Gas Prices, Stock Bubbles, Grad Advice -- And Teaching Personal Finance In School

All right, welcome back for episode two in this new format on the podcast. Pretty happy with how the first one went. Thanks for all your feedback and all your advice. This is fun and nice to see you again. If you're watching this on YouTube or somewhere else, that's the biggest change that we're doing here. I want to start off with just a couple of things before I get into your questions. One of the big ones that I want to start off here is what is the biggest economic news story this year, which is the war in Ukraine, and for most of you listening or watching, the biggest impact that that's had on your life is rising gas prices, rising oil prices. That's been the biggest thing. Now, I want to make a very nuanced point here about making predictions about the future that is so common in economics and so difficult and so humbling. Now, when the war in Iran first started earlier this year, three months ago or so, It was very common among the smartest, most astute, most educated economists, oil analysts, talking heads, making comments about the economy, that made predictions along the lines of this. If the Strait of Hormuz is closed for another week or two, You're not going to see a rise in oil prices. You're going to see an explosion of oil prices. Not $100 a barrel, $150, $200, $250. Not $4 gas, $7, $8, $9 gas, flights being canceled. Those predictions have been made for months. And it was always along the lines of, if it stays closed for another week or two, this is going to happen. I want to make a very nuanced point here without minimizing what's happened to gas prices all over the world and what could happen in the future. I don't want to minimize that and say, look at all these people, they were wrong, because the price of oil today is about where it was three months ago when the war first started. It surged, and then it's kind of plateaued at this level. And that is something that almost no one watching this three months ago would have predicted. Virtually everybody three months ago, if you told them that we would be three months into this war, With the Strait of Hormuz closed, would have said, this is going to be a Mad Max scenario in oil. And so far, yet, as I record this, it has not. I want to make an important point here without making any predictions about what might happen next. I almost want to make the opposite point of why these kind of things happen, why there is such a long history in economics and in politics and in any kind of social world that makes predicting what's going to happen next, even what seems like the most rational way, that if the Strait of Hormuz stays closed for more than a week or two, it's going to get absolutely apocalyptic. Why those kind of forecasts are so hard. It's so appealing and so easy. To make very simple predictions of if X happens, Y will be the result. If this happens, then that will happen. Very appealing and I think very comforting because when you make a prediction like that, it's giving you or the person who is listening to that forecast a sense of control in a world that you know is uncertain. If not, you know is unpredictable. So I say this with the glory of hindsight and nothing else. I would not have known any of this three months ago, but from my understanding, a lot of why oil has not yet at least reached those Mad Max levels, despite being three months into the Strait of Hormuz closed, comes down to a few reasons. Number one, the United States is exporting oil and gas like no other, like they've never had before, that has taken some of the supply crunch pressure off. Number two, Saudi Arabia has a series of oil pipelines that have been massively extended and increased over the last three months. One big pipeline going into the Red Sea has gone from 2 million barrels a day to 7 million barrels a day. That's taken a lot of the pressure off of oil that used to go through the Strait of Hormuz. Number three, China has massively decreased the level of its oil imports, part of which, and this is number four for all over the world, draining down the oil stocks and reserves that we've had. Now, can that last forever? Of course not. I'm not making any predictions of what's going to happen next. The point I want to make in a much broader area that applies to so many more things in the world of money and economics than just the Strait of Hormuz and oil prices in the last three months is that it is extremely difficult to know how people are going to adapt and evolve to a change in the economy. It's very easy to say if X, then Y. And it makes a lot of sense, and it's very comforting. It's much more difficult to say, if X, Strait of Hormuz closes, then people are going to adapt in this way, and this way, and this other way. And therefore, we don't really know what the end result is going to be. And there's so many cases like this, whether it's in housing prices, stock prices, whatever it might be. I'll give you one example of this that was crazy at the time, 2009. was one of the worst years in economic history since the Great Depression. It was just absolutely dreadful during the financial crisis during that area. Stocks finished up that year. They increased that year. And it's