0:00

important is this tariff situation? It has the potential

0:02

to be the biggest economic story of our

0:04

lives. People are losing a lot of money on

0:06

tariffs, and you're probably a matter of weeks

0:08

away from empty shelves. And there's a button on

0:10

the president's desk that says, end it right

0:12

now. So can you tell me what a tariff

0:14

is? I'll keep this very simple. Morgan Housel

0:16

is the money mindset guru who's shaking up everything

0:18

you think about wealth and how to achieve

0:20

it. I looked at the most googled questions

0:22

around money, and one of the most popular is

0:24

how to achieve freedom financially. It is largely a

0:26

mindset. You have an obligation to un - how money

0:28

works and how to manage it. And it's one

0:31

of many topics in which you're going to learn

0:33

the best by experiencing the downside. I'm going to

0:35

come back to that. The next question is how

0:37

to save money. So most people view saving money

0:39

as it's just wasted sitting there. But you need

0:41

the push in so that when the economy goes

0:43

south and there is a recession, I want to

0:45

have a level of control over my ability to

0:47

support my family. So how much money do you

0:50

think it's sensible to have saved? This is a bad

0:52

answer that no one's going to like. When

0:54

you look at all of these people through

0:56

history that have generated great wealth, are there like

0:58

certain strategies they've deployed? One thing that virtually

1:00

everyone listening this could learn from is they were

1:02

way more patient and had way more endurance

1:04

than anyone else. Also, I wanted to understand investing

1:06

and this idea of compounding interest. So compound

1:08

interest is the most misunderstood thing about investing because

1:10

that's what builds wealth. If you look at

1:13

like Warren Buffett, he wouldn't want to get haircuts

1:15

because if he invested that money and leave

1:17

it alone for 50 years in his mind, a

1:19

haircut would cost $10 ,000. And then

1:21

do you recommend people try and buy houses or?

1:23

Is it just to rent those houses? So

1:25

the truth is... I

1:29

find it incredibly fascinating that when we look at

1:31

the back end of Spotify and Apple and

1:33

our audio channels, the majority of people that watch

1:35

this podcast haven't yet hit the follow button

1:37

or the subscribe button. Wherever you're listening to this,

1:39

I would like to make a deal with

1:41

you. If you could do me a huge favor

1:43

and hit that subscribe button, I will work

1:45

tirelessly from now until forever to make the show

1:47

better and better and better and better. I

1:49

can't tell you how much it helps when you

1:51

hit that subscribe button. The show gets bigger,

1:53

which means we can expand the production, bring in

1:55

all the guests you want to see and

1:57

continue. to do in this thing we love. If you could

1:59

do me that small favour and hit the follow button, wherever you're

2:01

listening to this, that would mean the world to me.

2:03

That is the only favour I will ever ask you.

2:06

Thank you so much for your time. In

2:11

2020, my older brother Jason

2:13

came to me after spending more

2:15

than a decade working in

2:17

the finance industry. And he said

2:19

to me, Stephen, there is one

2:21

book you need to read to

2:23

understand money. And that was your

2:25

book, The Psychology of Money, and

2:28

that's how I came into your

2:30

world and understood who you were,

2:32

what you think, and really this book

2:34

has shaped how I think about money ever

2:36

since. And this is why I loved having

2:38

you on the show last time, but I

2:40

was insistent to speak to you again with

2:42

everything that's going on in the world right

2:44

now. Morgan, what

2:47

is the most important thing we should be

2:49

talking about at this present moment based

2:51

on, I guess, the subtitle of this book?

2:53

timeless lessons of wealth, greed, and

2:55

happiness. Thank you, Steve.

2:57

It's so good to be back. I think what

2:59

I like about what you just said and thank

3:01

you for that is that you said the

3:03

book changed how you think. And that's important because

3:05

the book does not tell you what to do.

3:08

Nowhere in the book do I say, this

3:10

is how you should invest your money. This

3:12

is how you should spend your money because

3:14

you're different from me and everyone else. We're

3:16

all different. I've always just been interested in

3:18

how people think. Like what's going through your

3:21

head when you're making investing decisions? And if

3:23

you can understand greed, fear, risk,

3:25

envy, jealousy, those topics,

3:28

that is way more important than anything

3:30

they will teach you in a

3:32

PhD finance course at Harvard. Not

3:34

that the technical stuff doesn't matter, but

3:37

the psychological stuff with money is

3:39

everything. I mean, so many

3:41

money problems in the real world have

3:43

to do with impatience, envy,

3:47

greed. That's it. It's not that

3:49

people don't know the formulas, don't know the data, know

3:51

how to calculate compound interest by hand. None of

3:53

that matters. It's envy.

3:56

It's impatience. And so that,

3:58

as a writer, I was always interested I'm

4:01

tired of people giving advice and saying, these are the

4:03

stocks you should buy. And here's what the economy is

4:05

going to do next quarter. No one

4:07

was any good at it. But I was always

4:09

just fascinated in what's going on in people's heads.

4:11

And you asked, why is that important right

4:13

now? I think it's always important. Those

4:16

topics of the subtitle is timeless lessons, because

4:18

I think a lot of these things

4:20

were as true 1 ,000 years ago as

4:22

they will be 1 ,000 years from now. Greed

4:25

and envy and impatience is just ingrained

4:27

in how people think. It always has

4:29

been. And so you see

4:31

what's going on right now with tariffs,

4:34

the economy. Stock market's gone up a

4:36

lot. Bitcoin's gone up a lot. These

4:38

points have always been true, but a

4:40

lot of them are magnified right now. A lot of people have

4:42

made a lot of money on Bitcoin. A of people are losing a

4:44

lot of money on tariffs. So greed,

4:47

fear, envy, it all kind of

4:49

just collides. It is right now. How

4:51

important is this tariff situation that

4:53

we find ourselves in? Because we're seeing

4:55

all over the news everywhere, tariffs,

4:57

Trump's done this 10 % here, blanket

4:59

tariff here. Does it matter?

5:01

And maybe even more specifically, does it

5:03

matter to the average person? it

5:05

has the potential to be the biggest economic story

5:07

of our lives. It doesn't have

5:09

to be. One thing that's very interesting about

5:11

the tariff story is that if you

5:14

compare it to 9 -11 or COVID

5:16

or 2008, the banking crisis, the

5:18

tariff issue that we're going through

5:20

right now can be ended in

5:23

one minute. There's a button on the

5:25

president's desk that says, end it right now. And

5:27

even if that did happen, there would still

5:29

be some lingering damage in terms of trust

5:31

and reputation. But there was no button on

5:33

the president's desk for COVID that said, end

5:35

this all right now. It didn't

5:37

exist. And 9 -11 and Lehman Brothers in

5:39

2008, once those risks hit, we just

5:42

had to deal with them through their

5:44

finish. This is different because

5:46

it can and is changing by the day.

5:48

So when people have a take on

5:50

what's going on right now, that take might

5:52

be stale an hour from now. But

5:54

it's absolutely true that the global economy, to

5:56

an extent that I think people don't

5:59

appreciate enough, is a very complicated, intricate

6:01

machine. And most economic

6:03

problems come when people like try to fiddle with

6:05

that machine a little bit. They're like, oh, let's

6:08

turn this dial by one degree and see what

6:10

happens. And then like, oh, it blows up. Oh,

6:12

I shouldn't have done that. tariffs is like, let's

6:14

hit it with a baseball bat a couple of

6:16

times. Let's hit it with like a crowbar and

6:18

see what happens. Like the

6:20

global economy is so interconnected. And if

6:22

you go to your local grocery store,

6:24

Target, Walmart, whatever it might be, and

6:27

go around and look at where that stuff was

6:29

made. And it's all

6:31

over the world. It's

6:33

everywhere. And once you shut that down

6:35

and put barriers on that, it can become

6:37

a big problem very quickly. One thing

6:40

I've noticed in the last couple of weeks

6:42

that I think is very interesting are

6:44

the number of educated and smart friends that

6:46

I have who send me a text

6:48

or a call or an email and say,

6:50

hey, can you explain what a tariff

6:52

is? I see this word, but I don't

6:54

really know what it is. And I

6:56

think that's important because I don't think the

6:58

average person understands what can happen to

7:00

the economy if this persists for a long

7:03

period of time. I'm so

7:05

glad you said that because I've

7:07

been waiting for weeks now to

7:09

ask somebody like yourself who studied

7:11

economics to explain in a simple

7:13

way what a tariff is and

7:15

feel free to use an analogy.

7:17

I think about 50 % of

7:19

people have no idea what a

7:21

tariff is. And then on an

7:24

incremental scale, people's clarity

7:26

gets better and better. I would

7:28

estimate about 5 % of the general

7:30

population could articulate what a tariff is,

7:32

5 % or less. So can

7:34

you tell me what a tariff is? The

7:36

first I would say is tariffs have been used

7:38

for hundreds of years. And there is, there can

7:40

be a very good, useful purpose for them in

7:42

the economy. I think as they're structured right now

7:44

in the United States, it's a huge mistake. It

7:46

has a potential to be a catastrophe. But

7:49

they can be a useful thing in the

7:51

economy. This is not a black and white

7:53

thing. What a tariff is, is keep this

7:55

very simple. The United States buys a

7:57

bunch of computers that are made in China, bunch

7:59

of iPhones that are made in China. They're

8:01

on a container ship. They ship them to

8:03

United States. When they get to the port

8:05

in the United States, the importer, which is

8:07

Apple, bringing the iPhones in that are made

8:10

in China. An American company. Has to pay

8:12

the tariff. Oh, that's put on it. And

8:14

a lot of people, and it's very understandable

8:16

why they would think this would say, well,

8:18

no, in that situation, China pays the tariff.

8:20

And there could be a situation where China

8:22

starts discounting the iPhones that the company that's

8:24

making the iPhones would discount it. Like there

8:26

can be some offset, but the

8:29

person who's paying that tax is

8:31

the importer. So often we think about

8:33

we've applied the tariff to China. Right.

8:36

So what's happening is China having to

8:38

spend the 10 % or I think the

8:40

tariff currently is like 125, 145. The number

8:42

doesn't matter because trade will eventually will

8:44

just stop at those levels. It just won't

8:46

happen. So if Apple import an iPhone

8:48

now with that tariff level, then Apple would

8:50

have to pay the 145 % when it

8:52

arrives at the shore. Correct. The United

8:54

States. I mean, here's an example that most

8:56

people will understand. Sales tax. You

8:58

know, in most states in the United States,

9:00

it's six to 10%. If you go to the

9:02

store and buy something, you add the sales

9:04

tax to that. VAT in the UK. Yeah, fair.

9:06

Who pays that is not the store. It's

9:09

the customer. So even if the tax

9:11

is put on the seller, the seller passes it on

9:13

to you, the customer, and says right on your

9:15

receipt, you bought something for $10 and then there's your

9:17

sales tax and here's what you're going to pay

9:19

in the end. And so it's similar from that. Now,

9:21

let me explain this. Why there would be a

9:23

very useful case for tariffs to show that this

9:25

is not black and white and this is not,

9:27

oh, all tariffs are bad. This

9:29

happened in the United States during COVID. We

9:32

were virtually 100 % reliant on masks

9:34

and 95 masks that were made

9:36

in China and Korea. and not in

9:38

the United States. And so

9:40

when you have a medical crisis in the

9:42

early days of COVID and we're like, we

9:44

need hundreds of millions of masks yesterday, they're

9:47

all made somewhere else. We do not want

9:49

to be in that situation. So it would

9:51

absolutely make sense to have a tariff on

9:53

masks to make sure that they are so

9:55

expensive to import overseas that we have to

9:57

start making them in the United States. That

9:59

makes sense. Same with military equipment. You

10:01

do not want to go to war with the country

10:03

and be reliant on that country to make. that your

10:05

military gear, your bullets and your bombs and your tanks

10:07

and whatnot, absolutely makes sense to have a tariff on

10:09

that to make sure they're made in the United States.

10:12

That said, so it's not black and white,

10:14

but to have a blanket tariff and

10:16

say everything that comes from any country, anywhere

10:18

in the world, and China is going

10:20

to be this to an extreme degree, is

10:22

going to have a tariff on it.

10:25

And whether that's between 10 % for all

10:27

countries or 145 % from China, that,

10:29

you know, I've used this analogy

10:31

before that if you talk to dieticians,

10:33

There is a huge amount of

10:35

debate over what's the best diet should

10:38

you eat? Should you be Keto?

10:40

Should you be vegan? Like everything in

10:42

between they don't there's so much

10:44

debate All of them agree that processed

10:46

sugar is bad Nobody nobody thinks

10:48

processed sugar is good and tariffs are

10:50

that with economists Like there are

10:52

so much debate among economists on what

10:55

should the tax rate be? What

10:57

should subsidies be? Should we you know

10:59

like free market versus versus subsidies?

