Most People Are Chasing the Wrong Number

- January 21, 2026 (about 2 months ago) • 51:51

Transcript

Start Time	Speaker	Text
00:00	Shaan Puri	Today we're talking about money with the guy who's been studying money for, like, the last ten years. He's the author who sold more books about money than pretty much anyone on earth. It's Morgan Housel. He wrote The Psychology of Money, Same as Ever, The Art of Spending Money. We talked to him about Warren Buffett, about the behaviors that drive people to either make money or lose a bunch of money, about spending money, and about how much money is enough. It's just a good, honest conversation between a bunch of dudes about money. What more do you want? "Morgan, you tweeted out something that broke my brain. In fact, I thought it was, like, an AI deepfake. It's like when Luca got traded and people were like, 'You know this must be fake news — there's no way this is possible.' You said that: > "My favorite Buffett stat is that Berkshire Hathaway could lose 99% of its value tomorrow and still have outperformed the S&P 500 since Buffett took over." </FormattedResponse>
01:01	Morgan Housel	And the truth is, I was understating it. It's actually more like 99.6%, or something like that, that it could decline.
01:07	Shaan Puri	"That is so crazy. How is it even possible? You know, we don't do public math here, but that sounds mathematically impossible."
01:13	Sam Parr	And he only outperformed by seven points, right? It was like—or it was like, he's done like "20 annual versus..." [unclear: "20 annual versus"]
01:19	Morgan Housel	It's about that. His was about 20%, and I think the S&P nominal with dividends is probably like 11% or 12%, so maybe it's an 8% or 9% outperformance. But he did that outperformance over 60 years, and so the cumulative performance... I'm pretty sure I'm saying this off the top of my head — if I'm getting this a little bit wrong, I'm sorry — but I think the S&P 500 is 35,000% since Buffett took over and Berkshire's return was 5.5 million percent. And so even if it's "only" 9% per year over 60 years... </FormattedResponse>
01:51	Sam Parr	It just gets incredible.
01:52	Morgan Housel	Insane, preposterous. And you know, Buffett's current net worth is, I think, about $130 billion. But he's given so much away to charity that, if you count that in, it's something like $500 billion. If he hadn't given money away to charity, he'd be worth $500 billion.
02:07	Shaan Puri	He'd be the richest man alive, by far.
02:09	Morgan Housel	And he started with $10,000 and, I mean, turned it into half a trillion dollars. But I think the biggest lesson here — and this is the most important for ordinary people — is that you can't pick stocks like Buffett. You can't analyze businesses like Buffett. He's smarter than you, and he operated in a different era than all of us, so don't try to emulate that. What you can emulate — especially for young people — is the most important and powerful thing that he did: he was a good investor for 80 years. It's just the time that he was investing that made all the difference in the world. I pointed this out in my first book: if you look at his net worth, 99% of it came after his 60th birthday. 99% of his net worth was accumulated after his 60th birthday. So if he had retired when he was 60, when he was worth a couple hundred million dollars — like, pretty good — you would have never heard of the guy. The whole reason he became so famous and so wealthy is that he started investing when he was 11 and he retired last week when he was 95.
03:11	Sam Parr	You're very lucky that you get to talk to all these amazing, successful people. Investors are really cool because it's not always about investing that you're interested in; it's about, like you said, behaviors. That's why Sean and I love talking about two investors. Howard — we had Howard Marks on; it was one of our favorite things ever. We don't know anything about bonds. With Buffett, is that the attribute — other than time and the market? I mean, what other attributes separated him from the hundreds, or maybe even thousands, of equally (probably) smart people? What other attributes allowed him to be who he is versus the rest who are pretty good?
03:42	Morgan Housel	I think there's quite a bit. One is, I think what Berkshire did—what Buffett did for 60 years—is on one hand so unbelievably simple, and on the other hand almost impossible to replicate. It's hard to kind of square those two. What it required was an unbelievable amount of patience and an unbelievable amount of goodwill—in the trust he had from other businesses, his investors, and regulators. Everybody around him just left him alone to do his thing because they trusted him. I think that's an overlooked part of this. No other hedge fund manager or private equity manager would have had the trust among their investors, among portfolio companies, or among anyone else to let them do what Buffett did. That was huge.
04:26	Shaan Puri	"Sorry — explain that a little more. What's the thing that Buffett did that others might not have had the leeway to do?" </FormattedResponse>
04:31	Morgan Housel	He had the track record and the narrative that if you sell your business to Berkshire, it is not going to molest it and rip it apart and sell it for parts. It's going to nurture it and let it grow forever. I think that was a key point. If you compare that to Blackstone, KKR, and all the other private equity shops, their stated purpose — and I'm not saying this is wrong — is: "We're going to maximize IRR and we're going to do whatever is necessary to get there." Whereas Berkshire's stance was, "We are intentionally not going to maximize returns. We could easily flip this company next year for more than we paid for it. We could easily lay off half the staff and squeeze more net income out of it. We're not going to do that. We're going to keep this as it is." Because of that, businesses would sell their company to Berkshire for less than they could have gotten from Blackstone or KKR. If you were a family business that had been built up over the years and this was your baby, did you want to sell it to Blackstone for an extra $10,000,000 and have them rip it to shreds, or sell it to Berkshire for a little bit less and know that he was going to nurture it for several generations? </FormattedResponse>
05:47	Sam Parr	A common thread, I think, of the people I've grown to admire is that they're stewards. I've loved reading about George Washington. He was one of the only presidents ever — in our roughly 50-plus presidents — who had unilateral support from both sides of the aisle, which still existed back then. When people interviewed others, they would ask, "Why do you trust George Washington?" And they would reply, "Because I know that he is willing to put the Union in front of himself." For example, the idea of a two-term president: George Washington created that precedent. That was so notable — after two terms he said, "I'm now done; it's better off that someone else does it." The U.S. Constitution, which he helped formulate, was one of the very first self-amending rule books. It acknowledged that the rules might be wrong, but that we are going to work together to fix them as we go. That approach was modeled in part because of George Washington's attitude of being a steward. That's really interesting — that you're talking about Buffett that way. You're saying he was basically like a steward of goodwill.
