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the education and things like personal finance like investing like money is almost non-existent I was shocked at the beginning of this semester how little the students knew about really really really basic stuff my students knew next
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to nothing about student loans you say you're not in the money business you're in the happiness business the fire movement is insanity a lot of the stuff that's focused around cutting expenses put you in a position where you're thinking about money all the time
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investing is simple not easy I don't think commission free trading is good I actually pay high commissions on purpose because I'm not going to be ripping in and out of stuff but if you're cheap it'll affect your relationships with other people he's happy to come here and
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have all of us take turns buying drinks he can't buy one goddamn round focus on the big things not the little things minimize debt and minimize risk and try to acheve achieve some kind of balance the things that matter are relationships
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with people and our pets well hello everyone it's Jim o Shany with another infinite Loops I have been reading my current guests material for quite some time today I have with me Jared dillian the author of the famous daily that uh as well as several books um one
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of which we're going to spend a lot of time on today Jared which is the one you have coming out um but I'm also very impressed by the fact that uh you continued your education you went and actually got a master's in Fine Arts and
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you won an award uh for writing so wow congratulations uh on on seeing that through uh well welcome how are you I'm doing great thank you awesome let's start out with just a little background if you wouldn't mind uh one of the
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pieces that uh I always loved of yours you wrote a long time ago which was about the kind of Madness at Leman Brothers why don't you give us a bit of your personal background uh and then we'll jump right into your new book which comes out next year yeah so uh I'm
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from Connecticut I'm from the eastern part of Connecticut um went to the Coast Guard Academy out out of uh high school and I was a I was a math major at the Coast Guard Academy graduated and became an officer and uh went to C for a couple years um and I
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figured out pretty quickly that that wasn't the career for me so I started to think about what I was going to do and I was interested in trading so uh applied to some NBA programs I went to the University of San Francisco um did my
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second tour in San Francisco and while I was there I got a job on the floor of the peos options exchange and that's really where I started in markets was on an open outcry trading floor that was back in 1999 and um kind of parlayed that into
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working at Leman I mean I interview I interviewed everywhere but I got a job at Leman uh did index Arbitrage for a couple years then I was the head of the ETF task for four years so um very successful had a great career on Wall Street uh I decided I wanted to be a writer I
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wanted to publish a financial newsletter started the daily dirt naap in 2008 um around that time I was approached by a literary agent who wanted me to write a book about leing brothers so that was Street freak which came out in 2011 published all the evil
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of this world which is novel in 2016 published those bastards earlier this year I have no worries coming out next year I've written for malen economics and Forbes and I actually wrote for Bloomberg for five and a half
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years so I've done a bunch of stuff so so um interesting because I I have a sort of a similar thing I've written four books but uh I I I never really thought of myself as a writer per se you've actually switched your career pretty entirely yeah to
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writing yeah so you know like you said I went to scad Savannah College of Art and Design and I got an MFA in creative writing um that was I graduated in June and like you said I won the outstanding writer award for my class um congratulations so you know I mean I
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have this newsletter which I've been doing for 15 years and I like to think that I you know make above average calls and people make money off the newsletter but I don't I really think of myself more as a writer first and an and an analyst or a financial person second I
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really think of myself as a writer and you know one of the cool things about my life is that um you know most writers don't get paid very much you know it's not it's not very lucrative and I happen to make a lot of money doing what I love
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you know which is writing so uh write the newsletter I write the substack um actually I'm going to have a book of short stories coming out um after no worries I'm working on that right now it's actually written so very cool I'll have to have you back
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on and and talk just about the short stories Le let's let's get into the book uh which you kindly sent to me uh the pre-print uh and and I thought it was really really good uh the book is no worries how to live a stress free
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financial life one of the first things you you uh tell the reader is listen this is not a book about how to get rich this is a book you say I you have this wonderful thing you say you're not in the money business you're in the
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happiness business yeah expl explain well you know there is such a thing as a personal finance industry like it's a whole industry of giving people advice on Personal Finance you have Dave Ramsey you have Susie Orman you have Robert kosaki and then below
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them you have like thousands of bloggers like bloggers and YouTubers and stuff like that and you know what I noticed was that all of their advice is really focused on making people the most money right really like you know number go up like how do I get the most money
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and a lot of the things that they were asking people to do were things that would increase their stress right right so you know just for example uh you know one obvious example is you know uh Rich Dad Poor Dad kosaki wants people to buy a bunch of rental
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houses and rent them out and take out a bunch of debt and buy laundromats and businesses and stuff like that and that causes stress when you take out a bunch of debt debt is a source of stress that causes stress and other things you know
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like Dave Ramsey with his envelope method and stuff like that and a lot of the stuff that's focused around cutting expenses put you in a position where you're thinking about money all the time like even the decision of whether to go to a soda machine and get a soda for a
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dollar becomes this complex decision-making process about do I need it can I wait until I get home I'm thirsty whatever like so it really gets people thinking about money all the time and I think the ideal state is to get to a point where you don't think about it
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at all you never think about it because there's better things to worry about than money there's a lot better things to worry about than money like family kids job you know like there's all these other sources of stress and money stress
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is completely avoidable depending on how you structure your life you know uh I love that stute of the book and yet money is such an emotional topic and you know I I often joke it's the last taboo you know people will talk all day long
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about their sex life but ask them about money man and they they clam up and and one of the reasons I think that is true is that as one of my favorite authors Robert Anton Wilson says uh he he calls money fun coupons even what he calls it
