Muse

The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand, but by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy. Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property, liability, or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one-time decision. At The Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day-to-day operations. And when losses do happen, The Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. Game night rush, or any night of the week, really,

Genius keeps every order moving. From online ordering to your kitchen to the front counter. Big league reliability for any business. That's Genius.

Bloomberg Audio Studios. Podcasts, radio, news. This week on the podcast, old friend Carl Richards joins me to talk about his new book, Your Money, Reimagining Wealth in 101 Simple Sketches. If the name sounds familiar, he created the Sketch Guy column in the New York Times. It ran there for a decade. He's probably done more than anyone to expand usage of the phrase, the behavior gap, the difference between people's portfolios and what the results are. I thought our conversation was charming and I think you will also, with no further ado, here's me and Carl Richards talking about money. Carl, welcome to Bloomberg.

Very, so fun. Been looking forward to this for years.

Same, same. Long overdue. We've had you on At The Money, but we haven't had you for the long sit-down. Let's start out talking about your background. University of Utah, School of Business, Bachelor's of Science in Finance. That implies finance, investing, money. Was that the original career plan?

Yeah, no, not even close. Really? Yeah, so I was, I've told this story occasionally, I was an undeclared major, which means back then it meant you had no idea what you wanted to do with your life right i was the newest hire to landscaping company so i was literally digging ditches for living i come home one day my wife we'd recently been married this was 95 recently been married and she has the help wanted ads open she's got a job degree in finance a job as the cfo of a small real estate company got the help wanted ads open so i was like hey core her name's core corey what are you looking what are you doing she said i'm looking for a job i said well what do you find you She said, no, I said, but you have one. And she said, I know, I'm looking for you. I was like, what are you finding? And she found what we both thought was a security guard job.

At a little shop called Fidelity?

A security guard. I was like, you know, I could work as a mall cop at night. This would be great. So I can still go to school full time. This would be great. I went to apply. Nothing about Kung Fu. Nothing about self-defense. You know, they were asking about things. I didn't know what they were. Securities. Exactly. I didn't know the difference.

I was going to call BS on this because it sounds like, wait, how are you a finance major? But that happened afterwards.

Yeah, that's exactly right. So I get through the interview, which tells you a lot about the applicant pool, right? And they had narrowed it down to two of us. They offered it to the other guy, and the other guy said, I don't want it. You take it. So that's how I ended up at Fidelity's National Call Center just before Netscape's IPO. That's unbelievable.

Well, I started on a trading desk, and I was told, hey, rookie, no trading Netscape IPO. So you and I started just about around the same time.

You know what was crazy about that was, like, after I got clear that I wasn't a security guard, I was like, what's this job? And I was sort of looking around, and everybody was using calculators, right, and math. And I was like, okay, this must be, right, this must be a math job. And then, you know, a couple weeks into training.

they called us out onto the trading floor to answer phones. Because back then, you couldn't get a quote, you couldn't place a trade unless you called. And it was the day of the Netscape IPO. And I remember thinking, this isn't math. You know what I mean? And that was like my first introduction to this idea of like, so I like to say that I got in by accident, but I've stayed because of that moment. Like this, like, what is this crazy thing that we call money? Because nobody was doing math in there. They were excited, mad, angry, upset, right? So it was, that was, because I always thought it was a mistake getting into finance. I always thought I would go off and do, I was going to do the Stephen Covey organizational behavior thing at BYU. Right. That's what I always thought. Because work is where people go to do things that matter. And then some of these early experiences open the door to like money is the ultimate portal. Hey, this funny thing is, this is real. It's the ultimate portal to somebody's soul. Right. Do you know what I mean? Like, what do you really care about? I can find out pretty quickly how you spend your money and how you spend your time. So that's how I stayed. So, yes, afterwards I was like, maybe I should get a degree in this.

So then you switch, you get your degree in finance from the David Eckley School of Business. When do you go for a CFP? When do you become a certified financial planner? I was looking at that the other day. You don't remember, do you?

No, all I remember is I got made fun of. For taking? Yeah, remember back in the day, right? Like I left. I don't remember. I left Fidelity, and I went to work for a big broker's firm, which we'll go in name, but has a bull as its symbols owned by a bank, right? And about that, and I got my SEMA designation, because that's what, like, cool kids did. You know, the sort of institutional consulting stuff. Because I thought, I got to figure this thing out, this whole money thing. And then I started to get my CFP, so it was in the day when people in that side of the business were like, what are you wasting your time on that for? It's pretty early on. This whole fiduciary thing. I mean, really? Seriously.

Waste the time. Goals. What are you going to not charge people's commission? What are you thinking, Carl?

That's right. That's right. So fun.

So what I find fascinating about your career, and I'm now learning all the parallels between our career, you kind of reinvent yourself as a communicator, as an author, as a speaker. Is that something that helped you when you set up your own investment firm? Like, which came first, the chicken or the egg?

Yeah, I can remember who was in the room and where I was when I first sketched something out, because I wasn't a doodler in school. It's obvious that I didn't take any art classes, right?

I don't know if I would say it's obvious, because these are really kind of interesting. Like, Charles Schultz very famously drew peanuts and said he didn't have skill.

That's a super generous comparison. Thank you.

Oh, I'm not making that comparison. I'm just saying someone else.

Somebody else said something similar. Good. But I just remember sitting across the table from some really smart clients. And they were, he was an ER doctor. She was a technology sales rep like at EMC or something back in the day. Right, I remember. Super smart. And I was trying to explain some concept, and I was just getting blank stares. You know the feeling. That had happened before. But this is the first time it dawned on me, like, wait, they're really smart. This must be my problem. So out of an act of desperation in the shared conference room, there was a whiteboard. nobody used it and i stood up one day i was like no like this and just like some boxes and arrows like an estate planner would do you know and they were like oh oh and i and at that moment i was like i didn't make a grand conclusion i just remember thinking huh that was really interesting so that started this idea of like how so i started thinking like anytime i got asked a question more than once so the second time i got asked it i was like what if i just wrote down the answer and sent it to everybody who asked and i don't know if you remember but there's these things called blogs back in the day. Not only do I remember.

You were one of the OGs. I still am doing it. I have no interest in Beehive or Substack. I kind of learned early on, I don't want to give my content to another company. I want to control it.

So I started putting those things up on the internet, an answer to a question with some sort of diagram. And by the way, the hand-drawn sketches were just a fatal, were a flaw at the beginning. I mean, I went to download Adobe Illustrator, and the download thing said three hours. And I was like, anything that takes three hours to download, I should not be using. Illustrator would ruin this.

The whole beauty of, and I know most of you are listening to this and not watching me thumb through a book, but the whole beauty of your sketches is just how simple and informative they are with just a few lines, a few circles, a few squiggles. it's not a giant you know organizational chart it's oh he did that in 90 seconds and look how much information is in that well thank you but that early on it was like, I was only doing that because I couldn't download Adobe Illustrator. I saw it as a flaw. And so every couple of years early on, I would get them designed by somebody and I'd post those. And people would be like, where are the handraps? So I finally learned. I'm only telling you these stories because it's so tempting of us to look back and create these beautiful narratives of the experience. But it turns out there was just a lot of random experimentation and playing because it turns out the thing I thought was a flaw

ended up being the feature huh right that's really interesting yeah yeah so i i'm i'm surprised you think of it as a flaw not anymore um how long did it take you to get to that point because to me the beauty of your drawings are first of all it's obviously not ai slop it's uh you predate by 20 years or so but more importantly they just look and feel human and personal and, oh, someone has really put some time into figuring out how do I communicate a complicated idea in the least amount of letters, words, images. Yeah. So at what point did you think, hey, I could do something with these drawings,

maybe publish them in the New York Times every week? Never. What happened was I was putting these up on this website. I tried to stop. Right. I love that. like a compulsion can't can't help it yeah i mean and i even had people around me who were like just focus on building your business what are you doing and i was like and they were right do you know i mean like all the evidence well i mean but back like at the time and i kept putting it up and there's a guy named kent who i did not know uh-huh kent send them to a guy named ron who i did not know ron lieber at the time oh sure i know and i know of ron lieber kent didn't know ron and ron just sent a note like hey i think you might like these and ron sent me a note and i have that email still because nobody believes me the email was hey we love these could we try something and i knew enough from my like security guard background right to be a kid in the hills of utah right to say i mean i never thought i was like yeah of course what do you have in mind and that's kind of how and i've talked to ron since like why did you open that email because you know like he gets like stacks of books stacks of things that he would love to reply to and read because that's the kind of human he is, but he just doesn't have time. So why he opened that one that day? I don't know. I should still be sending Kent a gift every year. So I never thought maybe this could appear

in the Times. So from the late 90s, when do you launch the firm that you'll ultimately build up and sell in 2012?

