Page 39 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

genius, try to learn from his successes,” to “Rockefeller was a criminal, try
to learn from his business failures.” Very little.
COBACOBA

“What do I care about the law?” Vanderbilt once said. “Ain’t I got the
power?”

He did, and it worked. But it’s easy to imagine those being the last words of

a story with a very different outcome. The line between bold and reckless
can be thin. When we don’t give risk and luck their proper billing it’s often
invisible.

Benjamin Graham is known as one of the greatest investors of all time, the
father of value investing and the early mentor of Warren Buffett. But the
majority of Benjamin Graham’s investing success was due to owning an
enormous chunk of GEICO stock which, by his own admission, broke
nearly every diversification rule that Graham himself laid out in his famous

texts. Where does the thin line between bold and reckless fall here? I don’t
know. Graham wrote about his GEICO bonanza: “One lucky break, or one
supremely shrewd decision—can we tell them apart?” Not easily.

We similarly think Mark Zuckerberg is a genius for turning down Yahoo!’s
2006 $1 billion offer to buy his company. He saw the future and stuck to his
guns. But people criticize Yahoo! with as much passion for turning down its

own big buyout offer from Microsoft—those fools should have cashed out
while they could! What is the lesson for entrepreneurs here? I have no idea,
because risk and luck are so hard to pin down.

There are so many examples of this.

Countless fortunes (and failures) owe their outcome to leverage.

The best (and worst) managers drive their employees as hard as they can.

“The customer is always right” and “customers don’t know what they want”
are both accepted business wisdom.

The line between “inspiringly bold” and “foolishly reckless” can be a
millimeter thick and only visible with hindsight.