How You Get Rich Isn't How You Stay Rich: 300 Years of Proof | Joseph Moore

22:04James Altucher:In most cases, they make money on a fee on assets under management, particularly the hedge funds. They just need to return like 5%, 6 % on$10 billion. dollars. And if they do it pretty regularly, they're making, you know, billions of dollars. Like if you have your foot in that door, that is the easiest way to make billions of dollars, I think. It's good work if you can get it. Yeah. Meb, you know, Meb Faber, Meb told me this. Oh, very well. Yeah. Yeah. Meb had a great point about this. He said, you know, they had just released the top fortune, whatever, of social media influencers. And, you know, Taylor Swift and Mr.

22:37Beast. And he said, now compare those to the top hedge fund managers. They wouldn't even and be in the top 20, right? Or top 10. Like they're a rounding error to what people in that world are making. So it's good work if you can get it.

22:50James Altucher:Yeah, like a small hedge fund now is considered a billion dollars. So on a billion dollars, January 1st, the minute you walk on the door, you just made$20 million because you get 2 % of the assets. Now, if you're up 5 % on 10 billion, that's 500 million. Guess 5%, by the way, being a mediocre to small return. It's worse than T-bills in many years. But guess what? You just made another$100 million. So you made$120 million for doing a shitty job for the year. And basically tracking the index, which by the way, I mean, you probably know this, but there's, I'm sure you do, but there's this University of Arizona professor who like put this together.

23:25He's got a wonderful visual on it. That 96 % of all stocks ever, ever did not beat T-bills. They're tied or below T-bill returns. That means the entirety of market returns have come from the other 4%. of stocks.

23:41James Altucher:Yeah, it's a Pareto law. Yeah. 20 % of stocks are going to return 80 % of the value. But then if you do Pareto law squared, it means 4 % of the stocks are going to return 64 % of the value and 1 % of the stocks are going to return about 50 % of the whole value of the stock market. So that's why you have the mag seven, like Nvidia, Google and whatever else is out there. They returned almost all the value of the stocks last year, like the big techs and the rest of the market was flat and the big seven stocks were up like 80 or 90%. So that's all your returns. Some people could say, well, I had the vision of tech and AI.

24:16James Altucher:And so I went into those stocks and then some people got lucky. So those are the two categories of people who made money in stocks. It's very small categories. Yeah. There is a lot of concern about the Mag7 that we've now like, we're so concentrated. I'm actually not near, historically speaking, because this is, you know, this is what I do for a living. I read dead people's mail. And I, you know, I actually pointed out, we've actually been more concentrated, believe it or not. In the 1830s, over 30 % of the stock market was one stock, which was the second bank of the United States. And it cratered from 120 or 150 a share to$1.50 a share in like a year, and then eventually went to zero.

24:50Can you imagine? That would be like, imagine that Amazon, Berkshire, because this is statistically what it would be like. Amazon, Berkshire, Microsoft, NVIDIA, Tesla, and Walmart, I think, or the six or seven. And if all of those cratered and went to zero in a matter of like a year to two years, that would be like that event in the 1830s. So like we've actually had more concentration, at least we're spread out amongst some companies now.

25:15James Altucher:Yeah, I mean, it's a tiny bit different. And for a big reason, which you point out, which is that something like one or 2 % of America owned stocks in 1837. And right now, 90%, I don't know what the number is, but it's like 90 % of people own stocks. We've kind of turned it from, this is what I talk about in the book, is like how to identify historical change. and like when do things change fast and when do they change slow? And this is a slow change, but we have turned the stock market from a place for price discovery and investment for the return of capital, right? A place you can go, you can figure out what investments and risks are worth, where are you gonna get capital, where are you gonna get a return on capital?

25:50We've turned it from that to a retirement promise for the masses. And that's not what it was designed to do. It's not to say that it can't do it. It's just to say that's not what it was designed to do, but that's how people are using it. People aren't using it to get price discovery. The average investor is not using it for price discovery. The average investor is not using it as a risk-adjusted return on capital. They're using it as a retirement strategy. And that is historically speaking, very, very new. If you had told somebody at 1890, I'm gonna retire on the stock market, they would have told you you're nuts.

26:24Because if you had done what the baby boomers have done, let's say like, I'm gonna work 40 years, invest 10 % in stocks, buy a house and retire. if you had started that strategy in 1870, you get wiped out four separate times. Like nobody would have done that. And that's why nobody was doing it until fairly recently.

