Modern Wisdom - #707 - Morgan Housel - 9 Timeless Lessons About Human Psychology

Episode Date: November 16, 2023

Morgan Housel is a partner at The Collaborative Fund, an investor and an author. The world continues to change, but the hairless apes that inhabit it stay the same. So there must be some laws of human psychology which remain true, no matter what time and place you're in, and today we get to go through some of the most fascinating ones. Expect to learn the problem with the way most people make predictions, who exactly are the reasonable optimists, whether anyone was able to predict the great depression, just how different median income for families differs from the 1950s to today, why trajectory is much more important than position, why stories are more powerful than statistics and much more...  Sponsors: Get 15% discount on the best Colostrum from ARMRA at https://tryarmra.com/modernwisdom (use code: MODERNWISDOM) Get 20% discount on Nomatic’s amazing luggage at https://nomatic.com/modernwisdom (use code MODERNWISDOM) Get $150/£150 discount on the Eight Sleep Pod Cover at https://eightsleep.com/modernwisdom (discount automatically applied) Extra Stuff: Get my free Reading List of 100 books to read before you die → https://chriswillx.com/books/ Buy my productivity energy drink Neutonic: https://neutonic.com/modernwisdom - Get in touch. Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx YouTube: https://www.youtube.com/modernwisdompodcast Email: https://chriswillx.com/contact/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello friends, welcome back to the show. My guest today is Morgan Howsell. He's a partner at the Collaborative Fund, an investor, and an author. The world continues to change, but the hell is apes that inhabit it, stay the same. So there must be some laws of human psychology which remain true, no matter what time and place you're in. And today, we get to go through some of the most fascinating ones. Expect to learn the problem with the way most people make predictions, who exactly are

the responsible optimists, whether anyone was able to predict the Great Depression, just how different median income for families differs from the 1950s to today, why trajectory is more important than your position, why stories are more powerful than statistics, and much more. Morgan is an absolute beast. This is his fourth time on the show, maybe his fifth, but his first time in three years. And I adore this man.

I love his writing, I've always loved his writing, and there is so much cool stuff that we go through today. And his new book has 23 lessons in it, I think, and we go through nine today, but he's coming out to see me in it, I think, and we go through nine today, but he's coming out to see me in Austin, in January. So you'll get another 14, you'll get another 14 in 2024, but yeah, there's so much cool stuff to take away from today.

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But now ladies and gentlemen please welcome Morgan Housel. Morgan Houseell. Before we get started, your new book is absolutely phenomenal. It feels like it was written purposefully for me, your ability to weave a story into a lesson is ungodly. And everybody needs to go and buy same as ever right now. It's one of the best things that I've read in a very long time. That makes me so happy to hear. And maybe it was written for the show. Maybe I wrote it just for this episode right now that we're doing. Yes.

Yes, I knew it. I knew it. I knew that you dedicated years of your life to just me, my only child. My inner only child is coming out again. I also got to show the Rangers go into the World Series. So I am wrapping appropriately. The purpose of your book, Same as Ever is to kind of,

as far as I can see, explain to people the underlying principles and rules, like the thermodynamics of life that doesn't change, but a lot of the time people focus on things that they think won't change but will. So what do most people get wrong when they're making predictions? Well, it's pretty well known that particularly in finance and economics, but also in politics, things like that, we're so bad at predicting.

Predicting the next recession, predicting when the stock market's going to fall, predicting who's going to win the election. It's not just bad, it's abysmal. It's absolutely disastrous. And so I've been a financial writer for 17 years. And a big part of what I've focused on is just trying to answer the question, like, why are we so bad at this? And why does nobody care that we're so bad at this?

Despite the track, I mean, people keep doing it over and over again. And one of the ideas that I stumbled across was just the idea that, and it's kind of ironic and tongue-in-cheek, but it's not that we're bad at predicting. It's that we're actually very good at predicting, except for the surprises. And the surprises tend to be virtually all that matter over time. And so part of me was when I just accepted

how terrible we are at predicting. There's two things that you can do after that. You can become a grump about it and just say, just become a cynic and say, there's nothing we can do. Nobody knows anything by humbug. Or you can say, okay, actually are there things that never change that we can put all of our weight into? And I think if you look over history, across any field in history, business, economics, entertainment, medicine, politics, the themes that repeat themselves over and over again, once you start looking for them, they're everywhere.

And it's always like the characters change, but it's the same movie over and over again. And once you focus on that, and then you marry that with this idea that we can't predict the change, nobody can, nobody has ever been able to do it, nobody ever will be able to do it because they're all surprises. And then you marry that with, hey, there's actually all these facets of human behavior that never change.

All right, so let's put all of our emphasis and our new view of the future. Let's only focus on what we know is never going to change. And there could be literally thousands of those bits of human behavior that never change. For the book, I focused on 23 that I thought were powerful to me, and I thought I had stories to tell about of these things that like, look, regardless of what happens in the future, we know that these things are going to be part of it, regardless of which direction, which path we go down. It's so interesting to think about the common thread that ties all of this together, being

the idiot, shaven apes that kind of inhabit it. The world can be different, there can be a catastrophe or not, it can be peacetime or wartime, there can be depression or it can be the greatest wealth creation period in history. But ultimately, humans are always going to respond with the same fear and greed and envy and lack of altruism and focus on their own self first. I had, I know that you quote Neil Ferguson at the start of the book and I had him on a couple of weeks ago and I asked him just how accurate is the quote history doesn't repeat itself but it often rhymes

and he called it doubly wrong. He said not only is it not right it's also not what Mark Twain said. So just in case anybody needed a final sort of nail in the coffin of that. Yeah, you've got this great quote as well. You say to know where we're going, you have to know where we've been. But the more realistic is admitting that if you know where we've been, you realize we have no idea where we're going, events compound in unfathomable ways. I mean, there's so many, there's so many little stories in history where you realize how fragile history is and whether it's the start of World War II or 9-11 or COVID, you

realize that there would have been just a little tiny, no-nothing change in circumstances that nobody paid any attention to that would have utterly transformed everything. One of the stories I tell in the book came from David McCullough who is a historian died not too long ago, but he was one of the foremost authorities on the revolutionary war. And I know I'm talking, I'm an American talking to a Brit. This is going to get really awkward here for us. I'm an immigrant to this great nation. I survive two fourth of July's without getting into an existential crisis. I'm okay. Well, let's say bygones be bygones. Let's talk about the revolutionary war. There's a scene where David McCulloch says there is a period in the revolutionary war where

the British had George Washington cornered just outside of Long Island. And all they had to do was sail up the East River in New York and George Washington would have been cornered and all would have been over. But they couldn't do it because the winds were blowing in the wrong direction last night. They could not sail up the East River, which gave George Washington just enough time to get away. And Dave McCullough was asked, he said, if the winds were blowing in the other direction that night, would there be a United States of America?

And he said, no, it never would have happened. Like the entire existence of this country relied on the winds blowing one direction this one night in the 1700s. And if you take that out and you can tell similar stories about the start of World War One, World War Two, the Civil War, there's all these, the more you dig into it, you realize how fragile history is. And then you have to accept if history is that fragile, well, the future is too. There's going to be all these little no-nothing,

the equivalent of the wind blowing in the wrong direction that's happening today that will completely spiral into this God knows unknown story 10 or 20 years into the future. And it's just a plea for humility. Like, when you piece together how fragile the past is, we realize that we have absolutely no clue some of the finer details of what's going to happen in the future. Yeah, if you know where we've been, you realize we have no idea where we're going. Each big story could have been turned out differently if it had a few little puffs of nothingness going in the other direction. It's, I think people want to have a sense of control and certainty

about the future. And it's disquieting to realize just how much random chance gets thrown into this. And that's kind of what a lot of people didn't like the fact that Neal said, the cycles of history aren't really cycles. The only things that are the same with the humans, because it makes us feel uncertain. And we go, oh my God, like maybe I'm not going to be able to predict what happens next and he goes, well, yeah, previously could you have predicted what happened? What was that thing about the depression? How many people were able to

predict the depression? Zero. Exactly. Zero people, Robert Schiller from Yale University, one of the Nobel Prize and economics, he devoted a big chunk of his career to working with economic historians to find one person who predicted the great depression. And they could find a couple people who would say, where the economy is due to decline or do for a recession. But who predicted the great depression? 0.0 people. And of course, that was the biggest economic event

of the century. And so, and look, people were pretty well informed back then. It's not that people were running around oblivious to what was happening. Everyone knew the stock market was crazy. Everyone knew things were stretched here, but the chain of events that actually turned the decline into the Great Depression could not have been foreseen. I mean, not to go down too much of a rabbit hole here, but what really made the Great Depression awful was the banking crisis.

It wasn't the stock market crash. It wasn't necessarily the dust bowl. It was once the bank started failing all hell-brook loose. And the banking crisis really began in Austria when there was a big bank called Credit on Salt that went out of business. And you can literally track it on a map that the banking wave spread across the world. It went from Austria to Paris to London and eventually made its way to New York and then spread throughout the rest of the

United States. And it's literally like you can draw a straight line from this Austrian bank in 1931 going out of business to a guy in the middle of Ohio losing his job. It's not the kind of thing that somebody in 1925 could have predicted. It was such a crazy chain of events that made it all happen. Yeah, you've got this nice summation. We are very good at predicting the future except for the surprises. And the next line of that was, and the surprises tend to be all that matter over time. It tends to be like, if you look at the big events that have really moved the needle in history for the last 80 years in the United States at least it's Pearl Harbor, September 11th, COVID.

Those are the things that like we woke up one morning and we said oh shit the world is not the same. The world is not the same place it was yesterday. And the common denominator of those three events and you could add some more to it are that nobody saw them coming. There were not there was no economic outlook a year before that said, get ready for 9.11. Nobody wrote that in the year 2000.

I read in the book this crazy newscast that I came across, and it's from the morning of September 11th, and it's like haunting to listen to. It takes place about 20 minutes before the attack takes place, and it's this newscaster, I'm gonna paraphrase, but she says, good morning, it's Tuesday, September 11th, beautiful day here in New York City.

The side of the, like, she's completely oblivious to what's to happen 20 minutes later, which of course nobody could have seen it coming. And you can say with so much certainty that the biggest news story of the next year and the next five years, next 10 years is something that nobody is talking about today, that everyone's completely oblivious to, because it's always been like that. It's always been like that.

I mean, just in recent times, how many people a month ago were talking about Hamas and Israel, outside of that region zero, nobody. But now it's the biggest new story in the world. Same with two years ago with Russia and Ukraine, COVID of course, there's a great quote from Carl Richard, financial advisor. He says, risk is what is left over when you think you've thought of everything.

So you go out of your way to try to view the future in your own life and in the economy. And it's a great, that's a good thing to do. And then after you have thought about all the risks in your life, the thing that you're not thinking about, the thing that's not on that list is the one that's actually going to do the most damage. Because if it was on the list, you would have mitigated it in some way or another.

You would prepare for it. I mean, the perfect example of that is Y2K. It's not that it wasn't a risk, but everyone had been freaking out about it for five years. So when it happened, everyone had prepared for it and the computers had been changed whatever it was So compare why 2k to 9.11 that nobody saw coming. It's like it's night and day. Who was that NASA guy? Who's the dude dude with a helmet? Yes, yes Shach has read I love that story dude. It was one of the best ones in the book So it's a crazy story that I came across.

