[REPLAY] Morgan Housel – Same as Ever (EP.359)

22:43And so I think it's possible for there to not be a contradiction between low expectations and ambition. Having the idea that I did not think Samus Ever was going to sell as well as psychology of money did not prevent me from trying to write the best book that I could. So I do think there can be a difference between ambition of wanting to do something for the sake of doing it because it's my passion, it's my identity versus having expectations of what the result is going to be in the end. So if we're turning this on money, we've got to talk about compounding. One of your favorite subjects, lots of different lenses in this book about different ways compounding happens.

23:18The example that I use in Too Much Too Soon Too Fast is one of my favorite examples. The largest human who's ever existed is this guy named Robert Wadlow. He was around, I don't know, about 100 years ago, something like that. He had a pituitary gland abnormality that just bombarded his body with growth hormones. So he died in, I think, his late 20s. He was pretty young. And when he died, he was, I think, over eight feet tall. His hand was like a foot and a half large. He was the most enormous human you've ever seen. And you would think if you just hear that, you're like, oh, this guy's like a real-life Paul Bunyan, a superhuman giant.

23:50it. He must have been so strong and just like out of a cartoon, this living monster. And the truth is, no, he wasn't. He could barely walk. He was hunched over at the waist with a walker. And if he had lived much longer, because he was still growing, he was always going to grow. Simple walking would have literally snapped his leg bones in half. Because the thing was, you cannot double the size of a human and expect double the output, double the strength. It just doesn't work like that. Most animals that are huge either have very short, stocky legs like a rhinoceros or extremely long legs like a giraffe.

24:22You can't just take the human proportions and double them and expect double the output. And I think that's an analogy for a lot of businesses as well, that there is a natural growth rate, a natural size for every business, every investing strategy. And it's so normal and natural to want to speed it up. So I think in the stock market, let's go back to what I said, historically 6 % real annual returns. The majority of investing problems from professionals or amateurs comes from people looking at that and saying, let's get a little bit faster. How can we speed this up? How can we compress that? Historically, you've doubled your money every decade.

24:54How can we get that to every five years? And that's where most problems come because you cannot just compress the normal natural timeframe of what tends to work in investing and expect to get double the results. You're gonna get double the risk, double the catastrophes, whatever it might be. That's true for a lot of businesses as well. I think we're seeing this now that the VC bubble, if we can call it that, is starting to unwind. There were so many businesses in the last decade that were good businesses with a good product. that customers loved. And let's say their natural growth rate was 50 % per year, just throwing that out there.

25:23But a lot of VCs are like, oh, we're going to give you a billion dollars, but I need you to grow 200 % per year. And so many of those businesses just broke. They were exceeding their natural growth rate. So I think understanding that almost everything you do in life, your career, your investments, your relationships has a natural size, a natural growth rate, and understanding where those boundaries are is critical for almost everything. You have a chapter called Tiny and Magnificent, which has this wonderful story that Howard Howard Marks talks about compounding. I would love for you to share that thought process.

25:52Howard Marks tells a story about this fund manager I thought is so brilliant. He said this fund manager in any given year was never in the top quartile against his peers. But over a very long period, he was in the top 4%. And he just makes this point that, look, it's not what you can do in any given year. It's what you can sustain for the longest period of time. PIMCO, the bond giant, had this term that they used to use that that was so smart. It was strategic mediocrity, which was the same thing. in any given year, they're not going to be in the top half, but in every decade, they're always going to be in the top decile.

26:21What actually matters in investing is not what the highest returns that you can earn are in any given year. It's what returns that you can sustain for the longest period of time. And I think the dirtiest secret in investing is that average returns sustained for an above average period of time leads to magic, leads to incredible results. I've been pretty open that I dollar cost average index funds. I don't recommend other people necessarily do that, but it's what works for me. One of the reasons I do it, maybe the biggest reason is that the variable that I'm trying to maximize for my money is endurance.

26:51It's just, can I actually hold onto the stocks that I own for 50 years? And I think by keeping things simple and by keeping things average, it increases the odds that I will have an above average holding period. And I also know that if I can be an index fund investor for 50 years, I will probably end up in the top 2 % of all investors who are doing this, particularly after fees, after taxes, transaction costs, top 2%. My parents have fallen in this category. My parents have no financial education, no financial background, minimal financial interest. But because of their personality, they have dollar cost average in the Vanguard index funds since I think 1990, never sold a single share.

