Morgan Housel focuses on what never changes in new book – 01/26/2024 – Market

If someone could predict the future, that person would certainly be rich. Although it is impossible, trying to anticipate what is coming is behind many everyday decisions, especially those related to investments.

But what if, instead of trying to predict future changes, we identified what never changes? This is the premise of the new book by Morgan Housel, 37. Through several anecdotes, the American author introduces key concepts of behavioral economics in “The Same as Always – A Guide to What Never Changes”, released by the publisher Objetiva in Brazil, at the end of 2023.

With these lessons, which involve stories about Martin Luther King and Bill Gates and evoke personal reflection, Housel hopes to improve readers’ decision-making skills.

“The Same as Always” works as a continuation of his best-seller, “Financial Psychology: Timeless Lessons on Fortune, Greed and Happiness”, which has sold more than 3 million copies and has been translated into 53 languages.

According to Housel, the purpose of his new book is to instill a little humility in everyone. “Recognizing that we don’t know what will change in the future and focusing on what we know won’t change,” she said in an interview with Sheet.

How to gain financial independence? How to better control finances?
There are no rules that suit everyone. There are people who will live their best and happiest life if they are spending most of their money and there are also people who will only live happily if they are saving a lot of money.

I think I was born with the mentality of being a saver. [Guardar dinheiro] It was never a challenge for me, even when I earned little, it was always something very natural for me. It never required much effort. But I think that’s because that’s how my brain is wired. There are people who, if they tried to do this, would be unhappy.

So I think one of the first rules [para ter independência financeira] is to discover yourself. If you’ve always had difficulty saving money, perhaps this is part of your personality.

There are also people who genuinely want to save and have difficulty doing so. From there, I would look internally and ask, “What is the cause of all the spending you are making?” Is it because you’re just trying to keep up with the basic needs of rent and food? Or because you’re trying to show people that you have really nice clothes, a nice car, a nice apartment?

This may reflect something deeper, which is that you are trying to earn respect and admiration from other people through your spending, not through your friendship or your ability to love, be empathetic, or your sense of humor.

What advice would you give to someone who has no control over their money?
In this situation, you do not need a financial advisor. You need a therapist who digs a little deeper.

If you are the type of person controlled by money, this is indicative of a deeper wound that you are trying to fill. Nine times out of ten this wound leads you to try to get other people to admire and respect you, and you think that having more money is the only way to do that. Recognizing this is very important.

Money is just a tool to hopefully give yourself a better life. But for many people, it’s more like a drug, which you think is the solution to your problems, the key to your happiness. But if you’re addicted to it, it’s not. In fact, it may be the source of your problems, the source of your pain. And you need to dig a little deeper to find out where that pain is coming from.

What do you invest in?
I invest almost exclusively in very broad ETFs (index funds), which include US and international market stocks.

Instead of trying to pick a particular stock or sector, I want to own the entire economy. That’s the bet I’m making because if I keep things this simple, it increases the likelihood that I can stick to this strategy for the next 50 years, and let it build up. Historically, this is where the greatest wealth has been found.

In your view, has the debate around money and financial education improved over the years?
It got better because of the internet. Before, in the 1990s, unless you were rich, you couldn’t talk to a financial advisor. They were restricted to wealthy people. No one else had information, education, vision of what was happening.

Today, anyone with a phone, no matter how much money you make, how much money you have, has access to information. This democratization of information has been enormous.

Now, this has also opened the door to seeing how rich people live, which can cause a sense of envy and social angst that fuels worries about money. Before this, low-income people mostly socialized with other low-income people and didn’t feel that poor.

What is your advice so that people don’t fall for scams or make inappropriate investments?
Anyone who is promising the ability to get rich quick is sure to be scamming you. The only way to get rich is to undertake your own idea, or to accumulate capital slowly over time. These are the only ways to do this.

Anything in between, like “can I get rich with bitcoin quickly”, just doesn’t work. The world is not so generous to people that it allows you to become rich overnight without effort.

Everyone has to give up something for their wealth, be it patience or the risks you take as an entrepreneur. There are no easy ways to do this.

Do you consider yourself rich?
I consider myself satisfied, meaning I have enough to take care of my family and give them everything they need and most of what they want.

I wouldn’t use the word wealth. I don’t think anything good comes from that word. Being satisfied with what you have is the best thing you can do.