Yanwen’s blog

On August 10th, 12th, and 16th, I shared some reflections on Morgan Housel's book Same as Ever: A Guide to What Never Changes. Today, I’d like to delve deeper into the topic of risk.

"Risk is what you don't see. We are very good at predicting the future, except for the surprises--which tend to be all that matter." Thus begins one of its chapters.

Throughout history, people have consistently failed to foresee the biggest risks and most significant events. Take for example the Great Depression of 1929. In 1930, the U.S. National Economic League conducted a public opinion survey asking citizens what they believed was the country's most pressing issue. The top concerns for them were law enforcement, lack of respect for the law, and Prohibition. Unemployment ranked only eighteenth.

"Either everyone in the past was blinded by delusion. Or everyone in the present is fooled by hindsight."

If these risks had been anticipated, people would have prepared for them, and in hindsight, their impact would have been mitigated. In that case, they wouldn't have been considered risks at all. That's why Housel asserts: the biggest risks of the next ten years are the ones that no one is talking about today.

This is an eternal truth. No matter when you read this book, the reality remains the same: the future is inherently unpredictable. This was true in the past, and it will continue to be true in the future.

Housel's advice for dealing with an unpredictable future is simple: focus on preparation. And prepare more than you think is necessary, allowing for an extra layer of safety.

For instance, in personal finance, Housel believes that the right amount of savings should exceed what you initially planned. When you start to feel like it might be too much, that’s probably the right amount.

Similarly, when making financial plans, if you expect an 8% annual return on your investments, it’s wise not to base your future financial plans solely on that number. A better approach would be to discount that expectation, ensuring that your plans can still be realized even if the return is only 4% to 5%. The underlying principle is the same.

Finally, I share this part on risk to emphasize the importance of preparing for unforeseen challenges, as we can't predict them.

Elon Musk and ex-president Donald Trump recently dedicated a significant portion of their conversation on social media X to the southern border crisis. Their discussion underscores the issue’s importance and urgency, but it also reveals the daunting nature of this challenge, which has so far defied any lasting solutions.

This is a crisis of humanity. Whether labeled as a refugee or migration crisis, the pain and desperation behind these movements are visible and universal. Many European countries face similar challenges, especially in the wake of the Iraq War from 2003 to 2011, which displaced millions. The chaos left in the war's aftermath continues to push people from their homes, driven by the relentless tides of conflict, economic ruin, and political instability.

The situation at the U.S.-Mexico border is equally heart-wrenching. According to the Council on Foreign Relations, "Migrants and displaced people from across the world are arriving at the U.S.-Mexico border in droves. More than half come from six Latin American countries, where worsening violence, poverty, and other factors are pushing them to leave. The majority hailed from just six countries: Mexico, Guatemala, Venezuela, Cuba, Ecuador, and Colombia, in descending order."

Imagine the realities behind these faceless statistics -- each number representing a life—a family torn apart, a child who may never see their home again, a parent forced to make the unimaginable decision to leave everything behind in search of safety. 

In Mexico, families are shattered by the violence fueled by drug cartels, which thrive on the insatiable demand for narcotics in the United States. In Cuba, decades of economic hardship, exacerbated by U.S. sanctions, have left people with little choice but to flee. These migrants are not simply seeking a better life; they are escaping circumstances so dire that risking their lives on a perilous journey seems like the only option.

The refugee crisis will persist as long as there are vast disparities between the U.S. and its neighboring countries. But no wall can ever fully block the flow of people who are driven by the primal instinct to survive and protect their loved ones.

The Chinese saying "人往高处走，水往低处流" (Rén wǎng gāo chù zǒu, shuǐ wǎng dī chù liú), meaning "people strive to go upward, just as water flows downward," encapsulates this reality. People will always seek out hope, safety and better life, just as water seeks the lowest point. Instead of building barriers, we must confront the root causes that force people to leave their homes in the first place.

Let us strive to see the humanity in each migrant and understand the profound hardships they face. These are people who have been forced out of their homelands by circumstances beyond their control. Their journey is not one of choice but of necessity. By broadening our understanding, we can replace prejudice with empathy, recognizing that their struggle is not so different from what any of us might face in similar circumstances.

Let us move beyond the headlines and debates to grasp the deeper truths about migration. Only by acknowledging and addressing the systemic issues—historical foreign interventions, economic disparities, and even the growing impact of climate change—can we hope to create a world where people no longer feel forced to leave their homes in search of safety and dignity.

Yesterday, while video chatting with my family in Beijing—my youngest sister and my mother on the other end—I noticed something poignant. My sister observed that my other sister was sending her son to work due to the heavy rain, highlighting their close-knit family dynamic, with all three of them together.

She remarked that their family often engages in activities together whenever possible, which starkly contrasts with her own situation, where her only son lives in America and they see each other once a year or even less.

This observation led me to reflect on a broader issue on China's two generations of people. In my mother's generation, having multiple children was common, and now in her 90s, she is supported by two of her three daughters who live nearby.

