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Kindle Notes & Highlights
One is highlighting this book’s premise—to base predictions on how people behave rather than on specific events. Predicting what the world will look like fifty years from now is impossible. But predicting that people will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations, and social persuasion in the same way is a bet I’d take.
We are very good at predicting the future, except for the surprises—which tend to be all that matter.
As financial advisor Carl Richards says, “Risk is what’s left over after you think you’ve thought of everything.”
Nassim Taleb says, “Invest in preparedness, not in prediction.” That gets to the heart of it.
Two, realize that if you’re only preparing for the risks you can envision, you’ll be unprepared for the risks you can’t see every single time. So, in personal finance, the right amount of savings is when it feels like it’s a little too much. It should feel excessive; it should make you wince a little.
The first rule of happiness is low expectations.
Montesquieu wrote 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.”
Investor Charlie Munger once noted that the world isn’t driven by greed; it’s driven by envy.
Money buys happiness in the same way drugs bring pleasure: incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough.
You compare yourself to your peers through a curated highlight reel of their lives, where positives are embellished and negatives are hidden from view.
Today’s economy is good at generating three things: wealth, the ability to show off wealth, and great envy for other people’s wealth.
The first rule of a happy life is low expectations. If you have unrealistic expectations you’re going to be miserable your whole life. You want to have reasonable expectations and take life’s results, good and bad, as they happen with a certain amount of stoicism.
Something I’ve long thought true, and which shows up constantly when you look for it, is that people who are abnormally good at one thing tend to be abnormally bad at something else. It’s as if the brain has capacity for only so much knowledge and emotion, and an abnormal skill robs bandwidth from other parts of someone’s personality.
The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt. —BERTRAND RUSSELL
There are about eight billion people on this planet. So if an event has a one-in-a-million chance of occurring every day, it should happen to eight thousand people a day, or 2.9 million times a year, and maybe a quarter of a billion times during your lifetime.
A one-hundred-year event doesn’t mean it happens every one hundred years. It means there’s about a 1 percent chance of it occurring in any given year.
People don’t want accuracy. They want certainty.
It often takes too long for a sufficient sample size to play out. So everyone is left guessing.
Distinguishing between unfortunate odds and recklessness is hard when risk has painful consequences. It’s easier to see black and white even when the odds are apparent.
Stories are always more powerful than statistics.
Visa founder Dee Hock once said, “New ways of looking at things create much greater innovation than new ways of doing them.”
Historian Will Durant once said, “Logic is an invention of man and may be ignored by the universe.”
Carved on the wall at University of Chicago is a quote from Lord Kelvin that says, “When you cannot measure, your knowledge is meager and unsatisfactory.”
Jeff Bezos once said, “The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you are measuring it.”
Economist Per Bylund once noted: “The concept of economic value is easy: whatever someone wants has value, regardless of the reason (if any).”
Author Robert Greene once wrote, “The need for certainty is the greatest disease the mind faces.”
First you assume good news is permanent. Then you become oblivious to bad news. Then you ignore bad news. Then you deny bad news. Then you panic at bad news. Then you accept bad news. Then you assume bad news is permanent. Then you become oblivious to good news. Then you ignore good news. Then you deny good news. Then you accept good news. Then you assume good news is permanent. And we’re back where we began. The cycle repeats.
Minsky’s big idea was that stability is destabilizing.
Surprise has six common characteristics: • Incomplete information • Uncertainty • Randomness • Chance • Unfortunate timing • Poor incentives
Calm plants the seeds of crazy. Always has, always will.
My guess is if COVID-19 struck the world in 1920, it would be a single page in the history books about yet another deadly pandemic wedged in between a long list of common tragedies. But since it struck in the comparative calm of 2020, it will leave a mark that reshapes how some people think about viral risk.
A final word about why things have a tendency of getting out of hand. It’s that optimism and pessimism always have to overshoot what seems reasonable, because the only way to discover the limits of what’s possible is to venture a little way past those limits.
A good idea on steroids quickly becomes a terrible idea.
Warren Buffett once joked that you can’t make a baby in one month by getting nine women pregnant.
A good summary of investing history is that stocks pay a fortune in the long run but seek punitive damages when you demand to be paid sooner.
Nassim Taleb says he’s a libertarian at the federal level, a Republican at the state level, a Democrat at the local level, and a socialist at the family level.
Economist Alex Field wrote that by 1941 the U.S. economy was producing 40 percent more output than it had in 1929, with virtually no increase in the total number of hours worked. Everyone simply became staggeringly more productive.
Driving knowledge work in the ’30s was the fact that more young people stayed in school because they had nothing else to do.
Vannevar Bush, who ran the U.S. Office of Scientific Research and Development during World War II, controversially suggested the medical advances that came about from the war—most notably the production and use of antibiotics—may have saved more lives than were lost during the war.
An important fact that explains a lot of things is that good news takes time but bad news tends to occur instantly.
Even in a single year the improvement is incredible: more than half a million fewer Americans now die of heart disease each year than if we hadn’t made any improvements since the 1950s.
“complex to make, simple to break”
A lot of progress and good news concerns things that didn’t happen, whereas virtually all bad news is about what did occur.
Most amazing things happen when something tiny and insignificant compounds into something extraordinary.
Progress requires optimism and pessimism to coexist.
The best financial plan is to save like a pessimist and invest like an optimist.
From the day he started Microsoft, he insisted on always having enough cash in the bank to keep the company alive for twelve months with no revenue coming in.
There is a huge advantage to being a little imperfect.
Psychologist Amos Tversky once said that “the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”
This meshes with a Stanford study that showed walking increases creativity by 60 percent.