27:26They would be, if you compared them to the professional money management universe, probably in the top 5%. And they've done nothing. They've done nothing to do it. So just because they've maximized endurance, it's obvious when you explain it that that's where the formula for compounding is returns to the power of time. If you know anything about math, like the exponent does all the heavy lifting. That's what you want to maximize for. And now when you find a fund manager that earns amazing returns for a long period of time, then you get Buffett. Berkshire is 20 % annual returns on average for 60 years or whatever it is.

27:56That leads to absolute magic. But for the huge majority of people, literally just a lay person on the street who can earn average returns for an above average period of time, it leads to this ridiculous result. That's always been my investing strategy. What do you tell people, let's say like of our listeners in the institutional world, about how you can set up systems to improve your chances of having the duration so that you can let the magic of compounding work? I think every successful fund manager has been selective about who they accept as clients or LPs. And that's really what it is. It's the stability of your investor base that's going to give you that endurance.

28:32And I think there are actually a huge number of fund managers who truly in their souls want to and know that they should be long-term investors. But the gap between what you want to do as an investor and how you are managing and running your investing business can be a mile apart. I was talking to this financial advisor a couple of years ago, and he said that a client came to him and said, hey, I'm going to give you, Mr. Advisor, half my money and half to this other advisor. And in six months, whoever generates higher returns gets the other half. And this financial advisor was like, absolutely never in a million years would I accept you as a client, if that's your mentality.

29:04I think you see that a lot with fund managers. The greatest fund companies, it's not the LPs interviewing the fund manager, it's vice versa. Now, of course, this is one of the benefits of private investing, private equity and venture capital is like the 10-year lockup forces that in some ways. And I think if there is a structural advantage to private markets advantage over public, it tends to be that. The lack of liquidity is forcing a good level of behavior that I think is a wonderful thing. That's the biggest thing. There's a big difference between wanting to be a long-term investor and actually doing it.

29:33And I made this point saying I'm a long-term investor is like standing at the bottom of Mount Everest and pointing to the top and being like, that's where I'm going. You're like, good, great goal, wonderful. Now comes the hard part. And one of the biggest challenges with actually being long-term is getting the people in your orbit, your employees, your investors, your spouse, whoever it might be on that same page with you. We're going to take a quick break in the action to tell you about SRS Aquium. Want to make sure your M &A processes aren't stuck in the past? Partner with a company that's been defining the future of dealmaking for nearly two decades instead.

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31:23than saying risk is volatility, whatever risk might be. And I think a lot of fund managers, when they get into problems with their investor base, with their LPs, it's because they have given their LPs, their investors, a false definition, a false sense of what the risks they're going to take. You might have a fund manager that says, look, we're investing within this certain risk band. And it sounds great during the pitch. It sounds great during marketing, but in reality, you're very likely to exceed that band. And once you do that, that's when your investors are going to flee. Look, I have experienced and will experience again in the future, the market falling 50%.

31:53Do I view that for me personally as a risk? I don't know if I would put that in the category of risk because I expect it to happen. If I expect it to happen, it's not risk. It's just a normal run-of-the-mill behavior of markets. What would I consider risk? I think some sort of massive geopolitical event in the United States that would upend the legal framework for keeping assets safe, that would be a risk. A major world war that engulfs the United States, that would be considered a risk. A major, major fundamental currency decline, that would be something of risk. Things that I know are going to happen, I don't consider risk.

32:26I think there's a lot of investors who would consider a 5 % decline risk. And maybe for their strategy, it would be. Everyone's a little bit different. But I'm always astounded at when people consider risk, things that they know for certain are going to happen. It's the analogy of how crazy it is that your annual dental checkup is covered under insurance is supposed to cover risks. If you know it's going to happen, if you know you're going to need your teeth cleaned, it's not a risk. And at that point, it's just deadweight loss because you have to pay the insurance company 30 % to process the claims and whatnot.

32:55I think a lot of investors, when their risk framework include the equivalent of that, include the equivalent of a dental cleaning as their definition of risk. So you set in your mind of expectations of the market to drop a 50%. And for other people, that would seem like a wildly bad drawdown. What is your view of expectations of what will happen in the world over a decade? My expectation is that on average, the world will break once per decade. Break in the sense of you wake up one morning and you realize that a lot of what you thought was true is no longer true. But the other common denominator there is that breakage is always a black swan.

