Sketching Wealth Strategy: Masters in Business with Carl Richards

25:46And you spend most of your books, plural, talking about fear, regret, envy. What moves markets and what, more importantly, moves investors' portfolios? Gosh, that's such a good question. And I want to be careful about... You know I do this for a living. I know. It's a really good question. I want to be careful about the term Financial Pornography Network. I think that was originally the Jane Bryant Quinn term, which I love. That's exactly right. Which I love. I love the term, but I think it apprised just really broadly. I call it the fire hose of financial noise. Yeah, that's fine. I think sometimes media circus, it's a media business.

26:28And there's nothing, I want to be clear, I live in the hills in Utah. I ride my mountain bike every day. The trail's out in my backyard. I have a different hobby. Just because that's my hobby doesn't mean my hobbies are better than anybody else's hobbies. They're healthier. But I walk in this building and I see happy human after happy human walking through the halls. This is like shiny, happy people everywhere. Who am I? Free cappuccino. Who am I to say, right? But I think what's important is if we start to recognize, like, what are we doing it for? What's the goal? Because if it's something to talk about, there's nothing wrong with that.

27:04If it's entertainment, there's nothing wrong with that. But basing your financial decisions, your actual investment decisions, on something you heard, even if it was secret underneath the subway and it was labeled, isn't The Economist the one that all the really smart people read anyway? Right? Like, you're not the only one that's heard that. So I think we have to be careful with sort of making big investment decisions based on every wind of news or entertainment. Right? Versus linking. and again, this is back to like, how do we solve this behavior problem? I think it's got to be, it has to be, the portfolio has to be designed to give me the greatest likelihood of reaching my goals and my goals have to be carefully clarified and they're going to change over time.

27:52So it's this constant process of saying, is this, are these investment decisions aligned with what I want out of my life? Both of those sides of that equation are really challenging. Getting clear about what you want out of your life, super hard. Making sure you have a portfolio built on data and evidence and that will get you the closest to that, also really hard. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work.

28:34Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy. Support for the show comes from public.com.

29:16If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

29:52An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. So let's break that into two pieces. Yeah. Because I kind of feel like there are two distinct conversations.

30:30We'll get to the goal portion in a moment. I want to stay with the media circus. Isn't there really a very simple problem? And that is the mismatch in time horizons when you're putting money away to save for retirement or even to save for$5.29 for college or saving to buy a house or a second house or whatever. Like you're thinking 5, 10, 50 years, but all of the financial noise, that fire hose, that's the church of what's happening right now. So if we can simply readjust our media consumption into some context with the longevity of our portfolio goals, doesn't that solve a lot of these? if I'm putting this money away for 20-30 years, what do I care what happened on a random Thursday?

31:28What if we actually kept track of every single change of opinion and how sure somebody was remember that old statement that even a broken clock is right twice a day? I was going to say often wrong never in doubt That's exactly right. Is the line I like. And that's, like, again, entertaining, and there's nothing wrong with entertainment. We go to the movies. We go see plays. We ride our mountain bikes. Like, there's nothing wrong with entertainment. I just think we have to understand what it is. And what you're saying is, yeah, that's day-to-day entertainment. I like it because I can talk about it.

32:05It's important. Don't base my 20, my 10, my 5, my 10, my 20-year decisions on it. Right. And yet we continue to see people have that problem. So let me re-ask this question in a different way. How do you bridge the gap between what clients ask for, what they think they want, and what you know they actually need? It's another, Barry. You're super good at this whole job. It's all AI. It's all I didn't write in. No, I just, because now you've layered another problem in here. is because clients, the humans that we call clients, show up having been trained by us as an industry, speaking really broadly, that what matters is this day-to-day stuff.

32:50They think the job of an investor is to find the best investment because we taught them that on the television, waving our hands. So it's no surprise. We did this to ourselves. It's no surprise that clients come in expecting. And that's why I think clients who work with real financial advisors often go through a period of the financial pornography detox program, where they maybe wake up 18, 24 months into the relationship and go, hey, you know what? I'm not really paying that much attention anymore to that. All the stuff I used to think mattered, was critical, has lost its urgency, its tenor. So we've got this problem of like, it feels like, and again, back to the wiring in our bodies, Like it feels like we should be doing something.

33:37The news is saying we should be doing something. The guy at the club is saying we should be doing something. And I call Barry and Barry says, hey, let's hold on for a second. Let's review the – are these goals still the goals? Is this still what's important to you? Turns out if that's true, we're okay here. And almost always we end up at the same place, which is diversified, low-cost portfolio. Hold on to it for a long time. There's this inherent bias towards action. For sure. Which is the nature of that fight or flight response. Yeah, one or the other, right? Don't just sit there, do something.

34:08And really the right way to do it is don't just do something, sit there. But that causes a great deal of uncomfortableness amongst people. Let's take this to the next phase. So Jack Bogle and Vanguard gave us low cost. Everything we've learned from Richard Thaler and the behavioral finance folks is about the importance of humility. What does the next generation of investors learn once they figure out diversified low cost and a little bit of humility? Where do you go next? Yeah. You know what's so hard about that is this, like, everyone's a gambler thing that's sort of slipped in. Especially today.

34:50Yeah, that's sort of slipped in. I don't envy growing up as a 25-, 30-year-old person trying to sort this out right now because it just feels like everything's a bet, right? It is. Yeah, and it is. I think to me, I mean, I'm careful with advice, but the observation that I've noticed most frequently is that if I can, when I'm younger, focus on human capital and then realize that the money over here does the job of compounding, right? My main job should be to earn a bit more, raise my human capital. My ability to earn and save when I'm young will far outstrip getting an extra 25 basis points by paying attention to some newsletter on the Internet.

