930: Morgan Housel | The Power of Preparation Over Prediction

930: Morgan Housel | The Power of Preparation Over Prediction

[00:00:00] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger. And on The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. Our mission is to help you become a better informed, more critical thinker through long form conversations with a variety of incredible people, from spies to CEOs, athletes, authors, thinkers, performers, even the occasional Russian spy, cold case, homicide investigator, astronaut or investigative journalist.

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[00:01:00] Today, my friend Morgan Housel and I finally sit down. This one has been in the making for a few years now. Morgan is usually known as a financial writer, and he really shines in that area, of course. But today, we actually tackle a series of very different ideas, and we maybe seem to jump around a little bit. I think that's okay. It's a lot of fun, actually. A little bit lighter, a little bit less organized in a way that might make it seem a little bit less formal.

[00:01:22] We explore success, quirky billionaires, innovators, risk, financial and otherwise, wealth, fame, and happiness. This one clicked pretty good. It's a lighter fare. I know you'll enjoy it. Here we go with Morgan Hausel.

[00:01:36] Well, you usually write about money and finance, but in this episode, I think we'll be doing something different. First of all, I think people can get a lot of the investing wisdom elsewhere, even from your books, for example, and more importantly, money investing and thinking around those two things is, in my opinion, a great mental model or set of mental models for a lot of other areas as well. First of all, would you agree with that?

[00:01:58] Morgan Housel: Yeah, absolutely. I mean, I would actually more than agree with that. It's kind of a core of my work is like, if you want to learn about investing, don't spend your time in a finance textbook. Let's learn about how the rest of the world works and learn the models from that that you can apply to investing and vice versa.

[00:02:10] I think there's a lot that you can learn from investing that teach you about how the rest of the world works. All of it just falls under the umbrella of like, how do people behave?

[00:02:17] Jordan Harbinger: Mm-Hmm.

[00:02:18] Morgan Housel: It's all interconnected. And we come into problems when we try to silo it and think that investing is investing, and politics is politics. They're all interrelated.

[00:02:26] Jordan Harbinger: Yeah. I tend to agree, and it's also just kind of nicer to talk about the meta concepts or the framework concepts. I mean, clear thinking, divorced from ego, divorced from emotion, that's all really good stuff and that's kind of what you need with investing. And every time I make a mistake investing, it's always because I've convinced myself that this is the one time that my emotion is correct or like, “Oh, I really need to sell this,” because I'm sick of looking at it in the red on my online portal for what I'm using to trade stocks.

[00:02:55] It's just like, I don't want to — and then I'm like, no, this was a long-term investment. It was literally the person who's running the thing was like, “This is going to be down for a while and it's going to go up later because it's all early-stage companies.” And I'm like, “But it's so red and it's such a big number.” I just want to get rid of it.

[00:03:13] I think Tim Ferriss talks about how he had sold Amazon early, like way too early. and I can't remember why, but it of course had something to do with him just being like, “I'm freaking out because it's 2008 and I need to sell everything and get my money out.”

[00:03:26] Morgan Housel: It’s hard. So many of those too, only makes sense in hindsight. Amazon is an interesting example because what made Amazon by and large what it is today is AWS.

[00:03:35] Jordan Harbinger: Mm-Hmm.

[00:03:36] Morgan Housel: If you were at analysts looking at Amazon in 2005, AWS didn't exist anymore. So like, if you've held Amazon since 2005, you've done very well. But it's not because your analysis was right. Something happened that was unknowable in 2005 that made it what it is today.

[00:03:50] Jordan Harbinger: Yeah. I got really lucky with Tesla stock. People are like, “What's your best investment?” I’m like, “Tesla.” They're like, “Oh, you're so lucky. What did you see?” And I'm like, “The story is literally this.” I was working at another company with a bunch of business partners that were kind of petty, a*holes that I'd separated from.

[00:04:07] And these guys told me that I had the day off. And then I said, okay, I'm going to do all my investing for all my retirement funds and all this stuff today. I'm going to look at all this stuff, I'm going to buy all the funds, everything.

[00:04:17] And then at the last minute, they were like, “Oh, you have to teach this live workshop.” I was like, “No, I have the day off.” They're like, “Well, we changed our mind. You have to come in.” I was like, “Damn it. I can't leave the clients hanging. You know what? Okay, I have to finish this. It's the last day I can invest this stuff.” I'm just going to put everything into Tesla and everything into Apple. It was like 2015.

[00:04:36] Morgan Housel: Yeah.

[00:04:37] Jordan Harbinger: I was like, I just can't even think about this anymore. Just put it somewhere. Get it deployed. Go teach the class. Then, I just forgot about it. And then of course, years later, aside from Netflix, the two top performing stocks that the world has seen in the past decade or so, and I was like, wow.

[00:04:50] I put it all on black because I had to go out of the room where I was doing this. Those were the two things at the top of a huge list of other stocks I was going to look at. I was just like, eh, over time it'll all come out in the wash. No, it turned into a 20x return or whatever it was.

[00:05:06] Morgan Housel: Yeah. That was a very profitable course that you taught.

[00:05:08] Jordan Harbinger: Yeah. But it's like all the things that look like genius if I really just take the ego out of it, I'm like, that was just dumb luck, and it could have gone the other way.

[00:05:18] Morgan Housel: Yeah. Always.

[00:05:19] Jordan Harbinger: “Changes are exciting and novel, but most human behavior patterns are consistent over generations.” That's a paraphrase of something that you had either said or written. This is sort of low key, really insightful because I think a lot of people, when they look for, it doesn't even have to be investment.

[00:05:36] It could just be looking for what company they're going to found or what sort of ideas they're looking at, they always look for the big change, right? It's like, “AI. That's going to be the thing. We're going to put AI into our CBD gummies. That's going to be the next level. Turn us into a billion-dollar unicorn.” But that's not the important stuff to look for. The important stuff to look for is, I think you'd mentioned like what's not going to change?

[00:05:57] What's the thing that's still going to exist even when AI does all of our work? What are humans still going to spend their money on?

[00:06:02] Morgan Housel: I totally agree with that. And so much of what got me interested in this topic was two things. A, I'd become disgruntled and cynical as someone who wrote about finance, about how bad we were as an industry at predicting the next recession, the next bear market, or outside of finance, predicting the next president, the next terrorist attack, whatever it would be.

[00:06:21] We're just very bad at predicting the future, and the evidence of that is so overwhelming. So then for me it was like, okay, rather than just being cynical about how bad we are at forecasting and leaving it there, what do we know is going to be in our future? What are the things that truly never change, that we have no idea what the change is going to be.

[00:06:38] I have no idea where the stock market's going to go. I have no idea who's going to win the presidency, but what are the behaviors that have just always been here, that are always going to be there in the future? That idea was like appealing to me. And then two things really solidified this for me. One was, I was reading a book that I think is the greatest economic book ever written.

[00:06:55] It's called The Great Depression: A Diary. It's written by this Ohio lawyer named Benjamin Roth, who during the Great Depression in the 1930s, kept a very big diary. He was just writing about what he saw during the Depression, and he wrote in 1932, which was the bottom of the Depression. When I read it, I was like, if you change the dates, this could have been exactly what happened in 2008.

[00:07:16] Jordan Harbinger: Hmm.

[00:07:17] Morgan Housel: He's talking about what happened in the stock market, what happened in the real estate market, what politicians were doing. It could have been verbatim at a post from 2008. And then a couple pages later, Benjamin Roth says, “You know, what's happening in 1932 looks exactly like what happened in 1892 and 1874,” all the previous Depressions before that.

[00:07:37] He made some comment to the effect of, “Look, the details always change. But the behaviors never do.” It's always the same story. Every recession is the same thing over and over and over again throughout history in terms of how people respond to it. That was the first one. And then several years ago, I read this now, famous Jeff Bezos quote, where he said, “Everybody always asked me — what's going to change in Amazon?”

[00:08:00] And then he said, “I would actually propose to you that what is not going to change is more important.” Because you can never imagine a future in which Amazon customers don't want big selection, fast shipping, and low prices. Impossible to imagine a future where people don't want those things. And because those are going to be part of their future, they can invest so much time and money into those three things, knowing that they will be as relevant 30 years from now as they are today, which you can't do for most technologies.

[00:08:26] So that to me was like, yeah, I think that's actually a huge key to success in almost every area of life, whether it's investing or business or politics or relationships, whatever it would be, is focusing on what you know is going to be part of your future, what never changes, rather than fooling yourself into thinking that you can predict what is going to change.

[00:08:43] Jordan Harbinger: Yeah. It's quite simple, but it's the level of nuanced genius in that is really something huge. I haven't quite put that at a conscious level, but now that I think about it, I have given up on being able to predict the next like social media trend, for example. You know, I looked at TikTok and I was like, this is so dumb that I'll be surprised if it takes off.

[00:09:01] And now it's like the most popular thing ever because I don't use it, and I won't use it and I think it's bad for you. I was kind of maybe hoping that it didn't take off. I was right about Clubhouse being a complete wank and to completely just dropping off of a cliff. And I was like, “I'm good at this.”

[00:09:17] And then I was like, “TikTok. That's not going anywhere. Short attention span, nobody likes that.” But I started to think, okay. Am I going to go wrong with long form content that has deep value for people? That's a real conversation versus these 30-second clips that I'm not good at producing, that I don't want to produce, that are really shallow, that I would hate creating.

[00:09:36] And I was talking to Seth Godin, this was years ago, and I was like, “Do you think this is going to go away?” And he's like, “Do I think good quality work that people really enjoy and resonate with is going to go away? Is that what you're asking me?” And I was like, answered my question, right?

[00:09:50] Morgan Housel: Right.

[00:09:51] Jordan Harbinger: Because did books go away when television happened, or something along those lines? And it's right. We have television, we have radio. No one's going to read anymore. People read more than ever. Audio books are huge. Podcasts, people were like, “Oh, your show's too long,” because we were one of the first shows. “You got to do 20-minute episodes.”

