Morgan Housel, partner of The Collaborative Fund and best-selling author of The Psychology of Money, returns with his second book, Same As Ever: Timeless Lessons on Wealth, Greed and Happiness. Employing the same technique which made his prior work a success, the book contains short chapters, paragraphs, sentences and a focus on narration to impart profound knowledge on extensive topics.Be sure to watch Morgan Housel on the Half Time Report today at 12:35 PM ET and on ETF Edge at 1:10 PM ET.
Morgan Housel has achieved iconic status as a financial writer, with his work often praised for its humor, pungency, and folksy style, as well as its ability to peel away realities and uncover deeper truths. He is currently a partner at The Collaborative Fund and his 2020 publication, The Psychology of Money, became an international bestseller, selling an impressive 4 million copies worldwide - an achievement that’s remarkable given the typical financial book typically sells around 5,000 copies, and to become a true success 10,000 copies must be sold. Its focus was to emphasize what can be controlled, including expectations, knowing when enough is enough, and how to prevent changing the goalposts.
Now Housel is back with a second book, “Same As Ever: Timeless Lessons on Wealth, Greed and Happiness.” He is again utilizing his signature formula of short chapters, pithy paragraphs, and meaningful sentences - only this time he’s attempting to speak to a broader audience and explore timeless wisdom that can help people more fully understand life. His thesis in the book is that many of the same motivators (fear, love, hate, greed, envy) have existed throughout history and because of that, much of what occurs is completely predictable.
To learn more about Morgan Housel’s new book, be sure to tune in to the Half Time Report at 12:35 PM ET and the ETF Edge at 1:10 PM ET.
Charlie Munger has observed that envy, rather than greed, is what drives the world. Morgan Housel delves into an example of this phenomenon: the widespread sentiment that the 1950s was a "golden age". But when factoring in the median family income, higher homeowner rate, median household budget, and the workplace fatality rate, the 1950s does not compare to the present. Part of the reason for the nostalgia for that time is that people today can compare their lives to others more easily, thanks to social media, which can "inflate, fake, and airbrush" the glamorous lifestyles of the successful. Housel puts forth that this nostalgia is an example of expectations growing faster than circumstances.
Charlie Munger believes that having low expectations is the key to living a happy life. He claims that if one has unrealistic expectations they will never be satisfied. Consequently, one must accept good and bad times with a certain level of stoicism. To this end, Morgan Housel adds that maintaining a balance between what you have and what you require and desire is essential for finding happiness and wealth. He suggests that it is better to invest effort into regulating the expectations we have for ourselves, rather than focusing on improving our circumstances, as the former is easier to control. Put simply, our wants, which only exist in our heads, do not need to be the source of envy and anxiety. We can instead redirect our thoughts to more realistic, achievable goals.
Housel goes into detail on risk management in The Psychology of Money. He highlights that it is impossible to predict certain, potentially catastrophic events, using the example California's approach to earthquakes. He quotes Nassim Taleb, stressing the importance of preparing for a range of eventualities rather than predicting them. In practice, this means having realistic expectations and risk tolerance - having a little too much saved should make you feel uncomfortable.
Someone who is determined, optimistic, and persistent in their own abilities is the type of person who is likely to take on more than they can handle, overlook risks that are apparent to others, and be too overconfident. These same characteristics that drive people to success also increase the risk of them going overboard.
If there is a possibility of a new pandemic, an economic depression, a flood, or political instability in the coming year, then the likelihood of something negative occurring in the near future is relatively high.
Each company's worth is merely a figure resulting from the current day multiplied by a narrative about the future.
Those who persevere for the long haul recognize that reality is a perpetual cycle of the absurd, confusing, disorganized connections, and flawed beings.
The value of the most significant elements of life - be it love, careers, or investments - is largely determined by two factors: patience and rarity. It takes patience to give something the opportunity to develop, and rarity to appreciate what it has become. The challenge in any field - whether financially, professionally, or romantically - is being able to make it through the difficult, short-term times in order to be rewarded by the fruitful, long-term outcomes. History has taught us that the future can be bright, but the immediate is usually far from desirable. Finding a way to balance these forces and improving the ability to combine what may seem like conflicting skills is the essence of success. Those who fail to do so often become either cynical pessimists or overly-confident bankrupts.
If you comprehend the computations associated with compounding, you recognize that the most essential query is not 'How can I garner the greatest returns?' It's 'What are the most effective returns I can sustain for the longest duration possible?' Minor alterations cumulated over a lengthy duration produce exceptional changes.
It is wise to adopt a pessimistic approach to saving and an optimistic attitude towards investing. This concept of combining the expectation of improvement with the realization that there will be a series of trials and tribulations is a recurrent theme throughout history and can be seen in numerous aspects of life.
The query of "Why don't you concur with me?" can have an endless number of replies. Sometimes one viewpoint can be egocentric, foolish, or misguided; or perhaps just uninformed. However, a better query could be: "What have you encountered that I haven't that causes you to believe what you do? And would I be of the same opinion if I had gone through the same as you?"
The book Housel concludes by posing a set of questions to be considered by the reader, such as "What strong belief do I hold that has the potential to change? What remains timeless? What remains constant?" At the crossroads of investing, self-development, direction and inspiration, the book imparts the fundamental yet easy-to-lose idea that although technology, politics and other fields may be progressing at hyper speed, basic human behavior has not been altered. Consequently, no matter how advanced contemporary inventions are, they are simply tools to serve the same primitive emotions we have always possessed.
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