"Most Investors Make This Mistake" - A Masterclass On Building Wealth, Wisdom & Success | Guy Spier

you are one of my favorite people to listen to every time you have a podcast I always consume it because you have a way of humbling people about life and investing that I find nobody else has um and it it comes across every single time that you want people to make it down the slope in life and the reason I say slope is because you have this Perfect Analogy about skiing and recently hearing about ergodicity could you talk to the audience about navigating the slope of life and what is ergodicity oh that's a wow yeah

so first of all Jeremy it's great to have you here in Zurich um you're a special person and uh I love you we were just talking about you being an introvert and I feel like I'm an introvert but um you know I'm really impressed with your approach to life so uh I and and I think that so why is this relevant to the audience is that um uh for some reason I've managed to attract people like Jeremy into my life and that reinforces some things that I want to have reinforced so you're a part of

the flywheel in case you didn't realize I'm honored yeah and and it's very kind of you to um flatter me and I just I love responding to people when I I say you know talk to my wife I'm I'm I have plenty of reasons to be humble but I would say that Lori my wife um I was I was lucky enough to be wise enough to understand that I needed to marry somebody who didn't take my BS and so I think that a huge part of who I am and I've been married now 20 years

plus is that I have a wife who don't take my BS she don't stand for it so it's not something that happened on its own to the extent that I have that humility it happened because I have a wife and you know my children learn from my wife so they don't take my BS and obviously if you if you live a life in the markets the markets have a way of humbling you as well but I certainly think that that family setting and it was a selection that I made and it's an example of you

you make your bed and then you sleep in it you create your environment then your environment shapes you I'm I'm really grateful I had the wisdom to pick somebody like that to marry who was willing to stand up to me and stand against me so and now on to your question which is so uh you asked me to talk about aristy and um you asked me to talk about the analogy of skiing so uh the idea of arodis for me originated with somebody called o Peters who's a mathematician working at the London mathematical Institute and

the concept of arodis actually applies in its original form to gases and a gas is our IC if I'm not mistaken if you can take one small sample of the gas so if you have a you know a a room full of gas if you take one cubic centimeter of gas somewhere in the room is that representative of all the gas in the room or not so why the hell does this apply to investing in economics and I would tell you that ole Peters is a very capable mathematician and I can't claim to understand and

the mathematics uh of some of the more extensive work on ergodicity although I think I understood the basic stuff the guy who really opened it up for me and enabled me to talk about it in verbal terms was is somebody called Luca Delana who's based in Turin and he's written a book onist and he's written a book without any formula in it and he has the capacity to talk in terms of analogy IES and so I'm going to now go into the analogy that you gave of the ski race and before I get there I'll

just talk in terms of the mathematics and then we'll get to the simple version so uh uh imagine that we can flip a coin and if it lands um heads uh and I need to need to remember the ratios to get this uh correct if uh if if you get um you know I I want to refer to it it should be able to come up to me right away but uh without going into the specific arithmetic we're talking about expected value and uh yeah so if you if you if you get Tails you're down

by 50% you you lose you lose 50 cents and if you get heads you get 50 cents so you're by by 50 so the game is that you bet a dollar and there's a coin flip and it's a fair coin there's no kind of bias in the coin and if it land lands heads it's plus 50% and if it lands Tails it's down 40% so on a dollar if you want to calculate the expected value uh plus um 50 let me just double check the numbers plus 50% uh you'd be a $150 and half of

that is 75 and if you're down uh 40% and you're down to 6 and half of that is.3 and you add the you know to get the expected value of that bet you add the uh two sides of the possible outcomes so there's the upside and the downside the upside is um uh 75 and the downside is 30 and so you add those together you get A1 five and so that has a positive expected value and really genuinely I don't know that you've done an MBA we spent time at business school doing uh expected value

calculations and so you would imagine that if the expected value is positive as it is in that case that's a bet that you want to take all day long and what and that would be true if the system is erodic but uh uh if it's not you could lead led to ruin uh meaning that you can lose all your money if you play that repeated game and that for me was just astounding because it's not what I'd learned at business school and so I went and build a spreadsheet where I kind of tested this out

and I played the repeated game and I saw how the road to ruin happens and just because I double checked it on the website and I urge people to look at it um so this is the game played repeatedly the dollar flip a coin plus or minus and this is like sort of 750 games 1,000 games and you can see that the net worth of the person Trends towards zero and uh I don't know if you can see that but obviously somebody can look it up on the website that's aist economics you need to make

a difference between the arithmetic mean and the geometric mean and there are circumstances with in which the arithmetic mean and the geometric mean are the same circumstances which they're not with the coin toss what's going on is if we imagine a th000 individuals ideally 10,000 individuals and uh They're all playing the game of the coin toss you can imagine that there will be one extraordinarily lucky individual that comes up heads heads heads heads so it'll be plus 50% every time and they'll just keep going up and that will turn into we know what plus 50%

over over many many times we'll do that turns into a ridiculous amount of money so everybody wants to be that person but the number of people who get that kind of outcome are is is a minuscule proportion of the Thousand or 10,000 samples that you have in the overwhelming proportion of all the other possible outcomes of series of heads Tales heads Tales you get a number where so next time around I'm not working if I get a negative result I'm not working with um a15 I'm or sorry $150 I'm working with 60 and that 60

cents so so I have less Capital to work with so that was astounding to me it shows that a positive expected value game which um uh which has the wrong characteristics if played repeatedly can lead you to ruin that blew my mind so if somebody didn't understand that and just uh anybody wants to you know I came back or walked into my office and said people I've had a sort of um eye opening moment and they're like guy and let me just be clear I wish I was I wish I I think I'm capable of

it I wish I'd studied the mathematics to be able to be fasile with the ma mathematics I'm not so they're like you're full of guy and we don't understand what you're talking about and I'm trying to explain it to them in those terms and they're like we don't understand what you're talking about and then I come across Luca Delana and he gives me a way to explain it far more simply and it's written up in his book herity which is very very worth reading and so we're going to go to the ski analogy if none

of what I made sense n none of what I said made sense we can now go to a skiing analogy so uh and there there are a set of ratios for this to work uh in the skiing analogy and I'm not going to try and look them up right now but imagine that uh you're a professional skier we're in the mountains here and I love skiing so that's not a terrible thing and um there's a season of 10 races and the goal is to win the season to be the best skier over the whole season

and um the one of the variables is under the control of the skier is how aggressively the skier skis and we're talking about Downhill Racing so the name of the game is point his down the down down the hill and ski as fast as you can to the bottom and get the best possible time and so the skier can slow himself down but then he's less likely to win the race but he's also less likely to get injuries and uh in terms of the probabilities and again I mean I I refer you to Luca's work

or Luca's write up of this um the skier it's it's remarkable how conservatively you have to ski in order to have the highest chance of winning the season because the the when even with a relatively low risk of in injury the problem with an injury is that if you don't make it past race two or three or four or five you can't finish the season and then you're out of the game and then you definitely have not won the season and so uh there is a perspective difference so within the race the skier feels the

pressure to ski as fast as they possibly can because they feel like that what's going to win them the season but very very likely the skier is taking an undue risk with uh the risk of injury and pushing that too much such that he's going to get end up getting knocked out of the game and Luca with his wonderful way with English which is not even his mother tongue he says um future gains will I think he says won't recover present losses so you know if you take the the previous Co points analogy you've lost

the opportunity to work with the 40 cents that you've lost in round two and if you get another uh Tails now you've lost more opportunity to work with your capital and it's a road to ruin even though if you could stay in the game long enough you would eventually uh get there but uh but you can't stay in the game long enough and the injury is an obviously example of that so uh the person who wins the season is not the fastest skier it's the it's the fastest skier who does not get injured and um

so you know if I was a skiing coach I would certainly spend time explaining this to people and forgive me everyone there's some simple maths that will will demonstrate this to you and it's the table in in Luca's book and uh I had spend time with the skars helping them to understand that because it's just really really important and so where does this apply before we get to investing uh so when I explained this to some mathematician friends who spend their whole lives in mathematics they're like oh that's pretty obvious isn't it so there are

people who say dude this is obvious freaking don't get so excited for me it wasn't obvious so I want to go to another example of just before you do that actually the fact that you are willing to acknowledge that versus I and this whole conversation I just really want to cover all the ways people will break their legs on the slope um and so I actually worry about the intellects who aren't who say it's obvious because even if you take someone like easier said than done where um and clearly um for people who will watch