33:33It's things that virtually nobody saw coming before it happened. So let's look historically. COVID, Lehman Brothers, 9-11, collapse of the Soviet Union, Pearl Harbor, Great Depression. Keep on going down the list. once per decade, there is an oh shit moment. And the common denominator there is it was not in any analyst forecast, no macroeconomic outlook until the moment that it arrived. I think it'll be like that going forward. It's not exactly every 10 years, but on average, that's what it might be. And look, in the last 20 years, there's been three of those events, 9-11, Lehman Brothers, and COVID.

34:01And those are massive events that fundamentally changed how things work. And those three events were more momentous than virtually all of the other news stories put together, combined during those periods. I think it'll be like that going forward. And you can state pretty confidently that the biggest economic news story of the next year and the next decade are things that nobody is talking about today. And you can state that confidently because it's always been like that. I don't think there's ever been a decade, if not even a single year, in which the biggest risk in hindsight was foreseen at the beginning of the year.

34:32I think it's always been like that. That's really hard to grasp and to swallow because that is inducing uncertainty in your head when you are desperately trying to get rid of uncertainty. But I think if you're a student of history, you know that's the case, is that the surprises are the most common events that happen in economic history. You talk some in the book about this idea of wild numbers, where things that are, you could say, somebody might think is a risk, but if you looked at a probability distribution of outcomes, it should be more of an expectation. I'd love you to tell some of those stories.

35:00There's this wonderful story about this woman back in the 1980s who won the lottery twice. The mathematician calculated the odds that the odds of winning the mega lottery twice were I think one in 77 trillion. And so there's all these newspaper headlines. This woman won the odds of one in 77 trillion. And it's true that the odds of one person winning the lottery twice are one in 77 trillion. But if 150 million Americans play the lottery every single week, which is the case in the United States, the odds that in any given decade, somebody will win twice are one in 30. And of course, those odds are not very exciting whatsoever.

35:36There's this great quote from Daniel Kahneman, where he says, we need to come to terms with the fact that people are very bad at dealing with very large and very small numbers. It's just we're not good at mega numbers or very tiny numbers of risk. And I think there's another thing with probability where this is maybe the more important point, that people do not necessarily want to know what's going to happen next. They want to reduce the uncertainty that they have in their head. So when you are listening to a market pundit who says, stocks are going to do this this year, the economy is going to do this next year, I think most people don't actually care about what they're saying.

36:09What they want to reduce is the uncertainty that they have in their head. Because most people view the world as black and white. It's not about probability. If you want a good financial pundit to be giving you good information, what you want is someone who's going to say, there is a 57 % chance of recession this year. But of course, you're never going to build a business off of that. And you're never going to go on TV talking about that because people wanted to say yes or no, black and white. Is it going to happen? And I think there's so many examples of that and of alternative probabilities, but what we want is black and white because that reduces the uncertainty that we have in our head.

36:42So there's a very long history of this. I think it always will be the case. Philip Tetlock is a professor who's done some of the best work, incredible groundbreaking work on the science of prediction. Of course, the core of his research is we're very bad at it, but he digs into why that is and who's better than others. But someone asked him many years ago, they said, will we ever stop wanting predictions? No matter how bad we are at it, no matter the track record, will we ever stop wanting predictions? He said, absolutely not. We're always going to yearn for someone who tells us what's going to happen next, even if they are terrible at it.

37:13And I think there is a point too, that if you are a pundit in the financial industry or an analyst or an economist, whatever word you want to use, if you tell people what they want to hear, you can be wrong for a long time without any penalty because what you are doing, you're giving your clients exactly what they want, which is the reduction of uncertainty, even if what you're saying has no connection to what's actually going to happen next. How do you think about the actual practice of risk management and investing? A lot of this idea, forecasting and what we want to reduce uncertainty is just noise.

37:43It's not really signal. I think what's really true is that when things are going well, which is the majority of the time in the US economy, it's very easy to think you have a high risk tolerance for amateurs and professional investors. If you take most investors and you say, how would you respond if the market fell 15 %? The huge majority of investors will say, that would be an opportunity. I would buy more. That looks like a great entry point to buy more. But what's easy to miss is the context of the reason the market falls 15 % or 30 % or whatever it is, is because there's a terrorist attack or a pandemic or a surprise from the Fed.

