Yanwen’s blog

On August 10th and 12th, I shared some thoughts on Morgan Housel's book Same as Ever: A Guide to What Never Changes. Today, I’d like to explore another chapter that particularly resonates with me, titled "Calm Plants the Seeds of Crazy: Crazy doesn't mean broken. Crazy is normal; beyond the point of crazy is normal." This chapter delves into the intriguing relationship between calmness and chaos, stability and disruption, especially within the context of economic cycles.

Housel draws on Hyman Minsky's seminal financial instability hypothesis, which unfolds as follows:

• When an economy is stable, people become optimistic.
• As optimism grows, so does debt.
• As debt accumulates, the economy becomes unstable.

Minsky's key insight is that stability itself is destabilizing. A growing belief in the continuity of good times propels us—like a law of physics—toward eventual disruption.

First, when circumstances are calm or stable, they quietly set the stage for instability. Complacency takes root, leading people to take risks they would otherwise avoid.

Second, rather than viewing craziness as abnormal, Housel suggests that a certain degree of it is inherent to human behavior—indeed, it’s expected. When events move "beyond the point of crazy," it may signal a return to stability, underscoring the cyclical nature of stability and instability.

Third, Minsky's theory posits that economic stability breeds overconfidence. When people feel secure, they are more inclined to take on debt, believing that prosperity will continue indefinitely. Ironically, the very stability they seek is what eventually precipitates economic crises.

A Chinese saying, 物极必反 (wù jí bì fǎn), perfectly encapsulates this dynamic. It means "things will develop in the opposite direction when they become extreme." When a situation reaches its peak or an extreme state, it naturally reverses course. This concept aligns with the idea that prolonged stability can lead to instability, just as chaos can eventually give rise to a new order. It reflects the cyclical nature of many processes in life and in society, where balance is ultimately restored after extremes are reached.

In essence, this chapter illuminates the delicate equilibrium between stability and instability, calm and chaos, prosperity and decline, order and disorder. Stability can paradoxically be destabilizing, sowing the seeds for the next crisis, just as prosperity often carries within it the seeds of decline—good fortune and misfortune are inextricably linked.

A friend of ours from Kansas called me a few days ago, and the conversation has lingered in my thoughts ever since. Her daughter, approaching 40 next year, has established herself as a successful manager in a midsize company. Meanwhile, her husband continues to work as a chef at a local Chinese restaurant, despite having surpassed the full retirement age. Rather than retiring, he has chosen to keep working and delay applying for Social Security benefits.

Most people, given the chance, would have retired by now to savor life while still in good health and able to enjoy it. However, for some people, work offers more than just a paycheck—it provides a sense of purpose and routine that can be hard to relinquish. Others might view delaying Social Security as a strategic financial move, knowing that waiting until age 70 can result in higher monthly payments.

However, while financial security is undeniably important, it’s equally crucial to make time for personal fulfillment. Retirement brings with it the freedom to pursue passions, travel, relax, and immerse oneself in experiences that truly bring joy. For those who are financially prepared, embracing retirement can open doors to new interests, quality time with loved ones, and the opportunity to genuinely enjoy the fruits of their lifetime labor and contribution to society: social security payments.

A Chinese saying, 人生七十古来稀 (Rén shēng qī shí gǔ lái xī), translates to, "It is rare for a person to live to seventy years old." This ancient proverb reflects a time when reaching seventy was a significant and uncommon milestone. Although modern life expectancy far surpasses this age, the wisdom within the saying remains relevant—life is unpredictable. 

Even with advancements in healthcare, there’s value in considering how best to use the time we have, particularly in retirement. We should enjoy life as soon as it’s financially feasible. Life is too short to be spent solely in the pursuit of money or in a job that no longer brings value and satisfaction, especially when one has passed the age where other fulfilling options are still within reach.

Of course, ultimately, the best choice depends on each individual circumstances, including financial needs, health, job satisfaction, and personal values. It’s a balance between preparing for the future and enjoying the present. Let us hope that we can all enjoy the fruits of our labor when the time comes.

As I was preparing for a meeting with one of my Korean students on Tuesday, I thought of recommending a book to her: How Confidence Works: The New Science of Self-Belief by Ian Robertson (2021). The author, a neuroscientist, clinical psychologist, and Professor of Psychology, offers a compelling exploration of the mechanics of confidence.

I’d like to share some ideas about this. Confidence is pivotal to success. Confidence empowers us to take risks, make decisions, and pursue goals with determination. I remember back in 2012 when my son planned to quit his job and started his own company, he said, “I have some savings and if I need money I can always find a job.” That’s confidence.

Confidence also influences how others perceive you, often leading to greater opportunities and support from others. In essence, confidence can be the key that unlocks the door to many great things in life.

This book functions as a practical guide, grounded in social science. It draws on numerous research findings and academic analyses to unravel the mechanisms of confidence. Through a wealth of real-life stories and research data, the author substantiates the logic behind the operation of confidence.

First, the book emphasizes that confidence can be cultivated through learning and practice. As Robertson notes, "Confidence, then, is the words you say to yourself, in part. And given that we can choose what we say to ourselves, we can, to some extent, control our level of confidence."

