Morgan Housel: Get Rich, Stay Rich

Transcript from https://podmenti.com/t/1384775edaf14941

Not having FOMO.
Is the single most important financial skill. I think it's so important that you cannot ever imagine accumulating significant wealth over your lifetime if you are susceptible to FOMO.
Like if there's literally one thing.
The one trait that you want.
That's gonna allow you to accumulate wealth, it's the lack of FOMO. Why do index funds work so well?
Two reasons.
One is it's always gonna be the case that a very small number of stocks account for the majority of returns. The other is I think the
Whether it's like an investing debate or a saving or spending debate, they're not actually debating. It's people with different personalities talking over each other. And once you come to terms with that,
But there's not one right answer for any of this. What's the difference between being rich and being wealthy? Rich is when you have enough money to make your mortgage payment, make your car payment. You can pay off your credit card bill every month. Wealthy, I think, is when you have a degree of independence and autonomy. The weird thing here is that wealth is the money that you don't spend.
Let's switch gears and talk about reading and writing. How do you select what you read? I heard this idea, I think it was from Patrick O'Shaughnessy many years ago, who said you want a wide funnel and a tight filter. You're one of the best storytellers of our generation. Teach me how to tell a story.
Like Morgan House.
I think it's two things.
One is
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Today my guest is Morgan Housel, the best selling author of The Psychology of Money, and same as ever.
Morgan's unique perspective on finance, human behavior, and life has transformed countless people, including myself.
And how I approached life.
And investing.
In this episode we explore the powerful concept of positioning yourself to play the long game.
Morgan shares his insights on what it means to adopt a long-term set and the practical steps you can take to cultivate this perspective in your own life.
While much of this conversation is about money, including how to make it and how to keep it, you'll discover that it's really a revealing lens for understanding psychology and human nature.
We talk about how recognizing that different people are playing different games in life and how this insight can help you make better decisions.
We also talk about writing. As a writer, Morgan has mastered the art of using stories as leverage for statistics. He shares his approach to writing and how he crafts compelling narratives that make complex ideas accessible and memorable.
We also explore the critical distinction between rich and wealthy, and how understanding this difference can transform your relationship with not only money.
But success.
By listening to this episode, you'll gain a wealth of insights and practical strategies for navigating the challenges of investing, personal growth, and life itself.
Morgan's wisdom will inspire you to think different, embrace the long game.
and find greater meaning and joy in your journey.
It's time.
To listen.
And learn.

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I wanna start with
A bit of a paradox.
The less money we seem to have, the more risks we're willing to take.
Can you explain that to me?
Daniel Conneman. Uh
said something along the lines of
When all your options are bad.
your willingness to take a risk explodes.
Because you got nothing else to lose.
And I think you see this in a lot of areas in life.
One that I see it.
all the time in. That is a a big news story in the United States. I don't know if it's the same in Canada, but
In America, we spend something like a hundred billion dollars a year on lottery tickets.
hundred billion dollars massive that people spend on lottery tickets. And if you dig into who's buying it,
It's
Almost exclusively poor people.
They buy the vast majority of lottery tickets, and the poorer you are.
The more lottery tickets you buy.
And these are some people for whom they literally can't
Buy food.
Or they might l be homeless.
And when whatever little money they have.
They go into a seven eleven and buy some scratcher tickets.
And you might look at that and say, like you you idiots, like what are you doing?
Yeah, this is the dumbest idea I've ever seen.
And maybe that's the right answer. Like maybe you could just stop there, but
In Kahneman's framework, I think it starts to make a little bit more sense. If you have someone
In a situation like this.
Who in their mind at least they think
I can't get a raise. I can't build a career. I can't get promoted. I'm kinda stuck in minimum wage job. If that's their mindset, then buying a lottery ticket.
might be the only time in their life.
where they can say to themselves and believe like, This is my literally ticket out of here.
This is the only chance that I have to get ahead.
And so it starts to make a little bit more sense in that situation. And maybe you contrast that with someone who has
A very high net worth.
They might be like, look, I could just put all my money in treasuries and just live for the rest of my life just off the interest.
And when you have so much, you don't need to take the risk. Well, it comes down to perspective, right? So like if I could see what you see and feel what you feel, that decision would be rational. Yeah.
There's so many things in life where you can look at other
people and the and the decisions they make, not just in money, but for politics, their health decisions, whatever it might be.
And fiercely disagree with it.
But what's easy to overlook is that if I were in your shoes and had experienced what you had, had the same family dynamic that you do.
The same DNA that you do, I would do the exact same thing. And I think that is a more qu important question to ask yourself. Like
What financial decisions would I make differently?
If I were born in a different era.
Born to different parents, born in a different country.
And I think you can't answer that question, honestly, because you don't know, but you know there would be a lot of things different.
that are completely outside of your control. Where and when you were born.
Would have a massive impact. You and I should not pretend that if we were born in the 1960s in Nigeria, that we would have the same views about.
investing in the stock market over time that you and I do today. This kind of gets to the topic of luck.
And a lot of people when you bring up luck, they will say something that sounds smart that I've v I fiercely disagree with. They say, like, oh
You should increase the surface area of your luck. You should like, oh, the harder I work, the luckier I get. It was like some variation of that. And I'm like, no.
If you can do something that changes your odds of an outcome, it's not luck by definition.
Luck to me, the biggest are where and when you were born.
You can't control it.
Bill Gates couldn't control it.
Elon Musk couldn't control it, but it has a massive income uh massive impact.
on where you're gonna go in life.
That to me is what luck is. It's what you truly have absolutely no control over.
And then there's also the the not only the country you're born into, but the socioeconomic households you're born into, the schools that you go to.
H how much of this is nature versus nurture
versus chosen nurture. The stat that I I think is so astounding is that income among brothers.
is more correlated than height or weight. So basically that means if you have a brother
Who is rich and tall.
You are more likely to also be rich than you are tall.
It's more correlated than the literal DNA that you're that you're that you're sharing with each other. Look, is it is it a perfect correlation? No. Are there is it possible to be raised by a poor family and become rich? Of course. Is it possible to be raised by a rich family and and end up in the streets? Of course.
But there's a very strong correlation between those two. I I think people get really uh
can get kind of testy when you talk about luck.
Because if I say that you got lucky
I look jealous.
And if I say that I got lucky.
uh I feel diminished in in what I'm doing in life.
So it plays a massive role, but it's very easy to ignore.
The impact that it has in the world.
How how do we break down that contribution between luck and skill or what's repeatable on our part?
Rather than saying
What is luck?
I think it's important to just say like what is repeatable?
What is something that happened that I could do again?
And if we look at Buffett, this guy standing behind our shoulder here.
And and let's let's look at the course of his life.
I cannot, he cannot.
Recreate.
the trading conditions that existed in the nineteen fifties.
that allowed him to buy blue chip stocks at
three times earnings, whatever it was back then that he was doing. He can't recreate that. He couldn't do it again.
But could I or you or anyone else listening try to recreate his patients?
Some of his risk framework, yes.
So that's something we should pay attention to. You want to find what is repeatable.
And what you could do again.
And those are the things that you should s pay the most attention to.
I think that's fascinating, right? Because when we look at Buffett, what we want is the outcome.
And what we don't think about is all the things that go into creating that outcome. So what stays the same between all these different decades where he's done this, right? So he's done it from buying net net ben graham stocks.
All the way to buying great businesses, all the way to
the patience to do nothing and then once every 10 years deploy a whole bunch of cash. Yeah. What is consistent across that period in your mind? Two of the big ones, we could come up with dozens of things that are consistent with someone like Buffett, but the two big ones are
Endurance and maybe tied to that, capping a downside risk that allows him to stick around for longer than anyone else. There's also a psychological trait of wanting to keep going longer than anyone else.
Um I I I use a stat in in my book that ninety nine percent of Buffett's net worth was accumulated after his sixtieth birthday.
Like the vast majority of people, including me and maybe you
If we became a billion at age sixty, would be done.
You'd move to Florida and buy a private island and like live happily ever after.
For him to be that successful and to keep going full blast.
For what's now another thirty three years and still going stronger than ever.
is a very unique characteristic that plays a massive role in his success. If Buffett had retired
At age sixty or fifty, like a normal person would have in that situation, you would have never heard of him.
The whole reason he's so successful is just the endurance. And there's a again, there's a psychological and a financial component to that. Never getting wiped out financially and the psychology that will allow him to keep going full blast for
nearly a century on end now.
But that sounds
Academically correct, but in temperament.
incredibly difficult because
I see my friends getting rich off like Bitcoin or something.
And that makes me want to change the patience that I have. I know how to get wealthy over time. We know historically that what's worked is saving money.
Being very patient.
Letting it compound decade after decade, and then all of a sudden you wake up with it.
a ton of money and financial independence.
But if I see my neighbor
getting richer quicker than I am.
It makes me want to accelerate that timeline. Yeah.
And my lack of patience sort of changes the outcome.
Not having FOMO.
is the single most important financial skill.
I think it's so important that you cannot ever imagine accumulating significant wealth over your lifetime.
If you are susceptible to FOMO.
Like if there's literally one thing.
The one trait that you want.
that's gonna allow you to accumulate wealth, it's the lack of FOMO.
particularly in modern markets, I can get so crazy with social media and Reddit and Twitter and everything.
If you ha if you are susceptible to FOMO, there's no hope for you over time. I I I I really don't think that's an exaggeration. And that being able to see your neighbor get much richer than you.
And not being a
being impacted by it.
Is
is so incredibly critical and easy to overlook these days. I don't have that many financial skills. I could never be a stock picker. I could never be a trader. I don't have the intellect or the the the the horsepower
To pull that off.
But I feel like I've never been
At least that's susceptible to FOMO. It doesn't bother me in the slightest to watch other people getting rich. Brent Bishore, our our our mutual good friend, had a quote that I love. He said,
I am perfectly happy.
watching you get very rich doing something that I would never want to do.
And I think that's that that's a great way to frame it.
I don't get jealous or or anxious to watch other people get richer than I am over time.
My investing strategy is
To own index funds for as long as I possibly can, to be average for an above average period of time.
And I think that will actually lead to an incredible outcome.
Not only will it
Achieve the financial goals that I have for my family.
But I think over a long period of time it will put you in the top
Decile at least.
of people who are who are compounding money over time.
really hard to appreciate that what's short term optimal and what's long term optimal are.
are often two different things. Completely different things. Howard Marks talked about this investor that he knew who in any given year
He was never in the top half.
