But both are so hard to measure, and hard to accept, that they too often go overlooked. For every Bill Gates there is a Kent Evans who was just as skilled and driven but ended up on the other side of life roulette.

Bill Gates & Kent Evans

You are not invincible, and if you acknowledge that luck brought you success then you have to believe in luck’s cousin, risk, which can turn your story around just as quickly.But the same is true in the other direction.

Nothing is as good or as bad as it seems

If your job is to build cars, there is little you can do when you’re not on the assembly line. You detach from work and leave your tools in the factory.But if your job is to create a marketing campaign—a thought-based and decision job—your tool is your head, which never leaves you. You might be thinking about your project during your commute, as you’re making dinner, while you put your kids to sleep, and when you wake up stressed at three in the morning.

New Century Job Stress

More than 2,000 books are dedicated to how Warren Buffett built his fortune. Many of them are wonderful. But few pay enough attention to the simplest fact: Buffett’s fortune isn’t due to just being a good investor, but being a good investor since he was literally a child.

How did Warren Buffett build his fortune?

<ul><li>The best (and worst) managers drive their employees as hard as they can.</li><li>“The customer is always right” and “customers don’t know what they want” are both accepted business wisdom.</li><li>The line between “inspiringly bold” and “foolishly reckless” can be a millimeter thick and only visible with hindsight.</li><li>Risk and luck are doppelgangers.</li></ul>

Risk and luck are so hard to pin down.

Anything that is huge, profitable, famous, or influential is the result of a tail event—an outlying one-in-thousands or millions event.

Tail Event

Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.

Planning

When judging your failures I’m likely to prefer a clean and simple story of cause and effect, because I don’t know what’s going on inside your head. “You had a bad outcome so it must have been caused by a bad decision” is the story that makes the most sense to me. But when judging myself I can make up a wild narrative justifying my past decisions and attributing bad outcomes to risk.

We prefer simple stories

It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.You can be wrong half the time and still make a fortune.

If fevers are beneficial, why do we fight them so universally?I don’t think it’s complicated: Fevers hurt. And people don’t want to hurt.That’s it.A doctor’s goal is not just to cure disease. It’s to cure disease within the confines of what’s reasonable and tolerable to the patient.

Fever Vs. Hurt

Your personal experiences with money make up maybe 0.00000001% of what's happened in the world, but maybe 80% of how you think the world works.

No one's crazy

You know stuff about money that I don’t, and vice versa. You go through life with different beliefs, goals, and forecasts, than I do. That’s not because one of us is smarter than the other, or has better information. It’s because we’ve had different lives shaped by different and equally persuasive experiences.

The reason why you do some crazy things with money

Good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.

Compounding

<ul><li>The hardest financial skill is getting the goalpost to stop moving.</li><li>Social comparison is the problem here, accept that you might have enough, even if it’s less than those around you.</li><li>“Enough” is not too little. “Enough” is realizing that the opposite—an insatiable appetite for more—will push you to the point of regret.</li><li>There are many things never worth risking, no matter the potential gain. Freedom and independence are invaluable. Family and friends are invaluable. Being loved by those who you want to love you is invaluable.</li></ul>

Enough

The idea that a few things account for most results is not just true for companies in your investment portfolio. It’s also an important part of your own behavior as an investor.A good definition of an investing genius is the man or woman who can do the average thing when all those around them are going crazy.

Genius investor

If you think that’s a big failure, we’re working on much bigger failures right now. I am not kidding. Some of them are going to make the Fire Phone look like a tiny little blip.It’s OK for Amazon to lose a lot of money on the Fire Phone because it will be offset by something like Amazon Web Services that earns tens of billions of dollars. Tails to the rescue.

Amazon's Failure

Luck and risk are siblings. They are both the reality that every outcome in life is guided by forces other than individual effort.May mắn và rủi ro là anh em của nhau. Sự việc nào trong đời cũng hoặc may mắn hoặc rủi ro xảy ra & đôi khi không liên quan gì đến nỗ lực.

Luck & Risk

The idea that something can gain over the long run while being a basketcase in the short run is not intuitive, but it’s how a lot of things work in life.

Fight Intuitive 

The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.”The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.

The Highest Form Of Wealth

Using your money to buy time and options has a lifestyle benefit few luxury goods can compete with.

Using Moneu

Getting money requires taking risks, being optimistic, and putting yourself out there.But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast.It requires frugality and an acceptance that at least some of what you’ve made is attributable to luck, so past success can’t be relied upon to repeat indefinitely.

Getting Money vs. Keeping Money

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. Money—investing, personal finance, and business decisions—is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.

books

Books

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. Money—investing, personal finance, and business decisions—is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.

Morgan Housel is a partner at The Collaborative Fund. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He lives in Seattle with his wife and two kids.

Genius investor

Similar ideas to Genius investor

The Power of Compounding

How to avoid bad investment advice

Your belief in the long run isn't enough