11 April 2022

In today’s episode, William Green speaks with Jason Zweig, who writes the Intelligent Investor column for The Wall Street Journal. Jason edited and updated the revised edition of Benjamin Graham’s The Intelligent Investor, which Warren Buffett hails as “by far the best book on investing ever written.” Jason also wrote Your Money and Your Brain, a classic guide to the mental game of investing.

In this conversation, he shares rich insights on how to invest (and live) intelligently.

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  • What Jason Zweig learned from his father, the wisest person he’s ever known.
  • Why investors shouldn’t trust what brokers and financial advisers are selling them.
  • How success is shaped by weird moments of random chance as well as skill.
  • What Warren Buffett said when Jason asked him, “Do you think you’re a genius?”
  • Why Benjamin Graham was obsessed with the overwhelming importance of survival.
  • Why investors should be optimistic, humble, and intensely wary of overconfidence.
  • Why investing is, above all, a head game in which the secret of success is self-control.
  • Why investors need rules, policies, and procedures to drive their decision-making.
  • What Jason learned while working with Nobel Prize-winning genius Daniel Kahneman.
  • How Jason thinks about the perils and promise of disruptive technologies like Bitcoin.
  • How money can (and cannot) buy you happiness.
  • Why he’s inspired by the simple motto “I did the best I could.”


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

William Green (00:00:03):

Hi there. My guest today is Jason Zweig, who’s probably the most eminent financial writer in America. As I’m sure you know, Jason writes the Intelligent Investor Column in the Wall Street Journal. Since he started writing this column back in 2008 he’s done an incredible job of guiding readers week in and week out to make smarter investment decisions, and to protect them from all sorts of dumb and costly financial mistakes. Jason also edited and updated the revised edition of Ben Graham’s masterpiece, The Intelligent Investor, which Warren Buffet has described as, “By far the best book about investing ever written.” Jason’s also the author of The Devil’s Financial Dictionary, which is a very amusing, satirical book that skewers what he calls the fads and fakery of Wall Street. He also wrote a classic book called Your Money and Your Brain, which draws on neuroscience to explain how you can improve your financial decision making.

William Green (00:00:54):

In this conversation we talk about Jason’s belief that the real secret to investment success is actually to gain control over yourself. We discuss cryptocurrencies, like Bitcoin, and what he thinks about investing in disruptive technologies in general. We talk about what he’s learned from interviewing Warren Buffet. We discuss Jason’s fascinating experience of collaborating on a book with the Nobel Prize winning economist and psychologist Daniel Kahneman, and we talk about the science of happiness. As you’ll hear, Jason’s a wonderful storyteller, and he is full of wise and practical advice about investing and life. I’m also happy to say he’s an old and dear friend of mine, so this conversation was really just a total pleasure for me, as I’m sure you’ll gather from the occasional outbreaks of raucous laughter. I hope you enjoy it as much as I did, thank you so much for joining us.

Intro (00:01:48):

You’re listening to the Richer, Wiser, Happier podcast, where your host William Green interviews the world’s greatest investors, and explores how to win in markets and life.

William Green (00:02:08):

Hi everyone, I’m thrilled to be here with Jason’s Zweig, who has probably taught me more than anyone else about the art of investing over the years, and may possibly be the best financial writer around, so thank you for joining us, Jason.

Jason Zweig (00:02:21):

Well, it’s great to be with you, William, and we’ll leave the compliments aside, but thank you.

William Green (00:02:27):

I’m delighted to have you here. I wanted to start, actually, by asking you about your father, Irving Zweig, who died, I think, when you were about 22, this is way back four decades ago in 1981, and you’ve described him in the past as the greatest and wisest man you’ve ever known. And in one of your books you wrote a dedication to your father and it said, “For my father who knew everything.” And I wondered if you could tell us a bit more about who he was, why you revered him, and how he influenced the person you’ve become.

Jason Zweig (00:02:57):

Yeah, so my dad was a remarkable guy. I mean, he was born on a farm between Albany, New York and Pittsfield, Massachusetts during World War I, he had kids later in life because he served three tours of duty in World War II, because the military lost his records. He was a farmer, he was a political science professor, he was a newspaper publisher. He became an art and antiques connoisseur, and he was an athlete, he played semiprofessional baseball for a couple of years. He captained a boat in the Navy of the US Army during World War II, because the army had a few boats, and my dad was in charge of a ship, a mine sweeper. So he visited, his tours of duty took him to South America, the coast of Africa, the Indian ocean, the South Pacific.

Jason Zweig (00:03:52):

He didn’t see a lot of combat duty, but he saw enough, and among the many things he taught me was that there’s, one of his favorite expressions was there’s nothing so noble or so horrible that human beings can’t do to each other. And he was just an extraordinary man in a lot of ways. He was a great storyteller too.

William Green (00:04:16):

He was a crusading newspaper man as well, if I remember rightly, I remember reading something you had written where he almost got killed when he was working on some story.

Jason Zweig (00:04:26):

Yeah, that’s correct.

William Green (00:04:27):

What happened there?

Jason Zweig (00:04:27):

Yeah, that’s correct. So in the late 1940s my dad was working on his PhD in political science at Ohio State when, as he put it, he got bit by the newspaper bug, and he just dropped everything and bought a newspaper on the Ohio River right across from the West Virginia border, in what then was a very poor part of Ohio. I’m not familiar with the demographics today, but in those days it was quite poor. There were numerous pottery factories there, because there’s a lot of workable clay along the banks of the Ohio River there, and apparently one of the towns, all the workers were in the grip of a corrupt union boss who was terrorizing everyone and shaking them down from money. And my dad got a bunch of tips from people in the union, and at the next election he wrote a lot of editorials and a lot of investigative journalism exposing this guy as corrupt.

Jason Zweig (00:05:28):

And the labor union bosses, goons, came after my dad, slashed his tires, they threatened to beat his then pregnant wife, as he recalled one of them saying, “If you don’t knock off them stories we’re going to beat that baby out of your wife with a crowbar,” and this was my dad’s first wife, and then they ran him off the road on a foggy night and almost crashed his car down the banks of the Ohio River. But in the end journalism worked, justice prevailed, the union boss was thrown out and a new guy came in, and I think my dad spent the rest of his journalism career trying to find another story as good as that one and never really did. Most journalists get a handful of great stories in a lifetime, and obviously he had an amazing one, but he was an example of quiet courage.

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Jason Zweig (00:06:24):
I think the other story about my dad that really sticks in my memory, William, is in 1981, when my dad was dying of cancer, I was home for a visit and the phone rang, and a voice said, “Is this the Zweig residence?” Very polite, formal sounding man. And I said, “Yes, can I help you?” And he said, “Is Irving there?” And I said, “Yes, but he’s not really able to come to the phone, can I take a message?” And as I recall the man’s name he said, “Well, could you tell him that Glen Irwin is on the phone?” And I knew everything about my parents’ business and a lot about their life history, I had never heard of this man. And I went and I told him. At that point it was very difficult for my dad to move around the house because his lung cancer had spread to his legs, but he looked at me and then a light came on in his eyes and he said, “Oh, I’ll speak to him.” And he, with a great deal of difficulty, came to the phone.

Jason Zweig (00:07:28):
If you’ve ever listened to a stunning conversation that you can only hear one half of, it always sticks with you. And my dad took the phone and he said, “Glen,” and after a long pause my dad said, “Yes, I remember.” And the person at the other end started telling my dad a story, and my dad kept nodding and saying, “Yes, I remember, I remember” and I saw something I had never seen, I saw my father cry, and I couldn’t hear almost anything of what Mr. Irwin was telling him, but they talked for about 10 minutes And at the end my dad said, “Thank you very much, I hope so,” which I immediately inferred, and I think correctly, that Mr. Irwin had said to my dad, “I hope I will get to see you while I still can.”

Jason Zweig (00:08:22):
And when he hung up I said to my dad, “Who was that?” And my dad proceeded to tell me the other half of the story, which is sometime around in the late 1930s, my dad was the student at Union College in Schenectady in New York, and he was walking to class one morning, and he was walking behind a student, and my dad noticed he was black. And at that time he was either the only black student, or one of maybe three black students, or a handful of black students at the time, and my dad had never seen him before. And they were both walking along, minding their own business, and suddenly from behind a few trees a bunch of white guys jumped the black student and started kicking him and beating him up. And my dad immediately dropped his books, or whatever he was carrying, and jumped in and fought back and took Glen Irwin’s side, even though he didn’t know who this kid was, but it was obvious to him who was right and who was wrong.

Jason Zweig (00:09:26):
And momentarily the campus security people came along and broke up the fight, and they all got dragged to the office of the president of the university, whose name was Dixon Ryan Fox, who was a very famous scholar. And of course the white kids who had jumped Glen Irwin all blamed him, and they said, “We were walking along, minding own business, and this N-word guy attacked us, so we had to fight back, and then this kid came along and made even more trouble, and that’s what happened.” And so Fox turned to my dad, and Glen Irwin, and said, “What’s your side of the story?” And Glen Irwin was so scared he couldn’t speak, and my dad said, “Well, President Fox, maybe you remember me from when I was admitted to Union College,” because my dad had gotten a rejection letter when he had initially applied that said, “You’re qualified for admission but the Jewish quota is filled,” because in the 1930s most elite educational institutions in this country had a policy that they would only admit so many Jews, and the Jewish quota had been filled.

Jason Zweig (00:10:37):
And so my dad immediately got in his family’s wagon, because in those days they didn’t have cars, and rode to Schenectady, which was probably about 25 miles away, 30 miles away, and he waited outside President Fox’s office all day long until his secretary said that he could go in. And he was admitted, and he said to the president of the college, “You sent me this letter, and it said the Jewish quota has been filled. Well, as you know, President Fox, the whims of war are gathering in Europe, and young American men may be called into military service. Should I tell the US Army that the Jewish quota has been filled when I’m drafted?” So he’s telling this story, and President Fox says, “I remember you young man, why don’t you tell me what really happened?” And so what happened in the end was the thugs who attacked Glen Irwin were expelled. Glen Irwin went on and, if I remember right, he became something like a chemical engineer, and became a senior executive at a major company in the US. And what to me was so striking about this story is that my dad had never told any of us about this. My mom had never heard the story, in fact, the day it happened my mom didn’t even hear about it, because all this happened between me and my dad, and that, I think, is really the definition of quiet courage, when you do something that noble and you never even talk about it. And he completely transformed this man’s life, and obviously Mr. Irwin was calling because somebody had told him, “Irving Zweig is very sick,” and they hadn’t spoken in over 40 years.

William Green (00:12:28):
That’s extraordinary. So is it fair to say that there’s a moral seriousness to your journalism, I would say, where you take seriously the idea of writing about the financial world in a way where you’re standing up for people, in a sense, against exploitation by Wall Street, with all of its cunning ways and self-serving ways, that there is a, I was going to say, a subtle crusading element, but it’s not so subtle, it seems to be pretty central to what you do, protecting people.

Jason Zweig (00:12:57):
Yeah, I want to be very careful here. I mean, I would never compare the daily or weekly practice of what people like me do to the kind of courage that my dad exhibited on like that. But I am guided by something a little different, which is when I first became the mutual funds editor at Forbes Magazine in 1995, Jim Michaels, the editor of the magazine, and of course you knew him as well, William, when he gave me the job, at the end of our conversation I said to him, “Do you have any advice for me?” Because mutual funds editor at Forbes was actually his first job when he came to the magazine, or one of his first jobs anyway. And he thought about it for a second and then he looked at me and he said, “Yeah,” he said, “Don’t get anybody’s blood on your hands.” And that stuck with me, and has stayed with me ever since.

