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The Psychology of Money with Morgan Housel

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Jun 9, 2021

Guest

Morgan Housel

Morgan Housel, a partner at Collaborative Fund and author of 'The Psychology of Money,' dives into how our emotions shape financial behavior. He discusses the importance of introspection in financial success and the value of understanding personal strengths and weaknesses. Housel highlights the balance between saving and earning, and warns against the pitfalls of extreme frugality in the pursuit of financial independence. He emphasizes the necessity of long-term investing, accepting the reality of being wrong, and focusing on personal contentment over societal validation.

55:15

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insights

INSIGHT

Money as Behavior

Morgan Housel's book explores money as a study of human behavior, not just finance.
He draws insights from psychology, sociology, and other fields to explain financial decisions.

insights

INSIGHT

Teaching Behavioral Finance

Behavioral finance is difficult to teach because it lacks clear formulas.
It's more about navigating emotions like greed and fear, which aren't easily quantifiable.

insights

INSIGHT

True Wealth

The highest form of wealth is control over your time and schedule.
This "independence" reduces misery more than material possessions increase happiness.

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The Challenges of Teaching Behavioral Finance

03:28 • 2min

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Embracing True Wealth: Autonomy Over Accumulation

05:07 • 12min

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The Pitfalls of Extreme Frugality and the FIRE Movement

16:50 • 4min

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Psychology of Investing: Risks and Realities

20:59 • 13min

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The Acceptance of Being Wrong in Investing

34:12 • 4min

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The Art of Long-Term Investing

37:51 • 15min

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Introspection and Personal Finance: Key to Success

53:08 • 3min

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What We Knew

Terror, Mass Murder, and Everyday Life in Nazi Germany

Eric A. Johnson

Karl-Heinz Reuband

This book combines the expertise of a German sociologist and an American historian to offer a startling oral history of life in the Third Reich. It draws on oral histories and a unique survey of 4,000 people, including both German Jews and non-Jewish Germans, who lived under the Nazi regime. The research confirms that both Germans and Jews were aware of the mass murder of European Jews as it was occurring. It also refutes long-held assumptions, suggesting that Hitler and National Socialism were genuinely popular among ordinary Germans, and that intimidation and terror played a minor role in enforcing loyalty. The book is crucial for understanding life in the Third Reich and is a central work for scholars of the Holocaust, World War II, and totalitarianism.

The Psychology of Money

Timeless Lessons on Wealth, Greed, and Happiness

Morgan Housel

In 'The Psychology of Money,' Morgan Housel delves into the psychological and emotional aspects of financial decisions. The book consists of 19 short stories that illustrate how personal history, worldview, emotions, and biases influence financial outcomes. Housel emphasizes the importance of behavior over knowledge in managing money, highlighting the power of compounding, the dangers of greed, and the pursuit of happiness beyond mere wealth accumulation. He advocates for a frugal lifestyle, long-term perspective, and a balanced approach to investing, stressing that financial success is more about mindset and discipline than about technical financial knowledge.

The intelligent investor

Jason Zweig

Benjamin Graham

Written by Benjamin Graham, 'The Intelligent Investor' is a seminal work on value investing that has inspired millions since its original publication in 1949. The book emphasizes the importance of distinguishing between investing and speculation, calculating the intrinsic value of companies, and maintaining a margin of safety. The revised edition includes updated commentary by Jason Zweig, who provides modern examples and insights to help readers apply Graham's principles in today's market. Warren Buffett, a disciple of Graham, has praised the book as 'the best book about investing ever written'.

Security Analysis

Benjamin Graham

David L. Dodd

First published in 1934, Security Analysis is a seminal work in the field of finance that lays the intellectual foundation for value investing. The book, written by Benjamin Graham and David L. Dodd, distinguishes between investing and speculating, emphasizes the importance of thorough financial analysis, and introduces key concepts such as the 'margin of safety. ' The sixth edition includes commentary from leading Wall Street money managers and a foreword by Warren E. Buffett, who has praised the book for its enduring relevance in modern markets.

#6: Renowned financial columnist, Morgan Housel talks with Chris about the psychology of money. They discuss the mindset of winning investors, new ways to think about risk, when to hold cash vs. invest, and how you can stop wanting more and focus on your own financial independence.

Morgan Housel (@morganhousel) is a partner at Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He is also the author of the bestselling book The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.

Full show notes available at: https://www.allthehacks.com/psychology-of-money-morgan-housel/

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Resources Mentioned

Connect with Morgan: Twitter | Website | LinkedIn

Morgan’s book: The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness

Benjamin Graham's Books: The Intelligent Investor | Security Analysis

Eric Johnson's Book on Nazi Germany: What We Knew

Full Show Notes

(01:22) What Drove Morgan to Write the Book?

(03:58) Contrasting Finance Education with Real-World Application

(05:44) Unveiling the Highest Form of Wealth

(07:18) Exploring Financial Independence as a Spectrum

(10:28) Building Wealth: Balancing Saving and Earning

(12:30) The Paradox: Why People Dislike Saving Money

(13:36) Curbing Desires: A Strategy for Specific Individuals

(17:20) Extremes of FIRE: Striking a Social Balance

(19:34) Unraveling the Mysteries of Irrational Money Behavior

(22:16) Active vs. Passive Investing: Can You Embrace Both?

(26:52) Understanding Your True Risk Tolerance

(32:34) Embracing Fallibility and Liberating Yourself from Perfection

(36:25) Staying the Course: Making Multiple Calculated Bets

(38:51) Framework for Learning from Financial Mistakes

(39:30) Multidimensional History: Acknowledging Different Perspectives

(41:26) Learning from History: The Best Approach

(44:41) Reimagining Education: Shifting Curriculum Focus

(46:54) Parental Role: Nurturing Financial Education in Kids

(49:04) Delving into the Overlooked Aspects of Behavioral Finance

(50:47) The Singular Financial Hack You Need

Connect with All the Hacks

All the Hacks: Newsletter | Website | Membership | Email

Chris Hutchins: Twitter | Instagram | Website | LinkedIn

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