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Capital Allocators – Inside the Institutional Investment Industry
[REPLAY] Morgan Housel – Same as Ever (EP.359)
00:58:12
Morgan Housel is a partner at Collaborative Fund, blogger about behavior and money, and author of The Psychology of Money. The book has sold 4.5 million copies since its release three and a half years ago and already ranks in the top five best-selling...
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Foreign.
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I'm Ted Seides and this is Capital Allocators to kick off the new year, my guest on today's show is Morgan Housel, a partner at Collaborative Fund, blogger about behavior and money, and author of the Psychology of Money. The book has sold four and a half million copies since its release three and a half years ago and already ranks in the top five best books about finance. Morgan recently published his second book, Same as Ever, A Guide to what Never Changes. Our conversation starts with what happened since his last appearance on the show just before the release of the Psychology of Money. We then turn to his latest magnum opus and discuss some of its themes and stories across storytelling expectations, compounding risk incentives and people, Morgan's wisdom, humility and passion for his work comes out in spades. He also happens to be a wonderful person and a dear friend. Capital Allocators is brought to you by my friends at WCM Investment Management. WCM has the courage to back future histories not evident today. Informed by their unrelenting focus on moat trajectory and elevated by insights on corporate culture, WCM's deep roots in public markets set the foundation for its approach to private investing. They didn't just want to enter the private markets, they wanted to improve the investing model itself, build something better, aligned, more thoughtful and truly long term. As a firm owned by its people and grounded in Laguna Beach, WCM is built for alignment and independent thought. Rather than chasing a scoreboard, WCM invests with a partnership mentality to build meaningful relationships. With founders reimagining their industries, they show up earlier, stick around later and let value compound over years. WCM's style is their edge, authenticity over formality, two way learnings over checklists and stories over slide decks. To learn more, visit wcminvest.com this testimonial.
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Is being provided by TED Cites and.
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Capital Allocators, who have been compensated a.
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Flat fee by wcm. This payment was made in connection with Capital Allocators testimonial and production of podcasts and does not depend on the success.
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Or level of business generated.
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The opinions expressed are solely those of Capital Allocators and may not reflect the opinions of others. Investing involves risk, including the possible loss of principle. Past performance is not indicative of future results.
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Please visit wcminvest.com for WCM's ADV and further information. Capital Allocators is also brought to you by Morningstar. What if data wasn't just a bunch of raw numbers, but a clear and decisive language to help connect investment strategies with long term investor needs in a constantly evolving market landscape. Morningstar created that language, bringing order and utility to insight rich data so you can prepare for your next opportunity, no matter the asset class or Market. Visit wheredataspeaks.com to see what Morningstar Data can do for you. Please enjoy my conversation with Morgan Housel Morgan, great to see you, bud.
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Good to see you, Ted. Thanks for having me.
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We lasted this three years ago, and just to kick this off, I'm going to play a little clip from that show. Okay, so here goes. It's very exciting for me to make the prediction that I think this is going to be a bestseller.
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Did you just jinx it? It's not even out yet.
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By the time this comes out, might already be on the New York Times bestsellers. I'm going to say it anyway. You're not saying it. You'd be jinxing it.
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That's funny. Here's what's interesting. It did not make the New York Times bestseller list because since the publisher is a UK publisher, it was blacklisted from it.
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All right, but what happened from when we did that podcast?
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When we had done that podcast, the first print run of Psychology of money was 5,000 copies because we earnestly thought that's what it would sell. And if you understand the book industry, selling 5,000 copies of a investing book is really good. If you could do that, you did a great job. To get 5,000 people to pull out their wallets for content used to getting for free is not easy. And we're now at about four and a half million three and a half years later. So to say that it exceeded expectations. Look, we printed 5,000 because that's what we thought it would sell ever. And now it sells about 5,000 copies per day. Look, one of the chapters in the book is about tails, tail event distributions. And one of the things about tails is that you really can't see them coming. If you're a VC and you make a hundred investments, you know that most of your returns are going to come from three, but you don't know which ones those are going to be. It's very hard to see it coming. I think it's like that for the book, too. When I said that to you, oh, you're going to jinx me. It's not going to sell. That's really how I felt at the time. I really didn't see this coming. But it's been fun to experience.
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What else has happened when you have that kind of success, that's changed for you in the last couple of years.
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I would Say, if I look at my entire life, personal life, career, everything, I would say 20% of things have gotten better, 60% of things have stayed the same, and 20% of things have gotten worse. I think that's where it ends up. And I think anyone who's had any kind of career success you have, I know Ted, I think would say probably something similar. Now, what's interesting about that distribution is that when you are dreaming about career success, you imagine everything's going to get better. It's hard to imagine what's going to stay the same or get worse. But of course, perfect example of this, my wife doesn't love me more, my kids don't treat me better, I'm not any healthier, given that book success. So of course those three things are absolutely critical to your well being in life that don't change whatsoever. And what has gotten worse, expectations for current and future books are much higher now. So that makes things worse. Even if you have some level of success, it doesn't feel as good in your eyes and other people's eyes. But look, it's been great to experience, it's been fun.
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So walk me through the genesis of the new book. Same as ever.
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One of the most profound career experiences that I've had is this book called the Great Depression. A diary which was written by this Ohio lawyer named Benjamin roth in the 1930s, who was a bankruptcy attorney in Youngstown, Ohio. And he kept a very elaborate diary during the Depression. And since he was a bankruptcy attorney, he had this incredible perch to just watch what was going on in the world. And it's like unintentionally the greatest economics book ever written. Because he has no hindsight bias. When he's writing it, he's writing, this is a live dispatch from the Depression. And when I was reading it, there was a post from 1932 where he's talking about how Americans viewed the greedy Wall street bankers. And he's talking about the hyperinflation that everybody sees coming. And it occurred to me, I was like, if you change the date on this from 1932 to 2008, every single word matches. I had that feeling. Two pages later he writes, he says, if you change the dates from 1932 to 1894, every single word that he's writing their matches. So then it was like, ah, it's so obvious. It's the same thing that keeps happening over and over again. The details of a financial crisis change, the actors change, but it's the same damn movie over and over again. How people behave how they respond to greed and fear and risk and uncertainty has been the same for hundreds of years and will be in the future. And I mix that experience with also just my disgruntledness as a financial writer about how bad we are as an industry at forecasting the next bear market, the next recession, whatever it might be. And I think when you are disgruntled like that, you can do two things. You can say, nobody knows anything. Don't try to predict anything. Some people do that. Or I think you could say, look, rather than predicting what we think is going to change, let's focus all of our emphasis and effort on what we know is never going to change. These behaviors that you can see throughout history hundreds of years ago, and therefore, you know they are going to be part of our future, regardless of what might change in the future. That's been my personal finance and economic philosophy. And then I realized too, that's what I gravitated towards as a writer were the behaviors that I thought were timeless. And that was the genesis, the early seed of this book.
