#707 - Morgan Housel - 9 Timeless Lessons About Human Psychology

24:27That's so smart. I've had these ridiculous moments in the past. I'm sure others have something similar of I'll be on vacation. I'll be in Maui with my family. And it's day one we just get there. And standing on the balcony watching the sunset and thinking to myself, wouldn't it be so great if we could come back here next year? It was like like even though I'm literally right there, what gives me the most pleasure is thinking about coming back. And then I honestly have this recognition of just like, this is so absurd. But that's how your brain works because thinking about coming back is going to give you more dopamine than actually the fact that you're there in the moment.

25:01Does an interesting insight from God's sad new book on happiness that the amount of sex that makes somebody happiest is an adequate amount based on kind of an overall baseline, But what's most important is that you're having a little bit more sex than most of your friends are based on their self reporting and you've got this phenomenal quote Which I think kind of summarizes where we're at there is no such thing as objective wealth everything is relative and most relative to those around you There is no such thing as objective wealth is phenomenal and it's so true given the fact that Okay, are people today with all of the advantages that we have a hundred years hence better off than John D.

25:43Rockefeller. Well, no one's going to say that. No working class American, the living paycheck to paycheck is going to feel like they're more blessed than what was once the richest man potentially whoever lived, apart from Massa Musa or whatever that dude was. No one's going to feel like that. And yet objectively, there are arguments that you can have on both sides. Right. You know, there's as most comedians do, they'd really get to the point. There's this great Chris Roxquet where he says, if Bill Gates It's woke up with Oprah's money. He jumped out the window and slid his wrists on the way down.

26:15And it's just to show that all wealth is so relative. And so once it's framed like that, there's another quote from Montesquieu, who said this 300 years ago, back to things that never changed. He said, if you wish to be happy, that could very easily be achieved. But most people want to be happier than other people. And that is difficult because we overestimate how happy other people are. So that's the thing, too. It's not about how much you have. it's just where do you sit on the relative lot? And from an evolutionary standpoint, of course, that's the case because we're competing against each other for resources and for mates.

26:49So of course, it doesn't matter how much I have, it just matters that I have more than you, not you in particular, but you know. So this must relate to fame and status as well, beyond just finances. Yeah, I forget who said this quote, but there's I read something recently that said, it's so tragic that humans are not wired for happiness, they're wired for status. Yes, that's what we're going after. It's not what can I do to make me happier. It's what can I do that puts me ahead of the other people. And I think there's actually a lot of people early on in their career that really get this wrong in the sense of they might have a skill.

27:23I'm really good at Microsoft Office. Yes, but so's everybody else. Like on relative terms, that means absolutely nothing. And people over, they overestimate that how rare their skills are. And then they get to the job market and they, their first salary sucks and they're not, and they're not that useful and they can't figure it out. It's because the skills that you have, everybody else has them too. In relative terms, they're zero. And so that's really true. It's true in investing too, where it's like, it doesn't matter if you have a lot of information. All that matters is the information that you have that others don't.

27:55And that number for most investors is zero. The information that you have that others don't, doesn't exist. There's no information that you have about the stock that others don't. And that's why it's so hard to beat the market over time. everything is just relative to what other people have and what other people are doing. I've got this idea at the moment about trajectory being more important than position, and it's literally the same lesson, but from a status, fame perspective. So if you are the number two in the world, but last year were number one, there is way less sexiness and clamor around you than if you're number 150, but last year you were 300.

28:37And just something about our prediction engine, being able to kind of move out, let's extrapolate into the future exactly where this person's going to end up and what they're going to do in this sort of allure of what's trendy, something else that's going on specifically with that, which is someone who is an appreciating stock as opposed to a declining stock, even if that absolute position is lower, it tells you more about the current sentiment right now. And because our availability bias and our window of what we're seeing is so dependent on the moment, we overindex for the person who is on the climb but lower as opposed to the person who's maybe at the top, but not staying there.

29:22This is great quote from Will Smith in his biography where he says, Becoming famous is the most amazing feeling in the world. Being famous is a mixed bag. And losing fame is a pain like you've never felt before. And like too, I think it's true for wealth too, that becoming wealthier, like your net worth rising, is amazing. Being wealthy, just having a high net worth is okay. And losing wealth is terrible. It's always just the change in circumstances that you're after. Like most people get more joy and pleasure out of gaining wealth and they do having wealth. Dude. And they're going to be happier when it's going up than when they actually have it.

30:00You won't go into guess this, but Andrew Tate said it best, not one for quoting Andrew Tate, but I do love this quote from him. And he says, having things isn't fun, getting things is fun. There's a great quote from Drake too, where he says, people respect you more when you are chasing something, not when you have it. So good. Yeah, I think it applies to virtually everything. And it just, it kind of boils down to isn't life just one big competition. We're just trying to get ahead. And it's kind of a sad thing to come to terms with. And I think there are ways to combat that at the individual level.

30:35And not always beyond the rat race, but just enjoy what you have inside of your own head. But at the society level, it has always been like that and always will be. I'd mentioned before we started, I was with Dan Bilzerian this weekend. and I rolled this trajectory is more important than position thing to him. And he seemed to agree too. And I said, I wonder if there's an argument to be made that rapid changes in status and wealth and accolade and prestige are actually to be avoided almost at all costs. Because what you're doing is you're now resetting that baseline, as you mentioned. That's so good.

31:12Yeah, so I'm not like slow life strategy, but slow success strategy, trying as best you can to just pull the fork out. Let's just spread out. I'm not going to go and get the car that I've always wanted immediately. Why don't I get a car that's halfway between it? It's strange because we want success. We don't want to leave anything on the table. We want to feel like we're actualizing. We want to maximize whatever we can bring to the world. And yet, the quicker that we do that, all that we're really doing is condemning a future version of ourselves to have a high a bar to jump over. Right. I mean, the perfect example of that, everyone knows the long history of lottery winners, either going bankrupt or being miserable afterwards.

31:56I know recently, because the lottery's now get ridiculous. There was someone who was like a very modest blue collar worker. Imagine this person was making $40 ,000 a year and they won a billion dollars in the lottery. And that honestly, to go from making 40 grand to getting a check for a billion dollars, has got to be the biggest mind fuck that you can imagine. And I don't mean that in a good way. I think that is something that on net, it's ridiculous to say. I know it sounds crazy, but on net, that's a psychological burden. Could be one of the most difficult things that you've ever had to deal with in your life.

32:35Yes. I had this idea as well about guys like Jordan Peterson and Brett Weinstein and Eric Weinstein, like, you know, people who, for a long time were academics working in the dusty annals of some place, and then they get ripped out of obscurity by some bald MMA commentator. And before they know it, that, you know, heavily scrutinized and people care about what they think and, oh my god, I need to comment on the Ukraine and, oh, you, let's get involved in the trans issue. Like, they had, we often talk about the perils of fame to young,

33:12but you never got the chance to work out what it's like to be a normal person, you turned into Macaulay Culkin or whatever, but like, more old fame is you thought you knew who you were, and your sense of self has been completely ripped away from what you actually, your entire conception, the way that people see you, how much they care about what you've got to say, you decades and decades and decades of time accumulated, ossifying this version of you you thought you were for something to come in and just smash it to pieces in the space of no time at all. I just told it, that's great. I spoke with this author recently, whose first book was a mega blockbuster success.

33:50And his second book was by any objective standards, a huge success, but in order of magnitude or two less lower than his first book. Shit. Totally shit. And I asked him how that felt. And he said, even though he knew that was gonna be the case, going into his second book, he knew that would be the case. And he was prepared for this. It hurt. it hurt because his first book set the bar so ridiculously high. Have you got this in your mind given that the psychology of money your first book was just, I mean, you're telling me that it's growing. It's like it, the R0t number of your book is like COVID at a bad day.

34:26Yeah, have you got it the same as ever? Despite the fact that everyone needs to go and buy it right now and the link is in the description below, is almost certainly going to be a disappointment to you? Yeah, I think about a lot. And that was one of the points of talking to that author who I was speaking with because I know this is going to be my situation. How do you prepare mentally when I hope to write many books in my career and I would bet very good money that the first book I wrote will by an order of magnitude be the biggest seller. It's kind of a hard thing to wrap your head off. Of course, it's a good problem to have.

34:59Nobody feels bad for you. But yeah, it is kind of a hard thing. When I'm 66, how am I going to feel knowing that I peaked at age 36 when psychology money came out? It's probably not going to feel that great to be honest, but it's of all the problems to have It's it's not a bad one. Yeah. Have you seen the Lewis Capaldi documentary? No, you know who Lewis Capaldi is? Scottish singer guy, he would have heard his song 100 % one of your kids all have had his song on it at some point Oh, you've heard it on the radio billions and billions and billions of streams and albums and all this stuff Documentary about him and he has to write second album first albums just just ridiculous success, right?

