TIP817: Simple Investing Beats Complexity w/ David Fagan

26:28And of course, another way to think about this is that if you're hard on yourself, life will be easy on you. And if you're easy on yourself, life will be hard on you. And to your point before, if you ask people whether they want a simple or a complex life, they say they want a simple life. But it's also like asking people, is the life half full or half empty? And they know what they're supposed to say, but they don't really reflect too much. Whenever they say so, when people spend 110 % of their income, which a lot of people do, they don't do it because they want a complex life. They want to keep up with the Joneses and because it's human nature.

27:03And of course, you and I can sit here all day and tell them, hey, no, no, no, no, save and invest. And they will sit across from you and they would mean it in the moment you're speaking with them. And it's not because they're lying to your face at all. But people are people. It's just that simple and it's just that hard. And I meet countless people who ask me what to invest in. And unless I know that there are sophisticated investors who just can't get enough out of reading 10Ks, I always tell them to dollar cost average into a low-cost index fund such as the S &P 500 or ABCI World Index. And of course, Because people find the simplicity of that advice so frustrating.

27:45And to me, that is a bit ironic. You know, most people who ask me what to invest in, they literally don't know how to buy a low-cost index fund, because it's exactly why they should be buying it in the first place. Trey Lockerbie, Ph.D.: Yeah, there's, wow, a lot to unpack there. Kind of like Buffett saying the leverage comment as well, like, I'm going to give you the advice, but you're probably not going to take it. I want to pick up on one of your points that you just mentioned about having an invested interest in keeping things unnecessarily complicated when you were talking about the medical system.

28:22I mean, I live here in a rural area in Canada, and there are several towns kind of lined up within about a 20-minute driving radius of each other. There's roughly 5 ,000 or 6 ,000 people in each of these towns. And about a decade ago, there was a discussion around amalgamating some of these towns to reduce costs and simplify infrastructure, streamline services. I mean, to me, it all sounded pretty practical. But of course, the people responsible for making those decisions were the one who was going to be most affected by them. So I probably don't have to tell you what didn't end up happening. You know, instead of choosing simplicity for decades ahead, I mean, this is infrastructure and large contracts to keep towns organized.

29:08The existing infrastructure stayed in place in part because it protected the people who were benefiting from it. And, you know, maybe a more direct example for the listeners here relates to an investing conversation I just had a few months ago with an individual. I was speaking with someone who manages portfolios for one of the large banks here in Canada. And when I asked if he could manage, say, a$5 million portfolio using just three or four well-researched ETFs with a small fixed income component to manage the volatility, he flat out told me, looked at me, said, I can't. It would look too simple.

29:45And that took me back quite a bit. I mean, he said there needs to be more evidence that there's more work being done. And I just couldn't believe it in that moment. Now, I don't want to get into portfolio theory and asset allocation on this podcast, we can save that for another day, Stig. But when I see an investment statement that has, say, 75 individual holdings on it, and then compare it to the long term results of a simple index strategy, I think the listeners can see where I'm going with this. And I'm not talking about a manager with a fund that's deliberately taking on a different approach to perform the market, maybe in a concentrated way.

30:22I'm talking about a portfolio that looks complex, but doesn't need to be. And that's the difference. I mean, sometimes complexity exists because it's necessary. And sometimes it exists because it's expected. And I think I'm getting to the age where I start to see layers and layers of more. It just looks like chaos to me sometimes. I mean, people want to build wealth and they want a plan that they can stick to, and they want to avoid the mistakes that show up again and again in the financial world. Yet the industry sometimes makes it more complicated than it needs to be. And, you know, Munger talked about this in his book and poor Charlie's Almanac.

31:06I mean, he used the term feebezzlement to describe how people aren't usually misled by outright lies. I mean, they're not looking to be completely nefarious, but by the unnecessary complication, layers of products and jargons and moving parts create confusion. And that confusion quietly leads to poor decisions and less compounding. And I think Munger's point was simple. The more complex the system becomes, the easier it is to make mistakes and the harder it becomes to actually see what matters. And for me, that's behavior, discipline, cost, patience, the list goes on. And I can't help but come back to one of the quotes directly in his book because I've seen this play out in my world time and time again.

