Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)

Ben: Morgan Housel, welcome to ACQ2.

Morgan: Thanks so much for having me guys. Happy to be here.

Ben: I'm giddy right now. I have read so many of your words. I feel like they have shaped my thinking over the past few years. I just want to say before we start, thank you.

Morgan: Well, thank you. It's a mutual admiration, because I've listened to virtually every one of you guys' podcasts, including what I mentioned earlier, the podcasts you are on very recently on the art of investing, where you talked about your personal backgrounds and the history of the show. It was so inspiring and great. I'm such a fan of you guys.

David: Thanks, Morgan. I will just add real quick, I echo everything Ben said. You have also shaped/rechanneled a lot of my thinking and behavior as a native of Westchester, Pennsylvania, very close to Valley Forge, Pennsylvania and the whole of Vanguard. I had strayed from being so focused on Vanguard over the years, and you brought me back to the flock, so thank you.

Morgan: That's great that it worked for you. I always have to make the point though that even though I'm a Vanguard fan and I invest in Vanguard funds, I don't necessarily recommend other people do it. I think the way that I invest would not be right for a lot of people, because they could not look themselves in the mirror if they were not trying to find the next Microsoft, the next Tesla, whatever it would be. It works for me. I'm glad, I hope it works for you, but that's definitely not a blanket advice that that's what everybody should do.

Ben: You mean you don't wake up in the morning and look yourself in the mirror and say, you are going to find alpha in the market today, Morgan.

Morgan: That meme? It was funny. I think when I was 19, I did. The only skill I had was very quickly recognizing that that was a meme and not reality.

Ben: Good for you for doing it quickly. For folks who don't know, you started your career as a professional ski racer, where all great investment analysts and writers start. You went on to write a lot for The Motley Fool.

Morgan: I was in The Motley Fool for 9 years, and I think the final tally was 3200 or 3300 posts. That's actually a statistic that I'm proud of and I wince at, because I'm proud of it, because there's no better way to learn writing than just repetition, particularly repetition when it has a comment section. Every article that you write people will tell you in no uncertain terms, this sucked, you're wrong about this. You learn so quickly.

The feedback loop was so tight for that. But I'm not proud of it in the sense that a lot of it was just writing for sport, and it was like a game, like how many posts can I write today? Maybe this is inevitable for someone starting out writing, but I look back at some of the stuff I wrote in 2007–2008 and it's like, oh, God, that is not a post that I hope anyone reads ever again. But it was a great way to learn just that much volume and repetition.

Ben: It's funny. I feel that way about some of our early episodes, too. You have to perform the craft to hone the craft.

Morgan: Yes.

David: There's no substitute for getting reps.

Morgan: Yeah, but it's hard to do in a public forum like a podcast or a blog, where people can and do shred you to pieces. It would have been great if my first three years as a blogger, I could have had no audience. I'll take that back. It would have felt better. But what made me better was every bad post, people told me it was bad. And then after I got done sulking, I would say, okay, let's try to not do that again.

David: I don't want to say there's no value to just producing something in private for yourself. That's certainly not the case. Through a certain lens, the only reps that matter are reps for you in public, right? For this kind of thing.

Morgan: I think that's by and large true, because even today, after doing this for 17 years, still, whenever I write a sentence, I think there's at least part of my brain that's either implicitly or explicitly thinking, how are people going to interpret this? Are they going to think it's dumb? Are they going to be offended by it?

There's always a like, okay, people are going to watch this. How do you feel about it? Whereas I think if I didn't have an audience, the crazy side would just come out. Maybe there's some value to that, but I liked the pressure of knowing that people are going to read this.

Ben: You transition from writing at The Motley Fool to writing for yourself. How did the whole writing on the Collaborative Fund blog happen?

Morgan: I don't know if I've told the story before, but it's pretty interesting. I was very comfortable and happy at The Motley Fool. My intention was I was going to be there for life. In fact, in 2016, we bought a house half a mile from The Motley Fool's headquarters. My wife and I were like, this is it, this is great. I was so stoked. They took good care of me, I was happy, all my friends were there.

In 2015, a guy named Craig Shapiro, who runs Collaborative Fund, reached out. He said, hey, I like your writing, why don't you come work for the Collaborative Fund? You keep doing exactly what you're doing, just do it here. My response was, hey, thank you. I'm flattered, but I'm really happy at the Fool.

My wife and I had our first kid, a newborn. We just bought a house, like I said. I was not in the mood up in my career. That was already so good and so comfortable, so I said, thanks, but no thanks. And he kept pestering away, not pestering, he was very polite about it. But Craig and I kept meeting for the next year. He finally convinced me that it was going to be the right move.

It was still very scary to leave something that I'm so comfortable at and then I really ingrained my identity at. I joined Collaborative Fund in 2016. The reason it works so well is that Craig and I have total mutual trust in each other. Our arrangement is more or less, you leave me alone, I'll leave you alone, and we'll both go do our best work. That's why it works.

When I joined Collaborative Fund, the agreement with Craig was like, I'm going to write what I want, when I want, in the style that I want, period. And that period can never be erased. Seven years later, that's what it's been. I really feel like it's just my personal template to draw on. It's a lot of fun.

David: It's so funny sitting here at the end of 2023. People listening who maybe haven't focused on your story before, they might be like, yeah, okay, cool. That's maybe somewhat surprising that this happened like, oh, a venture capital fund would bring somebody on to just create content not even related to the firm. In 2016, that was a literal insane idea.

Morgan: It was crazy. To put some more context, when I joined Collaborative Fund, I think AUM was a little over $100 million, which is not very big, and I was employee number four. Not many effectively a startup venture capital firm will say, our fourth hire needs to be a blogger.

Ben: Who’s not going to contribute to the investment decision-making.

Morgan: Who's not even going to write about the things that we're investing in. I think Craig was so smart in realizing that money, in so many ways, is a commodity. There are a lot of VC firms who can write a check. If you want to stand out to LPs, to founders, whoever it is, people need to know about you. They need to know what your values are, what you stand for. They just need to know who you are.

If we had a blog that would generate content, that people would share forward to their cousin, forward to their co-worker, that was just going to raise brand awareness of the firm, even if I was not even writing about what we were doing.

I was actually pretty explicit about that, because I said, very few people wake up in the morning and say, I want to read about the investments that this VC firm I'm not even aware of made last week. It's a form of marketing.

But if I would say, hey, I'm going to write about these quirks of behavioral finance and economic history, that I hope, if I do a good enough job, people will find it interesting enough to forward to their friends and family. If we do that every week for years on end, it'll eventually raise the brand awareness of the firm. That was the whole idea.

Ben: Fascinating. Almost like duh now, but fascinating at the time.

David: To the extent that anybody was doing this before you and Collaborative Fund like this, it was Fred Wilson at USV, Brad Feld at Foundry, but they were GPs writing about the investments they were making, and other things, too. I think the secret was, it was the other things, too. That's what actually got them audiences, but people didn't realize that at the time.

Morgan: My theory was like, look, this is all I know how to write about it. I know how to write about behavioral finance and the intersection of that with history and some other things. The litmus test for whether they're going to share it, it's just whether they like it. It's not about whether it was about a company they invested in or whatnot.

Fred Wilson was a savant at what he does and such a good writer, but that is a smaller net to cast than if you're writing about something that is much more general interest.

Fred Wilson's writing is very, very effective at targeting that specific audience, which is his goal. It's not to say it's wrong. He's doing exactly what he wants. But my goal was like, I want to cast a wider net. I want my parents who are smart, educated people but have no interest in finance, let alone venture capital, to be sharing this post with their friends. That's the target that I'm going for.

Ben: You have this one post, how this all happened. I'm pretty sure I've made this a carve out at the end of an Acquired episode. It is so good. There is zero chance you would find a venture capitalist writing a retrospective on the last 100 years of America and how the social, political, and economic factors wove its way through various war times and peace times to give people this sense of whether or not they should take on debt or not. You read that and you're like, sorry, what about investing in startups?

Morgan: Right. I think in so many ways, these things are all intertwined. Whether you are an index fund investor or a seed stage VC, it's all just the study of how people make decisions with money. We've all been influenced by the economy and society in very similar ways.

I think once you put yourself in a box and say, I'm a seed stage VC, and therefore the people who buy Vanguard funds were not related at all, I think that's wrong thinking. I think we're all trying to make decisions amid uncertainty, risk, greed, and fear. Actually, the Venn diagram is massively overlapped between those.

Something like how this all happened, which is a short history of the US economy. I think no matter who you are, even if you're not an investor at all, I hope that you will find some interest in a post like that. I think that's always what I'm trying to do. I wouldn't even say I'm trying to do it. I would say, I write things that I'm interested in personally.

I write for an audience of one, which is myself. It's just like, what am I interested in? I'm really interested in things like that. How can we try to understand 50 years of economic history through the lens of behavior and incentives? No matter how you're viewing the world, how you're investing, or what your political beliefs are, I think that will apply to virtually everybody.

Ben: All right. Speaking of applying to virtually everybody—you'll like this transition I'm about to pull off—you just wrote a book called Same as Ever, which is a focus on the things about humans that will never change. This is such a good second book topic. Your first book, The Psychology of Money, I think is the New York Times' best selling. What are some of the stats on it?

Morgan: Just crossed 4 million copies sold. That's the only stat that I care about.

Ben: Congratulations. Ludicrous.

David: For context on that, it's one of the top 10 nonfiction books of the past decade?

Morgan: It's hard to verify this stuff, but I think it's now the fourth best selling investing book of all time. There's a lot of nuance on what is an investing book. It's not as clear of a statistic, but it's in that zone.

Ben: But this idea of a second book, coming off of a mind-bending, ludicrous, successful first book, that just landed so well with so many people. When I was reading it, I just remember going, yes, yes, as I'm reading some of your points on the page, and clearly other people thought that way.

David: You were texting me as you're reading it constantly.

Ben: Yes, I'm taking photographs of the pages. But how did you arrive at the topic of what book needed to be?

Morgana: I've talked about this book I'm about to mention so often, but it had such an impact on me. There's a book called The Great Depression: A Diary. It was written in the 1930s by this Ohio lawyer named Benjamin Roth. He was a bankruptcy attorney, and he was just a very astute observer of society. He kept a diary during the Great Depression, and his son published it in 2010.

