On today’s show we talk to renown investment blogger, Shane Parrish. Shane is a Buffett style investor that reads and studies everything about the markets. On today’s show we talk to Shane about learning and optimizing one’s life. He also discusses his opinions on the difference between Ray Dalio and Warren Buffett’s investing approach.

In Today’s Show You’ll Learn

  • How Shane thinks about learning new things
  • What mental models are
  • Shane’s opinions on Ray Dalio and Warren Buffett
  • What books Shane values

Tweet your comments about this episode directly to Preston, Stig, and the rest of The Investor’s Podcast Community using #TIPMoney.

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Podcast Transcript and Summary (automated)

Preston: [00:01:10] All right. I am really excited about this episode here because we have Shane Parrish with us and Shane is a hardcore Warren Buffett fan and just really all around investor. It is really exciting to talk to you because I’ve been reading your blog for such a long time now. We’re really honored to have you!

Shane: [00:01:31] Thanks for taking time out of your day to be with us. It’s been an honor to be here. Thanks for having me.

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: [00:01:50] And I guess my first question for you is how did you become this way (being such a learning machine) and were you like this when you were younger.


: [00:01:58] No matter I was. Most people don’t know this but I was a street D student until grade 10. OK. I don’t think I literally had a grade above D until grade 10.


: [00:02:10] I was never never really excited about learning. Right. I was always hanging around with the wrong people or in the wrong crowd. My parents were in the military so I was a military brat moving you know city to city every year. And the city had to make new friends. And then in grade 10 my peers changed and the expectation began that not only could you have fun but you also had to get good grades. And it was all of my friends that I was hanging around. You know got me into this good grade thing and I was like OK well you can still have fun and get good grades and you know that kind of led to university in expectation of university. And at that point I still wasn’t super interested in learning things I didn’t have to learn. It wasn’t until I got out of the work or get into the workforce and you know after graduating with a Bachelor of computer science I went to work for an intelligence agency and that was a really kind of like kicked into this thing which was you know I noticed that I was spending more and more of my time fixing problems that I was creating myself. And I wanted to avoid that. And one of the ways to avoid that is through kind of intelligent preparation and learning things in advance of meeting them and not trying to learn them the time when you need them and then refining them and trying to learn things that don’t change over time so that you can apply them to a wide variety of situations and say No I wasn’t. I don’t even I wouldn’t consider myself a learning machine.


: [00:03:38] Now to the extent that I am it’s born from that sort of background.


: [00:03:45] You know there’s a lot of people that will say well you can still learn from a movie you can watch a movie or you can turn on TV and watch it.


: [00:03:52] Why do you think learning through books is better maybe not better than watching TV when you can.


: [00:04:00] I mean I think just to back up for one second we learned from experiences. Right. We can if we don’t learn that we’re not learning and if we are learning we’re learning from experiences whether those are experiences are yours or somebody else’s matters. And if there’s somebody else’s what we really want to get out of those experiences to learn is that the raw material that they use to develop that experience that so much of what we consume online is other people’s obstruction. So somebody who’s done all of this work like a Ph.D. or whatever and they have all of this input material and then they reflect on it and they come up with these abstractions and then we consume those abstractions and we consider that knowledge. But in reality the knowledge comes from transferring the raw inputs into the abstraction that comes from the reflection. So when we’re trying to learn from other people we really want to have the reflection piece still be our own. So yeah you can learn from movies you can learn from documentaries you can learn from all these things. But what I really want when I’m learning is the raw material that other people use and I find in books you get a level of fluency and a level of information that you don’t get online articles. The bar is higher. You don’t get in movies because movies are usually generally there for entertainment purposes and you might learn stuff in movies that say can’t learn things in movies. It is to say that I want to do my own reflection on that material and that is how I actually draw my own abstractions which then I can put into action.


: [00:05:31] So talk to us about how you read is it audio books are you reading hard copies.


