The Jordan Harbinger Show - 930: Morgan Housel | The Power of Preparation Over Prediction

Episode Date: December 7, 2023

If we can't predict the future, how can we prepare for a future in which we'll thrive? We consult Same As Ever author Morgan Housel for answers! What We Discuss with Morgan Housel: Why the best investment lessons won't be found in a finance textbook — they'll be found by understanding human behavior. Changes are exciting and novel, but most human behavior patterns are consistent over generations. The importance of preparedness over prediction. Why Morgan believes the first rule of happiness is low expectations. The dangers of lifestyle creep and comparison (and the early epiphany that broke Morgan free from playing this losing game). And much more... Full show notes and resources can be found here: jordanharbinger.com/930 This Episode Is Brought To You By Our Fine Sponsors: jordanharbinger.com/deals Sign up for Six-Minute Networking — our free networking and relationship development mini course — at jordanharbinger.com/course! Like this show? Please leave us a review here — even one sentence helps! Consider including your Twitter handle so we can thank you personally!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Welcome to the show. I'm Jordan Harbinger, and on the Jordan Harbinger show, we decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. Our mission is to help you become a better informed, more critical thinker through long-form conversations with a variety of incredible people from spies to CEOs, athletes, authors, thinkers, performers, even the occasional Russian spy, cold case homicide investigator, astronaut, or investigative journalist. And if you are new to, the show, welcome. Or if you want to tell your friends about the show, thank you. I suggest our episode starter packs. These are collections of some of our favorite episodes. Well, your favorites, really, we went by popularity. Persuasion, negotiation, psychology, geopolitics, disinformation, cyber warfare, crime, cults, and more. That'll help new listeners get a taste of everything we do here on the show. Just visit Jordan Harbinger.com slash start or search for us in your Spotify app to get started. Today, my friend Morgan Housel and I finally sit down. This one has been in the making

for a few years now. Morgan is usually known as a financial writer, and he really shines in that area, of course. But today, we actually tackle a series of very different ideas, and we maybe seem to jump around a little bit. I think that's okay. It's a lot of fun, actually, a little bit lighter, a little bit less organized in a way that might make it seem a little bit less formal. We explore success, quirky billionaires, innovators, risk, financial and otherwise, wealth, fame, and happiness. This one clicked pretty good. It's a lighter fair. I know you'll enjoy it. Here we go with Morgan Housel. Well, you usually write about money and finance, but in this episode, I think we'll be doing something different.

First of all, I think people can get a lot of the investing wisdom elsewhere, even from your books, for example. And more importantly, money investing and thinking around those two things is, in my opinion, a great mental model or set of mental models for a lot of other areas as well. First of all, would you agree with that. Yeah, absolutely. I mean, I would actually more than agree with that. It's kind of a core of my work. It's like, if you want to learn about investing, don't spend your time in a finance textbook. Let's learn about how the rest of the world works and learn the models from that that you can apply to investing and vice versa.

I think there's a lot that you can learn from investing that teach you about how the rest of the world works. All of it just falls under the umbrella of like how do people behave. It's all interconnected. And we come into problems when we try to silo it and think that investing is investing and politics is politics. Like they're all interrelated. Yeah, I tend to agree. And it's also just kind of nicer to talk about the meta concepts or the framework concepts. and I mean, clear thinking, divorced from ego, divorced from emotion, that's all really good stuff.

And that's kind of what you need with investing. And every time I make a mistake investing, it's always because I've convinced myself that this is the one time that, like, my emotion is correct. Or like, oh, I really need to sell this because I'm sick of looking at it in the red on my online portal for what I'm using to trade stocks. And it's just like, I don't want to. And then I'm like, no, this was a long-term investment. It was literally the person who's running the thing was like, This is going to be down for a while and it's going to go up later because it's all early stage companies. Yeah.

And I'm like, but it's so red and it's such a big number. Like, I just want to get rid of it. I think Tim Ferriss talks about how he'd sold Amazon early, like way too early. And I can't remember why, but it, of course, had something to do with him just being like, I'm freaking out because it's 2008 and I need to sell everything. Yeah. And get my money out. It's hard.

And somebody of those, too, like, only makes sense in hindsight. Amazon is an interesting example because what made Amazon, by and large what it is today is AWS. So if you were an analyst looking at Amazon in 2005, AWS didn't exist anymore. So like if you've held Amazon since 2005, you've done very well, but it's not because your analysis was right. Like something happened that was unknowable in 2005 that made it what it is today. Yeah, I got really lucky with Tesla stock. People are like, what's your best investment? I'm like, oh, you're so lucky. What did you see? And I'm like, the story is literally this. I was working at another company with a bunch of

business partners that were kind of petty a-holes that I'd separated from. And these guys told me that I had the day off. And then I said, okay, I'm going to do all my investing for all my retirement funds and all this stuff today. I'm going to look at all the stuff. I'm going to buy all the funds, everything. And then at the last minute, they were like, oh, you have to teach this live workshop. And I was like, no, I have the day off. And they're like, well, we changed our mind. You have to come in. And I was like, damn it, I can't leave the clients hanging. You know what? Okay, I have to finish this. It's the last day I can invest this stuff. I'm just going to put everything into Tesla and everything into Apple, and it was like, 2015.

Yeah. And I was like, I just can't even think about this anymore. Just put it somewhere, get it deployed, go teach the class. And then I just forgot about it. And then, of course, like years later, aside from Netflix, the two top performing stocks that, like, the world is seen in the past decade or so. And I was like, wow, I put it all on black because I had to go out of the room where I was doing this.

Those were the two things at the top of a huge list of other stocks I was going to look at. And I was just like, eh, over time, it'll all come out in the wash. No, it turned into like, you know, a 20x return or whatever it was. Yeah, that was a very profitable course that you taught. Yeah, but it's like all the things that look like genius, if I really just take the ego out of it, I'm like, that was just dumb luck. And it could have gone the other way. Yeah, always. Changes are exciting in novel, but most human behavior patterns are consistent over generations.

That's a paraphrase of something that you had either said or written. This is sort of low-key, really insightful. because I think a lot of people, when they look for, it doesn't even have to be investment. It could just be looking for what company they're going to found or what sort of ideas they're looking at. They always look for the big change, right? It's like, AI, that's going to be the thing.

We're going to put AI into our CBD gummies. That's going to be the next level, turn us into a billion dollar unicorn. But that's not the important stuff to look for. The important stuff to look for is, I think you'd mention like, what's not going to change? What's the thing that's still going to exist even when AI does all of our work, what are humans still going to spend their money on? I totally agree with that.

And so much of what got me interested in this topic was two things. A, I'd become disgruntled and cynical as someone who wrote about finance, about how bad we were as an industry at predicting the next recession, the next bear market, or outside of finance, predicting the next president, the next terrorist attack, whatever it would be. We're just very bad at predicting the future. And the evidence of that is so overwhelming. So then for me, it was like, okay, rather than just being cynical about how bad we are

at forecasting and leaving it there. What do we know is going to be in our future? What are the things that truly never change, that we have no idea what the change is going to be. I have no idea where the stock market is going to go. I have no idea who's going to win the presidency. But what are the behaviors that have just always been here that are always going to be there in the future? That idea was like appealing to me. And then two things really solidified this for me. One was I was reading a book that I think is the greatest economic book ever written. It's called The Great Depression a diary. And it's written by this Ohio. lawyer named Benjamin Roth, who during the Great Depression in the 1930s, kept a very big diary.

And he's just writing about what he saw during the Depression. And he wrote in 1932, which is the bottom of the Depression. When I read it, I was like, if you change the dates, this could have been exactly what happened in 2008. He's talking about what happened in the stock market, what happened in the real estate market, what politicians were doing. It could have been verbatim at a post from 2008. And then a couple pages later, Benjamin Roth says, you know, what's happening in 1932 looks exactly like what happened in 1892 and 1874, all the previous depressions before that. He made some comment to the effect of, look, the details always change, but the behaviors

never do. It's always the same story. Every recession is the same thing over and over and over again throughout history in terms of how people respond to it. That was the first one. And then several years ago, I read this now famous Jeff Bezos quote where he said, everybody always asked me, what's going to change in Amazon? And then he said, I would actually propose to you that what is not going to change is more important.

