How You Get Rich Isn't How You Stay Rich: 300 Years of Proof | Joseph Moore

Transcript from https://podmenti.com/t/c19f53848db4f866

Today on the James Alteger Show.
In the eighteen thirties.
Over thirty percent of the stock market was one stock.
which was the second bank of the United States. And it cratered from a hundred and twenty or hundred and fifty a share.
to$1.50 a share in like a year, and then eventually went to zero. This is statistically what it would be like. Amazon Berkshire, Microsoft NVIDIA,
Tesla and Walmart, and if all of those cratered and went to zero in a matter of like a year to two years.
That would be like that event the eighteenth.
Yep, nothing.
Opportunity mixture.
And debt allows you to reach in and grab as much as you can personally handle while the opportunity is there.
You would not pick the 1790s.
When
If you fail, you go to jail. And not only do you go to jail, your wife
And your kids have to go too.
Really? Yes, debtor's prison is for the whole family.
This isn't your average business podcast, and he's not your average host.
This is the James Alteger Show.
So in Seventy.
The richest man in America
Got rich.
The old fashioned way, he married a rich widow.
And then
Benjamin Franklin.
Was so much in debt, so under water.
He actually offered to marry a woman if her parents
We'll just mortgage their house.
To pay off his printing press debt, and when they refused.
He didn't marry her, he married someone else who had money.
By the way.
Back then, if you were in debt, you could go to debtor's prison, like actual prison. And not only would you go
But
Your wife and kids would go to prison.
As well.
So now fast forward to the nineteen hundreds
Only like one two percent of America owned stocks.
So
People would gamble, they had this game playing the numbers, and that was their
retirement strategy.
And there would be these dream interpretation books that would tell people what numbers to play, like playing a lottery.
So how do I know all about this? Well
My next guest, Joseph Moore.
Literally wrote the book.
How to get rich in American history and there's
A thousand.
Fascinating.
facts about kind of the history of getting rich
In America.
Yes, there's all these weird little quirks about Benjamin Branklin, George Washington, about debtor's prison, about
You know, the Great Depression and what was happening.
But what's interesting is
The common themes about how people try to get rich.
had basically stayed
The same thing.
Most of the time.
Basically the history of getting rich in America is kind of a history
of scams
But we also talk about things like the fire movement, which is
Financial independents retire early and how that's worked out for people. We've talked about
kind of modern booms in the markets.
But what was great is
Joseph Moore, the author of his book.
He has zero patience.
For the usual
personal finance miss and we talk about that. And if you think the rules
For getting rich have changed.
You're about to find out how little they have.
Joe.
Tell me.
How do you get rich in America in seventeen ninety?
In seventeen ninety.
From your book I know that George Washington, who was at one point the richest man in America, did so by marriage.
Yeah, he's actually not the richest man in America, but he's very close. He's certainly the richest president we'd ever had at election.
But the thing about Washington is he's kind of like middle ish upper middle class.
And he's blowing all of his money.
He has
Kind of a quasi gambling addiction.
And he kind of has that moment that every young man, or I guess young women too, but like have in their like mid to late twenties are like, I gotta get my shit together, man.
And so
Martha Washington.
recently widowed is the richest woman in Virginia and he is like I'm gonna woo this woman.
Everybody is trying to woo her. It is like a line out the door of men trying to get a date with this woman.
And
He's actually not the top contender. He's just like tall and handsome and some military
Background.
So he's got bravado.
But he shows up the night before he gets sick.
I'm like
He gets diarrhea. It's bad.
And like he pulls it together'cause he has one shot at this date, and he shows up, and apparently he did great,'cause then she sends a letter.
Saying basically come hither, right? Like it's a Netflix until
Like come over and next time plan to stay at my estate.
Kind of letter.
And that's how he gets rich enough to do all the things we know about.
So like the Washington we know
Is the Washington who married Martha and her money funded him doing all those cool things.
Obviously he stayed away a lot of the time, like oh Martha, don't worry, I'm gonna go
Fight this war.
In Ohio.
In the seventy.
Oh more than
Just
Chill out. I'm gonna be fighting the British. It's okay.
I'm gonna have to move to New York City for a while to be president of the United States.
You stay here in Virginia.
Take care of the estate. Like he probably live large doing all these other things.
You know, it's odd, we don't have a lot of of indication that he did much of it. He was kind of one of those guys just obsessed with his job.
Like once he kind of matured into it, he just
He really was kind of dialed in.
But no, she was her money that was funding most of his adventures.
And his ability to do it and then become who we think of him being.
Yeah. And look, I wanna get up to present day times and I'm I'm particularly interested in
And you write about this in the book, but the the fire movement and then some other stuff.
I would say at that time
When you say someone like Benjamin Brangel was probably the richest entrepreneur, or at least one of them, the one that we know about. Yeah.
Yeah. Steven Gerard is the wealthiest man of that generation.
Until I read your book, I didn't know who he was.
Yeah, he comes from absolutely nothing. Like he's the other end of the spectrum. Like he's got one eye.
He was barely educated.
He's made a cabin boy'cause his dad gets him a job on a ship'cause he doesn't have any other option for him.
And so he just rises through the ranks
of like being a a trusted sailor.
Gets to Philadelphia.
He's a Frenchman.
And he is I mean, this guy like is working class, working class.
His wife is barely literate.
And in fact she is illiterate.
And
He takes one big gamble.
He gets enough trust that he sends one ship out, he borrows almost all the money.
This is an entirely leveraged thing.
If it sink he is
Done. He is going to debtors prison.
It doesn't sink, it comes back, it makes money, he turns around, pays off the debt.
And from there on he does more ships with less leverage until the point he's barely levered at all.
Like he knows how lucky he got.
And then he uses that and he slowly d levers over the course of his career.
And he becomes the wealthiest man in America.
Franklin on the other hand So well kind of not on the other hand, Franklin kinda does the same thing.
Franklin goes so far into debt.
Okay. Franklin has is like printing
Treatises on like
Why you shouldn't go into debt and you know, why you should all be fiscally responsible.
Meanwhile.
He borrowed the money to start his business, he borrowed money to buy the printing press from the printing press company.
Fell behind on his payments.
The printing press company threatens to repossess
The press.
The borrowed money was from his partner's dad. That guy wanted his money back.
He goes to some friends, borrows money to pay off the printing press so it won't get repo'd.
And then he goes to a woman in Philadelphia.
and says I will marry you goes to their parents that I will marry your daughter
If you send her a dowry big enough.
It's like
Pay off my debts and I'll marry your daughter.
And they're like, Won't have enough money.
And he says, Well, that's fun. Mortgage your house.
They tell him no and he literally marries else.
Like that's how much debt Benjamin Franklin was in.
Mortgage your house, I'll marry your daughter.
Save my butt.
Now he gets out of it.
But nonetheless, that is like the way people got ahead was they generally took a leveraged bet.
And once it paid off, then they outran the debt.
Now very few of them stayed in that much debt. If they did, they got destroyed.
And so the
Они смен.
of the revolutionary generation that nobody remembers anymore, dies in debtor's prison because he keeps levering up and buying more.