06:42	Morgan Housel	I think that's true. A lot of it was not altruism — he knew he would be able to get the best terms and the best deals if he had that level of trust. So part of it was morals, of just "doing the right thing," but a lot of it was self-interested: he knew this would accrue to him personally and to Berkshire over time.
07:01	Sam Parr	Sure.
07:01	Morgan Housel	And I think that's where you get the best results: when it's like everybody's winning here. The companies that would sell to him were like, "This is where we want our baby to go." And Buffett himself was going to get it on better terms and have better flow than anyone else doing it. Also, this should not take away from any of his success, but it's important to point something like this out. Buffett once pointed out that over the course of his career he has purchased 500 stocks, and he made the vast majority of his returns on 10 of them. Munger once pointed out that if you look at all of Berkshire's deals over the fifty or sixty years that it was doing them, if you remove the top five, its returns fall to average. So this is true for almost any endeavor you look at: the vast majority of Berkshire's returns—whether it's Berkshire buying whole companies or Buffett as a hedge fund manager back in the day—the huge majority of the success comes from a very small minority of what he did.
07:59	Shaan Puri	I've talked before about the way that I know how to make money, about how to build a money-making skill, and about how to leverage your time and energy. The team at HubSpot actually went through the video where I explained all of that and turned it into a free, downloadable cheat sheet on my "four rules of how to make money." This is not get-rich-quick advice; it's just core, foundational principles about building wealth—things that I wish I knew when I was just getting started. If you want to download it, it's in the description below. It's totally free—you can go get it. Thanks to the folks at HubSpot for doing the research, making this document, and making it available to all of you. Alright, back to this episode. How do you action that power law—the observation that a few things will account for the majority of your success and returns?
08:42	Morgan Housel	Two takeaways from this. 1. Be comfortable with an imperfect success rate. If you're in a game where you don't have a perfect success rate—unlike a pilot, where every flight should land and the success rate should be 100%—you must be comfortable with many things not working. A lot of investors cannot handle that. It can destroy their ego, their soul, or the trust among their investors. For example: you pick 10 stocks, three go bankrupt, four do okay, and one does really well. Even if, on average, it works out, many people simply can't handle that kind of volatility. Accepting that "it's always going to be a tail-driven business"—and managing the psychology of that—is important. 2. The humility of how hard it is to emulate this. It's one thing to learn to be a pilot: learn the mechanics of an airplane, aerodynamics, and how to land every time. You can teach that skill. It's another thing to be an investor. If you're a great investor, you might be right five and a half times out of ten, and that is, if anything, a humbling statistic. It puts people in their place—hopefully in a constructive way—about how difficult this business can be.
10:01	Shaan Puri	I asked the same question to Monish Pabrai, who is a value investor [Buffett disciple; friend of Charlie Munger]. I said, "What's the takeaway from that stat — that Buffett himself admits it's a dozen decisions out of 500 that really charted the difference between them being who they were versus being average?" He said you can't control — you don't know upfront — which of those decisions is going to be the big winning decision. But he said Buffett was able to circle the wagons: once he bought one of those companies that was a long-term compounder — one that would keep paying dividends — he didn't sell too early. He held them for the long term. He circled the wagons around those core assets and just never let anything attack them. Buffett is famous for having called Peter Lynch once and saying, "Hey, I love this phrase — can I steal it for my annual letter?" Lynch was like, "Yeah." Buffett then recalled, "You said, 'Don't cut your flowers and water your weeds.'" The meaning is clear: don't sell your winners to take profits and then put that money into lesser investments, because that destroys your ability to get returns. It's so hard to find these winners. When you find them, you have to circle the wagons around them. I think the only thing you can do after you've made the good decision is let your winners ride for longer.
11:27	Shaan Puri	Of time.
11:27	Morgan Housel	Yeah, and this might get back to a little bit to what we said earlier. I joined the fund in 2016. I'm not an investor, but I've been able to watch and observe a top-tier venture capital fund operate. What's very interesting to me is that, true to all venture capital firms, a small minority of the companies we've invested in account for the vast majority—virtually all—of the returns. </FormattedResponse>
11:50	Shaan Puri	Who are the big winners for Collab? </FormattedResponse>
11:52	Morgan Housel	Lyft, Beyond Meat, Impossible Foods, Upstart — those companies I just named are the vast majority of returns. That's probably right. What's interesting about it is, if you go back to 2016, when I joined, the companies that were going to be our obvious winners weren't, and most of them don't exist anymore. The companies that did just explode — Upstart and those that were not [obvious winners] — were companies that...
12:16	Shaan Puri	We were like, "Oh, that's... that's..."
12:17	Morgan Housel	A cool company — they're doing some cool things, but never in a million years would we have thought this was going to be it. So, not only is it a small minority of companies that are your winners, but, similar to what Mona said, you don't even know which ones those are going to be. It's very difficult to know in real time.
