
Back when the quickest way to transport horses from one place to another was by boat, ship captains had to beware. Transporting inanimate objects was simple: you load the cargo on the ship, sail to your destination, and unload.

But it was a different story when cargo was alive, and horses were one of the most worrisome.

When a ship transported horses, they were stored in the bottom of a cargo hold, so the slightest wake from a passing ship or an unexpected wave could send the army of galloping creatures into a frenzy.

A wake from a passing boat could cause one of the ship’s sides to dip, startling the horses on that side. In response, they’d take a big step back, trying to balance themselves. This sudden movement startled the horses on the other side, causing them to take a step back for balance, which caused another sudden movement and startled the horses on the original side, who would then take a step back and…

This continuous back-and-forth was called a “horse storm,” and it would cause a ship to rock back and forth violently. Though it never managed to capsize a ship, it could damage a dock or a ship if a horse storm happened while the ship was docked.

Humans are the same way.

When something unexpected happens, our reactions can often make the situation worse. When the situation gets worse, we respond poorly again, making a not-so-bad situation into an absolutely terrible one.

Before you react to unexpected news, let the ship settle.

Don’t create a horse storm.

---

I first learned about a “horse storm” in [Dead Wake](https://a.co/d/eRn64xE).

Don't Create a Horse Storm

Here are three lessons I learned from reading *The Devil in the White City,* a book on the construction of the Chicago World’s Fair (juxtaposed with a suave, murderous criminal), on human psychology and project management.

## 1. You will always be compared to what came before

Four short years before the Chicago World’s Fair, the French had their turn. At the Paris exhibition of 1889, they unveiled the Eiffel Tower–a majestic display of creativity and ingenuity.

America’s pride was hurt. Everyone in America thought they were the most creative and ingenious country. To be outshone by the French was an embarrassment. Chicago would help reignite its spirits.

But trying to “out Eiffel the Eiffel,” as the goal came be to known, would not be easy.

Chicago had to either beat the extravagance of the tower or be humiliated, bringing disgrace and shame upon America.

An interview in the *Chicago Tribune* captures the consensus at the time:

> The most marvelous exhibit of modern times or ancient times has now just closed successfully at Paris. Whatever you do is to be compared with that. If you equal it you have made a success. If you surpass it you have made a triumph.

If you fall below it you will be help responsibly by the whole America people for having assumed what you are not equal to.
>

**Lesson:** **If you try to imitate something that people have already experienced, you can’t just “build a taller tower.”** Your product, your offering, your service, has to be as new and unique as anything that came before, lest it just be compared to just trying to build a taller tower in a race to “out Eiffel the Eiffel.”

Chicago’s big unveiling was the Ferris Wheel. It was something so different and new that it captured people’s imagination in a unique way. The Eiffel Tower, though it was still an amazing feat of architecture, didn’t spin 2,000 people around in a circle. Chicago had successfully out Eiffled the Eiffel.

## 2. Simple and done well is better than extravagant and rushed

Rain was a menace to the fair. It would wash away the wet paint on buildings and ornate plants of the landscape that were already in the ground.

Frederick Olmstead, the chief architect of the fair, gave sound advice to his crew:

> Do not lay out to do anything in the way of decorative planting that you shall not be quite certain that you will have ample time and means to perfect of its kind. There be can little fault found with simple, neat turf. Do not be afraid of undecorated, smooth surfaces.
>

**Lesson: When a deadline is looming, do the best you can with the time you have, and don't overcommit.** There's nothing wrong with simple.

A good plan done well is better than a great plan done poorly.

## 3. When creating a scene or display, every detail matters

Olmstead, the landscape architect, insisted on not having steamboats on the fair’s waterways, even though they would be more efficient.

He wrote:

> Put in the waters unbecoming boats and the effect would be utterly disgusting, destroying the value of what would otherwise be the most valuable original feature of this Exposition.
>

**Lesson: Small details have a big impact. When they're done right, they create an extravagant scene. When ignored, they ruin it.**

Sometimes, you have to bite the bullet and spend more, or take the less efficient route, to create a great atmosphere or product.

