Morgan Housel — The Psychology of Money, Picking the Right Game, and the $6 Million Janitor (#576)

“You have to have a level of savings in your asset allocation that doesn’t make sense. You have to have a level of conservatism that seems like it’s a little bit too much. That’s the only time that you know that you are prepared for risks that you cannot envision.”
— Morgan Housel

Morgan Housel (@morganhousel) is a partner at the Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He serves on the board of directors at Markel Corporation. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism.

His book The Psychology of Money has sold more than one million copies and has been translated into more than 30 languages.

Please enjoy!

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. You can watch the interview on YouTube here.

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The transcript of this episode can be found here. Transcripts of all episodes can be found here.

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#576: Morgan Housel — The Psychology of Money, Picking the Right Game, and the $6 Million Janitor

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What was your favorite quote or lesson from this episode? Please let me know in the comments.

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SELECTED LINKS FROM THE EPISODE

Connect with Morgan Housel:

Website | Twitter

SHOW NOTES

Warren Buffett vs. Jim Simons. [06:43]
What do people get wrong about the partnership between Warren Buffett and Charlie Munger? [13:45]
The size is the strategy. [16:59]
Six years after writing his “Financial Advice for My New Son” article for The Motley Fool, are there any points Morgan would add or amend? [20:27]
While there’s no way of knowing what kind of adults our kids will grow up to be, how might we instill in them the value of money and the ability to control how it affects their lives? [23:43]
What unorthodox career decision did Morgan’s father make in his 30s, and how did the family’s life change as a result? How did earlier lessons of frugality give Morgan’s parents more options later on than their more steadily affluent peers? [28:28]
How Morgan’s career path meandered from Denny’s greeter to investment banker to reluctant writer. [34:18]
After finally hitting his stride as a writer at The Motley Fool, what compelled Morgan to join the Collaborative Fund team? [42:15]
What’s a Markel and how did Morgan get involved with it? What was it hoped he could bring to the table there? [49:07]
How does Morgan approach risk? [56:32]
What “fin tweet” game is Morgan playing, and what are the rules? Who are the top players in this space, and what makes them worth your attention no matter the medium? [58:59]
Investors Morgan respects — even if he wouldn’t try to emulate them. [1:03:33]
Don’t beat yourself up too badly if you’ve ever been gamed by the market. Even Warren Buffett still makes mistakes. But would his younger version have made the same decisions he makes today? What made the early days of the pandemic such an uncertain time for even the most seasoned investors — Buffett and Housel alike? [1:09:37]
Sometimes it’s the counterintuitive bets that elevate an investor into deity or demigodhood in the pantheon of the money-minded — whether it’s Benjamin Graham, Walt Disney, or Michael Moritz. [1:19:11]
Notes on leverage and the “buy, borrow, die” approach to investing, and making sense of conflicting, diametrically opposed advice from seemingly intelligent, rational parties with differing opinions. [1:28:37]
Sometimes peace of mind matters more than profit. [1:33:44]
Is it better to be an antediluvian penny pincher who dies rich, or a high-roller who casts fistfuls of dollars into the sea only to pass away penniless? Maybe the middle ground is healthier than either extreme. [1:36:01]
How does Morgan recommend someone of means ensure their children don’t grow up to be horrible, entitled, and generally useless to society? [1:40:13]
Biographies and memoirs Morgan recommends (and what they can teach us about current events). [1:48:19]
How can you increase the likelihood that you will not respond in moments of panic by doing what cripples you financially? Morgan weighs in. [1:52:26]
In Morgan’s experience, how does someone who comes into money effectively allow themselves to enjoy it without succumbing to the all-too-common temptation to sink it all under a mountan of status symbols nobody really cares about? For his own part, what does his financial comfort allow him to enjoy, and how does he scratch the itch when he’s pestered by such temptations? [1:57:27]
Preparing for financially bumpy long hauls, and “understanding the difference between a fee and a fine.” [2:07:15]
A handful of journalists and writers Morgan would choose as trusted informants in a world without Twitter or in-depth news sources. [2:10:37]
Morgan’s hall of fame for books about investing and finance, and how Dan Gardner’s book The Science of Fear has made him think about fear. [2:17:02]
Morgan’s advice for helping someone (like me) regain a regular cadence of writing if COVID or other life interruptions have derailed such efforts, and a glimpse into what his own writing process looks like. [2:19:18]
Tolerance for petty annoyance as a valuable life skill. [2:25:48]
How did training as a competitive ski racer prepare Morgan for USC and, eventually, a world-class writer for The Motley Fool? [2:30:53]
What does Morgan think is true, but is actually just good marketing? [2:39:17]
What looks unsustainable, but is actually a new trend we haven’t accepted yet? [2:40:57]
What has been true for decades that will stop working, but will drag along stubborn adherence because it has such a long track record of success? [2:43:50]
Which of our current views would change if our incentives were different? [2:45:46]
What are we ignoring today that will seem shockingly obvious in a year? [2:48:11]
Money is not spreadsheets. It’s dopamine and cortisol. [2:49:06]
Thoughts on near-future innovations both frightening and fascinating. [2:50:10]
Websites Morgan thinks are worth your while. [2:55:23]
Stories or points in The Psychology of Money Morgan wishes people paid more attention to. [2:57:39]
Parting thoughts. [2:59:02]

MORE MORGAN HOUSEL QUOTES FROM THE INTERVIEW

“If your tolerance for bullshit is zero, you’re not going to make it at all in life.”
— Morgan Housel

“All compounding is never intuitive.”
— Morgan Housel

“There’s a reason why quoting Warren Buffett is easier than being the next Warren Buffett.”
— Morgan Housel