So it's the people who levered up, took a bet, it won, and then they delevered over time. Those are the people who got ahead.
Yeah, and look, those are the ones obviously we hear about because they become rich and famous.
I think the large percentage of people who get into debt to succeed.
Probably fail.
And and I say this.
S knowing that
The formula of getting in debt to succeed.
Works.
If you succeed. Like a large Yeah, yeah, exactly. A large number of people who succeed.
Either they they got into to debt or
Where they're using other people's money in some way, like through investment or
They take enormous risks that are scary.
I think
Getting rich
Involves
Doing something scary.
Yes. I think there's two myths around that. One is that there was like a
A time when Americans frolic in a no debt.
world like frolic through fields of pay as you go, and that's just not true.
Americans were
Up to their eyeballs in debt the whole time.
What is also not true is that debt makes you rich. Debt does not make you rich.
Opportunity makes you rich.
And debt allows you to reach in and grab as much as you can personally handle while the opportunity is there.
Not everyone can handle all they grab.
And
not everyone gets lucky enough to find the opportunity. You know, I don't want to make it sound like there's no luck involved. There isn't luck involved.
But there is an element to which debt is kind of just a tool along the way when you find opportunity.
And you're right, it is scary. And a lot of people don't succeed. But by the way, like
If you had to pick a time to risk it and fail fail.
Like and lose everything, you would pick right now.
Like you would not pick the seventeen nineties.
When
If you fail, you go to jail. And not only do you go to jail, your wife.
And your kids.
Have to go to
Really? Yes. Debtor's prison is for the whole family.
If you go broken, you can't make your payments.
In revolution they did not put this in Hamilton.
Uh, you get you go to debtor's prison and your wife and your children, if they can't be sustained by some other family member, they go to.
The idea is we're gonna put you in so much pain, your family's gonna come rescue you somehow.
Fast forwarding then.
You mentioned in the in the current like top
Richest hundred in America.
Nobody is there because they got rich from real estate, which is obviously
The way people think of okay, I can get into debt.
Leverage up, buy a house.
Or an apartment building or an office building, start renting it out.
Use the cash flows for that to borrow more money. And this has been a very standard way.
To get
Wealthy.
Over the centuries, not just the years.
And yet I was surprised that
That you said
Nobody in the top bunch of all these people is there because of real estate.
So
Real estate is a great way to build a modest
Middle class fortune.
It is a terrible way to build the biggest fortunes.
Because it just it doesn't grow exponentially the way other industries can grow.
What real estate offers everyday people
And what it really is at the end of the day in the modern era is a short on the dollar.
You are basically betting on inflation.
So let's go back. There's a pre inflation America.
Pre nineteen twelve.
When inflation is basically zero percent. If you had bought real estate back then
The way you get wealthy is by treating it like a business.
And actually improving the property.
The only way to make money is to improve the property. To illustrate this, I bought an acre of land on the moon.
Which believe it or not, is a thing.
There are two competing groups that claim they own the moon and that they can sell it.
Neither of which would hold up in court.
But I went to one of these groups.
And I bought an acre on the land uh the sea of serenity.
That was advertised as having phenomenal earth views zoned for tourism.
And I was like, Well if it was zone for heavy industrial, it would definitely ruin the earth views, so I get it.
So
The reason I did that, other than to have a great cocktail story.
Is
I wanted to show like if I have that acre of land, legalities aside.
The only way to make it more valuable is to oxygenate the moon.
And to get Elon to give me a ride. Like I can't do that. Therefore it will not become more valuable.
Early America.
If you r owned real estate, the way to make it more valuable was to make it more valuable. You to do something to it to improve it.
Now, since like Nightin eighty, we're living in a housing shortage.
And we're living in an inflationary period.
And we're living in an era with no dividends from stocks. Not really. The the dividend on the S P five hundred right now is like one percent.
All right, so what is real estate? Real estate is a short on the dollar.
You're betting that the dollar will go down.
It is an income annuity in a world with no dividends. Yeah.
It's it's basically a put option on housing saying at any point that I want to use this as housing I can.
And it's a tax haven. So now
That is not how you make the biggest fortunes.
The biggest fortunes are in tech, they're in retail, they're in all kinds of different industries.
But it is a way that you can lever up.
That the average American simply could not do in any other place. Like if I wanted to put five cents down on the dollar for an investment.
Where would I go?
I mean maybe the okay, the Chicago Board of Trade.
The average American cannot go to the Chicago Board of Trade.
And if they did and they got the money, they're gonna be wiped out in thirty days max.
I think this is an important concept and this even applies to real estate.
Ninety nine percent of the time when you're making a bet on something, whether it's a house, a stock, an option, a commodity.
There's someone on the other side of that bet betting against you.
And so
You're taking the chance.
That they know something you don't.
Which
Professionals usually know something and if you're just saying, Oh, I'm gonna just buy options on NVIDIA and get rich
Yeah. You're selling that option to somebody who might be
you know, or in Buffett or whatever, and they might know something you don't.
It's you have to always I think this is just an important message.
I and I think this kind of runs throughout your book.
You have to know something that other people don't. You have to have an advantage.
Like I'll give an example from your book.
At one point it looked like you had an advantage in two thousand five.
You were reading that
Whenever Jim Cramer on the TV show Mad Money and by the way, I for a little while I I wrote
For Jim Cramer on
For that show.
Oh no way. I didn't know that.
Yeah, a long time too uh right around then, actually.
But I y you would notice that the stock would pop.
the next day, like we go up because Jim Kramer said it, it would go up five or six or ten percent. And then a couple of days after that it would go back down to where it was, you know, after all the Jim Kramer

Come down and got out on the stock, it will go down.
So you kind of
started shorting the stock and and you said you lost money, but my question is
That was sort of a little bit of an edge.
Versus a naive audience who did not have that edge.
What caused you to lose money in that situation? So I actually beat the market, but I lost net of fees.
Because I was playing with such small amounts of money that the fees ate it all away, right? And so
Now, had I been playing with m with millions of dollars, then I would have outrun the fees.
My point in doing that
was there's this there's this very common
Idiom you hear it all the time, nobody beats the market.
And that is not true.
Some people do beat the market. It is very hard, and most professional money managers do not beat the market.
But
If you look at the money managers who control six hundred million dollars or more.
The the top performers do regularly beat the market by about one half of one percent.
They actually buy better than everybody else, but they sell slightly worse.
And they ended up averages about
One half of one percent.
Now to do that
They probably went to Yale.
Paid four years of tuition.
They did a grueling internship and they work seventy plus hour weeks. I mean, I think it was Morgan Stanley recently said as like a a morale measure they were gonna cap the work week at eighty hours.
Like to like boost morale.
Because like so that's what they're doing. They're living in that world to try to eke out the one half of one percent.
All right.
Let's take that on the average American four oh one K balance.
And just assume that you could do what they do, which you can't.
If you spent seventy hours a week trying to beat the market, you would eke out an extra five hundred dollars a year.
