10 Years of Money Wisdom in 51 Minutes | Morgan Housel

today we're talking about money with the guy who's been studying money for like the last ten years he's the author who sold more books about money than pretty much to anyone on earth it's morgan h he wrote the psychology of money the same as ever the art of spending money and we talked to him about warren buffett about the behaviors that drive people to either make money or lose a bunch of money about spending money about how much money is enough it's just a good honest conversation between a bunch of dudes about money what more do you want i feel like i could rule to where i know i could be what i want to put at all in it like a days off on a goal less track morgan you tweeted out something that broke my brain in fact i thought it was like an ai deep fake it's like when luca got traded and people were like you know this is must be fake news there's no way this is possible you said that my favorite buffett stat is that berkshire hathaway could lose ninety nine percent of its value tomorrow and still have outperformed the s and p five hundred since buffett took over and the and the the truth is i was under understanding it it's actually like ninety nine point six percent or something like that that it could decline that is so how is it even possible like you know we don't do public math here but that sounds mathematically impossible and and he only outperformed by seven points right it was like or it like he's done like twenty percent annual versus it's it's about that his was about twenty and i think s and p nominal with dividends is probably like eleven or twelve so maybe it's eight percent or nine percent outperform but he did that outperform over sixty years and so the cumulative performance i'm pretty sure i'm setting this off the top of my head if if i'm getting this a little bit wrong i'm sorry but i think the s and p five hundred is thirty five thousand percent since buffett took over and berkshire return was five and a half million percent and so even if it's only quote unquote only nine percent per year over six per year over sixty years it just gets incredible insane preposterous and you know buffett current net worth is i think a hundred and thirty billion but he's given so much a way to charity that if you count that in it's something like five hundred billion that if he hadn't given money weighted to charity it he'd be worth five hundred billion he'd be the richest man alive by far and he started with ten thousand bucks and i mean and entered it into half a trillion and so that's but i think the biggest lesson here and this is the most important for ordinary people is that like look you can't pick stocks like buffett you can't analyze businesses like buffett he's smarter than you and he operated in a different era than all of us so don't try to emulate that what you can emulate especially for young people of course is the most important and powerful thing that he did is that he was a good investor for eighty years and it's just the time that he was doing it for that made all the difference in the world so i pointed this out in my my first book if he if you look at his net worth ninety nine percent of it came after his six birthday ninety nine percent of his net worth was accumulated after his six birthday so if he had retired when he was sixty when he was worth a couple hundred million bucks like pretty good you would have never heard of the guy the whole reason he became so famous and so wealthy is that he started investing when he was eleven and he retired last week when he was ninety five you're very lucky that you get to talk to all these amazing successful people and investors are really cool because it's not always about investing that you're interested in it's about like you said behaviors that's why sean and i love talking about two investors how we had howard marks on it was one of our favorite things ever and we don't know anything about bonds with buffett is that the attribute other than time and market that i mean what other attributes separated him from the hundred of thousand other people because there's definitely hundreds or maybe even thousands of equally probably smart people what other attributes allowed him to be who he is versus the rest who are pretty good i think there's there's there's quite a bit one is i think what berkshire did what buffett did for sixty years is on one hand so unbelievably simple and on another hand almost impossible to replicate and it it's hard to kinda square those two but what it required was an unbelievable amount of patience an unbelievable amount of goodwill in terms of the trust that he'd had among all other their businesses among his investors among regulators because everybody around him just left him alone to do his thing because they trusted him and i think that that's an overlooked part of this like any other hedge fund manager private equity fund manager would not have the trust among their investors among portfolio companies anybody to let them do what buffett did that was huge sorry explain that a little more what's the thing that buffett did that others might not have had the the leash to do he had the track record and the narrative that if you sell your business to berkshire it is not going to it and rip it apart and sell it for parts it's gonna nurture it and let it grow for for in forever and i think that was and if you compare that to blacks stone k k r all the other private equity shops their stated purpose and i'm not saying this is wrong but their stated purposes we're gonna maximize irr we're and we're gonna do whatever necessary to get there whereas berkshire was we are intentionally not going to maximize returns we could easily flip this company next year for more than we paid for it we could easily lay off half the staff and squeeze more more net income out of it that we're not gonna do that we're gonna keep this as it is and do it and because of that you had businesses that would sell their company to berkshire for less than they could have gotten from blacks donor or k k because if you were particularly a family business who built your business up over the years and this was your baby did you wanna sell it to blacks stone for an extra ten million bucks and have them rip to shreds or sell it to berkshire for a little bit less and know that he was gonna nurture it for several generations a common thread i think of the people that i've grown to admire is that they're stewards so i've loved reading about george washington he was one of the only presidents ever and there are fifty years of fifty or you know fifty plus presidents or so where he had unilateral support from both sides of the aisle which that still existed back then and when when he when people interviewed they said why why do you trust george washington they go because i know that he is willing to put the union in front of himself for example the idea of a two term president george washington created that that was so crazy when he had been president for two terms and he was like i'm now done it's it's better off that someone else does it or the us constitution which he helped formulate it was one of the very first self amending rule books where we acknowledge that the rules might be wrong but we are going to work