Morgan Housel on the Culture of Finance (Podcast)

one of them. I think you'll find this conversation absolutely fascinating. So, with no further ado, my conversation with writer Morgan Housel. This is Master's in Business with Barry Riddholts on Bloomberg Radio. I have an extra special guest today. His name is Morgan Housel and he is a partner at Collaborative Funds. But he is also a financial writer who began at the Motley Fool and has published in such August institutions

as The Wall Street Journal, USA Today and elsewhere. He is the two time winner of the Best in Business Award from the Society of American Business Editors and Writers, and a winner of The New York Times, Sydney Award. His new book, The Psychology of Money, Timeless Lessons on Wealth, greed, and Happiness, came out September eight. Morgan Household, Welcome to Bloomberg. Thank you for having me Berry. It's good to be here. I have been looking for an excuse to bring you

on the show, um forever. Full disclosure, we know each other uh quite a while. But in preparing for this conversation, I discovered all sorts of funny little things about you that I never knew. Starting with your undergraduate career, tell us what you originally studied and what you thought you would be when you got out of college. So I have a interesting education background, and it might might might

help to start a little bit before college. I grew up as a ski racer in Lake Tahoe, UM, and because ski racing was taking so much time, myself and a lot of my peers were doing it effectively bypassed high school infectively. Did not go to high school. We did an independent study program where you uh, we did virtually nothing. I mean we, I honestly don't have many many memories of doing anything. For my high school education.

We got a piece of paper that said diploma on it when we were sixteen years old, and that was it. So when I started college, I started when I was twenty years old. I had no high school education. I had an eighth grade education. At that point, I had to start at the very bottom. I started at a local community college with the most remedial courses that they offered, trying to catch up. And I was always interested in finance,

even during this period I had. I had no education, I had no idea what I was doing or or what I was looking at. But I was always interested in the stock market. I was interested in investing, and it just kind of occurred to me. I don't know where I learned this or how I figured it out, but I got this idea that investment bankers were the smartest, most richest, most powerful, glamorous people in the history of the universe. So I wanted to be an investment banker.

This was the mid two thousand's. Every slightly ambitious young man in finance and economics wanted to be an investment banker. That was what I wanted to do, and I had no backup plan. When I went to college. I was going to be an investment banker. That was it. I was going to move to Manhattan. I was gonna work in mergers and acquisitions, and the story no plan B. And then I got an investment banking internship in my

junior year of college. And I walked in on day one and literally literally within minutes, I thought to myself, get me the hell out of here. This is the worst environment, the worst culture I've ever seen in my life. It was just such a hazing environment of it wasn't about learning or doing good work. It was fit in your desk and shut up so we can yell at you. And if you're lucky, you'll go home at three am and you will enjoy yet and you will have a

smile on your face. And like, I'm I'm all for hard work, I'm all for grinding, but this was just such a hazing It was not hard work for any sake other than, uh, you know that the the senior bankers had to do it themselves, so they wanted to put the torture back on you. So I got to that. I got out of that really quickly. I think I lasted maybe like a month or something like that. Uh. And then I needed to do something else in finance.

I didn't know what it was gonna be. But that's how I kind of serendipitously ended up as a financial writer. That was not part of the plan whatsoever. But I had a friend who was a writer at the Motley Fool at the time, and he said, Hey, you're interested in investing. They're hiring writers. Why don't you apply? And I did apply, thinking, Ay, they're not going to hire me, but be if they do, maybe I'll stay there for uh three months or six months before I find another

real finance job. And long story short, I ended up staying as Molly Full for almost ten years and fell in love with writing. You know, I've always been interested in investing and finance. I was then, I still am now, but you know, falling in love with with writing was something that I did not see comment. It was not part of the plan, but it became what I do

for a living now. So that was, you know, fourteen years ago, and here we are, so let me let me roll back pre Motley Full but post investment banking. Wasn't there a stint doing some private equity somewhere in the middle, But yeah, yeah there was. So this was kind of summer two thousand seven, I guess, and I interned at at a private equity firm in Los Angeles, and I love private equity. It was great. It was a good mix between business and finance versus just one

side or the other. Whereas investment banking is just finance, you're not you're not working with the companies that you're investing it, you're just doing deals. So private equity was great. And then uh, summer of two thousand seven, as you know all too well, everything started blowing up. Financial markets

started seizing up, credit markets seized up. So if you are a private equity firm that was borrowing tons of money to do these deals, things got really dicey, and you know the look that was not two thou eight by then, this was still two thousand seven, but it was already clear enough that things were breaking and our portfolio companies were struggling that I was told, hey, there's not going to be a full time position for you.

Uh you know when when When when you graduate? So that was when I needed to do something else and found my way kind of by pure accident, into writing. And the ironic thing that knowing you're writing all these views to me, it's funny. Investment banking, private equity, venture capital. It's so opposite the way you describe how you invest and how you think the average investors should put their

money at risk, sort of sort of contradictory. You keep it simple and say more or less just be a passive long term index or or am I oversimplifying that? I think it's a little oversimplified, because the only the only edit I would make to that is, look, I am I dollar cost average into index funds. I plan on holding them for decades if I if I'm so lucky to be able to do that. But that's what works for me, and I'm not going to pretend like that's the best advice for everyone. So I'm not a

passive zella at all. I I admire a lot of active managers. I'm not against active management, And in the slightest I'm not just saying that to cover my basis. I'm really not. This works for me because I and in my life value this simplicity and the hands off approach of our finances. Why I love being able to wrap my head around our entire net worth in the

simplest ways possible. And I think that active management is something where it should be the case that no more than ten percent of people who set out to do it will be successful in it. But of course, like that should be the case, people will always make make the you know what, will point out active managers underperforming the benchmarks. Well they should of course, it's the case. You shouldn't have a situation where everyone who tries to beat the market can and and they're rewarded, you know,

with with with kingly thumbs when they do it. That not be the case. It should be the case where it's like, you know, you know what, what percentage of college basketball players go to the NBA A really small percentage, but that's how it should be. The NBA is the big leagues where the you know, the stakes are high and the pay is huge. That's how it should be. So when I just think about that from an active management perspective, it's not that I'm against it. It's just

a risk reward trade off. And I know with really high confidence that if I and my wife can dollar cost average into index funds, do it consistently and hold them for thirty or forty or maybe even fifty years, we will achieve every financial goal that we possibly have. And more so, when I look at that, and then I look at the odds of outperforming actively, you know, something like ten percent something like that. I just kind of I just kind of shrug my shoulders and say,

why why why would I need to do that? If I can do this simple thing, Uh, that's going to achieve all of my goals and I put no effort into it. The odds of like catastrophic failure are very low. The odds of you know, the fund losing end of its value or becoming a fraud, whatever it is. The odds of of the the the the manager retiring or being accused of fraud, whatever it is, that's all out the window. It's just like all those other risks are gone and and versus acts investing where I would have

a chance of doing worse. Uh not because managers are bad at what they do, or you know, it's hard to pick it's hard to pick good managers. But that's just how the active management space should work. When I look at that trade off, it just doesn't make a lot of sense for us, but I completely understand why it would for other people. I you know, there are a lot of people for whom like they cannot wake up in the morning and look at the mirror, and

look in the mirror. If they were dollar costs averaging in the index months, it's just against their personality. They would feel bad about it. They want to do it, they would feel like they're leaving opportunity on the table. And I just don't have that in the slightest. I want to spend all my day reading and researching and thinking about writing and doing the writing. Uh so, so

that that's where that's where I leave it. So active investing is not like lake will begun where all of the children are above average, sort of a mathematical cork um. Doesn't work that way. I mean you would. It's it's like, for years, I was one of the people who was pointing at these statistics of mutual fund managers underperforming the benchmarks, you know, and saying this is ridiculous. They're all, you know,

this is this is the indication of their failure. And it took me a while to come around to the idea of like, no, that's how it should be. That's, of course how it should be. If neal back to like the college basketball analogy, no one looks at the fact that or whatever it is, of college basketball players don't go to the NBA. No one looks at that and says, college basketball is a joke. You know, you know, they're they're they're they're all failures. What are they doing?

