Posted by on May 21, 2019 in Articles & Advice, Blog, Books, Featured, Radio & Podcasts, Tooting Own Horn |

Image Credit: Adam Bernaert, Vanitas Still-Life (detail), ca. 1665, The Walters Art Museum

By Jason Zweig  | May 21, 2019 9:59 p.m. ET


It took a while for us to synch our schedules, but I recently chatted with David Perell for his North Star podcast.

I’ve fixed a few minor errors in the online transcript that David posted.  My corrected version follows.

Jason, welcome to the North Star podcast.

Great to be here, David. Thank you.

So you had the great fortune of spending six hours with Charlie Munger back in April, and he said a quote by Lee Kuan Yew that is as simple as “Figure out what works, what doesn’t and why.” But that’s stuck with you. And I want to hear why it resonated with you so strongly?

It seems to be a guiding principle for Charlie Munger’s life. And for anyone listening who isn’t familiar with him, he’s one of the greatest investors of our time, Warren Buffett’s business partner, and somebody who has just an extraordinary track record in the investing and business world. But I think what makes him unusual is his intellectual consistency. He really seems to try to apply that principle – “Figure out what works and what doesn’t, and why” – across all of his business thinking and maybe even across parts of his private life as well. And that kind of intellectual consistency is really rare. What’s remarkable about both Charlie Munger and Warren Buffett is that every year for decades at the Berkshire Hathaway meaning they’ve taken on this task of answering questions on any topic from anybody. And, remarkably, they always give the same answers and people keep coming back. And I think it’s because that sort of constant is rare in the business community and in public life as well. And people appreciate always hearing the same message delivered the same way.

That reminds me of something that you’ve written, that you try to say the same thing but in different ways, in ways in which that same message continues to be entertaining.

To give you the backstory on this, 20 years ago, I was a speaker at a journalism conference. And the question came from the audience. “Describe what you do for a living. Don’t tell me what it says on your business card or your resume. But tell me what you do for a living.” My answer was: Between 50 and 100 times a year, I say the exact same thing in such a way that neither my editors nor my readers will notice I’m repeating myself. That is kind of the way I think about my job. It’s because I am in the business of giving advice on investment decision making. And I think there’s only a handful of things that are true. And when you try to sort of expand beyond that set, you quickly get into the position of starting to tell people things that are bad for them. So I’ve willingly put myself in a box.

It seems like what you’re trying to do – and what Munger and Buffett are trying to do – is find principles, find axioms that then are stable and consistent enough that in times of joy and toil, you can still depend on those axioms. Is that the right way to put it?

That’s a very nice way of summarizing it. Just sticking to investing for a minute, another way I sometimes summarize my beliefs is: As an investor you want to bet on regression to the mean, rather than against it. What most people do, in technical terms, is they’re procyclical: If, when they invest, the US stock market is going up, then they want to be with the cycle and then some, so they borrow money to buy more stocks, or they buy something that itself is leveraged. They take on more and more risk as the ambient level of risk is rising. And then the flip side of that is they’re also procyclical in bad markets. So when prices are falling, they reduce their exposure to whatever is going down instead of buying more because it’s getting cheaper. So what I’ve tried to do – although of course I wouldn’t pretend that I’ve done it perfectly – is to be less enthusiastic when markets go up and more enthusiastic when they go down. And it’s a bit like being the skunk at the garden party. But that’s just the way it is.

So when you look at somebody like Buffett, somebody like Munger, there are so many people who have a ferocious love for their ideas. Now, as a writer, as a journalist, as an analyst of the investment business, how do you separate skill from luck? How do you know that if you’re going to go spend six hours with somebody like Buffett or Munger is actually the best person to spend that time with?

Well, you don’t. You never know. But you can have a pretty good idea. I had a one-on-one interview with Charlie Munger four or five years ago. And we ended up talking for well over an hour. And he was terrific.

A Fireside Chat With Charlie Munger

I figured, “Well, he’s only 95. I’m sure he’s still just as good as he was then,” and he was better.

Perfect. Now, in terms of Charlie Munger and in terms of Daniel Kahneman, who you’ve also spent a lot of time with. You worked on Thinking, Fast and Slow with him. Talk about some of the similarities that you’ve seen between the two of them and talk about some of the differences and then we’ll get into how both of those people have influenced yourself and your own worldview?

I think the most fascinating similarity between those two is Charlie Munger has said that he loves destroying his own ideas. And Danny Kahneman has said the same thing both to me and to other people and in public over the years. One of the most memorable moments from helping Danny write Thinking, Fast and Slow — and one of the most memorable moments was pretty early on — I had just published a book at that point on neuroeconomics and the psychology of investment decision making. And someone who read the book had written me this long email. It was probably, single-spaced, four pages long. With this detailed analysis of why he thought that one sentence in the book was wrong. I read it, and I immediately realized that the person was probably right. But I wasn’t actually smart enough to figure out for sure whether the person was right, or even how I should fix the flaw that the person was pointing out. And so the very next morning, when Danny and I were going to be working together in his apartment, I brought it with me and I showed it to him. I asked him, “What should I do?” I was asking him to help me. And he read it. And when he was done, he handed it back to me. And he said, “Do you have any idea how lucky you are?” And I said, “Well, what do you mean?” and he said, “Most people never have anyone point their errors out to them. In here, you have four pages, outlining exactly why you’re wrong, and what you should do about it.” At that point, I realized he was not going to give me any help. But I also took that lesson to heart. And I mean, it’s really important to get that kind of negative feedback, and to welcome it and really be open to it, not just as a writer, but as a thinker and as a person.