how you how you go through your life um a day in the office uh tour that we just filmed is you're you're constantly setting up these things so you don't fool yourself and and and people say easier said than done and um you know you take someone like Jesse Livermore who was one of the most successful traders of all time who said even uh make money while sitting not by trading and he lost his fortune and committed suicide so here yeah and here's one of who you would call one of a genius and clearly uh

easier said than done so I just really want to acknowledge that yeah and so I guess um the uh so so Charlie mango I mean you could summarize all of ergodicity standing on one leg by saying all I want to know is where I'm going to die so that I don't go there what does that mean I'm coob Bryant and um it's very convenient for me to take a helicopter to my I'm a very rich guy to take a helicopter to my basketball practice and um uh during bad weather there's a small but nonzero chance

that you have a hard Landing and possibly people die because it's very very hard to orientate the helicopter in bad weather low visibility and coobo Bryant makes the decision that he's always going to fly to basketball practice using the helicopter so you have a situation where a oneoff um very low risk of something happening it's real but you do it once then you have that very very low risk risk but if you do that thing every single day every single day sooner or later that risk becomes on 100% certainty and so there's the the the

difference in perspective for Kobe Bryan and he made that mental error and he paid for it with his life um yes on each individual helicopter ride the risk of a hard Landing in bad weather is extremely small if every now and then you decide to take that risk that's not the end of the world and it is a very very small risk if you do it repeatedly you know if you're um if if if you're some if I'm somebody who's extremely concerned about uh nuclear weapon detonating in New York City and of all the cities

in the world New York City is the most likely to have a dirty bomb or nuclear weapon that some terrorist decides to detonate or some point or I'm very worried about being caught in an earthquake in California or if um I uh very concerned about being caught in the middle of missiles being fired at Tel Aviv in Israel so if I go to Tel Aviv for a four or five day period or if I go to LA or if I go to New York the probability that that that particular event happening while I'm there is

a very very small risk if I live there it's close to 100% And so that there's an example of where um in Kobe Bryant's case he paid for that risk for he paid for that misunderstanding of the different perspectives on risk on an individual basis it's extremely small yeah but on a repeated basis if you pay the repeated game it's practically 100% And you know so what you can't do in the case of the helicopter ride you can't divide yourself into a thousand people and say well it's okay because in this number of helicopter rides

I survive because you need to know that the one that you're on so there's a difference between playing the game sequentially and dividing yourself up into a thousand people and play and having each of you play that game and you can only need one of them to succeed so this idea of uh you know there are some kinds of games like flying helicopters in bad weather where you don't want to pay with your life so you have to succeed in all the versions of the world where it can possibly come out and your expected value

is not the right way to look at it um so uh I I found this extraordinarily powerful when it comes to investing um there are plenty of bets that have a positive expected value but if you take them repeatedly with a significant proportion of your net worth you will will be led to ruin the only way you can possibly take them repeatedly is to do this idea of dividing your portfolio into many different buckets and do it with a small enough number of buckets so that the the the amount that you've bet is not fatal

when you lose it and you can come back and Reb bet again uh and so it's extremely extremely important to figure out what kind of investment idea one's looking at is it an idea like the coob Bryant idea where um you know mistakes could be fatal or sometimes people call those binary outcomes or is it is it an example which is far more um uh forgiving of stakes and I took the decision once I understood this that I only really wanted to be invested in situations which were not binary where no matter the only question

is how much money do I make is never a question of if I lose if it comes out Tales I don't lose much I don't want to lose at all in a way um so uh yeah I guess I guess there you have it I guess the ways in which you can break your leg is a um so I think that that what you're picking up on is elements of my annual letter to investors where survival is so important so in the case of it's not just whether you win the the competition in fact I

think what I wrote is survival is everything because if you survive that's all actually you need to do because there are so many ways you can fail and perhaps another way of describing that is something that I just somebody put in front of me you know it's written by somebody life in a way so many aspects of Life are not a Winner's game it's a losers game so uh the analogy is to tennis at up to a certain level of tennis the way you win tennis is not just not make any mistakes if you just

pop the ball back to your opponent manage to hit the ball into the court your opponent will make a mistake sooner or later and if you can just consistently return the ball into the court you don't have to hit that killer shot that killer slam that a serve and so that's a losers game the people who win are just the people who consistently able to return the ball and the people who try and smash the ball are going to lose because they're going to keep making unforced errors and so it turns out that just in

a way in investing making unforced errors is the way to survive actually and many people end up losing money like um Jesse Livermore because he made unforced errors he he didn't actually I think that quite possibly I read that book a long time ago he did not have that distinction is in his mind if he had that distinction that simple distinction he may well have been far more able to manage his desire because he would have understood hey this isn't a a non-ergodic bat um you know so I cannot do it with a lot of

money and actually it's it's a checklist item for me is this orotic or non orotic an example of an orotic an orotic B would be um you know and I love using this example is Nestle so uh you know the only question is how much does Nestle grow into the future there's no doubt that people are going to consuming more of their products are they going to grow by 3% real atal growth 2% 1% 5% that is that is a question but the products that they have the basic food products what we know about human

consumption patterns what we see the business doing uh and so then the only question is how much is they grow how much am I paying for it and and if you don't pay too much for the growth then the probability that you're going to lose money you don't know if you're going to make you know a 12% return a 15% return an 8% return but there's a very very different example to buying a knockout option where you put your money down and if one the state of the world is one you win a lot of

money if the state of the world is the other you lose everything and um and many many so take for example a company that and this is happened to me in my portfolio where when I invested in the company it wasn't very leveraged and leverage built up and really the management didn't pay attention to it so it was an arotic bet where I invest when I first invested and then over time it changed into a different kind of bet you know and so um just paying attention to that and being aware of it can make

an enormous enormous difference um yeah well and one of my favorite books is uh what I learned investing uh about Darwin and um and yeah the survival of um you you I've heard you once say how you have in your cave you have ner uh berries and nuts at the back of the cave um and that dichotomy of then going out to hunt for fresh meat but but how this ties into the the skiing down the hill is if you yeah if you go out every time to go hunt fresh meat the saber-tooth tiger will

get you eventually and so I know that dichotomy of you've you've been outperforming the S&P 500 but have you gotten maybe the returns higher returns that you would have dreamed of when you first started this um I know that dichotomy and even when I'm trying to think about me going into investing how much I'm truly starting to really appreciate that um instead of thinking oh just generate 20% rate of return without taking in the factor of you know how important it is for survival and to have nuts and berries in the back of the cave

yeah I mean um so so so two places I want to go with that question one is one is so so what is pulad prak's book is p pulak prasad's book investing like Darwin I I I'll go into that set of ideas because I think I think that that's one of the most original books that I've read and he did a a phenomenal job of taking investing and thinking about investing into an area which is extremely powerful valuable and useful but um before we go there I want to address your aspects of um the cave

and I think that something that you may not be aware of Jeremy is that you need you're in a different place to me I'm uh about to turn well I'm 58 so shortly I'll be 60 uh I can think that you know certainly more than half of my life is behind me possibly more probably more I don't think I'll live to 120 and um so you know U and and it also depends on whether I'm investing my own savings and whether I'm investing other people's money and what their time Horizon is but you know you're

at the closer to the beginning of your life and you have a far longer time Horizon so the ear you are in life the you know you should be able to recover from your risk so I'm not encouraging you to go hand gliding or to go wingshot wing suit uh jumping or any of those things but but I think that with investing to take higher risks now is probably a good thing to do provided you can recover from them and so um I think that as I grow older I have less opportunity to recover from

