THE PSYCHOLOGY OF MONEY (BY MORGAN HOUSEL)

Summary

The video script narrates the inspiring story of Ronald Read, a janitor who amassed $8 million through consistent saving and the power of compounding interest, emphasizing the significance of financial behavior over intelligence. It outlines five key takeaways from Morgan Housel's 'The Psychology of Money': 1) The necessity to accept the volatility associated with higher returns in investing, 2) The futility of comparing wealth leading to envy and dissatisfaction, 3) Recognizing that individual perspectives and backgrounds influence financial decisions, 4) Preparing for unforeseeable financial disasters (Black Swan events) rather than trying to predict them, and 5) Being aware of the natural human tendency towards pessimism and its potential to skew investment decisions. The summary encourages viewers to embrace a balanced approach to investing, focusing on long-term stability and personal financial goals rather than short-term gains or comparisons.

Takeaways

• 💼 **Consistent Saving and Compound Interest**: Ronald Read's story illustrates the power of consistent saving and the magic of compound interest, which can accumulate wealth over time without the need for lottery winnings or inheritance.
• 🧠 **Behavior Over Intelligence**: Financial success is more about behavior and habits with money rather than raw intelligence. It's a soft skill that anyone can learn and apply, regardless of their educational background.
• 💰 **Paying the Price for Investment Returns**: High returns in the stock market come with volatility, which is the price one pays for potentially higher gains. Investors must be prepared to handle downturns and not be deterred by short-term losses.
• 🏆 **The Futility of Keeping Up with Others**: Envy and social comparison can lead to dissatisfaction and unwise decisions. Recognizing the concept of 'enough' is crucial for maintaining financial and emotional health.
• 👀 **Different Perspectives, Different Decisions**: People's financial decisions are influenced by their unique backgrounds and experiences. What may seem irrational to one person might be entirely logical to another, emphasizing the importance of personalized financial strategies.
• 🎰 **Understanding Others' Choices**: Recognizing the reasons behind seemingly irrational financial behaviors, like lottery ticket purchases, can lead to a more empathetic and less judgmental approach to financial advice.
• 🚫 **Avoiding Unfamiliar Investments**: Stick to what you know and understand. Don't be swayed by trends or the actions of others in areas outside your competence.
• 🦢 **Black Swan Events and Preparation**: Unpredictable events like financial crises have a significant impact on the market. Instead of trying to predict them, it's more useful to prepare for such eventualities.
• 📉 **The High Cost of Timing the Market**: Missing out on the best-performing days can significantly reduce investment returns. It's more effective to remain invested and not attempt to time the market.
• 🌐 **The Seduction of Pessimism**: Pessimism often appears more intelligent and convincing because it plays into our evolutionary instincts. However, recognizing this bias can help maintain a balanced perspective on the future.
• ⚖️ **Balancing Optimism and Pessimism**: While it's important to be aware of potential risks and downsides, focusing on long-term progress and positive trends can lead to a more optimistic and potentially more profitable investment outlook.

Q & A

What was the story of Ronald Read that inspired many people about saving money?

Ronald Read was a janitor who had accumulated $8 million in savings by the time of his death in 2014. He did not win the lottery or inherit the money; instead, he saved consistently throughout his life, allowing the power of compounding to grow his wealth. This story illustrates the importance of financial behavior over raw intelligence in achieving wealth.

What is the significance of the statement 'Financial success is not a hard science, it’s a soft skill'?

The statement emphasizes that financial success is more about how one behaves with money rather than the level of financial knowledge one possesses. It suggests that anyone, regardless of their educational background or profession, can achieve financial success by adopting sound financial habits.

What does 'Paying the price' in investing mean?

'Paying the price' in investing refers to accepting the volatility and risks associated with pursuing higher returns. It means understanding that to achieve significant gains in the stock market, one must be prepared to endure periods of loss and market downturns.

Why is it important not to aim to maximize returns if you are not comfortable with volatility?

Maximizing returns often involves taking on higher risks, which can lead to significant decreases in net worth during market downturns. If an investor is not comfortable with such volatility, they may make hasty decisions that could negatively impact their long-term financial goals.

What is the psychological impact of social comparison on financial behavior?

Social comparison can lead to feelings of inadequacy and envy, even among those who are financially well-off. This can result in unwise financial decisions, such as taking on excessive risk to 'keep up' with others, which can lead to significant financial and emotional distress.