“You have to have a level of savings in your asset allocation that doesn’t make sense. You have to have a level of conservatism that seems like it’s a little bit too much. That’s the only time that you know that you are prepared for risks that you cannot envision.”
— Morgan Housel

“I have a feeling that there will never be a clean, uncontested election in your and my lives. Once you set the precedent of chaos, it’s hard to put that genie back in the bottle.”
— Morgan Housel

“A fine means you did something wrong like, ‘Shame on you, here’s your speeding ticket. Don’t do it ever again. You’re in trouble.’ And a fee is just a price of admission that you paid to get something better on the other side. Like you go to Disneyland, you pay the fee, and then you get to enjoy the theme park. You didn’t do anything wrong, it’s just that’s the fee.”
— Morgan Housel

“There’s a cost to everything. And just identifying what the cost is, then realizing that the cost is not on a price tag. You’re going to pay for it with stress and anxiety and dopamine and cortisol. That’s how you pay for these things. I think that’s the only way to deal with those big ups and downs.”
— Morgan Housel

“To me, [it] has always been kind of a sad thing that we are so accustomed and attuned to just wanting to use our money … to go out and buy more stuff when we could be using it for freedom and autonomy.”
— Morgan Housel

“To the extent that we can use money to gain independence and autonomy, that is, I think, as close as it comes to a universal want and thing that we can use money for.”
— Morgan Housel

“You stand apart in the private investing world by having values and a view of the world that is differentiated in some way. And those values do not matter at all unless people know about them. You need to be going out there, showing the world how you think, what you think, who you are, waving your arms. That’s the purpose of hiring someone like me to be a writer.”
— Morgan Housel

“Risk is just the odds that something will prevent you from achieving your goals. But the nuance is that everyone has very different goals and aspirations and time horizons.”
— Morgan Housel

“You and I, and everyone else, and the smartest people that we know have no clue what’s going to happen over the next 10 years. That’s always been true and I think it always will be true.”
— Morgan Housel

PEOPLE MENTIONED

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Shehraj Singh

2 years ago

I loved Morgan’s book, learned a lot about money…

Excited to see him on the show

tektutes

Thanks for sharing such an amazing post with us

Jim Krenz

Tim—I’d love to read your highlights/notes on the books that you read. You could make those into a service or book (Tim’s Notes) or such.

Savan Wilson

Every time I listen to your podcasts, I come away with a list to explore (thanks show notes to find sites), more curiosity, and just a desire to know more. I am a retired 77 year old womb to tomb learner. You make it fascinating and easy. I now want to visit Africa as a result of a couple of weeks ago. Even at over 1,500 a night…..may do it even on limited income, as so impressed with Boyd Varity. Thanks. Avid listener for years. Loved Morgan Housel….so many of your guests are new names for me. Show notes are amazing. What about the Fear comment during his? Could not find in show notes. Tho May have written a book title mentioned somewhere.

JoshMiller

Wish I had heard this when I was 21… Great podcast…

Joseph Grieco

I’m sitting in my condo in Naples Italy drinking a glass of Croatian Teran from Istra while reading “The 4-Hour Work Week” and I cannot stop repeating your words in my head—“people don’t want to be millionaires—they want to experience what they believe only millionaires can buy”.

I make under $100K but I travel to a different country every week and often, more than one! I have a collection of Europe’s finest wines and I do all the things I once thought impossible but always dreamed for. My own life is proof enough that your methods and words are true—it’s like the old Chinese proverb, “Aim at nothing, hit nothing”. Living the life of my dreams was a decision. I only had to choose to cross the bridge . I didn’t need to make millions or even do a job society deemed “dream-worthy”. Instead, I enlisted in the military and worked in mobile comms and later cyber security. This was a thrilling and soul-enriching decision that also enabled me to experience places and people I never would have if I hadn’t served. The idea that the only way to live ones dreams is to have lots of money, is factory made and federally made. Thank God for people like you who strive to shower the world in truth—to pass them the shades of a different perspective that will lead to a life lived in happiness and with satisfaction!

Cín Cín ad Ora!

skipkapur

Reply to Joseph Grieco

Tim, I love your interviews. Morgan has influenced me with his book, essentially reinforced my beliefs. I was able to retire from an interesting career at 54 simply by indexing over my working years. Discipline and calmness.

Kat Gordon

This was a FANTASTIC episode! Lots to unpack and I’ve been digging into the links, articles, etc. Many appreciations to Tim & Morgan for hitting so many areas and sharing some personal successes and failures to illustrate points- very generous!

Only jarring note for me was the casual use of some extremely coarse language about midway through– was honestly shocked to hear Tim just throw out the C-word multiple times, especially when any number of vocabulary options would’ve illustrated the point just fine. I’ve shared the episode with a handful of folks, and would love to share it with more but that gives me pause.

Akimbo

Reply to Kat Gordon

I completely agree with Kat. Tim, I love your podcast and the multiple use of the C-word was uncomfortable and unnecessary.

John Deely

Agree totally on the point you made. It was unnecessary and jarring. I made a similar comment and endorse yours…

Really enjoyed this episode, the breadth of the discussion and the energy that Morgan Housel brought to the topics. The emotional connection with money was well illuminated among other things. One observation based on the references in the show and the show notes is how male centric they are. This is not a criticism per se but it would have been interesting for Tim to cop this and ask Morgan about the diversity of his sources and whether this is a reflection of the industry? One other observation was the particular use of a swear word. Nothing wrong with some of that in my opinion however some words are more coarse than others and it appears gratuitious and unnecessary to make the point even though the origins of the word go back 800 hundred years…. https://qz.com/1045607/the-most-offensive-curse-word-in-english-has-powerful-feminist-origins/

Sarah Knapp

1 year ago

“The grass is always greener on the other side that is fertilized with bullshit” was my favorite quote from this podcast.