Yeah, and the thing that kept coming to my mind, as you were saying that is attachment to ideas. So I’ve noticed that when I speak with investors, the best ones that I’ve spoken with, I’m shocked at how quickly even in the course of a conversation they can change their mind. It’s as if they don’t feel the same kind of possession to their ideas, whereas other people treat them like children.

I think this is one of the most difficult things in the human condition. It takes a lot of time, it takes a lot of commitment and mental effort and struggle, to arrive at what feels like a conclusion. And I think one of the problems is that once it feels like a conclusion, it becomes very difficult to let it go. And, you know, to me, probably the single most memorable moment of the time I spent working with Kahneman was when we had written a chapter that I thought was wonderful. And I woke up the next morning and opened my email. And I must have had over a half dozen emails for me – just this sort of cascade of increasing despair – as he had read through it. The first subject line was something like “Why did we say this?”, and then it became “Are you sure?” And then “I don’t think so.” And the next one was something like “This is all wrong.” And I’m pretty sure the final one was “Disaster” or something like that. Then there was one more email from him and he had stayed up all night and the final email from him that said something like, “Don’t worry, I think I can fix it.”

What I Learned from Daniel Kahneman

And so when I saw him later that day, he had rewritten the entire chapter as if it had never existed. And as somebody who at that point had been a professional writer for, you know, 25 years, I was dumbstruck. I had never seen anybody do that. Certainly not me. And I said to him, “How did you do that? How could anybody do that?” And he just looked at me. And he was kind of puzzled at how astounded I was, and he just said, “I have no sunk costs.” And it was so clear to me that it wasn’t a performance. It was how he worked. So I started over and there’s no point starting over with what you already have. You start over with a completely blank slate. And that’s what he did.

I’m curious to walk through the writing process with you from incubation to publishing and execution. Do you begin with a conversation? How does the way that you live and kind of structure your life – and I’m really interested in conversation and reading – then inform and begin to improve your writing process over time?

There’s a lot of variation. And there’s a big difference between writing for The Wall Street Journal and book writing, or, you know, the little bit of creative writing that I do on the side.

My reading away from the office, when I’m not working, has absolutely nothing to do with my day job. Nothing to do with finance. I will not read investing or finance books. I don’t watch Wall Street movies. In fact, The Big Short is the only financial movie I’ve seen in the past 20 years. And that’s because I personally believe it’s really important for writers, no matter what you write about, to refresh your brain when you’re not on the job. And the best way to recharge your brain is to engage in in things that are different from what you’re doing in your work-day life.

Structured Serendipity

So, I read classic novels, I read history, I read biographies, I read books on science or philosophy. But I still will pick up threads in all of that reading that that are more like grains of sand that go into the oyster, and they eventually will make something, and that process is kind of mysterious. I might read something by Mark Twain or Emily Dickinson or Shakespeare or Bertrand Russell. And it just kind of sits up in my head for weeks, months, years, and then eventually comes out. And I might recognize it, or I might not until after I’m done writing, and then I realize that an idea kind of came in, at a glancing angle or from an oblique.

So what you were saying reminds me of a quote from Michael Pollan. He says that every night before he goes to sleep, he gets into that kind of fiction mode, reads the greats because he wants while he’s sleeping while he’s dreaming, he says he does so much of his work then. And he wants the night time work to be inspired by the greatest writers of all time.

Yeah, it’s interesting to hear you say that, David, because that’s kind of what I do, too. I mean, I, I tend to go to sleep a few minutes before my wife does. And that’s my last reading of the day, and there’s a few books I always have on my bedside table or almost always have.

What I Read, and Why

One is the Essays of Montaigne, which I’ve written about a lot. And that’s kind of — that book is almost like a touchstone for me. I think the only time I didn’t have that book with me from the time I first read it when I was 18, I guess, is when I traveled 3500 miles overland in West Africa in the backs of trucks where it wasn’t really practical to bring it. But it’s gone with me just about everywhere else. And I don’t read it every night. I have a bunch of books on my night table. But it’s certainly one of the books I will read before I go to sleep.

Another is Sir Thomas Browne – whose name may not be very well known to people – who was a 17th century English essayist, who wrote this wonderful, ornate, complicated, Latin-inflected prose that I love, even though I don’t write the way he wrote. But his writing is gorgeous and complicated. And it’s not super accessible for a lot of people today. But it had a lot of influence on me, and I will periodically look at that. And then I usually have a Mark Twain book or Moby-Dick. Something like that.

So, I mean, my dad, who was very literary, had a phrase that it took me a long time to appreciate, was called “integumentary toughness,” which is just another way of saying you have a thick skin. And I don’t know where it comes from exactly, or why I’m going to flatter myself into saying that I have it.

