Kind: captions
Language: en
the hard truth about money is that if
you don't invest it you will lose it to
inflation that forces all of us to
become degenerate gamblers and I have a
growing thesis that hard money that
can't be seized or inflated ought to be
an inalienable human right but currently
that's not the case so you have to
invest in something as a way to beat the
hidden theft that is money printing
today's guest is Cody Sanchez and she
has one of the most unique solutions to
this problem I've ever
seen I want to start with a quote from
Cody Sanchez if you game for it yeah
here we go we're about to have one of
the most difficult markets of our
careers I was at Goldman Sachs in 2007
and 2008 when the world was falling
apart I saw what happened to retail
investors then and I think it will be
worse this goor round between interest
rates commercial real estate and the
fact that we also have to battle
inflation we are going to come into one
of the most difficult markets in our
history of
investing why do you think this time is
going to be different why isn't the
government going to come in print more
money and either stop us from having a
recession at all or if we do have one
that we won't just bounce back I think
guns only have so many bullets right and
the government in some ways at the
federal level operates like a gun and
they've used their bullets you know
they've used quantitative Ean which was
a massive money printer for a long time
longer than they should have from QE to
then tarp uh which the temporary asset
relief program actually Contin continued
far past when it was supposed to um and
then they did it with uh interest rates
and then they're going to have to try to
figure out how to manage a burgeoning
deficit that is getting slightly out of
control 34.4 trillion doll as of the
time of this recording which now has
higher interest rates on it and will
continue to have higher interest rates
on it which they didn't extend longer
terms for and they should have when
interest rates were at the lowest amount
uh you know during our lifetimes and so
I think the government is out of bullets
and we you know when when you're out of
bullets what do you do next I mean you
have to go to like bigger ammunition and
so I think the thing that scares me the
most about this recession is because the
government doesn't know what else to do
that is within their normal arms they're
going to have to come and do something a
little bit crazy or let the market
really really fall and I think political
will right now does not want to let the
market Fall and big corporates do not
want to let the market Fall and so for
that reason I worry about the
economy you and me both I don't see a
way around printing they especially in
an election year there's no Universe in
which they will let that happen they
have also proven every time there's a
problem every time there's a problem
since 2008 they whip out the money
printer and that's everybody Democrats
Republicans does not matter print print
print print print and I keep asking
people about this and the only so what I
ask people is the debt is increasing
every 100 days we add a trillion dollar
in debt as you said the interest rates
are high interest rate payments are now
the third biggest line item that the
government has that's going to keep
growing if you lower interest rates then
inflation is going to rear its ugly head
again if you print money inflation is
going to rear its ugly head and so to
your point about being out of
bullets yes but I think the analogy ends
up breaking down because they will fire
the bullets they'll just kill the wrong
people and so what ends up happening is
the dollar begins to struggle now I
don't think we're going to have rapid
dollarization or hyperinflation or
anything like that but it's going to be
a super weird economy where everybody is
turned into a
gambler yeah I mean I think your points
on inflation are really well taken too
what concerns me with inflation is you
know if you go out right now on the
market everybody says inflation's coming
down we're more around a 2% level we're
not at the four to 5 to 8% inflation
that may be depending on how you measure
it we at in the past but then you go and
buy groceries right and you feel the
difference in groceries bought in 2020
versus groceries bought in 20124 and so
I looked at some sample baskets both
economically and from an individual
person and you could see that if you
bought $10 in groceries in 2020 and $10
in groceries in 2024 you basically got
50% Less in 2024 so you went from $10 to
$5 for the same amount now what's
fascinating is you go well how's that
possible because inflation's down and
you know we're trending at a at a better
level well how it's possible is once you
have a permanent price increase that
settles along small businesses they
actually don't pull those down on a
commodity basis just because the
commodity prices have come down if they
already know that they can charge XYZ
amount businesses typically don't wheel
back their prices once they raise them
now baskets like um you know oil for
instance those definitely change but
small businesses across the us are going
to normalize prices and so I think the
bigger issue too is people are not
making more inflations come down but
they feel like they have to spend more
and they're right they do and actually
the way that we measure inflation
doesn't make a lot of sense for the
normal average Joe who really has most
of their costs and things like everyday
food utilities rent I heard a stat I
don't remember exactly where this comes
from but it sounds intuitively correct
and somebody in the comments will uh
bang me if I'm uh off but uh that while
it is true that the stock market which
is basically the only place that the
most people invest in they're not Savvy
investors they have no idea what they're
doing so they just do a basic fund uh
that most even though the stock market
returns roughly 10% on average that
isn't what the average investor gets the
average investor ends up losing to
inflation and so that I think speaks to
a lot of what's going on in crypto and I
know you're not a big crypto person but
so I'm I'm uh I'm a part of a meme about
sitting on two chairs because I very
