Motley Fool Hidden Gems Investing - When Investing is Irrational

Episode Date: March 25, 2023

Should you save in a 401(k) or is it better to keep that money available in cash? Justin Richmond is the host of new podcast “Started from the Bottom”.  where he interviews successful people who grew up on the outside – people of color and people who grew up in a world where almost nobody went to college. He’s also the co-host of the popular music podcast "Broken Record" podcast alongside Rick Rubin, Bruce Headlam, and Malcolm Gladwell. Ricky Mulvey caught up with Richmond to discuss: - Learning the unwritten rules of business - How class and upbringing affects attitudes towards money - The relationship between musicians, Live Nation Entertainment, and dynamic pricing Company discussed: LYV Host: Ricky Mulvey Guest: Justin Richmond Engineers: Dan Boyd, Annie Franks Learn more about your ad choices. Visit megaphone.fm/adchoices

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house hanging out with my mom and so I was doing that at her kitchen table and uh I got to the section where I was asking me about 401k contributions and I remember asking my mom like should I should I should I contribute that she was like like no better to have cash in hand don't contribute. I'm Chris Hill, and that's Justin Richman, host of the brand new podcast Started From the Bottom. He's also co-host of the popular music podcast Broken Record. Ricky Mulvey caught up with Richman to talk about the challenge of investing when money is scarce, the rise of dynamic pricing in music and entertainment, and the business rules that aren't taught in college maybe an overly broad question but growing up what was

your family in your relationship with money like man yeah yeah money felt scarce we weren't poor by any stretch I mean we weren't but it certainly money felt scarce and it felt like a thing to be respected there was a there was a high premium put on looking as if you had money and and not in um not necessarily in like some gross keeping up with the joneses kind of sense but sort of presenting yourself as sort of you can fit in with people who you know the way i sort of thought about money for the longest time was you know that it was a a scarce thing hard to get but was a thing to but but was certainly something to want to collect you know it was like if i could somehow manage you know the other thing would be you know

when you're a kid and you and you don't have a ton of money in your family you know but you're still a kid like you still want certain things you you you see your friends behave in a certain way you behave in that way and i just remember a common refrain in my household was you know you you better make a lot of money when you grow up if that's how you're going to sort of behave, you know. If you're going to waste food like the way you do or want snacks from Trader Joe's, you know, like that's like you better grow up to have some money.

It sounds like your first encounter with social class was in kindergarten. Yeah, first time it occurred to me that, you know, racism was a thing in class and the two were sort of linked, you know, in a personal way i guess i'll say because i also remember like you know like there was a lot happening around the time like there was the the the the la riots and and all kinds of things so i of course i knew there was things out in the world but just in a personal way but first day of kindergarten i um turned up to school we were living in a new place um so we had just moved there a couple months prior and it's 1994 so of course i got my power rangers you know attire

shirt lunchbox i'm feeling pretty good about the way the day is going to go nervous but feeling good uh feeling like i look good and uh i'll i'll refrain from the name using the name but i remember the kid's name i remember being in line behind this kid and the kid turning around this white kid turning around and sort of and asking me if i was poor you know now i've been in line i've been at kindergarten all of five minutes and i'm being asked if i'm poor and i remember it just sort of like you know obviously just made me feel really bad right and and um and hurt and i didn't really get it what do you mean well you look poor oh well i don't even understand what like why how why what what did i do you know and then you know going home that night talking to my mom and and my mom

sort of explaining to me that, you know, that there's, um, you know, that, that racism is a thing I will encounter and that, um, in a lot of white families, there's things that people aren't out and out racist. There's just sometimes there are things that are spoken behind closed doors that, that, that will sometimes then slip out to me. So yeah, that was, that was my first encounter and it really felt like it set up my entire public school experience. I want to touch on an idea you mentioned earlier about money being a scarce resource and how that affected your attitude toward it and your relationship with it. Growing up, was the idea of investing, was that an irrational idea for you and your family? Investing was always a mystery to me. I always heard about

