99% Of People Watching This Will Stay Broke - Will You Be The 1% That Builds Wealth? | Morgan Housel

the odds of you dying broke are extraordinarily High making money is not about being smart it's about not doing dumb things dumb things that virtually all of you are going to do but if you want to beat the odds and all but guarantee you'll die rich there is a really simple formula to follow the question is will you be able to do it I'm joined today by bestselling author Morgan housel and we're going to lay out the formula for wealth creation the single biggest problem is figuring out what you want what you're good at what your risk tolerance is and that's going to be a very unique answer for you and I always cringe whenever there's any kind of financial content on TV or online or on YouTube where it says you should do this and I'm like who are you talking to are you talking to a 17-year-old day trader are you talking to a 95-year old Widow are we going to pretend like those are the same people with the same goals and a big part of this is I feel like a lot of financial debates when people saying you should do x no no no no you should do why they're not actually disagreeing with each other it's people with different goals and different time Horizons talking over each other and so so much of the psychology of money is us being looking in the mirror and being introspective into saying who am I what do I want and what's the best path for me and one of the most dangerous things that you can do is take your cues and get from get your advice from people who are playing a different game than you are you have people who are chasing other people's dreams and when it doesn't work or if they get there they realize they're not happy it's like yeah because that wasn't your game that's not what you actually wanted to begin with really what every business is is solving somebody's problem figuring out a problem for someone else that's a very very basic way to describe a business but you would be surprised how many businesses ignore that fundamental concept and when they're making a product when they're making a marketing plan whatever they're forgetting that part of it what is a problem that somebody else has and what can we do to fix that one that really sticks out to me here that I wrote about a lot in the psychology of money is the math behind compounding is not intuitive at all to most people so all wealth comes from compounding compound interest that's very basic but the math behind it always screws people up I frame it this way if I asked you what is 8 plus 8 plus 8 plus 8 you could you could figure that out in 5 seconds but if I said what is 8 time 8 time 8 time 8 time 8 your head your head explodes you can't figure it out like we're just not meant for compounding or a simple statistic like this 99% of War it's net worth he's worth $100 billion 99% of that came after his 60th birthday bananas was accumulated after his 60th birthday that number doesn't doesn't compute doesn't make sense in people's heads because that's how compounding works if he retired at age 60 when he was worth $1 billion you would have never heard of him the only reason he's successful and has gained so much wealth over time is because of how long he's been doing it for it's because it's not just because he's a good investor it's because he's been a good investor for 70 years and that's where all the money comes from so that too is so easy to overlook like people look at Warren Buffett and they say how did he do it how did he pick stocks what is he looking for how does he think about valuation and management teams those kind of things and that's all important but the secret is that he's been a good investor for 80 years that's all of it and most people don't have that kind of patience whether they're an entrepreneur or just an individual investor it's like how can I make money fast and if you try something new and it's not working you give it a month or maybe six months before you're like this isn't working I had to move on to something else when all of the big fortunes over time whether it's from an entrepreneur or an investor have come from people who are doing roughly the same thing for an inordinate amount of time and for most people in investing if you're investing in the stock market it's a one way to get wealthy over time the secret is that average returns sustained for an above average period of time will lead to Magic that's all you need to do everyone in the the stock market is like how can I earn the highest Returns what are the stocks I can own this year that are going to double what like how can I get money fast and most of the time that's not the strategy that you want that's not what's going to earn you the most money over time what's going to earn you the most money is how can I earn what are the best returns that I can sustain for the longest period of time and if you can just be average for 20 or 30 years you're going to end up in the top 2% of investors over time there's uh a quote that you said goes like this in finance spending less than you make saving the difference and being patient is maybe 90% of what you need to know to do well so if it really is that basic and I've had people on the show that say very similar things yeah and yet I mean it when I say that the vast majority of the people listening to the sound of my voice right now are going to die broke yeah so what is it in our minds that trip us up why can't people do that I think for well first there's a lot of societal pressures pushing you away from that there's a huge societal pressure that you're not rich enough and even if you have money you need to spend more of it your your house isn't big enough your car is not nice enough your clothes aren't flashy enough so even when you get the money holding on to it is a completely different thing and my definition of wealth is the money that you have not spent yet that's what it is it's the house you didn't buy the cars you didn't buy that's what wealth is so earning money to begin with is very difficult for some people and for those who do keep hold like holding on to it is a whole another set of problems that there's all these social pressures pushing you away from when you frame it as earn money save the difference invest and be patient it's very very simple but the social pressures like the math is not difficult the social pressures pushing you away from that are enormous and then I think for even the people who understand that basic equation it's too simple for them to take seriously if you look at that and say that's 90% of what you need to know like okay but now let's get into the fun stuff let's start trading options like that's that's what's intellectually stimulating for them and so that's where their mind goes even if that's that's how you chop your fingers off in investing so for some people it's too simple Health might be the same of like eat a balanced diet get some exercise and sleep eight hours okay that might be 90% of what you need to know for it but it's not exciting it's not exciting for people so they're not going to pay attention to it a lot of what I write about in same as ever is that the best story wins not the best idea not the right idea not the accurate idea not the best answer the best story that gets people to nod their heads is what's going to win in every Endeavor in life business politics money investing when you tell a story and people sit up in their seats and they're like oh I like that that sounds good that's the person who wins that's who gets people's attention and so in investing even if what you need to know is very basic the people who are telling a better story and a more exciting story those are who are going to get the followers and that's where all the attention is going to go to okay so how do we combat that if you've seen uh or read I guess not scene I think it was in The Odyssey where the guy wants to hear the sounds of the sirens so he says strap me to the Mast so that I can't go anywhere and all of you put wax in your ears so you can't hear anything and then I'll be able to hear you know the the song that calls men to crash upon the shore what is the thing that we can do that has that kind of effect so that we can know what to do and actually do it this is a little bit fatalistic but I think there's a lot of people who won't be able to and we we're never going to live in a world in which everyone in society perfectly understands how to make money and keep money and invest money the reason that there is opportunity in investment markets is because most people are doing it wrong that's who you're getting the opportunity from if everyone did it right there'd be no opportunity so we're never going to live in a world in which we're like we've solved the investing problem everybody gets it in a way that we've s we've you know uh eradicated malaria from the United States like we're never going to get to a point where like we've eradicated bad financial behavior it's never going to happen so the truth is it's it's just going to be very difficult a lot of of it is just the social pressures and think of a world where everyone tomorrow is twice as Rich everyone just magically there's no inflation but everyone's net worth doubles tomorrow in that world your expectations would double overnight too because you don't just want to be rich you want to be richer than your neighbors so as everyone else gets richer their inflations go their their expectations inflate as well and so even if everyone's making great decisions and saving money and getting wealthier what you actually want is to be richer than other people and so no matter even if we're all making great decisions and becoming richer we're still going to have that little bit of insecurity that's pushing us towards bad decisions so that part I think is never going to is never going to change I do think at the individual level for the some people who can take this to heart and put it in their own life I think it's trying to figure out what your goals are and that can be very different from the goals that Society tells you that you want and I think for most people not everybody but most people at their core what they actually want from money is independence and autonomy they it's not that they want a big house and a flashy car and a private jet they want to wake up every morning and say I can do whatever the hell I want today even if what they want to do is go to work they don't want to be told by somebody else what to do they don't want to have a boss or a banker telling them what to do and when to do it they want to be independent and autonomous and so if that's your goal a lot of a lot of doors open up in finance of like that's my goal for money I just want to be independent I'm not that materialistic of a person I just want to make sure that nobody's telling me what to do I want to wake up and do everything on my own terms I think a lot of people are like that but then the goal is like okay I want to build up a net worth that allows me to do that enough money so that I'm not beholden to other people's whims and one way to think about it is that every dollar of savings that you have is a piece of your future that you own it's a claim check on your time in the future and you can flip that around and say every dollar of debt that you have is a piece of your future that somebody else owns it's a claim check that they have on your time and your work in the future so viewing it like that like just that fundamental goal of like that's what I'm after and most people haven't defined what they're actually after with money it's this vague just like I want to be rich why and it seems like a dumb question because of like oh it seems great but once you define why you actually want to get there it might be different for everyone then I think a lot of these strategies clarify it's very interesting all of that makes a lot of sense to me the only thing I will push back on is I think the I think it was Charlie merer that said the world doesn't run on Greed it runs on Envy Y and so I will use that as a counter to I don't I agree that people want freedom but I think it's a distant second subconsciously they're not obviously being thoughtful about prioritizing it but I think that comes a distant second to what you said before which is I want to dunk on my neighbors yeah and so if you want a society to get violent and actually turn on itself and start literally shooting people in the streets all you need to do is up the jny coefficient so that totally agree totally agree and for people that don't know that phrase the jinny coefficient is not absolute wealth it's the differential in wealth between the rich and the poor it's wealth inequality exactly and so I think about this in American terms uh even correlated to what I've heard you say which is in the 1950s things were way worse than they are now y but just just on like objective every objective measure in life expectancy the average size of the house the average median American adjusted for inflation is way better today than they were in the 50s except for one number and that's expectations that based on how wealthy some people are you could use the Genny coefficient to measure that you know in the 1950s for a lot of various reasons there was not a lot of wealth inequality the gap between rich and poor was much lower than it was before or since a lot of that was just like an echo from World War II of how companies were managed and the top marginal tax rate was 91% back in the 1950s so you you didn't have CEO making $30 million a year there were no athletes making $30 million there were no billionaire hedge fund managers it just didn't exist and so in the 50s most people looked at their neighbors and their co-workers and everyone else in their town and said relative to that person I'm doing pretty well and so even if their incomes were lower than they are today and they're living in a smaller house and driving shittier cars and going on worse vacations they felt great because relative to everybody else around them they were doing pretty well and I think what has happened over the last 80 years is that on average our incomes have gone up our net worths have gone up our life expectancy has gone up but so have everybody else's and so our our expectations have gone up by even more so I think there's a lot of people for whom their income is doubled but their expectations have tripled yeah and they feel like they're worse off and that's that's a formula that it's an absolute recipe for misery you can imagine a world in which our grandkids are earning twice as much as us and have way better Medical Technology they've eradicated disease they they live in Global Peace and they're no happier for it because their expectations go up and you can say that because the world that you and I live in today is indistinguishable from Magic 100 years ago if someone 100 years ago could see today's world with something as simple as antibiotics they they wouldn't know to what to make of it it would just look like pure Utopia but are we actually happier for it today how like how many times do you wake up grateful for antibiotics it just becomes something that you expect and you're not grateful for it and and everyone's like that I'm like that everyone's like that like it takes about 2 seconds for a new luxury Innovation to become a baseline necessity and so we can sit here today and dream about eradicating cancer and Ai and all these things that are like so fun to dream about and would be great things for society and if we're lucky enough to have them we'll get used to them in two seconds and so that's a big problem with money it's just like if your expectations grow with your Prosperity you're never going to be happy there's this great quote from the philosopher monu he said this 300 years ago he said if you just want to be happy that's very easy to do but people want to be happier than other people and that's a very difficult thing to do and one of the reasons he said is because we think that other people are happier than they actually are he said that 300 years ago but now think what is social media has done to that where now when we're judging other people's prosperity and happiness you go on Instagram and look it's all fake it's all a curated highlight real nobody posts on Instagram the vacation photo of their kids crying or fighting with their spouse it's all the curated highlights if not airbrushed highlights and that inflates everybody else's expectations when they grow go on and they say why how come I'm not as beautiful rich and happy as they are yeah and so that's we we live in a world which like mon monu said that 300 years ago if he saw today's world he I think he would double down on that by an order of magnitude yeah just be like yeah this is exactly what I know to be true about Humanity it's always been true it's just so much worse now yeah this is what I worry about when I think about um how people avoid the Trap Of Dying broke how they can get the freedom that they want it to your point isn't so much about money money is going to be a huge part of the equation I don't want to lie and as I always tell people money is more powerful than they think it's just different than they think yeah um but the thing I want people to understand is what is going to stop you from generating wealth is your own mind um it's funny because if I want to have a clip or something that I do go not necessarily viral but do very well all I need to do is yell at people and be a drill sergeant that's what people want me to be and the reason is they want me to intoxicate them with certainty they want me to tell them precisely what to do how to behave to stop doing that to do this the bad news is the only thing that I have that level of aggression and certainty around is that people shouldn't be so certain like that I will yours think You' answer and it's never going to be questioned you're going to get hit by a freight train 100% And you have got to cultivate like a deep sense of distrust in your emotions particular and if someone says here's the secret to getting Ro here's the path to getting rich just follow these three steps that's what people want to hear that sense of certainty just tell me how to do it tell me the formula the truth is there's no form it's there are mindset ideas there psychological ideas but everyone wants the drill sergeant this is going to tell them exactly what to do and how to do it because that's that seems like the easier path when a lot of like one of the bestselling books of all time in finance is is Napoleon hell's Think and Grow Rich oh my God the book changed my life it's a great it's a great book and one of the Thor the keys of it is like you have to Envision and imagine the success that you're going to have in order to get there it's a very vague and nebulous point but I think that that's the point is like if the secret to wealth is like this very vague and nebulous thing it's not do this do that and step three you're rich it just doesn't exist it doesn't exist here's what I took away from thinking Grow Rich and this that book I remember where I was written like the 1920s very long old he was I assume he was interviewing effectively the robber barons of the day like going around like who are the people that have just amassed all this wealth and I was on a plane I was broke broke at the time and flying to see my wife in who is now my wife then my girlfriend to England and all the stops you can imagine to get the cheapest ticket possible um and he says in the book like hey I've given you the secret on every page of this book but it's still not sinking into you yeah and I'm like what I was like what has he said on every page of the book and then I was like oh if I believe I can I can it but if I believe I can't then then I won't right and I was like oh my God that that thing in that book changed my life in fact before we started rolling I said to you I have the saying I call the only belief that matters yeah which is that if you put time and energy into getting better at something you will actually get better at that thing yeah it wasn't directly from him but it was a combination of him and Carol D who wrote the book mindset that made me realize oh my God it look as somebody who's built businesses I will just tell you you cannot wish your way to success but if you don't believe it's possible then you won't do the things you need to do to get good at the skills you need to get good at in order toate wealth or whatever it is I think whether it's an entrepreneur an investor or a politician or an athlete a common denominator that they have is just like this incredible belief in their own skills that they can do it no matter how hard it's going to get that they can do it themselves that they can eventually get there this like like ridiculous confidence in their own ability to get [ __ ] done is a common denominate you're going to see a lot of those people but back to like Napoleon Hill that's the idea of like if you believe in it you can do it and if you don't believe in yourself you're not going to get that that's very different than the drill sergeant saying do X Y and Z and then step three Is wealth because I think what Napoleon Hill told you was the truth of like like let's leave aside the actual like technical idea of like believe in yourself and you can get it done there there is no formula for getting it done believe in yourself is a vague nebulous concept but everyone out there wants the hack everyone else wants the shortcut of he' like follow the three steps follow