# How To Invest Like An Optimist With Morgan Housel

Channel: Greg Isenberg
Video: https://www.youtube.com/watch?v=9FGSd5t76wY
Duration: 1 hr 6 min
Language: English
Words: 13408
Transcript page: https://viewrankai.com/tools/youtube-transcript/9FGSd5t76wY

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[0:00] we never have thought that yesterday's success guaranteed tomorrow's success we've always been paranoid and i think that's a great mentality for a lot of things in life in your personal life in your personal career for your business whatever it might be just if you're lucky enough to be successful the acknowledgement that it does not guarantee you anything for tomorrow nothing [Music] guys i am so excited to share this episode with you it was an amazing discussion one-on-one with morgan hausell the author of psychology of money and a prolific writer creator investor extraordinaire i was really privileged to get to have this discussion honestly he was amazingly transparent vulnerable

[0:47] and shared a lot of new insights and ideas from everything on investing to life to fatherhood and dealing with insecurity so it was an amazing conversation i think you guys are going to love it and uh let's just dive right into it what's up man how you doing good to see you thank you so much for doing this i appreciate it yeah of course um how do you ask me first how's the podcast going the podcast is great you know it's like a um podcasts are interesting it's a whole different growth challenge sort of i mean it's not dissimilar from like a newsletter or a blog and the fact that

[1:22] there's no natural discovery so you sort of have to figure out what your mechanism is for like jamming it through the algorithm to get it out to people mine is obviously twitter for doing that you know you have a large audience and you can leverage it for that um but it's a it's an interesting and like entirely different growth challenge but it's been a blast it's been a lot of fun that's cool awesome so you know morgan i'm really excited to have you on and i would um i would start off i guess by just saying the reason i'm so excited and the reason i admire you so much as a person

[1:55] is uh you're a you're a unique individual because you are both successful highly successful and also one of those people that doesn't take yourself too seriously um and as it turns out the overlap of those two circles is actually quite narrow uh the the venn diagram if you will and so i'm excited to get to chat with you it's you i've always really admired your work your writing um and this is a real privilege to get get a chance to go deeper with you today well thanks i'm stoked to be here i appreciate that thanks interested in investing in commercial real estate but not sure where to start

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[3:12] com slash room and get a 50 bonus when you deposit at least five hundred dollars what is up you guys today i am so excited to share with you one of my favorite companies butcherbox my go-to resource for all my meat needs if you've been following me by now you know that i love meat steak and beef are my favorite food in the world and i really can't get enough of them well butcher box has me covered they've got the 100 grass-fed beef that i love free-range organic chicken wild-caught seafood for my wife and a little bit of everything in between there's great flexibility you can mix and match boxes

[3:48] choose when it comes to you so there's really something for the whole family and it all comes at an unbeatable value generally less than six dollars per meal i've loved butcher box and i know that you will too today we're so excited to be sharing with you a special offer free ground beef for life as long as you keep a subscription going with butcher box you can find that offer special for our listeners at butcherbox.com room again that's free ground beef for life by going to butcherbox.com room you're gonna love it so one of the things that i always think is important to start off you know any

[4:25] discussion any interview is this idea of like determining the person's map of reality um you're familiar with the concept i assume but for anyone that hasn't heard of it it's sort of you know this idea that we all have a specific map or lens through which we view the world and through which we perceive things and i think it's important to understand what someone's map of reality is as you kind of dive in and to understand their perspective so maybe we just start there and and see where it takes us what do you think your map of reality is morgan what what has shaped your map

[4:58] your map of reality over the course of your life well one thing that i think about a lot and maybe this gets back into what you said before about not taking myself too seriously is the extent to which i should be like a a car mechanic or a grocery bagger or an uber driver with with no offense to those professions but the ex the the fact that i'm here doing this if you look at the trajectory of my life is crazy i there was absolutely nothing about me when i was a young adult when i was a teenager that would have said you know that would have predicted any of

[5:32] this whatsoever i've talked about this before on other podcasts i don't want to rehash it too much but i have no high school education i didn't have i basically have an eighth grade education and then i went to college after that but i had this gap in my teenage years where i was i was dumb as a rock waste of a waste of waste of a breath whatever adjective you want to use i had absolutely no intelligence and it wasn't like oh i skipped high school because i was so smart no it was not that in the slightest you know if you if you were to meet me when i was 19

[6:00] or 20 i had an eighth grade education and i and it showed i was it was it was that and i think i thought and everyone else around me thought and my parents thought that i would be you know an eight dollar an hour service worker for the rest of my life and that was that was my expectations and i'll tell you i was okay with it i was totally okay with that that was so i think coming from that and then being here wherever here is my that map of reality it's it's uh but i'll tell you it yes it's it's cool like that's it's it's fun for me to think

[6:32] about that journey but it also is like kerosene for imposter syndrome and this feeling of like oh this is all gonna end and i'm gonna be pushed back to where i belong so i feel like that's the that's the the other side of this that often goes uh undisclosed for people in this situation so that's so interesting you know one of the things that comes up in kind of researching and learning more about your background is your parents lived on a commune like a farming commune and i thought that was such a unique i mean when i was thinking about what i perceived to potentially be your map of

[7:06] reality i thought that might be an interesting part of it of like your parents um you know had a very interesting trajectory in their own lives and your dad became a doctor at or decided to become a doctor at age 30 which is very unique um so how much of that like your parents having a maybe at the time actually it wasn't that different i guess you know at the time when they were probably living on the farm commune maybe that was actually like the cool thing to do probably at that uh at that era in american society but how much of that kind of impacted

[7:37] your you know young upbringing and and uh and how you perceived the world you're definitely right that when they moved there and lived there in the 1970s it was the cool thing to do that was like the hippie movement full-blown that was like an awesome awesome thing to do i would say both my parents grew up in fairly affluent households and then so it was their choice to be like screw all of that we're gonna go move to this commune and and rebel against everything that they that they had um i i think it impacted my my upbringing substantially because well in two ways and my my brother who

