Money Delusions: Barry Ritholtz on the Elusive Definition of Money and How Not to Invest It

[00:00:00] Hey guys, this is Justin. We're excited to announce the launch of a new podcast, Rabbit Hole, with Dave Nottig. In each episode, Dave will take a deep dive into a specific investing topic with a leading expert to get to the bottom of what investors need to understand about it. In this first episode, Dave sits down with Barry Ritholtz to discuss what we all need to know about money. If you want to keep receiving new episodes, you can subscribe to Rabbit Hole on all major podcast platforms. Thank you for listening. We hope you enjoy the new show.

[00:00:24] Dave Ritholtz Let me just give you a few things that money is not. It's not a store of value. It is a media of exchange. It is not the path to happiness. Someone once asked Munger, hey, were you and Warren just smarter than everybody else? He's like, no, we don't think we're smarter than everybody else. We're just less stupid. We've had a century of people telling us how to invest. And let's be honest, most people are pretty crappy investors.

[00:00:53] Bitcoin isn't a new asset class. It's not a currency. Think of it as a technology company somewhere between Google and Facebook. The market crashes, especially the bear markets that lasted a while, that shouldn't really have mattered to me very much, were the most terrifying. And the bear markets and the market crashes where I had the most at risk, where I had something to lose, I was completely blasé about.

[00:01:24] Welcome to Rabbit Hole. I'm Dave Nodig. I've got Barry Ritholtz with me. He's got a new book out, which we're not going to let him talk about till the very end. Barry, one of the themes of your book, How Not to Invest, is all the stuff that we get wrong. What do we get wrong about the idea of dollars? The dollars we earn, the dollars we save, the dollars we invest. What are we fundamentally getting wrong all the time? Money is a tool.

[00:01:48] It's not a tool. It's not a means to an end. It's not an end goal itself. It's not how we measure our success or failure. Let me just give you a few things that money is not. It's not a store of value. It is a media of exchange. It is not the path to happiness.

[00:02:04] I know across my lifetime, I went from broke to lower middle class to upper middle class to like, oh, okay, now I have enough money to do most of this crap I want to. And you change your perception along the way.

[00:02:18] What I've really learned, what money does do is it frees you up from first, you don't have to do the things you don't want to. You don't want to waste time on things you're not interested in. Money allows you to focus your effort, your time, your energy on what you want. And that is its greatest value.

[00:02:39] Let's dig a little bit deeper into that. You started out with money is not a store of value. Yet we built an entire society trying to get people to save it, right? If it's not a store of value, if it's not a store of power, as I often think about it, right? Having a million dollars in a bank account definitely lets you do stuff you can't do when that number is zero. Why do you say it's not a store of value?

[00:03:02] So if you have a million dollars, you should not have a million dollars in your bank account. You should be investing that money, not necessarily in the stock market, but certainly you should invest that money. You can invest that money in real estate, in starting a business, in yourself. Everybody who went to college made a huge investment of time, effort and money in themselves.

[00:03:29] But the point is you should never have a million dollars sitting around. Money does its best work when it's in motion, when it's operating on your behalf. Even something as silly as a bond portfolio, especially like munis today, you're getting the taxable equivalent. You're getting a million dollars throws off $35,000, $40,000 a year. So it has some value over and above inflation.

[00:03:55] Okay. That, to me, that's a problem with cash, which is different than talking about money, right? I wanted to dig into some of the sort of nittier, grittier stuff on this. Well, like Keens talks about money being an illusion. George Simmel talks about it being sort of this sort of absolute artificial thing that we chase. We've got, you know, Marx calls it, what did Marx call it? A fetish, like a sexual fetish nearly. Like people have weird emotional relationships with money.

[00:04:25] You're in the business of running a financial advisor firm, which is a lot about talking to people about money. What do people get wrong about their relationship with money? So there's really no one correct answer because everybody has a very different relationship with money. It depends on your specific history, how you grew up with it, what sort of traumas you have around money, whether you had too much money and have become complacent about it and don't recognize its value.

