Morgan Housel
Appearances
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And James, as you will see when he comes on, is the nicest, most humble, politest guy you'll ever meet. So the fact that not only had James had success in a book, but I was like, I want to be James. I'm not like, not just his success. I want to be him. was a big motivator for me to be like, okay, I really want to write a book now. And James and I have become friends since then.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's actually interesting. In the summer of 2018, I was in Omaha, Nebraska for the Berkshire Hathaway shareholder meeting. And we rented a house with 10 friends. And this random guy came over to have dinner. I don't know who invited him. No idea who he was. And he introduced himself. He said, Hi, I'm James Clear. I'm writing a book called Atomic Habits. It's going to come out in a couple months.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so we had no idea, but like in hindsight, looking back, it's so funny to piece all that together.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'd say in some ways, nothing has changed. In some ways, everything has changed. Nothing has changed because I still write about the same topics. I still read the same topics. I still sit in the same chair and think the same way. My wife and kids don't treat me any differently. In most ways, nothing has changed. What the book did to me
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's a very real thing is it gave me independence, which is a big topic in psychology of money. What you want to use money and wealth for is to gain control over your time. And if I'm being honest with you, I feel like I'm really opening myself up in this podcast here. Before the book, I was always filled with career anxiety. What happens if I get laid off? What happens if this doesn't work?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it really scared me, particularly as I became a father. I got mouths to feed. What happens if this doesn't work? That's the one thing that's changed post-books, a greater sense of financial independence. That means the world to me. And I also, my wife has pointed this out too, I think I've been in a better mental state post-books than I have in my life.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It didn't make me happier, but I think it removed anxiety from my life. It's interesting that in a way that was what the book was about. But then because of writing the book, I got to experience it myself, which has been the cool thing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's all of the above. It's book royalties. It's speaking. It's all of the above. And we haven't really changed our lifestyle to any meaningful degree. We live in the same house and drive the same car and whatnot. A lot of that has just accrued to net worth. This is what I write about in Psychology of Money too. Wealth is what you don't see. It's not the cars that you buy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it used to be that all of my emphasis and research and enjoyment was investing. I want to scour the world and study investing history and whatnot. And I still love that. I'll always do that. But the art of storytelling really bit me 10 or 15 years ago. And that's what I've really find joy in doing now. And that's the craft that I want to hone.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not the house that you buy. Wealth is the money that you've saved that gives you independence, that allows you to do whatever the heck you want to do. And so that's what it's been for us. It's like we've saved the vast, vast majority of it. And because of that, the anxiety that I had of what if back then has largely been stripped away.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Now, you will never get rid of what if because what if you get hit by a car? You're never going to remove risk. But a lot of the tangible career risks that I had five years ago has dissipated.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think jumping around like that has been really important. If you just put yourself in a box and say, I am a blank. you're cutting off so much of the world that you might find enjoyment in and have some talent in doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's how I always define it. If you are the smartest financial mind in the world, you have a PhD in finance from Harvard, you know all the numbers, you won the Nobel Prize in economics, but you don't have control over your behavior. You don't have a control over your greed and fear or patience or temper. You can and very likely will go broke.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the flip side of that is if you have no financial education, you don't know anything. You didn't graduate high school. You're a country bumpkin who knows nothing. But you do have control over your greed and fear and patience and temper. You have everything you need to become wealthy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think I was 19 when I first stumbled across investing. I've told the story before, but it'll always stick with me. When I was 18, my grandparents gave me $1,000 and I put it in a CD at the bank, certificate of deposit, where it earned interest. And I think I intuitively knew what interest was, but I didn't really get it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Just yesterday, there was a news story that came out about this guy who lived in the middle of West Virginia or something like that and lived in a trailer. I heard this. He recently died and he left $4 million to his town.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's the perfect example. He does not have the pedigree. He does not have the degree from Harvard. He did not work at Goldman Sachs, but he was clearly patient, not greedy, et cetera, et cetera. And because of that, he became very wealthy. So there are very few fields in which that's the case. If you did not go to medical school, you do not know how to perform open heart surgery, full stop.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's not like that in finance. You don't need the education to do well as long as you have the behaviors. So because it's one of the few fields that's like that, it's easy to overlook what you need. And most people, if they're like, I want to become a good investor, they're like, great, I'm going to go get a degree in finance. I'm going to memorize all the formulas.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And by and large, that's not what you need. What you need is the behavior. Now, for a lot of people, that behavior is nature instead of nurture. They're born understanding. Their brain is wired in a way that lets them do it. And some people are the opposite of that. But just understanding what you need and what you don't is, I think, the most important thing of doing well with money.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In math and in physics, there's one right answer for everybody. So if I say, what is two plus two? It's four, no matter who you are or where you're from or where you live or how old you are. But in finance, it's not like that. Because if I say, how should you invest your money? Well, what works for me might not work for you and vice versa.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Everyone listening, we're all going to come to a different conclusion. Because our risk tolerance is different. Our social aspirations are different. Our time horizons are different. Everything is different. So it's much closer to like taste in music. And if I said, what's the best music? There's no one answer for that. It just depends who you are and what you like and how old you are.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Music that I liked when I was 15 would be atrocious to me now. So you're going to change throughout time. That's most of the nuance in finance is just realizing that there is not one right answer. And I think the majority of the time in finance, when people are arguing with each other about how should you spend your money? How should you invest your money? They're not actually arguing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They're not actually debating. It's just people with different experiences and different risk tolerances talking over each other. And it's the equivalent. If I think X and X is good for me, you might think X is terrible because it would be bad for you. That's the biggest issue with financial debates.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The first thing I think is important is we live a great life. We live in a great house in a great neighborhood and we take great vacations. We are not the kind of people, like the guy who's living in the trailer and is leaving all this money. There is obviously some balance to it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I remember I logged into my account the next day and the balance had grown from $1,000 to $1,000 and 3 cents. I earned three cents of interest. And I remember jaw hitting the floor, being completely stunned that I just earned money for doing nothing. Just for waking up in the morning, somebody paid me. I knew at that moment, I was like, this is the thing. This is what I love doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think the idea that if your expectations grow faster than your income, you will never, ever be happy with your money is one of the most important and powerful realizations in finance. that there are hedge fund managers who make $100 million a year and feel like they're falling behind because their buddies make $200 million a year. There is no cap to that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Elon Musk displaced Jeff Bezos as the richest man in the world. I don't know this to be the case, but maybe that bothered Jeff Bezos because now he's only worth a quarter of a trillion dollars while Musk was worth a third of a trillion dollars. There's no end to financial comparison.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so, yes, it's important if you want to do well with money to grow your income, invest your money, grow your net worth. But it is equally important and very easy to overlook that you also need to go out of your way to manage your expectations. And just be happy with what you have, knowing that if you get the bigger house or the nicer car, it's going to feel cool for like four minutes.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And then you're going to get used to it and it's not going to feel any different. And so, look, we live in a nice house in a safe neighborhood. All of that checks all the boxes. But there is this thing of, yeah, but if we got a bigger house, we wouldn't be any happier. And we might actually spoil the expectations of our kids who think that that bigger house is now the norm.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So this is something that like we always battle with because even for us who believe this and live it, the expectation of, ah, maybe we should get a Range Rover. It's always there. That feeling, that drive is always there. But then just taking a step back and be like, well, is there something else we could do with our money? Would the vacation make us happier? Would donating it make us happier?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That battle is always there. But whenever we've experienced it, and when you go out of your way to keep your expectations low too, then your drive for a better life moves away from what's the next car, what's the next house. Actually, what makes us happier is spending more time with our kids, going for walks with my wife. So like, hey, can we use our money to do that?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Use our money to free up our time so that we can spend more time with our kids and with each other? Because that's definitely going to make us happier. But the Range Rover probably won't. That's the debate that we always have in our heads.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's so varied. And this is one thing that I've kind of tweaked my views on in the last couple of years is that the $6,000 bag for your sister-in-law, maybe that is the best use of her money.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Maybe it's not, but for some people it would be, even if for my wife and I, or maybe you, it would not be to each their own. And there are a lot of people who will look at how my wife and I spend our money professionally. particularly the few of our friends who would know our income and then look at how we spend, would be like, what are you guys doing? You are missing out on so much.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I don't think we are. I think we're pretty cognizant of what we're doing and how we spend it. And we're doing the best thing for us, which to me, all that matters. I've never wanted to become... the mansion Lamborghini guy. I've always wanted to become the independent guy who can just do whatever he wants any day. And no one's going to tell me what to do or when to do it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so all throughout college, I wanted to be a hedge fund manager or an investment banker. I think in that era, like the mid 2000s, that's what everybody wanted to do. in that field. Then I stumbled haphazardly across writing. It was never part of the plan. I never wanted to become a writer.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm not like a, I reject all authority kind of guy. I'm not like a hardcore libertarian, but for money stuff, for work stuff, I'm going to have the most fun and do the best work if it's on my own terms. So the fact that I can write what I want, when I want, and the reason I can do that is because I have some sense of financial independence. I don't need to work for the salaried company.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That is the best use of money for me by far.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think back to what we said of everyone's different and maybe the $6,000 handbag is right for you, but not for me. But if there is one common denominator of which almost everybody from every culture and every age is going to get benefit from, it's independence. People by and large do not enjoy being told when to work, how to work, and what work to do. They do that because they have to.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They need the paycheck and that's the way to do it. But when most people, the first taste of independence they have, they're like, oh, that's good. That's the one I like. And even if you are working for a salaried company, if you have a boss and in a position that gives you independence and autonomy, not only is it more enjoyable, you're going to do better work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The quality of your work is going to go up if you're doing it on your own terms. It's such a universal driver of happiness. And maybe that's actually the wrong word because independence doesn't necessarily make you happy, but it removes unhappiness. That's an important nuance, but it's really important. People who are wealthier by and large do not wake up happier.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Happy in the sense that they wake up smiling every morning. It's not that, but I think they have fewer bad days. And that is a huge life advantage to remove uncertainty and misery from your life is massive. It's one of the few things in money that tends to be universal.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's also very easy to overlook because particularly for young people and particularly young men, the knee-jerk reaction of why do you want to become rich is so I can have nice stuff, so I can have a big house and a fancy car. And it's easy to overlook what's actually going to bring you the most joy is using it to give yourself independence.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The two biggest that come to mind, one from personal finance and one from investing. In personal finance, it's social comparison. And there is no such thing as an objective measure of wealth. Everything is just relative to what other people have. You look at your house, your car, your bank account, and you say, what do I have compared to that person?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Even when I started doing it, I was a senior in college when I got a job at The Motley Fool writing about stocks. I didn't want to do it. I just needed a job. But I fell in love with it. So I think that in itself is a lesson, particularly for people in college. You might think you know what you want to do and you have a goal and you have a path in front of you.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That person is usually your friends, your neighbors, your coworkers, but also just people on social media. That is the fuel to move the goalpost. Because even if you are doing well, you're going to start looking at people who are doing better than you, and you're always going to feel inadequate. And it's very hard to break that cycle. Social media makes this so ridiculously difficult.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because now the people who you are comparing yourself to is like the curated algorithmic reel on TikTok and Instagram. that knows exactly what's going to make you anxious. They know exactly which posts are going to make you feel inadequate because that's what's going to get you to stare at it the longest and be like, why don't I have what he or she has?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's like a really difficult trap to break. In investing, the pitfall is FOMO. It's fear of missing out. It's similar to social comparison. That person is getting richer than me and therefore I need to take more risks or try to copy that person in order to catch up to him. And the danger in that is that just like in gambling, everyone on social media talks about their wins, never their losses.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So the people who look like they are getting so much richer than you, A, probably are not. Like it's probably some sort of mirage. But because you don't know that, you're going to start taking risks that you shouldn't and can't afford to take.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2021, when there was like the Robinhood explosion in investing, it went supernova at that point because you had all these 19-year-old people who were like, I just made $20,000 on Robinhood and you should be able to double your money every week. A, most of that was bullshit. And B, the people who looked at that said, I need to go start trading options too. And you know how that ended.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
For the vast majority of them, it ended in tears and losses. And so all of that is driven by FOMO, the idea that someone else is getting richer than you and you need to catch up. And so if you can break away from that and realize that there are always people who are either look like or actually are getting richer than you, and that's fine. That's totally fine. It's unavoidable.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You don't need to catch them. You just need to play your own game and do what works for you is really important.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I would actually take it a step further with nothing to do with your sister-in-law.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm sure she's wonderful.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
When you see somebody driving a $100,000 car, the only thing you know about their finances is that they have $100,000 less than they did before they bought the car. You have no idea how much money they have. And I learned about this when I was in college. I was a valet at a nice hotel in Los Angeles. And these people would come in driving Porsches and Ferraris and Lamborghinis.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But so many people, including myself, probably you, stumble into what they actually love and want to do serendipitously. So I think it was great that I did not follow the path that I thought I had paved for myself and just stumbled into something else.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And then if you get to know them and talk to them, you realize they're actually not that successful. They just spent half of their salary on a Lamborghini lease payment. The vision that they had, the identity of, oh, this guy's driving a Lambo. He's clearly super successful. No, you actually don't know that at all.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's the classic millionaire next door of like a lot of the people who are very successful are actually driving F-150s. They're actually driving Toyota 4Runners. And you would never know it because that's why they're rich. It's because they actually invested their money instead of spending it on a car they couldn't afford.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's this idea that getting rich and staying rich are two different skills, and they're often conflicting skills, which means it's hard for people to do them at the same time. Getting rich requires taking a risk, being optimistic about yourself, being optimistic about the economy and the stock market. That's what you need to get rich. And staying rich is almost like the exact opposite.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have to be a little bit paranoid, a little bit conservative, scared of risk, cognizant of risk. in order to make sure that you're not taking big enough risks to throw yourself over the edge. I think one way to summarize it is save your money like a pessimist and invest your money like an optimist. Save your money with the idea that the world is risky and dangerous and fragile.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And there are always recessions and bear markets and pandemics and terrorist attacks and wars and political mess-ups that you need to be able to endure financially. But if you can, if you can keep your head on straight during those periods, the rewards for those who stick around are incredible. I've been investing for 20 years. 2004 is about when I started investing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
