We Study Billionaires - The Investor’s Podcast Network - RWH006: Master Your Mind w/ Arnold Van Den Berg

Starting point is 00:00:00 You're listening to TIP. Welcome, folks. I'm excited to introduce today's guest, Arnold Vannemberg. Arnold is one of the most extraordinary people I've ever encountered. As the founder of an investment firm called Century Management, he overcame tremendous adversity to build an exceptional record as a money manager over the last four decades or so. That's a particularly amazing achievement, given that he grew up in hiding in an orphanage during the Holocaust, barely made it through high school and taught himself to invest without any college education or any formal training. As you'll hear, his life story is absolutely riveting.

Starting point is 00:00:36 But what also makes Arnold stand out for me is that he's such a likable, decent, and generous spirited person, and he has this irrepressible enthusiasm for helping other people, including me come to think of it, that when I worked on my book, Richer Wiser Happier, one of the first things I did was travel to meet with him in Austin, Texas. And before I left, he made sure to hypnotize me on the floor of his office so that he could change the way I think and speak to myself. I regard Arnold really as a wonderful role model and mentor, and a great example of what it means to live a truly abundant life, which obviously goes way beyond just financial success. In this episode, we don't talk that much about investing at all, except mostly for a brief

Starting point is 00:01:18 discussion of why he bought energy stocks a couple of years ago when they were dirt cheap and pretty much nobody other than him wanted to buy them. Instead, what we talk about in debt, depth here is how Arnold transformed his life by taking control of his mind. And we talk in some detail about what you and I can learn from him about how to improve our own lives. I hope you find this conversation as captivating and inspiring and really as helpful as I did. Thank you so much for joining us. You're listening to The Richer, Wiser, Happier Podcast, where your host, William Green interviews the world's greatest investors and explores how to win in markets and life. Hi, everyone. It's a huge pleasure to introduce my guest, Arnold Vandenberg. In my book, Richard Wiser

Starting point is 00:02:15 Happy, I write in great depth about Arnold's extraordinary story. And I thought I'd start by reading you the paragraph in which I first introduce him, because it'll give you a sense of why I'm so delighted that he's here with us today to share his wisdom about investing in life. So here's what I wrote about him. When I think about what constitutes a successful and abundant life, the investor who embodies it best for me is Arnold Vandenberg. He's not a billionaire or a genius. He doesn't own a yacht or a plane. Yet there's nobody in the investment world whom I admire more. If I had to choose just one role model from all of the remarkable investors I've interviewed over the last quarter of a century, it would be him. He was dealt a terrible hand, but has defied overwhelming odds to achieve a life

Starting point is 00:02:59 of prosperity that goes far beyond money. Arnold, I wonder if you could start by telling us about the first say six years of your life. So our listeners get a sense of why I believe the odds were stacked against you. And then we'll talk more about how you overcame that and built this life that I regard as a tremendously successful and abundant life. So thank you. The stage is yours. Tell us about your youth. Okay. Well, I guess we're start where I was born. I was born in Amsterdam, Holland. My folks lived on the Prince of Chraach, which is the same street that Am Frank lived on. We lived at A-23 Prince O'Hach. She lived at 267, Prince O'Hach. And everything was fine with my folks. My dad was born in Germany. And my mom was born in Poland. And when Hitler started in Germany,

Starting point is 00:03:49 they migrated to Holland. And they built a fairly successful business. And they were living in a real nice neighborhood. And then, of course, what happened is Hitler and Germany invaded Holland. And they started rounding up the Jews. And so we had to go into hiding. Just like Anne Frank's folks went, they went into an attic. My mom and dad had some very good friends, Hank and Marie Bunt, who offered to hide them at a great risk of their life. If they were caught, they would be sent to a concentration camp, just like my folks eventually into that. But anyway, there was a problem that came up. As I visited the home afterwards, they had a closet with clothes hanging down and there was a fake wall behind it.

Starting point is 00:04:34 They can sneak behind the wall and then it would close up. And if anybody was searching the house, they wouldn't be able to find it. The problem was they had me, I was two and a half years old and my older brother, who was five and a half, and it would be very difficult to keep me quiet when somebody is searching the house when you're a small kid. Now, I would tell people nothing has changed. It's hard to keep me quiet now, too. So they tried different things.

Starting point is 00:05:01 We had a maid, and her parents decided that they would take a chance to take us, and we lived with them for a while. That didn't work out. We went somewhere else. But finally, there was no long-term solution. So my parents turned to the Dutch underground, which Marie and Hank Bunt and other friends of theirs contacted. And they found a 17-year-old girl. which is just amazing. I used to think she was 19, but when you did your research, you found out

Starting point is 00:05:32 she was 17, which is even more remarkable. And she took the risk of smuggling me through the German lines. We had to go on a train and to check your passport. The problem with the passport was that it was a fake, it wasn't very well done. So if somebody took a real close look at the passport, they could see that it wasn't a real one. So what they did is, they put a man in front of the seat that we sat. And he was supposed to keep the guard busy when somebody comes on, the person that checks your passport, comes on the train, checks everybody's passport, and then gets off when the whistle blows.

Starting point is 00:06:13 So it was their hope to keep him busy, which the man did, was tremendous. And she said, while she was sitting there, her heart was just beating back and forth. She thought it was going to jump out of her body because she didn't know whether he was, going to be able to do that. But fortunately, he was. So we took the train and then at the place where the train ended, there was supposed to be a cart with a horse to pick us up and to take our luggage. But the only thing they could come up with was just the guy with a bicycle. He took the luggage on the bicycle and she carried me, but it was about two or three miles to the orphanage. So I got to the orphanage and then my brother threw another route got to the orphanage as well.

Starting point is 00:06:57 But this must have been terrifying for her, right? Because I remember you telling me that even when you guys arrived at the train station, if I remember rightly, there was some Nazis just standing there talking among themselves. And this is a time when they'd been rounding up Jews, sending them to Auschwitz. I mean, not only would you have been sent to a concentration camp if you'd been caught, but she would have been sent to a concentration camp. we both would have been. Yeah, they picked up children. And matter of fact, my folks knows a friend of a friend where they were in line. The Germans were getting ready to ship into Auschwitz. And she took her baby and handed it to a bystander who wasn't Jewish. She said, would you raise my child? And, you know, she figured she'd take a chance because she knew if the child went to Auschwitz, he'd be gone. And so would she. People took a lot of risks. And she took a lot of risk. And the most amazing thing is I I told you many times. As I grew up, the thing that really got me to thinking is, how could this

Starting point is 00:07:55 17-year-old girl be willing to risk her life? But more importantly, how could her dad? Could I send my daughter on a suicide mission? You know? And then her dad was a minister, a deep Christian, and he had people in his home and in his church, and he moved them back and forth. And the whole family was very much involved. And she said that that just was something that they believed they had to do because that was God's will. And so it was a deep faith that really impressed me of how deeply these people believed in what they were doing. And I remember many years later, you spoke to a psychiatrist, Dr. Ramal Jack, who we'll talk about later, I hope, who played a huge part in helping you as an adult. And he said something to you where you said to him, I just don't understand

Starting point is 00:08:43 why they would have helped me. He explained in a way that I think had a profound effect on you. Can you recall what it was that he said to you about why she would have saved you? Yes. When I got to him, I had told him that I was very depressed. I went through a divorce. I married my high school sweetheart. We were going around for four and a half years. We were married four and a half years. And we broke up and I was very depressed about it. I was very angry about all the things that were going on, which caused the depression later on and found out. But one of the first things I wanted to find out from him, he was a very wise man, very well respected, and I had a lot of respect for him. And I said, Dr. Ramblejad, can you explain one thing to me? I can't figure out

Starting point is 00:09:31 why this girl and her father and the family, but we're willing to risk all of their lives, and they had many children, to do this for us. And they didn't even know it. She'd never seen me before. And he said, oh, that's easy. And I said, it is. I've been trying to figure it out for about 25 years, you know. And he said, if your principles are more important than your life, then you sacrifice your life. If your life is more important than your principles, you sacrifice your principles. And that's what people do on a daily basis. They have certain things they believe. but if something is more tempting like somebody's working for a company and you have a chance to make an easy buck, if their principles aren't strong, they might go for it. So your principles

Starting point is 00:10:19 are your deep beliefs and they guide your behavior in extreme situations. And he said even in Auschwitz, he saw that operating. So that was a very profound effect on me. I thought, wow, what are these principles that they believe in that they would go to that extent? And so I got deeply involved in studying religions, Christianity, Buddhism. I studied everything I could get my hands on. And that led me to an earlier breakthrough in my thinking. I was struggling to try to understand a principle. And I couldn't come to the conclusion.

Starting point is 00:10:57 I talked to rabbis. I talked to ministers. I studied Bible prophecy, what the Christians believed about Jesus Christ, what the Jews believed about them. And there obviously was a conflict there. I mean, the conflict's been coming on for 2,000 years, right? Is Jesus the Messiah or is he not? And obviously, the Christians believe he is and the Jews are still waiting for the Messiah.

Starting point is 00:11:22 So that was a big conflict. And as I was struggling with that, I thought, geez, what would I do if Jesus is the Messiah? What am I going to do? Can you imagine telling my parents this? It would be like you talking to your parents saying you're going to be a communist to move to Russia. So I was deeply conflicted with it. All of a sudden, something flashed in my mind. If you want to follow the truth, you have to go wherever it leads you. In that incident, I thought about that, and I said, you know, that's right.

Starting point is 00:11:52 Why am I worrying about who's right? The most important thing is I'm focusing on the wrong thing. I should be focusing on what's the truth. And that became pillar in my thinking. That was my first real deep principle that I said, okay, no matter. matter what happens, I'm always going to follow the truth. And that has opened up a whole new world to me because I always accepted things because you were raised that way and you believed that way. You go to school and they teach you that way. But all of a sudden, I started questioning things

Starting point is 00:12:24 looking at the other side. And if you question your belief, you're going to come up with some things that you were taught and you accept it that aren't really truth. They're not reality. Let's go back, Arnold, in time to the chronology of the story. Tell me what, A, what the orphanage was like, and B, what happened to your parents while you were in the orphanage, because they must have been absolutely desperate, right? Trying to figure out whether you and your brother Sigmund, who was hidden on a farm with a childless couple, they must have been desperate to figure out what had happened to you and whether you were safe, whether you were still alive even. Yeah, that was a very important point. What happened is when this girl took me on the train, my folks were told that the orphanage would call a neighbor because they didn't have a phone where they were hidden. And the neighbor would come over and tell my folks that I had arrived.

Starting point is 00:13:18 Well, they never got a call. And my mom was sitting there just agonizing for hours. She never got a call. And she kept telling my dad, he should have gotten here by now. The train landed an hour ago and then two hours ago and then four hours. After a while, they got to thinking, something must have gone wrong because they never got the call. My dad says, so my mom says, why don't we go to this butcher shop down the street because they have a phone there and we could borrow the phone and ask him if the kids got there? And he said, man, we can't do that because the Germans are all over the place and if they stop you, you're dead.

Starting point is 00:13:54 So he tried to persuade her not to go. And he was able to do that for a few hours. But after a while, she said, you go, if you don't go with me, I'm going alone. I need to know, I can't stand the suspense. He said, the final thing he said to her, Mania, if God forbid they were caught, there's nothing we can do. And if he didn't get caught, if there was some delay, we're taking a risk where he's going to end up not having any parents. But the emotion took over. She said, I'm going.

Starting point is 00:14:26 He said, he had a very bad feeling. about it. But he said, I couldn't let her go along. So I went with it. And sure enough, we went into the butcher shop and the butcher shop's wife was a traitor. And in those days, you had people turning in Jews for 15 goldens and some food rations, which they did. They turned them in. And when they got out, they walked down the street to Gestapo picked them up and took him to Westerbrook, which was a holding tank. So my mom never knew that I got to. They never knew because they were picked up and sent to Westerbrook and then eventually to Auschwitz. She said the greatest torture in Auschwitz was not the cold and the hunger and the beatings and all that.

