The Role of Fear and Introspection in Investment Decisions

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Morgan Housel (@morganhousel) is a partner at the Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He serves on the board of directors at Markel Corporation. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism.

His book The Psychology of Money has sold more than one million copies and has been translated into more than 30 languages.

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Warren Buffett vs. Jim Simons. [06:43]

What do people get wrong about the partnership between Warren Buffett and Charlie Munger? [13:45]

The size is the strategy. [16:59]

Six years after writing his “Financial Advice for My New Son” article for The Motley Fool, are there any points Morgan would add or amend? [20:27]

While there’s no way of knowing what kind of adults our kids will grow up to be, how might we instill in them the value of money and the ability to control how it affects their lives? [23:43]

What unorthodox career decision did Morgan’s father make in his 30s, and how did the family’s life change as a result? How did earlier lessons of frugality give Morgan’s parents more options later on than their more steadily affluent peers? [28:28]

How Morgan’s career path meandered from Denny’s greeter to investment banker to reluctant writer. [34:18]

After finally hitting his stride as a writer at The Motley Fool, what compelled Morgan to join the Collaborative Fund team? [42:15]

What’s a Markel and how did Morgan get involved with it? What was it hoped he could bring to the table there? [49:07]

How does Morgan approach risk? [56:32]

What “fin tweet” game is Morgan playing, and what are the rules? Who are the top players in this space, and what makes them worth your attention no matter the medium? [58:59]

Investors Morgan respects — even if he wouldn’t try to emulate them. [1:03:33]

Don’t beat yourself up too badly if you’ve ever been gamed by the market. Even Warren Buffett still makes mistakes. But would his younger version have made the same decisions he makes today? What made the early days of the pandemic such an uncertain time for even the most seasoned investors — Buffett and Housel alike? [1:09:37]

Sometimes it’s the counterintuitive bets that elevate an investor into deity or demigodhood in the pantheon of the money-minded — whether it’s Benjamin Graham, Walt Disney, or Michael Moritz. [1:19:11]

Notes on leverage and the “buy, borrow, die” approach to investing, and making sense of conflicting, diametrically opposed advice from seemingly intelligent, rational parties with differing opinions. [1:28:37]

Sometimes peace of mind matters more than profit. [1:33:44]

Is it better to be an antediluvian penny pincher who dies rich, or a high-roller who casts fistfuls of dollars into the sea only to pass away penniless? Maybe the middle ground is healthier than either extreme. [1:36:01]

How does Morgan recommend someone of means ensure their children don’t grow up to be horrible, entitled, and generally useless to society? [1:40:13]

Biographies and memoirs Morgan recommends (and what they can teach us about current events). [1:48:19]

How can you increase the likelihood that you will not respond in moments of panic by doing what cripples you financially? Morgan weighs in. [1:52:26]

In Morgan’s experience, how does someone who comes into money effectively allow themselves to enjoy it without succumbing to the all-too-common temptation to sink it all under a mountan of status symbols nobody really cares about? For his own part, what does his financial comfort allow him to enjoy, and how does he scratch the itch when he’s pestered by such temptations? [1:57:27]

Preparing for financially bumpy long hauls, and “understanding the difference between a fee and a fine.” [2:07:15]

A handful of journalists and writers Morgan would choose as trusted informants in a world without Twitter or in-depth news sources. [2:10:37]

Morgan’s hall of fame for books about investing and finance, and how Dan Gardner’s book The Science of Fear has made him think about fear. [2:17:02]

Morgan’s advice for helping someone (like me) regain a regular cadence of writing if COVID or other life interruptions have derailed such efforts, and a glimpse into what his own writing process looks like. [2:19:18]

Tolerance for petty annoyance as a valuable life skill. [2:25:48]

How did training as a competitive ski racer prepare Morgan for USC and, eventually, a world-class writer for The Motley Fool? [2:30:53]

What does Morgan think is true, but is actually just good marketing? [2:39:17]

What looks unsustainable, but is actually a new trend we haven’t accepted yet? [2:40:57]

What has been true for decades that will stop working, but will drag along stubborn adherence because it has such a long track record of success? [2:43:50]

Which of our current views would change if our incentives were different? [2:45:46]

What are we ignoring today that will seem shockingly obvious in a year? [2:48:11]

Money is not spreadsheets. It’s dopamine and cortisol. [2:49:06]

Thoughts on near-future innovations both frightening and fascinating. [2:50:10]

Websites Morgan thinks are worth your while. [2:55:23]

Stories or points in The Psychology of Money Morgan wishes people paid more attention to. [2:57:39]

Parting thoughts. [2:59:02]

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