Because you can never imagine a future in which Amazon customers don't want big selection, fast shipping, and low prices. Impossible to imagine a future where people don't want those things. And because those are going to be part of their future, they can invest so much time and money into those three things, knowing that they will be as irrelevant 30 years from now as they are today, which you can't do for most technologies. So that to me was like, yeah, I think that's actually a huge key to success in almost every area of life, whether it's investing or business or politics or relationships, whatever it would be, is focusing on what you know is going to be part of your future, what never changes, rather than fooling yourself into thinking that you can predict what is going to change.

Yeah, it's quite simple, but it's the level of nuanced genius in that is really something huge. And I haven't quite put that at a conscious level, but now that I think about it, I have given up on being able to predict the next social media trend, for example. You know, I looked at TikTok and I was like, this is so dumb that I'll be surprised if it takes off. And now it's like the most popular thing ever. And what, you know, because I don't use it. And I won't use it. And I think it's bad for you.

And I was kind of maybe hoping that it didn't take off. I was right about clubhouse being a complete wank and completely just dropping off of a cliff. And I was like, I'm good at this. And then I was like, TikTok, that thing's not going anywhere. Short attention span. Nobody likes that. But I started to think, okay. am I going to go wrong with long-form content that has deep value for people, that's a real

conversation versus these 30-second clips that I'm not good at producing, that I don't want to produce, that are really shallow, that I would hate creating. And I was talking to Seth Godin, this is years ago. And I was like, do you think this is going to go away? And he's like, do I think good quality work that people really enjoy and resonate with is going to go away? Is that what you're asking me? And I was like, answered my question, right? Because did books go away when television happened is something along those lines and it's right we have television we have radio no one's gonna read any more people read more than ever audio books are huge podcast people were like oh your shows too long because we were one of the first shows you got to do like 20 minute episodes okay let's look at

the most popular podcast joe rogan three and a half hours long you know like you look at joe rogan and tim ferris and even stuff that's as popular as this show lex friedman or what it's like these are three hour long conversations i'm coming in on the short end with an hour maybe 90 minutes of content. One other example of that, what's some of the most powerful, popular documentaries ever made? Ken Burns' documentaries that are literally 17 hours long. Yeah. And people love them. They can't get enough of them. Right. They'll take time off work to go and finish this thing. And so is that going out of style? Even if it's decreasing in popularity, I realized it doesn't mean my show's going to decrease in popularity. I just have to stay in the top 1% or whatever,

and all the returns are going to be there for me and everybody else in that top 1%. It doesn't really matter if the market shrinks by 99% because if I still have that one percent that I have already, it's enough to make a living. I might even grow because competitors drop out to do things that are easier or more profitable at an earlier stage. So when you start to switch your thinking around, it becomes a lot easier. Right, Ken Burns' documentaries, you really need like the whole week and no kids in the house to watch one of those things. One way to frame this as well is that everybody is always looking for the hack, the shortcut. What is the new? What is the new? little shortcut that I can use to leverage whatever I'm doing and get ahead. And for most things in

life, the answer is there is no hack. You just have to put in the work. Years ago, when I was working at a different company, they hired a social media consultant who came in and told us like all the hacks for social media. And it was things like hashtags on Twitter and like what time of day you should post. And I remember sitting there thinking, they're not talking about the only quote unquote hack that works on social media, which is write good content. That's the only thing. thing that works. That's the only thing that's going to build you a big following over time, but nobody wants to hear that everybody wants the little trick, the little hack. And I think right good content is timeless. It worked 100 years ago as well as it'll work 100 years from now.

But since it's hard and takes some effort, people want the shortcut of what's going to change, like the new little trick. It's the same in diet and exercise and investing, of course. It's like everyone's looking for the trick when none exists. You just have to figure out what has always worked and put all of your effort into that. Yeah, look, even if the tricks exists, right? Because if the people listening are going, no, no, no, the tricks work. That's probably 10% or not even of what gets something to do well. Post five times a day. You got to repurpose this content from TikTok to Quora to Instagram Reels to YouTube shorts. And it's like, okay, but at the end of the day, if it's not good, but they're like, oh gosh, good content, that's really hard

to produce. It's going to take my team a bunch of time to do it. And we have no formula for that. But what we can do is, right, tell you to put the hashtags on. There are no hacks in content, then make good content. It's the only thing that works. And I think there are no exceptions to that. Like, name someone who sold a lot of books, who has a big podcast like you, who has a good TV show. It's just good content. That's it. Nothing else matters. I look at guys who are flash in the pan. Some of them are scammy, right? So you look at these guys who sell like courses on making money online or something like that. They're popular for a year, maybe two, three years because they're spending $10,000 a day on YouTube ads. Like here in my garage, you remember that guy? Oh yeah.

So you see these flash in the pan guys like him. But then you look at Mark Manson and James Clear and other Ryan Holiday, other friends of mine, and you're just like, ah, the key is you wrote a really good book and then you wrote a really good book again. And then you wrote a really good book again. And oh, the stuff didn't expire because it wasn't about hashtags on Twitter or whatever the self-help equivalent is of that. And they keep doing it. James Clear only has one book so far. but like the stuff was good and he thinks well

and it's not just like hacked together crap that was designed to get him a couple of speaking gigs so that he could, I don't know, be a digital nomad or something, right? He like built the foundation for this. Yeah. And it's good and it's going to remain good for five years. Those guys in five years you're going to see more from all of them. And I think one thing that you mentioned too, that's really important,

is that the stuff that those kind of guys are writing is timeless. And one other hack that people try to do is like, what's popular in the news this week. I don't write about that in my blog. What's the big trend this year? I'm going to write a book about that. I've always been off the thought, like, if you want to write a book

that takes a lot of effort, it's going to take you two years of your time to write this and get it out there, at least write something that has a fighting chance of being relevant and readable five, 10, 20 years from now. I used to work at a major news publication

and every article that I wrote, the editors would write something along the lines of, hey, good piece, but how is this relevant to this week's news cycle? And I would be like, A, it's not. Who cares? Yeah.

And B, that's the point. And I was always, always of the thought that if the article is only relevant this week, it's not relevant at all. And I think this is actually a good filter when you're reading the news too or reading any book, is to ask yourself, will I still care about this topic a year from now and five years from now and 10 years from now? And if the answer is no, it's a pretty good filter for like how much of your time you actually want to invest into it. I agree with that. That's a really good point. The equation for a lot of writers is, like you said, spend two years planning and writing the book, and then you spend, I know nothing about book tours, three, six months, one year, hammering it

as hard as you can. And then it just falls off a cliff because it was written for a world that doesn't exist anymore in any way, shape, or form, right? It's like making your clubhouse talks to the best in the business or whatever it was, whereas really good creators create something and they go, all right, when the people who are reading this now, haven't had kids, they're going to like it. But when they're grandparents, it's going to be especially relevant. I read The Daily Dad, and I'm like, this is really good. And I read it slightly before I had kids. And I'm reading it all the time. And I love this. And I'm thinking, like,

I forward stuff to my dad, who is, of course, a grandfather. And I'm like, check this out. And he's like, oh, that was interesting. And I sent a bunch of it to my wife. This stuff is relevant to any person at any age who has kids or might have kids. That's a massive amount of people that can get value out of this content. But when something is about like making your YouTube shorts go viral, you're really hoping you get like three keynotes at whatever events are about digital stuff. And then you're back to the grind. And that's, I think, a lot of reasons why these guys will like self-publish their thing on Amazon because they need to get it up in like three days.

Yes. They need to like have AI write it and get it up there yesterday. There's another point that you just brought up that I think is so critical, which is no matter what you're writing about, if you want to cast the widest net and grab a big audience, you need it to be relevant to a very wide variety of people. And therefore, whatever you're writing about should teach you about more than one topic. If you're writing a book about finance, there should be some ideas and lessons in there that could be applicable to other parts of your life, health, relationships, politics, whatever it would be. If you're writing a book about

finance, write a book about risk and reward and greed and fear that you can apply to other parts of your life. If you read James Clear and you read Atomic Habits, you can learn about habits that will be relevant to investing, relationships, exercise, health, whatever it would be. So no matter who is going to read it, whether it is you or your child or your grandfather or your mother or your grandmother, there's going to be something in there that they're going to say, I can apply this to my own life. But the more hyper-specific you make it, the narrower of the audience that you're going to get to, every book publisher will ask you something along the lines of, who is your target audience? And it's a very well-meaning question. And it's a good question. It's not a bad question.