It's so fascinating because it's one of the only economic books that is written with no hindsight bias. He was writing it in real time when he didn't know how this was going to end. He was writing in 1932. When I was reading it, I was thinking to myself, this is exactly what happened in 2008. If you change the date from 1932 to 2008, what he's writing would fit in perfectly.

I had that thought, and then two pages later, Benjamin Roth writes. He says, what's so striking about 1932 is that if you change the dates to 1893, it's exactly what happened. In 1893, if you change the dates to 1874, it's exactly what happened. It was like, yes.

Obviously, the details of the economy changed, new technologies, new rules and regulations, but it's the same story over and over and over again for hundreds of years. It's because what's happening are just the ways that people respond to greed, fear, and risk never change. They will be the same in 2123 that they are in 2023, that they were in 1823. These things never change. That was one insight.

The other was I was disgruntled and cynical at just how bad the industry was at predicting recessions, bear markets, and technological change. Not just bad, it's abysmal. There are two options. You can just become a grump about how bad we are, or you can say, okay, if we can't forecast to change, what can we predict with confidence? I think there could literally be thousands of things that are just innate features of human behavior that will never change.

This book, I just picked 23 that were big in my mind of not only have people always done this, they will always do this. You can predict with confidence that this little quirk of human behavior is going to be part of your future. Once I thought I had enough material for that, it was like, all right, let's take another swing at the ball and try this.

David: We have to ask, given this is Acquired and given that you are also now a Seattle person, did the Bezos philosophy have any impact on your choice of topic here?

Morgan: Yes. There's now a very famous Bezos quote, where he says, "People always ask me what's never going to change. But what's more important is what's not going to change." The more nuance to that question that he said a couple sentences later, is he said, “You can never imagine a world in which consumers don't want cheap prices, fast shipping, and big selection. It's impossible to imagine a world where people don't want that. Because of that, you can put so much confidence into investing in those things, knowing they'll be relevant in the future.”

I think that's a big part of this. Once you've identified what will never change, you can confidently put effort into that as your prediction. So many problems in finance come from people putting overconfidence in things that may or may not happen. But when you find something that is definitely going to happen, go all in on it. You can invest all in.

I have no idea what the market is going to do next, but I know exactly how people respond to greed and fear, because it's always been the same. I can confidently predict that, even if I have no clue exactly when the next bear market is going to occur.

Ben: Have you figured out a way in your life to structure making bets on human nature without having to be precise about them?

Morgan: I think it's less about making bets on other people and more back to the audience of one. I think it's more just trying to understand myself. I think in some ways, you could tweak every one of these chapters. Psychology of Money, too. This could have been a diary entry of just trying to figure out myself here, just my own flaws and my own crazy mind. It's less about, okay, now, how can I make a big bet with this? And it's more just an introspective, like what's going on in the world? How does this all work?

I'm pretty open with the fact that I dollar cost average into index funds. From a technical sense, I'm not really making bets, other than I'm betting on long-term innovation and economic growth. That's pretty much the only bet that I'm making, which by the way, there are some things that never change embedded in that, but I follow markets every day. I'm very interested.

I read the Wall Street Journal, New York Times, and Bloomberg every single day, because I just think markets are a fascinating window into how the world works. It's such a fast feedback window into how people process greed, fear, and uncertainty.

There's greed and uncertainty in politics, but there's only one election every four years, whereas the markets open five days a week, or crypto 24 hours a day. It's just a much faster feedback loop of how people respond. It's just a really interesting window into the world. It's less about making bets. To me, it's just a philosophy of trying to understand what the hell is going on out there.

Ben: In part, probably just to keep your BPMs and your heartbeat down. It's like, hey, it turns out I actually don't need to get too worked up about this, because I already know where this is going to go approximately.

Morgan: I think it's a huge relief to take the burden off your shoulders and say, I don't need to try to predict the economy. That's a really stressful and hard thing to do. Once you just shrug your shoulders and say, I don't know, because I don't need to know, that's actually a massive burden that's relieved, and then you can spend all of that extra mental bandwidth focusing on something else. You're trying to make yourself happier or focusing on the things that you know are never going to change.

Ben: As I was starting to read Same as Ever, I wanted to ask you this question. This is actually before I emailed you and said, do you want to come on the show? I'm like, oh, I should see if Morgan will answer my email on this. What do you believe today that is different from what you believed when you wrote Psychology of Money?

Morgan: The history of Psychology of Money, at least to me, was pretty interesting, because I set out to write a traditional book, which is 8–10 chapters, each chapter is 5000 words, and I wanted it to all be brand new material that had never seen the light of day. I started doing that. After six months into that, it was a complete and utter failure. I cranked out two 5000-word chapters, and I sent them to a couple friends whose opinions I really admired. Both of them wrote back and said, this ain't it.

Ben: Those were good friends.

Morgan: I was very grateful for it because they were not nuanced about it. They said, this is not it. I think a lot of the reason was because I had for my entire career, written thousand-word blog posts, and writing a 5000-word chapter is actually a completely different beast. A 5000-word post is not a longer post, it's a completely different animal. It's the difference between football and baseball. They're both sports, but they're totally different.

When I was like, oh, I'm going to write a book, I was actually taking on something that I had no skill in doing. I wrestled with that for months. Finally, not out of strategy, but out of desperation, I just said, you know what? Screw it. I know how to write a thousand-word blog post. That's what this book is going to be.

This book, I'm going to write 20 or 25 short chapters, because that's all I know how to do. I didn't do it because I thought it was the right thing to do. I did it because I gave up. Honestly, I gave up. Not only were they short, but lots of what's in there are topics and stories that I had already written about before on the blog.

There was a big part of me that was like, you know what? People have already read this story. They're not going to like it. It turned out that was not the case at all. That was not the case whatsoever.

I'll quote our mutual friend, David Sandra, who likes to quote David Ogilvy, who says, "You're not advertising to a standing army. You're advertising to a moving parade." That was true. If I had written this blog post 15 years ago about the story about Bernie Madoff, the idea that I could never use that ever again was because it's obviously bogus. Of course, you should use it again.

Jerry Seinfeld has the saying where he says, "Don't show me your new work. I want to see your best work. Don't assume that you just always need to come up with new stuff. Show me your best work."

Psychology of Money was, again, out of desperation, not strategy. It was short chapters of what I thought was my best work that I had already written. I was ashamed of that, and I was disappointed in myself at the time.

In hindsight, it’s the smartest thing I ever did. I had no clue that it was going to be that case because I think a lot of people in nonfiction books, most nonfiction books, the chapters are too long. People are just like, make your point and then get out of my way. Stop with the fluff, stop with the 57 other examples of your point here.

The average chapter in Psychology of Money and Same as Ever is about 1800 words, versus 5000–7000 in a traditional book. I think it makes it really quick and snappy, I hope. The fact that I was using what I thought were my greatest hits, the greatest stories, the best examples I'd come up with, was like, yeah, if that story was good, I should use it again.

Now, that's my strategy. That's my style. I want short, snappy chapters. If I use an example that people liked, I'm going to use it again without shame. Like Seinfeld said, people don't want your new work, they want your best work.

David: That’s such a good insight.

Morgan: Not only did I not know it at the time. I firmly thought the opposite at the time.

David: Wow. What did your publisher think? What did the industry think?

Morgan: I remember when I emailed Harriman House. I basically said, guys, I'm giving up on this book, and I just have to slap some stuff together. That's a derivative of what I've written in the past. They said, if that's what you're going to do, that's what you're going to do, but it's not a good idea. I said, I know, but this is where we're at. I've been struggling with this thing, and this is where we are right now. They said, okay, do it, but it's not going to be good. I don't even think I've thought about it to this degree since then.

David: You accidentally uncovered this great secret for writing a book.

Morgan: I'm going to say this for the 50th time. It was not my strategy or my insight. It was just serendipity that I stumbled into that.

David: As we said, Psychology of Money was not just a grand slam. You hit it out of the park, and it rolled around through the whole state. Books just aren't as successful as that ended up becoming.

Morgan: I think books are very much like a seed stage startup, where even if you do everything right, you're smart, talented, and you make all the right decisions, the odds are so stacked against you for success. Also just like a seed stage startup's success, for 99% of successes is mediocre. For 0.001% of them, it's Facebook, Tesla, whatever.

Other examples of books recently, James Clear was one, Ryan Holiday books, Mark Manson's books. The Subtle Art of Not Giving a Fuck was sold (I think) 15 million copies now. Usually, books are extremely tailed distribution of 99% won't work, even if they're great books. There are so many books that you've never heard of that did not sell well, and you read it and you're like, this is amazing, this is a wonderful book. Even when you do everything right, it's just very hard to get it to scale.

Ben: There's something very interesting here, too, which is when your book is left for dead, or let's say the startup analogy is the VCs wrote it down to zero, you were not going to get any promotion out of the book publisher because you said it was crap, they said it was crap, so everyone was just going to get it out there. It means that the intrinsic value of the work is the reason that it did well. A hundred percent of the signal is of the value of the signal belongs to the fact that you did good writing.

A lot of times, at an overfunded company, you could say, I don't really know if they have product/market fit, but they're doing a lot of revenue. I'd hate to look at their advertising line. There's a beauty to the fact that you just assumed it was going to be zero, so it was all word of mouth.

Morgan: About a week before Psychology of Money came out, Jason Zweig of The Wall Street Journal—he’s a good friend of mine—told me this saying. He said, look. If the book is good, you don't need to market it. And if the book is bad, no amount of marketing is going to help. I think that was tongue-in-cheek. I think what he said is 70%–80% true, but it's definitely leaning towards true. There's only so much marketing that will sell books, and nothing sells books like word-of-mouth.

Obviously, the formula for a book that keeps going is super simple. If every person who buys it and recommends it to at least one other person, it's not only going to maintain, it's going to grow. It's not easy to get that, but nothing works like word-of-mouth. If you had a 30-minute spot on the biggest podcast, the biggest TV show, if you had a billboard in Times Square, nothing sells books like the person who bought it texting their brother, their sister, their mom and saying, you should buy this too.

