Tony Robbins Interview: Part 2 (Full Episode) | The Tim Ferriss Show (Podcast)

optimal minimal at this altitude I can run flat out for a half mile before my hands start shaking can I ask you a personal question now we a broken time what if I did the opposite I'm a cybernetic organism living dissue over a metal [Music] endoskeleton well hello there my dear little munchkins this is Tim Ferris I've had some C since you last heard from me what you're about to hear is part two of a multi-part conversation with Tony Robbins to put it briefly Tony Robbins is a performance strategist with clients including presidents like Bill Clinton Mother Teresa not making this up Andre Agassi Leonardo Dicaprio and Oprah Winfrey who calls him superhuman this guy is a force of nature if you didn't catch the first part you might want to do that before venturing in but really we jump around a lot cover a lot of different topics so if you don't mind your stories as more of a jigsaw puzzle then by all means keep on listening from this point on this episode is brought to you by 99designs.com the largest Marketplace of graphic designers in the world here's how it works you go to 99designs.com I suggest Tim for reasons I'll explain and whether you need to create a logo a website a car wrap bumper sticker whatever it might be a t-shirt you can put up what you need a description then designers around the world compete for your business by submitting ideas and designs and so on and in less than a week you have an original design that you love or you get all your money back and I have used 99 designs for years including for some very big projects like the book cover or at least uh brainstorming book cover ideas for the 4-Hour Body which went on to become a number one New York Times bestseller and is in I don't know a dozen plus languages and has sold a gajillion copies so I have used it when time and money has been of the essence it is a fantastic tool and if you go to 99designs.com Tim you can actually see some of the campaigns some of the competitions that I've run so actual submissions for the book covers and things like that you can also get a $99 upgrade for free which gets you more submissions so check it out 99designs.com and now without further Ado please enjoy part two the final part of the Tim Ferris show with Tony [Music] Robbins and to to touch on a few things that you mentioned for those people asking themselves as I'm sure a lot of people would how how can I apply what these guys do to what I do and I think that you you present a number of observations articulated very very well that most people will never be exposed to for instance uh number one asset allocation does not mean choosing if you are going to be a stock picker or invest in an index fund for the S&P 500 because those both you're in one bucket right there that's right you're in a correlated class that's right there's no diversification in that right there's more well there's some there diversication maybe more companies but it's all within the same asset class yeah and the the other thing is that there are ways uh there are there are ways to look at the problem um that are not obvious right off the bat for instance uh you mentioned something that's so simple but a lot of people Miss if if you invest and you lose 50% you have to now have 100% gain to get back to break even put another way uh this is also straight from the book If you let's just say you uh I think it was investing over uh it was either five or 10 years uh the the exact numers in the book but and you had uh you'd invested in the stock market through a let's just call it sort of off-the-shelf mutual fund that charges typical fees yeah and the market moves up and down up and down up and down at the end of that period of time you're back at the same market levels yes you would think if you put in 100 Grand you'd be you you'd have 100 Grand at the end of that period of time and it ends up that you're what 47% down something OB it's it's the idea of average rates of return so if a lot of people look at their what they've invested and their their broker or their whoever represents them F them their portfolio and go look you know you went up you started here you went up 50% you went down 50 but you went up 50 you went down 50 so you're average rate of return is zero but I put real dollars in there $100,000 and you go up 50 or 150 you go down 50 you're at 75 you go up 50 oops and you go down and you end up at $37,000 instead of $100,000 yeah because your principal is moving up and down so there are all these ways we could Del the biggest one the biggest lie you know in the book I walk you these seven steps so one of those steps is frankly you got to do what most of us guys that probably people listening on your team already do and that is you've got to become an investor you got to be an owner not a consumer right and and the way to do that frankly we all know but very few people do and that's you take a percentage you lock it down it you never see it it's automated and you put it aside for investment and that just occurs and I show the people some of the tools that Nobel Prize winners have come up with so if you say I have no money you can invest more for tomorrow by committing when you get a raise or your company gets the next level you automatically have that percentage go there so it's money you've never seen it's not taking away money from you so you're willing to commit to it right and there ways to automate that totally automate which is fantastic so you know they took they took a group of bluecolor workers who couldn't save more than 3% and they showed in 12 years they had them up to 16% with absolutely no sense of loss because you know once if I they show this with example of the behavior showed me that if you if you give an a monkey an apple they go crazy and you give them two apples and they go crazy and if you take one of the two apples back they're angry as hell they still have the same first Apple yeah what happens is if you don't give them that second Apple but it gets invested for them you know that changes your world you don't feel a sense of loss there's no drop and yet you set yourself up saving 15 16 177% at a totally different world than three or nothing obviously second piece though I got through that brought this up for is you got to know it's great to get in the game but oh my God don't get in the game till you understand the rules till you're an Insider and so I go through the nine biggest lies they and they their investment lies their Wall Street lies however you want to call them but they're marketed lies there's a reason you believe very heavily marketed very heavily marketed to the advantage right and one of those is this idea that they're going to beat the market now here's the real facts 96% check it that 96% of all mutual funds in a 10-year period will never even match the market now you're paying a premium you could have owned an index that cost you 20 basis points right at Vanguard or 14 basis points what what what index you're dealing with instead you're paying they say 1% you ask people what oh it's just 1% in reality if you go through Forbes is shown the average mutual fund when you put all fees in if you read the perspectus and there's all these 21b trading Fe all these things that don't they don't call fees very often but they're money out of your pocket the average is 3.1% now when you do that here's the problem number one only 4% what's your chance of picking the 4% of mutual funds they're going to be succeed if you go for Morning Star you're screwed because I can show you statistically morning star's own statistics that show in a 10-year period out of 250 people that made it to festar Morning Star four are left doesn't work that way right so if you could pick the 4% if you were magically able to do that you could do all right but the 4% is always changing so your chances of picking the right mutual fund are 96% against you and the average person's 40 andk at work they don't know how to evaluate this they try and pick it so they're screwed and then you get poor performance and you pay somewhere between 10 and 30 times more for the same investment you could have got for 30 times 10 to 30 times less it's like the ultimate insert injury and go why does that matter well first let me give you this so people understand what 96% means are getting a 4% possible success rate if you and I play Blackjack most people not to play right 21 