Same as Ever: A Guide to What Never Changes

by Morgan Housel

Our life is indeed the same as it ever was. . . . The same physiological and psychological processes that have been man’s for hundreds of thousands of years still endure. —Carl Jung

The wise in all ages have always said the same thing, and the fools, who at all times form the immense majority, have in their way, too, acted alike, and done just the opposite. —Arthur Schopenhauer

History never repeats itself; man always ...

I’ve learned an important trick: to develop foresight, you need to practice hi...

The dead outnumber the living . . . fourteen to one, and we ignore the accumulated experience of such a huge majority of ma...

Amazon founder Jeff Bezos once said that he’s often asked what’s going to change in the next ten years. “I almost never get the question: ‘What’s not going to change in the next ten years?’ ” he said. “And I submit to you that that second question is actually the more important of the two.” Things that never change are important because you can put so much confidence into knowing how they’ll shape the future. Bezos said it’s impossible to imagine a future where Amazon customers don’t want low prices and fast shipping—so he can put enormous investment into those things. The same philosophy works in almost all areas of life.

What would be true in every imaginable version of your life, not just this one? Those universal truths are obviously the most important things to focus on, because they don’t rely on chance, luck, or accident.

Entrepreneur and investor Naval Ravikant put it this way: “In 1,000 parallel universes, you want to be wealthy in 999 of them. You don’t want to be wealthy in the fifty of them where you got lucky, so we want to factor luck out of it. . . . I want to live in a way that if my life played out 1,000 times, Naval is successful 999 times.” That’s what this book is about: In a thousand parallel universes, what would be true in every single one?

Author Tim Urban once wrote, “If you went back in time before your birth you’d be terrified to do anything, because you’d know that even the smallest nudges to the present can have major impacts on the future.” How hauntingly true.

It was a complete fluke, a random and thoughtless bit of dumb luck that became the most important decision of my life—far more important than every intentional decision I’ve ever made—or ever will make.

Historian David McCullough once told interviewer Charlie Rose that “if the wind had been in the other direction on the night of August twenty-eighth [1776], I think it would have all been over.” “No United States of America if that had happened?” Rose asked. “I don’t think so,” said McCullough. “Just because of the wind, history was changed?” asked Rose. “Absolutely,” said McCullough.

The Lusitania was hit with a torpedo, killing nearly twelve hundred passengers and becoming the most important trigger to rally U.S. public support for entering World War I. Had the fourth boiler room been operating, Turner would have reached Liverpool a day before the German submarine had even entered the Celtic Sea, where it crossed paths with the Lusitania. The ship likely would have avoided attack. A country may have avoided a war that became the seed event for the rest of the twentieth century.

So much of the world hangs by a thread. An irony of studying history is that we often know exactly how a story ends, but we have no idea where it began.

People like to say, “To know where we’re going, you have to know where we’ve been.” But more realistic is admitting that if you know where we’ve been, you realize we have no idea where we’re going. Events compound in unfathomable ways.

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.

Every event creates its own offspring, which impact the world in their own special ways. It makes prediction exceedingly hard. The absurdity of past connections should humble your confidence in predicting future ones.

The other thing to keep in mind is to have a wider imagination. No matter what the world looks like today, and what seems obvious today, everything can change tomorrow because of some tiny accident no one’s thinking about. Events, like money, compound. And the central feature of compounding is that it’s never intuitive how big something can grow from a small beginning.

We are very good at predicting the future, except for the surprises—which tend to be all that matter.

The biggest risk is always what no one sees coming, because if no one sees it coming, no one’s prepared for it; and if no one’s prepared for it, its damage will be amplified when it arrives.

As financial advisor Carl Richards says, “Risk is what’s left over after you think you’ve thought of everything.” That’s the real definition of risk—what’s left over after you’ve prepared for the risks you can imagine. Risk is what you don’t see.

Two things can explain something that looks inevitable but wasn’t predicted by those who experienced it at the time: • Either everyone in the past was blinded by delusion. • Or everyone in the present is fooled by hindsight.

The Economist—a magazine I admire—publishes a forecast of the year ahead each January. Its January 2020 issue does not mention a single word about COVID-19. Its January 2022 issue does not mention a single word about Russia invading Ukraine. That’s not a criticism—both events were impossible to know when the issues were planned in the months before publication. But that’s the point: The biggest news, the biggest risks, the most consequential events are always what you don’t see coming. Put another way: There is rarely more or less economic uncertainty; just changes in how ignorant people are to potential risks. Asking what the biggest risks are is like asking what you expect to be surprised about. If you knew what the biggest risk was you would do something about it, and doing something about it would make it less risky. What your imagination can’t fathom is the dangerous stuff, and it’s why risk can never be mastered.

A big part of this idea is coming to terms with how limited our view of what’s happening in the world can be.