together to fix them as we go enjoy and it was modeled in part because of george washington attitude of being a steward and that's really interesting that you're talking about buffett that way you're saying he was basically like a steward a goodwill i think that's true and a lot of it was not alt it was he knew that he would be able to get the best terms and the best deals if he had that level of trust and so a lot of it was was morals of just doing the right thing but a lot of it was he he this this was going to accrue to him personally and to berkshire over time sure and i think but but that's where you get the best results when it's like everybody's winning here the the the companies that would sell to him were like this is this is where we want our baby to go and buffett himself was gonna get it at better terms and have better flow than anyone else doing it also important to point out there should not take away from any of his success but it's important to to point something this out buffett once pointed out that over the course of his career he has purchased five hundred stocks and he made the vast majority of his returns on ten of them and mu once pointed out that if you look at all of berkshire deals over the fifty sixty years that it was doing it if you remove the top five it's returns fall to average and so this is true for almost any endeavor that you look at the vast majority of berkshire returns and whether it's berkshire buying whole companies or buffett as a basically a hedge fund manager back in the day the huge majority of the success comes from a very small minority of what he did i've talked before about the way that i know how to make money about how a build of money making skill about how to leverage your time and energy and the team at hubspot actually went through the video where i explained all that and turn it into a free downloadable cheat sheet on my four rules of how to make money now this is not you know get a quick advice it's just core principles foundational principles about building wealth things that i wish i knew when i was you know just getting started and so if you wanna download it it's in the description below it's totally free you can go get it thanks to the folks at helps hubspot for doing the research making this document and make it available to all you guys alright back to the episode how do you action that power law the observation that man it's all about these power laws that the a few things will account for the met majority of your success your returns i think there's probably two takeaways from it one is the idea that if if you're in a game like that where you don't have a perfect success rate like if you're a pilot you should have a perfect success rate every every flight should land it should be a hundred percent every time if you're an investor and it's not like that you have to be very comfortable with a lot of things not working and a lot of investors are not a lot of investors it will destroy their ego their soul or the trust among their investors if they're if they're like hey we picked ten stocks and three of them went bankrupt and four from did okay but one did really well even if on average it works out a lot of people just can't handle that kind of volatility so coming to terms of the idea that it's always gonna be a tail driven business just the psychology of that is important the other i think more important takeaway though is the humility of how hard it is to emulate this it would be one thing to learn how to be a pilot and learn the mechanics of an airplane and of aerodynamics and to figure out how you can land the plane every time and you can teach that skill it's another to be like man if you're a great investor and you're so smart and you know everything you're right five and a half times out of ten and and that's if you're good and that's like that's it's a it's a very humbling statistic just to put people in their place i think in in a good way of how difficult this business can be i asked the same question to mon who is a value investor he was a kind of buffet disciple friends with charlie mon type of thing and i said what's the takeaway from that that stat that he's you know buffett himself admits it's a dozen decisions out of five hundred that really chart you know the difference between them being who they were versus being average and he said you can't control which you don't know upfront which of those decisions is gonna be that the the big winning decisions but he said buffet was able to circle the wagon meaning once he bought one of those companies that was the like long term compound that was just gonna keep paying paying dividends out for them that he didn't sell too early he held them for the long term he circled the wagon around those core assets he just never let anything attack those core assets and buffet is famous for having called i think peter lynch once and he said like hey i love this phrase you said can i steal it from my annual letter and he lunch was like yeah well what did i say i don't didn't remember and he goes you said don't cut your flowers and water your weeds meaning don't sell your winners to take profits and then take those and put them into less good investments because that is like you know that's gonna destroy your ability to get returns it's so hard to find these winners when you find them you gotta circle with the wagon around them and i think that's the only like thing you could do after you've made the good decision is let your winners ride for a longer period of time yeah and this might get back to a little bit what we said earlier of you know so i i joined the fund in in in twenty sixteen but i'm i'm not an investor but but i've been able to watch and observe a top tier your venture capital fund operate and what's very interesting to me is true to all venture capital companies a small minority of the companies we've invested in account for the vast majority virtually all of the returns who are the big winners for collab lyft beyond me impossible foods ups start those come the those what i just named are the vast majority of of of returns it's that's probably right and what's interesting about is if you go back to twenty sixteen when i joined the companies that were gonna be are obvious winners weren't and most of them don't exist anymore and the companies that did just explode ups start and those are we're we're not where companies that are like oh that's that's a cool company they're doing some cool things but never in a million years would we have thought this was gonna be it so not only is it a small minority of of companies that are out are your winners but similar to what mona said you you don't even know which ones those are gonna be it's very difficult to know in real time well that was the case with your book i think you said you printed five thousand copies of the psychology and money you've sold ten million not sure how many books have sold ten million but like you know you are in the freaks amongst the freaks in terms of in terms of numbers and nobody's nobody's saw that coming i didn't see it coming the publishers didn't see it coming i've said this a million times before but every us publisher turned it down every single us publisher rejected it and but and i don't i don't fault them like