much Michael sailor who has literally
bet the farm and then some on bitcoin uh
there's no Universe in which I would do
that so I'm just I don't trust anything
that much so I don't think the future is
a guarantee and so just too many weird
things can happen so anyway uh I'm
taking a far broader uh approach to this
but when I start talking about like hey
we have a debt crisis what's the
solution I don't see a way to unwind
this like every that I run every
scenario that I run you end up with a
debt Jubilee now a debt Jubilee sounds
awesome but it usually comes when people
are getting shot and blown up so uh
historically the button that says debt
Jubilee is war so as somebody who'd
really like to avoid that anyway when I
bring this up that I don't see a
solution people always like bro Bitcoin
okay first of all let me say I'm a huge
believer in Bitcoin and that is my
largest single holding crypto in general
for sure is by far my largest holding
however that is what I'll call a life
raft because the people that know to get
in it sure you now have a protection
from inflation but that isn't additional
uh productivity and so you're not going
to be able to escape the debt crisis
that we're in now it may avoid the next
debt crisis from happening but it
doesn't help us with the one that we're
in now so when you look at at that you
see something I'm missing well you know
I think no I don't see anything that
you're missing I think the federal
government has turned into a transfer
service and they are essentially they
used to provide services to uh to all of
us to Citizens and now if you actually
look at the amount of money and where
they spend it they spend most of their
money transferring money from those who
have made it to those uh who say that
they need it um and like there's
actually a graph that's fascinating that
I sent to you that we can put on here
and people can can disagree with it in
the comments but it basically shows that
federal spending is at all-time high
levels with transference which is things
like um you know Social Security
Medicare
Medicaid and um and so I think the
problem even bigger than the debt crisis
is we have systemic issues in this
country that the government has no
incentive to change because what are
they doing when they transfer your
dollars to somebody else times 20 um
they're buying votes and so you know of
course they're going to be able to stay
in office and continue to have systemic
issues like this if they keep
transferring money in this way and so I
think it's not everybody's focused on
government spending that is problematic
very much so how much they're spending
but it's also where they're spending it
it's the fact that we've turned into
this you know this funnel system and
that's the thing that I think scares me
more than anything else because you are
not increasing productivity of those
dollars when you transfer it from one
person to another based on need not
output capability uh you know additional
spending that they're going to do to
push the economy forward and so it would
be much better if we were spending on
even things like defense infrastructure
Innovation and we're just not that's
nice and distressing so when I saw that
graph I'd never seen that before and uh
for people listening we will have this
up on screen but what I found very
interesting so the it starts tracking in
like the 1940s and obviously defense is
massive it's like 80 plus% of what the
government spends on as you expect
because we were in the middle of World
War II y um then that pretty
precipitously falls off in the 50s and
you get this sort of normalization but
what's interesting is you see that line
fall really low and then the what I
think the graph calls individual
payments what you were just describing
starts rocketing up in like the 50s and
60s and what's really interesting and oh
man this is this is one of those things
that to really talk about you have to
get into the nitty-gritty of why people
want to do this so it's the sense of
nobody left behind right so we see that
somebody has need we want to make sure
that they're taken care of I love that
the most but what ends up happening to
your point is you're taking efficient
Capital dollars yeah and you're turning
them into inefficient Capital dollars
simply because some people are good at
allocating capital and some are not and
so you are literally siphoning money
from people who made that money because
they're good Capital allocating they're
good at building businesses just to not
use fancy words they know how to build a
business they know how to build things
that people want people are willing to
pay money and so hey it greases the
wheels of the economy GDP goes up we're
able to make more with less and the
people that are able to make more with
less one would think you would want to
keep the money in their hands but what
we're doing Instead at an ever
increasing rate is we're moving that
capital from the people who have
demonstrated an ability to do something
to the people that don't know how
certainly have not yet demonstrated an
ability to do that yeah that's exactly
right well I think also you know if you
think about what's happening here I
think you individually get overwhelmed
when you know you think what do I do
about these huge things okay so the debt
ceiling's happening you know I mean so
we have this massive uh debt problem
Cody says we're out of bullets Tom says
they're going to shoot us anyway you
know what do I do about all of this
right and what I'm just a normal person
trying to get by trying to afford
a two we vacation during the summer and
a smaller house than I had before maybe
and less cars and the government keeps
getting bigger but I have less what am I
supposed to do about this I I'm not I'm
not calling up Senators I have no access
to this sort of change that you two are
talking about and I think if that's how
you feel in my mind it's one knowledge
is power so now you get to know what is
happening and when somebody says
something idiotic to you like it's good
to transfer the money from the rich to
the poor you go wait a second why
because it turns out we are very
Collective individuals as opposed to
individualistic this Collective Society
