Magnus Carlsen | Podcast | In Good Company | Norges Bank Investment Management

Episode Overview

• World chess champion Magnus Carlsen discusses the parallels between high-level chess and investing, focusing on skills like complex problem-solving under pressure.
• The conversation explores the evolution of chess styles, contrasting Carlsen's intuition-based approach with the calculation-heavy, computer-influenced methods of the new generation.
• Carlsen delves into the critical role of psychology in elite competition, highlighting the need for a mindset balanced between optimism and delusion to maintain resilience and take necessary risks.
• He reflects on his own career, the rising skill level of his competitors, and offers pragmatic advice to young people on pursuing chess professionally.

Key Concepts

• Chess and Business Parallels: High-level chess and finance both require the ability to solve complex problems under time constraints. Hedge funds have historically recruited chess players for this reason, though chess skills alone are not a guarantee of business success.
• Evolution of Playing Styles: A generational divide exists in chess. Older players often rely on intuition and "feel," while the new generation, raised with powerful computer engines, leans heavily on "brute force calculation."
• The Psychology of a Champion: A top competitor's mindset is crucial. Carlsen advocates for a mental state "somewhere between optimistic and delusional" to maintain confidence, take risks, and recover quickly from losses, as evidenced by his statistically elite performance after a defeat.
• Impact of AI on Chess: Artificial intelligence and powerful chess engines have democratized high-level preparation, leveling the playing field. This has shifted the focus from memorization to on-the-spot creativity and interpretation.
• The Future of Competitive Chess: To counter the deep opening preparation enabled by computers, the future of top-level chess is likely to involve faster time controls and formats like Chess960 (Fischer Random) that reward creativity over memorization.

Quotes

• At 0:22 - "Today we are going to talk about business, or actually, we're going to talk a bit about what we as investors can learn from chess." - Host Nicolai Tangen introducing the central theme of the conversation with Magnus Carlsen.
• At 1:54 - "Playing chess at an early age certainly teaches you to solve complex problems in a limited amount of time." - Carlsen identifying the core transferable skill that chess develops.
• At 2:02 - "Continuing to only play chess probably will not get you far in business, but I think it's a good start." - Carlsen qualifying the benefits of chess skills, suggesting they are a foundation rather than a complete toolkit for business success.
• At 21:27 - "more sort of computer-based way in that they are less intuition-based and so much more... sort of brute force calculation." - Carlsen describing the style of the new generation of top chess players.
• At 24:47 - "I think I play better now, but then also other people play better, so my results are not necessarily better." - Reflecting on his skill level a decade after becoming World Champion, acknowledging the rising talent in chess.
• At 27:21 - "The right balance is somewhere between optimistic and delusional. That's where you're going to get the best results." - On the ideal psychological mindset for a top competitor.
• At 29:38 - "My performance right after a loss is over 2900. So apparently I do something really well." - Sharing a statistic that reveals how he elevates his game immediately following a defeat.
• At 32:59 - "Be curious, learn, read, and play chess... But don't pursue it as a career unless you're going to be the best in the world." - His direct and pragmatic advice to young people interested in chess.

Takeaways

• Cultivate a mindset that allows for rapid recovery from setbacks; a loss can be a catalyst for heightened focus and peak performance.
• In any competitive field, it is crucial to balance deep, data-driven calculation with well-honed intuition to maintain a competitive edge.
• To succeed at the highest level, develop a psychological state that blends extreme optimism with a touch of delusion to foster the resilience needed to take risks.
• Recognize that foundational skills are a starting point, not the final destination; continuous learning is required to adapt and succeed in complex domains like business or investing.
• Pursue professional mastery in a field only if you are committed to being the best; otherwise, engage with challenging activities for personal growth and enjoyment.