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 tend to lend more credence to events that “align with their own experiences,” but that they must be willing to adapt their views to change […]

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 list of billionaires over the past decade. He suggests that remaining humble is the best way to maintain wealth. Housel quotes Intel founder Andy Grove: […]

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 by former Benchmark partner Andy Rachleff: “What most people don’t realize is that you don’t make money if you’re right in consensus. The only way […]

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, accepting that other people’s goals are different than your own.” Citing the research of Hyman Minsky, an economist who attempted to provide an understanding and […]

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 to distinguish from salesmanship and aloofness.” According to Daniel Kahneman, 2002 Nobel Laureate for his work in the field of behavioral economics: “Organisms that treat […]