Same as Ever - Morgan Housel

1. Risk is what’s left over after you’ve thought of everything. It’s what you don’t see

   1. Invest in preparedness, not in prediction

   2. Houdini death as an example. He was a boxer and impressed crowds by withstanding any man's punch. One day, after a show, he invited a group of students backstage to meet him. One student walked up and randomly started punching Houdini in the stomach without warning. He wanted to see his trick. Since Houdini wasn't prepared for it, he died shortly after.

      1. That was the biggest risk. What he didn't see coming

2. Math:

   1. People don’t want accuracy. They want certainty. 

   2. It’s easy to underestimate how often “rare” events happen in a world this big

      1. 8 bn population. If there was a one in a million event happening everyday, it would happen to 8000 people every day around the world 

      2. If the chance of a miracle in our lives was one in a million, we have 30,000 secs a day. That means one miracle every month

   3. It takes too long for a sample size to play out. So that leaves everyone guessing

      1. An economist with 50 years experience will probably experience 5-7 recessions in his life. Thats 5-7 moments he can show his expertise 

      2. If he predicts each recession with 80% probability, the only way to tell that they are right is to compare other predictions with 80% probability over dozens of moments and see if he was right 80% of the time

3. Importance of storytelling

   1. Professor John Burr Williams had more valuable insight on investing than Ben Graham. But Ben knew how to write good paragraphs so he sold more 

   2. People told Stephen Hawking every equation he writes halves the book sales

   3. Everyone knows Titanic. It killed 1500 people. But no one knows the Chinese ship in which over over 4000 people died

4. Do not compute

   1. The Battle of the Bulge was one of the deadliest American battles of all time. 19,000 dead, with many more wounded/missing. The reason was that they didn’t prepare for it, as it made no sense for the Germans to attack. What the American generals overlooked was that Hitler wasn’t rational. 

   2. Archibald Hill made a theory that if one’s heart pumps more blood to the muscle than others, they will run faster and for longer. But it didn’t make sense on race tracks. If that was the case, we wouldn’t need to race to find out. He overlooked the brain’s role. It limits the body function unless the reward is greater than risk.

5. Calm plants the seeds of Crazy

   1. In 1900, 800 in 1000 people died of infectious disease in America. By 2014 that number was 46. But that’s what made the COVID pandemic so shocking and overwhelming. We got so good at preventing diseases that we cut down funding, and most importantly, we weren’t psychologically prepared. 

   2. Jerry Seinfeld once had the most popular show in TV. Then he quit. He later said the reason he killed his show while it was thriving was because the only way to know where the top is, is to experience the decline. 

6. When the magic happens

   1. The circumstances that tend to produce the biggest innovations are those that cause people to be worried, scared and eager to move quickly because their future depends on it

   2. Big, fast changes happen only when they’re forced out by necessity

7. Overnight tragedies and long-term miracles

   1. No one tends to notice small change but over long periods of time. Example: GDP growth. US GDP has increased 8x over the last century, and senior Americans were there to witness it. But no one felt it as they only know what happened in the last few months. 

8. Elation & Despair

   1. The trick in any field is being able to survive the short-run problems so you can stick around long enough to enjoy the long-term growth. Save like a pessimist and invest like an optimist. Plan like a pessimist and dream like an optimist. 

   2. Bill gates was interviewed when he was 28 years old. From when Microsoft was started, Gates wanted to keep enough cash in the bank to go for 12 months without revenue. “Things change so fast in tech that next year’s business wasn’t guaranteed, including Microsoft’s”. 

9. Casualties of perfection

   1. Really high trees are susceptible to winds. Large lions are easier targets for hunters. 

   2. Everyone needs a bit of inefficiency to grow. Some of the best ideas have come from breaks. One should take regular breaks during their day if its a thinking job. 

10. It’s supposed to be hard

    1. Everything worth pursuing comes with a little pain. The trick is in not minding it. 

    2. Munger: The safest way to try to get what you want is to try to deserve what you want. 

11. Incentives: The most powerful force in the world 

    1. When the incentives are crazy, the behavior is crazy. People can be led to justify and defend nearly anything. 

    2. The Wall Street Journal says there are 3 ways to be a professional writer: 

       1. Lie to people who want to be lied to, and you’ll get rich 

       2. Tell the truth to those who want the truth, and you’ll make a living 

       3. Tell the truth to those who want to be lied to, and you’ll go broke

    3. Notorious B.I.G always wanted to be an artist growing up. But in 4th grade, he started selling crack. He instantly left commercial art to make some “real” money