Preet Bharara:

From Cafe and the Vox Media Podcast Network. Welcome to Stay Tuned. I’m Preet Bharara.

Morgan Housel:

It’s definitely going to be the case that there are a small subset of investors. The harder they try, the smarter they become, the better they’re going to do. But in my estimation, it’s probably something less than 5% of investors if that maybe 1% of investors will be able to consistently do it. And of course, we are always going to praise and admire those investors.

Preet Bharara:

That’s Morgan Housel. He’s a partner at the Collaborative Fund and the author of two bestselling books about finance and human nature. The first, The Psychology of Money has sold almost four million copies since its release in 2020. The second last month’s Same as Ever, was an instant bestseller and explores the things that never change. Housel joins me to discuss the reason for Warren Buffett’s success, the balance between risk and reward and why there isn’t such a thing as enough for some investors. That’s coming up, stay tuned.

Q&A

Now let’s get to your questions.

Patrick Moore:

Hi, my name is Patrick Moore. I am calling from Dallas, Texas where I teach government in a community college. I always hear these days, every time a judge is referred to, particularly in these Trump cases, the comment or mentions which party appointed the judge. So we are hypersensitive to who appointed these judges. It seems to me that that very fact of focusing on who appointed the judge diminishes the legitimacy of the judicial system. Do you think that’s an important thing and something that we should perhaps start trying to avoid if we can? Thank you very much. Enjoy the podcast. I appreciate your time.

Preet Bharara:

Thanks, Patrick. I think that’s a great question and a pretty keen observation. I think you’re correct that the frequency with which we refer to judges and point out the name of the president who appointed that judge is on the increase, I think that’s definitely so. The confirmation process and legal altercations have always been politicized to some degree, but I think more so in recent years. And one reason for this phenomenon that you’ve described in your question is that I think it’s been accelerated by Donald Trump. Five years ago it was Donald Trump himself who once denounced a judge who rejected an argument he was making in favor of his migrant asylum policy as an Obama judge. And though it was five years ago, you may remember the Chief Justice John Roberts actually addressed this issue. It was a rare moment when John Roberts entered the political fray outside of writing an opinion for the Court.

John Roberts said this to the Associated Press, “We do not have Obama judges or Trump judges, Bush judges or Clinton judges. What we have is an extraordinary group of dedicated judges doing their level best to do equal right to those appearing before them.” And then he said also, “The independent judiciary is something we should all be thankful for.” Trump responded in the tweet saying, “Sorry, chief Justice John Roberts, but you do indeed have Obama judges and they have a much different point of view than the people who are charged with the safety of our country.” I think John Roberts has something of a point, and I get it and I understand the principle that he’s talking about, that if you start to label judges by the presidents who appointed them, that perverts the system, it undermines faith and confidence in the independence of the judiciary. That all makes sense.

I will say though, that with respect to the Supreme Court, the designation of justices when you’re describing opinions and views of those justices and make references to the President who appointed them is the least unfair at all the levels of the judiciary. It just happens to be the case that in recent years in particular, both democratic presidents and Republican presidents appoint justices who are fairly clear in their ideology and their judicial philosophy and the way they will approach jurisprudence. And obviously as we’ve been discussing on the show for years now, you can’t predict with certainty how any particular justice is going to rule in any particular case, but there is an ideological leaning based on which president appointed that justice. That’s just the case. I think the reference to Obama judges or Trump judges or Biden or Bush judges is a bit more unfair when you talk about the appellate court.

And it’s quite unfair when you talk about the district court. Many, many, many district court judges, the first level of judiciary in this country on the federal system, the trial court judges are appointed as independent jurists. Often it’s the case, by the way, and I know this from my experience working on the Judiciary committee for Senator Chuck Schumer, judges appointed at the district court level are sometimes appointed at the recommendation of a senator from the opposite party of the sitting presidents. So there are Bush judges on the bench who are recommended by democratic senators and there are Obama judges on the bench who are recommended by Republican senators. So I think it’s most unfair when you use that appellation to talk about district court judges, least unfair when you refer to Supreme Court justices, but I think John Roberts makes an important point.

This question comes in an email from Callie who writes, “Hi Preet. Can you give us your reaction to what’s happened so far in Rudy Giuliani’s defamation trial?” Well, it’s very interesting to remind people this is a defamation trial in which Rudy Giuliani has been accused by two plaintiffs, a mother and a daughter, Ruby Freeman and Shaye Moss who were election workers in Georgia and Rudy Giuliani and other people falsely accused the mother and daughter team of manipulating ballots and cheating in the election in 2020. It’s notable by the way that the trial that’s underway right now in the District of Columbia is not about liability. The judge has already ruled based on various procedural defaults and discovery defaults by Rudy Giuliani and concessions that he and his lawyers have made that Rudy Giuliani is in fact liable for defamation and this trial is set for the purpose of deciding how much he has to pay both in compensatory damages and potential punitive damages.

So quite literally for Rudy Giuliani, this is an exercise in damage control. I can say off the bat that I think it’s not going to go well for Rudy Giuliani. You may remember the testimony during the January 6th committee’s hearings from Ruby Freeman and Shaye Moss, and I felt, and you may have felt too, that it was among the most compelling bits of testimony in the entire proceedings. These are two ordinary people trying to be good citizens, trying to help an election get underway and conclude fairly and honestly. And as they have detailed at trial so far, they were subject to menacing threats, psychic pain, and all sorts of other damage that was inflicted because Rudy Giuliani spread a lie about these women. If their courtroom testimony is anything like their testimony before the January 6th committee, I think the jury will find it compelling and the jury will likely not only want to find Rudy Giuliani liable for compensatory damages to give them money that would make them whole, although it’s probably impossible to make them whole.

They will also want to punish him with punitive damages to make sure he never does anything like this again specifically and also to generally deter anyone else from engaging in these kinds of lies that have real life damaging consequences for ordinary people. One notable thing I’ll say however, is that despite the fact that Giuliani and his lawyer had effectively conceded liability, and we’re just going to argue to the jury that the damages finding shouldn’t be too high, Giuliani outside of court told a reporter from ABC News, Terry Moran, that he actually stands by his false statements about the two women. As he left the courthouse this past Monday, Giuliani said unexpectedly, “Everything I said about them is true,” and also, “They were engaged in changing votes.” Well, you can imagine that didn’t sit well with the district court judge Beryl Howell, who said in fact that those comments that are made outside the courthouse on Monday, “Could support another defamation claim.”

And she asked Giuliani’s lawyer, how do you reconcile these comments? And generally speaking, lawyers are supposed to represent vigorously their clients and they don’t throw them under the bus. In this case, Giuliani’s lawyer, Joseph Sibley said, “I wasn’t there. I don’t know how that’s reconcilable.” So he could subject himself to another count of defamation. He could subject himself to sanctions in some sense depending on how he conducts himself, and he’s going to subject himself to bad cross-examination if he takes the stand. And finally this case I think reminds us of something incredibly important when we talk about the big lie and we talk about election interference.

