WEBVTT - Jonathan Clements Explains Why Dying is Hard Work 0:00:02.600 --> 0:00:11.920 Bloomberg Audio Studios, podcasts, radio news. This is Masters in 0:00:12.000 --> 0:00:15.520 Business with Barry Ritholts on Bloomberg Radio. 0:00:17.040 --> 0:00:20.200 This week on the podcast boy, What an extra special 0:00:20.239 --> 0:00:24.320 guest I Have? Jonathan Clements was the personal finance columnist 0:00:24.640 --> 0:00:27.240 at The Wall Street Journal for nearly twenty five years. 0:00:27.600 --> 0:00:30.320 He wrote over a thousand columns. He also worked as 0:00:30.680 --> 0:00:35.199 director of financial education at City Group. Jonathan kind of 0:00:35.240 --> 0:00:40.240 famously announced that he was diagnosed with terminal cancer on 0:00:40.280 --> 0:00:44.519 his website as well as social media, and that started 0:00:44.560 --> 0:00:49.680 this cascade of not just an outpouring of affection and 0:00:49.760 --> 0:00:53.800 appreciation for his work, but just a dialogue about how 0:00:53.800 --> 0:00:57.680 we all should be thinking about our lives, our money, 0:00:57.840 --> 0:01:01.840 and our life satisfaction. I've been a reader of his 0:01:02.080 --> 0:01:05.360 for forever, and it was really a privilege to have 0:01:05.480 --> 0:01:11.319 him come into the studios and with no hesitancy, discuss 0:01:11.440 --> 0:01:15.600 what many people find to be difficult subjects with just 0:01:15.840 --> 0:01:20.640 tremendous grace and insight and dignity. And I found it 0:01:20.680 --> 0:01:24.399 to be an absolutely fascinating conversation, and I think you 0:01:24.480 --> 0:01:29.200 will also if you are at all curious about estate planning, 0:01:29.520 --> 0:01:34.560 or investing or personal finance. This is not the usual discussion, 0:01:35.240 --> 0:01:37.280 and I think it's very worthwhile for you to hear 0:01:37.319 --> 0:01:39.640 this and share it with friends and family with no 0:01:39.760 --> 0:01:44.000 further ado. My discussion with Jonathan Clements Barrio. 0:01:44.280 --> 0:01:46.000 It's great to see you again and it's great to 0:01:46.000 --> 0:01:46.800 be on your podcast. 0:01:46.880 --> 0:01:49.560 Well, well, thank you so much. I'm glad we have 0:01:49.640 --> 0:01:53.040 the opportunity to do this. Before we start talking about 0:01:53.080 --> 0:01:57.520 the serious, heavy stuff, let's get a little background for you. 0:01:57.280 --> 0:02:01.520 You grow up in London, you graduate Cambridge and you 0:02:01.760 --> 0:02:05.800 start at Eural money magazine in London. What were you 0:02:05.840 --> 0:02:08.760 studying at Cambridge? What was your original career plan? 0:02:09.400 --> 0:02:13.240 So from a relatively early age, I actually thought about 0:02:13.240 --> 0:02:15.400 being a financial journalist because my father had been a 0:02:15.400 --> 0:02:19.200 financial journalist. He spent ten years in journalism in London. 0:02:19.400 --> 0:02:22.160 He worked for the Daily Telegraph, he was city editor 0:02:22.200 --> 0:02:25.960 for the Glasgow Herald. His first job out of college 0:02:26.160 --> 0:02:28.679 was at the Financial Times. In fact, wow, and this 0:02:29.120 --> 0:02:32.280 will blow your mind, Barry. My father graduated from Cambridge 0:02:32.280 --> 0:02:35.200 in nineteen fifty six. He decided he was going to 0:02:35.280 --> 0:02:37.720 take the highest paying job he was offered, and the 0:02:37.840 --> 0:02:40.680 highest paying job he was offered the second highest paid 0:02:40.760 --> 0:02:42.639 job he was offered at seven hundred pounds a year 0:02:42.840 --> 0:02:46.640 was as a management trainee for Shell Oil. The highest 0:02:46.680 --> 0:02:49.440 paying job he was offered at eight hundred pounds a 0:02:49.480 --> 0:02:52.800 year was as a cub reporter for the Financial Times. 0:02:53.200 --> 0:02:55.839 Can you imagine a world to where the highest paying 0:02:55.919 --> 0:02:58.079 job you get offered out of college is a job 0:02:58.120 --> 0:02:58.800 in journalism? 