35:37Globe trotting insanity. And it's songs that he wrote when he was 17, still playing them in working men's pubs around Scotland, right? And it's better mastering and studios and all the rest of it, but it's the same songs. And then he gets this catapulted to the top of the tree and then is told, right, do it again. And COVID happens. So he's back in his parents house in Scotland in this shed type thing that's got is recording equipment in there trying to write songs for this second album. And he develops a twitch, like a Tourette's twitch. And there's videos, you can look at the videos, it's pretty uncomfortable to watch, of him at Glastonbury, big festivals, and he can't sing.

36:20Like he literally can't get the words out because of how nervous he is. So he's very much feeling the pressure, a man who has the talent but not the constitution to be famous, which I think is a beautiful, very interesting dichotomy and he's got this one line in it that I paused the documentary and just turned it off after that and went into like a fever dream for about an hour thinking about it. He's there and he's talking about all of this change and it has been all of this chaos around him and he's trying to write the second album and the pressure from the label and all of this sort of stuff.

36:49He needs sense of the camera and he goes, fame doesn't change you. It just changes everybody around you. Yeah, yeah. Oh my god. Every time I say it I get my hairs on my arms stand up because I just thought it was so profound and so beautiful. And uh, yeah, yeah, you should watch some Netflix. It's kind of scary because what do so many people, even if not explicitly, but they implicitly hope for and want in life? It rounds to fame at least, if not explicitly famous what they want. And then you watch these people who've actually had it. And there's a lot of baggage attached to it. And I really admire the people who who went out of their way to push back or to quit the system.

37:32One is the actress Cameron Diaz, mega a list actress, and then she said she's done, she's done acting. Now, she's still famous, I'm sure the paparazzi still hound her and whatnot. She can't get rid of that. But for people who say, I've had enough, I achieved what I wanted to in this industry, and I'm out of here. The other example, I don't know how to pronounce this band's name. It was spelled G -O -I -T -E, and they had one mega hit in 2012. I don't know how to pronounce it, goi, goi, what whatever it is. It sounds like goi, yeah. I think that's what it is. And they have this mega mega blockbuster hit in 2012.

38:06It's all over the world. It's like the top song and then they just quit. They said, we're done. We're never going to top that. We're out of here. And I have so much respect for that if you can actually pull it off. It's the people who feel like they start with a mega blockbuster and then they have to top it the next time that you are guaranteeing yourself depression and misery if that's your goal. You had this other bit saying expectations are easy to ignore because their value isn't on a price tag. What's that? Well, we know what is the cost of a Ferrari. You can look at the price tag. You know what the cost is.

38:37It's very easy to measure and put on a spreadsheet and get with precision. This is the cost of a Ferrari. Not only is this a cost, but here's how much work you have to do to earn that much money. So it's very quantifiable. But what is the cost of high expectations? Most people are completely oblivious to them. and you can't really measure them with a lot of precision. But they are an enormous cost because they're weighing on your happiness. And so that's really what it is. And that's why they're so easy to ignore is because they're not on a price tag. It's not quantifiable. How do I say, like, how do I quantify the fact that I have hired expectations for medical care than John DeRoccafeller did?

39:13How do you quantify that? You can't, but it's very real. It's extremely real. Yeah, I've got another one for you, dude. So me and George Mack have been working on this for a while, hidden and observable metrics. And it's our contention that people trade hidden metrics for observable metrics. And it's mostly to do with the gamification, the ability to track, like how visceral and how front of mind it is. But a good example of hidden metric would be the quality of the relationship with your significant other. Or time is an odd metric. It's kind of hidden, it's kind of not peace of mind, sanity, right?

39:52Quality of sleep, your ability to spend your attention where you wanted to be as opposed to it being distracted. All of these things, right? Happily traded for a raise. Happily traded to change to a different job, which is twice the distance away. One of the biggest determinants in someone's life happiness is the length of their commute, right? I learned that from Jonathan Height. Like, if you want to be happier, half your commute. Don't worry about the wage. And yeah, people will happily, well, I'm going to spend an extra, you know, 45 minutes there, 45 minutes back, which means an hour and a half that I'm not going to spend with my wife.

40:25And that's going to cause this amount of degradation of the amount of relationship, satisfaction that we get. But 20 grand extra year or whatever, right? Hidden metric traded for an observable metric. And the fact that you can measure your salary down to the penny, and not only that, but I can compare mine to yours. So if we're in a society where it doesn't matter what I have as long as I have more than you, I can measure that so cleanly. But what also matters to your life's success in terms of the quality of your marriage, your ability to be a good parent, your own happiness to sleep eight hours at night with a clear conscience, those things are very hard to quantify, if not impossible to quantify.

41:03But they matter more. So I think all of that observable versus uno -observable, that's what it is. It's just we're searching for something that's so easy to quantify. everything else, even if it matters more, it's at a site, at a mind. George is trying to battle back against this by making the hidden observable. So he's got some type form thing that populates a Google sheet. It's peak autism. And he puts in at the end of the day, how many stars he was, did he wake up at this time, did he do these things and tries to track quantify that, which is usually just kind of like an ephemeral wishy washy notion.

41:46It's like this ambient fucking sense behind the back of his head. So to kind of round this out, and I think it's a really, really important point. I'm so glad that you put it in the book. Presumably, there are two things that you can change, right? Either your expectations or your circumstances. You can either reduce your expectations down or you can raise the quality of your life up on whatever metric it is that you're playing about with. And so, technically, have you found any way to reduce your expectations? The only thing that's worked for me, I wrote about this in the psychology money, was this, it was an observation that I had when I was a valet at a five star hotel in Los Angeles during college.

42:22And there would be all these people driving in in Rolls Royces, Bentley's, Lamborghini's. And I realized, I was like 20 at the time, but I realized that never once, when somebody drove in in a Lambo, did I look at the driver and say, oh, that guy is so cool. What I did is I imagined myself as a driver. And I thought if I was a driver, people would be looking at me and thinking that I'm cool. But I was like, wait, but I never do that for the drive. I just imagined myself. So then it was, nobody actually cares about the driver, but they want to be the driver, because they think people will then care about them.

42:56And it was just like, once you recognize that game, and the big takeaway is like, nobody is thinking about you as much as you are. They're busy thinking about themselves. And once you realize that, No one's paying any attention to the size of your house or how nice your car is. Nobody's paying attention to your clothes. Nobody is paying attention to him as much as you are. Once you recognize that, then I think your desire to put out your peacock feathers like that, diminishes not not to zero. It's not to say you should look like a slop. It's not that in the slightest. It's just when you realize that nobody, nobody cares about your seconds, your circumstances as much as you do because they're busy worrying about themselves.

43:33then I think it's much easier to keep your expectations in check and be like, why do I want to spend money on this thing that's going to make me look better when nobody's even paying attention to it? Except maybe the people who are like very close in my life, my spouse, my kids, my parents, who don't care about the clothes that I'm wearing. They love me for being me. So that's like that realization for me was like, okay, look, I like nice homes and nice cars, but when you recognize that game, I think you are ambition for those just peacock feathers aspects of life goes way down. Wild minds, people who think about the world in unique ways you like also think about the world in unique ways you won't like.

44:13I started thinking about this years ago when people were like Elon Musk is kind of rude on Twitter and he's saying the wrong things and he's not very polite to people and like of course this is a guy who at age 30 took on GM Ford and NASA at the same time and succeeded. Like, of course, he's not a well -balanced individual. Of course, he has these crazy quirks, and of course, he thinks that the rules of society don't apply to him, because that's what you like him for. The reason that people like and admire Elon Musk is because he doesn't think any of the rules apply to him, and he's willing to take these bonkers bets on new technologies and new engineering.

44:50And with that, an unavoidable part, an undivisible part of that, Are these parts of the world where he thinks about the world differently than used in negative ways? He can be a jerk. He has different political views than people. You cannot separate those two. You cannot have somebody who is a crazy out of box thinker in a positive way and also dresses and speaks and looks and is polite like an average citizen. It does not exist. Every person who has outside success is going to have some traits in them that are bad. even if it's someone like Warren Buffett. It's like the best investor of all time came at the expense of time with his family and his kids.

