Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in
Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
Speaker 2: This week on the podcast boy, What an extra special
Speaker 2: guest I Have? Jonathan Clements was the personal finance columnist
Speaker 2: at The Wall Street Journal for nearly twenty five years.
Speaker 2: He wrote over a thousand columns. He also worked as
Speaker 2: director of financial education at City Group. Jonathan kind of
Speaker 2: famously announced that he was diagnosed with terminal cancer on
Speaker 2: his website as well as social media, and that started
Speaker 2: this cascade of not just an outpouring of affection and
Speaker 2: appreciation for his work, but just a dialogue about how
Speaker 2: we all should be thinking about our lives, our money,
Speaker 2: and our life satisfaction. I've been a reader of his
Speaker 2: for forever, and it was really a privilege to have
Speaker 2: him come into the studios and with no hesitancy, discuss
Speaker 2: what many people find to be difficult subjects with just
Speaker 2: tremendous grace and insight and dignity. And I found it
Speaker 2: to be an absolutely fascinating conversation, and I think you
Speaker 2: will also if you are at all curious about estate planning,
Speaker 2: or investing or personal finance. This is not the usual discussion,
Speaker 2: and I think it's very worthwhile for you to hear
Speaker 2: this and share it with friends and family with no
Speaker 2: further ado. My discussion with Jonathan Clements Barrio.
Speaker 3: It's great to see you again and it's great to
Speaker 3: be on your podcast.
Speaker 2: Well, well, thank you so much. I'm glad we have
Speaker 2: the opportunity to do this. Before we start talking about
Speaker 2: the serious, heavy stuff, let's get a little background for you.
Speaker 2: You grow up in London, you graduate Cambridge and you
Speaker 2: start at Eural money magazine in London. What were you
Speaker 2: studying at Cambridge? What was your original career plan?
Speaker 3: So from a relatively early age, I actually thought about
Speaker 3: being a financial journalist because my father had been a
Speaker 3: financial journalist. He spent ten years in journalism in London.
Speaker 3: He worked for the Daily Telegraph, he was city editor
Speaker 3: for the Glasgow Herald. His first job out of college
Speaker 3: was at the Financial Times. In fact, wow, and this
Speaker 3: will blow your mind, Barry. My father graduated from Cambridge
Speaker 3: in nineteen fifty six. He decided he was going to
Speaker 3: take the highest paying job he was offered, and the
Speaker 3: highest paying job he was offered the second highest paid
Speaker 3: job he was offered at seven hundred pounds a year
Speaker 3: was as a management trainee for Shell Oil. The highest
Speaker 3: paying job he was offered at eight hundred pounds a
Speaker 3: year was as a cub reporter for the Financial Times.
Speaker 3: Can you imagine a world to where the highest paying
Speaker 3: job you get offered out of college is a job
Speaker 3: in journalism?
Speaker 2: That's amazing. Journalism today has, you know, technology has changed
Speaker 2: it so much that's really hard to fathom. Although you
Speaker 2: and I not far apart in age, grew up in
Speaker 2: an era where media was very specific and thought of
Speaker 2: as a genuine career. I don't think even at the
Speaker 2: journalism schools people are approaching.
Speaker 4: It the same way.
Speaker 2: What's your thoughts on the state of journalism in the
Speaker 2: modern world.
Speaker 3: Well, if you said to me, you know, what advice
Speaker 3: would I give to somebody who wanted to go into journalism,
Speaker 3: My aunts would be dope. I really feel like I
Speaker 3: was the last generation that got into journalism and made
Speaker 3: a career out of it and made a living wage.
Speaker 3: But anyway, going back to your question, yeah, financial journalism
Speaker 3: was always on my radar screen, and even before I
Speaker 3: went to Cambridge, I actually spent eight months working for
Speaker 3: a little suburban newspaper outside of Washington, DC, and in
Speaker 3: many ways it was the most fun and then the
Speaker 3: most educational experience I had in journalism. I worked for
Speaker 3: this you know, rinking little paper that came out every
Speaker 3: other week. The circulation was twenty five thousand, but as
Speaker 3: a nineteen year old, I was able to not only
Speaker 3: get involved in writing stories, but also I was involved
Speaker 3: in the paste up of the paper. For people who
Speaker 3: remember what paste up was. I even went on advertising
Speaker 3: calls with the advertising director. It was so much fun
Speaker 3: and I learned so much.
Speaker 2: So you're from the UK, but you've spent a lot
Speaker 2: of time in the US. Where did you grow up?
Speaker 3: Both places? I was born in London, and when I
Speaker 3: was three and a half, my father got a job
Speaker 3: for the World Bank in Washington, d C. So we
Speaker 3: all moved to Washington, d C. Then, just before my
Speaker 3: tenth birthday, my father was posted to Bangladesh for four years.
Speaker 3: So my mother and father and my sister went to
Speaker 3: live full time in Bangladesh, and my two brothers and
Speaker 3: I got packed off to boarding school in England, which
Speaker 3: explains everything you know. We'd go out there during vacations.
Speaker 3: Four years later, my parents moved back to DC, but
Speaker 3: with my parents' encouragement, I stayed on a boarding school
Speaker 3: in England, went to Cambridge, worked there for a year,
Speaker 3: and then after a year as a journalist in London,
Speaker 3: I realized the standard living for reporters in England seriously socked.
Speaker 3: And that's when I decided to move to New York
Speaker 3: City and I joined Forbes magazine as a glorified fact
Speaker 3: checker and immediately doubled my salary moving from London.
Speaker 2: Well didn't you also double your cost? New York back
Speaker 2: then was still in the nineties, New York was really
Speaker 2: an expensive place to live.
Speaker 3: London is also a really expensive place to live. And
Speaker 3: in any case, at the time, I was actually living
Speaker 3: out in Princeton with my graduate student wife.
Speaker 2: You go from Forbes pretty much during the golden era
Speaker 2: of mutual funds and star managers, like the eighties and nineties,
Speaker 2: that was peak mutual funds. What was that like looking
Speaker 2: at it as the data was begun coming clearer that hey,
Speaker 2: this may not be the best deal for investors.
Speaker 3: When I was at Forbes, after this initial spell as
Speaker 3: a fact checker, I was given the mutual funds beat
Speaker 3: and the core article as the mutual funds reported for
Speaker 3: Forbes magazine and subsequently when I covered mutual funds for
Speaker 3: the journal, was the star manager profile, and it was
Speaker 3: very formulaic. You went and you interviewed some star manager,
Speaker 3: usually a man, and you would have a couple of
Speaker 3: paragraphs about their investment philosophy and strategy. You would offer
Speaker 3: three of their stock picks where they were probably touting
Speaker 3: stocks they wanted download from their portfolio, and the managers
Speaker 3: you selected were all based on past performance. And one
Speaker 3: of the things I started to realize in those years
Speaker 3: was the star managers, well, their stars started to flame
Speaker 3: out pretty quickly. And this, of course was the experience
Speaker 3: of many investors across the US, and that was in
Speaker 3: many ways, you know, the seeds of the index fund revolution.
Speaker 3: That people bought these star managers, you know, one after another,
Speaker 3: the managers started to flame out, they bought new star managers.
Speaker 3: They ended up with these portfolios that were just a
Speaker 3: hodgepodge of x star fund managers and that really set
Speaker 3: us up for the boom and index scene in the
Speaker 3: late nineteen nineties and into the two thousands.
Speaker 2: Yeah. The funny thing is the behavioral aspect of mutual
Speaker 2: funds seems to have been when people finally learn about
Speaker 2: a manager who's put up great numbers. By the time
Speaker 2: it makes it to Forbes, hey, most of that run
Speaker 2: is probably over in a little mean reversion is about
Speaker 2: to kick in. That experience led you to becoming the
Speaker 2: index guy. Tell us a little bit what it was
Speaker 2: like being an index guy at a time when it
Speaker 2: wasn't as popular or well thought of as it is today.
Speaker 3: So in nineteen ninety four, at the lofty age of
Speaker 3: thirty one, the journal gave me my own column, which,
Speaker 3: in retrospector is obsurd. I have a thirty one.
Speaker 2: Year old their own It seems to have worked out
Speaker 2: well for them, though, to be fair.
Speaker 3: Yeah, but I'm not sure I would give a thirty
Speaker 3: one year old that that chance. Okay, but yes, I
Speaker 3: was given my own column. And by that point, having
Speaker 3: seen all these star managers come and go, you know,
Speaker 3: I had become an index fund devotee. And in column
Speaker 3: after column I banged the drum for index funds to
Speaker 3: the point where my editors were asking me, hey, could
Speaker 3: you write about something else? But the numbers you can't
Speaker 3: argue with. I mean, we all know that the brutal
Speaker 3: math of investing before costs, investors collectively will earn the
Speaker 3: market's return after costs. They will earn that mark return
Speaker 3: less whatever they're paying. If you can just match the
Speaker 3: market's return minus some tiny amount for an index fund's expenses,
Speaker 3: you're going to outperform the vast majority of investors, and
Speaker 3: that annual advantage snowballs over time. Until probably the early
Speaker 3: two two thousands, that message didn't resonate as widely in
Speaker 3: pot because index funds were the preserve of bank gotten
Speaker 3: a couple other, you know, fun companies. But then these
Speaker 3: ETFs came along, these exchange traded index funds, and at
Speaker 3: that point any financial advisor, any broker, could sell index
Speaker 3: funds to their clients. And it was really the ETF
Speaker 3: revolution that took indexing and turned it into a national
Speaker 3: phenomenon that now supposters the amount of money and actively
Speaker 3: managed funds.