So I am really, really bad with dates, but we were in early 2000s? No, 2008 or 2009. So after the financial crisis. That's exactly right. So

four years, you build this up, why sell it? You're just like, hey, I'm going to focus on my security

guard business? The first thing I should tell you is why I left and started my own firm. I remember the impetus for that was two things. This is at Fidelity. No, I was now working at the big brokerage firm. Oh, okay. And I left to start my own RIA firm. Got it. And I remember when the, do you remember that cover? I can't remember if it was Fortune or Forbes that had the cover with Rex and David at DFA and it said how they're really smart money invest? Uh-huh. Do you remember? Vaguely. I had that in the top drawer of my desk every time I opened my drawer because I still had this like, I'm just a kid from the hills in Utah like imposter syndrome thing. Like, I'm supposed to be in jail. Do you know what I mean? Right. And I'm helping people make really important decisions with money. I need to figure out, like, am I a security guard? Is this math? Like, what is this thing? And so this idea of like how the really smart money invests, I called and was like, how do I get access to this? And they're like, well, you can't do it where you're at. So I left for that reason. And then the second reason was, ended up being one of the greatest disappointments of my life. I left because I thought it was really important to be able to tell everybody that I was a fiduciary and that everybody would care. And I left. And one of the greatest disappointments of my career was nobody seemed to care. I mean, of course, you and I both know it's incredibly important. But most people don't know. I just remember people looking at me like, fiducia, what? Of course you put my interests first. So that's why I left to start the firm.

That's fascinating. So you sell it in 2012. When did the Sketch Guy columns for the New York Times start?

Before that. Is that right? No, oh yeah, way before I started, I sold the firm. Part of the reason I sold, so I think 2000... You sold the firm to concentrate on your doodles. That's right. So the book came out in 2012, and I sold the firm about the same time. And I remember specifically having this conversation with my wife. I was like, oh, we'll never sell this thing. I always thought of it as a security blanket, like I'd never sell it. It's an annuity. It generates income every year. and typically you have a 10% win that you're back just due to the market appreciation. It's such a great business, right? It is a good business. That's right. And especially if you're a fiduciary and doing the right thing by your client, you not only make a decent living, you get to sleep at night. That's exactly right.

All the things. So I never thought I'd sell it. There was just this increasing demand. The book was coming out. I was getting asked to speak all over the world. It was clear that I really, really liked that stuff. I had to make a choice. And in the end, I was like, this is a security light my wife said hey maybe it's an anchor and i was like you guys speak the

same love language it's kind of fascinating really yeah because just think about that's a very insightful observation from your wife she's the one who tried to get you a hat a shield and have you parade around the mall like paul blart i mean that you guys are very much on the same

yeah i know it's been super i mean she's been amazing 31 years and amazing but yeah anyway Really? Amazing. Yeah. And it's the best it's ever been, and I hope it's better tomorrow. Do you know what I mean? Like one of those two competing truths at the same time. Like I could have never dreamed of it. And I just wanted to get a little bit better tomorrow. And I hope I never stop thinking that way. But anyway, left, sold the firm, full time into the speaking, writing thing for a little while. I was at a big firm, sort of the firm that bought my company. I was there for a while. Another nameless firm? Yeah, back then it was Buckingham, so band.

Oh, okay. I kind of remember that.

Went and toured for those guys and loved it.

Who else did you work with there? There were some people I really liked. Larry Swedrow, Tim Maurer. Tremendous Larry Swedrow.

Yeah, that whole crew. Adam, their mom, the whole crew there was really, really good.

Really interesting. So we're going to spend a little bit of time talking about behavior, but you came from a big shop, you came from several big shops, Fidelity, Merrill, as well as Buckingham, they all have PhDs in Monte Carlo simulations, and they run factor model tests, and yet people still buy high and sell low. What is it about the human condition that is a permanent drag on performance?

That feels to me like the question that I've been exploring for 20 years.

That's why I asked it.

Yeah. Yeah, I mean, to me, I thought at first, I remember I almost left the business because I couldn't solve this problem. Like after I got my SEMA designation and I came back.

Explain for lay people what that happened.

The Certified Investment Management Analyst. So it was sort of like for people who were doing institutional consulting work. So I thought it was like.

So not a CFA, but more than a CFP.

Yeah, and sort of like CFA light that can talk to people. And back then it was taught in conjunction with Wharton. So I went to Wharton for two. That was the whole reason. I'm always looking for external validation back then.

Goes hand in hand with the imposter syndrome.

That's exactly right. And I'm not afraid to admit it. But I came back from that, working with clients, and realized, okay, now I've got this great system. The best training in the world. Honestly, some of the best training at the firm, right? And yet, I still had this repeated experience where we would create really detailed spreadsheets of how to hire and fire managers. And then we'd have this experience over and over where the manager that showed up on our buy screen, we would commit clients' money to it. It would become the... I thought that was our job, the search for the best investment. We'd find the best investment, we'd commit clients' money to it, and then it would go through a normal cyclical period of underperformance. And it would show up on our fire screen. And I repeated that two or three times over maybe a three or four year period and was like i i don't know what's going on like i maybe it's just me and then i and then i ran across some of that industry research around investor returns versus investment returns where you see that the average investment right average investor underperforms the average

investment now whether it's anything close to not not only does the average investor underperform the average investment but the average investor underperforms their own investments so it's like

I just remember being so excited that it wasn't just me. Do you know what I mean? Like, wait, this is an industry-wide huge problem. So that's when I was like, wow, how do we? I mean, what that research said to me was that I could own a mediocre investment. If I behaved correctly, I would outperform 99% of my neighbors. And that's all we care about in the first place, right, is outperforming our neighbors. That's the whole goal. Right. How is that idiot down the block getting rich and I'm not? Yeah, exactly. As if that's the thing that matters. But that's how people will. That's exactly right. So I just remember, so digging into that a bit, I really think like Buffett's statement that if you were to design a poor investor, you would design a human. Right, right. Is as close as we get. Like the hard wiring.

We are hard-wired, and I think it was in one of Zweig's books where they hooked up scanners and had people open their brokerage statements, right? Like talk about a masochistic experiment. And if the brokerage statement was down, you process that in the same part of your brain as you do mortal danger, like where I'm doing a bear breaking through the room.

Fight or flight, right there. My favorite Bill Bernstein quote is, it's all about your amygdala. If you don't get your limbic system under control, you will die poor, and it's that exact same system.

That's right. And if the statement's up, same part of your brain as you do security and pleasure. And I think it was in the book that for women, that's chocolate, and for men, that's sex. And I didn't quite understand the difference in the book. Between sex and chocolate? No, just wow. It must be a fun day. So, if that's what's going on, it's a little bit like the interaction we have with our phones now. You know, like, on the other side of that interaction are 300 PhDs trying to get us to pay attention to what's going on on Instagram, right? And I just think we finally have to recognize, unless we put some serious guardrails in between us and the big mistake, we're going to make the big mistake. Because it feels like, I don't care what you tell me, Barry, my hand's on a stove, I'm taking it off. Do you know what I mean? 100%. So I think that, to me, is the work of worrying about, like, what does it mean to be a real investor, a successful investor, versus what it means to find good investments.

