Summary

This book’s key theme is that in an unpredictable world there are still things one can find that remain the same over the years. Morgan says that “Predicting what the world will look like fifty years from now is impossible. People will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations, and social persuasion in the same way is a bet I’d take.”

Morgan then dives into each one of those topics and provides examples in history when human’s have surprisingly had the same responses. This is an excellent book on human nature and psychology that I’m sure I will revisit time and time again.

Favorite Quotes and Chapter Notes

I went through my notes and captured key quotes from all chapters below.

P.S. – Highly recommend Readwise if you want to get the most out of your reading.

Epigraph

• The wise in all ages have always said the same thing, and the fools, who at all times form the immense majority, have in their way, too, acted alike, and done just the opposite. —Arthur Schopenhauer

• The dead outnumber the living . . . fourteen to one, and we ignore the accumulated experience of such a huge majority of mankind at our peril. —Niall Ferguson

Introduction

• Jim said to Warren,“It’s so bad right now. How does the economy ever bounce back from this?” Warren said,“Jim, do you know what the bestselling candy bar was in 1962?”“No,” Jim said.“Snickers,” said Warren.“And do you know what the bestselling candy bar is today?”“No,” said Jim.“Snickers,” Warren said.

• Change captures our attention because it’s surprising and exciting. But the behaviors that never change are history’s most powerful lessons, because they preview what to expect in the future. Your future. Everyone’s future. No matter who you are, where you’re from, how old you are, or how much money you make, there are timeless lessons from human behavior that are some of the most important things you can ever learn.

• Amazon founder Jeff Bezos once said that he’s often asked what’s going to change in the next ten years.“I almost never get the question: ‘What’s not going to change in the next ten years?’ ” he said.“And I submit to you that that second question is actually the more important of the two.” Things that never change are important because you can put so much confidence into knowing how they’ll shape the future. Bezos said it’s impossible to imagine a future where Amazon customers don’t want low prices and fast shipping—so he can put enormous investment into those things.

• Entrepreneur and investor Naval Ravikant put it this way:“In 1,000 parallel universes, you want to be wealthy in 999 of them. You don’t want to be wealthy in the fifty of them where you got lucky, so we want to factor luck out of it. . . . I want to live in a way that if my life played out 1,000 times, Naval is successful 999 times.” That’s what this book is about: In a thousand parallel universes, what would be true in every single one?

Hanging by a Thread

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

• Historian David McCullough once told interviewer Charlie Rose that“if the wind had been in the other direction on the night of August twenty-eighth [1776], I think it would have all been over.”“No United States of America if that had happened?” Rose asked.“I don’t think so,” said McCullough.“Just because of the wind, history was changed?” asked Rose.“Absolutely,” said McCullough.

• Every current event—big or small—has parents, grandparents, great-grandparents, siblings, and cousins. Ignoring that family tree can muddy your understanding of events, giving a false impression of why things happened, how long they might last, and under what circumstances they might occur again.

• People like to say,“To know where we’re going, you have to know where we’ve been.” But more realistic is admitting that if you know where we’ve been, you realize we have no idea where we’re going. Events compound in unfathomable ways.

• Predicting what the world will look like fifty years from now is impossible. But predicting that people will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations, and social persuasion in the same way is a bet I’d take.

• The absurdity of past connections should humble your confidence in predicting future ones. The other thing to keep in mind is to have a wider imagination. No matter what the world looks like today, and what seems obvious today, everything can change tomorrow because of some tiny accident no one’s thinking about.

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.

• As financial advisor Carl Richards says,“Risk is what’s left over after you think you’ve thought of everything.”

• I can promise you that will be the case going forward. The biggest risk and the most important news story of the next ten years will be something nobody is talking about today. No matter what year you’re reading this book, that truth will remain. I can say that confidently because it’s always been true. The fact that you can’t see it coming is exactly what makes it risky.