0:02:59.040 --> 0:03:03.200 That's amazing. Journalism today has, you know, technology has changed 0:03:03.240 --> 0:03:06.280 it so much that's really hard to fathom. Although you 0:03:06.360 --> 0:03:09.400 and I not far apart in age, grew up in 0:03:09.480 --> 0:03:15.000 an era where media was very specific and thought of 0:03:15.280 --> 0:03:18.760 as a genuine career. I don't think even at the 0:03:18.800 --> 0:03:21.639 journalism schools people are approaching. 0:03:21.160 --> 0:03:22.000 It the same way. 0:03:22.400 --> 0:03:26.160 What's your thoughts on the state of journalism in the 0:03:26.200 --> 0:03:26.919 modern world. 0:03:27.080 --> 0:03:28.760 Well, if you said to me, you know, what advice 0:03:28.760 --> 0:03:31.120 would I give to somebody who wanted to go into journalism, 0:03:31.160 --> 0:03:34.280 My aunts would be dope. I really feel like I 0:03:34.360 --> 0:03:37.360 was the last generation that got into journalism and made 0:03:37.400 --> 0:03:39.880 a career out of it and made a living wage. 0:03:40.240 --> 0:03:44.040 But anyway, going back to your question, yeah, financial journalism 0:03:44.120 --> 0:03:46.640 was always on my radar screen, and even before I 0:03:46.680 --> 0:03:51.200 went to Cambridge, I actually spent eight months working for 0:03:51.240 --> 0:03:56.880 a little suburban newspaper outside of Washington, DC, and in 0:03:56.880 --> 0:04:00.400 many ways it was the most fun and then the 0:04:00.440 --> 0:04:03.480 most educational experience I had in journalism. I worked for 0:04:03.520 --> 0:04:06.000 this you know, rinking little paper that came out every 0:04:06.040 --> 0:04:12.960 other week. The circulation was twenty five thousand, but as 0:04:12.960 --> 0:04:15.960 a nineteen year old, I was able to not only 0:04:15.960 --> 0:04:18.440 get involved in writing stories, but also I was involved 0:04:18.440 --> 0:04:20.520 in the paste up of the paper. For people who 0:04:20.520 --> 0:04:23.640 remember what paste up was. I even went on advertising 0:04:23.680 --> 0:04:27.200 calls with the advertising director. It was so much fun 0:04:27.240 --> 0:04:28.520 and I learned so much. 0:04:28.800 --> 0:04:31.880 So you're from the UK, but you've spent a lot 0:04:31.920 --> 0:04:34.160 of time in the US. Where did you grow up? 0:04:34.800 --> 0:04:37.560 Both places? I was born in London, and when I 0:04:37.600 --> 0:04:38.960 was three and a half, my father got a job 0:04:38.960 --> 0:04:40.880 for the World Bank in Washington, d C. So we 0:04:40.920 --> 0:04:43.880 all moved to Washington, d C. Then, just before my 0:04:43.920 --> 0:04:46.960 tenth birthday, my father was posted to Bangladesh for four years. 0:04:47.320 --> 0:04:51.320 So my mother and father and my sister went to 0:04:51.320 --> 0:04:53.640 live full time in Bangladesh, and my two brothers and 0:04:53.720 --> 0:04:55.960 I got packed off to boarding school in England, which 0:04:56.080 --> 0:04:59.920 explains everything you know. We'd go out there during vacations. 0:05:00.320 --> 0:05:03.320 Four years later, my parents moved back to DC, but 0:05:03.880 --> 0:05:06.400 with my parents' encouragement, I stayed on a boarding school 0:05:06.440 --> 0:05:08.680 in England, went to Cambridge, worked there for a year, 0:05:08.960 --> 0:05:14.360 and then after a year as a journalist in London, 0:05:14.440 --> 0:05:19.240 I realized the standard living for reporters in England seriously socked. 0:05:19.320 --> 0:05:22.039 And that's when I decided to move to New York 0:05:22.080 --> 0:05:26.240 City and I joined Forbes magazine as a glorified fact 0:05:26.320 --> 0:05:29.760 checker and immediately doubled my salary moving from London. 0:05:30.400 --> 0:05:33.000 Well didn't you also double your cost? New York back 0:05:33.040 --> 0:05:35.320 then was still in the nineties, New York was really 0:05:35.360 --> 0:05:36.640 an expensive place to live. 0:05:36.880 --> 0:05:39.560 London is also a really expensive place to live. And 0:05:39.600 --> 0:05:41.160 in any case, at the time, I was actually living 0:05:41.200 --> 0:05:43.559 out in Princeton with my graduate student wife. 0:05:44.480 --> 0:05:48.560 You go from Forbes pretty much during the golden era 0:05:48.720 --> 0:05:52.640 of mutual funds and star managers, like the eighties and nineties, 0:05:53.120 --> 0:05:58.080 that was peak mutual funds. What was that like looking 0:05:58.120 --> 0:06:02.200 at it as the data was begun coming clearer that hey, 0:06:02.560 --> 0:06:04.720 this may not be the best deal for investors. 