During that time, there has never been a single moment in which you couldn't point to a dozen things going catastrophically wrong in the economy. Every single moment, stock market's overvalued, companies aren't doing very well, unemployment's too high, inflation's too high, interest rates are too low. At any moment, you could have pointed to a dozen things.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And during those 20 years, the stock market is up fourfold. That's how investing works. You have to save like a pessimist to endure all of those dozen things to point at. But if you can stick around, you look back over a 20-year period and you're like, man, I made four times my money during this period. It's incredible. That's always how it works.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Saving like a pessimist, investing like an optimist.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, I think Bill Gates is the best example of someone who has gotten optimism and pessimism to coexist. Because when he started Microsoft in the 70s, he took the most optimistic swing that any entrepreneur has ever taken. When in the 70s, he said, every desk in the world needs a computer on it. That was the craziest idea in the world. Crazy optimism.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At the same time, from the day he started Microsoft to the day he left in 2000, he ran it as conservatively as you possibly could. He said he always wanted enough cash in the bank so that he could run Microsoft for one year with no revenue. Like the most pessimistic way to run a business. I think that's why they've done so well.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not that they're always optimistic or they're always pessimistic. They realize that if you can survive all the uncertainty and all the upheaval, then you have a fighting chance to actually compound for 50 years as they have. And very few businesses are actually like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
If you have a very optimistic CEO, they're like, let's bury ourself in debt and invest every penny that we have and swing for the fences. And nine out of 10 of those businesses are eventually going to go bankrupt, probably pretty soon. But also if you're too pessimistic, then those businesses become obsolete.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So it's getting both of those at the same time that is so rare, but that's really the key to doing well over your entire career, over an entire lifetime, is getting optimism and pessimism to coexist.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's what's really interesting. I would not say I had an open mind about it. I graduated college in 2008 when the world was on fire and everything was burning down. The economy, no one in finance was hiring. Everybody was laying people off. So I found a job at The Motley Fool as a writer. And I took it because I had rent to pay. That was why I took it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I didn't do it because I was like, oh, maybe I like writing. That'll be fun. I took it because I was like, I need a paycheck today. And they were the only people in finance who were hiring. And so for the first six months, Not only did I not really like it, I was kind of ashamed of it. I was like, I want to be a hedge fund manager and now I'm a blogger. What is this?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The painting example is one that I love. There were all these art collectors in the last 50 years and a very small number of families ended up with these ridiculous art portfolios. They had Picassos and Monet's and like Renoir, like the top paintings ended up in the hands of very few number of people. How did those art collectors know what was going to become valuable?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because when Picasso was alive in painting, he was not the Picasso who he is today. Most artists become famous after they die. how did these people know what was going to be big? And they looked at their art portfolio. And the explanation was, those collectors did not know who was going to be big.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
What they did is you had a couple of collectors would go out and buy every painting they could possibly get their hands off of. If any painting was for sale, they scooped it up. And they ended up with thousands or tens of thousands of paintings. And within that portfolio ended up by chance,
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
some Picassos and some Monets and some Renoirs, but they didn't know in hindsight what it was going to be or with foresight, they didn't know. It was only in hindsight that because they collected so many, a couple of them ended up being worth a zillion dollars. And investing is exactly the same. You have no idea Which companies are going to be the next Tesla, the next Apple, the next Amazon?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Nobody knows. And people who say they do know are fooling you. But if you own an index fund that owns 3,000 companies in it, then you know that whatever is going to be the next Tesla is in there, whatever it might be. Always in investing, if you own an index of 100 companies, over a 10-year period, you're going to earn most of your returns from five of them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
After about a year, I started to really enjoy it and just love the craft of writing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
a very small portion is going to return most of them. And since you don't know what those five are going to be with foresight, the best idea is just own all of them knowing full well that whatever is going to be the winner is going to be in your portfolio. And that's why you have the statistics about what percentage of active stock pickers index funds, it's very, very low.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Particularly if you adjust it for fees and for taxes, over a 10 or 20 year period, it rounds to zero. Warren Buffett recently said that in his life, he's met 10 people who he thinks can consistently outperform the stock market, consistently pick the right stocks. 10 people that he's ever met in his entire life. And everyone listening to this podcast, you are not one of them. I'm sorry to say. Yeah.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So I think that's the only anecdote to that. And it's the easiest, cheapest anecdote to that is index investing. It's just own all of them knowing that you're going to have the winners in there.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, if you look at his net worth, 99% of his net worth was accumulated after his 60th birthday. So he's 93, I think he is now. And 99% of the money came after he was 60, which means that if he had retired when he was 60, like a normal person may have, he was a billionaire when he was 60, you would have never heard of him.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The whole reason he's so successful and the whole reason he's now a household name is because he's been, yes, he is a good investor, but the secret is that he's been a good investor for 80 years. And it's just the amount of time he's been doing it for that generates all of that money. He also started investing when he was 11 years old.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's why he's so successful because he's been doing it nonstop from 11 to 93. That's actually the biggest takeaway that ordinary people can take from him because I and you and anyone else cannot pick stocks like Warren Buffett. But can we try to emulate his patience? Is that something that we could maybe copy from him?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have a fighting chance of replicating his patience than you do replicating his intelligence. Just understanding why he's wealthy and using that as a takeaway of what we can do and copy him at is really important.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
To your last point, I keep it as simple as I can. I own Vanguard index funds. I've owned for a long time. It's probably all I will own for a long time. I'm not recommending other people exactly do that. You have to figure out what works for you.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if there's one thing that has really helped me in my career, it's a combination of for the first two or three years, I had to do that job because nobody else was hiring. And then after that, I think I've just been stubborn. I don't know if it's patience or stubbornness or a mix of the two, but I've been writing about behavioral finance every day for 17 years.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And as we talked about earlier, there are definitely people for whom picking stocks is the right strategy for them, even if it's not the best for my wife and I. But one little quirk I would say is I actually do follow financial news every day. Every day I know what the market did. I read the Wall Street Journal every day because I think it's intellectually interesting.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's a fascinating window into how people behave. But the important thing is that I don't read the Wall Street Journal and then say, I need to go out and buy and sell these specific stocks. It doesn't influence my behavior. I just think it's a fascinating window into how people behave. But my personal investing strategy is as simple and basic as you could possibly be.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
My entire net worth is this house, a checking account, Vanguard funds, and shares of Markel where I'm on the board of directors. And that's pretty much it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's spread out over many different accounts. And actually quite a bit of it is now in treasuries because you can earn a great return there. Spread out over different bank accounts, different brokerages accounts. Yeah. You know, and the money that I have in short-term treasuries, I consider that cash. That's cash-like to me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So Same As Ever is about what never changes over time. I think in many ways, Psychology of Money is about the behavior of you, the individual, and same as ever is about the behavior of us, the collective. Like what do we, the collective society, keep doing over and over and over again? And I've always been a student of, I think, two things. One is investing and the other is history.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I like the intersection of that, like investing history and economic history I've always been so fascinated in. And one of the things that will really stick out when you're studying any kind of history is it's really interesting to see what has changed over time. What do people used to do that they don't anymore? That's interesting.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But to me, way more interesting and way more common is when you see what has not changed at all. And when you're studying the history of Americans 100 years ago, or Europeans 1,000 years ago, or Chinese 5,000 years ago, you see all these kinds of behaviors that would fit in perfectly today that have not changed whatsoever. So how people respond to greed and fear and uncertainty and opportunity...
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That is the same today in the United States as it was in any culture a thousand years ago. And it hasn't changed at all. And because of that, we know that it's going to be part of our future for the rest of our lives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And a lot of why I wrote this book was because I kind of got disgruntled at how bad we were as an industry at predicting what's going to happen next, predicting the next recession, the next bear market. Nobody can do it. Nobody has any ability to do it. And so with that, you can either say, nobody knows anything. Don't even try to predict. No one has a clue. Just kind of become a cynic about it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And if you do anything for that long, you'll gain some proficiency no matter what it is. Anybody in any field, if they do it every day for 20 years, will get good at it. And so I think that's been just like sticking with it has been what's helped me the most.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Or you can say, okay, we don't know what's going to change, but we do know what's not going to change. We do know what behaviors are going to be part of our future, regardless of where the future goes. So let's put all of our emphasis on that. And so same as ever is 23 very short little stories about little facets of human behavior that I think have always been with us and always will be.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And no matter where your future goes or where society's future goes, you know that these little bits that I write about are going to be part of the story.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's a great financial advisor named Carl Richards who has this quote. One of those quotes that just knocked me off my feet. The quote is, risk is what is left over when you think you've thought of everything. So you can spend all day trying to predict the next risk in your personal life or in the economy and for society. And that's great. You should do that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But then when you are done with that exercise, the thing that is not on the list is what's actually the biggest risk that you're going to face. So think about what the biggest risks we've dealt with in the United States over the past couple generations. Pearl Harbor, September 11th, and COVID are probably the three biggest societal shocks that we've dealt with in America.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the common denominator of all three of those is that nobody, certainly no ordinary American, saw those coming until the day that they happened. In all those situations, there was no economic outlook. There was no analyst forecast. There's nobody on the news warning you about these things that in one day utterly transformed the world that you lived in.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so the biggest risk is what you didn't see coming. And the fact that people didn't see coming is what made it dangerous because they were not prepared emotionally, financially, logistically. They were not prepared for these things to happen. So when they hit, it was like, Red alert, what do we do now? And it's always like that. I think in any given year, it is like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
What is the biggest worldwide news story in 2023? It's probably, I hope it's going to end up, hopefully nothing bigger than it happens, will be Israel and Hamas, will be the biggest story of 2023. Of course, there has been tensions, to say the least, in that region for literally thousands of years. But how many people in January of 2023, predicted that that would be the biggest news story.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Maybe there were some people who were on the ground and had a greater sense, but by and large, ordinary people watching the news, it was not on their radar whatsoever. Same with in 2019. If you were looking at the biggest risk for 2020, nobody said a viral pandemic that's going to close down the schools. Nobody said that. 2001, nobody sees 9-11 coming. You can play that game all day long.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so because of that, you can state with a lot of confidence that the biggest risk over the next year and over the next 10 years is something that you and I and none of us are even thinking about because it's always been like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
By definition, you can't. But that in itself, that realization and that mindset is really powerful in itself because you stop pretending that you can predict. There's a great quote from Nassim Taleb where he says, invest in preparedness and not in prediction. So one way that I think about that is think about earthquakes in California.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
California knows that there is going to be a major earthquake in the future. But everybody also knows that you can't predict when it's going to come. It's impossible to predict what day it's going to happen or what year it's going to happen. So because of that, you're just always prepared. They build buildings that can withstand it no matter when it comes.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They don't like, you know, oh, an earthquake is going to come in December, so let's retrofit the buildings then. You're always prepared for it. And I think that's how you should think about
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
economic risks recessions and bear markets and job losses you have no idea when it's going to come so don't try to think oh once you see a recession coming then you'll start to save money no it could happen tomorrow so always be prepared for it i think that idea of having expectations instead of forecasts is the only way to really survive in that world where risk is what you don't see
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah. So I grew up as a competitive ski racer in Lake Tahoe, California. I was on the Squaw Valley ski team and that was my life from my childhood and my teenage years. Skied six days a week, 10 months a year, all over the world racing. It was great. It was like such a cool experience. And there were about 12 of us on the Squaw Valley ski team and we were all Best friends.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, whenever you have something good, you have an investing strategy that works or a company that's going well, the very normal knee-jerk reaction is, great, let's make it go faster.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Let's milk it. Let's push it as hard as you can. You do it with noble intentions. You're like, I don't want to leave money on the table. If I have this golden goose, let's keep milking the goose. It happens all the time. In investing, people who are doing well start using leverage or they start making bigger bets, more concentrated bets.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In businesses, when it's going well, it's like, let's raise more money and grow faster, faster, faster, faster. And it is such a common story that those investors, those entrepreneurs, or even in your own individual career, you eventually realize that there was a natural speed limit to what you're doing. And if you go over the speed limit, you're going to get in trouble.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And you only know where that speed limit is in hindsight when you've gone past it and you get a speeding ticket, so to speak. And so you see this with every successful business. The example I use in the book was Starbucks 15 years ago.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe most people don't remember this now, but there was a period in the early and mid 2000s where Starbucks was opening a new store on every street corner, like every couple of hours. It was just like this absolute proliferation of Starbucks stores. And because of it, the quality of the coffee and of the food plunged. The company's only goal was to grow, grow, grow, grow, grow.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the quality of the stores just disintegrated. And Starbucks had a really rough period because of that. And in hindsight, they talked about, they're like, look, The natural growth rate that we could sustain the quality of the product, we way exceeded. We pushed it way too hard. And because of that, the business broke for a period of time.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's so many examples of that, of like you have a good, legitimate business that is working and customers love you and they will pay you. But if you try to take that and just say, let's try to make it go twice as fast, it's probably going to break. So understanding the natural speed limit and size of whatever you're doing is a really critical aspect of what you are doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Let's use the Starbucks example. The reason people love Starbucks was not necessarily because it was on every corner. It was because they liked the quality, the food, they liked the taste. And once your ability to scale takes precedence over that, then you know exactly what's going to happen. So understanding, I think this is such a basic comment, but it's so easy to overlook.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Understanding why you are successful. is the key to doing this. And a lot of people, they don't actually understand why consumers like them or why their boss appreciates them. And because of that, they overlook what is actually needed to keep this going. And once you have an honest assessment of customers like me because of X, then you realize any deviation away from that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And of course, you're going to lose what made you special to begin with. I don't think it's any more complicated than that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We had been together since we were children, skiing six days a week all over the world. And so one day in February of 2001, I was 17 years old and I was skiing with my two best friends. We had grown up together. They were 17 as well. And we would ski down the backside of Squaw Valley, which is out of bounds, which you're not supposed to do. You duck under the ropes that say, do not cross.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We look back historically, the biggest periods of innovation and new technology and productivity growth without exception happened during periods when the world was on fire, so to speak. Like the most productive economic decade that's ever occurred is the 1930s during the Great Depression when the economy was
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
the biggest train wreck it had ever been because every business in America woke up and they were like, if we don't find ways to get more productive and get our act together, we're going to go out of business tomorrow. And that as a motivator, that fear as a motivator creates the biggest productivity boom we've ever had. The other was World War II and the Cold War.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The incentive to figure things out was so extreme because if we didn't figure things out, Adolf Hitler was going to control the world next year And that kind of incentive created this technology boom of the likes the world has never seen. What do we get out of World War II?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got nuclear energy, rockets, jets, penicillin, microwaves, radar, eventually with the Cold War, satellites, all of these things that benefit you and I today that happened specifically because of the stress and anxiety of the war. And you may be able to say this with COVID in hindsight too, like as tragic and deadly as it is,
