# The Art of Spending Money with Bestselling Author Morgan Housel

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 21 Nov 2025, 1 h 18 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/d4577377-7cb5-42c7-aec6-b39c010a5c55/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Barry sits down with New York Times Bestselling author of The Psychology of Money, The Art of Spending Money, and Same As Ever. They discussed different sections of market cycles and the psychology of money. Morgan also discussed the role of innovation and financial growth in history. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in
[0:11] Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
[0:17] Speaker 2: On the latest Masters in Business podcast. My conversation with
[0:21] Speaker 2: Morgan Housel. I've known Morgan for I don't know fifteen years,
[0:25] Speaker 2: and I've loved all of his writing and his books.
[0:29] Speaker 2: The Psychology of Money is one of the best best
[0:33] Speaker 2: sellers in all of personal finance, coming up on ten
[0:36] Speaker 2: million copies sold. Amazing same as ever Timeless Stories about
[0:41] Speaker 2: Human Nature. The new book The Art of Spending Money,
[0:44] Speaker 2: Simple Choices for a Richer Life, drops today. I thought
[0:48] Speaker 2: this conversation is one of our best. Morgan is a
[0:52] Speaker 2: deeply thoughtful person. Everything he says comes from both experience
[0:58] Speaker 2: and academics. I love the way he puts stories together
[1:01] Speaker 2: with lessons. I thought the conversation was fascinating, and I
[1:05] Speaker 2: think you will also with no further ado, My conversation
[1:09] Speaker 2: with author Morgan Housel. Let's for people who may not
[1:14] Speaker 2: be familiar with you in your career, Let's give them
[1:16] Speaker 2: a little bit of background. You go to University of
[1:20] Speaker 2: Southern California, where you get a BA in economics. What
[1:23] Speaker 2: was the career plan?
[1:25] Speaker 3: The plan all along was to be an investment banker
[1:27] Speaker 3: or a hedge fund manager.
[1:28] Speaker 4: The reason why is.
[1:29] Speaker 3: Every or very many young, ambitious, young twenty something males,
[1:34] Speaker 3: particularly in the mid two thousands, that was the thing
[1:37] Speaker 3: to do. If you go back to the early mid
[1:38] Speaker 3: two thousands, tech really wasn't that much of a thing yet.
[1:41] Speaker 3: Of course it was around, but it didn't have the money,
[1:43] Speaker 3: the prestige the growth that.
[1:44] Speaker 2: Did, especially after the crash after.
[1:46] Speaker 4: The Gosh, finance was the thing.
[1:48] Speaker 3: If you were young and ambitious and wanted to make
[1:50] Speaker 3: a lot of money, you went to Wall Street, you
[1:51] Speaker 3: worked at Goldman Sachs or investment banker. That's what I
[1:53] Speaker 3: wanted to do, Plan A, B and C didn't want
[1:56] Speaker 3: anything to do. I got an investment banking internship in
[1:59] Speaker 3: what would have been I guess junior year, and it
[2:01] Speaker 3: was like, this is it, this is the dream. Here
[2:03] Speaker 3: we go, this is awesome. Within ten minutes of the
[2:05] Speaker 3: first day, I knew it was not for me.
[2:07] Speaker 4: Ten minutes.
[2:08] Speaker 3: It took ten minutes for me to be like, Nope, nope,
[2:10] Speaker 3: that's not going to work. I'm I can do good work,
[2:14] Speaker 3: but not under the hazing style pressure that was so
[2:18] Speaker 3: prevalent in banks back then. And it's not that I
[2:21] Speaker 3: didn't have the work ethic for it. It was just
[2:23] Speaker 3: it seemed like such a broken culture that I wanted
[2:26] Speaker 3: nothing to do.
[2:27] Speaker 2: It's so funny you said that I had the same
[2:29] Speaker 2: experience as a first year associate and a summer associate
[2:31] Speaker 2: in a law firm, and I'm like, oh, this is
[2:33] Speaker 2: a horrible lifestyle. You're in your twenties. Why do I
[2:38] Speaker 2: want to be spending every weekend in the law library.
[2:41] Speaker 2: It was miserable.
[2:42] Speaker 4: Yeah.
[2:42] Speaker 3: They had a quote on the first day of my
[2:44] Speaker 3: investment banking internship and they said, the rule here is
[2:46] Speaker 3: if you don't come to work on Saturday, don't bother
[2:48] Speaker 3: coming back on Sunday.
[2:50] Speaker 4: And I went, nope, no, what about Monday. That's not
[2:52] Speaker 4: for me. That's great.
[2:53] Speaker 2: So I don't have to work weekends. Fantastic, see it right?
[2:56] Speaker 3: So then, so I didn't know what to do, and
[2:58] Speaker 3: I was really a drift and lost. And then I
[3:01] Speaker 3: graduated in two thousand and eight financial crisis. World is
[3:03] Speaker 3: in flames, nobody is hiring, and I stumbled haphazardly, not
[3:07] Speaker 3: by any plan or strategy. Out of desperation, I took
[3:11] Speaker 3: a job as a finance writer at the Molly Fool.
[3:13] Speaker 2: So were you an analyst or a finance writer?
[3:15] Speaker 4: A writer from day one? I was still in college
[3:17] Speaker 4: at the time, Uh huh.
[3:18] Speaker 3: And I started covering banking stocks at the Motley Fool
[3:21] Speaker 3: in two thousand and seven time, and I've been a
[3:25] Speaker 3: writer ever since.
[3:26] Speaker 2: So I'm curious talking about being a hedge fund manager
[3:29] Speaker 2: or an investment banker. I know your early life you
[3:33] Speaker 2: were both a ski bomb and a car valet. Yeah,
[3:37] Speaker 2: parking really expensive cars. Did that have any influence on
[3:41] Speaker 2: your initial erroneous career choice?
[3:43] Speaker 4: It had so much influence.
[3:45] Speaker 3: But really, I grew up in a middle class family,
[3:48] Speaker 3: great town and not a wealthy town, not poor, not
[3:51] Speaker 3: out in the sticks, but a decidedly middle class town
[3:54] Speaker 3: in California's just outside of Lake Tahoe, California. Also before
[3:58] Speaker 3: tech money infiltrated Lake Talk, So back then it was
[4:01] Speaker 3: truly just a small little mountaintown.
[4:02] Speaker 4: It's not anymore because tech money came up.
[4:05] Speaker 3: And so I didn't have much concept of wealth because
[4:09] Speaker 3: in the town that I grew up in, regular people
[4:12] Speaker 3: had old pickup trucks and rich people had new pickup trucks.
[4:15] Speaker 3: That was the stratification of wealth. That was as far
[4:17] Speaker 3: as it got. And so but anyway, I started working
[4:20] Speaker 3: at this these fancy hotels and all of a sudden,
[4:22] Speaker 3: people were starting to come in in these cars that
[4:25] Speaker 3: just blew my mind. Not just BMW's and Mercedes, but Ferraris,
[4:28] Speaker 3: Lamborghinis once in a while. And then I went to
[4:30] Speaker 3: college in Los Angeles, stayed working as a valet at
[4:34] Speaker 3: even nicer hotels in LA and then it was Rolls,
[4:37] Speaker 3: Royce's and Aston Martins, and it was just a level
[4:39] Speaker 3: of wealth.
[4:39] Speaker 4: That I didn't know existed.
[4:41] Speaker 3: And in my young, you know, nineteen twenty year old mind,
[4:44] Speaker 3: it was just so appealing to me. I was just
[4:46] Speaker 3: overwhelmed with, like, whatever that is, I want it. I
[4:49] Speaker 3: want some of that immediately. But it was also I
[4:52] Speaker 3: think I not on purpose, but I think I just
[4:56] Speaker 3: kind of started picking up the little subtle clues of
[4:59] Speaker 3: the psychology of rich people. The first thing that was
[5:02] Speaker 3: I was very apparent was that a lot of them
[5:05] Speaker 3: were not that happy. A lot of them were just
[5:07] Speaker 3: kind of old, bitter, broken men arguing with their wives,
[5:11] Speaker 3: always kind of stressed, third wives right right away, always stressed,
[5:16] Speaker 3: always barking on the phone, and it was, and it
[5:18] Speaker 3: was all the time. It was all the time, And
[5:21] Speaker 3: I remember picking up on that and being like, Hey,
[5:23] Speaker 3: on one hand, I really want that. On the other hand, like,
[5:26] Speaker 3: is that supposed to be my role model? Because it
[5:28] Speaker 3: doesn't look that great. And I know a lot of
[5:30] Speaker 3: middle class people from the town I grew up and
[5:32] Speaker 3: who seemed a hell of a lot happier than that guy.
[5:34] Speaker 3: And so I think that was I started picking up
[5:36] Speaker 3: on kind of the psychology of wealth, not intentionally, but
[5:39] Speaker 3: it was a very good window into that aspect of
[5:42] Speaker 3: wealth because in my little, p size nineteen year old brain,
[5:47] Speaker 3: it was in my what I assumed was you have
[5:49] Speaker 3: so much money, you must just be a walking ball
[5:52] Speaker 3: of happiness. That was that was the intuition that I had,
[5:55] Speaker 3: But it was so clearly not that.
[5:57] Speaker 2: So think about that for a second. And I have
[6:00] Speaker 2: so much stuff from your new book to that's relevant
[6:03] Speaker 2: to this, but we'll get to that later. Think about
[6:06] Speaker 2: when you're young and relatively broke. And I grew up
[6:10] Speaker 2: lower middle class and put myself through college and grad
[6:13] Speaker 2: school and always felt like, Gee, if only I didn't
[6:17] Speaker 2: have to worry about money, how much greater my life
[6:20] Speaker 2: would be. But chasing away the lack of money blues.
[6:24] Speaker 2: That's just a modest decrease in stress, not the secret
[6:30] Speaker 2: to happiness.
[6:30] Speaker 3: I think of what is tends to be true, and
[6:32] Speaker 3: there's no hearted fast rules here. This is not black
[6:34] Speaker 3: and white, but it tends to be true that wealthier
[6:36] Speaker 3: people might have fewer bad days than poor people. I
[6:41] Speaker 3: don't know if they necessarily have more good days. That's
[6:43] Speaker 3: a great now, that is a lifestyle improvement. To have
[6:46] Speaker 3: fewer bad days, to not have to worry and stress
[6:49] Speaker 3: about making rent and healthcare and whatnot to remove. That
[6:52] Speaker 3: is a lifestyle improvement, but it is not happiness. It
[6:55] Speaker 3: is different in the same way that you and I
[6:58] Speaker 3: are fortunate enough to wake up every morning not worrying
[7:01] Speaker 3: about catching polio, right, that's a lifestyle improve.
[7:04] Speaker 2: Or what you can eat that dell or exactly will
[7:08] Speaker 2: you eat that? Right?
[7:09] Speaker 3: And relative to the standards of one hundred years ago,
[7:11] Speaker 3: that is an unbelievable lifestyle improvement. But it's not happiness
[7:14] Speaker 3: because you and I didn't wake up this morning thinking
[7:16] Speaker 3: about it.
[7:16] Speaker 2: That is simply Maslow's hierarchy of basic needs. That's different
[7:21] Speaker 2: than happiness than contentment, which we'll talk about so let's
[7:25] Speaker 2: stay with your writing at the Motley Fool. One of
[7:30] Speaker 2: the things two of the things that really distinguish your writing. First,
[7:35] Speaker 2: you're a great storyteller and you find some fascinating stories.
[7:39] Speaker 2: But second, you figured out early that finance is not
[7:44] Speaker 2: so much about math as it is about behavior. Now
[7:47] Speaker 2: tell us how you stumbled into an interest in behavioral finance.
[7:52] Speaker 3: So much of this was moley Ful is a stock
[7:54] Speaker 3: picking organization, and I'm not I don't look down upon
[7:58] Speaker 3: stock picking, but it's not what I do. It's not
[8:00] Speaker 3: how I invest, it's not what interests me at all.
[8:02] Speaker 3: And so I kind of had to find a little
[8:04] Speaker 3: niche for myself. At the Mali Fool, they were completely
[8:07] Speaker 3: and they were completely supportive of my you know, kind
[8:10] Speaker 3: of black sheepedness being there being like, hey, you know
[8:14] Speaker 3: everyone else is picking stocks and I'm just trying to
[8:16] Speaker 3: do something else over here. You're counterprogramming, right, And so
[8:18] Speaker 3: I had to figure out what to do. For a while,
[8:20] Speaker 3: it was macro. This was post financial crisis, and I
[8:23] Speaker 3: was like, I'm going to study the forces of the economy,
[8:25] Speaker 3: and that not intentionally but kind of just pushed into
[8:29] Speaker 3: behavior in psychology, I think a lot of that was
[8:32] Speaker 3: as I was studying macro, this realization and you've been
[8:36] Speaker 3: a big part of this as well, of realizing that
[8:39] Speaker 3: there is nothing in a macro textbook that will explain
[8:42] Speaker 3: two thousand and eight, and so as a writer, as
[8:44] Speaker 3: I was trying to explain what just happened and the
[8:47] Speaker 3: aftermath of the GFC was there's nothing in there that
[8:49] Speaker 3: explained why people did what they did. Nothing in an
[8:52] Speaker 3: economics textbook or the academic framework that would explain the
[8:56] Speaker 3: housing bubble that preceded it, the behavior during the crash,
[9:00] Speaker 3: the pessimism after it, Like, not much there, but if
[9:02] Speaker 3: you looked at it through the lens of psychology or sociology,
[9:06] Speaker 3: or political science or evolution, all these other fields like
[9:09] Speaker 3: had a lot to say and could explain why people
[9:12] Speaker 3: were doing the things they do.
[9:13] Speaker 2: So that was just the subtle.
[9:15] Speaker 3: Coming to terms with the idea that money and finance
[9:18] Speaker 3: is not the study. It's not the study of finance,
[9:20] Speaker 3: it's a study of how people behave with money.
[9:22] Speaker 2: So I'm pulling forward a quote from later in our
[9:27] Speaker 2: conversation that's dead on with that insight. Risk has two stages.
[9:33] Speaker 2: First one it actually hits. Then when the scars influence
[9:37] Speaker 2: our subsequent decisions. Now, so you graduate into the eight
[9:41] Speaker 2: to nine disaster, everybody post financial crisis, and I shouldn't
[9:47] Speaker 2: say everybody, but so many people post financial crisis was Hey,
[9:52] Speaker 2: that was just the first leg after March or nine, Wait,
[9:55] Speaker 2: wait for the second leg.
