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Speaker 1: This is Master's in Business with Barry Riddholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an old friend

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Speaker 1: who is also an extra special guest. His name is

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Speaker 1: Morgan Housel, and he could be the most popular writer

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Speaker 1: in finance today. He's a partner at the Collaborative Funds,

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Speaker 1: but we really know him for his weekly missives on

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Speaker 1: investing and behavior and psychology. Uh. There aren't a lot

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Speaker 1: of people on my must read list, Morgan is certainly

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Speaker 1: one of them. I think you'll find this conversation absolutely fascinating. So,

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Speaker 1: with no further ado, my conversation with writer Morgan Housel.

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Speaker 1: This is Master's in Business with Barry Riddholts on Bloomberg Radio.

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Speaker 1: I have an extra special guest today. His name is

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Speaker 1: Morgan Housel and he is a partner at Collaborative Funds.

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Speaker 1: But he is also a financial writer who began at

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Speaker 1: the Motley Fool and has published in such August institutions

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Speaker 1: as The Wall Street Journal, USA Today and elsewhere. He

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Speaker 1: is the two time winner of the Best in Business

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Speaker 1: Award from the Society of American Business Editors and Writers,

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Speaker 1: and a winner of The New York Times, Sydney Award.

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Speaker 1: His new book, The Psychology of Money, Timeless Lessons on Wealth, greed,

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Speaker 1: and Happiness, came out September eight. Morgan Household, Welcome to Bloomberg.

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Speaker 1: Thank you for having me Berry. It's good to be here.

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Speaker 1: I have been looking for an excuse to bring you

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Speaker 1: on the show, um forever. Full disclosure, we know each

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Speaker 1: other uh quite a while. But in preparing for this conversation,

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Speaker 1: I discovered all sorts of funny little things about you

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Speaker 1: that I never knew. Starting with your undergraduate career, tell

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Speaker 1: us what you originally studied and what you thought you

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Speaker 1: would be when you got out of college. So I

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Speaker 1: have a interesting education background, and it might might might

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Speaker 1: help to start a little bit before college. I grew

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Speaker 1: up as a ski racer in Lake Tahoe, UM, and

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Speaker 1: because ski racing was taking so much time, myself and

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Speaker 1: a lot of my peers were doing it effectively bypassed

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Speaker 1: high school infectively. Did not go to high school. We

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Speaker 1: did an independent study program where you uh, we did

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Speaker 1: virtually nothing. I mean we, I honestly don't have many

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Speaker 1: many memories of doing anything. For my high school education.

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Speaker 1: We got a piece of paper that said diploma on

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Speaker 1: it when we were sixteen years old, and that was it.

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Speaker 1: So when I started college, I started when I was

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Speaker 1: twenty years old. I had no high school education. I

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Speaker 1: had an eighth grade education. At that point, I had

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Speaker 1: to start at the very bottom. I started at a

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Speaker 1: local community college with the most remedial courses that they offered,

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Speaker 1: trying to catch up. And I was always interested in finance,

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Speaker 1: even during this period I had. I had no education,

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Speaker 1: I had no idea what I was doing or or

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Speaker 1: what I was looking at. But I was always interested

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Speaker 1: in the stock market. I was interested in investing, and

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Speaker 1: it just kind of occurred to me. I don't know

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Speaker 1: where I learned this or how I figured it out,

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Speaker 1: but I got this idea that investment bankers were the smartest,

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Speaker 1: most richest, most powerful, glamorous people in the history of

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Speaker 1: the universe. So I wanted to be an investment banker.

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Speaker 1: This was the mid two thousand's. Every slightly ambitious young

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Speaker 1: man in finance and economics wanted to be an investment banker.

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Speaker 1: That was what I wanted to do, and I had

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Speaker 1: no backup plan. When I went to college. I was

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Speaker 1: going to be an investment banker. That was it. I

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Speaker 1: was going to move to Manhattan. I was gonna work

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Speaker 1: in mergers and acquisitions, and the story no plan B.

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Speaker 1: And then I got an investment banking internship in my

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Speaker 1: junior year of college. And I walked in on day

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Speaker 1: one and literally literally within minutes, I thought to myself,

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Speaker 1: get me the hell out of here. This is the

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Speaker 1: worst environment, the worst culture I've ever seen in my life.

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Speaker 1: It was just such a hazing environment of it wasn't

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Speaker 1: about learning or doing good work. It was fit in

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Speaker 1: your desk and shut up so we can yell at you.

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Speaker 1: And if you're lucky, you'll go home at three am

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Speaker 1: and you will enjoy yet and you will have a

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Speaker 1: smile on your face. And like, I'm I'm all for

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Speaker 1: hard work, I'm all for grinding, but this was just

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Speaker 1: such a hazing It was not hard work for any

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Speaker 1: sake other than, uh, you know that the the senior

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Speaker 1: bankers had to do it themselves, so they wanted to

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Speaker 1: put the torture back on you. So I got to that.

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Speaker 1: I got out of that really quickly. I think I

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Speaker 1: lasted maybe like a month or something like that. Uh.

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Speaker 1: And then I needed to do something else in finance.

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Speaker 1: I didn't know what it was gonna be. But that's

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Speaker 1: how I kind of serendipitously ended up as a financial writer.

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Speaker 1: That was not part of the plan whatsoever. But I

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Speaker 1: had a friend who was a writer at the Motley

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Speaker 1: Fool at the time, and he said, Hey, you're interested

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Speaker 1: in investing. They're hiring writers. Why don't you apply? And

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Speaker 1: I did apply, thinking, Ay, they're not going to hire me,

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Speaker 1: but be if they do, maybe I'll stay there for

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Speaker 1: uh three months or six months before I find another

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Speaker 1: real finance job. And long story short, I ended up

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Speaker 1: staying as Molly Full for almost ten years and fell

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Speaker 1: in love with writing. You know, I've always been interested

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Speaker 1: in investing and finance. I was then, I still am now,

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Speaker 1: but you know, falling in love with with writing was

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Speaker 1: something that I did not see comment. It was not

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Speaker 1: part of the plan, but it became what I do

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Speaker 1: for a living now. So that was, you know, fourteen

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Speaker 1: years ago, and here we are, so let me let

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Speaker 1: me roll back pre Motley Full but post investment banking.

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Speaker 1: Wasn't there a stint doing some private equity somewhere in

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Speaker 1: the middle, But yeah, yeah there was. So this was

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Speaker 1: kind of summer two thousand seven, I guess, and I

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Speaker 1: interned at at a private equity firm in Los Angeles,

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Speaker 1: and I love private equity. It was great. It was

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Speaker 1: a good mix between business and finance versus just one

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Speaker 1: side or the other. Whereas investment banking is just finance,

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Speaker 1: you're not you're not working with the companies that you're

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Speaker 1: investing it, you're just doing deals. So private equity was great.

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Speaker 1: And then uh, summer of two thousand seven, as you

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Speaker 1: know all too well, everything started blowing up. Financial markets

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Speaker 1: started seizing up, credit markets seized up. So if you

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Speaker 1: are a private equity firm that was borrowing tons of

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Speaker 1: money to do these deals, things got really dicey, and

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Speaker 1: you know the look that was not two thou eight

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Speaker 1: by then, this was still two thousand seven, but it

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Speaker 1: was already clear enough that things were breaking and our

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Speaker 1: portfolio companies were struggling that I was told, hey, there's

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Speaker 1: not going to be a full time position for you.

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Speaker 1: Uh you know when when When when you graduate? So

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Speaker 1: that was when I needed to do something else and

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Speaker 1: found my way kind of by pure accident, into writing.

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Speaker 1: And the ironic thing that knowing you're writing all these

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Speaker 1: views to me, it's funny. Investment banking, private equity, venture capital.

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Speaker 1: It's so opposite the way you describe how you invest

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Speaker 1: and how you think the average investors should put their

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Speaker 1: money at risk, sort of sort of contradictory. You keep

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Speaker 1: it simple and say more or less just be a

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Speaker 1: passive long term index or or am I oversimplifying that?

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Speaker 1: I think it's a little oversimplified, because the only the

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Speaker 1: only edit I would make to that is, look, I

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Speaker 1: am I dollar cost average into index funds. I plan

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Speaker 1: on holding them for decades if I if I'm so

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Speaker 1: lucky to be able to do that. But that's what

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Speaker 1: works for me, and I'm not going to pretend like

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Speaker 1: that's the best advice for everyone. So I'm not a

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Speaker 1: passive zella at all. I I admire a lot of

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Speaker 1: active managers. I'm not against active management, And in the

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Speaker 1: slightest I'm not just saying that to cover my basis.

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Speaker 1: I'm really not. This works for me because I and

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Speaker 1: in my life value this simplicity and the hands off

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Speaker 1: approach of our finances. Why I love being able to

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Speaker 1: wrap my head around our entire net worth in the

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Speaker 1: simplest ways possible. And I think that active management is

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Speaker 1: something where it should be the case that no more

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Speaker 1: than ten percent of people who set out to do

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Speaker 1: it will be successful in it. But of course, like

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Speaker 1: that should be the case, people will always make make

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Speaker 1: the you know what, will point out active managers underperforming

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Speaker 1: the benchmarks. Well they should of course, it's the case.

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Speaker 1: You shouldn't have a situation where everyone who tries to

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Speaker 1: beat the market can and and they're rewarded, you know,

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Speaker 1: with with with kingly thumbs when they do it. That

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Speaker 1: not be the case. It should be the case where

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Speaker 1: it's like, you know, you know what, what percentage of

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Speaker 1: college basketball players go to the NBA A really small percentage,

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Speaker 1: but that's how it should be. The NBA is the

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Speaker 1: big leagues where the you know, the stakes are high

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Speaker 1: and the pay is huge. That's how it should be.

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Speaker 1: So when I just think about that from an active

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Speaker 1: management perspective, it's not that I'm against it. It's just

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Speaker 1: a risk reward trade off. And I know with really

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Speaker 1: high confidence that if I and my wife can dollar

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Speaker 1: cost average into index funds, do it consistently and hold

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Speaker 1: them for thirty or forty or maybe even fifty years,

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Speaker 1: we will achieve every financial goal that we possibly have.

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Speaker 1: And more so, when I look at that, and then

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Speaker 1: I look at the odds of outperforming actively, you know,

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Speaker 1: something like ten percent something like that. I just kind

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Speaker 1: of I just kind of shrug my shoulders and say,

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Speaker 1: why why why would I need to do that? If

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Speaker 1: I can do this simple thing, Uh, that's going to

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Speaker 1: achieve all of my goals and I put no effort

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Speaker 1: into it. The odds of like catastrophic failure are very low.

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Speaker 1: The odds of you know, the fund losing end of

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Speaker 1: its value or becoming a fraud, whatever it is. The

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Speaker 1: odds of of the the the the manager retiring or

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Speaker 1: being accused of fraud, whatever it is, that's all out

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Speaker 1: the window. It's just like all those other risks are

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Speaker 1: gone and and versus acts investing where I would have

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Speaker 1: a chance of doing worse. Uh not because managers are

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Speaker 1: bad at what they do, or you know, it's hard

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Speaker 1: to pick it's hard to pick good managers. But that's

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Speaker 1: just how the active management space should work. When I

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Speaker 1: look at that trade off, it just doesn't make a

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Speaker 1: lot of sense for us, but I completely understand why

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Speaker 1: it would for other people. I you know, there are

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Speaker 1: a lot of people for whom like they cannot wake

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Speaker 1: up in the morning and look at the mirror, and

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Speaker 1: look in the mirror. If they were dollar costs averaging

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Speaker 1: in the index months, it's just against their personality. They

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Speaker 1: would feel bad about it. They want to do it,

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Speaker 1: they would feel like they're leaving opportunity on the table.

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Speaker 1: And I just don't have that in the slightest. I

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Speaker 1: want to spend all my day reading and researching and

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Speaker 1: thinking about writing and doing the writing. Uh so, so

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Speaker 1: that that's where that's where I leave it. So active

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Speaker 1: investing is not like lake will begun where all of

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Speaker 1: the children are above average, sort of a mathematical cork um.

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Speaker 1: Doesn't work that way. I mean you would. It's it's like,

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Speaker 1: for years, I was one of the people who was

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Speaker 1: pointing at these statistics of mutual fund managers underperforming the benchmarks,

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Speaker 1: you know, and saying this is ridiculous. They're all, you know,

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Speaker 1: this is this is the indication of their failure. And

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Speaker 1: it took me a while to come around to the

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Speaker 1: idea of like, no, that's how it should be. That's,

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Speaker 1: of course how it should be. If neal back to

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Speaker 1: like the college basketball analogy, no one looks at the

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Speaker 1: fact that or whatever it is, of college basketball players

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Speaker 1: don't go to the NBA. No one looks at that

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Speaker 1: and says, college basketball is a joke. You know, you know,

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Speaker 1: they're they're they're they're all failures. What are they doing?

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Speaker 1: They have no idea what they're doing. It's a scamp.

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Speaker 1: No one would say that. Everyone would just know, like, hey, look,

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Speaker 1: the jump from uh from good to really good is

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Speaker 1: going to have a big calling effect. There's like not

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Speaker 1: not everyone's gonna make it. That's how it should be.

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Speaker 1: So it's it's hard in the musical fund space and

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Speaker 1: the hedge fund space whatever it is to accept that though,

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Speaker 1: that that's just the reality of it, that you know,

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Speaker 1: maybe ten percent of you will outperform over the long run.

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Speaker 1: But when you expect, when you accept that that's how

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Speaker 1: it should be, it should not be any different than that.

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Speaker 1: In adjust world, that's exactly what you would expect. Then

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Speaker 1: it just becomes, you know, less less cynical. When you're

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Speaker 1: looking at it. You look at it and say, yeah,

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Speaker 1: performed last year. But that's how it should be. So

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Speaker 1: it doesn't bother me anymore. It makes perfect sense to me.

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Speaker 1: You have been writing about finance for the better part

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Speaker 1: of a decade. At what point do you start to

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Speaker 1: run out of topics? Do you do you ever begin

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Speaker 1: to feel like you're repeating yourself? Well, there's there's there's

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Speaker 1: two ways to look at this, And first I would

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Speaker 1: say you've been writing about finance for the better part

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Speaker 1: of two decades, so you have insight on this as well.

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Speaker 1: I know, I think there's there's there's two sides of this.

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Speaker 1: One is um my belief and I'm pretty sure I

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Speaker 1: stole this from Jason's wide. But there's only like a

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Speaker 1: dozen financial topics worth writing about you can you can

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Speaker 1: kind of you know, guess what they are. Volatility is

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Speaker 1: common is common, compounding is amazing, Fees hurt like, there's

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Speaker 1: only there's only so many topics that you can write about.

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Speaker 1: Unlike the core ideas. Uh so, yes, there there's a

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Speaker 1: very limited number of things to write about. But the

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Speaker 1: number of ways that you can express those ideas, the

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Speaker 1: number of examples, the number of of different connections from

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Speaker 1: other fields that you can tie back to investing, those

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Speaker 1: I think are endless. They are bottomless. You could do

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Speaker 1: this forever. You could be a writer for a thousand

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Speaker 1: years and never run out of examples. And for me,

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Speaker 1: that really took off when I realized that investing is

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Speaker 1: not the study of finance. It's the study of how

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Speaker 1: people behave with money. And since it's the study of behavior,

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Speaker 1: it has all of these other lessons from other fields,

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Speaker 1: rules and laws from other fields, other industries, other practices

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Speaker 1: that apply to investing. So when you think of investing,

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Speaker 1: is just how people think about greed and fear and

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Speaker 1: opportunity and scarcity. Well, those things apply to a lot

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Speaker 1: of other fields. They apply to politics, they applied to

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Speaker 1: military history, they applied to biology, they applied to you know,

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Speaker 1: all these like all these other fields that will that

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Speaker 1: are important. Like if you can take the lessons from

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Speaker 1: those fields and apply them to investing or write about

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Speaker 1: how people dealt with those topics in different fields and

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Speaker 1: what we can learn about that as investors, then I

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Speaker 1: think the well of ideas is endless. Um So it's

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Speaker 1: it's it's definitely the case that every week, I'm sure

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Speaker 1: you can relate to this as well, Barry, that every

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Speaker 1: week I kind of wake up and say, what am

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Speaker 1: I going to write about this week? I'm talking to

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Speaker 1: feel like I'm running ow ideas, But you always figure

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Speaker 1: it out. I mean that's the case for you as well. Right, yeah,

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Speaker 1: I don't you know. I used to let me back

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Speaker 1: up a little bit. So when I started writing, I

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Speaker 1: was putting stuff up every day just as a habit,

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Speaker 1: just as a routine to become a better writer. And

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Speaker 1: I actually had a conversation with Jason's wife, who you

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Speaker 1: referenced earlier, about Hey, how do I transition to weekly

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Speaker 1: columns that are a little more in depth and use

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Speaker 1: a little more data and not just sort of I

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Speaker 1: don't want to say superficial, but just daily becomes a

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Speaker 1: little more news driven and weekly allows you some time

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Speaker 1: to step back and think that that definitely was a transition.

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Speaker 1: It wasn't easy going from daily to weekly. I still

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Speaker 1: post on the blog every day, but those are quick hits. Hey,

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Speaker 1: take a look at this Take a look at this chart.

