Same as Ever: A Guide to What Never Changes

by Morgan Housel

But you’d notice people falling for greed and fear just like they do in our current world.

You’d see people persuaded by risk, jealousy, and tribal affiliations in ways that are familiar to you.

You’d see overconfidence and shortsightedness that remind you of peo...

You’d find people seeking the secret to a happy life and trying to find certainty when none exists in way...

Some of the biggest and most consequential changes in history happened because of a random, unforeseeable, thoughtless encounter or decision that led to magic or mayhem.

Viewing events in isolation, without an appreciation of their long roots, helps explain everything from why forecasting is hard to why politics is nasty.

Events compound in unfathomable ways.

“Risk is what’s left over after you think you’ve thought of everything.”

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.

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.

suffer from misinterpretation, incompleteness, embellishment, lying, and selective memory.

Types of historical documentation

It’s impossible to plan for what you can’t imagine, and the more you think you’ve imagined everything the more shocked you’ll be when something happens that you hadn’t considered.

“Invest in preparedness, not in prediction.”

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.

Sometimes it’s the smartest planners in the world, working tirelessly, mapping every scenario they can imagine, who end up failing. They planned for everything that made sense before getting hit by something they’d never imagined.

A common storyline of history goes like this: Things get better, wealth increases, technology brings new efficiencies, and medicine saves lives. The quality of life goes up. But people’s expectations then rise by just as much, if not more, because those improvements also benefit other people around you, whose circumstances you anchor to. Happiness is little changed despite the world improving.

“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.

world isn’t driven by greed; it’s driven by envy.

“In the 1930s I worried about how I could eat,” Life quotes one taxi driver. “Now I’m worrying about where to park.”

he finds immense pleasure in something I don’t think twice about.

There is no such thing as objective wealth—everything is relative, and mostly relative to those around you. It’s the path of least resistance to determining what life owes you and what you should expect. Everyone does it. Subconsciously or not, everyone looks around and says, “What do other people like me have? What do they do? Because that’s what I should have and do as well.”

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.

What was so unique about the 1950s was the ability for people to find financial balance in a way that before and since has felt elusive.

By the early 1980s, the postwar togetherness that dominated the 1950s and ’60s gave way to more stratified growth, where many people plodded along while a few grew exponentially wealthier. The glorious lifestyles of the few inflated the aspirations of the many.

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

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

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.

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.

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.

Reversion to the mean is one of the most common stories in history. It’s the main character in economies, markets, countries, companies, careers—everything. Part of the reason it happens is because the same personality traits that push people to the top also increase the odds of pushing them over the edge.

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

Dealing with the math behind risk and uncertainty in general is difficult—something people have struggled with forever and always will. That something can be likely and not happen, or unlikely and still happen, is one of the world’s most important tricks.

“I’m about to go look the president in the eye,” he says. “And what I’d like to know, no bullshit,

Probability is about nuance and gradation. But in the real world people pay attention to black-and-white results.

What’s different now is the size of the global economy, which increases the sample size of potential crazy things that might happen. When eight billion people interact, the odds of a fraudster, a genius, a terrorist, an idiot, a savant, a jerk, or a visionary moving the needle in a significant way on any given day is nearly guaranteed.

Bad news gets more attention than good news because pessimism is seductive and feels more urgent than optimism.

The majority of Americans were less likely than their descendants to be dogged by that frightening sense of insecurity which comes from being jostled by forces—economic, political, international—beyond one’s personal ken. Their horizons were close to them. Their horizons were close to them. In modern times our horizons cover every nation, culture, political regime, and economy in the world.

“We need to believe we live in a predictable, controllable world, so we turn to authoritative-sounding people who promise to satisfy that need.”

The inability to forecast the past has no impact on our desire to forecast the future. Certainty is so valuable that we’ll never give up the quest for it, and most people couldn’t get out of bed in the morning if they were honest about how uncertain the future is.

But our difficulty dealing with probability and large numbers makes us overly sensitive to run-of-the-mill, inevitable risks. Same as ever.

Great ideas explained poorly can go nowhere, while old or wrong ideas told compellingly can ignite a revolution.

The influence of a good story drives you crazy if you assume the world is swayed by facts and objectivity—if you assume the best idea or the largest numbers or the correct answer wins.

Leverage squeezes the full potential out of something with less effort. Stories leverage ideas in the same way that debt leverages assets.

Stories get diverse people to focus attention on a single point.

water.” He found the universal emotions that influence everyone, regardless of who they were or where they were from, and got them to nod their heads in the same direction. It’s nearly magic.

Most decisions aren’t made on a spreadsheet, where you just add up the numbers and a clear answer pops out. There’s a human element that’s hard to quantify and explain, and that can seem totally detached from the original goal, yet it carries more influence than anything else.

“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.