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right is uh this idea that you you got to have so many of these fund coupons are so much cash Etc and then I find over my career at least I found that a lot of people tie a bunch of extra stuff to money like am I good enough am I providing for my family you know and as
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you would have it that is a huge source of stress right why do you think why do you think that it's money as opposed to you know it could be a bunch of other things it could be like Oh I'm a PhD or oh I'm a great artist yet so many people
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just put tie so many aspects of their life into money why do you think well a lot of it's about self-esteem you know what I mean a lot a lot of it's about self-esteem and actually I want to go back to your original point for a second where you said that people don't talk
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about money there are some people that talk about money Wall Street people talk about money all the time they love to talk about money they talk about their bonuses they talk about how much money money they made on trades they you know
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they love to talk about money and one of the funny things is is that if you take a Wall Street person and put them in a conversation with a bunch of University professors it's like that this person's talking about money and it's like it's
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like bad like you shouldn't do that like so but a lot of it is a lot of it is self-esteem um I mean having worked on Wall Street I can tell you that there is an emotional aspect of it there was one year where my bonus was the same as the
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year before I had gone up every year and then I was flat for one year and that that there were there were emotions associated with that like I just I was like I was like oh my God like is is is this the end of my career does this mean
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that my career is flatlining after this like is this as good as it gets you know so there are a lot of emot emotions associated with it uh and when I was referring to most people I was I I I was excluding our Financial types right um I meant uh in
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when I would when we used to handle uh individual accounts for high netw worth people I would often speak with them and those that was kind of the group that I was referring more to but you're right about Wall Street Giants um uh having been there myself you know
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the the goal of the book is as you point out uh you want to get people to the point where they never think about money ever is that realistic no it's not it's not but it's a goal like I think it's something that we should strive for um you know before we
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came on the call today uh I went to The Bagel Factory in town right and uh I took my intern I have an intern and we got two chicken salad bagels and it came out it came out to 19 bucks and I thought to myself I'm like that's funny the last time I was in here
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it was 17 bucks you know what I mean so I was like you know so so you spend like a split second thinking about it and then and then you know like rationality takes over and you're like all right it's two bucks it doesn't really make a
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big difference like it's fine you know so but really like you know one of the curses of what I do for a living in writing a financial newsletter is I have to think about money all the time always thinking about trade ideas and put this
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on and put that on or whatever and it sucks I hate it like I really wish like like I I wish that I could just like sit in my house and write books and operate in the vacuum and not have to think about it like it's you know I I really it's not it's not it's not to say
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that I don't like my job because I do but it it brings an element of stress into my life which I really don't want you know yeah and uh do do you look at that as kind of a a dichotomy I mean in other words you you've got the some great
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short stories coming out you've got other uh literary Endeavors that you're very good at uh do you ever see a time when you stop uh writing the daily dirt map uh yes for sure so there's there's whole bunch of things I'm thinking about
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doing uh other business ventures um you know parallel to the book is I started a personal finance business called Jared dillian money okay so the website is Jared dillian money.com and uh we I've written up some products I actually have
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a whole master class on bonds I have a class on the awesome portfolio where adding a whole personal finance course so ultimately I would like that to be really successful uh and make x amount of dollarss a year and then I can either scale back or walk
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away from the daily newsletter like that would you know in an ideal situation that's what I would love to do so yeah and uh you brought up a couple things there uh I think we both love entrepreneurship we're gonna talk a bit
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about that a little bit later because you've got some great ideas there but you brought up your awesome portfolio which I find interesting I'd like to talk about a little bit Yeah your awesome your awesome portfolio is simple boring and diversified I love simple
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boring and then adding in the Diversified it's 20% stocks 20% bonds 20% cash 20% gold 20% real estate and you note in the book that since 1971 it's up annually about 8 .1% biggest draw down at least and unless you've bet a bigger one biggest
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draw down was in 200 8 minus 99.8% and for our listeners who don't remember 2008 minus 9.8% would maybe put you in the upper two desiles of performance for that particular year so uh talk to me about like you know there's the classic 6040 that most
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financial advisors uh try to put their clients in I've heard the you know take your 100 minus your age and like if you're 60 you should have 40% in stocks and 60% you know all you know all of these rules of thumb why did you why did you
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pick this one in particular and the uh specific question I have is 20% cash wow that's pretty high yeah so bunch of questions there let me back up for a second so I had been kind of working on a portfolio like this for a number of years and I had back tested a bunch of
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stuff the key with the awesome portfolio is that it minimizes volatility and draw Downs okay so it returns 88.1% a year but you get half the volatility of an 8020 portfolio which is fantastic so let's say you have two choices A and B
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Choice a is the S&P 500 okay the returns are great 9 10% a year something like that the returns are great but if you invest in an index you get the returns of the index but you also get the volatility of the index volatility of the index is pretty high I mean S&P 500
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is volatile on average it moves like 1% a day 16% a year like and you have massive draw downs from 2007 to 2009 there was a 57% draw down you have had four 50% draw Downs in the history of the S&P 500 right so there's a pretty good chance that you're going to have
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one in your investing career now my position on this is that the index fund industry which Vanguard is a part of what they the advice that they give people is just a dollar cost average into these index funds and write out the draw downs and
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keep dollar cost averaging but emotions take over like we're talking about human beings here so emotions take over so inevitably what happens is is that people dollar cost average in the good times but they don't in the bad times and maybe they liquidate everything and