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Speaker 1: See that it's not the same as a thousand word

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Speaker 1: column where you're really going into depth. So that leads

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Speaker 1: me to my next question, which is, tell us a

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Speaker 1: little bit about your daily routine. How do you structure

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Speaker 1: your day? When do you get to think, when do

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Speaker 1: you get to write? It's changed a lot over the

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Speaker 1: years because when I was at the Motley Full, particularly

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Speaker 1: early on at the Motley Fell I was on the

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Speaker 1: volume game. I was writing three articles per day, which

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Speaker 1: gives you, you know, literally minutes maybe an hour to

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Speaker 1: think of an idea, do a little bit of research

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Speaker 1: on it, write it and get it out. But that

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Speaker 1: was that was tough, but that was also a great

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Speaker 1: way to learn how to write. I had no writing

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Speaker 1: experience or background when I joined, so that was a

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Speaker 1: good you know, just kind of thrown in the deep

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Speaker 1: end and figured out. So my routine back then was

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Speaker 1: very much just like almost like a daily panic, think

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Speaker 1: of three things to write, get him out there. And

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Speaker 1: also the articles weren't very good because I wasn't thinking

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Speaker 1: about I didn't have time to think them through. You

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Speaker 1: really picked up a following at the Motley Fool pretty

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Speaker 1: early in your career. There where was the transition from

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Speaker 1: just cranking out a lot of Volume two, I'm gonna

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Speaker 1: do something more thoughtful and in depth. It was it

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Speaker 1: was actually I was speaking with him the other day.

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Speaker 1: My old boss of the millyful of name is Brian Richards.

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Speaker 1: He's he's still he's still one of my great friends.

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Speaker 1: Um he. I came to him one day and I said, hey,

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Speaker 1: rather than writing three articles today, what if I were

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Speaker 1: to slow down and write like three per week and

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Speaker 1: they would be much more thoughtful and in depth and

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Speaker 1: better researched. But the thing is the reason I'm not

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Speaker 1: doing that is because I'm getting paid per article. So

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Speaker 1: if I reduced my volume by I can't feed my

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Speaker 1: family anymore. So I came down and said, what if

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Speaker 1: I cut on this three a week, but you paid

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Speaker 1: me the same, and he said, great, Yeah, absolutely, let's

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Speaker 1: do it. And the pitch to him was like, hey,

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Speaker 1: my articles are gonna be better, They're gonna be much

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Speaker 1: more in depth and thoughtful. So so we did that

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Speaker 1: and it it worked. I feel I feel like that

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Speaker 1: was the turning point for me, is when I the

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Speaker 1: economics let me slow down and think things through, and

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Speaker 1: you would be a little bit more in depth and thoughtful.

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Speaker 1: And that was when I really started going from you know,

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Speaker 1: just sitting on my deck and just at my desk

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Speaker 1: and cranking out whatever I could as fast as I could,

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Speaker 1: to hey, let's let's read a book about this topic

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Speaker 1: and then I'm going to go for a walk and

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Speaker 1: think about it and think about how it applies to

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Speaker 1: these other things that I read about, and call some

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Speaker 1: of my friends and bounce the idea off of them

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Speaker 1: and then do some other research, just a much more calmer,

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Speaker 1: thoughtful process. Um So that was when I started spending

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Speaker 1: most of my day reading and going for walks, which

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Speaker 1: is what I do now. That that that's when it started.

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Speaker 1: So the actual writing that I do now and now

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Speaker 1: I slowed down to one article per week something like that.

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Speaker 1: So my week is reading and going for walks, which

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Speaker 1: is where I do most of my quote unquote writing.

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Speaker 1: That's where all like the thinking, like piecing ideas together

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Speaker 1: happens and speaking with friends on the phone who are

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Speaker 1: in kind of you know, similar fields, have expertise about

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Speaker 1: these things that I don't. That's the huge majority of day.

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Speaker 1: There's not a lot of structure because I don't think

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Speaker 1: there's there can be because good ideas creativity can't be forced.

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Speaker 1: They can't be scheduled. Like there's no like you can't

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Speaker 1: just have like a calendar entry and say, Okay, at

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Speaker 1: nine o'clock, I'm gonna do creative thinking and come up

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Speaker 1: with an idea. It doesn't work that way. It's always

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Speaker 1: just this kind of random things. Sometimes the ideas are

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Speaker 1: really easy and Monday morning it just like pops in

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Speaker 1: your head and you got it and your step for

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Speaker 1: the week. Other times it's really just this, like you

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Speaker 1: spend several days just kind of grinding through a bunch

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Speaker 1: of ideas, a lot of which don't work. A lot

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Speaker 1: of us aren't very well thought out. Or you try

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Speaker 1: to start writing an article and you quickly realize it's

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Speaker 1: not it's not gonna work. So there's there's really not

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Speaker 1: much structure other than just kind of um unstructured rambling thinking.

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Speaker 1: And that's that's It's not an easy thing to do

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Speaker 1: because most of the time it feels like you're not working.

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Speaker 1: And then so I feel like a lot of my time,

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Speaker 1: even after doing this for fourteen years, I'm constantly hit

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Speaker 1: with this idea of like, what did I get done today?

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Speaker 1: I didn't do anything today. I've just been sitting. I've

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Speaker 1: been sitting on the couch, you know, reading some reading

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Speaker 1: some books, that listened to two podcasts. I didn't do

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Speaker 1: anything productive today. And it's hard to accept that. No,

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Speaker 1: that's that's the work. I mean, obviously, that's that's it's

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Speaker 1: it's a great job. I'm fortunate to be able to

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Speaker 1: do that, but that is the work. It's just trying

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Speaker 1: to piece together different ideas over time so that maybe

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Speaker 1: once a week one of them sticks enough that you

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Speaker 1: can write a thousand words about it and publish it.

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Speaker 1: I can relate to that sensation of what did I

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Speaker 1: accomplished today? And if you don't have anything on the

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Speaker 1: page to show for it, or you've been in meetings

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Speaker 1: and phone calls all day, it feels like, well I

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Speaker 1: failed to produce something. Did I really get anything done?

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Speaker 1: I think what's so hard about that is that for

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Speaker 1: most of of modern history, work was visible and physical.

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Speaker 1: So your work was digging a ditch or pulling a

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Speaker 1: lever at the factory, or you know, making goods in

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Speaker 1: in a factory, or you worked on a farm. That's

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Speaker 1: for most of our history, work was very physical. It

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Speaker 1: was doing stuff with your hands, and it was visible.

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Speaker 1: You could see, you could see what other people were doing,

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Speaker 1: and you can see what you got done. And then

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Speaker 1: now is you shift to the era where most jobs

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Speaker 1: are thought jobs. They are creative jobs where you're working

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Speaker 1: with your head, and what really matters is not what

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Speaker 1: you've what you've it's not your physical deliverables, it's the

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Speaker 1: ideas that you came up with then work becomes something

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Speaker 1: that just happens in your head. And most people, myself

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Speaker 1: um do their best work when they're sitting on the

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Speaker 1: couch or going for a walk, or doing something that

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Speaker 1: looks nothing like work. Like I, I really don't do

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Speaker 1: any good work, any good thinking from sitting up desk,

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Speaker 1: and I think that's true for most people. Are definitely

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Speaker 1: not sitting in a meeting. That's true for most people too.

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Speaker 1: I get my best ideas what I'm doing things that

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Speaker 1: look absolutely nothing like work, which is easier when you

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Speaker 1: work from home because you don't have a boss, you

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Speaker 1: don't have a coworker who's who's watching you sitting on

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Speaker 1: the couch and is judging you for it. But even still,

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Speaker 1: even for yourself, it just doesn't feel like you're being productive,

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Speaker 1: even though that's when you do your best work. So

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Speaker 1: last question about the business of writing, so to speak,

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Speaker 1: who is your audience? Who are you writing for? I've

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Speaker 1: always so Here's this is where I might differ for

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Speaker 1: for from many writers is that most most writers will

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Speaker 1: know who their audience is and they will try to

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Speaker 1: write for them, and they'll say, oh, I'm writing towards

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Speaker 1: for investors or financial advisors, and let's write for them.

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Speaker 1: I've always been been attracted to this idea of selfish writing,

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Speaker 1: where I'm writing for myself, And what I mean by

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Speaker 1: that is I only want to write things that I

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Speaker 1: think are interesting that I would want to read myself,

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Speaker 1: and then I just have to take a leap of

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Speaker 1: faith that there are other people out there who will

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Speaker 1: want to read that too. And the reason I do

430
00:21:02,240 --> 00:21:04,480
Speaker 1: that is because I think obviously people do their best

431
00:21:04,520 --> 00:21:07,000
Speaker 1: work when they are most interested in it, when they

432
00:21:07,080 --> 00:21:10,439
Speaker 1: when they themselves personally think something is interesting and they

433
00:21:10,480 --> 00:21:12,720
Speaker 1: are learning about it as they go as they write.

434
00:21:13,119 --> 00:21:15,520
Speaker 1: So that's all I ever try to think about for

435
00:21:15,560 --> 00:21:17,920
Speaker 1: who my audience is. And I haven't done much research.

436
00:21:18,000 --> 00:21:20,520
Speaker 1: I I have a hard time answering your questions. I

437
00:21:20,520 --> 00:21:22,880
Speaker 1: don't know who my audience is. I know, I mean,

438
00:21:22,880 --> 00:21:26,560
Speaker 1: there are lots of them are financial advisors or fund managers,

439
00:21:26,720 --> 00:21:28,720
Speaker 1: but I know there's a lot of non finance people

440
00:21:29,040 --> 00:21:31,800
Speaker 1: that are in there. UM And hopefully if I find

441
00:21:31,880 --> 00:21:35,400
Speaker 1: something personally interesting that and and and it's interesting enough

442
00:21:35,400 --> 00:21:37,760
Speaker 1: for me that I want to go write about it, um,

443
00:21:37,800 --> 00:21:39,880
Speaker 1: there will be other people who are who are interested

444
00:21:39,960 --> 00:21:41,879
Speaker 1: in it as well. When I was working at the

445
00:21:41,880 --> 00:21:45,040
Speaker 1: Wall Street Journal. The task that they gave me was

446
00:21:45,200 --> 00:21:49,399
Speaker 1: right and investing column every week that is relevant to

447
00:21:49,520 --> 00:21:53,760
Speaker 1: a hedge fund manager, but is understandable and accessible to

448
00:21:53,840 --> 00:21:57,520
Speaker 1: someone who has no financial background or training or even interest.

449
00:21:57,840 --> 00:22:00,800
Speaker 1: That was that was the challenge, the goal which pushed

450
00:22:00,840 --> 00:22:03,359
Speaker 1: me to, you know, writing about finance and economics in

451
00:22:03,359 --> 00:22:05,680
Speaker 1: a way that is I think, you know, that is

452
00:22:05,680 --> 00:22:09,639
Speaker 1: hopefully totally jargon free and under and understandable without erasing

453
00:22:09,880 --> 00:22:13,560
Speaker 1: the really important context, the nuance of finance and investing.

454
00:22:14,040 --> 00:22:16,160
Speaker 1: So I think when you do that, it opens up

455
00:22:16,800 --> 00:22:19,040
Speaker 1: your financial writing, your thoughts, and your ideas to a

456
00:22:19,119 --> 00:22:22,359
Speaker 1: much broader audience. Uh. You know, you know, lots of

457
00:22:22,400 --> 00:22:26,320
Speaker 1: finance writers are just writing for cfps, and anyone else

458
00:22:26,320 --> 00:22:27,800
Speaker 1: who is a not a CFP is not going to

459
00:22:27,880 --> 00:22:30,840
Speaker 1: understand a word of what they're saying, that kind of thing. Whereas,

460
00:22:30,840 --> 00:22:32,560
Speaker 1: whereas I think if you're writing it through the lens

461
00:22:32,560 --> 00:22:35,720
Speaker 1: of behavior and history and just how people think about money,

462
00:22:35,760 --> 00:22:38,639
Speaker 1: the psychology of money, then it just opens up the

463
00:22:39,400 --> 00:22:41,919
Speaker 1: you know, the the net that you're casting out to

464
00:22:41,920 --> 00:22:45,159
Speaker 1: your audience is much wider. I share your enthusiasm for

465
00:22:45,240 --> 00:22:48,640
Speaker 1: writing for an audience of one. People ask me who

466
00:22:48,680 --> 00:22:51,720
Speaker 1: who's the podcast for, and my answer is always just me.

467
00:22:51,880 --> 00:22:53,280
Speaker 1: It's people I want to sit down and have a

468
00:22:53,280 --> 00:22:56,680
Speaker 1: conversation with. If anyone comes along, great, But these are

469
00:22:56,680 --> 00:23:00,400
Speaker 1: folks that I'm interested in talking to. It's a podcast

470
00:23:00,440 --> 00:23:02,680
Speaker 1: audience of one. And it sounds like you do the

471
00:23:02,720 --> 00:23:04,959
Speaker 1: same thing with your writing. I think you and I

472
00:23:05,000 --> 00:23:09,920
Speaker 1: have swapped Daniel Borsten's quote he's the former Librarian of Congress.

473
00:23:10,440 --> 00:23:12,879
Speaker 1: I write to figure out what I think. And besides,

474
00:23:13,240 --> 00:23:15,639
Speaker 1: at that hour all the bars are closed is his

475
00:23:15,920 --> 00:23:19,639
Speaker 1: uh his famous line, which I think is pretty pretty talent.

476
00:23:20,400 --> 00:23:23,960
Speaker 1: The last question on this really is it sounds like

477
00:23:24,119 --> 00:23:28,399
Speaker 1: your writing style and your voice have evolved over time.

478
00:23:28,920 --> 00:23:31,800
Speaker 1: How long did it take for the voice that we

479
00:23:32,080 --> 00:23:36,000
Speaker 1: know today as Morgan Housel to come about. I don't

480
00:23:36,000 --> 00:23:39,080
Speaker 1: think it ever, and I think it's a constant evolution.

481
00:23:39,119 --> 00:23:41,199
Speaker 1: I'm sure that what I write ten years from now,

482
00:23:41,240 --> 00:23:43,720
Speaker 1: if I'm still doing this, will sound very different from

483
00:23:43,720 --> 00:23:46,760
Speaker 1: what I am today. I think everyone's writing is kind

484
00:23:46,800 --> 00:23:50,760
Speaker 1: of shaped by who they who they read last, and

485
00:23:50,840 --> 00:23:53,240
Speaker 1: what they read last. Of course that's the case like

486
00:23:53,440 --> 00:23:56,240
Speaker 1: when whenever I write something that may maybe seems like

487
00:23:56,240 --> 00:23:57,960
Speaker 1: it's in a different voice. It's probably because I just

488
00:23:58,000 --> 00:24:00,719
Speaker 1: read a book that I liked, that is that was

489
00:24:00,760 --> 00:24:02,879
Speaker 1: written in a way that was really inspiring to me,

490
00:24:02,880 --> 00:24:04,800
Speaker 1: and when I sit down and write, I'm kind of

491
00:24:04,800 --> 00:24:06,920
Speaker 1: have that voice still in my head. I think that

492
00:24:07,000 --> 00:24:10,120
Speaker 1: the shift that I've that I've had over time, um

493
00:24:10,280 --> 00:24:15,280
Speaker 1: is just using smaller words, shorter sentences, shorter paragraphs, because

494
00:24:15,320 --> 00:24:18,080
Speaker 1: that's just that that, to me is the huge majority

495
00:24:18,160 --> 00:24:22,879
Speaker 1: of what separates uh, good writing from average writing is

496
00:24:22,920 --> 00:24:25,719
Speaker 1: just who is just who can say the most amount

497
00:24:25,720 --> 00:24:28,159
Speaker 1: of stuff and the fewest words possible, That's who wins.

498
00:24:28,720 --> 00:24:30,120
Speaker 1: And then so if if you look at the stuff

499
00:24:30,119 --> 00:24:32,879
Speaker 1: I wrote ten years ago, it was just bigger words,

500
00:24:32,960 --> 00:24:34,840
Speaker 1: longer paragraphs. And if you look at from when I

501
00:24:34,840 --> 00:24:38,040
Speaker 1: first started, it was the classic like let's use big

502
00:24:38,080 --> 00:24:40,240
Speaker 1: words that people have to use a dictionary to look

503
00:24:40,320 --> 00:24:42,640
Speaker 1: up to try to show people that I'm smart, which

504
00:24:42,680 --> 00:24:45,760
Speaker 1: is like the worst absolute writing that exists. Um. So

505
00:24:46,080 --> 00:24:48,800
Speaker 1: I think that that is just the that that's been

506
00:24:48,800 --> 00:24:51,439
Speaker 1: the only common denominator over time. Is trying to simplify it.

507
00:24:51,640 --> 00:24:53,840
Speaker 1: But I would say the actual voice is always evolving.

508
00:24:53,880 --> 00:24:55,280
Speaker 1: And even if I go back and look at stuff

509
00:24:55,280 --> 00:24:57,800
Speaker 1: I wrote three years ago, not that long ago. Sometimes

510
00:24:57,800 --> 00:25:00,640
Speaker 1: I read it and it seems like a different person. Um,

511
00:25:00,680 --> 00:25:03,800
Speaker 1: it's just so, that's that's always changing over time. Interesting.

512
00:25:03,880 --> 00:25:07,359
Speaker 1: Go pick up any Kurt Vonnegut novel which were written

513
00:25:07,400 --> 00:25:12,359
Speaker 1: so long ago, and he absolutely writes so much information,

514
00:25:12,480 --> 00:25:17,879
Speaker 1: so much detail, such wonderful storytelling with very simple words

515
00:25:17,880 --> 00:25:20,760
Speaker 1: and very simple sentences. That's always the common denominator if

516
00:25:20,800 --> 00:25:22,720
Speaker 1: you look at like Earnest hending Way, or like any

517
00:25:22,720 --> 00:25:25,560
Speaker 1: of the really famous historic authors, and you just ask

518
00:25:26,160 --> 00:25:28,960
Speaker 1: what makes that good writing? Like, you know, that's good writing,

519
00:25:29,000 --> 00:25:31,679
Speaker 1: but why is it good? Most of the time, I

520
00:25:31,680 --> 00:25:33,160
Speaker 1: think if you really think about it, you will come

521
00:25:33,200 --> 00:25:36,080
Speaker 1: down to simplicity. That it was just easy to read.

522
00:25:36,680 --> 00:25:40,479
Speaker 1: And most readers are have limited time. They don't have

523
00:25:40,720 --> 00:25:43,240
Speaker 1: endless amounts of time to really struggle through a paragraph

524
00:25:43,320 --> 00:25:46,400
Speaker 1: and stop and think, what what did that sentence mean?

