Morgan Housel is an exceptional writer and his latest book is another wonderful example of his writing and storytelling prowess. In, Same as Ever: A Guide to What Never Changes, Housel guides readers through 23 short stories to help them understand that some things never change.
Housel says that the very same things that have motivated men and women since the dawn of time – greed, envy, fear, love, and hate – are still present today, and for this reason, much of what occurs is actually pretty predictable. Behaviours that never change are history’s most powerful lessons.
Voltaire said, “History never repeats itself. Man always does.” Humans are flawed, but there are patterns to help us make better financial and life decisions based on the things that simply don’t change, instead of trying to predict the future, which we’re not very good at anyways. Housel uses stories to identify patterns of human behaviour, how they affect our lives, and shape our future actions.
Some of the more relevant finance takeaways are highlighted below.
“The best financial plan is to save like a pessimist and invest like an optimist,” he writes. “That idea – the belief that things will get better, mixed with the reality that the path between now and then will be a continuous chain of setback, disappointment, surprise, and shock – shows up all over history, in all areas of life.”
Housel talks about compound interest, and how it’s key to understanding investing.
“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 period of time?’ Little changes compounded for a long time create extraordinary changes,” the book says.
“The trick in any field – from finance to careers to relationships – is being able to survive the short-run problems so you can stick around long enough to enjoy the long-term growth…An important lesson from history is that the long run is usually pretty good and the short run is usually pretty bad. It takes effort to reconcile those two and learn how to manage them with what seem like conflicting skills. Those who can’t usually end up either bitter pessimists or bankrupt optimists.”
Patience is so important because “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.”
Some things change. Others don’t. In investing, the latter is what really matters.
I highly recommend this book for anyone trying to figure out how to better manage their money, and looking to make good investing, career, and life decisions.