We Study Billionaires - The Investor’s Podcast Network - TIP617: Improve Your Investing Operating System w/ Vitaliy Katsenelson

Episode Date: March 24, 2024

Kyle Grieve chats with Vitaliy Katsenelson about why we should align ourselves with what we love doing, how stoicism has helped Vitaliy deal with the volatility of negative emotions in the market and life, Vitaliy’s four favorite stoic tools, how to engineer our environments to improve our decision making and decrease costly mistakes, how we can utilize specific modes of communication to foster the learning process, why we should concern ourselves more with the truth and less on being right, how the markets have developed in the last decade pertaining to sideways markets, and a whole lot more! IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:04 - What soul in the game is and why it's so important to understand it if you want to truly excel at investing and other passions. 07:36 - Why meditation is such a powerful tool to help improve stress. 13:40 - How Vitaliy prioritizes areas of his life to ensure he's spending the right amount of time on high-priority areas. 19:13 - How stoicism has helped Vitaliy remove the volatility of negative emotion in the market and life. 20:13 - How investors can utilize the dichotomy of control to navigate volatile markets better. 20:13 - Simple negative visualizations to use on individual stocks and your portfolio to improve decision-making. 36:43 - Why toxic environments can influence us to live by other people's values. 40:30 - Why specific tasks should be delegated so you are focused only on creating value. 48:16 - Why our modes of communication can limit or expedite our abilities to improve and learn. 48:25 - The importance of discovering the truth for successful investing. And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Buy Soul In The Game here. Buy The Little Book Of Sideways markets here. Read Vitaliy’s articles here. Check out Vitaliy’s fund, IMA, here. Learn more about the Berkshire Summit by clicking here or emailing Clay at [e-mail]. Follow Kyle on Twitter and LinkedIn. Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: River Toyota CI Financial AT&T Yahoo! Finance Long Angle iFlex Stretch Studios Public American Express USPS NerdWallet HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. I remember hearing about Vitaly, Katz and Elson from some people in my audience recommending his book, The Little Book of Sideways Markets. I read it and it was great. But as soon as I read his latest book, Soul in the Game, I realized there was a lot of exciting investing concepts that Vitale understood at a very profound level. The concept of Soul in the Game resonated with me. Vitali distinguishes between having Soul in the Game and having skin in the game.

While they have some characteristics in common, soul in the game is a concept that adds a dimension of alignment. It's evident to me that Vitaly has soul in the game regarding investing. One of the reasons this matters so much is that investors with soul in the game will have unique competitive advantages over an investor who just sees investing as a job. When you find an investor who truly loves what he does and is aligned with his occupation, they'll be very tough to beat. Vitale has done a great job of beating the MSCI World Index since its inception in 2006.

What stands out most about Vitaly is the depth of his thinking. He thinks a lot about thinking and has engineered his life to upgrade his thinking operations, operating system. Listen to this episode and you'll pick up several simple tools that you can easily use today to help you improve your thinking and deal with the markets in a much healthier way. Now, let's get into this week's episode with Fatali Katzenelson. Celebrating 10 years and more than 150 million downloads. You are listening to the Investors Podcast Network. Since 2014, we studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed.

and prepared for the unexpected. Now for your host, Kyle Grieve. Welcome to the Investors' Podcast. I'm your host, Kyle Grieve, and today we're bringing Vitali Katzan Elson onto the show. Vitali, please to have you on this podcast. Hey, Kyle, it's my pleasure. Thank you. So Vitaly has written several books and penned many articles.

So you could say he loves writing about investing, but also loves other topics like family, fatherhood, stoicism, and classical music. Today, we will focus primarily on his newest book, Soul in the Game. So I think the concept of Soul in the Game is very powerful, and it extends far outside the realm of investing. So for listeners who haven't yet read your book, can you discuss how you define Soul in the Game? Sure. Soul and Game is really just if one word can actually describe it very well, alignment.

Let's start with this kind of a basic layer of Sol in a Game is a Skin in a Game. Okay? I'll give you a couple examples. Let's say, a cook, you would expect that, cook to eat his own cooking, right? That cook has skin in the game. He doesn't just benefit from selling his food to his patrons, but also if he sells poisonous food to his patrons, he'll, you know, he'll bear the consequences. Imagine you're an engineer building a bridge, and then when the first truck rolls over the, you know, through the bridge, you are standing

under the bridge. That means having skin in the game. So in other words, not just benefiting from the upside, but also suffering the consequences of the downside of your creation. So that's skin in the game. Soul in the game is the next iteration of that. And that iteration where you have this inner alignment with whatever you're doing, it's something is so dear to you, it's so important to you that your sole focus is to be doing a great job. Like we've seen people that have soul in a game.

I'll give an example. You go to a restaurant and you have this waiter or waitress. that gives us just absolutely incredible service. And that person is not really doing it because how much, you know, she's going to get tipped or he's going to get tipped, but does it because they want to make you feel good. Or you go to a mechanic and, you know, like, they will, that mechanic will do whatever he has to make sure he does a good job for you

because he cares about delivering value to you as a customer. What you find usually people that have soul in the game, First of all, their identity is perfectly aligned with what they're doing. In other words, if they do something that would diminish what they're doing, it actually would go against their identity. That's the point, number one. Number two, they're usually playing an infinite game. And what I mean by this is that this car mechanic, he, like, you know, like, when we

go to car mechanic, there's usually a symmetry of information, right? The mechanic knows so much more about your car than you do. The reason we usually don't like going to car mechanics is because we're always afraid to be ripped off. So when you go to car mechanic and says, you know what, your brakes, you can still use them for another year or two. Well, car mechanic knows so much more about those breaks than you do. And that person being honest with you creates a connection to that person and therefore, in the long run, it's going to pay off. So anyway, this is just an example. But that's what to me that means having soul in the game, this alignment, that the inner alignment,

you have with whatever you're doing. Yeah, I really like that definition. And obviously, like you said, with skin in the game, I mean, you can have skin in the game, but obviously not have soul in the game, right? Like you said, if you were an engineer making that bridge and you hated your job of engineering, well, yeah, you'd still have skin in the game if you're standing underneath that bridge, but you might not actually enjoy what you're doing. So you wrote about Giro Ono, the three Michelin Star sushi chef featured on the documentary

Jiro Dreams of Sushi. So he said, quote, once you decide on your occupation, you might, must immerse yourself in your work. You have to fall in love with your work. Never complain about your job. You must dedicate your life to mastering your skill. That's the secret of success and is the key to being regarded honorably, unquote. So it's very, very clear that Jiro had his soul in the game based off of the definition that you just gave, especially in regards to his job. And he's also thought deeply about why he loves what he does. So do you think it's possible to be a good investor without actually loving it.

