We Study Billionaires - The Investor’s Podcast Network - TIP175: Shane Parrish - On Buffett, Dalio, and Reading (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. So on today's show, we have a guest that I highly admire and have followed for quite a few years now. For anyone coming out of the value investing community, you'll definitely recognize the name Shane Parrish. Shane is a highly read blogger that gets millions of views and has over 160,000 subscribers. He shares his insights on business, investing, and just good ideas on how to become a better version of yourself. One of the things that Shane is best known for is reading, and I mean really reading. A lot of what we're talking about has to do with how you can get more out of the way you read, the way you think, and the way that you can optimize your own life. So I hope you guys enjoy our discussion with the astute and kind Shane Parrish.

Starting point is 00:00:46 You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right, I am really excited about this episode here because we have Shane Parrish with us. And Shane, as a hardcore Warren Buffett fan and just really all-around investor, it is really exciting to talk to you because I've been reading your post for such a long time now. So to have you here with us, we're really honored to have you. So thanks for taking time out of your day to be with us. It's an honor to be here. Thanks for having me.

Starting point is 00:01:36 So this is what I think. If I had to put Shane Parrish into just like a little snippet of three words, it would be this, total learning machine. All right. And I guess my first question for you is how did you become this way? And were you like this when you were younger? Oh, no, man. I was a, most people don't know this. I was a straight D student until grade D. 10. I don't think I literally had a grade above D until grade 10. I was never really excited about learning, right? I was always hanging around with the wrong people or in the wrong crowd. My parents were in the military. So I was a military brat moving, you know, city to city. Every year I had a new city, had to make new friends. And then in grade 10, my peer group changed. And the expectation became that not only could you have fun, but you also had to get good grades.

Starting point is 00:02:33 And it was all of my friends that I was hanging around, you know, got me into this good grade thing. And I was like, okay, well, you can still, you know, have fun and get good grades. And, you know, that kind of led to university and the expectation of university. And at that point, I still wasn't super interested in learning things I didn't have to learn. It wasn't until I got out of the workforce or get into the workforce in, you know, after graduating with a Bachelor of Communications. computer science, I went to work for an intelligence agency. And that was where I really kind of like kicked into this thing, which was, you know, I noticed that I was spending more and more of my time fixing problems that I was creating myself. And I wanted to avoid that. And one of the ways to

Starting point is 00:03:16 avoid that is through kind of intelligent preparation and learning things in advance of needing them and not trying to learn them the time when you need them and then refining them and trying to learn things that don't change over time so that you can apply them to a wide variety of situations. And so, no, I wasn't, I don't even, well, I wouldn't consider myself a learning machine now to the extent that I am, it's born from that sort of background. You know, there's a lot of people that will say, well, you can still learn from a movie. You can watch a movie or you can turn on TV and watch it. Why do you think learning through books is better, maybe not better, than why?

Starting point is 00:03:58 watching TV. Well, you can. I mean, I think just to back up for one second, we learn from experiences, right? We can, well, if we don't learn, then we're not learning. And if we are learning, we're learning from experiences. Whether those are experiences are ours or somebody else's matters. And if there's somebody else's, what we really want to get out of those experiences to learn is the raw material that they used to develop that experience. So much of what we consume online is other people's abstractions. So somebody's done all of this work, like a PhD or whatever, and they have all of this input material, and then they reflect on it, and they come up with these abstractions. And then we consume those abstractions, and we consider that knowledge. But in reality,

Starting point is 00:04:43 the knowledge comes from transferring the raw inputs into the abstractions. It comes from the reflection. So when we're trying to learn from other people, we really want to have the reflection piece still be our own. So yeah, you can learn from movies. You can learn from documentaries. You can learn from all of these things. But what I really want when I'm learning is the raw material that other people use. And I find in books, you get a level of fluency and a level of information that you don't get in online articles. The bars higher. You don't get in movies because movies are usually generally there for entertainment purposes. And you might learn stuff in movies. That's not to say you can't learn things in movies. It is to say that I want to do my own reflection on that material. And that is,

Starting point is 00:05:26 is how I actually draw my own abstractions, which then I can put into action. So talk to us about how you read. Is it audiobooks? Are you reading hard copies? Oh, man. I read mostly physical books. Increasingly, it's kind of Kindle. And I would say the percentage is maybe like 80, 10, 10 at this point between physical

Starting point is 00:05:51 Kindle and audiobooks. I use audiobooks at the gym. but I often use them for books that I'm reading physically or I'll use them to preview books so I'll put them on like one and a half two X speed and I'll just kind of go through a few chapters in them and sample the book to see if I actually want to read the book but for me I find the audio a very hard-to-consume medium

