The World's Richest People Are Weird by Design, with William Green

26:00I was so proud of myself that my marks for things like creativity and conceptual thinking were very high. And then my marks for systems and processes were literally, I think, in the bottom 1%. I mean, I was so bad at this stuff. And so one of the things that Dalio made very clear to me, both in our conversations, was that I had to have this self-awareness to look at what I was actually good at and bad at. And then as he would put it, you find suitable paths to play to those strengths and to avoid those weaknesses. And so I think it starts with self-awareness, whether it's through a personality test, whether it's through going to therapy, whether it's through talking to friends who know you better than you know yourself.

26:42You need the self-awareness to know that you're then able to play games that you're capable of winning. And so one thing I realized, I meet once a week with three friends who are very successful investors and also incredibly thoughtful, evolved human beings. And I was complaining recently about how overwhelmed I was by the number of projects I was working on. And he's a very well-known former hedge fund manager. And he said to me, William, you love the maelstrom. You would be so bored if you weren't in a maelstrom. And he's like, you just have to learn to enjoy it, recognize that you enjoy it.

27:18And it was very revelatory to me. I realized, oh, I actually understand myself less well than my friend understands me. And so I think you have to really be self-aware and then ruthless about saying, I'm going to play games that I'm suited for and that I value. I mean, I'm not actually interested in sitting dark room every day going through annual reports. That's not what interests me about investing. I have plenty of friends who are interested in that. I'm much more interested in sitting around reading obscure books about Tibetan Buddhism and Kabbalah and Stoicism and things like that, and then figuring out how does this connect to what I'm learning from the great investors about how to build a happy and abundant life.

28:00And so I don't have to fake that. That actually is what I'm interested in. So I think for our listeners and viewers, as they're thinking about how to construct a life that's true to themselves, look at the things you would do not for the money. You know, if you said, no one's going to pay me to read this book or to think about this problem, what would you actually do? And I interviewed a famous investor the other day, a guy called Bill Priest, who's on the Barron's Roundtable. And we spent about two hours talking. And I came away just totally high, just thinking, what an amazing thing that I get to talk to this extraordinary guy in his 80s, really smart, really wise, who's lived through so much.

28:36And I get to ask him kind of important questions, personal questions, and study his life and learn from him and then share that with other people. You know, for me, that's just a really beautiful thing. And that's deeply idiosyncratic that that's what I care about. And it's taken me quite a long time actually to figure out that that is what I care about. But many of the great – you mentioned studying Kabbalah and stoicism. Many of the great investors also do the same. They draw from a wide variety of disciplines and then pull those insights into their investing thesis. Exactly. They're polymathic.

29:13They're continuous learning machines, to use a phrase that Munger used about his partner Buffett. And they'll study anything that could conceivably give them an edge. And so if they want to study the science of habit formation, because it's going to give them an edge, they'll do that. If they think that being calmer can help them and give them an edge, they'll become really obsessed with meditation. I know so many successful investors, fund managers who've become obsessed with meditation. I mean, this group that I meet with once a week, we're discussing this ancient Tibetan Buddhist text that's about studying meditation and equanimity, how to build equanimity.

29:53So I think it's just this pragmatic willingness to study anything that could help you, that could give you an edge. And there's a sort of, it's almost, it's a loaded word, but there's almost an agnosticism about it, where they'll just look at something, and to use a phrase Charlie Munger used, he'll say, I observe what works and doesn't work and why. So he's not dogmatic. It's not looking at things and saying, it must be this way, this must be true. It's saying, does it work? And so if meditation works, they'll do it.

30:31The kids are back in school now, and I finally have some extra time to plan a weekend getaway for just us. We've been wanting to visit Lancaster County, Pennsylvania for a while now because I've heard so many people rave about it. We love exploring new places, finding the cutest shops, and eating at restaurants that the locals love. DiscoverLancaster.com is the best place to learn about the unique things to do and upcoming events. Plan your trip alongside us at discoverlankaster.com slash amplified. This Friday, the NBA on Prime tips off with their debut doubleheader. First up, Boston brings the action to the garden as the Celtics face the New York Knicks.

31:11Then out west, it's a battle of the superpowers as the Lakers try to poster the relentless pace of the Minnesota of Timberwolves. The Celtics and Knicks, who has the most hustle in defense? This game will come down to who wants it more. And the Timberwolves and the Lakers, it's two Western Conference heavyweights going toe-to-toe. Buckle up, folks. This one's going to be electric. Celtics-Knicks. T-Wolves and Lakers. Coverage starts Friday, 7 o 'clock Eastern. Only on Prime. I want to shout out to all the small business owners out there. You wear a million hats, you're doing a lot of things, and you show up for your team every single day.

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33:18You talk about the edge. Much of successful investing is figuring out where you have that edge and staying within that realm where you have that edge. How do you identify that? And particularly for anyone who's listening to this, how do you know if you have an edge and if so, where? I asked that exact question to Ed Thorpe, this guy who is this genius a gambler, an investor. And he said, if you don't have a rational reason to believe that you have an edge, then you probably don't. And I found that a little chilling. I sort of stopped in my tracks and was like, oh God, do I not have any edge at all?