45:32Like there's always, most people, I heard this quote the other day, everybody adds up to the same number. But there's like different ways to get there. And I think most people who are abnormally good at one thing are almost always abnormally bad at something else. Like those numbers are gonna even out in the end. So if you take somebody like Musk who is off the charts talented at engineering and risk taking entrepreneurship. Of course, he's going to have traits in which he is abnormally bad in equal parts to what he is good at. And I think there are so few exceptions to that. Actually, the closest that we've come to, an crazy thinker who looked and acted like a normal CEO is Bill Gates.

46:13There aren't many others who are like that where it's like he was this crazy hard driving visionary, but he wore a suit and said the right things on conference calls. There aren't many people like that. Even if you looked at Mark Zuckerberg, he was one of the first to, I'm going to wear T -shirts and jeans. Even that little thing was just like, he didn't look the part of what he was supposed to be doing because he was just like, I'm going to do it my own way, I'm my own person. For all of these people, there are traits. To me, it's just be careful who you look up to because you cannot pick and choose the parts of people that you look up to.

46:47So you can't say this came from Navale. You can't say I want his body and his mind and his wealth You got it. It all comes with the same package So if you look up to this person and say I want to be like that guy Well, you got to take the full package the good and the bad. They always come one in the same That Navale sequence has inspired like probably ten blog posts for me There's another one from Jason Pargan, which is great accept all of your heroes a full of shit. Your heroes aren't gods. They're just regular people who probably got good at one thing by neglecting literally everything else.

47:22So, you know, Tiger Woods, Gilt Golfer, not a fantastic husband. Alan Watts, life -changing spiritual teacher, died of alcoholism early. James Joyce, guy that wrote Phinegan's Waken Eulices, masterful author, but also, posthumously, a bunch of fart -fettish love letters that he wrote to his wife got released. Like, you know, you might want to be the best golfer on the planet, but you want to be chased down the driveway by your wife, wielding a club that presumably you got for free from your sponsor. Like, you might want to have millions of people fall asleep to the things that you say in this beautiful British accent, but you want to die early because of how much you drink or like, you might want to write blockbuster novels like Eulacees and Finnegan's Wake.

48:01But you want to have your innermost thoughts about the different types of farts that come out of your wife while you have anal sex with her, be released to the world upon your death. No, no, no, no. I guess I imagine that you would say no. I read a lot of biographies of entrepreneurs and generals and presidents never once, not a single time, have I finished a biography of someone who achieved these mountainous heights in life and said or thought, I wish I could have lived that life. And the opposite is almost always true. It's usually at the end of the book. It's like, you achieved a lot, but that was a sane life that I never hoped to pay.

48:38within a hundred miles of it. I just finished the Ken Burns documentary on Ernest Hemingway. And here's another. He was the author of The Century. I don't think that's an exaggeration. And his personal life was the most despicable, miserable, immoral, drunken life that you can imagine. And of course, he ended by taking his own life. And but the finer details of what his day to day life were like, nobody would look at that and say that looks fun. And it was easy to glamorize the life of a writer, this big macho guy who loved bullfights. But like the actual love like his love life, his family life, his alcoholism, his depression, was terrible.

49:16It was awful. And I also don't think that you can detach how good he was of a writer from that alcoholic depression. They were one in the same. It was driven by that. And it was that messed up mind. It was that pain in his head that created the good writing that we all enjoy. What does it say that the people who we most admire are the ones who have the least admirable internal states? I think that that was kind of the point of this chapter. It's like be careful who you look up to. And after that I started trying to admire people in my life who I thought lived a good life. But we're like, I mean this in the most plightway, like very average.

50:00Not the celebrity, not the billionaire entrepreneur, but who do I know who's just like, oh, that guy is a good husband and a good dad, and he's in good shape. He takes care of himself, he takes care of his family, he's smart, he's educated, he's funny. And look, he doesn't make that much money. Nobody knows who he is, but let's leave that aside. The rest of his life looks amazing. And it's something that I want for myself. I wanna be a good husband, I wanna be a good dad, I wanna take good care of myself. So rather than looking up to the famous celebrity, look up to the guy across the street, who nobody knows.

50:32That's actually who's closer to your role model. Yeah, the same personality traits that push people to the top also increase the odds of pushing them over the edge. And I found out that we're both mutual fans of John Boyd, who, if you want to talk about extreme personalities that achieved stuff, this is a guy who actually wrote the book on fighter pilots for the US Air Force during a kind of a glory period, right? Sort of 40s through to 80s, which is kind of like this era of fighter pilots. And he would smoke cigars. I think once there was a story that he just put his cigar out on one of his commander's ties.

51:12He just, he was an absolute monster. There was some story. I like getting some of these details wrong, but there was a story of he was in the barracks with his fellow air forcemen. and the heater wasn't good enough. It was in the middle of the winter and they were all cold and the army refused to put in new heaters. So he burned the barracks down. He'd lit them on fire and burned the bed just out of protest. And there's all these scenes of like these little things if he would be in a meeting with his superiors, with generals, and he would be, he would like bite the callus off his hands and spit it across the table.

51:41Just like it, he was just a monster of a human, but he was so talented at being a fighter pilot and he was so good at figuring out the math of the certain speeds and the trajectories of how you wanted your plane. But with that ridiculous talent came this personality that was like impossible for people to put up with. Wild numbers, people don't want accuracy, they want certainty. There's this great quote where Jerry Seinfeld and Jimmy Kimmel are driving in a car. And it's this old car. It's like this old relic of a car, this old custom car. And Jimmy Kimmel gets in and he says there's no seat belts in here.

52:17Does that bother you? And Jerry Seinfeld says, is no, but tell me the truth. How often in your life have you actually needed a C -Pel? And it's a joke, it's supposed to be funny. But in that is the world is governed by odds. It's not black and white. It's like, of course, if there is a 1 1 1 1 1 1 1 % chance that you're gonna need to seek out in your life, you should wear it every day. People understand that. But what actually gets people to pay attention in life is just whether you are right or wrong. And you see this a lot in investing, where it's like, I think there's an 80 % chance that this stock is gonna go down.

52:48But then if it goes up, was I wrong? Like no, it's not a black or white thing. This happened in a big way during the 2016 presidential election, when Nate Silver, who is a very famous statistician who predicts elections, he said that the odds were that Hillary Clinton was going to win. And I think at the time he said there's a 70 % chance or 80 % chance that Hillary Clinton's going to win. Obviously she did not win. And so the next morning, every headline was Nate Silver was wrong. Nate Silver got this wrong. Nate Silver and Blue is forecast. And he was like, no, I said there's an 80 % chance he's going to win, which implies there's a 20 % chance that Trump is going to win.

53:25Just because that's what happened doesn't mean it was wrong. But most people will not accept that form of thinking. It's black or white, were you right or were you wrong? And so that's like it's a big flaw when people think about numbers in the world and data and statistics is that the world is governed by probabilities, but everybody thinks in just binary. Yes or no, right or wrong. And it makes it so it's really difficult to know who to pay attention to. Like you want to be paying attention to the Nate Silvers who think about the world and probabilities. And even when they are quote unquote wrong, it's like, it's actually really tough to tell whether that was like a bad call.

54:01Like he easily could have been right. Like there's an 80 % chance Hillary was going to win. That was probably the right statistic, even if it didn't turn out to be how it, like what happened in the real world. So the way that people think about numbers, is screwed up in all kinds of ways. And it just makes it, that's part of the reason that we're so bad at predicting markets and politics. It's like the world is governed by probabilities, but we always think binary, right or wrong. I think there's something seductive about a person who is able to speak in binaries and black and white as well, because it seems like certainty, which is a good proxy for expertise, and you don't actually know.

54:37Like if everyone's just throwing shit at the wall and my shit's sexier than your shit, even if my shit's wrong, it's going to garner more attention. Right? I see this online with other cultural commentators and people that do YouTube and podcasts and stuff. I'm very, I'm chronically uncertain of everything about, and it's why I don't really make big proclamations about much that I don't have an area of expertise in. Didn't bother commenting on COVID, didn't bother commenting on Ukraine, didn't bother commenting on Israel because I don't think that the world needs more noise. it needs more signal and uneducated idiots like me who don't have specific knowledge within that domain, giving cod psychology opinions about it is precisely the problem that we're trying to battle back against.

55:20That's a second. And you had a post on Twitter recently that was just about this for what's going on in Israel where you said, I don't know enough to comment on the situation and I know there are a lot of people who took issue with that. How can you not know more about this situation that you don't know more about. I don't know, it is what it is, but I think the world would be a much better place if people that didn't know what they were talking about tried to not talk about the things they don't know about. And we all get out over our skis, right? You know, that same thing I spoke about early run, like if you're someone who has a young medium or old age garnered a little bit of attention, why shouldn't I give my thoughts on epidemiology?