Starting point is 00:06:14 and that's a personal thing I know not everybody's like that but for me I can't be doing anything if I'm doing audio media consumption I get lost I mean, I lose track of things. I want to write stuff down. It's just not convenient for me to do that. And I lose focus so easily doing that. I don't lose focus as much on the physical books and it's really easy to write things down. Kindle's just becoming a practical sort of necessity, right? Like I can't pack a suitcase full of 50 books when I go away for a few weeks. But I can bring a Kind of Kind of Kind of adapting to that, although I would be a slow kind of convert to that. And then when I am reading, I mean, I'm not reading every book cover to cover. I want to know why I'm reading the book. I want to have an understanding of what I want to get there to that. I always, almost always skim books.

Starting point is 00:07:04 So I'll read the introduction, the conclusion, skim the chapters, the index, get a feel for the author and the arguments that are presented in the book. And then that gives me a sense of like how much effort in time. It takes 10, 15, maybe 20 minutes to do that. But it gives me a sense of how much time and effort I want to put in this book. And often it's like, oh, this book is not what is. going to solve the problem that I'm curious about right now. It's great and I want to keep it. Or sometimes it's like, you know what? I really, you know, based on my knowledge of this subject,

Starting point is 00:07:34 I don't really think that they know what they're talking about. And I'll just kind of give it away. Or I'll put it on a shelf somewhere and come back to it later, right? Like sometimes you're just not ready for that. If you're learning a new subject, you can't dive in with these books that are way above your level. You have to go just above your level and grasp that level. And then you can move forward on them. So a lot of it boils down to like, I want to know what I'm reading, why I'm reading it. I have a system for like how I take notes, but that works for me. And the point I think for everybody is to develop their own systems about how you keep track of notes and how you integrate that into your life. But the real point of that going back to what

Starting point is 00:08:11 we said about learning is that that becomes how we reflect on the material that we're consuming and that helps us learn it. So how do you filter what's next on the plate? So So, yeah, let me walk us through this. I don't know if I have an answer that works for everybody. I mean, I'm super lucky. So at this point, I mean, Farnham Street is a fairly well-known website. We get recommendations from publishers who are generally very thoughtful about what they send me, and also readers, right?

Starting point is 00:08:42 And I get most of my new book recommendations from readers or people that I'm curious about. And I have a huge network of incredibly smart people who will. send me emails, go and check out this book. And then, you know, it's an instant buy at that point. And then I'll get to it when I get to it there. That's the thing that sometimes annoys people. It's like, oh, did you read that book? And it's like, well, you know, it's sitting on my shelf somewhere, right?

Starting point is 00:09:06 Like, it doesn't mean that you can usurp my time and kind of direct it. It means that I trust you to recommend a book. And I'm really happy you recommended me this book to read. But it doesn't mean I'm going to read it tomorrow. It might mean I'm going to read it in 10 years. It might mean I'm never going to read it. But, you know, I have it on my shelf. and I kind of have an idea of what it's about.

Starting point is 00:09:24 And that allows me to kind of use it. Like I have an anti-library that's probably, I think the office here has, I don't know, 3,000 books. You know, the people walking by think it's a library, they come in and they're like, can I look at your books? And I'm like, no. That's just weird. I don't know you at all. Well, they probably think it's a library because that's not something you see at most people's homes is 3,000 books. Oh, yeah, not at all.

Starting point is 00:09:52 It's not in my house. It's next to a dental office, right? The kids come over and they're like, can we look at your books? And she's like, ah. So how about talk to us about the genre that you read? So I know here, Stig and I, I mean, it's almost always a business book. But to be honest with you, sometimes it gets a little repetitive. So it's like, okay, heard that story before, heard that story before.

Starting point is 00:10:15 And it seems like you really venture off into a lot of other areas outside of business. So talk to us about the different. subject areas that you read about? So I read mostly nonfiction. Within that sort of broad category, I read everything. And, you know, everything. I mean, I got a dog training manual in the mail last week. I don't even have a dog.

Starting point is 00:10:41 But it's interesting from a psychological point of view in terms of stimulus response and how you train people. So, I mean, I'm always looking for ideas. It doesn't matter to me where they come from or who has. than if they have a better adaptation of something that I have in my head or something that I don't have in my head that I should have, then I want to read about it. But within that, I mean, increasingly it's kind of biographies,

Starting point is 00:11:03 and it's always been a little bit of philosophy, I would say, over the last five years, I've had a decent chunk of philosophy. That's just been important to me with what I'm going through in my light, and it helps me. And one of the things that I do for books is, like, I think three years ago, it was 2014. I was trying to read as many books as I can.