Starting point is 00:15:12 She said every night she would think, I wonder if the kids got there. And she says, you know, your imagination goes wild. And just to show you the power of thinking and the subconscious mind, which we're going to talk about later, look how powerful that was. She taught me all my life. Arnold, it's okay to get married, but don't ever have any children. And I heard this my whole life. Well, it turns out I have three brothers, so there's four boys, not one of them had a biological child. And so when I got remarried again to Eileen, which she had two children's, but we wanted another child. And for five For six years, no matter what we did, we got tested. Everything was great. We couldn't have a child.

Starting point is 00:15:58 So I remembered all the things that my mom told me about not having children. But when I was getting older, I thought, I'm not going to tell her this, but I'm going to have children because it's just going to upset her. And I'm not going to deprive myself of a family. That was one of the big things. One of my big goals in life is I wanted a family because we lost 39 members of the family. I never had a cousin. and uncle or grandmother, you know, all that, which I would have liked to have. So I thought, well, I'm going to have a family. Anyway, so I got to thinking about it, and I realized that maybe it had gotten cut. I was studying the subconscious mind, maybe it had got stuck into early enough to where I

Starting point is 00:16:40 accepted it, where on a subconscious level, but on a conscious level, I was willing to do it. So I called up to psychiatrist, Dr. Ramblejack. He was not into hypnosis at the time, but after I left, he got into it. I was already into hypnosis at that time. So I said, how would you like to do an experiment? He said, sure, what is it? I said, well, I really believe this thing about having a child is a mental block there. And I'd like to be regressed back and see if we can find that block and eliminate it because we want to have a child.

Starting point is 00:17:14 He said, great. He said, I could see how that could happen. So here I went to five years of therapy, but that never came up. Sure enough, we regressed back on the third session. I woke up one morning, just had a gut feeling. I told Eileen, you're going to be pregnant this month. Sure enough, she was pregnant. And we now have a daughter, the biological.

Starting point is 00:17:36 Now, here's the thing. Out of the four boys, I'm the only one that has a biological child. So it shows you how what you were taught as a young person, influences your mind without you even being aware of it. Now, how many times have you heard about people who can't have a child, they adopt one, and then they have one? Almost everybody has met somebody like that. Well, obviously, there was a fear or a concern or something that prevented it. But look how powerful the mind is that it can actually prevent you from having a baby. I remember you telling me another extraordinary story once that I don't think I included in the book,

Starting point is 00:18:15 even though I wrote about your story at some length, which was about you starving pretty much in the orphanage and then many years later, driving to your parents' home, we'll go back to the chronology in a minute, but driving to your parents' home and having this reaction where suddenly you realized there was an early memory embedded in your head. Can you tell us that story? Oh, yeah. My wife and my children were on the way to visiting my parents who lived in Santa Cruz at that time I was living in L.A. So as we approached the house, my wife, Eileen, says, why don't we stop and get your folks a flower or plant? I said, great, let's do that. So we found a nursery and I said, why don't you look for the plant? I'm just going to look around. Maybe I can find something that I like. She said, sure. So I'm walking along and I'm looking and all of a sudden I started swimming.

Starting point is 00:19:06 smelling this plant. And the minute I smelled it, my tears started coming down for no reason. And I was saying, gee, what's the matter? Tears were coming down. I was getting all choked up. I felt terrible. And all of a sudden, my back started going out. And just as I, it's almost like I'm crying. My wife turns around the corner. She says, oh, what's the matter with you? And I said, I don't know. I just all of a sudden, I'm starting to tear up. My back is hurting. I'm tense everywhere. I don't know what's going on. Anyway, we got into car. I could barely get into car. We drove over to the folks' house. And I started thinking about it and I thought it has to be something psychological because I wasn't doing anything. We got into the house and I said, Mom, Park,

Starting point is 00:19:54 can I use your bedroom? I lay down on the bed. My back is going out and I think it's psychological. So I'm going to do a little hypnosis and see if I can figure out what's going on. So as I was starting to go into hypnosis, all of a sudden it hit me before I was even into. That smell was the smell of the plants that we used to eat in the orphanage. And we used to go out in the field because we were so hungry. And we would try to eat things and say, geez, try this. This tastes pretty good. And you know, another guy found something else. None of it tasted really good, but one tasted better than the other. So that was the trigger. As soon as I smelled it, that was it. While I laid down, did a relaxing drivet.

Starting point is 00:20:36 Drill, 10 minutes later I got up, tears were gone, felt great. My back was back. You know, I could barely get into the house limping in there and I walked out, the back was fine and everything was fine and it never bothered me again. So if I remember correctly, even water was pretty scarce in the orphanage. I mean, they were doing an extraordinary thing, right? They were hiding Jewish kids and taking care of them in a Christian orphanage. They were taking great risk.

Starting point is 00:21:04 But this was a tough environment, and you were in a terrible state, if I remember rightly, by the time you got out of that orphanage, your health. Can you talk a bit about the conditions, the lack of water, and what effect it had on you? Yeah. Now, these people were wonderful people. Don't forget. They wanted to do what's best they risked their life to hide Jewish kids in the orphanage. But there was no food and there was no water. It was very scarce. I remember at one time, all the kids were sitting around and the ladies took us outside and two women had snuck through the German lines to get a bowl of soup for us. And as they came, I could choke me, as they came across the hill, we were all clapping because they were shown the pot of soup. You know, so that's how

Starting point is 00:21:48 scarce were. Water was scarce. Food was scarce. The Germans would come through and even if they had anything, they would just help themselves. And they just, that was just the conditions that was there. It wasn't on purpose. It wasn't intentional. It was just the conditions in a war zone. I remember you telling me at one point a story where you actually stole some water or you went and got so, not stole, but you went to the well and got water when it was unauthorized. I mean, you must have, what, four or five?

Starting point is 00:22:19 What happened is they told us, you can go out and sign play, but don't mess with the pump. The pump is where we got the water, right? Everybody said, you know, they were all standing around the pump. Everybody's saying, geez, we'd like to get some. water, but we're not supposed to. So I said, I said to myself, I'm amazed that I was able to think that through. I said, I'll tell you what, I'm going to go ask her again and see what she said. So I went around the corner as if I went to talk to her. I saw her looking through a window, she was on the sewing machine. I came back and I said, guess what? She said, it's okay.

Starting point is 00:22:52 So we are pumping the water and everybody's drinking. Everybody's very happy. And I was like a hero, you know what I mean? I'm the one that got into water. And all of a sudden, she comes out and she's living. She said, I told you kids, you can't drink that water. And they said, well, Arnold said it was okay. And she turns at me and she looks at me and I thought, oh, I'm in trouble. And she hit me so hard, I thought my head was going to come off. I mean, it was really a tough blow. She was very upset. It's a funny story of how that affects you, just to give you the thing that I've probably never told you. After the war, this lady came to visit us.

Starting point is 00:23:32 She wanted to visit me because, you know, the war was over and everything was fine. And so she wanted to come. So my mom says, guess what? I came home from school. We have a visitor. And she's very anxious to see you. And I think you're going to be very happy to see her. And I said, who could that be?

Starting point is 00:23:51 She's, no, I'm not going to tell you. We're going to open the door. So they opened the door. I'm standing a few feet away and it's this woman. And I am so angry and ticked off. I just get angry and ticked off just to look at her. And I wouldn't say hello to her and I walked out of the room and my mom was very embarrassed. And she said, she's come all the way here from another city to visit you and this is the way you treat her. And I just didn't give it damn. You know, I just wouldn't do it no matter what my mom said. Finally, I just walked out and my mom was very

Starting point is 00:24:23 embarrassed and this woman probably never even remembered the incident, you know, because she's a good woman. She was caring for the kids, but I never forgot it. And I didn't even remember it at the time, but when I saw it, immediately it brought bang bad memories. So it goes to show you when you hit a kid as a child, you can see the memories that that implants in that child. I've always been against hitting kids and doing things like that. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the

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Starting point is 00:29:07 were sent to Auschwitz around May 1944, and your mother ended up in a different camp that was liberated by the Russians, and your father, I think, was liberated by the Americans in May in 1945. Can you talk about your memory of being reunited with them, what state you were in, whether you even recognize them, how they managed to survive? Because it's kind of extraordinary that both of them even managed to survive Auschwitz. Very few people did. And in Holland, remarkably few Jews actually survived. What happened is they both were picked up in Westerbrook, then they were sent to Auschwitz on a train, which was about three-day ride. And it was sub-zero weather in Poland. It was horrible. There was no food on the train. It wasn't even a

Starting point is 00:29:54 bathroom. They had a bucket that they would put in on each car, and people would stand there with a coat to hide them while they're going to the bathroom, and then it spilled over and smell. It was just horrible ride. But anyway, they got the Auschwitz, and they have selection, and both my mom and dad were selected to go labor because they were younger. and they were strong people. So they were in there for about 15 months and probably one of the most memorable things that I learned besides the hunger and the beating and the cold

Starting point is 00:30:31 and all of that was my dad was on the death march where when the Americans were coming through, they were moving to camps. And he was 85 pounds. You can imagine. I'm one inch taller than him and I weigh about 157, 160 pounds. So I was almost doubled the,

Starting point is 00:30:48 wait. And it was sub-zero weather. They had to march 24 hours, no breaks, two slice, two thin slices of bread. It was one slice equivalent of ours, two slices. The water you picked up off the guy in front of you off the snow that was on the shoulder. And the snow was halfway up your knees. And if you buckled, if you got kind of like, you know, you got tired or weak or something and your knee hit the snow, they beat you. And if you don't get up, they shoot you. So the thing that really impressed me that had a profound effect on me is when my dad said, I said, Pa, how did you make it?

Starting point is 00:31:30 I mean, I can't even imagine today marching 24 hours in good health. He said, you know, I asked myself, you go, what's the most important thing you can do here? And he said, I came to the conclusion that I could not weaken and fall down or because I wouldn't get So he said, I did all my concentration on just moving my leg and making sure that it was solidly planted because it was snowing and you can slip and then you can go down. So he said, I focused all my attention just on my leg. And the longer we went, the harder it was to do. And every time I thought I couldn't move my leg again, I just thought about it and I was

Starting point is 00:32:10 able to move it. And he said, I didn't think about how hungry I was. I didn't think about how cold I was. I wouldn't let any thought get in my mind, just totally focus on moving that leg. And he said, you know what's interesting? There's something about the mind that when you focus that much, it actually creates more strength and it allows you to do things. You didn't think you could do. Like if I would have thought about marching 24 hours, I would have never thought I could make it. But I didn't think about that.

Starting point is 00:32:42 I just thought about the immediate, move that leg, make sure it's solid, and that's how I got through. And that really got me to thinking about the mind. And what was that extra thing that gives you that energy? Well, as I was doing my studies, I come across Victor Franco, who was a psychiatrist, a Jewish psychiatrist in Auschwitz, and he took the opportunity to study people in those extreme conditions. missions. He was on the same death march, but he didn't know, they didn't know each other. But he talks about the thing in his book, Man's Search for Meaning, Page 37, I'll never forget it. It hit me. He said that he was marching along and a friend of his next to him whispered, I hope our wives

Starting point is 00:33:28 are doing better than we are. He said that immediately got him to focus on his wife. And he said he didn't think about anything as he was walking along, marching along. He thought about his wife. He felt her present. He felt that they were talking back. He didn't know whether she was alive or not. Matter of fact, she wasn't. She died in that. But he didn't know then. He said he felt her presence. He could back. And he said, a thought transfixed me. For the first time in my life, I realized what all the poets and philosophies have alluded to that the greatest thing a man can achieve. is love, the ability to give and receive love. And he said, the salvation of man was through love. So your parents came to pick you up when you were about six from the orphanage. If I remember

Starting point is 00:34:20 correctly, you could barely walk, right? You were shuffling along on your knees because you were so malnourished. Did you recognize them? Did you know who they were? I mean, you hadn't seen them since you were, what, a couple of years old, three years old or something. My dad explains that I was so weak that the bones were sticking through my skin, and he was afraid to pick me up because he's afraid that he might hurt the bones. And I could walk a little bit, but most of the time I was called because I was so weak. So I was sitting out in front with the orphanage. There was a girl out there. We were kind of playing together.

Starting point is 00:34:53 And she said, Arnold, you see those people walking up the driveway? I said, yeah. She says, I've heard that those are your parents. And I said, no, they couldn't be because people used to come up, either one or two, pick up kids. And we'd run to them because we'd hope that it was our parents. And it never was. So I quit going, I quit running up to the people. And so I could hardly believe my luck that they were my parents.

