Welcome to the Knowledge Project, I'm your host, Shane Parrish, the curator behind Farnam Street, which is an online intellectual hub of interestingness. We cover topics like human misjudgment, decision making strategy and philosophy.
Knowledge Project allows me to interview amazing people from around the world to deconstruct why they're good at what they do. It's more conversation than prescription. On this episode, I'm proud to have Morgan Housel Morgan, a columnist at The Motley Fool and a former columnist of The Wall Street Journal. His work has also been published in Time, USA Today, World Affairs and Business Insider. I mean, you name it, he's been there. Simply put, he's one of the shining lights of the business press.
More than that, though, he's one of the few people that I read all the time. And as I've gotten to know him over the years, I can also tell you he's an exceptional person. I hope you enjoy this conversation as much as I did.
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Morgan, thanks for coming on the show. You're one of the very few financial people, very few writers in general that I read all the time, and I have a hard time believing that.
Well, first, thank you, but you read so much. I have a hard time believing that.
I just don't read the same person all the time. Well, thanks. I'm happy to be here. Awesome.
So I've had a question I've always wanted to ask you, which is like what was your first job and how did you get into this space that you're in now? And maybe you can tell people a little bit about what you do.
Well, my first job wasn't very exciting, but I can I can move on from that. My first job, I was a host at Denny's and I worked there for a couple of weeks and I wasn't very excited about it. And then I moved on to I worked as a valet at a hotel in Lake Tahoe. It was it was a nice, fancy hotel in Lake Tahoe Valley. And I always thought even before I did, it would be the coolest job.
And it was it was such a cool job. So I started that in Tahoe and then I moved to Los Angeles. So I went to college. I kept doing that. So I was a valet for many years.
Is it true that people go enjoy rides from there? Yes. Yes, it's true. It's true. It's totally true. I mean, nothing nothing too. Nothing too bad. But if you come in in a nice car and you give it to a 20 year old, you know what's going to happen.
You know what the probabilities are. Right? Right, right.
But it was it was it was a it was a cool job. I really love doing that. But how I got interested in finance, I, I always knew that I wanted to go into finance. And when I look back, you know, when I was a teenager and I was excited about finance, I don't think I knew why. I think it was probably finance is attractive to a lot of to a lot of especially young men in their teenage years, because it has the impression of money and power and prestige.
And I think when I look back, that's what attracted me to it. And what's funny is that my current job now doesn't have a lot of that because I didn't really go into finance. I just sort of write about it. But when I was so all throughout college, my my point plan A, B and C was investment banking. That's what I wanted to do. That was I didn't have any that was what I was going to do.
I was going to be an investment banker and I got an investment banking internship in my junior year. And it was clear from day one, from the first hour of the first day that it was not going to be for me. Investment banking has just been incredibly intense, competitive, almost combative culture. That is the opposite of my personality. They had this saying that they told us on the first day and it was kind of a joke, but it wasn't.
And that was the culture. And investment banking was if you don't come in on Saturday, don't bother coming back on Sunday.
Oh, and it was just a really intense culture that wasn't it just didn't fit my personality. It works for some people. If you're just ultra type A and you just need the most intense work environment, that's good for some people. It wasn't good for me. So so then so after I ended that, after a couple of months, it was an internship. I got a job in private equity and I really enjoyed private equity because it's kind of, you know, you're kind of in the trenches digging deep into finance and researching companies and buying entire companies.
And and then you own the company outright. So you can you have a hand in its operations. I really enjoyed private equity, but this was the summer of 2007 and credit markets started blowing up all over the world. And when you are in a business like private equity, which requires you to borrow lots of money to buy companies and credit markets are blowing up, things got pretty tight. And they came to me and it was it was the funniest.
It was one of the funniest lines of my career. They came to me and they said, you're not fired, but you can't work here anymore.
And I said, OK, that's fair enough. I'm pretty sure that's called being laid off. But OK, fair enough. So I needed to do so. I need to find something else to do. I had I was one semester away from graduating college. I knew I wanted to go into finance, but I didn't know really what I wanted to do. And I had a friend who was a financial writer and he was writing for The Motley Fool at the time.
And he said, hey, you should you should come to this. You're interested in finance once you come to this. And I had never really written much of anything. I studied economics in college, which doesn't require a lot of writing. It's a lot of math and whatnot. So I had no writing background whatsoever, but I gave it a shot without thinking anything of it, thinking maybe I'll do this for six months until I find something else.
And that was nine years ago. And I just I just stuck with it. And I've been writing about finance ever since.
And you seem to love it. I mean, it comes across in your writing that you have a passion for it or you developed one, I guess, even if you didn't have one to start with.
You know, when I started doing it, there was no it wasn't like I'm passionate about this and I want to. It it was I'm going to try this and see how it goes, but instantly, once I started doing it, it was it was clear that I really did enjoy doing it. I think the writing is a great process for anybody in any field because it really helps you solidify your thoughts. I think in any field, no matter what it is, a lot of people have ideas in their head that they just can't really put their finger on.
They know it's there. They can kind of like feel the idea floating around, but they can't they just don't really know what it is. And if you sit down and force yourself to write about that topic, it things really start crystallizing and solidifying. And I've really found that true for there are a lot of topics that I think I have this idea about behavior or psychology or I can't really figure it out. And once I sit down and force myself to write it, then it's like, OK, that's that's what I meant to say.
So I think writing writing is a really good process for anyone in any field to go through.
Do you think writing about finance and not being a practitioner in the sense I get well, what are your personal investments? Do you do that still? Are you. Oh yeah.
Yes, I'm I'm an active investor most of mine. So how I invest is basically every month I dollar cost average into index funds. That's my that's the core of it. And then on top of that rarely. But it is a portion of my portfolio when I come across an individual stock that is attractive to me for whatever reason, then I'll buy that too. So I it's the core of my portfolio is index funds, but I still have some individual stocks on the side.
So I guess some people call that index.
Plus, do you think that the writing about the finance gives you a bit of an outsider's perspective, which gives you an advantage? I think there are two sides of it.
One is without a doubt, there are parts of the investing field that I don't understand because I'm not a practitioner, that someone who is a financial adviser or a mutual fund manager or a hedge fund manager could very rightly look at me and say, you don't understand X, Y and Z. And they're right about that because I'm sitting at the comfort of my desk from an outsider sort of Monday morning quarterbacking. That's absolutely true. There is another side that I think that this, I think is true for every field, too, that it is impossible to think objectively about a field that you that you get your paycheck from.
Right. And I think that's really true for a lot of money. Professional money managers, mutual fund managers, hedge fund managers that no matter how hard they try, it's very difficult to look objectively at your field. And that's where I think if there is an advantage that journalists and financial writers have, it's the ability to think a little more objectively about both the upsides and the downsides of the financial world. So it's balancing that advantage with the inevitable downside that, you know, it's impossible to understand what it's like to manage money for other people until you are actually in the trenches doing it.
So how do you define success for writing about finance? What for you? What are the measures that you kind of gauge?
I've always thought like there are there are three types of of writing, especially financial writing. There is just providing information, which is I guess what like Reuters and Bloomberg would do, just breaking news, just putting out the objective facts and the story. And then so that's one type a second type is sharing opinions, which is a lot of most of what's out there, where you're you know, there's some facts involved, but it's very clear that this is my opinion.