Starting point is 00:11:22 I think I got up to like 142, 145 in the year. And I wasn't retaining what I wanted to out of them. And I was reading a lot of things that had a half-life that just kind of like disappeared, right? And, you know, I would read this book and I'd be like, oh, this is interesting. And two weeks later, it's irrelevant, right? The study was disproven that, you know, the pop psych books, sort of speak. And I think at the end of the day, I got away from that. And I moved to like, okay, well, what has stood the time?

Starting point is 00:11:52 of time. What is still in print today after 10 or 20 years? Because if you go back and this is a fun experiment for people to run and I've done this once and you go back and look at all the bestseller list from like 2000, go to the New York Times and look at New York Times bestseller list, 2001, nonfiction, 2002, nonfiction, 2003. And look at how those books have aged. And you know, most of them, that's not to say that they're not good books, but most of them are pretty much irrelevant at this point. And so I want to, we have a limited amount of time, right? And the way that I think of my day is I have 100 energy blocks. 33 of those blocks go to sleep. 33 blocks go to kind of miscellaneous family, errands, friends, all of that stuff. And then I have 34 blocks to kind of work with.

Starting point is 00:12:38 And within those 34 blocks, I can apply that energy however I want. But if I'm applying it to things that change quickly, then I'm going to just keep applying that energy to things that change quickly. I'm never going to get further ahead. I'm like running on a treadmill, right? But I want to run a marathon, but I'm just standing on a treadmill. I'm not actually moving anywhere, although I'm doing a lot of work, a lot of energy, but I'm not getting anywhere. So how can we build a framework if we work backwards that we can build upon that's going

Starting point is 00:13:06 to stand the test of time? Or if it doesn't stand the test of time that changes slowly. And one of the ways to do that is to allow time to filter things. I think it was Seneca the younger who said time discovers truth. And I think there's a lot of wisdom to that. I mean, much of what we think of as modern philosophy today is actually just ancient philosophy modernized. It's the same subjects. It's similar phrasing.

Starting point is 00:13:31 They were dealing with the same problems that we deal with today. 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. in every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, bringing

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Starting point is 00:17:26 sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. So, Shane, let me shift gears here just a little bit. We have a question from our Twitter feed. This one comes from Charlie Newsom. And Charlie said he read your blog a lot and that you like to learn from success and failures.

Starting point is 00:17:58 And so his question is, which failure have you learned the most from? Oh, man. I had so many failures. but it's hard to pick just one that I've learned the most from. I mean, I've been fired. I've lost a lot of money for clients. I've had to fire people and done that the wrong way. I've been too tolerating.

Starting point is 00:18:24 I mean, there's so many. But I think the one that would probably resonate the most is when I was on the board of a hedge fund. I mean, overall, the fund did really well. But we had one particular investment that did poorly. and it caused me to lose a massive amount of money, both for clients and for myself personally. And what can I say?

Starting point is 00:18:45 I mean, I eat my own cooking, which is good, but the failure in that case led me to go back and look at why I thought I was so right and what we missed. And that started a process of evaluating the way we made decisions. I mean, everybody ends up failing in one way or another. How you respond to that failure makes all the difference in terms of where you end up in life.

Starting point is 00:19:06 But by becoming curious and asking myself, instead of protecting my ego, it was putting my ego aside and going like, how do we figure out why we were so wrong about this? And how can we take this and learn from it? So that it's not that it won't happen again because I don't believe that you can say, oh, this won't happen again. It's how do we make it probabilistically less likely to happen again? And I mean, the world in this case was saying I had a bad outcome. And that doesn't mean we have a bad process.

Starting point is 00:19:33 We instinctively think that if we had a bad, we have a bad process, but that's not the case. And in this case, we did end up having a bad process, but that's a little bit of an aside. So I had to go back to see where I was wrong, right? And I started thinking more and more at the time about how to make better decisions. I mean, what was really getting in the way and what really gets in our way is ego, right? So my ego was getting in the way. I spent tons of time doing analysis on this company. and we only owned, I think at the time, I had six stocks in our portfolio.

Starting point is 00:20:07 And so each stock was really heavily weighted, and we spent a lot of time researching it, and we failed, right? So I had a huge personal stake in the company, and I told myself that I must be right because I've done all this work effectively, right? I was discounting the things that were disconfirming what I thought to be true. And when I went back after the fact and kind of reevaluated things with some disconfirm, I could see that I was getting in my own way, right? I was on the wrong side of being right.