26:42James Altucher:I mean, I guess there's always, look, people buy lottery tickets, right? Because then you're really buying this ability. Like I always say, when I buy a lottery ticket, that means for 24 hours or whenever the lottery is going to be, I just bought daydreams. Like I'm going to daydream about winning. And so like when you buy, get into the stock market, there is always the hope, whether it's 1923 at the beginning of the roaring 20s or, you know, dot-com bubble or right now, you're buying this hope that the future is going to be great and stocks will follow that future and you're going to benefit from it.

27:14James Altucher:And that's not an unreasonable thing because there are happen periods, maybe even now, who knows, where that hope will have come true. If you buy the right stocks, like you can't buy pets.com, you got to buy amazon.com. Who would have known? But, you know, there is always hope, whereas T-bills, which you point out really interestingly, bonds often outperform stocks contrary to what people think. But T-bills are a reliable way to not lose money and make money, often better than inflation. But there's no hope there. It's just boring. That's a good point. Where's the hope in this strategy? Take a quick break.

27:52James Altucher:If you like this episode, I'd really, really appreciate it. It means so much to me. Please share it with your friends and subscribe to the podcast. email me at altitra at gmail.com and tell me why you subscribed. Thanks.

28:12James Altucher:I say every day your business is late to AI, you fall two days behind. The competition is only moving faster. Fortunately, there's NetSuite next. You probably know NetSuite, the AI-powered business management suite that securely connects all of your data. It's a unified suite that brings your financials, inventory, commerce, HR, and CRM into a single source of truth, trusted by over 44 ,000 customers. NetSuite Next is the next huge leap because AI is built into everything you do. It automatically surfaces custom insights throughout your day. AI agents work alongside you to solve problems and handle routine work.

28:50James Altucher:And anytime you have a question about anything, just ask, like you're talking to a colleague. It's customized for a wide range of industries, so it supports the way your business truly works. Whether your company earns millions or even hundreds of millions, it's time for NetSuite Next, where your business meets AI. I use this, and you should too. For the first time ever, you can try NetSuite Next for free. If your revenues are at least in the seven figures, go to netsuite.ai slash james. Built for every industry, ready for every boardroom. netsuite.ai slash james.

29:32So to that point, most Americans, for most of history, could not invest in the stock market. It wasn't something you could do, which it drives me nuts when like the guys, you know, the financial advisor slides you the chart. I just call it the chart because the dates change, but the point is always the same. The run I got was 1929. If you had invested$10 ,000 and reinvested all dividends until today, you'd be worth$10 million. I distinctly remember those numbers. because I looked at the guy. He thinks I'm gonna be so impressed with his like historical brilliance. And it was like, houses did not cost$10 ,000 in 1929.

30:03So you mean to tell me this person put their life savings into stock, which by the way, they couldn't do. I'll explain that in a second. Then they lost 80 % in the crash. Then they fought Nazis and feared nuclear holocaust. Then they cried when Ross and Rachel got back together. And they never once touched the money. Like that's not real life, but here's why they couldn't have done it. There's not an index fund. There's not an index vehicle. There's mutual funds, which had huge fees. So that would have eroded the return completely. And then there's, if you had wanted to buy the index, you'd have to buy a hundred shares of everything in the index.

30:34That's a million dollars in 1929. That's like 12 to$15 million today. So nobody did that. Here's what everyday people were doing, talking about hope. They were going to gambling dens and betting in these things called bucket shops because the average person can't afford to buy the actual stock. So what they'll do is they'll bet on the price movement. I bet radio, which would be, you know, Radio Company of America. I bet radio will go up or down, or I bet AT &T will go up and down. And you would win based on the price movement. It's Calci. And the other thing people would do is -

31:05James Altucher:Calci has markets like that. You can bet every 15 minutes whether Bitcoin will be up or down in those 15 minutes. Yes, that's exactly. And people would go get a couple of beers, sit with their buddies and bet on the market. No investment needed because you can't actually do it. The other thing, they just play the numbers. People are talking about lotteries. So like the numbers were huge. Like working class people would talk about how the numbers were their investment strategy, which is basically a lottery game. I mean, I've heard that expression, but specifically what does it mean? So it's just, it's a lottery.

31:34Basically, there's going to be a random set of numbers at an agreed upon time and you bet on the outcome of the numbers. It's a version of a lottery game. And it was wildly popular for working class people because you could buy a ticket for like 50 cents to a dollar. And there were guidebooks. You could go into bookstores and get big, thick guidebooks called dream interpretation books, where if you, there were these things called gig, which is like a gig was a set of numbers. So if you had a dream about a police officer, you played the policeman's gig. If you like met an Irishman, you played the Irishman's gig.

32:06Like whatever had happened to you in your dreams or that day, you played that gig. And they were well-selling books in bookstores to tell you what gig to play. That's what everyday people are doing with their money. that's investing in the same way that like kids are saying now that millennials are now saying their sports gambling is part of their investment strategy. So we've seen all this before. It's a great thing that we've had the index revolution. It's a great thing that everyday people can with with no friction really be in the market. But we have to account for the fact that that changes what the market is.