Versus his peers.
He was never in the top fifty percent of of other investors. And over a twenty year period, he was in like the top four percent.
'Cause everyone else who was beating him in a given year couldn't keep it going.
And so like what's your ultimate goal? So much of investing is just define the game that you're playing.
And I don't look down upon or criticize people who are short term traders.
Maybe like that's their game and for their investors or for their like it makes sense for them. My game is is different. I think your game is different. Most people's game might be a little bit different.
And what's important is that
If your game
is to invest for the next twenty, thirty, fifty years, that you're not taking your cues.
from people who are playing a different game.
Of trading for the next quarter.
And that's where a lot of danger in investing comes from. You've changed my capital allocation strategy. Our conversations, our walks. Totally. Yeah.
How how how so? What what what did you used to do that you don't anymore?
Uh, we used to do a lot more private investments and now it's mostly index funds. And as things sort of roll in.
uh through dividends or whatever, it just gets reinvested in index funds. But th it's our conversations that change that. Well great. That makes me happy and nervous that that I'm having influence. One thing that some people will say when you talk about index funds is like
What is the guarantee that this is gonna work for the next fifty years? Okay, I understand it works in the past fifty years.
And my response is always like nothing. There's no guarantee that this is gonna work. It's very possible that it doesn't work out for whatever reason.
And there have been periods, you know, from
the you know, the late nineteen twenties to the nineteen fifties where the returns were terrible.
Or even from 2000 to 2010, you had basically zero percent real returns in index funds.
So it's not perfect in the slightest. Nothing guarantees that it's gonna work or be satisfactory over time.
But I think when you adjust it for
The effort that is put in.
the lack of effort that's put in, basically zero effort to do this.
And you adjust it for the fees, which round to zero now.
When you adjust for all those things, it's a very
appealing way to invest over time.
If I was to look at your balance sheet, what is your capital allocation strategy?
I'm trying to think what like the percentage wise, it's probably something like
Fifteen to twenty percent cash.
the house that I live in.
And then the rest.
uh the rest index funds and shares of Marquel where I'm on the board of directors.
And that's it. Th th those are those are my only assets. Cash, house, index funds, Marquel stock. That's it.
Which indexes?
Uh Vanguard Total Stock Market Index, Vanguard Value Fund, and a little bit of uh an international
Fund. Why do index funds work so well?
Two reasons.
One is it's always gonna be the case that a very small number of stocks account for the majority of returns.
So recently it's been
Uh Fang plus NVIDIA. If you didn't own those stocks, Fang plus NVIDIA over the last decade.
your odds of outperforming are are very, very low.
it's it's not zero, but it's incredibly hard if you didn't own those few.
And even if you look at an index fund.
That owns a thousand stocks, I'd say.
You're gonna get the majority of returns from probably fewer than twenty.
of them. And it's always been like that. Back in the nineties, it was uh it was AOL and Cisco and Microsoft and Dell and those kind of companies. In a previous generation it was General Electric and Intel and those kind of companies. It's always the case that
It's very tail driven, the distribution of returns. And owning the index just guarantees that whatever is going to be the next driver.
I own.
Because it's extremely difficult to know what those are gonna be.
If you had gone back to two thousand uh uh four, twenty years ago.
and tried to predict what are the big winners gonna be over the next twenty years.
Well
By the way, some of those companies didn't even exist yet. Facebook didn't even exist yet. Google was still a private company, or maybe it had just gone public in 2004. The big winners are, I think, extremely difficult to know with any foresight what it's gonna be. And if you had suggested
Even three years ago that NVIDIA was gonna be one of them, you would have been like, What? Inv like it w it would have sounded absurd.
So you're guaranteeing that you're gonna own the oddballs that account for the majority of the returns over time.
The other is I think the
the lack of effort that goes into it that is needed.
Investing is one of the very few endeavors in life where the harder you try, the worse you're probably gonna do. And yes, there are exceptions to that renaissance technologies, of course, you you you you can name the exceptions for people who tried very hard and did very well.
But for the vast majority of people, there's gonna be a negative correlation between
the effort you put into it and the results that you got out of it.
And so the the leave it alone aspect of of investing of in index funds is very important. One little stat I love about this is that if you look at both the Dow and the S P five hundred, those are not static indexes. They change over time. There are new constituents that are added, companies go out of business or they merge and then new and then
New companies are added to that.
If you were to look at the Dow, I think one one one of the studies showed.
over the last hundred years. If rather than adding a new company
when one of the original components uh went out of business or merged. If you just left it alone, don't add anything else, don't take anything out. Just literally take the original components and leave them alone.
You would have done better.
than the companies that were added and removed, added and removed. Like any activity that goes into it.
tends to be detrimental over time.
That's I I I I've always thought is is is very fascinating. It's literally like there's very few exceptions in the index world.
to where the more effort you put into it.
The better you're gonna do over time.
Do you think we find it boring and that's why we don't want to do it?
It's a combination of boredom and just the
Counterintuition
Of the less effort, the better we're gonna do. Because any other endeavor in life.
Whether it's your physics or whatever it might be.
there is a positive correlation. If you want to become in better shape.
You exercise, you put more effort into it. In most endeavors in life, the harder you try, the better you're gonna do. And investing is just not one of those. And it's so not intuitive that people
End up tripping over themselves.
I would also say too that I am not against active investing in the slightest.
At all. I have so much respect.
An admiration.
for the people who do it well.
And the stats that get thrown around that are true that you know 90% or more of mutual funds will underperform the benchmark.
My response to all that is always like of course
That's how it is. You should not expect to live in a world in which
Everyone who tries to beat the market can do it.
Of course that's how it is. And the people who can do it are enormously talented.
And I have so much respect for them. Two of them are s sitting behind our shoulders here. And other people I I know people.
You know people.
who have been and I think will continue to be successful
Uh at this.
So I I'm not a passive zealot in the slightest. I just think for myself and many other people.
It's probably the smartest way to invest.
How do you
keep your goalposts from moving as you accumulate and compound wealth.
Hey, I I think
Everyone's including my and my wife's
Have not stopped moving, nor nor should they. I I I don't personally aspire to live in a world where if I'm lucky enough for my net worth to go up.
uh one hundred percent of it just accrues to savings over time. That's not the life that I wanna live. I wanna
have a great life with some great material possessions and travel with my kids and live and live well over time. If your net worth grows 10%, but your expectations grow twelve percent, that's that's when you get into trouble. It's just the gap between the two. And so look, I'm making this up. This is a this is not an actual analysis, but I bet over time,
If my net worth has gone up by ten percent per year.
Mm our goalpost has grown by five percent per year. I'm making those numbers up, but it's something like that. So yes.
my family lives a better life materially today than we did ten years ago.
But we've still saved and
lots of money that period. I think that's all that matters over time is that you you know, and even uh Buffett and Munger, who are, you know, known for being fruit. Buffett lives in the same house he bought when he was twenty six. Yes, but he also flies a private jet and had a beautiful beachfront house in Laguna Beach. These guys are not living like paupers over time.
And that that's what I think is really important. It's just making sure that there's a gap between your net worth and your expectations.
Seems one of the things that we inherit.
From society.
Is that the house you live in
Is your prime financial asset. Yeah.
That seems really recent as well, maybe the last thirty, forty years where that's become
the vast majority of wealth for Americans and Canadians.
I I know in the in in the United States real home prices uh
For most of modern history in the twentieth century were flat as a pancake.
Robert Schiller of Yale didn't did a lot of analysis on this, tracking US home prices since the eighteen hundreds.
And in real terms.
From probably the nineteen forties through the nineteen nineties were flat as a pancake on average across the United States.
And then in the last twenty years, starting with the housing bubble, that started around two thousand three.
They exploded higher.
And then of course we had the housing crash in two thousand eight.
And people thought that was the end of the bubble.
But then they've exploded higher even more.
And real home prices in in the US, I'm sure it's the same in Canada.
Are much higher today than they were at the peak of the bubble in 2006, on average. Of course, there's many variables going into that, a lack of building up new homes.
uh that didn't keep up with generational growth. And it makes it
It kind of bifurcates the world in terms of
If you ha if you have owned a home.
For any period over the last twenty years, you've probably done very well.
And if you are looking for your first home today, it's harder than it's ever been.
particularly now that interest rates in the US are seven or seven and a half percent for thirty year fixed rate mortgage.
Combine that with home prices that are just
absurd, particularly in the in the metro areas that people want to live in. It's completely bifurcated because
If you own a house for the last ten years
You can sell that house.
And take the equity that has grown in that house to buy a new one.
to use for your down payment on the other house that's been inflat whose price has been inflated.
But if you're trying to break in for the first time, like it's it's a joke.
It's a complete joke.
So that's it's a t it's a very difficult thing. I would not I have a lot of
sympathy for the first time home buyer today who's just who does not have parental support, which is the vast majority of them.
It's harder than it's ever been.
And there are few things that make you feel like you are stable in your adult life than owning the house that you live in.
And I think it plays a huge role in a lot of things in life.
a lot of people, this would have been the same for my wife and I, don't want to start having kids until they own their home.
They they they want to have that sense of stability before they start having kids. So I think the lack of housing affordability has an impact on demographics and having kids over time.
that will echo for the next fifty or seventy years.
So it plays a huge role in in what's going on in society. There's also sort of a difference between what's optimal
Financially and what's
optimal psychologically. And we we've had this conversation before
Where you've you've told me you paid off your mortgage. Yep.
And that makes no
very little financial sense'cause you you had one of those crazy, like really low mortgages. Like a mortgage rate was three point two percent fixed for thirty years and we paid it off, which I I say is very true. It's the worst financial decision we've ever made.
But
It's the best money decision we've ever made.
And the difference between the two is like, look on a spreadsheet, it's terrible. I've done the math of like what if I had just invested that money instead? How much would I more money would we have today? It's a lot.
Yeah, it's a lot of money.
But nothing that we've ever done in our financial life has given us more
Happiness.
Then paying that off.
And a lot of that is unique.
Maybe to my personality. This is not advice for other people because maybe you and other people don't have that personality. I'm a worst case scenario thinker.
Uh I also have a career that can be fickle.
And so and and I'm the sole breadwinner in our household. My wife is is is is is home with our kids.
So with all of those, my personality, my career, and whatnot, it made perfect sense. And when we did it
I was nearly in tears with joy.