Big mistakes but but I think the rational thing for somebody your age is to take to take more risks but to take them in a recoverable way what do I mean by that uh somebody I know is he had an exit from a uh a very successful exit in an artificial maybe artificial intelligence company and um he now wants to buy business and he's moved back to Europe and is looking for a business to buy and learning from Burkshire Hathaway what I kind of one of the things that I shared with him to do was

divide the pot of money you have to invest in a business into five ideally 10 different shots what's what am I trying to say ideally don't assume that the first business you buy will be a success set yourself up that you can if if if it works that's great and if it doesn't you can go on to number two number three maybe you can pursue some of them in parallel eventually you'll get to one that succeeds but you don't want want the first one to take you out and prevent you from coming back from doing

numbers two three and four and so I think that in an optimal way if I were in your shoes the person I am today I would be taking you know Bets with uh you know a bets that that don't that have very high upside don't necessarily have a as higher as higher probability of working out as I would like but the key is to be able to come back and do at least 10 or 20 or 30 of them uh so that the law of large numbers and this is something that actually Luca Deana talks

about as well be in the game long enough for the game law of large numbers to work for you um so uh uh but actually having said that and well in your specific case and I'm sure there are many people like this the only caveat to that is that you don't ever want to be in a situation where assume the first three bets you make don't work out so you need to make them in such a way that that whatever happens with those three bets you're not discouraged from making the fourth one and the fifth

one and the eighth one and the 10th one and the 12th one so B haway is incredibly structured because it's just got this Fountain of cash that keeps coming up and so every year there's I mean I think they produce a $100 million a week these days so you know and and in my case I mean somebody like you has high current earnings so you through that current earnings have high high cash every year hopefully that you're not spending on your life that you can reinvest and so I don't know that my bets this year

will work out another way to look at that and it's a wonderful analogy is it's a Vineyard and every year you're going to plant a new row of vines and you're going to be planting Vines for the rest of your life sometimes the wines will come out good sometimes the Harvest will be spoiled it's not entirely under your control so leave that aside and go to your the second point that I heard you make before I come back to you which is pulak prasad's book uh D what I learned from Darwin about investing and um

he took a really really unusual and interesting take on the way Evolution happens and what he pulak Prasad pointed out from the study of evolution and The evolutionary record is that Evolution doesn't happen in a in a um consistent manner it happens in punctuated periods they periods of seeing through the geological history where um fora and Flora on planet Earth we evolving very quickly new species being created very rapidly and then periods of stasis when not much happens and those periods can last an extremely long time and then you get you know an asteroid that

hits the Earth and you have a collapse of a whole bunch of species and then suddenly rapid development and uh and so one is one of the two takeaways for me one is what you know so the analogy to businesses there are businesses that are in stasis they're not evolving if you take the analogy of a business being a species and the the structure of the industry and the structure of the profits and the costs is stable over a long period of time then there are businesses where things are changing very very rapidly and so

actually look for businesses where you know it's like a species that is not changing very much and doesn't have to change very much and those some of them are not very profitable some of them are extremely profitable and I you know unfortunately so many of them come back to well-known industries that we all know uh in this case I think that he uses the example of Coca-Cola Pepsi Dr Peppa 7 Up um that's a very very stable structure a very stable uh set of economic returns and Moes that um have endured for like probably the

best part of 100 years which is really really fascinating um but uh you know the the power of thinking by analogy is so analogies are extremely powerful they can also mislead us so as we think like that we have to say yeah I'm using a model of the world I don't fully understand everything about Evolution and applying that model of evolution to investing be aware that that model might not be an appropriate model so have some humility about the tool that I'm using or the framework that I'm using to trying to understand the world realize

the world might be different to the framework I'm using never conf confuse you know I pulled out that book by alen Greenspan the map and the territory never confuse the map for the territory uh the map is the idea you have in your mind of the way the world works the territory may be different you know and always be clear so what I'm saying is just be aware that's a model of the world it's not how the world actually works and forgive me because this just Hawks back to the tour do you see how I

I remembered that map in the territory and I brought that relevant brought in Alan Greenspan because I'd pulled the book off the shelf simple as that you know it's okay to flip through books you know yeah I don't know that is very powerful and I have to yeah I have to remind myself about that because I I typically speak in analogies U with people and so that's fine that's that's a sign of a highly intelligent capable mind there's nothing wrong with that at all it's great it's great but just be aware of the analogies yeah

you know yeah even in his book um where he talks about the silver foxes and how they were they were bred in Russia there was uh some laboratory going on and I think by the 20th generation they were just looking for silver foxes that were more docile and they were just training them to be more docile and then by the 20th Generation Um I think I might be wrong about the number of generations um they started to wag their tails they they their eyes got cuter their nose got smaller and when I read that chapter

I instantly thought about you know the environment that we are conditioned in and set up and you walking us through your library tour you moving to Zurich how you have set up a condition um I know when looking for companies to not evolve um per se but also putting yourself in the condition to evolve or not evolve um because you also said New York it might be harder for some people to actually be a successful investor because they might have to be fighting those conditions of New York that are subconsciously evolving them I don't know

if you have any thoughts on that I mean what comes up for me when you say that is uh we we shape our environment and then it shapes us we pick our environment and then it shapes us I think that uh look I at the time that we lived in New York some some deep force in me made me decide and made me we took the decision together but I was I think I that my wife Lori would agree with me that I was leading that decision to move to Zurich and I um instinctively sensed

that something was right in the environment in Zurich for me and that's been extended through the office that you've seen um there are also enormous disadvantages to being in Zurich uh I I understand American companies the best uh that's because I spend a l large part of my life there it's also because they're the easiest to understand and it's the most incredible place to invest and make money and I'm far away from the United States unless I want to be on a plane every week to the US I live here I don't live there so

I you know if I wanted to go and do due diligence on boat manufacturers Leisure boat manufacturers that are based in the US I got to fly over there and I'm less likely to do that due diligence because I don't want to be in a plane all the time there's also something that happened to me here in Zurich for your interest um you know after I came here I got regulated and I would have been regulated in the US by the SEC here I'm regulated by finma and uh but that was a significant change in

my environment that I didn't choose that that was kind of brutal and difficult for me to adjust to and I've I've first of all I've adjusted to it second of all I think I've found ways to use it to my benefit and to the benefit of our business and our investors but it's not like everything's perfect over here and I think that and and there I I my daughter last time I spoke to her doesn't like Zurich very much because she finds it boring and people think in a very structured way and I like that

because it creates certainty for my erratic mind and I need hard walls to bounce off and Zurich gives me hard walls New York City is a city of possibility you know in a way Zurich is a city of certainty and reliability uh so somebody who's wants to get lucky in life you're going to be far better off in New York for me but but having said that you know many Swiss people feel constrained in Zurich and they feel far happier in a place like London or New York and there's far more free open thinkers if

you like and and so there is a certain cost to being here as well I think that the benefit to me outweighs the cost but I just think that want to share with you that it's not as if there's any perfect place there's no perfect place and to the degree that I think that where I where I come out now which is 180 degre opposed to what I wrote In the book and in a way um 180 degrees deposed to sort of this office tour that we did you know I the way I where I

come from right now I think it's really beautiful to be close to people that you love and family and those you know the reasons why they end up the way they where they are are all sorts of multifarious and you know maybe maybe a better approach if I was starting again is to find a way to be close to family and then construct the environment in that environment whether that's New York City or St Louis Missouri or Tokyo Japan or wherever it is but that close closeness to half and home is more important than any

of those things and what I said at the end of the interview which I think is really really important is it's the people it's not the physical environment it took me a long time to really realize so but I think and then I'll I'll give you back the mic I think that what you would say back to me of course you're here you can say it to me but I'll have it go at this is yes fine it's the people and we can talk about the people but structuring wherever you are whether you're in New

York's Missouri Tokyo or Zurich you can still structure your physical environment in a way that supports it and those are small actions that one can take and one should definitely take them if you like I I'll share one additional thought that I think is helpful so um and I think that this maybe so if you're looking to build so so I'm trying to answer I'm realizing there's a question behind all of your questions and the question is I I would put it this way is um for somebody who wants who's either already investor who's starting

to invest wants to be a successful investor is you know uh what do I do and where do I start and how do I start and how do I avoid the big mistakes and how do I avoid ruin how do I avoid Kobe Bryant and um so one thing is you know make a move keep making moves make moves that are small enough that uh if they turn out to be mistakes there's the opportunity to learn and every person needs to judge that for themselves don't take big moves if in doubt take smaller then do

less you know if if you think that climbing that mountain will might kill you then then climb a hill climb a climb a smaller Hill a smaller Hill it's not it's about climbing it's not about climbing the tallest mountain uh you know it's not about the amount of money you invest if if never invest more than 10% maybe it's 5% or 1% of your profit it's a half a percent that's okay but make a move make a move and then and then learn from it so um you need to be making the moves but then

the next point was the most critical one which I had in my mind and it just went out of my mind but it's going to come back to me very very soon um so yeah um don't think the insignificant moves don't matter and I would argue thinking a so I make an investment move I made a make a decision to buy on office furniture I make a decision to hire somebody whatever it is time to get up in the morning what alarm clock think of think of it in terms of the material practical impact you

know and and then think of it as also being a way to shape one's environment so I think that what I'm picking up on in you is that what you're noticing is there are things that are relatively insignificant that I've done that uh were perhaps surprising to you because they seem so small and insignificant but guy still pays attention to them and so uh you know the the the the beginning of climbing Mount Everest is to take one small step in the right in the right direction and those small steps really really make a difference

