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 Dale Carnegie 5
Housel’s conviction is that behavior trumps other considerations in the pursuit of financial success. “Doing well with money has a little to
HOME CONTACT NEWSLETTER PRODUCTS BOOK SUMMARIES  PODCAST MOTIVATIONAL SHOWERS SUCCESS IN 50 STEPS AUTHORS  CATEGORIES  SEARCH do with how smart you are and a lot to do with how you behave.” Engage in the right behaviors and you are likely to succeed. Similarly, no
 Donald Trump 2
amount of intelligence, savvy, or inside information will save you from the wrong set of behaviors.

 Earl Nightingale 3

Each of the first 18 chapters in the book explores an individual human behavior or attitude towards money (the final two chapters are a
summary of the lessons and a commentary on Housel’s personal financial practices). Certain behaviors induce positive outcomes while  Eckhart Tolle 3

others guarantee failure. For instance, the first chapter titled “No One’s Crazy” considers the limits of our understanding vis-à-vis the limits
 Evan Carmichael 2
of our personal experiences. Consider that we are all, in the grander scheme of things, woefully inexperienced. “Your personal
experiences with money make up maybe 0.00000000001% of what’s happened in the world, but maybe 80% of how you think the world 8
 Gary Vaynerchuk
works.” In other words, there’s a huge gap between firsthand knowledge and how we parlay those limited insights into making sense of the
world. Our experiences color our judgment, but the foundations of that judgement are dubious, incomplete, and full of blind spots.  Grant Cardone 8

 Habits 13
For example, consider two different people born in different decades and their attitudes towards the stock market, one born in the 1950s
and the other in the 1970s. The first individual, as a teenager and young adult would have witnessed the anaemic stock market returns of
 Health 66
the 1960s-70s (low single digit returns in the decade aggregate). The second individual, as an adolescent and young adult, would have
watched the double-digit returns for both the 1980s and 1990s. The latter is more likely to enter adulthood with a bullish attitude towards  Interviews 121

equities. The former is likely skeptical of the stock market having witnessed two decades of negligible returns. The lesson: you cannot
Jim Rohn 2
discount the impact of personal experience on your decision-making process (nor can you discount the unique set of circumstances that 

influence the decisions made by others).

 John Maxwell 2
MONEY

Housel’s book is filled with these sorts of lessons. Some lessons caution us against certain behaviors, other lessons encourage us to

The Psychology of Money | Morgan Housel | Book Summary  Leadership 20

embrace beneficial habits. The beauty of these lessons is that they are accessible to anyone: they are not the sole domain of high-income
earners or those with elite education degrees. Reading this book won’t give you a profound knowledge about investment instruments,  Lewis Howes 2
By Michael George Knight — 4 years ago  0  3,002
asset allocation, or tax-advantaged strategies; it will, however, improve your relationship with money and your attitude regarding personal
 Malcolm Gladwell 2
finance. It isn’t difficult, Housel assures us, financial wealth just requires discipline, patience, and a handful of constructive behaviors.

 Misc 42
 – Share on Twitter  – Share on Facebook  – Share on Google+  – Share on LinkedIn  – Share via Email Introduction: The Greatest Show on Earth

 Money 73

“The premise of this book is that doing well with money has a little to do with how smart you are and a lot to do with how you behave.”
Motivational Showers 7
STOP READING BY YOURSELF AND JOIN THE ‘BEST BOOK CLUB’ NOW HERE TO MEET AUTHORS AND NEW FRIENDS 
“A genius who loses control of their emotions can be a financial disaster. The opposite is also true. Ordinary folks with no financial
SEARCH education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence.”  Napoleon Hill 6
STOP TRYING TO ACHIEVE YOUR GOALS BY YOURSELF AND BE COACHED TODAY HERE

 Og Mandino 2
DOWNLOAD THIS FREE PDF SUMMARY HERE Enter keyword to search the site... Two contrasting examples:

 Osho 3

CHECK OUT THE FOLLOWING Book | Summaries | Course Ronald James Read: Gas station attendant, janitor and American philanthropist. Saved throughout his life, lived frugally and amassed an
$8 million net worth at time of death. The majority of his fortune was left to a local hospital and library.  Parenting 6

