So I recently read: Same as Ever

There was always an ongoing joke when I was growing up that if the weather forecast says it would rain, it definitely won’t rain. If they say, the day will be sunny, high chance that it will rain cats and dogs. Fortunately, the accuracy of weather prediction has come a long way and it is indeed really accurate nowadays. But forecasting remains a funny topic.

I spent the majority of the last 3 years working in forecasting for retailers. The algorithms take historical sales and inventory data and after applying a bunch of data science models, generate forecasts for the next few seasons. When it comes to retail, it is generally safe to assume that for mature market societies, patterns generally repeat seasonally. Thus, the forecasts more or less are pretty accurate. Of course, when drastic events happen, all forecasts go haywire but even those are nowadays taken into account and predictability takes into account such shocks and comes up with good predictions.

You cannot apply forecasting easily to many other things like Share Market, although people try their best to do so. Gambling and Betting on Sports play on human emotions and greed more than luck and forecasting abilities, I think. Another field that deals with prophecy is Astrology. It is beyond me that horoscopes are given such a big place in newspapers and people take pride in being from such and such zodiac signs. I can go on and on about this but let me not digress.

I recently read Morgan Housel’s ‘Same as Ever’. He surely is one of the most known writers nowadays who knows how to drive a point using stories. His earlier book The Psychology of Money was also a best seller and is often quoted. He explains, in this book, that no matter how much we can predict and play with numbers and emotions, some things never change and that is Human Behavior. Time and again, people do the same things, make the same mistakes, learn from the same mistakes, and the cycle goes on. Societies or individuals go through cycles of ups and downs and initially, we forget what we did then but later we realize. It tells that the world remains unpredictable and human attempts to tame it remain the same. Mediums might change but the primal urge to react to things hasn’t evolved much since our ancestors also reacted and adapted to changes in the same way.

It might sound pessimistic but rather the book strengthens the belief that if we have got into trouble, it is also the human ingenuity that can pave the way forward. I felt that it encourages us to experiment and use previous knowledge to come up with new solutions because even if nature cannot be predicted, people’s behavior remains the same.

As I mentioned earlier, I have been following Housel’s blog for some time and all his writings and storytelling are highly enjoyable. Like ‘Psychology of Money’, I recommend ‘Same as Ever’ as a compelling book about the psychology of people.

[AD] ‘Same as Ever’ by Morgan Housel can be bought from here:

So I recently read: The Psychology of Money by Morgan Housel

I didn’t read but I listened to the audio book actually.

I am following blogposts of Morgan Housel for some time now and I find them really insightful. Moreover, this book got enough good praise so it was due.

Some key lessons which I learned from this book are as follows:

Compounding Works

Money might grow in short term but wealth doesn’t. Short-term thinking is good only for the short term. The longer one stays in the game, the more the wealth (not just money but it applies to everything else too) gets enhanced. There are some great stories shared in the book which tells about people who took their time in getting the returns out of their savings. while also some examples of people who spend too much away, too quickly.

Money means different thing to different people

I find this one particularly true. I belonged to a family in which taking risks with money has been a strict no-no as generations have been service class. Do your job, do it better, and let it speak for you has been the mantra. While some of my friends had money, stocks, Demat accounts, and businesses being discussed daily at the dinner table since they were kids. That conditioning plus an individual’s own mindset makes money appear differently. For example, a discount offer not availed is just a missed opportunity for me. While for one of my friends it was considered a loss.

Luck vs Skill

This isn’t given as much importance as much skill is given. But luck is highly important. An example of Bill Gates is shared in the book. Bill Gates is indeed a genius but we shouldn’t overlook that how lucky he was when he got access to a Computer in high school. This was the time when having a computer in a school was not even a notion anywhere in the world. People didn’t even think that Computers had a place in academia. The same lesson about how the skill in the market is just a pseudo-barrier created by some lucky people was told in this Podcast by Deepak Shenoy on Amit Varma’s The Seen and the Unseen.

Never Enough

This lesson is timeless and not obvious till you don’t have it yourself.

I found ‘The Psychology of Money’ by Morgan Housel a good and easy read but impactful in every sense. It is one of the first books I have ever read about money in general and I am glad that I started with this. It is not about investing or saving but just the thought that our perceptions about money are different than our perception about time. Increasing our wealth requires time, effort, and the ability to take risks. And of course, luck.

Photo by Mathieu Stern on Unsplash