Morgan Housel
Appearances
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think it's true that some people would go nuts if they took the safe path. And even if they're doing it in the name of like, oh, I don't want to regret this, but they need some sort of variability in their life. They need to go out and do things. The other element is we don't know the paths that we didn't take. And I'll give you a personal example of this.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
20 years ago, I was enrolled in Pepperdine, but I didn't go. I was enrolled and just at the last second I transferred. So I never actually attended, but I was all enrolled. And of course, I think, what would my life have been if I had gone there? Because the school that I transferred to, I met my wife, started my career there.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And it's easy for me to say, God, I'm so glad I did not go there because my life would not be what it is today. But the truth is, maybe it would have been fine. It would have been better. You never know the paths that you didn't take, where they're going to end up.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So I took on this point, a well-calibrated sense of your future regret, but nobody knows the paths that they didn't take and where those would go. So it just makes it very difficult to have any idea of which path you should be on in that end. I think just avoiding those two camps of the extreme ends of it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Again, as I said earlier, I think that is actually more than half of people are on some sort of extreme end of spending way more than they can or saving way more than they need to. There's a fat tail distribution in how people manage their money. That's quite a few people. I think that's why I think it's one of the reasons why we live in a society that is richer than it's ever been by far.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Not just at the top, but at the median level. The average family is richer than they've ever been. But because we manage it in such extreme ways, is it making people happier? Are we happier today than we were 40 years ago or 100 years ago? That there's not a ton of evidence for.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Because managing it in a way that's actually going to make you happier and reduce your regret and live a more meaningful life is much harder than earning it and accumulating it over time.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think the knee-jerk response would be, oh, it helps you pull your consumption forward so you can have more toys that you would not have had in a different era. And I actually think for a lot of people it's the opposite, that there are a lot of people that have holes in their life, challenges in their life.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And a very easy answer if you're not happy with your life and you have a hole you're trying to fill is, well, if I had more money, this problem would go away. And in previous – generations, previous decades, you could not just go out and have a ton of more money. You earned your money from your paycheck. That was what you had.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Today, it makes it easier to try to fill that hole in your life with money. And so you can keep on getting more and more and more. And for a lot of people, they will wake up and say, oh, if only I had that car, my life would be better. And they go buy that car and they still feel the same. So it's like, ah, you know what? If I had that car and that watch, then I'd feel better.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They get the watch, they feel the same. Ah, you know what's missing? A house. I gotta go get that fancy house. It's this continuous spiral. And since you can finance all of that, it makes it easier and easier to go on that spiral. Will Smith made this incredible realization I loved from his biography. He said, when he was poor and depressed,
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
he had hope because he could tell himself, one day I'm going to have money and all these problems will go away. And then when he was rich and depressed, he was still depressed and he lost all his hope because he had more money than he could ever spend. So he could not tell himself, if only I had more money, these problems would go away.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And so for a lot of people, the availability of credit is giving them, I think, a false sense of hope that's keeping them on this hamster wheel of, if only I had this bigger house, this nicer car, all these problems that I wake up with every morning would go away. and it keeps you on that path.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Which I think if you actually don't have access to that much money, you're more likely to wake up and say, what is this hole? I need to fix it in a different way. It's health, it's relationships, it's purpose, whatever it might be, rather than trying to put a bandaid of credit over it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Money absolutely can buy happiness. It's often though an indirect path. And what I mean by that is, will a big fancy house make you happier? And the answer is probably yes. But the reason it might is because it'll make it easier to host friends and family. And that's what's actually making you happy. It's those extra connections with those people. Does going on a nice vacation make you happy?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
An expensive vacation? Yes. Because you're going to form memories with your kids, with your spouse, with your friends while you're there. That's what's making you happy. So you can't say that money doesn't make people happy. It does. It obviously does. The other thing that's important is what really makes people happy in their core is some sense of purpose.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
There's a great quote from the movie Boiler Room where he says, people who say money doesn't buy happiness don't have any. And I think there's a lot of truth to that, that people who become richer say, of course, I was happier now than I was when I was poor. Of course, I would never want to go back there.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But often what's happening is the reason that you were happier when you were rich is because the reason you got rich is because you found some sort of purpose. You built a business. You were successful in your career. And that gave you a good sense of purpose and identity. And where you see the opposite of that are lottery winners.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
who become rich, but not because they made a good investment, not because they built a business, not because they're successful and their peers like them and whatnot. They just got lucky. And those are the people, so many studies, that winning the lottery will not make you happy. It might for a very short period of time, but over time it doesn't because you didn't get any added purpose.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You can't wake up in the morning and say, I built this business. I did it. I'm so successful. I got my PhD. There's none of that. You just got lucky. And so that's not going to bring you much happiness. So money does make you happier. I think it can for everybody if you learn how to spend it in your personality and whatnot. Spending a lot of it, spending a ton of money can make you happier.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think there's almost no limit to it, but it's different for everybody. And it's often a roundabout way. I think a lot about this when... If I go on an expensive vacation with my kids, let's say that's a 10. That's a 10 out of 10 in terms of just happiness, memories and whatnot. But actually what was making me happy was spending uninterrupted time with my kids.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So staying home and playing Legos on the living room floor with them, that might be like an eight and a half because that's what's making me happy. You just have to figure out like the actual purpose. I think a good formula for a pretty good life at the simplest level is independence plus purpose.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You need to have a purpose that is bigger than yourself that you are chasing, family, religion, work, whatever it might be, different for everybody. And you need to have the independence to make sure you can do it on your own terms rather than chasing somebody else's goal. That's the highest level of psychological well-being, independence and purpose.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And money is not one of those things, but you can easily see how money can help those things. Money brings you independence. It can allow you to find your purpose in a bigger way. You're not chasing, you're not at your boss's whim. You can do whatever you want. You're independent. So using money as a tool can make you happier. Spending money can make you happier.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But it's not the thing that is making you happier. It's just a tool to do other things and acquire other things that are actually making you happy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
There's a gerontologist named Karl Pillemer who wrote a great book called 30 Lessons for Living. And what he did is he interviewed about 100 centenarians and he just said, tell me about your life. What advice do you have for the rest of us? And there's a section of his book about money.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And he says of the 1,000 people he interviewed, of the 1,000 centenarians he interviewed, not a single one of them looking back at their lives said, I wish I earned more money. Not one, but virtually every one of them said, I wish I spent more time with my kids. I wish I was nicer to people. I wish I spent more time with my friends, my family. That was universal.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But earn more money was not in there whatsoever. That stuck with me.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It can, but I think there are a lot of people for whom it's the opposite. If you are a partner at a law firm, you're earning a ton of money. Congratulations, great. You probably have a big house and a nice car. You're also probably working 100 hours a week. And the things that might fill your soul, it's different for everybody.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
This is not universal, but what might actually make you happy, spending time with your friends, your family, exercising, sleeping late, is not available to you. So that's why it's independence plus purpose. And I think there are a lot of people who make millions of dollars per year and have no independence whatsoever. They are completely tied to their boss's whims, to their work, to their employer.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They might love it. I'm not saying you shouldn't do that, but they have no independence at all. I think there are billionaires who have no independence. Because they are so tied to doing things whether they like it or not. And that's – I think a lot of people go crazy in that situation because they're like, I'm making $5 million a year, but it's not making me any happier.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's like, yeah, what would make you happier is independence. And you are pushing yourself away from that. You were probably more independent when you were 15 and had no money than you are at 40 making millions of dollars a year.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yeah. And what's true is that that scenario, that dream scenario, might be true for 1% of the people, that they can earn enough money to retire young and then pursue whatever they want. There's an entrepreneur named Felix Dennis who wrote a book many years ago called How to Get Rich. And there's a quote in that book.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He says he was at the time maybe in his 70s and worth about a billion dollars, something like that. And he said, if I knew what I knew now and I could do life over again, I would make as much money as I could, retire at age 35, and plant trees and write poetry. And he's like, looking back, that's what I should have done. But let's leave aside that, of course, not everybody can do that.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He kept working.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Well, I think there are a lot of people. I think you're one of them and I'm one of them who enjoy what they do. And if you and I got to a point where we're completely financially independent, all the money we'll need for the rest of our life, I would still be a writer. You would still do your research because we enjoy it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's not just, right. And I think if actually, if you are the kind of person who says, once I hit my number, I'm done, you probably don't love your work at all. Almost by definition, you don't. I think what's dangerous though, is when the money itself is part of your identity. I like being a writer. I like the process of writing.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But if I were to say, I have to keep writing books because I need to make more money. I just, I have to have a higher net worth, particularly if I'm past the point of taking care of my family. Then at that point, I think money is actually like a liability. It's a financial asset and a psychological liability. It's taking control over what you're doing in life.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
If you're saying, I have to have more of it. I mean, if there's anything in life where you're like, I have to have more. And even when I get more, my satiation point goes higher and higher. What is that? It's an addiction. And it's controlling you at that point. So there are a lot of people for whom money is a financial asset and a psychological liability.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think that's actually true for some of the richest people in society. that the more like it grows exponentially over time, the richer you become, the more addicted to having more grows on you.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And for a lot of people, that pain is a social pain, that they're not going to climb high enough on the social ladder, that their peers are earning more than them, that their neighbors have a bigger house, whatever it might be. That's the pain that they're trying to avoid. And that is a game that cannot be won because gratefully, thankfully, there are a lot of very wealthy people in this world.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And no matter how much money you're making, there's always somebody out there who's earning more, living better, and has a bigger house and a nicer car. That's always the case. So if you are on that path of I need to earn more to climb that ladder so I can have more than the next guy, I mean, that's a game that you cannot win.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think that game of comparison too also grows the wealthier you are. The billionaires are more likely to compare themselves to other billionaires than the minimum wage worker is to compare themselves to somebody making $10 an hour or whatever. You are more likely to compare your lifestyle the richer you become.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And since that comparison to other people is what gives you a feeling of inadequacy, There's this irony. It's hard to wrap your head around it and come to terms with it. But some of the most money insecure people you'll ever meet are the richest people you'll ever meet. People who live in a 15,000 square foot mansion. Yeah, but he's got a 17,000 square foot mansion.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Things that ordinary people would never consider. That just consumes their life. And again, that's the point where money is like the psychological debt. It's psychological liability. It's controlling their... It becomes an integral part of their identity. They wake up in the morning and look in the mirror and they see... a person who makes money. That's their identity. Who are you?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I'm a person who makes money. And that's when like your process of chasing it just becomes like a detriment to your happiness over time. You're not using it as a tool to live a better life. You're using it as a yardstick to measure yourself against others by.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Right. I view it in the negative sense of the people who work to get money so hard that it takes a physical toll on their body. And that is so incredibly common. And that's another form of debt that you can very easily measure your net worth and your income. You can put a number on it very clean to measure. It's much harder to measure your health
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think it's easier for people to say, yes, I'm only sleeping five hours a night and I'm on my third divorce and I'm overweight, but I'm making a lot of money this year. Because one is very easy to measure and the others are much harder. Your happiness, your health, whatnot, it's harder to measure that.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I do think too that if you are very wealthy, particularly the very, very wealthy, you get so accustomed towards, I can snap my fingers and literally get anything, a Gulfstream jet, a mansion, whatever, I can get it right now. But health is like this last elusive thing. that by and large you cannot purchase. And I think that drives a lot of people crazy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And that's why if you can have anything in the world by snapping your fingers and getting it, then you eventually move towards what's the thing that you don't have, and that's immortality. And I think there's a long history of that going back to the robber barons. John D. Rockefeller was obsessed with it. Andrew Carnegie was obsessed with it. If you can have everything material in the world,
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You're still going to have desire. And ordinary people can sit around and dream and say, one day I'm going to have the mansion. We're not even a mansion. One day I'm going to have a house of my own. I'm going to have a car. I'm going to send my kids to college. Everybody wants to dream. So if all that is a given, you have all the money you could ever spend, you still want to dream.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So what do you dream about? You dream about immortality. And so I think that's been the case for a very long period of time. What's interesting too is that there was a historian who looked back at the British peerage. He got a lot of data on how long people lived in various points of the UK economy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And what he found was until about, I think it was 1750, the richest members of the UK had among the shortest lives. The poorest people were some of them who were living the longest. And he dug into it. So how could this be? The richest people die the fastest. And what he found is the richest people were the only ones who could afford
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
all the quack medicines and the sham doctors who were just poisoning them. They were poisoning them back in the day when we knew nothing about medicine. So I think the idea of I want a better life and I should be able to buy that, like there's a long history of that backfiring on people as well.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Do you think you see this, though, where the wealthiest people are spending money on treatments that you either know are not going to work or are a very questionable treatment? Yeah, all the time. And that might backfire on you. That might make you less healthy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
See, I can see a very wealthy person using their money if you are very sick and you have a rare cancer to throw the kitchen sink at it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Those million dollar therapies and whatnot, absolutely. I think it's a different animal if you are already pretty healthy to say, I'm going to throw my money at trying to become immortal or close to it, whatever it might be. That's a different thing.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Maybe that's with dopamine too, right? We always want more. It's the pursuit of more. And if you're wealthy enough to have everything, you still have a part of your brain that's like, yeah, but I want more. I want more. I want more.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And if you've exhausted the physical part of the world, that material part of the world, and let's leave aside the billionaires, even the average ordinary American family that owns a modest house, owns a car that functions well, owns nice clothes, will send their kids to a state school. By a lot of historical definitions, they have everything.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They have everything you would ever need, but you're always yearning for more. It's always this pursuit of, well, what else don't I have? And I think what you want more than anything in life is what you want and cannot have. That's what you're going to chase with all of your effort is the thing that you want and cannot have. And I think that's where health comes in for a lot of these people.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But maybe with social media, it makes it seem so that there are virtually anything is within your reach. because it used to be before social media that your view of the world was mostly your neighbors and your coworkers and your siblings. And now everybody's view of the world is a curated highlight reel of the most extreme events in the world.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So if you are a 15 year old scrolling through Instagram, then what is within your reach, what looks within your reach is a Ferrari and a private jet and a mansion in a way that didn't exist when you and I were kids. And I think it makes the aspiration level that much harder.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
This is a great anecdote that Kanye West used to practice his Grammy speech when he was walking to the train because he couldn't afford the car. Like when he was an absolute nobody, he was practicing his Grammy acceptance speech of just like absolute ambition of where you're going.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
If you look at the studies, when you ask teenagers, what is your preferred career? What do you want to be when you grow up? It used to be astronaut. It used to be doctor. It used to be entrepreneur. Now it's influencer by far is what people want to be. It seems like the quickest path to fame and wealth. And for a lot of people, it is. My sister-in-law is a kindergarten teacher.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
She has a girl in her class who has over a million followers on YouTube as a kindergartner. Like that didn't exist when you and I were kids or it was so rare. But now like enough people know stories like that, even if there are a few of them, enough people know stories to give you the sense of hope of like, well, if they could do it, I could do it too.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
There's a great quote from Duval where he says, what you want to be is rich and anonymous. That's the sweet spot that you want to be. The opposite, you are poor and famous. And that's the hardest spot to be in.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But if you can be rich and anonymous, because I think there's a really important concept with money that I call social debt, which is when the money that you have influences, it changes how other people think of you and even maybe how you think about yourself. And you can measure your asset. It's not actually debt.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's not like you repay the bank, but it is very much a debt in terms of it is an anchor on your happiness that you have to repay. And fame is the ultimate social debt. And for a lot of people, their social debt of fame is more than the money that they made from whatever made them famous to begin with. And there's this anecdote from Tiger Woods where he said –
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He loves scuba diving because when he's 100 feet under the ocean is the only time in the world where people aren't taking pictures of him and asking things of him and gawking at him. That sucks. Not that you have a lot of sympathy for somebody like that, but it does suck. You can measure his net worth very quickly. What's your net worth? Just show me the number.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
How do you measure the liability of feeling like you have no privacy unless you are scuba diving? That's a hard thing. And at various levels, a lot of people have that. Even if you earn a modest income and all of a sudden your friends, your family starts saying, hey, I heard you got a raise. I could use a little bit myself. That's a social debt. They want you to pay at dinner and whatnot.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And maybe you're happy to do that. You're happy to share it. But let's not pretend that there's not a little bit of social debt and liability that comes with every added amount of income that you have.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yeah, the smartest minds of the generation work at Facebook and Instagram and Twitter to figure out how to give you FOMO, how to generate a little bit more dopamine. And they're very good at it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yeah. Warren Buffett brought this up one time. He said a good way to think about life is, it's kind of grim, but he said, write what you want your obituary to say, and then work backwards to live up to it. And in that situation, if you were to write, like, what do you want your obituary to say? Most people would say, oh, I hope it says Morgan was a good father. He was a good husband.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He helped his community. He was admired by his coworkers. That's what I wanted to say. And for a lot of people, it's different for everyone, but it'd be something like that. And why Buffett said it was important is because nobody who's writing their preferred obituary would say, would include the size of their house, how many horsepower their car had, how nice their clothes were.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Because everybody knows it doesn't matter. And it's like, forget who made this idea. There's a thing between resume virtues and eulogy virtues. Yeah, that was David Brooks. David Brooks said that. Thank you. Resume virtues are, you know, how much money you make, your degrees, everything. Eulogy virtues is he was a great father. He was a great friend. He helped his community. He was funny.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think most people really aspire to have eulogy virtues, but they spend all their day chasing resume virtues. Resume virtues can be great. I want a good education. I want a good income. But what you're really trying to chase is to use those things to gain more resume virtues at the end of the day. So I think if you think about it through that lens, a lot of these things become clear.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And that's why, like I said, going on a great vacation with my kids, if that's a 10, what's really fun about that is spending time with them when I'm detached from work. I'm not checking my phone every seven seconds. I'm just spending hours with my kids, giving them my full attention. That's what made me happy. The view was great on the beach, cool, but that's what made me happy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I can do that at home, can't I? And so that's the difference between like going to Maui is a resume virtue. Spending time with your kids is a eulogy virtue.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yeah. I think there's two ways to think about this. One is my friend Michael Batnick phrased it this way. He said, if I ask you, what is eight plus eight plus eight plus eight? You figure that out in five seconds. That's an easy one. If I said, what is eight times eight times eight times eight times eight? Even if you're a math nerd, it's too hard. You can't figure it out.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
We're not wired for exponential thinking. You just can't do it. And therefore, even if you show you the numbers, hey, invest a small amount, retire with a million dollars. I think it's so counterintuitive that most people see that and they're like, eh, okay, that doesn't really seem right. It doesn't really pass the sniff test, how big the numbers can get, how quickly the numbers can get big.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The other thing is if you tell a young person, hey, You have 50 years in front of you to invest. That's great. Time's on your side. When you're 70 years old, you're going to have $10 million. 50 years from now might as well be 10,000 years from now. You're talking about people who don't know what they're going to eat for dinner tonight.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And you're talking about like, hey, let's talk about the year 2077. It's so far out of there, even if that's the right way to think about it. It's a tough way to think about it. And time perception, you mentioned, is so difficult for people. If I said you're going to get punched in the face in 10 seconds, like that's a fear. And you're like, oh, I don't.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But if I said someone's going to punch you in the face 50 years from now, I'll deal with it when I get there. It's so easy to put out of sight, out of mind. And so and the other thing is Warren Buffett talked about this a lot. He said. Actually, it was Charlie Munger who said this. He said, when teaching finance to young people, people either understand it instantly or never.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He's like, some people are just wired to get it and some people aren't. And that's always been the case. Munger often said all the time, he said, the iron rule of math is only 1% of people can end up in the top 1%. And that's why for a lot of people, yes, you should save and invest for 50 years. Let's not pretend that that is easy or that everybody is psychologically able to do it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Some people are wired differently. Of course, that's the case, as they are with health and intelligence and lots of other things. So I do think there's a thing for financial education of getting people to understand what is possible. But I don't think we'll ever live in a world where everyone gets it and does it. The world has never existed and I think will never exist because it's not math.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's not a spreadsheet. It's behavior. And we now live in a world where we understand the dangers of smoking and highly processed foods and whatever it might be. But even if we know it, people still do it because it's behavioral. It's not intelligence. So showing people the numbers and getting them to do it is night and day.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Oh, I think it's very different. What I meant by no one is crazy is that it is so easy for people to look around at society and how other people are spending their money and saving their money and investing their money and say, why the hell would anybody do that? Why would you waste your money on this? Why would you hoard your money like that?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Or if it's like the marshmallow test, which got misconstrued in many ways, but it's like, yeah, would you rather have one right now or two in the future? I think for a lot of people, it's just like there. There are some people for whom they're wired so differently for this. So you hear stories about the old, very wealthy people, the old billionaires.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
When they were 20 years old, they would not get a haircut because they knew that $3 haircut would compound into $100 by the time they're older. They were just so wired from birth to understand this and to have a very long perception of time to do it. By definition, that's the rarity. Most people are not like that. And I don't know if they should be either.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I don't know if you should be the kind of person your entire life who is always saving for a future and never enjoying what you have too. Like that could lead to a lot of regret as well.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
My understanding, and maybe this is not complete, but my understanding, at least part of it, was neither of those two things. The kids who did the best and resisted it were the ones who distracted themselves. They weren't even thinking about the marshmallow. They would sing a song. They would start playing with their shoes. They'd play with another kid.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And the ones who could not resist are the ones who just sat there staring at the one marshmallow. that was tempting them. That's too hard to resist. Almost everybody will resist that. It was like the environment that they put themselves in.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I actually think if you peel back the onion layer of what's going on in those people's lives, no one is really that crazy with how they spend their money or save their money. It makes sense to them in that moment. My brother-in-law is a social worker. He works with very disadvantaged kids, kids who are abused at home, who don't have homes.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think they were so, because their kids are so distracted. They have the memory of a goldfish. They wanted to just go do something. They'd sing a song. They'd play with their shoes. They'd play with their friends. And then by dint of doing that, all of a sudden they had waited long enough to get the two marshmallows. I think that was at least part of it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think that's true for a lot of people too. Think about the stock market. where so much temptation to always watch it and see what it's doing because we have CNBC and there's the ticker and the lights are green and red and whatnot. For a lot of people, it's impossible to watch that. Or even worse, in Robinhood, you get a push notification on your phone. That's too hard to resist.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But you know where you see very good investing behavior, where people do a really good job, is when you invest automatically every paycheck into your 401k and you forgot your password. Because that environment is against temptation. There's nothing to do. You forgot your password. But if you're just bombarding yourself with stimulus of what to do, most people cannot resist that.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And a lot of those kids, not surprisingly, do very poorly at school. They misbehave. They get in fights. They don't go to school. And it is so common for those kids that the teacher will look at those kids and say, why are you acting like this? Why don't you do the right thing? It's so obvious. And he says, there's a phrase in social work, all behavior makes sense with enough information.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Jerry Seinfeld said one of the reasons he quit his show in the 1990s was because what made it so good and so funny is that he and Larry David would go like sit in a deli and watch people order and make a joke. That's where they got their content from was observing the world. But they got so busy and so famous that they couldn't do that anymore.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And he knew that it was going to come at the detriment of the show, that it wasn't like the ultimate reward of like how big was the season? How many people watch the show? How much money do we make? What made them great was going out and living and doing their thing. And once it came at the expense of that, it didn't work anymore.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Maybe that's a good analogy for the lottery winner who gets a lot of money, a lot of dopamine in this example, but didn't put anything into it. You didn't build a business. You didn't work at your career. You just got lucky. So it doesn't feel as good.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
That if you look at what those kids are dealing with in life, it would all make sense to you, why they are misbehaving at school. And I think that's a powerful idea for a lot of things in life, that all behavior makes sense with enough information.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I feel like so much of it too with parenting. This is a slightly different topic, but it's the things that you're not trying to have fun with that build the biggest memories. And for me, it's when I travel with my son, he's nine. So we go on a lot of trips now. What's fun is not the event we're going to. whether it's skiing or a football game, that's not the best part of the trip.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The best part of the trip is flying with him, renting a car with him, going out to dinner with him. That's where you get all the memories. It's like it's a process of doing it that you're really enjoying that's going to build all the memories, not necessarily the final destination where you're going.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Going through a challenge with someone, going through a journey of like, we did this together. We went through it together. I think there's so much of that. If you go on a long hike with somebody at the top, like you want to hug each other. Like we just did that together. And it's not even about being at the top. It's like the journey you did with each other.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's so cliche, but I think it's true for a lot of things.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And you can really apply it to money too, that you could easily tie how I spend my money today and save my money today based off of the experience that I've had in life, how I was raised, where I was raised, how old I am, the generation I was born into. all things that are outside of my control. And it is very common to look at people who are spending a ton of money.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Absolutely. Yeah. And this is why solitary confinement is such a torture. The extreme end of it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yeah.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think there's this anecdote that I love, which was from Franklin Roosevelt when he was a kid. I think he was like five years old. He complained to his mother one day. He said, my entire life is rules and schedules, and I hate it. So his mom said, okay, Frankie, tomorrow you can do whatever you want. The day is yours, anything you want. And His mom, Sarah Roosevelt, wrote in her diary that night.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He said that day that he could do anything, he went back to his normal schedule. He did everything on schedule like he was supposed to do, but he was much happier because nobody was telling him to do it. And I think that's what's true for a lot of people. Freedom does not mean you do nothing. It doesn't necessarily mean you retire. It doesn't mean you quit working.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I want to be free and independent, which means I want to wake up every morning and say I can do whatever the hell I want today, even if most mornings what I want to do is work. and be productive and put myself to use. So I think a lot of people misconstrue freedom as I'm gonna ride off into the sunset and do nothing now.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's like, no, I think people have an inherent drive to wanna be productive and social and do things. But there's a big difference between your boss telling you to do it and doing it on your own terms. When I was a junior in college, Like a lot of young men, I wanted to be an investment banker. That's what looked like power and prestige.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So I got this investment banking internship and it was absolutely miserable. They had this saying that is so funny in hindsight. They said, if you don't come to work on Saturday, don't bother coming back on Sunday. Like just the culture of it was work 100 hours a week. Just go nuts with it. And I hated it. I hated every single second and I had to leave.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Well, there's a story behind that. They're spending a ton of money because they want some, you know, for a lot of them, they want some sort of attention. They're trying to get people's attention. Maybe sometimes they're trying to cover up a hole. Maybe they actually are really enjoying it. People who are hoarding a lot of money, there's a story there too.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But it wasn't because I was not into hard work. I think I was absolutely willing to work hard. I just didn't want anyone to tell me to do it. And so when I became not necessarily financially independent, but I could have a job, it was more entrepreneurial. It was like, oh, I will work very hard. And sometimes I might work as hard as an investment banker.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I might work 80 hours a week, but it's on my terms. And I think everyone is way more willing to do that than they are to be told what to do. I think that is an inherent human driver. And if you can use your money for independence to where you can wake up and say,
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I have the financial flexibility to work where I want, live where I want, retire what I want, take a different job, move to a different department, even if it's going to pay less. That giving yourself independence and autonomy, I think for most people is what's going to drive. That's the highest tool that you can use with money.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And what's important about that is where do you get independence with money? It's the things you don't spend money on. It's the car you didn't buy. It's the house you didn't buy. And most people will view that as like idle money. You're saving up money. It's just sitting in the bank doing nothing. No, no, no. It's giving you independence.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And once you view as like every dollar that you don't spend is money that you are actually spending on independence. It's not idle. It's giving you marginal more independence than you had the day before. Then I think that's, to me, that's why I save money. I'm not saving money because I'm a pessimist. I think it's all going to come collapsing down.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I'm saving money because I want to be independent because that's what I think is going to give me the most fulfillment, the most happiness. And that's where the savings comes from.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They experience something that's causing them to do that. And I think that this is really important for two reasons. One, it forces you to realize that there is not one right way to manage money, to save it, to spend it. You gotta figure out what works for you. And what works for me might not work for you. There's not one answer. And it's not like math.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But did you feel like you had independence? You could teach what you want, say what you want. There was a level of independence.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Two things come to mind here. One is like if... Most people understand inherently the dangers of communism or something. If the government's telling you what to do, when to do it, what to say, that's a bad thing. It's going to erode society. But a lot of those people work at a job where their boss tells them what time to come in, what to wear, what to say, how to act, whatnot.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So they really understand it fundamentally at one level, but they're actually doing some version. Now, companies have to manage their employees, whatnot. It's not a knock against that. But I think what's really true for independents and people, if they eventually move on, to writing poetry and playing in their garden, whatever it might be, is that you leave on your own terms.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
That whatever your exit from your career was, was because you wanted to do it on your own terms. So the thing in psychology called the peak end rule, where to simplify it, minimalize it, a lot of how you remember any endeavor that you did in life, a career, a vacation, whatever it is, is how you felt at the very end. And for a lot of people, if you have a great career,
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You enjoyed your career, you helped people, you made money, your colleagues appreciated you, but then you got fired or your boss came to you and said, you're too old to keep doing this. That's bad. You'll never recover from that. And you compare that to the people who quit on their own terms. They said, look, I'm proud of my career, but that's enough.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I'm going to take a step back and pass the baton to another generation. Those are the people who, even if they didn't really enjoy their career that much, will look back at it fondly because it gets back to freedom and autonomy and control. Do you leave on your own terms or are you forced out on somebody else's schedule? Yeah.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And so I think maximum, wherever you go in life, whatever you're doing, even if you're not an entrepreneur, maximizing for independence and autonomy and doing it on your own terms, on your own calendar is absolutely vital in anything you're doing. I mean, most people are not necessarily, particularly as they get older, are not necessarily scared of death.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Like in math, two plus two equals four for everybody. And in money, it's like, you gotta figure it out for yourself. It's almost like your taste in food or your taste in music. Like, just find out what you like and do that. The other thing is I think you become less cynical about other people's decisions.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They're scared of a death not on their own terms. that's going to sneak up on them where they're not going to have a chance to say goodbye. So I think that's a good analogy for a lot of these things. We're not scared of the ultimate outcome. We're scared of not being able to do it on our own terms.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I heard it phrased as when you get older, you either become an elder or elderly. You get to choose which one. Do you want to be an elder and help other people or elderly? You're just going to disintegrate over time. You got to choose which one.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He's already given away, I think about a hundred billion. And the plan is to give away the vast majority. I think he announced recently that he was going to leave each of his kids a billion dollars for philanthropy, not for their personal use, but for philanthropy and the rest is all given away.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And you don't spend all your day saying, look at that idiot spending their money in a stupid way. No, it's just you got to figure it out for yourself. I think you become happier when you're a little less cynical about how other people are doing it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
There are a couple of families. I think of all the big robber baron families of 150 years ago, the Rockefellers probably did it the best. The Rockefellers still have a lot of wealth. The Vanderbilts by far did it the worst. They just squandered it in a couple of generations. And this is fairly well known now, but it's pretty interesting.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The first Vanderbilt heir who did not get a trust fund for whom all the money was dried up, the first person who didn't get any money was Anderson Cooper. His mother, Gloria Vanderbilt, was the last Vanderbilt who got a big trust fund. And Cooper, I think not coincidentally, is the most successful and probably the happiest Vanderbilt heir in 150 years. And he's talked about this.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He was like, I was the first person in my family who had to make a name for himself The fact that his last name's not Vanderbilt, it's Cooper, and he didn't get any money. He was like, I had to go out and find my own way and find my own identity. Whereas all of his ancestors, their identity was you're rich from birth. That's your identity. You don't need to go out and make a name for yourself.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You don't need to work hard. You don't need to create anything. All you need to do is sit here and spend your money. And it made them miserable. And Cooper was the first person. Look, this is very anecdotal. I'm not saying this is how it's going to work for everyone.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But the first person who had to make a name for himself and work for himself was the one who was the most successful and probably the happiest.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's hard to have sympathy for a Vanderbilt heir who inherited $400 million on their 18th birthday. They're gonna have a lot of sympathy for that, right?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think the situation is you don't have sympathy for them, but you should also realize that if you were in their shoes, you would probably self-destruct as well. It's very difficult to do. Once in a while, you see someone who is completely motivated, irrespective of money. Mark Zuckerberg was offered a billion dollars cash for Facebook when I think he was 22. And he said, no, I don't want it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I'm going to keep going. That's a ridiculously rare personality. And I think most people, if I inherited a billion dollars on my 18th birthday, I probably would have no motivation. But if Musk did, if Elon Musk did, wouldn't slow them down whatsoever. Jeff Bezos did, Mark Zuckerberg did. Those are very rare people who have a motivation that is so detached from money.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
For a lot of those people, it's the pursuit of solving the problem that's doing it. And I have a good friend, Patrick O'Shaughnessy, who phrased it this way. I'm going to paraphrase him, but he said, if you had to describe the mindset of those very successful entrepreneurs... It's not driven. It's not motivated. It's tortured.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
That they wake up every morning tortured by the problems that they're not fixing and the opportunities that they have not yet found. And there's a famous Elon Musk interview. I think it was on Lex Friedman where he was like, you think you want to be me, the richest man in the world, but you don't. And he was like, it's a storm up here. It's a mess up here. I think that's true for a lot of people.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
My friend, David Senra is a great podcast.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He's one of the best guys in the world I've ever met. But he says of all the 350 founders that he's profiled, only one of them has he actually said, I would want that guy's life. It was Ed Thorpe. But put that aside. Of the other 349, I think you read their biography and you can say, I'm so glad that they existed. Most of the time, they did a lot of good in the world.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They created products that make us better off. And never in a million years would I want his life. It seems miserable. Because most of the time, the simple answer is their financial and career success came, the reason they're so successful is because they devoted every waking second of their entire life to this one problem, this one endeavor.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And that came at the expense of their family life, of their health, of their mental health, their physical health. And if you get a full view of there, it's easy to look at Musk and say, oh, richest man in the world. Wouldn't that be fun? Yeah, but it came because he's had this life of a singular devotion to, well, in his case, two or three different companies.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think if you take that full picture, it's less glamorous than it would seem. And it's too tempting in life to... have envy of someone and say, oh, well, I want their money and I want their career and their relationship or their humor. You're picking little bits and pieces from their life, but it's not how it works. You got to take the full package.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And when you look at the full package of those people who you might envy, if you actually take a complete view of their life, maybe some of them you would say, no, that is a great life, like Ed Thorpe. But I think for a lot of them, if you got the full view, you would look at it and say, oh, that's actually a lot different than I thought. I frame this one way.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
If you look at, this is flagrantly anecdotal, but among the 10 richest men in the world, there are a cumulative 15 divorces among them. So it's very easy, particularly for young people to say, oh, that's like, I'm jealous of that person. I envy that person. I want to be that person.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But I think for a lot of them, if you actually got a full view of their life, it's not nearly as good as you would think.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think because money is so tangible, counting it is so easy and so tangible, that even if people know that, they're going to put an inordinate amount of effort towards making more money. at the expense of their relationships, their health, their children, their friends, their family. It comes at the expense. Because if I were to say, how do I increase my income by 10%?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I can wrap my head around that. I can give you a number of what that would be and how I might be able to do it. But if I said, how do I get my kids to love me 10% more? I have no idea how to measure that or how to even pursue it. So even if I want that, because it's hard, it's not tangible, it's much easier to ignore and just pursue the thing that you can count, which is money.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And they're constantly in the moment. They're just living right there. This is a great cartoon. A lot of people have probably seen it. It's a guy and a dog sitting on a lake. And the guy's thought bubble coming out of his head is he's thinking about money. He's thinking about work. He's thinking about stocks. The dog's thought bubble is a picture of them sitting on the lake.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The dog's just right in the moment, just enjoying what he's doing right there. I think that's my jealousy of my dog when I look at her. 24 hours a day, there's a dog will recognize this. They're just in the moment. They just enjoy what they're doing, whatever they're doing. And everyone, including me, is either worrying, thinking about the past or dreaming about the future.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The worst guard dogs in the world. You can break into your house, a golden retriever will just come up and wag its tail and lick you.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Well, I think the balance between it is so difficult because for a lot of people who have families and are working very hard, at the core, if you said, why are you working so hard? Well, to make more money. Why do you want more money? To take care of my family. Like it's for very good intentions, but it's coming at the expense of time with your family and whatnot.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So a lot of things, it's not that you're making a terrible decision. You're doing what you think is right. And then if you said, well, how much is enough to take care of your family? By and large, it's a game of comparison. The way that people lived 100 years ago, what is a good life 100 years ago is a completely inadequate life today. Not even 100 years ago.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You go back to our parents' generation and say in the 1950s. There is a nostalgia for the 1950s of, oh, life was so good then and so great and the white picket fence and the dog and the stay-at-home mom. It was a good picture. But what was the definition of a good life back then? A good middle-class life was an 800-square-foot house with one bathroom for four people.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
and camping for your annual vacation, you would describe a life that most people would say that's inadequate today. That's not my definition of a good life today. So that is shifting all the time. And therefore you're saying like, well, how much money do you need to be happy? The truth is I need more money than the next family, than the next person. It's this continuous chain.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think a lot of that is just evolution. It's a competition for resources and it doesn't matter how much money you have. What matters is that you have more money than the next person. That's the sad truth for a lot of this.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And therefore, you can easily imagine a world in which my grandkids are earning on average way more money than we are today and have way better resources, better health, better technologies, and they're no happier for it. And they don't feel any more relieved for it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They don't feel like they can scale back and work less for it because they're going to be competing with other people that have all of those things. John Maynard Keynes, a great economist, very famously predicted a world where people would be working 20 hours a week because technology was going to make it so we didn't need to work. And that's not how it works whatsoever.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
We are working less than we did back when everybody was a farmer, but not nearly as little as we could be if we still had the expectations of a 1950s family living in an 800 square foot house. If we had those expectations, people could be working way less, but it's all a competition between other people.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So even if 100 years from now, a middle class family is living in a 5,000 square foot house with a spaceship in their backyard, if that becomes the norm, you don't appreciate any of it.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I mean, if you took someone 100 years ago, if you took John Rockefeller, the richest man in the world 100 years ago, and brought him to today and showed him a middle class family in America, he would say, what is this, the Advil? You take a pill that makes your headache go away? You have sunscreen. You just rub this on the face. You don't get sunburn. His jaw would be on the floor.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But nobody appreciates that today like he would because it's just commonplace. Your definition of a good life is I expect to have that. So it's always going to be the case that The reason we're working hard is to take care of our family. And what we feel like is an adequate amount is a growing level over time. I should also say that that is by and large a great thing.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The reason society progresses is because most people wake up in the morning feeling a little bit inadequate. Whatever I have today is not enough and I need to go work harder to get more. That's why we have good technology and economic growth over time. So at the macro level, it's a great thing. That's what pushes society forward and better medical technologies, all better technologies.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But the individual level, it creates this hamster wheel of a constant feeling of inadequacy that we try to compensate for by working harder and working harder, even when it comes at the expense of things that should be more dear to us, like our friends and family and health.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Well, this is one of those things where what is so good and beneficial for society is what makes individuals miserable. So I think what is the message here in Los Angeles or in New York or any other big city? San Francisco, the message is waking up in the morning and feeling inadequate. because you are surrounded by people who at least look like they're doing better than you.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And you say, I have to chase that person. I have to get what they have. That is great for society. That's where we get new technologies, new innovations and growth. The individual level, it's very difficult. I grew up out in the woods in Lake Tahoe. And in that region, if you are a dentist, let's say, you are on top of the world. You are the richest guy in town. Everybody looked up to you.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You had the nicest house, the nicest car. If you are a family dentist here in Los Angeles, you don't stick out whatsoever. You might feel like you are so far behind because you're surrounded by legitimate billionaires. And so I think it's interesting to ask, is a dentist happier in Lake Tahoe or here?
