Risks You Don’t See Coming: A Review of “Same as Ever” by Morgan Housel – Episode #501

On this episode of the Dentist Money Show, Ryan, Matt, and Victoria examine how Morgan Housel guides investors past uncertainty by revealing what remains constant. “Want to understand the changing world? Start with what stays the same.” So counsels Housel, a name you’ve heard many times on our podcast. And now he gets a show devoted specifically to his advice as we review Same As Ever, his new book. 

Show Notes
Same As Ever – by Morgan Housel

 

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Podcast Transcript

Ryan Isaac:
Hi, hi everybody. Matt, Victoria, Ryan, on the scene, breaking news, reporting live. Hello everybody. How are you guys? I do feel like a three panel reporter when we do these things. Like when they do like election coverage or some big story and there’s like multiple people, multiple look at, yeah. Victoria. What?

Victoria Ferguson:
Thank you. How’s it going?

Ryan Isaac:
Matt, will you tell us the book title and how we arrived at this book title? Although it’s obvious because he’s the best financial writer in the industry these days, or one of the best.

Matt Mulcock:
He is. Yeah. So the book is, uh, same as ever by Morgan Housel. This is his second book. His first book was wildly popular. I think number one selling financial book. It still might be, uh, but it was like number one for months and months and months. Uh, psychology of money was fantastic. This is his second book, uh, same as ever. And so how we chose this was simply, we all love Morgan Helsel. We all love his, his blog that he writes. And then, uh, we, we’ve just loved his approach to, uh, all things, money and, you know, concepts and philosophy around this. So, uh, yeah, so we just decided to choose that for January and, um, kind of the premise of it is just things that don’t ever change things that we think. Things that we think are new. Or this idea that like, oh, this is, this time is different. Kind of the famous John Templeton quote of the foremost dangerous words in finances, this time is different. Uh, and he, the whole premise of the book is just talking about the things that you can always count on the things that never change and he tells in pure Morgan Howes old fashioned tells incredible stories to really drive the point home. Uh, so yeah, there’s the breakdown.

Ryan Isaac:
When I heard this book title, and then I wanna ask a question to the two of you, but when I heard this book title, it reminded me of a tweet he sent once, Matt. You’ll remember this a little bit better than me if you can explain it. It was a, can you know exactly what I’m gonna say? The chart? Yeah, can you explain that tweet? Because when I heard this book title, I’m like, I’m so glad he basically turned that tweet into a book. Although the book could have been a tweet, the book was a tweet and that’s the whole book too. I mean, that’s the funny thing.

Matt Mulcock:
Yeah, honestly. So yeah, the tweet you’re talking about, he had a chart of the S and P 500, um, from like basically the beginning. It’s like 1926 to now. And, uh, it was just when you zoom out that far, it just straight up basically like climbing a mountain. And, um, I don’t, I can’t remember the exact wording, but it was basically just like, stay put that’s the tweet or something like that.

Ryan Isaac:
Yeah, it was like, what did he say? Oh, it was just, it was so along the lines of like, I think he even said something about if this was a book or if the S&P was a book, it would just be this chart. It would just be this chart. Keep, like just.

Matt Mulcock:
It would just be this chart and it would be like, it was like, and it was like something like shut up and stay in your seat. Like that’s it. Yeah.

Ryan Isaac:
Uh-huh. It was amazing. Victoria, were you very familiar with him before, like this book?

Victoria Ferguson:
No, I read the Psychology of Money and I loved it. I think that’s one of the best books out there. So this one was my like only other exposure to Morgan Housel was that first one. But I really liked it because I think news and a lot of what we talk about is just like trying to find some consistency and like what’s going to change. But his focus was like, these are the things that never change and that you can rely on. And it’s things that you don’t really think about. So I really liked that angle of the book.

Ryan Isaac:
I wanted to, oh yeah, go ahead. I want, yeah.

Matt Mulcock:
Can we back up really quick just to set this up? We talked about this book club because people might hear that and be like, okay, what does that even mean? So, I mean, people know what a book club is, I think. But just to give people details on this, because we’d love people to, we’re trying to find this balance, right, of not making this too formal and commit to something that we’re not prepared to like execute on, you know? But so I guess the premise here we wanted to share is we’d love people to start joining in on this with us. So this was our first crack at it in January. We did again, same as ever in February, where we are doing the Behavioral Investor by Daniel Crosby. We actually have him doing a podcast with us next week. I don’t know when this will be being released, but he will be recording with us at the end of February. And then we’ll have one. We haven’t picked one for March yet, but I only bring it up to say, as we jump into this, please, we’d love you to join us on this. And if we get enough people that are interested, that want to keep doing this, we’ll probably make it more formal. We’ll probably start more of a discussion group online. We want people to be involved in this. One of our, yeah, like as maybe a Zoom and get people involved and hear your thoughts. One of our main kind of foundational parts of our purpose as a company is education. And so we want to get people involved in this. So I just wanted to make that little plug so people are understanding what’s going on here.

Ryan Isaac:
Thank you. Yeah. And one thing I just want to say, and let’s dive into this and some of our favorite parts of the book and the whole outcome of this is just to encourage people to go read this book because I think it will help people make better financial decisions. Probably my favorite thing that I’ve ever read from him that he’s ever written was non-financial. I just Google this while we’re talking. It’s a blog post he wrote in 2017. And then you can find his blog on there. The, the title was called overcoming your demons in 2017. This was about, um, so Morgan’s obviously been a writer for a long time, but he, uh, grew up and had a very pretty severe stutter his entire life. Um, and this, this blog post, like I cried reading this blog post when I first read it years ago. And I probably will again when I go read this, cause it’s like, it’s such a cool message, but the whole post is about him growing up with this stutter and then ending up in this position where he now speaks to thousands of people, earns so much money, we couldn’t get him at our summit. We couldn’t afford to get him. He’s a very nice guy though, I’ve heard. But if you want to go read something freaking inspiring,

Matt Mulcock:
Yeah, no we could not. Yeah.

Victoria Ferguson:
We tried to get him on this podcast, didn’t we? Matt tried, he said no. At least he responded.