[8:12] was five years older than me had more of this but i saw two very distinct sides growing up you know when i was a young child my parents were students and we were completely flat broke we had absolutely nothing it was not it was not homelessness it was not it was not that but we had no money whatsoever and then my dad became a doctor when i was um i don't know 10 12 something like that and and things changed and so i think seeing both sides of that is important because i feel like most people growing up only see one side of it maybe they grow up

[8:43] poor maybe they grow up very wealthy and it's relatively the same throughout their childhood seeing the stark black and white contrast and again from my brother who was like 16 when that contrast happened that was like a shock it was just like shock and awe because most people adapt to whatever their situation is so i say when i grew up when i was seven years old and we were flat broke i didn't know it and i didn't care i lived a guy had a great childhood i loved playing i loved digging in the dirt and climbing trees no but i did not care i thought it was

[9:13] great but then when you see that other side you're like wow there's another there's another world out here that so that was one way it impacted us the other was when i went on my little teenage journey of not going to high school i was skiing throughout my entire teenage years you were ski bum okay i was i was a complete ski bum i grew up in lake tahoe and i was a competitive ski racer and the high school thing was um school kind of gets in the way of ski racing so i'm i'm not not gonna do it it's basically what it came down to and

[9:45] i think at one point reading i'm sorry to interrupt you i remember at one point reading a story that you wrote about uh a close friend of yours who you had skied with for a long time in tahoe competitively who um tragically passed away in in an avalanche um and how much that impacted you during that period as well has that been a formative experience and i apologize for rehashing something that's clearly an upsetting event in your life but it does strike me as something that is you've been um sort of introspective about it and what it's meant to you in terms of how you live

[10:20] your life so i'm curious how that impacted those years and then your decision to kind of you know start to blossom into uh into the intellectual that you are today as well yeah there it it actually had a huge impact because of the timing that happened and there there were two of them actually two of my friends growing up with that we were we were skiing together all that that day and um they they did an extra run where i wasn't i wasn't with them i was gonna go pick them up at this out of bounds area where we would we would ski and they were killed in an avalanche during

[10:48] that during that run that they did by themselves and that so what happened i was i was 17 which for the ski racing world is kind of the get off the pot moment of like either you're pro or you're not like when you're 15 you can kind of hack your way through it 17 it's kind of like okay you're either going to the big leagues or or you got to figure something else out so and then two months after my friends died i broke my back skiing so between those those moments it was like okay it's time for me to go do something else it's time for

[11:17] me to kind of hang it up and figure out what's next it took me years to figure out what was next i had a couple years from you know age 17 to 20 where i was just kind of hacking it through not really doing much of anything but that was i think that event was it shaped me in a lot of ways it shaped it was obviously it was the first it was the first bad thing that ever happened to me i had a really good childhood upbringing everything was great very loving household great friends everything was perfect so that was the first bad thing that i had ever

[11:45] experienced in my life and it was a really bad thing so that had a big impact but also just timing wise it was actually a great forcing function to be like okay time to go do something else right well it relates to uh very closely to the sort of first rabbit hole i wanted to go down with you which is um this recent piece that you put out called deep roots which i thought was a fantastic piece if people haven't seen it we'll add it to the show notes but it all kind of ties into this idea of like the dots in your life you know the

[12:15] steve jobs famous commencement speech i forget what year 2005 maybe at stanford he talked about the dots connecting in your life and how it's basically impossible to connect the dots looking forward you have no idea he in his example was he took this calligraphy class where he was just like bumming around at reed he had dropped out and he was bumming around and took this calligraphy class and there was absolutely no reason why a calligraphy class would ever be impactful for your life a totally useless set of skills but then it became an integral part of how they thought about creating beautiful type fonts when they were doing that at

[12:48] apple and so he talks about it that you can never connect those dots looking forward but in hindsight you look at them and you say wow this weird chain of events led to where i am today into this set of circumstances and you wrote very beautifully about that as it relates to money and investing and second-order thinking but it ties into this point of what we're talking about i think of a terrible event in your life that you can somehow now trace to all of these different things that shaped you into the future and so i wanted to just talk and kind of talk to you about this idea of of

[13:23] forecasting and like as investors we all sit and try to think about oh i'm going to try to predict the future right now there's a million things going on in the world right like russia's invasion inflation's through the roof um you know the consumer economy is kind of teetering and so you sit around and you can spend hours and hours trying to predict the future but as you point out in your article it's almost impossible to do with any level of intellectual humility it's like basically impossible to do because the world is so damn complex yeah so can you just talk a little bit about that and

[13:57] you know the frameworks that you've kind of been using to think about that problem i think any time you'd really piece together why a chain of events has happened if you're really honest about the long chain of events of how you got there it could be so absurd that you realize that it's how hard it is to predict things i think about to use this like a really quirky personal example when i started at college they had like an orientation lunch for all the new students and you sat by your major the biology students here the econ students here and i got there and i i was trying to get into the

[14:29] business school but the business school table was all full there were no more seats so i was like okay i guess i'll sit with the economic students because economics is closely related to business like i'll sit at this table i sat next to this girl who became a very close friend of mine she's wonderful and she introduced me to my now wife so it was it's like like that's just like a simple chain of events of like this table i wanted to sit at was full so i randomly sat at this table and now we got two kids and we've been together for 16 years and i'll give you my

[14:58] example of that exact thing because it's very similar um so in seventh grade uh i was trying to impress a random girl um who i had a big crush on and for some reason i decided the way i was going to impress this girl was uh the test uh the social studies test we were gonna have the next day i had noticed was sitting on the table printed out all the copies of it that we were gonna take and so i bragged to her like hey i can get the test for tomorrow and she was like no you won't you won't do it and so i went

[15:28] in and i took it and i gave it to her and i didn't even cheat on the damn test which is the funniest thing in hindsight but someone snitched i got caught i end up you know getting a zero on that test so i get like a d in the class seventh grade whatever it shouldn't matter but as a result of that i had a bad grade for the class and so i didn't go i didn't get into private school which was kind of the plan my parents had had for me was that i was gonna go to private school for like eighth grade on through high school because i didn't

[15:55] go to private school i met my wife my sophomore year of high school at our public high school and i met this girl at the time we end up dating long distance did the whole thing and our son is being born next month so because of this like stupid decision that i made you can now trace that all the way to i'm sitting in our house my wife is somewhere nearby and we're having our first uh our first child next month and here and here's what's what's true with with all the due respect to both of our wives if i had sat at the business table and if you had gone to

