Guest Morgan Housel, a venture capitalist and author, shares ideas that never change to navigate an ever-changing world. Topics include unseen risks, compound interest beyond finances, managing expectations, embracing challenges, and the danger of success. He also discusses the importance of cash savings, unstructured time, and recognizing competitive advantages. Lastly, they explore long-term thinking and the insights from the Great Depression.
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Quick takeaways
Recognize the importance of timeless principles to navigate an ever-changing world.
Prepare for unknown risks by building savings and maintaining liquidity.
Manage expectations to find contentment and appreciate progress.
Deep dives
The importance of recognizing what never changes
In a podcast episode, Morgan Haussel discusses the importance of recognizing what never changes in order to navigate an ever-changing world. He emphasizes that trying to predict the future is futile, and instead, focusing on the timeless principles of human behavior is key. By understanding how people respond to fear, overconfidence, and uncertainty, individuals can better prepare themselves for success.
The biggest risks are those we can't see
Haussel argues that the biggest risks in life are the ones we cannot foresee. He provides examples like the Great Depression and the COVID-19 pandemic, which caught the world off guard. He suggests that while it is impossible to predict these unforeseen events, individuals can prepare for unknown risks by building up savings and maintaining liquidity to weather unexpected challenges.
Managing expectations for happiness
Haussel explores the idea that our expectations heavily influence our happiness. He points out that as society becomes more prosperous and advanced, our expectations rise as well, often outpacing our actual income or circumstances. This perpetual dissatisfaction can prevent us from fully appreciating the progress and prosperity we have achieved. Haussel suggests managing our expectations and appreciating what we have as a way to find contentment and happiness.
The Power of Compound Interest in Careers
One of the main ideas discussed in the podcast is the power of compound interest in careers. It is emphasized that staying at one company or in one field for a long period of time allows the benefits to compound. People who consistently switch companies or fields miss out on the compounding effect of networks, institutional knowledge, and skills. The importance of sticking with one thing and gaining valuable knowledge and skill through years of experience is highlighted
The Competitive Advantage of Imperfection
Another key point explored in the podcast is the competitive advantage of imperfection. The downsides of constantly chasing complete optimization are discussed, using the example of supply chains during the Great Depression. Companies with excessively efficient supply chains struggled to meet increased demand, while those with room for error and slack were better able to adapt. The value of inefficiency and the benefits of allowing flexibility and serendipity in one's schedule are emphasized, along with the importance of recognizing the long-term view in decision-making and avoiding short-term thinking.
To figure out what will happen in the future, we typically make guesswork predictions and look to particular periods in the past that seem like potential parallels.
My guest says that to figure out what will happen next, and how best to navigate that coming landscape, the best things to consider are those that have been true in every time, and will be true until the end of it.
Morgan Housel is a venture capitalist and the author of Same as Ever: A Guide to What Never Changes. Today on the show we talk about ideas and principles that never change that can help you be successful in an ever-changing world, including how the biggest risks are those you can’t see, how the idea of compound interest applies beyond your finances, how your expectations can sabotage your happiness, why you need to learn to accept that things are supposed to be hard, and how success can lead to failure. Morgan also shares his rubric for choosing your reading, what genres of books he finds most useful for improving long-term thinking, and two books he especially recommends for broadening your perspective.