Speaker 2: So that's an interesting thesis. I know ETFs are really
Speaker 2: significant to the adoption of indexing, But spy has been
Speaker 2: around for seems like forever. It certainly was around in
Speaker 2: the nineties. What was it about the two thousands, specifically?
Speaker 4: Was it just the variety of choice?
Speaker 2: Why do you think ETFs kicked off so much attraction
Speaker 2: to indexing, especially considering the bulk of those moneys, the
Speaker 2: flow of black Rock, Vanguard, and State Street.
Speaker 3: Well, so you're right, you know, spiders Spy came out,
Speaker 3: I believe in nineteen ninety three, but it was just
Speaker 3: the S and P five hundred and it was just
Speaker 3: that single fund. The exchange traded index funds really did
Speaker 3: take off thanks to what was then Barclay's now part
Speaker 3: of black Rock with the I Shares series, and suddenly
Speaker 3: you could buy index funds that cover all of the
Speaker 3: major asset classes, and you because they were stocks that
Speaker 3: traded on the market, you didn't have to have an
Speaker 3: agreement with Vanguard or with Fidelity in order to sell
Speaker 3: those funds. You just needed a brokerage account. And suddenly
Speaker 3: every broker, every financial advisor where they were operating through Mery,
Speaker 3: Lynch or Schwab, could sell those funds and indexing was
Speaker 3: available to all. Prior to that, there were a lot
Speaker 3: of brokers who would never have sold an index fund
Speaker 3: because they didn't have access to Vanguard's platform.
Speaker 2: So let me push back a little bit on that.
Speaker 2: My experience has been that the brokerage side, at least
Speaker 2: up until recently was much more interested in the value
Speaker 2: add And I'm making air quotes for listeners of stock selection,
Speaker 2: fund selection, manager selection, and they seem to have been
Speaker 2: less keen on passive or indexing, whereas the RIA side
Speaker 2: of the street, the independent advisor that or the certified planner,
Speaker 2: they seem to be more focused on let's get a plan,
Speaker 2: let's figure out what your objectives are, and the market
Speaker 2: will take care of itself. How do you see that
Speaker 2: that shift? I've watched that over decades. You you were
Speaker 2: in the thick of it. I'm curious as to what
Speaker 2: you witnessed.
Speaker 3: So you're right. I mean, these are traditional brokers were
Speaker 3: much slower to adopt ETFs than you know, the only
Speaker 3: financial advisors. But today you know a lot of brokers,
Speaker 3: you know, whether they're with the big full service brokerage
Speaker 3: firms now have advisory accounts. They flog to clients where
Speaker 3: they can buy ETFs and as long as they're getting
Speaker 3: their fee, whatever it's you know, one one and a
Speaker 3: half percent, whatever amount it is, you know, they now
Speaker 3: have an incentive to sell those ETFs. And remember, if
Speaker 3: you're an advisor and you're selling ETFs, I mean there's
Speaker 3: no reason to ever say sorry.
Speaker 4: Right, that's right.
Speaker 3: You get the market's a ton surprise, surprise.
Speaker 2: Well, if you tilt it all towards international or emerging
Speaker 2: markets or value, there are occasional apologies along the way. Hey,
Speaker 2: but that's what's the old joke. The cost of diversification
Speaker 2: is frequently having to apologize for something that's not keeping
Speaker 2: up with the SMP.
Speaker 3: If nothing in your portfolio is performing badly, you're not diversified.
Speaker 2: That's right, that's exactly right. So so you said something
Speaker 2: interesting that jog something in my mind. That you are
Speaker 2: constantly flogging passive indexing and ETFs, much to the sugarn
Speaker 2: of your editors, kind of makes me think of something
Speaker 2: Jason has said, which is his job is to write
Speaker 2: the same column over and over again, but in a
Speaker 2: way that neither his editors nor the readers know. What
Speaker 2: are your thoughts on repeating yourself over and over again,
Speaker 2: but in new and interesting ways.
Speaker 3: So Jason was the next employee hired by Forbes after me.
Speaker 3: That's hilarious. And when I left Forbes, Jason ended up
Speaker 3: with the Mutual Funds be Then he went onto Money Magazine,
Speaker 3: And then when I left the journal for the first
Speaker 3: time in two thousand and eight, they said, well, who
Speaker 3: should we hire to replace you? I said, Jason's why. So,
Speaker 3: Jason and I have known each other for over thirty years.
Speaker 3: I consider him to be one of my best friends,
Speaker 3: and in fact, you know, through my recent diagnosis, he's
Speaker 3: been a super supportive You know, we remain great friends
Speaker 3: after all these years, and I'm a huge admirer of
Speaker 3: his work for the Journal and elsewhere. So, yes, Jason
Speaker 3: has the same joke that I do, which is, you know,
Speaker 3: there are only twenty postal finance stories, which means by
Speaker 3: the time I left the Journal and writing a thousand columns,
Speaker 3: I've written each of those stories fifty times each. If
Speaker 3: you are going to serve your readers, well, you know
Speaker 3: there are only a limited number of stories to be written.
Speaker 3: You know, if you're a reporter who spends their career
Speaker 3: writing the stock of the day, the fund of the month,
Speaker 3: just flogging one thing after another trying to predict the
Speaker 3: market's direction, you'll be plenty busy, but your readership will
Speaker 3: be a whole lot poorer. So if you want to
Speaker 3: do the right thing, you're basically going to have to
Speaker 3: have a set of sound principles and focus on them
Speaker 3: again and again, and one of the things you discover
Speaker 3: is that you start to sound like a repetitive, blathering idiot.
Speaker 3: And that's when, for me, and I think also for Jason,
Speaker 3: you start costing around for other things to write about.
Speaker 3: So when I go back to the late nineteen eighties
Speaker 3: and I started as a financial journalist, the sole topic
Speaker 3: was investing. It was all about which fund to buy,
Speaker 3: which stock to buy. Fortunately, over time, the field that
Speaker 3: is personal finance has expanded to today, if you are
Speaker 3: a good financial journalist, you should be writing not just
Speaker 3: about investing, but about topics like you know when to
Speaker 3: claim Social Security, what should you have in your estate plan,
Speaker 3: you know what sort of house should you be buying,
Speaker 3: and then beyond that, writing about things like behavioral finance,
Speaker 3: thinking about things like money and happiness. The topic that
Speaker 3: we call financial journalism has expanded enormously over the past
Speaker 3: three plus decades. And that's good news for somebody like me,
Speaker 3: because if I'm still writing only about index funds, I
Speaker 3: would have been out of a job a long time ago.
Speaker 2: Really really interesting, So the twenty years you spent at
Speaker 2: the journal really is a fascinating couple of decades. You
Speaker 2: wrote at the Journal, through the dot com implosion, as
Speaker 2: well as the whole run up to two thousand, September eleventh,
Speaker 2: the Great Financial Crisis. What era of finance did you
Speaker 2: find the most intriguing as a journalist.
Speaker 3: I know this probably sounds like I'm an ambulance chaser,
Speaker 3: but you know what, the periods that I enjoyed the
Speaker 3: most was when the stock market was going down.
Speaker 4: I'm I totally agree with you.
Speaker 2: I have been warned repeatedly, hey, people are getting, you know,
Speaker 2: really hurt out there. Can you stop whistling into the
Speaker 2: office like that? But that's when the most amount of
Speaker 2: fascinating things happen and the most amount of opportunities present themselves,
Speaker 2: Which leads me to my next question. Right into the
Speaker 2: teeth of the financial crisis, you went ninety five percent
Speaker 2: into stocks. Tell us a little bit about why you
Speaker 2: did that, which turned out to be the right call,
Speaker 2: and how you shared that information with your readers.
Speaker 3: Coming into sort of late two thousand and eight, I think,
Speaker 3: if I recall correct, I have somewhere between seventy and
Speaker 3: eighty percent stocks. By that point, I'd left the Journal
Speaker 3: and I was working at City Group as director of
Speaker 3: financial education for the wealth management business. And a number
Speaker 3: of things happened. One was I was working on Wall streets.
Speaker 3: I was earning a whole lot more money. Two, I
Speaker 3: got my first Wall Street bonus. Three I sold another book,
Speaker 3: which meant I got a big advance. And four tragically,
Speaker 3: my father was killed during this period and I inherited
Speaker 3: money from him, and I took every one of those
Speaker 3: dollars and put them into the stock market. And it
Speaker 3: was a time when the sequence of returns, that combination
Speaker 3: of what's going on in the market and whether you're
Speaker 3: pulling out money from your portfolio of putting it in
Speaker 3: worked like magic. And said to people numerous times when
Speaker 3: we have a period in like two thousand and eight,
Speaker 3: two thousand and nine when everybody thinks the world is
Speaker 3: going to hell in a hand basket, well, if it
Speaker 3: really does go to hell, doesn't matter what you own, right,
Speaker 3: More than likely, you know, we humans being humans, will
Speaker 3: figure out a way to solve this problem and the
Speaker 3: market will come roaring back, and what you want to
Speaker 3: own at that point is stocks. So I just backed
Speaker 3: up the cart and bought stocks like crazy.