Jason Zweig (00:13:58):
I think it’s very important for journalists not to think of themselves as crusaders, not to become self righteous. We’re not better than the people we write about, we’re not even better than the people we criticize in our writing, but we do represent our readers, and what Jim was trying to tell me is that you have to treat your reader’s money as if it were your own, and you have to have that sense of responsibility where you can’t recommend an investment approach or critique something if you wouldn’t put your own money behind what you’re saying. And I think there is a moral component to that because, one expression I like to use is that in the financial food chain, the individual investor is like a piece of plankton. There’s sharks and barracudas and little fish and minnows and shrimp and krill, and then down below all of those is the individual investor, and it’s just so easy to pander and to tell people what they want to hear. And it’s not our job to tell people what they want to hear, it’s our job to tell them what they need to know.

William Green (00:15:19):
When you started covering mutual funds, which I think must have been around ’87, something like that, late eighties, early nineties?

Jason Zweig (00:15:27):
Well, I became the mutual funds editor at Forbes in 1992.

William Green (00:15:30):

Jason Zweig (00:15:32):
But I had done a little bit of fund reporting before that.

William Green (00:15:35):
Were you startled to see the things that were going on on Wall Street, and the way that money was managed, the way that funds were sold, the self interest, the conflicts of interest, what did you see that started to make you pretty cynical about the ways of Wall Street, and to see, actually instead of me just picking great fund managers and telling people you have to invest in this now, you were saying to people, you better beware because there’s stuff going on here that I’m not sure you understand.

Jason Zweig (00:16:08):
Well, I guess a couple things. I mean, I had great mentors at Forbes, Jim Michaels was one, Bill Baldwin was another, maybe even more importantly, because I worked more with them, Allan Sloan, Gretchen Morgenson, Alan Frank, Howard Rudnitsky, there were just incredible reporters at Forbes in those days. And Forbes was a journalistic culture of cynicism and skepticism, and also a fair amount of, let’s say, anger. The reporters and writers really didn’t like the way corporate America and Wall Street behaved a lot of the time, and I just drank that up and absorbed it.

William Green (00:16:57):
It was also fearless, which is unusual. For people who don’t know Jim Michaels, Jim, who looked a bit like Burns in the Simpsons episode.

Jason Zweig (00:17:05):
Yeah, Mr. Burns.

William Green (00:17:06):
He was small, satanic looking guy, who was just so fearless and tough, and he edited the magazine for 37. And before I joined the magazine I wrote a test story exposing a guy who was worth hundreds of millions of dollars, I think the headline was Mining the Suckers, because he was a mining entrepreneur, and the guy didn’t talk to me. And on my very first day at Forbes, when I’d been hired after this trial story, this guy, the centimillionaire, flies in from Singapore to tell Jim Michaels what an appalling guy I am and how I should be fired. So I literally, on my first day in this job, was like, I’m going to get fired on the first day.

William Green (00:17:43):
And I remember Jim Michaels writing to me and asking me for the facts, and I’d backed up various things that I’d written, and he wrote back and he said, “All right, I’ll just politely tell him to piss off then.” And it was just so phenomenal to have an editor with that courage that he was prepared to take on interests that were powerful and could sue, and I’m not sure that would happen anymore. I don’t think there are that many magazines and news papers that are willing to take on those powers with that kind of fearlessness, because the business isn’t so lucrative that you can survive that sort of war.

Jason Zweig (00:18:19):
That’s right. Well Forbes was, and a handful of other publications, had the luxury then of being incredibly profitable. And although I don’t remember the company, I distinctly remember writing a story that was so critical that the company pulled all of its ads from Forbes for the next year. I couldn’t tell you, it was so long ago, I don’t remember who it was. And I remember after happened, right after it happened, bumping into Jim, maybe in the hallway or someplace, and he said, “Congratulations.” And I said, “What did I do?” And he said, “You got them to kill all their ads for a year.” And the thought that an editor would say that to a reporter today is pretty farfetched, but in those days it was really a badge of honor.

William Green (00:19:14):
That’s impressive. Yeah, I remember once having a story killed by a major magazine, really prominent magazine, because the company I was writing about had an ad in that issue, and that was at least a decade later. And so I think that showed the vulnerability of these very powerful publications. So I think we were very lucky that we were groomed in that environment in which we just had a boss who was fearless and had money and power behind him, it was a fantastic schooling.

William Green (00:19:42):
So years later when you wrote this wonderfully cynical and witty book, The Devil’s Financial Dictionary, which satirizes Wall Street’s way of operating, you wrote, if I remember rightly, “No matter how cynical you are about Wall Street, you aren’t cynical enough.” And there was a point where, I think one of my favorite bits was your definition of clients, you said, “Noun, also known on Wall Street as muppets, flunkies, chumps, suckers, marks, targets, victims, dupes, baby seals, sheep, lambs, guppies, geese, pigeons, and ducks, as in when the ducks quack feed them,” and I was wondering if you could talk a bit about some of the things that made you skeptical and made you see, I’ve got to cover the business of investing on how money is managed in a deeply skeptical and wary fashion.

Jason Zweig (00:20:31):
Yeah, so I think one formative experience that I can remember was, I mean, this was probably, I think this was before I was a mutual funds editor, maybe it was right after, we did something that at the Wall Street Journal today we would not be able to do, but at Forbes then it was permissible, which is I, and I think another reporter, called every major brokerage firm and basically impersonated an investor and said, “I’d like to buy some mutual funds, how do I go about this? What’s the sales commission, what will it cost me every year?” Asking about the expenses of the fund. And so far as I can recall, not a single one of those conversations was truthful. Virtually every broker we spoke to told us something that was false. And I guess I learned two things from that, one, don’t trust anybody, but two, not everybody tells you things that are false because they’re lying. A lot of people tell you things that are false because they don’t know any better.

Jason Zweig (00:21:41):
The problem is, from the point of view of the end consumer, the individual investor, it almost doesn’t matter. I mean, if somebody is misleading you, you don’t really care whether that’s intentional or not, but the conclusion I came away with is that a lot of people are either lying or ignorant in the community that sells investments to the public, and that view has never really changed. I mean, do I think that the average financial advisor is a liar or a fool? No, I think most of them are honest people doing their best to earn a living and help the people they work for, but there’s still way too many of them who aren’t, and woe be tied the client who makes the wrong match.

William Green (00:22:35):
And even the phrase financial advisor is a little bit of a euphemism, isn’t it?

Jason Zweig (00:22:40):
Of course it is. The big problem I have is that most financial advisors don’t give financial advice. What they do is they recommend portfolios, and they’re basically investment managers who aren’t really qualified to manage investments, which is why they’re financial advisors rather than portfolio managers working for Fidelity, or another major firm. And they call what they do financial advice, but really all they’re doing is recommending portfolios, and most clients need more than just portfolio recommendations, they need financial planning advice, and most financial advisors would rather run these little portfolios than give people the advice they need.

William Green (00:23:29):
You and I worked together at Money Magazine back in the late nineties for about five years, I think, and despite the fact that I was much younger and less experienced than you I had the pleasure of editing your column, which must have been torture for you. And my sense back then was that even then you always were investing your money basically in index funds, instead of trying to pick the best active fund managers, and I figured that you were one of the few people who was actually in a perfect position to pick truly exceptional fund managers, that you got to interview of a lot of them, both at Forbes and then at Money, and when you were guest columnists at Time and elsewhere. And I thought that was really interesting, there was something very telling to me about that, that despite being in a position to pick potentially winning fund managers, you chose to index.

William Green (00:24:14):
And I always was a little bit more schizophrenic about the choice, I’ve always indexed a part of my family’s savings, particularly my wife and kids money, because I don’t think they should pay for own self delusion. But I’ve always erred towards investing my own money with active fund managers, at least to some extent, and I wondered if you could talk us through why you ended up being such a passionate advocate of indexing, despite the fact that you actually did have that opportunity to find exceptional fund managers, active fund manages.

Jason Zweig (00:24:50):
Yeah, so at the risk of disappointing you with a simple answer, I’ll say that I’ve always loved my work so much that I throw a lot of myself into it, and when I’m not on the job I don’t want to think about my job. I don’t want to do my job when I’m not doing my job. For example, I’ve only seen two financial movies, I think, ever, Wall Street and The Big Short, I make a point of not watching any movie that’s about finance.

William Green (00:25:29):
You’ve got to see the Wolf of Wall Street, that would complete the trio.

Jason Zweig (00:25:35):
Yeah, and Boiler Room, and I guess that’s the four best, but I haven’t seen them, and I don’t plan on it, because I don’t want to think about investing when I’m not thinking about investing. So that’s really the answer, I don’t want a portfolio that I have to monitor when I’m not monitoring portfolios, when I’m not working I want to be doing something else.

William Green (00:26:00):
So if you were trying to beat the market, which obviously is a very difficult game, I’m curious how you would go about it, because I think about this a lot, obviously, myself, and I often think that if I had the talent and the temperament, which I most definitely don’t, what I would do if I was setting up as a young money manager, and I actually really wanted to beat the market, is I’d run a small portfolio with say 8, 10, 12 stocks, and most of the time I’d just sit on my hands and do nothing, and then once in a while, when there was some sort of disruption in the market, or in that sector, I’d try to load up on cheap stocks when they were out of favor and then hold them for years.

William Green (00:26:33):
So in some ways the type of approach that people like Joel Greenblatt, or Nick Sleep, or Li Lu, I guess, have taken over the years, and maybe focus a bit on less efficient areas like micro caps, or spinoffs, where you’re more likely to find a mispriced stock. And I was wondering, is that the way to win the game? Or are there many ways to win the game? What would you do if despite a lifetime of preaching the virtues of indexing you said, yeah, actually, I’m going to try to beat the market.

Jason Zweig (00:27:01):
Well, first of all, I think there are many ways. Max Heine, who was Michael Price’s mentor at Mutual Shares, used to say, “There are many roads to Jerusalem,” and I think that really is true. I mean, just as the concentrated small cap value approach that you describe has a lot of appeal, the opposite does too. There’s tons of money managers out there who have built amazing records buying overpriced momentum stocks. So I think the key is the thing that people don’t talk about very much, the key is structure. A money management firm that isn’t structure from the start to optimize for a long term out performance is never going to be able to do it, never going to be able to sustain it, and one of the keys is having a mental and economic alignment between the manager and the clients.

Jason Zweig (00:28:03):
I mean, if you have the wrong clients, it doesn’t matter whether you have the right portfolio. If you have the wrong portfolio and the right clients, they’ll be able to see it through with you. I think when I read about firms, or I talk to managers at firm, that have designed the structure very deliberately, like how are the fees set up? Will you close to new investment when assets grow beyond a certain level? How do you handle redemptions? How often do you communicate with your clients and what do you tell them? I think the firms that invest the most in that kind of design, and recognizing that successful investing is about creating a community, so the members of that community are the companies that the portfolio is invested in, those are your investee, then there’s your investors, your clients, and then there’s the investment manager.