it's it's it's a it's impossible to know what's gonna work before it comes out about how many non fiction authors have sold ten million copies of a book could you guys book a table at a restaurant like i i kinda feel like it's gotta be like not it's hard it's hard to know because there's not a lot of it if if if you're looking at the last ten or fifteen years there's pretty good industry data that you can compare across time but if you go back a hundred years you're dealing with like the data sources are so all over the place okay well how many in the last fifteen years not many i don't know probably five something like that no shit how cool is that ma'am five four plus one dinner well isn't that interesting you said you wrote i think you said eight thousand blog posts you've written three books now that have been huge hits and yet you are telling me that predicting what will be popular in terms of content particularly in writing is impossible i don't like that as so who's big cut right i being very honest and of the the four thousand blog posts that i wrote there's like three or four that stood at that word you know in order of magnitude bigger than the others and all four of those before i hit publish i was like should i i don't this is crazy this is instant like i don't even know if i wanted this is crazy and there's there's literally one of them that i i i published it but i hid it from our blogs feed because i was like i i just wanna like i i wanna have a link that i can show some people but i don't know if i want people to see this yet and and so if there is any metric that you know like or they have some feel it's it's that it's before you publish it you're like this is the craziest shit i've ever said my life and i'm and and i'm embarrassed to hit publish but that i think almost that's what you need to make it work and so when we pitch psychology money to all the big publishers a lot of it wasn't just basic rejection a lot of it was like there's no way that that would ever work because it was a weird idea i was like look there's no central thesis to this book it's just nineteen random essays and like they kinda they're they're they're all about behavioral finance ish but there's no other cohesive theme that is so anti analytical to what a publisher wants a publisher wants one big idea weaving its way throughout the entire book and i'm now i i don't i don't have that sorry and so it it it it wasn't just that they didn't believe me in writer the whole i the whole structure of the book was the opposite of what they were looking for but i think you need that in order to stick out and like how could it be any other way that in order to have a non normal result you have to have a non normal idea that's true for entrepreneurs it's true for any endeavor that you take that you have to be an odd ball in order to stick out can i give you a couple of quotes that from your book that i've loved that i just have in my kindle highlights and i just kinda want you to talk about them i'm just i'm just gonna throw the match here okay the first one is a useful one and then i have a fun one right after that so the the useful one is this you said something like there are two ways to use money number one money is a tool to improve the quality of your life and number two money as a measuring stick to measure the sort of the the your self worth that one hit me hard and i now can't un that whenever i see anybody but whether they come on this podcast or just somebody in real life it's so black and white to me to understand kinda like who's using money in which way no it's it's tough and i think i've always i've always wanted to write things and about problems i have in my own life so a lot of this was just kinda looking in the mirror and being like what is my desire for more money am i using it as a tool to make my life better and my wife and kid's life better or is it just like i i'm it's just it's just a measuring stick of of how well am doing in life and where do i sit on the social hierarchy and if you're if i was if i was honest with myself it was a lot of the ladder and i think we've done a pretty good job spending money on the things that we like and whatnot but a lot of the desire was just like what's the scorecard look like and maybe that's not bad because like i enjoy that game yeah why is that bad because like for example you're you've sold ten million books we just use that as a measuring stick and ten million books correlates exactly to money like that to me that means your ideas are are impacting so many people for the better and it's and i want you to measure your life by getting to twenty million books because i think your book helps people i think you're right there but here's where it can really go astra money is so quantifiable and book sales are so quantifiable that they become like we over overestimate their importance you what mean by that if you if it's is if you said like what what's important in in life i wanna be a good husband a good dad a good friend a good citizen i wanna be funny i wanna be healthy all those things are so important and they're very hard to quantify how do i quantify whether i'm a good dad or not i i don't i don't know it's a way it's potentially the most important thing to me in the world and there's no score and so it means everything to me but it's easy to kind of ignore because this is mushy topic but what is my net worth how much did my income go up last year what are my returns versus the s and p five hundred you can measure those down to the millionth of a basis point and so because they're so easy to track and it's apples to apples my net worth versus yours how do i compare my you know social citizen score or my dad score or husband score from for me to you you can't there's nothing and but income we we can see here and compare our net worth all day and so i think the using it as a scorecard metric is both really good and be a lot of fun and used for good and i love that game i've been playing that game since i was a teenager and i'll keep playing it at the rest of my life but you have to understand the limitations of it and how much power there is towards it just just because you can quantify it not because it's necessarily gonna give you a better life and i think there are a lot of people who because it's so easy to quantify chase it as the ultimate metric to all of their problems the solution to everything in your life and everything else your friendships your relationships your health that are more important take a back seat just because you can't measure them look let me give you an example of this because i think usually when we're talk about like well like you gotta think about money's is not gonna make you use so so happy or money could be a tool to to improve your life or a measuring stick this is usually like rich guy problems so it's like you already have money and you keep chasing more money and you're in this you're facing this except existential you know what's whether it is enough right you've you've talked about this word enough sam i know you've talked about like enough is just twice what i have always right our buddy andrew will gets a wrote a book called never enough and like i kinda reject the premise and and i'll give you a opposite example so when i was twenty