I think it's very difficult to do this in a long run because what's going to happen, if you're doing it just for money, you're going to be competing against people who are doing it for the love of it, who are doing it because they wake up in the morning and that's all they can think about. So you're going to be in a significant disadvantage in the long run if you're just doing it for money and eventually you will lose that game because there's a lot of people who are doing it as a hobby. I mean, in a hobby, they get paid for it.

Like, I do it. I get paid for it, but I would do the same thing if I didn't get paid for it. Because I love investing. I remember reading that when George Soros was asked about when he first realized he was good at making money, he replied, quote, I don't like it. I'm just good at it, unquote. So do you think someone who thought about investing in that light and was successful had soul in the game? You know what's kind of interesting?

And I question George Soros' response a little bit, how honest it is, because he wrote like three or four different investment books. And he's a billionaire, and I can promise you, you don't write books for money. I can tell you this as an author of several books. So he probably loves a lot more than he's willing to admit. But I'm going to hedge my answer a little bit because if you look at, you know, they're probably around the same age as Buffett, more or less. and Buffett obviously loves what he's doing.

At Saurus, he basically stopped managing money professionally. He may still supervise it a little bit, but he had other money managers, other people run the bulk of his money. So he probably also, so maybe that explains in part why he's no longer managing money. So you mentioned meditation in your book,

and I think that I'm at a place that you mentioned you were at one place where I have this inability to not think while meditating, and it probably drives me away from keeping on doing it when I probably should be doing it over and over again. But the benefits of meditation, such as being better able to manage stress, thinking more clearly,

and increasing self-awareness, obviously has a huge impact on anyone's life, regardless of if you're an investor or not. So how would you suggest someone new to meditation get started? Dispel kind of a few myths about the meditations first. Number one, I think one of the biggest myths is that because you meditate, you're going to be calmer. I think, like let's say you meditate for 20 minutes. I'm not sure how much benefit that 20 minutes in itself has.

But it's the side effect, it's the other side effect that makes you calmer as a person. And I'll get to that side effect in a second. But you said something very interesting. You said, you cannot not think when you meditate. And I think this is the most, this is probably the primary reason why most, people don't meditate, because they try and meditate, they try not to think and they fail. Well, and when I say the word fail in quotes, that is the feature, not a bug. Like, trying to sit and not to think is part of meditation and you're failing, that's a big

part of it. Because what happens is this, when you fail, and again, I use it in error quotes, when you fail, what you try to do, you try to observe the thought that on which you failed. And this observation of thought makes you actually trains you to be mindful, to observe your thoughts, to observe your emotions. The reason is it's important because I think that's what gives you, that's what makes you a calmer person. Because what happens to us, we spend most of our time having this subconscious thought,

always thinking about something, always worrying about something. And it's happening subconsciously, so we're not noticing it. Now, once you train yourself, observe your thoughts, it's almost like, imagine like you have a desktop computer and the main processor, and then you have another little computer that sits on its side desktop computer that analyzes what desktop computer is doing. That's what meditation is. Can if you start observing your thoughts? And I'll give an example.

I was driving somewhere a few years ago, and I noticed that I'm very stressed about something. And I start to think about it and realize what I'm stressed about. And the second I realized what it was, it's almost like you poke a balloon with a needle. It's kind of, you poke the story and goes away. And that's what made me calmer. I think that is the kind of become mindful, be able to observe your own thoughts. And therefore, that pain that comes with incestant thinking about that gives you, that's what causes you pain.

That's what meditation helps you to do with. Now, how do you start meditation? Well, first, you're trying to create a new habit. So when you try to create a new habit, what I suggest you do, try to remove all the obstacles, make it as easy as possible, make it something that's easy to repeat. So if you find a comfortable chair at home, link it to something. In other words, you can link it to something you do every day. You wake up in the morning, you brush your teeth, maybe the next thing you meditate.

or you come after work, you put yourself on a way, you know, on the counter, maybe next thing then you meditate. Link it to something you do every single day. Also, I think this is the case where you're repeating it over and over again is more important than how long you meditate. If you start meditating three minutes a day and then gradually increase in anybody, everybody, I can promise to this one. They say not three minutes.

They say one minute. Anybody can meditate for a minute. I can promise you, anybody. You can meditate for a minute, for sure. And you stop is one minute and then you increase it to three to five to ten. And you do it every single day and you don't miss it. There are so many apps out there. There's Sam Harris has an app waking up.

There's another app called Come. Then YouTube has a lot of videos you can listen to and meditate to. The only thing what you're trying to do is like you are, like the basic meditation is you sit down, you breathe, you focus on your breath, and then just just all you're trying to do is just focusing your breath and nothing else. And while you're focusing your breath, thoughts come to mind. Oh, I'm on a podcast. I should be probably focusing on the podcast, not a meditation.

But anyway, you know, but anyway, so, but that's a, and then you observe this thought and you go back to breathing again. So I really like that point you made just about attaching it to a habit of something you do every day because it's funny. Like, I think, I do think a lot, you know, but I don't know if I'm necessarily focusing on my breathing. So, like, you know, I guess in some sense, I am meditating, but, you know, like, can you meditate without focusing on your breathing, in your opinion?

Well, oh, yeah, you can, there are many different ways. You can meditate by focusing on just listening to sounds. Just go to, like I said, try this, go to the park, go outside, sit outside on the bench and just start listening to sounds. First of all, I promise you, you're going to hear sounds. You didn't know, like, you're going to hear highway three miles away. Like, that sound is always there. never pay attention to that. You know, you can, there's many different ways to do this. You can focus

on breathing, you can focus on the subject, working on the subject, some meditations are with your eyes open. Like they, I mean, I try to meditate, listen to classical music as well. There's a many different ways to meditate. You need to find whatever works for you. So I love the chapters in your book where you talk about the adventures that you've had with your children and the challenges of parenthood. So I'm newish father myself as well. I have a 16-month-old son. and it's clear to me, obviously, from reading your book, that you made being a good father a large part of your life and invested a large amount of time into doing just that.

