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Sketching Wealth Strategy: Masters in Business with Carl Richards · Masters in Business

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
• 0:08
  Speaker 2: This week, on the podcast, old Friend, Carl Richards joins
• 0:12
  Speaker 2: me to talk about his new book Your Money, Reimagining
• 0:15
  Speaker 2: wealth and one hundred and one Simple Sketches. If the
• 0:17
  Speaker 2: name sounds familiar, he created the Sketch Guy column of
• 0:21
  Speaker 2: the New York Times. It ran there for a decade.
• 0:23
  Speaker 2: He's probably done more than anyone to expand usage of
• 0:27
  Speaker 2: the phrase the behavior gap, the difference between people's portfolios
• 0:33
  Speaker 2: and what the results are. I thought our conversation was charming,
• 0:37
  Speaker 2: and I think you will also, with no further ado.
• 0:40
  Speaker 2: Here's me and Carl Richards talking about money. Carl, Welcome
• 0:58
  Speaker 2: to Bloomberg.
• 0:59
  Speaker 1: Very so fun, looking forward to this for years.
• 1:01
  Speaker 2: Same same, long overdue. We've had you on at the money,
• 1:05
  Speaker 2: but we haven't had you for the long sit down.
• 1:08
  Speaker 2: Let's start out talking about your backgrounds. University of Utah
• 1:13
  Speaker 2: School Business, Bachelors of Science and Finance. That implies finance,
• 1:19
  Speaker 2: investing money. Was that the original career plan?
• 1:22
  Speaker 3: Yeah?
• 1:22
  Speaker 1: No, not even close?
• 1:24
  Speaker 2: Really right?
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  Speaker 1: Yeah, so I was. I've told this story occasionally.
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  Speaker 4: I was an undeclared major, which means back then it
• 1:31
  Speaker 4: meant you had no idea, what you wanted to do
• 1:32
  Speaker 4: with your life right. I was the newest hired a
• 1:34
  Speaker 4: landscaping company, so it's literally digging dishes for a living.
• 1:37
  Speaker 4: I come home one day my wife, we'd recently been married,
• 1:40
  Speaker 4: this was ninety five, recently been married.
• 1:43
  Speaker 1: And she has the help wanted ads open.
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  Speaker 4: She's got a job, a degree in finance, a job
• 1:50
  Speaker 4: as the CFO of a small real estate company. Got
• 1:52
  Speaker 4: the help on it ads open. So I was like, hey,
• 1:54
  Speaker 4: core her name's Corey, Corey, what are you looking?
• 1:56
  Speaker 1: What are you doing?
• 1:56
  Speaker 4: She said, I'm looking for a job. I said, well,
• 1:58
  Speaker 4: what do you finally said no. I said, but you
• 2:00
  Speaker 4: have one, and she said I know, I'm looking for you.
• 2:03
  Speaker 1: I was like, what are you finding?
• 2:04
  Speaker 4: And she found what we both thought was a security
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  Speaker 4: guard job at.
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  Speaker 2: A little shop call Fidelity.
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  Speaker 4: A security guard. I was like, you know, I could
• 2:13
  Speaker 4: work as a mall cop at night. This would be great, so.
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  Speaker 1: I can still go to school full time. It will
• 2:17
  Speaker 1: be gread. I went to apply.
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  Speaker 4: Nothing about kung fu, nothing about self defense. You know,
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  Speaker 4: they were asking about things. I didn't know what they were,
• 2:25
  Speaker 4: securities exactly. I didn't know the difference.
• 2:28
  Speaker 1: And I got I was.
• 2:29
  Speaker 2: Gonna call BS on this because it sounds like, wait,
• 2:31
  Speaker 2: how are you a finance major? But that happened afterwards.
• 2:34
  Speaker 1: Yeah, that's exactly right.
• 2:35
  Speaker 4: So I get through the interview, which tells you a
• 2:38
  Speaker 4: lot about the applicant pool, right, and they had narrated
• 2:40
  Speaker 4: on two of us. Yeah, they offered the other guy
• 2:43
  Speaker 4: and the other guy said, I don't want it, you
• 2:44
  Speaker 4: take it.
• 2:45
  Speaker 1: So that's how I ended up at Fidelity's.
• 2:47
  Speaker 4: National call center just before Netscape's ipl That's unbelievable.
• 2:52
  Speaker 2: I started on a trading desk and I was told, hey, rookie,
• 2:56
  Speaker 2: no trading Netscape IPO. So you when I started, so
• 3:00
  Speaker 2: just about around the same time.
• 3:02
  Speaker 4: You know what was crazy about that was like, after
• 3:04
  Speaker 4: I got clear that I wasn't a security guard, I
• 3:06
  Speaker 4: was like, what's this job?
• 3:07
  Speaker 1: And I was sort of looking around.
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  Speaker 4: Everybody was using calculators right and math, and I was like, okay,
• 3:12
  Speaker 4: this must be right, this must be a math job.
• 3:14
  Speaker 4: And then you know, a couple of weeks into training,
• 3:16
  Speaker 4: they called us out onto the trading floor to answer
• 3:19
  Speaker 4: phones because back then you couldn't get a quote, you
• 3:22
  Speaker 4: could place of trade unless you called.
• 3:24
  Speaker 1: And it was it was the day of.
• 3:25
  Speaker 4: The Netscape by Peel, and I remember thinking, this isn't math,
• 3:29
  Speaker 4: you know what I mean? And that was like my
• 3:30
  Speaker 4: first introduction to this idea of like, so I got
• 3:33
  Speaker 4: I like to say that I got in by accident,
• 3:35
  Speaker 4: but I've stayed because of that moment like this, like
• 3:38
  Speaker 4: what is this crazy thing that we call money? Because
• 3:41
  Speaker 4: nobody was doing math in there. They were excited, mad, angry, upset, right,
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  Speaker 4: So it was that that was because I always thought
• 3:48
  Speaker 4: it was a mistake getting into finance. I always thought
• 3:51
  Speaker 4: I would go off and do organization. I was going
• 3:53
  Speaker 4: to do the Stephen Covey organizational behavior thing at BYU, right,
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  Speaker 4: And that's what I always thought, because work is where
• 3:58
  Speaker 4: people go to do things that matter. And then some
• 4:02
  Speaker 4: of these early experiences opened the door to like money
• 4:05
  Speaker 4: is the ultimate portal.
• 4:07
  Speaker 2: Hey, this funny thing is.
• 4:10
  Speaker 1: Soul, do you know what I mean? Like, like, what
• 4:12
  Speaker 1: do you really care about?
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  Speaker 4: I can find out pretty quickly how you spend your
• 4:15
  Speaker 4: money and how you spend your time.
• 4:17
  Speaker 1: So that's how I stayed. So yes, that afterwards is
• 4:19
  Speaker 1: like maybe I shouldet a degree in.
• 4:20
  Speaker 2: This, So so then you switch you get your degree
• 4:26
  Speaker 2: in finance from the David Eckley School of Business. When
• 4:29
  Speaker 2: do you go for CFP? Wouldn't you become a certified financial.
• 4:32
  Speaker 4: Plan I was looking at that the other day, you remember, No,
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  Speaker 4: all I remember is I got made fun of because
• 4:38
  Speaker 4: I have we're taking remember.
• 4:40
  Speaker 1: Back in the day, right, like I left, I.
• 4:42
  Speaker 5: Don't remember the fidelity and I went to work for
• 4:45
  Speaker 5: a big broker's firm which will go and name, but
• 4:47
  Speaker 5: as a bull as that SYM was owned by bank right,
• 4:49
  Speaker 5: and about that, and I got my SEMA designation because
• 4:52
  Speaker 5: that's what like cool kids, did you know, the sort
• 4:54
  Speaker 5: of institutional consulting.
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  Speaker 4: Stuff, Because I thought, I gotta I gotta figure this
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  Speaker 4: thing out, this whole money thing.
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  Speaker 1: And then I started at my CFP.
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  Speaker 4: So it was in the day when people in that
• 5:03
  Speaker 4: side of the business were like, what are you wasting
• 5:05
  Speaker 4: your time on that?
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  Speaker 2: For it's pretty early full fiduciary thing.
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  Speaker 1: I mean, it's seriously waste goals.
• 5:11
  Speaker 2: What are you gonna not charge people's mission? What are
• 5:14
  Speaker 2: you thinking? Right?
• 5:15
  Speaker 1: That's right, that's right, so fun.
• 5:17
  Speaker 2: So so what I find fascinating about your career and
• 5:21
  Speaker 2: I'm now learning all the parallels between now a career. Yeah,
• 5:25
  Speaker 2: you kind of reinvent yourself as a communicator, as an author,
• 5:30
  Speaker 2: as a speaker. Is that something that helped you when
• 5:34
  Speaker 2: you set up your own investment firm, Like which came first,
• 5:38
  Speaker 2: the chicken or the egg?
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  Speaker 4: Yeah, I can remember who was in the room and
• 5:44
  Speaker 4: where I was when I first sketched something out because
• 5:48
  Speaker 4: I didn't I wasn't a doudler in school.
• 5:50
  Speaker 1: It's obvious that I didn't take any art classes, right.
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  Speaker 2: I don't know if I would say it's obvious, because
• 5:54
  Speaker 2: these are really kind of interesting. Like Charles Schultz very
• 5:58
  Speaker 2: famously drew peanuts and said he did have So.
• 6:01
  Speaker 1: That's super generous comparison. Thank you. But oh, I'm not
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  Speaker 1: making that.
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  Speaker 2: I'm just saying someone.
• 6:08
  Speaker 1: Else, somebody else said something similar. Good.
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  Speaker 4: But I just remember sitting across the table from some
• 6:14
  Speaker 4: really smart clients, and they were he was an the
• 6:17
  Speaker 4: ar doctor.
• 6:17
  Speaker 1: She was a technology sales rep like an.
• 6:19
  Speaker 4: EMC or something back in the day, right, super smart,
• 6:22
  Speaker 4: and I was trying to explain some concept and I
• 6:24
  Speaker 4: was just getting playing stairs, you know, the feeling, and
• 6:27
  Speaker 4: that had happened before, but this is the first time
• 6:29
  Speaker 4: it dawned on me, like, wait, they're really smart. This
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  Speaker 4: must be my problem. So I out of an active desperation.
• 6:36
  Speaker 4: In the shared conference room, there was a whiteboard. Nobody
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  Speaker 4: used it, and I stood up one day I was like, no,
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  Speaker 4: like this and just like some boxes and arrows like
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  Speaker 4: an estate planner would be, you know, and they were
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  Speaker 4: like oh oh, and that moment I was like, I
• 6:49
  Speaker 4: didn't make a grand conclusion. I just remember thinking, huh,
• 6:52
  Speaker 4: that was really interesting.
• 6:53
  Speaker 1: So that started this idea of like, how so.
• 6:56
  Speaker 4: I started thinking, like anytime I got asked a question
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  Speaker 4: more than once. So the second time I got asked it,
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  Speaker 4: I was like, what if I just wrote down the
• 7:02
  Speaker 4: answer and sent it to everybody who asked? And I
• 7:06
  Speaker 4: don't know if you remember, but there's these things called
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  Speaker 4: blogs back in the day.
• 7:10
  Speaker 2: Not only do I remember, you were one of the ogs,
• 7:14
  Speaker 2: I still I still am doing it. I have no
• 7:16
  Speaker 2: interest in Beehigh for substack. I'd like I kind of
• 7:20
  Speaker 2: learned early on, I don't want to give my content
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  Speaker 2: to another company.
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  Speaker 4: Yeah, so started putting those things up on the internet.
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  Speaker 4: An answer to a question with some sort of diagram.
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  Speaker 4: And by the way, the hand drawn sketches were just
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  Speaker 4: a fatal were a flaw. At the beginning, I mean,
• 7:38
  Speaker 4: I went to download Adobe Illustrator and the download thing
• 7:41
  Speaker 4: said three hours, and I was like, anything that.
• 7:44
  Speaker 1: Takes three hours to download, I should not.
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  Speaker 2: Be using Illustrator would ruin this. The whole beauty of
• 7:50
  Speaker 2: and I know most of you were listening to this
• 7:52
  Speaker 2: and not watching memb through a book, but the whole
• 7:55
  Speaker 2: beauty of your sketches is just how simple and informative
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  Speaker 2: they are with just a few lines, a few circles
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  Speaker 2: of fish squiggles. It's not a giant, you know, organizational chart.
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  Speaker 2: It's oh he did that in ninety seconds, and look
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  Speaker 2: how much information.
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  Speaker 1: Is in Well, thank you.
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  Speaker 4: But that early on, it was like I was only
• 8:18
  Speaker 4: doing that because I couldn't download it Obe Illustrator.
• 8:20
  Speaker 1: I saw it as a flaw, and so every couple
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  Speaker 1: of years early.
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  Speaker 4: On, I would I would get them designed by somebody
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  Speaker 4: and I'd post those and people be like, what are
• 8:28
  Speaker 4: the hand So I finally learned, And I'm only telling
• 8:31
  Speaker 4: you these stories because it's so tempting of us to
• 8:34
  Speaker 4: look back and create these like beautiful narratives of the experience.
• 8:39
  Speaker 4: But it turns out there was just a lot of
• 8:41
  Speaker 4: random experimentation playing. Because it turns out the thing I
• 8:44
  Speaker 4: thought was a flaw ended up being the feature.
• 8:48
  Speaker 2: Right, that's really interesting. Yeah, so I'm surprised you think
• 8:52
  Speaker 2: of it as.
• 8:53
  Speaker 1: A flaw, not anymore. But how little did it take.
• 8:56
  Speaker 2: You to get to that point? Because to me, the
• 8:59
  Speaker 2: beauty of your drawings are first of all, it's obviously
• 9:04
  Speaker 2: not AI slops twenty yeah years or so. But more importantly,
• 9:11
  Speaker 2: they just look and feel human and personal. And oh,
• 9:16
  Speaker 2: someone has really put some time into figuring out how
• 9:20
  Speaker 2: do I communicate a complicated idea in the least amount
• 9:25
  Speaker 2: of letters, words, images. So at what point did you think, hey,
• 9:31
  Speaker 2: I could do something with these drawings, maybe publish them
• 9:35
  Speaker 2: in the New York Times every week.
• 9:37
  Speaker 4: Never what happened was I was putting these up on
• 9:40
  Speaker 4: this website. I tried to stop, right. I loved it,
• 9:44
  Speaker 4: like a compulsion.
• 9:45
  Speaker 1: Can't help it.
• 9:46
  Speaker 4: Yeah, I mean, and I even had people around me
• 9:48
  Speaker 4: who were like, just focus on building your business.
• 9:49
  Speaker 1: What are you doing?
• 9:50
  Speaker 4: And I was like, and they were right, do you
• 9:52
  Speaker 4: know what I mean? Like all the evidence I mean,
• 9:55
  Speaker 4: like at the time, and I kept putting it up.
• 9:57
  Speaker 4: Then and there's a guy named Kent who I not know, Uh,
• 10:01
  Speaker 4: Kent send them to a guy named Ron, who I
• 10:04
  Speaker 4: did not know Ron Liber at the time. Oh sure,
• 10:06
  Speaker 4: I know. Kent didn't know Ron. And Ron just sent
• 10:11
  Speaker 4: a note like, Hey, I think you might like these.