• It’s impossible to plan for what you can’t imagine, and the more you think you’ve imagined everything the more shocked you’ll be when something happens that you hadn’t considered. But two things can push you in a more helpful direction. One, think of risk the way the State of California thinks of earthquakes. It knows a major earthquake will happen. But it has no idea when, where, or of what magnitude. Emergency crews are prepared despite no specific forecast. Buildings are designed to withstand earthquakes that may not occur for a century or more. Nassim Taleb says,“Invest in preparedness, not in prediction.” That gets to the heart of it. Risk is dangerous when you think it requires a specific forecast before you start preparing for it. It’s better to have expectations that risk will arrive, though you don’t know when or where, than to rely exclusively on forecasts—almost all of which are either nonsense or about things that are well-known.

• Two, realize that if you’re only preparing for the risks you can envision, you’ll be unprepared for the risks you can’t see every single time. So, in personal finance, the right amount of savings is when it feels like it’s a little too much. It should feel excessive; it should make you wince a little. The same goes for how much debt you think you should handle—whatever you think it is, the reality is probably a little less. Your preparation shouldn’t make sense in a world where the biggest historical events all would have sounded absurd before they happened.

• He was probably the most talented person in history at surviving big risks. Tie him up in chains and throw him into a river? No problem. Bury him alive in sand? No issue, he could escape in seconds—because he had a plan. But a little jab from a student that he didn’t see coming and wasn’t prepared for? That was the biggest risk.

Expectations and Reality

• The first rule of happiness is low expectations.

• It’s been like this forever. Montesquieu wrote 275 years ago,“If you only wished to be happy, this could be easily accomplished; but we wish to be happier than other people, and this is always difficult, for we believe others to be happier than they are.”

• There is no such thing as objective wealth—everything is relative, and mostly relative to those around you.

• If you look at the 1950s and ask,“What was different that made it feel so great?” this is at least part of your answer. The gap between you and most of the people around you wasn’t that large. It created an era when it was easy to keep your expectations in check because few people in your social circle lived dramatically better than you did.

• Today’s economy is good at generating three things: wealth, the ability to show off wealth, and great envy for other people’s wealth. It’s become so much easier in recent decades to look around and say,“I may have more than I used to. But relative to that person over there, I don’t feel like I’m doing that great.”

• Actor Will Smith wrote in his biography that: • Becoming famous is amazing. • Being famous is a mixed bag. • Losing fame is miserable.

• expectations for Truman’s abilities were so low that any leadership qualities he exhibited blew people’s minds. A little success was a win; a big success felt like a miracle. Actual circumstances don’t make much difference in all these cases. What generates the emotion is the big gap between expectations and reality.

• Peter Kaufman, CEO of Glenair and one of the smartest people you will ever come across, once wrote: We tend to take every precaution to safeguard our material possessions because we know what they cost. But at the same time we neglect things which are much more precious because they don’t come with price tags attached: The real value of things like our eyesight or relationships or freedom can be hidden to us, because money is not changing hands. Same with expectations—they’re easy to ignore because their value isn’t on a price tag. But your happiness completely relies on expectations.

• When asked,“You seem extremely happy and content. What’s your secret to living a happy life?” ninety-eight-year-old Charlie Munger replied: The first rule of a happy life is low expectations. If you have unrealistic expectations you’re going to be miserable your whole life. You want to have reasonable expectations and take life’s results, good and bad, as they happen with a certain amount of stoicism.

• My friend Brent has a related theory about marriage: It only works when both people want to help their spouse while expecting nothing in return. If you both do that, you’re both pleasantly surprised.

• I think it’s often hard to distinguish high expectations from motivation. And low expectations feels like giving up and minimizing your potential. The only way around that might be recognizing two things. One is the constant reminder that wealth and happiness is a two-part equation: what you have and what you expect/need. When you realize that each part is equally important, you see that the overwhelming attention we pay to getting more and the negligible attention we put on managing expectations makes little sense, especially because the expectations side can be so much more in your control. The other is to understand how the expectation game is played. It’s a mental game, and it’s often crazy and agonizing, but it’s a game that everyone is forced to play, so you should be aware of the rules and strategies. It goes like this: You think you want progress, both for yourself and for the world. But most of the time that’s not actually what you want. You want to feel a gap between what you expected and what actually happened. And the expectation side of that equation is not only important, but it’s often more in your control than managing your circumstances.