[9:56] Speaker 3: Nerrophrase double dip recession. That's where everybody said it for
[9:59] Speaker 3: eighteens a day. It was decades before. If you go
[10:02] Speaker 3: back to twenty ten, particularly twenty eleven, everybody in the
[10:05] Speaker 3: financial media said the phrase double dip recession every hour.
[10:09] Speaker 3: It was inevitable. It was absolutely inevitable. The other version
[10:14] Speaker 3: of this is at the end of World War Two
[10:15] Speaker 3: nineteen forty five, it was a foregone conclusion that nobody
[10:19] Speaker 3: disagreed with that the US economy would fall right back
[10:22] Speaker 3: into the Great Depression, that in the absence of military spending,
[10:25] Speaker 3: it was not just going to contract and revert to
[10:27] Speaker 3: the mean, it was going to go back to the
[10:28] Speaker 3: nineteen thirty two lows of desperation. And in hindsight it
[10:32] Speaker 3: didn't happen, but it was a foregone conclusion back then.
[10:34] Speaker 3: It is always the case that the simple narrative, and
[10:38] Speaker 3: oftentimes the simple narrative is just extrapolating whatever just happened
[10:41] Speaker 3: is going to be the most appealing, the most logical,
[10:43] Speaker 3: It makes the most sense in the cyclical nature of economies. Though,
[10:48] Speaker 3: like we all know in hindsight, what happened during those
[10:50] Speaker 3: piers that actually the end of World War Two. There
[10:52] Speaker 3: were some mild recessions in the late forties and fifties,
[10:55] Speaker 3: but by and large that was actually the beginning of
[10:57] Speaker 3: an epic boom in the fifties and sixties, and after
[11:02] Speaker 3: the GFC, you know, twenty nine twenty ten, that was
[11:05] Speaker 3: in the stock market and economically the beginning of a boom.
[11:08] Speaker 4: And it's almost.
[11:09] Speaker 3: Impossible to realize that in real time, as it was
[11:12] Speaker 3: almost impossible to realize in ninety nine two thousand that
[11:16] Speaker 3: of course in tech stocks, but also in the broader
[11:18] Speaker 3: economy that was about as good as it gets. And
[11:21] Speaker 3: when it's just about as good as it gets, that
[11:22] Speaker 3: was it was so easy to extrapolate from there, but
[11:24] Speaker 3: that was actually the end of the good days.
[11:26] Speaker 2: You know. The shocking thing about the post financial crisis period,
[11:31] Speaker 2: and I'll take a little credit for flowing this phrase
[11:34] Speaker 2: out there, it was the most hated bull market in
[11:37] Speaker 2: history by like October nine, people were talking about wait
[11:41] Speaker 2: for the next thirty forty percent dip, and you mentioned hindsight.
[11:45] Speaker 2: Our hindsight bias keeps us looking backwards and ignoring the
[11:49] Speaker 2: fact that, hey, when is a down fifty percent market
[11:53] Speaker 2: in the US not a great entry point, all right,
[11:55] Speaker 2: nineteen twenty nine, But that is the exception to rule
[11:59] Speaker 2: every other time it's been down cut in half.
[12:02] Speaker 3: I'm a buyer, right, And actually, if you go back
[12:04] Speaker 3: to you know, nineteen thirty one thirty two, when the
[12:06] Speaker 3: market was down fifty percent, it eventually fell eighty nine percent,
[12:10] Speaker 3: So if it was down fifty percent, you still lost
[12:11] Speaker 3: a fortune after that, that's right. But if you made
[12:13] Speaker 3: those purchases down to hel percent ten years later, you
[12:16] Speaker 3: were doing an absolutely incredible Now that was that's cold
[12:19] Speaker 3: comfort for the other fifty percent that you continued to
[12:21] Speaker 3: lose by nineteen thirty two. But there's all these cases
[12:24] Speaker 3: where people say they're long term investors, and they want
[12:28] Speaker 3: to be long term investors, but then, particularly when they're
[12:30] Speaker 3: trying to buy the dip, if the market falls for
[12:32] Speaker 3: another ninety days after that, they feel like they've made
[12:35] Speaker 3: a colossal error.
[12:36] Speaker 2: So I find there's a huge difference. Many people are
[12:40] Speaker 2: intellectually long term investors, but emotionally they're not, and that
[12:45] Speaker 2: tension is what drives a lot of that.
[12:47] Speaker 4: See, I would put a different spin on that.
[12:49] Speaker 3: I would say a lot of people, you know, claim
[12:52] Speaker 3: to be kind of short term investors in the sense
[12:55] Speaker 3: that on Twitter they're like, oh, this is this is
[12:57] Speaker 3: the peak, this is the top. The I mean in
[13:00] Speaker 3: Q four is not looking They say things like that,
[13:02] Speaker 3: But if you actually looked how they invest like and
[13:04] Speaker 3: therefore they dollar cost average into their four to one
[13:06] Speaker 3: ks and never sell anything.
[13:07] Speaker 2: And that's the right approach market crash. In fact, you
[13:11] Speaker 2: never pick a point as the bottom, even if you
[13:15] Speaker 2: put a big chunk of your free capital. You should
[13:17] Speaker 2: always be hey, I don't know where the bottom is.
[13:21] Speaker 2: I'll try a little in nineteen thirty and a little
[13:24] Speaker 2: more throughout thirty one and thirty two. Eventually your average
[13:27] Speaker 2: is going to be far lower with than where the
[13:29] Speaker 2: market is. But you have to have a steady source
[13:31] Speaker 2: of capital and some income.
[13:33] Speaker 3: Now, I remember in twenty eleven when there was the
[13:36] Speaker 3: double Depp recession and the market did fall I don't
[13:38] Speaker 3: know twenty or thirty percent. That was probably more pessimistic
[13:41] Speaker 3: in twenty eleven than people were in two thousand and nine.
[13:43] Speaker 4: Twenty eleven, people were.
[13:44] Speaker 2: Like, this is it, this is over going back down
[13:46] Speaker 2: to the.
[13:46] Speaker 3: Market was plunging, and the narrative was everyone's panicking, everyone's selling.
[13:50] Speaker 3: Vanguard put out a study that showed during that era,
[13:54] Speaker 3: ninety nine percent of their clients did nothing, didn't sell,
[13:58] Speaker 3: what didn't do any didn't do anything. And so the
[14:00] Speaker 3: narrative of everyone's panic, everyone's selling is usually so completely
[14:04] Speaker 3: different from what people are actually doing.
[14:06] Speaker 2: So let me share one of my favorite quotes of yours,
[14:09] Speaker 2: since you're talking about highs and lows. Every market valuation
[14:14] Speaker 2: is a number from today multiplied by a story about tomorrow.
[14:19] Speaker 2: I think that's genius. I love that quote.
[14:21] Speaker 4: Thank you.
[14:21] Speaker 3: You know it's always a number from today, like earnings
[14:23] Speaker 3: per share, multiplied by a story about tomorrow, like a
[14:27] Speaker 3: valuation multiple. And what's important is, particularly in a low
[14:30] Speaker 3: interest rate environment and particularly in a ZERP environment, those
[14:34] Speaker 3: stories are everything. The number from today almost doesn't matter.
[14:38] Speaker 3: The stories are everything. That's always been the case. But
[14:40] Speaker 3: in a social media world, the stories get bonkers. The
[14:43] Speaker 3: stories get absolutely nuts.
[14:45] Speaker 2: Narratives become memes.
[14:46] Speaker 4: Yeah, you know, Ben.
[14:47] Speaker 3: Graham had the quote in the stock market is a
[14:49] Speaker 3: voting machine or nol miamis knees voting machine in the
[14:53] Speaker 3: short term and a weighing machine in the long run.
[14:55] Speaker 3: But he said that one hundred years ago, and it's
[14:57] Speaker 3: still true. But they're because of how the world works today,
[15:01] Speaker 3: stocks can remain voted on, not necessarily weighed. For probably decades,
[15:06] Speaker 3: Tesla has been a voted upon stock, not a weight
[15:09] Speaker 3: upon stock, for its entire existence, and maybe that will
[15:13] Speaker 3: change someday. But I think in previous eras in the
[15:16] Speaker 3: Ben Gram era, or even not even you know, twenty
[15:18] Speaker 3: or thirty years ago, you could have brief, momentary flashes
[15:23] Speaker 3: of insanity. And that was probably the late nineties you had,
[15:26] Speaker 3: you know, eighteen months of just pure insanity where everything
[15:29] Speaker 3: was narrative driven, it wasn't really earnings driven. And now
[15:33] Speaker 3: you can have that going on for very long periods
[15:35] Speaker 3: of time. I mean, how long has has Hurts and
[15:39] Speaker 3: game stock been been meme stocks?
[15:42] Speaker 2: Like years, five, five years? Is still I think it's
[15:44] Speaker 2: still a thing, still a reddit, It's still a thing.
[15:46] Speaker 3: It's still still a thing, maybe not to the extent
[15:49] Speaker 3: that it was, but these stocks did not revert all
[15:51] Speaker 3: the way back. They still have this cult meme following,
[15:55] Speaker 3: and so the point being, it's always a number from
[15:57] Speaker 3: today multiplied by a story about tomorrow. Because the world
[16:00] Speaker 3: we live in interest rates and social media, the stories
[16:03] Speaker 3: get insane.
[16:03] Speaker 2: So let me mix your Canes quote with your own quote.
[16:09] Speaker 2: In the short run, markets or probability machines. In the
[16:12] Speaker 2: long run their narrative machines. That that's a good blend
[16:16] Speaker 2: of view, and Canes there are worse people to marry.
[16:20] Speaker 2: All right, One or two more questions in this segment
[16:24] Speaker 2: before we move on. I'm you address one of my
[16:29] Speaker 2: favorite pet peeves about uncertainty in a sentence that I love. Quote.
[16:35] Speaker 2: There's rarely more or less economic uncertainty, just changes in
[16:39] Speaker 2: how ignorant people are to potential risks. That sums it
[16:43] Speaker 2: up perfectly. I hate the uncertainty meme because by definition,
[16:48] Speaker 2: the future is always inherently uncertain.
[16:50] Speaker 3: Yeah, I mean, there have been some academics who have
[16:53] Speaker 3: tried to make uncertainty indexes. Where they make it in
[16:55] Speaker 3: the end, you can put it on a chart to
[16:57] Speaker 3: measure the amount of uncertainty, and there's various ways that
[16:59] Speaker 3: they do. In terms of like newspaper narratives and changes
[17:02] Speaker 3: in economic policy, and to map out uncertainty. And what's
[17:06] Speaker 3: so fascinating to me is if you look at these indexes,
[17:08] Speaker 3: which I think are pretty rationally put together, it shows
[17:11] Speaker 3: that uncertainty is the lowest, as in certainty was the
[17:15] Speaker 3: highest at two periods in modern times.
[17:17] Speaker 2: I guess three periods.
[17:18] Speaker 3: One is right before nine to eleven, the other is
[17:20] Speaker 3: right before the GFC, and the other is right before COVID.
[17:24] Speaker 3: That was when purportedly we understood the future in the
[17:27] Speaker 3: greatest degree.
[17:28] Speaker 2: And if you go to Sack time completely insane, I'm
[17:30] Speaker 2: going to tell you there was a lot of certainty
[17:32] Speaker 2: in late ninety nine. Yeah, stocks grow to the sky,
[17:35] Speaker 2: and you go back to March on nine, there was
[17:37] Speaker 2: certainty that stocks was going to zero.
[17:39] Speaker 3: And so what we know in hindsight is that those
[17:41] Speaker 3: three periods just before nine to eleven, just before two
[17:43] Speaker 3: thousand and eight, and just before COVID were the most
[17:47] Speaker 3: uncertain That was when your view of the future was
[17:49] Speaker 3: completely and utterly wrong, no matter who you were or
[17:51] Speaker 3: how smart you were. And so I think it's true
[17:54] Speaker 3: that there is never more or less uncertainty. It's just
[17:58] Speaker 3: we go through periods where we are more ignorant and
[18:00] Speaker 3: more confident in our ability to forecast than others.
[18:03] Speaker 2: Let's talk about luck. I just wrote something about this
[18:08] Speaker 2: and found a quote of yours afterwards that I would
[18:10] Speaker 2: have loved to use. Most people when they talk about luck,
[18:14] Speaker 2: increasing the surface area of your luck. Luck is where
[18:17] Speaker 2: preparation meets opportunity. Your definition of luck recognizes that it's
[18:22] Speaker 2: something fundamentally outside of your controls quote you can't believe
[18:27] Speaker 2: in risk without also believing in luck because they're fundamentally
[18:30] Speaker 2: the same thing, and acknowledgment that so much is outside
[18:34] Speaker 2: of your control.
[18:35] Speaker 3: Yeah, when people say like, oh, the harder I work,
[18:37] Speaker 3: the luckier I get, you know, those kind of they
[18:39] Speaker 3: seem like like benign quotes. I'm like, no, that's not
[18:41] Speaker 3: what luck is. If you can go out of your
[18:43] Speaker 3: way to increase it, it is not luck. It's hard work.
[18:45] Speaker 3: It's hard work, it's skill, it's a value. I commend
[18:48] Speaker 3: you for it, but it's not luck. Luck is you
[18:50] Speaker 3: were born in this era. Luck is your parents told
[18:54] Speaker 3: you X, Y and z. Luck is you haphazardly met
[18:57] Speaker 3: this person. You did not do anything intentionally to it.
[19:00] Speaker 3: It was completely outside of your control, the biggest of
[19:03] Speaker 3: which is where and when you were born that have
[19:05] Speaker 3: an unbelievable impact on this. Bill Groat's a great bond Mananagru.
[19:09] Speaker 3: I'm sure he's been on the show before. He spoke
[19:11] Speaker 3: about this one time that he was a bond manager
[19:14] Speaker 3: from the early you know, the bulk of his career
[19:17] Speaker 3: was during the largest decline in interest rates that's ever occurred.
[19:21] Speaker 4: And he wondered himself in this piece of a rope many.
[19:24] Speaker 3: Years ago, like, would he have had the success he
[19:26] Speaker 3: did if he was born ten years earlier or ten
[19:27] Speaker 3: years later. Would Buffett have had the same success if
[19:30] Speaker 3: he was born ten years earlier or ten years later.
[19:32] Speaker 3: I would, I would venture to say the answer is no.