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think it's probably in Lake Tahoe because your comparison group is so much less, especially back in the pre-social media days. The states that are statistically the happiest in the United States It's not for cities. It's not Los Angeles. It's not New York. It tends to be in the Midwest where wonderful places, whatnot, but less competitive than the grind of the big cities.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But that's where at the individual, where are you happiest? It's where you have less comparison. But for society, what is better? It's when you have a huge competition for getting ahead. So I don't know where I come down on that of like where I would want to be. Of course, I want to be happy as an individual, but I want to live in a society that is moving ahead.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And the reason it's moving ahead is because most people wake up feeling inadequate.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yes, absolutely. It was also, I lived in Tahoe pre-tech money. It's very different now because so much Bay Area tech money just flooded into it. It's its own little Hamptons now. But back in the day, I felt like when I grew up, normal people drove old pickup trucks and rich people drove new pickup trucks. That was the difference between rich and poor.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And both in a city like Los Angeles, New York, and in a social media world especially, it's normal people drive Honda Civics and rich people have private jets. Like the stratification between them is just blown so far out of proportion. I see this with my nine-year-old son who, like a lot of kids, watches Mr. Beast, who I think is great. I think he's an awesome, awesome guy.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But it's completely warped my son's sense of money. Because Mr. Beast will be like, oh, keep your hand on the table and the last person with their hand wins a million dollars. It's like if that's your sense of money, it's completely warped and skewed. And so, look, it's a tough way to live.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think the more of that angst that people have of I'm inadequate, I need to get ahead, the better society is going to be, the more technology we're going to have. Great example of this is what decades were the most technologically innovative? By far, it's not even close. It was the 1930s, the Great Depression, and the 1940s, World War II, when society was on fire.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
i asked daniel kahneman a very similar question about 10 years ago kahneman is a world-renowned psychologist won the nobel prize in economics passed away a year or two ago and he said the trait that you need to do well with money over time no matter who you are is a well-calibrated sense of your future regret what are you going to end up regretting in the past i think at the highest level that's how you should base all of your financial decisions is
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
That's when every business, every scientist, every entrepreneur woke up every morning and said, I need to figure this out right now, today, immediately. During the Great Depression, if you were a business owner, it was, if I don't figure out a way to become more efficient, I'm bankrupt tomorrow. So that was the birth of a lot of the assembly lines.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It was the birth of the grocery store, the birth of the laundromat. Every business got better at what they do. And the ones that didn't went out of business immediately. World War II was, if we don't figure out new technologies, we're going to lose everything. Hitler's going to control the planet.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So that was nuclear energy, radar, jets, going down the list of things that we benefit from today happened because of that social angst that we had back then. And so I think there's so much evidence that society progresses when things are a little bit on fire, not too much on fire, because then you just get overwhelmed with it.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But if you have a little bit of angst of, I need to wake up, I need to do this. And when societies become fat and happy and decadent, or when companies do this, companies that just are minting money, and there's no pressure on it, they have more money than they know what to do with. That's the downfall of a lot of companies.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Sears, IBM, Intel, Boeing, who are either not around or are shells of their former selves. I think you can tie a lot of that to the success that they had in the past when there was no pressure to innovate and get ahead. It was just a culture of, we have so much lying around here that we can do anything that we want.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I had a guy tell me one time who said, every business should have a little bit of debt. because it keeps you in check, keeps your ambitions in line of waking up and being like, no, I have to succeed this year because we have debt to pay off. And when you have too much freedom and a little bit too much autonomy, you have a higher chance of just letting it slip away.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
What made you great when you were young and poor and broke and hungry slips away with the wealthier you become.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Will I regret spending this or not spending this? Will I regret making or not making this investment? Now, much easier said than done. I think most people do not fully understand their own sense of regret, what they're likely to look back and say, I wish I had not have done this. The other thing is that it changes over the course of your life. I'll give you a perfect example.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think a lot of it is tied to your identity of just who do you see in the mirror when you wake up every morning? And if your identity is I'm a professional athlete, if your identity is I'm a podcaster. I am a rich person, whatever it might be, then that's what's pulling you. It's that source of your identity. So this gets back to the Paul Graham idea of keep your identity small.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think he meant it mainly in the context of politics, of politics can just poison your identity and it really affects your thinking. But keeping your identity small for a lot of things, I think is a great point of view. The more you look in the mirror and say, I am a blank, doesn't matter what that is. I'm a professor, I'm an author, whatever it is.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's hard to give that up because it's part of your identity. I saw this with my own dad. He was a doctor, and he retired, and he went back to work a year later. Because I think at least part of it was when he looked in the mirror, he had to say, I am a doctor. That was his identity. And when he retired, he couldn't say that anymore, and it drove him crazy. I think that's true for a lot of people.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Now, that could be great. For him, it was great. And I think for me, my identity, I think my core identity is I'm a father, I'm a husband, I hope to be a friend. But then maybe it's I'm an author. And if I had to give that up, it might sting a little bit. It's not maybe the core of my identity, but it's right there.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think for a lot of people, if you're successful, core to their identity is I'm a person who makes a lot of money. I'm a person who makes X dollars per year. And they're unable to give that up. And that, again, I think if we're talking about money, that's when money becomes a liability is when it's ingrained in your identity. And it's controlling you. You're not using it as a tool.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's using you as its little marionette doll to control you every day. And I think that's when a lot of people go astray with their happiness with money is when it starts controlling them because it's so core to who they see in the mirror every day.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I'm a big saver, have been for my entire adult life. heaven forbid, if I were on my deathbed tomorrow, would I regret the vacations I didn't take, the cars I didn't buy? The answer right now is absolutely not. I would feel so good knowing that my wife and kids are going to be okay. So I would take so much pleasure in knowing that I did not spend that money. I saved it for their protection.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He's doing it because he loves to do it. I think it's true. For me as a writer, what's always been the case, I wonder if this – I think this might – might really apply to your own career. I've always written for an audience of one, which is myself. I just want to write things that I think are interesting. I want to write stories that I find appealing.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I want to write it in a style that I would enjoy reading. And I don't care that much about the audience who might read it. Of course, I want them to read it and maybe buy the books and enjoy it, but I'm writing for myself. And I think you always do your best work when you do that, if you're writing or producing a podcast for an audience of one, which is you.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And so I think if you're doing it otherwise, it's performative. And people do much worse work. They're much less creative. They're much less enjoyable when it's performative. When you start off by asking, what does the audience want to hear or see? Yeah, that never works. But that's what most people do. And even what does every writing 101 teacher teach their students? Know your audience.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I don't think it's good advice because know your audience very quickly becomes pander to your audience. Not just as writers, but in any form of work that you do, pandering to your boss, pandering to your quarterly metrics, whatever that might be. You're always going to do your best work if you have the independence and the autonomy to have an audience of one, which is yourself.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Brian Chesky of Airbnb talks about this. He's like, don't build a product that a thousand people like. Build a product that a hundred people love or that one person you love and use it. That's when you're going to always do your best work. You're not trying to manage a product or a book or a podcast towards some metric or goal. You're doing it because you love doing it.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Much easier said than done for a lot of careers, because if you're working for a company, you do have metrics you have to follow. You'd have formulas and policies you have to follow. So it's not that everyone can do this, but it's unavoidable that you're always going to do your best work when it's yours and you're doing it for yourself, not because you're trying to reach some metric.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Will I still feel that way if I'm 80 years old? Then maybe I will look back and say, I should have lived a little bit more. I should have given my money away while I could have seen it being given away. So it changes throughout the course of your life. But I think if you're always thinking through the lens of what am I going to regret?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I actually hope that in 20 years I'm doing something different, that I'm not writing about the same topic. So maybe I hope I'm still writing and thinking and reading and learning. But if you're always doing the same thing – I think someone like Buffett is an incredibly oddball, rare bird who's been doing the same thing for 80 years and loves it.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Like I want to grow and adapt and evolve in what I'm doing. But if something becomes core to your identity, then it's hard to release that and let go. You feel like you have to keep doing it even when it's not that fun anymore. And you're not getting the dopamine rush of trying something new. You're attached to something.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
You keep being a lawyer or whatever it might be because that's your identity even when you don't like it anymore.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So I keep bringing up, but you build the biggest, most successful company in the world, Amazon. What do you do in your retirement? You start a rocket company kind of thing. It's like, you're like, maybe he did. I don't know this. I don't want to put words in his mouth, but maybe he did get a little bit bored with Amazon and it was, he needed to do something else, but he's not going to retire.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He's not going to play golf. He's not going to sit on his boat. He's going to go build another company. Always have to be doing something, even if it's growing and adapting.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Yeah, I think there are pieces of the book that you and I have talked about today. The book is called The Art of Spending Money. And I make a point of the book is not called The Science of Spending Money because spending money is not a science. It's not something where you can say, here's the formula that works for everybody. It's an art. And what is an art? It is different for everybody.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's subjective. It's often contradictory. And I think that's what an appropriate way to spend money should be. So at no point in the book do I say, here's how you should spend your money, because I don't think anybody can accurately do that for a broad audience.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's a look at the psychology of envy, of keeping up with the Joneses, of social aspiration, of identity that we've been talking about, managing money and kids, of... being jealous of other people, of wanting to get attention for yourself. It's a look at the psychology of that without offering any firm concrete advice, which I would say a lot of people don't like that.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It's never about YOLO or about like, oh, you know, save today so you can have it for tomorrow. I think that's too simple to think about it. You have to know what you're going to regret in the future and look back. And back to everyone's different. What I will regret might be very different from what you will regret. Very interesting story from Jeff Bezos.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
A lot of people are like, well, just tell me what to do. But I try to make a point in the beginning, same with my first book, Psychology and Money, of I can't tell you what to do because I don't know you. And what's right for you is going to be maybe not right for me. You have to figure it out for yourself, but I can tell you what's probably going through your head as you're going on that journey.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I can tell you about the psychological pitfalls and challenges and advice that is psychological. It's not what you should do, but here's how most people and why most people fall for envy and why if you understand the mechanics of envy, how silly it can be. That's what the book dives into.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Well, I guess this gets back to basic evolution. Evolution doesn't care if you're happy. It cares that you reproduce and you grow over time. That's what it's maximizing for. It doesn't really care whether you're having a good time during the process.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Louis C.K. says more of me. That's what we're trying to do. And whether you're happy or not doesn't really play into the situation and actually might reward the person who is dispensable.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
gaining a ton of resources, even if they're miserable in the process, who's making a ton of money in the process, even if they wake up miserable every morning, they're getting a lot of resources that might increase their fitness over time. Happiness doesn't play much of a role.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think it's so complex. It doesn't lead to simple answers, but I think there is a lot of evidence that what happens, why societies all over the world, this has always been the case, have fewer kids when they become wealthier is because their expectations for those kids go up.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So if you're living in a poor society, poor economy, or during a poor era, you could have 10 kids because you knew all 10 of those kids, or at least the ones who survived, were gonna become farmers. That's what they were gonna do. And that was their only hope. That was all they could do. And you didn't need to provide a lot of resources for them.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
If I give them basic food and shelter and clothes, that's all they need to become a farmer. And I think if you fast forward to today's economy, the expectations are so much higher. You want your kid to become a PhD, to become an astronaut, become a hedge fund, whatever it might be. And because of that, you need to provide so much more resources for that kid.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I need to foster their growth and development from the time that they are infants and provide them tutors and afterschool activities and maybe send them to private school and definitely send them to a college, which is going to cost a fortune because the expectations for what you need to provide are so much higher.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
you feel like you can only provide that to maybe one, maybe two kids, which would have been a couple generations ago, three or four kids, and a couple generations before that, 10 kids. There's also a very grim statistic about why do people used to have 10 kids? Because six of them died before they were five.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
He talked about when he started Amazon back in, I think it was 1994. The reason he started it, and he knew that there was very little chance it was going to work when he first started it. But he said, if I do not try this, I will regret it. And if I try it and it fails, I won't regret that. It's an amazing story that talks about his entrepreneurial spirit.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And so if you needed those hands on the farm, you needed to have a lot of kids to make sure you had a lot of teenagers who could help you one day. And so I think we're blessed to now live in a world where, thankfully, the infant mortality rate has collapsed so much that we don't need to play that lottery game that we used to.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think one of the points I always make that I've learned the hard way, parenting, is I don't think you need to sit your kids down and teach them about money because they're paying attention whether you know it or not. Kids are so incredibly good at learning. They're better at learning than adults are, particularly for things like language and whatnot.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But you don't need to say, sit your kids down and say, this is how much we spend and this is what we value and this is why. I say, they're paying attention. They're figuring it out. Every time they hear you say, I can't afford this. Every time we're at the store and they say, oh, look, this is on sale. Let's get two of these. They're making a mental note of everything.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Every time they hear you bicker about work, every time they hear you talk about a raise, even if it's just in the next room, they're piecing it all together. And I don't think they even know it, but they're so good at learning that they're building a mental model. And so even if you never sit your kids down and teach them, by the time, certainly they're teenagers, they know a lot about money.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And maybe some of those things are good, maybe some is bad, but they're paying attention. And so I think the only thing you can do as a kid or as a parent, I should say, is to lead by example. Because we talked about this earlier, the propensity to rebel as a kid, as a teenager. You talked about the smoking ads where they just wanted to do the opposite of what everyone else is doing.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think particularly for teenagers, which I don't have yet, but if you sit them down and say, this is what you should do, you should always do this, you should never do that, their propensity to rebel is enormous. So I should think it can backfire if you try to teach them. I think the best you can do, the only thing you can do is lead by example with people.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
One thing that a lot of, not just very wealthy people, but moderately wealthy people will say and ask is, how do I teach my kids about money without spoiling them? How do I use my money to help my kids without spoiling them? That's a big topic for a lot of people. Even if you're like a middle-class family, how do I leave a small inheritance or help my kids?
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Should I buy them a new car or should I help them through college? I think a big thing that is easy to overlook is two things. You might think as a parent that you are teaching your kid grit and independence by withholding resources from them. You're doing it very well-intentioned. You need to earn your iron, my money, and this is mine. You got to go figure out your own.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think it is very easy to overlook that you are not teaching your kid independence and grit. You're teaching them to resent you. I have a good friend, Chris Davis, who told the story. He's an extreme example. Chris Davis's grandfather is Shelby Davis, who was a billionaire investor, one of the greatest investors of all time.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And Chris tells a story that when he was a kid and his grandfather took him skiing, his grandfather would say, if you want me to buy you a lift ticket, you need to hike up the hill first and ski down, hike to the top. And if you do that, then I'll buy you a lift ticket. And Chris said the lesson that they learned from that was not grit and independence and hard work.
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The lesson they learned from it was grandpa's kind of a jerk sometimes. And I think that's an extreme example, but you see that a lot with kids. One like very practical takeaway from this is that I think as a parent, you have to live the same lifestyle as your kids. It's very difficult to say mom and dad fly first class, but you're back in coach. Does anyone actually do that? Oh, absolutely.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
The other thing, when I first heard that story is, bless him for thinking that, I do not have that personality. If I devoted my entire life and my family's money and my parents' money to a startup and it failed, I might regret that. I admire and I'm grateful for the people who do not have that vision, as he does, made the world better.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And maybe that's still a very extreme example. But what you think as a parent that the kid is learning is, oh, if I work as hard as mom and dad, one day I'll be sitting up there. And they don't. The lesson they learn is mom and dad think they are superior to us. or mom and dad are superior to me. I'm inferior to them.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think this is why you see a lot of very wealthy kids who are just psychologically broken. Because I think you have well-meaning parents who are like, look, we're very wealthy, but you're not. You got to earn your way. And all the kid hears throughout their life is I'm inferior, I'm inferior, I'm inferior, I'm inferior.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And by the time they become adults, it's so ingrained into who they are that they can't take a step forward. They can't advocate for themselves. And so, look, that's what the very wealthy deal with. But I think that's what I think a lot about with kids. The other thing that every parent with more than one kid will understand and recognize is my two kids could not be more different.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Their personalities, their goals. Even with the same parents living under the same roof, they are a million miles apart. And so if you say, what are you teaching your kids? I don't know who they're going to be when they grow up. I don't know what their goals or their aspirations are going to be.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So is it right for me to tell my daughter like, oh, here's how you can save and become super wealthy over time? What if she doesn't want to live that life? What if she does have more of a YOLO personality of like, oh, I just want to go travel the world. I have no aspirations to become super wealthy and retire early.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So you have to let them figure it out for themselves and realize that what might be right for you and what may have been right for the era in which you and I grew up in might not be right for them and might not fit the era that they grew up in.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They're thinking about- They're in their moment.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And maybe it would be different in Chris Davis's example if the grandpa hiked up the hill with them. Because then the lesson you're taking is like, oh, we're going to do this together. And that is teaching the value of hard work. I'm going to do it with you. I'm going to suffer with you. So leading by example rather than by humiliation, I think, is the way to do it with kids.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But everyone's sense of regret is going to be a little bit different.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I think it'll always be like that. We're never going to live in a world where people don't compare themselves to others. We're never going to live in a world where people don't feel inadequate to others who have more than them. But back to kids, I think this is a great place to tie this together. If you ask most parents, what do you want for your kids?
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Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Most parents will say, I just want them to be happy. I hope they're happy one day. And then if you said, well, do you hope that your children are rich and successful? Parents might say like, yeah, but mainly just happy. Like I just want them to be happy regardless of what they're doing. If they're a kindergarten teacher, I want them to be happy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And I think the parents themselves say that because they haven't done that themselves because the parents themselves have chased money over happiness and they see the downside of it. And that's very common. And that's why they say, I hope my kid does this because I haven't done a good job of that myself.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Because the temptation is to do that, is to pursue something that's not going to make you, is going to make you richer, but not necessarily happier. Now, that's not an argument against money or working hard, which I want to do. I want to work hard and make money and have more money, of course.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
But I think there's such a stark difference between using money as a tool to make yourself happier versus as a yardstick to compare yourself against others by. And so much in the modern world is the latter. We're not using money to make ourselves happier or freer or more independent or to sleep better or to spend more time with the people we enjoy.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
We use money to measure ourselves against other people. It's just, do I have more than you? Is my car faster than yours? Is my house bigger than yours? And all of that is completely separated from what we actually want, like for our kids and ultimately for ourselves, which is, can I use this to become happier and live a better life?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
It requires a lot of looking in the mirror and just saying like, who am I and what do I want? I think that's the biggest thing, particularly when we started this conversation by saying, everybody's different. What's right for me is not right for you. Inherent in that is that you have to understand yourself.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And a lot of people, a lot of financial damage is done when people have a financial plan that is right for another person, but it's wrong for them. And that's dangerous because it's the right financial plan maybe for a lot of other people. So it makes sense. It's rational. It makes sense on paper, on the spreadsheet, it looks good, but it doesn't fit your personality.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
That's when a lot of damage is done. So I think to do better with money, you need to spend a lot of time thinking about who you are and your family and your goals and your aspirations. realizing that all those things will change and adapt over time. So what was right for you 10 years ago might not be right today.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And in a way that might seem selfish, like tuning out the rest of the world and tuning out other people and coworkers and neighbors and whatnot and just saying, how can I use this as a tool to become happier, to live a little bit better life? What's the purpose of money if it's not that?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
Right. So there's a thing in psychology called the end of history illusion, which means that you are very aware of how much you've changed in the last 20 years. You are smarter, wiser. Your beliefs about things in life have evolved. And that's true for most people. But most people, if you actually dig into it, they think if you say – Who will you be in 20 years from now?
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
They think they'll roughly be the same person they are today. There's always this belief that I have grown so much in the past, but I'm done growing. Because it's hard to project how you're going to be different in the future. A lot of that is if I tell myself 20 years from now, I'll have very different beliefs about politics, whatever it might be.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
What I'm effectively admitting is what I believe today is wrong. And you don't want to believe that. Everyone wants to wake up and look in the mirror and say what I believe today is the right thing. It's just like a self-justification of your own beliefs to makes it easier to go about the days. What I believe right now is the right thing.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And maybe you have a little bit of doubt around the edges, but most of it is what I believe is true. So you don't wanna believe that you're gonna adjust and adapt those beliefs over time. So it becomes difficult to take a truly long-term view and make a decision today that is going to be something that you're not gonna regret in the future.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
As I've always framed this, I think the only anecdote to this of trying to get around this problem is avoiding the extreme ends of financial planning. And a lot of people are on the extreme ends. Like on one end, you have the fire movement, the people who save 90% of their income and they want to retire at 28, kind of that kind of thing.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
And on the other hand, you have like the YOLO crypto traders who are like, doesn't matter, like just throw it all down and let's see what happens. Those extreme ends are what you are most likely to regret at some point in the future. And the crypto, look, I think a lot of those people are young and they have time to make up for their mistakes.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
I did a lot of really dumb things with my money in my teens and 20s. But I think a lot of them, that's where they are most likely to look back. It's one thing to lose a lot of money in your 20s and say, ah, it doesn't really matter. But then when you're 48 and trying to put your kids through college, that's when you're going to look back and be like, I wish I hadn't done something like that.
Huberman Lab
Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel
So those extreme ends have the highest odds of future regret.
The Diary Of A CEO with Steven Bartlett
The Top 7 Money Making Hacks For 2025 That Are PROVEN To Work! Do Not Buy A House! Do This Instead!
You know, the biggest debt, one of the things I love saying this, but like the biggest debt all of us pay is ignorance. And so I heard this close at this pitch years ago. And this guy got on stage and he was like, hey, ma'am. She was like, how much do you make? She was like $50,000. She wrote $50,000 on the whiteboard. And then he wrote a million dollars on top of the $50,000.
The Diary Of A CEO with Steven Bartlett
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And he subtracted it and said $950,000. He said, you pay life $950,000 every single year for not knowing how to make a million dollars a year.
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and it was a crazy concept he was using it to close the audience but i like the most expensive thing that all of us are paying for is the information that we don't know and that's like both frightening and also incredibly exciting because like fish in the best ponds right like a good fisherman knows where to fish and a different way of saying it is find the people who value what you have the most
The Diary Of A CEO with Steven Bartlett
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And I'm sure you've heard this. Have you heard the story of the father and the son with the car? No. Okay. Maybe I have, but I'm not sure if that's enough detail.
The Diary Of A CEO with Steven Bartlett
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So there's a father who gifts his son an old beat-up car. And he says, you know, hey, I don't know if it drives or not, but you can take it down to the...
The Diary Of A CEO with Steven Bartlett
The Top 7 Money Making Hacks For 2025 That Are PROVEN To Work! Do Not Buy A House! Do This Instead!
the dealership down the street see if you can trade and get some money he's like okay so he goes down the street goes to the dealership they say we'll give you a thousand bucks for it and he come you know here's him out comes back home he's like dad they say give me a thousand bucks he's like okay he's like go to the impound yard where they you know break the cars up just for metal he's like see what they'll give you goes there and uh the guy's like ah i don't know this might be 500 bucks of metal kid like you know comes back home he's like dad you know he said it was gonna be 500 dollars he's like okay he's like hey
The Diary Of A CEO with Steven Bartlett
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go down the street to that antique dealership, see if they've got anything that use car lot. He was like, okay. So he goes down there, talks to the guy, comes back home, super excited. He's like, dad, you won't believe it. He was like, this is a historic car. There's only like 10 of them left. He's like, it's worth $100,000.
The Diary Of A CEO with Steven Bartlett
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And so the father smiles and he's like, and the lesson I want you to know is that it's not necessarily who you are, but the people that value you the most. And so you can talk to different people and go to the people who value you. And I just I love that story because it's a huge business story in terms of like sell where the fish are, where the big fish are.
The Diary Of A CEO with Steven Bartlett
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Like if you're going to go hook fish, go to go where the whales are. It takes the same work, but a lot of it's just belief. People don't think it's possible. And so a lot of times you have to just keep leveling up and you sell your first $10,000 thing, you sell your first $100,000 thing, sell your first multi-million dollar package. You realize that it's the exact same thing.
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It's just, so maybe if I'm list, if anybody's listing right now, it is the same thing. It's the exact same thing. And sometimes it's easier.
The Diary Of A CEO with Steven Bartlett
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Like, you know, you've seen that meme that says like, so what exactly am I going to be getting for this $50 thing? Right. And then it's like $50,000 clients like wire sent yesterday. Like, what else do you need? Like it's and that's totally true. But I think there's a skill in understanding where to fish.
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I will answer it with the stair steps of how each order of magnitude change in my income. So when I went from being an employee to self-employed, I went from making four figures a month to five figures a month. And that was for me just like, I am now in control. The level above that was I started having other people who worked for me and then went to six figures a month, right?
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And then from there, stayed there, did the turnaround business, still had the same organizational structure, had another degree of leverage. And so the next degree of leverage was that I started licensing. So it was digital, right? So the cost of goods was basically nothing. But all of these things are about leverage. And so this is like one of my favorite topics in the whole world.
The Diary Of A CEO with Steven Bartlett
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But we define leverage as the difference between what you put in and what you get out. So if you have a lot of leverage, but a little bit in, you get a lot out. If you have no leverage or low leverage, you put a lot in, you get a little bit out.
The Diary Of A CEO with Steven Bartlett
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And a lot of times people who are listening to this and are not making as much money as they want, they're putting lots of input in and not getting a lot out. They have low leverage opportunities. And so understanding how to get more for what you put in is the game. And so the first level that I described was labor. It's just work. First, I was working for someone else. Then I worked for myself.
The Diary Of A CEO with Steven Bartlett
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Then I got other people to work for me. First level, each of those levels was more leverage. Above that, I had media, which is the thing that I was licensing out. So another degree of leverage. I made it once and I could license it out infinity. On top of that, I have capital. I can take capital. I don't have to sacrifice time in order to get something for it. So it's high input output.
The Diary Of A CEO with Steven Bartlett
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Above that would be some sort of technology. You build the code once. In theory, obviously, you continue to improve the code. But theoretically, you build the thing once and then a million people can use it. And so you want to stack as many types of leverage as you can and as much of them as you can. Because like Joe Rogan also has a show and somebody else has a podcast.
The Diary Of A CEO with Steven Bartlett
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They both technically are using media as their vehicle for leverage, but he has significantly more of it. So it's not just like, I'm gonna use all these, right? Yes, but it's also how much and to what degree. But like Facebook had other people's money, he used media, had other people's work, max leverage. Amazon, same thing, right?
The Diary Of A CEO with Steven Bartlett
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They used every element of leverage and they maxed all of them out. And that's at least the curtain. And Naval talks about this, if you're familiar with Naval Ravikant. He talks about these things as the elements of leverage or four types of leverage. And understanding that, for me, has kind of been a blueprint for wealth overall. And then capital, there's degrees of capital.
The Diary Of A CEO with Steven Bartlett
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First, you can get friends and family to give you money. Then you can get institutional money. And then you can get public money. Right. Which, you know, you saw like the IPO money, like the fact that the Nasdaq was 4X, the Dusseldorf exchange, is that where it was?
The Diary Of A CEO with Steven Bartlett
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There's just significantly more capital in that market. And so same work, more zeros. And so I love this topic because I think that that's fundamentally like the people who move faster in life don't actually move faster. They get more for every step.