History knows three things: 1) what’s been photographed, 2) what someone wrote down or recorded, and 3) the words spoken by people whom historians and journalists wanted to interview and who agreed to be interviewed. What percentage of everything important that’s ever happened falls into one of those three categories? No one knows. But it’s tiny. And all three suffer from misinterpretation, incompleteness, embellishment, lying, and selective memory. When your view of what’s happening and has happened in the world is so limited, it’s easy to underestimate what you don’t know, what else could be happening right now, and what could go wrong that you’re not even envisioning.

Psychologist Daniel Kahneman says, “The idea that what you don’t see might refute everything you believe just doesn’t occur to us.”

One, think of risk the way the State of California thinks of earthquakes. It knows a major earthquake will happen. But it has no idea when, where, or of what magnitude. Emergency crews are prepared despite no specific forecast. Buildings are designed to withstand earthquakes that may not occur for a century or more. 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 same goes for how much debt you think you should handle—whatever you think it is, the reality is probably a little less. Your preparation shouldn’t make sense in a world where the biggest historical events all would have sounded absurd before they happened.

Your happiness depends on your expectations more than anything else. So in a world that tends to get better for most people most of the time, an important life skill is getting the goalpost to stop moving. It’s also one of the hardest.

Happiness is little changed despite the world improving.

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.”

People gauge their well-being relative to those around them, and luxuries become necessities in a remarkably short period of time when the people around you become better off.

Investor Charlie Munger once noted that the world isn’t driven by greed; it’s driven by envy.

It’s staggering how expectations can alter how you interpret current circumstances.

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.

Today’s economy is good at generating three things: wealth, the ability to show off wealth, and great envy for other people’s wealth.

It’s become so much easier in recent decades to look around and say, “I may have more than I used to. But relative to that person over there, I don’t feel like I’m doing that great.”

But nostalgia for the 1950s is one of the best examples of what happens when expectations grow faster than circumstances. In many ways it’s always been like that and always will be. Being driven by what other people have and you don’t is an unavoidable trait in most people. It also highlights just how important managing expectations can be if you want to live a happy life.

Actual circumstances don’t make much difference in all these cases. What generates the emotion is the big gap between expectations and reality.

Peter Kaufman, CEO of Glenair and one of the smartest people you will ever come across, once wrote: We tend to take every precaution to safeguard our material possessions because we know what they cost. But at the same time we neglect things which are much more precious because they don’t come with price tags attached: The real value of things like our eyesight or relationships or freedom can be hidden to us, because money is not changing hands. Same with expectations—they’re easy to ignore because their value isn’t on a price tag. But your happiness completely relies on expectations. Your boss’s impression of your career relies on them. Consumer confidence relies on them. What moves the stock market relies on them. So why do we pay so little attention to them? We spend so much effort trying to improve our income, skills, and ability to forecast the future—all good stuff worthy of our attention. But on the other side there’s an almost complete ignorance of expectations, especially managing them with as much effort as we put into changing our circumstances.

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.

My friend Brent has a related theory about marriage: It only works when both people want to help their spouse while expecting nothing in return. If you both do that, you’re both pleasantly surprised.

The only way around that might be recognizing two things. One is the constant reminder that wealth and happiness is a two-part equation: what you have and what you expect/need. When you realize that each part is equally important, you see that the overwhelming attention we pay to getting more and the negligible attention we put on managing expectations makes little sense, especially because the expectations side can be so much more in your control. The other is to understand how the expectation game is played. It’s a mental game, and it’s often crazy and agonizing, but it’s a game that everyone is forced to play, so you should be aware of the rules and strategies. It goes like this: You think you want progress, both for yourself and for the world. But most of the time that’s not actually what you want. You want to feel a gap between what you expected and what actually happened. And the expectation side of that equation is not only important, but it’s often more in your control than managing your circumstances.

People who think about the world in unique ways you like also think about the world in unique ways you won’t like.

The key thing is that unique minds have to be accepted as a full package, because the things they do well and that we admire cannot be separated from the things we wouldn’t want for ourselves or we look down upon.

That may perfectly sum up how extremely successful people operate. Of course they have abnormal characteristics. That’s why they’re successful! And there is no world in which we should assume that all those abnormal characteristics are positive, polite, endearing, or appealing. 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.

Naval Ravikant once wrote: One day, I realized with all these people I was jealous of, I couldn’t just choose little aspects of their life. I couldn’t say I want his body, I want her money, I want his personality. You have to be that person. Do you want to actually be that person with all of their reactions, their desires, their family, their happiness level, their outlook on life, their self-image? If you’re not willing to do a wholesale, 24/7, 100 percent swap with who that person is, then there is no point in being jealous. Either you want someone else’s life or you don’t. Either is equally powerful. Just know which is which when finding role models.

People don’t want accuracy. They want certainty.

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

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

The core here is that people think they want an accurate view of the future, but what they really crave is certainty.