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Before we dive into the book and some of the great stories you write, I want to do an aside because I've only once made a public bet, and you know about that, who's a guy who's a little bit wealthier than you and Omah. But going into writing this book, we made a bet, and it was a similar proposition that I originally made to Warren, which was over dinner. So that bet, which stuns me when you talk about a book that sold over 4 million copies, was that this book that the over under would be a hundred thousand copies, and I took the over. So explain to me why in the world you would take the under and how you actually thought this book wouldn't sell that much.
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This gets back to things that have gotten worse in my life is expectations. If your first book sells four and a half million, it made me wince so much when people like you would be like, oh, your next book's going to sell 5 million. And I just feel like, no, it doesn't work like that. I think the equivalent would be if you are a VC investor and the first investment you ever make is Facebook in 2006, and you make 5,000 times your money, whatever. And then all your friends are like, oh, your next investment you're going to make 10,000 times your money. You're like, no, it doesn't work like that. So here's the thing. As an author, even as an established author, you can sell a hundred thousand copies of a Book that is an absolute mega grand slam that is out of the park in the World Series. That's incredible. So when I said, look, I would be really excited and happy if this sold a hundred thousand copies, other people, I think to you it made it look like I was trying to sandbag it because relative to four and a half million and counting of psychology money, it looks so quaint. But I think in absolute terms, that's a mega home run. So that was where I anchored my expectations to. And I know you took the other side.
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I did. This isn't before you released it. So we're like five weeks after you released. And how many copies have you sold so far?
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I may or may not be close to 100,000.
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Let's just be clear that I wasn't predicting that you were going to sell 4 million, but yeah, I thought a hundred thousand was a healthy discount. So I'm looking forward to that dinner.
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I'm glad you could win a bet finally, Ted.
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I appreciate that. Well, let's dive into a couple of the themes in the book. And you're such a great storyteller. I'd love to start with stories. Yeah.
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I'll tell you where I started thinking about this. Two areas. One, in college, I was an economics major in college, a very analytical major, very math based, formula based, chart based. I had one teacher. He taught environmental economics. Might seem like a boring class, but how he taught was so good. He had been an economics consultant his entire life. He was like an expert witness in court. And for the course, he said every single lecture, there's no textbook, never going to write anything on the whiteboard. Every class you come in, I'm going to tell you a story for 60 Minutes about something that I've learned about economics out of every college class I've ever took. I learned more and I remember more from that class than everything else combined. And it was just because he told stories. People will remember stories. People will forget formulas in two seconds, but a good story will stick with them for life. And it's so much easier to contextualize a good story to your life. So I think that was honestly one of my early foundations of man. If you can tell a good story, it is so much more powerful than just dumping statistics in people's lap. And then as a financial writer, if I was to write in everything that I've written in blogs, here's what the Dow did today, here's what the PE ratio of Coca Cola is. You're not going to survive two seconds as a writer, There's a million other people doing that for faster than you do with bigger platforms. So as a survival mechanism, as a writer, I was just like, I need to tell stories that are going to set me apart so I can have some differentiation between another writer. And so not only was it a survival mechanism, but I thought it's just so much easier to learn and get people's attention and gets you closer to the truth of what's happening in finance than if you just look at finance as a math based field. My favorite example of the power of storytelling that I use in the book is Ken Burns, who makes documentaries about US history. His first mega documentary was about the Civil War. It was released in 1990. More Americans watched a Civil War documentary, 14 Hour Documentary in 1990, then watched the super bowl that year. It was just this absolute mega smash hit success. And what's incredible about it obviously is that he didn't break any new information. The Civil War is like the most documented American experience ever. And everybody knows how it ends. Everybody knows what happened. What Ken Burns did and continues to do is tell the most incredible story about it. And the example that I love that he's given is when Ken Burns is making a documentary, he will literally alter the narrator's script. He'll take out words or add words so that the narrator says a word that matches with a specific beat in the background music. So if the narrator says a powerful word, it will match up with a powerful beat in the background music. No other historians doing that. So Ken Burns is not the greatest historian. I wouldn't even say he is a historian. He's not uncovering new information. He's just a ridiculously good storyteller and that's why he so successful.
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How do you think about applying that in a market context?
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I think you can think about someone like Buffett, and I think an underappreciated contributor to his success is that for his entire life he's been such an effective communicator. I don't know if I'd say storyteller, but a very effective communicator in the hedge fund partnership days that gave him, I think, a more stable base of capital than other hedge fund managers who would have, for a lot of hedge fund managers send me the monthly statements, they judge you on your performance. Now, Buffett had incredible performance, but what he's always had as well is trust from his investors. And the reason they give him trust by and large is because he's communicated so damn well with people. And that has carried on through today, his ability to tell a story about what he's doing, why he's doing it. I think you can even say, look, Berkshire's performance over the last 25 years relative to the S and P has been okay. And by and large too, I think Berkshire investors don't care. They've gained so much respect and admiration for Buffett. And that respect and admiration only in part comes from his analytical success. And a lot comes from just his ability to explain what he's doing, why he's doing it, the folksiness. Munger falls in that category as well. He was the most quotable investor who's ever lived. And because of that, it's not his success, it's just his ability to tell a good story about why he's doing it. So in almost any field, you're going to see that. You see it. Of course, in politics, it's not the guy with the best ideas, the best policies. It's the person who gets enough people to nod along with them and say, that's who I want to vote for. Best story wins. True. In investing, there's plenty of fund managers whose returns are okay at best. They've built an incredible asset management business and you could call it marketing, but to me, they're better at telling stories. One last example I'll give you. Someone once made this point that I thought was really brilliant, that the greatest product that Elon Musk has ever made is not a Tesla car, it's not a SpaceX rocket, it's Tesla stock, it's the ticker TSLA. Because what he has done is he has told a more effective story about what Tesla might become in the future than maybe any other entrepreneur who's ever existed. And that's why you can have a car company that is good but okay, sometimes profitable, worth a trillion dollars. And you compare that to Toyota, Honda, whatever it be.
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It's a completely different universe in the investment world. Very performance based business, very measurable bottom lines. At the end of the day, stories around it, how do you think about the idea of what the right answer is, what the truthful answer is for someone who, let's say a money manager who performs well but isn't a good storyteller, or a money manager who's only okay but is a great storyteller?