The Diary Of A CEO with Steven Bartlett
The Top 7 Money Making Hacks For 2025 That Are PROVEN To Work! Do Not Buy A House! Do This Instead!
Okay.
The Diary Of A CEO with Steven Bartlett
The Top 7 Money Making Hacks For 2025 That Are PROVEN To Work! Do Not Buy A House! Do This Instead!
So take notes. Take notes.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
How important is this tariff situation?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
I can't tell you how much it helps when you hit that subscribe button. The show gets bigger, which means we can expand the production, bring in all the guests you want to see and continue to do in this thing we love. If you could do me that small favor and hit the follow button, wherever you're listening to this, that would mean the world to me. That is the only favor I will ever ask you.
The Diary Of A CEO with Steven Bartlett
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How did China get in there? And why are they the factory of the world? What are the core components that went into them being able to produce all of the things that we use on a daily basis at a fraction of the price that they're able to produce them here?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
So can you tell me what a tariff is?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
I want to play that clip you're talking about with Tim Cook because I remember seeing it as well. And it did, it was a bit of an aha moment for me. For anybody that doesn't know, Tim Cook is the CEO of Apple and he's been at the helm of Apple for more than a decade. And as you know, most of Apple's products, from what I understand, are made in China.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Thank you so much for your time. In 2020, my older brother Jason came to me after spending more than a decade working in the finance industry. And he said to me, Stephen, there is one book you need to read to understand money. And that was your book, The Psychology of Money. And that's how I came into your world and understood who you were, what you think.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Are they on a different living wage? from what I understand. Oh, yes, absolutely.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Which means that the products can be made cheaper. Yes. Significantly cheaper.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
So what's the impact on the average person listening to this now? And if this trade war continues, if these tariffs continue, what is the impact they're going to see in their life?
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The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
You'd be dumb not to wait. Right. I was sat here yesterday with the CEO, and she said to me that she gets... the majority of her products, pretty much all of them from China. And when she's looking at the tariff situation, she's figured out that if she buys those products and sells them at her current price, she's losing money on every unit.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
So she's like, I'll lose $9 on importing a, for example, like a dress. It's like, so I have no incentive now to continue to sell that dress. And my only choice is to raise the price by like 150% to my customer. Right.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Morgan Housel is the money mindset guru.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
What about the impact it has on trust in the United States?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Really, this book has shaped how I think about money ever since. And this is why I loved having you on the show last time, but I was insistent to speak to you again with everything that's going on in the world right now.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
And what's a treasury bond?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Okay. So less people are going to do that if they have less trust in the United States.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Are we heading for a recession? Because I saw some stats earlier on that said the probability of a recession has surged by 45%, which is the highest since December 2023, because of the tariffs. That was from Reuters, right?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
What is a recession?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Morgan, what is the most important thing we should be talking about at this present moment based on, I guess, the subtitle of this book, Timeless Lessons of Wealth, Greed and Happiness?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
You're not concerned about a recession?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
100%.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Independence you value. It sounded like freedom to me.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Can you tell me how to achieve freedom financially And what I should be thinking about in the context of a world that's changing at such incredible speed, when we're talking about tariffs and recessions and now AI, I've been thinking over the last couple of weeks, like, what should my personal financial strategy be? How should I be thinking about it? Is it a strategy? Is it a psychology?
The Diary Of A CEO with Steven Bartlett
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Is it a mindset? What is it that I should be thinking about to survive this area of tremendous change and Trump economics and get through the other end with that freedom and independence that you and I both desperately value?
The Diary Of A CEO with Steven Bartlett
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You're rich.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
And free.
The Diary Of A CEO with Steven Bartlett
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I looked at the most Googled questions around money and one of the most popular is how to achieve freedom financially.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Is there an evolutionary basis for this? I was thinking the other day after watching an interview with Naval where Naval talks about how From an evolutionary perspective, humans don't really understand the concept of wealth because once upon a time when we were cavemen and women, wealth was what you could carry.
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Yeah.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Because it's just not enough.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
So that happens as well. That's interesting. But that's linked to status because status was longevity. Yes. Like if you had status, you had food, you had the reproductive potential once upon a time. Yeah. So it's the same evolutionary sort of desire to like live survival.
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But if it's hardwired, then is there much we can do about it?
The Diary Of A CEO with Steven Bartlett
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And he's got $100 billion or something.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
In the first case, though, that gentleman had to have his dream fail him first before he realized. And so this raises another question, which is, does the viewer at home have to make the $100 million and then taste it by the mansion to realize that it was never about the mansion? I think the answer to that is yes. Oh, gosh.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Especially when all the problems staring you in your face are somewhat associated to money. Like the pain in your belly, the bills on your desk, the threats from the court. I'm thinking of myself here that I was getting the letters coming through with the red text on them telling me that my credit cards were going to be shut down.
The Diary Of A CEO with Steven Bartlett
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The inability to feed yourself, to socialize with your friends, the heating in your house, your child's pencil case costs, all of it seems to circle back to money. And so when you hear people who are wealthy... being subjectively honest about their own experience and then what's made them happy, it is hard to hear.
The Diary Of A CEO with Steven Bartlett
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I was just imagining, if I was hearing these stories when I was in that situation, I would still fucking go for it anyway.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Do you think it's important for people to have an idea what their number is?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Is there such thing as FU money? Like, is there a number where you think you've hit FU money? I saw some thread on Twitter and it was like, comment below what you think FU money is. And it was interesting to see the variation. Yeah.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Going back to this issue of tariffs, recession, and everything that's going on at the moment, are there any things practically, for those that don't understand the economy and economics generally, that we should be thinking about to make sure that we don't get burnt?
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And relative to your personal costs, your personal monthly costs, or overheads as they call them, how much money do you think it's sensible to have saved?
The Diary Of A CEO with Steven Bartlett
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The other protagonist of change at the moment is artificial intelligence. And I've spent a lot of lonely, quiet hours in my room thinking about the impact it's going to have and trying to develop my own thesis and what it means as a creator, as a podcaster, as a investor.
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And I wanted to understand how significant you think artificial intelligence is and if it at all impacts your thesis around money and wealth and investing and saving.
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How important is this tariff situation that we find ourselves in? Because we're seeing it all over the news everywhere. Tariffs, Trump's done this, 10% here, blanket tariff here. Does it matter? And maybe even more specifically, does it matter to the average person?
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One perfect example of that with AI is OpenAI have created this large language model which can do all these wonderful things. But then people are using that same technology to create AI agents, which are equally astonishing. I spent the last couple of weeks using AI agents to build some software. I'm someone that has no ability to code at all.
The Diary Of A CEO with Steven Bartlett
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But I can sit in my bedroom and speak to this agent and tell it to build me a new to-do list or a new website for the podcast that tracks who's been on the show and follows them. I can tell it to do anything. And for... What's probably costing me a dollar a day, it's building me software now. And we're just at the start of that exponential curve.
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So if we now think that these large language models are going to be able to create things, create digital things, things on the internet. This podcast is on the internet. We know that it can create podcasts. We know it can create videos, images, software. I look at that and go, you play this forward.
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And if I apply your optimism analogy, your optimism lens to it, where I go, we're underestimating this curve. It's hard. It's really hard to see how this isn't tremendously disruptive in the long term.
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What does history tell us about how this shakes out? Like when these industrial revolutions come along with the technological revolutions, where does the value accrue? And how do I participate in that value?
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And when we moved from machines to technology, it was a significant leap also for the user and for the customer and for the...
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as well as for the employees so that transition took time but i was reading something the other day that said now that we're native internet users we all are billions and billions and billions of people use the internet this is like a new application on the internet which explains why it's growing so fast that we haven't had to learn yeah you know this generation know how to type something on a screen so there hasn't been this big jump in fundamental skills like there was from like going from a
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I don't know, from a piece of machine to an iPhone. So this acceleration will be quicker. So therefore, one would assume that the transition will be more severe. And I think about even things like driving. I think Tesla are releasing in Austin this month or next month the first autonomous vehicle, the Cybertaxi, the Robotaxi, whatever it's called. And it has no steering wheel.
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And the profession of driving, from what I understand, is the biggest profession on Earth.
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Yeah. On my way here today, I did not touch the steering wheel. I did not touch the pedals because I'm in a Cybertruck and there's a button on it which auto drives you to wherever you want to go. And typically, I'd probably have got an Uber. But now I can sit there, do my work, and it drives for me. And that's also AI.
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But the thing with open AI, from what I understand, is they have less than 100 employees. Right. And the reason they have less than 100 employees is because they're using AI to build. To do the work. And they'll increasingly do that, especially when they hit AGI. Right.
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Yeah. And this is why I think they have 100 employees. I think they've purposefully kept it low because they think AGI is around the corner, which is this very, very advanced form of AI, which is going to be able to like, I think they call it self-reinforce, where it teaches itself.
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debate and angst and anger and things like with and disagreements like with what we're dealing with with tariffs right now you have your son in the green room watching us right now yeah how old is he nine nine okay so he's got some decisions he's he's wincing right now i'm sure now that we're talking about him but what if in terms of him building his career acquiring skills generating wealth
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Based on everything you know about how people have made money through history, what are the prevailing skills that your son would have to have to assure that he makes money regardless of what the industry is?
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When you think about great people through history that have accrued a lot of wealth, what principles would you instill in him so that he had a money mindset?
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For anybody that likes matcha, for anybody that likes lattes, one of my companies has just launched canned matcha lattes. And I was speaking with the founder, Marissa, and she said that creating this product has been no easy feat. They tried launching in 2021, but as is often the case in business, the development process turned out to be extremely complex.
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The next question is how to save money.
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So they've spent the last four years testing and refining every single detail to create this, which is a perfect Ted matcha vanilla latte and a perfect Ted matcha strawberry latte. So what we have here in these cans is barista quality matcha straight from the can. And it tastes like it's just been made from your favorite cafe, naturally sweet and naturally creamy in a can.
The Diary Of A CEO with Steven Bartlett
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And the reason why I've invested in this company and I drink matcha is because matcha as an energy source gives me lasting energy without the big crashes that I get from other products. You can grab their ready-to-drink canned matcha lattes at Waitrose, Tesco's, Holland & Barrett. And here's a little incentive for you.
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If you go to perfectted.com and use code DIARY40, you'll get 40% off your first order. Please don't tell anybody. Keep that to yourself. That's code DIARY40. You'll get 40% off on perfectted.com. So go use that before they change it. Men are struggling in a variety of different ways. Obviously, your son is going to be a man someday.
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If I think about some of the stats here, men's labor force participation has declined dramatically over time. For prime working age men between 25 and 54, participation fell from 98% in the 1950s. to about 80-something percent in 2024. 10.5% of men aged 25 to 54 were neither working nor looking for employment compared to with just 2.5% in 1954. And we had a study that came out in the UK recently.
The Diary Of A CEO with Steven Bartlett
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I think it was the Centre of Social Justice that showed that for the first time in a long time in recent history, more young men are out of work
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And because of this, a lot of people get involved in get-rich-quick schemes. Yes. Crypto coins, meme coins, all this stuff.
The Diary Of A CEO with Steven Bartlett
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Testosterone plays a role though, no? Because when we think about who becomes gambling addicts and who takes the biggest risks with finances through history, it's often men. Women do seem to be generally better with managing money than men.
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Your book profiles a few scenarios of who does better over a lifetime. And although I read your book, I think it must have been four years ago. I will always remember reading a story about it. I think it was like a stockbroker that you write about in your book. It was Jesse Livermore. Tell me that story.
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What do you think of crypto?
The Diary Of A CEO with Steven Bartlett
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Yeah, I have owned Ethereum for a long time. And more recently, I just changed it all into Bitcoin because I think Bitcoin is the safest bet. So it seems to be where institutional money has gone to. And I'm doing the same thing as you. I've never like traded coins in my life or anything. But I think most of it is probably going to zero, as we've seen. But I think Bitcoin feels like...
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The place that the market has decided will be the stablest, but who knows?
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One of the things that made me question my hypothesis on crypto was Google released this new computer. I don't know if you saw it called Willow. The quantum computer? Yeah. That can crack?
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Google built a powerful new computer called Willow that uses quantum technology. Some people worry it could one day hack Bitcoin by breaking its security system. But right now, Willow isn't strong enough to do that just yet. And they pose that quantum computers may well become strong enough that they'll be able to hack Bitcoin's system that keeps it safe. Right.
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Because there is a certain amount of compute that could... That doesn't exist right now, but could in the future with quantum computers. Yes. So like all assets, I mean, if you look back through history, we've used different things as stores of value. And many of those things, whether it's the tulips or whatever else, aren't our current store of value.
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So it's conceivable to think that Bitcoin as a store of value does have a shelf life.
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When you look at all these people through history that have made money, lost money, et cetera, generated great wealth, are there like certain strategies they've deployed? Because when I think of like Warren Buffett, I'm like, okay, so he like compounded for like 80 years, blah, blah, blah, invested. He was an investor. Then you've got this other strategy, which might be entrepreneurship.
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Some incredible company like Elon Musk making SpaceX or Tesla. Do you have it distilled down into a set of different strategies that are often deployed to equal wealth?
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I'm so glad you said that because I've been waiting for weeks now to ask somebody like yourself who studied economics to explain in a simple way what a tariff is. And feel free to use an analogy. I think about 50% of people have no idea what a tariff is. And then on a sort of an incremental scale... And people's clarity gets better and better.
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Endurance. Keep it going. Endurance is hard.
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On this point of perseverance, why is perseverance so key? If we break it down into what's actually happening when you persevere?
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And I would estimate about 5% of the general population could articulate what a tariff is, 5% or less. So can you tell me what a tariff is?
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How do you make that real for someone listening who's making, you know, $1,000 a month disposable income? So they've got $1,000 to play with a month potentially. If they've never heard about this idea of compounding interest before and the magic that it can create
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I was thinking about a very simple example. So there's a coffee in my cup today, and the coffee might cost $5. Now, with the laws of compounding returns, if I don't have that coffee today, in 40 years, if I got 8%, which is, I think the S&P 500 gives about 8%. Then in 40 years time, instead of the coffee that I had every day, with an 8% interest return, I would have $440,000.
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If you did a coffee every day? Yes. Yes. Assuming the coffee costs $5.00.
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I was just thinking about Warren Buffett getting his haircuts. So I thought, how old's Warren Buffett now? He's... Okay, so let's say for 80 years, if Warren Buffett didn't get, say, a $5 haircut and instead put it somewhere in the S&P 500, an index fund, which, by the way, you can invest in on your phone... 80 years later, Warren Buffett would have 10.3 million. That's it.
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It is magic as well. That's such a perfect word for it because it seems... It's magic because it's not intuitive at all.
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Forget about it.
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Because nothing was exponential once upon a time.
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I can't think of anything that was really exponential before...
The Diary Of A CEO with Steven Bartlett
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Oh, yeah, maybe brushing your teeth or decay. Yeah, yeah.
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So what's your view then on saving money? You're working on a book currently, which is being released in October this year called The Art of Spending Money. Yeah. What's your view on saving money? You told me to have the coffee, cut my hair.
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So how much money do you think it's sensible to have saved?
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And what's the opposite of that? Is it debt?
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I think, you know, you've written a book called The Psychology of Money, but as you were talking there, I was thinking, gosh, this is all psychology again, because at the heart of this, we will have our own unique relationship with money. And there's lots of people that won't even look at their own bank statements. They won't look at their own Revolut or Monzo app in the morning.
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They avoid their credit cards in terms of like their credit card statements. And to even start talking about these subjects of saving and spending, we probably need to preface it with some kind of like mindset or mentality towards your relationship with money.
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In your work on The Psychology of Money, how much did you think about trauma as a protagonist in the story of one's financial relationships?
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So often we think about we've applied the tariff to China. Right. So what's happening is China having to spend the 10% or I think the tariff currently is like 125, 145.
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This is a bit of a bizarre question, but it had me thinking as you're speaking about mortality as it relates to money, because one of the perspectives on money is YOLO. Yeah. Do you know what I mean? I'm only going to live once, so I might as well have a good time. I think I definitely have more of a bias in that direction, although I'm not fully in that direction.
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And my brother, who's a year older than me, is one that gave me your book and has worked as a stockbroker, an actuarial scientist. At 12 years old, he was budgeting his pocket money on an Excel document, whereas I was just spending, spending, spending. And he thinks much more long-term. He's like investing in his pension at 21. Whereas I was like at the casino.
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Not the literal casino, a figurative casino. I was taking bigger risks and just rolling the dice. And my... somewhat a logical way of rationalizing my behavior and not investing as much in my pension was, I'm only going to live once anyway, so I might as well just enjoy my life.
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So if Apple import an iPhone now with that tariff level, then Apple would have to pay the 145% when it arrives at the shore of the United States.
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And when we talk about the coffees and saving and all this stuff, a lot of people will be thinking, yes, but compounding's fine, but I want to... Enjoy life. Enjoy life.
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When you look at all these people through history that have generated great wealth, are there like certain strategies they've deployed?
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That is literally the worst thought in the world, isn't it? To think that you could be on your deathbed and look over at your family and know that they're about to struggle with bills and with food, and they're probably going to have to sell the house and their lifestyle is completely going to change when you go. I don't even have kids yet, but I was just thinking about my partner.
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VAT in the UK.
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I could also imagine that one of the great regrets one might have on their deathbed is just not having lived. Because I was thinking about, I sometimes ponder, if I die now, how would I feel? Like if I was given a diagnosis, God forbid, how would I feel? And I feel like I've really gone for it with my life. I feel like I've traveled, I've seen things, I've done things, I've met people, I've lived.
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So there's a certain feeling of, there's a certain smile on my face or gratitude when I think about this being the end. So it's a balancing act, isn't it? Between like, I guess you can do both.
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Worked less. Right, maybe, yeah. I think Brony Ware found that palliative nurse in Australia when she interviewed people in their deathbeds that like, I wish I'd worked less was super high.
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I think the top regret of the dying from her work was that I wish I'd lived a life more true to myself, which I kind of interpret as like I wish I'd done something else.
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I'm not sure if we talk about this much, but for that person who doesn't have financial independence because they're entrenched with debts and bills and all these kinds of things, how does one get out of that situation? Yeah. Because we can't necessarily just save our way out of that situation, can we? People do.
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The hardest conversations are often the ones we avoid. But what if you had the right question to start them with? Every single guest on the Diary of a CEO has left behind a question in this diary. And it's a question designed to challenge, to connect and to go deeper with the next guest. And these are all the questions that I have here in my hand.
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On one side, you've got the question that was asked, the name of the person who wrote it. And on the other side, if you scan that, you can watch the person who came after who answered it. 51 questions split across three different levels, the warm-up level, the open-up level, and the deep level. So you decide how deep the conversation goes.
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And people play these conversation cards in boardrooms at work, in bedrooms, alone at night. and on first dates, and everywhere in between. I'll put a link to the conversation cards in the description below, and you can get yours at thediary.com.
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Just to close off on this point of saving money, are there any tactics or tricks or ways to think about how to save for those people that might be working in a factory and that don't have a ton of excess income every month?
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I asked this because earlier on, I looked at the most Googled questions around saving. And the most popular question is how to save money.
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How to save money.
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The second most Googled is, what is a high-yield savings account?
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I love this quote from your book where you say, one of the most powerful ways to increase your savings isn't to raise your income, it's to raise your humility.
The Diary Of A CEO with Steven Bartlett
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So what do you spend your money on?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
And where is your capital allocation today? We spoke about this a little bit last time, but in terms of percentages, you have a ton of cash.
The Diary Of A CEO with Steven Bartlett
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So for someone that doesn't know what a Vanguard index fund is, if you had to explain it to your son, he probably knows, doesn't he? To someone of your son's age, how would you explain a Vanguard index fund? Because you said you've got cash. People understand that. People understand a house. Vanguard index fund.
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And which index funds do you invest in and why?
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You must have a thesis.
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And what has that yielded on average over the last couple of years?
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And is there a reason why you don't just bet on technology, for example?
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You mentioned the other thing is houses. You have a house. Yep. House sales in 2024 total just 4 million, the lowest rate since 1995. Yeah.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
Do you recommend people try and buy houses or is it just to rent those houses?
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So it's more about freedom and security than making a quick return. Absolutely.
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How does it compare to investing in that Vanguard thing, if we look at the returns on housing?
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It does beg a question for younger people who are thinking about building their wealth because the first thing and the most common thing we're taught as it relates to wealth creation is to go buy a house. Like it's the thing that everybody knows. You leave university, you get a job and you save as much money as you can to put that deposit down.
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Also, I wanted to understand investing and this idea of compounding interest.
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And if your children come to you and they say, dad, I'm 25 years old and I've just got some excess cash here. I've got $20,000, $40,000. I'm thinking of putting a deposit down for a house.
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It feels like when we rent, we're wasting money, though.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
And it's hard for the brain to conceive, you know, that renting might be the same as... buying a house. when you net out and you factor in opportunity cost and flexibility and the ability to get on a plane and go to London to do that job. And you can't quantify that flexibility.
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My brother said this to me. He's a very smart guy. Now I reflect upon it. He said this to me when I was younger, because I think at 25, when I got some money, I was telling him, maybe I'll buy this house. We should look at this house.
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And he explained to me in simple terms that the flexibility that I had to get up and move was actually worth so much more than maybe some of the equity that I might accrue from buying a house. And now I look back on it From that day onwards, I then moved to New York and I lived there for three days. Then the pandemic happened and I suddenly quit my job out of the blue unexpectedly.
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And I moved to Portugal, then went to Germany, then went to Bali for several months, then flew back to the UK, London. Now I've just moved to LA. Yeah. Yeah. And that's all in the space of four years. Incredible. And I've gone with the opportunity.
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So when the opportunity comes knocking and the podcast starts doing well, and then this happens, and then Dragon's done this, I've just moved with the opportunity. And if I bought a house... You'd be locked down.
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The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
What's this idea that you have of asking $3 questions? I heard you talking about it.
The Diary Of A CEO with Steven Bartlett
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So am I right in thinking that you think we should avoid either extreme end of the financial approach that people take. So you've got YOLO on one end and you've got caring about every coffee on the other end spectrum.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
What do you mean?
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
On the subject of retirement, me and my friend Jack over there, we were talking about people who retire and the impact it can have on the individual. And I think I'd be quite scared to retire because there seems to be lots of data that suggests that once we retire, it's downhill from there in many respects for many people in terms of purpose and meaning and connections. Yeah.
The Diary Of A CEO with Steven Bartlett
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How do you think about retirement? Is that something we should be aiming at?
The Diary Of A CEO with Steven Bartlett
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You can't say your own book, but if you had to recommend a book that would equip us to understand money, wealth creation, and all these kinds of things, what book would you recommend?
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So why is Trump doing it then, in your view? Because he's given lots of reasons. He said that they're ripping us off. He says lots of countries have been ripping off the United States. How do you unpack what he's saying there? And what do you believe the true reason is underneath there?
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One of the things that I learned from listening to your podcast, which is fantastic, I highly recommend people go listen to the Morgan Housel podcast, was you were talking about the dangers of rapid growth. Yeah. And I actually, I took something that you said in the podcast around the danger of rapid growth.
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I sent it to my CEO and my chief revenue officer, because it's a cautionary tale for a generation of entrepreneurs who are obsessed with growth at all costs.
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slow things down yeah what in your view what is the and this could be the dangers of rapid growth in any field it could be someone running a podcast or someone building a business or anything someone investing money why do we need to be cautious about rapid growth there's a really interesting analogy that i like with tree growth in nature that if you plant a tree out in the middle of an open field
The Diary Of A CEO with Steven Bartlett
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You just reminded me of an idea I wrote about in my last book about the music industry where they found the same thing. The faster a song went to number one in the charts, the quicker it came out. Absolutely. Because people get bored of it basically very, very quickly. It's everywhere. It's on every radio station everywhere. And then it falls out the chart. All the time. The same speed.
The Diary Of A CEO with Steven Bartlett
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How does your work all dovetail with the subject of happiness, Morgan? Because at the very heart of it, clearly, everyone who's clicked on this conversation and got this far, although they might be thinking it's money that they're looking for or wealth that they're looking for, probably at the end of the day, they just want to live a happy life.
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They think money or wealth is a pathway to a happy life. With all the work that you've done and the people that you've studied through history and all that you've written, what is your current view on how to live a happy life?
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I was thinking about the goals that I wrote in my diary at 18 years old, where I said that I wanted to be a millionaire, girlfriend, range over six pack. And actually when I envisaged that life, what I envisaged was contentment. Yes, everyone does.
The Diary Of A CEO with Steven Bartlett
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When I get the Lambo, I will be content.
The Diary Of A CEO with Steven Bartlett
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Another really interesting example is just if everyone else was made extinct on planet Earth and it was just you.
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Do you not think there's something hardwired into humans that makes us want to strive, though?
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And the reason I'm here now is because my ancestors... out-competed everybody else in that situation. Yes. So I have competition in my DNA.
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What is the most important thing we didn't talk about that we should have talked about? Is there anything that comes to mind? For the person at home that's dealing with all of this tariff craziness, AI, all of this stuff.
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We have a closing tradition where the last guest leaves a question for the next, not knowing who they're leaving it for. And the question left for you is, what is one thing you valued starting out that you no longer value?
The Diary Of A CEO with Steven Bartlett
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Morgan, thank you for doing what you do. It's so incredible because, you know, you referenced that book, The Intelligent Investor. I tried reading that book and I just bounced off it straight away. It's tough. It's really, really tough.
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But your book, the one that my brother gave to me all those years ago, has probably made me millions and millions of pounds because I read it when I was young enough. Because it helped me to have a lens and a framework to think about a lot of this tempting, get rich quick, investing mentality that you see today. I wouldn't even call it investing.
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It helped me to understand the emotional elements of saving, spending, investing. And ultimately, it gave me a strategy for what to do if I ever made money. And although it's a boring strategy, it's a timeless one. And that is part of the reason why so much of my money currently is in really safe places like index funds.
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And it's so important to read books like this because when you read it and you hear the stories of these individuals and what happened and what didn't happen to them, whenever you experience an emotion that is similar or you find yourself in like a similar situation where you can relate to one of these characters in the story, you have a blueprint for what happens next.
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And so you ultimately can like, oh my God, that was like that guy in the book who couldn't stop gambling even after he'd won or he predicted the stock market correctly once and then he predicted it incorrectly the next time and then ended up killing himself.
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And it's for so many moments in my life, whether it was crypto or investing in certain particular stocks, when I used to pick stocks or starting businesses, it's given me this wonderful framework. And same as ever is the book that I wish I had written myself. And it's written in a style that I wish I'd written myself. And in fact, my last book, which many of my listeners would have listened to,
The Diary Of A CEO with Steven Bartlett
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was very very much inspired by your writing style because it is it is so accessible it is so story driven and it's so the subjects you talk about in this book are so diverse but they're so pertinent to everything all the time and it's they're so such wonderful books you're the author i admire the most of all authors that i've ever met that means the world to me because of the way you write your books so well thank you that means the world to me and i think you're the absolute best in the world at what you do keeping it keeping a conversation going for a
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The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
And then do you recommend people try and
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
So thank you, Stephen. I hope everybody goes and gets your books. Thank you so much, Morgan. Thank you. We'll see you again soon.
The Diary Of A CEO with Steven Bartlett
The Savings Expert: They're Lying To You About Buying A House! Tariffs Are About To Skyrocket Cost Of Living! Here's The Truth About America Collapsing!
buy houses or is it just to rent those houses so the truth is i find it incredibly fascinating that when we look at the back end of spotify and apple and our audio channels the majority of people that watch this podcast haven't yet hit the follow button or the subscribe button wherever you're listening to this i would like to make a deal with you if you could do me a huge favor and hit that subscribe button i will work tirelessly from now until forever to make the show better and better and better and better
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So I grew up skiing in Lake Tahoe, California, and I was a competitive ski racer. So all throughout my childhood and teenage years, I skied six days a week, 10 months a year, all over the world. And it was great. There were about 12 of us on the Squaw Valley ski team. We had grown up together and we'd spent our entire lives together.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And not only do you not need to do it, if you have endurance, you're going to beat literally 97 or 99% of the genius stock pickers. And what's so interesting about it is like picking the right stocks is hard. It's supposed to be hard. There's no world in which everybody who tries to beat the market is going to do it. Of course it's hard. Just like being an NBA player is hard.
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Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But having endurance is like largely in your control. It's so much easier to just be patient than it is to pick the right stocks every single day. And I think some people nature nurture. Some people like probably Ronald Reed and my parents just understand it naturally. It's not hard for them to be patient.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But there are professional investors who work 80 hours a week for 30 years to try to beat the market and they can't do it. Not only some, that explains like most of them. And even the ones who can do it are maybe going to beat the market by half a percent per year, 1% per year.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I went back around to take my boots off and jump in my truck and go pick them up. 20, 30 minutes later, I go to pick them up at the pickup spot and they weren't there. And I knew it only took us a minute to ski down the hill. So 20 minutes later, I knew like they weren't coming. I was not worried. I figured that they had already hitchhiked home.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But if you can have endurance, that's a bigger benefit than you can have by even being like a very successful stock picker. Like somebody who outperforms the market by one percentage point per year, and they can do that for 10 years, that's amazing. That's like Mount Rushmore investor. But somebody who earns average returns and does it for 20 years is going to have way more money.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
You do it for 30 years, you're going to be filthy rich. You'd be like Ronald Reed. You can be a janitor who leaves $8 million to charity when you die.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Sit on your ass and do nothing. That's it. That's a Munger quote. And that's what they're doing right now. Berkshire Hathaway, which is Warren Buffett's company, has like $150 billion of cash right now.
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Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And that's their entire 60-year history of Warren Buffett and Berkshire Hathaway is build up a shitload of cash, wait 10 years for an opportunity, deploy it all, and then go back to waiting and building up cash.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And that's how they've done it. Good opportunities are rare. Of course they are. They should be rare. It shouldn't be that anybody can just open up their stock account and find the opportunity of a lifetime. It's going to come once a decade.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
For the ordinary person, endurance and patience is 99% of what you need as an investor because the opportunities there to invest in a low-cost index fund are available for everybody.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Do it from your phone. Open up a Robinhood account. Buy some index funds. Anybody can do that. And so that, but that was not always the case. It used to be like 20 years ago that the only people who could invest were people who had a lot of money and could afford a broker and had a connection to a broker.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
You had to make a phone call. You had to know a guy. And even then you were going to pay a ridiculous fee to that person for doing it.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
It was a joke. And that's 20 years ago. It was not that long ago. So I think like people aren't grateful enough or appreciative enough of how much things have changed that open up those opportunities for everybody. Yeah.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
financial survival and just putting up with all the unpredictable nonsense that's going to happen between now and the end of your life. And we talked earlier about the surprises, Pearl Harbor, 9-11, all these big surprises. It's just your ability to endure things like that that's going to be literally 90% of your financial success and your investing success.
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Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But so after waiting for another 20 or 30 minutes, I just left and went back to the lodge. I expected them to be there and they weren't. And I still didn't really worry. Like we didn't have cell phones back then. And people were just comfortable being out of touch. If you didn't know where your buddy was, it wasn't that big a deal. So we went about the day. I started worrying a little bit.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So gaining money is like being an optimist and taking a risk, like being optimistic about yourself, swinging for the fences. You need that to get rich. Staying rich is like the exact opposite. You need a level of being conservative. You need to be scared.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
You need to be like acknowledge of all the unknown risks that are in front of us and have a financial allocation and a mindset that's going to allow you to endure them and survive them financially. You need both of those skills at the same time.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I would actually say, I think this is a little counterintuitive that when somebody is young, you would think you would say, you got 50 years in front of you, swing for the fences, go for it. It's also when your life is the most fragile. It's when you're most likely to be laid off, most likely to change your career, most likely to break up or get divorced, whatever it would be.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And so for that, you need quite a bit of financial flexibility, just cash and liquidity. So once you had some level built up, whatever the level might be for a different person, then like do something crazy.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I also think like for careers, some of the best career advice that's maybe not universal, but when you graduate college and you're looking at your career, don't take the safe job, which is usually like the big company, the blue chick company, go for the weird company. Why?