if you live in the US you can't get away
from the repercussions of those on high
so I think everybody listening you
should you should feel like man I want
to understand this so badly because I
want to explain to all of my friends why
the government's decisions today can be
more impactful than what my boss does in
some instances or how much money I make
you know I had one business that was
eradicated because the government
changed one regulation and because of
that everybody got laid off in the
business I actually ended up leaving the
business and it was because they changed
this one little rule about Mark to Mark
Accounting in 2008 that we talked about
previously and money market funds and
variable nav like very Tech techy things
in the finance space and because of that
people lost their jobs and so I think
it's really important to like get to the
numbers through the narrative and so you
know as I was thinking about this today
I'm like what do the numbers say uh
versus what do the politicians say well
right now the politicians are telling us
tax the rich tax the billionaires that's
the solution let's take all their money
it's those guys fault and let me tell
you why I think that's so dumb is
because when you look at the math if we
took all of the Forbes one uh all of the
Forbes 400 richest people in the world
and we clawed back all their wealth
something like $4 trillion that would
run the US government for seven
months okay that's not going to do
enough then what if we took 100% of
their earnings every year about a
million people's earnings and we took
all their earnings how long would that
run the government well it' be about
like $500 billion and that would be 34
days so oh that's really helpful Mr
politician when you talk about let's tax
the rich show me what that gets me and
what it gets me is 34 days of your
salary no thanks we don't have a revenue
problem in the US we have a spending
problem and it turns out the politicians
just need to know how to use a [ __ ]
calculator and they don't or they do and
it's even worse and more mancal than
that yeah I mean for now I'll assume
that there's no uh evil intent behind it
um which I trust me I understand that's
playing naive a little bit but I think
if people start there they're going to
Blind themselves to what's really going
on um okay so we don't have a revenue
problem I don't actually think that's
true so anybody with a managing a
household budget if you come to me
because I get asked this question a lot
uh Tom I just cannot like make ends meat
or I'm struggling in my business I want
to scale what do I need to do the answer
is always you have two options you can
lower your expenses or you can make more
money so you could look at this and say
we do have a revenue problem cool I'm
here for that conversation the problem
is we've already covered this in this
conversation which is you've got you're
pointing your finger at the quote
unquote rich people I forget the stat
but most wealthy people did not inherit
their money certainly more than 50%
might be more than 70% it's pretty high
like it's really hard to retain wealth
really hard and they don't stay there no
within your own life you go up and down
in and out of classes so uh but the
narrative is not that but so you have
these people that are proven I'm very
good at at generating money I know how
to increase that y um and I increase it
by doing more with less so meaning I can
get you that stereo that you want it's a
better stereo for less money or a better
stereo for the same money TV car
whatever it's just more efficiency uh
take Amazon is my favorite story I canot
believe that people hate on Jeff Bezos
because Amazon changed our lives now if
you are willing to trade and I don't
want things that quickly I'd much rather
have Mom and Pop shops everywhere okay
fair we can at least have that argument
but you can't deny that he's been way
more efficient with the capital and when
you talk about and look let's put the
elephant in the room this is to wealthy
people having this conversation this is
also to self-made wealthy people which
I'd like to remind people so so if you
are overt taxing the rich what you're
doing is saying I'm taking Revenue as a
solution off the table because I'm now
going to handicap them because that
Revenue that they would have used to
become even more efficient to scale
their business or to start the next
business or whatever that's not you
don't have that ability because
especially if you're talking um taking
the tax rate up and up and up and people
will say oh there was a time where the
tax rate was 90% or whatever we did just
fine there was a time where the tax rate
was briefly 90% and you will notice they
brought that down real fast because you
were going to get Capital flight
massively people are just not going to
put up with that so anyway it could be
solved with Revenue but it won't be
solved with Revenue if the answer is
just go tax the life out of people and
to your point it just doesn't go long
enough so you end up taxing the life out
of the middle class anyway okay so if
you
remove Revenue now you're left with how
do we reduce expenses and and nobody
will vote for that you need to only look
at all the burning cars in France every
time somebody proposes like raising the
retirement age or whatever even here
people will twig out if you talk about
raising the retirement age so what do we
do with that well I think a couple
things are already happening if you
don't like the taxation system that
you're under you leave and so if you
want to be around winners the best thing
that you do is you go where there's more
winners than anywhere else and you
seeing in your state right here in
California you called my state a fail
State exactly sorry it's beautiful it's
a beautiful nightmare of a regulatory
environment yeah uh you know I I was
looking up these interesting statistics
and uh so I was like so what how would I
Define a failed State why would I say
that California is a failed State well
let's do a fun metric which is let's see
where the U-Haul prices are more
expensive versus not more expensive when
people are moving in and out and what
you basically see is my friends at First
Trust did this analysis where they
