10 Years of Money Wisdom in 51 Minutes | Morgan Housel

Transcript from https://podmenti.com/t/5c0f2ed1ce274e07

Today we're talking about money.
With the guy who's been studying money for like the last ten years.
He's the author who sold more books.
About money, then pretty much anyone on earth. It's Morgan Housewell. He wrote The Psychology of Money, the same as Ever, The Art of Spending Money. And we talked to him about
Warren Buffett.
About the behaviors.
that drive people to either make money or lose a bunch of money about spending money, about how much money is enough.
It's just a good, honest conversation between a bunch of dudes about money. What more do you want?
I feel like I can rule the world, I know I can be what I want to
I'm putting my law in it like my day's all on the road, let's try to get it. Morgan, you tweeted out.
Something that
Broke my brain.
In fact, I thought it was like an AI deep fake.
It's like when Luca got traded and people were like
You know, this is must be fake news. There's no way this is possible.
You
Said that.
My favorite Buffett stat.
Is that Berkshire Hathway could lose ninety nine percent of its value tomorrow?
And still have outperformed the S P five hundred.
since Buffett took over. And the and the the truth is I was understating it. It's actually like ninety nine point six percent or something like that that it could decline. That is so cr how is it even possible? Like, you know, we don't do public math here, but that sounds mathematically impossible. And and he only outperformed by seven points, right? It was like
Or it w like he's done like twenty percent annual versus it's it it's about that. His was about twenty, and I think the S P nominal with dividends.
is probably like 11 or 12. So maybe it's eight or nine percent outperformance.
But he did that outperforms over sixty years.
And so the cumulative performance, I'm pretty sure I'm saying this off the top of my head. If I'm getting this a little bit wrong, I'm sorry, but I think the S P five hundred.
is thirty five thousand percent.
Since Buffett took over.
And Berkshire's return was five and a half million percent.
And so even if it's only quote unquote only nine percent per year over six per year s over sixty years, it just gets incredible insane. Preposterous. And you know, Buffett's current net worth is
I think a hundred and thirty billion, but he's given so much away to charity.
That if you count that in
Uh it's something like five hundred billion. That i i if he hadn't given money away to charity, he'd be worth five hundred billion. He'd be the richest man alive by far. And he started with ten thousand bucks.
And I mean and and turn it into half a trillion.
And so that's
But I think the biggest lesson here
And this is the most important for ordinary people.
Is that like look.
You can't pick stocks like Buffett.
You can't analyze businesses like Buffett. He's smarter than you, and he operated in a different era than all of us.
So don't try to emulate that.
What you can emulate, especially for young people, of course.
Is
The most important and powerful thing that he did.
Is that he was a good investor.
For eighty years.
And it's just the time that he was doing it for that made all the difference in the world.
So I pointed this out in my my first book. If he uh y if you look at his net worth
Ninety nine percent of it.
Came after his sixtieth birthday.
Ninety nine percent of his net worth was accumulated after his sixtieth birthday.
So if he had retired when he was sixty
When he was worth a couple hundred million bucks, like pretty good, you would have never heard of the guy.
The whole reason he became so famous and so wealthy.
is that he started investing when he was eleven.
And he retired last week when he was ninety five.
You're very lucky that you get to talk to all these amazing successful people and investors are really cool because it's not always about investing that you're interested in. It's about, like you said, behaviors.
That's why Sean and I love talking about uh two investors. How we had Howard Marks on it was one of our favorite things ever, and we don't know anything about bonds.
with Buffett, is that the attribute other than time and market that you I mean, what other attributes separated him from the hundred of thousand other people? Because there's definitely hundreds or maybe even thousands of equally probably smart people.
What other attributes allowed him to be who he is versus the rest who are pretty good.
Quite a bit. One is I think what Berkshire did, what Buffett did for sixty years.
Is on one hand so unbelievably simple.
And on another hand, almost impossible to replicate.
And it it's hard to kind of square those two.
But
What it required was an unbelievable amount of patience, an unbelievable amount of goodwill.
In terms of the trust that he had among
All other businesses among his investors, among regulators, who because everybody around him just left him alone to do his thing because they trusted him.
And I think that that's an overlooked part of this.
Even like any other
hedge fund manager, private equity fund manager would not have the trust among their investors, among portfolio companies, anybody to let them do what Buffett did.
That was huge. Sorry, explain that a little more. What's a thing that Buffett did that others might not have had the the leash to do? He had the track record.
And the narrative
That
If you sell your business to Berkshire.
It it is not going to molest it and rip it apart and sell it for parts.
It's gonna nurture it and let it grow for
It for
In
Forever.
And I think that was and if you compare that to Blackstone, KKR, all the other private equity shops.
Their stated purpose, and I'm not saying this is wrong, but their stated purpose is we're gonna maximize IRR.
We're and we're gonna do whatever's necessary to get there.
Wers Burkshire was we are intentional.
not going to maximize returns.
We could easily flip this company next year for more than we paid for it. We could easily lay off half the staff.
and squeeze more more net income out of it. We're not gonna do that.
We're going to keep this as it is and do it. And because of that, you had businesses that would sell their company to Berkshire.
For less than they could have gotten.
from Blackstone or KKR.
Because
If you were particularly a family business.
Who built your business up over the years.
And this was your baby.
Did you want to sell it to Blackstone for an extra ten million bucks and have them rip it to shreds?
Or sell it to Berkshire for a little bit less.
And know that he was gonna nurture it for several generations.
A common thread, I think, of the people that I've grown to admire is that they're stewards.
So I've loved reading about George Washington. He was one of the only presidents ever in the our fifty year years of uh fifty pr of you know, fifty plus pres presidents or so where
he had unilateral support from both sides of the aisle, which that still existed back then. And when when he w when people interviewed they said, Why why do you trust George Washington? And they go, Because I know that he is willing to put the union in front of himself.