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I think the manager who has good performance but it's a poor storyteller is just going to be on a very short leash with their investors. A lot of investors, LPs are just trying to figure out, are you talented and what level of trust can I put into the fact that you're talented? Maybe your past success has been based off of luck or that can't be replicated in the future. So how do I trust you? If you have good past returns, but you're a terrible communicator, and then you have a bad quarter, a bad year, I think you're much more likely in that scenario to be like, yank the leash back. I don't know if I can trust you. I don't even know who you are. I don't know why you're doing what you're doing. And the opposite is true. If you're someone like Buffett who has so much trust built up through communication, Buffett can have a bad decade. And people are like, it's okay, we love Warren, we know Warren, we know what he's doing. He's so good at what he does. So I think it's just the length of leash that your investors are going to put you on. I think it's true for CEOs as well. I think someone like Steve Jobs was so brilliant in his communication, both for Apple products, but just the commencement addresses that he gave, it was like, ah, this guy, he articulates things so clearly that I think investors, board members, customers, clients, regulators, we're willing to just say, yeah, this guy knows what he's doing because he's so effective at communicating. It's true in any field. It's true in medicine, it's true in politics. You can tell a good story that can actually make up for a lot of relative poor performance and vice versa.
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When you take that to the market level, there's this idea that stories take things to extremes or the boom and bust cycles in markets. Just curious to get some of your thoughts about that.
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Well, every market valuation for any stock, public company, private company, even bond, is a number from today multiplied by a story about tomorrow. That's the basic mechanism of valuation. A number from today, like earnings per share and a story about tomorrow, which is, what do I think your future growth rate is? That's everything. And so the story about tomorrow is almost always more powerful than the number from today. Especially true in an era where interest rates were zero, then the story is everything. And particularly in the media landscape that we live in, the stories can become ridiculous and they can become very believable. It's completely normal and natural that those stories are going to be cyclical in nature. Comp Plants, the seeds of crazy. If the economy is strong and people perceive it to be strong, they very normally and naturally are going to go into debt. When they go into debt, the economy weakens. When the economy weakens, you have a recession. So this was Hyman Minsky's financial instability hypothesis, which is that stability plants the seeds of instability and vice versa. And so we should not be surprised when we have market cycles, even big crippling bear markets. There's always this intent of whenever there's a big bear market or recession, to point fingers and say, who's screwed up? Who's the policy maker, who's the politician, who is to blame for this? And I think if you view it through the Minsky lens of stability leads to instability, it's completely and utterly inevitable that we're going to have these things. And look, I think even among the professional investing crowd, it could be a tough pill to swallow to say, if you're going to be in this business for another 30 years, if you're lucky, if things are good, we'll probably have at least six or seven or 10 more recessions. That's if things go well. I don't know how you can be a student of market history and not come to terms with that. But even with that, at every single period there's a level of shock and surprise and finger pointing that takes place when I think really in reality, this is all just like the cyclicality of storytelling, of what people want to believe, of calm plants, the seeds are crazy.
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That gets into something you were talking about earlier about expectations. How do you think about calibrating expectations and reality?
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I think there's nothing more tragic than a world in which almost everything gets better and you appreciate none of it because you expected all of it. That's like a pretty tragic life. Imagine at the end of your life, you're like, man, I got richer. Society's life expectancy went up. Way better technology, the world is more peaceful. And you appreciate none of it because that was your baseline expectations that would happen. I think that actually explains the life of a lot of people and a lot of economies. And it's a tragic thing that wealth is always a two part equation. You need to grow your income, grow your net worth. That's where we put all of our emphasis. But then you need to, with as much emphasis, manage your expectations. And the amount of happiness that you accrue out of anything is just the gap between those two. It's the gap between your expectations and your reality. But it is so normal and natural for those expectations to grow not only in lockstep, but for your expectations to Exceed your circumstances, your income goes up by 1x, your expectations go up by 1.2x. That is almost par for the course. And that's why I think you can live in a world which the technological advances, the life expectancy advances, the financial growth that we've had over the last 80 years, let's say, has been extraordinary for virtually everybody. And there is virtually no evidence that on the whole we are happier for it or feel better about it. And I make this point that John Rockefeller, the richest man in the world, never in his life had Advil, Tylenol, penicillin, sunscreen for most of his life, sunglasses were not invented yet. All of these things that a low income American could take advantage of today, he never had. But low income American do not wake up in the morning saying, I'm living better than Rockefeller because all those new luxuries just become necessities very quickly. And whatever the new luxury is today is going to be the necessity a couple years from now. This is the early 1990s. If you had a computer, it was like, man, you're the cool kid in the neighborhood, you guys have a computer. And now of course it's a necessity, as it should be. All technology follows that path. And really what that is, it shows is just expectations rising in lockstep with circumstances. And so look, I think the reason I included this in, same as ever, is because I think it will always be like that. You can easily imagine a world, Ted, in which our grandkids are earning twice as much as us and their life expectancy is longer. The world that they live in is just analytically, numerically, way better than it is today and they feel no better off for it than you. And I do. And I think it always has been like that and always will be. I do think in some individuals at the margins can go out of their way to manage their expectations at least a little bit. I'll tell you what I do for my own finances. Historically, the US stock market has earned about a 6% annual real return. That's historically for the last hundred years. When I'm thinking about my future for the next 50 years, let's just assume it's three. Completely arbitrary, but just going out of your way to manage your expectations. Now if it's six or seven or eight, amazing, but I'm just going to assume it's going to be three. When I'm making all these forecasts of like, how much do I need for retirement? I think there are things like that you can do that just sets you up for a little bit more happiness and contentedness than just assuming that having high expectations going throughout your life.
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So beyond something like projecting out income, I'm curious how you adapt that expectations game with your life. There's two sides of that. One is just set low expectations, then you'll be happy because you can exceed them. And the other is the idea of having a vision, having goals, trying to achieve something above and beyond what you could imagine.
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I think that is a fundamental paradox here, is that I am so grateful that the majority of the world wakes up every morning feeling a little bit inadequate, because that is the fuel of their innovation and their willingness to work hard and make society more productive, more peaceful, whatever it might be. Because they wake up feeling like this is not enough. I need more. That's great. I do think at the individual level though, if you want to use money as a tool to give yourself a better life, you know that you need to keep expectations as part of it. But it's true. I made this point too, that the greatest meal that you will ever taste in your life is a glass of tap water when you're thirsty. Because it's the contrast between what you were in before and what you experience now. It's going to taste better than any Michelin star dinner as just a glass of tap water when you are parched. And so it's just the gap between the two that's going to accrue to happiness. And so I think it's possible for there to not be a contradiction between low expectations and ambition. Having the idea that I did not think Same as Ever was going to sell as well as Psychology of Money did not prevent me from trying to write the best book that I could. So I do think there can be a difference between ambition of wanting to do something for the sake of doing it. Because it's my passion, it's my identity, versus having an expectations of what the result is going to be in the end.
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So if we're turning this on money, we've got to talk about compounding. One of your favorite subjects, lots of different lenses in this book about different ways compounding happens.
