255: The Psychology of Money by Morgan Housel

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1. 00:00:00 So did you figure out what you are going to be optimizing for, Corey?
2. 00:00:05 No, Mike, this is a sad face for me on this one.
3. 00:00:08 And here's why I didn't figure out what I'm going, what I'm optimizing for.
4. 00:00:13 I figured out that I'm conflicted in what I'm optimizing for.
5. 00:00:17 And I don't know how to solve that, right?
6. 00:00:19 Like I know what I want to optimize for.
7. 00:00:23 And then I know where like my time and attention naturally goes.
8. 00:00:27 And unfortunately those two things are not aligned.
9. 00:00:32 So I don't really know what to do with that.
10. 00:00:35 And I've been kind of like thinking it hasn't been like super long since we recorded the last one.
11. 00:00:40 So I haven't had like a lot of time to process on this, but I know that's a problem.
12. 00:00:44 Like it's a problem what I'm actually optimizing for and then what I want to be optimizing for.
13. 00:00:50 And then I have to think about like, will those two things, sorry, how hard will it be to bring those two things together?
14. 00:00:57 Like how hard will it be to make those two things work?
15. 00:00:59 So that's what I'm trying to think about.
16. 00:01:01 Like I didn't even make it to the constraints because that was like the second aspect of this question is what are the constraints for what I'm optimizing for?
17. 00:01:07 I only made it to the fact that I was like, oh, I want to optimize for, you know, things like time with family and I want to optimize for things like pouring into the development of the boys and those kinds of things like targeted things.
18. 00:01:21 And then I realized that like, but I default to all these other, you know, things that I've done for the last 30 something years and then or 20 something years, I guess, depends on how you treat your teenage years.
19. 00:01:34 But like 20 something years that I've gone, well, hold on, that conflicts completely with wanting to develop the boys and pour into the boys and family and stuff like that.
20. 00:01:42 So really not sure what to do with that as we as we end this follow-up segment existential follow-ups.
21. 00:01:52 That's the best kind is it is existential.
22. 00:01:54 So if there is a, you know, I mean, I rated the book a three out of five last time.
23. 00:01:59 So if there was a good thing that came out of that, this is a very good thing to come out of that.
24. 00:02:03 Because if I can resolve this, I think that'll help out, you know, a lot, but I don't know how to resolve it right now.
25. 00:02:09 How about you?
26. 00:02:10 All right.
27. 00:02:12 So my, I had two action items here.
28. 00:02:15 One was to whiteboard more and as you mentioned, not a whole lot of time between this recording and the last one because I'm about to leave on a trip with my 16 year old.
29. 00:02:26 I did get a whiteboard session in, but I specifically said multiples per week and there was not multiples nor a week.
30. 00:02:32 So I guess it's yellow.
31. 00:02:37 The other one updating my favorite problems, this I did do most of the problems that were on that note.
32. 00:02:43 I kept, but I added two new ones.
33. 00:02:48 One, as I, as we talked about in the Pro Show, I have an assistant now.
34. 00:02:53 So one of the questions that I have added is what can I delegate to my assistant?
35. 00:03:00 It's a good one.
36. 00:03:01 Yeah.
37. 00:03:02 And there's lots of stuff.
38. 00:03:06 The other one is what can I build or what can I like vibe code?
39. 00:03:13 I'm still kind of clumsy around the wording of that, but basically what can I build because I've been going nuts, building all these different tools that we talked about this little bit in the Pro Show too.
40. 00:03:23 But one of the things that's making the working with the VA so successful this time around is that I can basically build whatever tool that we might need.
41. 00:03:32 So I am in cloud code almost every day at this point, making stuff and that's really cool.
42. 00:03:41 I built the the amplify page in in cloud using cloud design and cloud code.
43. 00:03:50 That's the cohort that is actually live by the time this this goes out.
44. 00:03:56 I've done a couple other sales pages with with cloud and it's it's helping me do a lot of things that just weren't options before.
45. 00:04:05 No, it's like I want to change this page, but I don't have a couple grand to give a designer to change it.
46. 00:04:14 You know, can I bring it in revamp it in code so it knows where everything is and then tweak some things, you know, stuff like that is very very empowering.
47. 00:04:25 So I'm constantly looking for what what I can throw at at code or design and see what what it can do.
48. 00:04:34 Some examples on that amplify page where like I created this creativity flywheel animation that was in cloud design like I wouldn't even know where to start with that sort of thing.
49. 00:04:44 And I just gave it to a lot of like, Hey, can you do this?
50. 00:04:47 And it here's here's the final version.
51. 00:04:49 What do you think of it?
52. 00:04:49 Actually, that's pretty good.
53. 00:04:50 I'd change this one specific thing, you know, but yeah.
54. 00:04:54 So if you're a builder, it's a pretty cool, pretty exciting time.
55. 00:05:00 And I want to constantly be asking myself basically like, what what else can I can I build?
56. 00:05:05 Yeah, good.
57. 00:05:06 Good.
58. 00:05:07 And you're doing it.
59. 00:05:07 You're doing a fun job.
60. 00:05:08 It's like it's fun to see and you're doing a good job on on all the bills, stuff, your buildings.
61. 00:05:12 So it's awesome.
62. 00:05:13 Thank you.
63. 00:05:15 All right.
64. 00:05:16 Ready to talk about a book?
65. 00:05:17 Yeah, let's talk about money, money, money.
66. 00:05:21 All right.
67. 00:05:21 So as Corey just alluded to, the book today is The Psychology of Money by Morgan Housel.
68. 00:05:28 This is the one that kind of made Morgan Housel famous.
69. 00:05:34 It made it made him appear on on my radar.
70. 00:05:38 And there's some pretty famous people who are have written the blurbs for this one, including James clear from atomic habits, stuff like that.
71. 00:05:47 I think this was like a series of blog posts.
72. 00:05:50 I had not come across Morgan Housel's work prior to reading books that he had written.
73. 00:05:56 I think the one that I read first was same as ever.
74. 00:06:00 Psychology of Money was the one that kind of put them on the map like I said.
75. 00:06:03 So this one always felt like we should definitely go back and read this one at some point.
76. 00:06:07 But I'm curious, Corey, had you come across Morgan Housel prior to reading this book?
77. 00:06:12 So I actually had heard of the psychology of money before same as ever.
78. 00:06:18 And I had never read it, but like I had no idea who Morgan Housel was.
79. 00:06:23 I was interested to see on the front cover of the book that over 10 million copies have been sold.
80. 00:06:29 So that's not too shabby.
81. 00:06:31 I mean, if you're going to write a book and you're going to sell 10 million copies, that's, that's pretty great in terms of, you know, just reach in terms of getting out to people.
82. 00:06:40 So I'm not sure how, how that happened, whether he had like a huge following or whether he just, it just caught on and kind of went like, wow, wow.
83. 00:06:47 But it was, it was published.
84. 00:06:49 If I'm looking at this correctly, it's published in 2020.
85. 00:06:52 So right around COVID times, which makes sense because he talks about some things right around in the COVID, the COVID era.
86. 00:06:58 So the short answer for your question is no, I had not heard of him, but I had heard of this book before.
87. 00:07:06 Okay.
88. 00:07:07 Yeah, I think this book, if you have one foot in the productivity space, you've heard about this, this book or seen it pop up.
89. 00:07:16 But the psychology of money maybe is not a super sexy title.
90. 00:07:20 It's not that's so I remember hearing about it, hearing it was good seeing, you know, it's sold to gazillion copies and was like, I should probably read that at some point.
91. 00:07:31 I don't want to read it now.
92. 00:07:34 Actually have two copies of this book, as I mentioned, because it keeps showing up on my, my radar.
93. 00:07:39 So I bought one from Amazon and then I was at half price books and saw it there.
94. 00:07:44 It didn't, I'd forgotten that I had already bought it.
95. 00:07:46 So I ended up buying it again.
96. 00:07:50 And I think it's not, I'll say this at the beginning.
97. 00:07:57 It's a much more entertaining read than a book on money might appear at the, when you just look at the cover, especially because it's got like dollar bills that are folded sort of like as the creases in the brain.
98. 00:08:11 Psychology seems like a kind of dry subject, maybe money sounds like a really dry subject.
99. 00:08:16 The psychology of money is like the worst of both worlds, perhaps, but I think it's interesting because the whole premise of this book is it's right there in the title of psychology of money.
100. 00:08:26 How we spend our money is not necessarily logical or rational.
101. 00:08:32 There's a lot of other things that go into it.
102. 00:08:34 So yeah, it's broken into all these different chapters, which I think appeared originally as blog posts.
103. 00:08:44 I don't know that for sure, but that's definitely the way that it reads is like there's a whole bunch of blog posts here.
104. 00:08:49 They're all kind of linked together in this book.
105. 00:08:52 There are no sections.
106. 00:08:53 It's just one idea to the next idea to the next idea with a linking sentence kind of at the end of every single chapter.
107. 00:09:02 And I think we just got to crank through them 20 different chapters here.
108. 00:09:06 Some of them, maybe we talk about a little bit more than others.
109. 00:09:10 Some we just fly through, but that's the format of the book.
110. 00:09:14 First impressions as you crack this one open.
111. 00:09:18 I agree with you in terms of the idea of psychology and money and going, well, what's this going to be like?
112. 00:09:24 What I'll say is like, you know, there weren't any bells and whistles in this.
113. 00:09:28 Like he wasn't trying to be super inventive or creative or makeup stories or do it as a parable or anything like that.
114. 00:09:36 But he gives really good examples and it's very clear, like this is what I'm going to talk about.
115. 00:09:42 And then I'm going to talk about it for, you know, a couple of pages.
116. 00:09:45 I mean, I don't remember any of the chapters being that long.
117. 00:09:49 So like they were all fairly concise chapters.
118. 00:09:51 There's 20 of them over all the books.
119. 00:09:53 A really quick read hitting a couple chapters a day and then if you want to read it like quick, really quickly.
120. 00:09:59 I mean, you can you can easily read, you know, seven to 10 chapters a day and have this done in a day or two.
121. 00:10:05 So overall, I think it was a I didn't know what to expect and, you know, it didn't surprise me.
122. 00:10:10 It didn't shock me.
123. 00:10:12 Okay.
124. 00:10:14 All right.
125. 00:10:14 So let's get into this chapter by chapter.
126. 00:10:17 We'll start here with the introduction, which is the greatest show on earth.
127. 00:10:23 And the big idea here is that handling money is a soft skill.
128. 00:10:28 Do you agree with that?
129. 00:10:29 By the way, I agree completely.
130. 00:10:31 Like I think I mean, I think and I live in a world of spreadsheets, right?
131. 00:10:36 Like, so I live in a world that says, okay, well, if we can spreadsheet that we should spreadsheet that, right?
132. 00:10:42 Like that just makes total sense.
133. 00:10:43 But there are certain areas of life where you can know, like you know the right answer.
134. 00:10:49 You could spreadsheet this and let the data tell you what the data is going to tell you and you're just not going to listen to it and you're going to say like, yeah, I know the data tells me to do that.
135. 00:10:59 And I just don't really care.
136. 00:11:01 Right.
137. 00:11:01 So I think one of the first things is to say psychology, think about it in terms of the way we think about and the way you behave related to something.
138. 00:11:09 Like that's the layman's, you know, definition of the way we think about it and the way we behave according to money.
139. 00:11:15 And I completely think it's a soft skill.
140. 00:11:18 I think if it wasn't a soft skill, then the markets would be completely predictable and the economy would be completely predictable and everybody would actually be, you know, very, very wealthy.
141. 00:11:27 And he separates wealthy and rich later, but they'd be very, very wealthy and it'd be fine.
142. 00:11:32 But it's not and we don't and none of that's true.
143. 00:11:36 So yes, soft skill for sure.
144. 00:11:38 Yeah, and just for context, I guess with the term soft skill, this is typically things like, I don't know, empathy or communication skills.