so easy to say, if you have... The second coming of the Great Depression, that's going to be bad for the stock market. That's a very easy prediction to make. It was much more difficult to see how people and prices and valuations would adapt and respond in that era. And so I was thinking about this recently when gas prices in my town have gone up tremendously, of course, in the last three months, but they've been about the same for the last, you know, two and a half months. They exploded at the beginning of the war and they've plateaued. Looking into it and seeing how the global oil market has adapted and evolved. And again, maybe that doesn't last forever. I'm not making any prediction, but it's so important to have a sense of humility for how complex the global economy is and for people's ability to adapt in a way that you never saw coming, in a way that leads to making predictions about what's going to happen this year or next year or over the next month. So, so difficult. The last thing I'll say about this in terms of the psychology of making predictions about the future is that it is very common that the higher the stakes, the more people are willing to believe forecasts. When the stakes are really high, as in gas prices could explode so much that you can't afford to commute to work or your flights are canceled. When the stakes are that high, people are willing to believe anybody out there who says, I can tell you what's going to happen next. That becomes very appealing. The irony. Is that when the stakes are that high and things are moving that quickly, that's when forecasts about the future become the least reliable. The demand for forecasts increase when those forecasts themselves become the least reliable because people are adapting and changing so quickly. That is why there is such a long history of economic forecasts for things that never happened. All right, next topic I wanna talk about. We spoke a little bit about on the last episode about AI and the future of jobs, topic that everyone is talking about in the world. It's one of the biggest things. Is AI going to take all of the jobs? And what are people going to do after AI takes their jobs? I should have brought this up on last week's episode, but I want to make kind of a nuanced point here. AI is one of the first technologies in the history of technology where the people who are making it and the CEOs of these companies that are building it Promise you in no uncertain terms that if they are successful, the world is going to be fundamentally changed, a lot of which is for the worse. It's going to take a substantial portion of people's jobs and maybe even wipe out humanity at the highest level. No other technology does this. Promises you that if they're successful, things are going to get really, really bad in the world. And of course, that leads to a lot of angst and anxiety, particularly among young people who are entering the workforce and don't know if the degree that they have or the job plans that they have, combined with their lack of immediate skills, means that they're not going to be employable during the most prime years of their life. Anxiety all over the place. Let's say that those apocalyptic forecasts are true and that AI is going to subtract, you know, a third of white-collar jobs over the next 10 years or whatever. Let's say that's true. Do you think? That governments around the world, the U.S. government, European governments, Asian, wherever it is, are going to sit back and say, hey, AI companies, Anthropic, OpenAI, whoever it might be, good for you guys. Congratulations on making a tool that destroyed society. Really happy for you. Enjoy all the profits that come from it. Of course not. Of course they would not do that. If that scenario were to come true, that AI is as devastating to the job market as people think it would be. You would see an immediate and fierce response from governments all over the world saying, you can't do that. Now, a million other things could come from that, including as long as there's just one model out there that's not government-controlled, that could have a monopoly on causing chaos and destruction. This, just like the last topic we talked about, very hard to make predictions about. But I think people underestimate. The ability and the willingness of governments to at some point step in and say, too much, too soon, too fast, too much damage. And you're already starting to see this. OpenAI and other companies going to the government and having conversations about, do you want to take an ownership stake in these companies? I think they probably see the writing on the wall already. That these products, these AI products are so powerful and so capable that eventually, before long, governments are going to come in and start regulating to a much higher degree than they are right now and trying to preempt that. All right, last topic before I jump into your questions. It's graduation season. And whether it's high school or college, grad school, middle school, whatever it might be, if you're listening to this and you're one of those grads, huge congratulations. I want to talk about if I were. Going to give people grad advice, which was one of your questions that I'm just working into this little bit