525
00:25:46,520 --> 00:25:48,000
Speaker 1: What is he saying? I have to go back and

526
00:25:48,040 --> 00:25:50,080
Speaker 1: read it again. People don't want that. They want to

527
00:25:50,080 --> 00:25:52,760
Speaker 1: just glance at their eyes over the page and quickly

528
00:25:52,840 --> 00:25:55,199
Speaker 1: understand what you're saying, what your point is, so they

529
00:25:55,200 --> 00:25:57,240
Speaker 1: can get back to their day. And the only way

530
00:25:57,240 --> 00:25:59,720
Speaker 1: to do that is to use simplicity, simple words. Short

531
00:25:59,760 --> 00:26:01,320
Speaker 1: sentence says, but you have to do it in a

532
00:26:01,359 --> 00:26:04,159
Speaker 1: way that doesn't remove any of the essence of what

533
00:26:04,160 --> 00:26:07,040
Speaker 1: you're talking about. That's the challenge. Like anyone can write

534
00:26:07,280 --> 00:26:09,840
Speaker 1: with short sentences and whatnot, But if you're doing that

535
00:26:09,880 --> 00:26:12,679
Speaker 1: and you strip away the most important salient points of

536
00:26:12,680 --> 00:26:14,480
Speaker 1: what you're talking about, and then you failed. You have

537
00:26:14,600 --> 00:26:16,720
Speaker 1: to say the most amount of stuff in the fewer

538
00:26:16,760 --> 00:26:19,880
Speaker 1: sports possible, and both sides of that are important. Quite interesting.

539
00:26:20,320 --> 00:26:22,719
Speaker 1: So let's talk a little bit about this book. I

540
00:26:22,760 --> 00:26:25,000
Speaker 1: really enjoyed it. I read it on the beach. I

541
00:26:25,080 --> 00:26:29,359
Speaker 1: plowed right through it. You use some wonderful stories to

542
00:26:29,520 --> 00:26:36,000
Speaker 1: make really important points about finance and investing and just

543
00:26:36,720 --> 00:26:39,879
Speaker 1: your relationship with money. How do you find some of

544
00:26:39,880 --> 00:26:44,040
Speaker 1: these really wonderful stories you use as illustrative points. To me,

545
00:26:44,080 --> 00:26:46,080
Speaker 1: It's like, look, I am a financial writer. I mean

546
00:26:46,160 --> 00:26:49,040
Speaker 1: I write about investing in the economy, but I never

547
00:26:49,160 --> 00:26:52,359
Speaker 1: read finance books. I never read investing books. I rarely

548
00:26:52,359 --> 00:26:55,440
Speaker 1: read anything online about investing. I just want to read

549
00:26:55,560 --> 00:26:58,239
Speaker 1: from the cast the widest net that I can and

550
00:26:58,320 --> 00:27:01,800
Speaker 1: read about behavior, how people think, and how people have

551
00:27:01,920 --> 00:27:04,840
Speaker 1: dealt with greed and risk and scarcity, and try to

552
00:27:04,920 --> 00:27:06,520
Speaker 1: learn from that in a way that's going to make

553
00:27:06,560 --> 00:27:08,760
Speaker 1: me a better investor, make me a better investor writer.

554
00:27:09,280 --> 00:27:11,240
Speaker 1: So all of those stories, there's just that's those just

555
00:27:11,359 --> 00:27:15,040
Speaker 1: came from years and years of just casual, unstructured reading

556
00:27:15,359 --> 00:27:18,320
Speaker 1: and just poking around, but always with this idea in

557
00:27:18,359 --> 00:27:20,840
Speaker 1: my head and always with this like this seed in

558
00:27:20,880 --> 00:27:22,600
Speaker 1: my head of when when I'm reading and trying to

559
00:27:22,640 --> 00:27:25,119
Speaker 1: ask how does this apply to investing? I think if

560
00:27:25,119 --> 00:27:28,199
Speaker 1: you're always asking that question, when you're reading about a

561
00:27:28,320 --> 00:27:30,919
Speaker 1: broad variety of topics, you know there's there's stories in

562
00:27:30,960 --> 00:27:35,159
Speaker 1: the book about meteorology and about medicine and about dentistry

563
00:27:35,480 --> 00:27:37,760
Speaker 1: that all tie back to investing. So if you just

564
00:27:37,840 --> 00:27:41,000
Speaker 1: have the widest net possible that you can read and

565
00:27:41,080 --> 00:27:43,639
Speaker 1: always asking yourself how does it apply to my field?

566
00:27:44,160 --> 00:27:46,320
Speaker 1: Then I think those stories are are pretty easy to find.

567
00:27:46,359 --> 00:27:47,960
Speaker 1: And I think that applies to a lot of fields

568
00:27:47,960 --> 00:27:50,280
Speaker 1: that's not just investing. I think if you are a doctor,

569
00:27:50,680 --> 00:27:54,239
Speaker 1: or an engineer, or a politician, whatever it is, if

570
00:27:54,240 --> 00:27:58,400
Speaker 1: you're reading about a broad variety of fields and topics,

571
00:27:58,440 --> 00:28:00,560
Speaker 1: you will and you're and you're always how does this

572
00:28:00,640 --> 00:28:02,760
Speaker 1: apply to what I do? That doesn't I think a

573
00:28:02,760 --> 00:28:05,040
Speaker 1: great way to learn. And if you are only learning

574
00:28:05,040 --> 00:28:08,359
Speaker 1: about your field through the narrow lens of your field,

575
00:28:08,680 --> 00:28:11,280
Speaker 1: and if you're an engineer, you're only reading about engineering.

576
00:28:11,320 --> 00:28:14,880
Speaker 1: If you're a historian, you're only reading history. Like that's

577
00:28:14,960 --> 00:28:18,400
Speaker 1: that's a narrow lens to learn about any field, particularly

578
00:28:18,400 --> 00:28:20,800
Speaker 1: fields that has to do with just trying to answer

579
00:28:20,800 --> 00:28:23,480
Speaker 1: the question how do people think, how do people behave?

580
00:28:23,520 --> 00:28:25,919
Speaker 1: What are people likely to do next? That's all that

581
00:28:26,000 --> 00:28:28,080
Speaker 1: investing is. But that's what a lot of fields are

582
00:28:28,119 --> 00:28:30,280
Speaker 1: as well, So that's that's why I take that approach.

583
00:28:30,320 --> 00:28:33,639
Speaker 1: I also just think it's more interesting. Most investing books

584
00:28:33,800 --> 00:28:37,520
Speaker 1: and economics books are really boring and and maybe people

585
00:28:37,520 --> 00:28:40,560
Speaker 1: who work in the field will find them worthwhile to read,

586
00:28:40,880 --> 00:28:43,480
Speaker 1: but definitely not like you average lay person on the street.

587
00:28:43,480 --> 00:28:45,920
Speaker 1: They're not going to pick up, you know, most economic

588
00:28:46,000 --> 00:28:48,560
Speaker 1: textbooks and say, oh, this is really fascinating. So you

589
00:28:48,600 --> 00:28:50,800
Speaker 1: have to be able to present it in a way

590
00:28:50,840 --> 00:28:55,000
Speaker 1: that is both interesting and also much more intuitive to grasp.

591
00:28:55,280 --> 00:28:57,520
Speaker 1: If you just lay out a bunch of formulas and charts,

592
00:28:57,960 --> 00:28:59,920
Speaker 1: most people are just gonna say this isn't for me.

593
00:29:00,120 --> 00:29:02,000
Speaker 1: I don't have enough mental bandwidth to get through this

594
00:29:02,120 --> 00:29:04,000
Speaker 1: right now. But if you can tell a story about

595
00:29:04,080 --> 00:29:06,680
Speaker 1: something that happened in World War Two, then a much

596
00:29:07,520 --> 00:29:09,480
Speaker 1: than a higher degree of people are going to say, oh,

597
00:29:09,520 --> 00:29:11,880
Speaker 1: this is interesting. I'm kind of fascinating to this now.

598
00:29:12,160 --> 00:29:15,920
Speaker 1: It humanizes what is typically just an analytical fieldman investing

599
00:29:16,200 --> 00:29:18,040
Speaker 1: in a way that I think makes it more accessible

600
00:29:18,080 --> 00:29:20,840
Speaker 1: for people. This is a story that you come back

601
00:29:20,880 --> 00:29:24,520
Speaker 1: to in your columns and in the book about the

602
00:29:24,600 --> 00:29:32,240
Speaker 1: Right Brothers and how completely ground breaking, game changing Kittie

603
00:29:32,240 --> 00:29:36,080
Speaker 1: Hawk was in the first powered human flight, and you

604
00:29:36,240 --> 00:29:40,320
Speaker 1: describe how no one really had any clue what took

605
00:29:40,320 --> 00:29:43,360
Speaker 1: place for years and years and years discussed that a

606
00:29:43,360 --> 00:29:45,760
Speaker 1: little bit. To me, it's always been fascinating because the

607
00:29:45,800 --> 00:29:48,640
Speaker 1: airplane is, in my view, and I don't think this

608
00:29:48,720 --> 00:29:51,160
Speaker 1: is a bold statement, the airplane was the most important

609
00:29:51,160 --> 00:29:55,480
Speaker 1: invention of the twentieth century because it impacted everything. It

610
00:29:55,960 --> 00:30:02,320
Speaker 1: impacted everything from retail transportation to business commerce delivery to military.

611
00:30:02,440 --> 00:30:05,960
Speaker 1: You know, it transformed geopolitics that started world wars and

612
00:30:06,200 --> 00:30:11,120
Speaker 1: ended world wars every like the airplane changed everything. Um

613
00:30:11,200 --> 00:30:13,400
Speaker 1: and when it came about. When the Rip Brothers first

614
00:30:13,400 --> 00:30:17,360
Speaker 1: flew in uh in Kitty Hawk, virtually no one paid

615
00:30:17,400 --> 00:30:19,800
Speaker 1: any attention to it, and not just not just in

616
00:30:19,840 --> 00:30:22,320
Speaker 1: the first few days after they're flying in which virtually

617
00:30:22,360 --> 00:30:25,200
Speaker 1: no newspaper covered it, but even after they went back

618
00:30:25,240 --> 00:30:27,520
Speaker 1: to Dayton, Ohio, where they're from. They left Kitty Hawk,

619
00:30:27,560 --> 00:30:30,120
Speaker 1: went back to Dayton, and and Dayton, they were flying

620
00:30:30,200 --> 00:30:33,120
Speaker 1: all over people's homes, people's businesses that were flying their

621
00:30:33,160 --> 00:30:37,240
Speaker 1: airplane all throughout town. And even then people weren't paying

622
00:30:37,320 --> 00:30:39,800
Speaker 1: much attention to it. And even when people started paying

623
00:30:39,800 --> 00:30:42,760
Speaker 1: attention to the fact that, hey, these kids made the thing,

624
00:30:42,920 --> 00:30:45,240
Speaker 1: that's that's pretty cool. Maybe it's not just a toy.

625
00:30:45,680 --> 00:30:48,680
Speaker 1: Maybe this is not just some like crazy wild science experiment.

626
00:30:48,720 --> 00:30:51,960
Speaker 1: Maybe there's usefulness to this. What most people thought about

627
00:30:51,960 --> 00:30:54,320
Speaker 1: the airplane, even when they started paying attention to it,

628
00:30:54,360 --> 00:30:57,600
Speaker 1: was just for military purposes. They thought, can we strap

629
00:30:57,680 --> 00:31:00,200
Speaker 1: a machine gun onto this? Can we drop bombs out

630
00:31:00,200 --> 00:31:02,840
Speaker 1: of this? It wasn't for years and not it's not

631
00:31:02,880 --> 00:31:06,200
Speaker 1: in decades that people really saw the usefulness of what

632
00:31:06,200 --> 00:31:09,880
Speaker 1: the airplane would be, which was transporting people around the world,

633
00:31:09,880 --> 00:31:13,440
Speaker 1: transporting goods and packages and and inventory around the world.

634
00:31:13,680 --> 00:31:16,040
Speaker 1: That took a long time for people to figure out

635
00:31:16,040 --> 00:31:18,320
Speaker 1: that that would be the usefulness of the airplane. So

636
00:31:18,400 --> 00:31:21,400
Speaker 1: when you think about that, just that, just that idea,

637
00:31:21,560 --> 00:31:23,480
Speaker 1: and then you say, how does that apply to today? Like,

638
00:31:23,760 --> 00:31:26,600
Speaker 1: what inventions are out there today we're not paying any

639
00:31:26,600 --> 00:31:29,040
Speaker 1: attention to, or we are paying attention to, but we

640
00:31:29,120 --> 00:31:32,120
Speaker 1: just have no clue about what their ultimate usefulness will

641
00:31:32,160 --> 00:31:34,080
Speaker 1: be because you know it's going to be the case.

642
00:31:34,400 --> 00:31:36,200
Speaker 1: It was. It was especially true for the Right Brothers,

643
00:31:36,240 --> 00:31:38,960
Speaker 1: but it was also true when the car first came about,

644
00:31:39,160 --> 00:31:43,360
Speaker 1: when computers first came out, when the Internet first came about, etcetera, etcetera, etcetera.

645
00:31:43,480 --> 00:31:45,480
Speaker 1: I feel like it takes at least a decade for

646
00:31:45,560 --> 00:31:49,440
Speaker 1: most big inventions to get notice, to get recognized, which

647
00:31:49,480 --> 00:31:51,120
Speaker 1: then makes you asking, what have we done in the

648
00:31:51,200 --> 00:31:54,400
Speaker 1: last ten years that no one's paying attention to? Quite interesting.

649
00:31:54,760 --> 00:31:58,560
Speaker 1: Tell me a little bit about your writing process for

650
00:31:58,640 --> 00:32:02,200
Speaker 1: putting this book together. What was your routine, Like, how

651
00:32:02,240 --> 00:32:04,960
Speaker 1: long did it take you and what did you learn

652
00:32:05,000 --> 00:32:08,040
Speaker 1: in the process of writing a book. So the genesis

653
00:32:08,040 --> 00:32:10,560
Speaker 1: of the book what came from a long form post

654
00:32:10,640 --> 00:32:13,720
Speaker 1: that I wrote in called the Psychology of Money, which

655
00:32:13,720 --> 00:32:15,640
Speaker 1: I set out at the time. I I kind of

656
00:32:15,640 --> 00:32:19,720
Speaker 1: shamelessly ripped off the title from Charlie Munger's speech The

657
00:32:19,800 --> 00:32:22,920
Speaker 1: Psychology of Human Misjudgment, which I loved. It's it's a

658
00:32:22,960 --> 00:32:24,920
Speaker 1: wonderful speech that I think he gave in I think,

659
00:32:26,440 --> 00:32:28,960
Speaker 1: and he lays out in that speech, I don't know,

660
00:32:29,040 --> 00:32:32,560
Speaker 1: fifteen or so of these just ideas about how human

661
00:32:32,600 --> 00:32:35,600
Speaker 1: thinking goes astray, and it's a really good speech. He

662
00:32:35,720 --> 00:32:39,080
Speaker 1: uses examples from other fields. So I kind of looked

663
00:32:39,080 --> 00:32:40,480
Speaker 1: at that and said, how can I do the same,

664
00:32:41,000 --> 00:32:43,560
Speaker 1: but for you know, just within the confines of money.

665
00:32:43,600 --> 00:32:47,280
Speaker 1: He's talking about just how humans misbehave in general, how

666
00:32:47,320 --> 00:32:50,200
Speaker 1: can I how can I narrow that down to money?

667
00:32:50,480 --> 00:32:52,840
Speaker 1: And then so for the post, I took the twenty

668
00:32:52,960 --> 00:32:56,080
Speaker 1: or so biggest ideas that I thought I had come

669
00:32:56,120 --> 00:32:59,240
Speaker 1: across in my decade of writing about this, and I

670
00:32:59,320 --> 00:33:03,240
Speaker 1: just tried to plain them as as as succinctly as

671
00:33:03,240 --> 00:33:06,040
Speaker 1: I could in the post um and and it did

672
00:33:06,040 --> 00:33:08,120
Speaker 1: really well. Over a million people read the post. It's

673
00:33:08,160 --> 00:33:11,040
Speaker 1: the biggest article that I've ever published. And it was

674
00:33:11,080 --> 00:33:13,239
Speaker 1: also the case that when I was writing it, I

675
00:33:13,320 --> 00:33:15,440
Speaker 1: was trying to keep it short because it's a blog post.

676
00:33:15,480 --> 00:33:17,400
Speaker 1: It still ended up in nine thousand words, which is

677
00:33:17,400 --> 00:33:19,680
Speaker 1: a very long blog post. But there were still a

678
00:33:19,680 --> 00:33:22,160
Speaker 1: lot more to say, there were more stories to tell,

679
00:33:22,240 --> 00:33:24,600
Speaker 1: there were other different points that I wanted to talk about,

680
00:33:25,000 --> 00:33:26,760
Speaker 1: So I knew when I wrote it like this could

681
00:33:26,800 --> 00:33:29,040
Speaker 1: be a book. Which is always a challenge with a

682
00:33:29,120 --> 00:33:31,400
Speaker 1: book is that there are a lot of good ideas

683
00:33:31,400 --> 00:33:33,600
Speaker 1: out there and a lot of great points, a lot

684
00:33:33,600 --> 00:33:36,640
Speaker 1: of great articles. But turning something into you know, from

685
00:33:36,680 --> 00:33:39,800
Speaker 1: a one thousand word blog post into a sixty thousand

686
00:33:40,120 --> 00:33:43,800
Speaker 1: word book is a big jump. And most books out there,

687
00:33:43,840 --> 00:33:46,040
Speaker 1: the reason that people don't finish them, most readers don't

688
00:33:46,040 --> 00:33:48,640
Speaker 1: finish the books they start is because most topics do

689
00:33:48,720 --> 00:33:51,440
Speaker 1: not take sixty words to explain. You can get your

690
00:33:51,440 --> 00:33:54,600
Speaker 1: point across in two thousand words chapter one and two.