145. 00:11:49 Maybe maybe that's that's a little bit easier to measure than some of the traditional soft skills and my background with soft skills working with the family business.
146. 00:12:01 I mean, my dad created assessments and skill building systems for social emotional learning. So these were the soft skills that they were trying to teach in schools.
147. 00:12:11 But also there's an emphasis in the schools on like the GPA and the hard skills, you got to be ready for life after high school and it was very easy to to sweep the soft skills under the rug.
148. 00:12:26 Those aren't really that that necessary.
149. 00:12:29 The place that they were really necessary was the market that we were specifically addressing and that is the special education market.
150. 00:12:38 I think they are the skills that everybody needs.
151. 00:12:42 And I think the world would be a better place if there was a bigger emphasis on teaching and developing soft skills.
152. 00:12:49 The problem is is they're hard, right?
153. 00:12:51 Because people are fickle.
154. 00:12:53 People are fickle and unpredictable beasts.
155. 00:12:56 So therefore, it's really, really difficult for us to, you know, and we can teach it.
156. 00:13:01 And there's a difference between that information and knowledge as we as we know.
157. 00:13:05 So yeah, it makes it tough.
158. 00:13:07 It makes it really tough.
159. 00:13:09 Interesting though, because the research behind it shows that these are the skills that account for the majority of your personal and professional success.
160. 00:13:17 So if you want to be successful, you got to focus on the soft skills.
161. 00:13:21 The hard part is, am I winning?
162. 00:13:22 Am I losing?
163. 00:13:23 I have no idea because they're really hard to measure most of the time.
164. 00:13:25 And he would say the same thing about money, right?
165. 00:13:27 Like, that's why it's a soft skill, because they're the really hard thing to go, am I doing right?
166. 00:13:32 Am I winning?
167. 00:13:33 Am I losing?
168. 00:13:34 I don't know.
169. 00:13:34 Like, what should I do?
170. 00:13:35 I should just wait.
171. 00:13:36 I should just keep doing it and wait.
172. 00:13:39 Yeah.
173. 00:13:39 And it's not that simple as like, am I winning and my losing?
174. 00:13:43 One of the things that he mentions in the introduction here is that there are a few topics are more powerful magnifying glass that explains why people act the way they do than money.
175. 00:13:52 So like, money kind of shows your core motivations and what you're optimizing for.
176. 00:13:58 But there's two topics that impact people, whether they're interested in them or not.
177. 00:14:03 One of them is money.
178. 00:14:04 The other one is health.
179. 00:14:05 So it is definitely worth paying attention to.
180. 00:14:08 And I feel like the introduction does a pretty good job of making the case that, hey, you should, uh, you should look at this.
181. 00:14:14 It's important.
182. 00:14:15 Yeah.
183. 00:14:15 He had, he had me.
184. 00:14:16 I was like, okay, I know what we're talking about here.
185. 00:14:18 And it was very clear about it.
186. 00:14:19 Like I like, I like it when the author is very clear, but he has a couple of statements in here.
187. 00:14:24 So that's what like we're trying to do in this book.
188. 00:14:26 Like this is what I'm trying to express to you in this book, which I liked a lot.
189. 00:14:30 Yep, totally.
190. 00:14:31 Okay.
191. 00:14:32 So the next chapter, chapter one is no one's crazy.
192. 00:14:38 And if I were to summarize this one, it's basically that everyone has a reason for the way that they do things with money.
193. 00:14:47 So yeah, money can give you a glimpse of why people like the way they do.
194. 00:14:51 But sometimes if you just look at the way that people spend their money, you're like, they're nuts.
195. 00:14:56 Well, if you, if you understand their belief system, then it usually makes a little bit more sense.
196. 00:15:04 One of the things that struck me from this is the fact that your personal experiences with money make up 0.00001% of what's happened in the world.
197. 00:15:14 I think that's the right number of zeros.
198. 00:15:16 But it also accounts for about 80% of how you think the world works.
199. 00:15:21 So all of your mental models get built off of your experiences and those experiences show up in the way that you manage your money.
200. 00:15:32 So this is kind of interesting how you were brought up, the things that you were taught or weren't taught, you know, those are real important.
201. 00:15:40 And they, they create the structure for how you're going to manage the most important resource you have in your life for the rest of your life.
202. 00:15:49 It's kind of crazy.
203. 00:15:50 Okay.
204. 00:15:50 So I have a question for you.
205. 00:15:52 Okay.
206. 00:15:52 What is the, what is the financial event that is most relevant in your head?
207. 00:15:59 Now, I'm not saying it's impacted you the most.
208. 00:16:00 I'm not saying you've made decisions based on it or anything like that.
209. 00:16:03 I'm just saying the one that if I say like a financial event that's happened in your life, what's the one that like very quickly pops into your head?
210. 00:16:11 The financial event that influenced my life or just that it pops into your head first.
211. 00:16:15 Like, which one do you think of when you go?
212. 00:16:17 Oh, financial event.
213. 00:16:18 Oh, oh, it was this.
214. 00:16:20 Gosh, I don't, I don't even know.
215. 00:16:21 So there are, there are some like he talks about the, the mortgage crisis, 2007, 2009 like I went through that, but I don't feel like it had the impact on me that the ones I didn't go through did like the Great Depression.
216. 00:16:38 That's the one that I, that comes to mind immediately, but I have no experience with that.
217. 00:16:42 See mine, mine is a hundred percent the one you brought up.
218. 00:16:44 I remember in 2008, I was sitting in AT&T's cafeteria in Dallas, Texas.
219. 00:16:50 And we're eating lunch, we're designing an audio video system and we're eating lunch and everybody's freaking out.
220. 00:16:56 Like, I mean, everybody like at AT&T, like all the employees of AT&T are freaking out and we're a subcontractor.
221. 00:17:02 So we're just sitting in there eating lunch, you know, and I was like, what is going on?
222. 00:17:06 Like, why is like, there was this like, come in the room and everybody's kind of like running around like frantic.
223. 00:17:11 And I looked up at the, um, uh, at the TV in the cafeteria and they had one of the financial channels on.
224. 00:17:18 I don't remember what it was.
225. 00:17:20 And I mean, you just saw this like line, like down red down red and I was like, I was like, oh, oh, like all of these people, because I mean, I'm brand new.
226. 00:17:29 I'm just out of college.
227. 00:17:30 I don't have any money to begin with.
228. 00:17:31 It doesn't really matter. It's not like I, I didn't have a house. I didn't have a mortgage. I didn't have any of this stuff.
229. 00:17:35 I was like, oh, all these people just lost like a boatload of money and they're like upside down on their mortgage and they have like no idea what's going to happen to them.
230. 00:17:46 And like, I was like, oh, this is like a big deal.
231. 00:17:49 This is like a really, really big deal.
232. 00:17:50 And where it like impacted me was understanding that for no fault of my own, the market can just do stuff.
233. 00:18:00 And I need to think about that.
234. 00:18:01 And I need to like account for that in my head that said it kind of is gambling, even though it's like a different form of gambling and like, and it's, I mean, it's impacted like the whole way I think about money moving on to there.
235. 00:18:13 So that's what I think about when I think about, no, it's crazy.
236. 00:18:16 Like you talked about everybody's got a reason for what they do.
237. 00:18:18 And I would even say an understandable, possibly legitimate reason.
238. 00:18:23 It could be wrong.
239. 00:18:24 I'm not going to tell you that it's like a right, you know, reasoning for what they do.
240. 00:18:29 But it's at least understandable and legitimate if you ask him about their backstory.
241. 00:18:32 So I think he hits a really, really good point here about like, hey, don't judge people.
242. 00:18:37 That's the way I took this.
243. 00:18:38 My summary for this chapter is don't judge people until you've walked in their shoes because you don't know what they've been through.
244. 00:18:44 I mean, my, my grandma used to make this dessert.
245. 00:18:47 And I was like, why does my grandma always make this dessert?
246. 00:18:49 Like it doesn't make any sense to me and it has like two ingredients in it.
247. 00:18:52 I was like, this doesn't make any sense.
248. 00:18:53 It tastes good, but it has like two ingredients in my mom would be like, yeah, because during the depression, like they didn't have it.
249. 00:18:59 Anything.
250. 00:18:59 She's like, they had these two ingredients and that was the only dessert they could make.
251. 00:19:03 And I was like, oh, okay.
252. 00:19:06 Like that makes makes complete sense of why that's the one my grandma defaults to.
253. 00:19:11 Yeah, that's actually a great jumping off point for the next chapter.
254. 00:19:14 If you're ready to go there, do it.
255. 00:19:16 Okay.
256. 00:19:17 So the next chapter, chapter two is luck and risk.
257. 00:19:22 And this is really about these two things that have more to do with the outcome that you see than most of us are probably comfortable with the stories that they told in this particular, or that he told in this particular chapter were pretty incredible.
258. 00:19:41 So it starts off talking about Bill Gates and how it was one in a million that he went to this high school that actually had a personal computer at the time that he went to high school.
259. 00:19:52 So one in a million chance that he gets connected with Paul Allen.
260. 00:19:56 And then a third friend Kent Evans and they end up starting Microsoft.
261. 00:20:02 Now, the reason you never heard of Kent Evans is that in high school, he died.
262. 00:20:08 Climbing a mountain or something.
263. 00:20:10 And again, a one in a million odds that that you would die in this type of type of activity.
264. 00:20:17 So you can tell like Bill Gates is getting emotional talking about him, he's like, yeah, he would have been a partner if he had made it.
265. 00:20:25 And it was kind of crazy.
266. 00:20:27 Like the poetic envelope of those two, one in a million chances from the like different, both a positive and a negative application in the same scenario, right, is kind of crazy.
267. 00:20:42 And then talking about how both luck and risk are based on factors that are outside of your control.
268. 00:20:47 So for people like me who want to control everything, that's uncomfortable.
269. 00:20:51 What's he going to do with that?
270. 00:20:52 Yeah, yeah, I have an interesting story here.
271. 00:20:56 A family friend had the opportunity to invest $10,000 in an athletic apparel company.
272. 00:21:05 And he gets presented with this and it was starting out of a university and he said, no, I can't, I can't do it.
273. 00:21:13 I can't afford $10,000 right now.
274. 00:21:15 That's just too big of a risk.
275. 00:21:16 I just, I just can't do it.
276. 00:21:17 Do you want to know what the athletic apparel company was Mike?
277. 00:21:20 What was it under armor?
278. 00:21:23 He knew the guys who started under armor and they were like, Hey, get on the ground floor.
279. 00:21:27 We need 10 grand, you know, you can be partial bubble blood.
280. 00:21:30 Like here's your percentage and he didn't do it.
281. 00:21:32 And can you think about the amount of money he would have if he'd have gotten in on the ground floor?
282. 00:21:36 And so it's, but it's like that's a luck risk thing, right?
283. 00:21:38 Like you're lucky enough to be in the room with those people and be friends with those people.
284. 00:21:42 And then what's your risk tolerance for that $10,000?
285. 00:21:46 Like if you lose it, okay, you know, that stinks.
286. 00:21:48 If it turns into something crazy, I mean, you know, that's, that's awesome.
287. 00:21:53 I mean, so one of the things I like about this chapter and he rounds out the chapter this way is he talks about action will take
288. 00:22:00 always and about how you look for broad patterns of success or failure.
289. 00:22:04 So like be careful looking at the individual data points.
290. 00:22:07 And this is something we talk about a lot in my world where, you know, we'll do kind of like line charts where we'll
291. 00:22:14 look for anomalies within the data and we will never act on a single anomaly unless it's like crazy, crazy out there, right?
292. 00:22:22 Like unless it's completely out of the control chart, but even then we tend to not act on that.
293. 00:22:27 We wait for a pattern of, okay, this is outside of the control lines and it's increasing.