11:01

There's so much debate no

11:03

serious economist thinks that you should have a

11:05

trade war. And the thing is, this

11:07

is not new. We've been doing this for hundreds of years. And

11:10

it's very well known that in the

11:12

1930s, the Great Depression, we put huge tariffs

11:14

on in the early days of the

11:16

Great Depression. They didn't know it was

11:18

called the Great Depression back then, because we put them on and it

11:20

shut down global trade. And it's easy

11:23

to think that if you put tariffs

11:25

on your own country, that will make

11:27

it easier to manufacture. Like all those

11:29

jobs that we shipped overseas of building

11:31

cars, they're all gonna come rushing back

11:33

to America. And it very

11:35

rarely happens like that when you have

11:37

a trade war. But what I mean

11:39

by trade war is we put tariffs

11:41

on China, they respond to put tariffs

11:44

on us and you just go tit

11:46

for tat and you go back and

11:48

forth and it's like mutually assured destruction

11:50

in economic terms. So why is Trump

11:52

doing it then in your view? Because he's

11:54

given lots of reasons. He said that they're ripping

11:56

us off. He says lots of countries have

11:58

been ripping off the United States. How do you

12:00

unpack what he's saying there and what do

12:02

you believe the true reason is underneath there? To

12:04

his credit, Trump has been very consistent on

12:06

this for literally 40 years. You can

12:09

go go on YouTube. He gave an interview

12:11

and I think it was 1986. He went

12:13

on Oprah in 1986 talking about how free

12:15

trade wasn't. free and that Japan and other

12:17

countries were ripping us off and that the

12:19

solution to it were terrorists. So this is

12:21

not a new view. This has been a

12:23

lifelong quest that he's had. I

12:25

would say not necessarily Trump's views, but

12:27

I would say it absolutely makes sense

12:29

that there is a large chunk of

12:31

America that looks back to the period

12:33

of 1950s, 1960s when we were a

12:35

manufacturing powerhouse and says that was better

12:37

than what we have now. And we

12:39

should go back to that. I get

12:42

why people would say that, because it's

12:44

true that we have lost a lot

12:46

of manufacturing jobs in the last 50

12:48

years. I think manufacturing jobs peaked in

12:50

the late 1970s, and we've lost something

12:52

like 10 million manufacturing jobs versus what

12:54

we had back then. And I

12:56

get why if I was in that situation, I would probably

12:58

feel the same. Where I would

13:00

push back is the situation that

13:02

we had. in the 1950s and

13:05

1960s, where it was just America

13:07

manufacturing powerhouse, were a very unique

13:09

period that I think is virtually

13:11

impossible to bring back. And I'll

13:13

tell you why. At

13:15

the end of World War II, 1945, Europe

13:18

and Japan were in rubble. They were

13:20

decimated from the war. America

13:22

was not decimated whatsoever. And

13:25

so we had basically a global

13:27

manufacturing monopoly for a period of time.

13:29

China was not in the equation.

13:31

South Korea was not in the equation.

13:33

India, Bangladesh, they were not in the equation. It

13:35

was basically Japan, the United States, and Europe, two

13:38

of which were just struggling to feed their citizens.

13:40

And once they got that under control, it was

13:42

like we have to rebuild the damage from the

13:44

war. So America had about 20

13:46

years from 1945 to the mid 1960s

13:48

of we have a manufacturing monopoly. And

13:50

then we had 16 million. US soldiers

13:52

come home from the war and there

13:54

was so much pent up demand for

13:56

them to buy homes and washing machines

13:58

and cars and radios and all these

14:00

things and all of them were built

14:02

in America because nobody else could build

14:04

them and that created a really special

14:06

time when like because we had a

14:08

manufacturing monopoly It was just like factories

14:10

everywhere. We built up so many factories

14:12

during the war There was endless demand

14:14

for those products and this is this

14:16

is an important part too white collar

14:18

workers during that period didn't make that

14:21

much money relative to what they did

14:23

before or since. And that

14:25

was important because the wages that the

14:27

blue collar manufacturing workers were earning felt

14:29

great by comparison. So if you were

14:31

an auto worker in Detroit and you

14:33

compared your wage in 1955 to the

14:35

local accountant or dentist or doctor by

14:37

comparison, relative to today, you're like, oh,

14:39

it's pretty good. Yeah, the doctor makes

14:41

more than me, but not that much

14:43

more than me. You know, I drive

14:46

a Chevy, he drives a Cadillac, his

14:48

is a little bit nicer, but we're

14:50

living mostly the same lives. And

14:52

so I think that was a

14:54

lot of the feeling of prosperity

14:56

in the 50s and 60s was

14:58

this very unique period of manufacturing

15:00

monopoly as Europe and Japan were

15:02

rebuilding. And by comparison to other

15:04

workers, it felt amazing. And

15:06

then at about the 1970s, Japan

15:08

and Europe. had gotten themselves back

15:10

together from the ravages of World

15:12

War II, and they became manufacturing

15:14

dynamos in their own right. And

15:17

I don't think we really understood

15:19

this in America until three companies came

15:21

in, which were Toyota, Honda, and

15:23

Nissan. And they started selling cars

15:25

in America. And at first, it was very

15:27

easy to be like, look at these

15:29

little lawnmower toys that they're importing, because you

15:32

compared an early Honda Civic to a

15:34

Chevy Camaro. in the 70s. And it was

15:36

like, you can't even compare them. So

15:38

at first, the reaction of American car companies

15:40

were like, these guys are a joke.

15:42

No one's going to buy these little cars.

15:44

But then gas prices surged in the

15:46

70s and 80s. And all a sudden, the

15:48

cars that Americans wanted was the tiny

15:51

little Honda Civic that got really good gas

15:53

mileage. And then once they started buying

15:55

them, they were like, hey, this

15:57

Toyota, this Honda, this Nissan, it's actually a

15:59

pretty good car. It's actually pretty well built. And

16:02

I think there was a lot

16:04

of denial among that, among American manufacturers

16:06

that these other nations that didn't

16:08

exist for 20 years in terms of

16:10

a global manufacturing source were actually

16:12

pretty damn good at it now. And

16:15

then one other thing happened to wrap this

16:17

up, then this might be the most important

16:19

part of it. The

16:21

reason that you cannot reasonably

16:23

expect the manufacturing powerhouse to

16:25

come back as it was

16:27

is, yes, we did ship

16:29

jobs to China and Mexico

16:31

and Canada and India that used

16:34

to be in America and that

16:36

has contributed to the massive decline

16:38

in manufacturing employment. But a bigger

16:40

factor in there is automation. And

16:43

if you look at a month, like

16:45

I would challenge people to do this.

16:47

Go on YouTube and look at a

16:49

Tesla assembly line in the United States.

16:52

I'll put it on the screen. It

16:54

is what you will see. It's amazing.

16:56

It is a miracle of engineering. What

16:58

you will see are armies and armies

17:00

of robots and very few people. And

17:02

if you compare that to the 1950s

17:04

assembly line, what you see are biceps

17:06

and backs and people hauling around material.

17:08

So because we got so good at

17:10

automation, even if we bring manufacturing back

17:12

to America, and that we still do

17:15

a lot of manufacturing in America, it

17:17

doesn't require the amount of employment that

17:19

it used to. It doesn't require the

17:21

amount of manpower. And the people who

17:23

do work on Tesla manufacturing lines by

17:25

and large are working on computers overseeing

17:27

the robots. I mean, here's one stat

17:29

that I thought was always interesting to

17:31

me. In 1950, there was a US

17:33

steel plant in Gary, Indiana. It produced

17:36

5 million tons of steel and had

17:38

30 ,000 workers. Today, it's

17:40

still operating. It produces 8 million tons

17:42

of steel and has 2 ,000 workers.

17:45

So it's producing more steel today than

17:47

it was in the 1950s. And they

17:49

went from 30 ,000 workers to 2 ,000.

17:51

Because what used to be done with

17:53

biceps and backs and shoulders is now

17:55

done with machines and robots. And

17:57

it's no different than what happened

17:59

in agriculture where a farm 200 years

18:02

ago was rakes and shovels. And

18:04

today it's tractors and combines. Like that

18:06

same thing happened to assembly. So

18:08

to wrap all that up, like I

18:10

understand and I empathize with people who say,

18:12

we need to bring back manufacturing to

18:14

America. We lost what we once had. I

18:16

get that and I respect it. But

18:18

I think the unique circumstances and automation makes

18:21

it just extremely unlikely to ever happen.

18:23

How did China get in there and why

18:25

are they the factory of the world

18:27

what are the cool components that went into

18:29

them being able to produce all of

18:31

the things that we use on a daily

18:33

basis and a fraction of the price

18:35

that they're able to produce them here. Tim

18:37

Cook of Apple gave a really interesting

18:39

interview a couple weeks ago and he said

18:41

you might think that we manufacture iPhones

18:43

in China because it's it's cheap labor and

18:45

he said that's not really true anymore

18:47

it used to be but China is not

18:49

the cheap cheap labor country anymore. That's

18:51

moved on to Bangladesh and Cambodia and other

18:53

places. The reason they manufacture in

18:55

China is expertise. And I think

18:57

it's okay to admit and people

18:59

should admit that your country and

19:01

also your company and you individually

19:03

can be very good at some

19:05

things and not very good at

19:07

others. China is just extremely good

19:09

and extremely talented at particularly like

19:11

low end manufacturing. Low end can

19:13

be anything from inflatable swimming pools

19:15

to all up to like basic.

19:18

basic electronics. They're extremely good at it. I was

19:20

talking to a CEO a couple weeks ago and

19:22

he said, and he's generalizing here,

19:24

but he said, if you go to a

19:26

Chinese factory and you say, I want this

19:28

part made, and here's step one, step two,

19:30

step three on how to make it, they

19:33

will do it better than anybody in the

19:35

world. Nobody can beat them at that. But

19:37

if you go to that same factory and

19:39

you say, please go design me a new

19:41

part. They're not very good at it. Americans

19:43

are way better at that. And that's why

19:45

the back of your iPhone says designed in

19:47

California, made in China. Like it's just specialization

19:49

of labor. And I think America

19:51

is the best in the world at a

19:53

couple of things. Entrepreneurship,

19:56

technology, services. and

19:59

like high -end manufacturing like planes and rockets

20:01

and we're not the best in the

20:03

world at low -end manufacturing and that's okay

20:05

that's not an insult that's not a put

20:07

down there's specialization of labor and and

20:09

so I think I think China just got

20:11

very good at one thing during a

20:13

time when we've always been very very good

20:15

at at different things and I think

20:17

that is why global is like why For

20:20

a lot of people, not for everybody. So

20:22

if you disagree with this, I get it.

20:24

By why the economic system works so damn

20:26

well over the last 30 years is because

20:28

we really got good at specialization of labor.

20:30

You design the iPhone, you make

20:32

the iPhone, we're both better off for it. I

20:35

want to play that clip you're talking about

20:37

with Tim Cook because I remember seeing it as

20:39

well. And it did. It was a bit

20:41

of an aha moment for me. For anybody that

20:43

doesn't know, Tim Cook is the CEO of

20:45

Apple and he's been... helm of Apple for more

20:47

than a decade. And as you know, most

20:49

of Apple's products, from what I understand, are made

20:52

in China. There's a confusion about China. And

20:54

let me at least give you

20:57

my opinion. The

20:59

popular conception is that companies

21:01

come to China because

21:03

of low labor cost. I'm

21:06

not sure what part of China

21:08

they go to, but the truth

21:10

is China stopped being the low

21:13

labor cost country many years ago.

21:15

And that is not the

21:17

reason to come to

21:19

China from a supply point

21:21

of view. The reason

21:23

is because of the skill

21:25

and the quantity of

21:28

skill in one location and

21:30

the type of skill

21:32

it is. Like the products

21:34

we do require really

21:36

advanced tooling. And the

21:38

precision that you have to have in

21:40

tooling and working with the materials that

21:42

we do are state of the art.

21:44

And the tooling skill is

21:47

very deep here. You

21:49

know, in the U .S., you could have a

21:51

meeting of tooling engineers and I'm not sure

21:53

we could fill the room. In

21:56

China, you could feel multiple. When I watch that,

21:59

I think can understand why there'd be a natural

22:01

reaction for people to be like, no, if they

22:03

can do it, we can do it too. And

22:05

again, I don't think it's an insult

22:07

when to say like countries are like, we're

22:09

really good at some things and less

22:11

good at others. How could that not be

22:14

true? Are they on a different

22:16

living wage from what I understand? Oh, yes,

22:18

absolutely. I mean, so much of it is,

22:20

you know, if you asked

22:22

Americans to work for those wages, they

22:24

would absolutely refuse to do it just because

22:26

of the expectations we have. And that's

22:28

a good thing. We should be proud of

22:30

that, that we have a standard of

22:32

living, which does not allow or people would

22:34

not put up with earning. $5

22:36

a day or whatever it would be

22:38

which means that the products can be made

22:41

cheaper. Yes Significantly cheap right right and

22:43

you know this is where I understand why

22:45

people might raise an eyebrow at this

22:47

but so much of why of What the

22:49

modern system how it's supposed to work

22:51

is when you have that specialization products become

22:53

cheaper And then the iPhone costs $1 ,000.

22:55

When in any other world, it would

22:57

cost $4 ,000 if we're building it in

22:59

the United States at paying wages that people

23:02

would put up with in the United

23:04

States. So what's the impact on the average

23:06

person listening to this now? And

23:08

if this trade war continues,

23:10

if these tariffs continue, what

23:13

is the impact they're going to see in their

23:15

life? It's so unpredictable, because as I said earlier,

23:17

it can literally change an hour from now. So

23:19

anyone giving firm predictions of, oh, here's what's going

23:21

to happen next. That's not how any of this

23:23

works. But you can say, though, that if the

23:25

tariffs last, one of two things will happen,

23:27

or both these two things will happen. Things

23:29

that we import will get much more

23:31

expensive. Or what's more likely in places

23:33

like China, if it's 145%, is that

23:36

trade just stops. And then you're probably

23:38

a matter of weeks away from empty

23:40

shelves at certain. for certain products in

23:42

certain cases. I mean, if you're

23:44

buying, you know, a pair of slippers from

23:46

China for $1 and now all a sudden

23:48

they're $2 .45. If you're an importer, for

23:50

a lot of those situations, they'll say like, which is

23:52

not going to work. Or if the iPhone that used

23:54

to cost $1 ,000 is now going to cost $2 ,500, Apple

23:57

might just say, there's not really a market for that. We

23:59

can't really sell Let's just pause and

24:01

wait for things to happen. We're already seeing that. I'm

24:03

sure this news will change by the time this airs.