one years old i graduated from college i graduated from a good school i went to duke when you go to go to school everybody you know goes and get a job in finance or consulting or they go become a lawyer or a doctor or whatever but the people who get jobs they go get high paying jobs at companies you've heard of and that sounds really good and so you know they i i would see one friend gets a k one friend gets a hundred twenty k one i got two hundred thousand dollar straight out of college as incredible and i faced that problem you were just talk about morgan which is like that's a number that i can compare myself on and i made a decision because we were trying to start a start up so nobody was gonna pay me any money and the company was a company nobody's ever heard of because we just created it like three days ago when we filed the llc okay so what am i gonna do and what i did was i created i tried to think about money as a tool to improve my life specifically i said what is the minimum amount of money i need to make this year so that i can live and have the maximum amount of time to go pursue this project and travel and like do these other things and so i calculated what i called the freedom number and i don't remember what it was exactly i think it was something like fifteen thousand dollars or something like that it was like a very low number like not even it's like less than minimum wage if you just work like in a mcdonald's or whatever so like what's a twelve hundred dollar or fifteen hundred dollars a month yeah i remember like we were splitting a two bedroom apartment three friends and we slept on air mattresses we got all our all our sofa for free off craigslist and like you know we ate you know the minimum stuff at home like we didn't go and we you know we drink at home and then we would go out we didn't you know buy drinks at the bar like little stuff and i realized i could make that number if i just i was tutoring like three or four college kids in statistics which i wasn't even good i i had a scene in statistics but they had it f so you know in in the land of the blind the one i'm at as king and and then i coach a basketball team of a of middle schoolers at a school for autistic children and like that was my job so i was like two basketball practice a week two or three kids and i i had all this free time that none of my friends you had like hedge fund jobs or banking jobs in new york had and it was the first time i got a taste of this concept you're doing which is like you need to create your own score board in your own metrics if you wanna live life on your own terms if you just take the metrics life hands you you're gonna live the life that those algorithms want you to have or society wants you to have and you're not really gonna have life on your own year only thing i ever wanted add of money was independence i just wanted to live life on my terms and do what i wanted to do and i've known this about myself for a long time that i can do good work but i'm not a good worker i'm not a good employee i'm not good at all when a boss says here's what i want you to do here's how i want you to do it and when i want you to do it i'm a i'm a shit worker under those terms but if i'm left my own devices and somebody says just just go do your thing i can then then i can really accomplish something and so i i i i i i just wanted to be fiercely independent in everything that i do and i think every single person has unbelievable talents if they could be left to their own devices but a lot of people once they're under the pressure of other people's goals other people's ideas other people's their financial incentives you know are are are are are pushed down a notch and and and it's unavoidable i'm not saying everybody should go be an entrepreneur of course but i think if you can use financial independence to work at the company that you want to live where do you want to live in an area that gives you a lower commute to retire when you want whatever it might be that to me i'm i'm not anti materialistic at all i i i i love nice things but using your money for that is i think the highest roi by tenfold if you can use it for independence rather than as a material you know social peacock showing other people look how successful i am using it more inward to just be like i just wanna wake up every morning and say i can do whatever i want today that to me was always ultimate goal today's episode is brought to you by hubspot did you know that most businesses only use twenty percent of their data that's like reading a book but then tearing out four fifth of the pages point is you miss a lot and unless you're using hubspot the customer platform that gives you access to the data you need to grow your business the insights that are crafted emails call logs transcripts all that unstructured data makes all the difference because when you know more you grow more and so if you wanna read the whole book instead of just reading part of it visit hubspot dot com we should talk about spending in a second but sean what are the rest of your quotes well one of them was the story speaking of like money for using money for status it was the story about the koch brothers yeah wine collection can you just tell the story i just sam have you heard the story i think it's i think it's awesome there was i mean one one of the koch brothers was a is a unbelievable wine collector and has not like tens of thousands of bottles and the rarest most amazing wine that ever existed and it two or three bottles that he purchased i forget the exact price it's it's in the book but an unbelievable amount money and they were thomas jefferson wines from his estate that he bottled from his estate on in in in virginia and whatnot and he bought bought you know painted i'd break ten years of sobriety to drink that well this is where the story gets good they they were they were fake they were forged shit he hired a private investigator to like audit his entire wine collection and be like give me a rough estimate of how much of what i'd bought over the years as fake and this is a a multi million dollar wine collection like how much roughly was the the wine guy i mean i i thought i i forget the exact numbers of of what they were but it was a a very uncomfortable percentage of what he had purchased for tens of millions of dollars was was all forge and once you once you dig into it the wine forge business is off the charts because you have very rich collectors and no way to to authenticate what's there it's sort of like the the the dog vitamin business it's like does it work one of the the tells of what they were doing when they're investigating this was like literally this thomas jefferson wine the label was on there or there was or for for for for some of these wines the label would be stuck on with elmer glue that was invented fifty years ago kind of awesome and so but but even when you open the bottle they're like turns out thomas jefferson didn't even bottleneck right but but even but even when you open the bottle and drink it you still you still can't tell so it's this ultimate forge business well but he less happy once he found that out that's the point i i think there there is a thing of like you do these things because they're cool and they make you feel good and