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The example that I use in Too Much Too Soon Too Fast is one of my favorite examples. The largest human who's ever existed is this guy named Robert Wadlow. He was around, I don't know, about 100 years ago, something like that. He had a pituitary gland abnormality that just bombarded his body with growth hormones. So he died in, I think, his late 20s. He was pretty young and when he died, he was, I think, over 8ft tall. His hand was like a foot and a half large. He was the most enormous human you've ever seen. And you would think if you just hear that, you're like, oh, this guy's like a real life Paul Bunyan, a superhuman giant. He must have been so strong and just like out of a cartoon, this living monster. And the truth is, no, he wasn't. He could barely walk. He was hunched over at the waist with a walker. And if he had lived much longer, because he was still growing, he was always going to grow. Simple walking would have literally snapped his leg bones in half. Because the thing was, you cannot double the size of a human and expect double the output, double the strength. It just doesn't work like that. Most animals that are huge either have very short, stocky legs like a rhinoceros, or extremely long legs like a giraffe. You can't just take the human proportions and double them and expect double the output. And I think that's an analogy for a lot of businesses as well, that there is a natural growth rate, a natural size for every business, every investing strategy. And it's so normal and natural to want to speed it up. So I think in the stock market, let's go back to what I said historically, 6% real annual returns. The majority of investing problems from professionals or amateurs comes from people looking at that and saying, let's get a little bit faster. How can we speed this up? How can we compress that? And historically, you've doubled your money every decade. How can we get that to every five years? And that's where most problems come. Because you cannot just compress the normal, natural timeframe of what tends to work in investing and expect to get double the results. You're going to get double the risk, double the catastrophes, whatever it might be. That's true for a lot of businesses as well. I think we're seeing this now, that the VC bubble, if we can call it that, is starting to unwind. There were so many businesses in the last decade that were good businesses with a good product that customers loved, and let's say their natural growth rate was 50% per year. Just throwing that out there. But a lot of VCs are like, oh, we're going to give you a billion dollars, but I need you to grow 200% per year. And so many of those businesses just broke. They were exceeding their natural growth rate. So I think understanding that almost everything you do in life, your career, your investments, your relationships, has A natural size, a natural growth rate and understanding where those boundaries are is critical for almost everything.
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B
You have a chapter called Tiny and Magnificent which has this wonderful story that Howard Marks talks about compounding. Would love for you to share that thought process.
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Howard Marks tells a story about this fund manager. I thought it was so brilliant. He said this fund manager in any given year was never in the top quartile against his peers, but over a very long period he was in the top 4%. And he just makes this point that look, it's not what you can do in any given year, it's what you can sustain for the longest period of time. Pimco, the bond giant, had this term that they used to use I thought was so smart. It was strategic mediocrity, which was the same thing. In any given year they're not going to be in the top half, but in every decade they're always going to be in the top decile. What actually matters in investing is not what the highest returns that you can earn are in any given year. It's what returns that you can sustain for the longest period of time. And I think the dirtiest secret investing is that average returns sustained for an above average period of time leads to magic, leads to incredible results. I've been pretty open that I dollar cost average into index funds. I don't recommend other people necessarily do that, but it's what works for me. One of the reasons I do it, maybe the biggest reason, is that the variable that I'm trying to maximize for my money is endurance. It's just, can I actually hold on to the stocks that I own for 50 years? And I think by keeping things simple and by keeping things average, it increases the odds that I will have an above average holding period. And I also know that if I can be an index fund investor for 50 years, I will probably end up in the top 2% of all investors who are doing this. This is particularly after fees, after taxes, transaction costs. Top 2%. My parents have fallen in this category. My parents have no financial education, no financial background, minimal financial interest. But because of their personality, they have dollar cost average in the Vanguard index funds Since I think 1990 never sold a single share. They would be, if you compared them to the professional money management universe, probably in the top 5%. And they've done nothing. They've done nothing to do it. So just because they've maximized endurance, it's obvious when you explain it that that's where the formula for compounding is. Returns to the power. If you Know anything about math. Like the exponent does all the heavy lifting. That's what you want to maximize for. And now when you find a fund manager that earns amazing returns for a long period of time, then you get Buffett Berkshire is 20% annual returns on average for 60 years or whatever it is, that leads to absolute magic. But for the huge majority of people, literally just a lay person on the street who can earn average returns for an above average period of time, it leads to this ridiculous result. That's always been my investing strategy.
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B
What do you tell people, let's say like of our listeners in the institutional world, about how you can set up systems to improve your chances of having the duration so that you can let the magic of compounding work.
- [28:20]
A
I think every successful fund manager has been selective about who they accept as clients or LPs and that's really what it is. It's the stability of your investor base that's going to give you that endurance. And I think there are actually a huge number of fund managers who truly in their souls want to and know that they should be long term investors. But the gap between what you want to do as an investor and how you are managing and running your investing business can be a mile apart. I was talking to this financial advisor a couple years ago and he said that a client came to him and said, hey, I'm going to give you Mr. Advisor, half my money and half to this other advisor. And in six months, whoever generates higher returns gets the other half. And this financial advisor is like, absolutely. Never in a million years would I accept you as a client if that's your mentality. I think you see that a lot with fund managers of the greatest fund companies. It's not the LPs interviewing the fund manager, it's vice versa. Now of course, this is one of the benefits of private investing. Private equity and venture capital is like the 10 year lockup forces that in some ways, and I think if there is a structural advantage to private markets, advantage over public, it tends to be that the lack of liquidity is forcing a good level of behavior. That I think is a wonderful thing. That's the biggest thing. There's a big difference between wanting to be a long term investor and actually doing it. And I've made this point, saying I'm a long term investor is like standing at the bottom of Mount Everest and pointing to the top and being like, that's where I'm going. You're like, good, great goal, wonderful. Now comes the hard part. And one of the biggest challenges with actually being long term is getting the people in your orbit. Your employees, your investors, your spouse, whoever it might be. On that same page with you, we're.