Speaker 2: So that's kind of interesting that you're making an active
Speaker 2: decision in the face of market turmoil and increase volatility.
Speaker 2: Did at any point in that process did you feel like, hey,
Speaker 2: you know, I'm kind of going against everything I've said
Speaker 2: in the past. Or was it people said stocks were
Speaker 2: pricing now they're cheap.
Speaker 4: I'm just a value investor.
Speaker 3: Well, guilty is charged, Barry. I mean, I can't entirely
Speaker 3: justify it. But over my career as an investing the
Speaker 3: things that I've learned is one that you know, you
Speaker 3: can't win through stock selection. You can't win by buying
Speaker 3: actively managed funds. You know what you need to do
Speaker 3: is indexing. But one way you can tilt the field
Speaker 3: in your favor is in periods when people are panicking.
Speaker 3: Is too, as I like to put it, over rebounds
Speaker 3: to move even more into stocks. It's it's a temporary move.
Speaker 3: But you know I've done it repeatedly. I did it
Speaker 3: in two thousand and two thousand and two, I did
Speaker 3: it in two thousand and eight and nine, I did
Speaker 3: it during the coronavirus collapse in twenty twenty, and I
Speaker 3: did it again in twenty twenty two. You don't know
Speaker 3: what the bottom of the market looks like, I think
Speaker 3: it's very hard to say stocks are objectively cheap because
Speaker 3: all of these valuation metrics have become unreliable over the
Speaker 3: decades as the nature of the stock market has changed.
Speaker 3: But the one thing I have learned is that if
Speaker 3: the market is off twenty thirty percent, things are a
Speaker 3: whole lot cheaper than they were prior to the decline,
Speaker 3: and what you should do is buy.
Speaker 2: It's easier said than done. You mentioned covering behavioral finance
Speaker 2: as a way to look beyond just indexing funds. Tell
Speaker 2: us a little bit about the challenges that the average
Speaker 2: investor faces trying to buy into a down thirty percent
Speaker 2: market when everybody else is panicking and running the other way.
Speaker 3: Well, we know how investors behaved, which is they extrapolate
Speaker 3: recent returns. So if the market's going up, they think
Speaker 3: it's going to keep going up, it's going down, they
Speaker 3: assume it's going to keep going down, and that, of
Speaker 3: course is what everybody around them is doing. They're also
Speaker 3: extrapolating returns. It's very hard to step aside from the
Speaker 3: narrative of that time and think independently, but that's what
Speaker 3: you need to do to be a successful investor. At
Speaker 3: a bare minimum. At a bare minimum, if you can
Speaker 3: just stand your ground, you'll probably do a whole lot
Speaker 3: better than most investors who will tend to be buying
Speaker 3: and selling it just the wrong time.
Speaker 2: I just have to ask you a little bit about
Speaker 2: what you did after the Journal, and that includes both
Speaker 2: City Group and Humble Dollars. You were at City Group
Speaker 2: for about six years and you were director of education.
Speaker 2: Tell us a little bit about what that role encompassed
Speaker 2: and what it was like dealing with City investors rather
Speaker 2: than journal readers. And I'm sure there's a bit of
Speaker 2: an overlap there.
Speaker 3: So in a couple of years running up to early
Speaker 3: two thousand and eight, I was getting increasingly burned out
Speaker 3: on writing the column and I was thinking, like I
Speaker 3: got to do something else in life, and I cast around.
Speaker 3: I talked to various people about different jobs. Nothing quite
Speaker 3: rang a bell for me. And then I was approached
Speaker 3: by City Group about being director of financial education for
Speaker 3: this startup called ma FI. And the idea was they
Speaker 3: were going to help small investors with their entire financial
Speaker 3: life in return for a fixed monthly fee. That was
Speaker 3: the notion, lovely notion. But two things went wrong. One
Speaker 3: is The idea of doing a startup within a large
Speaker 3: corporation is absolutely absurd. Companies large companies are incapable of
Speaker 3: innovating in that way. It was just a struggle from
Speaker 3: day one, particularly in the rehdatory environment that is the
Speaker 3: securities business between lawyers and compliance people. Everythink was a headache.
Speaker 3: And then on top of that, of course, we ran
Speaker 3: straight into the two thousand and eight two thousand and
Speaker 3: nine Great Recession, So the business was pretty much dead
Speaker 3: before it began. And by the summer of two thousand
Speaker 3: and nine they'd pulled the plug on this venture and suddenly,
Speaker 3: you know, I've thrown away my journalism career to join
Speaker 3: the City Group. You know what would happen next, Well,
Speaker 3: this group of people that were part of this startup,
Speaker 3: well my FI, were rolled into the traditional bank based
Speaker 3: brokerage business, if you can imagine two completely different group
Speaker 3: of people. And then on top of that, they decided
Speaker 3: they were going to try to turn these bank based
Speaker 3: brokers into feelingly financial advisors.
Speaker 2: Which, by the way, was the underlying trends outside of
Speaker 2: the broker's firm. They were watching what was a small
Speaker 2: part of the business really begin to blossom post crisis.
Speaker 3: So I became part of this new business, and I
Speaker 3: did a lot of writing and a lot of public
Speaker 3: speaking over the next four plus years until I realized that,
Speaker 3: you know, I really wasn't doing much good in the world.
Speaker 3: I was collecting the nice paycheck, the biggest paycheck in
Speaker 3: my life, but I really felt like I was wasting
Speaker 3: my time, and I've I've never already done anything in
Speaker 3: my career solely for money, and it's suddenly dawn on
Speaker 3: me that really I was just living for my paycheck.
Speaker 3: So I made a plan to get out of there.
Speaker 3: I realized I had enough to retire if I wanted to.
Speaker 3: I was in my I was fifty one, so I
Speaker 3: spent ten or eleven months preparing to leave. I contacted
Speaker 3: the journal about writing for them again. I also started
Speaker 3: working on a book, and after I got my lost
Speaker 3: year in Bonus in early twenty fourteen, I walked in
Speaker 3: and handed in my notice.
Speaker 2: So you said something I have to follow up on.
Speaker 2: I can't tell you how many people have said, you know,
Speaker 2: I don't really do this for the money, and very
Speaker 2: often they get pushedback. But I feel that way, and
Speaker 2: I know you feel that way. What sort of response
Speaker 2: do you get from people when you say, well, I'm
Speaker 2: getting a nice paycheck, but that's not why I do this.
Speaker 3: I think that in this case, I probably did not
Speaker 3: express it to people in that way. I'm not saying
Speaker 3: that I don't like getting paid.
Speaker 2: But well, we all like getting paid. But my question
Speaker 2: is why do we do what we do. Is it
Speaker 2: for the money or is the money like a nice
Speaker 2: aspect of being able to do what you really love?
Speaker 3: And it's really the latter, And I think it probably
Speaker 3: depends on the economic comfort in which you grew up.
Speaker 3: I mean, I grew up in a very comfortable middle
Speaker 3: class or from middle class household, so money was never
Speaker 3: my priority going into the workforce. You know, I wanted
Speaker 3: to cover the costs obviously, I wanted to save for
Speaker 3: the future, but I was never motivated by money. If
Speaker 3: I was motivated by money, I would never have ended
Speaker 3: up in journalism.
Speaker 2: That's interesting, and you have said, especially post diagnosis, you've
Speaker 2: very publicly said, gee, had I known when when the
Speaker 2: clock was going to run out, I would have spent
Speaker 2: money more aggressively. It's kind of interesting that you were
Speaker 2: saving despite having come from a fairly comfortable background. Clarify
Speaker 2: that a little bit. How did you think about spending
Speaker 2: money and how did the diagnosis change your perspectives on this.
Speaker 3: So there are two reasons why I became very focused
Speaker 3: on saving money. First, what I call the great family story.
Speaker 3: So when my great great grandfather died in eighteen eighty eight,
Speaker 3: he was listening in the newspapers as one of the
Speaker 3: richest men in England.
Speaker 2: Really, I had no idea.
Speaker 4: That's fascinating.
Speaker 3: He he was based out of Liverpool and he and
Speaker 3: his brother had launched a cigarette company called Cope Cigarettes
Speaker 3: and they made a ton of money. That fortune ended
Speaker 3: up with my great grandmother, uh huh, and she lived
Speaker 3: the Downton Abbey lifestyle. She had an estate in the
Speaker 3: Cotswolds on which there were five mansions. She lived in
Speaker 3: one and her various children lived in the other houses
Speaker 3: on the estate. The estate was inherited by the kids
Speaker 3: to a person. They blew the money in short order.
Speaker 2: Classic three generations shirtsleeves to shirts life.