Starting point is 00:35:19 But I didn't recognize him. All of a sudden, somebody else, Arnold, please come in. She said, you see, I think they're your parents. And I thought, wow, I was getting excited. So I walk into a room, and my dad looks at me and he says, that's not my son. That's not Arnold. He was much bigger when we dropped them off. And the lady says, no, no, that's Arnold.

Starting point is 00:35:42 My mom looked at my eyes just a quick second. And she said, that's Arnold. Well, that night, they were putting me to bed. And my dad was putting me to bed. And I asked him if he could lift me up so that I can turn off the light and sing a song to the sun. Then he said he knew for sure that I was his son because that was what he did with me before the war and I must have remembered it.

Starting point is 00:36:07 And so he picked me up. I fixed the switch. And then I said, Doc Sonacher, that means goodbye son. And then he put me to bed. So that was an important part because he realized that I was his son. And then he took us. Then my folks were both on bicycle. I was on my dad's bicycle and a bicycle to the farm where my brother.

Starting point is 00:36:28 brother was. He was hidden on a farm. And fortunately, he was in good shape because there was plenty of food there. He had to work very hard to help around that farm. And he was very strong. And when we saw each other, it was probably the happiest day in my life because we were together in the orphanage and he took good care of us. And he really looked after me and I depended on him. Like we used to pray for the bread. You know, they feed you the bread. They put one slice of bread with some candies on it. Then you'd say a prayer. When you opened your eyes, the bread was gone because the older kids just took it off your plate. So I learned early survival that when you go to pray, you put your hands over that and you watch the food so they don't take it. But my brother took care of me,

Starting point is 00:37:18 and one day he was gone. And that was the worst day of my life. So he initially was in the orphanage with you and then left and went to this farm. Yeah. So he had taken care of you on the orphanage and then sudden, because I remember you saying to me that you had this tremendous sense of abandonment where you, I mean, as a little kid, you were separated from Sigma and your brother, but you also, I think, had a sense that because you didn't understand, you felt that your mom had sent you away because she didn't want you.

Starting point is 00:37:47 Yeah, that was a big psychological problem. I had to work out. I had a lot of anger towards my mom because I felt. she abandoned me to the orphanage. Consciously, as I grew up, I knew she didn't, but subconsciously, that was a belief I had. But the worst thing was, William, is it lowers your self-esteem to a level that you don't think you're worth anything. And I had the biggest problem overcoming the self-image because I did very poorly in school. My dad, mom and dad enrolled me in a Hebrew class, which was almost like just a first grade or kindergarten.

Starting point is 00:38:25 And I couldn't function in the class. I couldn't do anything. And the rabbi and my dad got me together and saying, we're going to send you to a different class because they were trying to shield me from the pain of failing. But I could tell. I knew they weren't telling me the church. I said, how come I can't go with the rest of the kids?

Starting point is 00:38:42 Well, you know, you've got a different way. And you're going to do real well in the other class. And I just knew that I didn't make it. Then when I went to regular school, I never did well. And my mom even hired a child psychologist to figure out what was wrong with me. And I either heard, I don't know whether I heard him or she told me. But the conclusion from the child psychologist that because of the malnutrition, it affected my brain.

Starting point is 00:39:09 And therefore, I was going to have problems learning. And I believe that it goes to show you, which will get into the subconscious mind. Belief is everything. Once you believe it, you act it out. So I never bothered too hard in school because I knew I wasn't very smart and I had a low self-image and I had a lot of problem. I had a lot of anger because of that. And so it created a lot of problems in school. And I never did well. I barely graduated high school. And the only reason I graduated is because I got into gymnastics as I wanted to overcome my physical handicap. And over a long period of time, I was able to restore my physical health. I became a

Starting point is 00:39:51 champion. There was an event called the rope climb, which is that, you know, you walk in the gym and there's a 20-foot rope climbing. And I had a horrible time, as you can imagine, being the weakest kid in the school. But I eventually overcame him. And I had an experience one time that changed my life as far as the rope climb was that I struggled for two or three years climbing two hours a day. And I wasn't making much progress. But one day, all the kids were sitting around talking about, what are you going to do? I'm going to go out for football. One guy was going up for tennis. The other guy, at Bass Bandenberg, what are you going out for? Well, I'm going to go out for the rope climb. So there was a kid sitting there who was a bodybuilder and a very strong kid at a big build. And

Starting point is 00:40:37 he was going to go out for the rope climb too. So he looks at me. He looks at me. He looks at me and he said, you're going out for the rope climb? How in the world are you going to make it into rope club? And my ego got involved and all the guys were sitting around. So I challenged him to a race because I figured I'd been climbing two years and he hasn't even started. So I figured out to be able to beat him. Well, it was such a terrible embarrassment. We had a race and he was already at the top and I was barely halfway up. And it just almost destroyed me. I went home and I thought, God, I'm never going to make it in this thing. And then a thought flashed in my mind and it says, why would you quit?

Starting point is 00:41:17 You were going to climb the rope to get stronger. And I was definitely getting stronger. I was getting much stronger than I ever was. So I was making good progress. So the next year, in the ninth grade, I was able to compete because this was a four-year high school. And my coach went up to me and he said, Arnold, there's four guys going out for the rope climb, but we don't have a fifth man. Would you like to be our fifth man? Well, I was excited to make the team.

Starting point is 00:41:46 The only reason I made the team is because they had four guys and I was the fifth. But these guys were climbing the rope, the 25 foot rope in six seconds, and the best I ever did was 8.6. Well, you know, in a hundred meter sprint, one-tenth of a second separates the winners. I was two and a half seconds on a 20-foot rope. So you can imagine how bad I really want. It was horrible. Matter of fact, I think some of the teammates were embarrassed about. You'd start off sitting down on the floor and you'd shoot up and people would go, go, go, go, go. And after a few seconds, the people'd be up there. I was halfway up and they quit yelling, go, go, go. And the gym got silent. So it was horrible. But after the season, I went up to the coach and I said,

Starting point is 00:42:32 coach, I'm going to prepare for next year. What do you think I could do to improve my climbing? He said, you know, it's interesting. I've been thinking about you, and here's the situation. There's a new technique on the rope climb, and the guy who developed it has just made some breakthroughs that allow him to go much faster than anybody else, and people who are adopting the technique are getting much better. And I think if you adopted that technique, you could make big strides. And I was so excited.

Starting point is 00:43:02 He said, what do I have to do to learn this? He said, well, I don't know it because it's brand new. and this kid at Venice High School was climbing that way. Why don't you go to Venice High School when they have the championship? He'll be climbing there and you could watch him. And then you take notes and then you come back and show me and I'll help you work it together. William, I couldn't be more excited. So the day of me, I got up.

Starting point is 00:43:27 I took a bus there. I got there probably an hour and a half to two hours early just because I didn't want to miss it. I'm sitting around finally. They opened the gym. I sit right in front so I can see the climbing rope and he doesn't show up. And I am so disappointed. I thought, oh my God, I'm not going to be able to learn this. So as I'm sitting there, I'm looking at the clock and things are just swaying back and forth. There must have been in an altered state of mind or something deep disappointment. But anyway, all of a sudden, the guy shows up. He's pulling up his pants. He's fixing his

Starting point is 00:44:00 jersey. He sits out, shoots up the rope in 4.6 seconds. Now, don't forget, I climbed 8.6 second back year so you can see. I was just William. I was like in a different state of mind. I could see, I could see today him shooting up that rope. I've never forgot that image. And on the way on the bus, I was sitting there practicing the technique, kicking my legs and people looking at me at the bus. What's the matter with this guy? I didn't care. Every night I would go to bed, but at 3.30 in the morning, I'd wake up because I thought, my God, what if I forget, You know, you have to move your hands a certain way in and you have to pull it down. Very intricate.

Starting point is 00:44:39 So I thought, I'm going to get up and practice in front of the mirror. So I got up in front of the mirror and practiced it. Every night I would wake up. Finally, I didn't even care. I figured, this way, I won't forget it. I don't know how much time went on, but I did this for about six to nine months. One day, I woke up and I felt like Superman. I felt good.

Starting point is 00:45:00 I felt strong. I just had a feeling inside of me that I was going to break my record. So I struggled through class all day. I couldn't stand it to wait to get to the gym because gym starts at 3 o'clock, and I'm sitting in class at 8 o'clock, visualizing myself going up this rope. So finally I get the coach. I said, great, warm up. I warmed up, and I grabbed the rope, and it just felt different.

Starting point is 00:45:26 I lowered myself down. And when I pulled up, I shot up. It used to be you have to pull up. You know, you kind of pulled yourself up. And I just, it felt like I was in a dream. It was almost effortless. And by the time I got up there, I used to have to pull way down and reach, oh, I could barely touch the top.

Starting point is 00:45:48 I pulled down and I could have hit it with my elbow. I knew this was a fantastic climb. I could just feel it. So I'm hanging up to coach. What's the time? And he goes, he's messing with his wife. Come on down. So I said, I go across the gym.

Starting point is 00:46:03 What was the matter? What's going on? He said, Arnold, this is so good. I thought there was something wrong with the watch. I said, there's nothing wrong with the watch. I'm going to do it again. I did it 10 times in a row. And it was just a real breakthrough.

Starting point is 00:46:19 What do you think the transformation was? Because this became such a sort of fulcrum in your life, right? You had been this kid who used to get beaten up at school the whole time. You were emaciated from growing up malnourish. Something clicked. You stumbled upon some technique that became fundamental in your life. When you look back now in retrospect, what's the moral? What did you figure out? Was it visualization? Was it practice? What happened that clicked? Well, I tell you what happened. And the psychiatrist explained it to me later. I was so positive that I was going to be the next champion.

Starting point is 00:46:56 Matter of fact, when I saw this guy that night, when I went to watch him, the champion with the new technique, I was so excited. I said, that's going to be me. I'm going to be the next champion. I just had the feeling that I could do it. There was no rhyme or reason. It was just, I was so excited. I got caught up at the moment.

Starting point is 00:47:16 It reminds me of a couple of other great athletes who had the same experience, which I can talk about later. So the point about it is when I had this breakthrough in the technique and it was just the beginning of the season, I said to the coach, you know what, coach? I think I'm going to be the next lead champion. And he looked at me and he said, Arnold, look, this was a great breakthrough, but there's five guys on every school. And, you know, there's a lot of guys you have to beat. And I walked away and I said, I'm going to do it. I had the belief. And what I've come to learn in the subconscious mind and everything I've read for 45 to 50 years, single most important thing in life is what you believe. Your belief governs your feelings and your feelings create your

Starting point is 00:48:01 attitude and your attitude creates reality. And that's what happened to me, but I didn't understand it. So anyway, I was preparing, I prepared all summer. I climbed. I did the technique. I perfected it. By the time the opening season was, I was first man. And even though most the guys were still ahead of me. Every time I met somebody, even if they had a better time than me, I always beat him because I really believed it. And my buddies used to tell me, Arnie, how are you going to beat this other guy? I was at that time on the 20-foot rope climbing 4-6, and he was climbing 4'3, and 3 tenths of a second is a lot on a 20-foot road. So he was clearly better. So my buddy said, how are you going to beat this guy? I said, I don't know, but I just believe I'm going to

Starting point is 00:48:49 going to do it. And they kind of looked at me like, you know, I know it's working the past, but these the other guys weren't that much ahead of you, but this guy's way ahead of you. Well, anyway, the meet started, and he was in last sitting last, and I was second to the last, because the best guy goes last. I sat on the rope. I had that same feeling. I just flew up the rope, and I hit four three. And this guy was sitting there kind of bored, but then when he heard that I climbed four or three, it kind of lit him up a little. little bit. He got real nervous, and the best he could ever do that meet was four, six. We literally traded places. And even though in the league, I tied, I won the league. And then the next two years,

Starting point is 00:49:32 I won the league. There wasn't even any competition. And I climbed into National AAU, which is all college seniors climbing in a national meet. And there was only three kids that qualified. I was one of them. And I placed ninth in the nation while I was in high school in the national AAU, which was quite a dramatic change. So when I went to the psychiatrist, Dr. Ramal Jack, I was explaining what happened. And he was sitting there just silent. I said, what's the matter? He says, Arnold, you know what you did? He did everything that we teach in sports psychology. You visualized it, You repeated it. You were focused on it.