[00:04:54] It's really funny. Three, my family have three kids, right? I'm the oldest. My sister's three years younger than me. My brother's almost nine years younger than her. So we grew up in the same household. I kind of grew up, you know, lower middle class. I went to a state school, paid for it myself, paid for grad school. My sister, three years behind me, kind of went through more of a middle class upbringing. And my brother, way behind her, you know, we were doing well then.

[00:05:22] Dad was making money. Everything felt a lot looser. By then, I'm, you know, out of college and thinking about grad school. And it's funny because we each have a very different attitude with money due to our upbringing. I don't have the emotional bandwidth to balance a checkbook. I don't care. I have like a running total in my head.

[00:05:46] And I recall having a conversation when I was younger with, hey, you can't go through life spitballing checkbooks. And I kind of said, well, I better make some money because I don't want to bother with this. I don't want to think about, you know, I still have checks left. I should be good. But my sister, who grew up in like a slightly different class, I think she was solidly in that middle class, keep up with the Joneses sort of thing.

[00:06:13] And my brother, which is crazy because he grew up with the most amount of like the family was going on vacations and weren't driving old crap boxes. They were driving new cars and not wealthy, but, you know, solidly upper middle class. He's the guy with a million dollars in the bank because he's freaked out because I think the transition from being broke to having money very much affected him.

[00:06:39] How you experienced it growing up, it really has a big impact on your relationship with it. And that is pure emotionality. It is pure, just very, you know, primal level. You know, am I safe? Do I have enough to eat? Can I get new clothes? Can I do what I want? That whole hierarchy of needs as you work your way up it, as you go from lower income to middle income to upper middle income, all those things change.

[00:07:08] Do human beings, particularly sort of Western American type human beings, have a very similar pathway as they go from younger to older? And what can we learn from that? So the standard answer, which is technically correct, but I don't know how useful it is, is we go through three phases of accumulation, maintenance and distribution. That's the textbook answer. When you're young, you trade your time for money and experience.

[00:07:36] As you get a little older and have some expertise, you start making a little more money. Now you actually have cash at risk. You have a 401k, may have a mortgage. And then as you get older, you move from that maintenance era to the distribution era where you're drawing down money in retirement, philanthropy, wealth transfer, et cetera. That's technically accurate. But I came to realize that, and that was kind of a funny realization.

[00:08:04] Then it kind of dawned on me. You know, I started on a trading desk in the mid nineties. I had switched careers, so I didn't have a 401k. By the time we rolled around to the dot-com implosion in 2000, maybe my wife's 403b was 10 grand. I don't think we had even bought our first house by then. And when that crash happened, it was, you know, it was kind of horrifying.

[00:08:30] A decade later, coming out of the GFC, I had some 401k. Her 403b was no longer tiny, but it still was like a very impactful thing. By the time a decade rolls around and we go to the COVID crash in Q1, I was fully invested. I had a funded 401k. Not only that, but I'm the biggest owner in Ritholtz Wealth Management, and you're a couple of billion dollars in assets.

[00:08:59] That's a real asset tied directly to the market. And the funny realization was, you know, as you grow and mature and go through life experiences, hopefully you pick a few things up along the way. And one of those things is everything is a cycle. You've seen this movie before. You know how it ends. The Solomonic phrase, this too shall pass, is very much in your head.

[00:09:24] And so the shock was the crash where I had the most at risk mattered. It was just like, yeah, this is what happens. Oh, is this a surprise? You know, markets go up and down. It's not just one way. Is some of that just endowment effect that, you know, when you're younger and you've got $10,000 in the market, $10,000 matters a lot more on a sort of almost on a denominator blindness basis, right? It's like it actually matters more when you got nothing.

[00:09:52] If you've already got a $10 million portfolio, losing $5 million may seem like an awful thing, but you still have $5 million. You know, that sounds like it's rational. I think you're, especially when you're younger, you're probably more at risk for your income and your career than what's actually happening in the market.