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.

• 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.

• Reversion to the mean is one of the most common stories in history. It’s the main character in economies, markets, countries, companies, careers—everything. Part of the reason it happens is because the same personality traits that push people to the top also increase the odds of pushing them over the edge. This is true for countries, particularly empires. A country determined to expand by acquiring more land is unlikely to be run by a person capable of saying,“Okay, that’s enough. Let’s be thankful for what we have and stop invading other countries.” They’ll keep pushing until they meet their match. Novelist Stefan Zweig said,“History reveals no instances of a conqueror being surfeited by conquests,” meaning no conqueror gets what they wish and then retires.

• Naval Ravikant once wrote: One day, I realized with all these people I was jealous of, I couldn’t just choose little aspects of their life. I couldn’t say I want his body, I want her money, I want his personality. You have to be that person. Do you want to actually be that person with all of their reactions, their desires, their family, their happiness level, their outlook on life, their self-image? If you’re not willing to do a wholesale, 24/7, 100 percent swap with who that person is, then there is no point in being jealous.

Wild Numbers

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

• The core here is that people think they want an accurate view of the future, but what they really crave is certainty.

• A related and equally important problem here is how easy it is to underestimate rare events in a world as large as ours. Daniel Kahneman once said,“Human beings cannot comprehend very large or very small numbers. It would be useful for us to acknowledge that fact.”

• Same with the 1990s: We remember it as a calm decade, but the global financial system nearly fell apart in 1998, during the greatest prosperity boom we’ve ever seen. What’s different now is the size of the global economy, which increases the sample size of potential crazy things that might happen. When eight billion people interact, the odds of a fraudster, a genius, a terrorist, an idiot, a savant, a jerk, or a visionary moving the needle in a significant way on any given day is nearly guaranteed. There have been roughly 100 billion humans to ever live. With an average age of roughly 30 years, individual humans have lived something like 1.2 quadrillion days(or 1.2 million billion). Crazy things that have a one-in-a-billion chance of happening have occurred millions of times.

• The decline of local news has all kinds of implications. One that doesn’t get much attention is that the wider the news becomes the more likely it is to be pessimistic. Two things make that so: • Bad news gets more attention than good news because pessimism is seductive and feels more urgent than optimism. • The odds of a bad news story—a fraud, a corruption, a disaster—occurring in your local town at any given moment is low. When you expand your attention nationally, the odds increase. When they expand globally, the odds of something terrible happening in any given moment are 100 percent. To exaggerate only a little: Local news reports on softball tournaments. Global news reports on plane crashes and genocides.

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

• 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.

• Charlie Munger gave a talk in the 1990s called“The Psychology of Human Misjudgment.” He listed twenty-five biases that lead to bad decisions. One is the“Doubt-Avoidance Tendency,” which he described: The brain of man is programmed with a tendency to quickly remove doubt by reaching some decision. It is easy to see how evolution would make animals, over the eons, drift toward such quick elimination of doubt. After all, the one thing that is surely counterproductive for a prey animal that is threatened by a predator is to take a long time in deciding what to do.

• It often takes too long for a sufficient sample size to play out. So everyone is left guessing.

• It’s an important quirk, because if someone says there’s an 80 percent chance of a recession, the only way to tell if they’re right is to compare dozens or hundreds of times they made that exact call and see if it came true 80 percent of the time.

• Distinguishing between unfortunate odds and recklessness is hard when risk has painful consequences. It’s easier to see black and white even when the odds are apparent.

Best Story Wins

• Stories are always more powerful than statistics.

• Great ideas explained poorly can go nowhere, while old or wrong ideas told compellingly can ignite a revolution.

• There is too much information in the world for everyone to calmly sift through the data, looking for the most rational, most correct answer. People are busy and emotional, and a good story is always more powerful and persuasive than ice-cold statistics.