• 10:13
  Speaker 4: And Ron sent me a note and I have that
• 10:15
  Speaker 4: email still because nobody believes me. The email was, hey,
• 10:17
  Speaker 4: we love these? Could we try something? And I knew
• 10:20
  Speaker 4: enough for my security guard background right to be a
• 10:23
  Speaker 4: kid in the hills of Utah to say I mean,
• 10:26
  Speaker 4: I never thought.
• 10:27
  Speaker 1: I was like, yeah, of course, what do you have
• 10:28
  Speaker 1: in mind?
• 10:28
  Speaker 4: And that's kind of how And I've talked to Ron since,
• 10:31
  Speaker 4: like why did you open that email on it? Because
• 10:33
  Speaker 4: you know, like he gets like stacks of books, stacks
• 10:37
  Speaker 4: of things that he would love to reply to and read,
• 10:39
  Speaker 4: because that's the kind of human he is, but he
• 10:41
  Speaker 4: just doesn't have time. So why you open that one
• 10:43
  Speaker 4: that day?
• 10:43
  Speaker 1: I don't know.
• 10:44
  Speaker 4: I should still be sending Kent a gift every every year.
• 10:47
  Speaker 4: So I never thought maybe this could appear in the times.
• 10:50
  Speaker 2: So from the late nineties, when do you launch the
• 10:55
  Speaker 2: firm that you'll ultimately build up and sell in twenty two.
• 10:57
  Speaker 4: Yeah, yeah, so I I'm really really bad with dates.
• 11:01
  Speaker 4: But we were in early two thousands no, two thousand
• 11:06
  Speaker 4: and eight or nine.
• 11:07
  Speaker 2: So after the financial that's exactly right. So four years
• 11:10
  Speaker 2: you build this up, why why sell it you? Just like, hey,
• 11:13
  Speaker 2: I'm going to focus on the first thing security guard business.
• 11:17
  Speaker 4: The first thing to tell you is why I like
• 11:19
  Speaker 4: why I left and started my own firm. I remember
• 11:21
  Speaker 4: the thing that the impetus for that was two things.
• 11:24
  Speaker 1: One, this is that fidelity.
• 11:25
  Speaker 2: No.
• 11:26
  Speaker 4: I was now working at the big brokerage firm. Oh okay,
• 11:28
  Speaker 4: and I left to start my own RAA firm, got it?
• 11:31
  Speaker 4: And I remember when the do you remember that cover?
• 11:33
  Speaker 4: I can't remember if it was Fortunate or Forbes. It
• 11:35
  Speaker 4: had the cover with Rex and David at DFA and
• 11:39
  Speaker 4: it said how they're really smart money invest I had.
• 11:42
  Speaker 4: I had that in the top drawer of my desk
• 11:45
  Speaker 4: every time I opened my drawer because I still had
• 11:47
  Speaker 4: this like I'm just a kid from the hills in Utah,
• 11:51
  Speaker 4: like imposter syndrome thing like I'm supposed to be in jail,
• 11:54
  Speaker 4: do you know what I mean? And I'm helping people
• 11:57
  Speaker 4: make really important season with money. I need to figure out,
• 11:59
  Speaker 4: like am I security guard?
• 12:00
  Speaker 1: Is this math? Like what is this thing?
• 12:03
  Speaker 4: And I so this idea of like how the really
• 12:05
  Speaker 4: smart money invests. I called and was like, how do
• 12:07
  Speaker 4: I get access to this? They're like, well, you can't
• 12:09
  Speaker 4: do it where you're at. So I left for that reason,
• 12:12
  Speaker 4: and then the second reason was ended up being one
• 12:15
  Speaker 4: of the greatest disappointments of my life. I left because
• 12:17
  Speaker 4: I thought it was really important to be able to
• 12:19
  Speaker 4: tell everybody that I was a fiduciaria and that everybody
• 12:21
  Speaker 4: would care. And I and I left, and one of
• 12:24
  Speaker 4: the greatest disappointments in my career was nobody seemed to care.
• 12:26
  Speaker 4: I mean, of course you and I both both know
• 12:28
  Speaker 4: it's incredibly important, but the most people don't know.
• 12:32
  Speaker 1: I just remember people looking at me like, Faducia what
• 12:34
  Speaker 1: like what what do you? What do you?
• 12:35
  Speaker 4: Of course you put my interests first, So that's why
• 12:38
  Speaker 4: I left to start the firm.
• 12:39
  Speaker 2: Huh, that's fascinating. Yeah, So you sell it in twenty twelve.
• 12:43
  Speaker 2: When did the sketch Guy columns for The New York
• 12:46
  Speaker 2: Times start before that?
• 12:50
  Speaker 1: Is that? Is that right?
• 12:51
  Speaker 2: No? Oh?
• 12:51
  Speaker 4: Yeah, way before I started, I sold the firm. Part
• 12:53
  Speaker 4: of the reason I sold, so I think two.
• 12:55
  Speaker 2: Thousand you sold the firm to concentrate on your doodle.
• 12:58
  Speaker 1: That's right.
• 12:59
  Speaker 4: So I the book came out in twenty twelve, and
• 13:03
  Speaker 4: I sold the firm about the same time, and I
• 13:06
  Speaker 4: remember specifically having this conversation with my wife. I was like, oh,
• 13:09
  Speaker 4: we'll never sell the same I was thought of it
• 13:10
  Speaker 4: as a security blanket, like, I'd never sell it.
• 13:13
  Speaker 2: It's an annuity. It generates income every year and and
• 13:17
  Speaker 2: typically you have a ten percent when that you're back.
• 13:20
  Speaker 1: Just do the market such a great business.
• 13:22
  Speaker 2: It is a good business, that's right, And especially if
• 13:26
  Speaker 2: you're a fiduciary and doing the right thing by your client,
• 13:28
  Speaker 2: exactly you not only make a decent living, you get
• 13:31
  Speaker 2: to sleep at night.
• 13:32
  Speaker 4: It's exactly right, all the things. So I never thought
• 13:34
  Speaker 4: i'd sell it. There was just this increasing demand the
• 13:37
  Speaker 4: book was coming out. I was acting asked to speak
• 13:40
  Speaker 4: all over the world. It was clear that I really
• 13:42
  Speaker 4: really liked that study. I had to make a choice. Yeah,
• 13:44
  Speaker 4: And in the end, I was like, this is a securre.
• 13:46
  Speaker 4: Like my wife said, hey, maybe it's an anchor, and
• 13:48
  Speaker 4: I was like, you.
• 13:49
  Speaker 2: Guys speak the same love language. It's kind of fascinating, really, yeah,
• 13:53
  Speaker 2: because just think about that's a very insightful observation from
• 13:56
  Speaker 2: your wife. She's the one who tried to get you
• 13:59
  Speaker 2: a hat shields and you parade around the mall like
• 14:03
  Speaker 2: Coole Blart. I mean that.
• 14:07
  Speaker 4: You guys are very much on the same Yeah, I know,
• 14:09
  Speaker 4: it's been super I mean, she's been amazing thirty one years.
• 14:12
  Speaker 4: But yeah, anyway, really amazing. Yeah, and it's and it's
• 14:17
  Speaker 4: the best it's ever been. And I hope it's better tomorrow,
• 14:19
  Speaker 4: do you know what I mean? Like that one of
• 14:20
  Speaker 4: those like two competing trews at the same time, Like
• 14:23
  Speaker 4: I could have never dreamed of it, and then I
• 14:26
  Speaker 4: just wanted to get a little better tomorrow. And I
• 14:28
  Speaker 4: hope I never stopped thinking that way. But anyway, left
• 14:30
  Speaker 4: So the firm full time in the speaking writing thing
• 14:34
  Speaker 4: for a little while. Was at a big firm sort
• 14:36
  Speaker 4: of the firm that bought my company was.
• 14:38
  Speaker 1: There for a while.
• 14:40
  Speaker 2: Another name was firm.
• 14:41
  Speaker 4: Yeah that was back then it was Buckingham So, oh okay,
• 14:44
  Speaker 4: I kind of remember that.
• 14:46
  Speaker 1: Went into it, I said, and loved it.
• 14:48
  Speaker 2: Who else did you work with there? There were some
• 14:49
  Speaker 2: people I.
• 14:50
  Speaker 4: Really liked, Larry Swidrow, Tim Yeah, that whole crew, Adam,
• 14:54
  Speaker 4: their mom, the.
• 14:55
  Speaker 1: Whole the whole crew there. It was really really good.
• 14:58
  Speaker 2: Really really interesting. So so we're gonna spend a little
• 15:01
  Speaker 2: bit of time talking about behavior. But you know, you
• 15:06
  Speaker 2: came from a big shop. You came from several big shops, Fidelity,
• 15:09
  Speaker 2: Merril as well as Buckingham. They all have PhDs in
• 15:14
  Speaker 2: Monte Carlo simulations and they run factor model tests, and
• 15:18
  Speaker 2: yet people still buy high and sell low. What is
• 15:22
  Speaker 2: it about the human condition that is a permanent drag
• 15:27
  Speaker 2: on performance?
• 15:29
  Speaker 4: It's just like that feels to me like the question
• 15:31
  Speaker 4: that I've been exploring for twenty years.
• 15:33
  Speaker 2: That's why I asked it.
• 15:34
  Speaker 4: Yeah, yeah, I mean there to me, I thought at first,
• 15:41
  Speaker 4: I remember I almost left the business because I couldn't
• 15:43
  Speaker 4: solve this problem.
• 15:45
  Speaker 1: Like after I got my SEMEN designation and I came back.
• 15:47
  Speaker 2: I explained for lay people that I a.
• 15:49
  Speaker 1: Certified Investment Management Analyst.
• 15:52
  Speaker 4: So it's sort of like for people who are doing
• 15:53
  Speaker 4: institutional consulting work.
• 15:54
  Speaker 2: So I thought it was not a CFA but more
• 15:57
  Speaker 2: than a CFP.
• 15:58
  Speaker 4: Yeah, and sort of like CFA light that can talk
• 16:01
  Speaker 4: to people, you know, And it was back then it
• 16:04
  Speaker 4: was taught in conjunction with Wharton. So I went to
• 16:07
  Speaker 4: Wharton for two, like that was the whole reason I'm
• 16:09
  Speaker 4: always looking for external validation back then, Uh huh, right.
• 16:12
  Speaker 2: So goes hand in hand with the imposters.
• 16:14
  Speaker 4: It's exactly right, right, it's exactly right. So, and I'm
• 16:17
  Speaker 4: not afraid to admit it. But I came back from
• 16:21
  Speaker 4: that working with clients and realized like, Okay, now I've
• 16:24
  Speaker 4: got this great system, the best training in the world,
• 16:26
  Speaker 4: honestly some of the best training at the firm, right,
• 16:29
  Speaker 4: and yet I still had this repeated experience where we
• 16:32
  Speaker 4: would create really detailed spreadsheets of how to hire and
• 16:38
  Speaker 4: fire managers, and then we'd have this experience over and
• 16:41
  Speaker 4: over where the manager that showed up on our byscreen,
• 16:45
  Speaker 4: we would commit clients money to it. It would become the
• 16:48
  Speaker 4: I thought that was our job, the search for the
• 16:49
  Speaker 4: best investment. We'd find the best investment, we'd commit clients
• 16:53
  Speaker 4: money to it, and then it would go through a
• 16:54
  Speaker 4: normal cyclical period of underperformance and it would show up
• 16:58
  Speaker 4: on our fire screen. And you know, I repeated that
• 17:02
  Speaker 4: like two or three times over maybe a three or
• 17:03
  Speaker 4: four year period, and was like, I don't know.
• 17:06
  Speaker 1: What's going on, Like maybe it's just me.
• 17:09
  Speaker 4: And then I and then I ran across some of
• 17:11
  Speaker 4: that industry research around investor returns versus investment returns, where
• 17:15
  Speaker 4: you see that the average investment, right, average investor underperforms
• 17:20
  Speaker 4: the average investment.
• 17:21
  Speaker 1: Now, whether it's anything close to.
• 17:23
  Speaker 2: Not only does the average investor underperform the average investment,
• 17:27
  Speaker 2: but the average investor underperforms their own investment.
• 17:31
  Speaker 4: So it's like, I just remember, I remember like being
• 17:35
  Speaker 4: so excited that it wasn't.
• 17:37
  Speaker 1: Just me, do you know what I mean? Like, wait,
• 17:39
  Speaker 1: this is a this is an industry wide, huge problem.
• 17:42
  Speaker 4: So that's when I was like, wow, how do we
• 17:44
  Speaker 4: I mean, what that research said to me was that
• 17:46
  Speaker 4: I could own a mediocre investment if I behaves correctly,
• 17:51
  Speaker 4: I would outperform ninety nine percent of my neighbors. And
• 17:53
  Speaker 4: that's all we care about in the first place, right,
• 17:54
  Speaker 4: is outperforming your neighbors.
• 17:55
  Speaker 2: It's the whole goal, right, Right, So how is that
• 17:57
  Speaker 2: idiot down the block getting rich?
• 17:59
  Speaker 4: And I'm not, yeah, exactly as if that's the thing
• 18:02
  Speaker 4: that matters, But.
• 18:02
  Speaker 1: That's what week, that's how people Well, that's exactly right.
• 18:05
  Speaker 1: So I just remember.
• 18:06
  Speaker 4: So digging into that a bit, I really think like
• 18:09
  Speaker 4: Buffett's statement that if you were to design a poor investor,
• 18:12
  Speaker 4: you would design a human.
• 18:13
  Speaker 1: Right is as close as we get, like the hard wiring.
• 18:16
  Speaker 1: We are hardwired.
• 18:17
  Speaker 4: And it was I think it was in one of
• 18:18
  Speaker 4: his wife's books where they hooked up scanners and had
• 18:21
  Speaker 4: people open their brokerage statements, right.
• 18:24
  Speaker 1: Like talk about a masochistic experiment, and if.
• 18:26
  Speaker 4: The broker statement was down, you process that in the
• 18:29
  Speaker 4: same part of your brain as you do mortal danger
• 18:32
  Speaker 4: is what I'm doing for like a bear, break.
• 18:34
  Speaker 2: Your flight right there. Yeah, My favorite Bill Bernstein quote
• 18:39
  Speaker 2: is it's all about your amigdal. If you don't get
• 18:42
  Speaker 2: if you don't get your limbic system under control, you
• 18:46
  Speaker 2: will die poor. And it's that exact system that's.
• 18:50
  Speaker 4: Right and then right yeah, like and if it's if
• 18:52
  Speaker 4: the statement's up, same part of your brain as you
• 18:54
  Speaker 4: do security and pleasure. And I think it was in
• 18:58
  Speaker 4: the book that for women that's chocolate and for men
• 19:01
  Speaker 4: that's sex. And I didn't quite understand the difference in
• 19:04
  Speaker 4: the book, but.
• 19:06
  Speaker 1: Just so so, if.
• 19:11
  Speaker 4: That's what's going on, it's a little bit like the
• 19:13
  Speaker 4: interaction we have with our phones now, you know, like
• 19:16
  Speaker 4: on the other side of that interaction are three hundred
• 19:18
  Speaker 4: PhDs trying to get us to pay attention to what's
• 19:22
  Speaker 4: going on on Instagram, right, And I just think we
• 19:24
  Speaker 4: finally have to recognize unless we put some serious guardrails
• 19:28
  Speaker 4: in between us and the big mistake, we're gonna make
• 19:31
  Speaker 4: the big mistake because it feels like I don't care
• 19:33
  Speaker 4: what you tell me burying my hands on a stove.
• 19:35
  Speaker 1: I'm taking it off, do you know what I mean?