Compliment this with my [book notes from ***********Devil in the White City](https://www.dltn.io/posts/devil-in-the-white-city)* or the founding President of Stanford’s [thoughts on education, politics, and life](https://www.dltn.io/posts/david-starr-jordan-on-life-education-and-politics).


3 Lessons on Human Psychology and Project Management

One Sentence Summary
--------------------

Tipping Points can be caused by the right people, with the right information, in the right context; all we have to do is find those variables.

Two Main Takeaways
------------------

1.  If content isn't sticking or getting through to an audience, don't change the content. Change the way the content is delivered.
2.  Having a clean work space, providing a loving home, being in a nice, clean neighborhood, and enjoying where we work - anything about our environment has a much more dramatic impact than what we think or what we say.

Chapter 1: The Three Rules of Epidemics
---------------------------------------

-   Epidemics are the function of people who transmit infectious agents, the infectious agent itself, and the environment in which the infectious agent is operating
-   The Tipping Point is the moment of Critical mass, the threshold, the boiling point
-   The Law of the Few -
-   One very influential persons hops on a trend, or gets a lot of people sick, starting the epidemic.
-   The Stickiness Factor -
-   There are specific ways of making information memorable. Simple changes can be made to the presentation and how information is structured that make a *huge* difference on the impact of the message
-   The Power of Context -
-   The context in which people incur a stimuli has a massive impact on how that person responds - not necessarily the stimuli itself.
-   *Humans are a lot more sensitive to the environment than we think.*

Chapter 2: The Law of the Few
-----------------------------

-   There are very few people who have enough influence and impact to tip an epidemic. But those who do, start waves in things they pursue.
-   The messenger matters. They're the ones who make something stick

Chapter 3: The Stickiness Factor
--------------------------------

-   Sesame Street started telling stories more and in the stories were lessons taught. They found the more they taught things in narrative form, the more kids remembered the lessons
-   The ideas in Sesame Street were not profound. Instead, the understood how they presented the messages and lessons was what meant a kid remembering the lesson or not. Changing the way information is presented can have a massive impact on how well things stick.
-   There are people out there who can start epidemics, you just have to find them - The Law of the Few. There is also certain ways to package information that makes it irresistible and will move people to action, you just have to find out what that is - The Stickiness Factor

The Power of Context (Part One)
-------------------------------

-   The Broken Window Theory - Criminologist James Q. Wilson and George Kelling; Argued that crime is the result of disorder. Therefore, if broken windows in homes go un repaired for certain lengths of time, people will assume there is no order and crime will be inevitable.
-   Following that rule, epidemics can be tipped by tinkering with the smallest form of environment or context
-   Fundamental Attribution Error - When interpreting other people's behavior, humans overestimate character traits, and underestimate the importance of the situation and context one is in.
-   *The best person in the world could steal money if in the right circumstance and context. On the opposite end, the worst person in the world could change depending on the situation and circumstance they're in.*
-   The immediate context of behavior is more important than the context of your thoughts

The Power of Context (Part Two)
-------------------------------

-   Small, close-knit groups have the power to magnify the epidemic of a potential message or idea.


The Tipping Point by Malcolm Gladwell

## Impressions

*I didn't really know what to think of this book before I started reading it. I really like Morgan Housel's blogs and so it was a no brainer whether or not to buy his book when it came out. I was pleasantly surprised with the actionable insights and takeaways for managing money. Though the focus is mainly on the psychology, as you could imagine, it does give some practical tips.*

*This book would pair well with [Ramit Sethi's I Will Teach You To Be Rich.](https://www.iwillteachyoutoberich.com/) Housel's book gives some psychological factors to think about and Sethi gives more practical advice on how to actually manage your money.*