• If you have the right answer, you may or may not get ahead. If you have the wrong answer but you’re a good storyteller, you’ll probably get ahead(for a while). If you have the right answer and you’re a good storyteller, you’ll almost certainly get ahead.

• Even within a good story, a powerful phrase or sentence can do most of the work. 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.

• Stephen Hawking once noted of his bestselling physics books:“Someone told me that each equation I included in the book would halve the sales.” Readers don’t want a lecture; they want a memorable story. Winston Churchill was, by most accounts, a mediocre politician. But he was a master storyteller and orator, a savant at getting people’s attention through motivation and provoking emotion—which is what made all the difference during his time in office.

• If you’re trying to figure out where something is going next, you have to understand more than its technical possibilities. You have to understand the stories everyone tells themselves about those possibilities, because it’s such a big part of the forecasting equation.

• Perhaps no one has mastered the art of storytelling better than comedians. They are the best thought leaders because they understand how the world works, but they want to make you laugh rather than make themselves feel smart. They take insights from psychology, sociology, politics, and every other dry field and squeeze out amazing stories. That’s why they can sell out arenas while an academic researcher who discovers a great insight about social behavior can go unnoticed. Mark Twain said,“Humor is a way to show you’re smart without bragging.”

• When a topic is complex, stories are like leverage.

• Stories do more than persuade others. They can help you just as much. Part of what made Albert Einstein so talented was his imagination and ability to distill complexity into a simple scene in his head. When he was sixteen he started imagining what it would be like to ride on a beam of light, holding on to the sides like a flying carpet and thinking through how it would travel and bend. Soon after, he began imagining what your body would feel like if you were in an enclosed elevator riding through space. He contemplated gravity by imagining bowling balls and billiard balls competing for space on a trampoline surface. He could process a textbook of information with the effort of a daydream. Ken Burns once said,“The common stories are one plus one equals two. We get it, they make sense. But the good stories are about one plus one

• The most persuasive stories are about what you want to believe is true, or are an extension of what you’ve experienced firsthand.

• Stories get diverse people to focus attention on a single point.

• Guiding people’s attention to a single point is one of the most powerful life skills.

• Some of the most important questions to ask yourself are: Who has the right answer, but I ignore because they’re inarticulate? And what do I believe is true but is actually just good marketing?

Does Not Compute

• Historian Will Durant once said,“Logic is an invention of man and may be ignored by the universe.” And it often is, which can drive you mad if you expect the world to work in rational ways.

• 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.”

• Lehman Brothers was in great shape on September 10, 2008. Its tier 1 capital ratio—a measure of a bank’s ability to endure loss—was 11.7 percent. That was higher than the previous quarter. Higher than Goldman Sachs. Higher than Bank of America. It was more capital than Lehman had in 2007, when the banking industry was about as strong as it had ever been. Seventy-two hours later Lehman was bankrupt. The only thing that changed during those three days was investors’ faith in the company. One day they believed in the company and bought its debt. The next day that belief stopped, and so did its funding. That faith is the only thing that mattered. But it was the one thing that was hard to quantify, hard to model, hard to predict, and didn’t compute in a traditional valuation model.

• Economist Per Bylund once noted:“The concept of economic value is easy: whatever someone wants has value, regardless of the reason(if any).” 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.

• The first step toward accepting that some things don’t compute is realizing that the reason we have innovation and advancement is because we are fortunate to have people in this world whose minds work differently from ours.

Calm Plants the Seeds of Crazy

• Minsky’s big idea was that stability is destabilizing. A lack of recessions actually plants the seeds of the next recession, which is why we can never get rid of them.“Over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system,” he wrote. A growing belief that things will be okay pushes us—like a law of physics—toward something not going okay.

• “Everything feels unprecedented when you haven’t engaged with history,” writer Kelly Hayes once wrote. It’s such an important idea.