whatnot and so if you have a fake louis vuitton purse and it does does that make you feel we're like what what what should make you happy is the quality of the purse the feeling of it that the durability already no dude i so disagree the story can matter like for example we were just talking about like if you bought if you're like like i'm into like japanese denim it's just a weird hobby and like there's some weird story about how this the small company in japan they remake the jeans and this crazy stupid way but it's awesome to a very small review like me if i found out that wasn't true i that would bum me out because i was wanted to participate in this journey i i don't disagree with that i but i i i think there there is a an an interesting thing where the quality of the topic like brands gain their brand a lot of you know by the quality of the product there was a period when louis vuitton was just a a startup up bad company and they gained their brand and their prestige based off of quality over time yeah and there comes to a point where it's like if a fake has that exact same quality and i i totally understand the point about the the the the history and and and the the story of it a friend of mine just started a men's care company and i i i love supporting him and the product is great kind of thing so like there's a story behind it but i i think it's it's interesting when the the prestige of it disconnects from the quality of it to me i think there's always been this litmus test that i think about which is if i was on a deserted island with my family and nobody could see how we lived nobody could see our our house our cars are closed it was completely invisible to every other eyeball except for our own how would we choose to live and i think for some people the answer might be exactly as i do right now i'd have the same house the same card where the same clothes but not not most people but definitely not most people and i think i think i think for a lot of people they are living a life of performance and that's that's okay i think i think it's i think i i i think i do that to some extent but you have to perform for the right people i wanna perform for and that's that's that's a that's a silly way to to do it but i i i desperately want to impress my wife kids parents three or four of my friends because like i i i really want their love and attention once you start into the realm of i wanna perform for strangers and get their attention that i think is a completely fruit game okay but let's test that do you think your kids and wife care about no the books you've been spending years of your life right now right they're not impressed by that listen you but you're doing it so there's gotta be some other motivation no it's it that there's been an interesting thing of like you know i i i wrote my first book when i was married and had two kids and so all of this came after that does my wife love me more no she loved me enough back then and so it that you know do my kids does my six year old daughter love me more now no so but is there a part of you trying to impress some other group with the books or is there just some other motivation altogether if you're being honest like what what i think yeah so it's a good question i'll try to give you an honest answer i think it's a combination of i i genuinely love writing i think it's a lot of fun and if i'm looking at it from a financial point of view i like the game i like the game of earn as much as i can invested it as well as i can compound it for as long as i can use that money to both live a great life right now and pass it along to my heirs and charity at various points in the future i love that game i'd i forget love it and i would be sad if i stopped playing that game and so i think that's that's the main motive of it sean you've posed that question to me and you sorta of like posted it to me you're just you're teasing me where it you it was almost like i gotcha like see they don't they don't care and i and i i actually reflected on that and i actually realized the answer was they don't care right now but like your kids should be yeah my kids or or family members you know the people i think the context is you were saying like i really want my kids to see me working hard and like going for i think that's kinda of you've said right yeah yeah yeah and that's stuck with me and the reason it's stuck with me is because you and i have talked about our parents on this podcast and the things that we talk about are the things that they did when they were eighteen nineteen thirty years old when we were before we were born or when we yeah small enough that we didn't care then but we look back and we think now how we bad was that how great was that and so i think that the answer potentially morgan for you it is for me is they don't care today but how wonderful would that be when your son or daughter is twenty five or thirty years old and they're like look what my dad did he he had this concept no one believed in him it took off and he kept at it and how wonderful is that therefore if i wanna do if i have a particular goal in my life or something i wanna a be proud of my name and carry this on and b if my dad can do it i can do it and he's my model on like perseverance yeah you you're you're absolutely right in the in the the way you did that like kinda abstract it's like they might not care about the newsletter or about hampton or about this podcast or about like the specific projects we do but when i was with jesse in that last episode he goes he goes just he's like think about this when you go back and you tell your kids hey daddy took a long trip to go and try to be bet like try to better himself like he saw someone who might know something he was willing to go out there and try to learn it so that he could become better he's like what a powerful lesson you could teach your kids about like identifying you know maybe there's there's something out there that i could go learn and then being willing to go get on a plane and go chase it knowing it might not work out but it might and if it does that's important and i came back and i actually did tell my kids because they were like where'd you go and always when they said where'd you go i say atlanta as if they don't even they don't know what atlanta is daddy has work and to them work is just something that gets in the way of daddy spending time with them right they and you know like they are like they don't really understand like what what the purpose of in fact i give it quite a negative association i'm not showing them some wonderful example they just associated with it's this thing that we don't get to have daddy because he has to go do some like something that's bad because he's not here with us doing the fun things that we like and so once i reframe that i started to see them act different and they would say things in their own day of how they came back from school where they'll they'll use this language where i'm like that's the thing i told them two weeks ago that sounded kinda cheesy but hey it's just the three of us in the car and like nobody's here to judge me yeah i i both completely agree with what both you just said and i i also think you can be a a a a filthy rich terrible parent or a parent who you know makes forty five