• 19:38
  Speaker 4: So I think that that, to me, is the work
• 19:42
  Speaker 4: of worrying about, like what does it mean to be
• 19:44
  Speaker 4: a real investor, a successful investor, versus what it means
• 19:48
  Speaker 4: to find good investments.
• 19:50
  Speaker 1: Let's talk a little bit about the behavior gap.
• 19:52
  Speaker 2: I don't know if you created that phrase, but you've
• 19:56
  Speaker 2: done more than anybody else. I know it's popularize that phrase.
• 20:01
  Speaker 2: Tell us what the behavior gap actually is?
• 20:05
  Speaker 4: Yeah, yeah, So it started out as a very narrow thing,
• 20:08
  Speaker 4: which we already pointed to, this difference between it and
• 20:11
  Speaker 4: like the technical term would be the difference between time
• 20:14
  Speaker 4: weighted rates of return and dollar weighted. And because I've
• 20:17
  Speaker 4: had to explain this so many times, maybe I'll go
• 20:19
  Speaker 4: through the explanation. Sure, Imagine you open a newspaper, there's
• 20:23
  Speaker 4: an ad for a mutual fund. It says the fund
• 20:26
  Speaker 4: is return ten percent a year for the last ten years.
• 20:29
  Speaker 4: That's the investment return. And just for a minute, forget
• 20:33
  Speaker 4: taxes as you know, any sort of fees or whatever.
• 20:36
  Speaker 4: That's the investment return. That's the return you would have
• 20:39
  Speaker 4: gotten if you had invested money at the beginning of
• 20:41
  Speaker 4: the ten year period and not added or taken anyway
• 20:44
  Speaker 4: and left it there for the ten year period. But
• 20:46
  Speaker 4: nobody invests that way except your clients, right, Like, nobody
• 20:49
  Speaker 4: invests that way. They we are always chasing, right, right,
• 20:54
  Speaker 4: whatever we hear in the news, the financial pornography network
• 20:57
  Speaker 4: waves their hands and we've got a list of ten
• 20:59
  Speaker 4: funds to buy or whatever.
• 21:00
  Speaker 1: And the old days smart money, you know, like this smarty.
• 21:03
  Speaker 4: So we end up running around and that's the average
• 21:08
  Speaker 4: investment return is ten percent, But the average investor return
• 21:12
  Speaker 4: is always different from that.
• 21:13
  Speaker 2: Who does the annual report that everybody criticizes, Yeah, for sure,
• 21:17
  Speaker 2: that shows this differential.
• 21:20
  Speaker 4: So that that was one of the early reports I
• 21:22
  Speaker 4: ran across was Dowbar and I have not spent the
• 21:26
  Speaker 4: well I spent the time years ago. To understand, I
• 21:28
  Speaker 4: don't really know anything about that number. I know morning
• 21:31
  Speaker 4: Star does a number and it seems to be eighty
• 21:35
  Speaker 4: to one hundred bases points, not six percent, you know,
• 21:38
  Speaker 4: like and what.
• 21:39
  Speaker 2: About the SPIVA numbers on manager performance?
• 21:42
  Speaker 1: Yeah, for sure.
• 21:43
  Speaker 2: So you're running across these behavioral errors on pretty much
• 21:49
  Speaker 2: both sides. The manager who's running their funds and frequently underperforming,
• 21:55
  Speaker 2: and the longer that timeline is the greater percentage of
• 21:58
  Speaker 2: manager underperforming. On the other side, the buyers of those
• 22:01
  Speaker 2: funds tend to not only underperform the benchmark, they're underperforming
• 22:07
  Speaker 2: their own funds. So if only there was an alternative
• 22:12
  Speaker 2: way to invest.
• 22:13
  Speaker 4: Let me tell you a quick story. So this is
• 22:15
  Speaker 4: back during my institutional consulting days. We had this client.
• 22:19
  Speaker 4: We do a manager search and selection. We find the
• 22:21
  Speaker 4: best large cap value manager for this client and hire
• 22:24
  Speaker 4: that large cap value manager. And as I recall, it
• 22:28
  Speaker 4: was Davis New Adventure back in the day, right, Chris Davis.
• 22:32
  Speaker 1: Yep, we go two or three years.
• 22:34
  Speaker 4: Davis has one of those cyclical underperforming they're going to
• 22:38
  Speaker 4: do right.
• 22:39
  Speaker 2: Especially value, which runs in and out of favor.
• 22:41
  Speaker 1: Yeah, and it was even in comparison to other value managers.
• 22:44
  Speaker 4: Right as they're going to do right so we fire Davis,
• 22:48
  Speaker 4: not knowing any better, we hire another and I can't remember.
• 22:51
  Speaker 4: We'll just call them x y Z, right like, we
• 22:53
  Speaker 4: hire this new and the client's like, yeah, yeah, I understand.
• 22:55
  Speaker 4: It's two and a half years in we make this change.
• 22:58
  Speaker 1: We go to x y Z.
• 23:00
  Speaker 4: Two and a half years later, three years later, x
• 23:02
  Speaker 4: y Z does the same thing, cyclically underperforms. We go
• 23:06
  Speaker 4: through our manager screening, they're up on our fire list
• 23:10
  Speaker 4: and guess who pops into our by list? Yeah, call
• 23:13
  Speaker 4: the client thinking I'm so smart, Hey, we need a
• 23:15
  Speaker 4: fire x y Z and hire this manager.
• 23:17
  Speaker 1: It's it's called Davis.
• 23:18
  Speaker 4: And they were like, w didn't we client's name was Jeremy.
• 23:23
  Speaker 1: Didn't we just fire them two and a half years ago?
• 23:26
  Speaker 1: And I was like yeah, And he said, you know
• 23:28
  Speaker 1: what I'd like.
• 23:30
  Speaker 4: I would like the return of Davis for from the
• 23:34
  Speaker 4: day we first hired them till now. I'd like the
• 23:37
  Speaker 4: return of x y Z from the day you first
• 23:39
  Speaker 4: hired Davis to now and I'd like that compared to
• 23:42
  Speaker 4: my account. I was, of course, like, that's the outworks.
• 23:44
  Speaker 4: He said, yeah, that's what i'd like to see. And
• 23:46
  Speaker 4: we all know the story, right, He underperformed either of them,
• 23:49
  Speaker 4: both of those, like he would have.
• 23:51
  Speaker 1: Been fine in either one of those.
• 23:52
  Speaker 2: Just leave it alone, just lead.
• 23:53
  Speaker 4: And that was my first moment of like, I gotta
• 23:56
  Speaker 4: get out of this business. I gotta go to law
• 23:58
  Speaker 4: school or something. And that's when I discovered this idea,
• 24:01
  Speaker 4: or for myself, discovered this idea that maybe the investment
• 24:04
  Speaker 4: process only matters to the degree that I can behave.
• 24:09
  Speaker 2: So let's talk about what you call the financial pornography networks.
• 24:15
  Speaker 2: They talk all day long about ten year yield and
• 24:18
  Speaker 2: the FED and credit spreads and geopolitics and earnings and news,
• 24:24
  Speaker 2: and you spend most of your books plural talking about fear, regret, envy,
• 24:32
  Speaker 2: what moves markets and what more importantly moves investors portfolios.
• 24:39
  Speaker 1: Gosh, it says a good question, and I want to
• 24:41
  Speaker 1: be like careful about it.
• 24:42
  Speaker 2: You know, I do this for a living.
• 24:44
  Speaker 1: I know it's a really good question.
• 24:46
  Speaker 4: I want to be careful about the term financial pornography network.
• 24:49
  Speaker 4: I think that originally to Jane Brant Quinn term.
• 24:52
  Speaker 2: That's right, that's exactly right.
• 24:53
  Speaker 4: So I love I love the term, but I think
• 24:56
  Speaker 4: it a prize just really broadly, and.
• 24:58
  Speaker 2: I call it the fire hose, financial noise.
• 25:01
  Speaker 1: Yeah, that's fine.
• 25:02
  Speaker 4: I think sometimes media circus like it's a it's a
• 25:05
  Speaker 4: media business, and there's nothing I want to be clear,
• 25:08
  Speaker 4: Like I live in the hills in Utah. I ride
• 25:10
  Speaker 4: my mountain bike every day, the trails out in my backyard.
• 25:12
  Speaker 4: I have a different hobby. Just because that's my hobby
• 25:15
  Speaker 4: doesn't mean my hobbies are better than anybody else's hobbies.
• 25:18
  Speaker 2: Healthy.
• 25:19
  Speaker 4: Well, but I walk in this building and I see
• 25:22
  Speaker 4: happy human after happy human walking through the halls.
• 25:25
  Speaker 1: This is like shiny, happy people everywhere. I'm who am I?
• 25:29
  Speaker 1: Who am I to say? Right?
• 25:31
  Speaker 4: So so, but I think what's important is if we
• 25:34
  Speaker 4: start to recognize, like, what are we doing it for?
• 25:37
  Speaker 1: What's the goal?
• 25:38
  Speaker 4: Because if it's something to talk about, there's nothing wrong
• 25:42
  Speaker 4: with that. If it's entertainment, there's nothing wrong with that.
• 25:45
  Speaker 4: But basing your financial decisions, your actual investment decisions, on
• 25:49
  Speaker 4: something you heard, even if it was secret underneath the
• 25:53
  Speaker 4: subway and it was labeled. Isn't the economists the one
• 25:56
  Speaker 4: that all the really smart people read anyway, right, Like
• 25:59
  Speaker 4: You're not the only one.
• 26:00
  Speaker 1: That's heard that.
• 26:01
  Speaker 4: So I think we have to be careful with sort
• 26:03
  Speaker 4: of making big investment decisions based on every wind of
• 26:08
  Speaker 4: news or entertainment right versus linking. And again this is
• 26:13
  Speaker 4: back to like, how do we solve this behavior problem?
• 26:16
  Speaker 4: I think it's got to be. It has to be.
• 26:19
  Speaker 4: The portfolio has to be designed to give me the
• 26:22
  Speaker 4: greatest likelihood of reaching my goals, and my goals have
• 26:26
  Speaker 4: to be carefully clarified, and they're going to change over time.
• 26:30
  Speaker 4: So it's this constant process of saying, is this Are
• 26:33
  Speaker 4: these investment decisions aligned with what I want out of
• 26:36
  Speaker 4: my life? Both of those sides of that equation are
• 26:40
  Speaker 4: really challenging.
• 26:41
  Speaker 1: Getting clear about what you want out of your life
• 26:43
  Speaker 1: super hard.
• 26:45
  Speaker 4: Making sure you have a portfolio built on data and
• 26:47
  Speaker 4: evidence and that will get you the closest to that
• 26:50
  Speaker 4: also really hard.
• 26:51
  Speaker 2: So let's break that into two pieces, because I kind
• 26:55
  Speaker 2: of feel like there are are two distinct conversations. We'll
• 26:59
  Speaker 2: get to the goal portion in a moment. I want
• 27:03
  Speaker 2: to stay with the media circus. Isn't there really a
• 27:07
  Speaker 2: very simple problem, and that is the mismatch in time
• 27:13
  Speaker 2: horizons when you're putting money away to save for retirement
• 27:17
  Speaker 2: or even to save for five point twenty nine for
• 27:19
  Speaker 2: a college or saving to buy a house or a
• 27:21
  Speaker 2: second house or whatever, like you're thinking five, ten, fifty years.
• 27:26
  Speaker 2: But all of the financial noise, that fire hose, that's
• 27:31
  Speaker 2: about that's the church of what's happening right now. So
• 27:35
  Speaker 2: if we can simply readjust our media consumption into some
• 27:41
  Speaker 2: context with the longevity of our portfolio goals, doesn't that
• 27:46
  Speaker 2: solve a lot of these Why do if I'm putting
• 27:49
  Speaker 2: this money away for twenty thirty years, what do I
• 27:52
  Speaker 2: care what happened on a random Thursday?
• 27:55
  Speaker 4: But yeah, and guys, what if we had kept what
• 27:57
  Speaker 4: if we actually kept track of every single change of opinion?
• 28:02
  Speaker 1: Right?
• 28:03
  Speaker 4: And how sure somebody was I remember that? What's that
• 28:06
  Speaker 4: old statement that even a broken clock is right twice
• 28:09
  Speaker 4: a day?
• 28:10
  Speaker 2: I was gonna say, who often wrong? Never in death?
• 28:15
  Speaker 4: That's exactly. And that's like again, entertaining, And there's nothing
• 28:20
  Speaker 4: wrong with entertainment. We go to the movies, we go
• 28:22
  Speaker 4: see plays, we ride our mountain bikes, like, there's nothing
• 28:25
  Speaker 4: wrong with entertainment. I just think we have to understand
• 28:27
  Speaker 4: what it is. And you're what you're saying is, yeah,
• 28:30
  Speaker 4: that's day to day entertainment. I like it because I
• 28:32
  Speaker 4: can talk about it. It's important. Don't base my twenty,
• 28:35
  Speaker 4: my ten, my five, my ten, my twenty year decisions
• 28:38
  Speaker 4: on it.
• 28:38
  Speaker 2: Right, And yet and yet we continue to see people
• 28:43
  Speaker 2: have that problem. So let me re ask this question
• 28:46
  Speaker 2: in a different way. How do you bridge the gap
• 28:49
  Speaker 2: between what clients ask for, what they think they want,
• 28:53
  Speaker 2: and what you know they actually need.
• 28:56
  Speaker 4: Is another Barry, you're super good at this whole job. No,
• 29:02
  Speaker 4: I just because that now you've layered another problem in
• 29:06
  Speaker 4: here is because clients, the humans that we call clients,
• 29:10
  Speaker 4: show up having been trained by us as an industry
• 29:14
  Speaker 4: speaking really broadly, that what matters is this day to
• 29:17
  Speaker 4: day stuff.
• 29:18
  Speaker 1: Right.
• 29:19
  Speaker 4: They think the job of an investor is to find
• 29:21
  Speaker 4: the best investment, because we taught them that on the
• 29:25
  Speaker 4: television wave in our hands. So it's no surprise, like
• 29:28
  Speaker 4: we did this to ourselves, it's no surprise.
• 29:30
  Speaker 1: That clients come in expecting.
• 29:32
  Speaker 4: And that's why I think clients who work with real
• 29:35
  Speaker 4: financial advisors often go through a period of financial the
• 29:38
  Speaker 4: financial pornography detox program right where they maybe wake up
• 29:42
  Speaker 4: eighteen twenty four months into the relationship and go, hey,
• 29:44
  Speaker 4: you know what, I'm not really paying that much attention
• 29:47
  Speaker 4: anymore to that like all the stuff I used to
• 29:49
  Speaker 4: think mattered was critical has lost its urgency.
• 29:54
  Speaker 1: It's tenor right.
• 29:56
  Speaker 4: So we've got this problem of like it feels like
• 29:59
  Speaker 4: and again back to the wiring in our bodies, like
• 30:02
  Speaker 4: it feels like we should be doing something. The news
• 30:06
  Speaker 4: is saying we should be doing something. The guy at
• 30:07
  Speaker 4: the club is saying we should be doing something. And
• 30:09
  Speaker 4: I called Barry Barr says, hey, let's hold on for
• 30:12
  Speaker 4: a second. Let's review the Are these.
• 30:14
  Speaker 1: Goals still the goals? Is this still what's important to you?
• 30:18
  Speaker 4: Turns out, if that's true, we're okay here and almost
• 30:20
  Speaker 4: always end up at the same place, which is diversified
• 30:23
  Speaker 4: low cost portfolio.
