Greed, fear and the Psychology of Money

I just finished reading Morgan Housel’s The Psychology of Money, a wonderful book on investing. Reading it will not make you identify the next Apple, but will make you a better investor. Oxymoron?

The book explains in detail the role of human biases in investment decisions. The rational economic man exists only in spreadsheets and text books. Awareness of your own emotions will help you to take a more informed decision. Decision to invest in an asset class and how much to invest is in your control whereas returns are not. The role of risk, leverage, compounding and luck in investment returns are explained in a very lucid manner.