uh where something is on your desk uh the first thing I pick up in the morning you know I have a simple rule that has has been working really well for me um at at some point in the evening I forc myself to switch over from um from reading on a computer to reading paper and then I've given myself you know once the lights out I'm allowed to open the Kindle that's it but and then what I'm trying to do in the morning is make the first thing I touch paper not a device for example

and so it's a very very tiny thing it's a very very subtle change but those subtle changes like like drops of water onto a stone you know it can cut a huge huge hole in it if you do it for long enough and those things build up over time so do those things you need to wake up in the morning using alarm you know but um but then but then think of the so this is something that I know that Warren Buffett does if I do this thing repeatedly for the rest of my life will

my outcomes be better or worse and from my observations of Warren he never does things where it's short-term expedient but if you do it for the rest of your life could lead to a bad outcome so uh you know I just get drunk once every now and then with friends no don't ever get drunk with friends you know um uh I'll just this once fly the helicopter in the bad weather no don't ever fly the helicopter in the bad weather wait until the two the two things come together the short-term expediency and the long-term consequences

of doing it repeatedly over many many times and then do it you know so what happens if every night I switch off my laptop at a certain time and only allow myself to read paper you know that's a good thing and actually it'll help me to get to bed on time so that's kind of an obvious choice and there there are many many other things like that and so I think that one of the places where I fail in that is that that that's a very easy way to to to help get to the answer

of no if I accept this for expedience because I just want to do it if I were to do it repeatedly take that extra appointment I don't know uh if I were to do that repeat where do I end up ah I don't end up in a good place I'm not even going to do it this once even though saying no to it this time is difficult and um and don't don't be afraid well don't be afraid to make a move on the one side and don't feel like a tiny move is not worth it

it's to insignificant a tiny move is a step and it has consequences and gets built on so I'm thinking of a movie it's one of these Holocaust movies I don't remember the name and there's one of these camps and um the God says these awful words he says you know first of all you kill one and then once you kill one it becomes easier to kill more and more and more that's a very morbid way of looking at it but that's also true on the positive side as well so small steps are okay don't have

an inner voice that says oh this is ridiculous this is so small it's insignificant no that that voice should be banished um I got switched on to this by Anthony Robbins and I know that many people uh he's a complicated figure but everybody who's achieved anything significant in life it's a complicated figure with complicated people people have upsides and downsides Tony Robinson is no different is he a perfect human being no uh but he's taught me an enormous amount so I say all of that because I've mentioned Tony Robin something they like oh my God

and I I I I don't want you to let I I we should never allow somebody's um distasteful qualities to blot out uh what is good and what can be learned so what did I learn from Anthony Robbins from listening to his uh it was cassette tapes at the time I believe this concept of the inner voice and we all have an inner voice inside of us that's talking to us not even not just the schizophrenics who certainly have voices sometimes multiple voices but the voice is I don't know maybe Freud would call it the

super ego it's running constant commentary on what we're doing and we've all met you know sort of like narcissists who have an inner voice that think that every single damn thing they do is great you know and those people are probably far more rare and but we many of us all of us have have experienced life with the inner voice that saying you an idiot did you really do that oh my God like any any not even a loser would do that kind of thing so why do I bring it up the first thing is

to become aware that we all have that inner voice and to become aware of what it's saying what is that inner voice saying and be aware of what events in our life um change the tone of that inner voice change what that inner voice is saying we've all hopefully all of us listening to this have the experienced the thing that happened to us that we did we were I'm fuing awesome that's amazing I did that you know so that's that's one inner voice and then there's another another inner voice that says youing loser you idiot

you idiot so that inner voice first of all it's there listen to it learn to learn to recognize it learn it's there then this is what antin Robbins taught me I can take control of that inner voice that inner voice is not like the weather that I just have to be uh you know that inner voice is not some random thing that reacts to the world I can actually take the tone of that inner voice I can take what it says and I can make it say different things and that's why Anthony rins talks about

personal power that is power the ability to um take control of that voice and so in a way what I'm saying to you is um you know be aware of what that voice is saying and and and and realize hey look if if if the inner voice is saying you're awesome go do it again that might be just what you need to hear so so many times in life it's not the inner voice is wrong the inner voice may be 100% right there are times in life possibly many times in life when the inner voice

is completely and utterly wrong and different people different personalities so I think for much of my life I had an anxious personality so the inner voice was always worrying you know and so so another way to see it is that inner voice that that worrying voice is is is potentially very very valuable in certain circumstances but learn how to turn the volume up and down and Lear learn to know when it's prudent to turn that volume up and learn when it's prudent to turn that volume down I did something that potentially is is a KOB

Bryant thing um we we were had a very nice meal and suddenly at the end of the meal we' had some wine my wife didn't want to drive so this this happened to me um about a week or two ago and what I did was I I just said uh oh that's fine I'm happy to drive I need to sit here for an hour and drink water before I drive because I've had a couple of glasses of wine so I just sat there that would be the non-c Bryant way of doing things but this time

I don't remember exactly why I found myself having to and wanting to drive I don't know if I was over the limit but I certainly wasn't 100% sure that I wasn't over the limit and um so you know I just made sure that I drove Ultra carefully and slowly and told my wife um please pay close attention to me and and point everything out to me I'm I'm driving potentially in you know not in the safest possible state that I can be so what I did was in that case I turned up the anxiety so

I turned up the an accident's around the corner any moment any moment any moment drive as if an accident's about to happen drivve so you know the the one of the things the effects of alcohol is that it makes you feel overly confident in yourself and so I was aware of that and I turned up I I did the opposite and said you know you you're you're you have slow reaction times you have slow reaction times be ultra careful be ultra careful be ultra careful so so those are dials that we can use that's really

I learned he's he's incredible well that that learning was incredible yeah I think what what you caught on about the inner voice and also my my underlining questions um you caught me there on on what I'm speaking to about because I know even my fiance says I worry too much about everything um and operating from a position of power and not scarcity is is the the hardest thing I think to overcome and which is why you know I really admire um you know looking up to you and how you operate sometimes in a position of

power so I I have plenty of experience around anxiety and so you know I haven't met your fiance but here's here's what I want to say to both of you in a way is so so if if I could put words into your fiance's tell me her name Ana tell Ana Ana is Ana first of all anxiety is neither good nor bad it's it's it's an emotion it's it's a survival emotion it's very powerful um and um I I so so so what I'd want to do is modulate her language not to say and ultimately

your language is not to say you have too much anxiety or you're just too anxious the whole time it's like wow you have a really powerful you you're deeply connected to uh um the emotion of anxiety and that's a really valuable emotion to have let's see how we can use that effectively let's see how can you you can use that effectively um you know when can we let's have a conversation it's a fun dinner conversation when has your anxiety helped you I'm no doubt that it's been extraordinarily helpful in all sorts of things it's got

you where you are in a way uh let's see where it's not been helpful and uh so let's try and understand um when when you should lean into your anxiety and actually amplify it and when when when actually you want to kind of tone it down and when actually when and it's sort of like oh I'm feeling anxious let me double check hey Ana do you think there's a time when I need to turn the volume up on this or turn it down so this becomes a much more Nuance conversation then I'll give you an

example from um you know this is uh so I had a business partner in and and and my wife is deeply suspicious of her so so I could have said to my wife oh you you just you just you're just very suspicious you know you this like you're too suspicious in a way to analogize and I'm I'm I said something different I said you're I know that there's no person who loves me more and that you want to protect me and obviously you want to protect our family and you don't want to see this come

into a negative place I'm deeply grateful for that and I know that I know that the emotion that you're feeling is valuable and so now I want to find a way we need to find a way to make it useful to us we need to find a way so so you know so in some cases the suspicion might be actually you know you have a great point I should start structure this business relationship differently other the cases might be you're suspicious and I think that the conclusion is that this person is the wrong person to

deal with in my life so you do you see how there's a kind of if you say if you say oh he's just a suspicious bastard you know that becomes the inner voice that is just like is not productive and it's fascinating how a modulation of how you talk about it can can change um whether the emotion so so this is all you know Gad evolutionary psychology and um there there's there's a book uh oh yeah it's like a name like pank and it's called the archaeology of emotions and so we evolved as you know