Matt Mulcock:
We did. We tried to get him on the podcast. He’s like, I’m busy. I’m busy.

Ryan Isaac:
That has nothing, it can have anything to do with money, relationships, work, career, health, fitness, like whatever  you want, go read that overcoming your demons, Morgan Housel. It, that are, that blog post is like my favorite thing he’s ever written before. And that’s saying a lot because he is a master storyteller and like lesson teacher. So let’s, let’s dive in here. Um, I’ll just, uh, let’s just start with Victoria and Matt. Um, as you started this book, let’s just maybe talk about some, um, maybe some themes that were coming up for you, things that were sticking out or even expectations you were having going into it. Like what were you hoping to get out of it?

Matt Mulcock:
You know, the tulip crisis or the tulip craze in the 17th century or, you know, and then compared to the dot com bubble, like the, the details change, but what doesn’t change are humans. And that’s always a theme with, with Morgan and everything he talks about is just, and he talks about it by the beginning of like, I’m confident these things will never change because humans just never do humans are the same in the cycles, the greed, the fear, the things we’re going to talk about as we go through this even how we approach risk or our inability to conceptualize large numbers or our inability to get out of our own way when it comes to like all these things. It’s like, it’s been the same from the beginning and he tells all these incredible stories. So I guess where my expectations were, with everything I’ve read from him and including all his blogs and the psychology of money, I was expecting a lot of great stories that really bring these points home. And my expectations were easily met or exceeded as always with him.

Ryan Isaac:
Um, keep going sustainability. That was what I was expecting from the book is a theme of sustainability. And, uh, in addition to the things that you guys are talking about, I mean, every chapter was amazing. Every, every chapter had stories in that, that are so memorable. Um, the two things that stood out to me, you guys have touched on these a little bit, um, one of them was the concept of just merely surviving. I mean, I think that’s the, that’s the, that’s the, that’s the, that’s the and being successful by just merely surviving. When we’re talking about investors, especially dentists, the investment lifetime cycle that dentists are in, all of this really, is probably half a century or more for most people. And the ridiculousness of like, it’s our fear, it’s our greed, it’s our novelty, it’s our human nature. We’re always chasing the thing that’s like sexy, sophisticated, new, we’re always just clamoring to predict the future. But really all it takes is like, whoever survives is gonna end up winning. You know? And that whole concept made me kind of, we can talk about, made me just think of like my role as a financial advisor and what I’m trying to help people do. The other thing was around those chapters around the law of like probabilities and large numbers and data sets blew my mind. Blew my mind like miracles. Yeah, I have some quotes in here,

Matt Mulcock:
So crazy. The miracles just get like about miracles. Yeah.

Ryan Isaac:
Anyway, so do you guys wanna jump into some of those areas you were talking about? Maybe go back to Victoria. Let’s go jump into like risk, any stories, quotes, lessons, things that you wanna start sharing about the risk sections.

Victoria Ferguson:
Yeah, yeah. I feel like the quote that stood out to me the most out of the whole section of risk is risk is what’s left over after you think you thought of everything. And I feel like a lot of people have this narrative in their head that like, oh, that won’t happen to me. And so they try to plan for things that they can actually visualize happening to them. But you have no idea, life is going to happen. And so I guess from my role as an advisor, like my job isn’t to think through everything that could possibly happen to you. That’s not productive at all, but my job is to protect you as best as we can and prepare for the things that you’re not thinking about at all. And like you two are saying, Morgan’s really good at pulling in a story to each of these. I had no idea how Harry Houdini died. Like, was that new to you guys too? Like…

Matt Mulcock:
Well, I’ve actually read about this from him in a previous blog like back in a couple years ago.

Victoria Ferguson:
Yeah, like I had no idea that it was just like a complete and total accident, you know, like he wasn’t prepared to be punched in the stomach to death. So yeah, and correct me if I’m wrong here, but I think the story goes, everyone knows Harry Houdini, master magician, escape artist, you know, basically like a cat, I guess. Nine lives. Yeah, yeah, yeah. So he could do all

Ryan Isaac:
Yeah, he’s a cat. Don’t actually be sorry. That’d be a really great cat name, Houdini. That’d be stuck, like if you have like a little black kitty with like a little white patch on it, it’s named Houdini. Oh my gosh. Let’s get a kitty. Okay.

Matt Mulcock:
Houdini. He’d be a great cat name. Named Houdini. I love that.

Victoria Ferguson:
Oh, Houdini! Oh my god. You guys, don’t tempt me. I’ve been wanting a pet like this. You can call it Deenie, like Deenie for shh. Who do? I was going with Deenie or Deem. You’re mad at. Anyways, Harry, Black Cat with a little white patch, tuxedo kitty. He’s so cute. So he could do all these crazy things, right? Escape from.

Matt Mulcock:
I just love that Ryan keeps calling it a kitty. Let’s get a kitty.

Ryan Isaac:
Let’s get a kitty and name it Houdini. Okay. Oh, little Houdou. Little Houdou. Yes! Oh, okay. Carry on. Anyway.

Victoria Ferguson:
Who are his popular ones? Like being underwater for a really long time, straight jacket, all of this stuff. But he knew it was going to happen. He mastered the art of escaping. And one of his acts was being punched in the stomach, like really hard by some like massive men. And he would just say like, go off, like punch me as hard as you can. Go, go off, King.

Matt Mulcock:
Yeah, they chain them up and drop them in the ocean and yeah.

Ryan Isaac:
Finish that sentence go off King. Is that what he was saying? Was Moody eating saying that? Alright

Victoria Ferguson:
Yeah, yeah, yeah. Back in… When was he alive? I don’t even know. 1930s. He says, go off, King. Like, give it to me. So, you know, he was always prepared for it, but it was… What was it? Like an after-party or like a meet-and-greet? Probably not what they called it in the 30s. But some student, I guess, just like, you know, started punching Harry Houdini in the stomach and he wasn’t prepared for it. And he died. Like just because he was punching it wasn’t was not prepared like wouldn’t have crossed his mind that a student would come up and just start like punching him in the gut and then he died like weird.