35:36You know, it's funny you mention gambling being everywhere. We were talking before the podcast about Nine Finger Howey, and he wrote a post and created an index called the Degeneracy Index, where he puts in all of the various prediction markets and gambling apps, and it's been outperforming the NASDAQ, which has been on fire, like two to one, and it just is a kind of warning. What can we do with that? Yeah. It's a warning that, all right, I understand the Supreme Court decision that says gambling can't just be legal in one state, but maybe the decision isn't to make it legal everywhere. Maybe the decision is to say an entire industry based on human foibles, cognitive errors, and innumeracy is kind of an evil industry.

36:30It's just the problem we need to realize is that we're just not wired for it. It's not that we're dumb. It's not that we're... we can have any discussion we want about the morality of the whole thing, but underneath it all sits this idea that we're not wired to handle it. We're not, and I think this is another piece that's interesting right now, is I don't think we're really sort of wired to handle the level of uncertainty that we're dealing with right now, like the sort of change fatigue. And it seems like a lot of what Wall Street sells is this illusion of certainty. Yeah, this false sense of precision.

37:04Like, it's certainly so easy to sell. It's impossible to deliver, but it's super easy to sell because everybody wants to buy it. So I think those are the two, like, human capital and learning how to come to grips with the reality that the world is uncertain. So the quote of yours that always stays with me is, money is less about math and more about emotion. That was your insight watching the Netscape IPO. why is that so challenging for this industry for finance to accept it seems to me and I've been in a lot of the rooms where this discussion takes place that we just we have a deep sense of physics envy for sure like we just want the law of gravity for money and and when we understand that the systems that handle money, markets, economies, politics, and then humans, those are a mix of complex adaptive systems.

38:11They're not simple systems. And they're not even complicated. They're complex adaptive, almost chaotic. And when you understand a complex adaptive system, you start to understand that there is no, even with the benefit of hindsight, and you see this all the time, I'm sure, even with the benefit of hindsight, we look back and like, here are seven steps to having... It turns out that that only works for that period of time, right? You replicate those seven steps, it doesn't work again. All models assume the future looks like the past, and very often the future looks nothing like the past. It's exactly like all models are wrong, let's make ours useful.

38:44It's like much more helpful. This idea of saying like, okay, if that's the reality I live in, then how do I navigate a complex adaptive system? And then that gets us to this point where it's more about, like the problem is you, the problem is me, The problem is, like, it's us. And so I think that's why it's so hard, is we have to say, oh, man, we don't know exactly what we're dealing with here. Because it's so cute after a big crisis to see all the people who have very specific plans about how to avoid that exact same. We're still taking our shoes off in airports. You don't have TSA pre yet? Yeah, I do.

39:19That's true. I haven't taken my shoes off in a long time. I'm going to share one of my favorite random data points. I don't know if this made it into the last book. But earthquake insurance, earthquake insurance sales go up tremendously right after an earthquake. For sure. And if you think about how the plate technotics work about these two pieces of terra firma sliding, the odds of an earthquake happening after that 10, 20, 30 years of pressure is released plummets immediately. The worst time to buy earthquake insurance is right after the earthquake. The best time is, hey, this is an earthquake zone, and we haven't had an earthquake in 20, 25 years.

40:05Now's the time. I remember getting offered structured notes with downside protection in, like, October 2002. And I'm like, why do I need this? The Nasdaq is down 83%. Where were you in late 99 when this might have been useful? Down 83 %? I'm a buyer. I want all the upside. Why do I want to give you any of this? Like, I had that conversation in a room for the salespeople pitching this and got called into the chairman's office. What are you doing? We're trying to set up a relationship with these people. I'm like, this is crap. Nobody should own this product. And I'm like, I know you want a relationship.

40:41Tell them not to not bring us junk that we don't need. I mean, look, I like dessert as much as the next guy. This is what I came for right here. But I just, I remember, there are several times when I would get called, as the market strategist, called into the vice chair, who was general counsel, or the chair. He's like, what are you doing? By the way, the firm? Lehman Brothers. Yeah. So not only was I right, but the counterparty risk was you would have gotten nothing anyway. Yeah, and we will go to, the lengths we will go to make up stories about that after the fact. Do you remember, I can't, look, I'm going to deeply paraphrase, and I'm sure I'm ruining the story, but after long-term capital management went under...

41:2298. Do you remember, and again, there was some quote where one of those PhD Nobel Prize winners said, our models weren't wrong, reality just refused to conform to it. I don't remember who it was, but... Some broad thing, yeah. When genius failed, that quote is somewhere in that book. That's exactly right. And I only point that out, to point out that I certainly will go to great lengths to make a cute story that will protect me from dealing with uncertainty because our nervous system takes uncertainty as a threat. And it turns out, like, we are in a period of uncertainty. And I don't think we're going back, to be honest.

42:03Well, let me, let me, this is supposed to be about you, the guest. But you pushed my. Please, this is what I'm here for. My uncertainty button. We're all here for this. So whenever you hear people saying markets hate uncertainty, my knee-jerk response is always markets thrive on certainty. It's the whole point. The only time there's certainty is when everybody is on the same side of the boat. In late 99, everybody was certain trees grew to the sky. And in March 09, everybody was certain markets were going to zero. That's right. Except for the handful of people who stepped up and bought. Yeah. The future is inherently unknown and unknowable.

