We Study Billionaires - The Investor’s Podcast Network - TIP817: Simple Investing Beats Complexity

Episode Date: May 24, 2026

In this episode, Stig Brodersen speaks with David Fagan about why simplicity often beats complexity in investing and life. They discuss why many investors overcomplicate wealth creation, how simple systems can lead to better long-term outcomes, and why clarity, focus, and consistency are often underrated advantages. IN THIS EPISODE YOU’LL LEARN: 00:00:00 - Intro00:02:13 - Why you should choose simplicity over complexity in investing and life00:14:13 - Why complexity is hardwired into us00:18:26 - The simple truth about becoming financially independent00:34:17 - Why simplicity gives clarity and peace of mind00:35:45 - How we’re all driven by incentives, whether they are financial or not00:39:04 - Why everything in financial planning starts with savings00:42:33 - Why you should not have a budget but a personal spending plan00:37:15 - Why you should know about irreducibility and Occam’s Razor Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Mastermind Community⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Track ⁠⁠⁠⁠The Intrinsic Value Portfolio⁠⁠⁠⁠. Check out Stig and David’s new free educational resource, Compounding Simplicity. Watch David Fagan’s videos about Compounding Simplicity. Listen to our interview with David Fagan about Simple Investing. Listen to our interview with David Fagan about investing like a business owner. Listen to our interview with David Fagan about Buffett’s favorite business book.  Stig’s ⁠blog post⁠ on his portfolio and track record since 2014. Related ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠books⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ mentioned in the podcast. Ad-free episodes on our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. NEW TO THE SHOW? Get smarter about valuing businesses through ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Check out ⁠⁠⁠⁠⁠⁠⁠⁠The Investor’s Podcast Starter Packs⁠⁠⁠⁠⁠⁠⁠⁠. Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠X⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Try our tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TIP Finance⁠⁠⁠⁠⁠⁠. Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. SPONSORS Support our free podcast by supporting our ⁠sponsors⁠: ⁠HardBlock⁠ ⁠Human Rights Foundation⁠ ⁠Plus500⁠ ⁠Netsuite⁠ ⁠Shopify⁠ ⁠Vanta⁠ References to any third-party products, services, or advertisers do not constitute endorsements, and The Investor’s Podcast Network is not responsible for any claims made by them. 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. In today's episode, I joined by my close friend, David Fagan. David is the managing partner at MBF Charter Professional Accountants in Nova Scotia, Canada, and for decades he has advised countless business owners on investing, financial planning, and long-term wealth creation. We discuss why so many investors feel drawn towards sophisticated strategies, complicated portfolios, and endless optimization, even when the simple approach is often the better one.

A personal highlight from this episode is when David shares a story about a portfolio manager of one of the large banks in Canada, who admitted he couldn't manage a multi-million dollar portfolio using just a few ETFs because, in his words, it would look too simple. And with that, we open a much deeper conversation about incentives, status, human behavior, and why complexity often disguise itself as sophistication. If you sometimes feel that the financial markets and life are becoming increasingly complex, This is an episode you don't want to miss out on. Since 2014, with more than 200 million downloads,

we have interviewed the world's best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you. This show is not investment advice. It's intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments

in the securities discussed. Now for your host, Stig Broderson. Welcome to the Ammasters Podcast. I'm your host, Dick Broterson, and today I'm here with David Fagan again. David, how are you? I'm doing lovely. Just finished an intense tax season and ready to go. That's amazing.

Now, David, today's topic is simplicity beats complex. and I think I'll just throw it right over to you here at the very top of the show. So please take it away. Lovely. Let's jump right in. Let's do a little bit of a different type of deep dive today, Stig. Not on an individual stock, but on one facet of life that can affect the businesses we run, the investments we choose, and even some of the personal decisions that we make. When I think of simplicity in one's life, we don't wake up planning to overcomplicate it. It just sort of happens one decision at a time. And I've found that if you're not intentional about solving complexity, it can actually take over sometimes.

Choosing simplicity when making decision is not something that I arrived at right away. I mean, I would think it would be hard for any of us in our 20s to believe that the best answers are sometimes the easiest ones. But with age, and I'm not sure what comes first, a bit of wisdom or a few setbacks in life, you start to see things differently. You only have to get knocked down a few times before you start thinking there's probably another way to do this. And Stig, life is full of paradoxes, as we know. We have catch-22s that catch us, right? I mean, we read books, we learn, we grow, and we're constantly telling ourselves to push

and set figure goals. But at the same time, we're told to live in a way where we don't take everything too seriously and don't let our drive steal our passion. And I've found that if you only push, you have a higher chance of burning out. But if you're only light and casual, you might drift and not realize your potential. And I've seen this same paradox show up with simplicity. Sometimes people assume that what looks like the easier pass must be unintelligent or worse, lazy. Think about running a business or starting to manage real wealth.

I suspect that if we fully understood how hard entrepreneurship would be, and I know you and I've talked about this before, I'm not sure some people would sign up for what's going to happen. I mean, the sleepless nights, wondering if your heirs are going to be too large to overcome or carrying the weight of other people's families on your shoulders. I mean, you don't see that part on social media post it anywhere. This is tough, right? Take investing, for example, we've got asset allocation, diversification, risk tolerance,

but no one prepares you for the emotional side. the second guessing and then the temptation to act when you should actually sit still, you think it's all about strategy and then you realize so much of investing is really about temperament, right? And when I reflect on my life, I can say that I've been on the more practical end of learning. I've learned so much by trying and failing and adjusting. And I feel like I've learned a lot from other people's mistakes as well. That's really been the pattern in my business, investing in life. And yeah, it really hurts sometimes, but if you can reflect and learn on those mistakes, something starts to shift over time. I believe that you stop chasing complexity and you

start to look for better solutions, you know, simpler habits, just clear and honest feedback and conversations with people. And two of my favorites, consistency and discipline. You know, simplicity, it didn't come first in my life. It kind of came. from learning what not to do, which is a bit of a work backwards mentality. And when I flip to my business lens of the world, I watched something happen slowly over time. And honestly, at first, I didn't even notice it. It only became clear as I got a little older. Early in my career, I was watching another firm grow in our marketplace at the same time we were growing ours. And we weren't really competitors. I mean, there was more than enough work to go around. Both