Ryan Isaac:
What’s crazy about that is he actually was very prepared to be punched in the stomach. He just wasn’t expecting it at that moment. And that was what was crazy. As he was like, that was his stage act. He had developed the muscles and the tension and the like the positioning to withstand it. But then he just wasn’t expecting it. Caught him off guard. Yeah. Not instantly. Didn’t he like took a… From being punched in the stomach. Yeah. Spleen or…

Matt Mulcock:
No, I think he died within a couple of days after. Yeah. It like lacerated his kidneys or spleen, whatever. But yeah, he like bled out.

Ryan Isaac:
Yeah, wild story. What did you guys think about, and maybe you’ve heard this before, especially if you’ve followed him, his opening story about the ski accident. Okay, we’re here on risk. Talk about it. Go off.

Matt Mulcock:
I was just going to, that was the thing that set out to me on the risk side. Yeah. So he, he wrote about the go off King. Um, so he wrote about this before and a lot of his stuff, obviously he takes from his blog and 10 plus years of writing. Uh, so yeah, long story short, he’s, uh, he grew up as a ski racer, which is. Cool. And in and of itself, um, he grew up as a ski racer from young age all the way through like legit competitive ski racer. Yeah. So he did it through, I think through high school and he maybe even into early college, uh, but he went out one day, they had a day off and him and his two ski best friends in the ski team wanted to go out and they were in, I believe Squaw Valley in, uh, in California. And they wanted to go out and there was a huge storm a couple of days before. So they want to go out and ski. So he goes out with his two buddies. They go up to this place called KT 22. It’s like a big famous run, uh, in, in Squaw Valley. I’m sure really, really easy to ski. I’m sure. Um, but they go out, they do the run and they actually get caught in like a little mini avalanche while they’re out there, three of them together. So they get caught in this mini little avalanche, they get out of it and, uh, they get down to the bottom and this run, you get down to the road and you have to, you have to like basically hitchhike back up. So they get down to the bottom and there’s two friends say, I want to go up again and do that again, like they were like, Oh, that was so crazy because they’re 17 years old and they’re like, let’s go do that again. He says, he says he had no reason to say no. He wasn’t thinking at the time like I’m scared or he said he had no legit reason. He just was like, oh, I’m not, no. Yeah. Yeah, he was just like, yeah. So he, exactly right. So he says, you know what? I’ll go get the car. I’ll come meet you down here.

Ryan Isaac:
Like no gut feeling, he had no premonition, no intuition. He was just like, nah, I want some pizza or something. Like it didn’t even matter. He was just like, nah, I’ll go get the car for you. Yeah.

Matt Mulcock:
Uh, and he, he says, again, I had no reason to do that. I just did. And so he goes to pick him up. He’s there for quite a while. They never come back down and has the story goes to fast forward. They ended up getting caught in a bigger avalanche and they both died. And, uh, he, the way he tells the story is it’s obvious, like you, I got emotional during it as, and I’ve heard him speak about it. I’ve obviously heard or seen other things he’s written about it. And, uh, so again, this whole premise of number one, how he has gone through his life basically saying like, why didn’t I go up with them? Why was I spared? I would probably torture you for a long time. But then just this whole idea of risk is what you don’t see coming. That’s the true risk in investing or life in general.

Ryan Isaac:
Had a couple quotes around this subject from the book about the risks we don’t see in surprises. Humans wanna predict everything. He says, we are very good at predicting the future except for the surprises, which tend to be all that matter. And then he said, the biggest risk and most important news story of the next 10 years will be something nobody is talking about today. And with that, yeah, go ahead. No, finish.

Matt Mulcock:
So I was just going to say one really, I think, pertinent part of this when it comes to the economy, we talked about this a lot in 2023 on the flip side of this, that everybody, literally every outlet, every person you talk to was predicting a recession. Like everyone, it was like, okay, go off, King. So, but so I’m just, this is exactly what this is the other side of that equation of saying.

Ryan Isaac:
Yeah, we were gonna about say the same thing, man. Yeah, so go on, yeah, keep going.

Matt Mulcock:
Everyone saw it coming and guess what? It didn’t happen. It would have been the most obvious recession of all time, but that’s often why, like that’s why it didn’t happen is because that’s not true risk. When everyone’s calling for it, it’s not actually going to happen. The real risk is when we think everything is going great, like in 07, 08, and nobody outside of like you know, from the book, obviously, the big short talks about like the three or four people that actually saw that coming the rest of the world. No one saw that coming. That’s the true risk.

Ryan Isaac:
Yeah, that I was just gonna say something really similar. There’s all day long on all financial media, all day long is nothing but predictions and from the smartest people in the world and it’s just data and data and this and that, but it’s just, it’s these surprises that, I mean, that’s all that matters, you know? And then all the predictions based on all the data, they don’t hardly ever happen. It’s just these surprises we can’t see coming. I don’t remember what was being predicted going into 2020 from the economy? It wasn’t COVID, it wasn’t a shutdown. Yeah, it wasn’t that. But yeah, that just strikes me. And that kind of just goes to what stood out to me in the book too, which is like survival, you know? And to me as an advisor, that’s made me like rethink the way I think about a few really simple concepts. One of them being liquidity, which we’ve been big fans of in this company since it began, but reading this book, hearing some client stories recently, some accidents, some life-changing accidents from clients recently, it just made me think like we can’t predict this stuff. We’ll never see the surprises coming. That’s why there’s surprises. And, um, the, one of the only pieces of preparedness that might exist for a dentist is liquidity. I mean, I don’t care if you’re a DSO person or a real estate portfolio person or a stock and bond person, like liquidity will

That is like you’re prepared to through almost everything that save people through COVID, uh, that’ll save, you know, my client who just got in a horrible accident through, um, their family’s period of time with no income. I mean, it just made me think a lot about survival that concept stood out to me so much. And like, uh, what is our role as an advisor to help someone survive? You know, and it’s kind of a funny thing. Like you don’t, you don’t need to chase the biggest returns. You don’t need to double the, the S and P returns for people. They don’t have to have the best investments in the world. They just have to literally survive after 50 years of not like succumbing to somebody’s, with average you just have to survive. I have another, well maybe I’ll just read it because I’m kind of on this subject. There was another quote and here you guys remember this. He said, investor Howard Marks once talked about an investor whose annual returns were never ranked in the top core tile but over a 14 year period was in the top 4% of all investors. If he keeps those mediocre returns up for another 10 years he may be in the top 1% of his peers. One of the greatest of his generation, despite being unremarkable in any single given year. If you understand the math behind compounding, you realize the most important question is not, how can I earn the highest returns? It’s what are the best returns I can sustain for the longest period of time? Little changes compounded for a long time create extraordinary changes. I just like, like survival, you know? Like what are the basics that we can just stick to for 50 years and survive all of the crazy stuff that’s gonna happen in our lives and the economy outside of our control and make it on the other side. And those are the people who end up like winning this whole thing, I think. Any thoughts or comments? Survival, compounding, investing. Victoria, back to you.