31:55And just give me a sec. I'm going to read this verbatim. So in Charlie's words, anytime someone offers you a tax shelter, my advice would be don't buy it. In fact, anytime anybody offers you anything with a big commission and a 200 page prospectus, don't buy it. Occasionally you'll be wrong, but over a lifetime you'll be way ahead. And I'm going to give you an example that I've seen play out with my clients here. There are a few products in Canada, and I'm sure there's similar ones in other jurisdictions around the world where they're commingling life insurance with investments. And the agents selling them, they're often highly incentivized.

32:35And these structures themselves are complex and they sound great at first. But once you get into the details, they're costly to set up, they're really expensive to unwind, and they're difficult to fully understand. In fact, it's not uncommon for the people who are selling them to pause and refer questions back to their tax departments just to explain how they actually work if they get a question that's past their sales pitch. And most of us have probably been pitched something like this at some point, whether it's insurance or not. And Stig, I'm going to give you a client experience that I'll never be able to forget.

33:13I mean, I had a client who had just paid off their business loan and was finally in a wonderful position to start saving seriously for their retirement. You know, they were saving at this point after the loan was paid off, they were saving$150 ,000 a year. And this was lovely, a great problem to have. And they had lots of runway and time on their side. They hired a new investment advisor. And after one year, having saved their first$150 ,000, the advisor came back to them in year two with a really big idea. He wanted them to stop investing in equities altogether and put all their savings into a whole life policy for the next 10 years.

33:52And to put it in perspective, the insurance coverage that they were being sold could have been handled with a simple 10-year term policy for$3 ,000, leaving$147 ,000 still to be compounding in equities. But instead, the proposal had mashed everything together and won, to me, complicated product for them at their stage. And here's the moment that stuck with me after being brought up to speed on their situation. This was towards the end of it. The clients in this situation, one was a retired police officer and his wife was the one who was running this wonderfully successful small business. He asked the advisor a very direct question.

34:33Why would you recommend this instead of just managing our investments. And guess what? The advisor didn't give them an answer to that question. And when asked what commission he'd make on the policy, he dodged the question completely. And for context, for the listeners, that commission would have been north of $125 ,000 in year one to set up that policy. So needless to say, those non-answers got the spidey senses of the retired police officer up. And, you know, to me and getting back to Munger's quote, I mean, in what world is a product with that large of a commission on day one, really designed for the person buying it?

35:18I mean, I was looped in pretty much at the end of all this. And while I've seen whole life used a few times decently in limited cases, this wasn't one of them. This was way too much too soon in their savings journey and far too complex for these clients where they were on their path. They just needed time and simplicity and compounding, not layers and layers of complication. And needless to say, I probably don't have to tell you how that relationship ended up. I mean, that advisor didn't last very long with them. And there's the quiet danger of complexity, Stig. It often shows up dressed as sophistication when really maybe it's just misalignment or misguidance.

36:04and a good barometer that I always use for myself, if there are added layers of friction around setup or management or cost, liquidity, exit, anything like that, you really have to ask yourself why you want to take this on before you say yes. And Warren Buffett said it perfectly, there seems to be some perverse human characteristic that likes to make easy things difficult. And his solution, as many listeners have probably heard, is jump over one foot bars, not seven foot ones. And here, I'm just going to jump into the story of long-term capital management. I mean, it was built by some of the smartest minds in the world.

36:50I mean, Nobel Prize winners, physicists, mathematicians, there was Wall Street traders in here, and they engineered a really high precision model designed to capture tiny price discrepancies across global markets. And on paper, it looked amazing. But the system depended on layers of leverage and assumptions that were just so wound tight that even small shifts in real world conditions would break it. And that, of course, as most that have followed the story know, that's exactly what happened. When the markets moved outside their expected range, the strategy unraveled and it unraveled at speed. I mean, the fund lost billions and billions of dollars.

37:34The investors lost nearly 100 % of their capital. And as the book goes, genius didn't save them, it failed them, right? And the complexity they believed was their edge became the very thing that destroyed them. I've seen simple things beat complexity, not as a rule, but as a discipline. It can help you stay committed long enough for things to actually compound in investing, and that's worth it all to itself. I've talked before why our family index is a large portion of our wealth in a previous podcast, and it comes back to simplicity. When too many layers are introduced in the investing. It has the potential to raise fees when investments are outsourced.

