The Psychology of Money Book Cover

Book Review

Morgan Housel’s The Psychology of Money was released in early September and IT IS EXCELLENT. Housel delivers twenty chapters that can be read independently and share a commonsense approach to the behavioral aspects of money and investing. It is not a technical read. It is very well written and filled with valuable insights on how all of us tend to think about money and wealth creation.

One of our favorite chapters is Chapter 17 – The Seduction of Pessimism. The author makes the point that a pessimist typically sounds like someone trying to help you. They come across as having your best interest in mind and want to protect you from harm. On the other hand, an optimist comes across as someone trying to sell you something. We see this in the investing world frequently. Housel continues, “Pessimism just sounds smarter and more plausible than optimism. Tell someone that everything will be great and they’re likely to either shrug you off of offer a skeptical eye. Tell someone they’re in danger and you have their undivided attention.” So true.

Here is the link if you’d like to learn more. It also would be a great gift for someone early in their savings and investing careers.

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