Starting point is 00:20:37 By getting out of my way, I can focus on better outcomes and less about me being right, right? A lot of times we have our ego wrapped up in being right, and that prevents us from getting better outcomes. What do you think would be a good read or a good source for a person to allow themselves to check their ego or to be aware of that their egos get? out of control. This is a tough one. I think, you know, one of the things that did it for me was becoming an entrepreneur.

Starting point is 00:21:12 And when you have everything on the line, it's not about you being right. It's about being right, right? Because you risk utter total failure if you don't have the best outcome. So it's not about, it becomes less about your ego in some ways. And I think you have to have something at stake. Well, I think that there's part of that, but I think that there's also part of surrounding yourself with people that you believe are credible in what you're doing. And having the process in place by which you make decisions that it incorporates, I wouldn't say rigorous, but definitely incorporates that into the flow, right? So you're not doing it ad hoc and you're just chatting about it, right?

Starting point is 00:22:00 You're systematically sitting down and going, oh, this person has a credible opinion on this and they differ from me. I want to walk through that. I want to walk through their situational knowledge, their experience. I want to walk through how right they've been in the past. How many decisions they've made? I mean, are they smarter than me in this domain? And if they are, I really want to – or if they're not, I really want to learn from them. If they are – or sorry, vice versa.

Starting point is 00:22:27 I mean, if they are smarter than you really want to learn from them. And if they're not smarter than you, that doesn't mean that you can't learn anything from them. I mean, I tell my kids that their mission in life, they're detectives, and they have to go around. And their goal is to learn something from everybody they meet. Like, everybody knows something they don't know. And their job is to kind of find out what that thing is. So, Shane, you briefly talked about, you know, investing and working with the hedge fund and such. I think there's, you know, when we posted some that we were going to be talking with you on Twitter,

Starting point is 00:22:59 and people were posting their comments. We got a lot of people that were asking about your opinions on investing and kind of how your approach has evolved through the years. And I know that you're obviously a big fan of Warren and Charlie, but I also know that you're a fan of Ray Dalio. So one of the things that we talk about a lot on our show and the disparity between their two approaches is Ray's this macro guy and has been enormously successful. And Warren and Charlie are much more on the micro side. So I'm kind of curious how you see things. Do you think that there's a meshing between those two approaches? Do you just kind of side? Are you more polarized to one or the other? I don't think about it in the way that you laid out that question. I think they actually

Starting point is 00:23:45 triangulate really well in terms of how they think about specific problems. I think they're both focused on embracing reality and dealing with reality. I mean, the commonality and the overlap between the two of them is ginormous when you think about it. Well, they're applying those skills in completely different ways. They're similarly applying a thinking tool set to those problems. And that tells me that there's a lot more signal than just Buffett alone doing it or more signal than Dalia alone doing it. Now you have two incredibly successful people who overlap in the

Starting point is 00:24:28 way that they think about things and they're applying it in, while it's the same industry, incredibly different problem sets. That tells me that there's a lot to learn in that toolkit that can be applied probably outside of investing as well. And I don't know a lot about how Ray is about conducting his work. I think one of the, criticisms against Bridgewater is that not a lot of people completely understand how they make money. If there was a criticism against Bridgewater, that would kind of be it. And for me, intuitively, the Buffett approach makes more sense, right? Like, what am I buying it cheaper than I think it's worth?

Starting point is 00:25:11 I think I can wrap my head around certain businesses, and can I create an environment where I only have to invest in those businesses? So when we look at the Howard Marks and you kind of study how Howard looks at things, Howard really is very similar to the way Warren invest, but he also talks about in some of his in his book, the most important thing, he talks about how it's important to understand where you're at in the credit cycle, which I think kind of incorporates some of the Ray Dahlio stuff as well. Do you look at credit cycles when you're investing?

Starting point is 00:25:45 Are you really just buy into the Warren Buffett style where he just says, I just totally ignore anything to do with the credit cycles. I'm just looking at what's going to give me the best yield for the lowest amount of risk that's associated with that. Yeah, I would say I'm probably, I'm more inside personally on that. I just don't know enough about credit cycles to have any sort of credible opinion on them or any predictability about where we are, what's going to happen to say incorporating that or thinking about that. It's something to me that would be unknowable. and maybe it's knowable for other people, but it certainly appears to be unknowable for me.

Starting point is 00:26:25 So I don't place a lot of emphasis on that personally. Okay. So this question comes from Mark Harrison, and Mark says, what strong belief or idea have you changed her mind on recently and why? I kind of alluded to this earlier. I think one of the main things that I've changed my mind on in recent years, I'll give you two examples actually.