They have no idea what they're doing. It's a scamp. No one would say that. Everyone would just know, like, hey, look, the jump from uh from good to really good is going to have a big calling effect. There's like not not everyone's gonna make it. That's how it should be. So it's it's hard in the musical fund space and the hedge fund space whatever it is to accept that though, that that's just the reality of it, that you know, maybe ten percent of you will outperform over the long run.

But when you expect, when you accept that that's how it should be, it should not be any different than that. In adjust world, that's exactly what you would expect. Then it just becomes, you know, less less cynical. When you're looking at it. You look at it and say, yeah, performed last year. But that's how it should be. So it doesn't bother me anymore. It makes perfect sense to me. You have been writing about finance for the better part of a decade. At what point do you start to

run out of topics? Do you do you ever begin to feel like you're repeating yourself? Well, there's there's there's two ways to look at this, And first I would say you've been writing about finance for the better part of two decades, so you have insight on this as well. I know, I think there's there's there's two sides of this. One is um my belief and I'm pretty sure I stole this from Jason's wide. But there's only like a dozen financial topics worth writing about you can you can

kind of you know, guess what they are. Volatility is common is common, compounding is amazing, Fees hurt like, there's only there's only so many topics that you can write about. Unlike the core ideas. Uh so, yes, there there's a very limited number of things to write about. But the number of ways that you can express those ideas, the number of examples, the number of of different connections from other fields that you can tie back to investing, those

I think are endless. They are bottomless. You could do this forever. You could be a writer for a thousand years and never run out of examples. And for me, that really took off when I realized that investing is not the study of finance. It's the study of how people behave with money. And since it's the study of behavior, it has all of these other lessons from other fields, rules and laws from other fields, other industries, other practices

that apply to investing. So when you think of investing, is just how people think about greed and fear and opportunity and scarcity. Well, those things apply to a lot of other fields. They apply to politics, they applied to military history, they applied to biology, they applied to you know, all these like all these other fields that will that

are important. Like if you can take the lessons from those fields and apply them to investing or write about how people dealt with those topics in different fields and what we can learn about that as investors, then I think the well of ideas is endless. Um So it's it's it's definitely the case that every week, I'm sure you can relate to this as well, Barry, that every week I kind of wake up and say, what am

I going to write about this week? I'm talking to feel like I'm running ow ideas, But you always figure it out. I mean that's the case for you as well. Right, yeah, I don't you know. I used to let me back up a little bit. So when I started writing, I was putting stuff up every day just as a habit,

just as a routine to become a better writer. And I actually had a conversation with Jason's wife, who you referenced earlier, about Hey, how do I transition to weekly columns that are a little more in depth and use a little more data and not just sort of I don't want to say superficial, but just daily becomes a little more news driven and weekly allows you some time to step back and think that that definitely was a transition. It wasn't easy going from daily to weekly. I still

post on the blog every day, but those are quick hits. Hey, take a look at this Take a look at this chart. See that it's not the same as a thousand word column where you're really going into depth. So that leads me to my next question, which is, tell us a little bit about your daily routine. How do you structure your day? When do you get to think, when do

you get to write? It's changed a lot over the years because when I was at the Motley Full, particularly early on at the Motley Fell I was on the volume game. I was writing three articles per day, which gives you, you know, literally minutes maybe an hour to think of an idea, do a little bit of research on it, write it and get it out. But that was that was tough, but that was also a great

way to learn how to write. I had no writing experience or background when I joined, so that was a good you know, just kind of thrown in the deep end and figured out. So my routine back then was very much just like almost like a daily panic, think of three things to write, get him out there. And also the articles weren't very good because I wasn't thinking about I didn't have time to think them through. You really picked up a following at the Motley Fool pretty

early in your career. There where was the transition from just cranking out a lot of Volume two, I'm gonna do something more thoughtful and in depth. It was it was actually I was speaking with him the other day. My old boss of the millyful of name is Brian Richards. He's he's still he's still one of my great friends.

Um he. I came to him one day and I said, hey, rather than writing three articles today, what if I were to slow down and write like three per week and they would be much more thoughtful and in depth and better researched. But the thing is the reason I'm not doing that is because I'm getting paid per article. So if I reduced my volume by I can't feed my family anymore. So I came down and said, what if I cut on this three a week, but you paid me the same, and he said, great, Yeah, absolutely, let's

do it. And the pitch to him was like, hey, my articles are gonna be better, They're gonna be much more in depth and thoughtful. So so we did that and it it worked. I feel I feel like that was the turning point for me, is when I the economics let me slow down and think things through, and you would be a little bit more in depth and thoughtful.

And that was when I really started going from you know, just sitting on my deck and just at my desk and cranking out whatever I could as fast as I could, to hey, let's let's read a book about this topic and then I'm going to go for a walk and think about it and think about how it applies to these other things that I read about, and call some of my friends and bounce the idea off of them and then do some other research, just a much more calmer,

thoughtful process. Um So that was when I started spending most of my day reading and going for walks, which is what I do now. That that that's when it started. So the actual writing that I do now and now I slowed down to one article per week something like that. So my week is reading and going for walks, which is where I do most of my quote unquote writing.

That's where all like the thinking, like piecing ideas together happens and speaking with friends on the phone who are in kind of you know, similar fields, have expertise about these things that I don't. That's the huge majority of day. There's not a lot of structure because I don't think there's there can be because good ideas creativity can't be forced.

They can't be scheduled. Like there's no like you can't just have like a calendar entry and say, Okay, at nine o'clock, I'm gonna do creative thinking and come up with an idea. It doesn't work that way. It's always just this kind of random things. Sometimes the ideas are really easy and Monday morning it just like pops in your head and you got it and your step for the week. Other times it's really just this, like you spend several days just kind of grinding through a bunch

of ideas, a lot of which don't work. A lot of us aren't very well thought out. Or you try to start writing an article and you quickly realize it's not it's not gonna work. So there's there's really not much structure other than just kind of um unstructured rambling thinking. And that's that's It's not an easy thing to do because most of the time it feels like you're not working.

And then so I feel like a lot of my time, even after doing this for fourteen years, I'm constantly hit with this idea of like, what did I get done today? I didn't do anything today. I've just been sitting. I've been sitting on the couch, you know, reading some reading some books, that listened to two podcasts. I didn't do anything productive today. And it's hard to accept that. No, that's that's the work. I mean, obviously, that's that's it's it's a great job. I'm fortunate to be able to

do that, but that is the work. It's just trying to piece together different ideas over time so that maybe once a week one of them sticks enough that you can write a thousand words about it and publish it. I can relate to that sensation of what did I accomplished today? And if you don't have anything on the page to show for it, or you've been in meetings and phone calls all day, it feels like, well I failed to produce something. Did I really get anything done?