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then they stop compounding and that's really the key like you have to stay invested and keep compounding so what I wanted to do was to build a portfolio that had minimum volatility minimum draw Downs that you could really just set it
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and forget it and not think about it and in the worst year you would be down like 10% which is not a big deal at all yeah that was uh for many many years that was my white whale I was looking for a uh allocation that is very much like yours in the awesome portfolio
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because you know one of the things that I when I was young and I was uh uh doing all the research and uh publishing like what works on Wall Street Etc I always was going for maximum return and then of course uh I started dealing with actual
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investors and uh you know that led me to quip that the Four Horsemen of the investment apocalypse are fear greed hope and ignorance and and and the fear aspect I think is actually more damaging right and I think it's damaging for the reason
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that you brought up the the challenge is volatility turbulence whatever whatever you want to call it is the thing that I've seen more people get shaken out of positions in markets than almost anything else right because they they
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hyperbolic discount uh the future everything is just what's in front of them at that particular moment and they throw in the doll I used to say that uh you know an active investor faces two forms of uh failure first is he he or
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she picks bad stocks okay and they underperform their relevant index or they get washed out uh emotionally uh because of Market General market Behavior Uh index investors ETF investors Bas one which is the emotional one getting washed out as you say dollar
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cost averaging when prices are high not doing it when prices are low and I stopped trying to reform people because like as as as as much as much and man I I'm usually pretty good at reframing stuff but I gotta tell you Jared big fat zero was my score there like I I I still
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remember 08 going to one of our longterm investors and uh as I entered his office he he was had a pretty big office he was sitting at his desk looking at the door and I walked in with one of my colleagues and he goes like this he puts
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his hands up and he goes oan SE I know you got a bunch of charts and graphs in that breach case telling me why I should be not only holding but adding to positions here but I don't give a I'm not gonna do it because a I gotta
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keep my clients they think I'm a nutcase for even still being in in the market Etc so it it seems like we are predestined to uh you know investing is simple not easy right and and so what's been your reaction to the awesome portfolio well so you mentioned cash and
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I came up with this uh in 2019 when rates were zero and a lot of the push back I was getting is why do you have 20% in cash cash yields nothing I'm like wait and see wait a minute wait and see so so I mean so now cash yields 5% which looks looks pretty
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good and uh so that was that was a little bit of the push back I was getting you know one of the things about the awesome portfolio that makes it good is that you get exposure to inflation through gold through stocks and through
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real estate like you do have some gearing to inflation one of the disadvantages of the awesome portfolio is that you are exposed to higher interest rates so when you mentioned the Max draw down in 2008 was 99.8% there there was actually a bigger
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draw down in 2022 of about 12% because of higher interest rates and what it did to stocks and bonds and gold so um so that's really the one vulnerability of it like in in a in a very rapidly Rising interest rate environment there's really no place to
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hide but then again you have cash which helps you know so definitely um and and yet um it well you you'd be putting a lot of investment advisors registered investment advisors out of business if everyone adopted this particular one right that's my goal that's my goal
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yeah you know another thing that you uh go on about and and I agree with is this idea that there you see a lot of advice out there uh you know I guess they call it the fire movement and and some other stuff like like that that basically
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don't have that Starbucks don't have you know that uh extra fancy dessert don't you know it's it's basically in my mind at least it it creates kind of a a consistent and constant mindset of Zero Sum right that like literally it's the small choices
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according to them that make you rich in in the future I know you differ with that explain your your way looking at it so let's just do the math on it so I I go to Dunkin' Donuts every morning every morning and I get an iced coffee even in
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the winter I'm like one of these freaks that drinks iced coffee in winter so $3.7 cents 250 days a year it's like 900 bucks okay I'm G to work for 40 years 900 bucks over 40 years is $36,000 if I put that in the S&P 500 over time I'd have like
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$150,000 okay the math checks out you can absolutely do that if you gave up drinking Dunkin Donuts and you invested it you could have $150,000 at retirement the problem is is that people cannot give up small luxuries small luxuries right they can
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give up large luxuries but they can't give up small luxuries and a large luxury is okay I'm G to get a 2,800 SQ foot house instead of a 2400 sare foot house and that's going to cost me an extra $150,000 and the interest on that over
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30 years is going to be $200,000 so you're like so so somebody will get the big house and they'll spend an extra $200,000 in interest and they'll give up drinking coffee it doesn't make any sense the house is like 5 years worth of coffee so people focus
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on the little things which really do not not matter at all and when they focus on the little things they make themselves miserable absolutely miserable like you know I I don't want to get gross on the podcast but the reason I drink the coffee is it facilitates digestion okay
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like I have to go to the bathroom so if I don't go to the bathroom for 40 years I'm G to be pretty pretty grumpy you know like I'm going to be pretty upset like people like you can't tell people to give this stuff up so you mentioned the fire
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movement the fire movement is insanity because what what the so just to back up and explain it for people who don't know what this is the fire movement says that you should save 70% of your income for for 15 years once you graduate from
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college then you retire and you live off that for the rest of your life okay so basically what you're doing is you're living in deprivation for 15 years so that you can live in depr ation for the next 50 years and really it's an anti-consumption movement it says that
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consumption is bad consumption is evil right and like the reality is is that buying things bring us it brings us happiness like material things bring us happiness it's not not to say that you have to buy a Lamborghini but you know
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buying a new t-shirt buying a jacket buying airpods like these material things bring us happiness and it's not wrong to want to have these things right and if you put yourself in a position where you have to save 70% of your income and live like a monk so that you
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can live like a monk for the rest of your life and and by the way the whole time that you're doing that you're watching the market go up and down 2% every day and like stressing about whether this money is going to last your entire life it's