How does understanding that 'Crazy is in the eye of the beholder' help in making better investment decisions?

Recognizing that different people have different perspectives and values based on their backgrounds and experiences can prevent盲目模仿 (blind copying) of investment strategies that may not align with one's own financial goals and risk tolerance. It encourages investors to make decisions that are tailored to their unique circumstances.

What is a 'Black Swan' event, and why is it important for investors to prepare for such events?

A 'Black Swan' event is an extremely rare and unpredictable event that has severe impact on the financial markets. It is important for investors to prepare for such events because they are impossible to foresee but can have significant consequences. Being prepared both mentally and financially can help investors withstand these events without making rash decisions.

Why do pessimistic views often seem more compelling than optimistic ones?

Pessimistic views often seem more compelling because they tap into our evolutionary instincts that prioritize threats over opportunities. Additionally, setbacks and tragedies tend to happen more quickly and create more dramatic stories, which capture our attention more readily than gradual progress.

What is the key takeaway from the discussion on the 'seduction of pessimism'?

The key takeaway is that while pessimism may be more appealing to our instincts, it is important to recognize that the world is generally improving over time. Investors should be cautious about becoming overly swayed by pessimistic narratives and should consider the longer-term trends and progress when making investment decisions.

What is the advice given for dealing with the volatility that comes with stock market investing?

The advice is to view volatility as the price one pays for potentially higher returns and a brighter financial future. Investors should mentally and financially prepare for downturns and not be fooled into thinking they can avoid all costs associated with investing in the stock market.

How does the story of Ronald Read challenge common misconceptions about wealth accumulation?

Ronald Read's story challenges the misconception that significant wealth can only be accumulated through high-paying jobs, inheritance, or luck, such as winning the lottery. His example shows that consistent saving and the power of compounding can lead to substantial wealth, even from a modest income.

Why is it suggested not to follow the investment strategies of extremely wealthy individuals like billionaires?

It is suggested not to follow the investment strategies of billionaires because their financial goals and risk tolerance may differ significantly from those of an average investor. Billionaires may be more focused on preserving their wealth rather than aggressively growing it, which might not align with an individual's goal of building wealth.

Outlines

00:00

💰 The Power of Consistent Saving and Compounding

The first paragraph introduces the story of Ronald Read, a janitor who amassed $8 million in savings without winning the lottery or inheriting wealth. It emphasizes the importance of consistent saving and the role of compound interest. The moral is that financial success is more about behavior with money rather than intelligence or education. The video aims to help viewers improve their investing soft skills, starting with the concept of 'paying the price' for investments, which refers to enduring volatility for potentially higher returns. It uses the example of a concentrated portfolio and its inherent risk and volatility to illustrate this point.

05:04

🤑 The Phenomenon of Never Having Enough

The second paragraph discusses the psychological aspect of wealth where people often feel unsatisfied despite their financial achievements, as they compare themselves to others who have more. It uses statistics to show that even those in the top 1% of income earners can feel less successful when compared to someone earning slightly more. The narrative moves from a doctor earning $500,000 a year to a CEO making $10 million, and then to celebrities and billionaires like Michael Jordan and Jeff Bezos. The paragraph cautions against the dangers of envy and the foolish actions it can lead to, such as over-leveraging investments or breaking the law for financial gain. It concludes with the advice to accept that 'enough is enough' and not to trade needed possessions for unneeded desires.

10:05

🧐 Crazy Is in the Eye of the Beholder

The third paragraph explores the concept that what may seem like irrational financial behavior to some may be entirely logical from another person's perspective. It highlights the differences in backgrounds, experiences, and values that shape our financial decisions. Using the example of lottery ticket purchases, it points out that lower-income households spend more on lottery tickets, which may seem crazy until you consider their perspective and dreams of a better life. The paragraph advises investors to be aware of these differences and not to blindly copy investment strategies that don't align with their own financial goals and risk profiles.

15:05

👶 Peek-a-boo: Unforeseeable Events in the Market

The fourth paragraph deals with the unpredictability of major events, referred to as 'Black Swans,' that have significant impacts on society and financial markets. It discusses how humans tend to believe they should have been able to predict these events after they occur. The paragraph uses the example of the 1987 stock market crash to illustrate the potential reactions of investors and the importance of being prepared for unforeseen disasters. It advises against focusing on macroeconomic projections and instead encourages building a financial buffer to weather market volatility.