get two face cards that's worth 20 points if your inner idiot says hit me when you got two face cards Go 21 you have an 8% chance of success you have a greater chance success there than you did if you're try to find the right mutual fund now what's your chance of success in getting financially free when here's what's unbelievable if if I said to you here's an investment I want you to try Tim here's how it works you put up all the money you put up all the risk and I will put up no money and I put up no risk and if you win I get up to 60% of your entire growth of what you have over the lifetime of your investing you put a all of money I take no risk I put no money in and if you lose you lose but I don't lose anything that's a deal that most people said I'd never taken a million years that's the average Mutual fun because for every 1% you pay it's 20% over the lifetime of your Investments of growth because just like there's compounded growth there's compounded fees right so Bogle showed me 60% I'm saying Jack how's this possible how could people be doing this like he goes Tony it's a$ 13 trillion lie and it's called one thing marketing yeah says marketing so I've been in the business 64 years it makes me crazy and people still do it the vast majority of people put their money in the mutual fund they had an index fund and now now he's come to you know be the largest mutual fund in the world with an index fund now with 2 and a half trillion I mean Jack has been modified but most of smart money is there it's not the average person's money that's in the index today so I go through these lies and and what you don't know in the financial world will hurt you and the one you're talking about is just the average rate of return you want to be seduced when you look at the rate of return Bogle said to me Tony whenever you see what the rate of return was you're trying to evaluate that mutual fund based on its past performance just know that number is not accurate dalbar did in gradable study 20-year study they found the average mutual fund owner over 20e period of time made 2.5% net the market was 99.7% that'll give you sense so you know I I I went to go do this book and I won't mention the person's name I got all these incredible endorsements from everybody Nobel Prize winners right self- bid billionaires M all these guys there's a particular person that I really good friend if I won't mention the name but it was ironic he wrote me back and said well my team's read it and they really don't think it's that you know that that special I thought well I'm not insulted about that but it doesn't make sense to me and then I found out this person has six mutual funds right so it's like okay I get it dude don't ask a barber if you need haircut that's my fault I'm so sorry never should ask sorry about that one uh so I I should point out to folks also uh that it's some people are very math phobic part of the reason I went uh to Princeton and it's funny I was reading Carl icon's story and how he was he was just you told you he was told he would never get into any I schools and he chose Princeton same thing happened to me I was told I would never get in WoW uh to a whole host of schools because and this is kind of like your your mutual fund guy PE humans respond to incentives yes and this particular guidance counselor is incentivized for what to optimize to be able to say x number X percentage of students got into their first choice school so how do you do that most easily lower their expectations lower their expectations uh but the uh I am intrinsically not someone with a lot of math background part of the reason I chose Princeton over other schools because they didn't have a math requirement and I think for a lot of people listening they may be like oh my God perent and compounding it's very overwhelming and I think that part of the reason your book had to be as long as it is uh and a book should be as long as it needs to be yes is that if you were to try to compress it into 100 Pages it would be like watching a 3our action movie but getting a frame every 5 minutes yeah you wouldn't it it would be too much in too little space but when people read the book when I read the book uh you're leading people in a logical progression from building block to building block block to building block so that by the end people are very very Savvy and so people who are who might be thinking oh my God this is this is really a lot for me to absorb I'm probably talking 100 miles an hour in the book I'm telling you stories too and I think the stories take it away so it's not numbered you go holy [ __ ] if if me and if me and three of my friends all put aside the same amount of money and we both get a 7% return but my buddy's getting fees of 3% my other buddy's two and I'm one and we both put in all three of us put a million bucks in or ,000 however you want to do it uh the person with 3% of fees ends up with 65% less money and they got the same rate of return they start with the same amount of money over the same period of time and I think when you see that with real people's lives you start to go I don't have to know the math I just know one thing fees matter and I'm going to cut those babies to the absolute base definitely and uh I'd love to talk you you brought it up a little earlier uh Ray doio and uh asset allocation uh because this is something I've been thinking about a lot considering that uh due to paper gains I'd say I have uh very very very very high double digits of my entire net worth in Tech uh and it's hard unfortunately to rebalance when you have a lot of Private Stock they can't be traded uh but uh you know how it is so the but uh doio is someone I've been fascinated by for so long uh maybe you could talk about the the All Seasons uh and what some of the stuff that you that you chatted with him about as as it relates to asset allocation it might be helpful for people to take a second and and give people his background I mean Ray is not the guy you would think of as Master of the Universe he comes from Queens his dad was a jazz musician his mom was a homemaker really lovely lady he went from you know very lower middle class family and decided that he wanted to go work at a golf course he bumped into you know one of the things I talk about is proximity affects your life who you're in proximity with and he's around with proximity with the very wealthy people and they're talking about stocks and he got fascinated by it and got hooked on the process and then you know got involved in in the stock business and but he got involved in a Time time period when the world was incredibly volatile the 1970s they we all shaped by our time periods right and so if you can imagine you know that's a time we had this massive inflation where Nixon goes on television and says we're going off the gold standard that money as you know it called US dollar we're not going to back up with anything and he thought for sure the markets would just be destroyed the American dollar is going to be worthless and instead they had what was called the Nixon rally and it's like it shook him to his core that as much as you think you know you don't know and it gave him a lifelong Focus that says I always want to be asking what do I not know and how do I find understand the system as a whole not just my perspective on the system and um so he started Bridgewater and in fact my friend Paul Tor Jones gave him some of his initial Capital do this and is wishing he didn't loan it to him but would have kept it as an investment I think at this stage because Bridgewater G so gigantic um but what happened was he's the guy the US government went to when they're trying to figure out how to design tips I mean this is the level design he's the guy that when McDonald's is trying to come out with egg with with McNuggets and they're trying to figure out how can we make sure we have enough supply of chicken and he's the one who figured out the math of Futures and what to do so McDonald's could even do that that's that's the way this man's brain works so over the years he built this Alpha fund and it's very intensive and he's lost money in 23 years three times on that fund and the fund has returned 21% compounded for 23 years just mind bogging before Fe and then turn around and after all these years he said you know everybody talks about you know a different stage of your life you want to protect yourself so you do a balanc portfolio 50% 60% in stocks maybe and 