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Welcome to the Knowledge Project, I'm your host, Shane Parrish, the curator behind Farnam Street, which is an online intellectual hub of interestingness. We cover topics like human misjudgment, decision making strategy and philosophy.


Knowledge Project allows me to interview amazing people from around the world to deconstruct why they're good at what they do. It's more conversation than prescription. On this episode, I'm proud to have Morgan Housel Morgan, a columnist at The Motley Fool and a former columnist of The Wall Street Journal. His work has also been published in Time, USA Today, World Affairs and Business Insider. I mean, you name it, he's been there. Simply put, he's one of the shining lights of the business press.


More than that, though, he's one of the few people that I read all the time. And as I've gotten to know him over the years, I can also tell you he's an exceptional person. I hope you enjoy this conversation as much as I did.


Before I get started, here's a quick word from our sponsor. This podcast is supported by Slark, a messaging app bringing all your team's communications into one place. CELAC integrates with other tools and services you already use, like Google Drive, Dropbox and more.


Visit Slocomb Furnham to create your team and get one hundred dollars in credits you can use if you decide to switch to a paid plan.


Morgan, thanks for coming on the show. You're one of the very few financial people, very few writers in general that I read all the time, and I have a hard time believing that.


Well, first, thank you, but you read so much. I have a hard time believing that.


I just don't read the same person all the time. Well, thanks. I'm happy to be here. Awesome.


So I've had a question I've always wanted to ask you, which is like what was your first job and how did you get into this space that you're in now? And maybe you can tell people a little bit about what you do.


Well, my first job wasn't very exciting, but I can I can move on from that. My first job, I was a host at Denny's and I worked there for a couple of weeks and I wasn't very excited about it. And then I moved on to I worked as a valet at a hotel in Lake Tahoe. It was it was a nice, fancy hotel in Lake Tahoe Valley. And I always thought even before I did, it would be the coolest job.


And it was it was such a cool job. So I started that in Tahoe and then I moved to Los Angeles. So I went to college. I kept doing that. So I was a valet for many years.


Is it true that people go enjoy rides from there? Yes. Yes, it's true. It's true. It's totally true. I mean, nothing nothing too. Nothing too bad. But if you come in in a nice car and you give it to a 20 year old, you know what's going to happen.


You know what the probabilities are. Right? Right, right.


But it was it was it was a it was a cool job. I really love doing that. But how I got interested in finance, I, I always knew that I wanted to go into finance. And when I look back, you know, when I was a teenager and I was excited about finance, I don't think I knew why. I think it was probably finance is attractive to a lot of to a lot of especially young men in their teenage years, because it has the impression of money and power and prestige.


And I think when I look back, that's what attracted me to it. And what's funny is that my current job now doesn't have a lot of that because I didn't really go into finance. I just sort of write about it. But when I was so all throughout college, my my point plan A, B and C was investment banking. That's what I wanted to do. That was I didn't have any that was what I was going to do.


I was going to be an investment banker and I got an investment banking internship in my junior year. And it was clear from day one, from the first hour of the first day that it was not going to be for me. Investment banking has just been incredibly intense, competitive, almost combative culture. That is the opposite of my personality. They had this saying that they told us on the first day and it was kind of a joke, but it wasn't.


And that was the culture. And investment banking was if you don't come in on Saturday, don't bother coming back on Sunday.


Oh, and it was just a really intense culture that wasn't it just didn't fit my personality. It works for some people. If you're just ultra type A and you just need the most intense work environment, that's good for some people. It wasn't good for me. So so then so after I ended that, after a couple of months, it was an internship. I got a job in private equity and I really enjoyed private equity because it's kind of, you know, you're kind of in the trenches digging deep into finance and researching companies and buying entire companies.


And and then you own the company outright. So you can you have a hand in its operations. I really enjoyed private equity, but this was the summer of 2007 and credit markets started blowing up all over the world. And when you are in a business like private equity, which requires you to borrow lots of money to buy companies and credit markets are blowing up, things got pretty tight. And they came to me and it was it was the funniest.


It was one of the funniest lines of my career. They came to me and they said, you're not fired, but you can't work here anymore.


And I said, OK, that's fair enough. I'm pretty sure that's called being laid off. But OK, fair enough. So I needed to do so. I need to find something else to do. I had I was one semester away from graduating college. I knew I wanted to go into finance, but I didn't know really what I wanted to do. And I had a friend who was a financial writer and he was writing for The Motley Fool at the time.


And he said, hey, you should you should come to this. You're interested in finance once you come to this. And I had never really written much of anything. I studied economics in college, which doesn't require a lot of writing. It's a lot of math and whatnot. So I had no writing background whatsoever, but I gave it a shot without thinking anything of it, thinking maybe I'll do this for six months until I find something else.


And that was nine years ago. And I just I just stuck with it. And I've been writing about finance ever since.


And you seem to love it. I mean, it comes across in your writing that you have a passion for it or you developed one, I guess, even if you didn't have one to start with.


You know, when I started doing it, there was no it wasn't like I'm passionate about this and I want to. It it was I'm going to try this and see how it goes, but instantly, once I started doing it, it was it was clear that I really did enjoy doing it. I think the writing is a great process for anybody in any field because it really helps you solidify your thoughts. I think in any field, no matter what it is, a lot of people have ideas in their head that they just can't really put their finger on.


They know it's there. They can kind of like feel the idea floating around, but they can't they just don't really know what it is. And if you sit down and force yourself to write about that topic, it things really start crystallizing and solidifying. And I've really found that true for there are a lot of topics that I think I have this idea about behavior or psychology or I can't really figure it out. And once I sit down and force myself to write it, then it's like, OK, that's that's what I meant to say.