this simple trading algorithm and you'll get rich tomorrow but we can give them this is what drives me crazy you've already given it to them spend less than you make invest what you save and give it a long time so it becomes what you said earlier about but your mind is going to [ __ ] with you yes you won't like that it's not complex you're going to be drawn to these very like difficult things and there's H do you have anything to say to that cuz there's I'm going to move us on to like this other thing that you said in your book that I was like I totally disagree with this oh good I that's this this is what this is what I like talking about the most the one thing I'd say is the idea of spend less than you make and save the difference is is much easier said than done so as a formula that you can put is it not going to work 100% of the time over the last 100 years anyway we no one can predict the future but over the last whatever 120 years yeah that would work every time yeah it's just that most people won't do it because it's harder than it is to say okay so then before we move to the next thing which I will take a note to make sure I don't forget but uh why why is it harder so cultural you're going to be Instagram's going to push you to spend more money got it y Envy is going to push you to spend more money and to pursue more money and to constantly move the goalpost okay yeah is there anything else or is it literally Master those two things and you're golden the last point I'd bring up and I don't know if I agree with this 100% but I thought it was it was profound when he said it there's a Charlie Monker quote where he says when teaching Financial skills to young people they either get it instantly or never at all and I think what he's saying is like on the nature nurture Spectrum some people are just not wired to get it and some people are are very naturally wired to get it instantly I've often thought before I heard Monger say that I've often thought 10% of people don't need any help with their money they naturally understand it it just makes sense to them compound interest makes sense it's in it's intuition another 10% cannot be helped they're compulsive gamblers no matter what you tell them they're they're always just going to be making terrible financial decisions I think that's that's roughly right so there's always going to be a subset of the population for whom no matter what you tell them or what information you give them it's it's never going to click if that okay so the gambling thing that wipes out 10% but that would mean 80% you have a shot and I don't buy it I think that there is a given that the answer is so simple in fact let me make this about the body for a second I can tell you exactly how to get sixpack abs it won't work some of the time it will work all of the time to a person I don't care what disease you have literally nothing it will work every time if you let me control what that person eats I will get them to now they might have weak ass six-pack abs because they're not doing sit-ups yeah but you're going to get them this is a question of how much body fat are you storing and if I remove enough calories from your diet people are going to hate this but this is [ __ ] true if I remove enough calories from your diet you are going to lose fat that that is just a fact of nature there is no way around it there's nothing you can do to stall it out if you let me completely control your calories will control your body fat it will be different for different people but it will work 100% of the time yeah and so the question becomes then why is everybody fat yeah and they are fat because they don't care enough they have not built the discipline and I hate that this one is true they may not meet minimum requirements intellectually that just there is a sad reality to be faced that there is a point at which you drop below the requisite IQ and you're never going to make it yeah uh they are a wash in bad ideas which is where I focus I am entirely obsessed with I think the vast majority of people can make the change but they they're going to have to get rid of their bad ideas and supplant them with effective ideas not even going to pass moral judgment on I'm not even going to call them good ideas I'm just going to say there are ideas that work there ideas that don't work and how do you know whether you're pursuing an idea that works or not you're getting the result that you want or you're not getting the result that you want now we can go into a whole thing about if you don't know what your goal is of course you're going to fail which you mentioned earlier and a huge huge swath of humanity has no idea what their goal is and so they are not going to be able to get to it just because they've never taken the time to articulate it but okay all of this was a response to you saying that there's this huge percentage in the middle 80% that doesn't fall into either of those two categories wants and needs good advice yeah so I will say I still think the vast majority of them are going to fail and I think the vast majority of them that want and need good advice are probably not getting good advice you can reboot your life your health even your career anything you want all you need is discipline I can teach you the tactics that I learned while growing a billion dooll business that will allow you to see your goals through whether you want better health stronger relationships a more successful career any of that is possible with the mindset and business programs and impact Theory University join the thousands of students who have already accomplished amazing things tap now for a free trial and get started today the huge majority of the financial services industry by the way are by and large good honest well-meaning people the incentives of of the system are to push people away from the best financial behavior because if you are a stock broker if you are a fund manager you're not going to make a career you're not going to make your money telling people to buy index funds and go to the beach you want them trading you want them churning in and out that's how you as a broker as a fund manager are going to make your money okay and then so so much of the industry is pushing people towards the worst thing that they need to do because the incentives to do it are huge and in finance if you have a business model where you're taking 1% as your fee 1% on trillions of dollars across the industry is a shitload of money so the incentive to push people towards doing things that they shouldn't be doing is off the charts and that's a huge part of this too I mean it might be similar in health where it's like the incentive of the food companies is to make food that is good tastes good and is addictive it's not to give you healthy food they they couldn't care less and I think by and large they're good honest well people but the incentives are to push you away from what you should be doing I'm in a weird mood today so I'm going to say okay look as somebody who made my wealth in food yeah trust me there are amazing people out there and I am I have a lot of respect for myself because I cost myself hundreds of millions of dollars doing the right thing that I knew was like oh this isn't going to be as popular but it's going to have the right Metabolic Effect but I will say there are a lot of people that are probably dirt bags I'm not saying I met them I'm just saying when you look at oh God in fact this is from your book uh bag no no no you're going to remember this in a second uh I think this is really smart I summarized it as um oh God circumstances make the monster yeah but it's actually from the Russian poet the Russian poet that you quoted God I'm forgetting his name uh he he has a crazy name yes but basically he say you can turn anyone into a monster in two weeks correct and he was he was saying he was talking about it in terms of people who went to the gulg and people who were good honest Noble smart wise caring calm peaceful people two weeks in the gag and their monsters two weeks of starvation isolation torture whatever it would be and you're a monster that'll do it and you and I would do that too everybody would I imagine becomes bad there's no question but and in two weeks of starvation or torture or whatever it might be isolation at what point are you willing to you know start attacking people for your basic needs kind of thing that was that was his point and because of that we underestimate what Society is capable of doing yes in a bad way because everyone is calm and peaceful and by and large well-meaning right now it takes two weeks to turn that around yep yeah that that is scary and I think very true so going back to the the food industry so given the perverted in perverted incentives I have a feeling even though they may be like minus the bad incentives amazing people the incentives get hard to overcome yeah and this is why I think so many people succumb so uh dear viewers thank you for showing up because I care obsessively about one thing I really because I acknowledge the role of luck in my life I am obsessed with trying to give people the ideas that I feel separate me from people that have not had had my kind of success I got the ideas at the right time I had the right Constitution to get very frustrated with the way that normal business was being done and all of My Success was sort of a accidentally timed Rebellion against that that ended up being just absolutely the right time for pure luck oh so I am hellbent to give people the ideas that are going to help them so you are Your Own Worst Enemy you are going to create all the problems in your life the reason that you know the right thing to do in both your body and in money because we've told you them in this episode so if you were hearing my voice now unless you're skipping around randomly you know what to do now maybe you don't believe me I guess we'll set that aside for a second but assuming that people do Embrace those ideas I still think they're going to fail and so I want to dismantle what what happens psychologically that leaves them to fail now to do that though I need to ask you first do you think they can be changed or do you simply speak to the 10% that fall into the they'll get it and do something I think I'm speaking to the 50 to 80% who want and need good advice do I think everyone can change no because I feel like if I like my saying of spend less than you make invest be patient I almost to to rag on my own idea I almost view that as saying if you get people to stop fighting there'll be no more Wars you're like yeah no kidding but it's not going to happen and it's like it's a it's a when you make it that simple it highlights all that you need to do but that's not pretend that that's going to be easy and let's not pretend that anybody that everybody can do it I think that's that's where I fall down and to the point of same as ever it's it's always been like that bad financial behavior has always existed and I think it will always exist because of the natural human emotions of envy and wanting to one up your neighbor and Rising expectations I think those have all they're such an innate part of human behavior and because those exist it's never going to get to a point in society where everybody is making good financial decisions okay is is a room to improve at a broad level I mean the fact that Finance is almost ex not taught whatsoever in schools is absurd you have to take Tri you have to take trigonometry but not basic personal finance so so is there is there room to improve the masses absolutely and even at that level when the masses start getting a lot of financial education what has been most young people's uh introduction to finance in the last couple years it's Robin Hood which I'm I'm sure that company too is run by good and honest people but it's an it's an app that's designed to get you to start gambling not to invest for the long term not to learn about businesses to buy the stock that's going up between now and lunchtime is what they want you to do which every Financial study every academic study would show that's the single worst way that you can invest so even when you have a new product that's getting people into the game by and large because of the incentives of the game it's not pushing you to do the right thing yeah agreed um here's something that I say frequently that really drives people crazy but I'm going to say it anyway because um I speak to the 2% of people that I know can and will change yeah uh just to throw another number out that I have completely made up it it is while I think the vast majority of people that listen to the show are in the 2% I think that the World At Large breaks into roughly 98% if you're an adult got a whole thesis on kids but if you're an adult 98% of people are so stuck in the frame of reference are never going to make a change 2% will they're hyper malleable and they're going to figure this out okay uh the thing that I say that people hate is that I like my house to be chalk full of terrible food Oreos ice cream cakes all of that whatever because I don't eat based on what's tasty and delicious I don't eat based on what the industry is telling me I should want I eat based on my goals so I don't spend money based on what I'm excited about or this that and the other I base what I spend my money on on my goals now I am a drunken sailor when it comes to investing in my business so I want to be very clear I recognize I'm playing a very dangerous game in bus fair enough all the critiques in the world I will take them on uh but in terms of you I advise people to have bright lines in their life so the reason that I don't eat bad food when I shouldn't is because I have bright lines that I'll eat anything I want on a Saturday yeah but if today is a Tuesday and it is then I know that I can't have Oreos and cupcakes and cookie and whatever but do you think you have an abnormal amount of willpower that 99% of people don't in that situation can I tell you a story yeah yeah please okay uh when I leave for college my mother basically pushes me out the door and I am weak and fragile and I'm like I don't think I want to leave I want to stay here go to the same school my friends are going to play it safe and my mom is like Over My Dead Body you said you were going to go to USC you were going to USC you were going to chase your dreams and you're going to make them all come true then I actually go to USC and my mom spends every day after that trying to get me to move back home and so one day finally this was like maybe 10 years ago I'm like Mom I have to ask you pushed me out of the house if you hadn't I would have just stayed at home so why push me out if you're going to work so hard just to try to get me back without missing a beat Morgan she says oh I just always assumed you were going to fail and come home wow and I was like whoa Now by this good thing she didn't tell you that at 100% 100% my mom was always my biggest cheerleader she's amazing but I was like wowa she was so nonchalant oh yeah I just assumed you were going to fail wow now I asked my best friend what did you think of me when I was in high school he goes uh I just assumed you were going to marshmallow your way through life he was like you were so lazy and then my now father-in-law when I went to ask for his Blessing to marry his daughter he said no wow he was like bro I mean obviously he didn't say bro but he was like I don't think you're going to be able to provide for my daughter and at the time he was right now the thing I want people to understand all of those people accurately identified where I was in my life at that time I was profoundly lazy I did whatever came easily I ran from anything that challenged me I I had a fixed mindset so I was trying to put myself in the rooms where I was the smartest person and the second I hit somebody smarter than me I would turn and run in the opposite direction this is why my obsession with the only belief that matters I didn't think I could get better and so my whole life was an echo of I don't think I can get better so I'm just trying to position myself to look cool now in the moment I'm not willing to put my head down for 10 years and get good at something and outperform people so everybody that was like oh bro this guy is headed for a disaster had accurately identified where I was at that moment in my life yeah now what they underestimated was the power of Shame and my desire to impress my wife enough to sleep with her that's so and so then my wife also was very good people are not going to like this word with with love in her heart and all the best intentions and it worked out great I couldn't be more grateful but she was very good at manipulating me so it was like when she saw me being lazy cuz she thought the way she was going to affect the world was not directly herself it was going to be through me okay we we came of age in a different time boys and girls so my wife who is now an entrepreneur always thought she was going to be a mother and that was going to be her whole thing so she just thought a subconsciously she probably wasn't even thinking about it but I'll manipulate him she didn't use that word but I'll influence and he'll go do the magical things that I know he will become capable of doing yeah and I ended up by reading things like Napoleon Hill on and on and on I ended up cobbling together this mindset that allowed me to be successful so I don't want people to Discount me and say oh he's exceptional I could never do what he did because he's different I'm built differently now but I wasn't at the time and so any anybody that writes off my story you writing off my story puts you in the 98% because you're looking for reasons to stay where you're at instead of finding reasons to be like oh word I'm going to do that how can I do there this is not your point but I'm curious when I hear that story how much of the rejection from your father-in-law or and those kind of stories motivated you to get better and it was it was what you needed to get off the couch here here is the honest answer so earlier you said that one of the things that successful people have is just this unrelenting belief in themselves but I also think that they have an absolute Terror inside that they're not good enough to be successful abely it is this weird dichotomy that was first crystalized by Alex horos thank you Alex shout out uh it's crazy and it is so true of me I've always had an insane belief that I was going to get rich now that makes sense now because people know the punchline of my life but dude when I was a kid nobody I knew his wealthy met a wealthy person nothing my whole family used to make fun of me literally they would mock me because I'm I'm going to be rich one day they were like get out of here so that is when I go to my father-in-law I am broke I have this Vision in fact when I went to propose I don't even think I had a job so he's like oh God you're living with in my ex-wife's house you're you've gotten my daughter to fall for you which is already horrifying on a 100 levels and he had taken himself from a tiny village not a town a village in the island of Cypress which I never even heard of until I met my wife uh he taken himself from that to running one of the largest shipping companies in the world crazy Journey so this guy's looking at me like oh my God like this kid is going nowhere fast I also don't blame him for thinking that it's easy to poke fun at him but just knowing what I know now it's like I get why he would have said that for sure yeah so at that time I'm laying in bed in the morning for 4 to 5 hours I only get out of bed because my girlfriend who's working to support us both to live in her mom's house P.S uh she would come home at lunch and her one request that since I wasn't working that I make her a sandwich and I would get up in my pajamas and finally get out of bed after 4ish hours and I would make her that sandwich oftentimes like slap Dash together because she was like walking in the door and I was a wash and shame yeah and I was like I told told her I'm going to make her rich I told her father because I ended up proposing even though he said no yeah and I was like sir I hear you I respect that but I do want to tell you I'm going to propose to your daughter so she says yes and now I'm like whoa I'm really ashamed of myself yeah and I need to make a change but if I hadn't ever gotten ashamed if I had never met somebody and made big promises and then knew I wasn't living up to them I wouldn't have done it and because it ends up up taking me unfortunately the story of my life is not oh my God the next thing I do I get rich it's like almost 15 years of oh God we're so poor my wife is clipping coupons we only have one car I'm bumming rides off my employees like it was crazy yeah uh so through all of that it was am I ever going to make it and I can't let my father-in-law be right now I want to be very clear nobody was ever kinder to me he was once he realized this is happening whether I want it to or not he was warm emotionally available just a generous generous human being and I'm so grateful yeah um and I did apologize to him because he he gave me probably the best business advice I've ever received but I rejected it at the time because I still had a fixed mindset y uh so anyway yes without getting slapped around in that way and being completely ashamed of myself I never would have done it I I I have a friend Patrick oasy who says if you had to describe in one word the mindset of the most successful entrepreneurs the word that he would use is tortured is then