I was reading, I had this kick a couple years ago where I was really into studying the Apollo missions because I think going to the moon is the coolest thing humans have ever done. It's like the craziest, the riskiest, the most, the most bossy. And I came across this little story and it was almost a footnote, but it was one of those things where you read it and you're like, wait, tell me more about that. That sounds fascinating. And what it was is before NASA went into space on rockets, which were expensive and dangerous,

they used to test a lot of their equipment on these ultra high altitude hot air balloons. They had these hot air balloons that could go up to like 150,000 feet, like basically the edge of space, and they would do it to test a lot of their equipment. So in July of 1960, there was a US Air Force test pilot, named Victor Prather, who took the hot air balloon up to about 112,000 feet to test NASA's new suit. It was a suit that they eventually used in the Gemini missions, and he goes up,

suit works great, everything's perfect, he's heading back down to Earth, he starts descending back down to Earth. And one of the quirks of the suit that he was wearing, the space suit, was that it was very hot and stuffy to breathe in, particularly in the Florida summer heat as he's descending back down to earth. So when he was low enough to breathe on his own, which is like 5,000 feet, he opened up the face plate on his helmet

just to catch some fresh air. Like not that big a deal. He knows he's low enough to breathe on his own, like who cares? The plan A in that situation is that the hot air balloon would land on the back of an aircraft carrier That was what they intended But a very well-known and well-rehearsed plan B is that he would land in the ocean because it was just hard to stick the landing on this hot air balloon And so that's what happens he lands in the ocean nobody's panicking in that situation An Air Force helicopter is going to hover over him, drop a rescue line that he attaches to

himself and gets pulled to safety. As he's doing that, he slips and he falls into the ocean. And that too, like was not supposed to be that big a deal. They had rehearsed this and whatnot. But because the suit that he was wearing was supposed to be watertight and buoyant, he's supposed to bob in the water. But since he had opened up the faceplate to his helmet, all of a sudden he was not was supposed to be watertight and buoyant. He's supposed to bob in the water. But since he had opened up the faceplate to his helmet, all of a sudden he was not watertight.

And as soon as he hits the water, his suit fills up with water, and he sinks to the bottom of the ocean in drowns. And there could be so many takeaways from this story. One of them that I think is just the bonkers is that there are four NASA astronauts who die in the mission getting to the moon.

All of them died on Earth, which is just like crazy in itself. But the other thing that I think about a lot is that NASA is the most planning central organization that's ever existed. You don't go to the moon by crossing your fingers and hoping for the best. Every imaginable risk that they could think of was planned out and they had plan A, B, and C contingencies for how to mitigate that risk. And in their post-mortem of what happened to Victor Prather when he drowned,

they said something to the effect of, we had thought of every single risk imaginable in this mission except for the one thing that mattered most, which is that this poor guy just wanted to get some fresh air. And that I think that's the definition of risk. It's what's left over when you think you've thought of everything.

The other thing is like, you can imagine the planners for this mission, planning about what happened, I'm making this up, because I don't, I'm not an engineer. What happens if the balloon pops? What happens if we run out of fuel, whatever it might be? You're not gonna plan what happens if this poor guy wants to catch some fresh air, right?

There's another story that I wrote about in the psychology of money that I thought was just so ridiculous when I read it. It was during the battle of Stalingrad in World War II. And there was a division of German tanks out on the rear lines and they got caught up to the front. And it's like 20 or 30 tanks. They could get caught up to the front battle lines. All the tank commanders turned their tank on, I don't know if it's a key or 30 tanks, they could get called up to the front battle lines. All the tank commanders turn their tank on, unless it's a key or a button or whatever, and none of them start. The entire division of tanks, the tanks don't start.

And they start to research what the hell's going on here. And they realize that when the tanks were sitting in reserve, the field mice, outside of Stalin grad chewed through the wires. And then so they can't, so I use this in example too. If like imagine you're like an army general and you're planning for what can go wrong. And what can go wrong is you get shot at,

you get bombed, you run out of food. Nobody is like, hey, make sure that we protect ourselves from the mice in the fields, right? It's always a thing that you never see coming that's actually gonna pose the biggest risk. I wonder if those were specially trained saboteur mice perhaps. There were there, there were Soviet train mice during that period. That would be correct. So given the fact that risk is what is left over after we think that we've

thought of everything, what can we do about risk? What should our relationship with risk be like? Given that, as you say, I mean, do people become nihilistic and just stop caring about risk? What should our relationship with risk be like? Given that, as you say, do people become nihilistic and just stop caring about risk at all? Do people become overly risk-averse and try to steer clear of stuff? What's your relationship to risk-like? I do think there's some balance between those two. I think the honest answer to your question is, this is why the world is risky, and it's always going to be risky, and there is not much we can do about it. I think that's the honest answer. If question is this is why the world is risky and it's always going to be risky and there is not much we can do about it. I think that's the honest answer. If there is a more technical answer that I think particularly hasn't pertained to finance,

it's that if you are only planning for and saving for the risks that you can envision, by definition, you're going to miss a surprise every single time. And so I tend to have quite a bit of cash as a percentage of my net worth. And there have been a lot of people who would ask like, why? Like, what are you saving for? And my answer is always, I don't know. Because of course, if I was only planning for things that I can envision, oh, I'm going to need a new car here, and my kids are going to go to college then, you're always going to miss the equivalent of Pearl Harbor 9-11 COVID every single time. So the amount of safety that you have, it's not to say

it can be completely risk averse. That's not the point at all. But the amount of cushion that you have should feel like it's too much. Because when it feels like too much, you say it should make you wins. It should make you wins a little bit. Yeah. And because it like like if it feels like the right amount, then you know you're unprepared by definition. Right, so that's... I guess the meta lesson here, or it sounds like, is bake in more contingency, a greater buffer around your current risk profile to attempt as best you can to account for that,

which has been left over that you haven't been able to think of. That's the only way to do it. And the other thing to just to recognize is that the world usually breaks about once per decade. Not exactly on that timeline, but pretty much once per decade. There's a big event where, like I said, people wake up and they say the world's not the same as it used to be. So during that time when your savings makes you wince, you might have to sit on a wincing amount of savings for a decade. But once a decade, you're going to realize it's the most valuable asset you've ever had in

your life. The first rule of happiness is low expectations. Why? Because every every bit of happiness, every bit of joy that you're going to get out of life is simply the gap between your expectations and your circumstances. And you could show this very cleanly by just pointing out things like John D. Rockefeller, he was the richest man who ever lived. His adjusted for inflation, he was worth nearly half a trillion dollars in his time. But during his entire life, Nikki died in 1933 or thereabouts, he never had penicillin, sunscreen, adville,

to say nothing of the internet or communications of any of any kind. Like, he lived a life that the average ordinary American would look at today and view as positively primitive. Of course, he had mansions and servants and one that, but in terms of the technology, he took advantage of. It was a joke, but no average American should look at him today and say, I live better than Rockefeller because they have penicillin and sunscreen and Advil. Because everything, all those new technologies just become the baseline that we accept. And therefore, that's just to say, like,

you can go through a period of life or the economy in general where everything gets better. Technology gets better. Medicine gets better. Everyone becomes richer. And nobody feels any better off for it. Because you just reset your expectations all along the way. And you could so imagine a world in which my grandkids are earning three times as much as me, adjusted for inflation, and they're not any happier whatsoever.

And the medical that technology that they have, let's just assume they've cured cancer, they've cured every disease and they're not any happier for it, because that just becomes the norm. Just like when I today by and large don't think about malaria, if you told somebody three years ago that we in the developed world had more or less eradicated malaria, they would have, they would, they could not fathom a world being that glorious. Are you familiar with the Tokville paradox? Of course, yeah, that's exactly what we're describing here, yeah, living standard rise, being that glorious. Are you familiar with the Tokville paradox? Of course. Yeah. That's exactly what we're describing here. Yeah. Living standard rise, people's expectations rise and then overtake the actual living standards.

That's it. And at the micro level, it happens too, where if you get, if you get a raise at work, but then with that raise, you automatically adjust your expectations to the kind of house you need to live in, to the kind of car automatically adjust your expectations to the kind of house you need to live in, to the kind of car that you drive, to the kind of vacations that you take. That's why you get used to these things so quickly. It's not necessarily that you become accustomed to them. It's that you raise your baseline of what you expect in them.

And so, look, is it important to try to increase your circumstances, become wealthier, increase your network? Of course, duh. But with just as much emphasis, you need to go out of your way to increased your network, of course, duh. But with just as much emphasis, you need to go out of your way to manage your expectations, to keep them low, and recognize that it's the gap between those two that's actually going to bring you all the joy and happiness in life. So as a society, there's no way to do it. It's always going to be the case that society's expectations increases. That's the Tocqueville paradox. At the individual level, I think you can at least recognize the game that's being played though and how ridiculous

the game is. What's that? Is it a manga quote where he says the world is actually driven by... It's not driven by greed, it's driven by envy. That's it. And really what envy is is you're looking at your neighbor who has a bigger house and saying, I want that. That's all it is, which is just an adjustment of expectations. In the 1950s, which people tend to remember as this glorious period of prosperity, the average new house built was 920 square feet. And today in the United States, it's like 2700 square feet. But people don't feel better off. And not only do that feel better off, the people who are moving into a house that

is two and a half times the size of what my grandparents would have moved into. Probably feel like they're falling behind. Oh, my house is 2700 square feet, but on Instagram, that guy's house is 10,000 square feet kind of thing. It's just a constant readjustment of expectations. Part of that, by the way, this is an important thing here, is great. The fact that people are generally unsatisfied is where innovation comes from.

The fact that people wake up in the morning and say, I'm unsatisfied with my lot in life, I need to do better and figure out a better way is why the world improves. So it's not to say that this is bad, but it's an explanation for why there can be so much progress in your individual life or throughout all society and nobody feels any better for it. Have I given you my bet on the mis-translation of the Buddha? Have I given you this one yet? No, no, let's do it.

This is from Robert Wright's Why Buddhism is true and in it, life is suffering is commonly quoted as coming from the Buddha, but scholars can test that the translation is actually wrong. In the final word, which is duke, dukkjj, isn't translated as suffering, but unsatisfactoriness. Life is unsatisfactoriness. Now, I often think about this imaginary couple that I have a voyeurist relationship with every time I think of this thing. So they plan a holiday, they know that they're going to go away and both of them are big into putting their itinerary together. And they know exactly the hotel that they're going to go away and both of them are big into putting their itinerary together. And they know exactly the hotel that they're going to go to and they look at the menu of

the hotel, of the hotel bar and of the restaurant that they're going to go to. And they know the exact table that they're going to sit at and they know that the sun sets and they've imagined it and they've thought about it and they've organized the kennels to look after the dog and then they fly out and they get there and they sit down. And then the wife sits down and she's facing the sun, but the sun's actually a little bit low, and it's sort of glancing off the water, and it's a little bit bright for her eyes.

And they got this cocktail, but they wish that they'd got it on the rocks instead of blended, and there was some sand between her toes from walking on the beach a little bit early run. Life is unsatisfactoriness. It is baked into your existence, that things are just gonna be on average a bit shitter

than you hope they would. And even if they outdid your expectation, very quickly you're going to be looking over the current moment's shoulder, just trying to see what's coming next. 100%. I mean, and by the way, I love the phrase just a bit shitter than you expected.