So what have been some of your biggest realizations about improving your work-life balance that you've learned since being a father? I struggle with this concept of work-life balance because it's a balance, like when you think about the word balance, it kind of assumes there is a 50-50, there's some kind of, you know, I think the way I look at it

is that you want to mindfully look at your life and identify important elements in your life. And I'm going to give you an example going through and then prioritize those things. And knowing that, like, if you think about a big part of life is just dealing with constraints. It's like economics. You think about it, what economics is, it's just dealing with constraints. And so is dealing with life. And the biggest constraint in life is time. So the way I look at this, let me just kind of, as an example, let me go through my life.

The way I look at my life, I prioritize things like this. Myself, family, investor, writer, then CEO of IMA. You know, I'm separating, running like being an investor, I've seen portfolio manager, a CIO of IMA, and being CEO of IMA, and then friendships. You could argue that, well, friendship is not important to me. No, they are important to me. Don't get me wrong. But if you value everything the same, you value nothing.

So you have to, this process of prioritization. And you want to make sure that every single thing there is that you don't run it into deficit. In other words, if I completely neglect my friends, then I'm going to pay for that at some point in time. And it's horrible. And relations to me are important. But the reason I structured it this way, the reason I put myself first is because, you know,

when you're on an airplane and they tell you in case of emergency first put a face mask on yourself, well, if I don't get enough sleep, if I don't eat well, if I'm not a good mental state, nothing else is going to matter. So I want to make sure that I exercise, I eat well, I get enough sleep. I, you know, I mean, relationships, by the way, are part of it too. So I'd say, I kind of take care of the relationships right there. And then my family, and this is very important. Your kids, at some of your 16-year-old son, at some point he will be 22.

And he'll tell your dad, Kyle, where do you live? I'm Vancouver. Vancouver, okay. So he said, Dad, I want to move to Washington, D.C. And you'll be remembering the moments you had with your son when he was two years or five years or 15 years old. So I think like when it comes to my kids, I'll be honest, I kind of approach from regret minimization perspective.

I just want to make sure that I'm present and I'm there for them when I'm growing up because at some point they'll grow up and they won't need me. So that's when my family comes in. Second, then investing for me, it's very important because I mean, I make clients hire, you know, basically come to us and say, Vitale, here's my life savings, don't screw it up. So it's incredible responsibility. Plus, I love doing this, and that truly gives me meaning. So I do have soul in a game when it comes to investing.

Then I have writing, and writing to me, writing and investing, like sometimes you, it's very difficult to draw the line between writing and investing because I write a lot about investing. And that's how I think. If you think about writing, it's just basically focused thinking. For two hours a day, every morning I write, and that is my focused thinking time. So writing is right there next to investing. It's very important to me.

And so then I've been CEO of IMA. Now, this is a very important point. My company now at the point where I am not as much, it needed as much to run the company because I have a lot of people helping me. Ten years ago, when the company was much smaller, it was on the, its priority was higher where it is today. But now it's lower priority. Not because I don't care about the company.

It's just because I have so many capable people helping me to do this, freeing up time for me to focus on other things. And then finally, I have friendships. And again, when it comes to friendships, what I'm trying to do, I favor quality over quantity, to have meaningful relationships. It's very difficult to have a lot of, a lot of true friends, just because friendship requires investment of time. And so what I do, I have a handful very close friends with whom I talk all the time.

I go for work in the park and I call them. But I know that there's a lot of other. I have a lot of wonderful friends slash acquaintances. But I know there is just so much time and I can't have a deep relationship with them. So I have a handful friends and that's how I manage my friendships. My point is this. What I just described to you is prioritization of my life. And that is going to be different.

It was different for me at different points in life as well. I mean, before I had kids, obviously kids were not, you know, were not part of that. And studying was a big part of it. But the key here is this. You want to kind of mindfully create categories and figure out how much time, time, what's more important to you? And then you look at your time, how do you spend your time? Because, like, attention is really a currency of time.

How you spend your time is basically tells you exactly what your priorities are. When I was researching you, I came across a great comment on stoicism and why it resonates with you so much. So you said, quote, when we were born, we were born with the same hardware and software. We all have similar hardware. And the software from an operating system's perspective is basically a blank slate, unquote. So your point was that, you know, your operating system is largely shaped by things like our own experiences, our parents' experiences, books we read, you know, things that happen in the

world while we're alive. I'm interested in knowing how stoicism fits into how you've upgraded your own operating system. Well, it provides an operating system, basically. What stoicism basically helped me to reduce the volatility of negative emotion. It allowed me to, when I go through life, to remove stress from it. And so now I look at life differently because of stoicism. You discussed a few really, really good. investing tools that you've learned from your studies in stoicism. And the first one I'd like to

discuss is the dichotomy of control. So do you mind outlining that tool and how you've used it? That is the concept that got me into stoicism. That was like a, it's so simple. And I'm going to tell you what it is. And you're like, what? So that's never say, but it's so brilliant. And it's basically says, some things are up to us, some things aren't. I mean, that's the part where you say, oh, what's up is that? No, but then, so let me just give a little bit of context to Stoicism. So Stoicism, it's a 2,000-year-old philosophy that came from ancient Greece. There were basically three kind of main stoics.

There was Marcus Aurelius. He was an emperor of Rome, the most powerful person in that universe at that time. There was a Seneca who was kind of the Renaissance man, I know, seven and ten centuries before Renaissance. And then there was Epictetus. And Epictetus was a slave who was freed and then he became a Stoic teacher. So the concept, the academy of control is a concept that came from Epictetus. So, and he says, some things are up to us, some things aren't.

Okay. But then he continues and he says, things that are up to us are our values, our decisions, how we react to things. I mean, I'm paraphrasing. Everything else is not up to us. Kyle, you're driving to work and you get a green light every single time. That's good. But another day you drive to work and it's a red light.

Well, you get a green light or red light is not up to you. But what's up to you is how are you active to it? You go to a grocery store and a cleric is rude to you. There are a couple things. We can double click on that. First of, you have zero control how other people, people will treat you. And also, sometimes you should ask yourself a question, do I really expect to go through life and every single person I ever going to meet is going to be kind to me and

nice to me? Probably not. So you should be prepared that there will be time when people are not nice to you. And again, what you can control is how you respond to them being not kind. Also, and we can talk about this now, when somebody is not rude to you, it's a you just What I just did, I just basically framed somebody saying words and said they were rude. Actually, I would give you an interesting example. It's a fascinating example. We have some Israeli clients. And I don't know if you ever communicated with Israelis.

