#210 Morgan Housel – Episode Notes
Morgan Housel
Key Takeaways
Morgan’s career journey began with a desire to be an investment banker, but a contract writing position at Motley Fool led to his love for writing.
“Now I love writing as much as I love investing, I’d say they are co-equals in my career”
Morgan was originally a banking writer but after the 2008 financial crisis occurred he began writing about economics which then led him into writing about behavior.
“It was all about how people thought about risk and fear and greed, and these topics have nothing to do with math or economics, it’s about psychology, sociology, and biology”
Morgan’s new book, The Psychology of Money, is 19 chapters of stories and lessons that readers can apply to investing.
“What matters in investing, what actually moves the needle, is not how smart you are it’s how you behave”
3:54 From Blogs to a Book
Morgan has written for 13 years online which has accumulated into around 4 millions words published on the internet.
“If you take those words and put them between two pieces of cardboard people take them much more seriously”
The difference between writing blogs and publishing his book, is that Morgan cannot go back and change what he’s written after publishing, which he does with most of his blogs.
“The stakes for a book are just higher”
5:13 Morgan’s Confidence in The Psychology of Money
Morgan is confident that he gave his all in writing The Psychology of Money.
“I used a lot of the biggest things that I’ve learned in the last thirteen years of doing this”
He compares writing a book to a startup company;
“Books are like seed stage startups, 99% of them don’t work, so going into writing a book an author has to know that the odds are stacked against them.”
6:29 Morgan’s Teenage Years
Morgan spent his high school years ski racing in Lake Tahoe instead of going to school. He completed an independent study program which granted him a high school diploma, but he ultimately did not have the typical high school education.
“When I look back at my teenage years, never in a million years would I think I’d be a professional writer”
8:28 Morgan’s Relationship With Investing and Writing
Morgan’s interest in investing began in his late teens when his grandparents gave him $1,000 dollars and he put the money in a CV. When he checked the balance a week later he had earned 13 cents and he was stunned
“The fact that you could get paid to do nothing seemed like a good career because I was capable of nothing at the time, I had no education”
Originally, Morgan wanted to do investment banking, but after an internship with an investment banking company he realized he didn’t want to do it. A friend of his was a writer at the Motley Fool, which inspired him to apply for a job there.
“Now I love writing as much as I love investing, I’d say they are co-equals in my career”
11:40 Morgan’s Time at Motley Fool
Morgan began his job at Motley Fool in 2007 when he was a junior in college. He was a contract banking writer getting paid per article he wrote.
As a banking writer, half the companies that he covered went out of business during the 2008 financial crisis so he started writing about economics, and then it shifted towards behavior.
“It was all about how people thought about risk and fear and greed, and these topics have nothing to do with math or economics, it’s about psychology, sociology, and biology”
13:24 Morgan’s Writing Growth Chart
Morgan doesn’t believe that there is an exponential growth for writers, because of how subjective consumers are.
“If I think about exponential growth for writing, I don’t think that exists for anyone because the best writers in the world will most of the time write things that are not very good”
There are times when Morgan looks back on articles he wrote a month ago and he doesn’t like them or he’ll look back on an article he wrote ten years ago and think it’s really good.
“Because writing is an art, what is good to one person is going to be garbage to another so it’s hard to measure how you’ve done overtime”
14:35 The Article Morgan is Most Proud Of
The two articles that Morgan is most proud of, are also his most personal.
The first article is from 2017 called Overcoming Your Demons which describes his experience growing up with a severe stutter.
“Other people like personal stories, particularly personal stories about challenges because everyone’s got challenges and most people try to hide them and cover them up.”
The second article that Morgan is most proud of was published this year, called Three Sides of Risk. This article is a tragic story about Morgan’s two friends dying in an avalanche while he was skiing with them.
“I wrote about that whole experience and what it taught me about risk and I tied it back to how to think about risk in investing”
17:03 Speeding Up His Learning Curve
Morgan was writing three articles per day during his early years at the Motley Fool. This volume game is what Morgan credits to speeding up his learning curve when it came to writing.
“If you write three articles per day for 5 years, you’ll improve”
He pitched to The Motley Fool to let him write 75% less and get paid the same, which would allow him to produce more thoughtful articles.
“That was a really important shift in my career, if that hadn’t happened I would still be in the volume game”
19:40 Morgan’s Comparative Advantage
Morgan doesn’t believe writers can have a comparative advantage.