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
if it unleashes the scientific boom as it has, that maybe 20 years from now is going to benefit us in ways that we can't even fathom today. Using the phrase silver lining to COVID is a step too far because it's killed like 10 million people. I'm not saying like, oh, that's a great thing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's always the case that you look back and you're like, hey, despite that tragedy, we got this incredible new innovation because of it that's making life so much better today. So everybody wants a world in which everything goes great and there's no uncertainty. There's no bad times. Of course, that sounds like a great world. But in that world, the incentive to improve would diminish greatly.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's always the stress that creates the biggest improvements.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, I think for writing books, one of the biggest benefits that a publisher provides is a deadline. It's not necessarily that they're going to help you write the book, so to speak, but they're going to tell you you have to turn in your manuscript on this date and that will get your ass in gear.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's very often the case, not always, this is not black and white, but it's often the case that if you see somebody doing something that you find morally wrong or just something that you disagree with, you are probably underestimating the odds that you would do that exact same thing if you had their incentives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I saw this firsthand during the financial crisis of 2008, when a lot of Americans rightly pointed at Wall Street bankers and said, those greedy bastard bankers who ruined the economy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe that was not necessarily the wrong criticism, but I think what people overlooked is that if you worked at Bear Stearns in 2006, and they said, hey, package these subprime bonds and we'll give you a $6 million bonus, you would have done it too. You would have done the exact same thing if you had that incentive dangled in front of your face.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But we did this because we were young and rebellious. And that's where the best skiing is. It's untracked. You have the place to yourself. Now, when you ski out of bounds like that, when you get to the bottom, there's no chairlift because you went out of bounds. So it would spit us out on this back country road and we would hitchhike back. We loved doing this. It was kind of a thrill.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so I think we underestimate the boundaries of our morality when we don't understand the power of our incentives. Everyone thinks, oh, my moral boundaries are right here. But if you had different incentives, you'd be like, oh, maybe I can shift them out a little bit. And you don't even know you're doing it. It's subconscious. Everyone is so influenced by these incentives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And at every level, when you're looking at World War II, how could the Germans possibly have acted like this? I think when you look into what the 1930s were like for them, the incentives, the incentives to go along with it, the incentives to not want to be an outsider, the incentives to do what you're told, it's not to justify anything in the slightest.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you're looking for an answer of how can people do that thing, whatever that thing would be in business, in wars, whatever it be, the answer is usually some sort of incentives. And it's not even a financial incentive. There are social incentives. There are tribal incentives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There are political incentives to do things that you would otherwise find repugnant, but you do it because the incentives push you to do it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I mean, one way, as someone who writes books, I'd say one of the best advice that I've ever heard is if you want to write a book that people will read 20 years from now, write a book that people would have read 20 years ago. Make sure that what you're writing about is timeless. And I think we can say that about this podcast.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if we had a time machine and someone listened to this podcast in 2003... 99% of what we said would be relevant. So you have to understand what kind of information is expiring if you're watching the stock market. Oh, Microsoft missed quarterly earnings by one penny per share. That's expiring information. I'm not going to say it's irrelevant, but it's expiring. It has a shelf life.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you're talking about how people respond to greed and fear, that's permanent. That never changes. And that will be as relevant 20 years from now as it is today.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So you should put more of your emphasis in learning permanent skills, knowing that they're going to stick around rather than drowning yourself in expiring information that might be relevant for a week or maybe even a year, but it has the shelf life of something that's going to expire.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got to hitchhike. It was all very rebellious, something that 17-year-olds do. So the three of us ski this run. And as we're skiing down, I very vividly remember we triggered a small avalanche. And it's a feeling that you will never forget because rather than pushing on the ground with your skis to gain traction and control, all of a sudden the ground is pushing you. And avalanches are very...
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Go out of your way to define your gain and realizing that your gain might be very different from Your co-workers game, even your co-founders game, your siblings game, everyone is different. And don't assume that because society tells you that you should have X, that that's actually what you should be chasing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
realizing that there are probably 10 people in life who I want to love me. My wife, my kids, my parents, maybe three friends. And it's not that I don't care about the opinions of anyone else, but I think it's really helpful to have people in your life who you don't want to disappoint. Just a few people who it's like, That's your North Star.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm like, am I doing this for the benefit of those 10 people? Would they be proud of me? Is this going to help my relationship with them? I think it's just a very strong guiding light. What really matters? And if you're on your deathbed, are you going to care about your net worth or the square footage of your house? Or are you going to be proud that you are a good spouse? You are a good parent.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You are a good friend. You helped your community. Like it's obvious what's going to be more important to you. So like, let's keep that as the focus.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Thanks so much for having me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
powerful. You'll be skiing down and then all of a sudden you have no control and it'll push you 20 feet this way and then jolt you 30 feet that way. But it was pretty small and it ended pretty quickly. And the three of us skied down and we like high-fived about it at the bottom. We were like, whoa, did you see that avalanche? It was so cool. We hitchhiked back
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And Brendan and Brian, my two friends who were with me, they said, hey, let's do it again. That was great. Let's go ski that run again. For whatever reason, I don't really know. I said, I don't want to do it again. But how about this? How about you guys go do it again?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And rather than hitchhiking back, I'll drive around to the side of the mountain and I'll pick you up in my truck so you don't have to hitchhike. They said, great, let's do it. We made that plan. We went our separate ways. They went skiing. I went back to get my truck to go get them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
20 minutes later, I drive around to meet them at the pickup spot where I was going to meet them and they weren't there. And I really didn't think anything of it. I thought that they had probably already hitchhiked back and maybe I was late. It didn't really bother me. And I went back to our locker room where I expected to find them and they were not there either. And nobody had seen them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At that point, I started to wonder what happened, but I really wasn't worried at that point. Several hours later, Brian's mom called me at home and she said, hey, Brian didn't show up for work today. Do you know where he is? And I told her the truth. I said, yeah, we skied down the backside out of bounds and I was going to pick them up, but they never showed up.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think at that moment, she and I pieced together what probably happened here. Later that day, several hours later, we got the police involved, missing persons report. They eventually turned into, we got search and rescue involved. Search and rescue went on the hill at about midnight to start looking for them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They had these giant portable floodlights and a team of search dogs, search and rescue dogs. And then later the next morning, after about nine hours of searching, when the search and rescue workers got to the area, the out-of-bounds area where I told them we'd skied, They said it looked like half the mountain had been torn away from what was clearly a very fresh, just massive, enormous avalanche.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And avalanches can be the equivalent of like a tsunami, just unbelievable amount of power. They can snap giant trees with their force. And it had clearly just been a massive avalanche here. The search dogs eventually homed in on a spot in the avalanche field where rescuers who had these giant pro poles found Brendan and Brian dead in the avalanche. They were buried about six feet under.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So of course, I always have to say when I tell this story, I think you and everyone else listening has lost somebody dear to them. It's not unique in that sense. I don't want to pretend like it was unique that I had a friend who died. Most people have experienced some version of that. Of course, it had a really profound impact on me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And one of the reasons why, and it took me a while to really piece this together, was If I had gone with them on that second run, 100% chance I would be dead. It was such a massive, it took out everything in its path. And so then I look back on it and it's like the most important decision that I ever made in my life by far was not going on the second run.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I didn't put any thought into that decision. I didn't weigh the pros and cons. I didn't do a risk analysis. It was just a brainless, dumb decision. Why don't you guys go do it? I'll do something else. And nothing in my life has mattered more.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think a lot of things in life are like that, where in hindsight, and only in hindsight, do you look back and you're like, the worst or the best thing that ever happened to me came about because of this dumb brainless decision. And maybe people listening to this today, if you left your house for work at 8.53 instead of 8.54, you may have died in a car accident.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm making this up, but there's all these just random, like you understand how the world hangs by a thread. of these decisions. And when you come to terms with that, I think it makes you much more humble in your ability and willingness to predict what's going to happen in the future. When you see how fragile it is, you just realize you have no idea what's coming next.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think that would be a small part of it. I think in a broader sense, ski racing was so important because we were independent and treated as adults since we were like 14. And we would travel around with the coaches skiing, but the coaches, God bless them, would just go to bars. And then we were out being adults for better or worse.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think that created an incredible sense of independence and forced you to grow up very fast. That had a big impact on me. But certainly losing my friends at that age made me realize how fragile life can be. And I think my perception of risk changed dramatically after that. And after that, I would not take risks that I would have before that because you see the consequences of your actions.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think even before that happened, I was always kind of, I had friends who were doing it more than I am. I'm not going to sit here and say I did none of it. Okay, I'll give you a specific example. I was telling my wife the other day, I remember when I was 18, one of my friends had cocaine.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I was like, absolutely not, like not even in the slightest in a million years would I touch that stuff, never. But all my other friends are like, yeah, let's give it a whirl. Let's see how this works. So even at that age, I think just naturally, I had a risk assessment that was different from my friends. Yeah.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, it was one of the hardest decisions of my career because I was really happy and comfortable at The Motley Fool. It's a great place to work, still is, filled with great people. I was happy there. Got in Craig Shapiro, who runs a private equity firm called The Collaborative Fund, reached out to me in 2015. And he just said, hey, I like your work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Why don't you come to Collaborative Fund and just keep doing it? Keep doing exactly what you're doing, but just do it here. And I said, hey, I'm flattered, but I'm really happy here. No, thanks. My wife and I had just had our first kid who was two months old at the time. I was not prepared to just throw my career upside down. But he kept pushing and kept pushing and kept pushing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think what the decision for me eventually became was, if I stay at The Motley Fool forever, from the time I was in college until I retire in my 60s, will I regret never trying something different? And I think after a while, I realized that the answer was, yeah, I think I might wonder what else was out there. So I finally joined Collaborative Fund in 2016. And it's been amazing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That was before I had written books or done anything like that. And Craig was one of the only people, I think, in the world who would say, Morgan, just go do your thing. I'm not going to tell you what to write or when to write. And I don't write about what Collaborative Fund does. I feel like it's just my own canvas to write about anything that I'm interested in.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so that was a really rare opportunity. Almost every professional writer at an organization, if you write for the Wall Street Journal or Reuters or CNN or something, you have an editor telling you what to write, how to write it, when to turn it in. And I think that just strips away the art of writing. It just turns it into a job instead of an art. So I really enjoy the artistic side of it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
No, definitely not the latter. And it was a conscious decision for a long time to not write books. I never saw the point in it. And I would always say, look, I blog twice a week. Why does it matter if it's stuffed in between two pieces of cardboard? It's the same thing. It's the same words. I'm still writing, so who cares? So that was why I pushed off writing books for years.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
A publisher came to me in 2014, maybe 2013, and said, hey, we want you to write a book. And I was, absolutely not. I'm not ready. I don't want to do it. It sounds hard. And so in hindsight, I'm so glad that I waited because I became a better writer. I had more content to use for the books. So the fact that I was so stubborn about doing it, it was so beneficial to me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2018, I wrote a very long blog post called The Psychology of Money. It was a 10,000 word blog post, which is very, very long. Most books are about 50,000 words. So it was one fifth of a book in a blog. It was the biggest blog post that I had ever written. It did really well. It was well received. And so that was when I was like, oh, people like this style and format and this substance.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's not going to take me that much effort to expand what I already have into a book. And so that was when it was like, okay, I'm finally going to do this. My wife had convinced me. I don't think I've ever told this story before, but I'll tell it here.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
An author named James Clear, who wrote a book called Atomic Habits, It's the best-selling and one of the best books of the last generation. It's just an absolute gem of a book. And he published his book in 2018. And I think it was seeing the success of Atomic Habits that I was like, I want that. It was not jealousy. It was not envy. It was motivation. What James has, I want to chase it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's such a good question. I would say I don't. I've never tried to put myself in a box. And I think I've moved around over the years. I think if you asked me that question 10 years ago, I would have said, I'm an investor who writes. And maybe if you asked me today, I would say I'm a writer who invests. Like I've just switched around what I enjoy doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's the contradiction of being a startup founder is, look, I know the odds of success are stacked against me and I'm still going to go ahead nonetheless. There's this great story many years ago that I heard from a founder where he was raising money from an investor and the investor said, I love the idea of this company, but I think there's only a 20% chance that it's going to work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
New Year's resolutions don't tend to hold up because if you need to do something new on January 1st that you were unwilling to do on December 31st, you're almost certainly not going to stick with it. Most people have too much of their money in stocks and they should have less. And the reason why is
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think there's an 80% chance you're going to fail. And the founder was like, 20% chance it's going to work, you're optimistic. I think there's only a 10% chance this is going to work. And I think that mindset of an entrepreneur is saying, there's a 90% chance that I'm going to fail and I'm going to give it everything I've got nonetheless.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Elon Musk talked about this, where I think the figure was when he started Tesla and SpaceX, he thought there was like a 99% chance that they would fail. And he still didn't nonetheless. That's what's difficult. When it comes to financial planning, the important part about that is that in the very high odds that it's not going to work,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