38:18It can increase behavioral mistakes, which we've talked about. And it makes it harder to stay invested when emotions run high for individual investors. For some, I believe a simple investment approach can create clarity. And my approach using index funds for a significant portion of our investable asset. It's built on just broad diversification, low cost, tax efficiency, which we won't go into today. Well, maybe we'll save that for another episode. Long time horizons. And I'm hoping that the market just rewards us for patience. And simplicity is a practice and it can be in your finances. It could be in the businesses you run, or can even be in the relationships that you hold, right?

39:07I mean, you can ask yourself this question, like, what are the few things that matter most? And what could I stop doing that would actually make everything else work better? I mean, that's always a powerful thought to think about. Because over time, clarity can compound just like capital does. And if you can remove noise, then clarity can appear. Yeah, I think that's such a great point, David. And we're all driven by incentives. You invoked Shalamonga before, who was so famous for talking about incentives. But I also think whenever you study Munger, I think one of the wonderful things about him is that whenever he talks about incentives, he's not just talking about financial incentives.

39:49The example you had before with the advisor, and he gets this$125 ,000 commission, that is there for us to see. But there are so many other incentives in place that dictate how we handle things. Like, for example, let's say that our financial advisor is a good family friend. You know, it's so incredible complicated not to continue working with him because it's awkward. And we try to, you know, just not do awkward things. And we're going to do it tomorrow. And of course, tomorrow is a year and the year is 10 years. And so we all driven by incentives one way or the other. And I really like what you said there about clarity and about noise, because we rarely notice whenever we are drifting off course.

40:37And I think one of the reasons is that it doesn't feel like we're getting lost. It rather feels like we're just staying busy. And so simplicity is all about how you find your way back and identify your North Star. And I think the best way probably to do that is through mental models. now that we have talked about China Munger. So let me throw it back over to you. Yep, you're right. I mean, we all use certain operating systems to navigate our life. And like you said, some people do call these mental models or just simple frameworks that can help us make decisions, right? And, you know, I've thought about this a fair amount.

41:16I mean, when it comes to making things simple, there are two models that I lean on often, Occam's Razor and Ear Reduce Ability. And together, they help me find the balance point between clarity and completeness. Occam's razor nudges us to begin with the simplest explanation for a solution. Most challenges don't need heroic thinking. They need clear thinking. Fewer assumptions and fewer stories that we tell ourselves. Then irreducibility is the counterweight. It reminds us that every system has essential pieces. elements that cannot be removed without breaking the system. So we reduce boldly, but we don't cut past the point where everything just falls apart.

42:02And together, when you put them together, it's an inspiring philosophy. Occam's razor keeps us from adding what isn't needed. And then irreducibility keeps us from removing what must maintain. and getting back to professional services, which I can't help because it's dominated my life for so long. This is how most trusted advisors operate. They don't always name these models, but they follow them instinctively. And when you use them both, you land in the sweet spot, simple enough to work, but complete enough to rely on. And that's where I feel good decisions happen and how good systems can endure.

42:43And these models are not abstract either. They're pretty practical. And let's get back to investing, for example. Irreducibility tells us to start with the foundation, the part that can't be simplified any further. And in wealth creation, Stig, that foundation is saving. I mean, nothing happens until you save. There's no return. There's no compounding. There's no plan without that first irreducible step. And then once that foundation is set, Occam's razor guides the next choice. Use the simplest system that allows your savings to grow. And you don't need a complex strategy or exotic products or forecasts about the future.

43:24You just need a clear, low cost, evidence-based approach to do the heavy lifting for you. And I know we've talked about that many times. I mean, you know, if we zoom out too and step back and look across other professions, you'll see the same truth repeated again and again. Simplicity wins. I've talked about it in our accounting world. It can win in engineering, medicine, and many other professions as well. I mean, in Lean Six Sigma training, there's an engineering story that talks about a factory that was struggling with a major conveyor belt malfunction. And after$200 ,000 of diagnostics and airflow management studies within the factory itself, the true cause finally appeared.

44:08Bob, the assembly line worker, had plugged in a$30 fan during his shift on the assembly line that was blowing products off the belt. If you unplug the fan, you fix the problem. And sometimes the simplest answer is sitting in plain sight right in front of us, but we're too busy overengineering the solution, right? And in medicine, doctors live by a simple truth. When you hear hoofbeats, think horses, not zebras. Start with the most likely cause and only chase complexity when the simple explanation fails. Simple first, complex second. And simplicity, it doesn't stop at business or investing either.