They're incredibly direct. Like, they direct to the point that you think they're rude, but they are not. They're just being direct. It's very interesting because it's like I tell my staff when they talk to, to my coworkers when they talk to our Israeli clients, they're not being rude. They're just being direct. That's what culturally they do. So we really have a choice to frame anything. We can color it any way we want. We can color it as people basically been direct to us, or we can color it as they've been rude. If you color it as they've been direct, suddenly you don't

have a negative reaction to it. If you color it as you frame it, as they've been rude, you start interpreting the mean root and it has negative reaction, and you have a negative reaction. It's a, that's kind of an interesting example. I'm sure the cultural difference is, like a very interesting story. Let me just say. I think it's just a wonderful story. So we have this client, and she's been a client for a long time, and we actually became very good friends. And we managed significant sum of money for the family.

And she sends me this email, and she says, Vitale, which never happens like this. This stock is too expensive. if you need to sell this. This stock, the dividend is too low, we should sell it. This stock dividend is high. We should buy more of it. And this is like, I'm not a broker. I'm a money manager.

So people usually give me money and say, well, people, not usually, always give me money and say, invest it for us. So I never get a treatment like this. And here's what I did. I basically wrote this two line email basically says, they said, listen, I understand this is not your words. This comes from your family. But you have a couple options.

I can do everything you want me to do. why am I charging fees. And also, if you want me to do those things, you probably don't need me, so we can just move on and terminate the relationship. So this was the first line. And then what I did, I took this and put it into chat GPT and said, please make it very nice. And I said, dear Chris, I hope the sun is shining in your part of Israel. It is basically what was two lines, became like half a page.

And I sent her both versions. I said, here's an Israeli version. Rick is the American version, you decide she laughed so hard about this. I love the Israeli version so much more. But again, the point I'm trying to make, you're going to meet people and what you think is rudeness sometimes just, it's a different style of communication. And sometimes people just have a bad day. Like if you assume benevolence, your life is going to be so much easier.

Because you realize we all have a, you may be dealing with a person who just really had something bad happened to them. And they're reacting to you is not really to you. It's really they're reacting to other things happening in their life. But you're taking it personally, what you're doing, you're making your life worse. But you reframing it, what you just did, you remove unnecessary stress out of your life. It's funny because, you know, obviously in investing, the dichotomy of control is so powerful because there's so much stuff that is completely out of our control in the market. Let's double click on this.

Because I think investing in this, that's perfect. If you're an investor, you need to practice the Academy of Control every single day. And that's what you do. Because what's up to me is my process. It's up to me is learning, trying to get better, having it, executing, when you're doing a good research, executing a good process. That's it. After I bought the stock or when I own the stock, what happens to the, you know,

there's so many good things and bad things that can happen. None of those things are up to me. Okay, so now, and also the market will price my stocks. My market, in addition to this, has an opinion that every single stock I own in portfolio, but 5,000 times a day. Again, that opinion is not up to me either. Realizing that what's up to me is also to react, you know, doing research and reacting rationally when, by the way, bad things will happen.

And when bad things happen, me reacting rationally is up to me. So I think the Academy of Control is very, very important and invested. Yeah, so you wrote this really good Victor Frankel quote, which is between stimulus and response, there is a space. And in that space, our power to choose our response. And in our response lies our growth and our freedom, unquote. So this quote is a powerful introduction to the EJR framework, which is kind of along the lines of what you've already discussed, but the EJR framework, in your words,

stands for events, judgment, and reaction. So do you mind just going over this framework in a little more detail and discuss how it's impacted you the most? Yeah, so if you look about Stoic philosophy, it's just really, there's a bunch of mental models that you can use interchangeably with each other. You can sometimes, it's a multiple mental models you can be used at once. Event, judgment, reaction.

So something happens. At this point, you have an opportunity to judge. Like you're driving to work and you have all the red lights. It's the events and you're judging it as just part of life. You kind of accepted it as a part of life. Somebody's rooted at you, you know, root at you.

Now, first of all, you may choose to reframe it. The event, judgment, you can, you know, now you can use a reframing as a framework. You can also, therefore, once you reframe it, your reaction is going to be different. It's a basically, and this is where meditation comes in, that space between the event, judgment, that's where mindfulness comes in and this is when you feel like, okay, this is an opportunity where most likely I'm going to react negatively.

You identify that and then you change something. You can use negative visualization and other concept. I'll give an example. You're driving, your wife calls you up and says, Kyle, I have this incredible turkey and gravy. come home, we're going to have a bottle of wine and Turkey. And you're driving home and you're stuck, there was a car accident and you stuck in two-hour traffic. And now you can frame it as I'm sitting in this metal box, and there's a turkey and gravy waiting for me and wine and how horrible my life is.

Or you can say, I have an opportunity to sit in the car and to listen to wonderful podcasts, my guest Vitaly has. Okay, so you can do that. Or, and this is where negative visualization comes in, you say, how many people, like I could have been driving home from the hospital where the doctor told me I have two weeks to leave. Or I could be living in Ukraine right now,

I've been bombed by Russia or whatever. So negative visualization, often a lot of times what it does create this contrast that makes us appreciate what we have, which we take for granted, because we get used to it. And a lot of times, I tell you, like, we went to Mexico a couple of years ago and we ordered, we were supposed to have this ocean view, you know, a room and we didn't get it.

And I literally was going through this and I was like, telling my wife, you know what, we get to spend vacation in Mexico. Nothing could be that bad. It's not so bad. Like, this negative visualization, what it allows you to do, it's, you start looking at your situation and realize it's not so bad because it could be so much worse. And suddenly, what you just did, if you think about a lot of times what we're trying to do, we're trying to trick ourselves to basically kind of to remove stress out of,

unnecessary stress out of life. And this is what Stoidsen helps you, just gives you all these different tools, frameworks, to remove that unnecessary stress. 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've got long days of daylight, incredible food, floating sun. on the Oslo Fjord, and 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

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with the human operating system, right? Because if we don't use negative visualization, then, you know, these events happen. and we make our judgments, and then we just kind of react, kind of not really with much thought, which usually tend to be we overreact and we react in a negative way. But obviously, if we use negative visualization over a long period of time and become aware of our reactions, it becomes imbued into that operating system and we're able to just do it more naturally.