33:57And one of the things that he said to me that was very, very helpful is that you can give yourself a natural edge by investing in index funds and writing index funds up over the long term, because chances are that because of the growth of the economy, because of productivity growth and the like, the market will go up in the long run. It's not certain because we live in an uncertain world. And there are markets in other countries that closed. I mean, there are markets that closed during World War II, for example. There are markets where you haven't made money in decades. If you had your money in Cuba or something.

34:36Life was not great. Even Japan's economy over the last few decades. Yeah, Japan went nowhere for decades. So this is, again, it's a reason to diversify. But there is this assumption that if you invest in index funds for the long term, and you keep adding to the pot, you're, as Ed Thorpe would say, you're giving yourself this kind of natural edge because you're riding the upward trend of the markets at an extremely low cost. The problem is that most of us end up paying toll keepers along the way who overcharge for services that they can't actually provide. So they charge very high fees, they charge high transaction costs, or they conceal the cost.

35:15So even if you think you're getting a trade for free, maybe there's basically a toll concealed in the bid-ask spread. You know, there are all sorts of ways in which Wall Street can conceal how it's taking advantage of you. The thing about companies like Vanguard or like Schwab fidelity with their index funds is they're giving you this extraordinary ability to stack the odds in your favor. So I think once you're aware of the fact that the market does tend to go up in the long run, if you can live within your means and keep adding to the pot and be smart about not trying to time the market and not trying to jump in and out, not trying to, not incurring big tax bills by jumping in and out, not eviscerating your portfolio by loading up on some racy asset that is then going to blow up.

36:05You'll do well over time. So I think that's kind of the, there are things that you can control. Is that an edge? Maybe there's an edge that comes from self-awareness and honesty with yourself and just saying, like for me to say, I'm never going to be really good at systems and processes. That is not a game I can win. Let me stay away from that. Let me focus on learning stuff and figuring out how to share that knowledge. That's a game I can succeed at. So there is an edge. If you insist on playing games, you can win. Right. And one of the investors that you spoke with said something to the effect of if you maintain a slight edge and live below your means over time, you basically can't help but succeed.

36:46Yeah. I think it was Tom Gaynor, who's the CEO of Markel. And he then said, look, if you're living within your means, you're already rich. And then he said an extraordinary thing to me. We were talking about his father, who is a great hero of his. Tom is CEO of Markel and is in charge of like 20 ,000 employees. He's been an immensely successful guy. And he said to me that his father is the richest man he ever met. And this is a guy who knows people like Buffett and Munger and Howard Marks and all these people very well, all of these multi-billionaires. And he said, that's a psychological statement, not a financial statement.

37:17He said, my father had everything he wanted. You know, his father raised him on a farm, I think, in Salem, New York. And it was, I think, 100 acre farm. And he, I think, was an accountant. He'd been shot during World War Two in the knee, and he'd survived. And he did some property deals, but they were not a big deal. But he was happy with what he had. And so I think also, that's a really important realization that there are so many people in the investment business who are chasing happiness in the belief that it's going to come from more, if only I have more money. And I see again and again that that's not the case.

37:57So it's interesting when Gaynor tells you, no, no, the richest people I know are not Jeff Bezos and Musk and Buffett and the like, it's my father, because he had enough. Right. And that is reminiscent of the opening of one of Jack Bogle's books, the title of the book was enough. And it opens with this anecdote about Kurt Vonnegut throwing a party. And someone said to Vonnegut, look, I have all of this and I have all of this and I have all of this. And I basically was saying, hey, I'm so much richer than you. And Vonnegut replied, yes, but I have something you will never have. I have enough. Yeah, it's a great story.

38:34And I interviewed Bobel many years ago. And there was an extraordinary moment. I was sitting in the Time Life building where I was working at the time, and I must have been in my late 20s. And I called him and I was talking to him about his mentor. And his mentor was a mutual fund person. Yeah, he was one of the pioneers of the mutual fund industry. He was a guy called Walter Morgan. And the phone goes dead while I'm having this conversation with him about his mentor. And I said, Mr. Bogle, Mr. Bogle, are you there? And he said, yes, yes, sorry. It brings a tear to my eye speaking about him. I sort of stumbled and I was like, how come?

39:11And he said, because I realized how much he did for me and how much I loved him. I tried to figure out what it was that made this guy, Walter Morgan, have such a profound effect on him. And he said, one of the great lessons from Walter Morgan, who's long dead, as is Jack Bogle, one of the great lessons is that the shareholder was king. And Bogle said to me, there was a client who wrote to Mr. Morgan and said, I don't have a suit. Do you have a suit? And he said, my God, Mr. Morgan sent him one of his own suits. And so if you think about that mindset of really deeply caring about your client, that infuses Bogle's creation, which is Vanguard, which was set up not to be rapacious and maximize its fees at its time.

40:01customers' peril, but actually to serve its customers. And so part of what I'm trying to do in studying the great investors is figure out not only how to get rich, but how to live. How do you behave? What is it about Walter Morgan and about Jack Bogle that I want to honor and try to internalize myself? And so because these were such wise, thoughtful people, and none of them were flawless, they have egos, and I can't tell you how many of them ended up divorced. These are not perfect people. I'm not trying to idealize them. But you study them and you get these very powerful clues about what actually constitutes a happy and successful life.