And you have to work seventy hours to get the five hundred, not to get the base return.
So it's not that you can't beat the market, it's it is it worth it.
Would you have been wasting your time? And literally this happened to me.
So I'm sitting there, I there's a famous economics paper.
It shows if you
Sh you know.
And it's a very strict set of criteria, by the way. It's not just anything Jim Cramer says.
It's when he
Under this strict set of criteria, says buy a stock.
Then it will bounce for fifty to fifty five days.
You short it.
You beat the market.
But to do that I had to be glued to my television.
Watching Jim Cramer
For everything to align, which it doesn't always do.
And so while Jim is yelling at me like I'm a child.
And setting off a law and
I hear my wife holler like come quick, she's doing it.
And I missed my daughter's first steps.
Oh my god. So like
I beat the market.
Was it worth it?
Did I eke out enough of a return that to to trade off for that No.
And I don't have enough money, and most Americans do not have enough money that it would even be worth it to play that game. You need to play a completely different game if you're the middle America.
You need to you need to try to use the market to beat your own goals, not some mythical benchmark.
Yeah, and I'll add to that too.
I've been in and around the finance industry. I ran a hedge fund. I ran a V C fund.
Obviously I write a lot about
finance and the economy and stocks and stuff.
And
This is what always disgusts me about Wall Street.
Is that
Some guy
raises some money, starts a hedge fund.
And with a hedge fund, you get twenty percent of the profits and two percent of all the money you're managing. So it's an enormous fee.
So if you're running a hundred million dollar hedge fund and over five years it doubles, the hundred million in profits, you take twenty million off the table.
And you could do that.
Just following
An index in most cases.
So you don't have to do any extra work. Whereas
You know, you're getting a twenty percent profit on something people could do trivially from their home.
And that's actually what happens. Like once somebody achieves, let's say, a brand in the hedge fund business, so they're constantly getting
New money in?
They just stop whatever strategy
They start with and they just buy the top S P stocks.
You look at their holdings, oh they own
Google, Nvidia, Microsoft
You know, baseball, whatever.
And
That's it. And then they just
Click
They have ten billion under management. They collect a billion dollars a year and
Live a good life. That's almost all of Wall Street right now.
The shadow passive investing is very real. Mike Green talks about this a lot.
And I I think he's on to something that
Well, you're I mean you're as you're pointing out, right? Like there's a lot of shadow indexing that's happening.
Where what we think of as like Vanguard and Fidelity index funds are actually just being tracked by everybody else,'cause it's just easier to do.
And with far less risk.
Because if that guy underperforms that index
by a a a few percentage points, all those all that money goes somewhere else.
And so why not just free ride it?
So yeah, I think that's actually a growing problem. I'm writing an essay on this right now on my subsect. I haven't published it yet.
I should be curious to get your thoughts on it.
And which I talk because I pointed out that the index revolution occurred literally in nineteen seventy six. It was like a bicentennial gift to the average investor.
That
The Vanguard comes out with the original
You know, passive fund.
that you can invest in. And it's great. It truly is.
An American revolution for the average person. At the moment that that happens, ten percent of Americans own stocks.
Fast forward to today.
Sixty something, almost sixty five percent of Americans own stocks.
And
A huge number of those are indexers.
Because of the way that they're they're investing through four one Ks, et cetera.
And so
That I'm arguing that at some point will become a French revolution where heads start rolling.
Because as Bogle himself said, like you can't have the whole market be passive or it goes crazy.
And
The index it's a good illustration of like why history matters for like thinking about markets because like
Change happens more imperceptibly than you think, but it does happen. I call this slow time change.
And the index funds were supposed to be the ant on the back of an elephant.
Just getting a free ride from this huge work of market discovery.
Now it's like an
Ant army biting the ass of the elephant and causing it to run uphill.
Right. And and so there's there's some real
I think we're embedding some structural
It's gonna be some interesting historical life experience when that starts to unwind. I'll be real. I hope I'm around just to see it. Or but I hope my portfolio doesn't. He it's interesting because well what happened in the eighties was the rise of the mutual fund.
And then what happened in the nineties was and the early oh was the rise of ETFs.
And so
What ended up happening is
You know, something like ninety I don't know what the actual number is of making the statistics up, but let's say ninety percent of people are in
You know, a mutual fund or
And ETF, including the big pension funds, which are really the biggest investors in in the world, like the California Teachers Fund.
is is one of the biggest investors on the planet.
And
They don't invest in individual stocks. They uh invest in S P Y, which is the ETF for the S P five hundred.
And then you have to
Big hedge funds.
It it's not like they invest in the the ETFs, but what they do is they say, Okay
Here are the
twenty stocks in the S P five hundred.
We think are gonna do the worst, so we won't include them.
So now we have
You know.
four hundred eighty stocks instead of five hundred. And our bet is because we
We had PhDs find the twenty worst.
and get rid of them, we're gonna outperform slightly.
And then we're gonna raise
Tens of billions of dollars because we'll be able to say five years in a row we outperform slightly.
And that's
Their strategy and then
By the way, they don't make money on their
What turns in most cases they m they they make money on on a fee on assets under management.
Particularly the hedge funds.
They just need to return like
five, six percent on ten billion dollars. And if they do it pretty regularly
They're making
You know
Billions of dollars. Like if you have your foot in that door, that is the easiest way to make billions of dollars, I think.
It's good work if you can get it. Yeah, Meb you know, Meb Faber, Meb told me this. No, yeah. Yeah, Meb Meb had a great point about this. He said
You know, the they had just released the the top
fortune, whatever of social media influencers.
And you know, Taylor Swift and Mr. Beast and he said now
Compare those to the top hedge fund managers. They wouldn't even be in the top twenty.
Right. They could or top ten. Like they're a rounding error.
to what people in that world are making. So it's good work if you can get it. Yeah, like a small hedge fund now is considered a billion dollars.
So in a billion dollars
January first, the minute you walk on the door, you just made
twenty million dollars'cause you get two percent of of the assets.
Now if you're up five percent.
On ten billion.
That's
Five hundred million?
Yes.
Five percent by the way being a mediocre
To small return.
It's l worse than T Bills in in many years.
But guess what? You just made another hundred million. So you made a hundred twenty million for doing a shitty job.
For the year. And basically tracking the index, which by the way, there's I mean you probably know this, but there's I'm sure you do, but there's
This University of Arizona professor who like put this together, he's got a wonderful visual on it.
That ninety six percent of all stocks ever
Ever.
did not beat T Bills. They're tied or below T bill returns.
That means the entirety of market
returns have come from the other four percent.
Of stocks.
Yeah, it's a Pareto lot. Yeah.
Twenty percent of stocks are gonna return eighty percent of the value. But then if you
Do Pareto La Squared.
It means four percent of the stocks.
are gonna return sixty four percent of the value and one percent of the stock's gonna return about fifty percent of the whole value of the stock market.
So that's why you have the the Mag Seven, like
And Biddy uh
You know, Google and
Whatever else is out there.
They returned almost all the value of the stocks last year. Like the big tech and the rest of the market was flat and the big
Seven stocks were up like eighty or ninety percent.