Starting point is 00:50:15 And you believed it. And that's the secret. And if you will do the same thing in your business, at that time, I was starting sent your management, the same thing's going to happen. As soon as he told me that my right arm lit up. I got chills on my right arm. Whenever I hear something, truth or profound, I get chills on my right arm. And I knew he was right.

Starting point is 00:50:36 So I cleared out. I was living in a studio apartment. I cleared out my apartment, did nothing but put books on the, all the books I could afford on the market, started studying it. And that was my commitment at that point. I knew. And here's what's really the most benefit of the rope climb experience. And people who've never experienced, it will probably never believe it. But it gave me such a confidence in myself that if somebody you would have told me I could learn to fly, I probably would have believed it because I experienced that kind of a transformation. And people say, how could you believe that you could make it

Starting point is 00:51:16 in the market without having been trained or gone to college and doing all those things? It was because I believed it. Matter of fact, a friend of mine wanted to help me when I was starting my business. I wrote about this. I gave a speech in 1982 about these kind of principals to a group of college kids. And I told him the story about this guy was taking a class at night. He says, Arnie, you got to come to this class. The guy is just a whiz. He's a mathematics. He writes all the formulas on the board. And he's just fantastic. And I asked him if he would be willing to have lunch with you because he had a friend that wanted to be in the investment business. So he said, sure. So I was so excited to meet with this guy, you know, to get some

Starting point is 00:52:02 encouragement, some direction. And at that time, I was selling neutral funds, you know, which is how I got into the business. So I sit down with lunch and he asked me, Lindy tells me that you want to go into investment business. I said, yes, I'm going to start an investment counseling business. You can imagine if that was you, you know, and he looks at me and he says, what's your background? I said, what do you mean? What's your background? He said, well, have you been to college? I said, no, I haven't been to college. I barely got through high school. And he goes, oh, and then he said, aren't you going to go work for a company before you go into your own business? I said, well, I work for a company to sell mutual funds, but I want to be the one that's going to be managing

Starting point is 00:52:45 the money because the mutual funds got destroyed in the bare market of 68 to 74. And he looks at me like I'm kind of nuts. He said, you know, Arnold, I have a degree in economics. I have a degree in mathematics, and I've been as a broker for 10 years or something like that. And I don't believe that I'm yet qualified to become an investment counselor, which is ultimately what I would like to do. And for you to even think about doing this without going to college, without getting training, I just can't see. It's not right. You're going about it the wrong way. So I was stunned. He said, matter of fact, I don't think I'm qualified myself. And I looked at him and I said, what do you mean you're not qualified? How could you not be qualified? What else is there? And he just, well, you know, you got to know portfolio management. You got to know the market. You got to know all these things. And I was really stunned that this guy had no faith in himself. And yet I believed I could do it. And I went home. I was very depressed after the meeting. I took a nap and I woke up and I thought, wait a minute. This guy's got all these things going. And he

Starting point is 00:53:57 doesn't have the faith, but I'm going to be doing it. And the next morning, I woke up, ready to go, but it taught me a lesson. The definition of an expert is somebody who can tell you all the reasons why you can't do anything. I never paid any attention to it. I just made up my mind that I was going to learn everything I could about the business, and I've been doing it ever since. And you had no investment record. You had no assets. You were in debt. You barely made it through high school. You didn't have an office. I mean, it was really all about self-belief, right? There was no rational reason to think that you could do this, was that? No. See, what happened is I started off selling mutual funds. I got my license in March 68, and the market topped out in December

Starting point is 00:54:43 of 68. So here I'm selling mutual funds, which I thought were just the greatest thing in the world. They had big track records, you know, the top of the bull market. And I got all my friends involved. they didn't have much money, but whatever it is. And then I see the market going down. And I was in there from 68. It went down until June of 1970. Then it had a blip up for about a year. And then a year and a half. And then in 72, it came straight down. And so I, by that time, I had six years of bear market. And my funds got slaughtered. But I gained a great insight. I had selected funds as I listened to the portfolio managers, I would go to the meeting and if I thought somebody sounded great, then I would put some of the money in there. And some of the funds got a blil-rated, but some of them held up very well. This is during a six-year period. So I started thinking, what is it about these funds that are doing so much better? And I went to listen to the portfolio manager.

Starting point is 00:55:45 I talked to them and they were all disciples of Benjamin Graham. So every one of the funds that did well, they believed in Benjamin Graham. And I would talk to the portfolio manager and I said, what are the books of who's this guy, Graham? I got everything I could think of that Benjamin Graham said, wrote about or written. And I devoured those books and I read them over and over. And one of the things that made me believe in Benjamin Graham is my mom was a good businesswoman. She always told me, whenever you buy something, there's a wholesale and a retail. So whenever I'd buy a shirt, I'd come home real proud of it.

Starting point is 00:56:23 One time, the thing that stands out of my thinking is I brought a sweater that I had saved up for a long time. I think it was $30 at that time, which is about six or seven times what it's worth. So you can tell, I bought it at Bullocks. I came home and I said, Ma, how do you like this sweater? And she looked at that. It's beautiful. What did you pay for it? And I told her, she says, was it wholesale?

Starting point is 00:56:45 I said, Ma, it's Bullocks. They don't have wholesale and retail. You can't go in and bargain with them. There's the price you pay it. She says, what do you mean? You mean to tell me if I went in there and I bought three of them, they wouldn't give me a discount? I said, no, they wouldn't. So she impressed in my mind that if you're going to buy something, you've got to buy it wholesale. So when I started reading about Benjamin Graham and he talked about buying stocks at a discount, you know, like a wholesale price and a

Starting point is 00:57:13 private market value price, I thought, God, I can't even go into a store and buy a sweater wholesale. But here on the stock market, you can buy a company at a discount. I just was lit up when I read it. And then I found out he was Jewish. So I figured he's got to know what he's doing, right? Yeah, his family came from Poland as well, same as your grandparents. A very similar background to you and me. And the thing about it is he actually, but he was a brilliant guy.

Starting point is 00:57:43 He was a mathematician. I mean, he wasn't like me. The only thing we might have had in common is that we were Jewish, and fans were from Poland, other than that from an education standpoint. But it resonated with me. So what I did is they teach about the private market value, what sophisticated buyers and sellers are willing to sell a company for. So what I did is I made a list of every acquisition, every day, if there was an acquisition, I write it down, and I would figure out the formula. What was the price to book? What was the price to cash flow? What was the EV to sales? They didn't use

Starting point is 00:58:18 EV to sales, but price to sale. And I got a good idea. And so I took every industry and I categorized the companies, what multiples they paid. And then I would move my price down 40 to 50%. There was a couple of things that I had to learn about that. And one is that at the top of a market, even the sophisticated investors get caught up into drama and they bid it up. And at the bottom of the market, they get negative like everybody else, and so they pay less. But at the top of the market, the average price was 24 and a half times earnings, and at the bottom it was 13 and a half. So once I learned that difference, I moved it down to where the average price was,

Starting point is 00:59:02 I used 18 as a private market value instead of the 24, even though. And then I made the adjustments from that, and it worked pretty good. And Graham taught about the good balance sheets and all the different forms. formulas to make a stock. Well, after the market hit a bottom in 74, while the companies were buying stocks at 13 and a half times earnings because they have to pay a fair price or they get sued, stocks were selling at five to seven times earnings and seven percent dividend yields. Now, the average stock today sells for 19 times earnings, so you can see what the difference was. And the average big-half stock sells for about 21 to 22. Once I made the adjustment,

Starting point is 00:59:45 And that was by 74. So by the time I went through the six-year bear market and I studied everything I could get my hands on on Benjamin Graham. And actually, here's another lesson for any investor. Graham said that the performance of a stock is based on the price you pay for it. In other words, performance, price determines performance. Well, the proof of that is when I started in September of 74, the market. was three months away from a bottom. But I had studied Graham, and I knew that five or six times, seven times earnings was as cheap as the market had been since the Depression. So I knew I couldn't

Starting point is 01:00:27 go wrong, but everybody was just as bearish as you can imagine. And I told my wife, you know, from what you read economically, the world is going to end. And I said, the thing that you learn after a while is that the only thing that ends are people. The world keeps going. So I said, either the world's going to end or we're going to make a lot of money for our clients. And so the first 10 years, I had a tremendous performance. I averaged 20% for the first 10 years in the business. It was 5% better than the S&P.

Starting point is 01:01:01 It was good. And I was getting referrals from people who were in the nifty, 50, and the big cap stocks of wonderful companies, which just got decimated. So the point is, the point that I want to make to people is financial. genius is a rising market. In other words, there's a diminishing return to being educated, having all the knowledge. If you have all the knowledge and all the macro knowledge, and you pay too much for a company, you're going to lose money if you pay too much. So it gets down to understanding the value, and that has been the thing. And the other thing

Starting point is 01:01:37 I learned from that experience, everybody was as bearish as you could. Brokers were bearish at the bottom. And everybody you talk to, I'd go to a party and I tell them, I'm in the investment business, people would treat me like I had bad breath. They wanted to get away from me because they've been hurt so much. And actually, in 1979, you had a cover story that said, the death of equities. And they had a story about how stocks are not going to go. Six months later, it started the biggest bull market in history that just kept going until just recently. So the point I'm making is being in there at the right time and having the basic discipline and having the belief is what. And my main thing that I always tell people is if you can buy a stock

Starting point is 01:02:26 that's bearish, but you can find out good reason to buy it. And if the president of the company, if the whole industry, the ultimate thing is to have everybody bearish, have everybody in the industry bearish and have the stock, the people who are run the company bearish. And have the stock to people who are running the company bearish. And you get that kind of thing. It's like Rothschild says, you buy them when blood is running in the street. It's a tough time to get in. Many times you get in early, you get hurt. But if you truly understand what these companies are worth. Now, I give you an example. Just recently, the oil market, the fossil fuel market, got in such a terrible state that even for a couple of weeks it was trading at $15 a barrel.

Starting point is 01:03:10 which I figured out in 15 years, there was only a few days that it traded that low, so you know it's low. Everybody's bearish. ESG is against it. The major corporations against it. The pension funds are bailing out because it's not fossil fuel. We're into the renewable thing. And it created opportunities. I told my son, I have never seen stocks this cheap except in 74.

Starting point is 01:03:36 Two years ago, you could get into the oil companies. They were as cheap as stocks were in 74. That was a good example of how bearish things got. We got hurt terribly the first couple of years. But now we're going to be going into a full-fledged oil crises, and it's not going to get better because one of the biggest things that I see is that the companies haven't invested in the oil production because everybody was against them.

Starting point is 01:04:06 The banks are against them. The shareholders are against them. They haven't invested for 10 years. And matter of fact, that applies to almost all commodities. We've had such a big bull market that nobody wanted to invest in commodities. Why would you want to invest in a mining company or an oil company when you can invest in technology? And that makes sense. But there's a turning point.