But I think the right answer for every book is the answer that they don't want to hear, which is ideally everybody. Yeah, they hate that. They hate that answer because it feels like a cop out. But I actually don't think it's that hard to do. If you're telling stories rather than using jargon and charts and information, and those stories could be applicable to a wide variety of experiences in life, I actually don't think it's that hard to cast your net that wide. Although publishing is changing, and I'm sure you've noticed this. Now it's like, unfortunately, I get all these show fans being like, how do I get in touch with it? I got a book.

It's done. It's pretty good. A lot of people have read it. It's, you know, I really think it's something good. And my publisher connections will be like, how big is his current platform? And I don't know, none, but it's the literary part. The heavy lifting stuff is done. And they're like, I don't know.

I don't really interested in that. We're going to pass on that. And then you get people like me who have a platform and have no book and no idea what they would want to write. And I was telling Ryan, how. I was like, I don't want to write a book because I don't have anything to say that I want to say yet. And he's like, that's great. More people should think that way. If you don't have something you want to say, don't write a damn book.

And I was like, oh, okay, good. You're the only person who said that because the publishers are like, dude, we will hire somebody to write it. Just tell them a couple of stories. We'll fill in the blanks. And then you just sell this to your audience and it's going to make like a million or two dollars. And most of that is yours. And I'm thinking, like, wouldn't I turn to somebody else and go, that's a grift if they that, wouldn't I be pissed off if I knew that somebody did that? And the answer is, yeah, I would be

annoyed if somebody was like, so all I have to do is show up and the quality of the product doesn't matter and I'm going to make money? That's what they want now. They're like, can you sell this? That's the only question that matters. What the content is, whatever, we'll recycle. We'll grab Morgan Housel. We'll steal this story. We'll change the place, change the name, say it happened to you. It's fine. Ghostwriter. Blame the ghostwriter. No thank you. Joe Wisenthal from Bloomberg. He has his tweet many, many years ago where he said every book should have been a magazine article. Every magazine article should have been a blog. Every blog should have been a tweet and most tweets never should have been written. It's so true.

I think there's a lot of truth to that. Once people started reading Kindle in mass, there was a lot of data. Amazonca ran a study where they could look at Kindle highlights. Like when did most people stop highlighting in the book? And they use that as a proxy. It's like page 13. They use that as a proxy for when people stopped reading. And the average bestseller, forget the average book. The average best seller. Most people made it to like page 50. I'm surprised it was even that far, honestly. And those are the best sellers. So I think a lot of the reason this happens is that in a 250 page book, the author and the publisher knows that the average reader is going to read the intro and maybe chapter one and then they're done. And to Joe's point, that means that you can just,

if you have a vague idea, you can just slap some toilet paper together and turn it into a book and sell it for 30 bucks. And so for both my books, which are short and their short chapters, the variable that I wanted to maximize for, at least to some extent, was not how many people buy it necessarily, but how many people will finish it? Once in a while, you'll see a book that's like 110 pages, really short, thin book. And readers love them. They love those books. Yeah, the publisher doesn't because it's $7.99 instead of $27.99.

Publisher hates them. Yeah. I'm a fan of short books, or even if it's a long book, a short paragraph or a short chapter. Yeah. Make your point and get out of the way and don't waste the reader's time. I read a lot of books, probably two, sometimes even three. three a week, and there are a lot where I'm like, this whole damn thing could have been a 13-page article.

Would have been a long blog post, okay? Or a long magazine article. But it would have been complete. They're like throwing charts in here. You can tell the publisher was like, we really need three more chapters. And they're like, all right, I'm going to do one that's completely unrelated and it's going to go here and over here and you're like, these three chapters should definitely have been cut.

And you think, how did they not cut those? And then you talk to the author and they're like, no, they make. made me add those after the whole thing was done. And you go, ah, that's why it didn't fit at all. You got the square peg through the round hole with a sledgehammer on this book. And they're like, yeah, they wanted filler. And that's why I was going to put that in my next book. And now I can't because I put it in this one.

I'm like, what a mess. Right. It is a mess. You know, the Declaration of Independence is like 4,000 words and completely transformed the country, the world, et cetera, et cetera. The idea that you need 75,000 words to explain your mental model is like, come on. This shouldn't be the case. I've tried to get around this problem.

Not going to say I've mastered it, but I've tried to get around it with two things. Number one, very short chapters. The average chapter in both of my books is about the length of a blog post. And number two, each one of those chapters kind of hangs on a connected theme, but they could be standalone. If you want to start my book on chapter 13, it's fine. See, it's all going to make sense to you because they live on their own. Rather than rambling on one point for 20 chapters, let's make 20 separate points that could stand on their own within a theme. You're listening to the Jordan Harbinger show with our guest, Morgan Housel. We'll be right

back. If you're wondering how I managed to book all these great authors, thinkers, and creators every week, it's because of my network and I'm teaching you how to build your network for free over at Jordan Harbinger.com slash course. I know networking is a gross word, kind of deservedly so. This course is actually about improving your relationship building skills and inspiring other people to want to develop a relationship with you. This is not a gross, cringy thing that's going to make you look like a wanker. There's no awkward strategies or cheesy tactics. It's just practical exercises that are going to make you a better connector,

a better colleague, a better friend, a better peer, and it only takes a few minutes a day. That's really all it takes. And many of the guests on the show, subscribe and contribute to the course. So come join us. You'll be in smart company where you belong. You can find the course at jordanharbinger.com slash course.

Now, back to Morgan Housel. One thing I noticed that you didn't do in your book, which is in like a lot of books. is they'll take an example from another book. They'll be like, Simon Sinek said, and it'll be like 13 pages of just rehashing something from his work. And I noticed you didn't do that, and you were able to keep things short.

And I think that's clever. I'm torn as to why authors do this. I think some of it is filler and some of it is like, if I associate myself with this other very credible person, it will seem like I'm also very credible. But it's annoying because you end up reading the same anecdotal stories that later that author's like, yo, that was something I made up for the book

and wasn't even a real thing that happened. And it's in 40 different books over the next five years. I noticed that you did not do that. I guess the hack for you to make sure that everyone finishes your book is write a 350-page book, but the last 300 pages are just blank paper because they're going to stop reading at page 50. That's it. There you go. You're welcome.

I'll tell you, like, why authors do that. It's just trying to get to the word count limit. 50,000 words, which is the average nonfiction book, is very long and intimidating. And it's very common, particularly for new authors, to be like, I have an idea that I'm an expert, on and I'm going to write a book about it. And it's a great idea. And they sit down and they're like, okay, they write 2,000 words. And they're like, I've already said most of what I have to say. And you're like, great, I need 25 times this much. And then they kind of panic. And they start throwing a bunch of toilet paper on the page to make it fit. When it's poorly done, you can

really tell, right? Because it's like, why are you telling me about your high school experience and your science teacher? Like, you could have illustrated that point with one sentence, but instead I've got a whole chapter on like your dad taking into soccer practice. I'm like, we didn't need this, man. Back to the idea of success in what'll work in 10 years, you mentioned that Naval, Ravikon, he talks about success in parallel universes. And I love this concept, right? You don't want to rely on luck. And I think he said something along the lines of, in a thousand parallel universes, what would be true in every single one? And that's a great way to think about what would be true in every single one. People will like long-form content from a host they can trust

or a writer they can trust. And that's going to be true anywhere at pretty much any time, even if there's no, even in zero gravity. You're going to want to see somebody who you can believe what they say, and there's not going to be a hidden agenda, and it's not going to be produced like crap. That's pretty basic, and it seems to be a heavy lift these days, but it's pretty basic.