56:01Why shouldn't I give my thoughts on the lab leak hypothesis? Why don't they want to know about my opinions on immigration? You know, they're very, very interesting when it comes to productivity or focus or whatever the hell else that is that you talk about and you think. Again, with that, there's seductiveness to fluency in particular, but absolutely certainty to this guy called Peter Zayan, real interesting guy, geopolitics dude, and I don't know enough to be able to stress test his ideas. But I know one thing, he's one of the most certain humans when it comes to speaking that I have ever heard.

56:41And he came on the show and I found him very compelling. But I don't know much about what we're gonna do. Go dig into the fucking demography of China. And be like, oh, actually, I think it's not gonna be 650 million. It's gonna be 750. Like I'm not gonna go do that, right? But I remember thinking at the time, while speaking to him and I kept in touch with him, I think he's a very interesting dude. Wow, like this guy speaks with so much certainty and he has vehement fans on the internet. And I think it goes right back to what we said at the very beginning, which is people abhor a vacuum and they abhor uncertainty.

57:20And if you can give them something that seems like order wrangled out of chaos, you're allowed me to become an evangelist. Like, you know, I will pray at the altar of the person who can tell me what's going to happen. Yeah, I mean, this is this is cults. How many fucking cults are like the world's going to end on the 21st of December 2012 or whatever it is. And then it doesn't happen. But the certainty was so much there that the seduction continues even when the certainty was proven to be wrong. Even when they're wrong is because what people actually want, they don't want the truth. They don't even want an accurate forecast.

57:53They want to reduce the uncertainty that exists in their head at this moment today. And so even when the pundit is wrong, people don't care. Because the pundit already did its job of reducing uncertainty when they went on TV last week. And so that's a big part of this. If you go on TV and you say, there's a 20 % chance of a recession next year. That would be your last time on TV. But if you say 100 % chance, and it's going to be bad, and it's going to affect these people in these industries, your phone will ring off the hook because you've just reduced uncertainty. even if what you are professing is something that's pessimistic and is scary.

58:28If you say it with certainty, people like, that's who I want to pay attention to. I think a lot of religions are probably like this too. Like most religions don't say there's a 20 % chance that haven't exist. It's this is exactly what's going to happen with a 100 % certainty and there's no wiggle room. The Church of Household, I'd attend that. But that reduces uncertainty when you know for certain exactly how the world works and what's going to happen in the future, what's going to happen in the afterlife. There's a very comforting aspect to that that removes uncertainty that is so unpleasant to deal with in your head.

59:02What is it about the sufficiently big sample size playing out thing that you talk about? One of the things that's always struck me is that since the end of World War II, when we've had pretty good economic data of like we track the economy with a lot of precision. There have been I think nine recessions, which is not that many. Like the sample size that we're dealing with right now is ridiculously small. And if you wanted to really be an expert on economic history, you would, if you had like a wish from the genie, you would say, give me a hundred thousand years of apples to apples data that I can study the economy.

59:38Like let me study the last 10 ,000 recessions. But of course we don't have that. We have good data on nine of them all that we're each that was caused by like a very specific thing So it's we really don't for something as fundamental like an important for society as recessions and economic growth the truth is we really don't know that much we don't know What a really bad recession looks like we don't know the peak of our of our potential or like how fast the economy can grow Our sample size is so limited, but since it's all we have, and because it's still 80 years worth of data, it seems like a long period of time.

1:00:13It's very tempting to say the average recession lasts for eight months or whatever it is. It's very tempting to say the average recession unemployment goes to 8%. But when you look at that average, what that average is, like there are so much else that could happen for good or bad. Like the economy being way stronger than we think it could be or way worse than we think It could be once we realize that the day that we're looking at of economic history is so limited. You talk about unfortunate odds and recklessness and kind of distinguishing between the two. I think

1:00:49retroactively, even if we can see what occurred in the past, it's so hard to try and work out the correlation. Okay, did these two things just happen together or did this thing actually because this thing to happen, was it unfortunate odds, was it recklessness? It makes this entire situation really messy. You know, the one thing about a lot is that in 2007, I think it was, Mark Zuckerberg was offered a billion dollars for Facebook, NP of course turned it down. And we look at that and we're like, what a frickin genius he was, because now the company's worth a trillion dollars or whatever, like one of the smartest decisions that you could ever make.

1:01:26But during that same time, Yahoo was offered $50 billion dollars for Microsoft. The Microsoft wanted to buy Yahoo and Yahoo turned it down. And we look at that and we're like, you idiots. Like, of course, you should have taken it because now I don't know what Yahoo's worth, but it's not within 20 miles of $50 billion. And so you look at that and it's like, well, how do we know Mark Zuckerberg made a great decision and Yahoo didn't like like, there's such an easy world to imagine in which Facebook was a flash in the pan and Yahoo became the next Google. You could easily imagine that world. It didn't happen, but it easily could have happened.

1:01:58So when we look at these retro active decisions and say, uh, these retrospective decisions and say, look, Mark Zuckerberg was so smart and Yahoo, so stupid. It's not that clear, even if that's what actually happened in red. There are all these alternative histories that not only could have, but should have happened that could have made that narrative so much different than it is. Everyone's post -hoc rationalizing everything all the time. The more that I've dug into personal growth and and development and been around successful people, the vast majority of what people are doing is I have found a particular strategy that resulted in success for me, given my idiosyncrasies and pathosively resistance and genetic predisposition and upbringing and culture and timing and gender and all of that stuff, let me now create universal laws for everybody that is a retrospective justification of how what I did that gave me success is something anyone can do that can and give anyone success.

1:02:58When the irony is the reason that you are successful is because it only worked for you. If that could work for everybody, everybody would do it, and that skill wouldn't matter at all anymore. The whole reason that this person got successful is because nobody else could do that thing that they're now trying to turn into a universal law. So I think there are some things that we can learn from these major successes. Like if you're looking at Warren Buffett, the traits that you wanna learn from is like his patience, his endurance. But I don't think you should learn his stock picking skills because so many of those skills were honed in 1950 when this market was completely different than it is today.

1:03:36So that's why one of the most famous investing books is the Intelligent Investor by Benjamin Graham and was first written in the 1930s. And there is, of course, a lot of timeless wisdom in there. But there's also a lot in those books that is like hyper -specific to the economy in the 1930s and the 1940s. that if you tried to implement those formulas today, you'd lose everything. It was just relevant to that period of time, and it's not something that you can scale into a universal law. Best story wins. Stories are always more powerful than statistics. Why? It drives you crazy if you think the world is gonna be governed by the right answer and the best answer.

1:04:15And if I can just come up with the right answer, like that's what's gonna change people's minds. And it's almost never the case. It's always the case that what actually gets people to nod their heads is just whoever's telling the best story, the most compelling story. And even if the person is like, it's not to say that they're fooling people, but if you have the right answer and you're not a good storyteller, you may or may not get ahead. But if you have the right answer and you're a good storyteller, skies the limit. Those are the people that really run with it. It's so easy to discount the power of a good story because it's a soft skill.

1:04:48Well, like a lot of analytically minded people think if I can just find the right answer in the spreadsheet, if I can just create the product that works the best, everything also take care of itself. And it's not how it works. We were talking earlier, I write about this in the book, Ken Burns, who I think is just absolute genius documentary filmmaker. And everything he's ever made is just 10 out of 10. It's so good. And one of the things he does so well is incorporating music into his documentaries. And he's talked about this before where he will literally change the sentence structure of a script so that a specific word that the narrator is saying matches with a specific beat in the background music.

1:05:27The emotional word matches the emotional beat at the same time. And no other filmmaker, no other historian is doing that. Most historians would just say if I have, if I find the right information in the library, like that's what I'm going to present. And Ken Burns is like, no, this is going to be a performance. And because of that, I make this point that almost nothing Ken Burns has ever published is new information. He writes about, he's made films on the Civil War and World War II and the Holocaust. These are very heavily studied events. Everybody knows how the story ends. But his magic is that he's the best storyteller that exists of any historian who's ever existed.

1:06:07it. And because of that, when the Civil War documentary came out in 1990, Ken Burns Civil War documentary, more Americans watched it that year than watched the Super Bowl. And this is about an event, the Civil War, that everyone has been reading about since grade school. There's no new information in the documentary, but the storytelling is so captivating that it moves mountains. I think this is true for Michael Lewis, too. There's been no better business storyteller in modern times. And look, with some of what's come out recently, like he doesn't necessarily always get the story right, per se.