: [00:05:39] I read mostly physical books. Increasingly it’s kind of Kindle and I would say the percentage is maybe like 80 10 10 at this point between physical Kindle and audio books. I use audio books in the gym but I often use them for books that I’m reading physically or I’ll use them to preview books so I put them online. I want to know how to speed. And I’ll just kind of go through a few chapters in them and sample the book to see if I actually want to read the book. But for me I find the audio very hard to consume medium and that’s a personal thing. I know not everybody’s like that but for me I can’t be doing anything if I’m doing audio media consumption I get lost. I mean I lose track of things I want to write stuff down. It’s just not convenient for me to do that and I lose focus so easily. You know I don’t lose focus as much on the physical books and it’s really easy to write things down. Kindle is just becoming a practical sort of necessity right. I can’t pack a suitcase full of 50 books and I go away for a few weeks but I can bring a Kindle with me and I find that I’m increasingly kind of adapting to that although I would be a slow kind of convert to that. And then when I am reading I mean I’m not reading every book cover to cover. I want to know why I’m reading the book. I want to have an understanding of what I want to get to that I always almost always skim books or read the introduction of the conclusion skim the chapters the index get a feel for the author and the arguments that are presented in the book and then that gives me a sense of like how much effort and time it takes 10 15 maybe 20 minutes to do that but it gives me a sense of how much time and effort I want to put into this book and often it’s like oh this book is not what is going to solve the problem that I’m curious about right now.


: [00:07:27] It’s great and I want to keep it or sometimes it’s like you know what I really you know based on my knowledge of this subject I don’t really think that they know what they’re talking about and I’ll just kind of give it away or I’ll put it on a shelf somewhere and come back to it later. Right. Sometimes you’re just not ready for that if you’re learning a new subject. You can’t dive in with these books that are way above your level you have to go just above your level and grasp that level and then you can move forward. So a lot of it boils down to like I want to know what I’m reading why I’m reading it. I have a system for like how I take notes. But that works for me. And at the point I think for everybody to develop their own systems about how how you keep track of notes and how you integrate that into your life. But the real point about going back to what we said about learning is that that becomes how we reflect on the material that we’re consuming and that helps us learn it.


: [00:08:18] So how do you filter what’s what’s next on the plate. So when Yellam walk us through this I don’t know if I have an answer that works for everybody.


: [00:08:28] I mean I’m super lucky Su at this point.


: [00:08:31] I mean Farnam Street is a fairly well-known Web site. We get recommendations from publishers who are generally very thoughtful about what they send me and also Readers Write and I get most of my new book recommendations from readers or people that I’m curious about and I have a huge network of incredibly smart people who will send me e-mails going and check out this book. You know it’s an instant buy at that point and then I’ll get to it when I get to it. That’s the thing that sometimes annoys people it’s like Oh you read that book and it’s like well you know it’s sitting on my shelf somewhere right.


: [00:09:06] It doesn’t mean that you can you served my time and kind of directed it means that I trust you to recommend a book and I’m really happy. Recommended me this book to read but it doesn’t mean I’m going to read it tomorrow. It might mean I’m going to read it in ten years it might mean I’m never going to read it. But you know I have it on my shelf and I kind of have an idea of what it’s about. And that allows me to kind of use it like I have a antique library that’s probably I think the office here has earned three thousand books. You know the people walking by the library they come in and they’re like can I look at your books. No we’re I don’t know you at all.


: [00:09:44] Well they probably think it’s a library because that’s not that’s not something you see at most people’s homes is 3000 books.


: [00:09:50] Oh yeah. Not at all. Well it’s not in my house it’s next to a dental office right. So the kids come over like you look at your books.


: [00:09:59] So. How about. Talk to us about the genre that you read. So I know here Rustigan I mean it’s almost always a business book but to be honest with you sometimes it gets a little repetitive like so it’s like OK. Heard that story before I heard that story before. It seems like you really venture off into a lot of other areas outside of business. So talk to us about the different subject areas that you read about.


: [00:10:25] So I read mostly nonfiction and within that sort of broad category I read everything and you know everything.


: [00:10:36] I mean I got a dog training manual in the mail last week. I don’t even have a dog. But it’s interesting from a psychological point of view in terms of stimulus response and how you train people. So I mean I’m always looking for ideas and it doesn’t matter to me where they come from or who has them. If they have a better adaptation of something than I have in my head or something and I don’t have my head that I should have then I want to read about it. But within that I mean increasingly it’s kind of biographies. And it’s always been a little bit of philosophy I would say over the last five years I’ve had a decent chunk of philosophy that’s just been important to me with what I’m going through in my life. And it helps me. And one of the things that I do for books is like I think three years ago as 2014 I was trying to read as many books as I can. I think I got up to 140 to 145 in a year. And I wasn’t retaining what I wanted to add to them. And I was reading a lot of things that had a half life that just kind of like disappear crate and you know I would read this book and be like oh this is this is interesting and two weeks later it’s irrelevant relevant right.