- [29:55]
B
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- [31:13]
A
My basic definition of risk is something that you did not anticipate that's going to force your hand in a bad direction between now and the end of your time horizon. That's a very different definition than saying risk is volatility, whatever risk might be. And I think a lot of fund managers, when they get into problems with their investor base, with their LPs, it's because they have given their LPs, their investors, a false definition, a false sense of what the risks are going to take. You might have a fund manager that says, look, we're investing within this certain risk band and it sounds great during the pitch, it sounds great during marketing, but reality, you're very likely to exceed that band. And once you do, that's when your investors are going to flee. Look, I have experienced and will experience again in the future the market falling 50%. Do I view that in for me personally as a risk? I don't know if I would put that in the category of risk because I expect it to happen. If I expect it to happen, it's not risk. It's just the normal run of the mill behavior of markets. What would I consider risk? I think some sort of massive geopolitical event in the United States that would upend the legal framework for keeping assets safe that would be a risk. A major world war that engulfs the United States, that would be considered a risk. A major, major fundament, currency decline, that would be something of risk. Things that I know are going to happen, I don't consider risk. I think there's a lot of investors who would consider a 5% decline risk. And maybe for their strategy it would be everyone's a little bit different. But I'm always astounded at when people consider risk, things that they know for certain are going to happen. It's the analogy of how crazy it is that your annual dental checkup is covered under insurance is supposed to cover risks. If you know it's going to happen. If you know you're going to need your teeth cleaned, it's not a risk. And at that point it's just dead weight loss because you have to pay the insurance company 30% to process the claims and whatnot. I think a lot of investors, when their risk framework include the equivalent of that, include the equivalent of a dental cleaning as their definition of risk.
- [33:03]
B
So you set in your mind of expectations of the market to drop a 50% and for other people that would seem like a wildly bad drawdown. What is your view of expectations of what will happen in the world over a decade?
- [33:18]
A
My expectation is that on average, the world will break once per decade. Break in the sense of you wake up one morning and you realize that a lot of what you thought was true is no longer true. But the other common denominator there is that breakage is always a black swan. It's things that virtually nobody saw coming before it happened. So let's look historically. Covid, Lima brothers, 9, 11, collapse of the Soviet Union, Pearl Harbor, Great Depression, keep on going down the list. Once per decade there is an oh, shit moment. And the common denominator there is it was not in any analyst forecast, no macroeconomic outlook until the moment that it arrived. I think it'll be like that going forward. It's not exactly every 10 years, but on average that's what it might be. And look, in the last 20 years, there's been three of those events. Nine, 11, Lehman Brothers and Covet. And those are massive events that fundamentally changed how things work. And those three events were more momentous than virtually all of the other news stories put together combined during those periods. I think it'll be like that going forward. And you can state pretty confidently that the biggest economic news story of the next year and the next decade are things that nobody is talking about today. And you can state that confidently, because it's always been like that. I don't think there's ever been a decade, if not even a single year, in which the biggest risk in hindsight was foreseen at the beginning of the year. I think it's always been like that. That's really hard to grasp and to swallow because that is inducing uncertainty in your head when you are desperately trying to get rid of uncertainty. But I think if you're a student of history, you know that's the case, is that the surprises are the most common events that happen in economic history.
- [34:47]
B
You talk some in the book about this idea of wild numbers or things that are. You could say somebody might think is a risk, but if you looked at a probability distribution of outcomes, it should be more of an expectation. I'd love you to tell some of those stories.
- [35:01]
A
There's this wonderful story about this woman back in the 1980s who won the lottery twice. The mathematician calculated the odds that the odds of winning the mega lottery twice were, I think, 1 in 77 trillion. And so there's all these newspaper headlines. This woman won the odds of 1 in 77 trillion. And it's true that the odds of one person winning the lottery twice are 1 in 77 trillion. But if 150 million Americans play the lottery every single week, which is the case in the United States, the odds that in any given decade somebody will win twice are one in 30. And of course, like those odds are not very exciting whatsoever. There's this great quote from Daniel Kahneman where he says we need to come to terms with the fact that people are very bad at dealing with very large and very small numbers. It's just we're not good at mega numbers or very tiny numbers of risk. And I think there's another thing with probability where this is maybe the more important point, that people do not necessarily want to know what's going to happen next. They want to reduce the uncertainty that they have in their head. So when you are listening to a market pundit who says stocks are going to do this this year, the economy is going to do this next year, I think most people don't actually care about what they're saying. What they want to reduce is the uncertainty that they have in their head. Because most people view the world as black and white. It's not about probability. If you want a good financial pundit to be giving you good information, who you want is someone who's going to say there is a 57% chance of recession this year. But of course, you're never going to build a business off of that. And you're never going to go on TV talking about that because people wanted to say yes or no, black and white, is it going to happen? And I think there's so many examples of that and of alternative probabilities, but what we want is black and white, because that reduces the uncertainty that we have in our head. So there's a very long history of this. I think it always will be the case. Philip Tetlock is a professor who's done some of the best work, incredible, groundbreaking work on the science of prediction. Of course, the core of his research is we're very bad at it. But he digs into why that is and who's better than others. But someone asked him many years ago, they said, will we ever stop wanting predictions? No matter how bad we are at it, no matter the track record, will we ever stop wanting predictions? He said, absolutely not. We're always going to yearn for someone who tells us what's going to happen next, even if they are terrible at it. And I think there is a point too, that if you are a pundit in the financial industry or an analyst or an economist, whatever word you want to use, if you tell people what they want to hear, you can be wrong for a long time without any penalty. Because what you are doing, you are giving your clients is exactly what they want, which is the reduction of uncertainty. Even if what you're saying has no connection to what's actually going to happen next.
- [37:34]
B
How do you think about the actual practice of risk management and investing? A lot of this idea forecasting and what we want to reduce uncertainty is just noise. It's not really successful, people.
- [37:45]
A
I think what's really true is that when things are going well, which is the majority of the time in the US economy, it's very easy to think you have a high risk tolerance for amateurs and professional investors. If you take most investors and you say, how would you respond if the market fell 15%? The huge majority of investors will say, that would be an opportunity. I would buy more. That looks like a great entry point to buy more. But what's easy to miss is the context of the reason the market falls 15% or 30% or whatever it is, is because there's a terrorist attack or a pandemic or a surprise from the Fed. And in that context, it's much harder to be optimistic and view it as a buying opportunity. And I write about these things for a living and think about these things for a living. How did I feel In March of 2020, when the world was melting down in the early days of COVID scared out of my mind. I didn't panic sell. But it's so much easier to think that you have a high risk tolerance. It's much easier to quote Warren Buffett and say be greedy when others are fearful than it is to actually do it. Most people in that situation will realize that they are one of the others that Buffett was talking about. And so I think everyone's risk tolerance the majority of the time is lower than they think it is. And I think because of that, their allocation should probably be more conservative than it actually is. Just because it's so hard to contextualize how you're going to feel when the market is declining for the reason it's declining for.
- [39:02]
B
You're writing about behavior ultimately comes down to people, people. And there are a couple things you wrote about in this book that are very tied to incentives. Just love you to riff on those.