691
00:33:54,800 --> 00:33:56,360
Speaker 1: You get the point and then you can move on.

692
00:33:56,960 --> 00:34:00,080
Speaker 1: So I've always struggled with what is my book the

693
00:34:00,080 --> 00:34:02,400
Speaker 1: first book going to be because it's hard to find

694
00:34:02,400 --> 00:34:05,080
Speaker 1: a topic in which you can really devote that much

695
00:34:05,280 --> 00:34:08,359
Speaker 1: space too. But but this I realized that I could

696
00:34:08,760 --> 00:34:11,719
Speaker 1: um most particularly because rather than one idea that I

697
00:34:11,760 --> 00:34:15,840
Speaker 1: spent two hundred fifty pages rambling about, it's nineteen different ideas,

698
00:34:15,840 --> 00:34:18,719
Speaker 1: completely separate ideas. So you can start the book if

699
00:34:18,719 --> 00:34:20,520
Speaker 1: you want to do on chapter seventeen and it would

700
00:34:20,560 --> 00:34:22,759
Speaker 1: make sense to you, Like all the ideas have a

701
00:34:22,800 --> 00:34:25,680
Speaker 1: common theme that are tied together, but each one of

702
00:34:25,719 --> 00:34:28,640
Speaker 1: these ideas lives independently, which is really important for me

703
00:34:28,800 --> 00:34:31,160
Speaker 1: with writing the book, because that was going to reduce

704
00:34:31,680 --> 00:34:33,919
Speaker 1: the odds that I was just going to ramble on

705
00:34:34,000 --> 00:34:36,480
Speaker 1: and on and on and on about one topic. So

706
00:34:36,560 --> 00:34:41,200
Speaker 1: that was important in terms of the actual writing and research. Like,

707
00:34:41,680 --> 00:34:43,719
Speaker 1: most of these ideas that I that I that I

708
00:34:43,840 --> 00:34:45,160
Speaker 1: that I read about in the book are things that

709
00:34:45,200 --> 00:34:47,160
Speaker 1: I have come across and some of which I've written

710
00:34:47,200 --> 00:34:50,120
Speaker 1: about um during the years. So it was not like

711
00:34:50,160 --> 00:34:52,200
Speaker 1: I started with a blank flate with this book. I

712
00:34:52,320 --> 00:34:54,359
Speaker 1: kind of had a lot of these ideas kind of

713
00:34:54,800 --> 00:34:57,840
Speaker 1: sitting out there already, and then I I gave myself

714
00:34:57,920 --> 00:35:00,680
Speaker 1: one year to write it, uh, and a for nine months,

715
00:35:00,680 --> 00:35:03,239
Speaker 1: I think I had written one chapter. Uh. It was

716
00:35:03,280 --> 00:35:06,360
Speaker 1: just so easy to procrastinate and delay and delay and delay.

717
00:35:06,640 --> 00:35:09,640
Speaker 1: And then my wife one day, uh, you know, kind

718
00:35:09,640 --> 00:35:11,920
Speaker 1: of gave me some craft about how little progress I

719
00:35:11,960 --> 00:35:14,440
Speaker 1: was making. She kind of expressed that she was disappointed

720
00:35:14,440 --> 00:35:16,560
Speaker 1: and how little progress I was making. So then I

721
00:35:16,640 --> 00:35:19,840
Speaker 1: cleared everything off my calendar and I wrote the majority

722
00:35:19,880 --> 00:35:23,720
Speaker 1: of the book over about a four week period last December. Wow,

723
00:35:23,800 --> 00:35:27,520
Speaker 1: that's amazing, you know. Your your comment about how everything

724
00:35:27,600 --> 00:35:31,160
Speaker 1: is too long reminds me Our mutual friend, Michael Batnick,

725
00:35:31,280 --> 00:35:34,440
Speaker 1: is fond of saying most books should be magazine articles,

726
00:35:34,440 --> 00:35:37,480
Speaker 1: most magazine articles should be blog posts, and most blog

727
00:35:37,520 --> 00:35:41,160
Speaker 1: posts should be tweets. That philosophy abuse a lot of

728
00:35:41,160 --> 00:35:46,000
Speaker 1: your columns because you often write stuff that I finished

729
00:35:46,000 --> 00:35:48,360
Speaker 1: reading and I'm like, wow, that was like four words.

730
00:35:48,440 --> 00:35:51,000
Speaker 1: He could have gone on for triple that length. You

731
00:35:51,200 --> 00:35:55,440
Speaker 1: purposely choose to keep things short, don't you. I mean,

732
00:35:55,640 --> 00:35:58,000
Speaker 1: very few readers, whether it's a book, a book, or

733
00:35:58,040 --> 00:36:00,319
Speaker 1: an article, whatever it is, very few readers get to

734
00:36:00,360 --> 00:36:02,960
Speaker 1: the bottom and say, I wish it was longer, I

735
00:36:02,960 --> 00:36:04,839
Speaker 1: wish there were more words. I wish there were more

736
00:36:04,880 --> 00:36:07,560
Speaker 1: supporting examples. What's the idea? But most of the time

737
00:36:07,600 --> 00:36:09,439
Speaker 1: what people want out of an article or a book

738
00:36:10,000 --> 00:36:13,000
Speaker 1: is just a single idea or maybe a handful of ideas.

739
00:36:13,160 --> 00:36:16,120
Speaker 1: They don't need to just grind through four hundred pages

740
00:36:16,120 --> 00:36:18,800
Speaker 1: of examples. If you can leave them when they finished

741
00:36:18,840 --> 00:36:20,400
Speaker 1: the book, when they close it, whether they make it

742
00:36:20,440 --> 00:36:22,160
Speaker 1: to the end or not. If they can close the

743
00:36:22,200 --> 00:36:24,439
Speaker 1: book and put it back on their shelves with two

744
00:36:24,560 --> 00:36:26,880
Speaker 1: or three ideas in their head. The ideas can be

745
00:36:26,880 --> 00:36:29,319
Speaker 1: summarized in a sentence or two. That is, I think

746
00:36:29,360 --> 00:36:32,839
Speaker 1: most that's what you know. That's that's a success in

747
00:36:32,840 --> 00:36:35,560
Speaker 1: my view. So I try to keep it short, uh,

748
00:36:35,600 --> 00:36:38,040
Speaker 1: for for that reason, just trying to it's just out

749
00:36:38,040 --> 00:36:40,640
Speaker 1: of respect for the readers. There's actually one chapter in

750
00:36:40,680 --> 00:36:43,160
Speaker 1: the book that is four hundred words long, which is

751
00:36:43,200 --> 00:36:45,839
Speaker 1: one page. And when I turned it in, the publisher said,

752
00:36:45,880 --> 00:36:48,759
Speaker 1: is this the mistake? Are you? Did you for? Is?

753
00:36:49,040 --> 00:36:50,960
Speaker 1: Did you lose the rest of it? Like what happened here?

754
00:36:51,040 --> 00:36:52,799
Speaker 1: And I said, no, that's all I wanted. That's that's

755
00:36:52,800 --> 00:36:55,160
Speaker 1: all I have to say on this topic. And they said, okay, well,

756
00:36:55,160 --> 00:36:56,960
Speaker 1: you know the book. Do you want to add some

757
00:36:57,040 --> 00:36:58,920
Speaker 1: more to it? Do you want to add another example,

758
00:36:58,960 --> 00:37:01,080
Speaker 1: you know, some more examples. I said, no, that's all

759
00:37:01,120 --> 00:37:03,160
Speaker 1: I have to say on that topic. And out of

760
00:37:03,280 --> 00:37:04,920
Speaker 1: respect for the readers, I'm going to leave it at that.

761
00:37:04,960 --> 00:37:07,600
Speaker 1: I'm not gonna waste anyone else's time and ramble on

762
00:37:07,719 --> 00:37:10,000
Speaker 1: about this just because it's a book and I want to,

763
00:37:10,040 --> 00:37:12,439
Speaker 1: you know, have it be thicker. Uh you know, So

764
00:37:12,440 --> 00:37:14,239
Speaker 1: so it feels better we can charge more for it.

765
00:37:15,120 --> 00:37:17,920
Speaker 1: To me, it's just it's like the Golden rule. I'm

766
00:37:17,960 --> 00:37:21,680
Speaker 1: a big reader, uh, and I I don't like when

767
00:37:21,800 --> 00:37:24,799
Speaker 1: other writers waste my time with words that don't need

768
00:37:24,840 --> 00:37:27,000
Speaker 1: to be there. So that's what I tried to do

769
00:37:27,080 --> 00:37:30,000
Speaker 1: for the book. Is just I wanted to go deeper

770
00:37:30,200 --> 00:37:32,040
Speaker 1: than a normal blog post, because that's what you can

771
00:37:32,080 --> 00:37:34,080
Speaker 1: do in a book. You can tell longer stories. But

772
00:37:34,120 --> 00:37:36,640
Speaker 1: I also just wanted to respect people's time and make

773
00:37:36,680 --> 00:37:38,719
Speaker 1: my point as quickly as I can and then get

774
00:37:38,760 --> 00:37:40,120
Speaker 1: out of their way so they can move on to

775
00:37:40,160 --> 00:37:42,399
Speaker 1: the next chapter or go about the rest of their day.

776
00:37:42,560 --> 00:37:46,120
Speaker 1: All right, last two questions about the book. The first one,

777
00:37:46,920 --> 00:37:50,360
Speaker 1: what did you learn about the process of writing a book?

778
00:37:50,840 --> 00:37:53,680
Speaker 1: Would you do it the same way back in loaded

779
00:37:53,719 --> 00:37:56,520
Speaker 1: the way you did in the last four weeks, or

780
00:37:56,640 --> 00:38:00,000
Speaker 1: would you go out about differently. If you're advising an

781
00:38:00,040 --> 00:38:02,880
Speaker 1: new writer who wants to put out a book, what

782
00:38:03,000 --> 00:38:08,320
Speaker 1: would you tell them is a productive approach to cranking

783
00:38:08,320 --> 00:38:11,120
Speaker 1: out two and fifty or so pages. I would never

784
00:38:11,160 --> 00:38:14,160
Speaker 1: recommend that anyone try to write, you know, you know,

785
00:38:14,960 --> 00:38:17,880
Speaker 1: like like three quarters of a book in four weeks,

786
00:38:17,880 --> 00:38:20,760
Speaker 1: Like I did it was. It was miserable, it was terrible,

787
00:38:20,800 --> 00:38:23,439
Speaker 1: But I'm I I needed that deadline. When I gave

788
00:38:23,480 --> 00:38:25,360
Speaker 1: myself a year to write it, it it was so easy

789
00:38:25,400 --> 00:38:27,439
Speaker 1: to procrastinate and put it off and put it off.

790
00:38:27,680 --> 00:38:30,640
Speaker 1: We we we My My wife gave birth to a

791
00:38:30,760 --> 00:38:33,520
Speaker 1: daughter right an in the middle of that period, which

792
00:38:33,520 --> 00:38:35,080
Speaker 1: made it easier for me to say, oh, I'm going

793
00:38:35,120 --> 00:38:37,520
Speaker 1: to take a month off. One month turn to two months,

794
00:38:37,520 --> 00:38:39,600
Speaker 1: two months turn to three months. So for me, like

795
00:38:39,640 --> 00:38:42,719
Speaker 1: I needed that pressure to just to just sit down

796
00:38:42,719 --> 00:38:44,520
Speaker 1: and crank it out. I don't I would definitely not

797
00:38:44,520 --> 00:38:46,160
Speaker 1: recommend it, but I have a feeling that when I

798
00:38:46,239 --> 00:38:48,920
Speaker 1: write book number two, something similar is going to happen.

799
00:38:49,480 --> 00:38:51,759
Speaker 1: Um that's that's always when it's the case. But it

800
00:38:52,160 --> 00:38:55,600
Speaker 1: actually it actually worked out fairly well too, because during

801
00:38:55,640 --> 00:38:58,880
Speaker 1: those four weeks when I was doing absolutely nothing but

802
00:38:58,960 --> 00:39:01,440
Speaker 1: writing this book, barely even talking to my family, I

803
00:39:01,440 --> 00:39:03,279
Speaker 1: was just writing, like five in the morning until when

804
00:39:03,280 --> 00:39:06,200
Speaker 1: I went to bed. It was since it was constantly

805
00:39:06,280 --> 00:39:08,960
Speaker 1: on my mind and it was so fresh in my

806
00:39:09,000 --> 00:39:11,920
Speaker 1: head and there was nothing else in my head but book,

807
00:39:12,400 --> 00:39:14,560
Speaker 1: it made it easier for me to focus on it,

808
00:39:15,000 --> 00:39:16,839
Speaker 1: and since everything was still fresh, in my mind, Like

809
00:39:16,960 --> 00:39:19,680
Speaker 1: when I was working on chapter seventeen, there were things

810
00:39:20,560 --> 00:39:22,520
Speaker 1: that popped in my head about chapter three that I

811
00:39:22,520 --> 00:39:24,839
Speaker 1: could go back and change because chapter three was still

812
00:39:24,880 --> 00:39:27,520
Speaker 1: fresh in my mind. Versus, if you're writing something over

813
00:39:27,520 --> 00:39:29,520
Speaker 1: the course of a year, by the time you're you're

814
00:39:29,520 --> 00:39:31,640
Speaker 1: reading in the last chapter, the things that you wrote

815
00:39:31,680 --> 00:39:34,080
Speaker 1: in chapter two that was a year ago, you forgot

816
00:39:34,080 --> 00:39:37,440
Speaker 1: about it. So just just having that much uh, focused

817
00:39:37,719 --> 00:39:40,120
Speaker 1: on the book at one point actually worked out well

818
00:39:40,160 --> 00:39:42,600
Speaker 1: for me. And you hinted at what's going to be

819
00:39:42,680 --> 00:39:45,279
Speaker 1: my next question, which is when are we going to

820
00:39:45,360 --> 00:39:47,879
Speaker 1: see the next book from you? The book A book

821
00:39:47,960 --> 00:39:50,319
Speaker 1: number two is is definitely happening. We have a deal

822
00:39:50,400 --> 00:39:54,120
Speaker 1: with a publisher. Haven't made any public announcements yet. Um,

823
00:39:54,160 --> 00:39:56,760
Speaker 1: you know, the the the the turnaround time on books

824
00:39:56,840 --> 00:39:58,640
Speaker 1: is pretty long. It's about you know, a year and

825
00:39:58,680 --> 00:40:00,359
Speaker 1: a half or two years from the time you start

826
00:40:00,360 --> 00:40:02,200
Speaker 1: writing it to the time it's on the shelves. So

827
00:40:02,360 --> 00:40:05,640
Speaker 1: that will come out is broader than investing. It's not

828
00:40:05,680 --> 00:40:08,600
Speaker 1: a finance book, it's not an economics book. Um, but

829
00:40:08,640 --> 00:40:10,600
Speaker 1: it's the book that I'm really excited about. I've kind

830
00:40:10,640 --> 00:40:12,680
Speaker 1: of written a little bit about it. In blog posts

831
00:40:12,680 --> 00:40:15,080
Speaker 1: in the past, and this is gonna be This is

832
00:40:15,080 --> 00:40:17,359
Speaker 1: another topic that even though I've written blog posts on it,

833
00:40:17,680 --> 00:40:20,680
Speaker 1: I finally realized that I can write about that. I

834
00:40:20,760 --> 00:40:24,279
Speaker 1: can write two d and fifty pages on this topic. So, uh,

835
00:40:24,719 --> 00:40:28,120
Speaker 1: you know, still playing with the the final idea, but

836
00:40:28,160 --> 00:40:29,640
Speaker 1: I have a broad idea in mind, but we're not

837
00:40:29,680 --> 00:40:32,040
Speaker 1: talking about it publicly. But let's say two years from now,

838
00:40:32,120 --> 00:40:33,839
Speaker 1: you and I will be on the podcast again talking

839
00:40:33,880 --> 00:40:37,280
Speaker 1: about it. All right, looking forward to it. So let's

840
00:40:37,640 --> 00:40:40,959
Speaker 1: jump right into the big question. What are the big

841
00:40:41,040 --> 00:40:45,799
Speaker 1: lessons that investors should have learned from I think there's

842
00:40:45,840 --> 00:40:47,399
Speaker 1: there's two or three that come to mind, and all

843
00:40:47,400 --> 00:40:51,960
Speaker 1: of these were things that we've known before. Is just

844
00:40:51,960 --> 00:40:54,960
Speaker 1: just like slam them into our faces in a blunt

845
00:40:54,960 --> 00:40:58,239
Speaker 1: force way and made them obvious. One is that the

846
00:40:58,280 --> 00:41:01,320
Speaker 1: biggest risk that is out there is always what nobody

847
00:41:01,400 --> 00:41:04,319
Speaker 1: is talking about, because what makes it risky is the

848
00:41:04,360 --> 00:41:06,840
Speaker 1: fact that nobody is talking about it. So all the

849
00:41:06,920 --> 00:41:09,080
Speaker 1: things that people tend to worry about over the last

850
00:41:09,120 --> 00:41:12,239
Speaker 1: ten years, is the FED going to raise interest rates? Uh,

851
00:41:12,280 --> 00:41:14,040
Speaker 1: if Congress going to raise the debt failing, or we're

852
00:41:14,040 --> 00:41:17,279
Speaker 1: gonna have the stimulus packages, trade wars, etcetera, etcetera. It's

853
00:41:17,280 --> 00:41:19,440
Speaker 1: not that those things are not risky, it's just that

854
00:41:19,480 --> 00:41:22,280
Speaker 1: they are well known. They're well publicized. We're talking about

855
00:41:22,280 --> 00:41:24,560
Speaker 1: them all the time, so we can prepare for a

856
00:41:24,680 --> 00:41:27,440
Speaker 1: range of different outcomes. What really moves the needle over

857
00:41:27,480 --> 00:41:29,279
Speaker 1: time are the things that just come out of the

858
00:41:29,280 --> 00:41:31,400
Speaker 1: blue overnight that no one is talking about it. And

859
00:41:31,440 --> 00:41:33,560
Speaker 1: since they're not talking about it, they're not prepared for

860
00:41:33,640 --> 00:41:37,400
Speaker 1: it either in in actual terms in terms of their finances,

861
00:41:37,440 --> 00:41:40,240
Speaker 1: their their cash obligations there, you know, their their ability

862
00:41:40,280 --> 00:41:42,840
Speaker 1: to service the debt, and they're not prepared for it.