: [00:11:42] The study was disproven that you know the pop psych books were to speak and I think at the end of the day I got away from that and I moved to like okay what has stood the test of time. What is still in print today after 10 or 20 years. Because if you go back and this is a fun experiment for people to run and I’ve done this once and you go back and look at all the bestseller lists from like 2000 go to the New York Times and look at New York Times bestseller list 2001 nonfiction 2002 Nonfiction 2003 and look at how those books have aged. And you know most of them that’s not to say that there are not good books but most of them are pretty much irrelevant at this point. And so I want to. We have a limited amount of time right in the way that I think of my day as I have a hundred energy blocks 33 of those blocks go to sleep 33 blocks go to kind of miscellaneous family errands friends.


: [00:12:34] All of that stuff. And then I have 34 blocks to kind of work with and within those 34 blocks I can apply that energy. However I want. But if I’m applying it to things that change quickly then I’m going to just keep applying that energy to things that change Koopa I’m never going to get further ahead. I’m like running on a treadmill right. But I want to run a marathon but I’m just standing on a treadmill. I’m not actually moving anywhere although I’m doing a lot of work. Lot of energy but I’m not getting anywhere. So how can we build a framework if we work backwards that we can build upon. That’s going to stand the test of time or if it doesn’t stand the test of time. That changes slowly. And one of the ways to do that is to allow time to filter things. I think it was Seneca the younger who said time discovers truth and I think there’s a lot of wisdom to that. I mean much of what we think there is modern philosophy today is actually just ancient philosophy modern. It’s the same subjects it’s more phrasing.


: [00:13:31] They were dealing with the same problems that we deal with so Shane Let me shift gears for just a little bit we have a question from our Twitter feed and this one comes from Charlie Newsome and Charlie said he read he read your blog a lot and that you’d like to learn from success and failures.


: [00:13:48] And so his question is which failure have you learned the most from a man that’s I had so many failures that it’s like it’s hard to pick just one that has learnt the most from. I mean I’ve been fired lost a lot of money for clients. And you know I had to fire people and done that the wrong way. I’ve been to tolerating. I mean there’s so many. But I think the one that would probably resonate the most is when I was on the board of a hedge fund.


: [00:14:20] I mean overall the fund did really well but we had one particular investment that did poorly and it caused me to lose a massive amount of money for clients and for myself personally. And what can I say. I mean I eat my own cooking which is good. But the failure in that case led me to go back and look at why I thought it was so right. And what we missed. And that started a process of evaluating the way we made decisions.


: [00:14:48] I mean everybody ends up failing in one way or another. How you respond to that failure makes all the difference in terms of where you end up in life but by becoming curious and asking myself instead of protecting my ego putting my ego aside and going like how do we figure out why we were so wrong about this and how can we take this and learn from it so that it’s something that won’t happen again because I don’t believe that you can say this won’t happen again.


: [00:15:14] How do we make it probabilistically less likely to happen again. And I mean the world in this case was saying I had a bad outcome and that doesn’t mean we have a bad process. Right. We instinctively think that if we had a bet of about process that’s not the case and in this case we did end up having about process. But that’s a little bit of an aside. So I had to go back to see where I was wrong. Right. And I started thinking more and more at the time about how to make better decisions. I mean what was really getting in the way and what really gets under way is ego right. My ego is getting in the way I spend tons of time doing analysis on this company we only owned I think at the time had six stocks in our portfolio. And so each stock was really heavily weighted and we spent a lot of time researching it and we felt traders had a huge personal stake in the company and I told myself that I must be right because I’ve done all this work effectively. I couldn’t. I was discounting the things that were disconfirming what I thought to be true. And when I went back after the fact and kind of reevaluated things with some distance I could see that I was getting in my own way right. I was on the wrong side of being right by getting out of my way. I can focus on better outcomes and less about me being right. Right. A lot of times we have our ego wrapped up in being right and that prevents us from getting better.


: [00:16:39] What do you think would be a good read or a good source for a person to to allow themselves to check their ego or to be aware of that their egos getting out of control.