40 or 50% you know here in bonds because you know when the stocks are more evolved till the bonds are going to balance you out and then he says you know but didn't look that way in 2000 didn't look that way 20 all went down 2008 right so over the years he said this is a story everybody buys but it's not reality and whole segments of time so he began to pursue what he said what if I wasn't around I need a passive almost passive form of investment I need something that wouldn't take, 1500 people that my kids could use that you know that would support all my philanthropic efforts if I wasn't here and he questioned everything about asset allocation that everybody's ever been taught and came up with a different way of looking at it where he basically said there are four things that move the price of any investment it's inflation and deflation and whether the economy is growing or shrinking and that creates four different seasons in which every every type of investment stocks Commodities gold uh real estate it has an ideal environment which it grows and it has environments in which I it will absolutely slam and so he figured out what's the right combination of these things so that I can reduce the risk to the lowest level of loss possible which you know Warren Buffett's rules everybody talks about the rule right it isn't Warren Buffett's rule it actually comes from his teacher which was you know rule number one to investing don't lose money rule number two see rule number one right so how do I make that happen but also maximize them M upside as much upside as possible he called it his all weather fund because it works in all weather and he did all his own investing in for 10 years and he back tested it all the way to in 1925 and said oh my God I have discovered something unable so the only people got to use this is he and then finally his clients the $5 billion net worth the government's the Pension funds so I've read about it and you know R do very few interviews as I'm sure you know you go online you won't find a whole lot you know in front of the Congress you know maybe at Davos every now and then he kind of avoids any publicity and so forth and I did all my homework on him I you know Paul T is one of his dearest friends arranged to go see him studed it all out and I was prepared and I go into this meeting and I started asking him I asked him the question I asked everybody which was if you can't if you couldn't pass on any of your money your children none all you could pass on was a set of principles an investment strategy and a portfolio what would it be for your kids that they don't have your skill everybody gave me different answers but his answer was well be my all you know all weather approach said so explain to how it works explain at the end of it just just like me telling it you right now real fast you know people are probably going I don't have a clue what he just said it's seems logical um but the one thing he said is Tony is when people think they got a balanced portfolio stocks are three times more volatile than bonds so when you're 50/50 you're really 9010 y you really are massively at risk and that's why when the markets go down you get eaten alive so he has this portfolio and describes principles I said I said you know what Ray I said this is spectacular I understand it but I said the only way you really get the result from this is if you know the exact percentages it's like if you got a you know if you got somebody's recipe and you put in a gallon when they put in a teaspoon of a particular ingredient you're messed up so I said I need the secret sauce yeah and he looks at me laughs he goes Tony that's my business and that's when he gave me the whole $5 billion do net worth and you know got to have 100 million I said yeah Ray but you just got to done tell me you haven't taken anybody's money for 10 years you're not going to take anybody's money he goes yeah but you know it's really complex and I said I know it is but give me a simple version and he said no you know it's always changing I say give me a version with no leverage that the average person could do you just got done telling me they go into their broker go into their wealth manager you know go their Mutual fund's not going to work so help a little guy out I know you care and I started teasing him I said come on you know give me the juice he started laughing he goes well he said I could give you something wouldn't be perfect I said I don't want perfect your worst design will be the best design anybody else will ever come up with right so I got him going said well we might do and he lays out this simple strategy MH I was vibrating I mean I was like vibrating it just I could I knew what generosity level was it was unbelievable he's never revealed it to anyone in history and I ran as fast as I could I got in the helicopter flew back went to the guys at high tower and went to the guys at uh at two of the firms and I said I want you to run these numbers show me the modern period show me the last 30 years what really happened with this formula every single year for 30 years what's the overall for the 30 Years cuz that's I look at 30 years 1984 you know that's when we finally had cell phones even right that's when the world started shift show me 40 years and show me 75 years take me me back right before the depression even right and the guy the guy texted me I'm the middle of the night he never text me and he says have you seen the numbers and so I'll never forget I get up I call him on the phone I said what no I haven't seen him he emails him to me and Ray was right 85 to 86% of the time every time period we look at between 85 and 86 30 years 40 years 75 years would that mean and by the way that's being liberal because the 15% where he lost money the most he ever lost is 3. 95% in 75 years and that was 2008 when the market was from Peak to trough was down 51% the average loss including that was 1.9% so like for example you know one of his losses 03 I mean really it was Break Even but we called it a loss because it's technically it's a loss if you could go to Vegas and you knew that for 75 years the strategy you used had been successful 85% of the time and that when you lost the most you loss was 1.9% how much would you bet how long would you you know continue to gamble Ian it's hard to figure it out so I mean I mismatched I took it I took it to some very large institutions and they're like I've never seen anything like this so a couple of people said to me you know this let's just don't put this in the book this is G this is a business man this is a business this will this will give you the lowest level volatility the highest level of return it averages just under 10% return with that little volatility it's mindboggling so I said you know what that's not the spirit it was shared in I said uh you know we can do this for people if they want to do and give that option but I'm putting the book so anybody can do it and it's in the book right then and there and you know it's not the only one there's strategies for everybody but it's one of the more exciting ones that you'll see is there anything totally up to you but just is there anything you can share from what what he told you about the uh the all weather well the I I don't and I will just say as a preface look there there's so much in this book number one I've had also people say to me for instance I'm not going to name any of my close friends but uh you like yeah for our body blah blah blah that's fine give me the index card and so I know I know and I give them the index card and there's there's context missing and they also it's not just because they they can't in some cases do it because they're missing the detail they won't do it so get the book do yourself a favor I'm not holding back on that I don't think a damn book anyway the reason the reason I wouldn't share that is because it'll be out of context but even in the book I tell people the first chapter I tell them this result I give one example I say I know the first thing you're going to want to do is turn back to that section of the book look and I said you can do it but I caution you there's a syntax yeah there's a sequence the dog B join job the dog and if you will go through the sequence it's going to be more if you know that portfolio but you don't know truthfully what your risk tolerance is you don't know truthly what your personal goals are you don't know what you need to avoid on the fee