Is that kind of how you viewed it? Yeah, oh, absolutely. Let me give you a couple examples. Every day, before I write, I get a cup of coffee. But before I get a cup of coffee, I linked push-ups to the cup of coffee. And when I do this push-ups, and I'm not a big fan of working out in general, I'm not a big fan doing push-ups, but I tell myself, I'm so lucky that I can actually do this push-ups. There will be time when I won't be able to.

Just think about it. So now I appreciate that I get to do push-ups. You can use negative visualization this way. We already talked about your kids growing up. If you realize how scarce your time is with your kids, you're going to appreciate that time more. And I used to, this is true story. I used to dread is not the right word, but I used to look at drying my kids to school as a chore. I used to put in the same category as taking out trash.

So it's horrible. But it's like I love taking out trash as much as I loved before I go to work, you know, put into kids in the car and hear the yelling, you know, screaming and drive me school. And then when I realized that my time is so finite, after your kids go to college, you spend probably 90% or 95% of your time is them. And once I realized how finite it is, actually now I volunteer to drive my kids to school. Now I want to drive my kids to school. What the irony of this is the action is the same. I'm driving my kids to school, but I changed, I refrained how I look at it. And see again, it's a thing. reframing and negative visualization together.

Let's look at this more in an investing light. So how would you use negative visualization and your day-to-day investing and how does it help you think better and react more rationally? I think it's a kind of when you look at, when you buy it, before you buy a stock, you kind of visualize it's been down 50% and been fine with that. And I think that's that's easy. Yeah, because it's not, by the way, same thing. you can be your portfolio because at some point it will be. Again, I love this phrase. Do you really

expect to go through life as an investor and not see your portfolio decline by 20, 30, 50%, percent? And if you do, then you should not be in an investor. You should not be investing. You should buy money market funds or bonds or whatever. You should not be in stocks. That kind of phrasing, do you really expect to. And that's, then you, you know, I do it all the time. The last old tool that I want to talk about, which you've already discussed, is reframing. So there's just a couple of cool things I want to add. There was a really good Epicetus quote that you had in your book, which is, quote, it is our attitude towards events, not events themselves, which we can control.

Nothing by its own nature is calamitous, unquote. And then you had this really good example of taking cold showers, which I know you do. And you talked about basically how the cold shower itself is not particularly enjoyable, right? but it's our kind of our fear of how we're going to react and feel towards that cold shower and you've kind of reframed that into a different way of looking at it. So can you talk to the lia a little bit about that? I think when we call stoic philosophy philosophy, I think we're doing a little bit of disservice to it. It's called stoic practice. And the reason is practice because it's a muscle you need to train. Okay, just like you need to train yourself to meditate

and by doing this, you're going to start observing your own thoughts. Same way, the more you use these tools, the better you're going to become is these tools. Okay, so it's a constant never-ending practice. And cold shower is the kind of, it's basically, if, so like when you go to the store and the cleric is not root to you, you don't get to practice stoicism, unfortunately. However, you can create this kind of practice every day of soil. it says when you do cold shower because basically, like there's a lot of studies that tell you that taking cold shower is good for you, but that's not what I'm talking about.

I'm talking about turning on cold shower and actually, it's almost like you break it up into two parts. You look at the shower, I mean, actually three parts, before you get into shower, during the shower and after the shower, after the cold shower. So it's the part I'm talking about is you're standing in right before the cold shower and you're getting in and you really don't want to. And then you start asking yourself, so what's the worst thing that's going to happen to me? And you start, you start preparing, you start thinking about this, like you start preparing

yourself that you have, if you think about life, a lot of things that we have to do in life, you don't want to do them. But a lot of times you over-dramatize them in our heads, how horrible they are. And once we go through that, it's not such a big deal. By the way, that relates to stock market all the time. The stock market hates its uncertainty, and a lot of time you can take advantage of that because they are afraid what's going to happen in the next six months. Well, you know what happens in the next six months?

There is another forever. So if you can live through the next six months and the company doesn't die, you may have an opportunity. This cold shower is basically, I look at it as an exercise of basically kind of practicing, like identifying my thoughts, like my fear and conquering it. every single day. And I'm sure there are a whole bunch of other health benefits, but that's unrelated to Stoids. It's so I know that you're in Colorado, which definitely isn't a hotbed of investing like other states such as New York. So I'm interested in learning more about

some of the hidden advantages that you've noticed from living in Colorado compared to a very noisy city such as New York. You know what's interesting? I ended up in Colorado not because I wanted to be like Warren Buffett. I was just, it was a lack of a draw. I, when we came from, when my aunt left Moscow in 1979 and moved to Brooklyn, she married the rabbi and they moved to Cheyenne-Mayomoumian. So when she invited us to come over to United States, luckily she invited us to Denver. It's 100 miles away. So that's how I ended up in Denver.

And so initially, anything, you know, living in Denver was not a choice. I didn't make the choice. My aunt made it for us. But then later in life, I actually made, deliberately made their choice. I would go to New York and I love, by the way, I love going to New York, I love going to Manhattan, I love the energy, I love the culture, I love going to restaurants, I love going to theaters, museums, Central Park, walk in the streets, I love it. The only problem is I also love coming back. Three days is

plenty for me. I come back, I'm completely drained and exhausted. Now, but there is something else there too. If you are in the finance industry and you live in New York, you are are basically you get plugged in to this rat race. Everybody compares, like there is this peck and order comparison all the time. How far do you live on the east side of the park, central park or west side? Does your apartment have a balcony? How far is it, you know, what floor? Does it have a doormand?

So it's a, oh, and by the way, do your kids go to private school, which private school? So it's always what happens. Again, again, I'm generalizing. But if you're not careful that red trace, that environment is so toxic, that suddenly you start living by somebody else's values, which I would argue is not a good way to have a lot. At least I'm speaking for myself. That's not a life I want to have. I mean, again, there's a lot of it. It's possible to live in New York and not experience that.