Victoria Ferguson:
Thank you guys. No, I wrote that quote down too, because I feel like, I don’t know, at least 20% of our jobs is talking dentists off the edge of the shiny objects, we like to call it. And I think he goes into this with the behavioral section of complexity cells. And that happens all the time to dentists. They, you know, this idea that there’s a magic pill or you’re missing out on something when yeah, the best thing you can do is just sit in your seat and get average returns for a really long time. And I think it’s funny, that seems like that’s almost harder for folks than jumping around to a bunch of different things. And so I don’t know, I just appreciated that he said that because I’m like, yes, perfect. I’m not crazy. Like this is what we’re supposed to be like telling people to do for a really long time.

Ryan Isaac:
Yeah, well, Matt, you’ve told those stories about Warren Buffett. One of the keys to his great success is just his longevity, just doing something for such a long period of time.

Matt Mulcock:
Oh yeah. I mean, another quote from Morgan Housel from his other book, psychology of money. He says that Warren Buffett skill is investing, but his secret is time. And I’ve shared this with dentists over and over and over again. It’s like your skillset is dentistry and everything that comes from that. Your secret is the same as Warren Buffett’s. It’s can you survive for a period of time to be able to see this payoff? And nobody wants to hear this, but anything with fitness or building a business or investing anything worth anything is going to take time. And that’s the hardest part about this is being able to stay in your seat, stay disciplined, not bounce from one thing to the next as Victoria is saying. There’s another quote as you were talking Ryan that popped in my head and I will paraphrase it but from Napoleon Bonaparte, he actually had a quote that said something along the lines of true genius is the person who can stay, or the person that can do nothing while everyone else is losing their mind. Like that’s true genius. And it’s like so perfect when it comes to investing to what you’re saying is like average returns for an uncommon amount of time leads to extraordinary results. But the hard part is not losing your mind when everyone else is, whether that be.com bubble, oh wait, 2020. Whatever it is, as long as you cannot lose your mind, like you’re going to see the results. So hard.

Ryan Isaac:
It’s so hard. It’s so hard not to do.

Victoria Ferguson:
Well, and I guess the way you don’t lose your mind is like what you were saying, Ryan, is having liquidity. Because if you don’t and you’re invested and you see like a third of it gone, that makes more sense to be scared and like want to do something with it. So I like your point, like have liquidity so you have options and so that you don’t tinker with your investment strategy.

Ryan Isaac:
Yeah. I love that. Okay. What, uh, which section we got, you know, we’re kind of on the markets, investing topic economies. There are some cool quotes and stats here. If you guys want to camp there for a little bit, there’s the thing we brought up earlier about probabilities and uh, the law of large numbers. That was such a cool section. Uh, Victoria, where do you want to go next?

Matt Mulcock:
Can I add, sorry, can I add one more thing? I’m not meaning to cut you off, Victoria, please. It’s women’s month, it’s women’s month. I don’t want to be in trouble. I just want to add, yeah, I’m going to get canceled. I’m going to add just one more. I want to add a little bit more to that liquidity comment because I, first of all, I totally could not agree more in conversations we have with dentists all the time around debt and debt. You know, I just had a conversation, Ryan, when we were in El Salvador with one of the couples there and I went through some of their stuff with them and was helping them out and they… we’re talking about debt and I shared with him what we’ve shared so many times of saying, look, you think debt is the problem. You think debt is what stresses you out. But what is stressing you out as I’m looking at your balance sheet is your lack of liquidity. That actually is what is stressing you out. You don’t think it right now, but I can promise you, if you build this liquidity up, that debt will become much less stressful. The other aspect of this from a risk standpoint, I would add, there’s probably two other things. So liquidity number one number two, having risk mitigation via insurance. Like anything that is low frequency, high consequence, you have to transfer that risk to insurance, disability, liability life. It’s so basic. Everyone hearing this probably been like, yeah, duh, but we get so much pushback on this, you have to have that risk mitigation via insurance. And then the third one being cashflow. Like super simple, but the other risk here is spending more than you make or living paycheck to paycheck. And we’ve seen this not having a high profit margin in your business, too high of overhead, both personally and on the business side. So those are the three key pillars I would say as we’re talking through this of saying like, where you, how are you going to survive? You’re going to survive via healthy liquidity, healthy cash flow approach to your cash flow, both in the business and on the personal side, and then risk proper risk mitigation via insurance.

Ryan Isaac:
And folks, this is a person who makes no money from insurance telling you that you should have proper insurance, okay? Yeah, your side hustle. Yeah, that’s been a huge theme lately. Okay, markets, economies, we wanna like go there for a little bit, we wanna go to the large probabilities. Okay, markets, economies, we’re kind of on the subject anyway.

Victoria Ferguson:
Yeah, I thought something that was funny that I have never considered before. He goes, imagine if the stock market only ever went up. Imagine what people would do. Like, like I just, I think through that and people would go nuts, right? You know, he’s saying they would sell a kidney, remortgage their house. Like I’ve never considered that thought before. That was mind blowing.

Ryan Isaac:
Yeah, and it’s a funny concept. I remember thinking about that. And I think I listened to this book, by the way. Did you guys read it or listen to it? Okay. I was like doing, didn’t he talk about walking a lot? Wasn’t there a whole section on entrepreneurs like thinking and slowing down from work to just like walking?