12:31	Sam Parr	Well, that was the case with your book. I think you said you printed 5,000 copies of The Psychology of Money. You've sold 10 million [copies]. I'm not sure how many books have sold 10 million, but, you know, you are in the "freaks among the freaks" in terms of numbers.
12:43	Morgan Housel	And nobody — nobody saw that coming. I didn't see it coming. The publishers didn't see it coming. I've said this a million times before: every U.S. publisher turned it down. Every single U.S. publisher rejected it. But I don't fault them. It's impossible to know what's going to work before it comes out. </FormattedResponse>
13:00	Shaan Puri	"About how many nonfiction authors have sold 10 million copies of a book?" "Could you guys book a table at a restaurant? I kinda feel like it's gotta be... like, no. Yeah."
13:10	Morgan Housel	It's hard. It's hard to know because there's not a lot of [data]. If you're looking at the last ten or fifteen years, there's pretty good industry data you can compare across time. But if you go back a hundred years, the data sources are all over the place.
13:24	Sam Parr	Okay. Well, how many in the last fifteen years?</FormattedResponse>
13:26	Morgan Housel	Not many. I don't know—probably five, something like that.
13:29	Sam Parr	"No shit — how cool is that, man?"
13:31	Shaan Puri	Five people, plus one for dinner.
13:35	Sam Parr	"Well, isn't that interesting? You said—you wrote, I think, 8,000 blog posts. You've written three books now that have been huge hits, and yet you are telling me that predicting what will be popular in terms of content, particularly in writing, is impossible. I don't like that, as someone who's making content, right?"
13:52	Morgan Housel	No, I think I'm being very honest. Of the four thousand blog posts that I wrote, there are like three or four that stood out — they were, you know, an order of magnitude bigger than the others. And all four of those, before I hit publish, I was like, "Should I? I don't... this is crazy. This is insane. I don't even know if I want to." There's literally one of them that I published but hid from our blog's feed because I was like, "I just want to have a link that I can show some people, but I don't know if I want people to see this yet." If there is any metric you can feel, it's that before you publish it you're like, "This is the craziest shit I've ever said in my life and I'm embarrassed to hit publish." I think almost that's what you need to make it work. When we pitched "Psychology Money" to all the big publishers, a lot of the response wasn't just basic rejection. A lot of it was, "There's no way that would ever work," because it was a weird idea. > "There's no central thesis to this book. It's just nineteen random essays. They're all kinda about behavioral finance-ish, but there's no other cohesive theme." That is so antithetical to what a publisher wants. A publisher wants one big idea weaving its way throughout the entire book. I'm like, "No — I don't have that. Sorry." So it wasn't just that they didn't believe me as a writer; the whole structure of the book was the opposite of what they were looking for. But I think you need that in order to stick out. How could it be any other way? In order to have a non-normal result, you have to have a non-normal idea. That's true for entrepreneurs; it's true for any endeavor you take. You have to be an oddball in order to stick out.
15:38	Shaan Puri	"Can I give you a couple of quotes from your book that I've loved? I just have them in my Kindle highlights, and I kinda want you to talk about them. I'm just—I'm just gonna throw them at you."
15:49	Morgan Housel	"Yeah, let's do it."
15:50	Shaan Puri	Alright. The first one is a useful one, and I have a fun one right after that. So, the useful one is this: you said something like, "There are two ways to use money." Number one: money as a tool to improve the quality of your life. Number two: money as a measuring stick to measure your self-worth. That one hit me hard, and I now can't unsee it. Whenever I see anybody—whether they come on this podcast or just somebody in real life—it's so black and white to me to understand, kind of like, who's using money in which way.
16:22	Morgan Housel	No, it's tough. I think I've always wanted to write about things and about problems I have in my own life. A lot of this was just kind of looking in the mirror and asking: what is my desire for more money? Am I using it as a tool to make my life better and my wife and kids' lives better, or is it just— I mean, it's just a measuring stick of how well I'm doing in life and where I sit on the social hierarchy? If I'm honest with myself, it was a lot of the latter. I think we've done a pretty good job spending money on the things that we like and whatnot, but a lot of the desire was just: what's the scorecard look like? Maybe that's not bad, because I enjoy that game.
17:03	Sam Parr	"Yeah. Why is that bad? For example, you've sold 10 million books — we can use that as a measuring stick. Ten million books correlates directly to money. To me, that means your ideas are impacting so many people for the better. I want you to measure your life by getting to 20 million books, because I think your book helps people."
17:21	Morgan Housel	I think you're right there, but here's where it can really go astray. Money is so quantifiable and book sales are so quantifiable that they become—like—we overestimate their importance. What I mean by that is: if you said what's important in life—“I want to be a good husband, a good dad, a good friend, a good citizen. I want to be funny. I want to be healthy”—all those things are so important and very hard to quantify. How do I quantify whether I'm a good dad or not? I don't know. It's potentially the most important thing to me in the world and there's no score. So it means everything to me, but it's easy to kind of ignore because this is a mushy topic. But what is my net worth? How much did my income go up last year? What are my returns versus the S&P 500? You can measure those down to the millionth of a basis point. And so because they're so easy to track and it's apples to apples—my net worth versus yours—how do I compare my social-citizen score or my dad score or husband's score from me to you? You can't. There's nothing. Income we can see and compare all day. So I think using it as a scorecard metric is both really good and can be a lot of fun and used for good. I love that game—I’ve been playing that game since I was a teenager and I'll keep playing it the rest of my life. But you have to understand the limitations of it and how much power there is toward it. Just because you can quantify something doesn't mean it's necessarily going to give you a better life. I think there are a lot of people who, because it's so easy to quantify, chase it as the ultimate metric—the solution to everything in your life—and everything else—your friendships, your relationships, your health, which are more important—take a backseat just because you can't measure them.
