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Our predictions usually seem to fall towards extremes, either too optimistic or too pessimistic. We underestimate how bad things can be in the short term, and how much better they can eventually turn out to be in the longer run. This leads to bad decisions, laughably wrong forecasts and predictions and a lot of confusion.
A reasonably optimistic person is a little cautious, a little cynical, and expects surprises, setbacks, bewilderment and disappointment.
Too much optimism prevents us from accurately predicting and understanding the pain and struggle that is inevitable in the future.
What it does is it reduces our stress and anxiety and provides a ‘playground’ where we can imagine alternative realities which we need to believe in.
The war-torn countries of the 1940s, Germany and Japan, quickly recovered and exceeded the expectations of the world, ranking much higher in development than many countries who had not experienced war.
Progress happens at an exponential rate when people learn new things, and when there is collective pain, suffering and misery, people learn a lot.
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It’s impossible to think about risk and opportunity without a reference point. And ours is at most incomplete (if not totally wrong).
Everything we think about risk and opportunity is shaped by our own specific situation and personal experience. So everybody has a view of risk shaped by narrow experiences but applied to the broad world.
Long-term thinking is difficult to put in action because the long run is a collection of short runs that have to be handled, displayed, and used as information to gauge whether a long-term reward still exists.
Short-term thinking can be the only way you’ll survive long enough to experience long-term results.
Optimism and pessimism go hand in hand. In finance, we are told to save like a pessimist and invest like an optimist. The short term is full of setbacks, problems, breakages, depressions, pandemics, errors, but if you can stick around long enough, you can experience long-term growth.
The long-run is usually rather good and the short run is normally quite bad. In reconciling the two, we learn how to manage both.
In this world of uncertainties, nothing but death and taxes are sureshot in our lives.
There are however some assumptions that withstand the test of time. These assumptions take in...
People generally want to solve problems than to create harm, but those who want to harm get a lot more attention.
While people can be taken advantage of, it can’t be done for an infinite period of time.
Every ten years or so, there has to be some economic, political, military or social breakdown, according to historical data.