[00:10:16] And when you're older, yeah, you understand the cycle a little bit, but the cycle and how temporary these things tend to be. But you also become a little more self-confident in your own skills to navigate this and more secure in where you are professionally. So I think that is a big part of it. My wife and I were joking about how broke we were when we were first married. She's like, I thought I was marrying a lawyer.

[00:10:43] You declared you're going to switch careers a few years later. All right. It all worked out. It's all fine. But when you're in your 20s and 30s and you have no idea if your career will work out and how it'll work out, the stress of not knowing is really substantial. And the best part about launching our own firm and having a sense of agency and control is that you're no longer subject to the whims of third parties.

[00:11:12] It's more than just freedom. Money buys freedom. Hopefully it buys a degree of agency where I just told a story the other day about when I was an attorney, I got assigned something on a Friday afternoon. I have to have this Monday morning at 8 a.m. Kills my weekend. I bust my ass. Turns out that having really good research skills is not an asset in a law firm. Someone hunted me down and like, where else can find that crap?

[00:11:40] And so I handed the assignment in on a Monday morning and then don't see that lawyer for like two weeks. And when I finally bump into her again, hey, I didn't get any feedback on the piece. How did it go? Oh, I haven't read it yet. And that's just a debilitating sensation of, oh, I'm her bitch. I didn't realize that. I am just a, you know, a grunt worker and the lowest rung of the totem pole.

[00:12:07] And I have to rethink my career because I can't do this crap. But that kind of lack of agency is how I think a lot of people feel about not so much money, but the dollar. Like specifically as an American investing in American dollars and American markets, getting paid in American dollars.

[00:12:25] I think a lot of folks, a lot of investors feel like a lot of this is out of their control because they read all the headlines about what the Fed is doing and we're printing too much money and now we're going to save all this money. Do we get too caught up in what these externalities are? Because there's only so much we can do about them, both as just individuals and as investors. So I have three answers to this, a glib one, a snarky one and a thoughtful one.

[00:12:54] OK, what's the glib one, which I used to do when I was giving presentations where someone always says, class, isn't the fiat dollar collapsing? Isn't it going to be worthless? And the answer is always send me all of your worthless dollars for proper disposal. I will I will take care of making sure they are disposed correctly. Exactly. So that's the glib answer. The snarky answer is, what are your other options? You're going to go to the euro. Hey, go buy some Chinese one.

[00:13:21] And if that's too risky for you, perhaps the Russian ruble is where you want to you want to get paid in that. If you want to say it's the cleanest shirt in the hamper. I think that's wrong. The United States. Has a number of economic advantages over the rest of the world, and there's a reason why we enjoy this exorbitant privilege. Hey, you know, it's not that a recession is imminent, but I had written a piece a week before saying, just tune out all this noise.

[00:13:50] This is all garbage. And I woke up on Sunday morning thinking, I don't want anyone thinking I'm too blasé. So here are areas where risks are rising. And one of the areas was the collapse of the dollar is still at this moment highly unlikely. But the probabilities of that happening have ticked up a little bit and you should be aware of it. The last answer to the question is, what is a dollar's purpose as a medium of exchange?

[00:14:18] You trade your hours and experience for money. When you're young, you're trading your time and your effort. When you're older, you're trading your hours and your expertise and you get an exchange cash. It's a medium of exchange and it needs to be a store of value for the very short time between when I get paid and when I pay my mortgage or rent.

[00:14:42] If you're a renter, buy food, enjoy travel and entertainment, invest in my business, invest in the market. And it does that splendidly. And normally, you know, just a perfect example. We've been shopping for a vacation property for a couple of years and I've been putting money in a money market fund because all I wanted to do was have liquid cash that wasn't falling behind inflation.

[00:15:10] And for most of the past five years, it did that. Even with this inflation spike, I'm still effectively ahead of where I would have been had I just left that sitting around in dollar bills. So inflation is really the major reason why it's not a store of value then. I mean, if you imagined a world where there was, for some reason, structurally zero inflation. But like in that world, would we then not worry about these things and we could say, no, no, no, just holding cash is great? Well, here's where the psychology is so fascinating.