40:40And so I said to someone like Ed Thorpe as well, the great game player, do you have any regrets when you look back on your life? And he said, I don't regret any of the principled decisions that I made. It's a really interesting statement. That leads you to think, okay, so part of having a successful life is to look back and know that despite all of our flaws and foibles and mistakes, you tried to be a decent human being. And on the whole, you treated people well and lifted people up. And that is part of having a successful life. And there's a beautiful Buddhist phrase where they talk about the joy of non-remorse.

41:18And so think about that. Like here's a guy, Ed Thorpe, who could have structured his fund so that he had enormous fees. And he just didn't. He didn't want to take advantage of his shareholders. And at a certain point, he didn't care that much about the money, and he just shut down. He stopped managing money, just managed his own fortune. And so it wasn't about maximizing his own wallet. It was about solving problems that he found interesting, hanging out with people he liked, acting in an honorable way. And so that, I find increasingly, the life lessons are what excite me. And it's funny because when I started out in my 20s studying these guys, really, I just wanted to get rich and not have to work for anyone.

42:01And so it really was a game. It was a sort of subversive, smart aleck game to see if I think better than other people, will I become free? and I think as you get older you start to think well yeah I still want to become free but it's not just free financially I also want to be calm I also want to be ethical I also want to have good relationships and so how am I going to have to behave in order to create that sort of life so it becomes a much more soulful form of study I think. Is there a distinction do you think between studying the great investors and studying great business leaders or great athletes or people who excel in any field, great scientists?

42:46I think you can study any microcosm and you can draw the same lessons. But there's something very distinctive about investors that I think part of it, we were talking before about their pragmatism, the fact that they're open to studying whatever works and avoiding whatever doesn't work. I think part of it is that there's money at stake. The fact that there's so much skin in the game is really important because if I, as a writer, make a mistake, it's embarrassing, but it's not terrible, probably. I mean, if I got sued, God forbid, and stuff like that, it would be pretty terrible. I wouldn't want that.

43:23But the stakes are relatively low for getting things wrong, for misinterpreting things. But you look at someone like a legendary investor like Bill Miller, who I've interviewed for almost 100 hours over 25 years, probably the greatest mutual fund manager of his generation, utterly brilliant man. He made an enormous mistake during the global financial crisis, the biggest mistake of his career. And the assets under management at his firm went from, I think,$77 billion to$800 million. And over 100 people lost their jobs because of a mistake that he made, an analytical mistake that he made. And his shareholders bailed out the worst possible moment.

44:00And so they didn't get to benefit from the enormous rebound because he's truly brilliant. And so he's done amazingly since then. But most of them missed out on that because they lost faith and didn't stick with him. And so I think the fact that the stakes are so huge concentrates the mind. So someone like Miller comes out of that period with a greater respect for uncertainty. He said, I didn't realize just how wrong I could be. And he said, one of the things that happens is when you're right, right, right, again and again throughout your career, you start to believe that you really have the golden touch.

44:36And he had beaten the market for 15 years running, which nobody in history has done. I mean, it's an unbelievable achievement. And so at a certain point, you start to think, well, everyone thinks I'm golden. Maybe I actually am. And so he said, there's a certain kind of hubris that even though you're aware, even though you're trying to be humble, some of it seeps through. And he said, you know, you're on CNBC and stuff the whole time. And everyone's asking you your opinion. You start to believe that you know stuff. And he said, when you blow up like that, and you make such a huge mistake, he said, they stopped calling.

45:09And he said, it's really helpful, because you have to actually look at yourself honestly, and see what you knew what you didn't know. And so I said to him at one point, in retrospect, are you kind of glad you went through it? And he's like, yeah, yeah, it was pretty cleansing. And so it really helped him deal with his ego. And then he had this extraordinary rebound. And at a certain point, a couple of years ago, he said, I was looking at Amazon's financial statements. I said to Jeff Bezos, are these correct? Because if they are, I'm the biggest individual shareholder of Amazon whose name is not Bezos.

45:42And so while everyone was saying what an idiot Miller was, he had quietly kept hold of this immense stake in Amazon, and then simultaneously had built this immense stake in Bitcoin that's personally made him an unbelievable fortune. His average price was, I think,$500 a coin. And when I checked the other day, it was at$91 ,000. As of the time we're recording this, it's dancing near about$100 ,000. I mean, it's totally crazy. But so in a way, the ability to make these very big, contrarian, unemotional bets that allowed him to beat the market for 15 years, then got him in trouble during the financial crisis, and then allowed him to make these massive bets on Amazon and Bitcoin.

46:23So that's just a different mentality than most of us have. A, he's smarter. B, he doesn't have much emotion. I mean, he has emotion about if he goes to the opera or something like that, he has emotion, but no emotion when it comes to investments. He's able to look at them just probabilistically. It's just like a probability machine. And so there's something about that I admire tremendously, but also just his honesty about having made mistakes and trying to learn from them. And the fact that, as he said to me at one point, he said he's proud of the fact that after he screwed up so badly during the financial crisis, he didn't curl up like a tortoise inside his shell and be afraid of making more bets.

47:02He said, I know that I have some talent for buying things for less than they're worth. And if I kept doing it, it would work out in the long run. And so he kept doing it. There's something also, I think, when I look at someone like Bill Miller, who I really admire tremendously. I originally was impressed with his ability to make money and to outthink everyone else. And in retrospect, now as a 56 year old man, I look at him and I think, boy, the resilience of this guy, the fact that he took this public shaming when he screwed up and came back and there was something deeply stoic about it. And he was the guy who got me to read about stoicism 25 years ago, because he was a philosopher himself.

