Please enjoy this transcript of my interview with Morgan Housel (@morganhousel), a partner at The Collaborative Fund. His book The Psychology of Money has sold more than three million copies and has been translated into 53 languages.
He is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers and winner of the New York Times Sidney Award. In 2022, MarketWatch named him one of the 50 most influential people in markets. He serves on the board of directors at Markel.
Transcripts may contain a few typos. With many episodes lasting 2+ hours, it can be difficult to catch minor errors. Enjoy!
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Tim Ferriss: Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show. Today, we have a repeat guest, and good Lord did his last episode do well. It did spectacularly well. You guys loved it. So back by popular demand is Morgan Housel. You can find him on Twitter @morganhousel, H-O-U-S-E-L. He is a partner at the Collaborative Fund. His book, The Psychology of Money, which we really dug into in depth last time, has sold more than three million copies and has been translated into 53 languages. Didn’t even know there were that many languages. I’m kidding, of course.
He is a two time winner of the Best in Business Award from the Society of American Business Editors and Writers, and winner of the New York Times Sidney Award. I might be jealous. I might be jealous. In 2022, MarketWatch named him one of the 50 most influential people in markets, good friend to have.
He serves on the board of directors at Markel. Morgan’s new book is Same as Ever: A Guide to What Never Changes. You can find my first, and as I mentioned before, a widely popular interview, and very tactically dense interview with Morgan at tim.blog/morganhousel. And without further ado, morganhousel.com and Morgan himself, nice to see you again.
Morgan Housel: Nice to see you, Tim. Happy to be back. Thanks for having me.
Tim Ferriss: Absolutely. So let’s start with a cryptic prompt, and I’ll let you run with it, which is Buffett’s Snickers. Where should we go with that?
Morgan Housel: So after Psychology of Money, I was really debating what to write next for my next book. I had thrown around all these different topics and I had some good ideas, but it really hadn’t hit me what I wanted to write about. And I was at a retreat with a group of investors about three years ago, and one of the investors, he was actually a CEO of a large public company, and he’s pretty good friends with Warren Buffett. And he told this story that I had never heard before about Buffett, and it’s pretty rare to have a story about Buffett that I’ve never heard that no one’s — everybody knows every Buffett story, but this was a new one.
And he said, the CEO said, that in 2009 during the peak of the Great Recession when the economy was in pieces, he was driving around Omaha with Warren Buffett. Buffett was driving, he was a passenger, and the CEO said to Warren, and they’re driving past closed up shops during the Great Recession, the whole country’s in tatters. And the CEO said, “Warren, how are we ever going to pull out of this? The country’s never going to be the same after this.” And Warren said, “Let’s call this guy Jim.” That’s not his real name, but he said, “Jim, do you know what the bestselling candy bar was in 1962?” And Jim said, “No.”
And Warren said, “Snickers.” And Warren said, “Do you know what the bestselling candy bar is today?”
And Jim said, “No.”
And Warren said, “Snickers.”
And that was the end of the conversation. He just stopped right there. And that was his answer to, “Is the country ever going to be the same?” And I think if you look at Warren Buffett’s success, he has been betting on things that stay the same forever. And it really hit me in that moment that this was the book that I wanted to write, because for my entire career as a writer, I had been, “cynical” is probably the right word, and just astounded at how bad people are at forecasting, not just in finance, and the stock market, and the economy, but in politics. And it’s been like that forever.
The most famous expert’s ability to predict what’s going to happen next is atrocious, and it’s always been atrocious. And again, that just made me cynical. It was just like the whole pundit industry is a scam. That was my view. And then it was like, “Okay, is there a positive spin to this? How can I use knowing how bad we are at forecasting to try to do better at my ability to look forward in the future?”
And I think what I settled on is, people are so bad at predicting the future because they’re always trying to predict what’s going to change. They’re always trying to predict what’s the next new technology? Who’s going to win the next election? When’s the next recession going to come? And our ability to do that is zero. It’s virtually zero. But for the people like Buffett who focus on what’s not going to change, their ability to understand the future is actually pretty good. And so they’re focusing on parts of human behavior that have never changed, that were true 500 years ago, that will be true 500 years from now. And so I have no idea when the next recession’s going to come, but I know exactly how people are going to respond to greed and fear, because that’s never changed.
There’s a great quote from Naval where he says, “If your life played out a thousand times, a thousand different iterations of your life, what would be true in 999 of them?” And those are the things that you want to focus on in life because those are not things that are guided by luck, or chance, or just the quirky ways of the world. And so that was, that to me was like, “Ah, I love that framing.” And it also occurred to me that a lot of what I had been writing about for the previous 15 years were things that never change.
I think in many ways, Psychology of Money is the psychology of you, the individual. It’s like, “What’s going through your head?” And Same as Ever is the psychology of us as a collective. It’s just what do we keep doing as a society, as a group over, and over, and over again? One other thing that really struck me here that was influential to this book for me was one of my favorite books is a book called The Great Depression: A Diary, and it’s written by a lawyer named Benjamin Roth, who, during the Great Depression, kept a very detailed diary about what he saw all over his town in Ohio that his son published. And it’s the best economics book ever written.
And during that diary, there’s one diary entry from, I think, 1932 where he says, “What I see around the Great Depression in 1932, it reminds me exactly of what happened in 1920 and in 1878 and in 1865.” And he’s like, “It’s the same forces happening over, and over, and over again.” I thought, “Oh, that’s really interesting.” And then a couple pages later it dawned on me that what he was writing in 1932 is exactly what happened in 2008.
The way that people were dealing with uncertainty and greed and fear. It never changes. It’s the same movie over, and over, and over again. And so if you focus on those things that never change, I think it’s our only ability to really understand the future, your future, society’s future, the economy’s future. But it’s just not as exciting as focusing on what is going to change.
all of the attention in the media focuses on what’s the next big technology, what is going to change.
Tim Ferriss: Hence, the “news.”
Morgan Housel: And so the premise of this book is just like —
Exactly, because that’s exciting and it’s fun. So the premise of this book is like, let’s stop doing that. Let’s focus on what we know with certainty is going to be a part of your future, and that’s the best that we can do to see the future.
Tim Ferriss: I’ve been excited to have this conversation for a couple of reasons and I’ll edge into those by way of maybe a few anecdotes. So one, I’m not going to get the attribution right and I’m not going to get the phrasing totally on point. But there was an announcement, I think it might’ve been Donald Knuth, K-N-U-T-H, but there’s a blog post that I wrote some time ago, which was [“Finding the One Decision That Removes 100 Decisions.”] And he made an announcement when he stopped using email. Now I’d be curious to know how well that’s held up over time. However, he said, in effect, “I realize that I no longer want to stay on top of things. I want to get to the bottom of things.” So that’s phrasing that has really stuck with me and maybe we’ll come back to stories. And his entire email was maybe a mini story, and had an arc, and that has stuck with me for years now.
The second is, in the last few weeks I’ve become very interested in ancient Sumer and the dynasties in Ur and Uruk in modern day Iraq, and looking at the birth of writing as we understand it in cuneiform, which I never knew was cuneiform instead of a different pronunciation. In any case, the stories, as you listen to them in these various podcasts, if you did a search and replace with a handful of names, this is true for Letters from a Stoic or the Moral Letters to Lucilius as well from Seneca the Younger, if you just did a search replace with some names, it’s the same set of dynamics, it’s the same foibles of human nature. It’s the same consequences of fear, greed, wrath, fill in the blank.
And my question for you is, given how much you’ve thought about writing, given how much you have written, you’ve written, I would imagine, hundreds, thousands of pieces and we spoke quite a bit about writing in our last conversation and the fact that writing is on some level, or good writing, at least the type of writing that we do is intrinsically selfish. We’re writing for at least an audience of one and that I’m just going to do a quick recap on some of the things that stuck with me from our last conversation, which have proven to be true again, and again, and again, for instance, and please fact check me, but good writing is easy, bad writing is hard.
If you’re just struggling through, word by word, the slog of a piece, chances are it’s just not going to be good. And also if you have writer’s block, there’s a damn good chance it’s just a shitty idea or a mediocre idea that you’re trying to force into some existence. Of all the things that you could write about. How did you choose to do this, especially after the success of your last book?
Morgan Housel: I was told many years ago by Jason Zweig, a great friend and mentor of mine from The Wall Street Journal that you should only write a book if in your brain you have to do it. Not like, “Oh, I should do it.” Or, “Oh, that’s a lot of money that I could get for doing it.” Only doing it if you’re like, “I can’t sleep until I get these ideas on paper.”
And even in blog form, for my entire career, that’s always been the case. I’m not a sit down at my desk at nine o’clock and publish by four o’clock kind of person. I’ve always been, I’m just going to toss around a bunch of ideas in my head and I’m only going to sit down and write when I can’t do anything else until I get this done. The idea is so fresh, and it’s just spilling out of me. And there’s been plenty of times when we’ll be grocery shopping with my wife and kids and I’m basically just like, “I have to go. I need to go sit down at the computer and write this out.”
And the opposite of that, if I’m like, “Oh, I should probably write something this week, let’s force out the words,” it’s garbage every single time. And so I feel like I didn’t necessarily choose to write this book. I think I would’ve been really happy just stopping at Psychology of Money and saying, “That’s great. I’m just going to quit while I’m ahead,” which is a general idea that I really admire.
But I think it got to the point where I was like, “I really — I have to do this.” And it struck me around. It was the early days of COVID when this really struck me. I was writing almost every week, almost every day, about things that never change and putting a lot of thought into it. And it really became a philosophy that guides my entire life. And I think, to tell you the truth, it relieved a lot of anxiety from my life once I internalized a lot of these ideas, anxiety about the future, what’s my future hold? What’s the economy going to do next? During the early days of COVID, what’s COVID going to do next?
Once you admit that we have no idea, we have no clue, we have no clue what’s going to happen, but that doesn’t mean that you’re giving up just becoming a fatalist. It’s just like let’s shift our attention to what we know is going to be true. And I honestly think I became happier and calmer and my life improved once I got to that point.
Tim Ferriss: So in a sense, is that a Serenity Prayer applied to your life through the lens of human nature over time? In a sense, separating the things that you can change from the things that you cannot, the things that you can predict with some certainty versus the many things that you cannot. Is that what reduced the anxiety?
Morgan Housel: I think so. And of course this is not an idea I came up with. That’s the core of Stoicism. It’s been around for 2,000 years. It’s what can you control and what can you not? You really need to be able to figure out how to separate those. So I’m not claiming at all that I came up with these ideas, but once it became —
Tim Ferriss: Wait a second, you created Buddhism and Stoicism?
Morgan Housel: Exactly.
Tim Ferriss: Good for you.
Morgan Housel: In 2020. It was amazing. It was a very productive year. But once I crystallized them and I could contextualize that in a way that made a lot of sense to me, I honestly think it improved my life in a pretty profound way.
Tim Ferriss: So we’re going to come back to that and we’re going to come back to it quickly. But since I am getting back into writing and I’ve been experimenting with fiction largely, but I’d like to actually write some nonfiction blog posts in the old style back when there were blog rolls. I want to really rewind the clock and go retro with some of my writing, because I do have some ideas that are so persistent that I feel like it would be beneficial for me to write in order to think about them more clearly.
And what we didn’t cover in our last conversation was how you draft your first drafts, or your rough drafts. Because you have these ideas, you’re at the grocery store, you’re out on a walk, you’re in the shower, whatever it might be. What does it look like when you put first words on paper or screen? Because that is where I often procrastinate facing the empty screen, the blinking cursor. What’s your move there?
Morgan Housel: I first need to disclose that what I’m about to say is probably the worst writing advice you could give someone. So if you are a new writer or an aspiring writer, plug your ears and fast-forward this.
Tim Ferriss: That’ll be on the headline. “Including the worst advice for writers.”
Morgan Housel: I’ve always been like this, and I don’t think it’s a good strategy, but it’s been my strategy. I’m a first draft and publish writer.
I think the best way to write is to write a first draft, get it done, and then go back, and edit, and clean up, and rewrite, and whatnot. I’ve always been one sentence at a time, and when I’m done with that sentence, it’s final. So by the time I get to the bottom of the article or the bottom of a chapter, it’s pretty much done. But that’s not because I can write a perfect first draft, it’s because I’m not going to leave this sentence that I’m writing until it’s perfect. I’m not going to move on to the next sentence until every word is perfect. That’s always how I’ve been.
Tim Ferriss: I believe Kurt Vonnegut talked about swoopers and [bashers]. I may be getting the wording wrong, but swoopers are the vomit of first draft refine, refined into a diamond, and then the plodders are the line at a time, one small facet at a time, and then they’re done. I tend to err on the side of being closer to that myself.
However, that doesn’t seem to work unless you have a clear idea of what your structure is going to look like, or at least of where you’re going to start, so that you’re not then endlessly swapping things around or scrapping the first half, in which case you’re edging more towards that refine, refine, refine. So how do you figure out the structure of a piece or what your lead is going to be?
Morgan Housel: When I start an article, or a chapter even, I really have no idea where it’s going to go. It’s not like all the ideas are in my head and I just need to put them out on paper. And I feel like the process of writing is the research process for me. And so that’s where the plotter style comes in, which is I write one sentence, and I sit there, and stare at it and it’s like, “Oh, that reminds me of this. Oh, that prompts another thought that I had. That paragraph I just wrote reminds me of something else I can pull in.”
That’s really where it comes from. So coming up with an idea, honestly, I think most blog posts, I start with a headline. And I’m like, “I want to write an article called Everything is Cyclical. Whatever it might be. And let’s just run with that. That idea, because everything is cyclical, and I’m sure I could put together a story about why that is and a couple examples of that. So let’s just start there and see what happens.” And I just start throwing things on the page.
