Little Rules About Big Things

Brilliant list by Morgan Housel - read the whole thing and practice it everyday. 

Personally, I struggle to make people understand the following little rules which could ruin their lives. Starting with the very first item on Housel's list (I learned that from Taleb) 

• You should obsess over risks that do permanent damage and care little about risks that do temporary harm, but the opposite is more common. 

• It’s important to know the difference between rosy optimism and periods of chaos that trend upward. 

• Few things are as valuable in the modern world as a good bullshit detector. 

• Most of what people call “conviction” is a willful disregard for new information that might make you change your mind. That’s when beliefs turn dangerous. 

• There’s a sweet spot where you grasp the important stuff but you’re not smart enough to be bored with it. 

• A comforting delusion is thinking that other people’s bad circumstances couldn’t also happen to you.

• People learn when they’re surprised. Not when they read the right answer, or are told they’re doing it wrong, but when they experience a gap between expectations and reality. 

• People tend to know what makes them angry with more certainty than what might make them happy. Happiness is complicated because you keep moving the goalposts. Misery is more predictable. 

• Getting rich and staying rich are different things that require different skills. 

• Money’s greatest intrinsic value is its ability to give you control over your time. 

• “Learn enough from history to respect one another’s delusions.” -Will Durant 

• There’s more to learn from people who endured risk than those who seemingly conquered it, because the kind of skills you need to endure risk are more likely repeatable and relevant to future risks. 

• Nothing too good or too bad stays that way forever, because great times plant the seeds of their own destruction through complacency and leverage, and bad times plant the seeds of their own turnaround through opportunity and panic-driven problem-solving. 

• Unsustainable things can last longer than you anticipate. 

• Napoleon’s definition of a military genius was “The man who can do the average thing when everyone else around him is losing his mind.” It’s the same in business and investing. 

• It’s hard to tell the difference between boldness and recklessness, greed and ambition, contrarian and wrong. 

• Risk has two stages: First, when it actually hits. Then, when its scars influence our subsequent decisions. The recession, and the lingering pessimism that does as much damage. 

• Tell people what they want to hear and you can be wrong indefinitely without penalty. 

• There are two types of information: stuff you’ll still care about in the future, and stuff that matters less and less over time. Long-term vs. expiring knowledge. It’s critical to identify which is which when you come across something new. 

• There is an optimal amount of bullshit in life. Having no tolerance for hassle, nonsense and inefficiency is not an admirable trait; it’s denying reality. Once you accept a certain level of BS, you stop denying its existence and have a clearer view of how the world works. 

• Risk’s greatest fuels are leverage, overconfidence, ego, and impatience. Its greatest antidote is having options, humility, and other people’s trust.