showed that a U-Haul going from you know
San Francisco to I can't maybe it was
Arizona or Texas is
6.42 times more expensive out of
California as it is into California so
what does that tell you that basically
people are voting with their feed and
they're saying I'm not going to stay
here and be taxed to high heaven and if
I by some chance turn my little plumbing
company into a big plumbing company I
buy a nice house now it's a mansion
because what we don't think about today
that is real is the real trickle down
economics are that governments think the
word Rich trickles all the way down
until it gets to you every single one of
you including you and me and so you know
when we when we talk about a thing and
we hate on it we're never going to
become it right and so when you say you
hate the rich you should tax the rich
you should realize that you will never
be rich you're never going to achieve it
then and so if you want to think about
what to do differently it's actually hey
do the opposite of what most politicians
are saying and maybe do what they're
doing which is look at their stock
portfolios they're investing like crazy
they're picking the really efficient
Capital allocators to put their own
dollars behind they're leaving political
St uh positions and going to lobbying
firms where they get paid a ton of money
um and so I think we need to push back
on the fact that we need a big brother
we don't need one like I think
everybody's had a bad boss that's why
you leave jobs nothing worse than an
insufferable boss also nothing better
for you to achieve than that chip on
your shoulder and that's what the
government is the government's become a
bad boss that is trying to tell you all
the time what to do one way or the other
and they're saying oh by the way instead
of me being your bad boss and still
paying you you're going to pay pay me
for being a bad boss and I think about
that constantly I'm like could you
imagine a job in which you don't make
money instead you pay money and that
boss is awful nobody would stay in that
job and yet we do stay in those tax
Havens those cities those States and in
the future I don't think we'll do that
why not what what's happening in the
future that's going to make that it's
just easier it's easier to leave it's
easier to go to new country countes and
cities and states it's easier to change
your regulatory structure to be located
somewhere else the global pool of talent
is huge I mean people don't like to talk
about this but you know the the talent
pool that you have to compete with today
is global it's not communal it's not
Statewide and it's not National you know
we are not only having to compete with
people located in India Indonesia Europe
I have people in my teams in all of
those locations but now we also have to
compete with with robots right we have
to compete with AI we have to compete
with actual robots like the company
figure that we invested in and so I
think people are just moving and that
will continue and the government is not
noticing that and we have a mutual
friend bology that we're both in a chat
with and I I love talking to bology
because his brain is fascinating to
watch live um he's an AI yeah he might
be he might be an alien dude that kid if
he isn't an alien he's AI for sure he is
a very nice very smart alien AI I love
him to death probably he is a single
mind yeah he really is and you know last
I was chatting with him I'm like you
need you have a moral imperative I think
to explain the network state to more
people so that they can understand how
to become independent centers of gravity
that aren't reliant on many other things
in order to succeed but in order to do
that we have to do what you talked about
which is like simplify things I think
that's how people take money from us
they make it seem complex they make it
seem like oh you couldn't understand
it's too it's too much for like poor
normal humans let me help you and uh and
if we can break down those you know that
verbage like in finance we use a bunch
of big confusing words in order to keep
your money and so I think we have to
push back on that we have to start
saying no I'm smarter than you say that
I am explain it to me if I don't
understand it I'm capable of that and by
the way I do not need the government to
stand in for me because I'm a perfectly
individual Sovereign human and I think
most people
are yeah we're I'm sure we'll get into
that at some point I the that whole
thing the government is not going to
take that kindly yeah and we have lost a
sense of the government works for us
mentality like there's the greatest
trick the devil ever pulled was
convincing the world that he doesn't
exist and the thing that scares me about
the government is that they are riding
on and
Fanning uh the wave of I need to be
taken care of Nanny State protect me um
safetyism if you want to scale your
business you absolutely have to have the
right data in order to understand what's
really going on if you want to do that
well I highly recommend that you check
out netsuite by Oracle netsuite is the
number one Cloud Financial system
bringing accounting financial management
inventory HR all of it into one platform
for one source of Truth with netw Suite
you reduce it costs and you can cut the
cost of having to maintain multiple
systems you improve efficiency by
bringing all of your major business
processes into one platform slashing
manual tasks and eliminating errors it
is no wonder over
37,000 companies have already made the
move see how you can cut cost and boost
performance at the same time with netw
Suite now through April 15th netsuite is
offering a one-of-a-kind flexible
financing program head to netsuite.com
Theory go today and make sure you have
the information you need to really scale
your business again that's netsuite
/ Theory I don't think the book is out
yet but Jonathan hey I know is working
on a new book or just published a new
book about that where his first take the
coddling of the American mind was about
amazing uh was about hey social media
came and cobber at everybody and we now
have a problem yeah and now he's
realizing it's more than just that it's
the fact that parents became extremely
paranoid about letting their kids out
