WCI #261: The Only Investment Guide You'll Ever Need With Andrew Tobias

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.

This is White Coat Investor podcast number 261, the only investment guide you'll ever need with Andrew Tobias Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status, and one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the White Coat Investor can help. Welcome back to the podcast. I missed you guys. It's a great week. Wonderful spring weather here in Utah, which means it might be a blizzard or it might be sunny and hot. You never know out here. Spring's a weird season in the Intermountain West. Our quote of the day today comes From Randall Bell, Ph.D. who said achievers prefer the term setback. The terms success and failure imply a final point of destination and I think that is definitely the truth. All right, if nobody's told you thanks for what you do today, let me be the first. I know you're on your way into work, your way home from work. Maybe you had a bad day. Those happen sometimes in the high income professions. Maybe you're off working out whatever you're doing. Though if no one said thanks today, let me be the first. All right. In case you're not aware, I have a new book out. It's called the White Coat Investor's Guide to Asset Protection. I think it's a great book. If you are interested in protecting your assets from lawsuits and understanding what your risks really are, this is a book you should read. It's not that long. It's a relatively short book. In fact, about half of it, close to half of it, is the most comprehensive list of state specific asset protection laws that I know about. Asset protection law is always state specific. So the important thing to know is what are the laws in your state and in the states where you may do business or have assets. And so I've compiled that as a significant part of the book. You don't have to read every state's asset protection laws. You only got to read about the states you care about. So, you know, in reality, you probably only need to read about 60% of the book. And it's about as long as the White Coat Investor book, the original one. But I think it's really worthwhile if you're worried about losing everything to a lawsuit. If you just want to make sure you've done the basics of asset protection, if you want to learn more about kind of advanced asset protection techniques, if you're thinking about going to see an asset protection lawyer, if you've been named in a lawsuit, whatever, whatever your purpose is to be interested in this topic, I recommend you pick up the White Coat Investors Guide to Asset Protection. It's available on Amazon like all of the other books. All right. We have got a great guest today. You know, one of the fun things about having your own podcast is you get interview whoever you want as long as you can talk them into coming on the podcast. So sometimes that allows me to go out and find people who've had a significant impact on my financial life and bring them on the podcast and just get to know them a little bit better. And that's partly what we're doing today. We're going to be bringing on Andrew Tobias, who you may know as the author of the only investment guide you'll ever need, which was how I was introduced to his work, was reading that book, and there's been many different editions of it. He's got a new edition out of that book if you're interested in picking it up after hearing from him today. But Andy Tobias, he graduated from Harvard. He was there in the 60s, so he's an older guy now, but eventually got an MBA from Harvard. He's written for a number of magazines that you've heard of. You know, these include New York Magazine, Esquire, Time, Parade, Harvard Magazine, New York Times, Sunday magazine. He's written 12 books, I believe, and just continues to do a lot of great stuff in the country, whether it's finance related or not finance related. So I'm looking forward to getting him on the podcast and getting to know him a little bit better. Let's get him on. All right, Andrew Tobias, we're going to call you Andy today, right? Welcome to the White Coat Investor Podcast.

Thank you so much, Jim.

It's wonderful to have you here. Your work's affected me personally and I've Just gotten done introducing you before I brought you on, but let's hear a little bit from you. We want to hear a little bit about your upbringing and maybe how it affected your views on money.

Well, I had a great success in choosing my parents and they gave me $4, which was a lot of money back then. I'm 75 now. So when I was 4, I got $4 71 years ago. And I don't really remember that, but I remember getting $5 when I was 5 and $6 when I was 6 and $7 and I was hooked. And. And then When I was 10, my grandfather gave my brother and me each, I think 10 shares of General Motors and 10 shares of General Dynamics or whatever. And I actually, it's a little embarrassing, but I started looking at the stock pages every day and nothing ever happened. I mean, it is the most boring thing. If you're going to give your kid 10 shares or something, please make it one of these ridiculous volatile stocks that's going to go to zero. But at least it'll be fun and they'll learn that stocks, you know, not to take too much terrible risks, but as the most, you know, owning 10 shares of General Dynamics or General Motors, so boring. But we did kind of learn a little bit about this. And then I went to, I spent three months behind the Iron Curtain when I was 16 and I came back a little communist for about five minutes until I wound up running the student businesses in college and going to work for a company called National Student Marketing Corporation. After college, that Stock went from 6 to 140 in 18 months. And with stock options worth a fortune, at least in my terms. It turned out that the creative accounting that the company was practicing was so creative you could really only call it fraudulent accounting. So the president went to jail, I went to business school, wrote a book about it, and here we are.

So tell us about your education. You did undergraduate at Harvard as well as an MBA there, correct?

I majored in Slavic languages and literatures, which means that I read War and Peace in English in the trot, you know, the little clip notes thing. Because I was not a good student. But the real world was much more interesting to me. So every day I would ride my bike up to Harvard Student Agencies, which is the little student run business that would, you know, rented the refrigerators and sold class rings and all those things that undergraduates do to make a little extra money in college. And that was so much fun. And then they let me run a thing called let's Go the Student guide to Europe, which at the time was just one book for Europe and then we added some other countries and other continents, I guess. So I was a little business guy. I was not a good student. My brother was summa cum laude, you know, I was barely, I wasn't summa, I wasn't magna. I was barely, barely, you know, in the top 60% or something. But I sure did sell a lot of let's go, the student guides to Europe. So I've been interested in business and money kind of forever.

So where's that taken you in your career? Tell us some of the things you've done.