they wake up every morning and they're like they're terrified they have this big goal that they need to meet they have this audacious thing they're trying to accomplish and they're not there yet so you would think it's not driven it's not passionate it's tortured every day they wake up tortured and I think a lot of people in their life will get to that Rock Bottom moment and that's that's what they need the opposite of this the polar opposite of that are the spoiled kids who grow up with everything and they can wake up comfortable and under a warm blanket every single day and that's the shirt sleeves to shirt sleeves in three generations kind of idea like explain what that means you have someone who starts with nothing and they're tortured they're terrified they're going to be left behind a shirt they can they can't they can't do it they're in shirt sleeves because they're a bluec collar worker right they're terrified they make a lot of money and then they have one generation who maybe like kind of can follow it up a little bit kind of keep the family together a little bit the grandchildren who are just the grandchildren of very rich people are the ones who develop a cohabit at 17 and never accomplish anything and blew all the money and so there's a lot of families like this you and I were talking earlier about the Vanderbilts which to me is one of the most interesting examples of the mega Rich families because they had more money adjusted for inflation they had almost half a trillion dollars back in the 1800s and in three or four generations it was all gone and the three or four generations that inherited all the money and they were all getting hundreds of billions of dollars during this period And even if you were a cousin you were getting the equivalent of five or 10 billion dollars during this period they're all miserable they were all miserable and I think a lot of the reason was none of them accomplished anything other than being born in the right name they were not entrepreneurs themselves they didn't build anything themselves they didn't accomplish anything themselves other than spending their ancestors money and they're all miserable for it and you need someone who's like who can wake up terrified of their position in the world and that's going going to give them the drive to actually go out and build something themselves and you and I were talking earlier the first Vanderbilt Heir who did not get any money is Anderson Cooper from CNN and his mother was Gloria Vanderbilt she's the last one who got a trust fund Anderson got nothing and he talks about that that's probably why he's so successful and he's probably the happiest Vanderbilt Heir in 200 years because he was the first person who had to do it himself who he knew when he woke up when he was 18 or 20 years old he said I have to make a name for myself the fact that his last name is Cooper and it's not Vanderbilt means that he like he had nothing going for him no trust fund no name I'm sure he had connections and doors are open to him but I think that's a telling thing too like that's what drives people it's not having endless resources it's the opposite it's waking up terrified and a lot of entrepreneurs who keep it going are like this too there's this great interview with Mike meritz who is the founder of seoa which is the most successful Venture Capital firm that's ever existed and not only are they successful but they've been successful for 4 40 years which is a very long time in VC so he's doing this interview with Charlie Rose and Charlie Rose says what's your secret to being this good for 40 years and Mike Merit says we've always been scared of going out of business and this is a guy who is like an order of magnitude more successful than anybody else if there's anyone who has the right to brag and say the reason I'm successful is because I'm so smart it's Mike meritz but he doesn't he says I'm terrified of going out of business and he said we never assume that what we've accomplished in the past is going to transfer to to tomorrow so he's still waking up scared terrified tortured maybe and that's why he can keep his success going for such a long period of time and there's such a long history of people using their paranoia and insecurity to become successful and then as soon as they become successful they allow themselves to take a break because they're like I made it I met the goal I'm at the mountain toop I don't need to be scared anymore I was SC like the reason I was working so hard is so I didn't have to be scared anymore so then as soon as that fear goes away and they become comfortable with their succcess it's all over and what made them successful is gone and then it starts to unwind so many companies are like this Sears GM JC Penney the reason that they failed is because they got so successful they just got fat happy and lazy and you see that with individuals too and when you see someone like Mike Moritz who pushes back against that wildly successful the guy is a Deca billionaire and he's terrified of going out of business that is such a rare and unique mindset yes it goes back to you need emotions to make a decision but you really have to distrust your emotions yeah and I find that people it's ironic because most people are just absolutely devoid of self-esteem and all that but somehow still manage to once they get an idea in their head they they trust that emotion not an idea in fact as I was saying those words I was like something doesn't feel right they trust their emotions and they don't have a clear idea a and so this comes back to okay to me so I really want to I if if you and I disagree I want to debate this until the end of time uh I think that the reason that most people won't be successful is they cannot control their emotions yeah yeah and what's going to end up happening is they don't have a clear thesis on what they're investing against they're going to in the Euphoria when it's a bull market and everything's going great they're going to be like this is going to last forever and they're going to invest accordingly and so they will buy at the top and then they're going to panic as the number drops because of the emotion they'll forget that they didn't have a thesis in the first place they're just buying based on emotion effectively gambling and as it comes down they're going to sell at the bottom and so what becomes the simplest and best advice in the world Buy Low sell high they do the exact inverse high and sell low right but it's easier said than done for a very explainable reason your aot tions will convince you that dots connect that don't connect and so and this is something remember everything I say I'm saying to myself man I get it I'm I distrust myself more than anybody so what I've seen happen to myself and to other people is that the emotions make it feel like you have a thesis you're oh my God like this bull run no no no this is amazing so I went through I I didn't know what Euphoria in the market was until crypto so I sort of build for 20 years get wealthy pick my head up and realize oh investing never really thought much about it don't know anything about it let me go see what's up uh more I start learning about money the more I get into what's going on in crypto and I see the way that people are but I don't know that it's called Euphoria and so I have bright lines I go in with a thesis I know not to trust myself I know not to trust my emotions there's only so much Capital I'm going to deploy and when I hit that number I'm going to stop and everybody was like hey no keep going bye bye bye and I'm like nope I am deployed yeah and so it is what and I dollar cost averaged now the one thing if I were going to do it again I would elongate my dollar cost averaging time span so that you know I'm buying it over let's say 10 years instead of two but nonetheless uh had a number once I hit the number cool we're done and also I was like as long as my thesis remains intact then I'm not going to sell no matter what happens to the price and because I only invested what I could afford to lose which would be my Layman's tip number one I drive by what's going to let me sleep through the night that would be my Layman's advice number two Y and then um I just keep going with my bright lines this is how much I was willing to put in if I hit that number yes leave okay uh I plan to hold for like basically put your head down for 10 years don't even look at it don't think about it has it been 10 years no then don't sell and so we'll see if like and same thing I do in the stock market so we'll see if any of this strategy works out but that to me at least is I have a thesis that is unemotional I have it documented so that I can figure out am I adhering to my thesis or not y uh bright lines do this yes totally based on emotion or do this no again based on no emotion um what's wrong with that strategy if anything nothing but when I tie all this together when I hear about your diet and your entrepreneurship and how you invest it seems like you have an abnormal almost a freakish amount of self-control yes now the question becomes was I born with it or did I develop it yeah no I think I think if you ask me I think of the nature of nurture Spectrum I'm I'm making this number up I would think it's 80% nature yeah yeah I'm I'm pulling that number out of thin air but I think I think that's probably right and I think you see this in a lot of things one of the things that's so interesting about OIC the new drug and I I'm not a doctor I don't know anything about it but the idea that it can also has in in the early studies that have not been fully confirmed yet that people who are taking it for weight loss also are able to kick their smoking habit their alcohol their alcoholism their gambling habit and from what I understand it's manipulating a hormone in your pancreas that's doing this that is influencing all kinds of things that's how it gets you to stop eating so much if you piece all that together if that Layman's description is accurate of what I just said are the reason that people are alcoholics and gambling addicts is because they have an abnormal amount of a hormone in their pancreas that you and I don't and like if if to the extent that that's the case then yes I think self-control can be some on the nature of jure spectrum can leave lean heavily towards nature it's not to say that you can't learn to be better or learn the consequences of your actions or set up a system that's going to help you be a little bit more patient but I think without a doubt there are people who are born with more or less self-control that is we're in violent agreement on that the thing that we're in disagreement on is science seems to show that you're 50% hardwired and 50% malleable yeah and I'm certainly willing to say that cool I got a good hand on malleability is the one thing I think oo I'm a I am a hyper responder so not discipline it's my ability to change that I think is unusual yeah most are very stubborn then it becomes okay if did I put in the time and energy to actually change so my thing though is if all of us are 50/50 then I would encourage people because I'm going to guess that everybody listening to this could put they have not reached the max of their 50% malleability yet I don't almost certainly none of us ever will unless you're doing something like uh a sport which requires physical exertion your body will break down over time there's no 80-year-old in the NBA for a reason right um so I do fully acknowledge that there are limitations uh but I I don't think most people get to them certainly not with an intellectual game I think most people lose there's two things that I kill I think kill success boredom and um emotional weakness like you you feel badly about yourself and so you want to stop playing the game those are the two things that I think end up ruining most people so since I don't think most people have hit their cap I will just say okay cool let's assume that Tom's 50% that's hardwired is better than your 50% fair enough but when I look at Elon Musk I think it's pretty clear that his 50% of being able to solve problems or whatever his engineering mind I don't know what whatever it is yeah the the idea of trying to run seven companies I couldn't do it so Bonkers I can whine about that or I can do the best with my limitations that I possibly can do do you think there are areas in your life where you have very little self-control we've talked about the ones where you do is there anything where it's like you can't you you can't control that I don't know this is what you mean but this is the one thing that has really resisted my strongest efforts and that is anxiety now the biggest influence on my anxiety was diet so I was able to go from generalized anxiety of a constant sense of impending doom to okay now if I'm doing something high stakes and I'll still get anxious and I have to go way out of my way to manage my psychology yeah um and that does feel like sometimes I want to craw inside my brain and find is it my amydala what the [ __ ] is it but something is really pissing me off because I don't feel like I should have to work this hard to um maintain that sense of strength and confidence and I think people look at me and think oh well it's easy for him and I'm like Jesus man like very from my perspective other than verbal ability which that I will say I've always oh any energy I put into that I get a disproportionate return other than that like with the possible exception of malleability I feel like I'm what they EMB bodybuild and call a hard Gainer yeah ev Everything I Do takes an inordinate amount of time and energy and I just outwork people there's a new book by Robert spolski who's a very famous psychologist get him on the show and this I think that the thesis of his book is very controversial so I'm not saying that this is this is the truth his new book is that people don't have free will yeah after studying people for 40 or 50 years he's just saying the things that you do the things that you believe you don't have any control of they've been a consequence of what you've experienced in life and the DNA in which you were born with that makes you believe you do and I I have not read the book so I don't want to I don't want to cast too much judgment on it but there's part of me that wants to think like that's it's got to be it has to be 50% true I would say it's probably 80% true something like that don't we both agree it's 100% true I don't know without reading the book but the idea do you think we have free will ah it depends how we're how we're defining it like the ability to uh respond in any direction you want with total disregard for your biology and history I mean I guess we're framing it like that probably not I mean I would frame as there's probably things that I would want to do tonight that I know I should not do and therefore I'm not going to do I'm sure doing heroin is a lot of fun I'm not going to do it tonight because I know it's the wrong thing to do so is that free will no that would be free won okay is actually a thing oh no yeah that makes sense so maybe we can get behind free won so this is very interesting and I will say this the odds that we have free will to me seem like 0% yeah but you have to act as if you do so every word out of my mouth is as if I believe in free will because there's no other way to go through life you have to act like that yeah uh otherwise what are you doing um but I can't fathom that you do but what I'm saying is despite the fact that I don't have free will malleability is still a thing and you you you are lucky enough to now have encountered that idea now get after it right so I think anybody that resigns themselves to Free Will is an illusion in practice becomes an nihilist and I would very much recommend against that so does Robert sapolsky's idea push back against the idea of here's the formula you should do why aren't people doing this absolutely not it so this is this is one of those if we truly are just Cosmic billiard balls yeah does it really matter and my answer is no because the only thing it means is that we're all going through the motions that the percentages of people that can and cannot change are predetermined but the only way for these billiard balls to play out is for you to respond to the things that you were met with yeah and resigning yourself to uh I'm a billiard ball I can't do anything I'm never going to be able to make change does not make sense yeah to me now maybe that I'm just playing my role as the billiard ball fair enough but whether this is pre-ordained or not it doesn't feel pre-ordained it feels like I can at a minimum not do anything I don't want to do yeah so in fact let's hey let's talk about the goog archipelago so we were talking about the Googs earlier in that book Alexander soja niton says every body breaks under torture actually that's not true there are some women that will let themselves be tortured to death and I was like word there there are people who you cannot even viciously break their bones whatever they're fine kill me do whatever you want I will never tell you whatever it is that you want to know so you can go pick up my kids or whatever yeah okay word then we have free want I've never heard free want but that's good I like it strong important concept I would encourage people I'm I really want to get spolski on the show yeah uh he's a fascinating guy dude so interesting I've been following him for years even I I can't fathom I will read that book and be like no free will exists long ago I was like oh Free Will is clearly an illusion but it has no impact on how anybody should move through the world yeah that's good I like it that's a good distinction okay so if we accept that even if Free Will is an illusion you cannot act like that and you're now being confronted with ideas that are going to be consequential in your life because so far hopefully what we've established is you're the problem your emotions are the reason you're the problem and the way around this is to have a set of ideas that you turn into bright lines and you adhere to those bright lines because you can't trust your emotions the only way to adhere to these bright lines is to not have your entire um ability to live financially tied up in any investment you're G to need to have enough cash that you can I would encourage people to have a year six months to me is the absolute minimum agree yeah so how do people get to that because the first push back is going to be yeah dude I don't make the kind of money you make right so there's no way for me to save up a year that's crazy when was the first time that you started making a little bit of money I can tell my story about how I did it and there's a lot of luck that's involved in it yeah yeah I mean so I was a valet all throughout college and for someone who was 19 20 years old valet is one of the best jobs that you can possibly have I was making I was probably making 50 Grand a year as a 19-year-old when you're 19 50 Grand you feel like you're Bill Gates yeah not bad it's and it's such a fun 2000 this was in the mid 2000s uh here in Los Angeles and uh and it was such a fun job you're outside with your buddies driving Lamborghinis like it was it was the coolest job that exists so that was some degree I stumbled halfhazard into that all my other friends were like servers at Denny's kind of thing like working like working at the grocery store or something like that it was Serendipity that I fell into that my parents you know were paying for the majority of my education bought me my first car we're paying my health insurance we're paying my auto insurance that allowed me to save a ton of money just from that alone and so there's things that were outside of my control or things that were at least halfhazard that I did not strategically plan just kind of and a door that I just accidentally opened like oh valet is a cool job and I can make four times as much money as I do all my other peers that I didn't really do if I'm honest about it it was not a strategy it was just a dumb luck kind of thing that I fell into but and then I mixed that with I think I always had the money mind it didn't need to be explained to me I understood that I should save half my money and invest it and it was going to compound no one I was I was interested in it I used to go to the bookstore and read books about investing all the time because I thought it was fascinating it was never pushed on me but it also just like instantly made sense and so by the time I was in my early 20s I'd saved up a good chunk of money that was pretty abnormal for someone of that age but if I look back at it it was a combination of things outside of my control and I think a natural passion that was on the nature side of the spectrum of how I stumbled into it so like when I look at it like how what is the advice that I can give to other people from my experience early on and sometimes I struggle like what's the specific thing of like I did X Y and Z and if you do that you can have the same result I just I just don't know if that's really the case even even something so simple as I was a valet in Los Angeles in the mid 2000s when money was just overflowing through the Canyons in here it was the peak subprime bubble everyone was a gazillionaire everyone it was a very materialistic time in a very materialistic City it was just so much money and I know from talking to my friends who still work there it's not like it used to be so even the timing in which I was there that was obviously out of my control played a huge impact on on that so that's