And usually within the process of a blog post or a book chapter, I’ll go for three walks around my neighborhood. And during that walk I’m a hundred percent focused on what I’m– writing and thinking about, “What did I just write? Is that true? Oh, actually that reminds me of something else. So that’s always a process.” If I’m sitting at my desk, I really can’t get my brain to work as well as it is when I’m getting up and walking around. So very often, too, if the weather’s bad outside in the middle of walking, or in the middle of writing, I’ll get up and fold the laundry or get up and do the dishes, get up and just walk around the house. It’s just like, I think movement is really critical to forming new thoughts and moving the piece along, which is so critical when you don’t know where it’s going to go when you started writing it.
Tim Ferriss: So let’s look at a post of yours. And I read three in prepping for this conversation, “Respect and Admiration,” “Rich and Anonymous,” and then “Expectations Debt.” How did you decide to write “Rich and Anonymous?” And maybe that’s a way to move into discussing some of the content, some of the messages, some of the stories in that piece. But how did that come to be?
Morgan Housel: “Rich and Anonymous” came to be, because — this was probably about two years ago, I did a consulting session with a group of NBA athletes. Most of them were NBA rookies. And the topic of conversation was everybody knows that NBA athletes, all pro athletes have a very high rate of going bankrupt. They have a three-to-five-year career where they make tens of millions of dollars, they blow it all, and then they’re done. Everyone knows the story. So the topic of conversation was like, how do we prevent that?
And one of the athletes, who’s 19, from the NBA, he had very recently been drafted to deca-million dollar contract, massive amount of money. He brought up this fact that I thought was so astute, particularly for a 19-year-old. And he said, “When you grow up in inner city poverty and then you make tens of millions of dollars at age 19, that’s not your money. That is Mom’s money, Dad’s money, cousin’s money, brother’s money, neighbor’s money, Grandma’s money. You can’t just tell all of them, ‘I got my money, good luck to you all’ back in inner city poverty. It doesn’t work like that.'”
And he said the biggest reason that athletes go bankrupt is not because they bought themselves a mansion, it’s because they bought their fifth cousin a modest house and they felt so much obligation to help them. So that was this idea that I came up, I don’t know if I came up with it, but I called it “social debt.” And I think with every dollar that you earn comes some amount of social debt. And for somebody like an athlete or a movie star, there’s a ton of social — for every dollar that they earn, there’s probably $4 of social debt that comes on top of it.
And it’s very easy to track your net worth, it’s incredibly difficult to track your social debt. It’s this obscure figure, but it’s always there. And even if we’re not talking about deca-million dollar athletes, I think for the average person who gets a raise, their salary goes from $50,000 to $55,000. With that even comes an increase in expectations of now they expect to live in a bigger apartment to wear nicer clothes, to eat out more. And just their expectation increase that comes with that is a form of social debt that came with it.
And so that is this idea. I’m pretty sure that Naval came up with this phrasing, too, that the best spot you want to be in life is rich and anonymous. The worst is poor and famous, which was maybe Monica Lewinsky or something. Like very famous and no money, that’s the worst position you can be in. Rich and anonymous is the best. I spent some time with a family two or three years ago. The family is worth $8 billion and if you Google their name, nothing comes up. They are completely anonymous. They’re not on any Forbes list, they’ve not done any interviews, they donate their money anonymously, and that’s all very intentional.
And so this family is worth $8 billion and they have virtually no social debt. They can just walk down the street, they can go to any cheap restaurant. Nobody knows who they are, and they’ve been very cognizant of doing that. And when I see how happy they are and how well-balanced they are, how well-balanced their children were, it was like that’s the spot that everyone wants to be in.
So even if you’re not worth $8 billion like that, realizing that every dollar of net worth that you gain comes with probably at least a couple pennies of social debt, I think is a really important thing to think about and contemplate.
Tim Ferriss: So let me ask you more about this family.
All right, eight billion, that’s non-trivial. So you would think that this family would be on many radars, many lists, whether they want to appear there or not. And I think it’s probably sector dependent. I don’t want you to share anything you don’t want to share, but there may be some sectors, there are more sectors, that are prone to being publicly exposed, or of public interest than others. If you’re a defense contractor, maybe the people who read People magazine are not as interested as if you are a movie star, or fill in the blank.
But what are some of the decisions, outside of anonymous donations, that you think were critical for them, or might have been part of this plan? And then I have some other questions related to their kids and the happiness of their kids. Because last time we spoke about, I’m blanking on the name of the book, but I think it was the Vanderbilt fortune and how almost uniformly miserable everyone was downstream of the inflation adjusted whatever crazy number it was, 400 billion dollars or something like that.
So coming back to the question that I led with, what were some of the decisions or types of decisions they made that contributed to that outcome?
Morgan Housel: What’s so interesting about this family, and of course I’m not going to give any details to disclose who they were, but they made their money in a very ethical way. It’s not like they’re trying to hide the fact of how they made their money. And what’s also interesting is that if I told you the name of the company, you would know it. It’s not this hidden obscure business. You would know what it is.
But again, they’ve been very intentional about doing everything anonymously, not being part of any fundraiser gala, not — living, actually. They actually live a fairly good life, but it was all based around —
Tim Ferriss: I would hope so.
Morgan Housel: But it was based around this idea of, “How do we not ruin our children?” I think that was really it. How do we raise children who are well-balanced and understand the world and are not treated differently than anyone else?
Back to the Vanderbilts, which is such a crazy story, there is this anecdote in one of the books where one of the Vanderbilt grandchildren wants to learn how to play soccer. So they gather up all the servants in the mansion that they live in, and they’re like, “Go play soccer with our kid.” And they’re watching it. And the servants who are adults —
Tim Ferriss: I have to imagine where this is going.
Morgan Housel: The servants are all just getting their ass kicked by this eight-year-old. They let every goal go through. No one is going to try to take the ball from him.
Tim Ferriss: I knew it.
Morgan Housel: And of course the eight-year-old is like, “I’m so good! I’m so good at soccer!” So as soon as people know who you are, and what your last name is, how much — they treat you differently. And that’s not —
Tim Ferriss: And laugh at all your dumb jokes.
Morgan Housel: Is a terrible thing. Exactly.
Tim Ferriss: [inaudible 00:28:17] all your dumb ideas.
Morgan Housel: I don’t think I’ve ever talked about this before, but I’ve told my wife this. In my tenure at the Collaborative Fund, there was a period early on when I was doing deals and I was meeting with entrepreneurs, entrepreneurs who were trying to raise money from the Collaborative Fund. And it was astounding that when I was talking to an entrepreneur who wanted to raise money, every joke that I said was so funny. Every insight that I had was so wise.
When people want something from you, they treat you differently, and it’s not good. So this — back to the family that I did some work with, they wanted to move mountains to avoid that. They wanted their children to be treated normally, and I have so much respect and admiration for that. And going into this, a lot of what I was going to do was talk to the children about money. That was my role in this experience. And if I’m honest, going into it, I expected them all to be spoiled little brats. And they were the opposite.
They were the most well-balanced, polite, well-mannered kids. And what they had that I thought was so great is a sense of anxiety about who they are in the world. And that’s really rare for a child who grows up with that kind of means. Most of them, it’s in their identity that “I’m special, I’m the best, I’m the richest, I’m the smartest.” That’s tends to be their identity. And these were completely normal. If you didn’t know their net worth and you met them, you would think that they were the children of plumbers and accountants.
Tim Ferriss: If I could pause for one second, and I want to get into some specifics, maybe what you took away from that, or some of the things that they did, if you’re able to share to produce that outcome.
Now, maybe just out of the box, this family is programmed a little differently. So we’re looking at maybe, I don’t want to say reversed causality, but we might be looking at something that existed out of the box, so to speak, psychologically. However, there are probably some levers that people can pull. And this doesn’t just apply to families with $8 billion.
For instance, I grew up without very much money, and in my neighborhood on Long Island, the family that made 75k versus the families that made 40k had a similar psychological dynamic. The kids had better toys, they had bigger TV, and that came with it, unchecked, a certain arrogance, even though they were by no stretch close to a family with $8 billion. The positional economics of it were something similar. And as I think more about kids myself, I think about this a lot because you don’t need to be in the stratosphere economically for this to be a relevant topic, to think about. And if you’re born in the US with your native language as English in a reasonably safe place, you’ve already won a lot of lotteries, right? So from a global perspective, you can also subconsciously develop some pretty kind of perverse orientations throughout the world. So what are some things that they did or that people can do to produce kids or bend the arc a little bit towards kids who are less entitled and more self-aware in the way that you’re describing?
Morgan Housel: I’ve thought about this a lot and it’s a question I get a lot.
Tim Ferriss: I’m sure.
Morgan Housel: About how do you raise kids that don’t grow up to be spoiled little brats? And I’ve come to the conclusion that the only answer is give them less money. That’s it. That’s the only thing. It’s the answer that nobody wants to hear, but I don’t think there’s any other way around it. The reason that money is valuable is because you usually have to work hard for it. If you don’t have to work hard for it becomes not that valuable to you. In the sense of you just throw it around.
Tim Ferriss: I see. So give them less money, not just in the sense of inheritance, but you’re saying on an ongoing basis like allowance, toys, et cetera.
Morgan Housel: Yes. Totally. And of course like everyone, I just kind of anchored to my old childhood when thinking about this. My parents. Particularly later in my childhood, they had some means and I got very little from it. And at the time that sucked. I looked back on it and think that was great. That was so good because from age 16 I learned how to be self-dependent and I learned how to work and I learned how to do it.
There’s a good friend of mine named Chris Davis who his grandfather, Shelby Davis, is one of the Mount Rushmore investors. He became a billionaire in the 1980s just from picking stocks. And Chris Davis and his cousins and siblings got nothing, did not get one single cent from it. And his grandfather, Shelby Davis, would tell them, “I’m not going to rob you of the opportunity of earning your own income.” And that’s the right way to view it. And I think every cent that you give your children, particularly your older children, you are robbing them of that opportunity.
My wife and I think a lot about that with our own kids, of every cell in your body as a parent wants to say, “I want to provide for my kids, support my kids, boost my kids, give them all the benefit.” And it’s so hard to push back against that natural mentality and say, “No, I’m going to make you do it on your own.” I’ll give you one perfect example here. I grew up ski racing. My son who’s now seven, I started taking him skiing about two years ago. And because I’m a fairly advanced skier, it was no problem for me on the first day to hold him between my legs and ski down. It’s no problem for me to do that. And so that’s what I did and I thought it was the right thing to do.
“Hey, I’m going to make this easy for you. I’ll just hold you between my legs and we’ll ski down together.” And my son is very physically coordinated, very physically talented. But because I did that, it took him about 10 sessions of going skiing before he could do it on his own because I babied him. What I should have done is just strapped him in and kicked him down the slope, said, “Go for it. Learn yourself, learn how to fall.” And if I did that, he would’ve gotten it in two runs. Instead, it took him 10 sessions to do it. And I think it’s a great analogy for what money can do to your children too. It’s so hard to do, but when you see examples of it, I think every parent listening will understand this. Sometimes you’ve just got to click them into their skis and kick them down.
Tim Ferriss: I’m going to hijack this for my own selfish purposes for a second. I find it very frustrating. I have found it very frustrating over the last say, five to 10 years when speaking to very ultra-high net worth people from a philanthropic standpoint, if I’m fundraising for something that is clearly high-leverage, clearly capital efficient with good operators, but in the nonprofit space, how many demure or pushback with some argument along the lines of, and they wouldn’t word it this way, but compounding more into dynastic wealth, “I’ll do more good later.”
Often the subtext of that is they want to give this dynastic wealth to their kids. They will not say that explicitly, but there’s protecting of the nest egg, so to speak, in their response. And what I’m curious to hear from you, because you’ve spent a lot of time around very, very, very wealthy people, if you had a billion dollars of net worth, how many kids do you have?
Morgan Housel: Two.
Tim Ferriss: Two. All right. How much would you give to your kids versus give away before you die versus something else? What would you do?
Morgan Housel: It’s such a good question. And of course we don’t have a billion dollars, so this is all, it’s great that this is purely hypothetical, my guess —
Tim Ferriss: I mean, it might be greater if you had a billion dollars, I don’t know. But yeah, it’s hypothetical, so it’s easy to talk about.
Morgan Housel: And this is what we plan to do. Now, of course our kids would get the best education. They would always have healthcare no matter what decisions they make in life, we’d probably pay for a great wedding and some great family vacations. If we were billionaires, we might say, “We’ll buy you a house.” And that’s pretty much it. I think that’s pretty much it. I love the idea from the book Die with Zero, that if you’re going to give your kids —
Tim Ferriss: I was just going to mention it.
Morgan Housel: It’s such a good book. It’s a wonderful book everyone should read. And a lot of the premise is if you’re going to give your kids money, don’t wait until you die at age 97 to do it. Give your kids money when they need it in their thirties and forties. And so my wife and I think, our kids are four and seven, but I think about that now. And thankfully my kids won’t listen to this episode for many more years hopefully.
Tim Ferriss: [inaudible 00:36:58] Exploding seven-year-old demographic. Starting young on The Tim Feriss Show.
Morgan Housel: Exactly. We don’t plan to leave them much of any death inheritance, but to the extent that we’re going to give them a very small amount of money, we’re probably going to give it to them in their thirties and forties when they need it the most.
Tim Ferriss: So let’s continue with this hypothetical thought exercise. Okay, so you don’t give them an excess. Let’s just say you add up all of those things and while you’re alive, God willing, you give your kids who knows, inflation adjusted, you have a billion dollars just to keep it simple, right? Let’s assume that’s all reasonably liquid. Each of them gets two million bucks before you kick the bucket. People have not figured out vampire transfusions with 20-year-olds from Lithuania or whatever all the tech billionaires are trying these days. Whatever the latest and greatest is hasn’t really panned out. So you arc and then you come to a natural end, that still leaves a lot left over. Again, as a thought exercise, would you donate most of that over the course of your lifespan? What would be the plan for the leftover $998 million?