Starting point is 00:26:49 So the first is that I have to be right. And so this plagued me. I was a knowledge worker, right? So I got out of school with my computer science degree. I went to work for an intelligence agency, and I was literally paid for my brain. And that brain became my self-worth. And my ego got wrapped up in all of this.

Starting point is 00:27:07 And what that caused me to do for a number of years was think that if the idea didn't come from me, then it wasn't really good. So again, it became about my best idea and not the best idea for everybody else. The thing recently that I probably changed my mind on is tolerance with bad situations. And I've always been a fairly tolerant person and super loyal to those close to me.

Starting point is 00:27:34 And I think recently I've changed my mind in terms of how far that tolerance should go and when you should act on it. And making sure that you're dealing with reality, but you're actually dealing with it, and you're not just wishfully thinking that it'll get better. And I think when we wrap up friendships or we wrap up relationships into this equation, we tend to either ignore or become overly optimistic. And I think one of the things that I've done recently that has been terrible for me personally, and I'm kind of vowing

Starting point is 00:28:08 not to do again, is I've just been way too tolerant with relationships that aren't working for me. in the past you've been way too taller and now you're just more up front with it. Yeah, I mean, I'm definitely going to try to be too. I'm coming at the other side of this right now. Yeah. This question was originated from Stephen Lavery and he brings up these mental models that we know Charlie Munger talk so much about. Can you talk to our audience about what a mental model is and then maybe explain one that you think is a really valuable. or impactful mental model in your own life?

Starting point is 00:28:46 Mental models are pretty, they're easy to conceptualize when you think of, think of gravity, right? So gravity is this phenomenon that exists in the world. You probably can't really explain it at a level of detail that makes sense, but you know that if you hold a pen and you drop it, it's going to fall to the floor.

Starting point is 00:29:06 And you know that because you have this mental model of gravity in your head. And so mental models become this, abstraction of reality that allow you to kind of deal with it, right? To think through things and to grasp ideas in chunks and to visualize not only, and in some cases you can visualize what's going to happen. In some cases, you can visualize what has happened based on your mental models. So the more models you have, in theory, the better you understand the world. Now, everything is becoming a mental model. I mean, I think this has kind of been overblown in a way to the sense where

Starting point is 00:29:42 not everything needs to be a mental model that you think about, right? So when I think about mental models, I think about I want reliable mental models. And what are the reliable mental models? That means that they've stood the test of time. Right. So when I say mental model, I'm talking about reliable models of the world, right? So evolution in biology or thermodynamics and chemistry or thinking models and thinking models being like second order thinking or the map is not the territory or incentives. And being able to shift perspectives and think about things and taking a step back through those models and through those lenses

Starting point is 00:30:22 allows you to have better tools so you can avoid problems. And then course correct quicker if you do encounter problems. But I mean, if you have a lot of mental models in your head, in theory, you should be able to avoid most problems instead of getting yourself into them. It's not always the case. but the person with the fewest blind spots in the world wins. And removing blind spots means thinking better.

Starting point is 00:30:48 And thinking better is about finding simple processes that kind of help us work through problems from multiple dimensions and perspectives. And what better way to do that than kind of understand and know the big ideas of the world? So I'm curious, what would you say is one of the biggest mistake that young investors, because we have a lot of young investors that listen to the show that are in college or just got out of college. What would you say is one of the biggest mistakes that a lot of these young investors make whenever they first get into the markets? I'll relate this to a few friends of mine who've made, I would say, we'll say seven plus figures on Bitcoin. But I think that understates it.

Starting point is 00:31:29 And I think the biggest mistake that they're making right now is that they're ascribing that success to their knowledge. as an investor. And I think that that is going to cause them to probably lose most or all of that money that they have in paper gains at this point in time. I think early success is probably the worst thing that can happen to investors because you ascribe that to your knowledge and your processes and kind of your thinking. And that builds your ego and it builds your competence. and then you start taking bets that you shouldn't take,

Starting point is 00:32:14 and you're taking risks that you don't know about. And I think, you know, it was I think Alexander Pope, who said a little knowledge is a dangerous thing, you know. And there's kind of an inflection point there where, you know, you get to a point where you have enough knowledge that you're dangerous. And I think, you know, with a lot of young investors that I talk to, personally that, like, come to Ottawa

Starting point is 00:32:41 and when I have coffee or something, we start talking through a company. And, you know, almost everything that they say is textbook, right? Like, it's very much related to financial analysis or quantitative analysis. Or the first page of Google, right? And so I think you have this availability bias where you found this information. You think it's unique to you somehow. And your mind tricks you into this.

