The Future is Inherently Unpredictable

People like to say, "To know where we're going, you have to know where we've been." But more realistic is admitting that if you know where we've been, you realize we have no idea where we're going.

Events compound in unfathomable ways. (Page 14) There is rarely more or less economic unceranty; just changes in how ignorant people are to potential risks. Asking what the biggest risks are is like asking what you expect to be surprised about. If you knew what the biggest risk was you would do something about it, and doing something about it would make it less risky. What your imagination can't fathom is the dangerous stuff. (Page 20)

Humans Discount What’s Most Important Because It’s Not Traded and Therefore Not Priced

Peter Kaufman, CEO of Glenair and one of the smartest people you will ever come across, once wrote:

We tend to take every precaution to safeguard our material possessions because we know what they cost. But at the same time we neglect things which are much more precious because they don't come with price tags attached: The real value of things like our eyesight or relationships or freedom can be hidden to us, because money is not changing hands.

Same with expectations-they're easy to ignore because their value isn't on a price tag. (Page 33)

Wins Don’t Matter; Humans Only Feel Good If The Win Is Unexpected

You think you want progress, both for yourself and for the world. But most of the time that's not actually what you want. You want to feel a gap between what you expected and what actually happened. And the expectation side of that equation is not only important, but it's often more in your control than managing your circumstances. (Page 35)

The Sources of Success and Failure Are Inextricably Linked

The same personality traits that push people to the top also increase the odds of pushing them over the edge. This is true for countries, particularly empires. A country determined to expand by acquiring more land is unlikely to be run by person capable of saying, "Okay, that's enough. Let's be thankful for what we have and stop invading other countries.” (Page 42)

Crazy is Normal Because We Can Only Define Normal By Pushing Beyond Limits

That's why markets don't stay within the limits of sanity, and why they always overdose on pessimism and optimism.

They have to.

The only way to know we've exhausted all potential opportunity from markets--the only way to identify the top-is to push them not only past the point where the numbers stop making sense, but beyond the stories people believe about those numbers.

When a tire company develops a new tire and wants to know its limitations, the process is simple. They put it on a car and run it until it blows up. Markets, desperate to know the limits of what other investors can endure, do the same thing.

Always been the case, always will be.

There are two things you can do about it.

One is accepting that crazy doesn't mean broken. Crazy is normal; beyond the point of crazy is normal. (Page 86)

Gains Come From Patience and Scarcity

An important thing about this topic is that most great things in life-from love to careers to investing-gain their value from two things: patience and scarcity. Patience to let something grow, and scarcity to admire what it grows into.

But what are two of the most common tactics when people pursue something great? Trying to make it faster and bigger.

It's always been a problem, and always will be.

Same as ever. (Page 95)

Big Changes Only Happen by Necessity

Big, fast changes happen only when they're forced by necessity.

World War II began on horseback in 1939 and ended with nuclear fission in 1945. NASA was created in 1958, two weeks after the Soviets launched Sputnik, and landed on the moon just eleven years later.

Stuff like that rarely happens that fast without fear as a motivator. (Page 106)

Progress Requires Compounding, Destruction is Instant

An important fact that explains a lot of things is that good news takes time but bad news tends to occur instantly.

Warren Buffett says it takes twenty years to build a reputation and five minutes to destroy one.

A lot of things work just like that.

It's a natural part of how the world works, driven by the fact that good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in the blink of an eye. (Page 110)

The Long Term is Good Even if the Short Term is Bad

The trick in any field-from finance to careers to relationships-is being able to survive the short-run problems so you can stick around long enough to enjoy the long-term growth.

Save like a pessimist and invest like an optimist.

Plan like a pessimist and dream like an optimist.

Those can seem like conflicting skills. And they are. It's intuitive to think you should either be an optimist or a pessimist. It's hard to realize there's a time and a place for both, and that the two can-and should-coexist. But it's what you see in almost every successful longterm endeavor (Page 127)

The Cost of Success Is Usually Tolerance for BS

A simple rule that's obvious but easy to ignore is that nothing worth pursuing is free. How could it be otherwise? Everything has a price, and the price is usually proportionate to the potential rewards.

But there's rarely a price tag. And you don't pay the price with cash. Most things worth pursuing charge their fee in the form of stress, uncertainty, dealing with quirky people, bureaucracy, other peoples' conflicting incentives, hassle, nonsense, long hours, and constant doubt. That's the overhead cost of getting ahead! (Page 140)

Understand Others By Their Experiences

The question "Why don't you agree with me?" can have infinite answers. Sometimes one side is selfish, or stupid, or blind, or unin formed.

But usually a better question is, "What have you experienced that I haven't that makes you believe what you do? And would I think about the world like you do if I experienced what have?" (Page 198)