by Morgan Housel is a truly fascinating book. As the subtitle suggests, it teaches timeless lessons about wealth, greed and happiness. And it does so in the style of Napoleon Hill, Jean Paul Getty or George S. Clason. If you liked their books, you definitely won't go wrong with Morgan Housel.
The author's main thesis is that money has much more to do with psychology than with finance. Of course, you can see it either way. But there should be no question that money has something to do with psychology. The world of finance is undoubtedly much more than just facts, figures and data. And of course, some analysts believe that they can reproduce a formula or make precise estimates about the direction in which the economy, a company or an exchange rate will develop. But we have not only known since Nate Silver's book Calculating the futurethat they generally cannot consider all parameters.
Because in the end, a lot of things are more psychology than numbers. In the real world, according to Morgan Housel, people don't make their financial decisions based on a spreadsheet. And I can only agree with him.
"You meet them at dinner or during a meeting, where their personal history, their individual view of the world, their own ego and other crude influences come together."
In terms of content, this book thus moves into the elusive realm of the psychology of money, in keeping with its title. We can expect twenty short stories that not only educate, but also definitely entertain.
Hardly any other book has been advertised as positively as this one in recent months. I was all the more excited to read it myself. It has been described as one of the best and most original financial books in years. It was described as a must-read for anyone interested in managing money better. And the author also got some plaudits as one of the brightest new stars in the financial firmament and someone who would write with graceful clarity.
"People do crazy things with their money. But no one is crazy, everyone just brings their own background. We come from different generations, we were brought up by different parents with different incomes and values, we come from different parts of the world, we live in different economies with different labor markets, different incentives and we haven't all had the same luck. No wonder we all draw completely different lessons from our experiences."
Morgan Housel
After reading this book, I can undoubtedly understand many of these hymns of praise. Frankly, however, I find them somewhat exaggerated. This is definitely a really successful book. Perhaps it's also due to the fact that I probably read a lot more than the average person. However, I have come across a number of other wonderful books in recent years and I wouldn't explicitly praise this one to the skies.
"To understand why people are up to their ears in debt, you don't need to track interest rates, you just need to track the history of greed, uncertainty and optimism. To understand why investors sell at the lowest of lows, you don't have to do the math of expected future returns, you just have to imagine the pain of looking your family in the eye and fearing you've screwed up their future."
Morgan Housel
At this point a few words about the author:
Morgan Housel was a columnist for The Motley Fool and The Wall Street Journal. Today he is a partner in a venture capital firm. He is a two-time winner of the "Best in Business Award" from the Society of American Business Editors and Writers, winner of the "Sidney Award" from the New York Times and two-time finalist for the "Gerald Lœb Award for Distinguished Business and Financial Journalism".
This book has already sold over 200,000 copies and has been published in over 30 countries.
What makes this work particularly lively and authentic are the twenty entertaining and exciting chapters. In them, the author explains what he considers to be the most important aspects of the psychology of money. The very successful books by Dale Carnegie, Napoleon Hill and others follow a similar approach. As self-contained stories, they are easy to read in between and do not overwhelm the reader. At the same time, however, you shouldn't expect any particular depth. And it is precisely at this point that I question why this book was so highly praised.
It is undoubtedly very light, entertaining and mostly written on point. It will therefore reach a wide readership and imparts timeless and valuable lessons on the psychology of money. At the same time, however, it is not a work of the century such as Think and get rich by Napoleon Hill or How to win friends by Dale Carnegie.
"Money weaves through everything, affects us all and confuses most of us. Everyone thinks about it a little differently. Money can teach us something about aspects that are also important in many other areas of life, such as risk, self-confidence and happiness. Few other topics are better at showing why people behave in a certain way."
Morgan Housel
The book is entertaining and perfect for people who would be put off by a 600-page finance book. It hits the nail on the head, doesn't go into too much depth and doesn't overload even those new to finance. You can read it bit by bit and be very entertained - regardless of your level of knowledge. Everyone can learn from Morgan Housel. Because this book will trigger one thing above all else in the attentive reader: Raise questions in their own minds. Those who read it consciously will question their own actions, put their own beliefs to the test and reflect on financial issues. This is the real treasure of this book. It encourages a wide range of people to think and does not bore them with academic treatises. Instead, it entertains with stories and topics that, formally speaking, may not seem exciting to many at first glance.
But they are. And I never tire of emphasizing that we all have to face up to the topic of finance, whether we like it or not. Anyone who stamps it as too boring, dry, number-heavy or whatever else and puts it off will one day get the receipt for it.
"The basic premise of this book is that good money management has little to do with intelligence, but a lot to do with smart behavior. And behavior is hard to teach anyone, not even really smart people. A genius who doesn't have his emotions under control can cause a financial disaster. But the opposite is also true: An average person with no prior knowledge of finance is capable of becoming wealthy, provided he masters a few behaviors that have nothing in common with measurable intelligence."
Morgan Housel
In the short stories, Morgan Housel explains why soft skills play a greater role than the technical side of investing. He also refers to these soft skills as the psychology of money.
"Financial decisions are often presented as a mathematical problem: You enter values into a formula and the result tells you what to do. And then, so the assumption goes, people act accordingly. [...] But it turns out that we don't necessarily follow them. Why is that? To explain this, we need to explore what goes on in our heads when we try to follow the formulas."
In my opinion, this book is one thing above all: an ingeniously conceived work that had bestseller qualities from the outset. If you intend to write a bestseller in the financial sector, you can easily use this book as a guide. The title is catchy, the cover is well designed, the transitions between the chapters are more than successful and encourage you to read on. I have already praised the general structure above. This is exactly how the author appeals to an almost infinite target group.
Perfect for the masses, perfect for a few relaxed and amusing hours, perfect for dreaming, thinking and reflecting. But all in all, not a work that experienced readers of Financial literature remarkably forward. Nevertheless, more than worth reading and a clear recommendation on my part.