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Same As It Ever Was · Collaborative Fund

Voltaire

“History never repeats itself, but man always does.”

Voltaire

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IDEA EXTRACTED FROM:

Same As It Ever Was · Collaborative Fund

Same As It Ever Was · Collaborative Fund

https://www.collaborativefund.com/blog/same-as-it-ever-was/

collaborativefund.com

9

Key Ideas

The Lessons Of History

History is a treasure-house of learning, and as many books teaching us lessons from history point out, what was true in the medieval ages is often true even now, though the circumstances, technology and society have gone through a sea of changes.

The things that are worth knowing are those which hold steady and true then and now.

1920 and 2020

1920 is a hundred years apart from 2020, yet how people think is largely unchanged. Human behaviour is still hinged on greed, fear, opportunity, scarcity, and basic instincts.

We have no idea what will happen in the future, but we do have a good idea about how human beings might behave in certain situations.

Big Risks Vs Small Risks

Small risks can sometimes combine, compound and mutate into something big. Yet the attention is always on the big stuff, and the small stuff happening around is largely ignored by all.

Example: A huge nuclear bomb that destroys entire countries is unlikely to be used preemptively, but small, precise weapons with limited range are much more likely to be used in war and in turn, can result in the big ones to be used too, eventually.

Having A Positive Outlook

Optimism helps us dumb down and decrease the pain and difficulties that the future likely holds, and provides us with hope with regards to our options.

Even now, with the state of income mobility, and the disparity in wealth, few should have reason to be optimistic, but many are, and it doesn’t feel bad to have a positive outlook no matter what the circumstances.

Pain Is Short-Term

Pain is a short-term loss, but may have some long-term gain.

Exercising can be painful or tedious for some and has great benefits if done regularly. Telling the truth can be painful, but is often the right thing to do.

Avoidance Of Pain

History shows us that people avoid pain and exertion, would lie to avoid a painful situation and would create hacks or shortcuts to skip through pain, often leading to worse problems at a later stage.

Example: A simple toothache would make people eat a painkiller tablet, which leads to many serious complications of body organs like the liver.

Life-altering Experience

A person’s behaviour, once formed, largely remains unchanged. However, a major, life-changing event, that causes hardcore stress, can undo behavioural patterns.

It’s the basis of Post Traumatic Stress Disorder and it makes people change or alter their behaviour, creating new, lifelong habits, scarred by the major event.

The No. 1 Constant: Disagreement

When we are ‘hit’ by something huge, and unpredictable, we tend to explain it with great force and start forecasting with greater conviction, as if we know a lot about life. Someone who hasn’t experienced the earth-shattering event will not be on the same page.

Apart from selfishness, self-centeredness and stupidly, a majority of people do not agree with each other due to them having different experiences.

EXPLORE MORE AROUND THESE TOPICS:

SIMILAR ARTICLES & IDEAS:

Three different sides of risk
  • The odds you will get hit.
  • The average consequences of getting hit.
  • The tail-end consequences of getting hit.

The first two are...

The tail-end consequences

The tail-end consequences of an action or event (those with low-probability, high-impact) are all that matter.

In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk (for example, pandemics and depressions) are what make the pages of history books.

Some downsides are unavoidable
Some downsides are unavoidable

Life is a little easier if you expect a certain chunk of it to go wrong no matter how hard you try.

Smart people screw up. Good people have bad days. Nice people lose their temper....

How we think about risk and opportunity

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 and short-term thinking

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.

one more idea

Probability

Most of us understand probability and the likelihood of certain things to happen, or not happening, but still do not fully believe in it. For us, it’s about right and wrong, black or white.

Black And White
  • The pandemic death toll predictions are probabilities but the newspapers keep them as benchmark numbers which will be held against the experts.
  • In investing, stock predictions that come true are hailed on CNBC, as if those people have some superpower.
Ignoring Probability

Probability gets sidelined because:


  • People want certainty, not accuracy. It’s more appealing to make them feel better(with lies, if required) than to give them cold, hard data.
  • There are not many chances to measure our prediction skills, with sufficient sample sizes taking long to play out.
  • People don’t really understand what odds mean, as their beliefs and preferences of what should happen, takes precedence over probability.