Source: A Few Rules | Collaborative Fund, by Morgan Housel
A list of possible wisdom.
The person who tells the most compelling story wins. Not the best idea. Just the story that catches people’s attention and gets them to nod their heads.
Something can be factually true but contextually nonsense. Bad ideas often have at least some seed of truth that gives their followers confidence.
Tell people what they want to hear and you can be wrong indefinitely without penalty.
Woodrow Wilson said government “is accountable to Darwin, not to Newton.” It’s a useful idea. Everything is accountable to one of the two, and you have to know whether something adapts and changes over time or perpetually stays the same.
Behavior is hard to fix. When people say they’ve learned their lesson they underestimate how much of their previous mistake was caused by emotions that will return when faced with the same circumstances.
“Logic is an invention of man and may be ignored by the universe,” historian Will Durant says. That’s why forecasting is hard.
Being good at something doesn’t promise rewards. It doesn’t even promise a compliment. What’s rewarded in the world is scarcity, so what matters is what you can do that other people are bad at.
The world is governed by probability, but people think in black and white, right or wrong – did it happen or did it not? – because it’s easier.
Henry Luce said, “Show me a man who thinks he’s objective and I’ll show you a man who’s deceiving himself.” People see what they want to see, hear what they want to hear, and view the world through the lens of their own unique life experiences.
People learn when they’re surprised. Not when they read the right answer, or are told they’re doing it wrong, but when their jaw hits the floor.
Most fields have only a few laws. Lots of theories, hunches, observations, ideas, trends, and rules. But laws – things that are always true, all the time – are rare.
The only thing worse than thinking everyone who disagrees with you is wrong is the opposite: being persuaded by the advice of those who need or want something you don’t.
Simple explanations are appealing even when they’re wrong. “It’s complicated” isn’t persuasive even when it’s right.
Self-interest is the most powerful force in the world. Which can be great, because situations where everyone’s interests align are unstoppable; bad because people’s willingness to benefit themselves at the expense of others is so seductive.
History is deep. Almost everything has been done before. The characters and scenes change, but the behaviors and outcomes rarely do. “Everything feels unprecedented when you haven’t engaged with history.”
Don’t expect balance from very talented people. People who are exceptionally good at one thing tend to be exceptionally bad at another, due to overconfidence and mental bandwidth taken up by the exceptional skill. Skills also have two sides: No one should be shocked when people who think about the world in unique ways you like also think about the world in unique ways you don’t like.
Progress happens too slowly to notice, setbacks happen too fast to ignore. There are lots of overnight tragedies, but no overnight miracles. Growth is driven by compounding, which always takes time. Destruction is driven by single points of failure, which can happen in seconds, and loss of confidence, which can happen in an instant.
It is way easier to spot other people’s mistakes than your own. We judge others based solely on their actions, but when judging ourselves we have an internal dialogue that justifies our mistakes and bad decisions.
Reputations have momentum in both directions, because people want to associate with winners and avoid losers.
History is driven by surprising events, forecasting is driven by predictable ones. It’s not an easy problem to solve.