Same As Ever

Introduction

Through 24 stories, "Same as Ever" by Morgan Housel reveals that while the world is constantly changing, certain fundamental aspects of human behaviour, risk, opportunity, and life remain consistent.

• Rather than trying to predict the unpredictable future, the book encourages readers to understand and focus on these timeless truths.

History never repeats itself; man always does.

The Little Laws of Life

History is full of unexpected surprises, yet it also holds timeless wisdom, particularly regarding human behaviour.

• While changes like technological advancements, medical breakthroughs, shifts in geopolitical order, and linguistic evolution capture our attention due to their novelty and often exceed what we can imagine in the past, underlying human behaviours remain remarkably consistent.
• Throughout history, greed, fear, jealousy, and tribalism have persisted, unaffected by chance, luck or circumstance.
• People continually seek the secret to happiness and strive for certainty in an uncertain world.

These universal truths help us understand the present and even anticipate future trends.

Hanging By A Thread

History teaches us a stark lesson: the world's course often hangs by a thread.

• Major, consequential shifts have stemmed from seemingly random, unforeseen, or even thoughtless decisions, leading to both remarkable breakthroughs and devastating chaos.
• Simply put, small nudges in the present can yield profound future consequences.
• For example, a seemingly simple decision to forgo skiing could prevent an avalanche fatality. Likewise, the world would not have the iPhone were it not for Steve Jobs.

Thus, embrace a wider perspective, acknowledging that unforeseen, seemingly trivial occurrences can fundamentally alter the world as we know it.

Risk is What You Don't See

We excel at predicting the future, except for the surprises - which, ironically, are often the most consequential.

• The greatest risks are always unforeseen, because what is unforeseen is unprepared for.
• This lack of preparedness amplifies the damage when those risks materialize.
• Unforeseen risks like Pearl Harbor, the Great Depression, 9/11, and COVID-19 exemplify this principle.
• Yet, the greatest risk and the most significant news story of the next ten years will be something no one is discussing today.

Moreover, adults are equally oblivious to global events that could significantly impact their lives, simply due to a lack of awareness or understanding.

We know recessions will happen, but predicting the next one is impossible because we do not know what will cause it.

• Therefore, in personal finance, aim to save an amount that feels beyond necessary, ensuring sufficient coverage for unforeseen events, errors or necessities.

Risk is what's left over after you think you've thought of everything.

Expectations and Reality

The first rule of happiness is low expectations.

• Though technology and medicine have enhanced our quality of life, they have also heightened our expectations.
• As Montesquieu noted 275 years ago, "If you only wished to be happy, this could be easily accomplished; but we wish to be happier than other people and this is always difficult, for we believe others to be happier than they are."

We are not comparing ourselves to the old days without antibiotics, but rather judge our well-being relative to those around us, where the luxuries of others become our perceived "necessities."

• To illustrate, previous generations, having endured difficult lives, found pleasure in even slight improvements, such as freedom from war, higher-paying employment, a hot meal, and a larger, secure home.
• Today, we are so accustomed to our privileged lives that we often fail to appreciate what we have, instead comparing ourselves to curated and inflated lifestyle reels where positives are embellished and negatives are concealed.

Our actual circumstances often matter less than the gap between our expectations and reality. This discrepancy is what generates our emotions.

• Therefore, it is essential to cultivate reasonable expectations and accept life's outcomes, both good and bad.

Wild Minds

People who think about the world in unique ways you like, almost certainly also think about the world in unique ways you would not like.

• Because we tend to admire those with exceptional minds, we often overlook or fail to properly judge their less desirable traits or beliefs, such as rudeness, impatience, and disobedience.
• The reality is that extremely successful individuals are often exceptionally good at one thing, but correspondingly weak in other areas.

Figures like Steve Jobs, Walt Disney, and Elon Musk, while achieving extraordinary success, also faced criticism for certain shortcomings.