I don't know exactly what the formula is to get there, but that's the only thing that will really… I'm sure it's true for products too.

David: It's 100% true for podcasts.

Morgan: Yeah, true for podcasts. Billboards, advertisements, banner ads, nothing is within an order of magnitude as effective as getting a text from somebody you admire saying, you have to go try this, buy this, whatever it is.

Ben: It's so pure.

Morgan: I had a recent example of this. Have you seen the show The Bear? Have you heard of the show The Bear?

Ben: I've watched the first episode or two.

Morgan: Okay. I had, independently, three people on Twitter say, it's the best show that's ever been made. If one person said that, I would have been like, no, probably not. Two people, I was like, [...]. When the third person said it's the best show that's ever made, I'm like, I have to drop everything and go watch this right now. I agree with it. It's one of the best shows I've ever seen. It's just phenomenal.

That social proof from other people, there is no banner ad on or even recommendation on Netflix. If it came up in the algorithm and saying, you might be interested in this, nothing is going to move the needle like a recommendation from a friend.

Ben: Here's a funny question only because I know your psyche a little bit. Is it going to gnaw at you on the inside if Same as Ever sells the same number of copies as Psychology of Money, but Same as Ever had a leg-up on getting started, so it wasn't purely the work that generated all the sales?

Morgan: First I have no false impressions. I don't think there's any universe in which future books I write are going to outsell Psychology of Money. It's such an outlier that realistically, it's not going to match anything. I think I'm very much at peace with that.

It would be like if Mark Zuckerberg quits, starts a new company tomorrow, and be like, oh, so that company is going to be worth a trillion dollars too. No, it just doesn't work like that. I'm at peace with the fact that my career peaked when I was 36. I have no qualms with that.

David: But you're still in the arena, of course.

Ben: So you nullify the premise of my question then?

Morgan: Yes, completely.

David: It's an interesting experiment, though, because you used the same style, if you will, the same approach of take your best work in the style that is your native style in blog post type chapters. It'll be interesting to see what happened the first time repeatable.

Morgan: Maybe to some extent, but maybe not within the same order of magnitude. The book industry, particularly for nonfiction books, typically, if you can sell 10,000 copies, you did great. You did really well if you could sell 10,000 copies. One hundred thousand copies is you completely knocked it out of the park.

That's even for people with a massive social media following. Those are the numbers for book sales. If Same as Ever sold 100,000 copies, I would be stoked. That's the Bayesian expectation, you need to go in with it.

Ben: Our version of this is the Porsche episode of Acquired, where we've got this nice, beautiful chart where it grows word-of-mouth, doubles year over year. Lots of people are seeing the chart that we tweeted on Twitter.

We exempted out the insanity of the YouTube algorithm from the Porsche episode, because the Porsche episode got four times as many downloads or something crazy as any other episode ever, because it got swept up in whatever the magic of the YouTube algorithm was, of course, because we had Doug DeMuro on.

You're looking at that and you're like, that's just unnatural that that happened. That is an unnatural thing. I don't even know how to try to recreate the elements that created that. There are too many weird biases that just because somebody won the lottery once and they're standing there holding a ticket, it's not like you can be like, okay, I need to go retrace the steps that that guy took that day and go to that gas station, because that's how you win the lottery.

Morgan: I think it's a really important skill in life to be able to recognize when there were things outside of your control that led to some element of your success that are not repeatable. The more positive spin on that is just focus on the things that are repeatable, that you can do again, and there are lots of that.

If you look at Warren Buffett, you can maybe repeat and learn from his patience, his endurance, his risk controls. You cannot recreate the fact that he was investing in the 1950s and 1960s, when at least in hindsight, there were just opportunities everywhere to buy blue chip companies for two times earnings. You can't replicate that.

It's really important to try to only take from your role models or your own being introspective about your own career. What can you learn that is actually repeatable? That's a hard thing to do because you want to look at your successes and assume you can do it again. Sometimes it's the case, but a lot of times it's not.

David: Something that hopefully might bode well for Same as Ever whether it hits Psychology of Money levels or not is to maybe at least beat the benchmark. I do think it and you have something really valuable to say right now that's different, at least to me, than Psychology of Money.

We've now come off this hangover of the drunken binge of the last couple of years. I found Psychology of Money very helpful during that drunken binge period, shall we say, for the couple of years of insanity of zero interest rates and Covid.

I found a lot of your writing very cathartic recently about my own feelings about myself, my behavior, and what happened during that time. I think this has shown up maybe in a couple of different places in your writing recently. You had this great saying. We all have this idea that money is fungible. But money that comes easy, you actually don't value in the same way as money that you had worked hard for. That has been so true for me in the last couple of years.

Morgan: When money is easy or when it's fast, you didn't have to give up that much to get it, then the emotional cost of parting with it is very low. Whereas if you just grind it, sweat it, lost sleep, and you've worked so hard for this money, you're going to move mountains to hold on to it.

The sentence I used in that recent post was, old money wants a tax shelter and new money wants a Lambo. I think that's really true. When you've really sweated to get your money, and that money is in the identity of your family, and your great grandfather planted the seeds with this money, whatever it is, you're going to hang on to that. But when you buy Dogecoin, and it goes up tenfold, you're like, yes, let's go blow it on Lambo. Who cares?

I think at writ large, we saw a lot of that over the last couple of years, where there was just a surge of easy money. With that became, in some cases, Lambos. But more common, just an easy way to part with it. It just felt like fake money, because in a lot of ways it was.

I think there's an analogy here. Now that interest rates are 5%, it's such a healthier world that we live in. It's so much healthier to live in this world where it's harder to part with your money. It should be hard to part with your money.

Investment decisions should not be snapped, knee jerk. Sure, whatever, throw a million dollars at it. It should be like, well, there's alternatives measured against it, we need to think about opportunity costs. Just having that opportunity cost of 5.5% in treasuries, whatever it can be, it's so much healthier than the zero interest rate world that we had for years.

Ben: Having gravity is helpful to create a functioning society.

Morgan: Huge. I know there's pain with it. Mortgage rates are tapping 8% right now. If you're a first time home buyer, it sucks right now. It's an awful, awful world. It's not to say everything's great, but it's just healthier. It's not more enjoyable, it's just healthier to be in this world.

Ben: What strikes me is one of these things where it's healthier long-term. Even though it might be the right steady state for the world for T-Bills to be 5%, it's not to say that there's no short-term pain that comes from it. It's that, home prices went crazy, so those seem to be mostly staying there. They're down 10% or something.

Interest rates have gone up, but now we have this really difficult issue where we have these potentially very overvalued assets that are also very expensive to finance. We're in this, one thing has been corrected but the other thing hasn't been corrected yet, which creates that enormous short-term pain.

Morgan: I think most of that is probably just a mark-to-market flaw. When you say home prices haven't declined that much, it's probably because there are a lot of homes that are still marking themselves on Zillow at 2022 prices.

I'm not a guy who makes predictions about the economy, but maybe this is in the Wile E. Coyote moment, where we're still running. We haven't looked down and realize it's about to fall.

We're in this weird zone of like, look, we're over the cliff, but we haven't started dropping yet. It shouldn't make any sense that you go from a world where mortgage rates go from 3% to 8% and home prices go up. Like, what? What are we doing here? How does that make any sense?

Ben: If it's a super thinly traded asset class where you actually can't mark it, and suddenly, actually it becomes even more thinly traded because people can't move, because they can't find anywhere to move into, because they can't originate a new mortgage, then you have a really thinly-traded asset class and suddenly no ability to price anything.

Morgan: Right. I do some myself for my own house that I'm in right now. I have a number in my head that I think our house is worth. That number that I have in my head today is the same number I had in my head in 2022.

If you want to say the cognitive dissonance of the mark-to-market failure, I believe it myself. You multiply that by almost every homeowner in America. It's very hard to say in 2022, my house was worth X, and now it's probably worth 0.6X or whatever. That hurts. There's a real wealth effect of admitting that because they aren't listing their homes.

Ben: For the vast majority of people, it wipes out all their principal.

Morgan: Yes, for a lot of us. If you bought in 2021 at this inflated price and whatnot, okay, congratulations, you got a 2.5% mortgage, you have a low monthly payment. That's fixed for 30 years. But you paid $100,000, and now it's probably worth $60,000–$70,000 or whatever it would be. That's a hard thing to admit.

Home transactions right now, the actual number of homes changing hands, is at the lowest point in 20 years. I think it truly just is a mark-to-market. There's just not enough liquidity in the market to get a good sense for where prices are.

David: Over the last couple of years, you've been public and talked about the fact that you don't or at least you didn't have a mortgage on your home and the psychological impacts of that. It's been something that before I read you talking about it, it would have never even crossed my mind that that could be a financial way to live. I'm curious in this environment, how are you feeling about that? Has your thinking changed about it at all?

Morgan: I haven't tried to hide it. I don't know if that was the right decision or not, but I thought it was an important part of how my wife and I have managed our money.

The short story was it was 2017. We had a mortgage. It was a 3.5% mortgage, 30 years fixed, and we paid it off in 2017. I knew at the time, and it's so clear in hindsight, that on a spreadsheet, that was the wrong decision. Even at the time, not even in hindsight, in 2017 I said this is a dumb idea. If we had instead taken that money and invested it in stock, I knew at the time and in hindsight, we would have been so much better off.

I've done the calculation. Let's say we hadn't paid our mortgage off. Let's say we had just invested in the S&P 500, how much more money we'd have today. It's an insignificant sum. It does not bother me in the slightest, because the reason we paid our mortgage off was I wanted that sense of security of this is my house.

You cannot measure on a spreadsheet going to bed at night knowing that, hey, if something happens to me, my wife and kids are going to be okay. Particularly because I'm the sole breadwinner in our family. If something happens to me, it's okay. This is my family's house. No one's going to take it away from us. This is ours. But for my personality and my wife's personality, even though we knew it was the wrong thing to do on a spreadsheet.

I wrote in Psychology of Money, it was the worst financial decision we've ever made and the best money decision that we've ever made. It's the only money decision that still to this day, we could high-five ourselves about. Still, six years later, on the first of every month, when my mortgage payment would have been due, I still get this feeling of like, I won, even if it was the wrong thing to do.