grand a year and is an unbelievably good parent and so i think i think this gets back to the quantification of money just becoming the ultimate metric getting in the way i wrote about this in my last book i have a good friend him i i've known him for more than twenty years one of my favorite people in the entire world he's so funny he tells such good stories he's so much fun to hang out with i can't i i can't wait to see him and every time we hang out and among our friend group he by far earns the least amount of money by far and it really bothers him and it makes him feel inferior and he says this and i had to tell him one day i was like look if you are who you are a a a good husband a good father hilarious so much fun to hang out with you've probably earned nine and a half out of ten friend points that i'm willing to give you if you also happen to be a successful entrepreneur i might bump you up to like nine point seven out of ten from nine point but but don't pretend like it makes that much difference and i know i'm sure you know many rich entrepreneurs were the most ins inseparable arrogant people that you don't wanna spend five minutes with those people exist too we call it being the total man you know we'll have people in the podcast who are successful but we're like i don't emulate you know i wanna be like them but then we'll have other people who are successful and also their a good husband and also their fit and also they're fun to be around and also they're polite and kind and we're like that's the total man that's what it that's what i i a lot of people like the salt the earth of just like you're you're a you're a fire man and you coach the little league team and you're a you're a great dad great husband you'd fix your cars you help the community like people love that that that persona oh you just describing your your your dream hun you got a sick jaw a little salt pepper hair i love that like you know real on fu fighters there there there goes my hero he's he's ordinary i think i i i think you don't have i think the idea that you're only exceptional if you are earning more than x dollars per year has done a lot of damage to society especially among young people can you give a curated list of the people who are known so people who me and shank can go and copy so the or we can go and read the people who you've read about who you've talked about who have a public presence maybe like a list of three or five people who have had the biggest impact on you or who you think we should go learn and follow james clear is you know he if if you wanna talk about book sales he's i mean he's at a completely different league than than i am for for non fiction of the five or whatever people who sold more non fiction books he's at the top and he's one of the nicest humble people you can ever meet one of the most caring people you can ever meet james and i have only met in person maybe three times so i would be lying if i said he's one of my closest friends but whenever i have a question about books and then and this goes back to before i wrote psychology and money and he was a big dog and i was a nobody and i i i would send them a i would send him a text and he would write me back a novel like he would spend a half a day trying to help me figure out the title of my next book kind of thing so nice so humble and so unbelievably successful atomic cap is sold over twenty five million copies and it's still going stronger than ever kind thing and i think he thinks about he he he had the same one time that that i loved he said i'm not an author i'm an entrepreneur and a book is one of the products that i launched and he thought about atomic habits in that way and he is an incredible author of course but the way that he thought about how to launch it how to market it how to structure it how to how to write the table of contents in a way that would get your attention he thought about he he's the most scientific thinker about this that led to an unbelievable amount of success a generational level of success and still culminated with the humble nicest guy you can possibly imagine i had to do the math on that twenty five million books times twenty five dollars six hundred and twenty five million dollars of book sales right yeah i mean it's a it's it's a it's a it's a bonkers level and he also started the atomic habits app that exploded that exploded there's there's there's a whole there's a whole ecosystem around it and and look there's there's a lot of people who've you know tech entrepreneurs whatnot who made a fortune and are very talented and deserve to be praised and that level of success turned them into ins inseparable monsters and i i actually have a lot of sympathy for that i i think it's not uncommon for for people to do that particularly if you were sn when you were a child if you were bullied when you're were a kid and then at twenty five you're worth a zillion dollars it's very easy to for that that insecurity to come out as being in ins inseparable prick i think that i think that's not uncommon and most of the time it's a reflection of it's a it's a compensation of your lack of self esteem before you became rich who else is on your list other than james you you mentioned them earlier mona b someone who i i started following mona brian and probably two thousand five when he was just starting to get a little bit of notoriety in the value investing community and people instantly started g towards him because he's a very good communicator and that is very that's rare in the investing world that somebody can only have a track record of success but can explain it to anybody so at the time i was in college and reading his his books he published i think three books back in the day and those are some of the foundational books of when i was like oh i i i i'm really starting to understand how this investing thing works and for that to come from someone who has a great level of success himself and i i've i've met him a few times he's a he's also just an incredibly nice humble person and so maybe that's the common denominator that i keep bringing up i i really i have so much admiration for people who have an outs sized level of success and fame and it clearly not only did it not go to their head if anything it like it like dropped their ego from from what i understand obviously never met him the matrix the actor yeah reeves yeah keanu reeves thank you is is one of those people absolutely like tip top a list celebrity and from what i understand the nicest most helpful person you'll ever meet shu the paparazzi kind thing just wants to live his own humble life and so i that that's who i admire the most or people who can who can live that kind of life it isn't it funny how you know we each have a like what is it that you admire like obviously your type of the thing you look for is that that combo that's rare to come come by right extreme success and you know probably the second layer is like able to communicate or teach that success i think as a student of the game you appreciate that whether it's james communicating as an author or men communicating as an investor and then the last one but like and yet not only did it not ruin them they became sort of more humble and even more emotional and that makes it all the more rare you know