Money is a Window
Capital Thinking • Issue #1200 • View online
Investor Patrick O’Shaughnessy has a book club. An email he sent to his readers a few years ago began: “Consistent with my growing belief that it is more productive to read around one’s field than in one’s field, there are no investing books on this list.”
I love that. In the last five years I’ve learned more about investing by reading things that have nothing to do with investing than I did in the previous decade when I exclusively read investing books.
-Morgan Housel
Investing: The Greatest Show On Earth
by Morgan Housel | The Collaborative Fund:
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I call investing The Greatest Show On Earth because money is everywhere, it affects all of us, and confuses most of us. Everyone thinks about it a little differently. It offers lessons on things that apply to many areas of life, like risk, confidence, and happiness. Few topics offer a more powerful magnifying glass that helps explain why people behave the way they do.
How people manage their money is a window into what they value, who they want to impress, what they think they’re good at, what they’re clearly awful at, what they’re insecure about, and where they see the world going.
It shows how people go crazy in groups, obsess over what they want to be true and ignore what they don’t.
It can reveal what people have experienced in life. Show me a pessimist and I’ll show you someone whose economic well-being hasn’t turned out the way they imagined; show me an optimist and I’ll show you someone whose career has exceeded their expectations. There are so few exceptions to this it’s astounding.
Money reveals who people trust, who they don’t, who they find compelling and who they will never take seriously.
It shows what society values (not necessarily skills, but scarcity) and what makes things break (expectations getting too high, having no room for error).
It highlights why so many couples don’t get along, and how much power politicians have.
It shows, better than anything else, the advantage of being born lucky vs. having the odds stacked against you.
It shows what makes people happy and what clearly doesn’t.
Few things are better than money at revealing our capacity to adapt to circumstances. Few things are better at revealing how prone people are to jealousy, envy, and regret.
Each of those have takeaways outside the field of investing. But investing exposes them in such vivid ways.
The point is we should go out of our way to learn about investing by looking at things that have nothing to do with investing. And we should learn about things that have nothing to do with investing by looking at investing.
It’s more fun and gets you closer to the truth.