32:36You know, that's kind of the value of history is like using the study of the past to understand why the present isn't always just like the past. A lot of times we try to overfit the past to the present. And you just can't do that. You have to understand today is

32:46James Altucher:actually different. It's really true. Like on the one hand, the phrase this time is different is the easiest way. Saying that phrase means you're about to lose money because history, if it doesn't repeat, it rhymes. But at the same time, there is always new things going on. Like in the mortgage crisis in 2007, people didn't understand that the way borrowers were ranked by the banks had changed so that lower income families were able to get higher quality loans. There was a lot of reasons. Laws changed during various administrations to be favorable so more people could buy homes. But things had changed.

33:23James Altucher:Things were different. And hence, too many people borrowed money. And then hedge funds at the same time were growing and they leveraged up too much and everything sort of unwound. Very often, there are things that are different. Understanding what's different in each scenario is important. Yeah, exactly. And that's the point I make. By the way, I was one of those people. Actually, so I'll tell you, I was one of those people who like had no business owning a home who somehow was like slid papers to sign for a mortgage. But what I try to explain to people is there's this illusion that history is like physics and that it has some gravitational pull to the mean.

33:54And if you've studied the past, what you really learn is how crazy people get before they come back to the mean. And what I tell people is the mean moves through time too. And so the mean is itself changing behind you. You're looking forward. If you look back, it's not one thing that pulls you back gravitationally. So to your exact point, I was one of those people in 2005, I'm getting a PhD in history, by the way, not on financial history. That wasn't my goal. I did my PhD in American history on the study of like radical abolitionists, like the abolitionists who were so far to the extreme that they made the other abolitionist uncomfortable.

34:30Okay. So like that's, that's what I'm studying. And in 2005, everybody told you the lesson of history was clear. Renting is throwing your money away because housing always steadily goes up. Now we can put to the side, the fact that actually it's a flawed argument, but that was the general consensus is that that was the lesson of history. And so my wife and I nod our heads. We buy a small town home. They literally allowed us to use the student loan money to qualify as income for the mortgage. And when I asked if that was okay, the guy was like, just sign here. I distinctly remember he said, just sign.

35:05And he pushes it across the table. Like I push it over, like, is this okay? And he pushes it back, just sign. That was normal. Now, no one was saying that the housing market itself was, sure, a few people outliers, but like the housing market was itself becoming something new and different. And that's something nobody accounted for because the mean was moving through time.

35:23James Altucher:Yeah. And you know, it's a very interesting thing, by the way, this whole myth that renting is like throwing money out the window and buying a home is, oh, you might as well own it instead of just paying someone else to own it. That's an incredible myth that you put in. First off, it's a marketing scam. The real estate industry is like a$20 trillion industry. So of course, they're going to scam you to throw your money away. But when you buy a home, again, you need an edge. Like with anything else, you need an edge. When you buy a home, not only is, you know, you got to be careful because your mortgage is going to mean you're going to spend much more for the house than you thought.

35:57James Altucher:But also there's property taxes that you have no control over. There's maintenance. You're going to pay maintenance every single year. And the maintenance is volatile and it could be much more than you think. When the plumbing goes out and you have to change all the plumbing in your house, when the electricity goes out, you have to rewire the whole house. There's a lot of maintenance issues. And then usually when you need to absolutely sell, because let's say you're having problems in some other part of your life, that's the moment when the housing market is no good and you suffer a loss anyway.

36:23James Altucher:So I think it's very rare. But if I say this, people will say, well, my mom bought her house in 1971 and sold for$27 million. Yeah, because 1970s and 1980s was a period of enormous inflation and they all won. That whole generation won. This generation, every generation is different. It's unclear what's going to happen. I prefer to rent because, by the way, also, when you buy a house, you have to put this enormous down payment down where there's opportunity costs. You could have been using that money to invest in something else, put it in the market, or just relax and have no stress so you could be successful in other parts of your life.

37:00James Altucher:So I'm very much against buying a house as an investment. So I feel like there's a couple of... This is one of the things, there's not just two sides of the coin. It's like a dice. It's like which side of the die do you need to roll? Because if you're young, I would tell people, if you're young and you have upward mobility in your career, do not buy because you need to be not sticky where you are. Because the best opportunity for you may very well be in Austin or in LA or in New York or Atlanta, wherever. Like there's just, you may be able to take a job that over the course of your life triples or quadruples your income because you took the chance and got up and went.