structure and the tax structures then that return won't be very great for you and more importantly you won't go through the psychology it'll make you actually follow through for a while but if people want to do it by the way I then went to uh hi Tower which is the fifth largest rest investment advisory in the United States 30 billion in assets 13th fastest growing Inc magazine company fastest growing company amazing Elliott is a CEO blown away by this man I did an interview with him and I left there going this man is committed to Total transparency this man blows out all those fees all the to say it in this nicest way possible screwing over that happens to most clients he eliminates that he he's a former litigator he's got a moral code that's pretty intense I loved him so I came back and I called him up and said let's meet again and met again and I said you know I I got to challenge for you I said how about you do this for everybody else what are you talking I said how about for the average man that really needs it said what are you talking about I said bring that ultra wealthy advice to them show them on a small scale how they they do what your ultra wealthy client does he goes tell you can't make money doing it I said you don't need to make money doing it I'm I'm doing a book I'm not making money doing it I said a part of our life has to be for something more and I said I know that's what you're about I said but I'm not talking about putting your business at risk I said let's use technology technology with live people the balance and so we built together a site I put them together with this group called stronghold which is brilliant they've been managing my money for me for about plus s years AJ Gupta he's actually the person that Charles Schwab put on the cover of most magazines for the last year as kind of the the face of the 10,000 you know register investment advisory fiduciaries around the world and around the country and uh the two of them got together created a site it's kind of like checked your broker so now you can go online and you can put in all your accounts it'll aggregate them so patented technology you get to see a what your real costs are on everything all in one picture so there's no BS versus what you could have the same Investments for right it's like why would I pay more second thing it does it shows you what your real returns have been combined what first what you think they are and third it shows you what your volatility levels of been the amount of risk you're taking so you know and then fourthly it does a comparison to that versus other portfolios including the one designed by Dre alio and you can go wow do I want to do this if if you're a person like half the US less than 25,000 of investable assets you get to do the whole thing for free it's given to you you go do it if you are not you have Morey you can still do it for free you can do it yourself or you can push a button and say I like you to become my register investment advisor and somebody can do it so I got into it saying most of the people you're never going to see anything from but wealthy people started not wealthy right and so it's really cool it's one of those few cors that sounds win-wins right these guys are adding value I got them to do it uh and now they're proud of it and excited about it so it's it's a cool thing so answer question URL uh the URL is uh it's what is it stronghold financial.com I got to double check but I pretty sure we'll double check that and also go into the show notes guys you got it uh you're saying to answer my question I don't want to cut off oh which one sorry I got a lot of questions well you know one uh you know well let me let me highlight a couple things oh you ask your question I said I'm not going to I don't want to cover here because even the book I don't do it to get there it won't mean anything to you I'm not holding anything back you go to the bookstore and open up and read it and not pay anything I don't give a [ __ ] but I think you'd be doing yourself a disservice what you really want to do is take yourself to the process so that when you get to that point you can decide do I want that value to be 20% of what I do 5% 10% none 50 cuz there are many different strategies in the book and incl including as you said David Swinson David Swinson is the most successful Institutional Investor of all time from Yale he went from 1 billion took their monies from 1 billion to 23.9 billion 24 billion now in two decades he's a rockar uh nicest human being you'll ever meet in your life and doesn't get paid one1 the rest of these guys it's his dedication to Yale is why he's there I me he could leave there and be in a totally different place when he had cancer the man said listen I'm not going anywhere this is my bucket list is to be here and to continue to serve at Yale a man of such unbelievable integrity and he gave me his exact portfolio it's in the book also and he actually gets a higher return to give you an idea than Ray does but you have to go through a hell of a lot more volatility obviously so that's why your risk you see why you got to know what your real what you think your risk reward is and your mindset versus what it really is you'll know when you go to the book if I can make a request I would love for you to interview the guy who hired Swenson for Yale cuz talk about the best hire of all time no kidding I mean just the psychological profile in the guy is so unique yeah uh the so a couple things I'd love to to just underscore for folks the first is and and and again this is pulling stuff from the book I'm going to paraphrase some of it but I think it was doio who said something along the lines of uh like losers react winners anticipate that's actually me but that's okay you I'll give it to take that as a as a compliment no but but the point being that the uh and I guess Mark Twain quot is also in there which was what history doesn't repeat itself but it Rhymes yeah so there are going to be crashes there are going to be Black Swan events and you want to have a plan in place for when that happens exactly right and the more you can automate your uh many of your financial decisions you know no when to hold them no when to fold them and actually have a plan going in so if you buy something and have no plan for selling it you're going to be subject to sort of impulse reactions that will cause you to do what the vast majority of people do they they buy high and they sell low so what what is in this what what what we're talking about when we talk about asset allocation among other things just to sort of uh try to try to distill it for people as a concept is that you have uncorrelated or inversely correlated buckets so that if if if one portion of your Investments goes down because of inflation deflation fill in the blank there are others that go up which mitigate your risk that's correct and what you notice and I live in Silicon Valley I'm very involved with tech that's that's have been my sandbox for the last uh you know close to 10 years I guess and what you notice about the best okay 95% so talk about venture capital is very similar to mutual funds so it's the vast majority are horrible as a as a class they're terrible however if you if you pick the unicorns and you use the same term there Reed Hoffman or yeah yeah there are a handful who are very very consistent and so what I've tried to do just like you did with a lot of these hedge fund managers is uh look at what separates them and what separates them is you have the the vast majority of tech investors who think uh high risk High return I've got a swing for the fences I'll be okay as long as a third of my startups lose money a third break even and a third make money would wouldn't be nice if life worked that way yeah doesn't doesn't work that way whereas whereas the whereas the guys who are really good realize that there's a power law distribution one or two of their Investments are going to make up for all of the losses and the the very top of the top even though they don't talk about it publicly if they have a lot of their personal money at play have thought a lot about asset allocation so if they're heavily invested in Tech and it might have an IPO blah blah blah they have uh they have an entire basket of shorts on the NASDAQ or whatever it might be so that by the way it's not always high risk High reward if their Tech goes to hell they have enough money that is betting it's going to go