RV Classic: Mastering Life and Investments with Tim Ferriss

27:26The thing that I've looked at, the thing I'm spending more time thinking about is time itself. Time is, I think, one of the hardest things to control because it's a concept we don't really know how to grasp and how to deal with. How do you look at time? And how do you control that element that gets people kind of breathless with the fear that I just can't do all this stuff? I think of time as one of several currencies. So I think it's very easy to think of, and normal to think of money as a currency, because it is. But what is a currency? A currency is something that you trade for something else.

28:00So you use that money to purchase an experience or a possession, let's just say. Similarly, you have time. Perhaps you have mobility as another currency. And time is non-renewable, whereas capital is renewable. So in the hierarchy of prioritization, you know, the time should take past a certain point on Maslow's hierarchy of needs, right? Time should take should become your number one priority and allocating that effectively. So I think that.

28:38If you don't have time, it's an indication of not having sufficiently clear priorities. I think that's it. And when I think about time, again, I'm not, personally, I'm less interested in, can I cram more into a day? It's how do I get the most, the highest quality of life out of the time that I've got? Right. So I think there are many different ways to approach it. And there are many people who do a lot of thinking in this area. I think that there are a lot of contemporary thinkers. and David Allen. There are a lot of, of course, you can go as far back Ben Franklin and beyond, Marcus Aurelius. But I think Peter Drucker, the effective executive, is a fantastic place to start.

29:25And the focus on effectiveness over efficiency. So effectiveness being choosing your activities wisely, and then efficiency being doing those activities well. But doing something well does not make it important. And I think there's a lot of, it's very easy to conflate those two in a world where you are constantly hit with propaganda for the latest tools. But the principles are more important than the tools. If you're a good artist, you can use a crayon or a piece of chalk or a paintbrush. But if you're constantly just devising the latest tool and you never develop those artistic skills, it doesn't matter.

30:10And similarly, I think deciding what is important, deciding what is, which is oftentimes what makes you the most uncomfortable, I think, the thing you least want to do, a pretty good indicator. The general principles of thinking about prioritization remain fairly consistent, I think. And for me, and many of the top performers that I see in, say, just in the startup world, because it's a very exaggerated, it's a world in which you can look at every little problem gets magnified dramatically because of the velocity at which many of these companies are growing. So a small mistake turns into a very big mistake very quickly, which makes it easier to see.

30:59And for people who are growing at the rate of, say, an Uber, which is unprecedented, in the history of startups or anywhere else. I can apply this in my own life, but if you have, say, five to-do items, what is the one of those five that, if completed, renders the other four unimportant or that makes the other four easier to solve, easier to address, right? And trying to pick the lead domino in that respect and prioritize and allocate time accordingly, I think is a very simplistic way, but effective way to go about picking that, and I like to think of it as the lead domino that just knocks over the others.

31:42Or which of these decisions can I focus on that will prevent a thousand decisions in the future? That's a very sort of engineer-like way to approach, say, engineers or computer scientists have a general hatred of repetitive tasks. So if something needs to be repeated, they want to create a script or a program to run that. And you can do that by deciding what your decision-making framework is in advance. So those are a few of the ways that I think are very simple, but simple works. If the solution that you find is complicated, it's probably not the right solution. So, Tim, I guess, and it gets back to what I was saying a little bit earlier, you've got people in the hedge fund industry, in the investment industry.

32:30I mean, these are typically driven people. They're intelligent people. And they focus their efforts on their work. And it's satisfying, somewhat satisfying to extremely satisfying. What you and Josh Waitskin have helped me do is access other parts of my life and parts of myself and do so very easily. where the, I guess, the delta in terms of improvement is massive for very small amounts of effort. And I think that hedge fund managers particularly, they're the exact right people who are poised to kind of take advantage of some of the tools and some of the tricks that you employ. I mean, two things that really come to mind, you like to talk about taking ice baths.

33:24I take freezing cold showers and it's absolute nirvana. Another thing that maybe you could talk a little bit about is like lucid dreaming and using lucid dreaming to massively improve performance and improve that sort of conscious, subconscious brain connection. And maybe, you know, I know you've used lucid dreaming to train in wrestling in high school. Yeah. Yeah. No, I can talk about both. So the ice baths or cold therapy, and there are different ways to do it. You can use ice packs in the back of the neck, really came out of conversations I had with a former NASA researcher named Ray Cronice.