294. 00:22:33 Okay, we got to, we got to start thinking about that.
295. 00:22:34 Or, you know, this is too volatile and it's been volatile for too many periods.
296. 00:22:39 Like what we got to think about why there, why there's volatility in the data.
297. 00:22:42 And I like that he brings that back is let's look at the big broad patterns and try to make decisions based on those, not the
298. 00:22:48 individual data points because they're just too lucky and risky to look at.
299. 00:22:53 Yep, definitely.
300. 00:22:56 Anything else for the next chapter?
301. 00:22:58 Nope, there's never enough.
302. 00:23:00 Let's go to that one.
303. 00:23:02 All right.
304. 00:23:02 Yep, that's the next chapter.
305. 00:23:04 Chapter three is never enough.
306. 00:23:07 And this is really about envy, I guess.
307. 00:23:11 He mentions that modern capitalism is a pro at two things generating wealth and generating envy.
308. 00:23:19 And the equation that he has here for happiness, I think, is pretty brilliant.
309. 00:23:26 Happiness equals your results minus your expectations.
310. 00:23:31 So again, this is like very simple and nothing like completely new and original in the framing of this.
311. 00:23:40 But the way that he describes it is very motivating and it's like, yeah, you're right.
312. 00:23:46 I should totally just be satisfied.
313. 00:23:49 You mentioned and I thought this was great.
314. 00:23:51 The hardest financial skill is getting the goal post to stop moving.
315. 00:23:54 Because you've heard that saying like once you get to the goal post, they move and you got to have more, right?
316. 00:24:00 So I don't know.
317. 00:24:01 I feel like this at this point in the book, it's starting to sink in.
318. 00:24:06 He mentions that there's many things never worth risking, no matter what the potential gain is.
319. 00:24:11 And I feel like I don't have like an action item associated with this yet.
320. 00:24:18 I guess we'll talk about that at some point.
321. 00:24:20 But this is really hard to have a specific action item from this book.
322. 00:24:24 That is related to the core message of the book because the core message is basically.
323. 00:24:29 Think smarter about how you manage your money, but he's not going to give you any specific formula for how to do that.
324. 00:24:38 I kind of love that he doesn't.
325. 00:24:40 We're going to talk about this in style and rating.
326. 00:24:42 I love that he doesn't say like this is the approach you should follow.
327. 00:24:45 He's more like these are the things you should think about.
328. 00:24:47 And I'm not going to tell you what to think, but these are the things you think about.
329. 00:24:50 And then this chapter, I think, I mean, he is absolutely spot on, right?
330. 00:24:54 Like social comparison is an issue.
331. 00:24:57 Get the goalposts to stop moving.
332. 00:24:58 I tell my students this all the time.
333. 00:25:00 I'll ask them when they graduate, I'm like, hey, are do you plan on going to grad school?
334. 00:25:03 And they're like, well, I think I want to one day and I go, okay.
335. 00:25:06 So one of the things you got to worry about is you go out and you start making a bunch of money.
336. 00:25:10 And then you decide you're going to go back to grad school full time and you just stop making money.
337. 00:25:13 I was like, or you make significantly less money.
338. 00:25:15 I was like, can you do that?
339. 00:25:17 Because not everybody can and then you look at the numbers and you realize like, oh, shoot, I'm only going to make that much.
340. 00:25:23 And I was making, you know, whatever it was before, like this is a big deal.
341. 00:25:27 Like you need to actually pay attention to that.
342. 00:25:29 So like, I think all of the core ideas in this chapter, I mean, if you don't make it past chapter three, just reading the core ideas in this chapter
343. 00:25:38 and then taking those to heart, like it's a win.
344. 00:25:41 Like you have won and it was worth the money, whatever he charges for the book, the version of the book that you buy.
345. 00:25:46 It was worth the money.
346. 00:25:47 Like I really do.
347. 00:25:48 I think chapter three is awesome.
348. 00:25:50 I think I agree.
349. 00:25:53 Anything else from chapter three?
350. 00:25:55 Nope.
351. 00:25:56 Okay.
352. 00:25:56 So chapter four is confounding, compounding.
353. 00:26:01 And this is really about the magic of compound interest.
354. 00:26:04 But if you have read any other business or finance type book before, you've heard this message before, but maybe you haven't heard it the same way.
355. 00:26:14 So there's a statistic in here, which kind of blew my mind.
356. 00:26:20 84.2 billion of Warren Buffett's 84.5 billion net worth.
357. 00:26:27 Was accumulated after his 50th birthday.
358. 00:26:31 It's unbelievable.
359. 00:26:33 That is unbelievable.
360. 00:26:35 Like it's it's it's almost not real.
361. 00:26:36 Like I wanted to look at it and be like, listen, is this real?
362. 00:26:39 Did he just make this up?
363. 00:26:40 Yeah.
364. 00:26:41 And that's the the beauty of this style, I feel like is there's nothing in here that you maybe haven't heard before, but you haven't heard it this way.
365. 00:26:49 And that specific statistic sticks with you in a way that, hey, you just invest $100 a month starting when you're 18.
366. 00:26:59 You'll have this much by the time you retire does not.
367. 00:27:01 Yes, which I can tell you personally, it didn't.
368. 00:27:05 I heard that when I was young.
369. 00:27:07 I heard it when I was in college.
370. 00:27:09 I heard it all the time, but it just never like there's the difference between what works on a spreadsheet and what you actually do.
371. 00:27:16 And it's like so frustrating to be in my 40s and look back and go, why didn't I listen to the smart people that were telling me this?
372. 00:27:25 Like, you know, you know, I mean, it's just it's just wild.
373. 00:27:29 The difference between what we know to be true in our behavior as it as it comes on that.
374. 00:27:34 So, I mean, just to round out what Mike's saying, the whole chapter is just about the power of time, the power of compounding and the power of essentially being stable and committing to it.
375. 00:27:48 He talks about the fact that, you know, everybody claims Buffett's this like amazing investor.
376. 00:27:54 And it's like, or he just invested for 75 years and like he was consistent and invested for 75 years.
377. 00:28:01 And I think both of those get true, like, I think he was very smart in what he invested in, but I also think the time factor is huge in that.
378. 00:28:10 And it's just, I mean, it's it's just really simple, profound advice.
379. 00:28:17 And I think it's just really cool.
380. 00:28:20 I agree.
381. 00:28:22 Chapter five is sort of a continuation of this.
382. 00:28:27 So this is getting wealthy versus staying wealthy.
383. 00:28:31 Mike, did I ever tell you, I'm going to interrupt you for a second over.
384. 00:28:34 Did I ever tell you about my job that I thought about doing?
385. 00:28:37 And if any, if anybody's listening out here that has extreme wealth and wants me to do this, I will, I will entertain you.
386. 00:28:43 So this is partially a pitch and partially just a funny story.
387. 00:28:47 I just want to be the person that celebrities call and they say, hey, should I spend the money on this?
388. 00:28:53 And I just go, no, I just don't.
389. 00:28:56 Or like, I'm the, like, two factor code where, like, when they want to spend over $10,000 on something, like, I just hit the no button, you know, like the note, you're not allowed to do that.
390. 00:29:06 And they pay me a small retainer and everything's fine.
391. 00:29:10 Like, that's what I read.
392. 00:29:11 That's what I thought about when I read the get wealthy versus stay wealthy chapter.
393. 00:29:14 Sorry.
394. 00:29:15 Thanks for letting me know.
395. 00:29:16 I feel like you could, you could definitely vibe code something for that.
396. 00:29:19 Yes, you could.
397. 00:29:19 You definitely could.
398. 00:29:21 Sorry.
399. 00:29:21 I interrupted you, though.
400. 00:29:22 Thanks for letting me do that.
401. 00:29:23 No, that's cool. So this is basically that it talks about how getting wealthy, it takes one set of skills, staying wealthy, or is another set of skills.
402. 00:29:33 There are lots of ways to get wealthy, but only one to stay wealthy, some combination of frugality and paranoia.
403. 00:29:41 Compounding only works if you give an asset years and years to grow.
404. 00:29:45 And this, I think, kind of hints at one of the things you were talking about with Warren Buffett and how he just continued to invest.
405. 00:29:52 Even when things look bad, that's another, like, big theme I got from this book is that all of the, well, the markets are going down.
406. 00:30:02 It's time to jump ship.
407. 00:30:04 Basically everybody who tries to do that is guaranteed to lose.
408. 00:30:08 Even if you time it perfectly.
409. 00:30:10 Feel like you still net lose if you're trying to do that all the time.
410. 00:30:14 Plus also it sounds like a huge emotional burden to constantly be looking and trying to read those tea leaves and figure out.
411. 00:30:22 When do I need to, you know, strike all the iron is hot and all that kind of stuff.
412. 00:30:28 This isn't exactly what he was talking about here, but it sort of reminds me of my mom got into day trading.
413. 00:30:36 I remember when I was in high school because my uncle was into it.
414. 00:30:39 We went to visit him and he was a dentist, but we're out in California and he's shown us his office.
415. 00:30:44 He's got like the four monitors set up, not a nerd at all, but he's got this whole big stock set up, right?
416. 00:30:50 And he's convinced my mom that if that she can be a day trader.
417. 00:30:55 So she comes back and she's trying to do this stuff and I like going to basement, see her down there.
418. 00:31:00 And she's so stressed out trying to figure everything out and is like, is this really worth it?
419. 00:31:07 Mike, this is why like, I mean, for this is one of the reasons why, but like gambling never interested me.
420. 00:31:12 It still doesn't interest me and it's because I can't handle the emotional stress of, you know, like seeing.
421. 00:31:20 All of that stuff play and then like averaging it out and saying like, OK, what's my net?
422. 00:31:24 Like, because I know I'm going to win.
423. 00:31:25 I know I'm going to lose and all that stuff.
424. 00:31:26 The losses hurt too bad.
425. 00:31:28 They're too big of a gut punch.
426. 00:31:29 I can't I can't do it.
427. 00:31:31 And I learned that at like a community fair when I was like 12 years old and I was like, Nope.
428. 00:31:37 This is not for me.
429. 00:31:38 I need to just stay out of this game.
430. 00:31:40 You know, I just need to completely stay out of this game.
431. 00:31:42 But it hurts too much for me.
432. 00:31:44 Yeah.
433. 00:31:46 Well, related to that is chapter six, so chapter six is tales you win.
434. 00:31:51 And this is talking about the title comes from the idea of the tail end of the the curves where all of the results come from.
435. 00:32:03 But in between, there's a lot of stuff that doesn't work.
436. 00:32:08 I mentioned that we underestimate how normal it is for a lot of things to fail for out of 10 public companies fail and there's only a couple of things that account for most of the results.
437. 00:32:19 So investing genius is someone who can do the average thing when all those around them are going crazy.
438. 00:32:24 They can they can stick it out when everybody's jumping ship.
439. 00:32:29 But the thing that jumped out to me from this the section was if you are good at business, half of your products will work.
440. 00:32:39 And immediately got me thinking about my career business and the different courses and things that I've I've tried.
441. 00:32:46 And I can tell you that every single time I launch something there is an unstated pressure because it's like if I'm if I'm building this thing, it's based off of something that I'm really excited or passionate about.
442. 00:33:04 And I've figured it out and it's going to be helpful for somebody else and that is true, but like, assuming all that is true feels like there's this implicit expectation that this thing should go gangbusters every single time.
443. 00:33:19 And basically, when I read this chapter, I was like, Oh, I could have all those dots, all those boxes checked, all those dots connected.
444. 00:33:29 And still, when I launch things, half of them are going to fail.
445. 00:33:34 Well, I guess I should just try a bunch of stuff.
446. 00:33:36 Then there's another book that I came across.
447. 00:33:39 I ordered it and it came already.
448. 00:33:42 I might do it as a gap book.
449. 00:33:44 We'll see, but it's basically something like you can just do things.