[00:10:07] Okay, let's look at the most popular podcasts. Joe Rogan, three-and-a-half hours long. You know, like you look at Joe Rogan and Tim Ferriss, and even stuff that's as popular as this show, Lex Fridman or what, these are three-hour long conversations. I'm coming in on the short end with an hour, maybe 90 minutes of content.

[00:10:24] Morgan Housel: One other example of that, what's some of the most powerful, popular documentaries ever made? Ken Burns documentaries that are literally 17 hours long.

[00:10:32] Jordan Harbinger: Yeah.

[00:10:33] Morgan Housel: And people love them. They can't get enough of them.

[00:10:34] Jordan Harbinger: Right. They'll take time off work to go and finish this thing. And so is that going outta style? Even if it's decreasing in popularity, I realized it doesn't mean my show's going to decrease in popularity, I just have to stay in the top 1 percent or whatever, and all the returns are going to be there for me and everybody else in that top 1 percent.

[00:10:51] It doesn't really matter if the market shrinks by 99 percent, because if I still have that 1 percent that I have already, it's enough to make a living. I might even grow because competitors drop out to do things that are easier or more profitable at an earlier stage. So, when you start to switch your thinking around it, it becomes a lot easier. Right. Ken Burns documentaries, you really need like the whole week and no kids in the house to watch one of those things.

[00:11:16] Morgan Housel: One way to frame this as well is that everybody is always looking for the hack, the shortcut.

[00:11:21] Jordan Harbinger: Mm-hmm.

[00:11:21] Morgan Housel: What is the new little shortcut that I can use to leverage whatever I'm doing and get ahead? And for most things in life, the answer is there is no hack. You just have to put in the work. Years ago when I was working at a different company, they hired a social media consultant who came in and told us all the hacks for social media. And it was things like hashtags on Twitter and what time of day you should post.

[00:11:44] I remember sitting there thinking, they're not talking about the only “hack” that works on social media, which is write good content. That's the only thing that works. That's the only thing that's going to build you up big following over time. But nobody wants to hear that.

[00:11:56] Everybody wants the little trick, the little hack. And I think write good content is timeless. It worked a hundred years ago, as well as it'll work a hundred years from now. But since it's hard and takes some effort people want the shortcut of what's going to change, like the new little trick. It's the same in diet and exercise and investing, of course. It's like everyone's looking for the trick when none exists. You just have to figure out what has always worked and put all of your effort into that.

[00:12:20] Jordan Harbinger: Yeah. Look, even if the tricks exist, right, because if the people listening are going, “No, no, no, the tricks work,” that's probably 10 percent or not even of what gets something to do well. “Post five times a day. You got to repurpose this content from TikTok to Quora to Instagram Reels to YouTube Shorts.” And it's like, “Okay.”

[00:12:38] But at the end of the day, if it's not good, but they're like, “Oh, gosh. Good content,” that's really hard to produce, it's going to take my team a bunch of time to do it, and we have no formula for that. But what we can do is, right, tell you to put the hashtags on.

[00:12:49] Morgan Housel: There are no hacks in content other than make good content. It's the only thing that works. And I think there are no exceptions to that. Like name someone who sold a lot of books, who has a big podcast like you, who has a good TV show. It's just good content. That's it. Nothing else matters.

[00:13:04] Jordan Harbinger: I look at guys who are flash in the pan, some of them are scammy, right? You look at these guys who sell courses on making money online or something like that. They're popular for a year, maybe two, three years, because they're spending $10,000 a day on YouTube ads like here in my garage. You remember that guy?

[00:13:19] Morgan Housel: Oh, yeah.

[00:13:20] Jordan Harbinger: You see these flash in the pan guys like him, but then you look at Mark Manson and James Clear and Ryan Holiday, other friends of mine, and you're just like, ah. The key is you wrote a really good book and then you wrote a really good book again, and then you wrote a really good book again. And, oh, the stuff didn't expire because it wasn't about hashtags on Twitter or whatever, the self-help equivalent is of that, and they keep doing it.

[00:13:45] James Clear only has one book so far, but the stuff was good and he thinks well, and it's not just hacked together crap that was designed to get him a couple of speaking gigs so that he could, I don't know, be a digital nomad or something, right? He like built the foundation for this.

[00:14:00] Morgan Housel: Yeah.

[00:14:01] Jordan Harbinger: It's good, and it's going to remain good for five years. Those guys in five years, you're going to see more from all of them.

[00:14:07] Morgan Housel: I think one thing that you mentioned too that's really important is that the stuff that those kinds of guys are writing is timeless.

[00:14:12] Jordan Harbinger: Mm-Hmm.

[00:14:14] Morgan Housel: One other hack that people try to do is like, “What's popular in the news this week? I'll write about that in my blog.” “What's the big trend this year? I'm going to write a book about that.”  I've always been off the thought that like, if you want to write a book that takes a lot of effort. It's going to take you two years of your time to write this and get it out there.

[00:14:29] At least write something that has a fighting chance of being relevant and readable 5, 10, 20 years from now. I used to work at a major news publication, and every article that I wrote, the editors would write something along the lines of, “Hey, good piece. But how is this relevant to this week's news cycle?” I would be like, A, it's not.

[00:14:49] Jordan Harbinger: Who cares? Yeah.

[00:14:50] Morgan Housel: And B, that's the point. I was always, always of the thought that if the article is only relevant this week, it's not relevant at all. I think this is actually a good filter when you're reading the news too, or reading any book, is to ask yourself, will I still care about this topic a year from now and five years from now, and 10 years from now? And if the answer is no, it's a pretty good filter for how much of your time you actually want to invest into it.

[00:15:13] Jordan Harbinger: I agree with that. That's a really good point. The equation for a lot of writers is, like you said, spend two years planning and writing the book, and then you spend, I know nothing about book tours, three, six months, one year, hammering it as hard as you can, and then it just falls off a cliff because it was written for a world that doesn't exist anymore in any way, shape, or form, right?

[00:15:34] Morgan Housel: Right.

[00:15:34] Jordan Harbinger: It's like right, making your Clubhouse talks to the best in the business or whatever it was. Whereas really good creators create something, and they go, “All right. When the people who are reading this now haven't had kids, they're going to like it. But when they're grandparents it's going to be especially relevant.”

[00:15:49] I read the Daily Dad and I'm like, “This is really good.” I've read it slightly before I had kids and I’m reading it all the time, and I love this. I'm thinking like, I forward stuff to my dad who is of course a grandfather and I'm like, “Check this out.” And he's like, “Oh, that was interesting.” And I sent a bunch of it to my wife.

[00:16:03] This stuff is relevant to any person at any age who has kids or might have kids. That's a massive amount of people that can get value out of this content. But when something is about making your YouTube Shorts go viral, you're really hoping you get three keynotes that whatever events are about digital stuff, and then you're back to the grind. And that's I think a lot of reasons why these guys will self-publish their thing on Amazon because they need to get it up in like three days.

[00:16:29] Morgan Housel: Yes.

[00:16:30] Jordan Harbinger: They need to have AI write it and get it up there yesterday.

[00:16:33] Morgan Housel: There's another point that you just brought up that I think is so critical, which is no matter what you're writing about, if you want to cast the widest net and grab a big audience, you need it to be relevant to a very wide variety of people, and therefore whatever you're writing about should teach you about more than one topic. If you're writing a book about finance, there should be some ideas and lessons in there that could be applicable to other parts of your life, health, relationships, politics, whatever it would be.

[00:16:57] If you're writing a book about finance, write a book about risk and reward and greed and fear that you can apply to other parts of your life. If you read James Clear and you read Atomic Habits, you can learn about habits that will be relevant to investing, relationships, exercise, health, whatever it would be.

[00:17:13] So no matter who is going to read it, whether it is you or your child or your grandfather, or your mother or your grandmother, there's going to be something in there that they're going to say, “I can apply this to my own life.” But the more hyper-specific you make it, the narrower the audience that you're going to get to.

[00:17:28] Every book publisher will ask you something along the lines of, “Who is your target audience?” And it's a very well-meaning question. And it's a good question. It's not a bad question. But I think the right answer for every book is the answer that they don't want to hear, which is ideally everybody.

[00:17:43] Jordan Harbinger: Mm-Hmm. Yeah, they hate that.

[00:17:45] Morgan Housel: They hate that answer because it feels like a cop out. But I actually don't think it's that hard to do. If you're telling stories rather than using jargon and charts and information, and those stories could be applicable to a wide variety of experiences in life, I actually don't think it's that hard to cast your net that wide.

[00:18:01] Jordan Harbinger: Although publishing is changing, and I'm sure you've noticed this now, it's like, unfortunately I get all these show fans being like, “How do I get in touch with — I got a book, it's done. It's pretty good. A lot of people have read it. I really think it's something good.” My publisher connections will be like, “How big is his current platform?” And I'm like, “I don't know. None.”

[00:18:20] But it's the literary part, the heavy lifting stuff is done and they're like, “Ah, I don't know. I don't really interested in that. We're going to pass on that.” Then you get people like me who have a platform and have no book and no idea what they would want to write. I was telling Ryan Holiday, I was like, “I don't want to write a book because I don't have anything to say that I want to say yet.”

[00:18:36] And he’s like, “That's great. More people should think that way. If you don't have something you want to say, don't write a damn book.” And I was like, “Oh, okay, good. You're the only person who said that” because the publishers are like, “Dude, we will hire somebody to write it. Just tell them a couple of stories. We'll fill in the blanks and then you just sell this to your audience and it's going to make a million or $2, and most of that is yours.”

[00:18:58] I'm thinking like, wouldn't I turn to somebody else and go, that's a grift if they did that? Wouldn't I be pissed off if I knew that somebody did that? And the answer is, yeah, I would be annoyed if somebody was like, “So all I have to do is show up and the quality of the product doesn't matter and I'm going to make money?” That's what they want now.

[00:19:15] They're like, “Can you sell this?” That's the only question that matters. What the content is, “Ah, whatever. We'll recycle. We'll grab Morgan Housel. We'll steal this story. We'll change the place, change the name. Say it happened to you. It's fine.” Ghost writer. Blame the ghost writer. No thank you.