So I think writing writing is a really good process for anyone in any field to go through.


Do you think writing about finance and not being a practitioner in the sense I get well, what are your personal investments? Do you do that still? Are you. Oh yeah.


Yes, I'm I'm an active investor most of mine. So how I invest is basically every month I dollar cost average into index funds. That's my that's the core of it. And then on top of that rarely. But it is a portion of my portfolio when I come across an individual stock that is attractive to me for whatever reason, then I'll buy that too. So I it's the core of my portfolio is index funds, but I still have some individual stocks on the side.


So I guess some people call that index.


Plus, do you think that the writing about the finance gives you a bit of an outsider's perspective, which gives you an advantage? I think there are two sides of it.


One is without a doubt, there are parts of the investing field that I don't understand because I'm not a practitioner, that someone who is a financial adviser or a mutual fund manager or a hedge fund manager could very rightly look at me and say, you don't understand X, Y and Z. And they're right about that because I'm sitting at the comfort of my desk from an outsider sort of Monday morning quarterbacking. That's absolutely true. There is another side that I think that this, I think is true for every field, too, that it is impossible to think objectively about a field that you that you get your paycheck from.


Right. And I think that's really true for a lot of money. Professional money managers, mutual fund managers, hedge fund managers that no matter how hard they try, it's very difficult to look objectively at your field. And that's where I think if there is an advantage that journalists and financial writers have, it's the ability to think a little more objectively about both the upsides and the downsides of the financial world. So it's balancing that advantage with the inevitable downside that, you know, it's impossible to understand what it's like to manage money for other people until you are actually in the trenches doing it.


So how do you define success for writing about finance? What for you? What are the measures that you kind of gauge?


I've always thought like there are there are three types of of writing, especially financial writing. There is just providing information, which is I guess what like Reuters and Bloomberg would do, just breaking news, just putting out the objective facts and the story. And then so that's one type a second type is sharing opinions, which is a lot of most of what's out there, where you're you know, there's some facts involved, but it's very clear that this is my opinion.


And some people might disagree with this, but this is my opinion. That's the second type. The third type of writing is I think when you are challenging the reader to think differently themselves where you are, you're not necessarily giving your opinion and you're not necessarily just giving facts, but you're just giving them a different framework to think about a topic. And that's that's always what I've what I've tried to do, whether successfully or not. That's what I've tried to do is rather than saying this is how I think about something or rather than saying here's some facts for you to think about, it's putting out a framework to say, here's a different way to think about this, but you need you need to go think about this yourself.


But here's a different way to think about it. So that's that's always the style of writing that I shoot for. And I guess that would be my measure of success. And it's I think it's extremely difficult to measure or quantify this. But at the end of the article, does the reader think about their own life, their own finances, their own investments differently than they did at the beginning of the article? One other thing that I think is that I try to do is I've always had this idea that if an article is relevant today, but not relevant tomorrow, then it's not relevant at all.


So if so, whenever I write an article at the litmus test, I try to ask is if somebody reads this article one year from now, will it still be relevant? And for a lot of articles, I think the answer is no, because it's had. The news based, it's what is the market do today, what did the market do this week? What did GDP do this quarter? And that's valuable. But I've always thought that the most valuable content comes from things that are more or less timeless.


So that's that's another measure that I try to hold myself against.


OK, I have so many questions to dive into this just a little bit like at the end, how do you distinguish like how do you get the feedback? The reader has a different framework for thinking now. Like, how do you know that somebody has thought about it? Is it like it's not something as simple as the number of shares? Is it the number of people who email you afterwards and say something, or is it just a gut feeling that you get or comment based or.


First thing I say is there's no good answer for that because it's extremely difficult. I do. Of course, I get feedback from readers through emails and comments, but you have to be careful with that because this is true for any like product reviews. You get huge skews between people who really like the article or people who really hate the article. Not a lot in between. I think feedback is only relevant if, like, a reader is forced to give it so you get the biggest, the widest swath of opinions.


But most feedback is going to be from the tiniest skews on either end. People saying, I love this article, it's great or you're an idiot. You have no idea what you're talking about. So the emails, the comments you get from readers can be valuable. But I think you have to take all of them inevitably with some grain of salt. And then we have lots of of meetings, conferences by The Motley Fool. So I meet a lot of our members and our readers face to face and was good, too.


I like about it, is that I really enjoy when people are brutally honest and people come up to you and say, hey, I really disagreed with this last article. I really didn't like when you said this. I really didn't like when, you know, I think you're missing this point. I really like that because I think there's a sense in person, especially people will say anything online, but in person there's a tendency for people to bite their tongues and say, you know, just be polite and be civil about it.


It's also true that in the comments section on articles, I think every writer blogger knows this tends to doesn't descend into it. Just it kind of it's a magnet for the lowest common denominator. But once in a while, you get some comments from people who are critical, but you read it and you're like a you know, this is actually I really appreciate this. This person pointed that out. They did it in a very civil and rational way and they pointed out how I was wrong.


But you know what? I need to step back and say you're right about this. So, I mean, to answer your question, it's it's extremely difficult to really know what you're doing as a writer. Are you are you changing people's opinions? Because even when you get feedback, you never know if it's if it's the full picture. And, you know, you can have an article that has tens of thousands of readers and you might get 20 emails from that.