here. What advice would that be? And I want to give you a 60-second grad speech of the advice that I would give to grads today. Let me make three points to you new grads. Number one, be very careful who you admire. Be very careful who you look up to. And the reason that is, is that it is very often that the person who you look up to for their success, for their career success, For their financial success, whatever it might be, that that person made sacrifices that you are either unwilling or unable to make. That the reason they're so successful and have so much money is because they sacrificed their personal life, their health, their family life, their friends, their mental sanity in order to achieve that success. And it is very common to look at that success and say, I want that without a full understanding of what it took to achieve that. The great comedian Jimmy Carr has a wonderful line that I love. He says, everybody is jealous of what you got. Nobody is jealous of how you got it. The second point I'd make to you grads is try to go out of your way to understand times in your life that you have regretted and what you can learn from that. Understanding your own propensity for regret and recognizing it and eventually preempting it is one of the most important life skills. That, I think, is an overarching life philosophy. is a pretty big deal. Going through life, minimizing regret. So you can look back and say, I didn't do everything perfectly. Not everything went according to plan, but I have as few regrets, particularly big regrets as possible. I think the only way to do that is to look back and say, what happened a year ago, five years ago, 10 years ago that I do regret today? Whatever it might be, everyone's is going to be different. And say, what can I learn from that? And am I having similar feelings today that I can recognize that I have a problem in my life right now that has a high chance of regret 10 years from now with the decisions that I'm making today and understanding your own psychology and your own propensity for regret. The last thing I would say to the new grads is don't stop learning. If you did college right or high school right, what you did is you learned how to learn. The vast majority of what you learned in your education could have been learned elsewhere. You could have learned it online, could have learned it on YouTube. 90% of it, you're going to forget anyways. The skill that you hopefully took away from college was learning how to learn, learning how to read, learning how to be curious, learning what you are curious about, learning how to put information together, learning how to ask questions. That's the skill. And if you learn that skill, Then day one of putting it into use is the day you graduate college. It is so common that people graduate from college, graduate from graduate school, whatever it might be, and they assume now I've learned. Now I am a learned individual and I have my skill, my expertise about this topic and I can go put it into use. If you look across people who are very successful in their careers and their lives, one of the common denominators that comes up so often is that they are learning machines. They never, ever stop learning. They are very good at learning. They know how to read. They know how to synthesize and contextualize and ask questions. And they never, ever stop. That's my advice for new grads. And a big congratulations. All right, time to get into some of your questions. And by the way, the questions have been fantastic. You've submitted over a thousand questions, 98% of which I would say are worth answering and I would love to answer. Obviously that is so many that if I'm answering three per episode, you've kept me busy for the next decade or whatever, but keep sending them in because I love them. I'm gonna get to as many of them as I can. Send them in to pod at longtermwords.com. That's P-O-D at longtermwords.com. And my standard disclaimer, I'm not your financial advisor. I'm not your lawyer. I don't know you. I don't even know if I like you. And so none of this is advice. Take it for what it's worth. Hopefully you learned something from it, but I'm not giving you individual advice right now. All right, let me jump into it. The first question comes from Meb, who asks, how do you think about your allocation to the stock market as valuations continue to go up? A great question, and one that many people are asking these days, one that I think about a lot myself, my own individual money. To give you some context of what the stock market has done in the last couple of weeks, I'm not even talking years right now, in the last couple of weeks, look at this chart of Micron stock. Micron is a chip company, semiconductor company. Look at what this has done. And if you're listening and not watching to this, this is a chart that looks flat for several years until it goes absolutely vertical in In the last couple of weeks. Look at this chart of Western Digital, another tech company, absolutely vertical in the last couple of months. These kind of charts are not things that you look at and see very often. This is a once every 10 or 20 or 30 years kind of event, when you have stocks that are literally going up tenfold in six months. And yes, they're