to hell that they don't lose a lot of money if at all or maybe they even make money that's absolutely true and uh so I think the um it's you know a way of doing it that you mentioned I think your brain may have been going this direction maybe I'm wrong but Ray Del actually said something in there that stuck with me brutally he said I don't care what it is that you think you're great at investing in or you like most people invest in what they like real estate or stocks or bonds or what they think they're good at or what they've raised with he said whatever asset class you invest in I promise you in your lifetime it will drop no less than 50 and more likely 70% at some point and he said that is why you absolutely must diversify because you're saying but I can make so much more in this side you know I've had people throughout the years I I teach this bucket Theory this idea that if you want to make ass allocation simple it sounds like such a big word yeah it's just buckets some my money is going to go in a secure bucket that bucket is like a church people I'm going to it's not going away it's very secure type Investments its upside is not gigantic in terms of speed but you know what what it the compounding process if you give it enough time those low returns are giant returns still but you're not going to lose and then there's this bucket called what most people call growth bucket I call risk growth because it's really risk first yeah and on that I'm taking bigger risks for potentially greater rewards and now the question is how do I balance these am I 6040 50/50 8020 and that's designed really by three things number one what's your real risk tolerance it's not what you think it is yeah and they're never the same they're never the same you know I do I do these wealth Mastery programs in few years and invariably I'll do some crazy thing like I'll say every stand up make change they look at me go make change and they start reaching their pockets and making change that's so somebody will pull out five bucks and 10 bucks somebody pull out $100 and they'll someone will come up and they'll take it and give them five bucks and they're like you know they don't know how to react so this goes on for three or four minutes the music's going on I go okay stop right sit down and I go on like I'm talking about something else and in you know invariably somebody's like hey wait a second I want my I want my $10000 back said what are you talking about they said I want $100 back the game's over I said what you what do you think the game was over what you think the game had ever gone over right and who said it was your $100 yeah right and it's like the they it takes a while but they finally get you know I'm stressed about $100 what do you think is going to happen when you lose a million or half a million or 100,000 or 10 grand I mean your risk tolerance is not what you think it is so when you find out what your risk tolerance is and we got great ways to do that in the book and then you figure out really how much time you have if you're younger you got more time to make mistakes and so you can take bigger risks you know you got timeline on your part this part and the next piece is how much is your cash flow what's what's going to be the RO flow if you look at those three things now you can decide how much goes in my secure bucket how much goes in my growth and if you don't make that decision it's the most important investment decision of your life according to everybody I interviewed like what percentage secure what percentage growth and risk then when things come up you're always going to go for the growth risks it's looks so sexy and exciting and I can't tell you how many people over the years have done this they're telling me why would I put money over here when I've got this real estate and I'm making 120% I have a friend that built uh some of the first big condos in Vegas back in the boom time and he he actually went through my programs sold the business he had made $200 million invested in these condos started building the Panorama Towers and places of that nature and he was up to like 34 of a billion I kept saying to him dude take some of your growth money and put it in the secure bucket right how many times I told you this goes tone I love you I made $200 million go you but now I'm you know I'm really like what I touch it goes to the gold I'm listening to his ego and I'm going I love your brother but I said you know how many times I have this conversation and then guess what happens in 2008 how much do you think he lost he was worth 34 of a billion dollars he grown that rapidly in those short years what do you think happened to his net worth oh I'm guessing it went down according to the ray doio prediction but how about minus 400 million oh he didn't just lose what he had he lost everything at and Beyond so then he's trying to negotiate he was he was he was leveraged he was leveraged out WIP himself out so most people don't put enough in the security bucket is the lesson and a guy like Dal you provides you a strategy that's got great sustainability but there are many approaches in the book but you do have to decide how much is secure how much is growth and I show you how to do that in the book and I would emphasize at least I'd be curious to hear your thoughts Tony but for me it took me a long time to think to realize what investing represents for me and it's not maximizing return it's maximizing quality of life yes and there's a big difference yes uh and then for me at least i' I have very kind of barbell strategy where I have super super sa safe stuff and then the the startup stuff but I I need to modify that I want to modify that because it's not currently All Seasons at all and uh the um so so for people out there I think who might say ah you know I don't want to think about it I would just emphasize that you're making decisions every day about where you allocate your time your money your resources so whether or not you want to call yourself an investor you are an investor totally true and if you make no decision that's also a decision ision uh so it's it's important to become literate I think with a lot of these basic concepts which which is not difficult uh I want one thing thing about that people need to remember that everybody's a financial Trader but most people are making a bad trade because they're trading time for money yeah worst trade of your life because you can't get more time we all know it so what this book will do if you're willing to just give yourself a chapter a day for a month or go crazy on a weekend you'll go from maybe not even knowing what these terms sound so complex to being Juiced because you'll be an Insider you will look at the world in a totally different way you'll go that is the biggest ripoff on Earth that'll never happen to me that is where I want to go and you'll make some decisions and then it's not an everyday thing literally you might do rebalancing once a year for 15 minutes I mean unless you're going to be a Traer every day this shouldn't dominate your life but you when did you give yourself the initial education about one of the most important areas of your life there's only a few areas that really impact the quality of your life your body your emotions your relationships your finances your career your business spiritual side of your life how you use your time about a half dozen or so maybe seven areas that really affect you but most people major and minor things they know so much more about [ __ ] that doesn't matter so I'm saying to people give yourself the gift of just a short burst of time so that you can truly look at life and be good at this area and if you want someone to do it for you you can but at least then you lead them you're not being led by them right no definitely and I think that uh you know just like one of the things that sort of changed my world in startup investing was you know any company you invest in should be able to return the fund just as like a general the amount of money that you're investing over X number of years and uh just like the sort of $1 to5 yeah principle with tutor Jones and there there a couple of piy uh heris STS Like rules of thumb that I think will change how you view not just money or stocks but the world in general such as assume in the in the the Dalo uh case that you you know your favorite area your kind of pet investment bucket is going to decrease by at least 50% in the next you know X period