38:15And in that context, it's much harder to be optimistic and view it as a buying opportunity. And I write about these things for a living and think about these things for a living. How did I feel in March of 2020 when the world was melting down in the early days of COVID? Scared out of my mind. I didn't panic sell, but it's so much easier to think that you have a high risk tolerance. It's much easier to quote Warren Buffett and say, be greedy when others are fearful than it is to actually do it. Most people in that situation will realize that they are one of the others that Buffett was talking about.

38:44And so I think everyone's risk tolerance, the majority of the time, is lower than they think it is. And I think because of that, their allocation should probably be more conservative than it actually is, just because it's so hard to contextualize how you're going to feel when the market is declining for the reason it's declining for. Your writing about behavior ultimately comes down to people. And there are a couple of things you wrote about in this book that are very tied to incentives. Just love you to riff on those. I think the biggest thing about incentives that's easy to overlook is that the boundaries of what you are capable of doing.

39:18The boundaries of your morality are not known until you're factoring incentives. I'll give you an example of this. After the financial crisis in 2008, it was very common for a lot of people to say, those greedy bastard Wall Street bankers who ruined the economy selling subprime mortgages to widows and orphans. Let's put aside whether that's true or not, that's irrelevant here. What people missed is that if they had the same incentives as the banker from Lehman Brothers and their boss said, hey, if you package these subprime bonds, we'll give you a$4 million bonus, you would have done the same thing too.

39:48Of course you would have. And you can take this in different directions. The most extreme example of this is, Ted, if you and I were 20-year-old boys living in Germany in the 1930s, would we have gone along with everything else that happened? And I think we are fools to say, I would have been the one who's raised my hand and said, I'm not going along with this. There are so many social, tribal, nationalistic incentives to go along with what other people are doing. And this is why I think the boundaries of what you're capable of doing are unknown to a lot of people. So a really important question to ask that is almost impossible to answer, but it's still worth asking is how would my behaviors change if my incentives were different?

40:24I have incentives, you have incentives that massively influences what your worldview and your morality and everyone's are very different. And I know, I'm sure a lot of people who in real life are very nice, calm, down to earth people. And on social media, they're maniacs. You don't recognize the person when they're on social media because what are the incentives of social media? It's to be a maniac. And I don't even look down upon those people because I know they're just responding to their incentives. So it's the classic Munger quote, don't think about a single thing unless you're thinking about incentives.

40:54And when you realize how powerful that can be, then you should not be surprised when there are ridiculous events in the world, bubbles, bus, wars, terrorist attacks, when you realize that The huge majority of people are good people who want to do the best that they can. But almost all of those people can be influenced to do something that looks crazy if the incentives are right, including me, including you, including everybody. So it's one of the most powerful forces in the world that's easy to overlook. The combination of that incentives and tribal behavior, I think a lot of people gravitate to doing what other people are doing, right?

41:27You think consensus behavior. Then you have these outliers. Take like an Elon Musk or someone who, for whatever reason, is wired in such a way that they're just going against the crowd. And we'd love to hear your thoughts on someone like that. I think it was our friend Patrick O'Shaughnessy who brought up this idea that a lot of people like that, the very successful type of entrepreneurs, Patrick said the phrase that he would use to describe their personality is not driven. It's not ambitious. It's tortured. They wake up every morning tortured that they are not more successful, bigger, richer than they are.

42:04And I think that's true for virtually all these people. Musk, Bezos, Gates, all these people, I think woke up tortured every single morning. And that's what's driving them. I'm so glad that those people exist in the world because they give us so many incredible products and innovations. It's equally important though for me, and I think most people, to look at that and say, I'm glad you exist and I would not want to be you. Musk had this interview just a month ago where he was like, people might think they want to be me, but they don't. I think the phrase he used was, my mind is a tornado, not in a good way.

42:33I think he's tortured. And I think one thing that comes from this is almost without exception, people who are very good at one thing tend to be very bad at another thing. It's like your mind only has enough bandwidth for a certain amount of thought and action. And if you are a kind of person who's crazy successful at this business or this investing strategy, that has probably taken up so much of your mental bandwidth that it's going to come at the expense of something else. For a lot of these very successful people, what their success in business has come at the expense of is their family life, their health, their mental sanity.

