What did I learn from : " Same As Ever - by Morgan Housel" bestselling author of The Psychology of Money

" Same As Ever - by Morgan Housel" bestselling author of The Psychology of Money

One of the most important aspects of being financially literate is to understand how we behave in different situations, how we react to circumstances which were predicted or are something out of the blue. And history is the best teacher for that. We may call many things as unprecedented in todays world but maximum of them have deep roots in our history. The book "Same As Ever - by Morgan Housel" is a collection of short stories about what never changes in a changing world. It contains topics which the author is confident , will remain relevant even 100 years from now. And if we have an understanding of what doesn't change we will have a better clarity on our financial decisions.

One of the hardest part of being an investor is when one has to do nothing, literally nothing. Become boring . In the chapter : "Incentives-The most powerful force in the world" , the author gives wonderful insights such as - "One of the strongest pulls of incentives is the desire for people to hear only what they want to hear and see only what they want to see" , "It is most common in investing , law, and medicine, when "do nothing" is the best answer, but "do something" is the career incentive."

Every chapter of this book elaborates on such wonderful insights which can help us in making best possible financial decisions.

Some of these insights are :

1. Predicting what the world will look after 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.
   

2. 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.
   

3. Every investment price, every market evaluation , is just a number from today multiplied by a story about tomorrow.
   

4. There is a very common life cycle of greed and fear. It goes like this:

First you assume good news is permanent.

Then you become oblivious to bad news.

Then you ignore bad news.

Then you deny bad news.

Then you panic at bad news.

Then you accept bad news.

Then you assume bad news is permanent.

Then you become oblivious to good news.

Then you ignore good news.

Then you deny good news.

Then you accept good news.

Then you assume good news is permanent.

And we're back where we began. The cycle repeats.

5. 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.

6. If you understand the math behind compounding you realize the most important question is not "How can I earn the highest returns?" It's "What are the best returns I can sustain for the longest periods of time?" Little changes compounded for a long time create extraordinary changes.

7. Cash is an inefficient drag during the bull markets and as valuable as oxygen during bear markets. Concentration is the best way to maximize the returns, but diversification is the best way to increase the odds of owning a company of delivering returns.

8. There's a typical path of how people respond to what eventually becomes a world-changing new technology:

I've never heard of it.

I've heard of it but I don't understand it.

I understand it, but i don't see how it's useful.

I see how it could be fun for rich people, but not me.

I use it, but it's just a toy.

It's becoming more useful for me.

I use it all the time.

I could not imaging life without it.

Seriously people lived without it?

It's too powerful and needs to be regulated.

Finally in finance, spending less than you make, saving the difference, and being be patient is perhaps 90% of what you need to know to do well. But what's taught in college? How to price derivatives and calculate net present value. In health it's sleep 8hrs, move a lot, eat real food, but not too much. But what's popular? Supplements, hacks and pills.

In this 200 pages book, Morgan Housel gives us insights which if kept in mind while making financial decisions , will help immensely in ensuring we achieve financial freedom. 'Same As Ever' is a testament to the enduring principles that underpin our financial journey. So, immerse yourself in this enlightening read and embark on a transformative odyssey toward financial freedom. After all, in a world of constant change, some things remain 'Same As Ever'."