: [00:16:54] This is a tough one. I think you know one of the things that did it for me was become an entrepreneur. And when you have everything on the line it’s not about you being right. It’s about being right because you risk utter total failure. If you’re if you don’t have the best outcome so none of it. It becomes less about your ego in some ways.


: [00:17:18] And I think you have to have something at stake Well I think that there’s part of that but I think that there’s also part of surrounding yourself with people that you believe are credible and what you’re doing and having the process in place by which you make decisions that incorporates.


: [00:17:42] I wouldn’t say rigorous but definitely incorporates that into the flow. Right see you’re not doing it ad hoc and you’re just chatting about it right like you’re you’re systematically sitting down and going oh this person has a credible opinion on this. And they differ from me. I want to walk through that. I want to walk through their situational knowledge their experience. I want to walk through how right they’ve been in the past how many decisions they made. I mean there are they smarter than me in this domain.


: [00:18:08] And if they are I really are not really want to learn from them if they are or or vice versa. I mean if they are smarter then you really want to learn from them and if they’re not smarter than you that doesn’t mean that you can’t learn anything from them.


: [00:18:24] I mean I tell my kids that their mission in life their detectives and they have to go around. And their goal is to learn something from everybody they meet. Like everybody knows something they don’t know. And their job is to kind of find out what that thing is.


: [00:18:37] So Shane you you briefly talked about you know investing and working with the hedge fund and such. I think there’s you know when we post to some that we were going to be talking with you on Twitter and people were posting their comments. We got a lot of people that were asking about your opinions on investing and kind of how your approach has evolved through the years and I know that you’re obviously a big fan of Warren and Charlie but I also know that you’re a fan of Ray Dalio. So one of the things that we talk about a lot on our show in the disparity between their two approaches is raise this macro guy and has been enormously successful in Warren and Charlie are much more on the micro side. So I’m kind of curious how you see things do you do you think that there’s a meshing between those two approaches to you just kind of side are you more polarized to one or the other.


: [00:19:29] I don’t think about it in the way that you lay to that question. I think they actually triangulate it really well in terms of how they think a very specific problem.


: [00:19:41] I think they’re both focused on embracing reality and dealing with reality. I mean the commonality in the overlap between the two of them is China.


: [00:19:52] When you think about it they are applying those skills in completely different ways. They’re similarly applying a thinking tool set to those problems and that tells me that there’s a lot more signal than just Buffett alone doing it or more signal than Dalyell alone doing it. Now you have two incredibly successful people who overlap in the way that they think about things and they’re applying it in.


: [00:20:20] Well it’s the same interest free industry incredibly different problems. That tells me that there’s a lot to learn in that toolkit that can be applied probably outside of investing as well.


: [00:20:33] And I don’t know a lot about how Ray goes about conducting his work. I think one of the criticisms against Bridgwater is that not a lot of people completely understand how they make money. If there was a criticism against Bridgwater that would kind of be it. And for me intuitively the Buffett approach is makes more sense right. Like what am I buying I’m buying it cheaper than I think it’s worth. I think I can wrap my head around certain businesses and can I create an environment where I only have to invest in those businesses.


: [00:21:11] So when we look at the Howard Marks and you kind of study how Howard looks at things Howard really is very similar to the way Warren invests but he also talks about some of his in his book The most important thing he talks about how it’s important to understand where you’re at in the credit cycle which I think kind of incorporates some of the Ray Dalio stuff as well. Do you look at credit cycles when you’re investing or are you really just buy into the war. Warren Buffett story just says I just totally ignore anything to do with the credit cycles. I’m just looking at what’s going to give me the best yield for the lowest amount of risk that’s associated with that.


: [00:21:48] Yeah I would say probably more inside personally on that. I just don’t know enough of the credit cycles to have any any sort of credible opinion on them or any predictability about where we are or what’s going to happen. Incorporating that are thinking about that. It’s something to me that would be unknowable and maybe it’s knowable for other people but it certainly appears to be unknowable for me. So I don’t place a lot of emphasis on that personally.


: [00:22:20] So this question comes from Mark Harrison and Mark says what strong belief or idea have you changed your mind on recently and why I kind of alluded to this earlier.