Both firms had similar access to the opportunities, but they started their firm with the motto, there isn't anything we can't do. And they chased that belief with enthusiasm. If a client mentioned a new need, they added it. And they kept saying yes to whatever was right in front of them. And each of those yeses, they were starting to add building blocks and layers on this firm that they were building. And over time, I began to see what was slowly starting to happen within their firm. I mean, those building blocks, they weren't being stacked, maybe with a super solid foundation, and the layers, they started to not fit well together. Everything depended on working harder just to keep the whole thing from tipping over. They started to chase complexity

because they believed it signaled strength. But what started to happen was actually it produced a little bit of disorganization. And with hindsight, I would say that's when entropy really started to show up within their firm. And if you're in professional services in the professional service world, this may sound familiar to you because the symptoms, they show up rather quickly. It's rushed work, constant stress, burnout and staff turnover. That's a big one. Unhappy clients and a culture built on effort rather than clarity. And that is what I saw happen. They went from a firm that said there wasn't anything they couldn't do to a firm that was starting in the not get stuff done. It was quite an eye-opener. And, you know, every business has its flaws.

And of course, we have more than enough to go around when we're always working on them. I mean, you always want to keep that flywheel going. One of the things that I'm confident that we've got right over the past two decades in our accounting firm is the term that we called one-hour flights. And it's our shorthand for how much time we should be spending at the manager level to complete a file before sitting down with a client. If we've trained, our staff well and we've set clear expectations with our clients. They don't want to pay us for excessive senior management time just to get the compliance work finished. That's not where the value is. Clients want us to lead them on their path to prosperity. They want coaching, guidance,

clear thinking and not complexity just for the sake of it. And, you know, this discipline of one-hour flights, it focus us to ask simple questions. Are we adding value to the engagement? And, you know, I'd like to say that it was an original idea for us, but nothing that we do is ever an original idea. That idea came from South West Airlines and how they operated. South West, for the listeners that aren't familiar with them, they became famous and for almost obsessive focus on short haul flights, little short point-to-point flights with fast turnaround times. And their goal wasn't elegance or luxury. It was efficiency. And for years, their planes were turned around and roughly 25 minutes in airports compared to the industry average that was often around 60 minutes.

You know, if they couldn't operate in an airport efficiently within that system, they simply didn't fly there. You know, they were very intentional about not being all things to all people. No assigned seating, no first class, just a single aircraft with limited routes. And by narrowing their service offerings, they were able to say no to hundreds of decisions that create complexity inside most airlines. I mean, take the example of having this single aircraft. I mean, their mechanics would get really good at fixing this single type of aircraft time and time again and not having a fleet of six or seven different ones.

You know, at first glance, that kind of simplicity, it can look unsophisticated until all of a sudden it doesn't. And for Southwest, I mean, the results were hard to ignore. For decades, they posted one of the longest profitable. streaks in the airline industry, remaining profitable for, I think it was like 40 years until the pandemic. It was quite a run. And I would say that the performance wasn't accidental. It was a byproduct of their focus. And their focus created win-win outcomes. Passengers benefit it from low fares and reliable services. Employees worked within a system that was predictable. And

owners were rewarded with returns, right? And so, you know, can simplicity beat complexity every time? That might be an argument for a different day. I'm not sure any of us can know the answer to that, but what I do know is this. If you can't comfortably say no to professional opportunities or really any opportunities at all, the structure you're trying to build will eventually start to falter under scale. I remember a long time ago at a professional development conference for CPAs. I was at one of these sessions and I had the really engaging conversation with the gentleman who was probably twice my age at the time. And like most of these conferences, it feels a little bit like speed dating when you explain

to everyone what you do in the industry and you're talking to different people at these conferences. When I told him that we ran a niche accounting firm in the Annapolis Valley, his interest really sparked. And he leaned in and said, what do you mean by that? Because he didn't hear many firms describe themselves that way in the late 2000s. And for me, this is someone who ran a very successful practice, working with companies, preparing them for sale. And he would go in and help the ownership groups clean up and clean up their processes and improve their profitability before the sale.

And so early in my career, it felt validating to hear someone with that level of experience and the respect I had for this gentleman, just emphasize how important it was to focus in professional services. And that conversation always stayed with me. And over time, we leaned further into working with just owner-managed clients instead of trying to be everything to everyone. And we were more focused, and the more focus we became, the more valuable I feel our work became for the people that we were serving.

And, you know, what I certainly didn't appreciate at the time was that focus is really a form of subtraction. You're choosing what not to do. And this is the important part so that you can focus on the important things and make those better. And I've come to see that that focus can actually compound. I mean, each year you stay in your lane and you understand your clients a little bit better. You see patterns earlier and you make fewer mistakes, right? And investing works the same way. The people who do the best over time usually aren't the ones that are chasing everything.

They're the ones that have decided what they don't need to own or don't need to do. And they focused. And I feel like that focus is critically important. If we can remove the noise and clutter and complication, there's a good chance that clarity and even opportunity begins to appear. And I mean, we see what matters and we see what lasts. And I've come to believe that doing simple things isn't the absence of effort. It's aligning effort with what actually works. And over time, it becomes kind of an operating system that quietly guides your organization. And, you know, you can extend that to guiding your life and your

investment style and all kinds of stuff like that. Right. And so when you learn to specialize while running a business, you start to build on a much stronger foundation. And to me, that's the quiet power of focus. It's not dramatic in the moment, but incredibly powerful over decades. And, you know, Stig, you've spent years now, studying markets and human behavior. I'm curious, when you look at investing through your own lens, where have you seen simplicity create an edge or maybe take the inverse of that? maybe where do people overcomplicate things to their detriment?