42:43That's right. When people say things are uncertain, I always feel like what they're saying is normally I could lie to myself enough that I could BS you people that I have some idea what's going to happen. But goddamn, whatever's going on is so crazy. I can't maintain that fiction anymore. So I default to uncertainty. That's right. In reality, most of the time, everything is inherently uncertain. Let me just real quickly. I'm super interested in what you think about this. I feel like you and I came up, the financial planning industry, the financial advice industry, really grew up during a period that was an aberration.

43:24There was some, for a certain group of people, there was a predictable path of progress. Give me some years. My grandpa, I'm seeing post-war, my grandpa got a degree, could afford a first-time home without salary, stayed there for 30 years, retired with a pension. There was this window. That was the aberration, the entire post-war period. Is the aberration, yes. Like the roaring 20s, the uber-rich and the rest of us pleads. Things weren't like that. That's normal. Things weren't like that before. Right. And they aren't like that now. That's right. And we falsely believe that, oh, this is the new era.

44:03The problem is that was when we built all of our tools, our language, our planning tools, our Monte Carlo simulations. All around that aberration. It's during that aberration period. I think much more likely is if you think it feels like uncertain now, we're not getting more. We're not going back there. No, no, it'll all settle down. This will all go away. Yeah, exactly. So I think to me that leads to this really interesting discussion, at least around like, how do I learn? It's a posture shift. Instead of trying to defend an outdated map, like confirmation by, don't you know 10 best days? Instead of trying to defend an outdated map.

44:39Explain 10 best days because it's a great, and 10 worst days, it's a great concept. It's always, right? Like anytime anybody's scared of anything in the markets, we just parade out. You saw this on Twitter back when it was useful, right? Like if anybody said anything bad, like I'm scared or this market scares me, a bunch of financial advisors would jump in the room and say, don't you know if you sell and miss the 10 best days, you may as well be in CDs over the 20-year period or whatever, or you miss the 10 worst days. And they all are clumped close together. That's exactly right. And I also think that that was an effort to say, don't worry.

45:13When I think, and to spray people with facts and figures. When they're feeling irrational. I like the gun you hold. Yeah, spray people with facts and figures. Because when you're feeling irrational, the last thing you want is somebody to try and reason with you. Wait, you're telling me that pure logic doesn't satisfy emotional... This is a teenage teenager, right? The last thing you want. What you want is metaphorically a hug first. We'll get to the facts later and let's never get to the lecture. And so I think if we shift that posture a bit where we're like, turns out uncertainty is reality. I don't know what...

45:50I mean, add in sequencing risk. Are we going to have a great market for the first five years of your life or the last five years of your life? Like, who knows? You add all this in. Not that useful in the last five years. That's exactly right. It turns out that we're dealing with a very complex adaptive system, and the ability to navigate, make really important decisions in the face of irreducible uncertainty is the primary skill. Like, if I was younger, I would be studying complexity theory. I'd be studying being resilient. I'd be studying understanding how to make really important decisions. mountain guide you know how do i make really important decisions when i don't know how do i get comfortable not knowing their life and death decisions and how yeah like i my some of my favorite people are like really thoughtful um really thoughtful like people who worked in in distressed because if they're on the ground with the company they're having to make mission critical decisions and they do not know they don't know how they're going to work out i've got a really good friend that way and he's just like yeah i have every day some of these decisions are thousands of jobs right and i don't know you're making these decisions under intense uncertainty with incomplete information and no amount of spreadsheeting will get you more information the only way to get the more information is taking action fascinating right like to me that's the skill that's what this market is calling for in terms of leadership is the ability to create containers for collective interpretation rather than scream at people.

47:21So let's talk about this book. Sure. You describe it as a conversation grenade. Explain. Yeah, first of all, I think I first heard that term from Hugh McLeod, the gaping boy. Sure, love his work. I have some of his stuff on my wall and on the opposite wall some of your stuff. Well, that's cool. Thank you. In fact, buy high, sell low, repeat until broke. number one is on my wall. That's right. So full disclosure. Well, thank you. Yeah, I have some of you stuff in my office too. So Conversation Grenades, this idea that like, it's the only reason I wrote the book. I swore off writing. Why? Well, because I love audio so much.

48:01I actually had... Again, not mutually exclusive. This is exactly right. But I, you know, after I wrote the second book, I thought I'm just going to speak. And then podcasting came around. I was like, this is amazing. I had, between Bailout Nation and How Not to Invest, a solid 15 years. Yeah, you did. Like, I needed a recovery. That was my refractory period. That's right. Like, I need a decade and a half. That's right. I really needed a decade, and it just took me the pandemic to make me start thinking about it. I kept noticing that people like physical artifacts. I agree. I don't love a Kindle.

48:41I like a book. Yeah, and especially that. So working with Harriman really allowed me to, everything about the book is designed to think of it. We have the same publisher. I didn't even notice. Yeah, yeah. I'm sure Craig helped you. Yeah, he's great. For sure. So everything about that book is designed to feel like you toss it in a room and conversations break out. That's the conversation grenade analogy. Right? Set it on its coffee table. Unpretentious coffee table book. Like, I'm going to pick it up. I'm going to mess with it. I want to, we talked about hardback. I wanted it to be that soft cover.

49:14We moved the, you know the front matter, the legal stuff? Go to page one. There's none of it in there. You moved it to the back? They let me move it to the back. And they said, nobody's ever asked. Dude, I love that idea. Nobody's ever asked, but yes, I was amazed they let me to do it, but there's this stuff's in the back. Because what reader has ever said, please give me that? There it is in the back right there. I always assumed it was a legal requirement. It had to be up front. They said nobody's asked. So they let me do all sorts of things that allowed us to be like, no, this is in service of the reader.

