Morgan Housel on the Biggest Returns

In an article for The Collaborative Fund, Morgan Housel draws a parallel between the energy industry and investing through a discussion of how conservation and efficiency in the former has increased over the past 40 years. Housel notes that today, the U.S. uses 60% less energy per dollar of GDP than it did in 1950. He points out that those factors that are largely in our control, like efficiency, “can make the biggest difference over… Read More

Morgan Housel on the Psychology of Money

In an episode of The Motley Fool radio show, host Chris Hill talked to The Collaborative Fund’s Morgan Housel about the psychology of investing and how humans behave when it comes to money. Here are some highlights: ·      Housel referred to a 9000-word piece he posted on Twitter calledThe Psychology of Money, in which he asserted that “investing is not the study of finance, it’s the study of how people behave with money.” The most important… Read More

Housel Compares Expiring and Long-Term Knowledge

In a recent article for The Collaborative Fund, Morgan Housel reflects on the differences between information we retain and that which “expires” in short order. “It’s amazing how much of the information we consume has a half life measured in days or months,” Housel writes, pointing out how “expiring knowledge catches more attention than it should, for two reasons. One, there’s a lot of it, eager to buzz our short attention spans. Two, we chase… Read More

Housel on the Strength of Compounding on a Small Base

In a recent article for the Collaborative Fund, Morgan Housel addresses the topic of compounding through several interesting anecdotes about ice ages and Warren Buffett, among others. A hundred years ago, Housel explains, a Serbian scientist discovered that our earth “wobbles just enough to change how much solar radiation is let in, occasionally enough to wreak havoc.” But Housel points out that subsequent studies found a more layered explanation, that moderately cool summers were the… Read More

Housel on the Irony of Luck

In a recent article for the Collaborative Fund, Morgan Housel contrasts luck and risk as they relate to investing, arguing “you cannot understand one without appreciating the other.” “This is the irony of investing,” writes Housel, “Risk and luck are different sides of the same coin, but we treat one as critically important, and the other like it doesn’t exist—at least for you, when you succeed.” Housel offers the following insights/comparisons: Investors should quantify both.… Read More

Housel Lists Factors That Can Kill Competitive Advantage

More than 40% of all public companies go on to lose effectively all their value,” writes Morgan Housel in a recent article for the Collaborative Fund. Housel uses the example of Sears, a dominant player in retail in the early 80’s that even expanded confidently into the banking business. “Its catalog was the Amazon of its day,” he writes, adding, “Then everything fell apart.” Housel outlines the following factors that can destroy competitive edge: Knowing… Read More

Housel’s Fundamental Investing Skills

In an article for the Collaborative Fund earlier this month, Morgan Housel shares what he sees as the four skills most relevant in investing: “The ability to distinguish ‘temporarily out of favor’ from ‘wrong.’” Housel emphasizes that it’s difficult to distinguish between the two, but “worse, and more common, is forgetting that a distinction needs to be made in the first place.” “The willingness to adapt views you wish were permanent.” He argues that investors… Read More

Housel on How to Stay Rich

In a bull market, stocks become expensive and stretched valuations leave little margin for error, writes Morgan Housel earlier this year in an article for the Collaborative Fund. This increases the chances that the bull market will end. “People and companies, whose behaviors are changed by their own success, are vulnerable to the same cycles,” he says. Getting rich, Housel argues, is tougher than staying rich, as evidenced by the 60% turnover in the Forbes… Read More

Morgan Housel: Discomfort the Key to Investing Success

 A key component of becoming a successful investor, writes Morgan Housel of the Collaborative Fund, is the “ability to be comfortable being uncomfortable.” Investors, he says, “have a fascination with no-brainers, obvious decisions, and easy money. The phrases should be chapter titles in a book on the ease of deluding yourself.” He argues that finding well-performing investments requires above-average intelligence but also the willingness to “endure more discomfort and uncertainty than others.” Housel cites a comment… Read More

The Genesis of Market Bubbles

The concept of market bubbles and how they come about is addressed in a recent report authored by Morgan Housel of Collaborative Fund. In the report, Housel supports the following arguments: Bubbles are an “unavoidable feature in markets where investors with different goals compete on the same field.” Bubbles are more closely related to “shrinking time horizon” than to rising valuations. Investors can best protect themselves by “understanding and acting upon your own time horizon,… Read More