• Part of what made COVID dangerous is that we got so good at preventing pandemics in the last century that few people before 2020 assumed an infectious disease would ever impact their lives. It was hard to comprehend. So people were utterly unprepared for a pandemic when it arrived. The irony of good times is that they breed complacency and skepticism of warnings.

• When a tire company develops a new tire and wants to know its limitations, the process is simple. They put it on a car and run it until it blows up. Markets, desperate to know the limits of what other investors can endure, do the same thing. Always been the case, always will be.

Too Much, Too Soon, Too Fast

• Warren Buffett once joked that you can’t make a baby in one month by getting nine women pregnant.

• there’s a“most convenient” investing time horizon—probably somewhere around ten years or more. That’s the period in which markets nearly always reward your patience. The more your time horizon compresses, the more you rely on luck and tempt ruin.

• 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.”

• Nassim Taleb says he’s a libertarian at the federal level, a Republican at the state level, a Democrat at the local level, and a socialist at the family level. People handle risk and responsibility in totally different ways when a group scales from 4 people to 100 to 100,000 to 100 million.

• Most young tree saplings spend their early decades under the shade of their mother’s canopy. Limited sunlight means they grow slowly. Slow growth leads to dense, hard wood. But something interesting happens if you plant a tree in an open field: free from the shade of bigger trees, the sapling gorges on sunlight and grows fast. Fast growth leads to soft, airy wood that never had time to densify. And soft, airy wood is a breeding ground for fungus and disease.“A tree that grows quickly rots quickly and therefore never has a chance to grow old,” forester Peter Wohlleben wrote. Haste makes waste.

• Robert Greene writes:“The greatest impediment to creativity is your impatience, the almost inevitable desire to hurry up the process, express something, and make a splash.” An important thing about this topic is that most great things in life—from love to careers to investing—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, pain, discomfort, shock, and disgust—for all its tragic downsides, it’s also when the magic happens.

• Militaries are engines of innovation because they occasionally deal with problems so important—so urgent, so vital—that money and manpower are removed as obstacles, and those involved collaborate in ways that are hard to emulate during calm times.

• Multiply those kinds of leaps across the nation and the 1930s was the decade that transportation blossomed in the United States. It was the last link that made the century-old railroad network truly efficient, creating last-mile service that connected the world. Electrification also surged in the 1930s, particularly to rural Americans left out of the urban electrification of the 1920s.

• World War II began on horseback in 1939 and ended with nuclear fission in 1945. NASA was created in 1958, two weeks after the Soviets launched Sputnik, and landed on the moon just eleven years later. Stuff like that rarely happens that fast without fear as a motivator.

• Vannevar Bush, who ran the U.S. Office of Scientific Research and Development during World War II, controversially suggested the medical advances that came about from the war—most notably the production and use of antibiotics—may have saved more lives than were lost during the war. It’s so difficult to imagine these upsides as a crisis is happening. But time and again throughout history, the upsides indeed occur.

• President Richard Nixon once observed: The unhappiest people of the world are those in the international watering places like the South Coast of France, and Newport, and Palm Springs, and Palm Beach. Going to parties every night. Playing golf every afternoon. Drinking too much. Talking too much. Thinking too little. Retired. No purpose. So while there are those that would totally disagree with this and say“Gee, if I could just be a millionaire! That would be the most wonderful thing.” If I could just not have to work every day, if I could just be out fishing or hunting or playing golf or traveling, that would be the most wonderful life in the world—they don’t know life. Because what makes life mean something is purpose. A goal. The battle, the struggle—even if you don’t win it.

• 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.

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 twenty years to build a reputation and five minutes to destroy one.

• author Yuval Noah Harari writes:“To enjoy peace, we need almost everyone to make good choices. By contrast, a poor choice by just one side can lead to war.”

• A lot of progress and good news concerns things that didn’t happen, whereas virtually all bad news is about what did occur. Good news is the deaths that didn’t take place, the diseases you didn’t get, the wars that never happened, the tragedies avoided, and the injustices prevented. That’s hard for people to contextualize or even imagine, let alone measure. But bad news is visible. More than visible, it’s in your face.

