh” ideas.
  • Read old books
    You can borrow ideas not just from other fields, but also from other ages. By reading old books, you can bring the wisdom of the past to the present. Since most people are focused to learn only the current popular wisdom, your power of arbitrage will get a boost.
  • Read history
    Why should you repeat the same mistakes which have been made by others throughout the history? Reading history allows you to learn from past successes and failures, and prevent you from reinventing the wheel.

Culture arbitrage

  • Read books and magazines about different cultures
    This is the simple first step to learn from other cultures. Reading about different cultures allows you to know how different cultures think and act. Of course, it’s better if you can dig deeper using the other ways below.
  • Learn new languages
    Besides opening your way to read literatures in different languages, learning new languages also helps you experience how people in different cultures think. This understanding gives you new “lenses” to see life through. 
  • Read literatures in different languages
    After learning new languages, the door is open for you to read content exclusively available in those languages. There are so many different cultures in the world; how could you possibly understand the world only through the lens of one culture or language?
  • Travel to new places
    Of course, there is no better way to understand and learn from a culture than being in the midst of them. Whenever possible, travel to new places where you can experience different cultures. The insights you get would be priceless.

It may seem that doing all these would take too much time, but the important thing here is the quality of the time instead of the quantity. If you spend quality time on these, you will get all the benefits while still keeping your life in balance.


Categories: Learning, Relationship, Working

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  • http://creatingabetterlife.net/ Lyman Reed

    Great concept, and great tips, Donald. I could use some work in all three areas you mentioned… especially the reading. In his Art of Exceptional Living workshop, Jim Rohn talked about people who just stick with personal development reading… he said “You’ve got to get out of the second grade!” :)

  • http://litemind.com Luciano Passuello

    The great thing about all these activities you suggest is that they not only increase your arbitrage power, bu they’re useful and fun by themselves! It’s a double-win!

    I never thought about it before, but reading you post, I completely agree that arbitrage is really a key to living smart.

    I see it this way: For social arbitrage, for example, when you connect two different worlds, it’s like in trading: the trader doesn’t need to master neither of the two worlds. He doesn’t need to invest a large amount of energy to become an expert, but is able to provide value that neither of the experts could alone…

  • http://www.lifeoptimizer.org Donald Latumahina

    Lyman:
    Thanks, Lyman! I tended to read only personal development books myself. That’s a good learning experience, but I later realized that it doesn’t help me much to get fresh ideas. So I recently learned to diversify my readings.

    Luciano:
    Great example, Luciano! Your example clearly shows the power of arbitrage. In arbitrage we essentially try to “borrow” value from other worlds without spending too much time and effort to create our own.

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