• 30:24
  Speaker 1: Hold on to it for a long time.
• 30:26
  Speaker 2: There's this inherent bias towards action, for sure, which is
• 30:30
  Speaker 2: the nature of that fight or flight response.
• 30:33
  Speaker 1: Yeah, one or the other, right.
• 30:34
  Speaker 2: Don't just do something, And really the right way to
• 30:37
  Speaker 2: do it is don't just do something. Sit there. But
• 30:40
  Speaker 2: that cause is a great deal of uncomfortable miss amongst people.
• 30:46
  Speaker 2: Let's take this to the next phase. So Jack Bogel
• 30:50
  Speaker 2: and Vanguard gave us low cost everything we've learned from
• 30:55
  Speaker 2: Richard Thaylor and the behavioral finance, folks, is about the
• 30:58
  Speaker 2: importance of humility. What does the next generation of investors
• 31:04
  Speaker 2: learn once they figure out versified, low cost and a
• 31:07
  Speaker 2: little bit of humility, where do you go next?
• 31:10
  Speaker 1: Yeah?
• 31:12
  Speaker 4: Yeah, you know it's so hard about that? Is this
• 31:13
  Speaker 4: like everyone's a gambler? Thing that's sort of slipped actually today, Yeah,
• 31:18
  Speaker 4: that's sort of slipped in like it's it's I don't
• 31:20
  Speaker 4: envy growing up as a you know, twenty five thirty
• 31:24
  Speaker 4: year old person trying to sort this out right now,
• 31:26
  Speaker 4: because it just feels like everything's.
• 31:29
  Speaker 2: About right and it is.
• 31:32
  Speaker 4: Yeah, and it is, I think to me, I mean,
• 31:36
  Speaker 4: I'm careful with advice. But the observation that I've noticed
• 31:39
  Speaker 4: most frequently is that if I can, when I'm younger,
• 31:42
  Speaker 4: focus on human capital and then realize that the money
• 31:46
  Speaker 4: over here does the job of compounding. Right, my main
• 31:51
  Speaker 4: job should be to earn a bit more raise my
• 31:55
  Speaker 4: human capital. My ability to earn and save when I'm
• 31:58
  Speaker 4: young will far out strip get it extra twenty five
• 32:00
  Speaker 4: basis points by paying attention to someone who's letter on
• 32:03
  Speaker 4: the internet.
• 32:04
  Speaker 2: You know, it's funny you mentioned gambling being everywhere. We
• 32:09
  Speaker 2: were talking before the podcast about nine finger Howie, and
• 32:14
  Speaker 2: he wrote a post and created an index called the
• 32:19
  Speaker 2: Degeneracy Index where he puts in all of the various
• 32:24
  Speaker 2: prediction markets and gambling apps, and and it's been outperforming
• 32:29
  Speaker 2: the Nasdaq, which has been on fire like two to one.
• 32:33
  Speaker 2: And it just is a warning that it's a warning that.
• 32:37
  Speaker 2: All right, I understand the Supreme Court decision that said
• 32:41
  Speaker 2: gambling can't just be legal in one state, but maybe
• 32:45
  Speaker 2: the decision isn't to make it legal everywhere. Maybe the
• 32:48
  Speaker 2: decision is to say, an entire industry based on human foibles,
• 32:53
  Speaker 2: cognitive errors and enumeracy is kind of an evil industry.
• 32:58
  Speaker 1: It's just we're the probably need to realize that we're
• 33:00
  Speaker 1: just not wired for it. It's not that we're dumb.
• 33:03
  Speaker 4: It's not that we're this bad, Like we can have
• 33:05
  Speaker 4: any discussion we want about the morality the whole thing,
• 33:07
  Speaker 4: But the underneath it all sits this idea that we're
• 33:10
  Speaker 4: not wired to handle it like it we're not. And
• 33:14
  Speaker 4: I think this is another piece that's interesting right now
• 33:17
  Speaker 4: is I don't think we're really sort of wired to
• 33:20
  Speaker 4: handle the level of uncertainty that we're dealing with right now,
• 33:23
  Speaker 4: Like the certain fatigue.
• 33:25
  Speaker 2: And it seems like a lot of what Wall Street
• 33:28
  Speaker 2: sells is this solution of certainty.
• 33:30
  Speaker 4: Yeah, this false sense of precision, Like it's certainty so
• 33:34
  Speaker 4: easy to sell. It's impossible to deliver, but it's super
• 33:37
  Speaker 4: easy to sell because everybody wants to buy it. So
• 33:40
  Speaker 4: I think those are the two, like human capital and
• 33:43
  Speaker 4: learning how to come to grips with the reality that
• 33:48
  Speaker 4: the world is uncertain.
• 33:50
  Speaker 2: So the quote of yours that always stays with me
• 33:53
  Speaker 2: is money is less about math and more about emotion.
• 33:56
  Speaker 2: That was your insight watching the Netscape ip y. Why
• 34:01
  Speaker 2: is that so challenging for this industry, for finance to accept.
• 34:10
  Speaker 4: It seems to me, and I've been in a lot
• 34:13
  Speaker 4: of the rooms where this discussion takes place that we
• 34:17
  Speaker 4: just we have a deep sense of physics envy for sure,
• 34:21
  Speaker 4: like we just want the law of gravity for money.
• 34:25
  Speaker 4: And when we understand that the systems that handle money, markets, economies, politics,
• 34:34
  Speaker 4: and then and then humans, those are a mix of
• 34:37
  Speaker 4: complex adaptive systems. They're not simple systems and they're not
• 34:40
  Speaker 4: even complicated. They're complex, adaptive, almost chaotic. And when you
• 34:45
  Speaker 4: understand a complex adaptive system, you start to understand that
• 34:48
  Speaker 4: like there is no even with the benefit of hindsight,
• 34:52
  Speaker 4: and you see this all the time, I'm sure, like,
• 34:54
  Speaker 4: even with the benefit of hinds, we look back and like,
• 34:56
  Speaker 4: here are seven steps to having it turns out that
• 35:00
  Speaker 4: that only works for that period of time. Right, you
• 35:03
  Speaker 4: replicate those seven steps, it doesn't work again.
• 35:05
  Speaker 2: All models assume the future looks like the pasture looks
• 35:09
  Speaker 2: nothing like.
• 35:09
  Speaker 1: That's exactly like all models are wrong. Let's make ours useful.
• 35:12
  Speaker 4: It's like much more helpful this idea of saying like, okay,
• 35:15
  Speaker 4: if that's the reality I live, and then how do
• 35:17
  Speaker 4: I navigate a complex adaptive system? And then that gets
• 35:20
  Speaker 4: us to this point where it's more about it like
• 35:23
  Speaker 4: the problem is you, the problem is me. The problem
• 35:25
  Speaker 4: is like it's us, and so it's I think that's
• 35:28
  Speaker 4: why it's so hard is we have to say, oh man,
• 35:31
  Speaker 4: we don't know exactly what we're dealing with here, because
• 35:33
  Speaker 4: it's so cute after a big crisis to see all
• 35:36
  Speaker 4: the people who have very specific plans about how to
• 35:39
  Speaker 4: avoid that exact same we're still taking our shoes off
• 35:41
  Speaker 4: in airports.
• 35:43
  Speaker 2: You don't have tsa pre ye.
• 35:45
  Speaker 1: Well, yeah I do. I haven't had that's true. I
• 35:47
  Speaker 1: haven't taken my shoes off.
• 35:48
  Speaker 2: I'm going to share more of my favorite random data points.
• 35:52
  Speaker 2: I don't know if it's made it into the last book,
• 35:55
  Speaker 2: but earthquake insurance. Earthquake insurance sales go up tremendously right
• 36:02
  Speaker 2: after an earthquake. And if you think about how the
• 36:04
  Speaker 2: plate technotics work, about these two pieces of keep going gliding,
• 36:12
  Speaker 2: the odds of an earthquake happening after that ten twenty
• 36:18
  Speaker 2: thirty years of pressure is released plummets immediately. The worst
• 36:24
  Speaker 2: time to buy earthquake in shows is right after the earthquake.
• 36:28
  Speaker 2: The best time is, hey, this is an earthquake zone
• 36:30
  Speaker 2: and we haven't had an earthquake in twenty twenty five years.
• 36:33
  Speaker 1: Now's the time.
• 36:35
  Speaker 2: I remember getting offered structured notes with downside protection in
• 36:40
  Speaker 2: like October two, and I'm like, why do I need this?
• 36:43
  Speaker 2: As that get down eighty three percent? Where were you
• 36:46
  Speaker 2: in late ninety nine when this might have been useful
• 36:49
  Speaker 2: down eighty three percent? I'm a buyer. I don't need
• 36:51
  Speaker 2: I want all the upside. Why don't I want to
• 36:53
  Speaker 2: give any of this?
• 36:54
  Speaker 1: Like I had that.
• 36:55
  Speaker 2: Conversation in a room for the salespeople pitching this and
• 36:59
  Speaker 2: that called into the chairman's office. What are you doing?
• 37:02
  Speaker 2: We're trying to set up a relationship with these people.
• 37:04
  Speaker 2: I'm like, this is crap. Nobody should own this product.
• 37:07
  Speaker 2: And I'm like, I know you want a relationship. Tell
• 37:09
  Speaker 2: them not to not bring us junk.
• 37:12
  Speaker 1: That we don't need. I mean, look, I like dessert
• 37:15
  Speaker 1: as much as that's what I came for right here.
• 37:17
  Speaker 2: But I just I remember there are several times when
• 37:22
  Speaker 2: I would get called as the market strategist, called into
• 37:26
  Speaker 2: the vice chair, who was general counsel or the chair
• 37:30
  Speaker 2: It's like, what do you do? By the way, the
• 37:31
  Speaker 2: firm Lehman Brothers. So not only was I right over,
• 37:36
  Speaker 2: but the counterparty risk was you would have gotten nothing anyway.
• 37:39
  Speaker 4: Yeah, and we will go to the lengths. We will
• 37:41
  Speaker 4: go to make up stories about that after the fact.
• 37:44
  Speaker 4: Do you remember, I can't look, I'm gonna deeply paraphrase.
• 37:47
  Speaker 4: I'm sure I'm ruining the story. But after long term
• 37:49
  Speaker 4: capital management when in ninety eight do you remember, and
• 37:52
  Speaker 4: I again, there was some quote where one of those
• 37:57
  Speaker 4: pieced Nobel Prize winners said our models were wrong.
• 38:02
  Speaker 1: Reality just refused to conform to it.
• 38:05
  Speaker 2: So I don't remember who was broad thing when Gingius failed.
• 38:09
  Speaker 2: That quote is somewhere in that bloof.
• 38:10
  Speaker 1: That's exactly right.
• 38:11
  Speaker 4: And I only point that out to point out that
• 38:14
  Speaker 4: I certainly will go to great lengths to make a
• 38:17
  Speaker 4: cute story that will protect me from dealing with uncertainty,
• 38:21
  Speaker 4: because our our nervous system takes uncertainty as a threat.
• 38:25
  Speaker 4: And it turns out like we're we are in a
• 38:28
  Speaker 4: period of uncertainty, and I don't think we're going back
• 38:30
  Speaker 4: to be honest.
• 38:31
  Speaker 2: Well, let let me let me I'm, I'm. This is
• 38:34
  Speaker 2: supposed to be about you, the guests, you pushed my please,
• 38:37
  Speaker 2: this is what I'll here for this. So when whenever
• 38:42
  Speaker 2: you hear people saying markets hate uncertainty, my knee jerk
• 38:46
  Speaker 2: response is always markets thrive on certainty. The only time
• 38:51
  Speaker 2: to certainty is when everybody is on the same side
• 38:54
  Speaker 2: of the boat. In late ninety nine, everybody was certain
• 38:57
  Speaker 2: trees grew to the sky, and in March nine everybody
• 39:01
  Speaker 2: with certain markets were going to zero. So for the
• 39:04
  Speaker 2: handful of people who stepped up and bought, and the
• 39:07
  Speaker 2: future is inherently unknown and unknowable. When people say things
• 39:13
  Speaker 2: are uncertain, I always feel like what they're saying is
• 39:17
  Speaker 2: Normally I could lie to myself enough that I could
• 39:21
  Speaker 2: b as you people that I have some idea what's
• 39:23
  Speaker 2: going to happen. But goddamn, whatever's going on is so crazy.
• 39:27
  Speaker 2: I can't maintain that fiction anymore. So I default to uncertainty.
• 39:32
  Speaker 2: In reality, most of the time, everything is inherently uncertain.
• 39:37
  Speaker 4: Can I let me just just real quickly. I'm super
• 39:40
  Speaker 4: interested in what you think about this. I feel like
• 39:44
  Speaker 4: you and I came up the financial planning industry, the
• 39:47
  Speaker 4: financial advice industry really grew up during a period that
• 39:50
  Speaker 4: was an aberration. There was some for a certain group
• 39:55
  Speaker 4: of people, there was a predictable path of progress. Give
• 39:59
  Speaker 4: me some years because my grandpa, I'm seeing post war
• 40:02
  Speaker 4: my grandpa, my grandpa got a got a degree, could
• 40:06
  Speaker 4: afford a first time home with that salary, stayed there
• 40:10
  Speaker 4: for thirty years, retired with a pension.
• 40:12
  Speaker 1: There was this win.
• 40:13
  Speaker 2: That was the aberration. The entire post war period.
• 40:16
  Speaker 1: It's the aberration.
• 40:17
  Speaker 2: Yes, that's the Roaring twenties. The uber rich and the
• 40:20
  Speaker 2: rest of us.
• 40:21
  Speaker 4: Please weren't like that's normal, that things weren't like that before, right,
• 40:25
  Speaker 4: And they aren't like that net right?
• 40:26
  Speaker 1: And I think the problem is.
• 40:28
  Speaker 2: Also believed that, oh, this is the new year.
• 40:30
  Speaker 4: The problem is that was when we built all of
• 40:32
  Speaker 4: our tools, our language, our planning tools, our money Carlo simulations.
• 40:37
  Speaker 1: Is during that.
• 40:39
  Speaker 4: Aberration period, I think much more more likely is like
• 40:42
  Speaker 4: if you think it's uncertain, feels like uncertain now like
• 40:44
  Speaker 4: we're not getting more like we're not going back there.
• 40:46
  Speaker 2: No, no, it'll all settle down, this will all go away.
• 40:48
  Speaker 1: Yeah exactly.
• 40:50
  Speaker 4: So I think to me that leads to this really
• 40:52
  Speaker 4: interesting discussion at least around like how do I learn
• 40:57
  Speaker 4: if it's a posture shift instead of conform like trying
• 41:00
  Speaker 4: to defend an outdated map like confirmation by don't you
• 41:03
  Speaker 4: know ten best days? Like just instead of trying to
• 41:06
  Speaker 4: defend an outdated map, explain.
• 41:07
  Speaker 2: Ten best days because it's a great and ten worst days.
• 41:10
  Speaker 4: It's a great costways, right, Like, anytime anybody's scared of
• 41:12
  Speaker 4: anything in the markets, we just paraded out. You saw
• 41:15
  Speaker 4: this on Twitter back when it was useful, Right Like,
• 41:17
  Speaker 4: if anybody said anything back like I'm scared or this
• 41:19
  Speaker 4: market scares me, a bunch of financial advisors would jump
• 41:22
  Speaker 4: in the room and say, don't you know if you
• 41:24
  Speaker 4: sell and miss the ten best days.