I think what's so hard about that is that for most of of modern history, work was visible and physical. So your work was digging a ditch or pulling a lever at the factory, or you know, making goods in in a factory, or you worked on a farm. That's for most of our history, work was very physical. It was doing stuff with your hands, and it was visible. You could see, you could see what other people were doing, and you can see what you got done. And then now is you shift to the era where most jobs

are thought jobs. They are creative jobs where you're working with your head, and what really matters is not what you've what you've it's not your physical deliverables, it's the ideas that you came up with then work becomes something that just happens in your head. And most people, myself um do their best work when they're sitting on the couch or going for a walk, or doing something that looks nothing like work. Like I, I really don't do any good work, any good thinking from sitting up desk,

and I think that's true for most people. Are definitely not sitting in a meeting. That's true for most people too. I get my best ideas what I'm doing things that look absolutely nothing like work, which is easier when you work from home because you don't have a boss, you don't have a coworker who's who's watching you sitting on the couch and is judging you for it. But even still, even for yourself, it just doesn't feel like you're being productive,

even though that's when you do your best work. So last question about the business of writing, so to speak, who is your audience? Who are you writing for? I've always so Here's this is where I might differ for for from many writers is that most most writers will know who their audience is and they will try to write for them, and they'll say, oh, I'm writing towards for investors or financial advisors, and let's write for them.

I've always been been attracted to this idea of selfish writing, where I'm writing for myself, And what I mean by that is I only want to write things that I think are interesting that I would want to read myself, and then I just have to take a leap of faith that there are other people out there who will

want to read that too. And the reason I do that is because I think obviously people do their best work when they are most interested in it, when they when they themselves personally think something is interesting and they are learning about it as they go as they write. So that's all I ever try to think about for who my audience is. And I haven't done much research. I I have a hard time answering your questions. I

don't know who my audience is. I know, I mean, there are lots of them are financial advisors or fund managers, but I know there's a lot of non finance people that are in there. UM And hopefully if I find something personally interesting that and and and it's interesting enough for me that I want to go write about it, um, there will be other people who are who are interested in it as well. When I was working at the

Wall Street Journal. The task that they gave me was right and investing column every week that is relevant to a hedge fund manager, but is understandable and accessible to someone who has no financial background or training or even interest.

That was that was the challenge, the goal which pushed me to, you know, writing about finance and economics in a way that is I think, you know, that is hopefully totally jargon free and under and understandable without erasing the really important context, the nuance of finance and investing. So I think when you do that, it opens up your financial writing, your thoughts, and your ideas to a

much broader audience. Uh. You know, you know, lots of finance writers are just writing for cfps, and anyone else who is a not a CFP is not going to understand a word of what they're saying, that kind of thing. Whereas, whereas I think if you're writing it through the lens of behavior and history and just how people think about money, the psychology of money, then it just opens up the you know, the the net that you're casting out to your audience is much wider. I share your enthusiasm for

writing for an audience of one. People ask me who who's the podcast for, and my answer is always just me. It's people I want to sit down and have a conversation with. If anyone comes along, great, But these are folks that I'm interested in talking to. It's a podcast audience of one. And it sounds like you do the same thing with your writing. I think you and I have swapped Daniel Borsten's quote he's the former Librarian of Congress.

I write to figure out what I think. And besides, at that hour all the bars are closed is his uh his famous line, which I think is pretty pretty talent. The last question on this really is it sounds like your writing style and your voice have evolved over time. How long did it take for the voice that we know today as Morgan Housel to come about. I don't think it ever, and I think it's a constant evolution.

I'm sure that what I write ten years from now, if I'm still doing this, will sound very different from what I am today. I think everyone's writing is kind of shaped by who they who they read last, and what they read last. Of course that's the case like when whenever I write something that may maybe seems like

it's in a different voice. It's probably because I just read a book that I liked, that is that was written in a way that was really inspiring to me, and when I sit down and write, I'm kind of

have that voice still in my head. I think that the shift that I've that I've had over time, um is just using smaller words, shorter sentences, shorter paragraphs, because that's just that that, to me is the huge majority of what separates uh, good writing from average writing is just who is just who can say the most amount of stuff and the fewest words possible, That's who wins. And then so if if you look at the stuff I wrote ten years ago, it was just bigger words,

longer paragraphs. And if you look at from when I first started, it was the classic like let's use big words that people have to use a dictionary to look up to try to show people that I'm smart, which is like the worst absolute writing that exists. Um. So I think that that is just the that that's been the only common denominator over time. Is trying to simplify it. But I would say the actual voice is always evolving. And even if I go back and look at stuff

I wrote three years ago, not that long ago. Sometimes I read it and it seems like a different person. Um, it's just so, that's that's always changing over time. Interesting. Go pick up any Kurt Vonnegut novel which were written so long ago, and he absolutely writes so much information, so much detail, such wonderful storytelling with very simple words

and very simple sentences. That's always the common denominator if you look at like Earnest hending Way, or like any of the really famous historic authors, and you just ask what makes that good writing? Like, you know, that's good writing, but why is it good? Most of the time, I think if you really think about it, you will come down to simplicity. That it was just easy to read.

And most readers are have limited time. They don't have endless amounts of time to really struggle through a paragraph and stop and think, what what did that sentence mean? What is he saying? I have to go back and read it again. People don't want that. They want to just glance at their eyes over the page and quickly understand what you're saying, what your point is, so they can get back to their day. And the only way

to do that is to use simplicity, simple words. Short sentence says, but you have to do it in a way that doesn't remove any of the essence of what you're talking about. That's the challenge. Like anyone can write with short sentences and whatnot, But if you're doing that and you strip away the most important salient points of what you're talking about, and then you failed. You have to say the most amount of stuff in the fewer

sports possible, and both sides of that are important. Quite interesting. So let's talk a little bit about this book. I really enjoyed it. I read it on the beach. I plowed right through it. You use some wonderful stories to make really important points about finance and investing and just your relationship with money. How do you find some of these really wonderful stories you use as illustrative points. To me,

It's like, look, I am a financial writer. I mean I write about investing in the economy, but I never read finance books. I never read investing books. I rarely read anything online about investing. I just want to read from the cast the widest net that I can and read about behavior, how people think, and how people have dealt with greed and risk and scarcity, and try to learn from that in a way that's going to make me a better investor, make me a better investor writer.

So all of those stories, there's just that's those just came from years and years of just casual, unstructured reading and just poking around, but always with this idea in my head and always with this like this seed in my head of when when I'm reading and trying to

ask how does this apply to investing? I think if you're always asking that question, when you're reading about a broad variety of topics, you know there's there's stories in the book about meteorology and about medicine and about dentistry that all tie back to investing. So if you just have the widest net possible that you can read and always asking yourself how does it apply to my field? Then I think those stories are are pretty easy to find. And I think that applies to a lot of fields

that's not just investing. I think if you are a doctor, or an engineer, or a politician, whatever it is, if you're reading about a broad variety of fields and topics, you will and you're and you're always how does this apply to what I do? That doesn't I think a great way to learn. And if you are only learning about your field through the narrow lens of your field, and if you're an engineer, you're only reading about engineering.

