23 hours ago
At Moneycontrol’s Global Wealth Summit, author Morgan Housel made a bold claim: artificial intelligence (AI) will undoubtedly transform the world—but that doesn’t mean investors will make money from it.
Housel, known for The Psychology of Money and Same as Ever, argued that history is full of transformative industries that failed to generate consistent returns for investors. "Look at railroads in the 1800s," he said. "They were the most transformative industry of their time, but almost every railroad investor lost money. The same happened with airlines, which revolutionised global travel, yet airline stocks have been notorious wealth destroyers.” AI, he believes, will likely follow that pattern.
Housel’s central argument is that investing in groundbreaking industries does not guarantee success. While AI is an emerging force with immense potential, history suggests that many early players will disappear, leaving only a few long-term winners. “In the early 1900s, there were over 2,000 car companies in the United States,” he pointed out. “Only a handful survived. Even if you correctly predicted that cars were the future, picking the right company to invest in was nearly impossible.”
He likened AI today to the internet boom of the 1990s. “If you believed in the internet in 1999, you would have likely bet on AOL or Yahoo—neither of which are dominant today. Few people back then saw Google and Facebook coming.” The implication is clear: even if AI dominates the future, predicting which companies will thrive is far from easy.
One of the greatest risks in investing, according to Housel, is fear of missing out (FOMO). In today’s fast-moving markets, where AI stocks are generating enormous hype, many investors feel pressure to jump in before it's too late. But Housel warns that acting on FOMO is a surefire way to make costly mistakes.
“Social media makes FOMO worse than ever,” he said. “No matter how well you're doing, you’ll always see someone claiming to be doing better. That makes you feel like you’re falling behind, which leads to bad decisions.”
His advice? “If you can’t control FOMO, you shouldn’t be investing. The best investors in the world are disciplined enough to ignore the noise and focus on their own long-term strategy.”
Housel also emphasised the outsized role of luck in financial success. “Nobody likes to admit they got lucky,” he said. “But if Bill Gross, the legendary bond investor, had been born 10 years earlier or later, he wouldn’t have had the same career. The same goes for Warren Buffett—his greatest investing years were in a market environment that no longer exists.”
The key takeaway? Instead of trying to predict winners, focus on what is repeatable. “If you want to build wealth, don’t chase trends or try to outguess the market. Instead, control what you can—your behaviour, your endurance, and your ability to stay invested for decades.”
While AI is changing the way investing is done, Housel argues that the biggest advantage in the future won’t be access to information but the ability to maintain discipline. “AI levels the playing field. Everyone has the same data, the same models. What will separate successful investors from the rest is behaviour—who can stay calm during volatility, who avoids panic, who doesn’t let greed take over.”
Below is the edited transcript of the interview.
Q: I want to start by asking you, how did you get started? How did you start writing and writing so prolifically?
Housel: I started writing by accident. It was never part of the plan. I never wanted to be a writer. I never aspired to be a writer. I wanted to be an investment banker or a hedge fund manager. And I graduated college in 2008. Fun year. Awesome year in the global economy—2008. So, of course, nobody was hiring in 2008. Everybody was letting people go. In 2008, I submitted my resume to a large investment bank. A week later, they hadn't responded, so I reached out and said, "Hey, I just want to make sure you got my resume." And they said, "Oh, I'm sorry, we laid off the entire HR department. There's nobody to receive your resume anymore." So that was what trying to find a finance job was like in 2008.
So, I needed something to do. I had no idea what I wanted. I had no backup plan. And out of desperation—not out of enjoyment or skill, but out of desperation—I took a job as a finance writer for The Motley Fool. I thought I would do that for six months or so before I found a real finance job. But I ended up just sticking with it. In the first couple of years, I really didn't like it. I was not any good at it. It was not fun. But I just needed a pay cheque. And then, as the years went on, it got a little bit more enjoyable. I kind of found my niche. But I think lots of careers are like that.
You often hear from college graduates, or recent college graduates, who have a plan: "I'm going to do this for two years, then move to this career, and get promoted here." And it never works like that. It's great to have a plan, but almost everyone's career will just end up being more serendipitous. That was definitely true for me.
Q: And in your books, you talk about the role of luck. So, I think this is one of those instances. I'll get to that in just a bit, but right at the beginning, how do you invest your money? I believe index funds—a large part of it?