19:07	Shaan Puri	Look, let me give you an example of this, because I think usually when we talk about money it's like: "Money's not going to make you so happy," or "Money can be a tool to improve your life," or "Money is a measuring stick." This is usually rich-guy problems—you already have money and you keep chasing more, and you're facing this existential, "What is enough?" right? You've talked about this word enough, Sam. You talked about "enough is just twice what I have." Our buddy Andrew Wilkins wrote a book called "Never Enough," and I kind of reject the premise. I'll give you the opposite example. When I was 21 years old I graduated from college—I went to Duke. When you go to a good school, everybody goes and gets a job in finance or consulting, or becomes a lawyer or a doctor. The people who get jobs get high-paying jobs at companies you've heard of, and that sounds really good. I would see one friend get $100,000, one friend get $120,000, one guy got $200,000 straight out of college—that is incredible. I faced that problem you were just talking about, Morgan: that's a number I can compare myself against. I made a decision because we were trying to start a startup. Nobody was going to pay me any money, and the company was one nobody had ever heard of—we had just created it like three days earlier when we filed the LLC. So what am I going to do? What I did was try to think about money as a tool to improve my life. Specifically, I asked: What is the minimum amount of money I need to make this year so I can live and have the maximum amount of time to pursue this project, travel, and do these other things? I calculated what I called the "freedom number." I don't remember it exactly, but I think it was something like $15,000. It was a very low number—less than minimum wage if you were working at McDonald's.
20:58	Sam Parr	"So, like, what's that—$1,200 or $1,500 a month?" </FormattedResponse>
21:01	Shaan Puri	Yeah, I remember. We were splitting a two-bedroom apartment—three friends—and we slept on air mattresses. We got all our sofas for free off Craigslist. We ate minimal stuff at home; we drank at home, then we'd go out. We didn't buy drinks at the bar—little things like that. I realized I could make that number if I just... I was tutoring three or four college kids in statistics, which I wasn't even good at. I had a C in statistics, but they had an F. So, you know, in the land of the blind, the one-eyed man is king. Then I coached a basketball team of middle-schoolers at a school for autistic children. That was my job: two basketball practices a week, tutoring three kids, and I had all this free time that none of my friends who had hedge-fund jobs or banking jobs in New York had. It was the first time I got a taste of this concept you're doing, which is: you need to create your own scoreboard and your own metrics if you want to live life on your own terms. If you just take the metrics life hands you, you're going to live the life that those algorithms want you to have—or society wants you to have—and you're not really going to have life on your own terms.
22:09	Morgan Housel	The only thing I ever wanted out of money was independence. I just wanted to live life on my terms and do what I wanted to do. I've known this about myself for a long time: I can do good work, but I'm not a good worker. I'm not a good employee. I'm not good at all when a boss says, "Here's what I want you to do, here's how I want you to do it, and when I want you to do it." Under those terms, I'm a shit worker. But if I'm left to my own devices and somebody says, "Just go do your thing," I can really accomplish something. I just wanted to be fiercely independent in everything that I do. I think every single person has unbelievable talents if they could be left to their own devices. But a lot of people, once they're under the pressure of other people's goals, other people's ideas, other people's financial incentives, are pushed down a notch — and then it's unavoidable. I'm not saying everybody should go be an entrepreneur, of course. But if you can use financial independence to work at the company you want, live where you want, have a lower commute, retire when you want — whatever it might be — that to me is the point. I'm not anti-materialistic at all. I love nice things. I use them more inwardly, to be able to wake up every morning and say, "I can do whatever I want today." That, to me, was always the ultimate goal.
23:46	Sam Parr	We should talk about spending in a second, but Sean, what are the rest of your quotes?
23:49	Shaan Puri	Well, one of them was the story — speaking of "money for status." It was the story about the Koch brothers.
23:56	Morgan Housel	Oh, yeah.
23:56	Shaan Puri	"Wine collection. Can you just tell the story? I just—Sam, have you heard the story? I think it's... I think it's awesome."
24:01	Morgan Housel	One of the Koch brothers is an unbelievable wine collector. He has, like, tens of thousands of bottles—the rarest, most amazing wines that have ever existed. Two or three bottles that he purchased—I forget the exact price; it's in the book—cost an unbelievable amount of money. They were Thomas Jefferson's wines from his estate in Virginia, and he paid for them. </FormattedResponse>
24:29	Sam Parr	"I'd break ten years of sobriety to drink that."
24:31	Morgan Housel	Well, this is where the story gets good: they were... they were fake. They were forged.
24:36	Sam Parr	Shit.
24:38	Morgan Housel	He hired a private investigator to audit his entire wine collection and ask, "Give me a rough estimate of how much of what I'd bought over the years is fake?"
24:48	Shaan Puri	"And this is a multi-million dollar wine collection, right? How much, roughly, was the wine collection?" </FormattedResponse>
24:53	Morgan Housel	I mean, I forget the exact numbers, but a very uncomfortable percentage of what he had purchased—for tens of millions of dollars—was all forgery. Once you dig into it, the wine forgery business is off the charts, because you have very rich collectors and no way to authenticate what's there.