We talk broadly in sweeping fashion about the harm to democracy, the harm to our institutions, the harm to our system, and that’s all correct and that’s all important to specify and to call out. But it’s also the case that the big lie in election interference and the activities of Donald Trump, and in this case Rudy Giuliani, has worked particular obscene real harm against individual people who are just trying to be good citizens in our democracy and they should be ashamed of themselves. I’ll be right back with my conversation with Morgan Housel.

THE INTERVIEW

Does money buy happiness? Morgan Housel knows the answer. He joins me to discuss some of the biggest questions about capital, risk, and economic strategy. Morgan Housel, welcome to the show.

Morgan Housel:

Preet, thanks so much for having me.

Preet Bharara:

I’m very excited to speak to you about so many things about money, about psychology, about success, but can we start with a very basic question, what is your job? Are you a writer? Are you an author? Are you an economist? Explain what you do.

Morgan Housel:

Yeah. I’ve been trying to answer that question for about 18 years now. I still know if I have a great answer to it, I’ll first tell you what, I am not. I’m not a financial advisor. I’m not an economist, I’m not a portfolio manager, I’m not a psychologist, I’m also not a journalist. I’ve always considered myself somebody who is very interested in investing and finance and who happens to write. Now, 10 years ago I would’ve told you that I was an investor who wrote, today I would say I’m a writer who invests. I think I’ve switched the priorities of it, but I’ve always just considered myself up in the grandstands, observing the world, trying to figure out what the heck is going on and then hopefully telling a story about it that will help transmit those learnings to the broadest audience that I can.

Preet Bharara:

So how did you get to the point where this is your life and your job?

Morgan Housel:

It’s a really interesting backstory. I think like a lot of careers, I did not intend for this to be my job. It was never part of the plan, there was no strategy. I intended to become an investment banker or a hedge fund manager, like many young college students in the early and mid-2000s, that was looked like the peak of prestige and power. That’s what I wanted to do. I graduated college in 2008, which of course was the great financial crisis, a very bad time to graduate as looking for a finance job. So I stumbled haphazardly across a job writing about stocks for The Motley Fool and I took it pretty because it was, I needed a paycheck. It wasn’t because it was my passion or what I love to do, it was one of the only finance jobs I could find that was hiring. And I thought I would do it for six months or so before I found another hedge fund job.

But it took a while, but I ended up falling in love with both the process of writing and the fact that I was an outsider, that I was not in the trenches so to speak. I was just observing what people were doing in the world and trying to make a little bit of sense of it. And I think there are disadvantages to being an outsider. You don’t fully understand the incentives and the emotions of being in the trenches so to speak. But I think there’s a lot of advantages to being an outsider because you don’t have to deal with a lot of the career incentives and biases that are going to impact anybody. And if I were a financial advisor or a portfolio manager, I know I would think very differently about things than I do today just because my incentives of what to believe would be so different.

Preet Bharara:

How often do you think it happens that someone takes a job just to get a paycheck, not in an industry or in a field that they’re in love with and then happens to fall in love with it?

Morgan Housel:

I think it’s probably pretty rare. I think it’s probably much more common that what you wanted to do in college and based off of your major is not what you end up falling in love with, but it usually takes two or three attempts to stumble into various jobs before you find that job that you actually like. I think it’s also very common, and I think this is a fault, it’s a very normal thing. I did this too, that when you are 20 or 21 in college, you become very idealistic about what you want to do and the passions that you’re going to have. And of course everyone’s going to change the world and save the planet.

And then once you become a little more adult, your priorities, particularly when you become married and maybe become a parent, your priorities change then of well actually look, that would be the idealized world, but I actually now have bills to pay and a family to support and more different incentives and whatnot. So I think it’s extremely rare that at age 18 when you pick your college major, that’s actually going to be the job that you’re doing when you’re 47.

Preet Bharara:

Yeah. This is a real-life issue within my own family, I have a son who just went to college at 18. He has a particular idea in mind and I don’t know that that’s going to stick. And particularly if you’re in the sciences, there’s a lot of incentive and pressure to pick the particular area you’re going to be in early because you have so many requirements to get through. So maybe I’ll have him talk to you at some point. Although are you a life coach, is one of your jobs’ life coach?

Morgan Housel:

Let’s add that to the resume just now. Let’s do it.

Preet Bharara:

So you have a new book, which I think is super interesting for a lot of reasons. It’s called Same as Ever: A Guide to What Never Changes, and I was thinking about a lot of the concepts in the book that I want to get into in a moment, but I thought I’d begin where you begin and ask you how this had an impact on you. You talk about a ski run that you never went on. Can you tell us about that?

Morgan Housel:

Yeah, so I grew up as a competitive ski racer in Lake Tahoe, California. That was my entire childhood teenage years. I was on the Squaw Valley ski team. We skied six days a week, 10 months a year all over the world and there were about 12 of us on the ski team who grew up together. We had been together since we were at children. In 2001 we were 17 years old and I was skiing with my two best friends, Brendan Allen and Brian Richmond, and we would pretty often during our skiing days, ski out of bounds, which you’re not supposed to do, it’s illegal. You have to duck under the ropes that say, “Do not cross,” but we did it. A lot of people do it because that’s where the amazing skiing is found. It’s untracked, you get the mountain to yourself and now when you ski out of bounds like that, there is no chairlift at the bottom.

So we would ski until it spit us out on this back country road and then we would hitchhike back and we had done this fairly often. We had been doing this since we were probably 14 years old, and so the three of us were doing this one day in February of 2001. As we were skiing down the backside of Squaw Valley, we triggered a very small avalanche. It was not that big of a deal. It came up to our knees about, it was over in a couple seconds, it felt like we were on a roller coaster. We all high-fived and at the bottom saying, “Oh man, did you see that avalanche?”

That was so cool, but we didn’t really think anything of it and we hitchhiked back to the base of the mountain and Brendan and Brian wanted to do the run again. They said, hey, that’s great, let’s go ski it again. For whatever reason, I said, “I don’t want to.” It was probably the hitchhiking that freaked me out more than anything. I always felt like we were on the verge of being kidnapped while we were doing this.

Preet Bharara:

But it was nothing about the close call. Did you feel like you had a close call or not?

Morgan Housel:

No, we never felt like it kind of came up to our knees and I remember because when you get hit by an avalanche, you suddenly have no control whatsoever about what you’re doing rather than pushing on the ground to gain traction with your skis. The ground is pushing you. It’s very similar to if you’re standing on the ground during an earthquake, it’s just getting bucked around. But it was fun at the time. I remember we put our hands up, we were like, woo-hoo, this is great. So we didn’t think anything of it. We get back down to the base of the mountain, Brendan and Brian wanted to do again. I didn’t. I said, “Hey guys, how about this? You go ski the run again and rather than hitchhiking back, I will drive my truck around and pick you up on the other side of the mountain.”

We said, great. We made our plans and we went our separate ways. I went back to get in my truck and about 30 minutes later I went to pick them up where I was supposed to meet them up and they were not there. At the time, I didn’t think anything of it. This was before we had cell phones and people were just very comfortable being out of touch during this period. So I didn’t think much of it and I went about my day. I figured they had already hitchhiked back. Several hours went on. Later that day, Brian’s mom called me at home and she said, “Brian never showed up for work today. Do you know where he is?” And I told her the truth. I said, we were skiing out of bounds and I was going to pick them up, but they never showed up and nobody’s seen them since.

