Morgan Housel - The Psychology of Money book review

In a nutshell (256 pages), this is not a book about managing your money. It is a book about managing yourself, your emotions and your perspectives concerning your money. Housel argues, then demonstrates, that while many have been taught how to calculate risk like with the risk-adjusted discount rate, there is a massive difference between the theory, or calculation, that gives you the answer and what you are willing or emotionally able to do with the information.

What I got out of it

Every single chapter either adjusted my thinking, re-oriented my thinking, or just plain introduced me to an important concept I had no idea of. The first chapter, No One Is Crazy, out of the gate is a perfect example. For all the talk from economists about how we respond to incentives in our best interest, it is very difficult to see what is our best interest. Then add to that our personal history, personal baggage, and our personal goals and it’s incredibly hard to predict, never mind to judge, a person’s actions.

What was difficult

This is definitely one of those few books that will challenge and stretch you. Fortunately, it is incredibly easy to read and the way the chapters flow one into the next is very smooth and quite clever. This is a good thing because even if you are someone who is capable of changing your opinions or world views, it still isn’t always a very easy process to go through. But it is worth it.

Recommendation

I highly recommend you buy this book and then either lend it or recommend it to anyone you care about. This truly is required reading. Take your time, go through one chapter at a time, in order, and enjoy.