Book review - Same as Ever by Morgan Housel

The basic premise of this book is the existence of phenomena and behaviors that have withstood the tests of time and research. These never change. It's beneficial to be aware of these and keep them in mind. Morgan's eloquence shines through, making it a smooth read.

The Book in 3 Sentences (or so)

1. The main idea is that instead of trying to predict future changes, it might be more beneficial to focus on things that remain constant.
2. The primary reason is that while changes are constant, human behavior has largely remained the same throughout history. The patterns formed by changes across markets and societies are familiar, as they are driven by human behavior.
3. Morgan Housel explores this concept in depth through concise essays that cover 20 relevant areas. He draws from psychology, finance, history, personal experiences, and research. These concepts are irrefutable and can lead to improved decision-making.

Impressions

I couldn't miss this book, especially after how impressive his previous one, 'The Psychology of Money,' was.

Perhaps due to the high benchmark set by the first book, this one didn't strike me as much. However, it still stands as a book worth both reading and revisiting.

Who Should Read It?

This book is highly recommended for all, yet it may particularly resonate with individuals who have been on the surface of earth for three decades or more. They might find the themes more relatable and find themselves nodding in agreement more often.

My Top Quotes

• “Biologist Leslie Orgel used to say, “Evolution is cleverer than you are,” because whenever a critic says, “Evolution could never do that,” they usually just lacked imagination. It’s also easy to underestimate because of basic math. Evolution’s superpower is not just selecting favorable traits…..The real magic of evolution is that it’s been selecting traits for 3.8 billion years. The time, not the little changes, is what moves the needle
• .The best financial plan is to save like a pessimist and invest like an optimist.”
• “The trick in any field—from finance to careers to relationships—is being able to survive the short-run problems so you can stick around long enough to enjoy the long-term growth.”

Concise summary

This one is straightforward to summarize. It contains 23 chapters, each deserving mention.

Here are a few observations:

1. Hanging by a thread: Many prominent events in history result from seemingly insignificant actions or inactions. Often, pure chance significantly influences or determines these outcomes. Similarly, in our lives, the most significant opportunities or losses can stem from minor events, and serendipity.
2. Risk is what you don't see: The most significant risks are those that remain unseen. Morgan frequently references the Great Depression to illustrate how it was entirely unforeseen. Similarly, the 2008 crisis was largely unnoticed until it was upon us. The same applies to Covid-19; the January 2020 edition of The Economist doesn't even mention it. Instead of trying to predict, we should invest in preparedness. Think insurance, and saving a bit more than you believe is necessary.
3. Expectations and Reality: Expect less – you'll be happier. We devote time and energy to managing our income and abilities, but often neglect our expectations. These are two sides of the same coin, yet expectations are much more within our control. Step off the 'hedonic treadmill', as it's rapidly accelerating.
4. Wild minds: This concept is exemplified by Elon Musk. His ventures into rockets, cars, AI, robots, tunnels, and Mars require an almost maniacal drive. However, this brilliance comes with a dark side. We must accept all facets of such individuals, not picking and choosing - the biggest change makers do not come with all good content.
5. Wild numbers: Many people struggle to understand numbers. They seek certainty rather than accuracy, leading them to follow self-proclaimed experts who exude confidence. Balancing the pursuit of aspirations and goals with seizing unexpected opportunities is crucial. This balance can often mean the difference between success and failure, not just for companies, but for our careers as well.
6. Stories: The most compelling stories often receive the most attention, whether in finance, the workplace, or our personal lives. These stories can sometimes be baseless, but if well-told, they can be effective despite defying logic.
7. Does not compute: Not everything can be explained through numbers. Consider the stock market with its phases of euphoria and downturns. The real world is a continuous chain of absurdities, confusion, complex relationships, and flawed individuals. It's essential to acknowledge and deal with this.
8. Too much too soon too fast: Patience is key. Rushing seldom helps. Consider the concepts of evolution and compounding. For instance, investors often rush to small-cap stocks, even when their portfolios are already yielding market-beating returns. They seek more of a good thing more quickly, which often backfires.
9. When the magic happens: Often, challenging times can lead to significant breakthroughs. Consider the Covid vaccine development, which occurred in a year instead of the typical 10+ years it usually takes for a new drug. Significant changes tend to occur during high-pressure situations.
10. Varied reactions: It may seem strange when people react differently to similar circumstances. However, our responses are primarily shaped by our personal experiences. For instance, someone who has experienced a layoff may respond to a startup opportunity differently than a recent graduate would.
11. Calm leads to chaos: The following points explain it well: When an economy is stable, people become optimistic. Optimism leads people into debt. Debt makes the economy unstable.

Thus, the best time to prepare for a turn of fortune is when everything seems to be going well.

There are 12 more lessons, but listing them all here might detract from the pleasure of reading them yourself.

In conclusion, these are my key takeaways:

• It's more effective to focus on ongoing actions rather than making predictions.
• The greatest risk lies in the unforeseen, making it essential to invest in preparedness.
• Stories shape the narrative and influence markets.