[19:34] Speaker 3: There are both of those people, very hard working, very intelligent,
[19:37] Speaker 3: able to capture opportunity.
[19:39] Speaker 2: Yes.
[19:40] Speaker 3: Were they also unbelievably lucky in something they had no
[19:42] Speaker 3: control over, which is when they were born.
[19:45] Speaker 2: Yes, as well. I'm trying to remember the book that
[19:47] Speaker 2: mentioned it's not a coincidence that so many of the
[19:50] Speaker 2: best known entrepreneurs of our era were born post War
[19:54] Speaker 2: World War two, mid fifties, Steve Jobs, Bill Gates. It
[19:58] Speaker 2: goes through a whole list, and and just being born
[20:01] Speaker 2: into that vacuum when there was massive societal change, economic change,
[20:06] Speaker 2: technological change. That's what created the option of starting a
[20:11] Speaker 2: whole new company in a brand new space.
[20:13] Speaker 3: Yeah, and if Steve Jobs was born twenty years later,
[20:15] Speaker 3: he still would have been extremely successful.
[20:17] Speaker 4: He's just built different.
[20:18] Speaker 3: Of course, but to the degree that he was almost
[20:22] Speaker 3: certainly not so I think rather than luck, because people
[20:24] Speaker 3: don't like that phrase. It makes you sound jealous and
[20:27] Speaker 3: bitter of other people. I think the phrase to use
[20:29] Speaker 3: is what is repeatable? What have you done in the
[20:32] Speaker 3: past that you can do again? And if if you
[20:35] Speaker 3: know what in your life, in your in your world,
[20:38] Speaker 3: if you started over tomorrow with no money, no name, recognition,
[20:42] Speaker 3: no context, could you repeat what you've done? And sometimes
[20:44] Speaker 3: the answer is yes, So that's not luck.
[20:46] Speaker 2: I'm going to say no. For me personally, I guess
[20:49] Speaker 2: it's right time. Yes and got I literally just finished
[20:55] Speaker 2: a chapter for someone else's book on how random so
[21:00] Speaker 2: much of the world is. And I have to tell you,
[21:02] Speaker 2: the first couple of times a billionaire tells you how
[21:05] Speaker 2: important luck was, you kind of shrug it off, as Hey,
[21:08] Speaker 2: these guys are a little false humility. The person who
[21:13] Speaker 2: disabused me of that notion was Howard Marx, because he said,
[21:18] Speaker 2: you have to be smart, you have to be hardworking,
[21:20] Speaker 2: but you also have to get lucky. And I'm like,
[21:21] Speaker 2: come on, Howard, why do you say that. You know,
[21:24] Speaker 2: look at what you've done since you graduated Columbia Business School.
[21:27] Speaker 2: And his answer was, everybody I went to school with
[21:31] Speaker 2: was super smart. They were all incredibly hard working. Not
[21:35] Speaker 2: all of them became wildly successful. And you have to
[21:38] Speaker 2: just acknowledge how much of this is just serendipity. And
[21:42] Speaker 2: when a guy like that, who has no false humility,
[21:45] Speaker 2: when he says, no, I could give you ten instances
[21:48] Speaker 2: where my life changed because of dun luck, you kind
[21:51] Speaker 2: of have to acknowledge that, right, was ja Paul Getty said.
[21:54] Speaker 3: He said the three successes, the three rules for getting
[21:56] Speaker 3: rich are go to work early, stay late.
[22:00] Speaker 2: Oil fantastic. Coming up, we continue our conversation with Morgan Housel,
[22:07] Speaker 2: author of the best selling book Psychology of Money, discussing
[22:11] Speaker 2: how he writes books, essays and columns. I'm Barry Results.
[22:16] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
[22:34] Speaker 2: Barry Redults. You're listening to Masters in Business on Bloomberg Radio.
[22:38] Speaker 2: My extra special guest is Morgan Housel. He is the
[22:42] Speaker 2: best selling author of Psychology of Money as well as
[22:45] Speaker 2: Same as Ever his latest book, The Art of Spending Money,
[22:49] Speaker 2: Simple Choices for a Richer Life. Before we get to
[22:52] Speaker 2: the book specifically, I want to talk a little bit
[22:55] Speaker 2: about your writing process, and you know you're Some of
[23:00] Speaker 2: my favorite essays of yours take historical stories, world wars,
[23:06] Speaker 2: business failures, unlikely successes, and I specifically recalled Kitty Hawk's
[23:12] Speaker 2: story and the solo sale competition around the world, and
[23:16] Speaker 2: you connect them to timeless lessons on behavior and money.
[23:21] Speaker 2: Tell us a little bit about your research process. How
[23:23] Speaker 2: do you find these amazing and crazy stories.
[23:27] Speaker 3: I think it started with a survival technique as a writer,
[23:31] Speaker 3: because as a finance writer, if I got up every
[23:33] Speaker 3: day and wrote, here's what the Dow did today, you're
[23:36] Speaker 3: out the people who can do that faster than you.
[23:38] Speaker 3: You're not really adding much value if you do that.
[23:40] Speaker 3: And so as a writer it was like, hey, if
[23:42] Speaker 3: I need to get people's attention, I need to make
[23:44] Speaker 3: it interesting. So and one of the ways to do
[23:46] Speaker 3: that because myself, as a reader, what I enjoyed when
[23:49] Speaker 3: other people did is when they tied the rest of
[23:52] Speaker 3: the broader world into finance. Here's a story that has
[23:54] Speaker 3: nothing to do with money. It's a story about evolution
[23:56] Speaker 3: or World War two, whatever it might be, and let's
[23:59] Speaker 3: take the lesson from that entire I loved when people
[24:01] Speaker 3: did that.
[24:01] Speaker 4: I loved it, loved it, loved it, and wanted to
[24:03] Speaker 4: do it myself.
[24:04] Speaker 3: The second part is I think I got you closer
[24:05] Speaker 3: to the truth that when you study those fields, whatever
[24:08] Speaker 3: it might be politics or military history, you're studying behavior
[24:12] Speaker 3: and it's the same behaviors that impact investors in the
[24:14] Speaker 3: same way. And so a lot of even finance professionals
[24:17] Speaker 3: get into trouble when they view and study finance through
[24:21] Speaker 3: the very narrow lens of finance without realizing that it's
[24:24] Speaker 3: a very broad field of how people behave.
[24:27] Speaker 2: So that was the first of it.
[24:28] Speaker 3: The second is when you start looking for it, when
[24:30] Speaker 3: you have the little seed in your head that when
[24:33] Speaker 3: you're reading about a broad array of fields, if you
[24:36] Speaker 3: have a little bird in your head that says, how
[24:37] Speaker 3: does this tie back? Like what is the behavior and
[24:39] Speaker 3: how can tie it back to money? You see it
[24:41] Speaker 3: everywhere you can't stop seeing it, and you realize, like
[24:44] Speaker 3: how interconnected our behavior is, because the same way that
[24:47] Speaker 3: you and I think about risk and investing also impacts
[24:50] Speaker 3: a lot of things that we think in life. Our friendships,
[24:52] Speaker 3: our relationships, our health tie back to the same framework
[24:56] Speaker 3: of how we think about risk and money. It's very
[24:58] Speaker 3: tied together. The whole world is kind of woven together
[25:01] Speaker 3: in those and so you start seeing these same themes
[25:04] Speaker 3: over and over and over again about how compounding works,
[25:06] Speaker 3: how risk works, how envy works.
[25:09] Speaker 4: It's the same.
[25:09] Speaker 3: And I also think if you see a behavior repeat
[25:12] Speaker 3: in several different fields, you found something that is like
[25:15] Speaker 3: infinitely important and then you can be like, oh, that's
[25:17] Speaker 3: a good one.
[25:18] Speaker 4: I need to talk more about that.
[25:19] Speaker 2: In finance, how often when you're doing research you have
[25:22] Speaker 2: that WTF moment that's like, oh my god, how can
[25:26] Speaker 2: this possibly be true? And you research it and it's like, Wow,
[25:29] Speaker 2: not only is this true, but it applies to so
[25:32] Speaker 2: many other things. Is that a monthly occurrence a weekly occurrence?
[25:35] Speaker 2: How often does that happen?
[25:36] Speaker 3: I think it's very often that you find behaviors that
[25:40] Speaker 3: also have a ven diagram overlap with with money. That's
[25:44] Speaker 3: pretty often in terms of them being like a slam
[25:46] Speaker 3: dunk of like, oh, that is just a phenomenal interesting story,
[25:49] Speaker 3: and it is so identical to what happens in investing.
[25:51] Speaker 4: That's probably a once a.
[25:52] Speaker 2: Year kind of thing.
[25:53] Speaker 4: Oh really, I think. So that's a lot of slam
[25:55] Speaker 4: dunk in psychology.
[25:57] Speaker 2: And money, you have a bunch of those. And same
[25:59] Speaker 2: as ever, you have a run of those. There's a
[26:01] Speaker 2: lot of that in this you're less than fifty years old.
[26:04] Speaker 2: You have more than fifty of these stories.
[26:06] Speaker 4: Some better than others, though. There's a couple.
[26:08] Speaker 3: There's a couple that I've come across over the years
[26:11] Speaker 3: where I remember just sitting back in my chair and
[26:13] Speaker 3: being like.
[26:13] Speaker 2: That's that's just a jackpot.
[26:14] Speaker 3: That story is just could not be better seeing it,
[26:18] Speaker 3: and you find it in these areas that have nothing
[26:19] Speaker 3: to do with money.
[26:21] Speaker 4: I remember it.
[26:21] Speaker 3: So you mentioned in the artist spending money the story
[26:23] Speaker 3: about the sailors, Yes, has absolutely nothing to do with
[26:25] Speaker 3: money whatsoever.
[26:26] Speaker 2: And I remember reading everything to do with ego and behavior.
[26:29] Speaker 3: And behavior, But I remember reading an old New York
[26:31] Speaker 3: Times article is from not that old, maybe two thousand
[26:34] Speaker 3: and seven, and it had one line it said there
[26:36] Speaker 3: was a sailing race back in the nineteen sixties, and
[26:39] Speaker 3: one of the sailors was about to win, but decided
[26:41] Speaker 3: he liked sailing, so he quit the race and just
[26:43] Speaker 3: kept sailing.
[26:44] Speaker 2: And I didn't want the publicity and all the nonsense
[26:47] Speaker 2: around the opposite of ego.
[26:48] Speaker 3: And I remember reading that like that's interesting, Like can
[26:50] Speaker 3: we pull on that thread a little bit more?
[26:52] Speaker 4: And you start doing.
[26:52] Speaker 3: Research and you're like, oh, this is this is ego
[26:56] Speaker 3: or the lack of it, And of course that applies
[26:58] Speaker 3: to money in what I thought was just a slam
[27:00] Speaker 3: dunk way, Like that's a rare story.
[27:02] Speaker 2: Fine, you know, pull on that thread. People don't understand
[27:05] Speaker 2: the original quote from the professor who said it was
[27:08] Speaker 2: the plural of anecdote is data. And what was meant
[27:12] Speaker 2: by that is you start pulling on the thread of
[27:14] Speaker 2: these one offs and you find these broader things applical
[27:17] Speaker 2: to other things. You shouldn't just dismiss the one off
[27:21] Speaker 2: because it's anecdotally really kind of fascinating. So the other
[27:26] Speaker 2: one that has always stayed with me involved Kitty Hawk.
[27:30] Speaker 2: How long was it before the first Right Brothers faster
[27:35] Speaker 2: heavier than air flight made it into the New York times.
[27:39] Speaker 3: It took them about four years to build the airplane,
[27:42] Speaker 3: and then after they flew it in Kitty Hawk, it
[27:44] Speaker 3: took them about another four years before virtually anybody was
[27:46] Speaker 3: paying attention. And there were years after the right brother's
[27:49] Speaker 3: first flight.
[27:50] Speaker 4: We all seen the.
[27:51] Speaker 3: Picture, one of the most famous pictures of all time. Now,
[27:53] Speaker 3: it was literally years after that took place that The
[27:55] Speaker 3: New York Times was writing things along the lines of
[27:58] Speaker 3: humans will never fly, it will never happen.
[28:00] Speaker 2: It's already happened. Then they're staying the wrong thing.
[28:02] Speaker 3: And there was even periods back in Dayton, Ohio, where
[28:05] Speaker 3: they were from. After Kitty Hawk, they went back to Dayton,
[28:07] Speaker 3: and Dayton is where they truly mastered flying. They figured
[28:10] Speaker 3: out the two hardest parts, which were turning and landing
[28:12] Speaker 3: and h and Danon was a big city in the
[28:14] Speaker 3: early nineteen hundreds, and they're flying like over people's backyards
[28:18] Speaker 3: and there's virtually nothing written about it. There was in
[28:21] Speaker 3: one of their biographies it basically says that people in
[28:23] Speaker 3: Dayton that saw them flying assumed it must have been
[28:25] Speaker 3: some sort of magic trick, asking like where's the rope.
[28:29] Speaker 4: Kind of kind of thing, like.
[28:30] Speaker 2: The rope attached to exactly exactly well, it's it's you know,
[28:34] Speaker 2: it's all turtles all the way down.
[28:36] Speaker 3: But it was the analogy that was given in their
[28:38] Speaker 3: biography by David mccallough was if you and I saw
[28:41] Speaker 3: a demonstration of time travel today, we would be like, okay,
[28:44] Speaker 3: but it's just an illusion, like you didn't actually do that,
[28:47] Speaker 3: Like I saw what you did, but that's but there's
[28:49] Speaker 3: there's a trick here. And that's how they viewed flying
[28:52] Speaker 3: at the time. And it really took almost about half
[28:55] Speaker 3: a decade before people were like, oh, this is this
[28:58] Speaker 3: is the thing, this is this is big. And I
[29:00] Speaker 3: think that's true for a lot of new technology that
[29:02] Speaker 3: the gap between discovering it and it becoming a world
[29:06] Speaker 3: changing thing can be years of not decades. It's almost
[29:10] Speaker 3: never that it happens overnight that we come up with
[29:12] Speaker 3: a new technology and people are like, that's it.
[29:14] Speaker 4: That's the thing.
[29:15] Speaker 3: People talk about how quickly chat GBT was brought into
[29:19] Speaker 3: the fold. You know, within a year of it coming out,
[29:20] Speaker 3: there were hundreds of millions of users. But AI has
[29:22] Speaker 3: been a thing for.
[29:23] Speaker 2: Thirty years, forty years.