- [39:12]
A
I think the biggest thing about incentives that's easy to overlook is that the boundaries of what you are capable of doing, the boundaries of your morality are not known until you're factoring incentives. I'll give you an example of this. After the financial crisis in 2008, it was very common for a lot of people to say, those greedy bastard Wall street bankers who ruined the economy selling subprime mortgages to widows and orphans. Let's put aside whether that's true or not. That's irrelevant here. What people missed is that if they had the same incentives as the banker from Lehman Brothers and their boss said, hey, if you package these subprime bonds, we'll give you a $4 million bonus. You would have done the same thing too. Of course you would have. And you can take this in different directions. The most extreme example of this is Ted. If you and I were 20 year old boys living in Germany in the 1930s, would we have gone along with everything else that happened? And I think we are fools to say I would have been the one who's raised my hand and said I'm not going along with this. There are so many social, tribal, nationalistic incentives to go along with what other people are doing. And this is why I think the boundaries of what you're capable of doing are unknown to a lot of people. So a really important question to ask that is almost impossible to answer, but it's still worth asking is how would my behaviors change if my incentives were different? I have incentives. You have incentives that massively influences what Your worldview and your morality and everyone's are very different. And I know, I'm sure a lot of people who in real life are very nice, calm down to earth people, and on social media, they're maniacs. You don't recognize the person when they're on social media because what are the incentives of social media? It's to be a maniac. And I don't even look down upon those people because I know they're just responding to their incentives. So it's the classic Munger quote. Don't think about a single thing unless you're thinking about incentives. And when you realize how powerful that can be, then you should not be surprised when there are ridiculous events in the world. Bubbles, busts, wars, terrorist attacks. When you realize that the huge majority of people are good people who want to do the best that they can. But almost all of those people can be influenced to do something that looks crazy if the incentives are right. Including me, including you, including everybody. So it's one of the most powerful forces in the world that's easy to overlook.
- [41:21]
B
The combination of that incentives and tribal behavior. I think a lot of people gravitate to doing what other people are doing, right? Think consensus behavior. Then you have these outliers. You take like an Elon Musk or someone who, for whatever reason, is wired in such a way that they're just going against the crowd and would love to hear your thoughts on someone like that.
- [41:44]
A
I think it was our friend Patrick o' Shaughnessy who brought up this idea that a lot of people like that, the very successful type A entrepreneurs. Patrick said the phrase that he would use to describe their personality is not driven, it's not ambitious, it's tortured. They wake up every morning tortured that they are not more successful, bigger, richer than they are. And I think that's true for virtually all these people. Musk, Bezos, Gates, all these people, I think, woke up tortured every single morning. And that's what's driving them. I'm so glad that those people exist in the world because they give us so many incredible products and innovations. It's equally important, though, for me, and I think most people to look at that and say, I'm glad you exist and I would not want to be you. Musk had this interview just a month ago where he was like, people might think they want to be me, but they don't. I think the phrase he used was, my mind is a tornado, not in a good way. I think he's tortured. And I think one thing that comes from this is almost without exception. People who are very good at one thing tend to be very bad at another thing. It's like your mind only has enough bandwidth for a certain amount of thought and action. And if you are a kind of person who's crazy successful at this business or this investing strategy that has probably taken up so much of your mental bandwidth that it's going to come at the expense of something else. For a lot of these very successful people, what has happened, their success in business has come at the expense of is their family life, their health, their mental sanity. And so therefore we should not be surprised if you have someone who you admire for these really good traits. Musk is such a good entrepreneur. Bezos is such a good entrepreneur, don't be surprised when there are other parts of their life that you disagree with. The same kind of crazy, out of the box thinking that created something that you enjoy and admire is also, almost without exception, going to create part of their life that is out of the box thinking that you do not appreciate, do not admire.
- [43:32]
B
I love your idea that Musk, the guy who spent so much time seriously thinking about how we're going to colonize Mars, is not the same guy who's going to follow an SEC guidelines on Twitter.
- [43:42]
A
Yes, of course. Musk has talked at length about the way that we can colonize Mars to make its climate habitable is to constantly drop nuclear bombs on its poles. And if you did that, I don't understand the physics of this. You would create like a livable atmosphere on Mars. The person who's thinking about that all day is not also thinking about being polite on Twitter. Their mind is operating in such a different dimension. Of course he's a maniac. That's why you love him.
- [44:07]
B
As you've gone through all these different thought processes and stories, what are some of the key questions that you like to ask that help you hone in on some of these behaviors?
- [44:18]
A
I don't know if it's a question, but the key thought that I have when going through a lot of this, and I think this is also the core of psychology, of money too, is it's a plea for more humility. Let's stop pretending that we know what's going to happen next. Because if you're a student of any kind of history, you realize how hard that is. A plea for humility, that we don't know what's going to happen next. But in equal amounts, this idea that the behaviors, your personal behaviors and society's behaviors don't tend to change that much over time. A lot of what is important in investing is realizing that what I want is different from what you want, Ted. Not because one of us is smarter than one, another has better information, because we're very different people and you and I are a lot alike. We're friends, we enjoy each other's company. But obviously how I invest is different from how you invest. It's just because I'm wired a little bit differently than you. I have different goals, aspirations than you and everybody else. So the idea that investing and money is more akin to like your taste in music where nobody's right or wrong, everyone just has a different view of what's good and what's bad, that it's hard to grasp that in a field like finance, where it's taught as a math based field, where people are looking for the quote unquote, the right answer, it doesn't exist. What's right for you is not right for me and vice versa. So I think that's what I come to a lot, is how much of life is individualistic, that you have to go out of your way to find yourself, not what society tells you to like or want to like.
- [45:37]
B
In between these two books, one of the things that's come up and as you join the board of Markel, I'd love to hear more about when you take your own beliefs and put it in a situation that is a very different investment company than say how you invest your own money.
- [45:55]
A
What's interesting about Markel is that when you become a Motley fool employee, they give every employee, I think it's $2,000 to invest in a stock. Fifteen years before I joined the board, I put every dollar of that into Markel stock. I was a massive Markel fan well before they ever contacted me to join the board. The reason why is I've always been admiring of, and if not obsessed with Berkshire Hathaway, because what they've did is so powerful and it also seems so simple. And the reason that Berkshire has some sort of anchor now is because of size and to a lesser extent age of Buffett and Munger who just passed away. Of course, if there's one company that I was like, look, they don't have the size anchor and they have a little bit more of the youth to keep this going. The only company I've ever seen that's come close to that is Markel and it's shamelessly copied the Berkshire business model. It's a very solid, profitable global insurance business that uses the float and the proceeds of that to invest in whole industrial companies, buying the whole companies that we're going to hold forever and compound it from there. It's the exact same model as Berkshire. So I had admired that for many years before. So when Tom Gaynor and the rest of the board reached out to me three years ago to join the board, it was the easiest yes. Ever. It was not like, oh, I have to see if I understand what you're doing. But it was like, look, if there's one public company that I fit into, it's this. And so that has been pretty easy. The other thing that's important is that I think most people don't understand what the board of a public company does. The board does not run the company. The board is not making the investments. The board is not running the insurance company. The board's most important job is to hire the CEO, fire the CEO, and pay the CEO. That's what the board does. And so that is very different from saying, look, Morgan, you invest this way, but Markel is investing that way. How do you fit in? My job is not to tell them how to invest. That would be a terrible thing to do. My job is to make sure and the rest of the boards to make sure that we have the right people in place to do it.