[00:19:30] Morgan Housel: Joe Weisenthal from Bloomberg, he has this tweet many, many years ago where he said, “Every book should have been a magazine article. Every magazine article should have been a blog. Every blog should have been a tweet. And most tweets never should have been written.”

[00:19:42] Jordan Harbinger: That's so true.

[00:19:43] Morgan Housel: I think there's a lot of truth to that. Once people started reading Kindle en masse, there was a lot of data. Amazon ran a study where they could look at Kindle highlights, like when did most people stop highlighting in the book? And they used that as a proxy.

[00:19:55] Jordan Harbinger: It's like page 13.

[00:19:57] Morgan Housel: They used that as a proxy for when people stopped reading. And the average bestseller, forget the average of book, the average bestseller, most people made it to page 50.

[00:20:05] Jordan Harbinger: Right. I'm surprised it was even that far, honestly.

[00:20:06] Morgan Housel: And those are the best sellers. I think a lot of the reason this happens is that in a 250-page book, the author and the publisher know that the average reader is going to read the intro and maybe chapter one, and then they're done. And to Joe's point, that means that you if you have a vague idea, you can just slap some toilet paper together and turn it into a book and sell it for 30 bucks.

[00:20:27] Jordan Harbinger: Yeah.

[00:20:28] Morgan Housel: And so, for both my books, which are short and they're short chapters, the variable that I wanted to maximize for at least to some extent was not how many people buy it necessarily, but how many will finish it.

[00:20:37] Jordan Harbinger: Yeah. Yeah.

[00:20:39] Morgan Housel: Once in a while you'll see a book that's 110 pages, really short, thin book. And readers love them. They love those books.

[00:20:45] Jordan Harbinger: Yeah. The publisher doesn't because it's 7.99 instead of 27.99.

[00:20:49] Morgan Housel: Publisher hates them.

[00:20:49] Jordan Harbinger: Yeah.

[00:20:51] Morgan Housel: I'm a fan of short books or even if it's a long book, a short paragraph or a short chapter. Make your point and get out of the way, and don't waste the reader's time.

[00:20:59] Jordan Harbinger: I read a lot of books, probably two, sometimes even three a week. And there are a lot where I'm like, this whole damn thing could have been a 13-page article, would've been a long blog post, okay, or a long magazine article, but it would've been complete.

[00:21:14] They're throwing charts in here. You can tell the publisher was like, “We really need three more chapters.” They're like, “All right. I'm going to do one that's completely unrelated and it's going to go here and over here and over here.” You're like, “These three chapters should definitely have been cut.” And you think, how did they not cut those?

[00:21:29] And then, you talk to the author and they're like, “No, they made me add those after the whole thing was done.” And you go, “Ah, that's why it didn't fit at all. You got the square peg through the round hole with a sledgehammer on this book.” They're like, “Yeah, they wanted filler. I was going to put that in my next book and now I can't, because I put it in this one.” I'm like, what a mess.

[00:21:48] Morgan Housel: Right. It is a mess. The Declaration of Independence is 4,000 words and completely transformed the country, the world, et cetera, et cetera. The idea that you need 75,000 words to explain your mental model is like, come on. This shouldn’t be the case.

[00:22:01] Jordan Harbinger: Yeah.

[00:22:02] Morgan Housel: I've tried to get around this problem, I'm not going to say I've mastered it, but I've tried to get around it with two things. Number one, very short chapters. The average chapter in both of my books is about the length of a blog post. And number two, each one of those chapters, kind of hangs on a connected theme, but they could be standalone.

[00:22:18] If you want to start my book on Chapter 13, it's fine. See, it's all going to make sense to you because they live on their own rather than rambling on one point for 20 chapters, let's make 20 separate points that could stand on their own within a connected theme.

[00:22:34] Jordan Harbinger: You’re listening to The Jordan Harbinger Show with our guest Morgan Housel. We'll be right back.

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[00:24:08] This episode is also sponsored by BetterHelp. Our family sees the holiday season, not so much as a time for exchanging physical gifts, but as an opportunity to unwrap meaningful experiences and create cherished memories together, focusing more on the value of moments than material things. Shifting gears to the realm of personal wellbeing? Why not consider therapy as a unique form of self-care this holiday? BetterHelp is like having a therapist on speed dial, minus the stress of traveling. With BetterHelp, you can embark on your mental wellness journey right from your living room, perhaps while lounging in your festive PJs. Picture it as a personal growth workshop, but one where you're wrapped in a warm blanket with your favorite holiday drink in hand. As you're settling into the holiday spirit, why not explore BetterHelp? It's the mental health equivalent of a cozy and lightning fireside chat. BetterHelp tailors therapy to fit your life effortlessly. You start with a simple questionnaire to match with a licensed therapist and have the flexibility to change therapists anytime without extra charge. It's convenient, flexible, and it aligns perfectly with your holiday rhythm, just like choosing the right holiday movie.

[00:25:04] Jen Harbinger: In the season of giving, give yourself what you need with BetterHelp. Visit betterhelp.com/jordan to get 10 percent off your first month. That's better-H-E-L-P.com/jordan.

[00:25:15] Jordan Harbinger: If you're wondering how I managed to book all these great authors, thinkers, and creators every week, it's because of my network and I'm teaching you how to build your network for free over at jordanharbinger.com/course. I know networking is a gross word, kind of deservedly so. This course is actually about improving your relationship-building skills and inspiring other people to want to develop a relationship with you. This is not a gross, cringey thing that's going to make you look like a wanker. There's no awkward strategies or cheesy tactics. It's just practical exercises that are going to make you a better connector, a better colleague, a better friend, a better peer, and it only takes a few minutes a day. That's really all it takes, and many of the guests on the show subscribe and contribute to the course. So come join us. You'll be in smart company where you belong. You can find the course at jordanharbinger.com/course.

[00:26:01] Now back to Morgan Housel.

[00:26:04] One thing I noticed that you didn't do in your book, which is in a lot of books, is they'll take an example from another book. They'll be like, “Simon Sinek said,” and it'll be 13 pages of just rehashing something from his work.

[00:26:15] I noticed you didn't do that and you were able to keep things short, and I think that's clever. I'm torn as to why authors do this. I think some of it is filler and some of it is like, “If I associate myself with this other very credible person, it will seem like I'm also very credible.” But it's annoying because you end up reading the same anecdotal stories that later that author's like, “Yo, that was something I made up for the book and wasn't even a real thing that happened,” and it's in 40 different books over the next five years.

[00:26:36] I noticed that you did not do that. I guess the hack for you to make sure that everyone finishes your book is write a 350-page book, but the last 300 pages are just blank paper because they're going to stop reading at page 50.

[00:26:51] Morgan Housel: That's it.

[00:26:52] Jordan Harbinger: There you go. You're welcome.

[00:26:54] Morgan Housel: I'll tell you why authors do that. It's just trying to get to the word count limit. 50,000 words, which is the average nonfiction book is very long and intimidating, and it's very common, particularly for new authors to be like, “I have an idea that I'm an expert on and I'm going to write a book about it. And it’s a great idea.”

[00:27:08] They sit down and they're like, okay, they write 2000 words and they're like, “I've already said most of what I have to say.” And you're like, “Great. I need 25 times this much.” And then they kind of panic and they start throwing a bunch of toilet paper on the page to make it fit.

[00:27:23] Jordan Harbinger: Yeah. When it's poorly done, you can really tell, right, because it's like, “Why are you telling me about your high school experience and your science teacher?” You could’ve illustrated that point with one sentence, but instead I've got a whole chapter on your dad taking you to soccer practice. I'm like, “We didn't need this,” man.

[00:27:36] Back to the idea of success in what'll work in 10 years, you mentioned that Naval Ravikant, he talks about success in parallel universes. I love this concept, right? You don't want to rely on luck. I think he said something along the lines of, “In a thousand parallel universes, what would be true in every single one?”

[00:27:54] That's a great way to think about what would be true in every single one. People will like long-form content from a host they can trust or a writer they can trust. And that's going to be true anywhere at pretty much any time even in zero gravity. You're going to want to see somebody who you can believe what they say and there's not going to be a hidden agenda, and it's not going to be produced like crap.

[00:28:17] That's pretty basic and seems to be a heavy lift these days, but it's pretty basic. That's a really good rule of thumb or heuristic to think about what you're creating or what you're doing.

[00:28:29] Morgan Housel: Here's one example from Steve Jobs. What would be true if Steve Jobs lived in a thousand different lifetimes? Well, you could look at him and say, “Well, he invented the iPhone.” Okay.

[00:28:36] But if Steve Jobs was born in 1850, inventing the iPhone would not be a thing. So, in a thousand parallel universes, that's not a good lesson to take away from him. But let's look at something else he did. The intersection of art and technology was a big thing for Steve Jobs. That is something that would be relevant a thousand years ago and a thousand years from now.

[00:28:56] A lot of times when you're looking at these role models, whoever it is, Warren Buffett, Steve Jobs, Kobe Bryant, whoever it is, you want to make sure that the lessons that you're learning would be applicable in any different lifetime that they would be born into, so that you have a fighting chance of learning that yourself.

[00:29:12] A lot of people in investing, when they look at Warren Buffett fall for this, and they study how he invested in the 1950s and the 1960s, and the stocks that he bought and the formulas that he used without realizing that those formulas that worked in the 1960s, a lot of them don't work anymore.

[00:29:28] Because their time has come to pass, the market's adapted and evolved. You want to look at like, what can we learn from Warren Buffett that is applicable to me and is applicable to my life going forward and doesn’t rely on the luck of what the stock market happened to be at in the 1950s. There are things like, can I replicate the stocks he picked in the ‘50s? No.

[00:29:45] Can I try to replicate his endurance and longevity and patience, and use that as this timeless principle that I can apply to my life? Yes. That is something. A lot of this is just trying to make sure that you're learning the right lessons from the people that you look up to.

[00:30:00] Jordan Harbinger: Yeah, that's fascinating. You're right. What would Steve Jobs have done even a few hundred years ago? He would've made violins and they would've been incredible, right? They would've looked great.

[00:30:08] Morgan Housel: Yeah, that's such a good example. Yes, they would've been so much more beautiful. He would've built a steam engine train that was just so much more beautiful than the others. So that's the timeless principle, rather than, “Oh, he saw the mobile revolution coming.” No, that's not something we can learn from. It's too specific for that era.