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Plus, Shopify is packed with AI tools that write your product descriptions, create page headlines, and even enhance your product photos. It's like having a full team without the full-team price tag. See fewer carts go abandoned and more sales go. with Shopify and their shop pay button, then sign up for your $1 per month trial today at Shopify.com slash TIP. That's Shopify.com slash TIP. All right, back to the show. I mean, I see that everywhere. It's one of those things that whenever you see it, you cannot unsee it. But you know, I think if you allow me to take a step back, David, I would say that I found that we as

people, we have just certain traits that are part of everyone's DNA. For example, everyone cares about what other people think of them. And it's hardwired into us because in ancient times, we all need to be a part of a tribe to survive. And so I think a lot of it comes from this survival gene because it's so strong in all of us. And if you even imagine that some people wouldn't have that survival gene, wouldn't think about what other people thought of them, well, evolution made it so that those people just didn't survive in procreate. So it's sort of like a self-selection process. And so I don't necessarily think that it's as strong enough to choose complexity or simplicity,

but I still think it's hardwired to some extent to all of us. And I think it basically comes back to complexity comes with status. And no matter what you want to achieve in life, status is just beneficial. And you can really just, you know, think about it for a moment. Whatever you want to achieve your life, you want to be a Buddhist monk, if you want to spend more time with your kids. It's actually quite beneficial to have status. You can always speak about direct and indirect derivatives of that. And let's just talk about the investing world.

Last time we talked about why the vast majority should index and not pick individual stocks. So why do so many people then pick into your stocks and add complexity into their lives? Well, one of them is that complexity makes us feel special. If we think about this from an asset manager's perspective, you can't really run an investment fund and then tell people you just bought the SCP 500. Now, if you're charging expensive fees, you have to make it complex, basically to tell your clients that you can do something they cannot. And of course, Banlads, that is true in most professions.

There's a good reason why we have trained surgeons and why we don't try and operate on ourselves. But the investment space is perhaps a little bit different. Perhaps that is something you can do for yourself. And of course, I'm not saying that an active fund manager, you know, whenever they tell you a story about, you know, all the detailed adjustments that they've been made while reading financial statements and how they conducted, you know, thorough scoutbought research and how they travel around the globe to look management in the eye.

And in the world of investing in so many other walks of life, of course, the best story wins. But many people also have a vested interest in keeping things unnecessarily complex. You know, one of the most complex things that exist, you're thinking about the healthcare billing system, you know, how simple would it be if every service had a transparent, standardized pricing, and patients could easily understand? And of course, there are reasons why it's not that simple. You know, you have insurance structures, negotiated rates, regulations, but most people would probably agree that the current system is just far too complicated. Then, of course, you also have

a small group of people that benefit for them, your benefit outright, I would say, from that complexity, whether that's consultants, billing specialists, intermediaries, whose livelihood depend on navigating and managing that maze. And of course, it's not easy to convince someone to believe that life is simple whenever their livelihood depends on being complex. You know, it's that simple if you allow me to say so. So, you know, I also want to say, for the record, I don't think some people are just keeping things complex, you know, for malicious reasons,

because they're evil. That's not what I'm saying at all. I think, you know, I know a lot of active fight managers, and I don't think any of them don't think they can beat the market. I think all of them wake up in the morning, I think they're better than the average. But, you know, the same way, I don't think anyone gets married and thinks,

hey, I'm going to be one of those 45% of people who are getting a divorce. Like, that's usually not the mindset you have whenever you're getting married. And so if I look at myself and think, okay, when did I start to take my financial future serious? Yeah, I'd probably say I was doing that my mid-20s and thereabout. And I wanted to become financial independent as quickly as possible. And I know this is probably going to sound a bit vain, but the simplicity of becoming financial independent was just so basic.

that it was basically shocked to realize it. You have this simple concept of paying yourself first. It's such so powerful, so straightforward. So if you make $100,000, you pay yourself first, for example, $10,000, and then you invest in a low-cost index fund before you pay all the bills and start to consume. And then if you got a $20,000 raise, you would not increase your consumption, but just tug away that additional $20,000. So you would have $30,000 that you could then invest.

And of course, you might be saying, hey, dude, if it's that simple, why don't most people just do it? And of course, we are both finding the need to show how smart we are with complexity, but also a human instinct not to delay gratification. And, you know, that's tricky. And I know you, David, the way I know you is that you are a natural saver and having a long-term horizon. But that is not how a lot of people think. You know, for most people, money is just burning a hole in their pocket and keeping up with the Joneses. And I guess the idea of not spending excess cash, just buying a low-cost index fund such as the SP-500 and then continue to dollar-cost average for decades is simple.

If our listeners haven't already turned off by now, you know, because they might be falling asleep, just thinking about it. And that is actually why, ironically, it's so powerful. it's probably a lot more fun, certainly to tell your friends to buy this call option with expiration day tomorrow that's out of the money. And that's probably exactly why you shouldn't. And, you know, there's this wonderful selection bias. And this is, I think I'm quoting Buffett as I'm saying this.

If you're smart, you have no need to use leverage to invest. And if you're not smart, you have no business using leverage in the first place. And of course, it's hard to show your friends how smart you are if you're saying, hey, I live within my means and I invest in low-cost index funds. Like, that's not an interesting conversation. And so, David, I always say that capital is misbrudal. In that framework, I would say the financial markets are almost the ultimate leadified, and only the best should really be competing.

And of course, the problem is that it's hard to separate the signal from the noise investing because the feedback loop is just tricky. If you put me on the football pitch and everyone would be able to spot right out of the gates, I don't know what I'm doing. Like, it's super, super easy. But I think stock investing is more similar to poker in the sense that I would have no business playing poker with the best players in the world. But as a draw of a hand, you know, I might still get lucky.

And of course, the feedback in Pover is slightly quicker than the stock investing. But you can sort of like, you can disguise it in a different way than you can on a football pitch. And it's just, stock investing is just very hard to tell if you're good or if you're lucky. And there's also this human element where if you make money on stocks, of course you want to say it's because I'm skilled. And if you lose money, it's because you've been unlucky, you know. It's quite telling. I think it was in the last episode we did, David. I think you brought up this stat and you said, like, I think in the U.S., like 90% of large-cap managers

underperformed the SP 500 or the last 15 years. And then you brought up this Canadian stat where it was even more dramatic. It was 98% of Canadian and equity managers that failed to beat the S&P. TSX. So it's absolutely incredible to think of. But, you know, when you pick stocks, I guess that's my point. You're competing against really smart people who do it for a living and they don't even beat the market. And of course, it doesn't matter if you tell these people that simplicity beats complexity. They believe they can beat the market. Why wouldn't they believe they can beat the market? Most of us also believe that we're better drivers than average. And so it's just,

it's ingrained in us to think well of ourselves, and that's probably a good thing. But really here before I throw it over to you, David, I just want to shift gears a bit here because I want to return to this intersection of personal finance and simplicity. And I think it's simple to say that you should spend less money than what you make. And if you don't, your world becomes much more complex. And of course, another way to think about this is that if you're hard on yourself, life will be easy on you. and if you're easy on yourself, life will be hard on you.