Morgan Housel: I’m really ashamed of this. This is not a good thing, but it’s only been in the last two years that my wife and I have really thought about giving money away and we just started doing it in a very modest amount. And for people who have done it, I think you’ll agree with this, it’s actually a lot harder than you’d think. It’s actually very, very difficult to give it away in a way that you feel like is making a big difference and you feel great about and is going to the right causes. It should be easier than it is and it’s not, it’s actually very difficult. I’ve always been most interested in microphilanthropy, what I’ll call it. Rather than donating to a big charity, I want to find a single mother who’s struggling and give money directly to her, that sort of thing.
And that’s actually, I think, the hardest form of charity to do. I’ll tell you two examples of this that I’ve had that were really profound for me. One was, I was in New York City and I walked past, I think it was a CVS, and there was a mother and a child who looked like my son, who were saying, “Can we please have some money for food?” Because the child looked like my son, it was like, I have to stop. I went to the mother and I said, “Grab a shopping cart and fill it up and you can get anything you want,” which by the way, my mother did. I saw my mother do this to someone when I was a child, say, “Grab a shopping cart and fill it up, no limits.” We did this. She went in into CVS. I kind of followed them around and I said, “No, just fill the cart up.”
And when they were done with it, I paid and they just walked out. Not a thank you, not a look in the eye, nothing. Let me make clear I was not doing this because I wanted the attention or because I wanted the thank you, but I wanted some indication that I made a difference. I wanted some information that it helped and I didn’t get it. And that’s what made it really hard. And in my heart, I’m like, I know this made a difference. I know that kid can eat and that’s why I did it. But in anything you do in life, you want feedback that what you’re doing is working. And in a lot of these situations, you don’t get it.
And of course, people who are begging for food for their child probably don’t have the emotional capacity to say thank you. It’s not what’s going through their head. I completely understand it, but that’s what makes it so difficult. And I’ve had that similar situation happen many times to do it. So when I think about if giving away $200 is very difficult, how do you give away 998 million? Or if you’re Bill Gates and Warren Buffett, how do you give away 200 billion? Very, very difficult to do. Extremely difficult to do. I mean, I think the best analogy for this is really what the federal government is is a giant charity program with the exception of defense and whatnot. That’s kind of what it is. And it’s not very well run. Most people don’t like how it’s run because it’s so difficult to do and make everybody happy.
Tim Ferriss: Yeah, yeah, totally. I mean, if your options are, as somebody put it to me, I’ve been asking a lot of people this question because to emphasize, again, this might seem like rarefied air and people are like, come on, why are we talking about a billion dollars? Number one, because it’s sort of a large, absurd amount of money and unwieldy for the reasons that you just described. Although I think a lot of people who are in that upper echelon let perfect be the enemy of good, right? They want to do more homework and do more diligence, and they could do a lot of good sooner on compounding problems, but they put it off because they’re hoping for perfect information that will let them pick the winning stocks of all the nonprofits, which I think is very challenging to do, and often just a means of postponing things.
But they said, “Look, your options are taxes to the US government, your kids, or charity. Which would you prefer?” And like you said, I mean look, I pay taxes like everybody else, but it’s not always the best run. So would you prefer it to go there? Would you prefer it to go to a nonprofit or a set of nonprofits of your choosing?
But let’s zoom out, because I want this to apply obviously to more people. Mentioned the Stoics a little bit earlier. Seneca the Younger, who’s a very controversial figure for a lot of good reasons, but he’s a hell of a quote machine. He’s like the Arnold Schwarzenegger one-liner of the Stoics. He said, “People talk of having riches when often riches have them, much like a fever.” And this is paraphrasing, but of course we’re all paraphrasing, it’s translated, it wasn’t published in English. But how would you suggest people think about money or income and happiness? This has come up on the podcast quite a lot, but this is something that comes up in human history even more often. What are some patterns or takeaways or lessons learned from your observation and study of these things?
Morgan Housel: One thing that I think is really true, and it’s coming out a lot more in the data is that if you are already happy, gaining more money will probably make you happier. But if you’re already kind of depressed, gaining more money is probably not going to help that much. There’s a really interesting documentary about J. Paul Getty, who used to be the richest man in the world. I think that the interview is taking place in the 1960s or 1970s in his castle in England, and it is a bonafide castle straight out of a fiction book. And he’s sitting there in this 700-foot-long dining room surrounded by gold and diamonds, the most ostentatious thing you can see. And the interviewer says, “Who are you envious of?” And the interviewer says, “Obviously everyone’s envious of you. Who are you envious of?” And the guy, he’s so morose, he’s so glum, and he just kind of looks down and he says, “People who are happier than me.”
And it was like, that’s the case. Money didn’t help him because he was already depressed. And in that situation, it’s not going to do much. But I think if you are the kind of person who already has a chipper disposition, you’re already happy, then gaining more money will probably improve your life. That I think is kind of an unfortunate irony because so many people who are depressed will think to themselves, “If only I had money, it would fix everything.” And it’s probably not the case. There’s a really great quote in Will Smith’s biography where he says, when Will Smith was poor and depressed, he could say to himself, “If only I had more money, everything would be better.” And then when he was rich and depressed, he didn’t have that hope anymore. Money actually subtracted the hope from his life because he realized there was nothing else to strive for.
So I think that’s the case. If you’re already depressed, that’s who you’re going to be when you’re rich. And this is just highlighting something that a million people have said and everyone already knows, is that money just accentuates who you are. If you’re a jerk, it’s going to make you more of a jerk. If you’re happy, it’s probably going to make you happier.
Tim Ferriss: It’s like power or alcohol or many drugs. It’s an amplifier.
Morgan Housel: Exactly, exactly. And one of the things that’s really interesting to me, the new biography of Elon Musk, Walter Isaacson is interviewing Musk’s first wife, whose name is Justine, and she met Elon in college before he was any successful. He was just an immigrant from South Africa. He didn’t have any money, no success. That’s when she met him. She talks about how much money and fame changed him. It just completely altered his personality.
The other thing that I’ve always found interesting is that if you go back and look at an interview of Donald Trump in the early 1980s, there are several of them you can find on YouTube when he was known but not famous, and he was probably wealthy but not rich, you would not recognize him. Utterly different person, very calm, very measured, very reasonable. And even if you are a huge Trump fan, I think you would be stunned at who the person is on camera. So any of us, me, you, anyone, if we came into that level of fame and power and money, it would change us. And there’s another quote from J. Paul Getty where he says, “Nobody would be the same if they could afford to be different.” And I think that’s a sad quote, but I think there’s a lot of truth to that.
Tim Ferriss: Say it again.
Morgan Housel: He says, “Nobody would be the same if they could afford to be different.”
Tim Ferriss: What do you think he meant by that?
Morgan Housel: I think he was probably mentioning in the sense of does money make you happier? Does money change who you are? And I think all of us want to imagine that if you and I stumbled across a billion dollars tomorrow, we would be the same people. We would have the same friends, the same interests, the same hobbies, the same disposition, the same personality. And I think there’s enough examples of this where the answer is we would not, I think there are probably some exceptions that we could think of, but I think every single person who comes into that kind of money is a different person, becomes a different person, is going to have a different personality.
Tim Ferriss: Become a different person or if it’s similar to the quote, I wish I could recall the attribution, but, “Adversity doesn’t build character, it reveals it.” I wonder if it’s kind of like watching someone with money interact with a waiter or a waitress who’s having a tough first day or a busy section. When people don’t need to be nice anymore, how do they behave? Whereas when you’re still in building mode on some level, especially if you’re socially aware, you’re playing, I shouldn’t say all people. Most people are going to play the game consciously or subconsciously, be on better behavior. But when you really have fuck you money, how often do you actually say “Fuck you?”
I think that’s maybe a measure of what was a kernel of the personality or the hidden personality, the better hidden personality beforehand. Also, but I don’t want to end on basically, if you think your life sucks now, it doesn’t matter what money you make, you’re probably going to still think your life sucks. Now, even if it’s true, it’s sort of a sour note to end this chapter of the conversation on. So I want to explore it a little bit further, but what were you going to say?
Morgan Housel: I was going to say I was in Omaha, Nebraska last week. Obviously, Warren Buffett’s hometown, and I was driving along the freeway and there’s a giant building, one of the tallest buildings in town that on top of the building in enormous, probably 50-foot letters says, “Buffett Cancer Research Center.” So he’s funded it, he’s bought it. Warren drives by past that building every day and sees that. And there is no way that seeing your name on something like that, there’s no way that he’s the same Warren Buffett who drove past that building when he was 13. It’s going to completely change just your view of who you are in the world.
To your point about, let’s not leave this on a sad note, because you’re right, I do think money can be used to give yourself a better life. The distinction we need to make is the distinction between happiness and contentment. Does money buy happiness? I think that answer is pretty firmly no. Can money buy contentment? I think that’s a pretty firm yes. And that’s great, contentment is a great trait that makes your life better, but it’s very different from happiness.
Tim Ferriss: Could you just define that term so we understand what we’re talking about?
Morgan Housel: I would say happiness is you wake up grinning ear to ear. Happiness is you’re out at a bar with your friends. Happiness is you hear the funniest joke you’ve ever heard, and that’s what I think people strive for and they think that money’s going to give to them and it won’t. But I think contentment is you just wake up with a low or virtually no level of anxiety. You’re like, I’m good. I’m pretty happy — I’m pretty satisfied with my career. I’m satisfied with my relationships. I’m satisfied with the house that I live in. That’s not happiness though. I think money can reduce the number of sad days that you have, but it’s probably not going to increase the number of happy days that you have. Now, that’s awesome. If you can do that, that’s a huge life improvement, but it’s not happiness.
Tim Ferriss: Unless you have standup comedy budget and you go to more standup comedy shows.
Morgan Housel: See, that’s actually a great point.
Tim Ferriss: I’m not really kidding. That’s something that I do quite a lot of.
Morgan Housel: I’ve been on such a comedy binge lately, just Netflix specials. And I’ve said this many times, but I think comedians are the only good thought leaders because when you listen to good comedy —
Tim Ferriss: They’re the only practical philosophers left.
Morgan Housel: Exactly. And not only do you laugh, but you get smarter. I think George Carlin was a bonafide genius. I think Bill Burr is a genius. Those guys understand human behavior better than any psychology PhD does.
Tim Ferriss: So let’s take a hard left from what we’re talking about. Let’s talk about avalanches. I’ll let you take the baton and go from there. Avalanches scare the living hell out of me. I do have a decent amount, I have no expert skier to the extent that you used to compete and so on, but I have done in the last handful of years, quite a lot of side country and back country skiing, and this just scares the wits out of me, does not get less scary with each passing year. So tell me about your experience with avalanches.
Morgan Housel: So I grew up as a competitive ski racer in Lake Tahoe, and most of those big years were when I was a teenager, 16, 17, 18. And my friends and I, there were about a dozen of us on the Squaw Valley ski team, and we skied six days a week, 10 months a year, we skied all over the world, always traveling around. And one day, this is February of 2001, I was 17 years old at the time, and Lake Tahoe where we lived, had just been dumped on, just got an absolute monster blanket of snow, dumped on. And the layering of snow was very important to the story. So at one point, Squaw got about two feet of very light, fluffy snow. And then after that it got about two feet of very wet heavy snow on top of that, which we didn’t think about this at the time, but that creates a textbook perfect avalanche condition because you have heavy snow on top of light snow, it slides very easily.
So one day in February 2001, myself and two of my friends, Brendan Allen and Bryan Richmond, were skiing and we would ski out of bounds at Squaw Valley. We would duck under the ropes that say, “Do not cross,” to ski the untouched, untracked parts of the mountain that are so much fun to do. And when you do that, there’s no chairlift at the bottom. We would ski to the bottom and then hitchhike back once we got spit out on a back country road. The three of us did this run on the backside of Squaw. We had done it maybe a half dozen times before, not that often because it’s such a pain in the ass to hitchhike, but we skied down. It was so great, it was so awesome. And halfway down we triggered a small avalanche and it was pretty small. It came up to our knees.
And it’s the most bizarre feeling because you very suddenly have no control at all because rather than pushing on the snow to gain traction, the snow’s pushing you. So all of a sudden you go from skiing to I’m on a roller coaster is how it feels. But it ended pretty quickly and we got to the bottom. And I remember saying to Brendan, I remember saying like, “Holy shit, did you see that avalanche?” We laughed about it and we hitchhiked back and didn’t say another word about it. We get back down to Squaw and Brendan and Bryan say, “Hey, let’s do it again.” And I have no idea why, but I said, “I don’t want to do it again.” I think hitchhiking kind of freaked me out. But Brendan and Bryan said, “Okay, we’re going to do it again.” And I said, “Hey, rather than hitchhiking, I’ll drive my car around and pick you guys up so you don’t have to hitchhike.”
So we went our separate ways. Brendan and Bryan went and did the run again. I went down, took my boots off, drove around to pick them up. And when I got to the spot where I was going to pick them up, they were not there. And I didn’t think that much about it. I thought maybe they had already hitchhiked back. I think I was late. So I was like, I felt bad that I was late picking them up. And they had already left. And I drove back to our locker room and they weren’t there either. And no one had seen them. And this was before cell phones, but prior to cell phones, people were very comfortable being out of touch, unlike they are today. If you didn’t know where someone was, it was like, yeah, whatever. They’re somewhere else. I didn’t think anything of it.
And later that day, Bryan’s mom called me and she said, “Hey, Bryan didn’t show up for work today.” And she also just spoken to Brendan’s dad. And Brendan missed a dentist appointment that afternoon. And she said, “Do you know where they are?” And I said, “Yeah, we skied the backside of Squaw, which we were not supposed to do, was out bounds, and I was going to pick them up, but they never showed up and no one’s seen them since.” And Bryan’s mom, who’s an expert skier, said, “Oh my God.” And she clicked the phone, she hung up. And I think in that moment, both of us figured out what happened without saying it. Both of us knew what happened. And the day went on, we called the police, we got a missing person’s report. The police didn’t take it seriously at all. But eventually that evening we got search and rescue involved and they went out, it was still a blizzard.