And obviously when I phrased it verbally like that, both to Brian’s mom and to myself, we instantly, there was this oh shit moment of putting together what may have happened here. As the hours went on, we eventually got search and rescue involved. Search and rescue got on the mountain at about midnight. They had these giant portable floodlights and as soon as they entered the out of bounds area where we were skiing that day, they found the fresh scars of a massive avalanche that had clearly just occurred that day. One of the rescuers said, it looked like half the mountain had been torn away. And so they instantly knew this is where they need to be searching. About eight or nine hours later, the search dogs, the search and rescue dogs honed in on a spot in the avalanche field and rescuers who had these giant probe holes found Brendan and Brian buried under six feet of snow and they were dead of course.

And I always have to preface this when I tell the story of I’m sure, Preet, you and everyone else listening to this has lost somebody near and dear to them, the experience was not unique to me in that sense. It didn’t occur to me until a while later. But what was life-changing about this is the idea that if I had gone on that second run with them, I had a 100% chance I would die as well. I mean, this avalanche was so big, nobody could survive it, and therefore the most important decision that I ever made in my entire life was this decision to not go on the second run with them. And that decision was completely brainless. I didn’t do a risk analysis, I didn’t weigh the pros and cons, it was a dumb off the cuff decision to not do it and no other decision in my life.

Preet Bharara:

It seems like the lesson is just go about your day and don’t think too much. Is that the lesson?

Morgan Housel:

Well, to me, I use it as an example of how fragile the world is and let’s stop predicting that we know what’s going to happen in your individual life or in the entire world five or 10 years from now. Because the most important events in history hang by a thread. They’re not done by these massive events that you could have foreseen. At the macro level it’s things like Pearl Harbor, 9/11, COVID. The common denominator of which at least for the huge majority of ordinary people is nobody could have possibly seen these things coming. The world hangs by a thread.

Preet Bharara:

The world does hang by a thread. But if I can respectfully ask a question, you and your friends made the decision to ski out of bounds, so it wasn’t as if there wasn’t a warning not to do a particular thing. Does that figure into your analysis at all?

Morgan Housel:

No, I think that definitely makes sense. If you had asked us at the time, what are the consequences of the risks that we are taking, I would’ve said the consequences of skiing out of bounds means that we might get caught by the police. It means our coaches might yell at us. If you’re talking injury, it might mean that you blow out your ACL. Never in a million years did I think that the consequences of the risks that we were taking meant that we would die. That never crossed our minds. And I think you can almost make an analogy with COVID too.

Bill Gates gave a TED talk in 2015 where he said the biggest threat to society is a viral pandemic and we’re not prepared for it. So it’s not to say that nobody could have seen COVID coming, but the magnitude of it, I think even if you were someone like Bill Gates who was warning about these years before it happened, the magnitude of it shutting down the global economy for six months and 30 million Americans lose their jobs, something like that is extremely difficult to foresee how it’s going to play out in society. So even when you understand that what you are doing or facing is a risk, the magnitude of that risk is almost always easy to underestimate.

Preet Bharara:

Right. So people can assess risk, you can assess turning to the financial world for a moment that a risk of investing in a particular company may be significant because there’s volatility, but depending on what that company is, suppose it’s Lehman Brothers, the advanced knowledge or prediction that your investment could go to zero at a venerable financial institution is almost never predicted. Is that part of your point?

Morgan Housel:

I think it’s definitely the case. I mean, what are the biggest economic stories of the past 20 or twenty-five years? I would say it’s 9/11, Lehman Brothers and COVID and all of those things, particularly if you’re talking about Lehman Brothers, of course Lehman Brothers, their stock hit an all time high less than a year before it went bankrupt. So the idea that this was anyone could have seen this coming is a lot of hindsight bias in there. And you can take that a step further and say, what were some of the big venerable companies of 1999, General Motors, General Electric, Kodak, Sears, JCPenney, those are the big dominant winners in their field. And you can go back another generation and it’s a lot of companies that don’t even exist anymore.

And you can state without making a specific prediction here, but what are the big companies of today, Amazon, apple, Google, Microsoft, Facebook, if you’re a student of history, you know that 25 years from now, at least one of those companies is either going to be a shell of its former self or out of business, and you can state that just because that has always been the path throughout all of history, that’s how capitalism works. But if you were to say that today that Amazon or Apple or Microsoft might be out of business in 25 years, it sounds ridiculous. It sounds almost impossible, but that’s the whole history of not just financial markets but of geopolitics and medicine in all kinds of fields that the unthinkable happens fairly often, particularly if you’re looking at a long enough time period.

Preet Bharara:

So the premise of your book is in part that we should focus on the things that never change as opposed to trying to predict change if I am paraphrasing that correctly. And I want to read you an excerpt from your book, Same as Ever, and then get into it a little bit more deeply. You write, “I try to keep two things in mind in a world that’s vulnerable to chance and accident, one is highlighting this book’s premise to base predictions on how people behave rather than on specific events. Predicting what the world will look like 50 years from now is impossible, but predicting that people will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations and social persuasion in the same way is a bet I’d take. Forecasting events is hard because it’s easy to skip the question and then what end?” Can you elaborate on that?

Morgan Housel:

Well, if you’re talking about, and then what? Let me tie together a bunch of random events here that led to a big part of where we are today. September 11th, we have a terrorist attack of course, because of that, the Federal Reserve slashes interest rates because they were very concerned understandably about the economy being weakened. Because they slashed interest rates and kept them low for a little bit too long, we had a housing bubble that of course peaked around 2006, 2007, that leads to the financial crisis. The financial crisis leads to very weak unemployment and weak unemployment leads to a ton of people going to college and going into student debt because they couldn’t get jobs, that led to an increase of people going to college. Very few people on September 11th would say, this is going to lead to a boom in student debt. Nobody would make that connection, but it’s not hard to tie those things together.

And so the question of, and then what makes predictions very, very difficult. All these events compound in unfathomable ways. I mean, the most obvious is Archduke Ferdinand is assassinated, and next thing you know, you have World War I, which leads to World War II, which leads to the Cold War, which leads to the internet, which leads to you and I doing this podcast remotely right now. Nobody is tying those dots together in the moment, but in hindsight, they’re clear as day and that’s why predicting what’s going to happen. How is COVID going to change the future 20 years from now? I don’t think you or I have any idea, but if you are a student of history of how World War II led to different technologies, led to different geopolitical orders in ways that nobody could have foreseen, then it just gives you a little bit more humility of saying, because of x, y is going to happen.

Preet Bharara:

But part of why you engage in this analysis and part of what you’re write about, as you’ve said, is to give some picture about how people should be investing or how they do invest and what has value and what increases in value and what decreases in value. And you talk about some of the great investors. So if you can’t predict the, and then what, you can’t predict the event that’ll spark something, but you can rely on the fact that these basic features of humanity and human interaction remain the same, like greed, fear, opportunity, exploitation, et cetera. What does that tell you then about how you should invest? You park it in an index fund or something else?

Morgan Housel:

See I dollar cost average into index funds.

