By: Laura Walton AFC®
Morgan Housel, an award winning financial columnist, is gifted at expressing complex ideas clearly and with humor. Today a partner at The Collaborative Fund, he posted this recent blog, “Short Money Rules”, and I would add “to live by”.
- Above-average results require not being afraid of looking wrong.
- Most people are afraid of looking wrong.
- Good investing is 50% psychology, 48% history, 2% finance.
- Great investing is 40% skill, 20% luck, 40% inability to tell which is which.
- Bad investing is 40% overconfidence, 40% fees, 20% denial that keeps it all going.
- Getting rich is hard.
- Staying rich is harder.
- Being satisfied with your riches is hardest.
- Some good advice is simple but made complicated because professionals can’t charge fees for simple stuff.
- The fact that you can’t charge fees for it is part of what makes it good advice.
- Wealth is what you don’t see – money that hasn’t been spent, cars that haven’t been bought, jewelry that hasn’t been purchased, stuff that hasn’t been bought.
- Most people can afford not to be a great investor.
- Most people can’t afford to be a bad investor.
- The combination of the last two is the foundation of investing risk.
- Past results cause confidence to rise faster than ability.
- You’re not obligated to have opinion about anything. Unless you’re paid to do so.
- You’re obligated to not have an opinion about things you don’t understand. Unless you’re paid to do so.
- Be wary of people who are paid to give opinions.
- All market growth is just earnings and what people want to pay for those earnings.
- All economic growth is just population growth and how productive those people are.
- Being nice to people is the easiest career competitive advantage.
- Being smarter than others is the hardest.
- Options make people happy.
- Debt reduces options.
- Obvious risk: not having three months of emergency savings.
- Underappreciated risk: having three months of emergency savings when the average duration of unemployment is six months.
- People like weekends because it’s when they have the most control over their time; financial goals should keep this in mind.
- John D. Rockefeller was worth the equivalent of $340 billion, but he never had penicillin, sunscreen, or Advil. For most of his adult life he didn’t have electric lights, air conditioning, or sunglasses.
- Which is to say: Everything about money is results in the context of expectations.
- When asked, the TCI Foundation responded, “Couldn’t have said it better!”