Starting point is 01:04:28 So I believe that we are going into an oil crisis and it's going to really show up big time by the end of 22. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk and customer trust together. on one AI-powered platform. So whether you're prepping for a stock two or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation

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Starting point is 01:08:07 didn't get an MBA or an economics degree or anything, that you were teaching yourself, you were coaching yourself, figuring out Ben Graham's rules, figuring out how to buy things at a discount, helped you to get to things like these energy investments because you were just applying common sense. were thinking, okay, well, I should do what my mom, Mania did. I should buy things at a discount. In a sense, it was an advantage that you didn't have a conventional education going to Wharton or Columbia Business School or something. I would say this. You helped give me that insight when you wrote, he didn't have the skepticism

Starting point is 01:08:40 of a typically college-educated person. I have members of my family who have seen what I did in the road climb, how it changed my life, how I became wealthy and built a business. business and all that. And they were much smarter than me. I have a brother that's a CPA, Phi Beta Kappa, MBA, and he came to work with me in the business. And after a few years, he left, he says, oh, you ain't ever going to make it. You know, I have an MBA and this is the way the world works. And I remember one time he was telling me that I had a client that was losing his business because he wasn't pricing the product, the services of his people right. And I felt real bad for him because they're too hardworking people. The husband was a fireman and she was an

Starting point is 01:09:30 accountant and she was a bookkeeper. And they were having terrible problems. And the problem was that they weren't pricing their services right. They were giving too much to the people who were doing if there wasn't enough margin in the business to make a profit. Anyway, I met with them for about several hours in the afternoon because they were clients of mine. I was really trying to help them. I love the people. So my brother comes up to me after the meeting. He said, how much are you going to build those people? I said, oh, hey, I can't build those people because their business is going down and they don't have much money. And I think you and I, and he did help me to do the pricing for them, can help him turn their business around. If the business turns around, then we can always talk about it. He said,

Starting point is 01:10:14 you know, Arnold, I did your tax return last year, and I didn't want to say anything, but I'm going to have to say it to you. You're working as hard as any human being, spending more time, and here you waste three hours with this person. You're not even going to bill them. He said, you know what would happen if you were a lawyer? You wouldn't care whether they made money or not. You bill them by their time. You can't just give away your time. And he said, and by the way, I have housewives who sell real estate part-time, and they make more money. than you do. So I said, well, egg, here's the difference. I don't want to be a housewife, and I don't want to sell real estate part-time, and I don't want to be a lawyer. That you mark my words,

Starting point is 01:10:56 one of these days, I'm going to make more money than any lawyer you know, because if you do a good job in business and you get a percentage of what you manage, there's a lot of money to be made. So I am not worried about it. And he said to me, Arnold, your tax return tells me that your thinking is wrong, that you can barely pay your bills and you're giving your time away. And I said, I'm giving my time away on the basis that when you do good work for people, it eventually pay off. And I believe the universe is fair. It's going to compensate me. And I have no doubt about it. Well, he left shortly afterwards. And you can understand that because there's no business school professor would tell him that when you do good, you eventually reap the rewards. It's all about dollars and cents

Starting point is 01:11:46 and discount that's up. And I've never run my business that way. But when you have a belief and you have the dedication, that can change a lot of things. And I admit that it took me probably much longer than anybody else to build the business. But when you have the belief, the subconscious guides you to the right people. It guides you to circumstances. I got a quote here from one of the top astrophysicists that lived. He was on a par with Einstein. Listen what he said. Sir Arthur edited in his quote is saying, I believe that the mind has the power to affect groups of Adam and even tamper with the atops of atomic behavior. And that even the course of the world is not determined by physical law, but may be altered by the volition of human beings. That means you can

Starting point is 01:12:38 affect people around you, you can affect matter around you, and you can affect things in the universe. Now, that's what they teach in the subconscious, but now quantum physicists, and I don't understand quantum physics, I'm only quoting what they say, they are validating what I have always believed the subconscious is capable of doing. And that is the secret. Once you understand that and you believe it and you act on it and you are guided by it, you're, going to be directed to the right circumstances that will create success. And I believe it starts in the mind. So this is a book by J.K. Williams. It was written. He studied the subconscious for 50 years. Fantastic book. It influenced me greatly. First, you are the architect of your destiny.

Starting point is 01:13:29 Every experience or condition in your life, poverty or rich, success or failure, health or illness, is the result of action and purpose set in motion by you. Second, within the area of your life, you have a creative power. You can make a mental image or a blueprint of the progress and expansion you want to achieve. And by impressing the concept on your objective upon your subconscious mind, you can cause the condition you visualize in your mind to be created. Now, think about that. This is a guy that studied the subconscious mind for 50 years.

Starting point is 01:14:02 This is in what book, Arnold? What's the book called? The Wisdom of Your Subconscious Mark by J.K. Williams. There was another instrumental book, Think and Grow Rich by Napoleon Hill. He taught the same thing in great detail. And Napoleon Hill was taught the principles by Andrew Carnegie, who came to this country with a few cents in his pocket and built the steel industry. So when I read Think and Grow Rich, I thought, here is a guy Andrew Carnegie who built his fortune. and this is what he advocates. And then my own experience in the rope climb,

Starting point is 01:14:37 that just gave me the confidence that this was on the right tag. You literally, if I remember rightly, told me that you cut out a photograph from Barron's of some very dashing-looking, prosperous-looking money manager in a three-piece suit, right? What I did is I wanted to visualize myself a successful money manager. So how do you do it? I first thought, well, I'm going to make X number of dollars. And then I said, no, I need a visual. I need a visual to say, I've got a successful business. So one day I was reading Barrens and here's a guy standing. I don't even remember his name,

Starting point is 01:15:12 but obviously he had a good record. He was dressed three-piece suit with a vest and a whole bit, standing in front of his desk real proud as they told about what a brilliant guy he was. And I thought, that's it. That's a picture in my mind to create a successful money. manager. So one day I get a call and guess what? This guy calls me and a friend of mine says, you know, they want you to write, they're starting a new magazine. They want you to write an article for them. So I was all excited to write an article about all the things I had learned about the market. And so they come and ask me questions. They interviewed me. And then the guy calls me up a couple of weeks later. He says, Arnold, we got to talking about you in your article. And we have

Starting point is 01:15:58 decided not to use the article. And I was a little disappointed, but I thought, okay, well, nothing long. So I said, that's okay. Don't worry about it. If you ever change your mind, I'm happy to do it. He says, no, no, no, no. We want you to do the article about you. And I said, what do you mean about me? Well, what are you talking about? He says, oh, we think your ideas are fantastic and what you're doing. And we'd like to write to you because it'd be a real inspiration. This was a consulting magazine. I still have the magazine. It was in 79. So I said, okay, if you guys want to do it. So when they come in, he says, we're going to send a photographer, but you don't have to pose. He's just going to clip pictures as I interview you, and there'll be action shots. I said, okay, so the guy,

Starting point is 01:16:41 you know, this is 40 years ago. So the guy brings in a big set of lights and two bags full of equipment, and he sets it all up in my office, and then he packs it up and ready to go on and walking him out. He looks at my wall, and there was a wall there, and there was a beautiful panel. And he said, oh, my God, I would love to have a shot standing next to that panel. And I said, well, it's okay with me, but you got to unpack all this equipment and set up the line. He says, Arnie, it'll be worth it. I really can see this thing in my mind. It's going to be great.

Starting point is 01:17:15 I was a little tired, you know, after a couple hours of this. So I said, okay, so I just backed up and stood against the panel wall. wall and he took some pictures. So about two or three weeks later, they come back and say, Arnie, we want to show you a print of the way the magazine's going to look. We're very excited. She brings it over in kind of an envelope, big envelope, and I open it up and I pulled a picture out. Here I'm on the cover, and I'm just shocked. He said, that's the cover. I said, I'm going to be on your cover. I couldn't believe it. But what really struck me on the picture that I visualized, there was sort of a shadow on the guy's face.

Starting point is 01:17:53 You know, it kind of looked intriguing, but you couldn't see totally. It was, to me, if I was a photographer, I wouldn't have used that picture. But anyway, mine was the same way. It had the same shadow. Now, here's what's interesting. I was telling a friend of mine who was a track coach, this story, and I said, I visualized what I was going to be, and I became that, and he wanted to be a coach for, He was an All-American track start, and he wanted to do coaching for athletes who want to improve

Starting point is 01:18:23 the running, like a fullback who can pick up his speed in running. So that's his specialty. So he said, I'm going to do the same thing. I said, it can't hurt. To my shock, about a year or two later, I get a magazine sent to me, and here he is on the cover because his team broke the school record, and they put him on the picture. And here he is standing there in the cover with his top. up runners. So he said, I guess this stuff really works. So that's kind of an interesting thing,

Starting point is 01:18:54 isn't it, how you visualize and create your own reality? So let's run through a few other techniques like this. So visualization is clearly key. You got very into hypnosis and self-hypnosis. And I wondered if you could give us a sense of how you would hypnotize yourself so that you could actually get yourself into a state of deep relaxation where you could change your beliefs. Because you obviously had come out of the war and out of your experience at school and emigrating with quite a lot of beliefs that weren't helping you that much. And my sense is that you used self-hypnosis to change some of those beliefs. How did you do it and what would you recommend to us if we were open to trying this technique? Anybody who studies the subconscious

Starting point is 01:19:37 mind knows that the language of the subconscious mind is different than the language we use during the conscious time. So what happens is the language of the subconscious mind is images, it's pictures, it acts on that, and then it acts on repetition. Take any advertising executive will tell you that the secret is to make these dumb ads, which you just kind of look at and say, oh, this is BS, but your conscious mind moves out of the way, but your subconscious minds hears everything. If you study the subconscious mind, you know that everything you've ever heard, everything you've ever smelled, everything you've ever experienced, like the time I smelled those flowers, that smell was in my subconscious mind and it recalled it after 40 years.

Starting point is 01:20:31 So what happens is a lot of people's minds are full of things that are negative because they don't remember them. And, you know, maybe it's something that you're one of your parents maybe it's something that your uncle said, maybe it's something that you learn in school, whatever. It's in there and you believe it and now your life is influenced by it. But you can change that, they call it neuroplasticity. You can change your brain up until the day it dies by giving it different pictures, by giving it different affirmations and giving it different beliefs. And when that happens, you change your life in a very dramatic way. And it can happen to anybody.

Starting point is 01:21:15 And it's happened to people. You hear about people going to the lords and getting cured. You know, that actually happens. People go there because they believe they can get over their cancer or their heart disease. And an instant, they can be healed if the subconscious mind really accepts it. So here's the way the mind works. You start off with a program. The program is what you heard or were told or taught as a kid.

Starting point is 01:21:41 That becomes your belief system. Your belief system creates attitudes and those attitudes create feelings. And the language of the subconscious mind is visualization, affirmations, and feelings. It's how you feel about things that influence your mind. So let's say you want to lose weight and you're eating all the wrong foods, right? And you know they're the wrong foods. You know me well, Arnold. You've hit on a very appropriate subject.

Starting point is 01:22:14 Well, anyway, the point I'm making is you know they're bad foods and now you have bad feelings about it. You say, geez, I shouldn't ate that and why did I do that and you punish yourself and you keep? So you're giving yourself affirmations that that food is no good for you. You're programming your subconscious mind. The food isn't what makes it bad. It's your belief about what makes it back. Matter of fact, they made a study of people who ate good food and bad food and the people who ate the bad food but enjoyed it and loved it and felt that was good for them,

Starting point is 01:22:49 they could lose weight. But if they believed it was bad for them, they could. So there's whole studies being done on this. So it's your belief system. So what you want to do is you want to live your life to where everything you do you feel good about. And that's why you don't want to do negative things, because not only is it a negative act, which makes an impression, but then you feel guilty about doing the wrong thing. And guess what happens when you feel guilty? The subconscious mind is getting an impression that you deserve to

Starting point is 01:23:21 be punished. And so by doing wrong, you actually end up punishing yourself. So they found out tests on criminals that they do the stupidest thing, leaving themselves open to be caught. Why? Because subconsciously, they need to punish themselves, so they set it up so they get caught. So what we want to do is live our life to where everything we do, we feel good about. When you do a favor for a friend, you feel good. That's an impression. Later on, you think about it, and you feel even better. Then you get a letter from the person thanking you. That's another impression that makes you feel good. Then you filed a letter and one day you see his name again and it makes you feel good. So doing things that are good.

