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The Psychology of Money is the culmination of more than a decade of thinking and writing from @morganhousel.
I enjoyed it as much as I enjoy reading his articles every week.
These are my favorite points from every chapter.
THREAD/
I enjoyed it as much as I enjoy reading his articles every week.
These are my favorite points from every chapter.
THREAD/
1/No One’s Crazy
You know stuff about money I don’t.
You go through life with different beliefs, goals, and forecasts than I do.
It’s not because one of us is smarter. It’s because we’ve had different lives shaped by different and equally persuasive experiences.
You know stuff about money I don’t.
You go through life with different beliefs, goals, and forecasts than I do.
It’s not because one of us is smarter. It’s because we’ve had different lives shaped by different and equally persuasive experiences.
2/Luck & Risk
Every outcome in life is guided by forces other than individual effort.
“Incomes among brothers are more correlated than height and weight.”
“The line between ‘inspiringly bold’ and ‘foolishly reckless’ can be a millimeter thick and only visible with hindsight.”
Every outcome in life is guided by forces other than individual effort.
“Incomes among brothers are more correlated than height and weight.”
“The line between ‘inspiringly bold’ and ‘foolishly reckless’ can be a millimeter thick and only visible with hindsight.”
3/Never Enough
“There is no reason to risk what you have and need for what you don’t have and don’t need.” – Warren Buffett
“The hardest financial skill is getting the goalpost to stop moving.”
“There is no reason to risk what you have and need for what you don’t have and don’t need.” – Warren Buffett
“The hardest financial skill is getting the goalpost to stop moving.”
4/Confounding Compounding
Good investing isn’t about the highest returns.
Good investing is about earning pretty good returns that you can stick with and repeat for the longest period of time.
Good investing isn’t about the highest returns.
Good investing is about earning pretty good returns that you can stick with and repeat for the longest period of time.
5/Getting Wealthy vs. Staying Wealthy
“A plan is only useful if it can survive reality. And a future filled with unknowns is everyone’s reality…
The more you need specific elements of a plan to be true, the more fragile your financial life becomes.”
“A plan is only useful if it can survive reality. And a future filled with unknowns is everyone’s reality…
The more you need specific elements of a plan to be true, the more fragile your financial life becomes.”
6/Tails, You Win
“You can be wrong half the time and still make a fortune.”
“It’s not whether you’re right or wrong that’s important but how much money you make when you’re right and how much you lose when you’re wrong.” – George Soros
“You can be wrong half the time and still make a fortune.”
“It’s not whether you’re right or wrong that’s important but how much money you make when you’re right and how much you lose when you’re wrong.” – George Soros
7/Freedom
“Control over doing what you want, when you want to, with the people you want to, is the broadest lifestyle variable that makes people happy...
Doing something you love on a schedule you can’t control can feel the same as doing something you hate.”
“Control over doing what you want, when you want to, with the people you want to, is the broadest lifestyle variable that makes people happy...
Doing something you love on a schedule you can’t control can feel the same as doing something you hate.”
8/Man in the Car Paradox
“If respect and admiration are your goal, be careful how you seek it. Humility, kindness, and empathy will bring you more respect than horsepower ever will.”
“If respect and admiration are your goal, be careful how you seek it. Humility, kindness, and empathy will bring you more respect than horsepower ever will.”
9/Wealth is What You Don’t See
“Wealth is the financial assets that haven’t yet been converted into the stuff you see…
Its value lies in offering you options, flexibility, and growth to one day purchase more stuff than you could right now.”
“Wealth is the financial assets that haven’t yet been converted into the stuff you see…
Its value lies in offering you options, flexibility, and growth to one day purchase more stuff than you could right now.”
10/Save Money
“Savings can be created by spending less.
You can spend less if you desire less.
And you will desire less if you care less about what others think of you.”
“Savings can be created by spending less.
You can spend less if you desire less.
And you will desire less if you care less about what others think of you.”
11/Reasonable > Rational
“In the real world, people do not want the mathematically optimal strategy.
They want the strategy that maximizes for how well they sleep at night.”
“In the real world, people do not want the mathematically optimal strategy.
They want the strategy that maximizes for how well they sleep at night.”
12/Surprise
“Things that have never happened before happen all the time.” – Scott Sagan
“The correct lesson to learn from surprises is that the world is surprising.”
“Things that have never happened before happen all the time.” – Scott Sagan
“The correct lesson to learn from surprises is that the world is surprising.”
13/Room for Error
“You have to plan on your plan not going according to plan…
Few financial plans that only prepare for known risks have enough margin of safety to survive the real world.”
“You have to plan on your plan not going according to plan…
Few financial plans that only prepare for known risks have enough margin of safety to survive the real world.”
14/You’ll Change
The End of History Illusion:
The idea that people are aware of how much they’ve changed but underestimate how much their personalities, desires, and goals are likely to change in the future.
The End of History Illusion:
The idea that people are aware of how much they’ve changed but underestimate how much their personalities, desires, and goals are likely to change in the future.
15/Nothing’s Free
“Every job looks easy when you’re not the one doing it because the challenges faced by someone in the arena are often invisible to those in the crowd.”
“Every job looks easy when you’re not the one doing it because the challenges faced by someone in the arena are often invisible to those in the crowd.”
16/You & Me
Investors often innocently take cues from other investors who are playing a different game…
Assets can’t have one rational price in a world where investors have different goals and time horizons.
Investors often innocently take cues from other investors who are playing a different game…
Assets can’t have one rational price in a world where investors have different goals and time horizons.
17/The Seduction of Pessimism
a) Money is ubiquitous. Something bad happening affects everyone.
b) Pessimists extrapolate present trends without accounting for how markets adapt.
c) Progress happens too slowly to notice, but setbacks happen too quickly to ignore.
a) Money is ubiquitous. Something bad happening affects everyone.
b) Pessimists extrapolate present trends without accounting for how markets adapt.
c) Progress happens too slowly to notice, but setbacks happen too quickly to ignore.
18/When You’ll Believe Anything
“The biggest risk is that you want something to be true so badly that the range of your forecast isn’t even in the same ballpark as reality.”
“The biggest risk is that you want something to be true so badly that the range of your forecast isn’t even in the same ballpark as reality.”
19/All Together Now
•Less ego, more wealth.
•Use money to gain control over your time.
•Worship room for error.
•To do better as an investor, increase your time horizon.
•You can be wrong half the time and still make a fortune.
•Less ego, more wealth.
•Use money to gain control over your time.
•Worship room for error.
•To do better as an investor, increase your time horizon.
•You can be wrong half the time and still make a fortune.
20/Confessions
“I’m saving for a world where curveballs are more common than we expect…
I can afford to not be the greatest investor in the world, but I can’t afford to be a bad one.”
“I’m saving for a world where curveballs are more common than we expect…
I can afford to not be the greatest investor in the world, but I can’t afford to be a bad one.”
If you enjoyed these, make sure to check out my curation of Morgan's best work: https://josephcwells.com/curations/morgan-housel