47:41And so he was saying, look, I don't have control over my reputation, but I have control over my own behavior, my own attitude, my own mindset, my ability to learn from my mistakes, my ability to be honest about my mistakes, and my ability to try to get back the money for the people who lost it, who stuck with me. So again, it's like this shift from thinking just in financial terms to thinking, what can I actually learn from these guys about how to live? And resilience, the ability to endure the setbacks is an immensely powerful lesson from any of these great investors. Because the truth is, they all went through hell at different points in their life.

48:20It's not like a straight upward trajectory where you make tons of money and then you're free and you're not going to have problems with your marriage or your kids. And that's very helpful to know as well. It's kind of comforting to know. It's not just me who struggles. Right. Or problems with your own mind. Yeah, exactly. The ability to take care of your inner landscape, your own equanimity, turns out to be one of the keys to a happy life. A guy called Jason Karp, he had set up this hedge fund that I think was one of the fastest, if not the fastest hedge fund startup in history at the time. And he was a total star.

48:56and then it started to go wrong and he said even during the period when it was going right i was clinically depressed and he shut down in the end and has rebuilt his life in a way that makes him really happy and i think what he realized is that he was misaligned that he was doing something where he was working unbelievably hard and he didn't have control because the markets are so unpredictable And he said, if you look at these experiments where they'll sort of have these brutal experiments on guinea pigs or whatever, and they pull a lever and either they get a cookie or they get an electric shock.

49:35He said, at a certain point, you induce insanity in them. And he's like, that's what the stock market was doing to me because I was working incredibly hard and I didn't know whether I'd get a cookie or an electric shock. He decided, well, no, I need to shift to a different way of living. And so he said, I want to set up a holding company, sort of like a Berkshire Hathaway type company, but within health, so that he would be creating all of these companies that would help you live in a cleaner way, eat in a cleaner way, live in a cleaner way. And that made him really happy. And he has control over that.

50:09And so again, it was like understanding the fact that investing for him was going to drive him insane and figuring out how to create a life for himself that was better. And so he moved away from New York. He moved to Austin, Texas. He sets up this company. Last time I talked to him, he was really happy. It's really great.

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52:14How does a person, the average person listening, build the resilience that you're talking about? How do we practice that before the next great financial crisis? It's a wonderful question, and there are so many ways to answer that. One of the most important things to do is to set yourself up before a crisis so that you are not going to be out on the ledge because you're so over leveraged, you're so indebted, you're so dependent on your job working out or your portfolio working out. And so it's a recognition that I live in an uncertain world where anything can happen. Let me set myself up so I'm living within my means, so I'll be okay, whatever happens, so I can write it out, whatever happens.

52:58So some of it is preparation, simply not overreaching. Then there's another aspect of it where I interviewed a guy called Ken Schubenstein, who was a venture capitalist and private equity guy. He quit the investment business and became a neurologist. And so he's a real expert both on investing and on the brain. And so he said to me at one point, he said, there are four things that we know affect brain health and brain function. And so he said, we know good nutrition, good sleep, exercise, and meditation affect brain health. And he said, the key is to embed these healthy habits that give you more equanimity before the storm.

53:39He said, you don't want to wait until you're in the middle of the storm and then say, okay, now I'm going to start to meditate. Now I'm going to start to exercise. Of course, those things help you then. But to be aware that you want to make these habits a kind of daily practice before the storm, I think is very, very helpful. Another thing that he told me that I thought was hugely practical, again, like all of these guys, is a polymathic reader. And so he had studied a lot of addiction literature. And he said one of the things he'd learned from studying addiction literature was a mnemonic, which is HALT-PS, which tells you basically that a really good precondition for doing stuff that gets you in terrible trouble is to be hungry, angry, lonely, tired, in pain, or stressed.

54:26And so he said those are states, so he used HALT-PS as a way to remember this, those are states in which we tend to make suboptimal decisions. one of the things that he was doing to make sure he was more resilient was to say okay let me be self-aware enough to know what my own physiological condition is so that if i'm in a bad state i'm not going to make some huge decision that i could regret for the rest of my life and so when he quit the investing business and when he became a doctor he had a four-day-old first child and he went to be a doctor. I think it was an emergency room during COVID and it was full of people on ventilators.

55:06And he said, look, I took this lesson that I'd learned as a fund manager and applied it as a doctor. And so he said, I kept checking this checklist of mine, Hall PS to say, well, okay, am I hungry, angry, lonely, tired, in pain or stressed? And he said, my PPE equipment hurt. And he had a back injury when he was a wrestler at college. And he said, my back physically hurt. and he's like, we didn't have adequate equipment. And I was so upset and angry about the state of the world. And I was sad that I wasn't with my newborn child. And so he said, because of this lesson, I had to say to myself, all right, I know that I need to slow down and make decisions as carefully as possible and do everything that I can to be more empathetic and compassionate to the patients and to their families, because I know that these are conditions where I'll mess up.

55:54again it all comes down to self-awareness if you're aware of your state if you're aware of when you're likely to be unresilient you can compensate for it it's unawareness that bites us where it hurts you know that if you just go through life sort of blindly influenced by dopamine hits and your longings and your urges you're in real trouble i had a boss once as a journalist, was an amazing writer, incredible writer. And he had been a heroin addict in a previous period of his life. And he had once made a trade, he told me, where he called up the brokerage to make a trade. And they said, but you made the trade already.