So that's all your returns.
Some people could say, Well, I had the vision
Of
Tech and AI and so I went into those stocks and then some people got lucky. So
Those are the two categories of people who made money in stocks.
It's very small categories.
Yeah.
There is a lot of concern about the Mag Seven that we've now like we're so concentrated. I'm actually not near historically speaking, because this is, you know
This is what I do for a living. I read dead people's mail.
And I you know, I I actually point it out, we've actually been more concentrated, believe it or not, in the eighteen thirties.
Over thirty percent of the stock market was one stock.
Which was the second bank of the United States.
And it cratered from a hundred and twenty or hundred and fifty a share.
to a dollar fifth a share in like a year and then eventually went to zero. Like can you imagine that would be like
Imagine that Amazon Berkshire'cause this is this is statistically what it would be like. Amazon Berkshire
Um
Microsoft NVIDIA
Tesla and Walmart, I think are the six or seven.
And if all of those cratered and went to zero in a matter of like a year to two years.
That would be like that event in the eighteen thirties.
So like we've actually had more concentration, at least we're spread out amongst some companies now. Yeah. I mean it's a tiny bit different.
And I and for a big reason what you point out, which is that
Something like one or two percent of America owned stocks in eighteen thirty seven. And right now
Ninety percent of people. I don't know what the number is, but it's like ninety percent of people own stocks. We've kind of turned it from this is what I talk about in the book is like how to identify historical change.
And like when do when do things change fast and when do they change slow?
And this is this is a slow change.
But we have turned the stock market from
A place.
For price discovery and investment for the return of capital, right? A place you can go.
You can figure out what investments and risks are worth.
Where are you gonna get capital, where you're gonna get a return on capital?
We've turned it from that to a retirement promise for the masses.
And
That's not what it was designed to do. It's not to say that it can't do it.
It's just to say that's not what it was designed to do, but that's how people are using it.
People aren't using it to get price discovery the average investor.
is not using it for price discovery. The average investor is not using it.
As a risk.
Adjusted return on capital.
They're using as a retirement strategy.
And that is historically speaking very, very new.
If you had told somebody at eighteen ninety
I'm gonna retire on the stock market, they would have told you you're nuts.
Because if you had done what the baby boomers have done, let's say like I'm gonna work forty years, invest ten percent in stocks.
Buy a house and retire.
If you had started that strategy in eighteen seventy, you get wiped out four separate times.
Like no nobody would have done that. And that's why nobody was doing it until fairly recently.
I mean I guess there's always
Look, people buy lottery tickets, right? Because then you
You're really buying this ability.
Like I was saying when I buy a lottery ticket
That means for twenty four hours or whenever the lottery's gonna be
I just bought
Daydreams.
Like I'm gonna daydream about winning.
And so like when you buy get into the stock market, there is always the hope whether it's
Nineteen three, at the beginning of the roaring twenties, or
You know, the dot com bubble or right now.
You're buying this hope that the the future is gonna be great and stocks will follow that future and you're gonna benefit from it. And that's not an unreasonable thing because there are happen periods.
Maybe even now, who knows?
Where that hope will have come true.
If you buy the right stocks.
Like you can't buy pets.com, you gotta buy Amazon.com. Who would have known?
But
Yeah.
There is there there is always hope.
T Bills.
Which you point out really interestingly.
Bonds often outperform stocks contrary to what people think.
But but T bills are a reliable way to to
not lose money and make money.
Often
But better than inflation.
And but that's but there's no hope there. It's just more it's
That's a good point. Where's the hope in the strategy?
Hm.
Take a quick break.
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So to that point, most Americans
for most of history could not invest in the stock market. It wasn't something you could do.
Which i it drives me nuts when like the guy s you know, the the financial advisor slides you the chart. I just call it the chart'cause
The dates change, but the point is always the same.
The run I got was nineteen twenty nine if you would invest it ten thousand dollars.
And reinvested all dividends until today.
You would be worth ten million dollars. I distinctly remember those numbers.
Because I looked at the guy, he thinks I'm gonna be so impressed with his like historical brilliance and was like houses did not cost ten thousand dollars in nineteen twenty nine.
So you mean to tell me this person put their life savings in the stock?
Which by the way they couldn't do, I'll explain that in a second.
Then they lost eighty percent in the crash.
Then they fought Nazis and feared nuclear holocaust, then they cried when Ross and Rachel got back together.
And they never once touched the money. Like that's not real life.
But here's why they couldn't have done it.
There's not an index fund. There's not an index.
Vehicle, there's mutual funds.
Which had huge f's.
So that would have eroded the return completely.
And then there's if you had wanted to buy the index, you'd have to buy a hundred shares.
of everything in the index. That's a million dollars in nineteen twenty nine. That's
That's like twelve to fifteen million dollars today.
So
Nobody did that. Here's what everyday people were doing talking about hope.
They were going to
Gambling dens.
And betting in these thing called bucket shops.
Because the average person can't afford to buy the actual stock. So what they'll do is they'll bet on the price movement.
I bet radio, which would be you know
Radio Company America.
I bet radio will go up or down, or I bet AT will go up and down.
And you would win based on the price move. It's Calchy.
And the other thing people would do is now she has markets like that, you could bet every fifteen minute minutes
Whether Bitcoin will be up or down those fifteen minutes. Yes, that's exactly. And people would go, get a couple of beers, sit with their buddies, and bet on the market.
No investment needed because you can't actually do it.
The other thing, they just play the numbers, do you want lotteries? So like the numbers were huge. Like working class people would talk about how the numbers were their investment strategy, which is basically a lottery game. I mean, I've heard that expression, but what specifically what does it mean?
So it's just it's a lottery. Th you basically there's gonna be a random set of numbers.
At an agreed upon time and you bet on the outcome of the numbers. It's a version of a lottery game.
And it was wildly popular for working class people because you could buy a ticket for like
fifty cents to a dollar.
And they were
Guide books. You could go into bookstores and get big thick guide books called dream interpretation books.
Where if you there were these things called gig
Which is like a gig was a set of numbers. So if you had a dream about a police officer, you played the the policeman's gig.
If you like
met an Irishman, you played the Irishman's gig. Like whatever had happened to you in your dreams or that day, you played that gig. And there were
Well selling books in bookstores to tell you what gig to play.
That's what everyday people are doing with their money.
That's
investing. In the same way that like kids are saying now that millennials are now saying they're sports gambling is part of their investment strategy.
So we've seen all this before.
It's a great thing that we've had the index revolution. It's a great thing that everyday people can with with no friction really.
Be in the market.
But we have to account for the fact that that changes what the market is.
Yeah, that's kind of the value of history is like using
The study of the past to understand why the present isn't always just like the past. A lot of times we try to overfit the past to the present.
And you just can't do that. You have to understand today is actually different.
It's really true, like
On the one hand
The phrase this time is different.
is the easiest way to saying that phrase means you're about to lose money.
Because
Yeah.
You know, history.
It doesn't repeat it rhymes. But at the same time
There is always new things going on, like in the mortgage crisis in two thousand seven.