Starting point is 00:33:08 This isn't a conscious thing, right? you've spent 20, 30, 40 hours on this company. Of course, you know everything there is to know about it. And you find this information or this news source and you're like, oh, nobody knows this. But most of that information is priced into the market, right? It's the things that you think about that are different than the market where you have a leverage in terms of positive or negative in terms of the outcome of that company. And I think that one of the best things young investors can do and old investors. I mean, I work with hedge funds on a consulting basis to set this up, is to keep decision journals, right?

Starting point is 00:33:45 And those decision journals kind of check your ego at the door and you start writing it, like, what you think will happen and why you think it will happen. And the interesting thing is, like, often we're right, but we're right for the wrong reasons. And then when you read your handwriting going like, oh, this is going to happen and here's why it's going to happen. And then it's so easy to convince ourselves that, like, oh, well, what I thought was going to happen, so I must have been right on the reasons, but then when you're confronted with what you thought were the reasons and then what actually played out in reality, there are two different things often. And that's a very humbling experience for people. And I think like getting in that process, that habit early would be super lucrative long term. And I don't mean lucrative just in a financial sense.

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Starting point is 00:37:58 I think that when a person is able to look back at what they wrote, and if their temperaments being tested in the position, they can also say, hey, although it feels like I was wrong and I have this urge that I want to sell or get out of the position, these things that I wrote down haven't changed, right? Like, all these things that I wrote down are still the main reason why I owned it, and none of those things have changed. So it might help a person continue to hold the position if they are in fact right. you know. Well, I see a lot of like, I call it 13F panic selling, which is like you've cloned a couple of

Starting point is 00:38:36 super investors and the stock goes down. And because you don't, this kind of goes back to learning, right? Like if you think about the learning that we talked about earlier, because you didn't do the work yourself, you don't know kind of like what's going on. And then of course, you're going to be like, oh, I'm just going to sell and cut my losses. But the reality is maybe that's a good choice and maybe it's not. But the point is you don't. know because you haven't done the work. And doing the work is a constant struggle. It's a full-time job for people, right? Like, you can't be, oh, I mean, you can. You shouldn't be so young and thinking that you have all the solutions. I mean, there is people that are, like, investing

Starting point is 00:39:17 is a terrible career to get into when you think about it, right? It attracts the smartest people, the most competitive people. And it's like, you want to excel. in that field, maybe, you know, you could have a lot easier path if you excel in a, and if you apply that mindset and those brains to a field that doesn't typically attract those type of people, you will probably go a lot further. Yeah, that's an interesting point. So recently you had a chat with Ray Dalio. I'm kind of curious if there was any, like, big, you know, anything that you really remember

Starting point is 00:39:55 about the interview that you kind of just went, oh, why? Wow, I never thought of it that way. Do you have anything like that? Yeah, I like Ray's phrasing, right? Like, he says pain plus reflection equals progress. And I think that's true, right? Because he's hitting on the fact that you need reflection. And I think that that's super important and underrated by most people.

Starting point is 00:40:15 I think that one of the things that I love raise phrasing on, I don't know if I'm paraphrasing him here exactly, but it's like there's nothing more important than embracing reality, right? and when it comes to our mind, it's not a conscious thing, but most of us fight what's true when it kind of doesn't fit our world belief or what we want. That is so true. And if you can figure out a way to step back from that, you're a step ahead, right? And getting your ego out of the way, I mean, Ray's idea of meritocracy is fascinating

Starting point is 00:40:53 because, and I love the fact that he specifies idea meritocracy, right? It's not a meritocracy. It's an idea meritocracy, right? So if other people have a better idea, let's use it. And a follow on to that is, you know, you should also know when you're the best person to make a decision and when you're not. And if you don't know the answer to that question, odds are you're probably outside of your circle of confidence. Yeah. So how does a person, how does a person become more?

Starting point is 00:41:23 more acceptable to forming an idea meritocracy around themselves? I think that's incredibly hard. I mean, I think a lot of that is cultural. But, you know, you can use, Ray calls it believability of people. I kind of, I've always thought of it as credibility, right? So people have credibility weighted opinions. And those opinions should not be equal. And if you think about that, just that alone, as an observer,

Starting point is 00:41:53 So not choices that you're making because that's really hard. Your ego will be in play. The next meeting that you go to where decisions being made where you're inputting into the decisions, just step back during that meeting and go, like, I'm going to wait everybody's opinion credibly. How believable are these people, right? What is their experience in the area being decided? What is there a track record?

Starting point is 00:42:14 What is their knowledge of the situation? How close are they to the problem at hand? And if I think about things from that perspective, I will naturally probably come to the conclusion that not everybody's opinion should be weighted equally. And that is the very beginning, the first step, if you will, of becoming individually an idea meritocracy. And becoming a corporate one or cultural one within your company is a completely different story. But if you can do it for yourself, I mean, that would just go a long way. And I think, like, Buffett, Dahlia, a lot of great people have that in mind.