One of the earliest memories I have of thinking that I was going to be a writer was when I was in sixth grade. And our English teacher, Mrs. Powers, handed back to me some assignment we had done — with an A+ on it. I threw it out decades ago, but I still remember it. I was describing something about winter, because in upstate New York [where I grew up], that’s a pretty common theme or was then, when we used to get three feet of snow in the wintertime. And I remember, I described something with these exact words, because I still can picture it. And I don’t know whether it was a person or a thing. Might have been a tree. But it was “pinioned in the fluffy white trusses of Mother Nature.” And Mrs. Powers had underlined it, put a checkmark and in the margin, she had written, “Beautiful!”

And I remember looking at it, after she handed it back to me. I remember looking at it, and so I guess I was 12. And of course, there was no internet in those days. This is why I hesitate to tell you what year it was. It’s probably 1970 or something.

And I remember looking at it and saying, “‘Trusses’? What did I mean, ‘tresses,’ or ‘trusses’?”

So tresses are sort of hanks of thick hair — like, you know, Lorelei or Rapunzel had tresses. And I think that’s what I meant.

Tresses (Sandro Botticelli, ca. 1485)

Trusses are like jock straps [for the treatment of hernia].

Trusses (courtesy of the Wellcome Collection, London)

And I looked at what I had written, and it suddenly looked strange and clunky and wrong. And I said, “Well, so let’s say I meant tresses, because I think that’s what I meant. But how could you be pinioned in tresses? And that’s not what I wrote. I wrote ‘trusses.’ And I think those are jock straps. And how come she doesn’t know this?” And the more I read it, the more awful it became.

And that night, when I got home, I showed it, I showed it to my parents, who had been newspaper editors and publishers. And my dad read it and burst out laughing. And because he immediately said, “Jock straps? And why are the jock straps fluffy?”

And she had just liked that it was figurative language that was pretty advanced for a sixth grader to use. But that was, I think, the moment I woke up as somebody who could become a writer and was able to be self-critical.

It was like, “I’m being praised for something that’s actually bad.” And that’s not good. That’s really bad! Because I’d much rather be criticized for something that’s good than be praised for something that’s bad.

That is something I’ve always tried to be open to and try to welcome. It’s not easy: Being criticized is hard. But the ability to go through a writing life with a thick skin is I think the only way you can get better.

Now, one thing that you seem to do is to save investors from themselves. I’ve seen you write that before. And it reminds me of this Benjamin Graham quote, “The investor’s chief problem, and even his worst enemy is likely to be himself.” Talk about that.

Well, you know, what Graham understood, I think, better than probably anyone who had written about investing before him is that there’s a big difference between what people should do and what they can do.

A Note on Benjamin Graham

Another way to think about this is that distinction between what’s optimal and what’s practical. And we pretty much know how people should invest. Investing is – as Warren Buffett likes to say – “It’s simple, but it’s not easy.” And dieting is simple, but not easy. In fact, a lot of things in life are simple, but not easy. And investing is a very good example. I mean, if all you do is diversify, keep your costs low, and minimize trading, that’s pretty much it. It’s like eat less, exercise more. Investing is just about as simple, but it’s not easy. And so Graham understood that people are their own worst enemy, because when they should be cautious, they tend to take on risk. And when they should be taking on risk, they tend to be cautious. They are much too influenced by what other people are doing. And they have an enormous fear of looking foolish. So on the way up, you will have FOMO, fear of missing out. And then on the way down, you’ll have fear of sort of taking a worst loss and looking ridiculous in front of people. So all of those pressures come together, and they tend to make people get in their own way, really to their detriment.

Stop Worrying, and Learn to Love the Bear

Well, it kind of reminds me of some religious fasting rules, where a lot of religions will say fast one day a week. Actually, I think Ramadan begins today, where you can’t eat during the day [until] after the sun falls for a whole month. And as one of my friends who’s a wealth advisor says, behavior trumps math, and it gets back to what you were saying where, yes, there are optimal ways of doing things. But if that behavior is really hard, there actually might be easier practices to implement, that people can actually follow. And therefore kind of in this weird, backwards way, that’s actually the way to invest. Is that the right way to think about it?

Yeah, I think so. I guess once you recognize that you are your own worst enemy, then a lot of successful investing becomes about putting handcuffs on that don’t feel like binding constraints. So, you know, there’s a few classic techniques.

You can do what’s called dollar-cost averaging, where you buy a fixed amount of diversified mutual funds or ETFs, something cheap, once every month, so that it’s automatic, it’s an electronic funds transfer, you never touch the money. Another is, you can use auto-rebalancing, where when one asset goes way up in price, you automatically sell some of it. And the more you can do to automate how your investments behave, the more effective you can be in eliminating your own behavior from the equation.

Tie Me Down and Make Me Rich

How much do you think about the role of entertainment in your writing? And so I guess that question is twofold. The first one is, of course, you’re providing factual information. You’re teaching people how to save investors from themselves. But also there’s a role of entertainment because people have to say, hey, there’s a Jason Zweig column today. I can’t wait to read this. But then there’s another role where you want to make sure that the facts get slotted in there. And so it’s obviously not then pure entertainment, you’re doing a mix of both. So how do you think about that? And is it a trade off? Or are they symbiotic?

I think it’s all one. And certainly, like all writers, no matter what the medium or the style or the content, I want people to read what I write. And if all I did was just tell them, “eat your investing vegetables,” 50 times a year, then I don’t think anybody would read it. So part of the challenge in what I do in my day job is just getting people to feel that when they read this, they will be encountering something they didn’t know or they hadn’t thought of quite that way.

