Podcast Summary
Impact of high expectations on happiness and performance: High expectations can lead to intense pressure and dissatisfaction, even when things are going well. Keep expectations in check and appreciate the journey.
Expectations, whether personal or corporate, can significantly impact our happiness and performance. The feeling of winning and prosperity can be intoxicating, but the high expectations come with a debt that must be constantly repaid. This was evident with Amazon in 2021, when the company was at the top of the world and expectations were sky-high. However, when the results were merely good instead of extraordinary, the mood shifted dramatically. This "expectations debt" can lead to intense pressure and dissatisfaction, even when things are going well. It's a reminder that while we may strive for success and prosperity, it's important to keep our expectations in check and appreciate the journey, not just the destination.
Japanese Stock Market's Complex History of Boom and Bust Cycles: The Japanese stock market's recent return to an all-time high masks a complex history of extraordinary growth followed by long-term underperformance due to high expectations of the 1990s acting like a debt.
The Japanese stock market's recent return to an all-time high after 33 years should be viewed with a nuanced perspective. While it could be seen as a win, it could also be considered a long-term underperformer. What sets the Japanese market apart is the significant difference in returns before and after 1990. The Nikkei saw extraordinary growth from 1965 to 1990, with an average annual return of around 14%. However, since then, it has barely kept pace with inflation, returning 0% over the last 33 years. This period of poor performance can be seen as a repayment of the excess returns earned during the 1960s, 70s, and 80s. The high expectations of the 1990s acted like a debt that anchored investors, destroying wealth for decades before it was finally paid off. So, while the Nikkei is back at an all-time high, the long-term perspective reveals a complex history of boom and bust cycles.
The cost of unrealistic aspirations: psychological debt: Unmet expectations can lead to negative emotions and self-doubt. Aligning aspirations with reality can prevent psychological debt and contribute to overall happiness.
Desiring or acquiring assets, valuations, salaries, or lifestyles that exceed what we truly deserve can lead to a hidden psychological debt. This debt, often ignored, can manifest in self-doubt, crushed morale, or other negative emotions when reality catches up. This concept, rooted in stoicism, emphasizes the importance of aligning our expectations with reality to avoid the potential consequences of unrealistic aspirations. Elon Musk's story with Charlie Munger illustrates this idea. Despite Munger's predictions of Tesla's failure, Musk believed in the endeavor, acknowledging the potential for failure but finding value in the experience. Munger, in a different context, shared his secret to living a happy life: low expectations. This advice aligns with the concept of psychological debt, suggesting that setting realistic expectations can lead to greater contentment and resilience. In essence, striving for what we truly deserve helps us avoid the potential negative consequences of unrealistic aspirations, while maintaining a realistic outlook on life can contribute to overall happiness.
Expectations and adaptability for happiness and success: Having realistic and adaptable expectations is crucial for finding happiness and success in life. Elon Musk and Charlie Munger emphasized the importance of this mindset, with Musk encouraging worthwhile endeavors and Munger warning against unrealistic expectations. Both men highlighted the power of low expectations for greater resilience and adaptability.
Having realistic and adaptable expectations is crucial for finding happiness and success in life. Elon Musk and Charlie Munger, despite their different approaches, both emphasized the importance of this mindset. Musk encouraged trying worthwhile endeavors, even if they may fail, as part of the natural process of achieving success. Munger warned against unrealistic expectations, which can lead to disappointment and misery due to the volatile and complex nature of the world and the tendency of progress to move the goalposts. Both men highlighted the power of having low expectations, which may seem counterintuitive, but actually allows for greater resilience and adaptability. Musk's example of SpaceX's Starship and its unconventional landing method illustrates the importance of being open to new approaches and willing to adapt in the face of challenges. By focusing on reasonable expectations and remaining adaptable, individuals can better navigate the ups and downs of life and find greater happiness and success.
Embracing Failure for Long-Term Success: Having low expectations and being prepared for frequent failures can increase the odds of long-term success. Elon Musk's approach to ambitious projects demonstrates that higher risk does not always mean higher rewards, but rather a greater prevalence of failure with the potential for significant rewards.
Having low expectations and being prepared for frequent failures can increase the odds of long-term success, as demonstrated by Elon Musk's approach to his ambitious endeavors. Musk, known for his ambitious projects with SpaceX and Tesla, often acknowledges that not every attempt will succeed. He emphasizes that higher risk does not necessarily mean higher returns, but rather a greater prevalence of failure with the potential for significant rewards. This mindset, which Musk applies to both his personal endeavors and the broader business world, allows individuals to persist through setbacks and eventually achieve success. This concept is not exclusive to entrepreneurial "maniacs" like Musk, but applicable to ordinary people as well. In the stock market, for instance, a few companies typically generate the majority of returns, while the majority of companies experience okay to disastrous returns. Embracing this perspective can help individuals stay resilient and focused on their long-term goals.
Appreciating advancements instead of constantly striving for more: Recognizing and appreciating current advancements can lead to greater happiness than constantly chasing after more.
Having low expectations can lead to greater appreciation for life's improvements. John D. Rockefeller, the richest man in 1924, lacked many modern conveniences we now consider necessities. However, most people today would not trade their average lives for Rockefeller's immense fortune. The key is to recognize and appreciate the advancements we have, rather than constantly striving for more. As Louis C.K. put it, "everything is amazing, and nobody is happy." To counteract this, maintaining low expectations can help us find joy in the small improvements and prevent us from taking our current circumstances for granted.
Appreciating small gains and supporting others: Focusing on small wins and supporting others can lead to a more fulfilling life, preventing comparison and discouragement.
Appreciating small gains and not getting discouraged by bad news can lead to a more fulfilling life. It's easy to fall into the trap of comparing ourselves to others and setting expectations based on what's normal, but doing so can prevent us from fully enjoying the progress we make. A healthy relationship, much like personal growth, thrives when both parties focus on helping each other without expecting anything in return. By adopting this mindset, we can be pleasantly surprised by the positive outcomes in our lives. My friend Brent Beshore's theory on marriage, which emphasizes mutual support and selflessness, can serve as a model for various aspects of life. Don't let the fear of missing out or the weight of setbacks hinder your progress. Instead, strive to find joy in the little wins and support those around you, and you'll be amazed at the progress you make.