: [00:22:32] I think one of the main things that I’ve changed my mind on in recent years. I’ll give you two examples actually so the first is that I have to be right and say this plagued me I was a knowledge worker read so I got to school with my computer science degree. I went to work for an intelligence agency and it was literally paid for my brain and that brain became my self-worth and my ego got wrapped up in all of this. And what that caused me to do for a number of years was think that if the idea didn’t come from me then it wasn’t really good. So again it became my best idea and not the best idea for everybody else. The thing recently that our poll which changed my mind on is tolerance with bad situations and I’ve always been a fairly tolerant person and super loyal to those close to me. And I think recently I’ve changed my mind in terms of like how far that tolerance should go. And when you should act on it and you know making sure that you’re dealing with reality but you’re actually dealing with it you’re not just wishfully thinking that it will get better. I think when we wrap up friendships or we wrap up relationships into this equation we tend to either ignore or become overly optimistic. And I think one of the things that I’ve done recently that has been terrible for me personally and I’m kind of vowing not to do again is I’ve just been way too tolerant with relationships that are working for me.


: [00:24:05] In the past you’ve been way too tolerant now you’re just more upfront with it.


: [00:24:09] Yeah I mean I’m definitely going to try to be coming out the other side of this right now. Yeah.


: [00:24:16] This question was originated from Steven LaBrie and he brings up these mental models that we know Charlie Munger talked so much about. Can you talk to our audience about what a mental model is and then maybe explain one that that you think is a really valuable or impactful mental model in your own life.


: [00:24:36] Mental models are pretty easy to conceptualize when you think think of gravity right. So gravity is this phenomena that exists in the world. You probably can’t really explain it at a level of detail that makes sense but you know that if you hold a pen and you drop it it’s going to fall to the floor and you know that because you have this mental model of gravity in your head.


: [00:25:01] And so mental models become this abstraction of reality that allow you to kind of deal with it right to think through things and to grasp ideas in chunks and to visualize not only in some cases you can visualize what’s going to happen in some cases. You can visualize what has happened based on your mental model. And the more miles you have in theory the better you understand the world. Everything is becoming a mental model. I mean I think this has kind of been overblown in a way to this sense where not everything needs to be a mental model that you think about right. So when I think about mental models I think I want reliable mental models and what are the reliable mental models that means that they’ve stood the test of time. Right. So when I say mental model I’m talking about reliable models of the world or it’s evolution in biology or thermodynamics in chemistry or thinking models and thinking models being like second order thinking or the map is not the territory or incentives and being able to shift perspectives and think about things and taking a step back through those models and through those lenses allows you to have better tools so you can avoid problems and then course correct quicker if you do encounter problems. But I mean if you have a lot of mental models in your head in theory you should be able to avoid most problems instead of having you know getting yourself into. It’s not always the case but you know the person with the fewest blind spots in the world wins and removing blind spots means thinking better thinking patterns about finding simple processes the kind of help us work through problems from multiple dimensions and perspectives. And what better way to do that than kind of understand and know the big ideas of the world.


: [00:26:50] So I’m curious what would you say is one of the biggest mistake that young investors because we have a lot of young investors that listen to the show that are in college or just got out of college.


: [00:27:01] What would you say is one of the biggest mistakes that a lot of these young investors make whenever they first get into the markets all relate this to a few friends of mine who have made I would say will say seven plus figures on Bitcoin. But I think that understates it. And I think the biggest mistake that they’re making right now is that they’re ascribing that success to their knowledge.


: [00:27:30] And as an investor and I think that that is going to cause them to probably lose most or all of the money that they have and in paper gains at this point in time.


: [00:27:43] I think early success is probably the worst thing that can happen to investors because you ascribe that to your knowledge and your process’s and kind of your thinking and you know that builds your ego and it builds or competence and then you start taking bets that you shouldn’t take and you’re taking risks that you don’t know that and I think you know it was I think Alexander Pope who said a little knowledge is a dangerous thing.


: [00:28:14] And there’s kind of an inflection point there where you know you get to a point where you have enough knowledge that you’re dangerous. And I think you know with a lot of young investors that I talked to personally that like come to Ottawa and were Arab coffee or something we start talking through a company. And you know almost everything that they say is textbook like it is very much related to financial analysis or quantitative analysis or the first page of Google. Right. And so I think you have this availability bias where you found this information you think it’s unique to use somehow and your mind tricks you into this.