That's a really good rule of thumb or heuristic to think about what you're creating or what you're doing. Here's one example from Steve Jobs. what would be true if Steve Jobs lived in a thousand different lifetimes? Well, you could look at him and say, well, he invented the iPhone. Okay, but if Steve Jobs was born in 1850, inventing the iPhone would not be a thing. So in a thousand parallel universes,

that's not a good lesson to take away from him. But let's look at something else he did. The intersection of art and technology was a big thing for Steve's jobs. That is something that would be relevant a thousand years ago and a thousand years from now. So a lot of times when you're looking at these role models, whoever it is, Warren Buffett, Steve Jobs, Kobe Bryant, whoever it is, you want to make sure that

the lessons that you're learning would be applicable in any different lifetime that they would be born into so that you have a fighting chance of learning that yourself. A lot of people in investing when they look at Warren Buffett fall for this and they study how he invested in the 1950s and the 1960s and the stocks that he bought and the formulas that he used without realizing that those formulas that worked in the 1960s, a lot of them don't work anymore because they're time has come to pass, the market's adapted and evolved. So you want to look at, like, what can we learn from Warren Buffett that is applicable to me and is applicable to my life going forward and doesn't rely on the luck of what the stock market happened to be at in the 1950s?

So there are things like, can I replicate the stocks he picked in the 50s? No. Can I try to replicate his endurance and longevity and patience and use that as like this timeless principle that I can apply to my life? Yes, that is something. So a lot of this is just trying to make sure that you're learning the right lessons from the people that you look up to. Yeah, that's fascinating. You're right. What would Steve Jobs have done even a few hundred years ago? He would have made violins and they would have been incredible, right? They would have looked great. That's such a good example. Yes, they would have been so much more beautiful. He would have built a steam engine train that was just so much more beautiful than the others. So that's the timeless principle rather than, oh, he saw

the mobile revolution coming. Like, no, that's not something we can learn from. It's too specific for that era. Yeah, you're right. It'd be like a polished steam engine train where the coal doesn't get shoveled in by some poor schlep, but automatically that kind of way of looking at people and ideas is really a game changer. You mentioned risk earlier, and I heard you, I keep thinking I heard you, but I read your book, but it was an audio book. So now I'm like, where did he say this? Was it in the book or was it on a podcast? Thinking of risk in the way that California thinks of earthquakes, Tell me about that, because this is why I live in California, and I hope you're right about this. Well, if you live in California, you know with certainty that earthquakes are going to be part of your future.

Nobody doubts that. And some of it are going to be massive and destructive. Everybody knows that. Everybody accepts it. But nobody, including the foremost earthquake experts, know when it's going to occur, where it's going to hit, or how big it's going to be. And they don't even pretend to know. There's no earthquake CNBC of, like, predicting of like, you know, 24-hour news, like, oh, this guy

says it's going to come next first. Friday at 7 p.m., nobody knows, and you accept that. So rather than assuming that you can predict the next earthquake, you're just always prepared for one no matter when it comes. The firefighters and the EMS crews, they're always training, they're always on alert. No matter when it happens, they'll be at least somewhat prepared for it. And if you contrast that with how we think about the stock market, where there is a CNBC where they're like, our next guest, Joe Smith says the market's going to crash next Friday. It's a completely different way of thinking about risk. So it's a difference between expectations and forecasts. Nobody forecast earthquakes because you know you can't, but you expect them in the future.

And I think if we think about a lot of risks in our life the same way, that's a good way. And by the way, nobody else knows when the next recession is going to happen. Nobody knows. But if you look at history and you say, on average, there are two recessions per decade, one of which is usually pretty bad. And I expected to be the case going forward. That is not a forecast. It's just an expectation based off of what's happened in the past. I just think it's a way more realistic way to think about risk than fooling yourself into thinking that you can see it coming. Nassin Talat has a great quote that summarizes.

He says, invest in preparedness, not in prediction. That is a great way to look at this stuff because I suppose risk is especially dangerous if you think you have to predict it or forecast it in order to prepare for it. Because if you look at past events that people didn't predict, I don't know, Pearl Harbor, September 11th, COVID, whatever, we did have people sounding the, the alarm on potential pandemics, including guests on this show. My guest thought it would be the flu and nobody thought we'd have a lockdown. There's thought it'd be a big pandemic. Episode 320 and 22, by the way. We'll link it in the show notes. But yeah, nobody predicted September 11th.

Nobody predicted the COVID sort of shut down, the novel coronavirus. Nobody predicted this. And so the risk is especially dangerous if you're like, well, unless somebody can point to a specific thing, we're not going to prepare for it. Well, we sort of see what happened there. We were unprepared for all those events. And COVID is interesting because, like you said, you've had guests that talked about the risk before it. There's, I think, a 2015 TED Talk where Bill Gates gives a TED talk, and he says, the biggest risk we face is a viral pandemic. And even if in the 1990s, somebody hypothetically said, America is at risk of a terrorist attack

from hijacked airplanes. And I think they're actually mainly people who did say that. That is very different from a forecast. Bill Gates didn't forecast it's going to come in 2020. And people of the 90s didn't say, watch out for September 11, 2001. So even if you know that you are at risk and you have an expectation, don't pretend that you can prepare for it or that you can predict exactly when it's going to come. And to me, the big takeaway from that is just like how we prepare, particularly financially. I've always thought that like

the level of cash that you should have in your portfolio should feel like it's a little bit too much. It should make you wince a little bit because if you are only preparing for the risk that you can envision, then by definition, you're going to miss a surprise 10 times out of 10. And so You're only really prepared for these events if you are preparing for events that you cannot even fathom. That's when you know that you at least have a fighting chance of dealing with the surprise that you can't even think about that you're not prepared for. I suppose that makes me feel better. My wife is a very conservative, I guess you could say investor.

Like if it was up to my wife, we'd have a giant vault in our basement or something like that with stacks of gold coins in it. I mean, we don't quite get that ridiculous. We do keep our money in the bank. But, man, she's like, I just want enough cash where we can pay the entire team and all employees and all of our bills and all of our personal expenses for like a year. And I'm like, that's a lot without cutting back on anything. She's like, I just feel better that way. And I've learned to just not argue with that, but it does make me feel better. I mean, maybe she's right.

We'll have a lot of dry powder if anything does go wrong. It's so interesting that you bring up that example of paying everybody for a year because there's this amazing anecdote from Bill Gates. So when he started Microsoft in the 1970s, he was taking this colossal bet in this giant risk that computers were going to go mainstream. Yeah. At the same time, He said from day one, he wanted Microsoft to have enough cash in the bank that they could make payroll for one year with no revenue. It was a massive company. And the entire time he ran Microsoft. He was CEO through, I think, the early 2000s.

He kept that promise that he could make payroll for one year with zero revenue. And when asked about it, he was like, look, in technology, tomorrow is never guaranteed. Things changed so fast that you need to be prepared for that. And particularly when he was talking about in the 90s when he was at war with IBM. Yeah. He was like, look, in hindsight, Microsoft was successful, but none of that was guaranteed, and he needed to be able to fight another day. And so even though he was on one hand, like wildly optimistic and risk-taking, on the other

hand, he was super conservative in terms of how he managed the day-to-day risks of what he was facing. It sounds absurd. I guess planning for anything like this sounds absurd because most predictions of disasters actually sound absurd as well. Where's the line? Because I'm thinking of my buddies who are like doomsday preppers. And I'm thinking, yeah, but you're kind of dysfunctional because you want to grow your own food and live 100 miles away from the nearest highway so that nobody with the Mad Max can't come and get you or whatever. It's just weird, right? So there's a line somewhere, but like they won't look ridiculous if there is anything that happened. They'll be like, see, now you want to come and live in my underground bunker farm. You need three tanks of gas

in a back of a truck and bring some fresh drinking water. It sounds ridiculous. right? People were probably like, Bill, you should be taking this capital and deploying it in your company and he just didn't want to do that. Yeah. I mean, there is some extent, particularly with a lot of gold investors who they will say, the reason I invest in gold is because when the entire banking system collapses, I want to hold onto my wealth. And my counter is always, look, if the entire banking system collapses and the dollar goes to zero, your gold's not going to be good either. What you want is not gold. You're going to want ammunition and penicillin is what you're going to want in that scenario. So it's like there are some absolute catastrophic risks that it's like, why even bother?

Charlie Munger, who was very blunt, a lot of things, brought this up too. He was like, if you were living in Vienna in the 1930s and you saw the rise of Nazism and you said, I want to have all my money in gold that didn't do anything for you. Or if you were living in Europe in the mid-20th century and you wanted to protect your wealth from the ravages of World War II, having it in gold didn't matter. The cities were bombed into rubble. It didn't matter. So I think like the catastrophic bunker risks, in my view, don't make that much sense to try to protect from because they're probably not going to protect you if things actually get that bad.