## Actionable Takeaways
1. Just because you say you will do something when everything goes to hell doesn't mean you actually will. It's easy to *say* you'll buy when the market crashes and there is blood in the streets. But it's a totally different thing to actually do that when your portfolio is down 35% in one day.
2. Usually when people think about the market crashing 30%, they *only* think about the market crashing 30%. The problem with that is that when the market actually crashes 30%, it's because there is a massive deadly pandemic or a horrific terroist attack.
3. Managing money well is all about behavior.
4. Every decision someone makes, makes sense to them at the time. If you're baffled at how someone is behaving, try to think like they do. No one makes a decision thinking, "This makes no sense to me but I'm going to do it."
5. Good investing isn't getting crazy high, one-off returns. Instead, it's getting pretty average returns for an absolutely unbelievable amount of time.
6. Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.
7. Saving is as much psychological as it is tactical. Yes it requires you to physically put money away in an account somehow, but it also requires that you spend less. And you can't spend less if you're worried about what other people think of you.
8. Just because something hasn't happened before doesn't mean it can't happen. No one expected The Great Depression until it did. No one assumed WW2 would break out until it did. Don't use history, or the lackthereof as a predictor of future catastrophes. The future will most likely be much worse.
9. If you make too little money, you will never be able to retire. If you make too much money, you regret working so hard all of those years. The solution? Stay in the middle.
10. Not everyone is playing the same game. And one when group of people playing for a certain outcome get their moves and tactics from another group of people playing for a different outcome, the result is catastrophic.
11. Wealth is created by suppressing what you could buy today in order to have more stuff or more options in the future.
12. Use the money you earn to buy control over your time. Because the ability to do what you want, when you want, with who you want, is the biggest wealth benefit of all.

## Quotes
- "History never repeats itself. Man always does."
- "Be careful who you praise and admire. Be careful who you look down upon and wish to avoid becoming."
- "Getting money is one thing. Keeping it is another."
- "“It’s not whether you’re right or wrong that’s important,” George Soros once said, “but how much money you make when you’re right and how much you lose when you’re wrong.” You can be wrong half the time and still make a fortune."
- "But doing something you love on a schedule you can’t control can feel the same as doing something you hate."
- "Every bit of savings is like taking a point in the future that would have been owned by someone else and giving it back to yourself."
- "The historical odds of making money in U.S. markets are 50/50 over one-day periods, 68% in one-year periods, 88% in 10-year periods, and (so far) 100% in 20-year periods. Anything that keeps you in the game has a quantifiable advantage."
- "A good rule of thumb for a lot of things in life is that everything that can break will eventually break
- "Bubbles do their damage when long-term investors playing one game start taking their cues from those short-term traders playing another."
- "Growth is driven by compounding, which always takes time. Destruction is driven by single points of failure, which can happen in seconds, and loss of confidence, which can happen in an instant
- "Expecting things to be bad is the best way to be pleasantly surprised when they’re not."
- "Coming to terms with how much you don’t know means coming to terms with how much of what happens in the world is out of your control."
- "Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness. The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividend that exists in finance."
- "I can afford to not be the greatest investor in the world, but I can’t afford to be a bad one."

## Bonus (Stories, illustrations, & things that made me go wow.)
- A quote about another partner Warren Buffett did business with and how he wanted to get rich quick:
	 > Warren, Charlie, and Rick made investments together and interviewed business managers together. Then Rick kind of disappeared, at least relative to Buffett and Munger’s success. Investor Mohnish Pabrai once asked Buffett what happened to Rick. Mohnish recalled: [Warren said] “Charlie and I always knew that we would become incredibly wealthy. We were not in a hurry to get wealthy; we knew it would happen. Rick was just as smart as us, but he was in a hurry.” What happened was that in the 1973–1974 downturn, Rick was levered with margin loans. And the stock market went down almost 70% in those two years, so he got margin calls. He sold his Berkshire stock to Warren—Warren actually said “I bought Rick’s Berkshire stock”—at under $40 a piece. Rick was forced to sell because he was levered.
- > In Pharaonic Egypt … scribes tracked the high-water mark of the Nile and used it as an estimate for a future worst-case scenario. The same can be seen in the Fukushima nuclear reactor, which experienced a catastrophic failure in 2011 when a tsunami struck. It had been built to withstand the worst past historical earthquake, with the builders not imagining much worse—and not thinking that the worst past event had to be a surprise, as it had no precedent.