Speaker 3: So I grew up with that great family story about
Speaker 3: how you shouldn't you know, waste money, how you should
Speaker 3: think about the future. And then added to that was
Speaker 3: when I got out of college and I got into
Speaker 3: the workforce. I ended up getting married and having kids
Speaker 3: really quickly. I was a father at age twenty five,
Speaker 3: supporting a graduate student wife and living in New York
Speaker 3: City and tight.
Speaker 4: Money's a little tight.
Speaker 3: Yeah, you know, ordering a pizza on a Friday night
Speaker 3: was a questionable decision. And you know, I learned to
Speaker 3: be super careful with money, and that continued for probably
Speaker 3: thirty years. It's really on the last five years that
Speaker 3: I've become happier about spending money, eating out more often,
Speaker 3: traveling more. And of course since my diagnosis, you know,
Speaker 3: I've been doing even more of that. I mean, I
Speaker 3: still want to make sure that my kids and my
Speaker 3: wife inherit plenty of money, but I'm at the point where, Okay,
Speaker 3: I don't need to stay for the future anymore because
Speaker 3: there isn't much future left for me. So we've been
Speaker 3: traveling more. But to come back to the question you're
Speaker 3: going to ask me, which is do I regret my
Speaker 3: earlier frugality. Not really, because what I would say to you, Barry,
Speaker 3: is one sure way that money buys happiness is by
Speaker 3: allowing you not to worry about money. And so I
Speaker 3: have not worried about money for years.
Speaker 2: And to be fair, you know, I don't want to
Speaker 2: engage in what anti Duke calls resulting when you you know,
Speaker 2: all of us are born not knowing how long we
Speaker 2: have and when you get an end date, when you
Speaker 2: know when the game is going to end, well, now
Speaker 2: you have that information, it's not fair to go back
Speaker 2: and say, hey, twenty years ago, had you known, what
Speaker 2: would you've done differently, Because at the time you don't know,
Speaker 2: it's impossible to go back and revisit those decisions. The question, really,
Speaker 2: the fairer question, is the advice you would offer people
Speaker 2: who don't know what the end date is. How much
Speaker 2: should they be saving, how much should they be occasionally
Speaker 2: taking money out and enjoying it? And obviously it's all
Speaker 2: a function of specifics, but how has your perspective changed,
Speaker 2: if at all, when you're giving that sort of advice
Speaker 2: to people.
Speaker 3: So, first of all, I'd say to you, Barry, one
Speaker 3: of the things that's the greatest source of happiness to
Speaker 3: me is just the day to day. Just getting up
Speaker 3: in the morning, having a cup of coffee, sitting at
Speaker 3: my laptop writing in edit, seeing you know, going out
Speaker 3: for lunch, having a glass of wine in the evening
Speaker 3: with Lane. These are not expensive things for me. A
Speaker 3: happy life does not cost a whole lot of money. Yes,
Speaker 3: you know, we all are doing more traveling now, and
Speaker 3: you know we are traveling first class or business class,
Speaker 3: which I wouldn't have done a couple of years ago.
Speaker 3: So yeah, I'm spending more freely. But the real happiness
Speaker 3: I get is basically doing what I've always done, which
Speaker 3: is to do work that I think is important. That
Speaker 3: is a big source of happiness for me, And not
Speaker 3: only does it not cost very much, but it actually
Speaker 3: owns me some money. So up. The other thing I
Speaker 3: would say to people is you do not want to
Speaker 3: do all of this too early on. You know, if
Speaker 3: I had flown business cross regularly in my twenties, it
Speaker 3: would not be special to be today. Having a gradually
Speaker 3: rising standard living throughout your life is a wonderful thing.
Speaker 3: You know. If you stayed at Motel six in your twenties,
Speaker 3: staying at HIGHTT in your sixties seems pretty special, right.
Speaker 4: That's really interesting.
Speaker 2: So let's talk a little bit about Humble Dollar. When
Speaker 2: did you set that up? And you're still you're still
Speaker 2: running that and publishing yourself with a group of other
Speaker 2: people tell us a little bit about the humble Dollar.
Speaker 3: So Humble Dollar was launched right at the end of
Speaker 3: two thousand and sixteen. I used it essentially to take
Speaker 3: a annually updated financial guide that I was producing, and
Speaker 3: I decide just to throw it on the web and
Speaker 3: make it freely available and run some mads against it.
Speaker 3: And as part of that, I invited a few people
Speaker 3: to start writing for the site. And that snowballed over time,
Speaker 3: and I have, you know, probably fifty or sixty people
Speaker 3: who write occasionally for the site. They all do it
Speaker 3: for free. They're all amateur writers. And the thing I
Speaker 3: say to these amateur writers is, you know, you know,
Speaker 3: you may not be financial experts, but you are experts
Speaker 3: on your own life. So I encourage them to write
Speaker 3: about their own financial lives. And the result has been
Speaker 3: that people engage in a level of financial disclosure about
Speaker 3: what they've done with their own money that the readership
Speaker 3: finds fascinating, they find liberating, and it's become to my surprise,
Speaker 3: I mean, this is not what I set out to do.
Speaker 3: It's become a place where people happily talk about their
Speaker 3: own finances, and the readership tends to be very supportive.
Speaker 3: I do carefully moderate comments. I mean, if I feel
Speaker 3: like people are getting too rough on somebody, I'll delete comments.
Speaker 3: I also steer people away from the endless political commentary
Speaker 3: that's poisoned social media and it's becomes I like to
Speaker 3: take a safe place for people to talk about their
Speaker 3: own finances.
Speaker 2: I think that's the right approach. I mean, I had
Speaker 2: a comment section on the blog on the Big Picture
Speaker 2: for I don't know, close to ten years and literally
Speaker 2: millions of comments, and at a certain point, really post
Speaker 2: financial crisis, it kind of began going off the rails
Speaker 2: and I did the same thing you did. It's like, hey,
Speaker 2: this is not a political forum, and if you're gonna
Speaker 2: just really be you know, it takes so much time
Speaker 2: and effort for someone to write something, and it's so
Speaker 2: easy to just dismiss it. It doesn't seem fair, and
Speaker 2: I think your approach is the right way to go.
Speaker 2: Is I don't know what sort of pushback you get
Speaker 2: to it from the readers. But the other thing I
Speaker 2: wanted to ask you about that, not just the other
Speaker 2: writers on the Humble Dollar, but the comments is people
Speaker 2: are kind of weird about money sometimes people are just
Speaker 2: like it's perplexing how some people think about money or
Speaker 2: use money. Tell us a little bit about your experiences
Speaker 2: dealing with the public and trying to be sort of
Speaker 2: calm and rational when consumerism and materialism very often isn't.
Speaker 3: So. I'm not sure I have a clear view on
Speaker 3: how the typical American thinks about money these days. You know,
Speaker 3: what I have is a realtively narrow audience, somewhat older,
Speaker 3: more affluent. They tend to have been drawn to the
Speaker 3: site because they followed me for a number of years.
Speaker 3: A lot of them are indexers. Most of them are
Speaker 3: great savers, and the biggest issue for them is not
Speaker 3: saving more and delay and gratification even more, but learning
Speaker 3: how to spend in retirement. I mean, that is the
Speaker 3: biggest struggle. Obviously, not a struggle for most Americans. People
Speaker 3: do have peculiarities about money. You know this as well
Speaker 3: as I do. It varies enormously, so it's hard to generalize. Right.
Speaker 3: Probably most people are naturally inclined to spend too much
Speaker 3: and to save too little. But in terms of my audience,
Speaker 3: their inclination is to spend too little and save too much.
Speaker 2: Let's talk about that because we have about thirty advisors
Speaker 2: who are cfps that work in my shop, and one
Speaker 2: of the common conversations is I have a client. He's
Speaker 2: got millions of dollars invested. We can't get him to
Speaker 2: spend money. He wants to buy a vacation property, he
Speaker 2: can't pull the trigger. They want to take the family
Speaker 2: on a European trip, and he thinks it's going to
Speaker 2: cost too much. How do you help people who were
Speaker 2: earners and savers pivot in their fifty sixties seventies to
Speaker 2: becoming spenders.
Speaker 3: I think that pushing people to spend more is unlikely
Speaker 3: to work. I think instead you should talk about other goals.
Speaker 3: I mean, do you want to stop giving money to
Speaker 3: your kids? Do you want to start giving money to charity?
Speaker 3: Think of other ways to get them to let go
Speaker 3: of some of their dollars, and maybe that doorway will
Speaker 3: become the doorway to start spending more on themselves. Suddenly,
Speaker 3: I've changed up the last five years. Five years ago,
Speaker 3: pre pandemic, I was very careful about spending. I didn't
Speaker 3: go out to eat a lot, didn't spend a lot
Speaker 3: on travel, And I think one of the things that
Speaker 3: for me coming out of the pandemic was a willingness
Speaker 3: to spend more to God and enjoy life more after
Speaker 3: that long period stuck at home. And of course my
Speaker 3: diagnosis has done that even more. And not only I
Speaker 3: have I've been spending more, I've also been giving more
Speaker 3: to my kids, to charity and so on. So I
Speaker 3: think if you could open the door a little bit
Speaker 3: and people get comfortable with it, then they'll spend more.