I've often just looked at economic history and been like, okay, in a massive economic collapse, similar to like the Great Depression, could I survive, not only survive, but thrive and try to take care of, take advantage of opportunities for a year, two years, three years. And of course, it's always going to be arbitrary like where you draw that line. Sure. And even like, no matter how prepared you are, there's always going to be things that will still throw you for a loop. Even if it's not financially, you'll throw you for a psychological loop. If there was a nuclear war tomorrow, even if you have 10 years of cash in the bank, you're going to be scared. Yeah. You're going to be really worried.

You're going to worry about the safety of your children. The idea that you can conquer risk is, I think, the idea you need to get out of your head because you can't. I think if you can try to, like, endure it and survive it to the best you can. That's the best anybody can do rather than thinking that you can avoid it, which is, I think, what's some of the the bunker people try to do. It's like, if I have a bunker, I can eliminate risk. It's like, no, I don't think nobody can. You can just try to endure it to the best of your ability. Yeah, I mean, I suppose if you're Peter Thiel and you have billions of dollars to deploy, you can build your New Zealand underground bunker with a private airport and fly your jet with your pilot and your

you can try to do that all you want. But yeah, you're going to spend $300 million trying to avoid all that risk. And then what? You lose all of your money except for the money you spent on your New Zealand bunker anyway, right? So he just has more to lose that he will. He will. So, yeah, you're right. Your point still stands. As you've increased your wealth and social standing, so to speak, how is your thinking changed with respect to money and how you use it? And I know that's a broad question, but you mentioned on another show. I think it was a long time ago now. You said stuff we buy is usually a social signal. It's not something that really makes us happy. And that reframe is really good, because I have a lot of friends who've done really well, but I also have a

of friends who did not do well at all. And I will tell you that I'm not totally convinced that the ones who have done well are that much happier. They have less stress about certain things, but I'm not convinced that they are that much happier. And you can really see the ones that are making bad decisions, right? They have a car collection that they don't drive. They've got three homes. They haven't been to one in four years. Probably couldn't even tell you how to get there if they landed at the airport. But they bought that stuff thinking it would make them happy. But really, they mostly just talk about it because it's the status thing. That's it. And the quicker you can kind of absorb this concept into your head, you can avoid doing that to yourself. I'll tell you,

when my son was born, he's eight, actually today is his birthday, eight. I wrote him and his sister, when she was born later, a little letter that I thought when they're adults find useful about some life advice. And there's quite a bit in there that was about finance because that's my thing. And one of the things I wrote to my son was you might think that you want a fancy car and a big house and a flashy watch, but I'm telling you, you don't. What you want is respect and admiration from other people, and you think that the Ferrari is going to bring it to you, but it almost never does, especially from the people who you want to admire you. And so, like, this is not universal. I think there are really good, awesome people who also own Ferraris. This is not like a black

and white thing. For sure. But I do think that a lot of people who have the mansions and the Ferraris and the jewelry and whatnot, they're trying to seek respect and admiration. And to me, what's really important is that if you can gain respect and admiration through your virtues, through your ideas, through your humor, through your, you know, your wisdom, you don't need to gain it from your car. I mean, think about your favorite comedian or your favorite athlete. By and large, you wouldn't care how big their house is or what kind of car they drive. You respect them and admire them for the skills that they have.

I often think about someone like Louis C.K. I was just thinking about him. Yeah. Exactly. Through his own words, I feel fine saying this because I think he has said this. He's like, he's like a fat slum. And he dresses like if nobody cares because he's hilarious. They don't admire him for his wardrobe. So I think when you have people who are trying to gain respect through their wardrobe

or their horsepower or their square footage of their house, it can sometimes be trying to make up for the fact that they can't gain respect and admiration through other avenues. To that point, I think, like, sometimes my aspiration for material goods, you can almost think of it like an inverse proxy for how much value you have to offer the world in other things like wisdom and humor and intelligence and love. That's a really good way to look at things. And you're right. Actually, even sort of the inverse or the converse, I was confused the two things. If you saw Louis C.K. and he was riding around in, like, a, I don't even know cars at all, but like some sort of fancy Bugatti Viron or whatever.

you'd be like, oh, it's a little sad, right? It's a little cringe. Like, oh, look at him. Doesn't that guy already have enough? Come on, man. But then if you found out he was a car enthusiast and he's always been a car enthusiast since he was 16 years old and he just really loves that,

you'd be like, oh, well, good for you. Right, but as soon as you find out that they bought something because I thought it would make them look cool, it has the exact opposite effect. It's more like, oh, that midlife crisis is really hitting, isn't it? Right, yeah. So back to your first question. I think as my net worth has increased a little bit,

I try to keep that at mind of like, what I actually want is respect and admiration from like five people. I want my parents to love me. I want my kids to love me. I want my wife to love me. And that's really. So like if I have their respected admiration, that's the core of what I'm trying to get in life. And is the car that I drive going to improve that? Like, no.

Is the clothes that I wear going to improve that? No. So I try to think about that a lot. What I want my money to do for me that I think I've done okay doing this is giving myself, control of my time, independence and autonomy. I just want to wake up every day and say, I can do whatever the heck I want today. And most days, I want to wake up and work, but it's on my terms, it's up to me. And so using your wealth that you've saved up to gain control of your time and become independent, I think is massive. And you can contrast that to a lot of CEOs in particular

who might make $30 million a year or more, but they have no control over their time. Every second of their day is dictated by the demands of somebody else. And that to me is like a unique form of poverty. I'm interested in the opposite of that. I would much rather make a lower amount but have control over my schedule than to make a higher amount and be just at the whim of other people's desires all day long. I try to keep that in mind with the money that I might build up over time. Yeah. Not having time to spend it or enjoy it is really something. You look at guys like Bob Iger who came back and I think recently there was some article where he's like, Disney is in bad shape. I'm overwhelmed. And you can just see him getting older in like every picture that they take.

And I mean, like presidents, for example, they always leave the office of gray hair if they didn't have it going. Yes. And it's like, okay, they're eight years older, they're four years older. No, they didn't sleep more than three hours a night. And they had nuclear or whatever crises every Thursday morning for eight years, four years, whatever it was. That's not great, man.

The bonus you get from that is what, Secret Service guys standing outside the bathroom door for the rest of your life and speaking gigs that are overpaid? Like, I don't know if I would make that trade. I really don't. I don't think it's for me. And look, I'm grateful that there are people like that in the world who exist who have to work 24 hours a day. Steve Jobs, Michael Eisner, Warren, but like the great entrepreneurs, Elon Musk, I'm grateful that they exist and they make the world a much better place. But it's another thing to look at them and aspire to it because I think 99.9% of people not only could not do what they do, but would not want to do what they do and live the life that they live if they had that. And so I'm not a type A person.

Like my steady state, my homeostasis is like sweatpants on the couch reading a book. And so if I can use my wealth to get myself closer to that, that is what I want to do rather than using it to try to keep going and pushing further and further and further. This is the Jordan Harbinger show with our guest, Morgan Housel. We'll be right back. If you like this episode of the show, I invite you to do what other smart and considerate listeners do, which is take a moment and support our amazing sponsors. All the deals, discount codes, and ways to support the show are all in one place. Jordan Harbinger.com slash deals.

You can also search for any sponsor using the AI chatbot. You can even email me for the extreme lazy, or if you just can't find or figure something out. Hit me up, Jordan atjarbinger.com. I am happy to surface those codes for you. That's how important it is for you to support those who support the show. Now, for the rest of my conversation with Morgan Housel. Yeah, there's a maybe not a joke from Charlie Munger. the key to a happy life is low expectations.

I mean, it's funny. Yes. It's not totally wrong, right? If you're just like, I think about this, people go, wow, did you ever think your life would end up like this? And I'm like, no. And they're like, well, great. How have you changed living?

