Morgan Housel is a partner at Collaborative Fund and the author of “The Psychology of Money”, which sold more than 4 million copies. His new bestseller, “Same as Ever” is a collection of 23 short stories about “what never changes in a changing world.” focusing on risk, happiness and wealth. This book contains valuable insights centred around creating a financially successful yet fulfilling life. The author is giving tips on how to resist the urge of predicting the future – but rather to focus on managing our own, very predictable, human nature.
1.Focus On Optimising Constants Instead Of Variables:
Amidst rapid technological advancements, global conflict and shifting trends, Housel asserts that human behaviour remains surprisingly constant. He goes into principles of psychology and behavioural finance, and makes the argument that most of us are prone to highly predictable, codified behavioural patterns – often regardless of our background and economic status. Instead of focusing on ever changing events and volatility, our impact is maximised if we focus on managing the constants as opposed to individual events or variables.
2.Everything Is Cyclical:
Housel emphasises the cyclical nature of human behaviour within economic cycles. Understanding this perpetual cycle empowers individuals to strategically position themselves for success amidst economic fluctuations, acknowledging that challenges and opportunities are inherent. Highs and lows, whether we are referring to the real estate market, crypto bear and bull runs, quantitative easing or tightening – are inherent and predictable phases of each economic cycle. As such, we should anticipate and embrace them – but also factor in the strong emotional reactions these events evoke among all of us. Such insights echo much of what Ray Dalio mentions in his work called “The Big Cycle” and are incredibly useful given the current economic and political backdrop.
3.Strive To Be Rich And Anonymous:
Being rich and anonymous is better than being famous and poor. Similar to what Naval Ravikant popularised “Even being famous and rich has a lot of downsides associated with it. You’re always in the public eye”. Housel also adds that there is a universal desire for privacy and anonymity. It may seem like common sense, but given the rise of influencers and the popularity of this profession among kids and young adults – this lesson may be neglected by many. The author provides simple and actionable suggestions on why and how to balance success with personal fulfilment and further elaborates how striking this balance becomes imperative for navigating a complex and volatile world successfully and sustainably.
4. Admiration vs. Envy:
The book features fascinating anecdotes featuring Warren Buffet, one of which is building on his saying that the world is driven by envy. Housel warns that there is a nuanced dynamic of admiration versus envy in the realm of success. People may initially admire your achievements – but this admiration can transform into envy, leading to unforeseen consequences when support diminishes.
5. Story Over Statistics
The author highlights the inherent tension between the persuasive power of stories and the objective nature of statistics.
We’re in the era of Big Data, where we have statistics on everything. But the cult of “data driven decision making” often underestimates that stories are more powerful than statistics.
This is probably most evident with how the general public treats travelling via car vs. aeroplane. The risk of dying in a car accident is statistically higher than the risk of dying in a commercial plane accident. Data from the Department of Transportation indicates that more Americans die in car accidents every 13 days than in all commercial plane accidents combined over the last 27 years. The mortality rate for car accidents is about 1.5 deaths per 100 million miles travelled, while for commercial airlines, the average is 0.17. Even if a 9/11-like event occurred every year, flying would still be statistically safer than driving was in the 1950s.
German psychologist Gerd Gigerenzer found that the increase in car travel after 9/11 led to more auto fatalities than the total number of passengers killed in the four fatal flights of that event.
The author suggests that stories and anecdotes are so powerful, we should have them as a key component to every campaign and communication strategy – simply because it helps humans to digest and remember meaningful information.
Events Are Difficult To Predict But Human Behaviour Isn’t
Undeniably, human nature remains consistent despite an ever-changing world. Understanding the desire to control our future and predict events, recognizing cyclical patterns, appreciating the need for privacy, embracing risk, and striving for financial independence are essential steps towards realising one’s full potential in today’s complex and volatile world.
“We have Palaeolithic emotions, mediaeval institutions, and god-like technology.” – a quote by Edward O. Wilson, seems to be a timely summary of Morgan Housel’s book and serves as a great reminder that perhaps our biggest untapped potential is in recognising our Palaeolithic behavioural patterns and managing them to the best of our ability.