Well, I expected after my high flying stint as a 21 year old vice president of National Student Marketing Corporation, I figured, well, I'm, I don't know what I'm going to be but obviously it's going to involve lots of assistants and junior vice presidents working for me and all this stuff. And business school. I did get an offer from Boston Consulting Group, which made me feel good. But New York magazine had put me on the COVID when I just was starting business school because of this article in this book I wrote about the fraud that I was involved with even though I was innocent. But the company, company didn't do so well. So they said, when you get out of business school, come write for us. And I said, what do you. I'm not a writer. I only wrote that thing because I was. Happened to be in the middle of it, you know, they said, well, you know, you seem to. Whatever. So that I had a choice between going to Boston Consulting Group or working for New York magazine. And happily I chose the latter. And I've been writing magazine articles and books and I had some computer software called Managing your money before Quicken. So for a bunch of years I had a very good fortune with that. And then I, somebody called from the White House and said, if the President United States asked you to be treasurer of the Democratic Party, would you say yes? And I said, Richard, what are you calling me for? You clearly dialed the wrong number. No, no, no, president, whatever. And so for 18 years it was supposed to be a two year ceremonial kind of gig and it wound up being 18 years and it was still, I didn't get paid to do it. But it wasn't full time, but so I had that detour and now I'm 150 years old and I'm still updating this.

So you've been publishing financial books since 1971. Really? I count at least 12 books. How many books have you actually Published, not including new editions and translations.

I hear you're a terrific doctor, but you also count perfectly. I mean, there's 12. That's exactly the right number. And actually, so the first one, the very first one, was this book about national marketing. And it was sort of a financial book because it was a cautionary tale. Stock went from 6 to 140, and then in about 5 minutes went down to. Went down to 38 or something. Interestingly, you could have made as much money buying it at 3 8, never did go bankrupt, and letting it recover to 10 times that as you could have made in the very beginning. So there are different ways to skin a cat. But at New York magazine, everybody thought I would. Oh, my God, he's been to business school and he writes about all this stuff. He's got to be so smart. And everybody from the receptionist downstairs up to the editor in chief of. I don't know how many people remember now, but Clay Felker invented not only New York magazine, but all regional magazines. He was huge guy, very big character. Rupert Murdoch is the one who wound up buying this whole thing and wrecking his life. But everybody from the receptionist on up would say, so what should he do with my money? And I'm thinking, why are they asking me? I mean, you know, I don't know anything. I know Ben Franklin said, neither a borrower nor a lender B. And I know, you know, you spend less than you make and, you know, brilliant insights like that. But I did my best at it, but it also. It got kind of tedious because I would say the same thing over and over again. The advice would vary a little bit. If I was talking to Clay, who had, you know, lived high, had a big income and lots of rich friends, that would be a little different advice than. Than for the receptionist, but not that different. And I realized, you know, rather than my doing this over and over and over again, why don't I just write it down once and. And then I can give it to everybody. And I already had some pretty good success by then with a book or two, not about specifically about money, but. And I called my editor and said, hey, I got this little investment guide. It's be tiny. The virtue of it, especially back then, it was much smaller than it is now because the world's got more complicated. But would you publish it? And they looked and they said, well, it's not for us. And I said, oh, come on. I mean, I don't. You don't even have to give me an advance. I don't want to start with some other publisher, give it a try? Why not? And I said my last book was on the New York Times bestseller list for you. I mean, can't you risk this thing? And. Nope. So I took it someplace else and it sold millions of copies by now. And it's the luckiest thing I ever did. At first the money was what was so great, frankly. I mean, I got paid a lot of money. The paperback. I couldn't believe they were going to buy it. And paper paperback on top of the hardcover. The thing, you know, was terrific. But by now it's not, frankly, knock wood, you know, compound interest. And if you're 150 years old by now, you better be doing pretty well. So I'm okay. It's fine to get the royalties. But the emails I get and the letters, people, you know, I bought your book 40 years ago and we just returned retired and I give it to all my kids and graduation and all this kind of stuff. It's kind of. That's the royalty that keeps paying. So it's been a lot of fun, but also embarrassing because it's called the only investment guide you'll ever need. I explain in the book why it's how that title came to be. But if it's the only one you'll ever, ever need, I shouldn't really have to revise it, right? But they do things without my permission, by the way, they invent the Internet. They invent IRAs and Roth IRAs and stuff, and then crypto and meme stocks. So every five or six years I find myself revising it. And it's really fun to do because much of it stays exactly the same and I'm very lazy, so I don't have to rewrite it. But then there are ways to do challenges. How do you write about. What do you say about crypto and about all these things. So anyway, it's been fun and it just came out again and there won't be another one for probably five or six or seven years, by which time I'll be 156.

Well, you're in a very select group of people whose writing ability I don't just admire, I'm frankly jealous of it. That list is very short. It includes basically three other people. Morgan Housel, Bill Bernstein and Jonathan Clements. Your writing is both useful and entertaining. It doesn't sound like you had any form formal training in writing. How did you learn to write so well?

Well, first of all, you're very kind. Other than in the ninth grade, a guy named Dana Niswender. And I might get even a little bit choked up because nobody remembers Dana Nesswender, but he was the right after lunch English teacher in my high school. And everybody else, you know, after lunch is not a good time for 14 year olds, you know, that don't pay a lot of attention to somebody who had no. He was a monotonal kind of expression. But he taught us how to write. If you listen, what is a semicolon? What is, you know, ellipsis? And. And what. How do you. It wasn't the kind of writing I do now, because now I break rules all the time, but at least I know I'm breaking the rules. You're right, I didn't. I kind of write the way I talk, for better or worse, probably a bit worse, as people are beginning to realize. And I try the. The hand stuff. That's the punctuation or that's the, you know, I try to get the hands in there. But it's just. I guess again, it comes back to a good choice of parents. My dad was a terrific. He was the original Don Draper basically, not literally, but of Mad Men. He. He had his. And he won all sorts of awards for his copywriting. He did the. He introduced Patek Philippe watches to America and Ronzoni, Sono boni means Renzoni is so good. That's my limit of my Italian and all kinds. Oh, actually, you know, Manischewitz wine. Everybody listening is too young. But the slogan for Manischewitz was super famous back in the. In the 50s and 60s, the last century. And one day, I and a billion and a half other people on the planet were watching television when one astronaut said to the other man, oh, Manishevos, when you look at that crater, the astronauts were. And I remember this, and I wrote about it a few years ago and I think, did they really. Am I really remembering that? Right. So they had invented the Internet and Google. So I googled astronauts Manischewitz wine. And not only did they say it once, they said it like 20 times from the moon. All free impressions. So that was my. My dad was a. Was a very good writer, and I, maybe I picked up a little from him. Thank you for the compliment and letting me tell you about my dad.