• They were so determined and optimistic about their abilities and visions that they were willing to risk everything, a level of risk-taking that is often considered unacceptable or incomprehensible to the average person.

Wild Number

A common trait of human behaviour is the burning desire for certainty, despite living in an uncertain and probabilistic world.

• In life decisions, certainty is rare; the best we can do is make decisions where the odds are in our favour.
• However, in the real world, people often fixate on black-and-white outcomes, such as smart or dumb, right or wrong.
• We tend to be easily convinced by certainty statements about the future (e.g., 'a recession will occur at the end of the year'), even though this may not accurately reflect the future, which is inherently probabilistic and allows for alternative outcomes.

Another related and equally important problem is we tend to overweigh rare events in a large world, as well illustrated in Daniel Kahneman work of Prospect Theory and The Fourfold Pattern.

• News of rare, miraculous events can lead us to overestimate their frequency, fostering a belief that they are regular events and we might be similarly fortunate, like winning the lottery.
• Conversely, we are often acutely anxious about low-probability, high-impact events such as financial crises, floods, hurricanes, and pandemics.

Furthermore, we often struggle to grasp the implications of low probabilities when dealing with extremely large sample sizes (numbers).

• Unlike in the past, when news dissemination was primarily local or through newspapers, the internet has made global news reports readily accessible.
• Consequently, with countless potential risks, it is statistically probable that at least one catastrophic event will occur somewhere at any given time. This can lead to distorted perceptions.
• For example, a car insurance company might experience a seemingly high number of insurance claims, leading it to exaggerate the actual accident rate relative to the total number of cars safely driven on the road.

Best Stories Win

A brilliant or logical idea, when poorly articulated, will struggle to capture public attention or agreement.

• People are often driven by emotions and preoccupied with daily life, making engaging stories far more powerful and persuasive than ice-cold statistical data.
• History illustrates that even flawed or outdated ideas, when presented with compelling rhetoric, can spark revolutions, exemplified by Martin Luther King Jr.'s 'I Have a Dream' speech.
• We are more captivated by speculative visions of the distant future than by the practical possibilities of the near term.

The most persuasive stories are about what you want to believe is true, or are an extension of what you have experienced firsthand.

• This explains why successful movies and books, even without introducing new ideas, often achieve their impact by stirring universal emotions that resonate across diverse audiences.

A company's valuation, and by extension the stock market, is simply a number from today multiplied by a story about tomorrow.

Does Not Compute

Historian Will Durant once said, "Logic is an invention of man and may be ignored by the universe".

• Indeed, the world often defies rational explanation, rendering numbers and logical frameworks seemingly meaningless.
• Humans, driven by hormonal and emotional impulses, frequently make decisions and exhibit behaviours that contradict rational thought.
• Economist Per Bylund once noted: "The concept of economic value is easy: whatever someone wants has value, regardless of the reason (if any)."

Calm Plants the Seeds of Crazy

Minsky's Financial Instability Hypothesis posits that stability is inherently destabilizing.

• During periods of economic stability, optimism prevails, leading to increased debt accumulation.
• This, in turn, destabilizes the economy, initiating a recurring cycle.

Similarly, our success in mitigating diseases like measles, mumps, and chickenpox may have contributed to our unpreparedness for the COVID-19 pandemic.

• Had COVID-19 emerged in 1920, it might have been perceived as just another devastating pandemic.

This cyclical pattern, reflecting the inevitable progression toward disorder as defined by entropy, manifests in various aspects of life, including business, investing, careers and relationships.

• While the record rainfall of 2017 resulted in record vegetation growth that summer, it also ultimately caused some of the largest wildfires California has ever seen in 2018.

At your highest moment, be careful.
That's when the devil comes for you.

Finally, consider why things often spiral out of control: the only way to discover the limits of possibility is to exceed them.

• Throughout the history of economics and markets, we've repeatedly pushed past the boundaries of reason, insisting on finding the peak.
• The inevitable result? We overshoot, then look back and realize, 'That was the top".