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Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
go for something crazy because when you're older, when you're 40 and you have two kids and a mortgage, you're not going to want to take the weird job. That's when you want the stability. That's when you're probably going to want the job that has good benefits and a stable paycheck because you need that.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
When you're 22 and you're not tied down by anything, don't go work for Goldman Sachs or Apple or Deloitte or something like that. Go for the weird startup where you're going to learn something completely different.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
linked to that point is in the weird startup you're going to be so close to the failure and failure is the knowledge you're going to learn so much so much and there's so many people who take the blue chip the safe job out of college and it puts them on a very predictable track you're going to be an analyst for two years and then if you're good you'll get promoted to senior analyst and then you'll get promoted to associate it's like very stable and linear and
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And that's like, it's you capping all of your upside. Or if you go for the weird company, you're either going to do one of two things. It's either going to fail and you're going to learn a lot from that, or it's going to take off and you're going to learn a lot from that. And then maybe when you're 40, after going through all that, then you want the stable job at the big company.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Yes, I think that's true. Yeah, absolutely. And most people, I think if you do it the other way around, or most people would never do it the other way around. If you start your career in the stable company, you're probably never going to leave. You're going to get addicted to the nice paycheck, the stable benefits, whatnot, and you're never going to take a risk and do anything else.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Maybe that's okay. Maybe for some people's personalities, that's exactly what they want. But I think there is a higher level of regret for people that start in a safe company and then they get the golden handcuffs, they can't leave.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I remember I stopped at Brendan's house, inspected him to be there, and he wasn't there either. And I remember calling and leaving a message on his voicemail. And I remember ending the voicemail by saying, I hope you're okay, man. Those are my last words. I remember that very clearly. The day went on.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And by the time they're 40 and they realize that they wanted to work at the crazy company, they can't because they got a mortgage and two kids and they're saving for retirement and they can't take the risk at that level of their life.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
It's always life. Yeah. It applies to everything. Tales where just a couple of things that happen explain 90 or 99% of what matters. It's always the case. You see it in business where you take in the United States, there are thousands of public companies that you can buy stock in. But the huge majority of the value in the US stock market is in like 10 companies, Apple, Tesla, Microsoft.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So even though you have thousands of companies, 10 of them are the ones that really matter and are going to drive all of the returns over time.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Because nobody knows what they're going to be, at least in hindsight. That's the argument for owning a thousand of them is that you know that the 10 that are going to be the next big ones are going to be in there.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I think that's great. And that back to, I wrote this book for myself. That's been the biggest lesson for me is not only do I know, but nobody else knows either. Everyone else is bullshitting their way through the investing market too. They don't know either.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Where they think it's going to go. Right.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And I think at about four or five o'clock, Brian's mom called me and she said, Brian never showed up for work today. Do you know where he is? And I told her what happened. I said, we skied the backside of Squaw where we'd hitchhike back. I was going to pick them up, but they never showed up and I haven't seen them since.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
That's such a great, yeah. No, I think what's closest to investing is something like the horoscope, where even if you know it's bullshit, you want to read it. Why? Because it's comforting. What a lot of people want out of their investing forecasts or whatever it is, is they want to reduce the uncertainty that's giving them stress.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Because everyone, I think, intuitively knows that the future in front of us is unknown and it's unknowable. But that hurts. And so if it hurts, you try to reduce that stress by finding someone who says, I do know what's going to happen.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And when I was 17, this was in 2001, I was skiing with two of my best friends, Brendan Allen and Brian Richman. And we would ski out of bounds. which is illegal. You're not supposed to do it. We would duck under the rope that says do not cross and we'd ski out of bounds because that's where a lot of the good skiing is.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And I also remember so clearly Brian's mom saying, oh my God, and hanging up the phone. And that was so like, so then we started getting worried. We called the police. The police didn't take it very seriously because they thought, ah, they're out at a party. They ran off with a girl for the night. Like they weren't worried. But we finally got search and rescue involved.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And rescuers with probe poles frowned Brendan and Brian buried under six feet of snow. And they were, they'd been killed from a massive avalanche. And so, look, I think virtually everyone listening to this, I'm sure you too have lost somebody close to you, somebody that you love. So I know the experience was not unique in that way, but it was the first time that I had experienced loss.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And it was the first bad thing that had ever happened to me in my life. So it had a big impact on me. And there were a lot of takeaways. I think at the time I didn't have the cognitive tools to piece together what happened or to learn about what happened, like have any sort of takeaways.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But as I got older and thought about it and looking back, I put together all these like realizations of what that did to me, how it changed me, and what were some of the lessons from it too. One that I talk about in the book that I think about all the time is my decision to not go with them on a second run. was this completely brainless decision. I put no thought into that decision.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
It was not a cost benefit analysis. I didn't think through it, but it's the most important decision I've ever made in my life. 100% chance if I was with them, I would have died. And I had skied literally thousands of runs with Brendan and Brian. How many times did I deny a second run with them or say, you guys keep going, I'm gonna go in? Almost never. The one time I did, it saved my entire life.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And so that, you really realize that the world hangs by a thread. Everybody thinks like, oh, you're going to put a lot of thought into your big decisions to make sure that you're successful in life, where you go to college, what your career is going to be, who you marry. That's all great. But the world hangs by a thread.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And there are tiny little know-nothing decisions, maybe that you made today, of maybe it was when to cross the street. Maybe it was when to leave to get in your car. That can utterly change the course of your life.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And so once you accept that of how much the world hangs by a thread, I think you become much more humble with your willingness to make forecasts about the future, what the economy is going to do, who's going to win the election, what's going to happen in my life, my career, my family's life. We have no clue. We have no idea because all we can think about are the big decisions.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
We cannot piece together the chaos theory of I got in my car at the wrong time. I met the wrong person or I met the right person, or I decided not to take a second run. We cannot forecast the impact of those things.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And when we would do this, it would spit us out on this back country road where we'd have to hitchhike back. There's no chairlift when you ski out of bounds. You have to hitchhike your way back. So we did it one morning in February, 2001. The three of us did it. And when we did it, we triggered a very small avalanche. And I remembered it so clearly.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And so that had a big impact on me too, of just who are we to fool ourselves that we can predict the next recession, that we can predict where our careers are going to be in 10 years, that we can predict how long our marriage is going to last, that we can predict how long we're going to live. We can't, nobody can, because we can't predict how crazy these tiny events can turn into.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I mean, think about the biggest risks to the U.S. economy over the last two generations. COVID? That's one of them. The others would be Pearl Harbor, 9-11, COVID, and maybe Lehman Brothers couldn't find a buyer in 2008, which sparked the financial crisis of 2008. Those are the biggest risks by far. And the common denominator of every one of those stories is that nobody saw them coming.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
They were not in any newspaper before they happened. They were not in any economic outlook. Nobody was going on TV warning you that this was coming. The common denominator of those is that they did all of their damage in two seconds. And that would be the case going forward.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
You can guarantee that the biggest news story and the biggest risk over the next year or the next 10 years of our life, whatever it is, is something that nobody's talking about today. that you and I can't even fathom. Because it's always been like that. There's never been a time when the biggest news story was foreseeable. And it'll be like that going forward.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So that's another just like embracing how fragile the world is. There's a great quote from a financial advisor who I really admire named Carl Richards. And he says, risk is what's left over when you think you've thought of everything. You can go out of your way to think about all of the risks that are in your life and like, great. And like how you're going to prevent them. Great.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
That's a good thing to do. When you're done with that exercise, what's left over that you're not thinking about is what risk actually is. It's like, by definition, we can never plan or even imagine what the biggest risks in our life are going to be.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
It's true. And I think sometimes you can phrase it as terrifying. It's also kind of relieving that, like, why are you going to put so much effort into trying to predict what the stock market is going to do next, what the economy is going to do next? Why are you building a forecasting model to figure out what the economy is going to do over the next 10 years?
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
When you look at the last 10 or 20 years, how could you ever predict 9-11 or COVID? And even look, like something like COVID, there's like a 2015 Bill Gates TED Talk where he talks about the biggest risk to society is a viral pandemic.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Like I can still feel it 21 years, 22 years later. I can still feel what it's like. It's the weirdest sensation that I've had in my life. Because when you get hit by an avalanche, rather than pushing on the snow to gain traction with your skis, The ground is pushing you. So all of a sudden you're skiing along and you got control and all of a sudden, boom, you have no control anymore.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So it's not that nobody saw that thing coming, but the specifics of when it's going to happen, how bad it's going to be, is it just going to shut down the economy for a week or two years? That is completely impossible.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Of course, of course.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I think on balance, the world breaks once per decade. Not exactly once per decade, but on average, once per decade, everything that you thought about risk and uncertainty and stability goes to shit.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
There's another great quote from Nassim Taleb that I like where he says, invest in preparedness, not in prediction. So rather than going out of your way to be like, here's what I think is going to happen in crypto. Here's what I think is going to happen in the stock market. Just make sure that you have a big enough buffer in your finances, cash, liquidity, being scared of debt.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So that no matter what happens, you at least have a fighting chance of enduring it and making through. One thing I've often thought about is that you should have enough cash in your investing portfolio, the amount of cash you should have should feel like it's too much. It should make you wince a little bit.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Because if you only have enough cash to put up with the risks that you can envision and the risks that you can foresee, you're going to miss a surprise every single time. Every single surprise is going to be a surprise to you. But if you feel like you have too much cash, then at least you have a fighting chance of putting up with the 9-11, the COVID, the Pearl Harbor, whatever it might be.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So when people look at my asset allocation, my investments... A lot of people look at it and say, you seem really conservative. Why do you have this much cash? What are you saving for? And my answer is always, I don't know. I have no idea what I'm saving for. Who are we to assume that we can predict the risks that are going to be in our own personal lives and throughout the broader world?
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Nobody can do it. The only way to prepare for it is to have what feels like too much safety.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I keep it as painfully simple as I possibly can. So literally my entire net worth is cash, a house, and index funds, and some shares of Markel while I'm on the board of directors. And that's it. There's nothing else. I can summarize everything so easily and so cleanly. And truly, that's it. And it's not even like I have 20 bank accounts.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
I have one bank account, one brokerage account, and a house, and that's it.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And six years, so even with the big fall over the last two years, you're still up a lot.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Yes, that's exactly it.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
The ground is pushing you around. Probably similar to what it feels like if you're standing on the ground during an earthquake, like the ground's pushing you. But it was a pretty small avalanche, maybe came up to our knees, ended pretty quickly. And we kind of like literally high-fived about it at the bottom and went about our day. We get back around to the base lodge. We hitchhike back.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Good. That's why you're going to do okay. The reason I do this, what's important is that I am not one of the people who says nobody can beat the market, so therefore use index funds. That's not what I believe. I think it's extremely hard to beat the market and very few people will do it. But I think there are really smart people who can do it and people who I know who I could invest with.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
The reason I don't is not because I don't believe it can be done. It's because the variable that I want to maximize for in my investments is endurance. If I can just earn average returns for an above average period of time, it's going to lead to amount of success that will literally put you in the top 5% of investors. My parents are a great example of this.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
My parents are smart people, but they have no financial background. And they have like minimal financial interest, I would say. But they have dollar cost average into index funds for going on 40 years now. And literally, if you look at the returns, they've never sold anything ever. And literally, if you look at the returns, they'd probably be in the top 3% of professional investors.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Dollar cost averaging means you buy the same dollar amount of investments every single month come hell or high water. It doesn't matter what the stock market's doing, recession, boom, bust. You say, I'm going to put $100 or whatever it is in the stock market on the first of every month. Now, most people who have a 401k at work are doing this whether they know it or not. They have $100 or whatever.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
removed from every paycheck and it goes into the funds that they own and they don't have to do anything. Whether you know it or not, you're actually doing it. The contrast to that would say, I'm going to buy and sell based off of how I feel in the stock market. I wake up, I watch CNBC, I decided to sell and I'm going to put it back in when I feel better about the market.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
It's the contrast to that. An index fund is just a single fund that owns hundreds or thousands of stocks within it. And if it's diverse enough, if it's big enough, really what you're doing is you're owning a slice of the global economy, which is how I think about it. It's thousands of individual stocks in there, Tesla, Apple, whatever it'd be.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But really what you're doing is you're owning a slice of capitalism.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Your ability to do well over the next one year or five years is going to have no role whatsoever on your lifetime ability to generate wealth. All that's going to matter is not what are the best returns you can earn. All that matters is what are the returns that you can sustain for the longest period of time. All that matters is your endurance.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
It doesn't matter if you can double your money this year or even double your money again the next year. All that matters is can you stick and keep it going for 50 years? That's where compounding comes from. Prove it. All because the formula for compounding is returns to the power of time. That's not quite it, but like more or less, that's it.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So in that equation, if you understand the math, all of the heavy lifting comes from the exponent.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Because that's how exponential growth works. That's how it works. It's literally exponential.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And Brendan and Brian said they wanted to do it again. They wanted to ski again. And I said, hey, for whatever reason, I just didn't want to do it. So I said, hey, rather than hitchhiking back, why don't you guys go do it again? And I'll drive my truck around and pick you up. So we said, great. We made our plans, went our separate ways. They went skiing.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
Okay, here's one way to explain it that I use in the book. 99% of Warren Buffett's net worth was accumulated after his 60th birthday. After he turned 60 years old, 99% of his wealth has been accumulated after that period. Because the longer you hold that for, the crazier the numbers get. When he was 60, I think he was worth about $3 billion. A lot of money. He's a multi-billionaire.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
But now that he's 90, he's worth over $100 billion. And he's given like $100 billion away to charity. So if he didn't do that, he'd go from $3 billion to $200 billion since he's been 60. Because the numbers just get crazier at that point. He's worth $100 billion. So if his market, if his net worth goes up 10% in one year, he makes $10 billion, which is three times that he was worth when he was 60.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
So that's when you look at somebody like Buffett, is he a great investor? Is he a great stock picker? Of course. But the real secret to his success is that he's been a good investor for 80 years. And if he had retired at age 60 or at age 50, nobody would have ever heard of him.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
He would have been like one of the other multi-billionaires who lives in Florida and plays golf and like you've never heard of him. The reason he's a household name is because he's been doing this nonstop since he's been 11 years old and he's never stopped. It's just the endurance that's made him so wealthy, not necessarily the annual returns.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
And he was a janitor.
The Diary Of A CEO with Steven Bartlett
Moment 208: The Dumbest Financial Advice Everyone Weirdly Follows That’s Keeping Them Poor!
He took what very little money he could save from his job as a janitor, mopping floors at the gas station. He put it in stocks and he left it alone for 70 years. And that's it. That's all you need. That's all you need to do. If you have endurance in your investing and you can keep it going for years or decades, you don't need to be a genius stock picker.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
New Year's resolutions don't tend to hold up because if you need to do something new on January 1st that you were unwilling to do on December 31st, you're almost certainly not going to stick with it. Most people have too much of their money in stocks and they should have less. And the reason why is
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think this gets back again where it's like there's no blanket advice because by definition, entrepreneurs are oddballs and are marching to the beat of their own drum. Henry Ford had this idea. I read Henry Ford's biography recently. Henry Ford's a very interesting guy because he was the greatest engineer possibly of all time. He was an okay businessman and he was a devil of a human being.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So he's like, there's all these contradictions wrapped into one. One thing that he always said was that money in the bank to him was such a waste. You should put that to work immediately. So cash sitting in a checking account to him was a complete waste. He was like, go build something, go build a factory, go invest in something, put that money to work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I could also argue the other side of that in terms of cash is actually the oxygen of independence. But I thought that was really interesting that he just viewed the opportunity cost of cash that he had as a complete waste. And I actually think you see the opposite in a lot of startups these days, where if you can raise money from VCs, there's a lot of it. There's just a gusher of money out there.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So you have a lot of businesses that will raise $50 million from investors and then just kind of leave it in a checking account. And maybe that is not the wrong thing to do. Maybe that's actually a wise thing to do to have that much liquidity. But I think if you view it in the idea of entrepreneurs are supposed to build and cash is a tool to help you go build something.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you raise a lot of money and you can't put it to work in a reasonable amount of time, it was probably way too much more than you needed. I think a lot of the behavioral traits that entrepreneurs have is an unreasonable amount of confidence in themselves, bordering on egomaniac. And it can be off-putting to a lot of people, but that's what you need.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And this is why when the personality traits of a lot of very successful entrepreneurs become public, Elon Musk, probably the greatest entrepreneur, not even probably, he was almost certainly the greatest entrepreneur of modern times. And he also has a personality that a lot of people find distasteful. And that I think if you look historically is extremely common.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The reason they are successful is because they're maniacs. And that's why they're successful. And it also gives them this personality trait that a lot of people don't like. Steve Jobs was like that. Bill Gates is like that. Henry Ford, as I just mentioned, one of the greatest entrepreneurial geniuses to ever live and a terrible human. Because anti-Semitism is very well documented and whatnot.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Same with Thomas Edison. A lot of these people, the reason they were successful is because they did not think like most people did. And because of that, they had the side that people found distasteful. That's very common.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And so for a lot of it, particularly, not necessarily if you are an entrepreneur, but if you're going to work for an early stage startup, a successful early stage startup, you need to understand and embrace and be okay with the fact that you are probably working for a maniac. That's usually the case. And that's why the company is going to succeed.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But you need to sign up for that and understand what you're doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Well, I think for anybody, not just entrepreneurs, but any random person, to be able to wake up in the morning and put one foot in front of the next, you need to at least be able to look in the mirror and say, I know what I'm doing and I'm making good decisions. Because if you don't, you're never going to get out of bed. You're not going to do anything.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But the truth is, if you understand how volatile and uncertain and unpredictable the world can be, we don't know what we're doing. We don't know where the world's going to go next. So because of that, you need to be optimistic, but the world is very uncertain. Most people are overconfident in what they can do.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thanks so much for having me. Happy to be back.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'll give you a really interesting example of this that we see very recently and is very prevalent in the news right now. For a lot of people in the economy, if you ask them, they will say, how's the US economy doing? Most people will vote poorly. It's not doing well right now. Inflation is not going well. And then if you say, how are you doing in your life? Most people will say, great.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The gap between those two is enormous. People say, the US economy is doing terrible, but I'm doing great. And you also see this in Congress, where if you ask people, how much do you like Congress? They say, I hate Congress. They're all a bunch of bums, vote them out. But then if you say, how do you like your congressmen? People are like, oh, I love them. They're wonderful.
Young and Profiting (YAP) with Hala Taha
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That gap between the two comes down to overconfidence. where you look around the world and you say the world is fragile and it's broken and it's uncertainty. But if you look in the mirror, you say, I got this all figured out. And I think people actually need that.
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That's not something we should look down upon because we need that in order to put one foot in front of the other in order to get something done. Entrepreneurs are like this on steroids because they are doing something that has very low odds of working, that there is no defined playbook.
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There is no map on what they should do, but they need to wake up every morning and look in the mirror and say, I got this. I am the best in the world at what I do. I've often thought about myself in my own job. I've talked a little bit about this. I think I have this split personality where in one day, I can be like, I'm doing great. I've got this all figured out. I know what I'm doing.
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I'm really good at what I do. And then not even the next day, but maybe the next hour, I can flip to, I have no idea what I'm doing. I'm no better than anybody else. What am I doing here? And I actually think that is actually a pretty healthy personality. To have the confidence to take a risk
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but also the humility, if not the paranoia to be like, I need to really think about what I'm doing here because I'm actually not that smart. I think if you can get those two things to coexist, that's actually the sweet spot. People get into trouble when they only have the ego or they only have the paranoia. If it's one of those two things, it's never going to work.
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You have to have this split personality of I'm so good at what I do and I'm a complete idiot who has no idea what I'm doing.
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But sometimes it's even the same thing for myself as a writer where writing is an art. There's no right answer. It's just there's sometimes where I write something and I'm like, that's great. That is beautiful. I love it. And then I can read that same paragraph an hour later and say, this is garbage. Nobody's going to understand what this means whatsoever.
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But I think the confidence needed to actually write and take a risk and write a brave paragraph, you need, but you also need the humility to go back and say, no, actually, I need to change half of this so it makes better sense. You need both of those at the same time.
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Let's do it. I'm ready.
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I think there's a couple of things to keep in mind. One is the very well-known idea that has been tracked for many years that New Year's resolutions don't tend to hold up. Because if you need to do something new on January 1st that you were unwilling to do on December 31st, you're almost certainly not going to stick with it.
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Well, I had this experience a couple months ago. This was probably 15 years ago. My wife and I, this was before we had kids. She was my girlfriend at the time. We had this amazing apartment in the Seattle suburbs. And given we were young and we were broke,
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But the economy was such a mess at the time, this is after the financial crisis, that we got this incredible apartment with a view of the lake in a perfect location with restaurants nearby. And we lived there for like three years. And then so a month or two ago, I was reminiscing. And I told her, I was like, man, that was peak living because we didn't have kids.
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We could just wake up and sleep in and go for a walk. And life was so good. And she interrupted and she was like, what are you talking about? She said, Morgan, you were more depressed and anxious and scared when we lived there than you've ever been in your life. Because it was just a weird time in my career. I didn't know what I was doing. I didn't really have any skills.
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It was a low point in my life. And I was like, yeah, you're right. So then why do I remember it as being such a great time? And I think the reason why is when I look back with hindsight, with the benefit of hindsight, I look back and I see a boy back then who had nothing to worry about because I know that things worked out. I know that the career worked out. My relationships worked out.
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It wasn't always perfect. It wasn't always easy, but it all worked out. And so I look at that boy 15 years ago, and I think about someone who had nothing to worry about. But back then, I didn't know that. I didn't know it was all going to work out. So when we know how the story ends, it's almost impossible to remember how uncertain you were during that period of time.
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And that's why we look back at the past as usually better than it was. I think this is true, too, if you think about A lot of Americans have a lot of nostalgia for the 1950s. You look back at the 1950s, there's like this glorious age of middle-class prosperity. And I think in part, we think that's true because we know that for the most part, it worked out.
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That the US economy worked out, that the global economy worked out, that there was no World War III, that there was no nuclear war, which a lot of people really worried about back then. So when you know how the story ends, the past always seems much less uncertain than it actually was.
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So there's this idea, I think it was brought up by Scott Adams, who is the guy who created the Dilbert comic. You should have systems instead of goals. One example of that is a goal is I'm going to lose 10 pounds. That's a goal. A system is I'm going to work out every day. That's a system. It's very different from a goal.
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And we always fall for this when we're thinking about how glorious the 1990s were, how the early 2000s, whatever it might be. There's one other example of this where a lot of people right now will say the late 90s and the early 2000s were as good as it got. That was such a great time to be alive. And that was my teenage early 20 years. And at first glance, I'm like, yeah, that's true.
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The movies we had, the music we had was so great back then. But then I'm like, man, do you remember what it was like to live in America in the year after 9-11? It was terrifying. It was utterly terrifying. Every day you woke up and turned on the news and held your breath that this was not going to be another terrorist. So we remember today as being this amazing time.
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But I think that's just because we know how the story ends. We know that there was not another major terrorist attack, that there was not a World War III, that the economy did recover. Things that we actually didn't know back then at the time.
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I think it's very common that you look back and you're like, yeah, the stock market has doubled in the last four years or whatever it is. And that was really obvious to see. Anyone could have seen that coming. And it was easy money to make over the last four years. And I think that is a very bad mindset to have because it was never easy. The future was never certain. It's always been this
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swamp of uncertainty that we live in. So when you view the past as more certain than it was, you view like investing decisions are going to be easier than they are. And the fact is making an investing decision today feels uncertain and we don't know what's going to happen in the next five years. And that's always been true. There's never been a period when that's not the case.
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So realize that the world we live in today is not any more uncertain than it was 5, 10, 20 years ago is really important. Yes, it feels uncertain today. And that is never going to change when you're making a forward looking investment.
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Well, first I was like, yeah, that seems right. It feels like the stock market's gone up straight up in the last 15 years or whatever. And then I was like, wait, wait, wait a minute. The last 15 years have actually been a continuous chain of uncertainty and nonsense and volatility. There's been several times when the market fell 20%. The market lost a half of its value during COVID.
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There was inflation. There are budget deficits. In every given period during the last 15 years, in any given day, you had a million things that you could look at and say, here's why the economy is broken. Here's why the stock market's not going to go up in the future.
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It's a much better and more efficient way to have a new habit to do something. So I think if you do have an aspiration to have a New Year's resolution, do it right now in December and come up with a system that you can actually stick with over the long run. And a system means that it probably should not be extreme.
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And there were very smart people who said the market's overvalued, hyperinflation's right around the corner, the budget deficit's unsustainable, go on down the list. And yet the market still did, if you're just connecting the dots over the period, go quote unquote straight up. But during that period, it was a never-ending chain of uncertainty and volatility. And this gets back to nostalgia.
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I think we think that the last 15 years were an easy, calm time to make money because we know how the story ends. The story ends with the stock market has gone up fourfold in the last 15 years, whatever it is. And since we know that, we view the past as being much less uncertain and much more stable than it actually was.
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If you can earn average returns for an above average period of time, you will be among the top investors in the world. Most people are overconfident in what they can do. You have to have this split personality of I'm so good at what I do and I'm a complete idiot who has no idea what I'm doing. Bullshit is easier to create than it is to refute. So meme coins are an example of this.
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Yes, yes. And so if you held on tight for the last 15 years, you have done extraordinarily well, but you had to hold on tight during every single day where it felt uncertain and there were a hundred reasons that you should panic during the time.
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I think there's actually a lot of calmness to be had when you accept that the world is not more uncertain today than it's ever been. And that at every point in the past, whether it was 2010 or 2005 or 1995 or 1950, whatever it might be, we look back today and say, you guys had it so good. You guys had a calm, stable world that you lived in. And that's not true whatsoever.
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The world is not more uncertain today than it was in 1995. It's not. We just think it is because we know what happened after 1995. And the odds of a good or bad future today over the next 10 years, I think, are the same as they were in 1995 or 2005 going back to the past.
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And so it's not to say that we know the world is going to be better in the future or the world is going to be great over the next 20 years. We don't know that, but we've never known that. It's not any different today than it's ever been.
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Yeah, I think at least part of this is there's a very big difference between I can't afford eggs and the price of eggs has gone up and that pisses me off. Those are very different things. It's one thing to say, look, there are things in the economy, particularly with inflation, that make people angry and rightly angry. They should be angry about it. They should be upset about it.
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And also, people are doing better than ever and earning higher paychecks than ever. And the stock market's at an all-time high. And Bitcoin hit $100,000 yesterday. And those two things are not a contradiction. that people should be angry. And most people have a ton of money right now, more money than they've ever had.
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So if you have a system of, I'm going to work out five hours a day, let's say, just using that as an example, you're almost not going to stick with it. And the financial equivalent would be, I'm going to save half my paycheck. Well, you're probably not. It's probably not going to work.
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And I think that's what you see when you have low economic feelings and moods and also record spending.
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There are many things going on. This is not a black and white issue that you can just give one answer and say, here's what's going on. But I think one of the things that is going on that's easy to overlook is that it's not necessarily that these things are happening at record rates. It's that we are more aware of it than we've ever been.
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So when there was incredible wealth inequality as recently as the 1990s, most people didn't know about it because your view of the world was constrained to your neighbors, your coworkers, your friends who you talk to on the phone, and whatever you watched on the NBC nightly news that night. That was your view of the world.
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And now, because of social media in particular, if something's happening in the world, if somebody in the world is experiencing the world in a different way than you are, you are going to know about it. And you're going to know about it in social media terms, which is the person who says the most provocative off-the-wall thing gets the most attention.
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So yes, there is a lot of wealth inequality right now. There has been for decades. People are just more aware of how the other half lives than they used to. And it used to be that the people who lived in Beverly Hills and lived behind gated mansions, you never saw them. Nobody else ever saw how they lived.
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And now if you flip open Instagram, it is an often fake view of how beautiful, wealthy, and happy people are. And everyone is so aware of it. And when you are aware that there are other people who look like they are working not as hard as you, They're not as smart as you, but they at least appear to be happier, wealthier, and prettier than you are.
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So the more realistic it is and the more systematic it is rather than a goal, the higher the odds that you can stick with it.
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That leads to a lot of anxiety, a lot of social FOMO that we have just because we are more aware of it. What's interesting with wealth inequality too is that actually in the last five years, in percentage terms, not in dollar terms, but in percentage terms, the group who has grown their incomes the most are the poorest.
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That has been a complete reversal from what happened over the last 30 years or so, or 40 or 50 years or so, where it was lower incomes were stagnating and the rich were just exploding. And now it's been post-COVID that a lot of low-income workers, people who used to make $7 an hour, maybe now they're making $14 an hour.
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In percentage terms, it's enormous, even if it's still a big gap between rich and poor. I don't know how long that will last. or if that's sustainable at all, but it's definitely taken place.
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The other thing I would talk about here that I think is really important is whenever you are thinking about your financial future, and let's call them goals if you want to, despite what I just said, what you really have to keep in mind is the idea of what are you going to regret in the future? So if you have a savings goal, are you going to regret not saving money?
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But I think it has always countered with the idea that those people who maybe used to make $7 an hour and now they make 14, they're still opening up Instagram and TikTok and looking at people who at least are pretending to live this gigantic life that is inflating their aspirations.
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When I was a teenager, my view of the world outside of the little town that I lived in was MTV Cribs. That was like the only opportunity to see how the other half lives. And what's so interesting about that specific example, if you go look, there are so many documented cases of MTV Cribs, which was like, that was the show of my teens and early 20s.
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that the mansions that they were showing off did not actually belong to those celebrities. You would have a rapper or whatever who would go rent a mansion to film in, but it wasn't actually them, which highlights the idea that a lot of times when you view how the other half lives, it's not even accurate. It's not even true. It's not a depiction of how they're actually living.
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It's either a rented mansion or that is actually their mansion, but they're actually not as happy as you think they might be. They're There's so much going on behind the scenes that they look like they're living this incredible life, but they're actually not.
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I think it's a hard trade-off because you should be worrying about things that might happen in your future. That's what's gonna propel you into action today in your personal life and for the rest of the world.
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So you can take something like climate change and say, look, for not everybody, but for a lot of people, it has no impact on their life today at this moment, but they should be taking action and trying to come up with new forms of energy because it's gonna change 10, 20 years in the future. I think having an appropriate level of worry is what gets you going. And in your own individual life,
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The idea that you wake up a little bit nervous and paranoid about your own career is what's going to propel you into action to bring you success five or 10 years from now. Jeff Bezos talks a lot about when they report a good quarter for Amazon, that's actually for actions that they took five years ago.
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They made a change in the company five years ago that is now paying off in this quarter because they were worried about the future five years ago. So I think that's always important. I think like a lot of things, though, you can overdose on good ideas. So if your fear and paranoia for the future is preventing you from taking action today because it seems so uncertain.
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So I'll give you an example that people who are so worried about climate change that they don't want to have kids. That's a documented thing as well. That's an example of, OK, in my view, at least you are clearly overdosing on that worry that's preventing you from taking action to do things in your life that might actually bring you a lot of joy.
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not to judge anyone's personal decisions, but I think there are certain cases when you are clearly taking it too far and it's preventing you from taking action. So finding that balance between how can I be kicked in the butt to take action, but not so much as going to paralyze me in my tracks, that's always what it is.
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Are you going to regret saving too much money because it came at the expense of a vacation that you could have taken or a new car that you could have purchased? You have to understand what you're going to regret. And what I might regret is probably different from what you might regret. Everybody has a very different situation.
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And you also have to bring that with the idea that what you are worried about in the future is very likely not going to happen, but there are going to be bad things that do happen that you're not even thinking about today. So if I'm thinking about the next 10 years and you said, Morgan, what are the biggest risks to the U.S. economy over the next 10 years?
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I can name a couple of things, inflation, budget deficits, whatever it might be, that very likely will not be the biggest risk. The biggest risk over the next 10 years is something that you and I and nobody else are talking about. It's going to be some equivalent of 9-11, Pearl Harbor, COVID that nobody talks about until it actually happens.
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So when you embrace the idea that the biggest risk is something that you and I are not even thinking about right now, it's not in the news, nobody's talking about it. Then you kind of throw up your hands in a good way. And you're like, look, I know the world is fragile.
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I know the world is uncertain, but I'm not going to waste my time trying to predict exactly what it's going to be because nobody knows what it's going to be.
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Totally. I think a lot about, too, in the early days of the internet, let's call that 1990s, let's say, the biggest fear, the worry for the internet was that it was going to put brick and mortar stores out of business. To some extent, it kind of did, but not really. Costco is still an absolutely booming empire and whatnot.
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But what did happen was what virtually nobody talked about, was it was going to have an incredible impact on teenage, particularly mental health. on teenage anxiety, depression, suicide and whatnot that we know is at least heavily caused by social media addiction. That probably is right now the biggest risk that the internet poses on society. And virtually nobody was talking about it 20 years ago.
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And so that's just one example of what is actually the biggest risk is what no one's talking about right now.
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I think what's true historically is that the biggest inventions, the biggest innovations come specifically because there is a problem in the world. And when the world is on fire, so to speak, that is what gets people's butts into gear to go innovate. So the most innovative decades that we've ever had in America are the 1930s and the 1940s. And it's not even close.
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So you just have to have a good grasp on what you are likely to look back at a year from now to 10 years from now, 50 years from now, and say, man, I wish I had done that differently. It's different for everybody, but I think that's the formula you should have in your mind.
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The inventions that we came up with, the added productivity that they added to our life, 30s and 40s is where it's at. What are the 1930s? It's the Great Depression and World War II.
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Because what happened during those periods were if you were an entrepreneur or a business owner in the 1930s during the Great Depression, every single morning you woke up scared out of your mind and you said, I need to get more productive because if I don't, we're going to go bankrupt next week.
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So I need to figure out how to run my business way more efficiently and come up with new technologies, new ways to do things. And the accumulated impact on that was enormous. In World War II, it was, if we don't come up with new innovations, Adolf Hitler is going to take over the planet next year.