1:06:42It's it can be easy to criticize him. But maybe this is just because I'm a writer. I just finished going infinite the book about FTX. And even if yes, there are parts like many other people where I thought he was being unfair and supporting SPF in ways that I didn't agree with. But his storytelling is so good. His sentence structure is so good. His writing is so poetic that I will read it all day long, no matter what it comes out with. Like the best story is always going to win. I feel like that when I read yours, man, I adore the simplicity of your sentences, whether it's on your blog collaborative fund and there's a newsletter that I subscribe to.

1:07:17I want to say sorry to whoever else writes for you because my first thing is I click if it's not got Morgan House will written at the top, I just ignore it. And then you only want to read and I'm sure the rest of the right is really great, but I just focus on you. Yeah, the simplicity of your sentences, even some, I guess you would, you break convention in your books, especially in the new one, single lines, three or four word lines that are paragraphs all on their own. That was very intentional and the publishers don't like it, but that's how I like to read. I think what a lot of readers really want out of a book or what really makes them feel good is making progress.

1:07:54They're like, oh, I finished this chapter. I finished this level moving on to the next. And when you turn a page and it is solid, uninterrupted block of text, it's very easy to be like, oh, god, like what do I got in front of me? Not today, Satan. But when it's quick, when it's a quick line, it's just boom, boom, boom. It's much easier to a feel like you're making progress. But it's just an easier format to read it. You can just kind of breeze your eyes over the page and soak it up rather than like really dense, powerful reading. So I think that structure is, it's part of it. And I, yeah, you're right.

1:08:25I don't think most readers think about the length of their structures or the, the, the, the visibility of what a paragraph actually looks like. Like the, like, like a block of text, but it's critically important to the, the, the reading experience. Yeah. Your books have a particular robustness to put downingness. Like it's very difficult to put them down for precisely that reason. There's a little bit more in the high. There's another little thing. Oh, there's a story about fucking World War II. Like, let me get into that. And yet for my newsletter, I stole a bunch of ideas, yourself, James Clear, Ryan Holiday, even some of the conventions that he uses.

1:09:05And the newsletter, this is kind of commonly done now, but it's one sentence per paragraph with small align breaks in between. And it's just straight through, super easy, very nice to read, tight margins. So yeah, like stuff like that, and we were talking before we started about the story that I try and tell with these big productions that I do on the show. You know, I want to, we choose the location of these particular venues based on the guest that we're speaking to. So, you know, we have Patrick Bet David coming on and he's kind of like a, like a power guy, like a power broker kind of guy, he's like a mafia boss.

1:09:45So I wanted a wall of books, right? Or we have an Andrew Huberman coming on who's kind of this interesting blend of sort of science and precision with kind of like raw masculine kind of like grittiness, like in terms of the way that he presents. So he found this beautiful warehouse with exposed wooden beams. So it's kind of got that rawness to it, but it's organic as well. And it feels it sort of humanizes it. Or we do Peterson and we did him in the alamo in San Antonio. And it's got this sort of beautifully ornate blinds behind him, this sort of wooden blinds that's casting this very particular kind of light through.

1:10:22So you know, we're trying to do something to just create this little bit more of an event, of an occasion. But you're totally right that many of us, me included, how many times have we felt resentment for somebody who we think has achieved success that they don't deserve because of the way that they look, or because of something which is outside of the substance of what they're doing? All style, no substance is a meme for a reason. And with Ken Burns, you could spend forever designing the sentences to hit the beat of the music and do all the rest of the stuff. But ultimately, the reason that it works is because of the story that is then packaged in the way that's appropriate and going back to what we were saying before about certainty, fluency is another thing.

1:11:07If you've got some beautifully fluent person, you've got this great story about Martin Luther King. If you have someone who's unbelievably fluent, not forgetting that he went off script in his famous, I have a dream speech. He gives himself a pattern break. right? He starts doing it, follows the script, goes, ah, no. And then free styles it. Like, that's it. The fluency literally outdid the rational, prescribed, well thought out arithmetic stuff. The good, the script that he and his speechwriter wrote that day is what he started to speak from. And then there was a gospel singer in the crowd, a couple of lines in front of him, who is a friend of Martin Luther King.

1:11:51And you can actually hear this in some of the videos. At one point in the speech, she turns around and she says, tell him about the dream Martin, tell him about the dream. And you can literally see this in the video at that point. He takes his script on the podium and he moves it to the side. And then he looks up to the sky and he starts saying, I have a dream and then the rest is history. And he had actually practiced that, I have a dream. So it was another speech that he had given before. But in the moment, I think he could dissense of the speech that he was prepared to give was not the best one that day.

1:12:19And that the gospel singer, Mollye, Jackson was right. That the, I have a dream, it was the one he should have been doing. And he just started freewheeling it and became literally the most famous speech of modern history. How stories like leverage when you've got a complex topic? It's like leverage because you can squeeze more value out of them than you could just get by just putting raw data on the table. So, I mean, you can, you know, I think a lot of entrepreneurs will think If I have a successful company, I need to come up with something brand new, like the reinvent the wheel kind of thing.

1:12:52And a lot of times you don't. You can take a pre -existing product and just tell a better story with it. Like, boom, you're up to the races. That's great. And so there's, once you realize how much leverage you can get out of a story or and how powerful a story can be, like the field of opportunities in front of you is endless. Because you don't need to come up with something brand new. Ken Burns is the 10 ,000th person to document World War II. But he did the best job of that because he told a story. If Ken Burns had to find new history, find a new event that you've never heard of for his things, like forget about it.

1:13:25You can't do that. But if you can use a good story to leverage what's already out there, you can become the most famous storyteller of your era. What's the complex bit? Why is it when a topic is complex stories are like leverage? Do they help to synthesize down confusion? Yeah, I mean, I mean, most people's tolerance for complexity is so limited. And everyone knows like the dull professor who just talks in p -values and is just like writes in charts and is so monotonous. And if you can switch that out with a good storyteller, like off to the races, like there's so much you can do out there. So it's particularly in the complicated topics that are boring and dry and dull.

1:14:04This is why Richard Feynman was such a genius. He took physics, which is so boring and so dull for most people. But he could tell a story about it. There's this video online. You should, people should search for it. It's, he's explaining the physics of fire. I'm like, well, like, how does fire actually work? And I'm not going to do it anywhere near the justice. But he's like, imagine a trampoline with two bowling balls on it. And they're both like competing for space and they're running into each other. And when they're running into each other, like they move around. And he's describing how molecules interact with each other that creates fire.

1:14:34And I didn't do the the the accurate job there, but when he does it, you're like, oh, that's so entertaining. And by the way, I understand the physics of fire now in a way that if I just pulled out a physics textbook, I would have been like, so I, I, I don't understand it. And even if I understand it, this is so boring to read. Yeah, I like that. And again, the best diet is the one you stick to. The best fitness plan is the one that you follow. The best habit is the one that you're compliant with. with ultimately in order to be able to get whatever the information is that you want across, you need to play the game using the rules and the rules include all of the lack of attention and boredom and ease of distraction and everything else that humans have.

1:15:19Eric Weinstein said this to me about in a stickiness arms race, the most sticky message is the one that wins not necessarily the one which is most accurate. And you know, this is how cultural memes take hold. Like I have a friend Mary who says meme first explain later, which is why coming up with a name for something a great name. Retro fit the idea to the fucking name. Like get the name because presuming that like if the idea is bollocks, it doesn't matter. It's the packaging in many regards and I think the storytelling side. But you know, I still see inside of me that, oh, it's almost like a purity, like a puritanism to like this is the way that it should be done.

1:16:00It should be, you shouldn't need to dress up the facts. It should just be the raw data and the fact that it's truthful and honestly blah, blah, blah. And it's like, no, dude, like there's things gotta be sexy. Victoria secrets, they even they are rolling back their change in branding from the last couple of years. They're pivoting back towards sexiness. So. Very, very famous example from Steve Jobs with the iPod, where you could have called it digital MP3 player. But instead, what Steve Jobs said was a thousand songs in your pocket. That's just a story. And like, for the people who are just like, we don't need to dress up the technology.

1:16:34It should, it should exist on its own. They would have called it digital MP3 player, which is probably what Sony and Panasonic did. And Steve Jobs said, a thousand songs in your pocket, which everyone can easily be like, Oh, that sounds great. I love it. That's what I want. It was just such a brilliant era of storytelling. Does not compute the world is driven by forces that cannot be measured. There's so many examples when you're watching a group of people or an individual do something and you're like, why are you doing that? It makes no sense whatsoever. You should have quit long ago. You shouldn't be doing it, but they keep doing it.

