Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Mon, 10 Feb
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Morgan Housel once looked back at his twenties as a carefree, simple time, living in a beautiful apartment with his wife. But she quickly reminded him how anxious he truly was. His nostalgia had erased the uncertainty he once felt, just like how investors look back at past market growth and assume success was inevitable. In this episode, Morgan explains why the past is never as clear as we remember and why the future won’t be either. He also shares how entrepreneurs can build wealth despite uncertainty, the key to long-term success in the stock market, and practical strategies for sustainable financial planning. In this episode, Hala and Morgan will discuss: (00:00) Introduction (02:14) Why Most Financial Resolutions Fail (04:06) Balancing Saving and Spending Habits (09:15) The Power of Long-Term Investing (13:30) Navigating Startup Risks Wisely (15:49) What Sets Genius Entrepreneurs Apart (18:50) Why Doubt Is Necessary for Entrepreneurs (22:23) How Hindsight Can Misguide Investors (29:22) Wealth Inequality in the Social Media Era (34:36) Turning Anxiety About the Future into Action (40:23) The Financial Mistakes We Keep Repeating (48:38) Elon Musk’s Extreme Risk-Taking Strategy (50:42) Embracing Failure for Lasting Success (53:55) How Rumors Shape Financial Markets Morgan Housel is an investor, partner at The Collaborative Fund, and author of the New York Times bestsellers The Psychology of Money and Same As Ever. A former columnist for The Motley Fool and The Wall Street Journal, he simplifies complex financial ideas, emphasizing long-term thinking, compounding, and decision-making over market predictions. He is also a two-time Best in Business Award winner from the Society of American Business Editors and Writers. Connect with Morgan: Website: morganhousel.com Linkedin: linkedin.com/in/morgan-housel-5b473821 Instagram: instagram.com/morganhousel Twitter: x.com/morganhousel Facebook: facebook.com/morgan.housel.5 Sponsored By: Shopify - Sign up for a one-dollar-per-month trial period at youngandprofiting.co/shopify Airbnb - Your home might be worth more than you think. Find out how much at airbnb.com/host Rocket Money - Cancel your unwanted subscriptions and reach your financial goals faster with Rocket Money. Go to rocketmoney.com/profiting Indeed - Get a $75 job credit at indeed.com/profiting RobinHood - Receive your 3% boost on annual IRA contributions, sign up at robinhood.com/gold Factor - Get 50% off your first box plus free shipping when you use code FACTORPODCAST at factormeals.com/profiting50off Active Deals - youngandprofiting.com/deals Resources Mentioned: Morgan Housel: How to ACTUALLY Build Wealth, Investing to Gain Financial Independence | E266: youngandprofiting.co/4147SpO Morgan’s Book, The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness: amzn.to/3EoljZ0 Morgan’s Book, Same as Ever: A Guide to What Never Changes: amzn.to/4aOX7uV Morgan’s Podcast, The Morgan Housel Podcast: bit.ly/3EljBre Key YAP Links Reviews - ratethispodcast.com/yap Youtube - youtube.com/c/YoungandProfiting LinkedIn - linkedin.com/in/htaha/ Instagram - instagram.com/yapwithhala/ Social + Podcast Services: yapmedia.com Transcripts - youngandprofiting.com/episodes-new All Show Keywords: Entrepreneurship, entrepreneurship podcast, Business, Business podcast, Self Improvement, Self-Improvement, Personal development, Starting a business, Strategy, Investing, Sales, Selling, Psychology, Productivity, Entrepreneurs, AI, Artificial Intelligence, Technology, Marketing, Negotiation, Money, Finance, Side hustle, Startup, mental health, Career, Leadership, Mindset, Health, Growth mindset. Finance, Financial, Personal Finance, Wealth, Stock Market, Scalability, Investment, Financial Freedom, Risk Management, Financial Planning, Business Coaching, Finance Podcast, Investing, Saving.
Chapter 1: Why Do Most Financial Resolutions Fail?
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
Today, we are going to pick Morgan's brain on a number of interesting topics related to psychology, money, investing, and how you can avoid some of the biggest mental blunders when it comes to your financial decisions. Morgan, welcome back to Young and Profiting Podcast.
Chapter 2: How Can We Balance Saving and Spending Habits?
How can we actually plan out what we want to spend our money on this year?
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.
Thanks so much for having me. Happy to be back.
Yeah, I'm happy to have you here. So you were on the show about a year ago, and we had such an interesting discussion. We talked about all kinds of things, your background, the secrets to building wealth and staying rich, and some topics you discuss in your books. And since then, you've been busy writing, recording podcasts, creating content.
So I thought today we could kick off the new year with a grab bag of things that you're thinking about now related to money, investing, and psychology.
Someone creates a meme coin and you're like, that's obviously bullshit. And it becomes Dogecoin.
So how can we use this information when we're making investors and financial decisions? I think... Yeah, bam. My guest today is back for his second visit to the show. You may know him as the author of books like The Psychology of Money and Same As Ever, or as the host of the Morgan Housel podcast. I'm, of course, talking about Morgan Housel.
Let's do it. I'm ready.
Okay, cool. So speaking of the new year, what do you think the top things are that we should do to kick off the new year right when it comes to our finances? Is there any sort of exercise that we should be doing in the beginning of the year to evaluate our strategy?