🌎 The Seduction of Pessimism

The fifth and final paragraph addresses the tendency for people to be more influenced by pessimistic views than optimistic ones. It suggests that pessimism aligns with our evolutionary instincts that prioritize threats over opportunities. The paragraph contrasts the attention-grabbing nature of negative stories with the less dramatic but more sustainable progress of positive change. It encourages viewers to consider the longer-term perspective and not be swayed by short-term pessimism. The conclusion is that the world is better than it may seem, and investors should be cautious of the seductive appeal of pessimism over optimism.

📚 Final Thoughts and Recommendations

The final part of the script is a closing statement that summarizes the key takeaways from the video and encourages viewers to read Morgan Housel's book for further insights. It suggests additional resources for understanding the relationship between human psychology and money, ending the video on a positive note.

Keywords

💡Compounding

Compounding refers to the process where an asset's earnings, interest, or revenue are reinvested to generate additional returns. In the context of the video, it is highlighted as a powerful financial tool that Ronald Read utilized to amass his wealth over time. It is a core concept in personal finance and investing, demonstrating how consistent saving and reinvestment can lead to substantial wealth accumulation.

💡Behavior with Money

This concept emphasizes the importance of one's habits and attitudes towards money management over raw intelligence or formal education. The video suggests that prudent money behaviors can lead to financial success, regardless of one's background. It is illustrated through the story of Ronald Read, a janitor whose disciplined saving habits resulted in a significant nest egg.

💡Financial Success

Financial success is defined as the achievement of financial goals, which often includes wealth accumulation, financial stability, and the ability to manage one's finances effectively. The video posits that financial success is more about soft skills, such as behavior and decision-making, rather than hard knowledge. It is exemplified by the story of Ronald Read and is a central theme of the video.

💡Volatility

Volatility in the context of investing refers to the degree of variation in a financial asset's value over time. It is used in the video to describe the inherent risk of concentrated portfolios and the stock market in general. The video suggests that a willingness to endure volatility is the 'price' one pays for potentially higher returns, as illustrated by the hypothetical investment in Netflix.

💡Envy

Envy is an emotion that arises when one desires what someone else has. In the video, it is discussed as a negative force that can lead to irrational financial decisions and dissatisfaction. The video uses the example of income comparisons to demonstrate how envy can make individuals feel 'never enough,' despite their actual financial status.

💡Perspective

Perspective refers to a person's viewpoint or the way they understand and evaluate a situation. The video emphasizes that different backgrounds and experiences lead to varied perspectives on money and investing. It is crucial for making informed investment decisions and for understanding why people make the financial choices they do, as shown by the discussion on lottery ticket purchases among different income groups.

💡Black Swan Events

Black Swan Events are unpredictable, rare, and have significant impact. Named after Nassim Taleb's theory, these events are characterized by their extreme impact and the human tendency to rationalize them in hindsight. The video uses the term to caution against the futile effort of trying to predict such events and to emphasize the importance of being prepared for unforeseen financial disruptions.

💡Pessimism

Pessimism is a worldview that anticipates negative outcomes or dwells on the potential for failure. The video discusses how pessimism can be seductive and often appears more compelling than optimism due to our evolutionary bias towards loss aversion. It contrasts this with the slower, less dramatic nature of progress, suggesting that a balanced view is necessary for successful investing.

💡Risk Tolerance

Risk tolerance is an individual's ability and willingness to take on risk in the pursuit of financial goals. It is mentioned in the video in the context of portfolio management and the trade-off between potential returns and the volatility one is willing to accept. Understanding one's risk tolerance is critical for aligning investment strategies with personal financial goals and emotional well-being.

💡Portfolio Management

Portfolio management involves the strategic allocation and rebalancing of investments to achieve one's financial objectives. The video touches on this concept when discussing the trade-offs between concentrated portfolios and the potential for higher returns versus the increased risk of volatility. It is a key aspect of personal finance and is closely tied to an individual's risk tolerance and financial goals.

💡Financial Freedom

Financial freedom is the state of having enough financial resources to cover all expenses without having to work actively for a living. The video uses this concept to inspire viewers to learn and apply sound investment strategies. It is presented as a desirable end-goal that can be achieved through disciplined saving, smart investing, and a clear understanding of one's financial behaviors.

Highlights

Ronald Read, a janitor, had $8 million in savings when he died in 2014. He saved consistently throughout his life and benefited from compounding interest.