For example, the idea of a two term president
George Washington created that.
That was so crazy when he had been president for two terms and he was like, I'm now done. It's it's better off that someone else does it. Or the US Constitution, which he helped formulate. It was one of the very first self amending rule books where we acknowledge that the rules might be wrong.
But we are going to work together to fix them as we go. And George and it was modeled in part because of George Washington's attitude of being a steward.
And that's really interesting that you're talking about Buffett that way. You're saying he was basically like a steward of goodwill. I think that's true. And a lot of it was not
Altruism. It was
He knew that he would be able to get the best terms.
And the best deals.
If he had that level of trust.
And so a lot of it was was
morals of just doing the right thing. But a lot of it was he he this th this was going to accrue to him personally and to Berkshire over time. Sure. And I think but that that's where you get the best results when it's like everybody's winning here.
The the the companies that would sell to him.
We're like, this is this is where we want our baby to go. And Buffett himself was gonna get it at better terms and have better flow than anyone else doing it.
Also important to point out.
This should not take away from any of his success, but it's important to to point something like this out.
Buffett once pointed out that over the course of his career
He has purchased five hundred stocks.
And he made
The vast majority of his returns on ten of them.
And Munger once pointed out that if you look at all of Berkshire's deals over the fifty, sixty years that it was doing it.
If you remove the top five.
Its returns fall to average.
And so this is true for almost any endeavor that you look at.
the vast majority of Berkshire's returns. And whether it's Berkshire buying whole companies or Buffett as a basically a hedge fund manager back in the day.
Uh the huge majority of the success comes from a very small minority of what he did.
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How do you action that power law the observation that man, it's all about these power laws that the
A few things will account for the m majority of your success or your returns. I think there's probably two takeaways from it. One is the idea
That
If if you're in a game like that where you don't have a perfect success rate, like if you're a pilot, you should have a perfect success rate. Every every flight should land. It should be a hundred percent every time.
If you're an investor and it's not like that, you have to be very comfortable with a lot of things not working. And a lot of investors are not.
A lot of investors, it will destroy their ego, their soul, or the trust among their investors.
If they're if they're like, Hey, we picked
Ten stocks.
And three of them went bankrupt and four of them did okay, but one did really well. Even if on average it works out, a lot of people just can't handle that kind of volatility.
So coming to terms with the idea that it's always going to be a tail driven business, just the psychology of that is important. The other, I think more important takeaway, though.
Is the humility of how hard it is to emulate this.
It would be one thing to learn how to be a pilot.
And learn the mechanics of an airplane.
and of aerodynamics and to figure out how you can land the plane every time.
And you can teach that skill. It's another to be like, Man, if you're a great investor.
And you're so smart.
And you know everything.
You're right.
Five and a half times out of ten.
And and that's if you're good.
And that's like that's it's a it's a very humbling statistic.
just to put people in their place, I think in in a good way of how difficult this business can be.
I asked the same question to Monash Pabry, who is
a a value investor. He was a kind of Buffett disciple.
Friends with Charlie Munger type of thing.
And I said, What's the takeaway from that?
That stat that he Buffett himself admits it's a dozen decisions out of five hundred.
That
really charte, you know, the difference between them being who they were versus being average.
And he said
You can't control which you don't know up front which of those decisions is gonna be that the the the big winning decisions.
But he said Buffett was able to circle the wagons. Meaning
Once he bought one of those companies that was the like co long term compounder that was just gonna keep paying
paying uh dividends out for them.
The he didn't sell too early.
He held them for the long term. He circled the wagons around those core assets. He just never let anything attack those core assets.
And um
Buffett is famous for having called, I think Peter Lynch once and he said, Like, hey, I love this phrase you said. Can I steal it from my annual letter?
And he Lynch was like, Yeah, well what did I say? I don't even remember and he goes
You said don't cut your flowers and water your weeds, meaning don't sell your winners to take profits.
And then take those and put them into less good investments. Cause that is like
you know, that's gonna destroy your ability to get returns. It's so hard to find these winners. When you find them, you've got to circle the wagons around them.
And I think that's the only like
thing you could do after you've made the good decision is
Let your winners ride.
for a longer period of time. Yeah. And this might get back to a little bit what we said earlier of um
No, so I I joined the fund in in in twenty sixteen, but I'm I'm not an investor. Uh but uh but I've been able to watch and observe uh
uh top tier venture capital fund operate. And what's very interesting to me is
True to all venture capital companies.
A small minority of the companies we've invested in account for the vast majority, virtually all of the returns. Who are the big winners for collab? Uh Lift, Beyond Me.
Impossible Foods, uh upstart.
Uh those kind the those what I just named are the vast majority of of returns. That's that's probably right.
And what's interesting about it is if you go back to twenty sixteen when I joined
The companies that we're gonna be our obvious winners
Weren't you?
And most of them don't exist anymore.
And the companies that did just explode upstart and those were were not were companies that were like, Oh, that's that's a cool company. They're doing some cool things, but never in a million years would we have thought this was gonna be it. So not only is it
A small minority
of of companies that are are are your winners, but similar to what Mona said, you you don't even know which ones those are gonna be. It's very difficult to know in real time.
Well, that was the case with your book. I think you said you printed five thousand copies of The Psychology of Money. You've sold ten million. I'm not sure how many books have sold ten million.
But like, you know, you are in the freaks amongst the freaks in terms of in terms of numbers. And nobody's nobody saw that coming.
I didn't see it coming. The publishers didn't see it coming. I've said this a million times before, but every US publisher turned it down. Every single US publisher rejected it.
And but and I don't I don't fault them. Like it's it's it's a it's impossible to know what's gonna work before it comes out.