37:34And that's a real advantage for you. So there's no reason to have all the transactional costs of buying a house if you're young and building a career. But on the flip side, and this is like, there's a lot of historical advice on this. And this debate, believe it or not, goes a long way back. Like I can find people arguing about buying versus renting in the 1800s. And so we've been fighting this fight forever. There are some times when it does make sense. If you are in an area that you're going to stay for an extended period of time, and it does tend to like lock you in, again, back to that short on the dollar thing.

38:06The other time that it generally does come in handy is when you're older and can have a house with a paid off mortgage. not because the returns would be better because over the course of say 20 years, the returns would be better if you stayed in the market and just rented. But it's the sequence of return risks for somebody who's 68. If you're 68 years old and your retirement portfolio plummets in a year, it will take you years to get back. And so it's good to kind of lock in that kind of, it's basically an insurance policy. And so there are some, I think it's one of those, like it's very situational as to when it makes sense.

38:36It's not a universal, it always makes sense to buy or universal, it always makes sense to rent. It's incredibly situational and time dependent.

38:43James Altucher:Yeah, I'll concede that. Put it this way, I think it's rare that it's good. But I think there are like life circumstances too. If you have kids and you want them to make sure that they grow up in a steady community with a lawn and you don't want to be kicked out when the house owner says, oh, we can't rent you anymore. Okay, maybe there's life reasons why you're willing to take more of the risk and hopefully the financial stuff works out. But in general, I think it's probably not a good investment. You mentioned the transaction costs. is like 6 % of the fee. So all the time, what you think you're spending for the house ends up being much, much more as opposed to renting where you know what the cost is.

39:16James Altucher:That's it. That's the rent. And there's no other risk. It's interesting on that exact point. Most Americans who are multi-generation, like third, fourth generation Americans, they are much more prone to it to adopt the argument you're making. It's the families that were most keen throughout history, even to today, the most likely families to want to buy a home are immigrants because usually they came from places where somebody jacked up the rent. And this is true in the 16, 17, 18, and 1900s. And even today, a lot of them were renters who had the rents jacked up. And so they come to America dreaming of owning a home.

39:49But this economy is so big that it actually rewards a lot of people to not lock themselves into place. And so this is one of those things where like kind of sometimes an immigrant mentality can help people get into the property ladder, but also sometimes it can backfire and lock them into a place that say, you know, like middle of, you know, Indiana where the Rust Belt like just declines over time. And then a lot of those houses, like those investments in the Rust Belt went way down through the life of a lot of people who bought in the 70s and 80s. Adjusted for inflation, they were losers.

40:19James Altucher:This all, like obviously money is so important. Everyone would like to think that, oh, I don't think that much about money or I don't like to be stressed. But the reality is we need money to survive and money does reward value in many cases, the value that you bring to society. And also we just want to relax. We don't want to stress. So you talk about the fire movement in the book, Financial Independence Retire Early, which has become this huge like Reddit craze. But first the question is how much, like right now, 2026, how much do you think for the average person is enough? What is the number?

40:53James Altucher:Oh, wow. Okay. Wow. Right out the gate, we're going hot here. I think, again, I'm not dodging. I'm going to give you an honest answer that it is very situationally dependent in that this, I am financially independent, retired early. Like that happened to me. I was retired for about two years before my wife kicked me out of the house. I was like, you find colleagues because I don't know who Foucault is. I don't know why you want to argue about him, but I need you to get out of this house and find somebody to talk to. So I went back and like started teaching college kids again because she wouldn't let me stay at the house.

41:19But like, I actually did fire. And - What do you mean? Just describe it. financial independence, as in like, I could never work another day. I went heavy into the rental real estate market after 2008, after the crash, learned a lot of hard lessons, but made enough that at a modest level, I could get up every day and decide what I wanted to do, which apparently was following my wife around the house and annoying her with like oddball intellectual questions. And putting that aside to saying, my number for that is going to be very different than someone's number in Manhattan who, you know, went to Columbia and has certain social expectations about their life.

41:57So I joke with some people because I've been on book tour in Manhattan a lot this year. And I was like, I'm outside of Atlanta rich. I'm not Manhattan rich, right? And there's a difference.

42:08James Altucher:Having lived in Atlanta, I can tell you Manhattan rich is triple, at least, if not quadruple, Atlanta rich. Yeah. So what's enough, right? Which is your question. I think it does really boil down to like the people that you're talking to, like what is enough for them? And if you were to say, this is fire no matter the number, it's you have enough to eat, you have enough to pay your rent or your housing costs, you have enough to live a basic decent life for you and if you have children for your kids, and you have enough security in that income that it is unlikely to go away on a moment's notice.