Housel: I keep it as simple as possible. And I always say, just because I invest like this doesn't mean I'm recommending other people do it. Because everybody's different—different geographies, different countries, different generations. But I keep it as painfully simple as I can. It's overwhelmingly index funds.
And the reason I do that is not because I think nobody can outperform the market. I don't believe that. I think smart investors can, have, and will.
Q: So just to be clear, you've got nothing against active investing?
Housel: Nothing in the slightest. But the variable that I want to maximise is endurance. If I can be an average investor for the next 30, 40, or 50 years, I know that I'm going to achieve all of my goals. So, it just comes down to what variable you want to maximise. Some very smart people can maximise annual performance, and that's great. Some of them will do well; a lot of them won't, but some will. But if you instead say, "I'm going to maximise endurance, strength, and longevity," I think that is more in your control. Over time, over the course of your life, I think you will maximise the actual dollars of wealth you accumulate.
Q: The US is starting to experience a bit of a wobbly market. It's had a few wobbly sessions now. In India, of course, the market topped out in September. We had a painful correction, and now we're finding our feet once again. When people are asked to describe what kind of market we've had, they often use the term "narrative-based market," right? Stories, narratives. I think it's a topic you touch upon in your writings quite regularly—that at the end of the day, investing is storytelling. It's a number now, multiplied by a story in the future. How important is that recognition? Because, you go through these cycles—sometimes these stories and narratives do very well, but then we have periods when you have to go back to the numbers.
Housel: It's always the case that markets are narrative-driven. And the narratives change all the time. I think sometimes we want to pretend that every valuation is a number from today multiplied by a story about tomorrow. We want to believe that the number from today is the most important part because it's what we can quantify. It's what we can look at. But the truth is, the story we tell ourselves—positive or negative—is always the more important thing.
Not to get too technical, but the lower interest rates are, the more powerful that story is. For a lot of the last decade, at least in the United States, we had 0% interest rates. So, the story was everything. Particularly in a social media-driven world, the stories that people tell themselves get ridiculous. No matter what you want to believe in investing, someone on Twitter is saying it. You can find that narrative anywhere. It creates a situation where the wildest, craziest stories just take hold and run away.
Look at Tesla, for example. Tesla makes a tiny fraction of the number of cars that Volkswagen, Toyota, or General Motors make, but it's worth 20, 30, 50 times more than those other car companies. Another stat I saw the other day is that Ferrari makes 13,000 cars per year and is worth $90 billion, while Volkswagen makes 9 million cars per year and is worth $40 billion. The difference is overwhelmingly just narrative.
I think this throws a lot of people for a loop if they are analytically minded and expect the world to work in clean, rational ways. If you think like a spreadsheet, then this world will drive you crazy. You’ll constantly think the world is either in a bubble or completely irrational. But when you view it as a narrative, it starts to make sense. Yes, things are crazy. Yes, a lot of things don't make any sense whatsoever. No, you can't put a statistic on everything going on in the world. And it's always been like that—it always will be.
Q: And also, the numbers you mentioned—how many cars Ferrari, Volkswagen, etc., sell—one is looking back, and the other is betting on the future, which is the story, which is what you're talking about. Not necessarily wrong, but you have to acknowledge that’s what’s happening, right?
Housel: Yeah, and those stories can change by the day, by the week. Donald Trump has come up with 17 different trade policies in the last week. So those stories change all the time. It’s always been the case that hindsight gives us the illusion that the past was more certain than it actually was. We tend to believe there’s more uncertainty today than in the past, but in reality, we’ve always been navigating uncertainty.
So, is there uncertainty today on a global scale? Of course. There’s a lot, and no one knows what's going to happen next. But that has never not been the case. Just coming to terms with that makes investing—it's not that it becomes more comfortable or that you suddenly know what's going to happen next. You just become much more comfortable shrugging your shoulders and saying, "I have no idea, and nobody else does." And, by the way, that's what you get paid for in investing—putting up with uncertainty rather than assuming that you know what's going to happen next.
Q: The other thing is FOMO—fear of missing out. It’s a powerful force—it sucks people in. We've seen that here in India, right at the top. A lot of investors who write to us ask us questions, and we say, "show us your portfolio." And when we look at the portfolio, there are a lot of stocks, and we ask them, "Why did you buy these?" There are no clear answers. There was that strong pull—money begets money—and it's almost impossible to resist. It's just too strong. Talk to us for a minute about that, because you write about it quite often.