So it's such a small sample size that you really don't know what you're getting. That, to me, I think has to be honest, has bothered me as a writer that you never really know exactly what you're doing. Whereas I think if you are, say, a doctor or an engineer, it's pretty easy to measure the impact of your work. And that as a writer has. And I think this is true for every writer. I think you're never going to fully know what you've done either, for better or worse.


So do you read all the comments on every article that you write or do you give it like five days and then kind of go through them and then forget about it?


I give I give every comment, a quick triage, and there's times where I can read the first sentence and say, OK, I'm done here.


So the second category that you had mentioned was kind of like sharing opinions.


And you know what came to mind for me there is how are we in a world of financial opinions and so much noise to distinguish between the people who know what they're talking about at a deep, fluent level and the people who just pretend to know what they're talking about.


I think the hardest thing with that is that everybody, to some extent suffers from confirmation bias. What do you believe today? And then you're going to go out and try to find someone who shares that view. And that is especially potent in the in the field of of opinion, whether it's political opinion or financial opinion. If you're bullish on the stock market, you can go out and find a qualified, credentialed, rational commentator who agrees with you. And in your mind, that is going to be the person who whose opinion you should listen to.


And I think this is true for a lot of psychological biases, that it's really difficult to understand that you yourself suffer from them. So everybody knows what confirmation bias is and they can tell you what it is. But I think most people would say, oh, well, that's something that other people suffer from. But I don't. Right. That's a really natural tendency. But I think everybody does. So everybody's opinion or I should say everyone's definition of whose opinion should you listen to is probably going to be.


Well, the person who who who I agree with. I think what I have I try to do, but it's incredibly difficult is to find for any topic whether it's politics or investing or whatnot. Find someone who you disagree with. But at the same time, you can say, OK, this person at least sounds rational. I disagree with their views, but I don't think this person is crazy. Once you find someone like that, I think you should cling to them with everything you have, because those are really going to be the people that can help change your views or really challenge your current views.


And there are people like that that I read about a lot about investing, whose opinions I don't agree with, but I can at least really respect them as an analyst, as a commentator. And when I respect them, I can say, OK, I don't agree with this, but I'm still going to read it and I'm really going to try to measure it against my views to see where there might be holes in my views that I can know, to see if there's something that I'm missing, that I can plug in your views and with mine to to make sure that I'm getting the fullest picture.


But I tell you something that is it's a very difficult thing to do, no matter what anyone says or how hard they try. It's it's incredibly difficult to take someone who you disagree with seriously. But I think you will see that trait among a lot of the best investors and the smartest thinkers is that they take people who disagree with them more seriously than people who do agree with them.


Who is that person for you? One is John Hussman. If you're if you're an investor, if you're an investor, you probably know who he is. He has been bearish on the stock market. So he's a mutual fund manager and he's been bearish on the stock market since 2009. And not only bearish, but betting against the market since 2009. And you can imagine what that has done to the performance of his fund. But at the same time, he is an incredibly smart guy who has some great insights about market history and market volatility and valuations, different ways to value the market.


He's you know, there are some bears. People were bearish on the market who you just read and you just say, well, you're you're crazy or you're just mixing your politics in with this or you're just ranting. You're the end of the world conspiracy theorists. But there are some people like John Hussman, who is bearish. But at the same time, it's like, you know, this guy might be on to something and maybe he's seven years early, which is indistinguishable from being wrong, I think.


But but still, when I read his stuff, it's like, you know, he's got to be on to something here. He has some some good data and some good thoughts that challenge how I view the market.


Do you remember reading something by one of these people who you read but you don't necessarily agree with, but you have some sort of deep respect for that. You changed your mind on an opinion you had and how that felt?


You know, it's something that I really liked there. There's an economist named David Rosenberg. He's he's pretty famous. He's like he's on TV a lot. And he's a really smart guy.


And he was very bearish on the economy. And I believe the stock market, 2009, 2010, until I think twenty eleven, twenty twelve. And I really disagreed with him back then. But then he came around. I don't know the exact date. I want to say he was probably twenty thirteen where he just kind of flipped the switch and, and more or less said, you know, I was wrong and now I'm bullish and I, I think a lot of there's a tendency to look at that and say flip flopper changed your mind, you're blowing with the wind.


But I also respect people who can do that, who can look, who can look objectively and say, you know what, I was probably wrong about this and I'm going to change my opinion. Change your mind when the facts change.


There is so little of that among economists and investors and pundits that when I see it, it's really refreshing. So that's someone who, you know, I have so much respect for him now and I'm willing to take his opinions more seriously now because I saw his ability to be intellectually flexible, which is which is a trait that is incredibly rare but extremely powerful and important among people who are analyzing the stock market economy.


It's hard enough to do that in the privacy of your own head, let alone, you know, coming out and sharing with the world that you were wrong and must be orders of magnitude harder to do that than just admitting to yourself, which is already a degree of difficulty that most of us would rather avoid.


Yeah, and I can't think of anyone who I can think of does. But I'm sure there are there are analysts and economists who cling to positions that they know are wrong. They know in their head are wrong. But because of their career liability, their professional reputation, they they don't want to change their mind out of fear of looking like a flip flopper or out of fear of admitting that they were wrong before. So they they cling to ideas that they know are probably not true.


Yeah, I think you're absolutely right.


I mean, there must be so much pressure and there's so much money involved and some of these ratings and recommendations that I can't imagine a system. It is non corrupt and somehow allows people to actually speak their mind and freely have opinions. Sure.