Preet Bharara:

I saw that and I’ve said on the show before, people have been listening for a long time, that’s what I do too, very conservatively. But if you’re trying to beat that market, how do you think about what stays the same? What never changes in your mind?

Morgan Housel:

Well, see since this is one of the reasons why I don’t, and it’s interesting that you use the word conservative for that investing strategy. If you and I maintain an index fund portfolio for 30 or 40 years, we’ll end up in the top 5% of all investors. That doesn’t sound conservative to me, that sounds incredible to me, but this is part of why I do it. When I invest in index funds and I hope to hold them for 30 to 50 years, I’m just making a bet on humanity, that humanity will be able to solve problems and become more productive and that productivity will accrue to me as an investor.

Preet Bharara:

And over the long term value always increases.

Morgan Housel:

No.

Preet Bharara:

That’s your bet.

Morgan Housel:

I think the odds are in your favor. I would not say always because there have been plenty of economies, whether it’s in Latin America or Europe in the 1940s that were wiped out. So because it’s happened to other people, we can’t say it’ll definitely never happen to us. It could. I just think the odds are in our favor.

Preet Bharara:

Right. So why do more people not engage in that, call it conservative or wise or long-term investment strategy. Is it because it’s not interesting? Is it because everyone’s looking to do better?

Morgan Housel:

I think it’s part intellectual stimulation. It’s just too boring for a lot of people to put their money in the next fund and then go find something else to do. That’s one reason. The other, I think more common reason is that investing is one of the only endeavors in life in which the correlation between effort and results is negative in almost anything else. If you want to become a good athlete, if you want to become a good student, you work harder and it’s a very clear payoff.

Preet Bharara:

Well, I know some portfolio managers and founders of hedge funds who would disagree with the respect to the effort that they put into their job.

Morgan Housel:

Well, see, it’s definitely going to be the case that there are a small subset of investors who are going to do for whom that is the case. The harder they try, the smarter they become, the better they’re going to do. But in my estimation, it’s probably something less than 5% of investors if that, maybe 1% of investors will be able to consistently do it. And of course, we are always going to praise and admire those investors, Buffett, Citadel, Renaissance Technologies, all these investors who have just absolutely clobbered the index over a multi-decade period. But in my mind, I don’t put that any different than talking about, I would equate Renaissance Technologies, which is the most successful hedge fund of all time to LeBron James or Michael Jordan, and nobody in their right mind would say, well, if LeBron James can score 35,000 points, I can too.

But they make that jump in investing. If Warren Buffett could do it, I can too. Buffett had said one time that he, in his entire life, and he’s been investing for 80 years, he has met 10 people in his estimation that he thinks can consistently outperform the market. And so it’s a big leap of faith to think that you are one of those people.

Preet Bharara:

What’s the key to Warren Buffett’s success? And I think in part you talk in the book about the power of compounding. Explain that.

Morgan Housel:

The biggest element just in mathematical terms of why Buffett has been so successful is that he has been investing consistently full-time since he’s 11 years old and he’s 92 today, and you could put this in very stark analytical terms, 99% of his net worth was accumulated after his 60th birthday, after he was 60 years old, 99% when he was 60 years old, he was worth about a billion, today he’s worth over a hundred billion. And so you can imagine this alternative world in which Buffett like a normal person would’ve retired in his fifties and sixties and moved to Florida and played golf, and in that situation you would’ve never heard of him. He never would’ve become a household name. The reason he’s successful is yes, he is a good investor of course, but the secret is that he’s been a good investor for eight decades and that is literally 99% of the success.

So in analytical terms, it’s that. And in terms of the strategy of how he’s done it, I think it’s two things. One, if you read his biography, which is a book called The Snowball, he has devoted 24 hours of his day for 80 years to one pursuit, which is picking the best stocks, picking the best businesses, and by the way, that is by and large come at the expense of a lot of other things in his life, his personal life, his overall happiness. It’s a fanatical pursuit of one thing that when I look at it, I so admire that people like him exist, and I think it’s amazing and I think the vast majority of people would not want that in our own lives, and I think it’s a very similar thing for Elon Musk, Steve Jobs, Thomas Edison, go on down the list.

It’s almost maniacal focus on one thing for a multi-decade period that leads to it. The other thing that I think is underappreciated about Warren Buffett is that the era in which he was doing most of his investing in from about the 1950s through the 1980s, which is when his big returns were generated, was a very unique period, and I think if Buffett were born 40 years later, he would not have had a fraction of the success that he did given the strategy that he was implementing.

Preet Bharara:

Well, you talk about this, that people’s perceptions about investment and the market can depend on which generation they’re from. I think you give the example of someone who’s born in 1970. I’m very close to that, born in 1968 and in my formative years I saw how much wealth was created by a lot of people or for a lot of people during the heady ’80s and ’90s, and if you were born 20 years earlier, you would have a different perception. Can you explain that?

Morgan Housel:

Yeah, so I mean, if you were born in 1950, then you came of age in your teens and twenties, your formidable years where you’re learning a baseline of knowledge. You came of age in the ’70s when the economy was garbage and the stock market was going nowhere to say nothing of Vietnam and race riots and everything else. You came of age and formed your worldview when the world was on fire, so to speak. If it was closer to your generation and you’re coming of age or in college in the ’80s, it’s morning in America, stock market’s going straight up, interest rates are going down, Cold War’s over things are looking great, and then if you’re my generation, I was born about 13 years after you, that’s a very different view too. I graduated college in 2008, the world was on fire.

My first news story that I paid attention to as an adult was September 11th, that was the first time I started paying attention to the news. And then so I think my generation, it’s easier for the entire generation to feel pessimistic about the world relative to your generation for whom just if you were paying attention as a young adult, it was much easier to say, this is actually pretty great. It’s not to say your generation didn’t have its challenges and whatnot, but every generation has a different view during their formative years that sticks with them for the rest of their life.

Preet Bharara:

Going back to Warren Buffett for a moment, it’s one clear lesson of that in terms of advice to ordinary people, start early, save early.

Morgan Housel:

Yeah, I think that’s the most applicable lesson you could take away from Buffett. I think a dangerous lesson to take away from Buffett would say, oh, let’s look at how he thinks about company valuation and whatnot and try to replicate his strategy, some people can do that. It’s more dangerous. The takeaway that ordinary people can take away from it is two things. One, it’s yes, it’s time horizon, start early and stay late in your investing years. The other thing that’s easier to overlook is how much of his success as an investor has been based off of his reputation of investors and regulators and policymakers really trusting him and giving him the leash that he needs to do what he wants. And he’s done that because he has put integrity at the top of everything he’s done since he’s been a child. I don’t think that’s, that’s not from a hagiography.

I think really that’s what he’s done and he’s so respected in the business community that he can take risks and back when he was running a hedge fund, raise money, hold onto that money in ways that other investors could not, and I think that’s another thing that is easy to overlook. Buffett makes this quip where he says, “Ben Franklin did not say honesty is the best morals.” He said, it’s the best policy, it’s the best thing for you to do. It’s not just a morality thing, it’s a thing that’s going to help your career as well. And I think no one in finance has taken that to heart and implemented it better than Buffett.