34:06And he had tripled his rate of fat loss, which he's an expert in thermodynamics. He measured everything very meticulously after becoming fascinated by how Phelps could eat 10 ,000 plus calories per day. Why would that be? And he started looking at the effects of water exposure at different temperatures on caloric expenditure. Long story short, cold exposure can improve immune function, be very effective as antidepressant therapy. It affects hormones, including things like adiponectin that then consequently lead to an increased rate of fat loss in many cases, thermogenesis related to fat. And that was in the four-hour body.

34:50A lot of people kind of scoffed at it. It's now since been in the New York Times probably half a dozen times. I think it was just written about a month or two ago. And it's extremely effective. And it's an example, like you said, of something that takes next to no time. You take two bags of ice, put it in the tub, jump in for five minutes. And it can have a tremendous effect on you, not only for the subsequent, say, four to five hours where you feel like you're on cloud nine in many cases, where your mood and your mental performance is highly elevated. It's not subtle. Two, the longer-term cumulative fat loss effects, which can be really tremendous.

35:26I mean, tripling your rate of fat loss just by a very short intervention like that. So that would be one interesting example. I've been looking at recently the opposite, which is using heat shock, so saunas, for increasing, say, growth hormone release in combination with types of exercise. So studying how the extremes impact your physiology is very interesting to me. The lucid dreaming is a fascinating subject. So for those people who aren't familiar, lucid dreaming is when you are dreaming and you become conscious of the fact that you are dreaming. and it doesn't have to be anything woo-woo. There's nothing woo-woo about it, and they've demonstrated, I think it was at Stanford, they proved that it existed by having people memorize before sleep subjects eye movement patterns because in REM sleep, your eye movement in the dream correlates to your physical movement when you're laying down, so they could do like left, left, right, left, left, right, right, and they could do that, and they could track with an EEG, or other tools that they were in REM sleep and in fact sleeping.

36:37So they're like, okay, now I'm dreaming, just checking in with the researcher, you know, left, left, right, right, et cetera. And when you develop the ability to extend your lucid dreaming experience, and there's a great book called Exploring the World of Lucid Dreaming by Stephen LaBerge that makes it quite simple, but there are exercises that you implement throughout your waking day, which are called reality checks, where you'll look at aspects of reality that change very frequently in a dream state. So complex patterns, if you had, say, tiles that were laid a certain way longitudinally on the floor, you could look away and look back.

37:17And if it changes orientation, you're dreaming. If it doesn't, you're probably not dreaming. If you look at a digital watch display, that will also, because you're constantly recreating the landscape in a dream, that will change if you look away and look back. And you start to develop, and this also pairs very well with something like transcendental meditation or vipassana meditation, but you get to a point where you can go into a dream state, no longer view sleep as a waste of time. A lot of people do. And you can further reinforce or develop your skills while you're sleeping. So the example that you referred to, you can get to the point where you're spending the vast majority of your REM sleep cycles awake in your dream.

37:59And what I did when I was a competitive wrestler, and I went to prep nationals and was an All-American in my weight class. But one of my idols at the time was John Smith, who was an incredible Olympian and competitor. Went on to then, I think it was Oklahoma State, and dominate as coach. Really pioneered low leg attacks. And I would, in my dream, because I'd watched so many videos of John Smith, I would train with John Smith. and there was a very direct transfer of skill improvement from that state to subsequent practices, which is not that crazy if you think about it because there are many studies that have looked at, say, skiing aerialists, so people who, different types of ski jumpers or divers, and looking at the impact of replacing a training session with visualization.

38:55And they get to see the same, they see gains in performance. And that's exactly what you're doing when you're dreaming, but you get the benefit of sort of a simulated kinesthetic experience. So it's a fascinating tool that is really underutilized and underexploited. And it's fun. It's so much fun, which at the end of the day, it's like, look, like, what are we doing this all for? I mean, and you get to a point when you're playing the game and it is a game, we all choose the games you want to play, but it's like, you get to a point, you're like, okay, I've proven I'm really good at this. I'm able to meet my needs.