And to your point before, if you ask people whether they want a simple or a complex life, they say they want a simple life. But it's also like asking people, is they like half full or have empty, and they know what they're supposed to say, but they don't really reflect too much. Whenever they say so, when people spend 110% of their income, which a lot of people do, they don't do it because they want a complex life. They want to keep up with the Joneses and because it's human nature. And of course, you and I can sit here all day and tell them, hey, no, no, no, no, save and invest.

And they will sit across from you and they would mean it in the moment you're speaking with them. And it's not because they're lying to your face at all. But people are people. It's just that simple and it's just that hard. And I meet countless people who ask me what to invest in. And, you know, unless I know that there are sophisticated investors who just can't get enough out of reading 10Ks, I always tell them to dollar.

cost average into a low-cost index fund such as the SB 500 or ABCI World Index. And of course, people find the simplicity of that advice so frustrating. And to me, that is a bit ironic. You know, most people who ask me what to invest in that literally don't know how to buy a low-cost index fund, but this is exactly why they should be buying it in the first place. Yeah, there's, wow, a lot to unpacked there. Kind of like Buffett saying the leverage comment as well. Like, I'm going to give you the advice, but you're probably not going to take it. I mean, you know, I want to pick up a one-year point about that you just mentioned about having an invested interest in keeping things unnecessarily complicated when you were talking about the medical system. I mean, I live here in a rural area in Canada,

and there's several towns kind of lined up within about a 20-minute driving radius of each other. five or six thousand people in each of these towns. And about a decade ago, there was a discussion around amalgamating some of these towns to reduce costs and simplify infrastructure, streamlined services. I mean, to me, it all sounded pretty practical. But of course, the people responsible for making those decisions were the one who was going to be most affected by them. So I probably don't have to tell you what didn't end up happening. You know, instead of choosing simplicity for decades ahead. I mean, this is infrastructure and large contracts to keep towns organize. The existing infrastructure stayed in place in part because it protected the people who were benefiting

from it. And, you know, maybe a more direct example for the listeners here relates to an investing conversation. I just had a few months ago with an individual. I was speaking with someone who manages portfolios for one of the large banks here in Canada. And when I asked if he could manage, say, a $5 million portfolio using just three or four well-researched ETFs with a small fixed income component to manage the volatility, he flat out told me, looked at me, he said, I can't. It would look too simple. And that took me back quite a bit. I mean, he said there needs to be more evidence that there's more work being done. And I just couldn't believe it in that moment. Now, I don't want to get into portfolio theory and asset

allocation on this podcast, we can save that for another day, Stig. But when I see an investment statement that has, say, 75 individual holdings on it and then compare it to the long-term results of a simple index strategy, I think the listeners can see where I'm going with this. And I'm not talking about a manager with a fund that's deliberately taking on a different approach to perform the market, maybe in a concentrated way. I'm talking about a portfolio that looks complex, but doesn't need to be. And that's the difference. I mean, sometimes complexity exists because it's necessary, and sometimes it exists because it's expected. And, you know, I think I'm getting to the age where I start to see layers and layers of more. It just looks like chaos to me sometimes. I mean,

people want to build wealth, and they want a plan that they can stick to, and they want to avoid the mistakes that show up again and again in the financial world. Yet the industry sometimes makes it more complicated than it needs to be. And, you know, Munger talked about this in his book and poor Charlie's Almanac. I mean, he used the term feebezzlement to describe how people aren't usually misled by outright lies. I mean, they're not looking to be completely nefarious, but by the unnecessary complication. Layers of products and jargons and moving parts create confusion and that confusion quietly leads to poor decisions and less compounding. And I think Munger's point was simple.

The more complex a system becomes, the easier it is to make mistakes and the harder becomes to actually see what matters. And for me, that's behavior, discipline, cost, patience, you know, the list goes on. And I can't help but come back to one of the quotes directly in his book because I've seen this play out in my world time and time again. And just give me a second. I'm going to read this verbatim. So in Charlie's words, anytime someone offers you a tax shelter, my advice would be don't buy it. In fact, anytime anybody offers you anything with a big commission and a 200 page prospectus, don't buy it. Occasionally you'll be wrong, but over a lifetime, you'll be way ahead.

And I'm going to give you an example that I've seen it. I've seen play out with my clients here. there are a few products in Canada, and I'm sure there's similar ones and other jurisdictions around the world where they're commingling life insurance with investments. And the agents selling them, they're often highly incentivized. And these structures themselves are complex. And they sound great at first. But once you get into the details, they're costly to set up. They're really expensive to unwind and they're difficult to fully understand. In fact, it's not uncommon for the people who are selling them to pause and refer questions back to their tax departments just to explain how they actually work if they get a question

that's passed their sales pitch. And most of us have probably been pitched something like this at some point, whether it's insurance or not. And Stig, I'm going to give you a client experience that I'll never be able to forget. I mean, I had a client who had just paid off their business loan and was finally in a wonderful position to start saving seriously for their retirement. You know, they were saving at this point after the loan was paid off, they were saving $150,000 a year.

And this was lovely, a great problem to have. And they had lots of runway and time on their side. They hired a new investment advisor. And after one year having saved their first $150,000, the advisor came back. to them in year two with a really big idea. He wanted them to stop investing in equities all together and put all their savings into a whole life policy for the next 10 years. And to put it in perspective, the insurance coverage that they were being sold could have been handled with a simple 10-year term policy for $3,000, leaving $147,000 still to be compounding inequities.

But instead, the proposal had mashed everything together and one, to me, complicated. product for them at their stage. And here's the moment that stuck with me after being brought up to speed on their situation. This was towards the end of it. The client in this situation, one was a retired police officer and his wife was the one who was running this wonderfully successful small business. He asked the advisor a very direct question. Why would you recommend this instead of just managing our investments? And guess what? The advisor didn't give them an answer to that question. And when asked what commission he would make on the policy, he dodged the question completely. And for context for the listeners, that commission would have been north of $125,000 in year one to set up that policy.