56:34And he had no recollection of it. And they played him the recording. And I remember him telling me that on the recording, he said, lock and load, lock and load. And you listen to that and you think, oh man, that's a pretty good precondition for loss. And I think one of the best things I ever did was get him to buy Berkshire Hathaway many, many, many years ago, which was a little more sedate. But yeah, if you want to invert, just think of that attitude, lock and load and be like, let me be the opposite of that. You're more likely to be resilient. There's an implicit ego in a statement like that.

57:06Yeah. And just a lack of judgment. I mean, just to be at the mercy of your emotions. I think part of it there is a wiring advantage that a lot of the great investors have over most of us that they are unemotional At least when it comes to money And so to have the awareness to look at yourself and say am I am unemotional? How am I wired? Howard marks it He has an inclination to be fearful He's a little more likely to be fearful and he said my investors are not paying me to be a chicken And so I have to look at my own emotions and ask whether I'm being too fearful, whether that's coloring all of my decisions.

57:44So during the financial crisis, one of the things that he and his partner, Bruce Koch, did is the world was falling apart. And it really did seem like it was going to go off a cliff edge. He said to himself, well, most of the time, the world doesn't end. And he made this enormous bet. Oh, was he the one you wrote about on the day Lehman Brothers collapsed, made a huge bet. Yeah, I mean, that whole month, if I remember rightly, I think he bet something like eight or nine billion dollars on toxic bonds at a time when nobody else would invest in this stuff because it seemed like the world would end.

58:16And he said, yeah, but if the world doesn't end, we need to have done our job, which is people are paying us to buy stuff when it's incredibly cheap. And so part of it is this ability to look at the world probabilistically and say, what are the odds here? If I'm right, is the upside sufficient to compensate for the potential downside? And so this ability to think of your whole life in odds, in terms of odds, is very powerful. Well, and that goes to another value that a lot of great investors share, which is an appreciation for asymmetric risk. Yeah. And actually, one of the best applications of this in your own life, which is to say, okay, I want to have asymmetric upside, right?

59:03I want to invest in things where if it goes down, it's not going to kill me, but if it goes up, I'm going to do great. But also, I want to avoid situations in my life where the downside is catastrophic, not just in investing, but in other areas. So if you start to think about asymmetric risk, you start to say, okay, there are all of these ways in life that we borrow from the future, right? Like drink, drugs, overeating, stealing, cheating on our taxes, losing our temper, whatever it is, these things that give us a quick hit of energy, but somehow steal from the future. And so you have to look at these things and say, okay, so when am I doing stuff that could be catastrophic, right?

59:43So think of driving while texting, think of driving when you had too much to drink. So I started very consciously and repeatedly to apply this kind of mental model in my own life to say, okay, if I get in trouble here, will I survive? Or will it be catastrophic? Is the downside risk so great that I need to avoid this? And so if you think of these things, not just as being moralistic and saying, well, well, I better not do that because then I'll end up in hell or my wife won't like me or whatever the downside is. If you look at it and you say, that's a terrible bet. Do I really want to fill my life with bad bets that could end in disaster?

1:00:28I think that's really important. So it goes back to that question that Jeff Gundlach asked, which is, what's the consequence if I'm wrong? So I've had this multiple times where I would arrive at the train station out in Westchester where I live and my car would be there and I'd have gone out to dinner in New York City and and I shared a bottle or two of wine. And you'd be like, am I drunk? And you sort of think, well, no, I'm definitely not drunk. You know, we drank, I drank a few glasses over maybe four hours, I'm okay. And then you just think about it. What's the downside if I'm wrong? Would I lose my license?

1:01:00Would I hurt someone? Would I get, you know, and you're just like, just not worth it. Let me call my wife. Let me call my son. Let me ask someone to come pick me up and pick up the car tomorrow. So this appreciation of odds and the avoidance of catastrophe is huge. Just really prioritizing survival is really important. So yes, we want to make a lot of money. Yes, we want to be successful. Yes, we want to have amazing relationships and the like. But focus first on avoiding catastrophe. Right. Well, when you describe yourself standing at that train station in Westchester, looking at your car and thinking, am I too drunk to drive?

1:01:39I'm not sure. The other thing that strikes me is information gathering is huge. And so my senior year of college, I used to carry around a breathalyzer with me. And my friends all made fun of me because they were like, you must be a big partier. But actually, no, I wanted absolute certainty that I was good to drive. I did not want to leave that to chance. I wanted a reading. I wanted data and a reading to let me know in a dispassionate manner, can I drive? Can I not? Ed Thorpe would be proud of you because when I was fact-checking the book, I called all of the main characters. I interviewed, there were about 16 major characters who are really at the center of it.

1:02:23And I went back and re-interviewed them and fact-checked during COVID to see how they dealt with it and what had changed. And I said to Ed Thorpe, this amazing game player, so how did you deal with COVID? And he said, thank you for asking. And he starts taking me through how he played the odds. And basically, he figured out before anybody else, before a single death had been reported in the US, he figured out that there would be 200 ,000 to 500 ,000 deaths over the next year in the US, because he understood numbers. Right, because he understood probability. Yeah. And he calculated his own chance of death at somewhere between two to four percent.