: [00:28:57] This is the conscious thing like you’ve spent 20 30 40 hours on this company of course you know everything there is to know about it right and and you know you find this information or this news source and you’re like oh nobody knows this but most of that information is priced into the market and it’s the things that you think about that are different than the market where you have a leverage in terms of positive or negative in terms of the outcome of that company.


: [00:29:24] And I think that one of the best things young investors can do and all the investors I mean I work with hedge funds on a consulting basis to set this up is to keep decision journals and decision journals kind of check your ego at the door and you start writing it like what you think will happen and why you think it will happen. And the interesting thing is like often we’re right but we’re right for the wrong reasons.


: [00:29:47] And then when you read your handwriting going like this is going to happen and here’s why it’s going to happen and then it’s so easy to convince ourselves that like oh well what I thought was going to happen so it must have been right on the reasons. But then when you’re confronted with like what you thought were the reasons and then what actually played out in reality there are two different things often and that’s a very humbling experience for people. And I think like getting in that process that habit early would be super lucrative long term and I don’t mean lucrative just in a financial sense I mean lucrative in a getting what you want out of life since Yeah.


: [00:30:25] I think that when a person is able to look back at what they wrote and if their temperaments being tested in the position they can also say hey although it feels like I was wrong and I have this urge that I want to sell or get out of the position these things that I wrote down haven’t changed right.


: [00:30:44] These are all these things that I wrote down are still the main reason why I owned it. None of those things have changed so it might help a person continue to hold the position if they are in fact right.


: [00:30:56] I see a lot of like I call it 13 F panic selling which is like you’ve cloned a couple of Super Investors and the stock goes down and because you don’t this kind of goes back to learning right like you’re eating. They’re learning that we talked a bit earlier because you didn’t do the work yourself. You don’t know. Kind of like what’s going on. And then of course you’re going to be like oh I’m just going to sell and cut my losses. But the reality is maybe that’s a good choice and maybe it’s not. The point is you don’t know because you haven’t done the work and doing the work is a constant struggle. It’s a full time job for people right.


: [00:31:32] You can’t be oh I mean you can. You shouldn’t be so young and thinking that you have all the solutions.


: [00:31:40] I mean there is people that are like investing is a terrible career to get into. When you think about it. Right. It attracts the smartest people the most competitive people. And it’s like you want to excel in that field maybe you know you can have a lot easier path if you excel to if you apply that mindset and is brains through a field that doesn’t typically attract those type of people you will probably go a lot further.


: [00:32:10] That’s an interesting point. So recently you had a chat with Ray Dalio. I’m kind of curious if there was any like big you know anything that you really remember about the interview that you kind of just. Oh wow I never thought of it that way. Do you have anything yet.


: [00:32:27] Yeah like I like Ray’s phrasing right like he says pain plus reflection he goes progress and I think that’s true right because he’s hitting on the fact that you need reflection. And I think that that’s super important and underrated by most people. I think that one of the things that I love free raised phrasing on. I don’t know if I’m paraphrasing him here exactly but it’s like there’s nothing more important than embracing reality. Right. And when it comes to our mind it’s not a conscious thing but most of us buy what’s true and it doesn’t fit our world belief or what we want. That is so change. If you can figure out a way to step back from your you’re a step ahead. Right. And getting your ego out of the way. I mean Ray’s idea of a merit or an idea of meritocracy is Daphne because and I love the fact that he specifies idea meritocracy. Right. It’s not a meritocracy. It’s an idea meritocracy.


: [00:33:28] If other people have a better idea let’s use it and a follow on to that is you know you should also know when you’re the best person to make a decision and when you’re not and if you don’t know the answer to that question odds are you’re probably outside of your circle of competence.


: [00:33:45] So how does a person how does a person become more acceptable to forming an idea meritocracy around themselves.


: [00:33:55] I think that’s is incredibly hard. I mean I think a lot of that is cultural. But you know you can use Ray calls it believability of people. I kind of I’ve always thought of it as credibility raid. So people have credibility with opinions and those opinions should not be equal. And if you think it that just that alone as an observer so not choices that youre making because thats really hard your ego will be in play for the next meeting that you go to where decisions are being made where you’re inputting into the decision just step back. During that meeting and go Look I’m going to wait everybody’s opinion credibly. How believable are these people. Right. What is their experience in the area being decided what is their track record. What does their knowledge of the situation. How close are they to the problem at hand. And if I think about things from that perspective I will naturally probably come to the conclusion that not everybody’s opinion should be treated equally and that is the very beginning the first step if you will of becoming individually an idea meritocracy and becoming a corporate one or a cultural one within your company is a completely different story. But if you can do it for yourself I mean that would just go a long way and I think like Buffett Dalí a lot of great people have that in mind. I mean Gates is doing that right now with the Gates Foundation right. Like he’s not pretending to have the solution to all of these problems. He’s saying oh that sounds credible let’s try it. And you know he’s doing that 100 times and being like OK this one is the most credible. Well it’s a play a lot more money to this problem or the solution.