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nuts yeah and and you put it very colorfully cheap fors high rollers and which I love and you you end up uh advocating kind of for what I would call the Buddhist middle path uh that uh you you really shouldn't be on either end of
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this spectrum um is is that primarily because of what you just said right that oftentimes these small luxuries right like your duckin Donut's uh coffee or whatever I mean you know the the extra dinner with your significant other uh
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etc those actually add happiness to life now uh hopefully um and and so you basically argue that you've got to get the big decisions right right so you could don't sweat the small stuff get the big decisions right if you don't mind bring us through some of what you
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view as the biggest decisions people people make in the financial well one of them I mentioned it's the house that's the biggest one and people you know we have a very institutionalized even socialized housing market where uh the
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whole system is set up so that it's very easy to buy a house uh you have a realtor you have fny and Freddy you have Mortgage Bankers you have Banks like it's very easy to buy a house so when somebody goes in to sign the closing documents it just it doesn't feel like a
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big deal but it's a huge deal you're borrowing a massive amount of money it's a massive amount of risk you have huge amounts of Leverage like it can totally go pear-shaped it can totally go pear-shaped so people don't have an appreciation for how much risk buying a
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house for most people is going to be the most important decision they're going to make in their life right that's number one number two is buying a car which is a little bit of a smaller decision right but it's one of these decisions that's
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kind of wrapped up in ego and people sort of associate like oh I I should buy a BMW or Mercedes and people will think I'm a big shot like really like a car is the worst thing that you can possibly buy we all have to do it we all have to
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buy cars but if you finance an $80,000 BMW and pay $35,000 in interest plus the maintenance and gas and stuff like that the car depreciates to zero like it's just setting money on fire and the third one which is also a big one is student
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loans so so you know I talk a lot in the book about you know there's in most cases you should not borrow more than $40,000 to go to college and the thinking there is if you borrow $40,000 and you graduate from college and you get a job where you make $60,000
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a year you can pay it down $88,000 a year for five years and you can have it paid off everybody should have their student loans paid off in five years I know lots of people in in their 40s and 50s that are still paying off student
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loans it's bad right now there are some cases it's it's it's more nuanced because there are some cases in which student loan debt is okay if you're going to a top 10 school if you're going to a Harvard or a Stanford or an MIT or
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something like that then you know the the opportunities that you're going to get by going to that school are going to be massive and it really is worth whatever you pay to go to school but for the vast majority of schools that's absolutely not the case probably the
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biggest offender these days are law schools we have a huge amount of lawyers in this country there's more lawyers in the United States per capita than any other country in the world by a lot and most lawyers don't make a lot of money like if you go to a third tier law
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school like you might be making $40,000 a year and you have $200,000 in student loan debt it just doesn't make any sense so yeah and and what do you think it is because another one that you you say hey one of the most important decisions
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actually as far as this stuff goes is who you marry talk about talk about that a little bit well you want to marry somebody who has similar values as you in terms of money I got married when I was 23 years old I super young uh she's
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she was the same age um she actually just turned 50 I'm still 49 I'm 50 in a couple of months um we both came from poor families I was I wasn't really poor I was like I would say lower middle class but she was she came from a poor family like a very poor family and we
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had similar values when it came to money so we moved in together after we graduated from college you know I I went to the Coast Guard Academy she went to Penn we moved to Washington State and we saw like 12 different apartments and we
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got the cheapest one it was $350 a month we got an apartment for $350 a month I was driving a Toyota tcel uh she was driving some mitsubisi piece of terrible car and over so two the first two years after gr graduation I was getting paid 20,000 a
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year she was getting paid 20,000 a year we save 50% of our income after two years we had $40,000 saved up we moved to California we bought a condo used all that money for a down payment on a condo and that condo we bought for 170,000 and
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two years later we sold it for 300,000 so at age 27 two poor kids that didn't have any money we had no debt like zero debt and we we had a positive net worth of $200,000 because we had the same values on money right if I married somebody who was a high roller who liked
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to spend money and go shopping and stuff like that we would be getting in fights about money all the time and it would be miserable and also it works the other way you know for somebody who's who likes to spend money for somebody who is
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a high roller you can't marry somebody who is cheap because you're just going to be getting in fights all the time so yeah and I like the way it all goes along that more stress less stress t uh line right so when when you marry somebody who you have similar attitudes
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about uh investing money Etc that seems quite uh reasonable to consider you also say a couple of other things though that I'd like you to explain so the first one you say is don't uh mix your finances keep your finances separate and and then
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the other one which uh I many many people do and you're advocating they don't hey don't don't lend money to friends and family oh yeah oh yeah so so I've been married for 26 years um I make 93% of the money my wife makes 7% of the money we still keep our
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money separate we have separate accounts separate everything if we have common expenses like a mortgage or utility bills or whatever we contribute proportionally okay so basically we just zel money back and forth and seems like a pain in the ass but it works for us in
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26 years we have never thought about money because if I want to spend money on something stupid it's my money she can't say anything about it whereas if we had a joint account and I was buying stupid stuff out of the joint account we
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were getting the fights something I'm spending a money on right now is a cat psychic I I am talk I am talking to a psychic to my cats okay and I got to tell you it's $85 an hour it is the best money I've ever spent my wife who is a
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scientist and doesn't believe in this stuff at all she thinks I'm insane but she whenever I tell her about the cat psychic she's like that's why we keep our money separate you know any insights from the cats oh it's incred it's incredible I can recommend I I'll
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talk to you offline yeah you you you might have seen uh the piece over the weekend they think that they have discovered that whales actually have a pretty Advanced language and it was suggested that uh we set the AI to work on trying to translate it so we can talk