[00:15:40] When you have a zero inflation world or worse, a deflationary world, it's not everything is flat zero. Some stuff is going up. Some stuff is going down. What tends to happen are the things where there are economies of scale, the prices fall. And in a zero inflation world, they tend to fall faster than other prices rise. And so you run into the risk that the consumer is going to say, why do I want to buy this today if it's going to be cheaper tomorrow?

[00:16:08] And so suddenly you're in this negative economic spiral. Yeah. So there should be some modest amount of inflation seems to be reasonably healthy. When we're talking about inflation, what we're really talking about is the loss of purchasing power. Right. That's really how the consumer interacts with that. But when you go out and buy money, buy something today, you're not spending $19.25. You're spending $20.25.

[00:16:35] And this is a variation of denominator blindness where you're just looking at half the equation. Really, this is more of a framing issue. Hey, if the dollar has fallen that much, how much have wages increased over the same period? It's double entry bookkeeping. If you're concerned about purchasing power, what happened with your earning power? And once you look at it that way, you're better off today.

[00:17:02] You can purchase more goods, more services beyond mere survival today with a median income than you could have done a century ago to say nothing of the quality of life and the health advantages today versus a century. Isn't this just sort of the Keynesian money illusion that we all think in terms of nominal terms, not the real terms? I mean, that's basically saying the same thing.

[00:17:27] So I'll start with an anecdote and then I'll explain it. I have a very vivid recollection of the 2000s leading into the financial crisis. Housing peaked in 05 in volume and 06 in price, unless I have that backwards. And I have a vivid recollection of speaking to people in 08, 09, 2010.

[00:17:51] Hey, Bob down the street has the same model house as me and he got 700,000. Why can't I get 700,000? My answer was always, you can get a time machine and go back to 04. You get 700,000. But now following what happened, your house is 450. There was an excess of credit available. The underlying basic philosophy of credit used to be the borrower's ability to service that debt.

[00:18:19] And it very briefly for less than five or six years became the lender's ability to sell it to a securitizer. So who cares if they can pay the debt? And that obviously didn't work out so well. But it just goes to show you the psychology behind how people are stuck in the past. Always. Consumers, buyers, sellers are always stuck in the past. And mentally, we're always a little behind the curve. There's a great Paul Graham quote.

[00:18:49] When experts are wrong, it's because they're experts on an earlier version of the world. And that's really a brilliant insight. But let's extrapolate that bigger. All of us have a view of the world, whether we're an expert or not. And that view was foundationally formed in the past. And so what Keynes called the money illusion is, to me, really just the fact that we are traversing through time.

[00:19:18] And the gray matter between our ears is filled with experiences that, by definition, are old. In fact, you and I had a conversation a couple of years ago where what you're seeing right now, because of the 200 milliseconds it takes to get passed back to your brain, and then the whole processing, you're looking at immediate history. You're not seeing the world. And that's just like a small example.

[00:19:48] We created our very cognitively expensive models of the world in our past because we are not time travelers. So what does that tell us about the future then? Because, first of all, I completely agree with you. I'm always saying that the past is an illusion, and the only thing we can do about the future is tell a story about it in the present. The past is filled with rosy nostalgia and our best versions of ourselves, younger, handsomer, stronger, faster.

[00:20:16] And the future is completely framed by so much wishful thinking. Yes. That all of these things are cognitive creations. Arguably, time is a human construct. There is no past. There is no future. There is only the immediate here and now, albeit on your 200 millisecond delay. All right. So let's get into some actual core investing stuff about money right now. If you read on financial Twitter or if you're all involved in crypto,

[00:20:46] the issue of money and what money is comes up all the time. All the anti-fiat stuff and Bitcoin is the new money. As we're sitting here right now today with all of the actions that may or may not actually come to fruition from the current administration, all the stuff we know is happening geopolitically and globally with the rise of things like AI and crypto, which add both opportunity and lots of variability into potential outcomes.