- [47:41]
B
As you've been talking to people about this book, people have found you and your writing and wisdom over the last couple years. What are some of the most interesting and important lessons you've learned along the way?
- [47:52]
A
One thing that's interesting from both books is that people's favorite chapter is so different. Usually in any book, if the book is 20 chapters, there'll be one chapter where you're like, I got 80% of the benefit from this chapter. And even within that, I think you could say, within this chapter, these three sentences were the light bulb moment for me. It's interesting to me that people have come up with very different chapters from Psychology Money. Some people will say, the chapter on compounding, that chapter changed my life. And as someone else will say, I thought your chapter on compounding was completely wrong, and you got X, Y and Z wrong. And the book would have been so much better if you left that out. There's so many examples of that. There are books that I will say, that book changed my life. And then I go back and read it and I'm like, honestly, it's not that good. But what it was for me is that at that moment in time, when I read it, it was a missing puzzle piece for me. And I think that's true for why you get such a wide variety of people saying that was my favorite chapter. I think for whoever it is, that chapter, that paragraph is a missing puzzle piece. But for someone else who already has that piece in their quiver, it's just rambling nonsense or it's trite, whatever it might be. You see that with blogs as well. It's really hard to understand what people are going to like because it's going to hit people very differently now. I've always tried to write in a way that I hope what I write is a hedge fund manager will learn something from it and a soccer mom will understand it. It has to be both of those things at the same time. I've tried to do that with storytelling, but that makes it a little bit harder of if there is a sophisticated hedge fund manager reading the Psychology of Money and also a 16 year old reading it, it's the first thing they've ever read about money. I hope that the hedge fund manager will at least least be able to enjoy some of the stories and contextualize things. And I hope the 16 year old will understand every word that I'm writing.
- [49:32]
B
How do you bridge that gap?
- [49:33]
A
I think the only way to do it is with stories. My wife makes this joke that the reason that I keep things simple is because I'm not smart enough to make it complex. There is honestly a lot of truth to that. I don't have the mental horsepower to make it complicated, but I think I have some skill at creating and finding stories and telling stories about complicated things. If you can tell a story about how people think, that is something that an 80 year old hedge fund manager will appreciate and a 16 year old will understand. I don't think there's any data equivalent of that. There's almost no chart or formula of data or which a professional investor will learn something from and a novice will completely understand. If you're watching like the best comedian, a 14 year old will find it funny, 60 year old will find it funny, your grandma will find it funny because it's just a good story. And so that's the universal aspect of storytelling is that it's going to hit the widest variety of people. You're casting the widest net of interest. If you tell a good story story.
- [50:24]
B
What are the coolest things that have happened to you in the last three years?
- [50:28]
A
I think when you have any sort of career success, whatever the level is, you get to meet a lot of interesting people, people who you would not meet before. And so there has Been some level of that. I feel like also we talked about this at the beginning. Most things in my life have not changed at all. I'm raising my kids and trying to pack them lunch in the morning if there is. I said 20% of things have gotten better. And I think a lot of people will relate to this. If you can reduce career anxiety, that's a major life boom. So I think before the book I had a reasonable level of career anxiety of what if I don't make it? What if this isn't going to work out? What is plan B if this doesn't work? And I think if you can not eliminate that, but reduce it, that's something that I think I've probably slept better at night in the last three years just by taking that out of the stress equation.
- [51:10]
B
So I know it's not your natural instinct. I'm going to have to pull it out of you. But who are some of those people that you've met that you would not have met before?
- [51:17]
A
So two that stuck out. I had emailed a little bit with Howard Marks before the book came out. He had been a reader on my blog. I've looked up to him for so many years, as everyone has, and having gotten to know him a little bit better and had dinner with him in person, he is one of the nicest, humblest, down to earth people you'll ever meet. Despite his success, if you did not know who he was or how successful he's been and you met him, he comes across as a pretty normal guy. And that's very rare for someone in in his situation, but he might come across as normal, but you start to talk to him and the amount of wisdom he has and his ability to articulate it is almost unparalleled. He's just an incredible individual. And other people who I can't name, but I've done some consulting for extremely high net worth households. And many of them, what they want me to do is go talk to their kids, talk to their grandkids to try to instill some money values in them for people who have very unique resources. And I met a couple of families. One in particular, the family's net worth was $8 billion liquid. If you search their name, nothing comes up. You cannot find any information about this family. They have gone out of their way with God knows what kind of legal resources to scrub their presence from the Internet. They've done this very intentionally because they want people in society to treat them normally. They live a good life, but they're pretty anonymous Most people don't know, maybe their friends and their family of course, know who they are, but they can walk down the street street with pure anonymity. And the benefit that you get from that versus the person who's well known in which virtually everyone around them wants their money, wants something from them, is incredible. I heard this great quote from Matt Damon, the actor who he said, the day that you become famous, you stop maturing emotionally and socially because everybody around you treats you differently. And I think if you are very public with your financial success, you get that equivalent. You're the equivalent of an A list actor where everybody around you wants something for you and they're going to laugh at your dumb jokes and they're going to tell you that you're amazing because they want your money, they want you to open doors for them. And I think this family going out of their way to prevent that, not just for themselves, but for their heirs, their kids, their grandkids, has been incredible. And of all of the mega wealthy people that I've met, their kids and grandkids who were between their teens and 30s and 40s were the most down to earth that I've ever met. That was really inspiring to see that those people exist. It also makes you realize too that how many people there are like that who are not on the Forbes list. There's actually quite a few very anonymous, extremely rich families who you don't know about because they want it that way.
- [53:44]
B
What have you found experiencing some modicum of fame over these last couple years?
- [53:49]
A
You want your name to be famous, but not your face. And I was talking to someone who has a famous face recently and he asked me, he said, morgan, how often do you get recognized in public? And I said, twice a month maybe. And I said, what about you? How often do you get recognized in public? He said, every 30 seconds. And I said, that sucks. That's terrible. There is a saying with fame, if you want to call it that, like the grocery store test. Do you get recognized at the grocery store? If the answer is yes, your life sucks. If you can't go to the grocery store without being recognized, that's a terrible thing. That's when your fame starts to go downhill and just becomes a liability. So I think if you can have a notable name but people still don't recognize you at the grocery store and on flights and whatnot, that's like the sweet spot that you want to get to.
- [54:29]
B
So what's next on the writing docket?