39:32I can certainly satisfy a lot of my wants. Like, what are these psychological states that I want more of? What are the psychological states that I want less of? And the lucid dreaming is wonderful in the sense that it not only improves performance, it helps you develop present state awareness. And it puts you into a similar state if you practice lucid dreaming, because throughout the day you're doing these reality checks, What is that doing? It's like meditating for 15 seconds, 10 times a day. So you develop a calmness and awareness of how you're feeling so that you don't make emotionally based decisions that are bad for you.

40:08And that translates very directly to investing, particularly for the stuff that I don't do much of. I mean, I tend to hold stuff for a long time in the private markets because that's my game that I've chosen to play because I know my lesser self will make bad decisions if I'm allowed to play in some of the sandboxes that you guys play in. But certainly, all the more reason for people in the hedge fund world, if they're making daily or weekly or monthly decisions about positions and whatnot, to have a consistent practice so that they can become the observer of their emotional self. That's the question.

40:47How do you know? Because you identified, You know yourself, and you know you wouldn't be a good short-term trader, for example. But you know if you've got a longer strategic view, probably that's your skill set. How do you learn that? Because a lot of people don't get this bit when certain people are good at certain types of things. How do you understand what you're good at? Test. You throw a bunch of stuff against the wall, and you see what sticks. And you see what you enjoy, and you see what you dislike. Like in my particular case, I've actually, I've done, despite myself, done reasonably well in the public markets with a handful of stocks that I've bought.

41:24I mean, Pixar was the first stock I ever bought. And then there's a point where I bought Amazon. Amazon did really, really well. But in 2008, when everything was going to, well, seemingly, if you watch too much television, going to hell in a handbasket. and I spend just by the very nature of, you know, I have a blog with 2 million readers per month or so. I'm online a decent amount to write and communicate. So I'm exposed to a lot of this noise, this chicken little, the sky is falling hysteria, for instance, in 2008.

41:59And what I realized about myself is that if I can watch a chart of the value of my holding going up and down and Mr. Market is tapping me on the shoulder asking, are you sure you want to hold this? Would you like to sell? I really think you should sell. But wait, wait, wait, it just went down. Maybe you should buy some more. You want to buy some more? That monkey mind is very untrained in me. It is so poorly behaved and it's such a bastardly little saboteur in my mind. I need to create constraints. that allow me to utilize my strengths while mitigating my weaknesses. And the way I do that is by investing in startups where I have an informational advantage, where I have a product advantage, and I can also poll, say, a million plus people who are 25 to 40-year-old males in metropolitan cities, primarily on the coasts, who have high disposable income.

42:55I can get a very good read on those things, do a lot of front-end due diligence, It's make a decision, and then I'm locked in. That protects me against second-guessing and making subsequent decisions that are going to sabotage the good work I did in the first place. But I learned that by trying different types of investing. So do you think maybe you talked about journals before, which I think is an interesting concept because there's a certain intellectual integrity when you have to write it down and be honest with yourself. And I think a lot of people in investing aren't honest with themselves.

43:26I think it was Paul Tudor Jones would say to me that the thing that he learned about what makes a good investor is to have your time horizon and your investment horizon the same. So your idea time horizon usually is, I think the dollar is going to go up over three years. I'm going to put that trade on over two weeks. That's wrong because it's a big mismatch. And it's all of that intellectual integrity about what you're actually trying to do and who you are. And then it allows you to do that, I guess, to then focus exactly where you know your strengths are. Definitely. And I think that journaling is one example I think has tremendous value, especially if you don't view yourself as a writer.

44:06Because what writing allows you to do, and we could call it journaling just so people don't get intimidated, it is allowing you to freeze your thoughts in a form that you can analyze. You're not going to take the time to record yourself for hours and go over it. But you can write two pages every morning. and what I would encourage people to do, particularly if they're dealing with the stresses of sort of a high-pressure trading environment or investment environment, is write down their fears and worries and explore those because it will clarify what they are. Sometimes they'll end up unfounded, which can remove them as an influence that could lead to bad decisions or impulsive decisions.

44:49Other times it'll clarify ways that those risks can be mitigated. but when it's simply a five-second worry that is sort of on loop that repeats itself every hour or two, you never get that level of resolution. So literally, have some coffee, have some tea, five to 10 minutes in the morning, just freehand, write about what you're worried about for the day, what you're fearful of. It's hugely pragmatic. It's not just a self-indulgent poetic exercise. So what do you do when you've, so I've written that down and I've done it for a week. Now, how do I analyze that? And how long do I need to do it before I've got a decent data set to deal with?