This was a wonderful phrase. I think a lot of this too is that you get the most dopamine from anticipation. It's not by actually achieving it. You get the dopamine might dreaming about it. So of course, it's well known that the best part of a summer vacation is the anticipation of it,

but actually going on it is not. Didn't Ferris have a hack where he would, him and his family would book like the next half decade of holidays. I'm pretty sure that he did, that he would, him and his family would book like the next half decade of holidays. I'm pretty sure that he did that he would just be like, well, okay, if enjoyment is in the anticipation, if I get more anticipation, that means more enjoyment from the same experience. And I'm pretty sure that there was a period where he had like five years of holidays and

and resorts and trips and flights and everything else booked, booked, booked out for precisely that reason. That's so smart. I've had these ridiculous moments in the past. I'm sure others have something similar of, I'll be on vacation, I'll be in Maui with my family. And it's day one, we just get there. And I'm standing on the balcony watching the sunset and thinking to myself, wouldn't it be so great

if we could come back here next year? It was like, even though I'm literally right there, what gives me the most pleasure is thinking about coming back. And then I instantly have this recognition of just like, this is so absurd. But that's how your brain works, because thinking about coming back

is going to give you more dopamine than actually the fact that you're there in the moment. Does an interesting insight from God's sad new book on happiness that the amount of sex that makes somebody happiest is an adequate amount based on kind of an overall baseline, but what's most important is that you're having a little bit more sex than most of your friends are based on their self-reporting, and you've got this phenomenal quote which I think kind of summarizes why we're at, there is no such thing as objective wealth, everything

is relative, and most relative to those around you. There is no such thing as objective wealth is phenomenal. And it's so true given the fact that, okay, are people today with all of the advantages that we have a hundred years hence better off than John D. Rockefeller? Well, no one's going to say that. No working class American, that's living paycheck to paycheck is going to feel like they're more blessed than what was once the richest man, potentially, whoever lived, apart from mass amuse or whatever that dude was. No one's going to feel like that. And yet objectively, there are arguments that you can have on both sides. Right. You know, there's as, as most comedians do, they'd really get to the point.

There's this great Chris Roxquet where he says, if Bill Gates woke up with Oprah's money, he'd jump out the window and slit his wrists on the way down. And it's just to show that all wealth is so relative. And so, yeah, once it's framed like that, there's this other quote from Montesquieu, who said this 300 years ago, back to things that never changed.

He said, if you wish to be happy, that could very easily be achieved. But most people want to be happier than other people. And that is difficult because we overestimate how happy other people are. So that's the thing, too. It's not about how much you have. It's just where do you sit on the relative lot?

And from an evolutionary standpoint, of course, that's the case, because we're competing against each other for resources and for mates. So of course, it doesn't matter how much I have, it just matters that I have more than you, not you in particular, but you know. So this must relate to fame and status as well beyond just finances.

Yeah, I forget who said this quote, but there's, I read something recently that said, it's so tragic that humans are not wired for happiness, they're wired for status. That's what we're going after. It's not what can I do to make me happier. It's what can I do that puts me ahead of the other people. And I think there's actually a lot of people early on

in their career that really get this wrong in the sense of they might have a skill. I'm really good at Microsoft Office. Yes, but so's everybody else. Like, on relative terms, that means absolutely nothing. And people over, they overestimate that, how rare their skills are. And then they get to the job market and they,

their first salary sucks and they're not, they're not that useful and they can't figure it out. It's because the skills that you, they have, everybody else has them too. In relative terms, they're zero. And so that's, that's, that's that's what it's true in investing too, or it's like, it doesn't matter if you have a lot of information.

All that matters is the information that you have that others don't. And that number for most investors is zero. The information that you have that others don't doesn't exist. There's no information that you have about the stock that others don't. And that's why it's so hard to beat the market over time. Everything is just relative to

what other people have and what other people are doing. I've got this idea at the moment about trajectory being more important than position. And it's literally the same lesson, but from a status, fame perspective. So if you are the number two in the world, but last year were number one, there is way less sexiness and clamor around you than if you're number 150, but last year you were 300. And there's something about our prediction engine being able to kind of move out. Let's extrapolate into the future exactly where this person's going to end up and what they're going to do and there's this sort of allure of what's trendy. Something else that's going on specifically with that, which is someone who is an appreciating stock

as opposed to a declining stock, even if that absolute position is lower, it tells you more about the current sentiment right now. And because our availability bias and our window of what we're seeing is so dependent on the moment, we overindex for the person who is on the climb but lower as opposed to the person who's maybe at the top, but not staying there. This is great quote from Will Smith in his biography

where he says, becoming famous is the most amazing feeling in the world. Being famous is a mixed bag, and losing fame is a pain like you've never felt before. And like, I think it's true for wealth too, that becoming wealthier, like your net worth rising is amazing. Being wealthy, just having a high net worth is like, is okay. And losing wealth is terrible. It's always just the a high net worth is like, is okay. And losing wealth is terrible. It's always just the change in circumstances that you're after. Like you, like most people get more joy and pleasure out of gaining wealth and they do having wealth. Dude, and they're going

to be happier when it's going up than when they actually have it. You weren't going to guess this, but Andrew Tate said it best, not one for quoting Andrew Tate, but I do love this quote from him. And he says, having things isn't fun, getting things is fun. There's a great quote from Drake too, where he says, people respect you more when you are chasing something, not when you have it. So good. Yeah. And I think it applies to virtually everything. And it just, it kind of boils down to, isn't life just one big competition? We're just trying to get ahead.

And it's kind of a sad thing to come to terms with. And I think there are ways to combat that at the individual level. And not always beyond the rat race, but just enjoy what you have inside of your own head. But at the society level, it has always been like that and always will be. I'd mentioned before we started, I was with Dambell Zarian this weekend and I rolled this

trajectory is more important than position thing to him and he seemed to agree too. And I said, I wonder if there's an argument to be made that rapid changes in status and wealth and accolade and prestige are actually to be avoided almost at all costs because what you're doing is you're now resetting that baseline as you mentioned. That's so good. Yeah, so I'm not like slow life strategy but slow success strategy. Trying as best you can to just pulld pork this thing out a little bit. Let's just spread out.

You know, I'm not gonna go and get the car that I've always wanted immediately. Why don't I get a car that's halfway between it? You know, it's strange because we want success. We don't want to leave anything on the table. We want to feel like we're actualizing, we want to maximize whatever we can bring to the world. And yet, the quicker that we do that,

all that we're really doing is condemning a future version of ourselves to have a high a bar to jump over. Right. I mean, the perfect example of that, everyone knows the long history of lottery winners, either going bankrupt or being miserable afterwards. Like, I know recently, because the lottery's now get ridiculous. There was someone who was like a very modest blue collar worker. Imagine this person was making $40,000 a year and they won a billion dollars in the lottery. And that honestly, to go from making $40 grand

to getting a check for a billion dollars has got to be the biggest mind fuck that you can imagine. And I don't mean that in a good way. I think that is something that on net, it's ridiculous to say, I know it sounds crazy, but on net, that's a psychological burden. Could be one of the most difficult things that you've ever had to deal with in your life.

Yes. I had this idea as well about guys like Jordan Peterson and Brett Weinstein and Eric Weinstein, people who for a long time were academics working in the dusty annals of some place, and then they get ripped out of obscurity by some bald MMA commentator. And before they know it, that heavily scrutinized and people care about what they think, and oh my god, I need to comment on the Ukraine, and let's get involved in the trans issue. Like, we often talk about the perils of fame to young, but we

never talk about the perils of fame to old, right? Like young fame is you never got the chance to work out what it's like to be a normal person. You turned into Macawley Colquina or whatever, but like more old fame is you thought you knew who you were and your sense of self has been completely ripped away from what you actually, your entire conception, the way that people see you, how much they care about what you've got to say. You decades and decades and decades of time accumulated, ossifying this version of you

you thought you were for something to come in and just smash it to pieces in the space of no time at all. Just told it, ah, that's great. I spoke with this author recently, whose first book was a mega blockbuster success. And his second book was by any objective standards, a huge success, but in order of magnitude or two, less lower than his first book. Shit. And totally shit. And I asked him how that felt. And he said, even though he knew that was going to be the case, going into his second book, he knew that would be the case.

And he was prepared for this. It hurt. It hurt because his first book set the bar so ridiculously high. Have you got this in your mind given that the psychology of money your first book was just, I mean, you're telling me that it's growing. It's like it, if they are not number of your book is like COVID at a bad day. Yeah. Have you got it that same as ever, despite the fact that everyone needs to go and buy it like if the R naught number of your book is like COVID at a bad day. Yeah. Have you got it that same as ever, despite the fact that everyone needs to go and buy it right now and the link is in the description below, is almost certainly going

to be a disappointment to you. Yeah. I think about a lot. And that was one of the points of talking to that author who I was speaking with because I know this is going to be my situation of How do you prepare mentally when I hope to write many books in my career? And I would bet very good money that the first book I wrote will, by an order of magnitude, be the biggest seller. It's kind of a hard thing to wrap your head around. Of course, it's a good problem to have.

Nobody feels bad for you. But yeah, it is kind of a hard thing. When I'm 66, how am I going to feel knowing that I peaked at age 36 when psychology money came out? It's probably not going to feel that great, to be honest. But of all the problems to have, it's not a bad one. Yeah. Have you seen the Lewis Capaldi documentary?

No. Do you know who Lewis Capaldi is? Scottish singer? Yes. You would have heard his song. One hundred percent. One of your kids all have had his song on it at some point or you'll have heard it on the radio billions and billions and billions of streams and albums and all this stuff

Documentary about him and he has to write second album first album is just ridiculous success right globe trotting insanity and it songs that he wrote when he was 17 Still playing them in working men's pubs around Scotland, right? And it's better mastering and studios and all the rest of it, but it's the same songs. And then he gets this catapulted to the top of the tree and then is told, right, do it again. And COVID happens.

So he's back in his parents house in Scotland in this shed type thing that's got his recording equipment in there trying to write songs for this second album. And he develops a twitch, like a Tourette's twitch. And there's videos, you can look at the videos, it's pretty uncomfortable to watch, of him at Glastonbury, big festivals, and he can't sing. Like he literally can't get the words out because of how nervous he is. So he's very much feeling the pressure, a man who has the talent but not the constitution to be famous, which I think is a beautiful,

very interesting dichotomy. And he's got this one line in it that I paused the documentary and just turned it off after that and went into like a fever dream for about an hour thinking about it. And he's there and he's talking about all of this change and there's been all of this chaos around him and he's trying to write this second album and the pressure from the label and all of this sort of stuff. He needs sense of the camera and he goes, fame doesn't change you. It just changes everybody around you. Yeah, yeah. Oh my god. Every time I say it dude, I get the hairs on my arms stand up because I just thought it was so profound and so beautiful. And yeah, you should watch it.

It's kind of scary because what do so many people, even if not explicitly, but they implicitly hope for and want in life, it rounds to fame at least, if not explicitly famous what they want. And then you watch these people who've actually had it. And there's a lot of baggage attached to it. And I really admire the people who went out of their way to push back or to quit the system. One is the actress Cameron Diaz, mega a list actress. And then she said she's done. She's done acting. Now she's still famous. I'm sure the paparazzi still hound her and whatnot. She can't get rid of that. But for people who say, I've

had enough, I achieved what I wanted to in this industry and I'm and I'm out of here the other example I don't know how to pronounce his band's name it was spelled G-O-Y-T-E and they had one mega hit in 2012 I don't know how to pronounce it goy goy-y would whatever it sounds like goy-y. Yeah, I think that's what it is and They had this mega mega blockbuster hit in 2012. It's all over the world. It's like the top song and then they just quit. They said, we're done. Like, we're never gonna top that, we're outta here. And I have so much respect for that

if you can actually pull it off. It's the people who feel like they start with a mega blockbuster and then they have to top it the next time that you are guaranteeing yourself depression and misery if that's your goal. You had this other bit saying expectations are easy to ignore because their value isn't on a price tag. What's that? Well, we know what is the cost of a Ferrari.

