Same as Ever

Text in black are quotes; text in green are my notes. I sometimes write in Spanish.

• 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. #

• 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. #

• People don’t want accuracy. They want certainty. #

• 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. #

• Daniel Kahneman once said, “Human beings cannot comprehend very large or very small numbers. It would be useful for us to acknowledge that fact.” #

• ‘‘With a large enough sample, any outrageous thing is apt to happen,” Mosteller said. That’s part of why the world seems so crazy, and why once-in-a-lifetime events seem to happen regularly. #

• When you realize that making people feel better is more appealing than giving people useful figures, you start to see why thinking in probabilities is rare. #

• Professor Philip Tetlock has spent most of his career studying experts, self-proclaimed or otherwise. A big takeaway from his research is how awful so many experts are at predicting politics and the economy. Given that track record, will people ever choose to ignore the experts? “No way,” Tetlock once said. “We need to believe we live in a predictable, controllable world, so we turn to authoritative-sounding people who promise to satisfy that need.” #

• Take the stock market. You can show people that the market historically crashes every five to seven years. But every five to seven years people say, “This is wrong, this feels broken, my advisor screwed up.” Knowing the high odds of something happening loses its meaning when that thing happening hurts. Probability goes out the window. #

• There is a saying that people don’t remember books; they remember sentences. #

• In a perfect world, the importance of information wouldn’t rely on its author’s eloquence. But we live in a world where people are bored, impatient, emotional, and need complicated things distilled into easy-to-grasp scenes. #

• Jeff Bezos once said, “The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you are measuring it.” #

• Every investment price, every market valuation, is just a number from today multiplied by a story about tomorrow. #

• Not utility, not profits—just whether people want it or not, for any reason. So much of what happens in the economy is rooted in emotions, which can, at times, be nearly impossible to make sense of. To me it’s obvious that the one thing you can’t measure, can’t predict, and can’t model in a spreadsheet is the most powerful force in all of business and investing—just like it’s the most powerful force in the military. Same in politics. Same in careers. Same in relationships. A lot of things don’t compute. #

• 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. #

• Carl Jung had a theory called enantiodromia. It’s the idea that an excess of something gives rise to its opposite. Let me give you an example from Mother Nature. California was hit with an epic drought in the mid-2010s. Then 2017 came, dropping a preposterous amount of moisture. Parts of Lake Tahoe received—I’m not making this up—more than sixty-five feet of snow in a few months. The six-year drought was declared over. You’d think that would be great. But it backfired in an unexpected way. Record rain in 2017 led to record vegetation growth that summer. It was called a superbloom, and it caused even desert towns to be covered in green. A dry 2018 meant all that vegetation died and became dry kindling. That led to some of the biggest wildfires California had ever seen. So record rain directly led to record fires. #

• A good summary of investing history is that stocks pay a fortune in the long run but seek punitive damages when you demand to be paid sooner. #

• Schultz wrote in his 2011 book Onward: “Growth, we now know all too well, is not a strategy. It is a tactic. And when undisciplined growth became a strategy, we lost our way.” #

• But what are two of the most common tactics when people pursue something great? Trying to make it faster and bigger. It’s always been a problem, and always will be. Same as ever. #

• Entrepreneur Andrew Wilkinson echoed the same when he said, “Most successful people are just a walking anxiety disorder harnessed for productivity.” #

• 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. #

• A lot of progress and good news concerns things that didn’t happen, whereas virtually all bad news is about what did occur. #

• That’s the real lesson from evolution: If you have a big number in the exponent slot, you do not need extraordinary change to deliver extraordinary results. It’s not intuitive, but it’s so powerful. #

• Little changes compounded for a long time create extraordinary changes. Same as ever. #

• 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. #

• Psychologists Lauren Alloy and Lyn Yvonne Abramson have a theory I love called depressive realism. It’s the idea that depressed people have a more accurate view of the world because they’re more realistic about how risky and fragile life is. #

• In the middle is the sweet spot, what I call the rational optimists: those who acknowledge that history is a constant chain of problems and disappointments and setbacks, but who remain optimistic because they know setbacks don’t prevent eventual progress. They sound like hypocrites and flip-floppers, but often they’re just looking further ahead than other people. #

• Same in investing. I wrote in my book The Psychology of Money: “More than I want big returns, I want to be financially unbreakable. And if I’m unbreakable I actually think I’ll get the biggest returns, because I’ll be able to stick around long enough for compounding to work wonders.” #

• The irony is that people can get some of their most important work done outside of work, when they’re free to think and ponder. The struggle is that we take time off maybe once a year, without realizing that time to think is a key element of many jobs, and one that a traditional work schedule doesn’t accommodate very well. #

• It’s not about working less. It’s the opposite: A lot of thought jobs basically never stop, and without structuring time to think and be curious, you wind up less efficient during the hours that are devoted to sitting at your desk cranking out work. This is the opposite of the concept of “hustle porn,” where people want to look busy at all times because they think it’s noble. #

• If you’re honest with yourself, you’ll see that a little inefficiency is the ideal spot to be in. #

• The more precise you try to be, the less time you have to focus on big-picture rules that are probably more important. It’s less about admitting that we can’t forecast, and more about acknowledging that if your forecast is merely good enough, you can invest your time and resources more efficiently elsewhere. #

• “What is the optimal amount to put up with so I can still function in a messy and imperfect world?” 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. #

• Body size in biology is like leverage in investing: It accentuates the gains but amplifies the losses. It works well for a while and then backfires spectacularly at the point where the benefits are nice but the losses are lethal. #

• The career version of this is the Peter Principle: talented workers will keep getting promoted until they’re in over their head, when they fail. #

• Google Maps, TurboTax, and Instagram wouldn’t be possible without ARPANET, a 1960s Department of Defense project linking computers to manage Cold War secrets, which became the foundation for the internet. That’s how you go from the threat of nuclear war to filing your taxes from your couch—a link that was unthinkable fifty years ago, but there it is. #

• There’s a theory in evolutionary biology called Fisher’s Fundamental Theorem of Natural Selection. It’s the idea that variance equals strength, because the more diverse a population is, the more chances it has to come up with new traits that can be selected for. No one can know what traits will be useful; that’s not how evolution works. #

• 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. #

• James Clear put it this way: “People follow incentives, not advice.” #

• 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 so many financial professionals stray toward short-termism is because it’s the only way to run a viable business when customers flee at the first sign of trouble. But the reason customers flee is often because investors have done such a poor job communicating how investing works, what their strategy is, what they should expect as an investor, and how to deal with inevitable volatility and cyclicality. #

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

• My theory is that length indicates the author has spent more time thinking about a topic than you have, which can be the only data point signaling they might have insights you don’t. It doesn’t mean their thinking is right. And you may understand their point after two chapters. But the purpose of chapters 3–16 is often to show that the author has done so much work that chapters 1 and 2 might have some insight. #

• The problem with simplicity is that the reps don’t hurt, so you don’t feel like you’re getting a mental workout. It can create a preference for laborious learning that students are actually okay with because it feels like a cognitive bench press, with all the assumed benefits. #

• 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. #

• Disagreement has less to do with what people know and more to do with what they’ve experienced. And since experiences will always be different, disagreement will be constant. Same as it’s ever been. Same as it will always be. Same as it ever was. #