The Psychology of Money

This week, I had the opportunity to read "the Psychology of Money" by Morgan Housel (A slightly more scholarly type of book in comparison to my regular reads :) ). The book contains 20 chapters, each of which tackles a different topic. The book is stuffed with lovely anecdotes which allow you to understand and visualize the concept. It doesn't feature any complicated psychology theory or troublesome financial terms and impresses the reader nonetheless. I found myself reading with rapt attention and highlighting something on nearly every page! The book explains a variety of reasons why one should save money (along with examples of many who don't) while also analyzing a range of investing principles. 

  What I found most interesting in the book was that section which explained that humans are a lot more irrational than they seem, especially with money. It's easy to judge from an outside lens and call someone "stupid" for making a "bad" investment and praising someone when they make a "good" investment, but the truth is luck plays a much heavier role than one would think is such a number dependent field, and we often forget to acknowledge this. An example Housel used was that of Jesse Livermore, a trader who (purely by chance and a gut feeling) had decided to short the market right before the 1929 stock market crash. This unimaginable stroke of luck allowed his net worth to skyrocket whilst everyone else suffered. However, the years that followed are what are truly illuminating. Livermore, believing that his investing acumen and mastery was what had led to his initial wealth started making larger and riskier investments before eventually ending up in massive amounts of debt. 

 A lot of the information is common sense upon a further glance, but very useful nonetheless. Overall it is a good read, I loved the little stories and the quotes sprinkled through the book. My favorite one is "History is just one damn thing after another." I found it an amusing way to put a serious truth. 

Do give it a read if you have the time!