People didn't understand that.
The way
Borrowers were ranked
By the banks had changed.
So that lower income families were able to get higher quality loans.
There was a lot of reasons, laws changed during various administrations to to be favorable so peop more people could buy homes.
And
But things had changed. Things were different.
And hence
Too many people
Borrowed money.
And then hedge funds at the same time were growing and they leveraged up.
Too much and everything sort of unwound.
Very often there are things that are different. Understanding what's different in each scenario is important.
Yeah, exactly. And that's the point I make. By the way, I was one of those people. Actually, so I'll tell you, I was one of those people who like had no business owning a home who somehow was like slid papers to sign for a mortgage.
But what I try to explain to people is there's this illusion that history is like physics.
And that it has some gravitational pull to the mean.
And if you studied the past, what you really learn.
is how far cr how crazy people get before they come back to the mean.
And what I tell people is the mean moves through time.
Two.
And so the mien is itself changing behind you.
You're looking forward, if you look back, it's not one thing that pulls you back gravitationally.
So to your exact point, I was one of those people
In two thousand five, I'm getting a PhD in history. By the way.
Not on financial history. That wasn't my goal. I did my PhD in American history on the study of like radical abolitionists.
Like the abolitionists who were so far to the extreme that they made the other abolitionist uncomfortable.
Okay, so like that's that's what I'm studying, and in two thousand five everybody told you
The lesson of history was clear.
Renting is throwing your money away because housing always steadily goes up.
Now we can put to the side the fact that actually

It's a flawed argument.
But that was the general consensus, is that that was the lesson of history.
And so my wife and I nod our heads.
We buy a small town home.
They literally allowed us to use
The student loan money to qualify as income for the mortgage.
And when I asked if that was okay, the guy was like
Jine here.
Just sign. And he pushes it across the table.
Like I push it over like is this okay? He pushes it back, just sign.
That was normal. Now.
No one was saying that the housing market itself was ch of sure, a few people outliers, but like
The housing market was itself becoming something new and different.
And that's something nobody accounted for because the mean was moving through time.
Yeah and
You know, it's very interesting thing, by the way.
This whole myth.
That's
Renting is like throwing money out the window.
And buying a home is oh, you might as well own it instead of just paying someone else to own it.
That's
An incredible myth that you point out. First off, it's a marketing scam.
Real estate industry is like uh like a twenty trillion dollar industry. So of course
They're gonna scam you to throw your money away.
And
But
When you buy a home
Again, you need an edge, like with anything else. You need an edge. When you buy a home
Not only is you know, you gotta
Be careful'cause your mortgage is gonna mean you're gonna spend much more for the house than you thought. But also there's
Property taxes that you have no control over.
There's maintenance.
You're gonna pay maintenance every single year. And the maintenance is volatile, but it could be much more than you think. When the plumbing goes out and you have to change all the plumbing in your house, when the electricity goes out, you have to rewire the whole house.
There's a lot of maintenance.
Issues.
And then usually when you need to absolutely sell, because let's say you're having problems with some other part of your life.
That's the moment when the housing market is no good and you've so for a loss anyway.
So I I think it's very rare.
But if I say this, people will say well my mom
Waterhouse of nineteen seventy one.
And solver
twenty seven million dollars.
Yeah, because nineteen seventies and nineteen eighties was a period of enormous inflation.
And they all won. Make your that that whole generation won.
This generation is it's every generation is different. It's unclear what's gonna happen.
I prefer to red because
By the way, also
When you buy a house
You have to put this enormous down payment down where there's opportunity cost. You could have been using that money
Um
Invest in something else, put it in the market or just
Relax and have no stress. So you can
Be successful in other parts of your life. So
I'm very much against buying a house as an investment.
So I I feel like there's a couple of this is one of the things there's not just two sides of the coin, it's like a dice. It's like which side of the die do you need to roll?
Because if you're young, I would tell people, if you're young and and you have upward mobility in your career, do not buy.
Because you need to be not sticky.
Where you are because the best opportunity for you.
May very well be an Austin.
Or in LA or in New York or Atlanta, wherever. Like there's just you may be able to take a job that over the course of your life triples or quadruples your income because you took the the chance to and got up and went.
And that's a real advantage for you. So there's no reason to to have all the transactional cost of buying a house.
If you're young and building a career.
On the flip side.
And this is like there's a lot of historical advice on this, and this debate, believe it or not, goes a long way back. Like I can find people arguing about buying versus running in the eighteen hundreds.
And so
We've been fighting this fight forever.
There are some times when it does make sense. If you are in an area
that you're going to stay for an extended period of time.
And you know, it does tend to like lock you in again, back to that short on the dollar thing.
The other time that it generally does come in handy is when you're older and can have a house with a paid off mortgage.
Not because the returns would be better.
Because over the course of say twenty years, the returns would be better if you stayed the market and just rent it.
But it's the sequence of return risk for somebody who's sixty eight.
If you're sixty eight years old and your retirement portfolio plummets in a year, it will take you years to get back.
And so it's good to kind of lock in.
that kind of especially an insurance policy.
And so there are some time I think it's one of those like it's very situational.
as to when it makes sense. It's not a universal, it always makes sense to buy.
Or universal, it always makes sense to rent.
It's incredibly situational and time dependent. Yeah. I'll I'll I'll concede that. Put it this way. I think it's rare.
That is good. But I think there are like life circumstances too. If you have
Kids and you want them to
Make sure that they grow up in a steady community with
a lawn and you don't want to be kicked out when the
When the house owner says Oh, we can't rent you anymore.
Okay, maybe there's life reasons why you're willing to take more of the risk and and hopefully the financial stuff works out, but
In general, I think it's probably not a good message. Like you mentioned the transaction costs. It's like six percent of the fee. So all the time.
What you think you're spending for the house ends up being much, much more.
As opposed to renting where you know what the cost is, that's it. That's the rent.
And and and there's no other risk.
It's interesting on that exact point.
Most Americans who are who are multi-generation, like third, fourth generation Americans
they are much more prone to it to adopt the argument you're making.
It's the the families that were most keen throughout history, even to today, the most likely families to want to buy a home are immigrants.
because usually they came from places where somebody jacked up the rent.
And this is true in the sixteen, seventeen, eighteen, and nineteen hundreds, and even today.
A lot of them were renters.
who had the rents jacked up and so they come to America dreaming of owning a home.
But this economy is so big.
that it actually rewards a lot of people to not lock themselves into place. And so this is one of those things where like
Kind of sometimes an immigrant mentality can help people get into the property ladder, but also sometimes it can backfire
And lock them into a place that say, you know, like
Middle of you know.
Indiana where the rust belt like just declines over time. And then

Like those investments in in the Rust Belt.
Went way down.
through the life of a lot of people who bought in the seventies and eighties.
adjusted for inflation, they were losers.
This all
Like obviously
Money is so important. Everyone would like to think that, oh, I don't think that much about money or I don't like to be stressed.
But
The reality is we need money to survive and money does reward value in many cases, the the value that you bring to society. And also we just want to relax. We don't wanna stress.