[29:25] Speaker 3: So the idea that like, oh, we recognized it immediately,
[29:27] Speaker 3: like no, it took a lifetime to get there.
[29:29] Speaker 2: You know. I saw I saw a Reddit map and
[29:32] Speaker 2: I thought of you. It showed here's how far you
[29:36] Speaker 2: could travel one hundred years ago from London, and it
[29:39] Speaker 2: was a map of this is a day, this is
[29:41] Speaker 2: a week, this is a month, and then modern times
[29:45] Speaker 2: you could get anywhere on Earth today within thirty six hours. Now,
[29:49] Speaker 2: the polls whatever, but back then you couldn't even get
[29:53] Speaker 2: to America in a month from London. It was It's
[29:56] Speaker 2: just insane how that changed. And that's what made me
[29:59] Speaker 2: think of Kitty Hawk. There's another quote of yours I
[30:03] Speaker 2: love that's related to all of your books, which is
[30:07] Speaker 2: getting rich and staying rich are different things that require
[30:11] Speaker 2: different skills.
[30:12] Speaker 3: To explain that well, we all know the stories of
[30:15] Speaker 3: the hedgeplom manager who was very good at getting rich
[30:18] Speaker 3: and had no ability to stay rich whatsoever.
[30:21] Speaker 2: There's a lot of stories about that. Art you ghosts
[30:23] Speaker 2: very recently, very many billions.
[30:25] Speaker 3: To zero and the more famous, more famous examples long
[30:29] Speaker 3: term capital management or Jesse Livermore. I mean, going down
[30:31] Speaker 3: the list of people who are unbelievably skilled at getting
[30:33] Speaker 3: rich and completely brainless at staying rich, they're two very
[30:38] Speaker 3: different skills. And when you see either a person or
[30:40] Speaker 3: a company that has both equal skills of getting rich
[30:43] Speaker 3: and staying which, it's a rare thing, and some companies
[30:46] Speaker 3: have this. Microsoft has had that Apple. You know, no,
[30:49] Speaker 3: I would take that. I'd take Apple back if there
[30:51] Speaker 3: Microsoft since ninety nine. They went through a very rough
[30:53] Speaker 3: period before that. Microsoft is probably the quintessential example of
[30:56] Speaker 3: a country that a company that is or unbelievable, unbelievable
[31:00] Speaker 3: getting rich and has an equal ability at staying rich
[31:03] Speaker 3: in terms of how it manages its balance sheet and
[31:04] Speaker 3: staying relevant whatnot. It's a very rare skill, and it's
[31:07] Speaker 3: often a contradictory skill, because to get rich you need
[31:11] Speaker 3: optimism and risk taking, and to stay rich you need
[31:13] Speaker 3: almost the exact opposite. You need a level of paranoia
[31:16] Speaker 3: and conservatism to keep you around. You need that jeckal
[31:20] Speaker 3: and Hyde personality to do well over long periods.
[31:22] Speaker 2: And so the interesting thing about the examples we both
[31:25] Speaker 2: gave arch ghosts and long term capital management. They got
[31:28] Speaker 2: rich through an excessive use of leverage. But in your
[31:31] Speaker 2: book you talk about the Vanderbilts now, which is kind
[31:34] Speaker 2: of fascinating. They got wealthy through just wild business success,
[31:40] Speaker 2: oil and railroads, and go down the list. And yet
[31:45] Speaker 2: once they had that money, all they could do is
[31:47] Speaker 2: spend it at a profligate rate, derived seemingly no joy
[31:53] Speaker 2: out of the process. And it took three or four
[31:55] Speaker 2: generations and they were the money was all gone pretty much.
[31:58] Speaker 4: You know.
[31:58] Speaker 3: Of all the robber baron families here in New York
[32:01] Speaker 3: who managed the money, the Carnegie and the Rockefellers did
[32:07] Speaker 3: very well at using their huge wealth to better society
[32:12] Speaker 3: and to make their errors, to give them good lives,
[32:16] Speaker 3: and to keep it around for several generations. The Vanderbilts
[32:18] Speaker 3: did by far the worst, by far and away the worst.
[32:20] Speaker 3: So when Cornelius Vanderbilt died a justed for inflation, he
[32:23] Speaker 3: had about three or four hundred billion dollars, just an
[32:26] Speaker 3: unbelievable fortune. As you mentioned, within about three generations there
[32:29] Speaker 3: was virtually nothing left. And in between those three generations
[32:33] Speaker 3: were a series of errors who, by and large, with
[32:36] Speaker 3: few exceptions, were miserable. Were miserable, miserable people, and the
[32:40] Speaker 3: reason why was very clear when you study their biographies.
[32:43] Speaker 3: The money completely controlled their personality. It told them who
[32:47] Speaker 3: they could be, It told them where they could live,
[32:49] Speaker 3: It told them the lifestyle they had to live. It
[32:51] Speaker 3: told them who they could marry, It told them who
[32:53] Speaker 3: they could be friends with. It had complete and outer
[32:56] Speaker 3: control about it. They had all of the financial independence
[32:59] Speaker 3: that one in history could ever imagine, and they had
[33:02] Speaker 3: no intellectual independence, They had no lifestyle independence had They
[33:06] Speaker 3: were completely dictated.
[33:07] Speaker 4: By the money.
[33:08] Speaker 3: And it wasn't until the money was more or less
[33:10] Speaker 3: exhausted that the first Vanderbilt heirs who didn't get anything
[33:14] Speaker 3: could build a life of their own.
[33:16] Speaker 4: And this is now very well known.
[33:17] Speaker 3: The first Vanderbilt air who virtually didn't get anything is
[33:21] Speaker 3: Anderson Cooper. His mom was Gloria Vanderbilt.
[33:24] Speaker 2: A designer who famously built her own fashion shot.
[33:27] Speaker 4: And that was effectively where the big trust funds ended.
[33:29] Speaker 3: And Cooper has talked about this that you know, he
[33:32] Speaker 3: was one of the first people in his family in
[33:33] Speaker 3: one hundred and fifty years who could was like blessed
[33:36] Speaker 3: with the ability to build his own life where the
[33:38] Speaker 3: money didn't control it and dictated. And it's an amazing
[33:41] Speaker 3: thing to watch.
[33:42] Speaker 2: Are you the master of your wealth or are you
[33:44] Speaker 2: a slave to money? That's it really is the key question.
[33:47] Speaker 2: You know, you talked about the Rockefellers and versus the Vanderbilts.
[33:54] Speaker 2: I had the CIO of General atlantic On and General Atlannik.
[33:59] Speaker 2: Is the money that comes from the Duty Free shops,
[34:02] Speaker 2: which has blown up to be a spectacular fortune. The
[34:06] Speaker 2: founder you discuss in the book spent most of his
[34:10] Speaker 2: life giving away all his money and he couldn't be happier.
[34:13] Speaker 2: Tell us about him.
[34:14] Speaker 3: So the founder's a guy named Chuck Feeney, passed away
[34:16] Speaker 3: couple of years ago. Unbelievable story that he has started
[34:19] Speaker 3: Duty Free store made for him personal fortune about ten
[34:22] Speaker 3: billion dollars thirty years ago.
[34:25] Speaker 4: Yes, a lot of money.
[34:26] Speaker 3: The well known part of Chuck Feeney's story that's been
[34:28] Speaker 3: well documented is that he gave ninety nine point nine
[34:31] Speaker 3: to nine percent of it away.
[34:32] Speaker 2: I think during his life, during his life and his will,
[34:35] Speaker 2: I think he ended it out regularly.
[34:36] Speaker 3: I think the statistic was he took out two million
[34:39] Speaker 3: dollars with an m to live off of lived in
[34:41] Speaker 3: a small apartment flu coach, lived like a complete and
[34:44] Speaker 3: utter ordinary person, and gave ten billion dollars away.
[34:47] Speaker 4: That's the well known part of it.
[34:49] Speaker 3: The less well known part of his story that I
[34:50] Speaker 3: think is actually more important is that if you go
[34:52] Speaker 3: back to the eighties when he first made his fortune,
[34:55] Speaker 3: he lived like a billionaire. He had mansions and yachts
[34:59] Speaker 3: in a private in private jet, lived like the quintessential
[35:02] Speaker 3: billionaire would, and hated it ostensibly was not for him.
[35:06] Speaker 3: He has a quote that I love. He said, I
[35:08] Speaker 3: realized that I was happy when I was giving money away,
[35:10] Speaker 3: and I was not happy when I was not giving
[35:12] Speaker 3: money away. And so he chose, he rejected that and
[35:16] Speaker 3: chose to live this very frugal life that he had.
[35:18] Speaker 3: And what I love about that is not that he
[35:20] Speaker 3: lived frugally like you know there, you know he was.
[35:23] Speaker 2: He was.
[35:23] Speaker 3: He was kind of obsessive about it in a way
[35:25] Speaker 3: that I would not do it. I don't think he.
[35:26] Speaker 2: Will, like in front of the bus, you don't have
[35:27] Speaker 2: to sit in the back exactly giving away ten billion dollars. Sure,
[35:30] Speaker 2: But what I love about it is that he chose it.
[35:32] Speaker 3: He did not. He did not give any any care
[35:36] Speaker 3: in the world how society told him to live. The
[35:39] Speaker 3: money did not dictate his personality. He did it for himself.
[35:42] Speaker 3: He was He was a truly independent thinker. Could not
[35:44] Speaker 3: be more polar opposite than the Vanderbilts, who were absolutely
[35:47] Speaker 3: beholdened to what money in society told them that they
[35:50] Speaker 3: should be unbelievable.
[35:52] Speaker 2: Another one of my favorite quotes of yours. A big
[35:55] Speaker 2: takeaway from economic history is that the past wasn't as
[35:58] Speaker 2: good as you remember, the present isn't as bad as
[36:02] Speaker 2: you think, and the future will be better than you anticipate.
[36:06] Speaker 2: That's a fantastic quote because it's so true. We're stuck
[36:10] Speaker 2: here in the moment. History is roasty nostalgia, the future
[36:14] Speaker 2: is wishful thinking. Tell us how you put this quote together.
[36:18] Speaker 2: How'd you come together with this?
[36:19] Speaker 3: I think a lot about nostalgia. I'm a very nostalgic person,
[36:21] Speaker 3: so I think about it a lot in my own life.
[36:24] Speaker 3: And it tends to be true that we massively overestimate
[36:27] Speaker 3: how good the past was because we know how the
[36:29] Speaker 3: story ends. Yes, and so when we look back at
[36:31] Speaker 3: the nineteen nineties, we say, what an amazing period of
[36:34] Speaker 3: time because we know how everything played out. It all
[36:37] Speaker 3: worked out, but in the nineteen nineties we didn't know that.
[36:39] Speaker 3: We can wax about how great the nineteen fifties were.
[36:43] Speaker 3: Middle class America, prosperity mom and pop, white picket fences
[36:46] Speaker 3: got kind of thing.
[36:47] Speaker 4: They didn't know it back then.
[36:48] Speaker 3: What a lot of them were thinking about back then
[36:50] Speaker 3: was nuclear holocaust and the recession that see was seemingly
[36:53] Speaker 3: right around the corner. And so when you know how
[36:56] Speaker 3: the story ends, it makes it almost impossible to put
[36:58] Speaker 3: yourself in the shoes the past, including your own shoes
[37:01] Speaker 3: of the past, very difficult to do. So I think
[37:03] Speaker 3: we just habitually overestimate how good the past was. We
[37:07] Speaker 3: overestimate how bad the present is because we are just
[37:10] Speaker 3: completely bombarded with negative headlines about what's going on today.
[37:13] Speaker 3: If it bleeds, it leads right, and then extension of
[37:15] Speaker 3: that is you extrapolate today into the indefinite future, and
[37:19] Speaker 3: so we underestimate how good the future can be.
[37:22] Speaker 2: Really fascinating quote. Last writing process question, you discuss the
[37:31] Speaker 2: reverse obituary exercise and how can help people clarify their priorities.
[37:37] Speaker 2: Explain what a reverse obituary is.
[37:39] Speaker 3: It's this idea that it's kind of a grim exercise,
[37:41] Speaker 3: but I think it's very useful. Write down what you
[37:44] Speaker 3: want your obituary to say, what would be your dream
[37:47] Speaker 3: obituary to say? And everyone would be different, but for
[37:51] Speaker 3: me in that exercise, I would immediately go towards Morgan
[37:54] Speaker 3: was a good father, he was a good husband, he
[37:57] Speaker 3: was a good citizen. He helped his town, he helped
[37:59] Speaker 3: his friends. That's what I would want it to say,
[38:01] Speaker 3: and I think most people would be like close to that.
[38:04] Speaker 2: Not Morgan's bought a really cool red Ferrari.
[38:07] Speaker 3: You automatically know what is not in there, which is
[38:09] Speaker 3: your salary, the square footage of your house, the horsepower
[38:12] Speaker 3: of your car. It would be be completely absurd to
[38:14] Speaker 3: put that, and you would automatically say, what an absolutely
[38:17] Speaker 3: hollow life it is.
[38:19] Speaker 2: If that's what I.
[38:19] Speaker 3: Could put in my obituary was how much money I made,
[38:21] Speaker 3: how much money I saved? What a completely useless life?
[38:24] Speaker 3: And so I think automatically it pushes people to realizing
[38:27] Speaker 3: what they actually want out of life, what they actually
[38:29] Speaker 3: aspire to. And I think the gap between what you
[38:34] Speaker 3: are aspiring to today versus what you know intuitively you
[38:38] Speaker 3: want your obituary to say, which you want to accomplish
[38:40] Speaker 3: over the long term, can be huge. Maybe not for everybody,
[38:43] Speaker 3: maybybe there's some people that truly are living the life
[38:46] Speaker 3: of their reverse obituary. But I think it's a good
[38:48] Speaker 3: exercise to really clarify what you want out of life.
[38:52] Speaker 2: I lie, that wasn't the last question. I have so
[38:55] Speaker 2: many You're leading me down so many paths, starting with
[38:59] Speaker 2: nothing's worse than getting what you want but not what
[39:02] Speaker 2: you need.
[39:02] Speaker 3: And there's a lot of that, because if you are
[39:04] Speaker 3: fortunate enough to have a lot of money, earn a
[39:06] Speaker 3: lot of money, save a lot of money, sometimes that's
[39:09] Speaker 3: what that's what you want, that's that's exactly what you wanted,
[39:11] Speaker 3: that's what you set out to achieve, and you got it, congratulations.