43:07And so therefore, we should not be surprised if you have someone who you admire for these really good traits. Musk is such a good entrepreneur. Bezos is such a good entrepreneur. Don't be surprised when there are other parts of their life that you disagree with. The same kind of crazy out-of-the-box thinking that created something that you enjoy and admire is also, almost without exception, going to create part of their life that is out-of-the-box thinking that you do not appreciate, do not admire. I love your idea that Musk, the guy who spent so much time seriously thinking about how we're going to colonize Mars, is not the same guy who's going to follow an SEC guidelines on Twitter.

43:42Yes, of course. Musk has talked at length about the way that we can colonize Mars to make its climate habitable is to constantly drop nuclear bombs on its poles. And if you did that, I don't understand the physics of this, you would create like a livable atmosphere on Mars. The person who's thinking about that all day is not also thinking about being polite on Twitter. Their mind is operating in such a different dimension. Of course, he's a maniac. That's why you love him. As you've gone through all these different thought processes and stories, what are some of the key questions that you like to ask that help you hone in on some of these behaviors?

44:18I don't know if it's a question, but the key thought that I have when going through a lot of this, and I think this is also the core of psychology of money too, is it's a plea for more humility. Let's stop pretending that we know what's going to happen next because if you're a student of any kind of history, you realize how hard that is. A plea for humility that we don't know what's going to happen next, but in equal amounts, this idea that the behaviors, your personal behaviors and society's behaviors don't tend to change that much over time. A lot of what is important in investing is realizing that what I want is different from what you want, Ted.

44:51Not because one of us is smarter than one another, has better information, because we're very different people. And you and I are a lot alike. We're friends. We enjoy each other's company. But obviously, how I invest is different from how you invest. It's just because I'm wired a little bit differently than you. I have different goals, aspirations than you and everybody else. So the idea that investing and money is more akin to your taste in music, where nobody's right or wrong. Everyone just has a different view of what's good and what's bad. It's hard to grasp that in a field like finance, where it's taught as a math-based field, where people are looking for the quote-unquote, the right answer.

45:25It doesn't exist. What's right for you is not right for me and vice versa. So I think that's what I come to a lot is how much of life is individualistic, that you have to go out of your way to find yourself, not what society tells you to like or want to like. In between these two books, One of the things that's come up, I know you joined the board of Markel. I'd love to hear more about when you take your own beliefs and put it in a situation that is a very different investment company than, say, how you invest your own money. What's interesting about Markel is that when you become a Motley Fool employee, they give every employee, I think it's$2 ,000, to invest in a stock.

46:0115 years before I joined the board, I put every dollar of that into Markel stock. I was a massive Markell fan well before they ever contacted me to join the board. The reason why is I've always been admiring of and if not obsessed with Berkshire Hathaway because what they did is so powerful and it also seems so simple. And the reason that Berkshire has some sort of anchor now is because of size and to a lesser extent age of Buffett and Mungeru just passed away, of course. If there's one company that I was like, look, they don't have the size anchor and they have a little bit more of the youth to keep this going.

46:33The only company I've ever seen that's come close to that is Markel. And it's shamelessly copied the Berkshire business model. It's a very solid, profitable, global insurance business that uses the float and the proceeds of that to invest in whole industrial companies, buying the whole companies that we're going to hold forever and compound it from there. It's the exact same model as Berkshire. So I had admired that for many years before. So when Tom Gaynor and the rest of the board reached out to me three years ago to join the board, it was the easiest yes ever. It was not like, oh, I have to see if I understand what you're doing.

47:03But it was like, look, if there's one public company that I fit into, it's this. And so that has been pretty easy. The other thing that's important is that I think most people don't understand what the board of a public company does. The board does not run the company. The board is not making the investments. The board is not running the insurance company. The board's most important job is to hire the CEO, fire the CEO, and pay the CEO. That's what the board does. And so that is very different from saying, look, Morgan, you invest this way, but Markel is investing that way. How do you fit in? My job is not to tell them how to invest.