42:40In other words, it's not highly speculative and leveraged. Now, for some people, that's 5 ,000 a month. for if you're$10 ,000 a month? Like that's, you know, I tend to think annually, but I honestly could tell you, like there's a, every now and again on Twitter, somebody will say, I think you can retire with$2 million and people will like swarm this guy, whoever this guy is, because it's always somebody different with like, you idiot, blah, blah, blah, blah, blah. Here's all the things you don't know about. And I'm like, hey guys, I retired with$2 million and I now have more, but like it was more than enough for me.

43:11If I tell that to somebody in Manhattan, they're like, you're insane. There's no way I could live with$2 million.

43:15James Altucher:Like, so what's a million dollars? Okay, how much do you think you can reasonably make just with the most conservative investments? And that's up for debate too, but let's just discuss. 60 to 80 ,000 a year. So three to four, what is that? That's three to 4%. I'm being conservative. Yeah, I'm being very conservative there. I'm definitely not what I do. Like I have rental real estate and, you know, and I've bought more properties and sold properties and stuff like that. So that's, yeah, the median, let's just look at the median household income in America is$80 ,000. It's 81 for the median household.

43:45With$2 to$3 million of net worth, could you sustain$80 ,000 of spend, including your housing? Probably. Like if you're being decently smart with your money. And so what are the risks there? The risk nobody talks about is that it's actually not everything it's cooked up to be. Like fire is kind of the CrossFit of personal finance, right? It's like this insane group of highly dedicated, crazy people who are willing to do what nobody else is willing to do. And if you're not careful, you will get injured to your point of like, people will take wild, stupid risks or under-consume to a point their health declines.

44:20I've seen that happen. Trying to get to this mythical land. Now, if you do it and it works, you get an incredible shape. Like you can actually, you know, do what other people aren't able to do. But most people don't want to live that way. And I think that's the issue is like, most of us don't want to be up at five in the morning, hopping on top of boxes, sweating ourselves to death. And most people don't want to be under-consuming housing, food, you know, saving 40 % of your income so that one day when they're 42, they can walk away. That's just not, that's not most people. So I think the real risk is that it's way too much effort for what you get out of it.

45:13James Altucher:One argument, though, is kind of an extreme fire where you make the$2 million, and instead of figuring out how to live on$80 ,000 in Kansas, you live on$20 ,000 in India or Bangladesh or something like that. Geo-arbitrage. Yeah, you can move to a place where it's much cheaper. Right. Yeah, and there are people who do this. A lot of them are on Instagram. I think a lot of the people, I'd say at least half, I'm just making that number up, but like about half of the people on Instagram telling you how they're geo-arbitraging and financially free are actually living on the subscriptions of people paying for them to talk about being financially free.

45:47This is, by the way, a longstanding history. So look, the idea that you can make enough money to live a modest life on and not be stressed is very real and it is very longstanding. There's a guy in the book I talk about, Sylvester Judd. This guy's born the year the Constitutional Convention or the Constitution is ratified. He dies the year before the Civil War. He lives every year of Annabelle America. He works for half of it because he built a printing press business. He sold it. He did not make bank. He made enough. Like he had a modest small fortune and he decided I have enough and it was enough to live the rest of his life on.

46:22And he spends the rest of his life pinning histories of New England, which is why we know about him. And also why we know a lot about New England history because of what he did. So, and that's the way a lot of science was done this way by people who financially independent, retired early, had enough, and would go out and do weird science experiments. And so that was normal. But you get the people who sell you the dream of financial independence. And that's a very different thing. That's the Instagrammers out there. You know, Thoreau goes out in the woods, and he builds a cabin like a damn man should, and, you know, talks about the meaning of life not being work.

46:56And Emerson travels around Europe, and he writes these essays about not letting work own you. And then there's this couple, Helen and Scott Neering in the 50s and 60s, and they write these bestselling books. The New York Times is like drooling over them because they found the way to Walden Pond. All right, you go back. Thoreau's mom brought him food so he wouldn't starve. Emerson's wife died. She left a trust fund. He sued her parents for the trust fund. The day he won the lawsuit, quit his job, went to Europe to talk about not having to work. And the nearings are probably worse because they write all these bestselling books about how they work four hours a day.

47:34It's like the original four-hour work week was the four-hour work day. And people flock to Vermont to learn from them how to have a maple farm and work four hours a day and spend the rest of your time reading great literature. And they start to starve. And no one can figure out why they're not making it work, but the nearings are. Come to find out, they had not one, but two massive inheritances they were living on. So you just have to be really careful about what people put in the fire because it could be toxic when they're selling it. But the basic math is the basic math. And so whatever your lifestyle goals and dreams are, whatever your standard is, your standard or my standard may be wildly different, but it is math and you can't get there.