YouTube |Spotify | Instagram | Facebook | Newsletter | Website

Personal Development 240
Richard Fuscone: Harvard-educated Merrill Lynch executive. Borrowed heavily and spent lavishly, got hit by the 2008 financial crisis, 
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declared bankruptcy.
Philosophy 45
The Psychology of Money | Morgan Housel | Book Summary  $100M Leads: How to Get Strangers To Want


To Buy Your Stuff by Alex Hormozi | Book “Ronald Read was patient; Richard Fuscone was greedy. That’s all it took to eclipse the massive education and experience gap between
 Presents 1
Summary
the two.”
 Psychology 21
 The Millionaire Messenger By Brendon
Burchard | Book Summary Two explanations that explain existence of stories like Read and Fuscone:
 Real Estate 2

 The Art of Meditation by Matthieu Ricard | “Financial outcomes are driven by luck, independent of intelligence and effort.” (true to some extent)
 Relationships 19
Book Summary

“Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know.” (Housel believes 3
 Using your brain for a change by Richard  Richard Branson
this is the more common of the two explanations).
Bandler | Book Summary
 Robert Greene 7

 The Miracle of Mindfulness by Thich Nhat Knowing how to do something is insufficient. In many situations you also need to battle against your internal emotional and mental turmoil
Robert Kiyosaki 11
Hanh Book Summary as well which will influence or alter your planned response. 

 Russell Brunson 10
“We think about and are taught about money in ways that are too much like physics (with rules and laws) and not enough like psychology
(with emotions and nuance).” 7
 Ryan Holiday

“To grasp why people bury themselves in debt you don’t need to study interest rates; you need to study the history of greed, insecurity,  Sales 39

and optimism.”
 Science 5

Chapter 1: No One’s Crazy

 Scott Pape 2

Everyone has a unique idea of how the world works. This worldview is influence by a unique set of circumstances, values, and external 6
 Seth Godin
influences.
Simon Sinek 4
Nov 12 · Bestbookbits CATEGORIES 
“Your personal experiences with money make up maybe 0.00000000001% of what’s happened in the world, but maybe 80% of how you
Save on Spoti� 70
 5 Min Books 34 think the world works.”  Spirituality

����� 51  Success 34
 50 Words to Your Dreams “No amount of studying or open-mindedness can genuinely recreate the power of fear and uncertainty.”

15  Success in 50 Steps 35
 Best Business Bits
“We all think we know how the world works. But we’ve all only experienced a tiny sliver of it.”
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel
41  Tim Ferriss 4
 Biographies
For example:
Summary
13  Time Management 21
 Brian Tracy
If you were born in 1950, the stock market was flat during your teens and 20s (adjusted for inflation).
The Psychology of Money by Morgan Housel (2020) examines personal finance through the lens of human behavior. It’s a fresh take on a 5
 Business & Marketing 125  Tom Butler-Bowdon
well-trod subject; many personal finance books focus on exogenous considerations: e.g. how the stock market works, how to select stocks
If you were born in 1970, the S&P 500 increased 1000% during your teens and 20s (adjusted for inflation).
or build a portfolio, how to time the market, etc. Housel’s focus is the relationship between people and money—with particular emphasis  Chris Guillebeau 4  Tony Robbins 12

on the human variable of the equation. “To grasp why people bury themselves in debt you don’t need to study interest rates; you need to
Which generation is more likely to have a bullish view of the stock market? 4
 Coaching 3  Top 20 Books
study the history of greed, insecurity, and optimism.”

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 Travel 1  May 2021

“Their view of money was formed in different worlds. And when that’s the case, a view about money that one group of people think is Chapter 5: Getting Wealthy vs. Staying Wealthy
outrageous can make perfect sense to another.”
 Wayne Dyer 4  April 2021
There are many ways to get wealthy. There is one way to stay wealthy: through a combination of frugality and paranoia.
Consider people most likely to purchase lottery tickets in the U.S.: low-income households who spend, on average $400/year. Number 4
 Zig Ziglar  March 2021
seems crazy to people in higher income households. But some might justify the purchase by saying they are paying for hope and a dream. Getting money and keeping money entirely different things and require entirely different mindsets and strategies.
Without being in their shoes, it’s hard to fully appreciate why they behave the way they do.  February 2021
“Getting money requires taking risks, being optimistic and putting yourself out there.”
Modern financial planning is relatively new. For instance, individual retirement accounts are a recent phenomenon. 401k were created in  January 2021