But I think it's the uphill bottle. Living in Denver, I don't experience that. I live in this little micro bubble where I go to the park, I drive my kids to school. I don't experience the social pressure. And I love that. And I think it allows me to have a longer time horizon. And I think it allows me also not be as focused on material things. Again, I know it's like an investment guy writing a book about stoicism and life and then telling

you how important material things are. You know, I'm not living on the street and eating banana. You know, that's not the point. But my point is, it's not the material things do not dominate my life. I mean, they're still important, but don't get more than, but they don't dominate my life. And so I think that that's a huge advantage of living in Denver. So I still have a lot of friends, investment friends who might talk to all the time, so we share a stock ideas, et cetera, and it could be New York and London or Zurich, for that matter.

But I feel like today you don't have to live in New York anymore. And I think that's the kind of Buffett, I think at some point identified him living in Omaha, been far away from everybody else, allowed him to, it's almost like you have your own internal clock and your clock is not set by the environment. And I think when in New York, if you're not careful, that's what happens to you. So you wrote, quote, by making small but conscious decisions about the environment around us, we can influence our creative output and our ability to make good decisions. We have to be extraordinarily careful to choose the right environment to work with and even socialize with the right people, unquote. So you had a wonderful example of how you use this

to stay healthier by not eating desserts when you're in the state of Denver. But I'm interested in understanding more about how you've crafted your work environment to optimize your investing. Okay, I'll give a couple examples. Number one, I find that my most productive time is before 2 p.m. So I rarely, if ever, have any appointments before 1 o'clock. The from 5 to 7 roughly I right, that's my writing time. And from eight to one or two, this is the time I focus on investing. Every day, I go for a walk in the park. And I would argue, and to me, it's almost like a religious experience, because I find it incredibly important for creativity. Because if you look around you today, every single object around you has a symmetrical form. Everything, from this phone

to the screen to everything is symmetrical. And therefore, it's almost like the electrons in your brain kind of move in a symmetrical form, in the parallel form. When you go outside and you are around trees, there's nothing symmetrical about trees. And so suddenly your thoughts start to interact with each other slightly differently. I find going outside is very important for my creativity. And by the way, I would argue investing is a creative endeavor. So I usually have phone calls after 2 o'clock.

Any tasks that are not creative, I usually push it after 1 at 2 o'clock. In addition to this, right now we're sitting in my office where there's two big monitors. I have another office next door, which basically has an armchair, a giant iPad, headphones, a nice blanket, and my father's art around me. And this is where I go and I read. That iPad basically is connected to Internet, but it doesn't have any communication software on it. So I just download 10Ks, transcripts, whatever magazines I want to read, and that's where, no, that's where I read.

So that is because I find that what you want to do, you don't want to fight your environment. You want to be environment to be your friend. So you use as little willpower as possible. So if I'm sitting, imagine this. Let's say you don't look like you need to lose weight, but let's say you decided you want to quit sugar. And then what you did, you put apple pie, donuts. Mars candy right next to you and said, yeah, I'm trying, yeah, I'm trying not to eat sugar.

That's going to be like you're basically, it's very exhausting because how much energy is going to consume you, willpower are going to consume you, not to reach for the donut or for the Mars bar, whatever, right? So you want the environment to be your friend, not your enemy. Let me give you another example. I change my diet. This actually now my lifestyle where I basically eat meat and vegetables. So, I'm a benevolent dictator at my global headquarters.

The company actually, we are not Google, but the company basically buys groceries for the office. But there's a condition. We can buy high quality protein, high quality vegetables and fruits. No process food is allowed in the office. Okay, because again, I want the environment to be my friend. And therefore, I've been eating very healthy for the last six months, like, you know, once we instituted that. I try to kind of mold the environment to be my friend, knowing my weaknesses.

The next thing I wanted to go over was your formula for happiness that you actually talked about in your book, which was basically to take things that you enjoy the most and divide them by the things that you don't enjoy. And then the goal is to make that number higher by hopefully maximizing the numerator and minimizing the denominator. I'm interested in knowing the best strategies that you've come across to minimize a denominator, both in life and also. from an investing lens. We went through prioritization of my life, right? I should be spending most of my time at work, basically, on investing.

But other things come in. Like, I write articles. And then what we do, we have a podcast where basically that article is turned into kind of an auto form, like an auto book. If you don't have time to read my articles, you can listen to them. At some point in time, we had to make a choice who is going to read those articles. I realized that I enjoy, first of all, I enjoy writing those articles. I don't enjoy reading them.

Also, reading them would consume another 30 to 50 minutes per article. So what we decided to do, we just hired somebody who would read those articles out loud to my listeners. So what I did, I basically realized, okay, number one, I love writing and I can at this way at value. Somebody else, somebody else can do probably much better job reading than I can. and if I take this 15 minutes and if I do this, it means I'll have less time doing something else. The spending time with my friends, doing research, whatever.

I started to delegate things a lot more. So if I don't, you know, if it's basically two categories, I add a lot of value, I enjoy it. I'll give you a couple more examples. When it comes like in the past, I remember 10 years ago, 10, 15 years ago, when I would try to have an appointment, to schedule a call or an appointment or dinner with my friends, some of them would have their secretary, their assistant would schedule those appointments. And I felt like my friends were trying just to show how successful they are. And by doing this, and now I realize I was completely wrong.

They basically realized that the time they spent on scheduling, when, you know, the appointments, et cetera, they add very little value. And over time, the time adds up. So by delegating this tax to somebody else, they will actually, it's actually like buying time, basically. There is another kind of an interesting dilemma here because you almost, I used to have this feeling like, I don't like feeling like I'm superior to somebody else. When I ask my assistant to do something, I don't like the kind of the feeling I,

I used to not like the feeling I get that I'm asking to do things for me. But then I read this book. There's this wonderful book, completely unrelated to investing, called Shantaram. And it's incredible. By the way, I highly suggest the book. It's about India. And it's about this Australian going to India in 1980s. And he tells this wonderful story.

He lived in Mumbai. And he lived on the third of fourth floor. And it was very, very hot and muggy. So he would take a shower three times a day. And one day, he's walking down and see a guy carrying buckets of water. He's like, why are you carrying buckets of water? He's like, well, sir, you're taking a shower? That's, you know, there's no pump.

So that's the water we used for you to take a shower. And the guy says, oh, my God, I'm taking three showers a day and you have to do this. I feel so horrible. Like, I'm going to start taking one shower a day. And the guy says, no, no, sir, please take five showers a day. because if you're taking showers, I have the job. Okay, my point is this. You have, like, you have, like, by me having a need to have somebody schedule appointments,

I created the job. By me, not doing recording podcasts myself, I created the job. So once you start looking this way, you realize you're actually doing a good thing. Like, I'm creating, I'm spending more time doing things where I have the most value. and I'm creating jobs for people that wouldn't have jobs otherwise. So anyway, so this is, I thought that's reframing. It's kind of very liberating.