Speaker 3: And giving away money, whether to charity or to your children,
Speaker 3: is a way of opening that door.
Speaker 2: So I don't know if this is my perspective or
Speaker 2: if this is accurate or not. I kind of recall
Speaker 2: prior generations the wealth was passed down out of the
Speaker 2: estate after the person passed away.
Speaker 4: They would leave their money to their family.
Speaker 2: It seems like it's a little more modern concept is
Speaker 2: why not give them the money one you can watch
Speaker 2: them enjoy it, buy a house, travel whatever. Is that
Speaker 2: a skewed perspective or do you see something similar?
Speaker 3: No, absolutely, people definitely seem to be happier to give
Speaker 3: away money now. And it's not simply that you get
Speaker 3: the pleasure of seeing your kids enjoy the money. You
Speaker 3: can also guide how they use it. I actually just
Speaker 3: wrote checks at the beginning of the year to both
Speaker 3: my kids, and you know, my kids asked, well, what
Speaker 3: should I do with the money? So it's a chance
Speaker 3: to say, yeah, you know, you want to put it
Speaker 3: into your retirement account, you want to put it into
Speaker 3: your emergency fund, you want to use it to pay
Speaker 3: down the mortgage. The other thing, of course, is that
Speaker 3: you get to see them enjoy it, right, And they
Speaker 3: are at the point where, you know, if I give
Speaker 3: my kids nineteen thousand dollars this year under the gift
Speaker 3: tax exclusion, which is the sum you can give without
Speaker 3: how finding a gift tax return, that money to them
Speaker 3: in their thirties is so much more valuable than it
Speaker 3: is to me in my sixties, right right. I mean,
Speaker 3: they're at a point where they're still under a fair
Speaker 3: amount of financial stress. And I'm not saying that's a
Speaker 3: bad thing. I meanial stress, yeah exactly. That's how you
Speaker 3: learn good spending habits. But you also get a lot
Speaker 3: of pleasure from getting a nineteen thousand dollars check from
Speaker 3: your father.
Speaker 2: So a theme that we seem to be talking about
Speaker 2: is things that have changed. People are giving money away
Speaker 2: sooner rather than as part of the estate. We've talked
Speaker 2: about the shift from active mutual funds to passive ETFs.
Speaker 2: What other significant shifts have you observed over the course
Speaker 2: of your career.
Speaker 3: So we did touch on this as well, which is
Speaker 3: what is considered financial journalism has changed. It used to
Speaker 3: be that everybody was solely focused on investing and solely
Speaker 3: focused on beating the market. I mean, that was the discussion,
Speaker 3: you know, day in day out, and to some extent
Speaker 3: it still is in the financial media, but you know,
Speaker 3: the playing field is widened. So we are talking about
Speaker 3: things in what I consider PUSS finance, home ownership, social security,
Speaker 3: tax management, state planning, and so on. We're also talking
Speaker 3: about how money meets life, things like behavioral finance, things
Speaker 3: like money and happiness. And I think the next big
Speaker 3: focus within personal finance is trying to bring this down
Speaker 3: to the individual level, not just making you know, broad
Speaker 3: generalizations about you know, investors have this behavioral bias or
Speaker 3: that behavioral bias. Not talking in generality is about how
Speaker 3: you can use money to boost happiness. But you, as
Speaker 3: an individual, you know what sort of individual are you?
Speaker 3: Are you a savior, are you a spender? You know
Speaker 3: what is it from your past that is triggering you.
Speaker 3: I think that in the years ahead, we will start
Speaker 3: focusing more on that and that will lead to even
Speaker 3: more interesting conversations about money as people get to know
Speaker 3: themselves better and that works into how they manage their money.
Speaker 2: So let's talk a little bit about your announcement. Last year,
Speaker 2: you received a stage four lung cancer diagnosis. You're a
Speaker 2: non smoker, so this is the genetic variation of the disease.
Speaker 2: Tell us a little bit about that diagnosis and what
Speaker 2: motivated you to share it so publicly.
Speaker 3: So back in May of last year, Barry, I started
Speaker 3: having balance issues and I thought I might have an
Speaker 3: ear infection. I couldn't figure out quite what was going on,
Speaker 3: so I on a Sunday decided to go to an
Speaker 3: urgent care clinic and the doctor told me that the
Speaker 3: urgent care clinic must have realized something that was going
Speaker 3: on that you know, was obviously I was missing. So
Speaker 3: I got dispatched the emergency room and the next thing
Speaker 3: you know, I was stuck in the stroke victim really
Speaker 3: ward at at a hospital in Philadelphia. So it was
Speaker 3: sixteen beds up there, guys who are intbated, plus me
Speaker 3: sitting on the edge of my bed, like what am
Speaker 3: I doing here? So after some scans, some MRIs, they
Speaker 3: realized that I had not had a minor stroke. Instead
Speaker 3: I had cancer. They found ten lesions on my brain
Speaker 3: and a gulf ball size growth on my lungs, and
Speaker 3: after some some genetic testing and so on, they discovered
Speaker 3: that I had a relatively rare form of cancer that
Speaker 3: tends to flick people of Asian origin and women, called
Speaker 3: eachfr exon twenty and it's a relatively aggressive cancer. The
Speaker 3: median life expectancy for people who have each gfr x
Speaker 3: on twenty is sixteen months. So by the time I
Speaker 3: got into see the ecologist, she suggested I might have
Speaker 3: a year to live, and that was in June of
Speaker 3: twenty twenty four. Since then, I've had a couple more
Speaker 3: lesions on my brain and the cancer has also spread
Speaker 3: my spine. In both cases, the the cancer my spine
Speaker 3: was dealt with with radiation, similarly to the new lesions
Speaker 3: on my brain. I've also had recently had a to
Speaker 3: hour procedure to shore up my spine because of the
Speaker 3: damage done by the cancer. Otherwise there's a risk I
Speaker 3: was going to fracture my spine. So as of today,
Speaker 3: I'm feeling okay. But you know, the cancer is you know,
Speaker 3: isn't my blood. It's likely to crop up somewhere else.
Speaker 3: I think I'm gonna beat the one year mark that
Speaker 3: I was given. I'm hoping I'll make it through twenty
Speaker 3: twenty five, but you know, realistically, it's unlikely that I'm
Speaker 3: gonna make it much beyond them, though of course I
Speaker 3: would love it. I mean, I have to say this, Barry. Yeah,
Speaker 3: I love every day and I want every moment I
Speaker 3: can get, But you have to be a realistic and
Speaker 3: you know, this is stage four cancer. There is no recovery.
Speaker 3: You know, it's just a matter of trying to control
Speaker 3: the cancer. And do I have the good fortune that
Speaker 3: came into this in reasonably good physical shape. So I've
Speaker 3: coped with the treatment fairly well. You know, I'm having
Speaker 3: chemo immunotherapy every three weeks, taking countless medications. You know,
Speaker 3: I've had these radiation treatments. As I said, I just
Speaker 3: had my back operated on in order to shore it up.
Speaker 3: But you know, at some point, you know, cancer is
Speaker 3: gonna win. I just don't know when. So come back
Speaker 3: to answer the question that you asked, So, Yeah, after
Speaker 3: I got the diagnosis, I wrote about it on my
Speaker 3: website and you know, put out the word on social media,
Speaker 3: and the response to me was quite surprising. I mean,
Speaker 3: not only did I get, you know, an outpouring of
Speaker 3: love heard from people I hadn't heard from in years,
Speaker 3: readers have shown a lot of love that People also said,
Speaker 3: you know, you're so brave for sharing your diagnosis. I
Speaker 3: was like, brave. I've spent my entire life writing about
Speaker 3: my own fine answers. Why would I Why would I
Speaker 3: stop now? And you know, is it that people don't
Speaker 3: talk about this stuff because of denial? Is it because
Speaker 3: you know, they're just they're embarrassed? Is it because fear
Speaker 3: of death? I don't know, but it seems like the
Speaker 3: most natural thing in the world to write about it,
Speaker 3: And to my surprise, I seem to have done a
Speaker 3: fair amount of good by doing so. People really appreciate
Speaker 3: somebody talking openly about what it is, what it's like
Speaker 3: to have a terminal diagnosis. I would also say to
Speaker 3: you that a short life expectancy, this notion that your
Speaker 3: life is finite. I mean, of course that's true for
Speaker 3: all of us, right, but it really does make you
Speaker 3: focus on the day to day. I mean, when I,
Speaker 3: you know, get up in the morning, I really noticed
Speaker 3: the taste of the coffee. When I take a walk,
Speaker 3: I really notice how beautiful the trees are, how lovely
Speaker 3: the sky is. It really does focus the mind. And
Speaker 3: if anything, because I know the time is finite, I'm
Speaker 3: joined the day to day even more. It's strange, but
Speaker 3: it's true. And I would say to people, you know,
Speaker 3: even if you don't have a terminal diagnosis, you know,
Speaker 3: try to be sort of more purposeful and more mindful
Speaker 3: about each day because you will get greater happiness out
Speaker 3: of each day.