[16:27] private school things may have worked out great as well so the alternative history is not necessarily better or worse we just know it's vastly different and everything is is like that i usually i've used this example in my book of like why are student loans so high today well one of the reasons is because in the early 2000s there was a huge demand for college when the job market was so weak people are like i can't get a job i might as well go to college or i need to go to college to make sure i can get a job in this really tough market huge demand for college why was the

[16:58] economy so we was a jobs market week well because there was a financial crisis why was there a financial crisis well there was a housing bubble why was there a housing bubble well interest rates were cut too low why were interest rates cut too low well because 911 that was a big part of it so just from right there by the way you could keep going with that but why are student rates so hot why are student loans so high today nine because of 9 11. and like no one would tie those together and on the morning of september 11th no one was like oh here come the student debt

[17:25] nobody made that nobody would ever make that connection but you can piece it together pretty clearly now there is a thing called the narrative fallacy which is like putting like sometimes putting these things together in a way that makes sense like i just did can be like it's it's not it's not that clean i think mostly the narrative fallacy is when you piece together things going forward it's when for example on the morning of 9 11 people say consumers are never going to travel again which was which was not true but it was a narrative that made sense but i think looking back the narrative like that

[17:57] like piecing together that narrative does make more sense it makes sense in hindsight and when you realize how absurd it is in hindsight then you realize that any any skill that you think you might have looking forward is like is so do we have no clue what's going to happen next one of the examples i like from this too like a positive example are the number of incredible things that came from world war ii one of the biggest ones that's easy overlooked is penicillin which was basically it was discovered in 1929 and then it was basically a laboratory toy in the 1930s and it wasn't until world war ii that we were

[18:30] like hey we have all these six soldiers and we need to keep them healthy what is this like crazy mold that might be antibacterial like great make 10 million doses and give it to the soldiers and that was kind of the birth of antibiotics and like would we have discovered it without world war ii like yes probably but i think you can draw a straight line between world war ii and antibiotics coming online in the 1940s to say nothing again about like jet airplanes and rockets and nuclear energy all these like amazing things gps radar that happens specifically because of the war now nobody when the war began would be like

[19:05] oh here come all the amazing technologies but it's exactly what happened yeah and now we're in a similar period right like with kovid and the massive disruption and the impact it had on the world you could argue you know that there are going to be those similar unbelievable things technological innovations that get created as a result of this but similarly you need to have humility around the fact that we are not going to be able to predict what those things are looking forward with any degree of certainty totally and the obvious one that people use these days that might end up being the big one is

[19:38] mrna that's like that's like the easy that's the narrative fallacy of like oh because of covid we're gonna have all these mrna drugs which might be true it is true so far but there's gonna be things ten years from now that would be so absurd that you and i 10 years from now will be like hey because of covid we have the x whatever it might be and connecting those dots is going to be like the craziest thing you've ever imagined you know that's going to be the case whenever there's an upheaval in your personal life or in the economy in the world 10 years in the future there's this

[20:09] crazy chain of events that led to something either really good or really bad by the way um that you never could have seen coming yeah the whole takeaway for it is just humility and forecasting it's like the whole idea of like pro-entropic investing i recently heard i think from antonio gracias i think it was on a uh invest like the best podcast with with patrick o'shaughnessy and he talks about like companies and ideas that benefit from that chaos it sort of relates to telev and anti-fragility and that that whole general concept but when you think about these periods of chaos there are going to be certain ideas

[20:43] certain technologies things that benefit from that chaos and get created because it just sparks all of these new collisions of ideas people concepts etc that good things come out of it's like chaos theory right all of a sudden there's this movement in this one you know area that creates something amazing yeah and a lot of bad things come about that too so yeah to me one of the most important things here when you have humility and forecasting is such a preference for survivorship and endurance and durability so that you can stick around long enough for those positive surprises to actually pay off um you know to to

[21:17] state the obvious if you are if this is 2008 and you got you got pushed out of the market you got foreclosed on whatever it would be like you you did not stick around long enough to enjoy the rebounds and the new technologies and what and whatever it would be so that's when you have that humility and forecasting there's this great quote from talent that i like too where he says invest in preparedness not in prediction that's what i think it is like we can't predict what the good or the bad is going to be but i can invest in making sure that i am durable enough to stick around to

[21:47] experience whatever it might be in the future you also tweeted another tele quote recently that i thought was great about you know if something if you're if you're thinking that something is irrational for like a really long period of time your definition of rationality is probably just off if something has remained irrational in your mind for so long which i thought was it's a very funny uh it's a very funny quote i mean he's he's like a trevor treasure trove of uh of great quotes though he's great now as you say my example from this is that there is a there is a cohort of investors who have think who have

[22:22] thought that the market has been overvalued for the last 30 years and it's something the permabears you're like maybe your model is wrong i don't know maybe like like maybe this is a 30-year bubble or maybe you're you're not calculating this right so that's why like it the market looks irrational to them but if something has been irrational for a long period of time i think what you're actually just observing is the normal craziness of human behavior well it's like the uh the hilarious case study of um of recession predictor people where like you uh if you accurately predict a recession once you forever are the guy that accurately

[22:58] predicted that recession and if you just keep predicting recession you're eventually going to be right right you're like i don't know whether it's you that's written this in the past but someone has or you just say you know like a recession will come and it's just a question of you know is it one year three years five years seven years ten years like you're going to be right eventually and you can get paid to go on cnbc for the rest of your life as the guy who accurately predicted the whatever year recession if you just do it once totally like if you just go on and say we're gonna have a recession

[23:28] it's only a matter of time people are like oh that's a big deal and then if it happens four years later they're like oh he said it he said it was only a matter of time and it was only a matter of time it actually it's the the absurdity of financial media is hard to overstate like i was watching cnbc the other day and they had a former i'm forgetting who it is they had a former um fed board uh individual on and they asked him very directly like so are you telling your clients that you think a recession is coming and he said something to the