“I don’t think any writer has a comparative advantage because it’s an art”
But if he had to say one, it would be that he is a full time blogger, whereas most bloggers aren’t. “If there is any comparative advantage, this is all I do” because most bloggers do this as a hobby in addition to their day job”
20:56 The Sherlock Holmes Quote
Morgan begins The Psychology of Money with the quote from Sherlock Holmes,
“The world is full of obvious things which nobody by any chance every observes”
To Morgan, that quote is what investing is, simple.
“What works is so simple, that people won’t take it seriously because they think it has to be more complex”
22:14 Grace Groner
Grace Groner was a woman who was born on a farm outside of Chicago in 1910. She was an orphan, never married, had no children, and lived alone in a one room shack while she worked as a secretary. When Grace died in 2010, at 100 years old, everyone was shocked to see that she left 7 million dollars to charity.
“There’s no other industry where that’s the case, where someone with no education and no background can do so well while people who have the best backgrounds can go bankrupt”
When people dug through her papers, they found that she had invested the savings from her career as a secretary and left the stocks alone for 70 years.
“What matters in investing, what actually moves the needle, is not how smart you are it’s how you behave”
24:46 Selfish Writing
Morgan likes the idea of selfish writing, because if he finds something interesting, he believes that most other people will too.
“I want to find a story that I think is interesting and I want to write it in a way that I like”
Although Morgan describes this as a selfish process, it actually works for a larger audience because if he likes something then odds are higher that other people might as well.
“I think writers get into trouble where they start out with a process of thinking what will other people like”
26:32 Idea Generation Process
Morgan has figured out that his idea generation process is best with a combination reading and walking. He tries to read a wide range of books that are topics outside of the investing world, and then will think on his walks about how these topics apply to investing.
“You’re casting a much wider net and viewing the world through a much wider lens that can help you become a better investor”
Most books are also dealing with the same greed, fear, angst, and anxiousness that investing deals with too.
“Since it’s a study of behavior, there’s so many things from other fields that also apply to investing”
28:48 Deciding to Publish The Psychology of Money
The Psychology of Money is composed of 19 chapters of individual stories that don’t have anything to do with investing, but will teach you about investing.
Many of the stories came from his past blog posts that he was able to expand and go deeper with.
“It was a fun project to be able to expand and go deeper and tell more stories about ideas I had already come across in the last 13 years”
30:04 Costs of Writing
Morgan loves writing so much it doesn’t feel like work to him. However, he has accepted that writing is not a systematic and structured job. He currently writes one article a week and every week he gets anxiety about what to write about.
“If there is a cost it’s this constant nagging fear that you’ve run out of things to say”
31:54 Discovering His Interest in Writing
Although it’s obvious in hindsight, Morgan’s first year at The Motley Fool did not show an obvious interest and talent for writing.
“Even after I’d been at the Motley Fool for 2 of 3 years I didn’t think this was going to be my career”
For the first three years Morgan was somewhat disappointed that he had not become the investment banker that he had dreamed of.
“2013 was the hardest year for my career, because that was the crossroads of ‘am I really just going to be a writer and do I feel okay about that?’”
Morgan says that it’s taken him up to the last 3 years to accept that he is a writer.
34:53 Morgan’s Goal for The Psychology of Money
Morgan reads a lot but barely finishes books, so his goal was to write a book that people would finish.
“I wanted to make 19 points that you might finish instead of just making 1 point that goes on and on and on”
37:25 Wealth is What You Don’t See
Morgan talks about the difference between being wealthy and being rich.
“You see people’s cars, you see their homes, you don’t see their brokerage accounts”
He explains how the concept of wealth is hard for people to learn.
“What we see in the world is spending, therefore it’s hard to learn about wealth because you don’t see it”
41:48 Morgan’s Recently Learned Lessons About Finance
Morgan has gone from skeptical to cynical about the popularity of financial forecasts and so-called finance gurus.
“To me it’s just having a set of expectations about how the world works without specifics in terms of when or how or why they might occur”
48:27 Morgan’s Reason for Success
If there is anything that Morgan is proud of, it’s that he does a great job of explaining complicated things in simple ways because he has been able to spend everyday for thirteen years perfecting that.
“I want to prove my intelligence through simplicity”
51:20 Potential Writing Ventures
Morgan already has his second book outlined. This book is all about “what does not change in the world.”
If Morgan had to write a biography on someone it would be Charlie Munger.
53:34 If Morgan could interview anyone dead or alive, who would it be?
Franklin Roosevelt because he was a leader in what Morgan believes is the most interesting period of time in history, during The Great Depression and World War 2.
54:28 Morgan’s Bookshelf
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