So needless to say, those non-answers got the spidey senses of the retired police officer up. And, you know, to me and getting back to Munger's quote, I mean, in what world is a product with that, large of a commission on day one really designed for the person buying it. I mean, I was looped in pretty much at the end of all this. And while I've seen Whole Life used a few times decently in limited cases, this wasn't one of them. This was way too much too soon in their savings journey and far too complex for these clients where they were on their path. They just needed time and simplicity and compounding, not layers and layers of complication. And, And needless to say, I probably don't have to tell you how that relationship ended up.

I mean, that advisor didn't last very long with them. And there's the quiet danger of complexity stig. It often shows up dressed as sophistication when really maybe it's just misalignment or misguidance. And, you know, a good barometer that I always use for myself, if there are added layers of friction around setup or management or cost, liquidity, exit, anything like that, you really have to ask yourself why you want to take this on before you say yes. And, you know, Warren Buffett said it perfectly. There seems to be some perverse human characteristic that likes to make easy things difficult. And his solution, as many listeners have probably heard, is jump over one foot bars, not seven foot

ones. And here, I'm just going to jump into the story of long-term capital management. I mean, it was built by some of the smartest minds in the world. I mean, Nobel Prize winners, physicists, mathematicians, there was Wall Street traders in here. And they engineered a really high precision model designed to capture tiny price discrepancies across global markets. And on paper, it looked amazing. But the system depended on layers of leverage. and assumptions that were just so wound tight that even small shifts in real world conditions would break it. And that, of course, as most that have followed the story, no, that's exactly what happened.

When the markets moved outside their expected range, the strategy unraveled, and it unraveled at speed. I mean, the fund lost billions and billions of dollars. The investors lost nearly 100% of their capital. And as the book goes, genius didn't save them. It failed them, right? And the complexity they believed was their edge became the very thing that destroyed them. You know, I've seen simple things beat complexity, not as a rule, but as a discipline. You know, it can help you stay committed long enough for things to actually compound in investing. And that's worth it all to itself.

You know, I've talked before why our family indexes a large portion of our wealth in a previous podcast, and it comes back to simplicity. You know, when too many layers are introduced in the investing, it has the potential to raise fees when investments are outsource. It can increase behavioral mistakes, which we've talked about, and it makes it harder to stay invested when emotions run high for individual investors. For some, I believe a simple investment approach can create clarity. And my approach using index funds for a significant portion of our investable asset,

it's built on just broad diversification, low cost, tax efficiency, which we won't go into today. Well, maybe we'll save that for another episode. Long time horizons. And I'm hoping that the market just rewards us for patience. You know, and simplicity is a practice, and it can be in your finances, it could be in the businesses you run, or can even be in the relationships that you hold, right? I mean, you can ask yourself this question, like, what are the few things that matter most? And what could I stop doing that would actually make everything else work better? I mean, that's always a powerful thought to think

about. Because over time, clarity can compound just like capital does. And if you can remove noise, then clarity can appear. Yeah, I think that's such a great point, David. And, you know, we're all driven by incentives. You invoked Chalanga before, who was so famous for talking about incentives. But I also think whenever you study, Munga, I think one of the wonderful things about him is that whenever he talks about incentives, he's not just talking about financial incentives. Like, the example you had before with the advisor and he gets this $125,000 commission, you're like,

that is there for us to see. But there are so many other incentives in place that dictate how we handle things. Like, for example, let's say that our financial advisor is a good family friend. You know, it's so incredible, complicated not to continue to work with him because it's awkward. And we try to, you know, just not do awkward things. And we're going to do it tomorrow. And of course, tomorrow is a year and a year is 10 years. And so we're all driven by incentives one way or the other. And I really like what you said there about clarity and about noise because we rarely notice whenever we're drifting, of course. And I think one of the reasons is that it doesn't feel like we're getting lost. It rather feels like we're just staying busy. And so simplicity is all about

how you find your way back and identify your North Star. And I think the best, The best way probably to do that is through mental models now that we have talked about China Amongers. So let me throw it back over to you. Yep, you're right. I mean, we all use certain operating systems to navigate our life. And like you said, some people do call these mental models or just simple frameworks that can help us make decisions, right?

And, you know, I've thought about this a fair amount. I mean, when it comes to making things simple, there are two models that I lean on often. Occam's Razor and Irreducibility. And together, they help me find the balance point between clarity and completeness. Occam's Razor nudges us to begin with the simplest explanation for a solution. Most challenges don't need heroic thinking. They need clear thinking. Fewer assumptions and fewer stories that we tell ourselves.

Then irreducibility is the counterweight. It reminds us that every system has essential pieces. elements that cannot be removed without breaking the system. So we reduce boldly, but we don't cut past the point where everything just falls apart. And together, when you put them together, it's an inspiring philosophy. Occam's Razor keeps us from adding what isn't needed. And then irreducibility keeps us from removing what must maintain. And getting back to professional services, which I can't help because it's,

dominate it my life for so long. This is how most trusted advisors operate. They don't always name these models, but they follow them instinctively. And when you use them both, you land in the sweet spot, simple enough to work, but complete enough to rely on. And that's where I feel good decisions happen and how good systems can endure. And these models are not abstract either. They're pretty practical. And let's get back to investing, for example, irreducibility to tells us to start with the foundation, the part that can't be simplified any further. And in wealth creation, Stig, that foundation is saving. I mean, nothing happens until you save. There's no return. There's no compounding. There's no plan without that first irreducible step. And then

once that foundation is set, Occam's Razor guides the next choice. Use the simplest system that allows your savings to grow. And you don't need a complex strategy or exotic products or forecast about the future. You just need a clear, low cost, evidence-based approach to do the heavy lifting for you. And I know we've talked about that many times. I mean, you know, if we zoom out too and step back and look across other professions, you'll see the same truth repeated again and again. Simplicity wins. You know, I've talked about it in our accounting world. It can win in engineering, medicine and many other professions as well. I mean, in Lean Six Sigma training, there's an engineering story that talks about a factory that was struggling with a major conveyor belt malfunction.