Well, it reminds me of why writers shouldn’t use cliches. I was with a writing teacher a couple months ago. And he said, the problem with the cliche is that by definition, you are saying something, at least a phrase, a way of thinking that the reader has already heard before. And so it sounds like what you’re trying to do is take the cliche to the next level of there can actually be entire pieces that are cliches that have zero element of surprise, and therefore it loses entertainment value. It’s boring. And none of it sticks in the readers mind.

I think that’s absolutely right. There’s an infinite number of clichés, but clichés also take a variety of forms. Words can be clichés, phrases can be clichés, ideas can be clichés and approaches can be clichés. And so for example, as we’re talking, it’s May, I am not going to write an article about “Sell in May and go away,” which is this incredibly tedious, uninteresting, completely hackneyed concept that people on Wall Street like to trot out this time of year. It’s the idea that, you know, between — the stock market’s returns between May and the end of October are less attractive than the returns from November to April. So you should get out of stocks in the summer and get back in in the fall. It’s been done to death. And the problem with it is not only is it stupid, not only is it not borne out by the data. But at this point, everybody’s talked about it a million times. And that’s the kind of thing I just can’t bear to go near unless I have to at gunpoint. That’s a cliché.

On Writing Better: Sharpening Your Tools

“Don’t write cliches” actually didn’t make sense to me until a couple months ago. So can you walk me through the problem with cliches because I don’t think it’s intuitive. And this isn’t really just about writing, I actually think it’s about how to actually convey and communicate interesting to people, which helps everybody whether you’re in conversation, whether you’re writing an email, whatever it is. It feels like a cliche is the death of communicating an interesting idea.

I completely agree. I think somewhere I defined a cliché as words that hijack your hands, so that your fingers type the words without your brain even sending any signals, which isn’t, of course, literally true on a neurological level, but it’s what it feels like. If you’re sitting at your keyboard, isn’t it you write by typing? And you just find the words sparking out of your fingers spontaneously. What feels to you like spontaneity is probably just clichéd language. We could actually conduct this interview entirely in clichés as you realize, if you say, “Oh, you know, the room was filled to the rafters.” There’s a zillion clichés and anything that you can say without thinking is a cliché. And what I do when I write, but also when I edit what I just wrote, is I just go through it, and I say, “Why did I use those words?” And typically, at this point, I’ve stopped most of them before I even get to the editing phase, but it’s a constant battle.

We’ll get back to writing. But I want to know when in your career was the most invigorating moment, and we can start maybe with an inflection point in your life, your career, somebody you met, an experience you had – maybe it was the trip to Africa that you were alluding to earlier? Let’s talk about the inflection point. And then we’ll get into a moment more specific to financial journalism, where there were something that happened at the spirit in the air that was really exciting and just fascinating to navigate through.

The inflection point I would mention is probably the thing that turned me into a writer. And at that point, I didn’t know what kind of writer I would be. But when I was 13 years old, I read a novel called Look Homeward, Angel by Thomas Wolfe, who, many, many decades ago was considered the equal of Faulkner, Hemingway, and Fitzgerald. Although today, he’s not quite so well-regarded. But it’s a wonderful novel. And it’s also a great novel for impressionable bookish teenage literary boys. And I read the book, and I just said, I want to be a writer like this guy. And from that moment, I was probably halfway through the book, I just started writing all the time. And I grew up on a farm in northern New York State. And whenever I wasn’t doing chores, I was sitting in my room writing non-stop.

And then what was the moment in your career that was exciting, invigorating to you?

Well, I think there were two moments. And I guess I would say they both took place when I was working at Forbes magazine, where I worked from the late 1980s to the mid 1990s. And I would say the first was the first big investigative reporting project I had ever done. I identified a guy who was big in the toxic waste business in New Jersey. And he was also doing all kinds of really strange accounting and questionable business practices at his company. And I spent months researching the story and I went trudging across all these landfills in southern New Jersey, including at least one where some people thought Jimmy Hoffa was buried. It was absolutely fascinating. And I, at that point, I was like, “Well, why would anybody ever want to do anything but this?” And, you know, in the end, the story that we published was good. I don’t know that it changed his practices or the industry as a whole. But it really sort of launched me as somebody who realized that I can put my curiosity to work. And try to uncover things that can make a difference.

So that is interesting because it was surprising to me, that’s not what I think expected you to say. Because that had a more investigative tint than many of the things you do now. So how did you make that transition?

Well, the other moment I was going to mention, after about a year after that, was when I was having so much fun doing this kind of work, I could barely believe anybody would pay me to do it. I got called into Jim Michaels’s office, and Jim was the editor of Forbes magazine, and, and, sort of an absolute legend in journalism. He was brilliant, and it could be terrifying if you were on his bad side. And he said, “I want you to be the next mutual-funds editor.” And I knew only two things about mutual funds. One, I was pretty sure it was boring. And two, I knew that the first job he had when he came to Forbes in 1950s was mutual-funds editor. I immediately said, “Oh, that sounds great!” And walked back to my office just kicking the carpet in frustration. I was like, “Out of all the jobs, I got to do this.” Then, I spent a couple days and I quickly realized there was a trillion and a half dollars in mutual funds at that point. And I said, “If there’s that much money there, there must be some stories worth telling.” And sure enough, there were.