Jason Zweig (00:29:11):
And you should think of those things as a triangle, and unless it’s an equilateral triangle, it won’t be able to sustain its own weight, because when push comes to shove and markets go haywire, one or more of the legs of that triangle will snap, and the best firms are the ones that really plan for that in advance. And if you think about the managers who’ve built amazing track records over the course of decades, like Buffet, Munger, like Wilmot Kidd at Central Securities whom I wrote about late last year, these are people who really have designed their business as if it were an investment, and that’s a large part of what’s enabled them to succeed. It’s not so much what you invest in, it’s not even so much how you would invest, it’s how you integrate-

Jason Zweig (00:30:03):
It’s not even so much how you would invest, it’s how you integrate that process with the business and with your clients so that it all works together and you minimize the risk. And you’re not just managing investment risk, you’re also managing the business risk of people getting too enthusiastic and euphoric at the wrong time. And also people getting too pessimistic and pulling their money at the wrong time.

William Green (00:30:31):
You’ve written before that making and keeping wealth is impossible without luck. And I’d say even with a lot of these great investors, the timing had to break right for of them. Someone like Michael Price, who you mentioned before. I remember many years ago interviewing me and he said, “Look, I went to work with Max Heine,” or Heine, I can never pronounce his name. So I’ve got that name wrong for 25 years and I’m sticking with it.

William Green (00:30:54):
He said, “Look, I started with him at the bottom of the bear market in, I think. ’73, ’74. So I start with a guy who’s brilliant bargain hunter at the bottom of the market.” He’s like, “How could I fail to make an unbelievable amount of money?” Or you think of Peter Lynch who had this great 13 year run and however smart he was and talented he was, maybe the smartest thing was that he got out when he was at the top. So we remember him as this kind of genius.

William Green (00:31:20):
And I wondered if you could talk about the element of luck versus skill. Clearly these guys have to have skill. I remember people telling me that they had been in investment meetings with Peter Lynch at Fidelity, and they would say, “Look, I came out of the same meeting. I heard the same information from the same companies and he made more money than I did again and again.” So there was clearly something he had. And yet there is an amount of luck that I think we can’t deny. Can you unpack that a little for us?

Jason Zweig (00:31:47):
One way I like to think about it, is that there’s a skill to being lucky. And I know you’ve heard me tell this story before, William, and technically it has nothing to do with investment management. But people often ask me how I got to edit Graham’s book, The Intelligent Investor. And they expect me to say, “Oh, the publisher did a beauty contest and brought in 10 different writers and had each one write a sample chapter.” Or, “They interviewed people,” or whatever. And it’s like, “No, that’s not what happened at all.

Jason Zweig (00:32:19):
What happened is this. So I had read a book and then interviewed the author, a book called The Luck Factor by British psychologist named Richard Wiseman. And he had done a sort of big nationwide survey of people’s attitudes toward luck. And when all the surveys came back, he and his team were going through them. And there was one that really jumped out at him, which was, and I’m massively really paraphrasing. I’m going to get all the details wrong. But the essence of it is correct.

Jason Zweig (00:32:49):
This woman had said, “My husband died. Two of my kids have cancer. I lost my job. I got it back, but I’m a very lucky person.” And he said, “I really need to interview this woman.” So they brought her in and he said, “You described all these terrible things that happened to you and you say you’re lucky. Why do you say that?” And she proceeds to tell him this story. And she says that after her husband died and her kids got sick, she felt very depressed, as anybody would. And she was really struggling. And then she decided that she needed a rule. And the rule she came up with was whenever she’s about to go into a room full of people, she thinks of a color.

Jason Zweig (00:33:37):
Then she goes into the room and she walks up to the first person who’s wearing anything of that color and says, “Hello, my name is,” whatever her name was. And so she looks at professor Wiseman and he looks at her and he says, “Well, what does that have to do with luck?” And she says, “I always have a date on Saturday night.” So I have just read this and heard the story from him. And there was a huge party at Time Inc. where you and I think both were working there at the time. And hundreds of journalists were there. I forget what the occasion was.

Jason Zweig (00:34:10):
And I was talking with as usual, my closest friends and not really socializing with the group. But before I had walked in the room, I had said to myself, and I’m not sure which color it was, but I’m going to say blue. I had said blue. And so I looked across the room and there was somebody I knew wearing blue. And I said to my friends, “Excuse me, I really have to go talk to her.” And it was our mutual friend, Nina.

William Green (00:34:39):
This is Nina Munk who’s a wonderful writer.

Jason Zweig (00:34:43):
Yep. And so I lost her in the crowd. And I haven’t talked to her in like three years or four years or something. And I was like, “Ah, the heck with it. Forget it.” And then I was like, “No, I have to talk to her because she’s wearing,” whatever color it was, blue. And I found her because I was for the color and we had a wonderful talk about nothing in particular and life went on.

Jason Zweig (00:35:06):
And I went back to work the next day, et cetera, et cetera. But it turns out a couple days later, her book publisher takes her out to lunch to congratulate her for finishing her wonderful book on the merger, the takeover of Time Warner by AOL.

William Green (00:35:21):
Fools Rush In.

Jason Zweig (00:35:22):
Fools Rush In. And her publisher says to her, “Oh-

William Green (00:35:25):
And we were working for those fools.

Jason Zweig (00:35:26):
That’s correct. And her publisher says to her, “Oh, Nina, you could help me with one thing.We have this book by this guy who’s dead, Benjamin Graham, I think his name is. And it still sells, but it’s old and we need to update it. Who do you think would be good for that?” And she said my name. Now, she insists to this day that she would’ve said my name anyway, but I’m not so sure about that. I think she might have said, “Well, I don’t know. There’s like five different people you could try. One of them is Jason’s Zweig.”

Jason Zweig (00:35:58):
But instead, because I just so happened to run over to her because she was wearing the right color, she said my name. And that’s why they hired me. And so the thing is, that was despite the fact that I was trying to outwork everybody else in financial journalism, despite the fact that I had all these great contacts, despite everything I threw into my job, why did I get this in honor of a lifetime? Because Nina Munk happened to be wearing a dress whose color I had thought of because I had read a book.

Jason Zweig (00:36:34):
So skill is hugely important and it matters, but much of life, maybe most of life is shaped by just these weird moments of random chance. And the more professional you are, and the more intellectual effort is involved in what you do, the more vehemently you will deny the importance of the luck, but it affects everyone in every field. And it’s hugely important in asset management too. [crosstalk 00:37:07]

William Green (00:37:07):
Jason, a few years ago, I don’t know if I’m speaking out of school, but someone asked you to write this book where they had these amazing photos of guys like Buffett and Munger and Howard Marks and Irving Kahn. And you, I think asked the Wall Street Journal if you could do it. And they said no. And so they said, “Well, so who else could do it?” And you recommended me.

William Green (00:37:26):
So I ended up writing The Great Minds of Investing, which got me back into writing about great investors after a hiatus, when I’d been working at Time as an editor. And that book led me to write Richer, Wiser, Happier. And that book led me to be doing this Richer, Wiser, Happier podcast, which is why you and I are here today.

William Green (00:37:44):
So there’s always this really strange sequence of events, I think. You wouldn’t have recommended me if you didn’t think I would do a decent job, just as Nina wouldn’t have recommended you if she didn’t think you would do a decent job. But I love the fact that Howard Marks always talks about his realization that he’s just a lucky guy and that that makes him happier. And it also protects him from what I like to call master of the universe syndrome, where you start actually to believe that you are really good. And I do think you have to be really good, but it’s just not enough.

Jason Zweig (00:38:17):
Yeah, it’s not. And I don’t understand why people get so angry when others attribute their success to luck. I mean, I don’t find it threatening that I’m lucky. I mean, the one thing I worry about is that my luck will turn. But being lucky, doesn’t diminish you. It doesn’t make you less skilled. It just means that on top of whatever skill you have, you’ve also been blessed either by powers above, if you believe in that, or by random coincidence, you’ve been blessed with luck.

Jason Zweig (00:38:54):
And that’s a very important thing to remind yourself of. The first conversation I ever had with Warren Buffett. We were speaking off the record, but I think I can share this part of it. One of the first questions I asked him is, “How do you think about yourself? I mean, given all the praise that you get and the track record you’ve built up over the decades…” This was summer of 2003. “Do you think you’re a genius with all the people telling you you are?” And he paused for a long time. And then he said, just very matter of fact, he said, “No, I think I’m lucky.”

Jason Zweig (00:39:27):
And then he went into his concept of the ovarian lottery, which I think is incredibly powerful and it’s also irrefutable. If Warren Buffett had been born in another time or a different place, he wouldn’t have been Warren Buffett. If he’d been born a century earlier, maybe even a decade earlier, or a decade later, he wouldn’t have amounted to what he ended up achieving. And if he’d been born in a different place, I mean, what if he had been born in Ouagadougou or Burkina Faso or Yangon in Myanmar? We never have heard of him.

William Green (00:40:03):
I remember him telling a story to Guy Spier and Mohnish Pabrai when he had a charity lunch with them back in, I think, 2008, something like that, where he had just come back from a trip, I think to China, with Bill Gates. And he was talking about how he had seen some guy pulling in the boats. I think I’m remembering this correctly or roughly correctly enough that we can get away with it. That he’d seen this guy pulling in some boats. And he said, “That guy, however smart he is, could never have done what I’ve done because he just wasn’t born in the same place, he didn’t have…” At that time, Ben Graham’s books weren’t available in Mandarin. And so even the good fortune, not just of being born in America at that time when it was booming, but actually having access to Ben Graham was transformative.

William Green (00:40:44):
I wonder if we could actually switch to go in greater depth about Ben Graham, because he’s such a formative figure in the history of investing. And I don’t think there’s anyone other than Buffett who actually knows more about him than you. Because I think back in 2003, you edited the revised edition of The Intelligent Investor and you added a commentary and updated it.

William Green (00:41:03):
You also did a really excellent book on a collection of his other writings, which I liked a lot. I wondered if you could talk a bit about Graham as actually a human being, because he was such an extraordinary figure. I remember reading your introduction in one of those books before he even graduated from Columbia in 1914, I think he was invited to teach English, Math or Philosophy at Columbia. And I suspect he could have taught classics as well if he had wanted to. And can you just tell us more about what a towering figure he was? And then if we could talk a bit about why is Graham still relevant? What should investors be learning from him now?

Jason Zweig (00:41:37):
Yeah. So Graham was just extraordinarily brilliant. One detail you omitted, William, was that he was offered those three positions on the faculty at Columbia at age 20 because he was admitted when he was 16. And the other detail I love is that Graham applied to matriculate at Columbia when he was 15 and Columbia, as only Columbia could, lost his application because otherwise he almost certainly would’ve been a college freshman at age 15.

Jason Zweig (00:42:13):
And he was such a star student that three of the university’s strongest departments at the time wanted to hire him to teach before he even graduated. So that gives you some sense of his brilliance. The other anecdotes I love about Graham are that late in his life, after he retired, he was traveling, I guess in Latin America. And he heard about this wonderful novel that was published in Spanish by Uruguayan writer, whose name I think is, di Benedetto, I think.

Jason Zweig (00:42:48):
And so Graham taught himself and translated the novel. He also wrote a Broadway play that was produced on Broadway. He held several patents, including a patent for an improved calculator. And when he was 21 or 22, he had an article on advanced calculus published in the Journal of the American Mathematical Association. So Graham was as close to a Renaissance man as Wall Street has ever seen. One of his hobbies was translating Homer into Latin and Virgil into Greek. And he used to play multi- language Scrabble with people when he lived in the south of France.