So the, you know, the bestseller here, the most popular one, it sounds like, is pretty clearly the only investment guide you'll ever need, which I read pretty early on in my financial literacy journey. I don't know how many editions ago. It was probably three or four editions ago, but I actually have that book on my recommended list. Fairly high on my recommended list in a personal finance section. I think the book section on personal finance is even better than the investing information you include in it. Why do you think it's so important to take care of the basics and have a financial plan in place before worrying about investments?

Well, first of all, most people, not your audience, your audience doing very well by and large, which is awesome and well deserved, by the way. Sorry for the digression, but my plan is medical school should be free and it should be paid for by doubling tuition at law school. Too many lawyers and it's too hard for, for docs. It's a little late for your listeners, I guess, for this in case they adopt this plan. But anyway, the basics of personal finance, having an overall strategy and getting into habits that will allow you to come out at a few thousand dollars ahead each year or a few hundred for, you know, just starting out instead of a few thousand behind, which if you're a doc, you can easily. I mean, everybody wants to lend you money, so I mean, it's easy to, to build up all kinds of debt, but unless it's done very well and with lots of good strategy behind it, you don't want to be in debt at all. Your mortgage, of course, is different, but so the basics. And also from a marketing, from my point of view, most of the people in this country, again not your audience, but they don't have any money. They're $400 away from a, you know, we have all kinds of problems. So if I can make it, my only real talent in this thing is to try to make it enough fun so people get motivated to actually try getting into better habits and see that if you can make a game out of it and if you have a goal, you're not sacrificing a night out at the movies or sacrificing a Starbucks or whatever. You're actually, this is part of a goal where in three years you're going to be out of debt and in 10 years you're going to have half a million dollars. And then all of a sudden you're doing it because you want to, not because, oh gosh, I can't afford to go to Starbucks or people were telling me not to. Basically, I try to help people own their financial futures. And not to say that bad things can't happen and you can't totally control it, but if you make a plan, at first it's very hard, as with any kind of new habit, but once you get Going it becomes part of who you are. And you wind up being the person who doesn't smoke and has an extra million dollars when they're my age instead of having no money and lung cancer. I mean, that one habit of not smoking. If you can I tell people, forget the whole thing about health. It's probably good for you and it makes you sexier and all kinds of things. Think about the money, think about them. That's why you shouldn't smoke. And it's interesting. That's more of a motivator for some people.

You know, I've been using that in my practice. Oh, I think you mentioned that in your book at some point. Oh, yes, and I have had that financial discussion with patients many times. Well, let's see. What are you paying for a pack? Eight bucks. How much do you smoke pack a day? Well, what's that work out to? 240 bucks a month? You know, that's three grand a year. That's a pretty nice vacation down to Mexico. Would you like to go to Mexico every year? Would you like to keep smoking? And it's the first time they've ever added that up.

You know, it's so powerful. And also it's tax free. So it's like getting a $5,000 raise or better still, if you put it in a Roth IRA and you start compounding, makes an amazing difference. Also, not to, you know, belabor the point, but your life insurance premiums will be a lot lower if you're not a smoker. So you save money, you know, great deal of money that. And you'll have fewer sick days and less nyquil and all these other things that you. You don't have to buy. Here I am prescribing to your. You're going to be healthier. It saves a fortune. Anyway, so that's the. Those kinds of things. Making a budget, it sounds so boring, but. And I would tell people, we'll start by making a budget. And somebody finally said, how do you do that? And I'm thinking, duh. And what do you mean, how do you do that? And then I realized, well, I guess. So I wound up writing. It's in the chapter in the book. But I think I wrote it for Parade, which had. I used to be have the COVID of Parade magazine every, you know, one Sunday a year or something. And I think I did it for parade for like 20 million people. And it was so fun because it's kind of like. And going through it, it's kind of like naming the states. We can all you know, you get, you go through all the states and you're up to 46 and then you're. Oh, yeah, oh yeah, okay, Missouri, Missouri. And no offense to anybody listening from Missouri and 47. And then, you know, but boy, does it ever take a long time for you to come up with Delaware or whatever it is. It's very hard to get all 50. But the chapter on making a budget and remembering, oh, yeah, lawn care, lawn care. Or maybe I should just do something different with the lawn. It's a really useful exercise and keeping track. Once you get in the habits, then you don't even have to think about it. But to get into the habits, you've got to kind of organize yourself and make a plan and see the difference it can make and find ways that you can, instead of coming out $2,000 a year behind, come out $4,000 a year ahead. The difference over a lifetime is enormous because last I looked, the money the bank would pay you on your savings was like, you know, a couple percent. The money they would charge you on your credit card was like 20%, you know, so a lot of people who may even have some money in a savings account, they're earning 2% before tax with their right hand and paying 20%, which is not tax deductible on a credit card with their left hand. They need to get organized.

Yeah, for sure. Now, the updates in this book, the number of editions in it is significant. I mean, this book's been in now, what, six different decades this book has existed. Take us on a journey through history over that time period. What are the changes you've had to make to this book over the years? What changed in the financial world that made you say, I got to do a new edition?