I think that's actually a pretty universal lesson. There are some things you can do with your money that are not rational, that you can't explain on a spreadsheet, but they're reasonable, and they make you happier, and they help you sleep better at night. If they do those things, great, go do it.

Even when I have said that to other people on other podcasts, they'll be like, okay. They'll dig deeper to the numbers. I'm like, no, no, the numbers don't work. The numbers don't add up, full stop. But it made me really happy. Is there any value in that? Why are you just living your life in Excel? Life is not in Excel, life is at the dinner table. At the dinner table, it was the greatest thing we ever did with money.

David: I'm so glad you wrote about it. Thank you for doing it. Before having read that, thought about it, and lived with the idea over the last couple of years, I was in the camp of money lives in Excel. Every decision should be made rationally, analytically via Excel.

This example of your home and your mortgage, especially once you have a family as I do now—again, probably not for everybody but for me—it just completely pierced that bubble of, oh, yeah. I totally get why you would do that. Oh, maybe I shouldn't live everything that I do financially in Excel.

Morgan: I think part of it for me, just for my personality, maybe this doesn't map with other people, but probably if I sat down with a therapist, there would probably be some sense of career insecurity, that I was like, I want to quit the game before someone can take it away from me. Having a bunch of debt, I was just like, look, debt is just a symbol of somebody else owns my time in the future. That's what debt is. Every dollar of debt you have is a piece of your future that somebody else owns.

I think if I sat on the therapist's couch, I would have said, I don't have enough confidence in my future, in my career to know that I can sell somebody my time in the future. Even if realistically I actually did, I think there's a part of my soul that was like, it's better to just wipe this out now and you're going to sleep better if you do this, and I have.

I think there are lots of similar examples. If you're day trading penny stocks on the spreadsheet, dumb idea, terrible idea. You're going to lose money. You're losing money on fire. If that scratches an itch that you have to scratch, and you're doing it with 5% of your money, awesome. Go do it. Have fun. That's probably the equivalent, to some degree, of paying off a mortgage. It makes no sense on the spreadsheet, it makes perfect sense for you in your head.

Ben: David and I used to work with this very, very successful, older venture capitalist who bought lottery tickets. I remember asking him at one point, I was like, what are you doing? All you do all day is calculate odds. He goes, where else can you just make $100 million on a few dollars? It's the craziest thing.

Morgan: I love it. That's great. John Bogle who founded Vanguard has this interesting part of him. He passed away several years ago, but his son is an active fund manager. His son is an active stock picker. And John Bogle invests a lot of money with his son.

Someone called him out. They said, John Bogle, you are the godfather of passive investing with explicitly the idea that nobody can beat the market, and yet you invest in your son's active fund. Isn't that a contradiction? He responded, he said, yes, but life is just a contradiction.

I think that he was basically saying, don't figure this out on the spreadsheet. Life is messy. Don't pretend it's not messy, of course it is.

Ben: I am okay with admitting that not everything should be run through the spreadsheet. You can think of these extreme examples of like, well, sure, you can eat for $6 a day, but come on. If you don't have to, then after three or four days, you're going to be like, my life sucks.

I get in the extreme example is not living your life in a spreadsheet. The thing with housing that makes it so particularly difficult to stomach is buying your house is first and foremost not a financial decision, it is a life decision, and it is the largest financial decision you will ever make at the same time. For most people, it's the most significant portion of their net worth, and it's first and foremost not a financial decision. And reconciling those two things is hard.

Morgan: I think every parent will relate to this. When our first child was born, I was so overwhelmed with this emotional urge to provide that is, of course, lasted today. A parent's job is to provide for your children, at least first and foremost, that's it. Shelter might be at the top of that list. Food and shelter is at the top of that list.

I think I had this caveman instinctual urge to provide safe shelter for my wife and kid. I think that was really the core of of why we bought the house and then why I was eager to make it our house, not the bank's house.

Ben: You brought up the idea of things that make you happy. What makes you happy? What patterns of activities make you happy? Do you think there's anything in your life that's just different from humankind as a whole? I want to ask two different questions of what makes you happy and what makes people happy.

Morgan: I think that the answer is one and the same for these. I have a lot of career autonomy. I can write what I want, when I want, in any style I want. But there are elements in my career where I lose control over my time.

My calendar fills up like anybody else's, I look at my calendar and I say, oh, I got all these calls that I don't want to do. I've got all this BS admin work that I don't want to do. At that moment, I don't have control of my time, and that's when I'm the least happy.

When I'm the most happy is when I wake up, I look at my calendar, it's free as a bird, and I say I can do whatever I want today. Nine times out of 10, what I want to do is work. That's what I want to do.

Freedom does not mean sitting on the couch. Some days it might, but freedom just means you get to do the work that you want to do. That's when I'm the happiest. I think I get an abnormal amount of that relative to other careers.

I've been a writer since college. Whether it's at The Motley Fool or the Collaborative Fund, I've always just been like, I'm just going to do my own thing for better or for worse. I've had a lot of independence and autonomy doing that.

I think for most people, independence and autonomy is not the only factor, but it's a major, major factor for happiness in your life. Independence comes in a lot of different forms. If you have to work in a job that you hate but you have to do it, that's completely losing control of your time. There are also, by the way, CEOs who make $50 million a year and have no control over their time.

David: I think most have no control over their time.

Morgan: I'm making this up, but I would bet good money that Tim Cook is scheduled from 6:00 AM to 9:00 PM, and he doesn't have that much control over. He has to meet with this department, he has to meet with this person, whether he likes to or not. That's a level of not controlling your time and for a lot of people can lead to a sense of just things spiraling out of control. They're not under your own influence. I'm happiest when I can do whatever I want, and I think that's true for most people.

David: I think this was one of the best parts of our interview with Jensen from NVIDIA. I think this is becoming the Ben Gilbert question. This is like your version of the Tim Ferriss question of, what do you believe now at X that you didn't at Y period in your life before? You asked that to Jensen, and his answer was there's always time. Don't let Outlook control what you do. It's exactly what you're saying, Morgan.

Morgan: I think during Covid, I did some of the best writing that I've ever done. I think the reason is because during Covid, I was not traveling, I was not speaking. I was just sitting at home seven days a week with nothing else to do but think and write. Because of that, it was almost like a forced independence.

During the lockdowns, I didn't have the luxury of being like, oh, I'm going to go fly to see a friend, I'm going to go fly to speak at this conference. It was forced to sit at your desk, and there's nothing else to do but write.

I think I get this a lot. Actually, that is somewhat of a counter to that. I actually get it a lot on airplanes. When it's a five-hour flight, there's nothing to do but sit in your seat, listen to this podcast, and think about it. Versus at home, I'm like, oh, I got to walk the dog, I got to do the laundry, I got to get up, I got to do this.

There's some forced independence. I know that sounds like a crazy contradiction. You're just sitting here and there's nothing else to do, but you're just like, run with these thoughts in your head that at least for an artistic job is really great.

Ben: I run with your thoughts in my head a lot. You had a recent podcast episode that ended with what I thought was just an excellent sentence. The sentence was,
“I tend to view material desire as a loose proxy for the inverse of what else you have to offer the world.” I wanted to ask you about this point. Can you, first of all, expand on what it means to take us backwards through the post?

Morgan: When my son was born—he's eight now—I wrote him a little letter. It was a blog post. It was like, here's some financial advice that you might be interested in someday. One of the things I wrote was, you might think that you want a big house, a fancy car, and an expensive watch, but you don't. I'm telling you, that's not what you want. What you want is respect and admiration from other people, and you think that nice material stuff will bring it, but it almost never does.

The point from that is everybody wants respect and admiration. It's just an innate thing. Everyone wants to be respected and admired, particularly by the people who they want to respect and admire.

There are a lot of ways to get respect and admiration, one of which is through your intelligence, your wisdom, your love, your capacity to be a friend. If you cannot achieve respect and admiration through those things, the other way to do it is with the square footage of your house and the horsepower of your car. But that's a last resort.

This is not black and white. I'm not painting this on everybody. But I think a lot of the people who have Lamborghinis, mansions, and yachts, are doing it because they cannot gain respect and admiration through the other avenues like intelligence, wisdom, love, and friendship. If you can't gain it there, then you revert to the material side of trying to gain it through, hey, look at my car.

That's where the proxy comes in. The more that I want to show off material wealth, I tend to view it as the least or as a proxy for the less I have to offer of things like wisdom, intelligence, humor, love, and whatnot.

I always use the example of Louis C.K. He's so funny, and people admire him for being funny. They don't admire him for his looks, they don't admire him for his attire, and because you don't care. He's funny, that's why you admire him. And I think it's true for a lot of athletes.

A lot of athletes have gone bankrupt, phenomenal athletes go bankrupt. By and large, you don't care. You're like, he was a great football player, who cares if he was a bad investor? I admire him for being a football player.

If you can admire people for being wise, smart, and loving, that's where you should gain your respect and admiration to the extent that you are trying to gain it through material possessions. You should take a step back and ask yourself whether you're doing it, because you can't gain respect from other things that are more durable.

Ben: It's funny. There are a small minority of people who buy something very expensive that everyone knows is very expensive, because they are obsessed with the craft of building that expensive thing.

We did this with the Porsche episode with Doug DeMuro. There are a lot of Porsche people out there that own that particular 911, because they could tell you every detail of how it was all made and the story.

And then there are 10 times more people who think they're like that person. The reason that they're justifying making this purchase to themselves is because they fancy themselves, someone who is obsessed with the craft. But really, the primary motivation that they're hiding from themselves internally is exactly what you're talking about, Morgan.

Morgan: If you have a Lamborghini because you like the craft, or because you actually take it to the racetrack on the weekends and drive it, awesome. I'm so happy for you legitimately.

David: Lamborghini might not be the right example for either of those.

Morgan: I would venture to guess, though, that 90% of Lamborghinis have never been driven over 70 miles an hour, because they're just buying them to show off. That's the only reason they're doing it. If you own a Lamborghini in New York, you for sure have not driven over 70 miles an hour. You're just doing it to show people what you have.