the market, always heard about investing. I heard about stocks. I didn't even necessarily, I don't even think at the time I could have necessarily told you that any of those three things were related necessarily you know i wasn't i wasn't wasn't just wasn't sure what it all was and what it meant there was certainly no one in my family doing it or or could explain that to me i remember when i got after getting getting out of college and i went to go start my first job and i was signing my onboarding paperwork and i was doing it i was at my mom's house hanging out with my my mom and so i was doing that at her kitchen table and uh i got to the section where i was asking me about 401k contributions and I remember asking my mom like should I should I should I

contribute and she was like she's like no better to have cash in hand don't contribute you know and so you know I spent nearly four years at that place I spent nearly four years at a company that matches 401k contributions not contributing you know so I would say it felt like again with money i guess the the idea is yeah with with money being thought of as a scarce thing it's like why would you give it away to this imaginary sort of place that maybe you get it back somewhere down the line but if you really need it then you're going to get taxed on it and it's like just no no just keep the money in your account you know you could you could grow it in a savings account you know it's sort of i guess maybe the thought so i i guess yeah i guess it was thought of as

irrational you know um and irrational enough that to be honest i didn't know what it was for the longest time it just was never even explained to me i guess irrational was was a leading way but i think that like our expectations around investing i think changed dramatically based on your upbringing and it's i think it's easy it's easy to say like why wouldn't someone contribute to their 401k why wouldn't they invest and for many it's it's uh if not only if you don't know you don't know but also why would you when why would you give it away to that imaginary resource well Well, I'd also say, too, like, you know, like having, you know, gone into college around the Great Recession to like also completely changed my conception of what money was. If before I thought it was a scarce resource to be sort of hoarded, you know, and I sort of was thinking like, well, how can I get a career that will make me lots of money when the Great Recession happens?

And again, I was, you know, 18, 19, 20. I had a little understanding of what was going on, but not a not a really sophisticated understanding of what was happening. It appeared to me from a layman's point of view that no matter how much money you endeavor to make and make in your career, it can just be taken away from you in this very unfair way. You know, that's the way I read it as an 18, 19 year old. And so that sort of became to me. And I think that's probably why I ended up going into journalism, which is felt more like a passion for me, because I felt like, well, why would I go into something that makes a ton of money when I'm not even sure that I'm going to end up with all that money that I'm earning, you know, over the years, you know. Talk to me about your education and investing and maybe how your mind changed a bit. Well, yeah, certainly my mind's changed a lot. I would still say I'm not necessarily a sophisticated investor by any stretch, but I certainly see the value of it. I certainly see much more of a value in putting a certain amount of money aside every month to put into, you know, like I don't do I don't do short term investing.

You know, I think I'm investing is pretty my money's pretty spread thin in my investment portfolio. And, you know, like I, but I definitely see it as being much more of an asset than just sitting in, you know, a savings account somewhere, you know, collecting very minimal interest. So, you know, now there's, there's times when I invest a lot of my income and then there's times when I pull back and I contribute a little less, but I'm always contributing. In your conversation with Malcolm Gladwell, you kind of mentioned that early in your career, you didn't understand the jargon of business and the unwritten rules. what were the unwritten rules i'm still not sure i know but you know like imagine me like i don't again like i don't know the the the jargon and i'm showing up to meetings with people with the hair the way my hair looks you know which is i can say it maybe you can't ricky boss say it it's you know it's unkempt you know like i have a pretty um natural afro going you

know um and i i like it it feels it feels that it feels natural to me you know you know when you go then you go into a place and everyone's suited and they have their hair cropped like cropped and coiffed perfectly and and you're sort of like and and then and they're using words and jargon and slogans that you're not a hundred percent you know it becomes a very intimidating experience for me it was revealing of something i just lacked growing up which was a mentor or someone just in my life whether someone in my life like in a neighbor uh in my family of a friend's dad anyone that looked like me that had experience in this arena you know someone at church like no one like nowhere did i have anyone that looked like me that had experience in this arena that i could go to