And if you're an analyst and you have a good job and a good salary and a mortgage and some kids in school, and you fear that changing your opinion is going to threaten your job, threaten your career, then no matter how how intellectually honest you want to be, you're going to make a decision that backs up your your personal conflicts. And I don't think you can. I think what's difficult is I don't know how much you can blame people for doing that.


You know, it's you we all want our analysts and our pundits and our commentators to be as intellectually honest as possible. But there is I think it's just a very real practical reality that the intersection between intellectual honesty and career stability, conflict furled for a lot of people. And so I think when I hear stories about people in these situations, I really feel for them. It's it's one thing to point at them and saying, well, you're being intellectually dishonest and you shouldn't you shouldn't do that, which is true.


That's that's the right thing to say. But I do have sympathy for people who really struggle with the balance between professional security and intellectual honesty. So speaking of learning from others, who's the best teacher you've ever had and why? This is probably a cliche answer, but I think Charlie Munger has done a better job than anyone alive at taking really complicated topics and explaining them in a way that is simple and entertaining. I think a few people have done it as well as he have and as he has.


And I think that is the biggest skill. The biggest benefit that you can do as a teacher is taking something complicated and explaining it in plain terms, and that it's such a rare trait, particularly among academics who are these are our teachers, literally our teachers. And I think there's such a tendency in academia to complicate and use bigger words than you need to in an attempt to come off as knowledgeable. But but in practical reality, you are not teaching as effectively as you can.


Then if you just explain things in simple terms, simple examples, and people like like Munger and Buffett have done that so incredibly well. I think someone else who has done that incredibly well in the world of finance is Jason Zweig of The Wall Street Journal, who has better than, I think any financial journalist in history taken the complexities and the volatility of financial markets and explain them in a way that anyone can understand. So he was incredibly helpful and influential to me early on when I was learning about finance, because I just felt like everything I read, it was simple and easy.


But at the end of it, it was there were so many of his columns and books that I read that at the end of it, it just fundamentally changed how I thought about the topic. But it didn't require me to really rack my brain about what is he saying here? What is I don't understand these words. It was presented so cleanly and simply that it's just easy to pick up instantly. So any time someone can take a complicated topic and explain it simply, I'm going to be a fan of that person and try to learn as much from that person as I can.


Well, that's what you're trying to do with your writing, right? How do you how do you hone your ability to do that?


This, I think, is cliche to everyone says, but the best writing is a simple writing. And there is so much tendency, especially among new young writers, to use the biggest words and the longest sentences that you possibly can. But what's strange about is that everyone knows the best writers over time, whether it was Mark Twain or Ernest Hemingway, use small words and small sentences, short phrases, quick, you know, seven words, sentences with simple words that a 10 year old can understand.


That's what makes the best writing. But it's it's so I think it's so hard to wrap your head around that concept as a writer and it's so easy to pretend and to convince yourself that you're going to gain more credibility by trying to sound smart. And, you know, if you look around at the best financial writers today, Josh Brown, Barry Ritholtz, Michael Baden, these are people, too, who use short sentences, small words, and just try to make it easy to understand.


And I think so much there's so many times when I read a white paper by a college professor, and you can tell by by reading the abstract, you're like there's some there's some cool data in this. There's some there's a big point here. But you start reading the paper and you just have to stop saying, what am I what what am I reading here? I don't I have to go back and read this paragraph four times to try to figure out what you're trying to say.


And I just find that so unfortunate. And the people who can add the most value to not only journalism, but just the most value to learning in general are the people who can kind of decipher the complicated research and explain it to anyone. And the litmus test that I always try to think about is would my mom understand this? And my mom, my mom's a smart lady, but she has no interest in finance whatsoever. So I always ask myself, like after I write a paragraph, would my mom get that?


And the answer a lot of times as no. And then he kind of try to go back and simplify it, but not simplify it in the way that you're taking away any of the essence of what you're trying to say. It just taking something complicated and explaining it in plain terms.


Switching gears a little bit, what does your typical day look like? Like what percentage of your time are you reading? Do you schedule time for digesting and kind of chewing on what you're reading or is it all moving from one task to the next?


So I think most writers I think there's even academic research on this. Most writers do most of their work and their best work, their best writing early in the day, early in the morning. And a lot of famous writers would wake up and head straight to the typewriter, straight to their computer and just start cranking out two hours of writing. I've never been like that. And so when I wake up, I read I read newspapers for maybe two hours and then I read some articles online.


I'm always on Twitter. Read research reports and anything I can get, so I read from the time I get up till about 4:00 in the afternoon and then most of my writing is done between about four and seven p.m. So that's kind of like my peak. That's when I do my bit. And I don't I don't really know why, but that's always maybe it takes me till 4:00 in the afternoon before my brain's awake and I can actually sit down and do some writing.


But and then the other thing is I walk a lot. I go for at least two, sometimes three walks during the day. And that's kind of my digestion time of what I read this what have I read lately and how can I tie it together? And always what's going through my head as a writer is what am I going to write about next? That's always like the struggle and the stress of someone who writes full time for a living is what am I going to write about next?


What's my next topic? So my digestion, when I go for a walk is just thinking about what have I read lately and how can I turn that into a topic for my next article? And it's tough. I think there's a a paradox in that most fields, the more you do it, the better you get in, the easier it gets. I think writing, especially writing about a single topic like investing. It's the other way around in that.


So I've written 30, 600 articles now.


So the low hanging fruit is long gone. And it's this weird thing that, like, the more you do it, the more experience you have, the harder it gets because because you start running out of ideas. So so I would say probably three years ago, like twenty, twelve, twenty thirteen was when it was easiest for me to think of ideas and it's gotten progressively harder for me. And that's made my walks when I'm digesting what I read more difficult.