Lucy uh at alivi uh gorge in Tanzania was 2,000 2 million years ago she was walking uh on two feet um so we've been bip for two million years by contrast we've had writing I think for less than 10,000 years even before we see animals have emotions dogs have emotions so but certainly Lucy two million years ago had some kind of emotions over 2 million years those emotions have been evolving those emotions are um uh they helped us to survive they are deeply embedded within us and the minute we're dismissing them you are to dot

dot dot you're too suspicious you're too anxious of this we're taking all the stuff that evolved that emotion and throwing out the window and um so in the last 10,000 years and especially in the last 200 years the world that humans humans have operated and is just like it's like changed so quickly that all of that human evolution can't keep up with it so what happens now is somebody comes up with the emotion of Suspicion which is a highly evolved emotion that evolved over 2 million years what's in the trees over there is a wild

animal could it kill me is it is a is it a competing tribe are they friend of foe you get the feeling this feeling in the gut so over the two million years if we were still in our hunter gatherer State those em emotions would be accurate to what is going on in the rustling of the leaves or whatever the hell else if we talk about suspicion then we go into this unbelievably complex world that we live in with writing and all the stuff that we have social media and in not in all cases can

we trust the emotion there are there are people who don't trust their emotions at all there are people who live in their emotions if but if you say something like you're too suspicious or you're too you're too anxious you you're you're cutting that connection between two million years of evolution and you're cutting the informational content of that and it's very very hard to translate that the informational or the the the survival content of that into practical action today and you know if I'm faced with a wild beast it's possible that yelling at the top of

my voice because I feel threatened and shaking my hands and jumping up and down is exactly what I need to do to protect myself and my family but if a guy just uh bumped into me in the traffic behind and comes out at me and makes threatening noises for me to jump out and start yelling at him in that way would be you know potentially they might might be road rage gun they might shoot me so the one it's very obvious that it probably works and it's the right thing to do in the second so

so we have we have to kind of like switch on other modules which allow us to make that translation but never lose the profound and Powerful informational content of those emotions so if it's if it's my wife suspicious I'm a less suspicious person um to say oh my God that is really interesting let's try and understand what's going on now obviously that requires my wife to have an open mind and say she's not like well you just a suspicious bastard it's like okay let's try and here's what I'm feeling here's what I'm seeing did you

see the way they dot dot dot you see that they're not responding you know and it goes the other way I'm an anxious and and I'm like oh my God you know I sent him an email and he didn't respond you know and and uh uh instead of you're always anxious it's like well how many days did you give it I sent it two hours ago well you just remember you don't respond to email sometimes for 48 hours or more so ah okay I can calm myself uh emotions are a guide to action it never

serves us to deny our emotions so roomie you the roomie poem so roomie lived in what is now I believe present day Iran Persian poet Beautiful Soul read a lot in English so this is a translation but um every human being is a guest house every morning a new arrival a joy a depression and meanness some momentary awareness comes as an unexpected visitor welcome and entertain them all even if they are a crowd of Sorrows who violently sweep your house empty of its furniture still treat every each guest honorably he may be clearing you out

with some for some new Delight the dark thought the shame the malice meet them at the door laughing and invite them in be grateful for whatever comes because each has been sent as a guide from Beyond and so you know when we're talking I didn't interrupt the poem that's very powerful yeah you never you never you know so like anxiety you if I had if I had Ana here like just invite anxiety and say hello anxiety would you like to sit down and have a cup of tea tell me what's going on with you you

know tell me what you're seeing you don't have to be the anxiety you know and so that's a that's a powerful powerful idea yeah the inner voice yeah that was very powerful thank you I am going to do therapy sessions with myself yeah in that manner um because yeah it is very powerful and even back to the inner voice something that um actually really aligned with a question I wanted to segue to as you said you know appreciating the fact that you can say you know I'm the man this is amazing but at the same

time this I really sucked in this in this aspect and and having that Duality and respect both uh I heard someone um say that the three traits of all successful people morning routines didn't matter none of it actually matter there were only three traits and the one was you felt like you could conquer the world but you never felt good enough to achieve it so you delayed gratification and hopes of achieving it yeah and I I want to get your thoughts on um on balancing that because I mean that is from when I look at

like all successful people well there is that torture and that beauty in that and that doesn't necessarily lead to happiness though it leads to success but maybe not happiness so I'm curious your thoughts on that well what I heard you say and I'm not sure if this is addressing exactly what but I think it's it's valid and relevant and then if I didn't address it you can come back and re askk the question a different way is um uh so the the um the first word that came in my mind was HPA which is a

Jewish origin word which is of the brazenness to to you know Hillary Sidman Hillary the brazenness to think that he can climb Mount Everest Ernest Shackleton the brazenness to think that he can he can uh um he can reach the Antarctic but that's compined with the humility or anxiety or what you know the um the fear of failure the uh the concern about the downside and it's when those two things come together and the one doesn't you know the brazenness is not lost but neither is is the fear of taking care of the downside that

when those two things come together that's when you get some some kind of really powerful results in life and and and and and leads to satis satisfying outcomes success uh big potentially big success but satisfying success and if you're just concerned about the downside you'll never take those big steps but if you only take those big steps with the brazenness then um you know you could get yourself into some serious trouble so how how do you how do you inculcate well I guess one is to diagnose which one is and I think that we've all

met met the big rollers uh who lead to ruin Jesse Livermore and we know plenty of people who go and do things like work as librarian or work as civil servants or all sorts of jobs where there ain't much upside but there ain't much dside downside and I think that's fine I mean Philip Lin a famous poet worked as a librarian I believe as I think did TS Elliott although I may be mistaken there uh and I think they lived really happy lives because their real goal in life was to create great poetry which they

did um as you can see I'm a kind of a big fan of not a big fan but I do love poetry um so that but but there I've met people we all will meet people where they like so they they really regret not taking more risk they lived too much on that side I think my answer on I actually think it's easier to convert from somebody who's extremely risk averse somebody who takes a little bit more risk in life and takes creates more possibilities for upsides because my word to them is you know you

don't have to convert from being being a Hermit living in a very protected environment to going Sky skydiving you know do a small thing take a small step like I said do a small step that's okay don't get if you have that in voice that says that's ridiculous don't compare yourself to you know it's okay to climb climb the hill to my home I don't have to be um s Edmond Hillary climbing Everest you know maybe one day I'll get to Everest but the first thing I can do is I can walk up the hill

you know I can walk five steps I can take a flight of steps something like that that's actually a better place and what that's easier to work on because your downside in a way is protected through your personality then the other side which is um people who just can't stop themselves from taking big humongous flying risks on things and you know live extraordinary highs when it works out but are in extraordinary pain when it doesn't did that address yeah yeah finding finding that balance I'm ious if there's a trait that you would add into the

mix of so there were the three successful traits but what is a trait that you think is missing in that equation that that person came up with so so the three traits are um you feel like you can conquer the world or you serious for the taking so a bit of ego uh but you never feel good enough to achieve it um the humbleness or the insecurity um but you're willing to delay gratification and hopes of actually achieving it it's it's it's do you know who who wrote that I don't I know who said it

um but he he never gave up who actually wrote it uh guy named Alex Heros on YouTube uh said that in a podcast and that was really profound uh hearing that I think that's something that it's a question that I didn't ask myself because I had high anxiety probably and my life would have been very different if I if I'd asked this question and taking it seriously and this is again I'm like you I don't remember the person who asked it first or who I can attribute it to but um what would you do if

there was no doubt that you would succeed what would you dedicate your life to if there's no doubt you would succeed at doing it and uh and so I I can say for me I came at investing I think if I try and understand myself for partly being an immigrant partly a family history that I've written about in my any report of fleeing for um uh reasons of persecution religious or otherwise security was everything most important thing don't even start to think about all that other stuff until you've found that security and Security in the

way I saw the world was primarily Financial Security period but I think that question is a wonderful question so if I had to ask myself the question if you could achieve anything what would you set your mind to I might have might have sought to become politician might have sought to become a world a a kind of world-renowned Professor maybe I don't think I would have sought to become a I I just finished a book by Salman rashy knife I don't think I would have sought to become a an author of um um what is

what is his genre called it's called Uh magical realism is a kind of a wonderful name um 100 Years of Solitude is also considered to be magical realism both wonderful Satanic Verses what I'm reading right now which I feel obliged to read I don't feel obliged to read it I found my way into the book and I'm it's not the only one I'm reading but zman rashy is one of the greatest men walking alive today uh given what he's gone through and he's got my enormous respect and gratitude um but uh I will never meet

him and I didn't know much about him until recently but poor guy was stabbed 18 times over 27 seconds in Chaka New York chataka sorry in any case I just went off on a tangent there I think that um you know you you climb a mountain by taking the first step so just like take the first step uh yeah I mean yeah taking the first step I think is always the hardest right I think I think what I what what what I come back at you with is I don't want to talk about qualities because