1:02:58Exactly. So he said, when it's something important, study the data for yourself. He's like, don't believe what other people are saying. If the government is telling you this is safe, that's safe, this isn't safe, don't believe them. Study the numbers yourself. So he was doing things like analyzing the data from Wuhan and looking at the number of unexplained deaths. And then he's looking back at the influenza pandemic from whatever it was, 1917, 1918, that had killed his grandfather. And so he's inferring from that what happens when a pandemic forms, you know, what happens to the numbers. And so he very quietly buys up masks and all of this stuff, like a month before the shelves got cleared in all of these pharmacies and went and hid.

1:03:42So what it's really about is, as you were doing with the breathalyzer, it's looking dispassionately at the evidence, thinking for yourself and saying, how do I stack the odds in my favor? Well, maybe I'll survive if I drive without the breathalyzer and if I drive a little bit tipsy. Maybe I'll be lucky. But if you keep doing it, if you keep behaving recklessly, over time, you're liable to get in trouble. And so one of the things I keep coming back to is this line from Nassim Taleb, who said in one of his books, I think it may have been anti-fragile, he said, the fragile breaks with time. So as you think about how to construct an anti-fragile life and an anti-fragile portfolio, you want to look at it and say, okay, what am I doing that adds fragility to my life?

1:04:33If I'm lying, if I'm cheating, if I'm treating people unethically, if I'm cheating on my taxes, if I'm getting angry at my kids or my wife, if I'm driving recklessly, if I'm texting in the car, I may get away with it. But if I keep doing this for decades, the fragile breaks with time. Whereas if I take the opposite approach and I say, okay, let me try to be kinder. Let me try to be more loving. Let me try to be more compassionate. Let me try to understand where people are coming from, be forgiving and tolerant. Let me try to get these habits under my belt that I know are going to help me over time, whether it's meditation or prayer or volunteering or saving and living within your means, you're gradually stacking the odds in your favor.

1:05:22And so it's not that you know what the outcome is going to be. We still live in a very uncertain world, but you can stack the odds in your favor through your own decision making. And so this is one of the things that Ed Thorpe said to me. He's like, look at your health. He said, I think it was when he was about 30. He said basically if he ran like quarter of a mile, he wanted to kind of fall over and collapse. And so he said gradually he started running for a few minutes a day. And then he ended up doing, I think, 21 marathons. And he said, with your health, you're dealt certain cards. And then you have the choice how you play the cards.

1:05:58Like, do you go and get your vaccinations? Do you go for your annual checkup? Do you exercise? Do you, and I'm not saying any of this in a sort of proselytizing way, because I'm terrible at things like exercise and the like. So I'm much better at meditating, because I'm good at sitting rather than moving. But just the understanding that there are ways in which you can tilt the odds in your favor is very powerful because I think sometimes we feel kind of powerless in this very uncertain world. And depending on your politics or your sense of geopolitics, you start to feel like, oh, it's all just so overwhelming.

1:06:29And I just keep coming back to it and thinking, okay, what can I control myself? I can't control what's going to happen in terms of the geopolitical situation, in terms of the economy, in terms of the political situation. But I can control my own behavior. I can control my own choices. I can try to get greater equanimity myself through whatever it is, meditation or exercise or helping others, not becoming sort of lost in my own ego, but trying to focus on helping other people. And so you're just constantly trying to stack the odds in your favor. May the odds be ever in your favor. Thank you. And yours.

1:07:06Well, we're approaching the end of our time. But since I know that you've interviewed Jack Bogle, and there are many people who are listening to this who are particularly fans of Jack Bogle, there are many people from the Bogleheads crowd who are members of the Afford Anything community. I was wondering if there were any other anecdotes or lessons about Jack Bogle that you would share. I think one of the most profoundly important things that I learned from Bogle is the power of simplicity. And he talked about Occam's razor, which is this idea that usually the simplest solution is the best. If all things being equal, the simplest solution is the best.

1:07:44And there's been an important insight in science, obviously. And he said, when you look at Wall Street, it's the opposite of Occam's razor. He said, they're all trying to come up with these really complex ways to make money. Think of all the things that got people in trouble during the financial crisis. These things with exotic names, whether they were lions and prides or various exotic derivatives. They always love to give manly names to these things, lions and prides. You know, that's a way to get you in trouble. And he said, actually, what you really want to do is keep things as simple as possible.

1:08:17And he said, one thing you could do is you could literally buy one balanced mutual fund that had, say, 60 % stocks, 40 % bonds, or 80 % stocks, 20 % bonds, and just hold that and just keep adding to it. And so I found when I was writing this chapter on simplicity, my wife needed to make an investment in one of her retirement funds. And I just put it in one Vanguard fund that I think had an international stock portfolio, and a US stock portfolio, and an international bond portfolio, and an international stock portfolio. And it was 80 % stocks and 20 % bonds. And I just thought Bogle would be proud of me because this is, I'm not trying to optimize here.

1:08:58You know, there are definitely better ways to make money. I could definitely make more, but it's such an elegant solution. It's very low cost, very low fees. You just keep adding to the pot and you'll do okay and you'll survive. And he said, by contrast, he saw so many famous fund managers over the years. they were like these meteors. And he said, then they would blow up and you'd see the ashes float gently back down to earth. And he said, I saw it happen again and again. And it's not that it's impossible. It is possible to beat the market over very long periods of time. The people I write about, they've done it.