And I'm like, I don't know. I mean, I have a lot more free time. They're like, yeah, but you could buy like a bigger, how you get a beach house. You know, you could do this. And I'm like, I never cared about being rich. Never cared about it. I know most kids who I grew up with assumed they would be rich. I didn't really, because my mom was a public school teacher.

my dad was an auto worker and I was like, if I can make the equivalent of six figures, whatever that means when I'm an adult, that's fine. I got everything I need. Do I have everything I want? No, but like, that's life. You know, I don't, I'm fine. Yeah. So now that I can afford all that stuff, I don't really feel the need to have it. And some of that really is low expectations. It's like, no, I just really want stability. I want free time. Yeah. I don't want to get up at five o'clock in the morning and drive to Detroit like my dad. I could live without that. That was a commute. I never wanted. I don't want a bad boss like my mom had as a public school teacher. I don't want parents yelling at me. Okay, but that's a career choice thing, right? That's not like, okay, I need to

make three million dollars a year to make this happen. No, totally. You don't even need six figures to make that happen. You need to figure out how to make money from home like many of us have who listen to this show, especially post-pandemic, this sort of work from home thing. You don't need six figures to make your life worth it anymore because you don't have to go to your cubicle and get yelled at by some a-hole with seniority. You just don't have to do that anymore. Lifestyle creep, though, man, is dangerous. And it seems like some of us avoid this, but other people don't. And I'm wondering if you have any thoughts on how that actually happens. I think most people, when they are going down some sort of path of lifestyle creep, they are making a false assumption that if their car was

faster or their house was bigger or their clothes were nicer, they would gain more respect and admiration from other people. And when they don't see that connection, it's always just, well, if the car was a little faster, if the house was a little bigger, if it was a little bit more. If you were just describe a similar process of you take a hit of something and it's not enough so you need a little more and that's not enough so you need a little more. It's a drug addiction. Yeah. The process is an addiction. And I think it is in a very real sense. It happens with money as well. To me, like breaking the chain of that. I told a story in my first book about I used to be a valet at a five-star hotel in Los Angeles. And I was young. I was, you know, 19 to 22 at the time. But it dawned me one day that if I saw

somebody drive into the hotel in a Rose Royce or a Lamborghini, whatever it was, never once did I stare at the driver and say, whoa, that guy's cool. What I did is I imagined myself as the driver. And I thought, if I was the driver, people would look at me and think I'm cool. And it was like, don't you see the irony? I don't care about the driver, but I want to be the driver because I think people will care about me. Once I realized that dumb game, that everybody thinks they're looking at you, but they're not. They're imagining themselves being you and imagining everyone else looking at them. And so the core takeaway for that for me was nobody cares about you as much as you do. Nobody's thinking about you as much as you are. Nobody cares about your possessions as much as you do.

And once you gain control of that, then I think your aspirations for nicer lifestyle stuff diminishes. And I think the most powerful financial asset that exists is not needing to impress other people. If you don't need to impress other people, it's actually so easy to. to focus on the things that actually make you happy in life. One other way that I heard this phrase recently, I thought was so brilliant, was a high-end Toyota is a nicer car than an entry-level BMW.

Because the high-end Toyota is filled with things that make driving pleasant for you, comfortable seats, a good stereo system, whatever it is, whereas the entry-level BMW is just bragging rights. It's all you get from it. Otherwise, it's a pretty shitty car. That's trying to charge you $10 to use the heated seats. What do you mean?

I'm sway my credit card. Whatever it is, yeah. Go ahead. So I think for many things, you want to align your life towards the high-end Toyota, so to speak, versus the low-end. And once you do that, I think lifestyle creep goes away. Well, you can't really creep unless you get rid of the Toyota, and then you're comparing your high-end Toyota with that low-end BMW, man.

And if you're not lying to yourself, you see who comes out on top. That's so interesting. I live in Silicon Valley, so I see a lot of this where I'm like, you know, you see like this bright red or yellow Lamborghini drive and pull up and the guys having trouble going slow enough in the parking lot because it's a freaking supercar. so it's like jerking. They finally stop, right? And you expect the girl from Cannonball Run to get out, right?

Leather bodysuit, aviators, takes off the hat and like this luscious locks a hair fall out. No, it's a dude with half his shirt tucked in, his ass crack hanging out. And he like can't fit into his jeans because he works at like LinkedIn or something in tech support. And you're like, yeah, nobody's looking at that guy and looking their chops. Like this is a guy who just can't park the car. That's it. Yeah. And I think if you were to break it into two lives, like,

Would you rather make $100 grand a year, but your spouse loves you, your kids admire you, you have control over your time, you're in good health, or you can make a million dollars a year and you're on your fourth divorce, you're estranged from your children, you're obese and overweight and your health is falling apart. It's so obvious which one of those you should want. But the irony is like, what do people actually chase? Are they going to chase things that actually make them happy, relationships and health and whatnot? Or are you going to chase just something that is so tangible and easy to measure, like salary,

even if everything else in your life is going to hell. Man, my friend Shep Gordon, have you heard of this guy? He's like, he used to manage all these big stars. He still manages a bunch of people. He's an older dude now. They did a Netflix on him called Super Mench. And he's just an amazing, amazing guy, a rock and roll manager. And he told me, I've never met anyone in my career where fame didn't completely ruin their life.

This is a guy whose job it was to make artists famous so that they could sell tickets. And he did a great job with it. I mean, it's the stuff of legends. And I remember saying, like, wow, you know, you make people famous all the time. And he's like, yeah, and I'm almost sorry I did it. It's what they wanted, but really it never ends up well. And I was, what are you talking about? He basically invented the celebrity chef, you know, I'm real Lagassee and all these guys.

This is all his doing. And he just would tell me story after story of, well, this person who you think is probably like the most amazing guy in the world and has been famous for 50 years is miserable and broke and has no real relationships outside of me and a handful of other people. And you're just thinking like, oh, this is almost like a disease they got that looks really good.

It's like a disease that makes you taller and better looking, right? And you think, oh, find me a river. It's like, no, no, no, they're still dying. They're still dying a slow, painful death. It really sucks. It actually sucks. This is a great quote from Matt Damon

where he says, the day that you become famous, you stop maturing socially because everybody is treating you different. The girls or the guys are treating you different. Like your dating pool is different. People are going to kiss up to you. They're never going to tell you you're wrong.

And that might be comfortable, but you stop maturing socially. And this is why I think childhood celebrities, Michael Jackson, the Olson twins, who might be, I think to some extent, they never matured at all because they stopped maturing socially when they were children. And it's just impossible to do it that way. So then you see, like, some of the people who have done well, to me who sticks out. And I'm sure he's not perfect. But the A-List celebrity who's done the best at this is Keanu Reeves, who if you look

into him seems like a very humble life, seems like a genuinely do-gooder is not seeking attention left and right. And I'm sure, I'm sure he hasn't done it perfectly. But when you see people who've gone out of their way to try to be somewhat normal, it's like good for you to fight back against this disease that the other celebrities don't even know that they've been afflicted with. Yeah, Keanu Reeves is a friend of mine's cousin. And I was like, oh man, what's he like? you know, and he's like, well, he owns a basketball, a hoodie, and I think he lives in a motel or a hotel. I love that. I think that's amazing.

Yeah. He goes and plays at a park. I won't say where, obviously, but like he goes and plays basketball. It depends where he's staying, right? And he'll just go and play basketball at a park or a gym, and he plays pickup games. And he's got, like, his circle of artsy friends or something. And sometimes he'll be like, why don't we go to Rome? I heard there's this, like, cool thing going on.

Why don't we just all get on a jet and go to Rome? and they're like, yeah, cool. And they go there and they stay in a hotel and they hang out and they have fun. And it's the same crew of guys and it's been the same crew of guys for a long time, apparently. And that's like he literally owns a few outfits.

I mean, he's probably got clothes everywhere because those guys get free stuff given to them by stylists and designers all the time. But according to my friend, he really just like, his prize possessions are like his ratty-ass hoodie in a basketball. I think there's no celebrity. Forget A-list.

Like, even if you're talking about like a D-list celebrity that virtually every new friend that you come across want something out of you. Even if it's innocent, they want the attention of being associated with you, they want the connections that you're going to have. And therefore, every kind of friend that you meet after you become famous is a potential liability.

And I think there are a lot of these people. George Clooney, I know, is like this, who pretty much only hangs out with friends that he knew before he was famous. Oh, wow. That's a brilliant thing to do. And it sounds like that's what Keanu Reeves is doing too. It's like it's always been the same crew.

He values their friendship. And I bet those friends treat Keanu and George Clooney, like they're just a normal dude. They're not trying to get something out of him. It's just like he's just a guy. He's just a guy. I like him, but he's just a dude. And that's a big thing. I think it also explains why there's so many celebrity divorces. If you meet somebody when you're famous, it's almost impossible to see through that fame and accept the person for who they are. And a lot of that stuff is manufactured, man. You see these relationships. I have a few sort of adjacent circles of people like this. And they'll say something like, yeah, I'm dating this person now.