48:14It's just a matter of like, is that a value you want to pursue? And for some people it is, but some people also want to get up at 4 a.m. and do, you know, box crunches.

48:22James Altucher:No, and then the other issue with fire, which you point out in the book, is that there's inflation. So let's say you can survive an 80 ,000 a year now. Well, what happens when food costs double or oil costs double so you can't drive as much or there's a variety of costs. And I always think, okay, well, instead of buying from Whole Foods, I could buy from Publix and you see 20, 30 % there. And instead of paying$4 a gallon, so okay, I still pay$4 a gallon, but I just won't drive as much and figure out my life. So I figure there's always ways to fight initial inflation. But in the long run, I don't know.

49:00James Altucher:If you're really just relying on battling inflation and solving that, you might be in trouble. You can. And I think there's a lot of people who just assume the stock market always beats inflation, so it always will. So that's where they put most of their money. Because, so the first Financial Independence Retire early book that's explicitly like formulaic is in 1919. But the one everybody knows about is called Your Money or Your Life. and it's by Joe Dominguez and Vicki Robbins. What people forget, because I mean, that book took the tech world by storm. Like there's all these tech bros in the 90s and 2000s reading this kind of antihero text about how you can make enough and cash out and they are making a lot of money and they're like dreaming of cashing out.

49:41What nobody remembers is that his advice was to put it all in bonds. And so he's put, which when he started doing it in the 70s and 80s made a lot of sense. You could get double digit returns, but by the 90s, his government bond portfolios dwindled and dwindled. He ends up in a men's shelter. Like he dies in a men's shelter because he's out of money. So to your point about risk, the godfather of this movement basically lived that risk and died with no money.

50:10James Altucher:So over the years of, you know, the history of America and people getting rich in America, what has been the most consistent way, and what is the way right now to basically get rich? Or is it a personality type? Like what sort of person gets rich consistently over this time? There's not a personality type. There's a skew in the personality type. Some pessimists can get ahead. It's going to be more optimists get ahead than pessimists, usually just because of the nature of the way a capitalist economy works. But so in the book, I like have 25 lessons that kind of stand the time of every era, seven things that always fail.

50:47But I can boil those down into five basic pillars. The first is solve people's problems. If I walk into Barnes & Noble and I just reach on a shelf with my eyes closed and I grab a personal finance book, nine out of 10 chance it says to buy index funds and look at my behavior and my spending, which takes about one page. And now the guy has to write 199 other pages about the same thing all the other books are about. But like, it's on me and my problems. Should I drink lattes, whatever? Okay, that's about me and my problems. That will keep me from going broke. It will not make you rich. You get rich solving someone else's problems.

51:21And there's a lot of problems that get solved in this economy. This economy is massive. And so when you can find a place to solve somebody else's problems, that's where the real money is, where you double and triple and quadruple your income. The second thing is you got to take risks. We live in the least risky age in American history. Your house and your spouse can all be insured. Like we talked about earlier, if you go broke, they don't take you to jail. They certainly don't take your wife and kids there. And yet we are more risk averse than we've ever been. The third thing is move more back to our renting conversation, especially the younger you are.

51:54You live in the largest free market zone in the history of the world. There is an opportunity for you somewhere, but we don't move anymore. So if I go back to the 1800s, forget the 1800s, that's far, far back away. Like go to the 1950s. One in five Americans changes addresses every year. One in five. Today it's one in 13. And a lot of the one is old people going to Florida and Arizona to retire. So young people are not as mobile as they used to be. And that was a key to getting ahead. There is opportunity. You may have to go where the opportunity is. The fourth is marry well. That survives every era.

52:29But it's not just marrying into money. It's marrying into the kind of person who understands you are going to build a joint enterprise and a life together. And you're both going to cover down on each other's dreams. And marriage will blow your mind for all the other factors it outperforms for financial outcomes. And then the fifth is believe you can. And that sounds very self-helpy, doesn't it? It makes me sound like, you know, I'm selling like some kind of seminar class or something. But here's the reality. Consumer Financial Protection Bureau did a big set of studies, had two studies back to back.

53:00And in both of the studies, they found the number one predictor of financial wellness was a positive attitude, which was an internal locus of control, meaning I control my outcomes, at least to some extent. It was a positive attitude combined to a habit of saving. That outperformed income, it outperformed inheritance. So optimism is wildly over-rewarded in the American system, which gets back to the risk-taking and gets back to the going where the opportunity is and probably gets onto hitting somebody on somebody in a bar who looks like a great partner.