1:09:33It is possible, but it's not a game that many of us can play. If you want to play this game and you think you're wired to win it, these are the rules of the game. And you better understand this is what's worked. But it's perfectly logical to go and say, let me just do what Bogle did and invest at a low cost over a long period of time, keep adding to the pot, and then go live the other areas of my life, you know, try to devote my time to my relationships and to creating something and building something. And I think that's a perfectly logical decision. And I just happen to be torn between these two approaches.

1:10:10So there's a part of me that wants a simple life at a low cost, and I just invest in index funds. And there's a part of me that can't resist the desire to play the game. And so after all of these years, I still invest with a handful of people who I think will beat the market, but I may just be delusional. But even people who actively participate in the market, and I think Warren Buffett is the prime example of this, the ones who are successful have a very simple philosophy. I think simplicity is key. And I was very struck with this interview that I did with this guy, Will Danoff, who's a legendary investor from Fidelity, who was managing over$200 billion at the time.

1:10:49And I went to visit him in Cambridge. And here I was sort of thinking, okay, there's some kind of secret sauce that explains why he's beaten the market over five years, 10 years, 15 years, 20 years, 30 years. And really, he could reduce it down to three words, which were stocks follow earnings. And so all he was trying to do was find a few great businesses where he said, all things being equal, so long as I don't pay a ridiculous price over time, they're going to go up if the earnings go up. And so he made very, very early investments in Starbucks, very early investments in Tesla, Microsoft. He'd owned things like Berkshire for decades.

1:11:28It was simple, but the execution wasn't easy. But it's like saying, I'm going to lose weight by exercising more and eating less. I know that would be a good idea. It's been really hard. And so I think often, as Munger would say, investing is simple, not easy. And he once got up from a lunch with Howard Marks. And as he was leaving, he said to Howard Marks. Anyone who thinks this is easy is stupid. And I think it is simple in certain ways. The principles, the underlying principles are simple, but it's not easy. And if I think about someone like Danoff, he's so intense. And just that intensity is hard to replicate.

1:12:11I remember when he's been friends with Bill Miller for decades, and Bill Miller told me about the first time he met Will Danoff and they went to some investment event. Someone introduced him. Bill's a very gregarious, lovely guy. And he holds his hand out and he says, hi, Will. And he said, Will Danoff didn't shake my hand. And he just said, I'm going to beat you, man. I'm going to beat you. And so think of the intensity of that guy, Will Danoff. So yes, he has this very simple underlying strategy, but he's running like crazy. And he said at one point, frankly, I care more. I think that's one of the things that when you're asking yourself what kind of investor you want to be, ask yourself, how much do I care?

1:12:52Is this how I want to spend my time? I'm really fascinated in the psychology of great investors. And I really like hanging out with great investors and talking to them. And I think it's a beautiful microcosm of life, because it teaches you so much about what works in life and what doesn't work and how to create a hugely successful, but also truly abundant life. but I'm not that interested in sitting around analyzing the stocks. And so just knowing I can't compete with Will Danoff doing that. It's just not, that's not what I want to do. But he doesn't want to sit around reading obscure books about meditation and philosophy and spirituality.

1:13:28And so that's good. Play to your strengths. Play a game that you can win. Well, thank you for spending this time with us. Where can people find you if they'd like to learn more? Thank you. It's been a great joy. Well, I have a website which I cloned from Michael Lewis because WilliamGreen.com was missing. And so I saw Michael Lewis had MichaelLewisWrites.com. So it's WilliamGreenWrites.com. So you can always go there. I'm on X, formerly known as Twitter, WilliamGreen72. People are welcome to follow the podcast, which is the Richer, Wiser, Happier podcast, which goes out on the feed of We Study Billionaires.

1:14:01I hope they'll read the book as well. I've had access to these unbelievably smart people. And so I've tried to synthesize the most useful lessons. And it took me five years without a vacation. And so I think for people who actually want to learn what works in life, it's very powerful to go back and read books. So I think above all, I would encourage people to go back, look at the books, look at the resources in the back where it lists other books to read. And it's like this low-hanging fruit that's out there if you want to take advantage of it. Well, thank you. Thank you. It's been a great delight.

1:14:40Thank you, William. What are three key takeaways from this conversation? Key takeaway number one, success comes from playing games that you can win. Most people aren't wired to be active investors. The key to being good at investing is to understand your strengths and your limitations and structure your life accordingly. I think one of the things is actually to ask yourself whether you're equipped to play that game of being contrarian in the first place. And so one of the great lessons for me, as I interviewed all of these famous investors was to realize, well, I'm actually not them. I'm not wired like them.

1:15:17And so I probably shouldn't be playing the game in the way that they're playing it. William Green talks about how Warren Buffett's business partner, Charlie Munger says, if you're 5 '3", don't try to be a pro basketball player. And it's an exaggerated way of saying, stick to your strengths. I think one of the drawbacks of K-12 education, you know, oftentimes when children show strength in a particular subject area and weakness in another area, the grown-ups around them encourage them to spend more time in the areas in which they are weaker. So the grown-ups all say, oh, you got an A in this subject, so you don't really have to worry about it so much, but you got a C in this other subject.

