The Morgan Housel Podcast

Luck plays such a big role in the world. But few people want to talk about it. If I say you got lucky, I look jealous. If I tell myself that I got lucky, I feel diminished.

Maybe a better way to frame luck is by asking: what isn’t repeatable?

And maybe better yet: The way to get luckier is to find what’s repeatable.

The fun part of behavioral finance is learning about how flawed other people can be. The hard part is trying to figure out how flawed you are, and what stories make sense to you but would seem crazy to others.

A few of the best and most insightful things I've read lately. 

Woodrow Wilson was the only president with a Ph.D. in political science.

He came to office having thought more about how a government functions than most before him or since.

One of his complaints was that too many people in government held the belief that it was a Big Machine: that once you set up a series of rules you could take your hands off the wheel and let the government run on its own forever. They viewed government like physics, with a set of customs and laws that required no updating or second-guessing because they were believed to be precise and perfect as they were.

Wilson thought that was wrong. He viewed government as being a living thing that adapted and evolved. 

I really don't care about politics. But he had a theory that I think is so important, and so applicable, to us ordinary people managing our money. 

Mae West said, “Too much of a good thing can be wonderful.” That might be true for some things – health, happiness, golden retrievers, maybe.

But in so many cases the thing that helps you can be taken to a dangerous level. And since it’s a “good thing,” not an obvious threat, its danger creeps into your life unnoticed.

Take intelligence.

How could someone possibly be too intelligent? How do you get to a point where you realize you could have been more successful if you had been a little dumber?

Let me share three reasons why.

And if you're looking for another podcast to listen to, check out The Rundown by my friends at Public.com. It's a quick five-minute listen that gets you all caught up on the latest in the stock market, the economy, and in crypto. Hope you enjoy it. 

This episode discusses my take on what you should pay attention to when reading history. 

There’s a quote I love from writer Kelly Hayes who says, “Everything feels unprecedented when you haven’t engaged with history.”

It’s so true. History’s cast of characters changes but it’s the same movie over and over again.

To me, the point of paying attention to history is not the specific details of certain events, which are always random and never repeat; it’s the big-picture behaviors that reoccur in different eras, generations, and societies.

Let me share a little theory I have about optimism, and why progress is so easy to underestimate.

I’ll explain it in four parts.

Behavioral finance is now well documented. But most of the attention goes to how people invest. But the study of how you spend money might be far more interesting -- and practical. How you spend money can reveal an existential struggle of what you find valuable in life, who you want to spend time with, why you chose your career, and the kind of attention you want from other people.

There is a science to spending money – how to find a bargain, how to make a budget, things like that.

But there’s also an art to spending. A part that can’t be quantified and varies person to person.

There’s obviously a hierarchy of information. It ranges from life-changing good to life-changing disastrous.

That got me thinking: What would be the most interesting and useful information anyone could get their hands on?

Years ago I asked that question to Yale economist Robert Shiller. “The exact role of luck in successful outcomes,” he answered.

I loved that answer, because nobody will ever have that information. But if you did, your entire worldview would change. Who you admire would change. The traits you think are needed for success would change. You would find millions of lucky egomaniacs and millions of unlucky geniuses. The fact that it’s impossible to possess this information doesn’t make it useless – just thinking about how powerful it would be to have it forces you to ponder a topic that’s important but easy to ignore.

Keeping the idea that the most interesting information doesn’t have to be realistic – it can be impossible-to-obtain, magical-wish thinking – here are three other things that would get your attention.

There are two big ways to learn: 

Active learning: Someone tells you what to learn, how to learn it, on a set schedule, on pre-selected standardized topics.

Passive learning: You let your mind wander with no intended destination. You read and learn broadly, talk to people from various backgrounds, and stumble haphazardly across topics you had never considered but spark your curiosity, often because it’s the topic you happen to need at that specific time of your life.

I can’t be alone in realizing that most of what I’ve learned in life has come from passive learning.

One sentence that knocked me off my feet when I read Will and Ariel Durant’s The Lessons of History was: "Learn enough from history to bear reality patiently, and respect one another’s delusions."

I love that so much.

The key here is accepting that everyone is deluded in their own unique way. You, me, all of us.

When you realize that you – the good, noble, well-meaning, even-tempered, fact-driven person that you are – have views of how the world works that are sure to be incomplete if not completely wrong, you should have empathy for others whose deluded beliefs are obvious to you. I am such a fan of Daniel Kahneman’s observation that we are better at spotting other people’s flaws than our own.

This episode shares three reasons why all of us become deluded in our own way. 

My wife recently bought me an old book. It's called The Mathematical Theory of Investment. It was written in 1913 and it's as dry and boring as it sounds (but the old weathered cover looks awesome on a bookshelf). 

I flipped through it and thought, "Does any of this matter?" These formulas, these charts, this data?

Well, yes. 

But not nearly as much as the soft, behavioral side of investing. 

This episode shares 10 of what I think are the most critical financial skills -- none of which you'll find in a 100-year-old academic text. 