Starting point is 01:24:06 Doing things good for the body is what makes it all possible. Now let me give you this start. There is some controversy, but they say we have no less than 6,000 thoughts a day and some people feel they're as high as 70 to 80,000. Deepak Trooper actually said he believes that it's between 60,000 and 80,000. And there are reason there's such a divergence, we have a lot of thoughts that are acted on the subconscious belief that we don't even realize we make, but the subconscious is keep on repeating itself. But let's just take the six thousand. So let's say every time you have a negative thought, you get a black dot. And every time you have a positive thought, you get a bright, orange, yellow thought. So at the end of the day, how many thoughts out of the 6,000? You know what

Starting point is 01:24:53 the statistics are? 80% of the thoughts people have are negative. Now, three. Think about how successful some people are thinking 80% of the time negative thoughts. Just think if you switch that to where the majority of, or you move the needle, where maybe instead of 20% they're positive, maybe you can get them 40 to 50%. Your life would expand tremendously. So how did you do it in tangible terms? Like if you were, because you must have been barraged with negative thoughts, right? I was angry. Anger is the worst thing. if you ever want to improve your life, you first of all have to get rid of anger because everything in anger is negative. Let me give you an example. Five minutes of anger creates cortisol,

Starting point is 01:25:41 which is a negative thing in your body, for six hours. Think about that. Five minutes of anger, you got six hours of poison in your body that affects your health and your thinking and everything. And you know what cortisol does to your brain? It stops the good, the things, that create good feelings and creates bad feelings. So anger is one thing I had to work on. It was the most difficult to overcome. To get to the meat of the thing, I read an article what got me interested in hypnosis is I was so depressed, William, that every day at 3.30 in the afternoon, I had to lay down on the ground on the floor because it was like I worked all night at 3.30 in the morning. I was so fatigued and tired. And I was trying to build the business. And then things

Starting point is 01:26:30 weren't going well, which didn't help. So I read an article one time about if you hypnotize yourself for 20 minutes, it's the equivalent of three hours sleep. So I thought, wow, if I can do that every day. So I started doing it within a week. I was able to do it. I'd hypnotize myself, I put myself out for 20 or 30 minutes and I could work until 1030 and be perfectly clear. How? What did you do, Arnold? The whole key to life and success and using the brain is to get your brain waves. Like right now, we're talking in what they call the beta stage. And the beta states is your brain is doing between 15 to 100 cycles per second. Okay, moving. Now, when you get into the alpha state, which is a deep relaxed stage, your brain weight goes from 7 to 15. And then as you get

Starting point is 01:27:26 into the theta stage, it goes from 4 to 5 to 6. So what you're doing is you're slowing your brain down and you're getting very relaxed. And as you get into the alpha and theta stage, you actually increase the capacity by 50% because in the beta states, you're only using the left part of your brain. and as you get more relaxed use into the creative part, which reaches into the universal mind and creates all the things that the quantum physicists tell you you can do. And so I didn't understand the beta, you know, the cycles per second, but I knew if I got into a hypnotic state, which is a deep relaxed state, then the subconscious mind is susceptible to suggestion because you have nothing filtered.

Starting point is 01:28:11 You don't have your conscious mind to say, you can't do this. Let me give you an example. This is by William Tiller, one of the top scientists in neuroscience. Most people don't affect reality in a consistent, substantial way because they don't believe they can't. They write an intention and then erase it because they think that's silly. I mean, I can't do that. And then they write it again and they erase it.

Starting point is 01:28:35 So time average, it's a very small effect. And it really doesn't come down to the fact that they believe that they can't do it. It starts off with belief. Now, where do you get belief? You got belief by your parents telling you you were wonderful and you were going to become a great writer. And you had other people who told you you're never going to amount to anything. It's in there. So you believe it.

Starting point is 01:28:59 So your belief system starts off with a program. Well, we can write our program under neuroplasticity. They teach you can change that. So what you do is you set a goal. You start thinking about the things you're going to accomplish rather than the things you fear about. So your goal, it's like they have a missile that they can shoot a plane down. It goes by the exhaust. So they shoot it up in the air and the missile seeks out the exhaust of the plane and hits the plane.

Starting point is 01:29:26 You could fire it this way and the planes that way and it'll reverse curve. So the mind is a servile mechanism. Once you give the subconscious a goal, you start working on it. Well, how do you get it to do that? You repeat things over and over. What do the advertisers do? What they do is they have a stupid little ad, and you kind of look at it and dismiss it, but all the time you're relaxed, you're getting into a relaxed state, and your subconscious mind

Starting point is 01:29:55 is hearing it. And the more it hears it, the more there's a chance that you're going to buy their product. And believe me, it works because they wouldn't be spending $300,000 for a few minutes in the Super Bowl if that doesn't work with millions of people. repetition is one. So you first, you set a goal, what kind of person do you want to be 20 or 30 years from now? Now, when I studied the subconscious and the body, I realize we are all a precision instrument. And the body is just as important as the subconscious mind. Matter of fact, I have a quote, let me read it to you, by Andy's Purr. And she wrote a book called Molecules of

Starting point is 01:30:36 emotion. Listen what she said. The way to reduce your stress, meditation, honesty, and play. Now, here's what she said about honesty. And that's such an important part. She said, honesty brings us back to center, the ground of personal integrity. Then when violated, leaves us anxious and filled with self-doubt. So you start off getting rid of the anger, you start off trying to seek truth and you start off believing that if you do the right thing, you'll be rewarded. And I have a saying that I always tell all the family, you never go wrong doing the right thing. So it's a matter of starting to live your life to become the kind of person you want to be. So the first thing to get down to the basic, you set a goal. The second thing is

Starting point is 01:31:27 you start doing everything you can to get that at goal. The third thing you start doing, is repeat. I repeat to myself every day. I am happy, healthy, wealthy, and wise. So when I have a negative thought, I'm not going to let it take root. I'm going to replace it with a positive thought. I'm happy, healthy, wealthy, and vice. So I am instructing the subconscious mind. At the end of the day, I want a lot of bright little yellow dots on my board because that's going to help shape my future, right? And so you start off with the goal, you start off with the repetition, You find a picture of what you want to be. So the point I'm making is you set a goal, you work towards it, you spend every minute you can working on that goal.

Starting point is 01:32:15 You want to make it very narrow goal. You don't want to do a lot of different things. We want to focus on it. It's kind of like I tell young people, if you ever had a magnifying glass and you put it to the sun and then it burns the paper, right? So what have you done? You've focused the sun on a very specific thing. If you do the same thing with your mind, the same thing's going to happen. That's where my dad got the idea that by focusing, he created energy.

Starting point is 01:32:41 And you do. The subconscious mind can do it. You set the goal, you visualize it, you repeat it, you learn everything you can, and you do everything you can. And the more you do it, the more you believe it. And when I had that experience with the rope climb when I did this great client, and I said to myself, I told my coach, I'm going to be the next Chapman. I actually believed it. It wasn't just saying. And hypnosis is just using a magnifying glass. You're laying on the floor. Matter of fact, I didn't sleep much last night because I was so excited about the Olympics. And I watched Nathan Chen win the gold in the figure skating. It was hard for me to go to sleep. I didn't sleep much last night. So when I came in there and I had to get this talk, I laid down before we went on the air and I put myself out for 10 or 15 minutes.

Starting point is 01:33:32 minutes. And I feel great. I didn't have much sleep, but I could make up for. What you do is you magnify. Whatever you do, you repeat it under hypnosis. And I have regressed people back to where the time they were six months old and they told me about their life. I used it to train my son in hypnosis. And he actually won a meat. He was a shot putter. We want a meat with a sprained ankle in a cast. And I put him under hypnosis before the meat. I kept them under hypnosis, all the meat, and he actually won the meat and threw six inches of the best he'd ever thrown in his life. And I had people tell me he could never be a shot putter because the heaviest he got was 5-9, 295. And these guys are 6'4, 240 pounds. But he was able to compete

Starting point is 01:34:21 with them and beat him because of the fact that he believed he could. And even coaches to him. I give you an example. I'm training my son when he first started on a shot put, and I built a little shot put area in the back so he could shot put in the afternoon. And a football coach next door to me called me over one time. And he said, you know, I saw Scott shot putting into heat two or three hours. And I said to myself, this kid doesn't have a chance. And I said, why not? He says, well, what I do is I'm the track coach when football season's over. And I get the biggest guy on the football team. And I run my hand across their heads. And the biggest one, they become my shot putters.

Starting point is 01:35:03 And those are the guys that Scott are going to be competing against, and they're about a head bigger than him. And I said, well, you know what, children, we will have a contest, and what Scott and I are going to do is we're going to take all these guys that you run your hand across, and we're going to kick their ass. And we did.

Starting point is 01:35:21 Top guy was a six-foot-seven guy who went to work for you, went to be a lineman at USC. But Scott beat him because the guy had no, technique. He had no discipline. He didn't visualize anything. And he just looked, you know, he just wasn't up to the task. So it's interesting what you said just now. He had no technique. So it's similar to what happened to you with your investing. You had to do the work, right? You had to do all of the study of private values, figure out what companies were worth. You had to study Ben Graham. But you also had to do this other stuff, the inner game of getting your mind under

Starting point is 01:35:59 control, talking to yourself in the right way, changing your beliefs. So it's a combination, right? It's not enough just to get your head straight and then not have the technique or not have the knowledge. It's both. Yes, I think you hit an important point that I want to point out. And that is, most people think that I'm hard working, okay? And then I worked harder than anybody else in the road club. And I believe that that was true. But what got me to work that hard. You see, most people, motivation come from the outside. You give you a raw, raw, the coach gave you a pep talk, and you go out and do it for a couple of days, and then you drop off, right? That's why the average person can't do these things. But here's the difference.

Starting point is 01:36:44 When you are, and I have something that I wrote from my subconscious, you'll appreciate this as writer. It's a whole page, and I only change one word. And here's the secret. Most people are outward-driven. They go to a rally and they have a guy tell them, if you set your goals and you do this, it's all going to work. And then they're not grounded from the inside. So after a while, they get tired and they don't do it and they drops off. But here's what I wrote. So I was giving a talk and they wanted me to talk about how you use these things.

Starting point is 01:37:15 It'll take about a minute and 36 second. Can I read it to you? This will capsule it up. Sure. So I had the whole speech written, but I didn't have the ending. And you know how you get writer's block? I'm sure you know more better than I do. You just can't get it together.

Starting point is 01:37:30 So I went away from it. One day I woke up at 3.30 in the morning. And here's my closing. Remember, the thing that governs success in any field is the determination to see something through to a successful conclusion. Yet this is exactly where most people fail. The average person will get discouraged and quit many times shorter ones goal. What is the difference between an individual who dodgily hangs in or against all odds,

Starting point is 01:37:55 reason and hope? It is my belief through personal observation and experience that there's no difference between the individual from a chemical, genetic, or intellectual standpoint. The difference is that the person who's likely to get by the first sign of hardship does not have a well-defined goal. If you're going to build a building, you've got to have a blueprint. All the details. You can't just say, I want to build a building.

Starting point is 01:38:19 And if the person does have a goal, they may not impress it deeply on the subconscious mind. They might want it, but not badly enough to the point where they are willing to make an all-consuming burning desire. Naturally, if it's a weak desire, it will be sacrificed at the first sign of hardship. Only a deep commitment, a burning desire, and a sacrificial attitude, George Z. Gold, will be deep enough to make an impression on the subconscious mind. If that is accomplished, along with the faith that it can be achieved, you will never lack driver motivation. you will be pulled by a force that will drive you relentlessly towards that goal. It will no longer be necessary to force your thing to do you have to do. You will receive energy that you never knew you had because of these forces, you and you alone

Starting point is 01:39:07 will have the power to shape your future. And I wrote that in 1979. We're talking about 40 years ago. So the point is that most people are driven from outside motivation. that doesn't work. Let me ask your question. When you get thirsty, do you have to write yourself a note to make sure you drink water? No.

Starting point is 01:39:30 Okay. When you are hungry, you have to tell yourself, you know, it's about 2 o'clock now. I should have eaten at 1 o'clock. No, I'm good at eating even when I'm not hungry, Arnold. Okay. So the point I'm making, all of these instincts are for your survival. They are programming your subconscious mind. And when you program these things that you want to do as deeply as your hunger is in your deal,

Starting point is 01:39:58 then you never think you're working. I never feel when I am studying these things or looking at these things that I'm working. Matter of fact, I get excited when I learn a new thing. And that's because I have to do it. You know, it's like I'll give you one great dance teacher said, I don't want people who would like to dance. I want people who have to dance because if they like to do it, yeah, I'd like to do it, you'd like to do it. But when you have to dance, when it's so much part of your inner drive, you can't help but drive.

Starting point is 01:40:31 When I was climbing ropes, I never thought I was working hard. I was working on the technique. And when I was getting better, there's nothing that gave me greater joy. I think you were always, Arnold, you were kind of maniacally driven. Because I remember you once telling me a story where in your early days as an investor, you realized you really loved chess. And at a certain point, you said, I've got to give this game up. It's just taking up too much of my mental space. And then I think you told me once you played a game of golf and you, I think your phrase to me was you said, I realized this game was going to shackle my mind. And that's pretty strange, right? I can totally understand it because I'm pretty maniacal and obsessive myself.