0:06:05.440 --> 0:06:08.040 When I was at Forbes, after this initial spell as 0:06:08.040 --> 0:06:10.440 a fact checker, I was given the mutual funds beat 0:06:10.640 --> 0:06:14.600 and the core article as the mutual funds reported for 0:06:14.600 --> 0:06:17.880 Forbes magazine and subsequently when I covered mutual funds for 0:06:18.000 --> 0:06:21.479 the journal, was the star manager profile, and it was 0:06:21.600 --> 0:06:24.760 very formulaic. You went and you interviewed some star manager, 0:06:24.880 --> 0:06:28.640 usually a man, and you would have a couple of 0:06:28.680 --> 0:06:31.840 paragraphs about their investment philosophy and strategy. You would offer 0:06:31.880 --> 0:06:33.960 three of their stock picks where they were probably touting 0:06:34.000 --> 0:06:38.040 stocks they wanted download from their portfolio, and the managers 0:06:38.040 --> 0:06:41.240 you selected were all based on past performance. And one 0:06:41.240 --> 0:06:44.200 of the things I started to realize in those years 0:06:44.279 --> 0:06:47.280 was the star managers, well, their stars started to flame 0:06:47.320 --> 0:06:50.560 out pretty quickly. And this, of course was the experience 0:06:50.560 --> 0:06:55.279 of many investors across the US, and that was in 0:06:55.320 --> 0:06:58.560 many ways, you know, the seeds of the index fund revolution. 0:06:58.920 --> 0:07:02.320 That people bought these star managers, you know, one after another, 0:07:03.120 --> 0:07:06.920 the managers started to flame out, they bought new star managers. 0:07:07.000 --> 0:07:09.680 They ended up with these portfolios that were just a 0:07:09.720 --> 0:07:13.960 hodgepodge of x star fund managers and that really set 0:07:14.040 --> 0:07:16.240 us up for the boom and index scene in the 0:07:16.320 --> 0:07:18.560 late nineteen nineties and into the two thousands. 0:07:19.040 --> 0:07:22.440 Yeah. The funny thing is the behavioral aspect of mutual 0:07:22.480 --> 0:07:27.040 funds seems to have been when people finally learn about 0:07:27.080 --> 0:07:30.080 a manager who's put up great numbers. By the time 0:07:30.120 --> 0:07:34.080 it makes it to Forbes, hey, most of that run 0:07:34.200 --> 0:07:36.600 is probably over in a little mean reversion is about 0:07:36.600 --> 0:07:41.120 to kick in. That experience led you to becoming the 0:07:41.160 --> 0:07:44.200 index guy. Tell us a little bit what it was 0:07:44.320 --> 0:07:48.400 like being an index guy at a time when it 0:07:48.600 --> 0:07:51.840 wasn't as popular or well thought of as it is today. 0:07:52.400 --> 0:07:56.320 So in nineteen ninety four, at the lofty age of 0:07:56.360 --> 0:07:58.520 thirty one, the journal gave me my own column, which, 0:07:58.760 --> 0:08:01.480 in retrospector is obsurd. I have a thirty one. 0:08:01.440 --> 0:08:03.480 Year old their own It seems to have worked out 0:08:03.680 --> 0:08:05.560 well for them, though, to be fair. 0:08:05.320 --> 0:08:08.640 Yeah, but I'm not sure I would give a thirty 0:08:08.640 --> 0:08:11.960 one year old that that chance. Okay, but yes, I 0:08:12.120 --> 0:08:14.800 was given my own column. And by that point, having 0:08:14.880 --> 0:08:17.720 seen all these star managers come and go, you know, 0:08:17.880 --> 0:08:22.040 I had become an index fund devotee. And in column 0:08:22.120 --> 0:08:25.520 after column I banged the drum for index funds to 0:08:25.520 --> 0:08:28.040 the point where my editors were asking me, hey, could 0:08:28.040 --> 0:08:32.640 you write about something else? But the numbers you can't 0:08:32.720 --> 0:08:35.280 argue with. I mean, we all know that the brutal 0:08:35.360 --> 0:08:39.480 math of investing