and taking a risk and getting hurt
abducted and so as the world got safer
and safer parents got more and more
paranoid and now you have a world where
people actually believe words are
violence and so when I grew up it was
sticks and stones may hurt May um break
my bones but names will never hurt me
and so that is what your parents would
say when you were like yo I was getting
bullied people were making fun of me do
the number of times Cody that I got
called Dumbo I can't even tell you yes
now I like them oh well that makes one
of us uh but here's here's the reality
my cousins were so cruel to me about my
ears that by the time I got to school I
was just like whatever you have this
whole thing like I I think my response
was cuz everybody went straight to Dumbo
hey Dumbo I was like at least Dumbo Can
Fly good BL yes young Tom so my mom
wasn't like oh my God poor you she was
like what's your comeback what do you
got like you can't just go in and uh let
people you know make fun of you now it
be like yo somebody goes into the school
you've got to stop that we can't let
people speak and so the expectation on
me was you have to get tough like you've
got to be tough enough to deal with your
cousins you've got to be tough enough to
deal with the kids on the playground and
now it's very much the opposite and so I
can see the government leveraging that
to say yeah we are going to take care of
you uh no kid Left Behind do you know
the the mckin vento law I don't know if
this is just in Washington state where I
grew up so my mom worked in
transportation she's now retired but
they will literally literally drive a
school bus two and a half hours one way
to pick up a single
child think about the math on that yeah
no it doesn't look good no no so anyway
all of that that's why the spend is
going up up up up up and things are
getting worse and you have my own team
Millennials coming up to me and saying
I'm just getting Savaged like I don't
know how to get on the property I don't
know how to invest I feel like I can't
get ahead I've got student debt that's
just drowning me like basically nihilism
I just want to give up and then that
pushes him further into the bosom of CLA
Schwab yeah and his idea of you will own
nothing I like it you will like it you
will like it which was then retracted as
never said what do you think about like
that whole we things are going just fine
don't worry don't worry no I mean I
think I think you could try this on
which is you know take some risks try to
sell something every single day get up
at 6: a.m.
continuously uh ask for feedback
relentlessly in what you're doing and
continue to repeat for somewhere around
one to two years I'm sorry Kim
Kardashian did you just tell me to work
harder yeah I think that's I think
you're going to surprise yourself about
how many people are going to call you
lucky and you're actually going to just
say there was a recipe and I think there
actually is a recipe but it's it's much
easier for all of us to say there's no
recipe everything is against me than it
is to say what would happen if I
followed these few steps and so um one's
just really empowering and one's
disempowering but um you know there's a
bunch of Statistics that are fascinating
today I was reading a study the other
day that said uh Millennials and jenzy
on average take 25% less risk than the
previous generation and how is risk
demonstrated they start less
businesses they get married later they
have less intercourse risky in some ways
good bad or otherwise um they have less
relationships um and they buy less
property uh because they're living at
home to to agree I've never seen before
45% or something like that for Jen what
45% up to what age it's a good question
the internet will tell us um but 25%
less risk what does that mean well that
means that you're probably going to make
25% less per year that you have that
activity right at least because you're
not putting yourself out there at all so
how does that compound over time if
you're taking less and less risk you
know I talk about this all the time with
my team I think you should be at
companies that allow you to have an
ability for you to continue to earn more
if you drive more Revenue to the company
and so you know I don't think any one of
my employees has ever come to me and
said hey if I drive more Revenue if I
close this deal for you if we hit this
metric and it makes us X can I can I get
why from it now I might not like their
why I might say no you don't get 25% but
you could get five um but the thing is
this generation doesn't want to take the
risk of asking trying none of it and so
you have to change that mentality or
you're never going to win you and I
aren't that much smarter than anybody
else we just took a lot of risks
continuously and we compounded every
time we learned that we were bad at
something and made a mistake and change
direction and that's sort of it yeah
we're not that much smarter than people
that I really want that to land for
people um to me this is not look
intelligence matters a lot I'm not
downplaying that Jordan Peterson has
made it very clear if you meet a magic
Genie just ask for more intelligence
like just simple as the the number one
predictor of ability and success is IQ
now it's a UR it is yeah Angela
Duckworth study on grit that shows that
being the number one predictor how about
this I'm going to guess that grit is
going to be tied to intellect none of us
are going to like that but there's
almost certainly some truth that I'm
making that up I don't know that that's
true but life has taught me that
intelligence is like height on a roller
coaster yeah that if you're below a
certain level when you go upside down
you fly off and die yeah that's true and
if you are too tall then you're going to
get your head walloped when you go under
a piece of scaffolding so there there's
a goldilock zone of intelligence to be
sure I remember at one point the
smartest person in America had like a
220 IQ Einstein is estimated to be at
160 was at 160 to give you an idea uh
and they were a bouncer at a bar yeah I
was going to say but they weren't
successful they can't actually empathize
with most other people right they're
alien which is partly why bology seems
