Morgan Housel, the author of the best-selling book “The Psychology of Money,” recently spoke with CNBC’s “ETF Edge” to address investor anxiety over market downturns. In his new book, “Same as Ever,” Housel emphasizes the inevitability of market recessions, stating that understanding this can make it easier for investors to manage their expectations.
As a partner at the venture capital firm, the Collaborative Fund, Housel believes that a recession is not a matter of “if,” but “when.” He argues that bear markets ultimately lead to recovery, as fear motivates people to take action and drives the development of new technologies.
Housel advises investors to always have a plan in place for unexpected events, as these surprises can catch the market off guard. He notes that the financial system is adept at predicting market and economic trends, unless it comes to unexpected events like natural disasters and pandemics, which can cause significant market shakeups.
Ultimately, Housel suggests that even times of calm can “plant the seeds for crazy,” as stability can lead to unexpected market developments. It’s clear from his perspective that understanding and preparing for market downturns is essential for successful investing.