Dec 10, 2020
As author and financial expert Morgan Housel explains this
episode, “people don't make financial decisions on a spreadsheet.
They make financial decisions at the dinner table.” Today we chat
to Morgan about his key insights into financial decision-making —
many of which are captured in his book, The Psychology
of Money. Our conversation opens with an exploration of how
investing success has less to do with what you know and more to do
with how you manage your behaviour. We then look into the dangers
of emulating top investors and how luck can fuel success.
Reflecting the theme that people invest according to their unique
circumstances, Morgan shares why he prioritizes endurance as an
investor by minimizing his debt and having high cash reserves.
After hearing his take on debt and whether young people should use
leverage, we dive into how financial expectations impact investing
and the importance of deciding what ‘enough’ means to you. We
discuss the virtues of saving like a pessimist and investing like
an optimist before looking into the role that financial advisors
play in guiding their clients. In the latter part of the end of the
episode, Morgan touches on active versus passive investing, the
purpose that bonds serve in your portfolio, his top lesson from
2020, and why he’s empathetic toward people who sell their
portfolios during a downturn. Throughout our discussion, Morgan
shares his clear understanding of how our psychology affects our
relationship to money. Tune in and benefit from his incredible
Key Points From This Episode:
- Introducing today’s guest, financial author Morgan Housel.
- Morgan shares his view that succeeding in investing has little
to do with how you behave. [0:02:31]
- Hear about the problems that can arise from trying to emulate
top investors. [0:05:02]
- Exploring the impact of luck on your success.
- The differences between being conservative and having a margin
of safety. [0:08:35]
- Insights into Morgan’s personal investing strategy.
- Morgan’s thoughts on leverage and how debt impacts behaviour
and peace of mind. [0:10:31]
- Stepping off the hedonic treadmill and the importance of
defining your financial expectations.
- The link between money, independence, and having a high quality
of life. [0:16:44]
- What it means to be wealthy and what motivates the drive to be
- Morgan’s advice to save like a pessimist and invest like an
- Why no one makes perfectly rational investing decisions.
- The role of financial advisors in guiding clients towards their
investing decisions. [0:26:22]
- Why Morgan has embraced the simplest investing strategy
available to him. [0:29:02]
- How you should be thinking about fixed income in your
- Why financial advisors can be priceless when understanding your
finances and goals. [0:33:44]
- Life is surprising; hear why this is Morgan’s top takeaway from
- Morgan’s thoughts on the FIRE Movement and retiring early in
- Hear Morgan’s predictions on the next big financial innovation.
- Why Morgan is empathetic towards people who sell their
portfolios during a downturn. [0:43:50]
- The tendency for people to embrace more extremist views during
times of financial crisis. [0:47:34]
- We ask Morgan how he defines success in his life.