When we did it.
Knowing full well that it was a dumb that it was a dumb financial decision. So I think once you stop viewing money as just trying to make the spreadsheet happy.
And you view it as a tool to live a better life.
A lot of things change.
And in that situation, it was a tool that
improve my the quality of my life and my family's life, I think dramatically.
Even if it was the dumbest thing that we've ever done on a spreadsheet.
And a lot of people when I when I say this, they'll still push back and be like
Well walk me through like why it was why it was rational. I'm like it's not rational.
It's not rational at all.
I I I can't explain to you on a spreadsheet. It was the it was dumb to do, but it made me really happy.
And like d i is there any worth, is there any value to that?
You know, for you. Like it made me happy. We can just stop right there. I don't need to prove it anymore.
But doesn't that make it rational?
If you're you're playing a different game, right? Like if you're trying to optimize every penny
Over the long term, maybe that doesn't make sense. Yeah.
But if you're optimizing for happiness and longevity, maybe it does make sense. Yes. And so I think the the qu the qualitative factors of money are hard for people to wrap their head around, particularly in a field that has been taught as an analytical field.
When you if you get a degree in finance or get your CFA or whatever it would be, it's purely numbers. That's that's not totally accurate. There's some there's some in there, but vast majority of how they teach finance is just numbers.
And so it can be hard for a lot of people to wrap their head around why you would do something where the numbers don't make sense.
What can money do for us and what can it do for us?
What's the lie it tell us? What's the thing that we we feel like it can do for us that it can.
Well, I think the the lie is that
A lot of people in life if they're unsatisfied with how their life is going.
It's a very quick and easy answer to say if I had more money, things would be better.
And that can be true.
It can solve a lot of your problems. But
I think what a lot of people want in life, not everyone, I don't want to completely generalize this, but
What I want that I think is
Is
reasonably uh common for people is I want independent.
And I want to spend time with the people who I love, my family and friends. And that's pretty much it.
And
Can you use money to do that? Of course. Money is kind of the oxygen of independence. And if you can use your money to spend more time with your friends and family, you and I went out to a lovely dinner last night with each other. That costs money. Thank you for buying, by the way. And we had a great time with each other. Now, if you and I went for a walk that would have been free, it would have been great too. But using money for
To spend time with whom you want.
When you want
For as long as you want, waking up every morning and saying, I can do whatever I want today, even if what I want to do is go to work.
And and be productive is absolutely critical. And that is different from the knee jerk of just, oh, if I have more money, I can buy.
More things, nicer things.
But what you actually want in your soul is to like is you want independence and to spend time with people who you who who you love. Money can do those things, but it's not as direct as people as people think. One one example of this is like, will having a nicer house make you happier?
It might.
But b the reason it's gonna make you happier is because it makes it easier to have friends over. It's y it's makes it more convenient to hang out with your kids in a big, nice, glorious living room.
So it's not that the house will make you happier, but the house can make it more conducive to do things.
in your life that those things will make you happier.
I was reading Rich Dad, Poor Dad with my youngest and it we come to the the concept of a house and if I get this right, it was sort of your house is a liability.
and not an asset. So don't think of it as like a financial asset that's gonna grow and acquire wealth for you. Think of it as liability that's just uh sort of table stakes for playing playing the game if you want or living life and having stability and all these other things.
And I thought it was really interesting. And as we talked about it, I was like, you know, it's just the house. What the house is effectively, it's a container. And what matters is what happens inside that container. The house in and of itself, like
Who cares? Yeah.
uh just recently, just last month.
Uh I traveled with my son to the town that I grew up in.
And I stopped by
The house that I grew up in for the majority of my childhood. I hadn't been there in 20 years. We we pulled in the driveway, of course, there's people who live there now, so we just sat in the car.
But I I sat there for ten minutes
Just kinda reminiscing.
About as soon as you pull in the drive, all these memories start flooding back.
of the things that happen in that house, good and bad, fun and sad, like like so many memories in there from my childhood.
And of course, you can go on Zillow and see what that house is worth. It'll give you a very specific dollar figure for what the house is worth. But what the house is worth to me.
And my parents and my siblings.
Is
complet is invaluable. It's you can't put a price tag on those kind of memories. And I think that's common for most people. There's a tangible financial value and there's this intangible that you can't ever put a price on. That's true for vacations. It's true for a lot of things in life that
There's a financial value. I if if if I asked you and said what is this house worth
Again, you could go on Zillow and say.
But what are the memories built inside that house worth? It's like you can't put a price on that. When you've reached financial independence, is is that the ultimate
when you're spending money, but it's not a matter of the money. You're not quantifying it sort of a dollar figure. You're quantifying it in a feeling or I think there's truth to that. It's when you start using it as a tool to become happier.
Now what's gonna make people happy is very different.
having an incredible Ferrari collection might make you happy.
Uh so if it i it it's not to say that the things will make you happy are not material, that you should just use this for experiences. That I think is a step too far.
I think a lot of people have hobbies that cost a lot of money that are material that really make them happy. So it's like great.
It's there there are a lot of people out there who would say
You know, who would really promote frugality and be like, you you don't need a big house. You don't need a nice car. Well, big houses and nice cars make some people really happy. Other people they don't. It's whatever you can use money as a tool for to give to live a better life, versus
I think a yardstick of status and success to compare yourself against other people.
that's what gets dangerous is when you're just using it as a scorecard.
to compete with other people. How do we catch ourselves in a status game where we're playing a status game, but we don't
We can't see it because we're in it. It's unavoidable at the economy level, especially at at the broad macro level. It makes sense from an evolutionary perspective.
that people compete with each other. There's limited resources. And like if I want if I want the food, if I want the mate, whatever it would be.
I need to compete with you.
That's always what it is. So it's so natural. It's never gonna go away. This is truly like same as ever. People are always gonna be keeping up with the Joneses. And you can imagine a world in which our kids and our grandkids.
Are living way better lives than you and I are.
and living longer and have better material uh access to than I do, and they're no happier for it.
because they're just competing with other people who have even more than that.
That's always been like that.
If people a hundred years ago could see how you and I are living today.
They'd be completely dumbfounded.
With
uh virtually everything we have in our life.
But I would also
wager that you and I are not that much happier.
than they are. There there'd be some aspects of life where healthier. We don't have to wake up, you know, worry that we're gonna die, die from the flu next week. Kind of
But um
People just adjust their expectations to whoever is around them. A lot of this is like a a a DNA thing. Some people are just way more susceptible.
to wanting to keep up with others and other people just could just care less what other people think about them. There's probably uh six people in my life who I really desperately want their love and respect.
My parents, my wife, my kids, a handful of friends, and everyone else. It's not that I could care less, but after those six or maybe eight people, it drops dramatically.
And the vast majority of people on Twitter and whatnot, I could I could care less what you think about the decisions that I'm making.
So I think if you define that, it's it's you know, whose whose love and admiration do I want in life?
Defining who those people are and what do I have to do?
to earn their love and respect. The love and respect of my wife and my kids and and my parents.
And that's what I want to use money to
do in my life. So like spending time with my family, taking them to cool places and whatnot. There is a financial aspect to this, but once you define that personal game you're playing, a lot of these decisions clear up.
I think a lot of people don't actually think about what game they're playing. They look at other people and
you know, from my lens, you should be doing something different. But that really comes'cause we're optimizing for different things. Yes. I bet if you and I sat down and like deeply compared our lives, there would be things that we do very differently.
spending like you spend a lot of money on this and I don't. I spent a lot of money on this and you don't.
And it's not
A disagreement.
It's just we're different people.
Even if you are about you and I are about the same age, same education, you know, th there's probably a lot that is just like, Yeah, but we're we're different. So I think most financial debates
Whether it's like an investing debate or a saving or spending debate.
People are not actually disagreeing with each other.
they're not actually debating. It's people with different personalities talking over each other.
And once you come to terms with that.
There's not one right answer for any of this. There's so many things that we inherit, though, from our parents, like invisible rules about money or practices around money. I remember like these moments in my childhood where
You know, my parents had to decide between fixing the roof and fixing the car and they couldn't afford to do both.
And I remember they, you know, they worked for the military and the military had sent them a financial advisor.
And
I remember listening to the conversation they had with the financial advisor and how out of the loop they were with what was happening with
My, you know, the the severance pay that my mom was getting and what was happening. And they had new knowledge of it. And I was like, I never want to be in this position. Yeah.
Well what are the lessons that you learned from your parents that really stick with you today that sort of defined how you think about money? The two things that stick out for my parents, my my parents' upbringing. So my dad started undergraduate college when he was 30 and had three kids.
I'm the youngest of three. He started his undergrad.
uh when I was like a month old, something like that. And he became a doctor when I was in third grade. My early childhood, my parents were very, very poor. They were students and maybe they had some like student grants that allowed allowed us to buy groceries and live in a tiny little apartment. We were very happy, had a great childhood, but they were very, very poor.
And then my my dad became a doctor when I was in third grade and had the so and then it was immediate shift towards very poor to like upper middle class.
Literally overnight.
when I was in third grade, and my sibling my brother and sister were teenagers at that point.
So I got to see very like both sides of the spectrum. And I remember the year, 1993, is the year everything changed in our family. What sticks out from that?
Is that the frugality that was demanded of my parents when with they were poor.
Stuck with them.
After they started making more money.
And so even after my dad became a doctor, they were we were very frugal.
We lived a much better life than we did when we were poor,'cause we were we were living in abject poverty for most of my childhood. And but at but after that it was they had a very high savings rate. We were not spending money like my dad's uh co workers were.
Like you would expect a normal doctor to. It was nothing close to that. I think I looked down upon my parents for that. I was like, we could be living in a nicer house. I know how much money you make. We could be living in a better house and driving a better car, but we don't because you're cheapskates.
That was my view.
For my teens and early twenties.
My dad was an ER doctor.
Which is a very stressful field. Literally people dying in front of you in your arms every day.
And working night shifts and uh it's a very stressful field.
So after about twenty years or so, he had just had enough.
And well before I think he intended to retire.
He more or less woke up one day and said, I'm done.
It was a little more planned than that, but that was a that was that was close to it.
And because they had saved so much, he could do that.
He had the independents to wake up one day and say, I'm gonna do like I I I'm proud of what I did, but I'm gonna go do something else now.
And a lot of his peers
Could not do that.
Because they spent like doctors.
They lived in big houses and sent their kids to private school and drove fancy cars. So when they wanted to quit, they couldn't.