25:14	Sam Parr	"It's sort of like a dog‑vitamin business... does it work?"
25:18	Morgan Housel	One of the tells of what they were doing when they were investigating this was literally this "Thomas Jefferson" wine — the label was on there. For some of these wines, the label would be stuck on with Elmer's glue, which was invented 50 years ago, kind of thing.
25:32	Sam Parr	That's awesome.
25:33	Morgan Housel	And so... even when you open the bottle.
25:35	Sam Parr	They're like, "Turns out Thomas Jefferson didn't even bottle."
25:36	Morgan Housel	But even when you open the bottle and drink it, you still can't tell. So it's this ultimate forgery business.
25:43	Sam Parr	But was he less happy once he found that out?</FormattedResponse>
25:45	Morgan Housel	That's the... I think there is this tendency to do things because they're cool and they make you feel good and whatnot. So, if you have a fake Louis Vuitton purse, does that make you feel... where, like—what should make you happy is the quality of the purse: the feeling of it, the durability, all of this.
26:06	Sam Parr	No, dude—I so disagree. The story can matter. For example, we were just talking about this: if you're into Japanese denim, it's a weird hobby. There's a story about how this small company in Japan remakes the jeans in this crazy, stupid way, but it's awesome to a very small group of people—like me. If I found out that wasn't true, that would bum me out, because I wanted to participate in this journey.
26:28	Morgan Housel	I don't disagree with that, but I think there's an interesting thing where brands gain their reputation a lot—by the quality of the product. When Louis Vuitton was just a startup bag company, they gained their brand and prestige based on quality over time. There comes a point, though, where if a fake has that exact same quality... I totally understand the history and the story of it. A friend of mine just started a men's skincare company, and I love supporting him—the product is great—so there's a story behind it. But I think it's interesting when the prestige disconnects from the quality. To me, there's always been this litmus test I think about: if I were on a deserted island with my family and nobody could see how we lived—nobody could see our house, our cars, our clothes; it would be completely invisible to every other eyeball except our own—how would we choose to live? For some people, the answer might be exactly as it is right now: the same house, the same car, the same clothes. But not most people.
27:39	Sam Parr	But definitely not most people.
27:41	Morgan Housel	I think—for a lot of people—they are living a life of performance. That's okay. I do that to some extent, but you have to perform for the right people. I want to perform for... well, that's a silly way to put it, but I desperately want to impress my wife, kids, parents, and three or four friends because I really want their love and attention. Once you start into the realm of performing for strangers to get their attention, that, I think, is a completely fruitless game.
28:16	Shaan Puri	Okay, but let's shit-test that. Do you think your kids and wife care about...?
28:19	Morgan Housel	No.
28:19	Shaan Puri	The books you've been spending years of your life writing—right? They're not impressed by that. But you're doing it, so there has to be some other motivation.
28:26	Morgan Housel	No, it's... that's been an interesting thing. Like, you know, I wrote my first book when I was married and had two kids, and so all of this came after that. "Does my wife love me more?" No — she loved me enough back then. And so, you know... do my kids — does my six-year-old daughter love me more now? No.
28:42	Shaan Puri	So... is there a part of you trying to impress some other group with the books, or is there just some other motivation altogether? If you're being honest... like, what is— [sentence trails off]
28:51	Morgan Housel	Think.
28:51	Shaan Puri	It's... what is that?
28:52	Morgan Housel	Yeah, it's a good question. I'll try to give you an honest answer. I think it's a combination of things. I genuinely love writing — I think it's a lot of fun. If I'm looking at it from a financial point of view, I like the game: I like the game of earning as much as I can, investing it as well as I can, and compounding it for as long as I can. I use that money to both live a great life right now and to pass it along to my heirs and to charity at various points in the future. I love that game. I freaking love it, and I would be sad if I stopped playing that game. So I think that's the main motivator.
29:27	Sam Parr	Sean, you've posed that question to me and you sorta... you were just teasing me. It was almost like, "Gotcha — see, they don't, they don't care." I actually reflected on that and realized the answer was: they don't care right now.
29:43	Shaan Puri	"Who, like, your kids, you mean?"
29:44	Sam Parr	Yeah, my kids or family members know the people.
29:46	Shaan Puri	I think the context is: you were saying, "I really want my kids to see me working hard and going for something." I think that's kind of how you said it.
29:52	Sam Parr	Right. Yeah, yeah, yeah — and that stuck with me. The reason it stuck with me is because you and I have talked about our parents on this podcast. The things we talk about are the things they did when they were 18, 19, 30 years old — before we were born — or when we were small enough that we didn't care then. But we look back and we think...
30:09	Shaan Puri	Now.
30:10	Sam Parr	How now — we appreciate badass. Was that... how great was that? So, I think the answer, potentially, Morgan (for you, as it is for me), is: they don't care today. But how wonderful will that be when your son or daughter is 25 or 30 years old and they're like, "Look what my dad did. He had this concept, no one believed in him, it took off, and he kept at it." How wonderful is that? Therefore, if I want to do it — if I have a particular goal in my life or something — I want, a) to be proud of my name and carry this on, and b) if my dad can do it, I can do it. He's my model on perseverance. Yeah.