before costs, investors collectively will earn the 0:08:39.520 --> 0:08:43.440 market's return after costs. They will earn that mark return 0:08:43.679 --> 0:08:46.760 less whatever they're paying. If you can just match the 0:08:46.800 --> 0:08:50.840 market's return minus some tiny amount for an index fund's expenses, 0:08:51.120 --> 0:08:54.280 you're going to outperform the vast majority of investors, and 0:08:54.320 --> 0:08:59.760 that annual advantage snowballs over time. Until probably the early 0:08:59.840 --> 0:09:03.480 two two thousands, that message didn't resonate as widely in 0:09:03.559 --> 0:09:07.880 pot because index funds were the preserve of bank gotten 0:09:07.920 --> 0:09:11.280 a couple other, you know, fun companies. But then these 0:09:11.320 --> 0:09:14.280 ETFs came along, these exchange traded index funds, and at 0:09:14.320 --> 0:09:18.840 that point any financial advisor, any broker, could sell index 0:09:18.920 --> 0:09:21.040 funds to their clients. And it was really the ETF 0:09:21.080 --> 0:09:26.360 revolution that took indexing and turned it into a national 0:09:26.400 --> 0:09:29.959 phenomenon that now supposters the amount of money and actively 0:09:30.000 --> 0:09:30.720 managed funds. 0:09:30.960 --> 0:09:35.760 So that's an interesting thesis. I know ETFs are really 0:09:35.800 --> 0:09:41.559 significant to the adoption of indexing, But spy has been 0:09:41.559 --> 0:09:45.200 around for seems like forever. It certainly was around in 0:09:45.240 --> 0:09:49.520 the nineties. What was it about the two thousands, specifically? 0:09:49.640 --> 0:09:51.400 Was it just the variety of choice? 0:09:52.600 --> 0:09:57.000 Why do you think ETFs kicked off so much attraction 0:09:57.120 --> 0:10:02.040 to indexing, especially considering the bulk of those moneys, the 0:10:02.080 --> 0:10:04.920 flow of black Rock, Vanguard, and State Street. 0:10:05.360 --> 0:10:08.720 Well, so you're right, you know, spiders Spy came out, 0:10:08.720 --> 0:10:12.560 I believe in nineteen ninety three, but it was just 0:10:12.640 --> 0:10:14.680 the S and P five hundred and it was just 0:10:14.800 --> 0:10:17.960 that single fund. The exchange traded index funds really did 0:10:18.000 --> 0:10:21.120 take off thanks to what was then Barclay's now part 0:10:21.120 --> 0:10:23.760 of black Rock with the I Shares series, and suddenly 0:10:23.960 --> 0:10:26.880 you could buy index funds that cover all of the 0:10:26.920 --> 0:10:32.360 major asset classes, and you because they were stocks that 0:10:32.600 --> 0:10:34.960 traded on the market, you didn't have to have an 0:10:34.960 --> 0:10:37.680 agreement with Vanguard or with Fidelity in order to sell 0:10:37.679 --> 0:10:40.559 those funds. You just needed a brokerage account. And suddenly 0:10:40.600 --> 0:10:44.400 every broker, every financial advisor where they were operating through Mery, 0:10:44.520 --> 0:10:49.640 Lynch or Schwab, could sell those funds and indexing was 0:10:49.640 --> 0:10:51.960 available to all. Prior to that, there were a lot 0:10:52.000 --> 0:10:54.240 of brokers who would never have sold an index fund 0:10:54.240 --> 0:10:57.000 because they didn't have access to Vanguard's platform. 0:10:57.200 --> 0:10:59.120 So let me push back a little bit on that. 0:10:59.400 --> 0:11:04.160 My experience has been that the brokerage side, at least 0:11:04.240 --> 0:11:08.000 up until recently was much more interested in the value 0:11:08.120 --> 0:11:12.880 add And I'm making air quotes for listeners of stock selection, 0:11:13.120 --> 0:11:16.880 fund selection, manager selection, and they seem to have been 0:11:17.000 --> 0:11:23.600 less keen on passive or indexing, whereas the RIA side 0:11:23.600 --> 0:11:28.360 of the street, the independent advisor that or the certified planner, 0:11:28.440 --> 0:11:31.480 they seem to be more focused on let's get a plan, 0:11:31.559 --> 0:11:34.559 let's figure out what your objectives are, and the market 0:11:34.559 --> 0:11:37.480 will take care of itself. How do you see that 0:11:37.480 --> 0:11:41.000 that shift? I've watched that over decades. You you were 0:11:41.000 --> 0:11:43.120 in the thick of it. I'm curious as to what 0:11:43.200 --> 0:11:43.840 you witnessed. 