They wanted to retire. They were
They were tired and they wanted to quit, but they couldn't do it.
And that was such a profound shift in my thinking.
This was not that long ago, I don't know, twelve years ago or so.
Of when I was like, Oh, that's that's why you are saving so much.
It wasn't because you were cheapskates.
It's because you were wanting to become independent.
And now you are.
You wanna quit so you could quit.
That's why you were saving. That was a profound shift for me of like
you're not saving because you're just scared to spend. You're saving because you want something different, which is independence. And independence is gonna give you so much more pleasure.
than the big house ever would.
That really stuck with me. How did they talk to you when you said, Hey, you're just being cheapskates like, let's do this thing or let's get this.
Bigger house or if they heard what I just said, they would say, yes, in hindsight, that's all true, but we didn't know we were saving for independence.
They also my my parents are very interesting that they have dollar cost averaged in the Vanguard index funds for more than forty years and never sold anything ever.
So they would be like literally in the top probably two percent of investors during that period.
Without any financial education, no financial skill, like no, no, nothing like that. So I think a lot of the decisions they've made have worked out well.
But it hasn't really been conscious.
So I think back when I said your cheapskates, I'm sure they just kind of shrugged and okay, well, this is what we're doing, but I don't think they actually had a plan for what they were doing. It was just, again, the frugality that was demanded of them. My parents also met on a hippie commune in the 1970s. Uh, not exactly the breeding ground for like good saving skills.
And so for their entire adult lives, for literally decades, they were they had they had zero money. They had absolutely nothing.
So they learned how to be poor.
And they're also very happy.
And have a great marriage. If you can learn how to be poor with dignity.
that skill will just like stick with you forever. So when they started making money, I think I think it's probably true that they didn't exactly know what to do with it because they were so used to be they're so used to being poor. But um whether it was conscious or not, it created this thing that has given them so much happiness and pleasure, which is independence.
What's the difference between being rich and being wealthy? The definitions are are my own. So I I'm just making this up, but I think rich is when you have enough money to make your mortgage payment, make your car payment. You can pay off your credit card bill every month. Like you can afford the things that you're buying technically.
Wealthy, I think, is when you have a degree of independence and autonomy. The weird thing here is that wealth is the money that you don't spend.
That's what wealth is like the homes you didn't buy and the car you didn't buy. It's money that you saved and invested.
that is gonna give you independence.
And that's a hard thing for people, I think, to wrap their head around that wealth is what you don't see because I can see your
House.
I can see your car.
Can see your clothes.
But I have no idea what your not worth is. I can't see your
bank your brokerage account. I can't see your bank account. So wealth is always hidden.
And
It throws a lot of people for a loop because if if I was looking for a role model of physical fitness.
Well, I I can see your fitness. I can see your weight and your muscle tone, whatnot. It's it's all visible.
But when you're looking for a financial role model
Who do you look up to?
And a lot of people, particularly young people, will look up to the guy in the mansion with the Ferrari.
But that guy for all you know is living paycheck to paycheck. A lot of a lot of those people are. And the person who is actually wealthy and independent might be the person in the modest house driving the modest car.
that you would actually want to be. If
You wanna be wealthy instead of just rich.
You want to be independent instead of just making your monthly payments.
The people that you
actually want to look up to are some of the hardest people to identify in society. Who do you look up to? In general who I look up to are people who do whatever they want and people with independence.
And there's a huge range of that. I think there are people whose net worth is, you know
in the low six figures who are independent. There's a guy named named Mr. Money Mustache who kind of started the fire movement, I don't know, 10 or 15 years ago.
And his story was when his net worth was six hundred thousand dollars, not not that much money, he retired and lived a great life on it.
And there's other people, you know, obviously
Jeff Bezos and Elon Musk are independent, but
I would I would venture that
more than half of Elon Musk dayers is doing things that he doesn't want to do.
It's like there's it's you know, you know, piling on all these things that
you know, he's he's still driven to do them and get them done. And of course he of course he could quit tomorrow.
Uh
But doing things that he doesn't necessarily want to do. So anyone who can wake up every day and say like
I can do whatever I want today. If you have independents, that that's my personal goal. So the people who have that at any income level are are the ones I look up to. Why are so many people who
have money. I think the the answer's sort of maybe embedded in the last one, but why are so many people who actually have a lot of objective wealth?
Or money.
If you will.
Unhappy.
Andrew Wilkinson, our our friend, had a a saying where he says, like a a lot of people
I'm paraphrasing it, but a lot of people who are very successful.
Are just walking anxiety disorders harnessed for productivity.
Mm-hmm.
I think it was Patrick O'Shaughnessy who said the single word.
That he would use to describe a lot of very successful people.
It's not driven.
It's not passionate.
It's tortured.
They wake up every morning tortured about like I'm trying to solve this problem. I have to get ahead. I have to hit this goal. And they are literally it's they they wake up very anxious and depressed and like you know, just tortured about achieving their things. Elon Musk a couple months ago gave an interview where he said
You might think you want to be me.
Yeah. As in like the richest person in the world, richest person in history. But you don't.
And he was like and I think he said something like it's a it's a tornado up here.
It's a mess inside of this head. You do not want to be inside of this head. I think that's really true.
I think that's a profound truth that you might think you want.
That kind of life.
But there is a cost to that life. And the reason he's successful.
Is because he's probably woken up tortured for his entire adult life trying to solve these problems. I am so glad.
And grateful that people like
Himself exist because they they made the world a better place, new technologies that we can all benefit from. But there's a big difference between saying, I'm glad you exist and I would want your life.
Those are two very different things. It's almost like we're looking at the outcome. We're like I want the outcome.
I don't want I don't want all the stuff. It we do this with athletes too, right? Like I want the gold medal.
I don't want the five AM practices seven days a week. I don't want the
I think it was Naval who said you can't just
pick and choose bits of someone's life and say
I want his physique.
And her net worth.
And I want his house and y like you you have to take the whole package.
And a lot of the great things in anyone's life, th there there there's a cost that came with that.
whether it's their career success that they had to put into it.
Now, there's stories that Bill Gates worked, I think it was twenty five years without ever taking a single day off.
And most of the days he's working, it would be like he came home at midnight and crashed on the couch for four hours and then went back to work.
I'm so grateful that he exists.
But I would not want that for myself. That's not my definition of the life that I would want. Our friend David Senera, who runs the f the podcast founders, has uh profiled, I think now probably three hundred and four
Fifty.
Founders over time.
And he says, I don't want to put too uh don't want to put words in his mouth, but I'm pretty sure he said
The only founder
That he has ever read their biography.
And thought.
I want his life.
is Ed Thorpe.
And and everybody else that he reads it, I think he comes to the same conclusion that I do. I'm glad they exist. I would never want to live their life.
Because there's always a hidden cost that when you dig into it, you're like, yes, he was very successful because he sacrificed a million things that would be very
um that are very important to you and I.
Well, let's talk about that a little bit. Like you're you're incredibly successful. Your books have sold well over five million copies now.
The inbound to you.
for requests of your time, your speaking, your presence, hop on the phone for fifteen minutes.
Must be off the charts.
How do you keep
Your surface area small or keep doing the things that you want to do. Well, the only way to manage that is to say no to virtually everyone. And that sucks for me for two reasons. A, I don't have any assistant. I'm personally saying no to them and I'll point it off to anyone else.
And I don't like
I d I don't like making making people sad when when you blow someone off or even respectfully say no.
uh they're they're gonna be hurt a little bit. I vividly remember, I'm not gonna say who, but names that y you and people would would would know.
That I reached out to.
early in my career and said, Hey, I would can I please pick your brain for fifteen minutes? And they said no, and I was hurt.
I still remember it. I still remember the emails. I re I I remember reaching out to a couple of
Authors.
Probably fifteen years ago.
And saying my name is Morgan, I'm a aspiring author. I'm trying to I'm trying to do this. I so admire you.
Can I please ask you, you know, just ten minutes on the phone? And some of them didn't respond. And I still remember that. So if
If anyone who remembers that
gets in that same position themselves where they have to say no to a lot of people. It sucks, but there's no other way to to handle it. There's no other way to manage it.
It seems like success.
And we've talked about this before, but success sows the seeds of its own destruction. How do you think about that and what ways does it do it?
The the biggest is just that it allows you to become uh lazy.
And it's going to degrade the thing that made you great.
What made you what made you, like literally you, um
successful it's probably like some degree of like waking up and feeling uh feeling feeling inadequate.
waking up and being like, I I know I'm capable of doing more than I've achieved already and I gotta go do it.
And it's it's pretty common. Like whether that was driven by
Um a lack of
Uh self.
Self-esteem, like whatever it was, you're waking up and you're like, I need to achieve more than I have today. And once you achieve some level, it's easy to be like, Well, I've already
done that. And then the the thing that made you successful, that drive you had is diminished. You see this in companies and in people.
And the other thing that's really powerful is
When you are low lower on the totem pole.
It's very e it's easier for everyone around you to tell you what you're doing wrong.
And the higher you gain, particularly when you get up to the very high levels, no one wants to tell you doing wrong because you're probably paying those people to to to be surrounded, uh to you know, to to surround you with advice. And they don't want to tell the emperor he has no clothes.
That happens to a lot, lots of people, lots of companies and whatnot. The thing that made you great
is degraded the more successful that you become.
And some people fight this.
very well, but a lot of people don't. It's a it's a tough thing. I think the laziness aspect of it of once you become more financially independent.
You're not driven. For most of my career, I was writing because that was how I fed my children. I have I have to do this. Yes, I love it. Yes, I enjoy it, but I absolutely have to do this.
Once you get to a point where it's like, look, I still love to do this, but I don't have to do it anymore.
Um, is my motivation
lower than it used to.
I think the answer is yes. Like I I I I don't like to admit that, but I think the answer is yes. Now I I'm still as motivated I'm I'm I'm still very motivated to keep right because I love doing it.
And I think I l there's a part of it that I enjoy more now that I'm not doing it.
to feed my children. I'm doing it because I just love because I love the the the art of writing rather than just the business of writing.
But
People's motivations change over time. Now part of that is is great.
I don't wanna be s sixty years old and having to work to to feed myself this week, but you shouldn't pretend that it's gonna not impact the thing that made you great.
I wanna come to writing later on.
Uh I got a lot of questions about your process around that.
But before we get there, w what is risk?