Starting point is 00:42:54 I mean, Gates is doing that right now with the Gates Foundation, right? Like, he's not pretending to have the solution to all of these problems. He's saying, oh, that sounds credible. Let's try it. And, you know, he's doing that 100 times and being like, okay, this one is the most credible. Let's apply a lot more money to this problem or this solution. So earlier you had mentioned about a book that was about training a dog and the psychology of that. And I found that really a fascinating comment.

Starting point is 00:43:23 I guess my question would be, what book or topic have you studied in your past? And it doesn't matter the timeline that it could be five years ago. It could be last month. But what topic or book have you studied that would really surprise the audience? It's like kind of out there. But that has also had a very profound impact on you, even though it's kind of something that would be out of the ordinary. How to talk so your kids will listen would be one of them. And I think that applies to everybody, right?

Starting point is 00:43:53 Like how you communicate with each other. And I think that there's a lot of wisdom in parenting books that are, it's surprising because you would never, if you don't have kids, you would A never think to pick up a parenting book. But if you do have kids and you pick up a parenting book, you know, a lot of that stuff applies to other people, right, in terms of like how you handle a situation, how you make sure that you step back from the situation and how you talk about it. So the way that you're supposed to address things with your kids helps you address things in the workplace, right? Because you don't want

Starting point is 00:44:24 to blame your children, right? It's not about them personally. It's about an action they did. Well, that's the same thing you want to do in the workplace, right? It's not like you're a bad person because you did this. It's like, no, you did this and this isn't what we should be doing. How do we get to a better place on this? Or what would you do next time? And I mean, you don't want to take the same approach that you would take or same language that you would take with your kids. But the same sort of framework would apply to setting goals with people at work, dealing with performance problems with people at work, anything that's relationship based where you need to have a more open and honest conversation, right? And it teaches you to kind of separate different parts of the

Starting point is 00:45:04 conversation, to structure the conversation with them, to not confuse topics. Right. And we do that so often at work is like, we'll have a decision to. to make and, you know, say you and your partner have to decide where you're going to go for summer vacation. So you start mapping it out and they start planning logistics and the conversation just becomes incredibly complicated, right? Because now you've intermixed two things instead of just going like, let's figure out where we want to go first and then let's figure out how to get there. Because when you're mixing two things, it becomes infinitely more complicated and you're less likely to actually move forward. Interesting. And was that, and was that,

Starting point is 00:45:43 a book that you said at the beginning how to talk to kids who will listen or is that just I think the title is how to talk so your kids will listen. Okay, got it. All right, this is a, this is a funny question that you have to only provide a response to one of two books that I'm going to name. And I'm not going to say anything other than the name of the two books. And then you have to say one of the two books. Okay. Okay. The intelligent investor or margin of safety. Margin of safety Am I the only one who says that? No.

Starting point is 00:46:16 No, Stig and I have the same opinion, and we were just kind of curious. You know, you're a well-read person. We were just kind of curious what you thought. And you didn't say that it was better. You just said the name of the book. So we'll let the audience interpret the results. All right. The last thing, Shane, and we know you're so well-read,

Starting point is 00:46:38 and it's almost impossible to name one point. book, and if you want to name however many, what would you say is something that has really influenced you in a major way? Maybe it was a book that just got you reading a lot, or maybe it was something that kind of put you in a certain direction. I won't offer recommendations, but to answer that question, books are contextual. So it's kind of like art, right? Like if you go to the art gallery by your house and you look at a painting, and then you go back 10 years and look at the painting, you know, the painting doesn't really change, but what changes is you. And that painting can mean something completely different 10 years from now than it did the first time

Starting point is 00:47:16 you saw. And for me, I've had a number of occasions where that's happened, right? So one great example would be Marcus Aurelius Meditations. I read that first year university, I thought this thing was like the worst thing to ever happen. And in part, that was because I had a crappy translation. But in part, it was just, I wasn't in a place where it was. it mattered to me, where it made a difference to me, and it didn't speak to me. And so when you talk about what books made a big difference in my life, there's no book

Starting point is 00:47:45 that made a bigger difference than the Stopwatch gang. I would have been arrested in a police car had I not been reading that book. My trajectory in life would be totally different. And that is 100% luck. But it's also the answer to the question. I think in life, books that help me are books that make me feel like I'm not alone. Marcus Aurelius Meditations was a really good example of that. Here you have the most powerful Roman Empire, Roman Emperor in the world