So you begin to dive into understanding mutual funds but how do you then make the pivot to where you are now really writing more about the personal finance and stuff like that? It’s interesting, and quite frankly, surprising to me to follow this transition. And it’s not entirely clear to me how that path was paved.

Well, it’s not entirely clear to me either. But what I will say is that I noticed something which is, at that point, I had worked at Forbes for five years. And in the first five weeks that I was the mutual funds editor, I got more letters — because in those days, that was what people did, they wrote letters, not emails or tweets or something — more letters in five weeks than I had gotten in the previous five years combined. And I said to myself, “Whether people should care as much about their investments as they do is an open question. But the fact is, they care. People really care about this.” And I decided, “If it matters that much to people, then there’s got to be a good way of doing it and a bad way of doing it. And I’m going to try to pick the good way.” The other, I guess, guidance that I got on that was from Jim Michaels himself, because I said to him, “I know, I know that this was the first job you had when you came here. Do you have any advice for me?”

And I thought he was going to say something like, “Read this book or interview this person, or maybe go take a class in something in night school.” And he looked out the window for a while. And then he turned back and he looked at me: “Don’t get anybody’s blood on your hands.” What it means is: Don’t pander. Don’t tell people what they want to hear just because they want to hear it. Tell them what’s good for them. Often, the advice that sounds good for people is bad for them.

I have a theory. And I want you to tell me if this theory is totally crazy, or somewhat smart. And I’ve heard it sort of circling and other parts of the internet. And so good to kind of bring it all together for you here. But you grew up on a small farm in northern New York, middle of nowhere. We have to zoom in for 30 minutes on Google Maps just to find the name of the place. And when I look at my own personal experience, my intellectual curiosity didn’t peak when I was living growing up in the big city of San Francisco, it actually peaked when I was in the middle of nowhere, North Carolina. And I had to turn to books and ideas to keep my mind activated and stimulated. So my question for you is, does growing up in a place that maybe isn’t so stimulating fuel that intellectual curiosity? And how does your experience growing up on that full farm now inform your worldview?

I think there’s a couple of answers to that. I think, first of all, growing up in the middle of nowhere is stimulating. But in different ways. I grew up very sensitive to the natural world. When you grow up on a farm, I think it gives you a much better sense of the cycles of life than you get in a city, where something always seems to be new and different. It’s about the cycles of the seasons, and the weather and crops and animals and vegetation. And I wouldn’t say it made me cynical, but it made me skeptical of arguments about “this time is different”, or here’s this incredible new thing that nobody has ever thought of before.

And also, I think maybe there’s two more levels. One is that social interactions were a little complicated for me. My family was Jewish, everybody else was not. My brother and I were a little bit on the outs. And I think that gave me a natural sympathy for the underdog. That has stayed with me. And skepticism about sort of power structures and hierarchies and whether the people or organizations that are on top really belong there. And then I think the final thing is that having a lot of chores in farm country keeps you very busy. But when you’re off duty, you’re off duty. So I was able to indulge my bookishness. And I just read and, in my spare time, all I did was read and write.

What’s interesting is when you were talking about investing, you’re talking about regression to the mean. And so as you began that answer, the first thing that popped in my head was if what you’re saying is true, moving to the country actually might make you a better investor, because seasons and temperature and nature operates with its own kind of regression to the mean.

Certainly getting away from the conventional sort of gossip mill and social pressures of being surrounded by people who think the same way is definitely not good for anyone who wants to succeed as an investor. There’s two obvious examples of people who escaped the sort of the hamster wheel of New York or some of the other financial capitals like Boston or San Francisco or London or Hong Kong. The first is Warren Buffett who, who spent several years in New York, working on Wall Street as a professional investor, and then just left and went back and founded an investment fund in his bedroom in Omaha. Now, Omaha isn’t really the country, but it is very far from Wall Street. And the second great example of that is John Templeton, who was one of the great global stock investors starting really in the 1920s, and 30s up until he died a few years ago. And he left and moved to an island in the Bahamas and used to sit out on his veranda watching the waves and thinking about investing.

So if I came to you I want to do roughly what you’re doing in 30 or 40 years? What would you say to me in terms of things that would be the same and things that would be different? I’m particularly curious about how much would you use the internet? Would you kind of try to build your own brand and do a Ben Thompson and go launch your own Jason Zweig Stratechery? Or would you say go find a publication or go find a publisher? How would you think about incorporating the internet? But then also, what are the timeless principles of writing and publishing, especially online?

Well, I’m not much of a futurist. And I think the challenge is knowing how the delivery platforms are going to develop over the next few decades. Certainly there are people who have monetized their names into brand names and have been enormously successful doing that. I’m quite happy being associated with The Wall Street Journal, and having people think of me that way first. But not everybody can work in a major media organization, or wants to. I think probably the key is to figure out what you want to stand for. There’s a wonderful a line from Abraham Lincoln, where he said, important principles should be inflexible, because someone was criticizing him for being too sort of stuck in his ways. And his point was, I don’t mind compromising on the little things. But the big things, I’m not going to compromise on. And I think it doesn’t matter what you stand for, as long as it’s something positive. But when you figure out what you stand for, then don’t let anybody move you. I think that will help build an audience no matter what medium you choose, or how information is delivered in the future, that will help people find you, and it will help them be loyal to you.