that's not something that's under my control right and I want to talk about things that are under my control and I can't just like create the quality of uh you know arrogance or um you know those other qualities that you talked about what I can do is take an action so funny enough we talked about the physical environment shaping our uh ability to make good decisions um the uh taking an action shapes your soul so I've started doing something with my family with my wife but my extended family and I learned it from Shantel here

so when my wife leaves on a journey or goes off to the airport in the taxi stand at the gate and I salute her and it's really fascinating it says you're really important to me and my family is really important to me and I salute you because if you're leaving then I'm going to stand and give that Mark of respect on the one hand it's just a stupid salute shapes your soul shapes who I am shapes the actions that I Subs quently take and so I'm more interested in what actions can I take that will

shape my soul that will shape my and and maybe maybe shaping my soul is is is a bit much but I think it does ultimately shape your soul again Warren's got all the wisdom but this is actually doesn't originate with Warren um there's a beautiful set of you know watch your actions because they become Deeds what your Deeds because they become habits what your watch your habits because they become character watch your character because it becomes Destiny so you know this is a theme that I've what act what this action how's how's it going to

ultimately that's Destiny you know the the the book by the famous US general who said you know making your bed in the morning's Destiny why you make your bed you've achieved something you feel you've accomplished you feel a sense of Mastery you feel so what actions can I take that ultimately will affect my destiny and actually making enough standing there and saluting my wife ultimately becomes Destiny it's just kind of nuts you know it's those small actions just incredible small actions taken repeatedly the the um the bonds of habit are too light to be felt

until they're too heavy to be broken something like that is I think what Warren said it's it's everything yeah oh it is uh yeah it is so profound I mean even just thinking about it and trying to navigate that Paradox of all the little things matter but then at the end of the day the things that truly matter can also be refined to simple steps taken yeah and um you know one of the one of the things I wanted to just speak to you about was um a Jewish proverb that I actually really resonated with

I'm curious your thoughts on this about about just moving all the complexities away from life and getting to the root and you know the closest one can get to immortality as they say is plant a tree have a kid write a book and I just like that to me like talking about success is just so everything you need and we also talked about William Green's book richer wiser happier it's a nice triarte division three words it says everything and even that that proverb plant a tree write a book have a kid says everything about life

and uh I'm curious your thoughts on on on how much of Life Is Us just really over complicating things when we it is right in front of us when you hear something like that the world is complicated so we live in a very complicated world we have live in a world that's been made made comp more complicated by you know developments of the last 200 between you know last 10,000 200 whatever time scale you want to make so it's not our fault uh you know I mean we grow up in different circumstances we we get

given brains that are different we get brains many of us that are not might have been suited to hunter gatherer lifestyle but not particularly suited to uh Modern Life or there's one aspect of our brains that is not suited to Modern Life and and we have to master uh and then over and above that some of us are born with with real physical handicaps some of them momental handicaps might be you know neurodiversity might be low IQ um and then and then we have the social circumstances we grow up in we might have had Abus

of parents we might have had an abuse of relationship I met a girl a girl a woman a young lady at the burky meeting public knowledge I won't mention her name who was repeatedly raped by a friend of her older brother from age 13 to 15 so we you know some poor people were born in Gaza and they didn't ask to be born in Gaza you know I won the ovarian lottery I wasn't born in Gaza period that's uh so plenty of reasons why life's not simple and um and so so what comes up for

me is you know I so so how fortunate have I been I was born I was born with a good IQ I was born in a stable home my parents still married I was born in financial plenty I was born in a part of the world where I could get a good education you could go on and on and um uh over above that I've been lucky enough to sort of like you I don't think I've done the best I possibly can but I've evolved myself to straighten myself out so definitely Kinks and flaws that

I've been able to straighten out for my for myself one should never uh confuse winning a roty ticket with ability and so yeah there's some ability and it's fun to try and focus on it and trying and squeeze out lessons but let's not let's not deny the extraordinary lottery tickets that I've drawn in life I mean I I can I can count so many lottery tickets that I've just given you yeah so the the very end bit I've managed to straighten myself out a little bit done some therapy done some Anthony Robbins you know but

how many things was I just given you know and um I gave my children A New Perspective on this when I said you know so one of my children says yeah I'm really smart and I deserve dot dot dot it's like oh you think you earn your intelligence you know you just inherited that you did nothing you just got it just like that you know because some combination of genes environment nutrition whatever else created the brain you didn't do anything to get that I was like holy yeah that's a lottery ticket winner and the world

is full of the biographies and autobiographies especially autobiographies are full of I think that Charlie Munga maybe calls it misattribution eror let me tell you how I did so great in business now you're lottery ticket winner you know that was one of the great benefits for me of reading uh Nasim tb's book full by Randomness Fooled by Randomness I I didn't think how many people you know he calls places like New York extremist Stan so many lottery winners in New York and so you need to first of all realize that they're lottery winners and second

of all you need to understand that they don't realize that they're lottery winners and may never realize and in a way many many people who living extraordinary fortunate and successful lives are not sure themselves is this the result of my hard work or or am I just extraordinarily lucky I think that the longer life is the more you work you know the more you can be tell about some people that it's not luck it's um their effort I think I can say that about Warren Buffett I think that there are aspects of my life that

I can say no that that life that you have guy you were extraordinarily fortunate you are extraordinarily fortunate but there's you know and I appreciate you coming to the office and talking to me about it CU in a way you're saying no there's effort there decisions you've made things that you've learned that have helped you to become very fortunate but I think there a very long and roundabout way of saying it don't forget the lottery ticket aspect don't forget be be careful of always that people may be there to I mean so I I'll give

you another example examp this is is kind of fun the case method at Harvard Business School you know so you go and you you you know 20 years ago the cases were Proctor and Gamble General Electric you know unver that was it you know then uh 10 years ago the cases were all Apple Google Microsoft and each time that's the model of success this is but actually they're not teaching you what the next thing is they're just reinforcing what these companies did to become successful those companies in a way lottery winners because you can't recreate

those conditions to make it happen again how useful is that knowledge is Harvard Business School in the case writing method is it about studying best practice or is it just promoting the most successful powerful companies of the day not you know I I'm I'm making very Grand generalization and Grand claims Without Really backing them up but I'm just asking the question and um I think that there's enough doubt you know Harvard Business School would like to claim it's all about studying the best it's probably complex there's a lot of that but is there an element

that you're actually just promoting the lottery ticket winners there's also an element of that I heard that they did a class uh teaching on Taylor Swift her success and when I heard that I thought you know she how much of is she a pure anomaly in society and to teach a class on that I found was was kind of strange and it it depends the way the class is taught I would imagine because if I had to teach that class you know I I think that I would say um you know we're going to study

Taylor Swift which is a total anomaly but let's see what we can learn from anomalies is is there anything that we can learn learn and and it may be that there are things that we can learn that's why the world is complicated you know a big a blustery bigheaded business person you know art of the deal by Donald Trump you know they're probably things that you can learn from that even though he didn't turns out right the book but you know uh so so so it's complicated we can learn from Toler Swift even if she's

an anomaly probably or can we I'm not entirely sure yes no doubt we can and that no doubt that we can so yeah I have two final questions for you um this one is is one that uh I I myself probably need to um work on the most and I'm sure a lot of the audience as well especially your portion who are aspiring to be successful in their own Endeavors um is the Trap of desire and uh nval ravikant one of my favorite amazing amazing amazing yeah and his book uh audio book where he says

desires a contract with ourselves to be unhappy until we get what we want and so in the investing Community I I mean everyone's desire is to generate a specific rate of return for 20 30 years and to we're we're willing to sign that contract to be unhappy until we get what we want and so I'm just really curious to hear your thoughts uh one how do you navigate desire um especially with how dangerous it can be and two um what is your advice for people who uh think that um how to pick a desire per

se yeah so so I suspect desire is you know I haven't thought that much about desire desire is an emotion so I'm not sure we can pick an emotion the emotions well up inside of us so I think it's more a question of ride that bucking horse uh how do you manage that emotion how do you steer it how do you find its evolutionary um what how do we translate this evolutionary thing that we've got inside of us into something that is functional and productive for us today and um you know if I I'm thinking

extemporaneously but desire obviously the first place is sexual reproduction and we desire what is fcked what is going to help us to reproduce the species that's clearly go straight to the evolutionary um framework because we need to propagate our genes and you know what we find desirable are the things that will help propagate life to the Next Generation including women who are fertile and men who are strong and all of those things depending on which sex we are and um and yeah and and and when you're married uh that that especially if you're early in

your marriage that desire doesn't go away and if you're male my experience is that that desire can be for women who you're not married to and then it needs to be managed and channeled because uh maybe in Hunter gather of groups it was okay to you know have to be polygamous in some way that doesn't work today so there's there's desire I think that and if we just stick with that for a second because I think that that's where it's at the at its core um the the first thing is just to confront it and

describe it accurately and just just to see it for what it is and to understand it so don't deny it see it's there and then try and understand what to do about it and the same that we were talking about don't live in your anxiety you are not your anxiety that's something different to you that by the way meditation helps a lot with as well you are not your desire that is a thing that's coming up for you it's not who you are invite it in have a conversation with it don't let it Lead You