[00:30:25] Jordan Harbinger: Yeah, you're right. It'd be like a polished steam engine train where the coal doesn't get shoveled in by some [unintelligible] but automatically. That kind of way of looking at people and ideas is really a game changer.

[00:30:40] You mentioned risk earlier. I heard you, I keep thinking I heard you, but I read your book, but it was an audio book, so now I'm like, “Where did he say this? Was it in the book or was it on a podcast?” Thinking of risk in the way that California thinks of earthquakes, tell me about that, because I live in California, and I hope you're right about this.

[00:30:57] Morgan Housel: Well, if you live in California, you know with certainty that earthquakes are going to be part of your future.

[00:31:01] Jordan Harbinger: Mm-Hmm.

[00:31:02] Morgan Housel: Nobody doubts that, and some of them are going to be massive and destructive. Everybody knows that. Everybody accepts it.

[00:31:06] Jordan Harbinger: Mm-Hmm.

[00:31:07] Morgan Housel: But nobody, including the foremost earthquake experts know when it's going to occur, where it's going to hit, or how big it's going to be. And they don't even pretend to know. There's no earthquake CNBC of predicting of like, 24-hour news. Like, “Oh, this guy says it's going to come next Friday at 7:00 PM.” Nobody knows and accept that.

[00:31:25] So rather than assuming that you can predict the next earthquake, you're just always prepared for one no matter when it comes. The firefighters and the EMS crews, they're always training, they're always on alert. No matter when it happens, they'll be at least somewhat prepared for it.

[00:31:38] And if you contrast that with how we think about the stock market, where there is a CNBC, where they're like, “Our next guest, Joe Smith says the market's going to crash next Friday.” It's a completely different way of thinking about risk. It’s a difference between expectations and forecasts. Nobody forecasts earthquakes because you know you can't, but you expect them in the future.

[00:31:57] I think if we think about a lot of risks in our life the same way, that's a good way. And by the way, nobody else knows when the next recession is going to happen. Nobody knows. But if you look at history and you say, “On average there are two recessions per decade, one of which is usually pretty bad, and I expect it to be the case going forward.” That is not a forecast. It's just an expectation based off of what's happened in the past.

[00:32:18] I just think it's a way more realistic way to think about risk than fooling yourself into thinking that you can see it coming. Nassim Taleb has a great quote that summarizes it. He says, “Invest in preparedness, not in prediction.”

[00:32:30] Jordan Harbinger: That is a great way to look at this stuff because, I suppose risk is especially dangerous if you think you have to predict it or forecast it in order to prepare for it, because. If you look at past events that people didn't predict, I don't know, Pearl Harbor, September 11th, COVID, whatever. We did have people sounding the alarm on potential pandemics, including guests on this show.

[00:32:51] My guest thought it would be the flu, and nobody thought we'd have a lockdown. They just thought it'd be a big pandemic. Episode 320 and 222, by the way. We'll link it in the show notes. But yeah, nobody predicted September 11th, nobody predicted the COVID shutdown, the novel coronavirus. Nobody predicted this. The risk is especially dangerous if you're like, well, unless somebody can point to a specific thing, we're not going to prepare for it. Well, we sort of see what happened there. We were unprepared for all those events.

[00:33:16] Morgan Housel: COVID is interesting because like you said, you've had guests that talked about the risk before it. There's I think a 2015 TED Talk where Bill Gates gives a TED Talk and he says, “The biggest risk we face is a viral pandemic.” And even if in the 1990s somebody hypothetically said, “America is at risk of a terrorist attack from hijacked airplanes,” and I think there are actually may have been people who did say that, that is very different from a forecast. Bill Gates didn't forecast it's going to come in 2020. The people in the ‘90s didn't say, “Watch out for September 11th, 2001.”

[00:33:46] So even if you know that you are at risk and you have an expectation, don't pretend that you can prepare for it or that you can predict exactly when it's going to come. And to me, the big takeaway from that is just like how we prepare particularly financially. I've always thought that the level of cash that you should have in your portfolio should feel like it's a little bit too much.

[00:34:06] It should make you wince a little bit because if you are only preparing for the risks that you can envision, then by definition you're going to miss a surprise 10 times out of 10. And so, you’re only really prepared for these events if you are preparing for events that you cannot even fathom. That's when you know that you at least have a fighting chance of dealing with the surprise that you can't even think about, that you're not prepared for.

[00:34:26] Jordan Harbinger: I suppose that makes me feel better. My wife is a very conservative, I guess you could say, investor. Like if it was up to my wife, we'd have a giant vault in our basement or something like that with stacks of gold coins in it. I mean, we don't quite get that ridiculous. We do keep our money in the bank, but man, she's like, “I just want enough cash where we can pay the entire team, and all the employees, and all of our bills, and all of our personal expenses for a year.”

[00:34:50] I'm like, “That's a lot,” without cutting back on anything. She's like, “I just feel better that way.” I've learned to just not argue with that. But it does make me feel better. I mean, maybe she's right. We'll have a lot of dry powder if anything does go wrong.

[00:35:02] Morgan Housel: It's so interesting that you bring up that example of paying everybody for a year because there's this amazing anecdote from Bill Gates of when he started Microsoft in the 1970s.

[00:35:10] He was taking this colossal bet and this giant risk that computers were going to go mainstream. At the same time, he said from day one he wanted Microsoft to have enough cash in the bank that they could make payroll for one year with no revenue.

[00:35:22] Jordan Harbinger: Wow. That is a massive company.

[00:35:23] Morgan Housel: The entire time, he ran Microsoft. He was CEO through I think the early 2000s. He kept that promise that he could make payroll for one year with zero revenue. And when asked about it, he was like, “Look, in technology tomorrow is never guaranteed. Things change so fast, and you need to be prepared for that.”

[00:35:40] And particularly when he was talking about in the ‘90s when he was at war with IBM, he was like — look, in hindsight, Microsoft was successful, but none of that was guaranteed and he needed to be able to fight another day. Even though he was on one hand, wildly optimistic and risk-taking, on the other hand, he was super conservative in terms of how he managed the day-to-day risks of what he was facing.

[00:36:00] Jordan Harbinger: It sounds absurd. I guess planning for anything like this sounds absurd because most predictions of disasters actually sound absurd as well.

[00:36:11] Where's the line? Because I'm thinking of my buddies who are like doomsday preppers and I'm thinking, yeah, but you’re kind of dysfunctional because you want to grow your own food and live a hundred miles away from the nearest highway, so Mad Max can't come and get you or whatever. It's just weird, right?

[00:36:28] There's a line somewhere, but they won't look ridiculous if there is anything that happen. They'll be like, “See? Now you want to come and live in my underground bunker farm. You need three tanks of gas in a back of a truck and bring some fresh drinking water.” It sounds ridiculous, right? People were probably like, “Bill, you should be taking this capital and deploying it in your company,” and he just didn't want to do that.

[00:36:49] Morgan Housel: Yeah. I mean, there is some extent, particularly with a lot of gold investors who, they'll say, “The reason I invest in gold is because when the entire banking system collapses, I want to hold onto my wealth.”

[00:36:59] And my counter is always, look, if the entire banking system collapses and the dollar goes to zero, your gold's not going to be good either. What you want is not gold. You're going to want ammunition and penicillin is what you're going to want in that scenario. It's like there are some absolute catastrophic risks that it's like, why even bother?

[00:37:16] Charlie Munger, who was very blunt on a lot of things brought this up, too. He was like, “If you were living in Vienna in the 1930s and you saw the rise of Nazism and you said, ‘I want to have all my money in gold,’ that didn't do anything for you.” Or if you were living in Europe in the mid-20th century and you wanted to protect your wealth from the ravages of World War II, having in gold didn't matter. The cities word bombed into rubble. It didn't matter.

[00:37:38] I think the catastrophic bunker risks, in my view, don't make that much sense to try to protect from, because they're probably not going to protect you if things actually get that bad. I've often just looked at economic history and been like, okay, in a massive economic collapse, similar to the Great Depression, could I survive not only survive, but thrive and try to take care of [unintelligible] and take advantage of opportunities for a year, two years, three years? Of course, it's always going to be arbitrary where you draw that line.

[00:38:05] Jordan Harbinger: Sure.

[00:38:06] Morgan Housel: And even like, no matter how prepared you are, there's always going to be things that will still throw you for a loop. Even if it's not financially, it'll throw you for a psychological loop.

[00:38:14] If there was a nuclear war tomorrow, even if you have 10 years of cash in the bank, you're going to be scared. You're going to be really worried. You're going to worry about the safety of your children. The idea that you can conquer risk is, I think the idea you need to get out of your head because you can't.

[00:38:28] I think if you can try to endure it and survive it to the best you can, that's the best anybody can do, rather than thinking that you can avoid it, which is, I think what some of the bunker people try to do is like, “If I have a bunker, I can eliminate risk.” It's like, no. I don't think nobody can. you can just try to endure it to the best of your ability.

[00:38:44] Jordan Harbinger: Yeah. I mean, I suppose if you're Peter Thiel and you have billions of dollars to deploy, you can build your New Zealand underground bunker with a private airport and fly your jet with your pilot and your family. You can try to do that all you want, but yeah, you're going to spend $300 million trying to avoid all that risk and then what? You lose all of your money except for the money you spent on your New Zealand bunker anyway, right? So, he just has more to lose that he will — yeah, you're right. Your point still stands.

[00:39:09] As you've increased your wealth and social standing, so to speak, how has your thinking changed with respect to money and how you use it? And I know that's a broad question, but you mentioned on another show, I think it was a long time ago now, you said, stuff we buy is usually a social signal. It's not something that really makes us happy. And that reframe is really good because I have a lot of friends who've done really well, but I also have a lot of friends who did not do well at all.

[00:39:33] And I will tell you that I'm not totally convinced that the ones who have done well are that much happier. They have less stress about certain things. But I'm not convinced that they're that much happier. And you can really see the ones that are making bad decisions, right? They have a car collection that they don't drive.