450. 00:33:49 I'll grab the link and I'll put it in the show notes that people are interested in it.
451. 00:33:52 But it's really like giving you permission to just try things and not put all of your validation into whether this thing actually works or not.
452. 00:34:03 I recognize, based on some of the coaching that I've done recently, that whenever I launch something or release something out into the world, I feel like that is now a permanent part of my identity.
453. 00:34:16 And I want to get good at the skill of just trying it.
454. 00:34:21 And then if it doesn't work, being like, OK, well, I'm not going to do that anymore.
455. 00:34:24 Sorry, everybody who bought it, you know, I'll make it right.
456. 00:34:26 But just because I had a few people buy it doesn't mean that I have to continue to service this thing for the rest of time.
457. 00:34:33 I can continue to run experiments until I find the thing that really, really clicks.
458. 00:34:38 And I feel like I've had some moderate successes, but I really haven't found the thing that really just is the tail end of that curve for me yet.
459. 00:34:48 But I am excited to do it.
460. 00:34:51 Well, and if you think about the examples from other companies that some of them he talks about some of me doesn't, I'm almost positive he talks about venture capital here.
461. 00:35:00 And the fact that venture capital will invest significant amounts of money in a lot of different things.
462. 00:35:06 But they're not going to hit on, like, they're going to hit on barely any of them, right?
463. 00:35:11 Like, so, you know, one out of ten or whatever is going to hit.
464. 00:35:13 But what they want is they want that one that hits to hit big.
465. 00:35:16 And it wipes out all those other losses, all those other things that just kind of fizzled out and didn't plan.
466. 00:35:22 And we, you know, read about these on the internet and they're called unicorns, right?
467. 00:35:26 Like, so what the VC firms are trying to find is they're trying to find the unicorns because they know the unicorns will make up for all their other losses and then they'll still look good.
468. 00:35:34 Well, pharmacists, pharmacies are the same way.
469. 00:35:37 Pharmaceutical drug companies, actually, not pharmacies.
470. 00:35:39 Pharmaceutical drug companies are the same way.
471. 00:35:41 They're really trying to find the one drug that'll hit, knowing that they're going to spend billions and billions and billions in the development of a bunch of stuff that's never going to hit.
472. 00:35:50 Or it's never going to get approved by the FDA or whatever it is.
473. 00:35:53 So it's like this idea is throughout all different kinds of things, right?
474. 00:35:59 I mean, it's a really pervasive idea in our world.
475. 00:36:03 You don't think about it like that, but it's a really pervasive idea in our world.
476. 00:36:07 The thing that got me about this chapter was I actually thought this chapter was slightly confusing, and it's because of, like, the Tails language.
477. 00:36:15 Like, I knew what he meant, but I just didn't think it read as clearly.
478. 00:36:19 Overall, the idea made sense, but it's like, I didn't think this one read as clearly.
479. 00:36:25 So I mean, I didn't have many of those in this book, but this was one of those chapters.
480. 00:36:29 Chapter six was one of those where I was kind of like, I don't really like the Tails language.
481. 00:36:33 Yeah, I can understand that. It didn't bother me, but I was an economics minor.
482. 00:36:39 I'm not as familiar with it, so that it was kind of new to me.
483. 00:36:44 Yeah, but I will say that for the most part, you don't have to have a business or economics degree in order for this book to make sense, which is one of the things that I like about it.
484. 00:36:52 It is very approachable.
485. 00:36:53 I would agree completely with you on that.
486. 00:36:56 Can I start seven?
487. 00:36:57 Yeah, go for it.
488. 00:36:58 Okay, so chapter seven is freedom. I actually think if you're looking for Morgan Haussel's core psychological bent when it comes to the way he manages money, this is where you're going to get it.
489. 00:37:12 It's the idea of freedom.
490. 00:37:13 It's not a strategy.
491. 00:37:14 It's not a individual like implementation of anything like that.
492. 00:37:19 It's the idea that he wants to at all times be financially free.
493. 00:37:23 Now, Mike, you might think I'm going too far if you do correct me with your error, but this is in my mind the underlying thread of Morgan Haussel's psychology of money is like he wants the freedom to do whatever he wants to do with his money or whatever he wants to do with his time or whatever he wants to do with
494. 00:37:39 and therefore he's going to make money decisions, investment decisions, all of those decisions based on this idea of freedom. I think it's kind of like the crux of the book to me like it's the key component of his perspective in the book for me.
495. 00:37:56 I completely agree. I think this is the big takeaway from the book so far is that you want to have freedom over how you spend your time.
496. 00:38:10 He mentions here we're richer than ever but compared to generations prior control over our time has diminished. There's a term called a reactance which is doing something that you love on a schedule you can't control.
497. 00:38:23 I feel like I've been there.
498. 00:38:26 And I don't like it.
499. 00:38:29 But the common denominator for happiness is control of our lives.
500. 00:38:34 The highest form of wealth he says is the ability to wake up every morning and say I can do whatever I want today.
501. 00:38:39 He also mentions another book in this chapter which I have read. Have you ever heard of 30 lessons for a living?
502. 00:38:45 Okay, I'm actually searching the Bookworm website right now to see if we've covered it because this book sounds super, super interesting to me but tell me about it because I've not read it.
503. 00:38:54 I don't think we have read it but I read it as a gap book. It's by Dr. Carl Pillimer and he was basically trying to study what makes a good life.
504. 00:39:07 And so he went and he interviewed something like 10,000 people in nursing homes but not just people in nursing homes.
505. 00:39:13 He would go into a nursing home and he would find the one or two rock stars there that are just living their best life.
506. 00:39:20 And interviewed them and he took all of the responses that he got and he condensed them down into basically these 30 different lessons.
507. 00:39:30 So everything that he got basically was condensed down into 30 different responses that people gave over and over and over again.
508. 00:39:36 He put that into a book, shared a bunch of anecdotes from specific people on the stories that they told and things like that.
509. 00:39:42 And it's a really, really good book. I would definitely recommend that it might be a cool Bookworm book if you wanted to cover it at some point.
510. 00:39:51 I don't know, get it and take a look at it. Let me know if you like it because it's basically just people at the end of their life and they're like, "Yeah, if I was younger, this is what I would want to know.
511. 00:40:01 Basically, what do you wish you would have known earlier in life for someone who really wants the wisdom that you've accumulated over the years?"
512. 00:40:10 So it's stuff like, "Don't go to bed angry or always say you're sorry." Things that you've heard before, but I don't know.
513. 00:40:16 The way that they're packaged is really kind of cool.
514. 00:40:20 I was going to talk about what he pulls from that book. He wrote, "Not a single person out of thousands said to be happy. You should try to work as hard as you can to make money to buy things you want.
515. 00:40:31 Not a single person said it's important to be at least as wealthy as the people around you."
516. 00:40:37 I think the things he's pulling out of here are the things that made me go, "Have I thought that in the past? Do I currently think that?"
517. 00:40:44 I was like, "Oh, and it's a really good book for analyzing yourself as you go through. How do I think about money? How do I think about freedom? I liked that a lot.
518. 00:40:58 I like being challenged as I read a book and having to go introspective on it. He does a good job. Morgan Hassel does a good job as he's writing this book."
519. 00:41:07 Yeah, absolutely. That ties into the next chapter. Let's go there. Chapter 8 is "The Man in the Car Paradox."
520. 00:41:17 This makes no sense if you don't understand the story that Morgan Hassel tells you.
521. 00:41:22 I took no notes on this chapter. I have no idea what this chapter is about. You've got to own this one for me, bud.
522. 00:41:29 He was a valet driver. He would see people pull up in these fancy supercars. He would look at the people driving them and be like, "Man, that guy is really cool."
523. 00:41:41 Then he would go park the car. Then he had the realization one day that he couldn't remember anything about the people who drove the cars. He just remembered the cars.
524. 00:41:50 The story you tell yourself is I need that status symbol, that car, what it represents. People know that I am successful, but if you are the man in the car, no one is looking at you. Everyone is looking at the car.
525. 00:42:07 It sort of doesn't work, even if that was the whole goal. That in and of itself is kind of like, "Why?" But his point is that no one is impressed with your possessions as much as you are.
526. 00:42:19 People buy fancy cars because they think people will admire them, but the people end up admiring the car, not the person driving it.
527. 00:42:26 I remember it now, but I didn't remember any of that, and it's a really good principle. Did you ever valet before?
528. 00:42:33 I did not know. I valeted a country club, and I can totally see where he's coming from on this one. It's like, I don't remember any of the people I remember the cars, though. I got the dress from interesting cars.
529. 00:42:43 I'm pretty sure that's where he was of LA, too, but I don't remember the specifics of that. I just remember that he was of LA, and that's kind of what anchored that whole thing for me.
530. 00:42:53 Was this the one where the story about the guy who would throw around dumb amounts of money and throw the coin, or was that later?
531. 00:43:03 I thought that was earlier. I don't recall specifically, but yeah, that was basically like, some guy was throwing all around money, and then he's like, "You wouldn't be surprised to find out later that he was broke."
532. 00:43:16 I don't know. He probably weaves that in throughout a bunch of these chapters to tell you the truth.
533. 00:43:25 Maybe even the next one, which is chapter nine, wealth is what you don't see. He says right at the beginning here, "We see the car, but we don't see the bank account."
534. 00:43:37 And he makes a very important point here that when most people say they want to be a millionaire, what they mean is they want to spend a million dollars.
535. 00:43:46 Yes, yes. Yeah, exactly.
536. 00:43:49 So the way to be rich is to spend money you have, and don't spend money you don't have feels very simple, right?
537. 00:43:56 But rich equals your current income, wealth is income that's not spent.
538. 00:44:00 I think this is an area where he could expand on this book, or the idea, but I didn't get too much to cover, because he talks about wealth being hidden, and rich is what you show people, but wealth is hidden.
539. 00:44:11 And I just think he could have unpacked rich and wealthy, and much more.
540. 00:44:16 It wasn't the point of the book that he wanted to cover more than that, but I really think he could have expanded that out more as you go there, because I've heard of this distinction before in other places.
541. 00:44:26 And it's kind of like just to summarize it again, rich is what you show people.
542. 00:44:30 You know if a person's rich.
543. 00:44:32 You can tell by the house they live in, the car they drive, the way they throw around money at dinner or whatever it might be, but wealthy.
544. 00:44:38 I mean, they're sneaky wealthy people, right?
545. 00:44:40 Like people who are like crazy wealthy, and you never know, because they eat their McDonald's and drink their Coke.
546. 00:44:46 You know, like Warren Buffett.
547. 00:44:49 I think probably most millionaires don't eat McDonald's if I had to guess.
548. 00:44:54 Yeah, I would say that's probably true.
549. 00:44:56 Not because it's expensive, but like he talked about health and wealth are related.
550. 00:45:02 So maybe if you have that revelation about the wealth is probably a correlation to some of the health stuff too.
551. 00:45:10 Be my totally shot in the dark guess there, but I get your point.
552. 00:45:16 I do think that, and I agree with you, he could go further into that distinction, but what this chapter really does for me is it sets the stage for the next one.
553. 00:45:26 You ready to go there?
554. 00:45:27 Let's do it.
555. 00:45:28 Okay.
556. 00:45:29 So the next chapter is chapter 10, and this is save money.
557. 00:45:33 So with the context of if you want to be wealthy, you have to not spend the money.
558. 00:45:43 Like if you don't have that leading up to chapter 10, I feel like chapter 10 maybe doesn't hit the same way.
559. 00:45:50 I agree.
560. 00:45:51 And that's part of the brilliance of this book is that these essays are great, and they probably can stand on their own, but the way that he orders them and the way that they tie together sometimes is a little bit magical and it makes them better when they're packaged together.
561. 00:46:06 And this is one of those, I think.
562. 00:46:08 So chapter 10 is very simple.