47:36That would be a terrible thing to do. My job is to make sure, and the rest of the board is to make sure that we have the right people in place to do it. As you've been talking to people about this book, people have found you and your writing and wisdom over the last couple of years. What are some of the most interesting and important lessons you've learned along the way? One thing that's interesting from both books is that people's favorite chapter is so different. Usually in any book, if the book is 20 chapters, there'll be one chapter where you're like, I got 80 % of the benefit from this chapter.

48:04And even within that, I think you could say within this chapter, these three sentences were the light bulb moment for me. It's interesting to me that people have come up with very different chapters from psychology and money. Some people will say the chapter on compounding, that chapter changed my life. And as someone else will say, I thought your chapter on compounding was completely wrong and you got X, Y, and Z wrong. And the book would have been so much better if you left that out. There's so many examples of that. There are books that I will say, that book changed my life. And then I go back and read it.

48:32And I'm like, honestly, it's not that good. But what it was for me is that at that moment in time when I read it, it was a missing puzzle piece for me. And I think that's true for why you get such a wide variety of people saying that was my favorite chapter. I think for whoever it is, that chapter, that paragraph was a missing puzzle piece. But for someone else who already has that piece in their quiver, it's just rambling nonsense or it's trite, whatever it might be. You see that with blogs as well. It's really hard to understand what people are going to like because it's going to hit people very differently.

49:01Now, I've always tried to write in a way that I hope what I write is a hedge fund manager will learn something from it and a soccer mom will understand it. It has to be both of those things at the same time. I've tried to do that with storytelling. But that makes it a little bit harder. If there is a sophisticated hedge fund manager reading the psychology of money and also a 16-year-old reading it, it's the first thing they've ever read about money. I hope that the hedge fund manager will at least be able to enjoy some of the stories and contextualize things. And I hope the 16-year-old will understand every word that I'm writing.

49:31How do you bridge that gap? I think the only way to do it is with stories. My wife makes this joke that the reason that I keep things simple is because I'm not smart enough to make it complex. There's honestly a lot of truth to that. I don't have the mental horsepower to make it complicated, but I think I have some skill at creating and finding stories and telling stories about complicated things. If you can tell a story about how people think, that is something that an 80-year-old hedge fund manager will appreciate and a 16-year-old will understand. I don't think there's any data equivalent of that.

50:01There's almost no chart or formula of data in which a professional investor will learn something from and a novice will completely understand. If you're watching the best comedian, a 14-year-old will find it funny, 60-year-old will find it funny, your grandma will find it funny because it's just a good story. And so that's the universal aspect of storytelling is that it's going to hit the widest variety of people. You're casting the widest net of interest if you tell a good story. What are the coolest things that have happened to you in the last three years? I think when you have any sort of career success, whatever the level is, you get to meet a lot of interesting people, people who you would not meet before.

50:35And so there has been some level of that. I feel like also, we talked about this at the beginning, most things in my life have not changed at all. I'm raising my kids and trying to pack them lunch in the morning. If there is, I said 20 % of things have gotten better. And I think a lot of people will relate to this. If you can reduce career anxiety, that's a major life boom. So I think before the book, I had a reasonable level of career anxiety of what if I don't make it? What if this isn't going to work out? What does plan B if this doesn't work? And I think if you can not eliminate that, but reduce it, that's something that I think I've probably slept better at night in the last three years just by taking that out of the stress equation.

51:10So I know it's not your natural instinct. I'm going to have to pull it out of you, but who are some of those people that you've met that you would not have met before? So two that stuck out, I had emailed a little bit with Howard Marks before the book came out. He had been a reader on my blog. I've looked up to him for so many years, as everyone has. And having gotten to know him a little bit better and had dinner with him in person, he is one of the nicest, humblest, down-to-earth people you'll ever meet, despite his success. If you did not know who he was or how successful he's been and you met him, he comes across as a pretty normal guy.

51:42And that's very rare for someone in his situation. But he might come across as normal, but you start to talk to him and the amount of wisdom he has and his ability to articulate it is almost unparalleled. He's just an incredible individual. And other people who I can't name, but I've done some consulting for extremely high net worth households. And many of them, what they want me to do is go talk to their kids, talk to their grandkids to try to instill some money values in them for people who have very unique resources. And I met a couple of families, one in particular, the family's net worth was$8 billion liquid.