and be like hey like i'm not i don't feel like these meetings are going the way they should be going and i feel it's partially because i don't understand how the how to approach them you know that was sort of the impetus for this this show i felt like well i i bet if i could just go ask a bunch of very successful um black men what they do for a living or how they how they got to where they got i would start to sort of see a path for myself you know and then as i was talking to other friends um from various different backgrounds and as i was talking to you know my my women colleagues and friends they felt similarly you know they didn't have women role models in their lives growing up or presently necessarily that they could go to and confide in in these ways

and be like i don't know how to um approach these sorts of scenarios and so i thought well maybe this could be useful one thing i've heard you mention in the previous interview is that you said you were less successful in business professional settings when you code switched why yeah so obviously you you have to temper yourself and stuff right we bring different versions of ourselves everywhere we go but if the version of yourself that you bring to work or to family or wherever it is is like really inauthentic i don't know that you're bringing in other words when you get hired to a position you should be bringing and i believe now at this point something intangible to that position like you are hired to bring you to that not only to

to fulfill like all the generic duties of that position that that need to be fulfilled but you also need to bring that intangible thing that is you like your unique perspective to that right And I think if you're being inauthentic or in other words, code switching, you're not bringing your authentic self to that to that job. And therefore, you're not you're really only doing the bare minimum that that job requires. And, you know, sometimes you find out, like I think I did at NPR, that like, you know, your authentic self isn't necessarily valued. and that can hurt but it's also a good thing to know because it's like great well you know this may not be the place for me let me go to a place where I am valued where being my authentic self of course tempered for the workplace for a professional setting provides some extra value

and you know I've landed at a place like Pushkin with Malcolm Gladwell where you know being my authentic self was was was encouraged and and certainly seemed to bring a lot of value and um so i don't know how you can be successful when you when you are a code switching in a place because you you're ultimately you're going to be miserable you're not you only bringing the bare minimum to that job and you don't know if you're really compatible you know or or you're a psychopath and you can be anyone anywhere all at once sure sure sure there's that too not many there's not many who could sustain something like that though you speak to a lot of musicians on broken record and i want to talk about live nation and ticket master there's a

lot of headlines i think uh zach brian is is thumbing his nose at ticket master with his latest tour uh taylor swift is is the biggest controversy but a lot of artists seem to work with Ticketmaster and you don't hear much from them uh from your conversations what are the relationships between artists and Live Nation like behind the scenes I think strained you know I think right now strained I mean I think because they're so it's very hard to make a living as an artist now I mean I imagine artists are to some degree okay with making sure they're maximizing the value uh of their of their of their ticket prices right for concerts but i think what's happening now is like we've seen them a period of like you know basically no concerts for two

years people are are starved for live experiences we're coming back there's this you know crazy inflation and and now the couple of major ticket services that exist are are are using dynamic pricing and i and i think it's really ticking fans off and i think it's rather than um on some level there's there's very savvy fans the swifties the taylor swift fans are very savvy a group of people and they're they're sticking a ticket master with like a lawsuit but i think i think you know a good amount of fans aren't you know sort of directing their ire at at the ticketed services but at at the artist you know like the amount of people i've seen angry at bruce springsteen in particular because of the price of his concerts you know this it's just like um or or beyonce like you

know the some of the blowback is getting back to the artist and so i would say it's strained right now and and i wonder if that keeps increasing sort of the blowback that artists are receiving based on ticket prices um and ticketing ticket pricing strategies if we'll see the relationship become more and more strained, and we'll see artists become more vocal. If the ire of audiences are not getting back to the artists, I don't really think it behooves them to be vocal against Ticketmaster or AXS or any of that, right? But obviously, if that is coming back to them and hurting them and their image and their fan base, I think we'll probably see artists be more vocal about it. Slightly gross way to put it, I can't afford to go to the concert. I wish the