- [54:32]
A
I'm working on another book right now. Won't be out for, I don't know, two years or something. But it's called the Art of Spending Money. A self explanatory title. Psychology of Money is really, at least it leans towards investing. There's some about personal finance in there. But the Art of Spending Money is really going to dive deep on the non investing side of money. Particularly how do we use money as a tool to live a better life? It's actually harder than most people think. The knee jerk reaction is more money, bigger stuff, more stuff, nicer stuff, better life. And I think that is maybe 20% true. There's a lot more that you need to dig into of why do you want nicer stuff? What are you trying to get out of this? Is that covering up for something else? There's a lot to dig into there that I'm excited to dig into. And after that, I don't know. I've made this point that I don't want writing to be my identity. I want my identity to be father, son, friend. And I want to be able to just walk away from writing when it's time. I don't want to say that's what I'm going to do forever. So I don't know what the long term future looks like.
- [55:27]
B
All right, Morgan, I got a couple of closing questions I didn't ask you a couple years ago. What is one fact that most people don't know about you?
- [55:33]
A
I've tried to be a pretty open book, but maybe one is that I think I have intentionally, for financial matters, tried to come off as a little bit Zen. Ted, you know this because you're a good friend of mine. I tend to have a more anxious personality and I'm a worst case scenario thinker. Sometimes to some extent, not fully, but to some extent what I write is, is who I want to become. But it's sometimes not who I am, it's who I wish I was. I'm not ashamed of that. I think that's a fine thing. I think everyone is broken in their own unique way. And it gets really dangerous when you look up to someone and you're like, oh, that person has it all figured out. Nobody has it all figured out. We're all just making it up as we go.
- [56:09]
B
Which two people have had the biggest impact on your professional life?
- [56:13]
A
1. And these are unsung heroes. There's a guy named John Reeves who was the editorial director at the Motley fool in 2007. I was in 2007, a mediocre college student who had never written Anything before, and I couldn't get another job as an investment banker or hedge fund manager. And John Reeves said, we'll take the risk. We'll take a chance and hire you as a writer. Whenever someone takes a bet on you when they don't need to, or they have no evidence that they should take a bet on you, and it works out, that person is like an unsung hero in your life. So I think a lot about John Reaves because he's one of the few people who changed my life by taking a bet on me when he didn't need to and probably shouldn't have. That had a huge impact on me. The other that sticks out a lot me is Craig Shapiro from the Collaborative Fund. He is another person like John Reeves, who took a bet on me when he didn't need to. And the story there was, in 2015, I was very established and comfortable with the Motley Fool. I had worked there for eight or nine years at that point, and my assumption was, I'm going to stay here forever. My wife and I bought a house a half a mile away from Motley fool headquarters. We were going to be there forever. Craig Shapiro reached out to me in 2015 and said, hey, I'm a fan of your blog. Work for Collaborative Fund and just keep doing the same thing. And Collaborative Fund at the time was like 100 million AUM had three employees. Most fund managers in that situation do not say, our fourth employee should be a blogger. Weird thing to do, But Craig was like, I believe in what you're doing, and I think it's a great thing. Come do it for me. It took me a while to actually pull the trigger and take the plunge and join Collaborative Fun. Over the last seven years, it's worked out, and Craig's like one of my best friends. He didn't need to do that. And it actually looked crazy that he did that. But he's another person. I look back, it's like when someone makes a bet on you when they don't need to. It's one thing when someone makes a bet on you when it's obvious, oh, of course this person is worth X and they have the value of Y. When people take a flyer on you, you should be especially appreciative of those kind of people.
- [58:04]
B
What's been the happiest moment of your professional life?
- [58:07]
A
There's one moment professionally that really sticks out. I've admired and looked up to Jason Zweig so much for years. Jason Zweig of the Wall Street Journal. I just think he's the greatest financial writer of our time. And I've thought that for a very long time. And then I started to get to know Jason a little bit. I don't know, 10 years ago. And when Psychology of Money came out, before it came out, he and I had a conversation. I don't want to put words in his mouth, but it was something to the effect of he said, morgan, if you don't want me to review it, I won't, because we're friends. I'll give you that opportunity. But if you want me to review it, I'm gonna be honest. I'm not gonna do you any favors, because we're friends. If we review it, I'm gonna tell people what I really think of it. I said, okay. We didn't really talk much after that, but I learned a couple weeks later that he was gonna review it. I learned because there's an editor of the Wall Street Journal who contacted me, and he said, we need a picture of you and whatnot. So I knew there was a review coming, and I was terrified, because I knew Jason, as he should do, because he's a principal journalist, was just gonna tell people what he really thought about it. And I think I really thought genuinely that he was going to tear it to pieces. It terrified me, not because I was going to be in the Wall Street Journal, but because my hero, Jason Zweig, was going to write that. And when the piece came out, I didn't know what he was writing. He did his own thing. He's a principal journalist. So when it came out, someone sent it to me. I didn't even get a heads up that it was coming out. I think I was literally trembling when I clicked on the link. And the first sentence is. It's literally framed on my wall next to me. It says, psychology Money is the best and most original finance book in years. I was sitting at this desk right here, and I think I literally put my hands up. That was the happiest moment in my career. The fact that anyone would say that, let alone my hero, Jason Zweig, said that, that doesn't get much better than that.
- [59:38]
B
All right, Morgan, one more for you. What's the best advice you've ever received?
- [59:42]
A
One thing that I think has really benefited my career, that several people told me early on was, write for an audience of one, which is me. Don't go out of your way as a writer to say, what does the audience want to hear? Because that quickly turns into, how do you pander to the audience and tell them what you think they want to hear. If you're writing for an audience of one yourself, then you're naturally going to do your best work. Writing for yourself is really fun and I think it shows in the writing. Writing for other people is work and that shows in the writing. You can see it, you can smell it. And so I think just being really true to myself of I really don't care what other people want to hear. I write about things that I think are interesting, and I write it in a tone and a style that I like. And then I take a leap of faith that if I like it, maybe some other people will as well. I think that's been really important to my career and I think it is very contradictory to most career advice as a writer, which is know your audience and know what they want to hear. That's been important to me.
- [60:35]
B
Morgan, really appreciate you coming on the show, talking about the book. I hope that a couple of copies will sell, we'll put it over the edge and really looking forward to you buying me that dinner, whoever pays for it.
- [60:45]
A
I'm looking forward to dinner.
- [60:46]
B
Ted, thanks for listening to the show. To learn more, hop on our website@capitalallocators.com where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more. Have a good one and see you next time.
- [61:10]
A
All opinions expressed by Ted and podcast guests are solely their own opinions and do not reflect the opinion of Capital Allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Capital Allocators or podcast guests may maintain positions in securities discussed on this podcast.