You can have a million different definitions of risk. I think it broadly, it's anything that's gonna prevent you.
from achieving the goals that you want. That's a a very basic answer, but I think that's what it is. And
The reason that's important is because take
Volatility in the stock market.
Is that risk?
Well it could be. If you're a day trader, then yes, if the market goes down tomorrow, that's a risk for you.
If you're in if you're gonna retire in fifty years, it's not whatsoever.
So just defining it in personal terms.
is I think the most important. But a lot of finance is not that. They define risk as
volatility, whatever it might be, recessions.
all these different things, but it's a very personal
answer. What is risky for me
might not be for you and vice versa.
And this is what it gets back to most financial debates are people with different time horizons talking over each other. There's a quote that I love that is
Personal finance is more personal than it is finance.
That is really important for everyone.
You and I should not pretend that risk for renaissance technologies is gonna be the same for you and I within our personal households. Like it's completely completely and utterly different. So anything that pulls you away from whatever goals you personally have is what what I would define as risk.
You had to break down the skill differences between
Accumulating money.
Keeping money and spending money.
How would you do that?
I've often defined it as a
getting rich and staying rich are completely different skills.
And there's not that many people who are equally skilled.
In getting rich versus staying rich.
There's, you know, a sliver of society that's very good at getting rich that has no ability to stay rich.
And there's some people who are very good at holding on to money, but m much less talented at at building it and growing it over time.
When you have both skills combined, it's a it's a very special thing. Buffett is obviously that, Bill Gates is that. There's a handful of people who are extremely good at getting rich and have stayed rich.
Very well. The example that I always use is Bill Gates when he started Microsoft.
Took the most audacious
entrepreneurial swing that maybe anyone's ever taken.
Of saying every desk in the world needs a computer on this. And he's saying this in 1974, whatever it was.
Crazy amount of risk, crazy bold vision.
At the same time
He said that he always wanted Microsoft.
To have enough cash in the bank.
to make payroll for one year with no revenue.
Which is the most conservative
Pessimistic way to run a business.
So he's like
Very risk taking.
and very conservative paranoid at the same time.
Very good at getting rich, very good at staying rich at the same time. It's very unique to have both of those acting at the same time. And I think at the individual level, you can have it too.
My my net worth, you'd say, is like is very barbelled. Like a lot of cash.
That's the paranoid conservative side.
And stocks that I hope to own h uh hold for fifty years.
That's like incredibly audacious that that this is actually gonna work out over the next half century.
And I I don't think that's that's any contradiction. It's just trying to get both of the skills of getting rich and staying rich work at the same time.
Speaking of stain rich, one of the stories we talked about last night was the Vanderbilts.
And how they basically blew a four hundred billion dollar fortune.
What happened?
If you look at all of the Robert Barron very wealthy families, the Carnegie's the JP Morgan's the Fords, the Rockefellers, the Vanderbilts.
I think virtually all of them did well.
or did a decent job at managing that dynastic money, except the Vanderbilts. The Vanderbilts completely and utterly botched it.
Um the stat is, you know, when Cornelius Vanderbilt died, his net worth adjusted for inflation.
Uh,'cause he died in the eighteen hundreds.
was the equivalent of four hundred billion dollars.
And in three generations, there was nothing left, which is an astounding thing to think about. And in between there sat three generations.
who just blew money in the dumbest ways you can imagine. And the rate the reason you could say it was dumb is because I don't think
Any of them were happy.
I think they were pretty much all miserable if you dig into the biographies of these three generations. A lot of the other
Robert Barron families taught their children, taught their heirs to run the business.
Or to become good philanthropists, whatever it was.
The Vanderbilts effectively told their heirs.
Your job, your soul perpis, on this.
Yeah.
is to spend more money than anyone else. And to and and so they did it.
They built the biggest houses that were so big they didn't even want to live in them because they were too big. They threw parties that were so extravagant, they were just burdens on themselves. It's like they they were used like their sole financial metric is can you spend more money than the other socialite.
And they were all miserable for it. And the the the story that a lot of people know now is that the first Vandable air.
To not get any money, when all the money was exhausted, the first heir where there's nothing left was Anderson Cooper.
of CNN.
His mother was
a woman named Gloria Vanderbilt was she she got the kind of the the last trust fund in the family.
And Cooper is not only the most successful Vanderbilt Air.
In like a hundred and eighty years, he's probably the happiest.
And he's talked about this that
Money that you are
given that you inherit can be a
Burden to your ambition.
a burden to your identity of building a name for yourself.
And
he was kind of the first Vanderbilt era who was like relieved of the burden of having to carry on this thing of like I'm a socialite, I'm a Vanderbilt. And he's just like, I gotta go build my own name and my own career. And I'm sure because his mother was Gloria Vanderbilt, there were doors open to him uh that would not be open to anyone else. But he pretty much had to build it for himself for the first time in a hundred and fifty years.
Do you believe that money should be able to pass between parents and kids?
Well, Abel, sure, it's your decision.
But there are obviously downsides, and I'm sure I I hope it's a long time for now that I'll leave my kids some money, not a lot. I love the Buffett quote where he says
Leave your kids enough money so they can do anything.
But not so much money that they can do nothing.
And that I think is really important. I want to use whatever money I've saved to give my kids the best opportunity of building the life that they that they want.
But not so much money that they are forced to live the life that I want for them.
I've met some families who are who are very wealthy.
And wealth becomes like a personality burden.
Of
Because I inherited this much money.
my job is to just be an heir of my grandfather, an heir of my of of of my parents, rather than finding out who I am and discovering who I am for myself. That's dread like the very high levels. But
You you don't want the wealth that you pass your kids to
burden them into a lifestyle that they don't want for themselves. You just want to be like, here's enough money so that you can have the leverage and the tools to find out who you want to be and live the life that you want.
But not so much that it's gonna burden you into like forcing you into a direction that you don't wanna be. It's almost like there's a
a geometric progression of surface area here where
The more houses you acquire, the more staff you need. The more staff you need, the more managers you have, the more managers.
You know, as you I I was talking to Sam Zell, we were supposed to record a podcast, it never happened because he he unfortunately passed away. But when I was talking to him, he he just wanted two houses.
Right. He didn't want ten houses. He didn't want all of these things. He's like, I can just rent them. I don't want the hassle. I don't want the burden.
that comes with that. Do you do you think that we lose sight of that?
And then there's sort of like a natural entropy to wealth, right? Like it starts to expand. Yeah. And you actually have to apply a lot of energy to keep it small. Yeah. It's obviously not the case that the more money you have, the less happier you're gonna be. That's obviously wrong. But I think if you have more money, you can have a more complicated life.
And complication can lead to a lot of unhappiness. That's definitely true.
And I think this is
Mostly true for people who are like middle wealth. If you're like extreme upper wealth, you can just hire out every decision, people can take care of it for you.
It's people who have enough money to buy a second home, but they have to manage it themselves.
That's when things get like really complicated in your life. Many years ago, I did this consulting session with a group of NBA rookies.
They were they were some of them were nineteen, twenty years old.
And they're now making millions, and a lot of them grew up in like inner city poverty.
They grew up very, very poor, and when they are teenagers, they sign contracts for millions of dollars.
It's like such a stark.
uh movement for them. And the purpose of this conversation
was to talk about money to try to prevent the very well known path of athletes going bankrupt.
A a a very significant percentage of these people who make millions of dollars are bankrupt by the time they're thirty.
So like how do we prevent that?
And one of these athletes who was I think it was nineteen
Said something that I thought was so
Profound and wise.
He said
When you grow up
In inner city poverty.
And then you make millions of dollars when you're still young. That's not just your money.
That is mom's money.
That is brother's money, that is cousins' money, that is neighbor's money. You can't just tell everyone back at home.
Good luck to y'all. I got my money. I'm gonna go live in the mansion. You stay in this level. You can't do that.
And he said the reason so many athletes go bankrupt.
Is not because they bought themselves a mansion. It's because they bought their fifth cousin a house and they felt so much pressure to do it.
That they had this like social burden.
That came with the money.
And I think at many different levels. That's an extreme example, but
At a lot of levels.
There is social debt that comes with money.
So if you the at every level of net worth, like if your net worth grows by one dollar.
With that comes a couple pennies maybe of like social debt.
Where you are like
incentivized or like push towards to increase your lifestyle or to take care of other people in ways that might be great, but might be a burden, might be a debt that comes with it.
And at some point I think that social debt explodes.
Mean people who are worth
you know, fifty or a hundred billion dollars. We see there's not that many of them, but their social debt
to use that money and to donate that money money wisely is off the charts. It's enormous the pressure that they have to use that money well, to not end up like the Vanderbilts to, you know, w how much pressure does
uh Jeff Bezos and Bill Gates have
to donate their money effectively.
And no matter what they do, no matter what causes they give to, people are gonna say, Well, that's not a worthy cause. This was more worthy than that. Enormous amount of like invisible social debt that comes with that.
Talk to me more about that, but uh like I love that concept. I don't want to talk about the extremes where like Bizos and Moscow and
But the the social debt like almost like you
go to a wedding and you have to give more because you have more. Is that or you go out to if your friends know that you have money, you go out to dinner, you're you're forced to pay kind of thing. Or like oh I heard I heard this guy just got a huge bonus last year. Let's see what he gets me for Christmas kind of thing. That's there's a there's a lot of that.
That comes with it.
And of course, it's a good problem to have. It's you should not have sympathy for people who made so much money that they now have social debt, like boohoo, you know, you deal with it. But it's a real thing.
And a lot of it is just the um
incentive on yourself or within your own family to be like, Oh, we have more money now. We should I guess we should buy more stuff. It's like this pressure to do something that you may or may not actually want.
One one other like like weird oddball story that I've thought about here on the Amtrak train.
From Washington, D C to Boston is where it goes.
Um there is always a quiet car.
It's it's one section of the train where you're supposed to be completely quiet if you want to get some work done or whatnot.
And always what happens, you go there for peace and serenity.
But everyone on the quiet car is so
Anxious and upset.
Because
On the quiet car if someone so much as whispers
Or if your phone accidentally goes off.
People lose their minds.
Because they have this expectation that it's gonna be completely quiet. And so
the slightest little sound sets them off.
And like the irony is you go there for serenity, but you're just so angry while you're there because if anyone's making any noise, it drives you crazy.