Starting point is 01:41:10 But most people are not like that, right? if someone finds a hobby they like, like chess or golf, they're like, oh, that's great. I'm going to pursue my hobby, whereas you actually gave it up because you liked them. I'll tell you the thinking. My goal was to become a money manager when I was playing chess. And I would play a guy and sometimes we play for two or three hours, the chess game. Now, the professionals, they use a time clock. They can play 10, 15, 20 minutes.

Starting point is 01:41:36 But I don't like to play that way because it's an enjoyment. You try to figure things out. So when I thought about the fact that I have a reading list that I wanted to accomplish to be successful in the money management business, and I'm looking up that my goal is to finish this book at this date and this book, and now I spent three hours on a chess game, I thought, my God, I could have read a half a book or a third of a book. So I can't afford that. That's not being a maniac.

Starting point is 01:42:03 That's just saying, if you want to achieve a goal, you have to use every spare moment to that goal. Now, when I started, when I played, my friend invited me to play, we didn't even play a whole game. We just went to the driving range to shoot it. And he's trying to tell me all the techniques. And I thought, oh, my God, this is going to take a lot of work. Golf is a mental game, right? So I thought, I'm going to be studying the market.

Starting point is 01:42:29 And if I play golf, I'm going to take that time that I could be reading more books on the market or research reports or annual reports or 10K. and I'm going to be playing golf. So people said, well, when you're in the money management business, you should play golf because you meet clients that way and all that. I said, no, no, the subconscious mind is going to get me the clients if I do a good job. So the most important thing, you have to decide that. Remember, is only a deeper commitment of burning, desire, and sacrificial attitudes as a goal be deep enough to make an impression of such.

Starting point is 01:43:05 I can't play chess and then play golf and then read a little bit about the market and hope to become a good money manager. What does Warren Buffett do besides study the market and read all day and do all those things? He used to play golf. I don't ever hear about him playing golf. I don't hear about him doing anything else because that he gets more pleasure out of doing good in that area than he would ever get playing golf. If I play chess today, I wouldn't get as much enjoyment out of it. It's because I get more enjoyment out of learning what we're talking about and helping people. Do you realize that these simple principles that we've talked about can change people's lives? And I have done it. And you've seen some of the letters. I just sent you a

Starting point is 01:43:52 letter recently where we took a guy who had 20 years of back problems. And in one session, we cured his back problem because they're stress related. So you can do this through getting into to the alpha state for getting into hypnosis. So why would I want to waste my time playing chess? What does that do for me or anybody else, except maybe give me some eager satisfaction if I win a guy? Someone Arnold named Barry Schwartz, who's a chief investment officer at a phone called Baskin wealth management, asked me on Twitter, he'd love to know more about John Sarno and how he's used self-talk techniques to eliminate chronic pain. And I think that's related to what you were telling me about this guy whose back pain you killed. Can you say anything about that?

Starting point is 01:44:37 About how? Yeah. So I had this friend of mine who said to me, you know, Arnie, I used to have back problem. I read this book by Dr. Sarno. He's a back surgeon. And he came to the conclusion that the reason people have back problem, 95%, I think it was even as high as 98, but let me be conservative and say 95. 95% of the people who have back problem don't have anything. wrong physically with their back. And the way he discovered it, he started noticing that he had people who had slip disc, terrible x-rays, and they played tennis and had no problem. Then there were people who had perfect x-rays, and they were in so much pain that they were in a wheelchair. So he said, it can't be the physical what we've been taught in medical school. It's got to be

Starting point is 01:45:25 something more than that. So he started getting together with psychiatrists, and they came to the conclusion that when the subconscious mind gets overloaded with pressure, it does things to you to make you get your mind off the problem. So when your back is out, if you've ever had a back problem, you're laying there in so much pain. It doesn't matter what's going on. All you're thinking about is the pain. While you're thinking about the pain, the subconscious reprograms the tension, you get more relaxed. You go to a chiropractor who relaxes you, and then the back gets better. Well, I had a lot of problem with my back many years ago, and I figured that it had to be mental pressure because there was really nothing wrong with my back.

Starting point is 01:46:07 So one day I wake up, you asked a subconscious, and it'll give you the answer. I woke up. The reason your back goes out is when you get behind in your work. So somebody who's conscientious is going to get a back problem when they get behind in their work. Other people may get a back problem because something else creates tension. Everybody has different things that creates tension. But the problem is not the bad.

Starting point is 01:46:32 The problem is the subconscious mind. So once you read that and you study it and you can relax yourself, and this guy, the recent guy that I sent to the letter, I found a book about five years ago that laid out everything that you and I are talking about. And the name of the book is The Genie Within. And it's by Mr. Carpenter. And I just talked to Mr. Carpenter the other day. And I read his book and I thought, my God, if I was going to write a book, this would be the book I would write, except that he's a much better writer than I.

Starting point is 01:47:04 So I called him up and I congratulate and I said, I want you to know that I have read everything in the last 45 to 50 years in the subconscious and from a practical standpoint, not theory, for a practical standpoint, which is what I want to give to people. This is the best book I can give anybody. There's a lot of books with a lot of theories and a lot of other things, but if you want to know what to do, this is how you do it. And I said, it's a wonderful book. And he said, you know, Arnold, I'm really, I feel bad about it because I didn't write the book to make money. I wrote the book to help people because I was eight years old dying from a heart disease that was incurable. The doctor sent me home to die. And there was a gentleman who was part of the family who believed in the Christian Science Church.

Starting point is 01:47:51 and they believe in healing through the mind. Why don't you get one of the practitioners from the church to come and he could heal your son? They said, they confided in him that they didn't really believe in. He said, well, what do you got to lose? Kids going to die. So they said, oh, you're right. So since you believe in it so much, why don't you bring the guy over? So they brought the guy over and the guy cured him.

Starting point is 01:48:13 In a matter of three months, he was, well, went to school, and now he's 80 years old. So he said he wanted to find out what this guy did to heal him because he was just a little kid at the time. And he said he read everything. And I went through his bibliography and he and I have almost read all the same books. And he said, I finally put a course together. And he said, the sad thing is that I've only sold 70,000 copies. And that, it isn't the money because I didn't write it to make money. I wanted to reach people with this.

Starting point is 01:48:46 And people don't seem to take to it. And I said, well, you only sold 70,000 copies until you net me. But now I guarantee your sales are going to go up because I said, I'm going to give you an order right away. I gave an order for him. I said, I'm going to give this book to anybody who will read it. And he said, oh, that's wonderful. I give you a discount. I said, I don't want the discount.

Starting point is 01:49:09 I want to pay the full price because I believe that the universe rewards those who do good work. you've done a brilliant job and you deserve to get the money whether you need it or not. If you don't want it, give it to your favor of charity, but I feel good about pain. Now, it's the only time I'm making exceptions to Benjamin Graham rule about getting a discount. I said, I feel good about paying for the book because I know that the author deserves it. And so I pass it out. So I send it to this guy in New York and he has one technique where he gets you into Alpha and Theta State. He said, this guy, he read in the letter, he put himself in the theta stage, and his back problem was gone that he had for 20 years.

Starting point is 01:49:51 So I had this guy who was a friend of mine. It was a PhD in psychology and a PhD in statistics. And he had back problems from the time he was 16 years old till that time at 43. And every time he'd be in my office, he'd be stretching, you know, because his back would be tight. So when I heard about this guy, Dr. Sarno, who cured people through the mind, I said, I got to read this book. So I sent for it and I said, Ken, I think we can cure it. Really? He said, Arnold, I've been to the best doctors at UCLA.

Starting point is 01:50:21 I teach there and they haven't been able to help me. I said, this guy's a back surgeon. He's done it for 25 years and he cures most of the people, 95% of them, without doing any surgery or any backward. He tells you, don't go to chiropractors, don't go to the doctors, don't do back exercises. Just get yourself to believe that you can. get rid of it and you talk to your subconscious mind. Here, let me read you the first page what he says. This is exciting. What Dr. Sano tells his patients, resume physical activity,

Starting point is 01:50:56 it won't hurt you. Talk to your brain. Tell it, you won't take it anymore. Stop all physical treatments for your back. They may be blocking your recovery. Don't repress your anger or emotions. They can give you a pain in the back. Don't think of yourself as being injured. psychologically conditioned contributes to the ongoing back pain. Don't be intimidated by back pain. You have the power to overcome it. So that's his basic formula. You do the same thing we've been talking about. You visualize yourself with a strong back. You visualize yourself lifting weights, carrying your kids, doing whatever you want to do. And you keep on repeating yourself, I am going to be happy, healthy, and you concentrate on the back. And you don't do back exercise.

Starting point is 01:51:42 You go for a walk, you go for a run, you lift weights, but don't do it because of your back, because you don't have a back problem. You've got a mental problem. There's one other book before I let you go, Arnold, that I wanted to ask you about, which obviously has had a transformative effect on your life, which is from poverty to power by James Allen. And that's clearly become almost like your Bible over the years. It should be everybody's Bible. Well, I don't know if you're even aware of this, but my book actually ends with, the quote from him, because I have this section of notes on additional sources and resources,

Starting point is 01:52:16 and I ended it with this thing that almost nobody will notice, which is, it says in the last paragraph here, a common theme that runs insistently through many of the books that have shaped Vandenberg is the belief that our consciousness determines our reality. He has spent half a century experimenting with different techniques to change his thoughts, influence his subconscious mind, and transform himself from within. Everything comes back to what he learned from his favorite book of all, from poverty to power. As Alan wrote 120 years ago, it matters little what is without, for it is all a reflection of your own state of consciousness. It matters everything, what you are within, for everything without will be mirrored and colored accordingly.

Starting point is 01:52:56 And the reason I ended the book with that is that I have a great teacher who would just say, it's a great capitalist named Raabberg, who would just say over and over again, everything is consciousness. So instead of me proselytizing in the book, and saying, look, everyone should study with my teacher. It was a way of me saying, wow, this is interesting. You look at all of these different spiritual paths, and they all came down to this same fundamental revelation that everything is consciousness, that your consciousness creates your reality.

Starting point is 01:53:27 That's right. Look what this guy, J.K. Williams said, you are the architect of your destiny, every experience and condition of life, poverty, rich, success, or failure, health, or ill, is a result of action and purpose set in motion by you. So you create your, now, I don't know anything about quantum physics, but I read what the quantum physics teach. And they teach the same thing that the subconscious teaches. So that is a confirmation. Yeah, that your thoughts can affect your body essentially, right?

Starting point is 01:53:58 And everything, that they can. And Dr. Candice Perch said that your body is your subconscious mind. your body influences your mind and your mind influences your body. And together they are a precision instrument. And if you will just focus on your desire rather than on your fears, you will realize your reality. I am living my reality. This is what I wanted to do. And what I want to do now is I have 550 pages of notes on the subconscious mind, not just what I wrote, but articles and different things.

Starting point is 01:54:35 And I'm organizing them in a way that I call it the collection of the subconscious. And I hope to be able to distribute that to people in the next couple of years because that's 45 to 50 years of personal experience and beliefs. And, you know, if you ever talk to Scott, he can tell him that I used to hypnotize all of his friends the day before the track meet. In every room, I had a different guy and I'd go from one to the other. and they all just improved dramatically, way beyond what I even expected, just by changing their belief. It's powerful, William.

Starting point is 01:55:11 It can change people's lives. Yeah, what's striking to me, Arnold, I think is, and I've said this to you before, is that I think for people like me who came through these sort of elite schools like Eaton, in Oxford and Columbia and stuff, we were intellectual snobs. And so I came out of those schools celebrating rationality. and logic and thinking that anyone who talked about things that were a little bit more mystical or a little bit more self-helpy were kind of idiots. And so for me, a lot of what's had to happen over the years is actually for me to unlearn

Starting point is 01:55:43 my intellectual arrogance. And so part of what I love about your story is that you spent the last 50 years as kind of a guinea pig where you actually did this stuff. You would read something like James Allen saying, you need to change your life from within. You need to change your consciousness. You'd read these guys saying, well, hypnotize yourself and you'll be able to change your thoughts. And you actually did it. And you did it so much.