Speaker 2: Well, that that's really good advice. You wrote a Wall
Speaker 2: Street Journal piece some final personal finance advice, and some
Speaker 2: of the things you discussed were really, I don't want
Speaker 2: to say funny, but just the way you phrase them,
Speaker 2: we're so blunt and matter of fact, it was really intriguing.
Speaker 2: Let me run through a few of these, and I'd
Speaker 2: like to get your your thoughts on it. The first
Speaker 2: one that leapt off the page was death is hard
Speaker 2: work explain.
Speaker 3: So I've always had my finances pretty well organized, but
Speaker 3: until you know that you're about to pop off, you
Speaker 3: realize how much, sorry to use the phrase, how much
Speaker 3: crap you've accumulated, and you realize how hard it will
Speaker 3: be for your family to figure out your finances. So
Speaker 3: in the weeks and months that followed, I've done all
Speaker 3: kinds of things. I got a new will, powers of attorney.
Speaker 3: I closed accounts so that there is there are fewer
Speaker 3: accounts for my.
Speaker 2: Everything was consolidated in one place.
Speaker 3: They were already consolidated. But for instance, I had a
Speaker 3: a wroth for one K, and it's like, I'm I'm
Speaker 3: not gonna I'm not gonna fund this anymore, so I'm
Speaker 3: going to close it and roll it into my regular IRA.
Speaker 3: I had an inherited diarray from my father. It didn't
Speaker 3: have very much in it, so I closed that out.
Speaker 3: But also downe in the basement, I had a box
Speaker 3: of papers, a couple of boxes of papers. Some of
Speaker 3: them went back to when I was in college. It's like,
Speaker 3: what I had every Christmas card from nineteen eighty six?
Speaker 3: Why do I need every Christmas card from nineteen eighty six?
Speaker 3: So I just started trashing all of this stuff. And
Speaker 3: you carry around this stuff for decades, one day you're
Speaker 3: gonna look at it. Well, this was my moment to
Speaker 3: look at it, and you know what I didn't. I
Speaker 3: just started sticking in the recycling bind. So there was
Speaker 3: a lot of work to be done in order to
Speaker 3: simplify things for my for my wife and for my kids.
Speaker 3: And I still have more work to do. So I
Speaker 3: all the utilities are currently in my name, and in
Speaker 3: the weeks ahead, one of the final things I want
Speaker 3: to do is to make sure that I move you know,
Speaker 3: the internet, the cell phones, the gas, the water, the
Speaker 3: electricity olint Elane's name, so that this one less thing
Speaker 3: for her to do after I'm gone.
Speaker 4: Huh, really really very thoughtful.
Speaker 2: The other thing that really leapt off the page was
Speaker 2: so much talking.
Speaker 3: So two days after my diagnosis, both my kids were
Speaker 3: in town and was in town. I sat them down.
Speaker 3: I explained my estate plan, and of course all this
Speaker 3: was obvious to me. You know, while there's this traditional iray,
Speaker 3: there are these roth iro rays, the regular taxable accounts,
Speaker 3: there's you know this account that yeah, and they're looking
Speaker 3: at me like like during the headlights, like what is
Speaker 3: all this about? And it's when I realized that the
Speaker 3: stuff that's second nature to me isn't second nature to
Speaker 3: my kids. So had an hour discussion then and so
Speaker 3: many discussions since then as I've tried to explain, you
Speaker 3: know why you should not spend the roth ira until
Speaker 3: the end of the ten year period, but you'll have
Speaker 3: to draw down the traditional ira over time because there's
Speaker 3: going to be taxable income on top of your income.
Speaker 3: Lots of stuff like that. That second nature to me,
Speaker 3: just wasn't clear to them.
Speaker 2: And the last thing was simply taxing matters. How I'm
Speaker 2: assuming your state is not going to be in the
Speaker 2: taxable size, So what do you discuss with your wife
Speaker 2: and kids about taxes?
Speaker 3: So my kids will be subject to the Pennsylvania inheritance
Speaker 3: tax four and a half percent, and so you know,
Speaker 3: that's why I've started to distribute money to them now.
Speaker 3: I had written a private mortgage for my daughter. It
Speaker 3: was currently a little over three hundred thousand dollars, and
Speaker 3: I forgave that loan and then adjusted how much she's
Speaker 3: going to get versus how much my son is going
Speaker 3: to get. And as long as I make it through
Speaker 3: to July past the one year mark, then Hannah won't
Speaker 3: have to pay the inheritance tax on that money.
Speaker 2: It becomes part of the estate and it's non taxable
Speaker 2: at that point.
Speaker 3: Well, it's not part of the estate at all, so
Speaker 3: she won't have you know, she won't have to pay
Speaker 3: the inheritance tax on that three hundred thousand dollars. Okay,
Speaker 3: So there are a variety of things like that that
Speaker 3: you know, I've done in order to make things a
Speaker 3: little less taxing. For my kids. It's also why as
Speaker 3: soon as January one past this year, that's why I
Speaker 3: made them a gift for twenty twenty five. Similarly, for
Speaker 3: my grandchildren, you know, I funded their five twenty nine
Speaker 3: plans early in the year so that I can get
Speaker 3: that money, you know, out of my estate and hopefully
Speaker 3: I'll make it past the one year mark, so it's
Speaker 3: not subject to the inheritance tax.
Speaker 4: Really really intriguing.
Speaker 2: So given you your diagnosis, has your perspectives on money
Speaker 2: and happiness at all changed? How have you thought about
Speaker 2: some of your previous philosophies and views.
Speaker 3: I think one of the things that makes me happy
Speaker 3: through this period is not even that I don't have
Speaker 3: to worry about money. With everything else that's going on,
Speaker 3: money is not a worry. So when I go back
Speaker 3: to the twenties and thirties, and the sacrifices I made,
Speaker 3: I'm glad I made them so that I have that
Speaker 3: financial security today, so that amid everything else that's going on,
Speaker 3: money is not something that's top of mind for me.
Speaker 3: Truth is, I haven't really worried about money for years,
Speaker 3: but you know, it would be terrible to be faced
Speaker 3: with huge medical costs potentially and not have the finances
Speaker 3: to cover it. I've also, however, you know, thought about
Speaker 3: you know, this is my retirement, right. If I don't
Speaker 3: enjoy my retirement now such as it is, I'm never
Speaker 3: gonna enjoy. So yeah, I have been spending more freely.
Speaker 3: You know. We went to London recently, we went to Ireland.
Speaker 3: I took the family on a fairly luxurious long weekend.
Speaker 3: This month, we're going to Paris. We've got other trips
Speaker 3: planned in the months ahead. There's a limit how far
Speaker 3: I can plan ahead because I never know where and
Speaker 3: I'm going to get derailed by some bad diagnosis and
Speaker 3: I hate the idea of the cancelation fees. But you know,
Speaker 3: we do have trips planned, and we've booked the hotels,
Speaker 3: but I haven't booked the flights because I don't have
Speaker 3: to cancel them.
Speaker 4: Huh.
Speaker 2: So, So we talked earlier about money and happiness. I'm
Speaker 2: curious as to how you think about the relationship between
Speaker 2: life satisfaction, well being, and what money does.
Speaker 4: And does not help you obtain.
Speaker 3: So money, I believe can do three things for you. One,
Speaker 3: it can allow you not to worry about money. We've
Speaker 3: talked about this already in many ways. You know, money
Speaker 3: doesn't buy happiness. It lets you avoid unhappines it's the
Speaker 3: unhappiness of being broke. But two, money can buy you
Speaker 3: the financial freedom spend your days doing what you love.
Speaker 3: If you love your job, that's great, that's the greatest
Speaker 3: combination get. But a lot of people clearly don't love
Speaker 3: their jobs. So what they want is the financial freedom
Speaker 3: to do whatever it is they wished to be able
Speaker 3: to do. And you get that by saving diligently a
Speaker 3: year after year, decade after decade. And then third, money
Speaker 3: can allow you to have special times with friends and
Speaker 3: family and you know, whether it's you know, the barbecue,
Speaker 3: the special vacation, flying across the country to see the grandchildren,
Speaker 3: whatever it is, money can allow you to do that.
Speaker 3: So those three things, avoiding on the unhappiness of being broke.
Speaker 3: Two doing whatever you think is fulfilling, and three is
Speaker 3: spending special times with friends and family. That's what money
Speaker 3: can do for you. That is the way that money
Speaker 3: can buy happiness.
Speaker 2: Huh, very intriguing. So you've mentioned a lot of your
Speaker 2: earlier in life financial decisions have set you up in
Speaker 2: a good financial situation today. What what decisions do you
Speaker 2: look back and say, oh, I'm really glad I did that.
Speaker 2: What were the with hindsight, with the benefit of hindsight,
Speaker 2: what were the choices you made that you most appreciate today.