45:27And what do I do with it when I've got it? Well, so, okay, this is a good question. So I thought when I started doing this, that the value would be in spotting the patterns, going back and analyzing. And there is value in that. But part of the value is you're taking these muddy, distracting thoughts and imprisoning them on paper so that you can get on with your day and act analytically and effectively without them, without irrational concerns affecting your rational process. So you're just taking it out of your mind, plonking it over there for the time being. That's it. Okay. And it's surprisingly effective, and it's so simple.

46:15Yeah, some people do that at night. You know, if you've got that, you know, you've got the night horrors and you're thinking about something, writing it down. Yeah, get it out of your head. It's out of your head and then you can do it. You know, one of the interesting things that you and Josh had me implement was, you know, in terms of taking advantage of the subconscious mind was, you know, feeding myself questions or problems to deal with before I entered into one of these periods like sleep or meditation or exercise. Can you maybe expand on that? I don't know. Sure. Yeah. Yeah, absolutely. I think that it is a wasted opportunity if there's sort of different levels of processing.

47:00And that ranges. There are many different ways to frame this. Daniel Kahneman, who wrote, this is Thinking Fast, Thinking Slow, talks about system one, system two. People talk about the conscious and subconscious. But if you look at talking about pattern recognition, a lot of the breakthroughs, the sort of lateral or oblique discoveries that people make that are non-obvious, they often happen in the showers. They often happen when listening to music. They often happen when daydreaming. They often happen in the middle of the night in a dream, et cetera. And you can encourage that by prompting that level of processing with a question before you go to bed.

47:43which is why when I journal, it's typically five minutes first thing in the morning, five minutes before I go to bed. And I also do a little bit of post-game analysis on the day, at the end of the day. But that's another very, very simple approach for allowing those idle CPU cycles, as we think of them as idle when we're sleeping, while it's not totally accurate, to have a problem to chew on. You know, it's almost like when, you know, what some people are doing with distributed technology now where you might have, say, you're trying to borrow computing power to look at protein folding. And so Sony will make, you know, the PS3s in a distributed fashion if people opt in available for that type of like offline processing when they're not in use for, you know, call of duty or whatever.

48:40So when you're not in call of duty, i.e. your job, you can assign a problem in a very similar way to an extremely powerful computer, which is your brain, to work on while you're asleep. And it doesn't always produce breakthroughs, of course, but it's a fantastic practice to get into, and it's also something that really doesn't take any extra time. It's not an additive activity. It doesn't displace anything else. One of the things I wanted to make sure we got in this interview is a little bit about yourself. And specifically, it was an excellent book, probably read Robert Greene's Mastery. And Greene says there are kind of three stages to mastery.

49:24And the most important is the first one, which is identifying your calling. I look at you, you're a world-class ballroom dancer, martial artist, life coach. You seem to have mastered so many different things. What's your calling? Where does it all come from? Is this cultivated? It's definitely cultivated. So the calling, I think, is studying meta-learning. so the teaching people how to learn or learning how to learn what is what is the framework that can be imposed on any skill that is my calling is to study that test that research that and then hand that toolkit to as many people as possible and it's absolutely a learned skill i remember when i was in in high school i had to leave my spanish class because it was too hard for me and I concluded I was bad at Spanish and bad at languages.

50:23And a lot of people make these decisions in junior high or high school. They carry with them for the rest of their lives. You know, they have someone make fun of their singing. Oh, I'm a terrible singer. I can't sing. And they carry that for decades. And for me, that happened with language learning. And then I took a year abroad in Japan as an exchange student. And I had, it wasn't an optional activity. I had to learn Japanese. I was going to a Japanese high school. And I used judo textbooks. and I deconstructed ways of approaching characters so that I could learn how to read and write and came back and I realized that I'd gone from Japanese one to Japanese level six at my high school in six months.

51:01And I was like, okay, well now I need to really reconsider this bad at languages conclusion that I reached. It wasn't bad at languages, it was that I had a bad set instructions. I had a bad recipe. So I think my calling is to master the art of meta learning. Because a lot of people, there are people who will look at the various areas in which I experiment. So I was like, all right, he's taking muscle biopsies and implanting glucose monitors and spending time with black market chemists and like NFL combine trainers. And then he's doing in the startup stuff. This guy's a jack of all trades. And on some level, that's true.