[24:01] effect of oh no i wouldn't say that i'm telling them that it's more likely it's probably 45 to 50 percent likely now versus the 30 that it was before and i was sitting there just like how how is this put like possibly relevant valuable information for anybody because i have no idea what 30 versus 45 percent likely means to my portfolio what does that mean what do i do like not only like what do you do as a client but also the idea that anyone can be like oh the odds used to be thirty percent but now they're forty percent is is insane is insane that you're being

[24:36] like that technical about it i think the best way to summarize financial media was um this is ten or twelve years ago jim cramer was on jon stewart show uh the the daily show and jim cramer like jon stewart was poking fun about how crazy how dumb some of the segments are on cnbc and kramer said i'm paraphrasing he said you know john you have to understand we have 17 hours of live tv to fill every day and stuart said maybe you could cut down on that like that's that's the solution here that's not the excuse that's the fix and think about if you had like 24 7 live tv of like the

[25:14] trucking industry or the shipping industry or like the chemistry industry there's nothing to talk about and it should be the same in business news but we want there to be 24 7 live coverage and therefore like the only way to fill the time is just kind of by making up sometimes yeah and it's this whole idea that everything has to be breaking news right like everything is news and um you know new things that have happened and newness and they put breaking next to everything and um i've heard you talk about this before and i think it's such a great point that the best stuff is evergreen the best

[25:50] writing is evergreen the best ideas are evergreen they're not only relevant for the 10 minutes that after you post them they're relevant forever and i know you've kind of strived in your career as a writer to write things that will be relevant 10 years from now if someone reads them it's going to change the way they think it's going to provide them with frameworks or a lens through which to evaluate problems that do come about in the future and you strike me as an interesting character in the financial world because you don't come across as someone that cares deeply about um money in a in like a gross sense you

[26:28] know of you don't strike me as someone that like wants to be the richest person in the world and you know have the yachts and the planes and the cars and do all of that and yet you write so eloquently about money um so what do you think has kind of formed that for you and what why are you um you know different in that sense i have no desire to be the richest man with the yachts and the ferraris i probably have an above average desire for independence i i want to be independent more than than most people and therefore i think it's it's easier

[27:01] for me to have some concept of what is enough money like how much do i need to be independent and if i've checked that box then everything else above that is really superficial um and i think that's that's where it it comes from some of that might be if i were to be like deeply introspective it might be like some sense of insecurity i think some of my desire for independence is out of fear that um this is all gonna end so like i need to become independent as soon as possible so that i can leave on my own terms versus leaving on somebody else's terms

[27:31] getting fired whatever it might be i think that's probably the roots of it um but that's that's where it is i think i just view money as a as a tool towards independence versus a tool to gain social aspirations and like wave your peacock feathers and show everyone how rich you are so like i i i like nice things i like nice homes and nice cars and whatnot but independence is above that like 10x that's that's all i really care about so i want to tap into this a little bit more a few years ago you were on shane parish's podcast the knowledge project and you talked about

[28:07] uh your one of your bucket list items was true financial independence uh and this feeling that anything could go wrong and you'd be okay um a do you feel like now you've gotten there i mean you've sold a book that has sold a million copies um have you know a new job i think since then with collaborative fund and being there a lot of things have changed in your life um and then b where do you feel like that insecurity comes from like why why do you feel like you have that i actually feel like i have that as well so that's that's the root of the question from my perspective

[28:42] to answer the first part uh yeah i think it's i think it's largely there not maybe not a hundred percent because it's easy to move the goal post even if you're trying to treadmill it's it's easy to do that but i think for the most part it's roughly there and i'm proud of it it's what it's the thing i'm most i'm proudest of in my personal life outside my wife and kids i'd say it's something that i think is like a really key contributor to my um i wouldn't say happiness i would say just well-being like it's not that independence makes me happy it's that it

[29:12] removes an anxiety that used to be there which is great that's a benefit but it's very different from happiness um what's the second part of your question i forget that feeling of insecurity oh yeah yeah yeah you know i i because i have that as well and i still have that to this day and i know a lot of people who do who i consider highly successful and that i don't you know from the outside looking in shouldn't have that insecurity but do um so can you just double click on that a little bit i would say it's that's a good thing i'd say if you don't have

[29:41] that insecure the absence of that insecurity is probably the definition of ego and like i think you want i think you want that insecurity you shouldn't try to get rid of that once you get rid of it that's when you're screwed once you're like i'm so talented i'm so good i could do i could i could make a zillion dollars doing anything tomorrow that's when it's like you're probably in trouble i think i think there's a very heavy there's a very healthy dose of insecurity one of my favorite little uh quotes was many years ago charlie rose was interviewing mike moritz of of sequoia and he said why has sequoia been

[30:17] so successful for 40 years not just in the last market cycle but 40 years and mike moritz said we've always been scared about going out of business and charlie rose is like that's like you're the most successful he says we've he said we've never taken anything for granted we never have thought that yesterday's success guaranteed tomorrow's success we've always been paranoid and i think that's a great mentality for a lot of things in life in your personal life in your personal career for your business whatever it might be just if you're lucky enough to be successful the acknowledgement that it does not guarantee you anything for

[30:49] tomorrow nothing and i think i that's where that insecurity for me comes from and for me it was it was probably like maybe the the humble background that i had and graduating in the teeth of the financial crisis as lots of people did was like i want to i don't want to rely on other people to um judge whether i'm worth it to be in a job the judge whether they should hire me to judge whether i should stay around to try to figure out what my what my salary is that they think i'm worth i don't want to rely on the kindness of strangers for that i want to i want to do it all

[31:26] myself it was also another and i'm sure this is a universal trait it was just to me like the absolute worst feeling i could have as a husband and a father would be looking my wife and kids in the eye and saying like we're in trouble and you know the the word husband derives from like to provide is what it comes from that's why like animal husbandry it's like taking care of providing for and i feel like if i ever got to that point where i couldn't i couldn't provide i couldn't you know give them what they needed not what they wanted but what they needed i

