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August 23 - September 21, 2024
Save like a pessimist and invest like an optimist. Plan like a pessimist and dream like an optimist.
An important lesson from history is that the long run is usually pretty good and the short run is usually pretty bad.
It takes effort to reconcile those two and learn how to manage them with what seem like conflicting skills. Those who can’t usually end up either bitter pessimists or bankrupt optimists.
Albert Einstein put it this way: I take time to go for long walks on the beach so that I can listen to what is going on inside my head. If my work isn’t going well, I lie down in the middle of a workday and gaze at the ceiling while I listen and visualize what goes on in my imagination.
that simple, you free up time and bandwidth for other activities. I like studying the investing behaviors that never change, and I’d never have the time to do that if I spent my day predicting what the economy will do next quarter.
“It hurts! What’s the trick, then?” he asks. “The trick is not minding that it hurts,” Lawrence says. This is one of the most useful life skills—enduring the pain when necessary rather than assuming there’s a hack, or a shortcut, around it.
Charlie Munger once noted: “The safest way to try to get what you want is to try to deserve what you want. It’s such a simple idea. It’s the golden rule. You want to deliver to the world what you would buy if you were on the other end.”
If you can get your work life to where you enjoy half of it, that is amazing. Very few people ever achieve that. Because the truth is, everything comes with overhead. That’s reality. Everything comes with pieces that you don’t like. You can be a Supreme Court justice and there’s still going to be pieces of your job you don’t like. You can be a university professor and you still have to go to committee meetings. Every job comes with pieces you don’t like. And we need to say: That’s part of it.
But there’s rarely a price tag. And you don’t pay the price with cash. Most things worth pursuing charge their fee in the form of stress, uncertainty, dealing with quirky people, bureaucracy, other peoples’ conflicting incentives, hassle, nonsense, long hours, and constant doubt. That’s the overhead cost of getting ahead.
“Where there’s pain there’s profit,”
“The higher the monkey climbs a tree, the more you can see his ass,”
Size is associated with success, success is associated with hubris, and hubris is the beginning of the end of success.
“The grass is always greener on the side that’s fertilized with bullshit.”
There’s a saying—I don’t know whose—that an expert is always from out of town. It’s similar to the Bible verse that says no man is a prophet in his own country.
It’s easiest to convince people that you’re special if they don’t know you well enough to see all the ways you’re not.
It leads to a few things: When you are keenly aware of your own struggles but blind to those of others, it’s easy to assume you’re missing some skill or secret
that others have. The more we describe successful people as having superhuman powers, the more everyone else looks at them and says, “I could never do that.” Which is unfortunate, because more people would be willing to try if they knew that those they admire are probably normal people who played the odds right.
“Show me a man who thinks he’s objective and I’ll show you a man who’s deceiving himself,” Luce said.
When good and honest people can be incentivized into crazy behavior, it’s easy to underestimate the odds of the world going off the rails.
A good question to ask is, “Which of my current views would change if my incentives were different?”
And even though Warren Buffett says to be greedy when others are fearful, far more people agree with that quote than actually act on it.
Jim Carrey once said, “I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.”
Your belief in the long run isn’t enough. Your partners, coworkers, spouses, and friends have to sign up for the ride.
Patience is often stubbornness in disguise.
Benjamin Graham said, “The purpose of the margin of safety is to render the forecast unnecessary.” The more flexibility you have, the less you need to know what happens next. And never forget John Maynard Keynes: “In the long run we’re all dead.”
A trick to learning a complicated topic is realizing how many complex details are cousins of something simple. John Reed wrote in his book Succeeding:
When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles—generally three to twelve of
them—that govern the field. The million things you thought you had to memorize are simply various combin...
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This is so vital. In finance, spending less than you make, saving the difference, and being patient is perhaps 90 percent o...
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In health it’s sleep eight hours, move a lot, eat real food, but not too much.
Complexity gives a comforting impression of control, while simplicity is hard to distinguish from cluelessness.
Pain is the sign of progress that tells you you’re paying the unavoidable cost of admission.
What have you experienced that I haven’t that makes you believe what you do? And would I think about the world like you do if I experienced what you have?
Wounds heal, but scars last.
An important component of human behavior is that people who’ve had different experiences than you will think differently than you do. They’ll have different goals, outlooks, wishes, and values. So most debates are not actual disagreements; they’re people with different experiences talking over each other.
They had learned from bitter experience to crave security.
“A mind that is stretched by new experience can never go back to its old dimensions,” said Oliver Wendell Holmes.
The present-day college generation is fatalistic . . . it will not stick its neck out. It keeps its pants buttoned, its chin up, and its mouth shut. If we take the mean average to be the truth, it is a cautious, subdued, unadventurous generation.
Two things tend to happen after you get hit with something big and unexpected:
• You assume what just happened will keep happening, but with greater force and consequence.
You forecast with great conviction, despite the original event being improbable and something few, if anyone, predicted.
But usually a better question is, “What have you experienced that I haven’t that makes you believe what you do? And would I think about the world like you do if I experienced what you have?”
It’s uncomfortable to think that what you haven’t experienced might change what you believe, because it’s admitting your own ignorance.
It’s much easier to assume that those who disagree with you aren’t thinking as hard as you are.
Who has the right answers but I ignore because they’re not articulate? Which of my current views would I disagree with if I were born in a different country or generation? What do I desperately want to be true so much that I think it’s true when it’s clearly not? What is a problem that I think applies only to other countries/industries/careers that will eventually hit me? What do I think is true but is actually just good marketing?
What haven’t I experienced firsthand that leaves me naive about how something works? What looks unsustainable but is actually a new trend we haven’t accepted yet? Who do I think is smart but is actually full of it? Am I prepared to handle risks I can’t even envision? Which of my current views would change if my incentives were different? What are we ignoring today that will seem shockingly obvious in the future? What events very nearly happened that would have fundamentally changed the world I know if they had occurred? How much have things outside my control contributed to things I take
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