[00:39:50] They've got three homes. They haven't been to one in four years. Probably couldn't even tell you how to get there if they landed at the airport. But they bought that stuff thinking it would make them happy. But really, they mostly just talk about it because it's a status thing.

[00:40:02] Morgan Housel: That's it.

[00:40:03] Jordan Harbinger: And the quicker you can kind of absorb this concept into your head, you can avoid doing that to yourself.

[00:40:09] Morgan Housel: I'll tell you, when my son was born, he's eight, actually, today is his birthday. He turned eight. I wrote him and his sister when she was born later, a little letter that I thought, when there are adults find useful about some life advice. There's quite a bit in there that was about finance because that's my thing.

[00:40:22] Jordan Harbinger: Mm-Hmm.

[00:40:24] Morgan Housel: One of the things I wrote to my son was, “You might think that you want a fancy car and a big house and a flashy watch, but I'm telling you, you don't. What you want is respect and admiration from other people. And you think that the Ferrari is going to bring it to you, but it almost never does, especially from the people who you want to admire you.”

[00:40:42] This is not universal. I think there are really good, awesome people who also own Ferrari. This is not like a black and white thing.

[00:40:49] Jordan Harbinger: For sure.

[00:40:50] Morgan Housel: But I do think that a lot of people who have the mansions and the Ferraris, and the jewelry and whatnot, they're trying to seek respect and admiration. And to me, what's really important is that if you can gain respect and admiration through your virtues, through your ideas, through your humor, through your wisdom, you don't need to gain it from your car.

[00:41:11] I mean, think about your favorite comedian or your favorite athlete. By and large, you wouldn't care how big their house is or what kind of car they drive. You respect them and admire them for the skills that they have. I often think about someone like Louis CK.

[00:41:24] Jordan Harbinger: I was just thinking about him, yeah. It's funny.

[00:41:25] Morgan Housel: Exactly. Through like his own words, I feel fine saying this because I think he has said this. He's like a fat slob and he dresses like — nobody cares because he's hilarious. They don't admire him for his wardrobe. I think when you have people who are trying to gain respect through their wardrobe, or their horsepower, or their square footage of their house, it can sometimes be trying to make up for the fact that they can't gain respect and admiration through other avenues.

[00:41:50] To that point, I think sometimes my aspiration for material goods, you can almost think of it like an inverse proxy for how much value you have to offer the world in other things like wisdom and humor and intelligence and love.

[00:42:03] Jordan Harbinger: That's a really good way to look at things, and you're right. Actually, even sort of the inverse or the converse, I was confused those two things. If you saw Louis CK and he was riding around in like a, I don't even know cars at all, but like some sort of fancy Bugatti Veyrn or whatever, you'd be like, oh, it's a little sad, right? It's a little cringe.

[00:42:23] Morgan Housel: Yeah.

[00:42:23] Jordan Harbinger: Like, “Oh, look at him. Doesn't that guy already have enough? Come on, man.” But then if you found out he was a car enthusiast and he’s always been a car enthusiast since he was 16 years old, and he just really loves that. You'd be like, “Oh! Well, good for you,” right? But as soon as you find out that they bought something because they thought it would make them look cool, it has the exact opposite effect. It's more like, “Oh, that midlife crisis is really hitting, isn't it?”

[00:42:44] Morgan Housel: Right. Yeah. So back to your first question. I think as my net worth has increased a little bit, I try to keep that in mind of like, what I actually want is respect and admiration from five people. I want my parents to love me. I want my kids to love me. I want my wife to love me. So, if I have their respected admiration, that's the core of what I'm trying to get in life.

[00:43:06] And is the car that I drive going to improve that? No. Is the clothes that I wear going to improve that? No. So I try to think about that a lot. What I want my money to do for me that I think I've done okay doing this is giving myself control of my time, independence, and autonomy. I just want to wake up every day and say, I can do whatever the heck I want today.

[00:43:25] And most days I want to wake up and work, but it's on my terms. It's up to me. And so, using your wealth that you've saved up to gain control over your time and become independent, I think is massive. And you can contrast that to a lot of CEOs in particular who might make $30 million a year or more, but they have no control over their time.

[00:43:43] Every second of their day is dictated by the demands of somebody else. And that to me is like a unique form of poverty. I'm interested in the opposite of that. I would much rather make a lower amount but have control over my schedule than to make a higher amount and be just at the whim of other people's desires all day long. I try to keep that in mind with the money that I might build up over time.

[00:44:04] Jordan Harbinger: Yeah. Not having time to spend it or enjoy it is really something. You look at guys like Bob Iger who came back, and I think recently there was some article where he's like, “Disney's in bad shape. I'm overwhelmed.” And you can just see him getting older in every picture that they take. I mean, like presidents for example. They always leave the office with gray hair if they didn't have it going.

[00:44:21] Morgan Housel: Yes. Yeah, totally.

[00:44:22] Jordan Harbinger: And it's like, okay. They're eight years older, they're four years older. No, they didn't sleep more than three hours a night and they had nuclear or whatever crises every Thursday morning for eight years, four years, whatever it was.

[00:44:35] That's not great, man. The bonus you get from that is what. Secret Service guys standing outside the bathroom door for the rest of your life and speaking gigs that are overpaid?

[00:44:44] Morgan Housel: Exactly.

[00:44:45] Jordan Harbinger: I don't know if I would make that trade, man. I really don't. I don't think it's for me.

[00:44:49] Morgan Housel: And look, I'm grateful that there are people like that in the world who exist, who have to work 24 hours a day. Steve Jobs, Michael Eisner, Warren Buffett, the great entrepreneurs, Elon Musk. I'm grateful that they exist, and they make the world a much better place. But it's another thing to look at them and aspire to it. Because I think 99.9 percent of people not only could not do what they do, but would not want to do what they do, and live the life that they live if they had that.

[00:45:14] Jordan Harbinger: Mm-Hmm.

[00:45:17] Morgan Housel: I'm not a type A person. My steady state, my homeostasis is sweatpants on the couch reading a book. And so, if I can use my wealth to get me myself closer to that, that is what I want to do, rather than using it to try to keep going and pushing further and further and further.

[00:45:35] Jordan Harbinger: This is the Jordan Harbinger Show with our guest Morgan Housel. We'll be right back.

[00:45:39] This episode is sponsored in part by Cometeer. Look, we've all done the drive through dash for coffee, but let's be honest. It can hit the wallet hard, tastes like it's been on the burner too long, and the lines are insane, especially when it's chilly out. Just forget it. Enter Cometeer. It's a game changer. It's like having a cup with the freshest, most flavorful coffee that's been flash-frozen to lock in all the good stuff. We're talking top tier roasters like Intelligentsia and George Howell right at your fingertips, coffee brands that seem very dapper and sophisticated. No fuss, no machines. Definitely no mess except when I open it and then immediately spill it on the floor. But that's, most of you aren't going to have that problem. Whether you're craving a hot cup and ice latte, or even a festive espresso martini, Cometeer has you covered. Jen and I have made Cometeer our morning ritual. It's a staple in our fridge. I whip up some frothy milk in my coffee machine that I don't freaking need anymore, blend it with a Cometeer coffee capsule, and voila. Jen enjoys a barista level latte in mere seconds.

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[00:48:04] If you like this episode of the show, I invite you to do what other smart and considerate listeners do, which is take a moment and support our amazing sponsors. All the deals, discount codes, and ways to support the show are all in one place — jordanharbinger.com/deals. You can also search for any sponsor using the AI chatbot. You can even email me. For the extreme lazy, or if you just can't find or figure something out, hit me up, jordan@jordanharbinger.com. I am happy to surface those codes for you. That's how important it is for you to support those who support the show.

[00:48:32] Now for the rest of my conversation with Morgan Housel.

[00:48:37] Yeah. There's a maybe not a joke from Charlie Munger that said, “The key to a happy life is low expectations.” I mean, it's funny.

[00:48:43] Morgan Housel: Yes.

[00:48:44] Jordan Harbinger: It's not totally wrong, right? If you're just like, I think about this, people go, “Wow, did you ever think your life would end up like this?” I'm like, “No.” They're like, “Well, great. How have you changed living?” I'm like, “I don't know. I mean, I have a lot more free time.” They're like, “Yeah, but you could buy a bigger house. You get a beach house. You know you could do this.” I never cared about being rich. Never cared about it.

[00:49:02] Morgan Housel: Yeah.

[00:49:04] Jordan Harbinger: I know most kids who I grew up with assumed they would be rich. I didn't, really, because my mom was a public school teacher. My dad was an auto worker. I was like, if I could make the equivalent of six figures, whatever that means when I'm an adult, that's fine. I got everything I need.

[00:49:19] Do I have everything I want? No. But like, that's life, you know? Eh, I'm fine.

[00:49:24] Morgan Housel: Yeah.

[00:49:25] Jordan Harbinger: So now that I can afford all that stuff, I don't really feel the need to have it. And some of that really is low expectations. It's like, I just really want stability. I want free time. I don't want to get up at five o'clock in the morning and drive to Detroit like my dad. I could live without that. That was a commute that I never wanted.

[00:49:41] I don't want a bad boss like my mom had as a public school teacher. I don't want parents yelling at me. Okay. But that's a career choice thing, right? That's not like, “Okay. I need to make $3 million a year to make this happen.” No.

[00:49:52] Morgan Housel: Totally.

[00:49:52] Jordan Harbinger: You don't even need six figures to make that happen. You need to figure out how to make money from home like many of us have who listen to this show, especially post pandemic, this sort of work from home thing. You don't need six figures to make your life worth it anymore because you don't have to go to your cubicle and get yelled at by some, a*hole with seniority. You just don't have to do that anymore.

[00:50:07] Lifestyle creep though, man, is dangerous. It seems like some of us avoid this, but other people don't. I'm wondering if you have any thoughts on how that actually happens.

[00:50:18] Morgan Housel: I think most people, when they are going down some sort of path of lifestyle creep, they are making a false assumption that if their car was faster or their house was bigger or their clothes were nicer, they would gain more respect and admiration from other people.

