The Hidden Chain: Unexpected Events That Shape the World

Why investment lessons also apply to everyday life
Many principles we learn from investing — managing risk, preparing for surprises, not clinging blindly to past success, avoiding emotional decisions — are equally useful in daily life. Whether in financial decisions, relationships, or career choices, the factors that move us forward or hold us back come from the same source: human behavior, expectations, and uncertainty. That’s why lessons from investing aren’t just for finance; they serve as a reliable compass for life as well.
Stanford professor Scott Sagan once said something every economist and investor should remember:
“Things that have never happened before happen all the time.”
History helps us adjust expectations, understand where people usually go wrong, and gives us a rough guide — but it is never a map of the future. A major trap for many investors is over-relying on past data, even though the main drivers of progress are innovation and change.
Investing is not an exact science. People make decisions affecting their well-being with incomplete information, and emotions — fear, greed, doubt — inevitably enter the picture. That’s why predicting investor behavior solely through past patterns is extremely difficult.
We also tend to glorify people who lived through certain unique events. But experiencing something exceptional does not create superior forecasting ability — it often creates overconfidence instead.
1. The danger of over-trusting the past
The events that shape history are usually rare, extreme, and surprising — world wars, crises, technological revolutions. A handful of “abnormal” events can direct entire economic systems. Even a few individuals not being born could have radically changed today’s world economy.
Surprises trigger chain reactions — for example:
9/11 → Fed rate cuts → housing bubble → financial crisis → weak job market → millions rushing into universities → $1.6 trillion student-loan problem.
The key lesson:
The worst and best events of the past will not be the worst and best events of the future.
Future outcomes will be shaped by events we have never seen before.
2. History is valuable, but it does not capture the structural shifts of the modern world
Legendary investor Benjamin Graham offered practical formulas, yet he repeatedly updated them because markets kept evolving:
•  competition grew,
•  information became more accessible,
•  the economy shifted from industry to technology,
•  market behavior changed.
Therefore, blindly applying decades-old formulas doesn’t work today.
The smartest approach:
The most useful history for predicting the future is the history of recent years.
Because its structure, pace, and technology resemble our current world.
What lessons should we take — and not take — from history?
We should keep:
•  human reactions to greed and fear
•  behavior under pressure
•  attitudes toward risk
These change very little over time.
We should not rely on:
•  specific sector trends
•  concrete investment formulas
•  past market patterns
Because the economy is like a living organism — always evolving.
Conclusion
Historians are not prophets, and history is not a roadmap. The world is full of surprises, and the real lesson is simple:
We know far less about the future than we like to believe.
How to think about — and prepare for — the future will be explained in the other article.