There are some interesting quirks about one of the top-selling personal-finance books of the past five years. “The Psychology of Money” is about investing, but it doesn’t discuss asset allocation or other nuts-and-bolts tips. Its author, Morgan Housel, had limited firsthand experience working in finance when he wrote it and no background in psychology or financial advising.
Harriman House had modest hopes for “The Psychology of Money” when they inked the deal with Housel, said spokeswoman Lucy Vincent. Based on Amazon pre-orders six months prior to its release, the publisher printed 5,000 copies. Housel remembers thinking that selling 5,000 would be “great.” He and the publisher had conversations about potentially donating unsold copies to schools. There was, of course, no need to donate copies.
The book is a series of mini essays, many of which draw from history, that explore how and why we form our beliefs about money and markets. “I think a lot of people read that and it gave them permission to justify some of the things that they do with their money that they know are probably wrong but they want to do anyway,” Housel said. “I think that’s great, to not pretend that you are a spreadsheet, to acknowledge that you are a very emotional person who maybe has a family to take care of, and that’s an emotional thing in itself.”
Another point that readers consistently take issue with: Housel’s own investing strategies. Now 38 and a married father of two living in Seattle, Housel writes in the book that he once picked individual stocks, but now, every stock he and his wife own is housed in a low-cost index fund. Early money lessons from parents who met on a ‘hippie commune’ Housel’s common-sense approach to money has its roots in his childhood. His parents were “dirt poor” students when they were raising Housel and two siblings, and his family lived very modestly.
“Out of desperation,” he has said, he then applied for a job writing about finance for The Motley Fool, a personal finance and investing website. Harriman House had approached Housel about writing a book a few years previously, but he had declined the offer. After being shut down in the U.S., he contacted Harriman. “To their credit, they had the opposite reaction of everyone in America,” Housel said. He received no advance, and when he signed the deal with Harriman House, it didn’t feel like the start of something big. He can’t remember how his wife reacted. “It wasn’t like, ‘Oh this is going to change our lives.
Maybe 1 million wouldn’t be hard to obtain after all. First couple chapters of this book are amazing, highly recommended