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to them what do you think absolutely absolutely yeah yeah I yeah I agree uh now what about the loaning money to friends in family wh why the prohibition there all right so there's basically two scenarios here you have a family member
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let's say a brother-in-law who is down in his luck and he's out of cash and he he needs money okay and then you have another scenario where you have a brother-in-law who wants to start a business or needs money for his business or whatever the
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first case this is a person who is exhausted all other possibilities they've maxed out their credit cards uh the bank won't give alone like basically the last thing left for this person is like payday loans and title loans and stuff like that so you should not extend credit to
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somebody in that situation right they're coming to you because it's the last resort and look there are situations when you're dealing with family there's other concerns and it might make sense to lend this person money in order to
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keep up family appearances and stuff like that but you have to structure it in such a way you like basically you structure it as an infinite Term Loan and you just say pay me back when you can okay and the reason you do that is if you loan this person 5,000 bucks and
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they don't pay you back they're not going to come to you for more money right and when you do that you consider it a gift you consider it a gift in your mind when you write that $55,000 check it's gone it's a gift right because if you don't do that if you don't consider
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it a gift then you're going to be angry at this person if they don't pay you back right and then it's going to cons you're going to be consumed by anger and it's going to stress you out the other situation where somebody wants to borrow
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money for a business like you just have to evaluate this critically because is this let's say it's a tractor business right okay your brother-in-law's tractor business like Okay sounds like a good opportunity but out of the universe of
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all other possibilities that you could possibly invest in is this the best investment or are you just considering this because it's your brother-in-law you know so and uh have you ever been in these situations yes I have I have and and and
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my guess is that's why they made their way into the book uh no but I mean I you know it's there's I've talked to a lot of other people like I I loan money to a family member one time it was a small amount of money it was 2500 bucks and he was basically
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just like he had liquidity issues he's like I'm getting paid next week I'll pay you back next week and I was like all right so I wrote the check it was a gift and he paid me back next week and it was fine right so um but I've heard of I've
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heard of much bigger larger amounts of money that have torn part families because people haven't paid the money back you know yeah um and I you know my solution for that uh is essentially if it's a family member or somebody I'm very very close
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to uh I I just call it a gift as opposed to a loan and uh that seems to work well because uh it it kind of it it it relieves the stress on both parties so to speak um as opposed to just me I mean I can definitely see your way of doing
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it as well you know on on the subject though like so uh one of the other things that you say is you well you actually say this in in bat in your bastards essays but you had a incredible uh willingness and desire to work hard work for a long period of time
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uh um and you know that's how that's how you got into the situation uh that you're in how would you respond to somebody reading your book who let's just put it uh as politely as we can uh isn't uh interested in in working super hard or or
40:18
long I mean it's going to be interesting when this book comes out to see the reaction to it you know especially the first chapter um the F the first chapter is a little bit of tough love you know what I mean and in the first chapter I say that look
40:34
if you know in order to get money you have to want money which it seems kind of obvious but is you know actually true and most people kind of intellectually want money but they aren't really willing to do what it takes to get it you know what I mean so but if if you
40:54
talk to anybody who's super rich it's it like it's never been easy for these people it's never been easy so you know I stand by the book 100% um and I hope I hope that that first chapter the first couple chapters can really get people thinking about
41:15
like oh May hey I could get a second job or hey I could start a business or hey I could get a raise or you know these are some things I could do to get more money um you know I'm even even myself I'm not strictly motivated by money like if if I
41:31
wanted to make a ton of money there's a lot of things I could do I could start a hedge fund I could start a CTA I could do all these things I don't have a desire I want to be a writer you know so I mean that kind of puts a cap on how much money I can make but this is what
41:47
makes me happy but what you know what that means is when I look at somebody who makes 10 20 30 million bucks a year I don't have Envy or resentment at that person because they've simply chosen a different path you know so yeah that's a
42:02
that's a very enlightened way of looking at it um I I wonder how many people could actually have that kind of dispassionate F right because of the old mimetic desire and all that kind of stuff you see somebody's making a lot of money it's just pretty easy I think Envy
42:17
is one of the worst emotions possible because it does more damage to you than it does to the person you envy was was wasn't there a Charlie humer quote about Envy like Envy is the worst of the seven deadly sins because you don't even get
42:30
to have any fun while you're doing it yes exactly exactly what what what do you think though about the kind of the sensitivity to starting conditions right so you know you've got me a boomer I was lucky as hell right I I loved Wall Street in the early
42:54
1980s all of my contemporaries thought I was a sucker all of my contemporaries were like still uh key to the business week uh article the death of equities everyone's like dude you if you want to do that stuff you do hard assets
43:11
Commodities Etc and then like I had the prol longest decline in interest rates at my back as I was starting my investment career they compare that to like a millennial right they come son good example he came and started working for
43:29
me guess when 2007 2008 so personally I think that might as somebody whose job was Financial uh investment advice not bad right because he had to go right into the fire but you think about the client end of things man so like for me I had the 70s which sucked but then I
43:54
had the 80s and 90s uh and like one of the longest bull markets in American history uh versus a millennial or even worse like a Zoomer like everything is just like exploding do you think that that materially changes the mindset
44:11
depending on what kind of zech guys financially they find themselves uh I don't I mean I'm an exer right I'm an exer so I'm kind of been between you know uh Boomers and Millennials a lot of people are really focused on people starting points you
44:26
know whether somebody comes from wealth or whether they don't come from wealth or whether they grew up poor or whatever um there's I can tell you that as somebody who grew up lower middle class and worked on Wall Street there was a lot of
44:45
obstacles to being successful that were above and beyond my education or anything else like um you know I was working with with people who were groomed for that job since a very young age they came from Wall Street families they knew how to dress they
45:06
knew how to talk to clients they knew how to eat at dinner like I did not know any of these things and I had to pick it up very quickly you know I don't I'm not I I mean it's a very it's a very conservative thing to say but I don't really give a I don't you know I
