Book notes: Same as Ever by Morgan Housel

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Same as Ever: A Guide to What Never Changes by Morgan Housel

Synopsis:

“From the author of the international blockbuster THE PSYCHOLOGY OF MONEY, a powerful new tool to unlock one of life’s most challenging puzzles.

Every investment plan under the sun is, at best, an informed speculation of what may happen in the future, based on a systematic extrapolation from the known past.

Same as Ever reverses the process, inviting us to identify the many things that never, ever change.

With his usual elan, Morgan Housel presents a master class on optimizing risk, seizing opportunity, and living your best life. Through a sequence of engaging stories and pithy examples, he shows how we can use our newfound grasp of the unchanging to see around corners, not by squinting harder through the uncertain landscape of the future, but by looking backwards, being more broad-sighted, and focusing instead on what is permanently true.

By doing so, we may better anticipate the big stuff, and achieve the greatest success, not merely financial comforts, but most importantly, a life well lived.” -Audible

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Opening thoughts:

I was excited to pick up this book because The Psychology of Money is easily one of my favorite books of all time. I was curious to see what this book was all about, especially since he was a recent guest on Tim Ferriss’s podcast promoting this book.

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Key notes:

Introduction: The Little Laws of Life

• It’s important to ask the question “what will never change?“

Hanging by a Thread:

If you know where we’ve been, you realize we have no idea where we’re going

Risk Is What You Don’t See

We are very good at predicting the future, except for the surprises: which tend to be all that matter

• Risk is what’s left over after you think you’ve thought of everything
  • Historically, the biggest risks are always the ones you don’t see coming
• It’s impossible to plan for things you can’t imagine
• Invest in preparedness, not prediction
• In personal finance, the right amount of savings is when it feels like it’s a little too much
• What you don’t see coming always is

Expectations and Reality

The first rule of happiness is low expectations

• People gauge their well-being relative to those around them
• The world isn’t driven by greed, it is driven by envy
• Expectations can alter how you interpret current conditions 
• Money buys happiness in the way that drugs bring pleasure: incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough
• What partially contributed to the happiness of the 1950s was the fact that the gap between you and most of the people around you wasn’t that large
• In a relationship, if you go into it only wanting to help the other person with no expectations in return, you’ll both be pleasantly surprised 
• Unhappiness and a longing for the past happens when expectations grow faster than circumstances
• Managing expectations is important if you want to live a happy life

Wild Minds

People who think about the world in unique ways you like also think about the world in unique ways you won’t like

• The extremely successful operate the way they do and have abnormal characteristics. This is why they’re successful 
• People who tend to be really good at one thing tend to be really bad and something else

Wild Numbers

People don’t want accuracy. They want certainty

• People think they want an accurate view of the future, but what they really crave is certainty
• With a large enough sample size, improbable events or 1 in a million miracles should happen more often than we think

Best Story Wins

Stories are always more powerful than statistics

• Even within a good story, a powerful sentence or phrase can do most of the work
  • People don’t remember books, they remember sentences
• “Humor is a way to show you’re smart without bragging” -Mark Twain
• Stories leverage ideas the way debt leverages assets
• Guiding people’s attention to a single point is one of the most important life skills

Does Not Compute

The world is driven by forces that cannot be measured

• Athletic performance isn’t just what you’re physically capable of, it’s what you’re capable of within the context of what your brain is willing to endure for the risk and reward in a given moment
• The concept of economic value: whatever someone wants has value regardless of the reason, if any
  • So much of what happens in the economy is rooted in emotions
• Rationality is relative to each person

Calm Plants the Seeds of Crazy

Crazy doesn’t mean broken. Crazy is normal; beyond the point of crazy is normal

• Stability is destabilizing
• Realize the power of “enough”
• An excess of something gives rise to the opposite

Reader’s note: basically this chapter highlights how things are generally cyclical

Too Much, Too Soon, Too Fast

A good idea on steroids quickly becomes a terrible idea

• Some things don’t scale well
• The greatest impediment to creativity is impatience
• Most great things in life gain their value from two things: patience and scarcity
  • Patience to let something grow and scarcity to admire what it grows into

When the Magic Happens

Stress focuses your attention in ways that good times can’t

• The biggest innovations tend to occur during and after a terrible event
• What makes life mean something is purpose
  • A goal, a battle, a struggle. Even if you don’t win it
• Hardship is the most potent fuel for problem-solving

Overnight Tragedies and Long Term Miracles

Good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in a blink of an eye

• Warren Buffett says it takes 20 years to build a reputation and five minutes to destroy one
• The most important things come from compounding, but compounding takes a while so it’s easy to ignore
• Progress always takes time and it’s hard to notice. Bad news happens instantly
  • Most things are complex to make but easy to break
• Setbacks will always get more attention because of how fast they occur

Tiny and Magnificent

When little things compound into extraordinary things

• The best question to ask is, “What are the best returns I can sustain for the longest period of time?“

