Morgan Housel, who made a life-saving decision at age 17, discusses the importance of snap verdicts and understanding constant concepts. He explores irrationality, overlooking good things, and the impact on our futures. Housel shares insights from his latest book on human behavior and the market.
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Quick takeaways
Seemingly minor decisions can have significant consequences, as exemplified by Morgan Housel's lifesaving choice at age 17.
Predicting major events like Pearl Harbor, 9/11, and COVID-19 is nearly impossible, emphasizing the importance of focusing on universal behaviors and trends.
The best story often triumphs over accuracy, highlighting the significance of storytelling and the understanding that humans are not entirely rational.
Deep dives
A Life-Changing Decision: Survival From an Avalanche
At age 17, Morgan Howsell made a seemingly insignificant decision that ended up saving his life. While skiing out of bounds with friends, he chose not to join them for another run and instead offered to pick them up at the base of the mountain. Little did he know that an avalanche had just occurred in the area they were in, burying his friends under six feet of snow. The decision to not go with them turned out to be the most important decision of his life. This highlights how seemingly minor choices can have significant consequences.
The Limitations of Predicting the Future
The podcast episode also explores the limitations of predicting the future, particularly in terms of economic forecasts. It emphasizes that major events like Pearl Harbor, 9/11, and COVID-19 were impossible to predict until they happened. Despite access to vast amounts of data and advanced forecasting models, economists and experts struggle to accurately predict these catastrophic events. This highlights the importance of focusing on behaviors and trends that remain constant and universal, rather than attempting to predict uncertain future events.
The Power of Stories and the Role of Irrationality
The episode delves into the significance of storytelling and the influence it has in various aspects of life. It suggests that the best story often wins, even if it lacks accuracy or is factually incorrect. Additionally, it explores the idea that people are not entirely rational and are influenced by their own experiences and viewpoints. Understanding this lack of rationality can help foster empathy and a better understanding of others' behaviors and decisions. The episode concludes by highlighting the importance of embracing uncertainty and focusing on behaviors that remain consistent over time.
The Power of Storytelling in Success
In various endeavors in life, the best story tends to win rather than the best or most accurate answer. This applies to businesses, products, authors, and more. Success often comes from telling a compelling story that captures attention and loyalty. Rather than focusing on new or novel ideas, individuals can find success by telling a better story about existing products or concepts.
The Pitfalls of Comparisons and Social Media
Growing wealth inequality and the rise of social media have made the comparison trap harder to avoid. In the past, people compared themselves to those around them and felt content with their financial status. However, with increased exposure to others' highlight reels on social media, combined with growing expectations due to higher incomes and improved living standards, people often feel like they are falling behind, leading to dissatisfaction and a sense of inadequacy.
#488: Ever made a flippant, seemingly minor decision that radically changed the course of your life?
Morgan Housel has experienced this. At age 17, he made a quick decision that ended up saving his life. Sadly, two of his friends were less fortunate.
He shares that story in today's podcast episode, and sheds light on the lessons he's learned from it.
Housel says that his lifesaving choice -- and many of our other important decisions -- are snap verdicts, ones that we don’t spend much time thinking about.
If pivotal moments are decided in a flash, how do we navigate risk? How do we evaluate our options?
Housel says this comes understanding concepts that remain constant, consistent, and universal.
We need to accept that humans aren’t rational. We must appreciate the reasons why the best answer doesn’t always win. We ought to remember that we overlook many good things happening around us. These constants will most likely impact our futures.
Housel was named by MarketWatch as one of the 50 most influential people in the market. He is the New York Times bestselling author of The Psychology of Money. His new book is titled Same As Ever.
He joins us to discuss the ideas in his latest book.