Financial success is more about how you behave with money rather than how much you know. Even without a Harvard degree or Wall Street job, you can become rich by behaving in a sound way.

Investing comes with a price - volatility. To achieve high returns in the stock market over the long term, you must be willing to endure periods of significant declines in your portfolio value.

Social comparison can lead to feelings of never having enough. Even highly paid professionals may feel inadequate when they compare themselves to others who earn more.

Different people have different perspectives and values when it comes to money based on their backgrounds, experiences and education. What seems crazy to one person may make perfect sense to another.

Major events like the Great Depression, World War II, financial crises and Covid-19 had huge impacts on society and financial markets, but were impossible to foresee. These are known as Black Swan events.

Missing just the 4 best performing stock market days in a 20 year period would have reduced your S&P 500 index return from 291% to 164%. It's more useful to prepare for unforeseen disasters than to try to predict them.

Pessimism is often seen as more intelligent than optimism. Losses loom larger than gains for evolutionary reasons, and setbacks often happen faster than progress.

The world is better than you think. While pessimists may be more persuasive, it's important to consider the longer-term optimistic trends like rising life expectancy, cheaper sustainable energy and increasing computing power.

Envy is the worst of the seven deadly sins. You should never risk what you have and need for something you don't have and don't need.

Different perspectives can lead to different actions being reasonable or rational. It's important to understand this when making investment decisions.

Instead of trying to foresee disasters, prepare yourself mentally and financially so you can survive them.

Be careful when taking investment advice. Understand that pessimism may appeal more to your survival instincts than optimism does.

The book 'The Psychology of Money' by Morgan Housel provides valuable insights into the human psychology around money and investing.

This video provides a top 5 takeaways summary of key concepts from 'The Psychology of Money'.

The Swedish Investor channel offers tips and tools for reaching financial freedom through stock market investing.

High returns from a concentrated portfolio come with the price of higher volatility.

If you can't handle a 20% drop in your net worth in a week, you shouldn't aim to maximize your returns as the higher the returns, the higher the volatility fee.

Even if you could foresee a company's success like Netflix, you would still have to endure major downturns and be able to stomach the price of that journey.

Transcripts

Have you heard the story about Ronald Read,

the janitor that had 8 million dollars in savings when he died in 2014?

Yes, you heard that right. Janitor. $8 millions.

And he didn´t win the lottery or inherit the money either.

He just saved consistently throughout his life,

while letting the wonders of compounding do its thing.

The moral is that your behavior with money is oftentimes more important than how intelligent you are.

Even if you don´t have a diploma from Harvard, or work on Wall Street,

you can become rich by just behaving in a sound way.

As Morgan Housel puts it:

“Financial success is not a hard science.

It’s a soft skill, where how you behave is more important than what you know.”

Spend your next ten to fifteen minutes on this video, and you might excel on the soft skill of investing!

This is a top 5 takeaways summary of The Psychology of Money, by Morgan Housel.

And this is the Swedish Investor,

bringing you the best tips and tools for reaching financial freedom through stock market investing.

Takeaway number 1: Pay the price

Let´s say you want a new, nice, watch.

You go to the store to check out the offerings.

You are really after something that will impress your friends

and the lovely lady you are dating.

You now have a choice:

either pay for the watch, or steal it and run

because you have done your cardio, right?

My guess is that you would choose option number one

- no matter your physical capacity.

You would take out your card and swipe that thing; do the right thing.

The point is that you know that having a new watch comes with a price, a fee.

And it's just the same with investing; it comes with a price too.

Throughout the videos on this channel,

there are some reoccurring takeaways for high returns;

one of them being a somewhat concentrated portfolio

with Peter Lynch perhaps being the exception.

The concentrated portfolio brings with it a characteristic to your performance;

it will be volatile.

This is the price, the fee, for having high returns in the stock market over the long-term.

If you don't have the stomach to stay the course when your net worth decreases by, say, 20% during a single week,

as two of your major holdings report quarterly earnings below what analysts expected,

don't aim to maximize your returns;

because the higher the returns, the higher this fee typically is.

Let´s say you already 10 years ago could visualize Netflix’ bright future.

You invested a large portion of your net worth in the stock.

Well, then you would be quite a rich person today!

However, could you afford paying the price for this journey?

Netflix has, during this period, had many major downturns.

Would you have sat still in that boat during 2011 when Netflix lost tons of customers,

and the stock price fell 80% from its peak during the ensuing months?