you wanna make sure that you have some landing pad that you're gonna fall back onto. Because in the situation where your business fails and then you have nothing, including maybe marketable job skills to pull yourself back up, that's a terrible thing. And it gets back to what we first discussed about what are you gonna regret?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think for a lot of people, they would regret not starting a business. They would regret not taking a chance. They might also regret putting everything they have into that business so much so that if or maybe even when it fails, they have nothing. They have nothing left. They're going to be left in a state of destitution. That's really important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think this gets back again where it's like there's no blanket advice because by definition, entrepreneurs are oddballs and are marching to the beat of their own drum. Henry Ford had this idea. I read Henry Ford's biography recently. Henry Ford's a very interesting guy because he was the greatest engineer possibly of all time. He was an okay businessman and he was a devil of a human being.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So he's like, there's all these contradictions wrapped into one. One thing that he always said was that Money in the bank to him was such a waste. You should put that to work immediately. So cash sitting in a checking account to him was a complete waste. He was like, go build something, go build a factory, go invest in something, put that money to work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I could also argue the other side of that in terms of cash is actually the oxygen of independence. But I thought that was really interesting that he just viewed the opportunity cost of cash that he had as a complete waste. And I actually think you see the opposite in a lot of startups these days, where if you can raise money from VCs, there's a lot of it. There's just a gusher of money out there.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So you have a lot of businesses that will raise $50 million from investors and then just kind of leave it in a checking account. And maybe that is not the wrong thing to do. Maybe that's actually a wise thing to do to have that much liquidity. But I think if you view it in the idea of entrepreneurs are supposed to build and cash is a tool to help you go build something.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you raise a lot of money and you can't put it to work in a reasonable amount of time, it was probably way too much more than you needed. I think a lot of the behavioral traits that entrepreneurs have is an unreasonable amount of confidence in themselves, bordering on egomaniac. And it can be off-putting to a lot of people, but that's what you need.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And this is why when the personality traits of a lot of very successful entrepreneurs become public, Elon Musk, probably the greatest entrepreneur, not even probably, he was almost certainly the greatest entrepreneur of modern times. And he also has a personality that a lot of people find distasteful. And that I think if you look historically is extremely common.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you can earn average returns for an above average period of time, you will be among the top investors in the world. Most people are overconfident in what they can do. You have to have this split personality of, I'm so good at what I do, and I'm a complete idiot who has no idea what I'm doing. Bullshit is easier to create than it is to refute. So meme coins are an example of this.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The reason they are successful is because they're maniacs. And that's why they're successful. And it also gives them this personality trait that a lot of people don't like. Steve Jobs was like that. Bill Gates is like that. Henry Ford, as I just mentioned, one of the greatest entrepreneurial geniuses to ever live and a terrible human. Because anti-Semitism is very well documented and whatnot.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Same with Thomas Edison. A lot of these people, the reason they were successful is because they did not think like most people did. And because of that, they had the side that people found distasteful. That's very common.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And so for a lot of it, particularly, not necessarily if you are an entrepreneur, but if you're going to work for an early stage startup, a successful early stage startup, you need to understand and embrace and be okay with the fact that you are probably working for a maniac. That's usually the case.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why the company is going to succeed, but you need to sign up for that and understand what you're doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Well, I think for anybody, not just entrepreneurs, but any random person, to be able to wake up in the morning and put one foot in front of the next, you need to at least be able to look in the mirror and say, I know what I'm doing and I'm making good decisions. Because if you don't, you're never going to get out of bed. You're not going to do anything.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But the truth is, if you understand how volatile and uncertain and unpredictable the world can be, we don't know what we're doing. We don't know where the world's going to go next. So because of that, you need to be optimistic. But the world is very uncertain. Most people are overconfident in what they can do.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'll give you a really interesting example of this that we see very recently and is very prevalent in the news right now. For a lot of people in the economy, if you ask them, they will say, how's the US economy doing? Most people will vote poorly. It's not doing well right now. Inflation is not going well. And then if you say, how are you doing in your life? Most people will say, great.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The gap between those two is enormous. People say, the US economy is doing terrible, but I'm doing great. And you also see this in Congress, where if you ask people, how much do you like Congress? They say, I hate Congress. They're all a bunch of bums, vote them out. But then if you say, how do you like your congressmen? People are like, oh, I love them. They're wonderful.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That gap between the two comes down to overconfidence. where you look around the world and you say the world is fragile and it's broken and it's uncertainty. But if you look in the mirror, you say, I got this all figured out. And I think people actually need that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's not something we should look down upon because we need that in order to put one foot in front of the other in order to get something done. Entrepreneurs are like this on steroids because they are doing something that has very low odds of working, that there is no defined playbook.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There is no map on what they should do, but they need to wake up every morning and look in the mirror and say, I got this. I am the best in the world at what I do. I've often thought about myself in my own job. I've talked a little bit about this. I think I have this split personality where in one day, I can be like, I'm doing great. I've got this all figured out. I know what I'm doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm really good at what I do. And then not even the next day, but maybe the next hour, I can flip to, I have no idea what I'm doing. I'm no better than anybody else. What am I doing here? And I actually think that is actually a pretty healthy personality to have the confidence to take a risk.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
but also the humility, if not the paranoia to be like, I need to really think about what I'm doing here because I'm actually not that smart. I think if you can get those two things to coexist, that's actually the sweet spot. People get into trouble when they only have the ego or they only have the paranoia. If it's one of those two things, it's never going to work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Someone creates a meme coin and you're like, that's obviously bullshit. And it becomes Dogecoin.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
You have to have this split personality of I'm so good at what I do and I'm a complete idiot who has no idea what I'm doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But sometimes it's even the same thing for myself as a writer where writing is an art. There's no right answer. It's just there's sometimes where I write something and I'm like, that's great. That is beautiful. I love it. And then I can read that same paragraph an hour later and say, this is garbage. Nobody's going to understand what this means whatsoever.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But I think the confidence needed to actually write and take a risk and write a brave paragraph, you need, but you also need the humility to go back and say, no, actually, I need to change half of this so it makes better sense. You need both of those at the same time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Well, I had this experience a couple months ago. This was probably 15 years ago. My wife and I, this was before we had kids. She was my girlfriend at the time. We had this amazing apartment in the Seattle suburbs.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And given we were young and we were broke, but the economy was such a mess at the time, this is after the financial crisis, that we got this incredible apartment with a view of the lake in a perfect location with restaurants nearby. And we lived there for like three years. And then so a month or two ago, I was reminiscing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I told her, I was like, man, that was peak living because we didn't have kids. We could just wake up and sleep in and go for a walk. And life was so good. And she interrupted and she was like, what are you talking about? She said, Morgan, you are more depressed and anxious and scared when we live there than you've ever been in your life. Because it was just a weird time in my career.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I didn't know what I was doing. I didn't really have any skills. It was a low point in my life. And I was like, yeah, you're right. So then why do I remember it as being such a great time? And I think the reason why is when I look back with hindsight, with the benefit of hindsight, I look back and I see a boy back then who had nothing to worry about because I know that things worked out.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I know that the career worked out. My relationships worked out. It wasn't always perfect. It wasn't always easy, but it all worked out. And so I look at that boy 15 years ago, and I think about someone who had nothing to worry about. But back then, I didn't know that. I didn't know it was all going to work out.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So when we know how the story ends, it's almost impossible to remember how uncertain you were during that period of time. And that's why we look back at the past as usually better than it was. I think this is true, too, if you think about A lot of Americans have a lot of nostalgia for the 1950s. You look back at the 1950s, there's like this glorious age of middle-class prosperity.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think in part, we think that's true because we know that for the most part, it worked out. That the US economy worked out, that the global economy worked out, that there was no World War III, that there was no nuclear war, which a lot of people really worried about back then. So when you know how the story ends, the past always seems much less uncertain than it actually was.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And we always fall for this when we're thinking about how glorious the 1990s were, how the early 2000s, whatever it might be. There's one other example of this where a lot of people right now will say the late 90s and the early 2000s were as good as it got. That was such a great time to be alive. And that was my teenage early 20 years. And at first glance, I'm like, yeah, that's true.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The movies we had, the music we had was so great back then. But then I'm like, man, do you remember what it was like to live in America in the year after 9-11? It was terrifying. It was utterly terrifying. Every day you woke up and turned on the news and held your breath that this was not going to be another terrorist. So we remember today as being this amazing time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But I think that's just because we know how the story ends. We know that there was not another major terrorist attack, that there was not a World War III, that the economy did recover. Things that we actually didn't know back then at the time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it's very common that you look back and you're like, yeah, the stock market has doubled in the last four years or whatever it is. And that was really obvious to see. Anyone could have seen that coming. And it was easy money to make over the last four years. And I think that is a very bad mindset to have because it was never easy. The future was never certain. It's always been this
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
swamp of uncertainty that we live in. So when you view the past as more certain than it was, you view like investing decisions are going to be easier than they are. And the fact is making an investing decision today feels uncertain and we don't know what's going to happen in the next five years. And that's always been true. There's never been a period when that's not the case.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So realize that the world we live in today is not any more uncertain than it was 5, 10, 20 years ago is really important. Yes, it feels uncertain today, and that is never going to change when you're making a forward-looking investment.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Oh, my God. Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thanks so much for having me. Happy to be back.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Let's do it. I'm ready.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you. So that's the contradiction of you actually don't want most of society to wake up every morning and say everything is great because that can lead to a period of getting fat, happy, and lazy. What you want is a low level of anxiety, not too much. The most innovation happens when people wake up in the morning and they say, I have to get more innovative.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think there's a couple of things to keep in mind. One is the very well-known idea that has been tracked for many years that New Year's resolutions don't tend to hold up. Because if you need to do something new on January 1st that you were unwilling to do on December 31st, you're almost certainly not going to stick with it. So there's this idea.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it was brought up by Scott Adams, who is a guy who created the Dilbert comic. You should have systems instead of goals. One example of that is a goal is I'm going to lose 10 pounds. That's a goal. A system is I'm going to work out every day. That's a system. It's very different from a goal. It's a much better and more efficient way to have a new habit to do something.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Not it would be fun if I became more innovative, but I have to do it because there's this existential threat. That's when you look back 20 years later and you're like, man, that period was tough. It was stressful. But look at all the good things that came out of it. That's always the long history of innovation.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, so in medicine, we have learned a tremendous amount about biology and chemistry and anatomy over the last 200 years, and it is cumulative. What I mean by that is if in the 1920s we discover penicillin, the next generation gets to start their career understanding what penicillin is. All the knowledge is cumulative over time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What one generation learned, the next generation starts with as a baseline of knowledge. And that's when knowledge just explodes exponentially. Other fields like finance are not like that. And by and large, the lessons that were learned in the 1920s and the 1930s or the Great Depression and the roaring 20s, we have to relearn those lessons.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
We don't have that knowledge passed down from generations that were like, great, we'll never do that again. No, we keep doing the same thing over and over and over again. And it would be the equivalent of every generation of new doctors had to find new medicines, had to rediscover medicines that the previous generation already discovered. That's ridiculous, but that's what happens in finance.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
A lot of it is because finance is not a science, it's behavioral. And I can read about what it was like to experience the Great Depression and the stupid risks that people took in the 1920s and how it all blew up in the 1930s. I can read about that. But for a lot of people, they're only going to really understand it when they've experienced it firsthand themselves.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why we keep doing the same things over and over and over again. And so any field that is behavioral and finance is definitely that. It's probably the greatest example of a field that's purely behavioral. There is virtually no accumulated knowledge over time. All the lessons have to be learned over and over again.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And you can easily imagine a world where, look, my grandparents lived through the Great Depression. And then my generation made some really stupid mistakes during the housing bubble and maybe during the dot-com bubble. And my kids and my grandkids are going to make a bunch of stupid mistakes themselves.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There's very little looking back and saying, hey, we learned from that, so let's never do that again. It's the same mistakes over and over again.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So I think if you do have an aspiration to have a New Year's resolution, do it right now in December and come up with a system that you can actually stick with over the long run. And a system means that it probably should not be extreme. So if you have a system of I'm going to work out five hours a day, let's say, just using that as an example, you're also not going to stick with it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think that's definitely the case. It's true that in the 1920s, during the peak of the stock market bubble in 1929, 5% of Americans owned stocks. That's it. 95% of Americans did not own a single share of any stock. And today it's about 55% of Americans own some stocks, maybe in their 401k or their brokerage account. So it's a way higher exposure today than it used to be. And I think that's good.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's great. But it also makes it so like, yes, there's so much participation in the stock market that when the stock market falls 50%, it has a much greater impact on society than it used to because there's a greater participation rate. And so a lot of those mistakes that we're still making today, when they occurred 50 or 70 years ago, it was bad for a small sliver of society.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Whereas today, when the stock market falls 50%, it is crushing and completely derails half the country's ability to retire on time, something like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it can help. It can also be very dangerous. And one thing that I've tried to do in my career is not pretend that I know who you are because I don't. I don't know what your goals are. I don't know what your income is. I don't know what your personality is. I don't know what your family situation is. So who am I to give you medical, to give you financial advice?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I said medical there because what I was going to say is imagine a world where there was the equivalent of CNBC for medicine. And you had doctors going on saying, you should take this medicine. You should get the surgery. And what you would do as a viewer is you would be like, you don't even know me. You don't even know if I'm sick. And you're recommending that I go take this pill.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That would seem ridiculous. But we do that with finance, where you have a financial influencer who says, you should buy this stock. You should have half your money in Bitcoin. And that might be good advice for some people and disastrous for others. You have to understand that person individually.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
This is why I think despite the massive growth in digital financial advice and whatnot, there is still a huge, incredible need for a face-to-face human financial advisor who can actually get to know you. Because it's never going to be the case that an app can know everybody and give blanket advice. There is no blanket financial advice.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And what works for me might be disastrous for you and vice versa. That's the limitation of giving advice to a very big audience is that there is no one size fits all piece of advice that you can give anybody.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And the financial equivalent would be, I'm going to save half my paycheck. Well, you're probably not. It's probably not going to work. So the more realistic it is and the more systematic it is rather than a goal, the higher the odds that you can stick with it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The other thing I would talk about here that I think is really important is whenever you are thinking about your financial future, and let's call them goals if you want to, despite what I just said, what you really have to keep in mind is the idea of what are you going to regret in the future? So if you have a savings goal, are you going to regret not saving money?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Are you going to regret saving too much money because it came at the expense of a vacation that you could have taken or a new car that you could have purchased? You have to understand what you're going to regret. And what I might regret is probably different from what you might regret. Everybody is a very different situation.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