Preet Bharara:

Why is that? If this is a guy who almost uniquely put integrity at the top of the list of things, says honesty is the best policy and he happens to be one of the richest people in the world worth a hundred billion dollars, why isn’t the best policy to emulate a person for whom that’s the best policy?

Morgan Housel:

I think there is so much opportunity in financial markets to make money in the short-term if you are willing to cut corners, moral corners, regulatory corners, whatever it might be. The money that you can possibly make in the short term is enormous. And for a lot of people, it’s like the classic marshmallow test. If that marshmallow is put in front of them, hey, if I cut some corners and sell a product to a widow, an orphan that they don’t need, but I’m going to get a big bonus this quarter, then I think not just some, but the majority of people in that situation will say, that’s the thing.

I think what Buffett has done that’s pretty interesting is obviously he has massively maximized wealth over the long-term, but for a lot of these periods, it came by intentionally minimizing the returns that he could have earned in the short-term, and this is not just moral things. He’s talked a lot about before if he had used more leverage in Berkshire, Hathaway, Berkshire, Hathaway might be worth several trillion dollars today, but he intentionally did not because he was so concerned. Priority number one is keeping this thing going for as many decades as possible, and you are always going to intentionally sacrifice short-term returns while you’re doing that.

Preet Bharara:

So one could say that the story of Warren Buffett, as I hear you speak, is a little bit at odds with the opening story you told whose lesson might be Life is short, you don’t know how much time you have left, and not for bad reasons or immediate gratification reasons, but for just understanding how life is. You got to balance having things today versus having things not tomorrow, but 20, 30, 40 years, it’s a great aspiration to want to be in the market for 50 or six years, but you lost your two best friends at a young age because of an accident. Related to this, in your book, you talk about the difference between being rich and being wealthy. What is the right way to balance having a good life now with means versus having a good life or a satisfactory amount of wealth later?

Morgan Housel:

This is the answer that I’ll give you right now that it’s easy for me to say because I have two young kids, my kids are four and eight. If heaven forbid I were on my deathbed tomorrow, I would not have the slightest qualm whatsoever about the money that I have saved and invested and not spent because I would take so much pride and happiness knowing that my wife and kids are going to be okay without me. And to me right now at this phase of my life, it’s the most obvious thing in the world. Now, I do think there are people who are on their deathbed in their nineties and they’ve been super savers their entire life, and at that point they might look back and say, man, I wish I had lived a little bit. I wish I had seen Europe.

Preet Bharara:

Maybe I could have got a nicer car.

Morgan Housel:

Right. And I think this is a big problem for a lot of financial advisors of getting people in retirement to responsibly spend money. And once you have built up this identity on yourself of I am a saver, I’m an investor, it’s hard for a lot of people to switch that and spin it around. One metric rubric that I’ve heard recently that I loved is that a high-end Toyota is a nicer car than an entry-level BMW because the high-end Toyota is filled with things that actually make your life more pleasant, nice seats, a nice stereo system. The entry level BMW is just bragging rights, and if you want to talk about using money to give yourself a happier life, that’s the strategy that you want to go after, like spending your money on things that actually make your life more pleasant versus just try to is a status chasing endeavor of showing other people how much money you have.

I think when I think about the balance between saving and living a good life, I am more than happy to spend money on the equivalent, the proverbial high-end Toyota, and I am terrified at spending money on the proverbial entry-level BMW, where it’s just a status seeking endeavor. And so I think at the high level, that’s how I think about these things.

Preet Bharara:

Yeah, it’s very interesting because I have a parallel to that. In 2005, I bought the best version of the Honda Accord you could get that had bells and whistles, I couldn’t afford anything higher than that, and I still drive it 18 and a half years later, it’s in my driveway. Does that make me smart?

Morgan Housel:

I think the fact that you are okay doing that despite the career success that you’ve had is-

Preet Bharara:

Well, I might have another car too.

Morgan Housel:

Fair enough.

Preet Bharara:

More recently secured, but very, very recent. For 18 years, my principal car was the Honda Accord.

Morgan Housel:

But you strike me as somebody with what I know about you as someone who wants to gain your respect and admiration through your values, your morals, your wisdom, not through your car, so to speak. I bring that up because I think a lot of people, if not the majority of people, are the opposite. If they’re unable to gain respect and admiration and status through their humor, intelligence, wisdom, love, then the only lever that they have to pull to gain respect from others is, “Look at my car, look at my house, isn’t this amazing?”

Preet Bharara:

Yeah. I mean, there are people who talk about shopping therapy, right?

Morgan Housel:

Yeah. And because if that’s their identity of this is how I get other people’s respect is by showing them my clothes and my car, that I think a lot of times is actually covering up something of the fact that they’re unable to gain people’s respect through their love and humor and wisdom.

Preet Bharara:

I will be right back with Morgan Housel after this. In the other book you’ve written, The Psychology of Money, you talk about this concept of people not having any sense of enough, and I was delighted to see or interested to see that you specifically refer to two people who the Southern District of New York prosecuted a former member of the board of directors of Goldman Sachs, Rajat Gupta, and the greatest Ponzi schemer of all time Bernie Madoff. What did you mean? They had no sense of enough?

Morgan Housel:

Madoff is a really interesting character because a very overlooked part of the Madoff story is that back in the 1980s, Madoff was an extremely successful businessman from the legitimate part of his business. He was a very talented, one of the most talented market makers on Wall Street and made a ton of money doing it. And what is astounding to me about someone like Madoff is that despite that legitimate legal success, he ostensibly wanted more money so badly that he was willing to take the risk and start the Ponzi scheme that he did. That of course ruined everything, not just for other people, but for himself. And I make this point that, look, if you are broke and you have a starving child at home and you go out and rob a grocery store and you Preet can understand that kind of crime, and I would probably do something like that myself if I had to, but when you take somebody who is already drowning in success, drowning in money, and they still want more money so badly that they’re willing to take these risks, that’s astounding to me.

Preet Bharara:

What’s that about? What’s that about, sir? Because I’ve been asked this question for years and years and years. I mean, we prosecuted many, many people like this, the two that you mentioned, and many, many more people didn’t have just a hundred million dollars. People who are literally certifiable billionaires commit crimes that sent them to prison. How do you explain that? I’ve given various explanations over time, none of them are particularly satisfactory.

Morgan Housel:

There is probably a medical explanation here of just clinical psychopath beyond the pay grade of the things that I talk about with Gupta in particular. There’s this very interesting quote from one of his friends where he said, Raja Gupta hangs out with people who are worth a hundred million dollars, but he wants to hang out with billionaires. And that to me is never-

Preet Bharara:

Well, that’s the person he committed the crime with. Just to remind people, Roger Gupta was the head of McKinsey on the board of directors of Goldman Sachs. He engaged in insider trading scheme with Raj Rajaratnam, who was a billionaire and the head of a hedge fund called the Galleon Group. And in Raja Gupta’s mind, there was a big difference between his a hundred million dollars wealth and the billionaire. And that armchair psychologists may reasonably argue is a thing that caused him to destroy his career and spend time in prison.