About how many
nonfiction authors have sold ten million copies.
Of a book.
Could you guys book a table at a restaurant? Like I I kinda feel like it's gotta be like the dusty. It's hard to know because there's not a lot
Uh it if i i if you're looking at the last ten or fifteen years, there's pretty good industry data that you can compare across time, but if you go back a hundred years, you're dealing with like the data sources are so
All over the place. Okay, well how many in the last fifteen years? Not many. I don't know. Probably five.
Something like that.
No shit. How cool is that, man?
Five plus one to the dinner. Well, isn't that interesting? You said you wrote I think you said eight thousand blog posts.
Um you've written three books now that have been um huge hits.
And yet you are telling me that predicting what will be popular in terms of content, particularly in writing, is impossible. I don't like that. No, I think I'm being very honest. And of the the four thousand blog posts that I wrote.
Um there's like
Three or four that stood at that word.
You know, an order of magnitude bigger than the others.
And all four of those
Before I hit publish, I was like
Should I I don't this is crazy.
This is insane. Like I don't even know if I want this is crazy.
And there's there's literally one of them.
that I um I I published it, but I hid it from our blog's feed.
Because I was like, I I just wanna like I I wanna have a link that I can show some people, but I don't know if I want people to see this yet.
And and so
If there is any metric.
That you know like or have some feel.
It's
It's that. It's before you publish it. You're like, this is the craziest shit I've ever said in my life.
And I'm and I'm embarrassed to hit publish. But that I think almost that's what you need.
To make it work, and so when we pitch psychology money to all the big publishers.
A lot of it wasn't just basic rejection. A lot of it was like there's no way that that would ever work.
Because it was a weird idea. I was like, look, there's no central thesis to this book. It's just nineteen random
Essays.
And like they kinda they're they're they're all about behavioral finance ish.
But there's no other cohesive theme. That is so antithetical to what a publisher wants. A publisher wants one big idea.
weaving its way throughout the entire book. And I'm like, nah, I I don't I don't have that. Sorry.
And so
It it it it wasn't just that they didn't believe me in a writer. The whole I the whole structure of the book was the opposite of what they were looking for. But I think you need that in order to stick out.
And like how could it be any other way that in order to have
A non normal result.
you have to have a non normal idea.
That's true for entrepreneurs, it's true for any endeavor that you take that you have to be an oddball in order to stick out.
Can I give you a couple of uh
Quotes that
from your book that I've loved, that I just have in my Kindle highlights.
And I just kinda want you to talk about them. I'm just I'm just gonna throw them at you. Yeah, it's two. Okay. The first one is a useful one, and then I have a fun one right after that. All right. So the f the useful one is this.
You said something like
There are two ways to use money.
Number one.
Money as a tool to improve the quality of your life. And number two, money as a measuring stick.
To measure the sort of the the your self worth.
That one hit me hard.
And I now can't unsee that. Whenever I see anybody, whether they come on this podcast or just somebody in real life.
It's so black and white to me to understand kind of like who's using money in which way.
No, it's it's tough. And I think I've always
I've always wanted to write
things and about problems I have in my own life.
So a lot of this was just kind of looking in the mirror and being like
What is my desire for more money?
Am I using it as a tool to make my life better and my wife and kids' lives better?
Or is it just like I'm it's just it's just a measuring stick of it of how well am I doing in life and where do I sit on the social hierarchy? And if you're if I was if I was honest with myself
It was a lot of the latter.
And I think we've done a pretty good job spending money on the things that we like.
And whatnot, but a lot of the desire was just like
What's a scorecard look like?
And maybe that's not bad,'cause like I enjoy that game.
Yeah, why is that bad?
Because like for example
You you've sold ten million books, we just use that as a measur, and ten million books correlates exactly to money.
Uh like that to me, that means your ideas are s are impacting so many people for the better. And it's and I want you to measure your life by getting to twenty million books because I think your book helps people.
I think you're right there, but here's where it can really go astray.
Money is so quantifiable.
And book sales are so quantifiable that they become um like we overestimate their importance.
What I mean by that, if you if is it if you said like
What what's important in in life? I want to be a good husband, a good dad, a good friend, a good citizen. I wanna be funny, I wanna be healthy.
All those things are so important and they're very hard to quantify.
How do I quantify whether I'm a good dad or not?
I don't I don't know.
Potentially the most important thing to me in the world.
And there's no score.
And so it means everything to me, but it's easy to kind of ignore because it's this mushy topic.
But what is my net worth?
How much did my income go up last year?
What are my returns versus the S P five hundred? You can measure those down to the millionth of a basis point. And so because they're so easy to track.
And it's apples to apples, my net worth versus yours.
How do I compare my
You know, social citizen score.
Or my dad score or husband score.
from from me to you. You can't there's nothing.
And but income we we can sit here and compare our net worth all day.
And so I think the using it as a scorecard metric.
Is both really good and can be a lot of fun.
And used for good.
And I love that game. I've been playing that game since I was a teenager.
And I'll keep playing it the rest of my life.
But you have to understand
the limitations of it.
And how much
Power there is
towards it just just because you can quantify it, not because it's necessarily gonna give you a better life. I think there are a lot of people
Who because it's so easy to quantify chase it as the ultimate metric to all of their problems.
the solution to everything in your life.
And everything else, your friendships, your relationships, your health that are more important.
Take a back seat just because you can't measure them.
L let me give you an example of this,'cause I think um
Usually when we're talk about like, well, like you gotta think about money's not gonna make you so so happy or
Money could be a tool to m to improve your life.
Or a measuring stick.
This is usually like rich guy problems.
So it's like you already have money and you keep chasing more money and you're in this you're facing this ex existential
Yeah, w what's it was it is enough?
