what other fields teach us about investing
TRANSCRIPT
What Other Fields Teach Us About Investing
Morgan Housel
“Since it is more productive to read around one’s field rather than in one’s field,
there are no investing books on this list.”
Best Investing Books of 2015
“Without models from multiple disciplines, you will fail in business and in life … because all the world’s wisdom is not to be found in one little academic department.”
No. 1What the War on Cancer Teaches Us About Investing
How to Succeed at Investing
• Spend less money than you make
• Save the difference
• Buy some stocks
• Be patient
Assessment of Confidence Limits of Selected Values of Complex-Valued Models
How Investing is Taught
11% Annual Outperformance
BH Annual Outperformance
Fees (4%)
Taxes (1%)
"More investors don’t copy our model because our model is too simple. Most people believe you can't be an expert if it's too simple.“
“How did Berkshire's track record happen? If you were an observer, you'd see that Warren did most of it sitting on his ass and reading.”
Take a simple idea, and take it seriously.
The best investing advice?
No. 2What World War II Teaches Us About Investing
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13 18 23 28
Age
13 =
1
Age
What stocks did in your teens and 20sBorn in 1970 1950 1920 1930 1940
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35 40 45 50 55
Age
35 =
1
Age
What stocks did when you were age 35 to 55 Born in 1910 1930 1920 1940 1950
8.3%
2.1%
-1.5%Parents Me Grandparents Germany
Average annual inflation in your 20s
0.5
5
50
1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014
German DAX S&P 500
Luck of the Draw• Grew up during the Great Depression = half as likely to invest in stocks compared to growing up in the 1960s
• Grew up during 1970s = 1/3 as likely to invest in bonds later in life compared to growing up in the 1950s
• Grew up during the 1980s = more likely to buy stocks compared to growing up in the 1970s
• “Our findings suggest that individual investors’ willingness to bear financial risk depends on personal history.”
•Talk to as many people as you can.
•Talk to people you disagree with.
•Talk to people who are in different emotional states than you are.
No. 3 What Presidential Elections Teach Us About Investing
Literary Digest, 193667%
33%
Alfred Landon Franklin Roosevelt
0.1
1
10
100
1000
1915 1923 1931 1940 1948 1956 1965 1973 1981 1990 1998 2006 2015
S&P 500
16 Democrats
18 Republicans
“The purpose of the margin of safety is to render the forecast unnecessary.”
No. 4What Ski Racing Teaches Us About Investing
Questions?