49:44We want you just to have this sitting around. And the number of stories I've heard, like I had it on my table, my son asked me a question, or I sent it out to clients and this. It's really meant to be a conversation grenade. So we started out talking about your deceptively simple sketches. Is this simplicity a conscious act of rebellion? There's so much complexity and arcane language. We know every profession uses arcane language to hold lay people at arm's distance. But was this simplicity in your sketches, is that purposeful or am I reading too much? Deeply purposeful. Purposeful. Yeah, yeah.

50:22Yeah, I think it's maybe just the way my brain works. I only have enough RAM for like one problem at a time. Okay. And so I like to get into it, understand nuance, edge cases. You know, it gets like a giant ball. There was actually a sketch in there about this. It gets like a big giant, like, it's a simple question. You know, simple, simple, simple. Boom. What about this? What about that? What about that? What about that? What about that? Edge cases, reading it all. And then there it was. And then, yeah, and then once I get in there, I'm like, okay, now, and you actually shared a quote one time about there are a lot of simple.

51:00Investing is simple, but hard. No, there's a lot of simple. There are a lot of answers that are simple, elegant, and wrong. Remember this? I don't know where I stole that. That could actually be me. Yeah, no, I remember you shared somebody else's quote. And I was like, oh, because... Simple, elegant, and wrong. Yeah, and I really worry about that. Because when you're in that ball of yarn complex, and you decide to distill or edit, you have to make some conscious decisions about what to leave out. And I often get that wrong. And when I do, I hear about it. And it makes the work a little bit better.

51:32There are words and lines in some of those sketches I've been thinking about for over a decade. That you want to change? I removed a word that had been in there 15 years. Which sketch? The word was... People you love experiences spend the money. Yeah, that one's one of my favorite ones. That is one of my all-time favorite ones. You do like a good Venn diagram. Well, by the way, the Venn diagram police have come after me, so I just call them circle sketches. Oh, dude, I used to get two-page emails from the Times readers. I call these people picture-shaper, picture-straighteners. I used to send equal rebuttals, and then finally I just developed a template email that said, You're right.

52:14I call them circle sketches. So, yeah, the Venn diagram piece is pretty loose. Wait, these are legitimate Venn diagrams. They can make an argument, of course. No, if it's this over here, this over here, and the overlap that you want to focus on. For sure. Things that matter, things that you can control is another one of yours. Yeah, what we should focus on. And then the overlap. How is that not a Venn diet? I don't know. I don't know, but somebody will find. But my point really is that when you distill and leave things out, you get things wrong sometimes. And you asked which one. For a point, though, you're trying to communicate cleanly and simply.

52:54It's true. But I'm saying some of that feedback is amazing. The Venn diagram police weren't particularly helpful, but some of the feedback is amazing. Like, hey, have you ever thought of this? And it makes me reconsider and adjust, and there have been changes that I've made. There's one sketch that says what's important. I used to say what's important to you. It was an alignment sketch. It was like your use of capital aligned with what you say is important to you. And that word say. Well, it's implying that it's not important, but you're claiming it's important. That word say bothered me for a decade before.

53:26I was like, no, no, no, it's we want to get to what's important to you, not what you say. You were hinting at another problem with people not speaking. That's right. Revealed stated versus revealed preferences. I'm more interested in the revealed preferences. What's actually important. That's really that's really interesting. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here, in the United States, but delivering American energy at a fraction of the cost and a fraction of the time.

54:03So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest.

54:46Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. When you own your own business, you own every decision.

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56:10Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A., member FDIC. So let's stay with the concept of spending money, right? Since I just flipped to whatever that was. every advisor that manages money for people can tell you story after story after story. My favorite one I'll share here. Hey, Barry's a car guy. He has a boat. You want to buy a boat and a car?

56:53Why don't you talk to Barry? So I speak to the client. So I'm thinking about buying a 60 foot, 50 foot, whatever sailboat. And I'm thinking about buying a Ferrari. I go, that's really easy. what's your boating experience zero you don't start with a 50 60 foot sailboat that requires a crew it's two and a half million dollars you'll take it out twice you'll sell it for a 30 percent loss right on the other hand go by the way this guy could buy a ferrari a month for the rest of eternity and it's fine yeah go buy the ferrari take the whole family down to the ferrari high performance driving school which i'll let you on a little secret all of these advanced driving schools, they're really defensive driving classes in disguise.

57:35That's right. And you will learn not only the limits of the car that you'll get in the way near, but you'll learn the limits of your own driving ability, and more importantly, learn how to operate within your own skill set. And so will your kids if you bring them. That's right. So everybody becomes a better, safer driver. So he goes out and buys a Ferrari, they do the class, they love it. Yeah. He also buys the boat. A year later, he sells it for a 30 % loss. Anytime Barry gets on the phone with a client, the advisor always says, do not mention the boat. So the only thing worse than being right is being wrong.

58:12And I could say this at the back of a podcast because you can confess to murder at the end of a podcast and no one will hear. So I'm very comfortable saying this here. So with that Barry digression here, let's talk about how do you help people focus on what's important what matters and what the purpose of money really is what should they be doing yeah with their money yeah especially later in life they've accumulated a nice pile can't take it with you yeah running experiment like practice like often one of the things we see is the very things that got you to that spot are working against you going forward like you're being frugal saving aggressively, being very disciplined and now you're saying hey I've been putting off this delayed gratification thing was really important maybe but it definitely got you to the spot you get to a point at which you should no longer delay there's not going to be time to delay so you practice this.