Young and Profiting (YAP) with Hala Taha
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And that spawned a ridiculous wave of innovations for everything from nuclear energy to rockets, to jets, to penicillin, microwaves, radar going down the list because people were so scared. So that's the contradiction of you actually don't want most of society to wake up every morning and say everything is great because that can lead to a period of getting fat, happy, and lazy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What you want is a low level of anxiety, not too much. The most innovation happens when people wake up in the morning and they say, I have to get more innovative. Not it would be fun if I became more innovative, but I have to do it because there's this existential threat. That's when you look back 20 years later and you're like, man, that period was tough. It was stressful.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But look at all the good things that came out of it. That's always the long history of innovation.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, so in medicine, we have learned a tremendous amount about biology and chemistry and anatomy over the last 200 years, and it is cumulative. What I mean by that is if in the 1920s we discover penicillin, the next generation gets to start their career understanding what penicillin is. All the knowledge is cumulative over time.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What one generation learned, the next generation starts with as a baseline of knowledge. And that's when knowledge just explodes exponentially. Other fields like finance are not like that. And by and large, the lessons that were learned in the 1920s and the 1930s or the Great Depression and the roaring 20s, we have to relearn those lessons.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
We don't have that knowledge passed down from generations that were like, great, we'll never do that again. No, we keep doing the same thing over and over and over again. And it would be the equivalent of every generation of new doctors had to find new medicines, had to rediscover medicines that the previous generation already discovered. That's ridiculous, but that's what happens in finance.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
A lot of it is because finance is not a science, it's behavioral. And I can read about what it was like to experience the Great Depression and the stupid risks that people took in the 1920s and how it all blew up in the 1930s. I can read about that. But for a lot of people, they're only going to really understand it when they've experienced it firsthand themselves.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why we keep doing the same things over and over and over again. And so any field that is behavioral and finance is definitely that. It's probably the greatest example of a field that's purely behavioral. There is virtually no accumulated knowledge over time. All the lessons have to be learned over and over again.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And you can easily imagine a world where, look, my grandparents lived through the Great Depression. And then my generation made some really stupid mistakes during the housing bubble and maybe during the dot-com bubble. And my kids and my grandkids are going to make a bunch of stupid mistakes themselves.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There's very little looking back and saying, hey, we learned from that, so let's never do that again. It's the same mistakes over and over again.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think that's definitely the case. It's true that in the 1920s, during the peak of the stock market bubble in 1929, 5% of Americans owned stocks. That's it. 95% of Americans did not own a single share of any stock. And today it's about 55% of Americans own some stocks, maybe in their 401k or their brokerage account. So it's a way higher exposure today than it used to be. And I think that's good.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's great. But it also makes it so like, yes, there's so much participation in the stock market that when the stock market falls 50%, it has a much greater impact on society than it used to because there's a greater participation rate. And so a lot of those mistakes that we're still making today, when they occurred 50 or 70 years ago, it was bad for a small sliver of society.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Whereas today, when the stock market falls 50%, it is crushing and completely derails half the country's ability to retire on time, something like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it can help. It can also be very dangerous. And one thing that I've tried to do in my career is not pretend that I know who you are because I don't. I don't know what your goals are. I don't know what your income is. I don't know what your personality is. I don't know what your family situation is. So who am I to give you medical, to give you financial advice?
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I said medical there because what I was going to say is imagine a world where there was the equivalent of CNBC for medicine. And you had doctors going on saying, you should take this medicine. You should get the surgery. And what you would do as a viewer is you would be like, you don't even know me. You don't even know if I'm sick. And you're recommending that I go take this pill.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That would seem ridiculous. But we do that with finance, where you have a financial influencer who says, you should buy this stock. You should have half your money in Bitcoin. And that might be good advice for some people and disastrous for others. You have to understand that person individually.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
This is why I think despite the massive growth in digital financial advice and whatnot, there is still a huge, incredible need for a face-to-face human financial advisor who can actually get to know you. Because it's never going to be the case that an app can know everybody and give blanket advice. There is no blanket financial advice.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And what works for me might be disastrous for you and vice versa. That's the limitation of giving advice to a very big audience is that there is no one size fits all piece of advice that you can give anybody.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What I think is interesting, if you talk to a lot of financial advisors, they will tell you one of the biggest problems that they have with their clients is you have a client who has saved diligently for retirement for decades and they saved up a giant nest egg.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They have millions of dollars saved for retirement and then they're 65 years old and they retire and they cannot bring themselves to spend it. They cannot do it because saving money has become so ingrained in their identity, in their personality, that they can never switch gears. That's really important too.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it's a very big problem because in your 20s, 30s, 40s, you create a very good habit of I'm a saver. I'm a long-term investor. And you can never break away from that. You can't do it. So the idea that a good financial skill in your 30s can actually be a liability in your 50s or 60s is really important. I think about this in my own life where in my 20s,
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
When I hear that, I have two thoughts. One is, yes, I believe that to be true. That makes sense. And B, people have been saying that for literally centuries. John Maynard Keynes, one of the most famous financial minds of the 1920s, 1930s, he very famously predicted that I think it was by the year 2000, the average work week would be 15 hours a week.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Because he calculated we were going to become so productive and so efficient that people just wouldn't need to work that much anymore. Of course, that did not happen because there is such a long history of if people's incomes go from $20,000 to $50,000, they don't say, great, that's enough. I can just retire on $50,000.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What they do is they say, great, now I make $50,000 and I aspire to make $100,000. And once they make $100,000, they're like, great, now I aspire to make $200,000. So you can imagine a world where AI makes us all much richer and way more productive. I think it's much harder to imagine a world where because of that, we all say, great, I don't need to work anymore.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think if we do that, we're just going to find some other new technology to want to work on. And that's always been the history of new technology. Maybe this time will be different, but I feel like that's always what it is. That if you double people's income, it's great. They live a better life and they are not satiated in the slightest. They're always going to want more.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think the reason why is because people's ability to feel wealthy has very little to do with the actual material life they're living. And it has a lot to do with whether I have more money than you do. It's all about social comparison. And so if my income doubles and your income doubles, by and large, I will not feel better off because I'm still comparing myself to you.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So if AI makes everybody richer, it's probably the case that nobody feels better off because by comparison to their peers, they're not any better off.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Everyone just wants to be the top 1%, but I think this was a Charlie Munger quote. He's like, the iron rule of math is that only 1% of people can be in the top 1%. It's always going to be that the other 99% feel like they're falling behind, even if their incomes are going up and up and up.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm probably going to get some of these numbers wrong, but I think this is roughly accurate. He made about $200 million from PayPal. I think he was about 30 years old, cashed out $200 million. Obviously, anybody could have and would have just sailed off into the sunset and bought a private island and a private jet and lived out the rest of their days in luxury.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And let's say early 30s, I was a very big saver. And I'm so proud of that. And that's great. Now I'm in my 40s. I have two kids and we spend more than we used to. And it is not because I broke my previous good financial habits. I don't view it that way at all.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What he did is he plowed every single cent of that money into Tesla and SpaceX, which at the time were nothing. And by his estimation, as I mentioned earlier, there was like a 99% chance that those were not going to work. Now, both of them worked. He's now the richest man to ever live. Everyone knows what happened.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's also important to realize that the vast majority of people, including myself, do not have that personality. That you could have made $200 million and said, I'm going to bet it all on companies that have almost no chance of survival. Even if it did work out in the end, we know how it worked out. And so more than the fact that he is a genius entrepreneur,
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
entrepreneur, a genius engineer going down the list, he has a level of risk taking that is truly one in a billion that I don't have. And so I think for lots of entrepreneurs, not just Musk, but many of those people, I can look at them and say, I am glad they exist because the products that they created make the world better.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And at the same time, I would never want to live that life for myself, where I'm lucky enough to make a fortune and I literally go put all of it on black. That's not what I have. But he does have it. Back to people like Henry Ford. He was like, look, if you have cash in the bank, you need to put it to work immediately. Otherwise, it's a total waste.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't have that personality, but I'm glad that he did because he made the world better for it. That's a lot of the contradiction here. I think it's important for people to wrap their heads around is that it's not a contradiction to say, I'm so glad that person exists. because their technology has made the world better.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And at the same time, they have parts of their personality that I find distasteful, and I would never want to take that much risk in my own life. That's not a contradiction. That's actually a very important thing to acknowledge for lots of those entrepreneurs outside of Elon Musk.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, it's a hard thing to wrap your head around. And this is true for a lot of things in life, for your relationships and whatnot, that you might need to try out 10 different things before you find one that works. And understanding the idea that if you'd start 10 businesses, let's say, and nine of them fail and one is a success, that's a good outcome. That means you did it right.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But that means you have to be comfortable with nine of the things not working. And you might need to date 10 people before you find your spouse. Like that idea exists everywhere in your life. And so getting used to the idea that the path to success often looks a lot like failure is very hard to wrap your head around.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I built up money so that I could spend more of it now and have maybe a lower savings rate than I used to because I have a bigger family who are hungry and we go on vacations and whatnot. And I think that's wonderful. The more you can use money as a tool to live a better life, rather than just a scorecard of social comparison, the better off you're going to be.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's true for stock picking as well, where if you pick 10 stocks, there's a very good chance that in the three to five of them won't even exist anymore. Those companies will go out of business. Even for big mega companies, they just won't exist anymore. And a couple of them will do okay. And if you're good and if you're lucky, one of them will generate all of your returns.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's always how it exists. I mean, if you go back 20 years ago, a lot of the biggest stocks in the world were AIG, Enron, General Motors, companies that either don't exist or barely exist anymore. And that's always been the case. And you can so imagine a world 20 years from now where one of... Amazon, Google, Microsoft, Nvidia, Facebook don't exist anymore.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That sounds crazy, but that has always been the path of history. Or they still exist, but they're shells of their former selves. And there's going to be some new company that you and I aren't talking about today that's going to be worth $10 trillion. That's always been the case as well.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So understanding that you can fail half the time and still do very well seems like a contradiction, but that's always how it works in a tail-driven society.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I've always liked the idea that fields are more interconnected than we think. So in school, the biology department's over here. And then in a separate building, you have the math department. In a separate building, you have the history department. But there's actually so many interconnections between those fields. And there's so much that we can learn from biology that teaches us about investing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And there's so much that we can learn from history that teaches us about medicine, like all these interconnections. So I think it's fun to look at some other laws and rules from other fields that you're like, look, that's from a different field, but it teaches me a lot about this field.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There's lots of different laws from evolution that can teach you a lot about investing, from biology that can teach you a lot about investing. And I think if you are only looking through the narrow lens of your field, whatever your field is, if you're an investor, you're only looking through finance.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you're a lawyer, you're only studying law, that you can actually learn so much if you expand your horizons and you realize how interconnected the world truly is.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That was from a guy who coined it Brandolini's law, which is that it is much easier to create bullshit than it is to refute it. So if somebody lies or says something completely untrue, that's very easy. To refute it is extremely difficult. And it's always been like that. Social media makes it 100 times more potent than it used to be. And you see this online.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If somebody tweets something that is obviously false, profoundly false, it might get 100,000 retweets. And then when it is corrected and the truth comes out, that correction will get half a percent as much attention and as many eyeballs as it did. That's always been the case, but it's so much more potent now than it used to be. That bullshit is easier to create than it is to refute.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, rumors and whatnot. What's interesting in finance is that a lot of what might seem like bullshit and rumors can become true because it's a story driven thing that enough people latch onto. So meme coins are an example of this. Someone creates a meme coin and you're like, that's obviously bullshit. It's obviously has no fundamental backing. It's obviously a joke.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And if you always view it through that lens, like how can I use this money as a tool for more happiness, not just how much can I accumulate and have a higher score than the next person? I think that's always the better way to think about it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it becomes Dogecoin worth tens of billions of dollars. Exactly. If enough people believe it, at least for a short period of time, it can become self-fulfilling. And even if it's based in bullshit and long-term is bullshit, it becomes self-fulfilling for a very long period of time if enough people think it's true.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Littlewood's law was this idea from a mathematician where he was like, a lot of what people consider miracles are actually just basic statistics. Because if something has a one in a billion chance of occurring, well, how many people are in the world? Eight billion. So by definition, there should be eight, one in a billion things happening every day, day after day after day.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And so in the news, we're always going to hear about this amazing, ridiculous thing, good or bad, that happened to somebody. And you're like, that's a miracle. How could that possibly have ever happened? Well, a lot of the answers to that is just there are so many people in the world doing so many things. Things that seem completely preposterous actually happen all the time.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And in a global news world, you are definitely going to hear about it. And it leads people to this idea that the world is probably more fragile and more uncertain than it actually is. It is very fragile and uncertain.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But when you only hear about the one in a billion things that are guaranteed to happen because there are so many people, it gives you this idea that those things happen more frequently than they actually do.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's the idea that work expands to the time that you have. And so if you give someone a two-month deadline, they're going to take two months to do that project. If you give them a one-week deadline, they'll get it done in a week. Back to Elon Musk, who we've been talking a lot about.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
He's been known for this very often, particularly in SpaceX and Tesla, where an engineer says, Elon, this part is going to take a million dollars to build, a million dollars to create and design this part. And he basically comes back and he's like, your budget is $50,000, go get it done. And they do. They do get it done.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Steve Jobs did this a lot too, where he was like, the iPhone or the iPod, it cannot be bigger than this. And the engineers are like, we can't do it. He's like, yes, you can. Go figure it out. And they do it. They get it done. If you give someone a tight deadline, they will probably find a way to get it done.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But if you give them the expense and the time, a larger budget or a larger period of time, they're going to fill up their needs in that time. And you see this in so many different careers where the amount of time and money that you need to get something done is just the amount of time and money that your boss gave you to get it done.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
One is figure out what is unique to you that does not apply to other people in your circle who you are currently looking up to and trying to copy. What is very unique about your goals or your personality that you're like, look, this person who I look up to, this strategy works for them, but it probably doesn't work for me. And it's not a contradiction.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm not going against them to say, I know that worked for you, but I have a different personality, so I'm going to do it my own way. Whatever that might be, everyone is different. I think that's what's most important.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I probably don't take as much investing risk as somebody of my age and income could. But that's because I have no aspiration to be the world's greatest investor. My only aspiration is to give myself and my family independence. And that might not be your goal. It might not be some of the listeners' goals.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So if we are doing things differently, it's not necessarily because we disagree with each other. We might just have a slightly different personality and different goals over time.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Independence, always. Not just financial independence, but hanging out with only people who I want to hang out with, only doing work that I want to do. If you could wake up every morning and say, I can do whatever I want today, regardless of what that might be. Having a sense of independence is not only the most enjoyable, but it's going to push you towards doing your best work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
My book's The Psychology of Money and Same as Ever. And I also have a podcast and a blog. Twitter, my handle is Morgan Housel, my first and last name. Awesome. What's your podcast called? It's called The Morgan Housel Podcast. Very creatively named.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Someone creates a meme coin and you're like, that's obviously bullshit. And it becomes Dogecoin.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thanks so much.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it probably is a good strategy, but like every good strategy, you can overdose on it. So it sounds like what you've done is just you have a very keen grasp on your net worth. That's great. I think you can overdose on it if you're like, I'm only a success as long as that number goes up every month. That's dangerous because that's not how the market works.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's not how you're going to eventually be able to spend that money in a way that will make you happier. And so I think it's great. I do the same, by the way. I have checked my brokerage account probably every day for the last... 20 years. That's very roughly true. But what's important is I don't use that to say, oh, I'm falling behind.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't use it to say, oh, I should go place a trade because the market went up or down today. I just think it's interesting. And I have a very keen in any day, I could tell you my net worth to a very high degree of... accuracy. I think that's great. And not a lot of people I think can do that. I think a lot of people, if you ask them their net worth, they would have to think very hard about it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Or if they gave you a number, it would be wrong. And that's when things start slipping out of hand. There's a lot of study and data on people who forget about their 401ks. And some of them will transfer to a new job, transfer their 401k, where it sits in cash for years, because they forgot about it. They never invested it. And the lost returns you can have that can be enormous.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So having a very keen grasp on exactly how much money you have is wonderful. You just want to make sure that you don't become so ingrained in your identity that you are so obsessed with that number that you only feel like a success in life if it's going up and you feel like a failure and you need to change if it's going down.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah. I mean, there's some people I probably fall in this category. They check their brokerage account once a day and they check their blood pressure never or once every five years or something, you know, like numbers that are probably actually very important to your life success and outcome.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They're oblivious to, but something that is almost by definition going to jump around randomly every hour, they pay close attention to it. I always used to use the example of nobody checks the value of their house every day because that would be ridiculous. But now actually, I think a lot of people do because of Zillow.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They have this number that like a stock ticker goes up and down and they check it all the time. It's true for any investment that your lifetime success is almost certainly dependent on how long you leave it alone for and just let it compound over time.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And if you are the kind of person for whom checking it every single day is going to prevent you from holding it for a long period of time, then that's an issue.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't know if it was wrong because you did it because that's what you felt like you should do. Even if you could criticize that and say, oh, you sold at the wrong time, you should have held out. I usually don't say that because if you had tried to hold on, you probably would have got scared out at a lower price.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The fact that you were tempted to sell means that at least in that moment, you didn't have the right mindset to hold on. So selling may have been the right thing for you to do. One of the things I've changed my mind on about money is criticizing the decisions that people make because you made that decision because it was the right thing for you to do in that moment.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Even if you could go back in hindsight and say, look at all the money you would have made if you held. Let's not do that. But I think what is true is, like I just said, what's going to account for the majority of your lifetime returns is not did you pick the right stocks? It's not did you pick the right industry? It's how long did you hold on to the stocks that you owned?
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And one thing that's hard for people to wrap their heads around is if you can earn average returns for an above average period of time, you will be among the top investors in the world. So everybody's attention goes to what's big, what's hot. Tech, AI, as you just pointed, that's big and hot right now. Over the next 30 years, those things are not going to matter that much.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What's going to matter is what did you hold on to for the longest period of time? Carl Richards, who's a financial advisor, brought up the idea that for most people, a house is the best investment they will ever make. And the reason why is not because it's a good asset. It's not because it's leveraged with a mortgage.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The reason why is it's the only asset that people are willing to hold uninterrupted for 20 or 30 years. And so even if the average annual return is not that high, a mediocre average return compounded for 30 years balloons into a fortune. And so that's what I would keep in mind for you. I would A, not criticize the decision that you made.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I would B, say, look, rather than trying to pick the best industry, pick a decent industry that you can stick with for another 10 or 20 years. And that's where the big money will be made.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why I think most people, not everybody, but let's say a lot of people have too aggressive of an asset allocation. They have too much of their money in stocks and they should have less. And the reason why is the only thing that matters is what do you need to have to make sure that you can hold on to the stocks that you own and are never forced to sell? You never panic sell.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
You're never forced to sell because you need the money for a new car, whatever it might be. Whatever that level is, that's the most that you should own. And for a lot of people, you might have a spreadsheet or a financial advisor that says, you're young. You can have 90% of your money in stocks. And maybe in theory, that's true.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But if having that high amount is going to scare you out during the next bear market, then it's the wrong amount. You should have had less, maybe just 50% of your net worth in stocks. Whatever the amount is that you need to hold on to for the long run, that's what you should have.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it gets back to the great Charlie Munger quote, where he said, the first rule of compound interest is to never interrupt it unnecessarily. That's what matters more than anything.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Such a good question because there's no one right answer because every startup is different. I think it's important to understand if you are a new entrepreneur to A, understand the base rate of success for startups. What I mean by that is how many other startups that came before you who are just as smart, had just as much money, had just as much ambition, failed.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that number is always going to be very high. And A, you need to understand that number and embrace it with both hands. And B... To be successful as an entrepreneur, you also have to say, yes, but I'm still going to plow ahead as hard as I can. That's the dichotomy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's the contradiction of being a startup founder is, look, I know the odds of success are stacked against me and I'm still going to go ahead nonetheless. There's this great story many years ago that I heard from a founder where he was raising money from an investor and the investor said, I love the idea of this company, but I think there's only a 20% chance that it's going to work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think there's an 80% chance you're going to fail. And the founder was like, 20% chance it's going to work, you're optimistic. I think there's only a 10% chance this is going to work. And I think that mindset of an entrepreneur is saying, there's a 90% chance that I'm going to fail and I'm going to give it everything I've got nonetheless.
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Elon Musk talked about this, where I think the figure was when he started Tesla and SpaceX, he thought there was like a 99% chance that they would fail. And he still did it nonetheless. That's what's difficult. When it comes to financial planning, the important part about that is that in the very high odds that it's not going to work,
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
you wanna make sure that you have some landing pad that you're gonna fall back onto. Because in the situation where your business fails and then you have nothing, including maybe marketable job skills to pull yourself back up, that's a terrible thing. And it gets back to what we first discussed about what are you gonna regret?
Young and Profiting (YAP) with Hala Taha
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think for a lot of people, they would regret not starting a business. They would regret not taking a chance. They might also regret putting everything they have into that business so much so that if or maybe even when it fails, they have nothing. They have nothing left. They're going to be left in a state of destitution. That's really important.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And James, as you will see when he comes on, is the nicest, most humble, politest guy you'll ever meet. So the fact that not only had James had success in a book, but I was like, I want to be James. I'm not like, not just his success. I want to be him. was a big motivator for me to be like, okay, I really want to write a book now. And James and I have become friends since then.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's actually interesting. In the summer of 2018, I was in Omaha, Nebraska for the Berkshire Hathaway shareholder meeting. And we rented a house with 10 friends. And this random guy came over to have dinner. I don't know who invited him. No idea who he was. And he introduced himself. He said, Hi, I'm James Clear. I'm writing a book called Atomic Habits. It's going to come out in a couple months.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so we had no idea, but like in hindsight, looking back, it's so funny to piece all that together.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'd say in some ways, nothing has changed. In some ways, everything has changed. Nothing has changed because I still write about the same topics. I still read the same topics. I still sit in the same chair and think the same way. My wife and kids don't treat me any differently. In most ways, nothing has changed. What the book did to me
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's a very real thing is it gave me independence, which is a big topic in psychology of money. What you want to use money and wealth for is to gain control over your time. And if I'm being honest with you, I feel like I'm really opening myself up in this podcast here. Before the book, I was always filled with career anxiety. What happens if I get laid off? What happens if this doesn't work?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it really scared me, particularly as I became a father. I got mouths to feed. What happens if this doesn't work? That's the one thing that's changed post-books, a greater sense of financial independence. That means the world to me. And I also, my wife has pointed this out too, I think I've been in a better mental state post-books than I have in my life.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It didn't make me happier, but I think it removed anxiety from my life. It's interesting that in a way that was what the book was about. But then because of writing the book, I got to experience it myself, which has been the cool thing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's all of the above. It's book royalties. It's speaking. It's all of the above. And we haven't really changed our lifestyle to any meaningful degree. We live in the same house and drive the same car and whatnot. A lot of that has just accrued to net worth. This is what I write about in Psychology of Money too. Wealth is what you don't see. It's not the cars that you buy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it used to be that all of my emphasis and research and enjoyment was investing. I want to scour the world and study investing history and whatnot. And I still love that. I'll always do that. But the art of storytelling really bit me 10 or 15 years ago. And that's what I've really find joy in doing now. And that's the craft that I want to hone.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not the house that you buy. Wealth is the money that you've saved that gives you independence, that allows you to do whatever the heck you want to do. And so that's what it's been for us. It's like we've saved the vast, vast majority of it. And because of that, the anxiety that I had of what if back then has largely been stripped away.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Now, you will never get rid of what if because what if you get hit by a car? You're never going to remove risk. But a lot of the tangible career risks that I had five years ago has dissipated.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think jumping around like that has been really important. If you just put yourself in a box and say, I am a blank. you're cutting off so much of the world that you might find enjoyment in and have some talent in doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's how I always define it. If you are the smartest financial mind in the world, you have a PhD in finance from Harvard, you know all the numbers, you won the Nobel Prize in economics, but you don't have control over your behavior. You don't have a control over your greed and fear or patience or temper. You can and very likely will go broke.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the flip side of that is if you have no financial education, you don't know anything. You didn't graduate high school. You're a country bumpkin who knows nothing. But you do have control over your greed and fear and patience and temper. You have everything you need to become wealthy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think I was 19 when I first stumbled across investing. I've told the story before, but it'll always stick with me. When I was 18, my grandparents gave me $1,000 and I put it in a CD at the bank, certificate of deposit, where it earned interest. And I think I intuitively knew what interest was, but I didn't really get it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Just yesterday, there was a news story that came out about this guy who lived in the middle of West Virginia or something like that and lived in a trailer. I heard this. He recently died and he left $4 million to his town.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's the perfect example. He does not have the pedigree. He does not have the degree from Harvard. He did not work at Goldman Sachs, but he was clearly patient, not greedy, et cetera, et cetera. And because of that, he became very wealthy. So there are very few fields in which that's the case. If you did not go to medical school, you do not know how to perform open heart surgery, full stop.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's not like that in finance. You don't need the education to do well as long as you have the behaviors. So because it's one of the few fields that's like that, it's easy to overlook what you need. And most people, if they're like, I want to become a good investor, they're like, great, I'm going to go get a degree in finance. I'm going to memorize all the formulas.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And by and large, that's not what you need. What you need is the behavior. Now, for a lot of people, that behavior is nature instead of nurture. They're born understanding. Their brain is wired in a way that lets them do it. And some people are the opposite of that. But just understanding what you need and what you don't is, I think, the most important thing of doing well with money.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In math and in physics, there's one right answer for everybody. So if I say, what is two plus two? It's four, no matter who you are or where you're from or where you live or how old you are. But in finance, it's not like that. Because if I say, how should you invest your money? Well, what works for me might not work for you and vice versa.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Everyone listening, we're all going to come to a different conclusion. Because our risk tolerance is different. Our social aspirations are different. Our time horizons are different. Everything is different. So it's much closer to like taste in music. And if I said, what's the best music? There's no one answer for that. It just depends who you are and what you like and how old you are.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Music that I liked when I was 15 would be atrocious to me now. So you're going to change throughout time. That's most of the nuance in finance is just realizing that there is not one right answer. And I think the majority of the time in finance, when people are arguing with each other about how should you spend your money? How should you invest your money? They're not actually arguing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They're not actually debating. It's just people with different experiences and different risk tolerances talking over each other. And it's the equivalent. If I think X and X is good for me, you might think X is terrible because it would be bad for you. That's the biggest issue with financial debates.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The first thing I think is important is we live a great life. We live in a great house in a great neighborhood and we take great vacations. We are not the kind of people, like the guy who's living in the trailer and is leaving all this money. There is obviously some balance to it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I remember I logged into my account the next day and the balance had grown from $1,000 to $1,000 and 3 cents. I earned three cents of interest. And I remember jaw hitting the floor, being completely stunned that I just earned money for doing nothing. Just for waking up in the morning, somebody paid me. I knew at that moment, I was like, this is the thing. This is what I love doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think the idea that if your expectations grow faster than your income, you will never, ever be happy with your money is one of the most important and powerful realizations in finance. that there are hedge fund managers who make $100 million a year and feel like they're falling behind because their buddies make $200 million a year. There is no cap to that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Elon Musk displaced Jeff Bezos as the richest man in the world. I don't know this to be the case, but maybe that bothered Jeff Bezos because now he's only worth a quarter of a trillion dollars while Musk was worth a third of a trillion dollars. There's no end to financial comparison.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so, yes, it's important if you want to do well with money to grow your income, invest your money, grow your net worth. But it is equally important and very easy to overlook that you also need to go out of your way to manage your expectations. And just be happy with what you have, knowing that if you get the bigger house or the nicer car, it's going to feel cool for like four minutes.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And then you're going to get used to it and it's not going to feel any different. And so, look, we live in a nice house in a safe neighborhood. All of that checks all the boxes. But there is this thing of, yeah, but if we got a bigger house, we wouldn't be any happier. And we might actually spoil the expectations of our kids who think that that bigger house is now the norm.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So this is something that like we always battle with because even for us who believe this and live it, the expectation of, ah, maybe we should get a Range Rover. It's always there. That feeling, that drive is always there. But then just taking a step back and be like, well, is there something else we could do with our money? Would the vacation make us happier? Would donating it make us happier?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That battle is always there. But whenever we've experienced it, and when you go out of your way to keep your expectations low too, then your drive for a better life moves away from what's the next car, what's the next house. Actually, what makes us happier is spending more time with our kids, going for walks with my wife. So like, hey, can we use our money to do that?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Use our money to free up our time so that we can spend more time with our kids and with each other? Because that's definitely going to make us happier. But the Range Rover probably won't. That's the debate that we always have in our heads.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's so varied. And this is one thing that I've kind of tweaked my views on in the last couple of years is that the $6,000 bag for your sister-in-law, maybe that is the best use of her money.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Maybe it's not, but for some people it would be, even if for my wife and I, or maybe you, it would not be to each their own. And there are a lot of people who will look at how my wife and I spend our money professionally. particularly the few of our friends who would know our income and then look at how we spend, would be like, what are you guys doing? You are missing out on so much.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I don't think we are. I think we're pretty cognizant of what we're doing and how we spend it. And we're doing the best thing for us, which to me, all that matters. I've never wanted to become... the mansion Lamborghini guy. I've always wanted to become the independent guy who can just do whatever he wants any day. And no one's going to tell me what to do or when to do it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so all throughout college, I wanted to be a hedge fund manager or an investment banker. I think in that era, like the mid 2000s, that's what everybody wanted to do. in that field. Then I stumbled haphazardly across writing. It was never part of the plan. I never wanted to become a writer.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm not like a, I reject all authority kind of guy. I'm not like a hardcore libertarian, but for money stuff, for work stuff, I'm going to have the most fun and do the best work if it's on my own terms. So the fact that I can write what I want, when I want, and the reason I can do that is because I have some sense of financial independence. I don't need to work for the salaried company.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That is the best use of money for me by far.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think back to what we said of everyone's different and maybe the $6,000 handbag is right for you, but not for me. But if there is one common denominator of which almost everybody from every culture and every age is going to get benefit from, it's independence. People by and large do not enjoy being told when to work, how to work, and what work to do. They do that because they have to.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They need the paycheck and that's the way to do it. But when most people, the first taste of independence they have, they're like, oh, that's good. That's the one I like. And even if you are working for a salaried company, if you have a boss and in a position that gives you independence and autonomy, not only is it more enjoyable, you're going to do better work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The quality of your work is going to go up if you're doing it on your own terms. It's such a universal driver of happiness. And maybe that's actually the wrong word because independence doesn't necessarily make you happy, but it removes unhappiness. That's an important nuance, but it's really important. People who are wealthier by and large do not wake up happier.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Happy in the sense that they wake up smiling every morning. It's not that, but I think they have fewer bad days. And that is a huge life advantage to remove uncertainty and misery from your life is massive. It's one of the few things in money that tends to be universal.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's also very easy to overlook because particularly for young people and particularly young men, the knee-jerk reaction of why do you want to become rich is so I can have nice stuff, so I can have a big house and a fancy car. And it's easy to overlook what's actually going to bring you the most joy is using it to give yourself independence.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The two biggest that come to mind, one from personal finance and one from investing. In personal finance, it's social comparison. And there is no such thing as an objective measure of wealth. Everything is just relative to what other people have. You look at your house, your car, your bank account, and you say, what do I have compared to that person?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Even when I started doing it, I was a senior in college when I got a job at The Motley Fool writing about stocks. I didn't want to do it. I just needed a job. But I fell in love with it. So I think that in itself is a lesson, particularly for people in college. You might think you know what you want to do and you have a goal and you have a path in front of you.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That person is usually your friends, your neighbors, your coworkers, but also just people on social media. That is the fuel to move the goalpost. Because even if you are doing well, you're going to start looking at people who are doing better than you, and you're always going to feel inadequate. And it's very hard to break that cycle. Social media makes this so ridiculously difficult.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because now the people who you are comparing yourself to is like the curated algorithmic reel on TikTok and Instagram. that knows exactly what's going to make you anxious. They know exactly which posts are going to make you feel inadequate because that's what's going to get you to stare at it the longest and be like, why don't I have what he or she has?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's like a really difficult trap to break. In investing, the pitfall is FOMO. It's fear of missing out. It's similar to social comparison. That person is getting richer than me and therefore I need to take more risks or try to copy that person in order to catch up to him. And the danger in that is that just like in gambling, everyone on social media talks about their wins, never their losses.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So the people who look like they are getting so much richer than you, A, probably are not. Like it's probably some sort of mirage. But because you don't know that, you're going to start taking risks that you shouldn't and can't afford to take.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2021, when there was like the Robinhood explosion in investing, it went supernova at that point because you had all these 19-year-old people who were like, I just made $20,000 on Robinhood and you should be able to double your money every week. A, most of that was bullshit. And B, the people who looked at that said, I need to go start trading options too. And you know how that ended.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
For the vast majority of them, it ended in tears and losses. And so all of that is driven by FOMO, the idea that someone else is getting richer than you and you need to catch up. And so if you can break away from that and realize that there are always people who are either look like or actually are getting richer than you, and that's fine. That's totally fine. It's unavoidable.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You don't need to catch them. You just need to play your own game and do what works for you is really important.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I would actually take it a step further with nothing to do with your sister-in-law.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm sure she's wonderful.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
When you see somebody driving a $100,000 car, the only thing you know about their finances is that they have $100,000 less than they did before they bought the car. You have no idea how much money they have. And I learned about this when I was in college. I was a valet at a nice hotel in Los Angeles. And these people would come in driving Porsches and Ferraris and Lamborghinis.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But so many people, including myself, probably you, stumble into what they actually love and want to do serendipitously. So I think it was great that I did not follow the path that I thought I had paved for myself and just stumbled into something else.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And then if you get to know them and talk to them, you realize they're actually not that successful. They just spent half of their salary on a Lamborghini lease payment. The vision that they had, the identity of, oh, this guy's driving a Lambo. He's clearly super successful. No, you actually don't know that at all.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's the classic millionaire next door of like a lot of the people who are very successful are actually driving F-150s. They're actually driving Toyota 4Runners. And you would never know it because that's why they're rich. It's because they actually invested their money instead of spending it on a car they couldn't afford.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's this idea that getting rich and staying rich are two different skills, and they're often conflicting skills, which means it's hard for people to do them at the same time. Getting rich requires taking a risk, being optimistic about yourself, being optimistic about the economy and the stock market. That's what you need to get rich. And staying rich is almost like the exact opposite.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have to be a little bit paranoid, a little bit conservative, scared of risk, cognizant of risk. in order to make sure that you're not taking big enough risks to throw yourself over the edge. I think one way to summarize it is save your money like a pessimist and invest your money like an optimist. Save your money with the idea that the world is risky and dangerous and fragile.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And there are always recessions and bear markets and pandemics and terrorist attacks and wars and political mess-ups that you need to be able to endure financially. But if you can, if you can keep your head on straight during those periods, the rewards for those who stick around are incredible. I've been investing for 20 years. 2004 is about when I started investing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
During that time, there has never been a single moment in which you couldn't point to a dozen things going catastrophically wrong in the economy. Every single moment, stock market's overvalued, companies aren't doing very well, unemployment's too high, inflation's too high, interest rates are too low. At any moment, you could have pointed to a dozen things.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And during those 20 years, the stock market is up fourfold. That's how investing works. You have to save like a pessimist to endure all of those dozen things to point at. But if you can stick around, you look back over a 20-year period and you're like, man, I made four times my money during this period. It's incredible. That's always how it works.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Saving like a pessimist, investing like an optimist.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, I think Bill Gates is the best example of someone who has gotten optimism and pessimism to coexist. Because when he started Microsoft in the 70s, he took the most optimistic swing that any entrepreneur has ever taken. When in the 70s, he said, every desk in the world needs a computer on it. That was the craziest idea in the world. Crazy optimism.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At the same time, from the day he started Microsoft to the day he left in 2000, he ran it as conservatively as you possibly could. He said he always wanted enough cash in the bank so that he could run Microsoft for one year with no revenue. Like the most pessimistic way to run a business. I think that's why they've done so well.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not that they're always optimistic or they're always pessimistic. They realize that if you can survive all the uncertainty and all the upheaval, then you have a fighting chance to actually compound for 50 years as they have. And very few businesses are actually like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
If you have a very optimistic CEO, they're like, let's bury ourself in debt and invest every penny that we have and swing for the fences. And nine out of 10 of those businesses are eventually going to go bankrupt, probably pretty soon. But also if you're too pessimistic, then those businesses become obsolete.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So it's getting both of those at the same time that is so rare, but that's really the key to doing well over your entire career, over an entire lifetime, is getting optimism and pessimism to coexist.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's what's really interesting. I would not say I had an open mind about it. I graduated college in 2008 when the world was on fire and everything was burning down. The economy, no one in finance was hiring. Everybody was laying people off. So I found a job at The Motley Fool as a writer. And I took it because I had rent to pay. That was why I took it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I didn't do it because I was like, oh, maybe I like writing. That'll be fun. I took it because I was like, I need a paycheck today. And they were the only people in finance who were hiring. And so for the first six months, Not only did I not really like it, I was kind of ashamed of it. I was like, I want to be a hedge fund manager and now I'm a blogger. What is this?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The painting example is one that I love. There were all these art collectors in the last 50 years and a very small number of families ended up with these ridiculous art portfolios. They had Picassos and Monet's and like Renoir, like the top paintings ended up in the hands of very few number of people. How did those art collectors know what was going to become valuable?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because when Picasso was alive in painting, he was not the Picasso who he is today. Most artists become famous after they die. how did these people know what was going to be big? And they looked at their art portfolio. And the explanation was, those collectors did not know who was going to be big.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
What they did is you had a couple of collectors would go out and buy every painting they could possibly get their hands off of. If any painting was for sale, they scooped it up. And they ended up with thousands or tens of thousands of paintings. And within that portfolio ended up by chance,
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
some Picassos and some Monets and some Renoirs, but they didn't know in hindsight what it was going to be or with foresight, they didn't know. It was only in hindsight that because they collected so many, a couple of them ended up being worth a zillion dollars. And investing is exactly the same. You have no idea Which companies are going to be the next Tesla, the next Apple, the next Amazon?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Nobody knows. And people who say they do know are fooling you. But if you own an index fund that owns 3,000 companies in it, then you know that whatever is going to be the next Tesla is in there, whatever it might be. Always in investing, if you own an index of 100 companies, over a 10-year period, you're going to earn most of your returns from five of them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
After about a year, I started to really enjoy it and just love the craft of writing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
a very small portion is going to return most of them. And since you don't know what those five are going to be with foresight, the best idea is just own all of them knowing full well that whatever is going to be the winner is going to be in your portfolio. And that's why you have the statistics about what percentage of active stock pickers index funds, it's very, very low.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Particularly if you adjust it for fees and for taxes, over a 10 or 20 year period, it rounds to zero. Warren Buffett recently said that in his life, he's met 10 people who he thinks can consistently outperform the stock market, consistently pick the right stocks. 10 people that he's ever met in his entire life. And everyone listening to this podcast, you are not one of them. I'm sorry to say. Yeah.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So I think that's the only anecdote to that. And it's the easiest, cheapest anecdote to that is index investing. It's just own all of them knowing that you're going to have the winners in there.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, if you look at his net worth, 99% of his net worth was accumulated after his 60th birthday. So he's 93, I think he is now. And 99% of the money came after he was 60, which means that if he had retired when he was 60, like a normal person may have, he was a billionaire when he was 60, you would have never heard of him.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The whole reason he's so successful and the whole reason he's now a household name is because he's been, yes, he is a good investor, but the secret is that he's been a good investor for 80 years. And it's just the amount of time he's been doing it for that generates all of that money. He also started investing when he was 11 years old.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's why he's so successful because he's been doing it nonstop from 11 to 93. That's actually the biggest takeaway that ordinary people can take from him because I and you and anyone else cannot pick stocks like Warren Buffett. But can we try to emulate his patience? Is that something that we could maybe copy from him?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have a fighting chance of replicating his patience than you do replicating his intelligence. Just understanding why he's wealthy and using that as a takeaway of what we can do and copy him at is really important.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
To your last point, I keep it as simple as I can. I own Vanguard index funds. I've owned for a long time. It's probably all I will own for a long time. I'm not recommending other people exactly do that. You have to figure out what works for you.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if there's one thing that has really helped me in my career, it's a combination of for the first two or three years, I had to do that job because nobody else was hiring. And then after that, I think I've just been stubborn. I don't know if it's patience or stubbornness or a mix of the two, but I've been writing about behavioral finance every day for 17 years.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And as we talked about earlier, there are definitely people for whom picking stocks is the right strategy for them, even if it's not the best for my wife and I. But one little quirk I would say is I actually do follow financial news every day. Every day I know what the market did. I read the Wall Street Journal every day because I think it's intellectually interesting.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's a fascinating window into how people behave. But the important thing is that I don't read the Wall Street Journal and then say, I need to go out and buy and sell these specific stocks. It doesn't influence my behavior. I just think it's a fascinating window into how people behave. But my personal investing strategy is as simple and basic as you could possibly be.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
My entire net worth is this house, a checking account, Vanguard funds, and shares of Markel where I'm on the board of directors. And that's pretty much it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's spread out over many different accounts. And actually quite a bit of it is now in treasuries because you can earn a great return there. Spread out over different bank accounts, different brokerages accounts. Yeah. You know, and the money that I have in short-term treasuries, I consider that cash. That's cash-like to me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So Same As Ever is about what never changes over time. I think in many ways, Psychology of Money is about the behavior of you, the individual, and same as ever is about the behavior of us, the collective. Like what do we, the collective society, keep doing over and over and over again? And I've always been a student of, I think, two things. One is investing and the other is history.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I like the intersection of that, like investing history and economic history I've always been so fascinated in. And one of the things that will really stick out when you're studying any kind of history is it's really interesting to see what has changed over time. What do people used to do that they don't anymore? That's interesting.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But to me, way more interesting and way more common is when you see what has not changed at all. And when you're studying the history of Americans 100 years ago, or Europeans 1,000 years ago, or Chinese 5,000 years ago, you see all these kinds of behaviors that would fit in perfectly today that have not changed whatsoever. So how people respond to greed and fear and uncertainty and opportunity...
