The Psychology of Money - by Morgan Housel


The Psychology of Money - by Morgan Housel

Read: 2023-06-19

Recommend: 4/10

I managed to finish reading the book in a day. It’s not a super exciting read.


Here are some text that I highlighted in the book:

  1. Kent Evans

  2. The hardest financial skill is getting the goalpost to stop moving.

  3. It gets dangerous when the taste of having more—more money, more power, more prestige—increases ambition faster than satisfaction. In that case one step forward pushes the goalpost two steps ahead. You feel as if you’re falling behind, and the only way to catch up is to take greater and greater amounts of risk.

  4. But life isn’t any fun without a sense of enough. Happiness, as it’s said, is just results minus expectations.

  5. Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.

  6. Peter Lynch is one of the best investors of our time. “If you’re terrific in this business, you’re right six times out of 10,” he once said. There are fields where you must be perfect every time. Flying a plane, for example. Then there are fields where you want to be at least pretty good nearly all the time. A restaurant chef, let’s say. Investing, business, and finance are just not like these fields.

  7. But CEO Jeff Bezos said shortly after the disastrous launch of the company’s Fire Phone: If you think that’s a big failure, we’re working on much bigger failures right now. I am not kidding. Some of them are going to make the Fire Phone look like a tiny little blip.

  8. For every Amazon Prime or Orange is The New Black you know, with certainty, that you’ll have some duds.

  9. The Chris Rock I see on TV is hilarious, flawless. The Chris Rock that performs in dozens of small clubs each year is just OK. That is by design. No comedic genius is smart enough to preemptively know what jokes will land well. Every big comedian tests their material in small clubs before using it in big venues. Rock was once asked if he missed small clubs. He responded: When I start a tour, it’s not like I start out in arenas. Before this last tour I performed in this place in New Brunswick called the Stress Factory. I did about 40 or 50 shows getting ready for the tour.

  10. What they did value were things like quality friendships, being part of something bigger than themselves, and spending quality, unstructured time with their children. “Your kids don’t want your money (or what your money buys) anywhere near as much as they want you. Specifically, they want you with them,” Pillemer writes. Take it from those who have lived through everything: Controlling your time is the highest dividend money pays.

  11. It was my dream to have one of these cars of my own, because (I thought) they sent such a strong signal to others that you made it. You’re smart. You’re rich. You have taste. You’re important. Look at me. The irony is that I rarely if ever looked at them, the drivers. There is a paradox here: people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.

  12. Rising prices persuade all investors in ways the best marketers envy. They are a drug that can turn value-conscious investors into dewy-eyed optimists, detached from their own reality by the actions of someone playing a different game than they are.

  13. “For reasons I have never understood, people like to hear that the world is going to hell.” —Historian Deirdre McCloskey

  14. The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.

  15. Everyone has an incomplete view of the world. But we form a complete narrative to fill in the gaps.

  16. Half of all U.S. mutual fund portfolio managers do not invest a cent of their own money in their funds, according to Morningstar.69 This might seem atrocious, and surely the statistic uncovers some hypocrisy. But this kind of stuff is more common than you’d think. Ken Murray, a professor of medicine at USC, wrote an essay in 2011 titled “How Doctors Die” that showed the degree to which doctors choose different end-of-life treatments for themselves than they recommend for their patients.