Let's talk a little bit about the behavior gap. I don't know if you created that phrase, but you've done more than anybody else I know to popularize that phrase. Tell us what the behavior gap actually is.

Yeah. Yeah, so it started out as a very narrow thing, which we already pointed to. This difference between, and the technical term would be the difference between time-weighted rates of return and dollar-weighted. And because I've had to explain this so many times, maybe I'll go through the explanation. Sure. Imagine you open a newspaper. There's an ad for a mutual fund. It says the fund has returned 10% a year for the last 10 years. That's the investment return. And just for a minute, forget taxes, you know, any sort of fees or whatever. That's the investment return. That's the return you would have gotten if you had invested money at the beginning of the 10-year period and not added or taken any way and left it there for the 10-year period. But nobody invests that way except your clients, right? Like, nobody invests that way. We are always chasing, right? Right. Whatever we hear in the news, the Financial Pornography Network waves their hands and we've got a list of 10 funds to buy or whatever. And the old days, smart money, you know, like this. So we end up running around, and the average investment return is 10%, but the average investor return is always different from that. Who does the annual report that everybody criticizes that shows this differential? So that was one of the early reports I ran across was Dow Bar. And I have not spent the time, well, I spent the time years ago to understand. I don't really know anything about that number. I know Morningstar does a number, and it seems to be 80 to 100 basis points, not 6%.

And what about the SPIVA numbers on manager performance? Yeah, for sure. So you're running across these behavioral errors on pretty much both sides. The manager who's running their funds and frequently underperforming, And the longer that timeline is, the greater percentage of managers are underperforming. And on the other side, the buyers of those funds tend to not only underperform the benchmark, they're underperforming their own funds. So if only there was an alternative way to invest.

Let me tell you a quick story. So this is back during my institutional consulting days. So we had this client. We do a manager search and selection. and we find the best large-cap value manager for this client and hire that large-cap value manager. And as I recall, it was Davis New York Venture back in the day, right? Chris Davis. Yep. We go two or three years. Davis has one of those cyclical underperforming moments as they're going to do.

Right, especially value, which runs in and out of favor.

Yeah, and it was even in comparison to other value managers, right? As they're going to do, right? So we fire Davis, not knowing any better. We hire another, and I can't remember, we'll just call them XYZ, right? Like we hire this new, and the client's like, yeah, yeah, I understand. It's two and a half years in. We make this change. We go to XYZ. Two and a half years later, three years later, XYZ does the same thing. Cyclical, he underperforms. We go through our manager screening. They're up on our fire list. And guess who pops into our buy list? Chris Davis. Yeah, call the client, thinking I'm so smart. Hey, we need to fire XYZ.

and hire this manager, it's called Davis, and they were like, wait, wait, wait, wait, wait, wait. Didn't we, his client's name was Jeremy, didn't we just fire them two and a half years ago? And I was like, yeah. And he said, you know what I'd like? I would like the return of Davis from the day we first hired them till now. I'd like the return of XYZ from the day you first hired Davis to now. And I'd like that compared to my account. I was, of course, like, that's not how it works. He said, yeah, that's what I'd like to see. And we all know the story, right? He underperformed either of them, both of those. Like, he would have been fine in either one of those. Just leave it alone. Just leave. And that was my first moment of, like, I got to get out of this business. I got to go to law school or something. And that's when I discovered this idea, or for myself, discovered this idea that maybe the investment process only matters to the degree that I can behave.

So let's talk about what you call the financial pornography networks. They talk all day long about tenure yield and the Fed and credit spreads and geopolitics and earnings and news. And you spend most of your books, plural, talking about fear, regret, envy. What moves markets and what, more importantly, moves investors' portfolios?

Gosh, that's such a good question. And I want to be careful about...

You know I do this for a living.

I know. It's a really good question. And I want to be careful about the term Financial Pornography Network. I think that was originally the Jane Bryant Quinn term, which I love. That's exactly right. Which I love. I love the term, but I think it apprised just really broadly.

I call it the fire hose of financial noise. Yeah, that's fine.

I think sometimes media circus, it's a media business. And there's nothing, I want to be clear, I live in the hills in Utah. I ride my mountain bike every day. The trail's out in my backyard. I have a different hobby. Just because that's my hobby doesn't mean my hobbies are better than anybody else's hobbies. They're healthier. But I walk in this building, and I see happy human after happy human walking through the halls. This is like shiny, happy people everywhere. Who am I? Free cappuccino. Who am I to say, right? But I think what's important is if we start to recognize, like, what are we doing it for? What's the goal? Because if it's something to talk about, there's nothing wrong with that. If it's entertainment, there's nothing wrong with that. But basing your financial decisions, your actual investment decisions, on something you heard, even if it was secret underneath the subway, and it was labeled, isn't The Economist the one that all the really smart people read anyway? You're not the only one that's heard that. So I think we have to be careful with sort of making big investment decisions based on every wind of news or entertainment. versus linking, and again, this is back to how do we solve this behavior problem? I think it's got to be, it has to be, the portfolio has to be designed to give me the greatest likelihood of reaching my goals, and my goals have to be carefully clarified, and they're going to change over time. It's this constant process of saying, are these investment decisions aligned with what I want out of my life? Both of those sides of that equation are really challenging. Getting clear about what you want out of your life, super hard. Making sure you have a portfolio built on data and evidence and that will get you the closest to that, also really hard.

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Support for the show comes from

public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S&P 500. Or, if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined an investing platform driven by your intent not just your clicks you can also get full read and write access to your account via the public api go to public.com slash market and fund your account in five minutes or less that's public.com slash

market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. When you own your own business,

you own every decision. Now own the card that rewards you for it. The Chase Sapphire Reserve for Business card brings the best Sapphire Reserve benefits to business owners who expect hard-working rewards. Designed to meet the needs of business owners at scale, this pay-in-full card elevates your travel experience and offers premium benefits and value toward business services that will take your business to the next level. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits, and more. Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges, whether you're looking for pre-flight productivity or time to rest and recharge. Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for Business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A., member FDIC.

So let's break that into two pieces. Yeah. Because I kind of feel like there are two distinct conversations. Yeah. We'll get to the goal portion in a moment. Sure. I want to stay with the media circus. Yeah. Isn't there really a very simple problem? and that is the mismatch in time horizons when you're putting money away to save for retirement or even to save for 529 for college or saving it by a house or a second house or whatever like you're thinking 5 10 50 years but all of the financial noise that fire hose that's about That's the church of what's happening right now. So if we can simply readjust our media consumption into some context with the longevity of our portfolio goals, doesn't that solve a lot of these? If I'm putting this money away for 20, 30 years, what do I care what happened on a random Thursday?

But, yeah, and gosh, what if we actually kept track of every single change of opinion, right? And how sure somebody was, right? Remember that? What's that old statement that even a broken clock is right twice a day?

I was going to say, often wrong, never in doubt is the line I like.

And that's, like, again, entertaining. And there's nothing wrong with entertainment. We go to the movies. We go see plays. We ride our mountain bikes. There's nothing wrong with entertainment. I just think we have to understand what it is. And what you're saying is, yeah, that's day-to-day entertainment. I like it because I can talk about it. It's important. Don't base my 20, my 10, my 5, my 10, my 20-year decisions on it.

Right. And yet we continue to see people have that problem. So let me re-ask this question in a different way. How do you bridge the gap between what clients ask for, what they think they want, and what you know they actually need.