52:14If you search their name, nothing comes up. You cannot find any information about this family. They have gone out of their way with God knows what kind of legal resources to scrub their presence from the internet. They've done this very intentionally because they want people in society to treat them normally. They live a good life, but they're pretty anonymous. Most people don't know, maybe their friends and their family, of course, know who they are, but they can walk down the street with pure anonymity. And the benefit that you get from that versus the person who's well known in which virtually everyone around them wants their money, wants something from them, is incredible.

52:48I heard this great quote from Matt Damon, the actor, who he said, the day that you become famous, you stop maturing emotionally and socially because everybody around you treats you differently. And I think if you are very public with your financial success, you get that equivalent. You're the equivalent of an A-list actor where everybody around you wants something for you. And they're going to laugh at your dumb jokes. And they're going to tell you that you're amazing because they want your money. They want you to open doors for them. And I think this family going out of their way to prevent that, not just for themselves, but for their heirs, their kids, their grandkids, has been incredible.

53:19And of all of the mega wealthy people who have met, their kids and grandkids who were between their teens and 30s and 40s were the most down to earth that I've ever met. That was really inspiring to see that those people exist. It also makes you realize too that how many people there are like that who are not on the Forbes list. There's actually quite a few very anonymous, extremely rich families who you don't know about because they want it that way. What have you found experiencing some modicum of fame over these last couple of years? You want your name to be famous, but not your face. And I was talking to someone who has a famous face recently.

53:55And he asked me, he said, Morgan, how often do you get recognized in public? And I said, twice a month, maybe. And I said, what about you? How often do you get recognized in public? He said, every 30 seconds. And I said, that sucks. That's terrible. There is a saying with fame, if you want to call it that, like the grocery store test. Do you get recognized at the grocery store? If the answer is yes, your life sucks. If you can't go to the grocery store without being recognized, that's a terrible thing. That's when your fame starts to go downhill and just becomes a liability. So I think if you can have a notable name, but people still don't recognize you at the grocery store and on flights and whatnot, that's like the sweet spot that you want to get to.

54:28So what's next on the writing docket? I'm working on another book right now. Won't be out for, I don't know, two years or something, but it's called The Art of Spending Money, a self-explanatory title. Psychology of money is really, at least it leans towards investing. There's some about personal finance in there, but the art of spending money is really going to dive deep on the non-investing side of money. Particularly, how do we use money as a tool to live a better life? It's actually harder than most people think. The knee-jerk reaction is more money, bigger stuff, more stuff, nicer stuff, better life.

54:58And I think that is maybe 20 % true. There's a lot more that you need to dig into. Why do you want nicer stuff? What are you trying to get out of this? Is that covering up for something else? There's a lot to dig into there that I'm excited to dig into. And after that, I don't know. I've made this point that I don't want writing to be my identity. I want my identity to be father, son, friend. And I want to be able to just walk away from writing when it's time. I don't want to say that's what I'm going to do forever. So I don't know what the long-term future looks like. All right, Morgan, I got a couple of closing questions I didn't ask you a couple of years ago.

55:29What is one fact that most people don't know about you? I've tried to be a pretty open book, but maybe one is that I think I have intentionally, or financial matters try to come off as a little bit zen. Ted, you know this because you're a good friend of mine. I tend to have a more anxious personality and I'm a worst case scenario thinker. Sometimes to some extent, not fully, but to some extent, what I write is who I want to become, but it's sometimes not who I am. It's who I wish I was. I'm not ashamed of that. I think that's a fine thing. I think everyone is broken in their own unique way. And it gets really dangerous when you look up to someone and you're like, oh, that person has it all figured out.

56:06Nobody has it all figure it out. We're all just making it up as we go. Which two people have had the biggest impact on your professional life? One, and these are unsung heroes. There's a guy named John Reeves, who was the editorial director at The Motley Fool in 2007. I was in 2007, a mediocre college student who had never written anything before. And I couldn't get another job as an investment banker or hedge fund manager. And John Reeves said, we'll take the risk. We'll take a chance and hire you as a writer. Whenever someone takes a bet on you when they don't need to, or they have no evidence that they should take a bet on you and it works out, that person is like an unsung hero in your life.

