The quotes behind Morgan Housel’s The Psychology of Money

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The Psychology of Money is widely considered one of the greatest finance books ever written. What makes it so special is that Housel is able to convey an array of topics in a simple and understandable format. The book goes beyond typical financial advice, and dives into why people do things. By studying the patterns of behavior surrounding what people do with their money, Housel derives unique lessons that he shares in his book.

The work builds off of a 2018 report Housel wrote which outlined 20 causes of bad behavior that affect people when dealing with money. The actual book is broken up into 20 sections, with many using short stories to demonstrate a point. Part of the reason that Housel’s explanations sit so well is that he is very practical. Housel uses countless real world examples, quoting authors, historians, investors, and celebrities.

Here are just a few of the quotes behind the brilliance of The Psychology of Money.

Quotations

“A genius is the man who can do the average thing when everyone else around him is losing his mind.” —Napoleon

The concept sounds easy, but is very hard in practice. Housel makes clear why this advice is so hard by applying it to real world scenarios involving your real money. Most of the time money makes people emotional and less reasonable.

“The world is full of obvious things which nobody by any chance ever observes.” —Sherlock Holmes

Here, it is hard to deny that Housel is comparing himself to Sherlock Holmes. But, if you read his work then you may have a hard time denying it too. Housel is extremely good at highlighting trends in human behavior, which he claims are much less susceptible to change than other historical trends.

“History never repeats itself; man always does.” —Voltaire

Housel is clear when he makes this distinction. He often sees investors who treat historians as prophets, and use past charts as the roadmap for future outcomes. What Housel wants you to focus on instead is that history is the study of change, and the best thing you can do is to expect the unexpected in regards to major market moves.

“Success is a lousy teacher. It seduces smart people into thinking that they can’t lose.” —Bill Gates

This quote was used to make Housel’s point about risk. Specifically, Housel is very adamant about the fact that luck plays a role in extreme successes and extreme failures. He begs the question, how big of a role does luck play?

“I’ve been banging away at this thing for 30 years. I think the simple math is, some projects work and some don’t. There’s no reason to belabor either one. Just get on to the next.” —-Brad Pitt

Housel wants the reader to know that they can fail, and it may not always even be their fault. The lesson learned in the section “Tails, You Win” involves understanding that it is okay to be wrong. You do not need to be right a large majority of the time to be successful, as shown by Housel’s many examples.

“The best way to achieve felicity is to aim low.” —-Charlie Munger

This is advice that expands beyond the world of finance and investing. Maintaining low expectations can not only prepare you for daily life in business, but also boosts your overall happiness. 

Most Impactful Lesson

I found that the most impactful lesson in this book was that money is useful because it can grant you independence. Housel repeatedly says that a basic function of happiness is being able to do whatever you want, with whoever you want, at any given time. That is the power that money provides; it provides the possibility of being unrestrained.

This is the core principle that guides a lot of the lessons found in this book. Budgeting is a great way to begin the road to financial freedom. If you want to get started organizing your money, check out my post: The 50/30/20 Budget Rule.

Who should read this?

In reality, everyone should read this book. Whether you have a comfortable salary or have just started earning, this book has a lesson for you. The financial concepts in this book are universal, meaning that they don’t apply to just one sub-section of income. The Psychology of Money is a critically acclaimed book that has received praise from other authors, investors, and large news outlets for its practicality across all levels.

Where do I get this book?

If you appreciated any of the quotes or content in this post, you should definitely go read the actual book. The Psychology of Money is a book that every person, no matter their occupation or interests, should have on the shelf. The price of this book might even make it your best investment of the year.

You can grab a copy on Amazon using the link below:

The Psychology of Money, Morgan Housel

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