If you're a historian, you're only reading history. Like that's that's a narrow lens to learn about any field, particularly fields that has to do with just trying to answer the question how do people think, how do people behave? What are people likely to do next? That's all that investing is. But that's what a lot of fields are as well, So that's that's why I take that approach.

I also just think it's more interesting. Most investing books and economics books are really boring and and maybe people who work in the field will find them worthwhile to read, but definitely not like you average lay person on the street. They're not going to pick up, you know, most economic textbooks and say, oh, this is really fascinating. So you have to be able to present it in a way that is both interesting and also much more intuitive to grasp.

If you just lay out a bunch of formulas and charts, most people are just gonna say this isn't for me. I don't have enough mental bandwidth to get through this right now. But if you can tell a story about something that happened in World War Two, then a much than a higher degree of people are going to say, oh, this is interesting. I'm kind of fascinating to this now. It humanizes what is typically just an analytical fieldman investing in a way that I think makes it more accessible

for people. This is a story that you come back to in your columns and in the book about the Right Brothers and how completely ground breaking, game changing Kittie Hawk was in the first powered human flight, and you describe how no one really had any clue what took place for years and years and years discussed that a little bit. To me, it's always been fascinating because the airplane is, in my view, and I don't think this is a bold statement, the airplane was the most important

invention of the twentieth century because it impacted everything. It impacted everything from retail transportation to business commerce delivery to military. You know, it transformed geopolitics that started world wars and ended world wars every like the airplane changed everything. Um

and when it came about. When the Rip Brothers first flew in uh in Kitty Hawk, virtually no one paid any attention to it, and not just not just in the first few days after they're flying in which virtually no newspaper covered it, but even after they went back to Dayton, Ohio, where they're from. They left Kitty Hawk, went back to Dayton, and and Dayton, they were flying all over people's homes, people's businesses that were flying their

airplane all throughout town. And even then people weren't paying much attention to it. And even when people started paying attention to the fact that, hey, these kids made the thing, that's that's pretty cool. Maybe it's not just a toy. Maybe this is not just some like crazy wild science experiment. Maybe there's usefulness to this. What most people thought about the airplane, even when they started paying attention to it, was just for military purposes. They thought, can we strap

a machine gun onto this? Can we drop bombs out of this? It wasn't for years and not it's not in decades that people really saw the usefulness of what the airplane would be, which was transporting people around the world, transporting goods and packages and and inventory around the world. That took a long time for people to figure out that that would be the usefulness of the airplane. So when you think about that, just that, just that idea,

and then you say, how does that apply to today? Like, what inventions are out there today we're not paying any attention to, or we are paying attention to, but we just have no clue about what their ultimate usefulness will be because you know it's going to be the case. It was. It was especially true for the Right Brothers, but it was also true when the car first came about, when computers first came out, when the Internet first came about, etcetera, etcetera, etcetera.

I feel like it takes at least a decade for most big inventions to get notice, to get recognized, which then makes you asking, what have we done in the last ten years that no one's paying attention to? Quite interesting. Tell me a little bit about your writing process for putting this book together. What was your routine, Like, how long did it take you and what did you learn

in the process of writing a book. So the genesis of the book what came from a long form post that I wrote in called the Psychology of Money, which I set out at the time. I I kind of shamelessly ripped off the title from Charlie Munger's speech The Psychology of Human Misjudgment, which I loved. It's it's a wonderful speech that I think he gave in I think, and he lays out in that speech, I don't know, fifteen or so of these just ideas about how human

thinking goes astray, and it's a really good speech. He uses examples from other fields. So I kind of looked at that and said, how can I do the same, but for you know, just within the confines of money. He's talking about just how humans misbehave in general, how can I how can I narrow that down to money?

And then so for the post, I took the twenty or so biggest ideas that I thought I had come across in my decade of writing about this, and I just tried to plain them as as as succinctly as I could in the post um and and it did really well. Over a million people read the post. It's the biggest article that I've ever published. And it was also the case that when I was writing it, I was trying to keep it short because it's a blog post. It still ended up in nine thousand words, which is

a very long blog post. But there were still a lot more to say, there were more stories to tell, there were other different points that I wanted to talk about, So I knew when I wrote it like this could be a book. Which is always a challenge with a book is that there are a lot of good ideas out there and a lot of great points, a lot of great articles. But turning something into you know, from a one thousand word blog post into a sixty thousand

word book is a big jump. And most books out there, the reason that people don't finish them, most readers don't finish the books they start is because most topics do not take sixty words to explain. You can get your point across in two thousand words chapter one and two. You get the point and then you can move on. So I've always struggled with what is my book the first book going to be because it's hard to find a topic in which you can really devote that much

space too. But but this I realized that I could um most particularly because rather than one idea that I spent two hundred fifty pages rambling about, it's nineteen different ideas,

completely separate ideas. So you can start the book if you want to do on chapter seventeen and it would make sense to you, Like all the ideas have a common theme that are tied together, but each one of these ideas lives independently, which is really important for me with writing the book, because that was going to reduce the odds that I was just going to ramble on and on and on and on about one topic. So

that was important in terms of the actual writing and research. Like, most of these ideas that I that I that I that I read about in the book are things that I have come across and some of which I've written about um during the years. So it was not like I started with a blank flate with this book. I kind of had a lot of these ideas kind of sitting out there already, and then I I gave myself one year to write it, uh, and a for nine months,

I think I had written one chapter. Uh. It was just so easy to procrastinate and delay and delay and delay. And then my wife one day, uh, you know, kind of gave me some craft about how little progress I was making. She kind of expressed that she was disappointed and how little progress I was making. So then I cleared everything off my calendar and I wrote the majority of the book over about a four week period last December. Wow,

that's amazing, you know. Your your comment about how everything is too long reminds me Our mutual friend, Michael Batnick, is fond of saying most books should be magazine articles, most magazine articles should be blog posts, and most blog posts should be tweets. That philosophy abuse a lot of your columns because you often write stuff that I finished reading and I'm like, wow, that was like four words. He could have gone on for triple that length. You

purposely choose to keep things short, don't you. I mean, very few readers, whether it's a book, a book, or an article, whatever it is, very few readers get to the bottom and say, I wish it was longer, I wish there were more words. I wish there were more supporting examples. What's the idea? But most of the time what people want out of an article or a book is just a single idea or maybe a handful of ideas. They don't need to just grind through four hundred pages

of examples. If you can leave them when they finished the book, when they close it, whether they make it to the end or not. If they can close the book and put it back on their shelves with two or three ideas in their head. The ideas can be summarized in a sentence or two. That is, I think most that's what you know. That's that's a success in my view. So I try to keep it short, uh, for for that reason, just trying to it's just out

of respect for the readers. There's actually one chapter in the book that is four hundred words long, which is one page. And when I turned it in, the publisher said, is this the mistake? Are you? Did you for? Is? Did you lose the rest of it? Like what happened here? And I said, no, that's all I wanted. That's that's all I have to say on this topic. And they said, okay, well, you know the book. Do you want to add some more to it? Do you want to add another example,

you know, some more examples. I said, no, that's all I have to say on that topic. And out of respect for the readers, I'm going to leave it at that. I'm not gonna waste anyone else's time and ramble on about this just because it's a book and I want to, you know, have it be thicker. Uh you know, So so it feels better we can charge more for it. To me, it's just it's like the Golden rule. I'm a big reader, uh, and I I don't like when other writers waste my time with words that don't need

to be there. So that's what I tried to do for the book. Is just I wanted to go deeper than a normal blog post, because that's what you can do in a book. You can tell longer stories. But I also just wanted to respect people's time and make my point as quickly as I can and then get out of their way so they can move on to the next chapter or go about the rest of their day. All right, last two questions about the book. The first one, what did you learn about the process of writing a book?