When I hear that, I have two thoughts. One is, yes, I believe that to be true. That makes sense. And B, people have been saying that for literally centuries. John Maynard Keynes, one of the most famous financial minds of the 1920s, 1930s, he very famously predicted that I think it was by the year 2000, the average work week would be 15 hours a week.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Because he calculated we were going to become so productive and so efficient that people just wouldn't need to work that much anymore. Of course, that did not happen because there is such a long history of if people's incomes go from $20,000 to $50,000, they don't say, great, that's enough. I can just retire on $50,000.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What they do is they say, great, now I make $50,000 and I aspire to make $100,000. And once they make $100,000, they're like, great, now I aspire to make $200,000. So you can imagine a world where AI makes us all much richer and way more productive. I think it's much harder to imagine a world where because of that, we all say, great, I don't need to work anymore.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think if we do that, we're just going to find some other new technology to want to work on. And that's always been the history of new technology. Maybe this time will be different, but I feel like that's always what it is. That if you double people's income, it's great. They live a better life and they are not satiated in the slightest. They're always going to want more.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think the reason why is because people's ability to feel wealthy has very little to do with the actual material life they're living. And it has a lot to do with whether I have more money than you do. It's all about social comparison. And so if my income doubles and your income doubles, by and large, I will not feel better off because I'm still comparing myself to you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So if AI makes everybody richer, it's probably the case that nobody feels better off because by comparison to their peers, they're not any better off.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Everyone just wants to be the top 1%, but I think this was a Charlie Munger quote. He's like, the iron rule of math is that only 1% of people can be in the top 1%. It's always going to be that the other 99% feel like they're falling behind, even if their incomes are going up and up and up.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So you just have to have a good grasp on what you are likely to look back at a year from now to 10 years from now, 50 years from now, and say, man, I wish I had done that differently. It's different for everybody, but I think that's the formula you should have in your mind.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm probably going to get some of these numbers wrong, but I think this is roughly accurate. He made about $200 million from PayPal. I think he was about 30 years old, cashed out $200 million. Obviously, anybody could have and would have just sailed off into the sunset and bought a private island and a private jet and lived out the rest of their days in luxury.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What he did is he plowed every single cent of that money into Tesla and SpaceX, which at the time were nothing. And by his estimation, as I mentioned earlier, there was like a 99% chance that those were not going to work. Now, both of them worked. He's now the richest man to ever live. Everyone knows what happened.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's also important to realize that the vast majority of people, including myself, do not have that personality. That you could have made $200 million and said, I'm going to bet it all on companies that have almost no chance of survival. Even if it did work out in the end, we know how it worked out. And so more than the fact that he is a genius entrepreneur,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
entrepreneur, a genius engineer going down the list, he has a level of risk taking that is truly one in a billion that I don't have. And so I think for lots of entrepreneurs, not just Musk, but many of those people, I can look at them and say, I am glad they exist because the products that they created make the world better.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And at the same time, I would never want to live that life for myself, where I'm lucky enough to make a fortune and I literally go put all of it on black. That's not what I have. But he does have it. Back to people like Henry Ford. He was like, look, if you have cash in the bank, you need to put it to work immediately. Otherwise, it's a total waste.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't have that personality, but I'm glad that he did because he made the world better for it. That's a lot of the contradiction here. I think it's important for people to wrap their heads around is that it's not a contradiction to say, I'm so glad that person exists. because their technology has made the world better.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And at the same time, they have parts of their personality that I find distasteful, and I would never want to take that much risk in my own life. That's not a contradiction. That's actually a very important thing to acknowledge for lots of those entrepreneurs outside of Elon Musk.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, it's a hard thing to wrap your head around. And this is true for a lot of things in life, for your relationships and whatnot, that you might need to try out 10 different things before you find one that works. And understanding the idea that if you'd start 10 businesses, let's say, and nine of them fail and one is a success, that's a good outcome. That means you did it right.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But that means you have to be comfortable with nine of the things not working. And you might need to date 10 people before you find your spouse. Like that idea exists everywhere in your life. And so getting used to the idea that the path to success often looks a lot like failure is very hard to wrap your head around.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's true for stock picking as well, where if you pick 10 stocks, there's a very good chance that in the next 10 years, 4%. three to five of them won't even exist anymore. Those companies will go out of business. Even for big mega companies, they just won't exist anymore. And a couple of them will do okay. And if you're good and if you're lucky, one of them will generate all of your returns.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's always how it exists. I mean, if you go back 20 years ago, a lot of the biggest stocks in the world were AIG, Enron, General Motors, companies that either don't exist or barely exist anymore. And that's always been the case. And you can so imagine a world 20 years from now where one of... Amazon, Google, Microsoft, Nvidia, Facebook don't exist anymore.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That sounds crazy, but that has always been the path of history. Or they still exist, but they're shells of their former selves. And there's going to be some new company that you and I aren't talking about today that's going to be worth $10 trillion. That's always been the case as well.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So understanding that you can fail half the time and still do very well seems like a contradiction, but that's always how it works in a tail-driven society.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I've always liked the idea that fields are more interconnected than we think. So in school, the biology department's over here. And then in a separate building, you have the math department. In a separate building, you have the history department. But there's actually so many interconnections between those fields. And there's so much that we can learn from biology that teaches us about investing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And there's so much that we can learn from history that teaches us about medicine, like all these interconnections. So I think it's fun to look at some other laws and rules from other fields that you're like, look, that's from a different field, but it teaches me a lot about this field.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There's lots of different laws from evolution that can teach you a lot about investing, from biology that can teach you a lot about investing. And I think if you are only looking through the narrow lens of your field, whatever your field is, if you're an investor, you're only looking through finance.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you're a lawyer, you're only studying law, that you can actually learn so much if you expand your horizons and you realize how interconnected the world truly is.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That was from a guy who coined it Brandolini's law, which is that it is much easier to create bullshit than it is to refute it. So if somebody lies or says something completely untrue, that's very easy. To refute it is extremely difficult. And it's always been like that. Social media makes it a hundred times more potent than it used to be. And you see this online.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If somebody tweets something that is obviously false, profoundly false, it might get a hundred thousand retweets. And then when it is corrected and the truth comes out, that correction will get a half a percent as much attention and as many eyeballs as it did. That's always been the case, but it's so much more potent now than it used to be. That bullshit is easier to create than it is to refute.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, rumors and whatnot. What's interesting in finance is that a lot of what might seem like bullshit and rumors can become true because it's a story driven thing that enough people latch onto. So meme coins are an example of this. Someone creates a meme coin and you're like, that's obviously bullshit. It's obviously has no fundamental backing. It's obviously a joke. and it becomes Dogecoin.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, like NFTs. Exactly. If enough people believe it, at least for a short period of time, it can become self-fulfilling. And even if it's based in bullshit, and long-term is bullshit, it becomes self-fulfilling for a very long period of time if enough people think it's true.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What I think is interesting, if you talk to a lot of financial advisors, they will tell you one of the biggest problems that they have with their clients is you have a client who has saved diligently for retirement for decades and they saved up a giant nest egg.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Littlewood's law was this idea from a mathematician where he was like, a lot of what people consider miracles are actually just basic statistics. Because if something has a one in a billion chance of occurring, well, how many people are in the world? Eight billion. So by definition, there should be eight, one in a billion things happening every day, day after day after day.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And so in the news, we're always going to hear about this amazing, ridiculous thing, good or bad, that happened to somebody. And you're like, that's a miracle. How could that possibly have ever happened? Well, a lot of the answers to that is just there are so many people in the world doing so many things. Things that seem completely preposterous actually happen all the time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And in a global news world, you are definitely going to hear about it. And it leads people to this idea that the world is probably more fragile and more uncertain than it actually is. It is very fragile and uncertain.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But when you only hear about the one in a billion things that are guaranteed to happen because there are so many people, it gives you this idea that those things happen more frequently than they actually do.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's the idea that work expands to the time that you have. And so if you give someone a two-month deadline, they're going to take two months to do that project. If you give them a one-week deadline, they'll get it done in a week. Back to Elon Musk, who we've been talking a lot about.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
He's been known for this very often, particularly in SpaceX and Tesla, where an engineer says, Elon, this part is going to take a million dollars to build, a million dollars to create and design this part. And he basically comes back and he's like, your budget is $50,000, go get it done. And they do. They do get it done.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They have millions of dollars saved for retirement and then they're 65 years old and they retire and they cannot bring themselves to spend it. They cannot do it because saving money has become so ingrained in their identity, in their personality, that they can never switch gears. That's really important too.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Steve Jobs did this a lot too, where he was like, the iPhone or the iPod, it cannot be bigger than this. And the engineers are like, we can't do it. He's like, yes, you can. Go figure it out. And they do it. They get it done. If you give someone a tight deadline, they will probably find a way to get it done.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But if you give them the expense and the time, a larger budget or a larger period of time, they're going to fill up their needs in that time. And you see this in so many different careers where the amount of time and money that you need to get something done is just the amount of time and money that your boss gave you to get it done.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
One is figure out what is unique to you that does not apply to other people in your circle who you are currently looking up to and trying to copy. What is very unique about your goals or your personality that you're like, look, this person who I look up to, this strategy works for them, but it probably doesn't work for me. And it's not a contradiction.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm not going against them to say, I know that worked for you, but I have a different personality, so I'm going to do it my own way. Whatever that might be, everyone is different. I think that's what's most important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I probably don't take as much investing risk as somebody of my age and income could. But that's because I have no aspiration to be the world's greatest investor. My only aspiration is to give myself and my family independence. And that might not be your goal. It might not be some of the listeners' goals.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So if we are doing things differently, it's not necessarily because we disagree with each other. We might just have a slightly different personality and different goals over time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Independence, always. Not just financial independence, but hanging out with only people who I want to hang out with, only doing work that I want to do. If you could wake up every morning and say, I can do whatever I want today, regardless of what that might be. Having a sense of independence is not only the most enjoyable, but it's going to push you towards doing your best work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
My book's The Psychology of Money and Same as Ever. And I also have a podcast and a blog. Twitter, my handle is Morgan Housel, my first and last name. Awesome. What's your podcast called? It's called The Morgan Housel Podcast. Very creatively named.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thanks so much.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it's a very big problem because in your 20s, 30s, 40s, you create a very good habit of I'm a saver. I'm a long-term investor. And you can never break away from that. You can't do it. So the idea that a good financial skill in your 30s can actually be a liability in your 50s or 60s is really important. I think about this in my own life where in my 20s,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And let's say early 30s, I was a very big saver. And I'm so proud of that. And that's great. Now I'm in my 40s. I have two kids and we spend more than we used to. And it is not because I broke my previous good financial habits. I don't view it that way at all.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I built up money so that I could spend more of it now and have maybe a lower savings rate than I used to because I have a bigger family who are hungry and we go on vacations and whatnot. And I think that's wonderful. The more you can use money as a tool to live a better life, rather than just a scorecard of social comparison, the better off you're going to be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And if you always view it through that lens, like how can I use this money as a tool for more happiness, not just how much can I accumulate and have a higher score than the next person? I think that's always the better way to think about it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it probably is a good strategy, but like every good strategy, you can overdose on it. So it sounds like what you've done is just you have a very keen grasp on your net worth. That's great. I think you can overdose on it if you're like, I'm only a success as long as that number goes up every month. That's dangerous because that's not how the market works.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's not how you're going to eventually be able to spend that money in a way that will make you happier. And so I think it's great. I do the same, by the way. I have checked my brokerage account probably every day for the last... 20 years. That's very roughly true. But what's important is I don't use that to say, oh, I'm falling behind.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't use it to say, oh, I should go place a trade because the market went up or down today. I just think it's interesting. And I have a very keen in any day, I could tell you my net worth to a very high degree of accuracy. I think that's great. And not a lot of people I think can do that. I think a lot of people, if you ask them their net worth, they would have to think very hard about it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Or if they gave you a number, it would be wrong. And that's when things start slipping out of hand. There's a lot of study and data on people who forget about their 401ks. And some of them will transfer to a new job. transfer their 401k where it sits in cash for years because they forgot about it. They never invested it. And the lost returns you can have that can be enormous.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So having a very keen grasp on exactly how much money you have is wonderful. You just want to make sure that you don't become so ingrained in your identity that you are so obsessed with that number that you only feel like a success in life if it's going up and you feel like a failure and you need to change if it's going down.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah. I mean, there's some people I probably fall in this category. They check their brokerage account once a day and they check their blood pressure never or once every five years or something, you know, like numbers that are probably actually very important to your life success and outcome.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They're oblivious to, but something that is almost by definition going to jump around randomly every hour, they pay close attention to it. I always used to use the example of nobody checks the value of their house every day because that would be ridiculous. But now actually, I think a lot of people do because of Zillow.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They have this number that like a stock ticker goes up and down and they check it all the time. It's true for any investment that your lifetime success is almost certainly dependent on how long you leave it alone for and just let it compound over time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And if you are the kind of person for whom checking it every single day is going to prevent you from holding it for a long period of time, then that's an issue.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't know if it was wrong because you did it because that's what you felt like you should do. Even if you could criticize that and say, oh, you sold at the wrong time, you should have held out. I usually don't say that because if you had tried to hold on, you probably would have got scared out at a lower price.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The fact that you were tempted to sell means that at least in that moment, you didn't have the right mindset to hold on. So selling may have been the right thing for you to do. One of the things I've changed my mind on about money is criticizing the decisions that people make because you made that decision because it was the right thing for you to do in that moment.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Even if you could go back in hindsight and say, look at all the money you would have made if you held. Let's not do that. But I think what is true is, like I just said, what's going to account for the majority of your lifetime returns is not did you pick the right stocks? It's not did you pick the right industry? It's how long did you hold on to the stocks that you owned?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And one thing that's hard for people to wrap their heads around is if you can earn average returns for an above average period of time, you will be among the top investors in the world. So everybody's attention goes to what's big, what's hot. Tech, AI, as you just pointed, that's big and hot right now. Over the next 30 years, those things are not going to matter that much.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What's going to matter is what did you hold onto for the longest period of time? Carl Richards, who's a financial advisor, brought up the idea that for most people, a house is the best investment they will ever make. And the reason why is not because it's a good asset. It's not because it's leveraged with a mortgage.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The reason why is it's the only asset that people are willing to hold uninterrupted for 20 or 30 years. And so even if the average annual return is not that high, a mediocre average return compounded for 30 years balloons into a fortune. And so that's what I would keep in mind for you. I would A, not criticize the decision that you made.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I would B, say, look, rather than trying to pick the best industry, pick a decent industry that you can stick with for another 10 or 20 years. And that's where the big money will be made.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why I think most people, not everybody, but let's say a lot of people have too aggressive of an asset allocation. They have too much of their money in stocks and they should have less. And the reason why is the only thing that matters is what do you need to have to make sure that you can hold on to the stocks that you own and are never forced to sell? You never panic sell.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
