“No one’s success is proven until they’ve survived a calamity.”

You can’t join the NBA with a few good shots, but you can join the ranks of “great” investors. Luck and skill are much harder to separate in the financial world and making that distinction can take a few decades. Chris Hill talked with best-selling author Morgan Housel in front of a live audience about: – Why inflation is so personal and variable – Elon Musk’s best product (hint: it’s not a car) – The power of incentives – The secret to 99% of Warren Buffet’s success – Investing through bear markets

Companies mentioned: BRK.A, BRK.B, HOOD, TSLA

If you’re a member of any Motley Fool service you can access the video for the full interview here: Host: Chris Hill Guest: Morgan Housel Producer: Ricky Mulvey Engineer: Dan Boyd…(read more)

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Morgan Housel is a well-known investor, financial writer, and partner at Collaborative Fund. He is a firm believer in the idea that the most successful investors are those who understand the underlying psychology and incentives that drive the markets.

One of the key topics that Morgan Housel has written about extensively is inflation. He argues that inflation is one of the most powerful forces in investing, and that it can have a significant impact on your investment decisions.

In particular, Housel emphasizes the importance of understanding the different types of inflation that can occur. For example, he distinguishes between demand-pull inflation, which occurs when too much money chases too few goods, and cost-push inflation, which occurs when rising costs (such as higher wages or raw material prices) force companies to raise prices.

Housel argues that understanding these different types of inflation can help you make better investment decisions. For example, if you believe that demand-pull inflation is likely to occur, you may want to invest in companies that are likely to benefit from rising prices (such as commodities or consumer staples), while avoiding companies that are likely to suffer (such as those in heavily regulated industries).

Another key theme in Housel’s writing is the importance of incentives. He argues that investors need to be aware of the incentives that drive the behavior of companies, regulators, and other players in the financial markets.

For example, he notes that regulators may be incentivized to be overly lenient in their oversight of financial institutions, in order to avoid upsetting powerful business interests. Similarly, he argues that companies may be incentivized to take on excessive risk (such as through financial engineering or over-leveraging) in order to boost short-term profits.

Housel’s focus on incentives is particularly relevant in the context of bear markets. He notes that during market downturns, investors are often faced with conflicting incentives – on the one hand, they may be tempted to sell their investments in order to avoid further losses, while on the other hand, they may want to hold onto their investments in order to take advantage of potential future gains.

Housel’s advice in this context is to stay focused on your longer-term investment goals, and to stay disciplined in your approach. He notes that this may mean avoiding the temptation to try to time the market or to make large, emotional investment decisions based on fear or uncertainty.

Overall, Morgan Housel’s insights on inflation, incentives, and investing through bear markets are a valuable resource for investors looking to navigate the complex world of finance. By staying focused on these key themes and taking a disciplined approach to investing, individuals can increase their chances of achieving long-term success and building a strong financial future.