59:18You just, like, your boat example is great. Yeah, like, I mean, I've literally had people who can't spend any money, and like you're saying, have enough money that they can spend it for the rest of their lives. Right. Go, like, go get a coffee with a friend, pay for theirs. And just go on the trip and enjoy the trip, right? Just, one of my favorite stories is from Alan Smith in the UK, had a client, he's a great financial planner, had a client that had, and he's told this story publicly, had a client that had relatives that had moved. There was a bunch of people from Wales that moved to Argentina for mining way back in the day.

59:57I know exactly where you're going to go with this. A bunch of his relatives moved. A bunch of her relatives moved. She'd always wanted to go see the Welsh national rugby team play the Argentinian, the Pumas, in Argentina. How hard is that? And she was like, I just can't, I can't. And he's like, you could do this every year. You could do this every month for the rest of your life. It's like, well, I can't sit that long. You could have a lay-flat bed. Right. Or you could go from Wales to New York, go from New York to Brazil, go from Brazil to Argentina. You don't have to do it one trip. So he finally, just over time, got her used to the idea.

1:00:33She went and she says it was the best. We're never going to rep those things. We're never going to... AI is not going to replace that. No, and so to me, it's like, dude, I think I would... I don't know if I'd rather Aaron being irresponsible, But I know we should spend the money. Spend the money. But you know, irresponsibility never comes into it. You're looking at someone's portfolio. Yeah, that's true. Hey, you have$10 million. You live on$350 a year. You want to bust out another$50, so you can take the whole family to the old country and show them where your grandparents came from? Why not?

1:01:09Yeah. I mean, it's not even$100 ,000. Yeah, and so I think to me... These, by the way, are very first-world problems. Of course. But there are problems. Brene Brown got really clear about comparative suffering does us no good. So I always like, whenever I hear first world problems, I'm always like, well, yeah, but this is a challenge, and it happens to be the challenge that many of your clients and the people I'm talking to are facing. So why not just practice? Can we pick something small? Something you've always wanted to do. And it might be simple. Take the grandkids to the art museum this weekend.

1:01:41I'm going to share another line with you, not comparative suffering, often falsely attributed to Teddy Roosevelt. It hadn't been around till like the late 1980s. Comparison is the thief of joy. Yeah, for sure. What a great phrase that is. And it's really, there's always someone with a bigger boat or a larger house or a faster car, whatever it, whatever you're envious of, you have this car, are you really happy with it? Then who cares what the guy down the block has? that's pointless. Just real quickly, that's one thing that I think makes this even harder, is we're never exactly sure, do we really want the boat?

1:02:21Do you know what I mean? Well, if you're not sure, then that's easy. Don't get the boat. But you could go out for a day. You could rent a boat. Try little experiments. I just remember growing up, I always wanted I grew up in the hills in Utah, right? We all had BMX bikes. I love this BMX story of yours. I always want a slightly better BMX bike. Oh, no, you wanted a really nice bike, and what did you end up doing? Which one are you talking about? Are you talking about the road bike? The moots that I ended up spending a moots? Yes. A titanium bike out of steamboat. Different story, but yeah, that's one of those moments where I, are you kidding?

1:02:56Those things were, I could not, like, I think those are$6 ,000 or$7 ,000. That's nothing today in terms of people who rode. Oh, no, you could drop$10 ,000 on a bike. But still, it was like, and that bike, like per unit of dollar, per unit of fun, I've never made a better investment. Right. What's a BMX story? When I was little, when I was like eight, I had slightly better BMX bike than some of my buddies, and some of my buddies had slightly better. That's all I knew. Right. I didn't know at the time that I was supposed to want a private jet. Uh-huh. And now I do. Like now Instagram has taught me.

1:03:27So I think we have this problem of like cultivating our comparison set. So now we're talking, even getting clear about the word goal is hard. Because you don't know if it's your mom's goal, if it's society's goal, if it's Instagram's goal. Five million dollars in a sailboat? Like, when did you go? Insane. Where did that come from? Let me share a fun private jet story with you. I love private jet stories. So whenever anybody used to ask me, hey, you going to sell the firm? What's your FU money? Questions like that. My answer has always been the same. Whatever it takes to never step foot into a commercial airport ever again.

1:04:04And then I made the mistake of saying this in public somewhere, and I started getting marquee jet, net jet, all these guys sending me pictures. So out of curiosity, one day I said, run the numbers for me. What does this really look like? So it turns out East Coast, 6 ,000, 6 ,500 an hour, cross country to California, 8 ,000. You want to go to Europe, it's 12 ,000 per hour of travel. So do the math. So I start, deep down inside, I'm a numbers guy. I'm like, oh, this is quarter million, half million a year. For that to be rational, you have to be, not have$10 million, you have to be earning $10 million gross to spend a mere 5 % of your annual income and cap gains on a PJ at half a million per.

1:04:59PJ right from succession, I never heard that phrase before that show. And so all of a sudden I'm like, oh, I have no interest in that. I don't ever expect to be pulling down$10 million a year. And while it's attractive bypassing all of airports, I kind of learn, all right, so I'm not going to go on high traffic days. We travel for Thanksgiving weekend. I'm the first flight out Thursday morning. Blow through security in five minutes. Two hours later, it's a zoo. So, all right, I'm not going to spend a half a million dollars a year. I could spend a little bit of brain power trying to navigate around the worst, worst.