563. 00:46:10 Just save money.
564. 00:46:12 You can build wealth without a high income.
565. 00:46:14 You can't without a high savings rate.
566. 00:46:17 And so savings is the gap between your ego and your income.
567. 00:46:21 I love that.
568. 00:46:22 One of the things he says here?
569. 00:46:23 Yeah, that was...
570. 00:46:24 Rachel and I were talking about this on the way back from Door County the other day.
571. 00:46:28 And that line alone probably makes the book worth reading.
572. 00:46:35 And I do have an action item from this particular chapter, which really doesn't have anything to do with saving money.
573. 00:46:46 But he talks a little bit in here about competitive advantage.
574. 00:46:52 In fact, he brings up soft skills again.
575. 00:46:54 Soft skills are a great source of competitive advantage.
576. 00:46:57 And one of the things that he's talking about from a business perspective is like standing out when you are compared to your competitors.
577. 00:47:08 And that was one of the questions that I jotted down that I want to consider is, how can I stand out?
578. 00:47:15 Maybe that's something I should add to the favorite problems sheet that I mentioned in the follow up.
579. 00:47:20 I don't know that I'll have a specific answer with this, but I feel like it's very easy to fall into that commoditized mindset for me with the stuff that I make online.
580. 00:47:34 Again, it has nothing to do with the main idea here, which is saving money and spending less.
581. 00:47:39 Yeah.
582. 00:47:40 And I think this ties really nicely into something from earlier chapters about that goalpost moving.
583. 00:47:45 What's one of the easiest ways to save money is to not let the goalpost move.
584. 00:47:50 You don't need to flip and buy the bigger house.
585. 00:47:53 You don't need to flip and buy the nicer car.
586. 00:47:55 You don't have to do any of that.
587. 00:47:57 You can stay where you're at and continue to work the job that you're working or get increase in promotions and things like that.
588. 00:48:07 I like the way he takes a simple concept, save money, and he approaches it in a couple different ways that say, "Hold on, here's the crux of saving money.
589. 00:48:18 Don't let your needs outweigh your earnings.
590. 00:48:22 Don't let your ego get in the way."
591. 00:48:24 I like that he adds that nuance detail underneath, and I think he does a really good job and he presents it in a way that can hit most people and kind of give them a different perspective on thinking about this.
592. 00:48:36 I like the chapter 10 a lot.
593. 00:48:38 100% agree, and I have to share this paragraph from this chapter because this is kind of the whole book in a nutshell.
594. 00:48:49 Savings can be created by spending less.
595. 00:48:52 You can spend less if you desire less, and you will desire less if you care less about what others think.
596. 00:49:00 That's it in a nutshell.
597. 00:49:01 It's beautiful.
598. 00:49:02 It's absolutely beautiful.
599. 00:49:03 Yeah, hard.
600. 00:49:06 Yeah, exactly.
601. 00:49:08 Simple, not easy.
602. 00:49:09 That's exactly.
603. 00:49:10 Okay, ready to go to the next one?
604. 00:49:13 Yep.
605. 00:49:14 All right, so the next chapter, chapter 11 is reasonable, greater than rational.
606. 00:49:21 A little greater than character.
607. 00:49:24 And basically, the gist of this chapter is that people will make decisions when they, even if they're not mathematically optimal, when they can connect the dots in their head, basically.
608. 00:49:42 And he uses a pretty crazy story from medicine here about fever being almost universally considered to be a bad thing, but it's actually good for the body when fighting diseases.
609. 00:49:55 And so, shared some stories of people who were trying to battle some, I should have written down the diseases they were fighting, but there was some disease that people were dying from at a crazy rate.
610. 00:50:09 And so, tried to cure them by giving them a mild form of malaria or something like that because it would cause their body to go into a crazy fever for a short period of time.
611. 00:50:22 And then that actually is the thing that helped fight off the more threatening disease.
612. 00:50:29 And that is just used as the example of the crazy thinking when it comes to this stuff. But rational thinking, he mentions becomes a liability if it means you're more likely to walk away when things don't go well.
613. 00:50:45 So, investing is, he also says, investing is giving money to strangers.
614. 00:50:51 So, I think it's important to recognize that. And then, I don't know, like, I don't have a whole lot from this chapter where it's like, yeah, this is what I want to do with this.
615. 00:51:01 This is the one that felt out of all the chapters so far, like, I had a harder time grasping the true thread throughout the rest of the book.
616. 00:51:12 But I think the big idea here is that if people think that there's a reasonable explanation for something, they will take that over the rational logical decision most of the time.
617. 00:51:23 Yeah, there was a paragraph towards the end of this chapter that brings this chapter home for me.
618. 00:51:27 It's basically the fact that commitment to a strategy and keeping steady with it.
619. 00:51:34 So, in my mind, he would call that the reasonable. It's not the rational.
620. 00:51:37 The rational would say, like, when the numbers start to go down, you sell, you know, or when the numbers start to go up, you buy.
621. 00:51:43 He said the reasonable strategy is you've committed to a strategy and you're going to stick with that strategy through thicker thin.
622. 00:51:48 And this is the part that I think is really interesting.
623. 00:51:50 The historical odds of making money in the US market and US markets are 50/50 over one day, 68% in one year, 88% in 10 years, 100% in 20 years.
624. 00:52:01 And it's like, so he's saying, if you're just reasonable about your strategy, it doesn't have to be a perfect strategy.
625. 00:52:08 Like, you can, you can screw up in the strategy that you chose.
626. 00:52:11 Just don't be volatile, right? Like, don't be, and he calls it rational in terms of, like, you're just overly black and white.
627. 00:52:21 That's the way I would describe that is overly black and white in it.
628. 00:52:23 And he's like, well, hold on. That's actually not what history shows.
629. 00:52:26 History shows pick a strategy, even if it's a little bit imperfect, and just stick with it.
630. 00:52:30 For time, stick with it for time. So it ties back to that compounding, it ties back to some other things that he's talked about in the book.
631. 00:52:36 So that's kind of what I took away from chapter 11.
632. 00:52:39 I like that. And then stick with it. That leads into the next chapter, which is chapter 12, surprise.
633. 00:52:47 And the big idea here is that the majority of what's happening at any given moment in the global economy can be tied back to a handful of past events that were nearly possible to predict.
634. 00:52:59 Exactly. So things that have never happened before happen all the time.
635. 00:53:05 And if you try to look at history and use what has happened previously as a predictor, there's a name for that.
636. 00:53:13 That's a historian's as profits fallacy. And that's when you place an overreliance on past data, and it's used as a signal of future conditions.
637. 00:53:23 So there's all sorts of stuff where people are looking at, you know, we're going into this recession, but it's probably going to be in this range and they're basing that off of things that they've seen before.
638. 00:53:34 But there's a pretty good chance that there will be things that we haven't seen before. And the big lesson to learn from the surprises he says in this chapter is that the world is surprising.
639. 00:53:45 I don't really know what else you do with this other than like, maybe don't believe the predictions. That was my, that was my key quote to the whole thing.
640. 00:53:54 It was like the correct lesson to learn is surprises are from surprises. The world was surprising. I was like, wow, so profound, more like that's, that's unbelievable.
641. 00:54:02 Mine is, it goes back to that principle that you talked about before, where you're trying to look at those big patterns.
642. 00:54:08 Like you're, you're not worried about those individual things that you can't predict that there's no way to predict those things. You're trying to look for those like gigantic patterns and different things.
643. 00:54:18 But even then, just be okay with the fact that something surprising is going to happen. I'm going to be sitting in the cafeteria at AT&T one day, and the world, the financial world is going to melt around me.
644. 00:54:28 We're going to go through COVID where we're going to have to like stockpile toilet paper and hand sanitizer. Like nobody was expecting that, you know, like, just be ready for that kind of stuff and stay the course.
645. 00:54:39 Like that's what I get out of this chapter is like, stay the course.
646. 00:54:42 Yeah. And the way to be ready for that kind of stuff, as you mentioned, is not to think of, oh, well, what if, you know, this happens, it's really just have some savings that actually leads into the next chapter.
647. 00:54:54 Yeah, the next chapter is chapter 13, room for error, mentions at the very beginning of this, when you're making a bet, you have to give yourself room for error.
648. 00:55:06 And if you don't, basically, you may end up in a real bad place. He says, history's littered with good ideas that were taken too far and are now indistinguishable from bad ideas.
649. 00:55:17 We're really bad at predicting, you know, he mentions that most people think if they see a home renovation project that somebody else is doing, that that project will be between 25 to 50% over budget.
650. 00:55:28 But then when it comes to our own projects, we estimate that they're going to be completed on time and within budget.
651. 00:55:36 And it just, I've heard stuff like that before. I've not heard that specific statistic before, but I've definitely heard stories about, you know, Sydney Opera House or the Denver Airport, you know, those projects that went way, way, way, way, way over budget.
652. 00:55:51 And I've heard them historically as reasons for why the waterfall method of project planning is a disaster.
653. 00:55:59 But I think the larger lesson here is that we think that, oh, yeah, it's a general rule, but I can beat it for some reason.
654. 00:56:09 And he's basically saying, no, you can't. Really powerful explanation here with the Russian roulette example, by the way, says the odds are in your favor when you're playing Russian roulette, but the downside far outweighs the potential upside.
655. 00:56:22 Yeah, I love that example, right, because it's like, listen, if that goes wrong, it goes completely wrong.
656. 00:56:29 Like, so therefore, you can't think of it like that. You can't think of it statistically. And this gets back to the rational and reasonable thing.
657. 00:56:35 That is rational. Oh, you know, I've got X percent of chance of success, but it's unreasonable because if it goes wrong, you're dead.
658. 00:56:45 But there's no, there's no getting out of that. I took a project management class one time where the guy was basically, he had 20 something, 30 years of experience.
659. 00:56:54 And he's like, okay, listen, if you're into a world where you have no background on the project that you're doing, he goes, your margin of error for your first round of your budget needs to be plus or minus 100% each way.
660. 00:57:07 And I was like, wow, I was like, that's, but I was like, that actually kind of makes sense because everything you're doing is guessing how much will that subcontractor charge me?
661. 00:57:15 I have no idea. How long will they take? No idea because we don't have any data on this. We don't have any experience in the situation.
662. 00:57:22 So like a lot of what he's saying in these chapters, I'm getting triangulation from other sources about like, you know, the truth of different things.
663. 00:57:32 I don't know, Mike, about you, but one of the things I am interested in, I like the idea of leverage. I mean, you're an economics minor, right? So you know of leverage and you like leverage scares the life out of me, right?
664. 00:57:46 I mean, I don't know why, but I am so maybe risk-averse. The idea of like taking on debt to then invest that and like, you know, leveraging myself to, I'm just like, that's not good. I can't handle that emotionally.
665. 00:58:03 I don't like it either. And I don't think Morgan Hausle does either. To be honest, I was economics minor, but I don't think I've used my econ degree in quite a while. Not a whole lot of reason to draw a supply demand curves as an independent creator.
666. 00:58:18 But yeah, the big takeaway, though, is that if there's one way to guard against the damage, it's avoiding a single point of failure. Maybe that's the big takeaway from the whole idea of leverage. You don't need a particular reason to start saving.
667. 00:58:35 And that's a theme that he says that over and over and over again. You don't have to have a goal like we want to do a renovation on the house or something like that. Just start saving. And you'll use it for something that you hadn't predicted.
668. 00:58:48 And you'll be glad that you you have it. So I think that's like, that's good advice.
669. 00:58:53 And he doesn't do this very often. I don't know if this is the first one or not. I didn't keep track of it, but he actually states in the end of this chapter, I save a lot.
670. 00:59:01 I have no idea what I'll use the savings for. So like, this is actually him telling you what he does, which he really reserves until chapter 20 for, or is it chapter 20, I think, I think that's when he tells his strategies.
