The Psychology of Money

by Morgan Housel

“Risk is what’s left over when you think you’ve thought of everything.”

When planning we focus on what we want to do and can do, neglecting the plans and skills of others whose decisions might affect our outcomes. Both in explaining the past and in predicting the future, we focus on the causal role of skill and neglect the role of luck. We focus on what we know and neglect what we do not know, which makes us overly confident in our beliefs.

“The first rule of compounding is to never interrupt it unnecessarily.”