Book: The Psychology of Money

The Psychology of Money

The greatest risk to your investments is your behaviour. From chasing funds with recent high returns to an outsized fear of loss, we are all susceptible to biases that reduce our investment performance. In this book, Morgan has bite-sized chapters that teach us all how to avoid our biases and focus on the kinds of behaviour that is most likely to be successful. For example, many people sell successful businesses and then quickly lose their capital by taking too much risk because getting rich requires a different approach to staying rich. We often assume that the future resembles the recent past, but to get a broader picture it pays to look deep into the past. This is why after a period of strong stock returns we take too much risk and after a market crash, we take too little risk. Morgan Housel makes all these lessons easy to absorb as he honed his writing skills working for the Motley Fool.