You're never forced to sell because you need the money for a new car, whatever it might be. Whatever that level is, that's the most that you should own. And for a lot of people, you might have a spreadsheet or a financial advisor that says, you're young. You can have 90% of your money in stocks. And maybe in theory, that's true.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But if having that high amount is going to scare you out during the next bear market, then it's the wrong amount. You should have had less, maybe just 50% of your net worth in stocks. Whatever the amount is that you need to hold on to for the long run, that's what you should have.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it gets back to the great Charlie Munger quote where he said, the first rule of compound interest is to never interrupt it unnecessarily. That's what matters more than anything.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Such a good question because there's no one right answer because every startup is different. I think it's important to understand if you are a new entrepreneur to A, understand the base rate of success for startups. What I mean by that is how many other startups that came before you who are just as smart, had just as much money, had just as much ambition, failed.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that number is always going to be very high. And A, you need to understand that number and embrace it with both hands. And B... To be successful as an entrepreneur, you also have to say, yes, but I'm still going to plow ahead as hard as I can. That's the dichotomy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
A publisher came to me in 2014, maybe 2013, and said, hey, we want you to write a book. And I was, absolutely not. I'm not ready. I don't want to do it. It sounds hard. And so in hindsight, I'm so glad that I waited because I became a better writer. I had more content to use for the books. So the fact that I was so stubborn about doing it, it was so beneficial to me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2018, I wrote a very long blog post called The Psychology of Money. It was a 10,000 word blog post, which is very, very long. Most books are about 50,000 words. So it was one fifth of a book in a blog. It was the biggest blog post that I had ever written. It did really well. It was well received. And so that was when I was like, oh, people like this style and format and this substance.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's not going to take me that much effort to expand what I already have into a book. And so that was when it was like, okay, like I'm finally going to do this. My wife had convinced me. I don't think I've ever told this story before, but I'll tell it here.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
An author named James Clear, who wrote a book called Atomic Habits. It's the best-selling and one of the best books of the last generation. It's just an absolute gem of a book. And he published his book in 2018. And I think he was seeing the success of Atomic Habits that I was like, I want that. It was not jealousy. It was not envy. It was motivation. What James has, I want to chase it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And James, as you will see when he comes on, is the nicest, most humble, politest guy you will ever meet. So the fact that not only had James had success in a book, but I was like, I want to be James. Not just his success. I want to be him. was like a big motivator for me to be like, okay, like I really want to write a book now. And James and I have become friends since then.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's actually interesting. In the summer of 2018, I was in Omaha, Nebraska for the Berkshire Hathaway shareholder meeting. And we rented a house with like 10 friends. And this random guy came over to have dinner. I don't know who invited him. No idea who he was. And he introduced himself. He said, hi, I'm James Clear. I'm writing a book called Atomic Habits.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's going to come out in a couple months. And so we had no idea, but like in hindsight, looking back, it's so funny to piece all that together.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'd say in some ways nothing has changed and in some ways everything has changed. Nothing has changed because I still write about the same topics. I still read the same topics. I still sit in the same chair and think the same way. My wife and kids don't treat me any differently. In most ways, nothing has changed. What the book did to me
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's a very real thing is it gave me independence, which is a big topic in psychology of money. What you want to use money and wealth for is to gain control over your time. And if I'm being honest with you, I feel like I'm really opening myself up in this podcast here. Before the book, I was always filled with career anxiety. What happens if I get laid off? What happens if this doesn't work?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it really scared me, particularly as I became a father. I got mouths to feed. What happens if this doesn't work? That's the one thing that's changed post-books, a greater sense of financial independence. That means the world to me. And I also, my wife has pointed this out too. I think I've been in a better mental state post books that I have in my life.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It didn't make me happier, but I think it removed anxiety from my life. It's interesting that in a way that was what the book was about. But then because of writing the book, I got to experience it myself, which has been the cool thing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's all of the above. It's book royalties. It's speaking. It's all of the above. And we haven't really changed our lifestyle to any meaningful degree. We live in the same house and drive the same car and whatnot. A lot of that has just accrued to net worth. This is what I write about in Psychology of Money too. Wealth is what you don't see. It's not the cars that you buy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not the house that you buy. Wealth is the money that you've saved that gives you independence, that allows you to do whatever the heck you want to do. And so that's what it's been for us. It's like we've saved the vast, vast majority of it. And because of that, the anxiety that I had of what if back then has largely been stripped away.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Now, you will never get rid of what if because what if you get hit by a car? You're never going to remove risk. But a lot of the tangible career risks that I had five years ago has dissipated.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's how I always define it. If you are the smartest financial mind in the world, you have a PhD in finance from Harvard, you know all the numbers, you won the Nobel Prize in economics, but you don't have control over your behavior. You don't have a control over your greed and fear or patience or temper. You can and very likely will go broke.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the flip side of that is if you have no financial education, you don't know anything. You didn't graduate high school. You're a country bumpkin who knows nothing. But you do have control over your greed and fear and patience and temper. You have everything you need to become wealthy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Just yesterday, there was a news story that came out about this guy who lived in the middle of West Virginia or something like that and lived in a trailer. I heard this. He recently died and he left $4 million to his town.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's the perfect example. He does not have the pedigree. He does not have the degree from Harvard. He did not work at Goldman Sachs, but he was clearly patient, not greedy, et cetera, et cetera. And because of that, he became very wealthy. So there are very few fields in which that's the case. If you did not go to medical school, you do not know how to perform open heart surgery, full stop.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's not like that in finance. You don't need the education to do well as long as you have the behaviors. So because it's one of the few fields that's like that, it's easy to overlook what you need. And most people, if they're like, I want to become a good investor, they're like, great, I'm going to go get a degree in finance. I'm going to memorize all the formulas.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And by and large, that's not what you need. What you need is the behavior. Now, for a lot of people, that behavior is nature instead of nurture. They're born understanding. Their brain is wired in a way that lets them do it. And some people are the opposite of that. But just understanding what you need and what you don't is, I think, the most important thing of doing well with money.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In math? And in physics, there's one right answer for everybody. So if I say, what is two plus two? It's four, no matter who you are or where you're from or where you live or how old you are. But in finance, it's not like that. Because if I say, how should you invest your money? Well, what works for me might not work for you and vice versa.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Everyone listening, we're all gonna come to a different conclusion. Because our risk tolerance is different. Our social aspirations are different. Our time horizons are different. Everything is different. So it's much closer to like taste in music. And if I said, what's the best music? There's no one answer for that. It just depends who you are and what you like and how old you are.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Music that I liked when I was 15 would be atrocious to me now. So you're going to change throughout time. That's most of the nuance in finance is just realizing that there is not one right answer. And I think the majority of the time in finance, when people are arguing with each other about how should you spend your money, how should you invest your money, they're not actually arguing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They're not actually debating. It's just people with different experiences and different risk tolerances talking over each other. And it's the equivalent. If I think X and X is good for me, you might think X is terrible because it would be bad for you. That's the biggest issue with financial debates.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The first thing I think is important is we live a great life. We live in a great house and a great neighborhood and we take great vacations. We are not the kind of people, like the guy who's living in the trailer and is leaving all this money. There is obviously some balance to it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think the idea that if your expectations grow faster than your income, you will never, ever be happy with your money is one of the most important and powerful realizations in finance. that there are hedge fund managers who make $100 million a year and feel like they're falling behind because their buddies make $200 million a year. There is no cap to that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Elon Musk displaced Jeff Bezos as the richest man in the world. I don't know this to be the case, but maybe that bothered Jeff Bezos because now he's only worth a quarter of a trillion dollars while Musk was worth a third of a trillion dollars. There's no end to financial comparisons.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so, yes, it's important if you want to do well with money to grow your income, invest your money, grow your net worth.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it is equally important and very easy to overlook that you also need to go out of your way to manage your expectations and just be happy with what you have, knowing that if you get the bigger house or the nicer car, it's going to feel cool for like four minutes and then you're going to get used to it and it's not going to feel any different.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so, look, we live in a nice house in a safe neighborhood. All of that checks all the boxes. But there's this thing of, yeah, but if we got a bigger house, we wouldn't be any happier. And we might actually spoil the expectations of our kids who think that that bigger house is now the norm.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's such a good question. I would say I don't. I've never tried to put myself in a box. And I think I've moved around over the years. I think if you asked me that question 10 years ago, I would have said, I'm an investor who writes. And maybe if you asked me today, I would say I'm a writer who invests. I've just switched around what I enjoy doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So this is something that we always battle with because even for us who believe this and live it, the expectation of, ah, maybe we should get a Range Rover. It's always there. That feeling, that drive is always there. But then just taking a step back and be like, well, is there something else we could do with our money? Would the vacation make us happier? Would donating it make us happier?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That battle is always there. But whenever we've experienced it, and when you go out of your way to keep your expectations low too, then your drive for a better life moves away from what's the next car? What's the next house? Actually, what makes us happier is spending more time with our kids, going for walks with my wife. So like, hey, can we use our money to do that?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Use our money to free up our time so that we can spend more time with our kids and with each other? Because that's definitely going to make us happier. But the Range Rover probably won't. That's the debate that we always have in our heads.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's so varied. And this is one thing that I've kind of tweaked my views on in the last couple of years is that the $6,000 bag for your sister-in-law, maybe that is the best use of her money. Maybe it's not, but for some people it would be, even if for my wife and I, or maybe you, it would not be to each their own. And there are a lot of people
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
who will look at how my wife and I spend our money, particularly the few of our friends who would know our income and then look at how we spend, would be like, what are you guys doing? You are missing out on so much. And I think we are. I think we're pretty cognizant of what we're doing and how we spend it. And we're doing the best thing for us, which to me, all that matters.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I've never wanted to become... the mansion Lamborghini guy. I've always wanted to become the independent guy who can just do whatever he wants any day. And no one's going to tell me what to do or when to do it. I'm not like a, I reject all authority kind of guy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm not like a hardcore libertarian, but for money stuff, for work stuff, I'm going to have the most fun and do the best work if it's on my own terms. So the fact that I can write what I want, when I want, and the reason I can do that is because I have some sense of financial independence. I don't need to work for the salaried company. That is the best use of money for me by far.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it used to be that all of my emphasis and research and enjoyment was investing. I want to scour the world and study investing history and whatnot. And I still love that. I'll always do that. But the art of storytelling really bit me 10 or 15 years ago. And that's what I really find joy in doing now. And that's the craft that I want to hone.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah. People by and large do not enjoy being told when to work, how to work, and what work to do. They do that because they have to. They need the paycheck and that's the way to do it. But when most people, the first taste of independence they have, they're like, oh, that's good. That's the one I like.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And even if you are working for a salaried company, if you have a boss and in a position that gives you independence and autonomy, not only is it more enjoyable, you're going to do better work. The quality of your work is going to go up if you're doing it on your own terms. It's such a universal driver of happiness.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe that's actually the wrong word because independence doesn't necessarily make you happy, but it removes unhappiness. That's an important nuance, but it's really important. People who are wealthier by and large do not wake up happier. Happy in the sense that they wake up smiling every morning. It's not that, but I think they have fewer bad days.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And that is a huge life advantage to remove uncertainty and misery from your life is massive. It's one of the few things in money that tends to be universal. And it's also very easy to overlook because particularly for young people and particularly young men, the knee-jerk reaction of why do you want to become rich is so I can have nice stuff, so I can have a big house and a fancy car.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's easy to overlook what's actually going to bring you the most joy is using it to give yourself independence.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The two biggest that come to mind, one from personal finance and one from investing. In personal finance, it's social comparison. And there is no such thing as an objective measure of wealth. Everything is just relative to what other people have. You look at your house, your car, your bank account, and you say, what do I have compared to that person?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That person is usually your friends, your neighbors, your coworkers, but also just people on social media. That is the fuel to move the goalpost. Because even if you are doing well, you're going to start looking at people who are doing better than you, and you're always going to feel inadequate. And it's very hard to break that cycle. Social media makes this so ridiculously difficult.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because now the people who you are comparing yourself to is like the curated algorithmic reel on TikTok and Instagram. that knows exactly what's going to make you anxious. They know exactly which posts are going to make you feel inadequate because that's what's going to get you to stare at it the longest and be like, why don't I have what he or she has?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's like a really difficult trap to break. In investing, the pitfall is FOMO. It's fear of missing out. It's similar to social comparison. That person is getting richer than me and therefore I need to take more risks or try to copy that person in order to catch up to him. And the danger in that is that just like in gambling, everyone on social media talks about their wins, never their losses.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So the people who look like they are getting so much richer than you, A, probably are not. Like it's probably some sort of mirage. But because you don't know that, you're going to start taking risks that you shouldn't and can't afford to take.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2021, when there was like the Robinhood explosion in investing, it went supernova at that point because you had all these 19-year-old people who were like, I just made $20,000 on Robinhood and you should be able to double your money every week. A, most of that was bullshit. And B, the people who looked at that said, I need to go start trading options too. And you know how that ended.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think jumping around like that has been really important. If you just put yourself in a box and say, I am a blank. you're cutting off so much of the world that you might find enjoyment in and have some talent in doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
For the vast majority of them, it ended in tears and losses. And so all of that is driven by FOMO, the idea that someone else is getting richer than you and you need to catch up. And so if you can break away from that and realize that there are always people who are either look like or actually are getting richer than you, and that's fine. That's totally fine. It's unavoidable.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You don't need to catch them. You just need to play your own game and do what works for you is really important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I would actually take it a step further with nothing to do with your sister-in-law. I'm sure she's wonderful.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