45:22
don't really care like what circumstances you came from like it you can succeed no matter what you know and I'm an example of that and my wife is an example of that um like it just it literally does not matter so the other thing is is that you can't predict the
45:37
future um you know you don't know like things are tough on Millennials and Zoomers today but maybe it'll be different in 20 years like you know it's tough to say so yeah um what what do you think about this whole like one of the
45:53
things that I've been noticing recently is uh financial advisers especially younger ones uh have been trying to uh distinguish and and redefine uh the difference between wealthy and Rich um you know back in my day wealthy was a euphemism for Rich and so so it's
46:19
it's been harder for me to now now they make some good points but like I guess wealthy they they take to mean you you you've understood what enough is right so like I guess they have that number or that situation because that's not always
46:39
a number right like so maybe one guy who wants to Surf all day is going to have a very different number of enough than another guy who wants to travel the world right um so what what are your thoughts about about that and and then the the follow on there would
47:00
be you know personal fulfillment does it require some level of financial success do you think so let me tell you a story I know a guy in Myrtle Beach who was homeless for eight years lived in a tent um mostly by choice like he he didn't
47:20
really feel like getting a job and he didn't mind living in a tent and he was he was perfectly happy but he decided to stop being homeless and you got a job in trucking and I remember he told me he was working in trucking for about a month and he had a paycheck and he said
47:38
he ate steak and shrimp every day for two weeks and he felt Rich right he he said he said literally I feel rich like I spent the last years in a last eight years in a tent and I now I'm eating steak and shrimp he's like this is amazing like I feel rich so
47:56
I think these are all I think these are all sort of relative relative terms like I don't think you could say wealthy is having 20 million in assets or 100 million in assets or anything like that I really I really do think it's it's a
48:08
state of mind you know I think it's I think it's where you are in your path um I forgot the second part of your question I think what I said was G does personal fulfillment and happiness does that require a certain base level of financial
48:24
success um I don't think so you know um you know I'm speaking as somebody who's a writer right how do you measure success as a writer well you uh you are writing 5,000 word articles for Vanity Fair or you're getting short sto stories
48:45
published in literary magazines or you publish a book that sells 7,000 copies like these are all these are all measures of success you know um there's Maybe 50 to 100 writers in the world that make more than a million dollars a year you
49:01
know so um I think if you're I think if you're professionally successful like I don't I don't think I don't think like that means that you have to be wealthy as a precondition you know what I mean like I think I think that that could could be anything I you know what's
49:17
funny is I was watching skiing over the weekend I was watching women's Slalom skiing and uh Michaela shiffrin won so I was like I Googled her I'm like I wonder what her net worth is you'll never take a guess as to what Michaela sheffron net worth
49:33
is uh just stab in the dark uh and putting endorsements in uh I'll say $15 million $2 million wow2 million y okay so she's the most successful female skier probably in history and she she's worth two million bucks I mean skiing is not a sport even
49:58
with endorsements where you make a lot of money and she do she's the best in the world and she's terrific and she's really good at it and she is successful you know so um so really contingent on on what you love and and what you don't one of
50:16
the things I think that we have a mutual love for is the idea of Entrepreneurship and uh you make several points are kind of interesting that link in to not only entrepreneurship but also with like if you want to make mad Stacks right um you say hey think bigger right uh prepare
50:39
yourself to blow up your identity that's what I want to really hear what you have to say about that and and uh just the the fundamental I guess active agency is what I would call it uh you've got to kind of be a high agency person to be an
50:55
entrepreneur right yeah I mean when I was talking about blowing up your identity like I think the example I used was somebody who was a teacher and you know we pay teachers like crap in this country and it's scandalous and they
51:07
should get paid more but in South Carolina if you're a teacher you're going to make about 35 40,000 a year which is not really enough to live on like it's pretty terrible so you know if you're a teacher you say gosh I wish I could make more money well probably
51:24
what's what that's going to require you to do is change careers you know and do something completely different which from a psychological standpoint is hard because if you're a teacher like your entire identity is wrapped up in being a
51:39
teacher and there's also certain social currency in being a teacher because you're an educator and you're helping kids and stuff like that so people generally like teachers um you can make more money as a real estate agent but people generally
51:53
don't like real estate agents so so so there's just like you totally have to blow up your identity and do something completely different I mean I have done that twice in my life I was a Coast Guard officer I was essentially a cop I was a law enforcement officer I
52:12
did law enforcement in Intel and I said nope I'm G to be a Trader and I completely switched and I became a Trader and then I said nope I'm going to be a writer and I SW completely switched and I became a writer I've reinvented myself twice in my life you know and
52:27
it's I actually find it to be fun like I think it's I think it's very cool like I I enjoy doing it so speaking of education do you think that I mean I think we'd probably be in agreement that the state of education in general is
52:41
pretty abysmal but the education and things like personal finance like investing like money is almost non-existent uh in terms of at least at the general uh high school college level uh any ideas for how you would change that well I'm actually I'm actually
53:02
doing that on a local level like I'm teaching at Coastal Carolina University I'm teaching a personal finance class um and it's fantastic you know there are some states which have passed laws I think South Carolina is actually one of
53:18
them that is requiring teaching Personal Finance in high schools um so that started to happen um that I think that's a good thing but it's also it's it's not a cure all because you know the quality of the education really depends on the person teaching it
53:40
um you know I can tell you that my students you know I guess I would consider myself to be a personal finance expert you know I've been doing it for a long time and they're getting their education from somebody who's like the top in their field um you know somebody
53:55
in high school that may not be the case but it's probably better than nothing you know um like it I I was shocked at the beginning of this semester like how little the students knew about really really really basic stuff like credit
54:12
cards and debt and stuff like that they just they didn't know anything so one of the things that you also talk about in the book is that debt and risk are the basically the the two causes of financial stress yep and and so I'd like you to elaborate a little bit on that
54:32
and then just kind of going back to your observation about your students what aspect is it like that seems pretty straightforward to me right like if if I'm taking x amount of money and this is what I got to pay in interest you know I can pretty much
54:48
calculate whether it's going to be beneficial to me or not risk a little tougher right because you you might you know we get return chasing and we get F and we get all that kind of stuff but what do you think the fundamental
55:03
misunderstanding especially with the kids that you're uh teaching now but also just people in general with what why are these so um difficult for people to get a handle on what that debt and risk are the source of stress yeah no no
55:21
the uh the lack of understanding right of debt of various risks Etc yeah and and like you're teaching the class right now um and as I said like that risk is is trickier but that like that's kind of math right it's arithmetic for the most part A lot of it is
55:48