And I'm like, oh, how did you meet? Oh, we met in the green room of this show. And I'm like, Oh, well, are you guys both, like, really busy? She is a music tour. You've got your other tour, and yours is in the UK, and hers is in the U.S. right now. And they're like, yeah, we only see each other once every two or three months for, like, a night or two. And I'm thinking, this is not a real relationship. Who's going to tell them? Yeah.

Is fake. I know you're enjoying the attention from People magazine when you get spotted together the one day that you guys go out and you have eight billion photos taken. But, like, what is actually happening outside of that? I have some sympathy for that, too. Because imagine to take someone whose dating life has been in the press a lot lately, imagine your Taylor Swift in 2023. How in the world do you find true love? I hope she does.

Maybe she has already found it. Yeah, me too. Poor thing. But how does Taylor Swift meet a random guy and be like, hey, do you want to go out to dinner and get to know each other? Like, are you kidding me? It's Taylor Swift. Yeah, it doesn't happen.

And you look at that. And of course, it's like a tiny violin, Crimee River. But that sucks. It sucks for them. It sucks when you become so famous that you cannot find true love, which is maybe the one thing that's going to make you actually happy in life. Yeah, I hadn't really thought about it, especially when these folks are so young, it's virtually impossible?

It reminds me, is it Jeff Bezos's ex-wife who met like a science teacher or something like that and got married? And he instantly became one of the wealthiest men in the world because of the amount of money that she, but he's like not, I think he's still a science teacher. But you know the ending to that story? No. They got divorced a year later. Oh, I didn't know that.

That sucks. And who knows? I have no clue what the details were. I won't even try to guess. maybe it's that when you meet somebody who's worth $50 billion, it's hard to look past, even if you try to look past it. Yeah, oh, man, I didn't know that. Well, there goes that example, blast it out of the water.

Good save. Managing expectations, though, in comparing yourself to others, this is tougher than it seems, right? Because I know we're talking like, oh, just don't do it. But it seems like it's worse now than before because you have the internet. I don't know, 20, 30 years ago, if I was comparing myself to people, it would be like other guys in the office or, like, like the kids I grew up with, there are other people in my community. Now it's just everyone in the

whole planet. And Hassan Minaj has a joke that was like, he got, I don't even remember, a million followers on Instagram, or maybe it was 10 million. And he's like, and my dad was like, have you heard of this other guy who's from Pakistan or India? It's like, he has 24 million followers. That's right. Oh yeah. And no one's ever heard of that guy anywhere in the West, unless you're of this particular culture. And Hassan Minaj is like, by all accounts, a very famous face in the United States at the very least. And his dad was just like, I don't care. You're nowhere near as famous as this guy who's on the Bollywood movies that we have illegally copied in the living room. Right. And that Bollywood guy who was 24 million followers is comparing himself to somebody who has 50. Right. It never ever ends.

Yeah. And even when you're at the top, even when you're Elon Musk and rich as man in the world, you start comparing yourself to people whose lives might be a little bit better than you. Even if you have more money to them. Yeah. Elon must might be like, ah, Jeff Bezos sleeps more than I do. gets eight hours of sleep at night, and I can't because I'm too busy. So, like, if that comparison game's never going to end, you're right that just in the last five or ten years, it's gone supernova compared to what it's always been because of social media. I just learned this in the last week, that there are now these Instagram accounts that are of fake influence, they're AI influences.

And it's literally like a picture of a woman who is absolutely anatomically perfect on the beach somewhere, but it looks 100% real. Oh, man. But it's totally fake. It's just AI generated. And so now it used to be that you were comparing yourself to other beautiful people around the world. And that was bad enough because it was a curated highlight reel. Now it's literally just an AI algorithm that's going to be screwing with your brain and screwing with your expectations.

And so I think even just in the last couple of months, literally, we're entering in this new world. There are these other Instagram pages of the inside of mansions that a lot of people like looking at to compare. Like, oh, what if I had this mansion? Same thing. They're AI generated. So it used to be like, oh, you would find a Zillow listing of a nice house and that would like peak your interest and you could dream about that. Now it's not even a real house.

It's all AI generated. Yeah, now it's fake. That's going to be screwing with you. So I think we're interested in a totally different dimension of what expectations inflation is going to do. I can see it with my own son, who again is eight about his definition of a good life compared to what my definition was when I was eight is totally different. When I was eight, a good life was like a new bike and new roller blades or something.

And his is like, because he watches Mr. B, so his definition is like, a Rose Royce and giving a million dollars to your friends for like competing some prank. Right. Oh, man. Totally different set of expectations. Yeah, that's brutal. When kids are thinking like, oh, I should also have three different sports cars when I'm younger or whatever. Yeah, that's really unhealthy. The AI thing, you're right, I hadn't thought about that.

We used to just compare ourselves to people who were on steroids and or had a bunch of surgery. Now it's like, well, why be limited by what the body. we'll do with the drugs and the surgery. Right. Now it's just completely fake. And by those way, those accounts are going to test constantly. Oh, if we tweak the lighting by 10%, well, it's going to be a constant optimization towards what is going to make you feel the worst about yourself, which is really what those are doing, about like, how can you compare your life to this fake life in a way that's going to make you just be like, oh, if only I had that. Yeah, well, I guess the way that you get that is what live in a virtual reality environment only. I mean, it really starts to become dystopian and

really fast, right? It's like a sci-fi novel where your real life, you're in some dirty apartment that's 16 stories underground in a box floating in some goop that feeds you and gets rid of your excrement. But your brain is living on another planet where you have unlimited food, unlimited money, and your boobs are not subject to the constraints of gravity and physics. And I feel like we have no idea what that's going to do to society because like the Instagram algorithm has probably been optimized for like eight years. And now just in the last couple of months, we have these like AI accounts that are doing something totally different. So the only thing that we know that has, it is like very clear to track and has been associated

with this cause is the rise in teenage suicide, depression, et cetera, et cetera, is exploded at the same time social media came about. So in some ways, we have no idea what this is going to do, but we know for quite certain it's not good. It's distinctly bad about what this is going to do to people's expectations. You mentioned Elon Musk a little while ago. I would love to talk about amazing personalities and how the bad has to come with the good. I've heard you talk about this, or maybe you wrote about this. And I love the idea, and I think I got this from Ryan Holiday, that if you want someone else's life, you have to trade for their entire life. And I've been thinking about this a lot lately, because whenever you, this is like the antidote to comparing yourself to a lot of people,

because you go, oh, man, you know, I wish that my show was as big as this one, but then I also want my physique to be like this person. It's like, whoa, whoa, wait. You got to take it all. You can't have the physique of this person unless you trade. How did they get that physique? Oh yeah, they work out eight hours a day and they take performance enhancing drugs and also they have really good genetics. But I want my show to be this big. Okay, well, you know that guy doesn't sleep, right? And he's also had a gazillion dollars in free advertising for being this other famous personality for years and years and years before he even started the show. And in order to do that, he had to live a pretty crappy life as like a open mic, comedian for years and years and years and

years in Hollywood. And he didn't go to college. In fact, he dropped out of high school. And you're just like, ooh, I don't know if I want this anymore. Yeah. And you start looking at these scientists and stuff like that and all these people that want to be Elon Musk. And it's like, okay, but doesn't he have like six kids with names that are symbols? And he probably doesn't see him all the time. And, you know, does he have functional relationships? I know he's got at least one or two divorced. Like, do you really want to be that guy? Even Elon said,

I think on Joe Rogan, you wouldn't necessarily want to be me. He meant that shit. Right. I mean, the stat that I think about. a lot is that among the top 10 richest men in the world, there are cumulative 14 divorces among those top 10, like way more than the national average. Of course, it's a small sample size and whatnot. But yeah, most of those people who have outside success and outsized wealth, there's a cost that came with it. And you can measure their net worth very accurately, but it's very hard to measure the cost that they put into it. We saw this with Bill and Melinda Gates, too. I'm from Seattle. So Bill and Melinda Gates were like the king and queen of Seattle.