0:11:44.600 --> 0:11:47.560 So you're right. I mean, these are traditional brokers were 0:11:47.640 --> 0:11:51.280 much slower to adopt ETFs than you know, the only 0:11:51.360 --> 0:11:55.239 financial advisors. But today you know a lot of brokers, 0:11:55.280 --> 0:11:57.640 you know, whether they're with the big full service brokerage 0:11:57.640 --> 0:12:01.560 firms now have advisory accounts. They flog to clients where 0:12:01.600 --> 0:12:05.480 they can buy ETFs and as long as they're getting 0:12:05.520 --> 0:12:07.599 their fee, whatever it's you know, one one and a 0:12:07.640 --> 0:12:12.040 half percent, whatever amount it is, you know, they now 0:12:12.160 --> 0:12:15.800 have an incentive to sell those ETFs. And remember, if 0:12:16.000 --> 0:12:19.040 you're an advisor and you're selling ETFs, I mean there's 0:12:19.080 --> 0:12:20.280 no reason to ever say sorry. 0:12:20.360 --> 0:12:21.320 Right, that's right. 0:12:22.040 --> 0:12:24.199 You get the market's a ton surprise, surprise. 0:12:24.440 --> 0:12:27.959 Well, if you tilt it all towards international or emerging 0:12:28.000 --> 0:12:32.160 markets or value, there are occasional apologies along the way. Hey, 0:12:32.240 --> 0:12:35.880 but that's what's the old joke. The cost of diversification 0:12:36.040 --> 0:12:39.839 is frequently having to apologize for something that's not keeping 0:12:39.920 --> 0:12:40.920 up with the SMP. 0:12:41.320 --> 0:12:44.400 If nothing in your portfolio is performing badly, you're not diversified. 0:12:44.840 --> 0:12:48.280 That's right, that's exactly right. So so you said something 0:12:48.280 --> 0:12:51.160 interesting that jog something in my mind. That you are 0:12:51.320 --> 0:12:57.079 constantly flogging passive indexing and ETFs, much to the sugarn 0:12:57.160 --> 0:12:59.600 of your editors, kind of makes me think of something 0:12:59.679 --> 0:13:03.560 Jason has said, which is his job is to write 0:13:03.559 --> 0:13:05.920 the same column over and over again, but in a 0:13:05.920 --> 0:13:09.680 way that neither his editors nor the readers know. What 0:13:09.720 --> 0:13:13.280 are your thoughts on repeating yourself over and over again, 0:13:13.440 --> 0:13:15.000 but in new and interesting ways. 0:13:15.440 --> 0:13:19.840 So Jason was the next employee hired by Forbes after me. 0:13:20.200 --> 0:13:24.760 That's hilarious. And when I left Forbes, Jason ended up 0:13:24.760 --> 0:13:27.479 with the Mutual Funds be Then he went onto Money Magazine, 0:13:27.600 --> 0:13:29.360 And then when I left the journal for the first 0:13:29.400 --> 0:13:31.760 time in two thousand and eight, they said, well, who 0:13:31.760 --> 0:13:35.040 should we hire to replace you? I said, Jason's why. So, 0:13:35.200 --> 0:13:38.360 Jason and I have known each other for over thirty years. 0:13:38.559 --> 0:13:40.160 I consider him to be one of my best friends, 0:13:40.200 --> 0:13:43.920 and in fact, you know, through my recent diagnosis, he's 0:13:43.960 --> 0:13:47.560 been a super supportive You know, we remain great friends 0:13:47.559 --> 0:13:50.360 after all these years, and I'm a huge admirer of 0:13:50.400 --> 0:13:54.280 his work for the Journal and elsewhere. So, yes, Jason 0:13:54.360 --> 0:13:56.720 has the same joke that I do, which is, you know, 0:13:56.800 --> 0:14:00.160 there are only twenty postal finance stories, which means by 0:14:00.200 --> 0:14:03.560 the time I left the Journal and writing a thousand columns, 0:14:03.559 --> 0:14:06.840 I've written each of those stories fifty times each. If 0:14:06.880 --> 0:14:11.319 you are going to serve your readers, well, you know 0:14:11.480 --> 0:14:15.320 there are only a limited number of stories to be written. 