24:05

This is moving so quickly, but our shipping container imports

24:07

from China have plunged in recent weeks, which is exactly

24:09

what you would expect when you put that high of

24:12

a tax on it. I mean, if you were buying

24:14

a house for a million dollars and all a sudden

24:16

they put on 145 % tax on that, you're probably not

24:18

going to buy the house. And that's what's happening now.

24:20

You'd be done not to wait. Right. I

24:22

was sat here yesterday with the CEO and

24:24

she said to me that she gets. the

24:26

majority of her products, pretty much all of

24:28

them from China. And when she's

24:31

looking at the tariff situation, she's

24:33

figured out that if she buys those products

24:35

and sells them at her current price, she's

24:37

losing money on every unit. So she's like,

24:39

I'll lose $9 on importing a, for

24:41

example, like a dress. So

24:43

I have no incentive now to continue

24:46

to sell that dress. And my

24:48

only choice is to raise the price

24:50

by like 150 % to my customer.

24:53

The two likely outcomes, if it persists,

24:55

are much higher prices and empty shelves. And

24:57

I don't think anyone knows when or to

25:00

the extent that could happen. And the button on

25:02

the desk that says, and this all could

25:04

be pressed before that happens. But if it persists,

25:06

that's what's likely to occur. What about the

25:08

impact it has on trust in the United States?

25:11

Because... Yeah, it's huge. Can you explain

25:13

that to me? Trust is hard

25:15

because you don't know how valuable it is

25:17

until you lose it. But once you lose

25:19

it, you're like, oh, that was everything. And...

25:22

know, foreign investors, people who don't

25:24

live in the United States, have $30

25:26

trillion invested in America. That's just

25:29

in stocks and bonds. That's not housing

25:31

or office buildings. Just in stocks

25:33

and bonds, $30 trillion. that

25:35

they've invested. And a lot of the

25:37

reason they do that, well, there's many reasons.

25:39

One of which is because it's by

25:41

and large seen as a trustworthy economy, a

25:43

stable economy, a economy of rules and

25:46

predictable laws and trust that you could not

25:48

say the same about Russia. And

25:50

so when global investors are looking where to park

25:52

their money, this has been the case for the last

25:54

80 years, America is usually at the top of

25:56

that list. There's also a thing where a lot of

25:58

the reason that they invest money in the United

26:00

States is because they have to because they have a

26:02

trade deficit with us. So if

26:04

China is selling us a lot more stuff

26:07

than they're buying from us, we're importing

26:09

a lot more from China than we're exporting

26:11

back to them. They're going to end

26:13

up with a lot of US dollars and

26:15

what they need to do something with

26:17

those dollars. They have to invest them somewhere.

26:20

And historically that's been in treasury bonds, which

26:22

lowered our interest rates and that was good

26:24

for everybody. And what's a treasury bond? It's

26:26

debt that the government issues from the federal

26:28

government. So it's a bond, you're loaning money

26:30

to the government and they're promising to repay

26:32

you plus interest. Okay. So less people

26:35

are going to do that if they have less trust in

26:37

the United States? Less trust and also less need to

26:39

do it because they don't have as many dollars that they

26:41

need to invest. Are we heading

26:43

for a recession? Because I saw some

26:45

stats earlier on that said the Probability

26:48

of a recession has surged

26:50

by 45%, which is the highest

26:52

since December 2023 because of

26:54

the tariffs. That was from Reuters.

26:57

It's interesting when people point like the odds of

26:59

recession at 45 % because they can't be wrong.

27:01

Like if there isn't a recession, they'd be

27:03

like, yeah, we said it was 45%. We didn't

27:05

say it was going to happen. So my

27:07

answer, if you said, are we heading for a

27:09

recession would always be yes. If you asked

27:11

me a year ago, if you asked me five

27:13

years ago, like historically, there's a recession. In

27:15

modern times, it's been every four to five years

27:18

that it's occurred. And so we

27:20

shouldn't pretend that when they happen that

27:22

they're this crazy out of the blue

27:24

thing. It's an inevitable feature that you're

27:26

always going to have recessions. But is

27:28

this going to cause it? What is

27:30

the recession? A recession technically is when

27:32

GDP in the economy, GDP is just

27:34

like economic output. How much the economy

27:36

is moving when that declines for two

27:38

quarters in a row. That's the technical

27:40

definition. For most people, you don't need

27:42

to worry about technical definitions because a

27:44

recession in your mind is when you

27:46

are feeling worse off economically for a

27:48

long period of time. When you feel

27:50

like you can't get a job or

27:52

your neighbors, your roommates can't get jobs

27:54

and it's starting to hurt on you.

27:57

It's kind of like, what's the definition? of being sick.

27:59

Well, it's when you don't feel good, but you can

28:01

get more technical than that. But a recession for most

28:03

people is when you don't feel good economically. You're

28:07

not concerned about a recession? It's

28:10

not that I'm not concerned, but it would be

28:12

like saying, if you live in Florida, are you

28:14

concerned about hurricanes? The answer is yes, you should

28:16

be concerned about a hurricane, but you also know

28:18

with 100 % certainty that they're going to come.

28:20

If you choose to live in Florida and you

28:22

live in Florida for 40 years, you know you're

28:24

going to get hit by one. 100 % chance. And

28:27

so it's not that I don't worry about it, it's that

28:29

I think it is inevitable. Always, no

28:31

matter what's going on. That says nothing to do with

28:33

terrorists, no, with the terrorists, that's always been the case.

28:36

And so this is where

28:38

at the individual level

28:40

personally, like room for

28:42

error and your finances is so

28:44

critical. What I mean by that is

28:46

just like savings, cushion, being scared of debt.

28:49

It's when everyone is, when you're well,

28:51

when you're gainfully employed and you have

28:53

a good paycheck. and the stock market's

28:55

going up and Bitcoin's going up. Everyone

28:57

feels great. You feel amazing. And

28:59

it's very rare in that situation that you

29:02

want to envision yourself losing your job or

29:04

losing a job and not being able to find

29:06

another one for six months or needing to

29:08

move or getting divorced or having a medical,

29:10

like no one wants to envision that. But

29:12

the truth is like, what are the odds

29:14

that one of, at least one of these will

29:16

happen to you and I over the next

29:18

30 years? major job loss

29:20

or just a major impact in

29:22

our businesses. Divorce, cancer,

29:26

wayward children. I can go on down.

29:28

What are the odds that at least one of those will occur to

29:30

you and I in 30 years? 100%. And

29:32

for a lot of people, they'll experience all of

29:34

those. And so the idea

29:36

that life is fragile, the economy

29:38

is fragile, countries are fragile, is

29:40

like people don't necessarily want to admit

29:42

that because it's hard to get out of

29:45

bed in the morning if you admit

29:47

that to yourself. But I think it's inevitable.

29:49

And it doesn't have to be necessarily

29:51

scary if you have the right like psychology

29:53

around it of just, yeah, like when

29:55

times are good, I don't expect them to

29:57

last forever. That's not how the world

29:59

works. And the right finances around it of

30:01

like, yeah, when times are good, I'm

30:03

going to save because I know this might

30:05

not last forever. And what I value

30:08

more than anything with money is independence. It's

30:10

not flashy cars or homes. I want

30:12

to be independent so that when the

30:14

economy goes south and there is a

30:16

recession and things are going bad, I

30:19

want to have a level of control

30:21

over where I work, where I live,

30:24

what I'm able to do, my ability

30:26

to support my family. That's the

30:28

top the list. And so

30:30

when things are going well, and for

30:32

a lot of people, they haven't for

30:34

the last couple of years, but for a

30:36

lot of people, they did. I think

30:38

that's always important. I think it's a major

30:40

psychological skill in life in general. This

30:42

goes beyond money. It's recognizing when things are

30:44

abnormally good and preparing yourself for them

30:46

to go the other way as they inevitably

30:48

will. Independence you value. It

30:50

sounded like freedom to me.

30:52

Can you tell me

30:54

how to achieve freedom financially?

30:59

And what I should be thinking about in

31:01

the context of a world that's changing

31:03

at such incredible speed, when we're talking

31:05

about tariffs and recessions and now AI, I've

31:08

been thinking over the last couple of

31:10

weeks, like what should my personal financial strategy

31:12

be? How should I be thinking about

31:14

it? Is it a strategy? Is it a

31:16

psychology? Is it a mindset? What is

31:18

it that I should be thinking about to

31:20

survive this area of tremendous change and

31:22

Trump economics and get through the other end

31:25

with that freedom and independence that you

31:27

and I both desperately value? This sounds like

31:29

such a squishy BS kind of answer,

31:31

but I think there's a lot of truth

31:33

to this, I'll explain in a second.

31:35

It is largely a mindset. And

31:37

that sounds crazy, but I'll explain what

31:39

I mean. My grandmother -in -law, she passed away

31:41

a couple years ago. She was 92

31:43

when she passed away. She, for 30 years,

31:46

she lived off of nothing but Social Security.

31:48

I think she got $1 ,700 a month

31:50

from Social Security. She had nothing else,

31:52

no savings, no pension, no nothing.

31:54

She was the happiest person. I've

31:57

met half a dozen billionaires in my life,

31:59

I'm sure you have as well. None

32:01

of them were as happy as she was. And

32:03

she was technically, she was like financially

32:05

broke, but she had this level of

32:08

psychological wealth that was like unparalleled. And

32:10

the reason was off $1 ,700 a

32:12

month, that was all she needed. She

32:14

was perfectly happy toiling in her garden, watching

32:17

birds, going for walks, hanging

32:19

out, reading from books from the library. perfectly

32:22

content with all of that. She didn't need

32:24

anything else. So she had very little money, but

32:26

she wanted even less. And

32:28

that, so like she had a level of

32:30

independence that a lot of billionaires do not.

32:33

Because if you are a billionaire, if you

32:35

have a billion dollars in the bank,

32:37

but you are so encumbered by your business,

32:39

your employees, your suppliers, your customers, you're

32:41

waking up at three in the morning sweating

32:43

because you got this email and you're

32:46

stressed out about it, you actually have very

32:48

little independence in that situation. your shareholders

32:50

or regulators are coming down on you. mean,

32:52

we see this, there's no one

32:54

in particular here, but we've seen

32:57

very wealthy people kind of become

32:59

sink offense to politicians. And

33:01

the truth is a lot

33:03

of those like mega billionaires

33:05

absolutely rely on politicians and

33:07

regulators to keep their machine

33:09

moving. And so my grandmother

33:11

-in -law on $1 ,700 a month had a

33:14

higher level of independence than a lot of

33:16

those people do. And that's why

33:18

I say a lot of this is

33:20

a mindset because the truth is the vast

33:22

majority of people listening to this could

33:24

have a level of independence. It's not that

33:26

you can retire tomorrow, but you can

33:28

have a level of financial independence once you

33:31

realize that the key is managing your

33:33

expectations more than it is, how can I

33:35

just pile up as much money as

33:37

I possibly can? It's easy to think, how

33:39

do you become financially independent? Save

33:41

a ton of money. And there's truth

33:44

to that. Of course, that's part of

33:46

it. But more of it is just

33:48

in, like, what kind of life do

33:50

you want to live? Because if your

33:52

expectations are growing faster than your net

33:54

worth, it's never going to feel like it.

33:56

You'll never be independent. Never. You have

33:58

$100 billion. But if

34:00

you want more and more and more, like,

34:02

it's never going to feel like it's

34:04

enough. Or if you enjoy birdwatching and reading

34:06

books like my grandmother in law, $7 ,800

34:08

a month, you're all set. You're set

34:10

for 30 years. You're rich. You're rich. I'm

34:13

free. She was psychologically rich, even if

34:15

she was financially poor. And I think that's

34:17

the biggest thing about it. Adam Smith,

34:19

who was the greatest economist to ever live,

34:21

this was 300 years ago, he

34:23

once wrote about this. He was like, why do people

34:25

work so hard? And he

34:27

was just like, there's a simple question,

34:29

but why do people work so damn

34:31

hard? And he's like, it can't just

34:33

be for our sustenance, because even poor

34:35

people, as he was writing about it,

34:37

had homes and adequate food most of

34:39

the time. He's like, there has to

34:41

be something else. And what that

34:43

something else was, he wrote, was to

34:45

be seen by other people. And

34:48

it was like, it was attention and admiration.

34:50

They wanted to be getting rich so that they

34:52

could have a bigger house and a nice

34:54

car and not in his day. But they wanted

34:56

to be, they wanted attention from other people.

34:58

But he was like, it's not that you needed

35:00

the money because even in his day, 300

35:03

years ago in Scotland, I think he was, he

35:05

was like, look, people have homes and food.

35:07

Like, what are they doing this for? And he

35:09

was not criticizing them. Like, his whole point

35:11

was like, they're going out and innovating or going

35:13

to have great technology. And like, it's great

35:15

to go do that. But the reason to do

35:17

it was not because they had to stop.

35:19

Now, of course, most people to get shelter and

35:21

food do have to keep working, but they're

35:24

working more than they absolutely need to because they

35:26

want something else besides independence. Is

35:28

there an evolutionary basis for this? I was

35:30

thinking the other day after watching an interview

35:32

with Naval, where Naval

35:34

talks about how, from

35:37

an evolutionary perspective, humans don't really

35:39

understand the concept of wealth because

35:41

once upon a time when we

35:43

were cavemen and women, wealth was

35:45

what you could carry, but we

35:47

do understand the concept of status.

