Morgan Housel: The Psychology of Money (EP.128)

<p>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, <em>The</em> <em>Psychology of Money</em>. 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 perspective.   </p> <p> </p> <p><strong>Key Points From This Episode:</strong></p> <ul> <li>Introducing today’s guest, financial author Morgan Housel. <strong>[0:00:15]</strong></li> <li>Morgan shares his view that succeeding in investing has little to do with how you behave. <strong>[0:02:31]</strong></li> <li>Hear about the problems that can arise from trying to emulate top investors. <strong>[0:05:02]</strong></li> <li>Exploring the impact of luck on your success. <strong>[0:07:37]</strong