Would you do it the same way back in loaded the way you did in the last four weeks, or would you go out about differently. If you're advising an new writer who wants to put out a book, what would you tell them is a productive approach to cranking out two and fifty or so pages. I would never recommend that anyone try to write, you know, you know, like like three quarters of a book in four weeks, Like I did it was. It was miserable, it was terrible,

But I'm I I needed that deadline. When I gave myself a year to write it, it it was so easy to procrastinate and put it off and put it off. We we we My My wife gave birth to a daughter right an in the middle of that period, which made it easier for me to say, oh, I'm going to take a month off. One month turn to two months, two months turn to three months. So for me, like I needed that pressure to just to just sit down

and crank it out. I don't I would definitely not recommend it, but I have a feeling that when I write book number two, something similar is going to happen. Um that's that's always when it's the case. But it actually it actually worked out fairly well too, because during those four weeks when I was doing absolutely nothing but writing this book, barely even talking to my family, I was just writing, like five in the morning until when

I went to bed. It was since it was constantly on my mind and it was so fresh in my head and there was nothing else in my head but book, it made it easier for me to focus on it, and since everything was still fresh, in my mind, Like when I was working on chapter seventeen, there were things that popped in my head about chapter three that I could go back and change because chapter three was still

fresh in my mind. Versus, if you're writing something over the course of a year, by the time you're you're reading in the last chapter, the things that you wrote in chapter two that was a year ago, you forgot about it. So just just having that much uh, focused on the book at one point actually worked out well for me. And you hinted at what's going to be my next question, which is when are we going to see the next book from you? The book A book

number two is is definitely happening. We have a deal with a publisher. Haven't made any public announcements yet. Um, you know, the the the the turnaround time on books is pretty long. It's about you know, a year and a half or two years from the time you start writing it to the time it's on the shelves. So that will come out is broader than investing. It's not a finance book, it's not an economics book. Um, but it's the book that I'm really excited about. I've kind

of written a little bit about it. In blog posts in the past, and this is gonna be This is another topic that even though I've written blog posts on it, I finally realized that I can write about that. I can write two d and fifty pages on this topic. So, uh, you know, still playing with the the final idea, but I have a broad idea in mind, but we're not talking about it publicly. But let's say two years from now, you and I will be on the podcast again talking

about it. All right, looking forward to it. So let's jump right into the big question. What are the big lessons that investors should have learned from I think there's there's two or three that come to mind, and all of these were things that we've known before. Is just just like slam them into our faces in a blunt force way and made them obvious. One is that the biggest risk that is out there is always what nobody is talking about, because what makes it risky is the

fact that nobody is talking about it. So all the things that people tend to worry about over the last ten years, is the FED going to raise interest rates? Uh, if Congress going to raise the debt failing, or we're gonna have the stimulus packages, trade wars, etcetera, etcetera. It's not that those things are not risky, it's just that they are well known. They're well publicized. We're talking about them all the time, so we can prepare for a

range of different outcomes. What really moves the needle over time are the things that just come out of the blue overnight that no one is talking about it. And since they're not talking about it, they're not prepared for it either in in actual terms in terms of their finances, their their cash obligations there, you know, their their ability to service the debt, and they're not prepared for it.

In psychological terms, it's just such a shock and and and people getting stuck into this, you know, this shell shock attitude of sitting there with their jaws in the floor when it happens. So that was definitely the case with when pandemics could have been seen coming. Like go Gates gave a ted talk in ten I think it was where he describes the risk of like exactly what

we're dealing with. It's not that we could not see these coming, it's just that the exact timing was completely unknown and for the majority of people other than epidemiologists and people like Bill Gates. I think we just assume that these kind of things like global pandemics, we're something that happened a hundred years ago, but that we have moved on from from in humanity, and then they were not going to be part of our lives, which makes it that much more scary what we're dealing with it.

So the general idea that the biggest risk is what no one is talking about, really like drives from the idea of of taking forecast and economic projections with a grain assault, because it's not that those things are going to be wrong or that they are not risk, it's that in any given year, I think this is true every single year, and definitely over any given decade, the biggest news story is something that was completely unforseeeable before

it happened. Whether it is COVID nineteen or September eleventh, or collapse of the Soviet Union JFK being assassinated, the Great Depression, whatever it is, the big US news story is always something that was unforseeable. That's one of the big ones. Uh. You know something else that's that's true is just the value of room for error in your finances, room for error in your budgets, room for error in

your valuation analysis. The number of companies that went from record sales, record health in February to bankrupt in March or April is astounding, and just like something like just kind of puts a spotlight into how fragile so many

businesses are, and how fragile so many investors are. How quickly things can change and when things go in a different direction, it only takes a couple of weeks or a couple of days, maybe a couple of months before things are broken and there's gonna be permanent damage, having room for error in your finances, Like just at the personal finance level, I think in general, not everyone, but in general most investors don't have enough cash in bonds

and that and that seems like a controversial statement when everything is going well and then march around will realize exactly why they have that. Cash and bonds is often associated with conservatism, like not wanting to take a lot of risk, not wanting to be, you know, be subject to a lot of risk, and I just don't think that's the case. What they do, what cash and bonds do is they allow the stocks that you do own to be left untouched, uninterrupted, so that they can compound

over time. The great quote from Charlie Monger is the first rule of compounding is to never interrupt it unnecessarily.

And when you think about it in those terms, then you realize that the cash and bonds that you do own, who cares that you're earning no return or a negative return these uh during these times, if once per decade, if that cash and bond and bonds can prevent you from being forced to sell stocks and in opportune time, they're going to earn all of their return and then sum those to me are the biggest takeaways from So that raises two questions I have to ask you about

your answer. I'll come back to the question of how you invest, but I want to stick with the idea of completely unforeseen black swan events or or unanticipated events. Here it is, it's the end of the summer of the headlines are talking about overvalued stock, about a tech bubble, about day traders? Are any of those things as important as the headlines make are those things we should be worried about? Or the mere fact that it's headline news suggests that it's less likely to be what causes the

next disruption. It's not that those things are are are not risky. Like if like could could testa stock moves of its value in the next month, of course, of course it could. We've seen that happen with other companies in the past. Of course it's possible. But if it were to happen, it would not be that surprising, particularly for people who don't own the stock, but even for those who do. Everyone has to know that that is a possibility. So when it happened, it's not that it's

not a risk. It's just that it would be easy. Particularly after it happened, we would say, of course that happened, that was foreseeable. But this has been happening for decades. So it's not that it's not a risk. It's just that it's it's somewhat foreseeable. Um, and so that's what that's what's uh, that's that's really what risk is. Like the idea that you and I can sit here right now and say Tesla might fall in the next month.

