What is Morgan Housel’s bestselling book — The Psychology of Money, all about?

I am not that big reader who spends most of time reading books but I like to read specific set of books at times. So I was exploring on instagram & came to know about this new bestselling book — The Psychology of Money. Many people were suggesting to read. Finally I purchased the paperback. Completed first chapter & it’s introduction.

Another book which recently being in trend is Atomic Habits by James Clear. Everyone should own a copy — this is what James said about this book. Book is tend to explain lessons on wealth, greed & happiness using different stories. Every book out their have some premise or theory on which author writes it.

It starts with - Introduction : The Greatest Show On Earth. Divided into 3 parts; first two are stories of success & failure while third part is where is he tries to give overview about premise of book.

First story starts, while he was working in hotel, of a tech executive whose relation with money, he described, was mix of insecurity and childish stupidity. That guy was arrogant who throws gold coins across the Pacific ocean just for fun. And when he was asked for 500 dollars, because he shattered a bulb, he pulled a cash pile of 5K and incredulously handed to manager. Few years later that tech guy went BROKE.

Second story he wrote was about Ronald Read. A guy who worked at gas station for 25 years & at JCPenny for 17 years. When Read died he made headlines because he left $2 million to his stepkids and more than $6 million to his local hospital and library. But how he did it? There is no secret behind it. No lotter or inheritance. He simply just saved what he could & invested. Waited for decades. And this is how $8 million compounded. From 0 to 1.

He further continued in second story about Richard Fuscone — Harvard educated MBA, savvy, leadership values & skillful. Fuscone was once in 40 under 40 list of Crain’s magazine. But this guy borrowed heavily to expand his 18,000 sq. foot home which made him bankrupt due to 2008 financial crisis. The thing is Read was patient & Fuscone was greedy! Author wrote that this stories are very unique to finance.

How can a person with no formal education, no connections, no training can outperform other one who have best education? Such stuff do occur in investing & finance. Morgan Housel wrote very interesting here that — financial sucess is not hard science. It’s a soft skill, where how you behave is more important than what you know.

Morgan called this soft skill as Psychology of Money. The main theory of book is to make you convince that soft skills are way more important than technical side of money. A book explaining reader via stories to make better financial decisions. Morgan further said that he realized that these skills are GREATLY UNDERAPPRECIATED.

Let me describe in very short what Morgan H. is trying to say ~

We are taught money like physics, not like psychology. Physics is guided by laws. Whereas finance is guided by people’s behaviour. Your behaviour impacts heavily on wealth generation capacity. A genius who loses control of their emotions can be a financial disaster.

I guess you may understand what he is trying to say. He is writing about finance since 2008 financial crisis. He studied financial crisis & realised that in order to understand better we have to look at it via psychology’s lenses, not just finance. Back in 2018, he wrote report describing 20 of the most important flaws, biases & causes of bad behaviour. In this book, he described each of 20 into detail. Each got their own chapter. Total 20 chapters.

Over a million copy sold. Why are you waiting? It’s not long book though! Thanks for having me🙋🏻‍♂️.

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