1:17:06And if you expect that every person is a rational thinker and they're doing things that make sense that add up on the spreadsheet, you're going to go through life completely bamboozled at the number of people who don't. And so I used this example in that chapter of during at the end of World War II, the Battle of the Bulge. When the Nazis attacked the Allies, there was a big, they made a big counteroffensive. It was a complete surprise to the Allies. They really never saw it coming, which is why the battle was such a big deal. And the reason they saw it coming is because the US generals, the Allied generals, thought there is no rational world in which the Germans would counter attack right now.

1:17:43They don't have enough troops, they don't have enough supplies, they don't have enough fuel. the weather is atrocious, the geography is not in their favor. So therefore, we assume they're not going to counterattack. What they missed was that the Germans were not rational thinkers at the time. Hitler was not a rational thinker. He was completely out of his mind. And so because the Allied generals assumed that their opponent was rational, they missed what actually happened. That's why they were so vulnerable. So going through life, assuming, it's the same with market bubbles. If you assume that people are rational with their money, like, of course, they're not.

1:18:15Then you're gonna be completely bamboozled when once a decade There's a massive bubble and people light their money on fire and you can't figure out what's going on Well, what's going on is like things just don't compute There's a human element like the world is not governed by spreadsheets There's an emotional hormonal human element that's very hard to track Impossible to measure but has some of the biggest outcomes in any of these activities in life Who's Archibald Hill? Archibald Hill was this craze He was such a cool guy. He was a physiologist about 100 years ago. And he was a big runner. He was an athlete.

1:18:51And because he was a physiologist and an athlete, he devoted a lot of his career to just trying to answer the question, how fast can people run? Given my body, given my aerobic capacity, or given your body, what's the theoretical limit on how fast we can run? And he came up with all of these formulas. He was kind of the early guy who came up with VO2 max, which a lot of people are familiar with now. to really measure like how people process oxygen, how it's dispersed throughout your body, the lactic acid build up in your legs, and it came up with a formula for how fast people can run. And it was very accurate.

1:19:23So people like these athletes would come into his laboratory and he'd run his tests and he would say, you know, making this up, you'd say, Jim, the fastest you can run a mile is six minutes and 32 seconds. And Jim would go on the track and give it all he's got and he'd run it in six minutes and 32 seconds. Like this formula was very accurate. And he'll actually won the Nobel Prize in medicine, I think in 1922. But there is this quirk about it in that his formula was never able to predict a race winner, like in a competitive race. You could not use this formula and predict who is going to win the Olympic gold medal in track.

1:19:57And I think this is kind of bothered. It bothered a lot of people in the field and it bothered him as well, that this formula was so accurate on the track, on the test track, and had no accuracy in the real world. And they eventually figured out what was going on here, which is that in a competitive race, like the Olympics, when the stakes are very high, people get nervous, they get excited, they get rushes of adrenaline, they get all these other emotions that cannot be replicated on the test track when the stakes are low. That completely alters your performance. And therefore, like his whole takeaway was your aerobic capacity, your ability as a runner is not just about your machine, your body.

1:20:35It's your body within the context of all you're in the moment incentives and the crazy hormones and feelings going through your head. It's those two things in combination that creates your actual capacity. So I phrase this too of like, if you said the fastest you can run a mile is six minutes and 30 seconds and you say like, I gave it everything I've got. I can't do it faster. But then if I said, hey, if you could do it in six minutes and 31 seconds, I'll give you a million dollars, you'll figure out a way to do it. Like, once the incentives change in the moment, you become a completely different person.

1:21:07And so I think that applies to a lot of things in life. And it's why things don't always compute. It's not just a spreadsheet. You have to figure out what's going through people's heads. So logic has its limits and our ability to be rational and make predictions is always going to bounce up against things that aren't able to fit inside of the model. Always. And it drives people crazy. This is just like best story wins, where if you assume the world is governed by logic, you're going to be led astray your entire life because it never is. Whether it's the Germans deciding to attack when they shouldn't or trying to predict athletes' performance, I grew up as a ski racer.

1:21:45That was my sport. Not a very popular sport in America, but that's when I follow. And the greatest ski racer, now of all time, is a woman from the United States named Michaela Schifrin. And she's She's the greatest skier man or woman in history. She's an absolute beast. She's incredible. And she has this thing that she's spoken about this publicly. It's not a secret that when the stakes are very high, like in the Olympics, so the world championships, she before the race will vomit. And it's a thing. She gets so nervous that her body just kind of gives up. And obviously that has a huge impact on like your hydration and energy levels if you're throwing up before the races.

1:22:20And one of the takeaways is like, Michaela Schifrin on the test track, on when she's training is not the same skier as she is in the Olympics. Her entire mindset is utterly different. And even like the physical composition of her hydration is completely different because when the stakes get high and people start getting nervous and emotional, they become completely different people. So you would think that her skiing ability would just be like the strength of her core and her agility, her flexibility. And it's not like 90 % of it. It's just what's going through her head in the moment. Ever DJ friend who for a long time wanted to be on Eric Pritz's label very much idolized him and then after a decade and a bit of working and producing and making songs, he ended up doing it and now supports Pritz all around the world.

1:23:08He's played Madison Square Garden, New Year's Eve shows with supporting Eric at his hollow projector thing and there was a good chunk of time where he would throw up before he he went on stage as well. And you see him backstage and he's just this super cool guy, he's like sort of a buff like Northeastern, British dude, and before he'd go up because he cared, right? He cared so much about what he was going to do. And you look at the component parts of this particular person's talent and go, ah, you know, they are the function of this and this and this and this and this. And you say, yeah, but what about the context and what about all of the other stuff that you can't imagine?

1:23:44thinking about the crazy battle of the bulge and the insanity of Hitler. Have you ever looked into Theodore Morrell that was his personal physician? I've heard a lot about it just because I know Hitler was drugged out of his mind, particularly in the last years of his life, but I don't know many details about it. Dude, if you come across a Theodore Morrell documentary, there's a few of them on YouTube that are great. It's amazing. This guy was a total quack. He was injecting Hitler with Bullseeman. He was like on meth, injecting him with cocaine, like multiple times per day. There's this really interesting interaction between Hitler and Mussolini, and it's one of these turning points in the war, and I think that Hitler kind of goes really, really crazy, and flies off the handle and all the rest of it.

1:24:35And it's thought that Morrell had overdosed him with with some drogues. I often think about just how much of what happened, obviously Hitler, not internet. I'm not just a fine Hitler, but I do. I do some. Don't chop this video up. I know. I do sometimes think about how much of the madness that we saw coming out of Nazi Germany was actually due to one particular quacky physicians covered and then what he chose to do to the leader of the Nazi party. And even for regular run of the mill soldiers, there's another thing where it's like, it's impossible to know how you're going to react and respond until there's bullets flying over your head.

1:25:20There's no amount of training and preparation that's going to prepare you for that. You'll know this. Isn't there some insane number of soldiers that went to, was it maybe Vietnam and didn't fire or they were firing in the air? They were purposefully not firing at the enemy? I forget the exact percentage of it, but that was true in World War II, where they could even the soldiers that were in front line combat. How many of them actually pointed their gun at the enemy and pulled the trigger? It's a very low percentage. And I think I would be willing to bet that a lot of those people probably knew it going into it.

1:25:50I don't know if I could kill another human being. But there are a lot of it who went in with a lot of bravado. And saying like, I'm gonna just end up getting training, I can do it. Hit the targets and training. And then you see the whites of the enemy's eyes and you realize it's just another kid just like you. And I'll say and you say, I don't know if I could do it. And who are you and I to say that we wouldn't do the same thing? If you've never been in that situation, you have absolutely no idea. Calm plants the seeds of crazy. Crazy doesn't mean broken. Crazy is normal. Beyond the point of crazy is normal.

1:26:22It's just this idea that the reason there are so much volatility and a lot of things in life are particularly the economy. The reason that we have booms and busts, the reason that we have recessions is because we have periods of calm. And when the economy is calm and people are really optimistic, once they become optimistic, they go into debt because they're optimistic about their future. Of course, I can pay off this debt. Once they go into a debt and their optimism grows, the economy becomes unstable. Once the economy is unstable, of course, you're going to have a recession. So it's this weird thing, like, in a world in which there were no recessions, no bear markets.

