Are you hoping to be a better investor, businessperson, or entrepreneur?

Well, today’s show is for you because we discussed the concept of behavioural finance, which is the study of the effects of psychology on investors and financial markets.

But don’t worry, it’s not woo-woo stuff, and it’s not technical. Instead, I share several quotes from my favourite author, Morgan Housel, and Mark Creedon and I will try and explain why investors often appear to lack self-control, act against their own best interest, and make decisions based on personal biases instead of facts.

Whether you’re a beginning investor or well down the track in your investment journey, I’m sure today’s show will give you some insights, as you’re probably twice as biased as you think, and if you don’t think this applies to you, you’re probably four times as biased as you think.

Want to become better with your finances?

Well, you could do a lot worse than learning from my favourite author, Morgan Housel, author of the Psychology of Money.

His book The Psychology of Money shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.

And today, I’d like to discuss several of Morgan Housel’s quotes with Mark Creedon, founder and CEO of Metropole’s Business Accelerator Mastermind.

Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people.

● Doing well with money has little to do with how smart you are and a lot to do with how you behave.

● Money―investing, personal finance, and business decisions―is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world, people don’t make financial decisions on a spreadsheet.

● Emotions can override any level of intelligence.

Morgan Housel Quotes

“Be careful when reading about how stupid investors can be and not realize you're reading about yourself.”

“The problem with economic forecasting is that the things you can predict tend to not matter, and the things you can't predict make all the difference in the world.”

“Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.”

“Getting rich and staying rich are different things that require different skills.”

“Most financial mistakes come when you try to force things to happen faster than is required. Compounding doesn’t like when you try to use a cheat code.”

“Imagine how much stuff you'd have to make up if you were forced to talk 24/7. Remember this when watching financial news on TV.”

● Investors were probably better informed 20 years ago when there was 90% less financial news.

● Predictions, opinions, and forecasts should be discounted by the number of times the person making them is on TV each week.

● The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.

“The market is rational, but investors play different games, and those games look irrational to people playing a different game.”

● A lot of financial debates are just people with different time horizons talking over each other.

● Beware of taking financial cues from people playing a different game than you are.

● Everyone is making a bet on an unknown future. It’s only called speculation when you disagree with someone else’s bet.

“When things are going extremely well, realize it’s not as good as you think. You are not invincible, and if you acknowledge that luck brought you success, then you have to believe in luck’s cousin, risk, which can turn your story around just as quickly.”

“Controlling your time is the highest dividend money pays.”

“No one is impressed with your possessions as much as you are.”

● Don't attempt to keep up with the Joneses without realizing the Joneses aren't any happier than you are.

“Read last year's market predictions, and you'll never again take this year's predictions seriously.”

● A big takeaway from economic history is that the past wasn’t as good as you remember, the present isn’t as bad as you think, and the future will be better than you anticipate.

“You're twice as biased as you think you are (four times if you disagree with that statement).”

“Tell people what they want to hear, and you can be wrong indefinitely without penalty.”

“You're twice as biased as you think you are (four times if you disagree with that statement).”

“Risk management is less about how you respond to risk and more about recognizing how many things can go wrong before they actually do.”

“If you have an idea but think “someone has already done that,” just remember there are 1,010 published biographies of Winston Churchill.”

● Just because someone else has done it before, that’s not a reason not to do it. If anything, it means that you can do it too.

More people wake up every morning wanting to solve problems than wake up looking to cause harm. But people who cause harm get the most attention. So slow progress amid a drumbeat of bad news is the normal state of affairs.

Links and Resources:

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Why not join Metropole’s Mastermind Business Accelerator

Learn more about Mark Creedon – Business Coach to some of Australia’s leading entrepreneurs.

Get a copy of Mark’s new book here – Have a Business not a Job

Join us at Wealth Retreat 2023 on the Gold Coast in 2023– express your interest here

Get a bundle of eBooks and reports – www.PodcastBonus.com.au

“We all think we know how the world works because we’ve only experienced a tiny sliver of it, so, therefore, we put our thoughts, our emphasis, our bias on this.” – Michael Yardney

“Past success can’t be relied on. You can’t repeat that indefinitely.” – Michael Yardney

“Don’t judge your chapter one or two by my chapter 30 or 40.” – Michael Yardney

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