doing it on news. A lot of these companies are related to the AI build-out, but valuations across the world, across asset classes, particularly in that are so heavily represented in index funds and so owned by so many investors have gone absolutely vertical in the last year, the last six months, the last month. So how do I think about that as an investor? Let me try to fast forward for what might happen in the future with all of the disclaimers on what that means and that no one knows what's going to happen in the future. But let's say two years from now, it turns out that yes, the market of June, 2026 was grossly overvalued. And people were falling for FOMO left and right. And stocks were completely overheated. And then they crashed. And let's say I'm making this up. This is my foggy crystal ball. Two years from now, the stock market is down 30%. Let's just say that happened. What word would I use to describe that event? Well, I might say unpleasant. You might say, you know, not fun. Thank Regret, maybe. Another word that I would use to describe that scenario is normal. It's completely, utterly normal in the history you, of the stock market that things get a little bit out of hand, that there is hype everyone. and excitement that turns out that it was overdone, and then the market corrects 20% or 30%. That is par for the course in the history of the stock market. And to put some numbers around that, if you look in the last 100 years in the stock market, what I just described there of markets kind of getting out of control and then falling 20% to 30% is something that has happened on average once per decade. On average, for the last 100 years. Now, I hope to be an investor for the next 50 years, let's say, if I'm lucky. Given those odds, I fully expect that in the normal course of events, that that scenario of the market falling 20 or 30% will happen to me five more times. Now, what people tend to do in a situation like this is say, look, I've identified that the stock market is overvalued. And I don't like what's likely going to happen next. And so let me do something about that. Let me take an action. Let me sell. Let me put my money towards something else. Maybe hold up a bunch of cash. Maybe put it in crypto or gold, whatever it might be. That tends to be the normal reaction. And I just think there is so much evidence across the history of investing that if you look over a one-year period or a three-year period or a five-year period, you can find people who say, look, that person identified that the stock market was overvalued. And they put their money towards something else, or they sold, and look how well they've done in the last one year. They avoided the crash. Look how well they've done in the last five years. They outperformed everybody by sidestepping the crash. That could be true over shorter periods of time. It is so common that if you were to look over a longer, and I think much more meaningful period of time, 20 years, 30 years, the lifetime of a full investor's career, that overwhelmingly The people who do the best, by far, not by a small amount, but by far, are the people who just endured whatever was going to happen to them. Who just said, look, I'm going to invest and hold on. And I know that on occasion, there's going to be periods where the market gets overvalued and falls, and I'm just going to stick with it. I'm just going to endure it and take the blows and sit there and get punched and get kicked and get knocked over and put up with it and hold on to it and recover as the years go on. Those people overwhelmingly do the best. Let me give you an example of this. Again, with the glory of hindsight. If you started investing in the NASDAQ in March of the year 2000, which was the month that it peaked before collapsing during the dot-com bubble, let's say you started investing there and you put all of your money in there during that day. This is like reverse cherry picking. I'm trying to come up with the worst scenario that I can. And you invested then and you just held through today. What would your return have been? And the answer is about 8% per year. Now, is that good? It's not great. It's not bad. And I think the biggest thing is how many investors in the dot-com boom destroyed themselves by buying when things were excited and then panic selling when everything was going crazy. Millions, millions of investors fell for that. The people who just held on for dear life actually ended up doing okay. Now, that's easier said than done because after the market falls 90%, it's much easier to say buy and hold forever than it is to actually do it. This is like the no atheists in foxholes version of investing. But the point I'm trying to make is that way more damage is done to investors who try to avoid uncertainty and volatility and ups and downs than is done to people who just put up with it and endure it. And so the skill that a lot of investors try to have is saying, how can I be a good analyst and have a good vibe metric to where things are and avoid the volatility that's going to happen in the stock market? And I think a way more realistic, frankly, easier and more powerful skill is saying, how can I absorb uncertainty and damage and volatility in a way that's going to let me ride out