Elation and Despair

Progress requires optimism and pessimism to coexist

• Progress requires optimism and pessimism to coexist
• The best financial plan is to save like a pessimist and invest like an optimist
• You can only be an optimist in the long run if you’re pessimistic enough to survive in the short run
  • Plan like a pessimist, dream like an optimist

Casualties of Perfection

There is a huge advantage to being a little imperfect

• Taking time off to think and not be busy is critical for creative, endeavors, and problem-solving
• A Stanford study shows that walking increases creativity by 60%
• Leisure time can be a measure of success, but it could also be a critical ingredient
• A little inefficiency is the ideal spot to be in almost every area
• The more perfect you try to become, the more vulnerable you generally are

It’s Supposed to Be Hard

Everything worth pursuing comes with a little pain. The trick is not minding that it hurts

• The safest way to try and get what you want is to deserve what you want. Deliver to the world what you would buy if you were on the other end
• The danger of shortcuts is that if you’re too efficient, you’re doing it the wrong way. It’s supposed to be hard work
• Identify the optimal level of hassle in any area in order to keep going
  • There’s an optimal level of hassle to accept and embrace. And when you accept a level of efficiency, you stop denying that it exists

Keep Running

Most competitive advantages eventually die

• In nature, the most dominant creatures tend to be huge, but the most enduring tend to be smaller
• There are no permanent advantages, no species or extinction proof. It’s a constant arms race
• Keep running just to stay in place is how evolution and most things in life work

The Wonders of the Future

It always feels like we’re falling behind, and it’s easy to discount the potential of new technology

• Big innovations are built up slowly as small innovations are combined over overtime

Harder than It Looks and Not as Fun as It Seems

The grass is always greener on the side that’s fertilized with bullshit

• Career advice: everything is sales
• Almost everything looks better from the outside

Incentives: The Most Powerful Force in the World

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

• If you want to persuade, appeal to interest and not to reason
• There’s a difference between medicine and being a doctor
  • Medicine is a biological science, while being a doctor is often a social skill of managing expectations, understanding the insurance system, communicating effectively, and so on

Now You Get It

Nothing is more persuasive than what you’ve experienced firsthand

• Expectations shift and goalposts move faster than you can imagine

Time Horizons

Saying I’m in it for the Long run is a bit like standing at the base of Mount Everest, pointing to the top, and saying, “That’s where I’m heading.” Well, that’s nice. Now comes the test

• Long runs are just a collection of short runs you have to put up with
• There are few things in any industry that never change and are candidates for long-term thinking
  • Everything else has a shelf life and needs constant updating and revision
• 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
  • Expiring information catches more attention. Permanent information is harder to notice because it is buried in books. It is useful for the long run and it compounds
• Expiring information tells you what happened, permanent information tells you why something happened

Trying Too Hard

There are no points awarded for difficulty

• A trick to learning a complicated topic is realizing how many complex details are cousins of something simple
  • In finance, spending less than you make, saving the difference, and being patient is perhaps 90% of what you need to know to do well
  • In health, it’s sleep eight hours, move a lot, eat real food, but not too much
• Why are complexity and length so appealing when simplicity and brevity will do?
  • Complexity gives a comforting impression of control while simplicity is hard to distinguish from cluelessness

Wounds Heal, Scars Last

What have you experienced that I haven’t that makes you believe what you do? And would I think about the world like you do if I experienced what you have?

• Hardcore stress leaves us scarred and can change our behavior
• Always consider that people’s experiences shape what they believe

Questions

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Closing thoughts:

Absolutely loved this book. It combines practical wisdom and actionable insights within a topic that is relevant to everyone. Similar to his first book, it’s a solid guide to personal finance, but it also intelligently combines principles of living a successful life.

Books like these that have unique yet profound ideas that change the way I think usually end up high on my list for top favorite books of all time, and this one is no different. This book is easily in my top 10 of all time, and top 3 for personal finance. I would highly recommend pretty much everyone read this book, or at least put it at the top of their list of important books to read.

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One Takeaway / Putting into practice:

Amazingly, this book had a handful of really impactful ideas that influenced the way I think about finance, risk, and achievement. Each chapter was massively insightful in my opinion. However, if I were to pick a singular takeaway from this book, it would be:

• Progress requires optimism and pessimism to coexist
• The best financial plan is to save like a pessimist and invest like an optimist
• You can only be an optimist in the long run if you’re pessimistic enough to survive in the short run

I put the main three points of the chapter here, but essentially it is the same message. I chose this one because it applies both to finances and life in general.

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Nutshell:

Morgan Housel explains how when we can identify the things that never change, we can learn ways to optimize risk, seize opportunities, and live our best life.

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Similar books:

• The Psychology of Money by Morgan Housel
• The Almanack of Naval Ravikant by Eric Jorgenson
• The Book on Rental Property Investing by Brandon Turner
• Unshakeable by Tony Robbins
• Essentialism by Greg McKeown
• Principles by Ray Dalio

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Rating:

4.5/5

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