[31:59] would have utterly failed at life and i was just so and and still am so paranoid of getting to that point that it's made me pretty conservative and pushed towards independence what is up you guys today i am so excited to share with you one of my favorite companies butcherbox my go-to resource for all my meat needs if you've been following me by now you know that i love meat steak and beef are my favorite food in the world and i really can't get enough of them well butcherbox has me covered they've got the 100 grass-fed beef that i love free-range organic chicken wild-caught seafood for my wife

[32:36] and a little bit of everything in between there's great flexibility you can mix and match boxes choose when it comes to you so there's really something for the whole family and it all comes at an unbeatable value generally less than six dollars per meal i've loved butcher box and i know that you will too today we're so excited to be sharing with you a special offer free ground beef for life as long as you keep a subscription going with butcher box you can find that offer special for our listeners at butcherbox.com room again that's free ground beef for life by going to butcherbox.com room you're gonna love it interested in

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[33:55] ipo in seattle sign up for free at lex dash markets dot com slash room and get a fifty dollar bonus when you deposit at least five hundred dollars josh wolfe has this wonderful quote on this similar topic similar to what you said with mike moritz um that failure comes from the failure to imagine failure um which i always think is so sharp you know it's obviously like a funny play on words but it is very very true in my own experience that when you actually fail it's just because you didn't prepare for those crazy chance events and i've heard you talk about this in the past that

[34:33] the rocking events the things that truly shake you shake society etc are never things that you could have predicted having happened and it relates to your deep roots article again they're never things that you could have predicted you didn't have a wide enough imagination to predict that like no one had it on their you know on their uh their score card that uh global pandemic was going to shut down the economy and every single service worker was going to be out of work you've said that before um and so you didn't but by definition whatever allocation you have or whatever you you know have done with

[35:05] your house your personal finances your investing etc is not prepared for that thing because you just didn't think about it it wasn't there and so you've written this and i think it's very smart to and it relates to this point around insecurity and not wanting to ever have to look your family in the eye and say that that you by definition because of that fact that you didn't realize these things could ever happen you need to have sort of an extra little like you know the tail risk event pool that just exists out there so that you know that you won't ever have to have that

[35:38] conversation and have that feeling in that discussion and what's hard about that is that what that really means is having a layer of of cushion in your finances that doesn't make sense a layer of conservatism that seems like it's excessive because the only way that you're going to prepare for the events that you cannot imagine that you cannot foresee that you cannot predict is if you have a level of of of security that doesn't make sense if if you are only saving and preparing for the events that you can foresee you are going to miss the ones you can't foresee ten times out of ten and the ones that

[36:10] you can't see coming are always the ones that do the most damage i mean let's say you are 95 years old today and you're you're you're on your deathbed you're looking back at your life over the last 90 95 years and and if i asked you hey what were the biggest economic risks that you face in your life you would not say oh in june of 1985 we missed non-farm payrolls by 100 like you would not say anything like that if you were looking back you would say covid 911 world war ii the great depression the oil spikes in the 1970s those are the biggest risk and the common

[36:45] denominators of all of those are that nobody saw them coming before they happened the biggest risk that you would look back and be like oh that mattered more than anything are things that no one saw coming well i had a recent example of this where um every january the economist which i think is a great publication one of the best but every january they send out a big issue called like looking at the year ahead and in january of 2020 their look ahead of course did not say anything about coven 19 of course but that was all that mattered and then two weeks ago i got the january

[37:22] 2022 edition i think it was lost in the mail so i got it in like march and of course there is nothing in there about russia ukraine because in january no one was talking about that so here it is like the most astute publication in the world that i really admire and their look ahead in two of the last three years was a joke it was a jo it was completely detached from reality and that's not a criticism against them to me that's just an example of risk is what nobody can see coming it's what nobody can see coming and that will be the case i guarantee you the biggest

[37:57] economic news story over the next 12 months is something that no one on twitter or anywhere else is talking about and the biggest story of the next decade is something that no one is talking about and i can say that confidently because it has always been the case and it always will be the case it's why i absolutely love by the way to go back to teleph his like barbell investment strategy i think i think is what he calls it which is this idea that like 90 of your money should be in the absolute safest you know risk-free like truly risk-free by the way like really um safe hopefully

[38:33] cover inflation although now maybe that's more challenging um investments and then 10 should be the highly you know risk-on things that maybe benefit from these insane spike events you know the like the crazy crypto thing or whatever it is that you're putting out there but that you know that 90 of your capital is truly safe from these insane insane events it's like yeah so i i think i i don't know if this is exactly it but i think his recommendation was like 90 treasuries 10 way out of the money call option something like that yeah and to me like the more practical everyday version of that is just this philosophy of save

[39:11] like a pessimist and invest like an optimist like if you can save like a pessimist with the idea that all of history is a continuous chain of surprises and setbacks and disappointments and pandemics and all these things that like suck and all of history is a continuous chain of that and it always will be so you say with the idea that like i need to survive and endure all of the unpredictable nonsense but if i can survive it if i can endure it and stick around long enough well then in the long run humans are really innovative and they fix things and they solve things then they rebuild and they

[39:44] recover and so i want to invest like an optimist so it's just like saving like pessimism in the short run so that you can survive long enough to enjoy the compounding of the long run is how i think about it yeah and to put it into your own words too from your piece uh the the saving like a pessimist is because of the humility you have about the absurdity of forecasting the future and then the investing like an optimist comes from having that wide imagination about what all of those potential futures can look like and so you can sort of map it exactly to that yeah it's

[40:17] totally it it's always been the case in history that we have you know very smart people have said the innovations are done look in the last 50 years we've done some amazing things but going forward it's just it's like we've picked the low-hanging fruit that's true today it was true 50 years ago 100 years ago and i think it just becomes like you said a failure of imagination about what we can do because let's say it was 1920 and you were looking at like hey what are the next the big innovations going to be for the next 25 years you of course could not have foreseen

[40:49] world war ii and therefore you could not have foreseen like i said penicillin nuclear energy rockets jet airplanes radar gps internet satellites it was impossible to see those because you could not have seen world war ii coming so a lot of it is just a failure of imagination that when we look forward we think linearly of just like oh this is the world today and it's going to progress very step by step and if i think about it in those terms like oh there's not a lot of innovations but the world's never linear it's like a slow couple years and then like boom everything breaks the world breaks once