When you see somebody driving a $100,000 car, the only thing you know about their finances is that they have $100,000 less than they did before they bought the car. You have no idea how much money they have. And I learned about this when I was in college. I was a valet at a nice hotel in Los Angeles. And these people would come in driving Porsches and Ferraris and Lamborghinis.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And then if you get to know them and talk to them, you realize they're actually not that successful. They just spent half of their salary on a Lamborghini lease payment. The vision that they had, the identity of, oh, this guy's driving a Lambo. He's clearly super successful. No, you actually don't know that at all.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's the classic millionaire next door of like a lot of the people who are very successful are actually driving F-150s. They're actually driving Toyota 4Runners. And you would never know it because that's why they're rich is because they actually invested their money instead of spending it on a car they couldn't afford.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's just this idea that getting rich and staying rich are two different skills. And they're often conflicting skills, which means it's hard for people to do them at the same time. Getting rich requires taking a risk, being optimistic about yourself, being optimistic about the economy and the stock market. That's what you need to get rich. And staying rich is almost like the exact opposite.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think I was 19 when I first stumbled across investing. I've told the story before, but it'll always stick with me. When I was 18, my grandparents gave me $1,000 and I put it in a CD at the bank, certificate of deposit, where it earned interest. And I think I intuitively knew what interest was, but I didn't really get it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have to be a little bit paranoid, a little bit conservative, scared of risk, cognizant of risk. in order to make sure that you're not taking big enough risks to throw yourself over the edge. I think one way to summarize it is save your money like a pessimist and invest your money like an optimist.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Save your money with the idea that the world is risky and dangerous and fragile, and there are always recessions and bear markets and pandemics and terrorist attacks and wars and political mess-ups that you need to be able to endure financially. But if you can, if you can keep your head on straight during those periods, the rewards for those who stick around are incredible.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I've been investing for 20 years. 2004 is about when I started investing. During that time, there has never been a single moment in which you couldn't point to a dozen things going catastrophically wrong in the economy. Every single moment, stock market's overvalued. Companies aren't doing very well. Unemployment's too high. Inflation's too high. Interest rates are too low.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At any moment, you could have pointed to a dozen things. And during those 20 years, the stock market is up fourfold. That's how investing works. You have to save like a pessimist to endure all of those dozen things to point at. But if you can stick around, you look back over a 20-year period and you're like, man, I made four times my money during this period. It's incredible.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's always how it works. Saving like a pessimist, investing like an optimist.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, I think Bill Gates is the best example of someone who has gotten optimism and pessimism to coexist. Because when he started Microsoft in the 70s, he took the most optimistic swing that any entrepreneur has ever taken. When in the 70s, he said, every desk in the world needs a computer on it. That was the craziest idea in the world. Crazy optimism.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At the same time, from the day he started Microsoft to the day he left in 2000, he ran it as conservatively as you possibly could. He said he always wanted enough cash in the bank so that he could run Microsoft for one year with no revenue. Like the most pessimistic way to run a business. I think that's why they've done so well.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not that they're always optimistic or they're always pessimistic. They realize that if you can survive all the uncertainty and all the upheaval, then you have a fighting chance to actually compound for 50 years as they have. And very few businesses are actually like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
If you have a very optimistic CEO, they're like, let's bury ourself in debt and invest every penny that we have and swing for the fences. And nine out of 10 of those businesses are eventually going to go bankrupt, probably pretty soon. But also if you're too pessimistic, then those businesses become obsolete.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So it's getting both of those at the same time that is so rare, but that's really the key to doing well over your entire career, over an entire lifetime, is getting optimism and pessimism to coexist.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I remember I logged into my account the next day and the balance had grown from $1,000 to $1,000 and 3 cents. I earned three cents of interest. And I remember jaw hitting the floor, being completely stunned that I just earned money for doing nothing. Just for waking up in the morning, somebody paid me. I knew at that moment, I was like, this is the thing. This is what I love doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so all throughout college, I wanted to be a hedge fund manager or an investment banker. I think in that era, like the mid 2000s, that's what everybody wanted to do. in that field. And then I kind of stumbled haphazardly across writing. It was never part of the plan. I never wanted to become a writer.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The painting example is one that I love. There were all these art collectors in the last 50 years and a very small number of families ended up with these ridiculous art portfolios. They had Picassos and Monet's and like Renoir, like the top paintings. ended up in the hands of very few number of people. How did those art collectors know what was going to become valuable?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because when Picasso was alive in painting, he was not the Picasso who he is today. Most artists become famous after they die. How did these people know what was going to be big? And they looked at their art portfolio and the explanation was those collectors did not know who was going to be big.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
What they did is you had a couple of collectors would go out and buy every painting they could possibly get their hands off of. If any painting was for sale, they scooped it up. And they ended up with thousands or tens of thousands of paintings.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And within that portfolio ended up by chance, some Picassos and some Monet's and some Renoir's, but they didn't know in hindsight what it was going to be or in with foresight, they didn't know. It was only in hindsight that because they collected so many, a couple of them ended up being worth a zillion dollars. And investing is exactly the same. You have no idea
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Which companies are going to be the next Tesla, the next Apple, the next Amazon? Nobody knows. And people who say they do know are fooling you. But if you own an index fund that owns 3,000 companies in it, then you know that whatever is going to be the next Tesla is in there, whatever it might be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And even when I started doing it, I was a senior in college when I got a job at The Motley Fool writing about stocks. And I didn't want to do it. I just needed a job, but I fell in love with it. So I think that in itself is a lesson, particularly for people in college. You might think you know what you want to do and you have a goal and you have a path in front of you, but so many people
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Always in investing, if you own an index of 100 companies, over a 10-year period, you're going to earn most of your returns from five of them. a very small portion is going to return most of them. And since you don't know what those five are going to be with foresight, the best idea is just own all of them, knowing full well that whatever is going to be the winner is going to be in your portfolio.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And that's why you have the statistics about what percentage of active stock pickers outperform index funds, it's very, very low. Particularly if you adjust it for fees and for taxes, over a 10 or 20-year period, it rounds to zero. Warren Buffett recently said that in his life, he's met 10 people who he thinks can consistently outperform the stock market, consistently pick the right stocks.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
10 people that he's ever met in his entire life. And everyone listening to this podcast, you are not one of them. I'm sorry to say. Yeah. Good luck. So I think that's the only anecdote to that. And it's the easiest, cheapest anecdote to that is index investing. It's just own all of them knowing that you're going to have the winners in there.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, if you look at his net worth, 99% of his net worth was accumulated after his 60th birthday. So he's 93, I think he is now. And 99% of the money came after he was 60, which means that if he had retired when he was 60, like a normal person may have, he was a billionaire when he was 60, you would have never heard of him.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The whole reason he's so successful and the whole reason he's now a household name is because he's been, yes, he is a good investor, but the secret is that he's been a good investor for 80 years. And it's just the amount of time he's been doing it for that generates all of that money. He also started investing when he was 11 years old.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's why he's so successful because he's been doing it nonstop from 11 to 93. That's actually the biggest takeaway that ordinary people can take from him because I and you and anyone else cannot pick stocks like Warren Buffett. But can we try to emulate his patience? Is that something that we could maybe copy from him?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have a fighting chance of replicating his patience than you do replicating his intelligence. Just understanding why he's wealthy and using that as a takeaway of what we can do and copy him at is really important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
To your last point, I keep it as simple as I can. I own Vanguard index funds. I've owned for a long time. It's probably all I will own for a long time. I'm not recommending other people exactly do that. You have to figure out what works for you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And as we talked about earlier, there are definitely people for whom picking stocks is the right strategy for them, even if it's not the best for my wife and I. But one little quirk I would say is I actually do follow financial news every day. Every day I know what the market did. I read the Wall Street Journal every day because I think it's intellectually interesting.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's a fascinating window into how people behave. But the important thing is that I don't read the Wall Street Journal and then say, I need to go out and buy and sell these specific stocks. It doesn't influence my behavior. I just think it's a fascinating window into how people behave. But my personal investing strategy is as simple and basic as you could possibly be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
including myself, probably you, stumble into what they actually love and want to do serendipitously. So I think it was great that I did not follow the path that I thought I had paved for myself and just stumbled into something else.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
My entire net worth is this house, a checking account, Vanguard funds, and shares of Markel where I'm on the board of directors. And that's pretty much it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's spread out over many different accounts. And actually quite a bit of it is now in treasuries because you can earn a great return there. Spread out over different bank accounts, different brokerages accounts. Yeah. And the money that I have in short-term treasuries, I consider that cash. That's cash-like to me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So same as ever is about what never changes over time. I think in many ways, psychology of money is about the behavior of you, the individual, and same as ever is about the behavior of us, the collective. Like what do we, the collective society, keep doing over and over and over again? And I've always been a student of, I think, two things. One is investing and the other is history.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I like the intersection of that, like investing history and economic history I've always been so fascinated in. And one of the things that will really stick out when you're studying any kind of history is it's really interesting to see what has changed over time. What do people used to do that they don't anymore? That's interesting.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But to me, way more interesting and way more common is when you see what has not changed at all. And when you're studying the history of Americans 100 years ago, or Europeans 1,000 years ago, or Chinese 5,000 years ago, you see all these kinds of behaviors that would fit in perfectly today that have not changed whatsoever. So how people respond to greed and fear and uncertainty
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
and opportunity, that is the same today in the United States as it was in any culture 1,000 years ago. And it hasn't changed at all. And because of that, we know that it's going to be part of our future for the rest of our lives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And a lot of why I wrote this book was because I kind of got disgruntled at how bad we were as an industry at predicting what's going to happen next, predicting the next recession, the next bear market. Nobody can do it. Nobody has any ability to do it. And so with that, you can either say, nobody knows anything. Don't even try to predict. No one has a clue. Just kind of become a cynic about it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Or you can say, okay, we don't know what's going to change, but we do know what's not going to change. We do know what behaviors are going to be part of our future, regardless of where the future goes. So let's put all of our emphasis on that. And so same as ever is 23 very short little stories about little facets of human behavior that I think have always been with us and always will be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And no matter where your future goes or where society's future goes, you know that these little bits that I write about are going to be part of the story.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's a great financial advisor named Carl Richards who has this quote. One of those quotes that just knocked me off my feet. The quote is, risk is what is left over when you think you've thought of everything. So you can spend all day trying to predict the next risk in your personal life or in the economy and for society. And that's great. You should do that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But then when you are done with that exercise, the thing that is not on the list is what's actually the biggest risk that you're going to face. So think about what the biggest risks we've dealt with in the United States over the past couple generations. Pearl Harbor, September 11th, and COVID are probably the three biggest societal shocks that we've dealt with in America.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the common denominator of all three of those is that nobody, certainly no ordinary American, saw those coming until the day that they happened. In all those situations, there was no economic outlook. There was no analyst forecast. There's nobody on the news warning you about these things that in one day utterly transformed the world that you lived in.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's what's really interesting. I would not say I had an open mind about it. I graduated college in 2008 when the world was on fire and everything was burning down. The economy, like no one in finance was hiring. Everybody was laying people off. So I found a job at The Motley Fool as a writer. And I took it because I had rent to pay. That was why I took it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so the biggest risk is what you didn't see coming. And the fact that people didn't see coming is what made it dangerous because they were not prepared emotionally, financially, logistically. They were not prepared for these things to happen. So when they hit, it was like red alert. What do we do now? And it's always like that. I think in any given year, it is like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
what is the biggest worldwide news story in 2023? It's probably, I hope it's going to end up, hopefully nothing bigger than it happens, will be Israel and Hamas, will be the biggest story of 2023. Of course, there has been tensions, to say the least, in that region for literally thousands of years. But how many people in January of 2023 predicted that that would be the biggest news story?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Maybe there were some people who were on the ground and had a greater sense, but by and large, ordinary people watching the news, it was not on their radar whatsoever. Same with in 2019, if you were looking at the biggest risk for 2020, nobody said a viral pandemic that's going to close down the schools. Nobody said that. 2001, nobody sees 9-11 coming. You can play that game all day long.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so because of that, you can state with a lot of confidence that the biggest risk over the next year and over the next 10 years is something that you and I and none of us are even thinking about because it's always been like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
By definition, you can't. But that in itself, that realization and that mindset is really powerful in itself because you stop pretending that you can predict. There's a great quote from Nassim Taleb where he says, invest in preparedness and not in prediction. So one way that I think about that is think about earthquakes in California.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
California knows that there is going to be a major earthquake in the future, but everybody also knows that you can't predict when it's going to come. It's impossible to predict what day it's going to happen or what year it's going to happen. So because of that, you're just always prepared. They build buildings that can withstand it no matter when it comes.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They don't like, you know, oh, an earthquake is going to come in December, so let's retrofit the buildings then. You're always prepared for it. And I think that's how you should think about economic risks, recessions and bear markets and job losses. You have no idea when it's going to come. So don't try to think, oh, once you see a recession coming, then you'll start to save money.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
No, it could happen tomorrow. So always be prepared for it. I think that idea of having expectations instead of forecasts is the only way to really survive in that world where risk is what you don't see.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, whenever you have something good, you have an investing strategy that works or a company that's going well, the very normal knee-jerk reaction is, great, let's make it go faster. Let's make it bigger. Let's milk it. Let's push it as hard as you can. You do it with noble intentions. You're like, I don't want to leave money on the table.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I didn't do it because I was like, oh, maybe I like writing. That'll be fun. I took it because I was like, I need a paycheck today. And they were the only people in finance who were hiring. And so for the first six months, not only did I not really like it, I was kind of ashamed of it. I was like, I want to be a hedge fund manager. And now I'm a blogger. What is this?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
If I have this golden goose, let's keep milking the goose. It happens all the time. Like in investing, people who are doing well start using leverage or they start making bigger bets, more concentrated bets. In businesses, when it's going well, it's like, let's raise more money and grow faster, faster, faster, faster.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it is such a common story that those investors, those entrepreneurs, or even in your own individual career, you eventually realize that there was a natural speed limit to what you're doing. And if you go over the speed limit, you're going to get in trouble. And you only know where that speed limit is in hindsight when you've gone past it and you get a speeding ticket, so to speak.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so you see this with every successful business. The example I use in the book was Starbucks 15 years ago. and maybe most people don't remember this now, but there was a period in the early and mid 2000s where Starbucks was opening a new store on every street corner, like every couple of hours. It was just like this absolute proliferation of Starbucks stores.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And because of it, the quality of the coffee and of the food plunged. The company's only goal was to grow, grow, grow, grow, grow. And the quality of the stores just disintegrated. And Starbucks had a really rough period because of that. And in hindsight, they talked about, they're like, look, The natural growth rate that we could sustain the quality of the product, we way exceeded.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We pushed it way too hard. And because of that, the business broke for a period of time. There's so many examples of that, of like you have a good, legitimate business that is working and customers love you and they will pay you. But if you try to take that and just say, let's try to make it go twice as fast, it's probably going to break.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So understanding the natural speed limit and size of whatever you're doing is a really critical aspect of what you are doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Let's use the Starbucks example. The reason people love Starbucks was not necessarily because it was on every corner. It was because they liked the quality, the food, they liked the taste. And once your ability to scale takes precedence over that, then you know exactly what's going to happen. So understanding, I think this is such a basic comment, but it's so easy to overlook.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Understanding why you are successful. is the key to doing this. And a lot of people, they don't actually understand why consumers like them or why their boss appreciates them. And because of that, they overlook what is actually needed to keep this going. And once you have an honest assessment of customers like me because of X, then you realize any deviation away from that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And of course, you're going to lose what made you special to begin with. I don't think it's any more complicated than that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
After about a year, I started to really enjoy it and just love the craft of writing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We look back historically, the biggest periods of innovation and new technology and productivity growth, without exception, happened during periods when the world was on fire, so to speak. The most productive economic decade that's ever occurred is the 1930s during the Great Depression, when the economy was...