Morgan Housel:

And I think this happens quite a bit. It’s just like social comparison has no ceiling. So even if Gupta is worth a hundred million dollars, which to you and me and everyone else is an extraordinary sum of money, I think in his mind he felt inferior and he was willing to take risks to get into that next social group. And by the way, I think there are billionaires who are chasing deca billionaires and deca billionaires who are chasing centibillionaires.

Preet Bharara:

And at the very top, literally when we’re talking about the richest people on the planet, there’s a little bit of a race to be number one.

Morgan Housel:

Yes. And not only that, but look at the personality of somebody like Musk who is worth a quarter of a trillion dollars, the richest man on the planet. But you can tell that he wakes up every morning tortured for wanting more, not necessarily more money, but maybe it’s more power, more influence, more prestige, more attention. Even the person who has more resources than anyone else in the history of humanity, you can still tell there is this constant yearning for more and more and more.

Preet Bharara:

That gets to the ultimate question that’s been lingering in this conversation the last few minutes. The age-old question, can money buy you happiness? And you have a theory on that, what is it?

Morgan Housel:

I think money can buy you contentedness, but that’s very different from happiness. Happiness is always fleeting. It’s always okay, you feel a moment of happiness, but no matter who you are, what you’re doing, it’s fleeting. Being content is a very different emotion, and I think having money done right if you are concerted about it can bring you a sense of being content with your career, but that’s very different from happiness. I think what money can bring a lot of people that is also worth chasing is independence and autonomy and just being able to do whatever the heck you want to do this morning. Even if what you want to do is wake up and go to work, doing it on your own terms without anyone else telling you what to do, when to do, with whom to do it with is a massive lifestyle boost. But it’s not happiness. It’s very different. And everybody knows that the new house, the new car, the new clothes will bring you a momentary burst of dopamine and happiness, but you’re going to get used to it very quickly.

Preet Bharara:

You can’t be happy all the time. Right? It’s like if you’re happy all the time, then how do you know you’re happy? Does that make any sense?

Morgan Housel:

Yeah.

Preet Bharara:

There have to be moments that are down. You appreciate things that you have because of loss.

Morgan Housel:

That’s right.

Preet Bharara:

And because there’s the possibility of loss and there’s actual loss.

Morgan Housel:

It’s always the contrast. I mean, it’s also in terms of getting used to things. If I tell you the funniest joke you’ve ever heard, you might laugh hysterically for 20 seconds, but then it’s over. And then if I keep telling you that joke over and over again, you’re going to get sick of it really quickly.

Preet Bharara:

Yes. Then we’ll stop being friends.

Morgan Housel:

That’s the equivalent of happiness. It’s like it’s a momentary burst, but if you’re looking for something more durable, you need to be seeking a different emotion.

Preet Bharara:

You’ve also written, I think that generally speaking, although you’re not a psychologist, you have the word psychology in one of your two books, that if you were generally unhappy before you had money, you’re going to probably be unhappy after you have money, and the reverse is also true. Do you stand by that?

Morgan Housel:

Yeah. I mean, there’s this really interesting related story that I heard recently, which was this ophthalmologist who performed miracle cataract surgery on this woman who had been blind her entire life. So she’s in, I think her fifties, and she’s been blind her entire adult life. She gets some miraculous surgery and boom, she can see for the first time in her adult life, you would think that would be this amazing celebration. But she comes back to her doctor a week or two later for a checkup, and she is distraught, and the doctor says, “What happened here?” And she said, “It’s too much for me to handle. I’ve been on disability for my entire life, and now that I can see, I’m expected to go get a job and it’s just overwhelming, I just can’t handle it.” And there’s another related story of a woman who got LASIK eye surgery and lost her glasses, and this too, you think would be great.

She doesn’t have to wear glasses anymore. She comes back to the doctor the next week and she’s distraught as well, and the same doctor, he says, “What’s going on here?” And she says, “I thought that if I lost my glasses, my husband would love me more. And he doesn’t,” and she’s distraught about that. So I think there is a lot of, you realize that if you are yearning for something and you think it’s going to change your life and then you actually achieve it, you’re going to be very disappointed with it once you do. And I think that happens with money as well, that particularly for young people, particularly young men, there is this almost obsessive yearning for more, if only I had more money, I would be happy.

All my problems would go away. And then once you get it, if you do get it, you realize that a lot of your problems were not caused by money. So if you’re an adult, maybe the problems in your life are related to your marriage, your health, your children, all three of those things are probably not going to be changed at all if you gain more money. And so if you are looking at it as the sole solution to your problems, then I think getting more money can actually be a negative aspect in your life because it removes the sense of hope that you had and it replaces it with discouragement.

Preet Bharara:

Yeah. I mean, it all comes down to, it seems to me a version of what you said earlier that what matters in connection with your relationship to money and wealth or professional success or anything else is how you’ve chosen to value your self-worth or measure your self-worth if it comes from your relationships or doing good things and having invested in your family principally. That’s one thing. If it comes from having your name in a headline or having the biggest house on the block, then that’s a different thing. And the question that arises is, do you have any view on, and I know you’re not a parenting expert either, although I’m sure you’re a terrific parent, how we make sure that people in our lives, whether we’re raising them or they’re friends of ours, fall into the first category rather than the second category.

Morgan Housel:

I had this conversation recently with a guy who’s about my age, who is the son of a billionaire, and he grew up as a billionaire with all the trappings of that life, the mansions, the private jets and everything. And we were having this conversation because he and his siblings grew up to be remarkably well-balanced down-to-earth adults, which is pretty rare for someone who’s grown up in that situation.

Preet Bharara:

We need to know that secret.

Morgan Housel:

Yes. I asked him What was the secret here? And he said, despite this success, and by the way, his father, who I will not name, made his money in finance money was never that big of a deal to them, and his parents just never made this idea that having more money makes you a superior person. It was never drilled into them. And this guy said, and I thought this was so astute, he said, “The reason so many rich kids grow up to be spoiled little brats is because the reason the parents were rich is because the parents were obsessed with money.” That’s why the parents were rich. But also it was that obsession with money that gave this idea to the kid that you measure yourself relative to other people based off of your net worth and the size of your house.

And as long as you don’t have that, as long as you are raising your kids to think that actually how you measure yourself relative to other people is your values and your integrity and how nice you are and your ability to help other people, if that is your value system, then even if the kids grow up with private jets and mansions, they can still grow up to be very well-balanced, well-rounded kids. Now, I do think there is a nature nurture component here. There is a lot that we can’t do. Some kids are going to be, if they grow up in that system, no matter what the parent tells them, are going to grow up to be spoiled little brats who view themselves as superior to other people. So I do think there is some that’s out of our control.

I often think about this idea that if you are a parent who has some financial means, is it your duty, if not just the right thing to do, to go out of your way to live a lesser materialistic life than you could just so that you are not setting unreasonable expectations for your kids. If you grew up wealthy and you raise your kids in a big house with nice cars and then your kid wants to be a kindergarten teacher, very noble profession, but they’re not going to make much money, then is kid going to feel inferior to your parents because she grew up in a big house, but now she’s living in a smaller apartment, and is that going to ruin her identity and her value in the world? That’s something that my wife and I debate back and forth of like, how do we want to raise our kids? There’s really no good answer here.