35:50

which really meant a lot to us in our sort

35:52

of tribes and was life or death for many

35:54

of us. So even though billionaires get all the money

35:56

in the world, the next thing they want to

35:58

do is start a podcast. You know

36:00

what I mean? Because it's just

36:02

not enough. Like everyone I know is Well, what a them

36:04

do too is when they have all the money in the

36:06

world, what they want is immortality. And you see these guys

36:08

trying to live forever. Yeah. So that

36:10

happens as well. That's interesting. But that's

36:12

linked to status, because status was longevity. Yes.

36:15

Like if you had status, you had

36:17

food, you had the reproductive potential once

36:19

upon a time. Yeah. So it's the

36:22

same evolutionary sort of desire to like

36:24

live survival. Yeah. Harvey

36:26

Firestone, who was a tire magnet

36:28

100 years ago, Firestone tires during the

36:30

explosion in cars 100 years ago,

36:32

he wrote about this in his biography.

36:34

He was like, every rich

36:36

person he knows, wants to get money, buys

36:38

a house that is way too big. not

36:41

only bigger than they need, bigger than they want, because

36:43

a giant house is just a huge pain in the

36:45

ass. The roof is leaking and like everything's breaking down.

36:47

It's a huge pain to manage. So he wrote in

36:49

his biography, he was like, why do we do this?

36:51

And he was like, he did it

36:53

too. He was like, I bought a house that

36:55

is way bigger than I'd want. And it's a

36:58

pain, it's a burden, but we all do it.

37:00

And he's like, why? And he's like, it has

37:02

to be status. There's no utility to

37:04

a 40 bedroom house, zero. There's a lot

37:06

of downside and upkeep. But he was like,

37:08

every one of us does it. And he

37:10

said, even Henry Ford, who was like the

37:12

cheapest SOB out there, lived in a giant

37:14

mansion in Detroit. He was like, it's so

37:16

natural. And he was like, it's just because

37:18

we want to show other people. It's not

37:21

utility. It's not making our lives better. It's

37:23

actually making our life worse. But

37:25

we have this evolutionary desire to show

37:27

people that we've made it. That's the

37:29

calling card. But if it's hard -wired,

37:31

then is there much we can do

37:33

about it? I think it's

37:35

true that... Virtually everyone who I

37:37

really admire in life. By

37:39

and large, they're not hugely successful people that you've

37:42

heard of. They're just people who have met, and they're

37:44

ordinary people with ordinary jobs. And I'm like, Matt,

37:46

you seem like you've got it all figured out. They

37:48

took themselves out of the system that they were

37:50

supposed to be in. And they're like, I'm going

37:52

to go figure out my own way. And

37:55

there's a really interesting story. A

37:57

guy named Chuck Feeney. He started a

37:59

company called DFS, the duty -free stores

38:01

in airports. He made, I think

38:03

at the peak of his wealth, he was worth about $9

38:05

billion. And this was like in

38:07

the 90s when that was a lot

38:09

of money, still a lot of money.

38:11

But the well -known part of Chuck Feeney

38:14

is that despite that wealth, he lived

38:16

like an ordinary person. He lived in

38:18

like a one -bedroom apartment. He flew

38:20

coach. He drove like a normal car,

38:22

lived like a normal guy. And

38:24

some people criticize that from that. He gave

38:26

all of his money to charity. He gave $9

38:28

billion away, lived like a monk himself. The

38:31

less known part of Chuck Feeney that

38:33

I think is very, is more important is

38:35

that when he first got wealth, became

38:37

wealthy in the 1980s, he lived the life

38:39

of a billionaire. He had a

38:41

fleet of private jets. He had mansions all over the world.

38:44

He had a yacht. And after doing it

38:46

for a couple of years, he was like, I don't like any of this.

38:48

He's like, I like being an ordinary,

38:50

simple person. And so I'm going

38:52

to go live an ordinary life. I don't care what the

38:54

world, the world tells me this is what I should want

38:56

now that I have money. But he's like, but I don't.

38:58

I want simplicity. And what I like about

39:00

that is not that he chose to live like a monk,

39:03

because I personally wouldn't want to do that if I

39:05

had that. I would have a jet if I had

39:07

that kind of money. So it's not to say that he

39:09

did it right. But what I like that he did

39:11

is that he said, I don't care what the world

39:13

tells me to like. I'm

39:15

going to do it on my own terms. And

39:17

that's true independence. That's true status. That's

39:19

true status too. He's like, I don't

39:21

care. That's the ultimate definition of FU

39:24

money. of like so much money that

39:26

like, I don't care. You tell me I'm supposed

39:28

to live in a mansion in Beverly Hills, but

39:30

I like my one bedroom apartment in San Francisco.

39:32

I like my buddies over here. Another person who's

39:34

done that to a very real extent is Warren

39:36

Buffett. Lives in the same house today that he

39:38

bought when he was 27 or whatever it was.

39:40

And he's got a hundred billion or something. Right.

39:42

And of course he could live anywhere. He could

39:44

buy anything, but he likes being with his friends,

39:46

doing it on, you know, like playing a bridge

39:48

with his buddies. In the

39:50

first case though, that gentleman had

39:52

to have... dream fail him first

39:54

before he realized. And so

39:56

this raises another question, which is, does

39:59

the viewer at home have to make the

40:01

hundred million dollars and then taste it by

40:03

the mansion to realize that it was never

40:05

about the mansion? I think the answer to

40:07

that is yes. Oh, gosh. That is very

40:09

difficult. You know, there's a thing where, I

40:11

forget who said this, but like they're responding

40:13

to the quote, money doesn't buy happiness. And

40:15

they're like, okay, but let me

40:17

go figure that out for myself first. Like, if

40:19

you don't have a lot of money and

40:21

you see rich people tripping over themselves and people

40:23

like Will Smith saying, like, I was no

40:25

happier at all when I was rich than when

40:27

I was poor. Actually, I was happier when

40:29

I was poor. If you

40:31

are poor when you hear that,

40:34

you're like... I don't believe it.

40:36

I have to go figure it out for myself.

40:38

I think a lot of lessons in life

40:40

you have to learn firsthand. Especially when the all

40:42

the problems staring you in your face are

40:44

somewhat associated to money. Like the pain in your

40:46

belly, the bills on your desk, the threats

40:48

from the court. I'm thinking of myself here that

40:50

I was getting the letters coming through with

40:52

the red text on them telling me that my

40:54

credit cards were going to be shut down. The

40:57

inability to feed yourself to socialize with

40:59

your friends, the heating in your house,

41:01

the your child's pencil case

41:03

costs, all of it seems to circle

41:05

back to money. And so

41:07

when you hear people who

41:09

are wealthy being subjectively honest

41:11

about their own experience and

41:13

then what's made them happy,

41:15

it is hard to hear.

41:18

Like I was just imagining if I was hearing this,

41:20

you know, these stories when I was in that

41:22

situation. I would still fucking go

41:24

for anyway. Right. Now,

41:26

let's say that there's a big difference between

41:28

not being able to buy food for

41:30

your kids and making 200 grand per year.

41:33

And, you know, the difference between 10

41:35

grand a year and 200 grand a

41:37

year is massive. Takes away so many

41:39

stresses, so many, you know, worries about

41:42

being evicted and whatnot. But the difference

41:44

between 200 grand and 500 grand is

41:46

not that much. And the difference between

41:48

500 grand and 20 million is not

41:50

that much. And there's between 20 million

41:52

and... billion is zero. I think that's

41:54

a lot of what it comes down

41:56

to. And even I think there is

41:58

such thing as like a peak worth

42:00

that you would want in life, after

42:02

which all the money that you accrue

42:04

becomes like a social liability. I

42:06

mean, who has more social

42:08

liability or like pressure than the

42:10

mega rich? You know, Musk,

42:12

Bill Gates, Jeff Bezos, there's a huge amount of

42:15

pressure. Like you better donate this money and

42:17

you better do a good job doing it kind

42:19

of thing. And so, and I think that

42:21

number of like, and at a much lower like

42:23

realistic level for people. It's when your friends

42:25

learn you make a lot of money and we

42:27

go out for dinner and they're like, you're

42:29

paying, right? And that's a small thing,

42:31

but it can really grade on people that

42:33

like, oh, it's gonna change how people think about

42:36

me. Now, that's a good problem

42:38

to have, of course, but it's a thing. And

42:40

I think the idea of there is a

42:42

maximum amount of Like there is a net worth

42:44

level at which your happiness is going to

42:46

be maximized and it's probably lower than you think.

42:48

Do you think it's important for people to

42:50

have an idea what their number is? I

42:52

don't think anyone really does because I've done this

42:54

in my own life. I'm sure you have too. When

42:57

I was 19, I was like, oh, if my

42:59

net worth was this amount, I'll be happy forever.

43:01

And then I was fortunate enough to get hit that

43:03

amount. And I'm like, okay, but what if what

43:05

if we got over here and you just keep

43:07

going up the ladder forever? Is there such thing as

43:09

a few money? Like is there a number where

43:11

you think? you've hit a few money. I saw some

43:13

thread on Twitter and it was like, comment below

43:15

what you think a few money is. And

43:17

it was interesting to see the variation. I have

43:20

a friend, Ben Carlson. He's a great financial writer. He

43:22

came up. This is very subjective. There's no science

43:24

behind this, but he was like a net worth of

43:26

$7 to $10 million. is

43:28

you can live an amazing life in the United

43:30

States, have an amazing house paid for, send

43:32

your kids to great schools, go on great vacations,

43:34

drive brand new cars on $7 to $10

43:36

million. And he brought that

43:38

up. Some people might wince at this, but he brought

43:40

that up of, it's a lot less than people would

43:42

think, because there'd be a lot of people who would

43:44

be like, oh, I'm gunning for $100 million, even if

43:46

that's just a fantasy, it's a dream. And

43:48

$7 to $9 million is out of reach for a

43:50

lot of people, no matter how hard they're working. But

43:53

I think... for young people who their

43:55

definition of I think about my son a

43:57

lot this he watches mr. Beast mr.

43:59

Beast is an amazing guy He's I think

44:01

he's one of the great guys, but

44:03

because of mr. Beast like my son's definition

44:05

of wealth is a private Highline to

44:07

private jet, you know keep your hand on

44:09

the table and win a million dollars

44:11

kind of thing It's a it's a different

44:13

level whereas when I was growing up

44:15

like ordinary people drove dirty pickup trucks and

44:17

rich people drove clean pickup trucks. That

44:19

was the stratification of what I saw growing

44:21

up. And I think because of social

44:23

media and other things, kids have a very

44:25

different view on what financial wealth actually

44:27

is these days. Going back to this issue

44:29

of tariffs, recession and everything that's going

44:31

on at the moment, are there any things

44:33

practically? For those that don't understand

44:35

the economy and economics generally that we

44:37

should be thinking about to make sure

44:39

that we don't get burnt. This is

44:41

less advice going forward more than just

44:43

like something to remember next time which

44:45

is that if you are worrying about

44:48

if you're worried about being laid off

44:50

if you're a small business owner worried

44:52

about going under the need for room

44:54

for error and cushion and savings and

44:56

backup plans. We're just as

44:58

important a month ago as they are today.

45:00

You're just learning how important they are today.

45:02

And I challenge you to remember that in

45:04

the future, when this is all over, whenever

45:06

it's all over, that when the economy is

45:08

going well and you feel stable in your

45:10

job, stable in your career, that is when

45:12

you also, you absolutely need backup plans and

45:14

room for error and savings and eschewing debt

45:16

and whatnot. I have a very high level

45:18

of cash as a percentage of my net

45:21

worth. And a lot of financial advisors would

45:23

look at that and say like, what are

45:25

you saving for? Like, what's going on here?

45:27

And I'm like, I don't know. I'm saving

45:29

for a world that I know is very

45:31

fragile. And I have no idea what's going

45:33

to happen to me personally or what's going to happen to the

45:35

economy. But if you're a lay

45:37

student of history, you know that things break

45:39

all the time. And so

45:41

my advice to you, if you're realizing

45:43

that for the first time, that how

45:45

fragile the world can be and how

45:47

the job security that you thought you

45:49

had might not have been as strong.

45:51

Remember this next time, how important room

45:53

for error and backup plans are. And

45:55

relative to your personal costs, your personal

45:57

monthly costs or overheads as they call

45:59

them, how much money do you think

46:01

it's sensible to have saved? It's

46:04

so hard for that, because I'm

46:06

sure people watching this will be in

46:08

a massive range of incomes. I

46:10

would say this is a bad answer that

46:12

no one's going to like, but pretty much as

46:15

much as you can. mean, I'll give

46:17

you one example of this. When COVID first hit in March

46:19

of 2020, the average restaurant I

46:21

heard had enough cash on hand to

46:23

last them for 14 days. And then

46:25

all a sudden, they were looking at a six -month

46:27

lockdown. And so I think one

46:29

answer to that question is however much you

46:31

think you'll need, it's probably more. The other

46:33

more practical example of this is in 2008

46:35

during the financial crisis. A lot

46:37

of people were losing their jobs, not for two weeks

46:39

or one month, but they were losing their jobs

46:41

for 12 months. And they got unemployment

46:44

benefits, but it wasn't enough. And so is

46:46

it practical to say like you should have

46:48

12 months of savings? It's probably not practical

46:50

for a lot of people. But the answer

46:52

is as much as you can, while realizing

46:54

that the world is more fragile than you

46:56

probably think it is. The other protagonist of

46:58

change at the moment is artificial intelligence. And

47:01

I've spent a lot of lonely, quiet

47:03

hours in my room thinking about the impact

47:05

it's going to have and trying to

47:07

develop my own thesis and what it means

47:09

as a creator, as a podcaster, as

47:11

an investor. And I wanted to understand how

47:13

significant you think artificial intelligence is and

47:15

if it at all impacts your thesis around

47:17

money and wealth and investing and saving.

