If past history is all there was to the game, the richest people would be librarians

If past history is all there was to the game, the richest people would be librarians. – Warren Buffett

She might not be able to help you predict the stock market, but I bet she can help you find the archives section.

What does that mean?
Like the disclaimer says, past performance is not an indicator of future returns. The person who said this quote is considered one of the brightest guys on the planet when it comes to the stock market. He’s just saying that the past is the past, and the future is something that cannot be predicted.

He says that if all that there was to making a fortune in the market was past data, the librarians have all that, so they’d all be rich. There is obviously something besides just the past that influences the market’s future. The same is true for people. Their past doesn’t guarantee their future, for good or ill.

Why is perspective important?  
Perspective is a way of how we view things in the present, based on what we know of the past. With the stock market, the librarians know all that has happened in the past. However that doesn’t do much good if you don’t know what’s going on today. Market forces are dynamic, and things are always changing. Static analysis can help tell you what has happened, but it is not too useful for telling you what is going to happen.

The same can be said of people. Good people go bad, and the news is full of them every day. People who knew them before they snapped are often quoted as saying that they seemed so nice. And while their story is rarely considered as newsworthy as the other transformation, there are bad people who reform their lives and go good.

Where can I apply this in my life?
This quote is about the stock market, which goes up and down quite a bit. The past might point to a certain sectors moving in unison, but just because one started up (or down) doesn’t mean you should bet the farm on the rest of the companies in that sector following suit, right?

Similarly, a lot of people bet the farm on Bernie Madoff. He was a nice enough guy, and was handling the money of lots of rich and famous people. He was even promising great returns. What could possibly go wrong? From the perspective of a year or two ago, it probably seemed a good enough deal. Their money was safe with a respected broker. Today, the perspective is a little different, isn’t it?

In short, this quote warns us that things change with time. It warns us that caution is an important part of success. It also implies a lot of other things, mostly that everything changes, and that only what has happened in the past is written in stone.

But what does that have to do with us, if we don’t play the market or have tons of money to invest with a cheat like Madoff? I would ask how many people are blindsided by a divorce request from a spouse? Everything was going the way it was always going, what changed? From the perspective of their mate, it never was all that great, and they got tired of not getting what they needed.

From one perspective, everything is great, from another, it never was even close to great. I would hope that their communication good enough to convey the dissatisfaction before somebody threw in the towel, but it’s not my place to say.

What do you take for granted? What do you assume will always be there, just because it always has been? Are you playing the librarian, betting the farm based on data from the past? I believe that you realize by this point that I think it would be unwise to invest with the librarian.

Grab some paper, think through your life, and write down all the things you rely on. All the things (or people) that have always been there, so you assume they always will be. All the actions that because they always worked, you assume they always will work (and in exactly the same way).

For the people on the list, you might want to make sure that they know you appreciate them, and value their contribution to your life. For the things you rely on, you might want to check to make sure they are in good shape, and that you have a ‘PlanB’ ready just in case. Did anyone list their car or their cell phone? How about family members, friends, & co-workers? Just checking.

What would your life look like without the items (or people) on your list? What would your perspective be a week after the things (or relationships) stopped working? No one wants to wake up to a note on the kitchen table, or turn the ignition key and get nothing. Check your relationships, and check your battery. What’s your perspective?

From: Twitter, @thequote
confirmed at : http://www.brainyquote.com/quotes/quotes/w/warrenbuff149676.html
Photo by Orange County Archives