• 41:26
  Speaker 1: You may as well be.
• 41:27
  Speaker 4: In CDs over the twenty year period or whatever, or
• 41:29
  Speaker 4: you missed the ten ten worst days.
• 41:31
  Speaker 2: And I think they all are clumped close together.
• 41:34
  Speaker 1: That's exactly right.
• 41:35
  Speaker 4: And I also think that that was an effort to say,
• 41:39
  Speaker 4: don't worry right.
• 41:41
  Speaker 1: When when I think, and to.
• 41:43
  Speaker 4: Spray people with facts and figures when they're feeling irrational.
• 41:47
  Speaker 4: I like the gun you are spray peal with facts
• 41:49
  Speaker 4: some figures, because when you're feeling hoes, when you're feeling irrational,
• 41:53
  Speaker 4: the last thing you want is somebody to try and
• 41:55
  Speaker 4: reason with you.
• 41:56
  Speaker 2: Wait, you're telling me that pure logic doesn't satisfy you.
• 41:59
  Speaker 4: Try teenage, right, Like, Like the last thing you want
• 42:04
  Speaker 4: is what you want is metaphorically a hug first, right, Like,
• 42:07
  Speaker 4: we'll get to the facts later, and let's never get
• 42:09
  Speaker 4: to the lecture. And so I think if we shift
• 42:12
  Speaker 4: that posture a bit where we're like, turns out uncertainty
• 42:16
  Speaker 4: is reality. I don't know what the I mean. Add
• 42:18
  Speaker 4: in sequencing risk, right like, are we gonna have a
• 42:21
  Speaker 4: great market for the first five years of your life
• 42:23
  Speaker 4: or the last five years of your life?
• 42:25
  Speaker 2: Like?
• 42:25
  Speaker 1: Who knows?
• 42:26
  Speaker 2: You? Add all this in that useful in the last
• 42:28
  Speaker 2: five years.
• 42:28
  Speaker 1: That's exactly right, Like.
• 42:29
  Speaker 4: We're it turns out that we're we're dealing with a
• 42:32
  Speaker 4: very complex adaptive system, and the ability to navigate make
• 42:37
  Speaker 4: really important decisions in the face of irreducible uncertainty is
• 42:41
  Speaker 4: the primary skill. Like, if I was younger, what I
• 42:44
  Speaker 4: would be studying complexity theory, I'd be studying being resilient.
• 42:48
  Speaker 4: I'd be studying understanding how to make really important decisions
• 42:51
  Speaker 4: Mountain guide, you know, how do I make really important
• 42:53
  Speaker 4: decisions when I don't know?
• 42:56
  Speaker 1: How do I get comfortable not know with decisions? And
• 42:59
  Speaker 1: how do Yeah?
• 43:00
  Speaker 4: Like some of my favorite people are like really thoughtful,
• 43:06
  Speaker 4: really thoughtful, like people who worked in distressed because if
• 43:10
  Speaker 4: they're on the ground with the company, they're having to
• 43:13
  Speaker 4: make mission critical decisions and they do not know, they
• 43:17
  Speaker 4: don't know how they're going to work out. I've got
• 43:19
  Speaker 4: a really good friend that way, and he's just like, yeah,
• 43:20
  Speaker 4: I have every day. Some of these decisions are thousands
• 43:23
  Speaker 4: of jobs, right, and I don't know how.
• 43:25
  Speaker 2: You're making these decisions. Zones or intense uncertainty.
• 43:28
  Speaker 4: With incomplete information and no amount of spreadsheeting will get
• 43:31
  Speaker 4: you more information the only way they get the more
• 43:33
  Speaker 4: information is taken action. Fascinating right, Like to me, that's
• 43:37
  Speaker 4: the skill. That's what this market is calling for in
• 43:41
  Speaker 4: terms of leadership, is the ability to create containers for
• 43:45
  Speaker 4: collective interpretation rather than scream at people.
• 43:48
  Speaker 1: Huh.
• 43:49
  Speaker 2: So let's talk about this book. Sure you describe it
• 43:52
  Speaker 2: as a conversation grenade. Explain.
• 43:56
  Speaker 4: Yeah, I, first of all, I think I first heard
• 43:58
  Speaker 4: that term from human cloud that gave.
• 44:01
  Speaker 2: Yeah, I have his some of his stuff on my wall. Yeah,
• 44:06
  Speaker 2: and on the opposite wall some of your stuff.
• 44:09
  Speaker 1: Well, that's cool, thank you.
• 44:10
  Speaker 2: In fact, by high sell low repeat until broke number one,
• 44:14
  Speaker 2: number one on my wall. That's right, it's my disclosure.
• 44:19
  Speaker 1: Well, thank you.
• 44:19
  Speaker 4: Yeah, I have some a few stuff in my office too.
• 44:21
  Speaker 4: So conversation grenade is this idea that likes The only reason.
• 44:24
  Speaker 1: I wrote the book. I swore off writing what Well
• 44:27
  Speaker 1: because I love audios so much. I actually had again
• 44:31
  Speaker 1: not mutually exclusive.
• 44:33
  Speaker 4: This is exactly right, but I I you know, after
• 44:35
  Speaker 4: I wrote the second book, I thought I'm just going
• 44:38
  Speaker 4: to speak, and then podcasting came around.
• 44:40
  Speaker 1: I was like, this is amazing.
• 44:41
  Speaker 2: I had between bailout Nation and how not to invest
• 44:45
  Speaker 2: solid fifteen years. Like there's like I needed to recovery.
• 44:49
  Speaker 2: That was my refractory period. That's right, right, Like I
• 44:52
  Speaker 2: need I need a decade and a half, that's right.
• 44:55
  Speaker 1: And I really.
• 44:56
  Speaker 2: Needed a decade, and it just took me the pandemic
• 45:00
  Speaker 2: to make.
• 45:00
  Speaker 1: It stuff back out.
• 45:02
  Speaker 4: I kept noticing that people like physical artifacts.
• 45:07
  Speaker 2: I agree, And I don't love a candle.
• 45:09
  Speaker 1: I like it and especially that.
• 45:12
  Speaker 4: So the working with with Harriman really allowed me to
• 45:16
  Speaker 4: Everything about the book is designed have.
• 45:20
  Speaker 2: The same publisher. I didn't even notice.
• 45:22
  Speaker 1: Yeah, yeah, I'm sure Craig helped you, for sure.
• 45:25
  Speaker 4: So everything about that book is designed to feel like
• 45:29
  Speaker 4: you toss it in a room and conversations breakout.
• 45:31
  Speaker 1: That's the conversation grenade, analogy right.
• 45:34
  Speaker 4: Set it onto the coffee table, unpretentious coffee table book,
• 45:37
  Speaker 4: like I'm gonna pick it up. I'm gonna mess with
• 45:39
  Speaker 4: I want to. We talked about hardback. I wanted to
• 45:41
  Speaker 4: be that soft cover. We moved the you know, the
• 45:44
  Speaker 4: the front matter, the legal stuff, go to page one.
• 45:47
  Speaker 4: There's none of it in there.
• 45:48
  Speaker 2: You moved it to the back.
• 45:49
  Speaker 4: They let me move it to the back, and they said,
• 45:51
  Speaker 4: nobody's ever asked. Nobody's ever asked, But yes, I was
• 45:55
  Speaker 4: amazed they let me to do it. But there's this
• 45:56
  Speaker 4: stuff's in the back, because what reader has ever said?
• 45:59
  Speaker 2: Nobody's given me that.
• 46:00
  Speaker 1: There it is in the back, right there.
• 46:03
  Speaker 2: I always assumed it was a legal requirement.
• 46:05
  Speaker 1: It had to be up there, they said, nobody's asked.
• 46:07
  Speaker 4: So they let me do all sorts of things that
• 46:09
  Speaker 4: allowed us to be like, no, this is in service
• 46:11
  Speaker 4: of the reader. We want you just to have this
• 46:13
  Speaker 4: citer and the number of stories I've heard, like I
• 46:15
  Speaker 4: had it on my table, my son asked me a question,
• 46:17
  Speaker 4: or I sent it out to clients, and this that's
• 46:20
  Speaker 4: it's really meant to be a conversation grenade.
• 46:23
  Speaker 2: So we started out talking about your deceptively simple sketches.
• 46:28
  Speaker 2: Is this simplicity a conscious act of rebellion? There's so
• 46:33
  Speaker 2: much complexity and arcane language. We know every profession uses
• 46:38
  Speaker 2: arcane language to hold lay people at arms distance, But
• 46:41
  Speaker 2: was this simplicity in your sketches. Is that purposeful or
• 46:45
  Speaker 2: am I deeply deeply.
• 46:48
  Speaker 4: Yeah, yeah, yeah, I think it's maybe just the way
• 46:52
  Speaker 4: my brain works.
• 46:53
  Speaker 1: I only have enough ram for like one problem at
• 46:55
  Speaker 1: a time.
• 46:56
  Speaker 4: Okay, and so I like to get into it understand
• 46:59
  Speaker 4: new on edge cases. You know, it gets like a
• 47:03
  Speaker 4: giant ball. There's actually a sketch in there about this,
• 47:05
  Speaker 4: Like it gets like a big giant like.
• 47:07
  Speaker 1: It's a simple question, you know, simple simple simple boom,
• 47:11
  Speaker 1: what about this? What about that? What about that? What
• 47:12
  Speaker 1: about that?
• 47:13
  Speaker 2: One?
• 47:13
  Speaker 1: About that? Edge cases? Reading it all and then there
• 47:16
  Speaker 1: was and then.
• 47:19
  Speaker 4: Yeah, and then once I get in there, I'm like, okay, now,
• 47:22
  Speaker 4: And you actually shared a quote one time about there
• 47:25
  Speaker 4: are a lot.
• 47:25
  Speaker 2: Of simple investing is simple but hard.
• 47:30
  Speaker 4: No, there's a lot of simple. There are a lot
• 47:31
  Speaker 4: of answers that are simple, elegant and wrong.
• 47:34
  Speaker 1: Oh remember this.
• 47:35
  Speaker 2: I don't know where I stole that. It actually be me.
• 47:37
  Speaker 1: Yeah, no, I remember you shared somebody else's quote.
• 47:39
  Speaker 2: Yeah. I was like, ah, because simple elegance and wrong.
• 47:43
  Speaker 1: Yeah, And I.
• 47:43
  Speaker 4: Really worry about that, because when you're in that ball
• 47:46
  Speaker 4: of yarn complex and you decide to distill or edit,
• 47:51
  Speaker 4: you have to make some conscious decisions about what to
• 47:53
  Speaker 4: leave out. And I often get that wrong. And when
• 47:56
  Speaker 4: I do, I hear about it and and and it
• 47:58
  Speaker 4: it makes.
• 47:59
  Speaker 1: The work a little bit better.
• 48:00
  Speaker 4: There are words and lines in those some of those sketches.
• 48:04
  Speaker 4: I've been thinking about for over a decade. I remember
• 48:07
  Speaker 4: I removed a word that had been in their fifteen years,
• 48:09
  Speaker 4: which sketch.
• 48:11
  Speaker 1: It's it's uh. The word was.
• 48:16
  Speaker 2: People you love experiences, spend the money.
• 48:19
  Speaker 1: Yeah, that one's one of my favorite one.
• 48:20
  Speaker 2: That is one of my I do like a good
• 48:22
  Speaker 2: ven diagram.
• 48:23
  Speaker 4: Well, by the way, the ven diagram police have come
• 48:25
  Speaker 4: after me, so I'm always I just call them circle sketches.
• 48:28
  Speaker 1: Oh dude.
• 48:28
  Speaker 4: I used to get two page emails from the Times readers.
• 48:32
  Speaker 1: I call these people.
• 48:35
  Speaker 4: Straight and but I used to I used to send
• 48:37
  Speaker 4: equal rebuttals. And then finally I just developed a template
• 48:40
  Speaker 4: email said you're right, it's I call them circle sketches.
• 48:43
  Speaker 1: So yeah, the ven diagram.
• 48:45
  Speaker 2: Piece, these these are legitimate.
• 48:48
  Speaker 1: You can make they can make an argument, of course.
• 48:50
  Speaker 2: No, if it's this over here, this over here, and
• 48:53
  Speaker 2: the overlap that you want to focus on things that matter,
• 48:57
  Speaker 2: things that you can control, is another one of yours
• 49:00
  Speaker 2: that we should focus on. And then and then the overlap, how.
• 49:03
  Speaker 1: Is that not a Vand I don't know, I don't know,
• 49:06
  Speaker 1: but some pe will find.
• 49:07
  Speaker 4: But my point really is that that when you distill
• 49:12
  Speaker 4: and leave things out. You get things wrong sometimes and
• 49:16
  Speaker 4: you ask which one, like I for a.
• 49:18
  Speaker 2: Point though you're trying to communicate cleanly, and.
• 49:21
  Speaker 4: It's true, but I'm saying some of that feedback is amazing,
• 49:25
  Speaker 4: Like the Van Diagram police weren't particularly helpful, but some
• 49:27
  Speaker 4: of the feedback is amazing, Like, hey, have you ever
• 49:29
  Speaker 4: thought of this? And it makes me reconsider an adjust
• 49:32
  Speaker 4: And there have been changes that I've made, Like there's
• 49:34
  Speaker 4: one sketch that says what's important what you I used
• 49:38
  Speaker 4: to say, what's important to you?
• 49:40
  Speaker 1: It was an alignment sketch.
• 49:41
  Speaker 4: It was like your use of capital aligned with what
• 49:44
  Speaker 4: you say is important to you, and.
• 49:46
  Speaker 2: That word say, well, it's implying that it's not important,
• 49:50
  Speaker 2: but you're claiming it something.
• 49:51
  Speaker 1: It bothered.
• 49:52
  Speaker 4: That word say bothered me for a decade before I
• 49:54
  Speaker 4: was like, no, no, no, it's we want to get
• 49:56
  Speaker 4: to what's important to you, not what you say.
• 49:59
  Speaker 2: You were in another problem with people not speaking it's.
• 50:03
  Speaker 4: Right revealed stated versus revealed preferences. I'm more interested in
• 50:06
  Speaker 4: the revealed preferences. What's actually important.
• 50:09
  Speaker 2: That's really that's really interesting. So let's let's stay with
• 50:13
  Speaker 2: the concept of spending money, right, since I just flipped
• 50:18
  Speaker 2: to whatever that was. Every advisor that manages money for
• 50:24
  Speaker 2: people can tell you story after story after story. My
• 50:29
  Speaker 2: favorite one I'll share here. Hey, Barry's a car guy.
• 50:33
  Speaker 2: He has a boat. You want to buy a boat
• 50:35
  Speaker 2: and a car. Why don't you talk to Barry? So
• 50:38
  Speaker 2: I speak to the client. So I'm thinking about buying
• 50:41
  Speaker 2: a sixty foot fifty foot whatever sail boat, and I'm
• 50:45
  Speaker 2: thinking about buying a Ferrari. I go, that's really easy.
• 50:49
  Speaker 2: What's your boating experience zero? You don't start with a
• 50:52
  Speaker 2: fifty sixty foot sail boat that requires a crew. It's
• 50:56
  Speaker 2: two and a half million dollars. You'll take it out twice.
