The Psychology of Money - Finance With Atul


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Friday, May 6, 2022

The Psychology of Money


The Psychology of Money


Timeless lessons on wealth, greed, and happiness 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. How to manage money, invest it, and make business decisions are typically considered to involve a lot of mathematical calculations, where data and formulae tell us exactly what to do. But in the real world, people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In the psychology of money, the author shares 19 short stories exploring the strange ways people think about money and teach you how to make better sense of one of life’s most important matters.
The Psychology of Money



About Author


Morgan Housel is a partner at The Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers, winner of the New York Times Sidney Award, and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He lives in Seattle with his wife and two kids. His book The Psychology of Money has sold over one million copies and has been translated into 46 languages. He serves on the board of directors at Markel.






The book is about stock market and making money from it. First level of investor is the one who knows money can be made in the market, but doesn't know how and starts to trade without any knowledge. Second level investor have made profit or loss on his capital and starts to find out where did he has gone wrong and starts learning about fundamental concepts such as PE ratio. Third level of investor starts finding value in whatever the scrip he has been following and starts finding justification that it is costly or cheap and buy or sell them. Fourth level investor follows and checks if the price has gone up or not very often and loses faith if it doesn't go up after he bought it, and if price doesn't go up he sells it and looks for another one in a short span of time. Again goes back to drawing board and finds what went wrong. Then come the whole talk of buffetology and starts to find companies like that and invest in them if he felt that it was cheap.



But everyone forgets that Warren Buffet is Buffet because of his principles and patience which helped him in compounding for very long time such as 70-80 years which very few do it. That's when actually psychology matters and that what Morgan tries to tell us in this book that more that analysis of the scrip, conviction that you calculated and the patience to hold it at least for several decades remains intact only then the wealth would be created or else you would be just a person among a crowd doing nothing but ordinary things in life. And explains that the world is actually big and we are just a blip in it. It gives us all a great humility and convinces us to be humble and show gratitude to others.



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