You can look at the price, you know what the cost is. It's very easy to measure and put on a spreadsheet and get with precision. This is the cost of a Ferrari. Not only is this the cost, but here's how much work you have to do to earn that much money. So it's very quantifiable. But what is the cost of high expectations? Most people are completely oblivious to them, and you can't really measure them with a lot of precision. But they are an enormous cost because they're weighing on your happiness. And so that's that's really what it is. And that's why they're so easy to ignore is because they're not on a price tag. that it's not quantifiable.

How do I say, like, how do I quantify the fact that I have hired expectations for medical care than John DeRocca feller did? How do you quantify that? You can't, but it's very real. It's extremely real. Yeah, I've got another one for you, dude. So me and George Mack have been working on this for a while,

hidden and observable metrics. And it's our contention that people trade hidden metrics for observable metrics. And it's mostly to do with the gamification, the ability to track, like how visceral and how front of mind it is. But a good example of hidden metric would be the quality of the relationship with your significant other. Or time is an odd metric. It's kind of hidden. It's kind of not peace of mind, sanity, right? Quality of sleep, your ability to spend your attention where you wanted to be as opposed

to it being distracted. All of these things, right? Happily traded for a raise. Happily traded to change to a different job, which is twice the distance away. One of the biggest determinants in someone's life happiness is the length of their commute, right? I lend that from Jonathan Hyte. Like, if you want to be happier, half your commute. Don't worry about the wage. And yeah, people will happily, well, I'm going to spend an extra, you know, 45 minutes

there, 45 minutes back, which means an hour and a half that I'm not going to spend with my wife. And that's going to cause this amount of degradation of the amount of relationship, satisfaction that we get, but 20 grand x for a year or whatever, right? Hidden metric traded for an observable metric. And the fact that you can measure your salary down to the penny and only that, but I can compare mine to yours. So if we're in a society where it doesn't matter

what I have as long as I have more than you, I can measure that so cleanly. But what also matters to your life success in terms of the quality of your marriage, your ability to be a good parent, your own happiness to sleep eight hours at night with a clear conscience, those things are very hard to quantify,

if not impossible to quantify, but they matter more. So I think all of that observable versus uno-observable, that's what it is. But they matter more. So I think I think all of that observable versus unobservable, that's what it is. It's just we're searching for something that's so easy to quantify. Everything else, even if it matters more, it's at a site, at a mind. George is trying to battle back against this by making the hidden observable. So he's got some type form thing that populates a Google sheet, it's peak autism. And he puts in at the end of the day,

how many stars he was, did he wake up at this time? Did he do these things and tries to track correlations? And basically tries to bring the hidden into the observable realm. So he's forced to quantify that, which is usually just kind of like an ephemeral wishy-washy notion. It's like this ambient fucking sense behind the back of his head.

So to kind of round this out, and I think it's a really, really important point, I'm so glad that you put it in the book. Presumably, there are two things that you can change, right? Either your expectations or your circumstances. You can either reduce your expectations down, or you can raise the quality of your life up on whatever metric it is that you're playing about with, tactically, have you found any way to reduce your expectations? The only thing that's worked for me, I wrote about this in the psychology money, was this, it was an observation that I had when I was a valet at a five star hotel in Los Angeles during college. And there would be all these people driving in in Rolls-Royce's, Bentley's, Lamborghini's. And I realized, I was like 20 at the time,

but I realized that never once, when somebody drove in in a Lambo, did I look at the driver and say, oh, that guy is so cool. What I did is I imagined myself as a driver. And I thought if I was a driver, people would be looking at me and thinking that I'm cool. But I was like, wait, but I never do that for the drive. I just imagined myself.

So then it was, nobody actually cares about the driver, but they want to be the driver, because they think people will then care about them. And it was just like, once you recognize that game, and the big takeaway is like, nobody is thinking about you as much as you are. They're busy thinking about themselves. And once you realize that, no one's paying any attention to the size of your house or how nice your car is. Nobody's paying attention to your clothes.

Nobody is paying attention to him as much as you are. Once you recognize that, then I think your desire to put out your peacock feathers like that diminishes. Not to zero. It's not to say you should look like a slop. It's not that in the slightest. It's just when you realize that nobody nobody cares about your seconds, your circumstances, as much as you do, because they're busy worrying about themselves. Then I think it's much easier to keep

your expectations in check and be like, why do I want to spend money on this thing that's going to make me look better when nobody's even paying attention to it? Except maybe the people who are like very close in my life, my spouse, my kids, my parents, who don't care about the clothes that I'm wearing. They love me for being me. That realization for me was like, okay, look, I like nice homes and nice cars, but when you recognize that game, I think your ambition for those just peacock feathers aspects of life goes way down.

Wild minds, people who think about the world in unique ways you like, also think about the world in unique ways you won't like. I started to think about this years ago when people were like Elon Musk is kind of rude on Twitter and he's saying the wrong things and he's not very polite to people. And of course this is a guy who at age 30 took on GM, Ford, and NASA at the same time and succeeded. Of course, he's not a well-balanced individual. Of course, he has these crazy quirks, and of course, he thinks that the rules of society don't apply to him, because that's what you like him for.

The reason that people like and admire Elon Musk is because he doesn't think any of the rules apply to him, and he's willing to take these bonkers bets on new technologies and new engineering. And with that, an unavoidable part, an undivisible part of that, are these parts of the world where he thinks about the world differently than used in negative ways. And he can be a journey, he has different political views than people. And you cannot separate those two. You cannot have somebody who is a crazy out of box thinker in a positive way and also dresses and speaks and looks and is polite like an average citizen. It does not exist. Every person who has outside success is going to have some traits in them that are bad.

Even if someone like Warren Buffett, it's like the best investor of all time, came at the expense of time with his family and his kids. There's always, most people, I heard this quote the other day, everybody adds up to the same number, but there's different ways to get there. And I think most people who are abnormally good at one thing are almost always abnormally bad at something else. Like, those numbers are going to even out in the end. So, if you take somebody like Musk who is off the charts talented at engineering and risk-taking, entrepreneurship, of course, he's going to have traits in which he is abnormally bad in

equal parts to what he is good at. And I think there are so few exceptions to that. Actually, the closest that we've come to an, a crazy thinker who looked and acted like a normal CEO is Bill Gates. There, there, there aren't many others who are like that where it's like he was this crazy, hard-driving visionary, but he wore a suit and said the right things on conference calls. There aren't many people like that. Even if you looked at Mark Zuckerberg, he was one of the first two, he's just like, I'm going to wear t-shirts and jeans. And even that little thing was just like, he didn't look the part of what he was supposed to be doing because he's just like,

I'm going to do it my own way, I'm my own person. So for all of these people, there are traits. And to me, it's just like be careful who you look up to because you cannot pick and choose the parts of people that you look up to. So you can't say, this came from Naval. You can't say, I want his body and his mind and his wealth. It all comes with the same package. So if you look up to this person and say, I want to be like that guy, well, you got to take the full package, the good and the bad.

They always come one and the same. That Naval sequence has inspired like probably 10 blog posts. For me, there's another one from Jason Pargan, which is great, except that all of your heroes are full of shit. Your heroes aren't gods, they're just regular people who probably got good at one thing by neglecting literally everything else. So, you know, Tiger Woods, Galt Golfer, not a fantastic husband. Alan Watts, Life-Changing Spiritual Teacher, Died of Alcoholism, early. James Joyce, guy that wrote Phinecom's Wake in Eulaceys, masterful author, but also posthumously a bunch of fart fetish love letters that he wrote to his wife, got released.

Like, you know, you might want to be the best golfer on the planet, but you want to be chased down the driveway by your wife, wielding a club that presumably you got for free from your sponsor? Like, you might want to have millions of people fall asleep to the things that you say in this beautiful British accent, but do you want to die early because of how much you drink? Or like, you might want to write blockbuster novels like Eulicees and Finnegan's Wake.

Do you want to have your innermost thoughts about the different types of farts that come out of your wife while you have anal sex with her, be released to the world upon your death? Probably not. No, I guess you would say no. I read a lot of biographies of entrepreneurs and generals and presidents, never once, not a single time,

have I finished a biography of someone who achieved these mountainous heights in life and said or thought I wish I could have lived that life and and the opposite is almost always true The is usually at the end of the book. It's like you achieved a lot But that was that was a insane life that I never hope you pay within within a hundred miles of it I just finished the Ken Burns documentary on earnest Hemingway and. And here's another, he was the author of The Century. I don't think that's an exaggeration. And his personal life was the most despicable, miserable,

immoral, drunken life that you can imagine. And of course, he ended by taking his own life. And but the finer details of what his day-to-day life were like, nobody would look at that and say, that looks fun. It was easy to glamorize the life of a writer, this big macho guy who loved bullfights, but like the actual of like his love life, his family life, his alcoholism, his depression, was terrible. It was awful. And I also don't think that you can detach how good he was of a writer from that alcoholic depression. They were one in the same.

It was driven by that. And it was that messed up mind. It was that pain in his head that created the good writing that we all enjoy. What does it say that the people who we most admire are the ones who have the least admirable internal states? I think that was kind of the point of this chapter. It's like be careful who you look up to. And after that, I started trying to admire people in my life who I thought lived a good

life, but were like, I mean this in the most plightway, like very average. They're like not not the celebrity, not the billionaire entrepreneur, but who do I know who's just like, oh, that that guy is a good husband and a good dad, and he's in good shape, he takes care of himself, he takes care of his family, he's smart, he's educated, he's funny, and look, he doesn't make that much money, nobody knows who he is, but let's leave that aside,

the rest of his life looks amazing, and it's something that I want for myself. I wanna be a good husband, I wanna be a good dad, I wanna take good care of myself. So rather than looking up to the famous celebrity, look up to the guy across the street who nobody knows. That's actually who's closer to your role model. Yeah, the same personality traits that push people to the top

also increase the odds of pushing them over the edge. And I found out that we're both mutual fans of John Boyd, who, if you want to talk about extreme personalities that achieved stuff, this is a guy who actually wrote the book on fighter pilots for the US Air Force during a kind of a glory period, right? Sort of 40s through to 80s, which is kind of like this era of fighter pilots. And he would smoke cigars. I think once there was a story that he just put his cigar out on one of his commander's ties. He just... He was an absolute monster. There was some story. I like you getting some of these details wrong,

but there was a story of he was in the barracks with his fellow air forcemen. And the heater wasn't good enough. It was in the middle of the winter and they were all cold and the army refused to put in new heaters. So he burned the barracks down. He lit them on fire and burned the bed just at a protest. And there's all these scenes of these little things, if he would be in a meeting with his superiors, with generals, and he would be,

he would like bite the callus off his hands and spit it across the table. Just like, he was just a monster of a human, but he was so talented at being a fighter pilot, and he was so good at figuring out the math of the certain speeds and the trajectories of how you wanted your plane. But with that ridiculous talent came this personality that was like impossible for people to put up with. Wild numbers, people don't want accuracy, they want certainty. There's this great quote where Jerry Seinfeld and Jimmy Kimmel are driving in a car.