47:19

I'm not even remotely an expert in AI,

47:21

but as someone who's looked at like

47:24

the history of technology, one thing that sticks

47:26

out clear as day when you study

47:28

technology. In hindsight, when you're

47:30

looking at a new technology that you know

47:32

went on to change the world, the computer,

47:34

the car, the airplane, those things, when

47:36

you know, like this was a turning

47:38

point in civilization, if you

47:40

go back and look at what the

47:42

optimists were saying at the time, they

47:45

massively underestimated it. And that's what the

47:47

optimists were saying. Forget the pessimists on

47:49

it. So go back to the 1920s

47:51

and say, what were the optimists saying

47:53

about the airplane? They were underestimating it

47:55

by a hundredfold. What did the optimists

47:57

say about the car? They underestimated by

47:59

a hundredfold. Computers, same. And

48:01

the Wright brothers themselves, came

48:03

up with the first airplane, the United

48:05

States, the Wright brothers themselves only marketed

48:07

their plane, primarily marketed their plane to

48:09

the U .S. Army, because they did

48:11

not really foresee much use for an

48:13

airplane outside of the military. They knew

48:15

you could strap a machine gun on

48:17

it and the army might like that.

48:19

But the Wright brothers foresee Delta Airlines,

48:21

like an Emirates, an A380, like not

48:23

in a million years. And so, I

48:26

think it's true that in a lot of things life, I

48:28

think it was Peter Thiel who said this. He was like,

48:30

when things are going wrong, you

48:32

underestimate how bad they're gonna get. But

48:34

when things are going right, you underestimate how

48:36

big it's gonna be. I may have

48:38

butchered that quote, but it's something like that.

48:40

And it's clear that AI is right.

48:43

And so it's almost certainly the case that

48:45

even the optimists, even the Sam Altman

48:47

optimists are underestimating where it will go. And

48:49

a lot of the reason for that is

48:51

because new technologies is not what the inventor,

48:53

whoever that might be. built. It's what other

48:55

people go on to manipulate it as and

48:57

that's why the Wright brothers come up and

48:59

play and now we have the A380. Like

49:01

it's other people manipulating things along the way

49:03

to create something just gigantic. One

49:05

perfect example of that with AI

49:07

is open AI have created this large

49:09

language model which can do all

49:11

these wonderful things but then people are

49:14

using that same technology to create

49:16

AI agents which are equally astonishing. I

49:18

spent the last couple of weeks

49:20

using AI agents to build some software.

49:22

I'm someone that has no ability to code

49:25

at all, but I can sit in

49:27

my bedroom and speak to this agent and

49:29

tell it to build me a new

49:31

to -do list or a new website for

49:33

the podcast that tracks who's been on the

49:35

show and follows them in the new,

49:37

like I can tell it to do anything.

49:39

And for what's probably costing me a

49:42

dollar a day, it's building me software now.

49:44

And we're just at the start of

49:46

that exponential curve. So if we now think

49:48

that these large language models are going

49:50

to be able to create things, create

49:52

digital things, things on the internet. This

49:55

podcast is on the internet. We know

49:57

that it can create podcasts. We know it

49:59

can create videos, images, software. I

50:03

look at that and go, you play this forward. And

50:05

if I apply your optimism analogy,

50:07

your optimism lens to it, where

50:09

I go, we're underestimating this curve.

50:11

It's hard. It's really hard to

50:13

see how this isn't tremendously disruptive

50:15

in the long term. Not even

50:17

the long term, but in the

50:19

short term. I'll give you one

50:21

example. You talked about coding there. We're doing

50:23

a little remodel on our house right now. And

50:26

one the things you can do is take a

50:28

real picture of a room, upload it in. We

50:30

use chat GBT for this and said, hey, paint

50:32

it this color, remove this wall, put this in.

50:34

It is better than any designer will be able

50:36

to do it. Right there, boom

50:38

in front of you. And you can multiply

50:40

that story by 10 ,000 different versions of

50:42

that story for 10 ,000 different jobs. I

50:45

see it as a writer, where I

50:47

don't use it to write, I write all

50:49

my own words, but one thing that

50:51

I've played around with, I don't really use

50:53

this as that much of a tool,

50:55

but just more of an experiment of like,

50:58

I'll upload a chapter from a book

51:00

that I wrote and say, hey, give me

51:02

some feedback on this. And it wasn't

51:04

that good a year ago. It's

51:06

pretty good today. It's pretty good. So

51:08

if you're looking for like a writing

51:10

assistant, it's amazing. Now, the downside of

51:12

that is everyone knows like the high schoolers and the college

51:14

students who use it to write the essay, just write

51:16

the whole thing. That's

51:18

probably not great. But if using it as

51:20

a helper, it's probably the best writing teacher

51:22

that's out there. So right there in my

51:24

just like tiny little world, I really don't

51:26

know anything about AI, but interior designer, editor.

51:29

Going down the list of jobs that like

51:31

literally three months ago, I would have been

51:33

like, oh, that's a very valuable job. And

51:35

all of a sudden you look at this

51:37

tool for a dollar a day, as you

51:39

said, you're like, it's pretty good. What does

51:41

history tell us about how this shakes out? Like

51:43

when these industrial revolutions come along

51:45

with the technological revolutions, where

51:48

does the value accrue? And

51:51

how do I participate in that value? I

51:53

guess one good analogy from my here, and

51:55

it's probably not as powerful as what we're

51:57

dealing with right now, but the. The closest

51:59

is probably, it wasn't that

52:01

long ago, the late 1800s, that 80 %

52:03

of Americans were farmers. That's

52:06

what it was. And then the

52:08

Industrial Revolution and the tractor and the combine came

52:10

along. And all of a sudden, it was

52:12

like, we don't need that many farmers doing this.

52:14

What people used to do with shovels and

52:16

rakes can now be done with a tractor. And

52:18

a lot of those people found themselves out of

52:20

work. And for them, it

52:23

was very disruptive, but they

52:25

also, the farmer, the

52:27

farm laborer, found himself pretty

52:29

easy to go into the factory because

52:31

they were working on, they were good

52:33

at working with their hands and whatnot.

52:35

And so to go from that into

52:37

the factory was not an easy transition,

52:39

but it was a transition they can

52:41

make. Now, do you

52:43

have that same transition did not

52:45

take place from manufacturing to technology? The

52:48

auto worker in Detroit could not just

52:50

learn to code and work at Google. like

52:52

that. And so it was much less

52:54

seamless. And I think what we're dealing with

52:56

now will be even more of a

52:58

disruption that the people who are being disrupted

53:00

out of AI are going to have

53:02

a much more difficult time historically to move

53:04

into where the economy is going next.

53:06

So the idea that an industry is disrupted

53:08

and you need to go figure out

53:10

something else to do, I think it's gotten

53:12

progressively harder over the last 150 years. And

53:15

when we moved from machines to

53:17

technology, it was a significantly also for

53:19

the user. and for the customer

53:22

and for the, as well as

53:24

for the employees. So that transition took time, but

53:26

I was reading something the other day that

53:28

said, now that we're native internet users, we all

53:30

are billions and billions and billions of people

53:32

use the internet. This is like a new application

53:34

on the internet, which explains why it's growing

53:36

so fast that we haven't had to learn. You

53:39

know, this generation know how to type

53:41

something on a screen. So there hasn't

53:43

been this big jump in fundamental skills

53:45

like there was from like going from

53:47

a, I don't know, from a piece

53:49

of. machine to an iPhone. So

53:52

this acceleration will be quicker. So therefore

53:54

one would assume that the transition will be

53:56

more severe. And I think about even

53:58

things like driving. I think Tesla

54:00

are releasing in Austin this month

54:02

or next month, the first autonomous

54:04

vehicle, the side of taxi, the

54:07

robot taxi or whatever it's called, and it has no steering

54:09

wheel. And the profession of

54:11

driving, from what I understand, is the

54:13

biggest profession. The biggest profession, truck drivers, drivers

54:15

in general. Yeah. On my way here

54:17

today, I did not touch the steering wheel.

54:19

I did not touch the pedals because

54:21

I'm in a cyber truck and there's a

54:23

button on it, which auto drives you

54:25

to wherever you want to go. And

54:28

typically I'd probably have got an Uber. But

54:31

now I can sit there, do my work, and

54:33

it drives for me. And that's

54:35

also AI. Yeah. No, it's

54:37

crazy. And back to the analogy, like when

54:39

the farmer had to go work in the factory,

54:41

it was a transition. He may have had

54:43

to move, but he did it. And that's why

54:45

we went from 80%. of the population were

54:47

farmers to 2%, which is what it is today.

54:49

But they were able to move in. The

54:51

manufacturer to technology struggled. And I think it's going

54:53

to be now like the truck driver, to

54:55

tell the truck driver, well, just go get a

54:57

job at OpenAI kind of thing. It's

55:00

funny to even think about because it's preposterous.

55:02

But the thing with OpenAI, from what I

55:04

understand, is they have less than 100 employees.

55:06

Right. And the reason they have less than

55:08

100 employees is because they're using AI. To

55:10

do the work. To do, and they'll increasingly do that,

55:12

especially when they hit AGI. Right, they're probably going to

55:15

four employees. Yeah, and this is why I think they

55:17

have a hundred employees. I think they've purposefully kept it

55:19

low because they think AGI is around the corner, which

55:21

is this very, very advanced form of AI, which is

55:23

going to be able to like, I

55:25

think they call it self -reinforce, where

55:27

it teaches itself. Synthetic data, right.

55:30

So, kind of going from there. Now,

55:32

I think if there's an optimistic side, it's always

55:34

been, it was the case that when farming was

55:36

being disrupted. There were a lot of people who

55:38

just said, these people are never going to find

55:40

jobs. If you put the farmer out of business,

55:43

it sounds comical today, but there was a big

55:45

push when the car came about to be

55:47

like, no, what are all the horses going to

55:49

do? Have some dignity

55:51

for the horse and the people who are

55:53

raising horses and whatnot. So it's always

55:56

been the case that you cannot foresee what's

55:58

going to happen next. And the optimistic

56:00

side of capitalism. is as messy

56:02

and as hard and as much personal

56:04

damage as you can cause to families

56:06

along the way, those people will eventually

56:08

figure out something to do. And when

56:10

people say that, it sounds so callous

56:12

and coarse. And that's why you have

56:14

so much debate and angst and anger

56:16

and things like, and disagreements like what

56:19

we're dealing with with tariffs right now.

56:21

You have your son in the green

56:23

room watching us right now. How old

56:25

is he? Nine. Nine, okay, so he's

56:27

got some decisions. He's wincing right now,

56:29

I'm sure. Neither we're talking about

56:31

him. But in terms of him

56:33

building his career, acquiring skills, generating

56:36

wealth, based on

56:38

everything you know about how people have made

56:40

money through history, what are

56:42

the prevailing skills that your son

56:44

would have to have to assure

56:46

that he makes money regardless of

56:48

what the industry is? Learn how

56:50

to communicate. Learn

56:52

how to get along with people you

56:54

disagree with. I think that's a very

56:56

under looked skill in life is particularly

56:58

in a social media driven world where

57:00

people have very different views on fundamental

57:02

topics. Learn how to get along with

57:04

people who you disagree with. Learn how

57:06

to communicate. Those would be the

57:09

top two. Those are extremely high level. Like

57:11

I'm not saying go learn calculus four kind

57:13

of thing or go learn engineering, but those

57:15

are timeless skills. And I think those two

57:17

skills can get you pretty far in life.

57:19

And I look back at myself. I don't

57:21

know if you had a similar example of

57:23

this, but I was not a good student.