And after $200,000 of diagnostics and airflow management studies within the factory itself, the true cause finally appeared. Bob, the assembly line worker, had plugged in a $30 fan during his shift on the assembly line that was blowing products off the belt, if you unplug the fan, you fix the problem. And sometimes the simplest answer is sitting in plain sight right in front of us, but we're too busy over-engineering the solution, right? And in medicine, doctors live by a simple truth. When you hear hoofbeats, think horses, not zebras. Start with the most likely cause and only chase complexity when the simple explanation fails. Simple first, complex, second. And simplicity, it doesn't stop at business or investing either. It shows up

in how we spend our time and our energy. And just flipping to the personal lens of my life, you know, one of the frameworks that I return to every year, and I've shared this in our lovely TIP mastermind community on a call earlier this year, it's the stop, start, and continue methodology. And it forces me to look back before I add something new. And it asks me, what am I doing that I should stop? What's worth starting and what deserves to continue? And then, you know, if you think of both entrepreneurship, especially, I mean, you start to wear lots of hats and it's remarkably easy to never take one of them off.

And the same thing happens with our personal commitments as well. We say yes and the calendar fills up. And before long, we're running at full speed and we're never stopping to ask if this stuff we're doing still fits. And so a simple check-in can prevent a lot of drift. And so here's a question for you and some of the listeners, you know, what's one commitment in your life that if you were to be honest, you might not say yes to again. And that's the question that answers when complexity starts to show up in your life, not all at once, but from the yeses that you continually say. And, you know, a good rule I try to follow, and I'll be the first two of bit, I don't always get this right, is to remove something before I add something new.

And before committing to something, just ask whether it makes life easier in some way. And that pause alone can create just a little bit of protection. And just where we've been talking about mental models, I'll just drive one more point home here, Stig. I mean, my wife and I, we've always managed our personal finances well, but we never called it a budget. We called it a personal spending plan. And there's a big difference between the two. And I'll share this with the listeners.

We earn, we save, we pay our taxes. And with the net income that comes home to us, we spend it happily. No guilt, no second guessing. I mean, of course, we're mindful of the necessities, but the system is just. design so that when the big priorities are handled in the master plan, we don't even think twice about the micro decisions that drain so many people's energy. I mean, the structure does the work for it. And, you know, I might be dating myself a little bit here, but years ago when you actually wrote checks for things, I'd sometimes draw a little smiley face on them. And it was just a small

reminder of gratitude and a signal to myself that if we planned properly, we should feel good about spending our money, right? And, you know, when we circle back to the mental models, I mean, irreducibility reminds us that every system has a core, and there are elements that you simply can't remove without breaking it. And if you strip things back too far, that whole structure is going to fall apart. And Occam's Razor, it challenges us to question what we're adding in the first place. So before complexity creeps in, it just asks a simple question, is this actually necessary. And I believe when you start using those two together, you end up with a system that are simple enough to run, but strong enough to loss. So Stig, I hope you're reflecting on your own

personal commitments as we speak right now. And I'd love to hear your take. And not just with personal commitment, but beyond investing, just where things where simplicity might add some clarity or stuff that you might be able to remove. Let's take a quick point. Rick and hear from today's sponsors. Every business is asking the same question. How do we make AI work for us? Sitting on the sidelines is, of course, not an option. Your competitors are already making their move.

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we always ask them to take the Myers-Briggs personality test. I know it sounds very corporate ironically, but knowing someone's personality test score makes it a lot easier to work for them because you know some of the filters that they see the world through. And, David, I don't know your personality type. I think I've known you for such a long time now that I would know what your personality type is. So there are a number of different letters and I don't want to go into the weeds of that. But there is one I would like to speak a bit about.

And it's about whether you're a J or a P. And Js like to make schedules and plans and they prefer to make decisions early. And so the model would be, let's decide and move forward. And so in the world of investing, that would mean that they'd like to stick to predefined rules. And so I don't know if, I know you know a lot more accountants than I do, David, but I would imagine that a lot of accountants tend to be Jays. And certainly a lot of people in what we do, they're Jays. On our team, we're 20 people and 19 of them are Jays. And so I know this is not, it's not political correct to say this.

I know I'm supposed to say something about diversity and we all are supposed to compliment each other. And that's probably all fine, good and well. And we are all good at different things and whatnot. But I do think that there is something to be said about that in organizations, there are certain things you need to do a certain way. And people should lean into how they are naturally wired. And if they're not naturally wired that way, perhaps they shouldn't be a part of that organization.

And so there are some professions where some personality types are just more suited than others. For example, I often speak with my team about, are we airline pilots or are we software engineers? And so, you know, and we're generally the latter because we are moving in a space that's just, it's just moving so fast. And we have to test a lot of things. And then a lot of things fail, and then that's fine. And then we move on to the next thing. But really, the job of an airline pilot is not to kill his passengers. Like, that's a success. And I'm sure there's a lot. some airline pilot there was like, well, there's a bit more to that. But the point is that, you know, if you're an airline pilot, your excellence is demanded all times, and box are not

to be tolerated. If you're a software engineer, you know you're going to have box in the code and expect it and you can correct those box. And whenever you do that, you know, you can send out a patch and it's fixed everywhere, then you move on. That's obviously not how it works if you crash the plane. And so with you, David, you know, being a J, and I'm pretty presumptuous here, but I think it's okay that I'm presumptuous because whenever you're not in the call like five minutes before, I think it turns out we're actually using different links, but I'm like, hmm, that doesn't sound like David. And then there's sometimes there are peas who are like five minutes after. It's like, by the way, I'm going to be 15 minutes late. You know, it's like, that's a typical

P sign. And so you have a natural inclination where you're better at meeting deadlines and you, you know, you like to do things a day before and preferably sooner. And so you have that. And then on one hand, you have other people who would say, deadlines stimulate them, and they tend to work better whenever they're close to the actual deadline. But what I found interesting from working with people of different personality types in my career is that everyone feels that their way of working is the most efficient. And they sort of have a hard time understanding that other people can be successful using a different approach than they are, which is also why we test them because we want to see,

like what is their natural inclination, how do they see the world? So whenever your community came to them, you have an idea of what in their world is the right and wrong way to work. And that's, I don't think you can necessarily change that, but I think it's a good thing as a business leader that you are aware of their reality, just like you have your own flawed reality. And so it might sound a bit ironic, as I'm saying this next, but I would recommend that 99% of people set up an investment system. Because if you are a J, like you and I, David, you should do it because it comes natural to you. But if you were a P, you should actually do it because it doesn't come natural to you. It's an investment system. So let me break this down.