And it's this old car. It's like this old relic of a car, this like this old custom car. And Jimmy Kimmel gets in and he says, there's no seat belts in here. Does that bother you? And Jerry Seinfeld says, no, but tell me the truth. How often in your life have you actually needed a seat belt? And like it's a joke. It's supposed to be funny.

But in that is like, the world is governed by odds. It's not black and white. It's like, of course there's an 80% chance that this stock is gonna go down. But then if it goes up, was I wrong? Like no, this is not a black or white thing. This happened in a big way during the 2016 presidential election when Nate Silver, who is a very famous statistician who predicts elections, he said that the odds were that Hillary Clinton was gonna win.

And I think at the time he said there's a 70% chance or 80% chance that Hillary Clinton was gonna win. And I think at the time he said there's a 70% chance or 80% chance that Hillary Clinton's gonna win. Obviously she did not win. And so the next morning, every headline was Nate Silver was wrong. Nate Silver got this wrong. Nate Silver blew his forecast. And he was like, no, I said there's an 80% chance he's gonna win, which implies there's a 20% chance

that Trump is gonna win. Just because that's what happened doesn't mean it was wrong, but most people will not accept that form of thinking. It's black or white. Were you right or were you wrong? And so that's like, it's a big flaw when people think about numbers in the world and data and statistics is that the world is governed by probabilities, but everybody thinks in just binary.

Yes or no, right or wrong. And it makes it so it's really difficult to know who to pay attention to. Like, you want to be paying attention to the Nate Sovers who think about the world in probabilities. And even when they are quote unquote wrong, it's like, it's actually really tough to tell whether that was like a bad call. Like, he easily could have been right.

Like, there was an 80% chance Hillary was going to win. That was probably the right statistic, even if it didn't turn out to be how it, what happened in the real world. So the way that people think about numbers is screwed up in all kinds of ways. And it just makes it, that's part of the reason that we're so bad at predicting markets and politics

is like the world is governed by probabilities, but we always think binary, right or wrong. I think there's something seductive about a person who is able to speak in binaries and black and white as well, because it seems like certainty, which is a good proxy for expertise. And you don't actually know, like if everyone's just throwing shit at the wall, and my shit's sexier than your shit, even if my shit's wrong, it's going to garner more attention.

Right. I see this online with, you know with other cultural commentators and people that do YouTube and podcasts and stuff. I'm very, I'm chronically uncertain of everything about, and it's why I don't really make big proclamations about much that I don't have an area of expertise in. Didn't bother commenting on COVID, didn't bother commenting on Ukraine, didn't bother commenting on Israel, because I don't think that the world needs more noise, it needs more signal, and uneducated idiots like me

who don't have specific knowledge within that domain, giving cod psychology opinions about it is precisely the problem that we're trying to battle back against. That's a sad idea. You had a post on Twitter recently, that was just about this for what's going on in Israel, where you said, I don't know enough to comment

on the situation and I know there are a lot of people who took issue with that. Well, how can you not know more about this situation that you don't know more about? I don't know, it is what it is, but I think the world would be a much better place if people that didn't know what they were talking about tried to not talk about the things they don't know about. And we all get out over our skis,

right? You know, that same thing I spoke about early run, like if you're someone who has a young, medium or old age garnered a little bit of attention, why shouldn't I give my thoughts on epidemiology? Why shouldn't I give my thoughts on the lab leak hypothesis? Why don't they want to know about my opinions on immigration. You know, they're very, very interesting when it comes to productivity or focus or whatever the hell else that is that you talk about and you think. Again, with that, there's seductiveness to fluency in particular, but absolutely certainty to, this guy called Peter Zayan,

real interesting guy, geopolitics dude, and I don't know enough to be able to stress test his ideas, but I know one thing, he's one of the most certain humans when it comes to speaking that I have ever heard, and he came on the show, and I found him very compelling, but I don't know much about what we're gonna do. Go and dig into the fucking demography of China, and be like, oh, actually, I think it's not gonna be 650 million,

it's gonna be 750, like I'm not gonna go do that, right? But I remember thinking at the time while speaking to him, and I kept in touch with him, I think he's a very interesting dude. Wow, like this guy speaks with so much certainty and he has vehement fans on the internet. And I think it goes right back to what we said at the very beginning, which is people uphaw a vacuum and they uphaw uncertainty. And if you can give them something that seems like order wrangled out of chaos. Oh, you're, you're, I allow me to become an evangelist.

Like, you know, I will pray at the altar of the person who can tell me what's going to happen. Yeah, I mean, this is, this is cults. How many fucking cults are like, the world's gonna end on the 21st of December, 2012 or whatever it is. And then it doesn't happen, but the certainty was so much there that the seduction continues, even when the certainty was proven to be wrong.

Even when they're wrong. Because what people actually want, they don't want the truth, they don't even want an accurate forecast, they want to reduce the uncertainty that exists in their head at this moment today. And so even when the pundit is wrong, people don't care. Because a pundit already did its job of reducing uncertainty when they went on TV last week. And so that's a big part of this. If you go on TV and you say, there's a 20% chance of a recession next year. That would be in your last time on TV. But if you say 100% chance, and it's gonna be bad,

and it's gonna affect these people and these industries, your phone will ring off the hook, because you've just reduced uncertainty. Even if what you are professing is something that's pessimistic and is scary. If you say it with certainty, people like, that's who I want to pay attention to. I think a lot of religions are probably like this too. Like most religions don't say there's a 20% chance that haven't exists. It's this is exactly what's going to happen with a 100% certainty and there's no wiggle room. The Church of Housel, I'd attend that.

But that reduces uncertainty when you know for certain exactly how the world works and what's going to happen in the future and what's going to happen in the afterlife. There's a very comforting aspect to that that removes uncertainty that is so unpleasant to deal with in your head. What is it about the sufficiently big sample size playing out thing that you talk about? One of the things that's always struck me is that since the end of World War II, when we've had pretty good economic data, of like we track the economy with a lot of precision, there have been, I think, nine recessions, which is not that many. Like the sample size that we're dealing with right now is ridiculously small. And if you wanted to really be an expert

on economic history, you would, if you had like a wish from the genie, you would say give me 100,000 years of apples to apples data that I can study the economy. Like let me study the last 10,000 recessions. But of course we don't have that. We have good data on nine of them. All that we're each that was caused

by like a very specific thing. So it's, we really don't, for something as fundamental, like an important for society, as recessions and economic growth. The truth is, we really don't know that much. We don't know what a really bad recession looks like. We don't know the peak of our, of our potential, or like how fast the economy can grow. Our sample size is so limited. But since it's all we have and because it's still 80 years worth of data, it seems like a long period of time. It's very tempting to say the average recession lasts for eight months or whatever it is. It's very tempting to say the average recession unemployment goes to 8%. But when you look at that average, what that average is, like there are so much else that could happen

for good or bad, like the economy being way stronger than we think it could be, or way worse than we think it could be. Once we realize that the data that we're looking at of economic history is so limited. You talk about unfortunate odds and recklessness and kind of distinguishing between the two. I think are.

Retroactively even if we can see what occurred. In the past, it's so hard to try and. Work out the correlation, okay, was did these two things just happen together or did this thing actually cause this thing to happen was it unfortunate Was it recklessness? It makes this entire situation really messy. You know, the one thing about a lot is that in 2007, I think it was, Mark Zuckerberg was offered a billion dollars for Facebook and he of course turned it down. And we look at that and we're like, what a freaking genius he was because now the company's worth a trillion dollars or whatever. Like one of the smartest decisions that you could ever make. companies worth a trillion dollars or whatever, like one of the smartest decisions that you could ever make. But during that same time, Yahoo was offered $50 billion

for Microsoft, then Microsoft wanted to buy Yahoo and Yahoo turned it down. And we look at that and we're like, idiots, like of course you should have taken it because now I don't know why Yahoo's worth but it's not within 20 miles of $50 billion. And so you look at that and it's like, well how do we know Mark Zuckerberg made a great decision and Yahoo didn't like like there's such an easy world to imagine in which Facebook was a flash in the pan and Yahoo became the next Google you could easily imagine that world it didn't happen but it easily could have happened.

So when we look at these retroactive decisions and say these retrospective decisions and say look Mark Zuckerberg was so smart and Yahoo was so stupid. It's not that clear, even if that's what actually happened. And they're all these alternative histories that not only could have, but should have happened, that could have made that narrative so much different than it is. Everyone's post-hoc rationalizing everything all the time. The more that I've dug into personal growth

and development and been around successful people. The vast majority of what people are doing is I have found a particular strategy that resulted in success for me, given my idiosyncrasies and pathos of least resistance and genetic predisposition and upbringing and culture and timing and gender and all of that stuff. Let me now create universal laws for everybody that is a retrospective justification of how what I did that gave me success is something anyone can do that can give anyone success. When the irony is the reason that you are successful is because it only worked for you. If that could work for everybody, everybody would do it, and that skill wouldn't matter at all anymore. Like the whole reason that this person got successful

is because nobody else could do that thing that they're now trying to turn into a universal law. So I think there are some things that we can learn from these major successes. Like if you're looking at Warren Buffett, the traits that you wanna learn from is like his patience, his endurance. But I don't think you should learn his stock picking skills because so many of those skills were honed in 1950 when this market was completely different than it is today. So that's why one of

the most famous investing books is the Intelligent Investor by Benjamin Graham and was first written in the 1930s. And there is, of course, a lot of timeless wisdom in there. But there's also a lot in those books that is like hyper-specific to the economy in the 1930s and the 1940s, that if you tried to implement those formulas today, you'd lose everything. It was just relevant to that period of time. And it's not something that you can scale into a universal law. Best story wins. Stories are always more powerful than statistics. Why? It drives you crazy if you think the world is going to be governed by the right answer and the best answer. And if I can just come up with the right answer, like that's what's going to

change people's minds. And it's almost never the case. It's always the case that what actually like gets people to nod their heads is just whoever's telling the best story, the most compelling story. And even if the person is, it's not to say that they're fooling people, but if you have the right answer and you're not a good storyteller, you may or may not get ahead. But if you have the right answer and you're a good storyteller, skies the limit, those are the people that really run with it. It's so easy to discount the power of a good story Because it's a soft skill like a lot of analytically minded people think if I can just find the right answer in the spreadsheet

If I can just create the product that works the best everything else will take care of itself And it's it's not how it works We were talking earlier. I've right about this in the book Ken Burns who I think is just absolute genius documentary filmmaker and everything he who I think is just absolute genius documentary film maker. And everything he's ever made is just 10 out of 10. It's so good. And one of the things he does so well is incorporating music into his documentaries.

And he's talked about this before where he will literally change the sentence structure of a script so that a specific word that the narrator is saying matches with a specific beat in the background music. The emotional word matches the emotional beat at the same time. And no other filmmaker, no other historian, is doing that. Most historians would just say, if I find the right information in the library,

like that's what I'm gonna present. And Ken Burns is like, no, this is gonna be a performance. And because of that, I make this point that almost nothing Ken Burns has ever published is new information. He writes about, he's made films on the Civil War in World War II and the Holocaust. These are very heavily studied events.

Everybody knows how the story ends. But his magic is that he's the best storyteller that exists of any historian who's ever existed. And because of that he's the best storyteller that exists of any historian who's ever existed. And because of that, when the Civil War documentary came out in 1990, Kenburn Civil War documentary, more Americans watched it that year than watched the Super Bowl. And this is about an event, the Civil War, that everyone has been reading about since great school.