the inevitable booms and busts? Mostly with the idea that what you are getting paid for as an investor, literally where the value comes from, is putting up with this uncertainty. The reason that I think I and most of you are going to do well in the stock market over the next 20 years is because we are willing to put up with uncertainty. It's because I am willing to say there's a measurable chance that the stock market will fall 20 or 30% at some point in the next couple of years. Of course, that's always been the case. And the fact that I am willing to put up with that and endure that is why I'm going to do well in the long-term. That's the cost of admission that I'm willing to pay in order to earn superior returns over time. So let me cap that off with a story that I love from the movie Lawrence of Arabia. When Lawrence lights a match, And he puts it out with his fingers. He doesn't flinch. He just butts it out, butts out the flame. And someone else watching him says, how did you do that? And he tries to do it himself. And he lights the match and he snuffs it out with his fingertips. And he goes, ah, it hurts. How did you do that? And Lawrence goes, the trick is not minding that it hurts. It's not to avoid the pain. It's not minding that you're dealing with pain. That is a philosophy that I think is so incredibly critical for investors. And so maybe, maybe, I'm not giving anybody advice, but let me tell you what I'm doing differently now that I can, as almost anyone paying attention right now, can see how crazy the world of particularly tech stocks are right now. The answer is absolutely nothing different. Not because I don't think it's going to be a problem, but because I think my ability to deal with problems is actually the skill that creates good investors over time. All right, next question. Mike asks, what is the antidote to worrying about having enough long after your utilitarian needs are met? Why do people apply their truly scarce time to meeting met needs? Mike, very good question. Thank you. Let me first make the point that I think a lot of people make a lot of bad financial decisions because they are reacting to how scarce time is. And they know that time is valuable and that they're not getting any younger and that they want things to happen fast. This is where FOMO comes in. I'm seeing other people get rich faster than I am. My time's running out. I need to go grab that. A lot of debt is based on the idea that I don't want to save for 10 years to get something new. I want it right now. I want to pull my income forward so I can have it right now. A lot of financial behavior, some of which is bad, some of it leads to regret, is based off the idea that, yes, your time is scarce. And I think a lot of why that happens is people are right that their time is scarce. And they look back with regret, maybe when they get older, at not being able to spend time with their young kids anymore, At the relationships that they broke. at the careers that they may have squandered with regret and realizing that because time is scarce, the decisions that you make today are very important. I think that's probably where a lot of this comes from. But I want to make a bigger point here as it pertains to having enough money and still worrying that it's not enough. On one hand, that can be A mental disease of having tons of money that you will always need. If you talk to a lot of financial advisors, they will tell you how common this is. That one of the biggest problems that they deal with are clients who have enough money to retire comfortably and live a comfortable life, and they can't spend it. They can't spend it down, no matter how hard they try. I think on one hand, that can be bad. On another hand, it makes a lot of sense because we are so lucky to live in a world where life expectancies have increased so much that there is a measurable chance That if you retire at age 60 or 65, you're going to live to age 90 or 95. That is a brand new challenge in the history of all of our modern societies. That an average, ordinary, you know, non-oligarch person would need to fund a third of a century without working. In a lifestyle that because of peer pressure and social pressure is not just basic necessities, but travel. golf, spending time with their grandkids, living a good life. That's a very new thing. I think people are aware of that, that funding their retirement is not what it used to be, which was you retired at age 65 and you died at age 67, which is a lot of what it was, you know, 50 years ago. But now it's a much bigger period that you're funding. So a lot of this worry and anxiety about about not having enough money to fund retirement. Dare I say is pretty rational, pretty reasonable that people do worry about this. Let me make another point that I don't want to live in a world in which most people wake up every morning and say, I have enough. My needs are met. I don't need to keep working and stressing anymore. If most people did that, progress and innovation would come to a grinding halt. The seed of almost all progress and innovation are people who have enough. And are doing just fine. Waking up every morning and saying, this is not enough. We need more. We need better. We need faster. We need more