30:40	Shaan Puri	You're absolutely right in the way you said that. It's kind of abstract — they might not care about the newsletter, or about Hampton, or about this podcast, or the specific projects we do. When I was with Jesse Itzler in that last episode, he said, "Think about this: when you go back and you tell your kids, 'Hey, Daddy took a long trip to try to better himself. He saw someone who might know something and he was willing to go out there and try to learn it so that he could become better.' What a powerful lesson you could teach your kids about identifying that there might be something out there you could go learn, and then being willing to get on a plane and go chase it, knowing it might not work out but it might — and if it does, that's important." I came back and I actually did tell my kids. They were like, "Where'd you go?" and when they ask I always say, "Atlanta," as if they don't even know what Atlanta is. To them, "work" is just something that gets in the way of Daddy spending time with them. They don't really understand the purpose of it. In fact, they give it quite a negative association. I'm not showing them some wonderful example — they just associate it with this thing that takes Daddy away because he has to go do something. They see it as something bad because he's not here with us doing the fun things we like. Once I reframed that, I started to see them act differently. They would say things in their own day about how they came back from school, and they'd use this language I'd introduced. I'm like, "That's the thing I told them two weeks ago." It sounded kinda cheesy, but hey — it's just the three of us in the car and nobody's here to judge me.
32:17	Morgan Housel	Yeah — I completely agree with what both of you just said. I also think you can be a filthy rich, terrible parent, or a parent who makes $45 a year and is an unbelievably good parent. I think this gets back to the quantification of money — it becomes the ultimate metric and gets in the way. I wrote about this in my last book. I have a good friend I've known for more than twenty years — one of my favorite people in the entire world. He's so funny, tells such good stories, and is so much fun to hang out with. I can't wait to see him; every time we hang out I'm excited. Among our friend group, he by far earns the least amount of money, and it really bothers him and makes him feel inferior. He says this, and I had to tell him one day: "Look, if you are who you are — a good husband, a good father, hilarious, so much fun to hang out with — you've probably earned 9.5 out of 10 friend points that I'm willing to give you. If you also happen to be a successful entrepreneur, I might bump you up to like 9.7 out of 10 from nine."
33:26	Morgan Housel	But don't pretend like it makes that much difference. And I know—I'm sure you know—many rich entrepreneurs who are the most insufferable, arrogant people; you wouldn't want to spend five minutes with them. Those people exist too.
33:39	Sam Parr	We call it being the total man. You know, we'll have people on the podcast who are successful, but we're like, "I don't emulate... I don't want to be like them." Then we'll have other people who are successful and also a good husband, also fit, fun to be around, polite, and kind. We're like, "That's the total man — that's what a perfect..."
33:56	Morgan Housel	I think a lot of people like the "salt of the earth" persona. It's like: you're a fireman, you coach the Little League team, you're a great dad and husband, you fix your cars, and you help the community. People love that persona.
34:13	Sam Parr	Are you just describing your dream hunk? You've got a sick jawline and a little salt-and-pepper hair.
34:21	Morgan Housel	People love that. Like, you know, from Foo Fighters: "There goes my hero — he's ordinary." I think you don't have to. The idea that you're only exceptional if you earn more than $X per year has done a lot of damage to society, especially among young people.
34:38	Sam Parr	Can you give us a curated list of the people who are known—people whom Sean and I can go and copy, or people we can go read about? People you've read about or talked about who have a public presence. Maybe a list of three or five people who have had the biggest impact on you, or who you think we should go learn from and follow.
34:57	Morgan Housel	James Clear is, you know, if you want to talk about book sales, he's in a completely different league than I am. For nonfiction, of the five or whatever people who've sold the most nonfiction books, he's at the top. He's one of the nicest, humblest, most caring people you can ever meet. James and I have only met in person maybe three times, so I would be lying if I said he's one of my closest friends. But whenever I have a question about books — and this goes back to before I wrote Psychology and Money — he was a big dog and I was a nobody. I would send him a text and he would write me back a novel. He would spend half a day trying to help me figure out the title of my next book, that kind of thing. So nice, so humble, and so unbelievably successful. Atomic Habits sold over 25 million copies and it's still going stronger than ever. He once said something I loved: > "I'm not an author; I'm an entrepreneur, and a book is one of the products that I launched." He thought about Atomic Habits that way — how to launch it, how to market it, how to structure it, even how to write the table of contents in a way that would get your attention. He's the most scientific thinker about this that I know, and that approach led to an unbelievable, generational-level amount of success. And yet he still comes across as the humblest, nicest guy you can possibly imagine.
36:29	Sam Parr	I had to do the math on that: 25,000,000 books × $25 = $625,000,000 in book sales.
36:36	Morgan Housel	Right. Yeah. I mean, it's bonkers level. He also started the Atomic Habits app, which exploded. There's a whole ecosystem around it. Look, there are a lot of people — tech entrepreneurs and whatnot — who made a fortune, are very talented, and deserve to be praised. That level of success turned some of them into insufferable monsters. I actually have a lot of sympathy for that. I think it's not uncommon for people to do that, particularly if they were snubbed or bullied as a child. Then, at 25, you're worth a zillion dollars. It's very easy for that insecurity to come out as being an insufferable prick. I think that's not uncommon, and most of the time it's a reflection — it's compensation for a lack of self-esteem before you became rich.
37:33	Sam Parr	"Who else is on your list?"