There's no new information in the documentary, but the storytelling is so captivating that it moves mountains. I think this is true for Michael Lewis, too. There's been no better business storyteller in modern times. Look, with some of what's come out recently, like he doesn't necessarily always get the story right, per se. It can be easy to criticize him. But maybe this is just because I'm a writer. I just finished going infinite the book about FTX. And even if yes, there are parts like many other people where I thought he was being unfair and supporting SPF in ways that I didn't agree with. But his storytelling is so good. His sentence structure is so good. His writing is so poetic that I will read it all day long, no matter what it comes out with.

Like, the best story is always going to win. I feel like that when I read yours, man. I adore the simplicity of your sentences, whether it's on your blog, collaborative fund, and there's a newsletter that I subscribe to. I want to say sorry to whoever else writes for you because my first thing is I click if it's not got Morgan Haussle written at the top, I just ignore it. And then you're only one so I've read and I'm sure the rest of the right is really great. But I just focus on you. Yeah, the simplicity of your sentences, even some, I guess you would you break convention in your books,

especially in the new one, single lines, three or four word lines that are paragraphs all on their own. That was very intentional. And the publishers don't, don't like it. But that's how all on their own. That was very intentional and the publishers don't like it. But that's how I like to read. And I think it's, I think what a lot of readers really want out of a book or what really makes them feel good is making progress. They're like, oh, I finished this chapter. I finished this level moving on to the next. And when you have, when you turn a page and it is solid, uninterrupted block of texts,

it's very easy to be like, oh, God, like what do I got in front of you? Not today, Satan. But when it's quick, when it's a quick line, it's just boom, boom, boom. It's much easier to a feel like you're making progress. But it's just an easier format to read it. You can just kind of breeze your eyes over the page and soak it up rather than like really dense,

powerful reading. So I think that structure is, it's part of it. And yeah, you're right, I don't think most readers think about the length of their structures or the visibility of what a paragraph actually looks like, like a block of text, but it's critically important to the reading experience. Yeah, your books have a particular robustness to put downingness. Like, it's very difficult to put them down for precisely that reason. There's a little bit more and there's another little thing, oh, there's a story about fucking World War II. Like, let me get into that. And yet, for my newsletter,

I stole a bunch of ideas yourself, James Clear, Ryan Holiday, even some of the conventions that he uses. And the news that this is kind of commonly done now, but it's one sentence per paragraph with small align breaks in between. And it's just straight through, super easy, very nice to read, tight margins. So yeah, like stuff like that, and we were talking before we started about the story that I try and tell with these big productions that I do on the show. You know, I want to, we choose the location of these particular venues based on the guests that we're speaking to. So, you know, we have Patrick Betdavid coming on, and he's kind of like a power guy, like

a power broker kind of guy, he's like a mafia boss. So I wanted a wall of bucks, right? Or we have an Andrew Hume and coming on, who's kind of this interesting blend of science and precision with kind of raw masculine kind of grittiness, like in terms of the way that he presents. So he found this beautiful warehouse with exposed wooden beams, so it's kind of got that rawness to it,

but it's organic as well, and it sort of humanizes it. Or we do Peterson, and we did him in the alamo in San Antonio, and it's got this sort of beautifully ornate blinds behind him, this sort of wooden blinds that's casting this very particular kind of light through. So, you know, we're trying to do something to just create this little bit more of an event, of light through. So, you know, we're trying to do something to just create this little bit more of an event, of an occasion, but you're totally right that, you know, many of us, me included, how many times have we felt resentment for somebody who we think has achieved success that they don't deserve because of the way that they look, or because of

something which is outside of the substance of what they're doing. You know, all style no substance is a meme for a reason. And, you know, with Ken Burns, you could spend forever designing the sentences to hit the beat of the music and do all the rest of the stuff. But ultimately, the reason that it works is because of the story that is then packaged in the way that's appropriate. And going back to what we were saying before

about certainty, fluency is another thing. You know, if you've got some beautifully fluent person, you've got this great story about Martin Luther King. Right, if you have someone who's unbelievably fluent, not forgetting that he went off script in his famous, I have a dream speech, and he gives himself a pattern break, right? He starts doing it, follows the script, goes,

ah, no. And then free styles it. Like, that's it. The fluency literally outdid the rational, prescribed, well thought out arithmetic stuff. The good, the script that he and his speech writer wrote that day is what he started to speak from. And then there is a gospel singer in the crowd, a couple of lines in front of them, who was a friend of Martin Luther King. And you can actually hear this in some of the videos. At one point in the speech, she turns around and she says, tell him about the dream, Martin, tell him about the dream.

And you can literally see this in the video at that point. He takes his script on the podium and he moves it to the side. And then he looks up to the sky and he starts saying, I have a dream and then the rest is history. And he had actually practiced that, I have a dream. So it was another speech that he had given before. But in the moment, I think he could dissense at the speech that he was prepared to give was not the best one that day.

And that the gospel singer, Melali Ajaxi, was right that the, I have a dream, was the one he should have been doing. And he just started freewheeling it and became literally the most famous speech of modern history. How stories like leverage when you've got a complex topic? It's like leverage because you can squeeze more value out of them than you could just get by just putting raw data on the table. So I mean, you can, you know, if I think a lot of entrepreneurs will think, if I have a successful company, I need to come up with something brand new, like the reinvent the wheel kind of thing. And a lot of times you don't, you can take a pre-existing product

and just tell a better story with it. Like, boom, you're up to the races, that's great. And so, there's once you realize how much leverage you can get out of a story, or how powerful a story can be, like the field of opportunities in front of you is endless because you don't need to come up with something brand new. Ken Burns is the 10,000th person to document World War II. But he did the best job of that because he told a story. If Ken Burns had to find new history, find a new event that you've never heard of for his things, like forget about it.

You can't do that. But if you can use a good story to leverage his already out there, you can become the most famous storyteller of your era. What's the complex bit? Why is it when a topic is complex stories are like leverage? Do they help to synthesize down confusion? Yeah, I mean, I mean, most people's tolerance for complexity is so limited. And everyone knows like the dull professor who just talks in p-values and it's just like writes in charts and is so monotonous. And if you can switch that out with a good storyteller, like off to the races, like there's so much you can do out there. So it's particularly in the complicated topics that are boring and dry and dull. This is why Richard Feynman was such a genius.

He took physics, which is so boring and so dull for most people. But he could tell a story about it. There's this video online, you should, people should search for it. It's, he's explaining the physics of fire. I'm like, well, like, how does fire actually work? And I'm not gonna do it anywhere near the justice, but he's like, imagine a trampoline with two bowling balls on it,

and they're both competing for space and they're running into each other. And when they're running into each other, like they move around, and he's describing how molecules interact with each other that creates fire. And I didn't do the accurate job there, but when he does it, you're like,

oh, that's so entertaining. And by the way, I understand the physics of fire now. In a way that if I just pulled out a physics textbook I would have been like So I I don't understand it and if I understand it, this is so boring to read Yeah, I like that and again The best diet is the one you stick to the best fitness plan is the one that you follow the best habit is the one that you're compliant with Ultimately in order to be able to get whatever the information is that you want across,

you need to play the game using the rules, and the rules include all of the lack of attention and boredom and ease of distraction and everything else that humans have. Eric Weinstein said this to me about, in a stickiness arms race, the most sticky message is the one that wins, not necessarily the one which is most accurate. And, you know, this is how cultural memes take hold. Like, I have a friend Mary who says meme first explain later, which is why coming up with a name for something a great name. I will retrofit the idea to the fucking name. Like get the name. Because, presuming that, like, if the idea is bollocks, it doesn't matter.

It's the packaging in many regards and I think the storytelling side. But, you know, I still see inside of me that, oh, it's almost like a purity, like a puritanism to like, this is the way that it should be done. It should be, you shouldn't need to dress up the facts. It should just be the raw data and the fact that it's truthful and honestly blah, blah, blah. And it's like, no, dude, like, this thing's gotta be sexy. Victoria secrets, they even they are rolling back

the change in branding from the last couple of years. They're pivoting back towards sexiness. So. Very famous example from Steve Jobs with the iPod, where you could have called it digital MP3 player. But instead, what Steve Jobs said was a thousand songs in your pocket. That's just a story.

And for the people who are just like, we don't need to dress up the technology. It should exist on its own. They would have called it digital MP3 player, which is probably what Sony and Panasonic did. And Steve Jobs said a thousand songs in your pocket, which everyone can easily be like, oh, that sounds great, I love it.

That's what I want. It was just such a brilliant era of storytelling. a thousand songs in your pocket, which everyone can easily be like, oh, that sounds great. I love it. That's what I want. It was just such a brilliant era of storytelling. Does not compute. The world is driven by forces that cannot be measured. There's so many examples when you're watching a group of people or an individual do something and you're like, why are you doing that? Makes no sense whatsoever.

You should have quit long ago. You shouldn't be doing it, but they keep doing it. And if you expect that every person is a rational thinker, and they're doing things that make sense that add up on the spreadsheet, you're going to go through life completely bamboozled at the number of people who don't. And so I used this example in that chapter of, during, at the end of World War II, the Battle of the Bulge, when the Nazis attacked the Allies, there was a big, they made a big counteroffensive. It was a complete surprise to the Allies.

They really never saw it coming, which is why the battle was such a big deal. And the reason they saw it coming is because the US generals, the Allied generals, thought there is no rational world in which the Germans would counter attack right now. They don't have enough troops, they don't have enough supplies, they don't have enough fuel, the weather is atrocious, the geography is not in their favor,

so therefore we assume they're not going to counterattack. What they missed was that the Germans were not rational thinkers at the time. Hitler was not a rational thinker. He was completely out of his mind. And so because the Allied generals assumed that their opponent was rational, they missed what actually happened. That's why they were so vulnerable. So going through life, assuming, it's the same with market bubbles. If you assume that people are rational with their money,

like of course they're not, then you're gonna be completely bamboozled when once a decade there's a massive bubble and people light their money on fire and you can't figure out what's going on. Well, what's going on is things just don't compute. There's a human element. Like the world is not governed by spreadsheets.

There's an emotional hormonal human element that's very hard to track, impossible to measure, but it has some of the biggest outcomes in any of these activities in life. Who's Archibald Hill? Archibald Hill was this crazy, he was such a cool guy. He was a physiologist about 100 years ago. And he such a cool guy. He was a physiologist about 100 years

ago. And he was a big runner. He was an athlete. And because he was a physiologist and an athlete, he devoted a lot of his career to just trying to answer the question, how fast can people run? Given my body, given my aerobic capacity, or given your body, what's the theoretical limit on how fast we can run? And he came up with all of these formulas. He was kind of the early guy who came up with VO2 max, which a lot of people are familiar with now, to really measure like how people process oxygen, how it's dispersed throughout your body, the lactic acid build up in your legs. And he came up with a formula for how fast people can run. And it was very accurate. So people like these athletes would come

into his laboratory, and he'd run his tests. And he would say, you know, make this up. He'd say, Jim, the fastest you can run a mile is six minutes and 32 seconds. And Jim would go on the track and give it all he's got. And he'd run it in six minutes and 32 seconds. Like this formula was very accurate. And he'll actually won the Nobel Prize in medicine, I think in 1922. But there is this quirk about it in that his formula was never able to predict a race winner, like in a competitive race. You could not use this formula and predict who is going to win the Olympic gold medal in track.