1978. Roth IRA was created in 1998. Index funds were developed in the 1970s. “Keeping money requires the opposite…it requires humility, and fear that what you’ve made can be taken away from you just as fast.”
NEWSLETTER  December 2020

As Housel says, many of the poor financial decisions stem from our collective inexperience: “there is not decades of accumulated Michael Moritz (venture capitalist): “We assume that tomorrow won’t be like yesterday. We can’t afford to rest on our laurels. We can’t be
 November 2020
experience…we’re winging it.” Pop in your email below to get a weekly complacent. We can’t assume that yesterday’s success translates into tomorrow’s good fortune.”
newsletter on the current book  October 2020
STOP READING BY YOURSELF AND JOIN THE ‘BEST BOOK CLUB’ NOW HERE TO MEET AUTHORS AND NEW FRIENDS summaries uploaded Nassim Taleb: “Having an edge and surviving are two different things: the first requires the second. You need to avoid ruin. At all costs.”
 September 2020

STOP TRYING TO ACHIEVE YOUR GOALS BY YOURSELF AND BE COACHED TODAY HERE Having a “survival mindset” requires three things:
First Name  August 2020

DOWNLOAD THIS FREE PDF SUMMARY HERE Aim to be financially unbreakable: be able to stick out swings in the market and stay in the game long enough for compounding to work its
 July 2020
magic.
CHECK OUT THE FOLLOWING Book | Summaries | Course Last Name  June 2020
The most important thing to plan for: the plan won’t go according to plan. A good plan leaves room for error. “The more you need specific
YouTube |Spotify | Instagram | Facebook | Newsletter | Website elements of a plan to be true, the more fragile your financial plan becomes.”  May 2020