1:16:03So we're going to make sure that you spend a lot of time here and we're going to give you extra tutoring for that. And the kid is encouraged to spend a lot of time in the areas in which they're weak and they're trying to bring their quote unquote weakness up to also be an A, see if they can pull that C into an A. Why not turn the A into an A plus? Like why not focus on that area of strength? And I know the pushback is that, oh, well, at that age, you're supposed to be well-rounded. That's not the age at which you specialize. That's the age at which you develop a broad-based foundation and you need to make sure that you're adequately strong in all areas.

1:16:39True. But it's also equally true that the lesson that we as grownups are imparting to kids is that they should try to focus on improving their weaknesses rather than try to focus on excelling in their strengths. And what these highly successful investors have done that is different, that is weird, that is out of the ordinary, is that they are hyper aware of what their strengths are. They lean into those strengths and they don't try to mitigate their weaknesses. They hire out, they delegate those weaknesses and lean into what they do best. So that is the first key takeaway. Key takeaway number two, focus on what you can control.

1:17:30In an uncertain world, build resilience by managing your own behavior and your own environment rather than trying to predict the markets. We still live in a very uncertain world, but you can stack the odds in your favor through your own decision-making. And so this is one of the things that Ed Thorpe said to me. He's like, look at your health. He said, I think it was when he was about 30. He said basically if he ran like quarter of a mile, he wanted to kind of fall over and collapse. And so he said gradually he started running for a few minutes a day. And then he ended up doing, I think, 21 marathons.

1:18:04Focus on what is directly within your locus of control and make small changes. Stack those small wins, those small tweaks, one tweak a week over time so that you can accumulate tiny gains. And by doing so consistently, you enjoy the compounding effect of small, consistent wins inside of your own locus of control. That's the second key takeaway. Finally, key takeaway number three. Flexibility is the only true security. The best way to handle market volatility is by setting up a lifestyle that gives you lots of flexibility and options. One of the most important things to do is to set yourself up before a crisis so that you are not going to be out on the ledge because you're so over leveraged, you're so indebted, you're so dependent on your job working out or your portfolio working out.

1:19:01And so it's a recognition that I live in an uncertain world where anything can happen. Give yourself margin of error, give yourself wiggle room, and above all, stay flexible. The most important aspect of any financial plan is flexibility. Those are three key takeaways from this conversation with William Green. Thank you so much for tuning in. If you have not downloaded it yet, go to affordanything.com slash financial goals and download our free one tweak a week guide. It is our guide for the year 2025 in which you make one tiny change in your financial life every week. Now, some of these are laughably small changes like adjusting your thermostat by a degree or two, checking the tire pressure in your car.

1:19:51I mean, we're talking tiny, small, but I mean, but when do you think of that, right? You're busy. You've got a million things to do. You're picking up the kids from school. You're filing your taxes. You're watching the game like no one's thinking about, are my tires properly inflated? But that's the kind of thing that can save you a bunch of money on fuel, right? That saves gas money at the pump. And so we have this guide. It's totally free. And it's one really small thing that you can do every week that's just sort of a small tweak in your day-to-day life that helps you shave just a little bit more money on the cost of groceries or gas.

1:20:29None of it's going to be breathtaking, brag to all of my friends kind of stuff. And that's exactly the point because one tweak a week is the aggregation of marginal gains, stacking small wins. And by doing this consistently, just one a week, every week over the span of the year, you could end up boosting your savings rate, let's say by an additional 1 % each quarter. And if you do that consistently over the span of the year, well, guess what? By the end of the year, you've boosted your savings rate by an additional four percentage points. That's huge. Just ask any financial planner. Go to literally any financial planner and say, hey, if a person were to boost their savings rate from 16 % of their income to 20 % of their income, and if they did that at the age of 40 and just did that consistently for the next 25 years, do you think it would matter?

1:21:29Literally any financial planner is going to be like, yeah, heck yeah, that would matter. Heck yeah, that would make a big difference. And so that's how the aggregation of tiny gains can, over a long enough period of time, be life-changing. All of that is to say, download one tweak a week. It's absolutely free. Affordanything.com slash financial goals. Again, that's affordanything.com slash financial goals. Thank you so much for tuning in. I hope you enjoyed today's episode. If you did, please share it with your friends, with your family. Share this with the people in your life. It's the most important way you can spread the message of having great financial practices.

1:22:12Now, please remember to open up whatever app you're using to listen to this show and hit the follow button so that you don't miss any of our amazing upcoming episodes. And while you're there, please leave us up to a five-star review, write a few words, talk about what you enjoy about this podcast. We so appreciate it, and it makes a huge difference in growing this community. Coming up in the weeks ahead, we have an interview with Dr. Margie Warrell about how to manage risk and have more courage in the face of some scary market volatility. We have, of course, at the beginning of February, our first Friday episode, the monthly economic update episode.

1:22:52And former financial planner Joe Salcihai and I have a special episode coming up in which we are going to unpack a question about real estate, how to handle real estate that is in a disaster-prone area. We're actually going to dedicate a full episode to this and really unpack what to do, whether you're a real estate investor or whether your primary residence is in a disaster-prone area, what do you do? And so we're going to be talking about that. That'll be our February 11th episode. So all of that is coming up. Make sure you're following this podcast in your favorite podcast playing app so you don't miss any of those amazing episodes.

1:23:31Thank you so much for being part of this community. I'm Paula Pant. This is the Afford Anything Podcast, and I'll meet you in the next episode.