863
00:41:42,920 --> 00:41:45,880
Speaker 1: In psychological terms, it's just such a shock and and

864
00:41:46,000 --> 00:41:48,959
Speaker 1: and people getting stuck into this, you know, this shell

865
00:41:49,040 --> 00:41:51,000
Speaker 1: shock attitude of sitting there with their jaws in the

866
00:41:51,000 --> 00:41:53,359
Speaker 1: floor when it happens. So that was definitely the case

867
00:41:53,400 --> 00:41:56,759
Speaker 1: with when pandemics could have been seen coming. Like go

868
00:41:56,960 --> 00:41:59,400
Speaker 1: Gates gave a ted talk in ten I think it

869
00:41:59,520 --> 00:42:02,440
Speaker 1: was where he describes the risk of like exactly what

870
00:42:02,440 --> 00:42:04,879
Speaker 1: we're dealing with. It's not that we could not see

871
00:42:04,920 --> 00:42:08,440
Speaker 1: these coming, it's just that the exact timing was completely

872
00:42:08,560 --> 00:42:12,000
Speaker 1: unknown and for the majority of people other than epidemiologists

873
00:42:12,000 --> 00:42:14,040
Speaker 1: and people like Bill Gates. I think we just assume

874
00:42:14,080 --> 00:42:17,399
Speaker 1: that these kind of things like global pandemics, we're something

875
00:42:17,440 --> 00:42:19,319
Speaker 1: that happened a hundred years ago, but that we have

876
00:42:19,680 --> 00:42:22,399
Speaker 1: moved on from from in humanity, and then they were

877
00:42:22,400 --> 00:42:24,000
Speaker 1: not going to be part of our lives, which makes

878
00:42:24,000 --> 00:42:26,560
Speaker 1: it that much more scary what we're dealing with it.

879
00:42:26,680 --> 00:42:29,080
Speaker 1: So the general idea that the biggest risk is what

880
00:42:29,160 --> 00:42:32,000
Speaker 1: no one is talking about, really like drives from the

881
00:42:32,040 --> 00:42:37,520
Speaker 1: idea of of taking forecast and economic projections with a

882
00:42:37,520 --> 00:42:39,359
Speaker 1: grain assault, because it's not that those things are going

883
00:42:39,400 --> 00:42:41,799
Speaker 1: to be wrong or that they are not risk, it's

884
00:42:41,880 --> 00:42:44,360
Speaker 1: that in any given year, I think this is true

885
00:42:44,400 --> 00:42:47,560
Speaker 1: every single year, and definitely over any given decade, the

886
00:42:47,600 --> 00:42:50,759
Speaker 1: biggest news story is something that was completely unforseeeable before

887
00:42:50,760 --> 00:42:54,360
Speaker 1: it happened. Whether it is COVID nineteen or September eleventh,

888
00:42:54,520 --> 00:42:57,640
Speaker 1: or collapse of the Soviet Union JFK being assassinated, the

889
00:42:57,680 --> 00:43:00,720
Speaker 1: Great Depression, whatever it is, the big US news story

890
00:43:00,800 --> 00:43:03,040
Speaker 1: is always something that was unforseeable. That's one of the

891
00:43:03,040 --> 00:43:06,520
Speaker 1: big ones. Uh. You know something else that's that's true

892
00:43:07,560 --> 00:43:10,400
Speaker 1: is just the value of room for error in your finances,

893
00:43:10,800 --> 00:43:12,719
Speaker 1: room for error in your budgets, room for error in

894
00:43:12,760 --> 00:43:16,080
Speaker 1: your valuation analysis. The number of companies that went from

895
00:43:16,160 --> 00:43:21,080
Speaker 1: record sales, record health in February to bankrupt in March

896
00:43:21,280 --> 00:43:26,920
Speaker 1: or April is astounding, and just like something like just

897
00:43:27,000 --> 00:43:30,359
Speaker 1: kind of puts a spotlight into how fragile so many

898
00:43:30,400 --> 00:43:33,520
Speaker 1: businesses are, and how fragile so many investors are. How

899
00:43:33,600 --> 00:43:35,880
Speaker 1: quickly things can change and when things go in a

900
00:43:35,920 --> 00:43:38,560
Speaker 1: different direction, it only takes a couple of weeks or

901
00:43:38,600 --> 00:43:41,080
Speaker 1: a couple of days, maybe a couple of months before

902
00:43:41,160 --> 00:43:44,839
Speaker 1: things are broken and there's gonna be permanent damage, having

903
00:43:44,920 --> 00:43:47,080
Speaker 1: room for error in your finances, Like just at the

904
00:43:47,120 --> 00:43:50,360
Speaker 1: personal finance level, I think in general, not everyone, but

905
00:43:50,400 --> 00:43:53,440
Speaker 1: in general most investors don't have enough cash in bonds

906
00:43:54,000 --> 00:43:56,560
Speaker 1: and that and that seems like a controversial statement when

907
00:43:56,560 --> 00:44:00,640
Speaker 1: everything is going well and then march around will realize

908
00:44:00,640 --> 00:44:03,839
Speaker 1: exactly why they have that. Cash and bonds is often

909
00:44:03,840 --> 00:44:06,759
Speaker 1: associated with conservatism, like not wanting to take a lot

910
00:44:06,760 --> 00:44:10,000
Speaker 1: of risk, not wanting to be, you know, be subject

911
00:44:10,000 --> 00:44:12,000
Speaker 1: to a lot of risk, and I just don't think

912
00:44:12,000 --> 00:44:14,680
Speaker 1: that's the case. What they do, what cash and bonds

913
00:44:14,760 --> 00:44:17,240
Speaker 1: do is they allow the stocks that you do own

914
00:44:17,600 --> 00:44:20,920
Speaker 1: to be left untouched, uninterrupted, so that they can compound

915
00:44:20,960 --> 00:44:24,520
Speaker 1: over time. The great quote from Charlie Monger is the

916
00:44:24,560 --> 00:44:27,880
Speaker 1: first rule of compounding is to never interrupt it unnecessarily.

917
00:44:28,280 --> 00:44:30,000
Speaker 1: And when you think about it in those terms, then

918
00:44:30,040 --> 00:44:32,000
Speaker 1: you realize that the cash and bonds that you do own,

919
00:44:32,160 --> 00:44:34,600
Speaker 1: who cares that you're earning no return or a negative

920
00:44:34,600 --> 00:44:38,560
Speaker 1: return these uh during these times, if once per decade,

921
00:44:38,760 --> 00:44:41,279
Speaker 1: if that cash and bond and bonds can prevent you

922
00:44:41,600 --> 00:44:44,279
Speaker 1: from being forced to sell stocks and in opportune time,

923
00:44:44,400 --> 00:44:46,319
Speaker 1: they're going to earn all of their return and then

924
00:44:46,400 --> 00:44:50,120
Speaker 1: sum those to me are the biggest takeaways from So

925
00:44:50,440 --> 00:44:54,360
Speaker 1: that raises two questions I have to ask you about

926
00:44:54,360 --> 00:44:57,200
Speaker 1: your answer. I'll come back to the question of how

927
00:44:57,280 --> 00:45:00,560
Speaker 1: you invest, but I want to stick with the idea

928
00:45:00,760 --> 00:45:07,200
Speaker 1: of completely unforeseen black swan events or or unanticipated events.

929
00:45:08,160 --> 00:45:09,840
Speaker 1: Here it is, it's the end of the summer of

930
00:45:11,239 --> 00:45:15,680
Speaker 1: the headlines are talking about overvalued stock, about a tech bubble,

931
00:45:16,200 --> 00:45:20,840
Speaker 1: about day traders? Are any of those things as important

932
00:45:20,880 --> 00:45:23,840
Speaker 1: as the headlines make are those things we should be

933
00:45:23,880 --> 00:45:28,120
Speaker 1: worried about? Or the mere fact that it's headline news

934
00:45:28,840 --> 00:45:32,759
Speaker 1: suggests that it's less likely to be what causes the

935
00:45:32,880 --> 00:45:37,000
Speaker 1: next disruption. It's not that those things are are are

936
00:45:37,239 --> 00:45:40,239
Speaker 1: not risky. Like if like could could testa stock moves

937
00:45:41,040 --> 00:45:43,319
Speaker 1: of its value in the next month, of course, of

938
00:45:43,360 --> 00:45:45,840
Speaker 1: course it could. We've seen that happen with other companies

939
00:45:45,880 --> 00:45:48,120
Speaker 1: in the past. Of course it's possible. But if it

940
00:45:48,160 --> 00:45:51,320
Speaker 1: were to happen, it would not be that surprising, particularly

941
00:45:51,360 --> 00:45:53,160
Speaker 1: for people who don't own the stock, but even for

942
00:45:53,200 --> 00:45:55,719
Speaker 1: those who do. Everyone has to know that that is

943
00:45:55,760 --> 00:45:58,239
Speaker 1: a possibility. So when it happened, it's not that it's

944
00:45:58,280 --> 00:46:00,360
Speaker 1: not a risk. It's just that it would be easy.

945
00:46:00,400 --> 00:46:03,320
Speaker 1: Particularly after it happened, we would say, of course that happened,

946
00:46:03,600 --> 00:46:06,520
Speaker 1: that was foreseeable. But this has been happening for decades.

947
00:46:07,040 --> 00:46:08,520
Speaker 1: So it's not that it's not a risk. It's just

948
00:46:08,520 --> 00:46:12,719
Speaker 1: that it's it's somewhat foreseeable. Um, and so that's what

949
00:46:13,000 --> 00:46:16,400
Speaker 1: that's what's uh, that's that's really what risk is. Like

950
00:46:16,560 --> 00:46:18,520
Speaker 1: the idea that you and I can sit here right

951
00:46:18,560 --> 00:46:22,160
Speaker 1: now and say Tesla might fall in the next month.

952
00:46:22,480 --> 00:46:24,520
Speaker 1: That is very different from the conversation if you and

953
00:46:24,560 --> 00:46:26,960
Speaker 1: I were having in January or December and we were

954
00:46:27,000 --> 00:46:28,920
Speaker 1: looking ahead saying, what are the biggest risk for the

955
00:46:28,960 --> 00:46:32,440
Speaker 1: next year. No one would have said a global pandemic

956
00:46:32,480 --> 00:46:34,600
Speaker 1: that's going to shut the global economy down and cause

957
00:46:34,640 --> 00:46:37,239
Speaker 1: the worst economic crisis. It's the Great Depression. And by

958
00:46:37,280 --> 00:46:39,200
Speaker 1: the way, during that period, Tesla stock is going to

959
00:46:39,239 --> 00:46:42,279
Speaker 1: be up. No one would have seen that. No one

960
00:46:42,320 --> 00:46:44,160
Speaker 1: would have said that. So the fact that it was

961
00:46:44,239 --> 00:46:47,239
Speaker 1: unforeseeable is what has made it risky quite interesting. And

962
00:46:47,280 --> 00:46:51,880
Speaker 1: then the second question is you know, it's funny given

963
00:46:51,920 --> 00:46:58,080
Speaker 1: your backgrounds UH investment banking to private equity. I find

964
00:46:58,080 --> 00:47:01,000
Speaker 1: the way you personally invest what you describe in the

965
00:47:01,080 --> 00:47:06,359
Speaker 1: chapter of the book surprisingly conservative, surprisingly risk averse. Your

966
00:47:06,440 --> 00:47:10,080
Speaker 1: your career seems like you embrace risk, but what you

967
00:47:10,120 --> 00:47:13,920
Speaker 1: actually do with your money is pretty you know, middle

968
00:47:13,920 --> 00:47:17,040
Speaker 1: of the road. Tell us about how you invest personally

969
00:47:17,320 --> 00:47:21,000
Speaker 1: and how you budget and plan for your personal finances.

970
00:47:21,360 --> 00:47:23,640
Speaker 1: So it's interesting that you bring that up because I

971
00:47:23,680 --> 00:47:25,759
Speaker 1: don't feel like that's the case. I feel like I'm

972
00:47:25,760 --> 00:47:28,319
Speaker 1: definitely an optimist. I feel like there's going to be

973
00:47:28,360 --> 00:47:30,800
Speaker 1: a tremendous amount of economic growth throughout the rest of

974
00:47:30,840 --> 00:47:32,480
Speaker 1: my life that I want to take advantage of and

975
00:47:32,560 --> 00:47:37,000
Speaker 1: invest in and compound and benefit from. It's maybe just

976
00:47:37,080 --> 00:47:39,200
Speaker 1: a difference in how people get there. So in our

977
00:47:39,239 --> 00:47:41,319
Speaker 1: personal finances, I read about this in the book. The

978
00:47:41,400 --> 00:47:44,000
Speaker 1: last chapter is called Confessions, and I kind of just

979
00:47:44,160 --> 00:47:47,400
Speaker 1: open up the kimono on my my wife's personal finances.

980
00:47:47,440 --> 00:47:49,680
Speaker 1: There's no numbers in there, but just here's everything that

981
00:47:49,719 --> 00:47:51,880
Speaker 1: we do with our with our money and how we

982
00:47:51,960 --> 00:47:55,680
Speaker 1: invest is we're quite true. What we save a high

983
00:47:55,719 --> 00:47:58,520
Speaker 1: portion of our income. We don't. We don't prevent ourselves

984
00:47:58,520 --> 00:48:01,040
Speaker 1: from buying anything that we want. It's just that most

985
00:48:01,080 --> 00:48:04,080
Speaker 1: of our needs or wants, our desires, you know, haven't

986
00:48:04,080 --> 00:48:06,600
Speaker 1: shifted that much over time. So as our incomes have grown,

987
00:48:06,960 --> 00:48:09,800
Speaker 1: are spending hasn't. And therefore we save a higher percentage

988
00:48:09,800 --> 00:48:12,239
Speaker 1: of our income. And then we dollar cost average into

989
00:48:12,320 --> 00:48:15,400
Speaker 1: Vanguard named X funds, and that that's it. Like our

990
00:48:15,440 --> 00:48:18,760
Speaker 1: our entire net worth is a house, a checking account,

991
00:48:18,880 --> 00:48:21,720
Speaker 1: some and some Vanguard funds and some shares of Berkshire

992
00:48:21,760 --> 00:48:24,200
Speaker 1: Hathaway that has have for like sentimental reasons. But that's it.

993
00:48:24,520 --> 00:48:27,080
Speaker 1: That's all of our finances. And back to what we

994
00:48:27,080 --> 00:48:30,319
Speaker 1: were talking about earlier. I uh, you know, our our

995
00:48:30,360 --> 00:48:33,040
Speaker 1: allocation might look for someone our age and our income,

996
00:48:33,080 --> 00:48:36,240
Speaker 1: our net worth, it might look conservative. It's there's various

997
00:48:36,239 --> 00:48:38,480
Speaker 1: ways to measure this, but cash is a percentage of

998
00:48:38,480 --> 00:48:41,560
Speaker 1: our of our stocks. Let's say is something like uh

999
00:48:41,719 --> 00:48:45,520
Speaker 1: twenty something like that, which few financial advisors would say

1000
00:48:45,520 --> 00:48:48,719
Speaker 1: that's necessary, But for me, it's important because I just

1001
00:48:48,760 --> 00:48:51,200
Speaker 1: want to make sure, Like my goal as an investor

1002
00:48:51,800 --> 00:48:53,480
Speaker 1: is to make sure that the stocks that I do

1003
00:48:53,560 --> 00:48:58,000
Speaker 1: own can remain untouched for thirty or forty or fifty years.

1004
00:48:58,160 --> 00:49:01,040
Speaker 1: That's my goal, and I'm gonna achieved that goal if

1005
00:49:01,080 --> 00:49:03,120
Speaker 1: I can make damn sure that I can be hit

1006
00:49:03,200 --> 00:49:06,880
Speaker 1: with a Category five financial storm and maintain it without

1007
00:49:06,880 --> 00:49:09,719
Speaker 1: having to sell my stocks for whatever reason, whether that

1008
00:49:09,880 --> 00:49:12,040
Speaker 1: is a job loss or I have, you know, a

1009
00:49:12,160 --> 00:49:13,960
Speaker 1: change in expectations that I want to go out and

1010
00:49:13,960 --> 00:49:15,680
Speaker 1: buy a boat or a bigger house, or send my

1011
00:49:15,760 --> 00:49:17,759
Speaker 1: kids to private school. I want to be able to

1012
00:49:17,840 --> 00:49:21,359
Speaker 1: handle all of that without ever having to touch my stocks.

1013
00:49:21,360 --> 00:49:23,440
Speaker 1: Because if I can do that, if I can leave

1014
00:49:23,480 --> 00:49:25,799
Speaker 1: my stocks untouched for the next twenty or thirty or

1015
00:49:25,800 --> 00:49:29,520
Speaker 1: forty years, that's when the big games are going to happen.

1016
00:49:29,640 --> 00:49:32,319
Speaker 1: That's when there's going to be extraordinary returns. So it

1017
00:49:32,360 --> 00:49:34,080
Speaker 1: looks like I'm not taking a lot of risk in

1018
00:49:34,120 --> 00:49:36,440
Speaker 1: the short run. But the reason I'm doing that is

1019
00:49:36,440 --> 00:49:38,680
Speaker 1: specifically so I can take the most amount of risk

1020
00:49:38,880 --> 00:49:41,359
Speaker 1: and gave the most amount of leverage in the long run.