what if I'm honest with myself and I try to be humble about looking back it's like look I made some good decisions but I don't know if it's fully replicable for other people or even for myself I don't even know if if I could replicate it here's what I tell people about my success I I can tell you exactly what we did down to the on day 32 turn the screw you know 3/4s to the left uh it won't work for you and the reason it won't work is everything is about what you do and timing and if you miss the timing you've got a problem so all the things that we did at quest to really blow that up uh they won't replicate it was about recognizing social media before anybody else it was about building a product that didn't have sugar right at the moment where social media allowed people to share the message that sugar was the problem I didn't know that was going to happen uh I didn't even do social media because I thought that I was a genius I did social media because I thought it was a way to build an audience of people uh that I could connect with emotionally because I was tired of being a what what I called a slick marketer like I don't want to be a slick marketer I want to build I didn't say community but that's the word we'd use now I didn't say authentic but that's the word that's the word we would use now but those were all the ideas like I want to go be who I really am that's what I used to say I want to be who I really am and I want to build an audience of people that like feel the same as I do I have a deep passion for storytelling and there's this new thing it wasn't called social media but there's this new thing we can create our own content wasn't called content you get the idea and so like now if it's like dude those are table stick were rocket ship to the moon so you're not going to get the timing right but there really are principles and let me see if you hate what I'm about to say beat me to death with a verbal Club okay let's do it so I had 3,000 employees at the height a thousand of them grew up hard in the inner cities okay I saw that [ __ ] up close and I cannot tell you that for the people and this is where I got the 2% for the 2% that did something with the ideas because I created what I called quest University so I would come in early I would stay late I would teach you anything you want to know about entrepreneurship which is really just the ability to Think Through problems to improve Etc and a bunch of people came 2% did something with the idea but the 2% that did something with the ideas they continue to text me call me and say oh my God you turn my life around you have no idea some of them started their own businesses some of just became like plant managers and work their way up a very traditional way all of them following effectively the Flaming Hot Cheetos model which I did not know at the time but that guy started as a janitor and people used to clown on him because it was like dude why do you like do your job to that degree like you don't need to polish things that well it's stupid and he was like no this has my name on it I'm going to do this extraordinarily well yeah now if you do that if Everything You Touch you make better you're going to move up in the world it will be the rare person that says no matter what job you give me I'm going to excel I'm going to be the greatest janitor whatever valet of all time you unless you're working for a sociopath in which case leave and go do that thing for somebody that will at least recognize selfishly the people they want to promote dude there I have I mean it's the 8020 principle here at impact Theory I love each and every one of them but 20% of them are the hardest core [ __ ] I've ever met and these guys will kill themselves they are smart they are hardworking they work long hours rad they're going to get promoted obviously because they have such a material impact on my business if you can make somebody else more money you are always going to be able to move for sure so get good at something this is where I get crazy with people who are like I was born at the wrong time born in the wrong family dude I'm poor this is never going to work for me not with that attitude and look I get it I grew up in a lower middle class income which I used to think I grew up poor and then I saw poverty and I had a huge leg up got it understood my father-in-law grew up in a village people wouldn't believe me if I described what his youth was like he ate meat once a year not because they were vegetarian because you had one animal you could [ __ ] kill and that was it and I was like did I hear that right anyway I've seen poverty up close yeah people can't escape it it's hard as hell yeah you have to meet minimum requirements I am very sad that anybody starts that far from the Finish Line because just to get to or sorry the starting line just to get to the starting line they have to work 10 times harder but please Jesus because I love and care about you anybody listening to this that is in that situation you really can do it it's going to be hard again I don't wish it on anybody but godamn if people resign themselves to saying H I can't do anything then the only belief that matters they won't do it they won't take the first steps is it thank you for sharing that story is it mutually exclusive to say that 100% if they don't have the mindset they're not going to have a chance but statistically if you're born into certain socio economic groups the odds of you getting out are less than 10% so statistically more than 90% will not be able to do it is it really close to 10% I you're it's it's probably less I was I was making that number up but it's it's less than 10% the inner cities destroy virtually everyone that they touch yes now the question so this is when and I I think we I think this might be a little bit of of semantics I think we 90% agree here but it's hard for me to think of a formula that you can give to somebody in which 90% of 99% of them are still not going to get out like then at at that point do you question whether the formula works and I think I I think we both agree that the mindset that you can get out is table Stakes for getting out is absolutely 100% necessary but it's not guaranteed to get you out because the odds are so heavily sticked against you is that right oh yes I think I think that's I think that's where I sometimes get tripped up and I I don't think we disagree but it's just even if you have the right mindset it's not a formula in the sense that 2 plus 2 equal 4 is a Formula it's very precise that's where we disagree so we'll zoom in on that if you have the right mindset and you have the intellectual horsepower unfortunately that's a real thing but see see that qualification right there there's nothing dude the Army won't let you the Army they're going to let you get shot the Army won't take you if you have less than an 83 IQ 83 or 84 yeah so unfortunately there is a reality to be faced there and I cave out that only so people know this is not a problem that I've taken a cursory glance at like I've dedicated my life to this answer yeah so seeing it up close I at first thought 100% of the people that you show the ideas to will change I was a fool and yeah I think I think that's that's the idea that I'm trying to articulate the numbers 2% so for obviously I'm making that number up but it is so disheartening Leo that I here's my punchline and Lord knows I hope I'm wrong I gave up on adults I realized I went to Lisa and I said I'm pouring my guts out so there there was a Breaking Point oh I hate this story that this is true one of the 2% at Quest um I hope one day I can tell his story it it is one of the most extraordinary human stories ever but unfortunately it ends with an early death due to just [ __ ] random tragedy uh but this guy got punched in the face by his good friend because you're ready he started reading books and his friend said you've changed and when he was like what are you talking about he's like you read and then he punched him okay crabs in a bucket yeah just trying to pull each other down that's the craziest [ __ ] ever and this was years into me doing Quest University and watching these guys like slowly climb their way up and build a mindset and uh and that that broke me in some way because in in our circles I think one of the coolest things that you can do and most like gaining respect is to be a big reader and have all kinds of knowledge and wisdom and when you contrast that with that story that you just told it's a it's a tough thing to swallow yeah and how would I respond if that was my Social Circle in which I was born into I would I would see I would not be here today if that was Social Circle I was I would I'm too weak I would have been eaten I would have been eaten alive absolutely yeah I think I'm I'm much more socially fragile than that now though what do we do because I will not accept defeat so my thing is I started impact Theory and decided it had to be aimed at kids I always thought it was going to make entertainment for adults and then I mean obviously this show was for adults I understand that this is my 2% thing long story my audience probably heard me explain it a thousand times but I spend 70% of my time focused on entertainment for kids because the brain from 11 to 15 is hyper malleable yeah yeah post that I I'm not good enough I hope there's somebody out there that is so good putting the ideas together that they can do it I'm just not that this quote from Kevin Kelly that I read recently and I I don't think this is actually a statistic he's just making it up but it's a great quote he says if you start smoking before age 25 you will never quit interesting and if you don't smoke at age 25 you will never start and I I don't think that's actually a statistic but I think that idea of just past a certain age once your pre frontal cortex is fully formed it's very like that plasticity in your brain really goes away you see this with kids learning a new language my parents both worked in the ER and they would talk about there would be sometimes a Hispanic family would come in and the 5-year-old child is translating for his parents that's cuz a 5-year-old picked up English in a year but the parents who've been here for 20 years couldn't not for lack of will just because it's much much harder to learn new language after puberty God now we have to be honest it is a lack of will it is a lack of will here it would be way harder for them by by a factor of 100 I get that but uh it this is so so could the parents learn yes but it's probably a factor of a 100 the other Amazing Story I have about language is I have a good friend who Moved with his family when I think he was 11 and his brother was 15 from Russia to the United States I already know where this is going my friend has no accent whatsoever speaks English like you and I his brother who moved here at 15 you can barely understand them I hate that so much and the the demarcation line for all this is puberty once you've hit puberty all that stuff becomes exponentially harder to change the wiring in your brain does that not enrage you it's astounding to me that it was a four-year difference and these are people who came from the same family with the same parents exposed to the same English at the same time but four years apart and they ended up 30 miles apart in terms of how they speak and you see this a lot too of like you'll meet someone who moved to America when they're 10 and you would never know it they they seem as Gringo as you and I and then you can meet someone who's lived in America for 50 years or look at someone like Henry Kissinger who's I think lived in America for 70 years or whatever it is and he still has the thickest German accent you can hardly understand what he's saying and so yeah all that gets to your point of like your brain stops accepting new ideas Monger says your brain is like the egg where it's like once the egg is accepted one sperm it shuts down no more sperm are allowed in and he says that's what your brain is too once you've accepted an idea it's like ingrained in there and there's a natural tendency to be like nope no more I don't have room for any more ideas I got this idea and of course you can fight back against it's not black and white it just becomes much harder as you age you have something in your book that I'm just really going to drag us into the depths of hell and then we are going to climb back out because I have I have a strong conviction that that some people can change and it's it even though I say that I've given up on adults obviously I still do the show in your book you talk about I can't remember which one now but you talk about Pavlov yeah and his dogs now I didn't know about the flood yeah tell me more so Pavlov's dogs is are very well known for they would Drool on command and what he did is he taught the dogs that when I ring the bell food is coming and when a dog knows food is coming they drool so what Pavlov this psychologist got his dogs to do is whenever I ring the bell the dog starts drooling and he could command the dog to drool it's this neat little study and a part of the study that was really left out was that uh this was in Leningrad Russia there was this massive massive flood and a lot of Pavlov's dogs were wrapped up in the flood and the water came all the way up to the cages he had to put the dogs on top of the cages and like push him across the river they went through this incredible trauma and Pavlov wrote about after the trauma and the ridiculous stress that the dogs have been through they lost some of that learned behavior that had been so ingrained in them like deep stress rewires your brain deep stress leaves a scar on you and I wrote this in the book as an example like people who have been through the Great Depression World War II the Holocaust name like the deep deep scars that will rewire your brain and you are not the same person coming out of that and one of the things I think is so interesting at the end of World War II is that we really did not understand PTSD at all it was not we didn't understand much about it and there were so many veterans who came home from World War II and became raging alcoholics or very depressed or just completely different person because the war fundamentally re rewired their brain they were Pavlov's dogs that once you experience that something that is ingrained in you before you experience it is gone it's at it's out of you so that's another thing that I think about of like I have my own values and views of the world today but I went through something utterly traumatic like that would it against my will against my my wanting it to happen would I just be a fundamentally different person would I turn violent would I turn angry would I turn depressed whatever it would be and this gets back to I think I'm almost 40 years old and I think I understand this thing between my head I understand who I am and how I think but any of us could go through an experience whether it's losing a loved one or going through even just a bad recession that rewires Who You Are and scary to think about yeah that's why I said I'm going to take us into the depths of hell here because well I mean that that to me is about as traumatic as it gets so uh Free Will is an illusion uh once your brain accepts that initial set of ideas I won't say it's a single idea but what I call frame of reference so to me frame of reference is the sperm and once you have a frame of reference you don't even realize it you don't realize that the Egg of your brain has been fertilized and that's it that's it and most people are never able to uh let's stretch the metaphor rill that soil uh so that it can you know take a new crop uh as it were just to really be all over the place um it's terrifying and the only thing that makes it worse is that in evitably you will go through something traumatic and that will make it worse and it will further break you and you will be further in a hole and this is why a grown man can punch one of his best friends in the face because he started reading and he doesn't understand that it's a rejection of the new and that you're making me feel judged and inferior he has no sense of that he just feels like his friend deserves to be punched in the face he trusts his emotion and he throws the punch yeah and that's why most people will die broke now I think if there is a positive spin on it and maybe this is you pulling us out of the depths of hell it's that the trauma is going to change you it could change you in a positive way it could I mean I think for a lot of people hitting rock bottom is exactly what they need and if they have a job loss it's or they their relationship falls apart in the moment it seems like the worst thing that could ever happen to them but in hindsight a year or 10 years later they realized there was no better event in their life it's exactly what they needed at that moment and the stress from that fundamentally changed them maybe in a good way maybe it was an entrepreneur who was way too cocky and then lost everything and then the experience of that made for their next venture they're going to make new mistakes but not they're not going to make that mistake so maybe that's the positive spin on like Pavlov's dogs stopped drooling okay maybe that wasn't that bad of an idea I think there are people who came out of the Great Depression let's say better for it they had learned a very valuable lesson that was the right lesson to learn and they were smarter for it now there's a lot of people who became utterly traumatized from in a negative way but I do think there are some people who take those terrible events with some stride and I think dealing with Co for example regardless of what your views on Co were every single person understands viral illness better than than they did in 2019 regardless of you think what you think should have happened or did happen um we we all understand it in a more fundamental way than we did in 2019 so as traumatic as it was for virtually everybody we're all smarter now because of it and we all understand something that we did not in 2019 and that that's a positive spin on the trauma that we that we went through there's an awesome Einstein quote and he said the most important decision anybody will ever make is whether they live in a friendly or a hostile universe what I love about that quote decision is that he says decision and so was Co good or bad it's a decision there is nothing good or bad but thinking makes it so so says Shakespeare and I think that's right and I think that's the the thing that will pull us out of the depths of hell is that the depths of hell is simply a frame of reference and if my frame of reference is that free will is an illusion and therefore I am powerless to do anything and so I might as well just sit around then I'm screwed but if I instead go all right well if I'm just a billiard ball let me take the most optimistic joyfill response that I can have to this that I can even think of and just say that's my role as the billiard ball is to live the most loving joyful fulfilled life humanly possible and how do I know because I have that impulse cool then do that and be that billar ball but if you decide that things are bad they're going to be bad if you decide that you can get better even though let's say it's way harder for you fair like Finance does not come easily to me brutally difficult and yet I've managed to uh make part of my business that I have gotten tens of millions more views on my in fact way more tens and tens of millions of views on my uh finance-based content yeah so maybe part of what and I mean this is a story that I tell myself to have an empowering frame of reference is that because it's harder for me I'm able to make it accessible to other people because if I can understand it anybody can understand it so I'm certainly not making it high flutin and complicated I keep trying to drag us back into that hyper simplistic deal with your emotions do these three things like uh because I think that's what actually works but it really is me deciding that that's the frame of reference I'm going to take there's a really good book that I like it's a very popular book I think Oprah blew it up blew it off the charts it's called the choice and it's about this Holocaust Survivor who was in ashz she survived her family did not survive she survived and when she came back and obviously just a PTSD in an order of magnitude that I don't think you and I could could comprehend and when she came back she eventually moved to America and she became a psychologist to help other people with PhD with with PTSD and the book is called the choice because it was a choice she made to use this trauma that she had to try to help other people and have a positive spin on it if you can do that with something like the Holocaust and did that help her PTSD was she you know was it a positive outcome from it like I I think that's probably a step too far but it was her choice to say I'm going to use this horrible terrible experience rather than dwelling on it to learn psychology to become a therapist and to help other people who are dealing with trauma themselves and I love that the book was called the choice and that she ends the book by saying like regardless of what you do or what you want to do like the choice is yours and because of the mindset that you're going to choose to get there I could not love that more if I tried I've heard interviews with her amazing she's great because look there's nothing I can point to in my life and be like see I overcame that but it doesn't get much more brutal than