Preet Bharara:

Well, what often happens in that situation, not always depending on how much wealth the parents had, is that you still live a very good life. You live in a large home that’s given to you by your wealthy parents, and then you can still do good work and serve the public and be a teacher or something like that. So there’s not that often it’s the case with generational wealth, there’s not that trade-off.

Morgan Housel:

It’s difficult. I fully agree with you. It’s difficult too because so many adults want to look at their house and their car and then the state of their family and say, I did this. Not my parents did this, not my grandparents did this, I did this. And I do think you are taking away a little bit of a potential identity to your kids. If you are the wealthy parent who says, “Hey, you want to be a kindergarten teacher, no problem. I’ll buy you a nice house.” You’re removing some of that identity that I think can be a tragedy too. I have a good friend Chris Davis who is public about this, so I’m fine naming it.

His grandfather was a billionaire and one of the greatest investors of all time, and his grandfather told his kids and grandkids, you’re not going to see a penny of this because I am not going to rob you of the opportunity of earning your own money. And Chris now who is now in his sixties looks back and says, that was smart. That was the right thing because now Chris built this business himself and he can take the pride of ownership and having done it himself.

Preet Bharara:

Right, although just for the record, he didn’t fully do it himself because a million different advantages and privileges who doesn’t ignore it to him from the fact, from his name as a billionaire father, even if he didn’t write him a check for a billion dollars, right?

Morgan Housel:

A thousand percent, yes.

Preet Bharara:

I’m going to talk about a couple other things that you mentioned in one or both of your books, and one of them is the incompleteness of history. Because I hadn’t thought about it this way before. You write in your book, history knows three things, what’s been photographed, what someone wrote down or recorded, and three, the word spoken by people whom historians and journalists wanted to interview and who agreed to be interviewed. And you write all three suffer from misinterpretation, incompleteness, embellishment, lying, and selective memory. That’s very true, right? We spent a lot of time focusing on and lauding people who study history and focus on history as if when some decades have passed the historical record and the written histories of various fallible human beings with limited access to the full picture. We take it as gospel that that’s what the history was, but it’s not as you point out, what’s the lesson of that and what’s the consequence of that?

Morgan Housel:

I think it’s that, and look, I respect historians. I’m a big student of history myself, but I started thinking about this when I was reading a biography of FDR and when his presidential library opened, there’s an opening ceremony and he goes in there and he’s in there with a group of historians and he starts laughing and someone says, “Mr. President, what are you laughing about?” And he says, “I’m looking at all of the historians and journalists who think they are going to find the answers to their questions in this library.” And his point was like the most important things that he’s ever done, the most consequential decisions are things that were never written down. You’re not going to find them in his presidential library. And I think that’s true for so many things, particularly for the big consequential things of like if you’re making a very important decision about a war or an election and what you’re doing is shady, it’s not right.

You’re not going to write that down. You’re not going to give it to the historians. This is always the case to say nothing of 99.9% of history are ordinary, average people going about their day. Historians did not write it down, they were not in the newspaper. We record the actions and the statements of presidents and generals and entrepreneurs, but the average ordinary school teacher or plumber or average ordinary lawyer, their day is completely lost to history. So I think when you are a student of history, you are always learning about the big massive events, which is great, but that’s 0.01% of what actually happened in the world in terms of the interactions with people and studying how people interact with each other. It’s all kind of lost to this mundane black hole of what happened that was never recorded. And so I think what’s the takeaway? I think a lot of humanity is more complicated, more complex and more fragile than we make it out to be. Because what we are focusing on as our definition of “history” is these things that somebody wanted you to learn about for one reason or another.

Preet Bharara:

You’ve also commented on this debate, and it’s confusing to me, I don’t know how to think about it. So lots of experts talk about data and evidence and that’s how they make their decisions, but people also talk about stories and narratives and anecdotes. And someone once pointed out that Jeff Bezos has suggested that when anecdotes and data disagree, the anecdotes are usually right. And you’ve also said that subjective factors rather than numbers are often the key to understanding significant events. Talk about how we think about things when we focus on narrative and anecdotes rather than data. Because the experts say that the latter is where the meat is.

Morgan Housel:

I mean, there’s so much what happens in the world, particularly very big earth-shattering events that do not compute. They don’t add up. They’re not something that you could have just looked at a spreadsheet and figured out that this was going to happen. I use the example of Same as Ever of during the Battle of the Bulge. All of the U.S. during World War II, the U.S. planners and generals who are looking at this, never in a million years expected that the Germans, that the Nazis would launch a counter-attack because by all of military strategic thinking, it made no sense for them to do it. The weather was terrible, the geography was terrible. They didn’t have enough troops, they didn’t have enough energy, they didn’t have enough gas. So everyone on the allied size says there’s no way Hitler’s going to launch a counter-attack and then he did.

And because he did it when it was such a surprise, a lot of the reason it was so devastating for the allies is because they were completely taken aback. They were surprised. And there was this quote from Omar Bradley who was a U.S. general during the time, and he says, “We got everything right except for one variable that we overlooked, which was how detached from reality Hitler had become.” So this is not something that you could just look at the data and rationally come up with a rational answer about what’s going to happen next. What’s actually going to move the needle is the irrationality of other people. And I think that’s a broader analogy for how it happens in a lot of things with money and finance and in general where a lot of finance is taught like it’s a math-based field where if you just have the data and the spreadsheets and the formulas, it’ll give you an answer and you follow that answer.

And then step two, everybody’s rich. That’s how it’s taught. But how markets actually work is just a reflection of people’s insecurities and over-optimism and their egos all playing in this cauldron of financial markets that leads to booms and bubbles and busts that don’t make any rational sense whatsoever, but they happen over and over and over again. There’s also a long history in politics of people voting against their own wellbeing against something that should be well for them because the power and the influence of a tribal identity surpasses that of a calm rational decision on a spreadsheet. So if you are an analytical thinker who says, “As long as we have enough data, we can figure out what’s going to happen in the world.” I think you’re missing the biggest and most consequential events that happened in history, which are done by emotions and storytelling and tribal identity that often don’t make any sense on the spreadsheet if you’re just thinking about them analytically.

Preet Bharara:

Can we do an experiment or an exercise? I’m thinking about various things that we can predict are going to happen, and we don’t know exactly how it’s going to go, but is there investment advice or there things that people should think about as they’re investing given things that are either going to happen or likely to happen or that we know will always be the case? So for example, the rise of China or the advent of AI or the persistence of Trumpism, or work-from-home policies and the general trend towards working at home, even though the pandemic is fading, do any of those things trigger in you a focus on the things that are the same as ever that should guide how we think about investing?

Morgan Housel:

I think when you get that technical, that’s where things go astray for me, because you mentioned, for example, the rise of China. The best analogy for how people talk about China over the last 10 years is how they talked about Japan in the 1980s. And it’s also actually a perfect analogy as well, because what derailed Japan from this juggernaut that we thought it was into the slow middling world economy that it’s today was their demographics. Japan just has terrible demographics and all economic growth comes from either population growth or productivity growth. Once you remove population growth from that equation, the economy grinds to a halt. And that’s exactly to a T what is happening in China today. China’s demographics are completely, god-awful. They will lose 200 million working age population between now and 2050.