44:51It shows up in how we spend our time and our energy. And just flipping to the personal lens of my life, one of the frameworks that I return to every year, and I've shared this in our lovely TIP Mastermind community on a call earlier this year, it's the stop, start, and continue methodology. And it forces me to look back before I add something new. And it asks me, what am I doing that I should stop? What's worth starting? And what deserves to continue? And if you think about entrepreneurship, especially, I mean, you start to wear lots of hats, and it's remarkably easy to never take one of them off.

45:33And the same thing happens with our personal commitments as well. We say yes, and the calendar fills up. And before long, we're running at full speed, and we're never stopping to ask if this stuff we're doing still fits. And so, a simple check-in can prevent a lot of drift. And so, here's a question for you and some of the listeners. You know, what's one commitment in your life that if you were to be honest, you might not say yes to again? And that's the question that answers when complexity starts to show up in your life. Not all at once, but from the yeses that you continually say. And a good rule I try to follow, and I'll be the first to admit, I don't always get this right, is to remove something before I add something new.

46:19And before committing to something, just ask whether it makes life easier in some way. And that pause alone can create just a little bit of protection. And just where we've been talking about mental models, I'll just drive one more point home here, Stig. I mean, my wife and I, we've always managed our personal finances well, but we never called it a budget. We called it a personal spending plan. And there's a big difference between the two. And I'll share this with the listeners. We earn, we save, we pay our taxes. And with the net income that comes home to us, we spend it happily. No guilt, no second guessing.

47:02I mean, of course, we're mindful of the necessities, but the system is designed so that when the big priorities are handled in the master plan, we don't even think twice about the micro decisions that drain so many people's energy. I mean, the structure does the work for it. And, you know, I might be dating myself a little bit here, but years ago when you actually wrote checks for things, I'd sometimes draw a little smiley face on them. And it was just a small reminder of gratitude and a signal to myself that if we planned properly, we should feel good about spending our money, right? And, you know, when we circle back to the mental models, I mean, irreducibility reminds us that every system has a core and there are elements that you simply can't remove without breaking it.

47:50And if you strip things back too far, that whole structure is going to fall apart. And Occam's razor, it challenges us to question what we're adding in the first place. So before complexity creeps in, it just asks a simple question, is this actually necessary? And I believe when you start using those two together, you end up with a system that are simple enough to run, but strong enough to last. So Stig, I hope you're reflecting on your own personal commitments as we speak right now. And I'd love to hear your take. And not just with personal commitment, but beyond investing, just where things where simplicity might add some clarity or stuff that you might be able to remove.

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52:25And I know it sounds very corporate, ironically, but knowing someone's personality test score makes it a lot easier to work with them because you know some of the filters that they see the world through. And David, I don't know your personality type. I think I've known you for such a long time now that I would know what your personality type is. So there are a number of different letters, and I don't want to go into the weeds of that, but there is one I would like to speak a bit about. And it's about whether you're a J or a P. And Js like to make schedules and plans, and they prefer to make decisions early.

53:03And so the motto would be, let's decide and move forward. And so in the world of investing, that would mean that they like to stick to predefined rules. And so I don't know if... I know you know a lot more accountants than I do, David, but I would imagine that a lot of accountants tend to be J's. And certainly a lot of people in what we do, they're J's. On our team, we're 20 people and 19 of them are J's. And so I know it's not political correct to say this. I know I'm supposed to say something about diversity and we're all supposed to compliment each other. And that's probably all fine, good and well, and we are all good at different things and whatnot.

53:46But I do think that there is something to be said about that in organizations, there are certain things you need to do a certain way. And people should lean into how they are naturally wired. And if they're not naturally wired that way, perhaps they shouldn't be a part of that organization. And so there are some professions where some personality types are just more suited than others. For example, I often speak with my team about, are we airline pilots or are we software engineers? And we're generally the latter because we are moving in a space that's just moving so fast and we have to test a lot of things and then a lot of things fail and then that's fine and then we move on to the next thing.

54:25But really the job of an airline pilot is not to kill his passengers. That's a success. And I'm sure there are some airline pilots that are like, well, there's a bit more to that. But the point is that if you're an airline pilot, your excellence is demanded at all times, and bugs are not to be tolerated. If you're a software engineer, you know you're going to have bugs in the code, and expect it, and you can correct those bugs. And whenever you do that, you can send out a patch, and it's fixed everywhere, and then you move on. That's obviously not how it works if you crash the plane. And so with you, David, being a J, and I'm pretty presumptuous here, but I think it's okay that I'm presumptuous, because whenever you're not in the call like five minutes before, I think it turns out we're actually using different links, but I'm like, hmm, that doesn't sound like David.