You feel like you have to dig a little bit deeper and think a little bit harder about what to write next.


Do you have a specific process that you use when you're kind of digesting this material and trying to formulate an answer? Or is it just kind of churning it over in your mind?


What's definitely true, and I've heard this from other writers, too, is that when you say is that when you sit down and try to force yourself to think about a topic, you're never you're never going to get it.


If you sit down and say, OK, I need to think about something, what am I going to write? If you try to force your brain into that? It doesn't work. Where I think and I've heard this from other writers, too, I think you get your best ideas just randomly. You're walking through the grocery store, you're in the shower, you're just kind of zoning off. And then it's like, pop, you get an idea in your head and you're like, oh, I got to I got to go to my computer right now and write this like they just come to you kind of sporadically for specific ideas like that.


So I tried to not actively think in my head, what am I going to write about next? Even though that I need to think of a new topic, I try to push out the idea of actively thinking about a new topic. So instead I just try to think about what have I read lately and what does that what does that mean? What do I think about it? What's interesting, how can I tie it into something else that I've read lately?


What did I learn from this book that ties into something else I learned from this book without actively trying to think of a new topic, just trying to stay as curious as I can about the topic and hope that new ideas come to me naturally that way.


And are you always filtering the information that's coming into you? Are you getting rid of sources of information? And what's your process for that? Or is it always just kind of additive?


I think I think the few sources that I've gotten rid of that has happened very often. But the only times I think it has happened is when someone just becomes overtly political in their writing. That's something that I have almost no tolerance for, is mixing politics and investing. And there's a lot of it because the two fields are kind of cousins. Right. But that's something that I just see almost no good about mixing politics and investing. So those have been the only sources that I have cut loose.


But, you know, what I really enjoy are link aggregators for people who I trust. So people like the website Abnormal Returns. It's basically a link aggregator of, you know, this investor named TOTUS Vaikunta who reads maybe more than anybody and he links out every day to here are the ten most interesting articles he's read. Those people, I think, add tremendous value because they kind of serve as your filter. You know, TOTUS is not going to link to anything that is low quality or misleading here.


He has a very good filter himself. I love that.


So he kind of. Yeah, yeah. He's amazing.


So that is, I think a good way for people to have a filter is to is to pay good attention and use those sites as sort of their daily reading list. Josh Brown also does it. Barry Ritholtz does it. So that's a lot. And then I have other people, including Yushan, who are kind of use as my resource for books to buy. You are, I am convinced, read more books and just about anybody I know.


And I have I can't think of a time when you have written about or recommended a book that I was disappointed in. Maybe I haven't finished them all, but I've learned something from most all of them. So I think it's really important for anyone, whether you're doing this professionally or just your. Just you just interested in finance to have some filter and the best way to have a filter is to find someone who you trust and let them be your filter.


I think that's an interesting point, especially in the world of kind of algorithmic curation. And what you had just mentioned was people and you're trusting somebody to filter, disseminate that knowledge for you, contextualize it perhaps, and perhaps link it to something else. But you're actually trusting a person at the end of the day versus trusting a machine.


I mean, the amount of the amount of financial content that is published every day, for one, I think is orders of magnitudes more than it was even six or seven years ago. But I mean, it's just so much that there's no possible way that you can just jump blindly into the world of financial content and try to learn something. You're you're drinking from you're drinking from five firehoses if you try to do that.


So I think it's more important than ever and becoming more important to have some sort of curated filter in place for what you're doing. But this, again, sort of the devil's advocate about that as it gets back to confirmation bias. If you're only reading something from one person curated from one person, you're probably going to get a single point, you know, not necessarily a single point of view, because I think you and taught us do a good job of having a wide range of views.


But I think you and taught us also do a good job of making sure that those views come from qualified, rational, sane people try to do so.


What book would you say, like dramatically influence the way that you think? That's how big it doesn't have to be a finance book, but it's had a big effect on your life.


I think the three books. So there's there's a historian. He was he was sort of an amateur historian named Frederick Lewis Allen, who wrote three books. One is called The Big Change. One is called since yesterday, and the other is called only yesterday. And they are about how America changed from nineteen hundred to nineteen fifty, how it changed culturally and politically. So so all three books just kind of go through in incredible detail what life was like in America in the early 19th, hundreds in the 1920s, in the 1930s.


What was everyday life like, what was work life, what was politics like, what was culture like, what was food like and transportation like? And he wrote the books, I believe, in the 1940s and 1950s. So he was looking back, but still early enough that he really, you know, because he lived through these periods, he really understood it. And he is one of the best writers I think I've ever come across. And the book's just absolutely captivated me, just showing how different life was like, you know, not that long ago.


The 1930s were not that long ago. We still kind of think of that as recent history, but how incredibly different life was like during that period. And not only that, but how much life changed during that period. I think the difference in how life in America changed from nineteen hundred to 1950 was an order of magnitude greater than how it changed from 1950 to two thousand nine hundred nineteen fifty.


You had you pretty much started the century with horse and buggy and you by 1950, we're talking jets and the early stages of the space race. Just incredible change during that period. And it was just fascinating to see how people and businesses adapted to that change were during that period. Every year you just had monumental changes, whether it was the automobile or TV or electricity or the Great Depression and World War Two. And as he just explains in incredible detail how people adapted during that time.


So those three books are my three favorite books of all time and had a big influence on how I think about adaptation and change among just everyday life.