ticket prices were lower for bruce springsteen he's selling out no problem like he can listen to them he's also selling out arenas well but then there was like but oddly enough like and again like bruce is like an artist where you think and i love i love bruce springsteen in fact i wish i wanted to go see him on this tour i don't think i'll get the chance but you know like you were hearing reports about like certain cities where like it was like there were like tickets ultimately weeks leading up to it going for like two dollars you know because like you know there weren't there wasn't selling out i saw bob eiger i think just yesterday was you know this is slightly different but talking about um he felt like maybe they were being too aggressive on the pricing for

for park admission for disneyland and for a couple of their experiences at the hotels because basically those the the hotel experiences were flopping and and the prices have gone up i mean perhaps a hundred percent i can't remember the exact numbers at parks over the last couple of years and um they're maybe looking at revising that and and i do think you know i think people are trying to make up for lost money uh coming out of lockdown but i'm wondering if we're gonna have to start changing changing the pricing strategy around around tickets be curious to see what happens with the movies you know i see i see movies are you know movie theaters are going to now experience with the or experiment with like variable pricing and um i wonder how how

that impacts that you know it's already hard to get people to get to a theater now if you're going to start not if you're not going to know as a consumer what a movie ticket's going to cost like do you go i don't know my cynical take on the movie theater ones though is that it's very easy to jump seats in a movie theater compared to a arena or ballpark like if you're seeing a wednesday night showing why wouldn't you just pay for the cheapest tickets and then see what's open it's showtime do you really think do you really think the guy the the guy or a woman working at amc theaters is gonna is gonna check your ticket and drag you out you're you you are very unlikely to to have to do the long walk of shame from the back to your seat in the way you would at like a

ballpark or something you know in working on broken record and talking to a lot of these artists it's it seems like a lot of musicians have incredible stories and just little anecdotes that are completely unbelievable are there any anecdotes stories from from doing that show or maybe not doing that show that you just like can't get out of your head okay i'm i'm definitely not gonna tell it in in any way as uh eloquently as he does um the way he takes you through his moods and such but um in the uh in the early 90s dmc from run dmc found himself incredibly depressed very depressed i mean he has a he has he has a wife he has a kid he has a career of course run dmc aren't necessarily like the hot new thing anymore but they're still run dmc get a lot of

respect from their peers and from at that point artists who are a bit younger and they were still able to go on tour and release records and make money so everything's fine career-wise really but he's in this deep depression and he just can't figure it out to the point where he's suicidal and if i'm remembering it correctly he got landed uh back in new york from a tour date and was in a back of a car courier service going back home i forgot if my memory is correct it's like that he was gonna go home to kill himself and the song he's in the car and the song sarah mclaughlin song in the arms of an angel comes on and he breaks down crying and sort of has this spiritual renewal like where all of a sudden his like depression or i don't want to say miraculously

but he has this like a spiritual it may it lifts him enough out of the depression that he's now not suicidal but he goes and he he gets the song and he just plays it on repeat for i believe for months until the song literally lifted him out of a depression it was amazing there's there's a there's a story we've done there about him there's a bit we've done there about him actually getting to meet sarah mclaughlin before he actually is lifted all the way out of this depression and ultimately he gets to collaborate on her with the song with her on a song but it is just this gorgeous story of um sort of someone struggling and and sort of trying to find find their way And this song, out of nowhere, lifts him up.

And I can't listen to that song now without thinking about that. That song has totally changed in my mind from sort of like a song that I didn't take all that seriously or thought of as sort of being that ASPCA, you know, infomercial song to like a really gorgeous, gorgeous, gorgeous song. I was listening to it actually, like not that long ago, my wife was looking at me like, what are you listening? I was like, just listen. It's beautiful. Okay. Just leave me alone. Totally changed my perspective on it. As always, people on the program may have interest in the stocks they talk about,

and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow. Bye.