Expiring skills tend to get more attention. They’re more likely to be the cool new thing, and a key driver of an industry’s short-term performance. They’re what employers value and employees flaunt.

Permanent skills are different. They’ve been around a long time, which makes them look stale and basic. They can be hard to define and quantify, which gives the impression of fortune-cookie wisdom vs. a hard skill.

But permanent skills compound over time, which gives them quiet importance. When several previous generations have worked on a skill that’s directly relevant to you, you have a deep well of relevant examples to study. And when you can spend a lifetime perfecting one skill whose importance never wanes, the payoffs can be ridiculous. Anything that compounds over decades usually is.

This episode discusses a few permanent skills that apply to many fields.

My new book, Same as Ever: A Guide to What Never Changes, is out today. 

Books are hard, a multi-year slog from start to finish. But I’m excited for you to read this. I think it’s the best writing I’ve ever done. And it was fun to write! My hope is that you enjoy reading it half as much as I enjoyed writing it. 

My first book, The Psychology of Money, was really about how you, the individual behave. Same As Ever is about how we, the collective, behave, and what we keep doing over and over. 

It’s 23 short stories about what never changes in a changing world. 

I’ve been thinking about this book for my entire career. I’ve always been skeptical of forecasts, because the world’s track record on predicting the next recession, the next election, or the next technology is so bad. That should draw you to the question: What’s never going to change?

What do we know for certain is going to be part of our future? 

All optimistic beliefs can be dangerous because they’re so comforting, so easy to accept without asking further questions. Hope often masquerades as optimism when you think things will improve only because the alternative is too scary to contemplate. 

Every optimist needs to justify exactly why they're optimistic. In this episode, I offer my own three reasons. 

Daniel Kahneman says, "The long-term success of a relationship depends far more on avoiding the negative than on seeking the positive."

It's like that in so many areas of life. 

Most people know what they're good at, or at least they think they do. Flaws, though, tend to be nuanced, and we're often blind to them. 

This episode shares dozens of little flaws I often think about -- ones that are easy to ignore, but can compound into disasters over time. 

Measuring wealth is easy. You just count it up. Measuring some of the downsides of wealth is so much harder and more nuanced. They can be so nuanced and hard to measure that many people won’t even believe they exist. A downside to wealth? How could that possibly be? 

Let me propose that the absurdity of talking about the downside of wealth is part of why wealth doesn’t tend to make people as happy as they thought it would. 

When the benefits of money are so obvious but the downsides are so subtle, the downsides you didn’t anticipate can be more jarring than the benefits you expected. 

I want more money, of course. Almost everyone does, albeit for different reasons. 

This is not an anti-wealth list -- just a collection of subtle downsides that are easy to ignore, and so common you may as well call them the only true laws of getting rich.

My new book, Same As Ever, comes out in a month. 

It's about things that never change -- what's always happened in the world, and will keep repeating again and again?

This episode shares five examples. 

Just after my son was born I wrote a few things I thought he’d find helpful as an adult. One of them was:

"You might think you want an expensive car, a fancy watch, and a huge house. But I’m telling you, you don’t. What you want is respect and admiration from other people, and you think having expensive stuff will bring it. It almost never does – especially from the people you want to respect and admire you."

Eight years later I still believe this to be true, and I might even double down.

A truth that applies to almost every field is that it’s possible to try too hard, and when doing so you can get worse results than those who knew less, cared less, and put in less effort than you did.

There are mistakes that only an expert can make. Errors – often catastrophic – that novices aren’t smart enough to make because they lack the information and experience needed to try to exploit an opportunity that doesn’t exist.

All greed starts with an innocent idea: that you are right, deserve to be right, and are owed something for the efforts you put into establishing your beliefs and opinions. 

It’s a reasonable feeling. But it sets off a chain reaction that leads to an inevitable boom-and-bust cycle. 

This episode explores one of the most important topics in investing: the lifecycle of greed and fear, and why it cannot, and will not, ever go away. 

This episode is about the difference between intelligence and smarts, and why one is valued more than the other despite being less useful in the world.

The core here is realizing that people are not spreadsheets. They are emotional, hormonal, misinformed, status-seeking, insecure creatures trying their best to make it through the day. So if you have to choose between understanding how the world should work in theory vs. how it actually works in practice, lean towards the latter. It’s like historian Will Durant once said: “Logic is an invention of man and may be ignored by the universe.” That is so smart. 

This is a short personal story about a fluke event 16 years ago that changed everything in my life. You probably have a similar story, and there is so much to learn about how everything can change from an event you never saw coming.

You spend years trying to learn tons of new stuff, but then look back and realize that just a few big ideas truly changed how you think and influenced most of what you believe.

Let me share a couple that had a big impact on me. 

I think there’s an “ideal” net worth for everyone, when money not only stops bringing pleasure but becomes a social liability. And that number is probably lower than most people think.

A subtle problem with money is that assets are easy to measure but liabilities can be hidden. Measuring assets is simple. But how do you measure losing your privacy? Or the nagging doubt that some friends only like you for your money? That’s way harder.