Preet Bharara:

So you are not bullish on China’s rise?

Morgan Housel:

I am not steadfastly bullish because you look at something like demographics alone and the headwind that that implies on it is massive. It’s not a little thing, there’s no history. There’s no country in all of humanity that has grown by any significant amount with a shrinking working age population. It’s never happened ever.

Preet Bharara:

So if there are investments in the longer term that correlate to in some way China not succeeding to the degree that is expected, that would be a wise bet given human nature and how things turn out often in your mind?

Morgan Housel:

Most of the developed world has very bad demographics, at least relative to what it was over the last a hundred years. So we don’t know what technology is going to change, but we do know that there are going to be fewer workers in a lot of these countries 20 years from now than there are today. So that is something that we do know because even if we started a new baby boom tomorrow, those new babies are not going to be workers for another 25 years. So we do have this window of insight into what’s going to happen in a lot of these countries, and it’s not great. Now of the developed nations around the world, the United States has about the best demographics relative to its peers that’s out there. It’s not as good as it was over the last a hundred years, but if you take something really fundamental to economic growth as demographics and you compare it to other industrialized nations, the U.S. comes out near the top.

Preet Bharara:

So we don’t know what AI is going to bring, what job displacement there’s going to be, but going back to that quote that I read from your book earlier, even though there’s so much uncertainty with the advent of artificial intelligence, we know that people will still respond to greed, fear, opportunity, exploitation, risk, et cetera. Talk about those things in light of AI, if you’ve given that some thought.

Morgan Housel:

I think it’s always the case with new technologies, whether it was the industrial Revolution or computers or now AI, that over a long period of time, those new technologies for the whole economy will create more employment. There’ll be more jobs over a period when that’s done. But for a given subset of the population for whom it is pushing out, there’s going to be protests. So in the industrial revolution, it was farmers who are now being put out of work by tractors, and in the ’90s it was travel agents and phone technicians who were being put out of work by the internet. So even if it is a benefit to society as a whole, there’s always going to be a pretty large subset that stomps their feet. And it’s interesting with AI now because now for whom that subset might be impacting the most are some of the most cherished, highly paid workers of the last generation.

Lawyers, programmers, financiers. Those are some of the people that AI might be the first people to put out of business or at least to substantially alter their workload. And so even if the economy as a whole becomes more productive and has more jobs, you’re going to take the princelings of the economy who have the highest incomes and the most prestige, and those are the people that might be at the biggest threat right now. That is pretty interesting to me, and I think over the next 20 years, it’s going to be incredible to see how that plays out. You can easily imagine the narrative in 2015 saying major in computer sciences, you’ll get a six figure job and job security for life.

You could easily see that 20 years from now being there’s not a lot of money to make in coding because ChatGPT can do all of it for you and can do it better and can do it for free. You can do it perfectly the first time. That’s not necessarily a prediction, but that’s something that I would not be surprised to see happen is just taking people who thought they had the most job security in the world and in a pretty short period of time, upending their careers in a profound way.

Preet Bharara:

All right, what stock should I buy?

Morgan Housel:

All the ones that are going to go up next.

Preet Bharara:

Oh yes, good. Spoken like a true blogger. Morgan Housel, thanks so much for being on the show. Check out the new book. It’s great. Same as Ever: A Guide to What Never Changes. My Conversation with Morgan Housel continues for members of the CAFE Insider community. In the bonus for Insiders, Housel and I talk about his experience with his own podcast and discuss his own backstory in some more depth.

Morgan Housel:

Way more people want to learn with their ears than with their eyes. And that was shocking to me because I learned with my eyes, I’m a reader. I’m not much of a podcast listener myself, but the market potential there for getting these ideas out to people in their ears is enormous. So that’s why I wanted to do it.

Preet Bharara:

To try out the membership for just $1 for a month, head to cafe.com/insider. Again, that’s cafe.com/insider.

BUTTON

Usually to end the show, I like to tell a positive or uplifting story often about someone doing good and bringing joy and cheer to other people. But this week I want to talk about something that’s the opposite, it’s something that’s happening in the state of Texas that to me and to millions of other people is depressing, demoralizing, and frankly disgusting. It’s the story of a woman named Kate Cox, a mother of two in Texas. She was around 20 weeks pregnant with her third, and sadly, she and her husband recently found out that the fetus has a fatal diagnosis, Trisomy 18. The pregnancy was threatening her life and fertility, and she needed to get an abortion. Now, in any ordinary, sane, medically sensitive environment, this is what should have been allowed to happen. But in the wake of Roe v. Wade being overturned, that is not what happened to this woman and her family.

Texas is one of 13 states that bans virtually all abortions though the state technically allows medical exemptions, doctors have argued that the vague and restrictive law allows little room for abortion care if any. Physicians won’t perform them out of fear because they could face serious criminal charges. So Cox filed a lawsuit for an emergency court order that would’ve allowed her to get an abortion in Texas. According to the suit, though she’s had several trips to the ER due to her complicated pregnancy, doctors told her that their hands were tied and they couldn’t perform an abortion. In a written statement, Cox said, “I do not want to continue the pain and suffering that has plagued this pregnancy. I do not want to put my body through the risks of continuing this pregnancy.”

A lower court ruled in favor of Cox, but Ken Paxton, the State Attorney General, appealed the ruling to the Texas Supreme Court, which in a devastating decision this week, overturned the lower court’s decision. They found that Cox’s condition did not pose the risks the exception requires. While the Texas Supreme Court was deciding her and her family’s future, Cox was able to leave the state to get the abortion she needed as Nancy Northup, the president and CEO of the Center for Reproductive rights pointed out, “While Kate had the ability to leave the state, most people do not. And a situation like this could be a death sentence.” We’ve talked a lot about Roe and Dobbs, and oftentimes when we focus on the law and the text, we talk about these decisions and the rights for women to control their own body as legal concepts. But the consequences of overturning Roe have been devastating to real individuals, real women, real families with real health crises in many parts of this country.

This is what the law does, it has real life and death consequences, and it’s important to never lose sight of that. Here’s a woman who just wants to do what is best for her and her family, and it’s difficult enough to deal with a complicated and dangerous pregnancy without turning it into a legal saga. Women and families deserve respect, they deserve autonomy, and they deserve so much more than what this court has done.

Well, that’s it for this episode of Stay Tuned. Thanks again to my guest, Morgan Housel. If you like what we do, rate and review the show on Apple Podcasts or wherever you listen. Every positive review helps new listeners find the show. Send me your questions about news, politics, and justice. Tweet them to me @PreetBharara with a hashtag #AskPreet. You can also now reach me on Threads or you can call and leave me a message at 669-247-7338. That’s 669-24-PREET. Or you can send an email to letters@cafe.com. Stay Tuned is presented by CAFE and the Vox Media Podcast Network. The executive producer is Tamara Sepper. The editorial producers are David Kurlander and Noa Azulai. The technical director is David Tatasciore. The audio producer is Nat Weiner, and the Cafe team is Matthew Billy, Jake Kaplan, and Claudia Hernández. I’m your host, Preet Bharara. Stay tuned.