to 70 70 50 to 70 even better 70 will get your attention yeah that'll get you attention and and plan accordingly right and uh I think that um it's it's been a very very fun process to read this and also to connect with you over it uh let me ask if I could because I know you've got you've got a lot planned and uh I I also want to finish up the last few interviews in the in the book reading the ones that you did uh I'm curious if there any any particular funny stories or what was the funniest story or interaction you had while researching or writing this book that comes to mind well I think to share one of them already I think is the it's funny now it wasn't until funny in the moment is walking at Carl icon's office so excited so prepared ready to rip open because this guy he's got the greatest returns of anybody out there and very few people know that Kiplinger did the first review that really showed all the numbers I mean oh if you'd invested him in 1968 you'd have a 31% compounded return within his firm versus at Buffett's firm you'd have a 20% return and people think of Buffett is the ultimate guy so like I got these facts figures I'm excited and to have him literally throwing my video crew out the door and then telling me no audio and I'm like how the hell am I going to keep up with this guy capture the no so that would be one a fun moment was introducing Carl icon to Jack Bogle they didn't know each other and they're fans of each other so it's like I came from being an outsider to now introducing them um but most of the time of these guys wasn't as much funny as was fascinating it was just seeing the level of the they play the game it's like with a great poker player you know they know the psychology they know the numbers they know the probability and you just realize why most people are never going to win because you know they're not going to win gold medals against these guys that are playing this game day and night night and day you know so and some of that isn't new to me just because Paul's been my dearest friend for you know 21 years now um but it's it's fascinating to see that in every in every industry in every sport there are a few players that play at the highest level and they have one thing in common Above All Else hunger but it's an unquenchable hunger you have that hunger I see that in you that's why I'm a fan of your work it's like you're going to keep finding the answer doesn't matter what answer you got want to know more and all every one of these people has that and it's fun to be around them because there's energy in every one of these people they have different styles but there's an energy and that energy is driven by that desire that hunger to know more and the the other observation uh that was reinforced by by reading the book was that they also they have principles they they have operating systems that they use and whether you are trying to lose weight trying to quit smoking trying to improve your uh investment returns you can ensure against your lesser Instincts by having a system and putting systems in place so that when you have the impulses that are going to lead to your destruction or eating the cupcake when you shouldn't eat it that you can mitigate against that and it's possible you can set these things up in advance uh I would love to before we wrap up just ask a couple of Rapid Fire questions sure go for it okay uh when you think of the word successful who's the first person who comes to mind gosh I like Richard Branson I don't know why that's first thing popped in my head when you said that only because I think he lives so passionately he lives life on his terms there's no [ __ ] with him uh he's having a good time he's close to his family um lives on an island like I do I guess I but he's an extra extraordinary leverage and very conscious man about society and what to do his Elders program and things like that he's very socially conscious and yet still has a great time so he' be one of the first people I think of probably uh what have you changed your mind about over the years any positions you've taken that you've that you've reversed since uh you don't have to be perfect in everything you do including not eating anything enjoyable that probably be a big one my wife would tell you uh gosh you know over the years there's you're always updating I mean I don't look at it as changing as much as updating and informing myself you know if you thought of it as changing I think you'd find resistance within your own Consciousness own identity and you know identity plays such a strong role but we need to be consistent with what you believe and that's why the political system is so messed up you know somebody can actually grow and they're seen as inconsistent yeah it makes the political system not grow it makes the system locked in place um so I don't look think there's it comes to mind just real directly but I think it's there's a constant upgrading and sometimes it's those two two mov met upgrades that provide the biggest impact yeah uh side note for folks it's also common among the top venture capitalist investors Mark andrees who created the graphical web browser uh one of his Motts for Andres Horowitz is strong opinions weekly held so he's he's he's ready to be corrected or update as you mentioned uh what would people be surprised to know about you um gosh you should ask my wife that question um I don't know if some people would not be surprised at all people in my events would I'm a love bug I'm that kind of guy that I can be brought to Tears by seeing someone do the right thing just and yet I'm you know I'll run I'll run through that wall shake the building with 10,000 people in it um I'm a softy really truly Underneath It All that's what drives all this in me okay I love to see people lit up i' love to see people happy I love to see people freed so I'm going to ask an unusual one given that answer uh what's the first face that comes to mind when you think punchable punchable oh my gosh well I had an interesting meeting with President Obama um it was actually interesting it was it was uh I was invited by Mark benof to uh come it was for I don't know 15 of you know billionaires there in silon Valley I was in in San Jose and it was for the president it was before the the second election his reelection and uh I voted for the president you know so i' been a fan of the president but I was getting more and more frustrated by watching the style of politics which was you know creating greater and great greater Division and there it seemed to me a great level inaccuracy and the promises are being made that very hard not to see and at that time it was the whole thing we're going to raise taxes on the rich and that's going to you know balance the budget and you know I've done the numbers I did a whole video on it shows you can kill every rich person the United States and take all their money and take all the corporations and all the advertising from the Super Bowl I mean I do this whole long gig that came from some statistics a nether man put together for me but I did it together and you can't cover the budget for one year and then what do you do next year right um and so I said to mark I said listen I support the president um but I said honestly I don't know I can support the other side but I don't know that I'm a guy to be there I don't know that I'm a fan and Mark I said Mark you and I are so aligned on so much but you know the way in which you know how Simpson BS was this close and he let it pass we had both sides willing to make some tough decisions is beyond me that just it lacks the leadership that fundamentally the president the United States in my mind has to have that's my judgment I'm just a person but it's like I don't don't understand taking the easy route is not something that's going to sustain or grow this economy long term and and I said and and using the political Capital even though I'm supportive of healthcare using that Healthcare where half the country is upset about it and pushing it down their throat and trying to say it's going to cost less money I mean it's just like there's certain things so Mark says I agree with you I agree with you Mark is the second largest fundraiser for the president so I said well then how the hell you raise all that money he goes well cuz I feel stronger about him than the other guy and he said and you and our line them on so many other things about you know the environment and you know you