Tim Ferris @tferriss interviewed Morgan Housel @morganhousel, the renowned author of Psychology of Money, one of the most insightful books on behavioral finance.
We listened to this 3-hour podcast and here are the insights that resonated with us.
A thread ....🧵
We listened to this 3-hour podcast and here are the insights that resonated with us.
A thread ....🧵
1/ On passing wealth to kids
If you are fortunate enough to save money, make sure to pass only enough to have a safety net without giving them fuel for entitlement. As Buffet said, “Leave enough money so they could do anything, but not so much that they could do nothing”
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If you are fortunate enough to save money, make sure to pass only enough to have a safety net without giving them fuel for entitlement. As Buffet said, “Leave enough money so they could do anything, but not so much that they could do nothing”
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2/ On gaming the market
Market cycles are unique. 2020 biological crisis was not the same as 2008 financial crisis. Even the most rational investors gave in to fear and panic. We respond to risk in different ways. Be greedy when others are fearful is easier said than done.
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Market cycles are unique. 2020 biological crisis was not the same as 2008 financial crisis. Even the most rational investors gave in to fear and panic. We respond to risk in different ways. Be greedy when others are fearful is easier said than done.
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3/ On fine vs. fee
There’s a price for everything. The pain an investor endures financially is a fee and not a fine for earning superior returns over time. Thinking of market volatility as a fee to learn the ups and downs of investing can make you a better investor.
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There’s a price for everything. The pain an investor endures financially is a fee and not a fine for earning superior returns over time. Thinking of market volatility as a fee to learn the ups and downs of investing can make you a better investor.
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4/ On value investing
The approach of successful value investors is oversimplified. Their success is an outcome of nuance, gut feel, access to people data and analysis. The formula for value investing continues to evolve, so, what works for one may not work for another.
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The approach of successful value investors is oversimplified. Their success is an outcome of nuance, gut feel, access to people data and analysis. The formula for value investing continues to evolve, so, what works for one may not work for another.
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5/ On definition of risk
People define risk based on the time horizon of their goals. Risks are odds that will prevent you from achieving your goals. Investing debates, are people with different time horizon and risk tolerance talking over each other.
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People define risk based on the time horizon of their goals. Risks are odds that will prevent you from achieving your goals. Investing debates, are people with different time horizon and risk tolerance talking over each other.
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6/ On rational vs. reasonable
Rational financial rules may not be reasonable for you. There's a reason it’s called “Personal Finance” so take reasonable financial decisions if they give peace of mind. Like, paying full mortgage early is reasonable but not rational.
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Rational financial rules may not be reasonable for you. There's a reason it’s called “Personal Finance” so take reasonable financial decisions if they give peace of mind. Like, paying full mortgage early is reasonable but not rational.
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7/ On the universal financial law
People universally desire financial freedom, though people use money to buy more things, instead of buying their freedom and autonomy. The purpose of money should not be to buy more things, but to gain control of your time.
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People universally desire financial freedom, though people use money to buy more things, instead of buying their freedom and autonomy. The purpose of money should not be to buy more things, but to gain control of your time.
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8/ On Morgan’s reliable sources
Dollars and data, Nick Maggiulli @dollarsanddata
Josh Brown, Ritholtz Wealth @RitholtzWealth
Derek Thompson, The Atlantic @DKThomp
Jason Zweig, WSJ @jasonzweigwsj
Carl Richards, The behavior gap
Blair H duQuesnay @BlairHduQuesnay
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Dollars and data, Nick Maggiulli @dollarsanddata
Josh Brown, Ritholtz Wealth @RitholtzWealth
Derek Thompson, The Atlantic @DKThomp
Jason Zweig, WSJ @jasonzweigwsj
Carl Richards, The behavior gap
Blair H duQuesnay @BlairHduQuesnay
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9/ On book recommendations
The Science of Fear by Jason Zweig
amazon.com/Science-Fear-C…
Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich
amazon.com/Your-Money-Bra…
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The Science of Fear by Jason Zweig
amazon.com/Science-Fear-C…
Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich
amazon.com/Your-Money-Bra…
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Did you know that "The Psychology of Money" by @morganhousel is #1 Best Seller in Wealth Management category at Amazon?
Check out this thread on the 5 life and money lessons from this book
Check out this thread on the 5 life and money lessons from this book
https://twitter.com/relaytime/status/1493966814728138752?s=20&t=vLiU_IW_l7bWhdy0NDp4Vw
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Link to the full podcast -
#financialfreedom, #wisdom, #financialeducation, #podcast, #mindset #frugal #smart
#financialfreedom, #wisdom, #financialeducation, #podcast, #mindset #frugal #smart
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