55:10And then there's sometimes there are P's who are like five minutes after, it's like, by the way, I'm going to be 50 minutes late. It's like, that's a typical P sign. And so you have a natural inclination where you're better at meeting deadlines and you like to do things the day before and preferably sooner. And so you have that. And then on one hand, you have other people who would say deadlines stimulate them and they tend to work better whenever they're close to the actual deadline. But what I found interesting from working with people of different personality types in my career is that everyone feels that their way of working is the most efficient.

55:46And they sort of have a hard time understanding that other people can be successful using a different approach than they are, which is also why we test them because we want to see what is their natural inclination, how do they see the world? And so your community came to them, you have an idea of what in their world is the right and wrong way to work. And I don't think you can necessarily change that, but I think it's a good thing as a business leader that you are aware of their reality, just like you have your own flawed reality. And so it might sound a bit ironic as I'm saying this next, but I would recommend that 99 % of people set up an investment system.

56:22Because if you are a J like you and I, David, you should do it because it comes natural to you. But if you are a P, you should actually do it because it doesn't come natural to you to have an investment system. So let me break this down. It really goes to what you said before there about you and your wife, you have this personal spending plan, not a budget. So you earn, you save, you pay your taxes, and then with the remainder, you spend it without guilt. And I absolutely love that, David. Trey Lockerbie, Ph.D.: And I know quite a few P's, and they spend all the money they make. Trey Lockerbie, Ph.D.: And they sort of know in the back of the head that they're supposed to save and invest, but they just don't know how to do it, which is why they need this investment system.

57:05Trey Lockerbie, Ph.D.: Because once the money comes in, before it hits their spending account, they should transfer a set amount, like a clockwork to an investment account, and then buy a global diversified index fund. And if they do, they can spend the rest of their money guilt-free. And they don't need to think about, is the stock market expensive? Is it cheap? What is the headline says? No. They're buying it. It's global diversified. They do the same thing every month. So the average of the average is the average, and that's just the way math works. And that is also why on average, they're going to do quite well.

57:41And there's just so many walks of life where simplicity is just superior to complexity. And it's even more important in the world, this just seems to be more and more complex. Let me just give you one example. Many people are on a diet and they still love dessert. It's a lot simpler to say that you don't eat dessert than saying, I'm only going to have desserts once in a while if it's really delicious, because then you have to spend a lot of willpower defining for yourself if something counts as a delicious dessert or not. And let me make a bit of a jump here, but perhaps the best advertising slogan I've ever seen is Loyalist, because I'm worth it.

58:20It's all the way back from 1973. And it still stands today, right? So who doesn't think they're worth whatever it is whenever it comes to spending money? And of course, this goes directly to this principle of simplicity and frugality. But of course, you can make the argument that consumerism has never been about simplicity in the first place. And all of this is, of course, much easier said than done. One thing I've learned whenever it comes to creating simplicity in our lives is that we are often our own worst enemies. For example, I have this friend who's really into watches, and I'm inclined to say that I'm refused to go down that path.

59:00And it's not because I don't appreciate a nice watch, but because I know whenever it comes to something like that, are my own worst enemy. I know, not because I bought a lot of expensive watches over the years. I actually think when I was 15, that was the last time I bought a watch, it was like a$200 watch, and that's my lifetime spending on watches. But I know the way that I'm wired, if I have really nice stuff and I don't really tend to have too much of that, if I bought a$10 ,000 watch, I would appreciate it. But I also think I have this thing in me where I'm like, yeah, but now I'm a collector, right?

59:32Now I need this even more expensive watch. I just don't want to go down that path. And I'm not saying that's a problem for everyone who buys nice watches. I'm sure a lot of listeners are fine with that. And hopefully, they're just wired differently than what I am. But let me give you another example. If you and I met up tonight, I might suggest that we would go out for a beer. And I know that alcohol can quickly become complex for some. I can go a month, three months, six months, I don't know, very, very long time without alcohol. And alcohol addiction is the last thing that's on my mind if we went out for a beer with or without alcohol, whatever we go out for.