[41:23] per decade on average it always has i think it always will and during those breakages that's where you get these step function innovations i think it was charged charles duell who was the head of the u.s patent office uh something around 1900 was the one that said the like famous quote that everything that can be invented has already been invented um and obviously hilariously wrong in hindsight but at the time and at many points in history as you point out people really thought that that like the major innovations have already been have already been made and so everything going forward is going to be incremental and obviously knowing what we know that

[42:00] just cannot be true i got into an argument with a friend uh this guy nick huber who's on twitter like a somewhat controversial figure uh sweaty startup he's um you know has the like uh made the like tomato farm joke that went super viral uh a year or so ago but i got into a debate with him about this because he basically said that technology is not going to impact our lives incrementally over the next 10 years and i just the absurdity of saying something like that knowing what we know about how much every 10-year period technology has impacted our lives incrementally is it's just it's astounding to me uh yeah i

[42:37] think i think it's it's usually true that when a new innovation comes about it takes 10 or 20 years for it to really start like weaving its way into society so it's easy in any period of time to look at the new innovations of the last five years and be like oh those aren't gonna do anything but you can't imagine where they're gonna go i mean some examples of this is like even when the car came about like the automobile it was for a long time inferior to the horse like when it came about it broke down every 100 feet and it was loud and the roads weren't equipped for it and

[43:10] there were no gas stations you could have named like a dozen things about why the car is never going to work and why the horse is always going to be superior and that was true that wasn't like you weren't missing something that was true you just couldn't foresee that like oh well actually in 20 years there's going to be gas stations every everywhere and the roads are going to be paved and they're going to the cars are going to be quieter and they'll be more reliable and in that world it's actually going to be amazing so i think it's it's always the case i mean i'm sure that was true

[43:36] for like the early internet i'm sure early in the day it was like easier and more efficient to fax something than it would to email something when people didn't have emails you know yeah and it's always easier to say why something is not going to work than it is to predict out all the things that need to change for it to work like i think about that net right now with a lot of the web 3 technology space and how it's very easy to like dunk on it right and say there's a lot of deficiencies and you know it's slow or it's insecure there's a hacks or

[44:06] whatever you can come up with a million reasons why decentralized tech is not going to dominate the world in the way that you know web3 aficionados think it is but can i sit down and think about you know a handful of things that might change that could completely shift that perspective probably it's just a lot harder to do i also think about in the same thread of what are things that we absolutely believe now that we are hilariously wrong about and that we will be proven hilariously wrong about a hundred years from now and i i heard an interview where you talked about this in the context of a great book that i also

[44:43] read the gene um which basically was talking about how 150 years ago our perception of what the gene was in the human genome was so fundamentally off what we now know to be the case and to be true and it got me thinking about like as a you know and i think you used the example of like people thought that there was a full-grown child like a mini full-grown child within human sperm inspiration right and then there was another theory that was really popular for a long period of time which is that sperm sculpted menstrual blood and that's where humans came from and the logic that they used was when a female

[45:17] gets pregnant she stops shedding menstrual blood she stops having her period and therefore the blood stays inside so that must be the human and the sperm must be sculpting the blood into the human and that was a popular medical like idea for centuries which we can crack up about now like i'm sitting here laughing this is hilarious but literally was the common understanding of among really smart educated people a question that i that i have a lot that like i think by definition you can't answer is who is the modern like galileo like who has this idea where everyone's like that guy's crazy lock him up he's a nut and he's totally

[45:53] right he's a hundred percent right about what it is but it completely goes against everything that we know to be quote unquote 100 true and you know that's going to be the case you know those people are out there another like more modern example james garfield the president died in what was that 1870s or 1880s something like that because the best doctor in the united states of america did not believe in germs so james garfield was shot he tried to he was trying to be assassinated he survived the bullet but his doctor stuck his like muddy finger into the bullet wound moving it around and then james

[46:27] garfield got this incredible infection and the doctor thought that infection was good he caught it like a good healthy pus and that pus was like a good that pus was a sign of healing and then he died from the infection and this was the president of the united states during our like great great grandparents lives like not that long ago and so you know there's going to be something like that 100 years from now that there's going to be some medical treatment that you and i are doing today that we're going to look back and be like how could we be so dumb i mean in

[46:58] our parents life that was smoking cigarettes yeah that was medically recommended in the 1920s and 30s and now we look back today we're like oh my god what were we thinking and so i think again by definition you can't answer what that is but we're gonna look back and and laugh or be really disappointed i do wonder whether there is something fundamentally different today like when you bring up the question of who is that person out there that is kind of being ostracized or you know just ignored plain ignored for whatever their idea is that will in a hundred years be the like genius that we look

[47:32] back on oh my god they came up with this idea because i and the reason i wonder whether it's different today is because of the internet and social media and how ideas proliferate and find their little micro communities that espouse them and can support them and promote them and i do wonder whether because of that because any idea can now reach millions of people um you know people can go tour around the world talk about whatever their crazy ideas are i wonder whether that has changed it a little bit versus the days when you know your reach as an individual was really geographically confined see i i buy that i would also

[48:10] buy the exact opposite if someone said it's actually worse today because the ability to cancel people is so much greater than it ever has been i i i equally believe in both sides of that that it's easier to get your crazy ideas attention and it's also easier for your crazy ideas to ruin your life do you worry about that as a as a public figure with a large internet presence and twitter presence do you worry or ever feel insecure about the risk of that yeah particularly of course the things that would be innocent not that i would like be trying to do something and say something like yeah

[48:47] i think it it i don't know if it worries me but i've because i feel like i'm a pretty open book online i'm not really there's not a lot that i'm hiding but so much i think can be misconstrued and whatnot and there's definitely times where i'll be talking with friends in private and there's a joke that we're telling that is a normal joke that you know men in their 30s would tell in private but i'm like god if like if we send this to the wrong person there's times where it's just like you know a lot of people who work in tech security work in it security will say

[49:20] like nothing is private you have no privacy anywhere ever and there's times where it's like yeah that's that's kind of frightening because every single person in the world says things in private that they do not want online everyone without exception and so that gets a little concerning you and i actually our first interaction kind of uh you know direct interaction was because someone tried to like cancel me or dunk on me for a like legitimate joke reply to a snarky tweet that you put out if you recall this like somebody you tweeted something um and i replied like some joke basically making fun of like banking culture and like oh a tier