Another, Barry, you're super good at this whole job. It's all AI. It's all I didn't write in. No, I just, because now you've layered another problem in here is because clients, the humans that we call clients, show up having been trained by us as an industry, speaking really broadly, that what matters is this day-to-day stuff. They think the job of an investor is to find the best investment Because we taught them that on the television, waving our hands. So it's no surprise. We did this to ourselves. It's no surprise that clients come in expecting. And that's why I think clients who work with real financial advisors often go through a period of the financial pornography detox program, where they maybe wake up 18, 24 months into the relationship and go, hey, you know what? I'm not really paying that much attention anymore to that. All the stuff I used to think mattered was critical. has lost its urgency, its tenor, right? So we've got this problem of, like, it feels like, and again, back to the wiring in our bodies, like, it feels like we should be doing something. The news is saying we should be doing something. The guy at the club is saying we should be doing something. And I call Barry, and Barry says, hey, let's hold on for a second. Let's review the, are these goals still the goals? Is this still what's important to you? Turns out, if that's true, we're okay here, and almost always we end up at the same place, which is diversified, low-cost portfolio, hold on to it for a long time. There's this inherent bias towards action. For sure. Which is the nature of that fight. or flight response yeah one or the other right don't just sit there do something and really the right way to do it is don't just do something sit there but that causes a great deal of uncomfortableness amongst people um let let's take this to the next phase so jack bogle and and vanguard gave us low cost uh everything we've learned from richard thaler and the behavioral finance folks is about the importance of humility what does the next generation of investors learn once they figure out diversified low cost and a little bit of humility where do you go next

yeah yeah you know what's so hard about that is this like everyone's a gambler thing that's sort of slipped actually today yeah that's sort of slipped in like it's it's i don't envy growing up as a, you know, 25, 30 year old person trying to sort this out right now, because it just feels like everything's a bet, right? And it is, I think to me, I mean, I'm careful with advice, but the observation that I've noticed most frequently is that if I can, when I'm younger, focus on human capital and then realize that the money over here does the job of compounding, right? My main job should be to earn a bit more, raise my human capital. My ability to earn and save when I'm young will far outstrip getting an extra 25 basis points by paying attention to some newsletter on the internet.

You know, it's funny you mention gambling being everywhere. We were talking before the podcast about Nine Finger Howie, and he wrote a post and created an index called the Degeneracy Index, where he puts in all of the various prediction markets and gambling apps, and it's been outperforming the NASDAQ, which has been on fire, like two to one, and it just is a kind of warning.

What can we do with that? Yeah.

It's a warning that, all right, I understand the Supreme Court decision that says gambling can't just be legal in one state, but maybe the decision isn't to make it legal everywhere. Maybe the decision is to say an entire industry based on human foibles, cognitive errors, and innumeracy is kind of an evil industry.

It's just the problem we need to realize is that we're just not wired for it. It's not that we're dumb. It's not that we're... We can have any discussion we want about the morality of the whole thing. But underneath it all sits this idea that we're not wired to handle it. We're not... And I think this is another piece that's interesting right now is I don't think we're really sort of wired to handle the level of uncertainty that we're dealing with right now, like the sort of change fatigue.

And it seems like a lot of what Wall Street sells is this illusion of certainty.

Yeah, this false sense of precision. Like, certainty is so easy to sell. It's impossible to deliver, but it's super easy to sell because everybody wants to buy it. So I think those are the two, like human capital and learning how to come to grips with the reality that the world is uncertain.

So the quote of yours that always stays with me is money is less about math and more about emotion. That was your insight watching the Netscape IPO. Why is that so challenging for this industry, for finance, to accept?

it seems to me and i've been in a lot of the rooms where this discussion takes place that we just we have a deep sense of physics envy for sure like we just want the law of gravity for money and and when we understand that the systems that handle money markets economies politics and then and then humans, those are a mix of complex adaptive systems. They're not simple systems and they're not even complicated. They're complex adaptive, almost chaotic. And when you understand a complex adaptive system, you start to understand that like, there is no, even with the benefit of hindsight, and you see this all the time, I'm sure, like even with the benefit of hindsight, we look back and like, here are seven steps to having, it turns out that that only works for that period of time right you replicate those seven steps it doesn't work again all models assume the future looks like the past and very often the future looks nothing like it's exactly like all models are wrong let's make ours useful it's like much more helpful this idea of saying like okay if that's the reality i live in then how do i navigate a complex adaptive system and then that gets us to this point where it's more about it like the problem is you the problem is me the problem is like it's us and so it's i think that's why it's so hard is we have to say oh man we don't know exactly what we're dealing with here because it's so cute after a big crisis to see all the people who have very specific plans about how to avoid that exact same we're still taking our shoes off in airports you don't have tsa pre yet well yeah i do i haven't that's true i haven't

taken my shoes off i'm going to share one of my favorite random data points i don't know if this made it into the last book um but earthquake insurance earthquake insurance sales go up tremendously right after an earthquake. And if you think about how the plate technotics work about these two pieces of terra firma sliding, the odds of an earthquake happening after that 10, 20, 30 years of pressure is released plummets immediately. The worst time to buy earthquake insurance is right after the earthquake. The best time is, hey, this is an earthquake zone and we haven't had an earthquake in 20, 25 years. Now's the time. I remember getting offered structured notes with downside protection in like October 02. And I'm like, why do I need this? The NASDAQ is down 83%. Where were you in late 99 when this might've been useful? Down 83%, I'm a buyer. I don't need, I want all the upside. Why do I want to give any of this? Like I had that conversation in a room for the salespeople pitching this and got called into the chairman's office. What are you doing? We're trying to set up a relationship with these people. I'm like, this is crap. Nobody should own this product. And I'm like, I know you want a relationship. Tell them not to not bring us junk that we don't need. I mean, look, I like dessert as much as the next guy. This is what I came for right here. But I just, I remember there are several times when I would get called as the market strategist, called in to the vice chair who was general counsel or the chair. He's like, what are you doing? By the way, the firm? Lehman Brothers. Yeah. So not only was I right, but the counterparty risk was you would have gotten nothing anyway.

Yeah, and we will go to, the lengths we will go to make up stories about that after the fact. Do you remember, I can't, look, I'm going to deeply paraphrase and I'm sure I'm ruining the story, but after long-term capital management went under? Uh-huh, 98. Do you remember, and I, again, there was some quote where one of those PhD Nobel Prize winners said, our models weren't wrong, reality just refused to conform to it. I don't remember who it was, but when genius failed,

that quote is somewhere in that book.

That's exactly right. And I only point that out to point out that I certainly will go to great lengths to make a cute story that will protect me from dealing with uncertainty because our nervous system takes uncertainty as a threat. And it turns out, we are in a period of uncertainty, and I don't think we're going back, to be honest.

Well, let me, this is supposed to be about you, the guest, but you pushed my uncertainty button. Please, this is what I'm here for. We're all here for this. So whenever you hear people saying, markets hate uncertainty, my knee-jerk response is always, markets thrive on certainty. That's the whole point. The only time there's certainty is when everybody is on the same side of the boat. In late 99, everybody was certain trees grew to the sky. And in March 09, everybody was certain markets were going to zero. That's right. Except for the handful of people who stepped up and bought. Yeah. The future is inherently unknown and unknowable. That's right. When people say things are uncertain, I always feel like what they're saying is, normally i could lie to myself enough that i could bs you people that i have some idea what's going to happen but god damn whatever's going on is so crazy i can't maintain that fiction anymore so i default to uncertainty that's right in reality most of the time everything is inherently

uncertain that can i let me just just real quickly i'm super interested in what you think about this I feel like you and I came up, the financial planning industry, the financial advice industry really grew up during a period that was an aberration. There was some, for a certain group of people, there was a predictable path of progress. Give me some years. My grandpa, I'm seeing post-war, my grandpa, my grandpa got a degree, could afford a first-time home without salary, stayed there for 30 years, retired with a pension. There was this window.

That was the aberration, the entire post-war period. Is the aberration, yes. Like the roaring 20s, the uber-rich and the rest of us pleads. Things weren't like that.