So you talk about the the fire movement in the book Financial and Retire Early, which has become this huge like Reddit craze.
But but first the question is
How much like right now
Twenty twenty six.
How much do you think for the average person
Is enough.
What is the number?
Oh wow. Okay. Wow. Right out the gate. We're going hot here. I think again, I'm not dodging. I'm gonna give you an honest answer that it is very situationally dependent in that this
I am financially independent, retired early.
Like that happened to me.
I was retired for about two years before my wife kicked me out of the house. I was like, You find colleagues.
Because I don't know who Foucault is.
I don't know why you want to argue about him, but I need you to get out of this house and find somebody to talk to. So I went back and like started teaching college kids again because you know, she wouldn't let me stay at the house.
But like I I actually did fire.
And
What do you mean?
Financial independent as in like I could never work another day. My I went heavy into the rental real estate market after two thousand eight, after the crash.
learned a lot of hard lessons, but made enough.
That
At a modest level
I could get up every day and decide what I wanted to do.
Which apparently was follow my wife around the house and annoying her with like oddball intellectual questions.
And putting that aside, the saying
My number for that is gonna be very different.
than someone's number in Manhattan.
who you know went went to Columbia
And has certain social expectations about their life.
So I I joke with some people'cause I've been on book tour to Manhattan a lot this year.
And I was like, I'm outside of Atlanta rich.
I'm not Manhattan rich. Like there's and there's a difference.
Having lived in Atlanta, I can tell you Manhattan Rich is triple at least
If not quadruple, Atlanta rich.
Yeah.
So what's enough, right? Which is your question. I think it does really boil down to like the people that you're talking to, like what is enough for them.
And if you were true to say this is fire no matter the number
It's you have enough to eat.
You have enough to pay your rent or your housing costs.
You have enough to live a basic decent life for you and if you have children for your kids.
And you have enough security in that income.
that it is unlikely to go away on a moment's notice. In other words, it's not highly speculative and leveraged.
Now for some people that's
Five thousand a month?
For if you're ten thousand a month, like that's
You know, I think I tend to think annually, but I I honestly could tell you, like
There's a
Every now and again on Twitter somebody will say
I think you can retire with two million dollars and people will like
Swarm this guy. Whoever this guy is, because it's always somebody different.
With like you idiot. Blah blah blah blah blah. Here's all the things you don't know about I'm like, Hey guys
I I retired with two million dollars.
And I I now have more, but like it was more than enough for me.
If I tell that to somebody in Manhattan, they're like, You're insane. There's no way I could live with two million dollars.
Like so what's a million dollars?
Okay.
How much do you think you can reasonably make
With the most conservative investments. And and that's up to for debate too, but let's let's just discuss sixty to eighty thousand a year.
So three to four per oh what is it? That's three to four percent.
I'm I'm being conservative. Yeah, I'm being very conservative there. I'm that's not what I do. Like I have rental real pri real estate and
You know and I've
What more properties and sold properties and stuff like that. So that's it's
Yeah, the median let's just look at the median household income in America is eighty thousand dollars. It's eighty one.
For the median household.
With two to three million dollars of net worth.
Could you
sustain eighty thousand dollars of spend, including your housing.
Probably. Like if you're being decently smart with your money.
And so what are the risks there?
The rest of what he talks about is that it's actually not everything it's cooked up to be.
Like fire is kind of the crossfit of personal finance, right? It's like this insane group of highly dedicated crazy people.
Who are willing to do what nobody else is willing to do.
And if you're not careful, you will get injured.
To your point of like people will take wild stupid risks or under consume to a point their health declines. I've seen that happen.
trying to get to this mythical land.
Now if you do it
And it works.
you get an incredible shape. Like you can actually, you know, do what other people aren't aren't able to do.
But most people don't want to live that way. And I think that's the the issue is like
Most of us don't want to be up at five in the morning.
Hopping on top of boxes, sweating ourselves to death.
And most people don't want to be under consuming
Housing, food
you know, saving forty percent of your income.
So that one day when they're forty two, they can walk away. That's just not that's not most people.
So I think the real risk is that it's way too much effort for what you get out of it.
Mm.
One argument though is kind of an extreme fire where you make the two million dollars and instead of figuring out
How to live on
eighty thousand dollars in
Kansas
You live on twenty thousand dollars in India or Bangladesh or something like that. Geo arbitrage.
Yeah, you can you can move to a place where it's much cheaper.
Right. Yeah, and there are people who do this. A lot of'em are on Instagram.
I think a lot of the people I'd say at least half I'm just making that number up, but like about half of the people on Instagram
telling you how they're geo arbitraging and financially free are actually
living on the subscriptions of people paying for them to talk about being financially free. This is, by the way, a longstanding history.
So
Look, the idea that you can make enough money to live a modest life on and not be stressed is very real and it is very longstanding.
There's a guy in the book I talk about, Sylvester Judd.
This guy's born the year the constitutional convention or the constitution is ratified.
He dies the year before the civil war.
He lives every year of Annabella America.
He works for half of it.
Because he built a printing press business, he sold it. He did not make bank, he made enough. Like he had a modest
Small fortune.
And he decided
I have enough.
And it was enough to live the rest of his life on and he
Spends the rest of his life pinning histories of New England, which is why we know about him.
Uh and also while we know a lot about New England history'cause of what he did.
So and that's the way a lot of science was done this way by people who financially independent retired early.
Had enough and would go out and do weird science experiments.
And so
That was normal.
But you get the people who sell you the dream of financial independence. And that's a very different thing. That's the Instagrammers.
out there.
You know, Thoreau goes out in the woods.
And he builds a cabin like a damn man should.
And you know, talks about the meaning of life not being work and Emerson travels around Europe.
And he writes these essays about not letting work own you.
And then there's this couple, Helen Scott Neering.
And the fifties and sixties, and they write these best selling books. The New York Times is like drooling over them because they found the way to Walden Pond.
All right, you go back. Thoreau's mom brought him food so he wouldn't starve.
Emerson's wife died. She left a trust fund.
He sued her parents for the trust fund.
The day he won the lawsuit, quit his job, went to Europe to talk about not having to work.
And the nearings are probably worse because they
Write all these best selling books.
about how they work four hours a day. It's like the original four hour work week was the four hour work day.
And people flock to Vermont to learn from them.
How to have a maple farm and work four hours a day and spend the rest of your time reading great literature.
And they start to starve.
And no one can figure out why they're not making it work, but the nearings are.
Come to find out.
They had not one but two massive inheritances they were living on.
So
You just have to be really careful about what people put in the fire because it could be toxic.
when they're selling it, but the basic math is the basic math.
And so whatever your lifestyle goals and dreams are, whatever your standard is, your standard and my standard may be wildly different.
But it is math, and you can't get there.
It's just a matter of like, is that a value you want to pursue? And for some people it is.
But some people also want to get up at four A.
You know.
Box crunches.
No, and and then the other issue with with fire, which you point out in the book
Is that there's inflation.
So
Yeah.
