The Exchanges

Q You actually told A couple stories I really loved in the book. One about Ronald Reed and Richard Foscone. Can you tell us about them?

A Ronald Reed, I, I've never met either of these people. Uh, Ronald Reed was a guy who was a, uh, he was a gas station janitor. Uh, no, I'm sorry, a gas station attendant and a janitor at a mall. Just as humble, low-key, or dare I say, like, low-class, poor kind of person that, that, that you would ever meet. And when he died, he ended up leaving millions and millions of dollars to charity. And people were like, what? Like, this guy's mopping the floors and pumping gas. Like, where in the world did he get all this money? And it turned out that he took what tiny dollars he could save from his minimum wage job, and he bought stocks that he held for, like, 50 years, and turned into millions of dollars and gave it away. But he's, he, he could not have been a more ordinary kind of person. Richard is, could not be more polar opposite. He's born into, born into wealth and went to Ivy League schools and worked on Wall Street and worked his way up to senior leadership on Wall Street, made tens of millions of dollars, and very Soon, not that long after Ronald Reed died, he filed for personal bankruptcy and blew himself up with debt and leverage. He had a house in Florida that had multiple elevators and like a swimming pool that you could stand on top, like all these crazy things, all heavily levered. Financial crisis hits. Boom. He's out. He's bankrupt. And I use that juxtaposition to be l…

AI assessment note: “Ronald Reed was a guy who was a, uh, he was a gas station”

Q What do you think about, I mean, now you've, you've sold millions of copies, uh, of your first book, and I'm sure you will of this one as well. You've, you know, talked to some of the richest people in the world. You've talked to some of the most successful people in the world. What have you found is the number one lie or untruth we are told about money?

A I don't know if it's, Hold so much as just expected. But there is a very clear expectation that if you wake up in the morning and you feel a little bit empty or diminished or anxious or in pain, that you can tell yourself, if only I had more money, those problems would go away. And I think to some extent, it can be true. Money can give you a comfortable life and solve a lot of your problems. But what you see with a lot of rich people is that once they gain the money, they still had a lot of problems in their life. And that can be such a jarring feeling. Because you told yourself, if only my net worth is X dollars, then I'll be good. And you get there and you're like, wait a minute. My friendship's still not that great. My health is still not great. My marriage is still not that great. I still don't sleep at night, that well at night. I still have all these anxieties. And so, then you kind of lose your sense of hope or you double down. And so, a lot of people are like, once my net worth is a million dollars, I'll be great. And then you get there and you're like, well, I feel the same, so maybe it's two million. And you get there, and you're like, ah, I feel the same. Maybe it's ten million. And you're just constantly chasing the high that you think you're gonna get from it. Money can solve a lot of problems in your life, but this is another area that we just overestimate what it…

AI assessment note: “if only I had more money, those problems would go away”

Q you have, like, spending money to show people how much money you have is the fastest way to have less. And so, you know, even for the person that's listening out there, you know, it's not like, oh, don't worry, stay poor, we don't care. It's really psychologically, if you don't rewire your brain, you actually never will get wealthy. And then simultaneously, You will have a counterproductive result, right?

A I think people should have a lot of ambition to have more money for independence. I think that should be the ultimate goal. It's not that money won't do anything for you, and you should stop chasing it and enjoy being poor. It's not that in the slightest. You should want more, and I want more for that reason. I, I just want to be completely independent, and everybody is talented in their own way, can be happy in their own way, if they have independence. And it's actually very difficult to have to express that talent and express who you are if you are completely beholden to somebody else's goals, metrics, incentives, which most people are. And so that's what, that's what I think the ambition should be. It's not ambition for necessarily for a greater material life or greater social status. It's ambition for independence.

AI assessment note: “I think people should have a lot of ambition to have more money for independence.”

Q How do you protect your mind and your psychology for those horrible financial life events like that?

A I save a lot of money. Am I saving for a new house? No. Am I saving for retirement? Not necessarily. Uh, I'm saving for a world in which Things are going to happen in the broader world and in my life personally that I can't foresee that I am not thinking about today and will have a major impact on my life. And so that's the psychology of it. I think a lot of financial advisors might look at my net worth allocation and say like, what are you preparing for? It's, it's, it's not that conservative, but probably more cash than people would generally recommend. And I think a lot of it is just being an amateur student of history, like all history. Is a constant chain of surprises that nobody saw coming that fundamentally shaped the world, usually in bad ways. And the people who do okay over time are the people who have a conservative enough financial arrangement and mental flexibility to endure those episodes.

AI assessment note: “I save a lot of money... I'm saving for a world in which Things are going to happen”

Q this repetition. So, you know, he was building software, uh, software companies and kind of in some ways you could say the, the initial AI companies, um, back in the nineties. And, uh, and you can see, you can see the rhythms to today. And so it's a really fascinating book if you're into building things. Have you ever made a really reckless money decision, but it actually paid off?

A I wouldn't say it was necessarily reckless, but we bought a house, uh, you know, I don't know, eight years ago or so, and we, we came up with a budget, and here's our budget for the house, and then we're house shopping, and of course, I think a lot of people have this experience. Oh, we found this one, and it's way out of budget, but like, look at that thing. Like, that's fantastic, and it gave me a lot of sleepless nights. The decision to buy it. I'm really going to do this. But we knew our life would be better. It was a better house in a better neighborhood with better schools. And I could check all those boxes. And since I had set an arbitrary limit of what our budget was, it felt reckless. It really did feel reckless. And I should say this was during a period when my career and the economy were not going that well. And so it was like, this feels wrong, but we did it. And looking back at that, it was like, I'm so So glad that we did that. So glad that we did it. To me, that's always been a thing of like, of course you can use money as a tool to live a better life. Too many people get caught up in the frugality movement of like, the best way to do everything is as cheap as you possibly can. Like, no, you can, you can live an awesome life and have a lot of material things that are fantastic that you will have no regrets of later. So that was an area where I'm like, I'm so glad…

AI assessment note: “we bought a house... way out of budget... felt reckless... so glad that we did that”

Q Do you think that most people should just put money into a diversified investment portfolio, leave it there? Most dollar cost average and that's it?

A I'm not a passive investing zealot. The, the, the person who's like, nobody can beat the market. Don't even try. Of course some people can beat the market. People have beat the market, and they'll continue doing that. And some people have done that profoundly well. But it's like asking, you know, should, should most people try to get in the NBA? Like, no. Like, some people can do it. Like, let's not pretend that I can do it. And there were that anyone else, like, of course it's hard. So, whenever people bring up the statistics of like, 99% of mutual funds will underperform their benchmark, they use that as a, Indication of like, see, the industry's a scam. My response has always been like, no, that's, of course, that's how it works. What world do you expect to live in and where everybody who tries to beat the market and make a fortune can do it? Like, of course, that's never going to exist. Just like everybody who wants to join the NBA is not going to be able to. And I don't know what the statistics are of like, what percentage of high school basketball players make the NBA? I don't know. It's probably point zero, zero, zero, zero, like whatever it is. And people are like, yeah, that's how it should work. And it's the exact same in investing. So your question is like, should most people dollar cost average and index? Yes. Does that mean you, it's impossible to beat the market? …

AI assessment note: “should most people dollar cost average and index? Yes.”