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

Morgan Housel Explains the Lure of Pessimism

“Every past market crash looks like an opportunity, but every future market crash looks like a risk,” writes Morgan Housel in a recent blog for Collaborative Fund. Housel offers insights as to why investors tend to attach more to negative thoughts than to positive ones, why pessimism is more “seductive” than optimism. Pessimism, he writes, “can be hard to distinguish from critical thinking and is often taken more seriously than optimism, which can be hard… Read More

Housel Says Investing is Also an Art Form

A provocative article penned by Collaborate Fund’s Morgan Housel describes how investing, like many fields, embodies both art and science. “Investing,” he writes, “is maybe 60% science, the rest art.” Some investors, he argues, “obsess over brand and intangibles. Others say ignore those and only look at fundamentals. Neither is right or wrong.” Housel uses the example of Warren Buffett’s investment in Coca Cola, in which there were favorable fundamentals as well as the immeasurable… Read More

Housel on Competitive Advantage

Morgan Housel recently joined Collaborative Fund, a New York-based venture capital firm established in2010. In a blog posted earlier this month, he shares his insights on the importance of competitive advantage in business and offers five characteristics to ensure its sustainability: The ability to learn faster than your competition: “The world is filled with smart people,” writes Housel, who “tend to cling to what they learn, even while the world around them constantly changes.” He… Read More