Down The Garden Path so many men especially have ruined beautiful families and marriages because they they thought they were the desire and they weren't um I think about what William said about that of all the investors who are divorced multiple times uh for various reasons whether they chose to their desire to be 150% in their invest investing Pursuit but maybe not 70% in other in multiple aspects of their life like relationships so what I I said in my letter in discussion with William as a result of discussion with William was you know I don't want

to run my life in such a way that out of all you know divide myself into a thousand people a thousand different ways the world can unfold I want to run my life in such a way that I'm successful in all of those possible worlds not just in some of those possible worlds and um and what it led me to was uh you know well you you bring up the example the guy who who who makes an extra you know Buck but destroys his marriage has kind of like created us a world which is not

the optimal world it would have been better to make 1 billion less or 1 million less or whatever it is and be and remain in that happy marriage um so so so it's really fascinating for me and it's it's something I struggle with a lot I know what the right answer is and I kind of you know I mean my my last annual letter kind of describes it and and describes the decisions I've taken around it there's there's absolutely no doubt that having more financial wealth is is not going to make me happier [Music] so

the pursuit of more financial wealth cannot be my goal the goal has to be something different and um so so that desire does not exist for me don't think it exists for Warren Buffett either I think that you know a better desire and maybe this is like to be the best version of myself that I can be I think is it extremely powerful idea how do I become the best version of myself uh what do I what steps do I need to take to achieve that um you know another perspective change for me was I

think it's wait but why that wonderful guy I think that you know he divided his life into how many weeks he's got left how many seconds he's got left and actually you know you know we're all far richer than Moren Buffett in terms of seconds of our life or days of our life left we got far more you know Mish at one point I don't know if he agrees with it now said that he would happily swap his life for Warren I'm like no way Warren's at the end of his life I'm still in the

middle of my life I would much rather have my life than Warren's life not because Warren has not had an extraordinary wonderful life but because I would also say Victor Franco you know what we can we can suffer any um any anyhow if we have our why I think he said that um you know Beauty appreciation of beauty is one of them appreciation of the beauty of mathematics of nature of mountains of uh my children of so that is that is a and the beauty of building a a good business to have great Investments of

wonderful relationships with the people in those Investments I get really motivated I get super excited I have no idea i i i there's certainly a significant chance of fading in this but uh I'm invested in an Indian rating agency called care ratings and it's not the leading agency it's a homegrown agency and have you heard me talk about this and you know th those guys they they I I I I'd like to be a part of the story that brings that agency to a whole new level to a place where perhaps that agency broke the

the oligopoly of the existing agencies and Sovereign ratings where that actually changes the structure of the capital markets where bonds rating is not just happening out of New York and London but it also happens out of Delhi and Bombay I think that would be an amazing thing and yeah I'll make a a shitload of money from myself and my investors by doing that if that were to happen but and and and the money is the measure but it's not the goal and um I don't have the desire so I another perspective change so how many

seconds do you have left what is the content of the seconds it's not the years to your life it's the life to your years you know I don't need to ever own a big fancy yacht but I'd very much like it if my friends own some big fancy yachts and they invite me onto their big fancy yachs that would be just fine so you know that kind of perspective changes the quality of your Rel relationships not how much money you have in the bank um another perspective change is the desire not for financial wealth the

desire for an ample you know balance sheet when you take into account every all the different kinds of wealth you have Financial psychological social um you know all of those things so you know you need to be valued and respected in society you need to be valued and loved by your family you know and yes it's nice to have money in the bank to pay the bills but to have money in the bank to pay the bills and nobody likes or respects you is not a great life or to have a family that doesn't love

you so I am I don't have desire for the highest returns and and and as you as we've established we be asinine to have the highest returns if they came at any risk of those other things you know the reason why one of the many reasons why Warren Buffett is such an unusual person and I think will go down in history as being the unusual person is that his pursuit of those things being loved by Society being loved by his family combines in his personality to make him one of the wealthiest guys on the planet

and to have some of the highest Returns on the planet but one of the key things I learned at that lunch and I I I realized it's like two-thirds of the way through was that he wasn't trying to be the richest guy he was just doing what naturally made him the happiest or is doing what naturally makes him the happiest and that happiness is way more important it's everything actually so I don't have the desire to have the highest returns I have the desire to live the fullest richest life to have the most life to

my years not the years to my life which is why you know at the Zurich project I'll be taking a group of people swimming you know I hope to learn a lot about investing where it' be nice to have a good swim in the lake you know yeah no I think yeah I think this is what gra makes me gravitate so much towards you in this community Warren Buffett because I mean yeah the most interesting thing is the money is just a vehicle for playing the game of how to constantly recreate yourself innovate on yourself

and pursue you know um and so yeah it I I love the the conversations how yeah money asking the money questions are the least interesting in my opinion um but as a final question I do have to ask one money question for the audience because unfortunately it breaks my heart that this will get the most views um All About views I'm a social media slop let's face it well and yeah I mean like the the understanding the psychology and and trying to live a beautiful life is um yeah I hope everyone um has just been

profoundly impacted by what you've just said to me uh and everyone watching but uh for everyone who does want you to answer this um if you were starting with a million dollars today what would you be doing differently someone asked Warren Buffett that at the birkshire meeting I'm curious what your answer would be differently to what I'm doing now y if you were starting just with a million dollars of your uh own money or or Capital you've you've raised um so if it's a million dollars the first thing for me is that I'm getting a

job as well so I'm doing it part-time because I want I I want to preserve that $ million for investing and um I don't want to draw down on it for living so I'm getting a job and I'm and I'm paying all of my living expenses from my job and I'm going to try and find a job that pays my living expenses and allows me to invest so I don't want to pay my life expenses out of the returns and that part of that is just take a pressure off I know that all I need

to do is compound that capital a million dollars at any rate of return but if I'm living you know on $60,000 a year then I'm drawing down I don't want to be forced to have to make a 6% return just to stay even say so you know and obviously see given the Way I Live Now if that were the case I'd have to massively cut expenses I have three children going through college all sorts of expenses so so now we just talk about the investing I've sorted out my life expenses part of it and um

and you know you know pay down debt don't have any Debt Pay down the mortgage get rid of that so so really be able to just invest I think that what then I would do differently to what I did and what I'm doing today is I I would want to take higher risks with my investing uh if I'm starting so it depends what age I am let's say you're you're under 30 yeah so so I think I I want to divide that million into at least 10 buckets but it might be as many as 20

buckets and I'm going to take um hopefully so so I'm going to try and make bets where none of them can turn out as a complete loss but but they are they they all have a high enough probability of returning multiples of my money and I and I I'm going to and and the key is to divide it into the pots to enough pots that I can keep going I'm not going to give up that I'm not going to get scared and um if I'm if I've got big brass balls like Mish pabai may only

need three or four pots but even Mish went to 10x 10 so he was talking about 10% I think that for me it's it's 20% and so I got to keep making those bets and um I'm not sure how many pots because I think that I need to make those bets over a 5year period minimum so maybe it's two bets a year and then it's it's 10 bets so it's uh so then is actually 10% each time so I'm drawing down on the million dollars would you be flipping through value line would you be oh

