Matt Hall: You Decide

Welcome to Take the Long View with Matt Hall. This award-winning podcast reframes the way you think about your money, emotion, and time. The goal? Helping you put the odds of long-term success on your side. Good day, Long View listener. Welcome to this short and sweet episode. After 38 episodes, we're going to take a little break. We will come back to you with more episodes aimed, of course, at a long view, but maybe with a dedicated theme. Our team is working on what the next batch of episodes will look like and how we can make them valuable to our loyal audience. If you happen to have ideas for us regarding guests, themes, or anything else, please email me at matt@hillinvestmentgroup.com. While we are on our podcast break, I invite you to stay current with us via Instagram. You can find us at Hill Hill Investment Group, or the podcast, I think, at Take the Long View, our monthly email, which you can join by going to hillinvestmentgroup.com. Or of course, you can always take time during the break to read or reread my book, Odds On. But before we leave you, I want to give you a couple of stories. So before we say see you next season, let me leave you with a message that is central to what this podcast is really all about. And what I'm about to tell you is going to sound obvious, but bear with me because It is true. Ready? Here it is. We get to decide what we focus on. Hold on, let me repeat that in case you missed it. We get to decide what we focus on. And when it comes to investing and money, that means you have a choice. You can focus on days, decades, or beyond. If you choose to focus on days, you're signing up to make yourself miserable. And for no good reason. There's actually no benefit to this perspective. I can handle, and I'm sure you can handle, pain that leads to gain, but this is just pain that leads to your mind being whipsawed by the noise. On the other hand, when it comes to investing in money, we actually get rewarded for ignoring the daily gyrations. As the great Warren Buffett said, benign neglect bordering on sloth remains the hallmark of our investment process. Remember, you actually have a choice and are in control, days or decades or beyond. What's it gonna be? And as you contemplate your answer, I have one more statement for your consideration. My team at Hill Investment Group found the perfect quote from a German poet named Rilke in "Letters to a Young Poet." Here's what he says. In this, there is no measuring with time. A year doesn't matter, and 10 years are nothing. Being an artist, or I would say investor, means not numbering and counting, but ripening like a tree which doesn't force its sap and stands confidently in the storms of spring, not afraid that afterward summer may not come. It does come, but it comes only to those who are patient. Who are there as if eternity lay before them, so unconcernedly silent and vast. I learn it every day of my life. I learn it with pain I am grateful for. Patience is everything. So when he says 10 years are nothing, in my work, I use this exact phrase. We say that 10 years are nothing, and we mean that even 10 years' worth of data can be noise. And if you look at the last 10 years of stock market data alone, you'll see precisely what we mean. When he says, "Stands confidently in the storms of spring, not afraid that afterwards summer may not come," this line resonates with us because our listeners have confidence even in tumultuous times, knowing that taking the long view is the closest we can get to certainty when it comes to investing. The longer into the future you look, the closer you get to 100% certainty of seeing a positive return. Summer comes only to those who are patient, who are there as if eternity lay before them. I believe the long view is actually longer than your lifetime because you can plan for the legacy you will leave. So that line really connects with me. Conscious choices will be felt by those who aren't even born yet, if that's what you want. Patience is everything. Well, you know, this podcast agrees with that line. The long view hopefully is longer than your own lifetime, if you want it to be. It's your call. Okay, if you happen to be craving a little bit more I thought, you know what, I want to give you my favorite all-time story reinforcing patience and a long view as the great advantage. It is the great advantage, the great equalizer. Listen not to me, but to my past guest Morgan Housel and the interview I did in November of 2020. You don't have to go anywhere. It's going to come here in just a second. We're going to fetch it for you. I love the way you start The Psychology of Money, and I've read this story before, but talk to us a little bit about who Ronald Read is and why his story, in my opinion, is like the perfect jumping off point for the whole book.