[39:15] Speaker 3: But very often it's not what you need. What you
[39:17] Speaker 3: needed were relationships, health, mental, clarity, clear conscious that's what
[39:22] Speaker 3: you needed, and that's what would.
[39:24] Speaker 4: Actually feed your soul. And so I use the example
[39:26] Speaker 4: in the book.
[39:27] Speaker 3: You cited this earlier when we were hanging out among
[39:29] Speaker 3: the top ten richest men in the world. There are
[39:32] Speaker 3: accumulative fifteen divorces, and so they have everything that they
[39:36] Speaker 3: wanted in terms of money and lifestyle and possessions, and
[39:39] Speaker 3: a lot of them, without passing too much judgment, at
[39:43] Speaker 3: least at various times, did not have what they what
[39:45] Speaker 3: they needed, but they absolutely needed. And you can imagine
[39:48] Speaker 3: too that the ninety five year old millionaire who's in
[39:50] Speaker 3: very poor health. Everything he wants, not what he needs
[39:53] Speaker 3: kind of thing. But I think that that afflicts a
[39:54] Speaker 3: lot of people.
[39:55] Speaker 2: You know, I'm trying to remember who it was. Might
[39:57] Speaker 2: have been Noah Smith. We were involved in a group
[40:00] Speaker 2: discussion on wealth and happiness, and I think it was
[40:04] Speaker 2: Noah who said, you have to break the world into
[40:07] Speaker 2: two groups. And the group that's been divorced or is
[40:11] Speaker 2: in the middle of going through a divorce, the curve
[40:14] Speaker 2: of their happiness relative to their money looks totally different.
[40:18] Speaker 2: That it's such a miserable experience. Almost no amount of
[40:22] Speaker 2: money is going to change their headspace. And you wrote
[40:25] Speaker 2: something related to that, which is unhappy people, regardless of
[40:31] Speaker 2: how much wealth they have, are always going to be unhappy.
[40:34] Speaker 2: That has to be and happy people the more money
[40:38] Speaker 2: they get up into a certain point continues to bring
[40:42] Speaker 2: at least some degree of happiness and perhaps some contentment.
[40:46] Speaker 2: How true is that? Are some people just unhappy and
[40:49] Speaker 2: nothing is ever going to change that? Yeah?
[40:51] Speaker 4: I think that's true.
[40:51] Speaker 3: I mean, that's one of the most important little quirks
[40:53] Speaker 3: of the broader topic of the relationship between money and happiness.
[40:57] Speaker 3: Does earning more money make you happy. The asterisk there
[41:01] Speaker 3: is that if you start out as an unhappy, anxious,
[41:04] Speaker 3: depressed person, it's unlikely that earning money is going to
[41:07] Speaker 3: make you happier. It's not going to fill the hole
[41:09] Speaker 3: that you needed to fill. But if you start out
[41:11] Speaker 3: as a pretty happy, joyful, healthy, content person, earning more
[41:14] Speaker 3: money is leverage on who you already are. So like
[41:17] Speaker 3: in either direction, it's just leveraging who you already were.
[41:20] Speaker 4: To begin with.
[41:21] Speaker 3: And so yes, you can find lots of examples of
[41:23] Speaker 3: people who earned a lot of money and had an
[41:24] Speaker 3: amazing life. The money made them very happy. Most of
[41:27] Speaker 3: those people still would have been happy anyways if they
[41:29] Speaker 3: earned less. And we can find plenty of examples of
[41:32] Speaker 3: the cranky, old, crotchety billionaire, and they probably would have
[41:35] Speaker 3: been cranky and croachy. There's no amount of money or
[41:37] Speaker 3: success that would have changed that.
[41:39] Speaker 4: At its core.
[41:40] Speaker 2: That's really amazing, really the last question. So right now,
[41:44] Speaker 2: the Psychology of Money is on pace to hit ten
[41:47] Speaker 2: million copies, since this segment is on your writing process
[41:52] Speaker 2: as you were putting this together, and I remember speaking
[41:55] Speaker 2: with you as you were writing this and stitching together
[41:59] Speaker 2: a whole bunch of work. Did you have any idea, Hey,
[42:02] Speaker 2: I'm onto something, or did it just feel like I
[42:04] Speaker 2: got a deadline and I'm not going to make.
[42:07] Speaker 3: One hundred percent the ladder one hundred percent the ladder.
[42:10] Speaker 3: I think it's true that in many aspects of life
[42:12] Speaker 3: that ninety percent of virality is luck, or it's to
[42:16] Speaker 3: you what we're talk talking about.
[42:17] Speaker 2: Derek Tom repeated and hit makers and how random hit
[42:24] Speaker 2: records are, and the impressionists, and that book just goes
[42:28] Speaker 2: through a run of Hey but for this, this, and this,
[42:33] Speaker 2: none of these things would be well known and beloved.
[42:37] Speaker 2: Is it really ninety percent?
[42:38] Speaker 3: That's a wild number, and sometimes I'm making that up,
[42:40] Speaker 3: but that's what it feels like. I mean, the first
[42:41] Speaker 3: print run of Psychology Money was five thousand copies because
[42:44] Speaker 3: all the data that we had at the time was
[42:46] Speaker 3: that would be a big success. And if you know
[42:48] Speaker 3: anything about publishing, selling five thousand books is no small
[42:52] Speaker 3: feet right to get five thousand people to pull out
[42:54] Speaker 3: their credit cards and pay for your words. That's that's
[42:57] Speaker 3: that's a that's that's a success. Can I tell you
[43:00] Speaker 3: it's so funny you say that.
[43:03] Speaker 2: So I read the initial manuscript over the summer, and
[43:07] Speaker 2: then the hard copy shows up a couple of weeks ago,
[43:10] Speaker 2: and I went through it a second time. And as
[43:13] Speaker 2: I'm reading it, I'm sitting on a big, comfortable chair
[43:17] Speaker 2: in a well lit room with a lovely view out back,
[43:22] Speaker 2: and I'm thinking, you know, I don't really need a
[43:25] Speaker 2: lot of money to be happiness. I just need twenty
[43:27] Speaker 2: seven bucks to buy a book to read each week.
[43:30] Speaker 2: And what is more delightful than either lying in a
[43:33] Speaker 2: hammock or sitting in a comfy chair and taking two
[43:38] Speaker 2: thousand hours of somebody's intellectual output for twenty seven bucks.
[43:42] Speaker 2: Is there a bigger bargain in all of the world
[43:46] Speaker 2: than purchasing a well written book and a.
[43:49] Speaker 3: Thirty dollars hammock and a nice view and a warm
[43:52] Speaker 3: cup of coffee doesn't take that much.
[43:54] Speaker 2: A cup of tea when I'm reading absolutely coming up,
[43:58] Speaker 2: we continue our conversation with Morgan Housel, author of the
[44:02] Speaker 2: best selling book Psychology of Money, discussing how he writes books,
[44:07] Speaker 2: essays and columns. I'm Barry Results. You're listening to Master's
[44:12] Speaker 2: Business on Bloomberg Radio. I'm Barry Redults. You're listening to
[44:30] Speaker 2: Masters in Business on Bloomberg Radio. My extra special guest
[44:34] Speaker 2: is Morgan Housel. He is the best selling author of
[44:37] Speaker 2: Psychology of Money as well as Same as Ever his
[44:40] Speaker 2: latest book, The Art of Spending Money, Simple Choices for
[44:44] Speaker 2: a Richer Life. So the book shifts from your previous
[44:49] Speaker 2: writing how we think about money, how we make money,
[44:52] Speaker 2: to how we actually use it. What inspired that pivot, I.
[44:58] Speaker 3: Think a lot of it was if you asked me
[45:00] Speaker 3: five years ago what my investing philosophy is. I could
[45:03] Speaker 3: sit here for hours and tell you my philosophy is
[45:06] Speaker 3: of investing and why I do what I do, and
[45:09] Speaker 3: what the logic is behind it and how it fits
[45:10] Speaker 3: my person. I could talk to you all day about that,
[45:12] Speaker 3: and you and I have over the years talk about
[45:14] Speaker 3: that topic. But if you ask me five years ago,
[45:15] Speaker 3: what is my spending philosophy? How do my wife and
[45:18] Speaker 3: I think about how we spend our money? And I
[45:20] Speaker 3: couldn't really tell you anything. I hadn't really thought about it.
[45:23] Speaker 3: And as I look to there are literally tens of
[45:25] Speaker 3: thousands of books written about how to grow wealth. Tens
[45:28] Speaker 3: of thousands of books written about how to grow wealth,
[45:30] Speaker 3: virtually none written about what to.
[45:32] Speaker 2: Do with it.
[45:33] Speaker 3: It's one of the few areas in finance that has
[45:35] Speaker 3: not been trampled over yet. And I think part of
[45:38] Speaker 3: the reason why is because we intuitively assume that nothing
[45:40] Speaker 3: needs to be said about it, that yes, we know
[45:43] Speaker 3: how complex markets are, and so we can talk all
[45:46] Speaker 3: day about the intricacies of it. But when you talk
[45:48] Speaker 3: about like spending money, I think most people's intuition at
[45:50] Speaker 3: least is like, you just spend it, you just buy things,
[45:54] Speaker 3: and then it's better, So it's all good. And I think,
[45:56] Speaker 3: but if you observe people, rich people, poor people, everybody
[46:00] Speaker 3: in between, you realize it's not that simple. That there
[46:02] Speaker 3: are some people who have gotten a lot out of
[46:04] Speaker 3: spending money, have done it very well, have used it
[46:07] Speaker 3: as a tool to live a better life, and there's
[46:09] Speaker 3: probably an equal number of people who've done a very
[46:11] Speaker 3: poor job about it, for whom it controlled their personality
[46:14] Speaker 3: equal a lot more, maybe more, they were chasing a
[46:17] Speaker 3: phantom life that they could never keep up with. They
[46:20] Speaker 3: were constantly torture mentally tortured by keeping up with the Jones.
[46:24] Speaker 3: Is that kind of thing that's actually that's like, there's
[46:26] Speaker 3: such a deep psychology of it in there, and so
[46:29] Speaker 3: what the book does is I don't tell you how
[46:31] Speaker 3: to spend because I don't know you.
[46:33] Speaker 2: I don't say very subjective and very subjective. It's called
[46:36] Speaker 2: the art of spending money, not the science of spending money.
[46:39] Speaker 3: Right, and which also mirrors how I think about investing.
[46:42] Speaker 3: I don't think there's one right way to invest. People
[46:44] Speaker 3: have very different personalities, different risk tolerances and whatnot, and
[46:47] Speaker 3: it's the same for spending. But I think the psychology
[46:49] Speaker 3: of how people think about envy and contentment and happiness
[46:53] Speaker 3: and social aspiration that tends to be universal.
[46:55] Speaker 4: So that's what the book digs into.
[46:57] Speaker 2: I love the quote, and I don't remember who I'm
[47:00] Speaker 2: stealing this from. Nothing is more infuriating than seeing your
[47:04] Speaker 2: idiot brother in law get rich.
[47:06] Speaker 4: That was JP Morgan.
[47:07] Speaker 2: Unbelievable, right, absolutely true. There's a quote of yours that
[47:11] Speaker 2: I'm not going to steal. I'll give you credit. And
[47:14] Speaker 2: this speaks right to how subjective our experiences are. Your
[47:19] Speaker 2: personal experiences make up maybe point zero zero zero zero
[47:23] Speaker 2: zero zero zero one percent of what's happened in the world,
[47:28] Speaker 2: but perhaps eighty percent of how you think the world works.
[47:32] Speaker 2: I love that quote.
[47:33] Speaker 3: Explain it, you see it a lot in a lot
[47:35] Speaker 3: of fields, particularly politics. Of the life that you have lived,
[47:38] Speaker 3: the experiences you've had, the town that you live in,
[47:41] Speaker 3: the employment situation that you face during your life, makes
[47:44] Speaker 3: up your view of the world, your model of how
[47:47] Speaker 3: the world works, and therefore it influences what you think
[47:49] Speaker 3: should happen next. And virtually everybody does this, that what
[47:53] Speaker 3: you have nothing is more persuasive than what you've experienced firsthand.
[47:56] Speaker 3: And you can go out of your way to try
[47:58] Speaker 3: to understand other people and be empathy of what they've
[48:00] Speaker 3: been through, but nothing makes more sense to you than
[48:03] Speaker 3: what happened to you personally. And since we've all had
[48:06] Speaker 3: very vastly different lives, different generations, different countries, different parts
[48:10] Speaker 3: of the world, we all have different models of how
[48:13] Speaker 3: we think the world works. And it's you know, a
[48:17] Speaker 3: criticism of my first book, The Psychology Money, were people
[48:20] Speaker 3: who would write and say what you wrote might be
[48:23] Speaker 3: true for a college educated white American male, but it
[48:27] Speaker 3: is what you are, which is what I am guilty
[48:29] Speaker 3: of stories. But they would say in a way that
[48:31] Speaker 3: they were absolutely right to say, it's different for me
[48:34] Speaker 3: in this country, in this generation, whatever it may have been,
[48:36] Speaker 3: And I would say, yes, I totally get that. I
[48:38] Speaker 3: try to make the point in the book, but I'm
[48:40] Speaker 3: still beholden to the lens that I have lived, as
[48:43] Speaker 3: everybody is.
[48:44] Speaker 2: You know, the greatest thing you could do to get
[48:46] Speaker 2: out of your own little bubble is just travel across
[48:49] Speaker 2: the country by car, and suddenly you realize, oh, now
[48:53] Speaker 2: I understand. This is why farmers say what they say.
[48:56] Speaker 2: This is why people out in the Midwest vote the
[48:59] Speaker 2: way they do the country or the world. And it's
[49:04] Speaker 2: really a shame that less than fifty percent. I don't
[49:07] Speaker 2: know if the statistic is still true, less than fifty
[49:09] Speaker 2: percent of Americans have a passport used to be a
[49:11] Speaker 2: data point. I don't know if that's still correct. But
[49:15] Speaker 2: you get out in the rest of the world and
[49:17] Speaker 2: suddenly you say, oh, we're not the only ones who
[49:19] Speaker 2: know how to do this. Other countries do this specific
[49:23] Speaker 2: thing better than us. We need to be more open
[49:26] Speaker 2: minded about our narrow little experience.
[49:29] Speaker 4: And the better question.
[49:30] Speaker 3: If you see someone who thinks or acts very differently
[49:33] Speaker 3: than you, the question you want to ask is not
[49:35] Speaker 3: why do you believe that?