I think there are two things that money can do for you. You can use it as a tool to give yourself a better life, or you can use it as a scorecard for other people to judge you by, for other people to value you by. The former is a great tool, and the latter is an addictive drug. Just like any drug, it might give you a temporary high, but eventually this is going to catch up with you, and it's going to lead to an extreme amount of misery.

David: I feel like electric cars have really thrown this into full relief, where you buy a long range Model 3, which is I think now less than the cost of an average car in America. It's a Model 3, it's not a big deal. It's definitely faster than most Lambos ever produced.

Morgan: Totally. I think there are entry-level electric cars that will smoke Ferraris and Porsches. Yeah, it's completely thrown on its head.

Ben: You had a quote. I think it's way back from Psychology of Money. "Whenever you see someone with a $100,000 car driving by, all you know is that's $100,000 they don't have." It's like, it's not actually a sign of wealth. All it is it's a sign of whatever their wealth could have been less $100,000.

Morgan: It's just an indication of consumption. There's a 10-mile wide gap between consumption and wealth. I got this idea, this insight. I was a valet during college in Los Angeles. It was in the mid-2000s when it was just fake money galore. LA was the subprime capital of the world. Literally, trillions of dollars sloshing around LA.

As a valet, I would get to know some of these people who would come in. I'd be like a 25-year-old driving a Porsche, driving a Ferrari. I got to know them, and I realized that they were not that successful. They were a first year associate at a law firm making $100,000 and spending two-thirds of their paycheck on a Ferrari lease payment. I assumed when a 25-year-old came in a Ferrari that they were a billionaire entrepreneur, and I realized that was so clearly not the case. The flip side of that, you meet people who were billionaires driving fairly modest cars.

My wife and I were talking about this last night. Every single person who we know who flies private, not one of them has ever posted a picture of it. Every single one of them will move mountains to keep it secret, and there's no exception to that. People who are actually wealthy don't tend to be the people who look the wealthiest. It's not quite that black and white, but definitely that's where it leads to.

In Psychology of Money, wealth is what you don't spend, wealth is what you don't see. Wealth is the money that you did not spend on a car, you did not spend on a nicer house. It's saved wealth that gives you independence and autonomy. But since you don't see it, it's very hard for us to have any sense of who's wealthy and who's not.

Ben: Why is it okay to make these very high dollar amount indulgent purchases? We talked a lot on this episode about demonizing all these activities. Sometimes I do it, and it's fun.

Morgan: I think there's a lot to be said, for everyone's indulgence is going to be different. You really need to rather than just saying, society tells me I'll be happy if I have this car or this purse. You really need to try a billion different things.

Ramit Sethi is really big on this. I'm pretty sure his thing is he drives an old beat up Honda, but he always flies first class. His wardrobe might cost more than my house, because that's what makes him happy. Cars don't, clothes do.

You really have to figure out what your quirk is, and then everyone's going to be different. I feel like most people don't because it is accepted at face value that society tells me I'll be happier if I have a big house, a fast car, and shiny jewelry. Maybe for some people those three are the key, but everyone's quirk is going to be a little bit different.

I don't even want to tally how much my wife has spent on landscaping our house. She loves buying rocks, plants, and trees. She's made our backyard beautiful, but that's her thing. She loves it. For most people, it would not be, but nothing's going to make her happier than spending a crazy amount of money on something like a rare Japanese maple tree.

David: If that's what you're into, then you can probably be pretty sure you're doing it for the right reasons, because nobody on social media is going to be like, whoa, that rock.

Ben: I don’t know, man. Landscaping is a thing.

David: Nobody on mainstream and social media.

Morgan: And there are a lot of people for whom they'd say, buying a first class seat on an airplane is the biggest waste of money. The seat is only three inches wider, the food sucks. What do you do? There are other people of whom I am one, who say it's worth every single penny, and I will never sit in economy ever again for the rest of my life. That's my little quirk. I completely respect other people who say that's a waste of money.

Ben: Do you have other indulgences, like when you reflect back on things you've bought in the last five years where you're like, yeah, that one made me happy, but that was an indulgence?

Morgan: The house we're in now we bought in 2020, in our house in Seattle. It was almost 50% above what our budget was at the time. We could still afford it without being crazy. We were like, okay, our budget is X. But we found this house that's 1.5X and, oh, my God, we love it.

It felt reckless at the time, but in hindsight, I'm like, I'm so glad we did it. I wasn't the miser looking at the spreadsheet. I'm so glad I just went with our heart and said, oh, that one looks great, let's swing for the fences and do it. I have zero regrets. It's one of the best decisions we've ever made.

Ben: My wife and I are having this conversation. I did a similar thing with my house. It's 50% over the budget that we had made. It's funny how house budgets seem to go that way.

Morgan: It never goes in the other way.

Ben: Right. We were sitting in it nine months after we bought it. I was making coffee, and she was on the couch. We were like, this is a delightful way to spend a Saturday morning. We got to talking about why it was okay to be more indulgent on our home purchase. The way at least I've bucketed it is it's actually not a thing, it's an experience.

In the framework of spending your money on experiences, not stuff, a house is something you experience every day and you spend the majority of your hours in if you do what we do. I'd say for other people, they spend a half or a third of their hours in it. It is actually more of the experience bucket than a physical object that clutters things up.

Morgan: I don't necessarily like our nice living room. I like watching my wife and kids play in our nice living room. Those are two very different things. If I watched my wife and kids play in a junky living room, I would still enjoy that too. But I think if I were in this house alone, I would not appreciate it a millionth as I do of watching my family in that house.

David: I don't think this is true for everybody. But for me, a house is even more than an experience. It's hard to be a family. This is why, Morgan, your posts on this and thinking about mortgage, really, it's such an impact for me. I was like, oh, yeah, I'm going to make terribly financially irrational decisions about my house for the rest of my life. And that is the right thing for me to do.

Morgan: I forgot who said this, but they said, don't show off the outside of your house, show off the inside of your house, because the outside you're showing off to strangers. And that is trying to gain respect and admiration with your peacock feathers. The inside of the house is for you, your family, and your friends. If it's the place to have a really nice house, it's that. That's when you're doing it for the right reasons.

The other framework that I heard a couple of months ago that I thought was so brilliant is someone who said, a high-end Toyota is a nicer car than an entry-level BMW, because a high-end Toyota is filled with things that make you happier, cushy seats, a nice sound system, a nice moonroof. The entry level BMW is only bragging rights. Other than that, it's a pretty shit car.

That framework applies to a lot of things. Some people will do that with housing when they're like, this is a junky house, but it's in a great area code. It's in Beverly Hills, whatever it is. That's the wrong way. You actually want a really nice house in a nice, safe neighborhood that's a little bit less prestigious. That's how I would view it.

Ben: When you're writing, what about it brings you satisfaction? Is it extrinsic or is it intrinsic?

Morgan: I think it's very much intrinsic of I really don't think that much about the audience. I'm aware that people are going to read this and judge it. But as I said before, I write for an audience of one, just me. I really get a lot of value when I write a sentence. It instantly dawns on me like, oh, that explains this quirk that I have. That explains the stress that I have in my life. That explains how I've been grappling with this element of my life. I feel like it's self-therapy.

I think that's really one of the magic parts of writing. The process of writing is what teaches you. It's not that the people who write a book already had this information in their head, they just had to write it down. The process of writing it is what taught them what they're writing about.

A lot of times when I'm writing, I'll write a sentence and I'll be like, oh, that reminds me of this other thing. I'll pull that in, I'll be like, oh, if I link these two together, that extra reminds me of this other thing. Now, this is all starting to come together. I had no idea where it was going to go when I started. But at the end of the article, I'm like, I think I figured out this new puzzle piece for this dilemma I was having in my own head. That's what's so rewarding about it to me.

Ben: Have you ever felt like you were writing for the extrinsic rewards of shipping it and then having someone tell you it was good?

Morgan: Definitely early on in a way that I think was pretty reasonable. I was really just fighting for approval. Early on when you did not have an established audience, and I was very young, and I was not very good, it was like, if I don't get approval, I'm done, I'm toast. This is not going to work.

There was definitely more pandering that I did back then of I'm going to say this, because I just really want you to clap for me. I think if I say these lines, you'll clap. I think that was really it. Whereas once you have an established audience, then that goes away.

The irony is once you start once your writing is honest and you're not pandering, that's when they start clapping. That's what people want. They want honest writing. There's some irony in that. It took years for that pressure to go away. It's not that I don't have it anymore, but I feel a little bit safer now than I did then.

Ben: Do you think it's possible for people to do work where they primarily derive their satisfaction from people telling them what they made was good and that that's sustainable?

Morgan: At least my personality. If everything I wrote, everybody said this sucks, even if I thought it was great, there's no way I could sustain that. Eventually, I'd have to say, the audience has spoken. The people have spoken here, this isn't good.

I think there are some people who just truly don't give a shit. There are some artists that are like that, but it's very, very rare. I think most people are social creatures. Particularly, there are five people in my life—my parents, my wife, my kids, and one or two friends—who if they say this wasn't good, I'm mortally wounded. And if they say this is great, I can last on that compliment for a year. It depends who it's coming from.

If a stranger says, I like Psychology of Money, I'm like, oh, thanks. That's great. If my wife says, I like it, I can die now, just take me now. That goes both ways, too, for people who say they don't like what I wrote. It just depends who it's coming from.

Ben: I asked because I'm still definitely in the extrinsically motivated part of the journey. I feel like when we make an Acquired episode, I get an immense amount of joy from learning these things and the aha moments that I string them all together. Like Costco, when we were assembling the puzzle pieces of like, okay, there's the low SKU count, and that works with high inventory turns, and that works with the way that the inventory is financed, where they don't have to keep it on their books.

They were very fun to figure out. I totally think I get more satisfaction from getting it out there and hearing from the world that you made something. I think your creation is good. You added value to the world by creating this thing. If I had to be brutally honest, I get more out of that than the intrinsic.

Morgan: One thing that I just thought about now is the smart way to write would be once you finish your final draft to sleep on it before you get it out. That's the smart thing to do. I can never do it. As soon as I'm like, this is done, I'm like, publish, publish, post. I haven't thought about this now, but I'll probably do that, because I can't wait to get the feedback for better or worse. I think that's probably true now that I think about it.