Too Much, Too Soon, Too Fast

As Warren Buffett humorously observed, you cannot produce a baby in one month by getting nine women pregnant.

• This highlights a fundamental truth: systems function optimally within their natural parameters (e.g. scale and pace) and break down when scaled beyond their limits.
• For instance, a flea can leap impressive heights relative to its size, but a man-sized flea would be hindered by air resistance and the immense energy required.

Yet, when people discover something valuable, particularly a lucrative investment or a specialized skill, they often attempt to accelerate the process beyond its natural capacity (sustainable rate).

• This is evident in stock investing, where long-term, patient strategies tend to yield significant returns, while short-term, rapid-return approaches often rely on luck and risk substantial losses.
• Similarly, rapidly expanding a retail business by opening numerous stores does not guarantee proportional sales growth; instead, it frequently leads to diminished customer experience and consequently, business failure.

Ultimately, growth is desirable - after all, runts eventually get eaten.

• Slow, organic growth builds a stronger foundation and better withstands challenges, whereas forced or accelerated growth often backfires.

When the Magic Happens

Historically, pivotal changes and significant innovations rarely arise during periods of prosperity (i.e., when everyone is happy and things are going well).

• Rather, they typically emerge from hardship and terrible events.
• It is precisely when people are gripped by panic, shock, and worry, and the cost of inaction becomes unbearable, that breakthroughs occur.

The same people, with the same intelligence, can achieve vastly different things depending on the situation.

• Innovation thrives on incentives, whether it is the fear of being fired, the hope of preventing disaster, the desire for wealth, or the life-or-death stakes of war.
• Stress focuses our attention in ways that good times cannot.
• It eradicates procrastination and indecision, pushing crucial tasks right in front of us, leaving us no choice but to tackle them, right now, with utmost diligence.
• In fact, many of the major innovations we enjoy today are byproducts of World War II, where the intense pressure incentivized the military to prioritize war-related advancements, leading to breakthroughs like radar, the internet, jets, rockets, antibiotics, and GPS, and ultimately sparking a surge in scientific progress.

However, stress-driven innovation has its limits; too much stress shifts people's focus from problem-solving to simply surviving.

Overnight Tragedies and Long-Term Miracles

Good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in a blink of an eye.

• As historian David Wootton notes, it took 200 years from the discovery of germs to the medical acceptance of their role in disease, followed by 30 years for the discovery of antisepsis, and another 60 years for the widespread use of penicillin.
• Conversely, catastrophic events like Pearl Harbor, September 11th and the COVID-19 pandemic occurred with shocking rapidity.
• The idea of "complex to make, simple to break" is ubiquitous. Construction requires skilled engineers; demolition requires only a sledgehammer.

In addition to the gradual pace of progress, a considerable amount of good news pertains to what did not happen: deaths averted, diseases prevented, wars avoided.

• Conversely, bad news is starkly visible: terrorist attacks, car accidents, stock market crashes, and wars.
• Consequently, it is easy to underestimate the extent of achievable progress.

Tiny and Magnificent

Extraordinary results are built from the compounding of small actions.

• Catastrophes often arise from a series of tiny, overlooked risks that multiply and compound, such as daily snacking leading to obesity.
• In contrast, incredible achievements result from the compounding of small, consistent habits, such as regular exercise leading to a muscular body and the gradual accumulation of wealth through compounded savings.

Elation and Despair

Progress requires a balanced coexistence of optimism and pessimism - planning with pessimism and dreaming with optimism.

• Pessimism is crucial for survival, enabling us to anticipate and mitigate risks, and to confront harsh realities.
• However, optimism is equally vital, fostering belief in a better future even amidst uncertainty.
• To illustrate, in all areas of life, progress will occur, though it will be interspersed with the constant reality of setbacks, disappointments, surprises, and shocks.

