Motley Fool Hidden Gems Investing - How Good is Your Investing Behavior?

Episode Date: August 18, 2020

Award-winning writer Morgan Housel shares how behavior can have a greater impact on your financial life than investing skills. His book The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness will be released September 8th.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. With The Motley Fool Money Extra, I'm Chris Hill. Morgan Housel is a partner with The Collaborative Fund and an award-winning financial writer. Two years ago, he wrote a piece entitled The Psychology of Money where he laid out the case that investing is not the study of finance. Sure, there are numbers involved and it helps to be good at math, But mastering the technical side of money won't do you much good if you don't have a firm grip on your emotions, because investing is really the study of how people behave with money. There's no amount of intelligence that can't be undone by poor emotions or poor behavior. And if you were to make a hierarchy of investor needs, like a pyramid, the base of that pyramid

is good investor behavior. And then as you go up from there, you need analytical skills, you need to know how to model, you need to learn how to read an annual report, and so on. But without investing behavior, and what I mean by behavior is your relationship with greed and fear, your ability to take a long-term view, your ability to market ups and downs with a sense of calm and a sense of not taking things too seriously, not getting too overwhelmed by greed, not getting too knocked down by fear, that's what I mean by good investing behavior. saving consistently, dollar-cost averaging. It's one of the simplest points of investing,

which is why it doesn't get that much attention. It's not that exciting. But I think it's unequivocally the most important part of investing. In the intervening two years, Morgan Housel has been digging deeper into the topic, and he's put his thoughts down in a new book, The Psychology of Money Hits Stores in Early September. I'm Chris Hill. Thanks for listening! We'll see you next time!