Housel: Yeah, I think social media and broader financial media make it harder than ever because no matter how well you're doing, there's somebody out there who at least claims they're doing better—whether they actually are or not. And that creates the idea that you're always falling behind.
If there is one single financial skill that is an absolute prerequisite to doing well over time, it's the ability to resist FOMO. You cannot do well financially if you're susceptible to FOMO—it's impossible. And really, what FOMO is, it is outsourcing your analysis to somebody else's emotions. You’re looking at someone else, some other asset class or investor, and saying, "They're doing better than I am; I need to catch up with them." You can't outrun that train.
So, while there are many different financial skills that are important over time, the base of that pyramid is this: if you cannot control FOMO, you should give up on investing. It’s never going to work.
Q: But how do you get rid of it? I think everyone has it. One is born with it.
Housel: I think a lot of people have it. I don’t know if everybody does. There’s a great quote from my friend Brent Beshore, where he says, "I am 100% happy watching you make money and get rich doing something that I have no interest in." I think that’s key. You have to understand what you’re good at and what you’re not. If you can’t describe what you are not good at, it’s going to be very hard to do well as an investor.
Most investors, when asked about their skills, will tell you what they’re good at: "Oh, I understand this industry. I have these connections." But I think it's more important to be able to clearly outline what you cannot do and what you're staying away from.
Investing is full of highly educated, intelligent people. Those are the ones least likely to admit what they are incapable of doing. The best investors in the world will list a hundred things they can’t do and stay away from them completely. That’s one way to avoid FOMO—you can watch someone getting rich in crypto or commodities and say, "I know nothing about those industries. I'm going to stay a hundred miles away from them." Knowing what you can’t do is more important than knowing what you can.
Q: The role of luck is another thing you frequently discuss in your writings. In bull markets, we’re all geniuses. It’s a timeless story. But when the markets go down, we start looking to blame someone—macros, Trump, tariffs, interest rates, or something else. But if you acknowledge that a large part of it is essentially luck in a variety of ways, it’s admitting that you don’t know everything. That provides a kind of buffer, doesn’t it?
Housel: Yeah. People hate the word "luck" because if I say you got lucky, it can come across as jealousy or bitterness. So, luck can sometimes be the wrong word. But if you ask, "What is repeatable? What is something I know I can keep doing over and over again?"—that’s a different story.
Take Bill Gross from PIMCO, once known as the greatest bond fund manager ever. He gave a very honest interview a few years ago, admitting that his career started when interest rates were at an all-time high and ended when they were at an all-time low. As a bond fund manager, it doesn’t get better than that—it was just dumb luck based on when he was born. He said that if he had been born 10 years earlier or later, he wouldn’t have had the same career.
Same with Warren Buffett. The greatest investor of all time. If he were born 20 years later, he would not have had the same career. He made most of his money in percentage terms around the 1960s and 70s, buying blue-chip companies for two times earnings. That doesn’t exist anymore. If Buffett were 40 years old today, he would do well, but not nearly as well as he did in his time.
Nobody wants to admit they got lucky. If I were born in a different country or generation, I’d have a different life. So, would you. Sometimes that difference would be better; sometimes worse. Everyone wants to believe their successes are due to hard work and genius, while failures are due to bad luck. We’re very aware of bad luck, but good luck? We tend to attribute that to our own skills.
Q: You say, "focus on what is repeatable, what never changes, rather than trying to predict the next big thing." Some might push back and argue, "Look at AI and all these technological changes happening right now. We don’t know where the most money will be made, but isn’t it wrong to bet against those things?"
Housel: We know in hindsight, that the internet was a huge opportunity in 1999. But many smart people back then thought it was a fad. Likewise, many things we believed were the future never materialised.
For instance, when the Wright Brothers invented the airplane, they thought its only use was for the US Army. They didn’t foresee commercial aviation. The same applies to Bill Gates in the 1980s—he couldn’t have predicted what the personal computer would become.
Even the people with the most inside knowledge can’t foresee the full impact of their innovations. AI will undoubtedly change the world, but even the people developing it don’t know exactly how. That’s always been true throughout history.
Q: So just a quick point—since we are on the topic of AI and tech in the US right now—do you think there is any way to tell whether it's a bit of a bubble at this point? I mean, considering how these companies are being valued?