37:34	Morgan Housel	Other than James — you mentioned him earlier — Mohnish Pabrai is someone I started following in probably 2005 when he was just starting to get a little bit of notoriety in the value-investing community. People instantly started gravitating toward him because he's a very good communicator, and that's rare in the investing world: somebody who not only has a track record of success but can explain it to anybody. At the time I was in college and reading the books he published — I think three books back in the day — and those are some of the foundational books that made me think, "Oh, I'm really starting to understand how this investing thing works." For that to come from someone who has a great level of success himself... I've met him a few times. He's also just an incredibly nice, humble person. So maybe that's the common denominator I keep bringing up. I really have so much admiration for people who have an outsized level of success and fame, and it clearly not only did it not go to their head; if anything, it dropped their ego from what I understand. [Final phrase in original transcript unclear: "obviously met him the matrix the actor"]
38:50	Sam Parr	Keanu Reeves
38:51	Morgan Housel	Keanu Reeves — thank you. He is one of those people: an absolute, tippity-top A-list celebrity and, from what I understand, the nicest, most helpful person you'll ever meet. He shuns the paparazzi and just wants to live his own humble life. I think that's who I admire the most: people who can live that kind of life.
39:11	Shaan Puri	Isn't it funny how—we each have a, like, what is it that you admire? Obviously your type or the thing you look for is that combo that's rare to come by: extreme success and, probably as a second layer, the ability to communicate or teach that success. I think, as a student of the game, you appreciate that—whether it's James communicating as an author or Manish communicating as an investor. And then the last one: not only did it not ruin them, they became sort of more humble and even more approachable. That makes it all the more rare that those things go together. It's so funny that that's your type. And then, Sam, you have almost a type like this as well. I'll throw out a couple [examples]—maybe you can correct them—but, like, Sam, I feel like for you...
39:55	Sam Parr	"Tall, dark, and handsome." "Oh—oh, yeah. Sorry. Yeah, yeah, yeah. Go ahead."
40:00	Shaan Puri	"There's some level of being a maverick or a rule breaker, in a way. I think doing non-technical things — things that are of the real world, or in the middle of America, or, you know, just manly in some way — it's like some masculine aspect to it. I feel like I'm missing a third. What would a third one be? Do I?"
40:20	Morgan Housel	"Have done it for a long time."
40:21	Sam Parr	Done for a... yeah.
40:23	Shaan Puri	They stayed on track. I think all of these are things that we fear doing wrong ourselves, so we really admire the people who did it right.
40:31	Sam Parr	Like, for example, I'm not a naturally focused and patient person. Therefore, I admire that the most. Right? Do you have one, Sean? </FormattedResponse>
40:38	Shaan Puri	Yeah. The traits for me are people who are having fun while they're doing it. When I meet them, they just have this—they're funny, they're laughing a lot, they have a zest for life. They talk to the waiter and the driver as much as they'll talk to the other fellow keynote speakers. I remember when we were at our HOOP Group event. Alexis Ohanian, who is the founder of Reddit, was there. On all the car rides, Alexis would always be chopping it up with the Uber driver, the security guard, the doorman. He paid as much attention and importance to them as the other mega VIP guests at the event. Contrast that with—I won't name names—other people at the mega VIPs who were literally scanning the room for who has a few more billion than me. "Let me get to their table; that's where I want to sit, that's who I want to talk to." If I don't immediately grok how you are—the man—then I'm going to eject from the conversation. I will visibly be disinterested. One trait that's very appealing to me is when a person is so—almost—secure in their success that they are not chasing. They don't give off this desperate chasing energy.
41:59	Sam Parr	Can I ask you a question about spending? Your last book is on spending, which I think is pretty cool, because there are a ton of books on how to get rich but not on how to spend. I know you hate formulas — I think you've said that. I hear you: you write about this and you talk about it, and you're like it's hard to say. For example, a common question is: > "What number is enough?" And you say, "I can't give you that number." So you don't really like formulas. But is there a filter — if something passes this filter, is it likely a good idea to spend money on it in order to make your life happier?
42:27	Morgan Housel	I don't know if there's any formula to get that. I think if there is something almost formulaic to achieve it, it's the idea that what's going to make me happy is not what's going to make you happy. Most people spend money on things that society—or marketing—tells them they should: cars, homes, clothes. The fancier and more expensive, the better. That's the basic model we're taught. The truth is everybody has very different likes and wants, and price is not always a good indication of how much value you're going to get out of something. The people who've done the best job spending are those who completely tuned out social influence or what other people thought of their spending and just said, "I'm going to do my own thing." Within that, you'll find wealthy people who spend way more on one item than you would expect and way less on other items than you would expect. Ramit Sethi is a perfect example. He personifies what I'm talking about: he loves clothes, so he spends a lot on them and dresses incredibly well—that's very important to him. He's not a car guy; I hope I'm getting this right, but I think he drives a Honda Accord. He's like, "I couldn't care less about cars or what anyone thinks about them, but I'm going to be dressed to the nines everywhere I go." That's his thing. Even if your priorities are the exact opposite, it doesn't matter. What I love is that he's like, "That's what makes me happy," and the money he saved on cars he can spend.
44:03	Sam Parr	On calls, he calls it his money dials. He says, "Think carefully about what my money dials are in order to live a rich life." "My money dial is clothing. I love fancy clothes." "And I think he said, 'Up until recently I drove a Honda Accord—or Honda Civic, whatever it is—and I wanted to try... I forget what the fancy one is. Is it Lucid?' He said, 'I tried a Lucid and it was way too complicated. I hated it. I went and got another Civic or something like that.'"