[00:50:31] And when they don't see that connection, it's always just, well, if the car was a little faster, if the house was a little bigger, if it was a little bit more. If you were to describe a similar process of, you take a hit of something and it's not enough, so you need a little more and that's not enough, so you need a little more, it's a drug addiction.

[00:50:48] Jordan Harbinger: Yeah.

[00:50:48] Morgan Housel: The process is an addiction. I think it is in a very real sense, it happens with money as well. To me, like breaking the chain of that, I told a story in my first book about, I used to be a valet at a five-star hotel in Los Angeles. I was young, I was 19 to 22 at the time. But it dawned on me one day that if I saw somebody drive into the hotel in a Rolls Royce or a Lamborghini, whatever it was, never once did I stare at the driver and say, “Whoa, that guy's cool.”

[00:51:16] Jordan Harbinger: Yeah.

[00:51:17] Morgan Housel: What I did is I imagined myself as the driver.

[00:51:19] Jordan Harbinger: Sure.

[00:51:20] Morgan Housel: And I thought, if I was the driver, people would look at me and think I'm cool. And it was like, don't you see the irony? I don't care about the driver, but I want to be the driver because I think people will care about me. Once I realized that dumb game that everybody thinks they're looking at you, but they're not. They're imagining themselves being you and imagining everyone else looking at them.

[00:51:38] And so, the core takeaway for that for me was, nobody cares about you as much as you do. Nobody's thinking about you as much as you are. Nobody cares about your possessions as much as you do. Once you gain control of that, then I think your aspirations for nicer lifestyle stuff diminishes. I think the most powerful financial asset that exists is not needing to impress other people.

[00:52:00] If you don't need to impress other people, it's actually so easy to focus on the things that actually make you happy in life. One other way that I heard this phrase recently I thought was so brilliant, was a high-end Toyota is a nicer car than an entry-level BMW. Because the high-end Toyota is filled with things that make driving pleasant for you — comfortable seats, a good stereo system, whatever it is. Whereas the entry-level BMW is just bragging rights. It's all you get from it. Otherwise, it's a pretty sh*tty car.

[00:52:25] Jordan Harbinger: Let's try to charge you $10 to use this heated seat. “What do you mean I swipe my credit card?” Whatever it is.

[00:52:30] Morgan Housel: [crosstalk] slide, yeah.

[00:52:31] Jordan Harbinger: Go ahead.

[00:52:32] Morgan Housel: I think for many things, you want to align your life towards the high-end Toyota, so to speak, versus the low end. And once you do that, I think lifestyle creep goes away.

[00:52:41] Jordan Harbinger: Well, you can't really creep unless you get rid of the Toyota and then you're comparing your high-end Toyota with that low-end BMW, man. And if you're not lying to yourself, you see who comes out on top. That's so interesting.

[00:52:49] I live in Silicon Valley, so I see a lot of this where I'm like, you see like this bright red or yellow Lamborghini drive and pull up. And the guy's having trouble going slow enough in the parking lot because it's a freaking supercar. So, it's like jerking. They finally stop, right? And you expect the girl from Cannonball run to get out, right?

[00:53:07] Leather body suit, Aviators, takes off the hat, and these luscious locks of hair fall out. No, it's a dude with half his shirt tucked in, his ass crack hanging out and he like can't fit into his jeans because he works at like LinkedIn or something in tech support. You're like, “Yeah, nobody's looking at that guy and look in their chops.” This is a guy who just can't park the car. That's it.

[00:53:29] Morgan Housel: Yeah. I think if you were to break it into two lives, would you rather make a hundred grand a year but your spouse loves you, your kids admire you, you have control over your time, you're in good health or you can make a million dollars a year and you're on your fourth divorce, you're estranged from your children, you're obese and overweight, and your health has fallen apart?

[00:53:47] It's so obvious which one of those you should want.

[00:53:50] Jordan Harbinger: Yeah.

[00:53:50] Morgan Housel: But the irony is, what do people actually chase? Are they going to chase things that actually make them happy, relationships, and health, and whatnot? Or are you going to going to chase just something that is so tangible and easy to measure, like salary, even if everything else in your life is going to hell?

[00:54:03] Jordan Harbinger: Man, my friend Shep Gordon, have you heard of this guy? He's like, he used to manage all these big stars. He still manages a bunch of people. He's an older dude now.

[00:54:12] They did a Netflix on him called Supermensch, and he's just an amazing, amazing guy, rock and roll manager. He told me, “I've never met anyone in my career where fame didn't completely ruin their life.” This is a guy whose job it was to make artists famous so that they could sell tickets and he did a great job with it.

[00:54:30] I mean, it's the stuff of legends. I remember saying like, “Wow, you make people famous all the time.” He’s like, “Yeah, and I'm almost sorry I did it. It's what they wanted, but really it never ends up well.” I was, “What are you talking about?” He basically invented the Celebrity Chef, you know, Emeril Lagasse, and all these guys, this is all his doing.

[00:54:47] He just would tell me story after story of, “Well, this person who you think is probably the most amazing guy in the world and has been famous for 50 years is miserable and broke and has no real relationships outside of me and a handful of other people.” And you're just thinking like, oh, this is almost like a disease they got that looks really good.

[00:55:06] It's like a disease that makes you taller and better looking, right? And you think, oh, cry me a river. And it's like, no, no, no. They're still dying. They're still dying a slow, painful death. It really sucks.

[00:55:16] Morgan Housel: It actually sucks. This is a great quote from Matt Damon where he says, “The day that you become famous, you stop maturing socially because everybody is treating you different.”

[00:55:24] The girls or the guys are treating you different. Your dating pool is different. People are going to kiss up to you. They're never going to tell you you're wrong, and that might be comfortable, but you stop maturing socially. This is why I think childhood celebrities, Michael Jackson, the Olsen twins, whoever it might be, I think to some extent they never matured at all because they stopped maturing socially when they were children.

[00:55:44] And it's just impossible to do it that way. So, then you see some of the people who have done well. To me who sticks out and I'm sure he is not perfect, but the A-list celebrity who's done the best at this is Keanu Reeves. If you look into him, seems like a very humble life, seems like a genuinely do-gooder is not seeking attention left and right.

[00:56:04] I'm sure he hasn't done it perfectly, but when you see people who've gone out of their way to try to be somewhat normal, it's like, good for you to fight back against this disease that the other celebrities don't even know that they've been afflicted with.

[00:56:18] Jordan Harbinger: Yeah. Keanu Reeves is a friend of mine's cousin, and I was like, “Oh, man. What's he like? He's like, “Well, he owns a basketball, a hoodie, and I think he lives in a motel or a hotel.”

[00:56:28] Morgan Housel: Totally. I love that. I think that's amazing.

[00:56:32] Jordan Harbinger: Yeah. He goes and plays at a park, I won't say where obviously, but he goes and plays basketball. It depends where he's staying, right. He'll just go and play basketball at a park or a gym and he plays pickup games and he's got his circle of artsy friends or something.

[00:56:46] And sometimes he'll be like, “Why don't we go to Rome? I heard there's this cool thing going on. Why don't we just all get on a jet and go to Rome?” And they're like, “Yeah, cool.” They go there and they stay in a hotel, and they hang out and they have fun. It's the same crew of guys and it's been the same crew of guys for a long time, apparently.

[00:57:00] He literally owns a few outfits. I mean, he's probably got clothes everywhere because those guys get free stuff given to them by stylists and designers all the time. But according to my friend, he really just like, his prized possessions are this ratty ass hoodie and a basketball.

[00:57:15] Morgan Housel: I think there's no celebrity, forget A-list. Even if you're talking about a D-list celebrity, that virtually every new friend that you come across wants something out of you. Even if it's innocent, they want the attention of being associated with you. They want the connections that you're going to have. Therefore, every kind of friend that you meet after you become famous is a potential liability.

[00:57:34] Jordan Harbinger: Yeah.

[00:57:36] Morgan Housel: and I think there are a lot of these people. George Clooney, I know is like this, who pretty much only hangs out with friends that he knew before he was famous.

[00:57:42] Jordan Harbinger: Oh, wow.

[00:57:43] Morgan Housel: That's a brilliant thing to do. And it sounds like that's what Keanu Reeves is doing too. It's like it's always been the same crew. He values their friendship. And I bet those friends treat Keanu and George Clooney like they're just a normal dude.

[00:57:47] Jordan Harbinger: Yeah.

[00:57:54] Morgan Housel: They're not trying to get something out of him. It's just like he's just a guy. He's just a guy. I like him, but he's just a dude. And that's a big thing. I think it also explains why there's so many celebrity divorces.

[00:58:02] Jordan Harbinger: Oh, yeah.

[00:58:03] Morgan Housel: If you meet somebody when you're famous, it's almost impossible to see through that fame and accept the person for who they are.

[00:58:09] Jordan Harbinger: And a lot of that stuff is manufactured, man. You see these relationships?

[00:58:12] Morgan Housel: Yeah.

[00:58:12] Jordan Harbinger: I have a few sort of adjacent circles of people like this and they'll say something like, “Yeah, I'm dating this person now. I'm like, “Oh, how did you meet?” “Oh, we met in the green room of this show.” I'm like, “Oh. Well, aren't you guys both really busy? She has a music tour. You've got your other tour and yours is in the UK, and hers is in the US right now”. They're like, “Yeah, we only see each other once every two or three months for like a night or two.”

[00:58:34] And I'm thinking, this is not a real relationship. Who's going to tell them? It’s fake. I know you're enjoying the attention from People Magazine when you get spotted together the one day that you guys go out and you have eight billion photos taken. But what is actually happening outside of that?

[00:58:50] Morgan Housel: I have some sympathy for that, too.

[00:58:51] Jordan Harbinger: Yeah.

[00:58:51] Morgan Housel: Because imagine to take someone who's dating life has been in the press a lot lately, imagine you're Taylor Swift in 2023.

[00:58:57] Jordan Harbinger: I know.

[00:58:57] Morgan Housel: How in the world do you find true love? I hope she does. Maybe she has already found it.

[00:59:02] Jordan Harbinger: Yeah, me too. Poor thing.