David: There's definitely a scale of this stuff. Probably, nobody is all the way on the end of intrinsic or all the way on the end of extrinsic. I suspect that you are probably more on the end of intrinsic than most people and certainly us. The nature of what you're writing about is both so personal and so timeless. The whole point is these principles that you're writing about are not news at the moment. We also aim to make timeless things, but it's not quite as timeless.

Morgan: One counterexample to all this that is truly the only standout I can think of, is J.D. Salinger, the famous author. For a lot of reasons, he had a lot of PTSD and mental illness. I think it was around the 1960s where he just said, screw the system. I'm done with you, publishers. I'm still going to keep writing. I'm going to write novels for the rest of my life, but you're never going to see them.

I think it's not really well-known or verified, but I think the assumption is that he wrote many, many novels that are literally still locked in a safe in his basement today.

David: Wow, I didn't know that. I knew that he disappeared, but I didn't know he kept writing.

Morgan: He kept writing, because he loved writing. But he just said, screw the system. I could never do that. Maybe those novels are amazing. Maybe since he knew people weren't going to read them, they weren't. I don't know if we'll ever know.

David: It's so funny. When you go to the extreme like that, I look at that and I'm like, that is so deeply unhealthy. Extreme is really a throw into relief whether he's a writer or not.

Morgan: I think he was a classic example of a lot of crazy geniuses. You also need to respect that they're crazy. For him, it was PTSD from World War II, alcoholism, and mental illness. He was not just a creative genius. He really had some demons in him.

David: Man, all those guys, Hemmingway. That whole generation, yeah.

Morgan: I just finished the Ken Burns documentary on Hemingway. His life was an absolute disaster. One of the most disturbing parts of it is, he killed himself with a shotgun, that's well-known. For two decades, he would rehearse that for friends. His friends would come over for dinner.

During the dinner, he would pull out the shotgun and he would say, this is how I'm going to do it. Barrel to the mouth, I put my toe in the trigger, this is how I'm going to do it. He did that for two decades. How he actually went out, he had been planning that for most of his life. You just realize the extent of the demons in that guy's head had been going on forever.

David: Wow, I didn't know that. That’s crazy.

Ben: It's funny. When you study these four or five standard deviation entrepreneurs, the demons aren't quite what we're describing here, but the trade-offs are. These people, they're who we cover in the press, they're who we cover in Acquired episodes, because to create a trillion dollar company or a $500 billion company, you have to be four-plus standard deviations from the mean and whatever you're doing.

But you trade off everything else to have the perfect skill set that you need to accomplish whatever that thing you're doing is, whether it's intentional or not. You may be born with the perfect cocktail of skills to be Warren Buffett, to have an infinite attention span to read annual reports, to get all the right joy out of doing that, to be very good at math, and have a phenomenal memory. Whatever the cocktail of skill is.

My mom used to say this. Everybody adds up to the same number. It is crazy how much when we're studying these people and idolizing these people, we disregard the fact that we are seeing all of their successes, and they have poured everything else into these characteristics. We're just assuming the other characteristics are there, too, but often they're not. Often, those styles are all the way zero.

Morgan: There's no such thing as a balanced genius. People will be like, Elon Musk is mean on Twitter, and he says things that are inappropriate. Yes, this guy took on NASA at age 29. Of course, he's not well-balanced. Of course, he's a nut job.

Anyone who thinks rationally would not be like, I can take on GM and Ford with battery cars. Anyone who thinks that, of course, they don't think society's rules apply to them. Same with Steve Jobs, who was a monster of a boss. Same with Warren Buffett, whose family life has been not something that most people would aspire to. I don't think there are any exceptions to that, whatsoever, in politics, in sports, in business.

Ben: What's the stat on the number of divorces in the richest people in the world?

Morgan: Among the top 10 richest men, there are accumulative 13 divorces, and seven of the top 10 have been divorced at least once. Obviously, a small sample size and correlation causation, et cetera, but it's so deviant from the broader averages among a group of people who are so universally admired.

I think if you ask most people, would you want a very successful career and a lot of money, but it comes with one price tag, which means your family life is going to fall apart. Wife's going to leave you. Your kids aren't going to know you. Would you take that trade-off?

It takes me 0.1 seconds to answer that question. Obviously, no. I think that we fall into that trap when we really idolize these people. It's great to idolize them for the skills that they have. It is wrong to idolize the life that they live. That's the quirk.

Ben: I said this a couple of times on air. I feel like every Acquired episode needs to come with this big banner at the top of the episode that's like, hey, everyone. This is a phenomenal story of which we are not promising you can learn anything from.

Morgan: Exactly. I was talking to David Senra recently. I don't want to put words in his mouth. I'm pretty sure he said, one of the only people he has studied who he felt like lived a great, balanced life that he admired was Ed Thorp. With the exception of Ed Thorp, most of these people that he's profiling, at the end of the story, you're like, yeah, so that life was pretty crazy. I don't want to do that myself.

I think that's a really healthy takeaway, and it's true for anyone—Kobe Bryant, LeBron James, Michael Jordan. It's so easy to say, I wish I had that life. But actually, if you lived a day or a year in their shoes, you'd be like, oh, this is hard. This actually sucks.

David: I'm curious in your work and maybe, particularly since Psychology of Money has come out and been so successful and widely consumed, have you had any people—obviously without saying names—who've come to you and either asked for advice, said that the book helped me, or your work helped me, who've maybe been along the vein of what we're talking about, and then said, you've helped me realize that I want to live my life in a different way?

Morgan: This was a lot of feedback that I knew when I wrote it, also from the publisher, and early people who read the book. It was like, hey, it's good, but this is really geared towards the young newbie. If you're 18 and you don't know anything about money, this book will help you. But if you're a 40-year-old hedge fund manager, you want nothing to do with this. That was the early view that I really believed too.

I think what has surprised me are the number of bonafide billionaires who have reached out and said, this really changed how I think about my own. I'm like, really? I really thought this was a book for beginners.

But I think the concepts of risk, uncertainty, greed, and fear are universal, no matter how much money you make. There are differences, but billionaires fall for the traps of greed, fear, and overconfidence. Maybe not as much as everybody, but they still fall for them.

I think there are a lot of universal rules. That's what took me aback from the people who said they got something out of it. Internally, I would think to myself like, I would have thought you already knew that, but apparently you don't.

Ben: And there's a difference between knowing it and knowing it today. Whatever part of your brain has your short-term memory and guides the decisions that you're making today, it's like you can know truths, but living them and being reminded of them is always helpful.

Morgan: Way different to know it versus actually do it. I know this for myself, too. I can write about Warren Buffett and be greedy when others are fearful. You can write about that all day long.

On March 15th, 2020, are you opening your brokerage account and going all in? That's exponentially harder to do than it is to quote Warren Buffett. So many of these things, when you quote, it's very easy to quote him. You're like, oh, that makes sense. But actually do it? It's way harder.

Ben: Dude, every think-boy account on Twitter should be required to off their brokerage account so we can see in community notes what they actually did in March of 2020 with their accounts.

Morgan: That would be great. That would be wonderful. That's a smart thing.

David: What's your view on participating in Twitter through this lens? On the one hand, it's a great ecosystem for spreading awareness of your work. On the other hand, it's also, maybe not necessarily, but it feels like a drug-fueled playground of a lot of these pitfalls coming there.

Morgan: I think drug is the right word there. Twitter is legitimately addictive. Hopefully for most people, including me, it's not that unhealthy of an addiction, but let's not pretend that it's anything but an addiction because it is. It's a dopamine addiction. It's not healthy.

I've tried to go on Twitter fast. If I can make it a day, I feel like it's really successful. I've been on Twitter since 2011, so it's just been attached to my hand for 12–13 years now.

One thing that's easy to fall for too is that there's the meme of people who are very online and are not people who aren't necessarily representative of the median American or the median global citizen. It's very easy to say, not only within my own Twitter bubble, but Twitter at large believes X, Y, and Z. It's like, no, people who live online believe X, Y, and Z. But the other 7.8 billion people on the planet think something totally different.

It's not even the filter bubble that we all have of the feed that I see is just what I want to see. But even if you were to look at Twitter as a whole, you're looking at a pretty small sliver of society. How many active members does Twitter have? Two hundred-fifty million out of eight billion people in the world? That, I'm sure, is heavily skewed towards college-educated, higher income, et cetera.

Ben: Those are the people reading Twitter. I have a feeling. I haven't seen the numbers on this, but it's got to be one-tenth the number of people who consume Twitter actually post or less.

Morgan: I'm making this up too, but I'm willing to bet, half of the posts come from 1% of Twitter users. You're probably looking at what Twitter is. It's the opinions of 2 million people in a country of 350 million people and in a globe of 8 billion. It's so easy to just get skewed about like, oh, everybody thinks X, Y, and Z. No, they really don't.

Ben: And all those people's incentives are to get engagement, because many of them have figured out ways to make their livelihoods on engagement, no matter how directly. We're among the most direct in the world, and we're not even getting the payouts from Twitter, or the YouTube video partner program payouts. We can be a lot more directly aligned.

At this point, politicians' entire existence is monetizing their social media presence. I think it's a very small set of people, that set of people is very skewed, and all their incentives are to produce engagement bait.

Morgan: Even if Twitter is not where you get your income, for a lot of people, it's where they get their dopamine. There are many people—of course without saying names here—who have really figured out the Twitter algorithm, and everything they tweet goes to the moon. I think a lot of those people in their heads, they think, I'm producing. I write very good content. I'm a genius at this.

Content is subjective. It's just my opinion, but a lot of times, these people when I say, no, it's not good, you just figured out how to tickle the algorithm in the right way.

That can be hard for a lot of these people who have massive Twitter followings, and they get zillions of retweets. But that doesn't scale to other platforms—books, podcasts, blogs even. It doesn't transfer, because all they really figured out is what the algorithm wants them to do.

Ben: I had this accidentally happen this week. We did this great interview with Jensen, and there was a lot of good substantive stuff the whole time. The thing that I tweeted that went nuts, 2.4 million views or something in the first few days, first time that's ever happened to me, I was looking at it and I'm like, oh, man viewed through a certain lens, this is just hustle porn. The reason this is going so nuts is because the whole hustle porn crowd has glommed on to this thing and is retweeting it with all their hot takes.