Victoria Ferguson:
Oh, yeah, walking increases creativity by 60%. So I’d like to spend more of my time here working walking. Walk casting, can we do that? Oh, that would be great.

Ryan Isaac:
Oh yeah. Walking. We should do that. I was walk casting. I’ll bet there’s, I was just going to, there’s gotta be a couple alpha dudes already with a podcast called the walk cast talking about their morning routines with our, with our new Apple vision pros. Okay. Um, anyway, I remember walking and listening to that section thinking what a funny concept that would be if it only went up. But then like when we were talking about that tweet and you zoom out in the stock market and that’s kind of what it does, but there’s enough periods of time. It does it slowly enough to not be obvious. It’s sneaky. Like it’s such a sneaky wealth builder because it does it slowly enough to not be too obvious and it has enough scary moments in it to make people think twice or hate it.

And it’s kind of funny because it really, when you zoom out, if you can survive 50 years in the stock market, you will be like a top investor from a returns perspective without ever having above average returns if you can survive. But it’s just, that’s such an interesting concept because it kind of does that go up, but not obvious.

Matt Mulcock:
I was going to say, yeah, not obviously and over enough time, it does only go up. But the only reason you’re even compensated for investing is because of the down part like of because of the scariness. And this is something speaking of again, risk and how it ties into what we’re talking about here. I’ve said this so many times and we’ve talked with us so much at presentations or just talking to Dennis that stocks are not risky. Like they’re really not risky. And again, this I think ties into what we just talked about what true risk actually is. But if you look at the actual numbers, stocks over a period of, again, if you go out far enough, are not risky. In fact, cash and bonds are far riskier than stocks because what is risk when it comes to investing? The only risk you should care about is permanent risk of loss, of actually losing your money. So if you are diversified or assuming you’re diversified and you last long enough to your point Ryan of survival, stocks are not risky. What they are is uncertain in the short term, but it’s because of that uncertainty that you are compensated over the long term. So you have to have both. You can’t have a situation where stocks only go up and with no uncertainty, otherwise there’d be no compensation.

Victoria Ferguson:
Mm-hmm. Right. Well, I was gonna say, oh, I always gotta bring the stats. I’ll back you up on what you’re saying there, Matt. I have to. You guys know. Oh, ooh, maybe I’ll start a little segment called Stats and Snacks with Victoria. Ha ha ha.

Ryan Isaac:
Yeah, you know it’s… Oh, go ahead, Victoria.

Victoria Ferguson:
Any three month period, it’s 60% that it’s up. Any one year period, 68%. Five year period, now a little bit longer, 80%. 10 year period, 88%. And then over a 20 year period, 100% of the time. So, you are correct.

Matt Mulcock:
The marks are not risky.

Ryan Isaac:
Yeah, so they’re not risky. What I was thinking there, Matt and then Victoria, you just said this, like confirmed it, but here’s what’s weird about the human behavior side of this though. It feels like people are more scared of the uncertainty of the timing of the stock market. Everyone can agree on the stat that you just said, right? Everyone can just look at them and be like, yeah, that we can agree on that. But the uncertainty is what throws people off so much by it. It feels like often that people are less scared of permanent loss of money. Like I have this investment idea my friend told me about, the returns are gonna be killer, but there is a chance I could permanently lose my $250,000. It feels sometimes like there’s less fear around that than just having uncertainty of the stock market that I don’t know what it’ll be this year or next year, but in 10 it’s gonna be fine or 20 it’s gonna be fine. Do you find that with clients interactions.? Like sometimes I’m surprised at how much fear there is around a diversified portfolio of 15,000 stocks held for 20 plus years versus my buddy’s got this like private equity thing. I’m going to toss them a couple hundred and see what happens. I might lose it all. How often they do. And they’re like, eh, no big deal. But like the market goes down for 12 months and people are freaking out. It’s like such a weird, we’re just wired weird. Do you find this? Does that resonate at all? Yeah.

Victoria Ferguson:
Well, I mean, I guess what was coming up, bubbling up for me as you were saying, that is humans are not wired at all to think long term. Like, that’s why part of the reason why it’s so hard for people to save for retirement, because they literally can’t visualize it happening to them. Like, to, yeah, we’re like literally not wired to do it at all. So I think the reason why these shiny objects are so appealing is because they generally speaking, not for all of them, but a lot of them have like a shorter timeframe that they can tie it to a little bit easier than like, hey, keep your money here and contribute to this, not mystery account, but this place that you’re just gonna put your money away and leave it there for 30 years. Like you can’t really visualize that and you know these large numbers in that amount of time and so I think part of the appeal to some of these like private equity or other shiny objects is because it’s a shorter time frame.

Matt Mulcock:
Totally, totally. I absolutely agree with that. The other thing I would say, as you’re saying that, and first of all, yes, this absolutely resonates with me, Ryan, in our experience with this, I think this comes back to the power of story and status. People, I think to Victoria’s point, perfectly said that there’s a disconnect with not only the timeframe, but I think there’s a disconnect for people whether it comes to the stock market you use the word mysterious. I think that’s actually true. I don’t think people feel connected to their investments in a brokerage account when they’re investing in a diversified portfolio of stocks that they don’t feel tangibly, again, connected to this is why real estate is so appealing to dentists or to people is they feel they, number one, they feel it’s more of a status investment. Real estate is, and it’s, you can see it. Yes, you feel more connected to it and it’s a better story. It’s an easier story to understand. I think it’s the same thing, Ryan, you’re talking about with this private investment type stuff we hear all the time. It’s an easy story to tell themselves. And I think they start to fantasize over what that private investment could do. And it’s a status thing. I don’t know if a dentist wants to go to their study club and talk about their diversified portfolio in the stock market, but they wanna talk about this investment in this quote unquote, private equity deal or this building that they just bought. Um, again, I think we’re really enamored with story and status.