1021
00:49:41,880 --> 00:49:44,759
Speaker 1: To me, it's the idea of saving like a pessimist

1022
00:49:45,040 --> 00:49:47,759
Speaker 1: and investing like an optimist. I want to be really

1023
00:49:47,800 --> 00:49:50,360
Speaker 1: pessimistic about the short run so that I have the

1024
00:49:50,400 --> 00:49:53,880
Speaker 1: opportunity to take advantage of the optimistic long run like

1025
00:49:54,000 --> 00:49:57,680
Speaker 1: a pessimist, invest like an optimist. I love that. So

1026
00:49:57,920 --> 00:50:00,440
Speaker 1: in the book you discuss the ten and see if

1027
00:50:00,520 --> 00:50:04,319
Speaker 1: people to engage in confirmation bias, to go out and

1028
00:50:04,440 --> 00:50:09,120
Speaker 1: seek information that confirms their prior belief. How do you

1029
00:50:09,360 --> 00:50:13,440
Speaker 1: avoid that? We all have biases, We're all subject to

1030
00:50:13,480 --> 00:50:16,920
Speaker 1: the same wet ware a foibles. How do you prevent

1031
00:50:17,080 --> 00:50:22,000
Speaker 1: yourself from falling into the usual behavioral problems. I don't

1032
00:50:22,000 --> 00:50:24,359
Speaker 1: want to pretend like I can. I don't think anyone can.

1033
00:50:24,600 --> 00:50:27,000
Speaker 1: Daniel Knoman, who is of course like the godfather of

1034
00:50:27,040 --> 00:50:30,799
Speaker 1: this topic, of all these topics of behavior, has been

1035
00:50:30,840 --> 00:50:34,000
Speaker 1: asked several times if he himself has become less biased

1036
00:50:34,400 --> 00:50:37,600
Speaker 1: doing this research, and he says no. So like if

1037
00:50:37,640 --> 00:50:40,680
Speaker 1: if someone like Konomen cannot you know, change who they are.

1038
00:50:41,080 --> 00:50:43,759
Speaker 1: How can someone like myself or you or anyone else

1039
00:50:43,800 --> 00:50:45,400
Speaker 1: do it? We can't. I think the best thing you

1040
00:50:45,440 --> 00:50:48,560
Speaker 1: can do it's just be interrospctive about yourself and your

1041
00:50:48,560 --> 00:50:51,359
Speaker 1: own flaws and embrace them. Rather than thinking you can

1042
00:50:51,480 --> 00:50:54,480
Speaker 1: change them or avoid them, just embrace them with both

1043
00:50:54,480 --> 00:50:57,960
Speaker 1: hands and then try to structure your life around your

1044
00:50:58,280 --> 00:51:01,279
Speaker 1: known flaws. So for me gets back into like, maybe

1045
00:51:01,280 --> 00:51:03,319
Speaker 1: I do have a lower risk tolerance in the short

1046
00:51:03,400 --> 00:51:06,759
Speaker 1: run than other people my age, but that's fine. Rather

1047
00:51:06,800 --> 00:51:09,200
Speaker 1: than me trying to change that, or me trying to figure,

1048
00:51:09,280 --> 00:51:12,640
Speaker 1: you know, trying to alter my mindset, alter my feelings,

1049
00:51:13,080 --> 00:51:15,120
Speaker 1: I would just rather embrace it with both hands and say,

1050
00:51:15,160 --> 00:51:16,880
Speaker 1: this is who I am. So I'm going to accept that,

1051
00:51:16,920 --> 00:51:20,480
Speaker 1: and I'm going to have a financial life and acid

1052
00:51:20,480 --> 00:51:23,640
Speaker 1: allocation that just accepts that and embraces it. That is

1053
00:51:23,640 --> 00:51:26,400
Speaker 1: the thing. The best thing you can do with behavioral biases.

1054
00:51:26,719 --> 00:51:29,200
Speaker 1: You can't change who you are, but you can embrace

1055
00:51:29,239 --> 00:51:31,839
Speaker 1: who you are and try to try to situate your

1056
00:51:31,840 --> 00:51:34,160
Speaker 1: life in a way that accepts it rather than I'm

1057
00:51:34,160 --> 00:51:36,600
Speaker 1: trying to rather than tries to avoid it. So one

1058
00:51:36,600 --> 00:51:40,799
Speaker 1: of the lessons we've seen from is there is some

1059
00:51:40,920 --> 00:51:44,839
Speaker 1: number of people moving out of big urban centers and

1060
00:51:45,400 --> 00:51:50,560
Speaker 1: to a little bit more suburban or even rural locations, uh,

1061
00:51:50,680 --> 00:51:53,600
Speaker 1: to kind of get away from crowds and COVID. When

1062
00:51:53,640 --> 00:51:56,440
Speaker 1: you and I were talking a year ago, long before

1063
00:51:56,560 --> 00:52:01,840
Speaker 1: COVID popped up, you were discussing leaving d C to

1064
00:52:02,040 --> 00:52:05,600
Speaker 1: relocate to the suburbs of Seattle. But tell us a

1065
00:52:05,640 --> 00:52:09,040
Speaker 1: little bit about what you ended up doing and what

1066
00:52:09,080 --> 00:52:12,000
Speaker 1: it was like doing it in the midst of of

1067
00:52:12,040 --> 00:52:15,279
Speaker 1: a pandemic. So my wife grew up in Seattle, and

1068
00:52:15,320 --> 00:52:17,640
Speaker 1: she and I lived here for several years after college.

1069
00:52:17,640 --> 00:52:19,560
Speaker 1: We then moved to d C. She went to grad school.

1070
00:52:19,600 --> 00:52:21,320
Speaker 1: We we end up staying there for for a while.

1071
00:52:21,520 --> 00:52:23,720
Speaker 1: Our plan has always been to come back to Seattle.

1072
00:52:23,920 --> 00:52:26,560
Speaker 1: That's been our plan for years. Uh. And we just

1073
00:52:26,600 --> 00:52:29,600
Speaker 1: happened to pick May of to move. We we planned

1074
00:52:29,640 --> 00:52:32,719
Speaker 1: that well before COVID, but it ended up being obviously

1075
00:52:32,760 --> 00:52:36,359
Speaker 1: the worst time possible that you could move yourself and

1076
00:52:36,440 --> 00:52:38,239
Speaker 1: two small kids. We have a four year old son

1077
00:52:38,280 --> 00:52:41,359
Speaker 1: and an infant daughter. Moved them across the country. We

1078
00:52:41,520 --> 00:52:44,359
Speaker 1: got it done. It worked. We flew out here. We

1079
00:52:44,480 --> 00:52:47,200
Speaker 1: on our plane, our seven thirty seven from DC to Seattle.

1080
00:52:47,360 --> 00:52:49,879
Speaker 1: Was I think us and six other people on the flight.

1081
00:52:49,960 --> 00:52:52,280
Speaker 1: On the entire flight Biscuits had a private seven thirty

1082
00:52:52,280 --> 00:52:56,120
Speaker 1: seven that was bringing us out here. But it worked out.

1083
00:52:56,160 --> 00:52:57,960
Speaker 1: It all worked out. It was scary, it was it

1084
00:52:58,040 --> 00:53:00,640
Speaker 1: was hard, but it all worked out. To clarify, you

1085
00:53:00,680 --> 00:53:03,960
Speaker 1: weren't flying private, it was you flew commercial. There was

1086
00:53:04,000 --> 00:53:05,920
Speaker 1: just nobody else on the plane. There's no one else

1087
00:53:05,960 --> 00:53:09,120
Speaker 1: on the plane. I think literally everyone on the plane

1088
00:53:09,160 --> 00:53:11,640
Speaker 1: had three rows to themselves. I mean it was a

1089
00:53:11,680 --> 00:53:14,799
Speaker 1: seven thirty seven and the entire flight of passengers I

1090
00:53:14,800 --> 00:53:19,080
Speaker 1: think was ten and people on the whole flight um

1091
00:53:19,160 --> 00:53:21,319
Speaker 1: and and we we were four of them, and we

1092
00:53:21,400 --> 00:53:23,399
Speaker 1: used airline miles to fly across, so they didn't even

1093
00:53:23,400 --> 00:53:25,919
Speaker 1: get any revenue out of us. I feel I feel,

1094
00:53:25,960 --> 00:53:27,959
Speaker 1: I feel sort of bad about it. But the point

1095
00:53:27,960 --> 00:53:30,920
Speaker 1: that you bring up about, like people moving out of cities,

1096
00:53:31,840 --> 00:53:34,120
Speaker 1: who knows how severe that's gonna be, Or maybe there's

1097
00:53:34,160 --> 00:53:36,840
Speaker 1: a vaccine in three months and everyone pours back into Manhattan.

1098
00:53:36,840 --> 00:53:39,440
Speaker 1: Who knows the danger and that kind of stuff that

1099
00:53:39,440 --> 00:53:41,040
Speaker 1: we've seen in the past, though, is how quickly that

1100
00:53:41,160 --> 00:53:44,240
Speaker 1: snowballs when people move out and then tax revenue declines

1101
00:53:44,360 --> 00:53:47,239
Speaker 1: and then police services decline and then it's snowballs from there.

1102
00:53:47,239 --> 00:53:49,680
Speaker 1: It's that happened to New York in the nineteen eighties,

1103
00:53:49,680 --> 00:53:52,839
Speaker 1: happened to Detroit over the last fifty years. Uh So

1104
00:53:52,960 --> 00:53:54,880
Speaker 1: that's the danger about it. It's not just like a

1105
00:53:54,960 --> 00:53:58,000
Speaker 1: trend that's going to happen this year, but how quickly

1106
00:53:58,000 --> 00:54:00,839
Speaker 1: those things snowball and become really hard to reverse over time.

1107
00:54:00,960 --> 00:54:03,080
Speaker 1: To be fair, we heard the same thing post nine

1108
00:54:03,160 --> 00:54:06,440
Speaker 1: eleven and that ended up. You know, New York came

1109
00:54:06,480 --> 00:54:10,480
Speaker 1: back bigger and stronger. Not a coincidence that cities have

1110
00:54:10,520 --> 00:54:14,840
Speaker 1: been creative centers of human capital for the past I

1111
00:54:14,840 --> 00:54:18,319
Speaker 1: don't know, twenty centuries. I imagine they're going to be

1112
00:54:18,360 --> 00:54:23,319
Speaker 1: okay once there's a vaccine and treatment, right, I mean

1113
00:54:23,360 --> 00:54:25,520
Speaker 1: we we We certainly hope though, but of course getting

1114
00:54:25,560 --> 00:54:29,319
Speaker 1: back in the surprises that no one sees coming. Who

1115
00:54:29,320 --> 00:54:34,320
Speaker 1: knows what's gonna happen. If has not diminished your willingness

1116
00:54:34,360 --> 00:54:36,960
Speaker 1: to forecast what's going to happen in the next six months,

1117
00:54:37,000 --> 00:54:39,640
Speaker 1: I don't think anything else will. So I agree with that.

1118
00:54:39,719 --> 00:54:41,960
Speaker 1: It seems like it seems like the base case scenario

1119
00:54:42,000 --> 00:54:44,160
Speaker 1: would be that we'll get a vaccine and life will

1120
00:54:44,239 --> 00:54:46,439
Speaker 1: roughly go back to normal, but who the hell knows

1121
00:54:46,440 --> 00:54:48,759
Speaker 1: at this point. So I want to I want to

1122
00:54:48,760 --> 00:54:53,080
Speaker 1: come back to the concept of you being a risk

1123
00:54:53,120 --> 00:54:56,600
Speaker 1: averse investor, but not being risk averse in the rest

1124
00:54:56,640 --> 00:54:58,840
Speaker 1: of your life, and let me just tick through a

1125
00:54:58,880 --> 00:55:01,560
Speaker 1: few things, because you and I have discussed this and

1126
00:55:01,600 --> 00:55:05,480
Speaker 1: you always push back. So in high school, you're a

1127
00:55:05,520 --> 00:55:09,240
Speaker 1: downhill ski racer. That's a you know, that's an easy, gentle,

1128
00:55:09,440 --> 00:55:14,680
Speaker 1: risk free gig, investment, banking, private equity. You're now a

1129
00:55:14,719 --> 00:55:18,440
Speaker 1: partner in collaborative firm, which is a venture capital farm.

1130
00:55:18,560 --> 00:55:21,799
Speaker 1: You're your writing is something that not only did you

1131
00:55:22,040 --> 00:55:26,279
Speaker 1: not go to school for, but your first job was, Yeah,

1132
00:55:26,280 --> 00:55:27,680
Speaker 1: what the hell, let me jump in and see if

1133
00:55:27,680 --> 00:55:31,560
Speaker 1: I could do that with absolutely no basis for expecting

1134
00:55:31,640 --> 00:55:35,920
Speaker 1: to achieve any level of success. Am I making too

1135
00:55:35,960 --> 00:55:40,520
Speaker 1: much of this or does your actual behavior maybe the

1136
00:55:40,760 --> 00:55:43,560
Speaker 1: maybe I'm I'm reversing the way I should look at

1137
00:55:43,600 --> 00:55:47,560
Speaker 1: this because you're such a conservative investor, Does that allow

1138
00:55:47,640 --> 00:55:52,080
Speaker 1: you to engage in risk your behavior as a professional,

1139
00:55:52,160 --> 00:55:55,080
Speaker 1: to take chances, to roll the dice, to try things

1140
00:55:55,200 --> 00:55:57,920
Speaker 1: that you couldn't do if you didn't feel like you

1141
00:55:57,960 --> 00:56:01,520
Speaker 1: had a comfortable financial cushion to leap off of. I

1142
00:56:01,520 --> 00:56:03,479
Speaker 1: think there's probably some truth to that. But there's also

1143
00:56:03,520 --> 00:56:06,280
Speaker 1: another side of it, which was ski racing in my

1144
00:56:06,280 --> 00:56:09,600
Speaker 1: my teenage in early twenty years. I didn't realize how

1145
00:56:09,680 --> 00:56:11,759
Speaker 1: much risk I was taking. I didn't I didn't think

1146
00:56:11,760 --> 00:56:14,560
Speaker 1: it was that risky until two things happened. I wrote

1147
00:56:14,560 --> 00:56:16,640
Speaker 1: about this recently. Two of my good friends who I

1148
00:56:16,640 --> 00:56:18,600
Speaker 1: grew up with ski racing were killed in an avalanche.

1149
00:56:18,840 --> 00:56:20,600
Speaker 1: And then three months later I broke my back. Then

1150
00:56:20,680 --> 00:56:22,360
Speaker 1: do any nerve damage, but broke my back, which is

1151
00:56:22,400 --> 00:56:24,839
Speaker 1: a very serious thing to happen. Both of those things

1152
00:56:24,920 --> 00:56:27,640
Speaker 1: kind of opened my eyes to what risk is and

1153
00:56:27,640 --> 00:56:30,160
Speaker 1: and they changed how I think about risk, probably through today.

1154
00:56:30,440 --> 00:56:33,960
Speaker 1: Like those events stuck with me. The other thing like uh,

1155
00:56:34,000 --> 00:56:37,400
Speaker 1: my my very short stint in investment banking or getting

1156
00:56:37,400 --> 00:56:38,960
Speaker 1: a writing job when I had not been a writer.

1157
00:56:39,120 --> 00:56:40,759
Speaker 1: It didn't feel like I was taking any risk because

1158
00:56:40,800 --> 00:56:42,319
Speaker 1: there wasn't a lot of downside if it didn't work.

1159
00:56:42,360 --> 00:56:43,560
Speaker 1: Then if it didn't work out, I could have just

1160
00:56:43,600 --> 00:56:47,480
Speaker 1: walked away. Um, it may be felt different worth investment

1161
00:56:47,480 --> 00:56:49,560
Speaker 1: banking because I had no Plan B. So when I

1162
00:56:49,600 --> 00:56:51,919
Speaker 1: realized that Plan A wasn't gonna work. There was this

1163
00:56:52,040 --> 00:56:54,239
Speaker 1: moment of oh my, like what now, like I don't

1164
00:56:54,239 --> 00:56:55,839
Speaker 1: I don't know what I'm gonna do for my career now.

1165
00:56:56,120 --> 00:56:58,759
Speaker 1: That felt risky, But I was also I was, you know,

1166
00:56:58,840 --> 00:57:01,759
Speaker 1: twenty one years older whatever, so my concept of risk

1167
00:57:02,360 --> 00:57:05,040
Speaker 1: was very different than it is now now that I

1168
00:57:05,120 --> 00:57:07,800
Speaker 1: have two young kids that I support. It's very different

1169
00:57:07,800 --> 00:57:10,400
Speaker 1: when you're when you're doing things when you're downside feels

1170
00:57:10,400 --> 00:57:13,879
Speaker 1: that much limited. So it's a combination of learning about

1171
00:57:13,920 --> 00:57:16,560
Speaker 1: what risk really is over time and also taking risk

1172
00:57:16,600 --> 00:57:18,760
Speaker 1: that didn't have a lot of downside. But there there

1173
00:57:18,840 --> 00:57:23,080
Speaker 1: is a sense I think that my our our main,

1174
00:57:23,320 --> 00:57:25,720
Speaker 1: our north star for how we manage our personal finances

1175
00:57:26,240 --> 00:57:29,880
Speaker 1: is again being being very pessimistic in the short run

1176
00:57:30,240 --> 00:57:32,240
Speaker 1: and having a ton of cash like preparing for the

1177
00:57:32,240 --> 00:57:35,320
Speaker 1: apocalypse in the short run, will still maintaining a lot

1178
00:57:35,360 --> 00:57:38,400
Speaker 1: of long term optimism both with our with our heads

1179
00:57:38,440 --> 00:57:40,240
Speaker 1: and with our investments, and then just in terms of

1180
00:57:40,240 --> 00:57:43,160
Speaker 1: how we invest. It's hard to wrap your head around

1181
00:57:43,200 --> 00:57:46,200
Speaker 1: that kind of dual personality, the Barbell personality, but that

1182
00:57:46,560 --> 00:57:49,600
Speaker 1: it is. I think that like what is necessary for

1183
00:57:50,160 --> 00:57:53,240
Speaker 1: getting rich and staying rich, which are the two two

1184
00:57:53,280 --> 00:57:55,920
Speaker 1: conflicting separate skills, but you need to marry both of

1185
00:57:55,920 --> 00:57:57,840
Speaker 1: those to do well over time. You have to have

1186
00:57:57,880 --> 00:58:00,600
Speaker 1: optimism and pestimism at the same time. Just know where

1187
00:58:00,640 --> 00:58:02,960
Speaker 1: each one of them belongs in your life, and if

1188
00:58:02,960 --> 00:58:05,000
Speaker 1: you don't, if you only have one or the other.

