Obvious things escape attention because attention is drawn to what it wants to see, or what it thinks makes the biggest difference, which often isn’t the obvious things because obvious things are viewed as too simple to make a difference.
—Morgan Housel
Having more than you need can be a liability masquerading as an advantage, and no sense of “enough” can look like ambition but often leads you over the edge.
—Morgan Housel
The Financial Times wrote, “In 2008 the three most admired personalities in sport were probably Tiger Woods, Lance Armstrong and Oscar Pistorius.” The same falls from grace happen in investing. Chose your role models carefully.
—Morgan Housel
Short-term thinking is at the root of most of our problems, whether it’s in business, politics, investing, or work.
—Morgan Housel
Blogger Jesse Livermore writes,”Most people, whether bull or bear, when they are right, are right for the wrong reason, in my opinion.”
—Morgan Housel
People are twice as biased as they think they are, which is precisely why biases are dangerous.
—Morgan Housel
Finance would be better if it was taught by the psychology and history departments at universities.
—Morgan Housel
Change is as rapid as it is unpredictable.
—Morgan Housel
Several academic studies have shown that those who trade the most earn the lowest returns. Remember Pascal’s wisdom: “All man’s miseries derive from not being able to sit in a quiet room alone.”
—Morgan Housel
When you think you have a great idea, go out of your way to talk with someone who disagrees with it. At worst, you continue to disagree with them. More often, you’ll gain valuable perspective. Fight confirmation bias like the plague.
—Morgan Housel
You can control your portfolio allocation, your own education, who you listen to, what you read, what evidence you pay attention to, and how you respond to certain events. You cannot control what the Fed does, laws Congress sets, the next jobs report, or whether a company will beat earnings estimates. Focus on the former; try to ignore the latter.
—Morgan Housel
Two things make an economy grow: population growth and productivity growth. Everything else is a function of one of those two drivers.
—Morgan Housel
Strong political beliefs in either direction limit your ability to make rational decisions more than almost anything else.
—Morgan Housel
No one on the Forbes 400 list of richest Americans can be described as a “perma-bear.” A natural sense of optimism not only healthy, but vital.
—Morgan Housel
You are under no obligation to read or watch financial news. If you do, you are under no obligation to take any of it seriously.
—Morgan Housel
A money manager’s amount of experience doesn’t tell you much. You can underperform the market for an entire career. Many have.
—Morgan Housel
Saying “I’ll be greedy when others are fearful” is easier than actually doing it.
—Morgan Housel
Try to learn as many investing mistakes as possible vicariously through others. Other people have made every mistake in the book. You can learn more from studying the investing failures than the investing greats.
—Morgan Housel
Do nothing are the two most powerful—and underused—words in investing. The urge to act has transferred an inconceivable amount of wealth from investors to brokers.
—Morgan Housel
Dean Williams once noted that “Expertise is great, but it has a bad side effect: It tends to create the inability to accept new ideas.” Some of the world’s best investors have no formal backgrounds in finance—which helps them tremendously.
—Morgan Housel
Investors want to believe in someone. Forecasters want to earn a living. One of those groups is going to be disappointed. I think you know which.
—Morgan Housel
Focus on not getting beat by the market before you think about trying to beat it.
—Morgan Housel
There is a strong correlation between knowledge and humility. The best investors realize how little they know.
—Morgan Housel
Not a single person in the world knows what the market will do in the short run.
—Morgan Housel
Investment bank Dresdner Kleinwort looked at analysts’ predictions of interest rates, and compared that with what interest rates actually did in hindsight. It found an almost perfect lag. “Analysts are terribly good at telling us what has just happened but of little use in telling us what is going to happen in the future,” the bank wrote. It’s common to confuse the rearview mirror for the windshield.
—Morgan Housel
If you’re going to try to predict the future—whether it’s where the market is heading, or what the economy is going to do, or whether you’ll be promoted—think in terms of probabilities, not certainties. Death and taxes, as they say, are the only exceptions to this rule.
—Morgan Housel
There’s a strong correlation between knowledge and humility. People who spend 10 minutes on Google studying monetary policy think they have it all figured out, while people with Ph.D.s and decades of experience throw up their hands in frustration. The more you study economics, the more you realize how little we know about it.
—Morgan Housel
How long you stay invested for will likely be the single most important factor determining how well you do at investing.
—Morgan Housel
When most people say they want to be a millionaire, what they really mean is “I want to spend $1 million,” which is literally the opposite of being a millionaire.
—Morgan Housel
Our memories of financial history seem to extend about a decade back. “Time heals all wounds,” the saying goes. It also erases many important lessons.
—Morgan Housel
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