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That is the same today in the United States as it was in any culture a thousand years ago. And it hasn't changed at all. And because of that, we know that it's going to be part of our future for the rest of our lives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And a lot of why I wrote this book was because I kind of got disgruntled at how bad we were as an industry at predicting what's going to happen next, predicting the next recession, the next bear market. Nobody can do it. Nobody has any ability to do it. And so with that, you can either say, nobody knows anything. Don't even try to predict. No one has a clue. Just kind of become a cynic about it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And if you do anything for that long, you'll gain some proficiency no matter what it is. Anybody in any field, if they do it every day for 20 years, will get good at it. And so I think that's been just like sticking with it has been what's helped me the most.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Or you can say, okay, we don't know what's going to change, but we do know what's not going to change. We do know what behaviors are going to be part of our future, regardless of where the future goes. So let's put all of our emphasis on that. And so same as ever is 23 very short little stories about little facets of human behavior that I think have always been with us and always will be.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And no matter where your future goes or where society's future goes, you know that these little bits that I write about are going to be part of the story.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's a great financial advisor named Carl Richards who has this quote. One of those quotes that just knocked me off my feet. The quote is, risk is what is left over when you think you've thought of everything. So you can spend all day trying to predict the next risk in your personal life or in the economy and for society. And that's great. You should do that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But then when you are done with that exercise, the thing that is not on the list is what's actually the biggest risk that you're going to face. So think about what the biggest risks we've dealt with in the United States over the past couple generations. Pearl Harbor, September 11th, and COVID are probably the three biggest societal shocks that we've dealt with in America.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the common denominator of all three of those is that nobody, certainly no ordinary American, saw those coming until the day that they happened. In all those situations, there was no economic outlook. There was no analyst forecast. There's nobody on the news warning you about these things that in one day utterly transformed the world that you lived in.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so the biggest risk is what you didn't see coming. And the fact that people didn't see coming is what made it dangerous because they were not prepared emotionally, financially, logistically. They were not prepared for these things to happen. So when they hit, it was like, Red alert, what do we do now? And it's always like that. I think in any given year, it is like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
What is the biggest worldwide news story in 2023? It's probably, I hope it's going to end up, hopefully nothing bigger than it happens, will be Israel and Hamas, will be the biggest story of 2023. Of course, there has been tensions, to say the least, in that region for literally thousands of years. But how many people in January of 2023, predicted that that would be the biggest news story.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Maybe there were some people who were on the ground and had a greater sense, but by and large, ordinary people watching the news, it was not on their radar whatsoever. Same with in 2019. If you were looking at the biggest risk for 2020, nobody said a viral pandemic that's going to close down the schools. Nobody said that. 2001, nobody sees 9-11 coming. You can play that game all day long.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so because of that, you can state with a lot of confidence that the biggest risk over the next year and over the next 10 years is something that you and I and none of us are even thinking about because it's always been like that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
By definition, you can't. But that in itself, that realization and that mindset is really powerful in itself because you stop pretending that you can predict. There's a great quote from Nassim Taleb where he says, invest in preparedness and not in prediction. So one way that I think about that is think about earthquakes in California.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
California knows that there is going to be a major earthquake in the future. But everybody also knows that you can't predict when it's going to come. It's impossible to predict what day it's going to happen or what year it's going to happen. So because of that, you're just always prepared. They build buildings that can withstand it no matter when it comes.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They don't like, you know, oh, an earthquake is going to come in December, so let's retrofit the buildings then. You're always prepared for it. And I think that's how you should think about
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
economic risks recessions and bear markets and job losses you have no idea when it's going to come so don't try to think oh once you see a recession coming then you'll start to save money no it could happen tomorrow so always be prepared for it i think that idea of having expectations instead of forecasts is the only way to really survive in that world where risk is what you don't see
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah. So I grew up as a competitive ski racer in Lake Tahoe, California. I was on the Squaw Valley ski team and that was my life from my childhood and my teenage years. Skied six days a week, 10 months a year, all over the world racing. It was great. It was like such a cool experience. And there were about 12 of us on the Squaw Valley ski team and we were all Best friends.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, whenever you have something good, you have an investing strategy that works or a company that's going well, the very normal knee-jerk reaction is, great, let's make it go faster.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Let's milk it. Let's push it as hard as you can. You do it with noble intentions. You're like, I don't want to leave money on the table. If I have this golden goose, let's keep milking the goose. It happens all the time. In investing, people who are doing well start using leverage or they start making bigger bets, more concentrated bets.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In businesses, when it's going well, it's like, let's raise more money and grow faster, faster, faster, faster. And it is such a common story that those investors, those entrepreneurs, or even in your own individual career, you eventually realize that there was a natural speed limit to what you're doing. And if you go over the speed limit, you're going to get in trouble.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And you only know where that speed limit is in hindsight when you've gone past it and you get a speeding ticket, so to speak. And so you see this with every successful business. The example I use in the book was Starbucks 15 years ago.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe most people don't remember this now, but there was a period in the early and mid 2000s where Starbucks was opening a new store on every street corner, like every couple of hours. It was just like this absolute proliferation of Starbucks stores. And because of it, the quality of the coffee and of the food plunged. The company's only goal was to grow, grow, grow, grow, grow.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the quality of the stores just disintegrated. And Starbucks had a really rough period because of that. And in hindsight, they talked about, they're like, look, The natural growth rate that we could sustain the quality of the product, we way exceeded. We pushed it way too hard. And because of that, the business broke for a period of time.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's so many examples of that, of like you have a good, legitimate business that is working and customers love you and they will pay you. But if you try to take that and just say, let's try to make it go twice as fast, it's probably going to break. So understanding the natural speed limit and size of whatever you're doing is a really critical aspect of what you are doing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Let's use the Starbucks example. The reason people love Starbucks was not necessarily because it was on every corner. It was because they liked the quality, the food, they liked the taste. And once your ability to scale takes precedence over that, then you know exactly what's going to happen. So understanding, I think this is such a basic comment, but it's so easy to overlook.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Understanding why you are successful. is the key to doing this. And a lot of people, they don't actually understand why consumers like them or why their boss appreciates them. And because of that, they overlook what is actually needed to keep this going. And once you have an honest assessment of customers like me because of X, then you realize any deviation away from that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And of course, you're going to lose what made you special to begin with. I don't think it's any more complicated than that.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We had been together since we were children, skiing six days a week all over the world. And so one day in February of 2001, I was 17 years old and I was skiing with my two best friends. We had grown up together. They were 17 as well. And we would ski down the backside of Squaw Valley, which is out of bounds, which you're not supposed to do. You duck under the ropes that say, do not cross.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We look back historically, the biggest periods of innovation and new technology and productivity growth without exception happened during periods when the world was on fire, so to speak. Like the most productive economic decade that's ever occurred is the 1930s during the Great Depression when the economy was
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
the biggest train wreck it had ever been because every business in America woke up and they were like, if we don't find ways to get more productive and get our act together, we're going to go out of business tomorrow. And that as a motivator, that fear as a motivator creates the biggest productivity boom we've ever had. The other was World War II and the Cold War.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The incentive to figure things out was so extreme because if we didn't figure things out, Adolf Hitler was going to control the world next year And that kind of incentive created this technology boom of the likes the world has never seen. What do we get out of World War II?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got nuclear energy, rockets, jets, penicillin, microwaves, radar, eventually with the Cold War, satellites, all of these things that benefit you and I today that happened specifically because of the stress and anxiety of the war. And you may be able to say this with COVID in hindsight too, like as tragic and deadly as it is,
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
if it unleashes the scientific boom as it has, that maybe 20 years from now is going to benefit us in ways that we can't even fathom today. Using the phrase silver lining to COVID is a step too far because it's killed like 10 million people. I'm not saying like, oh, that's a great thing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's always the case that you look back and you're like, hey, despite that tragedy, we got this incredible new innovation because of it that's making life so much better today. So everybody wants a world in which everything goes great and there's no uncertainty. There's no bad times. Of course, that sounds like a great world. But in that world, the incentive to improve would diminish greatly.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's always the stress that creates the biggest improvements.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, I think for writing books, one of the biggest benefits that a publisher provides is a deadline. It's not necessarily that they're going to help you write the book, so to speak, but they're going to tell you you have to turn in your manuscript on this date and that will get your ass in gear.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's very often the case, not always, this is not black and white, but it's often the case that if you see somebody doing something that you find morally wrong or just something that you disagree with, you are probably underestimating the odds that you would do that exact same thing if you had their incentives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I saw this firsthand during the financial crisis of 2008, when a lot of Americans rightly pointed at Wall Street bankers and said, those greedy bastard bankers who ruined the economy.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe that was not necessarily the wrong criticism, but I think what people overlooked is that if you worked at Bear Stearns in 2006, and they said, hey, package these subprime bonds and we'll give you a $6 million bonus, you would have done it too. You would have done the exact same thing if you had that incentive dangled in front of your face.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But we did this because we were young and rebellious. And that's where the best skiing is. It's untracked. You have the place to yourself. Now, when you ski out of bounds like that, when you get to the bottom, there's no chairlift because you went out of bounds. So it would spit us out on this back country road and we would hitchhike back. We loved doing this. It was kind of a thrill.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so I think we underestimate the boundaries of our morality when we don't understand the power of our incentives. Everyone thinks, oh, my moral boundaries are right here. But if you had different incentives, you'd be like, oh, maybe I can shift them out a little bit. And you don't even know you're doing it. It's subconscious. Everyone is so influenced by these incentives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And at every level, when you're looking at World War II, how could the Germans possibly have acted like this? I think when you look into what the 1930s were like for them, the incentives, the incentives to go along with it, the incentives to not want to be an outsider, the incentives to do what you're told, it's not to justify anything in the slightest.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you're looking for an answer of how can people do that thing, whatever that thing would be in business, in wars, whatever it be, the answer is usually some sort of incentives. And it's not even a financial incentive. There are social incentives. There are tribal incentives.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There are political incentives to do things that you would otherwise find repugnant, but you do it because the incentives push you to do it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I mean, one way, as someone who writes books, I'd say one of the best advice that I've ever heard is if you want to write a book that people will read 20 years from now, write a book that people would have read 20 years ago. Make sure that what you're writing about is timeless. And I think we can say that about this podcast.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if we had a time machine and someone listened to this podcast in 2003... 99% of what we said would be relevant. So you have to understand what kind of information is expiring if you're watching the stock market. Oh, Microsoft missed quarterly earnings by one penny per share. That's expiring information. I'm not going to say it's irrelevant, but it's expiring. It has a shelf life.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you're talking about how people respond to greed and fear, that's permanent. That never changes. And that will be as relevant 20 years from now as it is today.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So you should put more of your emphasis in learning permanent skills, knowing that they're going to stick around rather than drowning yourself in expiring information that might be relevant for a week or maybe even a year, but it has the shelf life of something that's going to expire.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got to hitchhike. It was all very rebellious, something that 17-year-olds do. So the three of us ski this run. And as we're skiing down, I very vividly remember we triggered a small avalanche. And it's a feeling that you will never forget because rather than pushing on the ground with your skis to gain traction and control, all of a sudden the ground is pushing you. And avalanches are very...
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Go out of your way to define your gain and realizing that your gain might be very different from Your co-workers game, even your co-founders game, your siblings game, everyone is different. And don't assume that because society tells you that you should have X, that that's actually what you should be chasing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
realizing that there are probably 10 people in life who I want to love me. My wife, my kids, my parents, maybe three friends. And it's not that I don't care about the opinions of anyone else, but I think it's really helpful to have people in your life who you don't want to disappoint. Just a few people who it's like, That's your North Star.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm like, am I doing this for the benefit of those 10 people? Would they be proud of me? Is this going to help my relationship with them? I think it's just a very strong guiding light. What really matters? And if you're on your deathbed, are you going to care about your net worth or the square footage of your house? Or are you going to be proud that you are a good spouse? You are a good parent.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You are a good friend. You helped your community. Like it's obvious what's going to be more important to you. So like, let's keep that as the focus.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Thanks so much for having me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
powerful. You'll be skiing down and then all of a sudden you have no control and it'll push you 20 feet this way and then jolt you 30 feet that way. But it was pretty small and it ended pretty quickly. And the three of us skied down and we like high-fived about it at the bottom. We were like, whoa, did you see that avalanche? It was so cool. We hitchhiked back
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And Brendan and Brian, my two friends who were with me, they said, hey, let's do it again. That was great. Let's go ski that run again. For whatever reason, I don't really know. I said, I don't want to do it again. But how about this? How about you guys go do it again?
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And rather than hitchhiking back, I'll drive around to the side of the mountain and I'll pick you up in my truck so you don't have to hitchhike. They said, great, let's do it. We made that plan. We went our separate ways. They went skiing. I went back to get my truck to go get them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
20 minutes later, I drive around to meet them at the pickup spot where I was going to meet them and they weren't there. And I really didn't think anything of it. I thought that they had probably already hitchhiked back and maybe I was late. It didn't really bother me. And I went back to our locker room where I expected to find them and they were not there either. And nobody had seen them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At that point, I started to wonder what happened, but I really wasn't worried at that point. Several hours later, Brian's mom called me at home and she said, hey, Brian didn't show up for work today. Do you know where he is? And I told her the truth. I said, yeah, we skied down the backside out of bounds and I was going to pick them up, but they never showed up.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think at that moment, she and I pieced together what probably happened here. Later that day, several hours later, we got the police involved, missing persons report. They eventually turned into, we got search and rescue involved. Search and rescue went on the hill at about midnight to start looking for them.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They had these giant portable floodlights and a team of search dogs, search and rescue dogs. And then later the next morning, after about nine hours of searching, when the search and rescue workers got to the area, the out-of-bounds area where I told them we'd skied, They said it looked like half the mountain had been torn away from what was clearly a very fresh, just massive, enormous avalanche.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And avalanches can be the equivalent of like a tsunami, just unbelievable amount of power. They can snap giant trees with their force. And it had clearly just been a massive avalanche here. The search dogs eventually homed in on a spot in the avalanche field where rescuers who had these giant pro poles found Brendan and Brian dead in the avalanche. They were buried about six feet under.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So of course, I always have to say when I tell this story, I think you and everyone else listening has lost somebody dear to them. It's not unique in that sense. I don't want to pretend like it was unique that I had a friend who died. Most people have experienced some version of that. Of course, it had a really profound impact on me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And one of the reasons why, and it took me a while to really piece this together, was If I had gone with them on that second run, 100% chance I would be dead. It was such a massive, it took out everything in its path. And so then I look back on it and it's like the most important decision that I ever made in my life by far was not going on the second run.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I didn't put any thought into that decision. I didn't weigh the pros and cons. I didn't do a risk analysis. It was just a brainless, dumb decision. Why don't you guys go do it? I'll do something else. And nothing in my life has mattered more.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think a lot of things in life are like that, where in hindsight, and only in hindsight, do you look back and you're like, the worst or the best thing that ever happened to me came about because of this dumb brainless decision. And maybe people listening to this today, if you left your house for work at 8.53 instead of 8.54, you may have died in a car accident.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm making this up, but there's all these just random, like you understand how the world hangs by a thread. of these decisions. And when you come to terms with that, I think it makes you much more humble in your ability and willingness to predict what's going to happen in the future. When you see how fragile it is, you just realize you have no idea what's coming next.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think that would be a small part of it. I think in a broader sense, ski racing was so important because we were independent and treated as adults since we were like 14. And we would travel around with the coaches skiing, but the coaches, God bless them, would just go to bars. And then we were out being adults for better or worse.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think that created an incredible sense of independence and forced you to grow up very fast. That had a big impact on me. But certainly losing my friends at that age made me realize how fragile life can be. And I think my perception of risk changed dramatically after that. And after that, I would not take risks that I would have before that because you see the consequences of your actions.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think even before that happened, I was always kind of, I had friends who were doing it more than I am. I'm not going to sit here and say I did none of it. Okay, I'll give you a specific example. I was telling my wife the other day, I remember when I was 18, one of my friends had cocaine.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I was like, absolutely not, like not even in the slightest in a million years would I touch that stuff, never. But all my other friends are like, yeah, let's give it a whirl. Let's see how this works. So even at that age, I think just naturally, I had a risk assessment that was different from my friends. Yeah.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, it was one of the hardest decisions of my career because I was really happy and comfortable at The Motley Fool. It's a great place to work, still is, filled with great people. I was happy there. Got in Craig Shapiro, who runs a private equity firm called The Collaborative Fund, reached out to me in 2015. And he just said, hey, I like your work.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Why don't you come to Collaborative Fund and just keep doing it? Keep doing exactly what you're doing, but just do it here. And I said, hey, I'm flattered, but I'm really happy here. No, thanks. My wife and I had just had our first kid who was two months old at the time. I was not prepared to just throw my career upside down. But he kept pushing and kept pushing and kept pushing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think what the decision for me eventually became was, if I stay at The Motley Fool forever, from the time I was in college until I retire in my 60s, will I regret never trying something different? And I think after a while, I realized that the answer was, yeah, I think I might wonder what else was out there. So I finally joined Collaborative Fund in 2016. And it's been amazing.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That was before I had written books or done anything like that. And Craig was one of the only people, I think, in the world who would say, Morgan, just go do your thing. I'm not going to tell you what to write or when to write. And I don't write about what Collaborative Fund does. I feel like it's just my own canvas to write about anything that I'm interested in.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so that was a really rare opportunity. Almost every professional writer at an organization, if you write for the Wall Street Journal or Reuters or CNN or something, you have an editor telling you what to write, how to write it, when to turn it in. And I think that just strips away the art of writing. It just turns it into a job instead of an art. So I really enjoy the artistic side of it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
No, definitely not the latter. And it was a conscious decision for a long time to not write books. I never saw the point in it. And I would always say, look, I blog twice a week. Why does it matter if it's stuffed in between two pieces of cardboard? It's the same thing. It's the same words. I'm still writing, so who cares? So that was why I pushed off writing books for years.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
A publisher came to me in 2014, maybe 2013, and said, hey, we want you to write a book. And I was, absolutely not. I'm not ready. I don't want to do it. It sounds hard. And so in hindsight, I'm so glad that I waited because I became a better writer. I had more content to use for the books. So the fact that I was so stubborn about doing it, it was so beneficial to me.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2018, I wrote a very long blog post called The Psychology of Money. It was a 10,000 word blog post, which is very, very long. Most books are about 50,000 words. So it was one fifth of a book in a blog. It was the biggest blog post that I had ever written. It did really well. It was well received. And so that was when I was like, oh, people like this style and format and this substance.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's not going to take me that much effort to expand what I already have into a book. And so that was when it was like, okay, I'm finally going to do this. My wife had convinced me. I don't think I've ever told this story before, but I'll tell it here.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
An author named James Clear, who wrote a book called Atomic Habits, It's the best-selling and one of the best books of the last generation. It's just an absolute gem of a book. And he published his book in 2018. And I think it was seeing the success of Atomic Habits that I was like, I want that. It was not jealousy. It was not envy. It was motivation. What James has, I want to chase it.