[50:00] 2 banking analyst something or the other and someone came out and dunked on me and so i deleted it and then i sent you a message and was like imagine taking my joke that seriously and we kind of laughed about it that like no matter what you put out there there is someone that is going to take it way too seriously yeah and extrapolate it out to your character right it's like the whole idea that um you know you should uh you probably shouldn't take everything and like put it on to someone's character versus just to whatever a joke whatever it is that they're saying like

[50:29] fundamental attribution error or something like that totally there's also like online on social media there's the um road rage phenomenon where once you're not talking to a person you're talking to a handle then all all humanity goes out the window and it's just like in road rage it's easy to like flip someone off and scream at them but if you actually get out of your car and see the person you probably shake hands and be like hey i'm sorry i didn't mean any harm like it's so easy to dehumanize people when you're talking or when you're dealing with when you're not looking at their face and they're i think that really goes

[51:03] in uh on in social media where you misconstrue what people mean and it's easy to create a caricature of who they are and what they want when you're just dealing with their handle this is a common challenge or pushback i have to the web 3 ethos of pseudonymity and it's a massive concern that i have so i tweeted out again you know maybe slightly controversial i tweeted out this mike tyson quote recently which i think is an amazing quote not a referendum on mike tyson as a human being just like full disclosure it has nothing to do with my like like or dislike for the guy but he

[51:42] he once said social media made you all way too comfortable with disrespecting people and not getting punched in the face for it um and i think it's so funny because it's really true right like you can openly disrespect someone with zero repercussions and it used to be if you're in a bar and you do that you lose your teeth if you say something to someone you have to know like if you think about it just from a pure like risk spectrum standpoint like risk and expected value if you were going to say something to somebody it used to be that the upside was like everyone goes yeah and you kind

[52:16] of got the guy like that's great but the downside was also he turns around and sucks you in the damn face yes yes so so you had to do that calculus there was the full spectrum with social media and whether you're pseudonymous or not that risk side is now like here it's just been narrowed where i don't have to worry about getting punched in the face maybe i have to worry about the person getting mad at me or like taking a screenshot and sharing it but definitely not getting punched in the face but it's almost the opposite not only are you not going to get punched in the face you're

[52:46] probably gonna get a thousand retweets which you like like like not only do you have no downside you have all you have huge upside by being a troll and yeah it's that's a that's a tough thing the quote tweet phenomenon of like how easy it is to dunk on people and get a bunch of likes for it is a very sad reality of twitter at scale it's also why and i think packy mccormick a friend of mine was the one that said this it's also why um a lot of large accounts as you reach scale become more and more fortune cookie yeah because it becomes the

[53:18] safest thing to do because it's hot you don't get dunked on i think this is true for me if i were to go back and look at my tweets from five years ago i probably took way more risk than i do today because the the downside as you're following grows increases as well i think that's definitely true i've also done this a handful of times not very often but if someone says something really terrible about me on twitter just really like not just casual trolling but just really mean i will i mean 99 of time i ignore that but once in a while i've dm that person

[53:49] and i've said hey i'm really sorry i offended you uh i'll i'll try to do better next time like kill them with kindness every single time without exception every time i've done that they have written back and said hey i'm sorry i didn't mean i i shouldn't have i shouldn't have been so mean i'll i'll delete the tweet and this i think gets back to the road rage phenomenon of like when you're dealing with the handle it's easy to be that jerk and then once as soon as you realize you're actually dealing with a human being like most people are actually pretty civil most people are

[54:18] actually pretty nice and so i think i i do that just because i think it's interesting to see how quickly the demeanor changes once they realize they're dealing with a real human being i've done the exact same thing and had the exact same experience every single time it's crazy i had somebody um you know i put out this thread explaining what swift was right as the sanctions were coming out and it went quite viral and at the end of it we had planned to do an episode where we would talk about swift and the impact of all that so i'd linked to the podcast and someone shared it and said

[54:50] like oh this guy you know trying to profit from uh you know the deaths of ukrainian citizens and i just i sent the person a message and just said like hey man that clearly wasn't my intent like i'm not trying to profit from anybody's death like we're gonna do an episode i want people to tune into it like i get it i sort of understand like maybe like on the margins of it but come on you know you like you know that that wasn't the intention and he immediately had that same reaction like okay i deleted it thanks for reaching out to me you know i'm sorry that i did that it was a

[55:18] gut reaction yeah and that's like i don't know if i don't know if it's good or bad to see that because you realize how easy it is to be a troll because you realize that the people who are doing it don't understand exactly what they're doing it would be one thing if people who are a troll knew what they were doing and they're like the world needs to hear this this criticism and this person truly is awful and i need to let the world know it but 99 of the time that's not the case it's just the barriers to entry of of uh on in civil behavior are so low on

[55:50] social media yeah no it's it it totally makes sense i mean it's it's the challenge that i think uh everyone faces as they continue to scale and continue to share i would say that the good definitely outweighs the bad i mean the ability to reach people all around the world how many people your writing has reached at this point your book you know sold over a million copies and continues to reach people it's it's quite amazing when you think about all the opportunities it has afforded creative people to to go out and and uh and put things out into the world that reach people at scale you have a few

[56:23] followers yourself i think and you've had a couple of tweets that have gotten like a few hundred likes i think just a few hundred a few hundred um so i i know we're kind of starting to run into the end of time here and i i don't want to um i don't want to let you go before asking for a few um a few a few final questions um one would be you are a prolific writer um you i don't know i'm at this point you've written thousands of articles i imagine from your days at the motley fool on now to your kind of weekly post with

[56:54] with collaborative fund and all of the writing you've done the book etc what is your process like are you writing every single morning um from a creative standpoint are you reading a lot every day like what is your actual process and your kind of framework that allows you to be such a prolific uh writer of really evergreen content i re i read a lot and i spend a lot of time just kind of aimlessly wandering around thinking going for walks or just sitting on the couch and just trying to like throw thoughts around actually sitting down in a google doc and writing is a very small minority of of what i do