And do you read them or is it something you read once and you just chew on a lot or.


I think I've read both of them twice also. So I do all my reading in Kindle and I highlight passages that I think are interesting. So I have I'm constantly going back and reading stuff that I highlighted from those books, just little anecdotes, little facts, little short stories about what life was like back then. Do you find the second time you're reading?


Do you draw your attention to different things?


Yeah, I think that's definitely true. I think a lot of people I think really intense focus reading is difficult. And a lot of times when people are reading, they have something else in their head. They're zoning off, they're falling asleep in bed as they're reading. And because of that, yeah, when you go back through and read something a second time, I definitely find things that I didn't pay that much attention to the first time, because maybe the first time I read it, I was I was thinking about work or I was falling asleep in bed.


So, yeah, I'm definitely a fan of reading things again. And I'm definitely a fan of highlighting passages that you think are interesting that you can go back to and read a second time. And that, I think, is by far the biggest benefit of something like Kendall, that you can archive things much better than before. I like everybody, miss, holding a physical book and the smell of a book, but I'm I'm 100 percent Kindle now just because I can search and archive things so much better.


What's your process for kind of reading, I guess, and then going back and reviewing and kind of arc or not archiving, but organizing the information so that it becomes accessible when you need it?


So, you know, I tried Evernote for a while, which is I think a lot of voracious readers do kind of a way to archive their notes. I never. For what? For whatever reason, I never really got into it. So I don't have a structured process for going back and rereading things, books, books that I that I think I really got excited about the books that I finished through the last page, which is increasingly rare. Those I think most of those books maybe a year later, two years later, I'll read them again.


But, you know, just when I'm trying to think about something to write, just trying to spur thoughts in my head, I pretty frequently go back to books that I read in the last six months or the last year, and to see what I highlighted, to try to spur slides, spur some thinking. So I do that, but there's really no structure to it. I just kind of go back randomly and see what I read and what I highlighted in the past.


And there are lot of times, too, where I try to I remember reading something in a book, but I can't really remember exactly what it was. And that's when when I enjoy the ability to search on Kindle, I can just go in and say, you know, there's this topic. And I remember these words, these this name, this place and search for it and try to reread that specific thing. So so I do that quite a bit as well.


And you incorporate any other technology into that process, or is it it's all Kindle for, you know, all the time.


It's all Kindle all the time. I'm also I'm probably clinically obsessed with Twitter, probably to an unhealthy amount, but that's where I get so much of my when I'm reading articles or research reports. Almost all of those come from Twitter. Now, following people on Twitter who I do I trust that are going to be good sources that link to good content. So that's where a lot of my my daily reading comes from now. Yeah.


I want to switch gears a little bit here. I'm going to ask you some questions that I was that got emailed to me that readers want me to ask you that are more personal than I have typically gotten into.


But I think you're game for that, too.


Yeah, definitely. So what indulgences would you enjoy if there were no consequences?


That's that's an amazing question. I'm probably more I'm not confrontational whatsoever. I, I dread any sort of confrontation, whether it's at work or, you know, with a clerk at the checkout. I just I absolutely dread confrontation. And I were I wish I guess that. OK, so so here's one way to explain it. There's a hedge fund name called called Bridgewater. It's the largest hedge fund in the world. And they have a pretty firm rule there for employees that you have to be one hundred percent honest to everyone.


You cannot talk about people behind their back. If you're in a meeting and you need to say something about something, they call that person into the meeting and you need to say it to their face. It is just a culture of one hundred percent blunt force honesty with everybody. And, you know, it's it seems to work for them. But I just think in the real world, almost no one can do that. Everyone, to some extent, is biting their tongue to avoid confrontation, as I do a lot.


So I guess if there is one indulgence that I wish I could have, it would be the ability among myself and other people to just be brutally blunt force, honest with people, because I think people would learn and change so much faster and efficiently if we could do that.


But I just I mean, it's it's I think that's true, though, like I mean, the last time somebody was really bluntly honest with you with no kind of agenda.


Did you walk away from that changing or did you I mean, you might have, but I think most of us would become defensive and dismissive.


And I think there's there's obviously there's a difference between being honest and being rude. We have one there's one coworker here at The Motley Fool who I think has mastered this really well. The art of being honest, while not rude. And he will shoot down your ideas in two seconds, but he doesn't in a professional way that you are not offended by. Whereas I think other people, even if they know your idea is bad, they might just nod their head and say, OK, yeah, that's that's interesting.


We can we can talk about that. Whereas I have this coworker who will just instantly say, here's why you're wrong. Here's not what you think about. Here's why we're not going to do that. But he does it in such a clean, honest way. And I think he would tell you that he got that from his time in the army where there's really no room for B.S. if you're out on the field with your troops. He was a captain in the army.


There's no room for being polite or to be asked with people, it's here's the truth, here's what we're watching. Here's what we're going to do. Thank you. Goodbye. I wish there could be more of that in the world, but balanced in a way that people who are on the other side of that are not offended, just pointing out people's flaws and saying, hey, this is the reality of what we're doing right now. And here's something you should think about.


I think I definitely don't do that enough. And I think a lot of people don't. And you're absolutely right that you can take it too far and just start you start getting really defensive with people. But I think if you could do it in a way that is is just sticks to the facts without much opinion and doesn't in a way that is professional and courteous, that is such a huge benefit to how people learn and change. I think that's one of the reasons why Bridge Bridgewater, the hedge fund that Demand-side has been so successful.


Next question, would you rather be a big fish in a small pond or a small or small fish in a big pond?