That's normal. Things weren't like that before. Right. And they aren't like that now. That's right. And I think the problem is- And we falsely believe that, oh, this is the new era. The problem is that was when we- built all of our tools our language our planning tools our Monte Carlo simulations during that aberration period I think much more likely is like if you think it feels like uncertain now like we're not getting more like we're not going back there no no it'll all settle down this will all go away yeah exactly so I think to me that leads to this really interesting discussion at least around like how do I learn it's a posture shift instead of like trying to defend an outdated map like confirmation by, don't you know 10 best days? Instead of trying to defend an outdated map. Explain 10 best days because it's a great, and 10 worst days, it's a great concept. It's always, right? Like anytime anybody's scared of anything in the markets, we just parade out. You saw this on Twitter back when it was useful, right? Like if anybody said anything bad, like I'm scared or this market scares me, a bunch of financial advisors would jump in the room and say, don't you know if you sell and miss the 10 best days, you may as well be in CDs over the 20 year period or whatever, or you miss the 10 worst days. And they all are clumped close together. That's exactly right. And I also think that that was an effort to say, don't worry. When I think, and to spray people with facts and figures. When they're feeling irrational. I like the gun you hold. Yeah, spray people with facts and figures. Because when you're feeling irrational, the last thing you want is somebody to try and reason with you.

Wait, you're telling me that pure logic doesn't satisfy emotional.

We tried this with a teenage teenager, right? Like, the last thing you want. What you want is, metaphorically, a hug first, right? Like, we'll get to the facts later, and let's never get to the lecture. And so I think if we shift that posture a bit where we're like, turns out uncertainty is reality, I don't know what the... I mean, add in sequencing risk, right? Like, are we going to have a great market for the first five years of your life or the last five years of your life? Like, who knows? You add all this in...

Not that useful in the last five years.

That's exactly right. It turns out that we're dealing with a very complex adaptive system, and the ability to navigate, make really important decisions in the face of irreducible uncertainty is the primary skill. Like, if I was younger, I would be studying complexity theory. I'd be studying being resilient. I'd be studying understanding how to make really important decisions. Mountain guide. How do I make really important decisions when I don't know? How do I get comfortable not knowing? But they're life and death decisions. And how, yeah, like, some of my favorite people are, like, really thoughtful, really thoughtful, like, people who worked in distressed, because if they're on the ground with the company, they're having to make mission-critical decisions, and they do not know. They don't know how they're going to work out. I've got a really good friend that way, and he's just like, yeah, I have every day. Some of these decisions are thousands of jobs.

Right. And I don't know how it's going to work out. And you're making these decisions under intense uncertainty.

With incomplete information and no amount of spreadsheeting will get you more information. The only way to get the more information is take an action. Fascinating, right? Like, to me, that's the skill. That's what this market is calling for in terms of leadership is the ability to create containers for collective interpretation rather than scream at people.

So let's talk about this book. Sure. You describe it as a conversation grenade.

Yeah.

Explain.

Yeah, first of all, I think I first heard that term from Hugh McLeod, the gaping void guy.

I have some of his stuff on my wall, and on the opposite wall, some of your stuff. Well, that's cool. Thank you. In fact, buy high, sell low, repeat until broke. Number one. Number one is on my wall. That's right. So, full disclosure.

Well, thank you. Yeah, I have some of Hugh's stuff in my office, too. So, Conversation Grenades, this idea that, like, it's the only reason I wrote the book. I swore off writing. Why? Well, because I love audio so much. I actually had...

Again, not mutually exclusive.

This is exactly right. But after I wrote the second book, I thought, I'm just going to speak. And then podcasting came around. I was like, this is amazing.

I had, between Bailout Nation and How Not to Invest, a solid 15 years.

Yeah, you did.

Like, I needed a recovery. That was my refractory period. That's right. Like, I need a decade and a half. That's right. I really needed a decade, and it just took me the pandemic to make me start thinking about it.

I kept noticing that people like physical artifacts. I agree.

I don't love a Kindle. I like a book.

Yeah, and especially that. So working with Harriman really allowed me to everything about the book is designed to think of it.

We have the same publisher I didn't even notice.

Yeah, yeah. I'm sure Craig helped you. Yeah, he's great. For sure. So everything about that book is designed to feel like you toss it in a room and conversations break out.

That's the conversation grenade analogy. Set it on a coffee table. Unpretentious coffee table book. I'm going to pick it up. I'm going to mess with it. We talked about hardback. I wanted it to be that soft cover. We moved the front matter, the legal stuff. Go to page one. There's none of it in there. You moved it to the back. They let me move it to the back. And they said, nobody's ever asked. Dude, I love that idea. Nobody's ever asked, but yes, I was amazed they let me do it. But this stuff's in the back. Because what reader has ever said, please give me that. Oh, crap. There it is in the back right there. I always assumed it was a legal requirement. It had to be up front. They said nobody's asked. So they let me do all sorts of things that allowed us to be like, no, this is in service of the reader. We want you just to have this sitting around. And the number of stories I've heard, like I had it on my table, my son asked me a question, or I sent it out to clients and this. It's really meant to be a conversation grenade.

So we started out talking about your deceptively simple sketches. Is this simplicity a conscious act of rebellion? There's so much complexity and arcane language. We know every profession uses arcane language to hold lay people at arm's distance. But was this simplicity in your sketches, is that purposeful or am I reading too much? Deeply purposeful. Purposeful, yeah.

Yeah, I think it's maybe just the way my brain works. I only have enough RAM for like one problem at a time. Okay. And so I like to get into it, understand nuance, edge cases, you know, it gets like a giant ball. There's actually a sketch in there about this. Like, it gets like a big giant, like, it's a simple question, you know, simple, simple, simple, boom. What about this? What about that? What about that? What about that? What about that? Edge cases, reading it all. And then there it was. And then, yeah, and then once I get in there, I'm like, okay, now, and you actually shared a quote one time about there are a lot of simple... Investing is simple but hard. No, there's a lot of simple... There are a lot of answers that are simple, elegant, and wrong. Remember this?

I don't know where I stole that. That could actually be me. Yeah, no, I remember you shared somebody else's quote.

And I was like, oh, because... Simple, elegant, and wrong. Yeah, and I really worry about that. Because when you're in that ball of yarn complex and you decide to distill or edit, you have to make some conscious decisions about what to leave out. And I often get that wrong. And when I do, I hear about it. And it makes the work a little bit better. There are words and lines in some of those sketches I've been thinking about for over a decade. That you want to change? I removed a word that had been in there 15 years. Which sketch? The word was... People you love experiences spend the money. Yeah, that one's one of my favorite ones. That is one of my all-time favorite ones.

You do like a good Venn diagram.

Well, by the way, the Venn Diagram police have come after me, so I just call them circle sketches. Oh, dude, I used to get two-page emails from the Times readers about Venn Diagram police. Picture shaper. Picture straighteners. I used to send equal rebuttals, and then finally I just developed a template email that said, You're right. I call them circle sketches. So, yeah, the Venn Diagram piece is pretty loosey.

Wait, these are legitimate Venn Diagrams.

They can make an argument, of course.

No, if it's this over here, this over here, and the overlap that you want to focus on. For sure. Things that matter, things that you can control is another one of yours. Yeah, what we should focus on. And then the overlap. How is that not a Venn diet?

I don't know. I don't know, but somebody will find. But my point really is that when you distill and leave things out, you get things wrong sometimes. And you asked which one. For a point, though, you're trying to communicate cleanly and simply. It's true. But I'm saying some of that feedback's amazing. Like the Venn diagram police weren't particularly helpful, but some of the feedback is amazing. Like, hey, have you ever thought of this? And it makes me reconsider and adjust, and there have been changes that I've made. Like, there's one sketch that says what's important. I used to say what's important to you. It was an alignment sketch. It was like your use of capital aligned with what you say is important to you. And that word say. Well, it's implying that it's not important, but you're claiming it's important. It bothered, that word say bothered me for a decade before I was like, no, no, no. It's, we want to get to what's important to you, not what you say.

You were hinting at another problem with people not speaking.

That's right. Revealed stated versus revealed preferences. I'm more interested in the revealed preferences. What's actually important to you. That's really, that's really interesting.