Right. You've wor you've talked about this word enough.
Sam, I know you've talked about like enough is
Just twice what I have, always. Right. Our buddy Andrew Wilkinson wrote a book called Never Enough.
And like
I kind of reject the premise and and I'll give you a opposite example.
So when I was twenty-one years old, I graduated from college. I graduated from a good school. I went to Duke. And when you go to a good school, everybody you know goes and gets a job in finance or consulting or they go become a lawyer or a doctor or whatever. But the people who get jobs
They go get high paying jobs at companies you've heard of.
And that sounds really good.
And so you know, they I w I would see one friend gets a hundred K, one friend gets a hundred twenty K, one guy got two hundred thousand dollars straight out of college. That is incredible.
And
I face that problem you were just talking about, Morgan, which is like that's a number that I can compare myself on.
And I made a decision'cause we were trying to start a startup.
So nobody was gonna pay me any money.
Uh and the company was a company nobody's ever heard of because we just created it like three days ago when we filed the LLC.
Okay, so what am I gonna do? And what I did was I created I tried to think about money as a tool to improve my life. Specifically, I said, what is the
Minimum amount of money I need to make this year.
So that I can live
And have the maximum of time.
to go pursue this project and travel and like do these other things.
And so I calculated what I called the freedom number.
And I don't remember what it was exactly. I think it was something like
fifteen thousand dollars or something like that. It was like a very low number, like not even
It's like less than minimum wage if you just work like in a McDonald's uh or whatever. So like uh what's that, twelve hundred dollars or fifteen hundred dollars a month?
Yeah, I remember like we were splitting a two bedroom apartment, three friends, and we slept on air mattresses. We got all our all our sofas for free off Craigslist and like, you know, we ate
You know, the minimum stuff at home. Like we didn't go and we you know, we drink at home and then we would go out. We didn't uh, you know, buy drinks at the bar, like little stuff.
And I realized I could make that number if I just I was tutoring like three or four
I
college kids in statistics, which I wasn't even good at. I I had a C in statistics, but they had an F, so you know.
in in the land of the blind, the one I'm as king. And and then I coached a basketball team of uh uh of middle schoolers at a school for autistic children. And like that was my job.
So I was like two basketball practices a week.
Two to three kids, and I I had all this free time.
That none of my friends who had like
hedge fund jobs or banking jobs in New York.
Had
And it was the first time I got a taste of this concept you're doing, which is like, you need to create your own scoreboard and your own metrics.
If you want to live life on your own terms.
If you just take the metrics life hands you, you're gonna live the life that
those algorithms want you to have or society wants you to have
And you're not really gonna have life on your own terms.
was independent. I just wanted to live life on my terms and do what I wanted to do.
And I I've known this about myself for a long time.
That
I can do good work, but I'm not a good worker. I'm not a good employee.
I'm not good at all when a boss says
Here's what I want you to do.
Here's how I want you to do it and when I want you to do it. I'm a I'm a shit worker under those terms.
But if I'm left to my own devices.
And somebody says
Just
Just go do your thing.
I can then then I can really accomplish something.
And so I j I'd I I I just wanted to be fiercely independent in everything
That I do, and I think every single person has unbelievable talents.
If they could be left to their own devices.
But a lot of people once they're under the pressure of other people's goals, other people's ideas, other people's
uh their financial incentives.
you know, are are are are are pushed down a notch. And and and it's unavoidable. I'm not saying everybody should go be an entrepreneur, of course.
But I think if you can use financial independence
to work at the company that you want.
to live where you want, to live in an area that gives you a lower commute, to retire when you want, whatever it might be.
That to me, I'm I'm not anti materialistic at all. I I I I love nice things.
But using your money for that.
is I think the highest ROI
By tenfold.
If you can use it for independence.
Rather than as a material, you know, social peacock showing other people look how successful I am, using it more inward to just be like I just want to wake up every morning and say, I can do whatever I want today.
That to me was always the ultimate goal.
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We should talk about spending in a second, but Sean, what are the rest of your quotes?
Well one of'em was the story, speaking of like
Money for using money for status.
It was the story about the Coke brothers wine collection?
Uh can you just tell the story? Sam, have you heard the story? I think it's I think it's awesome. There was uh I mean one one of the Koch brothers was a is an unbelievable wine collector.
And has not like tens of thousands of bottles and the rarest, most amazing
Wine that's ever existed.
And uh two or three bottles that he purchased, I forget the exact price, it's it's in the book, but an unbelievable amount of money, and they were Thomas Jefferson's.
wines from his estate that he bottled from his estate on in in in Virginia and whatnot.
And uh
He bought paid. I'd break ten years of sobriety to drink that. Well, this is where the story gets good.
Uh they they were they were fake. They were forged. He hired a private investigator to like audit his entire wine collection and be like
Give me a rough estimate.
And this is a
A multi million dollar wine collection, right? Like uh how much roughly was the the wine collection? I mean, I can find out. I I forget the exact numbers of of what they were.
But it was a a a very uncomfortable percentage of what he had purchased for tens of millions of dollars was was all forgery. And once you once you dig into it, the wine forgery business is off the charts.
Because you have very rich collectors.
and no way to to authenticate what's there.
It's sort of like uh the the the dog vitamin business. It's like does it work? One of the the tells of what they were doing when they were investigating this was like literally this Thomas Jefferson wine. The label was on there. Or there was or for for for for some of these wines, the label would be stuck on with Elmer's glue.
That was invented fifty years ago kind of thing. Awesome. And so the but but even when you open the bottom. But but even but even when you open the bottle and drink it, you still you still can't tell.
So it's his ultimate forgery business. But was he less happy once he found that out?
That's the point.
I I think there there is a thing of like
You do these things because they're cool and they make you feel good and whatnot. And so if you have a fake Louis Vuitton purse.