And a lot of people, a lot of people have their views about him. But if you just view it as built the most successful company of his generation, became the richest man in the world, and then use that wealth to try to cure malaria and whatnot. It's like, what an amazing life. But then you saw in the last two years that actually his private life was terrible. It was awful. There's this article from David Brooks. This is 10 or 15 years ago. I think it was like 2005 where he said, okay, two things happened to Julia Roberts this week. Number one, she won an Oscar. Number two, she found out that her husband was cheating on her. So the question is, did Julia Roberts have a good week? and most people would just focus on the Oscar

and be like, yeah, she had a great week. You're like, no, she had probably the worst week of her life. Yeah. To your point of you can't pick and choose which parts you want. You have to take it all as a whole. The reason you have to take it all as a whole is because the good things that you were looking at came with the bad things.

Like, they happened because of the bad things, the cost that came with it. So the reason this person is so rich is because they worked 100 hours a week and because they worked 100 hours a week, they're on their fifth divorce, whatever it might be. Those things go hand in hand with each other. I think there's another element of this with Elon Musk where it's like, people want a crazy genius who thinks outside of the box and comes up with these new technologies, builds amazing companies.

But they want that person to also have like social decorum and to say the right things and to be PC and whatnot. I'm like, no, the reason Elon Musk thinks outside of the box to use that very bad phrase is like it's because he's a maniac. Yeah. And because he's a maniac, he's going to do all these other maniacal things that you won't like. So if you like somebody because they think about the world in ways that are different from you, that person is also going to think about the world in ways that you don't like. You have to take them both at the same time. By the way, I want to caveat this, right? It's not that you can't learn from these people or that this is an excuse for mediocrity or whatever, but you really do need to dedicate 100 hours a week to your business and abandon your family goals if you want to do the same level of work as the other people who are doing exactly that.

Maybe there's exceptions to this, of course, if you can optimize or whatever. But you find people comparing themselves to the other people and it's like, okay, but that person has three kids that don't talk to him. Yes, exactly. And two divorces. Do you really want that? Well, look at what he's done with this company. Great. But again, estranged wife, estranged children probably doesn't even know if he has grandkids

can't get a callback on Christmas. Like, do you want to be that guy? I don't think so. And I think for a lot of those guys, maybe not all of them, but a lot of them, when they go to bed at night, where are they thinking about? Are they thinking about their bank account? or are they thinking about the fact that their kids don't talk to them? It's probably the latter.

Like, what's actually in their soul that they want? It's probably the thing that they gave up. And so I think about that quite a bit. I read a lot of business biographies. They're so fascinating. And with very few exceptions, have I finished a biography about an entrepreneur and thought to myself,

I want that person's life. It's usually the opposite. It's usually that person's fascinating. I learned a lot, but holy shit, that sounds like a terrible life. Sure. even something like Steve Jobs, right? He was this very stubborn thinker,

and then he got cancer and wanted to treat it with fruit and ended up dying and probably didn't have to. Oops. Maybe this isn't right. I'm just making this up. But maybe that personality that said, no surgery, I'm going to eat apples and it's going to cure my cancer,

is the same personality that Steve Jobs had to say all the other ways that you're building technology sucks. I'm going to do it my own way. I think it is that, yes. Like that stubborn, like screw the establishment. I'm going to do it my way. Right. He's what made him successful.

And maybe this is like so judgmental, but maybe it also killed him. I agree with you. I definitely think just based on Isaacson's biography, which is all I know of the man, right, that that's what happened. And I don't know. It'd be interesting to ask Walter Isaacson what he thinks. Yeah. Although he'd just say read the book because my opinion is basically in there. And that's what I got from the book.

But yeah, you need these personality tradeoffs that make someone successful in one realm, but maybe a total outcast elsewhere. You just cannot pick and choose. It's nice to think you can, but you just can't. Man, I didn't even get through like half my notes, but we should have you back sometime, maybe next year. Let's have it again. This has been fun. Yeah.

Morgan Housel, until we meet again, man, thank you so much for coming on the show. So interesting, man. And again, I only got through like half my notes. So it's a bonus for me because next time we do a round, I'm probably not going to have to do as much background prep. Obviously, I overprepared for this interview. Looking forward to, Jordan.

This has been so much fun. Thanks for having me. If you're looking for another episode of the Jordan Harbinger Show to sink your teeth into, here's a trailer for another episode that I think you might enjoy. Most of the people, young people I deal with, envision themselves in kind of the top economic class, or at least aspire to it. Two basic rules. Get certified and get to a city.

I know, of course, most people want to be in the 1%. You know what? Actually, I take it back. I think now most people want to be in the 0.1%. They just think that's what the 1% is. 100%. 100% the myth of balance is a myth. And the other big myth is this notion that you should follow your passion.

And the notion that you should follow your passion is dangerous. Because most passion sectors are over-invested. If you want to open a nightclub, go to work for a vogue, or play professional sports or music, just recognize. You better get a great deal of psychic income from those things. Because the monetary income relative to your effort will be dramatically lower than other asset classes. your job as a young person is not to follow your passion.

It's to find out what you're good at and then invest the time, the grit, and the energy to become great at it. The accoutrements that follow being great at something, status, respect your colleagues, money, access to better health care, the ability to take care of your parents and your kids, you will become passionate about whatever it is that lets you do those things. Happiness is love, full stop. So the depth and number of relationships across work, family and friends is the best practice around happiness.

Again, this is one of our most popular episodes. Scott has a bunch of great advice, whether you're young or old and you want to live in rich and happy life, whether that means economics or not. And that's episode 204 with Scott Galloway, solving the algebra of happiness here on the Jordan Harbinger show. Check it out. Interesting what he said about fame. Actually, there's an anecdote in the book where fame. it seems like the flip side of money and wealth. Will Smith said, becoming famous is great. Being famous is a mixed bag. Losing fame is miserable. That is quite

fascinating. Will Smith seems like a really smart guy, although I don't know what the hell that slap thing was. I mean, imagine now your whole life is basically your note for that. Being famous when you are actually famous, it merely meets expectations. Like you are just the famous guy. whether people treat you as famous as you are, that kind of probably dictates your mood in a lot of ways. A tiny bit of fame creates a huge positive gap between your life now versus what you probably thought your life would be. And I can kind of attest to that, right? Like, it's real addicting. And I see people all the time that dive into things like YouTube and they're getting all these comments and people know who they are and they get recognized in certain places. And it's just intoxicating. And for some people,

they don't do so well with it. I've mentioned this on the show, my friend Shep Gordon, who was a rock manager for like Alice Cooper and a bunch of other famous people, he flat out told me, I've never met anyone in my career

where fame didn't completely destroy them. And Shep is not a dramatic guy. He's not a guy who has an agenda to stop people from getting famous. I mean, his job was to make people famous, and he told me that it's just one of the worst things that can happen to you. And that changed the way

that I look at all this stuff. and I will never forget that lesson. Thank you, Shep. Another bit of wisdom from the book, wealth is a two-part equation. One, what you have, two, what you expect or what you need. And I love this gem because what we do as humans, we focus on getting more instead of focusing on lowering or managing our expectations. But this doesn't really make sense, right? Because going and getting more, one, it's a bottomless pit, there's never enough.

And it's also really, really hard. You trade your time, you trade your relationship with your wife and kids because you're at work all the time, whatever it is. But the ideal thing to do here is control the expectations side, right? Since the expectations side is so much more within our control, what we can do is manage or lower our expectations and say, yeah, maybe instead of wanting three houses, I just get one house that I'm kind of satisfied with. And maybe I rent some nice stuff here and there, go on vacations at nice places, but I don't need to own those things. Well, now you just saved yourself, what, five, six million bucks because you don't need a beach house on each coast? I mean, that's a really, really good example of this.

I know it's a little oversimplified, but it's really good. You might not have to eat fancy food every day. Maybe you just get satisfied with food that's good and healthy for you, and that's it. That's the kind of thing that could really be life-changing. Now, that's going to be easier said than done, right? Because what most people are going to want to do is control their expectations and then still go and get more, and then forget about the expectation stuff, let those grow out of control, and continue to get more.

And I know that because that's kind of what happened to me for a few years. And it's a constant battle for me to manage expectations as opposed to just trying to get more. And I still haven't given up on trying to get more. I'm just trying to rationalize a better way to go about it. All things Morgan Housel will be in the show notes at Jordan Harbinger.com or ask the AI chatbot on the website.

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