Support for this show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25...

buy a put option on the S&P 500. Or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered

services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com

slash disclosures. When you own your own business, you own every decision. Now own the card that rewards you for it. The Chase Sapphire Reserve for Business card brings the best Sapphire Reserve benefits to business owners who expect hardworking rewards. Designed to meet the needs of business owners at scale, this pay-in-full card elevates your travel experience and offers premium benefits and value toward business services that will take your business to the next level. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits, and more. Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges, whether you're looking for pre-flight productivity or time to rest and recharge. Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for Business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are

issued by JPMorgan Chase Bank N.A., member FDIC. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time so while others are busy talking we're busy building that's venture global that's unstoppable energy

so so let's let's stay with the concept of spending money yeah right since i just flipped to whatever um that was every advisor that manages money for people can tell you story after story after story um my favorite one i'll share here hey barry's a car guy he has a boat you want to buy a boat and a car why don't you talk to barry so i speak to the client so i'm thinking about buying a 60 foot 50 foot whatever sailboat and i'm thinking about buying a ferrari i go that's really easy what's your boating experience zero you don't start with a 50 60 foot sailboat that requires a crew it's two and a half million dollars you'll take it out twice you'll sell it for a 30 loss on the other hand go by the way this guy could buy a ferrari a month for the rest of eternity and it's fine go buy the ferrari take the whole family down to the ferrari high performance driving school which i'll let you on a little secret all of these advanced driving schools they're really defensive driving classes in disguise right and you will learn not only the limits of the car that you'll get nowhere near but you'll learn the limits of your own driving ability yeah and more importantly learn how to operate within your own skill set and so will your kids if you bring that's right so everybody becomes a better safer driver yeah so he goes out and buys a Ferrari. They do the class. They love it. He also buys the boat. A year later, he sells it for a 30% loss. Anytime Barry gets on the phone with a client, the advisor always says, do not mention the boat. So the only thing worse than being right is being wrong. And I could say this at the back of a podcast because you can confess to murder at the end of a podcast and no one will hear. So I'm very comfortable saying this here. So with that, Barry digression here, let's talk about how do you help people focus on what's important, what matters, and what the purpose of money really is? What should they be doing with their money? Especially later in life, they've accumulated a nice pile. Can't take it with you. Yeah, running experience, like

practice like like often one of the things we see is the very things that got you to that spot are working against you going forward right like you're being frugal saving aggressively being very disciplined and now you're saying hey i

been putting off this delayed gratification thing was really important maybe like but it definitely got you to the spot it's you get to a point at which you should no longer delay there's not

going to be time to delay it's so tough for some people to make that super so you practice you just

like like your boat example is great yeah like i mean i've literally have had people who can't spend any money and like you're saying have enough money that they could spend it for the rest of lives right go like go get a coffee with a friend pay for theirs and just under go on the trip and enjoy the trip right just one of my favorite stories is from alan smith in the uk had a client he's a great financial planner had a client that um had rel and he's told this story publicly had a client that had relatives that had moved there was a bunch of people from wales that moved to Argentina for mining way back, way back in the day. I know exactly where you're going to go with this. A bunch of his relatives moved, a bunch of her relatives moved. She'd always wanted to go see the Welsh national rugby team play the Argentinian, the Pumas in Argentina.

How hard is that?

And she was like, I just can't, I can't. And he's like, you could do this every year for, you could do this every month for the rest of your life. It's like, well, I can't sit that long. You could have a lay flat bed. Right. And so he finally.

Or you could go from Wales to New York, go from New York to Brazil, go from Brazil to Argentina. You don't have to do it in one trip.

So he finally, just over time, got her used to the idea. She went and she says it was the best. We're never going to rep to go to those things. We're never going to...

AI is not going to replace that.

No, and so to me, it's like, dude, I think I would... I don't know if I'd rather Aaron being irresponsible, but I know we should spend the money. Spend the money.

Well, you know, irresponsibility never comes into it. You're looking at someone's portfolio.

Yeah, that's true.

Hey, you have $10 million. You live on $350 a year. You want to bust out another $50 so you can take the whole family to the old country and show them where your grandparents came from? Why not?

Yeah.

I mean, it's not even $100,000.

Yeah. And so I think to me it's... These, by the way, are very first world problems. Of course. But they're problems. like I've decided Brene Brown got really clear about like comparative suffering does us no good right so I always like like whenever I hear first world problems I'm always like well yeah but this is a challenge and it happens to be the challenge that many of your clients and the people I'm talking to are facing so why not just practice like can we pick something small right something you've always wanted to do right and it might be simple like take the grandkids to the art museum this weekend

I'm going to share another line with you not comparative suffering often falsely attributed to Teddy Roosevelt. It hadn't been around till like the late 1980s. Comparison is the thief of joy. Yeah, for sure. What a great phrase that is. It's so good. There's always someone with a bigger boat, or a larger house, or a faster car. Whatever you're envious of, you have this car, are you really happy with it? Then who cares what the guy down the block has? That's pointless.

Just real quickly, that's one thing that I think makes this even harder. We're never exactly sure, do we really want the boat? Do you know what I mean? Well, if you're not sure, then that's easy. Don't get the boat. Yeah, but you could go out for a day. You could rent a boat. Try little experiments. Try little experiments. Because I just remember growing up, I always wanted, I grew up in the hills in Utah, right? We all had BMX bikes. I love this BMX story of yours. I always want a slightly better BMX bike.

Oh, no, you wanted a really nice bike, and what did you end up doing?

Which one are you talking about? Are you talking about the road bike? The moots that I ended up spending a moots, a titanium bike out of steamboat. Different story, but yeah, that's one of those moments where I, are you kidding? Those things were, I could not, like, I think those are $6,000 or $7,000. That's nothing today in terms of people who rode. Oh, no, you could drop $10,000 on a bike. But still, it was like, and that bike, like per unit of dollar, per unit of fun, I've never made a better investment.

What's a BMX story?

When I was little, when I was like eight, I had slightly better BMX bike than some of my buddies, and some of my buddies had slightly better. That's all I knew. I didn't know at the time that I was supposed to want a private jet. And now I do. Now Instagram has taught me. So I think we have this problem of cultivating our comparison set. So now we're talking, even getting clear about the word goal is hard. Because you don't know if it's your mom's goal, if it's society's goal, if it's Instagram's goal, $5 million in a sailboat? Like, when did you... Insane. Where did that come from? Let me share a fun private jet story with you. I love private jet stories.

So whenever anybody used to ask me, hey, you're going to sell the firm? What's your F-you money? Questions like that. My answer has always been the same. Whatever it takes to never step foot into a commercial airport. report ever again. And then I made the mistake of saying this in public somewhere and I started getting marquee jet, net jet, all these guys sending me pictures. So out of curiosity one day I said, run the numbers for me. What does this really look like? So it turns out east coast 6,000, 6,500 an hour, cross country to California 8,000. You want to go to Europe, it's 12,000 per hour of travel so do the math so I start I'm a deep down inside I'm a numbers guy I'm like oh this is quarter million half million a year for that to be rational you have to be not have ten million dollars you have to be earning ten million dollars gross to spend a mere five percent of your annual income and cap gains on a PJ at half a million per, PJ right from succession. I never heard that phrase before that show. And so all of a sudden I'm like, oh, I have no interest in that. I don't ever expect to be pulling down 10 million a year. And while it's attractive bypassing all of airports, I kind of learn, all right, so I'm not going to go on high traffic days. We travel for Thanksgiving weekend. I'm the first flight out Thursday morning. blow through security in five minutes two hours later it's a zoo right so all right i'm not going to spend a half a million dollars a year i could spend a little bit of brain power trying to navigate around the worst worst i won't arrive at the airport at five o'clock because i don't want to get get stuck in traffic and i won't take a nine o'clock flight in the morning that require so like all right i'm not flying private i'm trying to fly a little smarter commercial Even if you're in the front of the plane?