That is very different from the conversation if you and I were having in January or December and we were looking ahead saying, what are the biggest risk for the next year. No one would have said a global pandemic that's going to shut the global economy down and cause the worst economic crisis. It's the Great Depression. And by the way, during that period, Tesla stock is going to be up. No one would have seen that. No one would have said that. So the fact that it was

unforeseeable is what has made it risky quite interesting. And then the second question is you know, it's funny given your backgrounds UH investment banking to private equity. I find the way you personally invest what you describe in the chapter of the book surprisingly conservative, surprisingly risk averse. Your your career seems like you embrace risk, but what you actually do with your money is pretty you know, middle

of the road. Tell us about how you invest personally and how you budget and plan for your personal finances. So it's interesting that you bring that up because I don't feel like that's the case. I feel like I'm definitely an optimist. I feel like there's going to be a tremendous amount of economic growth throughout the rest of my life that I want to take advantage of and invest in and compound and benefit from. It's maybe just a difference in how people get there. So in our

personal finances, I read about this in the book. The last chapter is called Confessions, and I kind of just open up the kimono on my my wife's personal finances. There's no numbers in there, but just here's everything that we do with our with our money and how we invest is we're quite true. What we save a high portion of our income. We don't. We don't prevent ourselves from buying anything that we want. It's just that most of our needs or wants, our desires, you know, haven't

shifted that much over time. So as our incomes have grown, are spending hasn't. And therefore we save a higher percentage of our income. And then we dollar cost average into Vanguard named X funds, and that that's it. Like our our entire net worth is a house, a checking account, some and some Vanguard funds and some shares of Berkshire Hathaway that has have for like sentimental reasons. But that's it. That's all of our finances. And back to what we

were talking about earlier. I uh, you know, our our allocation might look for someone our age and our income, our net worth, it might look conservative. It's there's various ways to measure this, but cash is a percentage of

our of our stocks. Let's say is something like uh twenty something like that, which few financial advisors would say that's necessary, But for me, it's important because I just want to make sure, Like my goal as an investor is to make sure that the stocks that I do own can remain untouched for thirty or forty or fifty years.

That's my goal, and I'm gonna achieved that goal if I can make damn sure that I can be hit with a Category five financial storm and maintain it without having to sell my stocks for whatever reason, whether that is a job loss or I have, you know, a change in expectations that I want to go out and buy a boat or a bigger house, or send my kids to private school. I want to be able to handle all of that without ever having to touch my stocks.

Because if I can do that, if I can leave my stocks untouched for the next twenty or thirty or forty years, that's when the big games are going to happen. That's when there's going to be extraordinary returns. So it looks like I'm not taking a lot of risk in the short run. But the reason I'm doing that is specifically so I can take the most amount of risk and gave the most amount of leverage in the long run. To me, it's the idea of saving like a pessimist

and investing like an optimist. I want to be really pessimistic about the short run so that I have the opportunity to take advantage of the optimistic long run like a pessimist, invest like an optimist. I love that. So in the book you discuss the ten and see if people to engage in confirmation bias, to go out and seek information that confirms their prior belief. How do you avoid that? We all have biases, We're all subject to the same wet ware a foibles. How do you prevent

yourself from falling into the usual behavioral problems. I don't want to pretend like I can. I don't think anyone can. Daniel Knoman, who is of course like the godfather of this topic, of all these topics of behavior, has been asked several times if he himself has become less biased doing this research, and he says no. So like if if someone like Konomen cannot you know, change who they are. How can someone like myself or you or anyone else

do it? We can't. I think the best thing you can do it's just be interrospctive about yourself and your own flaws and embrace them. Rather than thinking you can change them or avoid them, just embrace them with both hands and then try to structure your life around your known flaws. So for me gets back into like, maybe I do have a lower risk tolerance in the short

run than other people my age, but that's fine. Rather than me trying to change that, or me trying to figure, you know, trying to alter my mindset, alter my feelings, I would just rather embrace it with both hands and say, this is who I am. So I'm going to accept that, and I'm going to have a financial life and acid allocation that just accepts that and embraces it. That is the thing. The best thing you can do with behavioral biases.

You can't change who you are, but you can embrace who you are and try to try to situate your life in a way that accepts it rather than I'm trying to rather than tries to avoid it. So one of the lessons we've seen from is there is some number of people moving out of big urban centers and to a little bit more suburban or even rural locations, uh, to kind of get away from crowds and COVID. When you and I were talking a year ago, long before COVID popped up, you were discussing leaving d C to

relocate to the suburbs of Seattle. But tell us a little bit about what you ended up doing and what it was like doing it in the midst of of a pandemic. So my wife grew up in Seattle, and she and I lived here for several years after college. We then moved to d C. She went to grad school. We we end up staying there for for a while. Our plan has always been to come back to Seattle. That's been our plan for years. Uh. And we just

happened to pick May of to move. We we planned that well before COVID, but it ended up being obviously the worst time possible that you could move yourself and two small kids. We have a four year old son and an infant daughter. Moved them across the country. We got it done. It worked. We flew out here. We on our plane, our seven thirty seven from DC to Seattle. Was I think us and six other people on the flight. On the entire flight Biscuits had a private seven thirty

seven that was bringing us out here. But it worked out. It all worked out. It was scary, it was it was hard, but it all worked out. To clarify, you weren't flying private, it was you flew commercial. There was just nobody else on the plane. There's no one else on the plane. I think literally everyone on the plane

had three rows to themselves. I mean it was a seven thirty seven and the entire flight of passengers I think was ten and people on the whole flight um and and we we were four of them, and we used airline miles to fly across, so they didn't even get any revenue out of us. I feel I feel,

I feel sort of bad about it. But the point that you bring up about, like people moving out of cities, who knows how severe that's gonna be, Or maybe there's a vaccine in three months and everyone pours back into Manhattan. Who knows the danger and that kind of stuff that we've seen in the past, though, is how quickly that snowballs when people move out and then tax revenue declines and then police services decline and then it's snowballs from there.

It's that happened to New York in the nineteen eighties, happened to Detroit over the last fifty years. Uh So that's the danger about it. It's not just like a trend that's going to happen this year, but how quickly those things snowball and become really hard to reverse over time. To be fair, we heard the same thing post nine eleven and that ended up. You know, New York came back bigger and stronger. Not a coincidence that cities have been creative centers of human capital for the past I

don't know, twenty centuries. I imagine they're going to be okay once there's a vaccine and treatment, right, I mean we we We certainly hope though, but of course getting back in the surprises that no one sees coming. Who knows what's gonna happen. If has not diminished your willingness to forecast what's going to happen in the next six months, I don't think anything else will. So I agree with that.