1:26:54Stock market never goes down. That is the world that guarantees the next recession. Because if we passed a law, completely hypothetical, we passed a law that stock market cannot go down anymore. The stock market can only go up. The rational thing to do in that situation would be to mortgage your house and sell your furniture and buy as many stocks as you could. Because they're guaranteed to go up. Once you do that, the valuations go to the moon. Stock prices get bit up to the stratosphere. And once the valuations are that high, they're guaranteed to crash. So this is like the irony of the reason that you have market crashes is because there's periods of commoness and calm always plants the seeds of crazy and it's so tempting to look at every boom and bust every bubble every market crash and say people were crazy like who do we blame here like who screwed up and I just think it's such a natural phenomenon in in economies there was this economist back in the 1960s named Jaime Minsky from the University of St.

1:27:50Louis and during the 1960s, there was this big idea that we are going to eradicate recessions. That was a big idea in economic circles. And Minsky basically said, it's all bullshit. That will never happen. And his theory was called the financial instability hypothesis. And he laid out what I just said. If there were no recessions, people would go into debt because they're optimistic. Once they go into debt, the economy is unstable. Once the economy is unstable, you're going to have a recession. So because of that, it's just like such a clean chain of events that you can never eradicate recessions.

1:28:21You can't eradicate booms and buss because calm always plants the seeds of crazy. Yeah, you've got this idea about paranoia leads to success because it keeps you on your toes. And I guess this is an uncomfortable realization that part of the reason that we are able to survive the chaos of the world is precisely the emotion that we are trying to mitigate. Like our our paranoia is the competitive advantage, which is keeping us going. It's this irony of like people are super paranoid about their career or the business that they started. And if you were to sit them down on the therapist couch and say, why are you so paranoid?

1:29:00They say, because like, I have this anxiety and I want to be successful, because once I'm successful, I won't have this anxiety anymore. I need to become rich so I don't have to worry anymore. So they become super, they wake up scared every morning. And because of that, because they wake up scared and driven. They're going to become super successful. And then once they get to some level of success, they say, now that I've made it, I can relax because I've made it. This was the whole point of getting rich was so that I could relax. And then once they relax, the thing that made them successful, which was the stress in paranoia is gone.

1:29:31And that's that plants the seeds of their demise. And then you see that with so many companies, like companies that get fat and happy and lazy. and they become the absolute top of their game. And then they just become, they start to become oblivious and then they start to lose it. Sears is one of the best examples of like, we don't think about it much today, but Sears, which is a department store, was the biggest department store in the United States, similar to Macy's or something like that. And it was the most dominant retailer that has probably ever existed. I think Sears in its heyday was more dominant than Wal -Marter target or anything like that.

1:30:05And now it barely exists. It still technically exists, but it's an absolute shell of its form of self. And if you look at the history of Sears, that's really what it was. It's like a hundred years ago they were scared and scrappy, and that's what made them so successful. And then they became so dominant that they just got lazy. And that of course led to their fall. Same with IBM, same with General Motors, same with AIG. It's like, be careful what you wish for for that, because a lot of times the reason that you are so successful is because you have this trait that you are so eager to get rid of once you become successful.

1:30:38And once that happens, like boom, it's all over. Well, there's another question. Kind of the reverse of this is a question around, if we sacrifice the thing that we want for the thing which is supposed to get it, what the fuck are we doing? Like, if we sacrifice happiness in order to be successful so that when we are finally successful, we can allow ourselves to be happy. If this was an algebra equation, and I just removed success from both sides of the equation, you would just be left with happiness. right? It's the parable of the Mexican fishermen. I like to say the exact same thing, but this is that this is an area where it does not compute enters the picture because life isn't an algebra equation.

1:31:15If if people just did the equation, what you just say to make perfect sense and people would be the Mexican fishermen, but it's it doesn't compute. There's this element of because from what we were talking about earlier of like people's goal is not to become successful, it's become more successful than other people. So there's never going to come a point where people say, oh I'm completely satisfied. I can just sleep in and do some fishing and hang out with my wife. It's always going to be, I have to get to the next level. I have to beat the next person next to me. Yeah. There's a scene in Rick and Morty where they play the game of Roy.

1:31:47You heard of this? No. It's a super legendary on YouTube. It's a one minute long clip you can watch. It's just Rick and Morty Roy. It'll come up. And it's a computer game where you play an imagined life as this guy and he works as a carpet seller. And Morty goes and plays it. And he's a football player and then he has a hard attack in a carpet store and then he goes back to the carpet store. And he comes out and Rick says to him, uh, never go back to the carpet store, Morty. And then he gets in and this crowd sort of gets around his VR thing and they say, oh my god, he's taken, uh, he's taken Roy off grid.

1:32:21Roy doesn't even have a social security number. And it always makes me think about people that are playing the game and people who have somehow managed to break the thermodynamics of the game. And the thermodynamics of the game, like a good person that I think is at least in part broken them, Ryan Holiday and Tim Faris both come to mind. Really? How so? Because I'm not that close, but I know both of those people. How so? So Ryan appears to be someone who has purposefully kind of like Cameron Diaz reduce the trappings of fame, ramped up simplicity as best he can, and he'll have his demons and goblins and all the rest of it, right?

1:33:04Just like the rest of us. And there's layers and layers and layers of whatever self -work to get to. But it seems to me like he purposefully leans into doing simplicity, like he has his routine. He knows kind of where his mission lies, and that seems to work. The same with Tim that Tim has largely taken a pretty big step back from super public life. He's not guessing on tons of podcasts. It doesn't seem like he's writing a book at the moment or at least he hasn't done for a little while. He still does his show, but even that, it's not so much about the YouTube and the Instagram stuff. It's like his audience and he owns this part of the audio stuff.

1:33:44I remember reading 13 Reasons Not to Get Famous, one of my favorite ever blog posts. It's so great. It's so great. I take it back. I thought you were using those people as examples of people who got trapped in the fame. But you're using them as examples of the opposite. Yeah. I agree. The Tim's post on 13 reasons not to get famous will make your jaw drop. To fucking masterpiece. It's great. And there's nobody who will read that and disagree with what he's saying. Like there's a massive downside to fame that I think wants to, I don't want to speak for him, but I think once he experienced it, he pushed back at, pushed back at it in a pretty successful way.

1:34:17Yeah. Yeah, it's very interesting, but the paranoia leads to success because it keeps you on your toes thing. Kind of also comes back to what we were saying earlier that the people who we most admire are the ones who have the least admirable internal states. If you were to trade places with the texture of Elon Musk or Kim Kardashian or Konome Gregor's mind, you would probably not put the bill for the price that you'd have to pay. And again, hidden observable metrics. Again, this is why I love the fact that these threads all tie together, even though they're disparate ideas. There's a narrative that kind of weaves them all together.

1:34:54And fundamentally, it's our stupid desire for recognition and accolade and prestige and to be seen and validated by the world and to be slightly higher than the people that are around us. There's this idea, I meant to say, they're on intergenerational competition theory. If you heard of this. Yeah. So it describes a situation where one of the biggest predictors of your quality of life, especially when you smear it across an entire nation, is how does this generation compare to its parents' generation at the stage of life that it's at. And you know, we've heard it's been a bit of a metamine for a while, you know, like millennials with the first generation to not do better than their parents.

1:35:37But really with Gen Z, I think that that is being felt very, very closely. And even if the raw facts and data when it comes to a cost of living minus inflation plus wages and all of the rest of it, even if that kind of ends up not making too much of a difference, the way that it seems, I'm never going to be able to buy a house, people staying in the house, you know, the most common living arrangement for a man under 30 is still being at home with his parents. Right. And I think social media plays such a massive role in this of just who you're comparing yourself to now is a curated algorithmic highlight reel of the fake scenes in other people's lives.

1:36:17And that becomes your baseline to compare yourself against too. And I see this in my own life of like when I was growing up, my definition of rich was the people who bought new pickup trucks and a normal person drove a used pickup truck. And you compare that to the current generation that grew up with YouTube and TikTok and Instagram and whatnot. Their expectations are in a different universe compared to my generations and your generation. And like, what is that going to do to their well -being, their psychological well -being? You know it's not going to be good. And the people who studied this, Jonathan Hyatt of NYU, of like teenage depression and suicide exploded when social media came out, particularly when it came out on mobile devices.

1:36:56Not went up a little bit. It went vertical during those periods. And I still feel like we're probably in the early eight, the early innings of that cycle. Yeah, I agree. And so it's pretty scary, particularly as a parent of two young kids who are, you know, four and eight. What is their generation going to be like when they're 17 after they grown up influenced by social media in such a profound way? What we've been able to facilitate is industrial scale comparison. Yes. That's fundamentally what social means. I think you, I think you, I think you, I think you'd take it one step further and say industrial scale anxiety is what it produces.