Young and Profiting (YAP) with Hala Taha
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's such a good question. I would say I don't. I've never tried to put myself in a box. And I think I've moved around over the years. I think if you asked me that question 10 years ago, I would have said, I'm an investor who writes. And maybe if you asked me today, I would say I'm a writer who invests. Like I've just switched around what I enjoy doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's the contradiction of being a startup founder is, look, I know the odds of success are stacked against me and I'm still going to go ahead nonetheless. There's this great story many years ago that I heard from a founder where he was raising money from an investor and the investor said, I love the idea of this company, but I think there's only a 20% chance that it's going to work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
New Year's resolutions don't tend to hold up because if you need to do something new on January 1st that you were unwilling to do on December 31st, you're almost certainly not going to stick with it. Most people have too much of their money in stocks and they should have less. And the reason why is
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think there's an 80% chance you're going to fail. And the founder was like, 20% chance it's going to work, you're optimistic. I think there's only a 10% chance this is going to work. And I think that mindset of an entrepreneur is saying, there's a 90% chance that I'm going to fail and I'm going to give it everything I've got nonetheless.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Elon Musk talked about this, where I think the figure was when he started Tesla and SpaceX, he thought there was like a 99% chance that they would fail. And he still didn't nonetheless. That's what's difficult. When it comes to financial planning, the important part about that is that in the very high odds that it's not going to work,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
you wanna make sure that you have some landing pad that you're gonna fall back onto. Because in the situation where your business fails and then you have nothing, including maybe marketable job skills to pull yourself back up, that's a terrible thing. And it gets back to what we first discussed about what are you gonna regret?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think for a lot of people, they would regret not starting a business. They would regret not taking a chance. They might also regret putting everything they have into that business so much so that if or maybe even when it fails, they have nothing. They have nothing left. They're going to be left in a state of destitution. That's really important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think this gets back again where it's like there's no blanket advice because by definition, entrepreneurs are oddballs and are marching to the beat of their own drum. Henry Ford had this idea. I read Henry Ford's biography recently. Henry Ford's a very interesting guy because he was the greatest engineer possibly of all time. He was an okay businessman and he was a devil of a human being.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So he's like, there's all these contradictions wrapped into one. One thing that he always said was that Money in the bank to him was such a waste. You should put that to work immediately. So cash sitting in a checking account to him was a complete waste. He was like, go build something, go build a factory, go invest in something, put that money to work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I could also argue the other side of that in terms of cash is actually the oxygen of independence. But I thought that was really interesting that he just viewed the opportunity cost of cash that he had as a complete waste. And I actually think you see the opposite in a lot of startups these days, where if you can raise money from VCs, there's a lot of it. There's just a gusher of money out there.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So you have a lot of businesses that will raise $50 million from investors and then just kind of leave it in a checking account. And maybe that is not the wrong thing to do. Maybe that's actually a wise thing to do to have that much liquidity. But I think if you view it in the idea of entrepreneurs are supposed to build and cash is a tool to help you go build something.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you raise a lot of money and you can't put it to work in a reasonable amount of time, it was probably way too much more than you needed. I think a lot of the behavioral traits that entrepreneurs have is an unreasonable amount of confidence in themselves, bordering on egomaniac. And it can be off-putting to a lot of people, but that's what you need.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And this is why when the personality traits of a lot of very successful entrepreneurs become public, Elon Musk, probably the greatest entrepreneur, not even probably, he was almost certainly the greatest entrepreneur of modern times. And he also has a personality that a lot of people find distasteful. And that I think if you look historically is extremely common.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you can earn average returns for an above average period of time, you will be among the top investors in the world. Most people are overconfident in what they can do. You have to have this split personality of, I'm so good at what I do, and I'm a complete idiot who has no idea what I'm doing. Bullshit is easier to create than it is to refute. So meme coins are an example of this.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The reason they are successful is because they're maniacs. And that's why they're successful. And it also gives them this personality trait that a lot of people don't like. Steve Jobs was like that. Bill Gates is like that. Henry Ford, as I just mentioned, one of the greatest entrepreneurial geniuses to ever live and a terrible human. Because anti-Semitism is very well documented and whatnot.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Same with Thomas Edison. A lot of these people, the reason they were successful is because they did not think like most people did. And because of that, they had the side that people found distasteful. That's very common.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And so for a lot of it, particularly, not necessarily if you are an entrepreneur, but if you're going to work for an early stage startup, a successful early stage startup, you need to understand and embrace and be okay with the fact that you are probably working for a maniac. That's usually the case.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why the company is going to succeed, but you need to sign up for that and understand what you're doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Well, I think for anybody, not just entrepreneurs, but any random person, to be able to wake up in the morning and put one foot in front of the next, you need to at least be able to look in the mirror and say, I know what I'm doing and I'm making good decisions. Because if you don't, you're never going to get out of bed. You're not going to do anything.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But the truth is, if you understand how volatile and uncertain and unpredictable the world can be, we don't know what we're doing. We don't know where the world's going to go next. So because of that, you need to be optimistic. But the world is very uncertain. Most people are overconfident in what they can do.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'll give you a really interesting example of this that we see very recently and is very prevalent in the news right now. For a lot of people in the economy, if you ask them, they will say, how's the US economy doing? Most people will vote poorly. It's not doing well right now. Inflation is not going well. And then if you say, how are you doing in your life? Most people will say, great.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The gap between those two is enormous. People say, the US economy is doing terrible, but I'm doing great. And you also see this in Congress, where if you ask people, how much do you like Congress? They say, I hate Congress. They're all a bunch of bums, vote them out. But then if you say, how do you like your congressmen? People are like, oh, I love them. They're wonderful.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That gap between the two comes down to overconfidence. where you look around the world and you say the world is fragile and it's broken and it's uncertainty. But if you look in the mirror, you say, I got this all figured out. And I think people actually need that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's not something we should look down upon because we need that in order to put one foot in front of the other in order to get something done. Entrepreneurs are like this on steroids because they are doing something that has very low odds of working, that there is no defined playbook.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There is no map on what they should do, but they need to wake up every morning and look in the mirror and say, I got this. I am the best in the world at what I do. I've often thought about myself in my own job. I've talked a little bit about this. I think I have this split personality where in one day, I can be like, I'm doing great. I've got this all figured out. I know what I'm doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm really good at what I do. And then not even the next day, but maybe the next hour, I can flip to, I have no idea what I'm doing. I'm no better than anybody else. What am I doing here? And I actually think that is actually a pretty healthy personality to have the confidence to take a risk.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
but also the humility, if not the paranoia to be like, I need to really think about what I'm doing here because I'm actually not that smart. I think if you can get those two things to coexist, that's actually the sweet spot. People get into trouble when they only have the ego or they only have the paranoia. If it's one of those two things, it's never going to work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Someone creates a meme coin and you're like, that's obviously bullshit. And it becomes Dogecoin.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
You have to have this split personality of I'm so good at what I do and I'm a complete idiot who has no idea what I'm doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But sometimes it's even the same thing for myself as a writer where writing is an art. There's no right answer. It's just there's sometimes where I write something and I'm like, that's great. That is beautiful. I love it. And then I can read that same paragraph an hour later and say, this is garbage. Nobody's going to understand what this means whatsoever.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But I think the confidence needed to actually write and take a risk and write a brave paragraph, you need, but you also need the humility to go back and say, no, actually, I need to change half of this so it makes better sense. You need both of those at the same time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Well, I had this experience a couple months ago. This was probably 15 years ago. My wife and I, this was before we had kids. She was my girlfriend at the time. We had this amazing apartment in the Seattle suburbs.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And given we were young and we were broke, but the economy was such a mess at the time, this is after the financial crisis, that we got this incredible apartment with a view of the lake in a perfect location with restaurants nearby. And we lived there for like three years. And then so a month or two ago, I was reminiscing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I told her, I was like, man, that was peak living because we didn't have kids. We could just wake up and sleep in and go for a walk. And life was so good. And she interrupted and she was like, what are you talking about? She said, Morgan, you are more depressed and anxious and scared when we live there than you've ever been in your life. Because it was just a weird time in my career.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I didn't know what I was doing. I didn't really have any skills. It was a low point in my life. And I was like, yeah, you're right. So then why do I remember it as being such a great time? And I think the reason why is when I look back with hindsight, with the benefit of hindsight, I look back and I see a boy back then who had nothing to worry about because I know that things worked out.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I know that the career worked out. My relationships worked out. It wasn't always perfect. It wasn't always easy, but it all worked out. And so I look at that boy 15 years ago, and I think about someone who had nothing to worry about. But back then, I didn't know that. I didn't know it was all going to work out.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So when we know how the story ends, it's almost impossible to remember how uncertain you were during that period of time. And that's why we look back at the past as usually better than it was. I think this is true, too, if you think about A lot of Americans have a lot of nostalgia for the 1950s. You look back at the 1950s, there's like this glorious age of middle-class prosperity.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think in part, we think that's true because we know that for the most part, it worked out. That the US economy worked out, that the global economy worked out, that there was no World War III, that there was no nuclear war, which a lot of people really worried about back then. So when you know how the story ends, the past always seems much less uncertain than it actually was.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And we always fall for this when we're thinking about how glorious the 1990s were, how the early 2000s, whatever it might be. There's one other example of this where a lot of people right now will say the late 90s and the early 2000s were as good as it got. That was such a great time to be alive. And that was my teenage early 20 years. And at first glance, I'm like, yeah, that's true.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The movies we had, the music we had was so great back then. But then I'm like, man, do you remember what it was like to live in America in the year after 9-11? It was terrifying. It was utterly terrifying. Every day you woke up and turned on the news and held your breath that this was not going to be another terrorist. So we remember today as being this amazing time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But I think that's just because we know how the story ends. We know that there was not another major terrorist attack, that there was not a World War III, that the economy did recover. Things that we actually didn't know back then at the time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it's very common that you look back and you're like, yeah, the stock market has doubled in the last four years or whatever it is. And that was really obvious to see. Anyone could have seen that coming. And it was easy money to make over the last four years. And I think that is a very bad mindset to have because it was never easy. The future was never certain. It's always been this
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
swamp of uncertainty that we live in. So when you view the past as more certain than it was, you view like investing decisions are going to be easier than they are. And the fact is making an investing decision today feels uncertain and we don't know what's going to happen in the next five years. And that's always been true. There's never been a period when that's not the case.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So realize that the world we live in today is not any more uncertain than it was 5, 10, 20 years ago is really important. Yes, it feels uncertain today, and that is never going to change when you're making a forward-looking investment.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Oh, my God. Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thanks so much for having me. Happy to be back.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Let's do it. I'm ready.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thank you. Thank you. So that's the contradiction of you actually don't want most of society to wake up every morning and say everything is great because that can lead to a period of getting fat, happy, and lazy. What you want is a low level of anxiety, not too much. The most innovation happens when people wake up in the morning and they say, I have to get more innovative.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think there's a couple of things to keep in mind. One is the very well-known idea that has been tracked for many years that New Year's resolutions don't tend to hold up. Because if you need to do something new on January 1st that you were unwilling to do on December 31st, you're almost certainly not going to stick with it. So there's this idea.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it was brought up by Scott Adams, who is a guy who created the Dilbert comic. You should have systems instead of goals. One example of that is a goal is I'm going to lose 10 pounds. That's a goal. A system is I'm going to work out every day. That's a system. It's very different from a goal. It's a much better and more efficient way to have a new habit to do something.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Not it would be fun if I became more innovative, but I have to do it because there's this existential threat. That's when you look back 20 years later and you're like, man, that period was tough. It was stressful. But look at all the good things that came out of it. That's always the long history of innovation.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, so in medicine, we have learned a tremendous amount about biology and chemistry and anatomy over the last 200 years, and it is cumulative. What I mean by that is if in the 1920s we discover penicillin, the next generation gets to start their career understanding what penicillin is. All the knowledge is cumulative over time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What one generation learned, the next generation starts with as a baseline of knowledge. And that's when knowledge just explodes exponentially. Other fields like finance are not like that. And by and large, the lessons that were learned in the 1920s and the 1930s or the Great Depression and the roaring 20s, we have to relearn those lessons.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
We don't have that knowledge passed down from generations that were like, great, we'll never do that again. No, we keep doing the same thing over and over and over again. And it would be the equivalent of every generation of new doctors had to find new medicines, had to rediscover medicines that the previous generation already discovered. That's ridiculous, but that's what happens in finance.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
A lot of it is because finance is not a science, it's behavioral. And I can read about what it was like to experience the Great Depression and the stupid risks that people took in the 1920s and how it all blew up in the 1930s. I can read about that. But for a lot of people, they're only going to really understand it when they've experienced it firsthand themselves.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why we keep doing the same things over and over and over again. And so any field that is behavioral and finance is definitely that. It's probably the greatest example of a field that's purely behavioral. There is virtually no accumulated knowledge over time. All the lessons have to be learned over and over again.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And you can easily imagine a world where, look, my grandparents lived through the Great Depression. And then my generation made some really stupid mistakes during the housing bubble and maybe during the dot-com bubble. And my kids and my grandkids are going to make a bunch of stupid mistakes themselves.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There's very little looking back and saying, hey, we learned from that, so let's never do that again. It's the same mistakes over and over again.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So I think if you do have an aspiration to have a New Year's resolution, do it right now in December and come up with a system that you can actually stick with over the long run. And a system means that it probably should not be extreme. So if you have a system of I'm going to work out five hours a day, let's say, just using that as an example, you're also not going to stick with it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think that's definitely the case. It's true that in the 1920s, during the peak of the stock market bubble in 1929, 5% of Americans owned stocks. That's it. 95% of Americans did not own a single share of any stock. And today it's about 55% of Americans own some stocks, maybe in their 401k or their brokerage account. So it's a way higher exposure today than it used to be. And I think that's good.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's great. But it also makes it so like, yes, there's so much participation in the stock market that when the stock market falls 50%, it has a much greater impact on society than it used to because there's a greater participation rate. And so a lot of those mistakes that we're still making today, when they occurred 50 or 70 years ago, it was bad for a small sliver of society.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Whereas today, when the stock market falls 50%, it is crushing and completely derails half the country's ability to retire on time, something like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it can help. It can also be very dangerous. And one thing that I've tried to do in my career is not pretend that I know who you are because I don't. I don't know what your goals are. I don't know what your income is. I don't know what your personality is. I don't know what your family situation is. So who am I to give you medical, to give you financial advice?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I said medical there because what I was going to say is imagine a world where there was the equivalent of CNBC for medicine. And you had doctors going on saying, you should take this medicine. You should get the surgery. And what you would do as a viewer is you would be like, you don't even know me. You don't even know if I'm sick. And you're recommending that I go take this pill.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That would seem ridiculous. But we do that with finance, where you have a financial influencer who says, you should buy this stock. You should have half your money in Bitcoin. And that might be good advice for some people and disastrous for others. You have to understand that person individually.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
This is why I think despite the massive growth in digital financial advice and whatnot, there is still a huge, incredible need for a face-to-face human financial advisor who can actually get to know you. Because it's never going to be the case that an app can know everybody and give blanket advice. There is no blanket financial advice.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And what works for me might be disastrous for you and vice versa. That's the limitation of giving advice to a very big audience is that there is no one size fits all piece of advice that you can give anybody.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And the financial equivalent would be, I'm going to save half my paycheck. Well, you're probably not. It's probably not going to work. So the more realistic it is and the more systematic it is rather than a goal, the higher the odds that you can stick with it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The other thing I would talk about here that I think is really important is whenever you are thinking about your financial future, and let's call them goals if you want to, despite what I just said, what you really have to keep in mind is the idea of what are you going to regret in the future? So if you have a savings goal, are you going to regret not saving money?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Are you going to regret saving too much money because it came at the expense of a vacation that you could have taken or a new car that you could have purchased? You have to understand what you're going to regret. And what I might regret is probably different from what you might regret. Everybody is a very different situation.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
When I hear that, I have two thoughts. One is, yes, I believe that to be true. That makes sense. And B, people have been saying that for literally centuries. John Maynard Keynes, one of the most famous financial minds of the 1920s, 1930s, he very famously predicted that I think it was by the year 2000, the average work week would be 15 hours a week.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Because he calculated we were going to become so productive and so efficient that people just wouldn't need to work that much anymore. Of course, that did not happen because there is such a long history of if people's incomes go from $20,000 to $50,000, they don't say, great, that's enough. I can just retire on $50,000.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What they do is they say, great, now I make $50,000 and I aspire to make $100,000. And once they make $100,000, they're like, great, now I aspire to make $200,000. So you can imagine a world where AI makes us all much richer and way more productive. I think it's much harder to imagine a world where because of that, we all say, great, I don't need to work anymore.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think if we do that, we're just going to find some other new technology to want to work on. And that's always been the history of new technology. Maybe this time will be different, but I feel like that's always what it is. That if you double people's income, it's great. They live a better life and they are not satiated in the slightest. They're always going to want more.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I think the reason why is because people's ability to feel wealthy has very little to do with the actual material life they're living. And it has a lot to do with whether I have more money than you do. It's all about social comparison. And so if my income doubles and your income doubles, by and large, I will not feel better off because I'm still comparing myself to you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So if AI makes everybody richer, it's probably the case that nobody feels better off because by comparison to their peers, they're not any better off.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Everyone just wants to be the top 1%, but I think this was a Charlie Munger quote. He's like, the iron rule of math is that only 1% of people can be in the top 1%. It's always going to be that the other 99% feel like they're falling behind, even if their incomes are going up and up and up.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So you just have to have a good grasp on what you are likely to look back at a year from now to 10 years from now, 50 years from now, and say, man, I wish I had done that differently. It's different for everybody, but I think that's the formula you should have in your mind.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm probably going to get some of these numbers wrong, but I think this is roughly accurate. He made about $200 million from PayPal. I think he was about 30 years old, cashed out $200 million. Obviously, anybody could have and would have just sailed off into the sunset and bought a private island and a private jet and lived out the rest of their days in luxury.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What he did is he plowed every single cent of that money into Tesla and SpaceX, which at the time were nothing. And by his estimation, as I mentioned earlier, there was like a 99% chance that those were not going to work. Now, both of them worked. He's now the richest man to ever live. Everyone knows what happened.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's also important to realize that the vast majority of people, including myself, do not have that personality. That you could have made $200 million and said, I'm going to bet it all on companies that have almost no chance of survival. Even if it did work out in the end, we know how it worked out. And so more than the fact that he is a genius entrepreneur,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
entrepreneur, a genius engineer going down the list, he has a level of risk taking that is truly one in a billion that I don't have. And so I think for lots of entrepreneurs, not just Musk, but many of those people, I can look at them and say, I am glad they exist because the products that they created make the world better.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And at the same time, I would never want to live that life for myself, where I'm lucky enough to make a fortune and I literally go put all of it on black. That's not what I have. But he does have it. Back to people like Henry Ford. He was like, look, if you have cash in the bank, you need to put it to work immediately. Otherwise, it's a total waste.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't have that personality, but I'm glad that he did because he made the world better for it. That's a lot of the contradiction here. I think it's important for people to wrap their heads around is that it's not a contradiction to say, I'm so glad that person exists. because their technology has made the world better.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And at the same time, they have parts of their personality that I find distasteful, and I would never want to take that much risk in my own life. That's not a contradiction. That's actually a very important thing to acknowledge for lots of those entrepreneurs outside of Elon Musk.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, it's a hard thing to wrap your head around. And this is true for a lot of things in life, for your relationships and whatnot, that you might need to try out 10 different things before you find one that works. And understanding the idea that if you'd start 10 businesses, let's say, and nine of them fail and one is a success, that's a good outcome. That means you did it right.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But that means you have to be comfortable with nine of the things not working. And you might need to date 10 people before you find your spouse. Like that idea exists everywhere in your life. And so getting used to the idea that the path to success often looks a lot like failure is very hard to wrap your head around.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's true for stock picking as well, where if you pick 10 stocks, there's a very good chance that in the next 10 years, 4%. three to five of them won't even exist anymore. Those companies will go out of business. Even for big mega companies, they just won't exist anymore. And a couple of them will do okay. And if you're good and if you're lucky, one of them will generate all of your returns.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That's always how it exists. I mean, if you go back 20 years ago, a lot of the biggest stocks in the world were AIG, Enron, General Motors, companies that either don't exist or barely exist anymore. And that's always been the case. And you can so imagine a world 20 years from now where one of... Amazon, Google, Microsoft, Nvidia, Facebook don't exist anymore.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That sounds crazy, but that has always been the path of history. Or they still exist, but they're shells of their former selves. And there's going to be some new company that you and I aren't talking about today that's going to be worth $10 trillion. That's always been the case as well.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So understanding that you can fail half the time and still do very well seems like a contradiction, but that's always how it works in a tail-driven society.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I've always liked the idea that fields are more interconnected than we think. So in school, the biology department's over here. And then in a separate building, you have the math department. In a separate building, you have the history department. But there's actually so many interconnections between those fields. And there's so much that we can learn from biology that teaches us about investing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And there's so much that we can learn from history that teaches us about medicine, like all these interconnections. So I think it's fun to look at some other laws and rules from other fields that you're like, look, that's from a different field, but it teaches me a lot about this field.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
There's lots of different laws from evolution that can teach you a lot about investing, from biology that can teach you a lot about investing. And I think if you are only looking through the narrow lens of your field, whatever your field is, if you're an investor, you're only looking through finance.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If you're a lawyer, you're only studying law, that you can actually learn so much if you expand your horizons and you realize how interconnected the world truly is.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
That was from a guy who coined it Brandolini's law, which is that it is much easier to create bullshit than it is to refute it. So if somebody lies or says something completely untrue, that's very easy. To refute it is extremely difficult. And it's always been like that. Social media makes it a hundred times more potent than it used to be. And you see this online.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
If somebody tweets something that is obviously false, profoundly false, it might get a hundred thousand retweets. And then when it is corrected and the truth comes out, that correction will get a half a percent as much attention and as many eyeballs as it did. That's always been the case, but it's so much more potent now than it used to be. That bullshit is easier to create than it is to refute.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, rumors and whatnot. What's interesting in finance is that a lot of what might seem like bullshit and rumors can become true because it's a story driven thing that enough people latch onto. So meme coins are an example of this. Someone creates a meme coin and you're like, that's obviously bullshit. It's obviously has no fundamental backing. It's obviously a joke. and it becomes Dogecoin.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah, like NFTs. Exactly. If enough people believe it, at least for a short period of time, it can become self-fulfilling. And even if it's based in bullshit, and long-term is bullshit, it becomes self-fulfilling for a very long period of time if enough people think it's true.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What I think is interesting, if you talk to a lot of financial advisors, they will tell you one of the biggest problems that they have with their clients is you have a client who has saved diligently for retirement for decades and they saved up a giant nest egg.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Littlewood's law was this idea from a mathematician where he was like, a lot of what people consider miracles are actually just basic statistics. Because if something has a one in a billion chance of occurring, well, how many people are in the world? Eight billion. So by definition, there should be eight, one in a billion things happening every day, day after day after day.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And so in the news, we're always going to hear about this amazing, ridiculous thing, good or bad, that happened to somebody. And you're like, that's a miracle. How could that possibly have ever happened? Well, a lot of the answers to that is just there are so many people in the world doing so many things. Things that seem completely preposterous actually happen all the time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And in a global news world, you are definitely going to hear about it. And it leads people to this idea that the world is probably more fragile and more uncertain than it actually is. It is very fragile and uncertain.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But when you only hear about the one in a billion things that are guaranteed to happen because there are so many people, it gives you this idea that those things happen more frequently than they actually do.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
It's the idea that work expands to the time that you have. And so if you give someone a two-month deadline, they're going to take two months to do that project. If you give them a one-week deadline, they'll get it done in a week. Back to Elon Musk, who we've been talking a lot about.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
He's been known for this very often, particularly in SpaceX and Tesla, where an engineer says, Elon, this part is going to take a million dollars to build, a million dollars to create and design this part. And he basically comes back and he's like, your budget is $50,000, go get it done. And they do. They do get it done.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They have millions of dollars saved for retirement and then they're 65 years old and they retire and they cannot bring themselves to spend it. They cannot do it because saving money has become so ingrained in their identity, in their personality, that they can never switch gears. That's really important too.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Steve Jobs did this a lot too, where he was like, the iPhone or the iPod, it cannot be bigger than this. And the engineers are like, we can't do it. He's like, yes, you can. Go figure it out. And they do it. They get it done. If you give someone a tight deadline, they will probably find a way to get it done.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But if you give them the expense and the time, a larger budget or a larger period of time, they're going to fill up their needs in that time. And you see this in so many different careers where the amount of time and money that you need to get something done is just the amount of time and money that your boss gave you to get it done.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
One is figure out what is unique to you that does not apply to other people in your circle who you are currently looking up to and trying to copy. What is very unique about your goals or your personality that you're like, look, this person who I look up to, this strategy works for them, but it probably doesn't work for me. And it's not a contradiction.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I'm not going against them to say, I know that worked for you, but I have a different personality, so I'm going to do it my own way. Whatever that might be, everyone is different. I think that's what's most important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I probably don't take as much investing risk as somebody of my age and income could. But that's because I have no aspiration to be the world's greatest investor. My only aspiration is to give myself and my family independence. And that might not be your goal. It might not be some of the listeners' goals.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So if we are doing things differently, it's not necessarily because we disagree with each other. We might just have a slightly different personality and different goals over time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Independence, always. Not just financial independence, but hanging out with only people who I want to hang out with, only doing work that I want to do. If you could wake up every morning and say, I can do whatever I want today, regardless of what that might be. Having a sense of independence is not only the most enjoyable, but it's going to push you towards doing your best work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
My book's The Psychology of Money and Same as Ever. And I also have a podcast and a blog. Twitter, my handle is Morgan Housel, my first and last name. Awesome. What's your podcast called? It's called The Morgan Housel Podcast. Very creatively named.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Thanks so much.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it's a very big problem because in your 20s, 30s, 40s, you create a very good habit of I'm a saver. I'm a long-term investor. And you can never break away from that. You can't do it. So the idea that a good financial skill in your 30s can actually be a liability in your 50s or 60s is really important. I think about this in my own life where in my 20s,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And let's say early 30s, I was a very big saver. And I'm so proud of that. And that's great. Now I'm in my 40s. I have two kids and we spend more than we used to. And it is not because I broke my previous good financial habits. I don't view it that way at all.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I built up money so that I could spend more of it now and have maybe a lower savings rate than I used to because I have a bigger family who are hungry and we go on vacations and whatnot. And I think that's wonderful. The more you can use money as a tool to live a better life, rather than just a scorecard of social comparison, the better off you're going to be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And if you always view it through that lens, like how can I use this money as a tool for more happiness, not just how much can I accumulate and have a higher score than the next person? I think that's always the better way to think about it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I think it probably is a good strategy, but like every good strategy, you can overdose on it. So it sounds like what you've done is just you have a very keen grasp on your net worth. That's great. I think you can overdose on it if you're like, I'm only a success as long as that number goes up every month. That's dangerous because that's not how the market works.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's not how you're going to eventually be able to spend that money in a way that will make you happier. And so I think it's great. I do the same, by the way. I have checked my brokerage account probably every day for the last... 20 years. That's very roughly true. But what's important is I don't use that to say, oh, I'm falling behind.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't use it to say, oh, I should go place a trade because the market went up or down today. I just think it's interesting. And I have a very keen in any day, I could tell you my net worth to a very high degree of accuracy. I think that's great. And not a lot of people I think can do that. I think a lot of people, if you ask them their net worth, they would have to think very hard about it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Or if they gave you a number, it would be wrong. And that's when things start slipping out of hand. There's a lot of study and data on people who forget about their 401ks. And some of them will transfer to a new job. transfer their 401k where it sits in cash for years because they forgot about it. They never invested it. And the lost returns you can have that can be enormous.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
So having a very keen grasp on exactly how much money you have is wonderful. You just want to make sure that you don't become so ingrained in your identity that you are so obsessed with that number that you only feel like a success in life if it's going up and you feel like a failure and you need to change if it's going down.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Yeah. I mean, there's some people I probably fall in this category. They check their brokerage account once a day and they check their blood pressure never or once every five years or something, you know, like numbers that are probably actually very important to your life success and outcome.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They're oblivious to, but something that is almost by definition going to jump around randomly every hour, they pay close attention to it. I always used to use the example of nobody checks the value of their house every day because that would be ridiculous. But now actually, I think a lot of people do because of Zillow.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
They have this number that like a stock ticker goes up and down and they check it all the time. It's true for any investment that your lifetime success is almost certainly dependent on how long you leave it alone for and just let it compound over time.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And if you are the kind of person for whom checking it every single day is going to prevent you from holding it for a long period of time, then that's an issue.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
I don't know if it was wrong because you did it because that's what you felt like you should do. Even if you could criticize that and say, oh, you sold at the wrong time, you should have held out. I usually don't say that because if you had tried to hold on, you probably would have got scared out at a lower price.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The fact that you were tempted to sell means that at least in that moment, you didn't have the right mindset to hold on. So selling may have been the right thing for you to do. One of the things I've changed my mind on about money is criticizing the decisions that people make because you made that decision because it was the right thing for you to do in that moment.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Even if you could go back in hindsight and say, look at all the money you would have made if you held. Let's not do that. But I think what is true is, like I just said, what's going to account for the majority of your lifetime returns is not did you pick the right stocks? It's not did you pick the right industry? It's how long did you hold on to the stocks that you owned?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And one thing that's hard for people to wrap their heads around is if you can earn average returns for an above average period of time, you will be among the top investors in the world. So everybody's attention goes to what's big, what's hot. Tech, AI, as you just pointed, that's big and hot right now. Over the next 30 years, those things are not going to matter that much.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
What's going to matter is what did you hold onto for the longest period of time? Carl Richards, who's a financial advisor, brought up the idea that for most people, a house is the best investment they will ever make. And the reason why is not because it's a good asset. It's not because it's leveraged with a mortgage.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
The reason why is it's the only asset that people are willing to hold uninterrupted for 20 or 30 years. And so even if the average annual return is not that high, a mediocre average return compounded for 30 years balloons into a fortune. And so that's what I would keep in mind for you. I would A, not criticize the decision that you made.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And I would B, say, look, rather than trying to pick the best industry, pick a decent industry that you can stick with for another 10 or 20 years. And that's where the big money will be made.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that's why I think most people, not everybody, but let's say a lot of people have too aggressive of an asset allocation. They have too much of their money in stocks and they should have less. And the reason why is the only thing that matters is what do you need to have to make sure that you can hold on to the stocks that you own and are never forced to sell? You never panic sell.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
You're never forced to sell because you need the money for a new car, whatever it might be. Whatever that level is, that's the most that you should own. And for a lot of people, you might have a spreadsheet or a financial advisor that says, you're young. You can have 90% of your money in stocks. And maybe in theory, that's true.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
But if having that high amount is going to scare you out during the next bear market, then it's the wrong amount. You should have had less, maybe just 50% of your net worth in stocks. Whatever the amount is that you need to hold on to for the long run, that's what you should have.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And it gets back to the great Charlie Munger quote where he said, the first rule of compound interest is to never interrupt it unnecessarily. That's what matters more than anything.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
Such a good question because there's no one right answer because every startup is different. I think it's important to understand if you are a new entrepreneur to A, understand the base rate of success for startups. What I mean by that is how many other startups that came before you who are just as smart, had just as much money, had just as much ambition, failed.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel: How Smart Entrepreneurs and Investors Grow Wealth on Autopilot | Finance | E336
And that number is always going to be very high. And A, you need to understand that number and embrace it with both hands. And B... To be successful as an entrepreneur, you also have to say, yes, but I'm still going to plow ahead as hard as I can. That's the dichotomy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
A publisher came to me in 2014, maybe 2013, and said, hey, we want you to write a book. And I was, absolutely not. I'm not ready. I don't want to do it. It sounds hard. And so in hindsight, I'm so glad that I waited because I became a better writer. I had more content to use for the books. So the fact that I was so stubborn about doing it, it was so beneficial to me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2018, I wrote a very long blog post called The Psychology of Money. It was a 10,000 word blog post, which is very, very long. Most books are about 50,000 words. So it was one fifth of a book in a blog. It was the biggest blog post that I had ever written. It did really well. It was well received. And so that was when I was like, oh, people like this style and format and this substance.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's not going to take me that much effort to expand what I already have into a book. And so that was when it was like, okay, like I'm finally going to do this. My wife had convinced me. I don't think I've ever told this story before, but I'll tell it here.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
An author named James Clear, who wrote a book called Atomic Habits. It's the best-selling and one of the best books of the last generation. It's just an absolute gem of a book. And he published his book in 2018. And I think he was seeing the success of Atomic Habits that I was like, I want that. It was not jealousy. It was not envy. It was motivation. What James has, I want to chase it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And James, as you will see when he comes on, is the nicest, most humble, politest guy you will ever meet. So the fact that not only had James had success in a book, but I was like, I want to be James. Not just his success. I want to be him. was like a big motivator for me to be like, okay, like I really want to write a book now. And James and I have become friends since then.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's actually interesting. In the summer of 2018, I was in Omaha, Nebraska for the Berkshire Hathaway shareholder meeting. And we rented a house with like 10 friends. And this random guy came over to have dinner. I don't know who invited him. No idea who he was. And he introduced himself. He said, hi, I'm James Clear. I'm writing a book called Atomic Habits.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's going to come out in a couple months. And so we had no idea, but like in hindsight, looking back, it's so funny to piece all that together.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'd say in some ways nothing has changed and in some ways everything has changed. Nothing has changed because I still write about the same topics. I still read the same topics. I still sit in the same chair and think the same way. My wife and kids don't treat me any differently. In most ways, nothing has changed. What the book did to me