• 50:58
  Speaker 2: You'll sell it for a thirty percent loss. On the
• 51:00
  Speaker 2: other hand, go by the way, this guy could buy
• 51:03
  Speaker 2: a Ferrari a month for the rest of you tarany
• 51:04
  Speaker 2: and he's fine. Go buy the Ferrari. Take the whole
• 51:07
  Speaker 2: family down to the Ferrari High Performance Driving School, which
• 51:11
  Speaker 2: I'll let you in a little secret. All of these
• 51:13
  Speaker 2: advanced driving schools, they're really defensive driving classes in disguise,
• 51:19
  Speaker 2: and you will learn not only the limits of the
• 51:21
  Speaker 2: car that you'll get knowing near, but you'll learn the
• 51:24
  Speaker 2: limits of your own driving ability and more importantly, learn
• 51:28
  Speaker 2: how to operate within your own skill set.
• 51:31
  Speaker 1: Are your kids if you bring that that's right, So.
• 51:33
  Speaker 2: Everybody becomes a better safer driver. So he goes out
• 51:38
  Speaker 2: and buys the Ferrari. They do the class, they love it.
• 51:41
  Speaker 2: He also buys the boat. A year later, he sells
• 51:44
  Speaker 2: it for a thirty percent loss. Anytime Barry gets on
• 51:47
  Speaker 2: the phone with the client, the advisor always says, do
• 51:50
  Speaker 2: not mention the boat. So the only thing worse than
• 51:53
  Speaker 2: being right is being wrong. And I could say this
• 51:56
  Speaker 2: at the back of a podcast, because you can confess
• 51:59
  Speaker 2: to murder at the end of a podcast, and so
• 52:03
  Speaker 2: I'm very comfortable saying this here. But so with that
• 52:07
  Speaker 2: ary digression, here, let's talk about how do you help
• 52:12
  Speaker 2: people focus on what's important, what matters, and what the
• 52:18
  Speaker 2: purpose of money really is. What should they be doing
• 52:22
  Speaker 2: with their money, especially later in life they've accumulated a
• 52:28
  Speaker 2: nice pile. Can't tell you with you.
• 52:31
  Speaker 4: Yeah, running experience like practice like often one of the
• 52:35
  Speaker 4: things we see is the very things that got you
• 52:39
  Speaker 4: to that spot are working against you going forward, right,
• 52:41
  Speaker 4: Like you're being frugal, saving aggressively, being very disciplined, and
• 52:45
  Speaker 4: now you're saying, hey, I've been putting off this delayed
• 52:48
  Speaker 4: gratification thing was really important maybe like but it definitely
• 52:51
  Speaker 4: got you to the spot. It's you get to.
• 52:54
  Speaker 1: A point which you should no longer delay. There's not
• 52:57
  Speaker 1: gonna be time to go.
• 52:58
  Speaker 2: So tough for some people to make.
• 53:00
  Speaker 1: So you practice you just like like your boat examples great.
• 53:03
  Speaker 4: Yeah, Like I mean I'd literally have had people who
• 53:06
  Speaker 4: can't spend any money and like you're saying, have enough
• 53:09
  Speaker 4: money that they could spend it for the rest of
• 53:10
  Speaker 4: their lives. Right, go, like, go get a coffee with
• 53:13
  Speaker 4: a friend, pay for theirs and just understand, go on
• 53:19
  Speaker 4: the trip and enjoy the trip, right. Just One of
• 53:23
  Speaker 4: my favorite stories is from Alan Smith in the UK.
• 53:27
  Speaker 4: Had a client, he's a great financial planner, had a
• 53:29
  Speaker 4: client that had rel and he's told the story publicly.
• 53:33
  Speaker 4: Had a client that had relatives that had moved. There
• 53:35
  Speaker 4: was a bunch of people from Wales that moved to
• 53:37
  Speaker 4: Argentina from mining way back.
• 53:40
  Speaker 1: In the day.
• 53:42
  Speaker 4: A bunch of his relatives moved, A bunch of her
• 53:44
  Speaker 4: relatives moved. She'd always wanted to go see the Welsh
• 53:48
  Speaker 4: national rugby team play the Argentinian the Pumas in Argentina.
• 53:53
  Speaker 2: How hard is that?
• 53:54
  Speaker 1: And she was like I just can't. I can't. And
• 53:56
  Speaker 1: she's like, you could do this every year for you
• 53:58
  Speaker 1: could do this every month for the rest of life,
• 54:00
  Speaker 1: and people it's like, well, I can't sit that long.
• 54:02
  Speaker 1: You could have a lay flat bed, right, and so
• 54:05
  Speaker 1: he finally.
• 54:06
  Speaker 2: You could go from Wales to New York, go from
• 54:09
  Speaker 2: New York to Brazil, go from Brazil to Argentina.
• 54:11
  Speaker 1: Could you don't have to do it with.
• 54:12
  Speaker 4: So he finally just over time like got her used
• 54:16
  Speaker 4: to the idea. She went and she says it was
• 54:17
  Speaker 4: the best. Like we're never gonna rep go of those things.
• 54:20
  Speaker 4: We're never gonna We're never gonna.
• 54:22
  Speaker 2: AI is not going to replace that.
• 54:23
  Speaker 1: No, And so to me, it's like, dude, I think
• 54:26
  Speaker 1: I would.
• 54:27
  Speaker 4: I don't know if I'd rather eron being irresponsible, but
• 54:29
  Speaker 4: I know I should.
• 54:30
  Speaker 1: We should spend the money. Spend the money.
• 54:32
  Speaker 2: You know, when you irresponsibility never comes into it. You're
• 54:36
  Speaker 2: looking at the Onuech portfolio. Yeah, hey, true, you have
• 54:38
  Speaker 2: ten million dollars, you live on three fifty a year.
• 54:42
  Speaker 2: You want to bust out another fifty, so you could
• 54:45
  Speaker 2: take the whole family to the old Country and show
• 54:49
  Speaker 2: them where your grandparents came from. Why not? Yeah, I
• 54:52
  Speaker 2: mean it's not even one hundred thousand.
• 54:54
  Speaker 1: Yeah, And so I think to me, he is, by.
• 54:56
  Speaker 5: The way, your very first world problem, of course, But
• 54:58
  Speaker 5: but they're problems like I've decide Brene Brown got really
• 55:01
  Speaker 5: clear about, like comparative suffering.
• 55:03
  Speaker 1: Does this no good?
• 55:04
  Speaker 2: Right?
• 55:04
  Speaker 4: So I always like, like, whenever I hear first world problems,
• 55:07
  Speaker 4: I'm always like, well, yeah, but this is a challenge,
• 55:09
  Speaker 4: and it happens to be the challenge that many of
• 55:12
  Speaker 4: your clients and the people I'm talking to are facing.
• 55:14
  Speaker 4: So why not just practice? Like can we pick something small?
• 55:18
  Speaker 4: R It's something you've always wanted to do, right, and
• 55:20
  Speaker 4: it might be simple like take the grandkids to the
• 55:23
  Speaker 4: art museum this weekend.
• 55:24
  Speaker 2: I'm going to share another line with you. Yeah, not
• 55:27
  Speaker 2: comparative suffering, often falsely attributed to Teddy Roosevelt if it
• 55:33
  Speaker 2: hadn't been around to like the late nineteen eighties, comparison
• 55:38
  Speaker 2: is the thief of joy. Yeah, what a great phrase
• 55:40
  Speaker 2: that is. And it's really there's always someone with a
• 55:43
  Speaker 2: bigger boat or a larger house or whatever whatever you're
• 55:49
  Speaker 2: envious of. You have this car, are you really happy
• 55:53
  Speaker 2: with it? Then? Who cares what the guy on the
• 55:55
  Speaker 2: block has.
• 55:56
  Speaker 1: That's pointless, just real quickly.
• 55:58
  Speaker 4: That's one thing that I think makes this even harder
• 56:01
  Speaker 4: is we're never exactly sure do we really want the boat?
• 56:05
  Speaker 1: Do you know what I mean?
• 56:05
  Speaker 2: Well, if you're not sure, then that's easy. Don't get
• 56:08
  Speaker 2: the boat.
• 56:08
  Speaker 1: Yeah, but but you could go out for a day.
• 56:11
  Speaker 2: You could rent a boats.
• 56:13
  Speaker 1: Try little experiments, try little experiments.
• 56:14
  Speaker 4: Because I just remember growing up I always wanted I
• 56:17
  Speaker 4: grew up in the hills in Utah, right, we all
• 56:19
  Speaker 4: had BMX bikes.
• 56:20
  Speaker 2: I love this BMX story of you.
• 56:22
  Speaker 1: I always always want a slightly better BMX bikes.
• 56:24
  Speaker 2: Oh no, you wanted a really nice bike. And what
• 56:27
  Speaker 2: did you end up doing?
• 56:30
  Speaker 1: Which what are you talking about? Are you talking about
• 56:31
  Speaker 1: the road bike? The moots that I.
• 56:32
  Speaker 4: End up spending moots, titanium bike, kind of steamboats? Different
• 56:36
  Speaker 4: different story. But yeah, that's one of those moments where
• 56:38
  Speaker 4: I are you kidding? Those things where I could not like,
• 56:41
  Speaker 4: I think those are six or seven thousand that's nothing.
• 56:44
  Speaker 1: Today, and people you could bike. But still it was.
• 56:48
  Speaker 4: Like and that bike like per unit of dollar, per
• 56:51
  Speaker 4: unit of fun. I never made a better investment, right,
• 56:55
  Speaker 4: But when I was little one, I was like eight,
• 56:58
  Speaker 4: we all had like I had slightly better bem expecting
• 57:00
  Speaker 4: some of my buddies and my buddies some of my
• 57:01
  Speaker 4: buddies had slught you better.
• 57:02
  Speaker 1: That's all I knew, right.
• 57:04
  Speaker 4: I didn't know at the time that I was supposed
• 57:06
  Speaker 4: to want a private jet. Uh huh, And now I do,
• 57:09
  Speaker 4: like now Instagram has taught me. So I think we
• 57:11
  Speaker 4: have this problem of like cultivating our comparison set. So
• 57:15
  Speaker 4: now we're talking even getting clear about your the word
• 57:18
  Speaker 4: goal is hard because you don't know if it's your
• 57:21
  Speaker 4: mom's goal, if it's society's goal, if it's Instagram's goal.
• 57:25
  Speaker 1: Five million dollars in a sale boat, like where did
• 57:26
  Speaker 1: you go? And say, where did that come from?
• 57:29
  Speaker 2: Let me share a fun private jet.
• 57:31
  Speaker 1: Story with you. I love private jet stories.
• 57:33
  Speaker 2: So whenever anybody used to ask me, hey, you're going
• 57:36
  Speaker 2: to sell the firm, what's your fu money? Questions like that,
• 57:41
  Speaker 2: my answer has always been the same, whatever it takes
• 57:44
  Speaker 2: to never step foot into a commercial airport ever again.
• 57:48
  Speaker 2: And then I made the mistake of saying this in
• 57:52
  Speaker 2: public somewhere, and I started getting Marquis jet Netscha. All
• 57:55
  Speaker 2: these guys start sending me pictures. So out of curiosity,
• 57:59
  Speaker 2: one day I said, run the numbers for me, what
• 58:02
  Speaker 2: does this really look like? So it turns out East
• 58:05
  Speaker 2: Coast six thousand and sixty five hundred hour cross contrary
• 58:09
  Speaker 2: to California eight thousand. You want to go to Europe,
• 58:12
  Speaker 2: it's twelve thousand per hour of travel, So do the math.
• 58:17
  Speaker 2: So I start. I'm deep down inside, I'm a numbers guy.
• 58:20
  Speaker 2: I'm like, oh, this is quarter million, half million a year.
• 58:23
  Speaker 2: For that to be rational, you have to be not
• 58:26
  Speaker 2: half ten million dollars. You have to be earning ten
• 58:29
  Speaker 2: million dollars gross to spend a mere five percent of
• 58:34
  Speaker 2: your annual income and cap gains on a PJA at
• 58:40
  Speaker 2: half a million part pg right from succession. I never
• 58:44
  Speaker 2: heard that phrase before that show, and so all of
• 58:47
  Speaker 2: a sudden, I'm like, oh, I have no interest in that.
• 58:49
  Speaker 2: I don't ever expect to be making pulling down ten
• 58:51
  Speaker 2: million a year. And while it's attractive, bypassing all of
• 58:56
  Speaker 2: sure airports, I kind of learn all right, So I'm
• 58:59
  Speaker 2: not going to go on high traffic days we travel
• 59:02
  Speaker 2: for Thanksgiving weekend. I'm the first flight out Thursday morning,
• 59:06
  Speaker 2: blow through security in five minutes. Two hours later, it's
• 59:09
  Speaker 2: a zoo. So all right, I'm not gonna spend a
• 59:12
  Speaker 2: half a million dollars a year. I could spend a
• 59:13
  Speaker 2: little bit of brain power trying to navigate around the
• 59:17
  Speaker 2: worst worst. I won't arrive at the airport at five
• 59:21
  Speaker 2: o'clock because I don't want to get get stuck in traffic,
• 59:24
  Speaker 2: and I won't take a nine o'clock flight in the
• 59:27
  Speaker 2: morning that requires so like, all right, I'm not flying private.
• 59:31
  Speaker 2: I'm trying to fly a little smarter commercial. But even
• 59:34
  Speaker 2: if you're in the front of the plane.
• 59:36
  Speaker 4: Yeah, But that to me is a really good example
• 59:38
  Speaker 4: of like thinking that something might be important, running a
• 59:41
  Speaker 4: little bit of an experiment, just actually running the numbers, deciding,
• 59:44
  Speaker 4: so we're just constantly.
• 59:45
  Speaker 1: Narrowing in for our whole lives on and those things.
• 59:48
  Speaker 2: It would still it would still be delightful to be
• 59:51
  Speaker 2: able to just show up at the airport and when
• 59:54
  Speaker 2: you want to leave, and you know, save a day
• 59:57
  Speaker 2: of travel on each.
• 59:57
  Speaker 1: Side, for sure.
• 59:59
  Speaker 2: But is that where the twe half a million dollars
• 1:00:01
  Speaker 2: a year to you, it's not. In order to make it,
• 1:00:05
  Speaker 2: I had I'm over sharing, but I'm gonna overshare one
• 1:00:10
  Speaker 2: more thing. So I'm friends of my wife get a
• 1:00:15
  Speaker 2: Piata tear in the city. They're empty nesters, they downsize,
• 1:00:19
  Speaker 2: they have a house, and then they have the city apartment.
• 1:00:22
  Speaker 2: And I started thinking about a Pieta tear we left
• 1:00:25
  Speaker 2: when we lived down at Gramercy Park. And I start
• 1:00:27
  Speaker 2: looking at this and again I start running the numbers,
• 1:00:32
  Speaker 2: and I'm like, wait a second. Just the monthly co
• 1:00:35
  Speaker 2: op fees are like three or four grand a month,
• 1:00:38
  Speaker 2: to say nothing of the insurance, the taxes, and the
• 1:00:42
  Speaker 2: one two, three four five million dollar purchase price, whatever
• 1:00:45
  Speaker 2: the hell it is. And I'm doing the math and
• 1:00:47
  Speaker 2: I'm like, gee, this is really like five grand a month.
• 1:00:49
  Speaker 2: It's sixty thousand a year. I can't spend. And we
• 1:00:53
  Speaker 2: take weekends in the city. I can't spend sixty thousand
• 1:00:56
  Speaker 2: dollars a year on hotels restaurants, Like, I can't get it.
• 1:01:01
  Speaker 2: I can't spend that much if I tried, Like we
• 1:01:04
  Speaker 2: do a few weekends in the city, it's a couple
• 1:01:06
  Speaker 2: hundred buck a couple thousand bucks. But it's certainly not
• 1:01:09
  Speaker 2: sixty grand. The pieta tear makes no sense to me.
