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The Psychology of Money with Morgan Housel and Sam Instone
In this video you will hear 4 stories, which have nothing to do with investing, but everything to do with the emotional side of money.
Contact usThe Psychology of Money with Morgan Housel and Sam Instone
In this special session, Morgan Housel, author of the international bestseller "The Psychology of Money," joins Sam Instone to explore why personal finance is so often more personal than it is finance. Rather than forecasting where markets or the economy are heading, Housel digs into what actually happens inside our heads when we deal with greed, fear, risk and uncertainty, and why behaviour, not intelligence, is the real driver of long-term investing success.
Drawing on his experience as a financial writer during the 2008 global financial crisis, Housel explains why the answers to how people behave with money can't be found in finance or economics textbooks, but in psychology, sociology and history. He then shares four memorable stories, none of them about investing directly, each carrying a powerful lesson for investors.
You'll hear the story of the Wright brothers and why time horizon, not timing, is an investor's greatest edge, illustrated by the fact that around 99% of Warren Buffett's wealth was built after his 50th birthday. You'll learn, through Stephen Hawking and the myth of the "golden" 1950s, why expectations matter as much as income, and why having a sense of "enough" may be the most important idea in all of finance. Through the extraordinary death of Harry Houdini, Housel shows why risk is what you don't see coming, and why the biggest economic risks are always the ones nobody is talking about. And finally, through earthquake preparedness in Seattle versus California, he explains why everyone sees risk differently, shaped by the dumb luck of when and where they were born.
The takeaway: you have no control over what markets or the economy will do next. The one thing you can control is your own behaviour, and that, reassuringly, is also the most important part of investing success.
Chapters / Key points
- 00:00 Introduction with Sam Instone and Morgan Housel
- 00:32 Why investing is a study of behaviour, not finance
- 04:05 Story 1: Timing is meaningless, but time is everything (the Wright brothers)
- 09:07 Why 99% of Warren Buffett's wealth came after age 50
- 11:02 What "long term" really means for investors
- 12:52 Story 2: Getting the goalposts to stop moving (Stephen Hawking and expectations)
- 14:39 Why the "golden" 1950s weren't what we remember
- 19:40 Bernie Madoff and the danger of never having "enough"
- 21:50 Story 3: Risk is what you don't see (Harry Houdini)
- 24:41 Why the biggest economic risk is the one nobody is talking about
- 27:38 Expectations versus forecasts, and getting rich versus staying rich
- 30:08 Story 4: Everyone has a different view of the world (earthquakes and experience)
- 34:46 How the markets of your youth shape you for life
- 37:15 Why willingness to take risk depends on personal history
- 40:32 Why personal finance is deeply personal, and you are your own biggest risk