Absolutely. Reminds me of a line from the Robert Caro biographies on Lyndon B. Johnson, where Lyndon B Johnson gets elected to the Presidency and he wants to pass the Civil Rights Act. And they say, Well, we can’t do this, the Republicans in the south are never going to help you. And he says, “If I’m not going to focus on this, then what the hell is the Presidency for?” And it was his moment, his time in power. And Caro always says “Power doesn’t corrupt. Power simply reveals.” And he said in this moment, this was one of the good parts of Lyndon B. Johnson really stood up and got that act passed. So it follows an idea that I think is fairly important in writing online. And this is what I call it building a personal monopoly. And I never thought of it around principles and values. But I find that so many of the people who do well online, either have a very unique way of thinking, a very unique, principled stance that they stick to, and a style and a sensibility that they have, that nobody else has, or they combine certain disciplines in a way that nobody else does.

I would completely agree. You know, I think just getting back to what I was saying earlier, I was being a little tongue-in-cheek when I said that it doesn’t matter what you stand for, as long as it’s positive. There are there are lots of ways to take a stand for what’s right in whatever your field or your specialty is. And people can arrive at their viewpoints and look at it from any number of different perspectives, but once you figure out what you believe in, I think the trick is to leave yourself open, completely open to challenge and changing your mind. But in so far as you continue to believe that you’re right, then that’s the stand you should take and the principle you should fight for.

I want to get into writing because you wrote a three part series on writing. I now have a writing course called Write of Passage. And actually, a lot of that course is built off many of the things I learned from you. A lot of my own writing practice is built from parts of that essay. And I just want to read my favorite quote from that essay. Because I think that this idea of treating every word like it matters and this line of so true, most people handle words as if they were pennies, light, cheap, dispensable, instead, I want you to handle them as if they were manhole covers, or 45 pound weights in the gym. Why that line?

On Writing Better: Getting Started

Well, because I’m unless you’re a 98-pound weakling, you probably can pick up a 45-pound weight. And I see people, men and women alike in my gym doing that every day. But you don’t do it casually. And if you’re putting 45-pound weights on a bar, you’re going to put them on carefully. You’re going to take them on, you’re taking them off carefully, you’re going to lift them and put them down carefully. And you’re going to count how many you put on. You’re going to make sure that you know what you’re doing.

And this gets back to what we were saying earlier about using clichéd language. It’s all about the effort to use words, instead of having words use you. As the writer, you need to be in control of what your sentences, your essay or poem, your book, your blog post, your tweet has to say, and not the other way around. And all too often people are being driven by their words. They’re in the backseat, and the words are driving them instead of the other way around. You have to take charge. You have to make words do your bidding instead of the other way around.

I want to ask you about a couple people who have influenced your own writing process.

So I did not do much writing for my college newspaper. In fact, I didn’t like it. I didn’t like the newspaper. I didn’t like the the inbred management structure where there were a handful of people who ran it. And if you were in, you were in, and if you weren’t, you couldn’t contribute. But I did write a couple things for one of our newspapers. When I was very young – in my teens and early 20s – I was extremely conceited about my writing abilities. I often think back and I actually visualize myself as a peacock, sort of strutting around saying: “Everybody, look at me, aren’t I great? And isn’t what I just wrote great?”

So something I had written had gotten published in the campus paper. I walked into this guy’s dorm room, or maybe it was the lounge on our dormitory floor. And I had the paper and I said, “Look at this, I wrote this.” And his name was Steve Landauer and, of course, I was watching his face very carefully. And his eyebrows kind of went up and down a little bit. And he got a couple paragraphs in, he looked up at me, and he said, “‘a paucity of persons‘?” And I couldn’t tell you what the article was about today. I couldn’t tell you what the rest of the sentence was. But that phrase was in there. I sort of stammered, and I said, “Well, alliteration is part of what makes writing good.” And he said, “It’s what makes this writing suck.” And, you know, at first, my feelings were really hurt. And I think I sort of stood there with tears in my eyes. And he just went back to whatever he was doing. And I walked back to my dorm room. And as I walked, I looked at it. And I said, “You know, he’s right, it does suck. Why did I do that? And I guess I really like it — I like alliteration, but maybe I like it too much.”

I don’t know why, at an early age, I was able to accept criticism of my writing and learn from it. But I think that may have had something to do with growing up in farm country too, at least in my case. But certainly being able to take criticism and immediately impound it, and turn it around and sort of tackle the problem, learn from it and fix it, is one of the greatest skills a writer can have. And it’s also, even among great writers, it can be rare.

Absolutely. There’s an interesting parallel here with investing where when you have criticism, we were talking about principles earlier. And these themes are really beginning to come clear in this conversation as we were talking about principles earlier and investing and every now and then I’m sure you read something that might defy one of the principles. And so there’s always a tension between how much do I accept this idea. And it must be the same thing. When you receive criticism, you have a system of writing, you have a style of writing, you have a voice, you have a way of being on the page, and then you hear criticism and some of it you want to take and you want to absorb you want to then have those words spoken to writing. And other times you want to give the old Heisman stiff arm to that criticism and say, Nope, that is not what I’m going to do. I’m going to be principled, because this is something I believe in. And you know what, it might just not be good for you.