However, in our generation, most families have only one child, as seen with my two sisters in Beijing. If their child lived overseas, their lives would be quite different in their old years.

Some might argue that life progresses whether together or apart, but family togetherness is still treasured, especially for older generations. I remember how excited my youngest sister was prior to her son's home visit, so excited that she couldn't sleep for a few days. The comfort and support that family bonds provide are very real. This is why I make it a point to visit Beijing every year to spend time with my mother.

Considering my youngest sister, whose son resides in America, she may feel a blend of pride in her son's independence and a sense of loneliness due to his absence. The contrast between her situation and that of my other sister, who frequently spends time with her son, likely amplifies these feelings.

In a world where most families have only one child, the impact of that child's absence is more noticeable as parents grow older. The Chinese saying 享受天伦之乐 (Xiǎngshòu tiānlún zhī lè)—"enjoy the happiness of family bonds"—captures the essence of cherishing the moments spent with loved ones and the warmth of family connections.

You've probably played Tetris game before, where you arrange falling blocks of different shapes into rows. Every time you complete a row, it disappears, rewarding you with a score. And that reward makes you happy and want more.

Harvard Medical School once conducted a study where they paid volunteers to play Tetris for several hours a day over three consecutive days. Afterward, almost all of them reported that they continued to dream about playing Tetris, and even when they were awake, they couldn't help but view the world around them through the logic of Tetris.

For instance, when they saw two boxes missing from a row of products on a supermarket shelf, they would instinctively move two boxes from the back row to fill the gap. Some even reported that when looking up at the city skyline, they imagined a long rectangular block falling from the sky, perfectly fitting between two buildings.

This phenomenon is known as the "Tetris Effect." After staring at the Tetris game interface for so long, the image imprints itself on the volunteers' visual systems—a phenomenon scientists call a "cognitive afterimage." This afterimage makes us unconsciously notice images that resemble Tetris blocks.

The study also revealed that prolonged gameplay alters the neural connections in our brains. Researchers observed that new neural pathways formed in the brains of these volunteers. This reflects a broader principle: many long-term experiences create fixed thinking patterns in our minds.

The first lesson we can learn from this is the power of repetition. Repeated exposure to certain activities or thoughts can shape our neural pathways and influence how we perceive the world. We can harness this effect positively by engaging in beneficial activities or thoughts.

The second lesson is about mental flexibility—our brains are adaptable and can be trained to create new pathways, even in our adult years.

Most importantly, the Tetris Effect teaches us the possibility of creating whatever cognitive afterimage that we want through our own consciously directed practice. Isn't that wonderful!

A Chinese saying, 滴水穿石，非一日之功 (Dī shuǐ chuān shí, fēi yī rì zhī gōng), means: "Constant dripping of water wears through stone, which is not accomplished in a day." The saying emphasizes the impact of one small but constant effort over time, much like how repeated exposure and practice can shape our thoughts, habits, and ultimately, our behavior.

By consciously applying these principles, we can cultivate positive habits, enhance our problem-solving abilities, and reach the goals we set for ourselves.

A few months ago, at the request of a young relative in China, I began teaching English to her 6-year-old daughter. Since she’s family, I didn’t accept any payment, even though she offered.

Before we started, I emphasized to her mother the importance of parental involvement in her learning, especially given the girl's young age. We meet online once a week, but without daily review outside of class, progress would be very limited. I even researched effective methods for teaching English to young children.

To illustrate the importance of consistent practice, I shared examples of American-born Chinese (ABC) kids in the U.S. who attend Chinese school every weekend but speak only English at home. As a result, many struggle to speak Chinese by the time they graduate because they don't practice outside the classroom.

I don’t believe that there’s a shortcut to anything good. A Chinese saying goes, 天下没有免费的午餐 (Tiānxià méiyǒu miǎnfèi de wǔcān), there’s no such thing as free lunch. You have to work hard to earn any progress. I also made this clear to her.

My relative promised to practice with her daughter for at least 10 minutes every day. However, that daily practice rarely happened, with various excuses each time. I couldn’t shake off the feeling that they weren’t taking the commitment seriously, not to speak of any appreciation for my time. That feeling really hurts.

Last week, while visiting my son, I expressed my frustration, feeling that my efforts were wasted because the girl wasn’t learning. He suggested that I speak to the mother and end the lessons, but I wasn’t sure how to approach it politely.

Last Friday, I shared it with other relatives in China. One of them suggested giving the girl a weekly test. If she repeatedly failed, I could use it as a polite reason to step away.

I think this approach makes sense, at least providing a way out of this time-consuming fruitless task if necessary.

I regret not addressing the issue sooner and allowing it to continue longer than necessary. Reflecting on this, I realize that my main mistake was not setting clear expectations from the start. By not communicating my expectations, I inadvertently suggested that I had none and that my time wasn’t valuable. 

We can apply it to elsewhere in life. That is, if I want others to take me and my time seriously, I first need to demonstrate that I take myself seriously. This experience has taught me the importance of setting clear expectations to others.