either the Googs or the um concentration camps and so it's the worst just a very quick story not to get too graphic about this but there's one story that sticks out when aitz was liberated she was in aitz I think she was actually moved to another Camp the Allied Soldiers the US and the British soldiers are walking through the Concentration Camp most of the people are dead on the ground so the soldiers say if you're alive raise your hand and she didn't have the energy to raise her hand she was so sick and withered she didn't have the energy to do it and she thinks that they're like about they're about to leave her and she has the energy to like kick a can next to her to get their attention who and that's how they found again it's like it's a level of trauma that you and I couldn't fath the ordinary person could not even in a million years fathom and to use that as the launching stone for her career to become a therapist help other people who've been through tragedy it's a it's a remarkable book remarkable I assume you've read Man's Search for meaning yes you had a similar response like two weeks ago actually really yeah I hadn't read it until then oh my God I'm a little I heard about it forever of course good amazing book one of the things that sticks out from that book um he talks about a lot of people in the concentration camps the people who made it were the ones who had something to live for who had a family and even if they didn't know if their family were still alive and for most of them the answer was no they are not but if they had an idea in their head I need to survive so I can see my son again so I can see my wife my daughter again those are people who made it but the people who didn't have anything to live for the ones who gave up very quickly and just let it go and so like their their actual physical health was determined by their mindset of like do I have a goal to live for and that was literally what was the difference between life and death for these people yeah it's astounding astounding it's it's exactly why I am so convinced that mindset won't solve all of your problems but everything is Downstream of your mindset and so if you don't get get that right down to the frame of reference so uh I'm in a concentration camp I mean this is literally straight from man search for meaning I'm in a concentration camp uh I I must give meaning to my suffering and if my suffering has meaning I'll be able to endure it if it does not have suffering then he said in the book that uh you could predict within 72 hours when somebody would die who's going to make it because as soon as they no longer had a reason for their suffering he's like they'll be dead in three days give up so EAS that is crazy that ultimately is your m mind that is the difference between life and death there's a very popular book right now written by a hospice nurse who spends her entire career dealing with people who are about to die and it's a fascinating book just talking about the end of life experience and one of the things she writes is that it's very common for people in their last days to predict the day they're going to die who you'll have these people in hospice who say Thursday is my last day wow and they're and they're right they're accurate about it now what's really going to bake your noodle is whether you would have knocked the vase over had I not said anything if you know what that's from I'll be very impressed but so that I think that's a is that a mindset too of just like in your mind you're like I'm I'm gonna like it's your choice to give up it's your choice to live or die now biologically it's not your choice if you have a heart attack if you have cancer it's not your choice to live maybe at the at the margins but you can't cure cancer by mindset you know but I thought that was I think I think the opposite might be true that those people who are on their way out could pick the day that they're going to give up yeah maybe they they can't pick the day in which they're gonna you know the the cancer is going to overtake them but if they're already on their way out they can say all right you know I'm I'm done now now you can take me yeah and I think that's part of why you probably have hear these stories I'm sure they're extremely anecdotal about couple's been married for 50 years one of them dies two days later the other one dies my wife finds that so romantic it unnerves me it's it's a Dre I think it's everyone's secret dream right to die at the same time or to die on your own terms die on my own terms yes but my wife's a little too obsessed with us dying together it makes me nervous should she ever get sick it is it is it is very romantic yeah for is it romantic I don't know my wife what's romantic about it is the idea that neither of you have to suffer with by not having the other yeah yeah I you never have to wake up in an empty bed kind of thing that's that's the romance behind it I would be crestfallen to not have my wife but uh let me this is so random and then I will bring us back but uh would you want to survive a mass plague that killed 98% of no absolutely not and this is why I think when they think about the uh nuclear drills in the 1950s where the kids in America said hide under your desk if the nuclear bomb's coming a of course your desk is not going to save you but honestly I feel like if a nuclear bomb is coming I want to lay out in the pavement and say take me do you hear about the stories about the people who survived rosma and Nagasaki it's the most horrific thing you could ever imagine and I I think in those situations you want to be taken quickly would you have wanted to survive the concentration camp I I I don't want to pretend like I can put myself in their shoes and understand what that kind of trauma would be like give me give me the high level inspo like you're inspired by this woman who's like I'm going to use my trauma would you not have been more horrified in where she doesn't Kick the Can I'll tell you a recent example without having any experience with this just relaying a story that I heard uh there was a father whose young daughter was one of the Israelis kidnapped by Hamas a couple weeks ago and he uh learned shortly after that she was dead and he said I don't want to quote him directly but something to the effect of thank God because being tortured by Hamas would be so much worse than death got it got it got it and so like without knowing any more details just relaying his story but I think there is some of that and would I want to be one of the survivors of the Holocaust I mean I think everyone has a will to live of course but I cannot fathom the trauma that a lot of those people went to including the woman who wrote the book The Choice I'm sure there's a lot I'm sure she had a lot of the most horrific nightmares you can ever imagine after that yeah so when I hear about the survivors of hoso who just had third degree burns head to toe and we absolutely never the same that's there there are some situations where it's like no in if a nuclear bomb's coming I I think that you you want to pray for Mercy at that point rather than pray for survival and hiding under your desk it's interesting while I admit uh if it were a question of you know my entire body being covered in third degree burns it's it's a think I mean imagine we're getting very graphic and dark here but imagine a world W your entire family is taken out and you're left with third degree burns but you live yeah are you grateful for that like there there's a line I hear you I hear you uh I do if I'm unscathed I do want to survive though I'm always surprised that some people don't if it's like some apocalyptic thing I don't know for me like even though here's the thing that I've thought about as a parent if there was a situation in which either of my kids kids were about to die and I could save them by taking myself facts I do it one would it would be the most natural instinct and when I hear stories about parents that do that my first thought is hero like you will go you we should build statues after you people who sacrifice themselves for their children there's nothing more heroic than that and I want to think of course I've never been in that situation but I want to think that I would do it without a moment's hesitation here's the question would you do it for your wife at this age absolutely because my kids kids need my wife more than more than than they need me so in that situation yes because I'd be doing it for my kids not for my wife what if your kids were like 15 and 19 we're getting into some serious hypotheticals here uh I I want to say that the answer is yes but I realistically it would not be as black and white as my young children I think that's true yeah yeah I hear that yeah okay uh so coming back to the economy and everything so uh I think we've laid out sort of the basics of what people ought to do if they want to die wealthy however I want to get into like the real economy that's happening right now so everybody inherits a set of circumstances those circumstances matter a lot they will for sure shape people um you said at one point either in your book or in an interview that I heard you say there's no precedent for it being worse than it is now if you're buying your first house yeah I think that's true specifically right now where home prices are by and large higher than they've ever been but mortgage rates went from 3% to 8% that defies all economic logic it should be in a world where mortgage rates go from 3 to 8% home prices fall 30% 40% 50% and we hasn't that hasn't happened yet at least so now you're in the situation where particularly in big cities La San Francisco Seattle New York Boston the big cities you're looking at at least a million dollars for a starter home for a starter home at an 8% mortgage it's a it's a completely different Universe than anything we've experienced in a lot because the last time that rates were this High even in the mid 1990s home prices adjusted for inflation like an apple stle comparison were a fraction of what they are today so having home prices where they are today at 3% mortgage rates was still very high and still oppressive for a lot of people to do it at 8% is just like a different world now because of that very few PE very few homes are transacting there's like the level of sales has just dropped off a cliff it's the lowest a point in I think 20 years in in terms of the volume of home sales because the prices that are out there are not realistic given the financing options for most people so a lot of people will say according to Zillow my house is worth x million but that's not actually a mark- to market price like if you actually needed to sell it to someone tomorrow who has an 8% mortgage the actual market price the clearing price for that is going to be much lower than you think so I think there's like a Wy coyote moment of like we've gone over the cliff and we're just starting to look down and realize there's no Road beneath us you find yourself hunching over your desk and battling back pain after a long day of work invest in a chair that is designed to improve posture prevent pain and maximize productivity anthos is built to be your last office chair and I'm telling you this thing is amazing it's guaranteed to be the most comfortable chair on the planet while also improving your wasure and reducing pain or your money back and I'm telling you it is also the most fun chair you were ever going to sit in I know that sounds ridiculous you have to try it trust me I have an anthos chair myself and it is not just me everyone in this office fights over this chair I am not kidding I have never had more fun or Comfort sitting in a chair this thing is amazing head over to anthro.com impact and get $200 off your purchase there's one of three things needs to change either incomes need to surge either mortgage rates need to come down or home prices need to come down like one of those three or combination of those has to occur you can't keep this situation that we have going indefinitely so is the would you call it a housing crisis that we're having now is there a set of other things going on in the economy that makes this a good or bad time like what if you were going to paint a generalized picture of what's happening now especially for young people um I mean what's good right now is that unemployment is incredibly low I mean unlo you know having an unemployment rate below 4% other than the late 1990s and a period in the 1950s it's lower now than it's ever been and even it's even lower now than it was in the late 1990s that we associate with like the best economy that's ever existed it's lower now than it was back then unemployment rate is crazy crazy low if you want a job jobs are out there so that's a major Tailwind that we have that's propping a lot of this up if you took today's housing market very high prices very high mortgage rates and you mix that with high unemployment everything falls apart everything breaks so I think a very strong employment Market that we have today can mask a lot of challenges the other thing is that during Co the amount of stimulus that went out trillions of dollars in stimulus during a period where people were locked in their homes they saved that up and what's called excess savings what trillions and trillions of dollars of money and by and large that benefited the poorest people the most the people who had the least money in their checking account before coid had had the the biggest percentage boom really like those are the people for whom their financial situation just utterly changed overnight and a lot of that excess savings still exists not as much as did two years ago but people like households in general are in a better Financial shape right now than they've been in a very long period of time including you can say mortgage rates are 8% today for the people who are buying a new house today but so many people locked in a 3% mortgage either because they bought in previous years or they refinanced in 2021 so to the extent that they don't need to move and someday they might eventually need to move but if you're locked in at a 3% Mortgage in a world where maybe you're getting an 8% raise every year like that's a that's a boom that's amazing situation to be in so there's all these like weird breakages mixed with a lot of great things that are happening in the economy at the same time so so many people were predicting recession I'll be honest like it as a person who is very tied to advertising I can just tell you things ain't what they used to be yeah so advertising money is pulling back advertisers are definitely expecting something bad to happen for sure um so from where I'm sitting the economy feels soft it feels like Wy coyote has run off the road and is looking down uh it's just no one has reported back what they actually see yet but everybody's paranoid that they're going to see something bad that's how it feels from where I'm sitting yeah um is that people just being paranoid what's the I mean not to get too technical about this how much of that is literally when Apple changed the tracking feature and all of a sudden advertising got less potent than it used to be isn't that at least part of this that wouldn't matter for the advertising that we deal with because we interface with it through YouTube yeah um but when we're trying to advertise our stuff that matters but not the inbound I mean one one other way to phrase this is that is the economy weak today no is it weaker than it was in 201 21 yes but 2021 was the anomaly today is not the anomaly so even if it is weaker by any metric and unemployment income growth household debt to income ratios it's doing very well today now the history of all of these things is that the speed in which you can break that narrative is very quickly so 199 the year 2000 strongest economy that's ever existed 2001 everything fell to Pieces 2007 absolutely on top of the world 2008 worst years since the Great Depression so even if you say even if I can say all these things are going well today we could be talking two months from now and be in a completely different world it's usually not a slow thing that kind of trickles in it's like most recessions are usually a big exogenous event that hits like Leman Brothers go goes bankrupt or coid or 911 that just throws things for a loop so just because you I can sit here today and say things are very good doesn't mean that 30 or 60 days from now that narrative can't be completely Unwound now and but and that's why forecasting is so difficult now you said the narrative so how much of this and this is one thing that freaks me out about the economy and money it's basically just a public confidence feelings there's a great economic uh commentator content maker named kylo scanon who who talks about the vibe recession and it's literally like most most economists are like data and charts and numbers she's like no it's just the Vibes it's just how people feel and it's true when people feel good about what's going on they spend money when they spend money the economy is strong when they don't feel good about things when The Vibes are low they stop spending money and then the economy unwinds like it's not more complicated than that so mood is a massive thing it's huge and a lot of it it's it's self-fulfilling a lot like there's measures of consumer confidence and most of what moves consumer confidence what actually moves the needles are three things stock prices gasoline prices and politics those are the things that people pay attention to or they can just get a quick update when they watch the news for 10 seconds stock market's up gas prices are down I'm not hearing anything about politics good I'm in a good mood or the opposite of that if gas prices are going up and the stock market fell today and politics is a mess you're going to be in a bad mood and like those are the three things that move people's economic sentiment that has a very strong uh impact on how much money they're going to spend and the money that they spend is somebody else's income so when you stop spending money that's someone else's income that just went down and it snowballs from there so okay knowing that um basically this is a sentiment game I want to bring up something that you talked about in your book uh that I'll tie to what I'll call the debt crisis that be very like it feels to me like we're in a debt crisis just looking at the numbers uh doesn't seem sustainable to me when you look at the housing numbers you were saying hey one of these three things has to give yeah like uh you you can't have debt like this with interest rates as high as they are like this just seems like an absolute recipe for driving off a cliff we're talking household debt everything household corporate and government debt all I don't know if they're historic Highs but holy hell they they are massive yeah Ma it's something like three times GDP that could be wrong it it's bad like the the debt to GDP ratio is crazy some people I think it was chamath that said oh it's a nothing burger and I'm like bro how can this be a nothing burger like you at some point just servicing the debt becomes a problem anyway not an expert but I'll call it a debt crisis from my limited understanding uh but you have a statement in your book where you say this is crazy to me stability is the stabilizing yeah and you walk through Minsky's Financial instability hypothesis do you remember the three beats oh yeah I mean so himman MSY was this economist back in the 1960s and in the 1960s there was this move in economic circles that we should eradicate recessions people were very optimistic back then yeah let's just get rid of it but we had just walked on the moon we had like eradicated polio there was this idea that that of course we should be able to eradicate recessions himman Minsky said you'll never do it it can never be done because of what he came up with what he called the financial instability hypothesis he said when people are optimistic they go into debt when they go into debt the economy becomes unstable when the economy is unstable you get a recession so the lack of recessions is what triggers the next recession if you never have any recessions people go into crazy amounts of debt when they go into debt you have a recession so by definition you cannot avoid it it's always going to be a thing that you're going to have to deal with in life the same is true in the stock market like if the market never crashed people would put all their money in the market if they put all their money in the market valuations go way up when valuations go way up the stock market's fragile and it crashes so a lack of crashes is what causes the next crash it's just it breeds a level of over optimism and over complacency that causes the next crash so when you accept that just like the nature of how cyclical these things are then you don't pretend that we're going to be in some sort of stable zone or that we can stop these or that the next recession is caused because this politician and that policy maker necessarily made a mistake that's just an innate part of how any capitalistic Society works okay so if we know that what do we do with that information those of us that want to navigate all of this well you have to assume as I do that there's going to be at least two recessions per decade one of which is going to be really bad that should be your Baseline scenario so don't act surpris when the next one comes don't say nobody could have seen this coming you know I hope to be an investor for the next 50 years so during that time I I hope to experience 