that those things go together it's so funny that like that's your type and then like sam like you have like almost like a type like this as what i'll throw out a couple i maybe you can correct it but like sam i feel like for you call dark and handsome oh oh yeah sorry yeah yeah yeah go ahead there's like a some level of like being a maverick or of like a rule breaker in a way i think doing non technical things like things that are like of the real world or like in the middle of america or you know just like manly in some way like there's like some masculine like aspect to it feel like i'm missing a third what would the third one be for a long time for yeah stay stayed on track and i think all of these are like things that we fear ourselves going wrong so we really admire the people who did it right like for example i'm not a naturally focused at patient person therefore i admire that most right do you have one sean yeah the traits from e are people who they're having fun while they're doing it so like when i meet them they just have this like they know they're they're funny they're laughing a lot they have zest for life they talk to the waiter and the the you know the driver as much as they'll talk to the other fellow keynote speakers you know what i mean like i remember when we were at our hoop group event alexis s who was the founder of reddit was there right and on all the car rides you know alexis would always be chopping it up with the uber driver that the security guard the doorman like he paid as much attention and importance to them as the other mega vip guest that were at this event and contrast with i won't name names but there were other people at the mega vip who literally were like scanning the room for like who's got a few more billion than me and like let me spend let me get at their table that's where i wanna sit that's why i wanna talk to and like if i don't immediately g how you are like the man then like you know i'm gonna eject out of this conversation you know what i will visibly be dis interested and like one trait that so that trade is like very appealing to me where the person is so almost secure in their success that they are not chasing they don't give off this desperate chasing energy alright let's take a quick break because i gotta tell you story let me tell you the first time i tried to run payroll for my team i was using a traditional bank and you know the type it's got a junky interface it's built like a two thousand and two tax form and it was open only during business hours and i hit send in a froze they flagged the transaction they locked my account they put me on hold for forty five minutes and then they told me i gotta visit my local branch and that was the day i started looking for a new bank solution after asking a few founders what they were using i found out about mercury and so now my payroll is two clicks i can wire money i can pay invoices i can reimburse the team all from one clean dashboard that's why i use it for all of my companies and so do two hundred thousand other startup founders and so if you're looking to level up your banking head to mercury dot com and apply in minutes mercury is a financial technology company not a bank bank the services are provided through choice financial group call them man a and evolve bank trust members fdic can i ask you a question about spending your your last book is on spending and i it's pretty cool because you're like there's a ton of books on how to get rich but not on how to spend and i know that you hate formulas i mean i think you've you got hear you you right about this and you and you talk about it you're like it's hard to say like know for example a common my question is like what number's is enough and you're like i can't give you that number so you don't really like formulas but is there like a filter where if it passes this filter it's likely a good idea to spend money on this in order to make your life happier i don't know if there's any formula to to get that i think if there is something that's it's almost formulaic to to get in this it's like what's gonna make me happy is not what's gonna make you happy and so the idea i think most people spend money on things that that society tells them that they should like that marketing tells them that they should like which is which is cars homes clothes and the fancier or the more expensive the better that's like the basic model that we're taught and i think i think the truth is everybody has very different likes and wants and price is not always a good indication of how much value that you're gonna get out of it i think the people who who've have done the best job spending are people who completely tuned out any kind of social influence or what other people thought of their spending and just said i'm gonna go do my own thing and within that you're gonna find people if if if we're looking at a wealthy person who spends way more on this item than you would think they would and way less on other items than on on other items and you would think they would ram said is is is is a perfect example of this and he's kinda i think he's he person what i'm talking about where his thing is he loves clothes and so he spends a lot on clothes and he dresses incredibly well and that's so important to him he's not a car guy and so i hope him getting this right but i he drives a honda accord he's just like i don't i i i couldn't care less i couldn't care us about cars or anyone thinks about it but he's gonna be dressed to the nines everywhere he goes that's his thing even if you were to the exact opposite it doesn't matter what your thing is what i love is he's like that's what makes me happy and the money that he saved on cars he can spend his his money dials he goes he goes i think i i think carefully about what my money dials are in order to live a rich life and my money dial is clothing i love fancy clothes and i think he said he goes up until recently i drove a honda accord or honda civic whatever it is and i wanted to try i forget what the fancy at lucid is at it lucid he was like he tried to lose it and he's like it was way too complicated i hated it i wouldn't got another civic or something like that it's it's the opposite of frugal gallon it's i love close so i'm gonna mer cut everything else in order to have a higher budget fore clothes and and and encouraging everyone to do that to figure out what their thing is my wife and i figure this out in the last six months at least at this phase in our life with two young kids travels not for us it's just it's it's like we we we realized that after the last like four vacations we took of the best part of the trip was coming home and after having that feeling for the fourth time we're like we just admit like maybe we should do less of this right now right maybe in five years when our kids are a little bit more stable it'll be different but i think but for other people they're like they they're va bonds they can't wait to travel like good like figure out what your thing is and what your thing is not and and and and and go for it from there i when i when i travel for work a lot i travel very well and spend a lot on travel that other people would find wasteful but it but i love it and so you have to figure out what your thing is and and work from