671. 00:59:13 But he really reserves all that stuff. And he basically just says, Hey, if you're planning for all these events, you're not planning for the surprise event. You're not planning for the event that you can't see and you don't have enough room for air. And I was like, Okay, that's a pretty good, pretty good stretch.
672. 00:59:29 Agreed. All right, chapter 14 is you'll change. And I think it's right there in the title. You're not going to be the same person that you were at the end of your life that you are at the beginning.
673. 00:59:47 And as a result of that, most people are very poor forecasters of their future selves. There's a statistic in here which doesn't surprise me. I'm curious your reaction to this shaking your head.
674. 01:00:00 I know what you're going to talk about. Go ahead. Yeah, only 27% of college graduates have a job related to their major. How does that make you feel?
675. 01:00:09 I mean, I actually think it's one of the reasons why college is so important. And that's not me just trying to justify my existence is because I think society has turned it into professional preparation.
676. 01:00:25 But I don't think it ever started out that way. Like, I think it started out as forming you as a human and like forming your thought processes and forming your knowledge about the world and forming those things.
677. 01:00:38 And then apprenticeships, you know, we've talked about Robert Green. We read a Robert Green book about mastery and apprenticeships and stuff.
678. 01:00:44 And apprenticeships were what actually formed you professionally. But I think we've kind of like smushed those two things together. And we've said, well, university is where you go to be figure out or go to learn how to do the thing you're going to do.
679. 01:00:57 And I don't like that thought. Like, I think university should be a way that you grow as an individual and as a human and you learn a bunch of skills and you get a bunch of knowledge.
680. 01:01:06 And I think we focus too much on the professional development. And I think that stat plays it out. I get shows that like people just for one reason or another you either didn't like it like you thought you were going to like it.
681. 01:01:17 Or you just couldn't find a job in that because the market was weird when you came out of school. So you took whatever job you could get. Like, there's a bunch of different causes or reasons for it.
682. 01:01:27 So I think it's a good point and sheds light on a bigger problem, if you will.
683. 01:01:34 I agree. I think the other things in this chapter kind of linked to that. So on the one hand, 27% of college graduates have a job related to their majors. So a lot of them have changed.
684. 01:01:49 Right. And if you look at why they've changed. Maybe there's a couple of different reasons for doing so. Maybe at some point, after you graduate, you feel like, Oh, I picked the wrong major. I really wanted to do this other thing.
685. 01:02:06 And I can see a situation where you've got this sunk cost. You went to the school. You got the degree. You've got the diploma on the wall. And so you just continue with this path and hope that it's going to get better at some point in the future.
686. 01:02:22 And then there's a specific phrase in here. He says regrets are especially painful when you abandon a previous plan and feel like you have to run in the other direction twice as fast to make up for the last time.
687. 01:02:33 So I feel like that is kind of natural if it's not a perfect fit. And you really have no idea whether this is a perfect fit. So the tricky says to accept the reality change and move on as soon as possible.
688. 01:02:45 I feel like that one sentence is very simple, but it's pretty profound. And it, again, is maybe simple, but not easy to do.
689. 01:02:58 You know, if you dropped a whole bunch of money, you got student loans, and then you decide, I don't really want to do this thing anymore. What I really want to do is this other thing to walk away from that and go do the other thing is really scary.
690. 01:03:10 And there are a lot of scenarios where that is actually a terrible idea. It kind of gets into the whole follow your passion and passion mindset stuff that Cal Newport rails against.
691. 01:03:21 And I agree with him 100%. You know, you can't just wake up one day and say, I want to be an underwater basket weaver. I'm going to go do this thing.
692. 01:03:29 But also, like, that's sort of what I did. I mean, I was at a family business. I was doing stuff online. I was an integrator, a digital marketing firm is like, I really need to give this independent creator thing a shot. I'm going to go do it.
693. 01:03:43 And I both feel at different points. I feel regret that I didn't try it sooner, but also gratitude that I actually didn't wait, like, another five to 10 years.
694. 01:03:56 And then because there's no way I would have done it done it then. So this is tricky. And again, there's no formula for this. So this is great advice that you're probably like, how the heck do I actually implement this?
695. 01:04:10 I don't know that I have anything for you. I agree. And I don't think he does either, right? Because he doesn't want to get into those practical tips and tricks kind of thing.
696. 01:04:19 You know, he talks in here about the sunk cost fallacy, which we've heard we've read before, but just in case folks are familiar with it anchoring current decisions on past effort that can't be refunded.
697. 01:04:29 So it's basically, oh, well, I bought this technology. I have to keep using it. It's like, no, you don't. Like, you can stop. You can just go like, well, that was a bad purchase.
698. 01:04:38 I made a mistake and we're just going to throw that out and we're not going to pay attention to it. Well, like a degree or an investment decision would be a very similar situation where it's like, well, I went to school for four years.
699. 01:04:49 I have to do that thing, but I'm miserable every day. And it's like, well, hold on. You don't have to. Let's figure out a way to use that.
700. 01:04:55 Or I made this investment decision. I have to stick with it. Maybe not. So this is where I kind of get like, what do we do? What do we do with certain things? And like, how do we actually put this stuff into practice? And the answer is, I think it's hard and it depends.
701. 01:05:10 And it's the gray area. Like there is no black and white. So I just think there's no, there's nothing you can do about that. Like, there's no way to get around that.
702. 01:05:18 But I do think the one thing that is helpful with the way that it's framed here is to feel like if you find yourself in a situation where you do want to change, that is natural. That's part of the process. There's not something wrong with you. You did mess up.
703. 01:05:33 Yeah. Yeah, I agree with that completely.
704. 01:05:36 All right. The next one, chapter 15, nothing is free. Says that every job looks easy when you're not the one doing it. Easy to be an armchair quarterback, I guess. But you can't get the prize without paying the price.
705. 01:05:56 Successful investing does have a cost. And you list some things that typically you wouldn't think of. You have volatility, fear, doubt, uncertainty, regret.
706. 01:06:07 But the bill always does come due. The worthwhile trade off of fees is clear when you're paying one. And so the goal from this, I think, is to find the price and then pay it.
707. 01:06:20 Not hope that you're going to catch that lightning in a bottle. And, oh, this is the magic formula and everything's going to work. There's one encouraging thing for me from this whole book up until this point.
708. 01:06:34 It's that there is a very simple logical explanation for the way that the world works. You may not like that. You may not be able to manipulate it in the way that you want.
709. 01:06:49 But it's a system and it works just fine most of the time.
710. 01:06:57 And someone say even when it's not working, when you have your big crashes or whatever it is, it's actually still working. That's part of the system. It's resetting itself.
711. 01:07:07 My big takeaway from this chapter was the idea of expect volatility and just be okay with it. And that's part of playing the game. And I go back to these examples that he talked about before.
712. 01:07:21 You think about the pharmaceutical drug companies. It's like they understand the price to play in this game is the fact that we're going to spend billions of dollars on things that never work or never reach the market.
713. 01:07:32 The cost for a venture capital firm is going to be, we're going to invest in a bunch of companies that are going to go nowhere or they're going to fold six months after we invest in them or whatever it is.
714. 01:07:42 And that's just the cost of playing the game. And I don't know how happy the people are in those worlds in terms of like, oh, I'm sure they don't want that to happen very often.
715. 01:07:53 But they've at least accepted and the boards that are overseeing them have accepted. That's the cost of playing the game. If we want to play this game, we got to deal with that. So I need to think about that too in terms of my financial situation.
716. 01:08:06 There are going to be things that I'm not happy about, but that's just the cost of playing the game. And if I'm not okay with that, I shouldn't play the game.
717. 01:08:15 Exactly. Right. Chapter 16 is you and me. And this links to what you were just sharing about playing the game because he says that money chases returns to the greatest extent that it can.
718. 01:08:32 And this chapter, I think maybe is a little bit hard for, I'm guessing, this one was maybe a little bit hard for non-econ miners because of where he talks about bubbles.
719. 01:08:43 So bubbles form when the momentum of short term returns attracts enough money that the makeup of investors shifts from mostly long term to mostly short term.
720. 01:08:52 So this is an interesting balance because he says in the short term, if an asset has momentum, it's actually not crazy to assume that it will keep moving up in the short term.
721. 01:09:07 But it's all based on the timescale. And if you take a long term approach, then you can see, well, obviously, yeah, I can't just continue at this clip forever because that's going to be unsustainable. And if you don't have a general idea, I think about how markets work.
722. 01:09:25 That argument maybe isn't quite as strong or you don't quite get the picture of how these bubbles work. And I don't know that there's a whole lot to take away from this other than the line he mentions near the end is don't be swayed by people who are playing a different game than you.
723. 01:09:43 So you may have a short term view. You may have a long term view. That's fine. Just don't compare your view to somebody else's view who's not measuring for the same things. They're not optimizing for the same things.
724. 01:09:54 That's exactly what my takeaway was is don't assume that your peer or the person that's talking to you sitting across the table has the exact same goals as you, has the exact same time horizon as you assume that they're on their own trajectory.
725. 01:10:08 And that's what makes this game hard is because in a lot of other places, when I say this game, I mean like the investment game and financial game is in a lot of other places like I learned from experience through you like you did a thing.
726. 01:10:21 So I'm going to ask you about it and I'm going to learn through your experience.
727. 01:10:24 And in this situation, that's fine. I can do that if we level set. And if I say like these are my goals, this is my time horizon. And we adjust for those kind of things. But we often don't like we don't go into that much detail to level set first.
728. 01:10:38 And that's my biggest takeaway is like stop comparing yourself to others who might be playing a completely different game financially or in the stock market or whatever it might be.
729. 01:10:48 The example, the bubble example for a non finance person that I like I thought about during this chapter was do you remember the GameStop stock and how like they were making like people were making a run on it a couple years ago.
730. 01:11:00 And like, I do remember the specifics, but yeah, it was like they were doing it on Reddit and basically it was a bunch of short term people just saying, listen, we don't really care what happens long term we just want to keep driving it up and keep making our money like as the day goes on.
731. 01:11:13 So like the GameStop stock for no reason for absolutely no reason about the value of the company just kept going up and up and up and it was like, it was just kind of wild how how they were manipulating the stock through the Internet.
732. 01:11:28 I do remember that. I don't remember any of the specifics about it, but
733. 01:11:33 all right, the next one chapter 17, the seduction of pessimism. This is interesting like that title.
734. 01:11:44 You read that and you're like, what is seductive about being pessimistic? I think most people who consider themselves to be pessimistic probably wish they weren't.
735. 01:11:55 Right. So this chapter I found fascinating because it kind of lays out the explanation for why people are generally pessimistic, at least when it comes to money.
736. 01:12:09 So he mentions at the beginning that pessimism sounds smarter than optimism. Do you agree with that statement, you think?
737. 01:12:16 I think it sounds more, do you say smarter? Yeah, I think it sounds more important. That's the way I take it. Right? Like, so you say something pessimistic and I'm like, that's more important than you're doing a great job today, Corey.
738. 01:12:29 It's like, you're about to get fired. Like, that's more important, you know, kind of a thing. That's the way I took it.
739. 01:12:35 And he defines optimism specifically here, which I think is important to get on the same page. But optimism, he says, is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way.
740. 01:12:47 So optimism, maybe most people will think about that as good things happening without the bad things happening. And that's not what he's saying.
741. 01:12:55 Okay, but the difference here, I think, is in the examples he shares, tell someone that everything's going to be great, they'll shrug you off or offer a skeptical eye. Tell someone they're in danger, and you have their undivided attention.
742. 01:13:08 Everyone thinks the world is more frightening, violent, and hopeless than it really is. And he mentions that progress happens too slowly to notice, but setbacks happen too quickly to ignore.
743. 01:13:17 So all those things, I think, tie together to create a natural tendency to focus on the doomsday profits. And you've got to get out now, or you've got to buy this now, or whatever.