Yeah. Well, so that’s a great point, David, and it reminds me of something that might be helpful, which is that there are different ways to respond to criticism, because there are different kinds of criticism. When people criticize the messenger, I usually discount it. I don’t really care if people tell me I’m wrong, unless they appear to be arguing on the basis of evidence. If they say, “You misinterpreted that: It wasn’t 43, it was 2048, and you’re wrong,” then I stop everything. Because if somebody is questioning the factual or the intellectual basis of something I wrote, that’s like a three-alarm fire in my world. I just immediately drop what I’m doing. And I go back, and I try to re-report or read all the research, go through my notes, and make sure that I didn’t make a mistake.

But if people don’t like how I said something, or they don’t like that I said something, then they can say anything they want. I mean, I’ve been called all kinds of things, which I wouldn’t repeat on a family podcast. But on the flip side of all of that is if one of my editors criticizes the way I’m saying something before — obviously, this is in the editing process — then typically, what happens is — this happened a few weeks ago. Actually one of my editors said, “You know, I like what you did, I think it’s really good. But you kind of waited five paragraphs to tell us what this is really about? Is there a way you could just say it?” I stood there in the door of his office for probably 30 seconds without saying anything. I said, “Yeah, probably, let me go try.” And it took me 20 minutes, and I rewrote the whole thing. And I sent it back to him. And he said, “Yeah, that’s it!” and then he just sent it through.

But you have to be wide-open to the possibility that what you’ve done isn’t nearly as good as it can be. I mean, my only agenda is to try to convey what I believe to be and the facts as I’ve learned them in a way that’s useful to people. And that’s all what I’m about. But other people think I’m writing about Obama versus Trump or some other nonsense that is just not on my list.

I think the other thing that all writers have to be aware of, is that everything we do, everything I write, everything you write, everything, all the writers we admire, right? Everything is a palimpsest. I don’t know if you know that word. So palimpsest is a really unusual, but wonderful, word. A palimpsest is tentative. I believe it’s originally a Greek, ancient Greek, term: Palimpsest comes from the time in the ancient world where paper was very hard to come by, in fact, in most cultures, paper didn’t exist. And people wrote on animal skin, or tree bark, or cloth or other paper substitutes. And what they would do is they would reuse things that already had been written. So if I wrote something on vellum, which is cured sheepskin, and then you needed a writing surface, you would take what I had written maybe 400 years earlier, or 1000 years earlier, or four days earlier and you would write your essay or your poem or your epic novel over what I had written literally physically over it.

Palimpsest (Codex Guelferbytanus, 6th century and 13th century; Wikimedia Commons)

And so I mean, when I say everything is a palimpsest, what I really mean is everything I write – my columns for the Wall Street Journal, my blog posts I do, the books I’ve written – it’s all a palimpsest, because I write one thing and each reader reads something else. And sometimes it’s a lot like what I wrote. And sometimes it’s nothing like what I wrote. But what’s interesting is it often is better than what I wrote. And you know, when you have dozens or hundreds or thousands or millions of readers, that collective intelligence and perception can bring things to what you wrote that you didn’t even realize were there.

I love that word, collective intelligence. And I want to hear about how that’s evolved. Because there must have been a time when you were receiving letters for what you wrote. And now you probably receive more emails for what you’re writing. How does publishing and getting your ideas into the world make you more intelligent? And how do you use this collective intelligence that we can tap into? How do you use that collective intelligence to improve your own thinking?

Well, we touched on this a little bit earlier. I think that there’s just, there’s only one critical factor, which is that when you get negative feedback, you have to sort it. You can’t just take all negative feedback and throw it in the “I’m not reading this” bucket. You have to go through it. And you have to say: “Is this person, who says I’m wrong, right or wrong?” Because if the person says you’re wrong, and is wrong, then how does that hurt you? But if the person who says you’re wrong is right, it’s devastating to you if you don’t listen. And I can’t sit here and promise that I always fall on the right side of both of those dividing lines. But I try. And so, when you, when you write a column for The Wall Street Journal that is called “The Intelligent Investor,” you get a lot of email and other forms of feedback questioning your intelligence. And, you know, the first few hundred times it happened, I thought it was funny, often It made me a little angry. But anytime somebody says I’m [empirically] wrong, I have to take it seriously, instead of taking it as an insult, or an invitation to a pissing match. It’s not about winning. It’s about learning.

Absolutely. I want to talk about one more idea and a couple more questions of writing and then we will conclude. But you have this idea that people are actually too good at learning lessons. When people keep making mistakes, it’s not always because they didn’t learn their lesson. It’s because they learn too precise a lesson. And that I think is the most dangerous kind of learning.

So again, this is something that I originally applied to the investing world, but I think it probably has much broader implications across people’s lives. And I was up close and personal to the internet stock bubble in 1999, and 2000, which is ancient history to a lot of people at this point. It was 20 years ago. You were five years old. My kids were very young. And what I saw over and over again, because I got into a back and forth with people in email telling me I was stupid because I told them that they shouldn’t speculate on dot-com stocks — but the lesson people learned from that was not, “I should never speculate on overvalued financial assets.” The lesson they learned was, “I should never speculate on internet stocks.” And so the same people who lost 90% or more of their money day-trading internet stocks ended up flipping homes in the mid 2000s. And getting wiped out doing that.