They had a team of search dogs and these giant floodlights to search for them. And the next morning, about 9:00 a.m. the next morning, the search dogs had honed in on a spot in the avalanche field and rescuers with these giant pro poles to probe the snow found Brendan and Bryan buried about six feet down from a massive avalanche. The rescuers had just said it looked like half the mountain had been torn away. And they were dead, of course. And so I was 17. That had a huge profound impact on my life. This is not that unique of a story. Everyone has lost somebody close to them. Everyone’s had a near death experience themselves. But this was my version of that, and it shredded me, completely tore me to pieces. And it wasn’t until years later that I had pieced together a couple of takeaways from this that impacted my life personally.
One was my decision to not go on the second run with them was completely thoughtless and brainless. I didn’t weigh the pros and cons. I didn’t say, “Oh no, it’s too dangerous.” I didn’t think anything of it. I think I was probably just tired. And I said, “You guys go do another run. And I won’t.” If I had went with them, 100 percent chance I would’ve died. So the most important decision that I ever made in my life, it was not where to go to college. It was not whom to marry. The most important decision I ever made in my life was to not go on the second run with them. And I put no thought into it. It was a complete random fluke. And so one of the takeaways there for me was just like how fragile life is.
There’s this great quote from Tim Urban, who I think has probably been on your show before, where he says, “If you had a time machine and you can go back in time, you would be terrified because you would realize that the tiniest little know-nothing decision that you make can flourish into completely change your life in good ways.” In good ways and bad. Like most people, how they met their spouse was a complete random fluke that ended up really important to them. And so you realize this is how incredibly fragile life is and how there might be a decision that you make today, that I make today, that we think nothing about. It’s the random decision that goes on to change everything. So that story, that experience had a profound impact on me on thinking about risk, thinking about the tail end consequences of risk, thinking about how fragile the world is. It went on to impact virtually everything in my life from that one day.
Tim Ferriss: I’m so sorry, obviously, for the loss of your friends. And the story for all the reasons you described is terrifying not just from the avalanche perspective, but from the angle of looking at how small decisions can have huge impacts. And also how I think as we discussed in the last conversation, risk is what’s left when you’ve thought of everything else. Now in this particular case, I suppose if you’d really taken a moment to sit down with the pro and cons, you probably would’ve figured out that it was a bad idea. But in the moment, you could have very easily made the wrong decision.
I suppose part of what I’m wondering, because you’ve become very good at interrogating the world and your own thoughts with questions. In that particular moment, you made a snap judgment. It’s not really a snap judgment. You made a snap decision that saved your life, but you have questions that you seem to explore or revisit with some regularity. Some of them we discussed in the last interview, but I’m just going to read a few.
So what are we ignoring today that will seem shockingly obvious in a year? Which of our current views would change if our incentives were different? And it goes on and on. I mean, there are many others. I mean, there’s one that I had not heard before, which is what hassle are you trying to eliminate that’s actually an unavoidable cost of success? That’s pretty interesting to me. Who has the right answers, but we ignore because they’re not articulate? What looks unsustainable that is actually a new trend we haven’t accepted yet? So my macro question about these questions is how you arrived at these questions, whether it was coming up with them or borrowing them or adapting them, and which of these might be worth exploring as our next chapter in this conversation?
Morgan Housel: I think maybe the core of a lot of these questions is that everybody, including myself, thinks that their experience in life is roughly how the world works without realizing that their experience in life is so very unique to their life. And so you and I are white American males, and I think it’s common for us naturally to think that the experiences that you and I have had and how people treat us is how everyone else is treated. And of course, that’s not true. And so I think when you accept that the world that I’ve experienced is so different from the world that you’ve experienced and other people, then I think you just start asking these questions about what else is out there that I haven’t seen that I’m oblivious to. And the fact is that I and you and everyone is oblivious to 99.99 percent of the world, completely oblivious to how it works because we’re centered on what we’ve experienced.
So that’s where a lot of it comes. I think a lot of it too, and this is an unhealthy mindset, but I spend 99 percent of my life thinking about the past and contemplating the future. The worst thing that you can do, like virtually never present. So I think I’m constantly interrogating the past of what could it have been? Why did that happen? What would my life have been like if that happened? My parents were visiting us just last week, and my mother was and is at a very high risk of breast cancer. By age 42, she was the oldest surviving female in her family, her sister and mother, her grandmother, everyone had died of breast cancer. And my mother is now 70 and she’s healthy. Fingers crossed, knock on wood.
But we were talking the other day about when we were growing up and myself and my siblings were children, that my father and mother would cry. If my mother had a lump that needed to get checked out, they would hold each other and cry about this is going to be the one. And it’s so bonkers for me to contemplate if my childhood had ended up differently and it so easily could have, not only could it have, it probably should have, statistically she should have died of breast cancer 30 years ago. And the fact that it didn’t — so I actually spent, this is probably unhealthy, but I spent a lot of my time contemplating what would life have been like if my mother died when I was 10 years old? I’ll take that back. I think that is a pretty healthy thing to think about, to imagine a life that’s different than it could have been. Because I think it prepares you for a more variant future than you’re expecting.
And the truth is that nothing would’ve been the same. I would’ve gone to different schools. I would’ve had different friends. I would’ve had a different mindset. I would’ve had a different career if that had happened. And you can say that for a billion different things in life. And then you realize that the path that got you to where you are today was completely unforeseeable and completely random. And in many ways outside of your control. Everyone, I think particularly successful people, want to think that their success was entirely, if not overwhelmingly, due to the decisions that they made. And I think in virtually any condition, in any example, that’s not the case. There were good decisions that you made —
Tim Ferriss: Very fragile framework, right? Because you’re then either excellent or terrible depending on the outcome. And in both cases, you’re not factoring all of the chance involved. It seems to be a fragile mindset in a sense. It’s a vulnerable mindset.
Morgan Housel: There’s a German philosopher whose name I’m forgetting, but he has this idea, and this is probably a pretty common idea, I don’t know if he came up with this, but he just talked about it, that there are an infinite number of possible worlds, an infinite number of ways the world could have turned out, and we just happen to live in this one. There are just an infinite number of alternative histories. It could have gone another way. During the Revolutionary War in the United States, it was the Battle of Long Island, and George Washington and his troops were very close to being wiped out by the British. All the British had to do was — they basically had them cornered just outside of Brooklyn, and all they had to do was sail up the East River and it would all have been over, and that was their plan.
And George Washington’s troops were starving and hungry and they were whipped. And the night that the British were planning to sail up the river and corner him, the winds changed direction and turned the other way and they could not sail up the East River. And that gave George Washington and his troops just enough time to get away. David McCullough, who was one of the world’s foremost authorities on this topic, was interviewed by Charlie Rose, and Charlie Rose said, “If the winds were blowing the other direction that night, would there have been any United States?” and David McCullough said, “Absolutely not.” The entire reason this exists is because the winds in Brooklyn changed directions last night. When you hear enough stories like that, you realize literally nothing is certain about the future.
It could all go in any different direction for the tiniest little reason, not a big reason, but, for me, it was not going on a second run, and I thought about it afterwards. I had probably been on something like 3,000 runs with Brendan and Bryan over the course of my life, probably something in that neighborhood. And how many times did I say, “Hey, you guys do another, I’m going to skip?” Probably never. I think it was probably the first time I had done something like that. And so, when you hear a story about the winds changing direction, for me, it just makes you so incapable of having any confidence that we know what the future’s going to bring for any of us.
Tim Ferriss: Let’s maybe shift to the meta level one more time, and I’ll make it more specific in terms of the question about the questions, and then I want to segue to, not in a rush, but asking about perhaps things that are more inside of our control in terms of coming back to the Serenity Prayer, which you so kindly invented in 2020, although I guess the Be Here Now, you did not, that was from the canon in terms of the past and the future, in any case.
Morgan Housel: Still working on that one.
Tim Ferriss: Yeah. These questions, like what are we ignoring today that will seem shockingly obvious in a year, were these questions that you generated or used mostly in thinking about investing? Are these prompts that you came up with for writing or something else? Where did these questions come from?
Morgan Housel: Let me start with that specific question about what’s going to be shockingly obvious in a year. I remember, I forget who it was, but in the dark days of COVID, so March or April 2020, and somebody tweeted, I forget who it was, but they said, “In one year, we’re either going to be in the second Great Depression, and it’s going to be so obvious that that was where we were heading, or we’re going to be in a giant boom, and it’s going to be so obvious that that’s where we were heading.” Either of those outcomes would be so obvious. And the truth is, one year later, by most measures, we were in a giant boom, stock market boom. Things were exploding in 2021, the meme stock bubble. And, for a lot of people, it was so obvious. The Fed printed all this money. We did $6 trillion. Anyone could have seen this coming, but the truth is that, if we were in the second Great Depression, it would’ve been just as obvious.
Most of these questions that I posed in the end of the chapter there are questions that I think are impossible to answer. What is going to be shockingly obvious today, one year from now, in 2024? I think it’s impossible to answer, but it’s going to be shockingly obvious. And maybe the answer will be who is going to win or who’s going to lose the presidency? And when it’s going to happen, it’s going to be so obvious. A lot of people did this with Trump in 2016. When he won, they said, “Yeah, I saw this coming.” Maybe, or if he had lost huge, that would’ve been obvious too. Most of these questions I just have in my semi-depressive walks around the neighborhood sometimes, when I’m walking my dog, contemplating what the past could have been or what the future’s going to hold for me, but I actually enjoy doing these things. I think it’s fun to contemplate a world that is so outside of your little comfort bubble of what you’ve experienced.
Tim Ferriss: Let me touch on another one of the questions, which is which of our current views would change if our incentives were different? And I want to tie it to another line that I have in front of me that I want you to elaborate on, and maybe these parallel, maybe they don’t, but they seem like they could, and it is the most valuable personal finance asset is not needing to impress anyone.
Morgan Housel: I’ll tell you what is so stark to me about the topic of incentives, about how would I be different if my incentives were different, one of the passages that I’ve read that stuck out to me the most and stopped me dead in my tracks was from this book on World War II, as we were just saying, it’s a book called What We Knew, and it’s a book that interviews German civilians who are around during Nazi Germany. And the book just asks, “What did you see? What did you know during this period? Did you know about the Holocaust?” in a very nonjudgmental way, because they’re all civilians, “Just tell me what you saw.” And there’s a German civilian who mentions that, when Hitler came to power, virtually every German supported him. And the interviewer says, “Why? What was so appealing?” And the civilian says, “Well, you have to understand, in 1920s and the early 1930s, the German economy was an utter catastrophe,” way worse than the Great Depression that we had in the United States.
They had hyperinflation, everything fell to pieces. I’m simplifying this, but Hitler came to power and said, “I have a better way. I’m going to give you all jobs. I’m going to make you all wealthy again. We’re going to restore German pride and power.” And, in that situation, when everyone was literally starving and had nothing, this civilian said, “If someone comes along and promises you a better way, you accept it and you say, ‘Yes, I’ll go with you.'” And they said everyone was so willing to overlook the obvious downsides of Hitler because he gave them the incentive to be like, “Hey, do you want a job? Do you want prosperity? I’m the way,” and they said, “Sign me up, I’ll do it.”
There’s another example. It was a documentary in Mexico where El Chapo, who was, of course, one of the most ruthless, murderous drug lords of all time, but he’s actually very well-supported by a lot of local communities in Mexico, and this interviewer had asked these people, “Why? Why do you support this murderous dictator?” And they said, “Well, you got to understand, we have nothing. We have no money.” And Chapo comes to town and he says, “I’ll build you homes. I’ll give you healthcare. I’ll give you food. I’ll give you jobs,” takes care of all of them, and their incentive, the civilians’ incentive is to say, “This guy’s great. Love this guy.”
I think a lot of society, when you look at why was Hitler supported, why is Chapo supported, can at least in part be explained by those people have incentives that you and I don’t. And what is scary, but undoubtedly true, is contemplating whether you or I, if we lived in Germany in the 1930s, or if we lived in Mexico in the last 20 years, would’ve supported those people.
Tim Ferriss: Of course you would’ve.
Morgan Housel: Yes, I think you are fooling yourself if you say, “No, I would not have.” And so I think, if you have a cynical view of everyone who lived in Germany was a monster, of course, a lot of them were, but if you say they all were monsters, everyone who supports El Chapo is a monster, I think if your conclusion is that if all of them, you are misunderstanding the power of incentives and how you would be different yourself.
Tim Ferriss: Yeah. I agree. Let’s use that as a segue to maybe the unrelated, maybe the related, the most valuable personal finance asset is not needing to impress anyone. Is that something you can cultivate or is that also a preset out of the box?
Morgan Housel: I think there are definitely people who are more insecure than others, and I think where a lot of this comes from is that everybody wants respect and admiration from people around them, particularly the people who they want to admire them, their friends, their spouses, their coworkers, and there’s a couple of different ways to cultivate that. If you can cultivate respect and admiration through wisdom and intelligence and humor and love and empathy, then you can get all of it from that. If you don’t have any of those traits, most people will resort to trying to gain admiration with horsepower and square footage, and they’ll just try to show off to other people. I can’t gain your respect with humor and wisdom, but look at my car. It’s really cool, isn’t it? That’s a lot of where it comes from.
And we were talking about comedians before Louis C.K., I’m fine saying this because I think he would admit to it, he looks like a fat slob. Nobody cares because he’s so funny. He doesn’t need to show off his six-pack. If he drove a Honda Civic, nobody would care. They admire him because he’s funny. And I think there’s a lot of insight in that, that everybody just wants respect and admiration. I know there was a picture of Justin Bieber the other day, and he’s wearing a dirty wife-beater and ripped sweatpants, doesn’t matter. He’s Justin Bieber, he can do it, does not matter. If you gain your respect and admiration from other ways, you don’t need to show it off. And so I think that’s a big part of this.