And uh
It does does that make you feel
Where like what what what should make you happy is the quality of the purse.
The feeling of it, that the durability always No, dude, I so disagree. The story can matter. Like, for example, we were just talking about like if you buy if you're like I'm into like Japanese denim. It's just a weird hobby. And like there's some weird story about how this ja the small company in Japan, they remake the jeans and this
crazy, stupid way, but it's awesome to a very small group of people like me. If I found out that wasn't true, I that would bum me out because I was wanted to participate in this journey. I don't disagree with that.
Um
But I I think there there is a
A a an interesting thing where the quality of the topic like brands gain
their brand a lot of y you know, buy the quality of the product. There was a period when Louis Vuitton was just a a startup bag company and they gained their brand and their prestige based off of quality over time.
And there comes to a point where it's like if a fake
has that exact same quality.
And I I totally understand the point about
But
the the the history and and and the the story of it. A friend of mine just started a uh men's skin care company
And I I I love supporting him and the product is great kind of thing. So like the story behind it. But I I I think it's it's interesting when
the uh the prestige of it.
disconnects from the quality of it. To me, I think there's always been this litmus test that I think about, which is if I was on a deserted island with my family and nobody could see how we lived, nobody could see
our our house, our cars, our clothes. It was completely invisible to every other eyeball except for our own. How would we choose to live?
And I think for some people the answer might be exactly as I do right now. I'd have the same house, the same car, I'd wear the same clothes, but not not most people. But definitely not most people.
And I think I think uh I think for for a lot of people
They are
Living a life of performance.
And that's that's okay. I think I think it's I think I I th I think I do that to to some extent.
But you have to perform for the right people.
I want to perform for
And that's that's that's a that's a silly way to to do it, but I I I desperately want to impress
My wife, kids, parents.
uh three or four of my friends because like I I really want their love and attention.
Once you start into the realm of I want to perform for strangers.
and get their attention, that I think is a completely fruitless game.
Okay, but let's should test that. Do you think your kids and wife care about the books you've been spending years of your life writing on? They're not impressed by that. But so you're but you're doing it, so there's gotta be some other motivation. No, it's uh it that there's been an interesting thing of like
You know, I I I wrote my first book when I was married and had two kids, and so all of this came after that.
Does my wife love me more? No, she loved me enough back then.
And so that you know, do my kids does my
Six year old daughter love me more now? No. So is but is there a part of you trying to impress some other group?
With the books.
Or is there just some other motivation altogether if you're being honest. Like what what is what is that? Yeah, it's a it's it's a good question. I'll try to give you an honest answer. I think it's a combination of I I genuinely love writing. I think it's a lot of fun.
And if I'm looking at it from a financial point of view
I like the game. I like the game of
Earn as much as I can.
Invest it as well as I can.
Compound it for as long as I can.
uh use that money to both live a great life right now.
And pass it along to
my heirs and charity at various points in the future. I love that game. I fri I freaking love it.
And I would be sad if I stopped playing that game.
And so I think that's that's the main motivator. Sean, you've posed that question to me.
And
You sort of like posted to me. You're just you're teasing me where it you it was almost like a gotcha like
See, they don't they don't care.
And I and I I actually reflected on that.
And I actually realized the answer was
They don't care.
Right now.
But like your kids, you mean Yeah, my kids or or family members. But I think the context is you were saying like it's I really want my kids to see me working hard and like going for something. I think that's kinda how you've said it, right? Yeah, yeah, yeah. And that's stuck with me. And the reason it stuck with me is because you and I have talked about our parents on this podcast.
And the things that we talk about are the things that they did when they were eighteen, nineteen, thirty years old, when we were before we were born, or when we were
Yeah. Small enough that we didn't care then.
But we look back and we think, Now how we badass was that.
How great was that.
And so I think that the answer, potentially, Morgan, for you, it is for me, is
They don't care today.
But how wonderful will that be when your son or daughter is twenty five or thirty years old and they're like
Look what my dad did.
He he had this concept, no one believed in him, it took off and he kept at it. And how wonderful is that.
Therefore, if I wanna do it if I have a particular goal in my life or something, I wanna A, be proud of my name and carry this on and B, if my dad can do it, I can do it and he's my model on like perseverance. Yeah, you you're uh you're absolutely right in the in that
The way you did that, like kind of abstract. It's like they might not care.
About the newsletter.
Or about Hampton, or about this podcast, or about like the specific
Projects we do.
But
Um when I was with Jesse Itzler in that last episode, he goes
He goes, just w he's like, Think about this. When you go back and you tell your kids
Hey, Daddy took a long trip.
To go
And try to be bet like try to better himself.
Like he f saw someone who might know something and he was willing to go out there
And try to learn it so that he could become better.
He's like, what a powerful lesson you could teach your kids.
About like
Identifying you know, maybe there's there's something out there that I could go learn and then being willing to go get on a plane and go chase it, knowing
It might not work out.
But it might. And if it does.
That's important.
And I came back and I actually did tell my kids'cause they were like, Where'd you go?
And always when they say, Where'd you go? I'll say
Atlanta.
As if th they don't even know they don't know what Atlanta is. Daddy has work.
And to them, work is just something that gets in the way of daddy spending time with them.
Right.
And you know, like they d or like they don't really understand like what what the purpose of it. In fact, I give it quite a negative association. I'm not showing them some wonderful example. They just associate it with
Uh it's this thing that's
We don't get to have daddy because he has to go do some like something that's bad because he's not here with us doing the fun things that we like.
And so once I reframed that, I started to see them act different.
And they would say things in their own
day of how they came back from school where they'll s they'll use this language where I'm like, that's the thing I told them two weeks ago.