Jason Zweig (00:43:34):
You could make a word in whichever language you chose, and Graham would of course try to intersect your word with a word in whatever language he felt like. And something tells me he won most of those games. So he was extraordinarily brilliant. And I think that really helped him. That really helped him as an investor. One of the most indelible memories I have as a financial reporter, and I’m not going to name any names, but many years ago, probably in the 1990s, I was at the Morningstar Investment Conference in Chicago. And after the day’s sessions, a bunch of portfolio managers went out to dinner. I tagged along and we got a private room at some restaurant in Chicago.

Jason Zweig (00:44:17):
And I would say there were probably a dozen managers around the table. And at one point, there was sort of a lull in the conversation. And I said, “I have a question for everybody at the table. I’m really curious.” And they all went silent. I had made it clear, we were off the record. So nobody would ever get named or anything. We were talking freely. And I said, “I want each of you to tell me what your hobby is.”

Jason Zweig (00:44:41):
And so I point to the first manager and he says, “Golf.” Second manager says, “Golf.” Third manager says, “Yeah, I like golf.” And around the table it went. And finally the last guy, after everyone had named golf, the last guy said, “My hobby is tennis.” And so my point is that part of what made Graham so great was that he was multidimensional. Most professional portfolio managers are extremely dull people. They work very hard. They sort of do nothing but think about investing. A lot of them think about investing all day long, all night long, all weekend long.

Jason Zweig (00:45:24):
Peter Lynch used to brag about taking a briefcase of papers home and spending his weekend reading 10Ks and 10Qs. And I personally find that very credible. Graham wasn’t like that. When Graham was still, he wasn’t a young man, but he was not an old man. When he was about 60, he quit and he stopped running professional portfolios. And he just decided he would go read books and write books and do the kinds of things he enjoyed. Having a [crosstalk 00:45:51]-

William Green (00:45:51):
There was a lot of romance involved as well. I mean, that’s one of the fascination [crosstalk 00:45:56]

Jason Zweig (00:45:56):
That was when he was a little younger, I think. But-

William Green (00:45:59):
Yeah, I mean, there’s a footnote, I think in one of your books where you talk about Graham being fragrantly unfaithful to his first three wives. And I felt like there’s a lot you could unpack from that sentence. There’s a lot not said in that sentence.

Jason Zweig (00:46:16):
Well, in other contexts, I have called Graham the Will Chamberlain of Wall Street. He was a big believer in free love, let’s put it that way. He got around, the old boy.

William Green (00:46:29):
And yet at the same time, was also a kind of model of integrity when it came to the way that he treated his clients in the investment business. He’s a fascinating character, right? There’s a complexity and a contradiction there. And I suspect some of that obsession with integrity and fairness, and also being a teacher and sharing your wisdom was very much inherited by Buffett.

William Green (00:46:52):
Buffett also cloned that structure of the partnership from Graham, where with his limited partnerships… And it’s interesting when you see people like Mohnish Pabrai and Nick Sleep and Josh Tarasoff, all of these guy, Bryan Lawrence, they all have cloned the structure, basically, that Buffett cloned from Graham that’s fair because it aligns your interest with your shareholders interest, because you’re not just gouging them and getting fees when you don’t perform. That’s interesting that emphasis on integrity, I think.

Jason Zweig (00:47:17):
Yeah, I think that’s totally right. And it is interesting and complicated. I mean, Graham was not the person you would want to take relationship advice from Ben Graham. I think all married people or anyone who has a partner or spouse or significant other should be very glad if their partner doesn’t act like Ben Graham. However, anybody who’s a client of the money management firm would want your portfolio manager to act exactly like Graham.

Jason Zweig (00:47:47):
And he succeeded in compartmentalizing that. Maybe even in some odd way, maybe it helped him. Maybe being a little disorderly and breaking the rules in one part of his life, helped him observe the rules in the other. It’s interesting to speculate about it. Never really thought about it that way.

William Green (00:48:08):
I wrote about Graham and Richard Wiser Happier about his early life, which is kind of fascinating, like that he came from this prosperous family that I think imported porcelain from Europe. And his father died at the age of about 35 and the mother was widowed and left with three kids to bring up. And the business collapsed and she ends up turning that home into a boarding house, which failed. Then she borrows money, gets wiped out in the panic of 1907. And then Graham grows up, instead of growing up with a cook and a maid and a governorness, which he’d always had when they were this prosperous family when his dad was alive, sees the family actually forced to sell its possessions in a public auction and never really recovered from that kind of public disgrace. And then lives through World War I, the Great Depression, the crash of ’29, where I think from 1929 to ’32, he lost something like 70% of his money and then lives through World War II.

William Green (00:48:58):
And he’s from a Jewish family. He was born Benjamin Crossman, as you know, and had come from Poland, same sort of area that your family and mine had come from as refugee [crosstalk 00:49:07]-

Jason Zweig (00:49:07):

William Green (00:49:07):
And what’s fascinating to me is that his entire investment credo is built on this idea of the margin of safety. And here’s a guy whose youth is, in a sense, the epitome of chaos. That even as a Jewish guy coming from Poland, if I remember rightly, I think his grandfather may have been the chief rabbi of Warsaw. So this is kind of fascinating to me, because my background is similar and your background is similar, right? My family came from Russia, Poland and Ukraine. Yours, I think, came from Ukraine. I remember your grandfather was from Ukraine.

William Green (00:49:40):
And I’m wondering if you could talk about that connection, the link between this kind of personal chaos and his sense that you have to find a way of investing that protects you against chaos.

Jason Zweig (00:49:52):
Yeah, that’s such a good observation, William. The anecdote that stands out for me from Graham’s life story is when he was a very small child, this was after his dad had died, his mother had to cash a check at the bank. I think she asked Graham to take it to the bank. I forget whether it’s to cash check or make a withdrawal, but in any case, Graham had to go to the teller. And the teller said out loud, sort of to the bank floor, “Is Mrs. Graham good for this amount?” And it just stuck with him. It was maybe $5 or something like that, which of course in those days was a lot more than it is today, but it still wasn’t much. And I think Graham was traumatized by loss.

Jason Zweig (00:50:41):
And in several of his books and articles, he has this expression. He says, “The future is something to be guarded against.” And this is the biggest knock on Graham. It’s the criticism so many people make of him today and have been making for 20 years. And I think it’s valid. Charlie Munger makes the same point. One of the first times I interviewed Munger, he said to me, “Graham was afraid that the depression would repeat. And he always saw another depression around the corner. And all he cared about was surviving that.” And in The Intelligent Investor, he talks about the difference between protection and projection. And effectively growth stocks, growth investors are in the projection business. They’re trying to extrapolate on a fabulous line of growth into the future. They’re projecting it. And Graham cares about protecting. He’s worried about the downside, and that’s because he really suffered it. And he really felt it.

Jason Zweig (00:51:50):
And both Buffett and Munger went through the Great Depression, but they were much younger than Graham. And they saw the country come roaring back. To Graham, he had been through many more severe cycles. And of course he was a young adult when the Federal Reserve was created. So he had lived through the panic of 1907 when there was no lender of last resort. And it wasn’t clear if the financial system would survive. So he was obsessed with the downside and protecting against it.

Jason Zweig (00:52:27):
And if I were revising the book today, that would be the main issue that I would be struggling with, which is how do we reconcile the need for protection with the importance of projection? I mean, we’re not investing for today, we’re investing for tomorrow. And if you don’t project, if all you do is protect, then how will you prosper tomorrow? And I think that’s a valid criticism of Graham’s approach.

William Green (00:52:58):
It’s a profound conundrum. I remember having a revelation at one point when Howard Marks who’s great at articulating these conundrums said at a certain point, “Risk avoidance becomes return avoidance.” And I have that kind of fearfulness and anxiety about the future that I suspect, to some degree, is an inherited thing from our families having gone through the trauma of having fled from Russia and Poland and the Holocaust and the like.

William Green (00:53:25):
And I remember talking to Chuck Akre about this at one point saying that I’m kind of a pessimist and he’s like, “Good luck with that.” He was like, “Look as an investor in stocks, you need to be an optimist.” I see you conflicted about this as well. Right? Because you’ve written, I think that uncertainty is the most fundamental fact about human life and economic activity. So I think you temperamentally, in some ways, are on my side and Ben Graham’s side more than on Chuck Akre’s side temperamentally.

Jason Zweig (00:53:52):
Yeah. I mean, sure. I’m a worrier, but I also am an optimist. I mean, I’ve seen too many good things happen in my own life and frankly in the world life to be a pessimist. I mean, I forget who it was, an Israeli prime minister, naturally, said, “To be a realist, you have to believe in miracles.” I think it might have been Ben-Gurion.

William Green (00:54:18):
Yeah. Either Ben-Gurion or Golda Meir, one of those two.

Jason Zweig (00:54:21):
Yeah. And it’s kind of true. I mean, you think back a decade ago, who would’ve expected well, a little more than a decade, but who would’ve expected cloud computing and fracking and the US’s energy independent? That seemed impossible 15 years ago. And progress doesn’t stop. As negative and horrible as a lot of the headlines are, and as worried as I am, as I think any thinking person has to be about the polarization in our society and the rising resentment and distrust of expertise, and the anger across the political spectrum at the other side, I just don’t know how you can really be a pessimist.

William Green (00:55:11):
Yeah. I tend to feel, having talked to a lot of great investors who are smarter about this stuff than I am, that it’s a kind of general upward trajectory that’s interrupted by these periods of tremendous disruption. I think that was Ray Dalio’s view when I interview you him recently, that if you look at the very long term picture of productivity, longevity, human lifespan, quality of life, it’s hard not to be optimistic, but there are these periods of disruption.

William Green (00:55:41):
And so it seems to me that part of the key to investing well is to set yourself up for survival. And I remember you having a great interview with Peter Bernstein, where he talked about just this recognition of just how badly things can get wrong when you asked him about the biggest mistake that you can make in investing. Can you talk about what you learned from that?

Jason Zweig (00:56:00):
Yeah. I mean, what Peter said was that, I think he said, “Survival is the only path to wealth.” And for anybody who doesn’t know, I mean, Peter was just this extraordinary figure. I mean, he was over 90 when he died. He worked on Wall Street for over 60 years. He was an economist, a portfolio manager and probably the most sophisticated observer of the investment management business I’ve ever come across.

William Green (00:56:29):
And wrote a beautiful book called Against the Gods: A History of Risk, which is one of the great books, which I somehow, I realize I have a signed copy that he’s inscribed me. I have no recollection at all of whether he gave it to me. This is the joy of middle age, is that I truly can’t remember if I even met him.

Jason Zweig (00:56:44):
Yeah. Well, you have to hang onto that. But it’s really true because Peter is giving us the bridge that sort of solves this conundrum that you raised with Graham, the bridge between protection and projection, right? Which is if all you do is project, you may well not survive. And if all you do is protect, then you may not have enough growth to really thrive over the long term. So you need to do both. You need to protect, you need to protect your downside. You need to have that margin of safety, but you also have to ensure that you haven’t truncated your upside too much.