51:37But what's missed when they miss the layer on top of that, which is the meta learning. There is a common thread and there is a common goal, which is figuring out what are the untested assumptions?

51:52What are the best practices that I can test, that I can even attempt the opposite of? right like the deadlift you know perfect example it's you have people who will say well you know your strongest range of motions is from the knee ups you want to do rack pulls and all this stuff and uh but you find someone like barry ross in los angeles who's produced multiple world champions and he pulls from the floor up to just below the knee it's just a few inches and then they drop the bar and they do that two to three times that's the full set they do less than five minutes of total time under tension per week and i put almost 120 pounds on my deadlift in like eight to ten weeks It is the same thing on your recommendations.

52:30It's insane. It's insane. And I would encourage, and Socrates would say the same thing, this is not a new recommendation, but for people who really want to open their mind to what is possible in every sphere of their lives, particularly if you're male, but not exclusively, get extremely strong. Read, and I'm sure you can find it, people have talked about it online, but the Effortless superhuman chapter in the four-hour body on the deadlift, just get, you will not gain a lot of mass, probably less than 10 pounds, and you could add like 100 to 200 pounds on your deadlift. Do that, and the lens through which you view everything will be different.

53:09It'll be like looking at the matrix. And I think that one of my guiding tenets, if I had one, would be a quote from Mark Twain, which is, whenever you find yourself on the side of the majority, it's time to pause and reflect. So when you've reached a cheery consensus of any type, It's time to be like, well, wait, let me just time out and ask, what do we all believe is true? And run through and just ask for each of them, what if the opposite were true? The question I wanted to ask is, so if you spend so much time analyzing, improving, when do you get to the state of equilibrium? Because otherwise, you end up with your monkey mind focusing on you and trying to tweak all the bits and pieces.

53:53When do you get to the point where you say, okay, I've got to the kind of status quo, or is there no status quo? Is it all about constant improvement?

54:04I'm very aggressive and very competitive. I think that there's sort of a subtext to that question that I think is important, which is related to satisfaction or dissatisfaction. I don't think that seeking constant improvement and dissatisfaction have to go hand in hand. So I feel like if you're not getting stronger, you're getting weaker. If you're not getting younger, you're getting older. If you're not getting further away from death, you're getting closer. There's no equilibrium. The biological system generally doesn't work that way. I mean, there are some forms of homeostasis the body seeks to achieve, but I think that I'm constantly trying to improve.

54:50It doesn't mean I'm trying to improve everything, but I'm trying to improve something. And however, the lucid dreaming, some type of mindfulness practice, which can be jujitsu, it can be transcendental meditation, doesn't need to be, you know, staring at a candle flame in your mind's eye. That's not designed for everyone. although you can use apps like headspace or calm which are very effective for people who otherwise can't sit still for 10 minutes uh when you when you develop when you allocate time for some type of appreciation that is how you reach equilibrium with the drive for achievement and when you find someone who is solely focused on achievement and has not created the bandwidth or time or activities for appreciation, they're usually pretty miserable.

55:42And I mean, I'm sure you guys know a lot of very successful, financially successful people. Certainly I know lots of very financially successful people who are utterly miserable. And I think the danger in pursuing that game exclusively is that you get to a point where you have all the money that could possibly solve your problems and you realize that it doesn't solve all your problems. So you're solving the wrong problems. And that's why I think some of the richest people are the most miserable. Because when people have less money, they can hold out with the hope that money will fix these intrinsically sort of existential or physical or emotional or psychological problems.

56:26But when you reach the pinnacle, then you're like, wait a second. I still have this whole set of problems. I thought that an extra X amount of dollars per year would have solved this. Lo and behold, no, you still have the work to do. So I think that developing a holistic set of practices that appreciates the full human, including the body, which is, it is your machine. You know, you can't just take care of the driver, i.e. the mind. Like, you need the Ferrari, so you should really care for it. But I think that the way you reach equilibrium or a sensation of balance is by having the appreciation and a set of activities and practices for that, and then a set of activities and behaviors for achievement.