NOTE: In Originals, Adam Grant explores the crucial balance between optimism and pessimism, highlighting how a combination of realistic optimism and strategic pessimism can contribute to successful planning.

Casualties of Perfection

In any pursuit, individuals often strive for perfection.

• Even with natural evolution, no animal species attains universal adaptation, ultimately leading to potential extinction.
• Evolutionary adaptations in one area often create vulnerabilities in others.
• For example, while a tall tree captures more sunlight, it is also more susceptible to wind damage.

Many individuals aim for highly efficient lives, where every moment is utilized.

• To some employers, an ideal employee is one who remains continuously occupied for the entire workday.
• However, periods of unstructured free time, away from scheduled tasks, foster creativity and facilitate the resolution of complex problems.
• Instead of being considered inefficient, activities such as strolling in a park or relaxing on a couch can enhance creativity and productivity.
• After all, if you are in a decision-making role, it is perfectly understandable that you need time to think.

The secret to doing good research is always to be a little underemployed.
You waste years by not being able to waste hours.

Furthermore, the pursuit of absolute precision in analysis can leave no room for error.

• However, mistakes and unforeseen events are inevitable.
• Plus, the more precise you try to be, the less time you have to focus on big-pictures that are probably more important.
• Hence, keep forecasting simple, but good enough.

It's Supposed to Be Hard

Everything worth pursuing comes with a little pain. The trick is not minding that it hurts.

• While shortcuts may seem appealing, they really exists and often lead to unforeseen risks.

Every industry and career is different, but there is universal value in accepting hassle and nonsense when reality demands it.

• Every job comes with pieces you do not like, but that is part of it, such as stress, long hours, office politics, difficult personalities and bureaucracy.
• Accepting a certain level of inefficiency allows you have to have a clearer view of how the world works.

Keep Running

Most competitive advantages are ultimately transient.

• Interestingly, Cope's Rule highlights a trend in evolutionary history where many animal lineages exhibit an increase in body size over time.
• Larger species often benefit from enhanced predatory capabilities, greater travel distances, and the potential for larger brain development. However, these advantages come at a cost.
• Larger animals tend to be more vulnerable, require more food relative to their body mass, struggle with concealment, have slower reproductive rates, and possess reduced mobility.

A company's public offering suggests it has achieved sufficient competitive advantage to become a major corporation.

• However, from 1980 to 2014, almost 40% of public companies lost all their value.

In the business world, five factors commonly erode competitive advantages.

• The feeling of being consistently correct can breed an unwarranted overconfidence that you cannot be wrong.
• Success tends to lead to growth, but potentially rendering previously effective strategies ineffective.
• People work hard in pursuit of a goal, but a justified period of relaxation upon success allows competitors and a changing world to creep in unnoticed. Plus, the fear and paranoia that makes them successful is gone.
• Skills highly valued in one era may not extend to the next.
• Some success are attributable to being in the right place at the right time.

Competitive advantages tend to be short-lived, often because their success plants the seed of their own decline.

• Consequently, companies should 'keep running' and maintain a sense of urgency, even when dominant.
• This is exemplified by Nvidia's unofficial motto: 'Our company is thirty days from going out of business.'

The Wonders of the Future

In scientific discovery, significant innovations are not sudden events, but rather the result of a slow, cumulative process of combining and building upon prior advancements.

• To illustrate, Thomas Edison modified the arc lamp, originally invented by the British scientist Humphry Davy, replacing its charcoal rod filament to achieve a longer-lasting, less glaring light.
• Google Maps, Facebook and Instagram would not be possible without the internet.

Harder Than It Looks and Not As Fun As It Seems

Most people conceal their inner struggles, fears, and insecurities, and often mask their true happiness.

• Everyone attempts to project a curated image, emphasizing strengths while concealing weaknesses.
• If it often said that "an expert is always from out of town", because it is easier to persuade strangers of one's exceptional abilities, as they lack the intimate knowledge to discern one's shortcomings.
• In essence, the grass is always greener on the side that is fertilized with bullshit.

