---
title: "Don't rely too much on historical data to predict the future, 👩‍🏫👋🧐"
type: "Topics"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/topics/39266058.md"
description: "Reading the twelfth chapter of &#34;The Psychology of Money&#34;, my thoughts! I've indeed been quite busy lately, but reading good books must not stop. Time to treat procrastination! Just finished the twelfth chapter &#34;Surprise!&#34;, this chapter is very brilliant. It directly shatters one of the most common cognitive errors we make in investing: over-reliance on historical data to predict the future. Stanford University Professor Scott Sagan once said a sentence worth hanging on the wall for all investors: &#34;Things that have never happened before happen all the time.&#34; 1. Investing is not physics..."
datetime: "2026-03-15T04:48:23.000Z"
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author: "[哆啦A梦の彼女](https://longbridge.com/zh-CN/profiles/12269917.md)"
---

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# Don't rely too much on historical data to predict the future, 👩‍🏫👋🧐

Reading Chapter 12 of "The Psychology of Money" - My thoughts!

I've been quite busy lately, but reading good books must not stop. Time to treat procrastination! 

Just finished Chapter 12, "Surprise!" This chapter is brilliant. It directly shatters one of the most common cognitive errors in investing: over-reliance on historical data to predict the future. Stanford professor Scott Sagan said something worth hanging on every investor's wall:

> "Things that have never happened before are happening all the time."

####  1. Investing is not physics; don't treat historians as prophets

Many see history as a map of the future, a fallacy of "treating historians as prophets." The author points out that geology and medicine are hard sciences; a kidney in 2020 functions exactly as one in 1020 did.

But investing is completely different. It's decisions made by a group of people with limited information who are prone to nervousness, greed, and suspicion. The great physicist Richard Feynman once said, "Imagine how hard physics would be if electrons had feelings." Investors are full of feelings, which is why it's so hard to predict their next move based solely on their past behavior.

#### 2\. Extreme surprises (black swans) are the real drivers of history

If we rely too much on investment history, we miss the "outliers" that truly change the game. The Great Depression, WWII, 9/11, the dot-com bubble... these few extreme events played decisive roles in the economy and stock market. The problem is, these record-breaking events were unprecedented when they occurred. The author cites the example of Japan's Fukushima nuclear plant: it was designed to withstand the worst earthquake in history, but its builders didn't imagine a scenario worse than the historical record.

The author sharply points out, "This is not a failure of analysis, it's a failure of imagination." As Nobel laureate Daniel Kahneman said, when we encounter a surprise, the right lesson shouldn't be "next time I'll guard against this surprise," but a deep recognition that the world is inherently surprising.

#### 3\. Market structures are constantly evolving; using old maps is fatal

History often cannot be a guide to the future because it cannot account for the structural changes in today's world. For example, venture capital (VC) barely existed 25 years ago, and the S&P 500 didn't even include financial stocks before 1976. The most shocking part of this chapter is the analysis of value investing pioneer Benjamin Graham. If you had strictly followed his classic formula from "The Intelligent Investor" to buy stocks over the past decade, you might have only ended up with a bunch of insurance and bank stocks. Probably wouldn't have made a fortune, missing out on the tech boom.

In fact, during Graham's lifetime, due to the changing market environment, he abandoned and replaced his original stock-picking formula as many as five times across different editions of his book. In his later years, he admitted that due to increased competition and technology making information more transparent, he no longer advocated for finding undervalued stocks through complex security analysis.

How should we treat history? The investment world often mocks the famous phrase, "It's different this time." But in reality, the world is always changing, and "it's different this time" is often an objective fact. This doesn't mean we should abandon history.

The author's practical advice is: the further back you look in history, the more "macro" your conclusions should be. Specifically, human relationships with greed and fear, and behavioral patterns under pressure, are stable. This kind of history will always have reference value. However, specific industry trends, particular trades, and the ways capital operates are always evolving. Use history to understand human nature, but never use it to predict price points. Historians are not prophets!

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