53:31James Altucher:I want to address the optimism in a second, but I've done, let's say, 1 ,500 podcasts with mostly very successful people. And I would agree, just seeing what I've seen among many of the billionaires, entrepreneurs, whatever that I've interviewed, marriage is the most important thing. When these guys know they've got someone at home or women, by the way, I've interviewed Sarah Blakely. When they know there's someone at home who's got their back, that is incredibly valuable. And it's someone who's going to be supportive of their dreams. Their wife has to be almost as optimistic, maybe not as optimistic, but almost as optimistic as them.

54:08James Altucher:You can't have someone like saying, oh, you're a failure. Stop trying to be an astronaut and just stay at home. Get a job as a pilot. They need someone who's going to help them pursue their dreams, who's going to have their back. I think that is the most worthy. And also the financial cost of divorce and so on. And also not to mention a benefit of if your wife has money too, but that's not the most important thing. But then the optimism thing, I think the reason for that optimism is so important, among other things, is that you're going to stay in the game longer than if you're pessimistic. And the only way to win the game is to stay in the game.

54:44James Altucher:And that's very important. If you combine that with a habit of savings, it's not that they're going to save their way to wealth. It's that a habit of savings shows financial discipline and that's how you stay in the game longer. Yes, exactly. Anything you can do to stay in the game will increase your odds. It'll expose what they call the surface area of opportunity gets bigger and bigger. You have to try lots of things because most things fail. So you have to be optimistic enough to come back from a failure. And if someone plays tennis for the first time and they lose, some people say, oh, well, I'm just no good at tennis and they move on.

55:23James Altucher:And other people say, oh, I need to improve how I hit the ball and then I'll keep playing. Well, then that person is more likely to eventually win some games of tennis. So you just have to stay in the game. And whatever habits are involved in staying in the game, whether it's health, good sleep, doing some discipline of savings. I have no discipline of savings. I'm very bad at that. But okay, I had to learn the hard way. I'm super optimistic. So that balanced that out. So it's an interesting thing. But I would say those two things are marriage and optimism. I'm not sure which one's more important, but those two things are very important.

55:57I, yeah, I, well, they're all important. And I, I think the, the idea of optimism has gotten kind of a self-help-y bad rap that you're supposed to not say that kind of stuff because, and Morgan Housel points this out that, you know, pessimism sounds wise when you hear it, because it sounds like somebody is trying to protect you from an event right now, but then you pan the camera back and asks, where are the pessimist mansions? Yeah. Because optimists live in mansions. pessimists talk about how you can't really get ahead. And so it's not that I'm, you know, not naive optimism. I'm not talking about like taking out a loan on your house and buying Bitcoin with it.

56:36That's gambling and reckless. When it's about recklessness, there is a line between recklessness and optimism, which I generally define as when you have some strong measure of control on the outcome, you'll never have all of it, but can you affect the outcome in some measurable way? Then you're an optimist because you know there's opportunity, you will do whatever it takes to squeeze your part of it out and then let the rest kind of be the chips that fall. But you live in a system that will reward that, reward shots on goal. And we live in an economy that is a basketball economy. Shots on goal matter.

57:09James Altucher:That's a real important point because the great thing about the US is that it doesn't necessarily reward failure, but it forgives failure. So you can fail at many things and still succeed. People trust you and you build up a kind of a personal brand. or if you just keep going back at the well with more ideas. U.S. is a very creative economy. It rewards creativity more than it punishes failure. So, look, but that's not to say there's a formula and it's not easy and it never gets easy unless you're like, you know, a billionaire or whatever. But, and even then they can go broke. I mean, back in 2004, I remember I helped someone sell a business where he made$41 million.

57:48James Altucher:And I lost touch with him over the years. I was just randomly, you know, you Google people and you see how so-and-so doing. Well, I saw that in 2019, he and his wife filed for bankruptcy. And I have no idea why or how I felt bad for him. I almost like picked up my hands and like looked away because there but for the grace of God go I. And you almost don't want to, I don't know, I didn't like seeing it. But people go broke with a lot of money. Yeah. And that's another thing too. You have to stay in the game always. And I've gone broke with a lot of money several times. and it's because I didn't judge risk correctly.

58:24James Altucher:I would say that's number three, is you have to be able to really analyze your risk. You have to be optimistic while still analyzing your risk. Yeah, there's a difference between how you get rich and how you stay rich. And so don't confuse what the rich have with what the rich did to have it. Most of the wealthy who get and stay wealthy de-lever over time. Talk about this a little bit in the book. They generally took big risks on the front end, but they had the realism to understand that over time, they had to dial that risk down to ensure they captured those gains and held on to them. And so, you know, maybe the one outlier to this is Elon who just has never met the risk he's not willing to take on and keeps winning, you know, and good for him.