It seems like it seems like the base case scenario would be that we'll get a vaccine and life will roughly go back to normal, but who the hell knows at this point. So I want to I want to come back to the concept of you being a risk averse investor, but not being risk averse in the rest of your life, and let me just tick through a few things, because you and I have discussed this and you always push back. So in high school, you're a downhill ski racer. That's a you know, that's an easy, gentle,

risk free gig, investment, banking, private equity. You're now a partner in collaborative firm, which is a venture capital farm. You're your writing is something that not only did you not go to school for, but your first job was, Yeah, what the hell, let me jump in and see if I could do that with absolutely no basis for expecting

to achieve any level of success. Am I making too much of this or does your actual behavior maybe the maybe I'm I'm reversing the way I should look at this because you're such a conservative investor, Does that allow you to engage in risk your behavior as a professional, to take chances, to roll the dice, to try things that you couldn't do if you didn't feel like you had a comfortable financial cushion to leap off of. I

think there's probably some truth to that. But there's also another side of it, which was ski racing in my my teenage in early twenty years. I didn't realize how much risk I was taking. I didn't I didn't think it was that risky until two things happened. I wrote about this recently. Two of my good friends who I grew up with ski racing were killed in an avalanche. And then three months later I broke my back. Then do any nerve damage, but broke my back, which is

a very serious thing to happen. Both of those things kind of opened my eyes to what risk is and and they changed how I think about risk, probably through today. Like those events stuck with me. The other thing like uh, my my very short stint in investment banking or getting a writing job when I had not been a writer. It didn't feel like I was taking any risk because there wasn't a lot of downside if it didn't work. Then if it didn't work out, I could have just

walked away. Um, it may be felt different worth investment banking because I had no Plan B. So when I realized that Plan A wasn't gonna work. There was this moment of oh my, like what now, like I don't I don't know what I'm gonna do for my career now. That felt risky, But I was also I was, you know, twenty one years older whatever, so my concept of risk was very different than it is now now that I

have two young kids that I support. It's very different when you're when you're doing things when you're downside feels that much limited. So it's a combination of learning about what risk really is over time and also taking risk

that didn't have a lot of downside. But there there is a sense I think that my our our main, our north star for how we manage our personal finances is again being being very pessimistic in the short run and having a ton of cash like preparing for the apocalypse in the short run, will still maintaining a lot of long term optimism both with our with our heads and with our investments, and then just in terms of

how we invest. It's hard to wrap your head around that kind of dual personality, the Barbell personality, but that it is. I think that like what is necessary for getting rich and staying rich, which are the two two conflicting separate skills, but you need to marry both of those to do well over time. You have to have optimism and pestimism at the same time. Just know where each one of them belongs in your life, and if you don't, if you only have one or the other.

We all know perma bears, who you know, have been waiting for the stock market to decline since nine and we all know perma bowls who kind of run themselves off the ledge, either fraudulently or innocently. They just take way too much risk by off more than they can choot and some backfiring. So I think you have to

manage both of those at the same time. That's what we try to do with our personal finances, and for us, how we manage optimism and pessimism is just about time horizon optimism over the next thirty years and a lot of pessimism over the next twelve to twenty four months. So you start the book out with something that I have to ask two questions about, and you you just

hinted at it. There is an enormous difference between getting rich, which we see lots of folks are capable of doing, and staying rich, which seems to be a very different skill set. Tell us about people who have a hard time despite being wealthy, either starting wealthy or achieving it. Staying wealthy. I mean the kind of person that can invest in, you know, a seed stage startup and then watch it increased, you know, five thousandfold and make a ton of money, do really well in the stock market.

Those tend not to be the kind of people who can eventually say, okay, that's enough, I'm gonna put my money in muni bonds so I can, you know, say even so I can stay rich and protect my downside. You tend not to have those kind of personalities and the same people, but you need something along those lines in order to stay wealthy over time. I think getting rich and staying rich are completely separate skills. We want

to think they are the same. The people who are able to get rich this year are going to be the same kind of people who are still wealthy ten or twenty years from now. But it turns out that there's not the case. There's a tremendous amount of turnover in the Fords list of billionaires, or if you're to look at you know, the these turnover a mutual fund managers. The ability to do well in the short run in

the long run are very very different. But and that is it's not intuitive, but it's really necessary to wrap your head around because everyone wants to do well, not just this year. They want to do well for the long run. No one wants to get rich and then lose everything like that's that's some of the world. Like most people would rather not get rich than they would be to get rich and then lose it two years later.

So you really have to marry those two skills. And since they are separate, conflicting skills, it's a it's a hard thing to do. I think about Bill Gates a lot who took probably the biggest business risk swinging for the Fence, is the biggest flyer that's ever been taken, which was in he said every human on the planet should have a computer on their desktop in their homes, which is the most absurd thing in the world. At the time, he was like the most optimist risk taking

Swing for the Fences. But during that very same moment he made a vow that Microsoft would always have enough cash in the bank so that they could pay everyone's payroll for twelve months with no revenue. So there he was marrying optimism and pestimism. He had to ridiculous optimistic view about where computers were going. But at the same time, he was an incredible pessimist in the short run, so much so that he wanted to make sure that Microsoft could survive with no revenue if no one was willing

to pay for its products. I think that is a rare skill to have in the same person. I don't think Elon Musk has that skill, and who knows where that's going to lead to. But Elon Musk is obviously willing to swing for the fences. But is he good at managing the short run? I mean, I don't think he is. So it's a It's a very different personality set than someone like Bill Gates, who has long term and dirting success across many different environments recessions, booms, bus.

Microsoft has thrived because of that, both when he was managing the company, but also just the kind of mentality that he left the company with. So you always need those two two sides, and if you don't realize that they are separate, skilled that needs to be nurtured separately and independently. Uh you're you're probably gonna run into a point eventually where you realize that you didn't have one

of those skills, and it leads to something regrettable. The morning we're cording this, the Bloomberg Billionaire Index shows I think one, two and three is Jeff Bezos, Bill Gates, and Elon Musk in that order. Uh. If you read about Musk, it's fascinating. He took a PayPal windfall, didn't even you know, plan with it. He just kind of rolled it all over into Tesla, and at several points in Tesla's history it was on the verge of, you know,

not making it. He really doubled down and doubled down again. And uh, it worked out. At least so far, it's worked out for him, and the same with SpaceX has worked out for him. The question is, as you point out, can he keep doing it? So you mentioned Bill Gates, who who there's a wonderful story in one of the biographies about him. They used to have bets him and Balmer and others in the early days of Microsoft, how late they could leave for the Seattle airport and not

miss a flight. And my favorite story he is he once left so late that he pulls up in his then old Porsche nine eleven, leaves it running with the keys in it, and just runs into the airport, just leaves it in front of, um, the arrival gate. UM. I don't know what made me think of that other than you. You brought him up and will edit this out because it's ridiculous, But no, it's such a good story and and and it makes you wonder, like what happened to that car? Did he come back and get

just someone just take it and drive off? I imagine he left. I'm sure it got told and he picked it up, and I doubt he cared about it. But the reason I brought that up is you mentioned earlier you were a valet for many years at a couple of different places. For those of us who valet cars and occasionally a nice car here and there, what happens when you give a high end sports car to a

valet at a restaurant or a hotel. What do you think happens when you give a nineteen year old a Ferrari and then he gets to drive it around the corner where no one's watching. What do you think happens, Verry, that that scene from Ferris Bueller's day Off where they take uh they take this to seventy Spider out for a joy ride and you know, all but destroy it.

That's the worst nightmare, I think. I also think that's why a lot of these a lot of these car companies have come up now with valet keys, so that you could give a car to a valet and it's rev limited and speed limited. It ain't going over thirty miles an hour, so there's no reason to take it anywhere.