44:31	Morgan Housel	It's the opposite of frugality. I love clothes, so I'm going to mercilessly cut everything else in order to have a higher budget for clothes. I encourage everyone to do that: figure out what their thing is. My wife and I figured this out in the last six months, at least at this phase in our life with two young kids. Travel's not for us right now. We realized after the last four vacations we took that the best part of the trip was coming home. After feeling that for the fourth time, we just admitted, "Maybe we should do less of this right now." Maybe in five years, when our kids are a little more stable, it'll be different. But other people are vagabonds — they can't wait to travel. Good. Figure out what your thing is, and what your thing is not, and go for it from there. When I travel for work a lot, I travel very well and spend a lot on travel that other people would find wasteful. But I love it. So you have to figure out what your thing is and work from there. I think most bad financial decisions and most bad financial behavior doesn't come from making a single bad choice. It comes from trying to follow somebody else's path and thinking, "Well, that works for them; maybe I should do that." People listening might think, "Oh, maybe I should try Remit's thing. Maybe I should go spend a lot of money on clothes and drive a Panda Civic." No — maybe that's for you, but it's probably not. You have to figure out what it is. It takes a crazy amount of independence and looking in the mirror to try to figure out what works for you.
46:04	Shaan Puri	"You've said, 'personal finance' is a lot more about the word personal than about finance, and I thought that was a good way of putting it."
46:10	Morgan Housel	And same for investing. What's interesting to me—maybe it's not surprising, but it was interesting—is that at the end of my first book, The Psychology of Money, there's a chapter about the psychology of my money. I just kind of laid out everything that I believe. There's no numbers in it, but it's like: here's how I save, here's how I invest, here's how I spend, here's my personal philosophies. In that, I said, "I dollar-cost average in index funds. I had a 3% mortgage that I paid off early, which is a terrible financial decision, but I loved doing it because it made me feel good." So I laid it out, and there are so many people who wrote—I can't tell you how many emails I got—people saying, "I loved the book until I got to that chapter, and now I can't take you seriously anymore." I think it's interesting that even after laying out in the book that there's no formula—you just have to figure it out for yourself—people looked at the decisions that I made and basically said to themselves, "I would have done it differently, therefore you must be wrong." I think that's the disconnect that people have.
47:13	Sam Parr	Well, I always troll people because I have this premise: I think owning a home is a stupid financial decision. But I always say, "If it makes you happy, you should do it." That makes it wonderful, and people get angry at that. You mentioned paying off your mortgage and other things. It's interesting— I study investing and I like all these investing people, but I don't even invest. I'm oddly not terribly into money. What I'm interested in are the stories and the behaviors around money. Money is everywhere. If you think of every story you see and ask, "What's the money angle here?" you find really cool stories. There's a huge connection between story, money, and our personal behaviors. When you bring up something like real estate, it changes people—it makes them question their identity, because a lot of financial decisions are tied deeply to identity. You also said that if someone has been saving and saving for sixty-five years — and now they're 66 and retired — oftentimes they don't spend. They don't spend because they can't change their identity; that's too hard. It's interesting how — and I'm a victim of this as well — it's very challenging to change your investing and spending habits because that's just what's underneath the money surface level. It's really like, what is... </FormattedResponse>
48:33	Morgan Housel	My identity — it's such an important part of society, and there's so much uncertainty to it. I think a lot of times when people are having a fight about money — when they're debating money, for example, between two investors who have differing views — nine times out of ten the people are not actually debating. They just have different preferences and are talking over each other. What they're really saying is: "If I believe X and you believe Y..." A lot of times I view your opinion as a threat to me because I know my views have a lot of uncertainty and they may or may not be right. If you believe something different, that's an indication that I might be wrong, and that makes me really uncomfortable.
49:13	Sam Parr	It'd be like me calling you an idiot for preferring vanilla.
49:16	Morgan Housel	That's exactly it. Yes. People understand food: I like Mexican food; you like Italian food—great. To each their own. But with money there is this feeling that there should be one right answer. If your answer is different than mine, one of us must be wrong. I think that's why finance can be more contentious than other fields, like food, where it's just, "figure out what works for you and go do it." We don't make that leap with finance.
49:42	Sam Parr	So, based on everything you've read and written so far, if you only had the next—let's say—60 or 120 seconds to summarize it in a couple of sentences, what would you say?
49:52	Morgan Housel	All that matters in finance is this: it's not about what you know, it's not about how smart you are, and it's not about how much information you have. It's just about how you behave. There's almost no other field where that's the case. Somebody with no education, no experience, and no background can massively outperform the person who has the highest education and the strongest credentials. There are no other examples of fields where a country bumpkin who didn't go to school and doesn't earn that much money, but has the right investing behavior, can invest, maintain, and hold with patience for 50 years and build a fortune — while at the same time the Harvard‑educated, Goldman Sachs MBA blows himself up with a complicated derivative trade. By and large, that kind of thing doesn't happen in other fields. Finance is a very unique field. It's not that behavior is important — the behavior part is everything. Behavior is very difficult to teach. It's hard even for very smart people because you can't distill it down to a formula you can memorize. It's unique and individualistic. Maybe the takeaway is this: you have to spend a lot of time thinking about the soft skills — patience, ego, greed, fear — and you have to spend a lot of time thinking about how those topics apply to you individually, to you and your family. Figure out your own goals and your own benchmarks, even if they're different from the people around you.
51:27	Sam Parr	We appreciate you so much.</FormattedResponse>
51:28	Shaan Puri	"Thanks for coming on, man."
51:29	Morgan Housel	Thanks, guys. This is fun — that's...
51:30	Sam Parr	It's the pod.

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Most People Are Chasing the Wrong Number

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