744. 01:13:33 And as he's reading, as he's describing the ideas in this chapter, I had this picture, I don't know, like, as there are people in my life who are getting older, I find I am part of conversations that make me more and more uncomfortable
745. 01:13:57 about these crazy things that are happening in the world. And I can't believe that people are doing this and getting away with it. And my response is sort of like, "I don't care."
746. 01:14:11 Yes. Yeah, so it's not like full on conspiracy theory, although some of it, I feel like, is borderline. But some of it is just like, they may have legitimate reasons for these are the way that shady back deal or back room deals go down.
747. 01:14:36 And it's not right, but this is what happens in these situations. And you can be upset about that, or you can, I feel like, have the optimist perspective here where, yeah, not everything's going to be great, but overall, it's going to be good.
748. 01:14:55 This is, I'm going to coin a term right now, and I don't know if this is real or not, if I'm really actually coining anything, but when it comes back in its famous mic, just remember that I said it. This is the 24-hour cable news fallacy.
749. 01:15:09 That's exactly what he's describing here. It's like, "What are we going to do? We're just going to tell you horrible things 24 hours a day, and what are you going to do? You're just going to be glued to the television, and you're just absolutely going to watch it the entire day."
750. 01:15:22 And these are, like, I think the gist of some of the people that you're talking about is I would suspect they are the 24-hour cable news status, which I have those people in my life too, and it's like, "Listen, man, just turn off the TV. You don't have to watch that stuff. Just turn off the TV."
751. 01:15:38 The redeeming part of this chapter for me, or the part that I kind of walked away with was the idea that he says there's a law in economics, extremely good and extremely bad circumstances rarely stay for long, that's applying demand, adapt in hard to predict ways, and that's comforting to me.
752. 01:15:58 So when you combine that with the other idea he has in this chapter, and the other idea is basically, we can see this compounding growth trend, compounding growth trend, that then, in one day, gets absolutely just completely wiped away.
753. 01:16:11 That none of this stuff is going to stay around for a long time, so just be okay with the volatility of it, and I don't know if he does it in this chapter or if he does it later, but then look at the general pattern, and if you look historically at the economy and at the market,
754. 01:16:26 historically, since it was founded, it's gone up and up and up and up and up and up, and there's been blips and there's been wiggles, but it's just continued to go up, so that's the pattern you should look at.
755. 01:16:36 So that's kind of what I think about here, is I try not to let the pessimistic, like, one day the economy is going to crash in your lifetime and say, "Yeah, okay, it probably is."
756. 01:16:46 But I know that if I'm consistent and slow, and I have savings, according to Morgan Hassel, everything is going to be okay long term.
757. 01:16:56 Yeah, and that's the thing is, I don't know that there's anyone alive who can say with certainty that in the long term, you know, there's enough evidence that the system is going to survive or enough evidence that this is going to come to
758. 01:17:15 a crashing end, and so why worry about it?
759. 01:17:21 One additional note with the 24 hour cable news fallacy, I like that term a lot, and it's not just one side, it is both sides.
760. 01:17:30 Oh, 100% both sides, yes.
761. 01:17:32 100% both sides, I find myself kind of weird, awkward middle place with a lot of the social circles that I'm in, and I definitely see it on both sides.
762. 01:17:46 And they're both convinced that they have an inside scoop on what is actually going on, which is the whole purpose of the 24 hour news channels, right?
763. 01:17:56 Their whole goal is to keep you engaged, they don't care how they do it, so they're going to feed you stuff that makes you upset, that's rooted in fear, and what other people are doing, and that's where we are now as the natural logical outcome of that.
764. 01:18:15 It kind of leads into the next chapter.
765. 01:18:18 We should just go to the next chapter, yes we should, let's just go to the next chapter.
766. 01:18:28 I recognize that I kind of was poking a bear there, but I think it's important because the big thing from this chapter is that stories are by far the most powerful force in the economy.
767. 01:18:40 Think about it, what's the phrase when somebody's going to release their quarterly results or whatever, it's like you buy on the rumor, sell on the news or something like that, isn't that what it is?
768. 01:18:51 I don't know, but yeah, I mean basically there are market swing based on, you know, they're going to, Apple's going to announce this thing or their profits weren't quite as high as everybody predicted they would be, so there's a huge stock sell, it's kind of kind of silly.
769. 01:19:08 But the interesting thing to me about all that stuff is that those numbers, the data, the figures that you would use to tell the story, you can make data say just about anything you want, you can use it to craft any narrative you want.
770. 01:19:24 And the key here I think is that the more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true.
771. 01:19:40 The appealing fiction happens when you are smart, you want to find solutions, but you face a combination of limited control in high stakes.
772. 01:19:55 Because they really, really want them to be true. I think about, was it in our last book, Mike, that they talked about the redaction of a bunch of articles, medical articles or something like that, where they essentially, I'm pretty sure like they essentially like, they did
773. 01:20:11 why are all these results coming out successful, why are all these results coming out successful, it's because they weren't doing real science, they were like, they were looking at the data and saying what can we find and then say, was a result of the study and it's not true.
774. 01:20:27 And this is the exact same thing, it's like, I really want this to be true, I really want this to be true, so what am I going to do, I'm going to find a way to make it true, I'm going to find a way to make it correct.
775. 01:20:38 And that's just a hard one to overcome because I just think our human nature is we want to be right and we want to be successful. So it's hard to overcome that.
776. 01:20:52 I have a question for you, what did you think about some of the lists that he puts within these chapters, because this is a chapter but there's been a bunch of them where he's put them in the list, like do you think when he originally was putting this stuff together, those were individual blog posts
777. 01:21:09 that he then kind of aggregated, or I'm asking you to speculate here, I don't know if you know the actual answer, but I found it interesting, I didn't find them overly compelling to where I was like, oh, that list actually makes, I just thought it was interesting the way he kind of embedded lists in some of the chapters.
778. 01:21:27 No, I don't think he was trying to make lists for the sake of the listicles on a blog, I think he's thinking like an economist and he's saying this is what we're seeing, what are the causes and he's listing the causes there.
779. 01:21:41 I thought the sections, because they're not really lists, but there's reasons why this is the argument that he makes, and he'll go through a header and then a short section, another header, short section.
780. 01:21:59 I thought they were fine, I don't think there was anything in those that I was like oh yeah absolutely this makes so much sense, the stuff that really impacted me from this book was not those lists, but the stories and specific points that that he made.
781. 01:22:13 Yeah that actually makes a lot of sense they're probably just a product of the outline, where he was like oh there's three reasons for this 123 and he just left those in as like sub headers, which makes a lot more sense than the way I was thinking about it.
782. 01:22:24 Reading some of those sections reminded me a lot of my econ classes in college, because it you know it presses up on the board just drawing the supply demand curves.
783. 01:22:35 Like so this is you know what we see and then like this is why you know and he just launches into the explanation like oh yeah that makes sense.
784. 01:22:45 Alright speaking of lists though chapter 19 I think this is the one with the big list this is all together now I think this is the one where he talks about his approach to managing money and then chapter 20 is the
785. 01:23:02 only postscript this that's it okay yeah you're 19 19 is really just a summary it's a summary chapter of the summary that's all the things I told you.
786. 01:23:10 Yeah and I don't have much for this one I jotted down a couple things but this basically a summarization of all the rest of the stuff from from the book so I don't know that we need to go in.
787. 01:23:20 We're going to a whole lot here.
788. 01:23:22 Well one thing actually I'll mention is he meant he says he says it this way in this chapter and I don't know that I he said it this way somewhere else but manager money in a way that helps you sleep at night.
789. 01:23:31 In a way that helps you sleep at night and define the game you're playing that's the one that I really like to find the game you're playing.
790. 01:23:37 You can play the game any way you want just figure out the rules that you want to play by.
791. 01:23:42 Alright so then chapter 20 is confessions this is the one where he talks about how he manages his money and then there's a postscript with a timeline.
792. 01:23:53 I know that I really cared a whole lot for you know this is how I would recommend you manage your money he didn't get real specific in here either but he did mention that he doesn't have a mortgage.
793. 01:24:06 He talks about how that's actually a bad financial decision depending on who you ask because mortgage rates at least when he wrote it were really low so why not take out a mortgage and use that money and some other investment.
794. 01:24:19 He mentions that good decisions are not always rational and there's something about not having that payment and the freedom that it gives them.
795. 01:24:26 So I think there's a lot to be said for that.
796. 01:24:28 I mean he he he is very what I got from this chapter is I feel like he is very honest and authentic about just like hey here's the way I think about some of these things and he admits you might think differently.
797. 01:24:43 I'm doing the wrong thing and I'm totally okay with that like he owns it like he owns it and he's very authentic.
798. 01:24:49 And this chapter right here.
799. 01:24:52 I don't want to say like endeared me to him but it like definitely left a good taste in my mouth at the end of this book because I was like oh I'm following I'm tracking all this stuff this stuff you know resonating and hitting.
800. 01:25:03 And I was like oh and he practices what he preaches and he is okay with the fact that when he doesn't he owns that and I like that a lot so I like the way he wrapped up the book with chapter 20.
801. 01:25:14 Yep I do as well.
802. 01:25:17 Okay and then there's the postscript this is kind of the epilogue and it's titled a brief history of why the US consumer thinks the way that they do.
803. 01:25:28 I don't know that they're how do you talk about this without just running through the entire timeline but basically he's making the case for why the US consumer spends a lot has a lot of debt you know why you shouldn't do that that sort of thing.
804. 01:25:43 This is a very interesting postscript I think it's very interesting I don't know if it is relevant to the show like to the podcast so I'm good with not talking about it.
805. 01:25:59 It's just very interesting to think about like the logical chain of events that have led us to where we are today and I was like oh okay that makes total sense but I get it now.
806. 01:26:02 Maybe I'll do I'll make an attempt to tell an abbreviated version here.
807. 01:26:14 So World War II ends and to keep the economy afloat interest rates were kept really low pent up demand for stuff fed a fed by a credit boom and a hidden 1930s productivity boom led to an economic boom so all of the things that the industries that had spun up
808. 01:26:26 and all the emphasis on productivity now they don't don't have to make airplanes and tanks. What are we going to do with this capacity right during that period debt rises so does incomes.
809. 01:26:37 So do incomes so the impact isn't really a big deal 1973 ish recession begins 1982 to about 2000 that's when the boom resumes but there's this gap between the rich and the poor that widens before that it was pretty flat.
810. 01:26:54 The American start to stretch beyond their economic capabilities keep up with the Jones's we're kind of in this situation where like there's all this momentum everybody's got this debt to try to keep up with the people who are at the top
811. 01:27:06 and he mentions like the tea party to occupy Wall Street Brexit and Donald Trump each represents a group shouting stop the ride I want to get off.
812. 01:27:16 That is powerful that's the big realization here is that there are a lot of people from very different backgrounds and very different perspectives who are not happy with the way that that things are.
813. 01:27:32 I don't know what you do with that what do you think the general tone is from this last chapter is it like a warning is it don't worry it's going to be okay.
814. 01:27:46 You know the tone of the last chapter is I think take what I've and he doesn't say this I wish kind of wish he explicitly say this but take what I've told you in the past and remember that we don't know what's going to happen.
815. 01:28:01 We don't see the water rising on something interesting happening.
816. 01:28:07 We don't know what that's going to be.
817. 01:28:09 But it's okay save stick to your plan right and where I get this from is the last statement history is just one damn thing after another right and I'm like.
818. 01:28:20 So he's just saying like just stay the course right like stay the course and make you know the I don't want to see saying make the take the suggestions I've given you before and make those decisions he's just saying like think about what
819. 01:28:36 we're doing here and don't go crazy like that's I guess that's my takeaway is like think about what you're doing here and don't go crazy.
820. 01:28:42 Yeah, I think as I think about the whole message of the book actually it's going to action items because this is relevant.