And for the huge majority of people, the biggest financial liability that they have, it’s not student loans, it’s not a mortgage, it’s their desire and their need to impress other people. And I think that the way that you can cultivate this is realizing that those people are, A, by and large, not paying attention to you. They’re worried about themselves. The people who you think are looking at your car are not. They’re thinking about their own car. That’s a big part of this, or the other part of it is there’s probably seven people in my life who I want to love me, my parents, my wife, my kids, one or two friends that I would say I really desperately want them to love me. It’s really important that they love me and that’s it.
The other 7.99999 billion people on the planet, maybe I would like you to like me, but that’s about it. Once you realize that, then it’s like I want seven people to really respect and admire me, and I’m going to put all my effort into that, and everyone else, I really don’t have much care about. I think, once you accept that, that’s a huge relief off your shoulders.
Tim Ferriss: You mentioned earlier the most important decision of your life being that snap decision to not take the extra run. Very quickly, either just before or just after you mentioned that, you talked about marriage or who you marry. How would you suggest people think about that, if there is a way to think about it, or is it just a crapshoot? It’s just like, hey, look, you’re in the casino and either you’re going to roll lucky sevens or you’re not, but best of luck to you. Is there a structured way to think about this, or a particular way, a mode of thinking about this, that you could — any suggestions? Asking for a friend.
Morgan Housel: Gun to my head, Tim, it’s the latter. I think a lot of it is there’s a tremendous amount of luck that’s involved in it. A lot of that is because most people want to get married during a pretty narrow window of their life. From probably age 25 to 35 is when most people want to get married. During that window, you’re really just like, “Who am I meeting?” And, particularly as you get older, a lot of people are like, “I really want to get married. I just met this guy,” or this girl. “Okay, that’s what I got. That’s what’s in front of me. That’s what we’re going to do.” I do think there is a sense, though, that a lot of people, particularly when they’re young, particularly in their early to mid-twenties, are obviously maximizing for the wrong variables. Guys are maximizing for beauty and women will tend to maximize for money and prestige.
That’s a very generalized statement that is not black and white. If you’re offended by that, I’m not talking about you. But, obviously, what’s going to work in the long run is just are you best friends with this person? That’s it. That’s it. I think there’s analogy to investing here where a lot of investors want to maximize for the variable how do I earn the highest returns this year? And, in many ways, that is like maximizing for beauty. It’s super fun. It’s super exciting right now. I’m going to get a lot of dopamine right now, which is what you’ll get from an attractive spouse, and it’s what you’ll get from owning a meme stock in 2021. But what actually works in the long term is owning a boring index fund for 50 years, and what’s actually going to work in marriage is marrying your best friend, even if they’re not the most attractive or richest person that was in your social circle. I think that’s really clear as day.
Now there are some people who will marry their best friend who is also very wealthy and very — of course, it works out, but I think a lot of it is just is just people maximizing for the wrong variables in there. When I look at my own marriage, my wife and I met when she was 19 and I was 21, so we were very young. We were in college. And we’ve been together for 17 or 18 years now. And when I look back at it, I think it was overwhelmingly luck. And I think the biggest element of luck in there is that we grew together and, hey, by the way, I’m going to say we’ve grown together so far, fingers crossed that we continue to do so, but if you understand what happens to most relationships, it’s much more difficult than you would think. But I attribute that a lot to luck.
And there were periods in our relationship when I started to go one way and she started to go another and we came back. But you can see it.
Tim Ferriss: How did you do that? Maybe you don’t have to give a concrete example if it’s not comfortable, but this is a relationship breaker. That divergence breaks a lot of relationships, or it just causes an incredible amount of strife, and it’s not clear that the lines come back to converge. I’ve seen many seemingly great relationships self-immolate because of this divergence that does not converge in time to save the relationship. What did you guys do to rein it back in, or what happened there?
Morgan Housel: The best definition I’ve heard about love is you love someone if you respect them for their faults as much as you do their good traits, and I think that was really true, that in —
Tim Ferriss: What does that mean though? It sounds good. I’m going to push back a little hard, because I’m not like, “Yeah, this person’s always late. I really respect that they’re always fucking late when they show up to dinner.”
Morgan Housel: No, I totally understand what you mean, and I think maybe respect is the wrong word, but it’s more acceptance.
Tim Ferriss: I see.
Morgan Housel: If my wife does something that irritates me, and of course, that’s happened, and vice versa, more so vice versa, I have to go out of my way, but I try to go out of my way to say, “I know she means well. I know she’s doing the best she can,” even if it really bothered me. And I think, if you can hold onto that, it’s easier not to look over things, but to compromise on things. Everyone knows the friendship with your best buddy, not your spouse or your mate, but your best buddy, that all it takes is for one person to pick up the phone and give you a call. And if you can do that, you can keep a friendship going for 20 years, 30 years. And I think, if one person in the relationship really wants us to work, you can really make it work.
I have a close friend who their relationship is not that healthy, and they’ve said that, at any given time, one of them wants to leave, but there’s never been a time when both of them want to leave, and that’s why they’ve stuck together. And so I think, if there’s one person in the relationship that is willing to compromise and make it work, there’s a good chance that it’s going to work over time. I don’t think I’ve ever said this, I really have three major life goals. I want to stay married, I don’t want to get fat, and I want to be there for my kids, and I think those are just pithy ways to be like —
Tim Ferriss: Is that in weighted order, one to three?
Morgan Housel: Probably not, probably not.
Tim Ferriss: I was kidding.
Morgan Housel: But I think that’s respect for my relationships, respect for my body, and respect for my family is one other way that you could put that. And I think those are really the goals that, if I’m on my death bed and I have not achieved those, I’m going to have some regrets. If those are that powerful, then you’re willing to compromise on a billion different things to make it work. And there’s a friend of mine named Brent Beshore who says, “If both you and your spouse want to serve each other and expect nothing in return, then it works. I want to serve my wife and I don’t expect her to serve me. And, if both of you do that, you’re always going to be pleasantly surprised. You’re always going to be like, ‘Wow, you did this for me.’ You’re always going to be in the sense of awe of the other person.” That is idealized, of course. It’s much easier to say than to do, but I think it’s a pretty good guiding philosophy once you be like, “I’m in the service industry, I want to try to serve my wife, and I don’t want to expect much in return.” If I can do those things, I’m probably going to wake up pretty satisfied with the relationship most days.
Tim Ferriss: That’s probably true for life, broadly speaking, in the sense that reality minus expectations equals state of being. Let me ask you a question that I brought up a little bit earlier. I’ve never heard it posed, or read it posed, and so I’m curious to know how you might answer this if you had a gun against the head, because I’m not saying this immediately produces answers, but if you had to answer it, or answer it for other people, what hassle are you trying to eliminate that’s actually an unavoidable cost of success?
And the reason that I want to return to this is that, and this ties into the question of money, happiness, contentment, et cetera, is that many people who achieve what would be considered by most financial success are people who have been rewarded for solving problems over long periods of time, and they probably identify as being a good problem-solver. And they are therefore conditioned, their behaviors are shaped, to look for problems to solve, and that does not always foster a sense of well-being, if that makes sense. Yeah. What hassle are you trying to eliminate that’s actually an unavoidable cost of success? How would you answer this, or how have you answered it, or how have you seen other people come up with answers?
Morgan Housel: I’ll give you a technical answer and then maybe a more personal answer. I think, when I wrote that question, I was probably thinking of stock market volatility, very technical, probably not where you thought I was going. A lot of investors try to eliminate volatility, and they view it as a burden and something that you should get rid of when, actually, it’s like, no, that’s the cost of success.
Tim Ferriss: It’s the fee and not the penalty.
Morgan Housel: It’s the fee and not the penalty. That’s probably what I was thinking. One thing that comes to mind is a blog post that you wrote many years ago, I think, about the cost of fame.
Tim Ferriss: Yeah, “11 Reasons Not to Become Famous.”
Morgan Housel: Yes, and you were very open and forthcoming about what it’s done to your own life. And anyone who reads that will read that and say some version of, “I don’t envy what Tim’s going through.” And the irony of coming to that conclusion after millions of people will look at the books that you’ve sold and the money that you’ve made and the downloads of your podcast would say, “I want to be like Tim,” and then you read that and it’s like, “I don’t know. Maybe, but I don’t know.” It’s not at all clear anymore.
Among the top 10 richest people in the world, there are, I think, 14 cumulative divorces, which is obviously a massive outlier within there. And I think the reason why that is is because to become very successful, you need to devote every waking hour to your career. And so your spouse, your children, your friends, “Bye. Sorry, don’t have any time for you.”
If you read the biography, The Snowball, which I reread recently, it’s a biography of Warren Buffett, as someone who’s been such a Buffett fanboy my entire life, and a lot of people will fall into that category, you read his biography, and at the end, you’re like, “To tell you the truth, not the life that I want.” He has devoted every waking hour since he’s been 11 years old to picking stocks, that’s not an exaggeration, and it came at the expense of his personal life, his marriage, his children. There was an interview with Elon Musk several years ago where they’re talking about how hard he works, and he breaks down in tears and he says, “All of this has come at the expense of spending time with my children.”
And it’s like I don’t want that. There’s not any version of life in which I would be on my death bed and say, “That was worth it. I made a ton of money, but who are these children that I had? I don’t even know them.” And so I think, if you want the success, but you want to eliminate the downsides of it, you’re completely fooling yourself. You have to make a decision. I would be willing to bet too, although I don’t want to put words in your mouth, that despite that blog post, when you’re talking about all of the downsides that you have experienced, if you had to go back to before, when you wrote The 4-Hour Workweek, you would not change your mind. You would still do it. The cost was worth it. I don’t want to put words into your mouth, but I’m willing to bet that’s true.
Tim Ferriss: I would say it’s a both/and. There are ways in which it is worth it, and there are many ways in which it is not worth it, and that’s what makes it so tricky on a forward-looking basis, thinking about decisions. Although it’s easier for me now because I’ve realized some of the Faustian bargains, and I’ve also realized how, to your earlier point, how much money is an amplifier rather than a savior, if that makes sense. And, of course, it depends on where you are on a Maslow’s hierarchy of needs, but chances are, if you’re listening to this podcast and you’ve made it however long, hour, hour and a half, that using the global average as a reference point, you are in the top one percent and you are doing very well from a global standpoint.
I’d say a few things just to give myself a little bit of slack, the younger self, that I don’t think hope is trivial, and that seems like such a self-evident statement. And I’m not sure if we talked about this, but there are some people I’ve come across who are like, “Oh, lotteries. Lotteries are taxes on the dumb,” and I think about it, I’m like, “Well, if you feel trapped, if you don’t have mobility, and 10 bucks, when the Powerball gets over $500 million, buys you a week or a couple of days of hope and excitement, is that really a bad investment?”
Morgan Housel: Totally worth it.
Tim Ferriss: I would actually push back and say it’s actually probably not a bad investment, it’s actually probably a great investment, as long as you don’t overdo it. And, similarly, I think that, without the delusion early on that money would fix all of these problems, it would resolve all of this inner conflict and turmoil and insecurity — I think that was actually a very valuable delusion.
What was my alternative? Compared to what, I think, is a question we need to ask more often. Risky, compared to what? Is it this, compared to what? Is that person a good match, compared to what? And, for me, it was like, all right, what was the best alternative, to just not have any hope, to assume that this steady state of, at the time, quite a bit of suffering and depression was going to last forever? I don’t think that was a viable alternative.
Even though I’ve arrived at a point where I need to find other solutions, I think that’s better than having given up hope 20, 30 years ago. But I would’ve made some very different tactical decisions along the way to minimize some of the risks and downsides for sure, but it’s tricky.
Morgan Housel: Even if that’s, in hindsight, definitely true, I think it would’ve been impossible because there’s no way for you to learn about the downsides of fame other than to go through them. It almost would’ve been very difficult to preempt it. I think there are some things to do. Back to the $8 billion family, they learned vicariously through other families what not to do, and they preempted a lot of it, so to the extent that you can learn those mistakes from other people — and I would say reading that blog post from you, Tim, had a profound impact on me. And I think what a lot of people who are in any degree of public spotlight don’t understand is that you think you’re gaining attention, but what you’re actually fostering is envy, and envy will come back to haunt you tenfold. And so be very careful when you put your successes out there, because even for people who are clapping for you, they’re clapping for you while they’re biting their lip because they’re envious of what you have.
Tim Ferriss: And even if they don’t feel that envy in the moment, and I may have mentioned this in that piece, but it’s the poles, the extremes switch sides very easily. And although it tends to be unidirectional in the sense that the people who are your biggest, most extreme fans, have the most dedication, are, in my experience, this is not my own experience, I’ve spoken to a lot of people who would reinforce this, they can switch to being the most violent, terrifying attackers very easily, and that can get physically dangerous. There are many examples of that. I don’t have to get into it. But that particular set of experiences has also led me to rethink, honestly, the podcast, in the sense that to compete — and I’m less and less interested in competing in most things, although, by nature, I’m very competitive. I enjoy competing. I enjoy winning, I guess, is a better way to put it, or maybe I just hate losing. Who knows? We can psychoanalyze that another time. But to compete right now, you need to, as a podcaster in this type of format, not true crime, there are exceptions like This American Life, but if you are interview format, if you really want to compete, you basically have to produce a television show.