[49:37] Speaker 2: It's would I believe.
[49:38] Speaker 3: The same thing if I were living in your life
[49:40] Speaker 3: and almost all the time. The answer is yes, that
[49:43] Speaker 3: if you were the farmer, you would also vote the
[49:45] Speaker 3: same way that if you lived in Russia or China
[49:47] Speaker 3: or Venezuela, you would also think the same way as
[49:49] Speaker 3: they do. And so it's very easy to criticize them,
[49:53] Speaker 3: like you know, to criticize other people. Look at how
[49:55] Speaker 3: dumb they are making these decisions when you would do
[49:58] Speaker 3: the exact same thing if you were in there sit So.
[50:01] Speaker 2: Let's get focused on the book, because there are some
[50:03] Speaker 2: wonderful quotes and wonderful chapters in it. One of the
[50:06] Speaker 2: themes throughout is the trade off between wealth as a
[50:10] Speaker 2: source of freedom versus riches as a status symbol. Explain
[50:16] Speaker 2: the difference.
[50:17] Speaker 3: I make up these definitions, so this is just my
[50:20] Speaker 3: view of it, but I would define rich as you
[50:22] Speaker 3: have the income to buy the things you want. You
[50:25] Speaker 3: can make your mortgage payment, you can make your car
[50:27] Speaker 3: lease payment, whatever, you can purchase the lifestyle you want. Wealth,
[50:30] Speaker 3: I would say, is having some level of independence over
[50:34] Speaker 3: both financial independence in order the ability to work where
[50:37] Speaker 3: you want as often as you want, is take time
[50:40] Speaker 3: off when you need to, retire when you want to.
[50:42] Speaker 3: But also like intellectual independence, you don't have to pander
[50:45] Speaker 3: to other people. You don't have to pander to a
[50:47] Speaker 3: boss or to clients or two regulators. You have the
[50:50] Speaker 3: independence to be who you are and wake up every
[50:53] Speaker 3: morning and say I can do whatever I want today.
[50:55] Speaker 2: That's wealth.
[50:56] Speaker 3: And the interesting thing is there are people who make
[50:59] Speaker 3: millions of dollars a year who are rich and have
[51:01] Speaker 3: no wealth whatsoever. And there are people who make fifty
[51:04] Speaker 3: thousand dollars a year who are not rich and are
[51:06] Speaker 3: extremely wealthy and their ability. For example, I use the
[51:09] Speaker 3: example of my late grandmother in law on the book.
[51:12] Speaker 3: For thirty years she lived off of nothing but seventeen
[51:15] Speaker 3: or eighteen hundred dollars a month in social security. She
[51:17] Speaker 3: had no pension, no assets, no n she was broke,
[51:21] Speaker 3: seventeen hundred bucks a month soci security. Happiest woman you
[51:23] Speaker 3: ever mean in your life, happiest woman you will ever meet.
[51:26] Speaker 2: Ever.
[51:26] Speaker 3: She was perfectly content. She had no money, but she
[51:29] Speaker 3: didn't want any of it. She was totally happy and
[51:32] Speaker 3: content working in her garden and going for walks and
[51:35] Speaker 3: like bird watching with her friends. It's all she wanted
[51:37] Speaker 3: to do. And so she had no financial wealth and
[51:40] Speaker 3: she was like off the charts. Psychological wealth. She had
[51:44] Speaker 3: total control over her expectations. Part of it was she
[51:46] Speaker 3: was a child of the Great Depression, and like that.
[51:48] Speaker 3: I'm sure that had an impact on it. Back to
[51:50] Speaker 3: you know, we're just mirrors of our past experiences. But
[51:53] Speaker 3: you and I know people who are extremely wealthy on
[51:56] Speaker 3: paper who are the opposite. They might be billionaires, they
[51:59] Speaker 3: have financial wealth, and they have no psychological wealth. And
[52:02] Speaker 3: unlike my late grandmother in law, she they wake up
[52:04] Speaker 3: every morning being like it's not enough.
[52:06] Speaker 4: I need more, I need more, I need more.
[52:08] Speaker 3: So the difference between financial wealth and psychological wealth is
[52:11] Speaker 3: a big part of it.
[52:12] Speaker 2: The most valuable financial asset is not needing to impress anyone.
[52:17] Speaker 2: The ability to not need to prove yourself to strangers
[52:21] Speaker 2: is priceless. I heard this how much of our bad
[52:26] Speaker 2: spending behavior is just simple, simple primate status seeking within
[52:33] Speaker 2: the tribe.
[52:34] Speaker 4: I think a tremendous amount of it. Man, you don't need.
[52:36] Speaker 3: To be to look very far to see that. I
[52:39] Speaker 3: heard this great quote from the comedian Jimmy Carr recently.
[52:42] Speaker 3: He said, in your twenties, most people worry about what
[52:44] Speaker 3: other people think of them. In your thirties, you say,
[52:47] Speaker 3: I don't care what anybody thinks of me, And in
[52:49] Speaker 3: your forties you finally realize the truth, which is that
[52:51] Speaker 3: nobody was thinking about you all a lot.
[52:54] Speaker 4: And it's such a.
[52:55] Speaker 3: Wonderful It's such a wonderful quote the idea that nobody
[52:58] Speaker 3: is thinking about you as much as you are, and
[53:00] Speaker 3: nobody cares about your house, your clothes, your jewelry, nobody
[53:03] Speaker 3: cares about it as much as you do.
[53:05] Speaker 2: They're busy worrying about themselves.
[53:07] Speaker 3: I think that realization, at least for me, was so
[53:10] Speaker 3: liberating to be like, look, why am I trying to
[53:12] Speaker 3: peacock for strangers if they're not even paying attention. What
[53:15] Speaker 3: I want to do is use money as a tool
[53:18] Speaker 3: to help the things and lever the things that actually
[53:20] Speaker 3: make me happy, which is time with my kids, health, independence,
[53:25] Speaker 3: Like those things are great. But to the extent that
[53:27] Speaker 3: I'm just using it to try to gain the attention
[53:30] Speaker 3: of strangers who are too wrapped up in their own
[53:33] Speaker 3: heads to even pay attention to me, then that was
[53:36] Speaker 3: That was a very freeing and liberating moment.
[53:38] Speaker 2: The spotlight bias is fascinating because we're all the lead
[53:42] Speaker 2: characters in our own story, but in everybody else's story. We're,
[53:46] Speaker 2: you know, walking on actors extras just in the background.
[53:50] Speaker 3: Yeah, I mean I remember seeing this study of they
[53:52] Speaker 3: would take somebody and put them in like an ugly sweater,
[53:56] Speaker 3: and then they would send them into a party and
[53:58] Speaker 3: then they would you know, the person would mingle around
[54:01] Speaker 3: the party in this hideous sweater, and then they would
[54:03] Speaker 3: ask everybody else at the party, did you notice the
[54:06] Speaker 3: woman in the ugly sweater?
[54:07] Speaker 4: And everyone's like, no, no, no, didn't pay anytime.
[54:09] Speaker 2: I have a pimple over here that I've been thinking
[54:11] Speaker 2: about the whole time.
[54:12] Speaker 3: But if you asked the woman who was wearing the
[54:14] Speaker 3: ugly sweater the test subject, how many people notice? She
[54:17] Speaker 3: basically says everybody. We always overestimate the extent that other
[54:20] Speaker 3: people are thinking of us.
[54:21] Speaker 2: Huh, that's amazing. Let's talk about time. Money's greatest intrinsic value,
[54:27] Speaker 2: and this can't be overstated. You wrote is its ability
[54:30] Speaker 2: to give you control over your time. So we know
[54:33] Speaker 2: that's very true when it comes to earning money and
[54:36] Speaker 2: investing money. Is it true when it comes to spending.
[54:41] Speaker 4: I've been a big saver for my whole career. I
[54:43] Speaker 4: know you have as well.
[54:44] Speaker 3: You know I live blow, I mean save and invest
[54:46] Speaker 3: the majority of what I make, and I've never viewed
[54:49] Speaker 3: it as saving money or delayed gratification. I think I
[54:52] Speaker 3: always viewed it as purchasing independence and I get a
[54:55] Speaker 3: benefit out of that right now today. And I think that,
[54:59] Speaker 3: like very simple reframing of it is important. If you
[55:02] Speaker 3: view it as saving money, idle money, delayed gratification, it
[55:05] Speaker 3: feels like a burden.
[55:06] Speaker 2: It feels like work, and.
[55:07] Speaker 3: It feels like, yes, I have this wealth, but I
[55:09] Speaker 3: need to go deploy it like quickly. I think if
[55:12] Speaker 3: you view it as every dollar that I save is
[55:14] Speaker 3: a piece of my future that I own, and I
[55:17] Speaker 3: get benefit out of that right now. I get benefit
[55:20] Speaker 3: out of knowing that I'm independent today, it's not delayed.
[55:23] Speaker 3: That's been an important shift in thinking for me that
[55:27] Speaker 3: all I want out of money is to be independent.
[55:29] Speaker 3: I just want to be able to wake up every
[55:31] Speaker 3: day and say I can do whatever I want today,
[55:33] Speaker 3: even if most days I wake up and say I
[55:35] Speaker 3: want to work today.
[55:36] Speaker 4: I want to be productive.
[55:37] Speaker 3: It's my choice, and I can do it on my
[55:40] Speaker 3: terms with the people who I like, and quit when
[55:43] Speaker 3: I want to do what I want to. That is
[55:44] Speaker 3: more valuable than any material possession you can have.
[55:47] Speaker 2: I really didn't start spending money until my fifties. Like,
[55:52] Speaker 2: I was a worker saver for most of my life,
[55:55] Speaker 2: and it was only you know once. I never had
[55:58] Speaker 2: a midlife crisis. But you start to realize, and certainly
[56:02] Speaker 2: the pandemic, I think very much made everybody realize, Hey,
[56:06] Speaker 2: life is short and you never know when your number
[56:09] Speaker 2: comes up? So what am I waiting for? I think
[56:12] Speaker 2: there was a lot of that going on. Have you
[56:15] Speaker 2: made that pivot? Have you? Like? Because I know I
[56:18] Speaker 2: recall when you were in DC and you were looking
[56:20] Speaker 2: for houses back on the West Coast. I remember you
[56:24] Speaker 2: wrestling with do I really want to buy a big house?
[56:27] Speaker 2: How many kids we can have? How has that spending
[56:31] Speaker 2: decision felt? How has yours personal spending change?
[56:34] Speaker 3: My wife and I have loosened up over the years.
[56:37] Speaker 3: Very You and I have known each other for fifteen years,
[56:39] Speaker 3: and we've been We've spent a lot of time personally
[56:42] Speaker 3: together talking about our own lives and whatnot.
[56:43] Speaker 4: And you've known and.
[56:44] Speaker 3: I think you've probably given me playful grief about how
[56:47] Speaker 3: cheap I used to be. It's always been a thing
[56:49] Speaker 3: I've always been, or I was for a long time,
[56:52] Speaker 3: very cheap, but my wife and I were totally content,
[56:54] Speaker 3: and it always kind of not bothered me. But I've
[56:57] Speaker 3: always found it interesting that people would give me so
[56:59] Speaker 3: much reef about how little I spent when the truth was,
[57:02] Speaker 3: like we were, we were living a great life. We're
[57:04] Speaker 3: at we're thrilled with what we did, and we've loosened up.
[57:07] Speaker 3: We spend considerably more money now than we did five
[57:10] Speaker 3: or ten years ago, but it's always just been on
[57:13] Speaker 3: the framework of independence, because the truth was, ten years ago,
[57:16] Speaker 3: I bought anything I wanted.
[57:17] Speaker 4: It just wasn't that much, just didn't want that much.
[57:20] Speaker 3: And today we buy anything we want, and it's just
[57:23] Speaker 3: marginally a little bit more because we have kids and
[57:25] Speaker 3: we've we've found new things that bring us joy and whatnot.
[57:28] Speaker 3: And so it's always been I always feel like we've
[57:30] Speaker 3: been in control over it, even when we are very frugal,
[57:32] Speaker 3: or today when we've loosened up a little bit, it's
[57:34] Speaker 3: always been our choice, not pushed or forced about by
[57:39] Speaker 3: social forces and society and marketing.
[57:41] Speaker 2: You know, it's funny, my wife is the conservative spender.
[57:46] Speaker 2: I'm I'm the value conscious spendthrift now, so I will
[57:50] Speaker 2: buy stuff, but I have to feel like I'm getting
[57:54] Speaker 2: value for money. All the junk I've bought over the years, watches, cars, houses, whatever,
[57:59] Speaker 2: every thing I own, I could sell for more than
[58:01] Speaker 2: I paid, because I feel like like I can't imagine
[58:06] Speaker 2: walking into a dealership and saying to the manager of
[58:11] Speaker 2: the Ferrari Ferrari of Long Island, I'll take that five
[58:16] Speaker 2: hundred dollars. It's unconscionable to me.
[58:19] Speaker 3: It's never too late for a midlife crisis, though you
[58:20] Speaker 3: can still figure it out.
[58:22] Speaker 2: You know, it's not so much a midlife crisis as
[58:26] Speaker 2: it's been a post pandemic. Life is short. What are
[58:29] Speaker 2: you waiting for? And in the office, we are constantly
[58:33] Speaker 2: telling clients true story. I get a call from a
[58:36] Speaker 2: client wants to buy a Ferrari, wants to buy a
[58:39] Speaker 2: sail boat, and someone says, oh, Barry's boater and he's
[58:42] Speaker 2: a car guy. I talked to him and the answer
[58:45] Speaker 2: I told him is, you've never been a sailer. Why
[58:47] Speaker 2: are you going to spend two million dollars on a
[58:50] Speaker 2: fifty foot sailboat that a needs a crew and b
[58:53] Speaker 2: you'll use twice and sell for a half a million
[58:56] Speaker 2: dollar depreciation. But by the way, this guy can buy
[58:59] Speaker 2: a month for the rest of his life and still
[59:01] Speaker 2: leave a nice estate to his kids. Go buy the Ferrari,
[59:05] Speaker 2: and not only by the Ferrari. Take the kids to
[59:08] Speaker 2: the Ferrari High Performance Driving class, which the dirty secret
[59:13] Speaker 2: about all these racing schools are effectively defensive driving courses.