It really goes to what you said before there about you and your wife, you have this personal spending plan, not a budget. So you earn, you save, you pay your taxes, and then with the remainder you spend it without guilt. And I absolutely love that, David. And I know quite of a few P's and they spend all the money they make. And they sort of know in the back of the head that they're supposed to save an invest, but they just don't know how to do it, which is why they need this investment system. Because once the money comes in, before it hits their spending account, they should transfer a set amount like a clockwork to an investment account and then buy a globally diversified index fund. And if they do, they can spend the rest of their money guilt-free. And they don't

need to think about, is the stock market expensive? Is it cheap? What is the headlines? No. They're buying it. It's global diversified. They do it the same thing every month. So the average of the average is the average. And that's just the way math works. And that is also why on average they're going to do quite well. And there's just so many walks of life where simplicity is just superior to complexity. And it's even more important in the world. This just seems to be more and more complex. Let me just give you one example. Many people are on a diet and they still love dessert. It's a lot simpler to say that you don't eat dessert than saying, I'm only going to have desserts once in a while if it's really delicious. Because then you have to spend a lot of

willpower defining for yourself if something counts as a delicious dessert or not. And let me make a bit of a jump here, but perhaps the best advertising slogan I've ever seen is loyelles because I'm worth it. is all the way back from 1973, and it still stands today, right? So who doesn't think they're worth whatever it is whenever it comes to spending money? And of course, this goes directly to this principle of simplicity and frugality. But of course, you can make the argument that consumerism has never been about simplicity in the first place.

And all of this is, of course, much easier said than done. One thing I've learned whenever it comes to creating simplicity in our lives is that, that we are often our own worst enemies. For example, I have this friend who's, he's really into watches. And I'm inclined to say that I'm a fused to go down that path. And it's not because I don't appreciate a nice watch, but because I know whenever it comes to something like that, I'm my own worst enemy.

You know, I know, not because I bought a lot of expensive watches over the years. I actually think when I was 15, it was the last time I bought a watch. It was like $200 watch, and that's my lifetime spending on watches. But I know the way. I'm wired, like, if I have really nice stuff and I don't really tend to have too much of that, like, if I bought a $10,000 watch, I would appreciate it. But I also think I have this thing in

me where I would like, yeah, but now I'm a collector, right? Like, now I need this even more expensive watch. And I just don't want to go down that path. And I'm not saying that's a problem for everyone who buys nice watches. I'm sure a lot of listeners are fine with that. But, and hopefully, they're just wired differently than what I am. But let me give you another example. If you and I met up tonight. I might suggest that we will go out for a beer. And I know that alcohol can quickly become complex for some. You know, I can go a month, three months, six months, I don't know, very, very long time without alcohol. And, you know, alcohol addiction is the last thing that's on my mind if we went out for a beer, with or without alcohol, whatever we go out for,

it would more be like an expression more than actually going out for a beer for me. But I'm also sure that for some people, it's the complete opposite. I mean, they might appreciate a nice watch, and they would stop right there. But whenever they taste that first beer, they just can't say no to the second. And my point is that we need to understand what brings simplicity and complexity into our lives. And why it's great to learn from other people's mistakes and we definitely should. We typically have to make our own mistakes before we probably learn, at least with a lot of things here in life. And let me just give you one example. You know, I just have to make a real mistake. You know, I previously here and definitely in a mastermind community, I've talked about how I've been

struggling with this idea of how long my social battery is. You know, for some activities, it's like three hours. For others, I might be able to do five hours. And I just, I know from experience, I can seldom be around other people other than my wife for more than five hours before I just become exhausted. And it's not because other people bore me by any means, but it's just my social battery is just spend and I just need to be alone to recharge. And knowing the duration of my social battery, I found really feeds into this concept of simplicity. And if you're an introvert like me,

you know the complexities of letting your social battery fully discharge. It's just nothing good is going to come out of it. And of course, similar, if you're an extrovert, you also notice the complexities in life and all the problems is going to throw at you if you're sitting alone and you need the energy from being around other people to recharge. So, it's basically the same thing. But shifting gears here, I spoke with a previous coworker here the other day, and he works in marketing. And we talked about how conventional TV watching was just, you know, whether or not there was over, because Jin C's, their habits are just so different than millennials and Gen X. And what he said to me really stuck with me, because he said, yes, habits are different

and some things are tied to a different generation doing different things. But it's also a reflection that whenever you're 25, you just do different things whenever you're 45. That's because they're 25. It's that simple and it's that hard. And it goes to this point at the very top of our episode, David, because whenever we grow and become young adults, we want to explore anything in the world because we no longer feel basically constrained by our parents.

and we feel we can do anything and we keep adding new things into our lives. And then after some time doing that, perhaps we find a significant other, perhaps we get a career, we get very, very busy. But now we feel we need to live a life of subtraction. And that life just suits us better. Perhaps we basically want to sit in front of the TV, even though it probably sounds super boring to a 25-year-old, not because simplicity is always better, but because different stages of life calls for different life strategies.

Yeah, no, absolutely. I mean, it's completely anecdotal earlier when you said that the world seems to be getting a bit more complicated, stick, but now I'm going to agree with you and say that the world seems to be getting more complicated. I was just literally having this conversation a month ago with a client as she was working through some staffing challenges. And to your point, just how differently people are wired these days and how people are working and they live.