57:26

My ability to do math is not any

57:28

good. My ability, my grades in science

57:30

were not any good whatsoever. I

57:32

think if there are two skills

57:34

that I was that I didn't even know

57:36

it at the time was not really like conscious

57:39

that I was doing this but learn how

57:41

to communicate and don't be a jerk like just

57:43

learn because that for me as a writer

57:45

that was like learn how to communicate as writing

57:47

and in the writing business learn how to

57:49

get along with people so you can move ahead

57:51

move your career like be nice to this

57:53

person so you can move on up I think

57:55

you see that a lot. What about in

57:57

terms of money making money when you think about

57:59

great people through history that have accrued a

58:01

lot of wealth what principles. Would

58:03

you instill in him so that he had a money mindset? It's

58:06

hard for a parent. I'm

58:08

not filthy rich by any means, but I've

58:10

sold a couple of books, and it's hard as

58:12

a parent to be like, I want to

58:14

use money to give you a good life, but

58:16

I don't want to spoil you. The last

58:18

thing I want is for you to be a

58:20

spoiled little brat. And it's very difficult for

58:22

a lot of parents to do that. And so

58:25

one of the things that I want him

58:27

to learn about money, and I want him to

58:29

learn in a very stark way, is like,

58:31

learned the scarcity and the value of $1. And

58:33

I think the only way to do that is

58:35

to experience it firsthand. So when he was

58:37

born nine years ago, I wrote him a little

58:40

letter and I published this on a blog. And one

58:42

of the things I said was, I hope you're

58:44

poor one day. And I said, not, not struggling, not

58:46

broke, but I hope the only way

58:48

to understand the value of a dollar is

58:50

to experience the power of its scarcity. And

58:53

I hope there's a period when my

58:55

wife and I are able to say like,

58:57

look, you're never gonna fall flat on

59:00

your face. You're not gonna be homeless. You're

59:02

always gonna have good healthcare. But I

59:04

hope you're able to experience the scarcity of

59:06

a dollar so you value it. I

59:08

did. My parents taught me

59:10

that in a way that they didn't

59:12

need to, but they let me be

59:14

poor for a while. And most people

59:16

will experience it because they have, that's

59:18

the situation they're in. So that's one

59:20

thing I think about. And I think

59:22

actually quite a few families deal with

59:24

that is like, how can you help

59:26

your kids? And it goes

59:28

beyond money. The helicopter parent

59:30

era is, I want to protect

59:33

you from downside at all

59:35

costs, emotional downside. And

59:37

I think money is one of many

59:39

topics in which you're going to learn

59:41

the best by experiencing the downside. you

1:00:56

Men struggling a variety of different ways

1:00:58

and obviously your son is going to

1:01:00

be a man someday. If

1:01:02

I think about some of

1:01:05

the stats here, men's labour force

1:01:07

participation has declined dramatically over

1:01:09

time for prime age men between

1:01:11

25 54 participation fell from

1:01:13

98 in the 1950s to about

1:01:15

80 something percent in 2024. 10

1:01:19

.5 % of men aged

1:01:21

25 to 54 were neither

1:01:23

working nor looking for

1:01:25

employment compared to with just

1:01:27

2 .5 % in 1954. And

1:01:31

we had a study that came out in the UK recently. I

1:01:34

think it was the Centre of Social

1:01:36

Justice that showed that for the first

1:01:38

time in a long time in recent

1:01:40

history, more young men are out of

1:01:42

work than young women. And think it

1:01:44

was like one in seven men are

1:01:46

out of work. So it's

1:01:48

a different world for a man. But we

1:01:51

still have the of prehistoric caveman mindset

1:01:53

of being a protector and a provider. Yes,

1:01:55

Yes, absolutely. world has changed. Yeah. think

1:01:57

of Scott Galloway recently said that like a

1:01:59

really aspirational definition of manhood is wanting

1:02:01

to procreate, provide and protect. You want to

1:02:03

have kids and you desperately want to

1:02:05

provide for your family and protect your family.

1:02:07

And I do think that there are

1:02:09

men all over the world to a higher

1:02:11

degree than there's ever been that feel

1:02:13

like those three things are out of reach

1:02:15

for them. And because of this,

1:02:18

a lot of people get involved in

1:02:20

it. get rich quick schemes, crypto coins, meme

1:02:22

coins, all this stuff. Daniel Kahneman, a

1:02:24

great psychologist, passed away last year. He had

1:02:26

a saying. He was like, when all

1:02:28

of your options are bad, you become very

1:02:30

risk -taking because you have nothing to lose

1:02:32

kind of thing. So whenever you see

1:02:34

people participating in get rich quick schemes, you

1:02:36

know it's because they feel like all

1:02:38

their options are bad. If you knew, if

1:02:40

you believed that if you could go

1:02:42

to college and learn a score, not go

1:02:44

to college, but if you can go

1:02:47

learn a skill, and go work

1:02:49

hard and earn a stable paycheck to

1:02:51

provide for your family, 99

1:02:53

out of 100 men are to say, that's

1:02:55

the one I want. But if you believe,

1:02:57

whether it's true or not, if you believe

1:02:59

that that option's not available to you, you're

1:03:01

like, let's throw it all on this new

1:03:03

coin kind of thing. And so

1:03:05

I think that's, you see that quite a

1:03:07

bit. There's a lot of things in life

1:03:09

where you see people making bad decisions or

1:03:12

what you think are bad decisions and it's

1:03:14

easy to mock them or look down upon

1:03:16

or to say they're idiots, but like deep

1:03:18

down there's always a reason that is kind

1:03:20

of, there's a deeper reason why they're doing

1:03:22

it. And for a lot of these things

1:03:24

with financial risk -taking, it's like a lack

1:03:26

of, not necessarily a lack of self -esteem, but

1:03:28

a lack of self -confidence in their ability

1:03:30

to earn a good, dignified, stable wage to

1:03:32

provide for their family. Testosterone plays a role,

1:03:34

though, no? Because when we

1:03:36

think about who becomes gambling addicts

1:03:38

and who takes the biggest risks

1:03:40

with finances through history, it's often

1:03:42

men. Women do seem to

1:03:45

be generally better with managing

1:03:47

money than men. Yeah. With

1:03:49

men, what a lot of it is,

1:03:51

is the inability to say that's enough,

1:03:53

particularly with the risks that they're taking.

1:03:56

So you see this with a lot of hedge

1:03:58

funds. Hedge funds are just giant investing pools

1:04:00

of money of rich people on Wall Street managing

1:04:02

money. They have quite a

1:04:04

long history, not lots of them,

1:04:06

but quite a long history of them

1:04:08

blowing up. And it's because this

1:04:10

very smart, genius, billionaire Wall Street trader

1:04:12

who has a PhD from MIT

1:04:14

could not say, That was enough. They

1:04:16

kept taking more risk, more risk,

1:04:18

more risk control blew up. And we

1:04:20

definitely see with women managing money

1:04:22

that they tend to not earn as

1:04:24

high returns on any given year,

1:04:26

but they don't blow themselves up, so

1:04:28

to speak financially. So men are

1:04:30

much more willing to swing for the

1:04:32

fences. And women are much

1:04:34

more willing to say, I'd like to just take

1:04:37

a calm, casual swing, but I want to

1:04:39

keep it going for a long period of time.

1:04:41

Now, who's going to do better over the

1:04:43

course of a lifetime in that situation? Your book

1:04:45

profiles a few scenarios of who does better

1:04:47

over. a lifetime. And although I read your book,

1:04:49

I think it must have been four years

1:04:51

ago. I will always remember reading a story about

1:04:53

it. I think it was like a stockbroker

1:04:55

that you write about in your books. It was

1:04:58

Jesse Livermore. Tell me that story. Jesse Livermore

1:05:00

was a trader, a Wall Street stock trader about

1:05:02

100 years ago. Did most of his work

1:05:04

in the early 1900s through about the 1920s. And

1:05:06

he was the best in the world at

1:05:08

getting rich. And he had no

1:05:10

ability whatsoever to stay rich. I

1:05:12

think he became the equivalent of a billionaire adjusted

1:05:14

for inflation four separate times and went bankrupt

1:05:16

four separate times He eventually at his end committed

1:05:18

suicide when he went broke for I think

1:05:20

the fifth time and in between there he would

1:05:22

become and literally the richest man in the

1:05:25

world at one point But he had no ability

1:05:27

to say that's enough so when he was

1:05:29

the richest man in the world He's kept taking

1:05:31

more risk more risk more risk and then

1:05:33

it blew up and he did it over and

1:05:35

over and over and over again until he

1:05:37

eventually killed himself It's

1:05:40

an amazing story because

1:05:42

punctuated through his story of

1:05:45

failure and bankruptcy and

1:05:47

eventual suicide is a level

1:05:49

of success that Steve

1:05:51

Jobs could not even fathom.

1:05:54

No one in history, I think, was

1:05:56

better at getting rich than he was,

1:05:58

and he could not keep it. For

1:06:01

most people, like a much better situation, of course,

1:06:03

is like, you don't need to become the richest

1:06:05

person in the world. You can just make a

1:06:07

modest amount of money that's gonna support you and

1:06:09

your family, but keep it. Don't keep

1:06:12

taking more risks that's eventually gonna blow it up. Just

1:06:14

keep it, and it's okay. What do you think of

1:06:16

crypto? I don't own any, so maybe

1:06:18

that's the summary of how I feel about it, but

1:06:20

I also think the only take that I've had

1:06:22

on it is like, if

1:06:24

you don't think that

1:06:26

some of it is

1:06:28

inspiring, and then you're not

1:06:30

paying attention. But if you don't think that

1:06:32

99 % of it is a joke, then

1:06:34

you're not paying attention. And

1:06:37

I say that because most people are one or

1:06:39

the other. The other thing, the whole thing

1:06:41

is a scam and they don't understand any of

1:06:43

it. It's a bubble, it's gonna burst. Or

1:06:45

it's literally the greatest invention of human history. And

1:06:48

I think whenever there's a new technology, you're

1:06:50

likely to get like those extreme one of

1:06:52

those camps. But also in the history of

1:06:54

technology, what you would see is that 99

1:06:56

% of the new players, the

1:06:58

new companies, the new products

1:07:00

won't exist in 10 years. And

1:07:03

a couple of them will turn into

1:07:05

Ford or Microsoft or whatever it might

1:07:07

be. That's always been the case. So

1:07:09

you can't envision a world in 20

1:07:11

years in which crypto is not having

1:07:13

a big part of the global economy.

1:07:16

And I also think you cannot envision a

1:07:18

world in which in 20 years, 99 %

1:07:20

of what exists today doesn't exist anymore. have

1:07:24

owned Ethereum for a long time. And

1:07:26

more recently, I just changed it all into

1:07:28

Bitcoin, because I think Bitcoin is the

1:07:30

safest bet. So it seems to be where

1:07:32

institutional money has gone to. And I'm

1:07:34

doing the same thing as you. I've never

1:07:36

like traded coins in my life or

1:07:38

anything. But I think most of it is

1:07:40

probably going to zero, as

1:07:42

we've seen. But I think Bitcoin feels

1:07:44

like the place that the market

1:07:46

has decided will be They're stabilized, but

1:07:48

who knows? It's not contradictory in

1:07:50

history to say that this new technology

1:07:52

will change the world forever. And

1:07:54

at the same time, you're probably not

1:07:56

going to make that much money

1:07:58

on it. The best example of that

1:08:00

were the railroads, which was probably

1:08:02

the most transformational new industry in US

1:08:04

history. Like to have a railroad

1:08:06

going from the East Coast to the

1:08:08

West Coast, that changed everything in

1:08:10

such a profound way. And the vast

1:08:12

majority of railroad investors lost all

1:08:14

their money. So you could get

1:08:16

it right. This is going to change the

1:08:18

world forever. It does not mean that you're

1:08:20

going to make that much money on it.

1:08:22

And that's not to say that most crypto

1:08:24

investors, no, actually, I would say it's almost

1:08:26

certain that most crypto investors will not make

1:08:28

that much money. That's pretty standard, historical. The

1:08:31

other thing is in cars, in the

1:08:33

early 1900s, there were 2 ,000 car

1:08:35

companies in America. And 1 ,997

1:08:37

of them went bankrupt. You

1:08:39

ended up with GM Ford and Chrysler. The

1:08:41

rest virtually disappeared. So it's always the case

1:08:44

that in a new technology that changes in

1:08:46

the world. There's a big gap between this

1:08:48

is going to change the world and everyone's

1:08:50

going to get rich on this. One of

1:08:52

the things that made me question my hypothesis

1:08:54

on crypto was Google released this new computer.

1:08:56

I don't know if you saw it called

1:08:58

Willow. The quantum computer that can crack. in

1:09:01

theory in the future. I've talked to people

1:09:03

about this that like you can't believe in

1:09:05

crypto and quantum at the same time. People

1:09:07

who are much smarter than me say that's

1:09:09

not the case, that you can augment the

1:09:11

system. I don't really understand it, but people

1:09:13

who are much smarter than me say they're

1:09:15

not worried about it. Google built a powerful

1:09:17

new computer called Willow that uses quantum technology.

1:09:19

Some people worry it could one day hack

1:09:21

Bitcoin by breaking its security system, but right

1:09:23

now Willow isn't strong enough to do that

1:09:25

just yet. And they pose that

1:09:27

quantum computers may well become strong enough

1:09:29

that they'll be able to hack Bitcoin's system

1:09:31

that keeps it safe. Right. Because there

1:09:34

is a certain amount of compute that could

1:09:36

have - That doesn't exist right now. That

1:09:38

could put in the future with quantum

1:09:40

computers. Right. So like all assets, I mean,

1:09:42

if you look back through history, we've

1:09:44

used different things as stores of value. Yeah.

1:09:46

And many of those things, whether it's

1:09:48

the tulips or whatever else, aren't our current

1:09:50

store of value. So it's conceivable to

1:09:52

think that Bitcoin as a store of value

1:09:54

does have a shelf life. Yes. But

1:09:57

that's, I mean, of course that could be

1:09:59

the case. I mean, gold, which has been,

1:10:01

you know, store value for thousands of years

1:10:03

has gone through periods where it surged and

1:10:05

then fell 90 % and sat there for

1:10:07

20 years, you know, kind of thing. So

1:10:09

even when you have something that is a

1:10:11

historic, like, you know, you know, very objective

1:10:13

store of value. That doesn't mean that you

1:10:15

know what the price is going to do

1:10:17

next month or next year, or even the

1:10:19

next 10 years. That's a totally different thing.

1:10:21

When you look at all these people through

1:10:23

history that have made money, lost money, et

1:10:25

cetera, generated great wealth, are there like certain

1:10:27

strategies they've deployed? Because when I think of

1:10:29

like Warren Buffett, I'm like, okay, so he

1:10:31

like compounded for like 80 years, blah, blah,

1:10:33

blah, invested. He was an investor. Then you've

1:10:35

got this other strategy, which might be entrepreneurship.

1:10:37

Yeah. Some incredible company.