Email address:
Chapter 2: Luck & Risk Be optimistic about the future but paranoid about the obstacles to your success.  April 2020
Your email address
 March 2020
Outcomes are determined by more than effort. Luck and risk often figure prominently in individual outcomes. STOP READING BY YOURSELF AND JOIN THE ‘BEST BOOK CLUB’ NOW HERE TO MEET AUTHORS AND NEW FRIENDS
Sign up  February 2020
Story of Bill Gates: Gates attended one of the only high schools in the world that had a computer in 1968. Were it not for the efforts of a STOP TRYING TO ACHIEVE YOUR GOALS BY YOURSELF AND BE COACHED TODAY HERE
teacher, Bill Dougall, to procure a $3000 teletype computer, it is unlikely that Bill Gates would enjoyed the same career success.  January 2020
DOWNLOAD THIS FREE PDF SUMMARY HERE
Gates himself admits as much: “If there had been no Lakeside [High School], there would have been no Microsoft.”  December 2019
ARCHIVES CHECK OUT THE FOLLOWING Book | Summaries | Course
 November 2019
At Lakeside there were three standout computer students (all friends): Bill Gates, Paul Allen, and Kent Evans. Kent Evans was destined
 December 2024
for success but met an untimely death in a mountaineering accident before graduation. This is used as an example of bad luck. YouTube |Spotify | Instagram | Facebook | Newsletter | Website
 October 2019
 June 2024
“Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort…they both happen because the Chapter 6: Tails, You Win  September 2019
world is too complex to allow 100% of your actions to dictate 100% of your outcomes.”  June 2023
Story of the art collector Heinz Berggruen. He amassed an amazing collection of Picassos, Braques, Klees and Matisses.  August 2019
 May 2023
“The accidental impact of actions outside of your control can be more consequential than the ones you consciously take.”
People were amazed by his art investing acumen.  July 2019
 April 2023
“Focus less on specific individuals and case studies and more on broad patterns.”
 June 2019
The reality was that he bought massive quantities of art. Only a subset of his collection was valuable.
 March 2023
Extreme outcomes are low probability outcomes. Applying the lessons of those who achieved these outlier results isn’t always helpful  May 2019
“Berggruen could be wrong most of the time and still end up stupendously right.”
since external forces of luck and risk may have played immeasurable and non-replicable roles.  February 2023
 April 2019
 January 2023 “Anything that is huge, profitable, famous, or influential is the result of a tail-event—an outlying one-in-thousands or millions event.”
Instead look at broad patterns that offer directional insights. For instance, happy people tend to be those who control their time and
 March 2019
energy.
 December 2022 This is the venture capital model: If a fund makes 100 investments, they expect 80% to fail, a handful to do reasonably well and 1-2 to
 February 2019
drive the funds returns.
Chapter 3: Never Enough  November 2022
 January 2019
Consider the distribution of winners and losers in the stock market: most public companies fail, a few do ok and a few generate
Story about writers Kurt Vonnegut and Joseph Heller (Catch-22) attending a party hosted by a billionaire. Vonnegut remarks that the  October 2022
extraordinary returns.  December 2018
billionaire makes more money in a single day than Heller made from his popular novel. Heller responds: “Yes, but I have something he will
 September 2022
never have…enough.”
“When you accept that tails drive everything in business, investing, and finance you realize that it’s normal for lots of things to go wrong,  November 2018
 August 2022 break, fail, and fall.”
Examples of Rajat Gupta and Bernie Madoff: People who had everything but wanted more. They brought ruin upon themselves because
 October 2018
they were greedy and didn’t know when to stop.  July 2022
Warren Buffett stated at the 2013 Berkshire Hathaway shareholder meeting that he’s owned shares in 400-500 different companies over
 September 2018
his life. His significant gains came from just a handful: 10.
“There is no reason to risk what you have and need for what you don’t have and don’t need.”  June 2022
 August 2018
 May 2022 We see outsized results from a mere fraction of the events or actions in our lives.
“The hardest financial skill is getting the goalpost to stop moving.”
 July 2018
 April 2022 Chapter 7: Freedom
Comparing ourselves to others is often the culprit. Capitalism is good at generating both wealth and envy. But social comparison is a
 June 2018
process without end: there’s always someone higher up on the ladder.  March 2022
“The ability to do what you want, when you want, with who you want, for as long as you want, is priceless.”
 May 2018
Enough doesn’t mean you have to go without. Enough means you know when to avoid doing something you will regret.  February 2022
“Money’s greatest intrinsic value…is its ability to give you control over your time.”
 April 2018
Many things are not worth the risk, regardless of the gains. A short list: reputation, freedom, family and friends, love, happiness.  January 2022
Chapter 8: Man in the Car Paradox  March 2018
 December 2021
The only way to win is to refrain from playing the game.
“When you see someone driving a nice car, you rarely think, ‘Wow, the guy driving that car is cool.’ Instead, you think, ‘Wow, if I had that  February 2018
 November 2021 car people would think I’m cool.’ Subconscious or not, this is how people think.”
Chapter 4: Confounding Compounding  January 2018
 October 2021
In other words, when we signal that we’re wealthy and that people should like and admire us, what really happens is people ignore the
The simplest fact about Warren Buffett’s fortune: He wasn’t just a good investor, he was a good investor for 75+ years.  December 2017
 September 2021 person in possession of the object of envy and just focus on the possession.

“Effectively all of Warren Buffett’s financial success can be tied to the financial base he built in his pubescent years and the longevity he  November 2017
 August 2021 Chapter 9: Wealth Is What You Don’t See
maintained in his geriatric years. His skill is investing, but his secret is time.”
 October 2017
 July 2021 “Someone driving a $100,000 car might be wealthy. But the only data point you have about their wealth is that they have $100,000 less
“Good investing isn’t necessarily about earning the highest returns…It’s about earning pretty good returns that you can stick with and
 September 2017
than they did before they bought the car.”
which can be repeated for the longest period of time. That’s when compounding runs wild.”  June 2021
 August 2017
“Wealth is financial assets that haven’t yet been converted into the stuff you see.”

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Housel reminds us that when people say they want to be millionaires, what it really means is that they want to spend a million dollars.  July 2017 Certain people and events have influence that is orders of magnitude more than others. Housel calls these “tail events.”