1:05:35I won't arrive at the airport at five o 'clock because I don't want to get get stuck in traffic. And I won't take a nine o 'clock flight in the morning that requires. So, like, all right, I'm not flying private. I'm trying to fly a little smarter commercial. But even if you're in the front of the plane. Yeah. But that to me is a really good example of like thinking that something might be important. running a little bit of an experiment, just actually running the numbers, deciding. So we're just constantly narrowing in for our whole lives. And those things change. It would still be delightful to be able to just show up at the airport.

1:06:10And you made a trade-off decision. Leave when you want to leave. And save a day of travel on each side. For sure. But is that worth a half a million dollars a year? Yeah. To you, it's not. In order to make it, I had... I'm oversharing. But I'm going to overshare one more thing. So, friends of my wife get a pied -à-terre in the city. They're empty nesters. They downsize. They have a house. And then they have the city apartment. And I started thinking about a pied -à-terre. We loved it when we lived down at Gramercy Park. And I start looking at this. And, again, I start running the numbers. And I'm like, wait a second.

1:06:50Just the monthly co-op fees are like three or four grand a month to say nothing of the insurance, the insurance, the taxes, and the one, two, three, four, five million dollar purchase price, whatever the hell it is. And I'm doing the math and I'm like, gee, this is really like five grand a month. It's 60 ,000 a year. I can't spend. And we take weekends in the city. I can't spend$60 ,000 a year on hotels, restaurants. Like I can't get it. I can't spend that much if I tried. Like we do a few weekends in the city. It's a couple of hundred, a couple of thousand bucks, but it's certainly not 60 grand.

1:07:26And a pied-a-terre makes no sense to me. And I'm having this conversation with a very wealthy client. And I see this look on her face. And I go, oh, you're saying if$60 ,000 is too much in co-op fees, you really can't afford this pied-a-terre. And she says, well, I wasn't exactly thinking it, but you're not wrong. Right, right. And what I was about to defend myself with was, well, the$60 ,000 just isn't worth it to me. But before I said that, it's like, yeah, but if you had$50 or$100 million, who cares? I just want a place that I'm comfortable in the bed, my clothes are in the closet, and I'm not dealing with checking into a hotel.

1:08:11That's worth$60 ,000 to me if you have X dollars. And she never said that, but I immediately, I immediately, like. I have a question for you. I can't afford this. On the heels of that, I have a question for you. What's the last thing you decided, I'm going to buy that, and you were just like, I don't care. I'm just buying it. It doesn't matter how much it costs. You didn't actually, because both those examples, you're like, I wanted a thing, I went around the numbers, decided not to do a thing. Is there a time when you were like, to hell with it? When was the last time I decided not to do it? No, you decided to do it.

1:08:41You're like, and I just threw, I didn't even care what the numbers said. I didn't even look. I just wanted to do that thing so bad, I was just like, I'm doing it. There's two answers. There's the Barry before he turned 60 and the Barry after he turned 60. Really? When Barry turned 60, so I think this is a function of immaturity. I never had a midlife crisis, probably because when I should have, I was still an idiot child. I still was 10, 20 years maturity level below where I should have been. And I turned 60, and I very much woke up with the sensation, all right, fourth quarter, down by seven.

1:09:16If you want to win this game, you got to get busy. Like literally that was what I thought. And I don't know if I ever told this story on the podcast. And the spouse still survives, so I can't really go into details. But a person about to sell a business for a ton of money, hundreds of millions of dollars, gets a diagnosis, six months to live. And when, you know, you know this, if you're managing money for enough families, the actuarial tables are such that people will begin to die. I mean, that's just the normal human finite lifespan. And so it's easy to start to pick up that pattern of life is short.

1:10:03What are you waiting for? So the combination of turning 60 soon after the pandemic ended and a lot of people lost a lot of people during that, I kind of said money should never prevent anyone from experiencing joy. And so what I started doing is not saying no and gifting a lot of stuff. Like my favorite thing in the world around Christmas is to pick a book and send it to 10, 20, 30 friends. The same book. And I'm like, 20 bucks? 30 bucks? This year it was The Uncool by Cameron Crowe. And I was just talking about this with somebody. And I said, oh, I gave that book to a few people for Christmas.

1:10:54And I went through Amazon. Oh, I gave 26 of these to various people. So good. It's$300. Anybody who's making a reasonable income. By the way, you don't have to wait until Christmas. I know. I know. I was just thinking about that Carl's Secret Book Club. It's launching that. It's a really fun thing. Now, there's a little bit of a puzzle figuring out what's the right book for the right person. And not everybody gets the same book because they're different people. But all this comes back to... Spend the money. So I... Again, it's the end of the podcast, so I can say stuff. Lex, there's no cutting any of this out.

1:11:40So 1987, 1988, 9-11 Cabrio, I purchased three or four years ago for like 60 grand. It was an old ratty car that needed to be restored, and the plan was to convert it to an EV. This car wasn't right for that, so I ended up doing it with an 87 coupe with 300 ,000 kilometers on it. But the 88 turned out to be this rare matching numbers M491 911 that was worth a ton more than I paid for it. So I put a bunch of money into it. My wife was complaining. my wife was complaining she doesn't get to drive a stick anymore hey honey here's your weekend car I bought it for this reason we're just parking cash and it's worth double what I paid drive it and she's like it's loud it smells it doesn't have ABS it doesn't she goes nice clutch but no airbags no ABS and I'm like so what are you saying by the way this is my cross to bear my wife is very unhappy that I got her an old 911, and she is forcing me to buy a newer Porsche.