1:10:40

like Elon Musk making SpaceX

1:10:42

or Tesla, do you

1:10:44

have it distilled down into a set

1:10:46

of different strategies that are often deployed

1:10:49

to equal wealth? I think if there's

1:10:51

one big one that is applicable to

1:10:53

ordinary people, you know, you can come

1:10:55

up with like different marketing things, but like, that's not going to

1:10:57

apply to me or you. One thing that

1:10:59

sticks out that is a common denominator that

1:11:01

virtually everyone listening this could learn from

1:11:03

is they were way more patient. and had

1:11:05

way more endurance and kept it going

1:11:07

for longer than anyone else. David

1:11:09

Senra, who's a great podcaster, he has

1:11:11

a podcast called Founders. He said

1:11:13

this one time, he was like, he

1:11:15

hears from entrepreneurs who are like, man,

1:11:17

I listened to your podcast, I'm a

1:11:19

founder, I have a company, and I'm

1:11:21

gonna sell my company next year. I'm

1:11:24

gonna do it, I'm gonna sell it

1:11:26

to Google. And David's like, did you

1:11:28

learn anything from the historical entrepreneurs of

1:11:30

Rockefeller or Steve Jobs or Bill Gates?

1:11:32

Those people ran their companies for 50

1:11:34

years. They ran their companies until

1:11:36

they died kind of thing. These are not people

1:11:38

who are looking to be like, I'm gonna create

1:11:40

a company and then sell it. I'm gonna start

1:11:42

another company and sell it. They keep it going

1:11:44

for as long as they possibly can. The big

1:11:46

wealth usually does not come. It almost never comes

1:11:48

from like a great idea that there's surges out

1:11:50

of the middle of nowhere. It's usually like a

1:11:52

pretty good idea that you can keep going for

1:11:54

40 years or 50 years. That's

1:11:57

where the big money comes from.

1:11:59

I wrote this in the book,

1:12:01

99 .9 % of Warren Buffett's net

1:12:03

worth. was accumulated after his 60th

1:12:05

birthday. So

1:12:07

when Warren Buffett was 60, he

1:12:10

was worth $2 billion, like an

1:12:12

incredible amount of money. He could have sold

1:12:14

then, and if he sold everything and

1:12:16

retired and had an absolutely amazing life, the

1:12:18

reason that he has accumulated, if you

1:12:20

count the money he's given away, $250 billion,

1:12:23

is because he kept it going. So

1:12:25

now he's 93 years old and he's still

1:12:27

going. Same with Bill Gates

1:12:29

could have sold Microsoft in the 1970s.

1:12:31

and made $10 million and had a

1:12:33

great little life. But he kept

1:12:35

it going and kept it going. Yahoo

1:12:37

offered Mark Zuckerberg a billion dollars cash.

1:12:40

And he was like 19 at the time.

1:12:42

And he said, no, I'm going to

1:12:44

keep doing this thing. That's the common denominator

1:12:46

that ordinary people can learn from is

1:12:48

like endurance and longevity is usually where the

1:12:50

big wealth is made. Endurance. Keep

1:12:53

it going. Endurance is

1:12:55

hard. Yeah. Larry Ellison,

1:12:57

who is the founder of

1:12:59

Oracle. did an interview in the

1:13:01

1990s. And they asked him about Bill Gates,

1:13:03

who was a friend, but also rival back

1:13:05

then. And Larry Ellison was like, the secret

1:13:07

to Bill Gates, yes, he's very smart, but

1:13:09

there's a lot of smart people out there.

1:13:11

And he was like, no offense, but there's

1:13:13

a lot of people smarter than Bill Gates

1:13:15

out there. But nobody has more endurance than

1:13:17

Bill Gates. He will outwork you every single

1:13:20

time. He'll keep it going

1:13:22

for as long as he needs to keep

1:13:24

it going to beat you. And that's his

1:13:26

skill. It's not intelligence, it's endurance. On

1:13:28

this point of perseverance, why is perseverance so

1:13:30

key? Like if we break it down into

1:13:32

what's actually happening when you persevere. I think

1:13:34

it's two things. It's one, in any endeavor

1:13:36

that's going to pay off, it's going to

1:13:39

be difficult. There's going to

1:13:41

be more roadblocks and speed bumps

1:13:43

and collapses than you want. It's

1:13:45

absolutely inevitable. The unofficial

1:13:47

model at NVIDIA, the giant chip company,

1:13:49

it's one of the most valuable companies

1:13:51

in the world, is we are always

1:13:53

30 days from going out of business. Now,

1:13:56

they're not. It's one of the most

1:13:58

successful companies in the world, but they

1:14:00

understand what is true for every business,

1:14:02

which is that business is hard. Like

1:14:04

every business is a knife fight. Every

1:14:07

company that you own or start is going

1:14:09

to be very difficult and you need the

1:14:11

perseverance to get through that. That's one element.

1:14:13

The other is compound interest. That's what builds

1:14:15

wealth. What compound interest

1:14:17

is and why it is

1:14:19

so powerful. Like the people who

1:14:21

get rich from it are not the

1:14:23

people who earn very high returns. It's people

1:14:25

who earn good returns for a long

1:14:27

period of time. Like all

1:14:29

compound interest is, like, it's

1:14:31

returns to the power of time.

1:14:34

And if you remember like eighth grade

1:14:36

math, that exponent, like time, that's doing

1:14:38

all the heavy lifting in there. And

1:14:40

so in investing, if you can be

1:14:43

good, merely good, or if

1:14:45

you can just be average for an above

1:14:47

average period of time, you do phenomenal. And

1:14:49

this is like the most misunderstood thing about

1:14:51

investing. Most investors are like, how do I

1:14:53

earn the highest returns? I wanna make the

1:14:55

best investments, highest returns. And you can do

1:14:57

well doing that. You're much more likely to

1:15:00

do well if you're like, hey, I just

1:15:02

want average returns, but I wanna be so

1:15:04

durable and have so much endurance that I

1:15:06

can earn average returns for 40 years. And

1:15:08

if I can be average for 40 years,

1:15:10

I'm gonna end up in the top 1%.

1:15:12

How do you make that real for someone

1:15:14

listening who's making... a thousand dollars a month

1:15:16

disposable income. So they've got a thousand dollars

1:15:18

to play with a month potentially. How

1:15:20

do, like how, if they've never heard

1:15:23

about this idea of compounding interest before

1:15:25

and the magic that it can create

1:15:27

if left to its own devices for

1:15:29

a long enough period of time, what

1:15:31

is the like simple way to show

1:15:33

them the power of it? So take

1:15:35

index funds, which are just a very

1:15:37

simple collection of businesses at a very

1:15:39

low fee. You can buy one stock,

1:15:41

but it's a collection of hundreds and

1:15:43

hundreds of different businesses. You own Apple

1:15:45

and Amazon and Coca -Cola. You own

1:15:47

all the companies in the world. And

1:15:50

so it's the most boring,

1:15:52

bland, average way to invest.

1:15:54

If you invest in that in a very

1:15:57

simple way and you do that consistently for

1:15:59

20 or 30 years with no skill, With

1:16:01

no expertise, you're not getting stock tips from

1:16:03

anyone. It's the most boring way to invest.

1:16:05

If you do it consistently for 30 years,

1:16:07

you will almost certainly end up in the

1:16:09

top 1 % of investors. You will almost

1:16:11

certainly beat literally 95 % of Wall Street

1:16:13

pros who were trying to outsmart the market,

1:16:15

trying to outwit the market, and were unable

1:16:18

to keep it going for 30 years. And

1:16:20

so this is where if you can just

1:16:22

be averaged for an above average period of

1:16:24

time, you'll be amazing. I mean,

1:16:26

it's probably similar in health that like, If

1:16:28

you want to be healthy, yes, you can

1:16:30

go out and become the best bodybuilder in

1:16:32

the world, the best marathon runner in the

1:16:34

whole world. But actually, if you

1:16:36

just work out, just like modest workouts

1:16:38

a couple of times a week for 30

1:16:41

years, you're going to be one

1:16:43

of the healthiest people in your town. If you

1:16:45

can work out two or three times a

1:16:47

week for 30 years consistently and eat a good

1:16:49

diet consistently for 30 years, you'll be one

1:16:51

of the healthiest people that you know. And it's

1:16:53

the same in investing. It's like the people

1:16:55

who do the best are not the geniuses. It's

1:16:57

the people who are ordinary for a very

1:16:59

long period of time. I

1:17:01

was thinking about a very simple

1:17:03

example. So there's a coffee in my

1:17:05

cup today and the coffee might

1:17:07

cost five dollars. Now

1:17:10

with the laws of compounding returns,

1:17:12

if I don't have that coffee

1:17:14

yet today, in 40

1:17:16

years, if I

1:17:18

got 8%, which is I

1:17:20

think the S &P 500 gives

1:17:22

about 8%, then in 40

1:17:25

years time, Instead

1:17:27

of the coffee that I had every

1:17:29

day, with an 8

1:17:31

% interest return, I

1:17:33

would have $440 ,000.

1:17:36

If you did a coffee every day? Yes. Yes.

1:17:38

Assuming the coffee cost $5. Now, I like

1:17:40

coffee. You do too. I don't want people to

1:17:42

listen to that and say, I should stop

1:17:44

drinking my coffee, but it's a powerful example. There's

1:17:47

a book called The Snowball, which is kind

1:17:49

of the most detailed biography of Warren Buffett.

1:17:51

And it would talk about how when he

1:17:53

was on his adulthood, he wouldn't want to

1:17:55

get haircuts because in his mind, a haircut

1:17:57

would cost $10 ,000 because it was a

1:17:59

$2 haircut. But if he invested that money

1:18:01

in the way that he knew he could

1:18:04

and leave it alone for 50 years, whatever

1:18:06

it would be, he didn't want to get

1:18:08

a car wash because he would tell his

1:18:10

wife, he's like, that's a $5 ,000 car wash.

1:18:12

She's like, what do we mean? It costs

1:18:14

$1. No, no, no. But if I invest

1:18:16

that money, and leave it alone. So he

1:18:18

was always thinking about not what something costs

1:18:20

today, but what he could grow that money

1:18:22

into in the future. I was just thinking

1:18:24

about Warren Buffett getting his haircuts. So I

1:18:26

thought, how old's Warren Buffett now? He's 93.

1:18:29

OK, so let's say for 80 years, if

1:18:31

Warren Buffett didn't get, say, a $5 haircut

1:18:33

and instead put it somewhere in the S

1:18:35

&P 500, an index fund, which by the

1:18:37

way, you can invest in on your phone, 80

1:18:40

years later, Warren Buffett would have

1:18:42

10 .3 million. That's it. That's

1:18:44

it. And that's why he's worth

1:18:46

a quarter trillion dollars today is

1:18:48

because you go through 90 years

1:18:51

of thinking like that. And it

1:18:53

really adds up. Now, you always

1:18:55

have to preface this by being

1:18:57

like, please drink your coffee

1:18:59

and get a haircut. It's always a balance.

1:19:01

But also understand how incredible it can

1:19:03

be by putting away, doing very ordinary things

1:19:05

for a long period of time can

1:19:07

lead to magic. It is magic as well.

1:19:09

That's such a perfect word for it

1:19:11

because it seems It's magic because it's not

1:19:13

intuitive at all. Yes. You don't, you

1:19:15

don't understand it. You're like, wait, what? I

1:19:17

can't understand how a haircut can turn

1:19:19

into $10 million. It's not

1:19:22

intuitive. Like

1:19:24

we're not, there's a great example from my

1:19:26

friend, Michael Batnick. He said, if I

1:19:28

ask you, what is eight plus eight plus

1:19:30

eight plus eight, you can figure

1:19:32

that out in your head quickly. But if I

1:19:34

said, what is eight times eight times eight times

1:19:36

eight times eight, forget about it. Can't do it.

1:19:38

We're not made to think exponentially. we're

1:19:40

not meant to think in multiplicative terms. Cause

1:19:42

nothing was exponential once upon a time. That's

1:19:44

largely true. Yeah. I mean, I can't think

1:19:47

of anything that was really exponential before. Yeah.

1:19:49

I'm sure we can come up with a

1:19:51

couple of examples in nature and whatnot. There's,

1:19:53

there's lots of, of compounding in nature and

1:19:55

that's, that's kind of the core of evolution

1:19:57

is like things building upon each other. Oh

1:19:59

yeah. Maybe brushing your teeth or decay. Yeah.

1:20:02

Yeah. But you know, certainly the stock

1:20:04

market is the most. pertinent example in most

1:20:06

people's lives. But there's also a lot

1:20:08

of like bad habits compound. You know, smoking

1:20:10

one cigarette is not that big a

1:20:13

deal. Smoking one cigarette every day for 30

1:20:15

years, big deal. Smoking two packs a

1:20:17

day for 30, a big deal. So there

1:20:19

are things that like in small doses,

1:20:21

they're not that big a deal. But if

1:20:23

you do them consistently for a long

1:20:25

period of time, it leads to negative magic.

1:20:27

So what's your view then on saving

1:20:30

money? You're working on

1:20:32

a book currently, which is being released. in

1:20:34

October this year called the Art of Spending

1:20:36

Money. What's your view on

1:20:38

saving money? You told me to have the coffee, cut

1:20:40

my hair. Yeah. I view

1:20:42

savings as, well, one thing, most people

1:20:44

view saving money as like, as

1:20:46

idle saving. Like, if you're not spending

1:20:48

it, it's just sitting in the bank

1:20:50

doing nothing. And it's just kind of,

1:20:52

it's just wasted money sitting there. I've

1:20:54

never reviewed it like that at all.