[00:59:03] Morgan Housel: But how does Taylor Swift meet a random guy and be like, “Hey, do you want to go out to dinner,” and get to know each other? Are you kidding me? It's Taylor Swift.

[00:59:09] Jordan Harbinger: Yeah. It doesn't happen.

[00:59:13] Morgan Housel: And you look at that and of course, it's like a tiny violin, cry me a river, but that sucks.

[00:59:17] Jordan Harbinger: That sucks for them.

[00:59:17] Morgan Housel: That sucks when you become so famous that you cannot find true love, which is maybe the one thing that's going to make you actually happy in life.

[00:59:23] Jordan Harbinger: Yeah. I hadn't really thought about it, especially when these folks are so young, it's virtually impossible. It reminds me of, is it Jeff Bezos's ex-wife who met a science teacher or something like that and got married?

[00:59:34] Morgan Housel: Yes, yeah.

[00:59:35] Jordan Harbinger: And he instantly became one of the wealthiest men in the world because of the amount of money that she — but I think he's still a science teacher.

[00:59:41] Morgan Housel: But you know the ending to that story.

[00:59:42] Jordan Harbinger: No.

[00:59:43] Morgan Housel: They got divorced a year later.

[00:59:44] Jordan Harbinger: Oh! I didn't know that. That sucks.

[00:59:47] Morgan Housel: And who knows? I have no clue what the details were. I won't even try to guess. But maybe it's that when you meet somebody who's worth $50 billion, it's hard to look past, even if you try to look past it.

[00:59:57] Jordan Harbinger: Yeah. Oh, man. I didn't know that. Well, there goes that example. Blasted out of the water. Good save. Managing expectations though and comparing yourself to others, this is tougher than it seems, right, because I know we're talking like, “Oh, just don't do it.” But it seems like it's worse now than before because you have the internet. I don't know, 20, 30 years ago if I was comparing myself to people, it would be like other guys in the office or like the kids I grew up with or other people in my community.

[01:00:23] Now, it's just everyone in the whole planet. And Hasan Minhaj has a joke that was like, he got, I don't even remember, a million followers on Instagram or maybe it was 10 million. And he’s like, “And my dad was like, ‘Have you heard of this other guy who's from Pakistan or India?’ He's like, he has 24 million followers.’”

[01:00:39] Morgan Housel: That's right.

[01:00:40] Jordan Harbinger: Oh, yeah. And no one's ever heard of that guy anywhere in the West unless you're of this particular culture. Hasan Minhaj is like, by all accounts, a very famous face in the United States, at the very least. His dad was just like, “I don't care. You're nowhere near as famous as this guy who's on the Bollywood movies that we have illegally copied in the living room.”

[01:00:59] Morgan Housel: Right. And that Bollywood guy who was 24 million followers is comparing himself to somebody who was 50.

[01:01:03] Jordan Harbinger: Right.

[01:01:04] Morgan Housel: It never, ever ends.

[01:01:05] Jordan Harbinger: Yeah.

[01:01:05] Morgan Housel: And even when you're at the top, even when you're Elon Musk, richest man in the world, you start comparing yourself to people whose lives might be a little bit better than you, even if you have more money than to them, Elon Musk might be like, “Ugh, Jeff Bezos sleeps more than I do, gets eight hours of sleep at night, and I can't because I'm too busy.” That comparison game's never going to end. You're right that just in the last five or 10 years, it's gone supernova compared to what it's always been because of social media.

[01:01:29] I just learned this in the last week, that there are now these Instagram accounts that are of fake influencers. They're AI influences.

[01:01:36] Jordan Harbinger: Oh, yeah. I've seen these.

[01:01:37] Morgan Housel: It's literally like a picture of a woman who is absolutely anatomically perfect on the beach somewhere, and it looks a hundred percent real.

[01:01:45] Jordan Harbinger: Oh, man.

[01:01:46] Morgan Housel: But it's totally fake. It's just AI generated. Now, it used to be that you were comparing yourself to other beautiful people around the world, and that was bad enough because it was a curated highlight reel. Now, it's literally just an AI algorithm that's going to be screwing with your brain and screwing with your expectations.

[01:02:02] I think even just in the last couple of months, literally, we're entering in this new world. There are these other Instagram pages of the inside of mansions that a lot of people like looking at to compare like, “Oh, what if I had this mansion?” Same thing. They're AI generated. It used to be like, oh, you would find a Zillow listing of a nice house and that would like pique your interest and you could dream about that.

[01:02:22] Now it's not even a real house. It's all AI generated.

[01:02:25] Jordan Harbinger: Yeah. Now it's fake.

[01:02:25] Morgan Housel: That's going to be screwing with you.

[01:02:26] Jordan Harbinger: Ugh.

[01:02:27] Morgan Housel: I think we're interested in a totally different dimension of what expectations inflation is going to do. I can see it with my own son, who, again, is eight, about his definition of a good life compared to what my definition was when I was eight is totally different. When I was eight, a good life was like a new bike and new roller blades or something.

[01:02:46] Jordan Harbinger: Oh, man.

[01:02:46] Morgan Housel: And his is like, because he watches Mr. Beast, so his definition is a Rolls-Royce and giving a million dollars to your friends for like completing some prank.

[01:02:53] Jordan Harbinger: Right. Oh, man.

[01:02:55] Morgan Housel: Totally different set of expectations.

[01:02:57] Jordan Harbinger: Yeah. That's brutal when kids are thinking like, “Oh, I should also have three different sports cars when I'm younger,” or whatever. Yeah, that's really unhealthy. The AI thing, you're right, I hadn't thought about that. We used to just compare ourselves to people who are on steroids and/or had a bunch of surgery. Now it's like, well, why be limited by what the body will do with the drugs and the surgery, right? Now it's just completely fake.

[01:03:19] Morgan Housel: By the way, those accounts are going to test constantly, “If we tweak the lighting by 10 percent, it's going to be a constant optimization towards what is going to make you feel the worst about yourself, which is really what those are doing about how can you compare your life to this fake life in a way that's going to make you just be like, “Ugh, if only I had that.”

[01:03:38] Jordan Harbinger: Yeah. Well, I guess the way that you get that is what live in a virtual reality environment only. I mean, it really just starts to become dystopian and weird really fast, right? It's like a sci-fi novel where your real life, you're in some dirty apartment that's 16-stories underground in a box floating in some goop that feeds you and gets rid of your excrement.

[01:03:57] But your brain is living on another planet where you have unlimited food, unlimited money, and your boobs are not subject to the constraints of gravity and physics.

[01:04:07] Morgan Housel: And I feel like we have no idea what that's going to do to society.

[01:04:10] Jordan Harbinger: No.

[01:04:10] Morgan Housel: Because the Instagram algorithm has probably been optimized for eight years. Now just in the last couple months we have these AI accounts that are doing something totally different. The only thing that we know that has, that is like very clear to track and has been associated with this cause is the rise in teenage suicide, depression, et cetera, et cetera, is exploded at the same time social media came about. So, in some ways we have no idea what this is going to do, but we know for quite certain it's not good. It's distinctly bad about what this is going to do to people's expectations.

[01:04:42] Jordan Harbinger: You mentioned Elon Musk a little while ago. I would love to talk about amazing personalities and how the bad has to come with the good. I've heard you talk about this, or maybe you wrote about this, and I love the idea, and I think I got this from Ryan Holiday, that if you want someone else's life, you have to trade for their entire life.

[01:04:59] I've been thinking about this a lot lately because whenever you could — this is like the antidote to comparing yourself to a lot of people because you go, “Oh, man. I wish that my show was as big as this one. But then I also want my physique to be like this person.” It's like, whoa, whoa, wait.

[01:05:14] Morgan Housel: You got to take it all.

[01:05:15] Jordan Harbinger: You can't have the physique of this person unless you trade. How did they get that physique? Oh, yeah. They work out eight hours a day and they take performance enhancing drugs and also, they have really good genetics, but I want my show to be this big. Okay, well you know that guy doesn't sleep, right, and he's also had a gazillion dollars in free advertising for being this other famous personality for years and years and years before he even started the show.

[01:05:36] And in order to do that, he had to live a pretty crappy life as like an open mic comedian for years and years and years in Hollywood. He didn't go to college. In fact, he dropped out of high school and you're just like, “Ooh, I don't know if I want this anymore.” And you start looking at these scientists and stuff like that.

[01:05:51] And all these people that want to be Elon Musk and it's like, okay, but doesn't he have six kids with names that are symbols? He probably doesn't see them all the time. Does he have functional relationships? I know he’s got at least one or two divorces. Do you really want to be that guy? Even Elon said, I think on Joe Rogan, “You wouldn't necessarily want to be me.” He meant that sh*t.

[01:06:09] Morgan Housel: Right. I mean, the stats I think about a lot is that among the top 10 richest men in the world, there are cumulative 14 divorces among those top 10.

[01:06:16] Jordan Harbinger: Oh, my gosh.

[01:06:17] Morgan Housel: Way more than the national average. Of course, it's a small sample size and whatnot. But yeah, most of those people who have outsized success and outsized wealth, there's a cost that came with it. You can measure their net worth very accurately, but it's very hard to measure the cost that they put into it.

[01:06:30] We saw this with Bill and Melinda Gates, too. I'm from Seattle. Bill and Melinda Gates were like the King and Queen of Seattle. A lot of people have their views about him, but if you just view it as built the most successful company of his generation, became the richest man in the world, and then used that wealth to try to like cure malaria and whatnot. It's like, what an amazing life.

[01:06:49] Jordan Harbinger: Mm-Hmm.

[01:06:49] Morgan Housel: But then, you saw it in the last two years that actually his private life was terrible. It was awful. There was this article from David Brooks, this is 10 or 15 years ago, I think it was 2005, where he said, “Okay, two things happened to Julia Roberts this week.”

[01:07:02] “Number one, she won an Oscar. Number two, she found out that her husband was cheating on her. The question is, did Julia Roberts have a good week?” And most people would just focus on the Oscar and be like, “Yeah, she had a great week.” Like, no. She had probably the worst week of her life.

[01:07:15] Jordan Harbinger: Yeah.