Say let's say you can survive on eighty thousand a year now.
Well, what happens when food costs double or oil costs double, so you can't drive as much or
You know.
There's a there's a variety of costs. And I always think
Okay, well instead of buying from Whole Foods, I could buy from
You know.
Publics
And you see
twenty, thirty percent there. And instead of
Yeah.
Paying four dollars a gallon. So okay, I still pay four dollars a gallon, but I w just won't drive as much.
And
No, figure out my life. So I figure there's always ways to fight initial inflation.
But in the long run, I don't know. If you're really just relying on
battling inflation and solving that. You might be in trouble.
You can, and I think there's a lot of people who just assume the stock market always beats inflation, so it always will. So that's where they put most of their money because so
The first financial independent retire early book that's explicitly like formulaic.
is in nineteen nineteen.
But the one everybody knows about is called Your Money or Your Life.
And it's by Joe Dominguez and Vicky Robbins.
What people forget because I mean that book took the tech world by storm. Like there's all these
Tech bros in the nineties and two thousands.
Reading this kind of antihero text about how you can make enough and cash out.
And they are making a lot of money and they're like dreaming of cashing out.

His advice was to put it all in bonds.
And so he's put which
when he started doing it in the seventies and eighties made a lot of sense. You could get double digit returns.
But by the nineties, his government bond portfolio has dwindled and dwindled. He ends up in a men's shelter.
Like he dies in a men's shelter because he's out of money.
So to your point about risk.
The the godfather of this movement
Basically live that risk and and
And died with no money.
So so
Over the
years of
You know.
The history of
America and people getting rich in America.
What has been the most consistent way
You know, and what is the way right now.
To basically get rich. Or is it what
A personality type, like what sort of person gets rich over you know, consistently over this time.
There's not a personality type, there's a skew.
In the personality type. Some pessimists can get ahead.
It's gonna be more optimist get ahead than pessimist, usually, just because of the nature of the way a capitalist economy works.
But
So in the book, I like have twenty five lessons that kinda stand the time of every era, seven things that always fail.
But I could boil those down into five basic
Basic pillars. The first is solve people's problems.
If I walk into Barnes and Noble
And I just reach on a shelf with my eyes closed and I grab a personal finance book.
Nine out of ten chance it says.
To buy index funds.
And look at my behavior and my spending.
Which takes about one page and now the guy has to write a hundred and ninety nine other pages about the same thing all the other books are about.
But like it's on me and my problems. Should I s should I drink lattes, sho whatever.
Okay.
That's about me and my problems. That will keep me from going broke. It will not make you rich.
You get rich solving someone else's problems.
And there's a lot of problems that get solved in this economy. This economy's massive.
And so when you can find a place to solve somebody else's problems, that's where the real money is where you double and triple and quadruple your income.
The second thing is you gotta take risks.
We live in the least risky age in American history.
Your house and your spouse.
Can all be insured.
Like we talked about earlier, if you go broke, they don't take you to jail. They certainly don't take your wife and kids there.
And yet we are more risk averse than we've ever been.
The third thing is move more back to our renting conversation, especially the younger you are.
You live in the largest free market zone in the history of the world.
There is an opportunity for you somewhere, but we don't move anymore.
So if I go back to the eighteen hundreds
Forget the 1800s. That's far, far back away. Like go to the 1950s.
One in five Americans change his addresses every year.
One in five.
Today it's one in thirteen and a lot of the one.
Is old people going to Florida and Arizona to retire?
So young people are not as mobile as they used to be.
And that was a key to getting ahead.
There is opportunity, you may have to go where the opportunity is.
The fourth is Mary Well that survives every era.
But it's not just smearing into money.
It's mirroring into the kind of person
Who
understands you are gonna build a joint enterprise and a life together and you're both gonna cover down on each other's dreams.
And
marriage will blow your mind for all the other factors it
outperforms.
For financial outcomes.
And then the fifth is believe you can. And that sounds very self helpy, doesn't it? It makes me sound like, you know, I'm selling like some kind of seminar class or something.
But here's the reality.
Consumer Financial Protection Bureau did a
big set of studies, had two studies back to back. And in both of the studies they found
The number one predictor of financial wellness was
A positive attitude, which they was an internal locus of control, meaning I control my outcomes, at least to some extent.
It was a positive attitude combined to a habit of saving.
That outperformed income, it outperformed inheritance.
So optimism is wildly over rewarded in the American system.
Which gets back to the risk taking.
And it gets back to the going where the opportunity is.
And probably gets on to hitting somebody on on on somebody at the bar who looks like a great partner.
I wanna address the optimism in a second.
But
You know, I've done let's say fifteen hundred podcasts with
mostly like very successful people. And I would agree
Just seeing
What I've seen among many of the billionaires, entrepreneurs, whatever that I've interviewed.
Marriage is
The most important thing. When these guys know
They've got someone at home, or women, by the way, I haven't read Sarah Blakely.
When they know
There's
Someone
at home who's who's got their back.
That is incredibly valuable. And it's someone who's gonna be supportive of their dreams, their wife has to be
Almost as optimistic as maybe not as optimistic, but almost as optimistic as them. You can't have someone like saying, Oh, you're a failure.
Stop trying to be an astronaut.
And just stay at home.
Get a job as a pilot.
Like they need someone who's gonna help them.
pursue their dreams, who's gonna have their back. I think that is the most worthy. And also the financial cost of divorce and so on.
And also not to mention
A benefit of
If your wife has money too.
But that's not the most important thing.
But then
The optimism thing
It's
I think
The reason for that object is so important, among other things, is that
You're gonna stay in the game.
Longer than if you're pessimistic.
And
The only way to win the game is to stay in the game.
And that's very important.
If you combine that with a habit of savings.
It's not that they're gonna save their way to wealth.
It's that
A habit of savings
shows financial discipline.
And that's how you stay in the game longer.
Yes, exactly.
Anything you can do to stay stay in the game.
Will increase your odds. It'll expose your
Your s what they call the surface area of opportunity gets bigger and bigger. You have to try lots of things because most things fail.
So you have to be optimistic.
Enough to not to come back from a failure.
And you know.
If someone plays tennis for the first time.
And they lose.
Some people say, Oh, well, I'm just no good at tennis.
And they move on. And other people say, Oh, I need to improve how I hit the ball and then I'll
Well then that person's more likely to
Eventually win some games of tennis.
So you just have to s you have to stay in the game and whatever habits are involved in staying the game, whether it's
Health.
Could sleep.
doing some discipline of of savings
Like I have no discipline of of savings. I'm very bad at that.
But okay, I had to learn the hard way.
I I'm super optimistic, so that balance
That out.
So so
You know, it's
It's an interesting thing, but I would say those two things are are marriage and optimism. I'm not sure which one's more important, but those two things are very important.
I th yeah, I well they're all important and I I think
The the idea of optimism has gotten kind of a self helpy bad rap.
That you're supposed to not say that kind of stuff because
And Morgan Housel points this out.
that you know, pessimism sounds wise when you hear it, because it sounds like somebody's trying to protect you from an event right now.