[59:18] Speaker 2: In drag, it's all about staying within your skill set,
[59:22] Speaker 2: staying within the parameters what the car can do. You
[59:25] Speaker 2: become a better safer driver, even though it's about epets,
[59:28] Speaker 2: turns and high high speed driving. And he did He
[59:33] Speaker 2: did that. He bought the Ferrari, loves it, took the
[59:35] Speaker 2: fam to the course, everybody had a great time with
[59:39] Speaker 2: the boat, sold it a year later, took a big hit.
[59:42] Speaker 2: I'm not allowed to mention the boat anymore so, but.
[59:46] Speaker 3: I think I think you could easily imagine a client
[59:48] Speaker 3: that was the opposite that they're like. Sailing has always
[59:51] Speaker 3: been my dream, change my life, absolutely, and and they
[59:55] Speaker 3: loved it. And they also bought a Ferrari, and a
[59:56] Speaker 3: week later said why did I do this?
[59:58] Speaker 2: It really depends on who you are. The joke about
[1:00:01] Speaker 2: boaters is every boater's favorite boat is their second to last,
[1:00:05] Speaker 2: because they only always go one step too far. Now, no, no,
[1:00:08] Speaker 2: the forty foot was plenty. I don't need a giant whatever.
[1:00:12] Speaker 2: But that's very much a case. So let's bring this
[1:00:16] Speaker 2: back to the book and spending. Talk about the connection
[1:00:21] Speaker 2: between money and happiness and what is spending for contentment mean?
[1:00:27] Speaker 2: How does happiness and contentment differ.
[1:00:29] Speaker 3: I think one of the issues with money and happiness
[1:00:32] Speaker 3: is that we chase the wrong emotion. We chase happiness,
[1:00:34] Speaker 3: and it seems very well intentioned. Of course, I want
[1:00:37] Speaker 3: to be happier. You want to be happier, that's great.
[1:00:39] Speaker 3: The problem is that happiness is always a fleeting emotion.
[1:00:42] Speaker 3: People are rarely happy for more than a couple minutes
[1:00:44] Speaker 3: at a time. I think it's very similar to humor,
[1:00:47] Speaker 3: where if I told you the funniest joke you've ever heard,
[1:00:49] Speaker 3: you laugh for a couple of minutes.
[1:00:51] Speaker 2: A couple seconds, you don't last at the next you don't.
[1:00:53] Speaker 3: Last for ten years, laugh for ten years, and just
[1:00:55] Speaker 3: doesn't work that way.
[1:00:56] Speaker 2: It's always fleeting.
[1:00:57] Speaker 3: So I think when you daydream about the new house,
[1:01:00] Speaker 3: the new car, the boat, when you daydream about how
[1:01:03] Speaker 3: great that will feel, buy and large, what you are
[1:01:06] Speaker 3: imagining is being content with those things. You imagine yourself
[1:01:09] Speaker 3: in the future house, sitting in the living room, and
[1:01:12] Speaker 3: what you actually imagine is yourself being saying I'm good,
[1:01:15] Speaker 3: I'm totally I don't need anything bigger. This is what
[1:01:17] Speaker 3: That's what feels good, the like picturing and imagining contentment
[1:01:22] Speaker 3: feels amazing. And I think that's what people should aspire to,
[1:01:24] Speaker 3: not necessarily happiness by contentment. And I think that's always
[1:01:28] Speaker 3: a goal, because you're not truly independent if you're not
[1:01:31] Speaker 3: fully content.
[1:01:32] Speaker 2: You know. That's to me, that's the value of buying
[1:01:35] Speaker 2: a lottery ticket for two bucks. Isn't the one in
[1:01:38] Speaker 2: a billion chance that you're going to win one hundred
[1:01:40] Speaker 2: million dollars. It's the twenty minutes you get to sit
[1:01:43] Speaker 2: around joking about what you would do with one hundred
[1:01:45] Speaker 2: million dollars. That's fun.
[1:01:47] Speaker 4: Yeah, of course.
[1:01:48] Speaker 2: I remember having an argument with my sister we were kids.
[1:01:52] Speaker 2: What do you mean you wouldn't buy me a car?
[1:01:54] Speaker 2: All right, maybe I'd buy everybody a car? What about this?
[1:01:57] Speaker 2: What about buying a half? And it was we were
[1:01:59] Speaker 2: having this hilarious debate. No one want anything was the
[1:02:03] Speaker 2: dollar lottery ticket? So that's always fascinating. I love the
[1:02:08] Speaker 2: story that Cal Richards tells. For people who don't know
[1:02:11] Speaker 2: who call Richard is. He's the sketch guy does these
[1:02:14] Speaker 2: wonderful little diagrams. Had a New York Times calm for
[1:02:17] Speaker 2: a long time, and he tells a story of being
[1:02:20] Speaker 2: big biker, loves cross country biking. There was a bike
[1:02:24] Speaker 2: he was jonesing for six thousand dollars for this really
[1:02:28] Speaker 2: high end, ultra lightweight titanium bank bike, and he couldn't
[1:02:33] Speaker 2: bring himself to pull the trigger. And his wife says,
[1:02:36] Speaker 2: you bike four times a week, go buy it. And
[1:02:39] Speaker 2: he said a year later, it's the best purchase he
[1:02:41] Speaker 2: ever made. He goes out with friends, he has these
[1:02:44] Speaker 2: memories from it. It's just been wonderful. How do you
[1:02:47] Speaker 2: distinguish between the purchases that are going to bring you
[1:02:52] Speaker 2: joy and the purchases that are just empty, unsatisfying babbles.
[1:02:57] Speaker 3: I think you kind of hit the nail on the
[1:02:59] Speaker 3: head there when you said Carl buying the bike, it
[1:03:01] Speaker 3: was great because of the experience, because he goes out
[1:03:03] Speaker 3: with his friends and he creates all these memories with
[1:03:05] Speaker 3: and like that's what made him happy, not necessarily the bike.
[1:03:08] Speaker 3: It was what the bike allowed him to do. I
[1:03:09] Speaker 3: think it's similar for homes, where, well, buying a big
[1:03:12] Speaker 3: mansion make you happier, The answer might be yes, if
[1:03:15] Speaker 3: it makes it easier to have your friends over and
[1:03:17] Speaker 3: have your If.
[1:03:18] Speaker 2: You tell in the book about people who have houses
[1:03:22] Speaker 2: that feel like hotels are so large needs a staff
[1:03:26] Speaker 2: of four hundred to run, nobody's happy in those houses.
[1:03:29] Speaker 3: Right, And you can compare that to someone who lives
[1:03:30] Speaker 3: in a fifteen hundred square for the house but has
[1:03:33] Speaker 3: their friends over every Friday for a barbecue and they
[1:03:35] Speaker 3: stay up till one in the morning, laughing with each other.
[1:03:37] Speaker 2: That's a better life. That's a way better.
[1:03:38] Speaker 3: So it's not what the possessions can do, it's how
[1:03:41] Speaker 3: can they or what the possessions are. It's how they
[1:03:44] Speaker 3: can serve as a conduit into things that make you
[1:03:46] Speaker 3: actually happier. And for everyone those things exist. It's like
[1:03:49] Speaker 3: maybe buying a bigger house will make you happier, and
[1:03:52] Speaker 3: buying a cool car. If you're spending time with your
[1:03:53] Speaker 3: friends and you're going you're taking your kids to track
[1:03:56] Speaker 3: races and one doilege you're talking about, maybe that doesn't
[1:03:58] Speaker 3: make you happierually not a direct thing, because you can
[1:04:01] Speaker 3: easily imagine buying the mansion but having no friends, having
[1:04:04] Speaker 3: no family, and you're sitting there alone, and then you're
[1:04:07] Speaker 3: wondering why you feel unfulfilled, why you dreamed for years
[1:04:10] Speaker 3: of having this house, and now you're sitting in it
[1:04:12] Speaker 3: and you're like, I don't feel anything. It's because the
[1:04:15] Speaker 3: only situation which it would actually make you happier and
[1:04:18] Speaker 3: more content is what it would serve as a lubricant
[1:04:21] Speaker 3: for for bringing other people over that actually make you happy.
[1:04:23] Speaker 2: Quick car story that I think you'll appreciate. So one
[1:04:28] Speaker 2: of my projects was taking a three hundred thousand kilometer
[1:04:33] Speaker 2: eighty seven nineteen eighty seven nine to eleven coup that
[1:04:37] Speaker 2: had been an accident single owner for like twenty five years.
[1:04:42] Speaker 2: The body and the interior was in really good shape,
[1:04:44] Speaker 2: but it needed a lot of mechanical work. And I
[1:04:49] Speaker 2: took this long story short, converted it to an ev
[1:04:52] Speaker 2: It's long process, and I was kind of horrified at
[1:04:56] Speaker 2: all the Porsche purists who would just torched me for
[1:05:01] Speaker 2: doing such blasphemy. And a friend owns a detailing and
[1:05:06] Speaker 2: wrap shop and he hosts a big cars and coffee
[1:05:09] Speaker 2: every year, and he's like, hey, can you bring the EV?
[1:05:13] Speaker 2: I don't really know if I want to do that.
[1:05:15] Speaker 2: I'm going to get, you know, really beaten up over it.
[1:05:19] Speaker 2: He's like, trust me, it's a great crowd, that all right.
[1:05:22] Speaker 2: So and this car ended up costing me everything said
[1:05:26] Speaker 2: and done, about what it would have cost me to
[1:05:28] Speaker 2: walk into a Porsche dealership and say give me that
[1:05:31] Speaker 2: nine to eleven brand new and not in Probably the
[1:05:34] Speaker 2: same is true where you live where I live. Nine
[1:05:36] Speaker 2: elevens or cameras, they're everywhere, right, they're they're valuable, but
[1:05:41] Speaker 2: they're not rare, whereas Ferraris are rare and valuable. So
[1:05:44] Speaker 2: I bring the all right, I'll bring the EV and
[1:05:47] Speaker 2: I bring it to this event. It's about fifty sixty
[1:05:49] Speaker 2: seventy cars, and I'm right across the way from a
[1:05:52] Speaker 2: guy with the brand new half a million dollar Ferrari cylindery.
[1:05:57] Speaker 2: It's its new front engine, twelve cylinder. And so I
[1:06:01] Speaker 2: opened the front where there's a big battery pack, and
[1:06:03] Speaker 2: I opened the back where the engine's supposed to be,
[1:06:05] Speaker 2: and there's another battery pack with a Tesla motor on
[1:06:08] Speaker 2: the bottom. And I just braced myself for people coming
[1:06:13] Speaker 2: up and just like, oh, you destroyed this car, and
[1:06:17] Speaker 2: I was so wrong. People were fascinated, and by the
[1:06:20] Speaker 2: end of the day I felt bad for the guy
[1:06:22] Speaker 2: with the Ferrari. Yes he was there by himself, no
[1:06:24] Speaker 2: one was talking to him. I had a steady stream
[1:06:26] Speaker 2: of people saying, Wow, this is really cool, this is different,
[1:06:30] Speaker 2: this is a one off. It doesn't hurt that the
[1:06:32] Speaker 2: license played is EV nine to eleven. It's the first
[1:06:35] Speaker 2: one in New York. That was genuinely surprising to me
[1:06:39] Speaker 2: that it wasn't something that you could just buy. It
[1:06:43] Speaker 2: was something that created a little required a little thought,
[1:06:46] Speaker 2: a little creativity.
[1:06:47] Speaker 4: And foster relationship.
[1:06:48] Speaker 2: And I, oh god, people giving me cards, Hey I
[1:06:52] Speaker 2: want to I'm hosting this event. Can you bring this
[1:06:54] Speaker 2: car like it was? And every time I bring that
[1:06:57] Speaker 2: car anywhere, people lose their minds.
[1:06:59] Speaker 4: That's great.
[1:07:00] Speaker 2: So it's so fascinating. And it wasn't a function of
[1:07:03] Speaker 2: spending a boatload of money. It was a function of, Hey,
[1:07:06] Speaker 2: this is kind of a kind of different you have
[1:07:10] Speaker 2: every time I spend money. You're in the back of
[1:07:13] Speaker 2: my head. I want to go through a couple more
[1:07:18] Speaker 2: quotes before we get to our favorite questions. You cite
[1:07:25] Speaker 2: the University of Pennsylvania professor Killingsworth. If you're already an
[1:07:30] Speaker 2: unhappy person, it's unlikely that more money will ever fix
[1:07:34] Speaker 2: your problem.
[1:07:35] Speaker 4: Yes, it could leverage who you are in either direction.
[1:07:37] Speaker 2: Either direction. And then our friend Michael Batnik said something,
[1:07:42] Speaker 2: I hope I'm not talking out a class. Wealth seems
[1:07:46] Speaker 2: like a burden and an obligation. The people I know
[1:07:49] Speaker 2: have become wealthy, other people treat them differently. They always
[1:07:52] Speaker 2: have their hands out at a certain point, it doesn't
[1:07:55] Speaker 2: seem like it's worth it.
[1:07:57] Speaker 3: I think everyone can make it worth it, but it's
[1:07:59] Speaker 3: easy for it to spiral out of control and to
[1:08:01] Speaker 3: let it change the what other people think of you,
[1:08:05] Speaker 3: your family, your friends, the rest of society. And so
[1:08:08] Speaker 3: it's very easy to think that when we are spending
[1:08:10] Speaker 3: a lot of money, we are gaining people's admiration. But
[1:08:12] Speaker 3: you have to be careful because often what you are,
[1:08:14] Speaker 3: the emotion you are fostering, is envy. The other people
[1:08:16] Speaker 3: envy you, and that's and that it's it's hard in
[1:08:19] Speaker 3: real time.
[1:08:19] Speaker 4: To know which is which.
[1:08:20] Speaker 3: You're like, oh, they're looking at me, they're looking at me,
[1:08:22] Speaker 3: they're talking about and they're talking about me like they
[1:08:23] Speaker 3: admire me, I don't know.
[1:08:24] Speaker 4: They envy you, which means they hate you.
[1:08:27] Speaker 2: So that's a good point to bring up. Fomo. Fomo
[1:08:29] Speaker 2: is recklessness massed as ambition.
[1:08:32] Speaker 3: Explain, it's outsourcing your critical thinking to other people. And
[1:08:36] Speaker 3: those other people got rich quickly, which of course is
[1:08:38] Speaker 3: going to is going to inhibit their own ability to
[1:08:41] Speaker 3: think rationally and cleanly about it. It's a very dangerous thing.