there and i think most bad financial decisions and most bad financial behavior comes not from making bad decisions it's when you're trying to follow somebody else's path and be like well that works for them maybe i should do that and so people listening to this might be like oh maybe i should try repeats thing maybe i should go spend a lot of money on clothes and drive a beat honda civic like no you like maybe that's for you but it's probably not you have to figure it out what it is it takes like just a a a crazy amount of independence and looking in the mirror and trying to figure out what it works for you yeah you've you said personal finance is a lot more about the word personal than about finance and i thought that was a good way of putting it and same for investing and so there what's interesting to me maybe it's not surprising but it was interesting is that at the end of my first book the psychology of money i there's a chapter about the psychology of my money just kinda laid out everything that i believe there's no numbers in it but it's like here's how here's how i save here's how i invest here's how i spend here's my personal philosophies and in that i said look i dollar cost avenue in into index funds i had a three percent mortgage that i paid off early like that which which is a terrible financial decision but i'd love doing it because made me feel good and so i i laid it out and there are so many people who were i can't tell you how many emails i got people saying i love the book until i got to that chapter and now i can't take you seriously anymore and and i think it's interesting to me that even after laying out in the book being like look there's no formula you just have to figure it out for yourself people looked at the decisions that i made and said well they they basically said to themselves i would have done it differently so therefore you must be wrong and i think that's the that's the disconnect that people have well they're and and and they're also think like because i i always all people because i have this premise that i think owning a home is a stupid financial decision and then i always say but if it makes you happy you should do it and that makes it a great that that makes it wonderful and and and people get angry of that and then paying off your mortgage and whatever else you said because you like it's it's interesting that i study investing and i like all these investing people but i don't even invest and like oddly not terribly into money but what you're interested is is the stories and the behaviors of it and that money is everywhere and if you think of of every story that you see what's the money angle here and you find really cool stories and there's a huge connection of story and money and our personal behaviors it it's just everywhere and when you say to someone like a real estate thing or something it changes their it makes some question their identity because a lot of people's financial decisions are tied deeply to their your identity you also said that if someone has has been saving and saving and saving for sixty five years they're sixty six they're retired yeah often oftentimes they don't spend they don't spend because they it can't change their identity and that's too hard and so it's like it's like it is interesting how and i and i'm a victim in this as well of how it's very challenging to change your investing spending habits because that's just a that's just what's under underneath the money surface level it's really like what is my an important part of society and there's so much uncertainty to it that i think a lot of times when people argue having a a fight about money they're debating about money it's two investors who are you know have differing views they nine times out a ten the people are not actually debating they just have different preferences and they're talking over each other and what they're saying is like and if if i believe x and you believe why a lot of times it's like i view your opinion as a threat to me because i know there's i know my views have a lot of uncertainty and they may they may or may not be right and if you believe something different that's like an indication that i might be wrong and that makes me really uncomfortable it'd be like me calling you an idiot for preferring vanilla that's exactly it yes and people understand with food like i like mexican food you like italian food good like great like to teach their own but with money there is this feeling that there should be one right answer and if your answer is different than mine one of us must be wrong and i think i the thing that's why finance can be more contentious than other fields like like food where it's just like just figure out it works for you and go do it but we'd we don't make that leap with finance so based off of like everything that you've read and everything that you've written so far if you only had the next let's say sixty or hundred and twenty seconds to kinda summarize it in a couple sentences all the matters in finances is it's not about what you know it's not about how smart you are it's not about how much information you have it's just about how you behave and there's almost no other field where that's the case where somebody with no education and no experience and no background can massively outperform the person who has the highest education and the highest background and there's there's no other examples of fields where a country bump in who didn't go to school and doesn't earn that much money but does have the right investing behavior and can invest and maintain and hold it with patience for fifty years and build a fortune while at the same time the harvard educated goldman sachs nba blows himself up with a complicated derivative that kind of thing like by and large doesn't happen in other fields and and i i think so finances is a very unique field where it is it it's not that behavior is important i think the behavior part is everything and behavior is very difficult to teach you it's hard to teach even a very smart people because you can't dis instill it down to a formula that you can memorize it's unique it's individualistic and so i think maybe the the the message the takeaway is you have to spend a lot of time thinking about the soft skills of patients ego greed fear and you have to spend a lot of time thinking about how those topics apply to you individually to you and your family and figuring out your own goals your own benchmarks even if they're different from the people that are around you we appreciate you so much thanks for coming on man thanks guys this is fun that's it that's the pod i feel like i could rude where i know i could be what i want to bring at all in it like a day so goal travel never looking back alright my friends i have a new podcast for you guys to check out it's called content is profit and it's hosted by luis and ph ka after years of building content teams and frameworks for companies like red bull and orange theory fitness luis and fans are on a mission to bridge the gap between content and revenue in each episode you're gonna hear from top entrepreneurs and creators and you're gonna hear share their secrets and strategies to turn their content into profit so you can check out content is profit wherever you get your podcast