• 1:01:11
  Speaker 2: And I'm explaining that I'm having this conversation with a
• 1:01:14
  Speaker 2: very wealthy client, and I see this look on her face,
• 1:01:18
  Speaker 2: and I go, oh, you're saying, if sixty thousand dollars
• 1:01:22
  Speaker 2: is too much in cop fees, you really can't afford
• 1:01:26
  Speaker 2: this pieta tear. And she says, well, I wasn't exactly
• 1:01:31
  Speaker 2: thinking it, but you're not wrong. And what I was
• 1:01:35
  Speaker 2: about to defend myself with was, well, the sixty thousand
• 1:01:39
  Speaker 2: dollars just isn't worth it to me. But before I
• 1:01:42
  Speaker 2: said that, it was like, yeah, but if you had
• 1:01:45
  Speaker 2: fifty or one hundred million dollars, who cares. I just
• 1:01:47
  Speaker 2: want a place that I'm comfortable in the bed, my
• 1:01:50
  Speaker 2: clothes are in the closet, and I'm not dealing with
• 1:01:53
  Speaker 2: checking into a hotel that's worth sixty grand to me
• 1:01:56
  Speaker 2: if you have X dollars. And she never said that,
• 1:01:59
  Speaker 2: but I immediately.
• 1:02:01
  Speaker 1: The whole I immediately like, I have a question for you.
• 1:02:04
  Speaker 2: I can't afford this.
• 1:02:05
  Speaker 1: On the heels of that, I have a question for you.
• 1:02:06
  Speaker 1: What's the last thing you decide? You decided I'm gonna
• 1:02:09
  Speaker 1: buy that, and you didn't. You were just saying, I
• 1:02:11
  Speaker 1: don't care. I'm just buying.
• 1:02:12
  Speaker 4: It doesn't matter how much it costs that you didn't Actually,
• 1:02:16
  Speaker 4: because both those examples, you're like, I wanted a thing,
• 1:02:18
  Speaker 4: I went around the numbers, decided not to do a thing.
• 1:02:20
  Speaker 4: Is there a time when you was not to do no,
• 1:02:23
  Speaker 4: you decided to do it? You're like I, and I
• 1:02:25
  Speaker 4: just threw I didn't even care what the number said.
• 1:02:27
  Speaker 4: I didn't even look. I just wanted to do that
• 1:02:29
  Speaker 4: thing so bad it was just like, I'm doing it.
• 1:02:30
  Speaker 2: There's two answers. There's the barrier before he turned sixty
• 1:02:34
  Speaker 2: and the barrier after return sixty. Really when Barry turned sixty.
• 1:02:39
  Speaker 2: So I think this is a function of immaturity. I
• 1:02:42
  Speaker 2: never had a midlife crisis, probably because when I should have,
• 1:02:46
  Speaker 2: I was still an idiot child. I still was ten
• 1:02:49
  Speaker 2: twenty years maturity level below where I should have been.
• 1:02:52
  Speaker 2: And I turned sixty, and I very much woke up
• 1:02:55
  Speaker 2: with the sensation, all right, fourth quarter down by seven,
• 1:02:59
  Speaker 2: I want to win this game. You gotta get busy,
• 1:03:01
  Speaker 2: like literally, that was what I thought, and I've told
• 1:03:06
  Speaker 2: I don't know if I ever told this story on
• 1:03:09
  Speaker 2: the podcast, and I the spouse still survives, so I
• 1:03:13
  Speaker 2: can't really go into details. But person about to sell
• 1:03:16
  Speaker 2: a business for a ton of money, hundreds of millions
• 1:03:20
  Speaker 2: of dollars gets a diagnosis six months to live and
• 1:03:25
  Speaker 2: when you know, you know this. If you're managing money
• 1:03:29
  Speaker 2: for enough families, the actuarial tables are such that people
• 1:03:34
  Speaker 2: will begin to die. I mean, that's just the normal
• 1:03:38
  Speaker 2: human finite lifespan. And so it's easy to start to
• 1:03:43
  Speaker 2: pick up that pattern of life is short. What are
• 1:03:46
  Speaker 2: you waiting for? So the combination of turning sixty soon
• 1:03:52
  Speaker 2: after the pandemic and did and a lot of people,
• 1:03:56
  Speaker 2: a lot of people lost a lot of people during
• 1:03:59
  Speaker 2: that I kind of said money should never prevent anyone
• 1:04:04
  Speaker 2: from experiencing joy. And so what I started doing is
• 1:04:10
  Speaker 2: not saying no and gifting a lot of stuff. Like
• 1:04:15
  Speaker 2: my favorite thing in the world around Christmas is to
• 1:04:18
  Speaker 2: pick a book and send it to ten twenty thirty
• 1:04:21
  Speaker 2: friends the same book, and I'm like, twenty bucks is
• 1:04:25
  Speaker 2: twenty thirty bucks. This year it was The Uncool by
• 1:04:29
  Speaker 2: Cameron Crow. And I was just talking about this with
• 1:04:33
  Speaker 2: somebody and I said, oh, I gave that book to
• 1:04:36
  Speaker 2: a few people for Christmas, and I went through Amazon. Oh,
• 1:04:39
  Speaker 2: I gave twenty six of these people. It's three hundred dollars.
• 1:04:46
  Speaker 2: Anybody who's making love reasonable income. By the way, you
• 1:04:52
  Speaker 2: don't have to wait until Christmas.
• 1:04:55
  Speaker 1: No, I know.
• 1:04:56
  Speaker 4: I was just thinking about that Carl's book, Carl's Secret
• 1:04:58
  Speaker 4: Book Club.
• 1:04:59
  Speaker 1: It's launching that.
• 1:05:01
  Speaker 2: It's really fun thing. Now there's a little bit of
• 1:05:06
  Speaker 2: a puzzle figuring out what's the right book for the
• 1:05:08
  Speaker 2: right person. And not everybody gets the same book because
• 1:05:10
  Speaker 2: they're different people. But all this comes back to spend
• 1:05:14
  Speaker 2: the money.
• 1:05:15
  Speaker 1: So I.
• 1:05:19
  Speaker 2: Again, it's the end of the podcast, so I can
• 1:05:21
  Speaker 2: I can say stuff.
• 1:05:22
  Speaker 1: Alexa's not cutting any of this out.
• 1:05:23
  Speaker 2: So nineteen eighty seven nineteen eighty eight, nine to eleven
• 1:05:27
  Speaker 2: Cabrio I purchased three or four years ago for like
• 1:05:31
  Speaker 2: sixty grand. It was an old ratty car that needed
• 1:05:33
  Speaker 2: to be restored, and the plan was to convert it
• 1:05:36
  Speaker 2: to an EV. This car wasn't right for that, so
• 1:05:40
  Speaker 2: I ended up doing it with an eighty seven Coop
• 1:05:42
  Speaker 2: with three hundred thousand kilometers on it. But the eighty
• 1:05:47
  Speaker 2: eight turned out to be this rare matching numbers M
• 1:05:51
  Speaker 2: four ninety one nine to eleven. That was worth a
• 1:05:54
  Speaker 2: ton more than I paid for it, so I put
• 1:05:56
  Speaker 2: a bunch of money into it. My wife was complaining.
• 1:06:01
  Speaker 2: My wife is complaining she doesn't get to drive a
• 1:06:03
  Speaker 2: stick anymore. So, hey, honey, here's your weekend car. I
• 1:06:07
  Speaker 2: bought it for this reason. We're just parking cash and
• 1:06:09
  Speaker 2: it's worth double what I paid. Drive it and she's like,
• 1:06:13
  Speaker 2: it's loud, it smells, it doesn't have abs. It doesn't.
• 1:06:17
  Speaker 2: She goes, nice, nice clutch, but no airbags, no abs,
• 1:06:22
  Speaker 2: and I'm like, so, what are you saying you? By
• 1:06:24
  Speaker 2: the way, this is my cross to bear. My wife
• 1:06:27
  Speaker 2: is very unhappy that I got her old nine to eleven,
• 1:06:31
  Speaker 2: and she is forcing me to buy a newer Porsche
• 1:06:35
  Speaker 2: like these are problemised that most married.
• 1:06:38
  Speaker 1: Men do not have.
• 1:06:40
  Speaker 2: That's how you know you married the white woman.
• 1:06:43
  Speaker 1: If your wife says, nice clutch, right, you're onto something.
• 1:06:46
  Speaker 2: I told her to drive a stick when we were dating.
• 1:06:49
  Speaker 2: She drives a stick better then, so her daily is
• 1:06:55
  Speaker 2: an unusual color. By the way, another great purchased during
• 1:07:01
  Speaker 2: the pandemic when everybody was freaked out. I got her
• 1:07:05
  Speaker 2: a Panamera fors Hybrid in amethyst metallic super rare color,
• 1:07:11
  Speaker 2: substantially less than it should have and some of the
• 1:07:16
  Speaker 2: One of the guys from my car group says to
• 1:07:20
  Speaker 2: me one day, you know you have the only amethyst
• 1:07:23
  Speaker 2: metallic Panamera on the Islands. I saw your wife driving it.
• 1:07:27
  Speaker 2: I tried to catch her. She's got a crazy leadfoot.
• 1:07:31
  Speaker 2: I couldn't catch her. I was beeping, I was waving.
• 1:07:34
  Speaker 2: So I'm like, oh, I'll ask her. So I go
• 1:07:36
  Speaker 2: home that night and I said, I said, hey, how
• 1:07:38
  Speaker 2: is your day? She goes crazy thing. This guy in
• 1:07:41
  Speaker 2: a green nine to eleven was haranging me, was chasing me,
• 1:07:45
  Speaker 2: and I just put the hair out and this guy
• 1:07:46
  Speaker 2: couldn't catch me. And I said, you know that was
• 1:07:49
  Speaker 2: Joe that green. It was green, right. She's like, yeah, yeah,
• 1:07:52
  Speaker 2: that was Joe. He was just swing trying to catch
• 1:07:54
  Speaker 2: up to say hi. I like, weren't He said, he
• 1:07:57
  Speaker 2: couldn't catch you. It's a GT three. It's like the
• 1:08:00
  Speaker 2: fastest street legal you know, just below the turbos. There's
• 1:08:04
  Speaker 2: only one other car that's a fastest street legal Porsche
• 1:08:07
  Speaker 2: with a stick shift.
• 1:08:10
  Speaker 1: So good. So that's what I'm talking about.
• 1:08:13
  Speaker 2: So so I am in the process of swapping the
• 1:08:18
  Speaker 2: eighty eight for a twenty twenty four. I know exactly
• 1:08:22
  Speaker 2: what I'm going to replace it with. I found a
• 1:08:24
  Speaker 2: little bit of a unicorn.
• 1:08:25
  Speaker 1: Wow.
• 1:08:26
  Speaker 2: The only problem is the color is wrong. But it
• 1:08:28
  Speaker 2: turns out it. You know, a new car, a relatively
• 1:08:31
  Speaker 2: new car, you put a PPF wrap around it to
• 1:08:34
  Speaker 2: protect the paint. Now they make those wraps in colors,
• 1:08:37
  Speaker 2: so you could get I really like this pink to
• 1:08:40
  Speaker 2: sample purple violet. That's like a twenty thousand dollars upgrade
• 1:08:45
  Speaker 2: when you worter the car new. No, just put plastic on.
• 1:08:48
  Speaker 2: It's six grand, and now you have the car. Whatever color.
• 1:08:51
  Speaker 2: So she picked that color, this is she's gonna be
• 1:08:55
  Speaker 2: the purple I found this. It's a GTS, it's a cabrio,
• 1:08:59
  Speaker 2: it's a stick, it's a chalk material, which is even
• 1:09:01
  Speaker 2: rare and rare still ceramic breaks. It's just the wrong color.
• 1:09:08
  Speaker 2: It's like, I'm going to fix this one.
• 1:09:10
  Speaker 1: So good.
• 1:09:11
  Speaker 2: So that was the This is an obscene amount of
• 1:09:14
  Speaker 2: money and I don't care.
• 1:09:15
  Speaker 1: Yeah, yeah, you tell me that. Twenty years from.
• 1:09:17
  Speaker 2: Now, nobody looks back and says, oh, why did I
• 1:09:21
  Speaker 2: buy that? Yeah, we look back and regret on the
• 1:09:23
  Speaker 2: things we didn't do. Try. That's exactly the things we did.
• 1:09:26
  Speaker 4: I mean, my version of that is two months ago,
• 1:09:28
  Speaker 4: I did not know that my twenty twenty four, twenty
• 1:09:32
  Speaker 4: four to twenty five year old son, twenty three year
• 1:09:36
  Speaker 4: old anyway, twenty four year old son was going to
• 1:09:38
  Speaker 4: ask me to go spend some time adventure on adventure
• 1:09:42
  Speaker 4: motorcycles this summer.
• 1:09:44
  Speaker 1: It wasn't in my financial.
• 1:09:45
  Speaker 4: You have a license for that, yeah, I actually do,
• 1:09:46
  Speaker 4: because ten years ago, five years ago, I was on
• 1:09:49
  Speaker 4: a you know, the nine hundreds.
• 1:09:51
  Speaker 1: Oh that's a big bike.
• 1:09:52
  Speaker 4: Yeah, and so we just got Yamaha T seven's so
• 1:09:57
  Speaker 4: the tenarey tenor a seven hundred, which is a great
• 1:10:00
  Speaker 4: But my son is the one. I didn't know that
• 1:10:02
  Speaker 4: it's costing me more money than I'd planned on spending.
• 1:10:05
  Speaker 1: And I'm not gonna regret my second of it.
• 1:10:07
  Speaker 2: Isn't that what else?
• 1:10:09
  Speaker 1: The whole point, First of all, you have to stop.
• 1:10:11
  Speaker 2: And I know you have gratitude drawings in here, the
• 1:10:13
  Speaker 2: fact that it's a realistic option for you or I
• 1:10:17
  Speaker 2: to indulge in these ridiculous spending things, and that part
• 1:10:21
  Speaker 2: of me knows how utterly ridiculous of course this is.
• 1:10:24
  Speaker 2: So First you have to have some gratitude for that.
• 1:10:27
  Speaker 2: But second, if not for that, what are you gonna
• 1:10:30
  Speaker 2: do with the money?
• 1:10:31
  Speaker 1: And the fact that my twenty something son asked me
• 1:10:34
  Speaker 1: to do it?
• 1:10:34
  Speaker 2: He's enthusiastic.
• 1:10:35
  Speaker 1: The answer is yes, right, I wrote, I called yeah.
• 1:10:39
  Speaker 4: The answer is yes, you know, and so am I'm
• 1:10:42
  Speaker 4: going to look back five years from now, ten years
• 1:10:44
  Speaker 4: from now, thirty years from now and regret that. There's
• 1:10:46
  Speaker 4: no we spent more money than we really should have
• 1:10:49
  Speaker 4: on our four years living in New Zealand, right, and.
• 1:10:51
  Speaker 1: I would do it. What years were you in New
• 1:10:53
  Speaker 1: Zealand sixteen to twenty? We didn't mean to do it. It
• 1:10:55
  Speaker 1: wasn't political. We went sixteen for a year, we ended
• 1:10:58
  Speaker 1: up just staying for four.
• 1:11:00
  Speaker 2: Yeah, I assume it was fantastic, unbelievable.