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Chapter 3: What Is the Power of Long-Term Investing?
We'll be running that episode again as a Gap Classic in the near future, and I encourage you to check it out. Today, we are going to pick Morgan's brain on a number of interesting topics related to psychology, money, investing, and how you can avoid some of the biggest mental blunders when it comes to your financial decisions. Morgan, welcome back to Young and Profiting Podcast.
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 almost not going to stick with it. 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. Thanks so much for having me. Happy to be back.
Yeah, I'm happy to have you here. So you were on the show about a year ago, and we had such an interesting discussion. We talked about all kinds of things, your background, the secrets to building wealth and staying rich, and some topics you discuss in your books. And since then, you've been busy writing, recording podcasts, creating content.
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.
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?
So I thought today we could kick off the new year with a grab bag of things that you're thinking about now related to money, investing, and psychology.
Let's do it. I'm ready. 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 has a very different situation.
Okay, cool. So speaking of the new year, what do you think the top things are that we should do to kick off the new year right when it comes to our finances? Is there any sort of exercise that we should be doing in the beginning of the year to evaluate our strategy?
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.
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Chapter 4: How Should Entrepreneurs Approach Startup Risks?
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,
Suddenly I've been investing more often, more frequently. And it's become more like a game. Psychologically, what do you think is happening? And do you think that this is a good strategy for people?
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.
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.
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.
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.
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.
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.
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Chapter 5: What Sets Successful Entrepreneurs Apart?
I love that. So one of the best things that I did this past year is that I actually started this dashboard and I use Monarch Money and they're not a sponsor of mine yet. I think they'll end up becoming a sponsor because I'm going to mention it right now. And basically I have all my accounts on this dashboard.
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.
So I have my bank accounts, my savings accounts, my E-Trade account, my Fidelity accounts in one place. And in the past, I used to be really lazy to like go check on this account, go check on this account. And I would just never check my accounts. And now that I have everything in one dashboard, I actually can see my net worth. And suddenly I've become more competitive.
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.
Suddenly I've been investing more often, more frequently. And it's become more like a game. Psychologically, what do you think is happening? And do you think that this is a good strategy for people?
I feel like for me, it's been good because I feel like I wasn't paying attention and now it is more fun to look at it. But to your point, I am getting a little addicted to like going and looking at it all the time. And maybe I need to like make sure that it's just like once a week instead of every day or something like that. So I don't overdo it.
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.
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.
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.
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Chapter 6: Why Is Doubt Important for Entrepreneurs?
So I have 50% returns just from this year of what I've invested. So I usually do like tech stocks. Now I'm investing in AI. And so I've done really well. But why don't we pause here? What was wrong with what I did when I pulled all my money out during COVID?
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.
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.
And I feel like this is why the rich get richer, right? Because during COVID, all these really rich people, they didn't need to worry about the money they had in the stock market. They were able to just let it sit there and ride it out. And so I feel like we should all strive to have money that we're okay with just letting it sit there, don't you think?
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.
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?
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.
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.
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.
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Chapter 7: How Does Nostalgia Mislead Our Financial Decisions?
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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. And I told her, I was like, man, that was peak living because we didn't have kids.
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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 were more depressed and anxious and scared when we lived there than you've ever been in your life. Because it was just a weird time in my career. 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. I know that the career worked out. My relationships worked out.
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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. So when we know how the story ends, it's almost impossible to remember how uncertain you were during that period of time.
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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. And I think in part, we think that's true because we know that for the most part, it worked out.
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Chapter 8: What Are the Common Financial Mistakes We Repeat?
Thank you. Thank you. Thank you.
And then I have friends who are really smart who can't get a job right now and who literally can't even hold a job. And so I just see this complete disparity of experiences when it comes to money and And I want to understand your thoughts about what's going on here in America.
There are many things going on. This is not a black and white issue that you can just give one answer and say, here's what's going on. But I think one of the things that is going on that's easy to overlook is that it's not necessarily that these things are happening at record rates. It's that we are more aware of it than we've ever been.
So when there was incredible wealth inequality as recently as the 1990s, most people didn't know about it because your view of the world was constrained to your neighbors, your coworkers, your friends who you talk to on the phone, and whatever you watched on the NBC nightly news that night. That was your view of the world.
And now, because of social media in particular, if something's happening in the world, if somebody in the world is experiencing the world in a different way than you are, you are going to know about it. And you're going to know about it in social media terms, which is the person who says the most provocative off-the-wall thing gets the most attention.
Thank you.
So yes, there is a lot of wealth inequality right now. There has been for decades. People are just more aware of how the other half lives than they used to. And it used to be that the people who lived in Beverly Hills and lived behind gated mansions, you never saw them. Nobody else ever saw how they lived.
And now if you flip open Instagram, it is an often fake view of how beautiful, wealthy, and happy people are. And everyone is so aware of it. And when you are aware that there are other people who look like they are working not as hard as you, They're not as smart as you, but they at least appear to be happier, wealthier, and prettier than you are. Thank you. Thank you.
That leads to a lot of anxiety, a lot of social FOMO that we have just because we are more aware of it. What's interesting with wealth inequality too is that actually in the last five years, in percentage terms, not in dollar terms, but in percentage terms, the group who has grown their incomes the most are the poorest.
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