And I think this is kind of bothered. It bothered a lot of people in the field and it bothered him as well, that this formula was so accurate on the track, on the test track, and had no accuracy in the real world. And they eventually figured out what was going on here, which is that in a competitive race, like the Olympics, when the stakes are very high, people get nervous, they get excited, they get rushes of adrenaline, they get all these other emotions that cannot be replicated on the test track when the stakes are low.

That completely alters your performance. And therefore, like, his whole takeaway was, your aerobic capacity, your ability as a runner, is not just about your machine, your body. It's your body within the context of all you're in the moment incentives. And the crazy hormones and feelings going through your head, it's those two things in combination

that creates your actual capacity. So I phrase this too of like, if you said the fastest you can run a mile is six minutes and 30 seconds and you say like, I gave it everything I've got, I can't do it faster. But then if I said, hey, if you could do it in six minutes and 31 seconds,

I'll give you a million dollars, you'll figure out a way to do it. Like once the incentives change in the moment, you become a completely different person. And so I think that applies to a lot of things in life. And it's why things don't always compute. It's not just a spreadsheet. You have to figure out what's going through people's heads. So logic has its limits and our ability to be rational and make predictions is always going to bounce up against things that aren't able to fit inside of the model. Always. And it drives people crazy. This is just like Best Story wins, where if you assume

the world is governed by logic, you're going to be led astray your entire life because it never is, whether it's the Germans deciding to attack when they shouldn't or trying to predict athletes' performance, I grew up as a ski racer. That was my sport. Not a very popular sport in America, but that's when I follow. And the greatest ski racer, now of all time, is a woman from the United States named Michaela Schifrin. And she's the greatest skier, man or woman in history.

She's an absolute beast. She's incredible. And she has this thing that she's spoken about this publicly. It's not a secret that when the stakes are very high like in the Olympics So the world championships she before the race will vomit and it's I think she gets so nervous that her body just Just kind of gives up and obviously that has a huge impact on like your hydration and energy levels if you're throwing up before the races And one of the takeaways is like Michaela Schifrin on the test track On on when she's training is not the same skier

as she is in the Olympics. Her entire mindset is utterly different. And even like the physical composition of her hydration is completely different because when the stakes get high and people start getting nervous and emotional, they become completely different people. So you would think that her skiing ability

would just be like the strength of her core and her agility, her flexibility. And it's not like 90% of it. It's just what's going through her head in the moment. Ever DJ friend who for a long time wanted to be on Eric Pritz's label very much idolized him and then after a decade and a bit of working and producing and making songs, he ended up doing it and now supports Pryd's all around the world. He's played Madison Square Garden, New Year's Eve, shows with supporting Eric at his hollow projector thing. And there was a good chunk of time where he would throw up before he went on stage as well. And you see him backstage and he's just this

super cool guy, he's like sort of a buff like Northeastern, British dude. And before he'd go up because he cared, right? He cared so much about what he was going to do. And you look at the component parts of this particular person's talent and go, well, they're like, they are the function of this and this and this and this and this. And you say, yeah, but what about the context

and what about all of the other stuff that you can't imagine? Thinking about the crazy battle of the bulge and the insanity of Hitler, have you ever looked into Theodore Morrell that was his personal physician? I've heard a lot about it just because I know Hitler was drugged out of his mind, particularly in the last years of his life, but I don't know many details about it. Dude, if you come across a Theodore Morrell documentary, there's a few of them on YouTube that are great. It's amazing.

This guy was a total quack. He was injecting Hitler with bullsemen. He was on meth, injecting him with cocaine, like multiple times per day. There's this really interesting interaction between Hitler and Mussolini and it's one of these turning points in the war and I think that Hitler kind of goes really, really crazy and flies off the handle and all the rest of it.

And it's thought that Morrell had overdosed him with some drugs. I often think about just how much of what happened. Obviously, Hitler, not internet. I'm not just a fine Hitler, but I do. I do. Don't chop this video up. I do sometimes think about how much of the madness that we saw coming out of Nazi Germany was actually due to one particular quacky physicians, and then what he chose to do

to the leader of the Nazi party. And even for regular run of the mill soldiers, it's, there's another thing where it's like, it's impossible to know how you're gonna react and respond until there's bullets flying over your head. There's no amount of training and preparation that's gonna prepare you for that. You'll know this.

Isn't there some insane number of soldiers that went to, was it maybe Vietnam and didn't fire or they were firing in the air? They were purposefully not firing at the enemy. I forget the exact percentage of it, but that was true in World War II, where they could tell even the soldiers that were in front line combat. How many of them actually pointed their gun at the enemy and pulled the trigger? It's a very low percentage. And I think I would be willing to bet that a lot of those people probably knew it going into it.

I don't know if I could kill another human being, but I bet there are a lot of it who went in with a lot of bravado. And saying like, I'm gonna do it. And then they get up there. I can do it. Hit the targets and training. And then you see the whites of the enemy's eyes and you realize it's just another kid just like you.

And all of a sudden you say, I don't know if I could do it. And who are you and I to say that we wouldn't do the same thing? If you've never been in that situation, you have absolutely no idea. Calm plants the seeds of crazy. Crazy doesn't mean broken. Crazy is normal. Beyond the point of crazy is normal. It's just this idea that the reason there are so much volatility

and a lot of things in life, particularly the economy, the reason that we have booms and busts, the reason that we have recessions is because we have periods of calm. And when the economy is calm and people are really optimistic, they once they become optimistic, they go into debt because they're optimistic about their future. Of course, I can pay off this debt. Once they go into a debt and their optimism grows, the economy becomes unstable. Once the economy is unstable, of course, you're going to have a recession. So it's this weird thing, like in a world in which there were no recessions, no bear markets. Stock market never goes down. That is the world that guarantees the next recession. Because if we pass the law,

it's completely hypothetical. We pass the law, the stock market cannot go down anymore. The stock market can only go up. The rational thing to do in that situation would be to mortgage your house and sell your furniture and buy as many stocks as you could. Because they're guaranteed to go up. Once you do that, the valuations go to the moon. Stock prices get bit up to the stratosphere. And once the valuations are that high, they're guaranteed to crash. So this is like the irony of the reason that you have market crashes is because there's periods of calmness and calm always plant the seeds of crazy. And it's so tempting to look at every boom and bust, every bubble, every market crash and say people were crazy. Like, who do we blame here? Like who screwed up? And I just think it's such a natural phenomenon in

in economies. There was this economist back in the 1960s named Jaime Minsky from the University of St. Louis. And during the 1960s, there was this big idea that we are gonna eradicate recessions. That was a big idea in economic circles. And Minsky basically said, it's all bullshit, that will never happen. And his theory was called the financial instability

hypothesis. And he laid out what I just said. If there were no recessions, people would go into debt because they're optimistic. What's they going to debt? The economy is unstable. Once the economy is unstable, you're going to have a recession. So because of that, it's just in such a clean chain of events that you can never eradicate recessions.

You can't eradicate booms and bus because calm always plants the seeds of crazy. Yeah, you've got this idea about paranoia leads to success because it keeps you on your toes. And I guess this is an uncomfortable realization that part of the reason that we are able to survive the chaos of the world is precisely the emotion that we are trying to mitigate. Like our paranoia is the competitive advantage, which is keeping us going. It's this irony of like people are super paranoid about their career or the business that they started. And if you were to sit them down on the therapist couch and say, why are you so paranoid? They say, because like, I have this anxiety and I want to be successful because once I'm

successful, I won't have this anxiety anymore. I need to become rich so I don't have to worry anymore. So they become super, they wake up scared every morning. And because of that, because they wake up scared and driven, they're going to become super successful. And then once they get to some level of success, they say, now that I've made it, I can relax. Because I've made it. This was the whole point of getting rich was so that I could relax.

And then once they relax, the thing that made them successful, which was the stress in paranoia is gone. And that's that plants the seeds of their demise. And then you see that with so many companies, like companies that get fat and happy and lazy. And they become the absolute top of their game. And then they just become, they start to become oblivious. And then they start to lose it.

Sears is one of the best examples of like, we don't think about it much today, but Sears, which is a department store, was the biggest department store in the United States, similar to Macy's or something like that. And it was the most dominant retailer that has probably ever existed. I think Sears in its heyday was more dominant than Wal-Marter target or anything like that.

And now it barely exists. It still technically exists, but it's an absolute shell of its form of self. And if you look at the history of Sears, that's really what it was. It's like a hundred years ago, they were scared and scrappy, and that's what made them so successful. And then they became so dominant that they just got lazy. And that of course led to their fall, same with IBM, same with General Motors, same with AIG, it's like, be careful what you wish for for that, because a lot of times the reason

that you are so successful is because you have this trait that you are so eager to get rid of once you become successful. And once that happens, like boom, it's all over. Well, there's another question, kind of the reverse of this, is a question around, if we sacrifice the thing that we want for the thing which is supposed to get it, what the fuck are we doing? Like if we sacrifice happiness in order to be successful so that when we are finally successful, we can allow ourselves to be happy.

If this was an algebra equation, and I just removed success from both sides of the equation, you would just be left with happiness, right? It's the parable of the Mexican fishermen. Exactly. You're like, you're going to say the exact same thing, but this is, that this is an area where it does not compute enters the picture because life isn't an algebra equation. Yes. If people just did the equation, what you just said to make perfect sense and people

would be the Mexican fishermen, but it's, it, it doesn't compute. There's this element of, because from what we were talking talking about earlier, people's goal is not to become successful. It's become more successful than other people. So, there's never going to come a point where people say, oh, I'm completely satisfied. I can just sleep in and do some fishing and hang out with my wife. It's always going to be, I have to get to the next level. I have to beat the next person next to me.

Yeah. There's a scene in Rick and Morty where they play the game of Roy. You heard of this? No. It's in this. It's super legendary on YouTube. It's a one minute long clip. You can watch it.

It's just Rick and Morty Roy. It'll come up. And it's a computer game where you play an imagined life as this guy and he works as a carpet seller and Morty goes and plays it and he's a football player and then he has a hard attack in a carpet store and then he has a hard attack in a carpet store and then he goes back to the carpet store. And he comes out and Rick says to him, never go back to the carpet store, Morty. And then he gets in and this crowd sort of gets around his VR thing and they say, oh my

god, he's taken Roy off grid. Roy doesn't even have a social security number. And it always makes me think about people that are playing the game and people who have somehow managed to break the thermodynamics of the game. And the thermodynamics of the game, like a good person that I think is at least in part broken them, Ryan Holiday and Tim Ferris both come to mind.

Really? How so? I'm not that close, but I know both of those people. How so? So Ryan appears to be someone who has purposefully kind of like Cameron Diaz reduced the trappings of fame, ramped up simplicity as best he can, and he'll have his demons and goblins and all the rest of it, right? Like just like the rest of us.

And there's layers and layers and layers of whatever self-work to get to. But it seems to me like he purposefully leans into doing simplicity like he has his routine. He knows kind of where his mission lies and that seems to work. The same with Tim, that Tim has largely taken a pretty big step back from super public life. He's

not guesting on tons of podcasts. It doesn't seem like he's writing a book at the moment or at least he hasn't done for a little while. He still does his show, but even that, it's not so much about the YouTube and the Instagram stuff. It's like his audience and he owns this part of the audio stuff. I remember reading 13 reasons not to get famous one of my favorite ever blog posts. It's so great, it's so great. I take it back, I thought you were using those people as examples of people who got trapped in the fame,

but you're using them as examples of the opposite. Yeah, I agree, the Tim's post on 13 reasons not to get famous will make your jaw drop. To fucking masterpiece. It's great. And there's nobody who will read that and disagree with what he's saying. There's a massive downside to fame.