I see but to find two bets a year would you be digging through the weeds so so everybody has their own journey and their own story and it's important to own that journey and story and not to regret that it's not a different story in my story I had enormous fears of losing money losing the confidence of my first investor was my father and so um I I had some bets like that that worked out enormously I just didn't put very much money into them an example was uh Duff and Phelps where given the amount

of money I was managing I ought to put a million dollars in I was managing about 10 and instead I put2 200,000 and that $1 million would have turned into $7 million instead 200,000 turned into 1.4 still not a terrible result but but um I didn't invest um enough so so I was all the way through the life of the fund I've had shares of Nestle Nestle is a wonderful company isn't going anywhere but it's not going to get you 7x in 3 years or two years or whatever it was that it was in Duff

and Phelps um so if I was doing if I was starting my 30s and was doing it again I would have way more of those and if you take the scenario where my job is covered yeah each one of those bets is a Duff and Fels types bet I'm putting 5 to 10% of the net worth you talked about a million dollars into to that and where am I looking if you want to find ideas that are going to be um you know uh 7x your money in in that period of time you're looking at

sub billion dollar market cap companies on the whole it's far less likely to happen so where where am I going um I'm I'm flipping through value line I'm uh looking at um Val investors Club Seeking Alpha you know I'm I'm going to things like the Zurich project I'm going to Value X I'm going to the bursha meeting I'm talking through best ideas I'm trying to develop network with people who have good ideas I'm running screens but all of that you know um I love this so this came up in the recent podcast that Mish pabai

had with Shan Puri he said an idear is like an everybody's got one so I ideas are like an everybody's got one at the end of the day you know I have to so it's not hard to come across the ideas or so so so the thing is at some point one has to actually say okay I'm going to commit now and it's going to be in an uncertain environment you're not going to see green you're going to see Amber it's not going to be perfect that's that so so that's a kind of like a

level of risk taking that in the past I was uncomfortable with because of this so aisy stuff I want go with things that are far shorer bets I'm trying to find something that's a 7x and also is a sh bet every now those now and then those will come up but I'm going to take things where it's not a Shore bet but it's still but still a potential 7x and I actually have to move to and then where I find them is constantly going to be changing uh but but I need to try all sorts

of different Avenues I was reading recently a wonderful piece of research that was produced four or five years ago where they looked at companies and I can sh with you the the research uh that had had done sort of like 100 Baggers or 50 Baggers they looked at where those those ideas came from and they show that there was a kind of a skew for example to the countries where those companies existed and finally enough the um there were you know the countries like the Scandinavian countries score quite highly in that category and you surprising

because it's a social welfare state with high taxes and things exact reason for that who knows but it might be you know it turned out that the aim Market in the UK had a pretty high number of those companies so maybe I'm saying look at aim companies maybe I'm looking at small caps maybe I like running F finding what works but at some point you got to make a move you know and Warren caus them wrinkles so yeah I'd be doing more of those wrinkles and I would have been developing the muscle that so the

muscle in me for all sorts of reasons is not as de well developed as it could be of being willing to look at wrinkles things where there's something going on special situations that makes it an unusual valuation and a very good likelihood of a very very high return but where there's also some hair on it and uh uh you know that's a muscle that you can strengthen that that that muscle is far stronger in Mish than it is in me and there are all sorts of reasons for that partly is temperament in Mish partly it's

a very unusual childhood that Mish had mish's father was an entrepreneur who went bankrupt many times that's Mish has told that story a few times and uh and Mish learned that that was okay he's not afraid of of those kinds of high risks and potential losses and that gives him an unusual orientation towards risk which I don't have um and so I would I would be working hard to strengthen that muscle at a younger age yeah that's what I'd be doing with the million dollars thank you so much well you know I sort of come

back on myself and say you look at my last letter to investors the most important thing survival is everything so I think in all of that I'm I I'm at the same time I want to optimize that better I think what I'm trying to say is that if I look at what I did for understandable reasons I was way more risk averse and conservative than I should have been and that's okay I forgive myself I think that I should have been willing to turn that dial up in the ways that I've described but with the

constraint of never uh risking going out of business and I would say that when Warren Gets asked that question he's so confident at that yeah but and and probably Warren is right to be confident but for every Warren there's probably a million people who are not right to be confident and so what's the probability that I'm weren what's the probability that I'm not there's a far higher likelihood that I'm not waren so even if I think that I'm going to be successful assume you're not you know and forgive me I'm I'm just like I'm adding

length to this I hope that's positive not negative it's a positive um so I you know uh the intern I've got right now SCH um he enjoyed this was like assume God is watching you and it doesn't matter whether you believe in God or not you know God is wired into our genes uh most humans evolved with some idea conception of some kind of God so so if you don't believe in God it's not a problem just activate that part of your genetic makeup that believes that there is a God we all have that and

be an atheist and do this and now God is watching me and if I invest in that thing God is going to make it go down by 50% only if I invest in it if I don't invest it it's going to go straight up to the moon but the minute he sees that I invested in it is going to go down by 50% at least because God is going to say are you serious you know did you really want to invest in that show me how serious you were you know assume God's going to do

that to you on every investment you know and um and then there's another thing which is that every risk that I don't investigate is the one that God's going to make show up in the so if I you know it's kind of like the uncertainty principle you know it's like if I investigate it won't show up and it will turn out to being useless but if I don't investigate it God will Duff is the Hebrew expression will just to be just to be that way we'll make it show up you know so um assume that

and what so one of the reasons why I love maths after this I'm going to done with mathematicians um it's like the negative the square root NE of of minus one so fast you know for the longest time ma there were mathematicians who like that doesn't exist and we don't do maths with with the square root of negative one for a certain period of time there were mathematicians who didn't accept the existence of negative numbers how could there be negative numbers you either had objects or they weren't any a minus one you know until they

finally accepted the number line I find it fascinating that those those ideas about God watching me is extremely powerful and you don't have to believe God exists for that idea to be powerful and to be effect action so yeah but it's fun to talk to you I hope that I hope that I've been helpful I I just find myself glad on no very helpful we'll find out by the number of video views That's How we'll find out that's true yes especially the last part there in that question uh yeah people people come for the the

the gossip and what would you do with the million dollars but we're going to keep them by uh having the here's what actually matters hopefully in life um so thank you so much guy really been a pleasure I've been looking forward to hosting in my office for a very long time and so ever since you came out of the Woodworks I don't know about 3 years ago maybe it's been such a pleasure getting to know you and uh it's been really fun for me to be at a place in my life where I'm you know

you're a highly selected person so I didn't I didn't I didn't walk out on the street and pick up a Jeremy Stickney Jeremy Stickney sent me an email you identified me you sent me a message was it on Twitter uh no just email it was an email yes that's right but I I did some I mean Jeremy told me about you told me about a little bit about what you'd worked on I was like wow I've never met a guy like that the only guy I know the only or one other it's not the only

one a connection like that is s balky who sent me a message on Twitter and I I in your case I looked to see the podcast that you'd worked on and I was like oh my God how many how many how many subscriptions were was it at the time uh at the time 3 million yeah yeah I was like my god I've never talked to a guy of 3 million so and in this case um s gets in touch with me and uh I look and I see my God he's got 100,000 followers so I

messaged him back within a week we were talking on the phone within two weeks I introduced him to Mish pabai and he's now part of our lce lce work group was quite incredible so yeah well I am deeply honored and uh to be a part of this community I will say it holds me accountable to which I God is watching me but also you guys are watching me and I really um one of the yeah so so what I'd say so then you know we we did a podcast together it was one of the most

popular episodes that I done I appeared on I'm blanking on your the his name EV carich on Evan Carmichael's show and uh and then I invited you to Value X and you came and Jeremy gave a presentation on the power of YouTube and you know I'd already learned some of this stuff but it was good to hear it again and I think that they asked you to do a deep dive on it uh the first time yes yeah so Jer then does a deep dive so we get votes you get voted back to do a

deep dive If people really like your talk and want to learn more and so so now you have deep Network and friendships across the valuea community and then way that's God smiling at you so you don't have to believe in God to have to to to understand this idea of God's sming so what I believe is when you make a decision when I make an uncertain decision then we get a sense of whether it was a good one or not because if it was a good decision things start showing up you know so I invited

Jeremy to I'm looking at the camera I invited you to Value WX and I don't know what would happen but now I understand that you're developing a podcast with I don't want to mention names unless I'm allowed to but some pretty pretty impressive people and so you're deepening your relationship and all sorts of good things are happening which is just so much fun and I'm very grateful for you yeah and and you were at the dinner at the Burkshire meeting MH this year and last year uh this year this not the year before no it

was my first time at birkshire actually oh jery the previous dinner we had Debbie banic you could have met Debbie Banning but that's okay she I think she'll be back at my dinner next year or so uh and uh but yeah there's a good crowd of people there it was fun A lot of fun yeah I'm very excited just make it a routine now oh yeah oh I mean because we never talked about it but so one of the huge shaping factors in my life is the simple decision I made 25 years ago or so

more to just attend the Buran meeting every year you know attend the bur meeting be at the South door at 6:00 a.m. meet the people there and shape my life it's incredible simple decision you know it's shaping your life playing long-term games yeah a rap it all around ergodicity yeah and Lucas LCA Dan's latest book is about playing longterm games I should read that yeah yeah you'll love it you got a summary of it in in his talk you his talk yeah that was my favorite talk thank you thank you