5 Timeless Concepts

Read time: 5 minutes

Welcome to The Ascend Archives Weekend Edition where I share insights from the brightest minds in business and life and how I'm applying them to my life.

Last week I finished reading Same as Ever by Morgan Housel.

This wasn’t a typical business/investing book with tactical tips I could use to immediately improve my financial situation. Instead, it was a book that made me think.

Each chapter had stories and anecdotes that revealed an underlying theme. The themes Housel chose to highlight were things that never change. In a world that is constantly changing and forcing us to adapt, there are some things like people’s responses to greed, fear, opportunity, risk, uncertainty, and social persuasion that never change.

Today, I’m going to share a few of my favorite concepts that really made me think.

1. Risk is what’s left over after you think you’ve thought of everything

Risk is what we don’t see.

It’s impossible to predict the future with 100% certainty. We can do a ton of research and make all the calculations, but there will always be some factors that we don’t anticipate.

Instead of trying to make predictions, we should invest in being prepared. It’s better to have expectations that risk will arrive, though we don’t know where or when, than to rely on forecasts that are not reliable or about things that are well known.

An easy way to think about this is in terms of personal savings. When thinking about how much savings to have in case of an emergency, always go for an amount that feels a little too much. Something at some point is going to happen where you will need to dip into those savings. Don’t waste time trying to predict that something, just be prepared for when it happens.

2. Expectations drive happiness

Housel shares a story that compares life in the 1950s to life today. The consensus from the 50s was that life was great and the majority of Americans were happy. Most people could afford the “American dream” of buying a house, having a steady job working in a factory and providing food for their family. Compare that to headlines today where people are struggling with mental health, paying the bills, and keeping up with the Joneses.

But when you actually dig into the financial metrics and adjust for inflation, people in the 50s were making a lot less money than the average American today.

So why were people so much happier with their financial situation even though they were making less?

Expectations.

People in the 50s could only compare themselves to their friends and family in their communities. Everyone living in a New Jersey suburb at that time probably had the same job, same house, and same car. Those were the expectations and they were being met.

Compare that to the social media and internet age of today. There are endless examples of people who have more, more, more which impacts our expectations of what we want. I admittingly fall into this trap of hearing about entrepreneurs running $50k/month businesses or having a multimillion dollar exit.

On one hand, there is a positive aspect of showing what is possible. Seeing other people’s success has led me to think bigger and grow myself. But at the same time, I catch myself dreaming about making more and more when maybe there’s a different, lower number that is enough for me.

Housel had a great quote, “Money buys happiness in the same way drugs bring pleasure; incredible if done right, dangerous if used to mask weakness, and disastrous when no amount is enough.”

3. The best story wins

Stories are always more powerful than statistics.

It’s not the best idea, the right idea, or the most rational idea that leads to success. Instead, it’s the person who can tell a story that catches people’s attention and gets them to nod their heads that gets rewarded.

Mark Twain would read his stories out loud to his wife and kids. He would watch their reactions to determine where to improve his stories. If they looked bored or disengaged, he would cut those parts out. If they leaned in or their eyes widened, he would double down.

In a perfect world, the importance of information wouldn’t rely on its author’s vibe. But we live in a world where people are bored, impatient, emotional, and don’t understand complicated things. When a topic is complex, stories are like leverage. Being able to distill a complicated idea into something easy to understand is incredibly valuable.

It’s not what you say or what you do, but how you say it and how you present it.

4. Stability is destabilizing

The irony of good times is that it leads to complacency and not paying attention to warnings of bad times.

Paranoia leads to success. Working harder than everyone else, triple checking your work, and going above and beyond usually leads to good outcomes. But that’s a stressful way to live. So once people get to the good outcome, they lose the paranoia and stop doing the things that got them the success in the first place.

The interesting thing about reaching the top of a mountain, whether it’s in business, life, or an actual mountain, is that the only place to go from there is down. It’s really hard to stay at the top. Everyone is trying to beat the team that won the Super Bowl last year. Everyone is trying to steal market share from Google and Apple. Eventually, they are going to fall.

Housel shares a few ways to think about combatting this.

The first is knowing when enough is. He talks about how Jerry Seinfeld ended his show Seinfeld abruptly. The show was at an all time high in popularity and people were shocked when he decided to stop. NBC was throwing millions of dollars at him to make more episodes, but he turned it down. He wanted to end on a high note. He knew that he went on an incredible run and knew what was enough for him. It was incredibly rare.

The second is having patience and being consistent. Being the best at something is not always ideal. If you are an investor, trying to outperform the market with high returns every year is nearly impossible. It will result in some booms and some busts. But if you just focused on getting 10-15% returns every year and let them compound over a long time horizon, you’ll be surprised how well you’ll end up.

5. It’s supposed to be hard

Two guys are playing with a burning candle. The first guy puts the candle out with his fingers. The second guy watches and decides to try for himself. Afterward, he turns to his friend and says, “Damn that was hot, what’s the trick to not get hurt?“

The first guy responds, “The trick is not minding that it hurts.”

Everything worth pursuing comes with some pain.

Another Charlie Munger quote I love is, “The safest way to get what you want is to try to deserve what you want.” Shortcuts in life tend not to work out. If you want to build a business, you gotta show up early and leave late. If you want to be healthy, you gotta say no to the burger and fries. If you want to find a great partner, you gotta be a great partner.

This one resonated as I was reading it while doing a hard thing. I love how this concept and many others apply to all aspects of life.

Final Thoughts

Many of these concepts were not new to me but just conveyed differently. Sometimes it takes hearing the same thing 5 times or maybe even 10 times before it hits home.

Patience. Consistency. Storytelling. Becoming comfortable with the uncomfortable. Reflecting on enough.

These are things that have always played a role in people’s lives and always will.

Same as ever.

My notes and reflections from this book will be something I’ll try to come back to from time to time.

Thank you for reading! As always please reply and let me know what resonated, what didn’t, or what you question. I love chatting about this stuff!

Cheers,

Andrew