Morgan Housel Quotes

There is an iron law in economics: extremely good and extremely bad circumstances rarely stay that way for long because supply and demand adapt in hard-to-predict ways.

Here’s the most important part of this story: The Russell 3000 has increased more than 73-fold since 1980. That is a spectacular return. That is success. Forty percent of the companies in the index were effectively failures. But the 7% of components that performed extremely well were more than enough to offset the duds.

The first rule of a happy life is low expectations. If you have unrealistic expectations you’re going to be miserable your whole life. You want to have reasonable expectations and take life’s results, good and bad, as they happen with a certain amount of stoicism.

Be careful who you praise and admire. Be careful who you look down upon and wish to avoid becoming.

If expectations rise with results there is no logic in striving for more because you’ll feel the same after putting in extra effort. It gets dangerous when the taste of having more — more money, more power, more prestige — increases ambition faster than satisfaction. In that case one step forward pushes the goalpost two steps ahead. You feel as if you’re falling behind, and the only way to catch up is to take greater and greater amounts of risk.

The biggest single point of failure with money is a sole reliance on a paycheck to fund short-term spending needs, with no savings to create a gap between what you think your expenses are and what they might be in the future.

Things that have never happened before happen all the time.

you need short-term paranoia to keep you alive long enough to exploit long-term optimism.

We are very good at predicting the future, except for the surprises — which tend to be all that matter.

Invest in preparedness, not in prediction.

Mark Twain once said he knew he was a successful author when Kaiser Wilhelm II said he’d read every Twain book, and later that day a porter at his hotel said the same. “Great books are wine,” Twain said, “but my books are water. But everybody drinks water.” He found the universal emotions that influence everyone, regardless of who they were or where they were from, and got them to nod their heads in the same direction. It’s nearly magic. Guiding people’s attention to a single point is one of the most powerful life skills.

Expecting things to be bad is the best way to be pleasantly surprised when they’re not. Which, ironically, is something to be optimistic about.

Compounding doesn’t rely on earning big returns. Merely good returns sustained uninterrupted for the longest period of time — especially in times of chaos and havoc — will always win.

The correct lesson to learn from surprises is that the world is surprising. Not that we should use past surprises as a guide to future boundaries; that we should use past surprises as an admission that we have no idea what might happen next.

Savings can be created by spending less. You can spend less if you desire less. And you will desire less if you care less about what others think of you.