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
the biggest train wreck it had ever been because every business in America woke up and they were like, if we don't find ways to get more productive and get our act together, we're going to go out of business tomorrow. And that as a motivator, that fear as a motivator creates the biggest productivity boom we've ever had. The other was World War II and the Cold War.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The incentive to figure things out was so extreme because if we didn't figure things out, Adolf Hitler was going to control the world next year And that kind of incentive created this technology boom of the likes the world has never seen. What do we get out of World War II?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got nuclear energy, rockets, jets, penicillin, microwaves, radar, eventually with the Cold War, satellites, all of these things that benefit you and I today that happened specifically because of the stress and anxiety of the war. And you can maybe be able to say this with COVID in hindsight too, like as tragic and deadly as it is,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
if it unleashes the scientific boom as it has, that maybe 20 years from now is going to benefit us in ways that we can't even fathom today. Using the phrase silver lining to COVID is a step too far because it's killed like 10 million people. I'm not saying like, oh, that's a great thing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's always the case that you look back and you're like, hey, despite that tragedy, we got this incredible new innovation because of it that's making life so much better today. So everybody wants a world in which everything goes great and there's no uncertainty. There's no bad times. Of course, that sounds like a great world. But in that world, the incentive to improve would diminish greatly.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's always the stress that creates the biggest improvements.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, I think for writing books, one of the biggest benefits that a publisher provides is a deadline. It's not necessarily that they're going to help you write the book, so to speak, but they're going to tell you, you have to turn in your manuscript on this date and that'll get your ass in gear.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if there's one thing that has really helped me in my career, it's a combination of for the first two or three years, I had to do that job because nobody else was hiring. And then after that, I think I've just been stubborn. I don't know if it's patience or stubbornness or a mix of the two, but I've been writing about behavioral finance every day for 17 years.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's very often the case, not always, this is not black and white, but it's often the case that if you see somebody doing something that you find morally wrong or just something that you disagree with, you are probably underestimating the odds that you would do that exact same thing if you had their incentives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I saw this firsthand during the financial crisis of 2008, when a lot of Americans rightly pointed at Wall Street bankers and said, those greedy bastard bankers who ruined the economy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe that was not necessarily the wrong criticism, but I think what people overlooked is that if you worked at Bear Stearns in 2006, and they said, hey, package these subprime bonds and we'll give you a $6 million bonus, you would have done it too. You would have done the exact same thing if you had that incentive dangled in front of your face.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so I think we underestimate the boundaries of our morality when we don't understand the power of our incentives. Everyone thinks, oh, my moral boundaries are right here. But if you had different incentives, you'd be like, oh, maybe I can shift them out a little bit. And you don't even know you're doing it. It's subconscious. Everyone is so influenced by these incentives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And at every level, when you're looking at World War II, how could the Germans possibly have acted like this I think when you look into what the 1930s were like for them, the incentives, the incentives to go along with it, the incentives to not want to be an outsider, the incentives to do what you're told, it's not to justify anything in the slightest.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you were looking for an answer of how can people do that thing, whatever that thing would be in business, in wars, whatever it be, the answer is usually some sort of incentives. And it's not even a financial incentive. There are social incentives. There are tribal incentives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There are political incentives to do things that you would otherwise find repugnant, but you do it because the incentives push you to do it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I mean, one way as someone who writes books, let's say one of the best advice that I've ever heard is if you want to write a book that people will read 20 years from now, write a book that people would have read 20 years ago. Make sure that what you're writing about is timeless. And I think we can say that about this podcast.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if we had a time machine and someone listened to this podcast in 2003, 99% of what we said would be relevant. So you have to understand what kind of information is expiring. If you're watching the stock market, oh, Microsoft missed quarterly earnings by one penny per share. That's expiring information. I'm not going to say it's irrelevant, but it's expiring. It has a shelf life.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And if you do anything for that long, you'll gain some proficiency no matter what it is. Anybody in any field, if they do it every day for 20 years, will get good at it. And so I think that's been just like sticking with it has been what's helped me the most.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you're talking about how people respond to greed and fear, that's permanent. That never changes. And that will be as relevant 20 years from now as it is today. So you should put more of your emphasis in learning
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
permanent skills, knowing that they're going to stick around rather than drowning yourself in expiring information that might be relevant for a week or maybe even a year, but it has the shelf life of something that's going to expire.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Go out of your way to define your game and realizing that your game might be very different from your co-worker's game, even your co-founder's game, your sibling's game. Everyone is different. And don't assume that because society tells you that you should have X, that that's actually what you should be chasing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
realizing that there are probably 10 people in life who I want to love me. My wife, my kids, my parents, maybe three friends. And it's not that I don't care about the opinions of anyone else, but I think it's really helpful to have people in your life who you don't want to disappoint. Just a few people who it's like, That's your North Star.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm like, am I doing this for the benefit of those 10 people? Would they be proud of me? Is this going to help my relationship with them? I think it's just a very strong guiding light. What really matters? And if you're on your deathbed, are you going to care about your net worth or the square footage of your house? Or are you going to be proud that you are a good spouse? You are a good parent.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You are a good friend. You helped your community. Like it's obvious what's going to be more important to you. So like, let's keep that as the focus.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Thanks so much for having me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah. So I grew up as a competitive ski racer in Lake Tahoe, California. I was on the Squaw Valley Ski Team, and that was my life from my childhood and my teenage years. Skied six days a week, 10 months a year, all over the world racing. It was great. It was such a cool experience. And there were about 12 of us on the Squaw Valley Ski Team, and we were all best friends.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We had been together since we were children, skiing six days a week all over the world. And so one day in February of 2001... I was 17 years old and I was skiing with my two best friends. We had grown up together. They were 17 as well. And we would ski down the backside of Squaw Valley, which is out of bounds, which you're not supposed to do. You duck under the ropes that say, do not cross.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But we did this because we were young and rebellious. And that's where the best skiing is. It's untracked. You have the place to yourself. Now, when you ski out of bounds like that, when you get to the bottom, there's no chairlift because you went out of bounds. So it would spit us out on this back country road and we would hitchhike back. We loved doing this. It was kind of a thrill.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got to hitchhike. It was all very rebellious, something that 17-year-olds do. So the three of us ski this run. And as we're skiing down, I very vividly remember we triggered a small avalanche. And it's a feeling that you will never forget because rather than pushing on the ground with your skis to gain traction and control, all of a sudden the ground is pushing you. And avalanches are very...
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
powerful. You'll be skiing down and then all of a sudden you have no control and it'll push you 20 feet this way and then jolt you 30 feet that way. But it was pretty small and it ended pretty quickly. And the three of us skied down and we like high-fived about it at the bottom. We were like, whoa, did you see that avalanche? That was so cool. We hitchhiked back
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And Brendan and Brian, my two friends who were with me, they said, hey, let's do it again. That was great. Let's go ski that run again. For whatever reason, I don't really know. I said, I don't want to do it again. But how about this? How about you guys go do it again?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And rather than hitchhiking back, I'll drive around to the side of the mountain and I'll pick you up in my truck so you don't have to hitchhike. They said, great, let's do it. We made that plan. We went our separate ways. They went skiing. I went back to get my truck to go get them.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
20 minutes later, I drive around to meet them at the pickup spot where I was going to meet them and they weren't there. And I really didn't think anything of it. I thought that they had probably already hitchhiked back and maybe I was late. It didn't really bother me. And I went back to our locker room where I expected to find them and they were not there either. And nobody had seen them.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At that point, I started to wonder what happened, but I really wasn't worried at that point. Several hours later, Brian's mom called me at home and she said, hey, Brian didn't show up for work today. Do you know where he is? And I told her the truth. I said, yeah, we skied down the backside out of bounds and I was going to pick them up, but they never showed up.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think at that moment, she and I pieced together what probably happened here. Later that day, several hours later, we got the police involved, missing persons report. They eventually had turned into, we got search and rescue involved. Search and rescue went on the hill at about midnight to start looking for them.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They had these giant portable floodlights and a team of search dogs, search and rescue dogs. And then later the next morning, after about nine hours of searching, when the search and rescue workers got to the area, the out of bounds area where I told them we'd skied, They said it looked like half the mountain had been torn away from what was clearly a very fresh, just massive, enormous avalanche.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And avalanches can be the equivalent of like a tsunami, just unbelievable amount of power. They can snap giant trees with their force. And it had clearly just been a massive avalanche here. The search dogs eventually homed in on a spot in the avalanche field where rescuers who had these giant pro poles found Brendan and Brian dead in the avalanche. They were buried about six feet under.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So of course, I always have to say when I tell this story, I think you and everyone else listening has lost somebody dear to them. It's not unique in that sense. I don't want to pretend like it was unique that I had a friend who died. Most people have experienced some version of that. Of course, it had a really profound impact on me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And one of the reasons why, and it took me a while to really piece this together, was If I had gone with them on that second run, 100% chance I would be dead. It was such a massive, it took out everything in its path. And so then I look back on it and it's like the most important decision that I ever made in my life by far was not going on the second run.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I didn't put any thought into that decision. I didn't weigh the pros and cons. I didn't do a risk analysis. It was just a brainless, dumb decision. Why don't you guys go do it? I'll do something else. And nothing in my life has mattered more.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think a lot of things in life are like that, where in hindsight, and only in hindsight, do you look back and you're like, the worst or the best thing that ever happened to me came about because of this dumb brainless decision. And maybe people listening to this today, if you left your house for work at 8.53 instead of 8.54, you may have died in a car accident.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm making this up, but there's all these just random, like you understand how the world hangs by a thread. of these decisions. And when you come to terms with that, I think it makes you much more humble in your ability and willingness to predict what's going to happen in the future. When you see how fragile it is, you just realize you have no idea what's coming next.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think that would be a small part of it. I think in a broader sense, ski racing was so important because we were independent and treated as adults since we were like 14. And we would travel around with the coaches skiing, but the coaches, God bless them, would just go to bars. And then we were out being adults for better or worse.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think that created an incredible sense of independence and forced you to grow up very fast. That had a big impact on me. But certainly losing my friends at that age made me realize how fragile life can be. And I think my perception of risk changed dramatically after that. And after that, I would not take risks that I would have before that because you see the consequences of your actions.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think even before that happened, I was always kind of, I had friends who were doing it more than I. I'm not going to sit here and say I did none of it. Yeah. Okay, I'll give you a specific example. I was telling my wife the other day, I remember when I was 18, one of my friends had cocaine.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I was like, absolutely not, like not even in the slightest in a million years would I touch that stuff, never. But all my other friends are like, yeah, let's give it a whirl. Let's see how this works. So even at that age, I think just naturally, I had a risk assessment that was different from my friends. Yeah.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, it was one of the hardest decisions of my career because I was really happy and comfortable at The Motley Fool. It's a great place to work, still is, filled with great people. I was happy there. Got in Craig Shapiro, who runs a private equity firm called The Collaborative Fund, reached out to me in 2015. And he just said, hey, I like your work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Why don't you come to Collaborative Fund and just keep doing it? Keep doing exactly what you're doing, but just do it here. And I said, hey, I'm flattered, but I'm really happy here. No, thanks. My wife and I had just had our first kid who was two months old at the time. I was not prepared to just throw my career upside down. But he kept pushing and kept pushing and kept pushing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think what the decision for me eventually became was, if I stay at The Motley Fool forever, from the time I was in college until I retire in my 60s, will I regret never trying something different? And I think after a while, I realized that the answer was, yeah, I think I might wonder what else was out there. So I finally joined Collaborative Fund in 2016. And it's been amazing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That was before I had written books or done anything like that. And Craig was one of the only people, I think, in the world who would say, Morgan, just go do your thing. I'm not going to tell you what to write or when to write. And I don't write about what Collaborative Fund does. I feel like it's just my own canvas to write about anything that I'm interested in.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so that was a really rare opportunity. Almost every professional writer at an organization, if you write for the Wall Street Journal or Reuters or CNN or something, you have an editor telling you what to write, how to write it, when to turn it in. And I think that just strips away the art of writing. It just turns it into a job instead of an art. So I really enjoyed the artistic side of it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
No, definitely not the latter. And it was a conscious decision for a long time to not write books. I never saw the point in it. And I would always say, look, I blog twice a week. Why does it matter if it's stuffed in between two pieces of cardboard? It's the same thing. It's the same words. I'm still writing, so who cares? So that was why I pushed off writing books for years.