Ryan Isaac:
Such a good point. Yeah. Um, I was just thinking about, I think the, the quote, I don’t know if you have this Victoria, there’s a, there’s a part in here where he’s talking about, um, how does this, the it’s the, yeah, no, it’s, it’s the, it’s the thing. He’s, he remember the part, the quote from the guy, the story from the dude. No, I’ve got it. I’ve got it. I’ve got it. It’s a, where he’s talking about, he doesn’t know

Victoria Ferguson:
I think I got you. Are you talking about the greed-fear cycle? Like good news. Ooh, yes, I got you. Well, maybe. I don’t know. I’ll read it, and then you can tell me. So the greed-fear cycle. First, you assume that good news is permanent. Then you become oblivious to bad news. Then you ignore bad news. Then you deny bad news. Then you panic at bad news. Then you accept the bad news. Then you assume bad news is permanent then you become oblivious to good news, then you ignore good news, then you deny good news, and then you accept good news, then you assume good news is permanent, and we’re back where we began.

Matt Mulcock:
So it’s exactly what you just said, Ryan. This is the part he’s talking about this of he can’t tell you when the next thing is going to be, but he can tell you this is going to be the cycle that ensues because it’s the same every time. And again, it’s what I said at the beginning. You go back to 1671 with the tulips, right? It’s this, uh, the tulip craze. This cycle is exactly what. Oh, okay. So tulip was basically the 17th century version of, um, crypto, uh, where, uh, yes, literally tulip bulbs, um, started in, uh, in, uh, France, I want to say, and in parts of Europe, um, uh, started to go wild and people started to basically bid up the prices of tulips. Like we’re talking thousands of percent over the course of a year, a couple of years, short period of time. And again, it was similar to crypto. It was basically the same thing, like these meaningless bulbs. There’s this massive craze and then of course, massive, the floor, the floor fell out and everyone lost all this money dot com bubble. Yep. Meaningless, meaningless things that get attached to a story that then catches on. And then exactly what you just said in the greed, fear cycle. That’s exactly what happened and has been happening forever.

Ryan Isaac:
Yep, do you guys wanna go to the concept of large numbers and the odds of something happening that seems like unhappenedable, which is not how you like that? Yeah, do you wanna go there? I also, I almost had forgotten about this, how much this impacted me, was the concept of how long, and we know this, but the way he illustrates the stories, how long it takes to build something good and how fast it can get destroyed. So those are two things that are still on my mind. Do you guys wanna touch on one of those or anything else that’s like top of mind right now for you? Okay.

Matt Mulcock:
Yeah, I love this concept that you just hit there of, um, that growth, uh, or, or creation of something takes so long and destruction of it as swift. And he’s written about this so many times, but again, you think about even we’ve an investment portfolio. You think about building a skyscraper that can be taken down by anything, right? And overnight you think about

Ryan Isaac:
Well, what about a dentist who went to school for 10 years, is in millions of dollars of debt over the time, a building, a practice, a house, practices for 20 years and has one disability accident? Breaks a hand one time. In a five second thing, 20 years of progress can be completely wiped out in one accident, completely.

Matt Mulcock:
Yep. Or not even an accident. I have a situation with a dentist I talked to a couple years ago, a long story, short, same thing you’re describing, built up this incredible practice, built up tons of liquidity, tons of investments, multiple millions of dollars and decided to bet it all in an option strategy and literally lost everything, his entire investment portfolio with this investment portfolio or this option strategy he wanted to take his hand at not only that, he came back, started building up his portfolio again over the course of five, 10 years, and then did it again and lost everything. Uh, so it’s not even an accident. Sometimes it’s your own undoing by just one bad decision.

Ryan Isaac:
One thing, yeah, that, that concept of that, one of the stories that stuck out for me, was the, you know, everyone knows the story of Pavlov’s dogs and it was so cool. So everyone knows the story about basically Pavlov, a scientist and back then I think it’s worth noting that a lot of cruelty to animals was happening during these experiments. Massive amounts of cruelty to animals, but he, geez, it’s dog month, dude. How can you talk about this during canine month, you know, what are you doing? You’re gonna be you’re gonna be the most hated man in America. Oh, geez. Pavlov, scientist, he was training his dogs. He was testing a reaction where before, he’d feed them every time. And I don’t remember how many he had, a dozen or so dogs. Maybe it was more, he would blow a whistle and then feed them. And he would just do this in patterns for a long period of time. It took kind of a long time to do this, but after a while he could make them salivate and be ready to eat by just, just the sound of the bell. Yeah, it was a bell, wasn’t it?

What I never knew, and of course, Morgan Housel just was like, Hey, what you didn’t know about this story, you know, was that right, uh, like, uh, pretty soon after these experiments, there was a giant flood in his town or like, you know, somewhere where he lived or where his like laboratory and his dogs were and flooded out his whole facilities, the dogs were swept away in the flood, um, some died and then the ones who survived, um, immediately forgot all of their conditioning, all of it. So. none of the conditioning that was so deeply programmed from his experiments worked anymore from one event. And that just drove home the concept of like one thing, one trauma, one event, one mistake, one thing out of your control, one accident can undo everything. It can undo the deepest programming in our brains. You might have like success, you know, savings and profitability and investing, but like one thing just wipes it out completely. I thought that story was like, I’ve never heard that the end of that story. So anything else you guys want to say about like progress and how fast it can be wiped out?

Victoria Ferguson:
Well, he talks about the other way of it too, like how, like, if you grow too fast, that’s also really bad. Like, he has a couple of examples. One of them was like the tree example, like trees that grow way too fast are the ones that are the first to burn down. And then there was another example of like how there’s an experiment with like fish in warm water grow really fast and cold water, they grow slower. And the ones that grew really fast were more susceptible to like diseases or they died way sooner. And so I guess kind of, again, coming back to the topic of staying in your seat and progress is slow, but through that slow progress, you’re gonna become stronger through it. So you don’t want to actually grow too fast because that’s where more mistakes can happen and you can become more careless.

Ryan Isaac:
I thought you were going to start talking about your 2 a.m. morning cold plunge routine, Victoria, when you’re talking about cold water. Just kidding. Yeah, no, it’s really, because that’s the most counterintuitive thing to tell a human, like, you don’t actually want really fast, big success too quick. Like, that’s so counter, like, why wouldn’t you? You know? But when it’s, you know, easy come, easy go, man.

