A Few Things I’m Pretty Sure About
A Few Things I’m Pretty Sure About
Dec 9, 2020 by Morgan Housel
If something is impossible to know you are better off not being very smart, because smart people fool themselves into thinking they know while average people are more likely to say, “I don’t know” and end up closer to reality.
Most professions would benefit from at least one a day month where you did nothing but think. No meetings, no calls, no deliverables. Just a seat on the couch thinking about what’s working, what’s not, and what to do about it. One day a week is necessary for some fields. But it’s rare, because sitting on the couch doesn’t look like work, so managers raise an eyebrow – even if it’s obvious that if your job involves thinking you should be given time to think.
You shouldn’t 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. People with crazy good ideas tend to have crazy bad ideas too, because crazy thinking doesn’t always discriminate on truth, collateral damage, or legality.
Once-in-a-century events happen all the time because lots of unrelated things could go wrong. If, in any given year, there’s a 1% chance of a new disastrous pandemic, a 1% chance of a crippling depression, a 1% chance of a catastrophic flood, a 1% chance of political collapse, and on and on, then the odds that something bad will happen next year – or any year – are … pretty good. It’s why Arnold Toynbee says history is “just one damn thing after another.”
Daniel Kahneman says a key to investing is having “a well-calibrated sense of your future regret,” which might actually be the key to understanding all forms of risk. You know exactly how much risk to take if you know exactly when you will cry Uncle when things don’t work out.
Risk is what you can’t see, think only happens to other people, aren’t paying attention to, are willfully ignoring, and isn’t in the news. A little surprise usually does more damage than something big that’s been in the news for months.
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