know people's right to marriage regardless as sexual preference and I said of course we are so he said come come and be there I said I said you know me I'm totally respectful but I'm honest he goes come he said I'll sit you right next to the president he said we'll have a great conversation so I went to this to this meeting and it was crazy you know I've worked with so many presidents over the years but I not been with Obama and it's downtown San Jose they locked everybody in their buildings and literally you know it looked like one of those movies you know when everybody's died and there's nothing left but the buildings it was it was the wildest thing for several blocks took us up in this room there's nobody else seeing there's these 16 people many of which you know from you know cicom Valley and uh I listened and president came in it was really wonderful and he shared you know some comments and said I'm not here to give a speech I'm here you guys have built the biggest companies in the world I'm thinking not me I don't fit that category and so I wasn't going to say anything he said but I really want to hear from you guys so Mark turns to him and says well are you ready for some you know real given take Mr President he said yeah he goes okay who wants to go first and he points straight at me that's what friends are for so I said Mr President I said I've paused I literally paused I shouldn't do this I'm not here they've all paid a quarter million bucks to be here I actually never done this before I went thousand one th try to to see if somebody else is going to say something I said okay so Mr President I said I said I really I want you know I voted for you I know you're a man of tremendous Integrity I share the same values you do I believe but I said I'm really confed confused about two things number one how you think you'll be able to have a you know a second four-year run and get anything done when you have taken the other side and demonized them to a point that they're never going to work with you and my second question if I ever get one would be why didn't you support Simpson Bulls right I said it was right there it need to be done and he you know long paused and he said well those are fair questions and he said uh he said first of all I don't think I've ever demonized the other party ever and I just sat there and I watched him say it I was like are you kidding me I'm I'm not a republican but come on right you know both sides of demonize your kid and he goes and they've been really unfair to me and he went through this piece and I said Mr President that's happened with every president you know to be fair you know that's that's what they both do and it's gotten worse throughout the years for sure I said but what about Simpson BS and he said well Tony and he you know every do a research about who's in the room the president knew he goes well Tony you know your friends your hedge fund friends he said you know they wouldn't like it if we got rid of you know the 15% you know tax they do and they wouldn't and he goes in you know most Americans wouldn't like it if they got rid of their mortgage deduction and you know those things and he said I got a better plan I said the better plan is you're going to raise taxes back to Bush on the wealthy and I said it takes $4 billion a day to run this country and you know as well as I do the estimates of all that money in won't even cover three months of this government spending so it won't solve anything you're going to have to raise taxes on everyone want to cover this and I said so how do you deal with that and so he and I went back and forth and to be fair I'm telling my version of the story I'm sure he' gave me different version of story but there's a point where I was I felt I'm losing rapport with every person in this room but I had to be honest and and finally at one point the secret shman came over and grabbed my wrist he said I think that's enough and the president's uh I wasn't didn't raise my voice the president's um you know to honor him he said no Tony's created some creative tension here and he said I'm not used to that in these rooms but he said it's fair question I said you know trust I just want to know because I voted for you and a lot of people I know that voted for you I don't know if they will again I don't know if they need to you're going to win anyway yeah but I'd really love to know what to tell them about how you're going to govern with this level of division and so at the end I just said well thank you for your time and then everybody else got up and asked questions like will you give a shout to the Jews and things like that no hard balls in there at all but you know it's political environment so afterwards I thought oh my God everybody's going to hate me and then Reed Hoffman walks up to me you know from LinkedIn and says I can't believe you asked in that question goes I can't believe you asked him that he said I've been wanting to ask him that question forever he go said that was good on you and I people coming up to me give me and then the president came around and when he came back around he wents to shake everybody's hand shakes my hand I shook his hand and I grabbed him with both hands and I pulled him close to me I said Mr President I said I'm not some stupid Republican who's just looking for some tax break I said you know this week I fed a quarter million people in San Jose I don't live here I came to do an event this is what I do wherever I go I came from nothing and I don't forget where I've come from I care as much as you care but I said I'm really concerned about your ability to get your agenda done in the next season of your career if you don't find a way to bridge your communication Style with these people intelligence is not enough you've got to build relationship and he stared at me and he said how about you we into my chief of staff and you come visit me in the White House you and I oneon-one for an hour and I was like blown away I thought you know I didn't reach him at all it was mindboggling so Mark was right there he goes that was unbelievable that was I love that you know Mark I love seeing that that energy back and forth you can really help so then um about a week later they were getting ready for these debates and the other side called me and asked me if I would work with their particular candidate privately and I'm not one side of the I I want to see a debate that's real so I work with Mr Romney and that's the first debate they went in and he did pretty well and my invitation was no longer extended so I wouldn't say punch in the mouth but I'd say frustrated because here here's a man who has such Integrity president the United States and I think uh a classic human being who cares deeply smart as a whip but it's you know the failure to find a way to bridge compromise is both sides responsibility but in my mind as a citizen I think the president United States has got to make that happen and their presidents have done that and presidents haven't and I think it's not his fault but we're at a impass politically that is not allowing us to do the things that I think are necessary for our you know put our house in order in this country and easy for an outsider to see it but as a citizen we all have a right to opinion so I don't know think punch but I'd say shake him metaphorically sh that might be a better one wow that's a hell of a story I uh one last question and uh this I think people are really going to enjoy this and I can't wait to see the comments of the questions also uh I have my moments of Doubt dark moments I don't know if you have those those those moments of doubt yourself anymore never what what what do you do uh when you have those those those those those dips when you have those those down moments and uh those moments those moments I've experienced primarily when I found an inner conflict uh that's hard to resolve um and that has been in the past when I'm traveling around the world you know I feel like I'm made to do what I do as a human being I'm certainly not the only human being to help people but I'm able to help a lot of people and I feel it's a privilege and it's a it's a gift and and something that's earned and something that is part of Grace and um and yet I the greatest thing in my life outside of my work and my family is my wife and ironically when I met her she had extreme motion sickness since birth and I spent almost a decade going everywhere CU she would throw