Jason Zweig (00:57:27):
And Graham got out of the market in, I don’t know, the late 1960s or something and never really got back in. He was probably a lot more conservative than he needed to be. On the other hand, once you have… There’s that wonderful expression, once you win the game, stop playing. He had all the money he needed or wanted. So what would he put it at risk for? One of the, I think the single most important principle any of us can take from Graham’s emphasis on protection, is don’t take a risk you don’t need to take. I mean, that’s true if you’re a professional portfolio manager, it’s true if you’re just an individual investor. You should take intelligent risks, which means they are risks you need to take and you understand.

William Green (00:58:25):
Yeah. It seems to me that focus on just catastrophe avoidance is so central, just constantly asking yourself, what’s the consequence if I’m wrong? And that was something Bernstein talked about a lot as well, right? That it was consequences. He said something about consequences matter much more than probabilities.

Jason Zweig (00:58:43):
I mean, Peter was a huge fan of Pascal’s Wager. And for anybody who doesn’t know, the great theologian and philosopher, Pascal proposed this thought experiment, which has become known as Pascal’s Wager. And the basic idea is either God exists or he doesn’t. You have a choice between living an ethical life or not. If you live an immoral life, you’ll have a lot of fun while you’re doing it. And if you live a moral life, it probably won’t be as much fun while you’re living it.

Jason Zweig (00:59:17):
So you’re basically wagering, does God exist or doesn’t he? And if God exists, then you don’t lose anything as the person who lived the moral life. But the immoral person is in a lot of trouble. And so Peter really emphasized framing things in terms of Pascal’s Wager, which is not so much the way most people think when they invest. Most people think how much am I going to make if I’m right. But Peter’s point is you also need to ask, how much am I going to lose if I’m wrong? And it hurts a lot more to be wrong than it feels good to be right. And being wrong once, if you’re too wrong, can take you out of the game permanently. I mean, if you get wiped out, you’re done.

Jason Zweig (01:00:03):
… can take you out of the game permanently. I mean, if you get wiped out, you’re done.

William Green (01:00:05):
And you’ve said, I think the phrase you used at one point was that a diversified portfolio is the closest thing to a sure thing in all of finance, that ultimately the best insurance policy, other than not investing, which doesn’t lead to a great outcome, either with inflation and the like, that the best insurance policy is to diversify. Is that also one of just the most simple and basic, but timeless lessons that we get from someone like Graham who was probably much more diversified than Buffett?

Jason Zweig (01:00:32):
Yeah, correct. I mean, it’s kind of interesting. This is another area where Buffett and Munger really diverge from Graham. Graham invested it in categories of security. If railroad stocks were cheap, he would just buy every railroad stock that was cheap. He wouldn’t buy one. He would buy dozens. If he thought utilities were cheap, he would buy every utility he could find if it was cheap. Graham was a huge believer in diversification. And Buffett and Munger are not.

Jason Zweig (01:01:05):
I think the right way to think about it is that diversification is inverse to the likelihood that you have superior knowledge and you’re actually right. So the more sure you are that you know what you’re doing, that you’re doing something that not everybody else is and there’s an asymmetry between the downside and the upside, the more you should put in that asset. And great investors will tend to be under diversified great active investors because they feel or their experience tells them that they should concentrate.

Jason Zweig (01:01:53):
The problem with that is that people aren’t very good at assessing how valid their signals of confidence are. And it’s part of normal human behavior to be over confident. And if you’re over confident about the things you’re over concentrating in, the result is not likely to be very accretive in the long run.

William Green (01:02:18):
Yeah. I remember once saying to Bill Miller when he was, I think he had bought 15% of Amazon. This is back in 2000, 2001, and everything was going to hell in the market after 9/11. I was with him while he was investing hundreds of millions of dollars. And I said to him at one point, “God, you got to have so much balls to do what you do.” And he said, “Yeah, I’ve also got to be right.” And it was one of those moments where you were like, oh yeah, it’s like so many of the truths that you hear in investing are so simple. There’s emphasis on survival. There’s emphasis on diversification. There’s emphasis on being right. There’s emphasis on being long term patient. They’re all so platitudinous that our eyes kind of glaze over and we don’t take them seriously, but it’s … yeah, if you are going to concentrate really heavily in a few positions, you better be really smart and right.

Jason Zweig (01:03:02):
Yeah. And it’s worth emphasizing for people the sequel, right, which is Bill was almost looking forward in a way, he was almost looking ahead because he did the same thing seven or eight years later with financials and he wasn’t right.

William Green (01:03:19):
And then the sequel to the sequel, which is then he did the same thing with Bitcoin and Amazon.

Jason Zweig (01:03:25):
And he was right.

William Green (01:03:25):
And was right. So-

Jason Zweig (01:03:27):

William Green (01:03:27):
I think to some extent, when I look at these great investors, I was thinking about this recently with Bill Ackman as well, where I was reading in the journal the other day about how he just made $4 billion during the COVID meltdown and then the recovery. I was just thinking, one of the keys is just to be true to themselves. Like you have to kind of embrace your own form of craziness to some extent, to be extraordinary at anything. You have to play the game in a way that suits your particular form of brilliance and craziness. Does that resonate for you?

Jason Zweig (01:03:55):
Yeah, it does. And I think the challenge all great professionals face is this push and pull between the sense you have that you are exerting actual skill and the need for humility. I mean whenever I hear anyone talk about being humble, I just, I mean, I want to throw up. I mean, it’s like, if you’re talking about your own humility, then you don’t have any.

William Green (01:04:30):
I literally Jason had a conversation a few years ago where I was talking with a guy I was friends with, who I was helping with a memoir that hasn’t been published who’s multi-billionaire, art collector. And I was talking about someone that said something about humility and vanity and the like. And he said, “No one is more humble than I am.” And I like sort of burst out laughing. And I thought he was joking. And then I realized, no, no, he’s totally serious. Here is this multi-billionaire saying nobody is more humble than I am.

Jason Zweig (01:04:57):
Right, yeah-

William Green (01:04:57):
Boasting about his humility. It was just wonderful.

Jason Zweig (01:04:59):
Right. ” I’m the best at being humble. Look at me.”

Jason Zweig (01:05:02):
I think the key is that combination of you can’t be good at something if you don’t think you’re good at it. And if you’ve been a professional investor for years and you have a successful track record, it’s sort of inconceivable that you would … You don’t come into the office each day and saying, “Oh God, what am I going to screw up next?” You come in, you have a sense of exerting your skill and demonstrating your power and your facility and your knowledge. And without that, you’d be lost.

Jason Zweig (01:05:37):
On the other hand, you can’t let it go to your head. And there’s ultimately, I think humility, the only way to resolve it is with paradox, right? I mean, there’s a wonderful expression. I think it’s somewhere in the Talmud actually that says the truly healthy man has a soul without knowing it. And it’s something like that. It’s that you want to be humble and you seek to be humble, but you don’t really expect to achieve it because if you did, if you did expect it, you would end up sounding like the person you were just describing.

William Green (01:06:23):
To go back a bit to what we were talking about before with Buffett. Buffett obviously learned immensely from Graham and Graham had a profound impact on him. But in many ways, the student far surpassed the teacher. Buffett has become a much greater investor I suspect, suddenly a much richer investor. You’ve interviewed Buffett multiple times. And I wonder a) if you could give us a sense of what that experience was like for you, what you took away from it. But also if you could talk to us about Buffett’s emotional makeup, which seems absolutely critical because it seems to be you that he does have an emotional or temperamental advantage over Graham. And I remember you once saying to me that you regarded Buffett as inversely emotional, if I’m quoting you correctly. Could you talk about that a little bit?

Jason Zweig (01:07:11):
The first time I ever met Buffett, which I, as I think I mentioned earlier was in July, 2003, what really struck me about him was his warmth and empathy. And it really feels as if you’re the only person he wants to talk to. He is incredibly good at focusing his attention on you as a person. And he asked me at least as many questions about myself as I asked him and very interesting questions, and more about his background and development as a person. I realized that that came to him after decades of relentless what must have been brutal effort. Because if you read the Alice Schroeder biography of Buffett, he was so shy when he was young, that he was almost literally socially paralyzed. He couldn’t speak to people.

Jason Zweig (01:08:29):
So he through Dale Carnegie courses, through just discipline and effort, he remade himself into the kind of person he wanted to be. And how many people do any of us know who have completed a self-transformation like that? It’s almost like someone who … I know most alcoholics would never use this term. It’s almost like someone who’s a recovered alcoholic. He didn’t want to be the person he had been, and he became somebody entirely different. And I think he’s applied that kind of emotional discipline and steely power to his day job as well in a way that most of us probably aren’t capable of doing.

Jason Zweig (01:09:25):
Every investor I’ve ever met, if you say to them, “Will you buy more stocks if the stock market goes down 10%,” I’ve never met anybody who would say, “No, I wouldn’t do that.” But when the stock market goes down 10%, it’s gone down 10% because a lot of people were selling. So, I mean, what does that tell you? And when the stock market goes down 10%, Buffett sits up and he starts looking because he says, “Oh, this is getting interesting.” And the more it goes down, the more interested he gets. And that’s why I use that term inversely emotional. And when I’ve discussed it with him, he says, “Yes, that’s correct. I use other people’s emotion as a cue for my own. And when other people are enthusiastic, I become pessimistic. And when they’re negative, I become positive.”

William Green (01:10:21):
When you wrote your book, Your Money and Your Mind, which I think came out in 2007, which was one of the first books about neuroeconomics and you were-

Jason Zweig (01:10:31):
Your Money and Your Brain. Yeah.

William Green (01:10:32):
Sorry, Your Money and Your Brain, and you were showing how our brains mess up as I just did, particularly when we’re making decisions around money. And I remember I was rereading it the other day and I’m having to say, I still have the advanced copy from before it came out, that you gave me all those years ago. And you were talking about how, when you’re making money in the market, for example, it’s like being high in that it has basically the same neural effect. And as part of your research, I remember you had your brain scanned in various MRI machines and took part in various experiments in different research laboratories. And I’m wondering what you learned about your own brain that surprised you, that made you think, “Yeah, I’m not Buffett. I’m not Munger, I’m not unemotional.” Or, “These are the forces that are unconsciously driving my decisions that I wasn’t even aware were driving my decisions.”

Jason Zweig (01:11:22):
I think the most remarkable experiment I participated in was at Emory University. I think it’s a little too complicated to describe here, but to boil it down to the essence, what was astounding to me is I was presented with a problem, like a choice problem, sort of A or B, and there was reward associated with the choices. And I was in the MRI scanner trying to solve these problems while my brain was being scanned. And my conscious mind was working like crazy, trying to figure out what to do. And while I was deliberating what the optimal choice was, my right hand, which was hovering over the button press that you use to record your responses inside an MRI machine, my right index finger was going ding, ding, ding, ding, ding, ding, ding, ding because my unconscious mind had figured out the answer, even as the sort of prefrontal cortex of me was totally flummoxed by the problem.

Jason Zweig (01:12:38):
The unconscious mind, the one that had gotten the reward was like, oh, the reward is over here. Stop thinking and go get the sugar water because that was the reward. It was basically like a sweet drink that they were piping into my mouth. And I remember flying home on the plane, looking out the window and just saying, “Oh, what just happened to me?” And it’s really humbling when you discover that there’s this sort of subterranean creature living in your head, doing all this stuff, and you have no awareness that it’s going on. And frankly, you never will, unless you’re exposed to those kinds of conditions, which are obviously extraordinarily rare.