Matt Mulcock:
But you really don’t. That’s the thing. You really don’t. It’s so weird. We’re going to, I’m going to jump into a quick, um, uh, fitness analogy here, nutrition analogy, um, this never happens. Uh, but it’s, if you think about this, so there’s a, there’s a guy I follow, uh, for fitness and nutrition. He’s not our guy, Ryan and different guy, but he’s very, no, I, a guy I followed way before. Um, uh, he’s very scientific. He’s awesome. Uh, his Jeff nipper, you don’t know if you followed him. Anyway, he’s awesome. Uh, but he talks about this when it comes to dieting. So he has this concept where he tells people all the time. And again, he’s, he has, he’s very data driven. He’s kind of like our guy, Marcus, um, where he follows the data, follows the studies and what he’s found when it comes to people who want to lose weight, he, he says there is very, very definitive data, the faster you lose weight, the quicker you’re putting it back on pretty simple, right? So his whole idea is you actually want to do this slowly. So as opposed to try to cut for summer, right? This whole idea of like cutting, you know, bros cutting for summer. I’ve done this before. Over like a, yeah, like a six week thing. He said, no, you actually want to extend this to a six or 12 month process. And you actually want to make this really, really slow. And the slower you do it, the more sustainable it becomes for your life. Because your habits are there, there’s less pressure, and your body and your body’s adapting to the progress. Right. So he talks about this as well. When you’re able to cut, let’s say you, you do it for a six month period or whatever, he says, you need to set actually these baselines of once you hit your, whatever that goal is, that goal weight, let’s say he said, you actually have to maintain that for the same amount of time it took you to drop it and your body creates these new baselines. I think it’s the same thing with money and investing the quicker you, you come into money, let’s say you win the lottery. You’re not psychologically, emotionally, or even like structurally set up to be able to even maintain that level of success. You have to like, the slower it goes, the more you adapt to that progress, and you’re able to sustain it.

Ryan Isaac:
You know, that reminds me of, just stay on the analogy, people I have known, hey, to each their own, by the way, but people I have known in gym settings who take certain drugs to get bigger, stronger, faster in like a really short period of time. Yeah, so just personal friends of mine, again, do your thing, I don’t care, but what happens is they end up sustaining injuries because their muscles outgrew their tendons and ligaments in a pace that was way too fast because when you grow stronger, faster, bigger, um, in a slower pace, your muscle, the supporting muscles and tendons, uh, will grow with that. But if your muscles become too fast and too powerful, um, ahead of, like ahead of your tendons and ligaments, um, they, they will get torn a lot easier. Um, because you’re throwing around weight that they weren’t, they didn’t have a chance to grow into like the muscles did. I saw that happen quite a bit actually. Um, and it kind of sucked. You got to get off your chair.

Victoria Ferguson:
Shoot, you guys, should I get off my steroids? Like, I think I’m like, I’m kind of too jacked at this point. Ha ha ha.

Matt Mulcock:
And probably should drop the steroids. Yeah. Well, to that point, Ryan, people think that it’s the muscles that are what lead to strength, it’s actually not. It’s bone density, it’s tendon strength. And that takes so long to create and develop bone density. Yeah. This was because I did my DEXA scan a couple, like a month or so ago, and my bone density was very, very high. And so we were talking about, like, yeah, what are you hitting at the gym today? Just hitting some bone density.

Victoria Ferguson:
Wait, you guys, a word that just keeps coming up as we’re talking is just impatience. Like how, like just through all of this, like just this word, like through risk, through investing, through this behavioral topics that we’re all talking about today, impatience keeps coming up. And like, how can you practice patience? How can you build that into your money mindset. I feel like that is a muscle that you have to train over time because we’re wired to be impatient. We want results, we want the magic pill. So what would we say to people who aren’t quite there yet? How do you really convince someone? Because I feel like you said, Ryan, people I think generally know, okay, yeah, stock market’s gonna do really well, but I’m super impatient and I’m getting in my own way and I just can’t do it. So how do we approach that? What would our resolution or ideas around this be?

Ryan Isaac:
Can I, okay, I have a question. That is such a good comment, Victoria, patience, and what do you do with it? You know what it reminds, and I don’t know, what am I saying? Jeez. I would have said this in any month. That was a great comment, okay? You know what it makes me wonder? This isn’t an answer, but there’s another question that I’d love to hear what you guys think. And Matt, this is kind of some of the things we were in El Salvador with the Elevation Association group. A lot of the topics of last week in the CE courses, we’re just around balance in life. This is what makes me wonder, and this is kind of personal experience watching other people. If there’s an area of our life that we’re really impatient in, do you think it might have something to do with being like out of balance in other parts of our lives, where like we don’t have anything else going on to take our time or energy or thoughts or passion or love. And so we just focus like insecurity and stuff on like money and returns, or maybe it’s like something in the gym or a business like.

Victoria Ferguson:
I think so, but also another idea to add to that is, what are you avoiding? I think it’s also like an avoidance thing too.

Ryan Isaac:
Yeah, like you don’t want to see the other things, so you’re just gonna like go ham bone on like, yeah. I’m gonna be the world’s greatest dentist investor that’s ever lived because I really don’t want to like focus on these other things that are harder to look at. Yeah, maybe. Yeah, that’s a good question.

Victoria Ferguson:
Yeah, so maybe if you’re being really impatient, like, well, what are you avoiding? Like, or what’s out of whack? Maybe we should compile some good questions.

Matt Mulcock:
Well, just to Victoria’s question, and I think it’s, again, an excellent comment and insight. I feel like it’s what we talked about in El Salvador, Ryan, for when we presented there. I think that we get obsessed with these desired outcomes. I think the traditional goal-setting mindset of people, New Year’s resolution, setting a goal, I think we get so fixated on some desired outcome desired outcome we want, that we skip the steps that actually come before that to actually be able to achieve that desired outcome. So for example, we talked about this, the order of this matters as opposed to jumping right to the desired outcome. We feel if we’re talking specifically around money in this case, that you actually should take three or four steps back and focus on your core values first. Like the why behind this. I think people are so focused on the what of like, what, what do I want? And, and usually that what is the idea of things, the idea of something that we don’t even actually know if we actually want it. Right. Um, so if we start, this is what we talked about in El Salvador, you start first with your values, right? You got to uncover what your values even are, your core values, what is driving every decision you’re actually making. And those are so unique to you. Uh, that’s number one. And then that leads to your purpose. Okay. Your value fleeting to your purpose. And what is this even for? What is my purpose behind all of this? Whether it be my business, my personal life, whatever. That then helps you create a system, right? And then the desired outcome comes from that. So I think a lot of this just comes down to like this impatience you’re talking about, Victoria, in my opinion, comes down to people rushing the process and getting too focused on the outcome before they actually are doing the work required to get that, whatever that outcome may be.