And why? I would much rather be the big fish in the small pond. I, I used to write for The Wall Street Journal I to write a column for The Wall Street Journal that I think is in there. I was a very small fish in a big pond and it was more difficult, I think why I didn't like that. Well, I've nothing bad to say about my experience. The Wall Street Journal. It was a great experience and I really I really enjoy and respect the editors I worked with.


But it is very difficult to be yourself when you're a small fish in a big pond. It's much easier to, I guess, write your own ticket for lack of a better word, when you're the big fish in the small pond and to be yourself and to be unique and to stand out when you're the big fish in the small pond, you know, it's you know, there are there are benefits to being in the big pond. You have more leverage, maybe more resources, more help.


But I think the the key to success in so many fields is your ability to stand out. And I think you stand out when you're the big fish in the small pond. Maybe I'm wrong about that. But but that's that that's that's that's the answer that pops in my head the quickest.


I think that was it really insightful in the sense that you can live I'm paraphrasing here, but a more meaningful life because you can live more in line with the way that you really want to be if you're a big fish in a small pond versus. Yeah, the other. What qualities would you say are most important to have in friends and friends?


That's that's I think and this is true for spouses I see in relationships to is the ability to understand that people have bad days and say say things that they don't really mean, the ability to understand that people that everyone is human and everyone has emotions and everyone has the same ups and downs in life and that almost everyone you see on the street probably has something bad going on in their lives that you don't know. And that's true for your friends, too.


And so I guess I guess the trait that I would look for is empathy. I think that's one of the most important traits in work and life. And it's a rare trait that's that's hard to have. But the ability to look at someone going through a tough period and empathize with what they're going through, that to me is is probably the most important trait to have in friendships and with significant others as well. How do you develop that?


I think it's rare and I think it's one of like a lot of things that are kind of, you know, I'm loath to say that's something that you're born with because I don't think it is, but I think it's something that you have to get lucky with, that you had an upbringing that developed that whether it was parents who really forced empathy on you or it was some experience you had, like maybe when you were a kid, you had a friend who was maybe you were wealthy and you had a friend who was really poor and it really showed you how other people live in the world and it made you just empathize with their situation better.


I think it's difficult because most people, when they're growing up and learning and really developing these traits, are going to stick with them for life, sort of by default, surround themselves with people like them and the people in their same socioeconomic class, people who look like them and sound like them, people who work in the same jobs go to the same schools. And I think it's tough to develop a lot of empathy in that situation, because then when you find someone who is in a totally different situation from you, it doesn't make sense because your whole life you've been surrounded by people who are just like you.


And that is, I think, something that if you weren't raised with with a lot of diversity, I think it's hard to accept a lot of diversity later on in your life. Well, in so many ways, we're becoming less diverse.


Neighborhoods are becoming, you know, income specific. And you're not seeing the diversity you talk about in order to develop empathy.


So you end up losing touch with, I would say, reality for the vast majority of people.


If you're in one of the more fortunate areas and I think and this is something I think about as a as a new parent, you. Nobody wants to send their kids. Well, I don't. I was going to say no one wants to send their kids to a diverse school. They want to send their kids to a good school. And maybe that's the wrong way to put it, because, of course, I want my my new son to experience as much diversity as possible.


But I want him to go to a good school. I want him to go to the best school in town. And I think almost by default, when you start doing that, the best school in town is probably not going to be the most diverse school in town. You know, it might be the other way around that the most diverse school that he could go to is the worst school in the poorest neighborhood. But of course, I don't want him to do that.


So it's a big challenge, I think, to expose your kids to diversity while at the same time giving them the opportunities that that you want in life, something that I think I've really looked up to that I'd like to to to emulate with that with our new son. We have I have a coworker here at The Motley Fool whose son is, I think, 10 years old, and he's been to at least 30 countries and he's ten years old.


He's just this coworker is just constantly taking his is his whole family to all corners of the world and not not at five star hotels in London, but going to Oman and Saudi Arabia and Brazil and countries that most people don't take don't consider vacation destinations that I think if you can really pull that off. And so his son is 10 years old and has seen dozens of different cultures and different experiences. That I think is something that can only gain, can only teach you and gain you empathy later in life.


To tie this back to the original topic, we're talking about, anything else that you have in mind?


How are you planning on developing empathy in your son as a parent?


I think the what actually, here's a here's a side question to that is like, what things do you want to pass on to your son that you are crafting his life to try to develop?


I, I want him to understand that most people in the world do not live like he's going to live, which is to say anything about our quality of life. But he's he's going to grow up an educated white male in America. And I want him to understand from a very early age that 99 percent of the world is not that. And I think that's probably the most important thing that I want him to understand and to get back to to to try to teach them empathy about other people's situation, because I think that lack of empathy is the cause of a lot of problems in the world today, just one side not understanding the other side's point of view.


And you see I think you see that with Brexit recently, you see that with wealth inequality in the United States, it's just a more a greater segmentation of understanding among different socio economic groups. And it just causes kind of a close mindedness. No matter what segment you're in, whether you're in the top one percent or the bottom one percent, you don't understand the other side. And I think that leads to almost nothing but problems. And the more that I can open his eyes to different ways that the world lives, the better he'll be.


But again, the hard thing about that is I want to open his eyes to new cultures while at the same time giving him the best opportunities that I can. And those things sometimes conflict I want to send to the best school. But I want him to understand that not everyone who goes to the best school is going to come from the same background as everyone else. So it's a really tough thing. And I don't I don't I don't have the clearest roadmap, but I'm going to do the best I can.