like an alien he's just so much smarter
than me yes um so look intelligence
matters I'm not going to pretend that it
doesn't but it's more of a minimum
requirements thing if you minimum
requirements it's what I always tell
people if you meet minimum requirements
and if you're listening to this point in
the podcast I'm going to guess you meet
minimum requirements then it becomes
grit determination and the
ideas that you live by and those ideas
so you were saying that people are
taking 25% less risk and what that got
me thinking is going back to Jonathan
Height's idea of safetyism becoming
safety isn't potentially being the big
problem of the generations right now
because they're reject reting ideas that
they think are quote unquote dangerous Y
and if you reject an idea out of hand
because you think it's dangerous um then
you're you are closing your mind off
there's actually God I don't even I'm
going to bring it up because it is true
but H God this is going to get me in
trouble probably there is a Jewish Times
article about me because years ago the
thing is I still believe this uh years
ago where before I knew about safe ISM
or anything I had no idea this was going
to trigger people uh and I was like bro
I don't understand why people are
looking for reasons not to hear somebody
out I was like you should be this person
might be a total psychopath but if they
have one idea that's useful like take
that idea so I was like I'd have
musolini on the show if he had a good
idea that I could learn from and so the
article says he said it he really said
it like you can go look it up he
actually said the words view it for
yourself so anyway I'm just saying if
you're looking to reject ideas I'm not
saying I want to invite him to a family
bar
I'm just saying if you're afraid of
ideas then you will never find the best
most efficient most effective idea and
therefore you will get stuck could you
imagine how poor you would be if you
only took ideas from people you liked I
poor never get anywhere yeah the
correlation between uh do I like this
person and is this something that could
function and work in society it could be
zero it actually doesn't matter at all I
mean this this idea of moral absolute
ISM lately that we have which is if a
single human did anything at any point
in time that we consider bad by today's
standards we have to wipe their name off
of the face of the planet and we could
no longer say that we might be able to
learn something from them is a huge
disservice to anybody who is in learning
and growth phase because you there's no
perfect human we've never met one I've
never met one and so every one of us has
some dark thing in our closet every one
of us has done things that we've been
embarrassed about or grown past at some
point and so the idea that you can only
take ideas from people you like is a
great way for you to stay poor um and so
I don't really believe in anything that
doesn't have an outcome that I like so
why would I why would I only listen to
people that I like it's such a bizarre
philosophy that somehow has been
normalized I'll even push it farther uh
I will take a good idea from somebody
even if they are despicable of course uh
I think there's even something in the
Bible about this that the
luciferian intellect I don't know if
that's Jordan Peterson phrase if that's
actually in the Bible but that uh I know
in the Bible there's something that
sometimes uh the evil Among Us have the
better idea oh God I'm paraphrasing but
like that's the idea that there are
times where you can actually learn
something from somebody even if they are
just outright evil yeah uh I think
that's wise I think the way that people
should live their life and I'd be very
curious to get your take on this this is
how I advise everybody to think and that
is from first
principles for first principles to work
you have to understand what your goal is
where am I trying to get to and I think
a big part of what's breaking down in
dialogue today is people don't
understand like where are we trying to
get and then they don't have an explicit
stated Philosophy by which they decide
what things they will and won't do in
order to achieve said goal and so what
people end up arguing about are the
quote unquote facts of the situation now
the problem is your worldview which is
made of your belief Bel and your values
they will change how you interpret the
quote unquote facts
and until people can say
stated this is my goal the these are the
the value systems or philosophical
underpinnings that I use to get to that
goal or to navigate the world and then
here's how I can track back my thinking
based on those beliefs assumptions
values and this is why I've come to this
conclusion but if you are just winging
it then usually the values are blind to
you you have them but you don't know
what they are your beliefs you confuse
for objective reality which they most
certainly are not um and so people end
up thinking oh I am just approaching
this from objective truth and objective
reality and so the fact that you view
things different than me just means
you're a lunatic versus going oh that's
a useful idea I'm going to take that and
so yeah taking a useful idea from
wherever it comes seems wise very I mean
I think it's quite useful to hold up a
mirror in front of yourself and ask you
who you think you are we were talking
about this to some degree and so what
what would I do if I was going to ask
who am I as a person and what outcomes
and actions would I like to have
according to my own philosophy and the
only way I've been able to do it well
and consistently is in every company we
have a Creed we have some sort of
guiding principles that we one for every
company uh no but I do one for every
company now there are like three
companies that have a same set of core
principles but some companies
necessitate something else and the CEO
gets to be the captain of that ship and
so they should get to set those
principles um but the principles that I
have for our contrarian thinking
grouping of companies are are 13 because
we like this idea of trying to make our
own luck and uh and they you know and
there are some that are very core and
helpful when you're thinking about what
