Morgan Housel, the author of “The Psychology of Money,” is aiming to ease investor concerns about market downturns by emphasizing their inevitability. In a recent interview on CNBC’s “ETF Edge,” Housel, a behavioral finance expert and partner at the venture capital firm the Collaborative Fund, highlighted this as one of the key themes of his new book, “Same as Ever,” which was released in November.
According to Housel, a recession is not a question of “if” but “when,” and understanding this can help investors better manage their expectations. He explained, “The bear market plants the seeds for the recovery because people get scared into action… All the new technologies come about because people are motivated by fear.”
In addition, Housel advised investors to always have a plan for unforeseen events, as these can catch the market off guard. He noted that while the financial system is generally good at predicting the economy and the stock market’s next moves, it often falters when faced with surprises such as natural disasters and pandemics, which tend to be the primary causes of market upheavals. However, even periods of calm can sow the seeds for market volatility.
Housel’s insights provide a valuable perspective on managing investor anxiety and expectations during market downturns, and his book “Same as Ever” offers further lessons on wealth, greed, and happiness. As investors navigate the uncertainties of the market, Housel’s advice and expertise are likely to be of great interest and benefit.
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