Well, there are two kinds of things. One would be just world events and where we are in the cycle each. It annoys some people because not everybody agrees with my perspective, but I usually kind of recap where we've been and what the next few years may hold in store. The last edition I said interest rates are really low. They're not going to go lower. At some point they're going to start to go higher. When they do, that's very tough on long term bonds. It's a disaster for long term bonds. And higher interest rates are a challenge for stocks and for that matter, for real estate and for everything. So we've had, you know, we had this long period first. We had, when I first wrote the book we had, it was just coming off inflation, of enormous inflation, treasury bills were yielding 15% last year they were yielding, you know, a tenth of a percent, a huge difference. So we had this long period from 1982 basically down to about five minutes ago when wind was at our back and long term interest rates were just unbelievably low. And just when you thought they couldn't get any lower, they kept getting lower. That's fantastic for the stock market and it's fantastic for business and for everything else. But in the last edition I said, I don't know how long it's not going to get any better and at some point it's going to get worse. And this edition, which of course I finished writing two, three, four months ago, but this edition, it said, yeah, and it looks like it really will get worse because with all, with all the stimulus and with all the, everything going on anyway, so, so part of the things that I, and we could talk about all that because this is on a lot of people's minds, but so part of the differences are just to put it in historical context and help people see where we are in these long cycles of interest rates and productivity and technology and all that. And part of it is just mechanical. Part of. Before there were IRAs, you couldn't write about them. And before there were Roth IRAs, which are better than traditional IRAs, for almost everybody couldn't write about it. There were mutual funds, but then there were no load mutual funds. And then there were exchange traded funds which have an even lower expense ratio and that kind of thing. This edition I've added crypto, I've added venture investing, which is very fun. And I've talked a little bit about meme stocks and Robinhood and all this stuff that, you know, people spend a lot of time thinking about. You gotta be very careful, know what you're doing because most of this stuff is not a good idea for, for people.

Yeah, let's, let's go through those three things that, that you changed in the most recent edition of the book or added to the book, rather. I shouldn't say changed. I mean, you included crypto assets in the book and you've been observing investments for a long time. As you mentioned, you're 150 years old.

Yes, exactly.

And I'm curious, after watching markets for decades and decades, what's your take on crypto?

So crypto is not an investment. And most people would probably, people who understand investing would agree it's not productive. It doesn't pay dividends, it doesn't pay interest, it's not an investment. It's basically a substitute for money. But it's not a good substitute for money for two reasons. I mean, well, for a bunch of reasons, but money is two things. It's a medium of exchange and it's also an accounting mechanism so you can make sensible decisions. And corporations do their bookkeeping in dollars in the US and much of the world, not in Ethereum or Ripple or Bitcoin or whatever. So Bitcoin is so volatile obviously that it's not like a medium exchange and it's certainly not a way to do accounting. So as money, it's not great. Also it's environmentally, you know, it takes so much energy to, to make it. But one thing I was just was watching David Pogue on cbs. He had a great little seven minute segment on, on all this stuff and he went through a lot of the caveats but he missed the one that nobody ever thinks about. But at some point it's going to be an issue every time you, I mean I have tons of friends. I'm sure you do. And a lot of the people listening have made a fortune in bitcoin, at least on paper, if they haven't cashed it in yet. So that's great and hooray for them. But if you spend the bitcoin, let's say you buy a Tesla with bitcoin. But even if you buy just a coffee at some coffee shop that takes bitcoin, technically that's a taxable event. If you're buying the Tesla or the cup of coffee with bitcoin selling at $30,000 today or whatever it's going to be. But you paid only $1,500 for this 30,000 Bitcoin, you have a, it's almost an entirely a capital gain either long term or short term. And yeah, probably won't be audited and certainly for the cup of coffee it's going to be very hard to figure out. But technically you have to pay tax on all the bitcoin that you spend. People I don't think are taking that into account. Anyhow. It may just, it may never go down from wherever it is today, but there's no particular reason for it to go up any faster than inflation. And it's not the best inflation edge. What it really is is it's a hedge against collapse of the government and the world order or at least the order in the particular country you live in. Most of us, the U.S. and if you want to bet against the success of our government and society, could be a good bet. I mean, look to have, especially if you bought it. I tried to buy some, but it got back 30,000 back down to 3,000. I just figured, you know, I'll buy 10 of these things and either I'll have something fun to write about when I lose it all, or maybe. And now it'd be worth a lot of money. I didn't wind up doing it for kind of a boring mechanical reason, but if I had it, I wouldn't probably sell it. Because to have a. At least not too much of it because it's fun. You'll feel like an idiot if it goes to a million dollars of bitcoin and you sold it, all that kind of stuff, but a much better hedge against inflation for the long term. Stocks, real estate or private businesses, or your own education, getting another degree to enhance your earning power. I don't think that ultimately the US Government is going to say, yeah, forget the dollar. Bitcoin is how we want to collect our taxes. So anyway, that's crypto. I'm not a big fan, as you can tell. Sorry to go on at such length.

Let's talk for a minute about venture investing. What's your take on venture investing?

Well, there I am a big fan with an enormous caveat that you have to assume you're going to lose your money. I mean, this is going to be. This has to be money you can afford to lose, which is true with the stock market or anything else. But I had so much fun in the book. I'm not going to. I thought of maybe reading it to you, but I don't want to do that. But I have this long paragraph. I lost $30,000 in a thing that says I lost $50,000 in that I lost. You know, And I go through. When I was putting it together, I realized, wow, I've lost even more than I thought in all these things. I lost money in everything you can imagine. But every once in a while, you know, you hit one that works. Honest tea. If anybody drinks honest tea, we. We sold that to Coca Cola and it worked out pretty well. And I had something that I didn't really know exactly what it was, but it was something having to do with logistics. So the trucks would come back with something in them instead of empty. I vaguely remember the name. Many, many years went by, like 12 years went by. And the thing. Basically it was going well at first, but then something bad happened and I kind of lost track of it. And I have an email account. You may do the same thing, which isn't my real. My. My best email Account. I have one for, you know, all the newsletters and all the spam and all this stuff. But I run my eye over every once in a while and delete, you know, deleting hundreds at a time. And I see a sender from casestack thinking, that sounds familiar. What is that? And I have maybe a better. So I clicked it and it said, oh, and it had an attachment. So I was thinking, oh, I hope this isn't. They're not trying to put a virus in my computer and all that stuff. But. So I won't open the attachment, but I'll look at the email said. It said, this isn't the email we sent you last week. This is something else you have to sign. And I really. I said, oh, okay. They finally going bankrupt, and they want me to sign, you know, waivers or whatever happens when they go bankrupt. You're a shareholder. But I looked and sure enough, the previous week, they had sent me something with another attachment. And that one, that email said, we've just sold the company for $252 million. Please, I'd like to tell you I own 10% of the company. Not quite, but I own enough. So that made up for an awful lot of mistakes. And the thing that I love about venture investing, other than it's fun and interesting, is depending on the venture, of course. But the ones I tend to invest in, if they work, will make the world better. I don't know what's going to happen with my investment in Wheel tug, but if we get FAA approval and it works, finally. And all this, everybody listening. When you take a flight on a 737 or an A320 at some point, not any. Not in the next few months, but in the next few years, you won't have to wait for a tug to pull you back out from the gate, and the plane will be able to twist when it gets to the gate and park parallel instead of nose in so you can board and deplane from the front and the back door, which cuts 15 minutes. I mean, it's going to make every airline and every airport 10 or 15% more efficient because the time you spend on the ground is wasted. And it's going to make every passenger, you know, et cetera, et cetera, et cetera. So I have a whole bunch like that. And some of them are going to fail, but if one or two succeed, I'll be able to go the next 150 years without having to work.