: [00:35:40] So earlier you had mentioned about a book that was about training a dog in the psychology of that and I found that really a fascinating comment. I guess my question would be what book or topic have you studied in your past and it could be it doesn’t matter the timeline that it could be five years ago it could be last month. What topic or book have you studied that would really surprise the audience it’s like kind of out there but that is also had a very profound impact on you even though it’s kind of something that would be out of the ordinary.


: [00:36:15] How to Talk to your kids will listen would be one of them. And I think that applies to everybody. I like how you communicate with each other and I think there’s a lot of wisdom in parenting books. It’s surprising you would never if you don’t have kids and a never think topic of parenting. But if you do have kids and you pick up a parenting book you know a lot of that stuff applies to other people. Right in terms of like how you handle the situation how you make sure that you step back from the situation and how you talk about it. Right so the way that you’re supposed to address things with your kids helps you address things in the workplace right because you don’t want to blame your children. Right. It’s not about them personally. It’s about an action they did. Well that’s the same thing you want to do in the Workbook. It’s not like your a bad person because you did this. It’s like no you did this. And this isn’t this is what we should be doing. How do we get to a better place than this or what would you do next time and I mean you don’t want to take the same approach that you would take or same language that you would take with their kids but the same sort of framework would apply to setting goals with people at work dealing with performance problems with people at work.


: [00:37:22] Anything this relationship is where you need to have a more open and honest conversation. Right. And it teaches you to kind of separate different parts of the conversation to structure the conversation with them to not confuse topics. Right. We do that so often that work is like we’ll have a decision to make and you know say you and your partner have to decide where you’re going to go for summer vacations. So you start mapping it. And they start planning logistics and the conversation just becomes incredibly complicated right because now you’ve intermixed two things instead of just going like let’s figure out where we want to go first and then let’s figure out how to get there because when you’re mixing two things it becomes infinitely more complicated and you’re less likely to actually move forward.


: [00:38:08] Interesting. Was that a book that you said at the beginning how to talk to kids who listeners that just think the title is how to talk so your kids will listen.


: [00:38:17] Ok got it. All right. This is a this is a funny question that you have to only provide a response to one of two books that I’m going to name and I’m not going to say anything other than the name of the two books and then you have to say one of the two books The Intelligent Investor or margin of safety margin of safety. I am I the only one who says no no stick and I have the same opinion. And we were just kind of curious you know you’re a well-read person we were just kind of curious what you what you thought and you didn’t say that it was better you just said the name of the book so we’ll let the audience interpret the results.


: [00:39:00] All right. The last thing Shane is and we know you’re so well-read and it’s almost impossible to name one book and if you want to name however many what would you say is something that has really influenced you in a major way. Maybe it was a book that just got you reading a lot or maybe it was something that kind of put you in a certain direction.


: [00:39:20] I won’t offer recommendations but to answer that question. Books are contextual. So this say it’s kind of like our right if you go to the Art Gallery by your hose and you look at a painting and then you go back 10 years and look at the painting you know the painting doesn’t really change but what changes is you and that painting can mean something completely different ten years from now than it did the first time saw it. And for me I’ve had a number of occasions where that’s happened so one great example would be Marcus Aurelius Meditations. I read that first year university I thought this thing was like the worst thing to ever happen in Perth. That was because I had a crappy translation but in Peard it was just I wasn’t in a place where it mattered to me where it made a difference to me and it didn’t speak to me. And so when you talk about what books made a big difference in my life there’s no book that made a bigger difference than the stopwatch. I would have been arrested in a police car had I not been reading that book right. My trajectory in life would be totally different. I’m not 100 percent luck. But it’s also the answer to the question I think in life books that help me are books that make me feel like I’m not alone Marcus areolas meditation’s was a really good example of that. You know here you have the most powerful Roman Empire Roman emperor in the world is going through very similar stuff to what we go through in life. And he’s writing openly and honestly about it. And you also have an exemplar behind the scenes which is like his he could literally do anything he wanted in the world and he didn’t abuse his power. And you know that helps. Helps me contextualize my life in a way.