Yeah, but that to me is a really good example of thinking that something might be important, running a little bit of an experiment, just actually running the numbers, deciding. So we're just constantly narrowing in for our whole lives. And those things change.

It would still be delightful to be able to just show up at the airport. And you made a trade-off decision. Leave when you want to leave. And save a day of travel on each side.

For sure.

But is that worth a half a million dollars a year?

To you, it's not.

In order to make it, I'm oversharing, but I'm going to overshare one more thing. So friends of my wife get a pied-à-terre in the city. They're empty nesters. They downsize. They have a house, and then they have the city apartment. And I started thinking about a pied-à-terre. We loved it when we lived down at Gramercy Park, and I start looking at this. And, again, I start running the numbers, and I'm like, wait a second. just the monthly co-op fees are like three or four grand a month to say nothing of the insurance the taxes and the one two three four five million dollar purchase price whatever the hell it is and i'm doing the math and i'm like gee this is really like five grand a month it's 60 000 a year i can't spend and we take weekends in the city i can't spend 60 000 a year on hotels restaurants like i can't get it i can't spend that much if i tried like we do a few weekends in the city it's a couple hundred a couple thousand bucks but it's certainly not 60 grand makes no sense to me and i'm explaining that i'm having this conversation with a very wealthy client and i see this look on her face and i go oh you're saying if 60 000 is too much in co-op fees, you really can't afford this pied de terre. And she says, well, I wasn't exactly thinking it, but you're not wrong. And what I was about to defend myself with was, well, the $60,000 just isn't worth it to me. But before I said that, it's like, yeah, but if you had $50 or $100 million, who cares? I just want a place that I'm comfortable in bed my clothes are in the closet and i'm not dealing with checking into a hotel that's worth 60 grand to me if you have x dollars yeah and um she never said that but i immediately saw the

whole i immediately like i have a question for you i can't afford this on the heels of that i have a question for you what's the last thing you decide you decided i'm going to buy that and you didn't you were just like i don't care i'm just buying it doesn't matter how much it costs that you didn't actually because both those examples you're like i wanted a thing i went around the numbers decided not to do a thing is there a time when you decided not to do no you decided to do it you're like i and i just threw i didn't even care what the number said i didn't even look i just wanted to do that thing so bad i was just like i'm doing it there's two answers there's

the barry before he turned 60 and the barry after he turned 60 really when when barry turned 60 and so i i think this is a function of immaturity i never had a midlife crisis probably because when i should have i was still Thank you.

an idiot child i still was 10 20 years maturity level below where i should have been and i turned 60 and i very much woke up with the sensation all right fourth quarter down by seven if you want to win this game you got to get busy like literally that was what i thought right and um i've told i don't know if i ever told this story on uh the podcast and i i the spouse still survived so i can't really go into details, but person about to sell a business for a ton of money, hundreds of millions of dollars, gets a diagnosis, six months to live. And when, you know, you know this, if you're managing money for enough families, the actuarial tables are such that people will begin to die. I mean, that's just the normal human finite lifespan. And so it's easy to start to pick up that pattern of life is short what are you waiting for so the combination of turning 60 soon after the pandemic ended and a lot of people a lot of people lost a lot of people during that i kind of said money should never prevent anyone from experiencing joy And so what I started doing is not saying no and gifting a lot of stuff. Like my favorite thing in the world around Christmas is to pick a book and send it to 10, 20, 30 friends. The same book. And I'm like, 20 bucks? 30 bucks? This year it was The Uncool by Cameron Crowe. and I was just talking about this with somebody and I said oh I gave that book to a few people for Christmas and I went through Amazon oh I gave 26 of these to various people so good it's $300 anybody who's making a reasonable income by the way you don't have to wait until Christmas I know I was just thinking about that Carl's Secret Book Club it's um launching that it's a really fun thing now there's a little bit of uh a puzzle figuring out what's the right book for the right person and not everybody gets the same book because they're different people yeah but all this comes back to spend the money ah so so i again it's the end of the podcast so i can i can say stuff lex there's no cutting any of this out So 1987, 1988 911 Cabrio, I purchased three or four years ago for like 60 grand. It was an old ratty car that needed to be restored. And the plan was to convert it to an EV. This car wasn't right for that. So I ended up doing it with an 87 coupe with 300,000 kilometers on it.

But the 88 turned out to be this rare matching numbers M491 911 that was worth a ton more than I paid for it. So I put a bunch of money into it. My wife was complaining. My wife was complaining. She doesn't get to drive a stick anymore. Hey, honey, here's your weekend car. I bought it for this reason. We're just parking cash, and it's worth double what I paid. Drive it. And she's like, it's loud. it smells, it doesn't have ABS, it doesn't, she goes, nice, nice clutch, but no airbags, no ABS. And I'm like, so what are you saying? By the way, this is my cross to bear. My wife is very unhappy that I got her a old 911, and she is forcing me to buy a newer Porsche. Like, these are problems that most married men do not have. That's how you know you married the right woman if your wife says nice clutch right you're on to something i taught her to drive a stick when we were dating she drives a stick better than so her daily is an unusual color by the way another great purchase during the pandemic when everybody was freaked out I got her a Panamera 4S hybrid in amethyst metallic, super rare color, substantially less than it should have. And some of the one of the guys from my car group says to me one day, you know, you have the only amethyst metallic Panamera on the island. I saw your wife driving it. I tried to catch her. She's got a crazy lead foot. I couldn't catch her. I was beeping. I was waving. So I'm like, oh, I'll ask her. So I go home that night and I said, I said, hey, how was your day? She goes, crazy thing. This guy in a green 9-11 was haranguing me, was chasing me. And I just put the hammer down and this guy couldn't catch.

And I said, you know, that was Joe, that green, it was green, right? She's like, yeah, yeah, that was Joe. He was just swinging, trying to catch up to say hi. I'm like, weren't, he said he couldn't catch you. It's a GT3. It's like the fastest street legal, you know, just below the Turbo S. There's only one other car that's a fastest street legal Porsche with a stick shift. So good. That's what I'm talking about. So I am in the process of swapping the 88 for a 2024. I know exactly what I'm going to replace it with. I found a little bit of a unicorn. The only problem is the color is wrong. But it turns out, you know, a new car, a relatively new car, you put a PPF wrap around it to protect the paint. Now they make those wraps in colors. So you could get, I really like this paint-to-sample purple-violet. That's like a $20,000 upgrade when you order the car new. No, just put plastic on it. It's $6,000, and now you have the car whatever color you want. So good. So she picked that color. The purple? The purple. I found this. It's a GTS. It's a Cabrio. It's a stick. It's a chalk interior, which is even rarer. And rarer still, ceramic brakes. So good. It's just the wrong color. It's like, I'm going to fix this. Don't worry about that. So good. So that was the, this is an obscene amount of money, and I don't care. Yeah, yeah, you tell me 20 years from now. Nobody looks back and says, oh, why did I buy that? We look back and regret on the things we didn't do, not the things we did.

I mean, my version of that is two months ago, I did not know that my 24, 25-year-old son, 23-year-old, anyway, 24-year-old son was going to ask me to go spend some time on adventure motorcycles this summer. It wasn't in my financial plan. Do you have a license for that? Yeah, I actually do, because 10 years ago, 5 years ago, I was on a BMW 900GS. Oh, that's a big bike. Yeah, and so we just got Yamaha T7s, so the Tenere, Tenere 700, which is a great bike, but my son is the one. I didn't know that. It's costing me more money than I'd planned on spending, and I'm not going to regret a second

of it. Isn't that what else? That's the whole point. First of all, you have to stop, and I know you have gratitude drawings in here. The fact that it's a realistic option for URI to indulge in these ridiculous spending things, and part of me knows how utterly ridiculous this is. So first, you have to have some gratitude for that. But second, if not for that, what are you going to

do with the money? And the fact that my 20-something son asked me to do it. He's enthusiastic about it. The answer is yes. I called, yeah, the answer is yes. You know? And so am I going to look back five years from now, ten years from now, thirty years from now, and regret that? There's no... We spent more money than we really should have on our four years living in New Zealand. Right. And I would do it... What years were you in New Zealand? 16 to 20. We didn't mean to do it. It wasn't political. We went 16 for a year. We ended up just staying for four. Yeah, 2016.