10 to 20 more recessions you know that's I think that's that's just the Baseline of what you should expect as as an investor but every recession we have people say something to the effect of nobody could have seen this coming and it's that guy's fault versus I just think it's just an innate part of how the system works so when you accept that not only are you psychologically more prepared but I think you should be financi more prepared I think most people don't have enough cash in liquidity because they extrapolate the good times indefinitely and they don't have the mentality to assume that just because it's good today doesn't mean everything can't be taken away from you next month like I said earlier most most recessions don't you don't Cruise your way into it you go from everything is great to utter chaos in 30 days that's usually how it plays out and so because of that and most of what causes the big economic declines are surprises things that people don't see coming 911 Leman Brothers Co nobody saw those things coming until they wre their havoc and so because of that I think most people just don't have enough cash liquidity margin of safety buffer in their finances so accepting that just the natural path of what we've gone through in the past and that these crashes are inevitable pushes you naturally towards a greater degree of safety not because you're conservative but because you want to be able to survive and endure all of those challenges so you can stick around long enough to be a good long-term investor okay so what does that look like what's the play so if I know that I'm going to get two of these a decade one's going to be super gnarly uh is it an amount of my paycheck that I just I invest every month no matter what is it that some of my paycheck goes to the stocks some goes to cash do I pull back in a recession do I go hard in a recession like what's the what's the play I think the more that you can mechanize it the better the better the more you can take your emotions out of the equation so I think whenever people have a system that says I'm saving up money so that when the market crashes I'll put it in then nine out of 10 people can't won't be able to do that CU When the market crashes they'll be they'll be scared shitless and they won't be able to do it and when when everything is going well they tell themselves that they'll be able to do it but in the trenches when it happens they they can't and a lot of people were were like this and if you talked to someone in 2019 who said oh if the market crashes 40% that would be an amazing opportunity I would buy in and then it actually happens in March of 2020 and so many of those people were not saying this is an incredible opportunity they were saying this is going to be worse than the Great Depression and by the way they may not have been wrong if you if in March of 2020 you said this is going to be worse than the Great Depression that was a smart statement to make I certainly had my fears that was a smart statement to make just because it was not doesn't mean that that was not the right mentality to have at the time but it just goes to show that saying all be greedy when other are fearful is much easier than actually doing it so the people who have that strategy I think for N9 out of 10 not 100 % but nine out of 10 people won't be able to do it so if you could just mechanize a dollar cost averaging strategy and just say on the first of the month I'm going to invest $100 into stocks I'm going to do that no matter what the econom is doing you may not be able to do that either you may still get scared out of that but at least you're trying to take the emotion out of the equation in terms of the amount of cash cushion you should have I don't think there's necessarily a formula for it you said at least a year or one year but at least six months I think that's great but I don't think it's that formulaic I don't think it's I don't think there's a study that shows why one year instead of 18 months is the right amount to have my view on this has changed a lot since I had kids and it used to be that my economic situation was just me and then it was me and my girlfriend and then me and my wife and then me and my one kid and then me and my two kids like that changed my risk tolerance and changed my goals of what I want and with that came a corresponding change of I think I want a little bit more cash because if [ __ ] hit the fan it's not just my own well-being I got all I got three other people to take care of and that might go in reverse when my kids move out of the house so I don't think you can come up it's and everyone's different my parents who are retired have a lower cash allocation than I do and I'm still working of course that doesn't make any sense but they know what they're doing and I know what I'm doing I just think I sleep better with this uh having more cash but they don't need it they sleep just fine having what they have even being fully aware of the risk that they're taking so everyone's risk tolerance for these things is going to be different too there's no greater nightmare for me than not being able to take care of my family in any degree to deny them something that a need that they would have or even some sort of Desire that they would have because I took too much risk in the stock market to me that's just in my own mind that's a degree of failure that I wouldn't want to put up with but other people would disagree with that and they would say no if I lost everything I think I'd be okay and I pick myself up and keep going I don't think I have that mindset for myself uh and I just Embrace that that's not my personality I I I I kind of wish I did but just how I'm wired I'm not so I think I'd lean towards more of the let's make sure that we can get through this side and by the way I don't again I don't think that's conservative I think what I'm really focused on is endurance to make sure that I never get kicked out of the game to ensure that the stocks that I do own I'm never forced to sell them so I can hold them for 50 years because that's when compounding just goes nuts and so a lot of it it's like the reason that I'm it's like a barbell Finance I'm super conservative over here so that I can take risk over here and if I was less conserv over here I wouldn't be able to maintain these risks that I'm taking what are here and here so you're conservative in cash cash and stocks let's say that let's just keep it really simple the more cash that I have the higher the odds that I'll be able to hold the stocks that I own for 50 years the less cash that I have the higher the odds that I'm going to be forced to sell them because I need the money and so that's how I view it it's like having that conservative portfolio is actually one of the most like optimistic things you can do I'm so bullish on the stocks that I own for the next 50 years that I want to make sure in no scenario am I forced to sell them early Charlie Monger has a quote he says the first rule of compounding is to never interrupt it un necessarily so like that that's what I try to do with my money how do you decide what stocks to buy I keep it as simple as possible I own uh broad-base index funds Vanguard index funds because the variable that I want to focus on is endurance and Longevity not the right sector and whatnot because I know that if I can earn average returns in an index fund for an above average period of time time not only am I going to achieve every Financial goal that I have it'll literally put you in the top 5% or top 2% of investors without trying and there's so many investors who spend their entire careers 60 hours a week trying to beat the market and and then they have nothing to show for it versus you can end up in the top 2% of professional investors without doing anything like that to me it's always just been so appealing to me for that and if you can if your outperformance comes from longevity and endurance rather than beating the market in a single given year you know you can like I know investors who can have and will continue to beat the market so I'm not one of the passive investors who says nobody can do it those people exist I'm I'm not one of them but I know that if I invested with those people or tried those strategies the odds would decrease that I could keep it going for 50 years but if I can be average for 50 years I have very high confidence that I can pull that off and the results if I can pull it off will be extraordinary so like that's good enough for me it's interesting good enough that is a that is an idea that is throughout your book that the people that really feel like okay this is all I need I don't need more than this they're going to have a much easier time than the person that keeps Shifting the goalposts yeah um what what is that psychological principle what's the problem at work I think you know there's a quote from Johnny Rockefeller where he was worth you know zillions and zillions and someone says how much is enough and he says just a little bit more and that mentality is like exists for everyone like the right amount of money is just more than you have right now no matter what the amount is and I think there are Deca billionaires For Whom the the the ideal amount of money is just twice as much as what they have like that that never ends so I think unless like having enough money doesn't mean that you have no aspirations for more I think to me enough means that I go out of my way to manage my expectations with as much emphasis as I do improving my circumstances so it's just reminding myself that like what actually gains happiness in any Endeavor in life is a gap between your expectations and your circumstances so you need to put just as much effort and emphasis into both sides of that equation and keeping your expectations low and realizing that like look I have aspirations for more I want more money I want a more successful career but if everything ended here today I think i' i' I'd be just fine because I think what I have right now is enough even if I have Ambitions and I think those two things to coexist is really important how do you get them to coexist how do you simultaneously want more and be perfectly content where you're at it's really it's really hard I I I think a lot of it has been natural in terms of what my wife and I like doing is like going for walks and going kaying and going for hikes and stuff it's not things that require it's not a materialistic or a business or an entrepreneurial set of goals it's just it's I find so much pleasure just reading and listening to podcasts and whatnot that's kind of my steady state so a lot of it is just a personality driven thing of like what I have right now as I said earlier what I really want is freedom and Independence and I'm fanatical about gaining that because once I gain that than the thing that I actually want which is just a life of control where I can read and hang out with my friends and the people who I love that all falls into place so a lot of it but you know I think there are definitely people you know take the extreme examples Jeff Bezos Elon Musk for whom nothing has been or will ever be enough and you know there's I don't think there's any world in which I would be come even remotely close to that kind of successful and not just pull the rip cord and be done and then go read books in in my independent quiet private life but I'm glad that people like that exist people for whom Nothing Is Never Enough like there's no goal that's ever going to just say okay now I have everything I want because that's why they're successful you know Mark Zuckerberg was offered a billion dollars cash for Facebook in 2007 I think it was and he was like 23 at the time something like that and for for him to turn that down that's a one in a billion kind of person who could say like no like we're gonna build this company I'm going to turn down a billion dollars cash in my pocket and just keep doing this that's that's a very rare mindset so I'm I'm thrilled and grateful that those people exist I'm not one of them and I think most people are not one of them either what what they really want is some degree of Independence and autonomy and once they gain that then the material side of it like it's all enough I've heard you speak pretty um I think wisely about the fact that you are going to need to do something with your time so when you look at the fire guys the oh God fin Independence retire early there we go I got the retire early part I can't remember at the beginning um yeah what's your critique on that so many of those people who retired at age 32 uh it's really fun for like a month and then they're bored to tears i' I've do this thing for years where every December I I take the month of December off of work I don't I don't work in December and every year leading up to it October November I'm like ah December's right around the corner it's going to be so great just hanging out sleeping in playing with my kids going for hikes and every December the same thing happens really fun for about a week by December 7th I'm bored really by December 15th I'm borderline depressed wow every year it happens but I still I still like the idea of it but the takeaway from that is what I actually like doing is being productive I like working and I I enjoy what I do and when I strip it out my life it's a missing piece that I want back so this actually I'm actually glad that I do it every year because at the end of that by December 15th I have a newfound appreciation for my job I think a lot of people in the fire movement realize that too they have this fanatical desire to retire with not a single thought about what they're going to do after that and a lot of them are just bored to tears particularly because all of their peers are working so when they retire they're like hey Wednesday at noon what are you doing and their friends are like I'm working so they they don't have they don't have anyone to spend much time with and I think by and large the reason that traditional retirees don't fall into that is because they reached a phase in their life where they can't keep working physically or mentally so they don't really have much of a choice but for people who have a cognitive you know they have the horsepower to keep working and the will and the drive to keep working but they intentionally extract themselves from the system they realize that like no actually the work and being productive and contributing to society was a big part of their identity and once it's gone they want it back really quickly so a lot of those people in the fire movement will do it for 6 months or a year and maybe it's a fun six months or a year maybe they do some traveling whatever but a lot of them fall back into what looks like work really interesting is that guy named Mr Money Mustache who is kind of the front runner of the fire movement he's like the Godfather of it he's such a cool guy ni his name is Pete Adney he runs a Blog called Mr Money Mustache and I think he was one of the first people to achieve fire and then take it mainstream but he makes a big point of like when he retired meant that he stopped working for other people after that he just started his own businesses so he was still working and being very productive and making a lot of money it just looked like retirement because he didn't have a boss and he was doing everything on his own terms so I think of like rather than like in the fire phrase It's the retire word that I like Financial Independence is amazing if you can gain independence and autonomy to me that's like the financial Nirvana but you're still going to work you're still going to contribute to society you're still going to put your brain to work every morning you're just doing it on your own terms for the people who you want to work for doing the projects that you want to work on during the times that you want to work on able to switch to a new project whenever you want to that's the autonomy that people want I'll give them a new acronym then so fire financial Independence real efficiently that because meaning and purpose is everything and as somebody so exited my company uh obviously never needed to work another day in in my life but thankfully I knew before doing that that if you don't feel like you're contributing in any meaningful way and this is interesting because this goes back to biology for me there are algorithms running in your brain that will insist that you're working hard this is why I think Rich Kids implode there's an algorithm running in your brain that says You must work really hard to gain a set of skills that allow you to serve not only yourself but other people in a way that you find exciting and if you do that you'll be fulfilled if you don't do that you will have a deep sense of dis sees nothing will feel right you just will all feel bad and wrong uh and so yeah this is where I go back to what I said earlier that money is more powerful than people think it is the great facilitator but it is not what people think people think it's going to make them feel about themselves the way that they feel about people they see with money yeah and it won't money cannot touch how you feel about yourself much to my dismay uh but the the cool thing about the way that I generated wealth was it was all in a moment so it went from I have no money to I have a lot of money yeah and because that's just how equity in a company works so it's like you're just shoveling money back into the company back into the company back into the company so I was worth on pap for hundreds of millions of dollars but uh I had one car with a leaky exhaust you like Rich cash po exactly and so then suddenly I was both out and I we we took a small piece but it was such a huge valuation that uh the number was big and so in that moment I was like oh wow I'm rich and I have all the same insecurities so I was like that is fascinating so that was um I was very grateful for the way that my life went that F I got first I got Wealthy on paper and was just completely miserable so I went to give all the equity back wealth on paper is almost the worst you can have cuz you are rich but you're not it is a trip yeah so I getting people to understand there's a big difference between being rich on paper and being rich in the bank uh and so when you see all these numbers oh my God he's worth you know whatever $80 billion like he does not have look I'm sure that person is doing just fine but they don't have 80 billion sitting in the bank right so that's if they were to sell all of their company then they would be worth so when I hear people railing about you know like oh they're hogging all the money it's like they don't actually the money doesn't exist it's a theoretical thing until you reach for it correct and then you probably disrupt the value of your company anyway and so the value go down of course if mus tried to sell all of his Tesla stock tomorrow Tesla stock would fall 50% yeah and all a sudden he he'd be worth half as much as he was yes and have created a just Firestorm of problems in his life being sued by investors and yes it's theoretical wealth yeah so so all right so if somebody is um really trying to get a beat on the economy right now should they be worried about debt is it just like take care of yourself and just worry about your personal debt like how do you I know you don't think anybody should spend time trying to predict the market um but are there things that people can do to not paint themselves into a stupid corner so that they end up having to fire sell whether it's their house or whatever and we because you've already answered in terms of stocks we won't have enough cash we don't have to worry about that um but I I have started paying attention a lot to macro movements yeah out of a concern for Humanity more than I'm worried about myself or that I'm trying to like time the market to make a ton of money um but it does seem meaningful so the question is am I chasing something stupid here and I should just stop paying attention or is there a there there here's how I'd phrase it and a lot of people will disagree with this and I may not even push back against their disagreements I don't think there are any macroeconomic risks today that are more serious than have not existed for the last 100 years it's not to say that there are not big risks today of course there are debt inflation interest rates those are all very real things but let's not pretend that we've ever been in an economy in which there were no risk so let's not pretend like things have always been great but today in 2023 things are now very bad and it's different from how it used to be there's always been massive economic risks that have come to fruition the Great Depression the inflation in the 1970s in the early 1980s interest rates were 177% like 911 Co we've always dealt with massive massive risks in fact if I had to look at like in my lifetime when was the economy the riskiest that it had ever been what the benefit of hindsight would say 2006 2007 and what was unique about that period is that people felt better than they had ever felt before that was a period where people would sit there and say everything is great like blue sky smiling at me kind of thing my wife convinced me to buy a condo in 2006 and that was that was a period where looking back in hindsight we were the most dangerous that we had ever been and so I think like are there big risks today yeah of course I'm not going to poop or anything I don't know if I would say it's a nothing burger like like shth I'm probably closer to that than I am the apocalypse