Morgan Housel on money, psychology, and investing

We interviewed Morgan Housel, columnist at “The Motley Fool,” after reading his excellent post – 140 things to know about investing. As many of you who read this blog know, I have a lot of energy for increasing financial literacy and I really appreciate folks like Morgan who’re focused on doing just that.


About Morgan Housel

Morgan Housel is a columnist at the Motley Fool. He is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013 he was a finalist for the Gerald Loeb Award and Scripps Howard Award. He holds a B.A. in Economics from the University of Southern California.


My favorite bits –

“What’s really interesting about finance –  and I think this is true for a lot of fields whether you’re in physics, math, chemistry, history, or whatever it is – the more you learn the you more you realize how little you know.

“If you really just started in investing, what’s really important is not necessarily when you’re young the investment decisions that you make.  It’s saving as much money as possible rather than getting caught up in the details about the different kinds of investments that you’re making.”

I think if you’re the kind of investor who really has no interest in business, finance, or the stock market, just investing in a low cost index fund, dollar cost averaging so you’re putting in the same amount of money every month over time is really a smart approach for most investors that don’t want to spend a lot of time doing this or are really not interested in it. “

“I really think that people who are interested in business, commerce, and economics, but not necessarily interested in trading or the stock market, are the people that I think can really do well for themselves over the long run – over the course of 20, or 30, or 40 years – by investing in really good high quality companies that they feel confident about.  They can do well by investing in a good diverse mix of companies that they plan on holding for a long period of time.

“I think a home makes a good place to live in, and that provides value for you of course.  You’ve got a great place to live in, spend the holidays with your family, have a barbeque with your friends, and that’s great.  The idea of the home as an investment, there’s really not much evidence backing that up.

Almost invariably the best investors are the people who have control over their emotions. Why do some people survive and other people perish?  The common denominator in survivors in these extreme situations is that the survivors did not panic when everyone else did.”

“In today’s 24 hour news cycle, where we have so much information online – Yahoo Finance, CNBC, and whatnot – it’s tempting to look at your portfolio all day long, minute by minute.  I think that’s very dangerous for a lot of people.  Most people should be looking at their portfolio once a quarter, four times a year.”

“The most important thing to know when you look at long term financial history is that volatility in the stock market is perfectly normal.  It’s the equivalent of having summers every year. If you look historically, the stock market falls 10% basically once every year.  If you go back through more than 100 years of data, it happens almost every year.  You get a 30% crash basically once a decade.  You get a 50% crash 2-3 times per century.”

The single most important variable for how you’ll do as an investor is how long you can stay invested. I’m always astounded when I think about compound interest and the power that it has for investing.  Time is massively powerful.  That’s my secret to investing.  That is the most powerful concept in investing.  It’s very importantly the single most over-looked aspect of investing as well.”

The full transcript, as always, is on