My theory is that the more money people have, the more social debt they tend to be burdened with.

Chris Rock joked that Bill Gates would jump out the window if he woke up with Oprah’s money. Like most comedy, it’s funny because it contains a nugget of truth.

There is no objective level of wealth -- everything is just relative to something, or someone, else. That means a billionaire can feel poorer than someone with infinitely less money.

This episode tries to create a spectrum of wealth based on the quality of your life, feelings, and social circles, versus measuring it on money alone. 

A weird thing in life is that everyone strives for a good life because they think it will make them happy. But what actually brings happiness is the contrast between what you have now and whatever you were just doing.

The best drink you will ever taste is a glass of tap water when you’re thirsty.

The best food you will ever eat is fast food when you’re starving.

The best massage you will ever feel is sitting on a couch after a long run.

The best sleep you will ever experience is when your newborn finally sleeps through the night.

This episode is about happiness, and the counterintuitive places it's often found. 

The knee-jerk way to set expectations is to anchor to what everyone else has right now. But imagine the tragedy of there being unbelievable progress throughout your life and you enjoy none of it because you expected all of it.  

This episode is all about expectations, and how the key to happiness in so many things in life is to aim low. 

Sometimes the best you can do when learning about any topic is to memorize a few short stories -- quick, direct, and to the point, that you're likely to remember forever.

This episode shares 15 short stories that have stuck with me, and helped me contextualize so many things in life, work, and investing.

One other note: I have a new book coming out this November. It's called Same as Ever, and you can pre-order it here:  http://amzn.to/41CHgKM

There are so many times in life where what you do is less important than how long you've been doing it for. 

It's true in careers. 

It's true in relationships. 

It's true in sports. 

And it's true with money. 

This episode is about compounding -- and how staying put, uninterrupted, is often the most overlooked skill. 

If you can explain something important in just a few words, it's a double win: You've probably found something that's obviously true, without needing further explanation or detail. And it's probably something you'll remember for a long time, easy to recall without having to memorize dozens of details. 

This podcast is a smattering of ideas that have been important and impactful to me, shared in as few words as I can manage. 

This episode has little to do with money. But in some ways it has everything to do with money. 

That's the riddle I want to unpack. 

I want to share a bunch of examples of what one field can teach us about another. 

What can we learn from biology that teaches us something about money?

What can we learn from physics that teaches us something about business? 

If you find something that is true in more than one field, you’ve probably uncovered something particularly important. The more fields it shows up in, the more likely it is to be a fundamental and recurring driver of how the world works.

One of the most complicated topics in money: How it impacts your family.

Your spouse.

Your kids. 

How do you avoid spoiling kids? 

How do you and your spouse learn to agree about the best way to spend? 

There are no easy answers -- but I try my best here, including sharing the letters I wrote to my kids when they were born. 

The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.”

People want to become wealthier to make them happier. Happiness is a complicated subject because everyone’s different.  But if there’s a common denominator in happiness -- a universal fuel of joy -- it’s that people want to control their lives. 

The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays. 

There is no world where two equally smart and informed people should agree on the best way to save, spend, and invest money. 

Everyone is different. 

What you want might not be what I want.

What’s fun to you might be miserable to me.

Your family’s different from mine. Your job’s different from mine. You have different life experiences than I do, different role models, different risk tolerances and goals and social ambitions, work-life balance targets, career incentives, on and on.

One of the most important financial skills is figuring out what game you're playing, and playing it -- and only it. 

This episode covers a hard topic about money: What you want more than anything is everything you can't have.

Your brain doesn’t want stuff. It doesn’t even want new stuff. It wants to engage in the process and anticipation of getting new stuff. 

The change, not the amount, is what matters.

When it comes to happiness and money, it's not about how much you have. It's about the change in how much you have. 

Special cameo from Richard Nixon. 

Getting rich and staying rich are two different skills. They are often conflicting skills, so many people focus on one or the other. 

But you need both to do well over time. 

This episode tells a 100-year-old story of two investors, neither of whom knew each other, but whose fates converged during the same week in the 1920s. 

It shows why a barbell personality of optimistic on one hand, and paranoid on the other, is vital to success. 

There are only a handful of financial rules, ideas, and observations that really move the needle -- and explain the majority of what you need to know to do better with your money. 

I could have narrowed this down to 10, but I had fun with this thought experiment, so here are my top 30 rules of the money game. 

Episode 2: A look at the lifestyles we all choose to live, with an old story I came across that might be my favorite example of living for the approval and applause of other people vs. doing things just because they make you happy. 

The first episode -- who knows where this will go?

There is a science to spending money – how to find a bargain, how to make a budget, things like that.

But there’s also an art to spending. A part that can’t be quantified and varies person to person.

In my book I called money “the greatest show on earth” because of its ability to reveal things about people’s character and values. How people invest their money tends to be hidden from view. But how they spend is far more visible, so what it shows about who you are can be even more insightful.

Everyone’s different, which is part of what makes this topic fascinating. There are no black-and-white rules.

But here are a few things I’ve noticed about the art of spending money.