Your portfolio returns would look terrible.

What would you tell your spouse and your kids?

Could you stomach facing them knowing that you might just have endangered their future?

Would you still think that being almost all-in Netflix is a good idea?

This is of course an extreme example,

but even if you have something less extreme than an all-in Netflix approach to investing,

you’ll have to pay the price of volatility nonetheless.

Let’s say that you bought an S&P 500 index fund in 1980.

You’d still have to face about 13 years combined when your investment portfolio was down 20% from its high.

And about 8 months when it was down 50%. That’s tough!

Stock-market investing is a great thing, that enables wealth creation like few other options.

But don´t try to fool yourself – it doesn´t come for free.

All investors will experience volatility;

and you have to look at it as the price you pay for a brighter future.

Takeaway number 2: Never Enough

It’s a very interesting phenomenon that

you can hand somebody a $2 million bonus, and they’re fine until they find out that

the person next to them got 2-million-1, and then they’re sick for the next year.

Capitalism is great at doing two things:

generating wealth and generating envy.

The urge to surpass your neighbours, peers, and friends,

can help energize your hard work and strive to really "make it".

And of course, being motivated into becoming more productive and doing meaningful work

is a good thing, but social comparison can also cause us to feel like we’re never enough.

Let’s look at some statistics.

To belong to the top 1% highest income earners in the US,

you’d have to earn somewhere around $500,000 a year.

That’s what a highly specialized doctor, let’s call him Bill, earns,

and by almost any standard, Bill would be considered rich.

He can afford to drive nice cars, go on long vacations to exotic countries,

perhaps hire someone to do work which he thinks is tedious, etc.

Bill has been feeling about himself

and what he has achieved financially in his life.

Well, that was until he bought a vacation home in the Hamptons

and realized that he had Stan as his neighbour.

Stan belongs to the top 1% of the 1%.

He is a CEO of a quite large public company, and earns a staggering $10 million per year.

Now, you’d hope that at least Stan would be satisfied with his financial achievements, but nope!

This guy was a childhood friend of Michael Jordan,

and this all-time great basketball player is someone who belongs to the 1% of the 1% of the 1%.

And well, compared to Michael’s fortune of about $2b,

Stan’s yearly salary of $10m suddenly seems like peanuts.

Does it end here?

Well no, it doesn’t.

Because Michael occasionally attends parties with celebrities where a guy named Jeff Bezos shows up.

Bezos is in the top 1% of the 1% of the 1% of the 1%

and he increased his net worth by about $75b in 2020, now sitting at something like $200b.

There’s always a bigger fish.

The type of envy which has emerged from comparisons of this kind

has caused a lot of people to do foolish things throughout history.

Some have leveraged their portfolios to the teeth in order to move up to a higher pyramid,

just to lose it all and then commit suicide.

Some have acted on insider information and lost both their personal reputation

and then later their freedom when they’ve gone to jail.

Many have forsaken their families

and then had their partners leaving them or cheating on them (or both) as a result.

By watching this channel and learning on how to become a successful investor;

chances are that you will at some point reach a level of financial freedom

that the average Joe can only dream about.

But you need to, at some point, accept that enough is enough.

We will not trade something that we have and need for something that we don’t have and don’t need,

even if we’d kind of like to have it.

Takeaway number 3: Crazy is in the eye of the beholder

At a first glance, it seems like a lot of people do crazy things with their money.

Some spend it in ridiculous amounts on ridiculous items,

and others hide it under their mattresses.

But the thing to remember is that people come from different backgrounds with different childhoods,

different parents, different life experiences and different educations.

All this adds up to different perspectives and values.

What seems crazy to you might make total sense for me.

Morgan uses the example of lottery tickets in the book:

the lowest income households in the US spend more than 400 dollars per year on the lottery.

This is 4 times more than the average in the highest income group.

Combine this with the fact that more than a third of Americans

cannot come up with 400 dollars for an emergency.

Do these people spend their emergency buffer on lottery tickets?

Seems crazy, doesn´t it?

But again; we don´t have the same perspective as individuals.

Try to see it from their perspective;

they live paycheck to paycheck, with little room to save money,

they often lack education and thus a nice career trajectory

they can´t afford a nice vacation or a new car,

and they can´t put their children through college without a mountain of debt.

Buying a lottery ticket is their way of buying into the dream that many of us already live.