guy but I I just don't think the risks today are necessarily bigger than they were for most of history and you could say well today we have climate change we have this and that yes you're 100% true but in the 1960s we had nuclear war at our doorstep there were missiles in Cuba pointing at Washington there's always been it's a different flavor of risk but the world's a very fragile and risky place and one take away from that is like if you have the financial wherewithal and the psychological mindset and the luck to survive that and endure it people are very adaptable economies are very adaptable I mean how much of Europe was literally Rubble in 1945 and rebuilt in a staggeringly fast period of time Japan was completely obliterated during World War II and by 1980s was the strongest fastest growing one of the richest economies in the world in one generation so C societies can be very resilient even when they are hit with a massive tragedy so if I had to say in the next decade are there going to be ma is there going to be an economic Calamity in the United States States yes I don't know what it's going to be but historically there always is once per decade but that would not preclude me from saying are we going to endure it and fix it and get through it and achieve a new high of prosperity I'm equally confident in that as well that's that's my take on what's going on in the macro World okay I'm gonna paint you a very gloomy picture let's do it let me hear and then because I like optimism so much uh you're going to pull us back out though I will say that you have said that if you really want to be successful for the long run you have to mix optimism with pessimism y so that's where I live that's my bread and butter baby is I can have both be wildly optimistic you have if you're one or the other you're doing it wrong you have to have both greed okay so I'm going to give you my paranoid case even though I agree with you on balance I think we'll be able to figure everything out um but I am very much a student of Mr Ray doio Y and Ray doio has mapped out the debt cycle I think in a hyper compelling way and in a way that when I read your work especially same as ever which by the way is a phenomenal book and anybody listening to this should buy it it's utterly fascinating and we're going to go deep into the principles of that in a minute but when I was reading it I was like oh this is RA alio this is this is the humans are predictable and they are predictable in the following ways yeah and what I like about what Ry does is he's like okay this stuff is so predictable let me tell you how this all plays out in terms of the economy and he breaks it into six stages and uh to spare people it the long winded version it basically breaks down the way that you were talking about it that stability creates instability basically people get hyped up they get into a ton of debt that debt is only sustainable for so long and it really does get to the point where people are going to default on the debt there's usually a huge restructuring that often happens with War I think it something like eight out of the last 10 times 12 times something like that uh it has ended in Hot War and so especially when you have a rising power so we have a rising China we have the US in just a mosive debt crisis by my estimation you've been very clear on your stance and um Ry maps all that out and this is just the way it goes and he nobody has spent more money researching the history of these debt crisis um the U Reserve currencies and the movements the rise and decline of Empires he spent I think he said hundreds of millions of dollars doing all this research absolutely crazy and then nobody has made more money betting on their knowledge being right than Ray Delia built the largest hedge fund in the world okay so here you have a guy that's more knowledgeable than anybody who's made more money being right about it than anybody and he's saying uh stage six is absolute collapse Hot War we're at stage five and a half and when he wrote the book whatever 18 months ago he said he put the odds of a World War at like 40% he now puts it at 50% that's before some of the news that's come out recently so uh I looked look at that and I say okay wait a second um I'll paint a very quick snapshot of what again I am a lay person on this so I'm I'm certainly not a macro guy I play one on YouTube a little bit but I like to be honest that I'm I'm now just walking people through how I think through a problem I do not consider myself an expert on this having said that here we go uh so if I'm China I'm going to be looking for a divided America and I'm going to wait for for America to be weakened in some way financially hopefully militarily hopefully both quite frankly uh America's debt is through the roof America's playing a proxy war via Ukraine America is threatened to get sucked into a proxy war in Israel uh tensions in Israel seem to be going up um uh I hopefully not much but definitely like I'm not super confident in where that goes so if I'm China I'm watching that going this could be a very good situation I know that the Russians can make um bombs for like a tenth of the cost that the US can make so if they end up going head-to-head like that just is we're now going to be able to be out not technically outspent but they'll be able to make way more Munitions than we'll be able to make so if I'm trying I'm like there might be a move here they're certainly making a play uh this is going to be very controversial and I recognize it as controversial and my o in fact one of my favorite authors Morgan howel has said if you ever say that you're 100% certain on something all my alarm Bells go off so I'll give you I don't know like 40% uh but when I look at the moves that China's making that are dollarization plays 40% again I don't think we're going to dollarize tomorrow or anything like that uh but when I look at what they're doing with the brics Nations getting together trying to get um countries to buy oil in their currency all of that and they're hoovering up gold like all of it just feels like a country who's perfectly happy to be patient so I'm not saying this happens tomorrow but they're clearly positioning themselves at least for a multi-polar world which I would say we're probably in I don't think we really have Pax American anymore yeah so that's already getting soft we're getting sucked into these conflicts and China has stated we are taking Taiwan back just letting everybody know yeah so now the question just becomes not if when and America does not strike me as it's moving in the right direction we're printing money like there's no tomorrow as if inflation isn't a real thing um and so I just look at all that I look at Ray doio and I'm like yeah there's a pretty compelling argument to be made that we're at a legit not not like oh randomly I'm picking 50/50 as in we went from 30 to 40 and now we're at 50% chance of a global conflict um last I heard he put Civil War at 40% in the US again up from 30 so it's like some of the leading indicators are just not pointing in the right direction and so as a I'm an individual guy I don't I think the only way to impact the macro is to talk directly to an individual human and say this is what you ought to do uh but when I look at all of that I'm like whoa and it does I'm not a prepper so I have not bought somewhere in New Zealand which people ask me all the time uh I have no intention of leaving the us but I will say that for the first time I'm like huh let me be cognizant of my surroundings I think you can agree with all of that and not push back on any of it and still say that the world is too fragile to make a proclamation that X Y and Z is going to happen fragile or complicated both I think it can be fragile in terms of it can go go a completely different way than any of us thought fragile tells me breaks it just breaks in a way that I'm not expecting a lot of these there's one winner and one loser so it could be fragile for China it could be fragile for the United States if you and I were having this conversation in 1989 you would have said the exact same things you just said but the country you would have said is not China you would have said Japan it's that's what Japan was taking over the world in 1989 and if we were having this conversation in 1950 and if someone said Japan is going to take over the world you'd say Japan those people who are just literally they can't feed themselves right now and if you were having this conversation in the 1920s and you said the United Kingdom is going to lose it it's not going to be the world superpower anymore the pound is not going to be the reserve currency anymore that would have sounded Preposterous too but it's exactly what happened at the same time living in Britain for the last 100 years has for by and large been a lovely place to live even though they lost their superpower status they lost their Reser Reserve currency status they went through debt crisis by and large it was a lovely place to live for most people and it was one of the one of the richest safest most prible countries to live in for the last 100 years so even if the things that you are saying come true and I would not put any weight on even if I don't disagree with that I have no rebuttal to it I just know enough of History to say nobody can say with a lot of confidence this is what's going to pan out over the next 20 years it's just there's never been a 20-year period in which that's the case imagine you and I sitting here in 1999 and someone said I think some Muslim terrorists are going to hijack airplanes and it's going to completely change the course of US History would have been the most ridiculous thing you would have ever heard but those are the kind of things that change history there's another say thing I think a lot about here there's a documentary on centenarians and it's asking him just what you've learned in life and they asked this French woman she was like 103 they said what was the happiest day of your life and she said armiston day in 1918 the end of World War I and they said why and she said said because we knew with certainty that there would never be a war ever again and that was at the end of World War I of course World War II starts 20 years later so it's like the most common path of history is that what actually PL pans out is what not only nobody saw coming but would have sounded Preposterous to you at the time so the narratives that Ray Delo puts forth and that UDA said make sense to me like I said I have no rebuttal for it but once you study enough history you realize that that narrative is that the clean easy simple narrative that intuitively makes sense is never what actually happens so that's that that's what I would what I push back on that for now I'd also say that people love hearing those narratives they love hearing the pessimistic narratives because it makes them sound like they should be able to do something about it if you know that the world is going to hell a you don't have any uncertainty in your head uncertainty is very uncomfortable you just eliminated it because you know it's going to happen and if you know the world's going to hell then you can take an you can buy a farm in New Zealand you can make a bunk or whatever and both of those things are eliminating uncertainty in your head in a way that makes you feel very good so nobody wants to hear you're not going to sell any books saying we have no idea what's going to happen next you will sell a lot of books by saying here's exactly I know for certainty I've spent hundreds of millions of dollars predicting what's going to happen next I would also push back and say Ray Delio has made an incredible amount of money in Asset Management that's not to say that he's made an incredible amount of money being right about all of his economic forecasts those are very two different things you make money in Asset Management through fees not necessarily by making the right calls he has made a lot of very good calls he's made a lot of very bad calls in his career as well that are much easier to ignore uh so in the asset management you make money by how much money you raise you raise money by telling a very good story not necessarily because you've been the Best Buy money manager of your age I'll give you that for a short period of time but if you're not returning to investors there's no way to sustain that and he sustained post his implosion CU he implodes in the 80s uh for people that don't know his story and he goes on to form the mindset that I think you would stamp with your approval I certainly will snap my wrist uh stamping it with mine which is effectively what I call the physics of progress so basically he was like oh [ __ ] now I realize that I don't I think I'm right I feel right but how do I know I'm right and so I need to surround myself with people that will tell me that they think I'm being stupid and then I can triangulate the most likely outcome no guarantees but the most likely outcome by surrounding myself with a lot of smart people um now I I think you will agree that if you try to learn a in fact Jesus I'm quoting you now if you try to learn a specific lesson from um 911 from coid you're going to make a mistake y the only lesson you should learn the world is fres exactly or the thing you said in the book is the only thing you should take from surprises is that the world is surprises I was quoting Daniel Conan with that yeah that's the lesson from surprises is that you will be surprised in the future yeah so you know it's not going to be the thing you expect but where I would take that is um one I want everyone to be very clear I'm not paralyzed by pessimism and I think it is very dangerous to lean into your more pessimistic thoughts which I absolutely do not long story I won't I won't spend our time on that now but uh so I'm going to continue down the pessimistic road but trust me I'm not paralyzed by this but when uh the Israel Hamas thing kicked off I was like I never would have expected that but I was expecting something just like that yes so those are very different things to expect the world to be chaotic is one thing that's a great thing to expect to expect uh not expect that when when I think about okay for the bad thing to happen to America that I'm afraid of that I know will happen on a long enough timeline yeah and look I'm I hyper understand that getting the timing wrong is the same as being wrong yeah and I have no belief in my ability to get the timing right which is why I am the world's most boring investor ever yeah much like you people would be very unexcited to hear that I do not trust myself to day trade blah blah blah all that I'm anyway uh so but when it popped off I was like yep like this is exactly the kind of thing I expect to happen in the world so I had been hearing like over the last few years like right before Co no was I think even after Co popped off that people were saying very smart people we're saying things like maybe the world is so interconnected now that we could never have another Global recession what that's those those are the kind of statements that you know if you're any student of History you know those are the ridiculous statements and so I I think what you can say is that there will be there will never be another pandemic like Co there will be more pandemics but they will be they'll come in a different flavor and a different time with a different lethality whatever it would be there will be more world wars but there's never going to look like World War II again that's what trips people up is like you learn a specific lesson about how to avoid a specific thing so you think we've eliminated that risk but the same flavor of risk can come just in a different a slightly different form I really wanted to believe we were at the end end of history and now I everybody it's very comforting to think that we are yeah but that's kind of the theme of the book is that there's all these facets of behavior that have always been with us and will never go away it's always like no matter what happens in the future and no matter what kind of Wars you have or recessions you have or what happens you know with certainty that certain behaviors of how people respond to Greed and fear and risk and uncertainty are are always going to be the same what are they so rather than pretending that we can predict the change let's focus on what we know is going to be part of our future how people adjust their uh expectations with their circumstances it's always been like that and it will be like that in the future so that's a big part of this how fragile the world is is the first chapter of the book how narratives and stories are what gets people's attention and if you get if you tell a good story not have the right answer if you just tell a good story you get people to nod their heads it's those kind of things that I try to tackle in the book so what are some of the things that we need to be most aware of in the context of navigating this world well doesn't have to necessarily be about money specifically but that's such a big part you said there's two things people are always going to care about health and money yeah I'll sign off on that yeah and those are two things that impact you whether you like them or not doesn't matter if you're not interested in health and money they're interested in you right and so everyone I think has some uh duty to at least have a basic knowledge of those two topics and the fact that those are the two topics that are not taught in school is one of the craziest things you can imagine drill down on algebra and trigonometry don't give two shits about health and money is kind of the view of the education system it's a it's a pretty wild thing to think about what's interesting to me though is that is uh whenever a discovery is made the person who made the discovery could never predict the the echo of their Discovery yeah um your book if it's that Discovery the fact that those things are not taught in school is predicted by your own book because here's why those things don't get taught in school if you were already good at that then you would go do that thing and this doesn't mean that those who can do and those who can't teach it means that teaching is a thing unto itself it is not the skill set that you teach yes teaching is a skill set it's not that you're the expert in money exactly so when people say why is it mindset taught in school because they don't understand it and you can't you can distill it to a formula that can be cleanly taught which is why they teach algebra and trigonometry but it's it's harder to test I always say the most decision most important decision anyone will ever make is whether when and whom to marry it's probably one of the most important decision one of if not the most important decision you I'll give you that and why is that not why is that not taught in school because you can't distill it to a formula cu everybody's different what you want's different from what I want what you want out of a wife is different from what I want there is some rebellious part of me that just cannot allow uh it to be said that it can't be reduced to a formula but I think that's why they teach trigonometry and not how to find a spouse because it can be reduced because it can be reduced to a formula and what is reduced to a formula even if it's not relevant to your life sorry trigonometry it's not but you can reduce it to a formula so we're going to make sure everyone has to take that but the most important things in your life how to find a spouse you can't reduce it to a formula so we're not even going to pretend to try to teach you about it I think that's why it happens can I give you the formula for finding the perfect spouse I'm going to push back on it but sure please I hope you do because then you're going to without even knowing it so here I love that uh okay here's how you find the perfect spouse so the most important thing is you need to make sure that you find somebody whose values match yours okay but that they have a different perspective than you have so a different frame of reference the reason for that is you guys are going to go through this life as a pair and your job is to solve problems better than you would have otherwise now I don't have kids but I still think that's the wisest framing like when you look at it from an evolutionary standpoint men and women coming together the whole point is for you to raise kids and pass your genes into the Next Generation so you are optimized from a biological standpoint to do that so you want to come together with somebody that's going to remove some of your blind spots so that you guys can raise a kid effectively and be taken uh be caught off guard by a lot less than you would otherwise be um the reason you need to share values is you are going to collide a lot on base assumptions that those are going to be the bulk of a lot of your fights but you'll be able to navigate your way through those because that's just you're not understanding the other person's view of themselves or the world so once you understand oh I believe um that uh public schools are terrible and they rot the brains of your kids and the other person believes you need to be around other children so that um they can be you know introduced to multiple ideas and have friends and learn how to connect once you understand oh the reason I was saying homeschool is because I think it's going to rot their brain the reason that you were saying send them to school okay that's different base assumptions you can get to the same page and try