That sounded kinda cheesy, but hey, it's just the three of us in the car and like nobody's here to judge me.
Yeah.
I I both
completely agree with what both of you just said.
And uh I I also think you can be uh
A a a a filthy, rich, terrible parent.
Or a parent who uh you know makes forty five grand a year.
And is an unbelievably good parent.
And so I think I think this gets back to
the quantification of money just becoming the ultimate metric getting in the way. I wrote about this in my last book. I have a good friend of mine. I've known him for more than twenty years, one of my favorite people in the entire world.
He's so funny. He tells such good stories. He's so much fun to hang out with. I can't
I I can't wait to see him every time we hang out.
And among our friend group, he by far earns the least amount of money, by far.
And it really bothers him.
And it makes him feel inferior.
And he says this.
And I had to tell him one day, I was like, look
If you are who you are, a a good husband, a good father.
Hilarious.
So much fun to hang out with.
You've probably earned nine
and a half out of ten.
friend points that I'm willing to give you. If you also happen to be a successful entrepreneur
I might bump you up to like
Nine point seven out of ten from nine point but but don't pretend like it makes that much difference.
And I know, I'm sure you know
Many rich entrepreneurs who are the most insufferable, arrogant people that you don't want to spend five minutes with.
Th those people exist too.
We call it being uh the total man.
You know, we'll have people on the podcast who are successful, but we're like, I don't emulate you know, I don't want to be like them.
Uh, but then we'll have other people who are successful.
And also they're a good husband. And also they're fit. And also they're fun to be around. And also they're polite and kind. And we're like, that's the total man. That's what a that's what a perfect thing. I think a lot of people like the salt of the earth of just like
You're uh you're a you're a fireman and you coach the little league team and you're a you're a great dad, great husband. You
Fix your cars, you help the community, like people love that.
That
That
Persona.
Are you just describing your your your dream hunk?
You got a sick jawline, a little salt pepper hair.
Foo fighters there there there goes my hero. He's
He's ordinary. I think I I I think you don't ha I think the idea that you're only exceptional
If you are
earning more than X dollars per year has done a lot of damage to society, especially among young people.
Can you give us a curated list of the people
who are known so the people who me and Sean can go and copy so the we can go read
The people who you've read about, who you've talked about, who have a public presence
Uh, maybe like a list of three or five people who have had the biggest impact on you or
Who you think we should go learn and follow.
James Clear is uh, you know, he you if if you want to talk about book sales, he's I mean, he's in a completely different league than than I am for for nonfiction. Of the five or whatever people who've sold more nonfiction books, he's at the top.
And he's one of the nicest, humblest people you can ever meet.
One of the most caring people you can ever meet.
James and I have only met in person maybe three times.
So I would be lying if I said he's one of my closest friends.
But
Whenever I have a question about books
And th and this goes back to before I wrote Psychology and Money.
And he was a big dog and I was a nobody.
And I I I would send him a I would send him a text and he would write me back a novel. Like he would spend half a day
trying to help me figure out the title of my next book kind of thing.
So nice, so humble, and so unbelievably successful. Atomic Habit has sold over 25 million copies and it's still going stronger than ever.
kind of thing. And I think he thinks about
He he he had the saying one time that that I loved. He said
I'm not an author.
I'm an entrepreneur.
And
A book is one of the products that I launched.
And he'd thought about atomic habits in that way.
And he is an incredible author, of course.
But the way that he thought about how to launch it.
How to market it.
How to structure it.
How to how to
write the table of contents in a way that would get your attention? He thought about he he's the most scientific
thinker about this.
That led to an unbelievable amount of success, a generational level of success.
And still culminated with the humblest, nicest guy you can possibly imagine.
I had to do the math on that. Twenty five million books times twenty five dollars, six hundred
$5 million of book sales. Right. Yeah. I mean it's a it's it's a it's a it's a bonkers level. And he also started uh the Atomic Habits app.
that expl that exploded there's there there's a whole there's a whole
Ecosystem around it.
And
And look, there's there's a lot of people who've you know
tech entrepreneurs, whatnot, who made a fortune and are very talented and deserve to be praised.
And that level of success turned them into
Insufferable monsters.
And I I actually have a lot of sympathy for that. I I think it's not
Uncommon.
Uh for for people to do that. Particularly if you were snubbed when you were a child, if you were bullied when you were a kid, and then at twenty five you're worth a zillion dollars.
It's very easy.
Two for that.
that insecurity to come out.
As
being in insufferable prick.
I think that I think that's not uncommon, and most of the time it's a reflection.
of it's a it's a compensation of your lack of self esteem before you became rich.
Who else is on your list?
Other than James, you you mentioned him earlier. Um
Monas Prabhai is someone who I I started following Monash Prabri in probably two thousand five.
when he was just starting to get a little bit of notoriety in the value investing community.
And people instantly started gravitating towards him.
Because he's a very good communicator.
And that is very that's rare in the investing world that somebody can not only have
A track record of success.
Бой ту анібарі су атей, а вас і коледж.
And reading his his books, he published, I think, three books back in the day.
And those are some of the foundational books of where and I was like, Oh, I I I I'm I'm I'm really starting to understand how this investing thing works.
And for that to come from someone who has a great level of success himself.
And I I've I've met him a few times. He's a he's also just incredibly nice
Humble person.
And so maybe that's the common denominator that I keep bringing up. I I real I have so much admiration for people
who have an outsized level of success and fame.
And it clearly, not only did it not go to their head.
If anything it like
It like dropped their ego.
From from what I understand.
Obviously never met him.
Matrix.
The actor.
Yano Reese, thank you.
Is is one of those people. Absolutely like
Tippity Top A-list celebrity. And from what I understand, the nicest, most helpful person you'll ever meet.
shuns the paparazzi kind of thing, just wants to live his own humble life.