Second, Robertson dissects the concept of confidence into two core components: (1) Efficacy—the belief that you possess the ability to achieve a desired result, known as "efficacy expectation"; and (2) Outcome Expectation—the belief that taking action will lead to the anticipated change. Confidence, therefore, arises from the combination of these two beliefs: the belief that you can do it and the belief that your efforts will yield the desired outcome. It is only when we trust in our ability to build a bridge to our goal and believe that the bridge will indeed lead us there that confidence is born.

Third, a significant source of confidence is a sense of control, which stems from overcoming challenges. Confidence is built through continuous effort and practice.

Fourth, the author highlights two key elements essential for fostering confidence: attention and a specific goal. The ability to focus on a specific, immediate goal is a crucial prerequisite for confidence. For example, during a competition, confidence may elude you if you are preoccupied with how others perceive you, if you lack a specific goal, or if the goal is too distant or abstract. True confidence emerges when your attention is fully directed at the immediate and specific objective.

A Chinese poem goes like this “自信人生二百年，会当水击三千里” (Zìxìn rénshēng èr bǎi nián, huì dāng shuǐ jī sān qiān lǐ), meaning: with confidence, one can live for two hundred years and ride the waves for three thousand miles." It emphasizes the power of confidence in achieving the unthinkable and overcoming challenges.

Finally, if you aspire to be richer, healthier, smarter, more energetic, and happier, confidence is the key.

Last Saturday, we drove to Nyack, a small village with a population of just over 7,000 in upstate New York. We spent the day exploring the area and had lunch at a Himalayan Tibetan Momo restaurant—our first time trying this cuisine. During our meal, we engaged in a brief conversation with the restaurant owner, who came to the United States in 2009.

This short day trip felt like a refreshing break from our otherwise monotonous daily routine. The experience, being a departure from our usual activities, brought in a sense of freshness and comparison.

The trip also brought to mind Claudia Hammond's book Time Warped: Unlocking the Mysteries of Time Perception and the questions it raises: Why does life seem to speed up as we age? Time appears to accelerate as we grow older because, with the passage of years, we encounter fewer and fewer new experiences—unless we consciously seek them out, like our day trip to Nyack.

For many, a routine life often feels like this: looking back over the past five years, it might seem as though nothing memorable happened beyond the daily cycle of work, home, meals, and sleep. Days, months, and years blur together, leaving little to remember. Naturally, it feels as if time is flying by, devoid of novelty, surprise, and excitement.

One way to slow down time is by embracing new experiences and creating our own surprises. The more varied and unique our experiences, the more time seems to stretch out and slow down.

A Chinese saying, 行万里路，读万卷书 (Xíng wàn lǐ lù, dú wàn juǎn shū), meaning: "Travel ten thousand miles, read ten thousand books." This saying emphasizes the value of new experiences and knowledge in enriching one's life and slowing down the perception of time. Each journey taken and each book read brings with it a sense of wonder and novelty, making life more memorable and fulfilling.

Finally, it is about creating and retaining the richness and freshness of our experience. By seeking out new experiences and stepping off the beaten path, we can add depth, surprises and novelty to our days and savor the moments that might otherwise slip away unnoticed. After all, life is as full as we make it, and time is only as fleeting as we allow it to be.

On August 10th, I shared some reflections on Morgan Housel's book, Same as Ever: A Guide to What Never Changes. There's another chapter I find particularly compelling, titled "It's Supposed to Be Hard," which delves into the true nature of achievement and success. The notion that anything worth pursuing involves a certain degree of difficulty or pain is a sentiment that resonates deeply, especially with those who have faced significant challenges in their personal or professional lives, and also among the first generation of immigrants.

"Everything worth pursuing comes with a little pain. The trick is not minding that it hurts. ... Hacks are appealing because they look like paths to prizes without the effort. But in the real world, those rarely exist."

This passage encapsulates the reality of achievement: it demands significant effort, sacrifice, and perseverance. It's a reminder that success is something to be earned, not handed out, and that no shortcuts can lead to lasting fulfillment or genuine accomplishment.

The idea that "the trick is not minding that it hurts" suggests a mindset rooted in acceptance and resilience. By recognizing that pain, stress, hardship, and uncertainty are inherent parts of the journey, we can maintain our focus on our goals rather than becoming discouraged by inevitable obstacles.

Charles Munger once remarked, "The safest way to try to get what you want is to try to deserve what you want. It's such a simple idea. It's the golden rule. You want to deliver to the world what you would buy if you were on the other end."

Munger's quote underscores the importance of earning what you desire through hard work and integrity. This "golden rule" approach highlights the significance of reciprocity and ethical conduct in the pursuit of meaningful goals.

Housel also addresses the hidden costs of success. The "price" isn't always monetary. More often, it's paid through intangible challenges—stress, risk, uncertainty, and dealing with difficult people or situations. These are the less glamorous, yet very real, aspects of striving for significant goals.

A Chinese saying goes, 成人不自在，自在不成人 (Chéng rén bù zìzài, zìzài bù chéng rén), meaning: To achieve greatness, you have to break from the comfortable zone; to stay in your comfort zone you can’t achieve greatness. The saying emphasizes the idea that personal growth and success often require enduring discomfort and challenges, while seeking comfort alone may prevent one from reaching their full potential.

Finally, Housel offers a realistic perspective on what it truly takes to achieve worthwhile goals. He emphasizes that success is not about finding shortcuts or avoiding difficulties, but about embracing hard work, integrity, and resilience as essential elements of the road to success. Same applies for all immigrants who come here for an American dream.