Ryan Isaac:
Yeah, thanks for bringing that up. This makes me want to give a plug. Victoria has done a lot of good presentations around values map. You’ve been doing them lately too, but Victoria, you have, is this part of your women’s circle at our summit this year? Is the values exercises? Yeah.

Victoria Ferguson:
Yes. Aw, thanks for the plug. Yeah, I started doing more core values work with folks at MDib or different places, but yeah, it’s like you said, Matt, all about the why your core values is your money serving you. How are you spending your time and your money? Your calendars and checkbooks are really tellers of that. So yeah, at the Denist Money Summit, I’m hosting a women’s money conversation circle. It is only for women at this point because women tend to be more shout out for the ladies, GNI, girls night in. But yeah, we’re we keep it to a female only space at this point because females tend to share more and it tends to be more of a productive conversation. But I feel like you guys could totally be invited.

Ryan Isaac:
I’m vulnerable, but I won’t intrude. I will take some leftover wine if there is any. There won’t be. Yeah. Cool.

Victoria Ferguson:
Perfect. There will be no tissues or wine left. But yeah, I’ll be hosting that. It’s more of an intimate session, so we’re only having about 10 to 15 people join us. So if you are really interested, we like to keep it small to make it a really productive session. So if that’s something that you’re interested in, I highly recommend signing up early.

Matt Mulcock:
It’s going to be amazing. And that’s really limited, like truly, like that is really limited. That’s going to be a small group.

Victoria Ferguson:
It’s yes, we’re gonna have Kira Dent. Yes, like it’s, yeah, yeah. And Kira Dent’s gonna be there. Dr. Ashley Hoves is gonna be there. So like great women in the space as well. So if you are interested, highly, highly recommend signing up sooner rather than later.

Ryan Isaac:
Thank you. Matt, you’re on editing duty lately, so we’re coming up on an hour. Is there another section you guys wanna hit, or would you guys like to kind of just wrap this up with what are your takeaways that you took, and then what would you hope someone got out of this? You wanna go there? Or is there anything else you, okay, let’s wrap it up.

Matt Mulcock:
Yeah, let’s do it. Let’s wrap it up. And if you want to do a part two, we could do a part two or take, I mean, we’ve already had like little things that have come out of this that probably would be a whole other show we could talk about. Yeah. So Victoria, I’ll let you go.

Victoria Ferguson:
Yeah, I feel like the whole impatience thing is just like, it’s really sitting with me the last little bit of this. The idea that really, I feel like we are our own most dangerous factor to our failure, right? Like we can ruin this very, very easily by literally just being impatient. So there’s a lot you can do to help your progress by just understanding your why, understanding your core values and not getting in your own way. Um, so I feel like that was my, my biggest takeaway was that.

Ryan Isaac:
Cool. Matt? Thank you.

Matt Mulcock:
Yeah, I think that’s great. Uh, I would agree with that. I think one of the quotes that he said so many times, and he said it in this book, he said it in a lot of his writing. Um, it’s kind of keep coming back to me here. It’s really simple. Uh, but the whole idea of save like a pessimist invest like an optimist. Um, I just love that. It talks, this kind of sums up a lot of what we talk about and what we’ve referenced on this podcast around, um, risk and, uh, this push and pull of, It’s actually interesting. I think people approach this more the opposite way, meaning I think people in general are actually more pessimistic with investing or they’re more drawn to pessimism with investing and they’re almost more optimistic with savings. Meaning I think people are more likely to not save enough and they’re more likely to invest again like a pessimist. They’re more likely to listen to pessimism when really they should be flipping it. You should be saving like a pessimist, focusing on your cashflow, and then investing over the long-term, knowing that things just keep getting better. So I think that was something that definitely stood out to me. And then obviously everything we’ve already been kind of going over this whole show.

Ryan Isaac:
Cool, thank you. I’ll just say that one of the things I said in the beginning was it really struck me how rare it is to survive. It’s just even in the mutual fund or stock or the public equity stock industry, things don’t survive. And just surviving after decades is winning. And it really struck me how important that is and what a role we can play as advisors of being like survivalist experts, you know? And we, with our clients, are kind of on this survivalist journey, and it’s about the basics, and it’s about protecting the basics, and doing that for a long period of time, and just surviving all of these unknown things that will happen. What did he say? He said something like, the world comes to a halt basically once a decade, in ways that we can’t even imagine and never see coming. And so, surviving that for 50 years is how you win. And we’re always shocked every time, which is what makes it come to a halt. So that stuck with me a lot is just this concept of just surviving and which seems like a low bar, but how many people don’t even do it. So that’s what I’m thinking about.

Victoria Ferguson:
Right, right. Well, I also want to know if anyone else like on our listeners or social media like listen to it. I want to know what they think. So I guess if you’re watching this or listening to it, let us know. Like we want to know what you got out of it and if you’re following along or want to in future books, please do. We’ll bring up your comments. Yeah, yeah. What should we read next?

Ryan Isaac:
Please join us. If you have any ideas, tell us the book ideas. Let’s do, let’s read them together. What should we read next? Okay. Thank you, Victoria. Thank you, Matt. Thanks to our team. Our team participated in this. We had a really cool discussion and thanks to Morgan Howse, who will never hear this, but we’re thanking him anyway. He’s amazing. Yeah. Thanks all of you for tuning in. We’ll catch you next time on another episode of the Dentist Money Show. Goodbye now.

Matt Mulcock:
We love it, we love it. Thank you, Morgan, fan of the show.

Victoria Ferguson:
Thank you, Morgan. We love you.

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