[00:21:12] What should we be ignoring about our ideas about money that may have been true in the past that are definitely not going to be true in the future? You're not going to love my answer, but it's I have no idea. That's the best answer. All right. I have some 30,000 foot data on consumer spending and all the happiness studies. And there's that's a whole nother conversation.

[00:21:37] And then I have lots of anecdotes, but I've been doing analytical research on markets in the economy and human behavior and investing long enough that I don't want to assume that I understand all the variations that people have. Now, there is the flip side of the question is what's consistent, what's never changed.

[00:21:58] And what I always find amusing, it doesn't matter whether it's the dollar or Bitcoin or gold, they're always surrounded by a narrative. And that narrative persists until it's either disproven or sort of falls out of favor. And then the narrative rotates. Let's use Bitcoin since you brought it up as an example.

[00:22:20] So the Satoshi paper comes out a year or so after the first iPhone comes out, and then Bitcoin starts trading a year after that in the immediate aftermath of the financial crisis. And the takeaway is we can't trust governments. We can't trust Wall Street. We need a currency that is and a medium of exchange that's independent of any sovereign nation or any central bank that's manipulating it.

[00:22:50] All right. That's a pretty compelling story until you start looking at actual Bitcoins and how insecure it is and how crazy this back in 2010, 2011, 2012. Like, I love these charts. If you would have bought Bitcoin 15 years ago, here's what it's worth. All right. Now explain to me the guy who lost $100 million because he can't find his password. So all the numbers were always misleading. So it went from that to now it's private and nobody can track that.

[00:23:18] Eventually, when a few people got arrested, the FBI has figured out how to track it. That narrative changed and it rotated. We went from narrative after narrative. It's this is deflation. Bitcoin is a hedge. Then it's inflation. Bitcoin is a hedge. And then once the world of finance started to adopt it, hey, you have to own this because this is going to be embraced by finance.

[00:23:40] And so we've had, I don't know, a dozen different narratives over 15 years, all of which have eventually kind of fallen out of favor. And the latest one seems to have some stickiness, but I feel like every previous one did. I have repeatedly told clients and I have said this, it's in the book. Bitcoin isn't a new asset class. It's not a currency.

[00:24:06] Think of it as a technology company somewhere between Google and Facebook. It's a little bigger than meta. It's a little smaller than alphabet. You know, at at 90,000 and it's way below that today, but at 90,000, it's one seven or one six trillion more than Facebook, less than Google. And once you realize it's almost but not quite a magnificent seven, your perspective on it shifts. Absolutely. That's a classic framing error, right? Yeah. Yeah, absolutely.

[00:24:35] In your book all the time, right, is if you think about it as a different kind of stock doing a thing. In this case, acting as a digital store of value, a medium of exchange is the job of Bitcoin Co. Right. That's an interesting way of thinking about it. Which it does really poorly. If you want to go buy something with Bitcoin, assuming that you're not a blackmailer or working on the dark web, it's very hard to do that. Because you're wrong about some of that, but that's not the point of this. Zeke Fox's book, Number Go Up, is just terrifying and eye-opening. Yeah.

[00:25:05] Look, there's plenty of things to say about it, but I think that framing of thinking about it as a stock is a useful one when we think about portfolios. Because very few of your clients, I'm sure, are coming to you saying, you know what? I think I should have 60% of my assets in NVIDIA. Well, we've had people say that and we fire them as clients. Hey, we want nothing to do with that. And what happened the past two weeks is exactly why you shouldn't have 60% of your assets in anything other than a broad index class.

[00:25:34] That, you know, the worst case scenario is in the past, I don't know, half century, what do we have? A 56% and a 57% crash in the S&P going back to 1973, 74, and then again, 08, 09, and it recovered. You don't get that with a single holding, be it Bitcoin or GE or, heaven forbid, Lehman Brothers.

[00:25:57] So owning asset classes is a bet on human ingenuity and innovation, at least equity is. Owning specific stocks is a bet on this company, this management team, this technology, this place in the economy. And we've seen time and time again, Demodaran over at NYU, his new book talks about the life cycles of companies. They're born, they go through this growth period, they mature, and they die.