 June 2017
Spending a million dollars is “literally the opposite of being a millionaire.” Tail events cause 2nd and 3rd order repercussions. “It is easy to underestimate how things compound…for example, 9/11 prompted the
Federal Reserve to cut interest rates, which helped drive the housing bubble, which led to the financial crisis, which led to a poor jobs
 April 2017
Difference between wealthy and rich: market, which led tens of millions to seek a college education, which led to $1.6 trillion in student loans with a 10.8% default rate. It’s not
intuitive to link 19 hijackers to the current weight of student loans…”
People who live in big homes and drive fancy cars are rich. People with big incomes are rich. They display the fact that they are rich.
“The majority of what’s happening at any given moment in the global economy can be tied back to a handful of past events that were
Wealth is hidden. Wealth is income that is saved, not spent. Wealth is optionality, flexibility and growth. Wealth is the ability to purchase  $100M Leads: How to Get nearly impossible to predict.”
stuff if you needed to. Strangers To Want To Buy Your
Stuff by Alex Hormozi | Book
These surprise events are nearly impossible to predict because they are so improbable and depend on the luck and occurrence of many
STOP READING BY YOURSELF AND JOIN THE ‘BEST BOOK CLUB’ NOW HERE TO MEET AUTHORS AND NEW FRIENDS Summary
similarly unlikely precursor events.

STOP TRYING TO ACHIEVE YOUR GOALS BY YOURSELF AND BE COACHED TODAY HERE  The Millionaire Messenger By
“This is not a failure of analysis. It’s a failure of imagination.” It is difficult to imagine a future that looks nothing like today or anything we
Brendon Burchard | Book
have seen before.
Summary
DOWNLOAD THIS FREE PDF SUMMARY HERE

Daniel Kahneman (psychologist and economist): “The correct lesson to learn from surprises: that the world is surprising.”
CHECK OUT THE FOLLOWING Book | Summaries | Course
 The Art of Meditation by
Matthieu Ricard | Book Similarly we should be skeptical of those who profess to know with great certainty how the future will unfold.
YouTube |Spotify | Instagram | Facebook | Newsletter | Website
Summary
Misreading the present by looking to the past because the past DOESN’T account for the structural changes that are relevant in today’s
Chapter 10: Save Money
world.
 Using your brain for a change
Three types of people (past a certain level of income): by Richard Bandler | Book Example: Certain financial mechanisms are new. Advice that predates these realities is obsolete. For instance: 401ks appeared in 1978.
Summary Venture capital barely existed 25 years ago. The S&P 500 did not include financial stocks until 1976.
Those who save.

Recent history is the most relevant to the future since it accounts for some of the important or relevant innovations and conditions that will
Those who don’t think they can save.  The Miracle of Mindfulness by impact the future.
Thich Nhat Hanh Book
Those who don’t think they need to save. Summary
“The further back in history you look, the more general your takeaways should be.”

Your savings rate is more important than your income or investment returns.
Chapter 13: Room for Error
 Tony Robbins Ultimate Edge
Analogy: The 1970s oil crisis. Program – INNER STRENGTH –
Book Summary Blackjack and poker players know they are dealing with probabilities not certainties.

Problem: Oil supply was insufficient to keep up with demand and economic growth.
The best plan is to plan for things to not go according to plan.

 Attached: The New Science of

Solution: Oil supply increased 65% but fuel efficiency and conservation doubled what could be done with that energy.
Adult Attachment and How It “Margin of safety—you can also call it room for error or redundancy—is the only effective way to safely navigate a world that is governed
Can Help You Find by Amir by odds, not certainties.”
Supply side was out of people’s control but the demand side was completely within the control of the individual. Levin and Rachel Heller

“The odds are in your favor when playing Russian roulette. But the downside is not worth the potential upside. There is no margin of safety
“You can build wealth without a high income, but have no chance of building wealth without a high savings rate, it’s clear which one
 Gary Vaynerchuk Best Quotes that can compensate for the risk.”
matters more.”

It is impossible to prepare for or anticipate what you cannot envision.

“Learning to be happy with less money creates a gap between what you have and what you want—similar to the gap you get from growing
your paycheck, but easier and more in your control.”
Minimize the impact of failure by avoiding single points of failure.
 The Science of Being Well by
“Past a certain level of income, what you need is just what sits below your ego.” Solution: Don’t worry about what other people think or feel Wallace D. Wattles
“The biggest single point of failure with money is a sole reliance on a paycheck to fund short-term spending needs, with no savings to
the need to keep up with the Joneses.
create a gap between what you think your expenses are and what they might be in the future.”