Starting point is 00:48:15 who's going through very similar stuff to what we go through in life. And he's writing openly and honestly about it. And you also have an exemplar behind the scenes, which is like he could literally do anything he wanted in the world and he didn't abuse his power. And, you know, that helps me contextualize my life. in a way. And I think that, you know, when I went through a divorce, that book spoke to me in a way that it didn't speak to me before, right? And it gave me a framework for handling things

Starting point is 00:48:51 that I had never had to handle before. And you can't match things better than perfect context, perfect book. And it helps you, right? Like, so A, I'm not alone. B, it's giving me a framework for how to deal with something that I've never dealt with before. And I can learn from somebody else's experiences in that. And I know that this is something everybody experiences, but so often when we're going through something in our life, be it a breakup, you know, or achieving success, right? We still feel alone. You know, we feel guilty about our success because we don't want to feel like we're bragging

Starting point is 00:49:26 about it. We feel terrible that we're going through a breakup and we don't want to burden our friends about it. So a lot of what modern culture does is forces us inward. And if we're going to be inward, and that's not to say that that is the best approach, but if we are going to be inward, then finding books or people that speak to you allow you that outlet that you can't have outside of that. I think that, you know, Tara Brock is another author who's done a lot for me in terms of dealing with reality and facing things that you want to change in yourself. Any book Any specific book by Tara?

Starting point is 00:50:09 No, I mean the name kind of behooes me. It was four, five years ago that I read her. But it's marked up a lot. I haven't gone back to it since. But I remember at the time kind of walking away going, oh, this is like, I feel better about where I'm at. And it's not this dark tunnel that I thought it was. Marcus Aurelius, the meditations,

Starting point is 00:50:31 if you're going to do meditations, get the Hayes translation, which is by far the best. And yeah, I think what you want is books can be drugs. I don't think people understand that, right? Like, it's not that you need medicine all the time, right? A book can be medicine because that book can speak to you in a way that changes your path. And it doesn't have to necessarily change things that you do if you don't feel alone anymore. Or you feel like you've gained knowledge that you can applaud.

Starting point is 00:51:02 to a situation that you've never had to encounter. I mean, if you thought about learning from only yourself, you would literally just learn from mistakes. And computers can do that because they process like trillions. I mean, AI is effectively that, right? Like it'll process trillions of transactions. And sure, it can learn, but I don't have a life where I can process trillions of failures.

Starting point is 00:51:25 So I need to learn from other people. And going back and finding books that stand the test of time on these. I mean, there's a reason they do stand the test of time. And then using those as your filter for reading is probably a good source, no matter what you're going through in life. Well, Shane, we can't thank you enough for taking time out of your day. And I know your time is very treasured. And to be a part of that, we're just very honored. If people want to learn more about you, where can they find you? They can go to fs.blog or at Furnum Street on Twitter. We have a newsletter called Brain Food. It's got a hundred and, I don't know, 65,000

Starting point is 00:52:03 subscribers at this point. Every Sunday I send out the best of what I found on the internet, try to pick timeless topics or subjects that I think are interesting from multiple different perspectives. It doesn't mean I agree with everything I send out, but it's designed to provoke thought. So we call it signal in a world full of noise. All right. Well, thank you so much, Shane. We really appreciate it. Thanks a lot. It was great being on. So guys, I wanted to conclude this episode by telling you about our community event that we're having alongside with the Berkshire Hathaway Shareholders meeting. So this is open to anyone that wants to attend and we always have such an incredible

Starting point is 00:52:40 time together. You don't need to own a $325,000 share of Berkshire Aid to attend. We explain exactly how you can do it on our website. So don't worry about that. Warren and Charlie aren't getting any younger and the time to see them is right now. We have plenty of people that come to the event all by themselves, but the common thing that we hear is that it was so easy for everyone to make friends and they had so much fun with all the other TIPers that attend the meeting. We do everything together so you won't miss anything or you won't feel left out. If you'd like to attend this meeting with Stig, myself, and some of the guests that we have on the show, simply go to TIPBurchshire.com.

Starting point is 00:53:21 We bought the domain and we have it pointed to an information page where you can sign up and you can learn. exactly what you need to do to attend the meeting. So let me repeat the address so you don't forget it. It's TIP Berkshire, all one word.com. We would love to hang out with you, so come and join us. All right, so that's all we have for you guys today, and we'll see you again next week. Thanks for listening to TIP. To access the show notes, courses, or forums, go to theinvestorspodcast.com.

Starting point is 00:53:52 To get your questions played on the show, go to Ask the Investors.com. and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP175: Shane Parrish - On Buffett, Dalio, and Reading (Business Podcast)

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