[00:26:25] And whenever someone talks about a 600-year-old company that makes stout ale in England or the 1,000-year-old sushi company in Japan, it's like, exactly. You have two examples out of a bajillion that the exception that proves the rule. You found the tails. Congratulations. In the book, which, you know, is great, people should go buy it. I don't know how many individual subchapters and sections are, but it's a lot. Like 100. It's like 100 of them. Short, really short.

[00:26:55] These sort of nuggets of like, here's a bias. Here's a thing people get wrong. Here's a reason for it. Pick a couple that you would say are the most relevant for the right now. This late February political chaos. Markets have started to roll over a little bit. People are getting a little nervous. What are the mistakes we're all most likely making right now here at the end of February? So I'm going to give you like a three-phase answer.

[00:27:21] Starting with everybody's information diet tends to be terrible, right? If you're an investor, you're not putting your money away for next Wednesday. The fire hose of noise that comes from Twitter, financial television, newspaper, the internet, TikTok, Instagram.

[00:27:40] It's just it's a fire hose of bullshit that is not only asymmetrically timed with your needs for this money decades down the road, but it creates this artifice. I just tweeted out this morning. The problem isn't social media.

[00:27:58] The problem is algorithmic social media that has been beautifully engineered to a terrible goal, which is to outrage, infuriate, generate anger. Because they want your attention, your energy, your eyeballs, your clicks, your focus.

[00:28:18] The technology is such that we can track not only what you're watching, but then we could tie it to your credit score and your internet browsing habit and what you like. And you have a profile, at least in the United States. Which Europe is a little more aggressive about stopping that, where they could really tailor ads that are specific and effective for you. And so phase one, clean up your media diet.

[00:28:46] One of the things I recommend, and you're in the book, so I'll blow you a kiss now. Create a team of experts. And the nice thing is you don't have to pay them. You don't have to put them on the payroll. So Dave Nottig is my market structure slash ETF expert. Sam Rowe is a person who puts in the market cycle into context. Jonathan Miller understands residential real estate better than anybody. And go on and on, Ed Yardini and Ed Hyman in economics.

[00:29:16] I mean, I have a list of a dozen. And what all these people have in common is it's not just a one big outlier call they got right. They are consistently much more right than wrong over time. They have a defendable process. But they understand the context of where all this data comes in. They know what's right and important and what's ephemeral and meaningless.

[00:29:45] And by the way, the 10 or 15 people that you're going to pick are going to be different for everybody. Everybody's going to have their favorites. To be just to fine tune that they don't all have to be people you have on speed dial, right? You, given your position, can actually call all these people on speed dial. I would argue that you are that expert for some people in this. Sure. And you can have experts that you've learned to trust, even if you don't necessarily get to have dinner with them.

[00:30:12] It's true today that I could pick up the phone and call an Ed Hyman or Ray Dalio. To quote Ray Dalio, the first job of the investor is to understand reality as it is. What makes investing so fascinating and so different from politics? If you vote for the wrong guy and this guy eventually cuts your Medicaid and 20 years later, you need an operation that you can't afford. Hey, that's a long, slow feedback loop.

[00:30:40] If you go into the market with a delusional idea and it doesn't have to be that the world is flat. It just has to be that, hey, this lockdown is going to last for decades and I'm going to load up on Peloton and DocuSign. You find out pretty quickly and that actually took longer, you know, that took a year for that process to play out. Usually you go in with a fundamental misbelief. So your information diet affects how and what you believe. It's really, really important.

[00:31:09] And then the last step is you really have to be thoughtful and be aware of the more decisions you make and the more actions you take, the more your chance of substantial unforced errors increased. And I think this is a big philosophical shift that you don't hear on Wall Street. And finance people in general kind of come up in a fake it till you make it environment.