1189
00:58:05,240 --> 00:58:08,240
Speaker 1: We all know perma bears, who you know, have been

1190
00:58:08,240 --> 00:58:11,760
Speaker 1: waiting for the stock market to decline since nine and

1191
00:58:11,800 --> 00:58:14,400
Speaker 1: we all know perma bowls who kind of run themselves

1192
00:58:14,480 --> 00:58:17,680
Speaker 1: off the ledge, either fraudulently or innocently. They just take

1193
00:58:17,720 --> 00:58:19,480
Speaker 1: way too much risk by off more than they can

1194
00:58:19,560 --> 00:58:21,760
Speaker 1: choot and some backfiring. So I think you have to

1195
00:58:21,800 --> 00:58:24,120
Speaker 1: manage both of those at the same time. That's what

1196
00:58:24,200 --> 00:58:26,760
Speaker 1: we try to do with our personal finances, and for us,

1197
00:58:26,760 --> 00:58:29,400
Speaker 1: how we manage optimism and pessimism is just about time

1198
00:58:29,400 --> 00:58:33,040
Speaker 1: horizon optimism over the next thirty years and a lot

1199
00:58:33,040 --> 00:58:35,480
Speaker 1: of pessimism over the next twelve to twenty four months.

1200
00:58:35,520 --> 00:58:39,280
Speaker 1: So you start the book out with something that I

1201
00:58:39,400 --> 00:58:42,880
Speaker 1: have to ask two questions about, and you you just

1202
00:58:43,400 --> 00:58:49,760
Speaker 1: hinted at it. There is an enormous difference between getting rich,

1203
00:58:50,200 --> 00:58:52,920
Speaker 1: which we see lots of folks are capable of doing,

1204
00:58:53,600 --> 00:58:57,120
Speaker 1: and staying rich, which seems to be a very different

1205
00:58:57,200 --> 00:59:00,960
Speaker 1: skill set. Tell us about people who have a hard

1206
00:59:01,040 --> 00:59:06,160
Speaker 1: time despite being wealthy, either starting wealthy or achieving it.

1207
00:59:06,400 --> 00:59:10,720
Speaker 1: Staying wealthy. I mean the kind of person that can

1208
00:59:10,760 --> 00:59:13,640
Speaker 1: invest in, you know, a seed stage startup and then

1209
00:59:13,680 --> 00:59:16,760
Speaker 1: watch it increased, you know, five thousandfold and make a

1210
00:59:16,800 --> 00:59:18,840
Speaker 1: ton of money, do really well in the stock market.

1211
00:59:19,000 --> 00:59:21,080
Speaker 1: Those tend not to be the kind of people who

1212
00:59:21,080 --> 00:59:24,120
Speaker 1: can eventually say, okay, that's enough, I'm gonna put my

1213
00:59:24,160 --> 00:59:26,440
Speaker 1: money in muni bonds so I can, you know, say

1214
00:59:26,520 --> 00:59:28,600
Speaker 1: even so I can stay rich and protect my downside.

1215
00:59:28,840 --> 00:59:31,040
Speaker 1: You tend not to have those kind of personalities and

1216
00:59:31,120 --> 00:59:34,760
Speaker 1: the same people, but you need something along those lines

1217
00:59:34,800 --> 00:59:37,640
Speaker 1: in order to stay wealthy over time. I think getting

1218
00:59:37,720 --> 00:59:41,400
Speaker 1: rich and staying rich are completely separate skills. We want

1219
00:59:41,440 --> 00:59:43,240
Speaker 1: to think they are the same. The people who are

1220
00:59:43,240 --> 00:59:45,080
Speaker 1: able to get rich this year are going to be

1221
00:59:45,120 --> 00:59:46,840
Speaker 1: the same kind of people who are still wealthy ten

1222
00:59:46,920 --> 00:59:48,800
Speaker 1: or twenty years from now. But it turns out that

1223
00:59:48,800 --> 00:59:51,720
Speaker 1: there's not the case. There's a tremendous amount of turnover

1224
00:59:51,840 --> 00:59:54,440
Speaker 1: in the Fords list of billionaires, or if you're to

1225
00:59:54,520 --> 00:59:57,480
Speaker 1: look at you know, the these turnover a mutual fund managers.

1226
00:59:57,960 --> 00:59:59,560
Speaker 1: The ability to do well in the short run in

1227
00:59:59,600 --> 01:00:02,520
Speaker 1: the long run are very very different. But and that

1228
01:00:02,720 --> 01:00:05,760
Speaker 1: is it's not intuitive, but it's really necessary to wrap

1229
01:00:05,760 --> 01:00:07,720
Speaker 1: your head around because everyone wants to do well, not

1230
01:00:07,800 --> 01:00:09,040
Speaker 1: just this year. They want to do well for the

1231
01:00:09,080 --> 01:00:11,360
Speaker 1: long run. No one wants to get rich and then

1232
01:00:11,440 --> 01:00:13,680
Speaker 1: lose everything like that's that's some of the world. Like

1233
01:00:13,800 --> 01:00:16,680
Speaker 1: most people would rather not get rich than they would

1234
01:00:16,720 --> 01:00:18,959
Speaker 1: be to get rich and then lose it two years later.

1235
01:00:19,200 --> 01:00:21,200
Speaker 1: So you really have to marry those two skills. And

1236
01:00:21,240 --> 01:00:24,240
Speaker 1: since they are separate, conflicting skills, it's a it's a

1237
01:00:24,280 --> 01:00:26,120
Speaker 1: hard thing to do. I think about Bill Gates a

1238
01:00:26,120 --> 01:00:30,080
Speaker 1: lot who took probably the biggest business risk swinging for

1239
01:00:30,120 --> 01:00:32,479
Speaker 1: the Fence, is the biggest flyer that's ever been taken,

1240
01:00:32,520 --> 01:00:36,200
Speaker 1: which was in he said every human on the planet

1241
01:00:36,200 --> 01:00:38,960
Speaker 1: should have a computer on their desktop in their homes,

1242
01:00:39,200 --> 01:00:41,160
Speaker 1: which is the most absurd thing in the world. At

1243
01:00:41,160 --> 01:00:44,960
Speaker 1: the time, he was like the most optimist risk taking

1244
01:00:45,080 --> 01:00:48,120
Speaker 1: Swing for the Fences. But during that very same moment

1245
01:00:48,520 --> 01:00:51,320
Speaker 1: he made a vow that Microsoft would always have enough

1246
01:00:51,400 --> 01:00:53,840
Speaker 1: cash in the bank so that they could pay everyone's

1247
01:00:53,880 --> 01:00:57,360
Speaker 1: payroll for twelve months with no revenue. So there he

1248
01:00:57,480 --> 01:01:01,560
Speaker 1: was marrying optimism and pestimism. He had to ridiculous optimistic

1249
01:01:01,640 --> 01:01:04,120
Speaker 1: view about where computers were going. But at the same time,

1250
01:01:04,160 --> 01:01:06,880
Speaker 1: he was an incredible pessimist in the short run, so

1251
01:01:06,960 --> 01:01:09,040
Speaker 1: much so that he wanted to make sure that Microsoft

1252
01:01:09,080 --> 01:01:11,400
Speaker 1: could survive with no revenue if no one was willing

1253
01:01:11,440 --> 01:01:13,720
Speaker 1: to pay for its products. I think that is a

1254
01:01:13,800 --> 01:01:16,480
Speaker 1: rare skill to have in the same person. I don't

1255
01:01:16,520 --> 01:01:19,120
Speaker 1: think Elon Musk has that skill, and who knows where

1256
01:01:19,120 --> 01:01:21,240
Speaker 1: that's going to lead to. But Elon Musk is obviously

1257
01:01:21,240 --> 01:01:23,400
Speaker 1: willing to swing for the fences. But is he good

1258
01:01:23,440 --> 01:01:26,479
Speaker 1: at managing the short run? I mean, I don't think

1259
01:01:26,480 --> 01:01:29,120
Speaker 1: he is. So it's a It's a very different personality

1260
01:01:29,160 --> 01:01:31,959
Speaker 1: set than someone like Bill Gates, who has long term

1261
01:01:31,960 --> 01:01:36,520
Speaker 1: and dirting success across many different environments recessions, booms, bus.

1262
01:01:36,520 --> 01:01:39,880
Speaker 1: Microsoft has thrived because of that, both when he was

1263
01:01:39,920 --> 01:01:42,240
Speaker 1: managing the company, but also just the kind of mentality

1264
01:01:42,240 --> 01:01:45,919
Speaker 1: that he left the company with. So you always need

1265
01:01:45,920 --> 01:01:49,000
Speaker 1: those two two sides, and if you don't realize that

1266
01:01:49,040 --> 01:01:51,960
Speaker 1: they are separate, skilled that needs to be nurtured separately

1267
01:01:52,000 --> 01:01:55,080
Speaker 1: and independently. Uh you're you're probably gonna run into a

1268
01:01:55,080 --> 01:01:57,160
Speaker 1: point eventually where you realize that you didn't have one

1269
01:01:57,200 --> 01:01:59,280
Speaker 1: of those skills, and it leads to something regrettable. The

1270
01:01:59,320 --> 01:02:03,920
Speaker 1: morning we're cording this, the Bloomberg Billionaire Index shows I

1271
01:02:03,960 --> 01:02:08,040
Speaker 1: think one, two and three is Jeff Bezos, Bill Gates,

1272
01:02:08,240 --> 01:02:11,880
Speaker 1: and Elon Musk in that order. Uh. If you read

1273
01:02:11,920 --> 01:02:16,680
Speaker 1: about Musk, it's fascinating. He took a PayPal windfall, didn't

1274
01:02:16,720 --> 01:02:19,080
Speaker 1: even you know, plan with it. He just kind of

1275
01:02:19,160 --> 01:02:22,840
Speaker 1: rolled it all over into Tesla, and at several points

1276
01:02:22,920 --> 01:02:26,160
Speaker 1: in Tesla's history it was on the verge of, you know,

1277
01:02:26,400 --> 01:02:30,000
Speaker 1: not making it. He really doubled down and doubled down again.

1278
01:02:30,760 --> 01:02:33,320
Speaker 1: And uh, it worked out. At least so far, it's

1279
01:02:33,320 --> 01:02:35,880
Speaker 1: worked out for him, and the same with SpaceX has

1280
01:02:35,880 --> 01:02:39,120
Speaker 1: worked out for him. The question is, as you point out,

1281
01:02:39,200 --> 01:02:42,800
Speaker 1: can he keep doing it? So you mentioned Bill Gates,

1282
01:02:42,960 --> 01:02:45,120
Speaker 1: who who there's a wonderful story in one of the

1283
01:02:45,120 --> 01:02:49,480
Speaker 1: biographies about him. They used to have bets him and

1284
01:02:49,560 --> 01:02:53,080
Speaker 1: Balmer and others in the early days of Microsoft, how

1285
01:02:53,360 --> 01:02:57,160
Speaker 1: late they could leave for the Seattle airport and not

1286
01:02:57,560 --> 01:03:00,600
Speaker 1: miss a flight. And my favorite story he is he

1287
01:03:00,720 --> 01:03:03,920
Speaker 1: once left so late that he pulls up in his

1288
01:03:04,080 --> 01:03:07,600
Speaker 1: then old Porsche nine eleven, leaves it running with the

1289
01:03:07,680 --> 01:03:09,680
Speaker 1: keys in it, and just runs into the airport, just

1290
01:03:09,760 --> 01:03:14,919
Speaker 1: leaves it in front of, um, the arrival gate. UM.

1291
01:03:15,000 --> 01:03:17,000
Speaker 1: I don't know what made me think of that other

1292
01:03:17,080 --> 01:03:19,520
Speaker 1: than you. You brought him up and will edit this

1293
01:03:19,560 --> 01:03:23,000
Speaker 1: out because it's ridiculous, But no, it's such a good

1294
01:03:23,000 --> 01:03:25,120
Speaker 1: story and and and it makes you wonder, like what

1295
01:03:25,280 --> 01:03:26,920
Speaker 1: happened to that car? Did he come back and get

1296
01:03:27,000 --> 01:03:28,920
Speaker 1: just someone just take it and drive off? I imagine

1297
01:03:28,920 --> 01:03:31,160
Speaker 1: he left. I'm sure it got told and he picked

1298
01:03:31,200 --> 01:03:32,920
Speaker 1: it up, and I doubt he cared about it. But

1299
01:03:32,960 --> 01:03:37,080
Speaker 1: the reason I brought that up is you mentioned earlier

1300
01:03:37,160 --> 01:03:39,880
Speaker 1: you were a valet for many years at a couple

1301
01:03:39,880 --> 01:03:43,760
Speaker 1: of different places. For those of us who valet cars

1302
01:03:44,160 --> 01:03:48,280
Speaker 1: and occasionally a nice car here and there, what happens

1303
01:03:48,360 --> 01:03:51,520
Speaker 1: when you give a high end sports car to a

1304
01:03:51,640 --> 01:03:54,280
Speaker 1: valet at a restaurant or a hotel. What do you

1305
01:03:54,280 --> 01:03:56,360
Speaker 1: think happens when you give a nineteen year old a

1306
01:03:56,400 --> 01:03:58,400
Speaker 1: Ferrari and then he gets to drive it around the

1307
01:03:58,400 --> 01:04:00,919
Speaker 1: corner where no one's watching. What do you think happens, Verry,

1308
01:04:01,200 --> 01:04:04,280
Speaker 1: that that scene from Ferris Bueller's day Off where they

1309
01:04:04,320 --> 01:04:08,120
Speaker 1: take uh they take this to seventy Spider out for

1310
01:04:08,160 --> 01:04:11,080
Speaker 1: a joy ride and you know, all but destroy it.

1311
01:04:11,320 --> 01:04:14,800
Speaker 1: That's the worst nightmare, I think. I also think that's

1312
01:04:14,840 --> 01:04:16,480
Speaker 1: why a lot of these a lot of these car

1313
01:04:16,560 --> 01:04:19,880
Speaker 1: companies have come up now with valet keys, so that

1314
01:04:20,000 --> 01:04:23,280
Speaker 1: you could give a car to a valet and it's

1315
01:04:23,320 --> 01:04:26,800
Speaker 1: rev limited and speed limited. It ain't going over thirty

1316
01:04:26,800 --> 01:04:29,360
Speaker 1: miles an hour, so there's no reason to take it anywhere.

1317
01:04:29,520 --> 01:04:32,000
Speaker 1: I don't know of any stories. I'm sure. I'm sure

1318
01:04:32,000 --> 01:04:34,160
Speaker 1: it has, but in my experience, I didn't know of

1319
01:04:34,280 --> 01:04:37,919
Speaker 1: any times when a valet left the lot with someone

1320
01:04:37,960 --> 01:04:40,680
Speaker 1: else's car when when they shouldn't have, like like taking

1321
01:04:40,680 --> 01:04:43,479
Speaker 1: on the street. Now, I that's not something I saw.

1322
01:04:43,840 --> 01:04:46,040
Speaker 1: But there there was a strip in our parking lot,

1323
01:04:46,120 --> 01:04:49,080
Speaker 1: like behind where everyone was watching. No one could see

1324
01:04:49,080 --> 01:04:52,560
Speaker 1: where we had like two feet of straight away where

1325
01:04:52,600 --> 01:04:54,280
Speaker 1: you could put your foot into the gas, So of

1326
01:04:54,280 --> 01:04:56,000
Speaker 1: course we did that. The other thing is in our

1327
01:04:56,080 --> 01:04:59,120
Speaker 1: vallet garage, we were always driving way too fast for

1328
01:04:59,240 --> 01:05:01,880
Speaker 1: management to life. Uh, So they put in these huge

1329
01:05:01,880 --> 01:05:04,400
Speaker 1: speed bumps, not normal speed bumps, but like really sharp,

1330
01:05:04,480 --> 01:05:06,680
Speaker 1: brutal speed bumps, and that didn't slow us down in

1331
01:05:06,680 --> 01:05:08,960
Speaker 1: the slightest We just started plowing over the speed bumps

1332
01:05:08,960 --> 01:05:12,120
Speaker 1: at full speed. So that's I mean, it's it's incredible,

1333
01:05:12,120 --> 01:05:14,400
Speaker 1: It's it's obviously, it's obvious. What would happen if you

1334
01:05:14,440 --> 01:05:16,280
Speaker 1: give a twenty year old or twenty one year old

1335
01:05:16,360 --> 01:05:19,120
Speaker 1: college boy the keys to a Lamborghini and say go

1336
01:05:19,320 --> 01:05:22,920
Speaker 1: for it. It's obvious, what's what would happen? Um, We

1337
01:05:23,080 --> 01:05:25,720
Speaker 1: parked on average about ten thousand cars per month at

1338
01:05:25,720 --> 01:05:28,240
Speaker 1: the hotel that I was working at, uh and in

1339
01:05:28,280 --> 01:05:31,080
Speaker 1: any given month we would get in a handful of accidents,

1340
01:05:31,160 --> 01:05:33,800
Speaker 1: three or four accidents, and then it's been always thought

1341
01:05:33,840 --> 01:05:36,120
Speaker 1: we were being so reckless, and we always had to

1342
01:05:36,160 --> 01:05:38,120
Speaker 1: point out, like, no, if you drive, if you park

1343
01:05:38,200 --> 01:05:40,280
Speaker 1: ten thousand cars and bang up three of them, that's

1344
01:05:40,280 --> 01:05:42,800
Speaker 1: actually a pretty good record. That's actually a record that

1345
01:05:42,840 --> 01:05:45,160
Speaker 1: we feel pretty good about. But when there was a car,

1346
01:05:45,280 --> 01:05:47,200
Speaker 1: you know, when we were smashing up a Bentley once

1347
01:05:47,240 --> 01:05:49,320
Speaker 1: a week, it's hard to explain that to your manager.