The successful people we admire do not possess superhuman powers; they are likely ordinary people who played the odds right.

• Despite their achievements, they may experience a troubled family life or suffer from depression.

Everything is sales!

Incentives: The Most Powerful Force in the World

Distorted incentives can corrupt even ethical individuals, pushing them beyond moral boundaries. People can be led to justify and defend nearly anything.

• To persuade someone, appeal to their self-interest rather than to pure reason.
• For instance, the desperation of starvation can make it easier to rationalize scamming others.
• In investing, law, and medicine, 'do nothing' is often the optimal strategy, yet career incentives favour 'do something.'

Now You Get It

Nothing is more persuasive than what you have experienced firsthand.

• No matter how much you have studied or how much you empathize, you often do not truly know what you are willing to do or want until you have seen something with your own eyes.
• Hard times and fear can make people do and think things they never thought possible when things were peaceful.

Also, success is rarely what you thought it would be before achieving it, and sometimes can even evoke a sense of "is that all there is?".

• Beyond pride, contentment, or independence, individuals may still encounter illness, legal disputes, and persistent insecurity.
• Future prosperity is often envisioned in isolation, while reality invariably presents a mix of positive and negative events.

Time Horizons

Long-term thinking is easier to believe in than to accomplish.

• Everything worthwhile has a price, and the prices are not always obvious, such as the necessary skills and mentality.
• Even when adopting a ten-year perspective in investments, careers, or relationships, one must still navigate short-term fluctuations and setbacks along the way.

Effective long-term thinking necessitates the ability to distinguish between patience and pure stubbornness.

• The world's constant evolution renders adaptability and flexibility not merely beneficial, but essential.
• However, changing one's mind is challenging, as self-deception with falsehood is often more comfortable than admitting a mistake.

Another crucial aspect of long-term thinking is its influence on our information consumption.

• Expiring information, such as news, informs us of recent events.
• Conversely, permanent information explains the underlying causes of events and predicts potential recurrences, facilitating the compounding of knowledge.
• Hence, read less news and more books.

Trying Too Hard

Humans are often drawn to complex problems and intellectual stimulation, while overlooking simple yet highly effective solutions. However, there is no inherent reward for difficulty.

• For example, we tend to overemphasize cancer treatment, while neglecting the less glamorous but crucial aspect of prevention. Yet, the fundamental truth remains: cancer cannot cause death if it never develops.

This tendency to favour complexity over simplicity, however, appears to contradict the general trend of simplification in evolution.

• Samuel Williston, a nineteenth-century palaeontologist, observed a historical trend: the reduction of body parts in primitive animals, coupled with an increase in their functional efficiency.

Wounds Heal, Scars Last

A crucial aspect of human behaviour is recognizing that individuals with differing experiences will inherently think differently.

• They will possess distinct goals, perspectives, desires, and values.
• Consequently, many debates are not genuine disagreements, but rather conversations in which people with disparate experiences talk past one another.
• Afterall, mindsets are harder to repair than buildings and cash flows.
• To illustrate, those who endured the Great Depression learned from their bitter experience to prioritize security by saving more and taking on less debt for the rest of their lives.

What have you experienced that I have not that makes you believe what you do?
And would I think about the world like you if I experienced what you have?

NOTE: A central premise in "The Psychology of Money" is 'no one is crazy,' suggesting that all human behaviours are rational when viewed through the lens of individual life experiences.

Summary

The lessons in "Same as Ever" are conveyed in a concise and succinct manner, thereby facilitating both comprehension and profound reflection on the part of the reader.

• While some of the principles are familiar, others may not resonate with every reader, or may conflict with their existing perspectives.
• Personally, I hold a few strong beliefs that I believe the author should have included, or that certain narratives could have been combined to construct a more robust argument (e.g. "Now You Get It" and "Wounds Heal, Scars Last").