action should I take I like to fall back
on making my brain be as lazy as humanly
possible so decision fatigue is real
it's really hard to continue to make
good decisions all day any parent knows
this and so how do you decrease the
fatigue that comes from making decisions
you have principles that you get to
revert back to and so like our very
first one is those who say it those who
say it can't be done should get out of
the way of those who are doing it very
first one you know one of the other core
ones is that we clean up the sink we do
the Dirty Work and so that's based off
of a company where they got rid of their
entire cleaning staff and the company
all the employees take care of cleaning
up the building by themselves
continuously and so if you believe that
another one of ours which is how you do
anything is how you do everything and
like you pause on that for a second
that's really impactful but the thing is
most of us we might have had a family
crest a million years ago but we
certainly didn't have a family crest we
didn't have a personal Creed we a lot of
us don't have company cedes and so you
don't have a set of aligned values and I
think values are so much more important
even than what your company does does
because they mimic your daily actions
and so you know if I was listening today
my husband and I have family values that
are mimicked off of contrarian thinking
values and and it goes back to little
things like one of ours is uh do you
want to be a good white shark or do you
want to be a great white shark and it's
tongue and cheek it's cute but that way
every time we're like in the gym and we
don't want to do it every time we could
eat poorly but we don't want to we just
kind of joke each other like what kind
of shark you and those little things can
just remind you of the type of human you
want to be I love that how do you think
through these incredibly intractable
problems like do you if so if my
methodology is first principles goal uh
beliefs values they're stated boom boom
think up to get there what's the
framework that you use what is the
framework that I use so I uh the other
weekend I met with a daughter of one of
the richest billionaires in the US old
old money uh in the energy space and and
she's incredible which is rare for
Billionaire's daughters right and so I
said to her hey um weird question but uh
you turned out really normal why and uh
and she said you know what my father
always taught me that uh our family name
means something and we have to stand up
for what that family name means for and
he made us repeat back to him what the
family name meant to him and then the
second thing he always said is that uh
the only thing you can control is how
hard you work that's the only thing you
can control we can't control how smart
you are we can't control what happens in
the world but you can control your
belief and what this family name means
and your ability to work really hard and
so when I think about my actions I think
about the same thing I think I want my
name to mean something I want to
remember that I'm here on this planet
for some particular reason and that the
only thing I really have in my control
is hard work and so it's not enough but
it is a lot and that's what I revert
back to every single time I really think
it's hard to beat somebody who works an
hour longer than everybody else in their
industry you know it's on average pretty
hard now you're going to have outliers
but like hard work's one of the easiest
things to actually do which seems like
it doesn't make a lot of sense given the
word hard in there I am a hardwork
junkie every time you say um do the
thing that you're obsessed with and it's
going to be hard to beat Obsession I'm
that's like my pornography like I'm very
much the hustle culture kind of person
however um obviously I want people to
live a life that that they're joyful
about so I'm I I'm not the psychopath
that's like work and that's all that
matters yeah um but I do want to push
back and say okay if if I like to think
about this a lot because I worked in the
inner cities I can't remember how much
of my backstory yeah you told me that
incredible so you're working with people
and you're really seeing what Poverty
Looks like up close and one it's
interesting how they will oftentimes
like as a family unit come together
there's some beautiful things to it
anyway setting that aside because
there's way more horror than there is
Beauty and I just got obsessed with okay
I've got whatever a month with this guy
how am I going to train them to actually
get escape velocity and get out of the
hood and hard work for sure foundational
layer but it isn't everything and so the
thing there are two things that add to
hard work tell me what you think uh one
is skill acquisition you have to be a
sociopath for acquiring skills because
ultimately if you're working hard but
stupidly you won't go anywhere and what
I find is people confuse hard work with
morality it's like this Puritan
underlying thing like I worked really
hard and therefore I
deserve to do well no you don't
[ __ ] if you did the right thing
the market will reward you because you
did a thing that other people can't do
and so getting people to understand the
whole reason that you acquire skills is
so that you can do a thing that other
people can't do and if you can do a
thing that the world values better than
other people can you will always be
employed always and then the other one
would be emotional control like if you
can't control your own emotions like you
are going to be in a very dark place and
so hard work Relentless skill
acquisition doing the effective thing
and then being able to control your
emotions that feels closer to like I'm
still like that's such a thumbnail
sketch and of course it's beyond
complicated in each one of those three
things yeah um how does that sit I think
it sits I mean I think here's the thing
that everybody should do if they want to
get rich but nobody wants to listen to
which is fascinating to me is that
amateurs do lots of things and Pros do
the few right things and how is that
possible it's because Pros teach other
amateurs how to do all of those little
things that they don't need to do and so
they have leverage right so Pros don't
