Same as Ever: A Guide to What Never Changes

by Morgan Housel

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.

Imagine a life where almost everything gets better but you never appreciate it because your expectations rise as fast as your circumstances. It’s terrifying, and almost as bad as a world where nothing gets better.

I think it’s often hard to distinguish high expectations from motivation. And low expectations feels like giving up and minimizing your potential. 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.

Knowing the high odds of something happening loses its meaning when that thing happening hurts. Probability goes out the window. What you always want to avoid are catastrophic risks. A pilot who crashes once every ten thousand flights is a catastrophe. But our difficulty dealing with probability and large numbers makes us overly sensitive to run-of-the-mill, inevitable risks.

Historian Will Durant once said, “Logic is an invention of man and may be ignored by the universe.” And it often is, which can drive you mad if you expect the world to work in rational ways. Attempting to distill emotional and hormonal humans into a math equation is the cause of so much frustration and surprise in the world.

The ones who thrive long term are those who understand the real world is a never-ending chain of absurdity, confusion, messy relationships, and imperfect people.

A common irony goes like this: • Paranoia leads to success because it keeps you on your toes. • But paranoia is stressful, so you abandon it quickly once you achieve success. • Now you’ve abandoned what made you successful and you begin to decline—which is even more stressful. It happens in business, investing, careers, relationships—all over the place.

Maybe there’s more potential out there, but it’s fine to say, “You know what, I’m pretty happy with this level of risk and I’m fine just watching this game play out.” Not everyone can do it—and markets on average can never do it—but more of us should try.

Stress focuses your attention in ways good times can’t. It kills procrastination and indecision, taking what you need to get done and shoving it so close to your face that you have no choice but to pursue it, right now and to the best of your ability.

A carefree and stress-free life sounds wonderful only until you recognize the motivation and progress it prevents. No one cheers for hardship—nor should they—but we should recognize that it’s the most potent fuel of problem-solving, serving as both the root of what we enjoy today and the seed of opportunity for what we’ll enjoy tomorrow.

Progress always takes time, often too much time to even notice it’s happened. But bad news? It’s not shy or subtle. It comes instantly, so fast that it overwhelms your attention and you can’t look away.

The irony is that growth and progress are way more powerful than setbacks. But setbacks will always get more attention because of how fast they occur. So slow progress amid a drumbeat of bad news is the normal state of affairs.

A lot of progress and good news concerns things that didn’t happen, whereas virtually all bad news is about what did occur. Good news is the deaths that didn’t take place, the diseases you didn’t get, the wars that never happened, the tragedies avoided, and the injustices prevented. That’s hard for people to contextualize or even imagine, let alone measure. But bad news is visible. More than visible, it’s in your face. It’s the terrorist attack, the war, the car accident, the pandemic, the stock market crash, and the political battle you can’t look away from.

The best financial plan is to save like a pessimist and invest like an optimist. That idea—the belief that things will get better mixed with the reality that the path between now and then will be a continuous chain of setback, disappointment, surprise, and shock—shows up all over history, in all areas of life.

Save like a pessimist and invest like an optimist. Plan like a pessimist and dream like an optimist. Those can seem like conflicting skills. And they are. It’s intuitive to think you should either be an optimist or a pessimist. It’s hard to realize there’s a time and a place for both, and that the two can—and should—coexist.

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.

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.”

A simple rule that’s obvious but easy to ignore is that nothing worth pursuing is free. How could it be otherwise? Everything has a price, and the price is usually proportionate to the potential rewards. 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. A lot of times that price is worth paying. But you have to realize that it’s a price that must be paid. There are few coupons, and sales are rare.

If your tolerance is zero—if you are allergic to differences in opinion, personal incentives, emotions, inefficiencies, miscommunication, and such—your odds of succeeding in anything that requires other people rounds to zero. You can’t function in the world, as Pressfield says. The other end of the spectrum—fully accepting every incidence of nonsense and hassle—is just as bad. The world will eat you alive. What’s easy to miss is that there are bad things that become bigger problems when you try to eliminate them. I think the most successful people recognize when a certain amount of acceptance beats purity.

being right instills confidence that you can’t be wrong, which is a devastating characteristic in a world where outlier success has a target on its back, with competitors in tow.

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. That one has deeper meaning, but they both get across an important point: 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.

Everything is sales also means that everyone is trying to craft an image of who they are. The image helps them sell themselves to others. Some are more aggressive than others, but everyone plays the image game, even if only subconsciously.

Everyone’s dealing with problems they don’t advertise, at least until you get to know them well. Keep that in mind and you become more forgiving—of yourself and others.

No matter how much information and context you have, nothing is more persuasive than what you desperately want or need to be true.

There can be a difference between knowing what’s right and making a living delivering what you know to be right. This may be most common in investing, law, and medicine, when “do nothing” is the best answer, but “do something” is the career incentive.

Unexpected hardship makes people do and think things they’d never imagine when things are calm. Your personal views fall into the same trap. In investing, saying “I will be greedy when others are fearful” is easier said than done, because people underestimate how much their views and goals can change when markets break. The reason you may embrace ideas and goals you once thought unthinkable during a downturn is because more changes during downturns than just asset prices. If I, today, imagine how I’d respond to stocks falling 30 percent, I picture a world where everything is like it is today except stock valuations, which are 30 percent cheaper. But that’s not how the world works. Downturns don’t happen in isolation. The reason stocks might fall 30 percent is because big groups of people, companies, and politicians screwed something up, and their screwups might sap my confidence in our ability to recover. So my investment priorities might shift from growth to preservation. It’s difficult to contextualize this mental shift when the economy is booming. 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. The same idea holds true for companies, careers, and relationships. Hard times make people do and think things they’d never imagine when things are calm.

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.”

Long-term thinking can be a deceptive safety blanket that people assume lets them bypass the painful and unpredictable short run. But it never does. It might be the opposite: The longer your time horizon, the more calamities and disasters you’ll experience.

Eventually being right is one thing. But can you eventually be right and convince those around you? That’s completely different, and easy to overlook.

Doing long-term thinking well requires identifying when you’re being patient versus just stubborn. Not an easy thing to do. The only solution is knowing the very few things in your industry that will never change and putting everything else in a bucket that’s in constant need of updating and adapting. The few (very few) things that never change are candidates for long-term thinking. Everything else has a shelf life.

There are two types of information: permanent and expiring. Permanent information is: “How do people behave when they encounter a risk they hadn’t fathomed?” Expiring information is: “How much profit did Microsoft earn in the second quarter of 2005?” Expiring knowledge catches more attention than it should, for two reasons. One, there’s a lot of it, eager to keep our short attention spans occupied. Two, we chase it down, anxious to squeeze insight out of it before it loses relevance. Permanent information is harder to notice because it’s buried in books rather than blasted in headlines. But its benefit is huge. It’s not just that permanent information never expires, letting you accumulate it. It also compounds over time, leveraging off what you’ve already learned. Expiring information tells you what happened; permanent information tells you why something happened and is likely to happen again. That “why” can translate and interact with stuff you know about other topics, which is where the compounding comes in.

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.

The question “Why don’t you agree with me?” can have infinite answers. Sometimes one side is selfish, or stupid, or blind, or uninformed. 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?”

So rather than ending this book with a list of conclusions to implement in your own life, I’ll leave you with a list of questions, all related to the chapters you just read, to ask yourself. 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 credit for? How do I know if I’m being patient (a skill) or stubborn (a flaw)? Who do I look up to that is secretly miserable? What hassle am I trying to eliminate that’s actually an unavoidable cost of success? What crazy genius that I aspire to emulate is actually just cra...