1:00:11It would more be like an expression more than actually going out for a beer for me. But I'm also sure that for some people, it's the complete opposite. I mean, they might appreciate a nice watch and they would stop right there. But whenever they taste that first beer, they just can't say no to the second. And my point is that we need to understand what brings simplicity and complexity into our lives. And while it's great to learn from other people's mistakes, and we definitely should, we typically have to make our own mistakes before we probably learn, at least with a lot of things here in life.

1:00:43And let me just give you one example. I previously here, and definitely in a mastermind community, I've talked about how I've been struggling with this idea of how long my social battery is. For some activities, it's like three hours. For others, I might be able to do five hours. And I know from experience, I can seldom be around other people other than my wife for more than five hours before I just become exhausted. And it's not because other people bore me by any means, but it's just my social batteries just spend and I just need to be alone to recharge. And knowing the duration of my social battery I found really feeds into this concept of simplicity.

1:01:23And if you're an introvert like me, you know the complexities of letting your social battery fully discharged. It's just nothing good is going to come out of it. And of course, similar, if you're an extrovert, you also notice the complexities in life and all the problems it's going to throw at you if you're sitting alone and you need the energy from being around other people to recharge. So it's basically the same thing. But shifting gears here, I spoke with a previous coworker here the other day, and he works in marketing. And we talked about how conventional TV watching was just whether or not that was over because Gen Zs, their habits are just so different than millennials and Gen X.

1:02:03And what he said to me really stuck with me because he said, yes, habits are different and some things are tied to a different generation doing different things. But it's also a reflection that whenever you're 25, you just do different things whenever you're 45. That's because they're 25. It's that simple and it's that hard. And it goes to this point at the very top of our episode, David, because whenever we grow and become young adults, we want to explore anything in the world because we no longer feel basically constrained by our parents. And we feel we can do anything and we keep adding new things into our lives.

1:02:41And then after some time doing that, perhaps we find a significant other, perhaps we get a career, we get very, very busy, but now we feel we need to live a life of subtraction. And that life just suits us better. Perhaps we basically want to sit in front of the TV, even though it probably sounds super boring to a 25-year-old, not because simplicity is always better, but because different stages of life calls for different life strategies. Yeah, no, absolutely. I mean, it's completely anecdotal earlier when you said that the world seems to be getting a bit more complicated, Stig, but now I'm going to agree with you and say that the world seems to be getting more complicated.

1:03:20I was just literally having this conversation a month ago with the client as she was working through some staffing challenges. And to your point, just how differently people are wired these days and how people are working and they live. And the complexity in people's lives, it's showing up everywhere. Now, when I think about what's required today to file a corporate tax return in Canada compared to 25 years ago, almost everything that has been added it has increased complexity, not reduced it. Nothing seems to be getting simpler. It's always another layer of something that needs to get done. And it's rare to hear someone say, you know what?

1:03:59You actually don't need to do that anymore. It's extremely rare. You just don't hear that. And it's not just taxes. I mean, think about what's required today to do banking and legal processes, development approvals, and building code requirements. I mean, the list just keeps going on and on. Everything seems to be getting a bit more complex. So, maybe it isn't anecdotal after all, Stig. I don't know. If the world, I guess, and if the world around us is becoming a bit more complex, then we have to be really intentional about pushing back against it, right? And I don't want to sound naive about simplicity as well.

1:04:38I know we're doing a deep dive on it today. I mean, like I said at the beginning, life is full of catch-22s and sometimes you do have to take on difficult challenges in order to grow and find new things. But I was reminded of this recently when I was reading The Paradox of Choice by Barry Schwartz. It's a beautiful book and in it he explains that now we're faced with an unprecedented number of choices in nearly every area of life, consumer goods, careers, relationship, and of course, business and investing, and a lot of the stuff that we talked about today. We tend to believe that more options lead to greater freedom and better outcomes, but his research is showing the complete opposite.

1:05:24Too many choices create overload, which leads to decision paralysis and stress and sometimes avoiding making decisions altogether. And his conclusion was pretty simple but powerful. Well-being improves when we actually limit our options, when we can reduce excess comparisons and accept good enough decisions and focus on what truly matters instead of endlessly searching for the optimal choice. And I really like that good enough framework versus perfection. And as I was preparing for this episode, of course, when you buy a red car, you start noticing all the red cars on the road. I started to notice how often simplicity shows up across all the books that I've been reading.