1:20:57

I view savings as little tokens of

1:20:59

independence. And every dollar that

1:21:01

I save is a little piece of my

1:21:03

time in the future that I own

1:21:05

and I control. It's just deferred spending. And

1:21:07

I view that as independent. So like, so

1:21:09

if you have a lot of savings, it's not just

1:21:11

like hoarding money and I'm not going to do anything with

1:21:13

it. And it's not even that I'm saving this money

1:21:15

so that I can spend it in the future. If I

1:21:18

save a dollar today, I have

1:21:20

a dollar more independence today. I benefit

1:21:22

from that today right now. Like I

1:21:24

feel more independent. because of it, and

1:21:26

I am more independent because of it.

1:21:28

So I view, again, my top financial

1:21:30

goal by far, and I think this

1:21:32

is true for most people, whether they know it or

1:21:34

not, what they really want out of money is independence

1:21:36

and autonomy, and just being able to

1:21:38

do things on their own terms, live the life that

1:21:40

they want to live. And I

1:21:42

view the oxygen of independence as savings. And

1:21:44

what's the opposite of that? Is it debt?

1:21:46

Debt, yeah, debt is a piece of your

1:21:48

future that somebody else owns. It's the polar

1:21:50

opposite of it. When you go into debt,

1:21:53

you're saying three years from now, this company

1:21:55

owns a part of my time. They own

1:21:57

my labor in the future. And

1:21:59

savings is the opposite. Savings is in the future. I

1:22:01

have this stored up. I have this consumption

1:22:04

stored up in the future. I can do whatever

1:22:06

I want with it. I think, you know,

1:22:08

you've written a book called The Psychology of Money,

1:22:10

but as you were talking there, I was

1:22:12

thinking, gosh, this is all psychology again, because at

1:22:14

the heart of this, we will have our

1:22:16

own unique relationship with money. And there's lots of

1:22:18

people that won't even look at their own

1:22:20

bank statements. They won't look at their own Revolute

1:22:22

Monzo app. in the morning, they avoid their

1:22:24

credit cards in terms of their credit card statements.

1:22:27

And to even start talking about these subjects of

1:22:29

saving and spending, we probably need

1:22:31

to preface it with some kind of mindset

1:22:33

or mentality towards your relationship with money. I

1:22:35

think the most important is there are

1:22:38

two topics in life that will impact you

1:22:40

whether you like them or not. That's

1:22:42

health and money. It doesn't matter if

1:22:44

you're not interested in those topics. Those topics

1:22:46

are interested in you and they will

1:22:48

impact your life. You can have a wonderful

1:22:50

life not knowing anything about chemistry or

1:22:52

meteorology. If you don't care about those topics,

1:22:55

you cannot have a good life if

1:22:57

you don't care about money and health. And

1:22:59

that's true for everybody everywhere. And

1:23:02

so I think everyone has an obligation. to

1:23:04

understand their own relationship with money. Now, some

1:23:06

people are going to be, you know, fanatics

1:23:08

about it and other people just view money

1:23:10

as just kind of like a necessary tool

1:23:12

that they need to get through life. But

1:23:14

you have to understand how it works and

1:23:16

what it's doing to you financially and psychologically.

1:23:19

And so much of modern ills

1:23:21

have to do with envy, jealousy,

1:23:23

feel like you're falling behind relative to

1:23:25

other people. The core of that is usually

1:23:27

financial. And so even if you're not

1:23:29

the kind of person who's like, I don't

1:23:32

care about the stock market and like,

1:23:34

I don't really care that much about money.

1:23:36

I like having fun with my friends.

1:23:38

That's great. But there's a huge component of

1:23:40

sociology and just what's going on in

1:23:42

the world all the time that is financial.

1:23:44

And I think money is like such

1:23:46

an interesting window into people's lives. You can

1:23:48

learn so much about somebody if you

1:23:50

understand. what they do with their money,

1:23:52

how they think about money, how much they talk about money,

1:23:54

how much they want to show off, how

1:23:56

much, how much attention they're putting into their

1:23:58

clothes and their cars and their jewelry

1:24:01

to show other people how much money that

1:24:03

they have. You learn so much about

1:24:05

someone's psychology. You know, if I learned

1:24:07

about your politics, I don't know what they are, but if

1:24:09

I learned about your politics, I might learn something about

1:24:11

you. But if I sat down and I said, tell me

1:24:13

everything about your money, tell me how much you make,

1:24:15

how much you spend, what do you value, what do you

1:24:17

want to do? I learned so much about your personality. In

1:24:20

your work on the psychology of money, how

1:24:22

much did you think about trauma as a

1:24:24

protagonist in the story of one's financial relationships?

1:24:26

I think less about trauma. That's a component

1:24:28

of it. But more so, it's just that

1:24:30

we are all prisoners of our unique past.

1:24:33

No matter what that is, that's trauma for a

1:24:35

lot of people, different forms of trauma. But you

1:24:37

grew up in a different country than I did. You

1:24:40

have different parents than I do,

1:24:42

different values, we're slightly different ages. And

1:24:44

so you saw a different side of the

1:24:46

world than I did. And that taught you different

1:24:48

values. It taught you to aspire to different

1:24:50

things than I did. And you

1:24:52

and I, in a lot of ways, are

1:24:54

a lot alike. I think if you, if

1:24:56

we sat down and like talked about broader

1:24:58

topics, we'd agree on 90 % of things,

1:25:00

but we are different. And so we shouldn't

1:25:02

pretend that what I want to do with

1:25:05

my money is what you should do. And

1:25:07

I think a lot of times when people

1:25:09

argue about money and they're like, oh, you're

1:25:11

investing wrong or you're, you're, you're spending, you're,

1:25:13

you're not spending enough. You're spending too much. It's

1:25:15

not actually people disagreeing with each other. It's

1:25:18

people who came from very different backgrounds

1:25:20

talking over each other. And they just

1:25:22

have different aspirations for what you want

1:25:24

to do. So everyone is so different

1:25:26

and they're a prisoner of their past.

1:25:29

My brother -in -law is a

1:25:31

social worker. I may have brought this up

1:25:33

when I'm the first time I was on your podcast, but I think about it

1:25:35

all the time. And in social

1:25:37

work, when you're working with very disadvantaged kids,

1:25:40

a lot of those kids who are homeless

1:25:42

and foster children behave very poorly at school.

1:25:44

They do very poorly. Their grades are terrible

1:25:46

in school. They're always getting into fights. And

1:25:49

he said, as a social worker, he said, we

1:25:51

have a saying in social work. It is, all

1:25:53

behavior makes sense with enough information. So

1:25:55

you look at this child who is getting into

1:25:57

fights on the playground and failing all of his

1:25:59

classes, and it's easy for the teacher to be

1:26:01

like, what's your problem? This is not that hard.

1:26:03

Just behave. Just stop doing this. And then you

1:26:05

look at what that kid's going through at home.

1:26:08

Maybe their parents are beating them. Maybe their

1:26:10

foster children or their orphans. Once you

1:26:12

piece together what's going on in their life,

1:26:14

you're like, I can't understand. All behavior

1:26:16

makes sense with enough information. And

1:26:18

I think you can apply that to a lot

1:26:20

of areas in life, money especially. Where

1:26:22

you're like you see someone driving a

1:26:24

yellow Lamborghini. There's a story there

1:26:26

about someone's past I'm not judging it,

1:26:28

but there's a story in there

1:26:30

of someone being like I want people

1:26:33

to know how much money I

1:26:35

made and it's not a criticism But

1:26:37

there's there's a story. There's something

1:26:39

that happened in your life that that

1:26:41

that Led you to there and

1:26:43

we all have that's not a criticism

1:26:45

because I have bits of my

1:26:47

past that influence how I manage money

1:26:49

today too. So just recognizing that

1:26:51

there's no one right answer. In math, two

1:26:53

plus two is four for me and you. There

1:26:55

is the right answer. Money's not like that.

1:26:57

We're all just kind of trying to figure out

1:26:59

what works given the lens that we see

1:27:01

the world through. This is

1:27:03

a bit of a bizarre question,

1:27:05

but it had me thinking as you're

1:27:07

speaking about mortality as it relates

1:27:09

to money, because one of the perspectives

1:27:12

on money is Golo. Yeah.

1:27:14

Do you know what mean? I'm only going to live once. I

1:27:17

might as well have a good time. I

1:27:19

think I definitely have more of a bias

1:27:21

in that direction, although I'm not fully in

1:27:23

that direction. And my brother, who's a year

1:27:25

older than me, that is one that gave

1:27:27

me your book and has worked as a

1:27:29

stockbroker, an actuarial scientist. At 12

1:27:31

years old, he was budgeting his pocket money

1:27:33

on an Excel document, whereas I was

1:27:36

just spending, spending, spending. And

1:27:38

he thinks much more long term.

1:27:40

He's like investing in his pension

1:27:42

at 21. Whereas I

1:27:44

was like... at the casino, not the

1:27:46

literal casino, a figurative casino. I

1:27:48

was taking bigger risks and just rolling

1:27:51

the dice. And my

1:27:53

somewhat illogical way of rationalising my

1:27:55

behaviour and not investing as much

1:27:57

in my pension was, I'm

1:27:59

only going to live once anyway. So I

1:28:01

might as well just enjoy my life. And

1:28:03

when we talk about the coffees and saving and

1:28:05

all this stuff, a lot of people will

1:28:07

be thinking, yes, but compounding's fine, but I want

1:28:10

to... life. I think about a thing when

1:28:12

I was I was in my early 20s at

1:28:14

this point and I met there's a co -worker

1:28:16

in line and he was 10 years older

1:28:18

than me and He had $25 ,000 of credit

1:28:20

card debt, which I could not fathom at the

1:28:22

time That was such an incomprehensible amount of

1:28:24

credit card debt that he was paying 17 %

1:28:26

interest on and at the time I just thought

1:28:29

and and all the debt came from Trips

1:28:31

that he had taken you traveled Europe and traveled

1:28:33

through Asia and had a great time doing

1:28:35

it But he put on his credit card at

1:28:37

the time. I remember thinking you idiot Do

1:28:39

you understand what this is gonna do to your

1:28:41

future? And then he died when he was

1:28:43

about 32. And then

1:28:45

I remember thinking like, I'm so glad

1:28:48

you took those trips. I'm so

1:28:50

glad you went to that credit card debt because

1:28:52

the truth was that at age 32, he

1:28:54

had seen more and done more than most people

1:28:56

would at age 62. And

1:28:58

so I think about that a lot of

1:29:00

like, it's always a balance. And the

1:29:02

truth is that you and I don't know,

1:29:04

are we gonna live? until we're 110

1:29:06

or die tomorrow, nobody knows, of course. One

1:29:09

thing I think a lot about as a parent

1:29:11

is that I've been a big saver my entire

1:29:13

life. Since I got my first job at age

1:29:15

16, I've saved the majority of what I made

1:29:17

in every job that I've ever been in. And

1:29:20

it would be easy to look at someone

1:29:22

like me and say, Morgan, if you were

1:29:24

on your deathbed tomorrow, you'd probably regret the

1:29:26

vacations you didn't take and the dinners you

1:29:28

didn't have, right? You'd regret that. My answer

1:29:30

is absolutely not because if I was on

1:29:32

my deathbed tonight, I would take so much

1:29:35

knowing that my wife and kids are gonna be

1:29:37

okay because of what I saved. That

1:29:39

would be the worst situation I

1:29:41

would be in is on my deathbed

1:29:43

and looking at my wife and

1:29:45

kids and knowing you guys are screwed.

1:29:48

I'm leaving you dead. But

1:29:51

that might change as I get older. And

1:29:53

so when my kids are hopefully

1:29:56

financially self -sufficient, will I still

1:29:58

think that? Will I still have

1:30:00

that need to be like, I need to

1:30:02

work and save? to provide for my

1:30:04

young kids. That's not going to last forever.

1:30:06

So it'll change throughout your life. That is

1:30:08

literally the worst thought in the world, isn't

1:30:10

it? To think that you could be on

1:30:12

your death bed and look over at your

1:30:14

family and know that they're about to struggle

1:30:16

with bills, with food, and they're probably going

1:30:18

to have to sell the house and their

1:30:20

lifestyle is completely going to change when you

1:30:22

go. I don't even have kids yet, but

1:30:24

I was just thinking about my partner. There's

1:30:26

no, there's no, there's no worse nightmare than

1:30:28

that. I think there's an opposite of that,

1:30:30

which is. In several of the books and

1:30:32

studies that have been done on dying, you

1:30:35

know, there are quite a few people who

1:30:37

have very peaceful deaths, people who know they're going

1:30:39

to die of terminal illness, and they're pretty

1:30:41

much at ease with it. And when you dig

1:30:43

into like, what is those people's psychology? How

1:30:45

do you know you're going to die in six

1:30:47

months and you're kind of at ease with

1:30:49

it? One of the big factors is knowing that

1:30:51

your family is going to be okay without

1:30:53

you because they are sufficient and they don't rely

1:30:55

on you for wisdom and

1:30:57

advice as much as they can take care

1:30:59

of themselves. But the opposite, if you're

1:31:01

on your deathbed and you're like, my children,

1:31:04

my spouse, is going to have a

1:31:06

real hard time without me, that's the most

1:31:08

painful thing you can imagine. I

1:31:10

can also imagine that one of the great regrets

1:31:12

one might have on their deathbed is just not having

1:31:14

lived. Because I was thinking about, I sometimes

1:31:17

ponder, if I die now, how would I feel? Like

1:31:19

if I was given a diagnosis, God

1:31:21

forbid, how would I feel? I

1:31:25