And it’s dangerous to learn narrow lessons. And I guess, the point is, you should try to invert the funnel. Instead of gathering a wide base to a narrow point and concentrating the lesson at the narrow point, you should turn it upside down, start from the narrow point and try to make the lesson broader. People who have kids, I think you have confronted the same kind of problem where your kid does some wrong thing and you chastise the kid or you discipline the kid. And the kid won’t do that again. But the kid will do the similarly wrong thing again and what you’re trying to do is you’re trying to convey a general lesson from a specific kind of misbehavior. And that’s a difficult principle to convey. But I think with experience, people can learn it.

Tell me about the quote, “What did you get on the AP test?” This goes back to an old memory. And I want to hear what that quote, “What did you get on the AP test?” What does that mean?

Well, so this is a this is a lesson about intellectual arrogance. As I mentioned, earlier, I was a very cocky young writer. When I was 17 or 18, and people would say to me, “What do you want to do?” I would just say, with a perfectly straight face, “I’m going to be the first person to win the Nobel Prize in Literature before the age of 30.” And I meant it, and I had no idea how absurd and ridiculously egotistical and wrong it was. But I meant every word of it.

When I got to college, I found out during Freshman Orientation Week that there was a requirement. And in those days, it was called Freshman Composition. Today, people call it University Writing. As I found out about it, I decided “I’m not taking this stupid class.” And I marched straight to the head of the department’s office. And I still remember he had the very unusual name of Cyril Knoblauch. I waited until he was free. And I went in and I sat down and I just clomped this huge manila envelope on his desk. And he said, “Why are you here and what is that?” And of course, it was the collected oeuvre of Jason Zweig. It was my poems, my short stories, my unfinished novel. “Well, that’s my writing. I don’t want to take Freshman Comp, I want to, I want to get placed out.” And I’ll never forget what he said. He looked at me, stared at me for a few seconds. And then he said, “Why should I do that?” I was completely taken aback by the question. I said, “Because I’m a great writer.” And he burst out laughing. And he said, “What did you get on the AP test?”

And so here I was, I’d grown up on a farm in northern New York state, in a very economically poor school district. I didn’t know what an AP test was. I’d never heard of it. And not only did I not know what it was, I couldn’t even figure out what it was. And I just sat there in a panic. And finally, I said the only thing I could think of, which was, “I don’t know, maybe they had a bureau in Albany, but that’s an hour-and-a-half from my house.” [In my desperation, the only thing I could think of that ‘AP’ might stand for was Associated Press.]

He just said, “Leave my office now and go sign up for Freshman Composition.” And he just shoved my stuff back across his desk at me. And I stood up and I walked out. I remember walking across campus, and it was raining. I got back to my dorm room and I said to my roommate, who was a year older than me, I said, “Mark, what the hell is an AP test?” He explained it to me after saying to me, “You idiot,” and I said, “I never heard of it.”

And I still remember that to this day, because whenever in any field of life, whenever I encountered people who are really cocky about what they do, I just think about what I was like when I was 18. And I just say, “You’re a lot older. Why haven’t you outgrown that yet?” I mean, I don’t say it out loud. At least not usually. But that’s what’s going through my head. But people who are that arrogant about their abilities are really hurting themselves, because that’s not the way the world works. The world doesn’t anoint one of us as the genius who’s going to win the Nobel Prize before the age of 30. It just doesn’t unfold quite that way.

So I had kind of the opposite thing going in through my head as you are telling that story. Because when you talk to a Silicon Valley founder, they run with bullhorn intensity towards their goal. And they chant and shout, we are going to change the world. And they’re arrogant, but some do. And so when you were first beginning writing, I speak to so many up and coming writers who have the opposite problem. They don’t think that their ideas have any value no worth. They’re scared to publish. So my question to you is, even if you had no business being that arrogant kid who was going to be the youngest person and win the Nobel Prize in Literature, was there a virtue to it? Because maybe it gave you the activation energy to turn potential energy into kinetic energy and to start running?

Well, what I would say is that I was obsessed. I would say, from the age of 13, probably until I was 23, or 24, I must have spent an average of two hours a day, every single day for a decade, just writing. I filled dozens of notebooks. And I was obsessed. And I was delusional about how good I was. But I think you made an useful observation that maybe – I mean, psychologists talk about positive illusions. Overconfidence is a positive illusion, for example. None of us are as good or as knowledgeable as we think we are about almost anything. But if we had a realistic assessment of our abilities, we might not do anything. And so certainly, a lot of my drive came from that level of ambition and whether the ambition was delusional or not, it certainly contributed to that drive.

Behavioral Finance: What Good Is It, Anyway?

Absolutely. Jason Zweig, thank you so much for coming on the North Star podcast. This has been a phenomenal conversation.

My pleasure, David, thank you.




For further reading:


Peter D. Kaufman (ed.), Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger

Benjamin Graham, The Intelligent Investor

Jason Zweig, The Devil’s Financial Dictionary

Jason Zweig, Your Money and Your Brain

Jason Zweig, The Little Book of Safe Money

Articles and other research:

Saving Investors from Themselves

On Charlie Munger

From the Archives: Daniel Kahneman

On Writing Better: Getting Started

On Writing Better: Sharpening Your Tools

On Writing Better: Becoming a Writer