have to be busy amateurs do have to be
busy because they can't differentiate
what is right and effective yet so I
think there's this portion of your life
where you have to you have to do
incredible amounts of hard work because
you can't delineate what is good versus
what is busy work and every one of us
just needs to realize that some point
and the only way you start to realize
what is good versus busy work is through
skill acquisition one of the skills of
which is what is effective versus what
is just filler and so you know you don't
even you don't even have to pick up
numerous skills you can be like what
Charlie Munger and Warren Buffett talk
about which is making three to five
really high signal to noise bets over
your entire career and sitting lazily on
your asses for the rest of the time I
mean Munger talks about all the time
that in fact their strategy is only one
thing which is when they see big risk
they go in huge if they think that risk
can be rewarded and they do not go in if
they do not see a huge risk reward so
they just are professional nosers
and that's because they learn to
differentiate the difference between
busy busy work and good work and I think
that is where most people should strive
can you strive to actually determine
what actions to take that will make
movements or change and it's really
really easy to say but hard to do I mean
think about it in your business in my
business every single day there's a too
to-do list so big I will never ever
finish it and I have to determine every
single day what is the one thing that if
I do it becomes the fulcrum on which I
get to place lever that moves a giant
boulder and if I can't
continuously get closer to that one
thing the business will fail and I think
that's how most of us are is we have to
be able to figure out what does a
fulcrum look like what does a lever look
like and what do just a bunch of pebbles
look like that are going to do nothing
for me and that's actually quite
hard okay skill acquisition matters a
lot yeah getting that leverage matters a
lot we've painted uh a dark picture
about where we're going but I don't
think I neither of us are afraid
paranoid yes uh because only the
paranoids survive but when I say I'm
paranoid what I mean is I'm trying to
see the angles yeah I'm not taking that
it's going to happen easily for granted
yeah so I my channel can be rightly
accused of quote unquote Doom and Gloom
but I'll just blame all of you
[ __ ] cuz that's all you click
on in a headline uh but the what I hold
myself accountable to is every word out
of my mouth is something I actually
believe so I believe all the things that
I'm saying I just don't have uh
crippling fear the only thing that that
maybe unnerves me even though I'm a huge
proponent of it is AI we'll get to that
later so anyway uh potentially quote
unquote dark period coming from a
recession standpoint I say dark because
a lot of people who aren't paranoid who
either don't have the intellect or have
not put the time in or just don't have
the right set of ideas whatever they're
going to get blindsided I love too many
of those people so it it it does appear
as a dark time to me however
you have a quote from Baron Rothchild uh
that I think Bears bringing up yeah buy
when there's blood in the streets even
if the blood is your own maybe
especially when it's your own and he
became a Titan of Industry uh probably
one of the richest men ever on an
inflation adjusted basis so I think he
did okay and uh you know I was thinking
I I pulled some some data for us uh for
this conversation today because here's
the thing if you haven't been if you
haven't been through a recession yet uh
you're going to survive this next one
too I mean if you look historically and
we can show this graph too we we
survived 90 99 two you know 2020 2008
those were just the recessions during my
working years and if you look at what
happened after all of those recessionary
periods not all of them bounced back in
a v-shaped recovery but all of them have
bounced back and so the best predictor
of the future is the past it's not
perfect but it's likely that we will
continue to sur survive as a country and
as individuals just like we have
historic
and so I think even though it's scary
out there realizing a sale is coming can
also be really really powerful what do
you mean sale when the market goes down
everything becomes cheaper you already
seen that Austin's one of the worst hit
real estate cities in the country so if
you're looking to buy real estate in a
market that has Tesla moving to it that
has Dell that has a bunch of Google
headquarters uh moving to it a bunch of
Facebook employees move to it a bunch of
AI it's like one of the defense AI um
centers of the country but it's you know
the average uh house in Austin's down
somewhere between 20 to 30% and so what
does that mean well interest rates are
coming down and houses are 20 to 30%
cheaper and so you can buy a house for
less money at less interest rates than
you could a year ago and probably your
pay hasn't gone down by 20 to 30% and so
in this market you're going to have a
bunch of opportunities to buy things at
sale and most people get their money I
sort of think about it like the
unprepared transfer their money to the
prepared during downturns and so if you
do not listen to channels that are Doom
and Gloom about what might come then
when it comes one you won't recognize it
two you won't act on it and three you
will actually lose from it because
somebody also take advantage of your
panic and so one of my biggest missions
is just getting people to see the
pattern because once you see oh look
this happened in 2008 it happened in
2020 it happened in 99 it happened in 90
and by the way signals right now that
show the same thing well then you might
be prepared for what's coming and it
might not scare you when you see that
you know auto loans are at the highest
level since the last recession uh auto
loan uh defaults that you might not see
that credit card delinquencies are at
alltime highs and that might not scare
you you might instead go okay well
something's coming on sale so how can I
make sure I have enough cash to do
something with how can I Circle up a
couple friends so we could