I think once, I don't want to speak for him, but I think once he experienced it, he pushed back at it in a pretty successful way. Yeah, it's very interesting. But the paranoia leads to success because it keeps you on your toes thing. Kind of also comes back to what we were saying earlier that the people who we most admire are the ones who have the least admirable internal states. If you were to trade places with the texture of Elon

Musk or Kim Kardashian or Konome Gregor's mind, you would probably not put the bill for the price that you'd have to pay. And again, hidden observable metrics. Again, this is why I love the fact that these threads all tie together, even though they're disparate ideas. There's a narrative that kind of weaves them all together. And fundamentally, it's our stupid desire for recognition and accolade and prestige

and to be seen and validated by the world, and to be slightly higher than the people that are around us. Does this idea, I meant to say earlier, on intergenerational competition theory? If you had of this. So it describes a situation where one of the biggest predictors of your quality of life, especially when you smear it across an entire nation, is how does this generation compare to its parents' generation at the stage of life that it's at? And you know, we've heard it's been a bit of a metamine for a while, you know, like millennials were the first generation to not do better than their parents.

But really with Gen Z, I think that that is being felt very, very closely. And even if the raw facts and data when it comes to cost of living minus inflation plus wages and all the rest of it, even if that kind of ends up not making too much of a difference, the way that it seems, I'm never going to be able to buy a house, people are staying in the house, the most common living arrangement for a man

under 30 is still being at home with his parents. Right, right. And I think social media plays such a massive role in this, of just who you're comparing yourself to now, is a curated algorithmic highlight reel of the fake scenes in other people's lives. And that becomes your baseline to compare yourself against too. And I see this in my own life of like,

when I was growing up, my definition of rich was the people who bought new pickup trucks and a normal person drove a used pickup truck. And you compare that to the current generation that grew up with YouTube and TikTok and Instagram and whatnot. Their expectations are in a different universe compared to by generations and your generation. And like what is that going to do to their well-being, their psychological well-being? You know it's not going to be good. And the people who studied this, Jonathan Hyatt of NYU,

of like teenage depression and suicide exploded when social media came out, particularly when it came out on mobile devices. Not went up a little bit. It went vertical during those periods. And I still feel like we're probably in the early eight, the early innings of that cycle home. Yeah, I would agree. And so it's pretty scary, particularly as innings of that cycle. Yeah, I agree. And so it's pretty scary, particularly as a parent of two young kids who are four and eight. What is their generation gonna be like when they're 17 after they've grown up influenced by social media

in such a profound way? What we've been able to facilitate is industrial scale comparison. Yes. That's fundamentally what social means. I think you, I think you, I think you, you'd take it one step further and say industrial scale anxiety is what it produces.

That's really what it was. It's designed to make you look at other people. Yeah. Yeah. Yeah. And it's designed to make you look at other people and feel a little bit worse about yourself. I looked at this study from Finland this week,

who's in my newsletter, that worked out that 15%, around about 15% of the increase in young female mental health, adverse mental health outcomes can be attributed to use of hormonal birth control. And I'd said this when I first learned about the impact of hormonal birth control. And I'd said this when I first learned about the impact of hormonal birth control on developing brains, maybe about a year ago, and I just sort of got it in the back of my mind, and I meant to tell Jonathan about it,

because I said, I don't know if anyone has like factored in the base rate of the increase in contraceptive pill use among young teenage girls. So there's a confluence of different things conspiring to try and damage the mental health of everybody. But yeah, man, it's not good. And you know, from a comparison perspective, think about yourself. Think about how you feel. I call it post content clarity. Like after you've spent a good bit of time on your phone, content clarity. Like after you've spent a good bit of time on your phone, like, you know, if you watch one type of thing, reading a blog, reading a collaborative fun blog or something,

and I'm like, oh, like, you know, I've spent five minutes reading this, reading this thing. What, how do I feel after that? Do I want to ring my mom? Do I want to go outside? Do I feel like the world is actually working with me as opposed to against me? Have I got agency or after I watch some panel argument about politics or something, I wanna just curl up in a ball and I wanna eat shit food and I don't wanna tell anyone that I miss them. And that very much is the duality of the internet.

And we always justify the toxic elements that we spend our time on by the needles in haystacks that we sometimes find. As my dad would say, a streak of piss in a pile of shit. I love it. This is true. I definitely feel like modern politics is explicitly designed to piss you off. And once you realize that that's the game, it's not a game that would want to voluntarily play that game, of which you are guaranteed to wake up every morning

and read your news, uh, site of choice, for it to explicitly just make you a little bit angry or at the other half of the country. And once you frame it like that, it's like, why would you voluntarily play that game? I'm gonna choose to play a different game. Too much, too soon, too fast. A good idea on steroids quickly becomes a terrible idea.

Yeah, there's this idea of blitz scaling in startups, which is like, and look, it came from very successful entrepreneurs. But it's this idea of like, however faster growing, like do it faster, like, whatever good idea you have, like do it 10 times better, 10 times faster, like go, go, go, go, and I think with blitz scaling usually comes blitzitz failing. Like there's a natural rate at which anything in investing or business or life relationships should go. And if you try to push it past that, it's gonna break, particularly true for relationships. Like there's a natural rate in which you should go from meeting someone to marrying them.

I have no idea what that natural rate is, it's gonna be different for everyone. But the extent that you're trying to push it further and faster than it's gonna go, it's gonna be different for everyone. But the extent that you're trying to push it further and faster than it's gonna go, it's always gonna lead to disappointment. So I think it's just understanding the natural rate at which these things need to grow at. And realizing that if you push them faster, it's all gonna break. It's so important.

It's really important in investing, where I say one time, the fastest way to get rich is to go slow. Because that's what always gets people, that's what always throws people off. It's like they get this investing strategy, or they're good at picking stocks, whatever it is. And then their natural intuition is like, great, now let's do it faster. I can earn 10% a year, like how do we get to 20?

I can earn 20, how do we get to 40? And it's gonna blow up 10 times out of 10. Like the natural rate of how fast you should grow your wealth for the huge majority of people is probably between 5% and 10% per year. That. The natural rate of how fast you should grow your wealth for the huge majority of people is probably between 5% and 10% per year. That's the natural rate. And you're willing to push it beyond that is eventually going to go over the cliff. And if you stay in that zone and just keep it going for your lifetime, you win.

You win the game. You're going to compound your wealth. Everything's going to be great. It's a people who try to push it beyond that that are always gonna end up as losers. It's like they don't hit the red button experiment. Like, there's just one thing that you don't do and it's don't push it beyond that. And yet, the blow up risk is always a hidden metric. Whereas the additional 10% gain that you got last year is a very observable one.

Who's Robert Wodlow? Robert Wodlow was the tallest human to ever exist. He was, I forget the exact number, but I think he was pushing eight feet tall. He was just an absolute, if you look at pictures of him, it doesn't look like a human being. It looks like a cartoon. He had an abnormality in his pituitary gland that just bombarded his body with growth hormone for his entire life. And what I wrote about it in the book is like, if you think about Robert Wilell, he was eight feet tall. He wore, I think, a size 22 shoe. His hand was like 16 inches across.

You think of him as like the real life version of Paul Bunyan. Like, you would think he would be a superhuman, just the strongest man, the best athlete, and he wasn't. He could barely walk. He could only walk on crutches, and when he did it, it was this horribly-pained limp that he had. He was super awkward walking around, because his body just didn't really work.

And the takeaway was, you can't double the size of a human and expect double the output. If you double the size of the human, the entire thing breaks. And you look at this in nature, like most very large animals, either have extremely long skinny legs, like a giraffe, or very short stubby legs, like a rhinoceros. But if you take a human that has like medium length legs and you just say double the size of it, it doesn't work

And while though he was growing so much he died I think in his late 20s. He was very young and but the scientists and the doctors who are studying him said if If you grow much larger Simply walking even with your cane your legs are gonna snap Because the like the mechanics of the human body just did not support a leg and weight ratio of that amount. And what actually killed him is almost his tragic. It was so hard for his heart to pump throughout his enormous body that he had very, very high blood pressure

and that led to an ulcer and the ulcer got infected and he died from the infection. So it's actually such a tragic story. It's amazing. He's always in the Guinness Book World Records and the like, he was basically a circus freak during his day. But you read about this, man, it's a terrible, terrible tragic life. But it's a stark example of, you can't just double the size of something and expect

double the output. Sometimes when you double the size, the whole system collapses. Yeah, there's something about kind of a survival of the fittest as well though. You've got this example about how trees grow sometimes and run, get eaten eventually. But then when you force growth too much, that's when it goes wrong. There is definitely something about, I guess, when the tide goes out, working out who's swimming naked, so to speak, I think that's a useful side effect of growth. Yeah, and the same thing with Robert Revel,

like perfectly applies to companies. You can't double the size of a company and expect just to get double the output. Because when you double the size of a company, particularly like a startup, goes from 20 employees to 100 employees or whatever. All of a sudden, your employee culture is different, your hiring practices are different,

you need rules and regulations, you need to employ a handbook, and that might completely kill the culture that made the startup successful from zero to 20 employees. So knowing the normal growth rate and the natural size of any of these businesses is super important. Starbucks is another example I used in the book of like back 15 years ago, it was on this ridiculous growth binge, and it was just like every street corner in the world needs not just one Starbucks, but two.

And it found that it completely oversaturated, and it completely killed the Starbucks experience and went through this depths of the spare a couple of years around 2007, where Starbucks was really losing its way. And it found that like whatever the natural growth rate for Starbucks was and whatever the right amount of stories it should have, it went way far beyond that and needed to pull way back. So all these examples of successful companies, good companies that try to push it too hard and a backfires on them, those stories are everywhere. What are there any examples of how this is, this would apply to people's personal lives

or the way that they show up in their day-to-day existence? I think there's definitely a case. I use the example of Travis Kalanek, who is the founder of Uber. And he later got pushed out of the company. As someone who he had the exact right personality and management philosophy to bring Uber from 0 to 100. And he was the exact worst person that you can imagine to bring Uber from 100 to 1000. And so there's a lot of times where your specific personality is going to work really well in this situation and be disastrous in another. And I think that we can true at different phases of your life. If you are someone who is the life of every party and you can drink people under the table

and you're loud and you're boisterous. That is an amazing personality when you're 21. If you are still that person at 47, it's probably a disaster. That's not the personality you buy large one at 47. So sometimes what works in one area like doesn't scale to other areas of your own life. And if you don't realize that, you can't change course. It's a tough road for a lot of people. I love it. Morgan,, so ladies and gentlemen, Morgan, you are one of my favorite writers.

I'm so glad that we've been able to get you back on. You're coming on again in January. In January. And I'm scared to see the set design that you pick from me because now I know that is it is a reflection. Is this going to be like some cute tea house that you bring me to? And I'm going to feel really bad about who you think I am. Perhaps, yeah, we'll have to wait and see. But no, dude, I absolutely adore this. When's the book actually out? When does it get released? November 7th. November 7th, right. This will be out pretty much around about then. Everybody needs to go and buy this book. Morgan Housel's first book, Psychology of Money was a beast. And this next one is absolutely phenomenal. Where

should they people go? Where else should they go to find out what you do and follow you? I spend most of my time on Twitter. My handle is first and last name Morgan Househall. I also have a young nasit experimental podcast called The Morgan Househall Podcast. I'm still playing around with it. Oh yeah. Morgan, I'll see you next year. Thanks Chris.