And so I th th that's who I admire the most are people who can
who can live that kind of life.
Isn't it funny how
You know
We each have a like
What is it that you admire? Like obviously your
type of the thing you look for is that that combo that's rare to come come by, right? Extreme success.
And you know, probably the second layer is like
able to communicate or teach that success. And I think as a student of the game you appreciate that, whether it's James
Communicating as an author or Maniche communicating as an investor.
And then the last one, but like
And yet.
Not only did it not ruin them, they became sort of more humble.
And even more approachable and that makes it all the more rare, you know, that those things go together.
It's so funny that like that's your type and then like Sam like
You have like almost like a type like this as well. I'd I'll throw out a couple, maybe you could correct it, but like
Sam, I feel like for you Tall, dark, and handsome. Oh oh yeah, sorry. Uh yeah, yeah, yeah.
Go ahead. There's like a some level of like being a Maverick or a r of like a rule breaker in a way.
I think doing non technical
Things.
uh like things that are like of the real world or like in the middle of America or you know just like manly in some way. Like is like some masculine like aspect to it.
I feel like I'm missing a third. What would a third one be? Do I have it for a long time?
Stayed on track.
And I think all of these are like things that we fear ourselves going wrong. So we really admire the people who did it right. Like for example, I'm not a
naturally focused and patient person. Therefore I admire that most.
Right. Do you have one, Sean?
Yeah, the traits for me are
People who um
They're having fun while they're doing it. So like when I meet them, they just have this like they know they're they're funny, they're laughing a lot, they have a zest for life.
They talk to the waiter.
And the the um you know the driver as much as they'll talk to the other fellow keynote speakers. You know what I mean?
Like I remember when we were at um
Or hoop group event.
Uh Alexis O'Hanian, who is the the uh founder of Reddit.
Was there, right?
And
On all the car rides, you know, Alexis would always be chopping it up with the Uber driver, the the security guard, the doorman.
Like he paid as much attention and importance to them as the other
mega VIP guests that were at this event.
And contrasted with I won't name names, but there were other people at the mega VIPs who literally were like scanning the room.
For like who's got a few more billion than me and like let me spend let me get at their table. That's where I wanna sit. That's who I wanna talk to and like
If I don't immediately grok.
How you are like the man.
then like, you know, I'm gonna eject out of this conversation. Um you know I I will visibly be disinterested.
And like one trait that so that trait is like very appealing to me.
Where the person is so almost secure in their success.
that they are not chasing, they don't give off this desperate chasing energy.
All right, let's take a quick because I gotta tell you a story. Let me tell you about the first time I tried to run payroll for my team. I was using a traditional bank and you know the type. It's got a janky interface. It's built like a 2002 tax form and it was open only during business hours. And I hit send.
And it froze. They flagged the transaction, they locked my account, they put me on hold for 45 minutes, and then they told me I gotta visit my local branch.
And that was the day I started looking for a new banking solution. Uh after asking a few founders what they were using, I found out about Mercury.
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Can I ask you a question about spending? Your your last book is on spending and I think it's pretty cool.
Um
Because you're like there's a ton of books on how to get rich, but not on how to spend.
And I know that you hate formulas. I mean, I think you've said I hear you you write about this and you and you talk about it, you're like it's hard to say like
You know, for example, a common question is like what number is enough? And you're like, I c I can't give you that number. So you don't really like formulas, but is there like a filter
Where if
It passes this filter.
it's likely a good idea to spend money on this in order to make your life happier. I don't know if there's any formula to to get that. I think if there is
something that's almost formulaic to to get in this. It's like what's gonna make me happy is not what's gonna make you happy.
And so the idea I think most people spend money on things that s that society tells them that they should like.
that marketing tells them that they should like.
Which is which is
Cars, homes, clothes, and the fancier, the more expensive, the better.
That's like the basic model that we're taught.
And I think I think the truth is everybody has very different likes and wants.
And price is not always a good indication of how much value that you're gonna get out of it.
I think the people who've done the best job spending
Are people who completely tuned out any kind of social influence?
Or what other people thought of their spending and just said, I'm gonna go do my own thing. And within that, you're gonna find people, if if if we're looking at a wealthy person who spends way more
on this
item than you would think they would and way less on other islands than on other items than you would think they would.
Ramit Seti is is i is a perfect example of this, and he's kinda I think he's
He
personifies what I'm talking about. Where
His thing is he loves clothes.
And so he spends a lot on clothes and he dresses incredibly well, and that's so important to him.
He's not a car guy.
And so I hope I'm getting this right, but I think he drives a Honda Accord and he's just like I don't I I I couldn't care less.
I couldn't care less about cars or what anyone thinks about it.
But he's gonna be dressed to the nines everywhere he goes.
That's his thing.
Even if you are the exact opposite, it doesn't matter what your thing is.
What I love is he's like
That's what makes me happy.
And the money that he saved on cars he can spend on?
He goes I he goes, I think I c think carefully about what my money dials are in order to live a rich life.
And
My money dial is clothing. I love fancy clothes.
And I think he said he goes up until recently I drove a Honda A cord or Honda Civic, whatever it is. And uh I wanted to try um I forget what the fancy lucid is that is it lucid. He was like he tried a lucid and he's like
It was way too complicated. I hated it. I went and got another civic or something like that.
It's d it's the opposite of frugality.
It's
I love clothes, so I'm gonna mercilessly cut everything else.
In order to have a higher budget foreclosure.
And and and encouraging everyone to do that to figure out what their thing is.
My wife and I
figure this out in the last six months.
At least at this phase in our life with two young kids.
Travel's not for us.
It's just it's it's like
We we we realize that after
The last like four vacations we took, the best part of the trip was coming home.