William Green (01:13:29):
So given that our emotional reactions are kind of crazy and that we are driven nuts by things like the thrill of gain or our fear of the pain of loss or cravings for whatever feels likely to be rewarding in the short term, what can we actually do in practical terms to protect ourselves? Like are there procedures that you would recommend, or that you put in place yourself after discovering that you were a little nuttier and more emotional and driven more by your subconscious mind than you thought? What can we actually do?

Jason Zweig (01:14:02):
As I know you’re aware, William, because you helped him do it, Guy Spier has written a lot about the importance of, I’m going to call it investing hygiene. And that term, the term hygiene comes up a lot. Danny Kahneman uses it in his new book Noise. He uses the expression decision hygiene. It’s a term I love. And I think that’s the key.

Jason Zweig (01:14:28):
One of the phrases I like that I’ve often used when I talk with fund managers and institutional investors is anything that can be made a matter of policy and procedure should be made into a policy and procedure. The idea is you want to take your subjective judgment out of the process, out of the decision process as often and as thoroughly as you can. You don’t want to remove it completely because you’re not a machine and you haven’t been hired to be one. Wherever it isn’t essential, you want to get rid of it.

Jason Zweig (01:15:13):
So you want rules and policies and procedures, and you want a lot of if-then statements in your investment process. If this stock goes down 25%, then if I own it, I must then reevaluate to see if I should be buying more and averaging down or whether something fundamental about the company has changed and I should sell. If I don’t yet own it, then because it’s on my watch list, I should be evaluating it as a purchase because it’s just gotten a lot cheaper. And everything should be an if-then statement that can be an if-then statement. And the more rules and policies and procedures you have, the more checklists and watch lists you can build into your process and the better your hygiene is.

Jason Zweig (01:16:15):
And then of course the other key, which Guy Spier has written about and you’ve written about extensively, it’s not just what you do, but it’s where and how you do it. Sir John Templeton managed money from life or key, Buffett manages money from Omaha. You don’t have to work on Wall Street or in Manhattan or on Bay Street in Toronto or in the London Financial Center or Hong Kong or whatever. It could be very constructive for you to be doing what you’re doing in the middle of nowhere, where you don’t have those influences. And anything you can do to break the usual pattern of reaction and response and hot emotion can be really powerful.

William Green (01:17:07):
Yeah. One thing that you helped to clarify for me in the last week where I was rereading all of your books in an insanely obsessive way to prepare for this, there’s a beautiful definition in the Devil’s Financial Dictionary, which is for people who don’t know a kind of satirical book of definitions that show the distortions and hypocrisy and spin on Wall Street. And there’s a definition of self-control as the secret to success as an investor. And you write, I think this was in that book. “Within you lurk an angel, a devil, a scholar, and an idiot. If the angel and a scholar ever let down their God, the devil and the idiot will wreak havoc that will take years of work to undo. Those investors who control their own behavior and abandon the futile effort to control the markets around them are the only ones who will ultimately prevail.”

William Green (01:17:59):
And it really struck me. I mean, a) it’s a beautiful piece of writing and reminded me without trying to be of secrets of what a gifted writing you are. But b) it’s really clarifying to come back to the realization that this is something from Ben Graham as well, right? This idea that you are your own worst enemy and that the real game at the heart of investing is what you call the struggle for self-control.

Jason Zweig (01:18:23):
Well, first of all, thanks for the kind words William. And I think we should tell our audience that over the years, you haven’t just edited me, but I’ve also edited you, and taken great pleasure, regardless of which side of the red pen I was on. But yeah, I think one thing that is important for everyone to think about is that investing is a head game, but isn’t everything? I mean, when you watch two of the world’s greatest tennis players hammering the ball at each other across the net, who’s going to win the one who’s bigger, stronger, faster, maybe? Or is it going to be the one who stays focused and who doesn’t let his or her own mistakes ruin the match? I’m a very poor recreational tennis player. And one of the reasons I sort of stopped doing it was I found I would get so frustrated at my own mistakes that I couldn’t calm myself back down.

Jason Zweig (01:19:37):
And there’s a useful lesson in that, which is that skill in one domain doesn’t really carry over to every other. I think I’m very good at managing my investment emotions, but I’m really bad at managing my tennis emotions. But look, investing is above all else a head game because everyone we’re competing with in the financial markets has pretty much the same resources at their disposal. After Reg FD in the United States, no analyst really gets some inside scoop before some other analyst. Everybody has a Bloomberg machine. Everybody reads the Wall Street Journal, and stock quotes are instantaneous. There’s a hundred, whatever it is, 180,000 CFAs around the world. It’s an unbelievably competitive marketplace.

Jason Zweig (01:20:35):
So what would distinguish the greats from the very goods? It kind of has to be something they’re bringing in from outside, which is their own character. And if you want to be great, you’re going to have to put as much effort into cultivating your character as you do into managing your portfolio.

William Green (01:20:57):
You spent a couple of years helping Danny Kahneman, the Nobel Laureate, who you mentioned before when he was first working on his book, Thinking Fast and Slow. And obviously, Kahneman is one of the great experts on biases and the way that we sabotage ourselves when making decisions. And I was wondering, having seen him up close, how rational was he? Because my guess is he’s a brilliant, but not an easy man. And maybe that’s unfair, but I was wondering, hey, what the experience was like of working with him, and whether you learned anything from him that’s really changed the way you operate in the world.

Jason Zweig (01:21:32):
Yeah. So the first day we officially started working together, Danny did something amazing, which is he did sort of the planning fallacy exercise with me. The planning fallacy for anybody who doesn’t know is that when people commence large or complicated project and estimate how long and how difficult they will be, they look at the inside information that’s available to them. Like, who are we? Who’s doing this? What are we trying to do? What resources do we have available? How good are we?

Jason Zweig (01:22:14):
And that’s the inside view. And the outside view is who else has tried stuff like this and how hard was it for them and how long did it take them? And so Danny sat me down and we did a planning fallacy exercise. And he’s like, “So how long does it typically take people to do a book?” And eventually we got into the kinds of details like, how many words a day is it realistic to write, and how many days in a row can people write?

Jason Zweig (01:22:51):
So we went through all this and he was very open and very adamant. He said, “I’m doing this because I want us both to be realistic about what we’re getting in for, and because I know that if we don’t do this, we’ll be absurdly over optimistic.” So at the end of the exercise after had grilled me for, I don’t know, it was probably over an hour, we sort of mutually decided it should take a year and a half. It might take two. So that would’ve been 2007 and the book came out in 2011, but he almost quit about 20 times. So we missed. We underestimated by at least half. And that is the remarkable characteristic that Danny has, which is that he approaches everything with a clean slate and he doesn’t take anything for granted.

Jason Zweig (01:23:58):
And I remember at one point we were just making small talk about something and my kids were very young at that point. And I said something along the lines, it was true small talk, just filling the empty time. I said something like, “Oh, my wife and I were, we’re kind of sort of strict parents.” And he turned to me and said, “Why?” And I suddenly realized I didn’t know. And I was like, “I do do that. I don’t know.” And another time we were walking along the street and someone came by sort of gushing over their dog, like the dog was on the leash and the person was sort of goo-goo talking to the dog. And then he said, “That’s something I know nothing about. Why do people do that?” I said, “Oh, dogs are wonderful, Danny.” And he said, “No, but why do people love dogs as much as they love people?”

Jason Zweig (01:24:55):
And that ability to look at the world is if you’ve never seen it before is really extraordinary. And to take every, sort of take every fact that’s presented to you and just treat it as some kind of alien object that you know nothing about, that was the … He gave me many gifts when we worked together, but I think that was the greatest along with letting go of some costs, which I think is so important. And he really taught me that.

William Green (01:25:30):
Would you apply how?

Jason Zweig (01:25:33):
So we had worked very hard on a chapter of the book on … I’m not sure at this point which one it was. I’m going to say it was probably the chapter about Paul Meehl’s research. Paul Meehl was one of the great psychologists of the 20th century and a hero of Danny’s. And we had worked on this chapter for weeks. And we finished it and it was beautiful. I went to bed that night, feeling very pleased at what we had accomplished. And I woke up the next morning and I had all these Danny grams in my mailbox. And anybody who knows Danny Kahneman well talks about Danny grams, which are these emails that he starts sending around two or three in the morning and are incredibly dire and pessimistic. And they just keep getting darker.

Jason Zweig (01:26:28):
And I think the first ones started out. The subject line was something like, “This will not do.” And then it became, “And this is terrible.” And then it became, the subject lines became things like, “Horrible. I am ashamed. This is ridiculous.” And then I think there was one that said, “Disaster.”

Jason Zweig (01:26:56):
So I’m reading these and I’m sweating. My forehead is dripping sweat. My palms are sweating. I’m feeling as if feeling nauseous. And then maybe around eight in the morning comes an email and it says, “I think I can fix it.” And Danny is not much of a sleeper. And when he wakes up in the middle of the night, he just gets up and does this. And by the end of the day, he had completely rewritten the entire chapter. It was as if it had been written by another person, almost a person from another planet. The tone was different. The substance was different. The organization was different. The materials he used to make the points were all different and it was great.

Jason Zweig (01:27:51):
And the next morning I went down to his apartment as I did every day at that point. And I walked in the door and I said to him, “Danny, how did you do that? How?” And he just turned to. He was making coffee. And he turned to me and he said, “I have no sunk cost.” And that was just his way of saying that if it didn’t work, try something else and see if that’ll work. And for a writer, and I think for anybody who makes decisions of any kind, that’s a very valuable lesson. I mean, you can’t let go of everything you do and start from scratch. But whenever something isn’t working beautifully, then you should smash it and start over and see if you can make it work beautifully.

William Green (01:28:46):
I asked last week for people to submit questions on Twitter that I thought they might like me to ask you. And I’ve pledged that if I use a particular question with each interview I do on this podcast, I’m actually going to send them a signed copy of my book, Richer Wiser Happier, which unfortunately this one I have to send to Spain, which knowing UPS will cost me about $200. An Israeli guy called Alon Michael, I think, or Mikhail, I don’t know, who lives in Madrid who asked me to ask you what biases you’re especially vulnerable to that prevent you thinking rationally? What have you had to work hardest to root out, and what did you do in practical terms to overcome it?

Jason Zweig (01:29:26):
Yeah. Well, for me, and thanks for the question Alon and enjoy the book. It’s great. I don’t think there’s any doubt in my own mind, which bias has been most harmful and difficult for me to overcome. Although of course I could be wrong, but for me it would be over confidence. A few years ago, I wrote an essay called Overconfidence: An Autobiography in which I told the story about my first week in college, in which I made a total complete idiot out of myself in front of all my classmates without understanding that’s what I was about to do. And …

Jason Zweig (01:30:01):
… Without understanding that’s what I was about to do. And it’s a moment that has lived with me ever since, and I don’t think I’ll ever forget. But one of the beauties of working at the Wall Street Journal, and having hundreds of thousands of… In fact, I guess millions… Of readers, is you can’t really make a mistake and get away with it.

Jason Zweig (01:30:24):
To the best of my knowledge, within about 30 seconds of when a column of mine is published that has an error in it, the emails start to come in.

Jason Zweig (01:30:33):
And that does keep me honest. And making mistakes is not enough to keep you from being over confident. What helps is making mistakes and learning that you made them.