education um I can tell you that in my class my well this is kind of the scary thing my students knew next to nothing about student loans right so I said in class I'm like do you guys know that you cannot discharge these in bankruptcy
56:06
like if you go bankrupt you still have this debt they had no idea they had no clue like they it's it is the worst kind of debt and they had absolutely no no idea like so I mean it's it's been it's been a process to educate these kids um but the
56:32
the other thing is is that you know they're not making payments on them yet and not all these kids have credit cards and for the most part their parents bought them cars so they're not really at the point where they're experiencing that stress where they're making
56:46
payments you know um so it's really more of an abstraction it's it's just kind of academic to them um it'll become real after they Gra graduate so do you think that there's like a tech solution do you think there could be an app where people
57:02
who like are clueless about debt are clueless about things like Risk um where you know just basic financial planning um or or are we gonna still fall uh victim to all of the normal foibles that screw us up but we're dealing with money and and uh that
57:24
type of stuff I think he just gave me an idea for a business good I have a very low F spirit so uh I I actually would be surprised if that did not already exist I would be surprised if somebody hasn't already tried that so yeah I but you the thing
57:47
about the thing about personal finances personal finance is hard it's really hard like it's actually more interesting than institutional finance and institutional Finance if you have two options one is optimal one is suboptimal it's pretty easy to figure
58:04
out but personal finance is like a big linear optimization problem so when you ask somebody a question about whether they should pay down their mortgage or contribute to their 401K it's a very complex question there's all sorts of
58:22
inputs like it's it's super super interesting you know yeah and uh it makes me also wonder about things like you know Robin Hood for example do you think Robin Hood which for those who don't know it is an app that young people embrac especially
58:42
during the pandemic um and uh I'm I'm all in favor of investment education especially for the young and personal finance education like you are are are doing but like then I saw Robin Hood and it kind of looked like a game app and I wondered you know
59:06
is that so on the one hand I'm like oh well good kids are going to learn about it they could have an account on a platform that they're familiar with right on a phone um but then of course we see that basically it it just really was design more like a gambling
59:26
site than like a Burbridge site what what do you think about things like that yeah I actually I think there's an argument for making investing hard I think there's an argument for making it hard instead of making it easy or at least you know not turning it into
59:42
a video game you know um like I remember when I opened my first brokerage account it was 1998 uh it was a merit trade not TD amerit trade but a merit trade and um I guess Joe mowley was probably running it at the time and I don't remember what I
1:00:03
had to do to fill it out I mean there was the internet in 1998 the internet was there uh I guess I guess I I I don't think I I don't think I filled out an application online I think they sent me forms and I had to mail them back and you know and
1:00:19
it was there was this waiting period involved and then I got this online account and I had like 2,000 bucks in it and my first trade was I bought Philip Morris uh I bought like 60 shares of Philip Morris or 40 shares or something
1:00:36
like that but it was hard like it was it was it was hard to do and you had to be pretty motivated to do it you know um like I don't you're going to get me going on another tangent which is I don't think low fees are good thing I I don't think commission free trading is
1:00:58
good commission free trading is terrible you know what happens when something is free if you have like a company function and you have free pizza people overc consume free Goods they take all the pizza they bring bags they bring it home
1:01:11
they never eat it they just bring it home like people overc consume free Goods so if trading is free people are going to trade a lot which is the opposite of what you want them to do you know there should be commit on stock trades just from a behavioral standpoint
1:01:28
in my experience the people who have done best investing are people who got financial advisors paid fees got load mutual funds right paid a 3% load held that mutual fund for 30 years they never sold because they're they're amortising
1:01:46
that sales charge paid High brokerage commissions they buy and hold stuff forever because of the transactions costs you know I I could easily trade on erade or one of the other platforms I have a brokerage account with one of the big Brokers and I pay like $150
1:02:05
commissions on purpose I actually pay high commissions on purpose because I'm not going to be ripping in and out of stuff I'm G to buy something and hold it for a long time you know so interesting so it's almost like a forcing function
1:02:21
with you right because if if you were just uh Spock here you'd say well if you're going to be buying things for a long time and you know that about yourself then you should probably go for the lowest cost of that trade because you
1:02:35
know you're you're going to hold it for a long time and what I hear you saying is the it's the free that gets infectious and and it maybe even who's Someone Like You who's Resolute about holding something for long the idea of having no cost to change your mind
1:02:55
uh is one that makes it uh you still be willing to pay that higher fee yeah yeah um that's a that's an interesting thing it reminds me of uh when I was a kid my parents had a tiny tiny little uh vacation place on one of the um Bohemian
1:03:13
out Islands Alo and uh the neighbor and and when I say small I mean small like these were tiny little Bungalows and and uh it transpired that all of a sudden one year there was just a bunch of I I guess as my elderly as our elderly
1:03:32
neighbor down there put it um you know kind of like not the best kind of people she said and and she looked at me and I said well why do you think and she looked at me and she goes free drinks ruin everything so that's very much in keeping with with your idea about you
1:03:57
know kind of having to pay up uh and taking it more seriously um what do you think ultimately though you know I've been I I was in asset management for 30 plus years and the the one thing that I just kept seeing as I said earlier just like
1:04:17
same type of behavior time and time and time again so what what about your book is going to be able to get your readers to see the light what do you think that the the parts of the book that are going to grab them and and like actually sink
1:04:36
in you know with oh I I guess I had that all wrong probably it's going to be the part about obsessing about small expenses you know what I mean you know out of college I used to do that like I'd go to the grocery store and I'd stand in front of the soup and I'd stare
1:04:56
at it for like 5 minutes one is like 49 cents a can one is 59 cents a can one is 69 cents a can and I would agonize over like 10 cents and people people do that and it just it just does not matter you know and I do the math in the book I do
1:05:13
the math in the book and I tell people it really does not matter um what I don't want the book to be and what I think people are going to accuse me of is giving people a license to just spend a shitload of money like hey it's little stuff it doesn't matter have an
1:05:29
abundance mentality spend as much as you want which is why I was careful to add the part about balance right like one of the things about the United States you know the people who do spend a lot of money the people who buy like a $100,000
1:05:44
truck and finance it and they have a 570 credit score and all that stuff like those people exist but there's really less of them than we think like people people in this country are generally good with money and I think you have
1:05:58
more cheap people than more people like that you know and there's consequences to being cheap like if you're cheap you'll never go bankrupt like that's fine you'll never you'll never endure financial hardship but if you're cheap it'll affect your relationships with
1:06:13
other people that's the point that I was trying to make in the book if you've ever had a relative that was super super cheap and they would never pick up the tab and they wouldn't send Christmas presents or whatever like that person is
1:06:25
