Morgan Housel

2022–2026 · changed view

“Oh, I think it's very different. What I meant by no one is crazy is that it is so easy for people to look around at society and how people are spending their money and saving their money and investing their money and say, why the hell would anybody do that? Why would you waste your money on this? Why would you hoard your money like that? And actually, think, if you peel back the onion layer of what's going on in those people's lives, no one is really that crazy with how they spend their money or save their money. It makes sense to them in that moment. My brother-in-law is a social worker. He works with very disadvantaged kids, kids who are abused at home, who don't have homes. And a lot of those kids, not surprisingly, do very poorly at school. They misbehave, they get in fights, they don't go to school. And it is so common for those kids that the teacher will look at those kids and say, why are you acting like this? Why don't you do the right thing? It's so obvious. And he says there's a phrase in social work: all behavior makes sense with enough information. That if you look at what those kids are dealing with in life, it would all make sense to you why they are misbehaving at school. And I think that's a powerful idea for a lot of things in life, that all behavior makes sense with enough information.”

2022–2026

“And the wider the channel is, the more that you can endure. And so much about compound interest, not just with money, but with relationships and careers and friendships, comes down to what can you endure? How many unknowns and the depths of those unknowns can you endure and survive? And so much, I wrote this in Psychology of Money. If you have to like sum up doing well financially in one word, I think it's survival. That's true in your career. That's true for savings. That's true for investing. Absolutely. It's just survive. It's just what can you endure? What can you put up with? And when you view it like that, you realize that like every dollar that you save is a claim check of independence that will serve you not just in the future but today.”

2022–2026 · changed view

“What I think is true is that on average, people who have more money tend to have fewer bad days, but I don't know if they have more better days. I think it is more likely that when you have more money, you are less likely to wake up and be like, man, things are not going well. But that doesn't necessarily mean that you're going to wake up grinning ear to ear. Now, that's a lifestyle improvement. If you have fewer bad days, that's like great. Your life is better. That's obviously better than the alternative, but it's not happiness. It's a very different thing. And I think it can throw some people off when they aspire to happiness or they think that what they're achieving in the money they're making should make them happy. Sometimes it does. Very often it doesn't. And they wake up and they're like, 'What happened?' Like I thought this was going to make me happy, but I'm not. So, I think there's a level of expectation setting where it's like I think money can be more like a vaccine where like it can prevent a lot of misery, which is great. Vaccines are wonderful. Like we don't have polio. It's a great thing, but maybe that's a good analogy because you and I don't wake up in the morning being like, 'Oh, I'm so glad I don't have polio. So grateful for the fact we don't do that.' We don't think about it. And I think that's a lot of what money can do. It is a lifestyle improvement, but don't think it's going to make you waking up ear to ear, grinning ear to ear.”

2023–2026

“The definitions are my own, so I'm just making this up, but I think rich is when you have enough money to make your mortgage payment, make your car payment, you can pay off your credit card bill every month. Like, you can afford the things that you're buying, technically. Wealthy, I think, is when you have a degree of independence and autonomy. The weird thing here is that wealth is the money that you don't spend. That's what wealth is. Like, the homes you didn't buy and the car you didn't buy. It's money that you saved and invested that is going to give you independence. And that's a hard thing for people, I think, to wrap their head around, that wealth is what you don't see. Because I can see your house, I can see your car, I can see your clothes, but I have no idea what your net worth is. I can't see your brokerage account. I can't see your bank account. So wealth is always hidden, and it throws a lot of people for a loop. Because if I was looking for a role model of physical fitness, well, I can see your fitness. I can see your weight and your muscle tone, what not. It's all visible. But when you're looking for a financial role model, who do you look up to? And a lot of people, particularly young people, will look up to the guy in the mansion with the Ferrari. But that guy, for all you know, is living paycheck to paycheck. A lot of those people are. And the person who is actually wealthy and independent might be the person in the modest house driving the modest car, that you would actually want to be. If you want to be wealthy instead of just rich, you want to be independent instead of just making your monthly payments, the people that you actually want to look up to are some of the hardest people to identify in society.”

2023–2026

“For a lot of people, not everybody, but for a lot of people, the more you are showing off or you just desire to show off, a lot of it is a wound that was inflicted upon you and you're like, I'm going to get back. And so, and sometimes too, you're not even showing off for other people. You're doing it for, you're doing it to prove to yourself.”

2022–2026 · changed view

“I hate that I'm quoting Buffett again, I don't want to do this ad nauseam for this whole podcast, but he has a great quote on wealth where he says he wants to leave his kids enough money that they can do anything but not so much money that they could do nothing. I think that's really the key, and that's how I think about my own kids, who are very young. But when my wife and I think, like, how do we want to use whatever savings that we have to benefit them, giving them a safety net but not a fuel is a — that's what my parents did for myself and my siblings. We — I always, when I was a teenager and in my early 20s, I always knew they would be there if I fell on my face, and they would — like, I would never just completely fail, I'd never be homeless, I would never — they'd always catch me. But they were never going to be a fuel. They're never just going to give me money just to make my life better. That was never going to be the case. And so knowing that they were going to be there, but knowing that I had to make it on my own, was so important for me. That's what I want to do for my own kids.”

2022–2026

“There are a lot of people that will define risk differently, by and large based off of the time horizon. So if you were to ask me, if the stock market fell 20% and stayed there for three years, is that a risk? A lot of people would say, yeah, that's a huge risk, that's an enormous, like, catastrophic risk. I personally would say that's not a risk at all, and the reason is because my goals lie 50 years in the future, so what's gonna happen in the next three years, I could honestly care less. That's really how I think. But that would not be my answer if I was a 90-year-old retired widow on a fixed income; then I'd have a very different answer for you. So I think, summing all that up, 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, so everyone thinks about risk differently. The takeaway from that is most investing debates where people are arguing with each other — is this a risk, is that a risk, should I buy this stock, is the market going to go up next week — by and large those debates are not actually debates. It's people with different risk tolerances and different time horizons talking over each other.”

2022–2026

“I think what's closer to the truth is that it's rigged against professionals who have to compete against each other on a 90-day clock. What were your returns last quarter and how do they rank next to your peers? That's what you live and die by. Like the rigged game the game's rigged against them. But for ordinary people who are like, I'm just going to invest in my 401k and leave it alone for 30 years. I don't even know what my password is. I don't care. I don't know or care if somebody else outperformed me last quarter. I'm just going to do this and follow my goals. That's where the money's made. And so I think that's the irony is we think it's rigged against you when it's rigged against the pros.”

2022–2026

“It's true for almost anything in life that the best story wins. Not the best idea, not the right idea. It's just the person who can tell a good story that gets people nodding along, that's who wins. That's been, that's true in politics. It's true in business. It's true in everything.”