[01:07:16] Morgan Housel: To your point of, you can't pick and choose which parts you want, you have to take it all as a whole. The reason you have to take it all as a whole is because the good things that you were looking at came with the bad things like they happened because of the bad things, the cost that came with it. So, the reason this person is so rich is because they've worked a hundred hours a week and because they worked a hundred hours a week, they're on their fifth divorce, whatever it might be.

[01:08:03] Those things go hand in hand with each other. I think there's another element of this with Elon Musk, where it's like people want a crazy genius who thinks outside of the box and comes up with these new technologies, builds amazing companies, but they want that person to also have social decorum and to say the right things and to be PC and whatnot. I'm like, no. The reason Elon Musk thinks outside of the box to use that very bad phrase is because he's a maniac.

[01:08:03] Jordan Harbinger: Yeah.

[01:08:03] Morgan Housel: And because he's a maniac, he's going to do all these other maniacal things that you won't like. If you like somebody because they think about the world in ways that are different from you, that person is also going to think about the world in ways that you don't like. You have to take them both at the same time.

[01:08:16] Jordan Harbinger: By the way, I want to caveat this, right? It's not that you can't learn from these people or that this is an excuse from mediocrity or whatever, but you really do need to dedicate a hundred hours a week to your business and abandon your family goals if you want to do the same level of work as the other people who are doing exactly that.

[01:08:30] Maybe there's exceptions to this, of course, if you can optimize or whatever. But you find people comparing themselves to these other people and it's like, okay, but that person has three kids that don't talk to him.

[01:08:40] Morgan Housel: Yes, exactly.

[01:08:42] Jordan Harbinger: And two divorces. Do you really want that? “Well, look at what he's done with this company.” Great. But again, estranged wife, estranged children, probably doesn't even know if he has grandkids, can't get a call back on Christmas. Do you want to be that guy? I don't think so.

[01:08:57] Morgan Housel: I think for a lot of those guys, maybe not all of them, but a lot of them, when they go to bed at night, what are they thinking about? Are they thinking about their bank account or are they thinking about the fact that their kids don't talk to them? And it's probably the latter.

[01:09:09] Like what's actually in their soul that they want, it's probably the thing that they gave up. I think about that quite a bit. I read a lot of business biographies. They're so fascinating and with very few exceptions, have I finished a biography about an entrepreneur and thought to myself, “I want that person's life.” It's usually the opposite. It's usually that person's fascinating. I learned a lot, but holy sh*t. That sounds like a terrible life.

[01:09:33] Jordan Harbinger: Sure. Even something like Steve Jobs, right? He was this very stubborn thinker. And then, he got cancer and wanted to treat it with fruit and ended up dying and probably didn't have to. Oops.

[01:09:44] Morgan Housel: Maybe this isn't right, I'm just making this up, but maybe that personality that said, “No surgery. I'm going to eat apples and it's going to cure my cancer,” is the same personality that Steve Jobs had to say, “All the other ways that you're building technology sucks. I'm going to do it my own way.”

[01:09:58] Jordan Harbinger: I think it is that, yes, like that. Yes.

[01:10:00] Morgan Housel: Like that stubborn like, “Screw the establishment. I'm going to do it my way,” is what made him successful. And maybe, this is so judgmental, but maybe it also killed him.

[01:10:08] Jordan Harbinger: I agree with you. I definitely think just based on Isaacson's biography, which is all I know of the man, right, that that's what happened. I don't know, it'd be interesting to ask Walter Isaacson what he thinks.

[01:10:19] Morgan Housel: Yeah.

[01:10:20] Jordan Harbinger: Although he'd just say, “Read the book because my opinion is basically in there,” and that's what I got from the book. But yeah, you need these personality tradeoffs that make someone successful in one realm, but maybe a total outcast elsewhere.

[01:10:32] You just cannot pick and choose. It's nice to think you can, but you just can't. Man, I didn't even get through half my notes, but we should have you back sometime maybe next year, let's have it again.

[01:10:44] Morgan Housel: This has been fun, yeah.

[01:10:45] Jordan Harbinger: Morgan Housel, until we meet again, man. Thank you so much for coming on the show. So interesting. And again, I only got through half my notes. It’s a bonus for me because next time we do a round, I'm probably not going to have to do as much background prep. Obviously, I over-prepared for this interview.

[01:10:59] Morgan Housel: Looking forward. Jordan. This has been so much fun. Thanks for having me.

[01:11:03] Jordan Harbinger: If you're looking for another episode of The Jordan Harbinger Show to sink your teeth into, here's a trailer for another episode that I think you might enjoy.

[01:11:11] Scott Galloway: Most of the people, young people I deal with, envision themselves in kind of the top economic class, or at least aspire to it. Two basic rules — get certified and get to a city.

[01:11:21] Jordan Harbinger: I know, of course, most people want to be in the 1 percent. You know what, actually I take it back. I think now, most people want to be in the 0.1 percent. They just think that's what the 1 percent is.

[01:11:31] Scott Galloway: A hundred percent. A hundred percent. The myth of balance is a myth. And the other big myth is this notion that you should follow your passion. The notion that you should follow your passion is dangerous because most passion sectors are overinvested. If you want to open a nightclub, go to work for Vogue or play professional sports or music.

[01:11:50] Just recognize, you better get a great deal of psychic income from those things because the monetary income relative to your effort will be dramatically lower than other asset classes. Your job as a young person is not to follow your passion. It's to find out what you're good at and then invest the time, the grit, and the energy to become great at it.

[01:12:11] The accoutrements that follow being great at something — status, respect of your colleagues, money, access to better healthcare, the ability to take care of your parents and your kids, you will become passionate about whatever it is that lets you do those things. Happiness is love. Full stop. The depth and number of relationships across work, family, and friends is the best practice around happiness.

[01:12:38] Jordan Harbinger: Again, this is one of our most popular episodes. Scott has a bunch of great advice, whether you're young or old, and you want to live a rich and happy life, whether that means economics or not. And that's Episode 204 with Scott Galloway, solving the Algebra of Happiness here on The Jordan Harbinger Show. Check it out.

[01:12:54] Interesting what he said about fame. Actually, there's an anecdote in the book where fame, it seems like the flip side of money and wealth. Will Smith said, “Becoming famous is great. Being famous is a mixed bag. Losing fame is miserable.” That is quite fascinating. Will Smith seems like a really smart guy, although I don't know what the hell that slap thing was. I mean, imagine now your whole life is basically, you're known for that.

[01:13:24] Being famous when you are actually famous, it merely meets expectations. Like you are just the famous guy and whether people treat you as famous as you are, that kind of probably dictates your mood in a lot of ways. A tiny bit of fame creates a huge positive gap between your life now versus what you probably thought your life would be.

[01:13:45] I can kind of attest to that, right? It's real addicting. I see people all the time that dive into things like YouTube and they're getting all these comments and people know who they are, and they get recognized in certain places, and it's just intoxicating. For some people, they don't do so well with it.

[01:14:02] I, I've mentioned this on the show, my friend Shep Gordon, who was a rock manager for Alice Cooper and a bunch of other famous people, he flat out told me, “I've never met anyone in my career where fame didn't completely destroy them.” And Shep is not a dramatic guy. He's not a guy who has an agenda to stop people from getting famous.

[01:14:21] I mean, his job was to make people famous. He told me that it's just one of the worst things that can happen to you. And that changed the way that I look at all this stuff and I will never forget that lesson. Thank you, Shep. Another bit of wisdom from the book. Wealth is a two-part equation. One, what you have, two, what you expect or what you need.

[01:14:42] And I love this gem because what we do as humans, we focus on getting more instead of focusing on lowering or managing our expectations. But this doesn't really make sense, right? Because going and getting more, one, it's a bottomless pit. There's never enough. And it's also really, really hard. You trade your time, you trade your relationship with your wife and kids because you're at work all the time, whatever it is.

[01:15:05] But the ideal thing to do here is control the expectation side, right? Since the expectations side is so much more within our control, what we can do is manage or lower our expectations and say, yeah, maybe instead of wanting three houses, I just get one house that I'm kind of satisfied with and maybe I rent some nice stuff here and there.

[01:15:25] Go on vacations at nice places, but I don't need to own those things. Well, now you just saved yourself what, five, six million bucks because you don't need a beach house on each coast. I mean, that's a really, really good example of this. I know it's a little oversimplified, but it's a really good you.

[01:15:42] You might not have to eat fancy food every day. Maybe you just get satisfied with food that's good and healthy for you, and that's it. That's the kind of thing that could really be life changing. Now that's going to be easier said than done, right? Because what most people are going to want to do is control their expectations and then still go and get more.

[01:15:55] And then forget about the expectation stuff. Let those grow out of control and continue to get more. And I know that because that's kind of what happened to me for a few years, and it's a constant battle for me to manage expectations as opposed to just trying to get more. I still haven't given up on trying to get more, I'm just trying to rationalize a better way to go about it.

[01:16:15] All things Morgan Housel will be in the show notes at jordanharbinger.com or ask the AI chatbot on the website. Transcripts in the show notes, advertisers, deals, discount codes, ways to support the show. All at jordanharbinger.com/deals. Please consider supporting those who support the show.

[01:16:31] We've also got the newsletter, and every week the team and I dig into an older episode of the show. We dissect the lessons from it, the takeaways. So, if you're a fan of the show, you want to recap of important highlights and takeaways, or you just want to know what to listen to next, the newsletter is a great place to do that. jordanharbinger.com/news is where you can find it.

[01:16:49] Don't forget Six-Minute Networking, jordanharbinger.com/course. I'm @JordanHarbinger on Twitter and Instagram. LinkedIn as well is a great place to reach me.

[01:16:58] This show is created in association with PodcastOne. My team is Jen Harbinger, Jase Sanderson, Robert Fogarty, Millie Ocampo, Ian Baird, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for the show is you share it with friends, and you find something useful or interesting. The greatest compliment you can give us is to share the show with those you care about. If you know somebody who is interested in topics like this wealth, but not necessarily just the money stuff, some of the fame lessons we talked about today, definitely share this episode with them. In the meantime, I hope you apply what you hear on the show so you can live what you learn, and we'll see you next time.

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