Speaker 3: Probably like everybody you know, Barry who has you know,
Speaker 3: mass and wealth on their own, The smartest thing I
Speaker 3: ever did was to be a good saver. You know,
Speaker 3: if you know, if you're a good saver, you know
Speaker 3: everything else is, everything's going to turn out fine. Even
Speaker 3: if you're not a great investor. As long as you're
Speaker 3: a good saver, you know, good things will happen. If
Speaker 3: you're a lousy saver, but a great investor, you know,
Speaker 3: it's unlikely that you're going to succeed financially. So yeah,
Speaker 3: saving with the number one thing, and then too, I
Speaker 3: was very early as you might imagine on the indexing train,
Speaker 3: and that has also rebounded to my benefit. But it's
Speaker 3: it's been a saver that was not the list.
Speaker 2: So so let me flip that question around. What do
Speaker 2: you think most people get wrong? What are some of
Speaker 2: the biggest myths in investing in finance that we often
Speaker 2: have a hard time getting passed?
Speaker 3: Well, suddenly, you know, this focus on investing, this focusing
Speaker 3: on beating the market is the wrong place to you know,
Speaker 3: be spending your time. But let me let me broaden
Speaker 3: it out, Barry, So something that I've been thinking about
Speaker 3: a lot of late, which is most people, and this
Speaker 3: was true of me in the early days, spend too
Speaker 3: much time worrying in general and worrying about money specifically.
Speaker 3: And I think this is hardwired into us. You know,
Speaker 3: we are here because our hunter gather ancestors survived. And
Speaker 3: why did they survive Because they were worriers, right, They
Speaker 3: worried about everything, you know, they wanted to make sure
Speaker 3: that they were going to be okay no matter what happened. Well,
Speaker 3: guess what, you know, the sabretooth tiger is not going
Speaker 3: to leap out of the bushes. We do not need
Speaker 3: to worry the way our ancestors used to. And yet
Speaker 3: people worry constantly. I mean, people are serial warriors. It's
Speaker 3: like the hedonic treadmill. We talk about how, you know,
Speaker 3: we strive towards goals, hoping that they're gonna make us
Speaker 3: happy forever, and then boom, we achieve whatever it is,
Speaker 3: and we immediately saw us driving off to something else.
Speaker 3: We can't get off that treadmill. But there's also a
Speaker 3: worry treadmill, and we worry about something blah blah bah
Speaker 3: bah bah. Choose away from us. The worry goes away.
Speaker 3: We're onto something else. People cannot escape their worries. And
Speaker 3: what I would want for listeners and I want for
Speaker 3: my reader is is please find some way to worry less.
Speaker 3: Because if you do the right stuff financially, you live
Speaker 3: bene your means, you're not crazy with your investments. Hopefully
Speaker 3: you index, you know, hopefully you don't take on too
Speaker 3: much debt. You know you're not gonna get it all right,
Speaker 3: but good things will happen in the end. You don't
Speaker 3: have to spend thirty forty years worrying about retirement. You
Speaker 3: don't have to get to retirement and worry that you're
Speaker 3: spending a crazy amount of money because you're going to
Speaker 3: get derailed by the stock market or whatever it is.
Speaker 3: Things are likely to walk out just fine. We are
Speaker 3: not you know, back you know in you know, like
Speaker 3: our hunter gather ancestors, you know, worried about every threat.
Speaker 3: You know, it's it's time to like go of those worries.
Speaker 3: That to me is the biggest mistake people make. And
Speaker 3: I don't have a magic cure for getting away from
Speaker 3: those worries, but I do believe that is the number
Speaker 3: one thing we could do for our own happiness.
Speaker 2: Huh really really very interesting. Of all the things you've
Speaker 2: learned over the course of being a personal finance columnist
Speaker 2: first for Forbes and for the journal and everything you've
Speaker 2: done at the Humble Dollar, aside from worry less, what
Speaker 2: do you think is the most important piece of financial
Speaker 2: wisdom that you want to pass along that you want
Speaker 2: to have outlive you What what's the most significant thing
Speaker 2: you wish people would embrace then it would make their
Speaker 2: life better.
Speaker 3: I think what people need to do is know themselves
Speaker 3: right much more than you know, what's the expensive issue
Speaker 3: on their index funds or you know, which is the
Speaker 3: best age of which claim social security. Know yourself, because
Speaker 3: everybody has different financial needs and different financial worries and
Speaker 3: so on. So if you customize your finances to your
Speaker 3: own needs, not to somebody else's needs, not to what
Speaker 3: your brother in law says, not to what you heard
Speaker 3: on the TV. If you focus it to your own needs,
Speaker 3: what you worry about the most, that is likely to
Speaker 3: lead you to have a happier financial life. I think
Speaker 3: one of the problems is that we live too much
Speaker 3: under the influence of others. It's not just the influence
Speaker 3: of people today. You know, our friends and family and
Speaker 3: the people we see in the media, but also we
Speaker 3: live under the influence of the past, what our parents
Speaker 3: told us or what they modeled for us. People go
Speaker 3: through their life buying what their parents bought because they
Speaker 3: thought it made their parents happy, and so they think
Speaker 3: it's gonna make them happy. Probably not gonna work out
Speaker 3: that way. So try to think for yourself and try
Speaker 3: to know yourself.
Speaker 2: Good good advice. Let me throw you a curveball. I
Speaker 2: remember last summer, towards the end of July, you were
Speaker 2: the focus of a New York Times piece headline a
Speaker 2: money guru bit big on a very long life. Then
Speaker 2: he got cancer. You're usually the author of pieces like that.
Speaker 3: How odd was it to.
Speaker 2: Be the subject of a piece I know you as
Speaker 2: a humble person, not just because of the Humble Dollar website.
Speaker 2: You're not seeking to be the center of attention. How
Speaker 2: strange was that entire experience?
Speaker 3: Well, Barry, to be honest, sitting here getting quizzed by
Speaker 3: you is not that difficult from different from getting quizzed
Speaker 3: by Ron Lieber at the New York Times. But that's it. Yes, Yeah,
Speaker 3: I personally do not want to be the center of attention.
Speaker 3: I would like the focus to be on my writing
Speaker 3: rather than me as a person. But you know, I
Speaker 3: knew Ron was not gonna be unkind. I've known Ron
Speaker 3: for decades. He's a friend of mine. Much more on
Speaker 3: couple actually was the photo shoot where I have to
Speaker 3: sit there and try to smile for now. But it
Speaker 3: sort of goes back to what I was talked about
Speaker 3: earlier about the amount of publicity that my diagnosis has generated.
Speaker 3: I mean, since that came out, you know, I had
Speaker 3: the Wall Street Journal article that I wrote, I had,
Speaker 3: I wrote a piece for the Washington Post. I've got
Speaker 3: a piece coming out in the ARP magazine. Ron Lieber
Speaker 3: wrote that piece for The New York Times. I also
Speaker 3: wrote a piece for my father's old paper in London,
Speaker 3: the Telegraph, which was a lot of fun. Well maybe
Speaker 3: not fun, but it was great to be in there.
Speaker 3: So Yeah, the focus on my diagnosis is a little
Speaker 3: bit odd and Cerddainly, it's uncomfortable for me to be
Speaker 3: the folks of attention wrong on my writing. But I
Speaker 3: feel in some way in a way that I didn't
Speaker 3: really realize that it's it's it's doing some good and
Speaker 3: being of service to others has always been really important
Speaker 3: to me. I mean, I feel like if I'm not
Speaker 3: doing some little good in the world, I'm I'm not
Speaker 3: spending my days usefully. I never want to spend the
Speaker 3: days focused solely on my own needs.
Speaker 2: But you were able to use the opportunity to amplify
Speaker 2: the good message that you had for people, which was, hey,
Speaker 2: here's just a fundamentally smart way to go about managing
Speaker 2: not just your investing but your personal finance and your life.
Speaker 2: That focus must have been gratifying to get that message out.
Speaker 3: No, absolutely it was, but it was also a little
Speaker 3: bit uncomfortable.
Speaker 2: Yeah, I can, I can certainly see. Knowing you and
Speaker 2: knowing your personality, I can see it was something like,
Speaker 2: all right, let me uh, let me make this trade
Speaker 2: off and and but it all seems to have accomplished
Speaker 2: the goal of spreading what you wanted to share with
Speaker 2: the public.
Speaker 3: And you know, for as long as I am able,
Speaker 3: you know, I want to be able to continue writing.
Speaker 3: I do have a whole bunch of articles that I
Speaker 3: still hope to pen. But you know, I know this,
Speaker 3: this ride is gonna it's going to come to an end,
Speaker 3: probably sooner than I would like. But you know, for
Speaker 3: now what I can still write, well, I can still
Speaker 3: get my fingers on the keyboard. I hope to keep
Speaker 3: punching out a few more articles.
Speaker 2: So normally at this point I shift to some of
Speaker 2: the favorite questions I ask all of my guests.
Speaker 4: I'm not sure how relevant.
Speaker 2: These are, but but let's uh, let's run through them
Speaker 2: for posterity stake. What's keeping you entertained these days? What
Speaker 2: are you doing if you just want to kick back
Speaker 2: and relax a little bit.
Speaker 3: Yeah, that's not a thing. I'm very good at kicking
Speaker 3: back and relaxing. That said, as I mentioned, if I'm
Speaker 3: gonna be retired, which I don't think I'll ever be
Speaker 3: fully retired. This is the moment, right. If I don't
Speaker 3: do it now, I'm never gonna get to do it.