And it's this thing of just like
If your expectations shift
then the littlest thing can can make you upset. So like when you go to the quiet car, yes, it is quieter, but you also have this like sound debt that comes with it, you could say this invisible sound debt that is a liability now.
I think it's so true with money.
as well that
The more money you gain, the more pressure you have.
to live a better life that may or may not actually make you happier.
Will Smith, the actor, said that when he was poor and depressed.
He could tell himself.
If only I had more money, all my problems would go away.
Right.
And then when he became rich
And he was still depressed.
He couldn't say that anymore.
He was still depressed, but he was like, I can't say that if I had more money, I would be happier because I already have more money than I could ever spend.
So he said what happened when he became rich is it just removed the hope that he had.
When he was poor, he had this hope like Oh, I gotta make more money and then I'll be okay.
And he's rich is just like lost all the hope. He's still depressed. Like it's it's very inspiring to think if I have more money, my problems will go away.
But then once you have that money and you realize that
you still have just as many problems, maybe maybe even more problems than you had before. That could be a tough thing for people to wrap their heads around. We were talking about that a little bit last night in the sense of people who
have money can't really talk about money either.
Because they have all the same problems that everybody else has, but they don't feel like they can
Openly.
Converse about it.
Yeah.'Cause it's like boo hoo.
And and and and it's true. It like they are boohoo problems. There are much bigger problems in the world. If you are, you know, have can't afford health insurance, you're homeless, whatever and they're much, much bigger problems.
But first world problems are real problems in people's heads. And you're right that they're
by and large can't talk about them.
It's very interesting when you get together a
group of wealthy people into a room where they can all start like in that safety zone, they can talk about their problems and they all have the same problems. How do I not spoil my kids? How do I do this? Things that they can't talk about with anyone else in their life because it's the because those those problems are so different from the the other like very real material health living problems.
But there are lots of things that are very difficult to figure out when you have a lot of money, or even just a modest amount of money.
that you can't talk about even with some of your closest friends. Yeah. I I'm sure you do have friends who have
Less money than you and I do. Yeah.
And you can talk about with those friends, you could talk about anything else in life. Problems with your marriage, problems with your health, whatever it might be. And there's all these other things that you're like, I can't talk about the things that are actually giving me anxiety right now.
It seems like the meta skill to think about right now through this conversation is how do we learn to manage our expectations?
We this is maybe this is how we started the podcast. I don't want my expectations to never move.
I want them to just grow a little bit slower than my wealth over time.
I want it so that in fifty years I hope that I'm
Living a better material life.
To to some degree. I just want that level to not exceed my net worth over time. Once your aspirations exceed your the growth of your wealth, that's when people get they take too much risk, they go into debt, whatever it might be. You've hung around and spent time with a lot of wealthy families.
either giving talks or individually
The problems are the same.
How do they deal with
Not raising spoiled children. How do they
What have you learned from that?
I'd say most of them, how do they deal with not raising spoiled children is uh they they don't deal with it well.
It's a very hard thing to do.
I had a conversation recently with a guy who was um his father is a billion.
And they is they've lived like billionaires his entire life. He's he's roughly our age. And he's a very down to earth
Grounded.
Polite.
Got.
And so I asked him like how did you grow up?
W private jets and mansions and not
Not become a spoiled little prick.
And he said despite having
That much money.
And living like a billion.
His parents never taught him.
Never told him.
that because we have more money, we're better than anyone else. And they told him quite the opposite. Like it's and he he said something I thought was was really uh important. He said, The reason that so many kids grew up spoiled is because their parents are obsessed with money.
That's why the parents are rich is because they're obsessed with money. But it naturally grows into this thing of like
You are better than other people if you have more money. And if people have less money than us, then we're not
They are they they are not equal to us.
And uh it it it it it's so basic and almost cliche, but
If you are very wealthy but you're still teaching your kids good values, that will stick with them.
And the opposite is true too. If you raise your kids, even if you have a lower income, but you raise them with an obsession with money.
To like that's the scorecard of measuring other people. It's like, well, what's your net worth? What's your salary? That's what I'm gonna measure you by and rank you by.
That's when you get spoiled little jerks as children. How do you and Gretchen talk to your kids about money?
Well, our kids are four and eight, so not not that much yet. The other thing that I've noticed, I'm sure it's the same for you and other people who have multiple children, is that my kids could not be more different in their personalities.
And of course, they're raised by the same parents. They shared they shared half their DNA. Like they're it's the same house, the same rules, the same upbringing, and they're utterly different people.
So you can't create one philosophy.
one parenting philosophy for that. The other thing is even if I know my children today
I don't know who they're gonna be when they're adults.
Does my daughter want to be uh a partner at Goldman Sachs? Does she want to work for Greenpeace? Does she want to be a kindergarten teacher? You have no idea.
what they're gonna do and the the different, you know, rules are gonna be different for them.
I also think that what's true is that
The more you try to tell your kids this is what you should do.
The more they're gonna rebel against that.
Particular when they're teenagers.
But the more that you can just
Lead by example.
Like A, they are going to pick up on it. You don't need to sit your kids down and say, Let me teach you about money. And in fact, if you do that, most kids are gonna y yawn and and and say, I uh I'm not interested in this.
But they are definitely paying attention to
Every time you say
We can't afford this. They're they're making a mental note of it. Every time you say that's too expensive, every time you say, I value this, I don't value that. They're they're forming a model in their head.
Um that's gonna stick with them forever.
And so I think just leading by example with them is what we try to do, rather than trying to say, this is what I want to teach you, these are the values I want to instill back to my own parents.
I don't think they ever.
sat near my my siblings down and said, Let me teach you about money.
But I
I learned profound money lessons for them by just observing when I was eight years old. Well let's invert it.
Uh well we can go from parenting and then maybe to money broader.
But like what lesson don't you want your kids to learn about money? What would be the worst thing that they could take away from you?
About money. Don't think that all poverty is due to laziness and don't think that all wealth is due to hard work.
It's not if you are just ranking people.
by their net worth and ranking their value by the net worth. That's a that that's probably the most dangerous thing you could do with money. It's the most profoundly wrong.
take away from money. And yes, a lot of wealthy people earned it, of course. And a lot of wealthy people or a lot of poor people made some very bad decisions. But once you just use it as a yardstick to measure people's
value buy.
you're making a you're making a huge mistake. There are a lot of wealthy people who I cannot stand.
And some of my best friends don't make that much money.
And I think you only can only have that in your life.
If you divorce
someone's salary and net worth from their
their personal worth in life.
What else? Keep going.
I think what what's interesting, I don't know if this is a lesson, but what's interesting is that if you want if you ask most parents, what do you want for your kids?
Almost every parent will say, I just want them to be happy.
I just want to raise happy kids. And then if you said, Do you want your kids to be rich and successful? Well, sure, but I just wanna be happy. I just I just want them to be happy. So I think figuring out how to use money as a tool to make you happier.
rather than just a tool to pile on to become wealthier.
Is is really important that I would yeah, you know, there are for sure people who earn thirty grand per year that are so much happier than people who earn three million dollars per year.
And understanding that value of money, I think, is is is really important. Like what what can money do to make you happier?
Because there's no other purpose. There's nothing else that you should even think about other than that.
What do you think is the biggest risk to capitalism?
I think it's always gonna be the case. It is inevitable, and it is actually ideal.
That there is some level of inequality.
in in the world.
It's it's not only it's not only inevitable, it's ideal. The opposite of that is is a nightmare.
But it's also the pl the the case that you do not want.
A third of society waking up every morning and saying, This doesn't work for me.
This system doesn't work for me.
So once one once you get to some critical level, I I don't know, maybe it's not thirty percent, whatever it is, but
If enough people wake up in the morning and say this sucks, this system doesn't work.
then it's gonna reverse itself and there's a very long history of that.
So the balance of you want inequality, you because people's skills are inequal. You want you you want that to be the case, but there is some barrier at which it starts to reverse itself.
And it becomes a pitchforks pitchforks in the streets kind of scenario
uh that that reverse. Now, in the history of the United States, that's happened several times.
the 1920s and the Great Depression. I'm thinking what we've dealt with in the last couple of years, there's always a pendulum between labor and capital, workers and and investors, and it kind of swings back and forth of who's taking the lion's share.
of the spoils in this this economy. In the nineteen twenties it was capital.
From the nineteen probably fifties to seventies, it was labor.
Uh and and since then it's been capital.
And it kinda shifts back and forth. Now just in the last
Three or four years.
There's been a huge growth.
The segment of society whose incomes have grown the most tends to be the lower.
Incomes. We're still kind of attached to this narrative of the rich get richer and the poor get poorer, but in the last couple of years, it has kind of flipped around, at least to a degree that we haven't seen in a very long time, is that the pendulum's shifting.
Towards another, you know, 30 year trend, maybe, I have no idea, but that pendulum is always there to kind of keep itself in check.
And I think if it gets too extreme, you can get very extreme outcomes.
We don't remember this now.
But in the nineteen thirties, during the Great Depression.
The words
Dictator.
An authoritarian
And even fascism were not the dirty words that they are today.
A lot of people during that era.
It was very it was not uncommon for people to say
Capitalism?
And even having a
Um
Big democracy just
Doesn't work.
The Great Depression in their minds proved that it didn't work. And people's
push to say, hey, look at all these countries in Europe that are going towards fascism. Maybe we should try that, because this didn't work. I think that's the danger when you get too unequal in society is that too many other people can be tempted to saying that didn't work. Let's try something even more extreme.
It's almost like I feel like I don't have opportunity. The minute I I feel like I don't have opportunity.
And it's almost like we want
equal opportunity and we're okay with unequal outcomes. Yeah.
It's a it's it's it's it's a really tough thing. And I would not mean I think you and I if we felt that we were trapped.
That there's no way, no matter how hard we work, if we felt
Whether it's true or not that we were trapped in a low income job, you and I would be prone to some extreme views too. Oh, totally. There's a saying I I that I love that um it was from a a Russi who spent a lot of time in the gulag.
And he says, um, man becomes a beast in two weeks. If you have two weeks of deprivation.
Two weeks without without food, two weeks in solitary confinement, a refined
Kind, polite person becomes an animal.
So like if if if if you put someone in an extreme scenario, they're gonna be prone to extreme views, extreme outcomes. Do you think most adults understand compounding?
I think it's not intuitive to virtually anyone.
Michael Badnick, a good friend of mine, has a a saying that's so simple, but I think sums this up the best, he said.
If I asked you
What is eight plus eight plus eight plus eight?