And one, I think, of the mostly hidden risks, which is obvious, I think, in retrospect, when people look back a year or five years from now, it will seem very obvious and they’ll say, “Well, how could it have turned out any different?” But the risks of video microfame, or macrofame, and the degree to which a much higher percentage of the population is going to be subject to stalkers and death threats and very, very, very scary things, people showing up at their homes because they bought it in their own name and not through an LLC or trust or whatever. That, I think, is going to be a cost that a lot of folks are not seeing down the pike that I think is unavoidable. For me, personally, particularly as I shift into new chapters in my life, I’ve been thinking about, meditating on, writing on, quite extensively how I want to adapt or stop or modify what I’m doing to mitigate some of those risks, because I do view them as unavoidable. And I just don’t think, most people having never experienced that, having never been in a car crash, they’re like, “What do you mean a car crash?” Like, “Sure, I’ll wear my seatbelt, but I don’t have to pay attention to A, B, and C, and D factors.” It’s like, “No, you probably should because the downside risk is so high.” Anyway, not to paint a dark picture. I think a lot of these things can be avoided, but the temptation, like you said, and the performative aspect of so much of this on say social media, and the reinforcement and the way that these platforms have been designed to take advantage of the baser drives and fears that humans have is remarkable. They’re very well-tuned. Maybe it’s easy for me to say, right, because I’ve had enough success on say, the podcast that I could afford to pull the cord if I wanted and do something else.
Morgan Housel: Right. And see that’s most interesting to me are the young people on social media who are very reasonably waving their arms to get attention because they don’t have any attention yet, and they’re trying to break through. I see this with a lot of new people on Twitter, a lot of new bloggers sometimes, new podcasters. How do you stand out? You stand out by being ridiculous. A lot of new politicians, by the way, some of whom are running for office right now. If you’re not a household name, how do you become one by saying the most ridiculous thing possible? So that’s like when attention is the currency and the only way to become wealthy in that sense is to do something so far out of the norm and norm breaking.
It’s a really dangerous world to live in, because social media came to be when I was in my early twenties, but I see my son who’s seven and is already interacting with YouTube, not any other social media platforms, but even in YouTube, the influence that it has on him is astounding. And growing up with MrBeast, which I think is reasonably wholesome content for young people to watch. It’s not that bad. But even that, I can see what it does to his expectations. And I see what it does to his ambitions, and I see what it does to his willingness to want to put on a prank video, or his willingness to want to catch people’s attention by doing something absurd.
That is a pretty unhealthy mindset to learn from a young age, and I think every child is learning it today. It’s just what’s being shoved down their throats in social media.
Tim Ferriss: Yeah. And also it’s on the spectrum of things as a male or a female, what you’re trying to do to get attention, how close is it to say a modeling career and how close is it to say being a professor, which are very different things? And you could use different fill-ins for that, but the closer you are to model or professional athlete, right? Let’s just say you’re doing something that is very physically intensive that you can only sustain for a short period. The longevity of that career is going to be very short until the newer vintage comes in to replace you, which they will. So also thinking about what the nature of the attention is and what’s involved and what the longevity is, which frankly, even when I was in my early twenties, I probably wouldn’t have been terribly receptive to hearing.
Morgan Housel: Yeah.
Tim Ferriss: I mean, if I were an attractive woman, I could just show my ass and get to the point where I’m making tens of thousands of dollars a month for holding energy drinks in my photos. Who am I to say I wouldn’t do it? I think there’s a good chance I would’ve.
Morgan Housel: I think it’s super dangerous in any life to attach your identity to something that’s unsustainable, whether it’s being a model or having a certain career, having an investing strategy. If you attach your identity to something that you cannot sustain when it ends, you’re going to be morally crushed. It’s just going to destroy you. And back to investing, the variable that I want to maximize for is how long can I do this for? It’s not, can I earn the highest returns? It’s, can I maintain this investing strategy for anoth er 50 years? And I know that I could earn a higher return this year and over the next five years if I did something different, but I’m way less confident that I could keep it going and sustain it. And I think it’s the same for relationships. You might be able to find I’m more attractive or a wealthier spouse or partner, but can you keep that going?
Is it something you can maintain? I think I’m not interested in anything that’s not sustainable. Friendships, investing, careers, podcasts, reading habits, exercise habits. If I can’t keep it going, I’m not interested in it. And I think the only way to really do that is if you are going out of your way to live life at 80 percent to 90 percent potential. If you’re always trying to squeeze out 100 percent potential for something, almost certainly it’s going to lead to burnout, whether it’s a friendship or a relationship or an investing strategy. So I think it’s not easy to do, and if you’re a type A person, it’s almost impossible to do. But going out of your way to live life at 80 percent has always been a strategy that I want to do just because I want to keep it going for a long time.
Tim Ferriss: Yeah, as we’re talking about it, I’ve never really mentioned this publicly, but in my experience of having various chapters in my career and life so far, it seems like in my case, if I’m trying to peek around corners and adopt, I wouldn’t say cutting edge, but sort of dull edge technologies, I’m very rarely the first. I mean, there’s some examples of me doing things very early, but generally if you look at say angel investing, the angel investing had existed for a decent, actually a very long time in Silicon Valley terms, and there were a handful of let’s call the micro VCs, but beyond that, there was a pretty wide open field for advising and investing. And so, I don’t know, let’s call it number 100 to the field, but there was a period where the game was kind of like Google AdWords in the very beginning.
I wasn’t the first to use Google AdWords, but man, was there a golden period three to five years where everything seemed to work. And that’s not true in angel investing, but a lot of things worked. I also got very lucky with timing, but I look at that, it’s like, okay, my sweet spot was really from 2008 to 2012, but let’s push it out from 2008 to 2015. It was about seven years. And then it became really popular. Everyone with an audience started building VC funds and man, oh, man, did that game get hard. Money came in from China at one point, terms started getting really wild, valuations went ballistic, and I was like, “Okay, I was playing with single-deck blackjack and now it’s like five-deck blackjack. This is a much harder game to play.” And so I stopped for an extended period of time.
Then you look at podcasting, it’s like, okay, I started in 2014. I would say the main meat and potatoes earning potential, growth potential was in the first seven years. Podcast is still doing great, but I’m coming up on the 10th anniversary and the game has become very, very, very challenging. And anyone who’s being honest at the higher end in the podcasting game will tell you a lot of brands have been cutting back due to global macro factors, a lot of the studios who have raised money for podcasting, and part of the reason you still see podcast growth, but a lot of it is because these studios are putting out 50 new shows, not necessarily focusing on making the next Charlie Rose and doubling and tripling down on single shows. There are some examples of that, and there’s some great shows out there. But the discovery problem for listeners and the competitive problem and many other factors have made this for me, again, reminiscent of angel investing.
When I started to think, you know, part of being good at a game is choosing the right game. Part of what makes the right game is the right competitive landscape and the right ratio of opportunity to cost and risk. The podcasting game’s getting very hard, and it’s getting dragged into territory because of platform competition, let’s just say Instagram and YouTube and so on versus TikTok, this short form or video reward system, incentive system, it’s pulling people like me or others in a direction where inevitable costs, fixed costs, being in single locations, which are all antithetical to the reasons why I started in the first place. And I saw this also with the angel investing where it’s like, “Wait a second, I’m being forced now into a position where I’m heavily tempted to do things that are counter completely to the strategies that have worked for me up to this point.”
Do I want to adapt and end up being one of a thousand people trying to do the same thing, or do I want to try something different? So I’m just observing this sort of, if I choose really well the shelf life for a lot of what I’ve done seems to be five to 10 years, and then in let’s just say the last 50 percent of that, I need to have my eyes open for what the next chapter looks like that could give me perhaps that type of runway where like five to 10 years, which is different in a way from what you’re describing, but I’m just observing that in my own experience.
Let me ask you this, and we can of course take this wherever you’d like. But where do you think text goes from here? Because I think that all that is old becomes new once again. You look at Substack, you look at any number of these things like, “Yeah, text has been sort of the redheaded stepchild, wasn’t sexy,” but you look at the success of, say, a Matt Levine, incredible, right? It still works and text still travels even though the platforms, if we look at those social media platforms as necessary, which I think is a question mark, actually. Text is not going to necessarily be as heavily rewarded as the things that they’re prioritizing to meet their own quarterly goals and so on. But where do you think text goes in the next handful of years?
Morgan Housel: Here’s what’s so shocking to me in my experience, the audiobook version of Psychology of Money outsells the physical book, the textbook by two to one. Never in a million years would I have thought that because I’m a book reader, I read [inaudible 01:43:57].
Tim Ferriss: Especially for that kind of book.
Morgan Housel: I know, right?
Tim Ferriss: Especially for that kind of book.
Morgan Housel: I know it’s bonkers, but talking to other authors, it’s similar. The number of people who are willing to get their content through their ears versus through their eyes, is way bigger. Reading is hard for most people. It’s a slog. They have to reread paragraphs, but listening is great.
Tim Ferriss: It’s also single-tasking, right? It’s a single activity. Whereas the listening in an attention economy where people are trained to feel there is a scarcity of time.
Morgan Housel: Yes. And the other experience I’ve had is that because of that experience with the audiobook, four months ago I started a podcast and I’ve put virtually no effort into it. I’ve done 14 episodes, they’re all about 10 minutes long. That podcast is already larger than my blog that I’ve been working on for 16 years. It just exploded, which is kind of depressing, but I think it just goes back to the audience that’s willing to listen is way bigger than the audience that will read.
Now, I do think it’s the case that not only is reading hard, but writing is hard. It’s easier to speak than it is to write in text. So the people who are good at it will always have an audience, that will always be there. If you write a textbook, if you start blogging again, as you said you would, you’ll have an instant audience because you’re good at it. But I think there are a lot of people. Without knowing this, I’d be willing to bet that Joe Rogan is not a good writer, but he’s a very good speaker, and so they’re just very different skills. And so the people who can do both —
Tim Ferriss: They’re very different. I will say that I actually think Joe, if he wanted to make it a high priority, would be a very good writer as a comedian.
Morgan Housel: That might be the case. I’m probably being unfair to him. That might be the case. But I do think they are very different skills.
Tim Ferriss: They can be mutually exclusive, right?
Morgan Housel: Yes.
Tim Ferriss: They don’t have to come as a pair. Yep.
Morgan Housel: So there are people who are good writers and not good speakers and vice versa. So I think that the people who try to do both will by and large be not that great at either of them. And I think most people should probably try to pick one or the other. When I started my podcast, I thought 90 percent chance it’s not going to work. Now I’d put those odds at 60 percent chance it’s not going to work, just because I’ve always been a writer. I like typing. That’s when I think I do my best work.
And so I think there’s always going to be a market for either. And the content creators who are going to screw themselves are the people who try to be everything to everybody. Most book publishers want authors to narrate their own audiobooks, and I haven’t done it for either of my books, because it’s not my skill and I want to pass it to someone whose skill it is. And it’s always been astounding to me that they want authors who are not good speakers to do it, even if they’re not that good at it. So I think that’s an analogy for where text is going to.
Tim Ferriss: I’m laughing because I thought of this story. Hope I’m not speaking out of school here, but pretty sure he’s mentioned it publicly. A.J. Jacobs, who’s an amazing writer. He wrote The Year of Living Biblically. He’s written many books that I think are very, very smart. They’re also very, very funny. I recommend people check out also an Esquire piece he wrote called “I Think You’re Fat,” which is an experiment in radical honesty.
Morgan Housel: Such a good title.
Tim Ferriss: And he said to me when he was persuaded to read his own audiobook, he went in for the recording session and a few hours in they said, “Look, A.J., why don’t you just go home, get some rest, take some decongestants, and we’ll see you when you’re feeling better.” And he is like, “What do you mean feeling better? This is just my voice.” Something along those lines. It was so funny, and we are not all designed to read audiobooks. But let me come back to text versus audio. And this is going to be hard to get from any analytics, so there’s going to be some guesswork involved. But do you value a read of, say, one of your blog posts in the same way that you value a single listen of a podcast episode? And embedded in this is do you think they are the same audience, right?
Or is it like speaking at a general business conference versus speaking at TED where you maybe 10,000 people in the first and a thousand people at the second, but that does not mean the latter is automatically worth 10 percent of the former.
Morgan Housel: It’s definitely not the same audience. And the reason I know that is because every podcast episode I do, I’m reading an old blog post and nobody cares because the people who are listening to it did not read the blog post. So for them, it’s all brand new content. Some of these blog posts I wrote 10 years ago, but it’s all new to them. And so I know it’s not the same. And I think there are people like myself, I will listen to podcasts on planes and that’s it. But other than that, I just read.
When I’m home, I never listen to anything. I just read. And even at night when I’m falling asleep, I can try Netflix for a little bit, but really what I want to do is read a book. And for me, I think the reason why I like reading better is because it’s easier to zip your eyes up and reread a paragraph than it is to rewind and try to figure and then like what’d that guy just say? It’s easier to just zip your eyes and read it again. And so I think you absorb a lot more of it by reading. At least that’s true for me.
I would be shocked if I deviated from that. I think I’ll be reading text forever, and I think I’ll want to be a writer forever. Even if my podcast were to become very successful, I think I would say, “I’m a writer.” I’m curious what your thought is that because you were a very successful writer before you started the podcast. If you go back to 2013 before your podcast started, would you have shaken your head in disbelief at the idea that you didn’t abandon writing, but you became much more of a speaker than a writer?
Tim Ferriss: I certainly wouldn’t have seen it coming. I started this podcast as an experiment. I think I committed to six episodes to see if I could refine my conversational skills, question asking, reduce my stammering, and get rid of some verbal ticks with the assumption that even if I stopped after six episodes, that would help me with my interviewing for nonfiction writing. So I couldn’t have foreseen it. Having done so many interviews prior to starting the podcast, I had confidence that I could do interviewing well, but I never could have foreseen the podcast getting to a billion downloads, right? I mean, that would’ve been so far outside of any mental schema for thinking about anything that I would do. It wouldn’t have occurred to me.
Morgan Housel: Tim, when you think about the arc of your career, would you put the podcast above The 4-Hour Workweek in terms of importance and success, however you want to measure that?