So what's a reasonable percentage of your portfolio to having something like Venture investing.

Well, for most people, zero. But it depends on where your overall circumstances. There are a couple of. One way to do it, of course, is to go into funds that do this. Most of them. I have a lot of caveats in the book about why the expenses wind up being so much and it's not necessarily the best way. But there are some where rather than you pick the venture yourself, you can diversify because you might be in 10 or 20 or 30 with professionals who spend a lot of time trying to figure out which ones are going to work. There's one of the funds that you can go into actually has a way to get people like us who normally wouldn't be able to get into the really hot Silicon Valley stuff that Kyr Perkins and all these big deal people do. They've kind of figured out a way to get the little guy into those things. So in my case it's probably half my net worth. But I'm not typical, I'm very lucky and I. Everybody's different. But this sort of segues into another thought that I, if I can offer it, which is, you know, most people, you're a doctor, you're a surgeon, you're a dentist, you're doing incredibly important work. It's wonderful. Your goal isn't, you know, to become the richest man in the world or be able to go into space on your own spaceship or anything. You have this great life. So most of your money should be, you know, over time at least the money that you want in the stock market, which is most of it, your long term money, most of it should be in index funds. And you will do better than 90% of your friends and neighbors and even those of your friends who went to business school instead of to medical school. Index funds have the lightest possible jockey. Think of mutual funds as horses in a horse race. An index fund will have like a 20 pound jockey. An actively traded fund will have 100 or a 200 pound jockey. Especially when you figure in some of the tax consequences it could be a three or four hundred pound jockey. So over the long run, most of the money should be on a regular basis. So dollar cost averaging should be an index fund. But if you're human, and I think virtually all of your audience are, it's so boring, right? So I think to carve out 10 or 20%, not more than 20 and kind of meaningless to be less than 10 for speculative things in the stock market, not where you're trying to find crazy risks and you don't have to do it all at once. But if you find some new medical device or something that you think is going to be great, and it hasn't been approved yet, but you know about it because this is part of your field and you think this company could be really good to put a little money into that and to, you know, your son or your cousin or something has some other. To put five or six chips down in risky things, ones you lose on, which of course could be all five or six. But the ones you lose on up to $3,000 a year lowers your taxable income, and that saves you a little bit on taxes, the ones you win on. And every so often you might have one where you do make 10 or 20 times your money as long as you've held it for more than a year and a day, first of all, that's a nice big win. But if you do any charitable giving, it shouldn't be with money and it shouldn't even be with stock. Although that's a great way to do it. It should be through a thing called the, either the Fidelity Charitable Gift Fund or the Vanguard Charitable Gift Fund or the Schwab Gift Fund. I don't want to go through all the details, but it makes it so much more convenient and so much more tax effective. So you have the fun of. Most of your money is sensibly invested, but you have some fun and you have the tax control to come out ahead, even if you break even. And I hope you do better than break even. But if you just break even after tax, you come out ahead. So that's one little piece of this.

Speaking of index funds, and maybe the opposite of index funds, you include a section about meme stocks in your newest edition. And I understand you kind of have a connection here. You've got a cousin that's the CEO of amc. Give us your take on meme stocks.

Meme stocks are the notion that we're going to find some. What really happened is, as a lot of people know, there was a company called Gamestop that was in big trouble, and there were some others, but Gamestop was the first one. And a lot of very sophisticated professional investors shorted stock knowing it was going to go down because it had to go bankrupt. And somehow on Reddit and one place from another, little guys were angry about this and, and rightly, you know, you know, I mean, the stuff being a little guy when there are so many people with 400 foot yachts and there. And, and all this stuff. And they said, heck no, we're gonna buy this, not you know, it was $3 a share, $4, whatever it was, I'm gonna buy 50 shares. 200 bucks, but I can, you know, and millions of people bought the shares. The people who were short either had to or got scared and started buying to cover their shorts. And the stock, at one point, I think it hit 480, up from four or two or whatever it was. And this was the triumph of the little guy. Not because GameStop is. Suddenly people realize, oh, it's going to make so much profits and pay out so much dividends or anything. Any business reason. It's just the crowd like tulips. As long as it's going up, it's going up. As long as someone will pay more. Musical chairs. So my baby cousin, who was not 150, he's actually the CEO of AMC. And I love the movies and I love my cousin, and I love popcorn. But they were in pretty rough shape because with COVID nobody was going to the movies. And the movie business wasn't spectacular even before because with Netflix and everything else and streaming and the stock went from like a couple bucks up to, I think, 78 or something, which is, you know, make 35 times your money in a few months. That's pretty appealing. Anyway, I. I'm not gonna. I could tell you lots more about that, but suffice to say, I have a wonderful cousin. I don't think it was a good buy at $78. I didn't buy it at $78. Meme stocks. You know, this is. If you want to play musical chairs or you want to go to Las Vegas. Obviously, some people go to Las Vegas and they hit the jackpot, but it's not because they were so smart in Las Vegas, unless they're counting cards, in which case they're going to get their knees broken. And yeah, slow but study wins the race. And my job in the book is basically to try to make it fun or give people enough confidence so they don't spend so much money on professional advice that it's not going to be. It's going to be well intended, but professional. If professionals. If spending $2,000 a year on professional advice is going to have you do really well, well, and 6,000 will make you do three times. It doesn't work that way. The professionals do average. They have good years, they have bad years, depending, you know, but by and large, with rare exceptions like Warren Buffett and Peter lynch and all that, you can't have everybody doing above average. So the trick is to keep your expenses really low, which is why you want a 20 pound jockey, not a 200 pound jockey.