: [00:41:04] And I think that you know when I went through a divorce that book spoke to me in a way that it didn’t speak to me before right. And it gave me a framework for handling things that I had never had to handle before. And you can’t match things better than perfect contact’s perfect book and it helps you. Right. So I’m not alone. It’s giving me a framework for how to deal with something that I’ve never dealt with before. And I can learn from somebody else’s experiences in that. And I know that like this is something everybody experiences but so often we’re going through something in our life a breakup you know we’re or achieving success right.


: [00:41:46] We still feel alone. You know we feel guilty about her success because we don’t want to feel like we’re bragging about it. We feel comfortable that we’re going through a breakup and we don’t want to burden our friends about it. So a lot of what modern culture does is forces us inward and if we’re going to be inward and that’s not to say that that is the best approach but if we are going to be inward then finding books or people that speak to you allow you that outlet. You can’t have outside of. I think that you know Tara Brock is another author who has done a lot for me in terms of dealing with reality and facing things that you want to change in yourself.


: [00:42:32] Yeah I. Any specific book by Tara.


: [00:42:35] No I mean the name kind of who’s me it was four or five years ago that I read her. But it’s marked up a lot. I haven’t come back to it since but I remember at the time kind of walking away going oh this is like I feel I feel better about where I’m at.


: [00:42:51] And it’s not this dark tunnel that I thought it was because it really is the meditation’s if you’re going to do meditations get the haze translation which is by far the best. And yeah I think that what you want is books can be drug. I don’t think people understand that right. It’s not that you need medicine all the time. Write a book and be medicine because that meant the book speak to you in a way that changes your path and it doesn’t have to necessarily change things that you do if you don’t feel alone anymore or you feel like you’ve gained knowledge that you can apply to a situation that you’ve never had to encounter.


: [00:43:32] I mean if you thought about learning from only yourself you would literally just learn from mistakes and computers can do that because they process like trillions. I mean AI is effectively that right like it’ll process trillions of transactions a second and sure it can learn but I don’t have a life where I can process trillions of failures. So I need to learn from other people and going back and finding books that stand the test of time on these I mean there’s a reason they do stand the test of time and then using those as your filter for reading is probably a good source no matter what you’re going through in life.


: [00:44:08] Well Shane we can’t thank you enough for taking time out of your day. And I know your time is very treasured and to be a part of that we’re just very honored.


: [00:44:17] If people want to learn more about your work and they find you they can go to fast stop blog or at firms Street on Twitter. We have a newsletter called brain food. It’s got one hundred sixty five thousand subscribers at this point.


: [00:44:32] Every Sunday is the best of what I’ve found on the Internet. Try to pick timeless topics or subjects that I think are interesting from multiple different perspectives. Doesn’t mean I agree with everything in this and it’s designed to provoke thought. So we call it signal. In a world full of noise.


: [00:44:47] All right well thank you so much Shane. We really appreciate it.


: [00:44:51] Thanks guys great being on.


: [00:44:53] So guys I wanted to conclude this episode by telling you about our community event that we’re having alongside with the Berkshire Hathaway shareholders meeting. So this is open to anyone that wants to attend. And we always have such an incredible time together. You don’t need to own a hundred twenty five thousand dollar share of Berkshire paid to attend. We explain exactly how you can do it on our Web sites. Don’t worry about that. Warren and Charlie aren’t getting any younger and the time to see them is as right now we have plenty of people that come to the event all by themselves. But the common thing that we hear is that it was so easy for everyone to make friends and they had so much fun with all the other team peers that attend the meeting. We do everything together so you won’t miss anything or you won’t feel left out if you’d like to attend this meeting with Stig myself and some of the guests that we have on the show. Simply go to THP Berkshire dot com. We bought the domain and we have a pointer to an information page where you can sign up and you can learn exactly what you need to do to attend the meeting. So let me repeat the address so you don’t forget it’s THP Berkshire. All one word dot com. We would love to hang out with you. So come and join us. All right. So that’s all we have for you guys today and we’ll see you again next week.