Starting point is 01:56:07 I mean, not just 10,000 hours, but probably 100,000 hours. You did it so much that you actually experienced the transformation. And I have this suspicion that if you'd been more educated. Yeah, if you'd gone through a conventional education instead of educating yourself, you actually wouldn't have been so naive as to believe all of this nonsense. And so it wouldn't have worked. And because you were naive, you believed it. And so it worked.

Starting point is 01:56:32 And so there's something really beautiful and paradoxical about it, that it was your open-mindedness that enabled you actually to- No, it was my naivety. You got it right to first time with my ignorance, the fact that I would think that I could change my life by changing my thinking. That is contrary to all the logic that you ever could teach in school. Now, let me tell you, in the book, What the Bleep do we know? All these quantum physicists are saying that you can create your reality. by the way you think in quantum physics explains that.

Starting point is 01:57:04 But I think you're making a mistake on it when you start to veer into quantum physics and stuff because I think we're looking for validation in an area that we don't really understand. And the validation is the fact that you did this stuff and it's worked. It's like Charlie Munger. Charlie Munger always says, I observe what works and doesn't work and why. And you've been in a 50-year experiment to see where they're rewiring your brain works. It's worked. Yes, but the neuroscience is now validating what I ignorantly believe. You can now read the neuroscientist

Starting point is 01:57:36 and they will tell you the same thing. Now, I'll give you an example. I told you an example of my brother. He is absolutely brilliant and he thought it was just hocus pocus nonsense. And if you talk about Jesus, whether as a Jew you believe that Jesus is the Messiah or a great philosophy, whatever you want to do, what he taught is it was all about belief. You read, I have a whole file of quotes on faith, and most of them are from the New Testament where he says, anything you, when you pray, believing it, you will receive it. So even he taught and Buddha taught all of these things that you can reach these things through the mind.

Starting point is 01:58:20 Yeah, it's all a mind game. It's all an inner game. Everything is mental. And so this is the wonderful thing, and I think it can change people's lives. And I can tell you, I literally have changed people's lives. Not that I did it. I just gave them the information, and then they did it themselves. I couldn't do it for them.

Starting point is 01:58:42 You did hypnotize me as well. I don't know if you remember, Arnold. You knocked me out on the floor of your office where you are at the moment and played me the four seasons and kind of lulled me. But no, what was cool is that we talked about sort of affirmations, before you did it. So we talked about what I was looking to do in my life. But then I think because you got me in a somewhat relaxed state, it was hard for me to relax because I was about to get a plane home from Texas to New York and was waiting for a taxi to arrive. But I do think you kind of

Starting point is 01:59:08 embedded some of these ideas, these more positive thoughts in my head when I was in a relaxed state. And what I've done is I wrote some of them down in a book that I look at most mornings. And then I kind of reworded some of them in the present tense. And so I go over them most days. So when you're talking about that idea of repetition, I think whether it's through prayer or affirmations, any of these things, repetition has great power. Oh, absolutely. That's what the advertising business is. Let me give you one quick example, because this is one of my favorite. I'm surprised I didn't mention it early. There was a French pharmacist in turn of the century called Emil Co. I don't know how to pronounce it.

Starting point is 01:59:52 Ku-A, I think. Ku-A, something like that, yeah. But anyway, what he discovered is that he had a pharmacy, and if you came in and said, I've got a rash in my skin, he said, oh, I got just a thing forward. This stuff really works. If he really believed in it and he sold it to people, it always worked. Then he had other medicine he wasn't sure about.

Starting point is 02:00:13 So he says, well, I don't know about this, but why don't you try it? It never worked. So after years of watching this, he came to the conclusion that it was. wasn't the medicine that cured people. It was his belief in the medicine. And so he decided he didn't need the medicine to cure people. He got that changed them belief. He had to change their belief.

Starting point is 02:00:33 So he sold his pharmacy and then he got people into a relaxed state. He had a beautiful Rose Garden. He'd play music and he'd walk around teaching them how important the thought process was. And he healed people. And the thing is he never wrote too much. I've got everything he wrote and what his students wrote. But what he did is he was treating 40,000 people a year. I figured out that's one every six minutes.

Starting point is 02:01:00 So the point, they asked him, why don't you write? He says, look, I can change a person's life in six minutes. Why would I want to take three months to write about it? Look at all the people I'm changing their lives. And he was phenomenally successful. They started the school in Nancy France called Auto Suggestion. Now, here's the thing. He used hypnosis, but he figured that if he uses hypnosis, uses the word, people have

Starting point is 02:01:28 negative things because they watch these guys on the stage, do all these weird things. And so he decided not to use it hypnosis. He called it auto suggestion. Well, it was hypnosis because he would get him to relax. He would play the music. He would kind of joke around, everybody feeling good. And then he would give them the suggestions. And it would go into the subconscious.

Starting point is 02:01:50 and he had them repeat every day, and I do it every day, every day in every way I'm getting better in bed. Just a standard thing. 30 times a day, every day. I mean, if you got 6,000 thoughts, you can do this 30 times a day, right? I do it in the shower. I do my trampoline workout in the morning, 45 minutes, then I do some yoga moves to loosen up. Then I get in the shower, take a hot shower, and then I take a cold shower for one minute.

Starting point is 02:02:18 And while I'm doing the shower, I'm giving myself affirmations. And I come out, I took a cold shower today and believe me, it was cold. And I thought, God, this is really invigorating. You know, it just gets your mind into a good, positive state of mind. You also told me once to write down affirmations 15 times. I did this for a while before my book came out. There were a couple of affirmations about my book. You ever heard of the Delbert cartoon?

Starting point is 02:02:45 Yeah, I think that was where you got the idea. Yeah. Now, here's another story about Scott Adams. Scott Adams wrote a book, The Delbert Future. He said that he was a hypnotist before he became a cartoonist. And while he was studying hypnosis, he met this woman who was way advanced and really believed in it. She said, if you change your thoughts, you're going to change your life. So he said, okay, let's experiment. He obviously was a skeptic. So she said, pick something that is unlikely to happen. So he said, he'd like to get rich into stock market. So he went into hypnosis, did the affirmation, and he found out that if you do the affirmation 15 times a day for six months, you're going to see results no matter what. So anyway, he did it. He woke up one day and he said there was a sign that said he should buy Chrysler from the subconscious. So he said he didn't know anything about the market, didn't even have a brokerage account, didn't know anything. But he said he read about Chrysler and it was going bankrupt and they had whatever his name was, it'll come to me.

Starting point is 02:03:51 And he couldn't understand why you could make money on a company that's going to go bankrupt. But he did it because- Oh, is this when Lee Ayacocca was coming in? Yeah, Lee Ayacocca. Yeah. Yeah. Well, anyway, he took him two weeks to get the account set up. And in the meantime, the stock just skyrocketed and was one of the best performing stocks that year.

Starting point is 02:04:12 So he said, okay, he missed it. but now he set up a stock brokerage account. He's going to do it again. He didn't want to be a money manager. He wanted to be a cartoonist, but he didn't have any talent for cartoonists. So he did another stock. Same thing happened. He bought it and a double.

Starting point is 02:04:28 When a double, he thought, geez, this is horrific. He sold it. And then the stock just ripped seven or eight times what he would have paid for. So he said, that taught him that the subcontact works. So what he did then, I Scott Adams, will become a great cartoonist. And he said that was about as likely to happen as for me to become an investment counselor because he had no talent in cartoon. He couldn't draw.

Starting point is 02:04:52 But he always wanted to do that. He thought it was neat. Well, anyway, he became one of the top cartoonists. These cartoons are in 20,000 papers. And he said, every goal that he set, he accomplished. And his book is called the Delbert Futures. So the point is, if you go to ancient studies like the Bhagavida or the Upanishad or the Hindus or the Buddhist or the ancient Hebrews or the Christians or the philosophers, they all point

Starting point is 02:05:20 to the same thing. Yeah, it's all the power of the mind. So I wanted to ask you one last thing that someone on Twitter asked me to ask you before I let you go, Arnold, which is someone called Niraj Dugha asked me, despite the challenges you've faced, including the Holocaust and setting up your business and divorce, all of these things that you went through, despite all those challenges, would you want to live the same life again? No, I would not. Matter of fact, I wrote down one of the things I wanted to tell you. You say I was dealt the bad hand. In one hand, I was. On the other hand, I would never want to go through

Starting point is 02:05:57 what I did. However, I would never have learned or accomplished what I did because of through suffering. And Benjamin Disraeli said there's three ways to learn. Studying, suffering, and observing. And so my suffering, I probably suffered more than most people, even things I don't remember. But I gained insights that I couldn't have today. And I don't think I would have the belief that I could overcome. If I was just in a regular, you know what, Andrew Carnegie said, I don't feel sorry for the poor boys of this world. I feel sorry for the rich kids because they have been deprived of motivation to accomplish things. if your parents were millionaires and they're going to leave you millions of dollars,

Starting point is 02:06:46 do you think I would go through what I did for 10 years to work for nothing to build the business? There's no way. Do you think I would go lift stuff on a garbage truck when I was 14 years old when the other kids of the parents gave them money for dates? I mean, I remember being over friends in the house and the mother handed them money for dates. I said, your mother hands you money for dates? Can you imagine my dad being asking him for money for a date when a 13-year-old. years old, he came up to me and he said, well, son, you bar mitzvah, congratulations, you're now a man. I said, thanks, Bob. And he said, now that you're a man, men take care of their own responsibility.

Starting point is 02:07:24 So you pay your own clothes, you break your own school dues, and you pay for expenses in your car. Well, if he hadn't have done that, I don't think I would have done those things. So no, I would not want to live the life over, but I thank God that I did. So it's been worth it and, anyways, the pain and suffering. It's... Yeah, but you don't think about that when you're going through it. You just think I'm going through hell and there's no future. But the suffering creates insight.

Starting point is 02:07:52 And what I want to tell any of your listeners who are suffering, think about it and think what's causing your pain and then think about what you can do in your mind to alleviate that pain and start working towards it. And as you work towards it, you create an inner joy. And let me give you a quote on that. The more your love in life becomes unconditional, the more joy and goodness that you get. And Abraham Lincoln had a saying that everybody passes off. It's just a simple thing, but it was very profound.

Starting point is 02:08:27 He said, when I do good, I feel good. And when I do bad, I feel bad. That's my religion. Well, if you study this stuff, you realize the way you feel is what gives you the joy. So if you are getting better, if you are doing good, if you are living the right way, you're going to feel better. And when you feel better, you experience joy instead of pain. Paul, thank you very much. This has been wonderful talking to you.

Starting point is 02:08:56 I've really enjoyed it. You're a great human being and I'm grateful to have you in my life. So thank you. Well, same here, William. Thank you for the insight you gave me on the fact that I was able to do that because I was ignorant. That brings warmness to my heart. Thank God I wasn't too educated for that. You were open-minded, whereas I had the arrogance of a highly educated person who thought I knew everything.

Starting point is 02:09:23 And so, yeah, I've had to unlearn a lot of that. And you've been a part of my re-education, so thank you, Arnold. Thank you, William. All right, folks. I hope you enjoyed this conversation. If you'd like to learn more about Arnold, you might want to check out the epilogue of my book, Richer Weiser Happier, which tells his story in much greater depth. You may also be interested in some of the books that Arnold and I discussed in this episode.

Starting point is 02:09:45 In the show notes, I've included links to all of the books he mentioned. Personally, I would particularly recommend reading From Poverty to Power by James Allen, which is Arnold's favorite book. Meanwhile, thanks to everyone who wrote to me on Twitter to suggest questions to ask Arnold, ended up using a question from Barry Schwartz about how to harness the mind to heal back pain. As a way of saying thanks, I'm sending Barry a signed copy of my book. book. That said, if you do have back pain, please consult your doctor before you do anything that could jeopardize your health based on this podcast. I'll be back very soon with guests like

Starting point is 02:10:19 Bill Miller and Monish Pabri and Guy Speer. In the meantime, please feel free to follow me on Twitter at William Green 72 and do let me know how you're enjoying the podcast. I really appreciate you listening. Thanks so much. Take care. Thank you for listening to TIP. Make sure to subscribe to We study billionaires by the Investors Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only.

Starting point is 02:10:56 Before making any decision consult a professional, this show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting. Thank you.

We Study Billionaires - The Investor’s Podcast Network - RWH006: Master Your Mind w/ Arnold Van Den Berg

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