Well, Ronald Read was a guy who was, by all accounts for those who knew him, I never knew him personally, but for those who knew him, he was a lovely gentleman, the nicest, kindest, down-to-earth guy, but he had a very humble, low-key life. He worked his entire career as a gas station attendant. And a janitor. His friends who knew him said the only hobby that he had was chopping firewood. He was the first person in his family to graduate from high school, and he only did that because he was walking something like 5 or 10 miles each way to the high school to get there. Just like the lowest, humblest upbringing and life that you can imagine. And when Ronald Read died, his friends who knew him were shocked to learn that he left, I think, $7 million to charity. And everyone said, where did Ronald Read, this janitor, this gas station attendant, get all this money? And they started looking through his paperwork and they realized that there was really no secret to it. There was no inheritance, there was no lottery winnings, there was nothing like that. What he did is he took what little money he could save as a janitor and he invested it in blue chip stocks and he left it alone for like 60 years to compound. And that was it. That was, that's all. That was his entire story that let him donate millions of dollars to his local library and some local schools and local hospitals. That was the end of his story. And to me, it's so important, you know, like that, that story, just as you mentioned, you had heard it before, it was, it was pretty big in the news when it came out many years ago. But to me, I think a big part that was overlooked in this, that is so important to the psychology of money, is of course, Ronald Read had no financial training, no education, no financial background, no experience, no connections, no resources, but he still did ridiculously well as an investor, because he had mastered whether he knew it or not, the psychological side of investing. He was patient, he wasn't greedy, he left things alone, he let things compound, he He didn't freak out, he wasn't trading, he just bought some companies and let them compound for decades. I think that is all you need to do well in investing. It's not that the analytical intelligence side is not important. If you are someone who is very smart, you have a lot of financial sophistication, it's not that it's not important, but if you mix a lot of technical sophistication with bad behavior, the bad behavior is going to win out, always, every time. You can be the best stock picker in the world, but if you panic in March of 2020, none of it matters. It's all extinguished.

Neutralized.

On the flip side, if you are Ronald Read, and you have no financial sophistication, no knowledge, no experience or training, but you do have good behavior, the good behavior still wins out in that point, and you can do very well over time, which is just this observation that the psychological part of money, of finance, of investing, is more important than the analytical side that we spend so much time thinking about and being taught about. Like most of finance is taught as a math-based field where it's formulas and data and charts. And again, it's not that that doesn't matter. But if you mix that without the right behavior, then none of it matters. It's all gone. So it's just this observation that the cycle of how important the psychology side of money, of investing is. And I've often viewed through my, through my years of writing about this, I came to realize that investing is not the study of finance. It's the study of how people behave with money. And those behaviors are all, are really all that matters, like people's relationship with greed and fear, people's ability to take a long-term mindset. Who you trust, and how gullible you are. None of those things are typically found in a finance textbook per se, or an economics textbook, but they make all the difference in the world to investing outcomes.

Yeah, well said. That's one of the things that's so powerful about the book is you shine a light, I think, on the things that matter and that are often ignored or undervalued. The opposite of Ronald Read is Richard Fuscone?

Yep, yep, that's right.

Tell us just a bit about his story.

Well, Richard had almost the exact opposite upbringing of Ronald Read. He was born to a wealthy family. He went to Harvard. He got his MBA from University of Chicago. He went to work on Wall Street and literally became one of the most important, powerful men in global finance. He was a vice chairman of Merrill Lynch, running one of their largest divisions. He retired in his early 40s to pursue charitable activities. That was how successful he was in his career. And just from the outside, just about as successful and wealthy a person as you can imagine. Several huge mansions, you know, multiple 10,000-square-foot mansions with elevators and whatnot, just kind of the epitome of financial success and wealth. And not long after Ronald Read died, Richard filed for personal bankruptcy. He told the bankruptcy judge that he had no income left. The financial crisis had completely wiped him out. There was one story that I read there where he said that he had been wiped out to such a degree that his only ability to buy food for his family was selling the furniture out of his house. I think this is actually— I have no ill will against Richard. I'm sure he was a very smart guy, but to me, it's just fascinating because it's almost the polar opposite of Ronald Read, that Richard had all of the education, all of the experience, all the sophistication, the connections, the assets, the resources. He had all of that, but from the outside, apparently, he did not have the psychological side. It seems like from the outside, he was greedy. He got in way over his head with debt that he was not able to service over time. That's the opposite of Ronald Read. Again, if you mix all that sophistication that he had, that Richard had, with bad behavior, the behavior wins out. I also don't think there's any other field where Ronald and Richard's stories can coexist. There's no other field where someone with the best education, the best training, the best experience, the best background can massively underperform someone who has no training and experience and background. It's totally impossible to think of Ronald Read performing open-heart surgery better than a Harvard-trained cardiologist. Never happen. It would just be impossible for that to occur. But those things do occur in finance, which again is just this observation of how important the softer psychological side that is kind of inborn in a lot of people, uh, and, and how important that is.

And there it is. How good is that? P.S. Morgan's book has become an international bestseller since he was on this show, and I have a few copies to give to listeners if you'd like one. Just shoot us a note or give us a Matt Hall. And of course, keep on taking the long view. Respect, Matt. How long can you go without looking at the value of your investments? Please note, the information shared in this podcast is not intended as advice. The intent is to share meaningful experiences. I am likely not your advisor, nor wealth manager, nor financial planner, and my opinions are my own and not necessarily shared by Hill Investment Group. Investing involves risk. Consult a professional before implementing an investment strategy. Thank you.