WCI #172: Behavioral Finance with Morgan Housel

Aug 20, 2020

Morgan Housel, a partner at The Collaborative Fund and an award-winning finance writer, shares his insights on behavioral finance. He discusses how psychology shapes financial decisions and the impacts of family dynamics on money management. The conversation includes navigating misinformation during crises and the common financial habits seen in doctors. Housel emphasizes the importance of recognizing personal risk tolerance and adapting one’s values amidst changing economic landscapes, making complex financial concepts accessible and relatable.

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ANECDOTE

Childhood Shaped by Frugality

Morgan Housel grew up very poor while his father was in medical and nursing school.
The family's frugality and simple living stuck even after his father became a doctor.

ANECDOTE

Accept Changing Goals

Morgan advised his daughter it's okay to admit when your values and goals evolve.
Forgiving yourself for changing your mind is a superpower, especially when young.

ADVICE

Value Flexibility and Options

Avoid locking yourself into one rigid financial path; keep options open.
Saving cash provides flexibility for future unknown changes in values or goals.

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Our guest this week is one of my favorite writers. Morgan Housel is a partner at The Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. His passion for finance and investing come through in his writing. I am intensely jealous when I look at his writing because of his talent. He is insightful and easy to read. He takes complex and important topics and makes them simple to understand. We really dive into behavioral finance topics in this episode. My favorite piece of his was called The Psychology of Money and was the base for his new book coming out September 8th. It is filled with so many pearls that it should be required reading for humans. I pull a few of those pearls out today and discuss them. We talk about some of "the flaws, biases, and causes of bad behavior" he has seen often when people deal with money. Listen to the episode and go pre-order his book. It will almost surely be a best seller and definitely on my recommended reading list.

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