“The flexibility and control over your time is an unseen return on wealth.”
Rainy-day funds are a good idea: save for things you cannot anticipate or predict.
 Free to Focus: A Total
Productivity System to Achieve
“Having more control over your time and options is becoming one of the most valuable currencies in the world.”
More by Doing Less by Michael STOP READING BY YOURSELF AND JOIN THE ‘BEST BOOK CLUB’ NOW HERE TO MEET AUTHORS AND NEW FRIENDS
Hyatt
Chapter 11: Reasonable > Rational
STOP TRYING TO ACHIEVE YOUR GOALS BY YOURSELF AND BE COACHED TODAY HERE

“Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable. Reasonable is more realistic and you
DOWNLOAD THIS FREE PDF SUMMARY HERE
have a better chance of sticking with it for the long run, which is what matters most when managing money.”

CHECK OUT THE FOLLOWING Book | Summaries | Course

Historical odds of making money increase over time. Lesson: stick to your guns and don’t let short-term volatility force a bad decision.
Example: Positive returns over a one-year period are 68% likely, 88% likely over 10 years, and 100% likely over 20 years.
YouTube |Spotify | Instagram | Facebook | Newsletter | Website

Chapter 12: Surprise!

Chapter 14: You’ll Change

Scott Sagan (political scientist): “Things that have never happened before happen all the time.”
We are terrible predictors of our future selves. Our present needs, wants, and dreams are not the same as our future needs, wants, and
dreams.
“History helps us calibrate our expectations, study where people tend to go wrong, and offers a rough guide of what tends to work. But it is
not, in any way, a map of the future.”
“The End of History Illusion is what psychologists call the tendency for people to be keenly aware of how much they’ve changed in the
past, but to underestimate how much their personalities, desires, and goals are likely to change in the future.”
Remember: Past performance is not indicative of future results, as the ubiquitous financial disclaimer states.

The result is that long-term plans and decision-making is very difficult to do effectively.
Focusing on past history and past patterns may cause two things:

Accept the reality that individuals are prone to change. What matters to you today, may be viewed as inconsequential in a decade.
Overlooking outlier events that move the needle.

“Sunk costs—anchoring decisions to past efforts that can’t be refunded—are a devil in a world where people change over time. They
Example: 15 billion people were born in the 19th and 20th centuries. But consider the handful that inordinately influenced historical events:
make our future selves prisoners to our past, different, selves. It’s the equivalent of a stranger making major life decisions for you.”
Hitler, Stalin, Mao, Edison, Gates, MLK, etc.

Chapter 15: Nothing’s Free

Example: Consider the projects, events and innovations of the last century: The Great Depression, WW2, Vaccines, Antibiotics, the
Internet, the fall of the Soviet Union.
“The key to a lot of things with money is just figuring out what that price is and being willing to pay it.”

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“Successful investing demands a price. But its currency is not dollars and cents. It’s volatility, fear, doubt, uncertainty, and regret—all of Philip Tetlock (psychologist): “We need to believe we live in a predictable, controllable world, so we turn to authoritative-sounding people
which are easy to overlook until you’re dealing with them in real time.” who promise to satisfy that need.”

“Few investors have the disposition to say, ‘I’m actually fine if I lose 20% of my money…but if you view volatility as a fee, things look Kahneman identified relevant errors in cognition:
different.”
When planning we focus on what we want to do and can do and neglect the plans, actions, and decisions of others who might impact our
When you invest in the long term, you need to be willing to accept the short-term price of market fluctuations. personal outcomes.

Chapter 16: You & Me When studying the past and forecasting the future we overemphasize individual skill and discount luck.

One reason for market bubbles: “Investors often innocently take cues from other investors who are playing a different game than they are.” We focus on what we know and ignore what we don’t know. This results in overconfidence.

