‘History never repeats itself; man, always does.’ – Voltaire 

In this captivating book about history and what never changes (such as the sales of Snickers bars) Housel is confident that though he has no clue what the stock market will do any given year, he’s confident about people’s penchant for greed and fear, which never changes. He may have no idea who will win the next presidential election but Housel is confident about the way people’s attachment to tribal identities influences their thinking, yesterday, today and a thousand years from now. Housel might not be able to tell us what businesses will dominate the next decade but he can tell us that business leaders let success go to their heads, becoming lazy and entitled and eventually losing their edge. This story hasn’t changed in hundreds of years and never will. 

According to Housel every big story could have turned out differently if a few little puffs of nothingness had gone the way – so much of the world hangs on a thin thread. An irony of studying history is that we often know exactly how a story ends but we have no idea where it began. For example, what caused the 2008 financial crisis? Let’s understand the mortgage market. But what shaped the mortgage market? Let’s understand the thirty-year decline in interest rates that preceded it. But what caused the falling interest rates? Let’s understand the inflation of the 1970s. What caused that inflation? Let’s understand the monetary system of the 1970s and the hangover effects from the Vietnam War. But what caused the Vietnam War? Let’s understand the West’s fear of communism after WWII and on it goes forever. 

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 probable. But the absurdity of past connections should humble your confidence in predicting future ones. The truth is, no matter what the world is today everything can change in an instant by some tiny accident no one is thinking about. 

We are very good at predicting the future, except for the surprises – which are what matter the most. COVID-19, 9/11, Pearl Harbor, the Great Depression – all these big stories are surprises and were virtually on no one’s radar. The biggest news, the biggest risks, the most consequential events are always what you don’t see coming and that’s what makes them so risky. 

History knows three things: 1) what’s been photographed, 2) what someone wrote down or recorded, and 3) the words spoken by people whom historians and journalists wanted to interview and who agreed to be interviewed. All three categories suffer from misinterpretation, incompleteness, embellishment, lying and selective memory. 

Nassim Taleb said, “Invest in preparedness, not in prediction.” And that rings true. Expectations and forecasts are two different things, and in a world where risk is what you don’t see, the former is more valuable than the latter. 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 biggest risk is when you don’t see something coming.

According to Housel, the first rule of happiness is low expectations. In history, things have gotten better, wealth increases, technology brings new efficiencies, and medicine saves lives. The quality of life goes up. However, people’s expectations rise by just as much, usually more, because those improvements also benefit your fellow citizens, whose circumstances you anchor to. In this way, happiness is little changes despite the world improving. And it’s been like this forever. Montesquieu aptly 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.” In this way, people analyze their well-being relative to those around them and luxuries become necessities in a short time-frame when those around you become better off. Investor Charlie Munger rightly noted that the world isn’t driven by greed – it’s driven by envy. 

Money buys happiness similar to how drugs buy pleasure: incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough. What was so special about the 1950s was the ability for people to find financial balance in a way that before and since has felt elusive. Many Americans could look around and find that not only were they living comfortable lives, they were living lives that were just about as comfortable as those around them whom they compared themselves to. People weren’t just better off, they felt better off. By the early 1980s, the postwar togetherness that dominated the 1950s and ‘60s gave way to more stratified growth where many people plodded along while a few grew exponentially wealthier. The glorious lifestyles of the few inflated the aspirations of the many. However, social media these days adds another dimension, in which each person in the world sees the lifestyles – often inflated, faked and airbrushed – of other people. As Housel puts it: “You compare yourself to your peers through a curated highlight and reef of their lives, where positives are embellished and negatives are hidden from view.” Psychologist Johnathan Haidt says people don’t really communicate as much on social media so much as they perform for each other. One sees the fancy cars people drive, the lavish homes the live in and the expensive schools their kids go to so the ability to say, “I want that, why don’t I have that? Why does he get it but I don’t?” is so much greater than it was a few generations ago. Today’s economy is good at generating three things: wealth, the ability to show off wealth and great envy for other individual’s wealth. But nostalgia for the 1950s is a great example of what happens when expectations grow faster than circumstances. Being driven by what other people have and you don’t is an unavoidable trait in most people and it highlights how important managing expectations can be if you want to live a happy life. 