1:06:11And it's remarkable how many thoughtful investors and writers come back to the same idea time and time again. And often, they're coming from different angles too. I just mentioned Schwartz. And of course, many of the listeners know that William writes about simplicity in his chapter on Joel Greenblatt. And even in a book with complex themes like Annie Fragile with Nassim Taleb, he never frames his work explicitly around simplicity. But if you dig down a little bit, it's everywhere in the subtext. He argues for subtraction over addition and real-world feedback over elegant models. Again and again, he shows how complexity hides fragility, while durable systems tend to be the simpler ones and the ones that are grounded in reality.

1:07:01And, you know, a really funny story that he tells in the book is about the wheeled suitcase. He said back in the 80s, his arms were always burning walking through airports because he was carrying his luggage that was loaded full of books. And then he questioned why did it take society so long to put wheels on the bottom of those darn suitcases, right? I mean, the wheels existed for 6 ,000 years, yet rolling luggage has only appeared just a few decades ago. You know, how do we miss something? so simple, right? The Stoics, they talked about subtraction thousands of years ago, remove what isn't essential so you can focus on what truly matters.

1:07:40Greg McEwen, he talked, he had a wonderful book on essentialism. And Nassim Taleb, he calls it via negativa, improving systems not by adding more, but by removing what makes them fragile. And the same idea shows up. Clarity doesn't come from adding more, it comes from removing what doesn't belong. And when you look at business, investing, and life through the lens of simplicity, I believe that it can create consistency. And consistency is what allows things to compound in a quiet and meaningful way. So, how can simplicity become a superpower in life? by creating simple systems that are easy to follow, easy to fix, and easy to repeat.

1:08:27In a world that often feels over-engineered and full of unlimited choices, we can still choose what Buffett calls stepping over one-foot bars instead of seven-foot bars. I absolutely love that, David. And it's very interesting that you would say that about simplicity. I had this experience not too long ago. I was checking up on our team in the Philippines. And I went there and I had this feeling that anything was possible. And sort of like the type of metropolitan feeling you can get in a city with 12, 15, I think someone on our team actually said there were 20 million people, if you included the entire metropolitan area.

1:09:06And especially for someone like me who grew up in the rural area here in Denmark, it's like, you got this, at least for me. And again, I'm not saying this is the case for everyone. I know a lot of people are very happy about living in big cities. So I don't know if it comes across the wrong way, but there was something extremely liberating about this feeling like I could do anything I wanted. But there was also almost like, to your point, I always felt stressed. I had so many options. There were so many things to do 24-7. And there is a strength to the simple life where there's not a lot of stuff happening around here after 5 PM.

1:09:43And I guess if you're basement, you would say nothing is happening also before 5 p.m. But there's only so many things I can do whenever I'm home. And at least to me, that's actually quite nice. And again, I'm sure other people would very much disagree and say that the best life is living in the big city, and that's probably true for them, or perhaps it's true at a certain age. Who knows? I'd probably be all over it whenever I was younger. Anyways, David, before we end the episode here, I want to give a handoff to a new website you and I created. It's called Compounding Simplicity. And we just completed our soft launch.

1:10:19So please forgive us if everything doesn't look exactly as it should yet on the website. Our target group specifically is Canadian business owners, but anyone can go out and check out the site. It's completely free. And we also set up a YouTube channel also called Compounding Simplicity. So we didn't strain any muscles there. And then once a month, we're going to publish a video. It's hosted by you, David, but it's produced by The Investor's Podcast Network. We want to educate on how to achieve your financial goals. And so our attention really is that after watching the videos, you should be able to manage your own portfolio.

1:10:53And at the very core of the philosophy is the idea that you don't need professional help. And also that managing your portfolio should take almost no time because you should be an overseer of your return. You shouldn't be an active portfolio manager. And so definitely feel free to check that out. Again, the target group is specifically looking at things in Canada, but we also think that there is a timelessness to some of the evergreen topics we're also going to cover. So let me just throw it to you, David. David Steinberg Yeah, that's lovely. Thanks for that summary. Really looking forward to the launch, Stig.

1:11:30It's nice working with you and your team. We're excited to lead people on their path to prosperity. And it's encouraging to see everything we've accomplished so far and check us out. Thanks for listening to TIP. Follow the Investors Podcast on your favorite podcast app and visit theinvestorspodcast.com for show notes and educational resources. This podcast is for informational and entertainment purposes only and does not provide financial, investment, tax or legal advice. The content is impersonal and does not consider your objectives, financial situation or needs. Investing involves risk, including possible loss of principal and past performance is not a guarantee of future results.

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