1348
01:05:49,600 --> 01:05:52,520
Speaker 1: That's a challenge. And I bet you're you're banging up

1349
01:05:53,080 --> 01:05:56,640
Speaker 1: Hanzas and Toyota is not. Ferraris my my roommate at

1350
01:05:56,640 --> 01:05:58,320
Speaker 1: the time who worked with me were roommates, but he

1351
01:05:58,360 --> 01:06:01,160
Speaker 1: was in valet as well. Uh. He was backing up

1352
01:06:01,160 --> 01:06:03,800
Speaker 1: a ferrari right in front of its owner and he

1353
01:06:03,960 --> 01:06:06,520
Speaker 1: just smashed it right into a curb on accident. He

1354
01:06:06,680 --> 01:06:09,240
Speaker 1: wasn't being rexplenced, but he just smashed the bumper straight

1355
01:06:09,240 --> 01:06:12,800
Speaker 1: into a curb. Uh. And it was it was painful

1356
01:06:12,800 --> 01:06:16,040
Speaker 1: to watch. It was painful to watch everyone's reaction. Unbelievable.

1357
01:06:16,080 --> 01:06:18,240
Speaker 1: I know I only have you for a finite amount

1358
01:06:18,280 --> 01:06:21,560
Speaker 1: of time, So let's jump to our favorite questions, our

1359
01:06:21,600 --> 01:06:24,520
Speaker 1: speed round. We ask all our guests and and let

1360
01:06:24,520 --> 01:06:27,320
Speaker 1: me start with what are you streaming these days? Give

1361
01:06:27,400 --> 01:06:31,440
Speaker 1: us your favorite Netflix or Amazon Prime or any podcast

1362
01:06:31,520 --> 01:06:33,360
Speaker 1: you happen to be listening to. I just watched a

1363
01:06:33,400 --> 01:06:36,840
Speaker 1: documentary on Netflix called Sour Grapes, which is about the

1364
01:06:36,880 --> 01:06:40,000
Speaker 1: wine boom, the fine wine boom of the two thousands,

1365
01:06:40,040 --> 01:06:43,320
Speaker 1: where the price of fine wine skylocketed. And what happened

1366
01:06:43,360 --> 01:06:46,600
Speaker 1: during that period is a lot of counterfeit wines. A

1367
01:06:46,600 --> 01:06:49,600
Speaker 1: lot of people would just take any old wine, peeled

1368
01:06:49,600 --> 01:06:52,320
Speaker 1: the label off, put on a label that says this

1369
01:06:52,480 --> 01:06:56,080
Speaker 1: was from came from this French vineyard, and it was

1370
01:06:56,120 --> 01:06:57,440
Speaker 1: all b s it was all made up, but they

1371
01:06:57,440 --> 01:07:00,320
Speaker 1: could sell those bottles for twenty bucks. So there was

1372
01:07:00,400 --> 01:07:04,000
Speaker 1: one guy. His name was, name is is is Rudy

1373
01:07:04,040 --> 01:07:08,320
Speaker 1: Kurtiwan who made tens of thousands of fake wine bottles,

1374
01:07:08,600 --> 01:07:11,200
Speaker 1: all of the finest vintages you can imagine, and sold

1375
01:07:11,200 --> 01:07:13,320
Speaker 1: them for tens of millions of dollars. He's in jail now,

1376
01:07:13,560 --> 01:07:15,920
Speaker 1: so the documentary is on his scheme and it was

1377
01:07:15,960 --> 01:07:19,440
Speaker 1: absolutely fascinating. Tell us about some of your early mentors

1378
01:07:19,480 --> 01:07:23,800
Speaker 1: who helped shape your career in both writing and finance.

1379
01:07:24,200 --> 01:07:26,720
Speaker 1: Carl Richards, who is a financial advisor. He's also a

1380
01:07:26,720 --> 01:07:28,600
Speaker 1: columist from The New York Times, writes a blog called

1381
01:07:28,600 --> 01:07:31,200
Speaker 1: The Behavior Death. He was always something who I really

1382
01:07:31,240 --> 01:07:32,760
Speaker 1: looked up to. I just thought he was such a

1383
01:07:32,760 --> 01:07:35,320
Speaker 1: good writer. He was who I wanted to be. And

1384
01:07:35,360 --> 01:07:37,200
Speaker 1: I emailed him one day out of the blue, just

1385
01:07:37,280 --> 01:07:39,520
Speaker 1: saying how much I liked his writing, and he said, oh,

1386
01:07:39,600 --> 01:07:42,160
Speaker 1: let's let's talk and we He called me up and

1387
01:07:42,200 --> 01:07:44,560
Speaker 1: we spoke, and that was just so I was absolutely

1388
01:07:44,560 --> 01:07:46,160
Speaker 1: nobody at the time, so the fact that he took

1389
01:07:46,160 --> 01:07:48,360
Speaker 1: the time to do that really meant the world to me.

1390
01:07:48,680 --> 01:07:51,000
Speaker 1: He was also big on the speaking circuit. He was

1391
01:07:51,000 --> 01:07:53,560
Speaker 1: speaking at financial conferences, which I always wanted to do,

1392
01:07:53,720 --> 01:07:55,400
Speaker 1: and you did as well, Barry. I looked up to

1393
01:07:55,480 --> 01:07:57,280
Speaker 1: that as well, and Carl was one of the people

1394
01:07:57,280 --> 01:08:01,760
Speaker 1: who really helped me get started, uh speaking. And I'll

1395
01:08:01,800 --> 01:08:05,520
Speaker 1: never forget the help that he gave me, because since

1396
01:08:05,520 --> 01:08:07,000
Speaker 1: I was I was a no one he offered, he

1397
01:08:07,000 --> 01:08:09,320
Speaker 1: owed me nothing, he was getting nothing out of helping me.

1398
01:08:09,360 --> 01:08:10,840
Speaker 1: He just did that out of the goodness of his heart.

1399
01:08:10,880 --> 01:08:13,880
Speaker 1: And I'll never forget that. Uh. We talked about reading.

1400
01:08:13,920 --> 01:08:17,480
Speaker 1: We talked about books, but we haven't named any titles.

1401
01:08:18,000 --> 01:08:21,120
Speaker 1: Tell us some of your favorite books and tell us

1402
01:08:21,120 --> 01:08:23,599
Speaker 1: what you're reading currently. I'm always a fan of any

1403
01:08:23,640 --> 01:08:26,599
Speaker 1: book that has to do with the period from uh,

1404
01:08:26,640 --> 01:08:29,360
Speaker 1: you know, nineteen eighteen to nineteen kind of the end

1405
01:08:29,400 --> 01:08:31,439
Speaker 1: of World War One through the end of World War Two.

1406
01:08:31,479 --> 01:08:33,839
Speaker 1: So the great Depression in World War Two that period

1407
01:08:34,160 --> 01:08:36,960
Speaker 1: is so fascinating to me for two reasons. One is

1408
01:08:36,960 --> 01:08:40,920
Speaker 1: that the more technological change took place during those twenty

1409
01:08:41,040 --> 01:08:43,800
Speaker 1: or thirty years that have taken place during any other

1410
01:08:43,840 --> 01:08:47,200
Speaker 1: period in history, Like we started World War two on

1411
01:08:47,320 --> 01:08:51,280
Speaker 1: horseback and ended with nuclear fission. Just so much progress

1412
01:08:51,280 --> 01:08:53,760
Speaker 1: took place during that period. That period is also the

1413
01:08:53,800 --> 01:08:57,000
Speaker 1: combination Great Depression world War Two is when people dealt

1414
01:08:57,040 --> 01:09:00,000
Speaker 1: with the most uncertainty, the most trauma, the most tragedy,

1415
01:08:59,880 --> 01:09:03,160
Speaker 1: the most misery of any other period in modern history.

1416
01:09:03,520 --> 01:09:06,000
Speaker 1: And it's fascinating to learn about that just as a

1417
01:09:06,200 --> 01:09:09,840
Speaker 1: lens into behavior and what people do during risk and

1418
01:09:10,040 --> 01:09:13,519
Speaker 1: threat and uncertainty. So any period, like any book around

1419
01:09:13,520 --> 01:09:15,760
Speaker 1: that topic, I'm always interested in. I'm reading a book

1420
01:09:15,840 --> 01:09:18,439
Speaker 1: right now by historian John Meacham called The Soul of America,

1421
01:09:18,720 --> 01:09:22,479
Speaker 1: which talks about periods in Americans past, uh when we

1422
01:09:22,600 --> 01:09:24,800
Speaker 1: felt like like the country was coming to an end,

1423
01:09:25,080 --> 01:09:28,040
Speaker 1: whether it was the race ride, whether it's a Civil

1424
01:09:28,040 --> 01:09:30,400
Speaker 1: war or the race rides in the nineteen sixties, or

1425
01:09:30,600 --> 01:09:33,679
Speaker 1: or dealing with today. Just kind of period that where

1426
01:09:33,680 --> 01:09:36,720
Speaker 1: America was tried, where the concept of America looked like

1427
01:09:36,720 --> 01:09:38,559
Speaker 1: it was breaking, and how we overcame that. It's a

1428
01:09:38,560 --> 01:09:40,920
Speaker 1: really good book. I know you have a couple of

1429
01:09:40,960 --> 01:09:45,440
Speaker 1: favorite books You've referenced about that period between the Depression

1430
01:09:45,479 --> 01:09:47,799
Speaker 1: and World War Two. A couple of history books you've mentioned,

1431
01:09:48,080 --> 01:09:50,080
Speaker 1: and I can't remember the name of him. There was

1432
01:09:50,120 --> 01:09:52,920
Speaker 1: an author who you read two or three of his books.

1433
01:09:53,479 --> 01:09:56,320
Speaker 1: You know what I'm referring to. Yes, there's a there's

1434
01:09:56,320 --> 01:10:00,320
Speaker 1: a historian named Frederick Lewis Allen who wrote three books. Uh,

1435
01:10:00,360 --> 01:10:02,920
Speaker 1: it's it's a trilogy. One is called Since Yesterday, one

1436
01:10:03,000 --> 01:10:05,439
Speaker 1: is called Only Yesterday, and the others called The Big Change.

1437
01:10:05,840 --> 01:10:08,920
Speaker 1: And they were about how America changed from nine and

1438
01:10:09,000 --> 01:10:12,160
Speaker 1: nineteen fifty. And it is so well written. The stories

1439
01:10:12,200 --> 01:10:14,640
Speaker 1: are so good, and he's writing about the perspective of

1440
01:10:14,680 --> 01:10:17,760
Speaker 1: like the average American, not what is going on with

1441
01:10:17,840 --> 01:10:20,320
Speaker 1: the generals and the presidents, but if you were just

1442
01:10:20,479 --> 01:10:23,400
Speaker 1: an average Joe living in Ohio, what how did your

1443
01:10:23,400 --> 01:10:27,240
Speaker 1: life change from nineteen fifty? And it is so it's

1444
01:10:27,280 --> 01:10:30,280
Speaker 1: so good. That trilogy was so well done. He wrote

1445
01:10:30,320 --> 01:10:33,240
Speaker 1: most of them in the nineteen forties and nineteen fifties. Um,

1446
01:10:33,280 --> 01:10:36,280
Speaker 1: and it was they're they're just gemms out there. What

1447
01:10:36,400 --> 01:10:39,280
Speaker 1: sort of advice would you give to a recent college

1448
01:10:39,320 --> 01:10:42,640
Speaker 1: grad who said to you they were interested in a

1449
01:10:42,800 --> 01:10:47,120
Speaker 1: career in financial writing. I would say, find four or

1450
01:10:47,120 --> 01:10:49,200
Speaker 1: five people who you really look up to, people who

1451
01:10:49,240 --> 01:10:51,120
Speaker 1: that you want to be when you know, five or

1452
01:10:51,120 --> 01:10:53,600
Speaker 1: ten years from now, and just cold email them and

1453
01:10:53,640 --> 01:10:55,679
Speaker 1: ask him out for coffee or maybe if it's still

1454
01:10:55,720 --> 01:10:58,800
Speaker 1: Covid asked him out to for a a a a

1455
01:10:58,920 --> 01:11:01,800
Speaker 1: quick zoom call. I think that's the best way to

1456
01:11:01,920 --> 01:11:04,200
Speaker 1: get ahead, to learn from other people, and also just

1457
01:11:04,240 --> 01:11:06,280
Speaker 1: to network with people who might be able to open

1458
01:11:06,280 --> 01:11:08,479
Speaker 1: doors for you one day. And you people will be

1459
01:11:08,479 --> 01:11:11,600
Speaker 1: surprised if you reach out to people, even people who seem,

1460
01:11:11,640 --> 01:11:13,680
Speaker 1: you know, let's say, out of your league. If you

1461
01:11:13,800 --> 01:11:16,080
Speaker 1: email them and say, hey, I reallymire what you do.

1462
01:11:16,080 --> 01:11:17,840
Speaker 1: I'd like to take you out to coffee, how many

1463
01:11:17,880 --> 01:11:21,680
Speaker 1: of them will say yes, uh this. The success rate

1464
01:11:21,720 --> 01:11:24,040
Speaker 1: for doing that will probably be much higher than you assume.

1465
01:11:24,280 --> 01:11:26,640
Speaker 1: And those few connections that you can make might have

1466
01:11:26,680 --> 01:11:28,920
Speaker 1: a bigger impact on your career than anything that you

1467
01:11:29,000 --> 01:11:32,080
Speaker 1: learn or read or or or taught in school. That

1468
01:11:32,120 --> 01:11:33,920
Speaker 1: will have a huge impact on what you can do.

1469
01:11:34,360 --> 01:11:36,880
Speaker 1: And our final question, what do you know about the

1470
01:11:36,920 --> 01:11:41,559
Speaker 1: world to finance investing writing today that you wish you

1471
01:11:41,640 --> 01:11:45,320
Speaker 1: knew twenty years ago or so when you were first

1472
01:11:45,360 --> 01:11:48,679
Speaker 1: getting started. One thing that sticks out is that good

1473
01:11:48,680 --> 01:11:51,560
Speaker 1: investing is not being good at something. You have to

1474
01:11:51,600 --> 01:11:53,800
Speaker 1: find something that other people are bad at. So the

1475
01:11:53,840 --> 01:11:55,880
Speaker 1: fact that you are good at modeling, the fact that

1476
01:11:55,920 --> 01:11:58,439
Speaker 1: you are good at spreadsheets does not necessarily make a

1477
01:11:58,439 --> 01:12:00,320
Speaker 1: difference because a lot of people are good at that.

1478
01:12:00,760 --> 01:12:03,559
Speaker 1: So that's where a lot of investors go Astray is thinking,

1479
01:12:03,600 --> 01:12:05,880
Speaker 1: I'm very smart, I'm very good at this. I have

1480
01:12:05,920 --> 01:12:07,600
Speaker 1: a lot of skill. I have a lot of intelligence,

1481
01:12:07,800 --> 01:12:10,000
Speaker 1: and it doesn't lead to any sort of investing results

1482
01:12:10,160 --> 01:12:12,240
Speaker 1: to speak of, because so many other people are good

1483
01:12:12,280 --> 01:12:14,680
Speaker 1: at You have to find something that other people are

1484
01:12:14,760 --> 01:12:16,680
Speaker 1: bad at, that is and and and and try to

1485
01:12:16,720 --> 01:12:18,800
Speaker 1: be a little good at that. If you are sort

1486
01:12:18,840 --> 01:12:20,760
Speaker 1: of good at something that other people are bad at,

1487
01:12:21,000 --> 01:12:22,840
Speaker 1: you have a lot more success than if you are

1488
01:12:23,080 --> 01:12:25,280
Speaker 1: very good at something that other people are also very

1489
01:12:25,280 --> 01:12:28,799
Speaker 1: good at. Quite fascinating. Thanks Morgan for being so generous

1490
01:12:28,800 --> 01:12:32,040
Speaker 1: with your time. We have been speaking with Morgan Housel.

1491
01:12:32,120 --> 01:12:34,880
Speaker 1: He is the author of the new book The Psychology

1492
01:12:34,920 --> 01:12:38,800
Speaker 1: of Money. If you enjoy this conversation, well, be sure

1493
01:12:38,800 --> 01:12:41,920
Speaker 1: and check any of our three hundred and something previous

1494
01:12:42,400 --> 01:12:48,360
Speaker 1: discussions where we talk about all things finance, investing, money related.

1495
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Speaker 1: You can find that at iTunes, Spotify, Overcast, Stitcher, wherever

1496
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Speaker 1: your final podcasts are found. We love your comments, feedback

1497
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Speaker 1: and suggestions right to us at m IB podcast at

1498
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Speaker 1: Bloomberg dot Net. Check out my weekly column on Bloomberg

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Speaker 1: dot com slash Opinion. Give us a review on Apple iTunes.

1500
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Speaker 1: Sign up for our daily reads at ridholts dot com.

1501
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Speaker 1: Follow me on Twitter at Ridholts. I would be remiss

1502
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Speaker 1: if I did not thank the crack staff that helps

1503
01:13:18,760 --> 01:13:23,160
Speaker 1: us put these conversations together every week. Tim Harrow is

1504
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Speaker 1: my audio engineer. Michael Batnick is my head of research.

1505
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Speaker 1: A Tika val Brun is our project manager. Michael Boyle

1506
01:13:31,479 --> 01:13:35,760
Speaker 1: is our producer slash booker. I'm Barry Riholts. You've been

1507
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Speaker 1: listening to Masters in Business on Bloomberg Radio.