0:14:15.520 --> 0:14:18.000 You know, if you're a reporter who spends their career 0:14:18.040 --> 0:14:20.640 writing the stock of the day, the fund of the month, 0:14:20.760 --> 0:14:23.280 just flogging one thing after another trying to predict the 0:14:23.320 --> 0:14:27.160 market's direction, you'll be plenty busy, but your readership will 0:14:27.200 --> 0:14:29.080 be a whole lot poorer. So if you want to 0:14:29.120 --> 0:14:30.760 do the right thing, you're basically going to have to 0:14:30.840 --> 0:14:33.200 have a set of sound principles and focus on them 0:14:33.280 --> 0:14:35.080 again and again, and one of the things you discover 0:14:35.720 --> 0:14:39.240 is that you start to sound like a repetitive, blathering idiot. 0:14:39.440 --> 0:14:42.760 And that's when, for me, and I think also for Jason, 0:14:42.800 --> 0:14:45.400 you start costing around for other things to write about. 0:14:45.560 --> 0:14:47.400 So when I go back to the late nineteen eighties 0:14:47.440 --> 0:14:50.720 and I started as a financial journalist, the sole topic 0:14:50.800 --> 0:14:53.360 was investing. It was all about which fund to buy, 0:14:53.440 --> 0:14:57.520 which stock to buy. Fortunately, over time, the field that 0:14:57.720 --> 0:15:01.520 is personal finance has expanded to today, if you are 0:15:01.760 --> 0:15:04.800 a good financial journalist, you should be writing not just 0:15:04.840 --> 0:15:07.760 about investing, but about topics like you know when to 0:15:07.760 --> 0:15:10.760 claim Social Security, what should you have in your estate plan, 0:15:11.160 --> 0:15:13.080 you know what sort of house should you be buying, 0:15:13.120 --> 0:15:16.040 and then beyond that, writing about things like behavioral finance, 0:15:16.160 --> 0:15:19.760 thinking about things like money and happiness. The topic that 0:15:19.800 --> 0:15:23.200 we call financial journalism has expanded enormously over the past 0:15:23.240 --> 0:15:27.040 three plus decades. And that's good news for somebody like me, 0:15:27.160 --> 0:15:29.960 because if I'm still writing only about index funds, I 0:15:30.000 --> 0:15:32.400 would have been out of a job a long time ago. 0:15:33.560 --> 0:15:37.320 Really really interesting, So the twenty years you spent at 0:15:37.360 --> 0:15:42.360 the journal really is a fascinating couple of decades. You 0:15:43.200 --> 0:15:46.360 wrote at the Journal, through the dot com implosion, as 0:15:46.360 --> 0:15:50.080 well as the whole run up to two thousand, September eleventh, 0:15:50.120 --> 0:15:54.800 the Great Financial Crisis. What era of finance did you 0:15:54.840 --> 0:15:57.560 find the most intriguing as a journalist. 0:15:58.640 --> 0:16:01.880 I know this probably sounds like I'm an ambulance chaser, 0:16:02.040 --> 0:16:04.360 but you know what, the periods that I enjoyed the 0:16:04.400 --> 0:16:07.120 most was when the stock market was going down. 0:16:07.800 --> 0:16:09.520 I'm I totally agree with you. 0:16:09.720 --> 0:16:14.760 I have been warned repeatedly, hey, people are getting, you know, 0:16:14.840 --> 0:16:17.880 really hurt out there. Can you stop whistling into the 0:16:17.920 --> 0:16:21.560 office like that? But that's when the most amount of 0:16:21.720 --> 0:16:25.760 fascinating things happen and the most amount of opportunities present themselves, 0:16:26.080 --> 0:16:29.800 Which leads me to my next question. Right into the 0:16:29.960 --> 0:16:34.120 teeth of the financial crisis, you went ninety five percent 0:16:34.200 --> 0:16:37.080 into stocks. Tell us a little bit about why you 0:16:37.200 --> 0:16:39.200 did that, which turned out to be the right call, 0:16:39.720 --> 0:16:42.280 and how you shared that information with your readers. 0:16:42.720 --> 0:16:45.760 Coming into sort of late two thousand and eight, I think, 0:16:45.840 --> 0:16:47.880 if I recall correct, I have somewhere between seventy and 0:16:47.920 --> 0:16:50.920 eighty percent stocks. By that point, I'd left the Journal 0:16:51.240 --> 0:16:54.880 and I was working at City Group as director of 0:16:54.880 --> 0:16:58.560 financial education for the wealth management business. And a number 0:16:58.600 --> 0:17:00.800 of things happened. One was I was working on Wall streets. 