efficient. That's where technology comes from. So on one hand, I agree with you. Of all the people whose needs are met and keep wanting more, more, more. And I want to work on that myself and be content and grateful for what I have. And I want to live in a world in which most people don't think that. And that's where innovation comes from. Someone who I think has Done a very good job at this idea of saying my needs are met and I don't need any more is Scott Galloway. I'm sure you've seen Scott Galloway all over the internet, online and his videos and his podcast. He's talked about this before. He's written about this before of having more or less a cap on his net worth that he's never going to exceed. And whenever, because he's invested, his net worth goes above that level, he either spends it or gives it away. He's quite wealthy, so it's one thing for him to have that idea of my net worth is never going to go above this amount. That amount is enough, and everything above that's going to be given away. But I think it's a very effective mindset. It's kind of the closest person who I've seen who can actually get to a level of saying, I have enough. And I think what it's done to him, and it can do for anyone, even of ordinary means in this thing, is forces you to think about what is actually valuable in your life. To say, look, my net worth is never going to go above X. So I might as well try to find my happiness, not from accumulating more money, but from spending the time with the people who I love, taking care of myself, from having a life that I enjoy, from going for walks and going for travel, whatever it might be. It forces you to find your happiness from areas that don't have to do and with daydreams of having more money. It's a pretty effective mindset. The question though that you asked is, what is the antidote to this? Well, people have been... Debating that for thousands of years, I'm obviously not going to give you the perfect answer on this podcast. What it has been for me, at least around the edges, some antidote to that is resisting the idea that I need more money after my needs are met largely comes down to social comparison. It's not that I don't have food or shelter. It's that their food and shelter looks a little bit better than mine, pointing to other people out there. That tends to be where this comes from. And I think there's two points That can. Fight back against that natural level of envy. Number one is when you look at someone else and say, if I had their blank, their house, their career, their net worth, their beauty, whatever it might be, it's easy to say, I would therefore be happier. And why that is almost always misleading is because you cannot take a tiny bit of anyone's life and assume that it equates to their overall happiness. You have to take the fullness of their entire life. So if you want that person's house, You also have to take the stress of that person's career. You also have to take that person's broken marriage. You also have to take that person's ill health, et cetera, et cetera. You have to take everything as a full package. You can't just take bits and pieces of it. Once you are honest with yourself about that, your desire, your willingness to envy others collapses about 90%. And for most people, when you say, even if it's subconscious, you're not actually putting this into words like this, I want that person's life. When you actually take the whole picture, you'll probably say something along the lines of, maybe my life isn't actually all that bad and I should be pretty happy and grateful for what I have right now. The other point I would make is that envy has no ceiling. And so it is very common to tell yourself, if I had X. Then this worry and anxiety that I have would go away if I had this income, this net worth, this house. And that is almost never true for almost anybody. Because as soon as you get to that level, to that salary, to that net worth, your aspirations and your dreams and your goals are just gonna ratchet up another notch. And the world is littered with people. And at various times, I've been one of them who told themselves, once my net worth is X, then I can stop worrying because my needs will be fulfilled. And it never happens. You immediately go to maybe 2x, maybe 3x, maybe 4x. That is always the case. Once you realize the rules of that psychological game and how powerful that psychological game is, you very quickly start realizing that the only way to win that game is to not play it. All right, next question is from Alicia, who says, you've said before that personal finance is more personal than it is finance. What would you say to people who feel frustrated that schools don't really teach personal finance? Great question, Alicia. A lot of people talk about this. A lot of people ask it because of course, personal finance should be taught in schools. And it's insane that it's not. That we make kids memorize a periodic table and play hot cross buns on the recorder and they graduate from school Barely knowing anything about the factor that is going to influence every single person who graduates from high school, which is money. We don't teach it that much. Should it be? Yes. Do I want it to be taught more? Yes, of course. And let me make a nuanced