• It is so easy to discount how much progress is achievable. If I were to say,“What are the odds the average American will be twice as rich fifty years from now?” it sounds preposterous. The odds seem very low. Twice as rich as they are today? Doubling what we already have? It seems too ambitious. But then if I said,“What are the odds we can achieve 1.4 percent average annual growth for the next fifty years?” I almost sound like a pessimist. One percent? That’s it? But those numbers, of course, are the same.

Tiny and Magnificent

• It’s good to always assume the world will break about once per decade, because historically it has. The breakages feel like low-probability events, so it’s common to think they won’t keep happening. But they do, again and again, because they’re actually just smaller high-probability events compounding off one another.

Elation and Despair

• Progress requires optimism and pessimism to coexist.

• A big thing to know about how people think is that progress requires optimism and pessimism to coexist. They seem like conflicting mindsets, so it’s more common for people to prefer one or the other. But knowing how to balance the two has always been, and always will be, one of life’s most important skills. The best financial plan is to save like a pessimist and invest like an optimist.

Casualties of Perfection

• There is a huge advantage to being a little imperfect.

• Nature’s answer is a lot of good enough, below-potential traits across all species. Biologist Anthony Bradshaw says that evolution’s successes get all the attention, but its failures are equally important. And that’s how it should be: Not maximizing your potential is actually the sweet spot in a world where perfecting one skill compromises another. Evolution has spent 3.8 billion years testing and proving the idea that some inefficiency is good.

• Psychologist Amos Tversky once said that“the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”

• 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. Not all jobs require creativity or critical thinking. But those that do function better with time devoted to wandering and being curious, in ways that are removed from scheduled work but actually help tackle your biggest work problems.

• Albert Einstein put it this way: I take time to go for long walks on the beach so that I can listen to what is going on inside my head. If my work isn’t going well, I lie down in the middle of a workday and gaze at the ceiling while I listen and visualize what goes on in my imagination. Mozart felt the same way: When I am traveling in a carriage or walking after a good meal or during the night when I cannot sleep—it is on such occasions that my ideas flow best and most abundantly.

• Someone once asked Charlie Munger what Warren Buffett’s secret was.“I would say half of all the time he spends is sitting on his ass and reading.” He has a lot of time to think.

• 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.

• Nassim Taleb says,“My only measure of success is how much time you have to kill.” More than a measure of success, I think it’s a key ingredient. The most efficient calendar in the world—one where every minute is packed with productivity—comes at the expense of curious wandering and uninterrupted thinking, which eventually become the biggest contributors to success.

• 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 Supposed to Be Hard

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

• This is one of the most useful life skills—enduring the pain when necessary rather than assuming there’s a hack, or a shortcut, around it.

• Charlie Munger once noted:“The safest way to try to get what you want is to try to deserve what you want. It’s such a simple idea. It’s the golden rule. You want to deliver to the world what you would buy if you were on the other end.”

• A unique skill, an underrated skill, is identifying the optimal amount of hassle and nonsense you should put up with to get ahead while getting along.

Keep Running

• Going public is a sign that a company has found enough competitive advantage to scale into a large corporation. But almost 40 percent of all public companies lost all their value from 1980 to 2014. The list of top ten Fortune 500 companies that went bankrupt includes General Motors, Chrysler, Kodak—and Sears. The list of those unrecognizable from their former selves is longer, and includes General Electric, Time Warner, AIG, and Motorola. Countries follow similar fates. At various points in the past, the world’s scientific and economic progress has been dominated by Asia, Europe, and the Middle East. Whenever a once powerful thing loses an advantage, it is tempting to ridicule the mistakes of its leaders. But it’s easy to overlook how many forces pull you away from a competitive advantage once you have one, specifically because you have one. Success has its own gravity.“The higher the monkey climbs a tree, the more you can see his ass,” oil tycoon T. Boone Pickens used to say.

• Hard work is in pursuit of a goal, and once that goal is met the relaxation that feels so justified removes paranoia. This allows competitors and a changing world to creep in unnoticed.