59:05But most people who risk at that level over and over, eventually the numbers catch up to you. You don't hit every shot. And so it's the people who lever, risk, whatever it is, and then understand they have to take that risk dialed down. Not in zero, you don't go from 100 to zero, but like back to Steven Gerrard, like over the course of his life, we can watch him de-lever, de-lever, de-lever until he's like basically, I think I may be wrong on this stat, but it's like basically 75 cents of equity for every 25 cents of debt. He still has risk, but he's not going to lose everything on one ship. And all the greats have done that.

59:39It's that they made big money and then they took the risk down a little bit.

59:41James Altucher:Right, and here's a counterexample. Like there are several counterexamples exactly what I'm about to describe. So whenever there's like a period of a massive boom, let's take 1999 internet, or even I'm going to say 2023 Bitcoin, it went from like whatever it was, or 2020 Bitcoin, 8 ,000 to ultimately like 100 ,000. You know, there's an exchange called Hyperliquid, which allows you to do 50 to 1 or 100 to 1 leverage on Bitcoin futures. And there's a guy, he's kind of like a famous guy. He's anonymous because all these accounts are anonymous. is there's a guy who went from basically$10 ,000 to$160 million during this period.

1:00:21James Altucher:And then all the way, you could see the account, and then all the way back down to$10 ,000. Because like, it's not, well, people would say, well, why didn't he stop? Okay, why didn't he stop at 3 million? Why didn't he stop at 15 million? Of course, he's going to keep going. That's who he is. And in the law of large numbers, there's going to be a guy or a gal, but there's going to be a guy who, at the exact beginning of the exact right movement up, they're going to be the one who's hyper leveraged and make$100 million out of nothing, as opposed to any other period, that same person would have lost money right away.

1:00:55James Altucher:But then they're going to lose it all because they're going to keep going. Oh, there's always a Jesse Livermore who is that figure for the 1920s and 30s. Yeah. I mean, just can't. And he admitted like, I don't even care about the money at that point. He's like, I love the game and the gamble. And he ends up blowing his brains out in one of the hotels in Manhattan. because he eventually just rolled and rolled and rolled until he lost. And there's always gonna be that guy. But I think, you know, one of the things I wanted to do with my book is we got so many histories of Rockefellers and, you know, we got all the histories of 1929 and 2008 and all these things.

1:01:25I wanted to write a history of like, what did everyday people try to do to get ahead? And usually, back to our point about what's the number, their rich was very different and they were very happy to get there. And I mean, sure, you move the goalposts and now you want the different, you know, handbag or car or whatever. But like, usually there was a sense that you had made it far enough and that you could be happy with that kind of one lifetime gain for you and your kids. And I think that's the pursuit of most middle, most of middle America are trying to get ahead to a certain point that they'll, to use the Supreme Court definition, know when they see it.

1:02:00And that's not what traders are after. Traders, and I've met some traders through the years, like they're gamblers. Like they'll tell you they're gamblers. Their favorite books are almost always not about the market. They're almost always biographies or autobiographies of gamblers and card players. So, which is actually a really good tutoring for how to get into trading. So yeah, their obsessions are different than most people's.

1:02:25James Altucher:Joe Joseph Moore, author of How to Get Rich in American History. There's so many stories in this book, by the way, that we didn't even touch upon. It's like a really great book, a really great read. and the subtitle I'll say is, because I always forget the subtitles, 300 Years of Financial Advice That Worked and Didn't. Really great book, really enjoyable and really valuable lessons ultimately on kind of like the history of money. It reminds me a lot of Morgan Housel's Psychology of Money and Morgan's been on this podcast as well. Really important addition to anyone's library about money and financial freedom and independence.

1:02:58James Altucher:So thank you for writing it. Thank you for coming on the show. What are you working on next? What are you working on now? James, thanks for having me. I've really enjoyed it. So about once a month, I try to write an essay kind of in the same vein, right? Like, so I'm working on one on index and like how have index funds changed over time that we don't think about. I wrote an essay called I Wish I Were Poor about the housing crisis because I have a lot of real estate and I wish I kind of owned a slice of a bigger pie. So I just try to write essays like that that are thoughtful use of how can history help you understand the financial present.

1:03:26Josephmorebooks.com is the sub stack.

1:03:28James Altucher:All right, excellent. Well, thanks for coming on the show. I really appreciate it. Thanks, James. Really enjoyed it. Look forward to the next time.

1:03:58The Matrix Trilogy Welcome to the real world.

1:04:05James Altucher:Mean Girls. Shut up. Titanic. I'm the king of the world! And so much more. For Showtime's, press nothing. They're free 24-7. That is so fetch. On Pluto TV. Stream now. Pay never.