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communication that you discussed in your book, which was preacher, prosecutor, politician, and scientist. So can you briefly discuss each of these modes and go into detail about scientist's mode and why it's so important to spend time in that mode to foster the learning process? I think so I got to give a credit for this to Adam Grant, who borrowed it from another of his, I forget the guy's name, from another colleague of his. So you have this, the preacher mode. So basically, we all at different times use this mode. When a preacher, imagine somebody like a preacher, you know, in the church, right?

He has his idea and he basically wants to communicate this and he wants everybody to kind of do buy into whatever he's selling, like his ideas, right? It's a one way of communication. It's going out. Communication going out. Then you have a prosecutor. And prosecutor is basically a person who is trying to change your mind. Doesn't really care about the truth. The whole point is there is just to change somebody's mind. Then you have a politician mode. And I argue that politician mode is where we spend a lot more time than we realize. When you go on a date, you're on a politician mode. Because what you're trying to do, you're trying to get somebody to like you.

So when the person says something, you don't fully agree with, you kind of miss, you know, you kind of brush the side, don't focus on this. You try to admit the negatives because you're trying to get somebody to like you. A politician tries to get other people to like me, to get reluctant. We do this when we look for jobs, when we go on dates. So we spend a lot of times in those moments. And they're important. However, if you spend a lot of time, like most of your life in these modes,

you are not going to progress as a human being. You will not learn much because none of these modes are, you're not learning in those modes. For the most part, you just, you are, it's the outward communication modes. Now, the scientist mode is the mode where investors especially should spend most of the time. Seneca has this wonderful quote that I need to frame, time discovers truth. And if you think about it, again, time discovers truth. If you think about investing, that's what investing is. Like when I make an investment decision, I'm trying to discover truth before time does.

When I discuss ideas with other investors, I want to be in a scientist's mode. What it means is that anything we discuss is a theory. And if it's a theory, it's moldable. If it's a theory, then you also, again, if you're trying to discover truth, you basically want to say, here are the assumptions I'm making. I'm assuming this, this, this, and this. And when you debate to invest stocks with my friends all the time, they say, well, let's debate this assumption.

Let's figure out this assumption. And suddenly, it changes the way you look at it because you start looking for the truth. And as an investor, you want to spend a lot more time in that mode. Also, there is another very, very important thought here is that a lot of times our beliefs are formed completely randomly. There is this Hebrew word abracadabra. And that word means, I create as I speak. So as you start saying things, you start believing them. If I ask you something and there's something like something you haven't thought about before,

And the first thing that comes to mind, if I start, you know, you say, this is what I think, in what I believe, and I start debating you, even though you haven't had a chance to think through yet, because you and I started debating it, if you are not in a scientist mode, if you are not one of those three other modes, then especially in prosecutor mode, then that idea gets calcified and becomes part of your identity. So you should be very careful. You should, a lot of ideas in your head should really be theories. And you should be very, very careful what becomes your identity. Like for me, part of my identity is being kind.

When it comes to politics and many other things, whatever, there's not part of my identity because I'm willing to change my mind. I'm willing to change my mind. So it's very important to examine how your beliefs are formed to reexamine your beliefs. So I really like that part there about you talking about how beliefs are formed. And I agree, most people probably don't spend nearly enough time in science mode. So my question is, how can we, I mean, I guess this kind of probably builds in with your thing on your emphasis on meditation and, you know, kind of knowing yourself and having that

self-awareness. But how can we kind of know when we should be in scientist mode, but we're not? Or, you know, how can we make ourselves as self-aware as possible for to know which mode we're in so that we can hopefully try to allocate more time to growth and thinking and being in scientist mode. Well, okay, let's go through some examples. You get pulled over by a policeman. Probably don't want me in a scientist mode.

There is a time for every mode. But I think, I see, if you are trying to get your employees route up to achieve something, again, scientist's mode is probably not the right mode. In fact, Steve Jobs was famous for his, I would be preacher mode, right? Like his distortion reality field, right? That was not a scientist mode. However, at the same time when Steve Jobs really wanted to make an iPad originally. And when they created the first iPad for him, he looked at it and said, perfect, let's go make an iPhone.

And because he realized it's a much bigger product than iPad. And he could see what iPhone is going to look like. I think as an investor, when you do in research, that is a scientist mode behavior. When you're learning something new, like when you're learning something and you should spend a lot of time as a human being learning a lot, then you should be in a scientist mode. If you're trying to get a girl to like you, politician mode here is more appropriate. But I think whenever it comes to learning, whenever you have debates, and especially, like, if, okay, this is very important.

I would argue you want to spend as little time as possible in the prosecutorial debates. If at the end of debate, nobody, there's zero possibility that any party is going to change their mind, probably should not have that conversation because it's a waste of time. So this is why I avoid talking politics because people thought it's already get calcified and they won't change the mind. So there is no, what's the point of having this debate if you're not going to learn anything, they're not going to learn anything. So there's no point on this.

But I think if you look at your life and just ask yourself how much time I spend in in mode of communication, if you spend a lot of time on the 3P modes, unless you are a lawyer. If you're a lawyer and you're a quarterly time, you probably should be spending more time with a prosecutor mode. But if you're doing research, you should be spending most of your time in a not a prosecutor mode, but in a scientist mode. Let me give you one more example.

Have a friend who is a very, very famous short seller, Jim Chanos. And what's fascinating about Jim Chanos is that this is a person who seeks out the other, he wants to understand the other side. Because as a short seller, you are in minority, almost been a definition. He always wants to understand what the other side argument is. And he usually can state the other side argument better than the other side. And I found on a different, it was several times where we were on opposite sides of a stock. He was short that was loaned.

And I found it to be fascinating because how unemotional, faggot-based our discussion was. And I also know other short sellers who look at anybody who loans the stock as a moral enemy, not Jim Cheney. And I think I respect him a lot for that because he's in a scientist mode, because he's just trying to make money for his clients. It's not it. He just wants to be right. He wants to discover truth before time does. That's it. I really enjoyed how you broke down your writing process, especially as it pertains to metaphors to help you better communicate with your readers.