[00:31:38] That's 180 degrees away from we need a little humbleness. We need a little humility. Does that come back to just like classic Charlie Ellis? I mean, a lot of what you're saying sounds like winning the losers game, right? That as an investor, avoiding those unforced errors like in tennis, unless you were at the very top of the game, you win by not losing. And if you make fewer decisions and take fewer actions, you have fewer chances to screw it up. Is it that simple?

[00:32:06] I dedicated the book to two Charlies, Charlie Ellis and Charlie Munger. So you did a very nice job explaining the Charlie Ellis philosophy. Someone once asked Munger, hey, were you and Warren just smarter than everybody else? He's like, no, we don't think we're smarter than everybody else. We're just less stupid. And that's the Munger version of Ellis.

[00:32:30] And Buffett followed that up with any IQ point over 125 is wasted. You need to have behavioral control and emotional control far more important than having a 140 or a 160 IQ. So I think we don't give enough credence to what we don't know or what we think we know and are wrong about.

[00:32:56] And look, the book is filled with all this academic research about how often fund managers underperform their benchmark. And the basic number is 95 percent over 10 years net of fees are not going to beat their benchmark. And so that raises the question, what makes you think you're going to find the one in 20 manager that's going to beat their benchmark for a decade? We know who Peter Lynch and Warren Buffett is today.

[00:33:25] We know who Will Dermott is. And go through the list, the Howard Marks and on and on. But when they're first starting out, they had teeny tiny. Well, and let's remember the 10,000 portfolio managers who got flushed that we have never heard of. Right. So there's a section in the book about survivorship bias and why for a long time we thought the average mutual fund outperformed the market.

[00:33:52] It was only when this academic study was done in, I don't know, was it 91 or 96, something like that, that we've kind of learned, by the way, once you back this out, not only are these guys underperforming net of fees, many of them are substantially underperforming. It's quite amazing. And worse, because of our behavioral problems, we have this tendency to underperform our own investments.

[00:34:18] If you're buying somebody a fund after it's had a giant run up and after you found out about this person when they're on TV, the odds are it's not going to work out for you. So you need clean information. You need a good grasp of reality. And you need to limit your own mistakes and errors. And, you know, the overarching theme of all that is, you know, you have to be humble.

[00:34:47] You have to recognize what you know and what you don't. And Dave, you know me long enough to know that humility probably isn't the first word that leap. I was going to say you're an odd messenger for this message. But what's so funny about this is like coming to the conclusion, holy shit, I don't know anything about what's happening in the future. And I'm having an increasing acknowledgement of how little we know about right now.

[00:35:16] Well, Barry, tell us a little bit, the name of the book, where they can get it, what's the best way for them to buy it. Sure. So I just happen to have a copy here, How Not to Invest, the Ideas, Numbers, and Behaviors that Destroy Wealth and How to Avoid Them. It's a combination of really interesting stories interwoven with in-depth academic research that I've been consuming for decades,

[00:35:43] along with, you know, three decades of being a trader strategist and wealth manager. And here's all the things I've learned. To go back to Charlie Ellis, we've had a century of people telling us how to invest. And let's be honest, most people are pretty crappy investors. You know, they buy the wrong stuff. They trade too much. They engage in panic selling.

[00:36:08] The ideas they believe, the numbers they think are important, and how they act on those all have been a cumulative negative. 90% of the book is, don't do this, don't believe that, and try not to engage in this behavior. And if you avoid these things, you're ahead of 90% of your peers. I will say, for a book with a don't title, a negative title, it's surprisingly uplifting and entertaining.

[00:36:36] I think we get to go along for the ride with both yours and a lot of other people's classic mistakes in a way that lets us smile while we're still learning something. Barry, thanks so much for joining us on this first episode. Really appreciate it. My pleasure. This has been a blast. And thank you for the really interesting, thoughtful questions. I could have spent another hour plowing through these. Thanks, everybody. This has been Rabbit Hole with Dave Noddick. See you next time. Thank you for listening. If you enjoyed this episode, please like and subscribe and tell a friend.

[00:37:03] No information in this podcast should be construed as investment advice. Securities discussed in the podcast may be holdings of the participants or their clients.