So our audience is composed of high income professionals, mostly doctors. What financial mistakes do you see those folks making specifically? And do you have any specific advice for them?

Well, I do know that doctors and dentists and so on are real targets. I mean, every life insurance agent in the world wants to sell whole life or variable life or universal life, one of these life insurance products that are impossible to understand and compare, which is one of the reasons that they're so profitable for the insurance companies. And so your audience are targets for all kinds of sales pitches. You may need life insurance, but you probably want inexpensive term life insurance that doesn't require a salesman. There are some people look for somebody with a very large medical practice. You have an accountant, talk to your accountant. Don't listen to me about some of this stuff. Because there are situations where you might want a different setup because of taxes and one thing or another. But by and large, you don't want that. You don't want to be sold annuities by an annuity salesman who under, you know, who gets a huge commission. And one of the things the book does, it just goes through all these things that you don't want to do to kind of arm you for the conversation when your college classmate who may be a terrific woman or a lovely guy and they would like to see you do well, but they make a big commission and they persuaded themselves that this is, you know, this is something you should buy. So the most important thing, I guess is that, yeah, you may well have your accountant and you may have people you trust, but don't spend a lot of money on the expenses on the frictional cost of this stuff because that does not add to your return. It used to be that people assumed you could get 10% a year in the stock market at least. How could you not? So to pay 1%, eh? Okay, but 1% is 10% of 10%. So 10% is not nothing. And if we have a period where you only get 3 or 4% in the stock market, 1% of 3 or 4% is a lot of it. And you say, how could we ever have a period like that? Well, I remember 1966, when again, did I mention that I'm 150 years old in 1966, I'm actually 75. So I'm half. This is half true. Everything I say, by the way, half true. So in 1966, I remember the day the Dow Jones Industrial average broke through 1,000 for the first time in History. It didn't close above 1000, but intraday broke through 1000. It took 16 years until 1982. I think I had that right. But 16 years to get back to 1000. 16 years is a long time to wait. Not for me by now, I mean it goes very fast. But if somebody's listening is in their 30s or 40s to wait 16 years to break even on your stock in GameStop or whatever, it's a long time. So it's really important to keep expenses low because you can't assume that you're especially your after tax return and your after inflation return. I mean it's time tough to make 3% after tax after inflation on your money. And the easiest way to improve your return is not to give up expenses that you don't have to give up.

Well, inflation is now over 8%. Now you were a columnist, you were an author the last time we had significant inflation back in the 70s.

That's right.

What advice do you have for our listeners regarding inflation? Now?

I like to think this is going to be different because aspects of it are very much tied to the aftermath of COVID All that pent up demand and obviously the Ukraine and oil and oil prices or energy prices go into everything. So it may well be that over the next year or two we get this more or less under control, things come back to more or less normal. We could have a recession in the meantime, I don't know. And interest rates, I think we're done with crazy low interest rates, but you never know. But it's also possible that we're going to have. It's going to be tougher than that and it'll be inflation of the type that we had in the 70s. Eventually we will fix it because we have to. And everybody, the Fed knows we have to, Congress knows we have to, the voters know we have to. So we'll fix it. It may be painful. So one thing to know is it's not going to be forever, I think. I don't think the dollar is going to become worthless the way the Russian Ruble did in 1917 or the way the German mark did in the Weimar Republic in the 30s where you needed a wheelbarrow of cash. So number one, I think we may got off easy or at least it's certainly going to. And it's. I don't think it's going to be like it was in the 70s. I could be wrong. But the other thing, even more important thing is whatever happens there is going to be. People are going to need places to live and places to work and the things that they buy. And if you own part of the company that sells the now hundred dollar movie ticket or the $200 basketball which, or the $41 pound of whatever it is, if you own the business and the business is well run, doesn't have too much debt and can survive this inflation itself and any recession we have, you will own. I'm not saying it as simply as I should think of it this way. You own a house. Oh, it's doubled in value. Well, it's still a four bedroom house. It hasn't double in bedrooms or in bathrooms or in swimming pools. You still own a house. It's kept up with inflation. If you own stock in a company, depends on the company and how it's run. But basically over the long run, no matter what happens with inflation, your shares in that company could well not only keep up with inflation but because the company is productive and may be growing and becoming more productive with better technology you can do great with, with the company. So the place you certainly don't want a lot of money sitting in the bank. Most importantly, you don't want any of it in long term bonds because you're going to get killed in inflation. I tend to run on at some length. The advantage of the book is I can go over and over and kind of with a scalpel and I can try to say things I write so much better than I talk because I can slim it down and slim it down.

You know, it's interesting. I thought I had a deal with the Fed, right? I thought the deal was if inflation starts going up, they're going to raise interest rates.

And I don't feel like they kept.

Up their end of the deal. You know, they kept them low for so long that now even these six little raises they're planning this year, it feels like too little too late. I mean, 10 year treasury yields are 2.8%, my high yield savings account's paying 0.5% and inflation's at 8. What do you think about the path the Fed steered us down the last couple of years? Are they behind the A ball?