I don't know of any stories. I'm sure. I'm sure it has, but in my experience, I didn't know of any times when a valet left the lot with someone else's car when when they shouldn't have, like like taking on the street. Now, I that's not something I saw. But there there was a strip in our parking lot, like behind where everyone was watching. No one could see where we had like two feet of straight away where you could put your foot into the gas, So of

course we did that. The other thing is in our vallet garage, we were always driving way too fast for management to life. Uh, So they put in these huge speed bumps, not normal speed bumps, but like really sharp, brutal speed bumps, and that didn't slow us down in the slightest We just started plowing over the speed bumps at full speed. So that's I mean, it's it's incredible,

It's it's obviously, it's obvious. What would happen if you give a twenty year old or twenty one year old college boy the keys to a Lamborghini and say go

for it. It's obvious, what's what would happen? Um, We parked on average about ten thousand cars per month at the hotel that I was working at, uh and in any given month we would get in a handful of accidents, three or four accidents, and then it's been always thought we were being so reckless, and we always had to point out, like, no, if you drive, if you park ten thousand cars and bang up three of them, that's actually a pretty good record. That's actually a record that

we feel pretty good about. But when there was a car, you know, when we were smashing up a Bentley once a week, it's hard to explain that to your manager. That's a challenge. And I bet you're you're banging up Hanzas and Toyota is not. Ferraris my my roommate at the time who worked with me were roommates, but he was in valet as well. Uh. He was backing up a ferrari right in front of its owner and he

just smashed it right into a curb on accident. He wasn't being rexplenced, but he just smashed the bumper straight into a curb. Uh. And it was it was painful to watch. It was painful to watch everyone's reaction. Unbelievable. I know I only have you for a finite amount of time, So let's jump to our favorite questions, our speed round. We ask all our guests and and let me start with what are you streaming these days? Give us your favorite Netflix or Amazon Prime or any podcast

you happen to be listening to. I just watched a documentary on Netflix called Sour Grapes, which is about the wine boom, the fine wine boom of the two thousands, where the price of fine wine skylocketed. And what happened during that period is a lot of counterfeit wines. A lot of people would just take any old wine, peeled the label off, put on a label that says this was from came from this French vineyard, and it was all b s it was all made up, but they

could sell those bottles for twenty bucks. So there was one guy. His name was, name is is is Rudy Kurtiwan who made tens of thousands of fake wine bottles, all of the finest vintages you can imagine, and sold them for tens of millions of dollars. He's in jail now, so the documentary is on his scheme and it was absolutely fascinating. Tell us about some of your early mentors who helped shape your career in both writing and finance.

Carl Richards, who is a financial advisor. He's also a columist from The New York Times, writes a blog called The Behavior Death. He was always something who I really looked up to. I just thought he was such a

good writer. He was who I wanted to be. And I emailed him one day out of the blue, just saying how much I liked his writing, and he said, oh, let's let's talk and we He called me up and we spoke, and that was just so I was absolutely nobody at the time, so the fact that he took the time to do that really meant the world to me. He was also big on the speaking circuit. He was speaking at financial conferences, which I always wanted to do,

and you did as well, Barry. I looked up to that as well, and Carl was one of the people who really helped me get started, uh speaking. And I'll never forget the help that he gave me, because since I was I was a no one he offered, he owed me nothing, he was getting nothing out of helping me. He just did that out of the goodness of his heart. And I'll never forget that. Uh. We talked about reading. We talked about books, but we haven't named any titles.

Tell us some of your favorite books and tell us what you're reading currently. I'm always a fan of any book that has to do with the period from uh, you know, nineteen eighteen to nineteen kind of the end of World War One through the end of World War Two. So the great Depression in World War Two that period

is so fascinating to me for two reasons. One is that the more technological change took place during those twenty or thirty years that have taken place during any other period in history, Like we started World War two on horseback and ended with nuclear fission. Just so much progress

took place during that period. That period is also the combination Great Depression world War Two is when people dealt with the most uncertainty, the most trauma, the most tragedy, the most misery of any other period in modern history. And it's fascinating to learn about that just as a lens into behavior and what people do during risk and threat and uncertainty. So any period, like any book around

that topic, I'm always interested in. I'm reading a book right now by historian John Meacham called The Soul of America, which talks about periods in Americans past, uh when we felt like like the country was coming to an end, whether it was the race ride, whether it's a Civil war or the race rides in the nineteen sixties, or or dealing with today. Just kind of period that where America was tried, where the concept of America looked like it was breaking, and how we overcame that. It's a

really good book. I know you have a couple of favorite books You've referenced about that period between the Depression and World War Two. A couple of history books you've mentioned, and I can't remember the name of him. There was an author who you read two or three of his books. You know what I'm referring to. Yes, there's a there's a historian named Frederick Lewis Allen who wrote three books. Uh,

it's it's a trilogy. One is called Since Yesterday, one is called Only Yesterday, and the others called The Big Change. And they were about how America changed from nine and nineteen fifty. And it is so well written. The stories are so good, and he's writing about the perspective of like the average American, not what is going on with the generals and the presidents, but if you were just an average Joe living in Ohio, what how did your life change from nineteen fifty? And it is so it's

so good. That trilogy was so well done. He wrote most of them in the nineteen forties and nineteen fifties. Um, and it was they're they're just gemms out there. What sort of advice would you give to a recent college grad who said to you they were interested in a

career in financial writing. I would say, find four or five people who you really look up to, people who that you want to be when you know, five or ten years from now, and just cold email them and ask him out for coffee or maybe if it's still Covid asked him out to for a a a a quick zoom call. I think that's the best way to get ahead, to learn from other people, and also just to network with people who might be able to open

doors for you one day. And you people will be surprised if you reach out to people, even people who seem, you know, let's say, out of your league. If you email them and say, hey, I reallymire what you do. I'd like to take you out to coffee, how many of them will say yes, uh this. The success rate for doing that will probably be much higher than you assume. And those few connections that you can make might have a bigger impact on your career than anything that you

learn or read or or or taught in school. That will have a huge impact on what you can do. And our final question, what do you know about the world to finance investing writing today that you wish you knew twenty years ago or so when you were first getting started. One thing that sticks out is that good investing is not being good at something. You have to

find something that other people are bad at. So the fact that you are good at modeling, the fact that you are good at spreadsheets does not necessarily make a difference because a lot of people are good at that. So that's where a lot of investors go Astray is thinking, I'm very smart, I'm very good at this. I have

a lot of skill. I have a lot of intelligence, and it doesn't lead to any sort of investing results to speak of, because so many other people are good at You have to find something that other people are bad at, that is and and and and try to be a little good at that. If you are sort of good at something that other people are bad at, you have a lot more success than if you are very good at something that other people are also very good at. Quite fascinating. Thanks Morgan for being so generous

with your time. We have been speaking with Morgan Housel. He is the author of the new book The Psychology of Money. If you enjoy this conversation, well, be sure and check any of our three hundred and something previous discussions where we talk about all things finance, investing, money related. You can find that at iTunes, Spotify, Overcast, Stitcher, wherever your final podcasts are found. We love your comments, feedback and suggestions right to us at m IB podcast at

Bloomberg dot Net. Check out my weekly column on Bloomberg dot com slash Opinion. Give us a review on Apple iTunes. Sign up for our daily reads at ridholts dot com. Follow me on Twitter at Ridholts. I would be remiss if I did not thank the crack staff that helps us put these conversations together every week. Tim Harrow is my audio engineer. Michael Batnick is my head of research. A Tika val Brun is our project manager. Michael Boyle

is our producer slash booker. I'm Barry Riholts. You've been listening to Masters in Business on Bloomberg Radio.