0:17:00.840 --> 0:17:03.320 I was earning a whole lot more money. Two, I 0:17:03.360 --> 0:17:08.560 got my first Wall Street bonus. Three I sold another book, 0:17:08.600 --> 0:17:12.080 which meant I got a big advance. And four tragically, 0:17:12.119 --> 0:17:15.080 my father was killed during this period and I inherited 0:17:15.119 --> 0:17:18.320 money from him, and I took every one of those 0:17:18.359 --> 0:17:21.639 dollars and put them into the stock market. And it 0:17:21.720 --> 0:17:25.480 was a time when the sequence of returns, that combination 0:17:25.600 --> 0:17:27.399 of what's going on in the market and whether you're 0:17:27.400 --> 0:17:29.399 pulling out money from your portfolio of putting it in 0:17:29.880 --> 0:17:34.120 worked like magic. And said to people numerous times when 0:17:34.119 --> 0:17:35.600 we have a period in like two thousand and eight, 0:17:35.600 --> 0:17:37.240 two thousand and nine when everybody thinks the world is 0:17:37.280 --> 0:17:39.159 going to hell in a hand basket, well, if it 0:17:39.200 --> 0:17:41.800 really does go to hell, doesn't matter what you own, right, 0:17:42.640 --> 0:17:45.639 More than likely, you know, we humans being humans, will 0:17:45.640 --> 0:17:47.919 figure out a way to solve this problem and the 0:17:47.960 --> 0:17:50.280 market will come roaring back, and what you want to 0:17:50.280 --> 0:17:53.920 own at that point is stocks. So I just backed 0:17:53.960 --> 0:17:56.520 up the cart and bought stocks like crazy. 0:17:57.440 --> 0:18:01.320 So that's kind of interesting that you're making an active 0:18:01.440 --> 0:18:07.199 decision in the face of market turmoil and increase volatility. 0:18:07.800 --> 0:18:12.120 Did at any point in that process did you feel like, hey, 0:18:12.160 --> 0:18:14.880 you know, I'm kind of going against everything I've said 0:18:14.920 --> 0:18:18.680 in the past. Or was it people said stocks were 0:18:18.720 --> 0:18:19.960 pricing now they're cheap. 0:18:20.320 --> 0:18:22.040 I'm just a value investor. 0:18:22.680 --> 0:18:26.680 Well, guilty is charged, Barry. I mean, I can't entirely 0:18:26.840 --> 0:18:31.320 justify it. But over my career as an investing the 0:18:31.600 --> 0:18:34.800 things that I've learned is one that you know, you 0:18:34.840 --> 0:18:39.639 can't win through stock selection. You can't win by buying 0:18:39.720 --> 0:18:42.119 actively managed funds. You know what you need to do 0:18:42.200 --> 0:18:46.080 is indexing. But one way you can tilt the field 0:18:46.160 --> 0:18:49.960 in your favor is in periods when people are panicking. 0:18:50.680 --> 0:18:53.000 Is too, as I like to put it, over rebounds 0:18:53.040 --> 0:18:55.880 to move even more into stocks. It's it's a temporary move. 0:18:56.720 --> 0:18:58.560 But you know I've done it repeatedly. I did it 0:18:58.600 --> 0:19:00.840 in two thousand and two thousand and two, I did 0:19:00.920 --> 0:19:03.880 it in two thousand and eight and nine, I did 0:19:03.880 --> 0:19:07.760 it during the coronavirus collapse in twenty twenty, and I 0:19:07.800 --> 0:19:10.399 did it again in twenty twenty two. You don't know 0:19:11.240 --> 0:19:13.320 what the bottom of the market looks like, I think 0:19:13.359 --> 0:19:16.920 it's very hard to say stocks are objectively cheap because 0:19:16.960 --> 0:19:20.639 all of these valuation metrics have become unreliable over the 0:19:20.720 --> 0:19:24.280 decades as the nature of the stock market has changed. 