I assume it was fantastic.

Unbelievable. We spent way more. It was borderline irresponsible in this case even. But it was a requirement. My wife was essentially like, after the financial crisis and everything, I was just a broken human. Really? Oh, just. I never thought of you that way. Well, that's nice of you. But yeah, that was part of the problem. I was a superhuman out here, but not inside, not in the house. And it was just a lack of patience and not deep presence. And she was like, we're going. Would you like to come? And I was like, yes. We ended up staying four years. And it was hard money-wise. Like, it was a bad decision financially. Were you working there? Yeah, but, you know, like, New Zealand, you're not doing the same thing. You're not that far from China. Did you do anything in Asia at all? Very little, no. Really? But my point really is it probably wasn't the best from a spreadsheet financial decision. but I would do it again all over so for sure same thing with a car spend to the degree that you can find the things that align with your use of capital and your family and the experiences with the people you love we know that we will not regret we will not regret spending time and money on experiences with people we love

so we've been at this for a solid 90 minutes let me jump to my favorite questions I ask all my guests otherwise I'm going to keep you here through dinner starting with who were your early mentors who helped shape your career I

I know you asked that question and I thought really carefully about it and the one that actually probably had the biggest shaping on me was a little far, Ron had a huge impact, so between Ron and Seth

Godin, oh really Seth Godin's stuff is really interesting yeah and seth i always saw seth as somebody who was doing something here that applied here uh-huh and that that was really like so doing something in a narrow little space like he was a marketing guy marketing marketing marketing but you know it had broad application and doing it consistently over a long period of time i mean behavior up radio was started because of seth's daily blog uh-huh he said to me why aren't you doing a daily blog i said i don't like to write he said you like to talk and so i started we're episode 1500 now you said yeah so seth go and Ron Lieber had the biggest impact

on me. Let's talk about books. What are you reading right now? What are some of your favorites? My favorite... And I know when you're writing a book, it's really hard to read.

Yeah, yeah. No, my... One of the most... Two really impactful books, Fooled by Randomness. Nassim Taleb.

Come on. I wanted to have him on the podcast. He told me to go F myself.

He probably said that exactly.

I'm giving you the polite word.

Yeah, yeah, I'm sure. So that book, and then Pema Chodron's when things fall apart.

That's a really interesting...

Pema Chodron when things... Well, they're both, if you understand, they're both related to this idea of this false sense of certainty that we talked about. So Pema's work has had a massive impact on me. Reading right now, I just finished... Literally last night, I just finished Homesick Nomad. And I can't remember her name, Brianna.

Fiction or nonfiction?

No, it's a memoir. A short little memoir about a lady who drives her van around the desert of southern Utah so it was like a home, she has a Utah connection Salt Lake connection, so that was really good and Bison for the Broken Heart or Buffalo for the Broken Hearted, Dan O'Brien's book someone else mentioned that I think you oh, I told Mev about it in his book Roundup

really interesting what are you streaming these days? tell us what you're either listening to or watching Mike Birbiglia

working it out

You know he has a podcast also.

Working It Out, that's his podcast.

Oh, I thought that was the name of his stand-up on Netflix.

I listen to it religiously. I'm trying to get, Mike, if you're listening, I've been trying to get a hold of Mike for a long time.

So there's a handful of comedians with their own podcast now. Sure. Not just Seth Rogen. Not just Joe Rogen.

Yeah, for sure.

Tom Papa has a podcast.

Mark Maron, the original. Mark is the OG in the space.

Pete Holmes. Who was the guy who was the co-writer Blocks with Dave Chappelle? Journal of Blank on his name. His pod is occasionally interesting.

Pete Holmes is actually really great, too.

Why do I know the name Pete Holmes?

Pete, he's another one of these Netflix comedians. It's amazing.

Good Hang with Amy Poehler. I was just watching her with Billie Eilish. That was really kind of fun.

Yeah.

There's a ton of them.

Yeah. I mean, the reason I really like Berbiglia is it's really about the process. and I think about a lot of my work especially the public speaking about like testing bits seeing how they land, paying attention that didn't work quite the way I wanted to and Mike does a really good job of explaining that and then I just finished The Dark Wizard Dean Potter's, the story of Dean Potter who was an El Cap climber long before El Cap climbing was this mainstream thing about his untimely passing through base jumping or something, it was an amazing story for an episode

there are a lot of these hobbies like i i don't mind going fast on the track there are a lot of these hobbies where you my brain does the risk reward analysis and say oh there's just way too much random risk in this oh like wingsuiting he's a wingsuiter yeah yeah i mean he he was driven by

the fact that the only thing that made him feel alive was the the death consequence right you

know that's a whole nother thing it's it's called the dark wizard psychological issue yeah for sure but it was super interesting we'll skip that final two questions what sort of advice would you give a recent college grad interested in a career in either uh being a financial planner being an author being an artist i know you sometimes don't think of yourself as an artist yeah you clearly are yeah um

just take the next step right like i just i think like getting too caught up in how is this going to work and what's the narrative yeah and thousand miles starts with try not to compare like there's a loutzu quote be who you really are and go the whole way and i think i wish i would have started that a little earlier like what does it even mean okay take one small step one take one small step and if i was preparing in finance i'd get more comfortable especially in the advice side get more comfortable with learning to be deeply present with people curiosity deeply present i think financial advisors aren't going to be paid for solutions if they are right now they're not going to be paid they're going to be paid for presence like opening up the ability to have these because the solutions are table stakes at this point right and but the it's like self-driving cars it was in the way

Waymo, right? It was safer than the Uber driver. Did it feel very weird? But here's the thing. I still have to tell it where to go. And even more importantly, on the journey, if I saw something, like, oh wait, what's that park? Right? I think that requires... Could you do that in a Waymo? Could you ask it to stop? Yeah, you can tell it to stop. Yeah, I don't know how you do it, but you can tell it to stop. On the app? So I'm a big fan of self-driving money. I can't wait. And there's still going to be somebody there that needs to say, hey, is this really... Is the boat really important to you? Go try the racetrack thing. And that, to me, is curiosity and presence. Still, you've got to be a technical rock star, but curiosity and presence is where the value will be.

Final question. What is it that you know about the world of investing or psychology today? It might have been useful back in the 1990s when you were first looking at that Netscape IPL.

Yeah. Yeah, that compounding does all the work, right? Stop spending time trying to find the best investment and just own stuff. If it compounds, I don't know who said this, if it compounds, let it compound.

The line I use is, your job is to prevent yourself from interfering with your portfolio's ability to compound. That's exactly right. That time is the thing that matters. Absolutely. Carl, this has been absolutely a delight. Normally, I want to make this about the guest, but there's something about you that just encourages me. It's my whole goal. It's your aura. You bring it out in people, which is probably why you were a good advisor. You get people to open up to you.

That's a really high compliment.

Thank you. It is. It absolutely is. Cheers. We have been speaking with Carl Richards. He is the author of the book, your money reimagining wealth in 101 simple sketches if you enjoy this conversation well be sure and check out any of the 639 we've done over the past 12 years you can find those at youtube bloomberg spotify apple or wherever you get your favorite podcasts i would be remiss if i didn't thank the crack team that helps put these conversations together each week alexis Norieger is my very patient video producer, producer, New Yorker, drop in the R. Sean Russo is my researcher. Anna Luke is my producer. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at thehartford.com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut.

As a restaurant genius, I know the experience starts long before the food hits the table. Genius by Global Payments makes it easy. Digital menus and price updates in real time. No reprints, no surprises. The kitchen and floor stay perfectly in sync. So every dish arrives exactly as it should. From game day crowds to memorable meals. Big League reliability for any business. That's genius.