Tim Ferriss: I don’t think I would because if I separate them out into discreet independent pieces, I think that’s a mistake since there was a domino effect. And without that first domino, the second and the third and the fourth domino don’t tip over. So I would have to still give The 4-Hour Workweek by far, love it or hate it for me, blessing and the curse, that is what made everything subsequently possible. So I still have to give The 4-Hour Workweek the vast majority of credit. Remarkably, that book and probably Tools of Titans are my two bestselling books still to this day. And I would say a third, probably almost all of the tools referenced in The 4-Hour Workweek are out of date. And that makes me very happy though, because the philosophical backbone, the core fundamental pieces are timeless in a sense. They really don’t have an expiration date.
So I’ve been very pleased to see that, but it’s nonetheless remarkable that the book continues to be read and recommended despite the fact that I’m telling people to go to a magazine rack and use various tools to determine readership of magazines as a way of sizing audience. I mean, that’s Model T or maybe the horse-drawn carriage compared to what we can do today. So at some point, perhaps I’ll update that, but that’s a losing game. Also, updating tools is just a losing game. I could have updated three years ago and then ChatGPT and other LLMs come along and I have to do a complete revision after that. So I assume the principles will enable people to find the tools. But the podcast, I would say certainly at this point, nine out of 10 people who come up to me on the street will mention the podcast and will not mention any book.
Morgan Housel: Yeah, that’s astounding.
Tim Ferriss: Which is astounding. Nonetheless, I do think the decay rate on the podcast is much higher and will be on a totality much faster than the book. In other words, not only will people forget a given episode, they will forget that I had a podcast or anything related to my podcast, I think much faster than they will the books simply because there is so much fucking noise, there’s so much. The replacement rate is so high and people can only hold so much in their heads, self included. So the sort of first in first out sort of mental archiving is such that I do think if I stopped podcasting today and people continued listening to podcasts who were devout listeners of The Tim Ferriss Show, I think they would forget about The Tim Ferriss Show within a few years, one or two years if I’m being optimistic. Whereas I do think the books, for whatever reason, seem to have a more persistent, enduring foothold in the mind than in the podcast.
Morgan Housel: I wonder if —
Tim Ferriss: Even if it’s the best episode I’ve ever put out. Doesn’t matter.
Morgan Housel: I don’t disagree with it. I’m just trying to figure out why that would be. And maybe it’s because in a book, if it’s 20 chapters, that’s all you got. It’s just 20 chapters in front of you. So it gives the impression or the truth that what is there is profound. Whereas if you open up Apple Podcasts, there are three million podcasts or whatever there is, and each of those has dozens or hundreds of episodes. It’s so much in there that it’s hard to take any single bit of it seriously. But maybe that’s true for books too. You walk into Barnes & Noble, there’s a million books in there as well. But when you’re holding a book, it’s like, “This is all that’s in front of me right now, and so I need to pay attention to every word.” Whereas a podcast, it’s just a living, breathing thing.
And if you watch the daily news, particularly 24/7 cable news, none of it should be that profound because there’s just so much of it. If you’re just constantly updating people on the news of the hour, odds are it’s not that important. Whereas if there was a one-hour newscast per year that was updating you on the most important news of the previous 12 months, it would be very important. You have to watch that. It’s very, very important. So I think a lot of it is just the scale, that it’s much easier to make a podcast episode than it is to publish a book chapter in physical form.
Tim Ferriss: Yeah, I agree with that. I mean, it’s spitballing ideas. I also think that if someone commits to reading a book, if they finish it, especially if the assumption is buying a nonfiction book that is prescriptive in its advice is that you are going to take action after a book. There are a few things that happen in the process of doing that. Number one, you’re contextualizing the book for your own life as you go. Number two, you’re harnessing sunk cost fallacy in a sense, because you’ve put more time into this book, I think you are more likely to try to take some type of action to justify that investment.
And I would say also with the book, and single tasking, you have captive attention, and I think people are more engaged. This is true for a novel versus say, a film also in co-creating the visual experience of traveling through these pages. And then when people, if they take action after reading a book, that is an extension of the experience of reading the book and is forever associated with that book, as are I think downstream effects of those first steps. Whereas listening to a podcast, I think the preset mentality coming into it, and this is true for me too when I’m listening to a podcast, is I’m listening to something while I’m going for a walk while doing something else, and I am absorbing information. But the expectation is not given the absurd volume of podcasts out there, and also just the absurd volume of podcasts and audiobooks that I listen to, the assumption I think in my mind is passive ingestion less than I’m going to take some notes and actually commit to making meaningful change in my life after I listen to this podcast. I wish it were different.
Morgan Housel: Yeah, I agree. No, it is definitely true. When I do listen to podcasts, it’s pleasure. And I think when I read books, I’m like, “I really want to learn something here and take notes and highlight it and read wise and really get something out of this.” What I did start doing recently that’s been very helpful is when I’m listening to a podcast and I hear something that’s really profound, I’ll just screenshot it and therefore I have it timestamped of like, “Oh, on Tim’s podcast at one minute and 23 seconds,” and then I’ll go back and find the transcript and try to take notes that way. That’s been the best note-taking process that I’ve had for podcasts to try to gain more insight out of it rather than just passive pleasure.
Tim Ferriss: Speaking of books, so let’s go through a list, and I’d love for you to pick one or two. We can certainly talk about all of them, but great books that you’ve read lately, Triangle Fire, Empty Mansions, The Strange Last Voyage of Donald Crowhurst, and then one that is a little cryptic, Robert Caro, if I’m getting the pronunciation right, Working. I don’t know what that refers to. Maybe we start there because I believe that is the author of The Power Broker. Could you maybe start with Robert and what that refers to?
Morgan Housel: Robert Caro is probably the greatest biographer of all time. He’s certainly the most thorough biographer of all time. Most of his books take between 10 and 30 years for him to write. He’s done biographies on Lyndon Johnson and Robert Moses, who was an instrumental figure in building the modern New York City, and he’s just ridiculously thorough. And so he wrote a book called Working, which is his life and practice and strategy as a writer, how did he become a writer and how does he do it? And you realize that his talent is just patience. He will sit in an archive for 15 years. And he has this motto, “Turn Every Page.” So he talks about when he decided to do a biography of Lyndon Johnson. The first thing that he did is he moved his wife to the middle of nowhere Texas, where Lyndon Johnson grew up. And he said, “There’s no way that he could understand the man unless he lived in the town that he grew up in.”
Tim Ferriss: Full understanding wife.
Morgan Housel: Exactly. There’s a funny quote where his wife said, “Why couldn’t you have done a biography of Napoleon?” And they could have moved to Paris or something. So he moved there, and then he sits and he goes to the Lyndon Johnson Presidential Library, and I think it’s literally like 8,000 boxes of material. And he goes through every page. He goes through every page. It takes him decades to do this. And so there’s just no one that is as thorough as —
Tim Ferriss: It sounds like a prison sentence.
Morgan Housel: Seriously. But I think he loves every second of it. I think the hunt for him is incredible. So even with something like Lyndon Johnson, Robert Moses is a little more obscure, but everybody knows Lyndon Johnson. His life was so well documented. But Robert Caro will find these nuggets that no one else has ever uncovered before, and I have so much admiration for that in terms of sticking out as a writer and doing something different. A crazy stat and you can take this several different ways, but there are 1,100 biographies of Winston Churchill, published biographies of the same person talking about the same life. But I bet there’s like 50 of those that really stand out because they found a different angle. They found a different fact, or they told a better story.
Here’s how I’d phrase this. Ken Burns, who does the documentaries, his skill is telling a story, and most of the information in his documentaries is already well-known about the Civil War, World War II, whatever it would be. It’s not new information, but he tells such a good story that it’s captivating and you’re going to watch it. Robert Caro, and I mean this with the most respect, is not the best storyteller, but his ability to uncover new information is completely unparalleled to everyone else. So I admire him that his skill is just, he works harder and he’s more patient than any other writer that’s ever existed.
Tim Ferriss: Is there anything else that you took from that book that you have applied or hope to apply to your own writing or creative process?
Morgan Housel: One of it that I think, and I’m not saying this to blow smoke, but it reminds me of you, is that in his interviewing process when he’s interviewing people, he would always just stop and say, “Tell me more. Tell me more. Keep going, tell me more.” There was one scene from the book where he’s interviewing Lyndon Johnson’s chauffeur who was with him for his entire career as a politician. Lyndon Johnson did the same driver. And so the driver saw everything. And Robert Caro says, “Tell me when Lyndon Johnson was in the backseat of the car when he was campaigning, what was he doing?”
And the chauffeur’s like, “I don’t know. I wasn’t paying attention.” But he just kept asking, “No, no, tell me more. What was he doing? What was he talking about? What’d he do?” And he kept getting the answer, “I don’t know. I wasn’t paying attention.” And finally, after weeks of asking the same question, the chauffeur says, “You know what? After campaign rallies, Lyndon Johnson would talk to himself in the backseat of the car, and he would say to himself, mumbling to himself, ‘This worked, this didn’t, I need to get better at this. I need to double down on this.'” That’s fascinating that he would talk to him himself. And it took Robert Caro weeks of asking the same question before.
Tim Ferriss: It’s like a black side interrogation just wearing him down.
Morgan Housel: Yes. But I think that’s true for everyone, and I think a lot of it is, if you asked me what did I do last week? I’d say, “Honestly, I don’t really remember.” But if you kept asking, I probably did something that was meaningful to me, if you kept asking and kept pushing, then, the memories start to bubble up. And I think Robert Caro was just a pro at that.
Tim Ferriss: Hm. What if these other books, maybe we pick one, if you had to pick two from this list, so Triangle Fire, Empty Mansions, The Strange Last Voyage of Donald Crowhurst. Or maybe you can give just a very brief, not to leave people hanging, what are these books? And then, if you had to pick one more, if you could only pick two, for you personally from this list, what the other one would be?
Morgan Housel: Yeah. Here’s what’s really interesting about the Triangle Fire. I think most, if not everyone here listening to this knows what the Triangle Fire is. It was a fire in the early 1900s —
Tim Ferriss: I have no idea.
Morgan Housel: Oh, okay, this is great, then. It was a fire and the Triangle Shirtwaist Company in New York City, which was a company in, I think it was 1911, that was making —
Tim Ferriss: Everybody knows about this. I feel like an idiot. I’ve never heard anything about this. All right.
Morgan Housel: Okay. No, this is even better, then. It was a fire that took place in this shirt garment factory in New York City, and it was in the middle of the workday and there were several hundred, they were virtually all young women who were making shirts in New York City in 1911 and a fire took place on the factory. The punchline of the story was very tragic. I think 200 of them died, A lot of them jumped out of the ninth storey of the building.
The building is now, I think it’s either part of or right next to NYU. The building still exists, and there’s a plaque in front of the building, but it was horrendous. Several hundred of them burned to death. Several of them, several dozen of them jumped out of the building. It was absolutely horrendous. And I think, until 9/11, it was the deadliest fire in New York City, the deadliest burning fire. It was just an utter tragedy.
And when I saw a book about this — I had heard about this in documentaries and whatnot, but I thought, how can you make a 250-page book about a fire that, from start to finish was 30 minutes? How do you make a book? There’s got to be so much rambling in here. And there wasn’t, because actually, the actual fire was just a seed of a much bigger story, which was, after the Triangle Shirtwaist Fire, what happened is all of the fire escapes in the building were locked intentionally so that the workers, these women, could not take an unscheduled break. It was literally lock you in a room to work.
Tim Ferriss: Ugh. That’s so bad.
Morgan Housel: So when there was a fire, they all went to the fire escapes and they were locked, and those women either burned to death or jumped out of the building.
This set off this unbelievable moral panic across the United States, of worker rights. And one of the witnesses of the fire, who stood on the sidewalk and watched the women jump out of the building, was a young woman named Frances Perkins. And Frances Perkins, a lot of people will know that name, she became FDR’s Secretary of Labor. She was the first female cabinet member of any administration. And she was so moved by the Triangle Fire, as were so many other people that, after she witnessed it, she said, “I’m going to devote my life to worker rights.” And after a century or more, several centuries of just horrendous sweatshop conditions, the Triangle Fire was the impetus that was needed to start all kinds of worker rights.
And there’s a quote from Frances Perkins when she said, “Without the Triangle Fire, there would’ve been no New Deal,” the New Deal of worker rights in the 1930s that moved everything.
So much progress in the world starts when something very tragic happens, and starts when things are really bad. The Great Depression, World War II, the Triangle Fire, so much innovation and improvement comes from those, because there is no motivation in life more than just shock and necessity.
So the Triangle Fire, as tragic and awful as it was, it really was the reason that we have so many workplace protections. And within a year or two of the Triangle Fire, there were all kinds of new laws in New York City about worker rights and simple things like fire escapes and whatnot that didn’t exist until that happened. That’s why you can take a 30-minute fire and turn it into a 250-page book, is because what the Triangle Fire sparked in terms of worker rights in America was unprecedented.
Tim Ferriss: What book or books have you reread many times? What’s in the top five list, if any come to mind, for books that you’ve read not just twice, or I should say not just read twice, but more than twice?
Morgan Housel: I’m pretty sure I’ve read Doris Kearns’ No Ordinary [Time] three times, which is, I think it’s 710 pages. It’s a very meaty book. I’m very confident that each three times I read to the last page. One thing I would say is that I always use that book as an example as brevity does not mean short, because that book is 710 pages and every single sentence needs to be there. It’s about FDR and Eleanor during World War II, and it’s specifically about their home life, not the decisions that he made during the war. It’s about the emotions that he was going through during that period, that he and Eleanor went through during World War II. And it’s fascinating, because you think of the pressure on somebody like that. Of course, today, we know the outcome, but FDR never knew the outcome. He died two weeks before Germany surrendered. So during this entire period, he really feels, and he’s right, that the fate of the world is on his shoulders. The decisions that he makes is literally the outcome of humanity, and it was as stressful as you would imagine.