But then you pan the camera back and ask.
Where are the pessimist mansions?
Yeah. Because optimists live in mansions.
Pessimists.
Talk about how you can't really get ahead.
And so it's not that I'm you know, not naive optimism. I'm not talking about like
Taking out a loan on your house and buying Bitcoin with it. That's that's gambling and reckless when it's about recklessness. There is a line between recklessness and optimism.
Which I generally define as when you have some strong measure of control on the outcome. You'll never have all of it, but can you affect the outcome in some measurable way?
Than then you're an optimist.
Because you know there's opportunity, you will do whatever it takes to squeeze your part of it.
And then let the rest kind of
Be the chips that fall.
But you live in a system that will reward that.
It reward shots on goal.
And you know, we live in an economy that is a basketball economy. Shots on goal matter.
That's a real important point because
The great thing about the US is that it doesn't necessarily reward failure, but it forgives failure.
So you can fail at many things and still
succeed, people trust you and you build up a kind of a personal brand, or if you just keep
Going back at the well with more ideas. US is a very creative economy. It rewards creativity.
More than it punishes failure.
So
Well, but that that's not to say there's a formula and it's not easy, and it's it never gets easy unless you're like, you know, a billionaire or whatever, but and even then they can go broke.
I mean I
Back in two thousand four, I remember I I helped someone
Sell a business where he made
Forty one million dollars.
And
I lost touch with them over the years. I was just randomly, you know, you Google people and you see
How so and so doing?
Well I saw that in twenty nineteen he and his wife filed for bankruptcy.
And I have no idea.
Why or how? I felt bad for him.
I almost like

There, but for the grace of God go I and uh uh you almost don't want to
I don't know, I got I got a little I didn't like seeing it.
But
People go broke with a lot of money.
Yeah.
And and that's another thing too. You have to stay in the game always. And I've gone broke with a lot of money.
Several times.
And
It's because I didn't I didn't judge risk correctly. That's the I would say that's number three is you have to be able to
Really analyze your risk. You be optimistic while still analyzing your risk.
Yeah, there's a difference between how you get rich and how you stay rich.
And so don't don't confuse what the rich have with what the rich did to have it.
Most of the wealthy who get in stay wealthy.
D lever over time. Talk about this a little bit in the book. Like they generally took big risks on the front end.
But they had the realism to understand that over time.
They had to dial that risk down.

captured those gains and held on to them.
And so
You know, maybe the one outlier to this is Elon
Who just has never met the risk he's not willing to take on.
And keeps winning you know, and good for him.
But most people who risk at that level over and over eventually
the it the the numbers catch up to you. You don't hit every shot.
And so it's the people who

And then understand they have to take that risk dial down. Not zero. You don't go from a hundred to zero.
But like back to Steven Girard, like over the course of his life, we can watch him.
D lever, d lever, delever until he's like
Basically se I think I I may be wrong on this step, but it's like basically seventy five
Cents of equity for every twenty five cents of debt.
He still has risk.
But he's not gonna lose everything on one ship.
And all the greats have done that. It's that they made big money.
And then they took the risk down a little bit.
Right, and and here's a counterexample. Like there are several counter examples exactly like what I'm about to describe.
So
Whenever there's like a period of a massive boom, and I think nineteen ninety nine, internet
Or even
I'm gonna say twenty twenty three Bitcoin. It went from like whatever it was.
Or twenty twenty Bitcoin, eight thousand to ultimately like a hundred thousand.
You know.
There was there's an exchange called Hyper Liquid.
Which allows you to do
Fifty to one or a hundred to one leverage on
Bitcoin futures.
And
There's a guy, he's kinda like a famous guy. It's he's anonymous because all these accounts are anonymous.
There's a guy
Who went from basically ten thousand dollars
To a hundred sixty million dollars.
During this period.
And and then all the w you could see the account, then all the way back down to ten thousand dollars.
Because
Like it's not well, people would say, Well, why didn't he stop?
Okay, why didn't he stop at three million? Why didn't he stop at
Fifteen million.
course he's gonna keep going. That's who he is.
And
In the law of large numbers, there's gonna be
A guy
Or or a gal.
But there's gonna be a guy who you know in the at the exact beginning of the exact right
Movement up.
They're gonna be the one who's
hyper leveraged and make a hundred million dollars out of nothing.
You know, as opposed to any other period, that same person would have lost money right away.
But then they're gonna lose it all because they're gonna keep going.
Oh, there's always a Jesse Livermore who's who is that figure for the nineteen twenties and thirties.
Yeah. And he admitted, like, I'm I don't even care about the money at that point. He's like I love the game and a gamble.
And he ends up blowing his brains out in one of the hotels in in Manhattan.
Because he eventually just rolled and rolled and rolled until he lost.
And there's always gonna be that guy. But I think you know, one of the things I want to do with my book is we got we got so many histories of Rockefellers and and
You know, we got all the histories of nineteen twenty nine and two thousand eight and all these things.
I wanted to write a history of like what did everyday people try to do to get ahead.
And usually back to our point about what's the number.
Their their rich was very different and they were very happy to get there. And I mean, sure, you move the goalposts and now you want the different, you know, handbagger car or whatever, but like
Usually there was a sense that you had made it far enough.
And that you could be happy with that kind of one lifetime gain for you and your kids.
And I think that's the pursuit of most middle most of Middle America.
Are trying to get ahead.

To use the Supreme Court definition, know when they see it.
And
That's not what traders are after. Traders and I've met some traders through the years, like
They're they're gamblers. Like they'll tell you they're gamblers. Their favorite books are almost always not about the market. They're almost always biographies or autobiographies of gamblers.
And and card players.
So and it just when it's sh which which is actually a really good tutoring for how to get into the you know into trading.
So yeah, their their obsessions are different.
Than most people's.
Joe Joseph War, author of
How to get rich in American history.
There's so many stories in this book, by the way, that we didn't even touch upon. It's like a really great book, a really great read.
Yeah, and and the subtitle I'll say is
'Cause I always forget sometimes. Three hundred years of financial advice that worked and
Didn't
Really great book, really enjoyable.
And really valuable lessons ultimately on
Kinda like the history of money. It reminds me a lot of Morgan Housel's psychology of money, and Morgan's been on this podcast as well.
Really important addition to anyone's library about
Money and
Financial freedom and independent. So thank you for writing it. Thank you for for coming on the show. What are you working on next? What are you working on now? Jace, thanks for having me. I've really enjoyed it. So about once a month.
I try to write an essay kind of in the same vein, right? Like so I'm working on one on index and like how have index funds change over time that we don't think about.
I wrote an essay called I Wish I Were Poor.
about the housing crisis,'cause I have a lot of real estate and I wish I kinda owned a slice of a bigger pie.
So I just try to write essays like that that are you know, thoughtful use of how can history help you understand
the financial present. JosephmoreBooks dot com is the
is the sub stack.
All right, excellent. Well, thanks for coming on the show. I really appreciate it.
Jenks, James, really enjoyed it. Look forward to the next time.
Mm.
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