Are there people you look up to as parents and try to learn from them in terms of like now you as a new father probably see the world differently.


Things as simple as putting food in your child's mouth has a whole different meaning than putting food in your own mouth.


I've been I've been surprised that our son is eight months old, is our first son, and I have been surprised at how news stories affect me now that one can have in the past anything involved with violence or terrorism or mass shootings affects me way more now than it would have eight months ago. So I think becoming a father has is just it's just made me more sympathetic and maybe just have a greater touch on life in general. Maybe that's kind of a philosophical kind of fluffy thing to say, but it's made me much more in touch with suffering and pain in the world.


I think whenever someone someone comes into your life that you love and want to protect and teach now, you become more understanding of how incredibly sad and and dangerous it is to put people in danger, whether it's something like terrorism or shooting. So that's just one observation of becoming a new dad, is that things like like mass shootings just affect me a lot more and just make me more emotional than they would have a. Months ago, has becoming a father changed how you live when you're not with your son?


Well, we don't sleep very much anymore. So I guess that and and the truth is, too, I don't I read probably half as much as I did before he came along. And of course, I want to trade him for anything, but I miss the amount of reading that I could do. There's no such thing as a Saturday sitting on the couch with a book anymore. It's I've I've I've other duties now, so I definitely miss that.


But I think it's probably this is I think almost every parent would say this, too. I think it's just made me more focused on priorities now, because as soon as you become a parent, it's not about you anymore. Everything is about the other person. So it's made me much more focus on what are our goals as a family and OK, no B.S. cut. The crap we got has got to go out and do that right now. Whatever it takes, we've got to go do it.


I think that's something that almost every parent would say.


Oh, it's awesome to questions left. I'm conscious of the time. Hear what's on your nightstand right now. What are you reading that you're liking?


So there's a book. So there's an author named Siddartha Mukherjee. He wrote the book called The Emperor of All Maladies, which was like the history of cancer. I think you won the Pulitzer Prize for it. He recently book he previously wrote a book called The Gene, which is the history of the gene. Oh, cool. And it's just fascinating. I mean, it sounds like kind of a boring topic, but it's a heat. I mean, he's he's one of the best science writers out there.


And that that's why his first book on cancer did so incredibly well. But he and this gets back to we were talking before he can take something incredibly complicated, like cancer or genetics and explain it in a way that anyone can understand without stripping out the essence or the complexity of the topic. So and so. I'm reading the book right now on the history of the gene, and it's just absolutely fascinating. And what's fascinating to me about it is how incredibly wrong the top scientists were about genetics.


One hundred or one hundred and fifty years ago and up until the mid eighteen hundreds, maybe the late eighteen hundreds around that time, just about the time that Darwinism started picking up. So, you know, not that long ago, maybe one hundred and fifty years ago, the main theory for how human creation works was that inside the sperm was a fully formed human that grew inside the uterus, that there was a fully formed miniature human inside of sperm that grew.


And that was the main scientific theory one hundred and fifty years ago. And it's just fascinating to me to see how incredibly wrong we were about something that's so important. And when I read something like that, what I start thinking about is what do we think today that we are that wrong about? Because there's problem. There probably is something that is that fundamental that we are that incredibly wrong about. And what what are we going to read? What is it going to be?


The book one hundred and fifty years from now that we are going to look back at and realize how that we were as wrong as we were about genetics one hundred and fifty years ago.


So insight into what that would be?


No, I think that's the impossible question to answer. But there is I think at every point in history, there has been something there have been two things, something that we were totally one hundred percent completely wrong about. And at the same time, a sense that we have figured everything out. And, you know, science, we figured out we figured out everything that's fundamental. Like those two things have always coexisted. And then so I think it's inevitable but impossible to answer that.


Twenty, fifty one hundred years from now, we will look back and say, can you believe that in twenty sixteen we believed x something fundamental about science that we will have. And I think in a way is that's what science is. It's just like a field of study that tries to break down things that we believe now, just through experiment in theory. What do we believe now? That is not true and how can we prove otherwise? That's kind of the basis upon science is.


So that, I think is fascinating. But I think it's almost by definition impossible to say what that might be today.


We're going to have to check that book. I'm fascinated by learning about genes right now. So it's great. OK, last question. What's on your bucket list? I was on my bucket list. I have and have had for a long time a burning desire to become financially independent. And I'm not I'm not quite there yet, but I have I have laid out how can I become totally financially independent so that I can spend my life just kind of reading and thinking and learning on my own time at my own free will, on on my own schedule, my own clock.


So I guess that's that's my ultimate bucket list is just getting to the point in life where I can just rely on only myself so that I can just be kind of a full time learner. And I think, Shane, you're pretty much at that point just just just a full time learner. So, you know, so I guess on my book. At least has become Shane Parrish. That's that's that's kind of where I want to get to. Oh, gosh.


Listen, this has been a fascinating conversation. Thank you so much for taking the time. Really appreciate it. We'll have to do it again. Thanks, Shane. This is fun.


Hey, guys, this is Shane again, just a few more things before we wrap up. You can find show notes at Farnam Street blog, dotcom slash podcast. That's fair. And S-T, our blog, dotcom slash podcast. You can also find information there on how to get a transcript.


And if you'd like to receive a weekly email from me filled with all sorts of brain food, go to Furnham Street blog, dotcom slash newsletter. This is all the good stuff I've found on the Web that week that I've read and shared with close friends, books I'm reading and so much more.


Thank you for listening.