For example, Harry Truman – a failed retailer, a failed farmer, failed zinc miner, failed oil driller and senator was almost universally slammed when be because president after Franklin Roosevelt died. The Washington Post dissed him by saying that there was a great disparity between his experience and the responsibilities thrust upon him. Yet today, Truman is consistently ranked among historians’ top ten presidents of all time, often ahead of Roosevelt. The reason partly is because the expectation for Truman’s abilities were so low that any leadership qualities he exhibited were thought of as exemplary. As Housel writes: “A little success was a win; a big success was a miracle.” 

Expectations are powerful, they can make a celebrity feel miserable and a destitute family feel amazing. For everyone, everywhere, doing almost any task, is just in pursuit of some space between expectations and reality. It’s the same for expectations, they might not have a price tag but your happiness completely relies on them, your boss’s impression of your career relies on them, consumer confidence relies on them and what moves the stock market relies on them. So, the rule to living a happy life according to Charles Munger is to have low expectations and take life’s results, good or bad, with a certain degree of stoicism. Managing your expectations is more often in your control, managing your circumstances often isn’t. Best to manage what’s in your control. 

In his chapter on Wild Minds, Housel explains that something that’s built into the human condition is that people who think about the world in unique ways you like almost certainly also think about the world in unique ways you won’t like. He goes on to give examples of how such geniuses can be troublesome as individuals, or just quirky. For example, Newton – one of the smartest individuals to live devoted much of his work to alchemy, sorcery and finding a portion for eternal life. Who knew? Same for Steve Jobs, Walt Disney, J. F. Kennedy to name a few. People who are capable of achieving great things often take risks that backfire just as powerfully. We should be careful who we wish to emulate, as Naval Ravikant 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.”

You either desire someone else’s life or you don’t. Both are equally powerful. I’d say you should know you’re sure when finding role models for yourself.

In the chapter Wild Numbers, Housel says that a common trait of human behaviour is the burning desire for certainty despite living in an uncertain and problematic world. Handling the math behind risk and uncertainty in general is difficult – something individuals have struggled with forever and always will. That something can be likely and not happen, or unlikely and still happen, is one of the world’s most serious tricks. “With a large enough sample, any outrageous thing is apt to happen,” says Mosteller. That’s why the world seems so crazy and why once-in-a-lifetime events seem to happen regularly. 

Housel says that if the chance of a ‘miracle’ is one in a million we should therefore experience one per month, on average. The idea that incredible things happen because of boring statistics is important, because it is true for terrible things too. 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 a particular day is near guaranteed. 

In his chapter, Best Stories Wins, Housel explains that people are busy and emotional and a good story is always more powerful and persuasive than ice-cold statistics. For example, Martin Luther King Jr.’s famous speech on the Lincoln Memorial on August 28, 1963, was not the one he had drafted but what he spoke extempore was:

“I have a dream…” and the rest as we say is excellent history. His story of equality was one of the best one’s ever told and evoked emotions connecting the dots in millions of people’s heads that changed history. Good stories tend to do that because they have the extraordinary ability to inspire and invoke emotions, bringing insight and attention to topics that people tend to ignore when they’ve previously been presented with only facts. Mark Twain would read his stories out to his family and cut out the parts at which they looked bored and double down on those parts on which their eyes widened. Yuval Noah Harari, Bill Bryson, Charles Darwin, Andrew Carnegie are all people who are essentially good story tellers.

Book: Same as Ever: A Guide To What Never Changes

Author: Morgan Housel

Publisher: Penguin Random House, 2023