point here. The most important decision that most people will ever make is whether, when, and whom to marry. That's gonna have a bigger impact on the quality of your life as an adult than almost anything else will over the course of your life. And we don't teach that course in school. In elementary school, in high school, in college, there's no course on how to pick a good spouse. Or if there is, it's a very niche topic, right? For obvious reasons, you can't teach that. It's not something that you can distill down into a formula that will apply to everybody, that we can teach you how to pick a spouse. Even if it is so important, it is inherently very difficult to teach. And maybe that's not a perfect analogy, but I think finance kind of fits into that bucket. There are technical skills that should be taught about how interest rates work, how the stock market works, how compound interest works, formulaic things that we can and should be teaching young people at that phase of their life, full stop. But the most important things about money to learn are things that cannot be taught. It's feelings that you have to experience firsthand. When did I learn the most about money? Was it reading books? Was it somebody told me something? None of that. I learned the most about money when I kind of became independent, left the house when I was 16 years old and was effectively on my own financially and learned very quickly about the value of a dollar when you experience its scarcity, about budgeting, about... Envy about social skills. All of the most important financial topics happen from first world experience. They are not things that anybody in any classroom can sit you down and say, let me tell you about the anxiety that will happen when you can't pay your bills. You have to experience that firsthand. And so that is not any excuse for why personal finance is not taught in schools. It's not saying that it shouldn't be taught. It absolutely should. But I think it is probably the case that even if we taught it in every high school from qualified, well-meaning teachers, it would not move the needle as much as we think it would in terms of good financial outcomes because the hardest skills have to be learned firsthand. One of the biggest trends in finance and investing over the last six or 10 years is the explosion of Robinhood, which markets itself primarily to young investors, particularly young men. You know, 19, 20 year old kids, if I can call them that, and teaches them not to invest by and large, but to gamble, but to speculate on stocks and options and crypto. And if you have any kind of market sense of market history, you know how that's going to end or that how it already has ended for a lot of them. And the answer is not very well. If you take a 19 year old who's going to speculate on short term options, you know how this is all going to end. It doesn't end well. If there's any silver lining to that, I think. It's that at least we are teaching a young generation of investors about risk early. They're experiencing it from a very young age. They're experiencing what it feels like to get burned, to lose a lot of money, to speculate and then lose. At least they're learning that lesson about risk when they're 19 and not 45 and trying to put their kids through college. Those firsthand personal experiences are the most valuable thing that we can teach in finance and you cannot. Teach it in a classroom. All right, my last question from Bruno, who asks, why has humanity never been so wealthy before, and yet we have never been so afraid of scarcity? Or is our current concept of scarcity flawed? Bruno, great question. Thanks for submitting it. Let me tell you a quick story that I think has stuck with me from the first time I read it many years ago. The coolest thing that humans have ever done, in my opinion, is walked on the moon. Back in the 1960s, early 1970s, the coolest thing the human species has ever done. And Buzz Aldrin, of course, was one of the first people to do it. The second person to walk on the moon, Apollo 11 in 1969. And two things about Buzz Aldrin, did one of the coolest things that humans have ever done. And if you're kind of familiar with him in the press, doesn't always come across as the happiest individual. A little bit grumpy, a little bit prickly at times. He's almost become famous for this. Michael Collins, who was one of the other astronauts on Apollo 11, along with Neil Armstrong and Buzz, framed this in a way that was very harsh, but I think actually pretty insightful. Michael Collins said, Buzz regrets not being the first person on the moon more than he appreciates being the second. A brutal quote, right? But pretty insightful. And I think a lot of envy works like that. It does not matter how much you have. All that matters is how much do you have relative to somebody else. Even if what you have is extraordinary, like being the second person to walk on the moon, if you are always compared to someone who is the first person to walk on the moon, it can feel pretty rotten. And so your question about scarcity is interesting because when we talk about scarcity, by and large, most people at least listening to this and watching this have enough food, have enough shelter, probably have enough health