1:12:52Like, these are problems that most married men do not have. That's how you know you married the right woman. If your wife says, nice clutch, you're on to something. I taught her to drive a stick when we were dating. She drives a stick better than... So, her daily is an unusual color. By the way, another great purchase during the pandemic when everybody was freaked out, I got her a Panamera 4S hybrid in amethyst metallic, super rare color, substantially less than it should have. And some of the one of the guys from my car group says to me one day, you know, you have the only amethyst metallic Panamera on the island.

1:13:42I saw your wife driving it. I tried to catch her. She's got a crazy lead foot. I couldn't catch her. I was beeping. I was waving. So I'm like, oh, I'll ask her. So I go home that night. And I said, I said, hey, how was your day? She goes, crazy thing. This guy in a green 9-11 was haranguing me, was chasing me. And I just put the hammer down and this guy couldn't catch me. And I said, you know, that was Joe, that green. It was green, right? She's like, yeah. Yeah, that was Joe. He was just swinging, trying to catch up to say hi. I'm like, he said he couldn't catch you. It's a GT3. It's like the fastest street legal, you know, just below the Turbo S.

1:14:21There's only one other car that's a fastest street legal Porsche with a stick shift. So good. That's what I'm talking about. So I am in the process of swapping the 88 for a 2024. I know exactly what I'm going to replace it with. I found a little bit of a unicorn. The only problem is the color is wrong, but it turns out a relatively new car, you put a PPF wrap around it to protect the paint. Now they make those wraps in colors, so you could get, I really like this paint-to-sample purple-violet that's like a$20 ,000 upgrade when you order the car new. No, just put plastic on it, it's$6 ,000, and now you have the car whatever color you want.

1:15:08So good. So she picked that color. The purple? The purple. I found this. It's a GTS. It's a cabrio. It's a stick. It's a chalk interior, which is even rarer. And rarer still, ceramic breaks. So good. It's just the wrong color. It's like, I'm going to fix this. Don't worry about it. So good. So that was the, this is an obscene amount of money, and I don't care. Yeah, yeah. You tell me 20 years from now. Nobody looks back and says, oh, why did I buy that? We look back and regret on the things we didn't do, not the things we did. I mean, my version of that is two months ago, I did not know that my 24, 25-year-old son, 23-year-old, anyway, 24-year-old son was going to ask me to go spend some time on adventure motorcycles this summer.

1:16:00It wasn't in my financial plan. Do you have a license for that? Yeah, I actually do, because 10 years ago, five years ago, I was on a BMW 900 GS. Oh, that's a big bike. Yeah, and so we just got Yamaha T7s, so the Tenere, Tenere 700, which is a great bike, but my son is the one. I didn't know that. It's costing me more money than I'd planned on spending, and I'm not going to regret a second of it. Isn't that what else? That's the whole point. First of all, you have to stop, and I know you have gratitude drawings in here. The fact that it's a realistic option for your eye to indulge in these ridiculous spending things.

1:16:37And a part of me knows how utterly ridiculous this is. So first, you have to have some gratitude for that. But second, if not for that, what are you going to do with the money? And the fact that my 20-something son asked me to do it. He's enthusiastic about it. The answer is yes. I called, yeah, the answer is yes. you know and so am I going to look back 5 years from now 10 years from now 30 years from now and regret that there's no we spent more money than we really should have on our 4 years living in New Zealand right and I would do it what years were you in New Zealand 16 to 20 we didn't mean to do it it wasn't political we went 16 for a year we ended up just staying for 4 I assume it was fantastic unbelievable we spent way more it was warline irresponsible in this case even.

1:17:26But it was a requirement. My wife was essentially like, after the financial crisis and everything, I was just a broken human. Really? Oh, just... I never thought of you that way. Well, that's nice of you. But yeah, that was part of the problem, is I was a superhuman out here, but not inside, not in the house. And it was just a lack of patience and not deep presence. And she was like, we're going. Would you like to come? And I was like, yes. We ended up staying four years. And it was hard, money-wise. it was a bad decision financially. Were you working there? Yeah, but you know, New Zealand, you're not doing the same thing.

1:18:02You're not that far from China. Did you do anything in Asia at all? Very little, no. Really? But my point really is it probably wasn't the best from a spreadsheet financial decision. But I would do it again all over. So, for sure, same thing with a car. Spend, to the degree that you can, find the things that align with your use of capital and your family and the experiences with the people you love, we know that we will not regret. We will not regret spending time and money on experiences with people we love. So we've been at this for a solid 90 minutes. Let me jump to my favorite questions I ask all my guests.

1:18:41Otherwise, I'm going to keep you here through dinner. Starting with, who were your early mentors who helped shape your career? I know you asked that question. and I thought really carefully about it. And the one that actually probably had the biggest shaping on me was a little far. Ron had a huge impact. So between Ron and Seth Godin. Oh, really? Seth Godin's stuff is really interesting. Yeah, and Seth, I always saw Seth as somebody who was doing something here that applied here. Uh-huh. And that was really like... So doing something in a narrow little space that brought application. Like he was a marketing guy.

1:19:15Marketing, marketing, marketing. But, you know, it had brought application and doing it consistently over a long period of time. I mean, Behavior Up Radio was started because of Seth's daily blog. He said to me, why aren't you doing a daily blog? I said, I don't like to write. He said, you like to talk? And so I started. We're episode 1500 now. Unbelievable. So Seth Godin, Ron Lieber had the biggest impact on me. Let's talk about books. What are you reading right now? What are some of your favorites? My favorite... And I know when you're writing a book, it's really hard to read. Yeah, yeah. No, one of the most...

