Debunking Misconceptions On How Investors Perceive Risk: Q&A With Morgan Housel

Published date: .

Morgan Housel of the Collaborative Fund

Morgan Housel of the Collaborative Fund

There are now just a few weeks to go until the Orbis Investments 'Think Differently, Invest Differently' breakfast session which is set to take place on 25 June at the BAFTA HQ in Central London.

The session will give delegates a chance to take a step back and think about how, and why, they make the investment decisions they make.

The team at Orbis, alongside Morgan Housel - who is a partner at The Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal - will debunk misconceptions on how investors perceive risk and offer thoughts on how to make better informed decisions with their clients' money. 

Orbis spoke to Housel ahead of the event. (To hear from Morgan Housel and a panel of Orbis Investment Team members at this exclusive event, please click here to reserve your place.)

From your experiences, what do you believe investors are doing well and what could they be doing better?

Investors have more information available to them than ever before. The amount of both corporate data on company health, and market data that lets people understand investing history, is orders of magnitude greater today than it was just a decade ago.

So I think investors are better informed than ever, and it's helped move them away from previously poor practices.

Some of the most egregious high-fee products and brokerage services no longer exist, because investors are better informed.

But the behavioral side of investing - your relationship with greed and fear, your ability to have a long-term mindset - is still a problem.

It will always be a problem, because it's so fundamental to who we are as people. It's the area I think most investors should spend their time focusing on. 

What would you say are the most important and most underrated qualities for being a successful investor?

A big one that goes overlooked is simply knowing yourself - your own goals, your own risk tolerances, your own faults.

There is a desire to look for thebest investment answer - a universal solution- when in reality what's best is whatever works for you and your own life.

My goals and preferences may be different than yours, so what's true and right for me might not work for you.

One way I think about this is that investors may opt to maximise for sleeping well at night, not necessarily the highest returns.  

What is the best piece of investment advice you have ever been given?  

There is a wonderful quote, intended to be humorous: "Save a little bit of money each month, and at the end of the year you'll be surprised at how little you still have."  

It's such a good reminder to all of us that savings is an important part of an investing plan. I think it's the single most important part. But it tends to get overlooked because it's so simple and not very fun to discuss.