Page 69 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

over time things will balance out to a good outcome even if what happens in
between is filled with misery. And in fact you know it will be filled with
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misery. You can be optimistic that the long-term growth trajectory is up and
to the right, but equally sure that the road between now and then is filled

with landmines, and always will be. Those two things are not mutually
exclusive.

The idea that something can gain over the long run while being a basketcase
in the short run is not intuitive, but it’s how a lot of things work in life. By
age 20 the average person can lose roughly half the synaptic connections
they had in their brain at age two, as inefficient and redundant neural
pathways are cleared out. But the average 20-year-old is much smarter than
the average two-year-old. Destruction in the face of progress is not only
possible, but an efficient way to get rid of excess.

Imagine if you were a parent and could see inside your child’s brain. Every

morning you notice fewer synaptic connections in your kid’s head. You
would panic! You would say, “This can’t be right, there’s loss and
destruction here. We need an intervention. We need to see a doctor!” But you
don’t. What you are witnessing is the normal path of progress.

Economies, markets, and careers often follow a similar path—growth amid
loss.

Here’s how the U.S. economy performed over the last 170 years: