Author and financial expert Morgan Housel has many strings to his bow. A partner at the Collaborative Fund — with more than $300m in assets under management — Housel built a reputation in the world of finance during his time as an economist writing for the likes of The Wall Street Journal and the Motley Fool. His recently published book, The Psychology of Money, has been highly praised.
It was this topic that was explored in this week’s episode of Opto Sessions, when Housel discussed, among other things, what investors should read, the mistakes they can avoid, and what gives so many legendary investors their edge.
Listen to the interview:
What’s the top mistake investors make?
Not being introspective enough and not realising your own flaws, your own biases, your own misconceptions. Instead, you focus on other peoples’ mistakes without realising that behavioural finance is the study of you.
Where do you go for investment or economic insights?
I read the normal news sources — The Wall Street Journal, The New York Times, Bloomberg — but most of what I read has nothing to do with investing. The question I want to answer is about how people think. You can learn about that and become a better investor by reading about psychology, sociology, politics, military history – all these other fields that seem like they have nothing to do with investing.
“The question I want to answer is about how people think. You can learn about that and become a better investor by reading about psychology, sociology, politics, military history – all these other fields that seem like they have nothing to do with investing”
What's the most memorable moment from your career to date?
The first time I gave a big speech in front of thousands of people in Johannesburg, South Africa. That was probably the coolest moment of my career. It was so much fun to do that in front of a big audience and something that I never thought I would have the ability to do, that was really cool.
What’s your top tip for your younger self?
Don't worry, things will be okay. It's not that everything's going to be perfect but things will be fine. Worry less, enjoy more.
From where do the greatest investors derive their outperformance?
I think they understand the difference between patience and stubbornness. You have to give your strategy time to work out and realise that your strategy is going to have periods where it is not favoured, but that's okay. You just have to have patience about it. Stubbornness is the inability to change your mind when the facts have changed. Those two are very difficult to tell the difference from in real time, but the best investors can tell the difference. They are willing to be patient when they need to be patient and they are willing to change their mind when they need to change their mind. That's probably the biggest common factor between them.
“I think they understand the difference between patience and stubbornness. You have to give your strategy time to work out and realise that your strategy is going to have periods where it is not favoured, but that's okay. You just have to have patience about it”
For more insights from Housel as well as a look inside his latest book, The Psychology of Money, listen to the full episode below.
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