Short term momentum attracts investors with short time horizons. “Bubbles aren’t so much about valuations rising. That’s just a symptom Chapter 19: All Together Now
of something else: time horizons shrinking as more short-term traders enter the playing field.” But note that the short-term investors will
only stick around so long as the momentum continues, but that this momentum is transient. Chapter is a summary of the lessons in the preceding chapters: humility, less ego, wealth vs. riches, financial decisions that offer peace of
mind, use the power of time and consistency, accept failure and risk, strive for time freedom, frugality, make saving a core habit, be
“Bubbles do their damage when long-term investors playing one game start taking their cues from those short-term traders playing prepared to pay the price required for successful outcomes, prepare a margin of safety, avoid extremes, define the game you’re playing.
another.”
Chapter 20: Confessions
“It’s hard to grasp that other investors have different goals than we do, because an anchor of psychology is not realizing that rational
people can see the world through a different lens than your own.” This chapter highlights some of the financial behaviors and beliefs of the author:

Chapter 17: The Seduction of Pessimism Independence drives all Housel’s financial decisions.

“Pessimism isn’t just more common than optimism. It also sounds smarter. It’s intellectually captivating, and it’s paid more attention than Live below your means.
optimism, which is often viewed as being oblivious to risk.”
Derive pleasure from free or low cost activities: exercise, reading, podcasts, learning.
“Tell someone that everything will be great and they’re likely to either shrug you off or offer a skeptical eye. Tell someone they’re in danger
and you have their undivided attention.” Owns his house without a mortgage. Admits that this is a terrible financial decision but a great money decision (peace of mind).

Daniel Kahneman: “This asymmetry between the power of positive and negative expectations or experiences has an evolutionary history. Maintains 20% of his assets in cash (outside of the value of his primary home). He does this to maintain a safety net and to avoid being

Organisms treat threats as more urgent than opportunities have a better chance to survive and reproduce.” forced to sell his stock market investments in an emergency.

“Pessimists often extrapolate present trends without accounting for how markets adapt.” Charlie Munger: “The first rule of compounding is never interrupt it unnecessarily.”

Remember the story from chapter 10 about the 1970s oil crisis: pundits failed to account for innovation in fuel efficiency and cheaper, No longer invests in individual stocks. All Housel’s stock market investments are in low-cost index funds.

more efficient oil extraction.

“Some people can outperform the market averages—it’s just very hard, and harder than most people think.”

Similarly, in the 2000s, as oil prices increased, certain type of oil extraction became economically feasible such as fracking.
“Every investor should pick a strategy that has the highest odds of successfully meeting their goals…for most investors, dollar-cost

Necessity is the mother of all invention and humanity is endlessly innovative. People respond to adversity and problems with new and averaging into a low-cost index fund will provide the highest odds of long-term success.”

novel solutions.
Max out your retirement accounts and contribute to your kid’s 529 plans.

“Threats incentivize solutions in equal magnitude. That’s a common plot of economic history that is too easily forgotten by pessimists who
His financial situation is simple. All of his net worth consists of a house, a checking account and Vanguard index funds.
forecast in straight lines.”

“One of his deeply held investing beliefs is that there is little correlation between investment effort and investment results.”
Progress is slow, but setbacks and disaster happens quickly and impactfully. “There are lots of overnight tragedies. There are rarely
overnight miracles.”
Three key elements of Housel’s approach: a high savings rate, patience, and long-term optimism.

“Growth is driven by compounding, which always takes time. Destruction is driven by single points of failure, which can happen in
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Chapter 18: When You’ll Believe Anything
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“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.”

“Everyone has an incomplete view of the world. But we form a complete narrative to fill in the gaps.” YOU MIGHT ALSO LIKE

B.H. Liddell Hart (historian) in his book “Why Don’t We Learn from History?”: “History cannot be interpreted without the aid of imagination
and intuition. The sheer quantity of evidence is so overwhelming that selection is inevitable. Where there is selection there is art. Those MONEY
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who read history tend to look for what proves them right and confirms their personal opinions.”
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Daniel Kahneman: “Hindsight, the ability to explain the past, gives us the illusion that the world is understandable. It gives us the illusion
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that the world makes sense, even when it doesn’t make sense. That’s a big deal in producing mistakes in many fields.”
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Rather than accept that we don’t know something we actively attempt to develop personal theories (stories) that creates illusory
understanding that is psychologically comforting. Illusion of control vs. the reality of uncertainty.  0  229  0  1,376  0  1,099

Recognize that there is much you do not know and much that is outside of your control.

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