That is why they buy more lottery tickets than we do.

Not so crazy after all perhaps?

So, how does this make you a better investor?

For one thing, by acknowledging that we are different,

we become less tempted to copying an investment portfolio or strategy

which doesn’t suit our own goals.

For example, our own risk-profile might be higher than a billionaire,

as our own focus is more on the “getting rich part”,

and not so much about “staying rich”.

Copying the billionaire’s portfolio might be suboptimal for your goals.

Acknowledging differences can also help us to say no more easily to investments

that are outside our own circle of competence.

Take Gamestop for example.

As I am not a trader, I didn’t participate in this drama at all.

It is simply not my card to play.

Understanding different peoples’ perspectives,

or at least that there are different lenses to see the world through,

will help you make better sense of our society

and lead you on the path that is yours.

Takeaway number 4: Peek-a-boo

What does the Great Depression, World War II,

the financial crises and Covid-19 all have in common?

They were all events which shaped our society,

they had huge impacts on the financial markets,

and they were pretty much impossible to foresee.

Nassim Taleb, who is one of my favourite authors,

would refer to these event as Black Swans.

The definition of a Black Swan is that:

1. It’s an outlier.

Nothing that has happened before can convincingly point to even the possibility of the event.

2. It carries an extreme impact.

3. It becomes explainable after the fact.

Human nature fools us into believing that we should have been able to know it would happen all along.

Imagine it is Black Monday 1987.

How would you have reacted to the market loosing almost one fourth of its value in one day?

Would you have been one of the individuals that shouted: “SELL! SELL!”

or would you have been able to weather the storm,

perhaps putting in additional chips which you’ve kept on the side-lines?

Here’s an interesting fact:

If you invested in the S&P 500 index 20 years ago,

but you missed out on the 4 best performing stock market days,

you’d have a 164% return instead of 291%.

That’s quite a big difference.

The moral of this takeaway is that it is more useful to prepare yourself,

both mentally and financially,

for a disaster which you cannot foresee than hoping that you’re able to react before everyone else.

Stop listening to macro projections,

the things that will cause big fear among the investment community in the future

are the things that are unlikely to be foreseen anyways.

Takeaway number 5: The seduction of pessimism

If I were to give you a bunch of reasons to why the market will crash later this year,

mentioning the gigantic US governmental debt,

that stimulus checks may lead to the return of inflation,

and perhaps something about new strains of Covid-19;

you would most likely be intrigued,

and perhaps end up with quite a negative view of where in the market cycle that we are at the moment.

Were I instead to give you examples of why things probably will continue to get better,

by showing how life expectancy is rising,

how sustainable energy is getting cheaper

or how computing power is exploding,

you would most likely just shrug your shoulders and not think twice about it.

We all know that the pessimistic person sounds so very intelligent,

and the optimist sounds naïve in comparison;

why is that?

Daniel Kahneman, the author of Thinking Fast and Slow,

says asymmetry towards loss and listening to pessimists is an evolutionary trait;

“When directly compared or weighted against each other, losses loom larger than gains.

Organisms that treat threats as more urgent than opportunities

have a better chance to survive and reproduce.”

We tend to listen to pessimists more carefully, not only for evolutionary reasons,

but also because progress happens much slower than setbacks do.

Progress rarely happens overnight, but setbacks often does.

Because tragedies and setbacks happen during much shorter time-periods,

its much easier to create an intriguing and persuading story around it,

and thus it receives more attention.

To create an optimistic story about the future,

we must look at longer time-horizons.

This often becomes more vague and less dramatic.

Knowing that you will perhaps be more fascinated by a pessimist,

and less so by an optimist,

can perhaps help you becoming less asymmetric towards it in the future.

The world is better than you think,

as Sweden’s Hans Rosling would have said.

So. you are not going to get rich in the stock market without paying the price of volatility

- Envy is the worst of the seven deadly sins.

Never risk what you have and need for what you don’t have and don’t need.

- Different perspectives cause different courses of actions to be reasonable or rational

- Instead of trying to foresee disasters prepare yourself mentally and financially so that you can survive them;

and - Be careful when taking investment advice.

Understand that pessimism appeals more to your survival instincts than optimism does.

That was it for today – but that was not it from Morgan Housel.

Check out the book, it’s a real gem!

Here’s a suggestion on what you can watch next

if you want to understand more about the human psychology and its relation to money.

Cheers!