821. 01:28:52 I think the one thing he's really trying to hammer home is you don't need a reason to start saving but you should start saving.
822. 01:29:01 So I guess that's one of my action items is to save more because we don't I don't know we we haven't.
823. 01:29:11 I mean we have a 401k and we have some savings but not like a six month emergency fund for my creator business stuff.
824. 01:29:22 So it's like that's one of those things where it feels like oh that'd be nice if we could have that but we can't because of the season of life that we're in.
825. 01:29:30 We sort of use that as an excuse like well we'll do that later when we are a little bit more stable.
826. 01:29:36 You don't have to have that goal of the six month emergency fund though you don't have to have the goal of once we have this much set aside get new vehicle or whatever.
827. 01:29:46 That's my that's kind of my big light bulb moment from all this is like even if it's just a couple of dollars a month.
828. 01:29:53 Something be intentional about it so I want to do that and then the other action item I had I mentioned earlier was to ask myself question how can I stand out has nothing to do with actually saving more to do with just my business and my brand.
829. 01:30:09 It as I make more practical became stuff.
830. 01:30:12 All right you got any action items.
831. 01:30:14 I don't.
832. 01:30:15 I have no action items for this book but don't take that as a negative.
833. 01:30:19 Action items come to me as we're doing things that I think about like oh I should I should write that down as something to do.
834. 01:30:25 I don't have any action items from this book like I don't feel compelled to go do anything or to not do anything or I just don't like I am pleased with the fact that I don't have any.
835. 01:30:37 All right, style and rating. My book I'll go first. I really like the style of this book. I think Morgan has all is a great writer.
836. 01:30:49 A great storyteller manages to talk about money and psychology in a fun way and maybe that's the econ minor in me is describing that but I enjoyed this book way more than I thought I would.
837. 01:31:04 I picked it because it kept showing up and it's one of those books with with would you say 10 million copies sold or something like that is like this book should be in the bookworm canon.
838. 01:31:16 We should be able to point back to an episode on the psychology of money.
839. 01:31:21 But I found myself resisting picking this one up and starting it and then once I actually started reading it I wondered why I did that because it was a really easy read like you said earlier.
840. 01:31:32 And it's he's a good writer. I liked it a lot. I think that even if you have no interest in personal finance even if you don't care about business even if you don't care about economics and markets and things like that.
841. 01:31:47 I feel like this is one of those books where you should eat your vegetables and you'll be better off for it and everyone should read this book.
842. 01:31:57 I don't know like if you're interested in personal finance where do you go there are different personalities to talk about things from different perspectives like I've gone through the Dave Ramsey Financial Peace University stuff.
843. 01:32:09 I think this is better than that.
844. 01:32:10 That is more tactical you know set up the accounts set aside this this amount of money whatever but we've we've been through that and honestly it didn't stick.
845. 01:32:21 And the psychology piece is the reason why you go through it and you're like yeah that makes sense but I don't feel it enough.
846. 01:32:30 There's not enough motivation there.
847. 01:32:32 They're totally different after reading this book. I mean after reading this I want to budget I want to set up the the accounts.
848. 01:32:39 I want to go through it with my with my wife. I was telling her about it.
849. 01:32:43 There are very few bookworm books that I'm like hey you should read this and then we should talk about it.
850. 01:32:48 But this was one of them and as I started talking to her about some of the things that I was getting from it because I was a natural question is like oh well why you know what what do you what do you like about it.
851. 01:32:57 I shared some things just oh that's really interesting.
852. 01:33:00 So I think I think it's a great great book that honestly I mean this is written I would say to a US consumer because there's so much emphasis on like the US market I think a lot of the principles can apply no matter where.
853. 01:33:17 Where where you live in the world.
854. 01:33:20 But as a US consumer I feel like this should be required reading it in high school or college or something when people are trying to figure out what they're going to do when they grow up.
855. 01:33:31 You know and you mentioned going to college and learning all the life skills learning how to manage money is an important life skill.
856. 01:33:38 This should be on the list.
857. 01:33:40 I it feels weird to give a money book five stars but I'm going to do it.
858. 01:33:47 I think this is a five star book I think it's really good.
859. 01:33:50 And the money pieces almost secondary like you'll get a lot out of it.
860. 01:33:55 But if you're like oh I don't want to read a money book you're not reading a money book you're reading a very good book that is going to teach you about the psychology of money and help you manage your finances better.
861. 01:34:07 I'm like you said so many things that I could not agree with more like I I mean it was almost like you were in my head as you were giving your your style and rating.
862. 01:34:16 It was a an interesting book the stories were interesting the narrative weave together.
863. 01:34:22 It wasn't like overly overt where it felt you know like insulting.
864. 01:34:27 But at the same time things connected back and forth.
865. 01:34:30 But I think is like a pretty expert way the way things connected back and forth because there were times where Mike would say as we were transitioning to the next chapter.
866. 01:34:38 Oh and that actually leads us into the next chapter but that wasn't on purpose like he denied it he and I didn't plan that.
867. 01:34:43 It's just the way the chapters flowed.
868. 01:34:46 You would think about one thing and then move on to the next chapter like and that was what he wanted to talk about in the next chapter.
869. 01:34:53 You should 100 100 100% be required reading in high school not in college college is too late you need to read this in high school.
870. 01:35:02 I don't know if people would take it serious in high school.
871. 01:35:05 But I think it's without a doubt like you know my children need to read this book before they graduate high school.
872. 01:35:12 Just as a way to like think about you know reasoning and thinking about volatility and thinking about yeah money.
873. 01:35:20 Like you said I told you it's like you're in my head.
874. 01:35:23 It's like a money book that's not about money.
875. 01:35:25 It's about like other stuff and money is just the context in which we're going to talk about it.
876. 01:35:29 I told you before I think how's it was authentic.
877. 01:35:33 I think he owns what he owns and he's okay with that like he's he's totally fine.
878. 01:35:38 Just kind of having an opinion on things and telling you that.
879. 01:35:41 I think he gets out of the way he does a good background from like a history standpoint in that that post script.
880. 01:35:47 Like I just I really really like this book.
881. 01:35:50 I think it has brought appeal so you know regardless of the types of books you like to read.
882. 01:35:56 This is just one where if you just decide hey I've got 10 minutes I'm going to read a chapter on it.
883. 01:36:01 You can do that like the chapter will only take you 10 minutes maybe 20 at the most depending on the chapter.
884. 01:36:06 And you'll be like huh hadn't thought about that that way.
885. 01:36:10 Or yeah like that that's a good that's a good way to think about that.
886. 01:36:13 Or I completely disagree with that I think he's way wrong but blah blah blah blah whatever it might be.
887. 01:36:18 Like I like I loved this book like I thought this book was phenomenal.
888. 01:36:24 This is easily a five star book to me.
889. 01:36:26 This is one that I debate whether or not I should put a calendar reminder in in like two years and say like hey read that Morgan housing book again.
890. 01:36:34 Just just to see what you get out of it the second time.
891. 01:36:37 I just really like this book so without a doubt five star book.
892. 01:36:43 Nice we got a golden book.
893. 01:36:45 All right let's put the psychology of money on the shelf what's next Corey.
894. 01:36:49 Okay next is one that I'm a little bit nervous about but we're going to see how it goes.
895. 01:36:54 It's called uncommon sense rethinking ordinary problems in extraordinary ways.
896. 01:36:59 So this individual was I believe the president of Johns Hopkins if I'm remembering that correctly I might have gotten that wrong.
897. 01:37:07 But yeah president Johns Hopkins University and he's going to use examples and he's going to use different you know fields.
898. 01:37:15 Medicine engineering entrepreneurship academic leadership but he's also going to use examples from you know famous people as well.
899. 01:37:23 To help us think about problems ideas ambition those kind of things in different ways.
900. 01:37:31 So uncommon sense I worry and here's my worry.
901. 01:37:35 I worry that the title is going to be more intriguing than the actual book and I hope I'm not wrong.
902. 01:37:41 But I'm pretty excited to read this one so the next one's going to be uncommon sense by William Brody.
903. 01:37:47 If you're if you're reading with us pick that one up for us Mike what's after that.
904. 01:37:51 Alright after that we're going to read an oldie but a goodie hopefully the goal the 40th anniversary edition.
905. 01:37:59 I think this is I think it's a goodie so I'm just going to tell you right now I think it's a goodie.
906. 01:38:03 Okay the goal by Eli who gold rats and this is really on the theory of constraints this came up in the last book that we read.
907. 01:38:16 And then shortly after that actually as I was reviewing that episode you can I came across a section where you were glowing about this book.
908. 01:38:25 And I was like do we need to cover this for bookworm and you were like absolutely I would do it not the one I'm picking for next time but it's on the short list.
909. 01:38:32 And then shortly after that I was listening to a Nathan Barry show episode Nathan is the CEO of kit and his podcast is really about like creator systems kind of right in my wheelhouse I like it a lot.
910. 01:38:44 He had Layla Pompeier on the episode and they brought up the goal so Layla has a company called I want to say process.
911. 01:38:56 I don't know I'll put the link to it in the show notes but basically she helps business business owners create business systems.
912. 01:39:04 And so they're talking about they're geeking out on systems and the goal comes up and they're both talking very highly of it and we had just talked about it.
913. 01:39:14 So I have this book somewhere it came in the mail and I was like why would anyone ever want to read this but now we're going to read it.
914. 01:39:25 And hopefully have a good conversation about another one that has over 10 million copies sold so very successful.
915. 01:39:35 Alright got any gap books.
916. 01:39:37 I do so I said last time that I was reading some nonfiction stuff I like to kind of preview some nonfiction things for my boys before we turn them loose on it.
917. 01:39:46 I previewed one that it's called the kingdom series called the kingdom the kingdoms dawn and in this one this week I'm probably going to be previewing it's called the door within.
918. 01:39:57 So each of these are the first book in a series of three or four or five books I forget how many each of them have but this will be called the door within.
919. 01:40:06 And I full disclosure Mike I'm previewing these while I run as an audio book because they are they are fiction books they are not nonfiction books and fiction books are 100% audible.
920. 01:40:20 Audible worthy.
921. 01:40:22 That is fine but I will say if you want to recommend a book for a bookworm do not recommend a fiction book correct and do not recommend an audible book.
922. 01:40:32 Both of these are true I can I can confirm those yes yes.
923. 01:40:37 Yeah we'll leave that that there I understand like some people need the like that's only a way they can consume books totally fine.
924. 01:40:46 If you have the option to read the physical pages or even the words on your screen.
925. 01:40:52 I would say you're going to retain more from the books if you do it that way.
926. 01:40:55 Thank you for that would be a solid there.
927. 01:40:57 I appreciate you.
928. 01:40:58 You're welcome.
929. 01:41:02 All right I have no gap books because the goal it says is four hundred and eight pages super fast it's a super fast four hundred and eight.
930. 01:41:12 Okay I don't remember not but I'm just a first time I've heard heard that I'm encouraging you it's a super fast four hundred and eight.
931. 01:41:20 You'll fly right through it.
932. 01:41:22 Okay well maybe I'll have one when I come back from my trip to North Carolina then.
933. 01:41:27 All right well thank you everyone for listening thank you specifically to the bookworm pro members who help us keep the lights on really means a lot to us.
934. 01:41:36 If you want to help help support the show you can go to bookworm.fm/pro seven dollars a month gets you access to a longer ad free pro show.
935. 01:41:47 Today we talked about some of the stuff that I am learning from working with a virtual assistant.
936. 01:41:54 You also get a bootleg of the show that gets released right after we record it so basically you get the episodes one to two weeks early.
937. 01:42:04 There's a wallpaper I put together my reading masterclass and like I said that's seven dollars a month if you want to help support the show go to bookworm.fm/pro.
938. 01:42:15 And if you're reading along with us pick up uncommon sense by William R. Brody and we'll talk to you next time.