hard to be around you know and that destroys relationships so there's consequences to doing that and that's one thing that I don't think the personal finance industry has addressed is the consequences to that types of behavior so that's interesting uh and
1:06:42
it's very true uh we had a family member extended uh not immediate family but we called him alligator arms because he could never get to his pocket to get uh you know pick up a check or even buy a round of drinks and like you're really
1:07:00
bang on with that because like everyone was like what is with this guy you know why like he's happy to come here and have all of us take turns by and drinks how come you can't buy one goddamn round and and so I I like that I like that a lot because it infers that
1:07:18
it's going to cause a lot of stress in other areas particularly your relationship how do you think Financial stress differs from just the general stresses of life it's it's Financial stress makes other stresses worse that's what it does
1:07:39
it's not so much that Financial stress in isolation is like a really terrible thing because if you have money problems you can solve them right but if you have other kinds of stress in your life it's going to compound them and make them worse
1:07:54
that's really the point so yeah and the other thing I want to to touch on because I I'm a big fan and and I and I sometimes feel that people uh look at things like entrepreneurship uh which by the way is a huge basket right like entrepreneurship could be starting your
1:08:13
own uh small business it could be you know a more classic startup there's a huge uh opportunity set with entrepreneurship what do you think it is that that gets the majority of people like yeah no I want I want a steady paycheck I I don't
1:08:33
want uh to have the risk and the responsibilities of that you know not to spill too much family dirty laundry but I have conversations with this with my wife every once in a while um you know she's super smart she's super capable um
1:08:51
around 2008 or nine I was really pushing her to start a company um that would basically like an engineering firm that would do CRM work and stuff like that I'm like you would kill it you would absolutely kill it she's like I have no desire like I just have I I don't want
1:09:11
this I don't want the stress I don't want the hassle I don't I don't want to think about it and I'm like all great now it's my job to make money so that's but some some people I don't know I like there's there is this fear or phobia
1:09:31
about starting a business I mean it's it's kind of new and scary and there's risk and stuff like that but the one thing I say in the book is entrepreneurship is the best thing in the world because you will be happy right it doesn't even matter if you are
1:09:45
successful if you start a company you will be happy even if it fails even if it fails if it fails you will learn learn stuff and you will be happier than if you worked in some soul destroying like humongous Corporation with terrible politics and all that stuff you know
1:10:05
yeah I agree and I and I love the fact that in the book that you consistantly uh advocate for optimizing for happiness uh over other things and and that is absolutely true having started several companies myself uh one of which failed
1:10:21
and I did have a good time with that particular one as well so that's banging on what's the worst financial decision you've ever made I've had some bad trades I'm actually kind of dealing with one right now because I'm trying to sell
1:10:34
my house and I put it on the market like a month late and now it's bad um I made I made bad financial decisions the worst one was probably around uh Canadian interest rate Futures in 2017 and um I I was convinced I was really big on the Canadian housing
1:10:56
bubble I thought that the Canadian economy would collapse I thought they would cut rates to zero and I was too big I I had way too much risk and the Bank of Canada hiked rates five times um and I actually hung on to the position I
1:11:13
was so stubborn about it like I just got really stubborn and it really like it ruined two years of my life like I was down a lot of money like for two years I was miserable you know I did hang on until the pandemic they cut rates to zero I got bailed out I made a bunch of
1:11:31
money but from like 2017 to 2019 like it was it was hell it was absolute hell you know so that you know what's interesting about that answer is that um you you yourself maintain that you gave kind of a trading or investing answer and you're
1:11:51
yourself maintain that most people are not cut out to be Traders or investors um so so for that group of people like if you were giving cautionary advice like other than other than the things that you've that we've already chatted about it you've already
1:12:07
enumerated in the book like what what kind of if if you if I guess if you had an elevator the time riding down an elevator with somebody and they ask you hey I loved your book what you know what are the one two or three things that if
1:12:23
I focus in and get those right the rest of it's going to be pretty much fall into place do you have such a a list of the three yeah I mean focus on the big things not the little things uh minimize debt and minimize rest risk and try to achieve some kind
1:12:43
of balance when it comes to money in your life those would be the three takeaways so yeah and uh any plans to do a uh ETF around your your wonderful uh uh incredible portfolio working on it working on it more to come huh coming soon very interesting well Jared this
1:13:07
has been a ton of fun uh if as you know if you do listen to the podcast uh we we give uh everyone a chance at the end to become the emperor of the world for a day uh you can't kill anyone nor can you put anywh in a re-education gap I've had
1:13:25
people who are really bummed out about that by the way uh but but but what you can do is we're going to hand you a magic microphone and you can say two things into it that will incept the entire world's population all eight billion people they're going to wake up
1:13:40
whenever their next morning is and they're going to think that they just had these two great ideas and more importantly they're going to act on them what what two things are you going to accept as emperor of world oh my God you
1:13:55
put me on the spot uh you need to get a cat [Laughter] psychic would would that car over to dog psychic for the dog lovers out there yeah you can get a dog psychic let's let's adjust it to a pet psychic pet psychic how about that okay okay you're gonna you're gonna make a
1:14:21
lot of uh animal psychics very very happy with that one what's what's your second one uh I don't know I would just say that you look like I really want the book to be successful I want my business to be successful I want all these things
1:14:36
to be successful but that's really about money and ego and things that don't matter you know the things the things that matter are relationships with people and our pets and you know the one I had to read Stephen Cy's book uh when
1:14:53
I was in college you know seven habits um and I don't remember most of it but the one thing that stuck with me was begin with the end in mind right and think about when you die what you want your funeral to look like who do you want to be there what do you want them
1:15:11
to say about you and every day I think about that I think about that like you know what what am I going to leave behind when I pass it's one of the reasons I write so many books you know I try to I try to you know I wanna I want
1:15:26
to make the world a better place so that's great and it's uh kind of reminds me of a one uh idea of write your own obituary right uh because that's going to give you a really good idea about what you really care about um when you when you futurecast it uh where can
1:15:45
people find you other than social media you have a website You' mentioned already uh and you have the course uh uh yeah so if you want to buy the book um it's buynow worries. comom and that'll take you to a page it has all the retailers I mean obviously Amazon is
1:16:04
there but you can buy from any retailer so buynow worries. comom uh my newsletter is www.nap.edu cool we you're doing a lot of cool things I am a subscriber to your newsletter which I enjoy um and uh I think uh congratulations span here you
1:16:34
are killing it right now with uh all of your various projects thank you thank you all right my thanks thanks for having me on I mean this has been terrific I mean I really I really appreciate you having me on the podcast
1:16:45
and I I know you subscribed to the dirt naap a couple years ago and we' never spoken since then but I really appreciate it I'm glad you're getting something out of it so absolutely absolutely well thank you very much and uh have a have a great holiday