[57:32] the huge majority of it is just trying to form thoughts and come across little examples and data and whatnot so almost every day that i have during the week is unstructured there's very little on the calendar and a lot of it is just kind of casually reading sitting on the couch and reading a book or listening to a podcast or scrolling twitter or talking to a friend on the phone it's things that do not look like work to anyone but what it is is just like i'm just trying to find the idea for the next article or something what are the most what are the most consistent things that

[58:07] you read like what are you reading on a consistent basis you mentioned the economist i think that's a phenomenal one what are the other things you're consistently reading the most the most consistent is probably history books um that's probably that like takes up the lion's share they have absolutely nothing to do with investing or the economy most of the time but they're just i just think they're insights into how people think and if i can gain an insight into how people think i'll be able to tie that back to investing that's always how i look at the process and so that's interesting that's what most of it is it's an interesting

[58:39] perspective because most of your writing you know people would characterize it as financial writing you know you work at a venture fund you're not writing about venture investing you're not writing about startups you're not writing about really the stock market all that often you're writing about the world frameworks perspectives mental models you're not calling them any of those things or branding it in any specific way but when i read your work i i find myself coming back to it because it encourages me to think about things that i'm seeing around me in a different way or in a new in a new light that's why i find it so interesting

[59:13] because you're not a financial i mean you're not a financial writer you're writing about basically everything the world around us i'm trying to i think that that's right and i'm trying to write about how people think and how people think is a hundred percent of what matters in startups and in venture capital and in the stock market and whatnot so they do they all do all tie together but i want to get there in a roundabout way and i think if you can learn something if you can find something about human behavior that is true in multiple disciplines you've found like something that is very powerful in human behavior so if

[59:46] you can notice how people react to risk in medicine and in military history and in politics and in relationships and in education and all these other facets of life if you start seeing like there's this behavior that keeps coming up it it almost certainly applies to investing as well like people don't people don't think about risk in their investments any differently than they think about risk with their health or you know for example there's all these things that fall under the same umbrella and i think it's much more interesting and more complete to think about investing through the lens of those other fields rather than the narrow tiny little lens

[1:00:22] of finance through a finance textbook i think that's like so incomplete to view the economy just through the lens of an economist but if you view the economy through the lens of economics and sociology and psychology and history and political science and biology and all these like geopolitics all these other things that have nothing to do with economics you understand the big picture so much better as the son of an economist um i can definitely say that economists are notoriously wrong about the economy yeah uh and it's sort of the hammer to a nail you're right like to to a hammer everything looks like a nail if that is your lens if that

[1:01:02] is the framework if that is your map of reality everything in your life is going to guide you to the that specific one answer and if you don't view it from those other perspectives or think in that multi-disciplinary manner you're going to have a really hard time yeah i mean i think most fields are some mix of that like um i heard this great quote recently i'm going to butcher it but the the this person it was a geologist and he said there's no such thing as geology geology is where chemistry and physics and astronomy and all these other fields like overlap that's what geology is and to be a good

[1:01:36] geologist you need to be a good chemist you need to be a good physicist you need to be a good astronomer like all these all these things like mix together and i think that's really true for economics as well that you can be an amazing economist if you don't really have any uh economics background but you're but you really understand psychology you really understand politics you really understand sociology you really understand all these things all these different things the mixture of those the intersection of those is going to make you a really astute economist it would also make school much more interesting and engaging for kids if we

[1:02:09] were able to teach and learn that way in a way that's not so compartmentalized across subjects because the reality is they all bleed into each other and so how do you kind of it's an interesting thought experiment for another day but how do you reframe our traditional education system to allow children to learn in that way where you're going a crisis more networked learning you're kind of going across different subjects and pairing things together that seemingly don't make sense but that actually lead to much more compounded knowledge growth and here's the thing i think i think most colleges try to do that with general end requirements like if you are

[1:02:45] a computer science major you have to take psychology 101 and in biology et cetera so they try to do that but where they fail is that they never blend them together they they still all those courses live in their own little silo and they're never woven together to be like hey here's what psychology teaches us about economics you take psychology and then you switch gears and you take economics but you never blend them together two final questions for you um most recent book that you really enjoyed i read the biography of charles lindbergh of course was the first man to fly across the atlantic in 1927 he flew

[1:03:19] from new york to paris and it's not an exaggeration that he was the most famous man in the world when that occurred it just completely blew people's minds the airplane had been around for about 20 years but charles lindbergh flying across the atlantic was the first time that the entire world was like oh this is a big deal this is going to change everything this is not a little toy to fly you across town this is going to completely change the world he was 25 when that occurred and he became the most famous man in the world and then his life um was kind of a series of downfalls after

[1:03:51] that a couple years after that his two-year-old son was kidnapped and murdered and then in the 1930s he kind of cozied up to the nazis which destroyed his credibility of course and so his life was i think i think probably more than any other modern human his life was extreme highs and extreme lows and the book just describes how he took it and how he dealt with it and he's just a really fascinating person is this is it lindbergh by scott berg that's it yep okay awesome all right well i'm gonna order it and then my final question for you i mentioned it earlier my first uh first child son do in uh in

[1:04:29] about a month lessons or um one thing that you would provide by way of advice when my wife was pregnant with our first child our son we went to dinner at a house with some friends who had young kids themselves and their advice was love the kid that you have not the kid that you want that is a little bit of preparation to say that your child is gonna be hard in unique ways every child is hard in their unique ways and every child is gonna do things that you didn't expect and that maybe you didn't necessarily want you thought it was gonna turn out differently

[1:05:05] but just love the kid that you have rather than the one that you want maybe it's like the charlie munger quote that the the key to happiness is low expectations that's that's that's a great that's a great advice for a new parent yeah great way to end thank you so much morgan this was amazing so many takeaways for people and i think it's going to be i think it's going to be an amazing one for people to listen to thanks man this is fun thanks so much for listening to today's episode if you have any questions that you want featured in a future episode email us at

[1:05:32] hi h dot trwih.com leave us a review at apple or spotify to help us grow the reach of this podcast until next time we will see you [Music] think on it soon on it simple cup of tea

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