Same as Ever: A Guide to What Never Changes

by Morgan Housel

Jeff Bezos once talked about the realities of loving your job: 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.

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.

Every industry and career is different, but there’s universal value in accepting hassle when reality demands it. Volatility. People having bad days. Office politics. Difficult personalities. Bureaucracy. All of them are bad. But all have to be endured to some degree if you want to get anything done.

A good rule of thumb for a lot of things is to identify the price and be willing to pay it. The price, for so many things, is putting up with an optimal amount of hassle.

The only thing harder than gaining a competitive edge is not losing an advantage when you have one.

Sears was, in almost every way, the Amazon of its day: so dominant at retailing efficiency that it could spread its magic into unrelated industries, where it would terrify rivals. The Times wrote in 1974:

Success has its own gravity.

The idea that advantage has a shelf life is a fundamental part of growth.

competitive advantages tend to be short-lived, often because their success plants the seeds of their own decline.

Evolution is the study of advantages. Van Valen’s idea is simply that there are no permanent advantages. Everyone is madly scrambling all the time, but no one gets so far ahead that they become extinction-proof.

Big innovations don’t come at once, but rather are built up slowly when several small innovations are combined over time.

And that’s why all innovation is hard to predict and easy to underestimate. The path from A to Z can be so complex and end up at such a strange point that it’s nearly impossible to look at today’s tools and extrapolate what they might become. Someone somewhere right now is inventing or discovering something that will utterly change the future. But you’re probably not going to know about it for years. That’s always how it works.

Since we never know how multiple innovations will collide, the path of least resistance is to conclude that our best days are behind us while ignoring the potential of what we’re working on.

The value of every new technology is not just what it can do; it’s what someone else with a totally different skill set and point of view can eventually manipulate it into.

Most people do not disclose what torments them, what they’re scared of, what they’re insecure about, or whether or not they’re actually happy. Rarely will they give you an honest account of their flaws and failures.

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. Since they’re crafting the image, it’s not a complete view. There’s a filter. Skills are advertised, flaws are hidden.

You never know what struggles people are hiding. I’ve always wondered how many people I know are stutterers, but, like me, have kept it mostly hidden. And how many other issues are like that? Depression, anxiety, phobias . . . so many things can be disguised in a way that places a facade of normalcy over a person’s internal struggles.

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.

Incentives are the most powerful force in the world and can get people to justify or defend almost anything.

No matter how much information and context you have, nothing is more persuasive than what you desperately want or need to be true. And as Daniel Kahneman once wrote, “It is easier to recognize other people’s mistakes than our own.” What makes incentives powerful is not just how they influence other people’s decisions but how blind we can be to how they impact our own.

Incentives can be cultural and tribal, where people support things because they don’t want to upset or become banished from their social group. A lot of people can resist financial incentives; cultural and tribal incentives are more seductive.

Everything from wars to recessions to frauds to business failures to market bubbles happen more often than people think because the moral boundaries of what people are willing to do can be extended with certain incentives.

The next generation never learns anything from the previous one until it’s brought home with a hammer. . . . I’ve wondered why the next generation can’t profit from the generation before, but they never do until they get knocked in the head by experience.

“If you find the right balance between desperation and fear, you can make people do anything.”

The big takeaway here is that we really have no idea what policies we’ll be pushing for in, say, five or ten years. Unexpected hardship makes people do and think things they’d never imagine when things are calm.

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.

Expectations also shift and goalposts move faster than you can imagine.

Part of this is the same reason that predicting how you’ll respond to risk is difficult: It’s hard to imagine the full context until you experience it firsthand. If you think of your future self living in a new mansion, you imagine basking in splendor and everything feeling great. What’s easy to forget is that people in mansions can get the flu, have psoriasis, become embroiled in lawsuits, bicker with their spouses, feel wracked with insecurity and annoyed with politicians—which in any given moment can supersede any joy that comes from material success. Future fortunes are imagined in a vacuum, but reality is always lived with the good and bad taken together, competing for attention.

The long run is just a collection of short runs you have to put up with. Saying you have a ten-year time horizon doesn’t exempt you from all the nonsense that happens in the next ten years. Everyone has to experience the recessions, the bear markets, the meltdowns, the surprises, and the memes. So rather than assuming long-term thinkers don’t have to deal with short-term nonsense, ask the question, “How can I endure a never-ending parade of nonsense?”

A lot of it comes from the gap between what you believe and what you can convince other people of.

Doing long-term thinking well requires identifying when you’re being patient versus just stubborn.

Time is compounding’s magic, and its importance can’t be minimized. But the odds of success fall deepest in your favor when you mix a long time horizon with a flexible end date—or an indefinite horizon.

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.

we have an example of complexity being favored for its excitement, when simplicity may actually do a better job.

in most situations a handful of simple variables drives the majority of outcomes. If you’ve covered the few things that matter, you’re all set. A lot of what gets added after that is unnecessary filler that is either intellectually seductive, wastes your time, or is designed to confuse or impress you.

things I need and make them effective.” 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 combinations of the core principles.

Complexity gives a comforting impression of control, while simplicity is hard to distinguish from cluelessness.

But a truth that applies to almost every field is that there are no points awarded for difficulty. It’s possible to try too hard, to be too attracted to complexity, and doing so can backfire spectacularly.

There’s a long history of people adapting and rebuilding while the scars of their ordeal remain forever, changing how they think about risk, reward, opportunities, and goals for as long as they live.

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.

It is too easy to examine history and say, “Look, if you just held on and took a long-term view, things recovered and life went on,” without realizing that mindsets are harder to repair than buildings and cash flows. We can see and measure just about everything in the world except people’s moods, fears, hopes, grudges, goals, triggers, and expectations. That’s partly why history is such a continuous chain of baffling events, and always will be.

Different conditions productive of extreme excitation often lead to profound and prolonged loss of balance in nervous and psychic activity . . . neuroses and psychoses may develop as a result of extreme danger to oneself or to near friends, or even the spectacle of some frightful event not affecting one directly.

Experiencing something that makes you stare ruin in the face and question whether you’ll survive can permanently reset your expectations and change behaviors that were previously ingrained.

Historian Tony Judt notes that the state of affairs was so bad in postwar Europe that only the state could offer hope of salvation to the masses of displaced people. So it did. Everything from generous unemployment insurance to universal health care became common after the war in ways that never caught on in America.

The typical attempt to clear up an uncertain future is to gaze further and squint harder—to forecast with more precision, more data, and more intelligence. Far more effective is to do the opposite: Look backward, and be broad. Rather than attempting to figure out little ways the future might change, study the big things the past has never avoided.