insurance, have enough healthcare, but there's always something else that somebody has that you don't. And so your sense of yearning for more, of having that sense of scarcity, is just going to keep ratcheting up until you get to the most ridiculous aspects of social comparison. Rob Henderson, who's a psychologist and a wonderful, wonderful writer, made this point that when he was a student at Yale, a lot of his elite Yale classmates loved the play Hamilton. Wonderful, wonderful play. They went and saw it. They loved it, talked about it, talked about going. And then Hamilton, I think this was in 2020, streamed online. Now anybody could watch it. That's when I watched it for the first time. And Rob made this point that as soon as that happened, as soon as anybody could watch Hamilton, suddenly his Yale classmates didn't like it anymore, or even if not rebelled against it. What made Hamilton so great in their minds was the fact that they could go see it and most people could not. And as soon as the masses could watch it, they weren't interested in it anymore. That is how a lot of value works. It works and things are valuable because they are scarce. And you see this among some of the most successful product companies in the world. Rolex, Ferrari, a lot of handbag companies. The reason that they are so valuable is not because of the quality of the product, although those are usually pretty good. It's because they go out of their way to engineer scarcity. If you walk into a Ferrari dealership or a Rolex dealership or try to buy a Birkin handbag, You know that you cannot just walk in and buy one of those things. That's not how it works. They make you fight for it. They make you get on a wait list. They make you buy 10 other of their products before they invite you to buy the super high-end one. Engineered scarcity is where value comes from. And I think that will always be the case. You can easily imagine where things that are scarce today, health insurance for the masses, Cancer treatments that are really effective. Going down the list of things we don't have today, we do have those things 20 or 30 years from now. And rather than being appreciative that we have free cancer treatment for the masses, cheap cancer treatment for the masses, rather than being appreciative of that, we will shift our anxiety of something else that is scarce. And aren't we doing that today? I've made this point many times, that if you talk to someone 100 years ago, And they learned that any of us can go on down to the pharmacy and get penicillin for $2, whatever it costs. They would faint on the spot of how amazing that is. But most of us don't do that today. We just accept that we have that, that penicillin is not scarce anymore. And we shift our anxiety to something else that is. We will always do that. We have always done that. A lot of value is in scarcity. Now, in my own field of writing, There've been some authors that I think have engineered their own scarcity in a way that has really benefited them. Michael Lewis, the great author, I'm sure all of you know. Part of the reason that I think Michael Lewis has had such a long career is, A, he's just a great writer, of course. But B, whether this is intentional or not, I think he's engineered a lot of scarcity in his life. By and large in his career, he writes a book every three to five years. He promotes it for a couple of weeks and then he disappears. No social media, not a lot of TV or podcast appearances, some, not that many. And so when he writes a book every three to five years, you're like, oh, I've kind of missed you. I haven't heard about you in a while. Let me get your stuff back. The author J.D. Salinger was another, wrote the biggest book of his era, Catcher in the Rye. Wrote a couple other things and then disappeared virtually off the face of the planet. There's like a couple pictures of him in the last half of his life. He just disappeared. A lot of the reason I think why there was so much demand for his work and why people love his work so much is that it is scarce. He didn't write 20 books, at least that he released, if not. He wrote a couple and therefore what was out there became very valuable because it was rare. That's always how value works. Now, I want to end this. podcast always with a recommendation for you. Last week, I recommended a book. This week, I want to recommend a podcast. Two podcasts, really. And they're from my friend, David Senra. David is, I think, one of the most talented business thinkers and talented podcasters of our era. He has two podcasts. One is called Founders, when he reviews and analyzes history's We're his greatest entrepreneurs. Usually by going through a book about a great company, a great founder, and he can analyze it and summarize the history of a business or an entrepreneur in a way that nobody else can. His latest podcast is called David Senra, very creatively named David, where he interviews a lot of the current greatest living entrepreneurs, a one-on-one interview. He's so good at it. I could tell you more about what it is, but I would just encourage you to go watch it. Founders and David Senra. That's my recommendation for this week. And that's it for this episode. Thank you again for listening. We'll see you next time.