Book comparison
The Psychology of Money vs The Intelligent Investor
Read The Psychology of Money if you are working out how to behave with money, and The Intelligent Investor if you are working out what to buy.
The Psychology of Money
Morgan Housel
2020 · 4h 0m
The Psychology of Money is Morgan Housel's argument that financial success depends less on technical knowledge than on behavior — specifically, on understanding how your personal history, emotions.
The Intelligent Investor
Benjamin Graham
1949 · 6h 0m
The Intelligent Investor is Benjamin Graham's case that successful investing has less to do with picking the right stocks than with managing your own behavior.
Where they agree
Both argue that temperament beats intelligence in investing, and that the largest risk in a portfolio is the person holding it. Both are hostile to forecasting, to excitement, and to the idea that doing more produces more. Both are routinely named as the investing book to read, which is exactly why people end up choosing between them.
Where they differ
Housel diagnoses; Graham prescribes. The Psychology of Money is nineteen short essays on luck and risk, room for error, the tails that produce most of the return, and knowing what enough is — it contains no procedure for valuing anything, and is not trying to. Graham gives you an actual framework: the distinction between investing and speculating, the margin of safety, Mr Market as a way of treating price quotations, and a defensive-investor policy for splitting money between stocks and bonds. The cost is that Graham is dense, and his specific company examples are many decades out of date, so most readers want an edition with modern commentary alongside the original text.
Which to read first
Housel first. He reads in an afternoon and builds the disposition Graham simply assumes you already have. Come to Graham once you have money going in regularly and are starting to ask what it should be going into. If you are already invested and already calm about it, skip straight to Graham.
Read The Psychology of Money if
You earn reasonably well, feel unreasonable about money, and want to understand why saving rate and patience matter more than picking anything.
Read the summary →Read The Intelligent Investor if
You are ready to make actual allocation decisions and want a durable framework for judging price against value rather than a set of attitudes.
Read the summary →Common questions
Should I read The Psychology of Money or The Intelligent Investor?
Read The Psychology of Money if you are working out how to behave with money, and The Intelligent Investor if you are working out what to buy.
What is the difference between The Psychology of Money and The Intelligent Investor?
Housel diagnoses; Graham prescribes. The Psychology of Money is nineteen short essays on luck and risk, room for error, the tails that produce most of the return, and knowing what enough is — it contains no procedure for valuing anything, and is not trying to. Graham gives you an actual framework: the distinction between investing and speculating, the margin of safety, Mr Market as a way of treating price quotations, and a defensive-investor policy for splitting money between stocks and bonds. The cost is that Graham is dense, and his specific company examples are many decades out of date, so most readers want an edition with modern commentary alongside the original text.
Which should I read first, The Psychology of Money or The Intelligent Investor?
Housel first. He reads in an afternoon and builds the disposition Graham simply assumes you already have. Come to Graham once you have money going in regularly and are starting to ask what it should be going into. If you are already invested and already calm about it, skip straight to Graham.
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