And after having that feeling for the fourth time, we're like, Can we just admit like maybe we should do less of this right now?
Maybe in five years when our kids are a little bit more stable, it'll be different. But I think but for other people, they're like they they're vagabonds, they can't wait to travel. Like good. Like figure out what your thing is and what your thing is not.
And and and and and go for it from there.
I when I
When I travel for work a lot, I travel very well and spend
A lot on travel that other people would find wasteful.
But it but I love it.
And so you have to figure out what your thing is and work from there. And I think most bad financial decisions.
And most bad financial behavior.
comes not from making bad decisions, it's when you're trying to follow somebody else's path.
And be like, well, that worked for them. Maybe I should do that. And so people listening to this might be like, Oh, maybe I should try Rumit's thing. Maybe I should go spend a lot of money on clothes and drive a beat upon the Civic. Like, no, you like maybe that's for you.
But it's probably not.
You have to figure it out what it is.
It takes like
Just a a a crazy amount of independence and looking in the mirror and trying to figure out what works for you.
Yeah, you've c you've said uh personal finance is a lot more about the word personal than about finance.
And I thought that was a good way of putting it.
And same for investing. And so there what's interesting to me, maybe it's not surprising, but it was interesting, is that at the end of my first book, The Psychology of Money.
I there's a chapter about the psychology of my money. I just kinda laid out everything that I believe.
There's no numbers in it, but it's like
Here's how here's how I save, here's how I invest, here's how I spend. Here's my personal philosophies.
And in that I said, look, I dollar cost average in into index funds.
I had a three percent mortgage that I paid off early.
Like
Th which w w which is a terrible financial decision, but I love doing it.
Because it made me feel good.
And so I I I laid it out and there are so many people who wrote I can't tell you how many emails I got of s people saying, I love the book until I got to that chapter and now I can't take you seriously anymore.
And
And I think it's interesting to me that
Even after laying out in the book being like
Look, there's no formula.
You just have to figure it out for yourself.
People looked at the decisions that I made and said, Well
They they basically said to themselves, I would have done it differently.
So therefore you must be wrong.
I think that's the that's the disconnect that people have.
Well, there and and and and they're also th like'cause I I always troll people because I have this premise that I think owning a home is uh a stupid financial decision.
And then I always say.
But if it makes you happy, you should do it and that makes it a great
That that makes it wonderful.
And and and people get angry at that and then paying off your mortgage and whatever else you said because
You like it's it's interesting that I study investing and I like all these investing people when I don't even invest.
And like oddly, not terribly into money, but what you're interested in is is the stories and the behaviors of it. And that money is everywhere. And if you think of of every story that you see, what's the money angle here? And you find really cool stories. And there's this huge connection of
story and money and m our personal behaviors. It it's just everywhere.
And when you say to someone
like a real estate thing or something, it changes their it makes them question their identity because a lot of people's financial decisions are tied deeply to their your identity.
You also said that
If someone has reti um has been saving and saving and saving for sixty five years, they're sixty six, they're retired.
Yeah.
They don't spend because they they can't change their identity and that's too hard. And so it's like it's like it is interesting how
And I and I'm a victim of this as well, of how it's very challenging to change your investing spending habits.
Because that's just a
That's just what's under underneath the money surface level. It's really like what is my identity.
And there's so much uncertainty to it.
That I think a lot of times when people
Ard.
having a a fight about money, they're debating about money. It's two investors who are, you know, have differing views.
They
Nine times out of ten, the people are not actually debating.
They just have different preferences and they're talking over each other.
And what they're saying is like
And if if I believe X and you believe Y.
A lot of
Times it's like
I view your opinion as a threat to me.
Because I know there's I know my views have a lot of uncertainty and they may or may they may or may not be right.
And if you believe something different, that's like an indication that I might be wrong and that makes me really uncomfortable. It'd be like me calling you an idiot for preferring vanilla. That's exactly it. Yes. And people understand with food, like
I like Mexican food. You like Italian food. Good like great. Like
Teach their own.
But with money, there is this feeling that there should be one right answer.
And if your answer is different than mine, one of us must be wrong.
And I think I think that's why finance can be more contentious than other fields like like food, where it's just like just figure out what works for you and go do it.
But we d we don't make that leap with finance.
So based off of like everything that you've read and everything that you've written so far.
If you only had the next, let's say, sixty or hundred twenty seconds to kinda summarize it in a couple sentences.
All that matters in finance is it's not about what you know. It's not about how smart you are. It's not about how much information you have. It's just about how you behave.
And there's almost no other field where that's the case.
Where somebody with no education and no experience and no background
can massively outperform the person who has the highest education and the highest background.
And there's there's no other examples of fields where
A country bumpkin.
Uh didn't go to school.
And d doesn't earn that much money.
But does have the right investing behavior.
And can invest and maintain and hold it.
with patience for fifty years and build a fortune.
While at the same time the Harvard educated Goldman Sachs NBA
Blows himself up.
with a complicated derivative straight, that kind of thing like by and large doesn't happen in other fields.
And and I I think so finance is a very unique field where
It is it it's not
That behaviour is important, I think the behaviour part is everything.
And behavior is very difficult to teach. It's hard to teach even to very smart people because you can't distill it down to a formula that you can memorize.
It's unique, і's individualistic.
And so I think maybe the the the message, the takeaway is
You have to spend a lot of time thinking about the soft skills.
Of
Patience.
Ego.
Greed.
Fear.
And you have to spend a lot of time thinking about how those topics apply to you individually.
To you and your family.
And figuring out your own goals, your own benchmarks, even if they're different from the people
That are around you. We appreciate you so much. Thanks for coming on, man. Thanks, guys. This is fun. That's it. That's the pod. I feel like I could rule the world of no
I want to
Mira.
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