• 1:11:05
  Speaker 1: We spent way more.
• 1:11:06
  Speaker 4: It was the whole line irresponsible in this case, even,
• 1:11:09
  Speaker 4: but it was a requirement. My wife was essentially like
• 1:11:12
  Speaker 4: after the financial crisis and everything in I was just
• 1:11:15
  Speaker 4: a broken human and really, oh just I ever thought
• 1:11:18
  Speaker 4: of you that way?
• 1:11:19
  Speaker 1: Well, that's nice of you, but yeah I did.
• 1:11:21
  Speaker 4: That was part of the problem is that was a
• 1:11:23
  Speaker 4: superhuman not not inside, not in the house, and it
• 1:11:27
  Speaker 4: was just a lack of patience and a deep presence.
• 1:11:30
  Speaker 1: And she was like, we're going, would you like to come?
• 1:11:33
  Speaker 1: And I was like yes. We ended up saying four years.
• 1:11:36
  Speaker 4: It was hard money wise, like it was a bad
• 1:11:38
  Speaker 4: decision financially are yeah, but you know, like.
• 1:11:42
  Speaker 1: You're in New Zealand the same thing, like.
• 1:11:45
  Speaker 2: You're not that far from China to do anything.
• 1:11:48
  Speaker 4: Very little No, so really but but but my point
• 1:11:51
  Speaker 4: really is it probably wasn't the best from a spreadsheet
• 1:11:55
  Speaker 4: financial decision, but I wouldn't I would do it again
• 1:11:58
  Speaker 4: all over so for sure.
• 1:11:59
  Speaker 1: Same with the car. Spend to the.
• 1:12:02
  Speaker 4: Degree that you can find the things that align with
• 1:12:06
  Speaker 4: your use of capital and your family and your experiences
• 1:12:09
  Speaker 4: with the people you love.
• 1:12:10
  Speaker 1: We know that we will not regret.
• 1:12:12
  Speaker 4: We will not regret spending time and money on experiences
• 1:12:16
  Speaker 4: with people we love.
• 1:12:17
  Speaker 2: So we've been at this for solid ninety minutes. Let
• 1:12:21
  Speaker 2: me jump to my favorite questions I asked all my
• 1:12:24
  Speaker 2: guests otherwise I'm going to keep you here through dinner,
• 1:12:27
  Speaker 2: Starting with who were your early mentors who helped shape
• 1:12:31
  Speaker 2: your career?
• 1:12:34
  Speaker 1: I know you asked that question.
• 1:12:36
  Speaker 4: I thought really carefully about it, and the one that
• 1:12:38
  Speaker 4: actually probably had the biggest shaping on me was a
• 1:12:40
  Speaker 4: little far.
• 1:12:41
  Speaker 1: Ron had a huge impact. So between Ron and Seth Godin.
• 1:12:45
  Speaker 2: Oh, really, Seth, Golden stuff is really interesting.
• 1:12:47
  Speaker 4: Yeah, and Seth. I always saw Seth as somebody who
• 1:12:49
  Speaker 4: was doing something here that applied here, uh huh, and
• 1:12:54
  Speaker 4: that that was really like.
• 1:12:55
  Speaker 2: So doing something in a narrow little space.
• 1:12:57
  Speaker 4: He was marketing guy marketing, marketing, marketing, but you know
• 1:13:00
  Speaker 4: it had brought application and doing it consistently over a
• 1:13:03
  Speaker 4: long period of time.
• 1:13:03
  Speaker 1: I mean Beavior Radio was started because of Seth's daily blog.
• 1:13:07
  Speaker 2: Hu.
• 1:13:07
  Speaker 1: He said to me, why aren't you doing a daily blog?
• 1:13:09
  Speaker 1: I said, I don't like to write.
• 1:13:10
  Speaker 4: He said, you like to talk, And so I started
• 1:13:13
  Speaker 4: where episode fifteen hundred. Now you said believe Yeah, So
• 1:13:16
  Speaker 4: Seth Godin, Ron Leeber had the biggest impact on me.
• 1:13:19
  Speaker 2: Let's talk about books. What are you reading right now?
• 1:13:21
  Speaker 2: What are some of your favorites?
• 1:13:22
  Speaker 1: My favorite?
• 1:13:23
  Speaker 2: And I know when you're writing a book, it's really
• 1:13:26
  Speaker 2: hard to read.
• 1:13:26
  Speaker 4: Yeah, yeah, no, one of the most two really impactful books.
• 1:13:31
  Speaker 4: Fooled by Randomness.
• 1:13:33
  Speaker 2: Not seeing till Up come on. I wanted to have
• 1:13:36
  Speaker 2: him on the podcast. He told me to go f myself.
• 1:13:38
  Speaker 1: He probably said that exactly.
• 1:13:40
  Speaker 2: I'm giving you the polite Yeah.
• 1:13:42
  Speaker 1: Yeah, sure.
• 1:13:43
  Speaker 4: So that book and then pema Children's When Things Fall Apart.
• 1:13:47
  Speaker 2: That's a really interesting children.
• 1:13:49
  Speaker 4: When Things Well, they're both if you understand, yeah, they're
• 1:13:52
  Speaker 4: both related to this idea that this false sense of
• 1:13:54
  Speaker 4: certainty that we talked about. So Pemma's work has had
• 1:13:57
  Speaker 4: a massive impact on me reading right now. I just finished,
• 1:14:01
  Speaker 4: literally last night, I just finished uh homes Homesick Nomad
• 1:14:07
  Speaker 4: about and I can't remember her name, Briann.
• 1:14:09
  Speaker 2: No.
• 1:14:09
  Speaker 4: It's a memoir, a short little memoir about a lady
• 1:14:12
  Speaker 4: who drives her van around the southern the desert of
• 1:14:17
  Speaker 4: southern Utah. So it was like a home she has
• 1:14:19
  Speaker 4: a Utah connection, Salt Late connection. So that was really good.
• 1:14:21
  Speaker 4: And and Bison for the Broken Heart or Buffalo for
• 1:14:24
  Speaker 4: the Broken Hearted Dan o'bryan's book Someone Else, I think,
• 1:14:28
  Speaker 4: I think you. Oh, I told meb about it in
• 1:14:31
  Speaker 4: his book ground Up.
• 1:14:32
  Speaker 2: Okay, really interesting. What are you streaming these days? Tell
• 1:14:38
  Speaker 2: us what you're either listening to or watching.
• 1:14:41
  Speaker 1: Mike or Biglia so hilarious. Working it Out.
• 1:14:45
  Speaker 2: You know he has a podcast Working it Out. That's
• 1:14:47
  Speaker 2: his podcast, his stand up.
• 1:14:49
  Speaker 1: I listened to it religiously.
• 1:14:51
  Speaker 4: I'm trying to get Mike, if you're listening, I've been
• 1:14:53
  Speaker 4: trying to get ahold of mic for a long time.
• 1:14:55
  Speaker 2: So there's a handful of comedians with their own podcast
• 1:14:59
  Speaker 2: now sure that not just Seth uh Seth Rogan? Not
• 1:15:04
  Speaker 2: not just Joe Rogan? Yeah, for sure, Tom Papa Mark,
• 1:15:09
  Speaker 2: the original Mark is the og in the space.
• 1:15:13
  Speaker 1: Who's Pete Holmes?
• 1:15:14
  Speaker 2: Who's the guy who was the co writer Blocks with
• 1:15:18
  Speaker 2: Dave Chappelle? Jodan blank on his name? His pot is
• 1:15:21
  Speaker 2: occasionally interesting.
• 1:15:22
  Speaker 1: Set Pete Holmes is actually really great too.
• 1:15:23
  Speaker 2: Why do I know the name Pete Holmes?
• 1:15:25
  Speaker 1: He's another one of these Netflix communities.
• 1:15:27
  Speaker 2: It's amazing, like good hang with Amy Poehler. Was just
• 1:15:30
  Speaker 2: watching her with Billie Eilish. That was really kind of fun.
• 1:15:33
  Speaker 3: Yeah, big there's a ton of them, Yeah really, I
• 1:15:36
  Speaker 3: mean his The reason I really like for Bigle is
• 1:15:38
  Speaker 3: it's really about like the process, right, And I think
• 1:15:42
  Speaker 3: about a lot of my work, especially the poet speaking
• 1:15:44
  Speaker 3: about like testing bits, you know, seeing.
• 1:15:47
  Speaker 4: How they land paying attention that didn't work quite the
• 1:15:50
  Speaker 4: way I wanted to. And Mike does a really good
• 1:15:51
  Speaker 4: job of explaining that.
• 1:15:52
  Speaker 1: And then I just finished The Dark Wizard.
• 1:15:55
  Speaker 4: Dean Potter's the story of Dean Potter, who was an
• 1:15:57
  Speaker 4: l CAP climber long before l CAP claimbing was this
• 1:16:02
  Speaker 4: mainstream thing, and about his untimely passing through based jumping
• 1:16:07
  Speaker 4: or something.
• 1:16:08
  Speaker 1: It is an amazing story for.
• 1:16:10
  Speaker 2: So there are a lot of these hobbies, like I
• 1:16:13
  Speaker 2: don't mind going fast on the track. There are a
• 1:16:15
  Speaker 2: lot of these hobbies where my brain does the risk
• 1:16:17
  Speaker 2: reward analysis and say, oh, there's just way too much
• 1:16:21
  Speaker 2: random risk in this, Like wingsuit.
• 1:16:24
  Speaker 4: Is a wing suitor yep, yeah, I mean he was
• 1:16:28
  Speaker 4: driven by the fact that the only thing that made him.
• 1:16:30
  Speaker 1: Feel alive was the death consequence. Right, that's a whole
• 1:16:34
  Speaker 1: other things.
• 1:16:36
  Speaker 2: Wizard psychological issue, ye, for.
• 1:16:38
  Speaker 1: Sure, but it was super interesting.
• 1:16:40
  Speaker 2: We'll skip that final two questions. What sort of advice
• 1:16:44
  Speaker 2: would you give a recent college grad interested in a
• 1:16:47
  Speaker 2: career in either being a financial planner, being an author,
• 1:16:53
  Speaker 2: being an artist. Sometimes don't think of yourself as an artist, clear, yeah.
• 1:17:03
  Speaker 4: Just take the next step right, like I just I think,
• 1:17:06
  Speaker 4: like getting too caught up in how is this going
• 1:17:09
  Speaker 4: to work?
• 1:17:09
  Speaker 1: And what's yeah, and.
• 1:17:13
  Speaker 4: Not take themrry like there's a louds to quote be
• 1:17:15
  Speaker 4: who you really are and go the whole way. And
• 1:17:17
  Speaker 4: I think I wish I would have started that a
• 1:17:19
  Speaker 4: little earlier, like what does it even mean? Okay, take
• 1:17:21
  Speaker 4: one small step, one, take one small step, And if
• 1:17:23
  Speaker 4: I was preparing in finance, I'd get more comfortable, especially
• 1:17:25
  Speaker 4: in the advice side, get more comfortable with learning to
• 1:17:29
  Speaker 4: be deeply present with people curiosity. I think financial advisors
• 1:17:34
  Speaker 4: aren't going to be paid for solutions if they are
• 1:17:36
  Speaker 4: right now.
• 1:17:37
  Speaker 1: They're not going to be paid.
• 1:17:37
  Speaker 4: They're going to be paid for presents like opening up
• 1:17:40
  Speaker 4: the ability to have these because the solutions.
• 1:17:41
  Speaker 1: Are table stakes at this point. Right.
• 1:17:44
  Speaker 4: But it's like self driving cars. It was in the
• 1:17:46
  Speaker 4: way Mo, right, it was safer than the Uber driver.
• 1:17:51
  Speaker 1: But here's the thing.
• 1:17:52
  Speaker 4: I still have to tell where to go, and even
• 1:17:54
  Speaker 4: more importantly on the journey, if I saw something like,
• 1:17:57
  Speaker 4: oh wait, what's that park?
• 1:18:00
  Speaker 1: Right? I think that requires could you do that in
• 1:18:03
  Speaker 1: a way?
• 1:18:04
  Speaker 2: MO?
• 1:18:04
  Speaker 1: Could you ask it to ye if to stop?
• 1:18:06
  Speaker 4: Yeah, I don't know how you do it, but it
• 1:18:08
  Speaker 4: does app So I'm a big fan of self driving money.
• 1:18:10
  Speaker 4: I can't wait, and there's still going to be somebody
• 1:18:13
  Speaker 4: there that needs to say, hey, is this really is
• 1:18:15
  Speaker 4: the boat really important to you? Go try the first
• 1:18:17
  Speaker 4: go try the racetrack thing you know, like and that
• 1:18:20
  Speaker 4: to me is curiosity and presence. Still, you gotta be
• 1:18:23
  Speaker 4: a technical rock star, but curiosity and presence is where
• 1:18:27
  Speaker 4: the value will be.
• 1:18:28
  Speaker 2: Final question, what is it that you know about the
• 1:18:30
  Speaker 2: world of investing or psychology today? Might have been useful
• 1:18:35
  Speaker 2: back in the nineteen nineties when you were first looking
• 1:18:38
  Speaker 2: at that netscape IPR.
• 1:18:40
  Speaker 1: Yeah, yeah, that it compounding does all the work right?
• 1:18:47
  Speaker 2: Like that?
• 1:18:48
  Speaker 1: That if like, stop spending time trying to find the
• 1:18:50
  Speaker 1: best investment and just own stuff.
• 1:18:53
  Speaker 4: If it compounds. I don't know who said this. If
• 1:18:56
  Speaker 4: it compounds, let it compound.
• 1:18:58
  Speaker 2: The line I use is is your job is to
• 1:19:02
  Speaker 2: prevent yourself from interfering with your portfolio's.
• 1:19:05
  Speaker 1: Ability to combat that time is the thing that matters.
• 1:19:08
  Speaker 2: Absolutely, Carl, this has been absolutely a delight. Normally I
• 1:19:12
  Speaker 2: want to make this about the guest, but there's something
• 1:19:15
  Speaker 2: about you that just encourages my whole goal. It's your
• 1:19:21
  Speaker 2: h it's your aura. You bring it out in people,
• 1:19:25
  Speaker 2: which is probably why you were a good advisor. You
• 1:19:27
  Speaker 2: get people to open up to you.
• 1:19:30
  Speaker 1: That's a really high compliment. Thank you.
• 1:19:31
  Speaker 2: It is, it absolutely is. We have been speaking with
• 1:19:35
  Speaker 2: Carl Richards. He is the author of the book Your Money,
• 1:19:38
  Speaker 2: Reimagining wealth in one hundred and one simple sketches. If
• 1:19:43
  Speaker 2: you enjoy this conversation, well please here and check out
• 1:19:45
  Speaker 2: any of this six hundred and thirty nine we've done
• 1:19:49
  Speaker 2: over the past twelve years. You can find those at YouTube, Bloomberg, Spotify, Apple,
• 1:19:57
  Speaker 2: or wherever you get your favorite podcast. I would be
• 1:20:00
  Speaker 2: remiss if I didn't thank the correct team that helps
• 1:20:03
  Speaker 2: put these conversations together each week. Alexis Noriega is my
• 1:20:08
  Speaker 2: very patient video producer, producer New Yorker Drop in the r.
• 1:20:14
  Speaker 2: Jean Russo is my researcher. Anna Luke is my producer.
• 1:20:18
  Speaker 2: I'm Barry Retults. You've been listening to Masters in Business
• 1:20:22
  Speaker 2: on Bloomberg Radio.