up on we never want to be AP and she would throw up on the flight up and on the flight down and she literally lost I don't know 19 pounds which she couldn't lose she was a size zero I took her to every type of physician I took her to every kind of natural healer acupuncturist I took her to NASA the expert there nobody's able to help her I took her to the guy who works the Top Gun Pilots cuz if they lose their vestibular system you know they're dead so he had the system and he was the only one who could help her like maybe 10% of the time not throw up but the process she did this tightening her body created a constriction of lymph fluid and she developed a tumor and so the darkest days are you know what I think I'm made here to do and is hurting the person I love most or I got to be a part and you know corny as it sounds I just I just believed that there was a larger lesson that I need to find a way to break through and we finally did and she no long she doesn't love motion but she no longer throws up on any flight it was ironically an experience in India which sounds so bogus to me but I experienced it she's never thrown up since that time it's mindboggling it's this man who's he doesn't he's not of any particular Faith it's called Oneness and uh he does this form of meditation work where it basically primed your brain to a certain uh way of being and it balanced her body out just amazing um but the point of the matter is I went through all this pain all this questioning all this doubt but I kept asking what's right what's real and I trusted my gut even when it was painful to trust my gut and I found that that's probably the most useful thing the other thing you got to do is sounds stupid hydrate your ass off make sure you rest because in a lowered state of energy you'll doubt everything and in the worst thing can happen if you are what I call energy rich if you are phys ol logically at a peak you can slam anything against you and you'll know um and so that's not to say you won't have those downs but that's what I try to do put my body back in the strongest place that'll put your mind back there your heart is always there and then ask what's right and live it and you're going to still make mistakes and when you do I think it's being forgiving yourself and learning from it and moving the hell on to what's next as quickly as you can so that that experience allows you to help other people and for me the worst events I've ever gone through my life have always been the best events cuz I figured if I'm experiencing this someone else is too and if I figure it out I can help millions of people and that's giving me sanity so I'm not just dealing with my pain or [ __ ] or whatever the case may be and that's that's a big part of my life is ending suffering which is impossible but ending it in areas of people's life is possible and you know it's like I always say you it's corny you know you know suffering is optional pain pain you know that everybody's going have pain in their life but suffering is optional and I really believe I can help people get out of that more importantly than get out of the suffering is to give them an experience of more of the joy that's already inside them and I live live to see that light in their eyes and I'm going to look forward to seeing it you at some point in an event because you'll have an experience of it it won't be this discussion discussion is wonderful experience is 10 times better I always tell people you know a belief is a poor substitute for an experience right you can believe all you want about what you think something is or investing is or what China's like go to China get in the experience go to event then you'll know and I'm a big guy and put people in the experience as quick as they can and let their spirit and their heart and their soul kind of take over and that's what my life's about good Mission it's an amazing Mission uh where can people learn more about the book more about you where would you like them to visit you I'll give you an address but they can go to tonyrobbins.com that's the easiest way and uh the book again is called money Master the game seven simple steps to Financial Freedom and uh uh what I'll do is I'll give you a site and if people decide to do this and they go to Amazon if they'll send me their receipt I will give them something I did for people during the pre-publication period which is I've made three uh videos that are kind of a fast trck so somebody's going like 600 Pages seems like a lot to me well here's this will get you going um I think for a lot of people the audio video approach is a good approach to them and then it'll take them deeper in the book but I do want you to know that uh most people I don't know if you're experienc this most people read the book are entertained because it isn't just like some heavy factual piece it's t it takes you on a journey and it's a journey through financial World which is wild weird crazy stuff happening it's a journey to the lives of people that started with nothing that are the wealthiest people in the world how they did it and your own Journey about where you're going to take yourself from this point on and how do you want to live that life and and experiences that you want to not only have for yourself but what you really want to give and and that's the greatest thing I I I look back and you think about money money is nothing but a tool that you either use for a life of service and a life increase the quality of life for yourself and the people you love or it's used on you as a weapon and I'm big on saying time for it to no longer be a weapon used against you and the only way to do that is educate yourself and you can do it in a way that's really fun and that's what this is oh absolutely so guys check out the book check out Tony uh Tony you've had a huge impact on my life and just to the the entertainment aspect of the book uh I have tons of books sent to me I mean dozens a week as I'm sure you do huge stack uh a lot of the questions that I asked did not require me to read the book and I ended up pushing off probably a half dozen important projects of mine because I got pulled into the book and I remember I emailed you and I said you know it's been 20 years you still have it God damnn like I that feeling the sort of the Tony Robbins response that I had reading your material back in high school and I remember you emailed me you're like high school how old are you uh it's it's a really fascinating read and I know some of you listening or my friends who are deep in the world of Finance you will find things uh whether it's in the interviews at the back that profile some of the uh you know the top performers over the last several decades or within it's it's a really fascinating romp with lots of good stories so Tony thank you so much for taking the time thanks for coming down great to meet you in person finally definitely hope it's not the last all right well be brother thanks thank you thank you for supporting the sponsors of this show I've used them I like them and I think you will too 99designs.com Tim it's the world's largest Marketplace of graphic designers you can see the projects that I've put up the competitions that I've spearheaded including the book cover of the 4-Hour Body and you can also get a $99 upgrade for free so check it out at 99designs.com of course you can subscribe to this show on iTunes you can also find every other episode in the show notes links from this episode at 4our blog.com that's f h blog.com and just click on podcast there's all sorts of other cool stuff including my interactions with people like Warren Buffett Mike of Lincoln Park the list goes on and on and on and I would love your feedback let me know what you thought of this show who you'd like to hear on the show next and any other thoughts really you can find me at Twitter at T Ferris that's twitter.com sltf r r i SS and on Facebook at facebook.com/ Tim Ferris with two RS and two s's until next time thank you for [Music] listening

Channel: Tim Ferriss

Views: 73,997

Keywords: tim ferriss, 4 hour workweek, 4 hour body, 4 hour chef, forbes, timothy ferriss, entrepreneur, author, writer, best-seller, public speaker, angel investor, ferriss, twitter, Facebook, stumbleUpon, evernote, uber, tim ferriss blog, timothy ferriss speaker, Tony Robbins (Musical Artist), Public Speaking (Literature Subject)

Id: -21OntkYTcM

Length: 58min 55sec (3535 seconds)

Published: Fri Oct 30 2015