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's a very real thing is it gave me independence, which is a big topic in psychology of money. What you want to use money and wealth for is to gain control over your time. And if I'm being honest with you, I feel like I'm really opening myself up in this podcast here. Before the book, I was always filled with career anxiety. What happens if I get laid off? What happens if this doesn't work?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it really scared me, particularly as I became a father. I got mouths to feed. What happens if this doesn't work? That's the one thing that's changed post-books, a greater sense of financial independence. That means the world to me. And I also, my wife has pointed this out too. I think I've been in a better mental state post books that I have in my life.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It didn't make me happier, but I think it removed anxiety from my life. It's interesting that in a way that was what the book was about. But then because of writing the book, I got to experience it myself, which has been the cool thing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's all of the above. It's book royalties. It's speaking. It's all of the above. And we haven't really changed our lifestyle to any meaningful degree. We live in the same house and drive the same car and whatnot. A lot of that has just accrued to net worth. This is what I write about in Psychology of Money too. Wealth is what you don't see. It's not the cars that you buy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not the house that you buy. Wealth is the money that you've saved that gives you independence, that allows you to do whatever the heck you want to do. And so that's what it's been for us. It's like we've saved the vast, vast majority of it. And because of that, the anxiety that I had of what if back then has largely been stripped away.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Now, you will never get rid of what if because what if you get hit by a car? You're never going to remove risk. But a lot of the tangible career risks that I had five years ago has dissipated.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's how I always define it. If you are the smartest financial mind in the world, you have a PhD in finance from Harvard, you know all the numbers, you won the Nobel Prize in economics, but you don't have control over your behavior. You don't have a control over your greed and fear or patience or temper. You can and very likely will go broke.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the flip side of that is if you have no financial education, you don't know anything. You didn't graduate high school. You're a country bumpkin who knows nothing. But you do have control over your greed and fear and patience and temper. You have everything you need to become wealthy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Just yesterday, there was a news story that came out about this guy who lived in the middle of West Virginia or something like that and lived in a trailer. I heard this. He recently died and he left $4 million to his town.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's the perfect example. He does not have the pedigree. He does not have the degree from Harvard. He did not work at Goldman Sachs, but he was clearly patient, not greedy, et cetera, et cetera. And because of that, he became very wealthy. So there are very few fields in which that's the case. If you did not go to medical school, you do not know how to perform open heart surgery, full stop.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's not like that in finance. You don't need the education to do well as long as you have the behaviors. So because it's one of the few fields that's like that, it's easy to overlook what you need. And most people, if they're like, I want to become a good investor, they're like, great, I'm going to go get a degree in finance. I'm going to memorize all the formulas.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And by and large, that's not what you need. What you need is the behavior. Now, for a lot of people, that behavior is nature instead of nurture. They're born understanding. Their brain is wired in a way that lets them do it. And some people are the opposite of that. But just understanding what you need and what you don't is, I think, the most important thing of doing well with money.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In math? And in physics, there's one right answer for everybody. So if I say, what is two plus two? It's four, no matter who you are or where you're from or where you live or how old you are. But in finance, it's not like that. Because if I say, how should you invest your money? Well, what works for me might not work for you and vice versa.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Everyone listening, we're all gonna come to a different conclusion. Because our risk tolerance is different. Our social aspirations are different. Our time horizons are different. Everything is different. So it's much closer to like taste in music. And if I said, what's the best music? There's no one answer for that. It just depends who you are and what you like and how old you are.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Music that I liked when I was 15 would be atrocious to me now. So you're going to change throughout time. That's most of the nuance in finance is just realizing that there is not one right answer. And I think the majority of the time in finance, when people are arguing with each other about how should you spend your money, how should you invest your money, they're not actually arguing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They're not actually debating. It's just people with different experiences and different risk tolerances talking over each other. And it's the equivalent. If I think X and X is good for me, you might think X is terrible because it would be bad for you. That's the biggest issue with financial debates.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The first thing I think is important is we live a great life. We live in a great house and a great neighborhood and we take great vacations. We are not the kind of people, like the guy who's living in the trailer and is leaving all this money. There is obviously some balance to it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think the idea that if your expectations grow faster than your income, you will never, ever be happy with your money is one of the most important and powerful realizations in finance. that there are hedge fund managers who make $100 million a year and feel like they're falling behind because their buddies make $200 million a year. There is no cap to that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Elon Musk displaced Jeff Bezos as the richest man in the world. I don't know this to be the case, but maybe that bothered Jeff Bezos because now he's only worth a quarter of a trillion dollars while Musk was worth a third of a trillion dollars. There's no end to financial comparisons.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so, yes, it's important if you want to do well with money to grow your income, invest your money, grow your net worth.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it is equally important and very easy to overlook that you also need to go out of your way to manage your expectations and just be happy with what you have, knowing that if you get the bigger house or the nicer car, it's going to feel cool for like four minutes and then you're going to get used to it and it's not going to feel any different.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so, look, we live in a nice house in a safe neighborhood. All of that checks all the boxes. But there's this thing of, yeah, but if we got a bigger house, we wouldn't be any happier. And we might actually spoil the expectations of our kids who think that that bigger house is now the norm.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's such a good question. I would say I don't. I've never tried to put myself in a box. And I think I've moved around over the years. I think if you asked me that question 10 years ago, I would have said, I'm an investor who writes. And maybe if you asked me today, I would say I'm a writer who invests. I've just switched around what I enjoy doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So this is something that we always battle with because even for us who believe this and live it, the expectation of, ah, maybe we should get a Range Rover. It's always there. That feeling, that drive is always there. But then just taking a step back and be like, well, is there something else we could do with our money? Would the vacation make us happier? Would donating it make us happier?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That battle is always there. But whenever we've experienced it, and when you go out of your way to keep your expectations low too, then your drive for a better life moves away from what's the next car? What's the next house? Actually, what makes us happier is spending more time with our kids, going for walks with my wife. So like, hey, can we use our money to do that?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Use our money to free up our time so that we can spend more time with our kids and with each other? Because that's definitely going to make us happier. But the Range Rover probably won't. That's the debate that we always have in our heads.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's so varied. And this is one thing that I've kind of tweaked my views on in the last couple of years is that the $6,000 bag for your sister-in-law, maybe that is the best use of her money. Maybe it's not, but for some people it would be, even if for my wife and I, or maybe you, it would not be to each their own. And there are a lot of people
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
who will look at how my wife and I spend our money, particularly the few of our friends who would know our income and then look at how we spend, would be like, what are you guys doing? You are missing out on so much. And I think we are. I think we're pretty cognizant of what we're doing and how we spend it. And we're doing the best thing for us, which to me, all that matters.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I've never wanted to become... the mansion Lamborghini guy. I've always wanted to become the independent guy who can just do whatever he wants any day. And no one's going to tell me what to do or when to do it. I'm not like a, I reject all authority kind of guy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm not like a hardcore libertarian, but for money stuff, for work stuff, I'm going to have the most fun and do the best work if it's on my own terms. So the fact that I can write what I want, when I want, and the reason I can do that is because I have some sense of financial independence. I don't need to work for the salaried company. That is the best use of money for me by far.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it used to be that all of my emphasis and research and enjoyment was investing. I want to scour the world and study investing history and whatnot. And I still love that. I'll always do that. But the art of storytelling really bit me 10 or 15 years ago. And that's what I really find joy in doing now. And that's the craft that I want to hone.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah. People by and large do not enjoy being told when to work, how to work, and what work to do. They do that because they have to. They need the paycheck and that's the way to do it. But when most people, the first taste of independence they have, they're like, oh, that's good. That's the one I like.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And even if you are working for a salaried company, if you have a boss and in a position that gives you independence and autonomy, not only is it more enjoyable, you're going to do better work. The quality of your work is going to go up if you're doing it on your own terms. It's such a universal driver of happiness.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe that's actually the wrong word because independence doesn't necessarily make you happy, but it removes unhappiness. That's an important nuance, but it's really important. People who are wealthier by and large do not wake up happier. Happy in the sense that they wake up smiling every morning. It's not that, but I think they have fewer bad days.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And that is a huge life advantage to remove uncertainty and misery from your life is massive. It's one of the few things in money that tends to be universal. And it's also very easy to overlook because particularly for young people and particularly young men, the knee-jerk reaction of why do you want to become rich is so I can have nice stuff, so I can have a big house and a fancy car.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's easy to overlook what's actually going to bring you the most joy is using it to give yourself independence.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The two biggest that come to mind, one from personal finance and one from investing. In personal finance, it's social comparison. And there is no such thing as an objective measure of wealth. Everything is just relative to what other people have. You look at your house, your car, your bank account, and you say, what do I have compared to that person?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That person is usually your friends, your neighbors, your coworkers, but also just people on social media. That is the fuel to move the goalpost. Because even if you are doing well, you're going to start looking at people who are doing better than you, and you're always going to feel inadequate. And it's very hard to break that cycle. Social media makes this so ridiculously difficult.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because now the people who you are comparing yourself to is like the curated algorithmic reel on TikTok and Instagram. that knows exactly what's going to make you anxious. They know exactly which posts are going to make you feel inadequate because that's what's going to get you to stare at it the longest and be like, why don't I have what he or she has?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's like a really difficult trap to break. In investing, the pitfall is FOMO. It's fear of missing out. It's similar to social comparison. That person is getting richer than me and therefore I need to take more risks or try to copy that person in order to catch up to him. And the danger in that is that just like in gambling, everyone on social media talks about their wins, never their losses.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So the people who look like they are getting so much richer than you, A, probably are not. Like it's probably some sort of mirage. But because you don't know that, you're going to start taking risks that you shouldn't and can't afford to take.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
In 2021, when there was like the Robinhood explosion in investing, it went supernova at that point because you had all these 19-year-old people who were like, I just made $20,000 on Robinhood and you should be able to double your money every week. A, most of that was bullshit. And B, the people who looked at that said, I need to go start trading options too. And you know how that ended.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think jumping around like that has been really important. If you just put yourself in a box and say, I am a blank. you're cutting off so much of the world that you might find enjoyment in and have some talent in doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
For the vast majority of them, it ended in tears and losses. And so all of that is driven by FOMO, the idea that someone else is getting richer than you and you need to catch up. And so if you can break away from that and realize that there are always people who are either look like or actually are getting richer than you, and that's fine. That's totally fine. It's unavoidable.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You don't need to catch them. You just need to play your own game and do what works for you is really important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I would actually take it a step further with nothing to do with your sister-in-law. I'm sure she's wonderful.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
When you see somebody driving a $100,000 car, the only thing you know about their finances is that they have $100,000 less than they did before they bought the car. You have no idea how much money they have. And I learned about this when I was in college. I was a valet at a nice hotel in Los Angeles. And these people would come in driving Porsches and Ferraris and Lamborghinis.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And then if you get to know them and talk to them, you realize they're actually not that successful. They just spent half of their salary on a Lamborghini lease payment. The vision that they had, the identity of, oh, this guy's driving a Lambo. He's clearly super successful. No, you actually don't know that at all.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's the classic millionaire next door of like a lot of the people who are very successful are actually driving F-150s. They're actually driving Toyota 4Runners. And you would never know it because that's why they're rich is because they actually invested their money instead of spending it on a car they couldn't afford.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's just this idea that getting rich and staying rich are two different skills. And they're often conflicting skills, which means it's hard for people to do them at the same time. Getting rich requires taking a risk, being optimistic about yourself, being optimistic about the economy and the stock market. That's what you need to get rich. And staying rich is almost like the exact opposite.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think I was 19 when I first stumbled across investing. I've told the story before, but it'll always stick with me. When I was 18, my grandparents gave me $1,000 and I put it in a CD at the bank, certificate of deposit, where it earned interest. And I think I intuitively knew what interest was, but I didn't really get it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have to be a little bit paranoid, a little bit conservative, scared of risk, cognizant of risk. in order to make sure that you're not taking big enough risks to throw yourself over the edge. I think one way to summarize it is save your money like a pessimist and invest your money like an optimist.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Save your money with the idea that the world is risky and dangerous and fragile, and there are always recessions and bear markets and pandemics and terrorist attacks and wars and political mess-ups that you need to be able to endure financially. But if you can, if you can keep your head on straight during those periods, the rewards for those who stick around are incredible.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I've been investing for 20 years. 2004 is about when I started investing. During that time, there has never been a single moment in which you couldn't point to a dozen things going catastrophically wrong in the economy. Every single moment, stock market's overvalued. Companies aren't doing very well. Unemployment's too high. Inflation's too high. Interest rates are too low.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At any moment, you could have pointed to a dozen things. And during those 20 years, the stock market is up fourfold. That's how investing works. You have to save like a pessimist to endure all of those dozen things to point at. But if you can stick around, you look back over a 20-year period and you're like, man, I made four times my money during this period. It's incredible.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's always how it works. Saving like a pessimist, investing like an optimist.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, I think Bill Gates is the best example of someone who has gotten optimism and pessimism to coexist. Because when he started Microsoft in the 70s, he took the most optimistic swing that any entrepreneur has ever taken. When in the 70s, he said, every desk in the world needs a computer on it. That was the craziest idea in the world. Crazy optimism.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At the same time, from the day he started Microsoft to the day he left in 2000, he ran it as conservatively as you possibly could. He said he always wanted enough cash in the bank so that he could run Microsoft for one year with no revenue. Like the most pessimistic way to run a business. I think that's why they've done so well.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's not that they're always optimistic or they're always pessimistic. They realize that if you can survive all the uncertainty and all the upheaval, then you have a fighting chance to actually compound for 50 years as they have. And very few businesses are actually like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
If you have a very optimistic CEO, they're like, let's bury ourself in debt and invest every penny that we have and swing for the fences. And nine out of 10 of those businesses are eventually going to go bankrupt, probably pretty soon. But also if you're too pessimistic, then those businesses become obsolete.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So it's getting both of those at the same time that is so rare, but that's really the key to doing well over your entire career, over an entire lifetime, is getting optimism and pessimism to coexist.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I remember I logged into my account the next day and the balance had grown from $1,000 to $1,000 and 3 cents. I earned three cents of interest. And I remember jaw hitting the floor, being completely stunned that I just earned money for doing nothing. Just for waking up in the morning, somebody paid me. I knew at that moment, I was like, this is the thing. This is what I love doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so all throughout college, I wanted to be a hedge fund manager or an investment banker. I think in that era, like the mid 2000s, that's what everybody wanted to do. in that field. And then I kind of stumbled haphazardly across writing. It was never part of the plan. I never wanted to become a writer.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The painting example is one that I love. There were all these art collectors in the last 50 years and a very small number of families ended up with these ridiculous art portfolios. They had Picassos and Monet's and like Renoir, like the top paintings. ended up in the hands of very few number of people. How did those art collectors know what was going to become valuable?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Because when Picasso was alive in painting, he was not the Picasso who he is today. Most artists become famous after they die. How did these people know what was going to be big? And they looked at their art portfolio and the explanation was those collectors did not know who was going to be big.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
What they did is you had a couple of collectors would go out and buy every painting they could possibly get their hands off of. If any painting was for sale, they scooped it up. And they ended up with thousands or tens of thousands of paintings.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And within that portfolio ended up by chance, some Picassos and some Monet's and some Renoir's, but they didn't know in hindsight what it was going to be or in with foresight, they didn't know. It was only in hindsight that because they collected so many, a couple of them ended up being worth a zillion dollars. And investing is exactly the same. You have no idea
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Which companies are going to be the next Tesla, the next Apple, the next Amazon? Nobody knows. And people who say they do know are fooling you. But if you own an index fund that owns 3,000 companies in it, then you know that whatever is going to be the next Tesla is in there, whatever it might be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And even when I started doing it, I was a senior in college when I got a job at The Motley Fool writing about stocks. And I didn't want to do it. I just needed a job, but I fell in love with it. So I think that in itself is a lesson, particularly for people in college. You might think you know what you want to do and you have a goal and you have a path in front of you, but so many people
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Always in investing, if you own an index of 100 companies, over a 10-year period, you're going to earn most of your returns from five of them. a very small portion is going to return most of them. And since you don't know what those five are going to be with foresight, the best idea is just own all of them, knowing full well that whatever is going to be the winner is going to be in your portfolio.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And that's why you have the statistics about what percentage of active stock pickers outperform index funds, it's very, very low. Particularly if you adjust it for fees and for taxes, over a 10 or 20-year period, it rounds to zero. Warren Buffett recently said that in his life, he's met 10 people who he thinks can consistently outperform the stock market, consistently pick the right stocks.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
10 people that he's ever met in his entire life. And everyone listening to this podcast, you are not one of them. I'm sorry to say. Yeah. Good luck. So I think that's the only anecdote to that. And it's the easiest, cheapest anecdote to that is index investing. It's just own all of them knowing that you're going to have the winners in there.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, if you look at his net worth, 99% of his net worth was accumulated after his 60th birthday. So he's 93, I think he is now. And 99% of the money came after he was 60, which means that if he had retired when he was 60, like a normal person may have, he was a billionaire when he was 60, you would have never heard of him.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The whole reason he's so successful and the whole reason he's now a household name is because he's been, yes, he is a good investor, but the secret is that he's been a good investor for 80 years. And it's just the amount of time he's been doing it for that generates all of that money. He also started investing when he was 11 years old.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That's why he's so successful because he's been doing it nonstop from 11 to 93. That's actually the biggest takeaway that ordinary people can take from him because I and you and anyone else cannot pick stocks like Warren Buffett. But can we try to emulate his patience? Is that something that we could maybe copy from him?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You have a fighting chance of replicating his patience than you do replicating his intelligence. Just understanding why he's wealthy and using that as a takeaway of what we can do and copy him at is really important.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
To your last point, I keep it as simple as I can. I own Vanguard index funds. I've owned for a long time. It's probably all I will own for a long time. I'm not recommending other people exactly do that. You have to figure out what works for you.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And as we talked about earlier, there are definitely people for whom picking stocks is the right strategy for them, even if it's not the best for my wife and I. But one little quirk I would say is I actually do follow financial news every day. Every day I know what the market did. I read the Wall Street Journal every day because I think it's intellectually interesting.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's a fascinating window into how people behave. But the important thing is that I don't read the Wall Street Journal and then say, I need to go out and buy and sell these specific stocks. It doesn't influence my behavior. I just think it's a fascinating window into how people behave. But my personal investing strategy is as simple and basic as you could possibly be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
including myself, probably you, stumble into what they actually love and want to do serendipitously. So I think it was great that I did not follow the path that I thought I had paved for myself and just stumbled into something else.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
My entire net worth is this house, a checking account, Vanguard funds, and shares of Markel where I'm on the board of directors. And that's pretty much it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
It's spread out over many different accounts. And actually quite a bit of it is now in treasuries because you can earn a great return there. Spread out over different bank accounts, different brokerages accounts. Yeah. And the money that I have in short-term treasuries, I consider that cash. That's cash-like to me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So same as ever is about what never changes over time. I think in many ways, psychology of money is about the behavior of you, the individual, and same as ever is about the behavior of us, the collective. Like what do we, the collective society, keep doing over and over and over again? And I've always been a student of, I think, two things. One is investing and the other is history.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I like the intersection of that, like investing history and economic history I've always been so fascinated in. And one of the things that will really stick out when you're studying any kind of history is it's really interesting to see what has changed over time. What do people used to do that they don't anymore? That's interesting.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But to me, way more interesting and way more common is when you see what has not changed at all. And when you're studying the history of Americans 100 years ago, or Europeans 1,000 years ago, or Chinese 5,000 years ago, you see all these kinds of behaviors that would fit in perfectly today that have not changed whatsoever. So how people respond to greed and fear and uncertainty
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
and opportunity, that is the same today in the United States as it was in any culture 1,000 years ago. And it hasn't changed at all. And because of that, we know that it's going to be part of our future for the rest of our lives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And a lot of why I wrote this book was because I kind of got disgruntled at how bad we were as an industry at predicting what's going to happen next, predicting the next recession, the next bear market. Nobody can do it. Nobody has any ability to do it. And so with that, you can either say, nobody knows anything. Don't even try to predict. No one has a clue. Just kind of become a cynic about it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Or you can say, okay, we don't know what's going to change, but we do know what's not going to change. We do know what behaviors are going to be part of our future, regardless of where the future goes. So let's put all of our emphasis on that. And so same as ever is 23 very short little stories about little facets of human behavior that I think have always been with us and always will be.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And no matter where your future goes or where society's future goes, you know that these little bits that I write about are going to be part of the story.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There's a great financial advisor named Carl Richards who has this quote. One of those quotes that just knocked me off my feet. The quote is, risk is what is left over when you think you've thought of everything. So you can spend all day trying to predict the next risk in your personal life or in the economy and for society. And that's great. You should do that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But then when you are done with that exercise, the thing that is not on the list is what's actually the biggest risk that you're going to face. So think about what the biggest risks we've dealt with in the United States over the past couple generations. Pearl Harbor, September 11th, and COVID are probably the three biggest societal shocks that we've dealt with in America.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And the common denominator of all three of those is that nobody, certainly no ordinary American, saw those coming until the day that they happened. In all those situations, there was no economic outlook. There was no analyst forecast. There's nobody on the news warning you about these things that in one day utterly transformed the world that you lived in.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Well, here's what's really interesting. I would not say I had an open mind about it. I graduated college in 2008 when the world was on fire and everything was burning down. The economy, like no one in finance was hiring. Everybody was laying people off. So I found a job at The Motley Fool as a writer. And I took it because I had rent to pay. That was why I took it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so the biggest risk is what you didn't see coming. And the fact that people didn't see coming is what made it dangerous because they were not prepared emotionally, financially, logistically. They were not prepared for these things to happen. So when they hit, it was like red alert. What do we do now? And it's always like that. I think in any given year, it is like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
what is the biggest worldwide news story in 2023? It's probably, I hope it's going to end up, hopefully nothing bigger than it happens, will be Israel and Hamas, will be the biggest story of 2023. Of course, there has been tensions, to say the least, in that region for literally thousands of years. But how many people in January of 2023 predicted that that would be the biggest news story?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Maybe there were some people who were on the ground and had a greater sense, but by and large, ordinary people watching the news, it was not on their radar whatsoever. Same with in 2019, if you were looking at the biggest risk for 2020, nobody said a viral pandemic that's going to close down the schools. Nobody said that. 2001, nobody sees 9-11 coming. You can play that game all day long.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so because of that, you can state with a lot of confidence that the biggest risk over the next year and over the next 10 years is something that you and I and none of us are even thinking about because it's always been like that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
By definition, you can't. But that in itself, that realization and that mindset is really powerful in itself because you stop pretending that you can predict. There's a great quote from Nassim Taleb where he says, invest in preparedness and not in prediction. So one way that I think about that is think about earthquakes in California.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
California knows that there is going to be a major earthquake in the future, but everybody also knows that you can't predict when it's going to come. It's impossible to predict what day it's going to happen or what year it's going to happen. So because of that, you're just always prepared. They build buildings that can withstand it no matter when it comes.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They don't like, you know, oh, an earthquake is going to come in December, so let's retrofit the buildings then. You're always prepared for it. And I think that's how you should think about economic risks, recessions and bear markets and job losses. You have no idea when it's going to come. So don't try to think, oh, once you see a recession coming, then you'll start to save money.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
No, it could happen tomorrow. So always be prepared for it. I think that idea of having expectations instead of forecasts is the only way to really survive in that world where risk is what you don't see.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, whenever you have something good, you have an investing strategy that works or a company that's going well, the very normal knee-jerk reaction is, great, let's make it go faster. Let's make it bigger. Let's milk it. Let's push it as hard as you can. You do it with noble intentions. You're like, I don't want to leave money on the table.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I didn't do it because I was like, oh, maybe I like writing. That'll be fun. I took it because I was like, I need a paycheck today. And they were the only people in finance who were hiring. And so for the first six months, not only did I not really like it, I was kind of ashamed of it. I was like, I want to be a hedge fund manager. And now I'm a blogger. What is this?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
If I have this golden goose, let's keep milking the goose. It happens all the time. Like in investing, people who are doing well start using leverage or they start making bigger bets, more concentrated bets. In businesses, when it's going well, it's like, let's raise more money and grow faster, faster, faster, faster.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it is such a common story that those investors, those entrepreneurs, or even in your own individual career, you eventually realize that there was a natural speed limit to what you're doing. And if you go over the speed limit, you're going to get in trouble. And you only know where that speed limit is in hindsight when you've gone past it and you get a speeding ticket, so to speak.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so you see this with every successful business. The example I use in the book was Starbucks 15 years ago. and maybe most people don't remember this now, but there was a period in the early and mid 2000s where Starbucks was opening a new store on every street corner, like every couple of hours. It was just like this absolute proliferation of Starbucks stores.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And because of it, the quality of the coffee and of the food plunged. The company's only goal was to grow, grow, grow, grow, grow. And the quality of the stores just disintegrated. And Starbucks had a really rough period because of that. And in hindsight, they talked about, they're like, look, The natural growth rate that we could sustain the quality of the product, we way exceeded.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We pushed it way too hard. And because of that, the business broke for a period of time. There's so many examples of that, of like you have a good, legitimate business that is working and customers love you and they will pay you. But if you try to take that and just say, let's try to make it go twice as fast, it's probably going to break.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So understanding the natural speed limit and size of whatever you're doing is a really critical aspect of what you are doing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Let's use the Starbucks example. The reason people love Starbucks was not necessarily because it was on every corner. It was because they liked the quality, the food, they liked the taste. And once your ability to scale takes precedence over that, then you know exactly what's going to happen. So understanding, I think this is such a basic comment, but it's so easy to overlook.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Understanding why you are successful. is the key to doing this. And a lot of people, they don't actually understand why consumers like them or why their boss appreciates them. And because of that, they overlook what is actually needed to keep this going. And once you have an honest assessment of customers like me because of X, then you realize any deviation away from that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And of course, you're going to lose what made you special to begin with. I don't think it's any more complicated than that.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
After about a year, I started to really enjoy it and just love the craft of writing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We look back historically, the biggest periods of innovation and new technology and productivity growth, without exception, happened during periods when the world was on fire, so to speak. The most productive economic decade that's ever occurred is the 1930s during the Great Depression, when the economy was...
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
the biggest train wreck it had ever been because every business in America woke up and they were like, if we don't find ways to get more productive and get our act together, we're going to go out of business tomorrow. And that as a motivator, that fear as a motivator creates the biggest productivity boom we've ever had. The other was World War II and the Cold War.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
The incentive to figure things out was so extreme because if we didn't figure things out, Adolf Hitler was going to control the world next year And that kind of incentive created this technology boom of the likes the world has never seen. What do we get out of World War II?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got nuclear energy, rockets, jets, penicillin, microwaves, radar, eventually with the Cold War, satellites, all of these things that benefit you and I today that happened specifically because of the stress and anxiety of the war. And you can maybe be able to say this with COVID in hindsight too, like as tragic and deadly as it is,
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
if it unleashes the scientific boom as it has, that maybe 20 years from now is going to benefit us in ways that we can't even fathom today. Using the phrase silver lining to COVID is a step too far because it's killed like 10 million people. I'm not saying like, oh, that's a great thing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But it's always the case that you look back and you're like, hey, despite that tragedy, we got this incredible new innovation because of it that's making life so much better today. So everybody wants a world in which everything goes great and there's no uncertainty. There's no bad times. Of course, that sounds like a great world. But in that world, the incentive to improve would diminish greatly.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And it's always the stress that creates the biggest improvements.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, I think for writing books, one of the biggest benefits that a publisher provides is a deadline. It's not necessarily that they're going to help you write the book, so to speak, but they're going to tell you, you have to turn in your manuscript on this date and that'll get your ass in gear.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if there's one thing that has really helped me in my career, it's a combination of for the first two or three years, I had to do that job because nobody else was hiring. And then after that, I think I've just been stubborn. I don't know if it's patience or stubbornness or a mix of the two, but I've been writing about behavioral finance every day for 17 years.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think it's very often the case, not always, this is not black and white, but it's often the case that if you see somebody doing something that you find morally wrong or just something that you disagree with, you are probably underestimating the odds that you would do that exact same thing if you had their incentives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I saw this firsthand during the financial crisis of 2008, when a lot of Americans rightly pointed at Wall Street bankers and said, those greedy bastard bankers who ruined the economy.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And maybe that was not necessarily the wrong criticism, but I think what people overlooked is that if you worked at Bear Stearns in 2006, and they said, hey, package these subprime bonds and we'll give you a $6 million bonus, you would have done it too. You would have done the exact same thing if you had that incentive dangled in front of your face.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so I think we underestimate the boundaries of our morality when we don't understand the power of our incentives. Everyone thinks, oh, my moral boundaries are right here. But if you had different incentives, you'd be like, oh, maybe I can shift them out a little bit. And you don't even know you're doing it. It's subconscious. Everyone is so influenced by these incentives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And at every level, when you're looking at World War II, how could the Germans possibly have acted like this I think when you look into what the 1930s were like for them, the incentives, the incentives to go along with it, the incentives to not want to be an outsider, the incentives to do what you're told, it's not to justify anything in the slightest.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you were looking for an answer of how can people do that thing, whatever that thing would be in business, in wars, whatever it be, the answer is usually some sort of incentives. And it's not even a financial incentive. There are social incentives. There are tribal incentives.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
There are political incentives to do things that you would otherwise find repugnant, but you do it because the incentives push you to do it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I mean, one way as someone who writes books, let's say one of the best advice that I've ever heard is if you want to write a book that people will read 20 years from now, write a book that people would have read 20 years ago. Make sure that what you're writing about is timeless. And I think we can say that about this podcast.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think if we had a time machine and someone listened to this podcast in 2003, 99% of what we said would be relevant. So you have to understand what kind of information is expiring. If you're watching the stock market, oh, Microsoft missed quarterly earnings by one penny per share. That's expiring information. I'm not going to say it's irrelevant, but it's expiring. It has a shelf life.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And if you do anything for that long, you'll gain some proficiency no matter what it is. Anybody in any field, if they do it every day for 20 years, will get good at it. And so I think that's been just like sticking with it has been what's helped me the most.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But if you're talking about how people respond to greed and fear, that's permanent. That never changes. And that will be as relevant 20 years from now as it is today. So you should put more of your emphasis in learning
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
permanent skills, knowing that they're going to stick around rather than drowning yourself in expiring information that might be relevant for a week or maybe even a year, but it has the shelf life of something that's going to expire.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Go out of your way to define your game and realizing that your game might be very different from your co-worker's game, even your co-founder's game, your sibling's game. Everyone is different. And don't assume that because society tells you that you should have X, that that's actually what you should be chasing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
realizing that there are probably 10 people in life who I want to love me. My wife, my kids, my parents, maybe three friends. And it's not that I don't care about the opinions of anyone else, but I think it's really helpful to have people in your life who you don't want to disappoint. Just a few people who it's like, That's your North Star.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm like, am I doing this for the benefit of those 10 people? Would they be proud of me? Is this going to help my relationship with them? I think it's just a very strong guiding light. What really matters? And if you're on your deathbed, are you going to care about your net worth or the square footage of your house? Or are you going to be proud that you are a good spouse? You are a good parent.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
You are a good friend. You helped your community. Like it's obvious what's going to be more important to you. So like, let's keep that as the focus.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Thanks so much for having me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah. So I grew up as a competitive ski racer in Lake Tahoe, California. I was on the Squaw Valley Ski Team, and that was my life from my childhood and my teenage years. Skied six days a week, 10 months a year, all over the world racing. It was great. It was such a cool experience. And there were about 12 of us on the Squaw Valley Ski Team, and we were all best friends.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We had been together since we were children, skiing six days a week all over the world. And so one day in February of 2001... I was 17 years old and I was skiing with my two best friends. We had grown up together. They were 17 as well. And we would ski down the backside of Squaw Valley, which is out of bounds, which you're not supposed to do. You duck under the ropes that say, do not cross.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But we did this because we were young and rebellious. And that's where the best skiing is. It's untracked. You have the place to yourself. Now, when you ski out of bounds like that, when you get to the bottom, there's no chairlift because you went out of bounds. So it would spit us out on this back country road and we would hitchhike back. We loved doing this. It was kind of a thrill.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
We got to hitchhike. It was all very rebellious, something that 17-year-olds do. So the three of us ski this run. And as we're skiing down, I very vividly remember we triggered a small avalanche. And it's a feeling that you will never forget because rather than pushing on the ground with your skis to gain traction and control, all of a sudden the ground is pushing you. And avalanches are very...
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
powerful. You'll be skiing down and then all of a sudden you have no control and it'll push you 20 feet this way and then jolt you 30 feet that way. But it was pretty small and it ended pretty quickly. And the three of us skied down and we like high-fived about it at the bottom. We were like, whoa, did you see that avalanche? That was so cool. We hitchhiked back
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And Brendan and Brian, my two friends who were with me, they said, hey, let's do it again. That was great. Let's go ski that run again. For whatever reason, I don't really know. I said, I don't want to do it again. But how about this? How about you guys go do it again?
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And rather than hitchhiking back, I'll drive around to the side of the mountain and I'll pick you up in my truck so you don't have to hitchhike. They said, great, let's do it. We made that plan. We went our separate ways. They went skiing. I went back to get my truck to go get them.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
20 minutes later, I drive around to meet them at the pickup spot where I was going to meet them and they weren't there. And I really didn't think anything of it. I thought that they had probably already hitchhiked back and maybe I was late. It didn't really bother me. And I went back to our locker room where I expected to find them and they were not there either. And nobody had seen them.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
At that point, I started to wonder what happened, but I really wasn't worried at that point. Several hours later, Brian's mom called me at home and she said, hey, Brian didn't show up for work today. Do you know where he is? And I told her the truth. I said, yeah, we skied down the backside out of bounds and I was going to pick them up, but they never showed up.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think at that moment, she and I pieced together what probably happened here. Later that day, several hours later, we got the police involved, missing persons report. They eventually had turned into, we got search and rescue involved. Search and rescue went on the hill at about midnight to start looking for them.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
They had these giant portable floodlights and a team of search dogs, search and rescue dogs. And then later the next morning, after about nine hours of searching, when the search and rescue workers got to the area, the out of bounds area where I told them we'd skied, They said it looked like half the mountain had been torn away from what was clearly a very fresh, just massive, enormous avalanche.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And avalanches can be the equivalent of like a tsunami, just unbelievable amount of power. They can snap giant trees with their force. And it had clearly just been a massive avalanche here. The search dogs eventually homed in on a spot in the avalanche field where rescuers who had these giant pro poles found Brendan and Brian dead in the avalanche. They were buried about six feet under.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
So of course, I always have to say when I tell this story, I think you and everyone else listening has lost somebody dear to them. It's not unique in that sense. I don't want to pretend like it was unique that I had a friend who died. Most people have experienced some version of that. Of course, it had a really profound impact on me.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And one of the reasons why, and it took me a while to really piece this together, was If I had gone with them on that second run, 100% chance I would be dead. It was such a massive, it took out everything in its path. And so then I look back on it and it's like the most important decision that I ever made in my life by far was not going on the second run.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I didn't put any thought into that decision. I didn't weigh the pros and cons. I didn't do a risk analysis. It was just a brainless, dumb decision. Why don't you guys go do it? I'll do something else. And nothing in my life has mattered more.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think a lot of things in life are like that, where in hindsight, and only in hindsight, do you look back and you're like, the worst or the best thing that ever happened to me came about because of this dumb brainless decision. And maybe people listening to this today, if you left your house for work at 8.53 instead of 8.54, you may have died in a car accident.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I'm making this up, but there's all these just random, like you understand how the world hangs by a thread. of these decisions. And when you come to terms with that, I think it makes you much more humble in your ability and willingness to predict what's going to happen in the future. When you see how fragile it is, you just realize you have no idea what's coming next.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think that would be a small part of it. I think in a broader sense, ski racing was so important because we were independent and treated as adults since we were like 14. And we would travel around with the coaches skiing, but the coaches, God bless them, would just go to bars. And then we were out being adults for better or worse.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
But I think that created an incredible sense of independence and forced you to grow up very fast. That had a big impact on me. But certainly losing my friends at that age made me realize how fragile life can be. And I think my perception of risk changed dramatically after that. And after that, I would not take risks that I would have before that because you see the consequences of your actions.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
I think even before that happened, I was always kind of, I had friends who were doing it more than I. I'm not going to sit here and say I did none of it. Yeah. Okay, I'll give you a specific example. I was telling my wife the other day, I remember when I was 18, one of my friends had cocaine.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I was like, absolutely not, like not even in the slightest in a million years would I touch that stuff, never. But all my other friends are like, yeah, let's give it a whirl. Let's see how this works. So even at that age, I think just naturally, I had a risk assessment that was different from my friends. Yeah.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Yeah, it was one of the hardest decisions of my career because I was really happy and comfortable at The Motley Fool. It's a great place to work, still is, filled with great people. I was happy there. Got in Craig Shapiro, who runs a private equity firm called The Collaborative Fund, reached out to me in 2015. And he just said, hey, I like your work.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
Why don't you come to Collaborative Fund and just keep doing it? Keep doing exactly what you're doing, but just do it here. And I said, hey, I'm flattered, but I'm really happy here. No, thanks. My wife and I had just had our first kid who was two months old at the time. I was not prepared to just throw my career upside down. But he kept pushing and kept pushing and kept pushing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And I think what the decision for me eventually became was, if I stay at The Motley Fool forever, from the time I was in college until I retire in my 60s, will I regret never trying something different? And I think after a while, I realized that the answer was, yeah, I think I might wonder what else was out there. So I finally joined Collaborative Fund in 2016. And it's been amazing.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
That was before I had written books or done anything like that. And Craig was one of the only people, I think, in the world who would say, Morgan, just go do your thing. I'm not going to tell you what to write or when to write. And I don't write about what Collaborative Fund does. I feel like it's just my own canvas to write about anything that I'm interested in.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
And so that was a really rare opportunity. Almost every professional writer at an organization, if you write for the Wall Street Journal or Reuters or CNN or something, you have an editor telling you what to write, how to write it, when to turn it in. And I think that just strips away the art of writing. It just turns it into a job instead of an art. So I really enjoyed the artistic side of it.
Young and Profiting with Hala Taha (Entrepreneurship, Sales, Marketing)
Morgan Housel on Investing, Wealth, and Financial Freedom for Entrepreneurs | Finance | YAPClassic
No, definitely not the latter. And it was a conscious decision for a long time to not write books. I never saw the point in it. And I would always say, look, I blog twice a week. Why does it matter if it's stuffed in between two pieces of cardboard? It's the same thing. It's the same words. I'm still writing, so who cares? So that was why I pushed off writing books for years.