You can figure that in your head.
Yeah. Five seconds.
If I said what is eight times eight times eight times eight times eight.
Even if you're a math genius, you're like
I don't know. It's such a huge number. Like I I don't I have no idea what it is.
Basic linear math is very intuitive, very easy. Compounding math is just it's so it's so unintuitive for even people who understand it.
And it's everywhere. Compounding is not just in your bank account, your brokerage account. There's compounding in nature, there's compounding for social trends.
And it's easy to underestimate how big something can become.
Because compounding is so
Counterintuitive. You see this with COVID, which was
compound interest at its at its prime. Like this virus that in the early days is, you know, doubling every day, whatever it would be.
And that's how you go from
Oh, three people are infected in March of twenty twenty.
To today, like I I don't know anyone who's not had COVID. So it goes from literally three people to the entire world in the blink of an eye.
When it's doubling that quickly.
How would you explain it to kids or adults? Like what is the best way to teach people the power of compounding? It's like the one formula I I tell my kids this when they're in math.
And they're learning this in sort of grade eight, grade nine.
They learn about compounding. And I'm like, your teacher's never gonna tell you this.
But this is the most important formula you're probably gonna learn.
In your math class. Yeah. I don't know if I don't know. I'm not making this up right now. I've not thought about this. I don't know how I explain it, but just growth fuels more growth.
like the the the the more you grow, the more fuel you have for more growth. That's not a very good explanation for it. But that's that's the thing to wrap your head around is like
It's uh it's not what you start with. It's just like how long you're doing it for. And it's it's not even the growth, it's the duration that matters. Yes. So I I said this earlier, how I think about my own investing philosophy. If I can be average
for an above average period of time.
That leads to a way above average result.
It's not it's it's not about like what are the returns that I can earn this year. If I can earn eight percent returns for fifty years, the results are ridiculous. The results are absurd.
And so maximizing the variable that matters, which is time and endurance.
You know, all compounding is, effectively, is
Returns to the power of time.
And so if you understand math, the the exponent there is what's doing all the heavy lifting. Like maximized for that.
But where is all of the effort?
In the investing industry.
It's in the s the smaller number. It's in returns. How do I increase my returns this year?
But I think when you understand like no all the power.
All the wealth, all the leverage is in the endurance.
Just focus on that before you think about anything else.
That's a really powerful way to think about it. Let's switch gears and talk about reading and writing.
How do you select what you read?
I heard this idea, I think it was from Patrick O'Shaughnessy many years ago, who said you want a wide funnel and a tight filter.
I will start reading.
Any book on any topic that looks even mildly interesting to me.
But I will slam it shut.
Without mercy.
and move on to something else if it's not working for me. A lot of the reason that people don't like read why why people don't read as much as they should, or if they say, ah I'm I'm I'm I'm not a big reader.
A lot of the reason is because they feel like morally that they need to finish every book that they start. And we realize that the majority of but there's four million books for sale on Amazon.
I I I bet three point nine million of those are not meant for you or for me. They they're they're they're they're meant for other people, but they're not they just don't work for what what we want out of them.
And if you force yourself to finish every book you start, of course it's gonna be a miserable experience.
But when you s when you are willing to try anything.
but have a f uh a filter that is m that just has no mercy to to move on if you don't like it. That's when you find the great books, because if you only stick to books that you know you're gonna like about topic that you're interested.
You are missing so many other topics out there that you don't even know that you would like. You have to try a million different things, but then cut it off very quickly if you don't like it. So that's how I try to read. If it's even slightly interesting, if someone has said, Oh, this is a good I I will start reading it.
By the way, Kindle samples are free.
You have no excuse to not try any book.
Um, and and then just mercilessly cut it off if it's not working for you.
I find this really interesting'cause uh with my oldest who who reads a ton
Uh I just put books on his night's dead. And you know, some of them I think he'll like, some of them I don't think he'll like, and he randomly he'll pick them up and he read like an immune system textbook last year. Yeah and loved it.
Yes, I think there's a lot of like that. If you ask me right now, would I like to read a book on the immune system? I say I I don't know, not not really. But there are so many topics like that over the years that I never would have thought that I would like.
I start reading, I'm like, this is incredible.
Or it's working for me in that moment. It's a missing puzzle piece in that moment. There are a couple books.
that have always been on my go-to books that I recommend to other people. Oh, this is one of my favorite books of all time.
A couple of those books I went back and reread.
And I'm like
They're really not that good.
But at the time that I read them, it was a missing puzzle piece.
that it was like perfect for me in that moment. Yeah. Even if when I read it now, I'm like, this book's kind of very basic, not that well written.
And so I think that missing puzzle piece is true for a lot of people. And that's why like you need to read a lot of books because what other people think are good may or may may or may not be the book that you need at that moment.
Are you a Kindle reader mostly? I'd go back and forth. I'm in a Kindle kick right now.
Um, and I've been in physical um books before. What I love about Kindle is
so easy to highlight and go back and search.
Which for me as a writer is really important. When I'm writing, I'm like, Oh, what was that quote from this book? I need to go find that.
Really hard to do that in a physical book. Uh whereas Kindle it's just so easy. Do you take them out of the Kindle or just leave the highlights on the Kindle? I use the ReadWise app.
And so
Everything that I highlight, whether it's in a blog post or in Twitter, or it goes all into that. David Senra is the one who said
His readwise.
feed of all of his highlights is his smart Twitter feed. Twitter can be filled with so much garbage and noise, but read wise, you can flick through, I think David Sunner said he has like 28,000 highlights.
And you can sit there and scroll it of these like amazing quotes and anecdotes that he's highlighted over the years. Are there passages that that stick with you or haunt you that you've read that you can't stop thinking about?
This might seem a weird one, but I just because I'm a writer too, as you are, I'm a sucker for just a well-crafted phrase.
But there was one I I I forget who wrote this, and I'm sorry, I can't tell you who wrote this, but it was a book about
Uh D Day.
Mm-hmm.
And it was talking about this one uh
This one group, this one.
one company of soldiers on D Day, of whom uh many of them died.
And the passage was
All of them were prepared to die that day.
And all of them did die that day.
Hm.
And that was something that's just it's such a beautifully crafted sentence, and it's also just haunting in its own way.
I'm I'm I'm such a sucker for that. It's not like I always say the best story wins. You could phrase that fact that they all died a million different ways, but how
Whoever the author was phrased that always really stuck with me.
Why do you think the best story wins? What what's behind that? What we're trying to do when we read a lot of times is just contextualize whatever factor story that was within our own lives. And it's much easier to contextualize a story than a statistic, because there's a human element to a good story.
And I also it's just so much easier to remember and stick with you.
I don't remember any of the formulas that I was forced to memorize in school.
I don't remember a single one.
But every good story.
That I was told some of them when I was six years old, I still remember. So because it's just so much easier to remember a story than a statistic, and it's easier to contextualize it within your own life.
And because there's so much emotion embedded in it.
Stories are like leverage.
For good statistics. If you decide like there's some statisti like I just said, if y if if I said
Uh
First platoon of company E all died on D Day. That's a statistic.
But if you phrase that, if you put a name or a face to it.
it becomes a completely different thing.
I always use the example of Ken Burns, who makes the best
documentaries about US history.
And the vast majority of what is in his documentaries are already known.
Documentary about the Civil War or World War Two. You know how it ends. You know what happened. There's not that much new in there, but he is a better storyteller.
Than I think any historian has ever been in history.
He can tell a story.
About the Civil War.
that will literally bring you to tears, even if you know what happened. You knew what happened, but when you hear the story and see the face and hear the music in the documentary, it will literally bring you to tears.
And Ken Burns has talked about
how important music is in his documentaries, the background music. And he said that he will literally
Edit the script.
So that when the narrator says a specific emotional word.
It matches up with a beat in the background music.
So that the emotion and the music is literally aligned like that. No other historians doing that.
No other historian does that. And that's why he can create
He he has the leverage by telling by talking about the civil war.
That
no other of the of the historians who were who are writing about the civil war can recreate.
Take a few seconds and
Think about how you would teach me.
to tell a better story. You're one of the best storytellers of our generation.
Teach me how to tell a story.
Like Morgan Housell.
I think it's two things.
One is um
Right for an audience of one, which is yourself.
Don't think about other people.
Don't think about who's going to read this. Don't think, don't ask yourself, how is the reader going to interpret the sentence? Write a sentence that moves you.
That makes you when you read it, you're like I I I like that.
Without thinking about anyone else.
I think once you start thinking about
Who is my audience and what are they gonna like?
You start to pander.
And you start to like perform for them in a way that is very hard to like create a good emotional story about just write for yourself.
The other is
Don't forget how impatient.
Everyone is.
So this is a sense where maybe you are thinking about the reader, but
Everyone is so impatient.
When they're reading.
that you just always have to ask yourself, what is the point that I'm trying to make? Make that point and get the hell out of s people's way.
And move on to another point.
And most storytelling
You lose it.
Once you lose the reader.
Mark Twain you said uh he he said at one point that
But
When he would edit his work.
He would read it aloud to his family. He'd read the story aloud. And when he saw them.
Getting bored.
He would make a note, all right, cut that part. They're clearly dozing off here. And when he would see their eyes
bug up, you'd be like, oh, this is a good thing. This is a good part.
And I think Mark Twain was the one who said
Leave out
the parts that readers tend to skip.
That's the key to good writing. Leave out the parts that people tend to skip.
I think that's important to keep in mind too.
Write for yourself in a way that you like.
And get to the point and
Get out of people's way after that.
How did you learn to write? You didn't even go to high school.
Right. Um when I was at the Molly Fool for ten years
That was a ten year period where I was sometimes writing three posts per day.
Three articles per day.
doing that every day for almost a decade.
I wrote thousands and thousands of blog posts.
And when you write online
People are merciless about the feedback they give you.
uh the the readers in the comment sections are on Twitter.
Will tell you in no uncertain terms
This article was shit, and you did a terrible job.
Or they'll say, This was really good. I really enjoyed it.
So having that level of constant feedback
And doing that thousands of times over a decade will turn anyone into a a much better writer than they were when they started.
So that was that was really what it was for me. It's a combination of
Of quantity.
And fierce
Unvarnished feedback from readers.
Do you test ideas? I think in some ways
You test ideas in Twitter.
And if they work, you can turn those ideas into a blog post.
If the blog post works.
You can turn it into a book idea or a
Book chapter.
