The Psychology of Money (review)

10/10

This book by Morgan Houssel is an instant classic. It goes over many of the personal finance trends we’ve seen in the last few decades. Not only he explains what they are, he talks about why they happen, and what should be the lesson of these phenomena. For example: he describes how people follow financial forcasters because thinking that someone knows the answer is simply more comforting than awknowledging the truth that no one knows for sure. The style of writing is such that it is not meant to be condescending or put you down for being part of some of these phenomena, rather he makes his explanations matter-of-fact and emotionless, because “that’s just how it is”. He loves to reference the phrase, “No one is crazy”, meant to recognize that everyone makes the choices they make just because it helps people sleep at night. We all do it whether we like it or not.

There are so many great points I could reference, but my favorite is his ideas about how we should learn from history. He says that history has so many “first times”, that using the past as the guide to the future is pointless. No one could ever imagine how history surprises us. He blames this fact due to butterfly effects, which happen every second, that influence the course of history every second. Houssel claims that in order to learn from history, we must look at broad, repeatable patterns. He actually follows this point in his next book, “Same as Ever”.

Overall, no matter who you are, what you’re doing, or where you live, Houssel’s words will be relatable, each sentance containing a lesson for us all.