David: I feel like Jensen and our take on it was the opposite of hustle porn. He was literally saying, I wouldn't do it.

Morgan: As one of the people who also retweeted that post of yours, I viewed it as the opposite of hustle porn. I viewed it as just a stark reality of how hard business is in a way that was very refreshing, because mostly, what you get is hustle porn of like, I'm successful because I grind so hard, and I'm so smart, and I come to work at 4:00 AM and do push ups.

This is the person who made it. This is the 10th standard deviation winner. He's saying, I wouldn't do it again, it was too hard. That's such a bucket of cold water of like, thank you for being so honest and for just giving me a dose of reality here.

Ben: Yeah, man, he's one of a kind. Those are the moments that you only get in those last 10 minutes of an interview, where you're comfortable enough with each other. You've gone through all the stuff that you both planned for, and now you're in run out the clock time, where it's like, all right, what fertile ground is there here, where we're in an emotional state to be able to discuss it?

Morgan: I'm sure there are athletes like that, actors, actresses who will achieve the pinnacle of success that you think is everybody's dream. If you actually got them on the therapist's couch, they would say, on net, it was not worth it. There were parts that were good, but there were so many parts that were hard that I will not do it again.

Ben: Yeah, that's the Will Smith thing. Becoming famous is awesome, staying famous is a mixed bag, and becoming less famous sucks.

Morgan: Yes. What most people want is the change in trajectory. That's what feels good. That's what's giving you the buzz. You used to be here and now you're there. Even if it's flat at the top of the mountain, you reach the top of Mount Everest, but now you're not moving any higher anymore, that is a mixed bag. Once you start descending and losing fame, losing income, losing clout, that hurts more than gaining it felt good.

There's a quote that I love from Seinfeld again, where he quit the show, and it was on top of the world. The show was the biggest it had ever been and he said, we're done, we're out of here, we're going to pull the plug. He said, "The only way to know where the peak is is to experience the decline, and I have no interest in feeling that."

That's why he quit while he was ahead. He was like, you only know how high you can go when you look back in hindsight and say, oh, I guess that was the peak. If you don't want to feel that way, you have to quit while you're ahead, but it's very hard to do.

David: His interview with Tim Ferriss was so good.

Morgan: I've often said, comedians are the only good thought leaders. I truly believe that the top tier of comedians understand human behavior better than any psychology PhD.

George Carlin, I think, is more insightful about psychology than any even Nobel Prize winning psychologists. I would go out on a limb and say, George Carlin understands psychology better than Daniel Kahneman, because not only those people really understand motivation and how people's heads work, but they can communicate it in the most effective medium that's ever existed. That, I think, is just a form of genius that is off the charts.

My favorite George Carlin joke or line, he says, "Everybody driving slower than you is a moron, and everybody driving faster than you is a maniac." It's funny, but there's also so much wisdom of relative viewpoints and your view versus their view. If you actually think about that, you're like, God, that is brilliant. That is such a smart thing to ponder.

How many psychology PDF white papers have you read and come across a nugget that insightful? Very, very few. I think it's true. Bill Burr, Chris Rock, Louis C.K., Jerry Seinfeld, they understand psychology in the most profound, deep ways you can imagine.

David: For something to be funny, it has to be true. For something to be funny to a lot of people, it has to be true for a lot of people.

Morgan: I think that's what makes it funny. If you read a deep, hardcore psychology paper, you really have to struggle and be like, okay, what are they saying? Oh, now I understand what they're saying. Let me let me grind the gears. Is that true? I think that might be true.

For comedy, you can be sitting there drunk at midnight and instantly, you know it's true. You're like, that's exactly how the world works. You nailed it right there. It takes so little effort to understand that what they're saying is profoundly true.

Ben: Again, I think this is Jerry Seinfeld. There were some podcasts I was listening to, where someone was talking about the academic literature behind trying to figure out what makes people laugh.

One of the only conclusive studies is that it is something unexpected. It's when your brain is assuming that a certain event will follow, but a very different event follows, and it's the physical reaction you have to this massive change in direction to the unexpected.

Morgan: It's a surprise.

Ben: Yeah. I find myself doing it. I'm curious if either of you have it. Someone will tell me something horrific and sad. Occasionally, I'll feel the chuckle reflex happen, and I have to like stuff and be like, oh, my God, do not let yourself… But it's so unexpected that I'm like, I don't know if you're joking. I don't know why I just did that, I'm so sorry. This has happened to me numerous times in the last couple of months.

Morgan: It's shocking. I was talking to my wife about this last night. My reading guilty pleasure is John Grisham. I know it's trash fiction, but I can't get enough of it. I realized I just finished his most recent book. What he does, and I'm sure this is intentional, is roughly 9 out of 10 pages are very boring. You're just like, why are you going into detail about like, okay, you got coffee, and the coffee tasted like this. Then page 10, you're like, holy shit, a guy came through the door with a gun.

I'm sure that's intentional, because if every page was a shocker, it wouldn't seem real. Intentionally, you insert a lot of boredom so that when you have a surprise, you jump out of your chair. It's the contrast between the two that makes it good. It's a constant contrast of black and white, of boring and surprise that makes it such a thriller.

Ben: It's how you can't do a stand up routine for longer than 40–50 minutes because at some point, people are just expected to keep laughing, so nothing is ever funny.

Morgan: There's a Chris Rock quote that I love, too. He was doing an interview. He said his favorite moment when he's doing a show is when he gets a good laugh early in the show. He thinks to himself, if you guys think that was funny, wait till you see the good jokes. You ain't seen nothing yet. I was like, that's good. He's very purposely managing expectations.

I think a lot of those people put the good jokes towards the end, so the best material is at the end, which is counterintuitive. That's how they manage expectations like, oh, you think that's funny? The next one's twice as funny.

David: Ben and I talk about this a lot amongst ourselves and try not to bore our audience with it too much. We've been talking about all these different mediums. Obviously, you live in, really, multiple mediums, but two primary ones writing for the Internet and writing for books.

Ben: And you just picked up podcasting, which is very good, by the way. Everyone who's listening, of course, will say, oh, you should go buy Morgan's books. But if you listen to podcasts, you'll enjoy your podcast.

Morgan: Thanks, I appreciate that. It still is an experiment. I have no idea where it's going to go or what I want to do with it, but I figured I should just start talking to the microphone.

David: Always a good thing to experiment. But I'm curious, especially in light of that, you've probably, I assume, thought a bunch about the pros and cons and natures of your mediums. I imagine you didn't start that way, because you like writing. But put that aside.

What's your take on this stuff? I guess to give a sense of groundedness and where Ben and I discussed, we're always talking about things like the relative algorithmic impact in a given medium, and being very, very glad that it is low in podcasting, and hoping it will continue to be low. We think about this stuff a lot. I'm curious since you operate across so many mediums, what do you think?

Morgan: I've learned so much about it. This is an area where I've really changed a lot of my views. I'll tell you two stories about it. I had been a professional writer for 14 years before I wrote a book. All throughout that period, I had people and family members being like, when's the book coming? My response was always, I've published literally millions of words, why does it matter if they live between pieces of cardboard? That makes no difference.

I realized that it was completely wrong that the number of people who want to read a book, not a blog, even if the book is a collection of blogs more or less, is enormous. That was the wrong thing to think that I thought made no difference. If I published these words in between cardboard, I really thought it made no difference, but it clearly did.

The other thing that has really blown my mind is that the audiobook version of Psychology of Money outsells the physical book two to one, because there is a huge number of people who would rather listen than read. They have more time, because they can listen in the car, when they're exercising. I never in a million years would have thought that, because I'm a reader. I listen to podcasts on planes, and that's it.

Most of my life, I would rather read with my eyes than listen with my ears. I assumed everyone else was the same. That's a bad assumption. You automatically assume that how you consume content is how other people want to as well. There's such a huge variance in how people want their content.

There's part of me that wants to say, just pick the medium that you're good at and stick with that. There's part of me that's like, look, if I can blog at some level, I should be able to read those words into a microphone and turn it into a podcast.

I don't want to change the content that I'm making for the medium. I want to really figure out how I can shove my plug content into the microphone and hopefully what comes out sounds good. I don't want to change it. I realized that the audience size, the total addressable market, is monstrous once you realize that people consume their content through different mediums.

Ben: Have you found yourself trying to change the content to make it more native to a new medium, or do you feel you don't need to?

Morgan: I don't know if it's the right thing to do, but I haven't. This is another thing I don't hide. The podcast that I have, I'm reading old blog posts. That's what I'm doing. I'm not coming up with new material. I think the reason that it's fine is because the huge majority of people who listen to podcasts do not read blogs. For them, it's brand new material. There's not much overlap.

David: It's probably very similar to the book. People are like, oh, you know, this is recycled stuff. Like, no, it's your best stuff.

Morgan: Who am I to think that everyone who buys the book or listens to the podcast also reads the blog? There's a lot of false ego wrapped up in that. It's not true. It gets back to Ogilvy's thing of like, this is a moving parade. Don't assume these are the same people that are watching you. There's going to be some overlap, but by and large, particularly when you're in a different medium, you're going to capture a different audience who has never read your stuff before.

That's the Seinfeld thing. Don't show me your new stuff, show me your best stuff. That's why I have no shame whatsoever in recycling some of this material. A lot of times, it's a very different format. In books, I'm going to change the story, spice it up, and add a lot of new material.

Mostly in a book, a 2000-word chapter was born out of an 800-word blog post. There's new stuff in there, but I'm really rehashing a lot of the core stories that I've told before, and I'll probably tell again.

For sure there are stories that I wrote on a blog, transferred to a book, it became an audio book, now it's on a podcast, and I'll probably use it again. I have no shame in that, whatsoever.

David: Why should you? They're great stories, it's great work. You're just maximizing the surface area that they can live on.

Morgan: As you can tell, I have a man crush. I just think he's a genius. He told the thing back to his quote about showing me your best work. He said that he has jokes that he uses in his standup today that he's used for 20 years. He says, why would I take it out? It's a good joke. It's funny. Why would I stop using it if it's a good joke? You're like, thank you, thank you.