0:19:24.600 --> 0:19:26.760 But the one thing I have learned is that if 0:19:26.800 --> 0:19:30.040 the market is off twenty thirty percent, things are a 0:19:30.080 --> 0:19:32.840 whole lot cheaper than they were prior to the decline, 0:19:33.040 --> 0:19:35.440 and what you should do is buy. 0:19:36.080 --> 0:19:40.679 It's easier said than done. You mentioned covering behavioral finance 0:19:41.200 --> 0:19:45.040 as a way to look beyond just indexing funds. Tell 0:19:45.119 --> 0:19:48.080 us a little bit about the challenges that the average 0:19:48.080 --> 0:19:53.120 investor faces trying to buy into a down thirty percent 0:19:53.520 --> 0:19:56.720 market when everybody else is panicking and running the other way. 0:19:57.119 --> 0:19:59.399 Well, we know how investors behaved, which is they extrapolate 0:19:59.440 --> 0:20:01.320 recent returns. So if the market's going up, they think 0:20:01.320 --> 0:20:03.600 it's going to keep going up, it's going down, they 0:20:03.680 --> 0:20:06.080 assume it's going to keep going down, and that, of 0:20:06.119 --> 0:20:08.560 course is what everybody around them is doing. They're also 0:20:08.600 --> 0:20:12.720 extrapolating returns. It's very hard to step aside from the 0:20:12.800 --> 0:20:16.680 narrative of that time and think independently, but that's what 0:20:16.720 --> 0:20:19.400 you need to do to be a successful investor. At 0:20:19.400 --> 0:20:21.880 a bare minimum. At a bare minimum, if you can 0:20:22.040 --> 0:20:25.120 just stand your ground, you'll probably do a whole lot 0:20:25.160 --> 0:20:28.000 better than most investors who will tend to be buying 0:20:28.000 --> 0:20:29.400 and selling it just the wrong time. 0:20:29.680 --> 0:20:31.760 I just have to ask you a little bit about 0:20:31.840 --> 0:20:35.560 what you did after the Journal, and that includes both 0:20:35.720 --> 0:20:38.520 City Group and Humble Dollars. You were at City Group 0:20:38.560 --> 0:20:41.240 for about six years and you were director of education. 0:20:41.680 --> 0:20:45.159 Tell us a little bit about what that role encompassed 0:20:45.200 --> 0:20:49.480 and what it was like dealing with City investors rather 0:20:49.520 --> 0:20:52.119 than journal readers. And I'm sure there's a bit of 0:20:52.119 --> 0:20:53.000 an overlap there. 0:20:53.640 --> 0:20:55.440 So in a couple of years running up to early 0:20:55.480 --> 0:20:58.520 two thousand and eight, I was getting increasingly burned out 0:20:58.760 --> 0:21:01.719 on writing the column and I was thinking, like I 0:21:01.720 --> 0:21:04.719 got to do something else in life, and I cast around. 0:21:04.840 --> 0:21:08.600 I talked to various people about different jobs. Nothing quite 0:21:08.920 --> 0:21:11.120 rang a bell for me. And then I was approached 0:21:11.200 --> 0:21:15.679 by City Group about being director of financial education for 0:21:15.800 --> 0:21:19.040 this startup called ma FI. And the idea was they 0:21:19.040 --> 0:21:22.360 were going to help small investors with their entire financial 0:21:22.400 --> 0:21:24.680 life in return for a fixed monthly fee. That was 0:21:24.720 --> 0:21:29.000 the notion, lovely notion. But two things went wrong. One 0:21:29.080 --> 0:21:32.240 is The idea of doing a startup within a large 0:21:32.240 --> 0:21:37.000 corporation is absolutely absurd. Companies large companies are incapable of 0:21:37.040 --> 0:21:40.080 innovating in that way. It was just a struggle from 0:21:40.160 --> 0:21:43.199 day one, particularly in the rehdatory environment that is the 0:21:43.200 --> 0:21:48.240 securities business between lawyers and compliance people. Everythink was a headache. 0:21:48.359 --> 0:21:50.400 And then on top of that, of course, we ran 0:21:50.440 --> 0:21:52.280 straight into the two thousand and eight two thousand and 0:21:52.320 --> 0:21:55.280 nine Great Recession, So the business was pretty much dead 0:21:55.320 --> 0:21:58.119 before it began. And by the summer of two thousand 0:21:58.160 --> 0:22:00.960 and nine they'd pulled the plug on this venture and suddenly, 0:22:01.040 --> 0:22:03.320 you know, I've thrown away my journalism career to join 0:22:03.440 --> 0:22:06.000 the City Group. You know what would happen next, Well, 0:22:06.280 --> 0:22:08.920 this group of people that were part of this startup, 0:22:08.960 --> 0:22:12.680 well my FI, were rolled into the traditional bank based 0:22:12.680 --> 0:22:15.840 brokerage business, if you can imagine two completely different group 0:22:15.920 --> 0:22:18.720 of people. And then on top of that, they decided 0:22:18.760 --> 0:22:21.280