Housel: One example I've used before is if you go back to the early 1900s, there were 2,000 car companies in the United States. And 1,997 of them went bankrupt and don't exist anymore. The survivors were GM, Ford, and Chrysler, two of which themselves ended up going bankrupt eventually. And so, it's always the case that in any new industry, in 10- or 20-years’ time, 90% of the companies don't exist anymore.
It’s true, too, if you go back to the 1990s. Let's say you believed the internet was the future. What companies would you have bet on? AOL, AskJeeves.com, all these companies that don't exist anymore. Yahoo.
And nobody would have said Google, which was a tiny little startup, or Facebook, which obviously didn't even exist yet—Mark Zuckerberg was still in high school. And so, it's always the case in any new industry that even if you get the trend right, getting the individual names right is a thousand times harder.
Q: But in the AI space in the US, do you think we have a bubble? Do you have a view? Do you feel strongly about it one way or the other?
Housel: I think it's not mutually exclusive to say this industry is going to fundamentally change the world, and the vast majority of investors will lose a lot of money. I mean, this is true for railroads in the United States, which is probably the most transformative new industry that we've ever had in the US—railroads back in the 1800s. It took the country from the stone age into the modern world. And I forget the exact statistic, but I think 97% of railroads went out of business. So, this completely changed the world—nothing was more transformative. And yet, if you were a railroad investor, almost everybody lost money.
The same happened with airlines. They completely transformed society in every way imaginable, and virtually every airline investor over the last century has lost money. So, it’s not uncommon for industries that are the most transformative for society to be the most difficult for investors to make money on. And by the way, the opposite is true. Some of the best investments over the last 100 years have been in cigarettes, beer, and toilet paper—things that don’t change the world at all but, in some cases, can be incredible investments.
Q: Regarding the impact of AI on investing, is it already changing the way investing is done? Artificial intelligence, tools related to it?
Housel: I think it's an extension of a trend that's been going on for a long time. Even 20 years ago, having access to different information was what set investors apart. Buffett used to talk about this. The reason he was so successful back in the 1960s was that he was practically the only investor willing to sift through every single annual report. He would go through thousands and thousands of them. He had an informational advantage simply through effort that others didn’t have.
That was true 20 or 30 years ago—firms like Goldman Sachs had information that you and I didn’t, so they earned better returns. But I think, by and large, that doesn't exist anymore. Virtually every investor is looking at the same information with the same models. Broadly speaking, that is true because it's all right here on the mobile, and it's all free. AI is just an extension of that.
Now, having knowledge is no longer a competitive advantage. The kind of information that used to take years to acquire, like earning a CFA, is now available in an LLM (large language model) that everyone in the world has access to on their phone. In this world, where information and even intelligence are no longer competitive advantages, behaviour becomes more important. Of course, I’m talking my own book here, but the person with the best behaviour will be the one who wins if everyone has the same information and the same models. That’s definitely the case now—it wasn’t in the past, but it is becoming more so.
That’s why I think it's becoming less and less about picking the right companies or predicting where the economy is going this quarter. That’s becoming less important. What truly matters now is: Can you keep your head on straight during moments of turmoil? Are you going to panic? Behaviour and temperament have always been important, but they are more crucial now than ever before.
Q: We read what you write. What do you read?
Housel: I read anything that looks even remotely interesting to me, from any topic imaginable. I have a very wide funnel—I’ll start reading anything—but I have a very tight filter. If a book or article isn’t hooking me, I abandon it quickly. I probably finish only about 5% of the books I start. I think a lot of people don’t like reading because they feel obligated to finish every book they start. I think that’s a mistake. If a book isn’t working for you, you should quit it quickly. So, I start reading almost anything, but I abandon it fast if it doesn’t keep me engaged.
Q: Who are your heroes in life and investing?
Housel: There’s a great line from the Foo Fighters song - There Goes My Hero: There goes my hero, he's ordinary. I love that idea. If you study history—like most people in this room do—you’ll notice that history tends to focus on big figures: Winston Churchill, Thomas Edison, and other well-known individuals. But that’s such a small fraction of history.
The vast majority of history consists of ordinary people trying to do a little better—raising their families, living better lives. Those are the people with the most interesting stories. So, many of my heroes are just ordinary people who never get any attention, press, or limelight. Yet, collectively, they live incredible lives and actually move the world forward.