Speaker 3: And for the first time, probably twenty years, I actually
Speaker 3: started watching sports again on TV HM and it sort
Speaker 3: of takes me back to being a teenager and so on,
Speaker 3: sitting on the couch. I'm not sure I could ever
Speaker 3: sit through a whole football game, but maybe I could
Speaker 3: watch the final quarter, and so I've been trying a
Speaker 3: little bit of that.
Speaker 2: So, yeah, have you played with red zone at all?
Speaker 4: No? My nephews are just crazy about it.
Speaker 2: It's just the highlights of every big game kind of
Speaker 2: all at once. It's just it's an amazing If you're
Speaker 2: a football fan, you might want to explore that. It's
Speaker 2: pretty bonkers.
Speaker 3: So I live down in Philadelphia, So the Eagles are
Speaker 3: an obsession. Yeah, and you can't help but catch a
Speaker 3: little bit of the fever. On a Sunday afternoon, half
Speaker 3: the people and this is not actuation, half the people
Speaker 3: you see walking on the street are wearing Eagles gear.
Speaker 4: Wow.
Speaker 3: I mean, that's how much of an obsession it is
Speaker 3: in the city. And it's fun. You know. I've been
Speaker 3: taught by my son in law that when you go
Speaker 3: into a store in Philadelphia, you know, to buy something
Speaker 3: on a Sunday, what you have to say when you
Speaker 3: leave is go birds.
Speaker 4: That's very funny.
Speaker 2: Tell us about your mentors who helped shape your career.
Speaker 3: So I would call out one person, which was the
Speaker 3: editor of this little newspaper that I worked for when
Speaker 3: I was nineteen. Her name was Leslie Levin, and she
Speaker 3: had just got out of the American University Journalism school,
Speaker 3: and she had all of this knowledge about journalism that
Speaker 3: she was anxious to pass on, and literally she taught
Speaker 3: me how to write, she taught me how to report.
Speaker 3: It was a great experience. I was so fortunate. And
Speaker 3: in fact, this was all before I went to college,
Speaker 3: and I took the advice that she gave me about,
Speaker 3: you know, how to run a small newspaper, and then
Speaker 3: I took it and I used it when I edited
Speaker 3: the student newspaper at Cambridge, and I've used it ever since.
Speaker 3: So if I ever, for instance, see a piece of
Speaker 3: copy with an exclamation mark on it, immediately here Leslie's
Speaker 3: voice in my back my head, saying, you only ever
Speaker 3: used the exclamation mark if it's World War III, otherwise
Speaker 3: no exclamation marks.
Speaker 2: That's really interesting. Tell us about some of your favorite books.
Speaker 4: What have you been reading recently.
Speaker 3: Lately? I've been doing a lot of reading about Philadelphia
Speaker 3: and about the neighborhood where I live. I live very
Speaker 3: close to the School River, across from the Pence the
Speaker 3: Penn U Penn campus and where I live now used
Speaker 3: to be full of Irish immigrants who worked on the
Speaker 3: wolves along the schookel and next to me is a
Speaker 3: very an elderly lady. I think she's probably in her nineties,
Speaker 3: and her son lives with her, and he's in his
Speaker 3: mid sixties. And Charlie tells me that when he was
Speaker 3: growing up in the neighborhood there were two Italian families
Speaker 3: and everybody else was Irish. And the fact that he
Speaker 3: was aware that there were only two families in the
Speaker 3: neighborhood who were Italian and everybody else was Irish tells
Speaker 3: you something about that neighborhood at the time. So I
Speaker 3: enjoyed reading about Philadelphia. But in terms of favorite books,
Speaker 3: the best time in terms of learning about finance was
Speaker 3: when I was at Forbes in the late nineteen eighties.
Speaker 3: Back then, the workplace was less pressured. There's less drive
Speaker 3: to produce, and there was more time to sort of sit,
Speaker 3: kick back and relax and read. And Forbes had a
Speaker 3: great library. So back in those days, you know, I
Speaker 3: read Burton Malkiel's ran Walk Down Wall Street. I read
Speaker 3: all the books of Wall Street history by John Brooks,
Speaker 3: and I picked to remember.
Speaker 2: Once upon a Time in Galanda's that the Go Go
Speaker 2: years right.
Speaker 3: And then there was this little book that I discovered
Speaker 3: in the Forbes library called Investment Policy by Charles Ellis.
Speaker 3: And Investment Policy, I believe, came out in nineteen eighty six,
Speaker 3: and I think the original edition was ninety four pages,
Speaker 3: and it just seemed like Charlie went through and picked
Speaker 3: out every word in that book with enormous care. Since then,
Speaker 3: the book has ballooned a little bit. It's over two
Speaker 3: hundred pages. But that and it's now of course called
Speaker 3: Winning the Losers Game. That's right.
Speaker 2: That in fact, that began life as a research paper.
Speaker 2: I don't remember if it was the CFA Institute, but
Speaker 2: it was published.
Speaker 3: Somewhere I think with the General of Portfolio manage.
Speaker 2: I think that's exactly right. But it was a short
Speaker 2: twenty thirty page thing which has persisted.
Speaker 4: Winning the Losers.
Speaker 2: Game is one of my favorite finance books. And you
Speaker 2: know he Charlie has a new book coming out this year.
Speaker 3: Yep, Charlie's Unstoppable. Yes, if you can find Charlie's original book,
Speaker 3: Investment Policy, which is the one that I believe came
Speaker 3: out in eighty six, you know, it's ninety four pages,
Speaker 3: it's a great read, and that I think was probably
Speaker 3: the most influential book on investing that I've ever read.
Speaker 2: Wow, that's a that's a big deal. I'm gonna have
Speaker 2: to hunt that down. I may have to reactivate my
Speaker 2: eBay account to get that. Our final two questions, what
Speaker 2: sort of advice would you give to a recent college
Speaker 2: grad interest in the career in financial journalism or investment?
Speaker 3: Well, so, I think I already obnsered the financial journalism one,
Speaker 3: which is don't do it. I'm not a tilly serious.
Speaker 3: I mean, journalism is the most fun you can have
Speaker 3: while keeping your clothes on. I mean it's you know,
Speaker 3: newsrooms are great places to be. You know, you will
Speaker 3: never meet a group of people who are more fun
Speaker 3: to be with and more cynical. I mean it's just
Speaker 3: so much fun to be in a newsroom. So yeah,
Speaker 3: go and be a journalist for a couple of years,
Speaker 3: learn how to write, learn about the world, and then
Speaker 3: go and make do something will make you some money.
Speaker 3: But spending a couple of years in journalism in your
Speaker 3: twenties when you don't really need to worry about making
Speaker 3: a lot of money is a great thing to do.
Speaker 3: So yeah, I would encourage people to do it, but
Speaker 3: don't imagine you're gonna make a career out of it.
Speaker 2: And our final question, what do you know about the
Speaker 2: world of investing today? You wish you knew thirty years
Speaker 2: or so ago.
Speaker 3: That's an interesting question. Why do I wish I knew?
Speaker 3: I guess what I wish I knew was to was
Speaker 3: that if I did the right things for long enough,
Speaker 3: everything was going to work out just fine. If you know,
Speaker 3: as long as I say, as long as I didn't
Speaker 3: fiddle around too much on my portfolio, if I just
Speaker 3: let it ride, you know, I could just go off
Speaker 3: and worry about other stuff, not worry about it at all.
Speaker 3: You know, things generally do work out today. You know,
Speaker 3: there are not many people you know who go into
Speaker 3: the world, out into the world, and you know are
Speaker 3: reasonably prudent and managing money and soon who don't successfully
Speaker 3: get to retirement. You don't need to fret about it
Speaker 3: every step of the way. You don't need to analyze
Speaker 3: every month spending in quicka and you don't need to
Speaker 3: find tune your portfolio every month. Just you know, set
Speaker 3: up a sensible acid allocation, buy some index funds saved regularly,
Speaker 3: and good things will happen.
Speaker 2: Jonathan, thank you so much for being so generous with
Speaker 2: your time and your incredibly insightful advice. We have been
Speaker 2: speaking with Jonathan Clements. He is the author of numerous
Speaker 2: finance books that you can find at your favorite bookseller,
Speaker 2: as well as the Humble Dollar blog. If you enjoy
Speaker 2: this conversation, well, check out any of the five hundred
Speaker 2: or so we've had over the past ten years. You
Speaker 2: can find those at iTunes, Spotify, YouTube, wherever you find
Speaker 2: your favorite podcast, and check out my new book, How
Speaker 2: Not to Invest The bad ideas, numbers, and behavior that
Speaker 2: destroys wealth and how to avoid them. I would be
Speaker 2: remiss if I did not thank the Cracked team that
Speaker 2: helps me put these conversations together each week. My audio
Speaker 2: engineer is John Wasserman. Anna Luke is my producer. Sean
Speaker 2: Russo is my researcher. Sage Bauman is the head of
Speaker 2: podcasts at Bloomberg. I'm Barry Ritolts. You've been listening to
Speaker 2: Masters in Business on Bloomberg Radio.