Weekend Reading: Five Lessons from History

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading lessons from history Weekend reading lessons from history
Weekend Reading

As author Morgan Housel says, historical events which reap takeaways that can be applied to broad areas of life often contain some of the most valuable insight


Here, he focuses specifically on the Great Depression, and the knowledge it still lends to the economy and managing finances. Some of the most noteworthy lessons include:

📌 People suffering from sudden, unexpected hardship are likely to adopt views they previously thought unthinkable: When the markets and economy are upended, emotions can cause people to make decisions they wouldn’t even consider otherwise. For example, just prior to the Great Depression in Germany, hyperinflation caused the destruction of all paper wealth.

📌 Reversion to the mean occurs because people persuasive enough to make something grow don’t have the kind of personalities that allow them to stop before pushing too far: As Housel says, “the same personality traits that push people to the top, also increase the odds of pushing them over the edge.” This same mindset can also be true for countries, companies and investors. Achieving wealth and keeping wealth are two separate tasks that require two different mindsets.

📌 Progress happens too slowly for people to notice; setbacks happen too fast for people to ignore: Tragedies can happen in a split-second, while miracles take time. When the Wright brothers built the first plane after an immense amount of time and work, the public didn’t pay much attention. However, instances like war, corporate bankruptcies or plane crashes went straight to the news. The lesson? “Growth is driven by compounding, which always takes time. Destruction is driven by single points of failure, which can happen in seconds…”

Above all – remember: History doesn’t repeat itself, but it often rhymes.