1:37:35That's really what it was. It's designed to make you look at other people. Yeah. Yeah. Yeah. It's designed to make you look at other people and feel a little bit worse about yourself. I looked at this study from Finland this week, who's in my newsletter, that worked out that 15 %, around about 15 % of the increase in young, female mental health, adverse mental health outcomes can be attributed to a use of hormonal birth control. And I'd said this when I first learned about the impact of hormonal birth control on developing brains, maybe about a year ago, and I just sort of got it in the back of my mind, and I meant to tell Jonathan about it, because I said, I don't know if anyone has like factored in the base rate of the increase in contraceptive pill use among young teenage girls.

1:38:25So there's a confluence of different things, conspiring to try and damage the mental health of everybody. But yeah, man, it's not good. And from a comparison perspective, think about it yourself. Think about how you feel. I call it post content clarity. Like after you've spent a good bit of time on your phone, like, you know, if you watch one type of thing, reading a collaborative fun blog or something, and I'm like, oh, I've spent five minutes reading this thing. How do I feel after that? Do I want to ring my mom? Do I want to go outside? Do I feel like the world is actually working with me as opposed to against me?

1:39:02Have I got agency or after I watch some panel argument about politics or something, I want to just curl up in a ball and I want to eat shit food and I don't want to tell anyone that I miss them. And that very much is the duality of the internet. And we always justify the toxic elements that we spend our time on by the needles in haystacks that we sometimes find. As my dad would say, a streak of piss in a pile of shit. I love it. This is true. I definitely feel like modern politics is explicitly designed to piss you off. And once you realize that that's the game, it's like, it's not a game that who would want to voluntarily play that game, of which you are guaranteed to wake up every morning and read your news, a site of choice for it to explicitly just make you a little bit angry or at the other half of the country.

1:39:54And once you frame it like that, it's like, why would you voluntarily play that game? I'm gonna choose to play a different game. Too much, too soon, too fast. A good idea on steroids quickly becomes a terrible idea. Yeah, there's this idea of blitz scaling in startups, which is like, and look, it came from very successful entrepreneurs. But it's this idea of like, however faster growing, like do it faster, like whatever good idea you have, like do it 10 times better, 10 times faster. Like go, go, go, go, go. And I think with blitz scaling usually comes blitz failing. Like there's a natural rate at which anything in investing or business or life relationships should go.

1:40:32And if you try to push it past that, it's gonna break, particularly true for relationships. Like there's a natural rate in which you should go from meeting someone to marrying them. I have no idea what that natural rate is, it's gonna be different for everyone. But the extent that you're trying to push it further and faster than it's gonna go, it's always gonna lead to disappointment. So I think it's just understanding the natural rate at which these things need to grow at and realizing that if you push them faster, it's all going to break. It's so important. It's really important in investing where I say one time, the fastest way to get rich is to go slow because that's what always throws people off is like they get this investing strategy or they're good at picking stocks, whatever it is.

1:41:12And then their natural intuition is like, great, now let's do it faster. I can earn 10 % a year, like how do we get to 20? I can earn 20, how do we get to 40? And it's gonna blow up 10 times out of 10. Like the natural rate of how fast you should grow your wealth for the huge majority of people is probably between 5 % and 10 % per year. That's the natural rate. And your willingness to push it beyond that is eventually gonna go over the cliff. And like if you stay in that zone and just keep it going for your lifetime, you win. You win the game. You're gonna compound your wealth. everything's going to be great.

1:41:45It's a people who try to push it beyond that that are always going to end up as losers. It's like they don't hit the red button experiment. It's just one thing that you don't do and it's don't push it beyond that. And yet the blow up risk is always a hidden metric. Whereas the additional 10 % gain that you got last year is a very observable one. Who's who's Robert Wadlow? Robert Wadlow was the tallest human to ever exist. He was, I forget the exact number, but I think he was pushing eight feet tall. He was just an absolute, if you look at pictures of him, it doesn't look like a human being. It looks like a cartoon.

1:42:20He had an abnormality in his pituitary gland that just bombarded his body with growth hormone for his entire life. And what I wrote about it in the book is, like, if you think about Robert Wileh, he was eight feet tall. He wore it, I think, a size 22 shoe. His hand was like 16 inches across. You would think of him as like the real life version of Paul Bunyan. Like you would think he would be like a superhuman, just like the strongest man, the best athlete, and he wasn't. He could barely walk. He could only walk on crutches, and when he did it, it was like this horribly pained limp that he had.

1:42:58He was super awkward walking around, because his body just didn't really work. And the takeaway was like, you can't double the size of a human and expect double the output. But if you double the size of the human, the entire thing breaks. And you look at this in nature, like most very large animals either have extremely long skinny legs like a giraffe or very short stubby legs like a rhinoceros. But if you take a human that has like medium length legs and you just say double the size of it, it doesn't work. And while he was growing so much, he died I think in his late 20s. He was very young. But the scientists and the doctors who were studying him said, if you grow much larger, simply walking, even with your cane, your legs are going to snap.

1:43:41Because the mechanics of the human body just did not support a leg and weight ratio of that amount. And what actually killed him is almost his tragic. It was so hard for his heart to pump throughout his enormous body that he had very, very high blood pressure and that led to an ulcer. And the ulcer got infected and he died from the infection. So it's actually such a tragic story. It's amazing. It's like he's always in the Guinness Book World Records and the like the he was basically a circus freak during his day But you read about this man. It's like it's a terrible terrible tragic life But it's the starkest example of you can't just double the size of something and expect double the output Sometimes when you double the size the whole system collapses Yeah, there's something about kind of a survival of the fittest as well though You've got this example about how trees grow sometimes and runts get eaten eventually But then when you force growth too much, that's when it goes wrong.

1:44:36There is definitely something about, I guess, when the tide goes out, working out who's swimming naked, so to speak, I think that's a useful side effect of growth. Yeah. And the same thing with Robert Evela, like perfectly applies to companies. You can't double the size of a company and expect just to get double the output. Because when you double the size of a company, particularly like a startup, goes from 20 employees to 100 employees or whatever. All of a sudden, your employee culture is different, your hiring practices are different, you need rules and regulations, you need to employ a handbook.

1:45:06And that might completely kill the culture that made the startup successful from zero to 20 employees. So knowing the normal growth rate and the natural size of any of these businesses is super important. Starbucks is another example I used in the book. Of like back 15 years ago, it was on this ridiculous growth binge. and it was just like every street corner in the world needs not just one Starbucks, but two. And it found that it completely oversaturated and it completely killed the Starbucks experience. It went through this depths of the spare a couple of years around 2007 where Starbucks was really losing its way.

1:45:40And it found that like whatever the natural growth rate for Starbucks was and whatever the right amount of stories that should have, it went way far beyond that and needed to pull way back. So all these examples of like successful companies, good companies that try to push it too hard and a backfires on them, those stories are everywhere. What are there any examples of how this is, this sort of apply to people's personal lives or the way that they show up in their day to day existence? I think there's definitely a case. I use the example of Travis Kalanick, who is the founder of Uber, and he later got pushed out of the company as someone who he had the exact right personality and management philosophy to bring Uber from zero to a hundred.

1:46:22And he was the exact worst person that you can imagine to bring Uber from a hundred to a thousand. And so there's a lot of times where your specific personality is gonna work really well in this situation and be disastrous in another. And I think that'd be true at different phases of your life. If you are someone who is the life of every party and you can drink people under the table and you're loud and you're boisterous, that is an amazing personality when you're 21. If you are still that person at 47, it's probably a disaster. That's not the personality you by large one at 47. So sometimes what works in one area like doesn't scale to other areas of your own life.

1:47:01And if you don't realize that, you can't change course. It's a tough road for a lot of people. I love it. Morgan Housel, ladies and gentlemen, Morgan, you are one of my favorite writers. I'm so glad that we've been able to get you back on. You're coming on again in January. in January. I'm scared to see the set design that you pick from me because now I know it is a reflection. Is this going to be like some cute tea house that you bring me to? And I'm going to feel really bad about who you think I am. Perhaps, yeah, we'll have to wait and see. But no, dude, I absolutely adore this. When's the book actually out?

1:47:36When does it get released? November 7th. November 7th, right. This will be out pretty much around about then. Everybody needs to go and buy this book. Morgan House's first book, Psychology of Money was a beast. and this next one is absolutely phenomenal. Where should they people go? Where else should they go to find out what you do in Folly? I spend most of my time on Twitter. My handle is first and last name Morgan Housel. I also have a young, nasid, experimental podcast called the Morgan Housel podcast. I'm still playing around with it. Oh yeah, Morgan, I'll see you next year. Thanks, Chris.