Well, we have big challenges ahead, that's for sure. I don't know that the Fed did it wrong. I do think the stimulus may have been, there are reasons for it, but to send money to people who didn't lose their jobs and send them $1,400 didn't seem to me as targeted as a Senate to the people who actually needed it. You know, there are things that in hindsight, especially if, if you could, if there weren't the mechanics, that can be very difficult. It just, it's one thing to have the idea, it's another thing to do it in a way that doesn't involve fraud and months and months of adjudication and all that. There are things that probably could have been done better. But you know, we didn't have huge inflation until, I mean people weren't thinking about inflation until quite recently and but we did have the possibility of a global depression and collapse and those are very hard to come back from. You don't flip the switch on that. So if the Fed and if the stimulus, by saving the world from global depression, which also can lead to more wars and to civil war and to horrible things, I mean the bad things that haven't happened we take for granted. Of course we didn't have, but they could have happened and we kept them from happening. And I think that we should feel pretty good that we kept them from happening. And now we have some inflation to deal with and in the next couple of years, hopefully we'll get it under control, ideally without a recession, but we'll see what happens. But no, I think the Fed, I got to interview Paul Volcker when he was chairman of the Fed and that period when inflation was 15% and treasury bills were yielding 15% and mortgages were as much as like 18 crazy times. It was the most interesting few hours I ever spent. I was like 12 years old and he was this incredible person with a 20 inch cigar and his feet up on the. I mean it was awesome. So, and he basically said, I mean what I took away from it was that, yeah, of course he's a superb economist and he's a brilliant guy and he was a real hero to the country. I think he's the one who put the screws on the whole thing and gave us this terrible recession, but killed inflation. But it turns out that the job of being the chairman of the Fed, even though you've got to be a great economist and all that, you're really the national psychologist, you've got to figure out what you've got to try to get in people's, the collective head of the American people are what are they expecting and how do you get them not to expect inflation? Because if people expect inflation, then we're going to have inflation. I mean if it gets to be a syndrome where no one can imagine that it's going to be tamed right now people can absolutely imagine and they should imagine that will Be tamed, because it will be. But anyhow, Volcker was a hero and we had a very rough recession that was necessary this time. We absolutely may not need a terrible recession, and we may not even need a recession at all. You know, oil prices can come down very quickly. It was six months ago, people who own oil stocks were. Don't hold me to the six number. But some months ago, not more than a year ago, people were who own oil stocks were moaning that the price was so low. And now no one thinks it can ever get low again. It's going to come back down in part because renewables are getting so much more competitive. It's cheaper now, renewables, than coal and fossil fuels in many situations, and that's just accelerating. There are tons of reasons to be optimistic.

Yeah, I mean, investors have to be optimistic. You know, that's kind of the nature of being an investor. And usually, despite the fact that being a pessimist sounds smarter, the optimists have won historically. You know, Very good point. Let's get even more political for a minute. Not for a long tangent, but just a brief one. Although you count many Republicans among your friends, you served as the treasurer of the Democratic National Committee for many years. Now. Many people view today's political polarization as a huge problem. I'm curious if you do, and if so, what do you think should be done about it?

It is a terrible problem with polarization, and it's playing right into Putin's hands. I mean, I think he had something to do with Brexit, and I think that he wants us to be as polarized as possible, because if we're polarized, we don't get anything done. And it could lead to all kinds of terrible stuff. It's not only Putin, of course, but. But there's a lot of money to be made in the extremes. You raise a lot more money, whether you're a media outlet or a political fundraiser, if you scream and shout horrible things that might have a grain of truth but are so overdone on either side. And it's a terrible problem. I'm a liberal, but basically a moderate Democrat. And I, you know, Eisenhower and Nixon, except for, of course, he had his issues, but Eisenhower, Nixon and Reagan. I was actually so. I was on a long time ago. I was on a radio talk show for one of the previous editions of this thing, and the publicist warned me in advance. Now, this guy and this before there were even were really right wing. I didn't know what this was way back, I think before the Tea Party before, long time ago. The publicist said, I just want to tell you this, this fellow is a lot of fun. You'll like him. But he's very right wing and you should just know that. So we get to the call in section of the show and somebody asked me about something or other and I realized, oh, what a softball. I'm going to convert every right wing listener. And I said, listen, Pete Peterson, even Pete Peterson, who was Nixon's commerce sexist secretary, even, he says, and the host of the thing starts to laugh and I get a little nervous. And I said, why are you laughing? He said, listen, you know, you're a nice guy, but you don't get it. To us, Nixon was a socialist, you know, and, and, and Reagan, of course, by now this Reagan could never be. This isn't the Republican Party. So if it were the Republican Party that most of us knew until about 20 years ago, okay, we might disagree. But you disagree agreeably and you compromise and all that. Compromise is really important if we're going to get anywhere. So yeah, it's a terrible problem. And the solutions are fixing the gerrymandering. And there are ways to do that. And for primaries, especially mail in ballots for primaries so that you don't have to be a real super duper activist to take the time to go to the primary. We should get rid of the caucuses. It should all be primaries. It should be easy to vote in the primaries so more people do it, not just the extremes. So average people do it. And there should be rank, rank choice voting. It's also called instant runoff voting, which means you vote for Ralph Nader as your first choice because, oh my God, he's fantastic. Or you vote for Marjorie Taylor Greene because, oh my God, she qanon, this is the real truth. Okay? But if need be, as your second choice, you would vote for Gore instead of Bush, let's say, or you would vote for whoever on the other side instead of Marjorie Taylor Greene. And that gives moderates, gives all the politicians some reason to try to appeal to people in the middle, people who are not rabid left wing or rabid right wing. So those structural changes which are possible, and we're making some progress in some of them, that would help to deal with the polarization and we need to.

Another area of your life that I think people would find really interesting is you have been on a bit of a personal crusade against smoking. Can you tell us about some of the things you did to fight smoking?