• The idea that advantage has a shelf life is a fundamental part of growth. It doesn’t have to be a tragedy—not all competitive advantages end like Sears. Great Britain lost the economic and military supremacy it held in the nineteenth century and remained a pretty nice place to live in the twentieth. But competitive advantages tend to be short-lived, often because their success plants the seeds of their own decline.

• takeaway is to keep running. No competitive advantage is so powerful that it can let you rest on your laurels—and in fact the ones that appear to do so tend to seed their own demise.

The Wonders of the Future

• Author Safi Bahcall notes that Polaroid film was discovered when sick dogs that were fed quinine to treat parasites showed an unusual type of crystal in their urine. Those crystals turned out to be the best polarizers ever discovered. Who predicts that? Who sees that coming? Nobody. Absolutely nobody.

Harder Than It Looks and Not as Fun as It Seems

• 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. Keep that in mind when comparing your career, business, and life to those of others.

• When you are keenly aware of your own struggles but blind to those of others, it’s easy to assume you’re missing some skill or secret that others have. The more we describe successful people as having superhuman powers, the more everyone else looks at them and says,“I could never do that.” Which is unfortunate, because more people would be willing to try if they knew that those they admire are probably normal people who played the odds right.

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.

• A good question to ask is,“Which of my current views would change if my incentives were different?” If you answer“none,” you are likely not only persuaded but blinded by your incentives.

Now You Get It

• Nothing is more persuasive than what you’ve experienced firsthand.

• Take a good, honest, loving person and strip them of basic necessities and you’ll soon get an unrecognizable monster who’ll do anything to survive. Under high stress,“a man becomes a beast in three weeks,” Shalamov wrote. Historian Stephen Ambrose chronicled World War II soldiers who left basic training full of bravado and confidence, eager to fight when they joined the front lines. Then they get shot at, and everything changes.“There was no way training could prepare a man for combat,” Ambrose wrote. It could teach you how to fire a gun and follow orders. But“it could not teach men how to lie helpless under a shower of shrapnel in a field crisscrossed by machine-gun fire.” No one could understand it until they experienced it.

• Downturns don’t happen in isolation. The reason stocks might fall 30 percent is because big groups of people, companies, and politicians screwed something up, and their screwups might sap my confidence in our ability to recover. So my investment priorities might shift from growth to preservation. It’s difficult to contextualize this mental shift when the economy is booming. And even though Warren Buffett says to be greedy when others are fearful, far more people agree with that quote than actually act on it. The same idea holds true for companies, careers, and relationships. Hard times make people do and think things they’d never imagine when things are calm. Chris Rock once joked about who actually teaches kids in school:“Teachers do one half, bullies do the other,” he said.“And learning how to deal with bullies is the half you’ll actually use as a grown-up.” It’s real experience with risk and uncertainty, which is something you cannot fathom until you’ve experienced it firsthand.

• Expectations also shift and goalposts move faster than you can imagine. Collins once said of Aldrin:“I think he resents not being first on the moon more than he appreciates being second.”

• If you think of your future self living in a new mansion, you imagine basking in splendor and everything feeling great. What’s easy to forget is that people in mansions can get the flu, have psoriasis, become embroiled in lawsuits, bicker with their spouses, feel wracked with insecurity and annoyed with politicians—which in any given moment can supersede any joy that comes from material success. Future fortunes are imagined in a vacuum, but reality is always lived with the good and bad taken together, competing for attention.

Time Horizons

• Long-term thinking is easier to believe in than to accomplish. Most people know it’s the right strategy in investing, careers, relationships—anything that compounds. But 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.

• Doing long-term thinking well requires identifying when you’re being patient versus just stubborn. Not an easy thing to do. The only solution is knowing the very few things in your industry that will never change and putting everything else in a bucket that’s in constant need of updating and adapting. The few(very few) things that never change are candidates for long-term thinking. Everything else has a shelf life.