So I'm interested in knowing how you utilize your extensive background and writing to help you create narratives for your investments that you're obviously researching. If I think about my writing, what I try to do is storytelling. If you think about storytelling is probably the least efficient way to communicate. And what I mean by this, if KPI for efficiency number of words you use, because you can probably say everything I say in that paragraph, what takes me a page to say, a page at two to tell through a story. You can sum it up in a sentence. But the thing is, we as human beings need stories.

This is how basically we go through life, this is how we experience life through stories. The finance could be very dry and boring and get people to, like, so let me give an example, three or four times a year, write letters to my clients. A lot of my clients are just very smart, professional people who have. not investors. So I need to communicate to them why, like how I look, how I analyze the company, you know, how I look construct portfolio. And I need to do it in a way that doesn't put him to sleep. Because I write, like I literally write 30 page letters and I want them to read that. So therefore, I know that it may take him more than a day to read it and maybe maybe take a few

bottles of wine, which is fine. But I want them to finish it. So therefore, I need to tell them through stories, and so they can, something that's complex, it's going to be easier for them to relate to. So I think storytelling are very powerful. Also, I think the Charlie Munger was very big in mental models. And mental models, to some degree, kind of a form of storytelling in a sense that you can port one framework, like the beat of mental models, you can port one framework from one discipline to another. So I think the historian mental models, combining mental models as storytelling, is a very important technique because I just, I guess, I actually, it's such a great

question because I didn't even realize until now. I guess I was telling stories because I just wanted people to read my boring content, and it didn't want it to be boring. I guess that's how it became a storyteller. I didn't even realize it until now. But yes, but I think it's an incredibly important tool. And a lot of times I know what I want to say when I sit down to write, but I don't know, but I spend most of my time discovering how to say it, what analogy to use, metaphor,

whatever. And I think this is where I spent probably the most of my time. But also a lot of times, and if you talk to almost anybody who writes, what they sit down to write and what they end up finishing writing looks very different. Because a lot of times you start writing, you start discovering new things as you're writing and new concepts. And this part of the reason why I love writing, because again, it's a focused thinking. It's a I think as I write. I'm sure there's a very cute word in a remake or something like abracadabra like board. But I think is a right.

So writing is probably one of the most important things that has happened to me as an adult. Because think about it, I write two hours a day, almost every single day. And that's like 700 hours a year. That's a 700 hours of focused thinking. That is a significant competitive advantage. When people ask me, what advice would you give to a young person? I would say, number one, write. Just write every single day.

And again, we can go through the same kind of exercise if we want to meditation. Find the time that works for you. I'm a morning person. I write in the morning. And if you are Walter Isaacson, you know, writes at night. So he's a night person. Great.

Just link it to something you do every day and write every day. It doesn't matter how much you write. Just start writing. And then over time, this is what writing is so powerful because what happens, if you write long enough, you develop what I call writer's brain. And writer's brain has a kind of mind of its own. I like this mix of all this different analogies. But basically what happens, when you start writing all this,

time, with the writer's brain, you start constantly looking for stories, for ideas. You're going to look at life differently than other people because you're constantly looking out for those things. Something that goes unnoticed by others, I notice because, again, I'm looking for ideas. In front of them I ask me, how can I write so much? Because I write probably maybe 40 articles a year. And I say on January 1st, I don't have 40 articles. I don't have 40 essays.

But as life happens, I get ideas because I constantly look for them. I get ideas. And I ended up writing 40. Like when I started writing, I was so concerned I was going to run out of ideas. I was paranoid about this. So it's a, this writer's brain is extremely powerful because it's basically, so I think the writer, the writer's brain, the more you write, the more writer's brain you develop. and then I think it just changes how the way you look at life, period.

So last question I wanted to discuss was a little bit about your other book, which I read and I really enjoy, but we didn't get to talk about, which was the little book of Sideways Markets. So it was published back in 2011, and obviously a lot has happened since then. I'm interested in knowing how you've viewed the markets since the book was published. I think in the book I discussed a framework, and I was very direct about this, that the one thing, the framework was based, the framework is very simple. Whenever the markets have become very, very expensive, they usually, the markets that follow

are not kind of bare markets, kind of the markets that decline for a long period of time, but are kind of a sideways markets where basically you have a lot of volatility in the markets, but the slope of them is flat. And so during that flatness, what's happening is just price earnings is declining, why earnings are growing. So if price earnings was 25, earnings as earnings have increased and prices haven't changed, the price earnings goes down to eight or nine times earnings. Everybody who love to own stocks, they were 25 times earnings.

And now that's nine, they say we'll never own stocks over again. And that's how next bull market starts. That's it. I just described the whole book at 30 seconds. However, what's interesting about this, After I wrote the book, I never expected the interest rates declined to zero and in some countries to negative levels. And that changed the dynamics because price electronics declined and then they just went up. Because interest rates were so low, the stocks became a lot more attractive than zero

almost negative interest rates. And I think we are at the point today when probably my book is a better, it's more appropriate than even when I wrote it because the market is expensive. And there is an interesting if here. Since I wrote the book, the corporate profit margins have increased tremendously. We are the highest level today in the corporate history. And therefore, profit margins historically would mean revergent. So they were high, they declined.

Now, in the past, you had a couple of things going for corporations that benefited profit margins. Number one, we had very low interest rates. And number two, outsourcing. We basically shifted a lot of our industrial capacity out to the United States to other countries. Now, as we bring this industry, you know, the world is a lot less friendly place than it was three, five, ten years ago. And therefore, we'll be bringing a lot more industrial capacity to United States or to our friends. and therefore I would argue most likely we benefited from outsourcing, now we're going to be insourcing,

and that's going to put pressure on corporate margins. I'd argue this book is actually more relevant today than it was in 2011. Vitale, I want to thank you so much for coming on to the show. Where can the audience learn more about you, your fund, and your books? I'll give you one link, and there you can read my articles, listen to my podcast, and it's very simple. investor.fm. Like FM Radio, investor that FM. You can read my articles, sign up for my newsletters, which are absolutely free.

And you get to learn about classical music, art, different things. And you can listen to my podcast, which is going to be read to you, not by me. Okay, folks, that's it for today's episode. I hope you enjoyed the show, and I'll see you back here very soon. Thank you for listening to TIP. Make sure to follow We Study Billionet. on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com.

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