Well, I'm just a bit player in this But I did a couple things. Every summer, airplanes would go up and down the beach, you know, with these banners. Newport, the perfect recess. Now, they're not trying to appeal to kids. Tobacco companies do not want kids to smoke. So recess is not, you know, which used to be what you had in between classes in elementary school. That just happens to be a coincidence. But anyway, Newport, the perfect recess. And there were a couple others. I forget now I have to look. But after a couple summers I called up and I found it's not that expensive to get one of these planes. So I hired a plane to follow the other plane and mine said, newport, the permanent recess. And I had another one. Larry Tish sells cancer sticks and had all these planes following their plans. The following summer they stopped. So that was one and the other. I went to Russia back when everything was changing. And I had read in the Wall Street Journal that you could buy a minute of time on the or 30 seconds on the nightly news for $3,000. And I figured, wow, I got $3,000. I even have $30,000. I'll buy ten 30 second spots. By the time I got over there, for various reasons, turned out it wasn't 30 seconds, it was a minute. And it wasn't 3000, it was 1200. And there were only three networks back then, so I took 50 for 15 nights, night after night on all three networks in December, when it was way too dark and cold to go outside during the nightly news and you couldn't mute the TV and go in the other room for beer because they didn't have remote controls and this was like 1992 and things were pretty primitive back then. So I annoyed the entire former Soviet Union with my dreadful high school Russian saying. The tagline of each of the, each one was different, but the tagline of each one was, kids, don't become slaves to the tobacco companies like your parents. And my reasoning was, kids don't. You can't tell kids what not to do because that's not going to that work. But if you tell them that their parents are kind of dumb that they, they might react to. So anyway, and I know it annoyed the whole former Soviet Union because about six months later somebody sent me a tape. They had made a spoof, somebody on a big popular comedy show. They had spoofed my terrible American accent and all that. So, yeah, kids don't smoke. And doctors know this better than anybody. And you have shown how you can turn it into a financial thing and get people to stop smoking that way.

Well, our time's Getting short. But tell us what you're working on now. Here's the part where you should hold up the book for those watching on YouTube. Show them the book cover.

No one is still watching and they're listening. We've been going for three hours. I'm now 152 years old. Here's the book. The only investment guide you'll ever need is. And what am I working on now? I have a little daily blog post most days. They started out, I've done about 6,500 of them. So if you've missed any of them, they're all archived. And if you have like two or three months, you can, you know, two minutes@andrichebias.com and it's sometimes. Sometimes I offer irresponsible stock recommendations for money that you can truly afford to lose. I always stress that. And as my readers can tell you, we truly have lost on many of them. But others have worked out quite well. But much of it by now is kind of politics and what's going on in Ukraine. And, you know, after 200,000 years when nothing pretty much happened until maybe 10, somebody, they invented fire and somebody thought of the wheel. These were big things and language was good, but basically nothing happened until what, 10,000 years ago. And some cave paintings and some more things, but. And then the Romans learned how to do indoor plumbing, but they forgot. So that didn't really count. Gutenberg is 500 years ago with printing press. That was pretty big. And since then it has just speeded up until, what, 150 years ago, information could never travel more than seven miles an hour, as fast as a horse could run or whatever these are. The next 10 or 20 years will set the trajectory. We are either on the cusp of unparalleled prosperity as a species. Cancer. In a few years, you go, they'll just take a pill or they'll do a little wand thing. The cancer's gone. The vaccines we're able to do now, which, by the way, were a DARPA parade for Moderna and for Pfizer, but it's DARPA that did the underlying, which is the big bad government got this thing going. We're either on the cusp of unbelievable prosperity, where almost everybody can have a decent, comfortable life and all that, or more likely, probably we're about to hurdle off the rails as a species. The cockroaches will be here, but we won't. I mean, there's so many ways this could go wrong. So this is a time to pay attention and to figure out how do you want to live your life and how much of the world's resources, I mean, can you have a good time living light on the land if the only way to be happy is to have something that consumes a huge amount of fossil fuel and so on and so forth? Well, okay. But if you could find another way, might be better and might save you a lot of money and set you up for a better retirement.

All right, last question. Our time is now short, but you've got the ear of 30 or 40,000 high income professionals, mostly doctors. What have we not yet talked about today that you think they should know?

All right, so I guess one of the things that I like to say, and many of your listeners do know this, but I think that happiness, which is after all what we're kind of all after, happiness, is a matter of direction, not amount. So especially for your younger listeners, I think if you had two families, one earning $50,000 a year, but somehow knowing that it's headed up to 150,000 and another earning $500,000 a year but somehow knowing it's headed down to $250,000, the first family is never going to even catch. Maybe they'll get to $150,000 and the second one will never get lower than 250. I think the first family earning 50 is a happier family or a happier individual or doc than the second because things are looking up, things are going the right direction, things can get better every year. So what? I counsel everybody and I apologize because you have a very sophisticated audience. So this may be too simple minded, but pace yourself, Pace yourself. A luxury once sampled becomes a necessity. So, you know, maybe you can afford, especially if you take a loan, and you can certainly get a loan. As we were talking about before, you can afford to go first class, but once you get used to first class, it's so depressing to have to go to Greece or to the Bahamas or someplace in coach. Oh my God. Anyhow, it's a direction, not amount. So these philosophical kinds of things may be as important in the long run as figuring out which index fund to buy or whether or not to go into crypto.

Awesome. Andy, thank you so much for being on the White Coat Investor podcast today. For the listeners out there, check out his book if you have not yet read this one. This is one of my favorite books on both personal finance and investing, the only investment guide you'll ever need. You can pick it up at Amazon or wherever you like buying books. And thanks so much for being on the podcast and sharing your wisdom.

Thank you. It was a lot of fun.

Hope you enjoyed that interview as much as I did. It's always good fun to get somebody that you've read their work and followed them a little bit and actually get to know them a little bit personally. So that was a lot of fun. You can check out his book. There'll be a link in the show Notes that you can check out. While you're there, check out our link to our new asset protection book, the White Coat Investors Guide to Asset Protection. It's my newest book. It may not be as entertaining as Andy's book, but it is a comprehensive book on the subject that if you are interested in anything about asset protection for physicians, this is the book to check out. So it'll be linked in the show notes for that as well. Or you can just look it up on Amazon. Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status, and one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the White Coat Investor can help. Thanks for leaving us. Five star reviews. Most recent one came in saying Great show. I really enjoy your show. After listening to a few episodes, I was totally hooked. It has great direction, it deals with very instructive and interesting topics. I really love this program. Thank you Maryanne. For the rest of you, keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast.

The hosts of the White Coat Investor Podcast are not licensed accountants, attorneys or financial advisors. This podcast is free entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.