The Psychology of Money
Last week, I hosted Morgan Housel, award winning financial writer, for a Zoom meeting to discuss his new book The Psychology of Money. You can watch the replay here!
Hiring a financial storyteller might seem counter-intuitive compared to hiring a market prognosticator or economist. However, I think about the famous lefty pitcher Sandy Koufax—Most don’t realize Koufax was on his way to a pretty dismal career until he met an obscure bullpen catcher, Norm Sherry. It was Sherry that convinced Koufax to throw a pitch that can be caught. Just look at the results when Sherry simplified things for Koufax. [i]
In many respects, we are only as successful as our pitches we throw that you, as our clients and investors, can catch. Few in my profession want to make things seem simple. In fact, Wall Street is paid to keep things as complex as possible. [ii]
Morgan helps our clients think about how to succeed at investing— which is the cornerstone of what we try to accomplish here at Phillips and Company.
For example, the simple—but elusive—concept of the power of compounding. Morgan describes how famed inventor Warren Buffet compounded 98% of his wealth after he was 65 years old. It is not only a great story but a great example. [ii]
Another great story Morgan talks about is the wealth created in the midst of nearly non-stop volatility and wealth destruction. Since 1957, the S&P 500 is up overall but, look at all the different times the S&P 500 was down 5%, 10%, and 20%. [ii]
Most average investors fall prey to these incredibly destructive forces and, historically, miss out on the best returns. [iii]
I promise you will not waste your time by clicking on this link to hear our guest speaker, Morgan Housel, help all of us understand the psychology of money.
Tim Phillips, CEO, Phillips & Company