And the complexity in people's lives, it's showing. up everywhere. Now, when I think about what's required today to file a corporate tax return in Canada compared to 25 years ago, almost everything that has been at it has increased complexity, not reduced it. Nothing seems to be getting simpler. It's always another layer of something that needs to get done. And it's rare to hear someone say, you know what, you actually don't need to do that anymore. It's extremely rare. You just don't hear that. And it's not just taxes. I mean, think about what's required today to do banking and legal processes, development approvals, and building code requirements. I mean, the list just keeps going on and

on. Everything seems to be getting a bit more complex. So maybe it isn't anecdotal after all, Stig. I don't know. If the world, I guess, and if the world around us is becoming a bit more complex and we have to be really intentional about pushing back against it, right? And I don't want to sound naive about simplicity as well. I know we're doing a deep dive on it today. I mean, like I said at the beginning, life is full of catch-22s. And sometimes you do have to take on difficult challenges in order to grow and find new things. And, you know, but I was reminded of this recently when I was reading The Paradox of Choice by Barry Schwartz. It is a beautiful book. And in it, he explains that now we're faced with an unprecedented number of choices in nearly every area of

life, consumer goods, careers, relationship, and of course, business and investing and a lot of the stuff that we talked about today. You know, we tend to believe that more options lead to greater freedom and better outcomes, but his research is showing the complete opposite. Too many choices create overload, which leads to decision paralysis and stress and sometimes avoiding making decisions all together, right? And his conclusion was pretty simple but powerful. Well-being improves when we actually limit our options, when we can reduce excess comparisons and accept good enough decisions and focus on what truly matters instead of endlessly searching for the optimal choice. And I really like that good enough framework versus perfection. And as I was preparing for this episode,

of course, when you buy a red car, you start noticing all the red cars on the road. I started to notice how often simplicity shows up across all the books that I've been reading. And it's remarkable how many thoughtful investors and writers come back to the same idea time and time again. And often they're coming from different angles, too. You know, I just mentioned Schwartz. And of course, many of the listeners know that William writes about simplicity in his chapter on Joel Greenblatt. And even in a book with complex themes like Annie Fragile with Nassim Taleb, he never frames his work explicitly around simplicity.

But if you dig down a little bit, it's everywhere in the subtext. He argues for subtraction over addition and real-world feedback over elegant models. Again and again, he shows how complexity hides fragility, while durable systems tend to be the simpler ones and the ones that are grounded in reality. And, you know, a really funny story that he tells in the book is about the wheeled suitcase. He said back in the 80s, his arms were always burning walking through airports because he was carrying his luggage that was loaded full of books. And then he questioned, why did it take society so long to put wheels on the bottom of those darn suitcases, right? I mean, the wheels existed for 6,000 years. Yet rolling luggage is

only appeared just a few decades ago. You know, how do we miss something so simple, right? The Stoics, they talked about subtraction thousands of years ago. Remove what isn't essential so you can focus on what truly matters. Greg McHugh and he talked, he had a wonderful book on essentialism. And Nassim Taleb, he calls it via negativa, improving systems not by adding more, but by removing what makes them fragile. And, you know, the same idea shows up. Clarity doesn't come from adding more. It comes from

removing what doesn't belong. And when you look at business, investing, and life through the lens of simplicity, I believe that it can create consistency. And consistency is what allows things to compound in a quiet and meaningful way. So how can simplicity become a superpower in life? By creating simple systems that are easy to follow, easy to fix and easy to repeat. In a world that often feels over-engineered and full of unlimited choices, we can still choose what Buffett calls stepping over one-foot bars instead of seven-foot bars. I absolutely love that, David. And you know, it's very interesting that you would say that about simplicity. I had this experience not too long ago. I was checking up on our team in the Philippines, and I went there, and I had this feeling that anything was

possible. And sort of like the type of metropolitan feeling you can get, you know, in a city with 12, 15, I think someone on her team actually said there were 20 million people if you included the entire metropolitan area. And especially for like, for someone like me who grew up in the rural area here in Denmark, it's like, you got this at least for me. And again, I'm not saying this is the case of everyone. I know a lot of people are very happy about living in big cities. So I don't know if it comes across the wrong way, but like there was something extremely liberating about this feeling like I could do anything I wanted. But there was also almost like, to your point, like I always felt stressed. Like I had so many options. There were so many things to do

24-7. And there is like a strength to the simple life, you know, where there are not a lot of stuff happening around here after 5 p.m. And I guess if you're baseman, you would say nothing is happening also before 5 p.m. But like there's only so many things I can do whenever I'm home. And At least to me, that's actually quite nice. And again, I'm sure other people would very much disagree and say that the best life is, you know, living in the big city and that's probably true for them or perhaps it's true at a certain age. Who knows? I'd probably be all over it whenever I was younger.

Anyways, David, before we end the episode here, I want to give a handoff to a new website you and I created. It's called Compounding Simplicity. And, you know, we just completed a soft launch. So please forgive us if everything doesn't look exactly. as it should yet on the website. Our target group specifically is Canadian business owners, but anyone can go out and check out the site.

It's completely free. And we also set up a YouTube channel, also called Compound Simplicity, so we didn't strain the muscles there. And then once a month, we're going to publish a video. It's hosted by you, David, but it's produced by the Investors Podcast Network. We want to educate and how to achieve your financial goals.

And so our attention is really is that after watching the videos, you should be able to manage your own portfolio. And at the very core of the philosophy is the idea that you don't need professional help. And also that managing your portfolio should take almost no time because you should be an overseer of your return. You shouldn't be an active portfolio manager. And so definitely feel free to check that out. Again, the target group is, you know, we're specifically looking at things in Canada,

but we also think that there is a timelessness to, some of the evergreen topics we also going to cover. So let me just throw it to you, David. Yeah, that's lovely. Thanks for that summary. Really looking forward to the launch, Stig. It's nice working with you and your team. We're excited to lead people on their path to prosperity.

And it's encouraging to see everything we've accomplished so far. And check us out. Thanks for listening to TIP. Follow the Investors Podcast on your favorite podcast app and visit the Investorspodcast.com for show notes and educational resources. This podcast is for informational and entertainment purposes only and does not provide financial, investment, tax or legal advice. The content is impersonal and does not consider your objectives, financial situation or needs. Investing involves risk, including possible loss of principle and past performance is not a guarantee of future results. Listeners should do their own research and consult a qualified professional before making any financial decisions. Nothing on this show is a recommendation or solicitation to buy or sell any security or other financial product. Hosts, guests, and the Investors' Podcast Network may hold position and securities discussed and may change those positions at any time without notice. References to any third-party products, services or advertisers do not constitute endorsements and the Investors'

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