• Time is compounding’s magic, and its importance can’t be minimized. But 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. Permanent information is:“How do people behave when they encounter a risk they hadn’t fathomed?” Expiring information is:“How much profit did Microsoft earn in the second quarter of 2005?” Expiring knowledge catches more attention than it should, for two reasons. One, there’s a lot of it, eager to keep our short attention spans occupied. Two, we chase it down, anxious to squeeze insight out of it before it loses relevance. Permanent information is harder to notice because it’s buried in books rather than blasted in headlines. But its benefit is huge. It’s not just that permanent information never expires, letting you accumulate it. It also compounds over time, leveraging off what you’ve already learned. Expiring information tells you what happened; permanent information tells you why something happened and is likely to happen again. That“why” can translate and interact with stuff you know about other topics, which is where the compounding comes in. I read newspapers and books every day. I cannot recall one damn thing I read in a newspaper from, say, 2011. But I can tell you in detail about a few great books I read in 2011 and how they changed the way I think.

• The point, then, isn’t that you should read less news and more books. It’s that if you read good books you’ll have an easier time understanding what you should or shouldn’t pay attention to in the news.

Trying Too Hard

• One of the missing pieces, he said, is that we focus too much on cancer treatment and not enough on cancer prevention. If you wanted to get the next big leg up in the war on cancer, you had to make prevention the front line. But prevention is boring, especially compared to the science and prestige of cancer treatments. So even if we know how important it is, it’s hard for smart people to take it seriously. MIT cancer researcher Robert Weinberg once described it this way: You can’t die from cancer if you don’t get cancer in the first place. But that simple truth is easy to overlook, because it’s not intellectually stimulating.

• Computer scientist Edsger Dijkstra once wrote: Simplicity is the hallmark of truth—we should know better, but complexity continues to have a morbid attraction. When you give an academic audience a lecture that is crystal clear from alpha to omega, your audience feels cheated. . . . The sore truth is that complexity sells better. The sore truth is that complexity sells better.

• Samuel Williston was a nineteenth-century paleontologist who first noticed a historic trend in the reduction of body parts. Primitive animals often had many duplicate body parts, then evolution reduced the number but increased their usefulness.“The course of evolution has been to reduce the number of parts and to adapt those which remain more closely with their special uses, either by increase in size or by modifications of their shape and structure,” Williston wrote in 1914.

• A trick to learning a complicated topic is realizing how many complex details are cousins of something simple. John Reed wrote in his book Succeeding: When you first start to study a field, it seems like you have to memorize a zillion things. You don’t. What you need is to identify the core principles—generally three to twelve of them—that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles. This is so vital. In finance, spending less than you make, saving the difference, and being patient is perhaps 90 percent of what you need to know to do well.

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

• The more knobs you can fiddle with—the hundred-tab spreadsheet, or the Big Data analysis—the more control you feel you have over the situation, if only because the impression of knowledge increases.

• Length is often the only thing that can signal effort and thoughtfulness.

Wounds Heal, Scars Last

• Here’s a common theme in the way people think: Wounds heal, but scars last. There’s a long history of people adapting and rebuilding while the scars of their ordeal remain forever, changing how they think about risk, reward, opportunities, and goals for as long as they live. An important component of human behavior is that people who’ve had different experiences than you will think differently than you do. They’ll have different goals, outlooks, wishes, and values. So most debates are not actual disagreements; they’re people with different experiences talking over each other.

• Experiencing something that makes you stare ruin in the face and question whether you’ll survive can permanently reset your expectations and change behaviors that were previously ingrained.

Questions

• The typical attempt to clear up an uncertain future is to gaze further and squint harder—to forecast with more precision, more data, and more intelligence. Far more effective is to do the opposite: Look backward, and be broad. Rather than attempting to figure out little ways the future might change, study the big things the past has never avoided. A decade ago I made a goal to read more history and fewer forecasts. It was one of the most enlightening changes of my life. And the irony is that the more history I read, the more comfortable I became with the future. When you focus on what never changes, you stop trying to predict uncertain events and spend more time understanding timeless behavior.