The book just goes through what he went through, how he managed stress, who he surrounded himself with, and there’s so many just incredible little anecdotes about how he lived his life and what he did. For example, every single evening, I think at 6:00 p.m., no matter what was going on that day, no matter how stressful or important the day was, he shut everything down and he brought two or three friends into this little dark room in the White House where he would have a drink. And his rule was no politics. Do not say a single word about politics. We’re here to talk about life and friendship and movies and books, and he did it every day at 6:00 p.m. And I think if he didn’t do that, he would’ve lost his mind. It would’ve just been too much. There’s all these little anecdotes about that that I really admire.
I’ll tell you one little other anecdote that really stuck with me for this book. On the night before D-Day, so almost nobody in the world knows what’s going to happen, he and Eleanor do, and he’s talking to Eleanor and he asks her, he says, “How does it feel to not know what’s going to happen tomorrow? Literally, the fate of the world relies on what’s going to happen tomorrow morning and nobody else knows it but us.” And Eleanor says, “To be 60 and still rebel against uncertainty is a bit ridiculous, isn’t it?”
Tim Ferriss: I love that quote. She’s like, “If you’ve made it to age 60 and you’re rebelling against uncertain — of course, we don’t know what’s going to happen. And there’s nothing we can do about it, so just go to bed, Franklin.”
Morgan Housel: There’s all these little anecdotes like that. And beyond the content, I think it’s one of the best written books ever. Like I said, it’s 700 pages in every sentence needs to be there. Doris Kearns Goodwin is a remarkable historian.
Tim Ferriss: She’s amazing. She and I had a really fun conversation on this podcast, actually, a few years ago.
Morgan Housel: She’s an absolute gem.
Tim Ferriss: Yeah, which I recommend people check out. Also, Ken Burns, we had a conversation about his creative process, which I encourage people to check out. Let me ask, and then, I promise we’ll move on. This title, this is probably the one that I would’ve picked up because it has, for me at least, a very seductive title, The Strange Last Voyage of Donald Crowhurst. What is this?
Morgan Housel: One of the most interesting people that is not very well known—to set the stage here—there was a boat race in 1968 that took place in England. It was sponsored by a local newspaper, and it was the first person to sail around the world solo wins 5,000 pounds. And actually, nobody in human history had ever sailed around the world solo, so the first person to win this race is going to be crowned the greatest sailor of all time.
Donald Crowhurst was at best an amateur sailor. He was a weekend warrior, and he had kind of been a failure at everything he had done in his adult life. He was a failed businessman, he got kicked out of the army for insubordination, he failed out of pilot school and he viewed this race as his last shot at redemption, his last shot to prove to the world that he was worthy of their attention and their respect.
So he set sail, this guy who really doesn’t know what he’s doing, he actually built his own boat, which he didn’t know what he was doing there either. And he sets sail, and to his credit, he makes it pretty far. He makes it halfway down the coast of Africa. And then, his boat catches a leak, his boat springs a leak. And he could bail that with a bucket. It’s not a catastrophic leak, but he knows that if he keeps sailing, he’s screwed, he’s going to sink and die, because in the Southern Atlantic, the waves are much bigger, so he knows he’s done.
So now, he’s like, “Okay, I can either turn around and go home and face shame and humiliation, or I can keep sailing and die.” And then he’s like, “No, actually…” He’s by himself doing this. In his diary, he’s like, “No, there’s actually a third option here, which is fraud and deceit.” What he did is, he turned his boat around and he sailed right into the middle of the Atlantic Ocean where the waves were very calm and placid, and he drifts in circles aimlessly for six months. And all the while he’s doing this, he’s sending fake radio communication back to England to make it seem like he’s still sailing around the world. He would literally send back a radio communication, and be like, “Oh, I’m passing the Falcon Islands. Here’s what they look like.” It was all a scam. He was drifting aimlessly in the Atlantic. His plan was to kill enough time doing this that he could have plausibly sailed around the world, and then, sail back to England with his dignity intact and just tell people that, “Ah, I sailed around the world. I did it.”
And then, after six months, he starts to sail back to England, and he realizes that the other sailors had taken so long to sail around the world that he’s going to sail back to England as the winner. He’s actually going to win this race, or at least appear to win this race. And he realizes that that’s a catastrophe because he’s going to get so much attention that they’re going to uncover his fraud.
Tim Ferriss: They’re going to scrutinize it.
Morgan Housel: They’re going to scrutinize it, and he’s done. So now, he’s very mentally unstable at this point, as anyone for six months at sea alone would be. He realizes the jig is up. And I’ll cut to the chase and get to the punchline. His body was never found. His boat was found, but the only plausible accepted outcome is that, after he realized it was all up, he threw himself into the ocean, took his own life. And to me, it’s a very astounding story of someone who was so obsessed with gaining the respect and admiration of other people. All he wanted to do was for other people to admire him. That’s it.
And he wanted that so badly that he was willing to have the six month fraud to deceive everybody, and when it didn’t work, he just decided that life wasn’t worth living. And that, to me, is just an astounding mental state, that someone would want respect from strangers and the press that badly that it’s worth everything to them. It’s just an astounding story of the lifestyle that you choose to live and the goals that you tend to have. He wanted this goal more than anyone else, and when he couldn’t have it, he took his own life.
There’s a quote from Nassim Taleb, I’m going to butcher it, but it’s like, “How interesting it is that more people commit suicide from financial loss than from medical diagnosis?” He said it more eloquently, but that’s roughly what he said. And it’s true. Losing your status or your internal dignity, however you want to define it, is more disturbing to people and more damaging to people than getting a terminal cancer diagnosis, for a lot of these people. It’s just an astounding story of someone making this crazy decision, the decision to deceive people and the decision to take his own life, for reasons that just make you shake your head.
Tim Ferriss: I’m going to act as a stand-in for the audience, which is also acting as a stand-in for myself. People listening to you describe these various books might think to themselves, “For fuck’s sake, Morgan, these are some really hardcore, dark books that you read. They don’t sound very reassuring.” Now, I understand that it gives you perspective on how your life could have gone differently, it probably leads to, perhaps, valuing your life, being grateful for things that you could take for granted. But let me ask you, are there any books that you have reread or really love that are more upbeat, but still decently high on the cry-o-meter for yourself, where you’re like, “Oh, God, that book just makes me feel so good I shed a tear,” or —
Morgan Housel: A book that doesn’t involve mass death and destruction. Is that what you’re saying?
Tim Ferriss: Yeah, exactly right. Burning to death or committing suicide at sea.
Morgan Housel: Fair point. I have one next to me that I’ll give. This book, it’s called The Tao of Charlie Munger.
Charlie Munger is one of the most quoted people ever, and this book does a better job than I’ve ever seen at distilling his best wisdom in a way that half of the quotes, even as a Munger fanatic, I had never seen before. And they’re just laid out in a very succinct way that this book is, if you’re an investing fan or a Charlie Munger fan, you should reread this book once a year. It’s very easy, basically a book of quotes.
But I think Munger is, I think he’s nine out of 10 on wisdom and he’s 10 out of 10 on succinctness and saying something in a pithy way. And you put those two things together, and he’s a really powerful person. And nobody burns to death in the book. That’s the upside of it.
Tim Ferriss: Yeah, yeah. Also, what I appreciate about Charlie, which I think goes hand in hand with his succinctness, is, he gives zero fucks, which is so fun, especially when he is on live TV, talking to somebody at CNBC and he’s like, “Oh, that’s bullshit. It’s bull.” And they’re like, “Uh, Charlie…” They can’t reign him in.
Morgan Housel: I admire it.
Tim Ferriss: It’s so fun.
Morgan Housel: Yeah, I’ve talked about, some people have fuck you money. Charlie has fuck you intelligence, where at least, in his own mind, he’s like, “I’m smarter than you. I’m going to tell you how it is, and I don’t care what you think about it.” He has actually talked about that. That’s one of his worst traits. That’s a trait that —
Tim Ferriss: No shit. I didn’t know that.
Morgan Housel: — he would not recommend other people have that. I actually don’t think it’s fuck you money. I think he had that trait when he 13.
Tim Ferriss: Oh, no, I don’t think it’s fuck you money. He just gives zero fucks, but I think it’s his preset to really beat over the head this word that I keep using.
Morgan Housel: Yeah. It rubs a lot of people the wrong way.
Tim Ferriss: Sure.
Morgan Housel: And I think it also can lead to, if I were to, even though I’m a massive fan, I’m not just going to say he’s the perfect person because I think that shut up and let me tell you how it is mentality can lead to a sense of egotism that makes you blind to a lot of how the world works.
And there are, I don’t know if I can think of one off the top of my head, but there have been a number of, this is why I say he’s nine out of 10 on wisdom, not 10 out of 10, there are some Charlie Munger quotes where it’s like, “I think you believe that because you’re a 90-year-old billionaire. I actually don’t think that’s how the world works for most people.” I think Buffett is much more open to how the world works versus the world in which he’s experienced.
Tim Ferriss: Fascinating. All right. I might dig into that separately another times. Let’s talk about Same As Ever. How has writing this book, thinking about the content, developing your own thinking around these lines, informed how you make decisions? If that’s a good question. Feel free to rephrase it if there’s a better way to put it, but how has this informed how you operate in the world, how you make decisions, how you react emotionally to things? However you want to answer that.
Morgan Housel: I think I’ve always been, as an investor, let’s focus on that, of the view, I mentioned this earlier, that no one has any idea what the future’s going to hold, but if you can have the right behaviors, then, it doesn’t matter. Whatever the future throws at you, you’re going to be okay if you have a level head and a proper asset allocation for you to absorb all the surprises.
I’ve never been the kind of person who’s like, “Let’s predict what the stock market’s going to do in the next year. Let’s predict the next recession.” I’ve always just been the, “Hey, if I can manage my asset allocation and my mindset so that I can absorb anything that might happen, that’s the best we can do.” And not only is it the best you can do, if you can actually do that, it’s really good.
I think a lot of it can be summarized as viewing life from 30,000 feet. It’s not only the best that we can do, it’s actually a really good spot to view how the world works. And for so many topics, I would say, “Look, if you have cancer, you want a doctor who understands the very fine minute details of that.” But if you’re talking about investing or philosophy or politics, you want to stay at 30,000 feet. That’s as good as you’re going to get. A lot of this is just understanding the behaviors that are very broad and macro rather than fooling yourself into thinking that you can understand the finer details of what’s going on around you.
Tim Ferriss: Who’s this book for? If you want to build on that, what is the audience for this book? What should they hope to come away from the book having learned or absorbed?
Morgan Housel: The answer to that will make will and did make every publisher shake their head, because they don’t like it, but it’s the truth for all of my writing. The answer is, that the book is for me. I wrote it for me. I wrote Psychology of Money for me. I wrote all my blog posts for me. I call it selfish writing. An audience of one.
The reason I do that is not because I want to think of myself as self-centered. The reason I do it is because I think you do your best work if you are being introspective about yourself. And quote unquote, “knowing your audience,” that slips into pandering very quickly. And pandering is the worst writing. Not only is it the worst content, it’s the worst writing style, is to pander to your audience.
So I wrote this book answering questions that I have about myself, and I wrote it in a style that is interesting to me. And I tell stories that I think are interesting. There’s probably a lot of death and destruction because, as you can tell, that’s kind of what I gravitate towards. Look, in most of the world, I want to think of myself as a selfless person, except for writing, and then, it’s just me and the keyboard and nobody else. And I think that that’s served me well as a writer, just to stick with an audience of one, for myself.
Now, I hope and I think that I can take a leap of faith that if I have these questions about myself, other people probably have it about themselves. Not everybody, you’re never going to please everybody, but that’s the leap of faith that I took with psychology and money is, those topics were really interesting to me, and I bet they’re interesting to you too.
That’s what I say. Now, I hope at the end of both books, Psychology of Money and Same As Ever, you become more introspective about what you want out of life, you start answering questions that you didn’t have before about life, and the things in the world that confuse you and cause you angst in investing, in money, in politics, in global affairs, whatever it might be, you have a greater sense of equanimity around them. Not because you have a new answer, but because you come accepting that there are some things we can’t answer, and the best things that we can do is just understand the broader behaviors that guide how people react to these topics.
Tim Ferriss: Getting on the same page as Eleanor Roosevelt.
Morgan Housel: I’m trying to.
Tim Ferriss: Trying to. Morgan, always enjoy our conversations. Is there anything else that you would like to add, anything else you’d like to mention? Whether it’s a story, maybe a request of the audience, anything you’d like to draw attention to, anything you’d like to say at all before we wind to a close here?
Morgan Housel: The only thing that comes to mind after having done this twice with you now, Tim, is that most conversations in life, I’m exhausted after 20 minutes, and I could go for three hours with you and keep doing it all day. It’s such an honor to do this, and I really admire your skill as an interviewer. It makes these things so much fun. And here’s what I would say too, as I think about what we just did here. I think half of what I just said, I had never said before on another podcast, and a quarter of it had never even crossed my mind before, which is a testament to the questions that you asked, so thank you for doing this.
Tim Ferriss: Oh, thanks, Morgan. I really appreciate you saying that. Fun for me also, super fun. That’s, I think, a testament to your ability to jazz improv in the way that you did in this conversation. People can find you online at morganhousel.com, Twitter @morganhousel, IG, that’s Instagram for you folks of my vintage, the gram, @morganhousel. And the book is Same As Ever: A Guide to What Never Changes, which people can find at fine book sellers worldwide.
And Morgan, thank you so much again. Really appreciate all the time. And to people listening, we will have links to everything in the show notes, as per usual, at tim.blog/podcast. Just search “Morgan,” and this and Morgan’s first episode will pop right up. Until next time, be just a bit kinder than is necessary to others and to yourself. And as always, thank you for tuning in.
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