Jason Zweig (01:30:50):
And I’m very fortunate that I have an audience that will immediately let me know if anything I say isn’t accurate. And it also helps to be married, or to be in a long term relationship with somebody.

Jason Zweig (01:31:03):
I don’t know if you know the wonderful line from H.L. Mencken, William. Mencken was a great American journalist in the early part of the 20th century. And I love one of his expressions, that a man may be a fool and not know it, but not if he is married.

William Green (01:31:27):
I was so lazy yesterday that I saw a footnote in something that you had written, that quoted Mencken’s Chrestomathy or however you [crosstalk 01:31:36]

Jason Zweig (01:31:35):
Chrestomathy, yeah.

William Green (01:31:37):
And I know that I have it in my house, but instead of go look for it… Which is a really hard thing to do because I have thousands of books… I just ordered another coffee. It was a terrible, terrible act of laziness.

William Green (01:31:47):
There was a beautiful thing in that essay that you wrote about your autobiography of your overconfidence, where I think, if I remember rightly, you said something about how you were the most dangerous of all people, the fool who thought he was a genius.

William Green (01:32:03):
And it seems like the that’s something that you’ve worked on a great deal over the years, whether it’s learning from Peter Bernstein, or from your father, or others. Just the importance of realizing how little we know. Again, these things are kind of platitudinous, but really profound.

William Green (01:32:18):
You spent the last 60 years reading obsessively, and yet you discover, “Actually, I still can’t predict anything about the future.” For example.

Jason Zweig (01:32:28):
I had both the incredible good fortune and the misfortune of growing up in a very unusual way. So I grew up on a farm at the end of a dirt road, 12 miles from the nearest stoplight, in the middle of nowhere.

Jason Zweig (01:32:45):
And I was far and away the best student in my teeny class, and probably the entire school. And so by the time I was 18, I thought I was brilliant. Because I guess by comparison, at least academic comparison, that’s what the numbers were telling me.

Jason Zweig (01:33:12):
And then of course, I got to college and found out that everybody else was brilliant too. And suddenly I wasn’t valedictorian of a class of 31 students, because five of them had dropped out over the course of my senior year in high school. I was near the bottom of my class. That was a really powerful lesson to me.

Jason Zweig (01:33:39):
The other difficulty you run into is when you do anything for a long time, you eventually learn stuff. And the real danger for a journalist, and I think for investment managers as well, or any kind of investor, is thinking you know all the answers, and eventually running out of questions.

Jason Zweig (01:34:03):
So that’s why the longer I do this, the harder I work at making sure I don’t run out of questions, and trying to keep digging into things I don’t know enough about, or things I know nothing about, to keep myself hungry. That’s another way I think you can try to keep your head from swelling.

William Green (01:34:29):
You’ve talked a lot about learning from your own mistakes, and other people’s mistakes, and the importance also, of learning from historical mistakes.

William Green (01:34:36):
And one of the things that I’ve been tearing my hair out… Little that’s left of it… Lately is… Sorry, I bring up that of sensitive subject, Jason… For people like us, who tend to be fairly skeptical of crowd euphoria, times when people get carried away, you look at things like the speculative excitement surrounding stuff like the ARK fund, Cathie Wood, and Tesla soaring, or cryptocurrencies going wild.

William Green (01:35:02):
And my instinct is always to look at those things and say, “Okay, so it’s just a repeat of the euphoria of 1928, or 1972, or 2000.” And yet I also have to be aware that I actually don’t know, that I don’t know very much. I don’t really understand technology very well.

William Green (01:35:18):
And maybe something really profound has truly changed, and that there are these disruptive technologies that we should be profiting from, rather than just saying, like Templeton, the four most expensive words in the English language are ‘this time is different’.

William Green (01:35:33):
And I’m wondering how you think about this latest manifestation of new paradigm-ism, new euphoria. What do you think? Is it the real deal? Is it something to be aware of? How do you think of it?

Jason Zweig (01:35:49):
Well, I guess I would say that… I’m sort of quoting myself from the column that I did today… You can be right about the future and be wrong about how to profit from it.

Jason Zweig (01:36:03):
Think back to the fourth quarter of 1999, or the first couple months of 2000. If you believed, as an investor, that the internet was going to change the world, and that it was going to be the biggest fundamental shift in how the economy worked in at least a generation, you would’ve been absolutely right.

Jason Zweig (01:36:27):
But that doesn’t mean you should have gone out and bought Yahoo, and Cisco, and WorldCom, and Global Crossing at hundreds of times earnings.

Jason Zweig (01:36:38):
The question isn’t whether a technology is disruptive, because new technologies come along all the time, and a lot of them are disruptive. The question is whether it’s disruptive and priced appropriately.

Jason Zweig (01:37:01):
And a lot of the estimates of the future market for various disruptive technologies are very aggressive. Back in the late nineties, people were making estimates for the growth of the internet that were ridiculous, which is why every internet stock traded at bubble valuations.

Jason Zweig (01:37:25):
And if you had bought only Amazon and maybe a couple others, maybe eBay, you would’ve done very well. But if you had bought all of them, you would’ve done terribly. And if you had bought indiscriminately, you have lost almost all your money.

Jason Zweig (01:37:44):
So that’s the real question. And then I think there’s another element that people are missing, which is that disruptive technologies don’t just disrupt the entrenched technologies. They disrupt themselves.

Jason Zweig (01:38:01):
It’s entirely possible that what we’ll see in crypto is this kind of massive, endless cannibalization, where new coins arise constantly and push the earlier coins aside.

Jason Zweig (01:38:16):
And one element that I do think a lot of younger investors don’t fully appreciate is that entire markets can disappear.

Jason Zweig (01:38:27):
And this is one reason Graham was pessimistic. And I don’t think he was wrong in this respect. I mean, just because there’s been a deep liquid active market for an asset for a long time, doesn’t mean there’re always will be.

Jason Zweig (01:38:45):
Because if the world changes and it moves away from that asset, the market for the asset, and the asset itself, will basically disappear.

Jason Zweig (01:38:57):
I mean, after my parents were in the newspaper business, they became art antique dealers, and they specialized in 18th century American furniture.

Jason Zweig (01:39:09):
And pieces that we would’ve sold to some of the finest museums in the country, for 10 or $20,000, or more, in the 1970s, today are probably worth a quarter or a third of that. Because nobody wants 18th century American furniture anymore. The market has basically gone away.

Jason Zweig (01:39:38):
And my dad loved to tell a story about Tiffany lamps. So when he was a teenager during the depression, my aunt, his sister, was just starting to date.

Jason Zweig (01:39:54):
And my grandfather, who in addition to being a farmer, was also sort of an estate dealer. He would buy entire house full… People’s houses, he would just buy all the furnishings and resell it, as a way to make it through the depression.

Jason Zweig (01:40:14):
And he had bought the estate of a New York State senator, who lived in Albany. And the contents of that house included a very large collection of Tiffany lamps. Dozens of them, in fact. And my grandfather brought them all home and stuffed them into their farmhouse. And my aunt said to her brothers, “I can’t bring any boys home because of these ugly lamps.”

Jason Zweig (01:40:46):
And my grandfather went on a horse buying trip out to Montana, or South Dakota or something, as he did every summer. And he was gone for two weeks, or a week or two. And finally, my aunt complained so much about the lamps that my grandmother said, “It’s okay. I’ll take the risk, get rid of the lamps.” And so my dad and his brothers loaded up the farm wagon with all the Tiffany lamps, and they drove to the local dump.

Jason Zweig (01:41:20):
And it was a beautiful sunny day. And they had a javelin contest, picking up the Tiffany floor lamps and heaving them onto the top of the dump. And my dad described how beautiful they were smashing in the sun, all red, and green, and blue and yellow.

Jason Zweig (01:41:39):
And my grandfather came home a few days later and beat all the brothers. And of course, my dad was telling us this story… I don’t know… In the late seventies or early eighties. And today, those lamps would be worth millions of dollars collectively.

Jason Zweig (01:41:56):
But in 1932, or whatever that was, they were junk. Nobody wanted them. And they were such junk that my aunt couldn’t bring any boyfriends into the house because they would make fun of her for having these ugly old lamps.

Jason Zweig (01:42:13):
That’s what can happen. Markets can just disappear for generations, or permanently. And you can’t take a liquid market for granted.

Jason Zweig (01:42:27):
Ask somebody who owned equities in Russia in 1913. In Germany in 1938. That’s why Graham believed in preparing for a disaster, and believed in the importance of protection.

Jason Zweig (01:42:43):
And if you’re investing in a speculative asset class, and all you’re doing is projecting, and you’re not putting any energy into protecting, you’re not asking yourself what could go wrong, and what would happen to me if it does, then you’re not really investing. You’re speculating.

William Green (01:43:04):
There was a beautiful thing I looked at in the interview that you did with Peter Bernstein all those years ago, where you asked him what the biggest mistake is that investors make. And he said, “The refusal to believe that shock lies in wait.”

William Green (01:43:17):
I thought that was just a lovely way to put it. Just this awareness that things can happen that you could just never predict. Think of the pandemic, shutting down everything around the world, forcing us all to…

William Green (01:43:29):
I was talking to a friend of mine who was visiting from South Africa the other day. And I was asking him why he didn’t have any wine with his dinner. I’ve never seen him not drink a couple of bottles of wine at a dinner.

William Green (01:43:38):
And one of the things that had happened is, I think he’d been in lockdown for 50 days in South Africa and they had closed all of the off licenses. Nobody was allowed to buy any alcohol. And he’d basically gone totally dry for 50 days.

William Green (01:43:54):
And it to protect all of the hospitals, I guess, from car crashes and domestic abuse cases that were stirred by alcohol. Could never predict.

William Green (01:44:04):
If you were running a bar, or a restaurant that relied on alcohol sales, or an off license… Never occurred to you in a hundred years that that could happen, that because of a pandemic, you’d lose all liquor sales for 50 days in South Africa.

Jason Zweig (01:44:23):
Right. Of course. I mean, look, I think all of us know from our own personal lives that wildly unpredictable things happen all the time. And then we turn to our investment portfolios and we say, “Well, we’re in control here.”

Jason Zweig (01:44:42):
And it’s kind of like, “No, that’s not the way the universe works.” And you just have to accept that

William Green (01:44:49):
You spent a lot of time studying happiness research over the years, from Kahneman and that whole crew of behavioral finance gurus.

William Green (01:44:57):
And I’m wondering if any of the things that you’ve learned have affected the way you live your life. And I remember in Your Money and Your Brain… Should have been called Your Money and Your Mind…

Jason Zweig (01:45:08):
It would’ve been easier for some of us.

William Green (01:45:10):
I would have remembered it better than. In that book your last chapter was about happiness, right?

Jason Zweig (01:45:15):

William Green (01:45:15):
And I remember there was a lovely bit where you were talking about the importance of maximizing your self worth rather than your net worth. Can you talk a little a bit about if there’s anything you’ve really applied in your own life that’s grown out of that research, to tilt the odds of you having a happy life?

Jason Zweig (01:45:33):
Well, I wish I could say that I have a really good work-life balance, but I don’t. The pandemic is really wreaked havoc with that. And I’m not proud of it. I’ve been working way too hard and not playing nearly enough.

Jason Zweig (01:45:47):
But I mean, the important principle, I think, to the whole question of money and happiness, is people don’t really learn from their own mistakes.