to convince each other if you have different values on the other hand now this becomes a collision uh base assumptions are what you believe is and then values are what you believe ought to be so it doesn't matter what is so now you can't use facts to navigate that that's just going to come down to like religion so I believe it ought to be this way if you Collide on that the odds of you being able to convince each other are basically zero so when people have values collisions the relationship is going to be terrible and that's why you're going to end up being profoundly unhappy okay another thing make sure that you guys one of the values that you have is that you're going to elevate each other so they're they feel better about themselves when they're with you than they feel when they're without you another one make sure that at least until you have kids you're their number one one because otherwise I don't know why people sacrifice to be in a relationship uh there's a few more I'll stop there but like how how am I do my only push back I don't disagree with any of those but I would be willing to bet making this making this number up I would bet that 90% of people on the altar say I check every one of those boxes and half of them will get divorced so I think I think it's an idealized set of goals to have so what is it I don't if it's a form for excess for Success um I think most people want want the wrong things and want too much out of marriage they expect their partner to fix all their problems in life for them and that's I I think it's it's an expectations mismatch I think I have a friend named Brent bore who says like that feels teachable if there is a key to marriage it's when and I this I think is not necessarily teachable but he says with when both spouses want to serve the other spouse and expect nothing in return and you can both do that simultaneously that's an incredible relationship you get a problem when someone says I I did this thing to help you and you didn't you didn't reciprocate that's when you get problems and you start getting needy there's one needy person in the relationship that's that seems to be when everything breaks down can I give you a different take on that yeah because they're dancing around a brilliant idea but I think they're being insincere about what humans are like nobody will do something forever with no expectation in return but I do think you need a wide margin of error so that you're not doing Tit for Tat I did this for you where is my thing it's like yeah cool look if I do uh more than you more for you than you do for me cool you know we're within a margin of era whatever it's all good um but nobody like if if my wife was constantly taking the piss as she would say and taking advantage of me after a while but that's why you you both have to do it if you both expect nothing but you're both devoting your lives to the other person you nothing from your wife nothing Well organ no I'm I'm I'm thinking this through if you expect little but you get something then it feels great it's it's expectations versus reality it's not that I expect nothing she doesn't punch me in the mouth it's lovely I get it but like in reality so I agree with you mismatch of expectation reality you could go from I have an amazing spouse but my expectation is they're going to do everything for me I feel like no so so here's the answer I feel like I don't have to answer that question because she gives a lot to anyways so I don't have to ask do I expect nothing because she's always giving me something so I I never have to ask is how's it going to feel when the Tank's empty because the Tank's always full I think I think that's the and if both spouses can do that simultaneously that's when you get magic I just don't know if it's really possible to teach that and even if there is the formula that Brent said I I don't think it's a formula like exists in in algebra where it's just very clean and it works for everybody it's it's a Nuance thing here's the future I imagine so I called it impact Theory University and not Tom Bilu University for a reason for those who don't know we have a school put that in air quotes since we're not accredited uh but we have a university that is designed to teach you mindset for now but ultimately it's meant to be to teach you all the things you didn't learn in school and while I do not expect every High School to be able to staff up with teachers I can teach that there are people that can teach this in my opinion and so the future of Education to me is a relatively small number of global teachers that are absolutely incredible at the thing that they teach and then everybody else just Tunes in to listen to that that's how it should be yeah and so then it's like okay maybe you have somebody to interface with directly that can answer questions or whatever but like the person that you're taking lessons from like they really know their [ __ ] yeah and so I agree with you and I completely acques the world is complicated this [ __ ] is hard uh if I could speak in bumper stickers I would be a way bigger YouTube channel and one of the critiques of me is that I will people wouldn't say Tom your to Nuance they would be like you waffle too much but I stand with [ __ ] conviction the world is a giant waffle you should be waffling I'm not I don't think I think I'm nuanced but I'm really trying to lay out here are all the complicated steps that interact with each other yeah um of course I'm never perfectly right but I think I am frequently directionally correct which is why I've been married for 21 years exactly so uh that to me it of course there's complexity at the edges and all of that and any one thing if you try to be too strict with it's going to break down and of course you talk about this guy in your book I forget his name uh but the guy that Warren Buffett learned from was like Hey basically all my returns are from one bet I made on Geico that breaks all of my own rules there are going to be things like that but to act like there aren't things that are directionally correct and that if you move in this direction your life is going to be way better is how people shoot themselves in the face yeah so so anyway this all feels teachable but not no one person is going to be able to teach all of this no High School you not every high school is going to be able to staff up there aren't going to be enough people that are great at this stuff but I do and even if you and even if you can teach the principles and the person follows all the principles there might be a 60 70 80% chance that they actually get the result that they're looking for for sure versus I think what you want to teach in school what what the society wants you to learn in school are things that are just objectively true for everybody uh we teach certainty and and that's you know things that are the chemistry and algebra and trigonometry things that there's no it's not if you get this formula right there's an 80% chance you get the if you get the formula right this is the right answer period that's what they want to teach because it's easy to test for it's easy to teach and Nuance which is how the real world works it's just a much Messier topic and there's no guarantee that even if you follow the rules you're going to be successful but that in itself is the lesson that I think is really important to learn yeah agreed okay so give me some more of the things about humans that you find utterly startling compelling exciting hilarious whatever your book is full of things that are like we are like this I mean one of the things that I take out from the book is that you know I call it wild Minds where people who you look up to because they've achieved something incredible you look like they've achieved something incredible because they are a crazy out of thee box thinker that's why they are super successful there there is always a case there's almost no exceptions to case that that person who has thinks about the world in crazy ways that you admire also thinks about the world in crazy ways that you would not admire and Elon Musk is the easy punching bag for this of like people admire him for a certain set of traits very good engineer very good entrepreneur extreme risk taker and we admire him for that and then there's this other side of him that makes people cringe at least some people his online Persona his political views whatever it would be and I you can't separate those two like there's this quote from Kanye West that he said years ago where he said if you guys want this crazy music and these crazy videos there's a chance it's G to come from a crazy person and and I I think I think some variation of that applies to a lot of the people who we look up to that most people who are abnormally good at one thing tend to be abnormally bad at another and therefore like be careful who you're looking up to for your role models and your Idols because if you say I want to be like that person because that person is really good good at this specific thing well they're also probably very bad at this specific thing too at something else for a lot of them not everybody but for a lot of it is the entrepreneurial and financial success that they achieved came at the direct expense of time with their family and relationships in their personal life and there are so many examples like this I wrote the other day among the top 10 richest men in the world there are accumulative 13 divorces and seven of the top 10 have been divorced at least once much higher rate than the overall population and I think when you read that on a it's kind of shocking B it's like of course that's the case these are people who worked 100 hours a week for 30 years of course they didn't have time for their spouse and their kids they were sing they had a singular focus on solving this problem and that's why they're crazy successful but if you want that realize that you cannot separate those two you can't have Warren Buffett's focus with the absolute perfect family at home life because Warren Buffett's Focus came at the direct expense of spending time with his wife and children and so I think that's it's really important to realize that if you want to be another person you have to accept the full package you can't say this comes from nval you can't say I want his body and his drive and his focus and his intelligence you have to take the full package because the reason that that person has an attribute that you like comes part and parcel with this attribute that you're not going to like yeah it's interesting I still think so I agree with all of that and I have uh found myself routinely watching like an influencer or whatever who is just you know I'm on my grind which I I'm a huge fan of hustle porn let me be very clear but if you don't spend time with your spouse or your kids there's going to be a consequence all falls apart none of it's going to be worth it for sure um but when I when I look at the world I do say I want that person's physique I want that person's business I want whatever whatever and now look I put that in the context of I know who I am and I'm very careful not to violate my values I'm very cognizant of spending all of my time wishing I were somebody else is a recipe for just misery and unhappiness and um one thing that makes me laugh about myself and this I think is is really um it's Universal but again I don't trust my emotions so but okay I have a very fancy house it's like the one sort of um I always fantasized about it as a kid it was just like the thing I always said I was going to do um and I can still get Jealous by seeing somebody else that has an even better he no matter how nice someone else's is nicer yeah oh yeah 100% yeah I I have literally I have to GAA when I have that emotion I'm like dude that is did this house fill a hole did it scratch the itch or is the itch still there it well it scratches one itch so this goes back to money is more powerful than you think but it's not what you think so it scratches the itch of it's like living in a piece of art that every time I catch it out of the corner of my eye I'm just like God damn it's beautiful so I'm very wired for beauty so for me like it really hits me and this is exactly what I think makes me a good Storyteller is you don't have to tell me if something's cool or good or beautiful I will have such a visceral response so anyway it scratches that itch but it does not make me feel cool it doesn't make me feel better about myself yeah um does make you happier uh it does appre appreciating art might make you happier so it might well something even more rudimentary than that so I will just say that as my first love is film Mak and I have a movie theater in my house so that's it's it's little things that's so cool and what percentage square footage of the house is the movie theater I'm I bet it's it's I bet it's very small 7% but it's maybe 80% of what makes you happy I'm making all this up it yeah it that particular in fact I've told my wife this so maybe it's 98% so I said look if we ever lost everything and we had to go back to like one of our old apartments uh I would want to turn it into basic just a movie theater if I have a movie theater and a balcony where I can get a little bit of sunlight like I'm good like that to me is that one lives up to the hype I that's an important realization yeah I like that for sure okay um I want to know given what you know is true about humans given what we've discussed about money where the economy is the world all of that give me your take on the 24 election what do you I know you're not you don't like to prognosticate but knowing what you know about humans your book basically opens with people think tribally yeah so not letting you off the hookie I um many years ago I went to a financial conference and a political scientist was one of the speakers I think this is 2008 it was just before the 2008 election and he said every election since 1900 has been framed as the most important election of our lifetimes and he said at some point it's just not at some point it's just another regular run-of-the middle election so every single election in modern history has felt like all the other elections didn't really matter but this is the big one this is the main event it's always been like that I think it always will be like that there's never going to be a normal run-ofthe-mill election in my lifetime it's definitely been like that 2004 it was war on terror we got to pick the right leader 2008 was the economy falling apart 2012 it was like socialism versus capitalism 2016 was Trump 2020 was it's always felt like the stakes are enormously High I think it always will so it feels like the stakes are enormously High going into 2024 I don't know if historically speaking they actually are the other push back that you get is like well politics is nastier and more dangerous and more partisan and tribal today than it's ever been that too if that is true I think it's marginally true it can't be true we've shot each other a lot a civil war they literally used to shoot each other and fight with canes on the Congress in our lifetimes I will say it does well M's a little longer than yours but in my lifetime this does feel like the most divided we've ever been but certainly historically it is clearly not and I I think regardless of how you've thought the last two elections whether which way you wanted it to go in both elections people said if this guy wins there's going to be an apocalypse and by and large it wasn't not to say that it couldn't have gotten worse than it was or could have gotten worse that it's going to be but it didn't and I think it's important to so I think it's it's very easy to paint the politician who you don't like as a monster when by and large like most of those opinions are overblown we shouldn't though poo poo the idea that getting the wrong person in office can completely and utterly change society I mean the most extreme example not comparing this to anyone running for office in the United States but Germany was the most civilized society that existed for a long period of time and you get the wrong person in office Adolf Hitler and everything goes to [ __ ] very quickly and you create the most atrocious atrocities that have ever existed no doubt that's a very extreme example well I think it's important to point out that you don't get a monster like that without the right circumstances yes of course it was the economic trauma that existed in the 1920s and 30s that fostered that rise there's a lot of quotes to the effect of uh when Adolf Hitler came to power of this like he he came to power with a new idea and he basically more just simplified he told the German people like follow this idea and you're you're all going to have a job you're going to regain the prosperity that you've lost over the last 15 20 years and back to the best story wins a lot of Germans said that's my guy that's who I want but I think one of the lessons in that is like social coll economic collapse can lead to social collapse if you if you Foster those right circumstances you can get the monster gets the elevator to the top in those circumstances so it's not to poo poo the idea that it doesn't matter who's President that's definitely not the idea but I definitely think there is validity validity to the idea that the person who you did not vote for is probably not the monster that you think I think that's generally true most of the time at least yeah the this is why I worry um not the right word this is why I'm now paying attention to things in the macro is like oo the circumstances are the things that give rise to a change in the individual human which I would say is one of the very predictable things same as ever with people is that um we are three weeks away from being a monster and that we have to be the price for freedom is eternal vigilance like we must be eternally vigilant for what are we doing with the collective Consciousness like how people are rallio talks about this a lot it all that matters I remember him saying he said this all the time I've had him on the show several times and he's like uh all that matters Tom is how people are with each other never really understood what he meant and then I started looking at what's going on in the political divide and I'm like oh this is exactly what he means yeah like when people are vicious to each other when they other people when you hear things like they're animals it's like o like if I ever say uh these people are animals my wife can just slap me right in the mouth just punch me in the face because the second you do that you are headed down a hyper dark path of just again being able to predict what humans are like the second you do that once you once you dehumanize it because the huge majority of people could not attack another human but once you de dehumanize another individual then you're not attacking a human because as soon as you change it most the huge majority people could not kill another human but once you dehumanize it all bets are off yeah and that was how he justified the rest of the war to himself it's a it's a stag it's one of those scenes where you have to pause it and just go oh my gosh now like it it it makes sense in a very disturbing haunting way I don't understand why people aren't way oid about themselves about uh The Madness of crowds how humans really can break bad in in the most horrifying way conceivable and that I am I am such a a believer in the words of Soulja niten again the author of Gulag archipelago when he said the line between good and evil runs through the heart of every man yeah and I include myself in that I I try to remind myself as good as I think I am as much as I feel like I have gone in my life way out of my way to be integrity and to do things with honor that oh there are circumstances in which I become a Monster yeah knowing that that is within my heart as easily as it is anybody else's I like to think it's part of what keeps me sane it's part of what keeps me um I seek out disconfirming evidence with aggression and look not nearly as much as I should for sure I love being right way too much but even within that context so paranoid about my desire to be right that I will be blinded to something yeah at least in business it's so Stark you either stay in business or go out of business yeah and so I can either have people tell me WR just reframe it in your head yeah it's a it's it's a pretty staggering thing to see what people are capable just by reframing something what you're capable of doing it's amazing the book is amazing same as ever where can people follow you I spend most my time on Twitter that's my my drug of choice I guess we call it X now these days but my handle is Morgan howel first and last name and my books psychology money and same as ever those those three things are really what I do I love it boys and girls get after it speaking of things you should get after if you haven't already be sure to subscribe and until next time my friends be legendary take care peace if you want to scale your business and avoid all the BS advice out there check out my latest episode with Alex horoi you can drink and do drugs and watch porn if you still do the that's all that matters I want to do the formula and then live my life how I want to live each of us gets to

Channel: Tom Bilyeu

Views: 720,923

Keywords: Tom Bilyeu, Impact Theory, ImpactTheory, TomBilyeu, Inside Quest, InsideQuest, Tom Bilyou, Theory Impact, motivation, inspiration, talk show, interview, motivational speech

Id: BUBnvfZaF9w

Length: 161min 19sec (9679 seconds)

Published: Tue Nov 14 2023