That's kind of the natural progression for a lot of these things. And just like uh it's very true in comedy too, even the best comedians, the world class comedians, don't necessarily know what's funny until they've tested it.
And this is why
George Carlin, Chris Rock, Jerry Seinfeld, they test their new jokes in tiny clubs.
'Cause even Chris Rock does not know what's funny until they've tested it, until he's tested it.
Yeah, I think it's true for
uh writers as well. I've had a lot of experience with
I'll write a blog post and I'm like, This is good. This is some of my best work.
And it flops.
No one else likes it.
And and the opposite is true too.
The biggest most
popular blog posts I've ever written were always ones where when I was writing it, I was like, I don't, I don't think this is any good. This is so obvious. It's so boring. It's too personal. No one else is gonna care about this.
That does well. So even after doing this for so many years, I don't know if my ability to
find a topic and say like, ooh, that's gonna turn into a good post is is really that good, which is why you kinda have to
Test ideas over time.
It's so interesting'cause uh podcasts are like that too.
I'll record an episode and I'll be like, Oh my God, that was mind blowing
And then you know, three months later I'll check at the stats and be like, What? And then I'll record a podcast where I'm like, Oh, that you know, I wasn't that engaged and I look at the stats and it's like off the charts. Yeah. The most popular blog post I've ever written.
By far.
By like an order of magnitude.
was a post in twenty seventeen that I wrote about. I grew up with and still have a a stutter.
And when I was a child and teenager, I could barely speak. It was a it was a very severe stutter when I was a child. And I couldn't really overcome it.
to where I can talk to you like I do now until I was thirty years old.
And so I wrote a post a post about this.
Trial.
Uh it's called Overcoming Your Demons.
And it was the most popular post I ever wrote.
When I published it.
I literally hid it from our blog feed because I was like, No one's gonna be interested in this. I l it was literally hidden. Like the the link was out there, but it wasn't even on the feed because I was like, I'm so embarrassed about this that I would just
be writing about a personal thing. No one else cares about this. And I really felt that way. And it turned into the most popular thing I ever wrote. Do you think it's hard to tell you do you think you were scared to put it out there?

The point of the post was overcoming your demons, that I started with this like profound disability that had such a big impact on my childhood, and then I overcame it.
And now I speak on stage and do these kind of podcasts.
And I felt like it was too look at me, look at me, look at me I didn't I didn't want that.
But I think
Everyone has their demons.
You do, I d everyone has something where they're like, I I I've got this problem in my life.
And a lot of those are hidden. People don't talk about them because they're embarrassed. They don't want to talk about it. It's too personal.
And I think when you are
Vulnerable and open.
People love it.
Because even if you don't stutter.
You're like, oh, I I I have this similar, I have this issue, whatever it would be. And like, thank you for telling me that your life was not as was was is not perfect. Thank you for being open about the struggles that we all have in our lives. I think people like that. But it's a fine balance between that.
And being too personal, which we've all seen online. Yeah.
Or being too
braggie egotistical about like look how much I overcame. I'm so important. I'm so special. It's it's a hard it's a balance.
Some people use vulnerability strategically. Yes. You can tell. There were there was that viral LinkedIn post a year or two ago of it was a founder and he said, I just had to lay off half my company and he included a picture of him with like tears running down his face. And people are like
that's terrible. You like shame on you.
For just trying to like pull up the heart strings and say, like, oh, I'm I'm so empathetic that I cry when I feel like it's actually a hard balance between like why why did my stuttering post work?
But that picture
was just universally panned.
It's a th it's a balance, but I think it's hard to know where you cross the line there.
I wanna come back to comedians for a second. What did they know about telling stories?
Then.
We should learn from that.
I forget who says this and this is not a direct quote I'm paraphrasing it. I'm gonna do a much
poor job paraphrasing it, but it's like comedy is a way to show you're smart.
Without being arrogant.
Something like that. That's not the quote. I'm doing such a bad job paraphrasing this. But I I I honestly think that
The best comedians are the some of the smartest people in society. They understand psychology. George Carlin understood psychology.
I think better than Daniel Kahneman did. That's a bold statement, but I think that is I think that is actually true. They are so smart at understanding how the world works.
What make what makes people tick?
How people think.
But they're doing it in a way where they don't want to just impress you with their intelligence. They want to make you laugh. What could be better than that?
And so
I'll give you one example, my favorite George Carlin line. He says
Have you ever noticed that everyone driving slower than you is an idiot?
And everyone driving faster than you as a maniac.
A, it's it's funny, but B, it's like God, that is if you think about it, that's profound. And understand like how like relative views of other people and whatnot.
And so they are s I think they're absolute geniuses, but they want to deliver in a way rather than using big words to say, like, look how smart I am, they just want to make you laugh.
And they are also
Because particularly for like a young comic.
If they are not making you laugh quickly.
they're gonna get boo off stage. So they are the epitome of
one line or just like
so succinct in their delivery, so succinct in their writing.
'Cause they don't have the luxury that a lot of authors do of like let me write a seven thousand word chapter.
A a comedian on stage is like, If you don't make me laugh every ten seconds, you're gonna get boo off.
It's interesting'cause you you mentioned psychology there. They're they're keen observers of
human nature and psychology.
And all we've talked about today, we've talked about it through the lens of money, but it's basically
Psychology.
Well I think
a lot of things in life fall under this umbrella of
How do people make decisions around uncertainty, risk, and lack of information?
And that is
Health?
That is politics. That is
Friendships and marriages, and it's also money. A lot of things fall under the same umbrella. There's a study of like how do people behave.
And
One of the things I think is important here is that you can learn so much about money.
By studying and reading fields that have nothing to do with money.
I think you can learn more about money by reading about politics, military history, biology, sociology than you will by reading a finance book.
because you're just trying to figure out how do people make decisions. How do you make decisions and how do other people make decisions.
And by and large, you're not going to learn that in an economics textbook, but you will learn about it by reading all these other fields that have nothing to do with money.
What's your process for writing?
I I I don't think this is a good advice. So if you're a writer out there, I'm not saying this is the right way to do it, but one of the things that I do that I think is v is not common.
Is
I write
By the time I get to the bottom of a post, it's pretty much the final draft. Not because I can write a final draft in in in the w in the in one shot, but because I
By and large, don't move on to the next sentence until I'm satisfied with the previous one.
Most writers, most very good writers.
We'll do the opposite. They say your first draft should just be a brain dump, and then you go back and edit. And it's that's never for whatever reason, it's never really worked for me.
So
Now the other thing is I can't sit I think I get too anxious uh and jittery sitting for too long. So a lot of times I'll write one sentence.
When I'm satisfied with it, I'll get up and like go do the laundry and I'll come back and write two more sentences and then I'll go do the dishes or walk my dog or something.
So it's very sporadic like that. And I think that contrasts with a lot of writers who are like, Oh, I sit down, I can dump five thousand words on the page and then I go back and edit it. That's that that th that is probably the
The best advice.
Like that's what you should do.
And it's
For whatever reason this never really worked for me. Well, you should do what works for you. I guess that that's it. But um most
writers that I look up to, I think are much better writers than I do it the opposite.
How do you hook people? You're one of the best at sort of you and James Clear the two people who
uh you know the first sentence to your paragraph and sort of like the first part of your story
really pulls people in. What would you what do you say what do you think you do differently? I think it's a constant reminder of how how impatient people are.
And if you don't hook them in five seconds, you're gone. And I know that because I'm a big reader.
And if you don't hook me in five seconds, I'm probably gone. Unless you are like a an author who I really know that I I will give you a little bit more leeway to be like, okay, like I don't know where your article's going, but I'm gonna I'm gonna stick with you because I like you.
If you're not that, you got five seconds to catch your attention or else you're out of there.
And I think that is a it's it's easy to overlook that, that it's not just being succinct.
you know, in in the core of your article, but they it's uh it's it's almost like an inverted period in there. It's like
People are most impatient in the first two sentences.
Yeah. It's like you would think it'd be the other way around. They would get impatient after they've worked their way through your article and they're getting bored. Like, no, they're most impatient at the top.
And there's a there's a lot of data that can be very disheartening for authors.
There was a mathematician who looked at Kindle highlight data, and he used highlights as a proxy how far people make it in a book.
And the assumption was when people stop highlighting
And Kindle, they probably stopped reading.
And he showed that even among best selling books.
the most popular books. The average reader makes like a quarter of the way through. That's in the bestsellers. That's in the good books.
a quarter of the way through and they're done.
And so just always reminding yourself how impatient people are. It's just like, what's your point? Like make your point and get the hell out of people's way.
I still think Twitter
has made people better writers.
Because the character count limitation has forced people to be like
You have two sentences to tell me your idea.
And if and that that that that's all you get. That's actually I think that's been a great thing overall for making people more succinct.
What makes a good hook?
It could be a lot of things. I could like it could be funny. It could be profound.
We were I think we were talking about this last night about I've I forget who said it that
You like good writing fits one of the acronyms of like OMG, L O L
Yeah, like something like that. It should be shocking or funny or profound or scary.
Something like that. That's gonna just gonna involve an emotion. Yeah. Yeah. Something like that. I wanna end with two questions. So one being what
Y you can um leave everybody some parting wisdom on
money and life.
What would it be?
I think the most important is to realize how personal it is.
And therefore you'd really got to be careful taking your cues from other people.
You and I again
Same same age, same like going down the list, you and I are very similar people, probably have very different views about what to do with money, and that is fine.
Just like you and I might have different views about food.
You like this food, I like that. Doesn't mean that
You're wrong. She's got different tastes, whatnot. People understand that with food. But there is a
Common sense with money that there is one right answer for everybody.
And I so I think you really have to be introspective and look in the mirror and just say, like what works for myself and my own family.
And even if there are holes and flaws and other people disagree with that.
If it works well for me, that's that's as good as you can do. That's an important thing.
And final question, what is success for you?
I heard I think Jim O'Shaughnessy said.
Uh that his goal
As a parent.
Was not to raise good kids.
It was to raise good adults.
Like he he wanted to be the kind of father that when his kids became adults, they were well balanced. That's different from raising good kids. You want to raise good adults.
So that would be a big
Like maybe the top.
box to check in my life.
is looking back and being like, My wife and I did our best to cre to
raise kids that became good, self sufficient, well balanced, polite, happy.
Adults.
That's excellent. Thank you very much, Morgan. Thanks, yeah.
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