The Ogilvy thing was his thing. He used the same ad in the same magazine for 20 years. I think he said the same thing. He's like, it's a good ad. It converts. Why would I change it? I'm going to take it out just because I've used it before? Of course not.

David: It's so funny. It's been top of mind. Our latest iteration of this discussion amongst ourselves, me and Ben, is very similar to this blog post and book thing. We're podcasters. We make podcast episodes. There's also this thing called audiobooks. We basically make audiobooks, and we publish them as podcasts. There's also this whole market of the audio book market. Should our work live there too?

Ben: And my argument back to David is always, no, we don't make audiobooks. Audiobooks are a super different thing. It's literally the written word translated from one person's voice spoken in the cadence of the written word. What we do is an organic conversation loosely guided by an outline and notes that we have. My view is they're pretty different things.

David: There's part of it that I said, the only difference is that you pay for an audio book and podcasts are free, by and large. I'm not going to say who it was, but I so admired. One of my favorite podcasters recently yawned in the middle of the episode and left it in. I was like, I love it. I love how informal and off the cuff this is. I actually gained admiration for the fact that they didn't edit out the yawn as he was speaking.

You cannot do that in an audio book that someone's paying $28 for. There is a level of professionalism. A podcast is a conversation, and an audio book is a performance. I think that's the main difference of it. By the way, I love the yawn. If somebody yawned during an audiobook, I'd probably be like, what the hell was that? But still, I love the off-the-cuffness of podcasts.

Ben: Which is funny, because ours is not that off-the-cuff. We have just enough off-the-cuffness. We try to strike the balance of this as a highly-produced, incredibly-planned piece of material. This is a performance, and we happen to have some spontaneity and personality in it. But make no mistake, we've been preparing for this for a hundred hours and are bringing our very best work to bear in a very organized fashion. It's weird trying to balance the two.

David: I think that's what's so confusing for me at least right now. I believe everything Ben just said. You and people who listen may not, but I believe it about our show. Can we live in the audiobook aisle, too? What changes would we have to make? Those sorts of things.

Morgan: To make it something that people would pay $28 for versus they could get it free. I think it's some combination of new content and more professionalized. But I also might think that to the extent that you guys are off-the-cuff, and by and large you're not, I know it's a very professional production, but if you remove that, and it was just very like, this is Ben and David in suits. I don't know if I want to listen to that.

David: It wouldn’t be as fun.

Morgan: When I speak at conferences, I'm giving a 45-minute presentation. Ninety percent of what I say is memorized verbatim. It'd be the same at every single conference, and 10% I intentionally adlib, because I think when you adlib, it brings in a very real and very noticeable sense of this is real, and I'm just speaking to you. I'm not reading from a script, not reading from a teleprompter. I'm just having a conversation with you. That's what audiences love. Whether it's an in-person audience or a podcast audience, they love the idea that we're just grabbing a beer and talking about life, and that's what this is.

I was listening to a podcast the other day. It was a pretty big podcast, and it was just so obvious that they were reading from a script. Even though it was a good script and it had good words, it was just like, this feels wrong. Compare that to the other guy who yawned, and I just cheered when he yawned. I was like, hey, it's so great. I think that realness is what makes podcasts what they are.

Ben: All right. We're not done yet, but I have a series of closing questions I wanted to ask you. What is an idea that you can't get out of your head right now, that keeps turning itself over in different forms that you're just obsessed with?

Morgan: It's very technical. I usually don't care about economic details, but demographics are one of the only details that we know how they're going to impact the future. Even if we started a new baby boom tomorrow, those people are not going to become workers for 20 years.

We really know with quite a bit of precision how many workers we're going to have in the world or in the United States 10 years from now or 15 years from now. There's a little wildcard with immigration. But even if you have a big zone or margin for error in there, we pretty much know what demographics is going to do.

The very quick story is, through the majority of the developed world and the emerging world, demographics are awful. They're not bad, they are awful. China, Japan, Russia, South Korea, Italy, keep on going down the list, these people are hemorrhaging people in a way that really has no precedent in any modern history. Outside of the—it sounds dramatic— Black Death, there's no precedent for a massive chunk of society disappearing. It's going to happen just through natural demographics.

All economic growth comes from population growth and productivity growth. Everything is one of those two things. You either increase the number of people that you have, or you make those people more productive.

In that simple equation, population growth over the next 50 years is very, very likely. Even if we start a new baby boom tomorrow, it's going to be a tiny fraction of what it was over the last hundred years. That's just one of the few economic variables that we can put a lot of faith in.

We talked about Same as Ever. We know that's going to be the case. The United States across the developed world has some of the best demographics. They're still much worse than they were over the last hundred years. China's working age population will decline by 200 million people between now and 2050. Two hundred million fewer workers by 2050.

The United States working age population will grow just at a much slower rate than it had in the past. That's something I think about just because you can put so much confidence in. It's so important, and you can put confidence in knowing that it's true. That's pretty much the only technical detail that I think about looking at the economy.

Ben: That seems to have pretty profound implications in what the future will look like. Do you feel like that's priced in, factored in, people understand how profound that's going to be?

Morgan: There's a big thought among economic circles that the reason interest rates were so low for the last 20 years is not because the Fed wanted them there. The markets wanted them there because future economic growth is going to be low because of demographics.

If the natural rate of economic growth in the 50s, 60s, 70s was 4% per year, now it's probably 2% just because of demographics. Even if we are just as innovative and come up with new technologies, even if we crush AI, et cetera, just because we have a headwind of fewer people, or just a slower rate of growth, you take that down. Because of that, interest rates should be lower than they were in the past.

That's also an argument for a lot of people that think that we are, today, dealing with a temporary inflation spike caused by Covid. But once that's worked through, the natural rate of interest rates is much lower than it used to be. Maybe we're going to go back to 1% or 2% interest rates at some point in the near future.

Ben: Lower interest rates and just lower returns on invested capital in basically everything, because there's just less total aggregate productivity to be had.

Morgan: The other thing to think about here with the optimistic spin is in the 50s, and 60s, we needed to grow at 4%–5% per year, because that's what made growth per capita meaningful. Whereas now, if we're growing 2% per year, in growth per capita terms, it's the same as what 4% used to be. We just don't need to absorb as many people.

It used to be in the 50s and 60s, every year, there were 5 million more people who needed jobs, and you need a lot of economic growth just to absorb them. Whereas in a world where there are only one or two million new people who need jobs, you can do just fine in per capita terms with 2% growth.

That was a big thing with China for most of the last 30 years. They needed 10% annual growth just to absorb the number of new people who are entering the workforce. So 10% growth in America would be bonkers. In China, it was par. It is what they needed just to absorb the people.

Even if we have a world in which economic growth is only 2%, the lives that people live on the ground per capita terms might feel about the same as what 4% used to mean.

David: That sounds disastrous, but it might not actually be that bad.

Morgan: Here's the stark example of this. Everyone knows that Japan for the last 30 years, population has declined and the economy has virtually stagnated, GDP growth of roughly 0%. But if you've been to Japan, it's a very lovely place. They seem like they're living great lives.

It's not the picture of economic despair that you would think. The reason is, even though they had 0% economic growth, they had 0% population growth. Realistically, they had 1% economic growth and 0% population growth. They're actually getting richer during the last 30 years, but you could so easily frame it as a disaster. On the ground, it really wasn't.

Ben: Fascinating. What is one of the most interesting conversations you have had that sticks in your brain that you remember in the last couple of years?

Morgan: I think in many ways, this is what you want out of a spouse, too. My wife is my most honest critic. She's willing to say things to me that other people wanted, but I know that she means well. I know that she loves me, I know she wants the best for me, so those criticisms mean more. I take them so much more seriously than anyone else.

I said before, if a stranger tells me I did something wrong, I'm like, [...]. If my wife says I'm a red flag, this is a red alert, this is a big deal. Some of the conversations I've had with her about what we want out of life, how I'm managing my career, and what I've done in some of the friendships that we've had just because I take her criticisms and her compliments more seriously than anyone else.

The other thing is, I always say that my wife has the narrowest range of emotions. The gap between her best and worst mood is an inch, whereas mine is a hundred miles. Therefore, when she has a firm opinion on something, I take it more seriously.

There are some people who have firm opinions. I'm like, you're saying that because you're in this mood. In an hour, you're going to think of something else. But when my wife has that, I feel like oh, this is actually something I should take very seriously.

Without getting into the details of what it was, she's the person that just because of who she is to me and the natural tendencies of her personality, whenever we get into a deep conversation, it leaves a very lasting impact on me in a way that nobody else in the world can do.

Ben: I love that. Is there anything that you think is a widely held belief in the world that you fundamentally disagree with?

Morgan: I think back to the idea of rational, reasonable, and specific examples of paying your mortgage off. If people believe that you should be rational, and when you say it, who could disagree with that? Of course, you should be rational. I just think that realistically, nobody is. You can pretend you're rational, but usually it's just a self justification for the irrational things you're doing.

David: Buying the lambo.

Morgan: Yes. I think if you're just honest with yourself and you just say, I'm just trying to be reasonable, and I want to be reasonable, I don't want to be unreasonable, but I'm not trying to be rational because I know I'm not, and you're not either. If we can all aim to be reasonable, that's the best that we can do.

I think to people who are very analytical, again, who could argue with wanting to be rational? A lot of people are like, what's the rational thing to do? I usually throw that out, because we're not going to do it. What's the reasonable thing that we can do here?

Ben: I like that angle. Morgan, this has been awesome. Same as Ever goes on sale, what's the date?

Morgan: November 7th.

Ben: November 7th, which is either nearly in the future or just in the past, depending when we actually ship this episode. I am very excited to finish it. I'm about halfway through it. Even though there's a lot of stuff that I have had floating around in my head from the last few years of listening to the podcast and reading your writing, Morgan, it's just been very fun to see you put your best foot forward with some same ideas, some new ideas, but in the most put together punchy, honestly beautiful prose that you could imagine.

Morgan: Thank you. Appreciate it. It means a lot coming from you. Thanks, Ben.

Ben: Thank you. Listeners, we'll see you next time.

David: We'll see you next time.