57:18Yeah, I think just one thing I'd add to it is, and I think something that you and Josh have taught me, is just to love the process. So you're pushing, you're pushing, you're working, you're working, you're working, but it's not even stopping and smelling the roses, but it's enjoying the path and loving the path. No, absolutely. And I think that it's perhaps cliched to say life is a journey, not a destination. But at the end of the day, I think from a very strictly pragmatic standpoint, you have to focus on the process because due to good or bad luck, you can get a bad result after a very good process.

58:00You can get a great result after a very bad process. And so your method of investing could be covering your eyes and throwing a dart at a dart board with a list of companies on it. And you could get lucky and have a great outcome, but that doesn't make that a good process. And vice versa. You could do all the research in the world and there's some blind spot that you couldn't have identified and you end up with a bad result. But the way that you end up, I think, being proud of how you are building is by refining and trying to have the most perfect process possible. And that also, I think, prevents a lot of the sort of depression and malaise that can come from bad outcomes, which are just part of the game.

58:50Yeah, and particularly in financial markets. What's interesting in financial markets is losing, even if you lose only a small amount of the time, that losing part, the pain of that far outweighs the benefits of when you're actually making any money. Yeah. Yeah. There's a really good book that I enjoyed anyway called What I Learned Losing a million dollars, which looks at sort of the psychological dynamics of making and losing money and what happens when you personalize those or attribute to talent what should not be attributed to talent or lack thereof. But what I realized, for instance, when we were talking earlier about how I realized I was not well suited for the public markets, personally, if I'm the one doing the managing of that is I realized that exactly that, that a small loss, the magnitude of that negative emotion was exponentially larger than even if I made five times that amount positively.

59:47And as a result, I didn't have the stomach to invest enough where a reasonable rate of return would be meaningful to me. I was like, on the pro and con list, that makes that ill-suited to my temperament and psychology. But oddly enough, people might say, well, you don't have the risk tolerance. It's like, no, no, no. I don't have the appetite for that type of risk. But I can do a binary investment in a startup where it's going to be zero or 10x or 100x. And I have no problem with that. I'm much more comfortable with that because between the investment and the outcome, I'm prevented from making bad decisions.

1:00:27Yeah, that's right. Because in private investing, you don't get the choice of marking to market. You don't have to worry about, am I losing 10 % today, tomorrow, whatever it is. It's just like, I'm in it for the ride. I've made my decision. And the payoff is that, the loss is that, and that's it, I'm done. That's it, right, exactly. And I think investing is a good metaphor for life. I mean, it's allocation. It's allocation of resources. And sort of bringing it back to what we were talking about earlier. You know, it's a mistake to view your primary and only currency as capital. I think time and mobility, these all determine the actual value of your capital.

1:01:10Because if you don't have time, you can't exchange that money for experiences. And what's your capital? Your capital is your quality of life, I guess, in some way, shape or form. And all of those are the currencies that you trade for that? Yeah. Yes. Absolutely. Great. Great. Tim, well, thanks very much. And Mark, thanks a lot. I think it's been really fascinating. Yeah, my pleasure. Thanks for having me. Absolutely. You see, the journey of Real Vision is the journey of life itself. We're all in this journey together. And that's why I'm so passionate about it. I'm passionate about you guys. I'm passionate about doing this journey together.

1:01:45Now, if you want to continue taking this journey, make sure you subscribe to the bloody channel, because then you get more and more of this content, whether it's me interviewing some greats, giving you presentations, or even bringing up old content from the past that I think you absolutely have to watch. So just click on the subscribe now on the YouTube channel. But obviously, if you want more, then come to realvision.com itself. It's free. And there you'll have the AI tools, trade ideas, where the community shares ideas with each other. And you can just go and find the best trade ideas in the world.

1:02:20Note-taking, AI summaries, the AI tool. If you don't know what something means in an interview, ask the AI. The Real Vision bot's there to help you. And you can see the pricing charting. And on top of it, it unlocks this incredible community of you guys in over 120 countries around the world where you get to talk to each other, meet each other, exchange ideas. There's real value in that. So realvision.com, I'd love to see you there. It's free. Honestly, it'll help you on Fuck Your Future. We hope you enjoyed this episode at real vision. We arm you with expert knowledge, time efficient tools, and a powerful network to help you succeed on your financial journey.

1:03:03Get a taste of financial freedom with our free offer at real vision.com forward slash free. That's real vision.com forward slash free.