Jason Zweig (01:45:58):
So they say things like, ” I really want that new car,” or, “I really want to renovate my kitchen,” or, “I really want that piece of jewelry, or those shoes, or these $500 or sneakers,” or whatever it might be. The new Peloton.

Jason Zweig (01:46:15):
But possessions and material goods don’t really do much for people’s happiness, because of adaptation. It’s like, as soon as we possess something and we take it in to our daily lives, we start to get used to it, we acclimate to it, we adapt to it.

Jason Zweig (01:46:38):
And the simplest way to think about it is, think about new car smell. The last time you bought a car, and you got in, and you smelled that new car smell, whatever that is. I don’t know how the automobile scientists generate it, but it’s some aroma.

Jason Zweig (01:46:56):
And you’re like, “Ah, I love the smell of this car.” And then it’s gone after two weeks, and after a month or two, the cat has scratched the backseat, the kids like on the upholstery, there’s muffin crumbs in the gear shift and coffee stains on the upholstery, and there’s mud on the floor, and the fenders are dented. And a little while later, the mechanical problems start.

Jason Zweig (01:47:26):
And that’s kind of the way most material possessions work. The way you use money to improve your happiness is through purchasing experiences, which means basically memories that you create with friends and family.

Jason Zweig (01:47:48):
Vacations, celebrations, flowers and feasts, as Danny Kahneman likes to say. Anything that brings people you love together. Because as time passes, the event actually grows in positive emotion for you, when you think back on it.

Jason Zweig (01:48:04):
And the other thing is making yourself a better and more well rounded person. Taking courses, volunteering for nonprofits, committing to your place of worship. Anything that puts you in a position to join with other people, doing things that help other people, that can bolster your spiritual growth.

Jason Zweig (01:48:29):
So you don’t just write a check to your favorite philanthropy, but rather, you would volunteer for that philanthropy, and you would wash the floors or serve the food at the benefit, or whatever it might be. Something that commits you, not just with your wallet, but body and soul.

William Green (01:48:51):
When you did a Google talk a few years ago, I remember you talking about various causes you want to support. You weren’t specific about it, but you were saying, look, I’m investing for the next hundred years, because I’ve got children. I want to help, I’ve got causes I care about, and I want to build a long term legacy with my family’s wealth.

William Green (01:49:09):
And I was wondering, when you think out the benefits of all of these decades of prudence, and deferred gratification in your investing… You’ve got to a point where you don’t really have to work, so you’re working and saving money, and investing it prudently for the future.

William Green (01:49:24):
What for? What’s the end game here? I mean, it’s wonderful that you have this prudent deferred gratification gene, that Charlie Munger talks about, but what do you think about what the end game is, who it can benefit?

Jason Zweig (01:49:36):
I mean, I do have causes I care about. In my case, a lot of them are environmental. And there’s some others as well. I also want my kids to have some security. I mean, Buffett has that wonderful expression, “You should give your kids enough money so that they can do anything but not enough so they can do nothing.” And I think that’s pretty wise.

Jason Zweig (01:49:58):
I think for any of us, when we think about leaving a legacy, it’s usually about something we do, not something we have. And I guess, the best epitaph I know of was actually the motto of the great Flemish artist, Jan van Eyck, which was, [foreign language 01:50:24], which means… I’m loosely translating… “I did the best I could.” Which I think is wonderful. I mean, what more could you ever ask from a person? If the legacy you leave is that other people would say about you, “He did the best he could,” or, “She did the best she could, they did the best they could,” that’s pretty good.

William Green (01:50:50):
I wanted to end where we began, with your father. And there was a brilliant article that he wrote, that you have on your website, about the complexity of his own father, who we mentioned before, your late grandfather Sam, who beat everyone up over the broken Tiffany glasses.

William Green (01:51:06):
And Sam, by your father’s description, was a very tough, illiterate, violent, rage-filled immigrant from Ukraine, who was kind of a miser, who started off working in a sweat shop in New York, and then saved up to buy a farm near Albany.

William Green (01:51:21):
But your father wrote this beautiful obituary, where he said, “He was not a kind man, as kind men and known by I accepted standards. He never stooped to give. Only after he died, did people fully understand the essence of his charity, and they came in overwhelming numbers to say, ‘I’m where I am today because he helped me.'”

William Green (01:51:39):
I thought it was a wonderful description of a man with great flaws, and great strengths and virtues. You similarly wrote a wonderful piece about your own father. And I’m wondering for you, as someone with two daughters now in their twenties, how you’d want to be remembered by your own children.

Jason Zweig (01:51:57):
Oh boy, we’re really ending with the morbidity, aren’t we? I hope my kids would remember me as fair and always honest. Honesty is, I think, my greatest, maybe my only virtue as a parent. I think I’ve always been honest with my kids.

Jason Zweig (01:52:21):
The thing that I hope I imparted to them is the importance of trying to find something you believe in, and just give it your all.

Jason Zweig (01:52:38):
And you know this story, William, but maybe not everybody listening to us has heard this. So when my dad was very sick, a couple months before he died, I came up from college to visit home. As he always did, not long after I got there and he asked me what I was reading, because books were very important in him. And of course I was a college kid, so I was full of myself. And I very proudly said, when he asked me what I’d been reading, I said, “Kierkegaard, the Danish philosopher.” Who’s pretty dark by the way.

Jason Zweig (01:53:15):
And my dad said, “What is he telling you?” And I happened to remember this beautiful line that I had just read while I was on the train, that Kierkegaard wrote, which was, “No individual can assist or save the age. You can only express that it is lost.”

Jason Zweig (01:53:37):
And I thought this was so beautiful, and sad, and sort of jaundiced, and existentialist. And my dad… He was in a lot of pain at that point… But he said, “Yeah, he’s right.” And he paused, and he said, “But that’s why you have to try to save and assist the age.”

Jason Zweig (01:53:58):
And I thought that was just incredible. Not just that my dad had out existentialized the great existentialist, but that he had put his finger on something that was incredibly profound, which is, life is hard work, and careers are hard work, families are hard work.

Jason Zweig (01:54:23):
It can be very tempting to give in, and say, “This is bigger than I am.” But that feeling is part of what should keep you going,

William Green (01:54:35):
Yeah. And I think you sort of resisted at the start of the conversation, when I was saying that you, to some degree, had inherited your father’s crusading quality as a journalist.

William Green (01:54:45):
I do think there’s an element in what you’ve done over the last 30, 40 years as a journalist, where you are saving and assisting the world.

William Green (01:54:52):
And I remember once you gave a speech, where you picked up some award, and you were saying, “Look, we are sometimes kind of embarrassed about what we do, writing about money. But actually money is hugely important.”

William Green (01:55:04):
And I think Peter Bernstein had said that if you want to really know about someone, look at how they deal with money. It’s so central to our lives, the way we invest, the way we save, the way we spend our money, the way we share our money. All of those things.

William Green (01:55:19):
And I think there’s deep honor, actually, in the sort of service journalism that protects people from getting taken advantage of, protects them from their own stupidity, and bias, and ignorance, and emotion, and arms them to make better decisions, and to take care of their families and the likes.

William Green (01:55:39):
So I feel like you may be wary of giving yourself credit for this, but I feel like you’ve done a great service in continuing that tradition.

Jason Zweig (01:55:49):
Well, thank you, William. Although, aside from embarrassing me, you’re also making me feel old. But, I mean, [inaudible 01:56:01]. I mean, you just do the best you can.

Jason Zweig (01:56:04):
And I just place a lot of store in what Jim Michaels said, that we talked about at the beginning, that you don’t want to get anybody’s blood on your hands. And that’s a pretty good guide.

Jason Zweig (01:56:18):
And I often tell fund managers that they would be better off if their firms always asked, “Would we want our mothers to invest in this?”

Jason Zweig (01:56:32):
It’s like out south and in the west, you’ll often see this bumper sticker on cars, WWJD, what would Jesus do? And I’d like to see a bumper sticker, WWMB, what would mom buy?

Jason Zweig (01:56:49):
And if you’re designing some investment product that you wouldn’t be proud to have your mom own, maybe you should bury that out back, and not try to sell it to the public. Because if it isn’t good enough for your mom, it isn’t good enough for anybody else either.

William Green (01:57:09):
And I think that’s one reason why we revere Buffett and Munger, is that they’re not just great at making money. They’ve done it in a pretty honorable way, treating their shareholders as partners, and transparent, and admitting their mistakes. So yeah, I think the manner of the victory matters as well.

Jason Zweig (01:57:26):
Absolutely. I think that’s really important.

William Green (01:57:31):
Is there anything else you’d like to add before I let you go?

Jason Zweig (01:57:34):
No, I don’t think so. I think we covered a ton of ground. As long as we fully disclosed to people that we’ve been friends for a very long time.

William Green (01:57:45):
And hopefully that survived this interview.

Jason Zweig (01:57:47):

William Green (01:57:49):
Okay, great. I’d like to thank you, Jason, for being a great ally, and supporter, and truth teller, and role model over the years. And thank you to our listeners for being here with us. I hope you’ve enjoyed this conversation. Many thanks.

Jason Zweig (01:58:02):
Yeah, my pleasure. William, always great to be with you.

William Green (01:58:05):
It’s a real delight. Thank you, Jason.

Jason Zweig (01:58:07):
All righty. Thanks.

William Green (01:58:08):
All right, folks. That’s it. Thank you so much for joining us today. If you’d like to learn more from Jason, the first place to go is his website,, which has a lot of terrific resources for investors, including many of his old articles.

William Green (01:58:21):
I’d also strongly encourage you to read his weekly column in the Wall Street Journal, which is called The Intelligent Investor. As I’m sure you’ll see, he does a fantastic job of looking out for his readers and protecting their best interests.

William Green (01:58:33):
Meanwhile, thanks to everyone who wrote to me on Twitter to suggest questions to ask Jason. I ended up asking him a question about his own biases that came from a listener named [Alon Michael 01:58:43], who lives in Spain.

William Green (01:58:44):
As a way of saying thanks, I’m sending Alon a signed copy of my book, Richer, Wiser, Happier, which is based on hundreds of hours of interviews that I’ve done over the last 25 years or so, with many of the world’s greatest investors.

William Green (01:58:56):
Please feel free to follow me on Twitter @williamgreen72, and do let me know how you’re enjoying the podcast.

William Green (01:59:02):
We’ve got some wonderful guests coming up, including Aswath Damodaran, Monish Pabrai, Arnold van den Bergh, and Bill Miller. I look forward to being back with you again soon. Until then, stay well and thanks a lot for listening. Take care.

Outtro (01:59:15):
Thank you for listening TIP, make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.


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  • Benjamin Graham’s The Intelligent Investor, revised and updated by Jason Zweig.
  • Jason Zweig’s book on neuroeconomics, Your Money and Your Brain.
  • Jason Zweig’s satirical survival guide to Wall Street, The Devil’s Financial Dictionary.
  • Jason Zweig’s website.
  • William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book
  • William Green interviews Joel Greenblatt on RWH003: How to Win The Investing Game.
  • William Green interviews Howard Marks on RWH002: Investing Wisely In An Uncertain World.
  • William Green interviews Tony Robbins on RWH001: The Life Force Revolution.
  • William Green interviews Ray Dalio on WSB410: The Changing World Order.
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