56:42So I think a lot about John Reeves because he's one of the few people who changed my life by taking a bet on me when he didn't need to and probably shouldn't have. That had a huge impact on me. The other that sticks out a lot to me is Craig Shapiro from the Collaborative Fund. He is another person like John Reeves who took a bet on me when he didn't need to. And the story there was in 2015, I was very established and comfortable at The Motley Fool. I had worked there for eight or nine years at that point. And my assumption was, I'm going to stay here forever. My wife and I bought a house a half a mile away from The Motley Fool headquarters.

57:15We were going to be there forever. Craig Shapiro reached out to me in 2015 and said, hey, I'm a fan of your blog. Work for Collaborative Fund and just keep doing the same thing. And Collaborative Fund at the time was like 100 million AUM, had three employees. Most fund managers in that situation do not say our fourth employee should be a blogger. Weird thing to do. But Craig was like, I believe in what you're doing. And I think it's a great thing. Come do it for me. It took me a while to actually hold the trigger and take the plunge and join Collaborative Fund. Over the last seven years, it's worked out.

57:44And Craig's like one of my best friends. He didn't need to do that. And it actually looked crazy that he did that. But he's another person I look back. It's like when someone makes a bet on you when they don't need to. It's one thing when someone makes a bet on you when it's obvious. oh, of course this person is worth X and they have the value of Y. When people take a flyer on you, you should be especially appreciative of those kind of people. What's been the happiest moment of your professional life? There's one moment professionally that really sticks out. I've admired and looked up to Jason Zweig so much for years.

58:12Jason Zweig in the Wall Street Journal. I just think he's the greatest financial writer of our time. And I've thought that for a very long time. And then I started to get to know Jason a little bit, I don't know, 10 years ago. And when Psychology and Money came out, before it came out, he and I had a conversation. I don't want to put words in his mouth, but it was something to the effect of he said, Morgan, if you don't want me to review it, I won't because we're friends. I'll give you that opportunity. But if you want me to review it, I'm going to be honest. I'm not going to do you any favors because we're friends.

58:38If we review it, I'm going to tell people what I really think of it. I said, okay. We didn't really talk much after that, but I learned a couple of weeks later that he was going to review it. I learned because there's an editor of the Wall Street Journal who contacted me and he said, we need a picture of you and whatnot. So I knew there was a review coming and I was terrified. because I knew Jason, as he should do, because he's a principal journalist, was just going to tell people what he really thought about it. And I think I really thought genuinely that he was going to tear it to pieces. It terrified me, not because I was going to be in the Wall Street Journal, but because my hero, Jason Zweig, was going to write that.

59:09And when the piece came out, I didn't know what he was writing. He did his own thing. He's a principal journalist. So when it came out, someone sent it to me. I didn't even get a heads up that it was coming out. I think I was literally trembling when I clicked on the link. And the first sentence is, It's literally framed on my wall next to me. It says, Psychology Money is the best and most original finance book in years. I was sitting at this desk right here, and I think I literally put my hands up. That was the happiest moment in my career. The fact that anyone would say that, let alone my hero, Jason Zweig, said that, that doesn't get much better than that.

59:38All right, Morgan, one more for you. What's the best advice you've ever received? One thing that I think has really benefited my career that several people told me early on was write for an audience of one, which is me. Don't go out of your way as a writer to say, what does the audience want to hear? because that quickly turns into how do you pander to the audience and tell them what you think they want to hear. If you're writing for an audience of one, yourself, then you're naturally going to do your best work. Writing for yourself is really fun. And I think it shows in the writing. Writing for other people is work.

1:00:06And that shows in the writing. You can see it, you can smell it. And so I think just being really true to myself, I really don't care what other people want to hear. I write about things that I think are interesting and I write it in a tone and a style that I like. and then I take a leap of faith that if I like it, maybe some other people will as well. I think that's been really important to my career and I think it is very contradictory to most career advice as a writer, which is know your audience and know what they want to hear. That's been important to me. Morgan, really appreciate you coming on the show, talking about the book.

1:00:37I hope a couple of copies will sell. We'll put it over the edge and really looking forward to you buying me that dinner. Whoever pays for it, I'm looking forward to dinner, Ted. Thanks for listening to the show. To learn more, hop on our website at capitalallocators.com, where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more. Have a good one, and see you next time. All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms.

1:01:17This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of capital allocators or podcast guests may maintain positions in securities discussed on this podcast.