[1:08:44] Speaker 2: Let's let's talk about wealth as everything you don't see,
[1:08:48] Speaker 2: which is effectively double entry accounting. You see the asset,
[1:08:52] Speaker 2: you don't see the liability.
[1:08:54] Speaker 3: Yeah, I can see your house. I can see your car,
[1:08:55] Speaker 3: you're not your your your ev nine to eleven car.
[1:08:58] Speaker 3: I can't see your bank account. I can't see your
[1:09:00] Speaker 3: brokerage statement. I can't see how much you save for retirement.
[1:09:03] Speaker 3: Like all wealth is actually hidden because wealth is the
[1:09:05] Speaker 3: money that you didn't spend.
[1:09:06] Speaker 4: It's the cars you didn't buy.
[1:09:08] Speaker 3: The vacations you didn't take, it's money that you've saved
[1:09:10] Speaker 3: for independence, and it's completely invisible. And it's pretty pernicious
[1:09:13] Speaker 3: because if you think, like for physical health, you can
[1:09:17] Speaker 3: see physical health. This person's overweight, this person's ripped there
[1:09:20] Speaker 3: you can see it, and so it's easy to find
[1:09:22] Speaker 3: a role model. I want to look more like that person,
[1:09:24] Speaker 3: less like this person. For money, it's very difficult to
[1:09:27] Speaker 3: do because you can't see wealth.
[1:09:28] Speaker 2: You don't see the hit debt, you don't see the leverage.
[1:09:30] Speaker 4: You don't see the leverage, you don't see what went
[1:09:31] Speaker 4: into it.
[1:09:32] Speaker 3: And of course there are a lot of people who
[1:09:33] Speaker 3: appear to be wealthy who are absolutely broke, and the
[1:09:36] Speaker 3: reverse is true. So it's very difficult to know who
[1:09:39] Speaker 3: to follow, who to take your cues from.
[1:09:41] Speaker 2: I love this quote, and this is your words. If
[1:09:45] Speaker 2: you're a good dad, a good husband, an honest person,
[1:09:48] Speaker 2: a hard worker, a helpful friend, and a funny joke teller,
[1:09:53] Speaker 2: you've probably earned ninety eight percent of the respect and
[1:09:56] Speaker 2: admiration that I'm capable of giving you. If you happen
[1:09:59] Speaker 2: to be rich and successful, I might bump that up
[1:10:02] Speaker 2: to ninety nine percent, but.
[1:10:03] Speaker 4: Let's not pretend it makes much difference.
[1:10:04] Speaker 3: I told that to a good friend of mine, who
[1:10:06] Speaker 3: is one of my favorite people in the entire world.
[1:10:08] Speaker 3: Earns a modest but not substantial income, and it bothers him,
[1:10:12] Speaker 3: and I told him that one day I was like, look,
[1:10:14] Speaker 3: if you have these, like if you're a good husband,
[1:10:15] Speaker 3: a good father, if you're fun to hang out with
[1:10:17] Speaker 3: and you're funny, that's about all the respect and admiration
[1:10:21] Speaker 3: I can give you. And if you happen to make
[1:10:22] Speaker 3: more money, like okay, kind of cool. Maybe that brings
[1:10:25] Speaker 3: some more stories and whatnot, but it doesn't make much difference.
[1:10:27] Speaker 3: I like you for this stuff, not the stuff that
[1:10:29] Speaker 3: you're actually chasing.
[1:10:30] Speaker 2: Last question before we get to our favorites. What do
[1:10:33] Speaker 2: you think people don't know about the art of spending
[1:10:36] Speaker 2: money but should what's the most important aspect of this
[1:10:40] Speaker 2: that just seems to slip by unnotice, Probably that.
[1:10:43] Speaker 3: There's no formula for it, that what works for you
[1:10:45] Speaker 3: might not work for me, and vice versa. And a
[1:10:47] Speaker 3: lot of people get into trouble with finance, whether it's investing, earning,
[1:10:50] Speaker 3: or saving or spending, when they follow the advice that
[1:10:53] Speaker 3: is good for one person but not for them. And
[1:10:55] Speaker 3: it's a very vicious trap to get into because because
[1:10:58] Speaker 3: it worked for somebody else, you're like, oh, I just
[1:11:00] Speaker 3: that's what I should do. It worked for them, it
[1:11:03] Speaker 3: surely should work for me. You have to spend more
[1:11:05] Speaker 3: time kind of looking in the mirror, so to speak,
[1:11:07] Speaker 3: and figuring out who you are, what you want.
[1:11:09] Speaker 2: Really really great insight. All right, let's jump to our
[1:11:12] Speaker 2: favorite questions, starting with who were your early mentors who
[1:11:16] Speaker 2: helped shape your career.
[1:11:19] Speaker 3: I would be lying, and I'm not blowing smoke if
[1:11:21] Speaker 3: I said you and josh I think an equal amounts.
[1:11:25] Speaker 2: You're gonna have to explain that You and josh this.
[1:11:27] Speaker 3: Would have been twenty thirteen, were some of the first
[1:11:31] Speaker 3: people who recognized me outside of the Motley Fool who
[1:11:34] Speaker 3: broke me out of that now I was, I felt
[1:11:37] Speaker 3: good and was comfortable within the zone of the Motley
[1:11:39] Speaker 3: Fool for their members or whatnot.
[1:11:40] Speaker 4: I had a pretty big audience. There's pretty good.
[1:11:42] Speaker 3: You and Joshu were the first ones outside of the
[1:11:44] Speaker 3: Moley Fool who recognized me.
[1:11:46] Speaker 4: And I feel like that was unbelievable.
[1:11:48] Speaker 3: And I think about this a lot of like, when
[1:11:49] Speaker 3: you see somebody like that, particularly if they're young, anything
[1:11:53] Speaker 3: you can say or do to help them is enormous.
[1:11:57] Speaker 3: It might be the smallest thing in the world to
[1:11:59] Speaker 3: DM them or reach out and say, hey, you're doing
[1:12:02] Speaker 3: some good work.
[1:12:02] Speaker 4: I'm really proud of me. I like your stuff.
[1:12:04] Speaker 3: It takes you nothing and it can completely change their life.
[1:12:07] Speaker 2: Nothing brings me more joy than hearing people say things like.
[1:12:10] Speaker 4: That, because well, that's the only nice thing I'll say
[1:12:12] Speaker 4: about you today.
[1:12:13] Speaker 2: Because the thing that's so amazing is these are throwaway
[1:12:17] Speaker 2: lines that you say, Hey, really like that column, really
[1:12:20] Speaker 2: like that piece. I thought it was that to you.
[1:12:23] Speaker 2: It's three seconds and of little bit of honesty and
[1:12:26] Speaker 2: someone says this was really meaningful that I kind of
[1:12:31] Speaker 2: felt like I was lost or I kind of felt
[1:12:33] Speaker 2: like no one was appreciating me, and just hearing that
[1:12:36] Speaker 2: somebody recognized that I had some skill and talent was huge.
[1:12:41] Speaker 2: You forget what it was like when you were in
[1:12:42] Speaker 2: your twenties and thirties, grinding away unnoticed for decade or so. Right,
[1:12:47] Speaker 2: how long were you with the Motley Fool Book was?
[1:12:49] Speaker 3: I was there for ten years before I left, But
[1:12:50] Speaker 3: I remember when you and Josh did that for me.
[1:12:52] Speaker 3: It was twenty thirteen. That's how you know. Vividly I
[1:12:55] Speaker 3: remember it, and I remember how much the confidence boost
[1:12:57] Speaker 3: that it gave me to keep going was enormous.
[1:13:00] Speaker 2: Well, that's a lovely view to say, I really really
[1:13:01] Speaker 2: appreciate it. Both of us have an eye for talent.
[1:13:05] Speaker 2: I could, I could, I could say that, and you
[1:13:08] Speaker 2: have fulfilled all of our highest aspirations for you. Let's
[1:13:15] Speaker 2: talk about books. What are you reading right now? What
[1:13:18] Speaker 2: are some of your favorites? And I know when you
[1:13:21] Speaker 2: finished writing a book, like the whole process, you're not
[1:13:25] Speaker 2: reading anything other than research. Yeah, so talk about your favorites.
[1:13:30] Speaker 3: I'm reading a book right now by by by Stefan Zwig,
[1:13:34] Speaker 3: who was a journalist in the in the twentieth century,
[1:13:37] Speaker 3: and he wrote his memoirs, which is basically about how
[1:13:39] Speaker 3: the world went from he was living in Austria and
[1:13:42] Speaker 3: in Vienna, and how the world went from before World
[1:13:45] Speaker 3: War One, Europe was so civilized and so great, and
[1:13:49] Speaker 3: everyone viewed that that would discontinue indefinitely, that it was
[1:13:53] Speaker 3: so organized and so polite and so which, of course
[1:13:56] Speaker 3: is somewhat of an exaggeration, but that was the view
[1:13:58] Speaker 3: that he had. And then he's about how the world changed,
[1:14:01] Speaker 3: both with World War One and then especially with World
[1:14:02] Speaker 3: War Two, and how everything happened that nobody thought would
[1:14:07] Speaker 3: have been possible before it happened, and how culturally and
[1:14:10] Speaker 3: socially that world changed.
[1:14:11] Speaker 4: That's that's some reading right now.
[1:14:12] Speaker 2: That, thank goodness, something like that would never happen here
[1:14:14] Speaker 2: exactly right. Let's talk about streaming. What are you listening
[1:14:18] Speaker 2: or watching these days? Be it? I don't want you.
[1:14:21] Speaker 2: This is in another solicitation for a compliment. But what
[1:14:24] Speaker 2: are you watching? What are you listening?
[1:14:26] Speaker 3: I finished Succession not too long ago, one of the
[1:14:29] Speaker 3: one of the best I've ever seen. One no, no, no,
[1:14:31] Speaker 3: And I didn't take that at all, one of the
[1:14:33] Speaker 3: best I've ever seen.
[1:14:34] Speaker 2: I love every second episode. I don't like any of
[1:14:37] Speaker 2: these people.
[1:14:37] Speaker 4: Oh but that's the point.
[1:14:39] Speaker 3: I loved every second of success Now and then I
[1:14:41] Speaker 3: just finished Your Friends and Neighbors.
[1:14:43] Speaker 4: That really good.
[1:14:44] Speaker 2: I believably good. I can't wait for you. Ham just
[1:14:46] Speaker 2: gets better and better, so good. And if when that
[1:14:50] Speaker 2: first came out, he hosted Center Live, and I want
[1:14:52] Speaker 2: to say, the best episode all season, so good.
[1:14:55] Speaker 4: I can't, I can't. I can't wait for the second
[1:14:57] Speaker 4: season of that.
[1:14:57] Speaker 2: There's a lot of stat spending earning. I mean, it
[1:15:03] Speaker 2: fits right into the sweet spot of what you write, and.
[1:15:05] Speaker 4: Just such good writing character development.
[1:15:07] Speaker 2: There our final two questions, what sort of advice would
[1:15:10] Speaker 2: you give an recent college grad who was interested in
[1:15:13] Speaker 2: the career and either investing or writing about finance, Read as.
[1:15:17] Speaker 3: Much as you possibly can. It's very boring advice, but
[1:15:19] Speaker 3: that's everyone. No one has more confidence in their ability
[1:15:24] Speaker 3: or where they think the world is going than a
[1:15:26] Speaker 3: twenty one year old man who's never read a book
[1:15:28] Speaker 3: about history of investing. Nobody thinks they've figured it out
[1:15:31] Speaker 3: more than that. And spend as much time as you
[1:15:34] Speaker 3: possibly can, reading as much as you can from the
[1:15:36] Speaker 3: diverse field of topics that you can.
[1:15:40] Speaker 2: And our final question, what do you know about the
[1:15:42] Speaker 2: world of investing, writing, earning, and spending today that would
[1:15:49] Speaker 2: have been useful back in the financial crisis when you
[1:15:52] Speaker 2: were first launching your career.
[1:15:53] Speaker 3: We mentioned diverse things there, like writing and spending, and
[1:15:55] Speaker 3: I actually think I have very similar philosophies on both,
[1:15:58] Speaker 3: which is when I write, I want to write for
[1:16:00] Speaker 3: an audience of one, which is me. I just want
[1:16:02] Speaker 3: to write things that I think are interesting, telling stories
[1:16:05] Speaker 3: that I think are funny and unique, and if other
[1:16:07] Speaker 3: people like them too, that's wonderful. But I know that
[1:16:10] Speaker 3: I can't please everybody, and that's just an inevil part
[1:16:13] Speaker 3: of it. So if I'm gonna pander to one person,
[1:16:16] Speaker 3: it might as well be myself. And I think that's
[1:16:18] Speaker 3: how I spend money too. I spend to please myself
[1:16:21] Speaker 3: and my family, and I don't care if other people
[1:16:23] Speaker 3: do it differently. I don't care if other people think
[1:16:25] Speaker 3: it's the wrong way to do it. It's what works for me.
[1:16:27] Speaker 3: And again, if I'm going to pander to anyone in
[1:16:30] Speaker 3: how I spend it might as well be myself.
[1:16:32] Speaker 2: Well, thank you Morgan for coming in. This is everything
[1:16:36] Speaker 2: I was expecting it to be. We have been speaking
[1:16:39] Speaker 2: to Morgan Housel, author of The Psychology of Money, same
[1:16:43] Speaker 2: Innette as Ever and the new book The Art of Spending,
[1:16:47] Speaker 2: Simple Choices for a Richer Life. If you enjoy this conversation,
[1:16:51] Speaker 2: check out any of the five hundred and eighty one
[1:16:53] Speaker 2: podcasts we've done over the past eleven years. You can
[1:16:57] Speaker 2: find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find
[1:17:01] Speaker 2: your podcasts, And check out my new book How Not
[1:17:05] Speaker 2: to Invest The ideas, numbers and behavior that destroy wealth
[1:17:09] Speaker 2: and How to avoid them at your favorite bookstore. I
[1:17:13] Speaker 2: would be remiss if I did not thank the Cracked
[1:17:14] Speaker 2: team that helps put these conversations together each week. Alexis
[1:17:19] Speaker 2: Noriega is my video producer. Anna Luke is my podcast producer.
[1:17:23] Speaker 2: Sage Bauman is the head of podcasts here at Bloomberg.
[1:17:26] Speaker 2: Sean Russo is my researcher. I'm Barry Ritolts. You've been
[1:17:31] Speaker 2: listening to Masters in Business on Bloomberg Radio.

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