1:19:46Two really impactful books, Fooled by Randomness. Nassim Taleb. Come on. I wanted to have him on the podcast. He told me to go F myself. He probably said that exactly. I'm giving you the polite word. Yeah, I'm sure. So that book, and then Pema Chodron's When Things Fall Apart. That's a really interesting combination. Pema Chodron, When Things... Well, they're both, if you understand, they're both related to this idea of this false sense of certainty that we talked about. So Pema's work has had a massive impact on me. Reading right now, I just finished... literally last night I just finished Homesick Nomad.

1:20:24And I can't remember her name. Brianna. Fiction or non-fiction? No, it's a memoir. A short little memoir about a lady who drives her van around the desert of southern Utah. So it was like a home. She has a Utah connection, Salt Lake connection. So that was really good. And Bison for the Broken Heart, or Buffalo for the Broken Hearted, Dan O 'Brien's book. Someone else mentioned that. I think you... Oh, I told Mev about it in his book Roundup. Okay. Really interesting. What are you streaming these days? Tell us what you're either listening to or watching. Mike Birbiglia. Uh-huh. So hilarious. Working it out.

1:21:01You know he has a podcast also. Working it out. That's his podcast. Oh, I thought that was the name of his stand-up on Netflix. I listen to it religiously. I'm trying to get... Mike, if you're listening, I've been trying to get a hold of Mike for a long time. So there's a handful of comedians with their own podcast now. at that. Not just Seth Rogen. Not just Joe Rogen. Yeah, for sure. Tom Papa has a podcast. Mark Maron, the original. Mark is the OG in this space. Pete Holmes. Who's the guy who was the co-writer Blocks with Dave Chappelle? Jordan Blank on his name. His pod is occasionally interesting.

1:21:39Pete Holmes is actually really great, too. Why do I know the name Pete Holmes? He's another one of these Netflix comedians. It's amazing. Good Hang with Amy Polar. I was just watching her with Billie Eilish. That was really kind of fun. There's a ton of them. The reason I really like Berbiglia is it's really about the process. I think about a lot of my work, especially the public speaking, about testing bits, seeing how they land, paying attention. That didn't work quite the way I wanted to and Mike does a really good job of explaining that. Then I just finished The Dark Wizard, Dean Potter's the story of dean potter who was an lcap climber long before lcap climbing was you know this mainstream thing and about his untimely passing through base jumping or something it was an amazing story for so there are a lot of these hobbies like i i don't mind going fast on the track there are a lot of these hobbies where you my brain does the risk reward analysis and say oh there's just way too much random risk in this oh like wingsuiting he's a wingsuiter Yeah, I mean, he was driven by the fact that the only thing that made him feel alive was the death consequence.

1:22:49Right. It's a whole other thing. It's called the dark wizard. That's a deep psychological issue. Yeah, for sure. But it was super interesting. We'll skip that. Final two questions. What sort of advice would you give a recent college grad interested in a career in either being a financial planner, being an author, being an artist? I know you sometimes don't think of yourself as an artist, but you clearly are. Yeah. Just take the next step, right? Like, I just, I think, like, getting too caught up in how is this going to work and what's the narrative. Journey to a thousand steps. Yeah, and... A thousand miles starts with the first step.

1:23:30Try not to compare, like, there's a Lao Tzu quote, be who you really are and go the whole way. And I think I wish I would have started that a little earlier. Like, what does it even mean? Okay, take one small step, take one small step. And if I was preparing in finance, I'd get more comfortable, especially in the advice side, get more comfortable with learning to be deeply present with people. Curiosity, questions. Deeply present. I think financial advisors aren't going to be paid for solutions. If they are right now, they're not going to be paid. They're going to be paid for presence. Like opening up the ability to have these.

1:23:58Because the solutions are table stakes at this point. Right. Right. But it's like self-driving cars. It was in the Waymo, right? It was safer than the Uber driver right before. Did it feel very weird? But here's the thing. I still have to tell it where to go. And even more importantly, on the journey, if I saw something, like, oh, wait, what's that park? I think that requires... Could you do that in a way, Mo? Could you ask it to stop? Yeah, you can tell it to stop. I don't know how you do it, but you can tell it to stop. On the app? So I'm a big fan of self-driving money. I can't wait. And there's still going to be somebody there that needs to say, hey, is the boat really important to you?

1:24:33Go try the racetrack thing. And that, to me, is curiosity and presence. Still, you've got to be a technical rock star, but curiosity and presence is where the value will be. Final question. What is it that you know about the world of investing or psychology today? It might have been useful back in the 1990s when you were first looking at that Netscape IPL. Yeah. Yeah, that compounding does all the work, right? Like stop spending time trying to find the best investment and just own stuff. If it compounds, I don't know who said this, if it compounds, let it compound. The line I use is your job is to prevent yourself from interfering with your portfolio's ability to compound.

1:25:23That time is the thing that matters. Absolutely. Carl, this has been absolutely a delight. Normally, I want to make this about the guest, but there's something about you that just encourages me. My whole goal. It's your aura. You bring it out in people, which is probably why you were a good advisor. You get people to open up to you. That's a really high compliment. Thank you. It is. It absolutely is. Cheers. We have been speaking with Carl Richards. He is the author of the book, Your Money, Reimagining Wealth in 101 Simple Sketches. If you enjoy this conversation, Well, please sure and check out any of the 639 we've done over the past 12 years.

1:26:09You can find those at YouTube, Bloomberg, Spotify, Apple, or wherever you get your favorite podcasts. I would be remiss if I didn't thank the crack team that helps put these conversations together each week. Alexis Norieger is my very patient video producer. Producer, New Yorker dropping the R. Sean Russo is my researcher. Anna Obluck is my producer. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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